PHÁT TRIỂN THỊ TRƯỜNG sản PHẨM “nắp bể cáp THÔNG TIN điện lực” tại CÔNG TY đúc GANG cầu THIÊN PHÁT e

PHÁT TRIỂN THỊ TRƯỜNG SẢN PHẨM “NẮP BỂ CÁP THÔNG TIN - ĐIỆN LỰC” TẠI CÔNG TY ĐÚC GANG CẦU THIÊN PHÁTTHESIS DEVELOPING THE MARKET SHARE FOR “COMMUNICATION UTILITY SERVICE MANHOLE COVER IN

PHÁT TRIỂN THỊ TRƯỜNG SẢN PHẨM “NẮP BỂ CÁP THÔNG TIN - ĐIỆN LỰC” TẠI CÔNG TY ĐÚC GANG CẦU THIÊN PHÁT

THESIS DEVELOPING THE MARKET SHARE FOR

“COMMUNICATION UTILITY SERVICE MANHOLE

COVER IN THIEN PHAT COMPANY"

Table of content 2

LIST OF TABLES 5

LIST OF PICTURES AND CHARTS 6

I Introduction 7

1 The necessary of the thesis 7

2 The research’s aims and tasks 8

3 Object and scope of research 8

4 Research methodology 9

5 Expected contribution of the thesis 10

6 Content 9

II Content Chapter I THEORETICAL BASIS ABOUT THE MARKET AND MARKET DEVELOPMENT STRATEGIES 11

1.1 Identifying the concept of market and classifying the kinds of the market 11

1.1.1 Identifying the concept of the market 11

1.1.2 Classifying the kinds of the market 12

1.2 The concept and development stages of the product 14

1.2.1 The concept of the product 14

1.2.2 The concept of the different kinds of the commodity 14

1.2.3 The development stages of the product 15

1.2.4 Theory of analyzing PEST and SWOT model 17

1.3 The concept and the market for the communications utility service manhole cover 19

1.3.1 The concept of the communications utility service manhole cover product 191.3.2 The market classification of the communications utility service manholecover product .20

1.4 Strategies for the market development 21

1.4.1 Overall theoretical basic of the strategy .211.4.2 Strategic model for developing the communications utility service manholecover and its market share 23

1.5 Methodology and data collection methods 24

Chapter II CURRENT DEVELOPMENT MARKET SITUATION OF THE COMMUNICATIONS UTILITY SERVICE MANHOLE COVER PRODUCT

OF THIEN PHAT COMPANY 28

2.1 Overview of Thien Phat Co and its business lines 28 2.2 Summary of technical factors and product features of communications utility service manhole cover 32 2.3 The external factors having impacts on the business activities of the Company 35 2.4 The Company’s internal environment 51 2.5 Market Analysis of product line of communications utility service manhole cover products 55 2.5.1 Real situation of domestic market of communications utility service manhole cover products 55 2.5.2 Real situation of communications utility service manhole cover products in some countries 59 2.6 Application of SWOT analysis in enterprise environments 62

Chapter III SOLUTIONS FOR DEVELOPING THE MARKET OF THE COMMUNICATIONS UTILITY SERVICE MANHOLE COVER 64

3.1 Some achievements and weaknesses of the company in the period of

2008-2012 64

3.2 Predicting the development of the communications utility service manhole cover product 66

3.3 Recommending some solutions to enlarge the market for the communications utility service manhole cover 68

3.3.1 Solutions about the strategies for the product 68

3.3.2 Solutions about pricing 69

3.3.3 Solutions about differentiation strategies 70

3.3.4 Solutions about PR and name – branding 71

3.3.5 Solutions about Marketing to enlarge the market 72

CONCLUSION 74

III References 76

IV Appendixes 77

LIST OF TABLES

Table 1 Revenue results in the period of 2008-2012 31Table 2 The comparison of the average price of some primary materials

used in Thien Phat

37

Table 3 The comparison of the average price of some Thien Phat’s

products in some recent years

38

Table 4 The comparison about the quality of the quality between

products suffering to D-400 (40 tons) produced by modern

technology and by out of date technology

41

Table 6 Average sales in each month in domestic and international

Table 9 The percentage of communication utility service manhole cover

comparatively to the other products of Thien Phat

58

LIST OF PICTURES AND CHARTS

Pic 4 A six-wing- communications utility service manhole cover 32Pic 5 The organizational differences between ductile iron micro-

structure and grey cast iron micro-structure

international market

50

Pic 10 Expected market share of communications utility service manhole

cover in the domestic market

57

I Introduction

1 The necessary of the thesis

Thien Phat Company specializes in producing cast iron items and its majorcustomers are road construction and water supply and drainage companies In somerecent years, the market for the other products is nearly still standing in the sameposition without any positive changes; for example, the total revenue of 2012 isonly equal to that of 2011 It is mainly due to the sales revenue of communicationsutility service manhole cover increases slightly while that of the others hardly grows

up comparatively to previous years Therefore, although their prices rose togetherwith the increasing of the production cost, the total revenue in 2011 – 2012 hardlyrises

In earlier periods (from the beginning to until 2011), the primarydevelopment strategies are promoting the production and consumption of manholescovers and grating and warrior surface box The technological standard andappearance requirements are not too complicated, so they can be easilymanufactured and priced much lower than that of the communications utility servicemanhole cover This strategy was considered to be most effective due to its newbusiness operation, the limitation of experience and the fertility of the market forthese products at that time

Currently, the market share for the communication utility service manholecover is becoming easy to increase sales In domestic market, telecommunicationsand electricity sector has an intention of undergroundizing electric and telephoneline system in big cities to make the urban landscape natural as it used to be Thus,its demand in domestic market will increase as well Similarly, in overseas markets,after a period affected by the worldwide economic crisis and all inventory are soldout, distribution agents in Europe have to begin buying to re-operate Therefore, the

expansion of the market for this product is very clearheaded and suitable for themarket’s demand.

2 The research’s aims and tasks

- Analyzing external factors which have effects on the business operation

- Reviewing the strengths and weaknesses, then be able to identify theopportunities and threats for the company in the future

- Under vesting the current consumption capacity of the electric andcommunication manhole cover in the market and especially that of Thien Phat’sproducts

- Recommending to build up strategic plans for the development in the nearfuture

- Giving some suggestions for the market development to gradually grow upsales, revenue and competition capacity in both domestic and international market

3 Object and scope of the research

This thesis is built on the basis of researching the strengths and weaknesses

of the company and the company's relationship with other competitors, rawmaterials suppliers in the market The object is Thien Phat Company and activitiesinvolved in the market of communications utility service manhole cover Inparticular, it also mentions the advantages of this product comparing to the others

The data and content used to analysis is in the period of from 2008 to 2012.Beside the internal aspects at the company and some steel producers in the sector, italso contains the preliminary macroeconomic content both in Vietnam and over theworld in this stage

Researched product is communications utility service manhole cover which

is regarded as the product line with high demands on the technical features, productquality and design

4 Research methodology

I would like to use the dialectical materialism combined with interpretationmethods to collect and process information in the thesis Moreover, mathematicalmethods and statistical methods are also used to support information analysis, fromthat I can compare and then give out the special advantages of the company todevelop the market share

In addition to some of the information provided by the company, I also usesome of the information collected by myself from reports and statistics from someinvolved state agencies

5 Expected contribution of the thesis

- Systemizing the theoretical basis for market and market development.

- Analyzing the current situation and the factors that have impact on thebusiness operations of the company

- Identifying the advantages and disadvantages of business while expandingthe market so that they can get the appropriate development strategies

- Giving out the positive solutions to increase sales and revenue

- Strengthening the company's brand and building up their own brand for theelectric and communication manhole cover

6 Thesis’s content

The thesis includes of 3 main chapters with the principal contents as follows:

Chapter I THEORETICAL BASIS ABOUT THE MARKET ANDMARKET DEVELOPMENT STRATEGIES

Chapter II CURRENT DEVELOPMENT MARKET SITUATION OF THECOMMUNICATIONS UTILITY SERVICE MANHOLE COVER PRODUCT OFTHIEN PHAT COMPANY

Chapter III SOLUTIONS FOR DEVELOPING THE MARKET OFCOMMUNICATION UTILITY SERVICE MANHOLD COVER

Chapter I THEORETICAL BASIS ABOUT THE MARKET AND MARKET

DEVELOPMENT STRATEGIES 1.1 Identifying the concept of the market and classifying the kinds of the market.

1.1.1 Identifying the concept of the market

From the beginning of human beings, the wealth was being produced moreand more due to the development of production, which makes the demand onexchanging the products appear Day by day, along with the development of thecommodity production, especially that of technology, the concept of market isenlarged and diversified rapidly The different viewpoints and perspectives createmany concepts about market Initially, according to the classical conception, marketwas only considered as the place where the commodity exchanges between buyersand sellers are took place Therefore, market was identified to be a place toexchange goods between sellers and buyers The concept was gradually wider andmore various The Industrial Revolution in England (in 18th and 19th century) and inFrance (in 19th and 20th century) basically improved the production tools, therebycreated a breakthrough for labor productivity Then, there were also some changes

in the concept of the market when it was understood as the whole interactionprocess between supply – demand activities for a kind of goods or services.According to this concept, the market is not just a place to trade but contain allfactors related to the production, supply and distribution of an item/service

With another understanding, the market is a combine of relationship forexchanging or trading goods, service, and currency Thus, the market contains thewhole factors in the relationship between buyers and sellers

According to Philip Kotler, “Market consists of both potential and currentclients for a product/service”.[8] Based on this point, for an enterprise, marketincludes not only current customers but also the ones who will be their customers

Thus, to enlarge their market, a company should aim at increasing the number ofpotential and current customers”.

Whatever definition people use, market always get three main elements,including things to exchange (goods or service), ones participating in exchanging(buyers and sellers) and exchange terms They are the factors that join in trading inthe market

1.1.2 Classifying the kinds of the market

There are many ways to approach the definition of “market”, so we candivide into different kinds of market as follows:

- Based on the level of competition:

+ Monopoly market: is the market which gets only one company supplyingand distributing goods The price is decided all by them without considering therelationship between supply and demand or operation expense There is only onesupplier, so there is, of course, no completion

+ Completion market: is the market which gets fare competition betweensellers and buyers In this market, the price is determined by supply, demand,competition, and operation expense

- Based on traded products:

+ Commodity market refers to the market whose objects are primaryproducts in order to meet the physical demand It is the basic and major market inthe economy when getting the involvement of all organizations and individuals

+ Service market refers to the market which provides services to meet themoral demands of the human beings, for example: health, tourism, education and so

on

+ Labor market is the market where labor force is supplied to produce items

or services Thus, it is considered as one of the most important inputs for productionand distribution process Abundant and well-trained labor force but with reasonablecost is the key factor to promote economic development In some developingcountries, the population of working labor force is decreasing, so the economy isalso getting some difficulties in maintaining the development growth

+ Capital market: in which money or financial credit is considered ascommodity to supply for economic and social development projects And thesuppliers and distributors are banks and financial institutes, including credit funds

or event individual investors through securities market The clients in the market areenterprises getting financial demands to do their business They have to pay interestfee for the right to use it

+ Scientific and technological market: It is relatively new market in Vietnam.The technology in the world is growing rapidly while many sectors in Vietnam arestill using backward technology So, in the near future, this market will developmore and more in Vietnam The trade in this market is usually done by machinerypurchase, technological cooperation and transfer, direct abroad investment and so

on [9]

Based on this classification, communications utility service manhole cover is

in commodity market when being manufactured to meet the physical needs

- Based on geographical area:

+ Domestic market: goods are turned out and sold right in this country

+ International market: goods are turned out in a country but sold in othercountries

They are big and various markets which help enterprises get moreopportunities and threats as well

1.2 The concept and development stages of the product

1.2.1 The concept of product

In Vietnamese Dictionary, “a product is defined as a thing produced from anatural or man-made change process” Things that are available in nature areinvariant but changed constantly accordingly to the common evolution of naturalrules Man-made things are also changed and improved day by day After that, anew product which is more perfect appears Phones are an example when the firstphone and the today’s phone are completely different

According to Mr Nguyen Bach Khoa in “Marketing and Internationalcommerce”, products are all things that can be attractive to be traded to meet adesire or a demand.[6]

Moreover, according to Philip Kotler, “A product is anything to sell or supplyfor customers to meet their demand” [8] It consists of not only goods but alsoservice, so it can be tangible or intangible Moreover, it usually gets twocharacteristics, including currency value and usage value Normally, a product withhigh usage value will cost high There are, however, still some products with lowerusage but high cost

1.2.2 The concept of the different kinds of the commodity

Nguyen Huu Khoa mentioned on his textbook “Commodity science” thatcommodity includes products distinguished by a signal or a method, gets manydifferent labels up to scale and difficult level of them in the whole commodity.[7]

According to Philip Kotler, item is a separate unit with the brand or it can bedistinguished by size, price, appearance or its own certain properties Items arecalled a storage unit or a production plan [8]

In addition, Philip Kotler also introduced the concept of product systemwhen he said the product system is the group of the various products which haverelationship to together and are gathered together when being used [8].

Here are its characteristics:

- The amplitude refers the scale which is shown by the number of goods inthe group (groups, classes and sorts the commodity)

- The depth refers the complication level through the number of items,categories, and design in each group

- The thickness points out the appropriate level of the items comparatively torequirements or management guidelines It is indicated by the coefficient ratiobetween actual lists of goods compared with requirement

1.2.3 The development stages of the product

Customers have trends of choosing high quality products with differentbenefits or new features comparatively to other products New products are oftensold better than the old ones due to the improved, updated and integrated-functionfeatures

To develop the products, they should improve the quality of services byresearch and development plans Then, they can capture the customers’ needs togive out continuous improvement for the products, which considered as one of themost vital elements because almost all products have a certain life cycle, especiallywhen there is much fierce competition in today’s economy

In the textbook “Marketing in business management” published in 1998, Mr.Tang Van Ben wrote about the development cycle of a product as follows [10]:

(1) A completely new product (with new functions) is created

(2) The product is improved and changed some existing functions Forinstant, the fly-wheel of a watch is replaced by a button to pull its wings

(3) A new product is a new application of the current one For example, theytake advantage of spray’s usage to not only switch pesticides tank but also to nail

(4) It gets more functions

(5) The current product is sold in a new market

(6) Reducing price to get more new buyers

(7) Identifying that an improved product gets the factors mixed from somecurrent products together

(8) A product is downgraded when using lower-quality equipment ordifferent methods with lower expense

example, television with semi-transition lights is replaced by modern TV withelectric circuits as plasma TV or LCD TV)

(5) Re-identifying the market of the products that the current products arelaunched into new markets or new segments

(6) Reducing expense: new products with similar functions will cost lower.[8]

1.2.4 Theory of analyzing PEST and SWOT model

a PEST market analysis tool

PEST and SWOT are effective tools to analyze and evaluate the workingenvironment of a company While PEST is used as a tool to assess the externalenvironment outside, SWOT is to analyze the internal situation of the enterprise

PEST is an acronym for the first letters of the phrase, including: Politics,Economics, Society and Technology They are 4 elements that make up the primaryoperating environment of a company Political, economic, socio-cultural andtechnological factors make up working environment for a company, which consists

of some components as follows:

- Politics: the stability of the politics, policies, law system, tax policies and

Some of advantages when using PEST model to evaluation an enterprise:

- Analyzing PEST model successfully helps an enterprise get suitablechanges to adapt impacts from outside

- Avoiding wrong decisions when being out of control

- PEST is useful when starting to do business in a new market, and helpingthem identify correctly and adapt quickly to new environment

b SWOT analysis

SWOT analysis is a method to analyze the internal elements of the businessbased on evaluating the strengths, weaknesses, opportunities and threats to thebusiness operations SWOT stands for: Strength, Weakness, Opportunity andThreat Their contents for each factor are mentioned below:

- Strength: when compared to the rivals, which factors are considered as theirstrengths, technology, and distribution channels or price? Then, they can give outsuitable strategies to make use of them effectively

- Weakness: What are their weak points? And how can they do to improvethem?

- Opportunity: An enterprise should take all advantages of strengths andopportunities they can get

- Threat: It can be the risk of exchange rate, input expense, or potentialcompetitors

Strength and Weakness are internal factors considered to determine wherethey are standing in the market They should be analyzed and evaluated on the basis

of the whole sector, then compared to the competitors in the market

In other words, Opportunity and Threat are the external factors affecting onthe business Using SWOT model to analyze, they can understand and takeadvantage of opportunities to promote the strengths, reduce weaknesses and threats so as

to get the most outstanding position in the market

Strengths Weaknesses

Opportunities Threats

Pic 1 SWOT model 1.3 The concept and the market for the communications utility service manhole cover

1.3.1 The concept of communications utility service manhole cover

Communications utility service manhole cover made of ductile cast of ThienPhat is used to protect electric lines underground In some developed countries, theyused underground power cables long time ago; however, it is only some recent yearsthat it is done in some big cities in Vietnam So, its customers will be certainlycompanies specializing in construction, and telecommunication

Its development lasts many steps At first, its design is very simple and made

of grey cast which is the material easy to use Nevertheless, its quality is low, design

is simple, but operation expense is high which leads price high as well Togetherwith the development of science and technology, Keith Millis invented ductilematerial in 1943 and it was immediately applied in metallurgy and foundry industryand used to produce Manhole Cover The outstanding features of the products made

of ductile material are the ability to suffer from high pull and load, and low price

low due to take advantage of all parts of the material However, to make niceproducts needs to know practical technology when it is much more complex thangray cast So, the majority of Vietnamese enterprises can produce items made ofgray cast only.

With the above concepts, we can see that electric and communicationmanhole cover made of ductile cast is a kind of commodity in the system ofManhole Cover and is in the first period of phase "existing products launched intonew market" In the system of manhole cover, besides electric and communicationmanhole cover there are many other kinds of products, including grating, surfacebox, ganivo cover, the drainage manhole cover and so on However, in the scope ofthis thesis, I just mention communications utility service manhole cover made byductile cast only, and compare them to other similar products in the market

1.3.2 The market classification of the communications utility service manhole

cover product.

Communications utility service manhole cover is used in constructing roads,bridge and urban infrastructure, and protecting the electrical and telecommunicationequipment set up underground roadways or sidewalks With the concept of marketwrote by Philip Kotler, the major customers of this product are construction orelectricity companies Additionally, its potential clients can be agents anddistributors These customers are usually in Europeans and Japan

In the view of trading, communications utility service manhole cover is incommodity market with some specific characteristics There are many differentsorts of clients in this market, including both direct and indirect ones (bidders ordistribution agencies) Regarding to distribution agencies and direct customers, theyare considered as not only buyers (they are the clients of the manufacture) but alsothe sellers in relation to direct customers (Power or Communication Companies)

Based on geography, the market of communications utility service manholecover is divided into two parts, including domestic market and international marketsuch as: Germany, Italy, Spain and so on Researching and dividing the market arevery important, because their results will be used to build up different strategies fordifferent markets For example, the domestic market is large, its quality demand isnot too high and it should get protection equipment against theft while theinternational market has stricter requirements about quality, it should be small andno-anti theft tool.

1.4 Strategies for the market development

1.4.1 Overall theoretical basic of the strategy.

The more methods we approach, the more definition about strategies we get.The term “Strategy” has been used many times in the field, such as: military,economy, society and so on According to Fred R David, "Strategy consist of long-term goals" [3], while Alfred Chadler said that "Strategy is the identification ofbasic and long-term targets, and also points out the process of coordinating andmanaging necessary resources to reach those goals"

In the field of economy, business strategy is understood as the long termmethods, business scope in order to make use of competitive advantages by usingeffectively resources to meet the requirement of market and shareholders

According to Johnson and Scholes, "Economic strategy is determining thelong term direction and scope of operation At this time, they should gainadvantages by combining resources accurately in a challenging environment, tomeet the needs of the market and expectations of involved agents as much aspossible"

According to Michael Porter, the professor of Havard University, America,

“Strategy is to create harmony between activities in a company Its success ismainly due to well-done tasks combined together”[4]

Approaching by this way, the strategy is to combine the available resources

to achieve common goals, and create their own competitive advantagescomparatively to rivals

To sum up, the strategy is understood as the method researching andanalyzing market, strengths and weaknesses so that they will establish plans orspecific actions to gain common targets

Based on the scope, strategy is divided into two kinds, including general andpartial strategy The general strategy is often mentioned overall and long-term issueswhile the partial strategy is specific strategy in order to fulfill general strategy Fromthe business sector, they divide into departments as follows:

- Helping them analyze current economic situation and internal factors, andforecasting the development opportunities in the future When taking theadvantages, they can get more profit;

- Guiding their business;

- Helping them with HR management

1.4.2 Strategic model for developing communications utility service manhole

cover and its market share

At Thien Phat Company, due to the specific characteristics of the castingsector that they should develop export market first, then domestic market, leaderteam combines partial strategies together to achieve the overall targets In particular,they also give out different strategies for each market based on the characteristicsand properties of the distribution channels

Regarding to general strategy, in the domestic market, the company's goal is

to develop the brand name leading in Vietnam By different channels, they willdistribute high quality products with perfect service to customers with reasonableprices, even the cheapest i the market Accordingly, the strategies consistsdifferentiating products and services compared to competitors; and build upstrategies about quality (which will meet international standards) and development

of key products (electric and communication manhole cover which can suffer fromheavy push and load)

For international markets, strategies about quality are used to improvereputation and gradually create brand name Moreover, they also constantly haveimprovement to compete with rivals from China Accordingly, pricing (based onlow-cost strategy) and distributing (shorter delivery time) strategy should be used inthis market

To reach the overall targets above, the company should use some strategies

as following to compete with the rivals:

- Pricing strategy: This strategy comes from the prominent technologicaladvantages to minimize production costs One of effective methods to reduce theprice of the product is minimizing the cost of production by applying the innovation

of foundry sand technology Furthermore, in the early time to enter the market,

they should be willing to sell the products with the cheapest price to eliminate rivals

in their market

- Strategies related to product and service’s quality: besides the price, leaderteam also keeps their eyes on product strategy when product quality is considered asthe most vital element One of the key factors in product strategy is making plansand keeping controlling strictly the quality of products to ensure that no substandardproduct are shipped out

- Differentiation strategy: because of having approached to internationalmarkets, their products have considerable differences compared with the products ofother competitors, including patterned surfaces, edges which get heavy suffer,hinges and latches to open and close easily, logo and European Standard on thesurface of the product and etc

- Market development strategy: developing simultaneously in both domesticand international markets The contents of the market development strategy consists

of researching the needs of customers and not only direct but also indirectcompetitors; cost of raw materials and price cost and price to edit and add intobusiness strategies appropriately and timely

1.5 Methodology and data collection methods.

Research method in the whole thesis is methodology of dialectical andhistorical materialism after approaching the system which combines with themethods of interpretation, data collection, information processing, mathematicalstatistics and information analysis Then, they make a comparison and give specialadvantages to develop market share Besides some of the information provided bythe Company, I also use some of the information collected from reports andstatistics documents of the related state agencies in my thesis Here are somemethods used in the thesis:

1.5.1 Data collection methods

Data collection is an important method to implement scientific studies Thedata collection method is used to select the data and information related to thecontent and object of the topics This is the first step to analyze, evaluate and sum

up researched content and objects accurately

1.5.1.1 Primary data collection methods

Primary data is collected by interviewing Details as follows:

* Survey method:

- Target interviewees: 24 suppliers, 05 competitors, 08 customers

- Scale: each person mentioned above will be interviewed once

- Content: survey technological and distribution capacity, strengths andweaknesses, then evaluate the potentials

- Method: direct or indirect survey through relevant objects

* Interviewing professors:

- Targeted interviewees: tariff experts in Depart of Customs, Board ofDirectors, Chinese metallurgical experts, and economic experts in some securitiescompanies

- Scale: 1-2 people for each group

- Purpose: collecting information and assessing the situation related to thefield of study under the view of experts

- Content: the content is related to macroeconomic issues and metallurgicalfoundry sector

- Method: interview directly

1.5.1.2 Secondary data collection method

To complete the research, it is necessary to collect other secondary data anddocuments, including:

- Report of Profit and Lost of Thien Phat company from 2008 - 2012;

- Statistics reports of Department of Customs, State bank of Vietnam,General Statistics Office;

- Law systems of Commerce, Tariff and Vietnam tax policies;

- Report of Southern Securities, Maybank Kim Eng Securities;

- Searching information on websites, national and international economicnews and so on;

- Other related documents

1.5.2 Methods involved in summarizing and analyzing data:

- Comparison method: is applied to detect the similarities and differences ofthings or phenomena, and determine the cause of unity or diversity, evenextraordinary This method is used relatively commonly in analysis Comparisonmethod is often used to study the development levels and trends of volume andscale growth, then compare to the results from investigation and interview in order

to get the overall results

- Statistical method: consists of collecting, processing, analyzing,interpreting and presenting data about a particular issue This method is normallyused in the quantitative studies to predict development trend in a certain period Thedata in the thesis is from 2007 to 2012 as the basis for the processing, analysis andevaluation

- Method of analysis and synthesis: is the method used widely in the entireresearch The analysis method is used to divide the whole or a complex probleminto more simple parts to do research and clarify issues Synthesis is the methodliking and reorganizing analyzed parts together, showing their relationship togeneralize the overall problem Secondary data analysis includes explaining,interpreting, summarizing, then analyzing again so as to provide justifications forthe study, from which finding out the cause of weaknesses and proposing solutions.

COMMUNICATIONS UTILITY SERVICE MANHOLE COVER PRODUCT

OF THIEN PHAT COMPANY

2.1 Overview of Thien Phat Co and its business lines

Thien Phat Company was founded in 2001, with the main business lines aretrading in iron products and steel exports to European countries and Taiwan,building consultancy and real estate investment Since 2006, based on the study andanalysis of domestic and foreign demands, the company’s board has decided tomake their investment in building an iron casting plant in the Industrial Park Dong-Hoan Son in Bac Ninh province Some main information about the company is asfollows:

- Name: Thien Phat Export and Import Company

- Company Type: Limited Company

- Headquarter: the Industrial Park Dong-Hoan Son in Bac Ninh province

- Representative offices: in Hanoi and Ho Chi Minh City

- Main business lines: Manufacturing and trading cast iron and steelproducts, construction materials, casting materials and real estate, etc

- Factory area: 10,000 m2

- Employees in total: 120 people

- Average consumption volume: 300 tons per month

- Primary product sales: manhole covers, gratings, postal covers, etc

- Average monthly revenue: approximately 7,500,000,000 VNĐ /month

- Main market: Vietnam, Germany, Italy, Spain and Japan

BOARD OF MANAGEMENT

Pic 2 The organization structure of Thien Phat

- Board of Management: they are responsible for making major policies,

with general orientations for general business operations of the company, theincrease or decrease of investment in key programs, etc

- Board of Directors: they are responsible for managing general operations

of the company and making decisions based on the consultation of relateddepartments

- Sales Department: this department is responsible for market development

and customer relations; exploration of customers’ tastes and opinions aboutproducts to report and propose to the Board of Directors about adjustments ofproducts at Technical Department and Design Department , in conjunction with theAccounting Department to follow the debt

- Personnel Department: this department is responsible for recruiting,

training and managing staff, employees of the Company as well as monitoring the

BOARD OF DIRECTORS

Accountant Dep

Production

Factory

implementation of the provisions of the Company's labor regulations, occupationalsafety and ensuring the regime policy for employees in accordance with law

- Accounting Department: this department deals with accounting business

activities, together with the Sales Department to monitor the customers’ debt and incollaboration with other units within the company to monitor attendance andproductivity of workers

- Technical and Design Department: this department is responsible for

monitoring and adjusting technical elements of the products ensure the quality ofthe production shift and design new models according to customers’ requirements,etc

- Experiment Department: this department is responsible for testing the

quality of the product before shipping, checking the chemical composition, weight,tensile compression capabilities of the product, and providing certificates ofshipping, etc

- Production factory: three production groups include smelting, molding,

and mechanic groups with their responsibilities of manufacturing products as percustomers’ orders proposed by the Sales Department and approved by the Board ofDirectors

* Business results in some recent years:

Table 1: Revenue results in the period of 2008-2012

(Unit: mil dongs)

(Source: Accounting Department)

Pic 3 Revenue chart in the period of 2008 – 2012

From the table above, it can be seen that the company’s revenue had largefluctuations over the years from 2008 to 2009, annual sales with approximately 20billion per year due to the impacts of the world economic crisis During this time,the products made are mainly to serve for export markets, which have heavilyaffected the revenue Even sales in 2009 dropped to just over 18.5 billion compared

to 21.9 billion in 2008 (equivalent to a decline of 15%) By 2010, sales hadrecovered and reached its higher stage in 2008 as the crisis began When it comes tothe period from 2011 to 2012, its revenue reached a stable growth level at 23%

Although sales volume in 2011 compared to 2012 has not changed much, there hasbeen a rapid increase (from 20,800 VND to 21,011 VND) and production exportshave recovered to 2012, revenues from iron and steel production has been a 20%increase compared to 2011 This is because the dollar exchange rate was against theUSD in the last months of 2011

2.2 Summary of technical factors and product features of electric and communication manhole cover

2.2.1 Product Summary of electric and communication manhole cover

The Thien Phat Company's Communications utility service manhole coverproducts are manufactured using ductile cast iron material, used to protect theelectrical wholesale, telecommunications underground or beneath the roadpavement In developed countries like the U.S., Japan and Europe, the quality of theproduct Communications utility service manhole cover - in particular and powergeneration products and manhole covers in general are highly valued and strictlycontrolled because of the reasons as follows:

(1) Due to the critical nature related to security, and economic value of theunderground equipment;

(2) The quality of products affects the quality of urban traffic operation andsafety of the traffic involved participants

Pic 4 A six-wing- Communications utility service manhole cover

(Source: Technical and Design Department)

- Reasons for choosing Communications utility service manhole cover asstrategic products:

+ Taking advantage of modern technology casting, because the

Communications utility service manhole cover products require high quality toprotect underground cable system below Level of demand of the productcompetitors is usually only for level 8 or level 7 while that of Thien Phat isgenerally stable in the 3rd level

+ The demand of the domestic and export markets for such commodities

are always stable The products should be replaced regularly to ensure thoseinformation systems are secure

+ Due to the nature of the product which requires high accuracy, large

loading, complex casting techniques, few casting businesses make their investment

in this product line

- Classification of the electric and communication manhole cover products:

(1) Sorting by weight: According to the European Standard BS EN

124:2008, the communications utility service manhole cover is divided into 6

categories as follows:

+ Class B-125: payload 12.5 tons;

+ Class C-250: payload 25 tons;

+ Class D-400: payload class 40 tons;

+ Class E-600: payload 60 ton;

+ Class F-900: payload 90 ton;

(2) Sorting by size: Based on the size of the existing products on the market,products are divided into the following types:

+ A single product type;

+ 2 wing product type;

+ 4 wing product type;

+ 6 wing product type

On the basis of analysis of market demand and the capacity of the enterprise,the company should build communications utility service manhole cover products

and in the coming time, the key products, the main products are the 2 wings and 4

wings with a load of 25 tons and 40 tons

2.2.2 Technical elements of products made of ductile cast iron:

With such a significant nature, nowadays in developed countries, almost onlyproducts made of ductile cast iron are used, very few products made of gray castiron are in use Cast iron is the iron with the highest durability of cast iron (cast ironside, gray iron and ductile iron) due to the spherical graphite background It is therequisite for tensile strength and resistance to high impact forces of ductile cast iron.Due to the above properties, ductile iron micro-structure is used to produce morepressure and large load, high impact resistance and abrasion resistance asautomotive engine parts, sewer, more weapons and especially effective forproducing system products cover cast iron manhole when the correct material isbrittle condition, rupture of the products produced by gray cast iron in earlierperiod

        Ductile iron micro-structure Grey cast iron micro-structure

Pic 5 The organizational differences between ductile iron

micro-structure and grey cast iron micro-micro-structure

(Source: Experiment Department)

With the use of strategic differences as the strength of the business, now thecompany is applying a variety of standard systems to meet the requirements of theexport market as well as the competitive strength for product on the domesticmarket The standard is applicable at the company include:

- ISO 9001: 2008 standard for quality management systems;

- ISO 1083: 1987 standard for quality ductile cast iron micro structure grade500-7 by

- BS EN 124: 2008 standard of European-design and product design forsystem manholes

2.3 The external factors having impacts on the business activities of the Company

2.3.1 Surrounding and internal environment

On the basis of the theory of the PEST model, the ability to analyze thegeneral environment and the industry's environment of communications utilityservices manhole cover products of Thien Phat Company is as follows:

(1) Political factor (P):

- Vietnam Government’s policies:

+ Import policy: The export producers are entitled to preferential export taxexemption, exemption procedures for inspection of goods, the preferential landlease fees to the production This is a great advantage for enterprises in producingexport activities such as Thien Phat when exporting the products of product systems

of manhole cover in general and communications utility service manhole products

in particular [11]

+ Social policy: in the early 2009, The Prime Minister has agreed to principleunderground cable network, telephone, internet in urban areas On that basis, theMinistry of Information and Communications is in collaboration with the city ofHanoi and Ho Chi Minh city to pilot the "wireless city" clean and civilized.Previously, electric lines and telecommunication lines usually go well, causingurban lose landscape and be insecure Until now, with the government’s policy ofthe lines advocated underground telecommunications cables, the domestic marketwill potentially be promising than before This is a great opportunity for Thien Phat,which cannot be ignored

- About EU policy:

+ Tax Policy: Vietnam’s products, including Thien Phat products exported to

the EU countries also have many advantages European Union offers preferentialtax policies for iron and steel commodities imported from Vietnam Some items,including manhole covers products system, has preferential tax rate of 0% [11]

+ Origin Policy: cast iron and steel items in general and manholes inparticular made from Vietnam are not subjected to production quotas, such asChina, a country with the proportion of cast iron produced is the highest in theworld This is one advantage of the Vietnam cast iron and steel products to competewith giant China [12]

This is the focused element, having a direct impact to the business activities

of all businesses The world economic crisis beginning in the late 2008 affectedmost countries in the world, including Vietnam The most obvious manifestation ofthe crisis was the existence of inflation and increase of exchange rates The prices ofessential commodities like petrol, oil together with gold prices on the world marketfluctuated In the element "E", we first consider the factors that influence directlyand strongly to most business operations

+ Prices of material inputs and average selling prices;

+ The exchange rate between the U.S dollar and Vietnam dong;

+ Real estate and construction market

The period from the late 2008 to mid-2010, the price of raw cast iron andsteel had galloping growth rates over the period 2007, a pre-crisis period At the end

of 2008, the price of raw materials increased from 115% to 136% compared to2007

Table 2 The comparison of the average price of some primary materials

used in Thien Phat

(Source: Sales Department)

Table 3 The comparison of the average price of some Thien Phat’s products in

some recent years

(Source: Accounting Department)

Over the two tables above, it can be seen that the price of the mainraw materials in 2008 increased suddenly as per prices of steel and constructionmaterials at that time period (115% and 136%) However, the selling price did notsignificantly increase due to the Company’s implementation of the order signedearlier with the clients Thus, in the 2 years 2008-2009 , the company hasimplemented a series of measures to reduce the production cost as the movement ofsmelting at night to reduce energy costs , improvement of molding techniques toreduce failure rates, the use of measures to reduce transport costs , technicalresearch to diversify coordinate- training materials In 2009 and 2010 , rawmaterial price increases slowly (only up in the range of 9% to 13% ) and productprices rose gradually at this time to catch up with the buying price of inputs

By 2011, the economy had started to recover with the gradual increase of thepurchasing power of consumers, especially the decline of iron and steel prices Thebusiness activities of enterprises were gradually restored However, as the worldeconomy was like new people recovering from sick was very sensitive to thenegative effects Therefore, the economic experts are still cautious when talkingabout the resilience of the world economy after the crisis

After the hot growth during 2007-2008, real estate and construction market

in the country was suddenly frozen due to mass property bubble Along with the

real estate market, the construction industry is also affected when large segments ofthe real estate office, apartment and villa for sale land fell into severe crisis [2].

Pic 6 Number of the apartments which have not been sold yet in HCM City

(Source: CBRE)

In the country after times of crisis, in 2012, the exchange rate betweenVietnam dong and the other currencies were relatively stable (U.S dollars in themarket, an average of 19,500 in 2010 compared to its peak of 21,000 on average in

2011 and 20,800 in 2012) [5]

Pic 7 The exchange rate between USD and VND in 2010 – 2012

(Source: State Bank or Vietnam)