HOẠCH ĐỊNH CHIẾN lược của DOANH NGHIỆP sữa VINAMILK e

HOẠCH ĐỊNH CHIẾN LƯỢC CỦA DOANH
NGHIỆP SỮA VINAMILK

PART I: INTRODUCTION OF VINAMILK MILK
COMPANY
1.

Overview of Vinamilk

Vinamilk is the abbreviation name of Vietnam Milk Company. Vinamilk was
founded based on the Decision No.155/2003 QD-BCN dated Oct 2003 of Ministry
of Industry regarding transforming State-owned Vietnam Milk Company into
Joint-Stock Vietnam Milk company. Vinamilk’s business license is 4103001932
issued by Ho Chi Minh city Department of Planning & Investment dated
20/11/2003
2.

Key summary of the company
2.1. Vision – Mission – Core values of Vinamilk

Vision: Vinamilk has focused all of its resources to become the leading milk and
nutrient food company. By applying the strategy of developing product chains with
long-term competitive edge, Vinamilk has enjoyed high and sustainable growth.
Mission: In order to sustain the leading position in the local market as well as
maximize benefits of shareholders, Vinamilk has continuously diversified product
chains, extended its distribution network. Vinamilk aims to become the company
with most-wanted products in Vietnam as well as in the region.

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Quality strategy: “Always meet the needs of customers and be responsible with
customers by diversifying products & services, guarantee quality and food safety at
reasonable prices, applying business ethics and complying with regulations” (Ms
Mai Kieu Lien – CEO of Vinamilk”
2.2. Business fields:
+ Manufacture and trade of cakes & biscuits, soya bean water, milk,
beverage, powder milk, nutrition powder and other products from milk.
+ Manufacture and trade of food, technology, equipment and chemicals
+ Real estate business, real estate leasing and brokerage
+ Warehouse services, transportation and logistics services.
+ Manufacture and trade of alcohol, beer, beverages, processed food, tea,
coffee, instant coffee.
+ Manufacture and trade of package and printing on package
+ Manufacture and trade of plastic products
2.4. The company’s objectives
Vinamilk has continuously developed manufacturing, trade and services in its
business fields to maximize profits for shareholders, increased the company’s
values and improved the employee’s benefits and fulfilled its tax responsibilities
for the government. Besides, by connecting processing industry with material input
sources, Vinamilk has become more independent of material sources in present and
in the future as well.

PART II: SETTING THE COMPANY’S STRATEGY
Analyze external environment
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1.1. Macro and global environment
World economy in general and Vietnam economy in particular in 2009 has still
been under difficulty due to the aftermath of global economic crisis. However,

Vietnam government has responded with effective strategy to control inflation
and crisis and driven the economy to achieve the growth of 5.2% and keep the
inflation at 6.88%
Together with economic development, Vietnamese’s living standard has
gradually increased. Before WTO joining, the quote used to be “enough food,
enough clothes”, now after Vietnam joining WTO, the quote is “delicious food,
beautiful clothes”. Vietnamese people’s needs for milk are stable, the average
consuming rate is 14 liters per head per annual, which is lower than that of
Thailand (23 liters/head/year) and China (25 liters/head/year). Milk and other
products processed from milk have been more popular to Vietnamese. Before the
year of 1990, there were only 1 0r 2 manufacturers and distributors of milk and the
products were mainly condensed milk and imported powder milk. Nowadays, there
are about 20 companies in the milk industry sharing a potential market. The total
amount of milk consuming in Vietnam market has dramatically increased at the
rate from 15% to 20% per year. It is estimated that the total amount of milk
consuming will be doubled in 2010 and continue to be doubled in 2020
Moreover, Vietnam has young population (children accounts for 36% of the total
population) and the population growth is 1% per year. Income per head increases
by 6% per year. These are potential factors contributing to the sustainable growth
of milk industry.
1.2. Import-export and tax policies
 Import – Export policies
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The government’s import - export policies over the recent years have not
fostered the development of the milk local market. The price of powder milk in the
world market has 2 times increased and always fluctuated. Milk processing
companies like Vinamilk and Dutch lady have paid more attention to developing
local material resources. However, there is no certainty about the plan of increasing

the rate of local milk resources in the coming years
Big population, high population growth, sustainable economic growth, increased
income, improved living standard, health issue receiving more attention, a
favorable natural resources, the supporting policy from the government in
encouraging milk cow breeding, government policies in health issue and
prevention of malnutrition, policies to stimulate Vietnamese to consume more milk
to improve body size, intelligence, bones for everyone especially the elder and the
children.
Those campaigns of free milk drinking and free milk providing have contributed to
make Vietnam milk market potential. The statistic for Vietnam market of a
multinational company has pointed out that Vietnam GDP growth rate is 8% per
year and the rate of children malnutrition is above 20%. The playing field for mike
companies lies on the increasing purchasing power of Vietnamese and the
government fund for the policy of reducing the rate of children malnutrition to
15% to 20% within the next 10 years. These policies to encourage cow breeding
have been fostered which serve to increase the milk input resources for local milk
companies. Besides, Vietnam joining WTO has brought a big opportunity for
Vietnamese to penetrate into the world market and gain experience in breeding and
management. However, being a member of WTO also poses threats for milk
industry. Vietnam joining WTO will make small milk producing companies lose its
competiveness against big group e.g. Mead Johnson, Abbott. In addition, we
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haven’t had an effective breeding model. The material resources are heavily
dependent on importing, which makes the milk prices in Vietnam remarkably high.
 Tax policy
In accordance with the commitment when joining WTO, import tax rate for
powder milk in 2012 is 25%. However, until now the import tax rate has been
reduced lower than the committed rate which makes imported powder milk more

competitive than the local one.
Import tax rate for material is lower than the committed rate. Currently, Vietnam
imports 70% of the powder milk for manufacturing since the local source is not
enough to meet the demand
1.3. The habit of milk drinking of Vietnamese
Vietnam is not a country having strength in manufacturing milk; hence the
majority of Vietnamese does not have the habit of drinking milk. Children in the
breast feeding period have digestive ferment in their body (lactose sugar). After
the breast feeding period, the bodies gradually lose the ability to generate this
ferment. The lactose sugar is not digested, which then causes diarrhea after
drinking milk. Therefore, there are many adults who cannot drink milk.
However, this symptom does not appear when drinking yogurt. Training the
children to have the habit of drinking milk regularly, maintaining the generation
of digestive ferment will help to reduce the diarrhea symptom. In addition,
compared the milk price to the price of other products, milk product price is still
high. In other countries with higher income, milk is essential in every day’s
food. In developing countries, the government provides the free milk drinking
program for kindergarten and primary schools. This not only helps to boost the
health of the children but also make the children have the habit of drinking
milk.
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1.4. Milk industry analysis
After the cases of Melamine contaminated milk scandal in China and
neighboring countries, powder milk with lower protein ingredient than displayed
on the package continued to be found out in 2009 have made consumers switch to
products of reliable brands. Vinamilk considers it as a threat but also a rare
opportunity for the company to develop and extend its business
Milk industry is a stable one and less vulnerable to the fluctuation of

economic cycle. According to statistic, world economic crisis over the last 2 years
does not affect much to the amount of milk consuming in Vietnam. The total
revenue in 2009 reached VND18.500 billion, increased by 14% compared to that
of 2008. There are 4 main product lines: powder milk, water milk, condensed milk
and yogurt. Hi-end market niche belongs to the foreign milk brand with imported
products, which are mainly consumed in big cities
Powder milk is the product line which bears the stiffest competition since the profit
margin is the highest – 40%. The revenue of formula powder milk in 2009 is
VND6.590 billion, which accounts for 35.6% of the total revenue of the whole
industry. Imported products account for 70% of the market share.
With the water milk, Friesland Campina and Vinamilk dominate the market.
In 2008, the market share of Friesland is 26,6% and that of Vinamilk is 25.2%.
Regarding the fresh milk market and pasteurized milk market, Vinamilk accounts
for 55,4% of the market share of the nationwide water milk. The total revenue of
drinking milk makes up of 43% of the total revenue of the milk industry.
The market for condensed milk shows the signal of saturation. The market share of
Vinamilk in this respective market is 79% and that of Friesland Campina is 21%.
The main consuming market for this product is rural areas. The revenue of yogurt
in 2009 is VND2,000 billion, increasing by 11% compared to that of 2008.
Vinamilk accounts for 80% of the market share of the yogurt market in Vietnam
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Overall, Vinamilk accounts for 35% of the market share of the milk market;
Dutch Lady is at the second position with 24% of the market share. According to
Dr Vu Thi Bach Nga, the Head of the department of protecting customers – Bureau
of competition management – Ministry of Commerce & Industry, “the increasing
income and the increasing awareness of the benefit of drinking milk have made the
demand for milk go up (20% to 25% per year, in which water milk increase from 8
to 10%). The total output of milk products and milk-originated products increase in

both quantity and variety. The breakdown of milk consuming also changes, in
which water milk consuming increased from 11% in 2000 to 35% in 2009”.

1.

Vinamilk’s internal environment analysis
Vinamilk is the leading company in producing milk and other milk-

originated products. Currently, Vinamilk has more than 240 distributors and more
than 140,000 retail shops selling Vinamilk products nationwide. Vinamilk’s market
share is 39%. Vinamilk products are available in almost supermarket chains
The leading position in the market has been built and maintained well. Since its
foundation in 1976, Vinamilk has made it a strong brand in Vietnam market.
Vinamilk brand has been used since the company was founded and nowadays it has
become a popular brand. Vinamilk has dominated the market thanks to setting
focus on marketing campaign and continuously strive to improve product quality.
With long history of presence in the market, Vinamilk is proud to say that Vinamilk
truly understand the market and the trend of the customer needs, which helps the
company to choose what field to choose to focus on. For example, with deep
understanding and efforts, Vinamilk Kid has become the best seller milk product
for children aged from 6 to 12 in 2007.

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Product portfolio of the company is very diverse meeting the increasing
demand of the customers. The company has four main brands but the key ones are
Vinamilk and Dielac. Vfresh is a new and potential brand. The product portfolio is
as the following
Water milk:

• Water milk for household: fresh milk and Flex pasteurized milk
• Water milk for children: Milk Kid pasteurized milk
Yogurt:
• Drinking yogurt
• Yogurt
• Probi fermented yogurt
Powder milk:
•

Powder milk for pregnant and breast-feeding women: Dielac Mama

•

Powder milk for children: Dielac Alpha Step 1, Dielac Alpha Step 2,
Dielac Alpha 123, Dielac Alpha 456

•

Powder milk for malnutrition children: Dielac Pedia

•

Powder milk for adults: Vinamilk Canxi, Dielac Sure, Dielac Diecerna

•

Eating powder for children: Ridielac Alpha

Condensed milk:
• Ông Thọ condensed milk

• Phương Nam Star condensed milk

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Besides, there are other products such as: ice-cream, coffee, fruit extract water
Vfresh
Technology process: applying manufacturing and packaging technology for
all factories, using technologies of European countries e.g. German, Italia,
Switzerland. Vinamilk is the only country in Vietnam having the spraying
dehumidifying technologies from Niro group – Denmark – the leading company in
industrial drying industry. Other companies like Dutch Lady (under Friesland
Foods), Nestle and New Zealand milk also use this technology. Besides, Vinamilk
also use the assembly line provided by Tetra Pak to provide better products to the
market
Human resources: until now, Vinamilk has more than 4000 employees
2.

Business direction and the company’s objectives
a. Business direction in the future
Key products are water milk and powder milk: from 2000 to 2012,
Vinamilk aims to account for 35% market share of powder milk and 55.4% of
that of the water milk
Customers and the target market: Plan to meet the local demand and export

nutrient powder milk to the international market. The company always strives to
diversify the products to satisfy the increasing demand of customers
Competitors: The competitors which have been following Vinamilk closely are
Dutch Lady. The market of powder milk is currently led by imported brands, of
which the imported brands account for 70% of the market share

Business philosophy: “core value” (honesty, determined, creative, effective,
respect, harmony, open-minded)
Motto: “four brands make an enterprise”
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Main resources to accomplish the objectives
•

Widespread distribution network: 240 distributors and
140.000 retail shops in 64 provinces. Experienced salesman force with
1.787 sales man nationwide

•

Advanced information technology infrastructure helps
make the management of the company smooth

•

Talented and well-experienced management board and
skilled engineers & workers

•

The reputation and brand of the company

b. Setting long-term objectives
The company’s objective is to maximize the benefits of shareholders. The
company aims to have VND 20,000 billion revenue in 2012 and target to be the

top 50 milk companies with highest revenues in the world in 2017 with annual
revenue of USD 3 billion
3.

SWOT matrix analysis and setting business strategies.

Vinamilk’s SWOT matrix:
Strengths(S)

Weaknesses (W)

1. The biggest and leading company in

1. Marketing activities are not strong

Vietnam milk market

enough to advertise to customers

2. Vinamilk has been a popular brand in

the strengths of Vinamilk products.
Vinamilk is providing products

Vietnam for 34 years now

which contains 70% to 99% fresh

3. Distribution network has been

milk, but the advertisements have

extended nationwide and kept

not managed to

extending, which helps to quickly
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bring its products to customers

2. Vinamilk has diverse products for
different target customers but the

4. High-quality products and gaining

packaging does not point out that

trust of customers

differentiation,

5. Factories are scattered around

3. Material procurement has not

Vietnam, which helps to eliminate
transportation cost. Factories are

utilized supplying resources from

equipped with advanced

farmers

technologies, annually upgraded,

4. Vinamilk’s investment in Da Nang

guaranteed to provide international

factory is not effective

standard products
6.

5. Exporting market is still narrow and

Long-term relationship with

not stable

local and international suppliers,
which guarantees a supplying
resource at reasonable & stable price.
Currently, Vinamilk is purchasing
60% of the fresh milk made in
Vietnam
7.

Extensively experienced
leaders in milk industry. Internal
control system is transparent,
processes are clear and good.
Innovation and a positive attitude
toward changing have been practiced
at Vinamlk, from management team
to employees.
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Opportunities (O)
1.

2.

Control the price of input fresh

1.

Local powder milk market has

milk

seen stiff competition from

Thanks to the policy of

imported products

developing milk cow of the

2.

Competitors continuously launch

government, Vinamilk has

new products with good

centralized material resources,

marketing strategies

which helps to reduce material

3.

Threats (T)

3.

Foreign competitors have better

importing expenses

marketing and market penetration

Develop and achieve strong

strategies

consuming of new products
4.

Higher income of Vietnamese, the
need for milk products and their
care & attention about health and
health-care products increase
accordingly

Proposed strategies: developing strategies
Detailed strategies:
•

Reinforcing, building and developing a system of strong brand to
satisfy the needs of Vietnamese consumers

•

Developing Vinamilk brand into the most trusted nutrient brand by
investing in Research & Development about the nutrient need of
Vietnamese people.
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•

Extending business products in the beverage market by focusing on

VFresh brand in an effort to meet the increasing demand for beverage
products which are originated from fresh and natural material and
healthy for people

•

Reinforcing distribution network in order to gain more market share at
those markets which Vinamilk has not enjoyed big market share e.g.
rural areas and small cities

•

Invest in brand building and developing new products, improving the
quality of the distribution network for products which require cold
storage with the objective to make cold-storage products (yogurt, icecream, pasteurized milk) to become the product line which mainly
contribute for the company’s revenue and profit

•

Exploit the strength and the reputation of Vinamilk as a reputable and
trusted nutrient brand of Vietnamese and aims to account for 35% of the
market share of the powder milk market in the next 2 years

•

Develops comprehensively product lines for milk and milk-originated
products aiming for a widespread customer base and extending into
high-valued products to increase profit margin of the company

•

Keeps improving the capabilities of the management system, keeps
extending and developing distribution network, strengthening and
effectively developing material resources to guarantee stable & highquality input milk resources at reasonable prices

REFERENCES
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1. In-class document
2.
3.

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