Business strategy of hue textile garment joint stock company from 2015 to 2018

BUSINESS STRATEGY OF HUE TEXTILE GARMENT JOINT STOCK COMPANY FROM 2015 TO 2018 ABSTRACT In 2007, Viet Nam joined the WTO with challenge.. FROM 2015 TO 2018 TTT LIST OF TABLES Table 2-

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TITLE APPROVAL PAGE FOR GRADUTE THESIS OR PROJECT

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT FOR DEGREE OF MASTER OF BUSINESS ADMINISTRATION AT LINCOLN

UNIVERSITY OAKLAND, CALIFORNIA

CANDIDATE: TAM TRUONG THI BANG

FILED OF CONCENTRATION: BUSINESS STRATEGY

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BUSINESS STRATEGY OF HUE TEXTILE GARMENT JOINT STOCK COMPANY

FROM 2015 TO 2018

ABSTRACT

In 2007, Viet Nam joined the WTO with challenge However, time by time Viet Nam affirmed in the world market And textile garment is one of field that attracted

investment from the oversea customer

In economic crisis 2008, the world oil price was increased and lead to material price was increased Especially, cotton price in China was increased and increased and effect

to garment field Because the garment price was confirmed some months before and

we could not turn back to ask the customer to increase garment price However,

Huegatex tried to keep its business on this year

As plan, in the middle of 2015 Viet Nam will join TPP with many chances and

challenge, The research aims at Huegatex’s plans, strategies to invest and ready for

TPP agreement

Written by Tam Truong Thi Bang Page 1

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FROM 2015 TO 2018

ACKNOWLEDGEMENT

I would like to say thanks to all people that helped me to complete this assignment Firstly, I would like to says thanks to all leaders of Hutech Institute of International Education- Hutech University of Technology, Lincoln University and Lincoln’s

Master of Business Administration program that have best condition for us to

participate in studying and discussion during the MBA course

I especially thanks to Dr Khai The Nguyen who has instructed, supported me to

complete this project

I also sincerely thanks to all leaders to Huegatex that helped and gave information of Huegatex to complete this project

Finally, I would like to say thanks to my family and my friends who have encouraged and supported me

Sincerely thanks,

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6 STRUCTURE OF THE REPORT: 27 cĂ nen re 8

CHAPTER 2: STRATEGIC MANAGEMENT cssscsssssessesenssssessncssesssnanseorsenses aD

2.1 OVERALL THE STRATEGIC MANAGEMENT eessee 9 2.1.1 Defining strategic managernen( -ccccscsetieieieerirersee 9 2.1.2 Benefits of strategic managemerI s- ch Hee 9 2.1.3 Stages of strategic mansg€Tm€Ti - c1 see 10 2.1.4 The Strategic Management ModelÌ chien 12 2.2 KEY TERMS IN STRATEGIC MANAGEMENIT series 12 2.2.1 Competitive advan†ag€: - -c ch 121144410011 tr 13 2.2.2 StrategistS: con HH HH ng 10141811212011111110101 1 11 13 2.2.3 Vision and Mission sfaf€erneTifS -.- cs sa nHnhng 2e 13 2.2.4 External Opportunities and ThreafS -:sĂcSa net 14 2.2.5 Internal Strengths and Weaknesss - cu nhe 15 2.2.6 Long— Term obj€CfÏV€S nen 8110311011 10811 1xx 15 2.2.7 Strategies mm 15 2.2.8 Annual/Short ObjectiVes chen 00121011211 16

2.2.0 PỌiCles S- TH HH HỈ HH2 021 1T HH 1 011 010100140111 14 978 16

2.3 SOME TOOLS FOR FORMULATING STRATEGY . : 16 2.3.1 The Extemal Factor Eveluation (EFE) Matrix . c-cce 16 2.3.2 The competitive Profile Matrix (CPM) chai 17 2.3.3 Internal Factor Evaluation(IFE) MatrIx cs‡Ăcsseeseeese 18 2.3.4 The Strengths-Weaknesses-Opportunities-Threats(SWOT) Matrix 19 2.3.5 The quantitative Strategic Planning Matrix(QSPM) c.ee 20 CHAPTER 3: ANALYSIS THE INVESTMENT OF HUE_TEXTILE GARMENT JOINT STOCK COMPANY .esessssesssnssssnsesesne 21 3.1 GENERALTNFORMATION chen re 21 3.2 ORGANIZATION: ĩc nàn ng HH tt ra 23 3.3 ANALYSIS EXTERNAL BUSINESS ENVIRONMENT 24 3.3.1 Marco environment o-ccc¿22c22cxvvetttEEE221Ae 2.22111 tri 24 3.3.1.1 ECOnOTHICS: sàn HH HH HH HH 0101110100101 01.1 198 24

Written by Tam Truong Thí Bang Page 3

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FROM 2015 TO 2018

3.3.1.2 Technological: ccc secsccsssscsessssessseesencansccsscneeseesesenseseneseseseauasenteesens 26

3.3.1.3 Social ,Cultural, Demiographic, and Natural Environment 26

3.3.1.4 Political, Governmental, and LegaÌ sinh 27

3.3.2 Micro environment ccscsesessecnsesseseeeescenesersnsesessenseseneseetensssesoneseetens 27 3.3.2.1 Hidden CompetifiV© - cành H021 01111111 27 3.3.2.2 Competitors m sarme field - cerseeserirsiereieriie 28 3.3.2.3 Potential development of substitute produCfS -<: 30 3.3.2.4 Bargaining Power of SuppÏiers - ceceieseinineeHiee 30 3.3.2.5 Bargaining Power of ConSUuIm€fS -:s<<< << 1neireerie 31 3.3.3 External Factors Evaluation Matrix -.-«c«eteeeeieiiriiiee 33 3.4 ANALYSIS INTERNAL BUSINESS ENVIRONMENT 35

khằNG ẽ 35

3.4.2 Finance/Accounfing T€SOUTC€: à ch nhe 36 3.4.2.1 FinanC€: Ă song nhì HH HH Hà 11010181101 1001141146 36

KV N,.L Tố 37 3.5 MACHINE, CAPACTTY PRODUCTION: à Hee 39 3.5.1, Producing DTOC€SS: HH H011 tt 001011611 39 3.5.2 Spinning ÍaCOTY: HH HH HH HH 011210 01110 0100101 kree 39 3.5.3 Dyeing and knitting ÍaC(OTV: c SH H0 11111 tk, 40 3.5.4 Garment/sewing ẨaCfOTV: che 1e sekeh 42

3.8.4 PTodUCfS nhàn HH HH HH HH0 1H10 1111412811101 110 1116 50 3.8.5 Distribution co Sàn HH HH HH hưng gang tre cac OO 3.8.6 Market HH HH nàng 1 041018010010111131 210 50

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4.2.2 ST (strengths-threats) Sirategi€s: coi 56 4.2.3 Diversification produc?s straf€gyY ceeằhhheeeesrssee TÖỘ CHAPTER 5: CONCLUSION cscsssssssossscescesscassaracsenessesssenssnessesscerssovenens "— 57 REFERENCE .csssscsssssscsessescsarsoesesesnnsnvassssenscscesacaseceasares “ 58

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FROM 2015 TO 2018 TTT

LIST OF TABLES

Table 2-1 The External Factor Evaluation (EFE) Matrix

Table 2-2 The Competitive Profile Matrix (CPM)

Table 2-3 Internal Factor Evaluation (IFE) Matrix

Table 2-4 The Strengths-Weaknesses-Opportunities-Threats(S WOT) Matrix Table 2-5 The quantitative Strategic Planning Matrix (QSPM)

Table 3-1 EFE Matrix for Huegatex

Table 3-2 Human Resources of Huegatex through the years

Table 3-3 Accountant balance sheet

Table 3-4 Sales structure as per field

Table 3-5 Report business activity in years 2011-2013

Table 3-6 IFE Matrix for Huegatex

Table 4-1 SWOT Matrix for Huegatex

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2 THE IMPORTANT OF RESEARCH:

At the meeting Trans — Pacific Strategic Economic Partnership Agreement (TPP), researchers confirmed that Viet Nam has more chances than challenges This is the reason why garment textile is main concern in TPP agreement As Viet Nam Textile, this is a big challenge because most of textile and garment factories have not ready for TPP agreement that will be signed in the middle next year — 2015.In global market, competition between companies is big deal for them So it is very important to analysis and improving the ability and having right strategy at right time

Hue Textile Garment Joint Stock Company is a big company at central of Viet Nam However, it also has difficult with competitors as Thanh Cong (TCM) in

Ho Chi Minh and Hanosimex in Ha Noi So the strategy of Hue Textile Garment

Joint Stock Company (HUEGATEX) from 2015 to 2018 is very important

To prepare TPP agreement in next year, all companies in Viet Nam have both chance and challenge So to joint TPP trade, all companies must be proof their ability and can competitive with foreigner companies at China, Bangladesh and even the companies in TPP area And it requires have more wide and long vision

HUEGATEX Company is always trying to have good relationship with partners to have two side benefits and bring for partners the good service, good products in high quality and Just In Time (J-I-T) also is a part in the strategy of HUEGATEX company Basing on these situations I chose the dissertation:

“Business strategy of HUE Textile Garment Joint Stock Company from 2015

to 2018”

Written by Tam Truong Thi Bang xa Page 7

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4 RESEARCH OBJECTIVES AND SCOPE:

The primary aim cf research is concentrate about the impact of environment to business activities of HUEGATEX And look back the business activities last few years to have right plans, right strategies in next few years to

2018

5 RESEARCH METHODOLOGY:

Methodologies in this dissertation: analysis; collect the data and compare; and business researchers

6 STRUCTURE OF THE REPORT:

The entire of report is divided into 5 chapters A brief of description of these chapters is given below:

Chapter 1: Introduction

This chapter gives quick overview about aim and purpose of research,

why there is a need of this research and what would be our analysis

Chapter 2: Literature review

This chapter will give detail information about the research topic Chapter 3: Research methodologies

This chapter will focus on approaches of research methodologies Primary, secondary data types zrd different are analyses in this research

Chapter 4: Finding and analysis

This chapter will portray the actual results and finding of the research Chapter 5: Conclusion

The conclusion of the research is the last chapter of the research report The whole research, its study and finding would be concluded in this chapter And

the recommend would be includzd in the last chapter of the dissertation which is the conclusion chapter

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FROM 2015 TO 2018

9 CHAPTER 2: STRATEGIC MANAGEMENT 2.1 | OVERALL THE STRATEGIC MANAGEMENT

2.1.1 Defining strategic management

There is many defining about the strategic management, and each defining is different and it depends on the point of view of author

As Fred R David (2011), the author of ‘Strategic Management Concept and Cases” book, strategic management can be defined as the art and science of formulating, implementing, and evaluating cross —functional decisions that enable an organization to achieve its objectives As this definition implies,

strategic management focuses on integrating management, marketing,

finance/accounting, production/operations, research and development, and information systems to achieve organization success

As Michael Porter (1985): Strategy is choice what we need to do and what not to do, something to ineet a group of customer, not all

I really like the sentence: “Without a strategy, an organization is like a

ship without a rudder, going around in circles It’s like a tramp; it has no

place to go.”

-JOEL ROSS and MICHAEL KAMI - 2.1.2 Benefits of strategic management

As Fred R David (2011), strategic management allows an organization

to me more proactive than reactive in shaping its own future; it allows an organization to initiate and influence (rather than just respond to) activities- and thus to exert control over its own destiny

Y Financial benefits Research indicates that organization using strategic-management concepts are more profitable and successful than those that do not Business using strategic-management concepts show significant improvement in sales, profitability, and productivity compared to firms without systematic planning

activities High-performance firms tend to do systematic planning to prepare for future fluctuations in their 2xternal and internal environments Firms with

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As Gordon Greenly, strategic management offers the following benefits:

3° It allows for identification, prioritization, and exploitation of opportunities

It provides an objectives view of management problems

It represents a framework for improved coordination and control activities

It minimizes the effects of adverse conditions and changes

It allows major decisions to better support established objectives

It allows more effective allocation of time and resources to identified opportunities

It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions

It creates a framework for internal communication among

personnel

It helps integrate the behavior of individuals into a total effort

It provides a basis for clarifying individual responsibilities

It encourages forward thinking

It provides a cooperative, integrated, and enthusiastic approach to tacking problems and opportunities

It encourages a favorable attitude change

It gives a degrec of discipline and formality to the management of

a business

2.1.3 Stages of strategic management

In the competition market, the strategic management process involves analyzing cross-functional business decisions prior to implementing them As

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FROM 2015 TO 2018

Fred R David (2011), strategic management process consists of 3 stages:

strategy formulation, strategy implementation, strategy evaluation:

Strategy formulation includes developing a vision and mission, identifying an organization’s external opportunities and thread, determining internal, establishing long term objectives, generating alternative strategies, and choosing particular strategies to pursue Strategy- formulation issues include deciding what new business to enter, what businesses to give up, how to allocate resources, whether to expand operation or diversify, whether to enter international markets, whether merge or form a joint venture, and how to avoid

a hostile takeover

Strategy implementation requires a firm to establish annual objectives, devise policies, motivate employees, an allocate resources so that formulated

Strategies can be executed Strategy implementation includes developing a

strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information system, and lirking employee compensation to organizational

Nowadays, there is lots of competitors in global market so organizations should continually monitor internal and external events and trends so that timely changes can be made as needed , if not they will not survive

gt

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FROM 2015TO 2018 |

2.1.4 The Strategic Management Model

As Fred R David (2011), the strategic-management process can be studies and applied as a model And each model will be represented some process The framework illustrated in Figure 2-1 is widely accepted, comprehensive model of the strategic-management process

A Comprehensive Strategic-Management Model

Perform External Auk Chapter 3

knplemart

Develop Vision Establish a some eo AWaesre

and Mission tong-Ters and Satect Management Finance, and Svante

Statements Chapter 2 Ctpecioves rapier S Strategies Chapter 6 Cper 2 teues Accounting, 8&0, and MS lan Chapters "Cues ca

Chapter 4

Source: Fred R David “How Companies Defines Their Mission,” Long Range

Planning 22, no.3 (June 1988): 40

2.2 KEY TERMS IN STRATEGIC MANAGEMENT

As Fred R David (2011) there is nine key terms: competitive advantage,

Strategists, vision and mission statements, external opportunities and threads,

internal strengths and weaknesses, long-term objectives, strategies, annual objectives, and policies

Written by Tam Truong Thi Bang co

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achieve sustained competitive advantage by continually adapting to changes in external trends and events and internal capabilities, competencies, and

resources; and by effectively formulating, implementing, and evaluating strategies that capitalize upon those factors

2.2.2 Strategists:

Strategists are the individuals who are most responsible for the success

or failure of an organization Strategists have various job titles, such as chief

executive officer, president owner, chair of the board, executive director, chancellor, dean, or entrepreneur

Strategists help an organization gather, analyze, and organize information They track industry and competitive trends, develop forecasting models and scenario analyses, evaluate corporate and divisional performance,

spot emerging market opportunities, identify business threats, and develop

creative action plans |

Strategists differ as much as organizations themselves, and these different must be considered in the formulation, implementation, and evaluation

of strategies Some strategists are differ in their attitudes, values, ethics,

willingness to take risks, concern for social responsibility, concern for profitability, concern for short -run versus long — run aims, and management

style

2.2.3 Vision and Mission statements

Developing a vision statement is often considered the first step in strategic planning, preceding even development of a mission statement Usually,

we should answer the question “What do we want to become?”

For example, the vision statement of Stokes Eye Clinic in Florence, South Carolina, is “Our vision is to take care of your vision.”

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compel strategists to think about the nature and scope of present operation and

to assess to potential attractiveness of future markets and activities

2.2.4 External Opportunities and Threats

External opportunities and external threats refer to economic, social,

culture, demographic, environmental, political, legal, governmental,

technological, and competitive trends and events that could significantly benefit

or harm an organization in the future Some opportunities and threats that face many firms are listed below:

Availability of capital can no longer be taken for granted Consumers expect green operations and products

Commodity focd prices are increasing

Computer acker problems are increasing Intense price ccmpetition is plaguing most firms

Unemploymert and underemployment rates remain high

Product life circle are becoming shorter

Local government are financially weak

Home prices remain exceptionally low

> Global markets offer the highest growth in revenues

Above changes that are creating a different type of consumer and consequently e need for different types of products, services, and strategies

Other opportunities and threats may include the passage of a law, the introduction of a new product by competitor, a national catastrophe, or the declining value of the dollar A competitor’s strength could be a threat

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FROM 2015 TO 2018

A basic tenet of strategic management is that firms need to formulate strategies to take advantage of external opportunities and to avoid or reduce the impact of external threats

2.2.5 Internal Strengths and Weaknesses

Internal strengths and weaknesses are an organization’s controllable activities that are performance especially well or poorly

Strengths and weaknesses are determined relative to competitor Relative deficiency or superiority is important information Also, strengths and weaknesses can be determined by elements of being than performance

Internal factors can be determines in a number of ways, including computing ratios, measuring performance, and comparing to past periods and industry average Various types of survey also can be developed and

administered to examine intecnal factors such as employee morale, production

efficiency, advertising effectiveness, and customer loyalty

2.2.6 Long — Term objectives

Objectives can be defined as specific results that an organization seeks to

achieve in pursuing its basic mission Long -term means more than one year Objectives are essential for organizational success because they state direction; aid in evaluation; create synergy; reveal priorities; focus coordination; and

provide a basis for effective planning, organizing, motivating, and controlling

activities Objectives should be challenging, measurable, consistent, reasonable,

and clear, In a multidimensional firm, objectives should be established for the overall company and for each division

2.2.7 Strategies

Strategies are the means by which long-term objectives will be achieves

Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures,

Strategies are potential actions that require top management decisions and large amounts of the firm’s resources Strategies have multifunctional or

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development, and management information systems (MIS) accomplishments

Annual objectives are especially important in strategy implementation, whereas long-term objectives are particularly important in strategy formulation Annual objectives represent the basis for allocating resources

2.2.9 Policies

Policies are the means by which objectives will be achieved Policies include guidelines, rules, and procedures established to support efforts to

achieve stated objectives ,

Policies are most often stated in terms of management, marketing,

finance/accounting, production/operations, research and development and management information systems activities Policies can be established at the corporate level and apply to an entire organization at the divisional level aad apply to a single division, or they can be established at the functional level and apply to particular operational activities or departments Policies, like manual objectives, are especially important in strategy implementation because they outline an organization’s exvectations of its employees and managers Policies allow constancy and coordination within and between organization departments 2.3 SOME TOOLS FOR FORMULATING STRATEGY

2.3.1 The External Factor Evaluation (EFE) Matrix

As Fred R David (20 11), an External Factor Evaluation Matrix allows

strategists to summarize and evaluate economic, social, cultural, demographic,

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FROM 2015 TO 2018

environment, political, governmental, legal, technological, and competitive information, Regardless of the number of the key opportunities and threats included in EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the ‘owest possible total weighted score is 1.0 The average total weighted score is 2.5 A total weighted score of 4.0 indicates that

an organization is responding in an outstanding way to existing opportunities

and threats in its industry In other words, the firm’s strategies effectively take advantage of existing opportunities and minimize the potential adverse effects

of external threats A total score of 1.0 indicated that the firm’s strategies are not capitalizing on opportunities or avoiding external threats

Table 2-1 The External Factor Evaluation (EFE) Matrix

2.3.2 The competitive Profile Matrix (CPM)

Ad Fred R David (2011), the Competitive Profile Matrix (CMP)

identifies a firm’s major competitors and its particular strengths and weaknesses

in relation to a sample firm’s strategic position The weights and total weighted

scores in both a CPM and an EFE have the same meaning However, critical success factors in a CPM include both internal and external issues; therefore,

the ratings refer to strengths and weaknesses, where 4=major strength, 3=minor

strength, 2=minor weaknesses and 1=major weaknesses The critical success

factors in a CPM are not grouped into opportunities and threats as they are in an EFE In a CPM, the rating and total weighted scores for rival firms can be compared to the sample firms This comparative analysis provides important internal strategic informatior

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2.3.3 Internal Factor Evaluation(IFE) Matrix

As Fred R David (2011), IFE matrix summarizes and evaluates the major strengths and weakness in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas Intuitive judgments are required in developing an IFE Matrix, so the appearance

of a scientific approach should not be interpreted to mean this is an all-powerful technique A thorough understanding of the factors included is more important than the actual numbers

Regardless of how many factors are includes in an IFE Matrix, the total weighted score can range from a low of Lo to a high of 4.0, with the average score being 2.5.Total weighted scores well below 2.5 characterize organization that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position The number of factors has no effect to upon the range of total weight scores because the weights always sum to 1.0

When a key internal factor is both strength and weakness, the factors should be

included twice in the IFE Matrix, and a weight and rating should be assigned to each statement

Table 2-3 Internal Factor Evatuation (IFE) Matrix

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FROM 2015 TO 2018

2.3.4 The Strengths-Weakresses-Opportunities-Threats(SWOT) Matrix

As Fred R David (2011), The Strengths-Weaknesses-Opportunities- Threats (SWOT) Matrix is important matching tool that helps managers develop four types of strategies: SO (Strengths-Opportunities) strategies, WO (Weaknesses-Opportunities) strategies, ST (Strengths-Threats) strategies, and WT(Weakness-Threats) strategies Matching key external and internal factors is most difficult part of developing a SWOT Matrix and requires good judgment-

and there is no one best set of matches

+ SO Strategies use a firm’s internal strengths to make advantage

of external opportunities All managers would like their organizations to

be in a position in which internal strengths can be used to take advantage

of eternal trends and ev2nts Organizations generally will pursue WO, ST,

or WT strategies to get into a situation in which they can apply SO Strategies When a firm has major weaknesses, it will strive to overcome them and make them strengths When an organization faces major threats,

it will seek to avoid them to concentrate on opportunities

+ WO Strategies aim at improving internal weaknesses by taking

advantage of external opportunities Sometimes key external opportunities exist, but a firm has internal weaknesses that prevent it from exploiting

those opportunities

+ ST Strategies use a firm’s strengths to avoid or reduce the

impact of external threats This does not mean that a strong organization

should always meet threats in the external environment head-on

+ WT Strategies are defensive tactics directed at reducing internal weakness and avoiding external threats

A schematic representation of the SWOT Matrix is provided as table 2-4 And it is composed nine cells: four keys factors cells(S, W, O, T), four strategy cells (SO, WO, ST and WT), and one cell is always in left blank

(the upper-left cell)

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FRQM 2015 TO 2018 Table 2-4 The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

O: external opportunites | T: Threats Empty box - -

2.3.5 The quantitative Strategic Planning Matrix(QSPM)

As Fred R David (2011), the QSPM determines the relative attractiveness

of various strategies based on the extent to which key external an internal critical success factors are capitalized upon or improved The relative attractiveness of each strategy within a set of alternatives is computed by factor Any number of

sets of alternative strategies can be included in the QSPM, and any number of

strategies can make a given set, but only strategies within a given set are evaluated relative to each other The components of the QSPM: Strategic

Alternatives, Key Factors, Weights, Attractiveness Score (AS), Total Attractiveness Scores (TAS), and the Sum Total Attractiveness Score

Table 2-5 The quantitative Strategic Planning Matrix (@SPM)

Strategic Alternatives

Strategy | Strategy | Strategy

Key Factors Weight 1 2 3

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FROM 2015 TO 2018

CHAPTER 3: ANALYSIS THE INVESTMENT OF HUE

TEXTILE GARMENT JOINT STOCK

HUEGATEX< is a member of Viet Nam Textile Garment Corporation It

was established in year 1988 as a spinning company with 100 employees

e In 1997 expanded | knitting — dying factory and 1 garment factory

with 2,000 employees

® In 2004, privatized as a joint stock company

® In 2007 expanded more 2 garment factories

e From 2013, total have 5 factories and operating in field of yarn, knitting and garment with nearly 3,900 employees

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FROM 2015 TO 2018

e Main products are’ now being exported to the USA, EU, Japan,

Taiwan, South Korea market In the USA market, we have big

customers and exported garments to them such as: Perry Ellis, Li & Fung, PVH, Sears, Costco, JC Penny, Kohl’s And exported yarns to Turkey, Egypt, and Portugal and also for domestic

e Huegatex is applying the quality control system under the ISO 9001-

2008 and has beea voting to be the Vietnam high quality goods for several years We are also issued the Worldwide Responsible Accredited Production Certification (WRAP) and The Custom- Trade Partnership Against Terrorism (C-TPAT)

e In the development strategy in 2015, Huegatex will invest another spinning mill with 25 thousand spinning spindles and a garment factory with 16 sewing lines to affirm our position of being one of the garment and textile hubs of the central region and Vietnam

e Huegatex advocates cooperation with all domestic and foreign partners through joint ventures, cooperative business and strive to attract strategic investors for long term cooperation in a spirit of

mutual benefits

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Spinning factory: make the yarn

HR Dept.: includes managing recruiting and hiring employees, coordinating employee benefits and suggesting employee training and development strategies

Engineering and Investment Dept.:

Health Station: take care the health of the labors

Electricity Mechanic Station: take care the electricity of the whole Huegatex

Security Station: watch and protect the assets of company

Life Station/Union labor: take care the life of the labors

Shop/show room

Garment factory: producing the goods

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FROM 2015 TO 2018

“+ QA Dept.: handle the quality of goods to make sure that the quality is meet customer standard before shipping

¢» Planning, import and export Department: make the production plan, buying

the material and make sure everything is ready as plan before producing

And after finishing the goods, the goods must be ship out on timer for customer as confirmed

“+ Accounting Dept.:

» Money out — making payments and keeping the bills paid

» Money in — processing incoming payments

» Payroll — make sure everyone gets paid (including the government)

« Reporting — preparing financial reports, e.g P&L, Balance sheets and budgets

« Financial Controls — to avoid errors, fraud and theft

“* Knitting and Dyeing factory : making the fabric

3.3 ANALYSIS EXTERNAL BUSINESS ENVIRONMENT

3.3.1 Marco environment,

3.3.1.1 Economics:

Recent years, the world economic market is changing and changing lead

to difficult for firms and the needs for importing from oversea customer in garment is deducted Especiaily, the rising price on cotton fiber was year 2008 and lead to the price of garments were increased while the market is down

In additional, Viet Nam’s economic also is in difficult and have to face in

inflation, tight bank credit, high expenditure, etc These things effected to Huegatex business

Viet Nam joining TPP trade agreement, as the plan TPP agreement will

be effected in the middle of this year-2015.Why Viet Nam need to joint TPP?

TPP is a free trade and trade agreement set rules that allow us compete They

stop big countries pushing around little countries Why TPP is important? Free

trade gives consumers more choice and a broader range of goods and services to

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ee 2015 TO 2018

choose Free trade helped make possible the lifestyles we have become accustomed to It has helped diversify and deepen our economy But more than this, the links we develop through trade and investment with other countries support people to people cormection They give us a richer and more diverse society

Main chances for Viet Nam after joining TPP agreement:

1* — Viet Nam has more condition for exporting increasing in big

markets with 0%import TAX such as US market Japan And Japan removed import Tax for agricultural products in TPP Besides garment textile, shoes products, wood products and agricultural products will have more benefits Because these goods have high values when exporting to TPP countries

2" _ Join into TPP, it will help Viet Nam to get the balance in trade relationship with other countries For example: total import value in year 2013: China = 36,95 billion USD, Korea=20,7 billion USD, Taiwan = 9,42 billion

USD, Thailand = 6,31 billion USD, Singapore = 5,7 billion USD Total 79,1

billion USD and it takes 59,9% value imported of Viet Nam

Above chance also create more chances for HUEGATEX to export

goods to countries in TPP

However, to get special Tax from 17-32% to 0%, all garment companies

in Viet Nam must finish the'rules in TPP that “products must be produced from

fiber in TPP countries” This is big difficult for most of garment companies Because of most of the materials are imported from oversea And Huegatex is preparing human resources, equipment, material resources for TPP

Viet Nam’s economic is developing lead to the GPD increase These things lead to necessary neecs of human increase This needs created chances for many fields, many companies in whole country While expenditure needs increase clearly especial in garment- medium market and the local market is expanded High need is chance for companies to produce more and sell products

in the market

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Techniques in Viet Nam garment market is developing strongly However, most of companies are concentrated in sewing so the spinning, knitting/weaving market is very small But, with new strategy and active in supplying materials in next few years, technique in knitting/weaving market will develop and make advantage for oversea suppliers to joint into this market And Viet Nam has more chance to buy new techniques to serve for new changing

3.3.1.3 Social ,Cultural, Demographic, and Natural Environment

In Social, Cultural, Demographic and Natural Environment have

changing The government ‘pays more attention in education, especially have more training skill class for students and can get the job after graduating Or have more job center and export worker at oversea

Or opening more work fair, technologies and science fair at some big cities(Can Tho, Da Nang) pushing new market in developing the technology and science

Viet Nam Textile Garment is effected by popular in every area Because

its supplying the labor for garment companies and it also is main factor for garment needing But, the labor resource still do not adapt for garment needing

It is shortage the labor with high skill Local garment market still so small and have more chance for oversea company to take it instead of Viet Nam companies taking

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Written by Tam Truong Thí Bang Page 26

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3.3.1.4 Political, Governmental, and Legal

Political, Governmental, and Legal are safety and stable So it makes for all companies feel confident to invest in business

And have more improvement in document of the government official in

2a, some of divisions such as: get the certificate for investment, custom service,

Tax official

Especially, the, government has some special policies and benefit for Textile garment éompany such as expand the investment, decrease the import tax, and using import barrier to protect for local company that produce and using locally

However, when TPP agreement is done, companies have to face with

difficult when competence with import goods that have nice look, difference styles, high quality and low price

3.3.2 Micro environment

3.3.2.1 Hidden Competitive

There is difficulty need to improve that is Viet Nam Textile is very limit and lead to 80% material must be imported from oversea Lead to the price is

very high and very difficult to compete with oversea companies And most of

orders are under cut and make: The designs for new styles are not development,

low result Another hand, most of Viet Nam Textile Garment is medium and

small so the ability to attach the investment from oversea is very low and limit

in changing new techniques, and limit in PR and advertising its products

Labor shortage happen recently after every Lunar New Year at big cities And the relation between labor-salary does not get balance and let to have more strike in industrial zone that effected to producing and late shipment This also

is a weakness that needs to improve to push Viet Nam Textile Garment more and more developing

As the plan from Viet Nam Textile Garment Corp from 2015 to 2020 will produce more than 2,000 million metters greige and knitting fabric and export 1,800million metters fabric So to reach this target the Government

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FR gM 2015 TO 2018

always makes more chance for new textile garment companies such as: low capital, medium technical also can open small factory to attach the investment from oversea

These new companies have more advantage to invest and using new technical and will produce raore products with high quality and new styles, good price, good service and created more competitive for local market Especially, recently there are lots of small companies that produced goods that follow the need and market trend with low expense and low price,

About the export market, the biggest competitive is China and the next is India and Bangladesh The popular of these countries are crowded so they Lave advantage in low expense and low price

3.3.2.2 Competitors in same field

Textile Garment field is very competitive Most of companies have to bear many pressure in production and try to make or flexible to survive, and more grow up as this period: ‘est labor resources, expense for input is very high

Now, there is lots of company make business in garment field from small,

medium to big company anc these companies want to be expanded factory and developed in producing And it makes more local competitors beside oversea competitors such as China, India So we can divide two groups: local competitors and oversea competitors:

= Local competitors:

Knitting products is main items of Huegatex and the big competitor of Huegatex is Thanh Cong Textile Garment Joint Stock Company (TCG), Thang Loi Textile Garment Joint Stock Company(Vigatexco),Phuong Dong Garment Joint Stock

Company, Hanosimex These companies have advantages and disadvantages that made strong position in textile garment field Besides, there is lots of garment company with main and strong

products such as Nha Be company, Viet Tien company, May 10 company (Garco 10) and other private garment companies

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Written by Tam Truong Thi Bang

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