IM PROVING THE COMPETITIVENESS 0F BLACK
TEA PRODUCING ENTERPRISES IN THAI NGUYEN PROVINCE
A Dissertation
Presented to the
Faculty of Graduate School of
Southern Luzon State University, Philippines and
Thai Nguyen University, S.R. Vietnam
In Partial Fulfillment
of the Requirements for the Degree
Doctor in Business Administration
TRAN THI HUYEN (MARY)
August 2013
THAI NGUYEN UNIVERSITY
Socialist Republic of Vietnam
SOUTHERN LUZON STATE
UNIVERSITY
Republic of the Philippines
IMPROVING THE COMPETITIVENESS OF BLACK
TEA PRODUCING ENTERPRISES IN THAI NGUYEN
PROVINCE
DISSERTATION
Advisor
Name of Student
English Name
Date of Birth
Course
: Dr. NGUYỄN KHÁNH DOANH
: TRẦN THỊ HUYỀN
: Mary
: 09/11/1979
: SLSU-DBA I
Thai Nguyen, May 2013
Title
IMPROVING COMPETITIVENESS OF BLACK TEA
PRODUCING ENTERPRISES IN THAI NGUYEN
PROVINCE
A Thesis
PRESENTED TO THE FACULTY OF THE
GRADUATE SCHOOL SOUTHERN LUZON
STATE UNIVERSITY IN COLLABORATION
WITH THAI NGUYEN UNIVERSITY
In Partial Fulfillment of the Requirement for the Degree of Doctor in Business
Administration
TRAN THI HUYEN- 2013
i
ACKNOWLEDGMENT
To complete the thesis, I have received the help of Thai Nguyen University,
International Training Center-ITC, University of Southern Luzon - PHILIPPINES, Thai
Nguyen College of Economics and Finance, the teachers, scientists, Provincial People's
Committee of Thai Nguyen, Department of Agriculture and Rural Development of Phu Tho
Province, Department of Agriculture and Rural Development of Tuyen Quang Province,
Thai Nguyen Department of Technology, Department of Planning and Investment of Thai
Nguyen, The small and medium tea enterprises in the provinces of Thai Nguyen, Phu Tho,
Tuyen Quang and the help of instructors. I would like to express my sincere thanks to the
organizations and the individuals who helped me during this research.
In particular, I would like to sincerely thank Dr. Nguyen Khanh Doanh has
dedicatedly helped me to complete this thesis.
I am deeply and forever indebted to my family for their love, support and
encouragement throughout my entire life. I would like to thank my husband Duong The Cao,
who has provided a tremendous amount of love and support during my research. On the final
note with love is for my children.
So much for objective and subjective reasons, the thesis has a lot of shortcomings; I
look forward to receiving the construction ideas from scientists, teachers and colleagues.
Sincerely
Thai Nguyen,……………………………..
The thesis‟s author
Mary
ii
ABSTRACT
CHAPTER I: THE PROBLEM AND ITS SETTING ......................................................... 1
Introduction............................................................................................................................... 1
Background of the study ........................................................................................................... 2
Statement of the problem .......................................................................................................... 4
Research Questions ................................................................................................................... 5
Objectives of the study.............................................................................................................. 5
The overall objectives ............................................................................................................... 5
Specific Objectives ................................................................................................................... 6
Hypotheses of the study ............................................................................................................ 6
Significance of the study .......................................................................................................... 7
Scope and limitations of the study ............................................................................................ 7
Definition of terms .................................................................................................................... 8
CHAPTER II: REVIEW OF RELATED LITERATURE AND STUDIES ..................... 10
2.1. The conceptS of competition ........................................................................................... 10
2.2. The conceptS of competitiveness .................................................................................... 12
2.3. System of criteria for assessing the competitiveness of enterprises ................................ 15
2.4. The basic contents when researching the competitiveness of enterprises ....................... 17
2.4.1. Competitiveness of products ........................................................................................ 17
2.4.2. The market share of the enterprise................................................................................ 17
2.4.3. Business performance ................................................................................................... 17
2.4.4. The productivity of production factors ......................................................................... 17
2.4.5. The ability to link and cooperate of enterprises ............................................................ 18
2.4.6. The ability to attract the resources ................................................................................ 18
2.5. The factors affecting the competitiveness of enterprises ................................................. 18
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2.5.1. Economy ....................................................................................................................... 18
2.5.2. Interest rate on loans ..................................................................................................... 18
2.5.3. Science and technology ................................................................................................ 18
2.5.4. The subplier .................................................................................................................. 19
2.5.5. Threat of substitute products or services ....................................................................... 19
2.5.6. Threat of new entrants ................................................................................................... 19
2.5.7. Level of organization and human resources ................................................................. 20
2.5.8. Financial capacity of enterprise .................................................................................... 20
2.5.9 Marketing capacity of enterprise ................................................................................... 20
2.6. Related literatures and studies ......................................................................................... 20
2.7. Conceptual framework..................................................................................................... 23
CHAPTER III: RESEARCH METHODOLOGY ............................................................. 25
3.1. Study area selection ......................................................................................................... 25
3.2. Approach methods ........................................................................................................... 25
3.3. Methods of data processing ............................................................................................. 27
3.4. Other methods .................................................................................................................. 27
3.4.1. The descriptive statistical methods ............................................................................... 27
3.4.2. Comparative method ..................................................................................................... 27
3.4.3 Method of experts ........................................................................................................... 28
3.4.4. Method of SWOT analysis ............................................................................................ 28
CHPATER IV: PRESENTATION ANALYSIS AND INTERPRETATION OF DATA .......... 29
4.1. Status of competitiveness of black tea producing enterprises in Thai Nguyen province ...... 29
4.1.1. Competitiveness of black tea products in Thai Nguyen‟s tea enterprises ..................... 29
4.1.2. The efficiency of production and business of black tea producing enterprises in Thai Nguyen .. 40
4.1.3. The productivity of the factors ..................................................................................... 42
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4.1.4. The capacity to attract financial resources of enterprises producing black tea in Thai
Nguyen .................................................................................................................................... 45
4.1.5. Ability to cooperate and work of black tea businesses in Thai Nguyen. ...................... 46
4.2. Factors affecting the competitiveness of black tea producing enterprises in Thai Nguyen
province .................................................................................................................................. 46
4.2.1. Economy factors ........................................................................................................... 46
4.2.2. Interest on loans ............................................................................................................ 47
4.2.3. Political factors and legal.............................................................................................. 48
4.2.4. Elements of science and technology ............................................................................. 48
4.2.5. The threat of substitute products and services .............................................................. 48
4.2.6. Industry competitors...................................................................................................... 49
4.2.7. The organizational level and management of human resources .................................... 50
4.2.8. Facilities and technology in the business of black tea in Thai Nguyen ........................ 52
4.2.9. Marketing Capacity ...................................................................................................... 52
4.2.10. Financial resources ..................................................................................................... 53
4.3. The strengths, weaknesses, opportunities and threats of black tea producing enterprises
in Thai Nguyen ....................................................................................................................... 53
4.3.1. The strengths ................................................................................................................. 53
4.3.2. The weaknesses ............................................................................................................ 54
4.3.3. The opportunities .......................................................................................................... 54
4.3.4. Threats .......................................................................................................................... 55
CHAPTER V: CONCLUSION AND THE PROPOSED SOLUTION ........................... 56
5.1. Conclusions ..................................................................................................................... 56
5.1.1. Through the study we draw the following conclusions ................................................ 56
5.1.2. Capacity assessment and competitive factors affecting the competitiveness of
v
enterprises producing black tea in Thai Nguyen we found: ................................................... 57
5.2. Some solutions to improve the competitiveness of balck tea producing enterprises in
Thai Nguyen province ............................................................................................................ 58
5.2.1. Viewpoints .................................................................................................................... 58
5.2.2. Orientation .................................................................................................................... 59
5.2.3. Some solutions to enhance competitiveness for enterprises producing black tea ........ 59
5.2.4. Solutions for state policy ..............................................................................................64
5.3. Recommendations............................................................................................................ 64
5.3.1. For State ........................................................................................................................ 64
5.3.2. For agencies, Thai Nguyen provincial government ...................................................... 64
5.3.3. For processing business, the business of black tea ....................................................... 65
BIBLIOGRAPHY ................................................................................................................. 66
APPENDIX 1 ......................................................................................................................... 69
APPENDIX 2 .........................................................................................................................82
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LIST OF TABLES
Table 3.1: The number of sample divided by form of ownership ..................... 26
Table 3.2: The number of sample divided by capital scale ............................... 26
Table 4.1. Customers‟ reviews of black tea products‟ quality of in Thai
Nguyen‟s tea enterprises ................................................................. 32
Table 4.2. Customer reviews on the form of black tea products‟ packaging .... 33
Table 4.3. Some product categories in the black tea producing enterprises ..... 34
Table 4.4. Products‟ brand in black tea producing enterprises in Thai Nguyen .. 34
Table 4.5. Production costs and profits of black tea producing enterprises in
Thai Nguyen according to the forms of ownership ............................. 35
Table 4.6. Production costs and profits of black tea producing enterprises in
Thai Nguyen according to the capital scale ......................................... 36
Table 4.7. The forms of advertising that black tea producing enterprises
applied in 2012 .................................................................................. 38
Table 4.8. The forms of advertising that black tea producing enterprises applied .... 39
Table 4.9. The efficiency of production and business of black tea producing
enterprises in Thai Nguyen according to the capital ownership ...... 40
Table 4.10. The efficiency of production and business of black tea producing
enterprises in Thai Nguyen according to the capital scale..................... 41
Table 4.11. Margin / revenue of black tea producing enterprises in Thai Nguyen
compared to black tea producing enterprises in Phu Tho and
Tuyen Quang according to the forms of ownership in 2012 ........... 42
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Table 4.12. The productivity of capital and assets of the black tea
producing enterprises in Thai Nguyen .......................................... 43
Table 4.13. Capital turnover ratio of black tea producing enterprises in
some provinces and the forms of ownership ................................. 44
Table 4.14. Income affects consumption of black tea products in 2012 ........... 47
Table 4.15: Qualifications of Enterprise leaders in the production of black
tea in Thai Nguyen ........................................................................ 50
Table 4.16. Qualifications of workers in enterprise producing black tea in
Thai Nguyen Province ................................................................... 51
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LITS OF FIGURES
Figure 1: Model of five competitive forces ............................................................................11
Figure 2.1. Analytical framework of competitiveness of black tea producing enterprises
in Thai Nguyen Province ........................................................................................24
Firgues 4.1: The process of black tea processing ....................................................................31
Figure 4.2. System of a distribution channel of some companies and processing facilities .........37
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CHAPTER I
THE PROBLEM AND ITS SETTING
Introduction
Tea is the perennial plant that has an important role in our social economy, Drinking
tea has long become a necessity in everyday life, and a habit brought the culture of Vietnam.
Tea is also an important export of our agriculture. Currently, 39 countries all over the world
have grown and processed tea, Vietnam has been ranked fifth in area and eighth in
production.
For years, tea tree has held an important position in the socio-economic development
strategy of Thai Nguyen province. Tea tree is the key to poverty reduction in agriculture,
rural development. With an area of 20 thousand hectares under tea business, farmers' average
annual harvest was 100 thousand tons, over 300 billion. Besides, there are more than 75
businesses, factories, tea processing facilities with a capacity of 10-50 tones of fresh
buds/day, dealing with the employment problem for thousands of agricultural workers. Tea
productions in recent years have contributed significantly to poverty reduction and elevate
the poor countryside. That is something one can hardly deny.
Thai Nguyen Province is known as the "capital" of the tea, where there are hundreds
of years old tea areas. Thai Nguyen Tea with the biological characteristics is superior to the
other varieties: The ability to grow, thriving, high quality tea, fragrance, the flowing nutrient.
Thai Nguyen tea plants produce high-quality tea leaves. Annual income from tea
plants accounts for over 60% of total income from farming activities. The activities of
production, processing, consumption create a lot of jobs; contribute to raising incomes and
living standards for the people.
In recent years, the market has appeared much more tea products with designs and
beautiful packaging, rich category, high quality. Consumer tastes are shifting sharply to the high1
quality products, products meet food safety. Thus, to survive and grow, black tea products also
need to shift and develop according to the trend of the times.
Therefore, studies to evaluate the situation, identify the factors that influence it,
finding solutions to improve the competitiveness of black tea in small and medium
enterprises in Thai Nguyen province is an urgent requirement that have scientific and
practical significance. Because of those reasons, I chose the thesis: “IMPROVING THE
COMPETITIVENESS OF BLACK TEA PRODUCING ENTERPRISES IN THAI NGUYEN
PROVINCE”.
Background of the study
Competition has a great and important role for the development of the economy in
general, and each small and medium enterprise in particular. Any economy needs to
maintain the competition. From the point of view of social benefits, competition is one of the
forms that the State used to be antitrust, create opportunities for consumers to choose the
products with good quality and cheap price. From the standpoint of enterprises, competition
will be favorable conditions in order for each enterprise to assert its position in the market.
Competition forces enterprises to produce and supply the products, goods and services that
the market needs to meet the increasingly diverse demands of customers.
Currently, in the economy of Thai Nguyen Province, small and medium enterprises
account for over 70% of the total number of registered enterprises, generate about 50% of
GDP and over 80% jobs for workers. However, small and medium enterprises are facing a
lot of problems affecting the efficiency, competitiveness, such as small capital, weak access
to capital, backward equipment and technology, quality of human resources, the weak
management. Due to small size, small and medium enterprises are facing difficulties and
challenges in competition both inside and outside the country, especially in the context of
international integration and global markets controlled by multinational companies and
transnational companies.
2
In the context of the general difficulties of the economy, the small and medium tea
enterprises in Thai Nguyen Province is considered to be the most affected. The enhancement
of competitiveness becomes a vital question of the enterprises. Over the years, Tea tree has
always been identified as a key economic crop for tea growing districts. Producing and
exporting tea increasingly play an important role and become one of the key economic
sectors of the province, with 80% of the province's tea production for export. Earnings from
tea exports have contributed to socio-economic development of the province.
However, the fact that the province's tea exports have not really had prestige, low
quality compared to other countries in the region and the world, even in the country. The
underlying cause of this problem lies right in the beginning stages of the production process,
from the building the material region, breeding, processing technology... Most processing
enterprises and exporters of tea are difficult to input source, fluctuation of prices,
fragmentary production, even facing the risk of market loss. Although the majority of
produced tea of the province is for export but mainly in the form of raw materials, the tea‟s
brand has not been positioned, therefore the income of tea growers and producers are not
high. Producing and exporting tea has not promoted the potentials and strengths to be
confirmed as the key economic sectors of the province. The domestic market is fiercely
competed by the famous tea companies in the world such as Lipton, Dilmah, and Qualitea.
The market share of tea industry is shrunk. Numerous companies are on the brink of
bankruptcy. Therefore, at this time, there should be an overview of the investment in the
development process of the tea industry, but first of all is the investment in the development
process of raw tea. Analyze the causes of these problems so that put forward the solutions to
have the most effective investment in order for the tea industry to overcome the crisis.
Enhancing the competitiveness for tea products like a prediction problem to look back and
analyze those data in the past then give the solutions for future. Assessing the competitive
3
situation of tea products, recognize the strengths and weaknesses the give the right directions
in the future.
Statement of the problem
In the face of requirements of economic development, particularly in the process of
international economic integration today, to survive and grow strongly, tea industry must
have the appropriate solutions. In recent years, the black tea producing enterprises in Thai
Nguyen province encounter a lot of difficulties, black tea products of the province faced 3
problems as: Export markets to countries in the Middle East were disrupted by political
instability. The Russian market is affected by imports from other teas. Unfavorable weather
affects tea production. From 3 reasons leading to earnings from tea reduced, some plants
temporarily closed. Before this situation, how to help the black tea producing enterprises in
Thai Nguyen province have good development to ensure requirements: quantity, quality,
competitive price, packaging, market share, revenue, profit. So the research aims to improve
the competitiveness of the black tea producing enterprises in Thai Nguyen province as
observed by businesses and customers. Specifically, it seeks answers to the following
questions:
- The position of the black tea producing enterprises in Thai Nguyen province in the
markets today?
+ Market share
+ Quality
+ Price
+ Revenue
+ Profit
- Competitive advantages of black tea products as observed by the enterprises?
+ Market share
+ Quality
4
+ Price
+ Revenue
+ Profit
- Competitive advantages of the black tea producing enterprises in Thai Nguyen
province as observed by customers?
+ Market share
+ Quality
+ Price
+ Revenue
+ Profit
- Are there significant differences between the observation of enterprises and
customers about the competitive advantage?
- What‟re the factors affecting the implementation of competitive advantage?
- The solutions can be introduced to improve the competitiveness of the black tea
producing enterprises in Thai Nguyen province to meet consumer demand?
Research Questions
1. How to increase the competitiveness of black tea products of small and medium
enterprises in Thai Nguyen?
2. What factors are to consider the competitive advantage for black tea products in Thai
Nguyen province?
3. How to improve the competitive advantage of the black tea producing enterprises of Thai
Nguyen province in today's market?
Objectives of the study
The overall objectives
Based on studying the real situation, factors affecting the competitiveness of black tea
producing enterprises, and then propose the direction and solutions to improve the competitiveness of
black tea producing enterprises in Thai Nguyen province.
5
Specific Objectives
Systemize the theoretical and practical basis for improving competitiveness of
enterprises in general, and particularly for black tea producing enterprises in Thai Nguyen
province.
Assess the situation; analyze the causes and factors affecting the competitiveness
of black tea producing enterprises in Thai Nguyen province.
Propose strategies and solutions to enhance the competitiveness of black tea
producing enterprises in Thai Nguyen province.
Hypotheses of the study
Based on the theory discussed in Chapter 2 and the research objectives of the thesis,
the following hypotheses were tested in the study:
- There are no significant differences in the observation of the enterprises that have
different competitive advantage of black tea:
+ Prices of products
+ Product innovation
+Products‟ quality
+ Packaging and designs of products
+ Services for products
- There are no significant differences between the observation of enterprise and the
employees about the competitive advantages of black tea product:
+ Prices of products
+ Product innovation
+Products‟ quality
+ Packaging and designs of products
+ Services for products
6
Significance of the study
This study will help small and medium tea enterprises in Thai Nguyen assess aspects
of competition to determine the strengths and weaknesses to enhance their competitiveness.
Furthermore, this study will help tea enterprises improve their competitiveness such as:
market expansion, brand building and maximizing profits.
- For tea industry: This study will help the tea industry to develop its products, from
increasing the area to the production and consumption, thereby increasing the state budget,
creating more jobs for local people and sustainable development.
- For labor: This study will help the labor to increase their income, have stable life
and many jobs.
- For customers: This study will help the customers gain access the products
conveniently and satisfy the demand.
- For the researcher: This study will help to complete the DBA thesis, In addition,
there is a document for the teaching of the author.
- For community: When enterprises do business effectively, they will contribute to
the state budget and social welfare.
- The thesis assessed the current situation of black tea products in small and medium
enterprises, determine its position in the export market. Determine how to have efficiency in
competition of the black tea products in small and medium enterprises. Introduce a new
competitive method for tea enterprises to improve their competitive advantages in the market.
Scope and limitations of the study
* Time: From 2010 to 2012
* Space: Gather information about the black tea producing enterprises in Thai
Nguyen Province and some black tea producing enterprises in the two provinces of Phu Tho
and Tuyen Quang
7
* Content: Study the basics:
- Focusing on a number of issues about the competitiveness of black tea producing
enterprises
- The study analyzes the situation of the competitiveness of black tea producing
enterprises in Thai Nguyen province.
- Propose the solutions to improve the competitiveness for black tea producing
enterprises.
Definition of terms
Competitiveness: is the ability to gain market share against competitors in the
market, including the ability to regain one or the entire market share of competitors.
Competitive factors: are the ones related to the competitiveness of products and
businesses when they compete with rivals.
Competition index is the index used to assess the competitive position of the
business compared with rivals.
The decisive factor is the factor affecting the decision of the competitiveness of tea
products.
Need: is the demand for products in the market.
The relevant factors are the ones that affect the performance of tea products such as
input, support activities.
Customer is a person or an organization or an enterprise willing to buy products to
satisfy those needs.
Workers are those perform work regularly according to administrator‟s orders. They
receive salaries and benefits according to the labor contract.
Small and Medium Enterprises are the ones that have small-scale in capital and
labor, revenue or including 3 above factors.
8
Geographical location is the place where the enterprises or customers stay.
Sales area is the one where the tea products are on display, distributed.
Substitute products and services are the ones offered by the enterprises to satisfy
the customer's needs.
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