Case Study - Acumen Inc. Mineral Water (Environmental Analysis)

International Executive
Master of Business Administration Programme
Case study – Acumen Inc. Mineral Water

(Environmental analysis)
Binh Minh Incorporated began an a small family textile establishment in Thai

Binh 10 years ago. Thought its headquaters are still in Thai Binh, it has recently
erected representative and trading office in Hanoi and Ho Chi Minh City.
The family chose to enter the textile industry initially because it was their
traditional trade. Every member of the family had inherited the expertise of their
ancestors in creating towels and cotton handkerchiefs. These products have remained
the company’s core competency since its inception. For its textile business, the
company uses two styles of management. One thousand labors and managers are
under the direct central management of the firm, working for one of the three main
departments (spinning, dyeing, and business). 1400 contract employees are semi-
managed by the company. Binh Minh provides them with materials and collects their
output.
Recently, Binh Minh’s top management began to worry about the cut-throat
competition and inconsistent demand in the textile industry. They decide to diversify
their product-line in order to insulate themselves from slump in their core business.
Binh Minh was given an interesting opportunity in early 1997 when the Local
People’s Committee offered to sell them the land-use rights and product license for a
mineral water deposit in Thai Binh Province. The deposit had been initially
discovered in the late 1970s by a foreign firm, which was excavating for oil and gas.
After an initial investigative study, Binh Minh determined that the mineral
water deposit is of good enough quality to meet international standards (a ratio of 250
mg of minerals per liter of water). They also estimated that the depth of the deposit
was 450 m below ground, which would require a large technological investment in
order to pump it to the surface. Binh Minh then conducted an investigative market test
to determine the potential for another mineral water manufacturer. Their research
included studies of the restaurants, hotels, government offices, and State Owned
Enterprises. Upon completion, they decided that a large domestic market was
available.
The managers of Binh Minh felt that they had a unique product. As a result,
they did not spend much time investigating potential competitors. While they knew
that there were several manufacturers of bottled water (e.g. La Vie, Le Ville, La Vite,
and A&B), they were uncertain that the majority of Vietnamese consumers could
differentiate between mineral water (250 mg/liter of minerals) and plain purified
water. They also did not feel it necessary to measure the frequency at which
consumers substituted products like Coca-Cola or Orange Juice for mineral water.
Although, top managers at Acumen did sign up for a high-level government
delegation trip to La Vie’s factory, taking detailed notes on the strategy and operations
of their chief domestic rival.
Upon the completion of its research, Binh Minh concluded that the investment
was sound and thus founded Acumen Mineral Water. They hired 40 employees for a
variety of Jobs ranging from engineering and contruction to marketing to clerical
work. They then invested in top of the line pumping, bottling, and sealing machines
from Italy. This investment immediately gave Acumen the most modern equipment in
the Vietnamese market, but it necessitated that all Acumen Water employees receive
training in Italy or by Italian trainers in Vietnam.
Since the begining of water production on May 8, 1997, Acumen’s philosophy

has been to use their own employees for every aspect of the business. They do their
own pumping, bottling, marketing, and distribution. Their Vice director even designed
the company logo and chose the trade name himself.
Acumen also manufactures its own bottle, as it believes the unique design and
size, based on several research trip to Europe, gives them a competitive advantage
over other domestic producers. This advantage stems from a slight curvature at the top
and smaller mid-section of the bottle. Acumen’s technology experts hold that this
shape allows the minerals to gently rise to the top where they collect for a pleasing,
full-bodied tatste. As Acumen is very afraid of having their design stolen, they refuse
to contract out bottle protection.
Acumen’s business strategy has been to concentrate on the high-end market,

which consists of Vietnamese and foreigners with a high enough education levels to
differentiate between different types of water. Acumen advertised on TV, but did not
draw attention to the modern technological equipment employed in production. They
instead decided to use a more entertaining approach. Acumen sells its products at a
range of prices that are competitive with domestic rivals. A small bottle with
carbonation sells for 3,400 VND while one without carbonationis a slightly cheaper
3,600 VND. Large bottle are sold for 6,400 VND.
The company has had some initial success in its strategy. They sell to several
hotels and restaurants and have landed several large clients, which include Vietnam
Airlines, Petrolimex, and the National Football Team. Interestingly, the Ho Chi Minh
City representative office outsells its Hanoi counterpart by three or four times. Their
present market research indicates that the demand for mineral water is increasing fast
and there is still a great deal of room for growth. As a result, Acumen has decided to
introduce more capital into their water operations in an affort to double out put by the
year 2005
Question:
Identify SWOT of Binh Minh

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International Executive

Master of Business Administration Programme

Case study – Acumen Inc. Mineral Water

Binh Minh Incorporated began an a small family textile establishment in Thai

Since the begining of water production on May 8, 1997, Acumen’s philosophy

Acumen’s business strategy has been to concentrate on the high-end market,

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