Table of content Introduction5 Content6 A. Task 16 I. Definition of the context of business strategy6 1. Vision and mission6 1. 1. Vision statement of KDC7 1. 2 Mission statement of KDC7 1. 3 The relationship between vision and mission of KDC8 2. Objectives and business strategy of KDC8 2. 1 Objectives of KDC8 2. 2 Business strategy of KDC9 II. Significance of stakeholder analysis explanation9 1. The identification of KDC stakeholders9 2. The influence of KDC key stakeholders11 2. 1 Internal stakeholders11 2. 2 Connected stakeholders12 2. 3 External stakeholders12 B. Task 213 I. External environment of KDC13 . Macro environmental factors13 1. 1 Political and Legal13 1. 2 Economic13 1. 3 Social – culture14 1. 4 Technology15 1. 5 Environment15 2. Micro environmental factors15 2. 1 Threat of new entrants15 2. 2 Bargaining power of buyers16 2. 3 Threat of substitute products or services16 2. 4 Bargaining power of suppliers16 2. 5 Rivalry among existing competitors16 3. Opportunities and threat of KDC17 II. Internal environment of KDC17 1. Competitive advantages of KDC17 2. Value chain analysis18 C. Task 321 I. Market penetration22 II. Horizontal integration by merger and acquisition22 III. Market development23
Conclusion24 Reference list25 Introduction Established in 1993 with only 70 staffs at the beginning, until now, Kinh Do Corporation (KDC) has became very big one in Vietnamese market, with total staffs of over 7. 741 employees. The company’s total revenue reaches 3,471. 5 billion VND with four main businesses: foodstuff, retail, real estate investment and financial investment. Up to now, after more than 17 years of formation and development, over 90% of revenue of KDC has gained from foodstuff. In fact, in the foodstuff industry, KDC reaches many achievements and has an important position in Vietnamese market.
This report will provide the definition of the context of business strategy; explain the significance of stakeholder analysis as well as conduct an external environment and organizational audit of KDC. At last, this report will show some strategic positioning techniques to the analysis of the company. All this parts of the report only focus on King Do foodstuff. Content A. Task 1 I. Definition of the context of business strategy Nowadays, along with the rapid development of economy in over the world, most of the companies have been established, which leads to the increase in the number of rivals also.
Therefore, the competition in the market becomes fiercer and fiercer. So in order to compete with other companies and become successful in a long term, the company in general has to have a clear direction to identify its position in the future, which will be shown by the vision, mission, goals and objectives of the company. KDC is not an exception 1. Vision and mission While a business must continually adapt to its competitive environment, there are certain core ideals that remain relatively steady and provide guidance in the process of strategic decision – making.
These unchanging ideals form the business vision and are expressed in the company mission statement (quick. MBA. com, n. d). KDC is a big corporation which originally operated in Vietnam since 1993; for over 17 years of operation, KDS has started vision and mission to meet the appropriate business environment in the foodstuff industry. VisionFlavor your Life MissionOur Consumer Mission is to identify and produce affordable staple and packaged foods, snacks, bakery products, beverages and juices, confectionaries and condiments, instant foods, processed meats and health supplements which people want.
Our products are pioneering market-leaders, hygienic, healthy, satisfying and conveniently available to all consumers. Our Shareholder Mission is to not only maximize investment returns over the long-term, but also to manage risk in order to give surety and confidence those investments can achieve our shareholder’s goals. Our Partner Mission is to create sustainable value for supply chain partners through creating innovative food products which address consumer demand trends and satisfy or exceed consumer expectations, and provide equitable returns for all.
Our Staff Mission is to nurture and develop the skills and abilities of our people to meet the professional demands of their work and satisfy their personal needs. In this way we create dynamic, creative, innovative and dependable members of the Kinh Do family. Our Community Mission is to contribute to the communities in which we operate through sponsorship programs and targeted community development and support activities. Figure 1 KDC foodstuff vision and mission statement 1. 1. Vision statement of KDC In case of KDC foodstuff, the company carried out a very short vision statement: “Flavor your life”.
In my point of view, this vision statement of KDC is not good and suitable for KDC. Basically, a good vision statement is evaluated base on 4 elements: realistic, credible, attractive and future. Firstly, the KDC’s vision statement is very equivocal and not clear. It still makes people know what do KDC like to be in the future, and it really looks like a slogan of the company more than a vision statement. Moreover, it does not mention about the time-bound when the company achieve. Therefore, it cannot make people believe in or it is not credible.
Besides, the attractiveness of this vision only influence to the customer, but it does not attract the employees of KDC. It cannot inspire and create the motivation for employees to work 8 hours or more a day. So these factors make me think that this vision statement of KDC foodstuff is not suitable. In fact, KDC is one of the old companies which have been experiencing stage of economy in Vietnam. If I were the chairman of KDC, I would require my company to have a more specific and also attractive vision statement for the future of the company.
Now the company is to maintain as one leading foodstuff group in Vietnam, so I think that a vision statement which mentions about the leading foodstuff group in the Asian area should be considered by KDC. 1. 2 Mission statement of KDC There are nine elements which involved in making a mission statement and a good one should be evaluated by incorporation of these elements in it Figure 2 9 elements in a good mission statement According to the mission statement of KDC and also these 9 elements above, I think the mission of the company is quite good.
This mission statement of the company covers a lot of elements includes customers, products, markets as well as profitability, public image and employees. Moreover, it answers these questions: “What need to be satisfied? ”; “Who is to be served and satisfied? ” and “Who is to be served? ” In addition, it also divide very clearly the mission for each position for internal as well as external stakeholder, and it helps KDC foodstuff be able to manage and achieve them easier. Therefore, based on these factors, I think this mission statement of KDC is very suitable and appropriate for the company. . 3 The relationship between vision and mission of KDC Mission and vision both relate to an organization’s purpose and aspirations, and are typically communicated in some form of brief written statements. Together, mission and vision guide strategy development, help communicate the organization’s purpose to stakeholders, and inform the goals and objectives set to determine whether the strategy is on track. These interdependent, cascading roles and the relationship among them are summarized in the figure. Figure 3 Relationships among Vision and Mission
Basically, mission supports much to the vision and it is looked as small vision of the company in the short-term and it helps the company to reach the vision easier. In fact, a firm with clearly communicated, widely understood, and collectively shared mission and vision has been shown to perform better than others without them, with the caveat that they related to effectiveness only when strategy and goals and objectives were aligned with them as well. In the case of KDC, the company has a very clear mission statements and it also relates to the stakeholders of the company very well.
KDC’s vision statement, on the other hand, it is not good and we can see not much communication link between the vision and mission of the company. Based on the available mission statement, KDC should have a new vision statement to help the company run well in a long term. 2. Objectives and business strategy of KDC 2. 1 Objectives of KDC Objectives can be defined as the desired or needed result to be achieved by a specific time. KDC also sets up some obvious objectives in the business.
In specific, the functional objective for KDC foodstuff is that: “uses state-of-the-art technologies, research and developments, quality raw materials from environmentally sustainable sources and the creativity and innovation of our people and selected external resources to produce and deliver an extensive range of affordable staple and packaged foods, snacks, bakery products, beverages and juices, confectionaries and condiments, instant foods, processed meats and health supplements. Our products are hygienic, healthy, satisfying and conveniently available to all consumers”.
A good objective can be evaluated by using SMART standard. Figure 4 SMART standard Based on SMART standard, KDC foodstuff objective gets 3 elements in total 5 elements. This objective of company is very specific and it is also achievable. The company can reach this objective in the future easily. However, it does not show the time-bound or it seems to be not measurable, and these elements make this objective be vague and not realistic as well. Therefore, KDC needs to put more information about time-bound or put more figure to make this objective be measurable and realistic. 2. Business strategy of KDC A strategy normally is known as a method or plan chosen to bring about desired future, such as achievement of a goal or solution to a problem. In fact, KDC has used a lot of business strategies in many different cases to reach many different purposes, such as market penetration, product development, etc. At current period, KDC will grow its foodstuff industry in both depth and width dimensions through the M strategy in order to become the leading foodstuff group in Vietnam. In 2010, the North Kinh Do Corporation and Kido Corporation are merged into KDC.
It is one of the efficient business strategies of KDC, and in fact it helps company to develop rapidly in term of economic scale. The top managers of KDC really knows about its competitive advantages, and has information about the business situation of KDC so they can set up the strategy for the company in right time and it is also works well. II. Significance of stakeholder analysis explanation 1. The identification of KDC stakeholders In general, stakeholders are divided into three kinds: Internal, connected, and external stakeholders. Figure 5 Stakeholder model
The evaluation technique to classify KDC stakeholders is discussed by “Stakeholder mapping”, which bases on their interest parallel to the level of influence/degree of power involve in the business Figure 6 Level of stakeholder influence According to the method above, the stakeholders of KDC with their influences could be classified through the following table. StakeholdersStakeholders mapping Minimal effort (A)Keep informed (B)Keep satisfied (C)Key players (D) InternalManagementX EmployeesX ConnectedShareholdersX CustomersX SuppliersX CompetitorsX
ExternalGovernmentX Local AuthoritiesX Community and Pressure groupX Figure 7 KDC’s stakeholder mapping 2. The influence of KDC key stakeholders 2. 1 Internal stakeholders ?Management Mr. Tran Kim Thanh Chairman of Board of Director Ms. Vuong Buu Linh Founder – Member of the Board of Management Mr. Tran Le Nguyen Vice Chairman of Board of Director – CEO Ms. Vuong Ngoc Xiem Founder – Vice President In KDC, managers play a very important role. In general, managers who hold a huge number of shares of KDC and they will make decisions for the company.
They have complete understanding of the company’s targets, in order to lead the firm well. Furthermore, managers encourage the employees, make them work better and also make a good working environment if KDC. In other word, in term of KDC, managers often provides both material needs such as capital as well as spiritual needs through leading the employees to keep the organization’s working style on right track. ?Employees One of internal stakeholder of KDC classified as employees, who are key players. In today’s increasingly competitive environment, KDC regards human resources as a determinant of its success.
Until now, KDC has built an extremely strong human resource, with a huge number of staff, worker, or foreign experts for high technologies. KDC prouds to be one of companies ranked in top business in Vietnam in using local labor work force effectively. Besides continuously retaining and developing staff via an advanced training mechanism, internal transfers and promotions, KDC also paid attention to drawing new labor from outside that possessed the competencies and attributes suiting KDC’s culture. Besides, while continuously expanding and growing, KDC is also focusing on nurturing its human resource for its sustainable development.
KDC formed a training center (KTC) where employees are trained to meet current work requirements and get prepared for the company’s future development. In 2009, KTC organized training for 3,685 people, a 17% increase over the previous year. So employees of KDC are gradually maintained and improved in quality, in both quantity and quality; for further development, the cooperation still need appropriate methods to meet the requirements of competitive environment in order to cope with challenges as well as able to catch opportunities. 2. 2 Connected stakeholders ?Shareholders
In term of KDC, shareholders belong to group C – keep satisfied. They hold the shares of KDC, invest money in KDC business, and in some how they can contribute their ideas in making the business decision. Besides, in case KDC have troubles in the business and cannot make profit and pay dividend for them, they will think about selling their KDC’s shares, so it will increase the control dilution of the company and make it more and more complicated. Therefore, with a big corporation like KDC, shareholders need to be satisfied carefully. ?Suppliers Suppliers are quite important in KDC’s operation.
If the organization pays suppliers late, existing suppliers may decide to stop supplying the company, and it will lead to the increasing costs of finding new suppliers, and influence in KDC business actions. In fact, KDC foodstuff has to base on their supplier much such as providing financial, technology; especially material. In the foodstuff industry, material input is looked as an extremely important. KDC’s suppliers are the main element which determines the quality of raw material, or they can delay in providing, and KDC really do not want this situation.
Therefore, suppliers belong to group C – keep satisfied by KDC. ?Customers The fact that “without customers, you do not have a business” emphasizes the importance of customers for every company, and KDC is not an exception. With KDC foodstuff, the customers focus on the quality of goods and services and their decision to trade with KDC or not based much on these elements. And their decision directly influences to KDC’s destiny, successful or failure. Therefore, KDC foodstuff always has to pay attention strongly to satisfy the needs and wants for this key player.
And easy to know why the first mission of KDC is focusing on customers. ?Competitors In recent years, the number of company operating in foodstuff industry in Vietnam increases dramatically. KDC now has to compete with more and more rivals including domestic one like Haiha Kotobuki, Hanobaco, Huu Nghi, etc and many foreign confectionery companies. These all firms create a very competitive foodstuff market in Vietnam, and this situation influence quite strongly in KDC operation. However, these rivals also seem to be motivation to make KDC develop, change as well as increase competitive ability in right domestic market. . 3 External stakeholders ?Government Government is one of external stakeholders which pursue the passing of law and policies. In fact, Government is the main factor which affects the business environment of KDC. For example, the government passes the laws to protect the interest of workers as well as customers and it asks KDC have to follow. For example, Vietnamese applies many rules for food hygiene and safety, and KDC foodstuff has to produce legitimately and provide good quality foods for customers. Besides, KDC has to pay corporation income tax, r import tax when KDC buys machine or material from foreign countries. Therefore government is noted in group C – keep satisfied with KDC ? Local authorities It also needs to satisfy by KDC. Basically, it influences in KDC operation in the local areas so KDC should pay attention in it. For example, the environment business of KDC stores or factories affects the local people like water, sound, air pollution. B. Task 2 I. External environment of KDC 1. Macro environmental factors The macro environment can be described in terms of six key components in PESTEL model
Figure 8 PESTEL model 1. 1 Political and Legal Vietnamese government is run by one single party, so Vietnam has the most stable political situation in the world. This condition allows KDC to develop their strategies without being worry about suddenly changes in political system. Moreover, now Vietnam is a member of many big commercial groups like WTO, or China – Asean Free Trade Agreement and the government’s policies create a more dynamic and competitive market, so it is a good conditions for KDC to increase competitive ability as well as expand the market to overseas. . 2 Economic Now KDC is operating in Vietnamese market which is evaluated as a growing market with a high GDP rate. It is an obvious opportunity for KDC to make profit and develop. Figure 9 GDP of Vietnam from 2003 to 2010 However, in Vietnam there are also many economic problems. Now Vietnamese government still cannot handle and curb inflation and it is over 20% in the year 2009. Figure 10 Inflation rate of Vietnam from 2003 to 2010 Furthermore, the volatile in real estate market, in stock market also influence in KDC.
Besides, in the year 2011, the exchange rate between domestic currency and foreign currency always change complicated, and a real situation that the value of Vietnamese currency is decreasing a lot. Moreover, the fluctuation of the world economic creates many disadvantages. These elements make the price level of flour, sugar, milk, butter, etc instable. When the price increases, it means that the cost of material also increases; manufacturing cost goes up and so on. It is a serious threat for KDC. 1. 3 Social – culture Vietnam is a densely populated country with 90 million people and in rank of 13th of countries with the highest population.
Therefore Vietnam is evaluated as a very potential for every organization to invest. According to CIA, in the recent years Vietnam population has been increasing gradually with the average population growth rate at 0. 88%. This is a good opportunity for KDC because the company runs the business in a big market, with a huge number of customer as well as employees. However, the lifestyle of Vietnamese is changing day by day and toward to western lifestyle. In addition, the current pressure from work also affects the overall diet of Vietnamese, so their tastes change as well.
Therefore these factors influence much in KDC. For example, KDC will have to grasp of the market trends and find out the suitable production strategy. 1. 4 Technology The revolution in science and technology happened rapidly in recent years, and it makes the life cycle of technology become shorter. This force asks businesses to continuously renew the technology if they do not want to be lagging behind. Particularly in foodstuff manufacturing, customer’s tastes change so often so it also makes product life cycle in this industry become shorter.
It is serious situation that KDC foodstuff must focus and find the way to solve. The paradox is that in the term of intense competition today, to develop the production, increase in investing, and develop the technology is a difficult problem for every company. However, in the case of economic integration now, it creates favorable conditions for KDC to access to new technology and modern machinery also from the developed countries like USA, Japan. It is considered as a opportunity for KDC to develop the productivity and quality. 1. 5 Environment
This natural factor can affect in KDC in some part of business. The matters of weather condition in Vietnam now are very serious, and it might have effects on KDC operation, such as the way of preservation the materials and inventory. Besides, the environment pollution now is concentrated very much by the government as well as the civil. Therefore, the company’s activities should be friendly with the environment. 2. Micro environmental factors The micro environment can be described in terms of five key components in Porter’s model Figure 11 Porter’s five forces model 2. 1 Threat of new entrants
As mentioned above, now Vietnam carries out the policy of opening the economy, so it leads to the emergence of large number of new corporations into Vietnamese market, and the foodstuff market is not an exception. Besides, the barrier against the new entrants is quite low, so it makes the numbers of KDC’s rival in foodstuff increasing. For example, Lotte Group (a joint venture in Japan and Korea) jumps into Vietnam, and early acquire Bien Hoa Confectionery –Bibica by holding up to 35. 65% of ownership. Therefore, the big new competitors are considered as a serious threat for KDC at the moment. 2. 2 Bargaining power of buyers
Next element is about the bargaining power of customers. Basically, the customers always have power to influence on the distributors. In the case of KDC, the profit the company can gain based on the strength of this force. Vietnam is a potential market with 90 million with 25% of population if under the age of 14 and 70% of population is from 15 to 64 years old. This makes a significant bargaining power over KDC. However, KDC foodstuff has good product excellence as well as service, and a famous brand name for a long term of operation in Vietnamese market, so almost customers always believe in the quality and price for KDC products.
Moreover, the CCI – customer confidence index is increasing gradually, so it means that Vietnamese customer is going to spend more money. Figure 12 CCI of Vietnam from 2007 to 2010 2. 3 Threat of substitute products or services In the foodstuff industry, it is unavoidable that the KDC products will have many substitutes. The customer’s choice of food is unlimited because of the diversity of food chain. However, KDC foodstuff also builds a strong and attractive image in Vietnamese customers, so KDC is still a good choice for them. Therefore, the threat from substitute products is not high. . 4 Bargaining power of suppliers As the mention above, the power of suppliers is evaluated to be quite important for KDC. The suppliers provide financial, technology and material for KDC and KDC needs their suppliers. However, suppliers do not have any power authority to control decisions that effects on KDC’s policies, so this force is not a threat for KDC 2. 5 Rivalry among existing competitors The fact is that KDC now is the market leader with 28% of market share in foodstuff industry. The main competitors of KDC is only Haiha and Bibica, and these company only hold 8% and 6. % of market share, respectively. So the KDC domestic rivals are quite small and they meet a lot of difficulties in competing with KDC. Therefore, the Vietnamese foodstuff companies do not influence KDC much, and to compete with weaker and smaller domestic rivals is really an opportunity for KDC. Foreign competitors, on the other hand, now appear more and more in this industry, with strong financial resource and high quality products, and it is a big threat for KDC. Figure 13 Vietnamese market shares in confectionery industry 3. Opportunities and threat of KDC
After analyzing the PESTEL and 5 forces model, we can see that there are some opportunities and threat also for KDC. About opportunities, now KDC is operating in a very potential market with a high population and many preferences. Besides, Vietnam now is a member of many commercial groups, and it is an obvious opportunities for KDC to develop. Besides, when Vietnam opens the economic, it is a good change for KDC to access the new and modern technology and also improve. One more opportunity for KDC is that their domestic competitors are quite small and cannot compete with them.
However, there are some threats that KDC has to face, including the strong new foreign competitors jump in Vietnam, the shorter foodstuff product life-cycle and the changing of price level of input materials. II. Internal environment of KDC 1. Competitive advantages of KDC Competitive advantage can be known as “Condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefit accruing to that company. ” KDC after 17 years of operation also have some competitive advantages compared with the rival in foodstuff industry in Vietnam. Famous brand name In Vietnamese market, KDC has built a strong image in the customer, and also the brand name is very well-known in Vietnam. Basically, the reasons KDC have a strong brand name because of the long-term history, the achievement and rewards, and also the quality of KDC’s products. In 17 years operation of KDC, the company is known as one of the most reputable and prestigious brands in Vietnam, which won the confidence and appreciation of consumers. Therefore, KDC’s brand name help the company attract the attention of customers as well as investor easier compared with their rivals in the market.
It is really an obvious advantage for company in expanding the market, developing the new products, or rising capital. ?Wide and diverse distribution channels KDC foodstuff includes three companies: Kinh Do Corporation, North Kinh Do Corporation and Ki Do Company, and these three companies build up a very wide distribution channel. KDC in particular covers all of 64 provinces of Vietnam with over 200 distributors and 75,000 retail outlets. Besides, KDC expands its distribution channel to international market, exports the products to more than 35 countries all over the world such as USA, Australia, Europe, Singapore, etc.
Compared with the rivals, KDC foodstuff has the widest distribution channel. Besides, KDC also develop both traditional as well as modern channel in Vietnamese market, such as build more supermarkets, bakeries, or entertainment areas. ?High quality management system and employees KDC is a very big corporation with a complex organization structure, but over 17 years of operation KDC has been run very successfully and efficiently. The main point which makes the difference between KDC with other companies is the high quality management system and staff.
The company spends much on developing information technology Enterprise Resource Planning of SAP, a cost-effective tool to aid in better management. Besides, KDC formed a training center where employees are trained to meet current work requirements and get prepared for the company’s future development. It helps the company own a high quality management system as well as professional employees. 2. Value chain analysis The value chain is a systematic approach to examining the development of competitive advantage was created by Michael Porter.
In specific, the value chain is used as a tool to describe the activities within and around the organization, which helps the organization to identify its strengths and weaknesses. This tool divided into two board types, namely support and primary activities. Figure 14 Value chain model In term of KDC foodstuff, by using the value chain tool, we normally know the strengths and weaknesses of the company, and it is shown in the following table. Inbound Logistics Firm InfrastructureKDC builds a store system which all kinds of raw materials like flour, sugar, or various flavorings.
KDC has some cold storages for preservation of fresh materials like eggs, milk, and butter. Human resourceKDC mobilize the local human resources, which is very available and has a large number of employees KDC builds many expert groups which evaluate the quality and quantity of materials input. Technology DevelopmentThe cold storage systems are using an advanced storage technology. ProcurementKDC has the local sources which provide the raw materials and it is very favorable for KDC. KDC has strong relationship with foreign suppliers, such as China. Operation
Firm InfrastructureKDC has 9 medium and large factories from the North to the South, and these factories have very convenient location. Human resourceEach factory covers about 1000 workers to 1600 workers, and it makes a strong human resource for KDC A lot of KDC worker in these factories are skillful and professional Technology DevelopmentKDC has just invested $10 million on purchasing the modern machinery, equipments and production technology from Italy, Netherlands, Denmark and USA. ProcurementProduction management system of KDC works effectively. Outbound Logistics
Firm InfrastructureArea of finished product warehouse is quite large. Transport systems are good, and the roads and traffic are favorable. Human resourceKDC is still mobilizing the local human resources. Technology DevelopmentThe high technology in preservation. Procurement Marketing & Sales Firm InfrastructureKDC has a very large distribution channel with over 200 distributors, 40 main KDC bakeries, and more than 120,000 retail outlets Human resourceThere is more than 1800 retailers nationwide Technology DevelopmentKDC applies the high information technology in sales and promotion such as develop shopping online, e-marketing.
KDC really focuses on R&D activities to reach the needs and wants of customer so the money KDC spends for KDC is very huge. Procurement Service after sales Firm Infrastructure Human resource1800 retailers is always ready to guide and answer customers’ questions Many staffs work in supporting online 24/24. Technology DevelopmentKDC is using CRM – customer relationship management to manage the customer easier. Procurement Figure 15 Value chain analysis in KDC After analyzing value chain as well as competitive advantages and the business situation of KDC, there are both strengths and weaknesses of KDC.
Firstly, KDC has a wide distribution network, together with a famous trade mark, high market share, and strong financial resource. Besides, KDC has a mass production with high quality, and the company also has good R&D capability. Moreover, the machinery and equipment of KDC is much more modern than the domestic competitors. On the other hand, KDC gets slow growth in some products and the company also base on some main product heavily. Beside, the Kinh Do brand name is still not famous in the international market. These factors create the KDC’s weaknesses. C. Task 3
Based on SWOT analysis, the following table will make us understand about strengths and weaknesses as well as opportunities and threats of KDC food stuff. Strengths S1. Wide distribution network S2. Famous trade mark S3. Mass production with high quality S4. Strong financial resource S5. Good R&D capability S6. Modern production machinery Weakness W1. Slowing growth in some products W2. Heavily reliance on some products W3. Not famous brand name abroad Opportunities O1. Potential market (90 million populations and high GDP growth) O2. Approach new and modern foreign technology O3.
Member of WTO and China – Asean Free Trade Agreement O4. Small and weak domestic competitors•O1, O4, S1, S2, S3, S4, S6: Market penetration in Vietnam •O1, O4, S2, S4, S5: Horizontal integration by merger and acquisition another food companies •O1, O4, S1, S2, S3, S4, S5: Product development in confectionery products. •O1, O3, W1, W2: Concentric diversification by venturing into restaurant business. •O1, O4, W1, W2: Horizontal diversification into other food products, e. g milk, dairy or noodle… •O2, O3, O4, W3: Market development. Threats T1. Strong foreign competitors appearance T2. Shorter foodstuff product life-cycle
T3. Changing of input material’s price•T1, T3, S3, S4, S5: Market development by export to USA, Asia market. •T1, T2, S1, S2, S4, S5 : Concentric diversification into supermarket business•T2, T3, W1 Divestment/ retrenchment of financial investment in some low – growth products. Figure 16 SWOT analysis in KDC By using SWOT analysis I find out some business strategies for KDC. In case of KDC, I only focus on 3 most available strategies to suggest for KDC. I. Market penetration Basically, market penetration is the strategy which the company seeks to achieve growth with existing products in the existing markets.
In the case of KDC, now the company is the market leader in confectionery, with 28% of market share, and KDC also has a famous brand name with strong image in Vietnamese market. Besides, the corporation is operating in Vietnam – a very potential market with a huge number of customers, and the rivals are not strong enough to compete with the company. Furthermore, the fact shows that the Vietnamese confectionery market is still not fully saturated. This industry growth rate is still increasing, while the market share of KDC’s competitor like Haiha or Bibica are decreasing.
Moreover, the CCI (shown above) shows that the existing buyers have the potential to purchase the same product and services in more quantity. Based on these factors, it is time for KDC to apply market penetration strategy. There are some available business activities supports to KDC’s market penetration. At first, KDC wants to maintain the company’s market share, and then increase it as possible as KDC can. In the term of KDC, I think KDC should improve its market share, from 28% now to about 35% – 40%. In order to achieve it, KDC can improve its products now buy using the strength of modern production machinery.
If KDC can carries out the innovation in the products as well as the business, it will create a breakthrough for KDC. Besides, KDC should run a lot of new marketing activities such as open exhibition or food fairs in the big cities, bring new advertising program in television, or invest money and build the company’ image based on a football team in V-league. These promotional activities will be very efficient because it adopted by KDC to raise their sales revenue without making changes in the products. Secondary, KDC can increase the usage by existing customer.
These marketing activities above stimulate the customer and make them want to buy KDC’s products more and more. Besides, KDC can use the strength of mass production with high quality to contribute more products and satisfy new demand of customer. Tertiary, KDC needs to secure dominance of growth market. By focusing on the competitors, and also try to collect information about their business condition and growth rate, KDC will always control the power of market leader. The next step is that KDC prepare to restructure a mature market by driving out competitor. This action will be shown more specific in the next part.
In one word, the case of KDC now, with strengths and opportunities, is very available to carry out market penetration strategy. It will help the company to increase sales revenue as well as improve its market share in the existing market. II. Horizontal integration by merger and acquisition In theory, the term horizontal integration describes a type of ownership and control. It occurs when a firm is being taken over by, or merged with another firm which is in the same industry and in the same stage of production as the merged firm. This process is also known as merger and acquisition (M&A).
In the case of KDC, now the company is the market leader, with a strong financial resource, and their domestic rivals are so many, but not strong and big. So it is time for KDC to think about driving out their competitors by using M&A strategies. It will bring many different benefits for KDC. Primary, it helps KDC to reduce the number of their competitors, and also increase their market share. Secondary, buy taking over food companies, KDC can improve the well-known brand name in Vietnam, as well as enhance the company’s reputation in this market. And at last, KDC can widen their distribution channels, as well as develop their products range.
In fact, this strategy is carried out by KDC and it makes KDC grow it foodstuff industry in both depth and width dimensions, and become the leading foodstuff group in Vietnam. So in the future, KDC still follow this strategy to develop in the fastest way. However, KDC should use the strength of good R&D capability to evaluate the firm they want to apply M&A carefully. Furthermore, KDC also implements it slowly by purchasing gradually the share of this food company in order take the control of its operation. Consequently, it will help KDC achieve the success in business. III. Market development
Market development strategy involves selling present product or services in new markets. According the SWOT table above, this strategy needs to be carried out by KDC in two situations. At first, KDC uses it strengths to export their product to international market such as Asia, USA, etc, and also to reduce the threat the company faces now. KDC focus on R&D activity to find some potential foreign market as well as suitable with the company and their product. Then KDC decides to invest money to go oversea by opening alliances and stores to expand in a new market, and carrying out targeting promotions activities to introduce the KDC brand name.
And the strengths of mass production with high quality helps KDC satisfy the needs and wants of foreign customers. Basically, KDC not only goes overseas and has new market, but also KDC can improve their competitive ability with strong foreign food corporations, and then KDC will be strong enough to compete with new foreign rivals in domestic market. Besides, when KDC expand the business in food to international market, the company will have chance to approach new suppliers and have stable input material provider, and avoid the changing price level of input material in Vietnam.
Overall, this strategy helps company solve some current threats as well as have chance to develop more and more. Moreover, KDC bases on their opportunities, decide to go oversea and improve their weakness. Now Vietnam opens the economic, and become member of many commercial group like WTO, Apec or China – Asean Free trade agreement. Besides, KDC does not have to care much about their domestic rival, so it is an available chance to think about expanding to foreign market. Especially, when KDC goes international, they can improve their brand name abroad by building the image Kinh Do in many markets all over the world.
Finally, market development is also an available strategy for KDC in term of reducing the threat, improving the weakness and expanding the market abroad. Conclusion This report above is divided into 3 main parts, and all these parts relates to KDC foodstuff. In the first part, this report defines and analysis the KDC’s vision, mission, objective, and also explain clearly about the role and importance of KDC stakeholders. Second part analysis the internal as well as the external environment of KDC to list out the strengths, weaknesses, opportunities and threats.
The last part uses these four to make the SWOT model and carry out some available strategies for KDC. Overall, this report covers KDC’s business situation and also bring out some strategies to help the company operation more successfully in the foodstuff industry. Reference list 1. BPP Professional Education, 2004. Mandatory Unit 7 Business Strategy Supporting Foundation Degrees Course Book 2. BPP Professional Education, 2004. Mandatory Unit 4 Business Environment Supporting Foundation Degrees Course Book 3. Kinh Do Corporation, 2010, KDC annual report 4.
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