Analysis of SWOT model as part of marketing mix vietnam dairy products joint stock company (VINAMILK)

Analysis of SWOT model as part of Marketing Mix -Vietnam Dairy Products Joint Stock Company VINAMILK Introduction Vinamilk is the abbreviation of Vietnam Dairy Products Joint Stock Compa

Analysis of SWOT model as part of Marketing Mix -Vietnam Dairy Products Joint Stock Company (VINAMILK)

Introduction

Vinamilk is the abbreviation of Vietnam Dairy Products Joint Stock Company which operates the production and business of milk and milk products as well as relevant equipments in Viet Nam According to the statistics of the United Nations Development Program, VINAMILK ranked the 15th in the scope of business in Viet Nam in 2007

Security Trading Code on Ho Chi Minh City Stock Exchange is VNM The Company is the leading enterprise in the milk production industry, counting for 75% market share of milk in Viet Nam In addition to the huge domestic distribution with network of 183 distributors and almost 94.000 sale points spread on 64 cities and provinces, Vinamilk products have been exported to countries such as USA, France, Canada, Poland, Germany, Middle East, South East Asia For 30 years being introduced to the consumers, up to now, Vinamilk has built 8 factories, 01 enterprise and have been constructing 3 more factories, with the diversity of products Vinamilk currently has more than 200 sterile milk and milk products

APPICATION OF SWOT MODEL IN EVALUATING THE BUSINESS ENVIRONMENT

A Concretization of effecting elements to the strength, weakness, opportunity and threat

I Strength of Vinamilk Company

1 Diversity of product category

Currently, Vinamilk Company has more than 200 milk kinds and milk products, providing the market products, flavor and package with the most choices Vinamilk products has their diversity in the category:

Among them, the trade mark has been leading the market include: Vinamilk sweet milk, condensed milk, Dielac milk powder, V-Fresh Juice, Vinamilk Café, etc

2 Dairy farm systems with large scale help Vinamilk take the initiative to establish the stable and sustainable resource of sweet milk material

Currently, Vinamilk Company possesses 4 dairy farm in Nghe An, Tuyen Quang, Lam Dong and Thanh Hoa provinces These are locations of favorable conditions for developing dairy farms with large scale due to the large land fund, productive soil and favorable weather

Particularly, Nghe An Dairy Farm – opened on 25 September 2009 is one of the most modern dairy farms in Viet Nam and the South East Asia with investment capital of more than 100 billion Viet Nam Dong This Farm has its scale with 3000 dairy cattle, supplying

30 tons of milk/day for milk production factory of Vinamilk at Nghe An

3 Application of modern technology to the production

Vinamilk products Vinamilk DIELAC V - fresh Vinamilk café S a đ cữa đặc ặc

3.1.The modern and automatic milking system

Each dairy cattle shall take electric chip to examine the milk quantity Through electric chip, the dairy cattle shall monitored by Alpro system provided

by Delaval company The dairy cattle are fed by TMR method (Total Mixed Ration) and distributed by exclusive equipments In addition, the farms are equipped of the modern waste treatment system to protect environment The entire solid waste of the farms shall be collected to produce fertilizer for grassland Sewage shall be biologically treated by deposited paste and used to irrigating the grassland

3.2 Applying the cross-breeds technology

Vinamilk is the first company in Viet Nam applying this technology and the first heifers in Viet Nam were born in Phu Lam farm, Tuyen Quang

3.3 In addition, the dairy farms apply other modern technologies such as mattress system and automatic sanitation system

Dairy cattle resting on the mattress The automatic sanitation system

4 Vinamilk products have high quality with food security and free of Melamine

In order to avoid all risks and ensure the faith of the consumers, Vinamilk has tested the Melamine with all imported milk powder materials (from New Zealand, USA and

Europe) and sweet milk purchased from farmers in Center of Anality Services and Experimentation, Department of Sciences and Technology of Ho Chi Minh City Results

of all material samples illustrate the ingredients are free of Melamine The consumers shall

be ensured the usage of Vinamilk products

5 The Company has dominated the big market share in the domestic market and has been exporting

Currently, Vinamilk has dominated almost 75% market of nationwide milk products and has been one of the biggest capitalization companies in the market (7%)

Aiming to expanding market to overseas, since 1998, Vinamilk has exported its products to the USA, Australia, India, the Middle East, Africa, Poland, Germany, China and ASEAN countries with export turnover of 649,1 million USD

6 The Steering Committee are active and creative in business

Vinamilk is not only famous for product quality but also for gifted leader: Ms Mai Kieu Lien – President of Board of Management cum General Director of the Company

She is the leader for the production of yogurt, sterile sweet milk, nutritious milk powder for kids in Viet Nam; is founder and co-founder of 90% dairy in the market

Domestic market share counted for 50-90% depending on the category; the master capital has increased for 10 times; value of Vinamilk trademark reached around 1 billion USD; average income of the labor increased of 28% (5,5 million Vietnamese Dong/ month) The capital has been increasing In 2005, she was rewarded of the best of Creation

by the WIPO in 2004 and Heroic Labour Decoration award (in 2005), first labour medal

(2006)

7 Vinamilk has the good engineers specializing in dairy and has investment policy for high knowledgeable human resources.

With the development strategy of dairy nowadays, Vinamilk Company has defined that the “human” element shall decide the success or failure of the enterprise Aiming to build the labor forces of the company in the future, in 1993, Vinamilk signed long-term contract with Applied Biological Technology University of Moscow of Russian Federation in order to send juniors of officials and workers to study in the fields of: dairy technology and milk products; automatic technology and production; equipments for food production; management in the dairy industry

In addition to the support juniors in their industry, Vinamilk also recruited excellent graduated students in universities in Ho Chi Minh City for studying abroad Owing to these sound policies, Vinamilk has trained high quality engineer force

8 Effective strategy of promotion

Vinamilk has been implementing its effective strategy of promotion:

With the successful strategy of promotion, funding, community development establishment, Vinamilk has established its good and impressive image to the consumers, partners, distributors, providers as well as the society as a whole Furthermore, Vinamilk has been implementing program of raising community awareness in the milk drinking to the children, warning the malnutrition children in Viet Nam This is one of the element encouraging the demand of milk for children in Viet Nam’s market

Products of Vinamilk has been promoted widely in the media such as Television, newspaper, etc providing information and image of Vinamilk products to the consumers regularly and frequently

9 The biggest distribution system in Viet Nam

Since its beginning of operation in 1976, the Company has built its biggest distribution system in Viet Nam which helps introduce new products such as juice, soya bean milk and coffee for the market Currently, the Company has possessed its wholesale system of 220 distributors at 64 cities and provinces

10 Vinamilk has posted its share in the stock market

Vinamilk has posted in the stock market in Ho Chi Minh City on 19 January 2006 At that time, capital of the State Capital and Investment Corporation counted for 50.01% chartered capital of the Company This post of Vinamilk on the stock market created more favourable conditions for mobilization of capital from the community

Moreover, on 12 November 2008, Vinamilk has also posted on the stock market of Singapore SGX-ST The Company was permitted to issue and post 8763784 new common shares on the official stock exchange of SGX – ST In addition to the goal of internationalization of Vinamilk trademark, this post has also created favourable conditions for the mobilization of capital from the international financial market and development strategy of the Company

11 Vinamilk has established its famous trademark

Most of products of the Company provided to the market in the trademark of

“Vinamilk” This trademark was selected as one of “famous trademark” and one of 100 strongest trademarks selected by Ministry of Trade and Industry in 2006 Vinamilk was also ranked in group “Top 10 high quality Vietnamese Goods” from 1995 to 2007

1 Attractive promotion but the implementation resulting in controversial problems:

The implementation of promotion was not managed strictly, resulting the complain

on the award Although it is small matter, it causes damage to the image and business plan

of Vinamilk

2 High cost due to importing materials

As the big demand, Vinamilk has to seek prestigious providers who are able to stably provide quantity as well as quality Those are New Zealand, Europe and the USA – developed countries exporting milk materials with international standard In addition to the high cost of foreign milk materials, Vinamilk was imposed of import tax and transport expense, storage, so that the high cost results in the high price causing Vinamilk products

to reduce the competitiveness in the market

3 The competitiveness of Vinamilk is not high in the domestic market

In these few years, milk is one of the goods having the most rapid growth in the packaging food industry in Viet Nam The annual growth in 2005, 2006 and 2007, respectively, was 43,2%, 26,4% and 25,6% Sweet milk and sterile milk, yogurt which are fields with large proportion, have strong and stable growth

However, in the context of high price of foreign milk, Vinamilk has its advantage of price in comparison with imported milk, in fact Vinamilk products have higher price than other domestic products with same kind such as Moc Chau sweet milk, etc The main reason for the consumers to buy Vinamilk is the promotion and strong trademark, but in fact category of Vinamilk is not as diversified as other companies Furthermore, Vinamilk has not utilized the strength of milk products such as cheese or butter, etc

Let’s take a question, if we change only style of package and attractive promotion, whether with the same product, Vinamilk could be able to compete with other milk brands having new products satisfying demand of the consumers?

Let’s compare the price of similar products of Vinamilk Company and Moc Chau Company, we can see the clear difference:

VINAMILK

- Goods

Weight Market

price

MOC CHAU

- Goods

Weight Market

price

Fine 100% Sweet

milk

180 g 3.800 đ Sterile sweet milk

– bag type

180 g 3.000 đ

Calcium-rich Milk

FLEX

180 g 18.000

đ/ bottle

Low-fat Sterile sweet milk

900 g 15.500

đ/bottle Sterile

milkplus-vinamilk

(strawberry taste,

sugar-free, sugar,

chocolate)

180 g 3.986 đ

11.000 đ/ box vfresh

Sterile sweet milk (sugar free, sugar, chocolate,

strawberry, coconut, honey, orange)

180 g 3.000 đ

sweetened

condensed milk

(Longevity

condenser milk,

southern star)

300 g

11.000-16.000đ /box

Pure Condensed milk

300 g about

10.000 đ/box

200 g

4 Vinamilk has not have impressive and effective promotion message and good marketing strategy

The weakness of Vinamilk is, although having good products, even the strong trademark, the weak marketing resulting in the ineffective message for promotion to the consumer on the strength of the Company As Vinamilk has not utilized its trademark, although the sweet milk counts for 70% - 99% in the products, established the effective message for the consumer understand the difference between the sweet milk and sterile milk Being active in the material resources, price purchasing higher than other enterprises, good reefer system, modern production chain are the preponderant advantages of Vinamilk However, all of these strength has not been transmitted to the consumers In the

future, Vinamilk shall promptly re-organize the marketing division, short-term and long-term marketing strategy with particular criteria and establishing the strong trademark is the first duty, said Mr Minh Mr P.N.C, Deputy General Director of dairy company having factories in both the Northern and Southern stated that: “In comparison with potential of Vinamilk, the promotion of trademark and marketing program of this company led by Mr Tran Bao Minh in 3 past years are not suitable for a national dairy company as well as the expense More important, Vinamilk is considered as leading in the dairy industry in Viet Nam, but programs of Vinamilk have not been cooperated with domestic enterprises, has not established its position leading other small sized dairy companies.”

5 Ineffective management results in accidents, waste which cause the negative effects to its prestige

- The allegation of moisture resistant in the ingredients: the number of isolated products is 6.928 box and 30 tons of semi-products The reason is a moisture resistant bag

30 gram used for 01 bag 5kg DHA (used for 900 kg finished product) was torn According

to the ISO process, the Company remained 30 tons of semi-products for examination, and sealed 6.928 boxes at the factory

- The allegation of scratch of the head of machine resulting in the iron filings: the number of isolated products was 10.872 boxes in suspect ion

- Or recently, the consumers commented on the strange matters of Vinamilk products such as: moudy, crumbling, sour, deformation of the box

III Opportunities:

After investigating and analysing market factors, the enterprise shall evaluate, collect factors directing to analysing the environment The opportunities are the external factors of the enterprise, change of the business environment in way of creating benefit for the enterprise The enterprises have to catch promptly the opportunities to utilize advantages, creating benefit and conditions for the development

According to analysis of experts as well as comment of consumers, dairy market of Viet Nam has so much potential for development That potential, partly established from new regulation of the state on the production and business of milk, other established from the consumption, demand of milk and trend to change in consumption of the consumers This is the opportunity for all enterprises operating in milk products in general and Vinamilk company in particular

1 The event that Viet Nam became an official member of the WTO is not only prestigious opportunity for the country, but also the opportunity for each civil, enterprise

To the enterprise, both large or small sized shall have competition with enterprises

of members of the WTO

Vinamilk is a trademark ranked in Top 10 strong Vietnamese trademarks Making use of this opportunity, Vinamilk has been improved its technology, invested in infrastructure, diversified products in order to be well-prepared for a new journey

Furthermore, integration also creates conditions for Vinamilk to approach to tough markets in the world such as: the USA, Thailand, Cambodia, Laos, China, the Middle East, etc And this is also the purpose can be reached by Vinamilk in the next time

Ministry of Trade and Industry approved the master plan for dairy and milk sector of Viet Nam until 2010 and toward 2020

The master plan raises the goal to gradually build and develop the dairy and milk sector in uniform way from material to final production, meet the demand of domestic consumption with average of 10 kg/person/p.a in 2010 and 20/person/p.a in 2020

Dairy and milk sector strives to increase quantity of milk of the entire sector with average of 5-6% in period 2006-2010, also export abroad Total capital investing in