KAAV INTERNATIONAL JOURNAL OF LAW, FINANCE & INDUSTRIAL RELATIONS

Transcription

1 KAAV INTERNATIONAL JOURNAL OF LAW, FINANCE & INDUSTRIAL RELATIONS THE STRATEGY OF REINFORCING THE DISTRIBUTION ACTIVITIES OF THE SAIGON SPECIAL BEER IN HOCHIMINH CITY TRAN QUOC TOAN Planning-Finance Department of Camau City ABSTRACT In Vietnam there are more than 85 million people nowaday. Nearly half of them are the male with friendship meetings, entertainments at pobs, bars and so on. And beer is a drink which is not missed in such meetings. In fact, Vietnam is a very potential market for beer manufacturers to focus on. As talking about the beer market in Vietnam, the harsh competition of portfollio among beer manufacturers is often mentioned endlessly. It is as same as a cake of portfolio being shared into many small pieces when there are more and more foreign beer manufacturers participate into the boiling Vietnam market of beer. The beer industry of Vietnam is highly concentrated on. There are more than 60 percent of market shares that belong to the three following big companies. 1

2 INTRODUCTION The first is SABECO, Saigon Beer, Wine & Beverage Joint Stock Company, occupying 35%. The second is VBL, Vietnam Beer Company Limited, occupying 20%. And the third is HABECO, Beer Wine Beverage Joint Stock Company, occupying 10%. Saigon Beer, Wine & Beverage Joint Stock Company, SABECO, is a company which is doing business of food, has good advantages of modern machines and well-experienced people. It was established long time ago for the products of traditional value and familiar Vietnamese tastes. At the present, SABECO is a leading company in the beer market which is suffering a very harsh competition from the large beer companies such as, Heineken, Tiger, Budweiser, Zoro and so forth. Among such beer brands, Saigon Special, a product of SABECO, was marketed in 1999 and positioned as a high class beer for the active and successful people. At the beginning, it was positioning at restaurants and hotels mainly. And in the mind of beer consumers, it is still a normal class brand beer. The Saigon Special has not yet escaped from the normal class features of the big family of Saigon beer. One of the key chains of elements that the beer manufacturers care most is the distribution. Its brand is for a high class beer range of the successful but the current appearance of Saigon Special is located at normal class places. The big question for the Saigon Special is that whether or not it is capable to penetrate into the market shares of the high class segment that Heineken and Tiger are occupying almost. The most important care is that how SABECO can do it. The functions of marketing of building and developing its distribution channels will play a decisive role. Literature review The term strategy originated from the army. As for Webster s New World, Strategy is the science of researching plans and instructing the large scale of military operations and practicing and training the forces who participate into the battles with the most advantageous position before they face the enemy. This term Strategy has been very popularly used in life and even in the micro and macro economy. In corporate business operations, the corporate resources are always limited. The business environment is usually changed while the firm has to face the high competition. So, doing business in market is not different from fighting in battles. Thus, the art of running business, as for many particular factors, is quite similar to operating the military. Therefore, the concept of business strategy is made from the following concepts: Alfred Chandler said: Strategy is included with the basically long term corporate targets. At the same time, the proper processes, methods and essential resources must be used and distributed to achieve these targets. According to William J.Glueck, strategy is a united, coordinated and general plan which is designed in order to make sure that the basic corporate targets will be completed. As for the concept of competition advantages, Stuart well said: a real strategy is positioning the competitive advantages in future. According to this author, any of strategic thinking also reflects the effort of the building of the competitive advantages. That is the purpose of running strategy. And an ideal strategy has to provide the better value to the client and create a sustainable competitive advantage. According to Michael Porter, strategy is understood as per the three following aspects: Firstly, strategy is a creation of valuable and distinct position including different 2

3 activities. In other words, strategy is a creation of difference which must make economic values. The difference may be included with selecting activities or various ways of carrying out activities compared to the competitors. Secondly, strategy is a selection and exchange in competition. During the time when the strategy is built and carried out, we always have to choose and find the ways of harmonizing and exchanging what is needed to do and what is not needed to do. Thirdly, strategy is a creation of harmony among corporate business activities. Building and carrying out strategy require us to coordinate all activities, departments and strategic levels in a company at the same time. The success of a strategy depends on how well we carry out the activities of the company with a form tightly united and linked. The management reality also shows that it is quite difficult to have strategies implemented as same as their planning in the conditions of fast changing environment as nowadays. Case 1 Planning St Implementing strategy Implementing St. Case 2 Planning St Harmonizing with the environment changes Changing environment Implementing St. Case 3 Making decisions not following the strategy Implementing St. Remark: St. is abbreviated for Strategy Figure 1.1: Planned and implemented strategy In the corporate business operation, the opportunities which are probably realized are accidentally given to the company by the environment or the human innovation to become strategies, also called appeared strategies. These appeared strategies will be implemented and become implemented strategies. 3

4 Research result The external factor evaluation matrix EFE: To evaluate the effort to follow the strategies in order to utilize the opportunities and to avoid the threats from the external environment as they are analyzed above, we make the external factor evaluation matrix EFE. Figure 2.12: The matrix of the external factor evaluation of SEBECO EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE The market demand of beer is increasingly high The national economy is growing fast and the life standards are also is increasingly high. The development of the science and technology makes chances for the company to apply the modern techniques into the production. At the present, the main competitors of the high class beer ranges are not so many so that the Saigon Special can take part in this high top end segment and compete them. The loyal of the customers is good The foreign beers of the high end segment are imported into the local market more and more There are not so many end-users who know the Saigon Special There are many alternatives in the high end segment It is harder and harder for the Saigon Special to participate into the high end distribution channels to which Heineken and Tiger are supporting very attractive policies Total: As for the results and the total weighted score at 2.97 mentioned above, we can recognize that the company in general and the Saigon Special in particular are reacting to the current opportunities and threats in their business market. The SEBECO Corporation needs to implement some strategies to deal with and utilize the opportunities better that it is getting as well as to minimize the possible negative influences of the threats from the outside environment. The internal factor evaluation matrix - IFE: For the weaknesses and strengths analyzed above, we build the internal factor evaluation matrix - IFE as follows: 4

5 No. Figure 2.12: The internal factor evaluation matrix of the SABECO Corporation The main internal factors 1 The company has the distribution channels across the country Weight Rating Weighted Score The sales & marketing teams and promotion girls are not strong enough and the top management groups do not care the marketing much. 3 The SABECO trade mark is very strong and it has large market share with various brands 4 It has modern facilities, machines and equipments as well as a strong finance The company has built a very good supply chain that makes it develop stably and get competitive prices Its product quality is internationally standardized and safe & good for health Its HR management tasks are not so good The organization of its human resource management is clumsy The SABECO trade mark is very popular with its normal class beer brands The Saigon Special beer is not popular as a high class one. 11 The sense of the competition among the staffs and managers is very low Total: For the results of the figure above, the total weighted score of 2.77 shows that the company only reaches the average rate of its general internal strategy. The SABECO group has to reconsider the internal factors to enhance its competitive capability, especially in a very harshly competitive international environment as nowadays. Through this matrix, we can identify the core competency of the SABECO group as follows: The SEBECO group can self-supply almost from the raw materials to the distribution that can help the company make very competitive prices and large distribution webs. Its core competency is also that the beer tastes are very special and different from other foreign beers and also very friendly with the tastes of the local as well as Asian end-user because of its specific ingredients. 5

6 The SWOT analysis of the current distribution channels of the Saigon Special beer: SWOT MATRIX OF THE DISTRIBUTION CHANNNELS OF THE SAIGON SPECIAL BEER Strong (S) - S1: The company has a particular position in the distribution market of beer, having the biggest market share of beer production. - S2: Being trusted and a Vietnamese company which can well understand the market. - S3: Supported by other Saigon beer ranges. - S4: Being present at wedding parties, the Saigon Special is supporting the wedding parties by its attractive sales promotion programmes. Weakness ( W ) Internal elements: - W1: The distribution channels of the Saigon Special is currently mixed up, not yet planned for any specific distributors, getting the overlaps of distribution lines and price-dumping. - W2: The number of promotion girls (PGs) and advertising pictures of the Saigon Special at pubs or restaurants is not so many and strong enough. - W3: The sales teams of the Saigon Special is still being built and employed and basically, professionally trained, not supported with maximum working conditions. - W4: the policies of the compensation and allowances are not satisfying the employees. External elements: - W5: As the pictures of the Saigon Special brand has not yet impacted on the consumers strongly, its distribution channels are still facing some obstacles. - W6: for the marketcovered rates, the presence of the Saigon Special beer at 6

7 Opportunities (O) - O1: The company has the support from the government because it is still belonging to the state possession in spite of its privatization - O2: There are some consumer groups who like to have the Saigon Special. - O3: There are trends in which the consumers change from the normal class beers to the high class beers more and more because of their increasingly high needs and health protection. - O4: The market of the light beers has not yet been joined so much. At the present, there is only the distribution channels is not so much. - W7: For its quality, because the Saigon Special beer is produced at different beer factories, its quality is impacted by a little bit of quality management methods. - W8: The expenses of supporting the pubs or restaurants that the Saigon Special is doing are not high. At the present, SABECO is not yet allowed to buy the exclusive pubs for the Saigon Special. - W9: The pressure of the consumption from the company impacts directly on the reduction of the prices of the distributors

8 the presence of the Coors, San Miguel and Saigon Special that is occupying almost. - There are 9 of 15 beer brands that are worldwide leading for their light beers. And over 48 % of the world-wide beer market shares are for the light beer. It shows that the light beer market in Vietnam is possibly growing well. Threat (T) - T1: The mixed status of the Saigon Special and other Saigon beers is very tensile when the Saigon Special is getting down and at the position of the other Saigon beers in the normal class segment. - T2: The Saigon Special is facing a very harsh competition with other high class beer brands because of the brand picture, number of promotion girls, consuming capacity at pubs, appearance at pubs and so on. - T3: There are increasingly many foreign beer brands flocking to Vietnam and strongly attacking on the distribution channels which make a lot of obstacles for the Saigon Special. - T4: There are unfair competitions among the beer companies that prevent the distribution channels from selling the Saigon Special because of money - - 8

9 sponsors. - T5: The government charges the beer, wine and beverage industry a special consuming tax. Vietnam has been getting the impressive achievements of the economy. Its people life standards and demands of entertainment are also increasing strongly. At the present, the consuming trend of the people is the high quality products with attractive styles that are suitable for a particular social position of certain consumers. The Saigon Special beer with top end segment has been made for a long time in Vietnam. But to be successful and a winner in a very harsh competitive environment as nowadays, it requires the company to have strategies of investment to develop its brand, packing, pictures, positioning and price also. And the most importance is that the Saigon Special must be stronger in its distribution activities at first. At the present, the SABECO has achieved some certain success in the Vietnam beer market. But it is not for such things, it stops the growth. The stronger the economy is participating into the global, the more international beer brands are coming to Vietnam. Then, the cake of the beer market shares will be separated into many pieces. That is why the company needs to continue investing into the human resource force, technology. And the most importance is that it should make suitable strategies of distribution activities to compete its rivals well in order to win the heart and belief of the consumer. REFERENCES Philip Kotler, Marking, statistics publisher, 2001 Philip Kotler, Be aware of the marketing from A to Z, the youth publisher 2006 Philip Kotler, Discuss about Marketing, the youth publisher,