Strategies for business development of TWG chain stores in vietnam

44 CHAPTER 3: DEVELOP STRATEGIES FOR TWG CHAIN IN VIETNAM.48 3.1 The objectives for business development of TWG in the next time...48 3.2 Analyze matrix and select strategies for develop

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-TRƯƠNG NHẬT HOÀNG

STRATEGIES FOR BUSINESS DEVELOPMENT

OF TWG CHAIN STORES IN VIETNAM

CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CHUỖI CỬA HÀNG TWG TẠI VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-TRƯƠNG NHẬT HOÀNG

STRATEGIES FOR BUSINESS DEVELOPMENT

OF TWG CHAIN STORES IN VIETNAM

CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CHUỖI CỬA HÀNG TWG TẠI VIỆT NAM

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS PHẠM VĂN HỒNG

Hà Nội - 2018

The author confirms that the research outcome in the thesis is theresult of author’s independent work during study and research period and it isnot yet published in other’s research and article

The other’s research result and documentation (extraction, table,figure, formula,and other document) used in the thesis are cited properly andthe permission (if required) is given

The author is responsible in front of the Thesis AssessmentCommittee, Hanoi School of Business and Management, and the laws forabove-mentioned declaration

I would like to express my deep gratitude to the teachers of the Hanoischool of Business and Management, Vietnam National University, especiallythe teachers who imparted to me a lot of knowledge and helped me Carry outthis essay

I would like to express sincere gratitude to Dr Pham Van Hong has spent alot of time, dedicated guidance, only told me during the course of the topic

I sincerely thank family, friends and colleagues for encouraging andsupporting me in the process of study and research

TABLE OF CONTENTS

LIST OF ACRONYMS i

LIST OF TABLES ii

LIST OF FIGURES AND CHARTS iii

INTRODUCTION 1

1 Urgency of the topic 1

2 Overview of the study 2

3 Research objectives and tasks 5

3.1 Objectives 5

3.2 Tasks 5

4 Objects and scope of the study 6

4.1 Objects of the study 6

4.2 Scope of the study 6

4 Methodology 6

5 Organization of the thesis 6

CHAPTER 1: RATIONALE OF BUSINESS STRATEGY OF ENTERPRISES7 1.1 Rationale of strategy 7

1.1.1 Definition 7

1.1.2 Role of strategy 8

1.2 Building business development strategies of the enterprises 8

1.2.1 Definition 8

1.2.2 Strategy building process 9

CHAPTER 2: ANALYZE BUSINESS ENVIRONMENT OF TWP IN VIETNAM 24

2.1 Introduction about TWG 24

2.2 Analyze external environment factors 24

2.2.1 Macro factors 24

2.2.2 Sector factors 31

2.2.3 Summary of EFE matrix evaluation 34

2.3 Analyze internal environment factors of TWG Vietnam 36

2.3.1 Quality of human resources 36

2.3.2 Products 37

2.3.3 Financial capacity 39

2.2.4 Market research 39

2.2.5 Marketing activities 41

2.2.6 Synthetize and evaluate IFE matrix 43

2.4 Summarization of opportunities, challenges, strengths and weaknesses in developing TWG tea stores in Vietnam 44

2.4.1 Opportunities and challenges 44

CHAPTER 3: DEVELOP STRATEGIES FOR TWG CHAIN IN VIETNAM.48 3.1 The objectives for business development of TWG in the next time 48

3.2 Analyze matrix and select strategies for developing chain of TWG stores 49

3.2.1 Develop strategies for developing chain of TWG stores using SWOT matrix 49

3.2.2Select the optimal strategic plans through QSPM matrix 53

3.2.3 Process of implementing the strategies 66

3.3 Solutions to implement the selected strategies 67

3.3.1 Additional services with TWG tea 67

3.3.2 Promote activities of marketing and market expansion 68

3.3.3 Improve the quality of human resources 69

3.3.4 Establish marketing department, promote market research 70

CONCLUSION 71

REFERENCES 73

123456

LIST OF TABLES

Table 1.1: External factor evaluation matrix (EFE matrix) 16

Table 1.2: Evaluation matrix of internal environment factors (EFE) 19

Table 1.3: SWOT mtrix model 20

Table 1.4: Summary table of QSPM matrix 22

Table 2.1: Some economic indexes of our country 25

Table 2.2: Policies of domestic tea support 27

Table 2.3: Customer survey result of TWG 31

Table 2.4 Comparison of tea TWG with some competitors 32

Table 2.5: Summary of EFE matrix evaluation 34

Table 2.6: Human resources in TWG 36

Table 2.7: Characteristics of TWG tea products 38

Table 2.8: Market research activity of TWG 40

Table 2.9: Marketing activities of TWG 41

Table 2.10: Synthetize and evaluate IFE matrix 43

Table 3.2 : QSPM matrix for group combination of S-O 54

Table 3.3: QSPM matrix for group combination of S-T 57

Table 3.5: QSPM matrix for group combination of W-T 63

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LIST OF FIGURES AND CHARTS

Picture1.1: M Porter’s model of five competitive forces 13Figure 3.1 Process of implementing the strategies for developing the chain of

TWG tea stores till 2027 67

1 Urgency of the topic

The fact that Vietnam signed the Trans-Pacific Partnership (TPP)– whichwillofficially come into effect in 2018 - has opened up many opportunities forenterprises to invest and develop their business Accordingly, as soon as the TPPcomes into effect, the export and import tax rate among TPP member countrieswill be0% This facilitates the expansion and investment of foreign enterprises inVietnam As one of the members of TPP, Japan is currently the country with thelargest import-export volume to Vietnam The number of Japanese enterprises inVietnam is increasing in quantity

TWG Tea is one of the famous brands of Japan TWG Tea currently has

55 stores in 16 countries including Singapore, the United Kingdom, Japan,and the UAE In order to catch the opportunity from TPP, by the end of 2016,TWG officially opened a Salon and Boutiqueselling tea at B2 floor atTakashimaya, Ho Chi Minh City, Vietnam with more than 800 kinds ofpremium teas and exclusive processed teas Defining Vietnam as a fastgrowing and a potential market for premium tea consumption, TWG Teaintends to develop its TWG chain stores in Vietnam in the near future.However, the later entrance to the market than other strong competitors fromChina, Thailand, Taiwan, etc and the habit of using domestic tea brands ofVietnamese consumers will be a great challenge for TWG Tea when it wants

to develop business in Vietnam

So, it can be seen that although TWG Tea’s products have morecompetitive advantages than other competitors in terms of quality andbrandname, but with the difficulties and challenges mentioned above togetherwith new business market, it is necessary to build business strategies whenTWG wants to develop the TWG Tea chain stores in Vietnam in the comingtime For those reasons, the author decided to select the topic "Strategies forbusiness development of TWG chain stores in Vietnam" as a master thesis

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2 Overview of the study

Johnson & Scholes (2000) conducted a study on "Exploring CorporateStrategy: Test and Case" According to them, in an organization or anenterprise, "Strategy is the orientation and determination of an organization’soperation scope over a long term, where the organization must gainadvantages through the combination of resources in a challengingenvironment to best meet the needs of the market and the needs of the agentsinvolved" In particular, in the study, the authors introduced three broadstrategies of competition including low cost, differentiation, and focus, whichturned strategy positioninginto a structured activity The research focused onevaluating strategies of competition without going into the details of strategiesfor developing business of a product

TOPICA Educational Organization (2012), in their lecture of

"Overview of strategy development of enterprises", says that the processofbuilding a general corporate strategy consists of 3 phases:Establishing

(planning) strategies,deploying (implementing) strategies andevaluatingstrategies (1) The stage of planningstrategies is understood as aprocess of establishing vision and mission;conducting investigations toidentify opportunities, challenges, strengths and weaknesses of theenterprise,building long-term goals and selectingtacticalplans to achieve them.(2) The stage of implementing strategies is the stage of transforming strategycontents into strategy actions Deploying strategies involves conductingnecessary things to make the strategies done and achieve the goals of theorganization (3) The stage of evaluating strategies consists of three mainactivities: reconsidering factors which are the basis for the current strategies,measuring achievements and performing corrective actions

Frederick W Gluck et al (1980) in "Strategic Management forCompetitive Advantage" compared and described the process of strategy

development for an organization The authors called the first stage ofdevelopment as elementary financial planning At this stage, the primaryconcern was addressing financial constraints through rigorous operationmonitoring, planning annual budget allocations, and paying attention tooperational and financial functions, etc The purpose of setting up thestrategies was to mobilize all resources to build competitive advantages Theplanning of strategies answers the four basic questions: (i) Where areenterprises/organizations? (ii) Where do theenterprises/organizations want to

go in the future? (iii) How to get there? (iv) How to measure the progress?

Le The Gioi (2012) carried out a study on "Introduction to strategydevelopment and mission declaration." The study compared the strategies inmilitary and economic fields In military, strategies refer to the managementskillsof exploiting forces to crush the enemy and create a global dominancesystem The basic theoretical point of the strategies is that one party can crush

a competitor - even stronger and more crowded - if they can lead the gameand put their opponents in a situation which is favorable for their abilities Anorganization's strategies are similar to those in militarybecause they areplanned to achievethe agreement between the differentiating capacities andthe external competitive environment in which the organization participates

in However, compared to military strategies, strategies in business are morecomplicated Unlike military conflicts, competition in business does notalways come up with a winning or losing result The competition in theindustry sometimes creates opportunities to improve their strengths and skills

as competing seeds The value of differentiating capacities that bringcompetitive advantagesto the organization can be reduced over time due toenvironmental changes

Huynh Thi Thien Chung (2009) conducted a study on "BuildingDecotex’s business strategies for curtains in Vietnamese market to 2015" In

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the study, the author interviewed 200 customers at supermarkets in Ho ChiMinh City with the questionnaire and conducted discussions with directors,heads of departments and business managers to collect the necessaryinformation to explore the external and internal factors of the enterprise Byusing the SWOT matrix to develop feasible strategies and using the QSPMmatrix to select the optimal strategies, Huynh Thi Thien Chung proposedsolutions for deployingstrategies includingbuilding a table of business tasks,maintaining and developing business advantages,building a new value line forthe blue ocean strategy.

Le Thai Son (2010) carried out a study on "Building strategiesforbusiness development of CaDaSa Joint Stock Company for Dalat ancientvilla resort to 2015" The study analyzedthe needs fortaking vacationcombining with conferences and the ability to meet the demand in Da Lat ingeneral and atDa Lat villa ancient resort in particular In addtition to assessingthe business development potential of Dalat ancientvilla resort throughstrategies,the study proposed business development strategies for this resort todevelop a new product for CADASA Joint Stock Company in the early stage

of business and create the foundation for future development However, sincethe study was conducted with the time from 2010 and earlier, the researchresults did not havea highly practical value

It can be seen that there have been many studies on strategies, strategymanagement, and strategy development in our countries as well as abroad.However, since TWG Tea is a new product in the market in general and inVietnamese market in particular, no research has been conductedonbuildingstrategies for business development of TWG chain stores Therefore, based onthe theoretical basis of the published research, the author conductedthe study

“Strategies for business development of TWG chain stores in Vietnam On thebasis of inheritance, the thesis would continue to clarify the following issues:

Firstly, continue to study the theoretical basis so that it can be flexiblyapplied to the building of development strategy of TWG.

Secondly, analyze the macro environment and industry environment inorder to identify the opportunities and challenges for the developmentstrategies of TWG chain stores in the coming time

Thirdly,analyze and evaluate the reality of TWG in all aspects:business, human resources, finance, facilities, organizational structure, etc inorder to point out strengths and weaknesses

Fourthly,combine opportunities and challenges with strengths andweaknesses to form strategies for business development of TWG chain stores

Fifthly,declare the mission, vision, and development objectives ofTWG;propose to implement the strategies for business development TWGchain stores in Vietnam in the coming time

3.Research objectives andtasks

3.1 Objectives

The study aimed at building strategies for business developmentofTWG Tea chain stores in order to help TWG increase its market share inVietnam

3.2 Tasks

Analyzing external environmental factors including macro environmentand industry environment to identify opportunities and challenges for thedevelopment of TWG tea chain stores in Vietnam

Finding out the strengths and weaknesses of TWG through theanalysis

Implementing the strategies to help TWG Tea chain stores increase itsmarket share in Vietnamese market.

4 Objects and scope of the study

4.1 Objects of the study

Objects of the study were factors from internal and external businessenvironment which formed the basis for building the development strategies

of TWG chain stores

4.2 Scope of the study

In terms of time: The data was collected since TWG opened its stores inVietnam.The end of 2015 to present

In terms of space: The study was conducted salon và boutique of TWG

is Takashimaya, Ho Cho Minh City

4. Methodology

5. Organization of the thesis

CHAPTER 1: RATIONALE OF BUSINESS STRATEGY OF

a series of actions as well as the allocation of needed resources to achievethese objectives (According to Rudolf Grunig & Richard Kuhn, 2003)

In 1996, M.E Porter defined strategy as the creation of a unique andvaluable position that includes different activities The core of establishing astrategic position is to choose activities that are different from those ofcompetitors (this difference may be different activities with competitors orsimilar activities but different implementing methods)

Nguyen Huu Lam, Dinh Thai Hoang and Pham Xuan Lan (2007)defined strategy as established plans or actions taken to achieve organizationalobjectives According to the authors, strategies are considered as plans for thefuture, includin planned strategies and the taken actions However, whetherthose strategies are planned or implemented, they should aim at achievement

of organizations’ objectives

Recently, Johnson and Schole have defined that strategy is the term direction and scope of an organization to gain advantages through itsresources in a changing environment in order to meet the demands of themarket and satisfy the expectations of the stakeholders (According to TruongDinh Chien, 2011)

long-7

Thus, there are many different definitions of strategy From abovedefinitions, it is possible to summarize the characteristics of the strategy asfollows:

- Strategy is always oriented

- Strategy always focuses on managers or head of the company to determine the most important issues of the company

- Strategy always builds up the business lines basing on company's traditional specialized business fields and strengths

1.1.2 Role of strategy

Manufacturers who want to approach consumers need to overcome avery big gap which is market The market is rapidly changing, requiringenterprises to be more energetic to approach the market and make effectivedecisions

- Strategy is the key tool of the enterprises and is the driving force forthe development of business plans of enterprises Strategy plays a decisiverole and controls the coordination between the enterprises’ business activitiesand the market, ensuring that the business activities of the enterprises canfollow market orientation by considering customers’ demands and expectation

as the most stable foundation for all business decisions

- Strategy outlines the main features in business activities of theenterprises Basing on that, the enterprises shall carry out their production andbusiness activities to meet demands of the market

1.2 Building business development strategies of the enterprises

1.2.1 Definition

Building business development strategies of enterprises is to use tools,matrix to establish and choose business strategy suitable to the businessenvironment (internal and external environment) of the enterprises, fromwhich the enterprises can promote the strengths, restrain the weaknesses and

make use of every opportunity to deal with the challenges and risks todevelop business activities (Nguyen Van Binh, 2009).

1.2.2 Strategy building process

1.2.2.1 Identifying enterprises’ mission and objectives

Identifying strategic tasks and objectives is the first step in the process

of building business strategies of the enterprises This activity is basis fordeveloping business strategies In order to establish the mission and specificobjectives, management side of the enterprises can apply the 3C Principles(Company Analysis, Customer Research and Competitor Understanding) toestablish the functions, duties and announce business policies and objectivesduring operation and transaction process of the company

The duties and missions of the enterprises must be developed andsketched into a series of specific objectives Objectives are achievement orresults that the enterprises want to achieve in the future In other words,objectives can be results from expectations of the enterprises

1.2.2.2 Analysis of external environment

(1) Features of macro environment

Macro environment includes the factors outside enterprises’ orientationand affecting operating environment and internal environment, creatingopportunities and threats to the enterprises (Nguyen Khoa Khoi and Dong ThiThanh Phuong, 2007)

Legal and political environment

- Politic

Politic is the first factor that the investors and enterprises’ managerstake care to forecast level of safety of the activities in the countries or areaswhere the enterprises are having trading or investment activities The factorssuch as political policies, political stability or fluctuations in a country orregion are initial signals that help the enterprises identify the opportunities or

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threats to make investment, production decisions in the market area within national or international range.

- Law:

Creating a healthy or unhealthy business environment is entirelydependent on the legal and economic aspects of state management Thepromulgation of a quality legal system is the first condition to ensure a fairbusiness environment and force the enterprises to be honest and responsible indoing business However, if the legal system is incomplete, it will have aconsiderable impact on the business environment, causing difficulties in theproduction and business activities of the enterprises

- Government:

The government plays a very important role in regulating the economythrough its policies of economy, finance, monetary and spending programs Inits relationships with the enterprises, the government both acts as a personwho controls, promotes, sponsors, regulates, prohibits, restricts and animportant customer of the enterprises (in the spending programs of thegovernment) Finally, government acts as a supplier providing the enterpriseswith services such as macro information and other public services

Economic environment

The economic environment is a very important factor that attracts theattention of all executives The impact of economic environment factors ismore direct and dynamic than other factors The evolution of the economicenvironment always contains different opportunities and threats for theenterprises of different industries and has potential impacts on the strategies

of the enterprises There are many economic environment factors but thefollowing factors have a great impact on business activities of the enterprises:

- Growth rate of the economy

- Interest rates and trends in interest rates of the economy

- Monetary policy and exchange rate

In addition, the population, also known as the demographicenvironment, is also a very important factor influencing other factors of themacro environment, especially social and economic factors Changes in thepopulation environment will directly affect the change of the socio-economicenvironment and affect the business strategy of the enterprises Thedemographic information provides important data for the executives inbuilding product planning, market strategies as well as marketing, distributionand advertising strategies Areas of concern for the population include: Totalpopulation of the society, population growth rate; structure and trend ofpopulation changes in age, sex, occupation, and income distribution; lifeexpectancy and natural birth rate; trends in population movement among theregions, etc…

Natural environment

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It can be said that natural condition is always an important factor inhuman life (especially the elements of the ecological environment) On theother hand, it is also a very important input factor of many economic sectorssuch as agriculture, mining, tourism, transportation However, in recentdecades, humanity has witnessed severe degradation of natural conditions,particularly: Increased environmental pollution; the depletion and scarcity ofresources and energy; imbalances in ecological environment The strategicexecutives need to have a flair for the threats and opportunities associatedwith four trends in the natural environment, namely: (1) lack of resources; (2)increasing energy costs; (3) Increased pollution levels

Technology environment

This is one of the very dynamic factors containing many opportunitiesand threats to the enterprises The pressures and threats from the technologicalenvironment can be:

- The emergence of new technologies has led to the appearance andcompetitive advantage of alternative products, threatening traditional products

of the existing industry

- The explosion of new technology makes existing technology obsoleteand creates the pressure for enterprises to innovate to enhance theircompetitiveness

- The introduction of new technologies has created good conditions fornew manufacturers and increased the threats to existing enterprises in theindustry

- The explosion of new technology has curtailed technology circle Thisraises pressure to shorten the depreciation period

Beside above threats, the technological environment also creates many opportunities for the enterprises, particularly as follows:

- New technology can facilitate the production of cheaper products withhigher quality, making products more competitive Normally, the enterprisescoming later often have more advantages to make us of this opportunity thanthe existing ones in the industry.

- The introduction of new technology can make the products morefunctional and thereby create new markets for the company's products andservices

(2) The factors of the industry environment

The industry environment (the operating environment) is the mostcomplex environment and also mostly affects the competition factors MichaelPorter has introduced the concept of open competition According to that,competition in an industry depends on five forces: potential competitors,alternative products, suppliers, customers, and current competitors in theindustry The first four forces are considered as external forces and thecompetition among competitors in the industry is considered as the fiercestcompetition (according to Ngo Kim Thanh, 2011)

Picture1.1: M Porter’s model of five competitive forces

Source: Associate Professor.Dr Ngo Kim Thanh, StrategyDevelopment Textbook, 2011

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These five competitive forces connect with each other to identifycompetitive intensity and industry profit level The strongest force shallbecome key factor according to strategy development opinion.

Potential competitors

Adhering to the market of new enterprises directly reduces competitivescale due to increase in manufacturing capacity and volume in the industry.The appearance of new competitors might lead to a great shock for currententerprises since the new comers often have lots of basis for making decisionsand their strategies are often unforeseen

To beat the potential competitors, the enterprises often implementstrategies to distinguish products, improve quality, add new features to theproducts and continuously innovate to make their products outstanding in themarket or try to reduce manufacturing expenses

Pressure from the suppliers

As a supplier of the production input factors, power of the suppliers isexpressed through pressure of material price The following characteristics ofthe suppliers have big influences on business strategies of the enterprises inthe industry:

- Number of the suppliers: shows whether capacity of providingmaterial and selecting suppliers of the enterprises is high or not Manysuppliers create the competition in the material market, helping to reduceinput expenses for the manufacturers

- Exclusivity of the suppliers: creates good condition for them to force price of the manufactures, causing difficulties in price competition

- Relation between the suppliers and the manufactures: When thesupplier is also a manufacturer doing business in the same organization withthe manufacturer, the internal connection is maximum promoted This helps tocreate good condition for the manufacturers to compete in price

To reduce bad influences from the suppliers, the enterprises shouldhave good relationship with the suppliers or purchase from different sources.Among those sources, the enterprise should choose a main supplier and at thesame time look for alternative material, store reasonable material.

Pressure from the buyers

The buyers compete with other competitors in the industry by forcing thesuppliers to reduce price, negotiating to be provided with better products withmore competitive price and at the same time making the competitors competeagainst each other These waste the profit of the industry in general and theenterprises in particular Power of each group of customer of the enterprisedepends on a series of characteristics about market situation of the group and theimportance of the products that the customers purchased from the enterprises.Customers can create great pressure if they have following conditions:

- A group of connected customers or a customer buying a greater

volume of products than the sold products of the seller

- Products of the enterprise do not have great difference and can bereplaced by products of other enterprises The buyer can surely find newsupplier and make this enterprise compete with another

Alternative products

The appearance of alternative products is an indispensable outcome inorder to meet the changes of market demands following the trend of morediversified products with higher quality This also leads to reduction in thecompetition ability of the current products to be replaced by the new ones

The alternative products often have higher competition ability sincethey are produced under more advanced production line Despite bearing theopposition of the current products, the alternative products have moreadvantages thus gradually narrow market of the current products (especiallythe products being blocked by the social market demand) That the alternative

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products develop well will reduce competition ability of the current products.Solution for these enterprises is to direct to new products or the customersseeking for new utility.

Current competitors in the industry

Competition among the existing enterprises in the industry is one of thefactors expressing nature of this environment There are always variousenterprises in one industry but there are only some enterprises who play role

as the key competitors having ability of dominating the market

Therefore, mission of each enterprise is to seek for information, exactlyanalyze capacity of the competitors in the industry especially main competitors

to build up suitable competitive strategy with the general environment

(3) Summarize results of external business environment analysis

According to results of external business environment analysis, it is

needed to evaluate and collect environment data to identify:

- Opportunities at the present and might appear in the future

- Risks, challenges, disadvantages at the present and might appear in the future

Table 1.1: External factor evaluation matrix (EFE matrix)

Externalenvironmentfactors(1)1

2

Total

(1) List the most important environment factors affecting the

enterprises according to opinion of the enterprise executives

(2) Importance of the factors to the industry ranges from 0.0

(unimportant) to 1.0 (very important) Total score of the listed factors is 1.0

(3) Importance of the factors to the enterprise is evaluated following theformula as follows: 4 coefficient is for the best reaction, 3 coefficient is forthe reaction above average level, 2 coefficient is for reaction of average leveland 1 coefficient is for reaction under average level

(4) Scoring: Total score = level of importance x coefficient Averagescore of the importance score is (1 + 4)/2 = 2.5; the highest score is 4 points; 1point is quite weak score

1.2.2.3 Analysis of internal environment

* Analysis of financial capacity

Analysis of financial capacity has very important meaning in building thestrategies (in the period of building strategies) and ensures financial resources forthe implementation of the business development strategies of the enterprise.Normally, when analyzing this factor during building business developmentstrategies, the enterprises should pay attention to following indexes:

The first one is scale, structure (classification), quality of financial resources

of the enterprises (such as capacity of payment, profit generating, etc…)

The second one is the capacity to meet actual demands of the financialresources with the programs, plans and activities of the enterprises at thepresent and in the future (short term and long term)

* Analysis of human resources of the enterprises

During process of orientation of development strategy, the executivesneed to pay much attention to the capacity of the human resources to haveexact and reasonable assessment of the responsiveness of human resources tothe manufacturing and business requirements of the enterprises in the future.Particularly, the enterprises need to focus on analyzing following factors:

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Firstly, the enterprises need to analyze business management capacity

or analyze the executives of different levels

Secondly, the enterprises need to analyze skills of the employees.Purpose of this analysis is to evaluate capacity of operating assigned tasks andcapacity of successfully implementing strategies of the enterprises Analysisresult shall be basis for the activities such as recruitment, training, rotation ordismissal to ensure that the enterprises have skilled staffs with the ability ofimplementing enterprises’ strategies

* Analysis of marketing activity

Marketing is a tool to implement the targets set in the businessdevelopment strategies of the enterprises Analysis of marketing activities ofenterprises should be focused on some basic factors as follows:

Marketing policies of the enterprises: Marketing policies are principals

of guidance, rules, methods, procedures which are set in accordance withmarketing activities in order to support and encourage implementation of theset targets

Normally, in order to analyze marketing policies, marketing mixpolicies such as product policies, price policy, distribution policy, mixedstimulation policies are often analyzed

* Analysis of market research capacity

Capacity of research and forecast the market of the enterprises is thecombination of the systematic activities from identifying, collecting, analyzingthe information in order to making effective decision and business strategies

When analyzing capacity of market research, the researchers need tofocus on 2 issues which are research methods and research location

Depending on particular situation, the enterprises shall implementsuitable research methods in order to take advantages of strong points andrestraint weak points

* Research on products of the enterprises

Researching on products shall help to evaluate product quality,competitive advantages of the products providing of the enterprises in comparedwith the competitors to build up business development strategies in order tomake use of strong points and restraint weak points of the enterprises thoroughly

* Summarize analysis results of the internal environment

Summarizing analysis results of internal environment is to identify strong points, advantages and weak points, disadvantages of the enterprises in compared with the competitors in the market in order to have solution during business process.

Summary and evaluation was implemented with the scoring method toevaluate direction and level of impact of the internal resource factors onenterprises' activities Evaluation structure of the internal factors is similar tothe evaluation matrix of peripheral factors as follows:

Table 1.2: Evaluation matrix of internal environment factors (EFE)

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1.2.2.4 Strategy formation and selection

The business strategy of the enterprises is developed basing on theanalysis and synthesis of external and internal environment The most commonlyused method is to use the SWOT matrix as a basis for analyzing and evaluatingthe impact factors of the formation and selection of business strategies

Table 1.3: SWOT mtrix model

Internal environment

Opportunities (O)

Threats (T)

Source: Nguyen Thi Lien Diep, 2006

The method of forming and selecting strategies is based on SWOT matrix following bellowing 4 steps:

- Identify opportunities, threats of the environment

- Determining the strengths and weaknesses of enterprises in the

business environment

- Identify strategies based on the combination basis of the factors such

as opportunities, threats, strengths, weaknesses

- Select the appropriate combinations, pursue the same goal to form strategies

In principle, strategies are formed on the basis of promoting strengths,exploiting potentiality, taking advantage of opportunities, avoiding threats andshielding the weaknesses of enterprises

The enterprises can pick up one of the following strategies

+ Corporate-Level Strategy: According to Fredr David (2006),corporate-level strategies may include: (1) forward integration: involves

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increasing ownership or control over distributors or retailers; (2) backwardintegration: A strategy of seeking ownership or control over a company'ssuppliers; (3) Horizontal integration: A strategy of seeking ownership orcontrol over a company's competitors (4) Intensive strategies include: marketpenetration, new market development and new product development; (4)Strategies of expanding activities in practice include: concentricdiversification; horizontal diversification, mixed diversification

+ Competitive Strategy: According to E Porter (1996), there are thefollowing types of competitive strategies: (1) Cost-based strategy isachievement of outstanding cost position through the policies aimed at thegoals of cost savings; (2) Differentiation strategy is to differentiate thecompany's products and services, creating unique points that are recognized inthe industry as a whole; (3) Focus strategy is to focus on a specific buyergroup, part of a commodity or a specific market area

+ Blue Ocean Strategy: Value innovation is a way of thinking andimplementing a new strategy to shape the green ocean, avoiding competition(Kim and Renee Mauborgne, 2007)

1.2.2.5 Evaluate the feasibility of the strategy

In previous studies, Quantitative Strategic Planning Matrix (QSPM)was often used to evaluate possible strategies that could replace theestablished strategy of the enterprises This phase helps to select the beststrategies The QSPM matrix used information from EFE, IFE, SWOTmatrices as of analysis Like other matrices, the QSPM matrix is also highlydependent on the strategic intuition of the strategist

Table 1.4: Summary table of QSPM matrix

Total attractive scores

Steps to build QSPM matrix

- Step 1: Research to bring key and replaceable strategies in SWOT matrix into QSPM matrix

- Step 2: List internal and external factors in EFE, IFE matrix in

combination process of the researched strategies

- Step 3: Get classification opinions for the factors in step 2

- Step 4: Identify attractive score AS) for every strategy in eachstrategy In which, attractive score ranges from 1-4 points, score of 1 point isconsidered as unattractive, score of 2 point is considered a little attractive,

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score of 3 point is considered as quite attractive, score of 4 point is considered

as very attractive

- Step 5: Calculate total AS by multiple classification score by each factor

- Step 6: Plus total AS and compare total score of the strategies Choosethe strategy with the highest score as the key strategy and the left strategiesare selected as replaceable strategy

CHAPTER 2: ANALYZE BUSINESS ENVIRONMENT OF TWP

IN VIETNAM

2.1 Introduction about TWG

TWG tea which belongs to The Wellbeing Group is the highest classtea brand name in the world It was founded in Singapore as combination ofthe modern style of the original retailed stores as well as the precision of thetearooms with the professional distribution network

Currently, TWG is recognized as the best tea brand name in the worldand is exclusively retailed in Harrods, London, Dean & Deluca series ofshops, business and luxury classes of Singapore Airlines, five star hotels andofficially distributed at the agents of VINE corporation

TWG brand name was founded in 2008 Until now, TWG has had 55shops in 16 countries, including Singapore, United Kingdom, Japan and UAE.Considering Vietnam as a quickly developed market where demands for teaconsumption is increasing, in their 8th birthday in August, 2016, TWG tea didbring one of the most precise products of tea to Vietnam TWG tea salon at B2floor, Takashimaya was founded since then At TWG tea salon, customers canenjoy all collection of high-class tea, luxury tea tooling and cuisine Aftermany years of doing business at the big tea manufacturing countries in theworld such as Japan, China, Taiwan and India, opening in Vietnam is expected

to bring great income for TWG in the future

2.2 Analyze external environment factors

accordingly The economic growth of our country during the period from 2012-2016 is represented as follows:

Table 2.1: Some economic indexes of our country Norms

Source: General Statistics Office of Vietnam

According to the above surveyed data, Vietnam's GDP has continuouslyincreased from US $ 136 billion in 2012 to US $ 217 billion in 2016 Grossnational product has been increasing steadily, helping per capita incomeimprove from $1,540 in 2012 to $2,215 in 2016 This has had a positiveimpact on purchasing capacity in the country That population incomeincreases, living standard is improved will make people pay more attention tovaluable consumer products, including tea TWG Thus, TWG customers areincreasing day by day and TWG has more opportunities to develop business

However, the rate of inflation is not controlled at a stable level In 2012,inflation rates remained high at 6.91% and 6.04% respectively The reason isthat the policies of interest rate support make credit increase, easing controlprice of some commodities such as electricity, water, gasoline, salary

increase adjustment During the period from 2014- 2016, although inflationwas pushed back, the inflation rate of 0.6% in 2015 was too low and could notstimulate the enterprises to invest business Until 2016, increasing in price offood, petroleum and medical services has pushed inflation up to 4.74% Thisinflation belongs to the government's inflation control target of less than 5%,

so it has positive impacts on business operations of the business organizations

TWG tea is the commodity offered by foreign economic organizations

in Vietnam so the exchange rate will directly affect the development of thisproduct In the period 2012-2016, the exchange rate of our country was keptstable Although it was still increased, the increasing rate was low Thestabilization of the exchange rate was due to intervention policies, activities ofbuying and selling foreign currency of the State Bank Stable exchange ratewill create more opportunities for the TWG to expand its business since theincome from the TWG business after deducting the expenses will beconverted into foreign currency before transferring to the mother company.Stable exchange rate will ensure the safety income from TWG business,creating a favorable investment environment for the TWG to develop

2.2.1.2 Political-legal environment

Vietnam has a stable political regime and a lawful system of laws,creating favorable conditions for the investment environment Along withjoining and signing many international economic agreements, the Government

of Vietnam has issued many policies suitable with the global integrationprocess, creating favorable conditions for investment attraction The Law onForeign Investment Promotion was promulgated Despite the shortcomings, itstill encourages investment and partly removes some difficulties for foreignorganizations as well as TWG tea products when doing business in Vietnam

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However, beside the opportunity created from the investment incentivepolicy mentioned above, TWG tea business in Vietnam also has to faces manychallenges as the tea industry in the country has been recognized as a strategicindustry and has had a policy system that supports the production andprocessing This creates a competitive environment for TWG Policies ofdomestic tea support which will cause some disadvantages for doing business

causing difficulties in expanding series of TWG tea business shops inVietnam in the upcoming time.

2.2.1.3 Socio-cultural environment

Ho Chi Minh City is the largest center of economic, culture, medicaland tourist, services in the country and is one of the industrial and educationand training centers of the whole country Being an important hub of traffic,science and technology, Ho Chi Minh City plays an important role in nationalsecurity and defense The majority of people living in the area with higheducational level contribute to the intellectuals and employees of manyagencies, schools in the centrals and city This is the main customers for thebusiness development of TWG tea

In addition, currently, the demand for tea products used by people inour country is increasing Per capita consumption in Vietnam today is about0.46 kg per year At the same time, the taste of Vietnamese tea is changing.New tastes of young people, of high income class, of international touristsrequires improve quality, products, convenient use, civilization and courtesy The new taste in enjoying tea has created a development advantage forTWGs since TWG tea products can meet all the set criteria

2.2.1.4 Natural environment

TWG products are manufactured in many countries all over the worldsuch as Jaona, China, Taiwan and India before bringing to Vietnam forconsumption Each country will only produce the suitable tea with its naturalcondition to ensure the highest product quality Therefore, the development ofTWG tea production in Vietnam is less affected by the natural environment

However, natural conditions in some economic regions of our countryare very favorable for developing high quality tea, such as Tan Cuong ThaiNguyen, Hoa Binh, Son La, Dien Bien tea The soil in these areas containsmicronutrients with appropriate proportions suitable for tea plants The pH

ranges from 5.5 to below 7.0, which is slightly acidic The natural conditions

in these areas give the tea a pervaded and long lasting sweet taste Theseconditions have caused competitive challenges for TWGs when developingtheir business in Vietnam in the near future

2.2.1.5 Technological environment

Currently, a number of advanced technologies in the world have beenapplied to support tea production, processing and preservation Japan hasimplemented the line of systematization, continuation and standardizationaccording to the advance of the world sciences in high frequency microwave,electromagnetic and photovoltaic The parameters in tea processingtechnology has been collected, processed and coded to control the automation

of process technology, thereby improving the quality and reducing the productcost Tea manufacturing and development companies in America and Japanhas produced tea in crystalline form (instant tea) and liquid form and addedwith natural additives such as the aroma of fresh flowers, fruit and herbs

India and Sri Lanka have developed OTD and CTC black teatechnology by stamping tea buds, increasing the proportion of tea budsexposed to oxygen in the air to promote fermentation In Oolong teatechnology, Taiwan has used the power of specialized machines to make thetea blocks move and friction themselves, break the cell and re-distribute thefluid to the parts of the tea bud At the same time, using treadmill to squeezeand form ball shape helps the compression process be more convenient

Thus, the technology environment is developing strongly, creating goodconditions for TWG tea to improve productivity, quality, diversify products inorder to better meet the needs of consumers This is a good condition forTWG to develop business in the future

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