Analysis of Trung Nguyen Coffee - Tài liệu tham khảo | Đại học Hoa Sen

Analysis of Trung Nguyen Coffee INTRODUCTION
In quarter 1 (2012), instant coffe G7 leaded the share market (40%) and experts predicted Trung Nguyen will stay in the number one position in next few years.
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According to the NCTT statistic, in 2009, 49% customers picked Trung Nguyen for daily using. From 2009 – 2011, Trung Nguyen was the number one brand-
name which the largest market shares (10million/17 million families) in which 65% coffee consumers agreed with the feedback: “I prefer buying Vietnamese
brandname” In quarter 1 (2012), instant coffe G7 leaded the share market (40%) and experts predicted Trung Nguyen will stay in the number one position in
next few years. According to the NCTT statistic, in 2009, 49% customers picked Trung Nguyen for daily using. From 2009 – 2011, Trung Nguyen was the
number one brand-name which the largest market shares (10million/17 million families) in which 65% coffee consumers agreed with the feedback: “I prefer
buying Vietnamese brandname”. Being one of the most famous brands in Viet Nam, Trung Nguyen has been being confirm its position not only in VietNam but also in the world.
With the successes Trung Nguyen has achieved so far, now this brand name confidently can expands and competes with any other top brands. Today we are
going to discuss Trung Nguyen Coffee “A Vietnamese brand, an International brand”.
CHAPTER 1 THE MANAGERS’ MACRO ENVIRONMENT
THE MANAGERS’ MACRO ENVIRONMENT
I-/ The external environment of Trung Nguyen
The term “external environment” presents the factors, forces, situations, and events outside the organization that affect its performance. For any organizations,
those external components include: Economic factor (interest rates, inflation, stock market fluctuations…etc) Demographic factor (age, race, gender, education
level, geographic, income…etc) Technological factor (concerned with scientific or industrial innovations) Sociocultural factor(attitudes, trends, traditions,
lifestyles, beliefs, tastes…etc) Political/Legal factor (federal, state, local laws, global laws…etc) Global factor (globalization, world economy…etc) (P.Robbins et al.2013)
It should be emphasized that those external implements above are very essential to Trung Nguyen. The changes in environment not only can bring huge
opportunities to organizationbut may cause remarkable threats and Trung Nguyen’s case is not an exception, they also have to deal with those above external components. Economic factors:
The economic component is significantly important, any changes in this area may affect to the decisions of Trung Nguyen’s managers weather should they
expand or put more investment in the company or they probably wait for better opportunities sobase on these factors they would find it out: a/ GDP:
Basically, annual GDP is considered the basic implements for Trung Nguyen’s managers to make decisions. It relates to company’s expansion and investment
because it influences the demand of market. GDP is an “economic indicator which measures the country’s total output. This includes everything produced by all
the people, companies in the country”. GDP tells us how the economy is, “the GDP growth rate measures if the economy is growing more quickly or slowly
than the quarter before, if the country produces less than the quarter before, it contracts and the GDP growth rate is negative and this signals a recession.”
(WHAT IS GDP, Kimberly Amadeo, useeconomy.com,2011). Fortunately, Viet Nam is a developing country and annual GDP growth rate was approximate 7%
– 8.7% (2005 – 2008) however this rate dropped grammatically from 2008 (6.5%) and reached the bottom in 2009 (3%). This worse circumstance became
better at the end of 2010 (7%) after fell down to 4% and slowly rose to nearly 5% in 2012 and 2013 respectively. Even though, being influenced by the world
recession but the GDP growth rate of Vietnam was still above the safe zone around 2% – 3%. Moreover, GDP growth rate probably increase in long-term which
will chug along at a pace around 5-7%, according to IMF forcasts (Time to go along Vietnam with VNM, n/a, 18/5/2011, seekingalpha.com).
Therefore, Trung Nguyen confidently invested more in their business and expanded their market share not only inside but outside Vietnam’s border. 2005:
Officially inaugurated “Roasting and Grinding” plant at Buon Me Thuot and “Instant Coffee” plant at Binh Duong with the capacity 10.000tons/year and
3000tons/year respectively. Increasing the numbers of coffee shops to 1000 shops. Franchising to Japan, China, Singapore, Thai Lan, Cambodia, USA,
Boland…etc 2006: Built and developed G7Mart’s distribution systems beside standardized the domestic franchising system. Inaugurated “Vietnam Global
Gateway Pte Ltd” located at Singapore. 2007: G7 Cappuccion – instant coffee – officially launched in the North Vietnam 2008: Prime Minister accepted
“Global coffee capital” project.(leddyking34, 10/06/2013) 2009: Inaugurated the first Trung Nguyen coffee shop at Sangi international airport at Singapore and
Liang Court shopping center. 2010 – 2011: Inaugurated 2 new coffee shops at Mariana bay. 2012: Planning for new model of cultivating coffee, potential cost 80 million USD. b/ Interest rate:
Any organizations attempt to survive and develop; they have to invest in order to enhance the competitive advantages meanwhile grow their company and
Trung Nguyen is also the same. Doing those investment activities, Trung Nguyen needs capital and there some channels that could financially support them:
Loan (Bank), Owner capital, Shareholders…etc. In this section, we discuss about Loan from bank which related to interest rate. So what is the interest
rate?“Interest rate is charged by lenders as compensations for the loss of the asset’s use”.(investopedia,n/d) That means Trung Nguyen is going to pay an amount of money to bank.
However, this is pretty risky in Vietnam these days where the interest rate is unstable and quite high around 12-15% per year. (Tram Anh, 26/09/2012)But using
loan can immediately provide lots of capital to Trung Nguyen or loan in long-term/short-term, furthermore, paying interest can reduce tax for Trung Nguyen
but from 2005, in fact, Trung Nguyen stopped using loan from bank yet from 2006, they started to use it again with the effective outcomes. (. (leddyking34, 10/06/2013, p-24) ). No Description Unit 2005 2006 2007 2008 1 Total captital investment % 100 100 100 100 2 Own capital % 71.09 74.23 66.04 78.27 3 Loan (Bank) % 0 5.83 17.09 12.55 4 Mobilize capital % 28.91 13.72 8.27 5.98 5 Others % 0 6.21 8.69 3.20 (doc.edu, leddyking34, 2013) c/ Inflation:
The inflation rate will highly influence Trung Nguyen’s development so what is inflation? Inflation is “the rate at which the general level of prices for goods or
services is rising, and, subsequently, purchasing power is falling.” (investopedia,n/d). It means customers have to spend little or buy less product and Trung
Nguyen will not able to sale as many as they have done before, obviously inflation will make Trung Nguyen’s profit going down(Geoff Riley, 05/10/2012) The
graph above revealed difficulties in the recent years, particularly in 2008 and 2011 when the inflation rate was significantly high.
Hence, what did Trung Nguyen do to overcome these barriers? According to the interview of CEO Trung Nguyen, Mr. Dang Le Nguyen Vu:“Trung
Nguyenreevaluated the core organization’s competencies, gotten riddeficiencies or narrowed the scope of some fields which do not content many opportunities
in order to concentrate on strength fields while optimized all of the business operations so the organization could cope and grow in the global recession which
can be severe in future.(seekingalpha,n/a, 2011)
“However, all the mentions above is for short-term.” Mr. Dang said, “for long-term, organization must reset their psychology and come up with featured
strategies in an uncertain environment.” He added on. Proving the wise decisions of Trung Nguyen, regardless the global recession Trung Nguyen’s revenue in
2012 was $200million, increase 32% compare to 2011 and expect to double in 2013.(chinhphu, n/a) 2/ Demographic factors:
Organizations use demographic for many purposes: Policy development or economic market research. So what is Demographic? “Demographic studies of a
population based on factors such as age, race, sex, economic status, level of education, income level and employment, among others.” (investopedia,n/a)
Demographic is able to affect Trung Nguyen in many aspects such as: market share, labor forces, potential market…etc, therefore, understand demographic
probably help Trung Nguyen to have better decision making. a/ Population
Viet Nam has85,789,573 residences (2009), approximate 17million families and young population structure which provides abundant workforce and cheap
labors. This is an advantage for Trung Nguyen’s operation, in addition the proportion of teenagers and young adults is high so it creates a potential market for company in future.
(Giang Thanh Long & Bui The Cuong, 2008)
According the latest press release (4/7/2012), Trung Nguyen brand has had the biggest number of end-users. Nearly 10 million/ 17 million Vietnamese families
purchased Trung Nguyen’s products (trungnguyen, 2012) b/ Education/Gender/Income
Education, gender and income will determine the purchasing behavior of customers so this section is essential to Trung Nguyen. According to the statistic
below, we can easily see the percentages of education level, gender and incomelevel from that Trung Nguyen will have a foundation to set up the strategies,
tactics for different customer segments. The Press release (4/7/2012) also mentioned the drinking behavior of individuals. The report presented in 2011 there
were 18% office staffs chose Trung Nguyen coffee, it equals to every 3 office staffs drink coffee, 1 will use Trung Nguyen. Especially 80% office staffs who
are over 30 year-old are going to pick Trung Nguyen ones. Trung Nguyen understands coffee may not the first priority drinks of women so “Passiona” was
arrived to rethink them. Passiona contains low levels of caffeine, collagen and antioxidant. These ingredients expect to attract female customers. Even the
income per capita in Vietnam has increased monotonously over the years but the wealth gap is large and Trung Nguyen needs an appropriate solution for this
issue so that Trung Nguyen seperated their product into 3 segments: Premium, Medium and Regular 1- Premium class includes:
Weasel (250g, Civet coffee)16.000.000 VND
Diamond Collection (250g, 5 various favors)
Legendee (250g & 500g, using biological fermentation) 990.000 VND Class Blend (can 450g, longer coffee scent and light brown color) 2- Medium class includes:
Passiona (250g package, light coffee scent, lower caffein) 43.500 VND Gournet Bent (250g -500g, strong taste, dark brown color)
House Blend (250g – 500g, strong scent, strong taste and dark bown color) Filter coffee – 35.000 VND 3- Regular class includes: The Vitaility – 44.300 VND The Desire
Instant coffee G7 3in1 – 116.000 VND
Instant coffee G7 cappuccino (3 favors: Hazelnut, Irish Cream and Mocha) 50.000VND(trungnguyenstore,n/a) (Minh Ngoc, 2013) 3/ Technological Factors
Trung Nguyen understands how important technology is, nowadays, if they want to conquer the café market in the world. With technology they would have the
capacity of increasing the yield as well as enhancing the quality of product, moreover cost would be cut down and they could reach to the efficiency of scale…etc
Therefore, CEO Dang Le Nguyen Vu came to Europe with an aim to seek the world’s leading partner in manufacturing technology and processing
café.Neuhaus Neotec company (German) – the company specializes in manufacturing coffee processing equipment in Hoykenkamp – was visited and Neuhaus
Neotec choose Trung Nguyen to be the exclusive partner for providing the most modern coffee processing technology in Vietnam.(DL, n/a) On 28/3/2012,
Trung Nguyen inaugurated the second G7 plant at Bac Giang with the investment up to $ 30million (Trung Nguyen,n/a)
Trung Nguyen not only cares about coffee processing technology but also notices the quality of raw materials so that in April, 2010 Trung Nguyen invested in
drip irrigation combine with fertilizing through water model. This model increased the yield from 1.6 tons/hectare (2009) to 4 tons/hectare (2011) and also
enhanced the quality of coffee beans.(HoangThien Nga, n/a) (he thong tuoi, n/a) 4/ Social Cultural Factors
Communication culture in Vietnam is remarkable, throughout a cup of coffee they can show their kind, friendliness, respect to the others. Throughout a cup of
coffee they can share their happiness or difficulties in life. Coffee in Vietnam is not only the drinks but also the bridge which brings people together. Hence,
that probably makes the demand in coffee climbs up and enlarges. However, in various regions it has dissimilar tastes in enjoying coffee so Trung Nguyen’s
managers should notice those differences in order to fulfill their clients. Beside coffee, tea is also the common drink in Vietnam, particularly in North Vietnam.
Therefore, in 2004 Trung Nguyen invested $1 million on “ Trà Tiên, nhà c?” at Lam Dong provice. With this movement, Trung Nguyen expects could cover all
the drinking habits of Vietnamese (TTXVN, 2004) 5/ Political/Legal
Vietnam has a long traditional in agriculture and coffee is one of them hence government puts lots of attention on this “key product”.
Generally in 2001, Prime Minister approved to use Export Support Fund to assisted coffee business which reduced 70% interest rate and reduced land use
tax.(tbkt, 2001). On 16/08/2013 KonTum People’s Committee promulgated the scheme “Development Assistance” for temperate coffee at DAK GLEI, TU MO
RONG and KON PLONG province. The content inclues: 100% assistance in coffee seeds, fertilizers, pesticides,
Assisting on training techniques, treatments, harvesting an preliminary processing coffee Assisting on paperwork…etc (Thuvienphapluat, 2013)
Particularly, government very appreciates what Trung Nguyen has contributed
to Vietnamese agriculture as well as the economic. On 17/03/2012, the President of Vietnam, Mr. Truong Tan Sang visited Trung Nguyen Company. The
President highly appreciated the model which provided by Trung Nguyen that will probably help the coffee export industry gain $ 20 billion and create5 – 6 million jobs. (Vu Gia, n/a) 6/ Global Factors
Globalization makes a big impact to Trung Nguyen in either positive or negative way. In positive way, globalization may create more chances to Trung Nguyen
approaches the world, find new market shares. For example China, Japan, Canada, USA…etc On the other hand, Trung Nguyen also faces to very strong
competitors which are from developed countries.Starbucks is a perfect example: Inaugurated the very first shop in Vietnam on 1/02/2013which at that time
attracted a huge numbers of customers and on 9/08/2013 the second shop was launched inside President Place building. Beside Starbucks, it should be
emphasized some common, popular coffee brand name such as: Highland coffee, Gloria Jean’s, Angel In Us, Coffee Bean & Tea ILLY…etc which can make
the coffee industry in Vietnam is more dynamic and unpredictable III-/ CONCLUTION
Macro environment particularly impacts the organizations by one way or other ways. By gathering information and careful analyzing, managers probably
reduce the damages or take the advantage s from the changes. Therefore, the macro environment not only threats but the opportunities but only when the
managers are quickly adaptive, flexible and have a good vision, orientation in managing employees. CHAPTER 2:
The change that may be necessary and how managers can manage resistance to change.
The change that may be necessary and how managers can manage resistance to change. As the No. 1 coffee brand in Vietnam, the Trung Nguyen coffee
experts relentless study and developed the great and delicious coffee in the world with a special private recipe cannot be copied . Unlike all other coffee brands ,
at the beginning , Trung Nguyen has mounted philosophy “Innovation helps successful ” in creating products and until now . Change is the most important
factor in business’s success, the market’s battle is very fierce, the business is just like the boat running with the water flow down, we don’t move fast, we run
backward. So what will be the power can make the boat speed up and go straight far, change is the key answer. Definition of Organizational change:
Organizational change is the changing of the way in which the group is organized. This can be something as simple as an organization restructuring itself to
some as complex as an imposed organizational change occurring during a takeover. To achieve the success it is today, Trung Nguyen has been implementing
strategic changes to keep pace with the market trends. I-/ Changing Technology:
Change: The combination of modern technology and the secrets of the mysterious East is unique only in Trung Nguyen.Trung Nguyen is the world’s leading
corporations to transfer technology , environmentally friendly . Trung Nguyen factory system is the most modern technology in the world that provides the
clean delicious great coffee , exports to the U.S. , Japan and Europe . Trung Nguyen guaranteed to retain the flavor of the coffee essence in each product that no
other brand in the world can be. There is a secret oriental blend of rare herbal ingredients, the energy from gems and special additives in the special roasting
process. Resistance: Every technological change has a difficulty that the employees can not quickly adapt with the new technology, especially the most modern
technology in the world. The lack of training and education lead to the fear of changing technology, the employees get worried and confused when using new
machine. Method: Trung Nguyen understood these incontinences and already has the best way to solve this. Education of using new models and communication
are used to make the employees understand clearly and quickly new things. After a very short time, they can manipulate the machine as well as they did with
the old technology. Table 1: Capital equipment procurement and technology (2005-2008) Number Years/targets Units 2005 2006 2007 2008 1 Total investment Mil VND 7834.09 8570.67 18724.36 79667.23 2 Purchase Machinery Mil VND 2335.39 2386.36 10194.75 21828.91 3 Absolute increase in wage Mil VND – 50.97 7808.39 11634.16 4 Rated Growth % – 2.18 336.53 834.70 5 Continuous Growth % – 2.18 327.21 114.12 6 Density compared to capital % 29.81 27.52 27.23 27.40 (doc.edu, n/a, p24) II-/Changing Franchise:
Change: Developing brand always comes with expanding markets. And franchising is the way to help Trung Nguyen dominate the world coffee market. Trung
Nguyen needs to build a Franchise department very quickly. It means Trung Nguyen has to have a franchise organization, they are the people who know very
clearly about Trung Nguyen’s structure, strategies and secrets. Resistance: The Human resource is the most important factor of this change. In fact, not so many
staffs who are working in Sale, marketing, HR, manufacturing…etc, departments want to leave their current job to start with Franchise. Method: Trung Nguyen
offers a very attractive salary and a education course to attract people change their mind. By giving new opportunity to earn more money and experience new
position, Trung Nguyen very quickly build up a strong franchise department. Table 2: The structure of the Customary system (2005-2008) Targets 2005 2006 2007 2008 Numbers Of people % Numbers Of people % Numbers Of people % Number Of people % University 7 17.95 10 19.61 24 19.05 105 19.52 College, high school 27 69.23 34 66.67 81 64.28 344 63.94 Others 5 12.82 7 13.72 21 16.67 89 16.54 Total 39 100 51 100 126 100 538 100 (doc.edu, n/a, p34)
III-/ Changing staffs at Customary System:
Change: Trung Nguyen currently uses employees at high school or intermediate qualification to serve foreign customers. These employees have very limited
English, communication and soft skills, and this a disadvantage of Trung Nguyen to attract more customers. Therefore, Trung Nguyen spent a lot of money to
educate these employees for the Customary System.
Resistance: With low awareness, at the beginning, the employees feel uncomfortable when they are trained to serve customers. This job requires good English
and soft skills which many people lack.
Method: Employees are the face of the company, realizing this thing Trung Nguyen has a very strong team training which can help build the employees skills
so they can serve the customers effectively. Furthermore, Trung Nguyen has a raise policy which can make the employees work harder and responsible. Table 3
: Payrolls in the customary system Number