Tài liệu Inappropriate pricing strategy in groupe seb vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Kim Long Chau INAPPROPRIATE PRICING STRATEGY IN GROUPE SEB VIETNAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2020 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Kim Long Chau INAPPROPRIATE PRICING STRATEGY IN GROUPE SEB VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. TRAN PHUONG THAO Ho Chi Minh City – Year 2020 Table of Contents 1 PROBLEM CONTEXT ......................................................................................... 6 1.1 Groupe SEB overview ................................................................................................................... 6 1.2 Symptoms ..................................................................................................................................... 8 1.2.1 Sales decline ......................................................................................................................... 8 1.2.2 Low gross profit .................................................................................................................... 8 2 PROBLEM IDENTIFICATION ......................................................................... 10 2.1 Problem analysis ......................................................................................................................... 10 2.2 Possible problems ....................................................................................................................... 11 2.2.1 Poor sales team performance............................................................................................. 12 2.2.2 Weak cost management ..................................................................................................... 14 2.2.3 Inappropriate price setting ................................................................................................. 17 2.3 Main problem validation ............................................................................................................ 21 2.4 Problem definition and consequences ....................................................................................... 23 2.4.1 Problem definintion ............................................................................................................ 23 2.4.2 Consequences ..................................................................................................................... 23 3 CAUSE VALIDATION ....................................................................................... 25 3.1 Possible causes ........................................................................................................................... 25 3.2 Cause validation.......................................................................................................................... 29 3.2.1 Poor distributor chains ....................................................................................................... 29 3.2.2 High inventories and pressure in slow-moving stock to the pricing................................... 31 3.2.3 Issue with price waterfall structure (Main cause) .............................................................. 31 3.2.4 Low brand image ................................................................................................................ 35 3.3 Main cause validation ................................................................................................................. 36 4 SUGGESTED SOLUTIONS ............................................................................... 37 4.1 Solution for price waterfall management .................................................................................. 37 4.2 Solutions selection ...................................................................................................................... 39 1 4.2.1 Control price waterfall and profit management ................................................................ 40 4.2.2 Simplify the Price Waterfall Structure ................................................................................ 41 4.3 Action plan in Organisations ....................................................................................................... 41 5. SUPPORTING INFORMATION ....................................................................... 43 5.1 Summary of research method .................................................................................................... 43 5.2 Interview scripts ......................................................................................................................... 43 2 List of abbreviation ORFA Operating Result from Activity NS Net sales GM Gross margin SGM Standard Gross margin KSI Key strategic indicator GT General Trade MT Modern Trade ES Electronic Supermarket SM Supermarket OPEX Operating expenses KVND Thousand Vietnam dong SDA Small Domestic Appliances KAMs Key Account Managers PWF Price waterfall MLA Main large account SLOB Slow moving and obsolete RSP Retail selling price DMX Dien May Xanh CP Cao Phong – Dien May Cho Lon NK Nguyen Kim EOL End of life products 3 List of tables Table 1 Net revenue report (2016 – 2019 KVND) Table2 Revenues to gross profit 2016 – 2019 (KVND) Table3 Other market brand Gross profit margin 2019 (%) Table 4 Sale by Main category (MVND) Table 5 Actual revenue compared to Budget 2017 – 2019 (KVND) Table 6 Sale by distributor (KVND) Table 7 Profit and Loss Statement (MVND) Table 8 Trading term (price discount on invoice) 2019 Table 9 Sales by Distributors 2016 – 2019 (KVND) Table 10 Action plan in details List of Figures Figure 1 Organizations Chart – Groupe SEB Vietnam Figure 2 Revenues to gross profit 2016 – 2019 (KVND) Figure 3 Gross margin declined from Table 4 Figure 4 Initial Problem mess map Figure 5 Price waterfall structure. Figure 6 Pocket price Figure 7 Possible Cause effect tree Figure 8 Sample of a Groupe SEB price waterfall – Cao Phong Figure 9 Sample of a Groupe SEB price waterfall – DMX Figure 10 Roadmap for PWF – Supermarket Figure 11 Final cause Effect map Figure 12 Price waterfall paradigm and profitability 4 EXECUTIVE SUMMARY Groupe SEB is one of the global leaders in small domestic appliances over the world with notable brand names include All-Clad, Krups, Moulinex, Rowenta, Tefal. In Vietnam, after mergers and acquisitions (M&A) Asia Vina Fan since 2015, Groupe SEB confirmed and expected to build up the strong manufacturing and merchandise system in Home comfort category. However, Groupe SEB’s business result has shown the down trend in recent years in term of revenue and operating profit margin. Few possible problems have been discussed by conducted in-depth interview and validated by theory-formed to see main problem is due to price structure model and specifically is pricing strategy, pricing structure. Consequences from wrong pricing setting may lead to some effects that impact to revenue and therefore net profit is not as good as expected. The main cause lead to the problem is walked through and confirmed via theory formed as well as some in-depth interview. This is mainly from price setting from Price waterfall structure. From there, some alternatives solutions are researched and offered from the current situation of Groupe SEB. The solution is also focused more on how to see the leak in price from waterfall model and design some action plan in this study. 5 1 1.1 PROBLEM CONTEXT Groupe SEB overview Groupe SEB is global leader in large French consortium that produces small appliances. It owns 27 brands including international name: All-Clad, Krups, Lagostina, Moulinex, Rowenta and Tefal are selling in more than 150 countries. It is the worldwide leader for electric fryers, convivial cooking, toasters, cookware, pressure cookers, bread makers, food preparation, steam irons, steam stations, electrical steamers, electric kettle, etc… Groupe SEB had approached Vietnam in 2004 and since May 2011, Groupe SEB had M&A Asia Vina Fan and become a strategic partner at 65% capital price at that time, and fully owned in 2015. In Vietnam, Groupe SEB own 4 brands: • ASIAVINA: All kinds of fans • SUPOR: Rice cooker, fried pans, cookware, etc… • TEFAL: Cookware, steam iron, rice cooker, Blender, Fans, etc… • ROWENTA: Fans to export Groupe. Groupe SEB Vietnam organizational structure is presented in Figure 1 below MANAGING DIRECTOR FINANCE SALES DOMESTIC MARKETING EXPORT/ B2B HUMAN RESOURCE INDUSTRY CSS MARKET SUPPLY CHAIN IT SALES RETAILS PRODUCT EXPORT RECRUITMENT TRAINING DIRECT LABOR SERVICE NETWORK DEMAND PLANNING F&A SALES NON RETAILS MARCOM/ DIGITAL B2B C&B INDIRECT LABOR TECHNICAL SUPPORT S.ORDER PROCESSING LEGAL TRADE HR ADMIN CALL CENTER EMPLOYEE RELATION &ADMIN SPARE PARTS Figure 1: Organizations Chart – Groupe SEB Vietnam 6 Since May 2011, Groupe SEB has acquis ion Vietnamese company Asia Fan, and become a leader on Fan market. By the M&A Asia Fan. Groupe SEB holds 65% of the capital, 30% holds by originator and 5% by employees. Asia Fan was established by the Vietnamese name Vu Dinh Phuong which traditional industry is manufacturing and marketing Fans and maintain like 25% of domestic market. Fan is a huge category of household appliance in Asia Pacific and its famous brand name in old times, it has total 40 stores and 2 industrial factory in Vinh Loc and Binh Duong with more than 700 employees. Together with Supor, a cookware and kitchenware brand name (original from China manufacturing) and Tefal (a branch name from France). Groupe SEB will expect to approach to the big potential market in Vietnam. Thierry de La Tour d’Artaise, Chairman and CEO of Groupe SEB declares: “The takeover of Asia Fan is perfectly in line with our strategy of development in emerging countries. Beyond our presence in Vietnam and Supor’s crucial action in the region, it will open doors to other markets in South-East Asia”. However, until 2019 from 45 retail store in 2015 now left over 9 stores “Home and Cook” and retails partner. In reality Groupe SEB Vietnam hasn’t shown up the rapidly growth as expected as well as the lack of attractive brand name. It’s not that hard for consumer to choose any other competitor name as Panasonic, Sanyo, Midea, Electrolux, Aqua... especially SENKO in Fan which is a lot cheaper and good quality. The reasons are, firstly these brands are strong reputation amongst consumers and secondly, Panasonic, Midea, etc… aggressively launched promotional and advertising programs to attract customer. Moreover, their strong relationships with retailer put their brands at the top of sales representatives’ recommendation list, and this further boosted their sales. 7 1.2 Symptoms 1.2.1 Sales decline The sales in an organization represent for size the business. Any activity that impact to sales and revenue will be considered as a big factor to business and the growth of business over the time. Over the last 4 years (2016 – 2019) have been deeply decreased over the years from 681bil in 2016 to 415bil by end of 2019. Compared to 2018, sale in 2019 has declined 20% and 61% if compared to 2016. Net sale Month 2016 2017 2018 2019 Jan 42,740,683 20,382,394 54,154,715 25,688,964 Feb 37,013,470 23,487,228 32,188,494 11,368,157 Mar 74,340,429 52,714,396 65,250,731 30,303,369 Apr 72,399,592 54,717,874 63,184,291 48,689,880 May 70,017,491 46,442,941 61,992,206 56,442,760 Jun 57,091,578 39,386,914 47,387,743 44,351,505 Jul 42,112,791 28,754,357 24,827,751 31,045,985 Aug 41,117,023 46,968,831 31,978,819 33,132,737 Sep 40,053,406 54,810,108 37,974,606 29,814,206 Oct 42,977,484 42,203,690 32,843,699 28,660,462 Nov 70,640,036 45,981,629 34,249,257 38,171,491 Dec 90,709,277 73,607,925 34,052,703 37,276,032 6 8 1 ,2 1 3 ,2 6 0 5 2 9 ,4 5 8 ,2 8 4 5 2 0 ,0 8 5 ,0 1 3 4 1 4 ,9 4 5 ,5 4 9 Grand Total Table 1: Net revenue report (2016 – 2019 KVND) 1.2.2 Low gross profit After reviewing some of financial figures and interview all member of management team of the company, the symptoms of problem had revealed as following Groupe SEB’s Gross profit margin have decreased steadily over the years (2016-2019) Operating Result from Activity (Gross profit) is Groupe SEB’s main performance indicator. It corresponds to gross sales minus discount to distributors, operating costs (cost of sales) 8 Though Groupe SEB is well-known in others continent such as Europe, America, Canada, Africa. In Vietnam, this name is still the newbie which has just been re-invested since 2011 and well equipped in 2015. Facing with the new emerging market and existing local competitors is such a difficult task for Groupe SEB Vietnam management. In specific, the gross profit from 2016 to 2019 showing at very low over the time 2016 to 2019 (from 22 – 28% at max). Gross Year Gross sales Net sales Gross profit 2016 757,521,635 681,213,260 163,122,078 24% 2017 561,874,485 529,458,284 148,916,071 28% 2018 553,023,130 520,085,013 115,735,133 22% 2019 451,134,894 414,945,548 109,364,003 26% margin GR O SS SAL E S NE T SAL E S 2016 Gross profit, 109,364,003 Gross profit, 115,735,133 2017 Gross profit, 148,916,071 Gross profit, 163,122,078 Net sales, 414,945,548 Net sales, 520,085,013 Net sales, 529,458,284 Net sales, 681,213,260 Gross sales, 451,134,894 Gross sales, 553,023,130 Gross sales, 561,874,485 Gross sales, 757,521,635 Table 2: Revenues to gross profit 2016 – 2019 (KVND) 2018 2019 GR O SS PR O FIT Figure 2: Revenues to gross profit 2016 – 2019 (KVND) 9 Compared to others brand name like Samsung and Panasonic or Philips and on average of industry which gross margin fluctuate around 35-45%, Groupe SEB current gross margin seems to be at very low point. Year/Brand Samsung Philips Panasonic 2019 35.62% 45.46% 29.3% Average Min: 32.03 Min: 38.36 Min: 25.26 profit margin Max: 46.03 Max: 47.2 Max: 29.77 Table 3: Other market brand Gross profit margin 2019 (%) 2 2.1 PROBLEM IDENTIFICATION Problem analysis To further understand on the decline of gross sales as well as gross margin, an analysis of the revenue of 6 main categorigs of Groupe SEB as follow: Net sales CATEGORY FANS COOKWARE RICE COOKERS OTHER SDA IRONS SPARE PARTS Grand Total 2016 2017 2018 2019 331,912,602 306,919,821 266,755,302 232,252,821 188,155,897 96,533,142 97,075,819 71,977,053 65,771,937 61,029,445 68,107,253 61,302,881 68,466,387 49,734,470 62,343,221 37,913,179 12,641,881 6,430,814 13,814,638 9,371,416 14,264,557 8,810,592 11,988,780 2,128,198 681,213,260 529,458,284 520,085,013 414,945,548 2016 31.2% 15.0% 19.2% 17.7% 33.6% 15.5% 23.9% Gross margin (%) 2017 2018 29.1% 20.4% 20.3% 19.0% 32.9% 31.6% 32.4% 25.4% 29.5% 32.0% 21.0% 7.6% 28.1% 22.3% 2019 22.5% 29.0% 33.2% 31.2% 33.5% 40.3% 26.4% Table 4: Sale by Main category (MVND) Fans: Key product in Vietnam which was very well-known brand since the old times as Electric Asia Fan. From 331Bil in 2016 to drop down 232bil in 2019 (-43%), that means half of the market share now falling to other brands name such as Midea, Mitsubitshi, Toshiba, etc… Along with the modern trending upward, the product improvement plus more convenient and unique may help to 10 bring the brand to be outstanding in the market, without efforts in product research and development, sales and sale target is hardly to be achieved as expected for business. Cookware: This category combined for all kinds kitchen utensils such as: frying pan, pressure cooker, saucepans, induction hobs, etc…Almost are imported from France (Tefal) or from China (Supor) but at high-end segment, therefore revenue for this also not that great, from 188 Bil down to only 71Bil in 2019 (deep down more than 60%) 7.6% 17.0% 15.5% 21.0% 33.6% 29.5% 32.0% 33.5% 25.4% 31.2% 32.4% 32.9% 31.6% 33.2% 19.0% 15.0% 20.3% 19.0% 20.4% 22.5% 29.0% 31.2% 29.1% 40.3% Rice Cooker/Steam Iron/ SDA: The same as Fans and Cookware, all slip over out of the market. FANS COOKWARE 2016 RICE COOKERS 2017 OTHER SDA 2018 IRONS SPARE PARTS 2019 Figure 3: Gross margin declined from Table 4 2.2 Possible problems From the symptoms and data results above, the company that leaded by General Manager (GM) and Head of Departments including Finance Director (FD), Key Account Manager (KAM) and Marketing Director (MD) to set up a focus group to discuss find out what possible problems may have. The meetings are organized and take noted by Chau (Commercial Finance) included all head departments in the sale and marketing short meeting. 11 Mr. Suwasit – General Manager Ms. Hoang Le Hang – Finance Director Ms. Tran Thi Tuyet Hong – Marketing Director Ms. Huynh Van Hoa Hiep – Sales Director (B2B and South) At Level 12, Lottery Tower, Friday afternoon 1:30pm, April 03rd 2020 Several questions are raised according to set of financial data provided and answers are taken note, there’re some possible problems are highlight and takes note 2.2.1 Poor sales team performance According to Alexander (1) it is very clearly to say that sales department and sale specialise play a vital role with consumer and could create benefit with all of their relationship. Zallocco et al (2) describes sales performance in the following way: “sales performance is ideally an integrative part of an organization’s strategy. Sales performance measurement should be in line with overall organizational mission and objectives, and measurements should direct salesperson towards desired behaviours, and thus outcomes”. When a company set up and promote any kind of products, it is the responsibility of sales team to well know about the products, any of characteristic of products. (3) Dannenberg, “This is an important task, because a company must develop its product range in order to retain its competitiveness in the future. If the sales force does not sell the new products to the customers, there will be a point when the old products are no longer enough against competitors' products and the customer might change supplier”. Sale team is the skeleton of business, and sale head is the man who drive the business with the target and confront all challenges to bring back the best outcome for business, without non proactive sale team, the business is hardly achieve the goal, especially in the home appliances products, which challenged by so many competitor such as Samsung, Panasonic, Electrolux, Philips, etc. 12 Below table showing the actual sale trend from 2017 – 2019, actual performance only reaches over 70% against the budget set. The managing director always has to adjust target by forecast and re-forecast to keep closer the gap. However, at this moment, the whole picture looks still grey and very tough to be turning back. KEY FIGURES (KVND) Ordinary Activity Revenues ACT2019 BUD 2019 414,945,001 573,809,748 72.3% ACT2018 BUD 2018 520,085,013 722,283,546 72.0% ACT 2017 BUD 2017 529,458,284 739,506,159 71.6% Table 5: Actual revenue compared to Budget 2017 – 2019 (KVND) According Mr. Suwasit – current Managing Director who share some thoughts: “My mission now is very critical and full of challenging. Particularly, the first step is how to restructure the sales department, along with building up the key strategic indicator (KSI) in short term and long term. It is a main reason for Groupe SEB losing the pie in the Vietnam market because we lack the key drivers who can lead the right direction for business” In addition, the data on the distribution channel of Group SEB aslo shows variations of net sales via different channels including wholesalers, Morden trade, business to business, supermarket Channel WHOLESALERS MORDEN TRADE BUSINESS TO BUSINESS SUPERMARKET OWN RETAILING SHOPS AGENTS INDEPENDENTS PARTNER RETAIL SHOPS INTERNET PURE PLAYER SALES TO EMPLOYEES Grand Total 2016 Net Sales 259,256,546 52,085,201 212,392,057 4,706,035 47,722,988 39,228,146 65,822,288 GM % 24.5% 30.9% 14.5% 30.1% 46.1% 25.0% 29.7% 0.0% 0.0% 0.0% 681,213,260 23.9% 2017 Net Sales 198,594,693 128,365,469 9,244,728 113,280,977 34,883,813 45,088,604 GM % 29.2% 26.7% 25.8% 25.8% 47.1% 19.2% 0.0% 0.0% 0.0% 0.0% 529,458,284 28.1% 2018 Net Sales 155,456,236 219,098,612 14,380,610 83,067,496 22,360,954 19,891,573 1,036,602 4,705,521 87,409 GM % 27.1% 17.1% 21.4% 24.2% 40.9% 10.7% 50.3% 22.7% 34.6% 0.0% 520,085,013 22.3% 2019 Net Sales 131,917,168 201,783,698 10,889,017 44,269,999 6,791,923 6,031,000 1,413,130 8,564,935 2,398,071 886,608 GM % 27.9% 24.5% 29.9% 30.1% 33.9% 17.9% 52.3% 28.7% 34.1% -89.4% 414,945,548 26.4% Table 6: Sale by distributor (KVND) 13 In the Groupe SEB, we distribute the products via a few sales channels: Wholesaler (GT): General Trade which are small dealers, outlets across Vietnam from North to Mekong, selling electric stuffs, main products for it are Asia Fan, some of kitchenware or rice cookers. Net sales in 2019 is only 131bil, decrease 100% against 2016 though gross margin is at 27.9%. In Fan industry, Asia Fan is facing with SENKO is the very big competitor, most of Senko Fans are spread overall the small shops, dealer, retail store, etc… at the very low price with better quality. Modern Trade: the term combines all kinds of electronic super market : Dien May Xanh (The Gioi Di Dong), Nguyen Kim, Cao Phong (Dien May Cho Lon), Thien Nam Hoa (Thien Hoa). Started since 2016 at 52bil, this ES is the key profitability one for business, the only channel have sales upward over the year. In 2019 revenue at 201bil though decreased 10bil compared to 2018 due to high stock risk. However, ES channels still is the last saver among the whole picture. Supermarket: This channel is more focusing on kitchen utensils such as fried pan, steam pans, rice cooker, steam irons…However, in 2019 the revenue is half down only 44bil compared to 83bil in 2018. The most impact to sale is Supermarket chains such as Coop Mart, Lotte, Aeon Mall, EMart, Mega and Kohnan. Due to some changing in Supermarket coordinator structure, these supermarkets have decreased number of buying dramatically and make hugely impact to revenue (60%) from 83bil in 2018 to 44bil in 2019. Above table showing the sale details by distributor: Wholesalers, Modern trade, Supermarket and Retailer... although some new distributors are developing; however, the net sales of almost the channel are declined, except for the modern trade. In other words, almost all channels are going down (2019 down 39% vs 2016, 22% vs 2017 and 20% vs 2018) 2.2.2 Weak cost management Cost Management is one of the tool to help business keep track of their expenditure and therefore make some strategic decision when need to spend more and when need to saving cost. (4) As Coper said “Strategic cost management methods can be applied in service, manufacturing, and not-forprofit areas, these cost management systems will not only manage costs, but also enhance profit consciousness” 14 Operating expenses (OPEX) refered to any expenses for Sales overhead activity, General Aministration and Marketing operating cost. These expenses are seperately with production or manufacturing cost of product. In the Profit and Loss statement, OPEX is set below Gross profit margin and it is one of the important part in basic business Below illutrated the basic Profit and Loss statement. From above basic P&L, Operating expenses are minus from Gross profit, and final result is Net income Should the management wants to improve the Net income, it has to cut off few related part, however, reducing OPEX could be the better option. Moreover, OPEX itself doesn’t impact to price of product either quality of product, Hence, adjusting OPEX toget the expected net income shoudl be one of the option at management level that not impact anything to product and quality. In the structure of Profit & Loss, apart from Revenue and Cost of goods sold, the most impacted factor to business is operating expense that are related to business operation. At Groupe SEB, OPEX are categorized as 3 divisions: • S/t Proportional means any expenses occurs during the sale, speed of sale growth. They are Direct cost, storage, freight out and after sale service (ASS) • S/t Drivers means any kind of expenses occurs to help to simulate the sale such as Product conception (R&D), advertising and operational marketing 15 • S/t Structure means all of expenses related to overhead cost to business include commercial (sale) expenses, G&A, exchange different. • Among 3 categories of OPEX, S/t Structure consume the most impact part which is 14.7% in total sale at 61bil VND in 2019 combined both of commercial and G&A are the 2 big factors that impact to net profit margin FY P&L in M VND T70 ORDINARY ACTIVITY REVENUES 2016 % 681,213 2017 % 529,458 % Sales growth vs N-1 2018 % 520,085 2019 163,122 -10,886 -188 152,049 -27,497 -24,124 -73,959 26,469 0 26,463 PRIMARY CONTRIBUTION 26,469 9,384 1.8% -18,896 % 480,100 1.2% 23.9% 148,916 28.1% 115,735 -1.6% -20,928 -4.0% 4,400 0.0% 2,996 0.6% 0 22.3% 130,984 24.7% 120,135 -4.0% -38,173 -7.2% -43,034 -3.5% -22,104 -4.2% -30,313 -10.9% -61,322 -11.6% -65,684 3.9% 9,384 1.8% -18,896 0.0% -5,287 -1.0% -14,209 3.9% 4,097 0.8% -33,104 3.9% BUD2020 V3 414,946 -22.3% T71 Standard gross margin Local Variances + Other COS Allocated Variances + Other COS Gross margin (T02) s/t Proportional s/t Drivers s/t Structure OPERATING CONTRIBUTION Allocated Costs ROPA % 0.0% 22.3% 0.8% 0.0% 23.1% -8.3% -5.8% -12.6% -3.6% -2.7% -6.4% 109,364 -674 0 108,690 -39,120 -26,361 -61,143 -17,933 -19,394 -37,327 26.4% -0.2% 0.0% 26.2% -9.4% -6.4% -14.7% -4.3% -4.7% -9.0% 133,767 -9,451 0 124,316 -38,296 -49,429 -73,713 -37,122 -32,375 -69,497 27.9% -2.0% 0.0% 25.9% -8.0% -10.3% -15.4% -7.7% -6.7% -14.5% -3.6% -17,933 -4.3% -37,122 -7.7% Table 7: Profit and Loss Statement (MVND) In Groupe SEB, the S/t Structure is classified as all kinds of expense related to Commercial expenses, Sale overhead expenses and General& Administrative expenses. Inside Commercial it has 2 sub expenses nature are Direct commercial and Sales overhead expense that capture all of salaries and wages and business development cost from Sales team. General& Administrative expenses have 6 sub expense nature. They are Finance, Legal, IT, HR, General overhead, and management & other tax expenses which combined salaries and wages as well. This S/t Structure cost is always higher than S/t Proportional and Driver over the years. It has some reasons behind but mainly is because number of headcount in Sales department is growing up. Among them, structure cost is related mostly to Salary and wages, which consumed a big part in it. Ms. Hang (Finance Director) state in the 1st interview that: “G&A cost that HR recruitment fee consumes a lot in last year. The turnover rate in HR is high and lack of commitment is also a reason that keep up our cost at very high.” 16 The Operating contribution is the net profit margin. From 2018 to 2019, net profit margin is at loss: -3.6% in 2018 and worse in 2019 ended at -4.3% equivalent to the loss average 18bil VND each year. The grey situation influenced by poor operation expense management, the decreased rate of OPEX can’t cover enough the down rate of Revenue. Therefore, company still bear the loss over 2 years. 2.2.3 Inappropriate price setting According to Rajagopal (5) “prices indicate perceptions of customer value, and delineate objectives of the firms”. Hence, pricing is one of the most important issue for business strategy in almost of management level. In addition, Krzysztof (6) states that “the price setting and negotiation process in the B2B field is a complex process that requires a solid methodology and usually also tools to make the process as efficient as possible”. The Price Waterfall model is efficient method that making the end-user net net price and a tool for management to control their pocket revenue. From a market site visit, we conducted an interview with Mr. Hiep – Sale manager in Export & South B2B, he mentioned “one of the reason that consumer hardly to approach almost Groupe SEB products is the Price setting are too high when the brand name seems to be not so close to them, at the same high price, consumers have tendency to choose the more familiar name like Panasonic or Philips, assuming quality of products are the same.” Moreover, following the past and current price strategy of Groupe SEB, it is almost supporting for sell-in but totally forgot to supporting sell-out (sell-out is the sell to direct consumer). Discount price will be offered to support distributor at their side which deducted on invoicing. Sell-in is sell from Groupe SEB to distributors/wholesaler – B2B to be recorded as revenue. Sell-out is the sell from distributors to direct consumer – B2C not recorded as Groupe’ revenue but Distributor’s revenue. With pressure on sales and sales target, salesman tried to use their relationship to push up the sell in which creating a huge inventory at distributor warehouse (Dien May Xanh, Nguyen Kim, Thien Nam Hoa, Cao Phong). Hence, once stock is at high level and distributor had little 17 chance to sell out to the consumer, they will request salesman to offer deep discount or additional discount to support them. The discount rate based on selling price is such a big issue that drag down the net sale at lower level, and impact directly to gross profit margin. Below table illustrate the average discount rate from retail selling price water fall to all distribution channels according to trading term Fixed discount: except for Fans in GT channel which is 7% and Supermarket 16%, the other channels have the wide range from 20%-31%. ES-DMX and ES-Nguyen Kim have highest fixed discount at 35% Rebate: is the amount business have to pay back to distributor such as discount but not in front invoice, the rebate is paid at the month end and treated as sale promotion that marketing uses as bonus or an incentives to boost sales. Rebate monthly lying from 4% to 10% depend on channels Total discount: Basically, in average total discount for each channel is around 35% on retail selling price. This means with $1 gross revenue, Groupe SEB only issue $0.65 net revenue. The more discount rate applied, the less net sale to be collected even though the final price to consumer is still the same. This doesn’t help pushing sell in neither sell out if distributor have no action on promotion from their channels to customer 18