Chiến lược kinh doanh của công ty cổ phần phân lân ninh bình giai đoạn 2010 2020

LUẬN VĂN THẠC SĨChiến lược kinh doanh của Công ty Cổ phần phân lân NinhBÌNh giai đoạn 2010 - 2020 MBA THESISSTRATEGIC BUSINESS OF NINH BINH PHOSPHATE JOINT STOCK COMPANY FROM 2010 TO 202

LUẬN VĂN THẠC SĨChiến lược kinh doanh của Công ty Cổ phần phân lân Ninh

BÌNh giai đoạn 2010 - 2020

MBA THESISSTRATEGIC BUSINESS OF NINH BINH PHOSPHATE JOINT STOCK COMPANY FROM 2010 TO 2020"

TABLES OF CONTENTS

Introduction 9

CHAPTER I: THEORITICAL BASIS OF BUSINESS STRATEGY 10

1.1 Concept, roles and business strategy models ……… 10

1.1.1 The concept of strategy and business strategy 10

1.1.2 The role of business strategy 11

1.1.3 Strategy model 12

1.2 Business strategy formulation process 13

1.2.1 Research stages 14

1.2.1.1 Identifying targets of the industry and company… 14

1.2.1.2 Analysing environment 14

1.2.2 Developing strategies 15

1.2.3 Selecting strategies 16

1.3 The major toolsfor strategy formulation and selection 16

1.3.1 SPACE Matrix 16

1.3.2 Matrix SWOT 17

Kết luận chương I 19

CHAPTER II CURRENT SITUATION ANALYSIS FOR NINH BINH PHOSPHATE JOINT STOCK COMPANY 20

2.1 Overview of Ninh Binh Phosphate Joint Stock Company 20

2.1.1 History and development of the company 20

2.1.2 The businesses of the company 22

2.2 The advantages and core competencies of the company 22

2.2.1 Geographical location of the company 22

2.2.2 Advantages of melted phosphate production in Vietnam 22

2.2.3 Production methods of melted phosphate 23

2.2.4 Current capacity and main products of the company: 23

2.2.5 Characteristics and the differences of melted phosphate as compared to

other phosphates: 24

2.2.6 Human resources of Ninh Binh Phosphate Joint Stock Company 24

2.2.6.1 Human resources 25

2.2.6.2 Organizational structure 25

2.2.6.3 Management 25

2.2.7 Financial analysis and business results of Niferco for three years of 2006; 2007; 2008 26

2.2.7.1 Balance sheet .26

2.2.7.2 Income statement for 2006, 2007, 2008 26

2.2.7.3 Capital mobilization and employment 26

2.2.7.4 Analysis of financial ratios 28

a Liquidity 28

b Performance 28

c Profitability 29

2.2.8 Position of the company in phosphate industry 30

2.3 Analysis of the company’s business environment 32

2.3.1 Analysis of factors affecting fertilizer demand ……… 32

2.3.1.1 Cultivated area development 32

2.3.1.2 Crop dependency 33

2.3.1.3 Farmers’ income dependency 34

2.3.1.4 Production practices and cultivation knowledge of each region in the country… 34

2.3.2 Analysis of production capacity and competition of domestic enterprises .36

2.3.2.1 Fertilizer demand and production cability of domestic enterprises 36

2.3.2.2 Analysis of the competition among rivals in Vietnam fertilizer

industry 37

- Companies in the industry 37

- Position of the companies in phosphate industry 39

2.3.3 Analysis of potential rivals 40

2.3.4 Analysis of substitute and imported products 43

2.3.5 Analysis of the negotiation power of the buyers in fertilizer industry 43

2.3.6 Analysis of the negotiation power of the suppliers in fertilizer industry 44

2.4 Analysis of current strategic issues and corporate governance from the theory perspective 45

2.5 Determining current shortcomings of the company and analyzing their causes 48

CHAPTERIII BUSINESS STRATEGY OF THE COMPANY FOR THE PERIOD 2010 - 2020 AND CONCLUSION 50

3.1 The company's mission 50

3.2 Business objectives of the company 50

3.3 Strategy selection model 50

3.3.1 Space Matrix for the strategic position of the company 51

3.3.2 SWOT matrix 52

3.4 Business strategy of the company for the period 2010-2020 53

3.4.1 Strategic investment in core competency building: Increasing the capacity melted phosphate production, investing more in the high quaility NPK production line structure 53

3.4.2 Products differentiatation strategy 54

3.4.2.1 Improving product quality from 15% to over 17% of P2O5 54

3.4.2.2 Strategies for improving product visual designs 55

3.4.2.3 Competition by quality

55 3.4.3 Production and selling price cost strategy 56

3.4.4 Market expansion and investment strategy 57

3.4.5 Product promoting and advertising strategy 58

3.4.6 Competitive supplier and supplying speed strategy 58

3.4.7 Human resource management strategy 59

3.5 Strategy organization of implementation 66

3.6 Stratege evaluation and checking 67

3.7 Limits of the research and research orientation in the future .67

3.8 Conclusion 68

References 69

Appendix 70

5 Ninh Binh Phosphate Joint Stock

Company

NIFERCO

LIST OF APPENDIX, TABLES, DIAGRAMS

1 Diagram 1.1 Levels of strategies

3 Table 2.1 Position the company in the phosphate industry

4 Table 2.2 Position the company in the melted phosphate industry

5 Table 2.3 Table on liquidity ratio

6 Table 2.4 Table on performance ratio

7 Table 2.5 Table on profitability ratio

8 Table 2.6 Financial statements of the company in 2006, 2007, 2008

9 Table 2.7 Financial analysis of the company in 2006, 2007, 2008

10 Table 2.8 Phosphate output of the companies in 2006, 2007, 2008

11 Table 2.9 Phosphate output of other companies

12 Table 2.10 Crop area by regions in Vietnam

13 Table 2.11 Inorganic fertilizer output from 2000 to 2008

14 Table 2.10 Phosphate output from 2000 to 2008

15 Table 2.11 Melted phosphate output from 2000 to 2008

16 Diagram 3.1 SPACE matrix for the company’s strategic position

1 Rationale:

With the increasingly fierce competition in the market, each company should

be ready with effective strategies to survive and develop steadily If an companyhas the right and appropriate business strategy, it can rely on its internal resources totake advantage of opportunities from the outside environment or to avoid the risks,limit the weaknesses and it will certainly be strong enough to compete and standfirmly on the market For Ninh Binh Phosphate Joint Stock Company, which is astate-owned company just having been transformed into a joint stock company, itfaces with many difficulties and challenges than ever before as state sponsor is nolonger available Ninh Binh Phosphate Joint Stock Company will have to make lot

of effort to maintain market share and develop further This is also the reason wedecided to select the project "Strategic Business of Ninh Binh Phosphate Joint StockCompany from 2010 to 2020" as the capstone subject

2 The objective and significance of the project

Objective: Appling learnt theories in combination with actual analysis tomake an effective business strategy for Ninh Binh Phosphate Joint Stock Companyfrom now to 2020

Significance: This thesis was made based on the management science withthe desire to contribute to a unit that one team member have worked for many years

3 Object and scope of research

Object of research: Business strategy of Ninh Binh Phosphate Joint StockCompany from 2010 to 2020

Scope of research: Research the business environment of the fertilizerbusinesses and formulate business strategy for Ninh Binh Phosphate Joint StockCompany

4 Research methodology

Many methods such as quantitative and qualitative methods have been used

in combination with analysis, statistics and expert interviews, capstone project is

done for Ninh Binh Phosphate Joint Stock Company to get the most comprehensiveand accurate results Based on that, the report can offer an effective strategy

5 Report structure:

Apart from the introduction, the structure of the capstone project reportconsists of three major chapters:

Chapter I: Theoritical basis of business strategy

Chapter II: Current situation analysis for Ninh Binh Phosphate Joint Stock

Company

Chapter III: Business strategy for Ninh Binh Phosphate Joint Stock

Company for the period 2010 to 2020 and conclusion

Because of the time limit and despite of the committed guidance of instructorand the authors’ efforts, shortcomings can not be avoided in the report We hope toreceive comments from the teachers, experts and all the course members

CHAPTER I

THEORITICAL BASIS OF THE

BUSINESS STRATEGY 1.1 BUSINESS STRATEGY CONCEPT, ROLE AND MODEL

1.1.1 The concept of strategy and business strategy

Strategy is a term having appeared for a long time It is originally often

associated with military and it is understood as: Strategy is the means to achieve long-term goals

Business strategy is attached to economic sector and it is understood indifferent ways, the following are some common understandings:

- According to Fred David, strategy means to achieve long-term goals

- According to Alfred Chadler, strategy is defined as the basic and

long-term goals of a business and it proposes a course of action and distribution ofresources needed to implement that goal

- According to M Porter, strategy is the art of building competitive advantagesfor defense

- By G Arleret, strategy is the determination of paths and other means to reachthe objectives defined through policies

So, business strategy is a set of goals and policies as well as plans to achievekey goals It clearly shows the company is in progress of or will do which kind ofbusiness and the company will be in which sector?

In general, there are differences of business strategy definition but basically

it consists of the following:

* Identify short-term and long-term goals of organization

* Define and select alternatives to achieve the goals

* Deploy and allocate resources to implement the goals

1.1.2 The role of business strategy

- First: The business strategy helps businesses clearly see its purposes and

directions It forces managers to consider and determine the direction for theorganization to follow and when they reach a certain position

- Second: Business strategy forces managers to analyze and predict

environmental conditions in the near future and far future

- Third: Thanks to the business strategy, businesses will attach decisions

with the conditions of the business environment

– Fourth: Business strategy helps managers to use effectively the available

resources of the business and allocate them accordingly

- Fifth: Business strategy helps managers to coordinate the functions within

the organization in the best way toward achieving the common goals of theorganization

1.1.3 Strategic model

1.1.3.1 Overall economic strategy

In the 1950s and 1960s, most of the developing countries developed economic development strategies Taiwan, Hong Kong, South Korea and Singaporeselected economic growth strategy

social-The nature of this strategy is to exploit the maximum comparative advantages

to increase the economic growth This strategy did not set comprehensive goals likethe social-economic development strategy It paid attention to specific industrieswhich had comparative advantages and capacity to make breakthroughs resulting inhigh speed economic growth

The reality basis of the economic growth strategy at early stage of the countryindustrialization, the investment capital of the Government and private sector in thecountry was not much so focused and key investment should be made to avoidspread and small investments On the other hand, focus investment made withcomparative advantage perspective, it will bring high economic efficiency, highrenewable investment possibility This is wise strategy of "the poor", "usingresources as they are available"

This strategy is the biggest and broadest lesson that developing countries canand should learn when studying new industrial developed countries

1.1.3.2 Corporate strategy

It is the example decisions in a company, it is clearly defines and outlines thecompany goals and objectives, identifies the businesses that the company pursues,creates policies and basic plans to achieve the objectives of the company

The corporate strategy is set out to determine the businesses in which thecompany will compete and allocate resources among those business activities

1.1.3.3 Business strategy

Business strategy is planned to determine the selection of specific products

or the specific market types for the business activities within the company and itdetermines how the company will compete given the known positions of thecompany itself and its competitors

Diagram 1.1: Levels of strategies

1.2 Business strategy formulation process

Business strategy formulation process includes the following stages:

* Strategy formation stage

* Strategy implementation stage

* Strategy assessment stage

At each stage, the work is different but they have close relations and

complement each other

Within this research scope, the report only focuses on strategy formulationstage It is conducted through the following steps:

Company level

- Analyze environment

- Define tasks and objectives

- Phân tích lựa chọn chiến lược- Analysis to select

- Define tasks and objectives

- Analysis to select strategy

- Implement

- Control

Functional level

- Analyze environment

- Define tasks and objectives

- Analysis to select strategy

- Implement

- ControlInformation

Information

1.2.1 Research stages

1.2.1.1 Identify objectives of the industry and company

Objective is a concept used to refer to specific business result that companieswant to achieve

There are two types of objective: long-term and short term

The objective is either long-term or short term depending on the period The short term objective tends to be completed within a year while the one taking longer

is the long-term goal

Long-term objective:

It is the target that shows the desired results in a long period of time term objectives are usually set up for the issues of: profitability, productivity,competitive position, staff development, staff relation, technical leadership, socialresponsibility

– Environment of an organization includes the internal and external

environment

a External environment analysis

The external environment of an organization can be divided into two levels:

- Macro e nvironment (also called the general environment) it affects all

industries but not necessarily in the same way

Analyzing the macro environment helps company to find who they are facingwith Management of companies often chooses the following main factors of macroenvironment to study:

Economic factors, governmental and political factors, social factors, naturalfactors, technology and technical factors and population factor.

- Micro environment (also known as the specific environment) it is

determined for a particular industry with all businesses in the industry beingaffected by the micro environment in that industry

Micro environment includes industry internal factors which are externalfactors of the company, deciding the nature and extent of competition in thatindustry It consists of five basic elements: competitor factor, customer factors,supplier factors, new potential competitors and substitute products

b Internal environment analysis

Internal environmental analysis is the analysis of all factors and systemswithin the company to determine the advantages and disadvantages of theorganization On this basis, measures limiting disadvantages and promotingstrengths can be offered to achieve maximum advantages The internal factorsmainly include functional areas such as: human resources, research anddevelopment, production, finance and accounting, marketing and the organizationculture

1.2.2 Strategy formulation

The strategic process formulation includes three stages:

+ The stage 1 of this formation process includes EFE matrix, competitiveprofile matrix, and IFE matrix This is called the data entering stage Stage 1summarizes basic information which has been entered and necessary for theformation of strategy

+ Stage 2 which is known as compiling stage focuses on making necessarystrategies from selection can be made by arranging and combining of importantinternal and external factors Techniques used in stage 2 are Strengths –Weaknesses – Opportunities – Threats matrix (SWOT)

+ Stage 3, which is called the decision stage, only includes only onetechnique of quantitatively strategic planning matrix (QSPM) QSPM matrix using

information input in stage 1 to assess objectively the feasible strategies to beselected in phase 2 QSPM Matrix expresses the relative attractiveness of thesepossible strategies and then provides an objective basis for choosing a particularstrategy

1.2.3 Strategy selection

Based on its functions, tasks, goals, the company selects of appropriatestrategy Strategy is also chosen based on the economic efficiency brought by eachstrategy such as the ratios of finance, profit, social welfare

The process of selecting the general strategy requires conducting thefollowing steps:

- Identify current business strategy

- Control investment portfolio limit

- Review company strategy

1.3 Major tools for strategy formulation and selection

1.3.1 Matrix Space

Matrix on the company’s strategic position

1.3.2 SWOT matrix

Strengths - Weaknesses - Opportunities – Threats Matrix (SWOT) is a

important combined tools which can help executives develop the following 04

IVCompetition

IIIDefense

IIDefense

Competitive

advantages

Envinronment stability

Industry power

strategies: strengths - opportunities strategy (SO), strengths - weaknesses strategy (SW), strengths – threats strategy (ST), and weaknesses – threats strategy (WT)

Combining of the important internal and external factors is the most difficult task indeveloping a SWOT matrix It requires a good judgment otherwise there will not bethe best match

* SO strategy uses the strengths within the company to take advantage of theopportunities outside All executives wish their organizations in a position that theinner strengths can be used to take advantage of such trends and events of theexternal environment Typically, organizations will pursue WO, ST or WTstrategies to bring the organizations to a position where they can apply SO strategy When a company has bigger weaknesses then it will try to overcome them and turnthem into strengths When an organization confronting important threats, it will findways to avoid them in order to focus on opportunities

* WO strategy aims at improving internal weaknesses by taking advantage ofopportunities outside Sometimes there are great opportunities existing outside, butthe company has weaknesses within and this prevents it from exploiting theseopportunities

* ST strategy uses the strengths of a company to avoid or to reduce theimpact of external threats This does not mean that a strong organization alwaysmeet strong threats from the outside environment

* WT strategy is defensive strategy to reduce internal weaknesses and avoidthreats from the outside environment

To create a SWOT matrix, the following eight steps should be taken:

1 - List the main strengths within the company

2 - List the factors within the company

3 - List the major opportunities outside the company

4 - List the important threats outside the company

5 - Combine the internal strengths with the external opportunities and recordthe results of the SO strategy in the appropriate box

6 - Combine internal weaknesses with the external opportunities and recordthe results of the WO strategy

7 - Combine the internal strengths with the external threats and record theresults of the ST strategy

8 - Combine the internal weaknesses with external threats and record theresults of the WT strategy

Table 1.2: Example of SWOT matrix

4

CHAPTER I CONCLUSION

Business strategic management has great significance to the existence and

development of enterprises Therefore, effective use of tools for the analysis,construction and selection of stragety and good strategy implementation areimportant steps for an enterprise to have the right business strategy It shows alogical, systematic and objective approach to determine the future of an enterpriseand bring it to success

Therefore, this is a very important job which is on the top priorities of allorganizations

CHAPTER II

CURRENT STATE ANALYSIS FOR NINH BINH PHOSPHATE JOINT STOCK COMPANY 2.1 Overview of Ninh Binh Phosphate Joint Stock Company

- The international transaction name (company brand name) is NIFERRCO

- The company has registered exclusive logo which is certified by theIntellectual Property Department of the Science and Technology Ministry in paper

2.1.1 History and development of the company

The Ninh Binh Phosphate Joint Stock Company today was previously theNinh Binh phosphate factory which was established on 01/8/1977 The company isone of four current largest phosphate manufacturers in Vietnam under the VietnamChemical Corporation (VINACHEM) Since 01/01/2005 the company has beenofficially transformed and operated as a joint stock company, in which the Stateholds dominant shares of 51% The process of company formation anddevelopment can be divided into four periods:

- 1977 - 1984 period: This is the period of constructing the factory Because

in this period was affected by the war against the United States, the factory buildingfaced with many difficulties from repeated destructions so the factory constructionprogress was slow and extended to 8 years until the completion The factoryreceived one investment in the production line in which are two phosphate meltingproduction high reactors with the capacity of 100,000 tons / year

- 1985 - 1990 period: in this period the factory officially entered production During this period, the production was mainly done under the subsidy mechanismaccording to the centrally planned targets assigned by the State and the productionwas for the subsidy mechanism The factory only focuses on the production and theproduct distribution will be appointed by the State It was due to producing underthe subsidy mechanism, few products were distributed and the production was only20-30% of the capacity

- 1991-2000 period: In this stage, because the mechanism has changed, theproduction was associated with the market The company must be autonomous inthe production, self-responsible for selling products by the market mechanism Inother words, the company was at the growth and development stage The companymade great efforts in finding marketing, doing marketing activities, expandingdistribution channels throughout the country so it has increased the productionoutput and sales In 2000, the company has produced all the design capacity of100,000 tons/year

- 2001 to present: The company has developed the most in this period From

2001 to 2008, the company has 8 years of continuous growth with an averagegrowth rate of 15-20% per year At this stage, the company has had the rightmarketing strategy to reach consumers, expanded the distribution channels to 45provinces across the country and exported fertilizers to the countries in the regionand Asia such as Laos, Cambodia, South Korea, Japan

In 2001, the company has decided to invest in an additional phosphate meltingproduction reactor while making technical improvement for two phosphate meltingproduction reactors, raising the company's capacity to 300,000 tons of meltedphosphate and 100,000 tons of NPK per year which was equal to 300% of theoriginal design capacity In 2008, the company has achieved the highest businessperformance so far by having produced 246,000 tons of melted phosphate and75,000 tons of NPK resulting in VND 566 billion revenue, VND 92 billion before

taxes profit, the production as compared to 2007 has increased by 17%, revenueincreased by 78%, profit by 411%

During this period, besides the good results in the production and business, thecompany also achieved many noble rewards that the Party and State awarded suchas: Third Labor Medal awarded by the President for the excellent achievements inmanufacturing and trading in the 2003-2007 period, contributing to the nationaldefense; Competition Flag by the Prime Minister in 2008; the merits by the PrimeMinister in 2005 and 2008; Competition Flag by the Industry and Trade Ministry,Ministry of Labor and Social Affairs, and Vietnam Chemical Corporation, NinhBinh Province People's Committee for two consecutive years in 2006 and 2007; twotimes winning the Vietnam Gold Star Award in 2005 in 2008; strong Vietnam brandaward in 2008 and many other noble prizes

2.1.2 The company businesses

The Ninh Binh Phosphate Joint Stock Company has the following major businesses:

- Producing and trading melted phosphate and other fertilizers

- Producing and trading cement and construction materials

- Producing and manufacturing phosphate melting manufacturing

equipments

- Other legal relevant businesses

2.2 The advantages and core competencies of the company

2.2.1 Geographical location of the Company

The company locates 6km south from Ninh Binh town, on the 1A National Highway, which is very convenient for road, rail and sea transportation

- The company is near 1A National Highway, cargo transporation to other provinces by road is very convenient

- The company has a specialized river harbor, so importing raw materialand transporting products to destination provinces by waterway is very quicklyand 24/24h shipment is possible

- Railway station is near the company, the company has specialized railway

to the yard and, warehouses so getting raw materials, and transporting products todestination provinces by railways is in control

- 5km away from the company is Ninh Binh river sea harbor so the shipment

by vessel to the southern provinces with large volume is very convenient

2.2.2 The advantages of melted phosphate production in Vietnam

Vietnam has special advantages in producing phosphate, especially meltedphosphate as follows:

- Vietnam has Lao Cai Apatite Mine with a reserve of approximately 7.8billion tons and it is expected to last in 250 years (Industry and Trade Ministry datasource) This is the main raw material source for phosphate production It is anatural mineral source that can not be renewable so the State limits exporting rawand science, technology and knowledge should be used to add more value byproducing fertilizers for domestic agricultural sector and having surlus for export

- Vietnam has Vang Danh - Uong Bi lump coal source to get good materialsource for melted phosphate production This source is very good and the quality isequivalent to cup coal, which is an extremely rare and valuable mineral resource inthe coal industry For example, in China and Japan it’s only possible to producemelted phosphate by phosphate melting production reactors when using cup coalswhile cup coals are only available when they are produced (i.e there should befactory to make cup coal from fat coal) So the production cost for using cup coal isvery high and cost compettitive In Vietnam, Uong Bi lump coal source can replacecup coals it’s an advantage for producing melted phosphate, which is a key factor tohelp melted phosphate industry to export its products abroad

2.2.3 The advantages and core competencies of the company

Melted phosphate production technology (the international name of meltedphosphate product is FMP) is to produce by thermal methods: Using the heatAntracit coal to melt the ore containing phosphate into liquid (P2O5) with someadditional elements in the furnace at a temperature of 1400-1450 C, and then cool

it down suddenly by a high pressure water, dry and classify it to form meltedphosphate grain which can be grilled into melted phosphate powder

The company has in its control the exclusive useful solution of productionmelted phosphate furnace with a large output of 100,000 ton/year/1furnace

With the current technology, the company is capable of competing with coststrategyy

2.2.4 Current capacity and main products of the company

Melted phosphate (FMP): 300,000 tons / year

Assorted multi-nutrient NPK: 150,000 tons / year

The products are manufactured according to the National standards in

conformity with the international standards and regulations

Current capacity is only sufficient to meet the current demand In the future

in order to expand market, increase market share, it requires for the company toprepare to invest more in expanding new production line, upgrading existingequipments

2.2.5 Characteristics and the differences of melted phosphate as

compared to other phosphates

+ Similarity: providing nutrients to plants with a similar concentration of

equivalent P2O5 from 15-17%

+ Difference: The difference of melted phosphate product as compared with

other phosphate is the prominence of the product

– Melted phosphate is alkali so it can reduce acid in soil very well InVietnam, 80% of the population are farmers who live on agriculture, 80% ofagricultural land is salty and acid coastal land, acid alum land in the Mekong Delta,acid low lying land so the use of melted phosphate is very proper

– Melted phosphate has the characteristic of melting slowly and it melts asthe plant development requires it it is not washed and lost when it rains So it is verysuitable to high and low mountainous land and industrial crop areas such as coffee,rubber, pepper Currently with the annual economy development, the demand of

natural rubber grows higher and higher Vietnam Rubber Corporation has invested

in about 100,000 ha in Laos and about 100,000 ha Cambodia to grow rubber treeswhile rubber trees need 100% of melted phosphate Therefore, the demand formelted phosphate will increase in the coming years

– Melted phosphate produced by heat method gets a large concentration ofnutrient silicon oxide composition supplemented (SiO2) This is the neutral elementwhich is essential for plant crops to help them against falling, limits pest better thanother fertilizers, reduce plant protection chemical uses so the quality of agriculturalproducts does not affect the ecological environment and groundwater

2.2.6 Human resources of Ninh Binh Phosphate Joint Stock Company

2 2.6.1 Human resources: After more than 30 years of development, growth

and the transition into a joint-stock company to present, the company has screenedand had the human resources basically meeting the business, production and trading

of the company at the moment

- Total staff as per January 11, 2009: 465 people

in which:

341 are permanent staff (270 men accounting for 80; 71 females, 20%) 124 are seasonal contract staff (68 men accounting for 54%; 56 females, 46%)

- Master degree: 02 persons

- Engineering university degree: 31, accounting for 9%

- College degree: 10, accounting for 3%

-Vocational training degree and technical workers: 298, accounting for 88%

- Average age: 38 years old

- Factory: There are four workshops, including the three main processing workshops and a servicing workshop

- Departments: There are five departments ensuring the smooth coordination

of activities in the company

- Unions: in accordance with the State regulations

2.2.6.3 The management

Include: Board of Directors and Board of Executives

- Board of Directors: Chairman of Board of Directors cum CompanyExecutive Director, other members of Board of Directors are the companyshareholders cum heads of departments in the company, no outside shareholders

- Board of Executives: Chairman of Board of Directors is the Director; onemember of Board of Directors is Deputy Director

- Comments on the management of the company are that it is compact, allmembers are inside people in the organization so in operating company, there aremany advantages as well as limits such as the time for the company managementand concerns over long-term strategy is little, the access possibility to the newthings outside is still slow, the ability to attach the work assigned andresponsibilities is limited (because the state still holds dominant shares of thecompany)

2.2.7 Financial analysis and business results of Niferco for three years of

2006, 2007, 2008

2.2.7.1 Balance sheet (attached):

Looking at the balance sheet, we can see that the total assets and capital haveincreased over the years with a speed higher every year (121% in 2007 as comparedwith 2006, 158% in 2008 over 2007, 191% in 2008 as compared to 2006) Thisreflects that the capital of the company is growing, the company does businessefficiency and scale of the company is growing

The capital and assets structure table of the company, it is found that thestructure of the company's assets have not changed much in 3 years (in 2006 current

assets/total assets rate was 95%, long-term assets/total assets rate was 5%, in 2007current assets/total assets rate was 95%, long-term assets/total assets rate was 5%, in

2008 current assets/total assets rate was 94%, long-term assets/total assets rate was6%) However, the capital structure has changed significantly with the trend thatequity making up larger portion than liabilities (in 2006 liabilities/total capital ratewas 58%, equity/total capital rate was 42%, in 2007 liabilities/total capital rate was53%, equity/total capital rate was 47%, in 2008 liabilities/total capital rate was 42%,equity/total capital rate was 58%)

Based on the data, we see that the short term assets of the company making up

a big part and this is a business characteristics of the company with production andbusiness processes are seasonal and they need large material and finished productreserve to meet the seasonal fertilizer demand so the capital of the Company ismainly short-term capital As the company's capital focuses on short-term assets sothe capital recovering is fast, little risky and increases the production and businessefficiency of the Company in the past years But in the long term, the companyshould consider investing in fixed assets to improve and change technology,diversify products and businesses to have sustainable and long-term development inthe future

In the 3 years of 2006, 2007, 2008, the capital structure has a clear change.Equity items have increased significantly and accounted for a large proportion inthe total business capital of the company The payable accounts of the company hasincreased but at slower speed

This is mainly because 3 years after privatization of the company, thecompany has strengthened measures to manage and actively expanded thedistribution network, brand development Therefore, the business results havegrown high (after tax profit in 2008 reached 80.6 billion accounting to 14% of therevenue) The above profit was used to supplement the company equity for the sake

of production and trading process of the company Loans borrowed from banks,

credit institutions and individuals have reduced, increasing the efficiency of thecompany production and business

2.2.7.2 Income statement for 2006, 2007, 2008 (attached):

The important ratios:

- Rate of average revenue increase: 159%

- Cost of goods sold: 149%

- Cost of sales increase: 150%

- Overhead cost: 160%

- Cost of goods sold/revenue for three years are: 78, 77, 69%

- The proportions of cost of sales/ revenue are 13%, 13%, 12%

- The proportions of overhead cost/ revenue are 4%, 2%, 3%

Based on the data, we find that the costs of the company were well managed.The cost growth rate was slow while revenue grew remarkably over the years Thishelps increase the efficiency of production and business in the company with thecompany ratio of profit/ revenue in 2006 was 4.5%, in 2007 was 5.2%, in 2008 was14.4%

2.2.7.3 Capital mobilization and employment:

Most of the capital is taken from sources such as profits, depreciation,charter capital and current liabilities of the company Companies mainly use thiscapital to increase the accounts receivable, inventory and other current assets

In 2006 and 2007, the capital of the company primarily relied on mobilizingcapital from outside (2006: 58% of capital used, 2007: 53%) However in 2008,there has been a distinct change thanks to the effective business, the accumulativecapital left for production activities has been growing and replacing the capitalraised from outside (in 2008 loan based capital was 42%, equity was 58%)

We see from above that the financial situation of the company is growingmore and more healthy The liquidity of the company is better and better However,

we need to consider using external loans the business profit rate is higher thaninterest rate In such case, we should take advantages of loans to boost the

production and business to increase revenue and profits This is also the way to usethe financial leverage to increase capital use efficient

2.1.7.4 Financial ratios analysis:

a Liquidity:

The liquidity of the company is increasingly better for 2 consecutive years with all short-term debts of the company are ensured with assets of the company, specifically:

Table 2.3 Table on liquidity ratio

Table 2.4 Table on performance ratio

Fixed asset efficiency 42.66 46.93 49.97

– The yearly stock turnover increases more and more while number of daysfor stock turnover reduces This proves that the company has sped up the process ofdistributing products and collecting cask quickly, reducing stagnant capital ininventory

– The yearly receivable turnover increases more while the number of daysfor a receivables turnover reduces It demonstrates that the company manages wellthe debts with the purchasers The sale policy is increasingly tight, reducing costs inthe company capital employment

- Based on the current ratio, fixed asset efficiency, we see that the companyhas used capital effectively with capital turnover increases more and more (2.2times per year in 2006, 2.5 times per year in 2007, 2.85 times per year in 2008)

c The profitability ratios:

Table 2.5 Table on profitability ratio

The profitability ratio of the company has increased over the years, especially

in 2008 it has increased sharply as the company manage better the production andbusiness costs and the sales has been on the rise

- ROA has increased over the years which shows the efficiency of using thetotal assets has been better (the profitability of assets to create profits has increasedover the years)

- ROE has increased rapidly over the years The capital has createdincreasing profit through the years, indicating the company’s competitiveness of the

has been stronger and the company's stock has been more attractive The increasingprofitability of the company is an importance target of the company

- The rate of profit over revenue of the company has increased over the years(in 2007 115% times as compared with 2006, in 2008 277% times as compared with2007) That showed the after-tax profit of the company as compared to revenue hasincreased, especially in 2008 This shows the growth rate of cost increases slowlywhile that of sales increases rapidly

- In general, the objectives of the company's profitability are high ascompared to other companies in the industry This is a good signal showing the fullcapacity of the company and the investors’ expectations

2.2.8 Position of the company in phosphate melting production industry

Since its establishment and over 32 years of development and growth, thecompany has affirmed its position on the market in general and fertilizer andphosphate market in particular Company has defined itself that it currently holdsabout 25% of the phosphate market and holds 50% market share in meltedphosphate In the coming years, the company will increase market share in nationalphosphate market and export thanks to its strategies

Table 2.8 Phosphate output of the companies in 2006, 2007, 2008

(Source: Vietnam Chemical Corporation)

II Product: Melted phosphate

Table 2.9 Phosphate output of other companies

(Source: Vietnam Chemical Corporation)

Through the analysis above (including the analysis of the competition amongcompanies in the industry) we see that:

- Among the four companies, Ninh Binh Phosphate Joint Stock Companyranks third in the fourth largest phosphate producers in Vietnam at present

- In the phosphate industry in particular, Ninh Binh Phosphate Joint StockCompany is going to be equal to Van Dien Phosphate Company at 45% -55% andwill be in the top two of the four companies

2.3 ANALYSIS OF THE COMPANY’S BUSINESS ENVIRONMENT 2.3.1 Analysis of factors affecting fertilizer demand

Our Party has affirmed that the development of agriculture and ruraleconomy has been the top concern and played the crucial role in stabilizingeconomic situation, society, providing the basis for industry development

Before 1950, Vietnam farmers in agricultural production seemed only useorganic fertilizers (livestock manure, plant manure, mud, human manure ) to feedthe crops Organic fertilizers have advantages like: making land soft, graduallyimproving and increasing soil fertility However, the disadvantages are longdecomposition, few plants using Thus, crop productivity increases slowly Since

1960, inorganic fertilizers such as ure, kali, phosphorus were put in use more andmore in Vietnam Today, for both improving soil and improving crop yield,Vietnam farmers often use a combination of organic fertilizer and inorganicfertilizer However, organic fertilizers are used primarily from Central downward.Farmers households often use as much as they have got and it is not a marketedcommodity like inorganic fertilizer In Mekong River delta, the field every year iscovered with alluvium so farmers do not have the practices of using organicfertilizer to feed the field

With highly developed agriculture, the structure of crops is relatively stableand the inorganic needs of farmers mainly depend on the income of farmers.However in Vietnam, the current demand of inorganic depends on many factorssuch as:

2.3.1.1 Cultivated area development

Vietnam has only about 7 million hectares of agricultural land but becauseVietnam is in the tropical monsoon area with a lot of sunshine and rain, hot and

humid weather all around the year For the short-term plants, when the problem ofirrigation, pest prevention is solved, it is possible to make the cultivated area of thecountry increase by each year Vietnam only has 3 million hectares of land capable

of reclamation left for agriculture but the reclaimed land area is only enough for theagricultural land area lost each year due to transferring land to infrastructureconstruction Therefore, the cultivated area only increases mainly due to increasingthe crops

According to the statistics, cultivated area in Vietnam in 2006 as compared to

2009 has increased to 1.932.800ha, increasing by 276.114ha on the average peryear, in which the annual plants increase by 1.415 million hectares On the average,

it increases by 201.142ha per year This area increase is primarily thanks toincreasing crops The perennial tree area increases by 518.200ha in which perennialindustrial area increases by 402.900ha (mainly thanks to newly reclaimed planting)and 63,000 ha increase of fruit trees (mainly thanks to improving complex gardens)

Assuming that other conditions do not change, only the cultivation areaincreases making the inorganic fertilizer demand increase 1ha per year requires200kg of inorganic fertilizer Increasing the annual area makes fertilizer demandincrease by 55,228 tons

2.3.1.2 Crop dependency

Plants in Vietnam are so diversified: food crops, industrial crops, vegetables,fruit trees, medicinal plants, food plants for cattle However, each plant type hasdozens, hundreds of specific plants For example, food crops in Vietnam alone hasmany kinds: rice, maize, sweet potato, cassava, bean (except soybeans), potatoes

In the plant groups, Vietnam farmers don’t use inorganic fertilizers for all inthe production process Practical development of Vietnam agriculture in the pastfew decades has shown that 80% of inorganic fertilizers are used for rice, only 20%

is used for other crops (these plants are mainly coffee, tea, sugarcane, vegetables,flowers) For the rest of the plants, people often use plant manure, livestock manure,

garbage manure Of course, it does not mean that other crops don’t require usinginorganic fertilizer It is very necessary but the capacity is limited, so people musthave to prioritize major crops first (to ensure national food security, creating large

Therefore, when the investment ability of farmers grows, the crops being fedwith inorganic fertilizer will be further expanded and thus the demand of inorganicfertilizer will increase

2.3.1.3 Farmers’ income dependency

Theoretically, Vietnam farmers seem to understand that to improve cropyields, there should be adequate investment, especially fertilizer investment.However, for a country with 80% of the population living in rural areas, over 70%

of the workforce of the entire society working in agriculture, but agricultural land istoo small (per capita number is one of the least in the world) Moreover, beingaffected by the serious destruction of two wars for 30 years, GDP of people in therural area, especially that of poor farmers, is only 200 USD/ year per person.Farmers find it hard spend a lot of money on buying fertilizer because they havemore necessary needs According to some experts, people in our country can notafford using enough fertilizer As compared to the norms of the InternationalFertilizer Association (IFA), the fertilizer used for rice, oranges and tea in Vietnam

is only 50%, coffee only 70%, cassava and sweet potato only 6-7% In recent years,thanks to the increasing income of farmers, the investment in buying fertilizer hasincreased

2.3.1.4 Production practices and cultivation knowledge of each region in the country

From the specific natural, social and economic conditions, Vietnam's territory

is divided into different economic and ecological zones

-Midland and mountainous region in the north

- Red River Delta

- Region numbered 4 before