quản trị chiến lược công ty Vinamilk (bản tiếng anh RESEARCH ON THE STRATEGIES OF VINAMILK COMPANY)

RESEARCH ON THE STRATEGIES OF
VINAMILK COMPANY
1. Group name : Golden key
2. Members and missions :

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Members

Studen code

Missions

Hà Kiều Trang

20128667

CEO

Lê Thanh Huyền

20128621

Finance/ account

Nguyễn Mỹ Huyền

20128622

Marketing

Hồ Trà Thục Uyên

20128670

Produce

Nguyễn Khánh Lan

20128629

Human resource

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I. Information about Vinamilk :
1. Vision, mission and core values
• Vision : Vinamilk will become a symbol of international stature in the

food and dink sector, that everybody can trust in safe and nutrition
products.
• Mission: Bring commmunities the most nutritious in all respects, love and
responsibility with the life
• Core values :
- Ethics : Respect established standards and realize ethically

- Equity : The company is equitable with employees, clients, suppliers and
other stakeholder groups
- Integrity : Integrity, honesty in behaviours and all of the transactions
- Respect : Respect ourself, colleagues, the company, partners and have a
cooperation with respect
- Compliance : Comply with laws, codes of conduct, statutes, policies and
rules of the company
- Responsibility : We are always conscientious with works and we do with
the highest responsibility
- Stable development : Our business focuses on the foundation of lasting
benefits to clients, shareholders and other stakeholder groups
- Creation : We are very appreciative about innovation and creativity in
quality, effective improvement of activitites
- Human development : Our business focuses on all of the knowledge and
skill development for employees
- Clients at the centre : We always give consumers the best things. We focus
on putting the clients at the centre of the business
2. The formation and development
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1976: Formerly, this is the Southern of milk and coffee company , under
the Gereral Department Food Industry, with 2 units under Thong Nhat milk
factory and Truong Tho milk factory.
1978: The company added more 3 factory, that were Bich Chi mill factory,
Lubico candy factory and Bien Hoa coffee factory. The company was
managed under The industrial and food. Beside that, it renamed into “The

complex enterprise milk, coffee and confectionary I”
1989: Dielac powder milk enter operation, milk powder products
nutritional powder for children launched in Vietnam for the first time.
1991: The “White revolution” starting formation built program “fresh raw
milk” area. First time company introduced UHT milk products and yogurt
in Vietnamese market.

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1992: “The complex enterprise milk, coffee and confectionary I” officially
renamed into “Vietnam milk products company and under the managed of
The ministry of light industry.
1994: In the strategic of expansion, development and response market
demand in northern of Vietnam, the company decided to build Hanoi milk
factory. On 7/10/1994, the company established sales branches in Hanoi,

business manager of the provinces in the Northern region.
1996: The joint venture with JSC Quy Nhon Frozen to establish a joint
venture enterprise “Binh Dinh milk”. Milk Factory went into operation in
Hanoi. In 5/1996, the company established sales branches in Danang,
business management the provinces in the central region.
1998: In order to expand and develop the business activities in the
southwestern provices, the company established a sales brach in Can Tho.
2001: Completed and put Can Tho milk factory in westhern came into
operational.
2003: Officially converted into a joint stock company in November 2003
and renamed JSC Vietnam milk suitable for the active form of the
Company.
2004 : Acquired Corporation Saigon Milk. Increased charter capital to
VND 1,590 billion
2005 : Purchase of the remaining shares of the joint venture partners in
Binh Dinh Milk Joint Venture Company, renamed Binh Dinh Milk Joint
Venture Company to Binh Dinh Milk Factory. Nghe An Milk Factory
inaugurated on June 30th 2005.
2006 : Vinamilk officially traded on the Ho Chi Minh City Stock Market on
January 19th 2006. In June, An Khang Clinic opened in Ho Chi Minh City
that provides nutrition consultancy services, pediatric consultancy and
general check-up all specialized centers. This is the first clinic in Vietnam
administered by the electronic information system. In November, startup
programs dairy farms starting from the acquisition of Tuyen Quang dairy
farm with 1,400 cows. This farm went into operation shortly after.
The Company makes strategic investments abroad by the joint venture
to build a milk processing plant in New Zealand with a capital of 10
million, with 19.3% of charter capital. Acquired 100% equity from
VietNam F&N Co., Ltd and renamed to Vietnam milk powder Company.
This is a project to build a new 100% the second Milk Powder Factory of

company. Acquired 100% remaining shares in Lam Son Milk Join Stock
Company to become Lam Son Milk One Member Limited Liability
Company. Opened and put Beverage Company in Binh Duong came into
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operation. Vietnam milk Joint Stock Company - Vinamilk was Forbes Asia
honored and awarded the Top 200 Best business in Asia in 2012. This is the
first and only a company of Vietnam was Forbes Asia recognized in this
list.
2007 : Buy 55% controlling shares of Lam Son Dairy Company in
September 2007, based in Le Mon Industrial Zone, Thanh Hoa Province
and renamed to Lamson milk Join Stock Company.
2008 : Completed and put Tien Son Milk factory in Ha Noi came into
operational.
2009 : In September, inaugurated Nghe An dairy farms. This is a modern
dairy farm in Vietnam with farm size is 3,000 cows.
2012 : In June, Danang Milk Factory came into operational and formal
production.
2013 : On October 21st 2013, the Department of Planning and Investment

in Thanh Hoa issuanced of certificates of business registration for Thanh
Hoa Unified Dairy Cows Limited liability company. Vinamilk held 96.11%
of the charter capital of the holding company and become the dominant
power in this business.
On December 6th 2013, the Ministry of Planning and Investment issuanced
of certificate No. 663 / MPI-outward investment for the Company
regarding the Company acquired a controlling share (70%) in Driftwood
Dairy Holding Corporation, in California , USA.
2014 : On June 1st 2014, the Ministry of Planning and Investment
issuanced of certificate No. 667 / MPI-outward investment to the Company
51% of the capital contribution with a foreign partner to establish Angkor
Dairy Products Company Co., Ltd. in Cambodia. Operational objectives is
build dynamic processors of dairy products for the Cambodian market. It is
expected that the factory had will go into operation in late 2015. On May
27th 2014, the Ministry of Planning and Investment issuanced of certificate
No. 709 / MPI-outward investment for the Company contributed 100% of
the establish subsidiaries Vinamilk Europe Spostka Organiczona
Odpowiedzialnoscia in Poland. Operational objectives are trafficked live
animals, raw milk production, milk, dairy products, food and beverages.

3. The corporate model and subsidiaries, joint – venture company

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Bo sua Viet Nam limited liability com

Sua Nam Son limited liability com

VietNam

Bo sua Thong Nhat Thanh Hoa lim
company

A Chau Sai Gon food material corpo
Vinamilk

Vinamilk Europe Spóstka Z Organic
Odpowiedzialnoscia

Driftwood Dairy Holdings Corpora
Internation

Angkor Dairy Products Co, Ud

Miraka Limited

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Subsidiaries
Company name
Ownership
1 Bo sua Viet Nam limited liability
100%
company
2 Sua Nam Son limited liability
100%
company
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5
6
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Vinamilk Europe Spóstka
ZOrganiczona
Odpowiedzialnoscia
Driftwood Dairy Holdings
Corporation
Angkor Dairy Products Co, Ud

Voting rights
100%
100%

100%

100%

70%

70%

51%

51%

Joint – venture company
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Company name
Ownership
A Chau Sai Gon food material
15%
corporation
6

Voting rights
15%


2

Miraka Limited

19.3%

19.3%

4. Main business sectors
• Main activities make profit and revenue of Vinamilk :
- Process, product and business fresh milk, canned milk, powdered milk,

baby foods, yoghurt, condensed milk, soya milk , soft drink and other dinks
form milk
- Breeding : Breed milk cows, provide animal varieties and farming
techniques, methods
The conpany focuses on breeding to supply fresh milk resource inputs

for products form milk of Vinamilk
•
The main products of company :
Dairy products
They are accounted for more
than 90% of the total sales
of the company
Dairy products include:
- Powdered milk, baby foods
- Condensed milk
- Water milk : Sterilized
milk, pure UHT milk, water
yoghurt
- Yoghurt
- Other products from milk :
icecream, cheese

Dinks
Dinks contribute less than
5% of total revenue of the
company
Main products include :
- Soft drink
- Juices : apples, oranges,
grapes…
- Teas : Antiso, aloe vera, ...
- Dinks : Bottled water,
daiquiri, …

5. The list of main products

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There are more 250 products with main lines :
Water milk :
+ 100% fresh milk : 100% sterilized milk, 100% Pure UHT milk, 100%
fresh milk is imported from New Zealand
+ Pure UHT milk : For children ADM+, For adults Flex, not lactoza
Flex
+ Daily pure UHT milk : Fino
Yoghurt :
+ water yoghurt : probi, susu, ozela, vinamilk
+ yoghurt : probi, susu, probeauty, aloe vera, yoghurt from 100% fresh
milk
Powdered milk and baby foods :
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+ Powdered milk:
For mother and baby
Dielac Mama
Optimum Mama
Dielac Anpha
Dielac Anpha Gold
Dielac Grow

Dielac Optimum
Dielac Pedia

For adults
Nutrition product for old
The product helps strong
bones
The product for diabetes
The product for losing
weight
Daily nutrition product

+ Baby foods : Ridielac baby foods
- Condensed milk: Ong Tho, Phuong Nam star
- Icecream and cheese
- Soya milk, soft drink and drinks :
+Soya milk : Goldsoy, goldsoy canxi- D
+ Soft drink: Vfresh, Vfresh Juki, Vfresh smoothie
+ Dinks : ICY bottled water, ICY daiquiri, lincha, antiso Vfresh, aloe
vera Vfresh
6. Bussiness area and distribution system :
Yogurt, fresh milk and fruit juice have already available on Viet Nam
and international airlines.
Vinamilk’s products have available in 650 mid-small scale
supermarkets all over the country.
The company have market on whole country and spreading abroad.
• Domestic market:
The company have 13 produce factories can meet up to 3 market:
Northern, Central and Southern Viet Nam. Distribution offices have been
established in Ha Noi, Da Nang and Can Tho in order to launch distribution

system on whole country. Below are specific details:
Productive block and storage:
- 13 Produce factories: 3 in HCM city, 3 in Binh Duong, 1 in Bien
Hoa, 1 in Can Tho city, 1 in Da Nang city, 1 in Nghe An, 1 in Binh
Dinh, 1 in Thanh Hoa and 1 in Tien Son.
- 2 storage enterprises in HCM and Ha Noi, in charge of transportation
and storage materials, products.
- Business block: 3 distribution offices in Ha Noi, Da Nang and Can
Tho.
- Raw material development block: View page 110 for more detail.
- An Khang clinic: 1 clinic in Ho Chi Minh in charge of periodic
check up for employees and citizen.

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Foreign market:
1 co-op company Miraka Limited to produce powder milk and fresh
milk in New Zealand
1 subsidiary – Driftwood Dairy Holding Corporation, produce and
sale many milk products in California state, US.

1 subsidiary – Angkor Dairy Products Co. Ltd, mainly produce milk
products. This company is in process of building factory and
expected to run in 3rd quarter 2015.
1 subsidiary – Vinamilk Europe Spostka … dealing with live
animals, raw material to produce milk, milk products, foods and
drinks.
Distribution system prototype
Vinamilk

Distributo
rs

Supermarket
s

Vinamilk
showroom
s

Export

Retailer
Customers

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Distributor:

Up to December 2014, The company have 265 exclusive distributors and
these distributors sale up to 215.000 retailers on the whole country.
Supermarket:
Vinamilk’s products have already available in 650 mid-small scale
supermarkets on the whole country. However, supermarket system in Viet
Nam mainly gather in big provinces, cities and still developing so
supermarkets only occupy 9% of domestic sales.
Vinamilk Showrooms:
This is a chain of Vinamilk showrooms. In the end of 2014, the company
have 74 showrooms on the whole country. Planning to have 110
showrooms in 2015 and in 2017 it will be 500 showrooms.
Export:
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Export activities occupy about 10% of company sales. Mainly export
products are powder milk, nutrition powder and sweetened condensed milk.
In 2014, the company have exported to 29 country and teritories. Vinamilk
still export to traditional market at Middle-East and SEA, also develop new
market at Central America and Africa.
7. The position of the company

With the boom, the company sets a goal that will reach a total
turnover is 3 billion dollars and ranks in the Top 50 big milk company for

the world in 2017.
Vinamilk is Vietnam's largest milk companies continuously for more
than 37 years since it opened in 1976.The company's current market share
is over 50% in the dairy sector in Vietnam. The growth rate of total sales,
profits before tax and equity by an average of 5 years is 31%, 31% and
28% respectively.
With the boom, company sets goals,which will reaches total sales is
3 billion dollars and ranks in the Top 50 the world's largest dairy company
in the year 2017.
The company was listed on the stock exchange in Ho Chi Minh City
in 2006. The company capitalization value on the market at the time of
31/12/2013 was about 5.3 billion dollars and the 2nd largest value on
Vietnam stock market.
II. Societal environment analysis of Vinamilk company
1. Economic forces
a. The growth rate:

According to the assessment of experts,the current state of the annual
growth of the country's steadily increased.

Chart 1: Vietnam's GDP growth in recent years

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Total domestic product in 2010 was 6.78%, in 2011, GDP grew by
5.89% compared to 2010. The average income of the people of Vietnam, as
of the end of 2010 was about $ 1,160, 2011 1300 USD.Demonstrate

economic growth and incomes of people are on a high. But overall, the
economic growth rate is not high in Vietnam, leading to average income
per capita is still low and unemployment rates are also high compared to
other countries.
The pace of growth also affects less to Vinamilk's operations.
But now, with the development of economy, people's income level
increases, improved lives as consumers pay more attention to quality and
hygiene food, especially the use of dairy products.
With the people's living standards rising, consumer spending on
dairy products in households is also growing facilitate Vietnamese dairy
sector South development.
However, in recent years the rising inflation rate, force people to cut
back on spending, especially in rural areas, the reduction in consumption of
milk is employment can take place before, this is the main cause of
problems for the dairy industry. But inflation has fallen over in recent years
(2012 and 2013), inflation reduction and slump in the price of raw
materials such as sugar (reduction of 5-10%), cream powder (50%). These
metrics are very beneficial to Vinamilk, because the raw materials
constitute a large ratio of a company's production costs..
The slow growth as people spend on products such as milk and
uncomfortable. Because of milk is an essential product to impact levels are
relatively low. This more or less negative impact on the milk processing
industry in general and our country in particular Vinamilk. Thus, the factor
of economic growth is seen as negative impact on business activities of
Vietnam Dairy Products Joint Stock Company.

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b. Interest rate factors:
Currently in the world, the interest rate is always the major concern
of the business loans. The catch and predictable situation frees increase in
interest rates will help businesses better orientation in the future.
In Vietnam, On 17/03/2014, the State Bank announced a series about
reduced key interest rates .Accordingly, the maximum rates applicable to
term deposits and term deposits of less than 1 month decreased from 1.2% /
year to 1% / year; The maximum interest rate applicable to deposits with
terms from 1 month to less than 6 months decreased from 7% / year to 6% /
year. Which is pulled by a series of banks to adjust interest rates, others
slightly higher. This is a support action from the government enterprise,
helping businesses get access to capital at a lower price, promote enterprise
production and business recovery.
This factor has a positive effect and pretty strong business
performance of the company. The interest rate was gradually reduced,
stabilizing the exchange rate, balance of payments improved. Deposit
interest rate ceiling has been adjusted from 14% to 12%, the interest rate of
credit fell from a year earlier, this trend is accelerating and directing the
flexibility of the market fluctuations and evolutions of inflation. This is an
opportunity for company to access preferential loans of the bank, maintain
and expand production.
2. Techlogical forces

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Now, Vinamilk joint stock company is still the leading enterprise of
the dairy industry in Viet Nam. Vinamilk’s leadership always attach
importance to science and technology elements. The company depends on
capital resources and market demands, product structure to convert

investment timely technology. Vinamilk has implemented three
technological level assessments of the production. Its objective is to know
the starting point of each priod, that we can compare the company’s
technology level to the technology level of the world. After each
techlogical level assessment, Vinamilk adjusts investment activities of
technological shifts. At present, we can confirm that Viet Nam dairy
processing sector in general and its Vinamilk in particular has reached the
advance, modern level of the world in both technology and equipment,
throught some examples:
The company invests and innovates the powdered milk production
technology from “ type” to “ blowers”
Technologies and equipments for the procurement of the famer’s fresh
milk, the company ensures the purchase of dairy cow and promotes the
dairy farming in the country
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The rapid sterilization technology in high temperature to produce UHT
fresh milk
Vinamilk invests and innovates the production technology of two- piece
cans
The technological innovation cans extraction of powdered milk to stabilize
the quality of product, improve the preservation duration and ensure labor
safety and hygiene…
Vinamilk is applying the equipment and production technology to
international standard. The company uses the modern production

technology and packing in all of factories. Besides, Vinamilk also imports
technologies from Europe countries, such as: Germany, Switzeland, Italy
to apply the production line. Vinamilk is the only company in Viet Nam has
the machinery system uses Niro spray drying technology of Denmark, that
is the world’s leading manufacturer about industrial drying technology,
production. Some companies, such as : Dutch Lady ( the company is
attached to Friesland Foods), Nestle and New Zealand Milk also use this
technology and manufacturing process. In addition, Vinamilk uses
production lines to international standard, it is provided by Tetra Pak to
produce dairy products and other valuable products.
We can see that technology is one of factors, that impact the success
or failure of the company. The above analysis, we can see that the
technology and science have both good and bad influence to the bussiness
activities of the company. So in the last time, we can see that how much the
company’s leadership focused on this element developing.
3. Socicultural forces

For Vietnam, the habit of using these products as well as sweets,
canned products or the related milk products is not high. This is
understandable because the conditions of the situation of the Vietnamese
economy is still difficult, and just get out of the list of the poorest countries
in the world (2008), the majority of people living on less than average ,
access to these products is almost very little. So this habit only a small
proportion of the urban population, relative living standards start forming
the habit of using dairy products. This is one of the impact of the results
change from the country the innovation, integration and development.
Awareness, income, lifestyle, people's thinking changes. Access to sources
of information more easily, through loudspeakers, newspapers, television,
posters, banners ... makes people increasingly feel the increasing demand
for care and satisfy physical needs.

In addition, the rapid population growth rate (1.5% - in 2015),
especially the growth rate of urban population is higher than rural areas
should be aware of health protection is increasingly focused, especially
issues essential nutrients for children only breastfeeding period gradually
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helped form the habit of milk consumption for all ages in the later stages.
According to statistics from the National Institute of Nutrition, current
consumption of the Vietnam Dairy has increased significantly (30.3 grams
per day).
Programs and policies to encourage milk in school meals, offering
free or very cheap price for the preschool and primary school children were
also mentioned in the government program of national development and
piloted in some areas with favorable conditions. Namely the program ''
School Milk '' with the state budget is done in Ba Ria - Vung Tau is a
research highlights need for national replication.
Vietnam culture is the culture of 54 ethnic mix ethnic groups, both
inclusive, both characteristic features of each ethnic group. But overall, all
cultures are very focused on family background, their race. Any material
possessions life savings, most parents are leaving the brothers support each
other, the children honor their parents.
Return to the situation of our country, milk and dairy products such
as cheese, coffee, juice ... is extremely good. For many people it has
become a habit of daily use. Especially when creating confidence in the
quality reputation as Vinamilk, it is easy to make loyal customers using this
product. As one of the set points in the Vietnamese people's perceptions
are often used what I feel comfortable and confident that rarely changes.

It should be added that one of the characteristics of Vietnamese
people with body image and weight is low compared to the height plus the
psychological world want to prove themselves and create the attention of
others. Therefore one of the highlights in the company's advertisements
Vinamilk is forming a healthy lifestyle, comprehensive development of
physical and intellectual, human dynamic, creative, a role model wall. Of
course, the efficiency gains are tremendous.
Vietnamese people are interested in the health capital of the self, the
family, but not like Japan, Korea ... which upholds the nation, popular local
restaurant, Vietnamese people tend to prefer foreign goods more domestic
goods by psychology often underestimate the quality of domestic goods
over imported goods. But the effects of this problem is not significant for a
dairy company has built brands such as Vinamilk.
Precisely because of these reasons, cultural factors - social always
strong and positive influence on the business activities of Vinamilk
production in particular and the dairy industry in particular.
4. Political-Legal forces

Polictics is one of the factors that effects strongly to the business activities
of a company. Goverment always attaches special importance to equality
between the different companies, focuses on bettering the enviroment for
the companies to develop.
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So, polictics has a huge influance to most of business activities of
vinamilk
Imported tax is usually high, so that imported milk is usually more

expensive than comestic milk, which makes a lot of advantages for the
companies producing milk in vn
Therefore, this is the factor that has a huge and positive influance to
the development of the companies.
The fact that in the developed countries, the percentage of children
have access to dairy products very early and quite sufficient concentrations
and activities of scientific entertainment created for the development
completed good weight, height, IQ. And this of course created for these
countries labor force of high quality. And so Vietnam is no exception. The
policy of the State that is desirable for the people have a right to enjoy the
benefits that nature. Although our country is not a good competitive
advantage for the production and processing of dairy products in large
quantities. The priorities of the Party and the State have for this area
through the establishment of systems departments, policies issued
guidelines to steer development assistance to businesses.
For Vinamilk particular, state support measures now in ensuring the
supply of inputs, infrastructure, experts, credit, marketing support, brand
image promotion Vinamilk ....
Based on the above analysis we can see the political environment,
powerful law and is considered good to operate the business of the Vietnam
Milk Joint Stock Company - Vinamilk.
5. Population forces

The Viet Nam population in particular and the world’s population in
general are developing. It means the number of children more and more.
This is the benefit condition for the dairy industry and products from milk.
Besides, in Viet Nam has rapid speed of urbanization and distribution
of population has also changed a lot. The econnomic structure has moved
by a reduction in the share of agricultural sector and an increase in the
share of industrial and services sector also change the structure of the

population. Statistically, the proportion of the population work in
agriculture accounted for over 50% of the country’s population, so the
distance can be shortened. Not to mention the income of people are
increasing, thí number is more 1000USD/ person/a year. The living
standards of Viet Nam people is improving steadily.
The rapidly growing population has strong impact on Vinamilk
business situation. It is a good impact if the company has a right choice in
attracting market and expanding market share.
Moreover, the average life expectance of people is gradually being
improved. This also affects much to the business situation of the company.
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Not only children but also elderly also need nutrients. As an increase in
quality of life, people gradually invest in the purchase of milk.
In the present life, human needs are very diversity, rich. This rich
consumption demand is a great opportunity for enterprises as Vinamilk.
Althought the country has a great demand about dairy products but
the number of consumption per capita is less than the international world,
because of limited sources of income.
In summar, cultural factors have a great influence on business
operations of the conpany.
6. Nature environment forces

Food, especially in raw food in Viet Nam as well as other tropical
countries usually has not higher quality than other temperate countries.
Tropical vegetation usually has a hydratcacbon content is lignified highly
but low in protein. Morover, mineral content is also low, unbalanced,

specially lacks phosphorus. So, the proportion of digestibility of tropical
vegetation is much lower than temperate vegetation. Because the
proportion of digestibility of tropical vegetation is low, so cows can not eat.
That slows down growth of cows and the quality of milk is not what we
want.
Temperature effect to milking cows : temperature affects behaviours,
ability to receive and digest food, growth, reproduction and production of
milking cows.
Temperature and humidity affect food source. A change in the
weather is the cause of the disease in dairy cows.
Temperature affects the fermentation of yoghurt. Viet Nam is the hot
and humid country, so the fermentation of yoghurt is relatively quick.
Environment conditions also impact on the preservation of raw milk
material and products form milk. The country has the relatively high
temperature, so material is easy to go off. This affects much the
preservation method of per firm. But there is the progress of science, so
that is not the great concern of dairy processing enterprises, including Viet
Nam.
Through the analysis , we can see that this is not the good influence
of the company, but the level of impact is not significant, so the compnay
need to have solutions to overcome, control to help business operations are
more efficient, saving input costs, reducing output costs, improving price of
products.
III. Task environment analysis of Vinamilk company

The environment sector (microfinance) are factors, these forces, the
institutions of the ... outside of the business micro stature that
administrators cannot control but they influence the activities and results of
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operations of the business. Analysis of industry environment can help
businesses evaluate the risks and opportunities that a company faces, and
learn how to identify the model as well as mission problems to be solved,
and the key processes required for the business model of successful
business. These risks can to identify the model as well as mission problems
to be solved, and the key processes required for the business model of
successful business. These risks can impact on achieving the strategic goals
will be assessed and plans will be developed to handle this risk.
the hidden opponents

suppliers

the competitors in
the industry

the buyer (customer)

replacement products

Diagram : The forces that control the contest in the industry
The general situation of the dairy sector in Vietnam :
Production consumption and the growth of the market for milk powder, one
of the main products of the dairy sector in Vietnam :

Chart 1: Predicting the growth of milk powder market in Vietnam
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Chart 2: Forecast consumption of milk per capita in Vietnam
In those years, the milk industry is one of the fastest growth rates
achieved in the food industry in Vietnam, with growth of over 20% per
year. With a developing country, has the speed of urbanization and
population growth as high in our country, the demand for milk
consumption will continue to increase in the coming years. But the dairy
sector in Vietnam still can not develop true potential by input source
material depends too much on the supply of international market with about
70% of the milk in the country I come from imports.
Impact on the company: Vinamilk is one of the pioneering
enterprise in the dairy sector in Vietnam, so the company had to be
advantages, advantages, namely the leading domestic dairy sector with
approximately 39% of the market in 2013, the strong growth of demand for
consumption of milk is a very good opportunity for the development ,
expand the company in terms of other domestic enterprises in the sector are
low in comparison with Vinamilk.
The opportunities and challenges of industry environmental brings
very strong impact and good influence to the situation of the company's
activities.
1. The current competitors of Vinamilk:
a. The competitive structure of the dairy sector:

+ Computer market share according to the value of Vinamilk and
Dutch Lady is currently the 2 largest milk producing company in the
country, accounting for nearly 60% of the market. Imported milk from
Abbott, Mead Johnson, Nestle ... account for about 22% of the market, with
products mainly powdered milk. The remaining 19% of the market belongs

to about 20 small scale dairy companies such as Nutifood, Milk, Ba Vi….
+ Milk powder is currently a segment of fierce competition between
domestic products and imports. On the market of milk powder, dairy
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imports accounted for about 65% of the market share, Vinamilk and Dutch
Lady is currently holding market share in turn is 16% and 20%.
+ At present the domestic dairy maker also is competitive pressure
on an increase due to the reduction in taxes for imported milk under the tax
cut policy of Vietnam when making the commitment to ASEAN's
AFTA/CEPT and commitment to the WTO Trade Organization.
+ Market segmentation condensed milk and liquid milk is mainly
due to the domestic companies held: Only Vinamilk and Dutch Lady, 2
companies have accounted for about 72% market share on the domestic
market and nearly 100% of the milk market condensed milk, the rest
mainly by domestic companies hold. The competitiveness of domestic
dairy products and milk imports almost negligible.
+ The country's milk market is the market has more potential for
growth in the future, and this is also a market that profit margins are quite
attractive. Condensed milk products market is forecast to have a slower
growth rate because of the potential the market no longer more profitable at
the same time, the minutes of the special milk products is also relatively
low compared with other milk products.
b.Industry structure:
Vietnam's dairy industry is scattered due to the many industry
manufacturers like Vinamilk, Dutch Lady, dairy companies are small as
Hanoimilk, Ba Vi ..., foreign dairy companies as Abbott, Nestle ... but the

companies with large market share as Vinamilk, Dutch Lady (nearly 60%
market share) is not enough to dominate the sector which is increasingly
subject to strong competition from other airlines, especially the milk comes
from foreign firms.
Table : The strategies of some major competitors:
Competit Goal, vision of the
ors
future
Nestle
(Lactoge
n II,
Guigoz
2)

19

Characteris Strategies and key activities
tics of
competitors
The slogan: "Good
Direct
Market Entry Strategy policy
Food, Good Life"
competition brief by average price, the
The vision, "the
promotion and higher
investment is
commissions to agents
beneficial for the
based on the inheritance of the

company and good for
South with consumers Lacogen
the community where
& Guigpz products, promote
the company is doing
products through the general
business."
agent system in Ho Chi Minh
The goal: "the leader
City, Hanoi and throughout the
19


in nutrition, health and
wellness"

Abbott
(Gain
Ensure,
Similac)

Dutch
Lady

Vision: "scientific
achievements for
future life."
The goal: to become
the leading health care
companies in the

world

Slogan: "get ready for
a life"
Strategic vision: "to
improve life for the
people of Vietnam"
The goal: to become a
leading company
Lothamil Investment in
k (Fresh development of dairy
Milk
farming; animal food
Long
processing,
Thanh)
manufacture of dairy
products
TH True Become the leading
Milk
manufacturers in
(Fresh
Vietnam in clean food
milk,
commodities derived
yogurt
from nature
TH True
Milk)
Vinasoy To become a leading

(Fami,
company on the
Vinasoy nutritional products
soy
from soybeans in the
milk)
Vinasoy market
operations
20

provinces. Focus on expanding
distribution network.
Using brands to market Nestle
baby as Milkmaid brands,
Milo.
Diversification of products
Milkmaid, Milo, Nestcafe,
Guigpz, lactogen ...
Direct
competition
,
confrontati
on

Market penetration strategy by
lightning moderate price policy,
the budget for big advertising
and promotions.
Use Gain leveraging other
brands like Ensure,

Similac. Focus on marketing
activities in hospitals.
Direct
Fast penetration strategy
competition The price is moderate, strong
,
promotion and advertising
confrontati
on
Direct
Market Entry Strategy slowly
competition higher prices, hitting the narrow
segment (good income), fresh
milk used as leverage to sell a
number of other lines such as
yogurt ...
Direct
Market entry strategy waged
competition high price, new penetration,
,
first just hitting narrow
confrontati segments (high income) by
on
distribution channel and
aggressive advertising,
promotion.
Direct
Entering the market slowly,
competition positive advertising,
promotion.

Cheap, hit on niche segments
(soymilk) and currently leading
the soy milk segment.
20


c.Barriers retreat:
+ Barrier technology, capital investment: the initial investment cost
of the dairy sector is very high, so when a company wants to withdraw
from the dairy market will have difficulty in the recovery of invested
capital as machinery and equipment ...
+ Once entered the industry, the company will be bound by the
workers, bound to the government, relevant organizations, the strategic
constraints, this is the plan ... create pressure for enterprises intending to
withdraw from the sector.
+ The Vinamilk operate in a competitive industry as strong as the
dairy sector requires companies to constantly invest in R & D, while
enhancing the marketing campaign, promote the image, causing huge
pressure to the company in many aspects such as cost, revenue, profit ...
But it is also a positive factor contributing to increased competitiveness and
create development for Vinamilk.
+ We see that the competition factor adversely affecting mostly
Vinamilk but also actively contributed to urge Vinamilk rising constantly
evolving.
2. The hidden opponents :

a.The pressure of competition from potential rivals depends on the
following factors:
• The attractiveness of the sector :
+ Dairy processing industry is profitable rates and high growth,

+ Our country dairy market is the market has more potential to grow in the
future, and it is also profitable market attractive border.
+ Domestic dairy market can continue to maintain the high growth rate in
the coming years, due to the consumption of milk per capita of Vietnam
still are low, the average milk consumption levels of Vietnam only reach
about 11.2 kg/year, pretty much lower compared to other Asian countries.
+ However lucrative level between the group product has quite a large
difference. Chinese milk powder products and is currently a senior product
team lead on lucrative, with effective yields of about 40%, the retail price
of milk, water and yogurt have lyrics about 30% the retail price.Condensed
milk market segment due to the needs and tastes of consumers on a
descending should have the lowest response and reached about 12% the
retail price.
The barriers to joining the industry:
+ Technical: this is a very important factor because it greatly affects the
quality of the product as well as the brand of business. Vinamilk in
particular as well as a few other companies in general have constructed
systems of modern production lines, advanced technology, superior
•

21

21


engineering creates a solid barrier to limit the competition to join the
industry.
+ Capital: a production line of milk worth an average of several dozen
billion, which is a small yet not investments to the construction costs, labor
costs, raw material costs ... so this is considered one of the most effective

barriers restrict the opponents joined the industry.
+ Commercial elements: dairy processing industry includes many channels
involved from breeding, processing, packaging, distribution to,
... However, I still don't have a clear, specific standards for each stitch,
especially the voice of the ministries are still separately led to the planning
of the dairy sector has not been as expected and causing many difficulties
for the company in the production and distribution of new company
especially established.
+ As for distribution channels, this is a very important department decides
success or failure of a large dairy company, a major impact on sales, the
Company delivered over: dealers, small grocery, the supermarket (the main
market of the dairy company at this time due to changes in the shopping
habits of consumers), in addition to other channels such as nutrition
centers, product introduction ...
creating established brand in the dairy industry will be extremely difficult
to confirm because of the quality of products as well as to compete with
large companies.
+ Material inputs: the majority of inputs to be imported from abroad
(80%). While working, the state can not control the input source strict raw
milk. Therefore, the quality of the input of companies is not high,
competitiveness with foreign companies lower.
=> In sum, the current dairy industry has huge growth potential. However,
these hurdles are not small industry for companies especially for capital
and processing techniques. In the future, Vinamilk will be able to face
many new competitors come from abroad due to the market economy and
the technical superiority, capital and inputs. Hence competitive pressures
will increase from potential rivals.
b.Impact on businesses:
Dairy industry is a highly profitable, it is both the opportunity and the
challenge to Vinamilk, the more our country deeper into integration,

opportunities emerge to develop the market new schools as well as
competitive pressures righteous home will also increase with each day of
Vinamilk and other businesses. This requires companies to constantly
develop and overcome existing constraints and potential to cope with the
new challenges coming from the wave of integration.
The potential competitors a strong impact on the situation operation of the
company, urged the company to take steps to be prepared thoroughly
22

22


strategies rooms swift penetration of foreign leading companies in the
sector joined the country forward line integration. This factor also
indirectly affect the operation of the company, adversely impact but also
help companies continuously improve and develop.
3.Supplier
Number and size of the supplier:

:

Table 2: List of some major suppliers of Vinamilk:
Provider Name
Fonterra (SEA) Pte Ltd.
Hoogwegt International BV
Perstima Binh Duong
Tetra Pak Indochina

Product supplied
Milk powder

Milk powder
Containers
Carton packaging and packaging
machines

Vinamilk has four dairy farms in Nghe An, Tuyen Quang and Lam Dong,
Thanh Hoa with about 10,000 cows provide more than 50% of the raw milk
of the company, while the rest is purchased from farmers paste. Vinamilk
autonomy in milk raw material, is not dependent on foreign
countries.Besides, the company also has partners who are dairy farms in the
country.
In addition, Vinamilk also import inputs from several other leading
suppliers in the world.
The ability to replace the products of the supplier:
+ Vinamilk build 4 dairy farms, milk supply self. About raw milk powder,
due to material production facilities not yet qualified and technically should
still depend on foreign supply, the company has not yet afford milk powder
products, substitute materials. In addition, the ability of alternative
suppliers of Vinamilk also low due to the supplier's products are of high
quality, the other providers can not achieve equivalent quality.
+ Information about providers: in the current information era is always a
factor in promoting the development of trade, information about the
provider have influenced the selection of suppliers of inputs for the
business.
+ Review of the level of impact, Vinamilk to bear a major impact by the
supplier, especially of milk powder material sources of input, by the
company dependent on imported resources from abroad.But Vinamilk has
restricted was the pressure from the supplier. Vinamilk can autonomy be
fresh milk source material, just depends on the source of the milk
23

23


powder. Moreover, the company has created pressure for the supplier of
quality materials, ensure the good quality of the product. Is the largest of
the country's milk procurement should the company have the ability to
bargain with farmers.Vinamilk is not subject to much pressure from the
scale by the provider and the owner of the high-quality materials and create
a higher position of the supplier.
+ Weak impact on suppliers to Vinamilk bargaining power by the response
by Vinamilk is large, the source of the company's milk powder import is
great but the company have more choice providers should the supplier not
much influence.
+ But directly affect providers, rather good to the quality products of
Vinamilk, thanks to imported milk powder which sources quality milk
powder of Vinamilk not inferior to many with other foreign suppliers on the
market.
4.Customers:
a.The amount of purchases of customers:
The number of people who buy influence directly to sales.Vinamilk's
clients was 2 groups: the first is the individual client and the second is the
distributors such as supermarkets, dealer ...
Customer segment:
So many ages, yogurt and fresh milk-sterilized are two sectors have the
highest number of speakers, in turn is 89.1% and 87.1%. This is also the
two products was the homemaker most choice compared to the other
groups, accounting for 22.9% and respectively 22.1% of respondents and
little disparity between income groups in the use of this product. There are
considerable differences in the use of dairy products and drinks in Hanoi

and Ho Chi Minh. According to the census, the percentage of households in
Hanoi and Ho Chi Minh using pasteurized milk respectively 47% and 53%,
is the tomato is 55.1% 44.9%, yogurt drink, uh is 52% and 48%. In addition
to occupying a large proportion in the domestic market, the consumer's
consumption in foreign markets (Australia, Cambodia, Iraq, Philippines,
Usa ...) also occupy from 10%-20% of the total revenue of the company
through exporting.
b. The ability to convert customer purchases:
+ The product line of Vinamilk and other opponents of the current very
varied, from sour milk, condensed milk, fresh milk to milk powder ...
Customers have a lot of choice the product line, but overall customer
demand for milk is fairly stable health care products, the company is not
run according to customer tastes as some service industries, fashion ...
+ In addition, customers can switch back and forth between Vinamilk and
other competitors such as TH True milk, Ba Vi, Long Thanh, ... these
24

24


companies are now eyeing a majority of customer segments for each
company the quality and quantity of product lines suit every segment of
their choice rather than covering all market segments such as Vinamilk,
customers can change so many providers to compare suppliers level with
each other, namely TH True Milk Long Thanh and hit the customer
segment income and above-average product quality is highly appreciated
by customers.
+ Therefore the ability to switch suppliers the current dairy customers is
very high, not as stable as the choice between the product lines. Effects
bargaining power of customers will now greatly increased, causing pressure

for Vinamilk.
c. The difference of product quality:
+ Vinamilk is a leading domestic company in the dairy industry, there are
many competitive advantages compared to the competition, so that the
company strategy is the leading choice of prices also such as market
coverage, with advantages in capital, technology and many other
advantages, with a consistent quality that the majority of customers
accepted while the lowest cost market, no business can can "race" now in
terms of price as well as market coverage with extensive distribution
channels to the retail from the artist.
+ The purchasing power of customers is quite large Vinamilk but not so
that bargaining can work force impact and can adversely affect the business
performance of leading a large company such as Vinamilk.
Vinamilk has limited the pressure comes from customers by reasonable
valuation of its product line and launched accurate information about the
products and create differentiation for those of rival products and other
alternative products.
+ By analyzing the purchasing power of the customers strategic impact on
operations of the company, accounting for tastes, brand building success
for Vinamilk.
Considering the level of influence, once customers have used to Vinamilk's
products, the company will develop, gain profit, even if the customer come
back to the company, the profit will decrease or cause losses, so this factor
has a positive impact, the negative medium companies.
5. Alternative products:
+ The competitive element of the replacement product is as follows: Price,
quality, culture, tastes, dairy products are the nutritional supplements
between meals to satisfy the ages client components.On the market there
are many types of cereal, drinks improve health ... but these products in
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