Tài liệu Business strategy of clean rice for the 2016 2020 period the case of vietnamese rice research center vinafood1

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN THÀNH PHƢƠNG BUSINESS STRATEGY OF CLEAN RICE FOR THE 2016-2020 PERIOD: THE CASE OF VIETNAMESE RICE RESEARCH CENTERVINAFOOD1 CHIẾN LƢỢC KINH DOANH GẠO SẠCH GIAI ĐOẠN 2016-2020: TRƯỜNG HỢP TRUNG TÂM NGHIÊN CỨU GẠO VIỆT – VINAFOOD1 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH Hà Nội – 2017 2 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN THÀNH PHƢƠNG BUSINESS STRATEGY OF CLEAN RICE FOR THE 2016-2020 PERIOD: THE CASE OF VIETNAMESE RICE RESEARCH CENTERVINAFOOD1 CHIẾN LƢỢC KINH DOANH GẠO SẠCH GIAI ĐOẠN 2016-2020: TRƯỜNG HỢP TRUNG TÂM NGHIÊN CỨU GẠO VIỆT – VINAFOOD1 Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƢỜI HƢỚNG DẪN KHOA HỌC: TS. NGÔ VI DŨNG 3 Hà Nội – 2017 4 DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article. The other’s research result and documentation (extraction, table, figure, formula,and other document) used in the thesis are cited properly and the permission (if required) is given. The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration. Hanoi, October 29th, 2017 ACKNOWLEDGEMENT I have gained huge knowledge, skill and insights from my MBA course. The course raises my capacity of administration and management up to the next level. I am now very confident in my position of management. I would like to extend my sincerest thanks and appreciation to all those who have made this Thesis to be possible. I woud like to express my great gratitude to my supervisor,Assist.Prof.Dr. Ngô Vi Dũng, for him useful comments, remarks and engagement during my process of doing this master thesis. I would also like to thank the leaders and staff of Vietnam Rice Research and Development Center – Vinafood 1 who enthusiastically participated in the survey and provided me with valuable advice and comments during my thesis completion. Sincere thanks are extended to the Faculty of International Training - Vietnam National University, Hanoi for equipping me with huge knowledge and skills through various interesting and practical subjects. I also would like to thanks my classmates for their friendship and reciprocal encouragement to make our class time to be unforgettable time. Lastly, I would like to give my great thanks to my wife, my kids, and my family who always standby me during the past two years and encourages me to keep moving from the beginning of my study. Hanoi, October 29th, 2017 Student Nguyễn Thành Phƣơng 6 Business Strategy for Clean Rice in the stage of 2016-2020: The Case of Vietnam Rice Research and Development Center – Vinafood 1 1. Summary of the results The thesis has systematized theories and studies on business strategy for rice products from related studies and proposed the process of developing strategies for developing clean rice products at Vietnam Rice Research and Development Center Vinafood 1 including identifying objectives, analyzing internal, external and sectorial environment, setting up Internal Factor Evaluation and External Factor Evaluation. That way, the author built the business strategy for clean rice products of the center using SWOT matrix, QSPM and found out the opportunities and challenges such as the strong development of technology of clean rice production in the world, strong current competitors with advantages in capital, technology, human resources and experience in the market which created many challenges and threats for the business activities of the center; or the strengths and weaknesses such as the ensurance of quality management standards, failure to meet customer needs of retail stores. This helped select the optimal strategy for clean rice trading of the center, helping Vietnam Rice Research and Development Center Vinafood 1 improve its business efficiency and maximize its the profits. 2. Applicability in practice The strategies proposed in the study will have a high applicability in practice since they were drawn from specific strengths and weaknesses of the enterprise and results of the survey with experts and managers. Moreover, the opportunities and challenges were also analyzed in line with the market situation and technology development of the economy in the country and in the world. In addition, the basis for proposing strategies was stable with a full process of building contents. 3. Further research orientations In order to complete this study, it is possible to add important elements in the process of building the internal and external matrix of the enterprise in order to increase the possibility of developing and proposing strategies. 7 TABLE OF CONTENTS TABLE OF CONTENTS ................................................................................................................. i LIST OF TABLES .......................................................................................................................... iv LIST OF FIGURES AND CHARTS .............................................................................................. v ABBREVIATION ........................................................................................................................... vi INTRODUCTION ............................................................................................................................ 1 1. Rationale of the study ........................................................................................................ 1 2. Research overview ............................................................................................................. 2 3. Research objectives ........................................................................................................... 4 3.1 Overall objective.............................................................................................................. 4 3.2 Specific objectives ........................................................................................................... 4 4. Research object .................................................................................................................. 5 5. Research scope .................................................................................................................. 5 6. Thesis structure .................................................................................................................. 5 CHAPTER 1: THEORETICAL FRAMEWORK ......................................................................... 6 1.1. Basic concepts ................................................................................................................ 6 1.1.1 Concept of clean rice .................................................................................................... 6 1.1.2 Concept of business strategy for clean rice .................................................................. 6 1.1.3 Possible business strategies for clean rice .................................................................... 7 1.2 Process of building business strategy for clean rice ........................................................ 9 1.2.1Selecting and building strategic targets ......................................................................... 9 1.2.2 Analyzing strategies ................................................................................................... 10 1.2.3 Building strategic options ........................................................................................... 16 1.2.4 Selecting strategies ..................................................................................................... 18 1.2.5 Organizing conditions for strategy execution ............................................................. 19 1.3 Experience in implementing business strategies of some rice trading enterprises ............... 20 1.3.1 Experience of Vinh Long Cereal and Food Import Export Corporation (Vinh Long Food)20 1.3.2 Experience of An Giang Import-Export Company (Angimex) ......................................... 21 1.3.3 Experience lesson for Vinafood 1 ........................................................................................ 21 CHAPTER 2: RESEARCH METHODS ..................................................................................... 23 2.1 Research procedure........................................................................................................ 23 2.2 Data collection methods ................................................................................................ 24 2.3 Data analysis methods ................................................................................................... 28 i CHAPTER 3: STRATEGIC ANALYSES OF CLEAN RICE TRADING OF VIETNAM RICE RESEARCH AND DEVELOPMENT CENTER – VINAFOOD 1................................ 30 3.1 Introduction of Vietnam Rice Research and Development Center – Vinafood 1 ......... 30 3.1.1 History of foundation and development of Vietnam Rice Research and Development Center – Vinafood 1 ............................................................................................................ 30 3.1.2 Organizational structure of the center ........................................................................ 30 3.1.3 Business sectors .......................................................................................................... 30 3.1.4 Annual rice sales of the center .................................................................................... 31 3.2 Analysis of clean rice business environment of Vietnam Rice Research and Development Center – Vinafood 1 ...................................................................................... 33 3.2.1 Analysis of macro environment .................................................................................. 33 3.2.2 Analysis of micro environment .................................................................................. 37 3.2.3 Analysis of internal environment of the enterprise .................................................... 46 CHAPTER 4: BUILDING BUSINESS STRATEGY FOR CLEAN RICE FOR THE VIETNAM RICE RESEARCH AND DEVELOPMENT CENTER - VNF1 TO 2020 .......... 55 4.1. Vision, mission, duties and strategic objectives of Vietnam Rice Research and Development Center – Vinafood 1 ...................................................................................... 55 4.2 Formation and selection of business strategy for clean rice at Vietnam Rice Research and Development Center – Vinafood 1 ............................................................................... 56 4.2.1 Formation of strategy through the analysis of SWOT Matrix .................................... 56 4.2.2 Selection of clean rice trading strategies for Vietnam Rice Research and Development Center – Vinafood 1 by QSPM ..................................................................... 60 4.3 Solutions to implement selected strategies .................................................................... 69 4.3.1 Solutions to implement the forward integration strategy ........................................... 69 4.3.2 Solution to implement product differentiation strategy.............................................. 71 4.3.3 Solutions to implement the market development strategy.......................................... 75 4.3.4 Solutions to implement the backward integration strategy ........................................ 79 4.4 Recommendations ......................................................................................................... 79 4.4.1 To the State ................................................................................................................. 79 4.4.2. To the Ministry of Agriculture and Rural Development ........................................... 80 CONCLUSION .............................................................................................................................. 81 REFERENCES ............................................................................................................................... 82 APPENDICES ................................................................................................................................ 83 Appendix 1: List of survey experts...................................................................................... 83 ii Appendix 2: Outline of group discussion ............................................................................ 84 Appendix 03: Questionnaire ................................................................................................ 87 Phụ lục 02: Dàn bài thảo luận nhóm ................................................................................... 89 Phụ lục 03: Phiếu khảo sát................................................................................................... 92 iii LIST OF TABLES Table 1.1: Summary of EFE Matrix .................................................................................... 14 Table 1.2: Summary of IFE Matrix ..................................................................................... 16 Table 1.3: SWOT Matrix ..................................................................................................... 17 Table 1.4: Summary of QSPM Matrix ................................................................................ 19 Table 2.1 Group discussion results ...................................................................................... 24 Table 3.1: Current technology of rice processing ............................................................... 35 Table 3.2: Some policies to support rice trading in Vietnam .............................................. 36 Table 3.3: Quantity of rice sales of competitors in Hanoi ................................................... 38 Table 3.4: Some alternative products .................................................................................. 39 Table 3.5: Survey results on customers’ habits of buying rice ............................................ 41 Table 3.6 External Factor Evaluation Matrix (EFE) ........................................................... 43 Table 3.7: Human reources at Vietnam Rice Research and Development Center – Vinafood 1 46 Table 3.8: Structure of human resources in terms of level of education ............................. 47 Table 3.9: Average salary of the employees at the center ................................................... 48 Table 3.10 Internal Factor Evaluation Matrix (IFE)............................................................ 52 Table4.1: Synthesis of SWOT matrix ................................................................................. 57 Table 4.2 QSPM of S-O strategy group .............................................................................. 60 Table 4.3 QSPM of S-T strategy group ............................................................................... 62 Table 4.4 QSPM of W-O strategy group ............................................................................. 64 Table 4.5 QSPM of W-T strategy group ............................................................................. 67 iv LIST OF FIGURES AND CHARTS Figure 2.1 Research procedure ............................................................................................ 23 Chart 3.1: Organizational structure of Vietnam Rice Research and Development Center – Vinafood 1 ........................................................................................................................... 30 Figure 3.1: Annual rice sales of the center .......................................................................... 32 Figure 3.2: GDP and per capita income in the stage of 2012 -2016.................................... 33 Figure 3.3: Area in contract and area of rice fields in the raw material regions of the factories ............................................................................................................................... 34 Chart 3.2: Process of production and operation of clean rice at Vietnam Rice Research and Development Center – Vinafood 1 ...................................................................................... 49 Figure 3.4: System of facilities and business locations ....................................................... 51 Figure 3.5: System of retailers of the center ........................................................................ 52 Figure 4.1: Distribution channel of Vietnam Rice Research and Development Center – Vinafood 1 ........................................................................................................................... 71 v ABBREVIATION NO ABBREVIATION ORIGINAL 1 VNF1 Vinafood1 – Vietnam Northern Food Corporation 2 VRRDC Vietnam Rice Research and Development Center 3 EFE External Factor Evaluation Matrix 4 GDP Gross Domestic Product 5 QSPM Quantitative Strategic Planning Matrix 6 IFE Internal Factor Evaluation Matrix 7 SWOT Strengths, weaknesses, opportunities and threats 8 USD United States dollar 9 HACCP Hazard Analysis and Critical Control Point System vi INTRODUCTION 1. Rationale of the study Nowadays, the strong growth of the economy has contributed to the improvementpeople’s lives. When the lives are improved, the demand for using high quality products is also raised (Ngoc Anh, 2015). In addition, food safety is one of the topical issues in the Vietnamese market due to the lack of strict standard control from the authorities as well as the problem of ethics in production and trading activities of part of enterprises. This makes consumers anxious and worried when they usedaily products such as food and drinks. As a result, the consumers’ demand for using high quality and safe products is urgently necessary (Nguyen Trong Khanh and Nguyen Van Hoan, 2015). Like other food items, the rice in our country is facing "barriers" in quality. This significantly influences the sales of rice ofenterprises in the domestic as well as export market. According to the Vietnam Food Association (2016), our country currently ranked third in the world in rice export turnover with annual export target of 6.5 million tons. However, the export market of our country mainly includes countries such as Indonesia, the Philippines, and African countries, so our rice does not have a good price. Therefore, the issue of improving the quality of rice and developing clean rice is a basic requirement to increase export turnover as well as serve the domestic market. Moreover, it is also necessary to create a premise for our rice to be present in the fastidious markets such as Japan and European countries. In addition, according to the survey results of Nguyen Trong Khanh and Nguyen Van Hoan (2015), the current demand and market potential of clean and high quality rice products was increasing. This was evidenced by the fact that all supermarkets in Hanoi, Hai Phong, Nam Dinh, Hai Duong, Thai Binh, Bac Ninh, etc. were mainly selling clean and high quality rice such asTam Thơm Hai Hau, Nang Xuan and BT7. At the same time, when surveying customers using rice in Hanoi, the authors found out that more than 90% of consumers did not care about the size of the rice grain or white or silverbelly.What they prioritized when choosing rice was that the rice must be clean, flexible and fragrant. This indicated that the demand for clean and high quality rice was increasing and consumers increasingly tended to buy rice from reputable brands to ensure quality standards of the rice. Facing that situation, Northern Food Corporation - one of the leading rice exporters with a lot of experience in the world’s rice market - has pioneered in looking for the development directions for in Vietnamese rice over the yearswith the research and 1 production of clean rice with the Corporation’s brand, which meets the increasing demand of people. Being concerned and assigned byThe Ministry of Agriculture and Rural Development, especially after the scheme on building the Vietnamese rice brand name was approved by the Prime Minister, the Northern Food Corporation decided to set up a specialized unit calledVietnam Rice Research and Development Center. The center was established on 19 September, 2014 with the task of researching and organizing the production of rice products under a chain of phases from researching seeds, cultivating to processing and distributing products with the aim tocreate good quality rice products and ensure food hygiene and safety and gradually build an excellent brand name for Vietnamese rice products. However, this center just focused on production but was not interested in building business strategy for the development of clean rice. As a result, although the business strategy had been built, the implementation efficiency was not high. The annual rice consumption did not correspond to the size and potentials of the center. Being aware of the reality, as an employee working at Agro Processing and Market Development Authorityunder The Ministry of Agriculture and Rural Development and being responsible for seeking the consumption markets for agricultural products (including rice) and exporting high quality agricultural products to fastidious markets, the author decided to select the topic "Business Strategy forClean Rice in the stage of 2016-2020: The Case of Vietnam Rice Research and Development Center – Vinafood1" for his graduation thesis as well as for serving his current work. 2. Research overview + Bao Yen (2015) conducted a study on "Strategy of building clean rice brand name for Ninh Binh Seed Plants and Livestock Joint Stock Corporation". In this study, the author analyzed the company's strategy for cooperating with farmers to implement the closed rice production process with the motto of focusing on breeding, reducing losses and assuring quality under standards. With this direction, the company was leading in the development of a brand name for clean andhigh quality rice in Ninh Binh and gradually changing the methods of producing low-grade rice of farmers in previous years. Besides, the author also mentioned the difficulties in building a clean rice brand name for Vietnam in general and Ninh Binh in particular. It was a fact that, Vietnamese exported rice had not been standardized.For example, the rice exported to international market was not homogeneous in breed and had three or even a dozen different kinds of rice in one bag.In fact, the branded rice must meet specific and tight standards of a grain of rice with high stability in length, diameter, clarity, gloss, moisture, impurities, content of substances, odor, 2 etc.Therefore, the research made a great contribution tobuilding the brand name for clean rice in Ninh Binh. However, the author had not analyzed the SWOT matrix and did not combine the strengths, weaknesses, opportunities and threats to buildthe business strategy for developing clean rice brand name suitable for Ninh Binh province. Trinh Thi Thanh Thuy (2008) carried out a research article entitled "Studying and proposing solutions to develop clean food trading when Vietnam is a member of the World Trade Organization". In the study, the author specified the theoretical framework on the development of clean food products when Vietnam is a member of the WTO including the concepts, role of clean food and meaning of developing clean food, factors affecting production, processing and circulation of clean food, legal provisions for the production, processing and circulating clean food, and pointed out experience in developing clean food in foreign countries. In addition, the author also mentioned the reality of trading clean food in Vietnam from 2002 to 2007 including: the reality of food production and processing, reality of food circulation and legal provisions related to the production, processing andfood circulation in the country and food import and export. Finally, theauthor proposed solutions to develop trading in clean food in Vietnam by 2015 and orientation to 2020 including solutions on clean food production and processing, solutions on transporting, preserving and distributing inland foodstuffs, solutions on importing and exporting clean food, solutions on finalizing legal bases related to domestic production, processing and circulation and import and export of clean food products, solutions on raising awareness of the whole society ofthe production, processing, distribution and consumption of clean food. However, sincethe author focused on building strategy for clean food including clean vegetables, clean rice, clean seafood, and so on, the research problem was quite broad and general, the results of this research could not be applied particularly for the development of clean rice products. + Peter Durman (2003) conducted a study on "Development of a clean food and water environmental policy in a third world city". The research focused on the policy of developing clean food and water environment in the city in the third world. The third world consisted of countrieswhich used to be colonial countries in Africa, Latin America, Oceania and Asia. In the study, the author pointed out that low-hygiene food was an accepted issue in many third-world cities. A large percentage of people accepted this as an unavoidable fact of life due to pollution sources. Therefore, in the study the author proposed a policy of developing clean food to reduce the incidence of foodborne diseases in third world cities. The author’s research built a development model towards people's 3 health and social infrastructure in Indonesia. The author’s model of clean food development can be applied in Vietnam because our country also used to be a third world country and our economic conditions were relatively similar to Indonesia. However, the results in Peter Durman's study did not have an update on time. At the same time, the research issue was on general clean food but not specifically on clean rice. + Another research was conducted by the United States Department of Agriculture (2005) entitled "Guidance for School Food Authorities: Developing a School Food Safety Program Based on the Process Approach to HACCP Principles". The author researched the development of school food safety program based on HACCP principles with such contents as the purpose of the school food safety program, the requirements of the school food safety program and the development of the school food safety program with the following steps: (1) Preparingdocuments in writing, and implementing operational procedures, (2) Making documentation of all food safety items in accordance with the HACCP Compliance Process, (3) Identifying control documents and measures, (4) Establishing monitoring procedures, (5) Establishing corrective actions, (6) Keeping records, (7) Reviewing and revising the overall food safety program periodically. This research contributed significantly to the development of clean food in schools in the United States. However, the study was only conducted on a school scale but not widely applied. In addition, the author conductedthe research on the development of clean food in general but had not gone deep into researching clean rice products. To sum up, there are many studies on business strategies for the development of clean food in general and high quality rice products in particular. However, each author approached their study in a different direction, so the results of each study were different. Besides, no authors conducted a comprehensive research on business strategy for clean rice. Therefore, to supplement the documentation for business strategy of clean and high quality rice, the author decided to carry out theresearch and selected Vietnam Rice Research and Development Center – Vinafood 1 (VRRDC) as the case study. 3. Research objectives 3.1 Overall objective The purpose of the study was to contribute to improving the business strategy for VNF1 to become the leading producer and trader ingood and clean rice(safe food) in Vietnam. 3.2 Specific objectives 4 - Systematizing the theoretical framework on building and developing business strategies in the agricultural sector in general and clean rice in particular. - Applying strategictools tobuild and develop business strategies for VRRDC. - Suggesting solutions to improve the business strategy for clean rice products of VRRDC. 4. Research object The object of the study was the business strategy for clean rice ofVietnam Northern Food Corporation - Vinafood 1. 5. Research scope - Space: The study was conducted with staffs, experts and customers of VRRDC in Hanoi. - Time: The research focused on the trading of clean rice (high quality) at Vietnam Rice Research and Development Center – Vinafood 1 in the period of 2011 – 2015 for secondary data and from 11th May, 2017 to 30th May, 2017 for primary data. - Contents: Based on the theory of business development in the field of agriculture and agricultural productsin general and rice in particular,the author builtthe business strategy for clean rice at Vietnam Rice Research and Development Center – Vinafood 1 and proposed solutions and recommendations to perform the business strategy for clean rice at the corporation. 6. Thesis structure Apart from the introduction and conclusion, the thesis consisted of 4 chapters. CHAPTER 1: Rationale of the study CHAPTER 2: Research Methodology CHAPTER 3: Reality of clean rice trading of Vietnam Rice Research and Development Center – Vinafood 1 CHAPTER 4: Building business strategy forclean rice of Vietnam Rice Research and Development Center – Vinafood 1 in the stage of 2016 – 2020 5 CHAPTER 1: THEORETICAL FRAMEWORK 1.1. Basic concepts 1.1.1 Concept of clean rice Rice is a food product. Rice is a popular food for people and is the main source of income for farmers all over the world (Le Xuan Tao, 2013). Derived from the above concept of rice, there are many concepts of clean rice, namely: Clean rice refers to the safety that this kind of rice brings to the health of people whoeatit (Nguyen Chi Trung, 2007). Clean rice is a kind of food that is grown in the right procedure and looked after according to the proposed quality standard with no preservatives. This kind of ricemust beconsumed in a period of time should not be stockedfor too long since the quality can be influenced (Huynh Van Thon, 2014). Clean rice is a kind of rice which is produced in accordance with standards in a system of food inspection and supervision from the stage of cultivation to harvesting, processing and storage. For example, the soil should be cleaned; the safety of the water source must be ensured; the rice seedsmustbe disease free because if the seeds are unsafe, they will affect the productivity and quality of the rice; the fertilizers and plant protection drugs must also be in the list allowedincluding organic medicines which are safe for users (Nguyen Cong Thanh, 2011). 1.1.2 Concept of business strategy for clean rice The author approached the concept of business strategy for clean rice through the concepts of strategy and business strategy as follows: According to Alfred Chandler (2013), strategy is the fixation of long-term fundamental goals of an organization, the choice of methods or courses ofactions and allocation of essential natural resources to accomplish these goals. A business strategy should be defined as a general business plan that directs the organization to the desired goal. According to James B.Quynn (2014),strategy is the plan to combine the principal objectives, policies and series of actions of the unit into a cohesive whole. According to William F. Glueck (2013),strategy is a united, comprehensive and coordinated plan which is designed to ensure that the basic goals of the enterprisewill be accomplished. 6 Business strategy is a general action program aiming at achieving the goals of the enterprise. The strategy is not intended to find outprecisely how to achieve these goals because it is the task of numerous support programs and functional strategies. Business strategies only provide frameworks to guide thoughts in the direction of business and action (Huynh Thi Thien Chung, 2009). According to Nguyen Ngoc De (2012), business strategy of an enterprise is that in the context of market economy, based on objective and subjective conditions and resources,the enterprise can determine the schemes,ways, measures to ensure the survival, stable andlong-term development according to the development objectives set by the enterprise. Thus, based on the concept of strategy and business strategy which have been defined by the world's researchers, the author proposed concept of business strategy for clean rice as follows: Business strategy for clean rice is a general and comprehensive plan which is set up based on objective and subjective conditions and internal resources of enterprises to ensure the implementation of revenue and profit targets in the trading of clean rice. 1.1.3 Possible business strategies for clean rice + Company-level strategy: According to Fredr. David (2006), the strategies that can be implemented are: - Forward integration: refers to increasing ownership or control toward distributors or retailers. - Backward integration: is a strategy for seeking ownership or control of a company's suppliers. - Horizontal integration: is a strategy for seeking ownership or control toward a company’s competitors. - Intensive strategies: Market penetration: refers to increasing market share for existing products or services in existing markets with greater marketing efforts. Market development: involves bringing existing products or services into new geographic areas. Product development: involves increasing revenue by improving or modifying existing products or services. - Strategies for expanding operations in practice: Concentrated diversification: Add new products or services that are interrelated. 7