In quarter 1 (2012), instant coffe G7 leaded the share market (40%) and experts predicted Trung Nguyen will stay in the number one position in next few years.
According to the NCTT statistic, in 2009, 49% customers picked Trung Nguyen for daily using. From 2009 – 2011, Trung Nguyen was the number one brand-name which the largest market shares (10million/17 million families) in which 65% coffee consumers agreed with the feedback: “I prefer buying Vietnamese brandname” In quarter 1 (2012), instant coffe G7 leaded the share market (40%) and experts predicted Trung Nguyen will stay in the number one position in next few years. According to the NCTT statistic, in 2009, 49% customers picked Trung Nguyen for daily using. From 2009 – 2011, Trung Nguyen was the number one brand-name which the largest market shares (10million/17 million families) in which 65% coffee consumers agreed with the feedback: “I prefer buying Vietnamese brandname”. Being one of the most famous brands in Viet Nam, Trung Nguyen has been being confirm its position not only in VietNam but also in the world.
With the successes Trung Nguyen has achieved so far, now this brand name confidently can expands and competes with any other top brands. Today we are going to discuss Trung Nguyen Coffee “A Vietnamese brand, an International brand”.
CHAPTER 1 THE MANAGERS’ MACRO ENVIRONMENT
THE MANAGERS’ MACRO ENVIRONMENT
I-/ The external environment of Trung Nguyen
The term “external environment” presents the factors, forces, situations, and events outside the organization that affect its performance. For any organizations, those external components include: Economic factor (interest rates, inflation, stock market fluctuations…etc) Demographic factor (age, race, gender, education level, geographic, income…etc) Technological factor (concerned with scientific or industrial innovations) Sociocultural factor(attitudes, trends, traditions, lifestyles, beliefs, tastes…etc) Political/Legal factor (federal, state, local laws, global laws…etc) Global factor (globalization, world economy…etc)
(P.Robbins et al.2013)
It should be emphasized that those external implements above are very essential to Trung Nguyen. The changes in environment not only can bring huge opportunities to organizationbut may cause remarkable threats and Trung Nguyen’s case is not an exception, they also have to deal with those above external components. Economic factors:
The economic component is significantly important, any changes in this area may affect to the decisions of Trung Nguyen’s managers weather should they expand or put more investment in the company or they probably wait for better opportunities sobase on these factors they would find it out: a/ GDP:
Basically, annual GDP is considered the basic implements for Trung Nguyen’s managers to make decisions. It relates to company’s expansion and investment because it influences the demand of market. GDP is an “economic indicator which measures the country’s total output. This includes everything produced by all the people, companies in the country”. GDP tells us how the economy is, “the GDP growth rate measures if the economy is growing more quickly or slowly than the quarter before, if the country produces less than the quarter before, it contracts and the GDP growth rate is negative and this signals a recession.” (WHAT IS GDP, Kimberly Amadeo, useeconomy.com,2011). Fortunately, Viet Nam is a developing country and annual GDP growth rate was approximate 7% – 8.7% (2005 – 2008) however this rate dropped grammatically from 2008 (6.5%) and reached the bottom in 2009 (3%). This worse circumstance became better at the end of 2010 (7%) after fell down to 4% and slowly rose to nearly 5% in 2012 and 2013 respectively. Even though, being influenced by the world recession but the GDP growth rate of Vietnam was still above the safe zone around 2% – 3%. Moreover, GDP growth rate probably increase in long-term which will chug along at a pace around 5-7%, according to IMF forcasts (Time to go along Vietnam with VNM, n/a, 18/5/2011, seekingalpha.com).
Therefore, Trung Nguyen confidently invested more in their business and expanded their market share not only inside but outside Vietnam’s border. 2005: Officially inaugurated “Roasting and Grinding” plant at Buon Me Thuot and “Instant Coffee” plant at Binh Duong with the capacity 10.000tons/year and 3000tons/year respectively. Increasing the numbers of coffee shops to 1000 shops. Franchising to Japan, China, Singapore, Thai Lan, Cambodia, USA, Boland…etc 2006: Built and developed G7Mart’s distribution systems beside standardized the domestic franchising system. Inaugurated “Vietnam Global Gateway Pte Ltd” located at Singapore. 2007: G7 Cappuccion – instant coffee – officially launched in the North Vietnam 2008: Prime Minister accepted “Global coffee capital” project.(leddyking34, 10/06/2013) 2009: Inaugurated the first Trung Nguyen coffee shop at Sangi international airport at Singapore and Liang Court shopping center. 2010 – 2011: Inaugurated 2 new coffee shops at Mariana bay. 2012: Planning for new model of cultivating coffee, potential cost 80 million USD.
b/ Interest rate:
Any organizations attempt to survive and develop; they have to invest in order to enhance the competitive advantages meanwhile grow their company and Trung Nguyen is also the same. Doing those investment activities, Trung Nguyen needs capital and there some channels that could financially support them: Loan (Bank), Owner capital, Shareholders…etc. In this section, we discuss about Loan from bank which related to interest rate. So what is the interest rate?“Interest rate is charged by lenders as compensations for the loss of the asset’s use”.(investopedia,n/d) That means Trung Nguyen is going to pay an amount of money to bank.
However, this is pretty risky in Vietnam these days where the interest rate is unstable and quite high around 12-15% per year. (Tram Anh, 26/09/2012)But using loan can immediately provide lots of capital to Trung Nguyen or loan in long-term/short-term, furthermore, paying interest can reduce tax for Trung Nguyen but from 2005, in fact, Trung Nguyen stopped using loan from bank yet from 2006, they started to use it again with the effective outcomes. (. (leddyking34, 10/06/2013, p-24) ).
Total captital investment
(doc.edu, leddyking34, 2013)
The inflation rate will highly influence Trung Nguyen’s development so what is inflation? Inflation is “the rate at which the general level of prices for goods or services is rising, and, subsequently, purchasing power is falling.” (investopedia,n/d). It means customers have to spend little or buy less product and Trung Nguyen will not able to sale as many as they have done before, obviously inflation will make Trung Nguyen’s profit going down(Geoff Riley, 05/10/2012) The graph above revealed difficulties in the recent years, particularly in 2008 and 2011 when the inflation rate was significantly high.
Hence, what did Trung Nguyen do to overcome these barriers? According to the interview of CEO Trung Nguyen, Mr. Dang Le Nguyen Vu:“Trung Nguyenreevaluated the core organization’s competencies, gotten riddeficiencies or narrowed the scope of some fields which do not content many opportunities in order to concentrate on strength fields while optimized all of the business operations so the organization could cope and grow in the global recession which can be severe in future.(seekingalpha,n/a, 2011)
“However, all the mentions above is for short-term.” Mr. Dang said, “for long-term, organization must reset their psychology and come up with featured strategies in an uncertain environment.” He added on. Proving the wise decisions of Trung Nguyen, regardless the global recession Trung Nguyen’s revenue in 2012 was $200million, increase 32% compare to 2011 and expect to double in 2013.(chinhphu, n/a) 2/ Demographic factors:
Organizations use demographic for many purposes: Policy development or economic market research. So what is Demographic? “Demographic studies of a population based on factors such as age, race, sex, economic status, level of education, income level and employment, among others.” (investopedia,n/a)
Demographic is able to affect Trung Nguyen in many aspects such as: market share, labor forces, potential market…etc, therefore, understand demographic probably help Trung Nguyen to have better decision making.
Viet Nam has85,789,573 residences (2009), approximate 17million families and young population structure which provides abundant workforce and cheap labors. This is an advantage for Trung Nguyen’s operation, in addition the proportion of teenagers and young adults is high so it creates a potential market for company in future.
(Giang Thanh Long & Bui The Cuong, 2008)
According the latest press release (4/7/2012), Trung Nguyen brand has had the biggest number of end-users. Nearly 10 million/ 17 million Vietnamese families purchased Trung Nguyen’s products (trungnguyen, 2012) b/ Education/Gender/Income
Education, gender and income will determine the purchasing behavior of customers so this section is essential to Trung Nguyen. According to the statistic below, we can easily see the percentages of education level, gender and incomelevel from that Trung Nguyen will have a foundation to set up the strategies, tactics for different customer segments. The Press release (4/7/2012) also mentioned the drinking behavior of individuals. The report presented in 2011 there were 18% office staffs chose Trung Nguyen coffee, it equals to every 3 office staffs drink coffee, 1 will use Trung Nguyen. Especially 80% office staffs who are over 30 year-old are going to pick Trung Nguyen ones. Trung Nguyen understands coffee may not the first priority drinks of women so “Passiona” was arrived to rethink them. Passiona contains low levels of caffeine, collagen and antioxidant. These ingredients expect to attract female customers. Even the income per capita in Vietnam has increased monotonously over the years but the wealth gap is large and Trung Nguyen needs an appropriate solution for this issue so that Trung Nguyen seperated their product into 3 segments: Premium, Medium and Regular 1- Premium class includes:
Weasel (250g, Civet coffee)16.000.000 VND
Diamond Collection (250g, 5 various favors)
Legendee (250g & 500g, using biological fermentation) 990.000 VND Class Blend (can 450g, longer coffee scent and light brown color) 2- Medium class includes:
Passiona (250g package, light coffee scent, lower caffein) 43.500 VND Gournet Bent (250g -500g, strong taste, dark brown color)
House Blend (250g – 500g, strong scent, strong taste and dark bown color) Filter coffee – 35.000 VND
3- Regular class includes:
The Vitaility – 44.300 VND
Instant coffee G7 3in1 – 116.000 VND
Instant coffee G7 cappuccino (3 favors: Hazelnut, Irish Cream and Mocha) 50.000VND(trungnguyenstore,n/a)
(Minh Ngoc, 2013)
3/ Technological Factors
Trung Nguyen understands how important technology is, nowadays, if they want to conquer the café market in the world. With technology they would have the capacity of increasing the yield as well as enhancing the quality of product, moreover cost would be cut down and they could reach to the efficiency of scale…etc
Therefore, CEO Dang Le Nguyen Vu came to Europe with an aim to seek the world’s leading partner in manufacturing technology and processing café.Neuhaus Neotec company (German) – the company specializes in manufacturing coffee processing equipment in Hoykenkamp – was visited and Neuhaus Neotec choose Trung Nguyen to be the exclusive partner for providing the most modern coffee processing technology in Vietnam.(DL, n/a) On 28/3/2012, Trung Nguyen inaugurated the second G7 plant at Bac Giang with the investment up to $ 30million
Trung Nguyen not only cares about coffee processing technology but also notices the quality of raw materials so that in April, 2010 Trung Nguyen invested in drip irrigation combine with fertilizing through water model. This model increased the yield from 1.6 tons/hectare (2009) to 4 tons/hectare (2011) and also enhanced the quality of coffee beans.(HoangThien Nga, n/a)
(he thong tuoi, n/a)
4/ Social Cultural Factors
Communication culture in Vietnam is remarkable, throughout a cup of coffee they can show their kind, friendliness, respect to the others. Throughout a cup of coffee they can share their happiness or difficulties in life. Coffee in Vietnam is not only the drinks but also the bridge which brings people together. Hence, that probably makes the demand in coffee climbs up and enlarges. However, in various regions it has dissimilar tastes in enjoying coffee so Trung Nguyen’s managers should notice those differences in order to fulfill their clients. Beside coffee, tea is also the common drink in Vietnam, particularly in North Vietnam. Therefore, in 2004 Trung Nguyen invested $1 million on “ Trà Tiên, nhà cổ” at Lam Dong provice. With this movement, Trung Nguyen expects could cover all the drinking habits of Vietnamese (TTXVN, 2004) 5/ Political/Legal
Vietnam has a long traditional in agriculture and coffee is one of them hence government puts lots of attention on this “key product”.
Generally in 2001, Prime Minister approved to use Export Support Fund to assisted coffee business which reduced 70% interest rate and reduced land use tax.(tbkt, 2001). On 16/08/2013 KonTum People’s Committee promulgated the scheme “Development Assistance” for temperate coffee at DAK GLEI, TU MO RONG and KON PLONG province. The content inclues: 100% assistance in coffee seeds, fertilizers, pesticides,
Assisting on training techniques, treatments, harvesting an preliminary processing coffee Assisting on paperwork…etc (Thuvienphapluat, 2013)
Particularly, government very appreciates what Trung Nguyen has contributed
to Vietnamese agriculture as well as the economic. On 17/03/2012, the President of Vietnam, Mr. Truong Tan Sang visited Trung Nguyen Company. The President highly appreciated the model which provided by Trung Nguyen that will probably help the coffee export industry gain $ 20 billion and create5 – 6 million jobs.
(Vu Gia, n/a)
6/ Global Factors
Globalization makes a big impact to Trung Nguyen in either positive or negative way. In positive way, globalization may create more chances to Trung Nguyen approaches the world, find new market shares. For example China, Japan, Canada, USA…etc On the other hand, Trung Nguyen also faces to very strong competitors which are from developed countries.Starbucks is a perfect example: Inaugurated the very first shop in Vietnam on 1/02/2013which at that time attracted a huge numbers of customers and on 9/08/2013 the second shop was launched inside President Place building. Beside Starbucks, it should be emphasized some common, popular coffee brand name such as: Highland coffee, Gloria Jean’s, Angel In Us, Coffee Bean & Tea ILLY…etc which can make the coffee industry in Vietnam is more dynamic and unpredictable
Macro environment particularly impacts the organizations by one way or other ways. By gathering information and careful analyzing, managers probably reduce the damages or take the advantage s from the changes. Therefore, the macro environment not only threats but the opportunities but only when the managers are quickly adaptive, flexible and have a good vision, orientation in managing employees.
The change that may be necessary and how managers can manage resistance to change.
The change that may be necessary and how managers can manage resistance to change. As the No. 1 coffee brand in Vietnam, the Trung Nguyen coffee
experts relentless study and developed the great and delicious coffee in the world with a special private recipe cannot be copied . Unlike all other coffee brands , at the beginning , Trung Nguyen has mounted philosophy “Innovation helps successful ” in creating products and until now . Change is the most important factor in business’s success, the market’s battle is very fierce, the business is just like the boat running with the water flow down, we don’t move fast, we run backward. So what will be the power can make the boat speed up and go straight far, change is the key answer. Definition of Organizational change: Organizational change is the changing of the way in which the group is organized. This can be something as simple as an organization restructuring itself to some as complex as an imposed organizational change occurring during a takeover. To achieve the success it is today, Trung Nguyen has been implementing strategic changes to keep pace with the market trends. I-/ Changing Technology:
Change: The combination of modern technology and the secrets of the mysterious East is unique only in Trung Nguyen.Trung Nguyen is the world’s leading corporations to transfer technology , environmentally friendly . Trung Nguyen factory system is the most modern technology in the world that provides the clean delicious great coffee , exports to the U.S. , Japan and Europe . Trung Nguyen guaranteed to retain the flavor of the coffee essence in each product that no other brand in the world can be. There is a secret oriental blend of rare herbal ingredients, the energy from gems and special additives in the special roasting process. Resistance: Every technological change has a difficulty that the employees can not quickly adapt with the new technology, especially the most modern technology in the world. The lack of training and education lead to the fear of changing technology, the employees get worried and confused when using new machine. Method: Trung Nguyen understood these incontinences and already has the best way to solve this. Education of using new models and communication are used to make the employees understand clearly and quickly new things. After a very short time, they can manipulate the machine as well as they did with the old technology. Table 1: Capital equipment procurement and technology (2005-2008) Number
Absolute increase in wage
Density compared to capital
(doc.edu, n/a, p24)
Change: Developing brand always comes with expanding markets. And franchising is the way to help Trung Nguyen dominate the world coffee market. Trung Nguyen needs to build a Franchise department very quickly. It means Trung Nguyen has to have a franchise organization, they are the people who know very clearly about Trung Nguyen’s structure, strategies and secrets. Resistance: The Human resource is the most important factor of this change. In fact, not so many staffs who are working in Sale, marketing, HR, manufacturing…etc, departments want to leave their current job to start with Franchise. Method: Trung Nguyen offers a very attractive salary and a education course to attract people change their mind. By giving new opportunity to earn more money and experience new position, Trung Nguyen very quickly build up a strong franchise department. Table 2: The structure of the Customary system (2005-2008)
Numbers Of people
Numbers Of people
Numbers Of people
Number Of people
College, high school
(doc.edu, n/a, p34)
III-/ Changing staffs at Customary System:
Change: Trung Nguyen currently uses employees at high school or intermediate qualification to serve foreign customers. These employees have very limited English, communication and soft skills, and this a disadvantage of Trung Nguyen to attract more customers. Therefore, Trung Nguyen spent a lot of money to educate these employees for the Customary System.
Resistance: With low awareness, at the beginning, the employees feel uncomfortable when they are trained to serve customers. This job requires good English and soft skills which many people lack.
Method: Employees are the face of the company, realizing this thing Trung Nguyen has a very strong team training which can help build the employees skills so they can serve the customers effectively. Furthermore, Trung Nguyen has a raise policy which can make the employees work harder and responsible. Table 3 : Payrolls in the customary system
THU MUA HT QUÁN
(doc.edu, n/a, p35)
VI-/ Changing Marketing System:
Change: With the Goal to build a leading brand in Vietnam, Trung Nguyen has built so many shop systems to develop the national coffee market. In recent years, to brand positioning and expand market, Trung Nguyen especially focus on marketing. Trung Nguyen needs a very strong marketing department, and that is why they require from the staff a lot.
Resistance: The requirement is the main thing makes the staffs difficult. They are required a very high qualification in specialized skills, English, group working, soft skills and patience. Method: Trung Nguyen creates a lot of opportunities for the marketing staffs to work and exchange experience in the best environment. The company also spends a huge of money in marketing and offers the very high salary for the staffs. Table 4: target revenue / capital investment made in the customary system Trung Nguyên 2005-2008
(doc.edu, n/a, p21)
According to Mr. Nguyen Vu, the first coffee store was born in Viet Nam was Beira Coffee in Hanoi in the early years of the nineteenth century 60, in 1882. The first black coffee was born. A while later, Coffee Trung Nguyen was established in mid-1996. It was just a small coffee capital firm in Buon Me Thuot, we can called Buon Me Thuot as DacLak with 100km from Buon Me Thuot to DacLak. Therefore, Trung Nguyen set their own desire to be the number one coffee brand in VietNam, it also a big industry coffee in the world. There are 7 dimensions that they would do to insist their motivation to work better: 1. Stability
2. People Orientation
3. Team Orientation
5. Outcome Orientation
6. Innovation and Risk Taking
7. Attention to Detail
In these dimension organizational culture, there are just 3 dimension focus on the distinct particular that Trung Nguyen aim to the wants: People Orientation:“An organization’s culture has an effect on what employees do, depending on how strong or weak of the culture is (P.Robbins et al.2013,Chapter 2: The management environment page 62-63). According to Mr. Nguyen Vu passion, his dream is not just to conquer the world but a very large driving force for all communities in the company. However, the strong culture in Mr. Nguyen Vu becomes. The more it affects what employees do and the way managers plan, the way employees do their work, lead and control. However, if the organization culture is weak, It will not have the shares values of itself, and it does effect on employee behavior is less clear and do less work. Moreover, the 2 main ways that an organization’s culture affects managers are its effect on what employees do and how they behave, and its effect on what manager do. (Vietnamplus, n/a)
Train Creativity: Stimulate creative potential and work, work and explore ways of a manager or a chair off a huge role for employees. Wanting to gain a job effectively, they must have a shared responsibility and the certain point in the work, the responsibility for themselves is equally important. Communicating: Reaching to the achieve goal of the Trung Nguyen’s company, employees need to reach to the teamwork and share information to each other. Simultaneously, the personally things of them need to deep down to other points insist to create a team work environment. Communicating is important, they can share their emotion, happiness and their work responsibility insist to help each other in every situation of the company. According to Trung Nguyen, communication is the best way to learn from people and its help to understand each other to evoke the potential of working, ways of learning activities and organization between employees and employers. (Dinh Phu, n/a)
Aggressiveness: “Degree to employees are aggressive and competitive rather than cooperative” (Robbins.S.P and Coulter.M, 2003). According to Trung Nguyen’s culture, there are many types of different degree in the competitive. For example, they always take the post holiness and heart of the work to the cave in order to reach the goal of showing the manager their abilities of fishing the work. Unfortunately, this kind of culture isn’t the way that Trung Nguyen aiming to their goals. (Trungnguyen, n/a) Why doesn’t Trung Nguyen want to apply this kind of culture to their employees? Disadvantage: The more they share information the less risk they take of doing the doing work. In action of sharing information is better doing work individually, because people mind of thinking has their limited and they just reach to a certain case of problems. Advantage: If a group is doing in a same works, a combination of information is better than an individual thinking. However, they must have a same particular goals and mind thinking, they will have less time to reach to their goals. Insisting teamwork rather than doing individual work, because every single person have a different thinking.
Team orientation: “Degree to which work is organized around teams rather than individuals” (Robbins.S.P and Coulter.M, 2003).Team oriented means that you just don’t think of just yourself, you include others in your decisions.
Everyone has a contributing factor in the operations and decisions that concern the business or venture. No one is more superior in the business and everybody has an equal say without any repercussions. (Trungnguyen, n/a) Disadvantage: The less they work individually the more they gain more information and passion from the works. However, the more time they spend has a bad affection to the (unity of command). Teams operate ss and members have not only the team leaders but also the managers to obey. So there may be many inconsistent commands given by the management. Moreover, the conflict of the member in a group can negatively impact to the entire team performance. Advantage: They have an excellent Human Resource division constantly training staff along their career path. Many staff members learn from one another. Therefore, they will have regular meetings to update everyone on future development of the Company. For example Instead of doing the tricky way, Trung Nguyen has chosen to Day sales office staff to pull closer to the sales staff. The route undertaken by the team, each team has a sale staff guide for one to two office staff. This ridiculous idea at first listen and ineffective, but at the back is a wise way.
According to the researching, these factors are the most important factor in the improvement mistaken for members to help each other and get the job done better. Community of Trung Nguyen’s work is in public, so do the activities organized by community group elements. Somehow, To promote this incentive, customers located in the important factor to motivate them to work better, more efficiently to increase the company’s progress and how they work in the company.
CHAPTER 4:Planning and strategic management process
Planning and strategic management process
“Planning activity essentially involves establishing the goals (or objectives) for the task being planned, specifying how to achieve them, implementing the plan and evaluating the results.” (David. B 2008). The benefits of planning are as follow: Clarifies direction;
Guides to use resources efficiently; and
Measures progress in proper ways.
Strategic management process
The strategic management is what managers do to develop an organization’s strategies. A common strategic management process includes 6 steps which contain identifying, analyzing, developing, implementing and monitoring the plan progress. In some studies, stage 2 and stage 3 (from the graph) is also known as internal and external analysis or SWOT analysis which determines Strengths, Weaknesses, Opportunities and Threads of the organization. In any business, a manager at strategic management level needs to identify clearly organization’s missions, goals and particular strategies at the beginning stage. Then through analysis, manager thus develops plans of action and communicates them accordingly to lower level of management in order to implement the plans consistently to the entire organization. Furthermore, monitoring and evaluating the plans is also in “to do list” of the manager, a redirection will take place when the plans are not obeyed precisely. Trung Nguyen Goals and Objectives
Dang Le Nguyen Vu is a nationalism person and has his faith in coffee value which can bring better value to the world, bring energies to the world of knowledge and create the creativity in harmony lead to development. So when he founded Trung Nguyen, he directed the organization carefully and precisely the path which attached all his faith in it and he wishes to transfer his faith all over the world. So that Trung Nguyen coffee established its organizational plans for growth strategies years ago with three different goals to be achieve: 1. Build strong brand of coffee in domestic market.
2. Increase the influences in coffee industry throughout the globe. 3. Globalization.
Trung Nguyen is currently achieving the second goal and the third goal is being obtaining in parallel and has a lot of success so far when Trung Nguyen coffee is some in several National Meetings. It shows the strong influence of Trung Nguyen in many countries, the influence even becomes
stronger in the future. The organization also determined the core competencies as following: Huge desire,
National and Global Spirits,
Non-stop learning and breakthrough,
Creating value and enduring development. (trungnguyen.com.vn, 2013) The organization’s mission of Trung Nguyen is to “Evoke the creativity”. In fact, Trung Nguyen obtained a lot of successes in domestic market and many countries. Trung Nguyen has built a strong “coffee culture” distinctly to other big players in this coffee market and with variety of products (Weasel, Legendee, Coffee Bean, Coffee powder, G7, G7 Cappuchino, Passionia for ladies, Etc) Trung Nguyen showed the ambitious to serve all the people who know about coffee. Current conditions and analysis (SWOT analysis)
Trung Nguyen G7 still maintained the biggest market share in Vietnam over big players such as Vina coffee, Nescafe Mac café, etc. Figures calculated at the 1st Quarter of 2013. But compare to the same periods last year, Trung Nguyen G7’s share strongly decline.
The reason of Trung Nguyen’s success is starting as the very first franchiser in Vietnam and already built a clearly strong coffee culture for Vietnamese. The value in branding that franchising bring to Trung Nguyen has been proven and it was the first goal of Trung Nguyen mentioned above. Trung Nguyen has their strengths in “national spirit” blown in almost every product, often owning the game domestically. Trung Nguyen is also 1 step forward to competitors, created distinct values to consumers physically and mentally. Besides, up to date technology in the coffee farms is utilized by Trung Nguyen created another gap to their competitors. Furthermore, cheap and qualified farmers from highland employed by Trung Nguyen are even more appropriate to the job than many specialists in farming. Opportunites
An open world and increasing numbers of coffee users around the globe leads to many opportunities for Trung Nguyen. The event that Vietnam Joined World Trade Organization (WTO) in 2007 (WTO, 2007) even enlarges the chances for expansionary. Strong supports from people and government in Vietnam make the expansion of Trung Nguyen easier. Praise from famous presses and newspapers virally increase the fame of Trung Nguyen Worldwide. Hence it is easier for Trung Nguyen to enter new markets and conquer the hearts of consumers. Weaknesses
However, there is a critical drawback from franchising that Trung Nguyen facing is the drop down in service of franchisees, they customize their services base on geographic, demographic, psychographic and behavioural. Franchisees somehow make the taste of Trung Nguyen coffee inconsistent. But Trung Nguyen has not showed any intervention yet. If this is not handled well, it will cause critical damages to not only Trung Nguyen market share domestically but also its image and influence throughout the globe. Another weakness of Trung Nguyen is they strongly stereotype the consumers (coffee users) that they will want the strong flavor and taste of Trung Nguyen coffee. New consumers perhaps cannot stand the strong taste. This somehow ignores the right of deciding of consumers. Threads
Moreover, Starbucks – the most famous coffee brand in the world has just entered Vietnam. Starbucks brings along the best quality of service as another thread to Trung Nguyen. Will people believe in Trung Nguyen’s coffee culture established before if they even lose in their own territory? On the other hand, Dang Le Nguyen Vu had his statement on Bloomberg that Trung Nguyen is planning and aiming to replace Starbucks for the next 10 years with the “magic flavor” of Vietnam highland coffee. (Bloomberg News, Feb 8 2013). If this is the real plan of Trung Nguyen, it would not be a wise choice. According to the “game theory”, smaller competitor as Trung Nguyen currently should aim to the niche and unexploited market to obey their growth strategies. In fact, not only Starbucks but there are many strong competitors in different markets might be threads to Trung Nguyen. Action Plans and Implementations
In current market conditions – lot of competitors worldwide and threads from domestic market, I suggest an adjustment in organizational plans and a franchising intervention plan. Adjustment: Trung Nguyen needs to stimulate the needs of enjoying coffee of the people worldwide as a preparing plan before globalization. Research showed that the level of attentions people paying into a particular product or service will be the highest if they have needs and wants existing. In addition, the essential principle of selling more products is “to sell what people need” instead of “selling what we have”. Thus, stimulation of needs is so important and should be taken by Trung Nguyen. So they can sell problems, solutions, coffee culture and products in sequence. Product varieties and filtering geographically: Instead of forcing consumers from other territories and regions obey Trung Nguyen coffee culture, Trung Nguyen may develop sets geographic adjusted low price products to please the consumers at the beginning stage. Then gradually educate and inspire them with the coffee culture by leading into higher quality products which are pure in taste and flavor. Later on, utilizing the power of viral marketing by offering the best quality service and demand for feedback from consumers.
Hence, Trung Nguyen coffee culture may effectively be injected into local consumers mind. Intervention plan to franchisees: In business, there are many decisions in managing customer relate to cost. As we know, taking market share from competitor costs the most, exploiting neutral customers costs less and maintaining existing customers cost least. Threads of competitors with high quality services may cause damage to not only the domestic influence but also the global image of Trung Nguyen. Directional and specific plans of interventions have to be approved to manage franchisees in order to increase value of franchise contrast, value of services to the end users as well as the brand value, image and influence of Trung Nguyen. Franchising in other countries: Trung Nguyen has more than 1000 franchisers currently but most of them are in Vietnam. Trung Nguyen franchising function has to employ the market researchers and establish more franchising teams in other countries to enlarge the franchise store system. By doing so, Trung Nguyen can gain two factors which are mutually supportive are adding more value to the products exported and strengthening the franchise system. Moreover, brand value and influence are enhanced as the entrance coffee culture.
Along the plan implementation, a monitoring progress should also be taken in account. Whereas the market is dynamic, the uncertainty of the global economics, monitoring is exclusively important for managers in order to evaluate the success or intervene punctually improper plans or executions. In case of Trung Nguyen, they can monitor by the key success factors or divided objectives along the operation of the plans.
CHAPTER 5:A few key strategies that the material has been used for branding
A few key strategies that the material has been used for branding 1/ Corporate strategy
A corporate strategy is an organization strategy that specifies what business a company is in or wants to be in and what it wants to do with those businesses. It’s based on the mission and goals of the organization and the roles that each business unit of the organization will play. The three main types of corporate strategies are growth, stability and renewal. 1.1 Growth strategy
Growth of Trung Nguyen can make anyone dazzle. Only 10 years, Trung Nguyen has became the largest coffee roasters in Vietnam, with continuous growth 37%/year. Coffee brand is known at 64 provinces and cities, and 37 countries in the world. The franchise system and development of Trung Nguyen.
Establishment with more than 10 years (1996) Trung Nguyen has increased rapidly, the average annual revenue increase about 20-30%/year. Revenue in 2003 was 70 billion VND, in 2004 achieved 100 billion and in 2005 was 150 billion (franchising only). Besides that, Trung Nguyen has 1000 coffee shop. This success is due to Trung Nguyen has adopted the method of franchising.Trung Nguyen has developed a system of franchised shops nationwide and international market such as; Japan, Singapore, Thailand, China, and Cambodia… The number of Trung Nguyen shop franchise is growing rapidly from 500 distributors in 2003 to the end of 2006 Trung Nguyen had 1000 distributors and 1000 coffee shops in Viet Nam. (gucafe, 2012) Trung Nguyen currently has about 3000 employees, revenue in 2012 achieved 200 million USD, increasing 32% over 2011. Estimate revenue in 2013 is expected double, coffee demand of Southeast Asian countries and China is growing strongly. Trung Nguyen aims to achieve one billion USD in 2016.(congthongtinchinhphu, 2013) The development of G7 and market shared
The previous day 23/11/2003, Trung Nguyen came up G7 – instant coffee market is packed as follow that; Nescafe (55,95%), Vina café (38,45%), 5,6% for other coffee brands. Nescafe want to impose consumer tastes. While Nescafe is setting up a strong market for themselves, G7 has launched new plans to attract consumers with the name “G7 festival” with more than 35000 people joined. There, Trung Nguyen invited consumers to try two cups of coffee, a G7 and a Nescafe. The results showed that 89% of consumers chosen G7 and 11% for Nescafe: Trung Nguyen had a complete victory in this campaign. End of 2004, instant coffee market in Vietnam have been divided again: Nescafe (44,5%), Vinacafe(28,95%), G7(21,8%), and 5% for the other coffee brands According to information from a market reseach company leading: in 2011, the product G7 instant coffee (3in1) market has led Vietnam instant coffeemarket share (38%) instant coffee (3in1) market has led Vietnam instant coffee market share (38%) According to survey data of consumers, G7 instant (3in1) is favorite brand of consumers that has been bought the most prevalent. In 2011, 49% of consumers buy G7 (3in1) coffee. (trungnguyen, 2012)
1.2 Stability strategy
Maintaining market shared, Trung Nguyen came up a variety of products. Through every cup of coffee, Trung Nguyen wants to send to customers that it is not just the scent of coffee, but also a source of new energy, stimulate thinking creativity.
It made in the best coffee beans (Excelsa and Arabica), coffee passiona suitable for new people with low caffeine, light aroma and gentle taste. Specially, Passiona is good for female, it has gentle taste and nutrients from plant are good for heath and skin.
G7 was born with resonates and support consumer. Only around 10 years, G7 captured the highest market shared, defeat Nescafe. Catching up new trends, from the original G7 Trung Nguyen has made other kinds of G7: G7 CAPPUCCINO
+ G7 Cappuccino – Hazelnut
+G7 Cappuccino – Irish Cream
+G7 Cappuccino – Mocha
The black dissolved G7
2/ Business level
2.1 Competitive strategy
Trung Nguyen has taken the traditional coffee from Tay Nguyen to create their own culture. Trung Nguyen has created an ideal space for enjoying coffee. So consumers are not only enjoy coffee but also be relaxed, learning a specific culture from Tay Nguyen. Trung Nguyen was the first business Vietnam apply franchising, that’s reason for a series of positive articles about Trung Nguyen, contribute to improving the image and brand name. Recently, concerns of media had faded, because the name Trung Nguyen is too familiar for consumers, it means phenomenon had no longer. So John is trying to strengthen their image through Pr activities. _ Enhancing communication activities such as; they has cooperated with the Youth in 2003 Newspaper, launching movement “creative Vietnamese brand” to encourage Vietnamese use Vietnamese products. Trung Nguyen combined Saigon Times, economic university, and Vietnam Marcom had organized the program “agricultural branding Vietnam”. Besides that, Trung Nguyen donated several billion in operations; poor protection fund, supporting victims of Agent Orange and scholarship HSSV… in 2005, setting up a fund “ creative origins” to business funding for young people with 2 billion VND
Slogan “creative resourcing“
Trung Nguyen chosen original coffee beans and best of the world (Ethiopia, Brazil, Jamaica, VietNam) selected simultaneously through a roasting process unique with the most advanced technology. Trung Nguyen had the research and development for 30 types of coffee and different flavors, creating 9 levels of flavor. From those types of coffee, Trung Nguyen divided into 3 segments coffee as follows; Scrumptious products
A types of coffee from weasel. It is called legendary weasel coffee because weasel coffee production worldwide is about 200kg/year, so weasel coffee is the most rare and expensive in the world ( Trung Nguyen Weasel coffee) GLASSIC BLEND
It is based on careful selecting, coffee beans is the best of world, plus the secret of Trung Nguyen create a specialty coffee products with fragrance lasts and glamorous. Intermediate products
It made in the best coffee beans (Excelsa and Arabica), coffee passiona suitable for new people with low caffeine, light aroma and gentle taste. Specially, Passiona is good for female, it has gentle taste and nutrients from plant are good for heath and skin. CREATIVE COFFEE
Creativity 1 – Culi Robusta: suitable who like strong coffee taste
Creativity 2 – Arbica, Robusta: suitable who like medium strong coffee Creativity 3 – Arabica Se: suitable who like medium strong coffee but used with milk
Creativity 4 –high grade Culi: suitable who like charming coffee Creativity 5 – Scrumptious Culi Arabica: suitable who like light scent coffee Popular products
The products made from coffee beans (Arabica, Robusta, Catimor, Excelsa). Each type has its own flavor and consistent with the low income people. G7 INSTANT COFFEE (Trung Nguyen, 2013)
In 2009, Trung Nguyen had launched Passiona coffee for ladies. However, this small segment of coffee because there are so many coffee products to respondconsumers demand. Specially, G7 3in1 is a drink popular family from the elderly, woman or office to student… will be easily for finding favorite products. So Passiona with different advantage created impression to consumers through marketing emphasized function of Passiona. Passiona is the first coffee for diet and proving nutrients Collagen, Vitamin PP and rare herbs. They makes beautiful healthy skin and good for heath. Besides that,
Trung Nguyen has launched coffee cans, this is the potential market. This product attracts many people because of convenience and suitable with busy life. 3. Functional strategy
Research and Development
Through the research process, Trung Nguyen understand culture as well as the customer’s taste. Trung Nguyen had the research and development for 30 types of coffee and different flavors, creating 9 levels of flavor. For instant coffee segment, from the original G7 Trung Nguyen has made other kinds of G7 such as: G7 Cappuccino, G7 3in1, G7 2in1… Manufacturing
Now, Trung Nguyen has approximately 3000 employees working for the shared company, coffee factory (Buon Me Thuot city), instant coffee factory, and branches such as; Da Dang, HCM, Ha Noi, Singapore… In addition, Trung Nguyen also create jobs for more than 15000 workers. Manager was mostly young people, be trained through professional courses, and experienced advisers work for foreign corporations. CONCLUSION
We can not deny that Trung Nguyen completely changed the face of coffee consumption on the domestic market, from the “highest cost” place at the middle of the centers to the very small corner in a quiet unnamed town, we can easily find the colored sign plates called Trung Nguyen coffee. And the slogan “Create ambition” then became so familiar to people, especially people who work required the creation. Coffee is known as a special drink, is the world’s second most valuable traded commodity, behind only oil. And CEO Dang Le Nguyen Vu said “Coffee bean is just like two hemispheres of our brain , a cup of coffee can help us work more consciously and effectively.” In fact, in recent years, along with Trung Nguyen’s efforts and the support of preferential policies to encourage investment in the state with all economic sectors. The company has achieved success rating in the investment process including development of systems consistent throughout the country and reaching out to the world. In other words, with the right business strategy along with the reasonable investment, TRung Nguyen has been successful in creating their image in customers’s minds. However, besides
the achievements in the investment process, companies still has some drawbacks. Hopefully in future the company will further enhance the investment activities of its consistent growth, confirming the position on the domestic market and internationally.
CHAPTER 1: THE MANAGER’S MACRO ENVIRONMENT
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Cite this Trung Nguyen Coffee
Trung Nguyen Coffee. (2016, Nov 23). Retrieved from https://graduateway.com/trung-nguyen-coffee-2/