Poor management in prices and dumping at locklock vietnam co , ltd

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Le Ngoc Khanh Quang

POOR MANAGEMENT IN PRICES AND DUMPING
AT LOCK&LOCK VIETNAM CO., LTD

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City - 2019


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Le Ngoc Khanh Quang

POOR MANAGEMENT IN PRICES AND DUMPING
AT LOCK&LOCK VIETNAM CO., LTD
MASTER OF BUSINESS ADMINISTRATION
SUPERVISOR: DR. PHAM PHU QUOC

Ho Chi Minh City – 2019


SUPERVISOR’S REPORT ON THE FINAL THESIS SUBMITTED
FOR DEGREE OF MASTER of BUSINESS ADMINSTRATION

The thesis proposal title:
POOR MANAGEMENT IN PRICES AND DUMPING
AT LOCK&LOCK VIETNAM CO., LTD

Student Name: Le Ngoc Khanh Quang
Supervisor: Dr. Pham Phu Quoc
1. General comments
 Remarks on the student’s attitude:
.........................................................................................................
.........................................................................................................
 Remarks on the assignment’s academic quality:
.........................................................................................................
.........................................................................................................
2. Overall assessment:
Meet requirement for submitting
Not meet requirement for submitting
3. Other remarks:
-

Did the student follow the report schedule?
Yes

No

Other ………………………………

- The Turnitin plagiarism percentage:
Supervisor’s signature

TABLE OF CONTENT

EXECUTIVE SUMARY

PART I - INTRODUCTION
1. Company background
2. Business model
3. Business goal
4. Mission and Vision

PART II - PROBLEM CONTEXT
1. Symptoms: Growth rate of Lock&Lock supermarket channel in the period of 2017 2018 is very low
2. Symptom validation
2.1.

The development of supermarkets in Vietnam

2.2.

Comparing with the total household appliances industry and the supermarket
channel revenue growth rate of household appliances industry

2.3.

Compare with other channels of Lock&Lock

PART III - PROBLEM IDENTIFICATION
1. Problem definition
1.1.

Development trend of other channels

1.2.

Goods are not guaranteed in quantity

1.3.

Poor management in prices

2. Problem validation

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PART IV – CAUSE VALIDATION AND CONSEQUENCES
1. Causes and cause validation
2. Consequences
PART V – SOLUTION
1. Alternative solutions
1.1.

Cooperate with e-commerce websites

1.2.

Work closely with B2B customers with contract that have a clear trading term

1.3.

Focus more on brand positioning and marketing campaign to make customers
realize the value of the product they receive

1.4.

Build a team of professional sales staff that have good knowledge and skills with
a thorough training program

2. Action plans for the organization
2.1. Evaluate and select the optimal solution
2.2. Define the objectives
2.3. Action plans
PART VI – APPENDIX

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Executive Summary

For a long time, management has been seen as the key to the success of enterprises
in the integration trend because management decides and coordinates the connection of
business and production activities of enterprises to the market and between departments
together, ensuring business operations always grow and develop.
Research and systematize the basic theoretical basis of management and the factors
affecting the performance of Lock&Lock company, identifying the problem that the
company is experiencing, thereby propose some solutions to improve the performance of
Lock&Lock company in Vietnam, so that the company can achieve its common goal.
Lock&Lock Co., Ltd is having problems related to revenue at supermarket channel.
This problem is the poor management of prices and dumping outside the market applied
with B2B channel goods. B2B channel’s goods are only sold as gifts, however, these items

are out of the market for trading purposes. This problem caused the situation of decreasing
sales of supermarket channels that did not meet expectations. If there is no solution to this
problem, in the long-term, this not only lost sales of supermarket channels, but also
significantly affected the reputation and brand of Lock & Lock that the Shop channel and
marketing department were invested to build in the past few decades in Vietnam.
The most feasible solution to this problem is building a team of professional sales
staff that have good knowledge and skills with a thorough training program. With this
solution and a long-term plan, not only sales of supermarket channel will be improved, but
also Lock&Lock can develop long-term stability and achieve its goals.

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1. INTRODUCTION
1.1.

Company background

Lock&Lock Co., Ltd. was established in July 2007, is a 100% foreign-owned
company. Lock&Lock Co., Ltd is a branch in Vietnam belonging to Lock & Lock Group.
Headquarters is located in Seoul – South Korea.

- Logo:
- Address: 9th Floor, Dai Minh Convention Building, 77 Hoang Van Thai, Tan Phu Ward,
District 7, Ho Chi Minh City, Vietnam

Main business areas of the company: Wholesale and retail distribution of household
appliance, food containers, kitchen tools, furniture, household appliance... especially plastic
used in the family... with advanced technology transferred from Lock&Lock Group in
Korea.

The company’s products are high-end household appliances available in 112
countries and Q-mark certified for product quality (Q-mark is a standard system of quality
assurance of products, managed by KEMTI). Besides that, the company’s products are also
voted the product of the year in the United Kingdom.
Lock&Lock owns 100 patents, designs and brands in 50 countries. Especially, it is
certified with the quality of products and brands of countries with strict requirements on
product quality and production processes such as UK, US, Germany...
Currently, in Vietnam, Lock&Lock has 3 production factories in operation In Dong
Nai Province and Ba Ria Vung Tau Province.

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1.2.

Business model

1.2.1. Key products
Wholesale and retail distribution of Food Storage Containers, Kitchen Appliances
and Livingware product lines with advanced technology transferred from Lock&Lock
Group in Korea.
1.2.2. Key customer
All customers are interested in home appliances, especially housewives
1.2.3. Distribution Channels
Lock & Lock have 4 main distribution channels in Vietnam:
 Supermarket and Convinience stores
 Shop Brand
 E-commerce
 B2B
1.3.

Business goal

Annual revenue growth of 20-30% in all business channels in Vietnam and become
the world’s leading company in household appliances industry in 2020
1.4.

Vision And Mission

1.4.1. Vision
Lock&Lock strives to become a world leader in household appliances, becoming a
reputable brand and easily found in any country.
1.4.2. Mission
 Producing and trading in products of household plastic, household appliance,
furniture and developing products with glass, ceramic and stainless steel materials.
 Improving the efficiency of production and business on the basis of product quality
is the first task to create prestige for the company.
 Satisfying consumers’ needs, always improving and innovating modern advanced
technologies, with the importers of products must ensure high competitiveness in
price and quality.

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2. PROBLEM CONTEXT
2.1.

Symptoms: Growth rate of Lock&Lock supermarket channel in the period
of 2017 - 2018 is very low

Lock & Lock Co., Ltd has a total of 4 main distribution channels: B2B, Supermarket,
Shop and Online channnel. Total revenue of Lock&Lock is generally very good and
revenue growth rate in 2016, 2017 and 2018 is quite high, respectively 34%, 85%, 57%.
Year

2015

2016

2017

2018

Total
Revenue

371,899,468

497,003,745

920,581,145

1,446,193,364

34%

85%

57%

Growth rate

Unit: 1,000 VND
Table 1. Lock&Lock Total revenue in 2015 – 2018
(Source: Sales Management Department)

Unit: 1,000 VND
Chart 1. Lock&Lock Total revenue in 2015 – 2018
(Source: Sales Management Department)

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Lock&Lock’s supermarket channel accounted for the second largest sales of the
company. Therefore, this is a very important distribution channel in the company.

Chart 2. Lock&Lock revenue rate of each channel in 2018
(Source: Sales Management Department)

But at the end of 2018, the management of Lock&Lock realized that the sales of the
Supermarket Channel at the company did not achieve the expected growth. Growth rate in
the period 2017 – 2018 is just 6%.
Year

2015

2016

2017

2018

Supermarket
Channel

124,004,943

169,196,737

288,356,270

305,722,349

36%

70%

6%

Growth rate

Unit: 1,000 VND
Table 2. Lock&Lock Supermarket Channel revenue in 2015 – 2018
(Source: Sales Management Department)
Symptoms are defined as sales of Lock&Lock supermarket channel is not high
and growth rate in the period of 2017 - 2018 is very low.

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2.2.

Symptoms validation

Although the sales of the supermarket channel did not meet the expectation, but
whether Lock & Lock’s problem come from it or not, I proceeded to go into analysis and
comparison, with the situation of supermarket channels in Vietnam, the development of the
Household Appliances industry and compared with other channels within the company.
2.2.1. The development of supermarkets in Vietnam
According to CCI France Vietnam (1), the retail market in supermarkets,
convenience stores and electronics supermarkets in Vietnam is growing, with CAGR of
4.7% (2013-2016) and 6.2% (2013-2017), convenience store chains are growing strongly
in recent years, with very high CAGR of 66.2% from 2014 to 2017. Forecast of the Institute
of Trade Research (Ministry of Industry and Trade) said that in the period of 2016-2020,
Vietnam’s retail trade growth rate will reach 11.9% per year. By 2020, according to the
plan, the whole country will have about 1,200 - 1,500 supermarkets, 180 commercial
centers, 157 shopping centers.

Chart 2. Number of supermarkets in Vietnam in 2017
(Source: Q&Me Vietnam Market Research)

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Because if supermarket channel is not immediately improved, the revenue of
supermarket channels cannot keep pace with the development of supermarket systems in
Vietnam, the company will face difficulties in today’s fiercely competitive market.
Moreover, the company’s goal is that the annual growth rate of all channels must be
more than 20% and become the world’s leading company in household appliances industry
in 2020.

2.2.2. Comparing with the total household appliances industry and the
supermarket channel revenue growth rate of household appliances industry
As The Statistics Portal, the internet’s leading statistics database, in the Vietnamese
market, the household appliances industry has a growth rate of 14.2% in 2017-2018 and
forecast the next year growth rate of 17.7%

Year

2018

2019

2020

Household Appliances
Industry’s rowth rate

14.2%

17.7%

19.0%

Table 3. Household Appliances Industry Total revenue in Vietnam in 2017, 2018 and
forecasts for 2019, 2020
(Source: />
12

Chart 3. Household Appliances Growth rate in Vietnam in 2017, 2018 and forecasts for
2019, 2020
(Source: />
Comparing the supermarket channel revenue growth rate of industry in 2017-2018 is
14.51% with the supermarket channel revenue growth rate of Lock & Lock is just 6%. It
is clear that the supermarket channel of Lock & Lock has problems in the period of 20172018.
Year

2016

2017

2018

Revenue

2,837,881

3,390,592

3,882,540

19.48%

14.51%

Growth rate

Unit: 1,000 VND
Table 4. Household Appliances Revenue in Supermarket Channel in 2016 – 2018

(Source: Marketing Department)

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Unit: 1,000 VND
Chart 4. Household Appliance Supermarket’s revenue in 2016 – 2018
(Source: Marketing Department)
2.2.3. Compare with other channels of Lock&Lock
Looking at 2017-2018, when other channels of the company simultaneously grew
more than 50% (Shop channel 63%, B2B channel 58% and Online channel 275%), the
revenue of the Supermarket Channel was almost “make no headway” with growth
rate is just 6%.
Channel/Year

2015

2016

2017

2018

Shop Channel

19,080,883

22,992,025

106,778,240

173,739,598

20%

364%

63%

291,587,065

463,513,495

734,596,135

31%

59%

58%

Growth rate

B2B Channel

222,927,936

Growth rate

14

Online
Channel

5,885,706

Growth rate

13,227,917

61,933,138

232,135,281

125%

368%

275%
Unit: 1,000 VND

Table 5. Lock&Lock other channels’ revenue in 2015 – 2018
(Source: Sales Management Department)

Unit: 1,000,000 VND
Chart 5. Lock&Lock Total revenue in 2015 – 2018
(Source: Sales Management Department)

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In-depth analysis into the sales of supermarket channels, mainly coming from
Electric Household Appliances, accounting for more than 60% of total revenue. From
2017 to 2018, total revenue increased by 6% but revenue from Electric Household
Appliances did not increase or even decrease. This proves the problem comes from the sales
of Electric Household Appliances of Supermarket channels. In summary, the company's
symptoms are showing that the company is having problems, that is Sales of Electric
Household Appliances of Supermarket channels does not seem to grow in the period
2017 – 2018.

Year

2015

2016

2017

2018

Supermarket
Channel Total
Revenue

124,004,943

169,196,737

288,356,270

305,722,349

Electric Household
Appliances Revenue

0

64,247,277

189,547,656

188,512,160

Weight (%) in total
sales

0%

38%

66%

62%
Unit: 1,000 VND

Table 6. Lock&Lock Supermarket Channel Electric Household Appliances Revenue from
2015 – 2018
(Source: Sales Management Department)

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Unit: 1,000 VND
Chart 6. Lock&Lock Supermarket Channel Electric Household Appliances Revenue from
2015 – 2018
(Source: Sales Management Department)

3. PROBLEM IDENTIFICATION
3.1.

Problem definition

The managers of the company were aware of this symptoms but did not have a
specific solution because the managers have not confirmed where the main problem is. The
company is increasingly developing production as well as diversifying products. Overall,
the revenue of the entire company is very good, but we have to find the cause of the
supermarket channel growing below expectations.
From the above mentioned symptoms, I conducted interviews with the stakeholders:
Lock&Lock Sales Director; Sales Manager and Sales Supervisors of Supermarket Channel;
Sales Manager of B2B Channel; Sales Manager of MESA Distributor, an official distributor
of Lock&Lock; Lock&Lock Promotion Girls (PG), who directly sell Lock&Lock products
at supermarkets and receive feedback from customers. The interview helps me find out
what’s happening at the supermarket channel in particular and Lock&Lock in general. Then
I put up some literature review to find out what potential problems that the company is

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facing. We have identified 3 problems: Development trend of other channels, Goods

are not guaranteed in quantity and Poor management in prices.

3.1.1. Development trend of other channels
A problem that is mentioned is that the other distribution channels of Lock & Lock
are supported too much, the strong development trend of the online channel is strong with
the financial support for the channel, these two things were significantly impact on revenue
of supermarket channel.
When interviewed about the problems derived from supermarket channel revenue, it
did not reach as expected, from the perspective of Sales Director, Mr. Kim Young Woong
said that:
The sales of supermarket channels in recent years have not grown as expected due to
the strong development of online channels in the 4.0 era. E-commerce is growing so
fast, people are gradually rushing to buy goods online rather than strolling around
stores and supermarkets.
Mr. Joo IL Gam, Sales Manager of Supermarket Channel, thinks that:
For the purpose of boosting the brand of Lock & Lock, Lock & Lock want to become
a high-end household appliances brand in the eyes of all Vietnamese consumers,
Lock & Lock promotes the development of Shop channel in all big shopping mall in
Vietnam. Therefore, the development speed of supermarket channel cannot be equal
to Shop channel.
Overall, E-commerce (Lock&Lock’s online channel) has many advantages.
According to Chaffey (2007), the online channel is no longer limited geographically, or by
working time (2), so Lock & Lock will not need to wait for customers to come to the store
but actively seek customers. Lock&Lock can provide catalogs, information, quotes to
customers in an extremely fast way. Phuong Nguyen (2017) said that online channels will
reduce problems in supply chain management such as inventory and delivery time, rental
costs and wages will not be as high as other channels. Online channel will be supported a
lot, on special occasions like Lazada’s or Tiki’s birthday, the products will be discounted

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more than other channels. This will be a significant impact on the revenue of the
supermarket channel. Further more, the company has spent most of the marketing costs
invested in the shop channel, all major commercial centers in Hanoi, Ho Chi Minh City, as
well as the big cities have opened their shops there and advertised immensely, this also
affects sales of supermarket channels.

3.1.2. Goods are not guaranteed in quantity
Sales by units multiplied by the selling price, so the lack of goods and goods provided
inadequate for the programs of the supermarket channel is an issue worthy of analysis.
I moved through the interview the team in charge of the supermarket, including sales
supervisors and sales admins staff.
Ms. Nguyen Thi Mai Chi, Sales Supervisor, in charge of managing MESA distributor,
complained that:
The company system does not allow to order production from factory too much,
because of fear of not selling out, when running the program, the good selling items
do not have enough goods.
Ms. Nguyen Thi Bich Hong, Sales Admin, in charge of tracking supermarket orders and
production orders from factory said that:
We have planned to order from the factory very early, however, the order process is
very cumbersome and complicated, we have to wait and see if the other channels
have ordered items too, so that we can reach MOQ (Minimum Order Quantity), and
must be approval from so many departments. Therefore, I think that supermarket
channel revenue is not high due to goods amount and processes.
Mr. Khong Nhat Minh, Sales Supervisor, in charge of promotion plan, complained that:
When planning a promotion, I have to look at the number of goods that have enough
stock or not, if not, I have to order from the factory, however, when using inventory
managing software, comparing with the real stock, it is incorrect data. Because of
the inefficient inventory management, it is difficult planning for Supermarket

promotions.

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Commodity issues will affect the sales of supermarket channels. When the goods are
insufficient or at the wrong time, the revenue will definitely decrease.

3.1.3. Poor management in prices
Similarly, price is a sensitive factor and significantly affects revenue. When
customers compare retail prices, they will decide whether to buy the product or not.
Therefore, the price is a problem of the supermarket channel that we will discuss and
analyze.
I conducted interviews with the sales staff of Lock & Lock at supermarkets (PG),
Those who directly meet, consult and communicate directly with supermarket channel
customers of Lock & Lock, Ms. Hang Gia Linh, PG at Vinmart Cong Hoa said that:
Customers told me that the quality of household goods Lock & Lock is very good,
the model is very beautiful and constantly has new products, but the price is too
high. Customers often complain about price issues. They go online to find
information and compare, there are many prices, when going to the supermarket to
meet PGs of Lock & Lock, then complain.

According to Philip Kotler, a well-designed and marketed product can deserve a high
price and a high profit (3). Lock & Lock is a good product, excellent quality, beautiful
design, so high price is not a problem. However, Philip Kotler added, buyers can get instant
price comparisons from thousands of sellers, who often actively find out information about
prices, possibly from previous purchases, from ads, friends, family, or online sources. Price
is the only component that generates the revenue of the marketing mix, which acts as a
determining factor for buyers’ choice (3). Therefore, this greatly affects the revenue of
supermarket Lock&Lock.

After identifying the symptoms of the problem of supermarket channel in
Lock&Lock company, I applied many theories and interview results to support finding
potential problems and potential causes, captured off is the initial cause-effect map below.

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Poor management in prices

There are so
many prices in
the market
The price is
high

The shop
channel is
supported
to open
more and
more

Development
trend of
other
channels

Inventory
data
management

is not good

Outstanding
development
trend of
Online
channel

Order from
factory
process is
too
complicated

Sales growth
rate of
Electric
Household
Appliances of
Supermarket
Channel is
lower than
expectation

Managers do
not allow to
order
production
from factory
too much

Goods are
not
guaranteed
in quantity

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3.2.

Problem validation

After identifying the three potential problems that can affect the sales of the
supermarket's electric household appliances, I conduct in-depth interview and gather more
information to determine which problem is central problem, most influential to revenue
growth, so that it can be solved in time.
Mr. Kim Young Woong, Sales Director, said that:
In terms of goods, because the characteristics of the Household Appliance Industry
are to constantly innovate and develop products in a short time, we have planned to
calculate and anticipate the market, however, it is not possible avoiding the risk of
new items not being accepted by the market, moreover, the old items still have to
maintain the sales, therefore, the company's policy is not to allow to order too much
from the factory, if so, it must be divided into several batches of goods. And about
data errors in inventory management, it is normal, because the gap between actual
data and system software is in the allowable range, all businesses will do the
stocktaking regularly to correct the data.
Ms. Vu Ha My, Sales Supervisor, in charge of Coopmart and Coopmart Xtra, said that:
In fact, although inventory management is not good, the number of goods is
problematic, but when the program runs, there are still many solutions, such as

borrowing other teams: shop, online, B2B, or propose to supermarket systems the
similar items, therefore, sales can still be guaranteed even though it is difficult.
Interview more PGs, who often work, meet with management of supermarkets, Ms. Hang
Gia Linh, Vinmart Cong Hoa PG added:
Regarding the issue of goods running promotions posted on leaflets, at supermarkets
that I manage, supermarkets and catagories managers have never complained to me
about the problem of lack of goods, the programs still run normally, but recently
sales have decreased slightly but I don't know for any reason.
Thus, although the goods are not guaranteed, inventory data is not accurate but it
does not affect the sales of the supermarket channel. Therefore, this is not the main problem
that has a great impact on the revenue growth of supermarket channels in 2017-2018.

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About distribution channels, Mr. Kim Young Woong added, Online channel is the
future trend and the shop channel is only for promoting brand, revenue is low, but it is
supported by the cost of opening stores so the revenue still increases with time time.
According to the strategy, the company will still develop supermarket channel because it
brings the second largest share in total revenue, Lock&Lock should combine all channels
to exploit the strong side of each sales channel, from there bring the highest added value to
customers. Thereby, although affecting the revenue of the supermarket channel by the
development of the remaining channels, however, that is not the main problem affecting
the growth of the supermarket channel.

When performing in-depth interview with PG staff at supermarkets, those who directly talk
to customers, Ms. Le Thi Duong, PG at MM Mega An Phu said that:
Few days ago, Ms. Yen (Go Vap District) was shopping at the supermarket and said
that she recently bought a Lock & Lock induction electric cooker at MM Mega
supermarket An Phu with a retail price of 1,800,000 VND, but when it came to Cho

Lon Electronics Supermarket, the retail price of Lock & Lock induction electric
cooker was only 1,200,000 VND. She reflects more, there are many items of Lock
& Lock, the price difference is up to millions VND. There were MM Mega customers
who didn’t buy Lock & Lock products but still reacted strongly to the PG, cursed a
lot, talked a lot about the price, said Lock & Lock is scam, making us really very
difficult to explain.

According to Anderson, prices have a tremendous impact on buyers’ behavior, not
only in determining what buyers can buy, but also in deeper awareness of the value and
process of marketing exchanges (4). This shows that buyers are very price sensitive, price
changes have a big impact on revenue. According to OpenStax, a higher price often reduces
the consumption of the suspected goods, but it can also affect the consumption of other
goods (5). This means, when the customer suspects the price of a product, the consumption
of that product’s goods will be significantly reduced. Customers tend to boycott household

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goods Lock & Lock at supermarket channel. This is a serious and big problem, causing
significant losses to sales at the supermarket channel. Lock & Lock is a good product,
excellent quality, beautiful design, so high prices are not a problem. A retail price that
cannot be changed and that is the company's policy, because the company knows for sure
that, if the retail price changes, it will cause misunderstanding for customers, even causing
great consequences. However, outside market price divergence is a testament to the poor
management of prices, not from the company’s policies.

In summary, there are three problems affecting the sales of supermarket channels,
but through in-depth interview, literature review and data collected, the central problem of
Lock & Lock is Poor management in prices, making the Electric Household Appliances
retail price heterogeneous in the market. This makes the revenue of Electric Household

Appliances of the Supermarket Channel from 2017-2018 seem not to increase.

4. CAUSE VALIDATION AND CONSEQUENCES
4.1.

Causes and cause validation

The root cause of the problem is source goods from the B2B channel has been
trading in the market.
After determining what central problem is, I proceed in depth to find out why there
are so many retail prices of Lock & Lock electric home appliances in the market. According
to Lock&Lock’s customers, I conducted a survey of market information such as Cho Lon
electronic supermarket and e-commerce websites such as Lazada and Shopee, Electronic
home appliance products of Lock&Lock are obviously there is a big gap between the prices
comparing to retail price of Lock&Lock.

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Image 1. Recorded at the Cho Lon Electronic Supermarkets, the price of Lock&Lock
electric cooker induction is 1,200,000 while Lock&Lock’s retail price is 1,800,000 VND

Image 2. Recorded at Lazada e-commerce website, the price of Lock & Lock glass kettle
is 600,000 VND while Lock & Lock’s retail price is 790,000 VND

When interviewing sales diretor about the cause, Mr. Kim Young Woong confirms:
Normally, the company’s products are listed price uniformly between retail
channels, Lock&Lock has a contract that requires distribution channels to officially sell
at the retail price offered by the supplier and only get a discount by percent on retail
price in a few promotions. There are stores where they make their own promotions to

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