Local Firm Research TRUNG NGUYEN COFFEE - Tài liệu tham khảo | Đại học Hoa Sen

Business Strategy and Policy Local Firm Research TRUNG NGUYEN COFFEE
INSTRUCTOR: Dr. Deane Pham, MBA, Ph.D CLASS: Advanced Finance 55B GROUP 5: 1. Vo Thuy Linh (B27-1132338) 2. Vu Bao Ngoc (B37- 11132844)
3. Le Thi Bich Nguyen (B38-11132926) 4. Do Thu Phuong (B-11133206) 5. Doan Bao Yen (B53-11134623)
6. Nguyen Thi Phuong Anh (B7-11130215)
7. Nguyen Dieu Linh (B28-11132110)
8. Ho Minh Trang (B49-11134037)
9. Nguyen Thi Ngoc Anh (B3-11130169)
10. Pham Thi Thuy Linh (B26-11132324) 11. Ngo Dai Dang (B9-11130872)
12. Nguyen Trung Hieu (B10-11131402) Ha Noi,14th December Table of Contents I.
EXECUTIVE SUMMARY................................................................................................ 3
II. COMPANY BACKGROUND AND IT’S EVOLUTION...........................................3 III.
CASE ANALYSIS............................................................................................................ 3
1. Company information............................................................................................. 3
2. Company positioning( low-middle-high)- price point..........................3
3. Evaluating a company’s internal....................................................................... 3
4. Evaluating external- PESTEL analysis............................................................ 3
5. Five forces competitive........................................................................................... 3
6. Value chain SWOT................................................................................................... 3
7. Generic competitive strategy- which one did TN use............................3
8. Financial performance........................................................................................... 3
9. Issues and recommendation............................................................................... 3 IV.
CONCLUTION............................................................................................................. 3 I. EXECUTIVE SUMMARY II.
COMPANY BACKGROUND AND IT’S EVOLUTION III. CASE ANALYSIS 1. Company information  Pain point  Vision  Mission  Core value
2. Company positioning( low-middle-high)- price point  Product  Price
3. Evaluating a company’s internal
4. Evaluating external- PESTEL analysis 5. Five forces competitive 6. Value chain SWOT
7. Generic competitive strategy- which one did TN use 8. Financial performance 9. Issues and recommendation IV. CONCLUSION Table of Contents I.
EXECUTIVE SUMMARY................................................................................................ 2
II. CASE ANALYSIS................................................................................................................ 2
1. Company background and its evolution....................................................... 2
2. Company positioning( low-middle-high)- price point..........................2
3. Evaluating a company’s internal....................................................................... 2
4. Evaluating external- PESTEL analysis............................................................ 2
5. Five forces competitive........................................................................................... 2
6. Value chain SWOT................................................................................................... 2
7. Generic competitive strategy- which one did TN use............................2
8. Financial performance........................................................................................... 2
9. Issues and recommendation  pain point...................................................2 III.
CONCLUTION............................................................................................................. 2 II. Case analysis:
1. Company background and its evolution
a. An overview about Trung Nguyen Corporation
Being established in middle of 1996, Trung Nguyen was a new coffee brand
in Viet Nam but it has quickly built up the reputation and now become the
most famous coffee brand in both domestic and abroad. During 10 years,
starting from a small coffee company which located in Buon Me Thuot city,
Trung Nguyen was growing into a strong corporation with 6 member
companies : Trung Nguyen coffee JSC (Joint-Stock Company), Trung Nguyen
Instant coffee JSC, Trung Nguyen coffee LLC (Limited Liability Company), G7
trade and service joint stock company and Viet Nam Global Gateway Joint-
venture company (VGG). Their main functions include producing ,
processing, tea trading, coffee trading, retailing, franchise and distribution
services. In the near future, Trung Nguyen Corporation will have 10
member companies with diversified industries.
Leading in the franchise business model application in Vietnam, Trung
Nguyen has a network of nearly 1,000 franchised coffee stores in our
country and eight stores in abroad such as USA, Japan, Singapore, Thailand,
China, Cambodia, Poland, Ukraine. Trung Nguyen coffee and G7 instant
coffee products are exported to 43 countries around the world , especially
to some major markets like the US, China. Furthermore, Trung Nguyen has
also built up a system of more than 1,000 stores and distribution centers G7Mart in Viet Nam.
b. Company history and its development stages
 16/06/1996: Start up in Buon Me Thuot (Manufacturing and trading of tea, coffee)
 1998: Trung Nguyen appeared in Ho Chi Minh city with 100 Trung
Nguyen coffee shops and the supporting slogan " Inspire new creation"
 2000: The first Trung Nguyen coffee shop appearing in Hanoi and the first franchise to Japan
 2001: Trung Nguyen was popular in our country and they continues
the franchise to Singapore and followed by Cambodia, Thailand.
 2002: Tra Tien product appeared.
 2003: G7 instant coffee was produced and then exported to many developed countries.
 2004: Opening the Trung Nguyen coffee shops in Japan. Trung
Nguyen has a network of 600 cafes in VietNam; 121 distributors;
7,000 of sale stores and 59,000 retail stores
 2005: Inaugurating a roaster factory in Buon Me Thuot and the most
biggest instant coffee factory in Binh Duong with the capacities of
roaster and instant coffee is 10,000 ton / year and 2,000 ton / year, respectively.
 2006: The Shaping of a corporate structure with the establishment
and putting into operation of new companies: G7 Mart, Media South
Vietnam, Vietnam Global Gate Way.
 2007: Publication of the philosophy of coffee and run the project
"Global coffee capital" in Buon Ma Thuot city.
 2008: Opening new franchised restaurant system in Vietnam and
international countries , inaugurated Trung Nguyen Coffee Village in Buon Ma Thuot.
 2009: Opening Trung Nguyen Creative Club in Hanoi. Trung Nguyen
invested over 40 million USD to build a coffee manufacturing
company with the latest technology in Buon Ma Thuot.
c. Company’s vision, mission and core value
Vision: becoming a corporation which promote the emergence of Vietnam's
economy, maintain the autonomy of the national economy and also
demonstrate the desire to discover and conquer.
Mission: Build leading brands through inspiring the creation to customers
and also transmit the pride of a coffee type deeply imbued Vietnam identities. Core values:
(1) Inspiring creativity : Creativity is the leading motivation of Trung
Nguyen in confirming the pioneering to supply the utility value for customers and employees.
(2) Developing and protecting the brand: all members are responsible for
construct , develop, nourish and protect Trung Nguyen brand.
(3) Focusing on consumers: the customer satisfaction as the key term for all activities.
(4) Co-operation for development : the success of the partnership is key to
the prosperity of Trung Nguyen . Hence, Trung Nguyen cooperates in a spirit
of trust, respect and equality with their partners.
(5) Developing a strong human resources: giving all employees the benefits
of both physical and mental power, as well as the opportunities for training and promoting .
(6) Focusing on efficiency and productivity to choose the best strategy
(7) Building community : positive contribution to build a better community
and also help for social and economic development.
2. Company Positioning ( low – middle – high) price point
Trung Nguyen company has become one of the most popular production,
processing and distribution of coffee as well as sought-after pleasures by
tourists. For the express purpose of adapting consumers’ demand, the
company’s goods is divided into 3 main categories, namely high-class,
intermediate and common goods.
 High-class products:
There are four subtypes of luxury coffee, including Weasel, Diamond, Legendee and Classic blend.
Trung Nguyen is known as an important producer and distributor of
Weasel. This (also called as Civet coffee or Kopi Luwak) which is produced
through digestive tract by the Asian Palm Civet is renowned all around the
world for its incredibly delicious, subtle, lingering flavor and exceptional
smoothness. Because of sophisticated process of production, only well over
40kg of Weasel are produced. Otherwise, Trung Nguyen’s Legendee brand
coffee is a stimulated Kopi Luwak product, which uses synthetic enzymes to
mimic the civet’s gastric acid. These are considered to penetrate the global
market for premium- quality specialty coffees with higher prices, around 3,000 dollars for an 1kg pack.  Intermediate goods:
Intermediate goods is consist of Passiona and Creative. Because Passiona is
combination of finest Arabica and Excelsa coffee beans, it has subtle flavor
and low volume of caffeine which is suitable for people who has enjoyed
coffee for the first time. Besides, Creative Coffee includes 5 types of coffee
produced with Arabica beans with different flavors.  Common goods:
They are the most popular coffee for customers which are Brown- Vitality, Inspiration and S-Conquering.
Combining heritage and modernity is at the heart of the brand, whether in
the packaging or the styling of the coffee shops. By pricing the coffee diverse
and suitable for the most of consumers, Trung Nguyen company appealed to
give Vietnamese generation creative inspiration.
Apart from original products, the company recently has released new
products named G7. G7, an instant coffee tasting as rich, full and satisfying
as a brewed cup, is considered to be competitive to others from Trung
Nguyen’s competitors like Nestle and Highland. Particularly, 3-in-1 Coffee is
the most popular kind of instant because it contains a very good creamer as
well as sweetener in perfect proportion.
Although at the recent time, there are other companies penetrating
Vietnamese coffee market such as Nestle, Vinacafe and Highland, Trung
Nguyen still proves itself as a competitive one. One launching G7, Trung
Nguyen hosted a fair providing free chance for customers to enjoy their
products, in comparison to Nescafe of Nestle. Based on the result that 89
per cent people appreciate G7 over Nescafe, Trung Nguyen executed their
strategy to bring in this new product to Vietnamese consumers. In fact,
price of G7 is still lower than other competitive goods by 3-5 per cent.
3. Evaluating a company’s internal a. Managment
First of all, Mr Dang Le Nguyen Vu always respect traditional values. He has
said that the product should reflect the culture of the country, not merely a
commodity to sell. From the beginning, when he chose a logo for Trung
Nguyen coffee, he has expressed his desire: Arrow logo is the stylized image
of communal house in Tay Nguyen . An arrow pointing straight to the sky
express the aspiration to conquer the peak and develop strongly. Three
white lines on the logo is a stylized image of the entrance to the house on
stilts, showing the culture of this company is to preserve Trung Nguyen’s
identities. White color represents the purity as the ensurance for product
safety. On signboard of Trung Nguyen coffee, brown is the dominant color
because it is the color of soil, of coffee bean and of ethnic origion.
Secondly, he has a great strategic vision. He set a right way for Trung
Nguyen coffee to develop. when Trung Nguyen was still young, he opened 3
coffee shops near together . By this tactic, the manager could control easily
his shop and adjust on time with the trend of market. Besides this, he soon
realizes that the way to gain the Vietnamese consumers is the value of
tradition in each coffee cup. Hence, he campaigned many programs to
attract customers such as “The party of Coffee” in order to get easily a
certain position in the domestic market. Moreover, he conceives the role of
the brand name in world coffee trade so he decide to build the Heaven of
Coffee in Buon Ma Thuot – the high land in Vietnam where coffee is grown popularly.
Last but not least, Mr.Vu has never stopped creating. With his passion and
dedication, he led Trung Nguyen to create G7 instant coffee to counter the
biggest multinationals – Nescafe – the most widespread foreign coffee in
Vietnam. In “G7 Instant Coffee Festival” in 2003, 89% of 13000 coffee
testers voted in favor of G7 while 11% selected Nescafe. What is more,
Passionate coffee for women which is decafein and added collagen and
vitamin P was created and attracted the interest of many women. Now,
women can drink their coffee comfortably without any worrying about the harm of coffee. b. Facilities
The office systems, factories, warehouses and production lines are quite
synchronized with nearly 60 categories of machinery and equipments. All
the workshops, machinery and equipments are constantly being improved
towards the modernization by the automatically control equipments and
specialized equipments with high accuracy. Trung Nguyen coffee processing
factory run operations in 2005 with a capacity of 1,500 tons of coffee
powder per year and now, after having been renovating and upgrading old
plants, the capacity can reach 24000 ton café powder per year. c. Human resources
Trung Nguyen corporation includes of 2000 employees, they are almost
young people and are well trained. Additionally, many leading experts and
strategy consultants are helping Trung Nguyen to reach more and more
international market targets. Trung Nguyen has experienced a lot of drastic
changes in organizational structure , the staff remuneration policies and
appropriate training on manufacturing coffee beans as well as serving
customers. All the staffs are focused on working independently,
continuously creating and learning from colleagues. d. Suppliers
Suppliers can increase their power and also make an impact onto the
industry by increasing supply’s price or lowering the supply’s quality. Trung
Nguyen has many advantages to make their supply become more
competitive. Firstly, in 506,000 hectares used for growing coffee Robusta
coffee-the most famous type of coffee in Vietnam occupies 26,000 hectares.
About 3/4 Vietnam’s coffee production is in the Highlands places where has
many relevant condition for growing coffee. Province Planted areas in hectares Dak Lak 234,000 Lam Dong 100,000 Gia Lai 75,000 Kon Tum 11,000 Dong Nai 60,000 Son La 35,000
As can be seen from the table above, the two largest producting provinces
are Dak Lak 234,000 hectares and Lam Dong 100,000 hectares. Trung
Nguyen was built in the uprooting areas above so it can make use of
advantages such as saving transportation cost. Additionally, with the
availability of the local labours who have experience in processing coffee,
Trung Nguyen can hire them without paying high. Therefore, Trung Nguyen
made a good qualitative coffee to sell but they did not need to spend much
money on production cost. Almost farmers living in the high land is the
coffee household. Their income is from mainly coffee. However, it is not
stainable when the coffee price is declined while they have to get bank loan
to expand their farm . Trung Nguyen know this problem of farmers so they
promise to pay the higher price with the condition that farmes have to sell
the good product to them. By this way, Trung Nguyen established the firm
relationship with their suppliers. Trung Nguyen always had priority to buy the best coffee bean.
4. Evaluating external – PESTEL analysis
 What is Pestel Analysis?
Pestel or PEST Analysis is an acronym for Political, Economic, Social and
Technological. This analysis is used to assess these four external factors in
relation to your business situation. Basically, a PEST analysis helps to
determine how these factors will affect the performance and activities of
your business in the long-term. It is often used in collaboration with other
analytical business tools like the SWOT analysis and Porter’s Five Forces to
give a clear understanding of a situation and related internal and external factors. Political Economic Social Technological  Political  Inflation  Customer  Technological stability  demographics advancement Interest rates  Tax  Cutural  Lifecycle of  Economic guidelines limitations technology  Trade growth  Lifestyle  Role of regulation  attitude Internet Unemploymen  Safety t rate and  Education  Government’s regulation policy technology spending  Employment  Business cycle law
 Pestel Analysis of Trung Nguyen Coffee
Every company operates in a broad “macro-invironment” that comprise
many components, however, four of them are considered in this report
according to Pestel Analysis. Each of these factors has the potential to affect
the firm’s more immediate industry and competitive environment of Trung
Nguyen Coffee either positively or negatively. Therefore, move to the
specific parts to find out how these factors influence Trung Nguyen Coffee. - Economic factors
With the growth of an international group, global economy as well as
domestic economy is the most important element. In recent years, the
world has beholden big economic crisis, which pushed many countries in
bad situation. It could be inferred that the coffee import rate of these
countries might decrease. In addition, Vietnam is the second country which
exports coffee with huge quantity. Therefore, the economic crisis would
have impact on export rate of coffee in Vietnam, raw products and finished
goods. Trung Nguyen might not an exception because this group exports
coffee to over 60 countries in the world, included in Asia, Europe and other
areas. However, Trung Nguyen group still stand in the market as number
one Vietnamese label of coffee. The products of Trung Nguyen like G7 is
very popular with Asians and Europeans. Dang Le Nguyen Vu, the manager
of Trung Nguyen continuously opened franchising shops in Singapore 2001,
Cambodia and Thailand in 2003, Japan 2004… At the present millions of
people in over 60 countries drink G7. What are the reasons for this success of Trung Nguyen?
The first reason is Vietnamese economic scale is small, so the crisis of the
world had a little bit effect on Vietnam companies. Secondly, Trung Nguyen
always try to be unique and different from the other competitors in the
marketplace of coffee in term of service and product. The branding of Trung
Nguyen was carefully planned. To counter competition from big
multinationals, whether coffee shops or brands such as Nescafé, Mr Vu
positioned it as part of a Vietnamese tradition. A Trung Nguyen museum
tells the history of coffee-making in the country. Moreover, one of Trung
Nguyen’s best-known products is kopi luwak or “weasel coffee”, made from
coffee berries that have passed through the digestive tract of a civet cat.
Marketing this expensive delicacy, which is harvested only in south-east
Asia, helps identify Trung Nguyen with Vietnam’s coffee culture.Finally,
Trung Nguyen receieves many good feedbacks from customers and becomes
one of the most favorite drink of Vietnamese as well as foreigners. In
Vietnam, 11 million over 17 million of households buy Trung Nguyen coffee.
The first Trung Nguyen coffee shop opened in Ho Chi Minh City in 1998, and
by 2010 there were more than 1,000 across Vietnam.
Another economics factor should be considered is that Vietnamese
economic policy’s government is promoting Vietnamese economy especially
export. This is one of advantages helping Trung Nguyen export more and
more. Additionally, EU and The US have some policies of investing in Asia,
that brings more opportunities for goods export in general and coffee
export of Vietnam in particular. - Social factors
Vietnam is densely populated and agricultural land officially accounts for 28
percent of its 33 million hectares and coffee occupied 4.16 percent of total
agricultural cultivating area. Thereby, coffee is an important part of the
rural economy. Mr Vu was very smart when he knew how to exploit this
strength in the best way. He founded a Trung Nguyen Village with a huge
dimension of 20,000 square meter. Inside the Village, scrumptious coffee
trees are grown such as Robusta, Arabica, Excelsa…
Natural condition added by copious human resources are making Trung
Nguyen brand in the taste of consumers. Trung Nguyen group has been
finding and training many coffee experts to research and find out finished
product that is more and more perfect: good taste, mental health effect…
One more wonderful characteristic of humans in Trung Nguyen is
experience of processing coffee from older generation many years ago.
Trung Nguyen, therefore, could gain more benefit and become more competitive. - Technological factors
Trung Nguyen has been transmitted modern technology from leading
corporations all over the world. All of Trung Nguyen manufacturers are
equipped with the most advanced apparatus with HACCP standard to
produce clean and superfine good coffee beans. These beans also overcome
strict standard of FDA to export The US, Japan and EU market. Trung
Nguyen order leading companies about technology of Italy and Germany to
design unique equipment to conserve their own taste of coffee. - Political factors
The government had some decision to support the import of fertilizer by
permitting private firms in 1998 and eliminating some quantitative import
restrictions based on decision 242/1999/QD- TTg) and quotas (Decision
46/2001/QD-TTg) in 1999. Thanks to this appropriate policy, taxes on
fertilizers imported have been decreased to five percent. Then, the award
policy was applied in order to encourage expand coffee export. Besides, it
has implemented some policies which are actually valuable in reduce
transportation costs and some unnecessary procedures. Especially, the
Vietnamese Government attaches special importance to Coffee industry;
thus, assists the firm to reducing cost for using ground water for growing
coffee in Dak Lak. Moreover, it enables Trung Nguyen to decrease the
irrigation time in additon to production cost. Certainly, profits and
productivity are more effective, and gradually growing when they have a
company which culture coffee as well. Another competitive policy is that
exchange rate is adjusted significantly by the Government. This helps the
coffee business suffer from crisis less than other countries which have
lower exchange rate. Basically, the development of the coffee industry in
general, and Trung Nguyen coffee in particular are under Government’s influence considerably.
5. Five forces competitive - Power of suppliers
The number of suppliers have an influence on the competitive pressure,
their negotiating capacity to the industry, and the enterprise. If there is only
a few suppliers of large scale on the market, the competitive pressure will
be created, affecting the whole business and production activities of the sector.
However, at the moment, Trung Nguyen Coffee has an extremely efficient
operating production system. All the materials used for the manufacturing
process of instant coffee and other products are derived from the farm
which is invested and managed by Trung Nguyen itself. Put it the other way,
Trung Nguyen is the main supplier for its own production. Therefore, Trung
Nguyen does not have to face with the competitive pressure from suppliers. - Power of customers
Customers play an important part as one of the competitive pressure which
can cause a direct effect on the entire business and the production of the