Improving the competitiveness by marketing and sale personnel management strategy (A case of protective and marine coating products in Sigma Yung Chi Coating C.,ltd)

TRệễỉNG ẹAẽI HOẽC Mễ TP. HCM UNIVERSITE LIBRE DE BRUXELLES
HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

MBAVB3



Lờ c Thng




Improving the competitiveness by marketing and
sale personnel management strategy
(A case of protective and marine coating products in
Sigma Yung Chi Coatings Co., Ltd)



MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)

Ho Chi Minh City
(
2011
)
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COMMITMENT

This dissertation is study of me, which is made on the basic of theoretical studies,
survey research of the real situation under the guidance of Professor: PhD Hoang Thi
Phuong Thao.

The data, figure and questionnaire results of the thesis is true. The specified marketing
strategy, the competitive improvement strategy launched from a case study of protective
and marine coating products in Sigma Yung Chi Coatings Co., Ltd and is submitted by
Dissertation evaluation association of economic Master

Once more, I would affirm the truthfulness of my promise.

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ACKNOWLEDGEMENTS

On completing this graduation paper, I would like to send my deepest and most
sincere gratitude to many people for their invaluable help during the conduct of the
research.
First and foremost, I would like to send my heartfelt gratitude towards my supervisor
PhD Hoang Thi Phuong Thao for her constructive and timely feedbacks as well as her
constant and unfailing support which were decisive factors to the completion of the study.
Additionally, I would like to show my deepest gratitude towards my colleagues as
well the Mantor Mr. Nguyen Duy Chinh, Regional Sales Manager of Sigma Yung Chi
Coatings Co., Ldt for his valuable information, advice and guide in the methodology of the
research.
Furthermore, I would also like to say the sincerest thanks to my classmates
On a personal note, I express my truly gratitude to my family and friends who
emotionally and spiritually comforted me through the challenging time of conducting the
research. The study could not have been completed without their continual encouragement.

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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION 1
1.1 Background 1
1.2 Rational of study 3
1.2.1 Asia industrial coating market overview 3
1.2.2 Major markets in Asia 4
1.2.3 Vietnam industrial coating market overview 5
1.2.3.1 General information 5
1.2.3.2 Some well-know industrial paint companies in Vietnam market 6
1.3 Research problem and research objective 6
1.3.1 Research Problem 6
1.3.2 Research Objective 7
1.4 Methodology of study 7
1.5 Structure of study 9
CHAPTER 2: LITERATURE REVIEW 10
2.1 Concept of competition and competitive advantage 10
2.1.1 Competition 10
2.1.2 Competitiveness 10
2.1.3 Competitive advantage 10
2.2 M. Porter model analysis 11
2.3 SWOT model analysis 13
2.4 Factor effecting to competitiveness of enterprise: 14
2.4.1 Macro factors 14
2.4.2 Micro- factors 16
2.5 Marketing mixed and HR strategy to improve the competitiveness 18
2.5.1 Marketing mix 18
2.5.2 HR strategies 19

2.6 Chapter Summary 19
CHAPTER 3: ANALYSIS OF THE COMPETITIVE ENVIRONMENT AND
COMPETITIVENESS ABILITY OF SIGMA YUNG CHI COATINGS CO., LTD 20
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3.1 General introduction about PPG Corporation and Sigma Yung Chi Coatings
Co., Ltd 20
3.1.1 PPG Corporation 20
3.1.2 Sigma Yung Chi Coatings Company Limited 21
3.2 Competitive business environment analysis of Sigma Yung Chi Coatings Co.,
Ltd-Protective and Marine Coating products 25
3.2.1 Macro environment 25
3.2.2 Micro environment 28
3.2.3 Porter competitive Analysis 29
3.2.4 Products 31
3.2.5 Prices 32
3.2.6 Sales personnel 33
3.2.7 General comparison of Sigma Yung Chi with other competitors 35
3.3 SWOT analysis of the competitiveness advantage of Sigma Yung Chi 38
3.4. Conclusion 40
CHAPTER 4: STRATEGY OF IMPROVEMENT OF COMPETITIVENESS OF
PROTECTIVE AND MARINE PRODUCTS- FOCUS ON MAKETING MIX AND
SALE PERSONNEL 41
4.1 The company recommended development objectives 41
4.1.1 Sales and marketing objectives 41
4.1.2 Personnel management objectives 41
4.2 Strategic solution of marketing mix and sales personnel for the company to be
able to achieve these objectives 42
4.2.1 Marketing mix strategy recommendation 42
4.2.1.1 Product 42

4.2.1.2 Price 42
4.2.1.3 Distribution 43
4.2.1.4 Promotion 46
4.2.2 Personnel strategy 46
4.2.2.1 Technical and sales staff recruitment process 46
4.2.2.2 Technical staff training process 47
4.2.2.3 Motivation of technical and sales staff in the firms 48
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4.2.2.4 Role of line manager in training and developing the people in the
organization 50
4.2.2.5 Being the Best Team in the marine and protective segments in
comparison with competitors 51
4.2.2.6 Customer relationship 52
4.3 Conclusion 53
REFERENCE LISTS 55
APPENDIX 57


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ABBREVIATIONS
ACC : Asia Coating Congress
DD : Dry Docking
EMEA : Europe, Middle East, and Africa
EPC : Engineering Procurement and Construction
FDI : Foreign Direct Investment

FROSIO : The Norwegian Professional Council for Education and
Certification of Inspectors
GDP : Gross Domestic Product
ISO : International Standard Organization
MC : Marine coating
NACE : The National Association of Corrosion Engineers
NB : New Building
OBP : Onboard Program
OEM : Original Equipment Manufacturer
PC : Protective coating
PFP : Passive fire protection
PPG : Pittsburgh Plate Glass Corporation
PTSC : Petro Vietnam Technical Service Corporation
PVN : Petro Vietnam Corporation
PVC : Petro Viet Nam Construction Corporation
ROC : Return On Capital
Sigma YC : Sigma Yung Chi Coatings
SOEs : State-owned enterprises
SS : Sea Stock
SSPC :
The Society for Protective Coatings
SWOT : Strengths, Weaknesses, Opportunities and Threats
TSR : Technical Service
Vinashin : Vietnam Shipbuilding Industry Corporation
VPIA : Viet Nam Paint and Printing Ink Association
WBT : Water Ballast Tank
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LIST OF FIGURE

Figure 1: Five forces model of M.Porter 11
Figure 2: The SWOT Matrix 13
Figure 3: Vietnam GDP growth rate 26
Figure 4: FDI Commitment and Implementation 27
Figure 5: Competitive price in the market of industrial products of Sigma 33
Figure 6: Factors to improve technical staff’s skills and knowledge. 34
Figure 7: Limited distribution channel 37
Figure 8: Recommended distribution network of Sigma Yung Chi in Vietnam 45
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LIST OF TABLE

Table 1: Market size of countries in 2009 and 2014 4
Table 2: General Information of Survey feedback 9
Table 3: The tables of comparison among coating company in term of market share
23
Table 4: Comparison of the market shares in field of protective coatings from 2009
to 2012 23
Table 5: Sales of Marine and Protective Coatings 25
Table 6: Main PVN’s projects from 2009-2020 29
Table 7: Frequency of product usage 32
Table 8: Competitors and SWOT 36
Table 9: The drawback of Sigma Yung Chi Coatings Co., Ltd in Vietnam Market 36
Table 10: Promotion activity 38
Table 11: SWOT of Sigma Yung Chi Coatings 39
Table 12: Recommended strategy on product and price 43

Table 13: Summary of sales and technical staff motivation strategy 49
Table 14: OBP recommended strategy 53
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CHAPTER 1: INTRODUCTION
1.1 Background
According to research and study of paint and coating manufacturer, with refer to one
of the biggest coating company in the world report (Akzo Nobel’s inaugural Global
Coatings Report, 2006), following pictures that could describe generally information about
coating industry
Put simply, a coating is a film forming substance which protects a substrate (i.e. a
surface or material) against potentially damaging elements in its environment, as well as
enhancing its appearance. But this is just basic definition, because if you study deeper,
you’ll find that there’s a countless of complexity and invention just waiting to be
discovered. Coatings, you see, are totally different when it comes to their production,
application and functionality. What the very general definition of coatings fails to do is
acknowledge that the conventional functions of protection and aesthetics are often
complemented and enhanced to meet additional, more specific demands.
The coatings market is typically divided into three major categories: architectural and
decorative coatings; industrial coatings and special purpose coatings. Within these
groupings there is an enormous range and variety, not only in terms of the properties that
the coatings themselves possess, but also the particular purposes they serve, the technology
behind them and the methods used to apply them.
ARCHITECTURAL COATINGS OR DECORATIVE COATINGS
When talking about coatings it is usually referring to architectural or decorative
coatings. Principally, this means paints, but it also includes all kinds of lacquers and

varnishes that are used to protect and decorate surfaces such as internal and external walls,
doors, window frames, and so on. The market for architectural or decorative coatings
includes both the do-it-yourself enthusiast and the professional or trade sector (Akzo
Nobel’s inaugural Global Coatings Report, 2006)
INDUSTRIAL COATINGS
Of course, it’s not just houses that get painted. Virtually all consumer durable
products, as well as all types of industrial equipment, have to be coated in some way or
another. New cars arrive “coated.” Anything made from wood—be it home or office
furniture, kitchen and bathroom cabinetry, flooring, windows and doors, or various other
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factory-finished building products—will be coated to enhance its appearance and provide it
with protection. Everything from computers to fridges and freezers, washing machines to
DVD players and mobile phones, are coated to extend their lifespan and enhance their
aesthetic appeal (Akzo Nobel’s inaugural Global Coatings Report, 2006)
SPECIAL PURPOSE COATINGS
That coatings are ubiquitous in our society can be seen from the fact that the third
category is simply known as special purpose coatings. Research-driven innovation has
enabled us to produce coatings that have very special properties to meet entirely specific
needs. There are main two kinds of special purpose coating name Protective Coating and
Marine Coating
Protective Coating: as their name suggests, protective coatings are applied on various
steel and concrete structures to preserve long-term strength and integrity. They need to be
effective in a variety of situations and must be able to withstand adverse conditions
resulting from, for example, atmospheric exposure or contact with corrosive chemicals.
The type of coatings used depends on the specific end use, because they can be adapted to
suit different environments, such as the demands of the oil and gas industry, the chemical
industry, power and water utilities, the food and paper industries, bridges and roads, as
well as railways. These coatings have to be particularly strong, because even the slightest
weakness in a coating can quickly become the focus for degradation and corrosion of the

structure beneath. They are special for oil and gas industry both onshore and offshore,
petrochemical plants, power plants… for example
Marine Coating: The marine environment is very severe. Salt water is particularly
corrosive and a wide range of specialty coatings have been developed to protect the
superstructure and hulls of ships from its impact. Organic matter, such as barnacles and
seaweed, also builds up quickly on vessels, damaging the hull and undermining speed and
energy efficiency. Special products—known as anti-fouling or foul release coatings—have
been developed for marine vessels which act as a salt water barrier and also minimize the
build-up of this organic matter. These products are used on all marine vessels, including
commercial tankers, ferries, and leisure craft ranging from the smallest dingy to the most
luxurious super yacht (Akzo Nobel’s inaugural Global Coatings Report, 2006)
With the development of paint and coatings industry, there has been a large quantity of
leading brands in the world coming into beings. However, this industry is stuck into the
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problems of balancing between the pressure from costs of energy, materials, being
pursuant to the regulations on environment protection issued by the government and the
issue of demands in the market for high quality and reasonable products. The solutions to
this problem would open many chances for the paint industry in the world to research and
deploy technological solutions, new materials and products, which also leave positive
impact on the further development of this industry. Hence, to survive in such an
environment with steadily increasing demand, the challenges for the managers is how to
develop and achieve a good position for their brand or their products by restructuring their
business strategies and methods to fit the market and also the features of their products
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At present, many strategies have been applied by the paint companies in Viet Nam
market particularly to gain their position and market share, especially in Protective and
Marine Coating products (Special purpose segment). Previous studies have shown that
there are most of projects are related to marketing management strategy in order to

improving the competitiveness of the company. For more understand which major factors
affecting on competitive capacity of the firms in marine and protective coatings market, the
applicable marketing mix and sales personnel strategy should be studied more deeply and
applying them in particularly paint product segment (Protective and Marine Coating). And
a well implement of this strategy could help the company (hereinafter Sigma Yung Chi
Coatings Co., Ltd) increasing its competitiveness against competitors as well revenue
1.2 Rational of study
This research is based on the general review of Asia Industrial Coating in which
Vietnam market is one of them. In the other hand, there is in deep study about Vietnam
Coating Market, especially Protective and Marine segment.
1.2.1 Asia industrial coating market overview
The market niche of Asia-Pacific, with 11 major economies mentioned in the table
below, has calculated to be 13.9 billion tons in 2009 and is also forecasted to make it
growth of about 7.9% annually from now to the year of 2014 – the time the market reach
the number of over 20 million tons

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, 2010
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Number Country Market Size in 2009 (tons)
Forecasted Market Size
up to 2014 (Tons)
1 China 7,566,300 12,185,600
2 India 1,813,500 2,920,700
3 Indonesia 636,700 852,100

4 Japan 1,418,400 1,282,100
5 Malaysia 140,000 166,300
6 Philippines 277,700 347,700
7 Singapore 219,000 307,200
8 South Korea 867,000 1,080,400
9 Taiwan 256,800 297,700
10 Thailand 406,300 496,700
11 Vietnam 280,800 384,700
Total 13,882,500 20,321,200
Table 1: Market size of countries in 2009 and 2014
(Source: Asian Paint and Coating Forum, Ho Chi Minh City – 2009)
1.2.2 Major markets in Asia
It can be seen that China and India are the key areas of developing in paint demand
with the annual growing rate of more than 10% in the coming period.
It can be also seen from the table that there are three regions holding paint demand
exceeding the level of one million tones: China with the demand of approximately 7.5
million tones, India of 1.8 million tones, and Japan of 1.4 million tones.
However, Japanese paint market, in the contrast to the two countries in this group of
demand, has been fought against the backdrop of transitional expectations for a long time
and also the reluctance to use a proportion of waterborne paint regularly.
In addition, there are some of the small economies in the region also showing the
prospect of promising coatings industry in either coming or longer term in the future.
(VPIA ACC HCM, 2009)
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Singapore, on the other hand, remains to hold the position of a strong market and one
of the greatest consumers of paint per capita with the quantity of 47 kg/head. Some of the
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VPIA ACC: Viet Nam Paint & Printing Ink Association- Asia Coating Congress
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market segments such as architectural, marine and protective coatings are expected to
continue growing in the future.
1.2.3 Vietnam industrial coating market overview
1.2.3.1 General information
In 1986, the Vietnamese economy engaged into the period of reforming with the nature
of market economy, however, positive steps in paint industry just started in the beginning
of 1990s to integrate into the region and international scale and gradually continue to
develop to the current time. The period from 2000 to present time marks the a great
development in the paint industry of Vietnam with great improvement in demand and also
a variety of paints in which decoration coatings take up a large proportion with average
annual growth rate of 25%, marine coatings, protective coatings and industrial coatings
developing more and more according to the demands of the market.
Vietnam is potential market for all paint companies. Regarding to global investors in
manufacturing, it is considered one of the top destinations with rich resources and has a
large and affordable workforce. Foreign Direct Investment (FDI) Law of Vietnam is
continuously amending and improving by Government to lead the economy into a more
open and attractive one for foreign investors. Ho Chi Minh, Hanoi, Da Nang, Vung Tau
City and Binh Duong are the key provinces of investment
In 2007, foreign-based firms started to penetrate into the market of Vietnam under the
form of 100% foreign investment or in outsourcing contracts with Vietnam paint and
coating companies. Besides, a large number of Vietnamese paint and coating firms (in
form of joint stock, private) also expand their business by building more factories,
investing in technology and machineries to improve the quality of products according to
the demand of consumers. It can be said that the fast development and quality
improvement did create an impressive picture on the paint industry of Vietnam in this
period. The improvement in the market helps to build up a healthy environment of paint
firms regardless of being domestic or foreign-based ones. (VPIA ACC 2007, 2009)

Despite the global economic as well regional downturn in recent years up to present,
over the last few years Vietnam's paint industry has continued to experience growth.
234,000t of paint was produced between January and November 2010, according to
Vietnam's General Statistics Office. In the same period last year production was at
181,200t. Sales increase too – the Vietnam Paint & Printing Ink Association (VPIA)
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predicts the country will see a 15-20% growth rate by value and a 12% growth rate by
volume in the paint and coatings market during 2010 and 2011 (Vietnam Paint & Printing
Ink Association)
Vietnam is also showing active growth in the shipbuilding and petrochemical industry.
According to the Vietnam Shipbuilding Industry Corporation, there is a three-phase plan
from 2001-2015 to upgrade and improve the shipyards in order to have technology equal to
the ASEAN shipbuilding industry. There are also many big projects owned or funded by
Petro Vietnam Corporation which need the huge quantity of coating to protect the steel
structures. These plans will clearly see a steady growth in the marine and protective
coatings industry demands in this country (Frost & Sullivan report collated
)
We will study more detail and deeply about Vietnam Protective and Marine coatings
market in to next chapters in this project
1.2.3.2 Some well-know industrial paint companies in Vietnam market
Decoration paints: 4 Oranges, Akzo (ICI) Decorative, Nippon, Jotun Paints, Kova ,
Bach Tuyet Tison and synthetic paints. etc
Marine and protective coatings: Sigma Yung Chi Coatings, Akzo Nobel with brand
International Paints, Hai Phong Paint, A Dong Paint, Jotun Pains, Hempel, Chugoku
Furniture coatings: Akzo Industry coatings, Dai Hung, Valspa Sherwin willams, Dai
Kieu, etc
Other types of coatings: OEM car coating, floor coatings, line coatings, can and plastic
coatings and brands such as; Hanoi synthetic paint, Nippon, PPG, KOVA, Hai Phong paint
1.3 Research problem and research objective

1.3.1 Research Problem
‘’Severe competition among leading coating suppliers in the Protective and Marine
Product segments – How to survive and become the leader in the product segment’’
These days, along with the development of the economy and the growing demand for
surface protecting for technical tools and machines, a wide range of coatings have come
into beings in the world market in general and in Vietnam in particular. Being aware of
potential in segment of protective and marine coatings, paint and coating firms more and
more improve their products to deliver the best products to customers in the combination
with marketing strategies to supply products to the end-customers.
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It is not an easy task to survive in a potential but saturated market of brand these days.
As mentioned in the section above, in the market of Vietnam, domestic paint firms, in spite
of possess products with high quality, find hard to compete with foreign ones.
The market segment of protective coating (PC) and marine coating (MC) in Vietnam
are currently driven by leading foreign-based companies. In comparison with the market of
Southeast Asian market as well as Asia region, the market niche of PC and MC in Vietnam
is quite small. Nevertheless, a variety of leading paint firms in the world penetrates this
market for the potential in the future. In details, paint firms holding their foot in PC and
MC market of Vietnam are PPG VN (Sigma Yu Chi Coatings), Akzo Nobel (International
Paint), Jotun, Hempel, Chugoku, Nippon. The competitive advantages of foreign-based
ones are of financial resources; hence, they have vivid marketing campaign, attractive
promotion and impression on customers about their brands.
Each company mentioned above holds their own strength in their market share. Due to
the small scale of the market, the competition among them becomes tougher and tougher.
The question arose is that how PPG Vietnam (Sigma Yu Chi Coatings) could stand strong
in their traditional market niche and gradually gain more and more market shares to
become the leading supplier of PC and MC in Vietnam?
1.3.2 Research Objective
In attempting to answer the research problems, this research is directed to following

objectives:
- To analysis the present competitive environment and competitive ability of Sigma
Yung Chi Coatings Company in Vietnam Market
- To investigate customer’s attitude to Sigma Yung Chi Coatings- marketing mix
activities
- To develop and recommendation the applicable marketing mix strategy to help the
Company improving the competitiveness in order to increasing the sales revenue-
focus on Protective and Marine Coating segments
- To develop and recommendation the sales and technical personnel management
strategy to support the firm achieving the efficiency personnel management.
1.4 Methodology of study
To achieve the intended result of the research, the study fully employed the methods of
qualitative research and dialectic to list, analyze sources of data to draw conclusion on the
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issue of research. These methods help to provide comprehensive data on the nature of
covering coating market in general also protective and marine coating in particular. Basing
on the data collecting from survey questionnaires, interview, analysis the actual market
(primary data) and gathering all information about the coating industry, company
operation, market trend… from internet, annual reports, news papers, professional article,
magazines, business books and principles (secondary data)…the strengths and weakness in
competitive advantages of Sigma Yung Chi Coatings would be presented to propose
solutions to the issue in order to create surplus value to the company. The research would
also be carried out under the principle of objectivity and logic.
To research improvement of the competitiveness of Sigma Yung Chi Coatings in the
market niche of protective coatings, the flexible adopting strategies are very importance.
To achieve that, the author of this thesis carried out survey the demand of the market to
evaluate current competitiveness in Vietnam marine and protective coating market between
Sigma Yung Chi Coatings and other competitors. This qualitative survey could provide
information about the Company’s customer opinions with regarding to products,

distribution, services, competitiveness ability and sales personnel of the Company. (See
detail of Questionnaires in Appendix enclosed)
The survey was conducted on two main groups of participants:
• Group 1: Managers and heads of sales and technical department.
• Group 2: Professional designers and consultants.
Group 1 is management and first line managers of these Companies whose are the EPC
construction contractors, contractors, sub contractors for power, petrochemical plants as
well oil and gas industry. The survey also is covered to some shipyard building companies.
The Group 2 is the management of some design, consultant Companies whose are doing
the Engineering for related projects
It uses two most common qualitative methods: in-depth interviews and focus groups.
Each method is particularly suited for obtaining a specific type of data. The population for
the survey would be selected 100 for both groups. And it is expected that at least 35% of
survey questionnaires will be returned with the answers for both groups
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Among 100 questionnaire sets administered to 20 Designing and Consultancy
Company for participants of group 2 and 80 to project contractors for ones of group 1, the
initial results are reflected in the table below:
Group Sent (Questionnaires) Received %
Group 1 80 48 60%
Group 2 20 12 60 %
Table 2: General Information of Survey feedback
(Source: Author’s Survey, 2011)
It can be seen from the results of market survey that among 100 questionnaires
delivered, the collecting ration made up to 60% actually. This is the result reflected the real
market response to the products of Sigma Yung Chi Coatings company. This result also
serves as the foundation so that the company could orient and introduce suitable policies to
compete and better competitiveness in the market.
1.5 Structure of study

The study is conducted in the structure of 4 chapters as below:
Chapter 1: Introduction
Chapter 2: Literature review
Chapter 3: Analysis of the competitive environment and competitive ability of
Sigma Yung Chi Coatings Company
Chapter 4: Strategy of improvement of competitiveness of protective and
marine coating products- Focus on marketing mix and Sale
personnel
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CHAPTER 2: LITERATURE REVIEW
2.1 Concept of competition and competitive advantage
2.1.1 Competition
Competition is defines as to try to get the better and to win among the individuals and
organizations who enjoy the similar chances (Vietnamese Dictionary, Institution of
linguistics, 1998; Da Nang Publication). Hence, competition is a powerful tool and a
dispensable element to the economic development of businesses, industries and countries.
According to Adam Smith in the Wealth of Nation “Competition is perceived as the
process of taking over each other to gain the market shares and customers”. To make it
clearer, in marketing, this concept is defined as “a momentum reflects and quantifies all the
elements of power, position, intense, dynamics of business activities of a company in the
relationship with direct competitors in the same targeted market and also in the same
reference of time.”
In general, most the viewpoints present the natures and aims of competition as
“competition among business is a fight for customers or market shares in order to sell as
much goods as possible and gain the highest level profits.” (Dimian, G.S. and Danciu, A.
,2011; National and Regional Competitiveness in the Crisis Context. Successful Examples,
Theoretical & Applied Economics Vol. 18 Issue 11).
2.1.2 Competitiveness
The concept of competitiveness is often used to refer features enabling one companies

to compete effectively with others thank to low cost and advance in technology in
international comparison (Alan V.Deardoff, Economist ).
2.1.3 Competitive advantage
Another term that is related to competition is competitive advantage, which refers to
possessing typical value and might be used to “take the chances” to gain profit. Speaking
of competitive advantage means mentioning the advantages that a business has and might
have in comparison with its competitors. Competitive advantages might be either of micro
scale (for businesses) or macro level (for countries). Besides, there is also the concept of
“sustainable competitive advantage” meaning the process of providing a special value in
the market by an enterprise while none of its competitors can do that. (Wang Wen-Cheng,
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Lin Chien-Hung and Chu Ying-Chien, 2011; Types of Competitive Advantage and
Analysis, International Journal of Business & Management; Vol. 6 Issue 5)
2.2 M. Porter model analysis
According to Michael Porter, the intense of competition in the market in any industry is
under the effect of five competitive forces as following:

Figure 1: Five forces model of M.Porter
(Competitive Strategy- M.Porter, 2001)
a. Strengths of the suppliers are shown through
- The level of density of suppliers.
- The importance of product quantity to the suppliers;
- The differences among suppliers;
- The impact of input materials on the cost or the differentiation of products;
- The expense of shifting of businesses in the field.
- The existence of substitute suppliers;
- The threat of increasing merging of suppliers;
- The supplying cost over total income of the industry.
b. Substituting threat is reflected as

- The cost of shifting the products;
- The trend of using substitute of customers;
- The relation between the price and quality of substitute goods;
c. Barriers of penetrating the market of new entrants are reflected as
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- The advantages of absolute cost;
- Understanding on fluctuation cycle of the market;
- The capacity of approaching input materials;
- Government policies
- Economies of scale;
- Requirements of capital
- The typical features of good brands;
- The cost of shifting business field;
- The capacity of approaching distribution channels;
- The possibility of being retaliated;
- Exclusive products.
d. Power of customers is reflected as
- Bargaining position;
- The number of buyers;
- Information buyers get;
- Typical features of good brands;
- Price sensitivity;
- Product differentiation;
- The density of customers in the industry;
- The availability of substitute products;
- Motives of customers;
e. Competition of competitors in the field is reflected as
- The barriers in case of getting out of the industry.
- The density of the industry;

- Fixed cost/ added value;
- Growth condition of the industry;
- The state of productivity surplus;
- Differences among products;
- Shifting costs;
- Typical features of good brands;
- Diversification of competitors;
- Phasing out in the industry;
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2.3 SWOT model analysis
SWOT model is an effective tool in perceiving and making decision in every situation
in any business units. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
SWOT provides a strategic analyzing tool in reviewing, positioning and orientating of a
company or a business project, SWOT is suitable to group work and applicable in planning
business activities, strategy building, competitor evaluation, marketing and promoting
products and services. (Hendry, L.C., 2010; Product customization: an empirical study of
competitive and repeat business); (International Journal of Production Research, 2010; Vol.
48 Issue 13)
Strengths and Weaknesses are the ones of internal factors while Opportunities and
Threats of external ones. SWOT enables the company to analyze other factors which have
relative impact on the competitiveness of the company. SWOT is often used in the
combination with (Political, Economic, Social, Technological analysis), the model of
analyzing the market and valuing the potentials through external factors in the aspects of
politics, society and technology. Analyzing according to SWOT model means evaluating
data organized as the structure of SWOT in a logical way to help readers understand as
well as present and discuss to facilitate the process of making decision.

Figure 2: The SWOT Matrix
SWOT model often gives out 4 basic strategies:

(1) SO (Strengths - Opportunities): Strategies basing on the strengths of the company
to take advantages of chances in the market.
(2) WO (Weaknesses - Opportunities): Strategies basing on the capacity of overcoming
weaknesses to make use of market opportunities.
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(3) ST (Strengths - Threats): Strategies basing on the advantages of the companies to
avoid threats of the market.
(4) WT (Weaknesses - Threats): Strategies basing on the capacity of overcoming or
absolutely minimizing weaknesses of the company to avoid the threats of the market.
2.4 Factor effecting to competitiveness of enterprise:
Any business of any field and any form also has it success or failure affected by many
factors including macro factors and also micro factors. These factors vary according to
business field of the company and forms of the business. (R.E Caves and M.E Porter,
2001)
2.4.1 Macro factors
In the context of fast changing globalization these days, macro factors are always of
“uncontrollable ones”. This requires the business always keeps alert and finds the solutions
to survive and develop.
a. GDP
GDP has an important impact on business condition of enterprises. In the domestic
market, GDP leaves great influence on the market and buying power of consumers,
structure, and behaviors of consumers. Although, the economy of Vietnam is enjoying
development and living standard of people is improved more and more, the difference in
buying power among social classes is unavoidable. Therefore, finding ways to match
different levels of buying power in the society is the key to improve competitiveness of the
business.
b. Financial market
In any country, financial market is the core element, which directly affect the
development of businesse, a strong financial condition would help the business to improve

competitiveness and develop more high quality products and create great prestige to
customers. Through financial market, activities such as investing, saving and inter-trading
among enterprises would get more effect. Enterprises should buy more machines and
equipment in a strong finanicial market condition enough to supply loans to business and
by contrast, enterprises would save more in spending and investing in a tied financial
market.
c. Government policies
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The policies ruled by the government in the framwork of politics and law leave great
effect on consumption activities of the business, and then affect competitiveness of the
enterprise. In recent years, Vietnam is always valued by international economic experts as
a country with stable political and economic environment. And the gorvernment oftens
applies favorable regulations on business activities. This creates much favorable condition
foe domestic enterprises to set up and develop.
d. Technology
These days, the revolution on scienece, technical and technology lay a meaningful
foundation on the basic factors of a business’s competitiveness namely quality and price.
Moreover, business competitiveness also depends on the process of collecting, processing
an communicating in a fast and exact way thank to advance in science, technology.
e. Investment and saving
Investing and saving are the two issues of marco economy. A favorable investment
process encourages the business to expand its scale and develop the brand of the quality. A
business with favorable condition is the one holding strong condition of finance and aslo
bright record of revenue. Besides, saving also plays an important role in activates of small
and medium businesses in such a hard situation these days. Businesses have to cut down
spending, maintenance the current market shares, save and wait for the chances of
investment and development.
d. Trading
Commerce also means trading and business exchanging. This activities hold high

liquidation position also means an effective business outcome of enterprises. Macro
environment facilitate the development of trading and businesses have chance to join a fair
and healthy competition in their market.
e. Geography
Natural factors such as natural resources of the country, geographical location and
geographical distribution business units, etc both create initial chances and challenges for
business process of an enterprise. In case of fruitful resources and favorable geographical
location, competition capacity of the company would be improved thank to saving in cost.
g. Society
Social factors are always evaluated as leaving strong effect on behavior of consumers.
This is the first basic element to turn natural needs of human beings into desire – the one