Analyzing the internal environment of the Nafoods Group

Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group Analyzing the internal environment of the Nafoods Group

Chapter II: Introduction of Nafoods Group 10

1.Overview of Nafoods Group 10

Objectives, vision and mission 12

Chapter III: Resources and capabilities of the Nafoods group 13

1 Resources of Nafoods Group 13

1.2.1 Resources for skills 15

1.2.2 Resources for innovation 15

1.2.3 Reputation, position 15

2 The capacity of the Nafoods Group 16

3 Nafoods' core competencies in the market 17

3.1 Valued 17

3.2 Rarely 18

3.3 Hard to imitate and irreplaceable 20

3.4 Can be exploited 20

Chapter IV Competitive advantages of Nafoods 21

1 Identify the competitive advantage of Nafoods 21

2 Factors affecting competitive advantage of Nafoods 22

A Introduction

In the period of economic integration and development, competition is an important factor to decide the success or failure of an enterprise, it is also the driving force for that business to grow Therefore, improving their competitiveness is something that businesses must always strive to

achieve In addition to broadening their horizons to detect each threat and seek opportunities, strategicmanagers must evaluate the strengths and weaknesses within their organizations As with external opportunities and threats, an awareness of internal strengths and weaknesses has practical implicationsfor knowing which corporate goals and strategies are viable Usually, the process of analyzing the internal environment begins with identifying and evaluating the resources and capabilities of the business This is the basis for strategic managers to identify the core competencies of the business These core competencies are the foundation of the company's development strategy as well as

building competitive advantages

Vietnam is a country with dominant agriculture and that is an important area for the development

of our country Besides, Vietnam is a country located in the tropical monsoon region - favorable conditions for growing and developing tropical plants As of 2011, our country has 832,000 ha of fruittree land with a variety of fruits with high nutritional quality, annual output of 7-8 million tons, one ofthe countries with growing area Large fruit trees in the area Taking advantage of this advantage of Vietnam, Nafoods Group, with more than 20 years of construction and development, has always strived to accompany Vietnam's agriculture Nafoods Group is steadfast in its goal of becoming the leading economic group in Vietnam and Asia in the field of green agricultural value chain production,competing globally with a professional, sustainable, and closed development strategy from seeding, planting, tending, processing, exporting and distributing - retailing to consumers

To learn more about the above problem, we researched on the topic: "Analyzing the internal environment of the Nafoods Group" to better understand the resources and capabilities of the

business From there, we learned about the core competencies of Nafoods Group Through that core competencies, we will know the competitive advantages of enterprises in order to capture strengths sothat enterprises can apply development strategies suitable to their capabilities and current situation

Chapter I Theoretical basis

1 Resources

1.1 Concept

Resources are the inputs to the production process of a business organization, including factors such as capital, employee skills, brand monopoly, finance and management capacity Moreover, resources also include individual, social and collective factors

1.2 Classify

Each business will have its own tangible and intangible resources:

• Tangible resources: assets that we can see and quantify, including 4 groups:

- Financial resources: Equity; loans; ability to create corporate internal funds

- Physical resources: The sophistication of the equipment or the plant location; control over raw materials

- Human resources: Training, experience, judgment, intelligence, wisdom, adaptability, industrial devotion and the loyalty of individual managers and employees

- Organizational resources: Structure of official reports, plans, inspection and supervision system, organizational system

• Intangible resources: invisible and quantifiable resources, divided into 3 groups:

- Skilled resources: Patents, trademarks, copyrights or business know-how

Resources for innovation: Technical and skilled labor

- Reputation: Reputation with customers: brand, the acceptance of product quality, durability and reliability; reputation with suppliers

• Capacity builds on the complex interactions of tangible and intangible resources

• Capacity based on the development, collection and exchange of information and knowledge through human resources in the enterprise

3 Core competencies

3.1 Concepts and meanings.

Concept: Core competencies or core competencies are the foundation for all competitive

strategies It refers to a company's expertise or skills in key areas that directly deliver high

performance

Meaning:

Core competencies reflect the company's competitiveness and distinctive qualities

Core competencies are formed over time through learning, systematically and organized accumulation

of how different resources and capacities are exploited

3.2 Characteristic standards of core competencies

The core competencies of the business must ensure at the same time 4 standards: valuable, rare, difficult to imitate and irreplaceable

Valuable capacity

Valuable competencies are those that can generate profits for a company by taking advantage of opportunities and neutralizing challenges from the outside environment → Helping a business

neutralize threats as well like an opportunity from the outside

Competencies are rare

Rare features are capabilities that very few businesses have

Competencies that too many businesses own are not considered the competitive advantage of anybusiness Instead, valuable but not uncommon resources and capabilities will be the basis for perfect competition At that time, competitive advantage is due to the development and exploitation of capabilities that other businesses do not have

Competencies are hard to be imitated

Competence that is hard to be imitated is a criterion for judging whether or not competencies are core competencies? It is an advantage if our competitors cannot imitate or if we do, it will be very expensive financially, take a lot of time

Conversely, a competency will not be considered a core competency of an enterprise if it is easy for competitors to copy

Capacity cannot be replaced

Irreplaceable capacities are competencies that do not have a resource or other competencies of equivalent value

Two valuable resources of the business are assessed as equivalent when each resource itself, when used separately, still creates the same strategy

4 Competitive advantage

4.1 Concept

Competitive advantage is what makes a business stand out, while other competitors don't As a result, businesses will perform better than other businesses This is the factor that helps the company become successful and long-lasting, different from its competitors

4.2 Types of competitive advantage

According to M Porter, there are 3 competitive advantages as follows:

Low cost advantage: when businesses provide similar products / services at lower prices than their competitors

Differentiation advantages: when businesses provide different products / services compared to competitors

The advantage of centralization: Requires businesses to focus on the process of responding to a narrow and exclusive competitive segment to gain a local competitive advantage rather than in the whole market big

4.3 Factors that create competitive advantages

Outstanding performance:

Concept: Efficiency is measured by the number of inputs required to produce a unit of product output

= Output / Input

Impact: Efficiency means higher productivity and lower cost Outstanding performance helps

businesses gain a competitive edge through reducing cost structures

How to achieve outstanding performance:

+ Take advantage of economies of scale

+ Make use of the road to influence learning

+ Take advantage of the experience curve

Flexible production systems and planning

+ Management of input materials

+ Focus on R&D strategies, human resource management, information system management and infrastructure management

Outstanding quality:

Concept: Outstanding product quality is assessed based on two attributes:

High reliability: Performs all functions designed and durable

Excellent: Perception by the customer is excellent

- Affect competitive advantage:

+ Products of outstanding quality are capable of differentiating and increasing the value of products according to customer reviews

+ Eliminating product defects helps to avoid waste, increases efficiency and thus reduces cost

structure, making profits increase

- How to achieve outstanding quality:

Outstanding innovation

Satisfy customers with

Low cost Differenti ation

Outstanding quality

+ Increase the quality of outstanding products based on reliability: apply quality standards such as 6 Sigma, TQM, ISO

+ Increase the quality of the product based on excellence: Research which product attributes are most important to the customer; Design Sp comes with a service to highlight the most important

attribute;

Outstanding innovation:

Concept: Innovation is the activity of creating a new product or process

- Affect:

+ Create products that can satisfy customers better

+ Improve the quality of existing products

+ Build skills in basic and applied research

+ Select project and conduct management

+ Consolidation of functional areas

Use product development teams

+ Develop parallel complementary processes

Outstanding customer satisfaction

- Concept: Outstanding customer satisfaction means identifying and satisfying customers' needs betterthan competitors

- How to satisfy customers:

Innovation and outstanding quality are indispensable to be able to

satisfying customers

+ Customers goods products / services according to special needs

of individual or institutional customers

+ Can enhance customer response through response time

response, design method, after-sale service, customer support

→ Outstanding customer satisfaction creates differentiation for the products / services of the business,thereby creating the customer's loyalty to the brand and the business can achieve the optimal price

5 Value chain

5.1 Concept

A value chain is a set of activities with vertical links to create and add value to customers

The value chain includes 9 activities related to the value creation strategy for customers,

including:

- 5 main activities: input supply, production process, product distribution, marketing- sales, service

- 4 support activities: general management, human resource management, technology development, purchasing activities

5.2 Value chain model (M Porter).

M Porter has identified 5 basic activities in the value chain of enterprises, including: Input logistics, operation, output logistics, marketing-sales, services; and supporting activities including: infrastructure, resource management, technology development and procurement

Content of activities in the value chain of the enterprise:

- Logistics inputs: Raw materials will be received from the suppliers of the business and preserved and stored until they are put into the production process

- Production: Raw materials are put into the production exploitation or assembly process Single activities can be hotel room service, book / video packaging of online retailers, etc

- Logistics output: complete production, finished products stored, packed and transported to the distribution system

- Marketing and sales: to provide products and services according to the needs of the target customers

of the business through brand positioning, forms of advertising,

- Service: to provide after-sale services and auxiliary services to customers through installation, inquiry service, training, guidance,

Infrastructure: often supports the entire value chain, not just any single activity including general administration, planning, finance, accounting, legislation,

- Technology development: including product manufacturing technology, online marketing activities, production efforts, in order to reduce costs, protect and maintain the competitive advantage of enterprises

- Human resource management: To ensure that businesses have a sufficiently skilled workforce to carry out effective value-creating activities

- Purchasing management: ensuring the payment of raw materials, services and other physical means

to ensure the lowest possible price for the payments to get the highest level of quality available can

Chapter II: Introduction of Nafoods Group

1.Overview of Nafoods Group

On August 26, 1995, Thanh Vinh Limited Liability Company - the forerunner of Nafoods Group JointStock Company was established

Twenty-five years of establishment and development, from the desire to be a business in fresh water, Thanh Vinh Limited Liability Company has grown to become the leading enterprise in

Vietnam in processing and exporting products frozen fruit juices, fruits and vegetables, dried fruit, nuts and fresh fruits; widely known in domestic and foreign markets as Nafoods Group Joint Stock Company (Nafoods)

With the main business field of production, export and distribution of products for fruit juices and vegetables Nafoods specializes in fruit juices / NFC, puree, concentrates, IQF and fresh fruit It is one

of the pioneering groups to develop green and sustainable agricultural value chains, providing the world with natural, safe agricultural products and providing a good life for everyone

Since 1998, faced with fierce competition from foreign brands such as Pepsi, Coca Cola, the company has turned to agricultural products with the establishment of a vegetable and fruit processingfactory in Vietnam Nghe An province (2003)

Experiencing many difficulties with the development of pineapple products, by 2009, the company developed passion fruit juice The product has brought great success to the company in both domestic and export markets Since then, the company continuously develops product lines and expands the market scale, invests in production line technology

On June 29, 2010, the company changed to joint stock company operation model, renamed to Choa Viet Food Joint Stock Company After that, the company was renamed to Nafoods Group JSC With the successes achieved, in 2019, the company successfully called for 8 million USD of investment capital in preferred shares from IFC - a member of the World Bank and nearly 500,000 USD of capital investment in stocks Endurance Capital Vietnam I Limited - in order to improve fruit processing capacity, expand export markets and further develop the new fruit seed business Besides,

in 2019, Nafoods marked success in the field of passion fruit seed production when it was the first company in Vietnam to be granted the right to protect 03 varieties of passion fruit under the Nafoods brand: Dai Nong1, Que Phong 1 and Bach Huong 1

From the end of 2019, Nafoods officially tested e-commerce retail in the domestic market After months of product introduction, actively surveying customer responses, we realize that this is a very potential market Nafoods is constantly exploring to diversify products, providing domestic customerswith natural products with high quality and intact nutritional value

Up to now, Nafoods accounts for more than 80% of concentrated passion fruit juice produced in Vietnam with a raw material area of nearly 50,000 ha stretching across regions and neighboring countries In the international arena, Nafoods Group's passion fruit products have conquered the most

demanding markets such as Europe, America, Japan, Korea, Australia providing about 8% of the concentrated passion fruit output is the world and the largest supplier of passion fruit concentrate in Asia.

2.Objective, vision, mission

2.1 Target:

Nafoods Group aims to reach more than 2,300 billion in revenue by 2022; gross profit margin more than 25%, EBITDA rate (profit before tax, interest and depreciation) more than 15%, profit after tax rate is more than 10%, ROE (return on equity) more than 25 %; has more than 1,000 quality

customers, with 70% of direct sales; control 50% of raw materials throughout Vietnam for 5 key fruits; 5 main warehouses and more than 100 technical transfer points / seed selling agents

nationwide

In addition to the goal of profitability and efficiency, businesses also focus on investing resources in R&D and application of IoT as the core technology needed in the near future, which is sustainable agricultural development under variable conditions Climate and agricultural land are increasingly narrowed

Nafoods aims to apply digitalization comprehensively in the coming time

The Group sets sustainable development goals with the development of safe products; ensure the working environment and the interests of employees; environmental Protection; supporting

community development and local economic development

2.2 Vision

Nafoods is a pioneer group in developing digital, green and sustainable agricultural value chains

2.3 Mission

Provide the world with natural, safe agricultural products and bring a good life to everyone, especially farmers

Chapter III: The resources and capabilities of the Nafoods corporation

1 Resources of the Nafoods Group

IFC's investment helps Nafoods expand the number of farmers involved in the company's cold chain

in line with them receiving the widely recognized ISO: 22000 Food Safety System in the world.

In addition, IFC's investment and technical advice has greatly supported Nafoods in its efforts to increase the value of its products by applying the principles of safe, sustainable agricultural practices and improve production facilities That helps Nafoods dominate over prominent competitors such as AFIEX, Quang Ngai Agro-Food Joint Stock Company, and Nam Dinh Export Agricultural Food Processing Joint Stock Company when they have no breakthrough in developing and supplying new products to the market

1.1.2 Physical resources

- With the goal of expanding the material area including 30% exclusive material areas, 50% from subsidiaries and branches and the rest from cooperative farmers, the company has cooperated with local authorities an important raw material area in Vietnam, expanding Southeast Asian regions and investing heavily in R&D for seedlings to develop raw materials

- Regarding agricultural product procurement: Nafoods raw materials are collected from monopolisticfarms and contract manufacturers, with about 70% of raw materials coming from smallholder farmers

or ethnic minorities

- Regarding the technological process: in order to reduce production costs, including transporting, minimizing and handling post-harvest damage to fresh produce, the Nafoods Group has developed its processing factories close to supply of raw materials Home processing machines in Nghe An and Long An are convenient from all directions of Vietnam, Laos and Cambodia

Currently, Nafoods has a system of modern factories in many localities across the country Typical examples are Naprod Nghe An Factory, Que Phong seedling factory, Nasoco Long An factory, and Northwest preliminary processing factory

1.1.3 Human resources

The company determines that human resources are one of the most important assets, contributing

to creating a competitive advantage for businesses Therefore, resource development is paid much attention by Nafoods through organizing training courses on skills, knowledge and especially attitudes

to ensure quantity, quality suitable for work and inheritance

Previously, Nafoods applied human resource management according to the traditional method, the salary and bonus system did not clearly reflect the capacity and results, so the group implemented

a new way: innovative application of BSC & KPI; Clear income policy 3P for the whole organization;Talent management system and inheritance team to develop Nafoods value; internal pricing system for efficient operation of the profit centers

With effective human resources, including many domestic and international experts, with a deep understanding of the agricultural activities of Vietnam and the world, Nafoods has boldly integrated information technology (IoT - Internet of Things) into the garden management and control system, building a centralized database, developing agent and customer management applications; step by stepmodernize agricultural activities, asymptotic to smart digital agriculture

1.1.4 Organizational resources

At factories, the Group strictly applies quality management standards, effectively and rationally controls food hygiene and safety Especially, Long An factory complex quickly completed the quality management system shortly after its inauguration, achieving international standards and passing strict assessment of customers; Rearranging production planning and raw materials, focusing on centralizedcontrol, to ensure fast, efficient communication and control of the entire chain

As of June 30, 2019, Nafoods Group had 4 subsidiaries: Nafoods Lime Joint Stock Company, Southern Nafoods Joint Stock Company, International One Member Limited Company, Tay Nguyen Nafoods Joint Stock Company and linked with 3 companies: JSC Que Phong Pharmaceutical JSC, La Giang Agriculture Joint Stock Company, Tay Bac Nafoods Joint Stock Company

1.2 Intangible resources

1.2.1 Resources for skills

In 2013, Nafoods Group invested in additional IQF product production lines, diversified productsand expanded export markets

In 2019, Nafoods is the first and only enterprise in Vietnam to create 3 varieties of passion fruit certified and protected by the Ministry of Agriculture and Rural Development, including Nafoods 1, Que Phong 1 and Bach Huong first

1.2.2 Resources for innovation

Nafoods Group focuses on training skills, knowledge, especially attitude The Group has trained 1,467 people with 5,205 hours of training In particular, the outstanding training programs such as: Responsible cultural training and not blame internally; Training on ISO standards, PRP regulations, hazards affecting product quality at factories, The program content is selectively suitable for each object to help employees increasingly improve their skills perfecting themselves to meet the

production and business requirements of the company in the 4.0 era

1.2.3 Reputation, position

Nafoods Group is one of the most innovative vegetable growing, processing and exporting groups in Vietnam, specializing in fruit juices / NFC, pureed, concentrated, IQF and fresh fruit, produced on-line advanced and modern technology line with strict quality requirements, ensuring international standards such as BRC, ISO 22000: 2500, HACCP, SGF

In Vietnam, Nafoods Group is a pioneer and leader in the production of concentrated passion fruitjuice Currently, the Company accounts for more than 80% of the concentrated passion fruit juice produced in Vietnam with a raw material area of nearly 50,000 ha spread across regions and

neighboring countries

In the international arena, Nafoods Group's passion fruit products have conquered the most

demanding markets such as Europe, the US, Japan, Korea, Australia The company provides about 8% of the output of coarse passion fruit concentrate in the world and is Asia's largest supplier of concentrated passion fruit

As the only unit in Vietnam successfully producing disease-free Dai Nong 1 passion fruit seedlings on

a large scale, Nafoods Group owns a large-scale seed institute with a capacity of 6 million seedlings / year, Nafoods Group is proud to be The only unit in Vietnam successfully produced disease-resistant Dai Nong 1 passion fruit seedlings on a large scale, supplying large areas of passion fruit material in Vietnam, Cambodia and Laos

Nafoods Group is also honored to receive international certifications such as GLOBAL GAP,

Rainforest Alliance and Fair Trade, being one of 50 enterprises awarded the title "Enterprise for farmers" by the Ministry of Agriculture and Rural Development

In 2016 and 2017, Nafoods Group is honored to be one of 100 businesses selected as a sustainable development enterprise in Vietnam.

2 The capacity of the Nafoods Group

Management capacity:

Towards the goal of sustainable development, the managers of Nafoods Group are constantly

learning, exploring, developing and diversifying the product industry According to experience from developed countries, in order to develop safe agricultural production in the value chain, the

application of S&T is an inevitable trend With that in mind, Nafoods management actively developedhi-tech agriculture, helping to create a breakthrough to improve productivity, quality and product competitiveness At the same time, actively promote the media, come up with effective strategies that are strong enough to enhance competitiveness

Putting food safety as the top principle, Nafoods leaders are always strict in management and quality control operating according to international standards

The company defines human resources as one of the most important assets, contributing to a

competitive advantage Therefore, development of employees and employees is always focused through the organization of skills, knowledge and attitude training Nafoods has every day perfecting and building a corporate culture with its own identity, creating a solid and civilized foundation, committed to ensuring all the interests of employees in the company Workers are guaranteed all rights that are regulated by law, respected, developed, recognized and adequately compensated.Regarding environmental protection, Nafoods Group is always aware that any cultivation and

production activities have impacts on the surrounding environment Therefore, all solutions are aimed

at the main purposes: effectively using inputs (materials, energy, water sources) and controlling output factors to minimize the impact on the environment

In addition, Nafoods always strives to participate more broadly and deeply in community support programs and strives to build Nghe An homeland more and more beautiful and civilized In all its activities, Nafoods aims to combine the company's development with the general development of the local and national economy

Production capacity:

 Raw material area:

The material area of Nafoods Group stretches from the Northwest, Central provinces, the Central Highlands provinces, and the Mekong River Delta region Nafoods GROUP system has been working with farmers, cooperatives and partners in all three regions of North, Central, and South and some major partners in Laos and Cambodia

 Production facilities:

Fruit and vegetable processing factory for export in Quynh Chau, Quynh Luu, Nghe An Capacity: 5,000 tons of product / year of concentration line and 2,900 tons of IQF of product / year.

Export vegetable and fruit processing factory at Hoc Thom 1 hamlet, Hoa Khanh Tay commune, Duc Hoa district, Long An province Capacity: Concentration Line 7,500 tons / year and IQF Line 5,000 tons / year

Plant producing passion fruit juice in Pleiku City - Gia Lai Capacity 150 tons of fluid / month Nursery garden with a scale of 5 ha, capacity of 6 million seedlings / year, in Tri Le commune, Que Phong, Nghe An And a number of production and processing facilities are outsourced by Nafoods Group

Human capacity:

 For employees and employees: At Nafoods, well aware of the importance of employee development in terms of building an effective and positive working environment, Nafoods spends a large part of its budget on Annual employee training activities through internal and external training programs The Group wants to create the best opportunities and conditions for its employees to improve their knowledge, develop themselves and contribute to the development of the company and the community

 For partners and experts: Nafoods cooperates with many domestic and international experts with a deep understanding of Vietnam's agricultural activities Thereby, Nafoods receives investment and technical advice as well as other supports that play an important role for the development and create a competitive advantage for businesses

3 The core competencies of Nafoods in the market

Apply VRINE rules:

3.1 Valuable

During its business operation, Nafoods Group relies on Vietnam's strengths in tropical fruits and agricultural products to develop its product portfolio The diversified product portfolio is divided into four main groups: concentrated juice, juice / NFC / Puree, fresh fruit and seedling (passion fruit) While the majority of Vietnamese agricultural products are traded on both domestic and export markets in fresh, unprocessed form and at low prices due to poor quality compared to other countries While the prominent competitors of Nafoods such as AFIEX, Lafooco, have no breakthroughs in the development and supply of new products in the market, the investment and IFC's technical consultant has greatly supported Nafoods in enhancing the value of their products by applying the principles of safe, sustainable agricultural practices and improving production facilities The Group'sincreased production capacity will enable more opportunities for local farmers to increase income andmeet the market requirements of high value export markets