Group Assignment 1 Phu Nhuan Gem Joint Stock Company (Pnj).Pdf

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FPT UNIVERSITY INTERNATIONAL BUSINESS ***

<b>GROUP ASSIGNMENT 1</b>

<i>Lecturers: La Thị Kim KhánhClass: IB17B02Group: 2 </i>

<i>Members: Chu Thị Thanh TâmTrần Đăng KhuêNgô Phương Diễm QuỳnhTrần Thảo Vy</i>

<i>Trần Ngọc Nhi</i>

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<b>INTRODUCTION... 3</b>

<b>I.ANALYISIS... 3</b>

<b>1.Environmental Analysis... 3</b>

<i><b>2. Five Forces model analysis...5</b></i>

<i>2.1. Competition in the industry...5</i>

<i>2.2. Potential of new entrants into the industry...5</i>

<b>2.Recommendations for company strategy:...15</b>

<i>2.1.Youth-Centric Marketing Strategies:...15</i>

<i>2.2.Technology Advancements and Employee Benefits:...15</i>

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Since 1988, PNJ has continuously driven innovation, creating jewelry collections withdiverse materials and countless gemstones, including diamonds, rubies, sapphires, emeraldsand semi-precious stones (colored stones). PNJ's jewelry products always represent aharmonious blend, artistically crafted by skilled jewelers to meet the diverse tastes ofcustomers.The main product of this report analysis is jewelry.

- Regarding tax policy, Decision No. 25/QD-BTC reduced the import tax ongold bars from 3% to 1% and the import tax on raw gold from 1% to 0.5%.- Current gold trading and trading activities in our country's market are almostcompletely spontaneous

- The State Bank of Vietnam established the Vietnam Gold Trading Center tonarrow the activities of the free gold market

- GDP per capita in 2022 increases by 393 USD, equivalent to 4,110 USD.- Regarding GDP usage in 2022, final consumption increases by 7.18%compared to 2021, contributing 49.32% to the overall growth rate.

- With a GDP growth rate of 8.02% in 2022, there will be an average impact onPNJ. Recorded net revenue reaching 33,876 billion VND (up 73.3% comparedto 2021) and profit after tax reaching 1811 billion VND (up 76% compared tothe same 2021).

- Domestic gold prices fluctuate in the opposite direction to world gold prices.World gold prices fell as the US dollar increased in value after the US FederalReserve (FED) increased interest rates to curb inflation. (March 2023)Social - Urban people account for 29.6% of the country's population. The density of

urban people is high, making it easy to distribute products. The proportion ofjewelry consumption in rural areas is not high due to the low standard of living.- In Vietnam, the demand for beauty jewelry can be divided by age:+ From ages 18-22 (22.3% of the population): income is not stable, focus on

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+ From 23 - 30 years old (35% of the population): stable job, likes to explore,chooses reputable brands, always innovates, has high aesthetics

+ From 31-50 years old (35% of the population): have abundant savings, shop alot, simple and sophisticated criteria, product quality and brand

+ From 50 years and older (12% of the population): preparing for retirement,less interested in luxury jewelry products

- All of PNJ's production machinery uses technology from Italy and Germany.- Upgrade retail and e-commerce store models, deploy digitalization of businessactivities with AWS to expand the system, and promote business on the cloudcomputing platform."

- PNJ uses Data Analytics, Computer vision, SAP to analyze and optimizeinventory and goods on the move, meeting customer needs to provide a betterexperience.

(Table 1.1 - Environmental Analysis of PNJ)

<i>2. Five Forces model analysis2.1. Competition in the industry</i>

In recent years, Vietnam's jewelry industry has achieved remarkable development, with anaverage annual growth rate of about 10%.

Competitive factors in the jewelry industry

Industry growth: In recent years, Vietnam's jewelry industry has an averageannual growth rate of about 10%.

Product differentiation: Cause product competition, customers are often interestedin diverse designs.

Conversion costs: Costs customers must bear if changing from one brand toanother

Brand competitiveness: Brand is an important factor that helps jewelry businessesattract customers and build trust.

The above factors contribute to increasing competition among businesses in the sameindustry.

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<b>Trademark</b> Strong brand Strong brand Strong brand

The widest in thecountry

Large distributionnetwork

Large distributionnetwork

(Table 2.1.1 - Comparative analysis of 3 brands PNJ, DOJI, SJC)

These brands have their own strengths and weaknesses, creating fierce and high level ofcompetition in the market. To compete effectively, jewelry businesses need to focus onimproving product quality, innovating designs and models, offering competitive prices andbuilding strong brands.

<i>2.2. Potential of new entrants into the industry</i>

Business activities Brand loyalty Government regulations

<i><b>Capital requirement:</b></i>

Involves high fixedcosts to enter theindustry.

Precious metal and canbe expensive toacquire.

<i>Labor and SkilledWorkforce to make</i>

<i>DistributionandLogistics,Marketingand Branding,..</i>

Cannot surpass largecompanies such asPNJ, DOJI, SJC,which are dominatingthe market

Gold is considered asspecial goods so there arealso many laws to followwhen enterprises want toenter the industry.

(Table 2.2.1 - Important factors act as key barriers to new entrants)

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<i>industry level. Therefore, famous brands still have many opportunities to dominate the market</i>

and gain a lot of profit for themselves.

<i>2.3. Power of suppliers</i>

Power of suppliers is considered high when suppliers can impact the jewelry industry in anumber of elements

Suppliers may increase theprice of raw materials,leading to an increase in theprice of jewelry products.

Suppliers may supply poorquality raw materials, leadingto reduced quality of jewelryproducts.

Jewelers may be underpressure from suppliers toreduce prices, leading toreduced profits.

(Table 2.3.1 - A number of elements that suppliers can impact the jewelry industry) Along with that, there are a number of factors that affect the power of suppliers

(Table 2.3.2 - A number of factors that affect the power of suppliers)

The above factors are all factors that businesses can influence suppliers, which reduces thepower of suppliers. So the power of Suppliers in the industry is medium, when both brandsand suppliers are under certain pressures.

<i>2.4. Power of customers</i>

In the gold and gemstone jewelry industry, most customers are consumers with averageincome or higher. Therefore, they are willing to pay switching costs for the products they areinterested in. As for price-sensitive consumers, they will tend to compare the price per ounceof gold in jewelry to choose to buy. In addition, customer power is also based on other factorssuch as satisfaction with quality and service, innovation of design.

Considering the above factors, customers have relatively high power in this industry.To deal with the power of customers, jewelry companies can implement several strategiessuch as invest in R&D, invest in marketing and logistic, provide good customer service…

<i>2.5. Threat of substitute products</i>

The threat of substitutes is the possibility of substitute products meeting customer needsand reducing demand for a company's products or services. Products that replace gold jewelryinclude silver jewelry, pearl jewelry, watches, technology accessories, luxury goods,...

There are manysubstitute products orservices

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instead of spending that amount of money just to buy that piece of jewelry, the customer canthink of buying pearl or gemstones jewelry are more reasonably priced.

However, in cases where grooming is needed, jewelry still becomes important to women,and no other accessory can replace it. So the threat of substitute products is medium.

<i>2.6. Conclusion for five forces model:</i>

Competition inthe industry

Potential of newentrants

Power ofsuppliers

Power of customers

Threat of substituteproducts

<i>3. Competitor Analysis</i>

The Vietnamese jewelry industry has demonstrated exceptional recovery capabilities,rebounding vigorously from the challenges posed by the COVID-19 pandemic. Projectionsindicate that this industry still has significant room for substantial growth, with an anticipatedaverage annual growth rate of about 10% in the next decade.

However, it's worth noting that this is a specialized and challenging sector to penetrate.Therefore, the prominent players in this field can be counted on one's fingers, with PNJ beingone of them. Alongside PNJ, notable competitors include DOJI and SJC, along with numeroussmall-scale traditional shops that collectively hold a significant market share.

Market share of jewelry industry in VIetnam 2022

<i>[Figure 3.1 - Market share of jewelry industry in Vietnam 2022.]</i>

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formidable adversaries, with DOJI standing out as a prominent rival. This has led to intensecompetition between these two major players in the Vietnamese jewelry market.

DOJI, originally known as TTD Trading and Technology Development Company, wasfounded on July 28, 1994, by Mr. Do Minh Phu. In 2007, the company underwent asignificant transformation, officially rebranding itself as DOJI Gold. Its decisive entry into thedomestic jewelry market was marked by the inauguration of Ruby Plaza in Hanoi on June 30,2007. Presently, DOJI Group operates with a model comprising 14 member companies, 4capital-contributing affiliated companions, 61 branches, nearly 400 stores, and over 3000employees across the nation.

SJC, originally known as City Jewelry Company, was founded on September 17, 1988,under the authorization of the People's Committee of Ho Chi Minh City. In June 2010, itunderwent a name change and became Saigon Jewelry Company Limited. Presently, SJCstands as the foremost enterprise in gold manufacturing and commerce within Vietnam,operating an extensive network of gold and gemstone outlets across the country.

However, beyond the well-known names of PNJ and DOJI, a substantial presence of local,small-scale jewelry shops prevails. These businesses, often family-owned, maintain strongcommunity connections and possess an acute understanding of local market needs. While theymay not command the same level of brand recognition, their products' quality and serviceshave garnered a sizable and devoted customer base.

<i>igure 3.2 - PNJ’s competitors.]</i>

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<i>4. Capabilities Analysis4.1. Value chain</i>

<i>[Figure 4.1.1 PNJ Value chain analysis]4.1.1. Support activities</i>

PNJ owns the PNJ Jewelry Factory, investing 120 billion VND with a production capacityof over 4 million products annually. It's one of the region's largest jewelry factories at 3,500m2, spanning six floors and 12,500 m2. In 2020, it stood among the top professionallymanaged facilities.

Within PNJ, more than 1,000 skilled jewelers work, with a significant stake (70%) in thenationwide Jewelry Artisans group since 2014. The current Creative Director, Ms. Vo NgocThuy Anh, earned recognition as a top three style designer in 2017 by Elle magazine.

PNJ prides itself on being Vietnam's largest jewelry manufacturing factory, eight timesthe capacity of SJC and Doji combined. It utilizes advanced European technology and askilled workforce, including state-of-the-art Italian and German machinery.

Furthermore, PNJ proactively sources materials, holding import licenses for tax-free goldfrom the State Bank of Vietnam, and directly acquiring gold from customers and domesticsources, ensuring diverse procurement channels.

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<i>4.1.2. Primary activities</i>

In 2022, PNJ's inventory reached 10 trillion VND, out of a total asset of 13 trillion VND,largely due to the high cost of gold, their primary product. PNJ's top-tier production line,recognized for excellence with the "Manufacturer of the Year'' award in 2020, combinesadvanced technology and precise manufacturing control. With approximately 384 retail storesand plans for further expansion, PNJ maintains its pioneer status in Vietnam's jewelryindustry, boasting over 30 years of experience and a stellar reputation. Their diverse productrange includes gold, diamond, pearl, silver, watches, and decorative pieces. PNJ is becomingmore actively targeting younger audiences through social media and platforms like TikTok.The company prioritizes employee retention and customer satisfaction by offering competitivesalaries, particularly for skilled artisans; comprehensive warranties, and exceptional post-saleservices.

<i>4.2. Alignment4.2.1. Internal</i>

PNJ's well-managed supply chain ensures high-quality, uninterrupted production, with arelentless commitment to innovation and customer satisfaction. Beyond maintainingproduction capacity, PNJ's major focus is investing in its creative team, the key driver of itsprofitability and competitiveness. Boasting over 50 designers trained by fashion experts andjewelers from their own rigorous training system, PNJ stays at the forefront of trends. Theyactively market on platforms like Facebook, TikTok, and Instagram to offer customers thelatest in jewelry. Furthermore, their direct distribution network via company-owned retailstores fosters strong customer relationships.

<i>4.2.2. External</i>

PNJ has effectively maintained alignment between internal and external forces, bolsteringtheir position in the market. They have established a robust after-sales service via company-operated service centers, fostering strong brand loyalty among customers. Their continuousinvestments in design and marketing drive nonstop innovation. Over the years, PNJ hasskillfully maintained its dominant market position and remains the largest jewelry company inVietnam to this day.

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<b>Market Position</b> Yes Yes Yes Yes

<i>(Table 4.2.2.1- PNJ VRIO analysis)4.3. Sustainability</i>

<i>4.3.1. Imitation</i>

Amidst the growing regulatory hurdles, notably the government's 2012 Decree 24, PNJstands out. As Anphabe attests, PNJ not only leads as the "Best Place to Work" in theretail/wholesale/trading sector but also secures positions in the top 20 "Vietnam's 100 BestWorkplaces in 2022" and the top 50 "Vietnamese Most Attractive Employer Brands in 2022."With a workforce exceeding 1,000, including over 160 classified as "jewelry artists," PNJpossesses invaluable human resources. The unique skills and expertise of these artisans areirreplaceable, rendering PNJ virtually inimitable in the industry. This exceptional humancapital forms the bedrock of PNJ's unparalleled competitive advantage, further bolstering itsinimitable brand reputation.

<i>4.3.2. Durability</i>

In 2019, PNJ's CEO, Mr. Le Tri Thong, was recognized as one of the top 10 entrepreneurs.His strategic repositioning of the business model in 2017 was a transformative milestone,propelling PNJ to become the leading retailer in the Asian jewelry industry by 2019.However, ensuring long-term competitiveness and sustainability is crucial, particularly withregard to the CEO's retirement and the skilled workforce. Currently, PNJ provides itsemployees with bonuses, performance-based salary increments, etc. within a professionalwork environment that supports career growth. To secure its value in the future, especiallyamong skilled artisans, PNJ should proactively develop a reserve team. Effective supply chainmanagement positions PNJ to maintain its strong market position in the years ahead.

<i>5. StrategyMap</i>

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