Name: Lam Thi Dieu Huyen
ID: MA0N0232
MID – TERM EXAM
ENTREPRENEURSHIP & INNOVATION
1. Introduction
Trung Nguyen Company – the biggest coffee company in VietNam makes effort to
find out many ways to export their products through franchise, the small export
amount with VietNamese businessmen in foreign countries. However, this company
realized that domestic manufactures have a window of opportunities to cooperate
mutually to promote VietNamese brands in the world.
One distribution system “Made in VietNam” spreads worldwide, which is considered
as VietNamese businessmen dream. Also they can catch the environment trend to
boom the retail industry, and the opening of Vietnam economy after joining WTO.
Besides, according to AT Kearney VietNam ranks the third place out of 30 the most
developing retail markets.
Table 1: Top ten retail markets in the world in 2006
Nation
Ranking
2006
2005
India
1
1
Russia
2
2
VietNam
3
8
Ukraine
4
3
China
5
4
Chile
6
11
Latvia
7
6
Slovenia
8
5
Croatia
9
7
Turkey
10
9
G7 Mart of Trung Nguyen company plays a role as the main domestic distributor
collaborating with the domestic manufactures and operating the distribution network
of VietNam, and solving problems to promote domestic products to foreign markets.
2. Description of G7-Mart business model
2.1 The history of G7 Mart
G7-Mart was established by Joint Venture Trung Nguyen Company in 2006.
Warehouse was set up on 168 Phan Van Tri – Go Vap
Mission
- Becoming the number one retailer in VietNam
- Integrating into the international retail market with the aim of extending the
VietNam marketplace
Objectives
-
-
Setting up the modern and professional supply chain to compete with the
foreign retailers tending to perpetuate into VietNam retail market.
Cooperation with the domestic manufactures to build the sustainable brands
of VietNamese products and also promote goods of VietNam to other
countries.
Short-term objectives
Establishing G7-Mart and franchising the friendly and convenient store socalled G7 Mart stores with some features:
The most reasonable price
The most convenient stores
The best customer service
Long-term objectives
-
Opening some the big supermarkets in the cities of VietNam and franchising
the convenient stores in the small cities.
Cooperating with the international distribution groups with the aim of building
the supply chain in some cities with the big consumption demand.
Building brands for VietNamese products and then extending to the foreign
markets through the VietTown system.
VietTown system includes trading centre in foreign countries with the aim of
promoting goods and transmitting VietNamese culture in the world effectively.
G7 – Mart Model
-
-
-
-
-
-
2.2 The business strategy of G7 – Mart
The first stage:
a. The pilot convenient stores
Convenient stores was set up by cooperating with available stores, and then
renewed these old stores into the modern convenient stores, and small
distributors into distribution centres.
All old and traditional stores will be renewed into the convenient stores
All owners of them will cooperate with G7 in the prospect of part of franchise.
(License of using G7-Mart brand). The objective includes distributors, stores,
retailers with the equity, management skills in retail.
G7 mart will invest to pilot cost, and every store supported 50 millions to 200
millions to renew the stores with G7 Mart standards such as cash counters,
display shelves, decoration, advertisement.
However, all next stores will have to be borne 60% cost, and the rest of cost
is invested by G7 Mart. In case, the sooner all convenient stores can make
profits, the quicker all of stores will transfer to total franchise.
Buying and selling way is the same with supermarkets’ way
Five kinds of products are supplied by G7: milk, cookies, cosmetics, coffee…
Marketing strategy of G7 Mart: price, promotion, display and supply chain in
G7 Mart system
G7 Mart will support technique, skills, and facilities for the stores. And also
the sellers will join the training course about sale skills. Besides, G7 Mart will
consult and support to get the criteria such as the design, display. All tends to
the customer satisfaction.
b. Distribution Center
G7 Mart will cooperate distribution chain including local distributors, and also
want to upgrade them into the professional distributors with many kinds of
products.
The duties of distribution center
- Receiving goods from manufactures, warehouse and maintenance
- Responsible for supplying the convenient stores in their areas. Making
arrangement to deliver the orders within 24 hours.
- The policies: distribution centers comply this one – price policy. And also the
the common information technology networks set up by G7 in order that G7
can manage the inventory, orders, sales, purchase, ect.
The requirements to join this system
- Each of distributor join G7 Mart will deposit and invest in facilities such as:
warehouse, office, means of transportation, ect. The deposit depends on the
total sale. And the amount of deposit is counted by accumulating method.
- Benefits of distribution center:
- G7 Mart supports distribution centers to make loans from banks
- The interest rate 8% per year
- G7 Mart subsidizes transportation cost
3. Feasibility Analysis of G7-Mart
3.1 Industry/ Market feasibility
A. Industry attractiveness
B. Target market attractiveness
C. Timeliness of entry into the target market
Assessment tools
Table 2: Industry Attractiveness ( Broader industry)
Low potential
Moderate
High Potential
Potential
1.Number of competitors
Many
2. Age of industry
Young
3. Growth rate of industry
Strong growth
4. Average net income for
High
firms in the industry
5.
Degree
of
industry
Neither
concentration
concentrated nor
fragmented
6. Stage of industry life cycle
Emergence
phase
7. Importance of industry’s
Must have
products and services to
customers
8. Extent to which business
High
and environmental trend are
moving favor of the industry
9. Number of exciting new
product
and
services
emerging from the industry
10. Long – term prospects
Medium
Strong
Table 3: Target Market Attractiveness Assessment Tools ( Target Market)
Low potential Moderate
High Potential
Potential
1. Number of competitors in
Few
the target market
2. Growth rate of firms in the
Rapid growth
target market
3. Average net income for
High
firms in the target market
4. Methods of generating
High
revenue in the industry
5. Ability to create “ barriers
May or may not
to entry” for potential
be
able
to
competitors
create
6. Degree
to
which
Unsatisfied
customers feel satisfied
by the current offerings in
the target market
7. Potential to employ low
Moderate
cost
marketing
techniques to promote
the firm’s product or
services
8. Excitement surrounding
Medium
new product/ service
offerings in the target
market
Table 4: Market timeliness Assessment Tool
Low potential
Moderate
High Potential
Potential
1. Buying
mood
of
Customers are
customers
in
an
aggressive
buying mood
2. Need for a new firm in the Low
market with geographic
location
3. Extent to which business
and environment trends
are moving in favor of the
target market
4. Recent
or
planned
entrance of large firms
1.
2.
3.
4.
5.
6.
High
Rumors
that
large firms may
be entering the
market
3.2 Organizational feasibility
Table 5: Management Prowess Assessment Tools
Low Potential Moderate
Potential
Passion for the business
idea
Relevant
industry None
experience
Prior
entrepreneurship
experience
Depth of professional and
social networks
Creativity
among
Moderate
management
team
members
College graduate
High Potential
High
Extensive
Strong
Graduated
3.3 Resource Sufficiency Assessment Tool
(Ratings 1 – 5 : strong –neutral – weak)
Ratings Resource Sufficiency
1
Office space
3
Lab space, manufacturing space, or space to launch a service business
Contact manufactures or outsource providers
Key management employees (now and in the future)
Key support personnel (now and in the future)
2
Key equipment needed to operate the business
Ability to obtain intellectual property protection on key aspect of the
business
1
Support of local and state government if applicable for business launch
Ability to form favorable business partnerships
Financial Feasibility
Table 6: Assessment Tools – Total start – up cash Needed
Capital Investment
Amount
Property
Computer equipment
9,210,000 NTD
Other equipment
7,990,000 NTD
Operating Expense
70,300,234 NTD
Total sales
124,564,000NTD
Overall feasibility: Summary and Conclusion
Overall feasibility of the Suggestions for improving
business idea based on the feasibility
each part
Market Feasible
Product/
Feasibility
Industry/Market
feasibility
Organizational feasibility
Financial Feasibility
Overall Assessment
Feasible
Unsure
Unsure
Unsure
4. Results of G7 Mart system
The existence of G7 Mart within 3 years in retail industry is evaluated as the big
effort of VietNamese business to promote consuming the domestic products. At that
time, this system set up over 100.000 stores and accounted for 65% consumption in
VietNam. This number is 15-20% higher than other distribution systems. G7 Mart
launched the good marketing strategy with the big investment to amplify their brand.
And to make the achievement at the first step because they realized the
opportunities in retail industry.
Opportunities (O)
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The economic growth rate of VieNam is high and stable about 8% per year.
The increasing of the GDP per capita promotes the consumption demand.
Consumption trend: the higher life quality leads the consumers to change the
buying behavior. For example the habits of buying at traditional markets or
stores changes to those of buying at supermarket or convenient stores.
There are no convenient stores and just a few supermarkets belong to the
international retailers.
G7 Mart is considered as the new retail system and draw the consumers’
attention, especially the support of government and VietNamese
manufactures.
The convenient stores are spread quickly because of exploiting the available
stores. So the pressure of capital is not high. Also it attracts to investors with
the new business model in VietNam.
Besides, they have their own strong features:
Strength (S):
– Perpetuating into the market with the short time and the low cost to operate the
distribution system.
– In the first step G7 Mart got the competitive advantages based on the difference of
the display, service quality from the traditional stores.
However, Trung Nguyen company showed the weakness in operating this system.
And they burden the threats from this market.
Weakness (W)
– Capital is low
– Human capital is not high. G7 Mart lacks skills and experience in retail industry.
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-
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There are many intermediates in distribution system
Infrastructure is not completed. The technology of distribution network
supported by Point of System has some problems, so G7 Mart is less
informative to control the market. For example, demand and the customer
satisfaction is not update quickly, consequently the feedback to the
manufactures is slow.
Logistics system is not professional enough and has not the competitive
advantages about price, diversifying kinds of goods.
G7 Mart has not applied ISO so the inventory management solutions,
transportation still are not qualified with international standards for example
the process of input and output must be operated automatically.
The locations of convenient stores are not convenient for customers to buy
goods because it upgrades old stores into the new stores.
Threat (T)
-
Traditional stores, markets account for 80% consumption.
In 2005, there are 200 supermarkets, 30 trade centers and 1000 convenient
stores, so G7 Mart has fierce competition in retail industry.