Phân tích thành cơng chiến lược kinh doanh VinaMilk TABLE OF CONTENTS I INTRODUCTION II OVERVIEW ON VINAMILK Corporate history .3 Profile summary .3 Vision, mission, corporate position 4 Major products Key financial information III ANALYSIS OF STRATEGIES USED Low pricing strategy Market strategy Product – market strategy Vertical integration Marketing strategy 10 Controlling strategy 11 IV CONCLUSION 12 REFERENCES 12 1/12 I INTRODUCTION Based on the concept “strategy is the system of different objectives and measures used to achieve those objectives”, we can see that in business operation, establishing a sound strategy is the crucial matter to ensure a successful implementation toward set goals On the basis of the scientific theory about strategic management and real-life operation of a business, the scope of this research will mention the success of Vietnam Dairy Products Joint Stock Company (Vinamilk) due to its sound strategy, as well as intensive analysis upon such success II OVERVIEW ON VINAMILK Corporate history The Company was founded under the name of Southern Coffee-Dairy Company (a stateowned subsidiary of the Food General Directorate) During its development of after times of reconstruction, it was renamed as Vietnam Dairy Joint Stock Company (Vinamilk) in 2003 Vinamilk was listed on Hochiminh City Stock Exchange (HOSE) in 2006 The Company’s market capitalization value as at Dec 31st 2013 is approximatelyUSD 5.3 billion and is ranked the second on the Vietnam Stock Market value Through the past 17 years (1997-2013), Vinamilk won continuous Vienam High Quality Goods certifications granted by Vietnam Standards and Consumer Association Profile summary - Company name : Cong ty Co phan Sua Viet Nam - English Business name : Vietnam Dairy Products Joint Stock Company - Abbreviated name : Vinamilk - Stock sticker : VNM - Share capital : VND 8,339,557,960,000 - Head office : No.10 Tan Trao Street, Tan Phu Ward, District 7, HCM City - Tel : (84-8) 54 155 555 - - Website: www.vinamilk.com 2/12 Fax: (84-8) 54 161 230 Vision, mission, corporate position - Vision: to become a world grade brand in food and beverage industry, where people put all their trust in nutrient and health products - Mission: To deliver the most valuable nutrition to community with our respect, love and responsibility - Corporate position: to achieve the total revenue of USD billion and to be ranked in Top 50 biggest dairy companies in the world by the year 2017 Major products - Dairy products (contribute more than 95% of the Company’s total revenue) include: powdered milk and nutrition powder, condensed milk, liquid milk (pasteurized fresh milk, UHT fresh milk and drinking yogurt), fermented yogurt, and other dairy products (e.g ice-cream, cheese) - Beverages (contribute nearly 5% of the Company’s total revenue) include: soy milk, fruit juices (apple, orange, grape, etc.), tea (green tea, lingzhi tea, artichoke tea), other beverages (bottled drinking water, salty lemonade, soaked apricot, etc.) Key financial information Unit: VND Billion 3/12 Figure Statement of income and balance sheet of 2009-2013 (Source: Vinamilk Annual Report 2013) 4/12 Figure Some key financial information of 2009-2013 (Source:Vinamilk Annual Report 2013) III ANALYSIS OF STRATEGIES USED Based on the above-mentioned financial statistic, we can see that the business operation of Vinamilk over the years 2009-2013 is an ongoing effectiveness That implies the Company has established an appropriate strategy to adapt to the changing market context (external environment), as well as to define the matters need to improve and surmount within the Company inner (internal environment) To make clear this issue, we will investigate in succession the strategies and solutions that Vinamilk has been using 5/12 Low pricing strategy Upon the mission to deliver the most valuable nutrition to community with all respect, love and responsibility, at the same time, to better the competitive competence, Vinamilk has employed the low pricing strategy to its products in order to meet the increasing demand for milk consumption of Vietnamese (there was an average 15 liters of milk used a year per capita in 2010, the forecasted number for 2020 might be doubled to 28 liters of milk/year/capita) This solution answered to the affordability for dairy products consumption of Vietnamese people Market strategy During the expansion implementation, developing sales and meeting market demand, Vinamilk gradually opened its following branches: - In October 1994, the sales office was opened and responsible for sales activities in the north provinces - In May 1996, Da Nang sales office was opened and responsible for sales activities in the central provinces - In 1998, Can Tho sales office was opened in order to develop sales activities in the Mekong delta provinces This solution helped the Company to structure its business organization appropriately to efficiently support executing the implementation of strategies on specific areas Product – market strategy Being one of the effective strategies used, contributed a great deal to the success of Vinamilk, expanded its operation nationwide and overseas, the strategy was executed through the following specific solution: 3.1 For the current market (Vietnam) and existing product lines (for specific operation stages), Vinamilk entered the market through the local distribution network as follows: - Modern trade channel: Vinamilk deals directly with about 600 supermarkets across the country 6/12 - General trade channel: Vinamilk sets up 266 exclusive distributors national-wide; these distributors deliver products to retailers within their assigned territory As at December 31st 2013, Vinamilk covered more than 224,000 retailers, increased by 24,000 retailers as compared to that of 2012 Figure Vinamilk’s distribution network model (Source:Vinamilk Annual Report 2013) 3.2 For the current market (Vietnam) and new product lines, Vinamilk keeps employing the strategy of new product development on the basis of researching and developing new products To this end, the approach that Vinamilk applying is to optimize its R&D staff’s competence The R&D department creates and innovates incessantly, updates latest information about technology, food safety, markets, regional situation, customers demand, etc in order to seek opportunities and ideas that best suit product development 7/12 In recent years, aside from inventing health care products, nutrient products for various customers (Vinamilk has more than 200 product lines of pasteurized/UTH milk, and dairy products), Vinamilk has developed its production using natural medicinal herbs (e.g Linhzhi mushroom combining with bee’s honey) Simultaneously with the introduction of several new product lines, another important solution is to invest heavily in technology to improve the quality of products, that has been effectively implemented by Vinamilk Specifically, in 2012, the Vinamilk set up 02 large dairy factors in Binh Duong: - VND 2,000 billion invested in factory of powdered milk for infants, been operating since April 2013, the plant's technology ensures all the nutrients, vitamins, minerals would not be altered during processing - VND 2,400 billion invested in liquid milk factory, been operating since September 2013, the plant's technology eliminates 99.9 % of bacteria in fresh milk With such investments, Vinamilk desired to increase domestic market share of powdered milk from 30% to 50%, and liquid milk from 50% to 60% 3.3 For new markets (foreign markets) and existing products, Vinamilk holds official exporting relations with South-East Asia, Middle-East and Africa (of which, exports to Cambodia reached USD 40-50 million and the Company is planning to build a milk factory in Cambodia, also) Exporting products are powdered milk and condensed milk Exporting sales of 2013 accounted for 14% of total revenue Vertical integration In order to implement vertical integration backward, over the past few years, Vinamilk conducted a cost-effective solution that is to develop material areas by investing in breeding dairy cow For one of the most important matter to major factors of Vinamilk, the material sources, therefore, since 2007, Vinamilk has invested nearly VND 800 billion to build 05 largescale farms (in Tuyen Quang, Lam Dong, Binh Dinh, Nghe An, Thanh Hoa provinces) and import cattle from Australia, with 8,000 cows producing 90 tons of milk per day Vinamilk breeding facilities is constructed on world up-to-date standard to develop the international 8/12 material sources demand (from grass planting, barn construction, food processing, veterinary and ambient management) The Company also linked to more than 5,000 breeding households with more than 65,000 cows across the country, purchasing 460 tons of milk/day The Company has taken positive measures to support people as animal training techniques, to direct people to read test results of microorganisms in milk in order to demonstrate transparency in procurement of milk This solution helped Vinamilk stable the supply of materials, save costs, control inputs quality; and helped in product quality assurance, food safety and hygiene creating customer trust Marketing strategy Vinamilk used to have a wide range of qualified products and even strong brands, however, due to weak marketing that led to inability to create an effective message to promote to consumers about the company’s strengths: - Although fresh milk accounts for 70-99% milk content, Vinamilk has not exploited its brands so there is a lack of messages for customers to understand the difference between the concepts of reconstituted milk and pasteurized milk for customers - Vinamilk has taken direct action in handling materials, higher milk purchasing price, highly-effective refrigeratory truck, and modern processing line That appeared to be a distinctive advantage of Vinamilk but has not been conveyed to the customers To overcome this weakness, the Company has stepped up measures to implement specific marketing strategy towards reorganizing the marketing department, conducting short term and long term marketing strategy with clear criteria, setting goals of building a stronger system of leading brands, paying attention to design of new and suitable packaging, using the media to promote its image (in 2013, Vinamilk boosted billion worth communication and advertising programs to increase sales and introduce new products) At the same time, the Company has developed and promulgated Policy of Corporate Social Responsibility and products commitment, including 02 elements: - Product safety: including research, product design safety; material security, quality control and management, product tracking control, product information 9/12 - Health and physical improvement: including research and product development; care and counseling to consumers Through the appropriate channels of information, the above solutions was informed to shareholders, distributors, consumers, employees, suppliers and policy commitments in corporate social responsibility specifically executed by the Company This has helped the Company implement successful marketing strategies and create community confidence in the quality of Vinamilk products Controlling strategy In recent years, not only has Vinamilk established 100%-owned factories to breed cattle in order to stabilize materials for domestic production, in 2010, Vinamilk invested abroad (representing the rate of 19.3% in Miraka Company, Ltd., New Zealand, specializing in milk production with a capacity of 32,000 tons/year) to produce raw materials for serving powdered milk market in Vietnam Figure Vinamilk’s details of subsidiares, joint ventures and associates (Source:Vinamilk Annual Report 2013) 10/12 This solution helped Vinamilk ensure effective implementation of domestic raw materials, and initial implementation of penetrating foreign markets to expand market development strategy The ownership of all or a part of domestic and foreign companies to implement investment projects in many different markets will help establish the preparatory position on raw materials, increase market share both domestically and overseas, and the projects will complement and support each other to help Vinamilk stand still and develop in the future IV CONCLUSION Through the above presentation on strategies and solutions that Vinamilk proposed and implemented well, it can be said that Vinamilk Company in general and its leaders in particular have ensured Vinamilk steps in the right direction and implementation of strategy proposed This shows that the formulation, implementation and control strategies have been implemented in Vinamilk are very effective and contribute to answer the reason why it is the leading brand in the milk industry in Vietnam On the basis of Vinamilk efforts to implement the strategy, including investment solutions such as breeding dairy cow, branding consolidation, technology improvement to enhance product quality according to the international standard to aggressively compete to fully exploit the domestic market, while expanding the market to other countries, we can say that the Vinamilk specific objectives set out in 2017 to become one of 50 largest milk companies in the world's is fully reasonable./ REFERENCES Strategic Management, Dang Ngoc Dai PhD Vietnam Dairy Joint Stock Company website – http://vinamilk.com.vn Vinamilk Annual Report 2013 The Saigon Times website – http://www.thesaigontimes.vn Investment Bridge website – http://nhipcaudautu.vn/article.aspx?id=19876-nam-2013tong-doanh-thu-va-loi-nhuan-sau-thue-cua-vinamilk-tang-17%-va-12%- Website: http://thuonghieudoanhnghiep.vn/?thdn=chien-luoc-kinh-doanh-cua- vinamilk&thuong-hieu-doanh-nghiep=503 Vietnam Business Council for Sustainable Development - http://vbcsd.vn/detail.asp? id=477 11/12 ... http://nhipcaudautu.vn/article.aspx?id=19876-nam-2013tong -doanh- thu-va-loi-nhuan-sau-thue-cua-vinamilk-tang-17%-va-12%- Website: http://thuonghieudoanhnghiep.vn/?thdn=chien-luoc -kinh- doanh- cua- vinamilk&thuong-hieu -doanh- nghiep=503... conducting short term and long term marketing strategy with clear criteria, setting goals of building a stronger system of leading brands, paying attention to design of new and suitable packaging, using... customer trust Marketing strategy Vinamilk used to have a wide range of qualified products and even strong brands, however, due to weak marketing that led to inability to create an effective message