Table of contents

Introduction
2
1.1 Assess how business missions, visions, objectives, goals and core
competencies
inform
strategic
.2
1.2 Analyses the factors that have to be considered when formulating
strategic plans..3
1.3 Evaluate the effectiveness of techniques used when developing strategic
business plans..4
2.1 Analyses the strategic positioning of Vinamilk by carrying out an
organization audit..5
2.2
Carry
out
an
environmental
audit
Vinamilk.. 8

for

2.3 Assess the significance of stakeholder analysis when formulating new

strategy.9
2.4
Present
a
new
strategy
for
Vinamilk..10
Conclusion
.
11References
.12

Introduction
Nowadays, with a stiff competition, companies always want to find
themselves in a new direction, more sustainable. They always want to build
themselves a stable foundation and mark their brands on the market.
Therefore, it is will be a huge advantage if companies can find the
appropriate business strategy because a business strategy will offer a guide
on how their business is performing internally. Also, how they are performing
against their competition and what they need to stay relevant into the
future. In this report, we will analyze these issue specifically in Vinamilk dairy
corporation at length.

1.1 Assess how business missions, visions, objectives,

goals and core competencies inform strategic:
Established in 1976 as the Southern Coffee-Dairy Company, Vinamilk has
grown strongly and become the leading business of the industry of milk
processing, and they was also the first Vietnamese company be included in
Forbes Asia's 200 top performing small and medium-sized companies (in
2010). The company today is the biggest dairy company in Vietnam and the
country's 15th largest overall. Vinamilk products such as powdered milk and
condensed milk are also marketed and sold to the Middle East, Cambodia,
the Philippines and Australia.
Vision statement describes vigorous and fascinating outlook of the firm in
the future. It indicates the growth, potential benefits of firm to the investor
and stakeholders. Vinamilks vision is to become the leading Vietnamese
trusted brand on nutrient and healthy products for human life
Mission statement is defined as the organizations basic function in
society, in terms of the products and services it produces for its clients (BPP
2010). Vinamilks mission commits to bring best-quality nutrition to
communities that reflects our respect, love and responsibility for the people,
life and society.
Goals and objectives are the specific results that business strives to
achieve in a specific period of time. Objectives are stages to gain the goal;
the objectives often propose short-term plan express more detail while goal
was proposed for long-term plan that is wide and have general expression.
For example:

Objectives: Taking of at least 35% of powder milk market segment in

the next 2 years.(source: http://tailieu.vn/doc/vinamilk-marketing-plan1717255.html)
Goal: Vinamilk aim to reach the sales of 3 billion USD and ranked in
the top 50 of the world's largest dairy company in 2017.

Core competencies are special things that make a business be outstanding

among competitors such as specific products, skills, quality or reputation.
3

Moreover, it helps a business build trust in mind of customer and make the
brand of business be famous.
Being around for 30 years, Vinamilk really understand the Vietnamese
sense of taste.
More than half of the domestic supply of raw milk (~370 tones/day) is
processed in VNMs factories.
Vinamilk has its processing plants and almost 178,000 retailers
scattered throughout the country at convenient locations, which is
huge advantage considering milk is highly perishable product.
The Company is highly valued for its experienced management,
especially madam Mai Kieu Linh.
(Source: Scenario)

1.2 Analyses the factors that have to be considered when

formulating strategic plans:
A plan is an important part of any business, whether you are starting up or if
you are an established business. A plan is defined as the primary
management function basis for each strategy. In its simplest form, a business
plan is a guidea roadmap for your business that outlines goals and details
how you plan to achieve those goals. A plan explain: what is to be done, how
its to be done and when is it to be done so that to achieve company goals
managers must plan. Every company need to have because a suitable plan
will give the coordination, direction, reduces uncertainty and diseconomies of
scale.
Informal planning: takes place in someone's head, and the decisions
reached may not be written down in any extensive form (source:
http://www.introduction-to-management.24xls.com/en303).
The
informal
planning has very little documentation, and it is concerned with routines,
daily business and it involves very few people. However, the disadvantage of
informal planning is the low decisions and it only suitable for small businessimportant law.
Top-down decision making: Decision are taken by managers and handed
down to subordinates. Top down Planning is easily seen in the VINAMILK
business, where all of the decision are mostly made by the Higher Level.
According to the lesson in class, in top down planning, goals are determined
early and very flexible. However, processes imposed by management so little
employee participation is lead to the lack of motivation.
Bottom-up decision making: Subordinates are encouraged to think of
themselves, and are involved in decision-making and planning.
4

Behavioral approaches: Johnson and Scholes (2002) state that strategy

needs to be understood as an outcome of the social, political and culture
process of management in organization (BPP 2010).
In my opinion, I believed that Vinamilk is using top-down decision making.
which means that the leaders in companies make all the decisions and
control of the activities related to the company, especially their subordinates
and staffs are forced to follow without asking or showing them what to do
and how to do it. Therefore, it does not encourage contribution or initiative
from subordinates. However, quick decisions can be made when speed is
required, and it also allow the person who know the job making decision, so
it will reduce risky. Vinamilk, as the HCMC-based dairy producer is known,
has surged 688 percent since March 2009 and is valued at $5.6 billion. Under
the leadership of CEO Mai Kieu Lien, the company is exporting to more than
23 countries and targets revenue of more than $3 billion by 2017, up from
about
$500
million
five
years
ago.(Source:
http://www.thanhniennews.com/business/how-the-vietnam-war-made-femaleceos-better-than-men-25075.html)

1.3 Evaluate the effectiveness of techniques used when

developing strategic business plans:
A business plan is a written document that describes your business and its
objectives, strategies, market and financial forecasts. A business plan can
help you secure funding and measure success. Potential investors may work
with you or lend you money on the strength of your plan (Source:
http://business.wales.gov.uk/use-your-business-plan-get-finance),
and
a
business plan include 7 components:

Mission describes the organizations basic function in society, in term

of the products and services it produces for it clients.
Strategies are courses of action, including those that specify
resources required, to achieved an overall objective.
Policies are general statements that guide thinking and action.
Procedures are customary method of action.
Rule are specific statements of what may or may not be done.
Programmes are collections of activities that need to be carried out to
achieve desired outcome.
Budget are statement of expected results expressed in financial
terms.
(BPP 2010, page 108)

BCG Matrix
5

BCG Matrix based on research that classifies a companys products in terms

of potential cash generation and cash expenditure requirements. It
characterized into four strategies categories which is a star, question mark,
cash cow, and dog.

(Source: Quick MBA, 2010)

The star that products are high market share and market growth.
Vinamilk has to spend more to maintain their market position, but
promise high return in the future. Stars of Vinamilk can be condensed
milk (~85% market share) and yogurt (~90% market share).(source:
scenario)
The question mark shows low market share but high in market growth.
To develop a question mark to a star, the firm should invest heavily
money. Vinamilk intends to enter into instant pro beauty, collagen and
beauty drinks market. Those are potential market with high growth
rates in Vietnam. However, Vinamilk is the new entrant, so their
market share in those areas is low.
The cash cow is business which is low in market growth but high in
market share. It means that the firm spending less, the business is
stable. So they should be profitable in order to help fund investment in
question mark and star. Snack products are the cash cow of Vinamilk
such as fresh Vinamilk, proby yoghurts, cheese, ice cream and fruit
juices.
The dog is business which is low in both market share and market
growth. The products in this stage cannot generate profit and must be
divested. The dog of Vnamilk can be dairy products such as condensed
milk.
(According from the lesson in class)
6

Vinamilk is the market leader with more than 40% dairy market share and
a production capacity far beyond that of other competiteors. Vinamilk has
access to 50% of total domestic raw milk supply, giving the company
immense control over ex-farm prices. Vinamilk stands among the most
affordable brands on the shelves today when maintaining its domination
on some product segment such as condensed milk (~85% market shares)
and yogurt (~ 90% market shares)(Source: Scenario). It can be clearly
seen that Vinamilk is having the high market share in the market that has
the growth rate is high. Thus, the current position of Vinamilk is at Star
position. With this position, Vinamilk is dominating the dairy Vietnamese
market. Vinamilk needs to continue to have the investment strategies to
increase the quality of product. When that, Vinamilk could have the
prestige and trust of customer. From that, the market share of Vinamilk
will be increased.

2.1 Analyses the strategic positioning of Vinamilk by

carrying out an organization audit:

SWOT Analysis
SWOT analysis is a method of analyzing information which attempts to
identify an organizations strengths, weaknesses, opportunities and threats
(BPP,2010)
Strength
1. Having a long history and strong foundation makes Vinamilk become
the biggest brand in the daily product industry and Vinamilk does not
do their business only in domestic market but they also does in over 30
foreign countries.(homepage)
2. Modern technology and machine system are used to produce the best
quality products from milk which are reached the international
standard. Vinamilk has the ability to produce variable types of milk

3.

4.

5.
6.

products, therefore they have diverse product list in order to satisfy the
customers demand in Vietnam.
Vinamilk also develops its distribution system and expands into
nationwide range, include 266 exclusive distributors, more than 22400
retail outlets and directly sells for over 600 supermarkets in domestic.
Moreover, the company has export into different countries in the ASIA
and all over the world.
The experienced Research and Development department cooperates
with the leading Research companies to advance the best quality
products to meet the variable demand of customers in different group
of ages.
Applying modern technology in Enterprise Resource Planning from
producing, qualify management to the circulation and distribution of
commodity stage.
The operating managers have the ability and experiences in milk
production that have strong attachment to the company for years,
understanding the market and consuming trend in Vietnam.

Weakness
1. The material are conditional on import resources because the national
milk resources was satisfy only 30% of the producing demand.
Therefore, the consistency in supply and price depends on the
international supply-demand relationship.
2. The big and continuous development in years unintentionally creates
stress for the new managers and employees.
3. Newly researched products are not published to the market.
4. The breeding productivity is lower than the general standard and high
price of milky materials also influences the profit.
Opportunity
1. Average consuming rate in milk market in Vietnam is lower than in
order countries in area and in the world. Special products for special
use have not been produced by domestic producers while the price of
exporting materials is too high. So, the company has opportunity to
grow up in long term strategy.
2. Expand and diversify the domestic distribution system offering more
retail outlets, developing store chain to introduce new products to
customers.
3. From now on, Vinamilk has exported to other countries and distributes
14% of total turnover in economy. However, the company still has
chance to expand the sphere of business.
Threat
8

Unstable economy (inflation, economic crisis,)

Joining WTO: many competitors appear to share market.
The world political situation today is much more dangerous and
unstable.
TH True Milk would be a redoubtable rival for Vinamilk after it
successfully joined the market in 2011.
Domestic dairy firms are still under heavy competing pressures from
imported milk.( 70 % Vinamilkraw material is imported)
Competitors always have new products and better marketing strategy.

Value Chain Analysis

(Source: http://www.sisg.com)
The primary value chain activities are:

Inbound logistics: the receiving and warehousing of raw materials, and

their distribution to manufacturing as they are required.
Operations: the processing of transforming inputs into finished
products and services.
Outbound Logistics: the warehousing and distribution of finished
goods.
Marketing & Sales: the identification of customer needs and the
generation of sales.

Service: the support of customers after the products and services are
sold to them. Vinamilk has many services to take care of customers
such as Hot line, promotion and complain management.

These primary activities are supported by:

The infrastructure of the firm: organizational structure, control
systems, company culture, etc. Vinamilk apply chain of command is
the structure in an organization which allow instructions to be passed
down form top management to the lower levels. VNM also apply flat
structure, it allow Vinamilk has fast conversation, quick decisions,
economies of scale.
Human resource management: employee recruiting, hiring, training,
development and compensation. Employee total number 4000 are well
train to serve faithfully and more than 1787 salesperson
(https://prezi.com/jbw3nvnagyon/copy-of-vinamilk-never-stopgrowing/).
Technology development: technologies to support value-creating
activities. Import cows from Australia by special aircraif. In quarter
2/2013, finished the main construction work and installation of
machinery and equipments for the second powdered milk factory in
Vietnam-Singapore Industrial Park I. Opened a largest liquid milk
processing and packaging plant in Binh Duong province on September
10, 2013. Using robots to create, pack and unpack packages in the
storage of Saigon milk factory.
Procurement: purchasing inputs such as materials, supplies and
activities. About 70% Vinamilks raw material are imported from
Australia and Vinamilk has also its processing plants and almost
178,000 retailers scattered throughout the country at convenient
locations, which is huge advantage considering milk is highly
perishable product(Source: Scenario).

2.2 Carry out an environme ntal audit for Vinamilk:

The current environment have the huge influence the performance of
company. Therefore, the PESTEL Analysis is very important for company to
10

analyze the market. The PESTEL including political, economic, socio-culture,

technology, environmental/ecological and legal.
Political: Vietnam is ranked as one of the most stable country in
South-East-Asia in term of politic. McDonalds could rely on this
situation for long-term development the business in fast-food industry.
In addition, Vietnam has joined the WTO in 2006, by joining the WTO;
Vietnam opens many doors for investors and offers various
opportunities for the new comer. It also means that Vinamilk will have
to face up with many strong foreign competitor such as Dutch Lady,
Abbott, Mead Johnson, etc
Economic: The economy of Vietnam is currently under-developingprocess, in 2014, the GPD reached 5.4% while the total scaled of the
economy reached 176 billion US dollar. This is a significant signal for
Vinamilk to advance the investment into the country. Moreover, the
rate-of-interest from Vietnam National Bank has dropped from 3-5% in
Vietnam, this might be affected by the inflation however the rate-ofinterest is down helps McDonalds has more opportunities to get
money and expand the business. Vietnam Economy is not considered
as strong enough than other Asian countries like Singapore or
Thailand, however its gradually developed by the effort of the
government and the investments from different nations, from now to
future, Vietnam might become the promised land for Vinamilk to
expand.
Social: Vietnam is a young population country; it will lead the
consumption of milk product in market. According WTO, population is
approximately 92 million (as of July 2013), 43 per cent of which are
under 25 years old, as well as a GDP per capita of around US $1,800
and still rising. Therefore, they are the important customer that
company should focus on. They will buy product not only for them but
also for their children. The demand for improving the health and
beauty increased so they need a product that can meet their
satisfaction such as fresh milk.
Technological: During the lesson in class, we are know that
technology is very important for business nowadays. It is a project
take one time high investment but low maintenance costs, and
technology can work 24/7 with no or little break times, so the
production will be faster, the working condition will be improve and
lowers production cost. Technology also can ensure the accuracy,
better quality. Inaugurated Da Nang Dairy Factory, Lam Son Dairy
Factory, Vietnam Beverages Factory with modern production lines
originated from the US, Denmark, Germany, Italia, and the
Netherlands and Vinamilk is the only company in Asia which has
11

automatic
milking
system
G.A.P
certification.(Source:
https://www.vinamilk.com.vn/en/lich-su-phat-trien)
Environment: Vietnam is the country that has tropical climate, and it
has two season: hot and dry season. The country is made up of
equatorial lowlands, high, temperate plateaus and cooler mountainous
areas. It lies in the inter-tropical zone and local conditions vary from
frosty winters in the far northern hills to the year-round subequatorial
warmth of the Mekong Delta. At sea level, the mean annual
temperature is about 27C in the south, falling to about 21C in the far
north
(source:
http://www.academia.edu/6494837/PESTEL_of_Vietnam).
Because
cows produce milk most in the temperature range of 5-21C so that
Vinamilk has to choose the right place for dairy farm and using strong
technology helps to limit climate affection.
Legal: During the lesson in class, Vietnam is the country which has
strong labor law in favor for employees, anti-discrimination law and
transparency of legal system. However, the corruption rate in Vietnam
is increase in recent years and Vietnam has many legal restriction on
free trade. Vinamilk must ensure the production, which are safety and
health for customer by using modern system. Company should follow
the rule of food safety not only in Vietnam but also other
organizational in global.

12

2.3 Assess the significance of stakeholder analysis when

formulating new strategy:
Stakeholder analysis is a systematic methodology that uses qualitative data
to determine the interests and influence of different groups in relation to a
reform (BPP,2010).In business, a stakeholder is usually an investor in your
company whose actions determine the outcome of your business decisions.
Stakeholders dont have to be equity shareholders. They can also be your
employees, who have a stake in your companys success and incentive for
your products to succeed .They can be business partners, who rely on your
success to keep the supply chain going. Understanding each stakeholder
group clearly will help Vinamilk know what to do to satisfied stakeholders,
and it will give Vinamilk a huge advantage.
Managers are these people appointed by the companys owner to supervise
Vinamilk the day by day with all of activities of the company. It is easy to see
that they need information about their companys current financial situation
and what it is expected as well. Manager of Vinamilk always interested in
about the financial statement in order to controlling Vinamilk operation such
as the capital structure, the bad debt. For example, Vinamilk has both shortterm loans and long term loans. In detail, short-term loans in 2009 about
1,601,363 VNDm in 2009, Vinamilks CEO Mai Kieu Lien had to make
planning so as to pay fully loans on time. Moreover, manager is used the
financial statement to adjust the suitable investment capital.
Employees as the core factor in the company because the work directly to
Vinamilk activities day by day (Anon, 2012). Furthermore, they have not only
had a special interest in the companys existence but also a major effect on
the success of Vinamilk. They should have a right to information about
Vinamilks financial situation, because their future job, discussing matters of
promotion, rankings and their wages, retirement benefits, and reward and so
on. Total assets, short-term, long term debt, sales figures which are the
most information they want to see. It is easy to see that the sales figures of
Vinamilk increased from 8,380,562 VNDm in 2010 to 10, 821,195 VNDm in
2009. It means the employees believe in Vinamilk operation, thus they want
to try more in order to develop their business.

13

Shareholder of Vinamilk Company who is Vinamilks owners, they want to

assess how effectively management is performing its function. Furthermore,
they also need to know how profitability management is running in
Vinamilks operation and how much profit they can efford to withdraw from
business for their own use. For instant, they want to know exactly the total
assets, gross profit, and profit before tax and so on. It is clear that the right
and dividend of shareholders depends on the operating of Vinamilk and the
value of dividend which is shown exactly on the profit and loss account.
Vietnamese Customers who purchased Vinamilks product directly and
customer need to know that Vinamilk is a secure source of supply and is no
danger of having to close down. For example, Vinamilk brand still keep
prestige in Vietnam market after melamine milk in Vietnam. Vietnamese
customers need detail information about the continuance of Vinamilk in the
long time, the suppliers are ensuring the quality of milk power or not.
Banks and investors are the important users with Vinamilks operation. It
is clear that Vinamilks capital not only from their stakeholders but also
borrowing the banks or investors. A bank permits Vinamilk to operate an
overdraft, also provides long-term finance by granting a loan. The banks and
investors who pay attention into Vinamilk through financial statement in
order to ensure that Vinamilk is able to keep up with interest payment and
eventually to repay the amounts advanced. For example, a bank considering
a short-term loan to Vinamilk would want to know the financial position of
Vinamilk at the time of the loan. It is easy to see that, if Vinamilks revenue is
more and more decrease, banks dont want to lend their money to Vinamilk.
Inland Revenue and VAT authorities who need to know information from
financial statement such as profits of Vinamilk to assess the tax payable from
Vinamilk in year. About Vietnam Governments and their agencies, they are
interested in the allocation of resources and, therefore, the activities of
Vinamilk. They also require information in order to provide the basis for
national statistics. Moreover, Vinamilk have to follow all the policies by
Government including taxation, interest rate, exchange rate, business profit
tax, land-capital tax, income tax and Quota in years. For example, the
Government wants to see the profit before tax because it is a core factor that
influences the Vinamilks income tax. Besides, Government might change
some appropriate strategy in the future in order to develop food industry.

14

2.4 Present a new strategy for Vinamilk:

Nowadays, Vietnamese people is very care about their appearance,
especially woman so it seem to be woman is a potential customer group for
Vinamilk.
Since the product is aimed for ladies who want to preserve their beauties,
beauty events is suitable for promoting. The new releasing milk can be used
as trial drink for woman come to the events. The events could vary like the
previous Vinamilk and woman beauty,Vinamilk accompanying with
womans health and beauty,etc. In addition, through word-of-mouth
marketing after these events, especially of young woman, it is more likely to
spread the products outstanding features to the consumers. Also, this milks
promotion can also be combined with the regular milk products promotion
from Vinamilk. For sport events, along with promoting for childrens milk,
there could be a section for young parents-where young mothers can find
this product of their interest besides caring for their kids. This kind of events
helps promotion direct to two main customers for two product lines at the
same time. As the target market of this product is of woman in general and
high living standard ladies in particular, these customers are likely to visit
salon often. Thereby providing these places with this milk as a common drink
during the spare time is an effective way to promote the products. In parallel
with normal distribution through exclusive outlets, these places are also of
the important part of Vinamilk business and promoting opportunities here
should be recognized and utilized.
Mass media huge impact on attracting consumers. Therefore, Vinamilk
should also utilize this promotion method. Housewives are also of the
important customers to this milk so TV ad is a useful tool. There should be a
simple advertisement deliver clear message about the breakthrough aspects
of products in which differentiate it with the other competitors and attract
customers from the first stage. A simplified ad is best fit with the clean
15

image of the firm. There are some channels could be utilized for this
promoting such as VTV3, TVC, HTV, SCTV and so on daily at the time of 8pm
to 10pm with the advertisements length of 30 seconds per ad, reducing to
15 seconds in the last phase of promotion campaign. Internet with online
marketing is needed as well by adding banner or small ads on sites of
famous web pages. Also, magazines especially ones for woman and business
woman should have included Vinamilk advertisement as well. The spread of
these weekly newspapers could help the company to reach to more woman.
For magazines like The Youth, Woman advertisements should be colorfully
printed in top pages of weekly editions.

Conclusion
After going through various analyses, the reporter has pointed out some of
the important aspects of the Business strategy in Vinamilk and provide us
information about how to create an appropriate business strategy for a
business.

References
Annual report 2012.Website: https://www.vinamilk.com.vn/en/bao-caothuong-nien. Assessed at 2/28/2015
The Value Chain. Website: http://www.netmba.com/strategy/value-chain/. Assessed
at 9/3/2015.

Alternative Approaches To Planning. Website: http://www.introduction-tomanagement.24xls.com/en303 .Assessed at 9/3/2015.

Copy
of
Vinamilk
"Never
stop
growing".
Website:https://prezi.com/jbw3nvnagyon/copy-of-vinamilk-never-stopgrowing/. Assessed at 10/3/2015.

How the Vietnam War made female CEOs better than men. Website:
http://www.thanhniennews.com/business/how-the-vietnam-war-made-femaleceos-better-than-men-25075.html. Assessed at 10/3/2015
P.E.S.T.L.E
ANALYSIS
OF
VIET
NAM
http://www.academia.edu/6494837/PESTEL_of_Vietnam
10/3.2015.

.
Website:
.Assessed
at

16

Use
your
business
plan
to
get
finance.
Website:
http://business.wales.gov.uk/use-your-business-plan-get-finance .Assessed at
10/3/2015.

17