Internal Analysis (VRIO, Competitive Advantages, Core Values, SWOT, BSG Matrix, company

performance)

SWOT ANALYSIS

STRENGTHS WEAKNESSES

– Vinamilk is the leading brand in Vietnam’s liquid milk

industry.
– Professional, experienced management board.

– High-quality milk of international standards. Relatively cheap

prices. Environment-friendly packages. Continual product
innovation.

– Globally recognized cow farms. Significant investment on – Heavy dependence on foreign supply
resource regions => Sustainable development strategy. for 70% raw materials
– Marketing activities in Northern
Vietnam is still weak.
– Extensive distribution network throughout the country.

– CSR programs => Responsible business practices => Positive

relationship with the public.

– Recognized as the second best workplace in Vietnam.

– Effective marketing activities in Southern Vietnam.

OPPORTUNITIES THREATS

– Dense population => Large market. – Fluctuation in pricing of raw materials

– Fast growing economy => Higher purchasing power. from foreign supplies => Unexpectedly
high material cost
– Intensive competition with domestic
– Increasing living standards => Growing concerns about brands
nutrition and health.
– Vietnam becoming a member of
– Government’s initiatives to increase Vietnam’s average height WTO and lower tax rate for dairy
and the subsequent perspective “Vietnamese use Vietnamese products => Foreign brands to enter
products”. Vietnam’s market
 – The government’s development budget on dairy industry – More legislation on Vietnam’s dairy
market, especially on children’s
– Vietnam becomes a member of WTO and ASEAN AEC => products
Constructing processing factories in neighbouring countries to
reduce production cost – The Great Recession renders
consumer confidence still low.
– Vietnamese consumers are interested in foreign brands.
– Milk consumption in urban and rural
– Internationally standardized production technology regions varies considerably.

2. Competitive Advantage
A. Development of raw material sources to ensure a reliable and consistent fresh milk supply base
Develop modern cow farms in Vietnam
Import cows from New Zealand, Australia and Thailand to increase the number of cows in
Vinamilk’s farms
Develop cow farms overseas, e.g. Cambodia, New Zealand
B. Diverse product portfolio capturing a larger share of the consumer wallet
Proves our market dominance in all core products of our diverse portfolio

C. Strong “win-win” supplier relationship

Competitive pricing policies: Purchases over approximately 50% -60% of domestically
produced raw milk in Vietnam
Financial support to farmers: Offer farmers seasonal subsidies when prices of raw milk
experience sharp changes
Proximity of facilities: Milk collection centers located within 30 minutes from farms
 Providing a support for retailer that results in a steady supply of high quality raw milk;
substantial pricing power for Vinamilk and consistent and fresh supply of raw milk.
Therefore, a close relationships with suppliers allow them maintain and increase
production output
D. Strong market-oriented research and development capabilities, combined with modern
production facilities
In terms of marketing team, they experienced in analyzing consumer preferences and
trends, then conducting consumer research with market research companies. Afterwards, sales
team will have a thorough understanding of consumer preferences through constant contact at
various outlets. At the same time, they have strong R&D team of over 10 members to improve
product quality and expand product portfolio with a help of agreement with three leading
companies named DSM, Lonza and Chr. Hansen for R&D for research, application and product
development.
For the high-tech equipment including production lines (Technologies imported from
Germany, Italy, and Switzerland for manufacturing), packaging (provided by Tetrapak, Bencopack
and SIG Combibloc), Spray drying (produced by Niro Inc. of Denmark which can retain high
content of nutrients and minerals) and Inventory management ( ERP technology powered by
Oracle manages inventory and minimizes spoilage loss)
3. Core Values
+ Integrity: transparency and morals can be found in whatever we do.
+ Will: We dare to think, to do, to take responsibilities and to overcome challenges to realize the
committed targets.
+ Creativity: We always highly appreciate the passion, unique discovery and innovative solutions.
+Efficiency: We always focus on added-values in all our works, investments and business
activities.
+Respectability: Self-respecting, equality and dedication to the growth of the company are what
we really appreciate at Vinamilk.
+Harmony of interests: Interests of Vinamilk are also the interests of its employees, partners,
government and society.
+Openness: Constructive and straight communication is the base for our team to become more
united and stronger.

4. BCG matrix
Powdered milk:
Vinamilk's powdered milk accounts for 30% market share but Vinamilk's market for powdered
milk products is mainly in rural areas. In big cities, the market share of Vinamilk powdered milk
is faced with great competition from foreign dairy companies due to the consumer sentiment of
urban residents who prefer foreign goods.
However, Vinamilk's powdered milk product group is increasingly diverse to meet the actual
needs of customer segments and target customers, not only limited to children but also expanded.
to many subjects such as pregnant women, the elderly, people with diabetes, people who are
overweight and obese. Therefore, this will still be a great advantage to help Vinamilk continue to
hold market share.
Liquid milk
It continues to be the key product, accounting for the largest proportion of Vinamilk's total
revenue. In 2012, the liquid milk market (prepared milk) was still held by Vinamilk and
Friesland Campina. With the advantage of 100% sterilized fresh milk product line, produced in a
closed cycle from raising, purchasing, processing and packaging; Liquid milk is still the segment
that brings many opportunities and profits for Vinamilk.
Condensed milk:
Vinamilk's condensed milk SBU appeared quite early and still has a certain position in the
market. SBU is a condensed milk product line with high market share but low growth, so it needs
appropriate investment policies
5. Company performance
Vinamilk has overcome challenges, continued to maintain its leading position with total
market share increased by 2.9% and recorded business results of 2018 compared to 2017 with
encouraging revenue and profit results at 52,629 VND billion. To be specific, 85% consolidated
net revenue from domestic and 15% consolidated net revenue from overseas. In addition, the
after-tax profit is VND 10,206 billion, decreased by 0.7% compared to 2017.
 TH True Milk
Comparative advantage
Athough newly established about 5 years; TH true milk is often mentioned with full pride
byVietnamese people. This brand has created its own comparative advantage in Vietnamese
dairymarket. The company is famous for advanced management system and integrated
production processes, synchronised by international standards from planting grass, building
barns, cattlefeed processing, management veterinary control, processing and packaging, to the
distribution of products to consumers
1. Quality level
TH true milk is created within the high standard originations and production in which
emphasized the position of high quality milk products. They have an 8000 ha farm in Nghe An
province which is raising raw materials for TH true milk, with pure raw self-supplied materials.
This makes it easy to manage input, rather than having to depend on imported raw materials like
many other competitors. With the slogan “100% pure milk, TH true milk built the largest factory
in South East Asia where they currently have 30,000 cows to ensure sufficient raw milk material
for production. At present, TH’s cow are imported from countries famous for raising dairy cows
in the world such as New Zealand, the USA, Australia, and Canada with clear genealogy to
ensure best milk, high yield, keeping fat, protein, etc. in the milk,and high fertility and disease
immune as well.
2. A Strong Brand Image
TH True Milk has successfully created an outstanding brand image, which is well-known for its
clean and safe products with ingredients made of high quality components through modern and
standard production. /rom the beginning stage of the firm, this brand is targeted to bring
Vietnamese consumers with breakthrough products of which assure highest quality daily milk for
customers.
3. Physical Store
Compared to the distribution places such as normal supermarkets or small retail stores of other
competitors, TH True mart- the direct selling system of TH true milk is much more ideal for
customers. It is a chain of convenience stores that provides safe, clean, fresh, delicious and most
nutritious, natural and original products produced by farm fresh dairy TH. TH True Mart facility
is invested with modern design and special interior materials, as well as the upgraded methods in
preserving the best products. Milk are not only preserved carefully under the best conditions but
also placed neatly on the shelf which is convenient for consumers to find their wanted goods. They
will enjoy a clean and enjoyable place of shopping. Unlike the normal overcrowded supermarkets
and stores, TH True Marts bring comfort to shoppers and make the purchase process of them
become easier with smart and scientific designed stores.
SWOT
Strength
  Good relationship with suppliers
 Modern production technology, machinery and equipment are warranted and maintained
periodically
 The executive, managerial and research staff are hired from abroad with high qualifications
and skills
 Large-scale factory located next to the raw materials (livestock farms, grasses and factories
located on the premises)
 The process of raising cows from Israel
 Good cow breed, imported from New Zealand with high quality, directly raised and
managed by the company
Weakness
 Product brands have not yet been popular with consumers
 The distribution channel system is not diverse and the coverage is not high
 Production costs are higher than competitors.
 Product lifecycle is short
Opportunity
 Demand for milk is increasing
 Abundant labor force with low costs
 Consumers care about product quality
 Supported by state policies (policies to encourage hi-tech agricultural investment,
development of dairy farming)
Threat
 Attractive designs and many different capacities lead to many choices for users
 Many competitors start to improve the quality of their products
 Machines are easily damaged by weather
Core Value
TH Group has developed five core values for its TH true MILK products, including ‘For the health
of the community,’ ‘Completely from nature,’ ‘Fresh-Delicious-Nutritious,’ ‘Environmentally
friendly,’ and ‘Excellent mind-set and harmonised benefits
BCG Matrix

Question marks, which are also known as problem children or wild cats, are business units
that have a small market share in a high growth market. They do not try to generate much cash in
their industry because of the organization must decide whether to build up them by practicing a
rigorous strategy (market access, market development, or product development) or to sell them,
i.e., it is not known if they will become a Star or drop into the Dog. They have high demand and
low profit due to low market share. They have to spend large amount of cash to gain market share.
They try to produce new goods to attract buyers. They have no fixed strategy to run their business.
As initially the company tries to enter a high growth market with existing market share. The
question marks may become dogs if they are ignored while huge investment is made. On the
other hand, they have potential of becoming stars and eventually a cash cow when the market
growth slows. Question marks have a tendency to produce new plant and equipment, low capacity
of utilization, top current asset levels, large R&D expenses, dear marketing expenses, narrow
domains, heavy new product activity, high direct costs, and competitive devices that lag
Star competitors on all fronts. They have the worst cash characteristics of all, because they have
high cash demands, and generate low returns due to low market share. If its market share remains
unchanged, it will simply absorb great amounts of cash.
Company performance

https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/1412564937-
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https://www.researchgate.net/publication/322695566_An_Analysis_on_BCG_Growth_Sharing_Matrix