A strategic management of Masan Group in the food and beverages retail industry in Vietnam in 2020

A strategic management of Masan Group in the food and beverages retail industry in Vietnam in 2020 and propose the company strategies for both long and short term.

Contents

Company Overview: 2

PART I: EXTERNAL ANALYSIS 2

1 PESTLE 2

2 Five-force model of competiton 4

3 External Factor Evaluation (EFE) Matrix 6

OPPORTUNITY 6

THREATS 7

BUILD THE EFE MATRIX 8

PART 2: INTERNAL ANALYSIS 9

1 The key internal forces 9

2.Internal Factor Evaluation (IFE) Matrix 11

STRENGTH 11

WEAKNESS 12

BUILD THE IFE MATRIX 13

PART 3: SWOT MATRIX 14

MEASURE SWOT FACTORS 14

DECIDE STRATEGIES 14

PART 4: STRATEGIC IMPLEMENTATION AND EVALUATION 15

Company Overview:

Masan Consumer is named Masan Consumer Goods Joint Stock Company, operating as a subsidiary of Masan Consumer Holdings Co… Ltd of Masan Group

Established in 1996, as a manufacturer and distributor of food and beverage products, Masan Consumer has quickly maintained its position as an industry leader in the domestic market Up to now, the company's main product lines include:

 Food: instant noodles, instant cereals, fish sauce, chili sauce,…

 Bevareges: instant coffee, energy drinks, mineral water,…

Masan Consumer's brand value is valued at around $305 million, up 113% and is considered the company with the strongest percentage growth

PART I: EXTERNAL ANALYSIS

ANALYSIS THE KEY EXTERNAL FORCES

1 PESTLE

 Political forces

Regarding the administration of the Government,the Government has made many efforts in changing the principle of economic management - from the direct intervention mechanism to the operating mechanism indirectly by law, through the impact on the business environment The above situation has made the macroeconomic environment stable and favorable for the development of enterprises

The political stability and the consistency in policy opinion are large is the factor that attracts a large amount of foreign investment into Vietnam Stable politics bring foreign capital investment into businesses, businesses can rely on that capital to develop production and business, expand market share In short, political stability creates a lot of profits for business

 Economic forces

Vietnam is said to be one of the few countries that will continue to grow in

2020 The stability of the economy creates favorable conditions for the development of domestic economic sectors, including the consumer goods

industry to serve the increasing needs of the people and society

Gross domestic product (GDP) in the fourth quarter of 2020 was estimated

to increase by 4.48% over the same period last year The Covid-19 epidemic is strictly controlled, the economy gradually returns to normal activities In 2020, Vietnam continued to attract foreign investments despite international travel restrictions FDI disbursement reached USD 20.0 billion in 2020 representing a slight 2% decline After joining the WTO, opening up for Vietnam bigger playgrounds, more challenges, but also more opportunities It is this, which has a great impact on the areas of operation of Masan Food

In the fourth quarter of 2020, final consumption increased by 1.48% over the same period last year; exports of goods and services increased by 15.25%; imports of goods and services increased by 14.83% Vietnam's stock market has recovered quickly and strongly, among the top in the world Vietnam's stock market closed 2020 with an impressive recovery,

up approximately 15% compared to the end of 2019

 Social forces

Taste and trend: Vietnam is still a developing country, necessary

consumption demands still account for 50% of the total consumption structure and will continue to account for a significant percentage According to a number of investors in the food industry, Vietnam currently consumes a large amount of fast food

Regional differences: Vietnam has 3 regions: North-Central-South, each

has its own taste So that the demands of people all throughout the country can be addressed, product development is a difficult issue for the food industry

Lifestyle: Consumers prefer to consume things with quick usability

because of the frantic pace of today's Vietnamese people, their more modern lifestyles, and the fact that they work outside of normal business hours Meeting the needs of all types of enterprises will have a positive development trajectory and the potential to generate profits

 Technological forces

Modern science and technology used to manufacturing will assist businesses in lowering labor costs and speeding up output Businesses will also give quality items to consumers if they have a closed product quality control system Masan Consumer has invested $ 3 million in the construction of a world-class Product Research and Development (R&D) Center, making it one of Vietnam's largest food and beverage R&D centers Masan Consumer focuses on establishing powerful brands, and as

a result, several of its products have quickly risen to the top of their respective markets in the spice, convenience food, and coffee industries

 Environmental forces

Vietnam borders the Gulf of Thailand to the south, the Gulf of Tonkin and the East Sea to the east, China to the north, Laos and Cambodia to the west Thanks to the favorable geographical location of Vietnam, Masan easily communicates with partners nationwide as well as in polar regions around the world by land, water and air Vietnam also has rich natural resources and the tropical climate is very suitable for farming.Thereby making an abundant source of raw materials for processing for the consumer goods industry

 Legal forces

In the contemporary Vietnamese market economy, the legal system has become progressively perfect, creating a legal corridor for commercial operations and requiring firms to accept state regulation Simultaneously, the legal system promotes political stability, instills confidence in investors, and facilitates corporate operations

To protect consumers, the government has also passed a consumer protection law, a competition law, established a food safety and quality measurement department, Therefore, before implementing Implementing strategies to introduce new products, the company implements an extremely strict product quality control regime

2 Five-force model of competiton

 Power of supplier

The supplier offers raw materials for the manufacturing process, hence it has a significant impact on the company The quality and cost of the materials have an impact on the product's quality and pricing Masan

Consumer has a very positive relationship with its suppliers; the two parties work together and support one another, ensuring that the company's commercial activities are constantly steady and proactive Masan Consumer is continually on the lookout for low-cost suppliers in order to compete with other firms Masan has bargaining strength with suppliers as one of Vietnam's major companies, allowing it to obtain cost-effective rates

 Direct competitiors

According to experts in consumer goods, this is a rather fierce market There are too many companies participating in this market, such as: Kalbin Fish Sauce, Ong Tay Fish Sauce, Vina Acebook Vietnam Joint Stock Company, Asiafoods Food Joint Stock Company, Cholimex Food Joint Stock Company

 Power of consumer

Masan Consumer's customers include both end-consumers and intermediaries Currently, the Company is applying exclusive distribution,

so there is very little price competition, products in different regions always have the same price and that price is determined by the company With the launch of many products in many different segments, Masan Consumer has exposed many types of customers with different incomes Masan, on the other hand, is constantly required to implement client retention and care programs Consumers can abandon their products at any time and move to those of competitors This is a persistent strain on the business that never goes away, requiring it to constantly develop

 Potential of new competitors

Because of the peculiarities of the FMCG business, there is a considerable danger of new competitors joining the market Customers have more options for newer products because of low-cost products of equal quality Despite the fact that Masan Consumer is a significant manufacturer with extensive industry knowledge, it must be mindful of these competitors

 Potential of substitute

Masan Consumer sells instant noodles, oatmeal, fish sauce, soy sauce, and chili sauce, among other things Masan is up against a slew of replacement

products in addition to quality and price concerns Consumer demand is growing, and they desire good and quick meals As a result, coupled with the emergence of fast food, street food ascended to the throne Bread, porridge, and pho, bread, vermicelli, vermicelli….bring consumers rich flavors, and suit each region's taste

3 External Factor Evaluation (EFE) Matrix

OPPORTUNITY

O1 Large market capacity, high growth potential

With a population of over 86 million people, the average economic growth rate

is about 7.5% / year A World Bank statistic shows that household consumption

in Vietnam is equal to 63% of the country’s GDP Thanks to the population structure it is among the youngest in the world, with 56% of the population under 30 years of age Total consumer spending in Vietnam is expected to double and reach approximately 173 billion USD by 2020

O2 Integration brings many opportunities to expand the market

In addition to the great opportunities in the domestic market, Vietnam’s participation in the ASEAN free trade area and becoming a member of the WTO has boosted exports in general and exports of agricultural products and processed foods in particular The integration process has a huge impact on the food industry businesses The food industry has expanded international cooperation, multilateralization and diversification of cooperation with foreign countries

O3 The people’s consumption demand for processed food is increasingly large and diverse

The habit of using foods processed from milk, cooking oil, soft drinks, … has been formed and increasingly developed Consumer demand for processed foods

is growing and diversified Therefore, this is also an opportunity to stimulate the development of Vietnam’s food processing industry

O4 The support of government

Because Masan Consumer produces consumer goods, which are essential items

of people’s lives, they receive support from government agencies especially in the especially in the context of the covid 19 epidemic, Reducing value-added tax

to 5%, personal income tax exemption and reduction, corporate income tax exemption and reduction, delaying tax payment time… are proposals related to tax policies to support businesses to helping businesses reduce cash flow pressure in the current difficult context

O5 Vietnamese people tend to use more domestic goods

Vietnamese consumers prefer to use domestic products because it is cheaper and the taste is more suitable for them than imported goods

O6 Being supported by customers

Being a brand developed over many years, Masan Consumer is a strong brand, winning the trust of consumers in Vietnam Masan also regularly organizes many promotions to thank customers

THREATS

T1 High competition

Currently, consumer goods and beverage products (fish sauce, instant noodles, instant coffee…) are subject to fierce competition from domestic and foreign enterprises such as Vina Acecook, Asia, Micoem, Trung Nguyen, Trung Thanh, Tan Hiep Phat

In addition, in the chaotic life, people have to work overtime, they don't have too much time to cook, so they choose dishes such as pho, bread in the canteen or sidewalk restaurants, Pressure from substitute products is also a challenge for masan consumers

T2 Demand for food safety increases

Food safety and hygiene is a problem of the whole society, this is also a big challenge for the company, they need to take measures to check the supply of raw materials and product quality after production is complete Do not let production expansion quickly affect product quality

Masan always have to improve product quality to meet the regulations on food hygiene and safety and protect the health of consumers The information related

to health has a great impact on consumers’ psychology so issues related to authentic hygiene and safety will be a strictly controlled issue

T3 Responsibility to protect the social environment increases rapidly

Masan Consumer needs more machines and equipment to treat waste after production, not to affect the living environment of the community

T4 Prices fluctuate in the direction of sharp increase

Increasing inflation makes commodity prices also increase, Masan Consumer needs to take measures so that when the price increases, the quality must also

increase

T5 Differences in taste, consumption culture

Vietnam is divided into three regions: north, central, and south, each with its own distinct flavor Product creation is a difficult issue for the food business to

overcome in order to meet the demands of people all throughout the country

BUILD THE EFE MATRIX

Opportunities

O1 Large market capacity, high growth

potential

O2 Integration brings many opportunities to

expand the market

O3 The people's consumption demand for

processed food is increasingly large and diverse

O4 The support of government (Policy to

reduce corporate income tax, delaying tax payment time)

O5 Vietnamese people tend to use

more domestic goods

O6 Being supported by customers 0.05 2 0.1

Threats

T2 Demand for food safety increases 0.12 3 0.36 T3 Responsibility to protect the social

environment increases rapidly

T4 Prices fluctuate in the direction of sharp

increase

T5 Differences in taste, consumption

culture

Assessments: Masan Consumer's total score of 3.34 indicates that company is

very responsive, far exceeding the industry norm in terms of pursuing initiatives

to capitalize on environmental opportunities Masan Consumer, on the other hand, requires better procedures to respond to each recognized threat

PART 2: INTERNAL ANALYSIS

1 The key internal forces

 Marketing development

Masan, the leading consumer goods company in Vietnam, also prioritizes promoting marketing activities to be able to compete more effectively with foreign brands From the very first days of its establishment, Masan has determined that the most important strategy is to build a strong brand

Masan has pioneered in branding for condiments and everyday consumer food products Masan currently owns a list of brands with sales of over VND 500 billion: In the condiments industry, there are Chin-su soy sauce, Tam Thai Tu and Nam Ngu fish sauce; In the convenience food industry, there are Omachi and Kokomi noodles and in the beverage sector, there are Vinacafe, Wake-Up coffee and Wake-Up 247 energy drink However, there are also many rumors about masan products that have caused loss to consumers and how to prevent such rumors is the task of the marketing team

In 2021, Masan Consumer expectd to launch about 50 new inventions serving buyers

 Finance function

Masan Consumer marked an important milestone when net revenue reached $1 billion for the first time in 2020 Masan Consumer’s net revenue and EBITDA grew by 27.2% and 22.4%, respectively compared

to 2019 Masan Consumer’s growth reached more than 20% for 4 consecutive quarters thanks to its ability to innovate and invest in brands

New innovations contribute 43% to Masan Consumer’s revenue growth in

2020

Inventory Turnover 20.0984

Total Assets Turnover 0.9976

Accounts Receivable Turnover 72.9252

Return on Total Assets (ROA) 19.0966%

Masan Consumer has excellent inventory management and debt recovery capabilities (Inventory Turnover = 20.0984; Accounts Receivable Turnover = 72.9252) Liquity and profitability are both high ( quick ratio

= 0.72; ROA = 19.0966%; ROE = 29.4781%)

 Human resources

Masan always offers attractive remuneration and working environment to attract and retain talents Salary is higher than the average Rated as one of the Top 100 enterprises with the best working environment in Vietnam

2016 (According to Anphabe and Nielsen), Masan is the desired workplace of many people

 Operation and Cutural Environment

Principle of operation

" Converging and nurturing aspirations & talents to seek breakthroughs to enhance the benefits of products and services for customers Therefore, customers will reward us with leading sales and profits and sustainable growth."

Operating principles Masan Consumer

Builds people with 4 qualities: Talent and creativity - Leadership qualities

Work mastery - Integrity and transparency

Thereby, all activities of Masan Consumer adhere to 6 principles: