Phân tích thành công trong chiến lược kinh doanh của vinamilk e

Phân tích thành công trong chiến lược kinh doanh của VinaMilk

TABLE OF CONTENTS

I. INTRODUCTION.....................................................................................................3
II. OVERVIEW ON VINAMILK................................................................................3
1. Corporate history.......................................................................................................3
2. Profile summary.........................................................................................................3
3. Vision, mission, corporate position.............................................................................4
4. Major products...........................................................................................................4
5. Key financial information..........................................................................................4
III. ANALYSIS OF STRATEGIES USED..................................................................6
1. Low pricing strategy...................................................................................................7
2. Market strategy..........................................................................................................7
3. Product – market strategy..........................................................................................7
4. Vertical integration.....................................................................................................9
5. Marketing strategy...................................................................................................10
6. Controlling strategy..................................................................................................11
IV. CONCLUSION.....................................................................................................12
REFERENCES.............................................................................................................12

1/12


I. INTRODUCTION
Based on the concept “strategy is the system of different objectives and measures used to
achieve those objectives”, we can see that in business operation, establishing a sound
strategy is the crucial matter to ensure a successful implementation toward set goals.
On the basis of the scientific theory about strategic management and real-life operation of
a business, the scope of this research will mention the success of Vietnam Dairy Products
Joint Stock Company (Vinamilk) due to its sound strategy, as well as intensive analysis

upon such success.
II. OVERVIEW ON VINAMILK
1. Corporate history
The Company was founded under the name of Southern Coffee-Dairy Company (a stateowned subsidiary of the Food General Directorate). During its development of after times of
reconstruction, it was renamed as Vietnam Dairy Joint Stock Company (Vinamilk) in 2003.
Vinamilk was listed on Hochiminh City Stock Exchange (HOSE) in 2006. The Company’s
market capitalization value as at Dec 31st 2013 is approximatelyUSD 5.3 billion and is
ranked the second on the Vietnam Stock Market value.
Through the past 17 years (1997-2013), Vinamilk won continuous Vienam High Quality
Goods certifications granted by Vietnam Standards and Consumer Association.
2. Profile summary
- Company name

: Cong ty Co phan Sua Viet Nam

- English Business name : Vietnam Dairy Products Joint Stock Company
- Abbreviated name

: Vinamilk

- Stock sticker

: VNM

- Share capital

: VND 8,339,557,960,000

- Head office

: No.10 Tan Trao Street, Tan Phu Ward, District 7, HCM City

- Tel

: (84-8) 54 155 555 -

- Website: www.vinamilk.com

2/12

Fax: (84-8) 54 161 230


3. Vision, mission, corporate position
- Vision: to become a world grade brand in food and beverage industry, where people put
all their trust in nutrient and health products.
- Mission: To deliver the most valuable nutrition to community with our respect, love and
responsibility.
- Corporate position: to achieve the total revenue of USD 3 billion and to be ranked in Top
50 biggest dairy companies in the world by the year 2017.
4. Major products
- Dairy products (contribute more than 95% of the Company’s total revenue) include:
powdered milk and nutrition powder, condensed milk, liquid milk (pasteurized fresh
milk, UHT fresh milk and drinking yogurt), fermented yogurt, and other dairy products
(e.g. ice-cream, cheese).
- Beverages (contribute nearly 5% of the Company’s total revenue) include: soy milk, fruit
juices (apple, orange, grape, etc.), tea (green tea, lingzhi tea, artichoke tea), other
beverages (bottled drinking water, salty lemonade, soaked apricot, etc.).
5. Key financial information

Unit: VND Billion
3/12


Figure 1. Statement of income and balance sheet of 2009-2013
(Source: Vinamilk Annual Report 2013)

4/12


Figure 2. Some key financial information of 2009-2013
(Source:Vinamilk Annual Report 2013)
III. ANALYSIS OF STRATEGIES USED
Based on the above-mentioned financial statistic, we can see that the business operation of
Vinamilk over the years 2009-2013 is an ongoing effectiveness. That implies the Company
has established an appropriate strategy to adapt to the changing market context (external
environment), as well as to define the matters need to improve and surmount within the
Company inner (internal environment). To make clear this issue, we will investigate in
succession the strategies and solutions that Vinamilk has been using.

5/12


1. Low pricing strategy
Upon the mission to deliver the most valuable nutrition to community with all respect, love
and responsibility, at the same time, to better the competitive competence, Vinamilk has
employed the low pricing strategy to its products in order to meet the increasing demand
for milk consumption of Vietnamese (there was an average 15 liters of milk used a year per
capita in 2010, the forecasted number for 2020 might be doubled to 28 liters of
milk/year/capita).

This solution answered to the affordability for dairy products consumption of Vietnamese
people.
2. Market strategy
During the expansion implementation, developing sales and meeting market demand,
Vinamilk gradually opened its following branches:
- In October 1994, the sales office was opened and responsible for sales activities in the
north provinces.
- In May 1996, Da Nang sales office was opened and responsible for sales activities in the
central provinces.
- In 1998, Can Tho sales office was opened in order to develop sales activities in the
Mekong delta provinces.
This solution helped the Company to structure its business organization appropriately to
efficiently support executing the implementation of strategies on specific areas.
3. Product – market strategy
Being one of the effective strategies used, contributed a great deal to the success of
Vinamilk, expanded its operation nationwide and overseas, the strategy was executed
through the following specific solution:
3.1 For the current market (Vietnam) and existing product lines (for specific operation
stages), Vinamilk entered the market through the local distribution network as follows:
- Modern trade channel: Vinamilk deals directly with about 600 supermarkets across
the country.

6/12


- General trade channel: Vinamilk sets up 266 exclusive distributors national-wide;
these distributors deliver products to retailers within their assigned territory. As at
December 31st 2013, Vinamilk covered more than 224,000 retailers, increased by
24,000 retailers as compared to that of 2012.

Figure 3. Vinamilk’s distribution network model
(Source:Vinamilk Annual Report 2013)
3.2 For the current market (Vietnam) and new product lines, Vinamilk keeps employing the
strategy of new product development on the basis of researching and developing new
products.
To this end, the approach that Vinamilk applying is to optimize its R&D staff’s
competence. The R&D department creates and innovates incessantly, updates latest
information about technology, food safety, markets, regional situation, customers
demand, etc. in order to seek opportunities and ideas that best suit product
development.

7/12


In recent years, aside from inventing health care products, nutrient products for various
customers (Vinamilk has more than 200 product lines of pasteurized/UTH milk, and
dairy products), Vinamilk has developed its production using natural medicinal herbs
(e.g. Linhzhi mushroom combining with bee’s honey).
Simultaneously with the introduction of several new product lines, another important
solution is to invest heavily in technology to improve the quality of products, that has
been effectively implemented by Vinamilk. Specifically, in 2012, the Vinamilk set up
02 large dairy factors in Binh Duong:
- VND 2,000 billion invested in factory of powdered milk for infants, been operating
since April 2013, the plant's technology ensures all the nutrients, vitamins, minerals...
would not be altered during processing.
- VND 2,400 billion invested in liquid milk factory, been operating since September
2013, the plant's technology eliminates 99.9 % of bacteria in fresh milk.
With such investments, Vinamilk desired to increase domestic market share of
powdered milk from 30% to 50%, and liquid milk from 50% to 60%.
3.3 For new markets (foreign markets) and existing products, Vinamilk holds official

exporting relations with South-East Asia, Middle-East and Africa (of which, exports to
Cambodia reached USD 40-50 million and the Company is planning to build a milk
factory in Cambodia, also).
Exporting products are powdered milk and condensed milk. Exporting sales of 2013
accounted for 14% of total revenue.
4. Vertical integration
In order to implement vertical integration backward, over the past few years, Vinamilk
conducted a cost-effective solution that is to develop material areas by investing in
breeding dairy cow.
For one of the most important matter to major factors of Vinamilk, the material sources,
therefore, since 2007, Vinamilk has invested nearly VND 800 billion to build 05 largescale farms (in Tuyen Quang, Lam Dong, Binh Dinh, Nghe An, Thanh Hoa provinces) and
import cattle from Australia, with 8,000 cows producing 90 tons of milk per day. Vinamilk
breeding facilities is constructed on world up-to-date standard to develop the international
8/12


material sources demand (from grass planting, barn construction, food processing,
veterinary and ambient management).
The Company also linked to more than 5,000 breeding households with more than 65,000
cows across the country, purchasing 460 tons of milk/day. The Company has taken positive
measures to support people as animal training techniques, to direct people to read test
results of microorganisms in milk in order to demonstrate transparency in procurement of
milk.
This solution helped Vinamilk stable the supply of materials, save costs, control inputs
quality; and helped in product quality assurance, food safety and hygiene creating
customer trust.
5. Marketing strategy
Vinamilk used to have a wide range of qualified products and even strong brands, however,
due to weak marketing that led to inability to create an effective message to promote to
consumers about the company’s strengths:

- Although fresh milk accounts for 70-99% milk content, Vinamilk has not exploited its
brands so there is a lack of messages for customers to understand the difference between
the concepts of reconstituted milk and pasteurized milk for customers.
- Vinamilk has taken direct action in handling materials, higher milk purchasing price,
highly-effective refrigeratory truck, and modern processing line. That appeared to be a
distinctive advantage of Vinamilk but has not been conveyed to the customers.
To overcome this weakness, the Company has stepped up measures to implement specific
marketing strategy towards reorganizing the marketing department, conducting short term
and long term marketing strategy with clear criteria, setting goals of building a stronger
system of leading brands, paying attention to design of new and suitable packaging, using
the media to promote its image (in 2013, Vinamilk boosted billion worth communication
and advertising programs to increase sales and introduce new products).
At the same time, the Company has developed and promulgated Policy of Corporate Social
Responsibility and products commitment, including 02 elements:
- Product safety: including research, product design safety; material security, quality
control and management, product tracking control, product information.
9/12


- Health and physical improvement: including research and product development; care and
counseling to consumers.
Through the appropriate channels of information, the above solutions was informed to
shareholders, distributors, consumers, employees, suppliers... and policy commitments in
corporate social responsibility specifically executed by the Company. This has helped the
Company implement successful marketing strategies and create community confidence in
the quality of Vinamilk products.
6. Controlling strategy
In recent years, not only has Vinamilk established 100%-owned factories to breed cattle in
order to stabilize materials for domestic production, in 2010, Vinamilk invested abroad
(representing the rate of 19.3% in Miraka Company, Ltd., New Zealand, specializing in

milk production with a capacity of 32,000 tons/year) to produce raw materials for serving
powdered milk market in Vietnam.

Figure 4. Vinamilk’s details of subsidiares, joint ventures and associates
(Source:Vinamilk Annual Report 2013)

10/12


This solution helped Vinamilk ensure effective implementation of domestic raw materials, and
initial implementation of penetrating foreign markets to expand market development strategy.
The ownership of all or a part of domestic and foreign companies to implement investment
projects in many different markets will help establish the preparatory position on raw
materials, increase market share both domestically and overseas, and the projects will
complement and support each other to help Vinamilk stand still and develop in the future.
IV. CONCLUSION
Through the above presentation on strategies and solutions that Vinamilk proposed and
implemented well, it can be said that Vinamilk Company in general and its leaders in
particular have ensured Vinamilk steps in the right direction and implementation of
strategy proposed. This shows that the formulation, implementation and control strategies
have been implemented in Vinamilk are very effective and contribute to answer the reason
why it is the leading brand in the milk industry in Vietnam.
On the basis of Vinamilk efforts to implement the strategy, including investment solutions
such as breeding dairy cow, branding consolidation, technology improvement to enhance
product quality according to the international standard... to aggressively compete to fully
exploit the domestic market, while expanding the market to other countries, we can say
that the Vinamilk specific objectives set out in 2017 to become one of 50 largest milk
companies in the world's is fully reasonable./.
____________________________________________
REFERENCES

1. Strategic Management, Dang Ngoc Dai PhD.
2. Vietnam Dairy Joint Stock Company website –
3. Vinamilk Annual Report 2013
4. The Saigon Times website –
5.

Investment Bridge website – />
6.

Website:

/>
vinamilk&thuong-hieu-doanh-nghiep=503
7.

Vietnam Business Council for Sustainable Development - />id=477
11/12