Industry analysis of Coca Cola in Viet Nam

Coca cola- business environment in Viet Nam:...5 Figure 1: Contribution and value growth of several groups in the FMCG industry...5 Figure 2: Growth of business environment of Coca-Cola

Table of Contents

1 Introduction to Coca-Cola Vietnam: 3

2 Coca cola- business environment in Viet Nam: 5

Figure 1: Contribution and value growth of several groups in the FMCG industry 5

Figure 2: Growth of business environment of Coca-Cola in Vietnam 6

3 Analysis of 2 competitors of Coca-Cola: 9

A, PepsiCo: 9

B, Big Cola: 9

4 Business functions of Coca-Cola in Vietnam: 13

Figure 3: Organizational chart of Coca-Cola 14

5 Conclusion: 17

Executive summary

Coca-Cola has ascended to the pinnacle of the drink industry Coca-Cola is expanding its marketplace part in Vietnam and swiftly becoming a popular beverage among both young and old people In order to build an efficient business plan, it is necessary to do research about the industry and the company The influence of the macro-environment on the development of the business does not end there; the functioning of the company's departments, referred to as the internal environment, is equally critical

The primary section provides an overview of Vietnam's sub-sectors (community, private, and volunteer), as well as the market size and growth of Vietnam's foreign company, with a focus on the Coca-Cola Vietnam sector

To establish the brand's position, it must be compared to competitors, most notably Pepsico and Coca-Cola.

Finally, because the smooth running of a company's internal apparatus influences its performance, an investigation of Coca-Cola Vietnam is necessary to explain how internal departments operate and how interrelationships are formed by the organization's structure.

Coca-Cola currently operates on a functional basis In this organizational structure, organization operations are organized into functions, and each function will have a particular task A functional structural construction approach benefits Coca-Cola Vietnam, however there are certain limitations

1 Introduction to Coca-Cola Vietnam:

Coca-Cola is the most popular soft drink brand in the world Produced by the Coca-ColaCompany, it is sold in more than 200 countries and is often referred to simply as Coke.Around the world, Coca-Cola operates in 5 regions which are North America, Latin America,Europe, Eurasia & Middle East, Asia, Africa Its flagship product is carbonated beverages,but the company also manufactures non-carbonated beverages such as bottled water, juice,and energy drinks In 1886, pharmacist John Stith Pemberton created a milk syrup and sold it

to the largest pharmacy store in Atlanta But, after just 5 years in the syrup business, withonly nine goods sold each day, he died in 1888 Coca-Cola was first introduced in Vietnam in

1960 and has been back since 1994 after the US lifted the trade embargo The first jointventure between Coca-Cola Indochina and Vinafimex was established, headquartered in theNorth Joint ventures in Da Nang and Hanoi also changed to a similar form of ownership.Coca-Cola is one of the global firms that has made significant contributions in Vietnam, asevidenced by particular metrics published by PwC for the period 2016–2018 Customers ofCoca-Cola in the Vietnam market are young people or households This can be seen in the

ads of Coca-Cola; they deliver the right inspirational messages For example, Coca Zero will

be suitable for adults in the family because the elderly often doesn’t tend to eat too manysweets, and for the young, on the contrary, they always want to find new and fancy things.Each year Coca-Cola Vietnam contributes an average of 3,500 billion VND to the nationalGDP, equivalent to about 0.11% of the country's GDP The company has created 80,076 jobs

on average annually, of which 2,370 occupations are created from direct activities ofenterprises, with a payment of 2,400 billion VND in salary, bonus, and welfare foremployees, 77,706 indirect jobs made from the source chain (Staff, 2019) From there, wecan see that Vietnam is one of the countries with potential markets for Coca-Cola to operate.There are four types of legal structures:

- Sole Proprietorship: "A sole proprietorship—also referred to as a sole trader or aproprietorship—is an unincorporated business that has just one owner who pays personalincome tax on profits earned from the business." (TWIN, 2021)

- General partnership: '' is a business arrangement by which two or more individuals share inall assets, profits, and financial and legal liabilities of a jointly-owned business In a generalpartnership, partners agree to unlimited liability, meaning liability is not capped and can bepaid through the seizure of an owner's assets Furthermore, any partner may be sued for thebusiness's debts." (BLOOMENTHAL, 2020)

- Limited liability: '' is a type of legal structure for an organization where a corporate loss willnot exceed the amount invested in a partnership or limited liability company (LLC) In otherwords, savers' and owners' private assets are not at risk if the company fails.''(HAYES, 2021)

- Corporation: ''is an independent legal entity owned by shareholders, in which theshareholders decide on how the company is run and who manages it.'' (Kunz, 2019)

In short, the legal structure of Coca-Cola is a private limited liability company In terms ofscale, this is a for-profit organization

2 Coca cola- business environment in Viet Nam:

Figure 1: Contribution and value growth of several groups in the

FMCG industry.

Source: Nielsen Vietnam

Strong economic growth, rapid urbanization, and a burgeoning middle class are driving thebeverage business in Vietnam The Vietnamese market offers opportunities for internationalplayers to expand their reach

Industry players are banking on both organic and inorganic growth strategies to strengthen theirfoothold in the market However, the current challenges are mainly related to strong competitionfrom other beverages that are cheaper or more popular than soft drinks or beer due to the

prevailing cultural preference for fresh fruit juices Vietnam is a market with high potential forfood and beverage consumption In the first nine months of 2018, the consumption index fornourishment dispensation then drink industrial climbed by 8.1 percent and 10.2 percent,respectively, over the same time previous year (according to GSO) In terms of prospectivegrowth, the food and beverage industry presently accounts for around 15% of GDP and isexpected to rise in the future Furthermore, with a rising share of the youthful population (it isestimated that more than half of Vietnam's population is under 30 years old), income levels haveincreased, and the habit of shopping for ready-to-eat food is becoming increasingly popular Theabundance of agricultural products - the source of raw materials for food and beverageprocessing activities benefits businesses in the industry by allowing them to diversify productcategories in order to meet the constantly changing needs of consumers, and these favorableconditions contribute to Vietnam becoming a potential food and beverage market in the region.The three fastest-growing groups in the FMCG (fast-moving consumer goods) business are beer,non-alcoholic drinks, and food (Ministry of industry and trade, 2018)

However, Coca-aim Cola's is to innovate and make a difference in the world Coca-Cola createsbrands and beverages that people love and inspires both physically and mentally whiledeveloping sustainable brands for a better-shared future In detail, they have 12 brands and 8main drinks in Vietnam For example: Sprite, Fanta, Dasani,

Figure 2: Growth of business environment of Coca-Cola in Vietnam

Source: Vietnambiz

According to Figure 2, In recent years, Coca-income Cola's has consistently increased bytrillions of dollars every year Coca-income Cola's in 2016 was VND 6,872 billion, whichclimbed by VND 346 billion to VND 7,218 billion in 2017 According to the most recent data,Coca-Cola Vietnam's revenue in 2019 was VND 9,297 billion, a 9 percent increase over theprevious year

- Macro environment:

 Political factors:

 Vietnam is building a market economic institution tasked with adopting new laws,regulations, and modifying old legal documents every year This illustrates thatthe government has put in place measures to encourage businesses to invest intheir operations Localities establish their own local attractions to attractinvestment Through its effect on the corporate environment, the government has

legally transitioned from a direct intervention method to an indirect regulationmechanism This improves the macroeconomic climate for Coca-Cola inparticular and enterprises in general.

 Economic factors:

 The income of Vietnamese consumers increases very slowly, the purchasingpower also increases very slowly, the structure of goods purchased is very weak.However, certain high-income consumers have extremely high purchasing power,resulting in income and shopping stratification Besides, the difference inpurchasing power between classes of the population, between urban and ruralareas, plains, and mountains Since then Coca-Cola knows the consumer market

of Vietnam so that it can make reasonable sales and marketing policies

 Sociocultural factors:

 Many Vietnamese citizens are practicing healthier lifestyles This has affected thenon-alcoholic beverage industry in which many people are turning to bottledwater and “diet” colas instead of beer and other alcoholic beverages The demandfor bottled water and other better and healthy products is very important in dailylife

 Consumers between the ages of 37 and 55 are also increasingly interested innutrition There is a large part of the population of the baby boomer’s generation(those born between 1946 - 1964) As more people are reaching old age, theybecome more concerned with increasing life expectancy This will continue toaffect the non-alcoholic beverage industry in a way that increases overall demandand demand for healthier beverages

 Technological factors:

 The efficiency with which the company's marketing and advertising operationsoperate New internet and television technology use special effects to advertisethrough the media These technologies make certain products look appealing,making them easier to consume… The use of tin cans and plastic bottles instead

of glass bottles boosted sales for Coca-Cola because these are easier to carryaround and you can throw them in the trash after use With advanced technology,new types of machines are continuously born Due to the introduction of these

machines, the efficiency of Coca-Cola Vietnam in production has increased a lotcompared to a few years ago.

- Global factors affecting the beverage industry Vietnam:

o International competitiveness, customer aversion, and unpredictable marketpricing define the global beverage business There are many ways that globalfactors like these can affect the beverage industry in Vietnam

+ Consumption with an intent:

o New age customers, particularly millennials, are concerned with their health.They expect functional advantages from the beverages they drink on a daily basis.This habit has resulted in the emergence of a new category of beverages known as

"wonder drinks." Infused sparkling water and plant-based milk beverages are twocommon examples Global influences such as changing lifestyles and growinghealth consciousness have an impact on the beverage sector in Vietnam

+ Personalization:

o From newly financed start-ups to well-heeled multinational giants, practically allbeverage industry participants are working hard to suit the never-ending wants ofnew-age customers

+ Economic situation:

o The worldwide economic condition has an impact on the global beveragebusiness The economic situation in Vietnam has recently improved, which hascontributed to an increase in disposable incomes for the population This meansthat the population may now be able to spend more on products like soft drinks

3 Analysis of 2 competitors of Coca-Cola:

A, PepsiCo:

- General introduction:

+ Pepsi officially entered the Vietnamese market in 1991, and the strategic connectioninformation between Suntory (Japan) and PepsiCo (USA) firms, formally known as Suntory

PepsiCo, has been in place for about 22 years Pepsi has grown to become one of the mostimportant brands in the commercial and beverage industries since its inception According to thelatest update from the recruiting portal Neuvoo, Suntory PepsiCo now has 6 manufacturing units,

5 sales offices, and 2800 direct workers This is a brand that has been honored 15 times with thetitle of High-Quality Vietnamese Goods after a lengthy period of struggling, demonstrating thehuge appeal of this product Pepsi Vietnam has since expanded its operations into many moreproduct lines, including bottled water, fruit juice, energy drinks, and tea, with product namesincluding Sting, Twister, Lipton Ice Tea, Aquafina, Tea Olong Tea Plus, Mountain Dew, and so

on (Wood, 2017)

- Organizational structure of Pepsi in Viet Nam:

Pepsi has its regional headquarters in Vietnam which manages all of its production anddistribution operations in the country The organizational structure of Pepsi Vietnam is based on

a three-tier model: The Ho Chi Minh City office is responsible for overseeing the functioning ofall factories and warehouses, while regional offices take care of local marketing and salesactivities

The organizational structure consists of three tiers:

- The Ho Chi Minh City office oversees the functioning of all factories and warehouses,

- Regional offices take care of local marketing and sales activities,

- Trader offices sell to third-party retailers such as supermarkets or specialty stores

B, Big Cola:

- General introduction:

+ Big Cola is a brand of AJE Group AJE Group was born in 1988 in Peru Initially, AJEproduced soft drinks from processed beer bottles and then sold them to residents around the areathrough small self-opened shops However, only three years later, AJE has expanded itsoperations to other cities while remaining focused on rural areas It was not until 1997 that AJEreached Lima, the capital of Peru (Our History - AJE Group)

- Organizational structure:

+ The organizational structure of Big Cola Beverage Company in Viet Nam is divided into 3functional areas: Sales & Marketing, Finance & Accounting, and Operations

 Sales & Marketing is responsible for developing and managing marketing campaigns toestablish a competitive edge over other beverage brands, Finance & Accountingmaintains accurate records on the finance department maintains accurate records of alltransactions, payroll, bank balances, taxes, and other financial aspects of the company sothat the accountant can do their job properly The finance department also handles anywork with government agencies to keep everything on track legally for tax purposes.

 • The accountant is in charge of everything in the firm's possession, as well as everythingthat has been received or manufactured They are responsible for compiling financialstatements which include balance sheets, income statements, trial balances, budgets, cashflow forecasts, and budgets for future planning purposes

Coca-Cola VietNam PepsiCo Viet Nam Big Cola

Type of

product Coca-Cola, Coca-Cola Light, Coke Zero, Sprite,

Fanta, Minute Maid

Nutriboost, Minute Maid

Teppy, Schweppes,

Dasani and Aquarius

Pepsi Cola, Sting, Mountain Dew, Tropicana Twister, 7UP,7UP revive, O Long TeaPlus, Mirinda, Lipton Tea, Aquafina, Boss Coffee

Big Cola

Vision Create brands and

beverages that people will

like and that will inspire

both the body and the

intellect Simultaneously,

grow in a sustainable

manner and toward a

better shared future,

bringing beneficial

consequences to the lives

of individuals,

communities, and the

whole globe (Coca-Cola

Viet Nam)

We aspire to be the global leader in convenient meals and beverages through Winning with Purpose

"Winning with Meaning" represents ourdesire to succeed in the marketplace in a sustainable manner and

to incorporate purpose into all parts of our business strategy and brands (About the Company)

The vision of Big Cola is

to be a leading beverage company by focusing on the most innovative products and ideas, setting a new standard forproduct quality, and delivering outstanding customer service They believe that there is a need for more innovation

in soft drinks They aim

to target the conscious population whoare looking for beverages with fewer calories but more taste They also hope to attract new customers who are