In 11th November 2007, Vietnam became a member in WTO, an intergovernmental organization which regulates international trade. Since then, Vietnam’s economy has turned a new page and Vietnam market is becoming more and more intense, especially in the area food processing industry. The sustainable development of business depends on the ability to innovate constantly and the ability to adapt to the changes of environment. Therefore, the managers need to have sophisticated and objective vision and lucid thought to solve problem and bring success to company. Among several strategic tools, SWOT analysis, a method used by almost managers in the world, is considered to be the best. And Vinamilk is no exception, they decided to take full advantage of it.
The purpose of this paper is to research the status of Vinamilk in the industry of Vietnam and covering the whole SWOT analysis. Through the information we gather in the internet, Vinamilk owns a lot of strengths: good branding, extensive distribution and sales network, diversity of product line and package and so on. However, Vinamilk also needs to make good their shortcomings such as the shortage of raw materials in the country and the competitive race for market share when Vinamilk becomes a WTO member. Beside Vinamilk have potential opportunities that company should develop in the future like society, nature, economy and political factor. Followed these opportunities are challenges that Vinamilk have to face. Those are the competition in the milk market, the tendency to use imported products of consumers or health problems related to milk and melanin. As a result, we give some recommendations with the hope that Vinamilk will find the improvement in planning to meet the demands of customers.
With limited knowledge, condition and experience, we cannot avoid mistakes in our report. We expect that the research about SWOT (strengths, weaknesses, opportunities and threats) of Vinamilk in Vietnam will be helpful for the development of the milk industry in the near future.
Thank you for your reading!
In recent years, Vinamilk is one of the biggest company in Viet Nam. Its international name is Vietnam dairy products joint stock company. Vinamilk acquire a reputation for its milk products. There are more than two hundred products with some kinds of main products such as: fresh milk, powdered milk, condensed milk, yoghurt, cheese and ice cream. Its products are allocated widely in Viet Nam with more than 180 distributors and 140.000 retail outlets. Besides, with aspiration for a milk domination in the world and target “Bring communities the most nutritious in all respects, love, responsibilities with the life”, Vinamilk has being tried to expand market to other areas in the world like Asia, Europe, America, Africa. To achieve this target market, Vinamilk builds target customer, based on analyzing demographic and geographic variables. Generally, Vinamilk’s goal is to meet all customers from kids to older people in any occupation. Especially, the company focuses on people who are under 14 – year – old because they are group consuming almost all products. In the present, consuming Vinamilk’s products at the rural or mountainous region is weak, so these areas are markets the company concentrates the most in the near future. Moreover, understanding deeply customer’s psychology, with serving good quantity, Vinamilk is also willing to propose new products and reasonable price for each of age groups with different tastes and different income. According to Euromonitor, Vinamilk is the top company in Viet Nam. Basing on its balance sheet and financial statement it can be considered that annual growth rate increase gradually each year.
2. Literature review.
In this report, we analyze SWOT – a theoretical framework, based on which we can review strategies, determine the position and direction of an organization, a company, analyze business proposals business or any ideas related to the interests of the business. It provides a tool for analyzing strategies, reviewing and evaluating the position, direction of a company or a business project. SWOT is suitable for group analysis, used in business planning, strategy development, competitor evaluation, marketing and service development without depending too much on other money-wasting sources. With the purpose of clarifying strengths, weaknesses, opportunities and threats for a project or an organization, SWOT analysis will support the manager to see through internal and external factors which can bring positive or negative impacts on the organizational goals in particular and the success of the whole organization in general. In details, in businesses, SWOT analysis is utilized to brainstorm ideas for meetings, to analyze strategies, to evaluate competitors, to solve problems relevant to products and brands competition, to decide whether entering or quitting from the market or not, and so on. Identifying strengths of a company is critical for creating value for customers and fortify the competitive position of the firm while realizing weaknesses can improve the ability to control competitive drawbacks against competitors. Additionally, anticipating the opportunities and threats from SWOT backs organization to make correct decisions.
3. SWOT analysis
In recent years, although there are many different dairy firms with a range of attractive design and various types for customers to select the best product, VNM is still one of the top consumer’s choices. Undoubtedly, Vinamilk has its own strengths and business strategies to struggle with other companies. Long history ; strong foundation is the first and foremost strength to become the leading business of the industry of milk processing. Thanks to entirely qualified products as well as competitive price, throughout more than 30-years operating history, Vinamilk has turned into a familiar and trusted trademark to domestic clients. VNM is the “top ten of high quality Vietnamese goods” that is selected by consumers between 1995 and 2009. VNM also owns a variety of top brands such as Ong Tho condensed milk, Ngoisao, Dielac, Yogurt Vinamilk. In addition, it has gained a great customer satisfaction and understanding as well as the knowledge of the local market. Another remarkable factor, which will be not easy for any other company to surpass, is the diversity of products. VNM has introduced in the market more than 200 brands of milk ; dairy products to meet the demands of all ages. Besides, the quality is not inferior to foreign imports, while the price is competitive. Specially, “Ong Tho” and “Ngoisao” have theirs low price so they are suitable to the needs and taste of the mass of people. Together with traditional products, this company also sells soft drinks, Soya milk and cool preservation such as ice cream, cheese and flan. Plus, nutrition biscuit is introduced to customers. Another essential strength that success in their operation is nation-wide distribution system is not only the core for the long-term period plan but also the decisive aspect for the success of a consumer goods producer. It allows Vinamilk to introduce its products and strategy effectively marketing across the country to consumers in a reliable and effective way. Moreover, today their products appeared through 250 distributors with 135000 retail outlets in all 64 provinces of the country. Distribution method combines modernity and tradition: Products are allocated through Metro, supermarket -; consumers (modern channels), distributors -; retail outlets -; costumers ( traditional channels). One more element that should be highlighted in the strong point of Vinamilk is modern equipment and technology. Vinamilk uses technology to manufacture and package in modern way in all its company. Vinamilk imported technology from Europe countries such as Germany, Italy, Switzerland to apply to production line. What is more, Vinamilk is the only company in Vietnam that owns Danish-technology-spray-dryer. On the other hand, Vinamilk’s production lines meet the international quality standards that are provided by Tetra Pak with the aim of bringing milky and other valuable products to market. Last but not least, some features have noticeable contribution like loyal and cooperative relationship with both local and oversee suppliers to gain initiative in having material sources; and a professional experienced management team or a useful marketing strategy (PR, advertising on TV, internet, social media). All of them are the keys to success making Vinamilk a leading position of the Vietnam milk industry branch.
Apart from strengths that Vinamilk has been created, there are some elements that the firm would need to improve. First of all, it can be seen from the Internet that the dairy industry in Vietnam mostly get the raw material from foreign countries to produce dairy products. Therefore, it is inevitable that Vinamilk is also import raw material from various countries. From DNA Branding, a website about strong brand models stated that Vinamilk buys about 60% of fresh milk production. So far, Vinamilk imported raw material mainly from New Zealand, America, etc. Up to now, New Zealand is the highly productive countries for fresh milk export because of their wealthy number of dairy cows( approximately 4.2 million dairy milking cows). Looking at the USDA GAIN report, we could see that New Zealand exported 38.708 metric tons of whole milk powder. Although import materials from trustworthy country like New Zealand, it is undeniable that the cost of imported material will cost a lot of money for Vinamilk, especially when the company face the exchange rates. Moreover, the accession of Vietnam in WTO will increase competition among countries in the industry. Secondly, the market share of milk powder is not competitive with milk powder products imported from the US, Australia, Holland, etc. According to the latest report of BVSC, domestic milk powder market accounts for the 65% dairy products, Dutch Lady accounts for 20% of imported dairy products and for Vinamilk is 16%.
Vinamilk has many opportunities based on four factors including society, nature, economy and politic to develop and achieve its goal. First of all, society factor brings some advantageous chances for Vinamilk. According to United nations, the population of Viet Nam is more than 96 million in November 2018. Kids under 14 years old among them occupies about 30% and the percentage of population in the urban area is more than 34%. Besides, Vietnamese weight and height are lower than other countries, so they want to improve their body. All of them build a stable market for Vinamilk. The second is nature factor. In order to satisfy fresh milk with good quantity, dairy farms have to meet fresh grass fields. Especially, tropical monsoon climate in Viet Nam is an important condition satisfying it. Another factor if economy, GDP of Viet Nam from July to September 2018 is estimated to increase 6.88% compared with the number of same period last year (general statistics office of Viet Nam). The development of economy induce people to care more about their health and family member’s health. In addition, products from milk provide much nutrient, vitamin, calcium and so on. Therefore, people will consume them more. Last but not least, politic factor also contributes to make opportunities for Vinamilk. The government has many incentive policies. Besides, Viet Nam joined in WTO, which helps Vinamilk to expand export market and have chances to compete with other companies in order to affirm its brand.
However, apart from opportunities, participating in WTO also poses considerable challenges Vinamilk has to face. First of all, pressure on the market opening and competitions for Vinamilk have increased remarkably since Vietnam became WTO member. It is obviously that taking part in WTO is a “double-edged sword”. In other words, it not only provided favorable chances but also gave some competitors namely Dutch Lady, TH True Milk, Abbott, Mead Johnson, Nutifood, Love in Farm, or Friesland Campina. It seems to be an exponential competition for Vinamilk because most of the countries in WTO produce milk at extremely low prices. These nations have favorable conditions suitable for the scale of dairy product industry like extensive grasslands so they do not focus remarkable efforts into grazing. Therefore, not only low production costs, high productivity, but the quality of their products is also perfect. If there is no available law on import tax, domestic production will be difficult to compete with overseas rivals. Besides, nowadays, consumers tend to buy imported milk-powder and they have plenty of choices on milk brand, so there is a significant increase in the price squeezing of customers and providers. Hence, it is necessary to pay more attention to changing demands and taste of users on production flow. In recent years, some health problems related to melamine and milk have risen. If the milk ingredient includes melamine, it will lead to diseases related to cancer; so consumers have a tendency to make more careful choices in buying milk products.
The SWOT strategy can provide a big picture for Vinamilk to others about opportunities, strengths as well as threats and weakness along with the organization. Fortunately, the gift of mother nature creates opportunities for Vinamilk to expand their market share more effectively. People in Vietnam can somehow acknowledge the great result of dairy products with the excellent in Vinamilk marketing. Modern technology has also been applied to the Vinamilk factories for diverse kind of milk products. But the pressure for becoming a WTO member will increase rivals for Vinamilk to compete, harder than it seem when strong organizations are also taking part in the big market. It is even a huge challenge for Vinamilk since the firm still partly import raw material from external countries. Finally, despite of challenges and threats that Vinamilk has to face up with, the organization is still be considered as a successful dairy company in Vietnam when they reach even strictly market such as USA, Australia, Cambodia, Laos, New Zealand and the Middle East.
Base on rich resources, Vinamilk can get a further opportunity in making a bigger and better dairy products not only in South East Asia. Research and development for health improvement in dairy products was a good plan to set up among the company. For marketing and sale, Vinamilk could focus on key requirement when export and keep up the marketing activities to create higher value. More importantly, Vinamilk could reduce the cost of external raw market by developing farms, educating farmer with applicable skills and adapting high-tech machinery. Lastly, finance management. Internal control and human resources strategy are superior parts of bringing Vinamilk to reach astonishing achievement.