Tài liệu A study of export demand for coffee the case of intimex vietnam jsc

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Export demand for coffee: The case of Intimex Vietnam JSC A study of Export Demand for Coffee: The Case of Intimex Vietnam JSC Name : Nguyen GiaPhuc English Name : Clinton Date of Birth : 25/09/1963 Hanoi – 2013 Nguyen Gia Phuc– Clinton 0 Export demand for coffee: The case of Intimex Vietnam JSC ACKNOWLEDGMENTS I would like to thank Dr. Eduardo T. Bagtang and the International center Education of Thai Nguyen University, Southern Luzon State University for guiding me throughout this research and for providing me with the opportunity to conduct this research and for helping me to carry out the necessary revisions to this dissertation. I would also like to express my deep gratefulness to Vietnam Intimex Company for providing me with useful and necessary information for doing this research, to my wife, my son and daughter, my colleagues for encouraging, inspiring me when I conduct this research, giving necessary feedbacks for making this dissertation successful. Finally, I would like to thank all my classmates for giving me constant support and encouragement as well as helping me with needed materials and reference. Nguyen Gia Phuc– Clinton i Export demand for coffee: The case of Intimex Vietnam JSC APPROVAL SHEET ..................................................................................................... x CHAPTER I: THE PROBLEM AND ITS BACKGROUND ................................ 11 1.1. Background of the study ................................................................................... 14 1.2. Statement of the problem .................................................................................. 18 1.3. Objectives of the study...................................................................................... 18 1.4. Hypotheses of the study .................................................................................... 20 1.5. Significance of the study ................................................................................... 20 1.6. Scope and Limitations of the Study .................................................................. 20 1.7. Location of the study ........................................................................................ 21 CHAPTER II: REVIEW OF RELATED LITERATURE AND RELATED STUDIES .................................................................................................................... 23 2.1. Coffee Production in Vietnam .......................................................................... 23 2.1.1. Coffee Export into USA‘s market.............................................................. 26 2.1.2. Vietnam coffee export: Lesson learnt ........................................................ 29 2.1.3. Vietnam coffee industry at present ............................................................ 31 2.2. Future of Vietnam Coffee Export ..................................................................... 36 2.2.1. Quality Improvement for Vietnam coffee.................................................. 37 2.2.2. Production cost reduction .......................................................................... 37 2.2.3. Variety and product shifting, production adjustment to the market demands ............................................................................................................... 38 2.2.4. Coffee consumption promotion in the domestic market as well as to great potential countries ................................................................................................ 39 2.2.5. Reorganization of production and export structure in a better scientific, modern, effective and steady way ........................................................................ 39 2.3. Major Market For Coffee Exports .................................................................... 40 Nguyen Gia Phuc– Clinton ii Export demand for coffee: The case of Intimex Vietnam JSC 2.3.1. Problems Encountered in Doing Business in the US ................................. 41 2.3.2. Countries Considered by Vietnam as Competitors .................................... 42 2.4. Company Analysis: The Intimex JSC Vietnam ................................................ 43 2.4.1. Features .................................................................................................. 43 2.4.2. Organizing structure............................................................................... 45 2.4.3. Management ........................................................................................... 46 2.4.4. Achievements of Intimex Vietnam ........................................................ 50 2.5. Other Related Studies ....................................................................................... 51 2.6. Conceptual Framework ..................................................................................... 61 CHAPTER III: METHODOLOGY ......................................................................... 64 Methods and Procedures .......................................................................................... 64 3.1. Research Design and Methodology .................................................................. 64 3.2. Respondents of the Study.................................................................................. 64 3.3. Data Gathering Tools ........................................................................................ 65 3.4. Treatment of Data ............................................................................................. 67 CHAPTER IV: RESULT AND DISCUSSION ....................................................... 69 4.1. The Current Status of the Coffee Exporting Companies of Vietnam ............... 69 4.2. Qualitative Data Analysis ................................................................................. 89 4.2.1. Existing competitors and market structure of coffee export ...................... 89 4.2.2. Product Quality .......................................................................................... 91 4.2.3. Coffee drinking trends in the American..................................................... 92 4.3. Test of Significant Relationship........................................................................ 94 4.3.1. Hypothesis testing .................................................................................... 100 4.3.2. Individual partial coefficient test ............................................................. 102 4.3.3. Testing overall significance of the multiple regressions.......................... 105 Nguyen Gia Phuc– Clinton iii Export demand for coffee: The case of Intimex Vietnam JSC 4.3.4. Testing the drop variable in the regression model ................................... 106 4.3.5. Errors in the model................................................................................... 108 CHAPTER V: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 116 5.1. Summary of Findings .................................................................................. 116 5.2. Conclusions ................................................................................................. 119 5.3. Recommendations ....................................................................................... 120 BIBLIOGRAPHY APPENDICES Nguyen Gia Phuc– Clinton iv Export demand for coffee: The case of Intimex Vietnam JSC ABSTRACT Following the trend of globalization, especially after Vietnam joins the WTO, in order to enter the international playing field, Vietnam has determined that it needs to boost exports. In terms of agricultural products, the export of coffee is one of the first priorities. With that business orientation, enterprises specializing in processing and exporting coffee are looking for strategy to penetrate international markets. One of the leading enterprises pursuing this direction is the Vietnam Intimex Joint Stock Corporation (Intimex). With its export turnover reaching an annual average of nearly $300 million, Intimex is the leading enterprises in Vietnam of which product lines have been certified by many associations of coffee in the world, namely 4C, UtzKappeh, Organic coffee. For several years, the United States (U.S) has become one of the biggest importers of coffee products. The Intimex‘s export value of coffee to this market accounts for US Dollar 200 million in 2009. With a view to maintaining its dominant status in this field and increasing its market shares in the U.S, Intimex always place much importance to the marketing activities, having the good marketing mix will bring efficiency to the company‘s export business. Given the above-mentioned rationale, I have decided to choose the topic: A study of export demand for coffee: The case of Intimex Vietnam JSC. After collecting data from both primary sources by utilizing questionnaires, interviews and secondary sources: articles, published documents, books and online articles, regression analysis models were utilized to find out the factors affecting coffee import demand of the US. By statistical approaches, the dissertation points out Nguyen Gia Phuc– Clinton v Export demand for coffee: The case of Intimex Vietnam JSC different qualitative and quantitative factors that have influence on the coffee import demand. These factors are:  Quantitative data: commodity price, coffee beverage price index, price of the biggest substitute, and coffee market share. In data analysis, E-view program was used to deal with figures from secondary sources. By statistical methods, I draw the conclusion about the dependent variables as follow On the hypothesis of significant relationship, it was found out that the key factors affecting coffee import demand are commodity price, price of the biggest substitute (tea) and coffee market share of Vietnam in the US market. The commodity beverage price index of the U.S. as one of the four has no significant impact on the dependent variable. The model of regression analysis has been checked for errors: multi-co linearity, heteroskedasticity and autocorrelation. In general, after conducting a set of statistical treatments, the model proves to be quite reliable and can explain the dependent variable based on independent variables. After data analysis using regression models, results are drawn and conclusions are made. Based on those results and conclusions, I have point out the recommendations to improve current situation of coffee export to the US markets in Chapter 5. These conclusions are based on findings from the data analysis and qualitative data assessment. Nguyen Gia Phuc– Clinton vi Export demand for coffee: The case of Intimex Vietnam JSC LIST OF FIGURES Figure 1: Organizational Chart of Intimex Vietnam .................................................... 17 Figure 3: Coffee productivity, area, and output in province Daklak in period 2006– 2012 (%)....................................................................................................................... 25 Figure 4: Vietnam coffee export market share 2st half of 2013 .................................. 26 Figure 5: Amount and value of coffee export into USA‘s market for period 2006– 2012.............................................................................................................................. 27 Figure 2: Conceptual Paradigm ................................................................................... 63 Figure 6: Data collection and process .......................................................................... 66 Figure 7: Coffee market shares .................................................................................... 80 Figure 8: World's export value of coffee ..................................................................... 90 Figure 9: Heteroskedasticity graph ............................................................................ 111 Nguyen Gia Phuc– Clinton vii Export demand for coffee: The case of Intimex Vietnam JSC LIST OF TABLES Table 1: Vietnam Coffee export to the world .............................................................. 36 Table 2: List of respondents......................................................................................... 70 Table 3: No. of Companies with Coffee as Major Export ........................................... 71 Table 4: Coffee Export destinations ............................................................................ 72 Table 5: Type of Coffee being exported to USA ......................................................... 72 Table 6: Possible problems when doing business in the US for Vietnam coffee enterprises .................................................................................................................... 73 Table 7: Opportunities for Vietnam coffee exporters .................................................. 74 Table 8: Solutions posed by respondents ..................................................................... 75 Table 9: US Import Policies That Affected the Coffee Export Business of Intimex Vietnam JSC to US ...................................................................................................... 76 Table 10: Factors that affected the market share of Vietnam Coffee Export .............. 77 Table 11: Vietnam Government Interventions to Help Coffee Industry ..................... 78 Table 12: Countries Considered as Competitors in Coffee Export.............................. 79 Table 13: Marketing Strategies Adopted and Found to be Effective as Identified by Intimex Vietnam JSC ................................................................................................... 81 Table 14: Product Policies Adopted and Found to be Effective by Intimex Vietnam JSC as Marketing Strategy ........................................................................................... 82 Table 15: Distributor chain Policies Adopted and Found to be Effective as Marketing Strategy as Identified by Intimex Vietnam JSC ........................................................... 83 Table 16: Price Policies Adopted and Found to be Effective as Identified by Intimex Vietnam JSC ................................................................................................................ 84 Table 17: Advertisement Policies Adopted and Found to be Effective as .................. 85 Table 18: Challenges experienced by Intimex ............................................................. 86 Nguyen Gia Phuc– Clinton viii Export demand for coffee: The case of Intimex Vietnam JSC Table 19: Measures and Strategies Recommended by Intimex Vietnam JSC to Increase Volume of coffee Export to the US ............................................................... 88 Table 23: Analysis of Covariance .............................................................................. 100 Nguyen Gia Phuc– Clinton ix Export demand for coffee: The case of Intimex Vietnam JSC THAI NGUYEN UNIVERSITY Socialist Republic of Vietnam SOUTHERN LUZON STATE UNIVERSITY Republic of the Philippines APPROVAL SHEET This thesis, entitled ―A STUDY OF EXPORT DEMAND FOR COFFEE: THE CASE OF INTIMEX VIET NAM JSC‖, prepared and submitted by Nguyen Gia Phuc in partial fulfillment of the requirements for the degree of Doctor in Business Administration, has been examined and recommended for acceptance and approval for FINAL ORAL EXAMINATION. Adviser July 25, 2013 Date Nguyen Gia Phuc– Clinton x Export demand for coffee: The case of Intimex Vietnam JSC CHAPTER I: THE PROBLEM AND ITS BACKGROUND Introduction Founded in 1979, Intimex Vietnam JSC has operated for 32 years with many ups and downs along with the economy of Vietnam. Until now, the company has got remarkable achievements during the operation and development process, Intimex has affirmed its position in the domestic and international market, to become one of the leading companies in import and export, supermarket business and manufacturing sectors of Vietnam (Intimex Company Profile, 2010). The success was recognized by the State, in 1986 the Government decided to put Intimex into one of the largest corporations of the Ministry of Domestic Trade, Intimex has been as important as the big corporations for many years in the industry and in 1988 the company has been honored by the State with the third class Labor medal (Intimex Business History, 2010). A relatively new activity for beginning period, has been thoroughly exploited by Intimex was sales of foreign currency for staff and oversea students,...( called spot export) in order to take advantage of markets and products and that were legalized by the States, Intimex implemented the strategy and the results were very encouraging. The creative application of this policy increased the Company's foreign currency funds a lot. In the early 90s, the subsidy economic mechanism was eliminated, Intimex and other businesses throughout the country are confident to get into the market economy. State regulatory mechanism was the open but social upheaval was really complicated, the economic policies of the Party and State are in the testing phase that was a time series of companies protected by subsidy system failed to operate to generate income. Nguyen Gia Phuc– Clinton 11 Export demand for coffee: The case of Intimex Vietnam JSC Unemployment rose and there was a production surplus. Intimex was also one of the units enjoying the advantages of the mechanism of the subsidy system, so it was also inevitably affected by this storm surge. The company had to face lots of disadvantages now. Facing this difficult, company leaders, trade unions and staff tried their best to overcome, the measures were set out in line with new situations, and the quota was initially formed. Open regulations facilitate companies to promote creativeness in doing business. Thanks to the positive measures, the company has survived and developed until now. In the following years, the company continued to perfect the by-the-piece mechanism for departments that have taken initiative in creating a dynamic business, breaking the deadlock and stagnation. The company's activities were close with the market and brought about certain results, maintaining the company's development, ensuring the lives of employees, while many other state enterprises went bankruptcy or made losses. Entering the new millennium, besides the basic advantages, the company faced many difficulties and challenges. The world economy faces new recession cyclones. Integration process poses new issues to businesses, especially trading companies: to exist or not in the context of cumbersome structural apparatus, inappropriate labor and wage policy with market economies, outdated and seriously degraded infrastructure, working capital losses in the mechanism transition process. In that context, what to do to bring the company through tough times and create the competitiveness in the Nguyen Gia Phuc– Clinton 12 Export demand for coffee: The case of Intimex Vietnam JSC market and integrate into the international economy? This is a difficult problem that companies have to find an optimal solution. The 5-year business strategy (2001-2005) was born in this situation and has demonstrated the validity through remarkable results. In particular, the export performance of the Company continues to rise: exports turn-over has soared admirably. A rapid rise in exports has contributed to enlarge rapidly the scope of the company. Over the past few years, Intimex had the boom in import and export business, especially exports turn-over. In 1999, Intimex‘s export turnover was USD 23 million and in 2007, it reached USD 227 million (Intimex Company Profile, 2010). The company's exports accounts for 70% of the total import and export with mainly agricultural products, especially coffee and pepper. For many consecutive years, Intimex was number two on coffee exports and was the best pepper exporter in the country. Thanks to Intimex‘s export activities, Vietnam's strong traditional commodities such as coffee, pepper, agricultural and aquatic products ... have affirmed its position in the world's largest market. The company has been very proud of the results. To achieve such great success, Intimex concentrated on developing export, export growth was the company‘s first priority. Intimex actively enhance the value of goods processing of exported products, production development by investing in a number of manufacturing and processing factories of agricultural products such as: Clean pepper processing plant in Binh Duong, cassava starch production plant in Nghe An, the aquatic plant in Thanh Hoa... These projects are and will help ensure high-quality and stable supply of goods for domestic market and export. Besides, Intimex always focused on improving export business to raise the prestige in the domestic and international market. Nguyen Gia Phuc– Clinton 13 Export demand for coffee: The case of Intimex Vietnam JSC Besides business, Intimex also focuses on market development. The company has been doing business with more than 100 countries and is continuing to looking for new customers. It also actively participates in business promoting activities and trade fairs. Intimex pays special attention to human factors. The staff of the company has continuously improved their knowledge and raise qualifications as well as professional abilities. The achievements of Intimex today were the contribution of the Board of Directors and Company‘s employees. With these achievements, the company has received numerous awards by State agencies and organizations, namely Vietnam Gold Star Award in 2005, the title of the most satisfying supermarket in 2008, golden Cup for supermarket brand in 2009, Top 500 enterprises in Vietnam in 2008, 2009 and 2010 ... Especially in 2009, to commemorate the 30th anniversary, the company was honored by the State with the Second Class Labor Medal (Intimex Company Profile, 2010). Since 2009, the Company began operating paradigm from state-owned enterprises into a joint stock companies. In the early days of operation under the new model, there were difficulties to be solved, obstacles and many challenges that Intimex had to overcome, but in the context of new opportunities and challenges, the company will continue to utilize its available and potential strength to further confirm its leading position in the field of import-export and domestic business and to promote production. That is the goal orientation of Intimex Corporation Vietnam today. 1.1. Background of the study Coffee was introduced to Vietnam in 1857 by the French and slowly grew as producer of coffee in Asia. The height of coffee production occurred in the early 20th Nguyen Gia Phuc– Clinton 14 Export demand for coffee: The case of Intimex Vietnam JSC century as small scale production shifted towards plantations. The first instant coffee plant, Coronel Coffee Plant, was established in Biên Hòa, Đồng Nai Province in 1969, with a production capacity of 80 tons per year. The Vietnam War disrupted production of coffee in the Buôn Ma Thuột region, the plateau on which the industry was centered. Although seldom involved in conflict, the area was a crossroads between North and South and was largely depopulated. After the North Vietnamese victory the industry, like most agriculture, was collectivized, limiting private enterprise and resulting in low production. Following ―Đổi mới‖ reforms in 1986, privately-owned enterprise was once again permitted, resulting in a surge of growth in the industry. Cooperation between growers, producers and government resulted in branding finished coffees and exporting products for retail. It was during this time that many new companies involved in coffee production were established, including Đắk Lắk-based Trung Nguyên in 1996 and Highlands Coffee in 1998. Both of these continued on to establish major brands distributed through a widespread network of coffee shops. By the late 1990s, Vietnam had become the world's #2 coffee producer after Brazil, but production was largely focused on poor-quality Robusta beans—considered inferior to Arabica due to their bitterness—for export as a commodity (Vietnam Coffee Annual Report, 2010). Recent government initiatives have sought to improve the quality of coffee exports, including more widespread planting of Arabica beans, the development of mixed-bean coffees, and specialty coffee such as kopi luwak (Vietnamese: cà phê chồn, "weasel coffee"). Nguyen Gia Phuc– Clinton 15 Export demand for coffee: The case of Intimex Vietnam JSC By 2000, coffee production had grown to 900,000 tons per year. Price decreases, however, led annual production to drop to around 600,000 tons/year in 2003. In 2009, Reuters reported Vietnamese coffee exports at "an estimated 1.13 million tons" for the previous year, stating that coffee was second only to rice in value of agro-products exported from Vietnam (GSO, 2010). Vietnam is the second largest producer after Brazil, accounting for 14.3 per cent of the world market share (World Bank, 2010). The quality of the beans, however, has typically limited their marketability. Robusta coffee accounts for 97 per cent of Vietnam's total output, with 1.17 million tons exported in 2009, a value of USD 1.7 billion (GSO, 2010). Arabica production is expected to rise owing to the expansion of growing areas. Other types of coffee grown in Vietnam include Chari (Excelsa) and Catimor. Nguyen Gia Phuc– Clinton 16 Export demand for coffee: The case of Intimex Vietnam JSC Chief Executive Officer Board Management Division Business Division Market Management Wholesale and Store Finance-Accounting Business 1 General Economy Business 2 Human Resource Business 3 Direct Units Subsidiary Companies Joint-venture Companies Intimex Hanoi Production and Trade Joint stock Company Intimex Saigon Joint stock Company Intimex Export and Import Company Training Staff Administrative Intimex Quang Minh HaoNam Intimex Market Intimex Commer ce& Service Intimex QuangNi nh Lac TrungInt imex Market Intimex HaiPhon g Huynh ThucKha ngIntime x Market IntimexT hanhHoa Dinh Cong Intimex Market Intimex Nghe An HoaBinh Intimex Market Intimex Da Nang Hung Yen Intimex Market Intimex Dong Nai Hai Duong Intimex Market SwordLa keIntime x Market QuyNho nIntimex Market Figure 1: Organizational Chart of Intimex Vietnam Nguyen Gia Phuc– Clinton 17 Export demand for coffee: The case of Intimex Vietnam JSC INTIMEX Company is one of the leading coffee export enterprises in the country besides other commodities. The company has got many important achievements that have been recognized by the state organizations such as Ministry of Industry and Commerce, Ministry of Agriculture and Rural Development. In 2006, the company received the title of ―The company with excellent achievements‖ Award held by International Economic Cooperation Committee and 53 other organizations. INTIMEX Company is one of the leading coffee export enterprises in the country besides other commodities. The company has got many important achievements that have been recognized by the state organizations such as Ministry of Industry and Commerce, Ministry of Agriculture and Rural Development. In 2006, the company received the title of ―The company with excellent achievements‖ Award held by International Economic Cooperation Committee and 53 other organizations. 1.2. Statement of the problem The coffee-exporting Vietnam companies are relatively small and medium in size. These companies particularly INTIMEX aim to expand their market share in coffee in the United States of America (USA). In order to this, the companies must understand the playing field they have to do business into. This study therefore aimed to determine the measures and strategies to increase the volume of coffee export to the USA. 1.3. Objectives of the study 1. To determine the current status of the companies in terms of? Nguyen Gia Phuc– Clinton 18 Export demand for coffee: The case of Intimex Vietnam JSC a. Major business of the company b. Major market for coffee exports c. Types of coffee exported to the US e. Expansion of coffee export to the US 2. To determine the problems encountered in doing business in the US. 3. To identify possible solutions to the problems encountered in doing business in the US. 4. To know the specific Import policies of US that affected the Intimex Vietnam JSC coffee export business to the US? 5. To determine the factors that affected the market share of Vietnam coffee exporting companies to the US as per experience of Intimex Vietnam JSC? 6. To determine the interventions that the Vietnam Government have introduce to help coffee export to the US? 7. To know the countries that Vietnam would consider as competitors in terms of coffee export to the US? 8. To determine the experiences of Intimex Vietnam JSC that helped the company became Successful in terms of the following: 8.1. Marketing strategy 8.2. Product Policies 8.3. Distributor chain Policies 8.4. Price Policies 8.5. Advertisement Policies 9. To identify the challenges experienced by Intimex Vietnam in exporting coffee? 10. What Measure and strategies can INTIMEX Vietnam JSC propose to increase volume of coffee export to the US? Nguyen Gia Phuc– Clinton 19
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