DEVELOPING A COMPETITIVE STRATEGY: A CASE STUDY OF THE

THANGLONG GARMENT COMPANY IN HANOI, VIETNAM

by
Dang Anh Tuan
A research study submitted in partial fulfillment of the requirement for the degree of Master
of Business Administration
Examination Committee: Prof ! "amachandran #Chairman$
Dr Truong %uang
Dr Arne Deussen
!ationality &ietnamese
Pre'ious Degree Bachelor in Economics
!ational Economics (ni'ersity
)anoi* &ietnam
+cholarship Donor ,o'ernment of +-it.erland
Asian /nstitute of Technology
+chool of Management
Bang0o0* Thailand
April* 1223
ACKNOWLEDGMENT
/ -ish to express my deep gratitude to my ad'isor and Committee Chairman* Professor !
"amachandran for his useful guidance* suggestions and encouragement through out the
research -or0
/ also -ould li0e to express my sincere appreciation to Dr Truong %uang* committee
member* for his sharing and encouragement for the research -or0
/ also grateful to Dr Arne Deussen not only for ser'ing as committee member but also for his
enthusiasm sharing* 'aluable suggestions for my research
Than0s are also due to the ,o'ernment of +-it.erland* the ,o'ernment of &ietnam* and the
Asian /nstitute of Technology for pro'iding the scholarship and opportunity for me to pursuit
my master degree at A/T
/ also -ould li0e to extend genuine than0s to Mr Phuong* Ms )a* Mrs Binh and other staffs
at Thanglong ,arment Company for their help and suggestion during the implementation of
my research study Than0s are also due to my friend* Dung* -ho had helped me during the
customer sur'ey
And the most -holehearted gratitude / -ish to express to my parents and my brother for their
endless lo'e* cares* encouragement and supporting to me during the course of my study
ii
ABSTRACT
This research study aims at de'eloping a competiti'e strategy for 4ac0et category at the
Thanglong ,arment Company #Thaloga$ in &ietnamese mar0et 5i0e other companies in the
textile and garment industry* Thaloga operation depends on orders of customers mostly from
foreign customers The ma4ority of company6s production is for export The company had
focused on domestic mar0et in the last three years
The research examines external en'ironment in -hich Thaloga operates 7pportunities
identified are go'ernment preferred treatment in tax and soft loans* gro-ing economy -ith
increasing purchasing po-er* large unexploited domestic mar0et* good customer perception
about domestic ready made garment* and fa'orable -eather condition for 4ac0et category
Threats include intensi'e competition from Chinese goods and increasing competition from
existing companies
8or company internal en'ironment* it has strong capability in design and production -ith
large production capacity 9ea0ness includes lac0 of customer understanding and customer
oriented product de'elopment The 4ac0et product category seems to be stuc0 in the middle
-ith no clear ad'antage in terms of price and product 'ariety
Three competiti'e strategies are de'eloped and e'aluated* in -hich cost leadership strategy is
recommended to the company to compete in the future
iii
TABLE OF CONTENT

Title Page
Title Page i
Ac0no-ledgementii
Abstractiii
Table of Contenti'
5ist of 8igure'i
5ist of Table'ii
1. CHAPTER 1 INTRODUCTION.......................................................................................................1
1.1. Rationale of the research study 1
1.2. Problem statement...........................................................................................................1
1.3. Research methodology....................................................................................................1
1.3.1. Specific objective....................................................................................................1
1.3.2. Conceptual frame work of the study.......................................................................1
1.4. Scope and limitation of the research...............................................................................2
1.5. Data collection method...................................................................................................3
1.6. Presentation of the research study...................................................................................3
2. CHAPTER 2 LITERATURE REVIEW.....................................................................................................5
2.1. Competitive advantage....................................................................................................5
2.1.1. Definition................................................................................................................5
2.1.2. Generic building blocks of competitive advantage.................................................6
2.2. Competitive strategy and competitive advantage...........................................................6
2.2.1. Three level of strategy............................................................................................6
2.3. Strategy formulation process..........................................................................................7
2.3.1. Mission and goals...................................................................................................7
2.3.2. External analysis....................................................................................................8
2.3.3. Internal analysis...................................................................................................10
2.3.4. Strategy formulation and strategic choice...........................................................10
2.3.5. Strategy implementation.......................................................................................12
3. CHAPTER 3 EXTERNAL ENVIRONMENT ANALYSIS....................................................................13
3.1. Societal environment....................................................................................................13
3.1.1. Government and legal factors..............................................................................13
3.1.2. Economic factors..................................................................................................14
3.1.3. Social, cultural and demographic factors............................................................15
3.1.4. Climate and weather factors................................................................................15
3.1.5. Technological factors...........................................................................................16
3.2. Customer analysis.........................................................................................................16
3.2.1. Sample characteristics..........................................................................................17
3.2.2. Customers buying pattern.....................................................................................17
3.2.3. Customers needs on the products.........................................................................17
3.2.4. Customer perception about Thalogas jackets.....................................................19
3.3. Textile and garment industry analysis..........................................................................19
i'
3.3.1. Industry overview 19
3.3.2. Industry attractiveness and competitor analysis..................................................22
3.4. Summary of external opportunities and threats for Thaloga........................................25
. CHAPTER INTERNAL ANALYSIS.....................................................................................................2!
4.1. Company profile...........................................................................................................26
4.2. Organizational structure................................................................................................26
4.3. Business operation and goals........................................................................................28
4.3.1. Business activities.................................................................................................28
4.3.2. Company goals.....................................................................................................28
4.4. Business performance and sales....................................................................................29
4.4.1. Manufacturing process, quality control and technology......................................29
4.4.2. Sales performance and profitability.....................................................................30
4.5. Marketing......................................................................................................................31
4.5.1. Market segmentation and targeted market...........................................................31
4.5.2. Product positioning..............................................................................................31
4.5.3. Pricing..................................................................................................................32
4.5.4. Promotion.............................................................................................................32
4.5.5. Distribution...........................................................................................................32
4.5.6. Design and new product development..................................................................34
4.5.7. Human resource management..............................................................................34
4.5.8. Information system...............................................................................................34
4.6. Summary of Thalogas strength and weakness.............................................................35
5. CHAPTER 5 DEVELOPING COMPETITIVE STRATEGIES FOR THALOGA.............................3!
5.1. SWOT analysis.............................................................................................................36
5.1.1. Summary of strategic situation for the company..................................................36
5.1.2. SWOT strategies...................................................................................................36
5.2. Alternatives competitive strategies for Thaloga...........................................................37
5.2.1. Cost leadership strategy.......................................................................................37
5.2.2. Differentiate strategy............................................................................................38
5.2.3. Focus strategy......................................................................................................39
5.3. Strategy evaluation........................................................................................................39
5.3.1. Cost leadership strategy:......................................................................................39
5.3.2. Differentiation strategy:.......................................................................................40
5.3.3. Focus strategy:.....................................................................................................40
!. CHAPTER ! CONCLUSION AND RECOMMENDATION.................................................................1
6.1. Conclusion....................................................................................................................41
6.2. Recommendation..........................................................................................................41
BIBLIOGRAPHY....................................................................................................................................................I
APPENDICES.......................................................................................................................................................III
'
'i
LIST OF FIGURE
8igure 33 Conceptual frame-or0 of the research study 1
8igure 13 &alue to customer and producer :
8igure ;3 Production process 1<
8igure ;1 Company distribution channel ==
'ii
LIST OF TABLE
Table 13 Competiti'e strategy and required competencies 33
Table =3 ,DP gro-th rate in 3<<1>1222 period 3;
Table =1 ,DP per capita in 3<<?>1222 period 3:
Table == !umber of firms in the garment industry as of 3<<@ 12
Table =; Production capacity of &ietnam Textile and ,arment industry as of 3<<@ 12
Table =: Export turno'er of textile and garment industry in 3<<;>1222 period 1<
Table :3 +ummary of strategic factors =?
Table :1 +ummary of strategy 'aluation ;2
'iii
1. CHAPTER 1
INTRODUCTION
1.1. Rationale of the research study
/n profit leaded organi.ations* net profit margin and return on equity are important measures
of their performance To achie'e high rate of profit* high sales 'olume is critical But sales
'olume is 'ery much depend on the attracti'eness of the products offered in terms of price*
quality* and other dimension that satisfy customer needs The heart of this attracti'eness lies
on the competiti'e ad'antage that a product has o'er other competing alternati'es
The research study aims at exploring current business practice at the Thanglong ,arment
Company #Thaloga$ and de'eloping competiti'e strategy for its 4ac0et* a ma4or product
category of the company* in &ietnamese mar0et The company6s management can refer to the
analysis and recommendation for formulating strategy and operation practices
1.2. Problem statement
/n the past* under central planned economy* the company under consideration operated in
accordance -ith the plan from central go'ernment Their -or0 is to manufacture product
-ithout -orrying about source of ra- material and sales because e'erything is planned /n the
ne- business en'ironment -hen the go'ernment had deregulated the economy* company
must struggle for sur'i'al itself
Thaloga currently operates to process order forms from other customers +o the company
business is depend significantly to the outside order To sur'i'e in the long run* company
must de'elop its o-n brand name and product capability to compete in the domestic mar0et
The problem is to manufacture the products that fit domestic mar0et* -hich is dominated -ith
imported goods* mostly from China at lo- price )a'ing obser'ed slo- sales in domestic
mar0et of 4ac0ets since the beginning of 1222>1223 -inter season from the end of !o'ember
1222* -hich is due to many reasons in -hich -eather condition might be an important one* it
is important to examine the competiti'e ad'antage of this product category
1.3. Research methodology
3=3 +pecific ob4ecti'e
> Analysis o'erall* current mar0et and industry condition for garment products* specifically
for 4ac0ets in &ietnamese mar0et
> Examine company o'erall business strategy
> Analysis company practices in manufacturing and mar0eting 4ac0ets in &ietnamese mar0et
> De'elop alternati'e competiti'e strategies and recommendations suitable strategy for 4ac0et
in this mar0et
3=1 Conceptual frame -or0 of the study
The analysis of current performance of industry and company is based on the process of
strategic management* -hich is used to implement +97T analysis for the company 8irst
3
company missions and goals are examined Then external and internal en'ironments are
analy.ed to identify strategic situation that company is facing +trategies are de'eloped for the
company and e'aluated to choose the most suitable one for recommendation 8igure 33
illustrates the frame-or0 of the research study
8igure 33 8rame-or0 of the research study
1.4. Scope and limitation of the research
The research only focuses on one product category> 4ac0ets in &ietnamese mar0et of Thaloga*
since the company under consideration manufacturing 'ariety of products and competiti'e
strategy for each product type -ill not be the same The reason to choose this product is that it
contributes an important proportion in company total re'enue and that producing 4ac0ets for
domestic mar0et is still ne- in company operation /n the past* most of 4ac0ets manufactured
are exported* company only focused on the domestic in the last three years
)o-e'er* the frame-or0 and analysis of external en'ironment can be applied in de'eloping
competiti'e strategy for other product categories or for company as a -hole -ith certain
modification in area of analysis
External Analysis
Mission and ,oals
+97T analysis
+trategic Choice
/nternal Analysis
Alternati'e strategies
+trategy e'aluation
"ecommended strategy
"ecommendation
1
1.5. Limitation
The una'ailability of information about sales 'olume of each product categories* timing of
sales of each product* and expenditure on acti'ities such as ad'ertising* promotion*
administration constrains deep analysis on the profitability of 4ac0et category and on
mar0eting mix acti'ities (na'ailability of current detail accounting information limits the
understanding about cost dri'ers #cost>causing items$ thus limits the specific of
recommendation on cost cutting measures
5imited information on industry and competitors #competitors6 past strategy and beha'ior$
places certain barrier to detail analysis about the competiti'e situation that is happening
/n addition* the con'enience sampling method in customer sur'ey might introduce bias due to
it may not incorporate a representati'e sample of the -hole 4ac0et clientele )o-e'er -ith
large enough for statistical significant of cases in the sample* it still someho- represents
customer6s requirement and perception about 4ac0et
1.6. Data collection method
+econdary data on textile and garment industry* Thaloga6s competitors* their capability* their
operation is gathered from Business and /ndustry 4ournals* /nternet -eb sites* &ietnam
statistical year boo0* and other sources This information gi'es board 'ie- about the mar0et
for the garment product and competition le'el -ithin the industry
Primary data is collected mostly through in>depth inter'ie- -ith company6s managers*
designers* and retailers #guiding questions for direct inter'ie- is collected in Appendix 3$
/nformation about company6s business and operation is gathered from company6s annual
reports* company6s brochure* other rele'ant documents and field 'isit and used to analysis
company current performance 8ield in'estigation is also to be conducted to gather
information about competiti'e price bet-een companies and mar0eting information A
customer sur'ey is conducted to identify customer requirements on 4ac0ets and their
perception about Thaloga6s 4ac0ets compared -ith other competitors
The data collected is consolidated in the company a -hole scenario* -hich -ill be to suggest
alternati'e and action plan for the company
1.7. Presentation of the research study
Chapter 3 /ntroduction
Chapter 1 5iterature re'ie-
5iterature on competiti'e ad'antage and competiti'e strategy as -ell as the strategic
management process are re'ie-ed as the basis for analysis in follo-ing chapters
Chapter = External analysis
External factors including legal* economic* -eather condition and technological factors are
analy.ed Customer analysis and industry analysis including competitor analysis is discussed
extensi'ely in this section as -ell
Chapter ; /nternal analysis
=
Company organi.ation* business performance* operation* manufacturing process* and other
related acti'ities are analy.ed to identify strength and -ea0ness
Chapter : De'eloping competiti'e strategies for Thaloga
Three competiti'e strategies are de'eloped including cost leadership strategy* differentiation
strategy* and focus strategy and e'aluated Cost leadership strategy is recommended to the
company to compete in the future
Chapter ? Conclusion and recommendation
;
2. CHAPTER 2
LITERATURE REVIEW
2.1. Competitive advantage
133 Definition
There is not many clear definitions of competiti'e ad'antage in textboo0s of strategic
management
)ill and Aones #3<<@$ say a company has a competiti'e ad'antage -hen its profit rate is
higher than the a'erage for its industry and it can sustain this ad'antage to maintain high
profit rate o'er a number of years
This definition uses profit rate as a measurement to rate the competiti'e ad'antage /n other
'ie-* -e can say that a product has competiti'e ad'antage -hen it -as chosen by a customer
after his or her comparing among se'eral similar products This definition is constructed in a
competition context /t can gi'e us better idea about competiti'e ad'antage in a competiti'e
en'ironment
The heart of competiti'e ad'antage lies in the concept of 'alue creation The 'alue of a
product to a consumer may be &* the price that company can charge under competiti'e
pressure may be P* and the cost of producing that product is C the company profit is equal to
P>C -hile the consumer benefit equal to &>P 8or t-o similar products -ith the same price
P3BP1* product 3 has competiti'e ad'antage if &3C&1 /n other -ords* product 3 has
competiti'e ad'antage because it brings greater 'alue to customer This -ill be the focal point
for us to formulate strategy and implementation plan The follo-ing section -ill discuss the
source of 'alue creation and then competiti'e ad'antage for a product
Customer6s benefit
Producer6s benefit
& P C
8igure 13 &alue to customer and producer
+ource: )ill and Aones #3<<@$
:
131 ,eneric building bloc0s of competiti'e ad'antage
Many factors contribute to competiti'e ad'antage of a company But in general* they can be
classified into four generic categories:
> Efficiency: is the ratio bet-een a company6s output to its input The more efficient the
company* the more outputs it can produce from certain units of input or in other -ords* it can
produce the same amount of outputs from less inputs thus efficiency help company to achie'e
lo- cost competiti'e ad'antage The most important component of efficiency for a company
is employees6 producti'ity 9ith other factors hold constant* the company -ith its highest
employee producti'ity typically ha'e the lo-est cost of production
> %uality: high quality of a product or ser'ice has strong contribution to company6s
competiti'e ad'antage 8irst* high product quality gi'e positi'e perception of customer about
product* increase customer preference thus company can charge higher price for higher
quality +econd* high quality comes from greater efficiency and lo-er defecti'e rate 5o-
defecti'e rate requires less time to fix substandard product and reduce the labor cost for fixing
it These t-o effects combined bring company higher profit rate
> /nno'ation: inno'ation can be defined as ne- -ay company produce froduct or product its
self /nno'ation can be in the form of process* product design* management system*
organi.ation structure or e'en in the business practice of the company According to )ill
andAones* inno'ation can be the most important component of competiti'e ad'antage /t is the
single most important to the differentiation of product or process that the competitors do not
ha'e (niqueness can allo- company to charge higher price for its products Example of
product inno'ation is +ony for 9al0man* )e-llet Pac0ard for la.er printer They are the
poineer company in each 0ind of product 9hen competitor immitate the product* +ony and
)P ha'e extablished leader position in the mar0et and strong customer loyalty -hich is hard
for competitors to attac0
> Customer responsi'eness: to be 'iable* any company must find their customer and satisfy
their needs The process of ad4usting* tailoring product features to mar0et -ill be crucial to
company competiti'eness Another aspect of customer responsi'eness is customer respond>
time* -hich is the time require company to bring a product to customer hand 8or
manufacturing company* customer response'eness is the time needed to fill an order* for a
band* it is the time to process the loan* and for a supermer0et* it is the time customer ha'e to
-ait in chec0 out line
Besides* the quality of aftersales ser'ice and support also affect customer satisfaction and
consequently company competiti'eness
2.2. Competitive strategy and competitive advantage
A strategy is a specific parttern of decisions and actions managers ta0e to achie'e the
organi.ation6s goals Any firm can consider three le'el of strategy: corporate strategy*
business or competiti'e strategy* and functional strategy
113 Three le'el of strategy
D Corporate strategy: corporate strategy is primarily about the strtegic choice of direction for
the company as a -hole /t raise three 0ey issues facing the corporation: #3$ the firm6s o'erall
strategy to-ard gro-th* stabality or retrenchment #directional strategy$E #1$ The industries or
mar0et in -hich the firm competes through its products and business unit #portfolio strategy$E
?
and #=$ The maner in -hich management coordinates acti'ities and transfer resource and
culti'ate capabilities among product lines and business units
D Business strategy: Business strategy or competiti'e strategy refers to the plan of actions that
management adopt to use a company6s resource and its distinti'e ability to gain a competiti'e
ad'antage o'er its ri'als in a mar0et or industry Porter #3<@:$ proposed three generic
strategies company can pursuit to outperform its competitors in the mar0et:
> 5o- cost strategy: strategy to design* produce and mar0et a comparable product more
efficiently and thus cheaper than its competitors do Cost leadership strategy aims at the mass
mar0et and require aggressi'e construction of lo- cost structure including efficient scale
facilities* 'igorous pursuit of cost reduction* tight control of o'erhead cost and cost
minimine.ation in areas li0e "FD* ser'ice* salesforce* ad'ertising and so on 5o- cost
structure allo-s company to charge lo-er price and thus allo- company to compete -hen
fierce competition exist -ith a quite reasonable good profit
> Differentiation strategy refers to strategy to deli'er uniqueness and superior 'alue to buyers
in terms of product quality* special feature* or after sales ser'ices Differentiation forcus also
at the broad mar0et and in'ol'es the creation of a product or ser'ice that is percei'ed through
the industry as unique (quine product enables firms to charge higher price for its product
The specialty can come from brand image* technology* features* dealers or dealer net-or0
Differentiation is 'iable for abo'e>a'erage profit The research of Ca'es and ,hema-at
#9helen and )unger pp3=3>3=?* 1222$ sho-s that differentiation generate higher profit than
lo- cost strategy because it creates higher entry barrier
> 8ocus strategy: focus strategy can be cost focus or differentiation focus This strategy
focuses to ser'e only specific needs of a mar0et segment (sually* this strategy is pursued by
small company to a mar0et niche* -hile mass mar0et has been -ell dominated by other larger
companies
D 8unctional strategy: of the three le'els* functional strategy is the lo-est le'el and it is
clearly must comply to business strategy 8unctional strategy is ta0en by a functional area to
archi'e corporate and business ob4ecti'e and strategy by maximi.ing resource utili.ation /t is
concern -ith de'eloping and nurturing distincti'e competency 8rom distincti'e competency*
firm can transform them to any of four building bloc0s of competiti'e ad'antage eg quality*
inno'ation* customer responsi'eness and efficiency and then to lo- cost ad'antage or
differentiation
2.3. Strategy formulation process
+trategy formulation process refers to the process by -hich managers choose a set of
strategies for a enterprise This process can be bro0en do-n into fi'e ma4or steps: #3$
+election enterprise6s mission and goalsE #1$ analysis of external en'ironment to identify
opportunities and threatsE #=$ analysis of organi.ation6s strength and -ea0nessE #;$ selection
of strategies built on organi.ation6s strength and other external factors and correct its
-ea0ness in order to ta0e ad'antage of opportunities and counter threatsE and #:$ strategy
implementation
1=3 Mission and goals
The beginning point of strategic management process is to re'ie- andGor selecting ne-
organi.ation6s mission and ma4or goals This statement -ill be the foundation for strategy
formulation and implementation in later steps
H
The mission sets out the reason -hy the organi.ation exist* -hose benefit it ser'e and -hat it
should do 8or example* the mission of an airline is to pro'ide con'enience and safety flight
to its customers
Ma4or goals are the targets that an organi.ation -ants to fulfil in long or medium term Most
profit>see0ing organi.ations place maximi.ation of profit near the top of their goals 7ther
possible goals are to get the largest share in the mar0et that a company currently competes in
t-o years for example* or to get annual sale gro-th of 3HI etc ,oals should be specific and
measurable -ithin a time frame
1=1 External analysis
Aa0er #3<<:$ presented a comprehensi'e frame-or0 for analysis external and internal
en'ironment for an organi.ation
External analysis focuses on examination of rele'ant external elements to organi.ation The
ob4ect of this analysis is to identify threats and opportunities facing organi.ation both present
and potential An opportunity is a trend or e'ent tat could lead to significant up-ard change in
sales and profit pattern> gi'en appropriate response A threat is a trend or e'ent that -ill result
in the absence of strategic mo'e* in a significant reduction in sales and profit figures External
analysis including the follo-ing analysis:
D Customer analysis includes identifying the organi.ation6s customer segments and each
customer6s moti'ations and unmet needs +egment identification defines alternati'e product
mar0ets and thus structure the strategic in'estment decision #-hat in'estment le'els assigned
to each mar0et segment$ The analysis of customer moti'ation pro'ides information needed to
decide -hether the firm can and should attempt to gain or maintain sustainable competiti'e
ad'antage An unmet needs> the need that currently not being met by existing products> can
be strategically important because it may represent a -ay that entrenched competitors can be
dislodged
D /ndustry analysis* firstly introduced by Porter #3<@2$ -ith the fi'e>force model* identifies
the important impact of fi'e elements to the performance of an enterprise The fi'e forces are:
threat of ne- entrants* ri'alry among existing firms* threat of substitute product* bargaining
po-er of buyers* and bargaining po-er of suppliers
> T"#$%& '( )$* $)&#%)&+: !e- entrants to an industry typically bring to it ne- capacity* a
desire to gain mar0et share and substantial resource !e- entrants thus are a threat to
established corporation The threat of entry depends on the entry barrier of the existing
companies in the industry An entry barrier is an obstruction that ma0es it difficult for ne-
entrants to enter and compete in an industry Entry barrier can be economic of scale* product
differentiation* capital requirement* s-itching cost* assess to distribution channel* and
go'ernment policy
> R,-%.#/ %0')1 $2,+&,)1 (,#0+: firms operating in competing mar0et are mutual dependent
to each other 7ne firm6s mo'e can ha'e impact on it competitor thus lead to retaliation and
counter effect According to Porter #3<@2$ intense ri'alry resulted from se'eral factors
including: number of firms* rate of industry gro-th* product or ser'ice characteristic* amount
of fixed cost* capacity* height of exit barrier
9hen de'eloping strategy* Aa0er #3<<:$ suggested -hat -e need to understand about the
competitors includes:
@
Performance: sales* sales gro-th* and profitability signal ho- healthy and formidable a
competitor is
/mage and personality: ho- is the competitor positioned and percei'edJ
7b4ecti'es: -hat does competitor commit resources to* for high gro-th or differentiation
strategyJ
Current and past strategies* -hat are the implications for future strategic mo'eJ
Culture: -hat is the most important to the organi.ation> cost control* entrepreneurship* or
the customersJ
Cost structure: does the competitor ha'e cost ad'antageJ
+trength and -ea0ness: is the brand image* distribution or "FD a strength or -ea0nessJ
> T"#$%& '( +34+&,&3&$ 5#'637&+ '# +$#-,7$: substitute products are those products that appear
to be different but can satisfy the same needs as another product Tea can be considered a
substitute for coffee To the extend that s-itching cost are lo-* substitute product can ha'e
strong effect on an industry +ubstitute products can put a ceiling price that firm -ithin the
industry can profitable charge
> B%#1%,),)1 5'*$# '( 43/$#+: Buyers in an industry can affect firm6s profitability through
their ability to force price do-n* bargain for higher quality or more ser'ices* and play
competitor against each other A buyer or group of buyers is po-erful if some of follo-ing
factors hold true:
A buyer purchase a large proportion of seller6s product or ser'ice*
A buyer has the potential to integrate bac0-ard by producing the product itself*
Product is standard and there are plentiful of supplier*
Buyer is sensiti'e to price and ser'ice difference* or
The purchased product represents high percentage of buyer6s cost so it is -orth to shop
around for a lo-er price
> B%#1%,),)1 5'*$# '( +355.,$#+: suppliers can affect industry through ability to raise price
or reduce the quality of goods or ser'ices purchased A supplier or group of suppliers is
po-erful if some of the follo-ing hold true:
the supplier industry is dominated by a fe- companies but sell to many*
/ts product or ser'ice is unique or it has built up high s-itching cost*
+ubstitute products are not readily a'ailable*
+upplier can go for-ard and compete directly -ith current customers #li0e /ntel company
can produce computers$* or
<
The purchasing industry buys only a small proportion of the supplier group6s goods and
ser'ices thus unimportant to the supplier
> +ocietal en'ironment: the strategists must also be a-are of societal factors that do not ha'e
short>run impact in firmK6 performance but they usually influence firmKs long run decision
8our important categories of societal are:
economic forces that regulate the exchange of material* money* energy and information
technological forces that generate problem sol'ing in'entions
political forces that allocate po-er and pro'ide constraining and protecting la- and
regulation
socio>cultural forces regulate 'alues* custom of society
)ill and Aones #3<<@$ urge that the fi'e>force model has its o-n limitation The model #3$
presents a static picture of competition that slights role of inno'ation and #1$ de>emphasi.es
the significant of indi'idual company differences -hile o'er emphasi.e the important of
industry structure as determinant of company profit rates They argue that inno'ation and
company differences play a 'ital role in competiti'e position of a company and then its profit
rate
A more interacti'e analysis of competiti'e en'ironment is proposed by Day and "eibstein
#3<<H$ They recommended that -hile de'eloping competiti'e strategy* managers must
understand the ad'antage in a dynamic changing competiti'e en'ironment and anticipating
competitors6 actions before formulating and implementing competiti'e strategy
1== /nternal analysis
The third step in strategic management process in'ol'es finding out firm6s strength and
-ea0ness +ales* sales gro-th and profitability are ma4or measurements of business
performance and past strategy The analysis co'ers resources* capability that is 'ital to build
and sustain competiti'e ad'antage "esource and capability are distincti'e competencies lying
in different functional departments li0e mar0eting* manufacturing* manager or employee6s
s0ills etc Company strength leads to superior performance in quality* efficiency* inno'ation
and customer responsi'eness -hile -ea0ness leads to inferior performance
1=; +trategy formulation and strategic choice
The next step in'ol'es generating a series of strategy alternati'es gi'en company internal
strength and -ea0ness and its external opportunities and threats The comparison of strength*
-ea0ness* opportunities* threats #+97T analysis$ is to identify strategy that align* fit a
company6s resource and capabilities to the demand of the mar0et in -hich the company
operates 9ithin the specified alternati'es* managers should choose the best one to follo-
8or business strategy* each of three generic strategies can be pursued gi'en certain resource
and capability as described in the follo-ing table:
32
Table 13 ,eneric competiti'e strategy and required competencies
+trategy Cost leadership Differentiation 8ocus
Commonly
required
s0ills and
resources
+ubstantial capital
in'estment and access to
capital
Process engineering
s0ills
/ntensi'e super'ision of
labor
Products designed for
ease in manufacture
5o- cost distribution
system
+trong mar0eting abilities
Product engineering
Creati'e flair
+trong capability in basic
research
Corporate reputation for
quality or technological
leadership
5ong tradition in the
industry or unique
combination of s0ills dra-n
from other businesses
+trong cooperation from
channels
Combination of
common s0ills
directed at the
particular
strategic mar0et
Common
7rgani.ation
requirement
Tight cost control
8requent* detailed control
reports
+tructure organi.ation
and responsibilities
/ncenti'es based on
meeting strict
quantitati'e targets
+trong coordination among
functions in "FD* product
de'elopment* and mar0eting
+ub4ecti'e measurement and
incenti'es instead of
quantitati'e measure
Amenities to attract highly
s0illed labor* scientists* or
creati'e people
Combination of
the common
organi.ational
requirement
directed at the
particular
strategic mar0et
+ource: Adapt from Porter* Michael E* 3<@2 Competitive Strategy: Techniques for Analyzing
Industries and Competitors 3<<@ Ed -ith ne- introduction* !e-Lor0* The 8ree Press* pp
;2>;3
+trategy e'aluation: ha'ing de'eloped alternati'e strategies* -e need to e'aluate their
suitability and feasibility A strategy can be 'alued through three criteria dimensions:
- Criteria of suitability -hich attempt to measure ho- far the proposed strategy fit the
situation in strategic analysis Does strategy capitali.e on company6s strength* o'ercome
its -ea0ness and counter en'ironment threatsJ
- Criteria of feasibility that assess ho- a strategy might -or0 in practice 8or example*
-hether strategy is achie'able in resource term
- Criteria of acceptability that assess -hether the consequences of proceeding -ith a
strategy are acceptable 8or example* -ill it be sufficiently generate profit or gro-th
expected by management or the ris0 in'ol'ed in e'ery strategy
1=: +trategy implementation
)a'ing chosen a strategy* the next step is to put strategy into practice Managers should
choose an appropriate organi.ational structure and control system to implement selected
33
strategy 7rgani.ational structure defines role and responsibility of each manager and
personnel -ithin a business unit as -ell as reporting relationships /f the old organi.ational
structure is unfitted* managers should de'elop a ne- one The control system is designed to
measure the performance and control the actions of the sub>units Measures li0e sales* mar0et
share* margin* profit can be used to monitor and control performance /n addition* manager
should also decide -hen to re'ie- and re'ise strategy This -ill be the feedbac0 loop for the
-hole process of strategic management
31
3. CHAPTER 3
EXTERNAL ENVIRONMENT ANALYSIS
3.1. Societal environment
=33 ,o'ernment and legal factors
+ince 3<@H* &ietnam had experienced through a reform process called Mdoi moiN The reform
has changed the face of the economy /t allo-s an open door policy that encourages
in'estment from foreign countries and all economic sectors in the country The strategic
direction for the economy is the free mar0et mechanism -ith state regulation to-ard socialist
orientation
After fifteen years of reform process* the legal system is continuously built up and updated to
help business acti'ities go smoothly 8irst* &ietnam has a stable go'ernment to manage the
country +econd* the legal system has built general rules of the game for business acti'ities
The ci'il code passed by the !ational Assembly regulates ci'il relationship in e'ery day life
and business transactions The code also includes articles regarding protecting intellectual
property and copyright These regulations assure companies that in'est in ne- products or
technology -ill be protected by la- to reco'er their de'elopment costs 5a-s encouraging
foreign in'estment* domestic in'estment are gradually passed to mobili.e more capital and
resources to business acti'ities
The enterprise la-* -hich came into affect one year ago* has brought about significant*
encouraging outcome beyond expectation in terms of economic de'elopment and
administrati'e reform About 3=*:22 ne- businesses -ere established until the end of last
year* triple the figure for 3<<< They could begin operations immediately after establishment
as the ,o'ernment scrapped 3:2 licenses Than0s to the ,o'ernmentKs abolishment of
licenses for a number of trades and its permission for enterprises of all economic sectors to
engage in the import and export of goods and ser'ices not banned by the la-* many
businesses can operate in ne- fields such as shipbuilding* and agro>product and handicraft
export The number of businesses engaged in production* processing and export has soared
and the business forms are more di'erse !e- 4oint stoc0 companies numbered ;;2* higher
than the combined figure for the pre'ious nine years The ,o'ernment -ill pro'ide support
through in'estment in infrastructure de'elopment including impro'ements to the
transportation* telecommunications and /T industries
/n 3<<2>3<<3* the ,o'ernment has a policy to establish general state>o-ned corporations in
ma4or industries to create synergy from existing state>o-ned companies in each industry The
goal of this policy is to create big and strong general corporations -ith huge operation
capacity to increase the competiti'eness of each industry in local and international mar0et
Complying this policy* the &ietnam Textile and ,arment Corporation #&/!ATEO$ -as
established in 3<<: in textile and garment industry The role and mission of &/!ATEO is
discussed in +ection =1
The textile and garment industry is an important one in &ietnam economy /n 3<<@* this
industry scored the highest export turno'er among exporting goods* about P3=: billion* and
textile and garment products is al-ays one of top three export goods #the others are crude oil
and rice$ As a result* this industry -ill continue to recei'e high priority in de'elopment
policy of the go'ernment During period of 1223>122:* the go'ernment plans to in'est in the
industry &!D =:*222 billion including &!D 31*222 billion for &/!ATEO By 122:* the
3=
target export turno'er of the industry is P; billion and create t-o million 4obs Till 1232* the
total soft loan the go'ernment tend to release amount to &!D ?:*222 billion and the &AT tax
for the industry -ill be cut a half to :I during this period #&ietnam Economics Times*
31G32G22$
7n the other hand* &ietnam plans to enter 9T7 in 122; and comply -ith A8TA requirements
in 122? This -ill represent a critical challenge to textile and garment industry since its
products must compete directly -ith imported goods -ithout go'ernment support in terms of
tax and non>tariff measures
=31 Economic factors
During the last decade* the &ietnam economy has been gro-ing -ith the a'erage gro-th rate
of HH?I )o-e'er* after se'eral year of high gro-th rate in 3<<1>3<<H* in 3<<@* the are
some signals to sho- the economy -as slo-ing do-n /n that year 3<<@* ,DP gre- only
?3I #Table =3$ Especially in 3<<<* due to the affect of Asia crisis* ,DP gre- only ;HI /n
1222* the economy o'ercame the hard time and sho- its gro- trend again its ,DP gro-th
raise to ?HI
Table =3 ,DP gro-th rate in 3<<1>1222 period
Lear 3<<1 3<<= 3<<; 3<<: 3<<? 3<<H 3<<@ 3<<< 1222
,DP #I$ @?: @2H @@; <:; <=; @@ ?3 ;H ?H
+ource: ,eneral +tatistical +er'ice* Statistical Year Book !!"# !!! and other sources
Although the economy has been gro-ing* it has its o-n -ea0ness The quality and efficiency
of the economy is lo-* represented in high manufacturing cost and this cost is increasing
Manufacturing cost in the economy as a -hole account for ;@I in 3<<? and increased to
:2:I in 3<<< of total goods 'alue 7f -hich* manufacturing cost for industrial goods
increased from :HI to :@:I* for ser'ice industry increased from 1@I to =:I Therefore* the
incremental 'alue #,DP$ of manufacturing and ser'ice is belo- the manufacturing 'alue of
these industries
The purchasing po-er in the economy is still -ea0 Although the ,DP per capita in 1222 is
estimated to reach P;22 this year #Table =1$#+ai,onTimes9ee0ly 1=G31G22$ an increase of
3=@I o'er the pre'ious year but the purchasing po-er in the society is not increased at the
same le'el /n 3<<<* the total sales of retail goods increase 1>=I compared -ith the pre'ious
year The retail trade 'olume representing high 'alue in ser'ice industry* gre- at only 1I /f
-e ta0e into account the inflation factor* the retail trade 'olume did not gro- o'er the
pre'ious year
But retail consumption gi'es positi'e signals in 1222 -hen the retail trade 'olume stand
higher The Ministry of Trade estimates total sales of retail trade and ser'ices in 1222 at
&!D13:*222 billion* up 3=1I from 3<<< Per capita spending of retail goods and ser'ices
-as &!D1H; million* up H@I on 3<<< The total sales of retail trade and ser'ices this year
are expected to increase to &!D1=:*222>1;2*222 billion This -ill be good ne-s for
consumer>goods producers and ser'ice pro'iders since people are -illing to spend money and
they can increase their turno'er
3;
Table =1 ,DP per capita in 3<<? to 1222 period #(nit 3*222$
Lear 3<<? 3<<H 3<<@ 3<<< 1222
,DP per capita =*?32 ;*2@< ;*HH2 :*2H< :*H@2
,ro-th rate #I$ > 3=1 3?? ?; 3=@
+ource: +ai,onTimes #=2G31G<<$* +aigontimes-ee0ly #1=G31G22$
/n conclusion* &ietnam economy has o'ercome tough time and the economy is entering a
booming period again -ith increasing purchasing po-er This is a good trend for garment
industry
=3= +ocial* cultural and demographic factors
&ietnam has young population and it ran0 3=
th
in the -orld in terms of population 9ith the
population of H?= million* this is a large potential mar0et )o-e'er* HHI of the population
li'ing in rural area ha'e lo-er income compared -ith people li'ing in urban area This
income gap leads to the differences in buying pattern* product requirement* and consuming
style (rban people are more sophisticated -hen buying goods* they require ne- design*
color* quality* and brand>name "ural people emphasi.e more on price and durability
&ietnamese people used to prefer imported goods due to their high quality Although imported
goods are more expensi'e* people are -illing to pay the premium to choose the good products
in their perception )o-e'er in the past se'eral years* domestic goods emerged as fa'orite
choice for local citi.en than0s to their good and stable quality Domestic manufacturers in
many industries li0e &inamil0 dairy products* Thien 5ong ball>point pens* BitiKs foot-ear*
&inh Tien noteboo0s* Casumina tires and tubes etc* has gained big mar0et share and defeat
imported goods in the mar0et 5ocal consumers are changing to buy domestic goods since
they ha'e comparable quality -ith imported goods but at substantial lo-er price
=3; Climate and -eather factors
The -eather condition in &ietnam differ substantially bet-een t-o regions !orth and +outh
/n the +outh* there are t-o seasons: dry and rainy -ith the a'erage temperature ranging from
13
o
C to =;
o
C in the -hole year
/n the !orth* there are four distincti'e seasons -ith the temperature conditions differ
significantly among four seasons /n summer* it is hot -ith the daily temperature 'aries
bet-een 1: to =H
o
C But in -inter* the cold -eather -ith temperature ranging from < to 3:
o
C
during -inter monsoon #!ortheastern seasonal -ind flo-s$ The temperature in -inter is
affected by -inter monsoon #-ind flo-$ compliment -ith light rain The -eather changes to
cold during -ind flo-s coming from the north blo-ing through the area that dri'e the
temperature do-n
The a'erage temperature in )anoi during these -ind flo-s 'aries bet-een 32 to 3;
o
C The
temperature can be lo-er -hen strong -ind>flo- hit the region Each -ind>flo- -ill ha'e
effect to -eather conditions from =>? days #= to ? days the -eather is cold$ but sometimes
se'eral -ind>lo-s hit the region consecuti'ely and the cold -eather can prolong for se'eral
-ee0s But -hen the -ind flo- is o'er* the -eather is -armer -ith temperature during
daytime ranging from 3?>13
o
C #Appendix =3 presents temperature condition in 3<<<>1222
-inter season$
3:
The -inter usually begins at the end of !o'ember e'ery year -ith 1>= -inter -ind>flo-s
dri'ing do-n temperature* after that it is -arm time 9inter -inds hit the !orth more
frequently from the second part of Aanuary till the end of 8ebruary 9inter often ends in April
of the next year This complicated -eather condition in the !orth lead to the need for 4ac0ets
andGor other substitute products that become the must>be clothes in -inter* especially our
habit in tra'elling to use motorbi0e or motorcycle But frequent changes in -eather condition
during -inter lead to sophisticated requirements for 4ac0ets that -ill be discussed in the data
analysis section Experience sho- that the -eather condition has strong effect on 4ac0et sales6
re'enue in domestic mar0et* specifically in the !orth The -eather condition in +outhern
region does not require clothes li0e 4ac0ets therefore the mar0et for 4ac0et in domestic mar0et
is only in the !orthern area
=3: Technological factors
Technology is important in garment industry Technology includes machines* manufacturing
technique and management /n the last decade* &ietnam textile and garment industry has
opportunities to moderni.e its technology through its o-n effort and through 4oint 'enture and
foreign direct in'estment (ntil December 3<<H* there are 3;: foreign and 4oint>'enture
pro4ect in'ested P3? billion in the textile and garment sector 7f -hich @; pro4ect are in
garment sector -ith the capital in'ested -orth P3<HH million Domestic firms also in'est in
ne- equipment and technology About P122 million is being in'ested e'ery year in ne-
factory andGor replacement of old equipment in existing factories Ducgiang* ,arment 32*
and &iettien companies are those in'ested most hea'ily in ne- equipment in 3<<H* in -hich
,arment 32 in'ested &!D @ billion !e- technology and equipment increase quality*
producti'ity thus allo-s companies to increase their product competiti'eness
Machinery in garment industry is di'ersified -ith automation and computeri.ed equipment
can be applied to any stage of se-ing process There are many 0inds of machine such as
spreading* dra-ing* cutting* se-ing* embroidery* poc0et -elting machine etc Machines used
in garment industry are mostly imported from Aapan* ,ermany* and the (nited +tate
3.2. Customer analysis
To collect data on customers6 requirement on 4ac0et and their perception to-ard 4ac0ets made
by Thaloga* a sur'ey -as conducted during late December 1222 and early Aanuary 1223
8irst* a pilot sur'ey -as conducted by inter'ie-ing 31 customers for deep understanding
about their requirement and their understanding about 'ague concept li0e product quality*
color* and design of the product
+econd* a questionnaire sur'ey -as conducted to collect data A con'enience sampling
method -as applied %uestionnaire are deli'ered at Thaloga fashion shop 1:2 Minh Qhai
street* at =< !go %uyen street -here six garment company6s sales representati'e offices are
around* and at the ne- year fair at ,iang &o /nternational Exhibition and 8air Center
Targeted respondents are adults -ho can use and buy 4ac0ets 7ne hundred eighty
questionnaires -ere deli'ered and one hundred fifty t-o -ere returned 7f -hich one
hundred thirty t-o are considered 'alid and used for analysis %uestionnaire sample is
included in Appendix =1
=13 +ample characteristics
The sur'ey intended to identify adult customers6 requirement for 4ac0et and their perception
to-ard Thaloga6s 4ac0ets Therefore* all respondents in the sample are abo'e 12 year old
3?
,roup age of 12>=2 is dominant in the sample They account for H:@I of the sample
"espondents -ithin =2>;2 represent second population in the sample -ith 3<I #Appendix
== Table 3$
9omen represent the ma4ority in the sample -ith ?1I #Table 1$ A third of respondents are
married They can be important customers as they can purchase clothes for them and for other
family members #Table =$ /n other aspect :<I of respondent say that they buy clothes for
both themsel'es and for family members #Table ;$ There is statistical relationship bet-een
marital status and buying pattern HHI of married people buy clothes for themsel'es and for
other family members -hile the percentage of single respondents buy clothes for themsel'es
or buy for both is nearly balance #Table :$
"espondents from a'erage income class presents for large proportion ;HI of respondents
ha'e a'erage monthly income in the range of &!D2:>3 million 7ther =1I of respondents
ha'e a'erage monthly income bet-een &!D3>1 million "espondents -ith monthly income
higher than &!D1 million only represent around 3HI in the sample #Table ?$
Qind of -or0 may ha'e impact on requirements of customers to-ard 4ac0ets "oughly :2I of
people in sample sur'eyed -or0 in office People -or0ing outside or -or0 require tra'elling
account for nearly 12I of sample #1? people$ #Table H$
=11 Customers buying pattern
!early <2I of the respondents replied that they buy less than t-o 4ac0ets per year More
specifically* about half of sample quoted that they buy from one to t-o 4ac0ets per year* the
other nearly =:I of respondents ans-ered that they buy one 4ac0et -ithin t-o years 7nly
about 32I of sample buy more than three 4ac0ets per year This represents the upper limit for
4ac0et usage of customers #Table @$
9hen buying 4ac0ets* t-o possible actions can occur* they can buy immediately -hen they
find a suitable clothes or they can consider se'eral alternati'es then choose +urprisingly*
nearly ?2I of customers in sample -ill buy right after they choose a suitable 4ac0ets
Customers -ith careful buying decision only account for ;2I of the sample #Table <$ This
phenomenon can be explained as -hen customers going into a close shop or retail store* they
ha'e already ha'e certain perception about price and quality le'el of clothes in that shop and
they are confident to purchase
8or the place -here customers usually buy 4ac0ets* companies6 retail stores and sales agent
are the most frequent place to buy Approximately :2I of respondents buy 4ac0et through this
distribution channel The next t-o other common places are in trade fair or in fashion
#clothes$ shop #Table 32$ This buying habit can be important for company to channel its
products to different distribution channels and design distribution net-or0
=1= Customers needs on the products
Product itself: customers need follo-ing benefit from the product:
/t can bear light rain
/t must gi'e sufficient -arm le'el
Customers prefer a 4ac0et that they can use to go to 'arious places and it can fit many
contexts 8or example* they can use at -or0* going to picnics* funeral* or other
3H
acti'ities 8i'e layer 4ac0ets are least preferred T-o or three layer 4ac0ets are li0ed
more due to its tightness and con'enience
Aac0et should fit the body form of customers
8or fabric materials* the respondents roughly agree that fabric material is of non>dust
catching type To a lo-er degree* they -ant fabric material resistance to fire from
cigarette or match
Product color: "espondents agree that they li0e elegance and simple color Aac0et -ith
colorful color mix* too bright or hea'y dar0 colors are considered unattracti'e in customer
perception #/tem -ith score near = up can be considered unattracti'e$
Design: again* simplicity in design for 4ac0ets is preferred )o-e'er* fashionable design
-ith fe- styli.ed features is also preferred -ith lo-er degree and opinion of respondent
upon the issue is more di'erse than for simple design
/f there is a hat accompanied -ith the 4ac0et* respondents agree that it can be flexible to
attach or unbind from the 4ac0et #Table 33$
Among four dimensions of a 4ac0et* price are the most important element that customers
consider in ma0ing their buying decisions #Table 31$ ;2I of respondents placed price in the
first priority %uality is ran0ed second in important le'el after price that is follo-ed by color
ran0ed third in the important ladder Consider simple 'ersus fashionable design* -e can see
that simple design is more important The implication of important le'els is that it suggests a
hint for companies to compete in these important dimensions of 4ac0et /f quality is relati'ely
similar among competiti'e products* and it is difficult and costly to significantly increase
quality le'el* -e can choose to compete on price or product appearance #color* design$ /t is
critical to note that respondents6 opinion about the important le'el of four dimensions of
4ac0et is not affected by sex* age* or income le'el of respondents People in different sex or
age or income le'el group ha'e consensus assessment on the importance of four dimensions
of 4ac0et
Men and -omen ha'e different requirement about color and material of 4ac0et Men li0e
4ac0et -ith simple and plain #single or one$ color* -hile -omen do not ha'e clear idea about
they li0e or disli0e 4ac0et -ith plain color 9omen do not li0e simple color as men* they ha'e
rather di'erse opinion on this character That means 4ac0et designed for -omen should ha'e
more 'ariety in color than designed for men 9omen are more cautious -hen selecting fabric
attribute They require fabric material resistance to flame* -hile men do not consider this
aspect important #Table 3=$
"espondents in different age group ha'e different requirement on follo-ing 4ac0et6s
characters: color mix* design pattern* edge line* special feature* and fashionable design #Table
3; and 3:$ Three big age groups are identified: 12>=2 year old group #group3$* =3>=: year
old group #group1$* and =? year old up group #group =$
,roup 3 considers color mix and edge line in 4ac0et important* they require simple*
fashionable design -ith special featured style #Table 3?$
,roup 1 sees simple design as normal attracti'e* but they do not li0e edge line in the 4ac0et
T-o to three color 4ac0et* fashionable design* design feature are not preferred either #Table
3?$
3@
"espondents of group = ha'e di'erse 4udgement upon these fi'e attributes* but there are only
3< people in these groups* detail analysis of their 4udgement may be not statistically
significant
9hen examining the relationship bet-een 0ind of -or0 and respondents requirement for
4ac0et* people in different -or0 en'ironment differ only on the requirement on fashion design
7ffice respondents agree that they li0e fashion* but respondents -or0ing outside or tra'el
-hile -or0ing do not consider this issue important #Table 3H* 3@$
Because the distribution of respondents among income groups is not balanced* the comparison
of requirements among income group to 4ac0et6s attributes -ill not gi'e reliable result so the
relationship bet-een income and customers6 requirement about 'arious 4ac0et6s attributes is
not discussed further
=1; Customer perception about Thaloga6s 4ac0ets
9hen examining the frequency of customers in sample ha'e bought and used products of
different companies* it is re'ealed that Thaloga6s 4ac0ets has the most frequent use besides
imported goods #Table 3<$ Thaloga is the second most frequent bought and used by
respondents in the sample #;=I$ after imported 4ac0ets including Chinese 4ac0ets #;<I$
T-o companies follo- Thaloga are ,arment 32 and !ha Be companies -ith frequent use of
=1I and 12I respecti'ely The information in Table 3< does not indicate mar0et share of
each company in the table* but -e can understand that Thaloga might ha'e a large mar0et
share of 4ac0et in domestic mar0et* company can be the first or second position in mar0et
share in this mar0et
7n the other hand* of 3=1 'alid respondents* @< people 0no- and gi'e their assessment about
Thaloga6s 4ac0ets The most positi'e point that respondents ha'e about Thaloga6s 4ac0et is
good quality and their assessment is most consensus among other issues of 4ac0et #mean 1=3
and standard de'iation 2@1$ 8or price issue* respondents score half point bet-een agree and
neutral point for t-o question about price appropriateness and relati'e price le'el This fact
sho-s that the price of company6s 4ac0et is not more attracti'e than other companies
"espondents6 perception about color and design 'ariety is nearly neutral !umber of color and
design pattern is not more di'ersified than other companies That means the company6s
4ac0ets do not big competiti'e ad'antage o'er other companies6 /n other -ords* little
difference in term of price or differentiation can be a threat to Thaloga6s 4ac0ets and its
competiti'e ad'antage
3.3. Textile and garment industry analysis
==3 /ndustry o'er'ie-
The textile and garment industry #the industry$ is hea'ily fragmented including about ?22
enterprises engage in textile and garment business Their main business or garment companies
are manufacturing for orders from foreign customer #87B business$ and subcontracting for
commission fee for foreign garment companies #CMP business$ 7nly small percentage of
total re'enue of this garment companies come from domestic sales
The total employee in the industry is @22*222 labors 7f the ?22 firms* there are about 3=2
state>o-ned enterprises of -hich the &ietnam !ational Textile and ,arment Corporation
#&/!ATEO$ is the largest state corporation )alf of total firms are belong to pri'ate sector
#Table ==$ 8oreign and 4oint>'enture firms account for small percent in the industry* @@ firms
of 3=I* but they are large companies -ith more than 122 labors and they possess large
3<
proportion capacity of the industry #Table =;$ 8urthermore* there are about @2*222
household tailors engaged in garment ma0ing throughout the country
Table == !umber of firms in the garment industry as of 3<<@
!umber of
employee
The -hole
industry
Pri'ate
sector
Cooperati'es +tate
companies
8oreign* 4oint>
'enture firms
7'er 122 :2I ;2I 12I :2I <2I
122 or less :2I ?2I @2I :2I 32I
Total ?21 firms =;@ firms =? firms 3=2 firms @@ firms
+ource: The study of Aapan /nternational Cooperation Agency and Ministry of /n'estment*
7ctober 3<<<
Table =; Production capacity of textile and garment industry of &ietnam as of 3<<@
Product 5ocal sector I 8D/ sector I Total
Larn #ton$ H1*222 ;;;; <2*222 :::? 3?1*222
8abric #mil sqm$ =@2 ;H: ;12 :1: @22
Qnit #mil pcs$ =3 H<;@ @ 12:1 =<
,arment #mil pcs$ 1@2 H22 312 =22 ;22
+ource:&/!ATEO #---'inatexcomGstatistics$
The textile and garment industry is one of the three leading export goods of &ietnam The
export turno'er of the industry increased o'er the years #Table =:$ The export turno'er
increased gradually from 3<<; to 3<<H /n 3<<@* it did not increase due to the Asia crisis
More than :2I of &ietnam export come to Asia countries But in 3<<< and 1222* the
industryRs export turno'er raise again and the reco'ery of regional economies promises a
higher export in the years to come
Table =: Export turno'er of textile and garment product in 3<<; to 1222 #in P million$
Lear 3<<; 3<<: 3<<? 3<<H 3<<@ 3<<< 1222 1223#Target$
Export ::; @:2 3*3:2 3*=;< 3*=:3 3*?@1 3*@3: 1*=22
,ro-th #I$ > :=; =:= 3H= 23 1;: H< 1?H
/mport D > > @1< 3*3H= H3H > > >
/mportGExport DD H1 @?<: :=
D /mport of material and accessories for textile and garment
DD Percent of import material to export turno'er
+ource: &ietnam Economics Times* $ietnam and %orld &conomy !!"'!!!
!ote that @2I export turno'er of garment industry is through commission business mainly
-ith )ong Qong* Tai-an* +outh Qorea* and Aapan :2I of commission contract is export to
Aapan The remaining :2I of commissioning business is -ith )ong Qong* Tai-an* and +outh
Qorea partners selling finished goods to E( mar0et
12
There are t-o mar0et categories for &ietnam6s export garment: quota and non>quota mar0et
The quota mar0et includes E(* Canada* And (+ !on>quota mar0ets are Aapan* Tai-an*
+outh Qorea* and )ong Qong These t-o mar0et categories share the same proportion #:2I$
of total export 'alue
Despite &ietnamese garment products ha'e appeared in many sophisticated mar0ets* domestic
sales of local garment companies account for small proportion ,arment companies had not
paid attention to domestic demand There are about do.en large garment companies that ser'e
the domestic mar0et The proportion sales in domestic mar0et account around H*:>32I total
sales 'alue of garment firms ,arment 32 has the highest domestic sales ratio of 3H3I
Thaloga domestic sales account for 33I of company total6s re'enue This fact represents a
great potential for garment enterprise to capture domestic mar0et share
Although the industry has experienced gro-th in export turno'er* there are some problems
inside 8irst* the textile sector does not gro- as fast as garment sector* textile companies can
satisfy only 12>=2I of fabric needs of garment sector A large quantity of high quality fabric
and accessories are imported #=22>;22 million square meters per year$ The export 'alue in
some years is also gi'en in table =: Therefore in finished garment product for 87B and
commissioning business* local material amount to merely 32>3:I 8or many contracts*
customers supply all fabric and accessories* domestic companies only do the processing part
/n other -ords* high export turno'er is accompanied -ith high import 'alue of material and
accessories /n 3<<H* the textile and garment industry reported a increase 3?I in re'enue and
3;I in manufacturing goods There is not profitability data but an o'er'ie- of export
turno'er compare -ith imported material #Table =:$* -e can see the profitability of the
industry is limited
+econd* &ietnam garment companies lac0 experience in mar0et research* mar0eting* and
assessing to ne- mar0ets This is the ma4or obstruction for the industry to export or sell its
product under its o-n brand name /n practice* garment companies ha'e to sign contracts -ith
middleman in Tai-an* )ong Qong* or +outh Qorea to export their products under foreign
brand names
Third* management capability in many textile and garment companies is limited The decision
ma0ing process is slo- 8or example* -hen a company has a in'estment pro4ect of more than
&!D:22 million* the regulation requires a bidding to select a 'endor* a process that can
prolong se'eral months to complete Moreo'er* they are also required to get appro'al of
go'ernment of correspondent ministry of corporation headquarter
/n textile and garment industry* the &ietnam !ational Textile and ,arment Corporation
#&/!ATEO$ is the largest state>o-ned enterprise group Established in 3<<:* &/!ATEO
operates simultaneously as manufacturer* exporter* importer* and distributor #both -holesale
and retail$ Main responsibilities of &/!ATEO are:
To carry out in'estment* production* supply* distribution* export* import acti'ities in
respect of the textile and garment business acti'ities
To enter into 4oint 'enture or business cooperation arrangements -ith &ietnamese and
foreign economic organi.ationsE
To target* de'elop and expand local and o'ersea mar0ets to pro'ide guidance to and
assign 'arious member enterprises to rele'ant mar0ets
13
To conduct research and application of ad'anced technologyE to reno'ate technology and
equipment in conformity -ith the general de'elopment strategyE
To pro'ide training and refreshing courses to management and technical staff and s0illed
-or0ers
At present* &/!ATEO manages forty>se'en member enterprises engaging in yarn spinning*
fabrics* -ea'ing and garment ma0ingE one financial companyE three mechanical repair and
spare parts manufacturing enterprisesE one textile and garment economic and technical
research instituteE one model and fashion research institute and three -or0ers training schools
&/!ATEO also establishes its branch offices in )aiphong and Danang and t-o trading ser'ice
companies in )anoi and )o Chi Minh City &/!ATEO has trading relationship -ith more
than 122 companies in ;2 countries and regions As an important organi.ation in garment
industry -hose one function is to help the +tate ,o'ernment in orientation and de'elopment
of local textile and garment sectors &/!ATEO is an important force in the en'ironment of the
industry
==1 /ndustry attracti'eness and competitor analysis
&ietnamese garment mar0et is supplied by garment companies* household tailors* and
imported clothes The household tailors account for ?2I of the domestic mar0et* according to
a study by +EC7 +ector Consulting #A/CA* 3<<<$ The remaining of the mar0et is supplied by
legal import clothes #:I$* illegal import primarily from China #3:I$* used clothes supplied
through aid program or smuggled through border of Cambodia or China #32I$ and di'ersion
of exports product to domestic mar0et #32I$
The household tailors gain some ad'antage o'er other companies in domestic mar0et
&ietnamese prefer tailor>made clothes because ready>made garment usually made -ith
standard si.e of foreigners to export so they are of large si.e Tailor>made clothes can be built
to fit customer body and they can be customi.ed )o-e'er* for a specific product li0e 4ac0et*
household tailors can not compete in large scale because ma0ing 4ac0et requires se'eral
speciali.ed equipment and large in'estment that 'ery fe- single household can afford Thus
the competiti'e forces in the mar0et only comprises imported goods #legal or illegal$ and
domestic firms producing 4ac0ets The next section -ill apply the fi'e>force model of Michael
Porter to analy.e the competiti'e force in the industry
Threat of ne- entrant
Technology and equipment in garment industry is a'ailable and easy to assess 8or a small to
medium firm employing from ?2>3:2 -or0ers* and ;2>?2 se-ing machines* an initial
in'estment of &!D?22>3*222 million is needed to start a business The recruitment of
-or0ers is easy 8or setting up a ne- business* such an in'estment is not difficult to get for an
organi.ation* so money -ill not a big entry barrier for this business The main entry barrier is
the established mar0et for existing 4ac0ets from se'eral big companies li0e ,arment 32*
Ducgiang or !habe companies These companies had set up strong customer bases than0 to
their good product quality and acceptable price Moreo'er* cheap price of Chinese 4ac0et also
a big fence for ne- comer to o'ercome As a result* threat of brand ne- players to 4ac0et
mar0et is not high But there is great potential that existing garment firm those ha'e not
introduced 4ac0ets to domestic mar0et yet* no- they begin to launch ne- 4ac0et product and
compete directly -ith existing firms 7f forty>se'en member companies of &/!ATEO
engaging in production of textile and garment goods* t-enty>fi'e are in garment ma0ing
sector and all t-enty>fi'e companies ha'e 4ac0et in their product portfolio But at present* not
more than ten companies are selling 4ac0ets in domestic mar0et /n the future* it is expected
11
that more companies -ill come and compete in this product category and ma0e the
competition tougher
Threat of substitute products
+ubstitute products can be coat* s-eater* leather 4ac0et* and fur>coat 8ur>coat used to be
popular about a decade ago -hen 4ac0ets are not introduced to mar0et yet 8ur>coat from
,ermany is most fa'orite and dominated the domestic mar0et The product can bring highly
-arm le'el but presented -ith monotonous color and design At present this product had
-ithdra-n from the mar0et
5eather 4ac0et is premium product -ith high price* usually more than &!D3 million /t ser'es
only high>income customers so this product -ill not be a ma4or threat for ordinary 4ac0ets
+-eater can 0eep the body -arm* but it can not bear light rain or pre'ent -ind -hile user
tra'elling by motorbi0e in cold -eather condition Thus s-eater can not replace 4ac0et -hen
the temperature falling do-n -ith strong -ind and light rain This -eather condition happens
frequently during the mid>-inter
Coat is a ne- product that introduced one or t-o years ago 8or tra'elling and 0eeping -arm
purpose* coat can bring the same benefit as 4ac0et* but coat is more bul0y and more expensi'e
than 4ac0et )ence 4ac0et still has ad'antage o'er coat
/n general* 4ac0ets still surpass the group of substitute products in respect of con'enience*
comfortable and price 8or e'ery substitute product* ordinary 4ac0et has clear ad'antage in
some extend Therefore the threat of substitute product for 4ac0et in mass mar0et is not
significant
Bargaining po-er of buyers
Buyers do ha'e bargaining po-er o'er domestic 4ac0et producers 8or company li0e Thaloga*
there are three main types of buyers: foreign and partners in 87B or commission business*
and local consumers 8oreign partners can ha'e po-er because they can choose a company in
&ietnam or in other countries ha'e the same lo- cost ad'antage li0e &ietnam or they can
choose among many domestic garment companies ha'ing ma0ing 4ac0et capability Domestic
partners also ha'e po-er because they can choose a company charging lo-er cost to place
order too 8or end consumers* they can also ha'e right to bet-een imported products or
among 4ac0ets produced by many domestic li0e ,arment 32* Ducgiang etc Customers are
price sensiti'e and the distribution net-or0 of other companies are -ide spread And
customers can s-itch among companies easily -hen they notify a more attracti'e price
Bargaining po-er -ill be an importance force in the external en'ironment of Thaloga and
must be considered carefully in the process of formulating and implementing strategy
Bargaining po-er of suppliers
+uppliers do not ha'e significant influence upon Thaloga business The company has long
term contract to pro'ide fabric -ith March = Textile Company /mport of other fabric and
accessories that are not a'ailable domestically -ill be conducted by company itself or through
&/!ATEO or other suppliers mainly in Qorea* Tai-an or Thailand These suppliers can be
approached easily 8or commission business in many contracts* the contractors also pro'ide
material and accessories /n conclusion* suppliers do not ha'e po-er o'er Thaloga
1=
"i'alry among existing firms
Aac0et has been tradition export product in &ietnam garment industry Many firms in the
industry ha'e the capability to ma0e 4ac0et All companies in garment sector of &/!ATEO
#t-enty>fi'e firms$ ha'e capability to produce 4ac0et Besides export business as their main
operation* many companies are changing their direction to-ard domestic mar0et This trend
-ill ma0e the competition in the industry more intensified
Aac0ets of Thaloga ha'e to compete -ith 4ac0ets from imported goods mostly from China and
-ith 4ac0ets of other domestic producers li0e ,arment 32* Ducgiang
8or Chinese 4ac0et* it has strong ad'antage of lo- price 8or example* three layer 4ac0ets of
Thaloga are priced from &!D3H2*222>1:2*222* -hile the same 0ind of Chinese 4ac0ets are
sold at from half to t-o third of Thaloga price #&!D<2*222>3;2*222$ Chinese goods sold at
these prices often ha'e clear lo-er quality in term of fabric quality* faded color* and thinner
than Thaloga 4ac0ets Chinese 4ac0ets are sold in small retail outlets* small shop in local
mar0ets* or e'en on street6s pa'ement usually -ith title Mgrand salesN )o-e'er the lo- cost
ad'antage of Chinese products -ill be eroded as the Chinese ,o'ernment announce that they
-ill no longer subsidi.e price for textile and garment products
Domestic firms6 4ac0ets compete -ith each other in some extend price* quality* color* and
'ariety of design Ma4or companies competing head on head in )anoi area are Thaloga*
,arment 32* !habe* Ducgiang* and 5egamex company
,arment 32 company is one among the fi'e largest garment companies in &ietnam in term of
scale* re'enue* profit* producti'ity and gro-th /t has ;*222 labors Company main products
are shirt* 4ac0et and other product Aac0ets account for 12I of total garment output The
company has ad'antage in technology* producti'ity and quality The shirt product of ,arment
32 has leading position in mar0et -ith its high quality and reasonable price The company has
-ide distribution net-or0 -ith more than ?2 sales offices and sales agent in )anoi and other
pro'inces including southern pro'inces Domestic re'enue of ,arment 32 in 3<<< -as
&!D1; billion The company has strong brand image of high quality products and
competiti'e price Aac0ets of ,arment 32 ha'e good quality and they are priced a little higher
than Thaloga products ,arment 32 has ambitious expansion plan to capture more mar0et
share in all product categories Till 1232* company6s goals are to produce all garment products
and mar0et them under company6s o-n brand>name for export and domestic mar0et To
achie'e these goals* the company plans to in'est P12 million to 1232 in ne- equipment* a
ne- trading center for design* fashion sho-* and product introduction acti'ities #%uang*
1222$
Duc,iang ,arment Company is a strong competitor -ith high potential /n 3<<@* it in'ested
&!D?: billion to upgrade equipment and -arehouse and increase its capacity to 1 million
pieces of ready made clothes a year Aac0ets are company6s ma4or products The company
offer 'ariety of designs and styles for 4ac0ets Price of Duc,iang6s 4ac0ets is a little higher
than that of Thaloga for the same product types Duc,iang only has three sales representati'e
office in )anoi and se'eral agents in other pro'inces
!haBe ,arment company has its plant and headquarter in )ochiminh City in the south of
&ietnam Aac0et is company6s product for export /n 3<<@* export turno'er of this company
amounted to P3=: million !haBe focuses on product quality especially fabric and
accessories quality and elegant design Thus its price for 4ac0et is higher than similar products
of Thaloga from &!D=2*222 S:2*222 !haBe has = retail stores in )anoi
1;
Another competitor coming from the south is 5eather and ,arment Company #5egamex$
5egamex produces and sells simple but comfortable and fashionable clothes including shirt*
trouser* dress* and 4ac0et /ts production capacity is H: million pieces of garment and =:
million shoes annually The company mar0ets its product by selecting good sales agent -ith
con'enient location in big cities The main customers of 5egamex are relati'ely high>income
youth -ho -ant to see0 clothes similar to imported goods -ith price not so high as those sold
in other fashion shops Aac0ets of 5egamex has high quality -ith fashionable designs and
relati'e high price Company has t-enty>se'en retail stores in )ochiminh City* )anoi*
Cantho
The analysis of Thaloga strength and -ea0ness as -ell as competiti'eness -ill be discussed
in the next chapter
3.4. Summary of external opportunities and threats for Thaloga
7pportunities
> Textile and garment industry is important export earning and -ill continue to be recei'ed
preference treatment of the go'ernment -ith soft loans and lo- &AT rate Thaloga can ta0e
this opportunity to upgrade and expand its facilities to increase quality and producti'ity
> &ietnam still has lo- labor cost ad'antage to exploit
> The gro-ing economy and purchasing po-er enables manufacturing and ser'ice firm to
increase their sales re'enue
> ,arment products of domestic firms ha'e gained good image in customer perception and
they are focusing more on buying domestic clothes
> A large mar0et in urban and rural area is being under exploited by domestic firm but filled
by cheap price good from China
> The de'elopment of textile sector -ill help to increase percent of domestic material in
finished goods thus reduce manufacturing cost
Threats
> &ietnam plans to enter 9T7 and to comply -ith A8TA agreement* the -ill be no more
restriction of tariff and non>tariff on imported goods* and Thaloga product -ill compete
directly -ith imported clothes -hich are either cheaper or better quality
> Bargaining po-er of buyers is significant* it does not allo- company to charge high
commission fee or high price that limit the profitability
> Tougher competition -ith other domestic companies is expected due to they are changing
direction to-ard domestic consumer and see0ing to capture more mar0et share
> Company6s 4ac0ets ha'e no clear ad'antage in terms of price* design* color o'er its
competitors
1:
. CHAPTER
INTERNAL ANALYSIS
4.1. Company profile
Thanglong ,arment Company #Thaloga$ is a state o-ned company belonging to &ietnam
Textile and ,arment Corporation #&/!ATEO$ The company -as founded in 3<:@ Thaloga
has the right to import and export directly* producing high quality garment product for both
domestic and foreign customers6 orders
Thaloga6s main products consist of men and -omen6 shirt* trousers* suits* 'arious 0ind of
4ac0et* o'ercoat* uniform* 0nitted -ear* sport -ear* and children clothes Company has
production capacity of : million equi'alent shirts per year /t has exported products to
customers in more than =2 countries such as 8rance* (nited +tate* Tai-an* )ong Qong* +outh
Qorea* and Aapan At present* company possesses relati'ely modern system of equipment -ith
different automation le'el such as automatic poc0et -elting machine* electronic embroidery
machine* automatic se-ing machine* 4eans -ashing system* and computer aided design
/n production aspect* company has six enterprises at headquarter in )anoi* three garment
affiliates in )aiphong* %uangninh and !amha pro'ince /n addition* company has a bonded
-arehouse -ith responsibility of 0eeping equipment* spare parts* material and accessories and
finished product for garment and textile industry -hile -aiting for export or import Company
also has plastic plants located in )aiphong producing garment accessories* pac0aging* and
different 0inds of plastic pipes for electric -ires
4.2. Organizational structure
The organi.ational structure of the company is typically functional -ith total 1:2 staffs and
around 1*222 -or0ers Appendix ;3 illustrates the organi.ation chart of company
Board of Director
Thaloga has a ,eneral Director and three Deputy Director
- The ,eneral Director is responsible for company o'erall acti'ities and performance )e is
in charge of company6s de'elopment direction* in'estment strategy* and labor )e
manages directly the operation of Domestic and Export Department* Technical
Department* Administration Department* and 8inance and Accounting Department
- The Technical Director is responsible for managing company equipment and facilities
system in enterprises )is responsibility is to assure that all equipment running smoothly
and they are maintained properly
- The /nterior Director manages supporting acti'ities in the company including the
operation of company6s cafeteria* security* office equipment and facilities
- The Production Director is in charge of directing the operation of Production Planning
Department* 9arehouse Department* and the operation of ? enterprises
8unctional Department
1?
Administration Department
/ts responsibility is to manage the -or0force and related acti'ities including training and
recruitment* calculating -or0er6s -age* manage -or0er6s social insurance and other -elfare*
organi.ing and managing emulation e'ents in company
Export Department
The operation of this department is to mar0et and recei'e orders of foreign customers in 87B
or commission business This Department in cooperation -ith Technical Department manage
to acquire material and accessories itself to fulfil customer order in case of they do not supply
material or they supply only part of require materials and then export finished goods to
customers "e'enue of export goods under the management and coordination of the
Department accounts @1I of company total re'enue in 1222
Domestic Department
Domestic Department deals -ith products* customers and mar0eting acti'ities in domestic
mar0et +ince time -hen company focused more on domestic mar0et and tried to capture
more share in this mar0et* domestic Department -as established -ith a group of executi'es
and staffs from Export Department speciali.ed in domestic mar0et in late 3<<@ The function
of this Department is the same as Export Department -ith additional tas0 is to de'elop and
manage distribution channels of the company -ithin the country Domestic sales is small in
total re'enue but it has been increasing during the last three consecuti'e years
Technical Department
Technical Department does not deal -ith equipment and machinery but -ith product design
and specification The Department can design a ne- product for domestic mar0et* or it can
design product according to sample customers pro'ide* or it can design products -ithin style
and specification already pro'ided There are cases the Department only responsible for
instructing production in technical aspect -hen all design -or0 has been done by the
contractors This Department also prepares material requirement plan for each code #product$
and informs Export or Domestic Department to acquire enough material for production The
Department also -or0s out costing plan for each code as a basis to determine price or
commission fee for that code
Production Planning Department
This Department is in charge of determining -hich product is produced -here and in ho-
long duration is Base on the a'ailability of materials* equipment and production capacity of
each enterprise* and the deli'ery date* the Department assigns -or0s to each enterprise and
each team -ithin one enterprise +e'eral 0inds of planning are made by the Department
Learly plan is made base of standard producti'ity 'alued in (+D assigned for -or0ers in each
enterprise Monthly plan -ill deploy ho- many product ordered are produced in that month in
each production enterprise And daily plan to determine -hat day to produce a specific
product Daily plans are used to 0eep trac0 of the production progress to ensure that the orders
-ill be deli'ered on time
Quality Control Department
/ts responsibility is to monitor the quality through production process and quality of finished
product There are four quality control staffs in each enterprise /t informs rele'ant
Department about problems affecting quality and suggestion for solutions %uality problems
1H
often arise for products requiring -ashing andGor stone>-ashing and material is of lo- quality
le'el or se-ing line is not complied -ith standard
Production Enterprises
Thaloga has six enterprises ma0ing garment and 0nitting -ears at company headquarter in
)anoi* each enterprise speciali.ed in some product categories 8or example* enterprise one
and t-o produces men and -omen shirt* enterprise three and four produces trouser* 4ac0et*
and 4eans Enterprise fi'e and six produces 0nitting -ears Each enterprise includes fi'e to six
se-ing lines* one cutting team* ironing section and quality control and pac0aging staffs
/n addition* Thaloga has 1 affiliate plants in !amha and )aiphong pro'ince -ith total labor of
@12 -or0ers producing 4ac0et and trouser and a 4oint>'enture plant in %uangninh pro'ince
-ith &ietnam Coal Corporation
4.3. Business operation and goals
;=3 Business acti'ities
Company6s main operation is garment ma0ing 5i0e common practice in garment industry*
there are t-o 0inds of business: 87B and commission 87B business is manufacturing
acti'ities to complete orders of foreign or local companies Thaloga manages to acquire
material and accessories* processes according to product6s specification gi'en by customers*
and sells directly to them 8or commission business* company only does the se-ing -or0
-ith all or part of materials pro'ided by customers (sually* re'enue from 87B contract is
t-ice as much as that of re'enue from commission business
8oreign customers are 'ery important to Thaloga Their orders6 'alue account for @1I of
company total re'enue in 1222 This leads to operation of company depending seriously on
external customers The 'alue of goods that company can sell itself to customers in domestic
mar0et is only part of &!D12 billion of domestic sales
;=1 Company goals
7'erall goals: to entrench existing mar0ets and to enter ne- mar0etE company tries to
enter (+ and other mar0ets -ith product under company6s brand>name and capture more
domestic mar0et share
+pecific goals in 1223:
Total re'enue increase 3<I* in -hich 87B and domestic sales accounts for o'er H2I
Export increase 3:I
A'erage income of -or0ers reaches &!D33 million
the -hole company is certified -ith /+7<221 qualification
4.4. Business performance and sales
;;3 Manufacturing process* quality control and technology
The manufacturing process for each order andGor product is prepared* monitored and
implemented in close cooperation among different Department and enterprises including
1@
Export or Domestic Department* Technical Department* Production Planning Department* and
manufacturing enterprises
The production process goes through following stages:
D Preparing stage
Export of domestic Department recei'e orders including product information and
specification such as real or paper sample* technical specification* se-ing line style and
standard and for-ard these information to technical Department
Technical Department -ill study product design and calculate material and accessories
required for each product and for the -hole order and produce material balance
Technical Department -ill ma0e t-o standard samples for each order for appro'al of
customers* after that it -ill use computer to generate specification of different si.es These
specifications are passed to production enterprise
At rele'ant enterprise* a technical team -ill again ma0e one sample for inspection of technical
Department* if there is no fault exist* this technical team -ill prepare sample paper for cutting
and assign specific tas0 #part of a product$ for se-ing line -or0ers
D Production deployment stage
Production Planning Department accesses the a'ailability of material and accessories and
releases production order to enterprises E'ery day this Department -ill send staff to
enterprise to monitor production progress to ensure that the order -ill be finished and
deli'ered to customer on time
At the enterprise* after recei'ing production order* -or0 is initiated 8abric is cut according to
sample to minimi.e cloth -aste Multiple fabric layers are cut together* number of layers
depends on fabric thic0ness and characteristic Cut pieces for one code #a product$ -ill be
numbered and group together and transferred to se-ing line 8igure ;3 depicts the flo-chart
of production process for a code
The se-ing lines usually consist of =: machines* 11 of them are se-ing machines and other
functional machines li0e button>stic0 machine* buttonhole* hole se-ing machine Each -or0er
#machine$ -ill complete simple part of the product After preparing all parts* se'eral #?>@$
-or0ers -ill assembly them to finished product Trimming is the last step to eliminate
Material and
design preparation
+e-ing of Parts
8inished Product
%uality inspection /roning /n'entory
8abric cutting
8igure ;3 Production Process
1<
redundant thread or material from finished product After being chec0ed and ironed* product
is pac0aged in nylon bag andGor carton box and transferred to -arehouse
Quality Control
Product quality is monitored throughout the production process until finished products are
transferred to in'entory %uality chec0points in the process are:
Chec0ing fabric quality -hile spreading and cutting* after cutting* there is a chec0 for the
completeness of parts of one code
%uality is chec0ed gradually in se-ing process by line manager for the complying of
stitching style to specification
At the end of se-ing line* finished product is chec0 by quality control inspector "edo
-or0 -ill be done on unsatisfactory parts if mista0e is identified /f there is no fault in the
product* it -ill be passed to ironing section
A final chec0 is conducted after ironing and before product is pac0aged
Technology
Machinery in garment industry is mainly se-ing machines /n addition* other speciali.ed
equipment also used such as boiler>'acuum ironing* stem ironing* embroidery* spreading*
cutting* -elting* buttonhole* button se-ing* fusing presser etc ,arment equipment can be
multi>function* automatic or semi automatic machines
At present* Thaloga has 3*:22 machines of 'arious 0inds* H2I of them are ne- that had been
installed in the last three years Equipment in enterprise one and six producing shirt and
0nit-ear are ne- since they are ne- production line of company since 3<<< Equipment in
other enterprises has been moderni.ed -ith ne- se-ing and other machines /n 3<<@* 3<<<*
company spent &!D3;=: billion in buying ne- equipment and upgrading plants in -hich
in'estment in upgrading plants is small /n 1222* company intended to in'est &!DH billion in
ne- equipment
/n general* -ith current equipment and manufacturing techniques* company can satisfy
customer6s order in large quantity and high standard quality
;;1 +ales performance and profitability
The company total re'enue has been gro-ing since 3<<@ #Appendix ;1 Table 3$ and it is
expected to gro- in 1223 to total re'enue of &!D3== billion )o-e'er* the a'erage sales
gro-th in 3<<@>1222 period is not stable +ales in 3<<< soured 1@H1I -hile sales in 1222
increases only 31?1I o'er the pre'ious year figures respecti'ely This fact indicates the
unstable in company operations that is mainly due to the dependence on orders of foreign
customers /f they order large quantity* company has enough -or0 to do* other-ise company
-ill face difficult to find addition -or0 for its -or0ers At present* the capacity of company
reaches : million standard shirts per year The fact is more clearly pro'ed -hen -e see the
percentage of export re'enue in company total sales Export re'enue accounted for @:I and
@1I of total re'enue in 3<<< and 1222 respecti'ely
/n domestic mar0et* company re'enue increase -ith promising trend /n 3<<@* domestic stood
at &!D31 billion /n 1222* the figure increased to &!D12 billion an increase of ;1I o'er the
pre'ious year
=2
7ne important aspect that affects the profitability of the company is re'enue from 87B
business and domestic sales As discuss earlier* re'enue from 87B business is t-ice as much
as that of from commission business 87B and domestic sales represents 'ery high percentage
in company total re'enue and highest in the industry* H=I in 1222
)o-e'er* if -e consider the profitability of the company* -e can see that the company is at
lo- profitability le'el /ncome from operation accounts for tiny percent of total re'enue*
-hich is only 3=I of total re'enue in 3<<@ #Table 1$ Table = presents information on
company balance sheet in 3<<@ "eturn on equity ratio #"7E$ in 1 year 3<<@ and 3<<< are
:2;HI and ?2=1I #estimated$ respecti'ely #Table ;$ This "7E is lo-er than the interest
rate in the beginning of 3<<@ #32:I>33I per month annually$ 7ther profitability ratios are
lo- too Especially the net profit margin is lo-* 331I and 32@I in 3<<@ and 3<<< Table ;
pro'ides ratios of Apparel and Accessories /ndustry in (nited +tate as an example of
profitability benchmar0 in this industry This lo- profitability is resulted from basic
characteristic of company operation The 'alue added is mainly come from se-ing acti'ity*
other materials company must buy from outside suppliers thus the profit is lo-
4.5. Marketing
;:3 Mar0et segmentation and targeted mar0et
Thaloga does not use many sophisticated criteria to segment the mar0et 7nly t-o broadest
attributes used are sex and age 8or age* company only has children and adult clothes
Children clothes are di'ided further to se'eral ages but for adult there is no distinction
bet-een clothes for young or middle age people Customers -ill choose products color and
style fitting their age and body>build
Thaloga focuses on mass mar0et as their target mar0et Customers in this mar0et are featured
-ith a'erage income and a'erage li'ing standard ,eographically* the mar0et of the company
is in )anoi and 'icinity area due to the limited co'erage of the distribution net-or0 Company
also has customers in other pro'inces* most of them li'e in urban area +ales in )anoi and
'icinity account for H2>H:I of total domestic sales
;:1 Product positioning
To match -ith the target mar0et and company competiti'e position in the mar0et* Thaloga
positions its products as high quality product at relati'ely cheap price The product quality
le'el is in the same grade as that of other companies The sur'ey result indicate that customer
has positi'e perception o'er quality of company6s product To achie'e relati'ely cheap price
in the mar0et* company is trying to lo-er the cost of material and accessories The company
has built long term contract -ith March @ Textile Company* !amdinh Textile Company to by
sufficient quality fabric from these companies 8or other accessories* company has searched
in domestic mar0et for high quality accessories but cheaper than imported goods such as
!hatrang .ipper* Phongphu thread* button* nylon bag* and carton box
Thaloga has -ide product portfolio as mentioned in pre'ious section #+ection ;3$ Aac0et is
tradition product categories that company has been ma0ing since its beginning export
business -ith foreign customers Aac0et production 'olume often accounts for H2>@2I of total
product export Aac0et can be classified into sub>categories including 1* =* : layer 4ac0et*
quilting 4ac0et* and children 4ac0et Companies producing 4ac0et usually combine 4ac0ets
attributes li0e number of layer #1* =*or :$* fabric quality* fabric color* design pattern to
differentiate their offerings Thus -e -ill hardly find t-o exactly similar products produced
from t-o different companies This phenomenon leads to the comparison of price bet-een
=3
competing 4ac0ets someho- difficult Company sells its products under its o-n brand name
Customers are -ell educated -ith the products therefore use foreign brand for 4ac0ets may not
gi'e payoff
;:= Pricing
Thaloga sets competiti'e price for all of its products and use one price for each product at all
of its sales points Although the comparison for price of similar products from different
producers can be difficult* -e can compare based on product sub>categories 8or example* for
t-o>layer 4ac0et* Thaloga sells at &!D@2*222>312222 depending on fabric and material
quality ,arment 32 company sells similar products at &!D<2*222>3;2*222 8or e'ery other
4ac0et subcategories* Thaloga usually sets price little lo-er or at least equal to price of
competiti'e products
The price of product is set based on production cost and common price le'el in the mar0et
The company has price committee -hose members come from different departments 8or
each product* the Technical Department -ill prepare a costing plan to list all cost item of that
product added -ith company profit rate #32>3=I$* tax rate #32I$* sales agent margin #32I$
to get initial price for that product The price committee -ill decide product price after
considering this plan and the price le'el as -ell as the sales po-er of that product Product
final price can be higher or lo-er to costing plan
/n general* comparing the price of ThalogaKs product -ith price of other head on head
competitor li0e ,arment 32* Dapcau* Ducgiang company* companyKs products are to certain
extend is little bit cheaper 9hen a customer choose a clothe made by Thaloga* they can be
assured that price they pay is not higher than other similar product
;:; Promotion
The company promotes its product in domestic mar0et through tele'ision* 4ournal* fashion
sho-* ne-spaper* and leaflet Ad'ertising in ne-spaper is not con'entional !o any intensi'e
ad'ertising campaigns has been implemented The content of ad'ertisements is simple -ith
company profile* product categories* production capacity and company address
Company participates frequently in trade fairs* -hich are organi.ed frequently o'er the course
of a year* especially in fashion fair and ne- year fair Thaloga also organi.es fashion sho-s
during these fairs Company in cooperation -ith 8ashion Design /nstitute #8adin$ produces
fashion programs to broadcast on !ational Tele'ision #&T&3* &T&=$* and )anoi Tele'ision
to enhance the brand identity in domestic mar0et
;:: Distribution
Thaloga has second largest distribution net-or0 among garment companies in northern region
after ,arment 32 This is one big ad'antage and strength of the company Company sells its
products through se'eral rather short channels 8igure ;1 illustrate distribution channels of
Thaloga
/n )anoi* company has three fashion shops* t-o retail stores and t-enty>three sales agents
#retailers$ There are other t-enty>four agents in other pro'inces in -hich se'enteen are in the
northern region #Appendix ;1 Table : lists detail number of agents in each pro'ince$
Company is continuing to expand its retail net-or0 in )anoi and other Pro'inces Domestic
Department personnel -ill scan the geographical area to find and choose a suitable location to
open a retail store At present* re'enue from )anoi and 'icinity retail stores account for H2>
H:I of domestic sales
=1
CompanyKs fashion shops and retail stores are responsible for introducing and selling all ne-
products made by company 7ther sales agents can choose -hich products they -ant to sell
and they can return unsold goods to company -ith full credit bac0 "etail agent recei'e 32I
margin on the goods sold but they are require to pay 322I of the good they ta0e from
company #They ha'e to buy company products and resell to consumers$ This policy is too
conser'ati'e and it could hinder the expansion of distribution net-or0 ,arment 32 only
requires sales agent to deposit =2I of total goods 'alue that they recei'e from ,arment 32
8or retailers outside )anoi and 'icinity* they can get subsidiary from company in
transportation cost #:2I$
)o-e'er* the deployment of company6s retail stores is not optimal 8or example* company
has t-o retail stores at 1< !goquyen +treet in )anoi These t-o shops stand next to each
other and they sell the same product categories These lead to the non>necessary competition
bet-een t-o stores to attract customers and -aste the space and personnel /n other case* the
concentration of three retail stores at company6s head quarter and se'eral stall shop of
indi'idual nearby to sell company products is also considered -aste of space and personnel
Another problem of some retail stores is their presentation of clothes inside the stores /t
seems that salespersons try to hang all clothes they ha'e in in'entory to shel'es as many as
possible They explain their action is that for times -hen customers come too cro-dedly* they
do not ha'e enough staff to ser'e* and hence it is better to sho- all clothes that the store has
and customers can choose themsel'es This argument is not 'ery persuasi'e because the
frequency that too many customers come at once is not high* usually in late afternoon after
office hour or in -ee0end and this frequency -ill not 4ustify for this argument The
shortcoming of this presentation is that it ma0es difficult for customers to choose a cloth from
tight sel'es /n the future* company -ill ha'e to in'est time and resource to correct these
shortcoming to increase the efficiency of distribution channels
;:? Design and ne- product de'elopment
Company has strong capability in designing The Technical Department is responsible for all
technical and specification of all products Besides designing products for customers6 orders*
the Department designs and de'elops ne- products too The concept of ne- products comes
from many sources: foreign catalogs* customers6 samples* fashion 4ournals* or competitors6
products After a product6s style* color>mix has been formulated* the Department -ill prepare
detail specification on material* accessories* se-ing line style* cutting and assembling plan for
C
o
m
p
a
n
y
"etail stores
+ales representati'e
office
+ales Agents
+ales Agents
C
u
s
t
o
m
e
r
s
8igure ;1 The company distribution channels
==
finished product and material requirement for the product +amples of ne- product are made
by Technical Department and these samples are tested -ith models /f the ne- product is
appro'ed by the Board of Director* the production -ill be deployed -ith the Production
Planning Department
/n one year company can handle -ith more than one thousand products designs 8or 4ac0ets*
each -inter season company can introduce 12>=2 ne- products to domestic mar0et /n spite of
strong design capability* company is still not 'ery much customer>oriented in their ne-
product de'elopment +ome color mixed patterns do not get customers6 preference and the
hea'ily dar0 color in some 4ac0ets does not get preferred either Moreo'er* the 'ariety of
4ac0et design pattern is limited and this dissatisfies customers* according to the result of the
customer sur'ey
;:H )uman resource management
The garment industry is labor intensi'e The s0ill of -or0er and stability of the -or0force is
important to company6 operation Thaloga has 1222 -or0ers in -hich @:I of the -or0force
are -omen Company recruits ne- -or0ers through s0ill examination to test their s0ill and
producti'ity Most -or0ers graduate from 'ocational high school After graduating* they
usually obtain third s0ill le'el in fi'e>scale s0ill le'el Company has policy to send -or0ers
for further training and to organi.e examination to upgrade s0ill le'el of -or0ers Three
hundred fifty -or0ers are examined and increased -age for their s0ill impro'ement in the
year of 1222
9or0er6 -ages are paid based on standard producti'ity calculated and assigned to each
-or0er in each enterprise 8or example* each -or0er in Enterprise =* Enterprise speciali.ed in
ma0ing 4ac0et and trousers* is required to se- a number of product equi'alent to (+D?= per
day to recei'e standard salary of &!D33 million per month /n order to finish this standard
producti'ity* each se-ing line consist of =: -or0ers -ill ma0e 332 4ac0ets per day -ith the
se-ing price of (+D1 per 4ac0et Those -or0ers -ho -or0 o'ertime are paid 12I more in
standard salary for urgent order or to complete before deli'ery date To conclude* company
labor force and its stability represent strength of it
;:@ /nformation system
/nformation technology is applied in the company in limitation Computers are used only in
composing documents* reports* or preparing contracts -ith customers Managerial
information is exchanged bet-een functional department through paper documents The local
computer net-or0 is not installed yet at the company and company has not planned to
upgrade its information system in near future This situation is common in the industry
4.6. Summary of Thalogas strength and weakness
+trength
- Modern equipment and large production capacity
- ,ood quality in customers6 perception
- +trong capability in product design
- "ather large distribution net-or0
- +0illful labor force familiar -ith garment ma0ing* especially 4ac0ets is tradition product
=;
9ea0ness
- -ea0ness in mar0eting acti'ities* mar0et research for customer need
- lac0 of information system* including mar0eting information system and material
management system
- -ea0 in understanding customer requirement and satisfaction
- -ea0 in customer oriented -hen design ne- product* lo- product 'ariety and color of
4ac0ets is not attracti'e
- no clear cut in mar0et segmentation
- -ea0 in promotion and ad'ertising acti'ities
=:
5. CHAPTER 5
DEVELOPING COMPETITIVE STRATEGIES FOR THALOGA
5.1. SWOT analysis
:33 +ummary of strategic situation for the company
8rom analysis and discussion from t-o pre'ious chapters* table :3 summaries the strategic
scenario that Thaloga is facing /n the follo-ing section* +97T strategies -ill be discussed to
cope -ith this strategic situation
Table :3 +ummary of strategic factors
7pportunities +trength
- garment industry en4oy preferred
treatment from go'ernment
- lo- labor cost
- gro-ing economy and purchasing po-er
- domestic garment has gained good quality
image from domestic consumers
- large urban mar0et remain under
exploited
- the de'elopment of textile sector allo-s
using cheaper fabric material and
accessories thus reduce product cost
- modern equipment and large production
capacity
- good quality in customer6s perception
- strong design capability
- large distribution net-or0
- s0illful -or0force
Threats 9ea0ness
- Tough competition -ith imported goods
#Chinese goods$
- More intensi'e competition is expected
from domestic firms
- +ignificant bargaining po-er of buyers
- Company6s 4ac0ets ha'e no clearly
ad'antage o'er competitors6
- Production hea'ily rely on orders of
customers
- 5ac0 of information system* production
coordination ta0e time and resource
- !o mar0et research acti'ities* lac0
understanding of customer6s requirement
and satisfaction
- 5o- product 'ariety and unattracti'e
color
- Mar0et segmentation is too broad
- 9ea0 in promotion and ad'ertising
:31 +97T strategies
+7 strategy #use strength to ta0e ad'antage of opportunities$
- use local material to produce lo- cost 4ac0ets
=?
- expand distribution net-or0 and attempt to gain more mar0et share
- increase producti'ity
- screen for lo-er price material in domestic mar0et -ith acceptable quality
- de'elop related product beside 4ac0et li0e coat to tap ne- mar0et segment
97 strategy #+trategy to ta0e ad'antage of opportunities to o'ercome -ea0ness$
- /n'est in information system to manage material* customers and mar0eting information
- +trengthen and consolidate mar0eting acti'ities
- Expand mar0et to urban area in other pro'inces
+T strategy #strategy to use strength to a'oid threats$
- de'elop simple and easy to manufacture 4ac0ets to reduce cost and increase producti'ity
- increase the 'ariety of product line and -idth
9T strategy #strategy to minimi.e -ea0ness and counter threats$
- re>segment the mar0et in some more dimension such as customer income* product usage*
or geographical area
- impro'e the effecti'eness of promotion and ad'ertising acti'ities
5.2. Alternatives competitive strategies for Thaloga
,i'en +97T strategies generated in the pre'ious section* three alternati'es are de'eloped for
Thaloga in order to increase the competiti'eness of its 4ac0ets including cost leadership*
differentiation* and focus strategy
:13 Cost leadership strategy
Cost leadership strategy aims at mass mar0et -ith lo- price offers to customers The price
reduction to le'el of Chinese price or a little bit lo-er is the target of this strategy
/n general* fabric and labor cost represent high proportion in manufacturing cost of a product*
about :2>?2I #Appendix :* Table 3 and 1$ Thus finding cheap material suppliers -ith
acceptable quality can be critical to reduce production cost of products 7n the other hand*
company can increase producti'ity to reduce labor cost per product unit 9ith s0illful labor>
force familiar -ith ma0ing 4ac0et* increase producti'ity* ta0e ad'antage of economy of scales
to dri'e cost do-n can be feasible
/n term of design and product 'ariety* lo- cost strategy requires simple design for easy
manufacturing and limited number of product lines to restrict design and de'elopment cost
9ith current customers6 preference of simple design* company can ta0e ad'antage of this
opportunity
An inaccurate method to calculate selling price for a product is identified -hen examining the
costing plan for a t-o>layer 4ac0et #Appendix :* Table 1$ After calculating manufacturing
=H
cost* 32I of profit rate is added then 32I of &AT #'alue>added tax$ and another 32I retail
margin for sales agent According to this calculation method* selling price is more than =2I
higher than manufacturing cost This is unreasonable because it lifts selling price too high
compared -ith manufacturing cost &AT calculation on manufacturing cost is not accurate
because the 'alue added by company is labor cost +o the base of labor cost should be use to
calculate &AT The change in calculating tax alone can reduce selling price by :I of current
price Therefore* addition cost reduction can be achie'ed through utili.ing sales force andGor
lo-er profit rate by 1>=I
Possible ad'antage:
- sales 'olume increase and offset the profit gi'en up due to lo-er profit rate
- company can capture more mar0et share
- utili.e production capacity and increase the proacti'eness in company operation
Possible disad'antage:
- ris0 of not catch -ith change in customers6 preference
- ris0 of deterioration in quality due to extremely focus on cost reduction by utili.ing cheap
material lead to lose brand equity
- ris0 of unattracti'e offers due to fe- product 'ariety and design for customers to choose
- Price reduction to Chinese 4ac0et le'el can be difficult to achie'e
:11 Differentiate strategy
/t is easy to differentiate a ready>made garment product li0e 4ac0et A combination of fabric
type* color mix* or design pattern of style* poc0ets organi.e and design can ma0e a 4ac0et
unique in the mar0et )o-e'er* this simple or arbitrary 0ind of differentiation based only on
the combination of these attributes is not critical enough to create competiti'e ad'antage for
the products The competiti'e ad'antage of them depends on ho- -ell they can satisfy
customers6 need about price* quality* usage* and con'enience of that product
Company can follo- a differentiate strategy in product de'elopment for different geographic
mar0et or for different usage purpose This is due to different needs of customers in urban or
rural area (rban customers -ill require elegant* fashionable and comfortable clothes 8or
rural customers* price* quality and usage are more important Therefore* company can launch
premium products in urban area and lo- cost and pragmatic product in rural area
Product can be also designed for specific usage 8or example* different 4ac0ets used at -or0*
going to picnic* or tra'elling can be de'eloped Company can launch other related product
line li0e o'ercoat to tap ne- mar0et segment to existing customers
Possible ad'antage:
- -ell satisfy the need and requirement of each customer segment
- company can charge good price and reduce purchasing po-er of customers
Possible disad'antage:
=@
- require careful mar0et segmentation and -ell understanding customers in mar0et segment
that company sells it products to
- require strong mar0eting capability but company is not 'ery strong at this acti'ities
- increase the design -or0 load since many product lines are maintained* cost may increase
- company can not ta0e ad'antage of scale economy and learning effect
:1= 8ocus strategy
8ocus strategy aims at specific mar0et segments or geographic segments 5eather and
,arment Company #5egamex$ focuses on young high income customers -ho see0 import>li0e
products -ith comparable quality but at cheaper price !ha Be ,arment Company focuses on
abo'e a'erage income customer segment /ts product stresses on fabric quality* elegant design
and sells at higher price
Thaloga can focus on a'erage income customer segment in -hich customers can be blue> or
-hite>collar -or0ers in urban and rural area The a'erage income of consumers in this
segment is bet-een &!D2:>3: million 8or this segment* company can launch four 4ac0et
lines #1*=*: layer 4ac0ets and children 4ac0ets$ and increase lines6 depth
Possible ad'antage:
- this segment can represent large proportion of consumers in the -hole mar0et* and
company gets used to ser'e customers in this segment
- mar0et share of company can gro- to other pro'inces outside )anoi and 'icinity
Possible disad'antage:
- company may lose some segment* especially high income segment -ith high purchasing
po-er
- !eeds bet-een mar0et segment may narro- do-n* and this segment can be -ell ser'ed
by broadly mar0eted competitors
- Mar0et segment can be redefined as competition get tougher and company mar0et
become obsolete
5.3. Strategy evaluation
:=3 Cost leadership strategy:
Cost leadership strategy can -ell fit -ith the situation identified earlier that company is
facing +ur'ey result re'eals that price is the most important criteria that consumers consider
-hen buy a 4ac0et 5o- cost can bring 'ital ad'antage and be suitable to compete -ith
products of other competitors* especially -ith lo- price 4ac0et from China
/n terms of feasibility* company has enough capability to pursuit this strategy /t has design
capability* s0illful -or0force* large production capacity 5arge production lots allo- company
to ta0e ad'antage of scale economy and learning effect
Cost leadership if achie'able could be acceptable in terms of possible outcome it can bring
5o- cost leads to gro-th of sales and mar0et share that meet company6s goals The ris0
=<
in'ol'ed is that competitors imitate but company can counter by gaining first mo'er
ad'antage and establishing more retail agents to increase the co'erage
:=1 Differentiation strategy:
Differentiation strategy can be suitable to compete in a mar0et -ith strong ri'alry among
existing competitors and -hen company products are not much differed from that of
competitors Differentiation can be good direction to compete
The strategy can be moderately feasible The basic idea of this strategy is product
di'ersification and locali.ation Company has strong design ability but lac0 competence in
mar0et research +o designing products to fit customers in 'arious segments can be
problematic
This strategy confronts high ris0 Product di'ersification can be 4ustified not necessary by
customers Price and realistic benefit can be more important Production cost can be high due
to di'ersification and economy of scale is not reali.ed Moreo'er* unique products can satisfy
only small mar0et segment -ith affordable income Thus this strategy might lead to mar0et
contraction -hich is opposite to company ob4ecti'e To conclude this strategy is not
acceptable
:== 8ocus strategy:
8ocus strategy is suitable and feasibility for company -ith its current situation and capability
+ince 4ac0et is only one product category* a moderate cost cutting requires not much
significant change in company operation #organi.ational structure* production process$ and
could be achie'able -ithin its capability /n term of acceptability* if conducted successfully*
this strategy could bring more mar0et share and sales 'olume* -hich is conformed -ith
company6s goals Table :1 summaries the 'aluation of alternati'e strategies
Table :1 +ummaries of strategy 'aluation
Dimension Cost leadership Differentiation 8ocus strategy
+uitability )igh )igh 5o-
8easibility )igh Moderate Moderate
Acceptability )igh 5o- 5o-
,i'en abo'e analysis* cost leadership strategy for Thaloga to pursuit right no- should be cost
leadership strategy
;2
!. CHAPTER !
CONCLUSION AND RECOMMENDATION
6.1. Conclusion
&ietnamese garment and textile industry has been gro-ing than0s to the export re'enue they
generate 7ur competiti'e ad'antage is lo- processing cost mostly based on lo- labor cost
and good product quality )o-e'er* sustainable gro-th and profitability can not be achie'ed
by relying hea'ily on orders of foreign customers Companies must de'elop and sell its
products under its o-n effort and brand name and be proacti'e in business acti'ities Thaloga
is not an exceptional case
Company has been a subcontractor for foreign customers for long time /t has strong
capability in product design* quality and production capacity Although company en4oys
gro-th in sales in the last se'eral years* its domestic business represents minority part in total
sales The business is conducted in strong influence of experience -ith limited understanding
about customers Mar0et research and customer needs sur'ey is conducted informally and
simply This fact can deteriorate the competiti'e ad'antage of company products
This research study aims at de'eloping competiti'e strategy for 4ac0ets of Thaloga This is
ma4or and tradition product category of the company Customer sur'ey finding sho-s that
factors contributing to competiti'e ad'antage of a 4ac0et are price* quality and color Price and
quality can be measured easily But elegant or bright color is illusi'e concepts
Due to seasonal use of 4ac0et #only use in -inter$* time to introduce ne- 4ac0ets to mar0et is
important +ales of 4ac0ets are reali.ed only in three to four month period during -inter /n
addition* the Tet #ne- lunar year$ holiday often ta0es place in mid -inter and consumer6s
habit to spend much before Tet but little after this occasion for clothes so sales of 4ac0ets -ill
be strong before Tet holiday Moreo'er* the -eather condition has strong effect on 4ac0ets
sales Experience sho-s that sales re'enue increases significantly during strongly cold days in
the beginning of -inter season
All of these facts plus tough competition from Chinese goods and other companies represents
a serious challenge to the success of Thaloga6s 4ac0et in the future The product is at sta0e if
no critical mo'e is ta0en Cost leadership strategy is suggested for the company to cope -ith
the current situation Although this strategy can be difficult to obtain in short time period* it
-ill be crucial for the company as a -hole for both domestic and foreign mar0et and for other
product categories
The fi'e>force model of Porter #3<@2$ is 'ery useful in analy.ing competiti'e forces and
competitors -ithin garment industry )o-e'er* the three strategies he called generic strategies
are 'ery broad /n practice* specifically in this case* pursuing a single strategy can require
se'eral integral steps to obtain the ultimate ob4ecti'e of the generic strategy /n addition*
contingency plans should be de'eloped to cope -ith possible responses of competitors
The next section -ill discuss recommendation to implement cost leadership strategy
6.2. Recommendation
+ince the proposed strategy is cost leadership* this section -ill suggest measures to reduce
cost by increasing producti'ity and cost reduction and other related issues
;3
7rgani.ational +tructure
Basically* no significant change in organi.ation structure is necessary but each functional
department should impro'e their producti'ity and the interaction bet-een department li0e
Technical S Domestic S planning department Ma0ing sample at the enterprise is not
necessary in the production process #+ection ;;3$ Technical Department should ta0e
responsibility to prepare enough sample for cutting personnel* to instruments engineering
feature of the product to line manager and line -or0ers* and he -ill monitor the initial -or0
on the product until the operation goes smoothly -ith the standard quality
The interaction bet-een Technical and other departments li0e Domestic or Export Department
is important because orders are recei'ed or placed by these t-o Departments* Technical -ill
design* prepare materials requirements and gi'e this information bac0 to t-o departments to
buy materials if they are not a'ailable in -arehouse +o the ser'ice speed of Technical should
be impro'ed to be better of interaction among these Departments
8inancial and Accounting Department should ta0e part in examining the accuracy of costing
plan and suggest for accurate price
Product:
Company should follo- the sample design pattern in de'eloping ne- 4ac0ets and also
consider limited product 'ariety to exploit scale economy
"efer to sur'ey* for fi'e layers 4ac0ets* t-o types each style has t-o products -ith popular
colors -ill be sufficient for customer to choose
8or t-o or three layers 4ac0ets* number of style can increase to three or four* and each style
t-o or three products -ith popular colors -ill be sufficient Product designed for men can be
fe-er than for -oman
Company should also focus on the children 4ac0et segment Most of direct competitors in the
mar0et do not ha'e this category in their offer
Price
To achie'e lo- price position* the company can apply target>costing method 8or each
product line* a target price is determined and be subtract to get manufacturing cost Technical
Department -ill design and choose material class to fit the predetermined price
Promotion
Company should exploit the participation in trade and fashion fair as a chance to introduce
ne- products and test ne- products These can be good time to understand customer ne-
taste and preference
Distribution
Expanding ne- sale agent is important to support the cost leadership strategy Company
should support ne- retailer in store opening* demonstrating products shop sign +ales person
should be trained in store decoration /t is not necessary to put all clothes on the shel'es* but
the presentation should be easy for customer selecting and eye catching for each product only
samples in se'eral colors or si.es 9hen customers -ant to see more choices* additional
clothes -ill be retrie'ed from the in'entory to sho-
;1
Company should also ease restriction on liquidation for sales agent 322I deposit of good
'alue can hinder number of the ne- sales agents to be opened and the capacity of existing
agents 8or trusted agents* the company can reduce this rate to =2I
The retail margin of 32I can be high for a lo- cost strategy A reduction by 1I>=I is
recommended -ith the consideration that the reduction -ill not decrease retailers6 re'enue
The company can consider to gi'e up 1I>=I profit rate #HI>@I of manufacturing cost$ in
order to 0eep price do-n -ith the expectation that the increase in sales re'enues -ill offset
the profit gi'en up
Material management
Besides searching for cheap materials* the company can enter into strategic alliance -ith
textile company to secure high quality material sources
/nformation system
A ne- information system is needed to 0eep trac0 of material* production progress and
production planning A computer net-or0 -ill need to be installed -ith technical computers
in department and a management soft-are is also needed
Besides* mar0eting information system soft-are is also needed to monitor and restore sales
figure o'ertime This information can be used again in future planning and de'eloping
competiti'e ad'antage strategy
R$7'00$)6%&,') ('# (3#&"$# +&36/
Due to this research study suggest cost leadership strategy* further study on impro'ing
company operation including increase producti'ity is strongly recommended The main point
of cost leadership is cost cutting* the study for measures to cut cost -ill be applicable here
Another study to apply ABC method to calculate the product cost and help eliminate
unnecessary acti'ities to reduce cost is also recommended
;=
BIBLIOGRAPHY
Aa0er* Da'id A* 3<<: (eveloping Business Strategy ;
th
Ed* Aohn 9iley F +ons /nc
Day* ,eorge +* and "eibstein Da'is* 3<<H %harton on (ynamic Competitive Strategy Aohn
9iley F +ons /nc
Doanh* 5e Dang* 1223 !e- )ope on "eform Saigon Times %eekly =
,arment 32 Company* 3<<< (omestic Business Annual )eport*
,iam* Truong Dinh* and Tung* Trinh )ai* 3<<@ 3<<H Business Performance of Textile and
,arment /ndustry Industrial )evie+ 3;
,iam* Truong Dinh* and Tung* Trinh )ai* 3<<@ Thanglong ,arment Company +trongly
8ocus on Export Industrial )evie+ 3:
)a* !ghiem Thu* 1222 The Asia Textile and ,arment Mar0et* Industrial )evie+ 3?
)ill* Charles 9 5* and Aones* ,areth "* 3<<@ Strategic management theory: an integrated
approach ;
th
ed* Boston* Mass* )oughton Miflin Company
A/CA* 7ctober 3<<< Study on the promotion of small and medium scale industrial enterprise*
Aapan /nternational Cooperation Agency and Ministry of Planning and /n'estment
Aohnson* ,erry* and +chiles* Qe'an* 3<@@ &,ploring Corporate Strategy 1
th
Ed Prentice )all
/nternational #(Q$ 5td
Porter* Michael E* 3<@: Competitive advantage: creating and sustaining superior
performance !e- Lor0* The 8ree Press
Porter* Michael E* 3<<@ Competitive strategy: techniques for analyzing industries and
competitors : +ith a ne+ introduction !e- Lor0* The 8ree Press
9heelen* Thomas 5* and )unger* A Da'id* 1222 Strategic management and -usiness
policy: entering .st century glo-al society H
th
ed* (pper +addle "i'er* ! A* Prentice>)all
%uang* !guyen &u* 1222 Strategic /arketing Implementation' A case study of The $iet Tien
Company in 0ochiminh City# $ietnam "esearch +tudy* A/T Publication
"esult of +ur'ey on /ndustry 3<<@* 3<<< )anoi* +tatistical Publishing )ouse
+ai,onTimes and +aigontimes-ee0ly* &arious issues
+almon Qurt Associates* /nc* 3<H< 1arment /anufacturing in 0a+aii )onolulu* Dept of
Planning and Economic De'elopment
Thanglong ,arment Company* 3<<<* 1222 Company Annual )eports*
The study of Aapan /nternational Cooperation Agency and Ministry of /n'estment* 7ctober
3<<<
Trung* Minh* 3<<@ &ietnam ,arment and Textile /ndustry: Bright Prospect +ignals
Industrial )evie+ 3?
i
Trung* Minh* 3<<@ ,arment 32 Company solidly to Enter 13th Century* Industrial )evie+
3?
&ietnam Economics Times* 3<<< $ietnam and %orld &conomy !!"'!!!* &ET Publications
&ietnam Textile and ,arment Corporation -eb site http:GG ---'inatexcom
&ietnam !et-or0 21G21G1223* http:GG ---'nn'nGgo'Gaction
&ietnam !e-s 21G21G1223* http:GG'ietnamne-s'nagencycom'n
$ietnam Statistical Year Book !!"# !!! )anoi* +tatistical Publishing )ouse
ii
APPENDICES
Appendix 3,uiding questions for direct inter'ie-
Appendix =3 Temperature beha'ior in -inter season 3<<<>1222
Appendix =1 %uestionnaire
Appendix == Customer sur'ey result
Appendix ;3 Thaloga organi.ational chart
Appendix ;1 Table on business result* balance sheet* income statement* profitability ratio*
and detail of distribution channel in &ietnamese mar0et
Appendix : Example of t-o costing of t-o 4ac0ets
iii
A55$)6,2 1
GUIDING 8UESTIONS FOR DIRECT INTERVIEW
3 9hat are company6s main product categoriesJ
1 9here does company sell its productsJ 9hich mar0et is most importantJ
= 9hat is company long term and short term goals and direction for de'elopmentJ
; 9hat does company intend to in'est toJ
: 9hat are measures that company ta0es to achie'e these goalsJ
? 9hat is the most important competence company has in its businessJ 9hat aspect
company should strengthen atJ
H 9hat external factors affect company businessJ
@ 9hat are the difficulties that company is confronting no-J
< )o- does company monitor its competitorsJ 9ho is the strongest competitorJ 9hat
measures company use to competeJ
32 )o- does company segment the mar0etJ 9hat are the criteria used in mar0et
segmentationJ 9hich mar0et segment is most important to companyJ
33 )o- does company position its product and its self in the mar0etJ 9hat is positioning
strategyJ
31 )o- does company launch ne- products #time* co'erage* and place$J
3= 9hat are the criteria used to price a productJ )o- ne- products are pricedJ 9hat is
company6s pricing strategyJ
3; Does company implement mar0et researchJ )o- this acti'ity is conductedJ )o- does
company analy.e and use research resultJ
3: )o- does company design ne- productsJ )o- long does it ta0e to bring ne- product to
mar0etJ )o- many ne- products are introduced per year on the a'erageJ
3? )o- does company manage productionJ )o- production plan is madeJ
3H )o- fabric is cutJ 9hat measures are used to minimi.e -aste fabricJ
3@ )o- are company product differentiated from other competitorsJ 9hat are distincti'e
characters that products of company ha'eJ
3< 9hat are steps in production processJ )o- does company control quality of productsJ
12 9hat are company6s competencies in productionJ
i'
A55$)6,2 3.1 Temperature beha'ior in -inter season 3<<<>1222
Month Temperature 5angson )anoi Donghoi
+ep* 3<<< A'erage 1:; 1@; 1H=
5o- a'erage 113 1:H 1;1
5o-est 3?: 1=? 11
!o'* 3<<< A'erage 11@ 1:; 1:H
5o- a'erage 12= 1=3 1=1
5o-est 3; 3H; 3@1
7ct* 3<<< A'erage 3@@ 11 11H
5o- a'erage 3?3 3<@ 13
5o-est 32; 3;@ 3:@
Dec* 3<<< A'erage 31? 3?= 3H=
5o- a'erage @< 3=: 3::
5o-est 21 H? 32H
Aan* 1222 A'erage 3:= 3@; 3<H
5o- a'erage 31< 3?? 3H<
5o-est :@ 32? 31
8eb* 1222 A'erage 31@ 3?1 3@?
5o- a'erage 32= 3;= 3?@
5o-est 1@ <3 331
Mar* 1222 A'erage 3H; 12= 12<
5o- a'erage 3: 3@= 3<1
5o-est H; <= 3=3
Apr* 1222 A'erage 1=1 1:1 1:H
5o- a'erage 12; 11< 1=3
5o-est 3H1 12 3@@
+ource: )ydro>Meteorological +er'ice of &ietnam
'
A55$)6,2 3.2
8UESTIONNAIRE
)elloT The purpose of this questionnaire is to understanding customer requirement and need
for 4ac0et The sur'ey result -ill be used for academic purpose And your cooperation can
help the producer to ser'e you better in the future
3$ )o- many 4ac0ets do you buy a year on the a'erageJ #Please tic0 x to one box appropriate
to you$
one in t-o year 3>1 per year =>; per year more than four
1$ To -hom do you buy 4ac0et forJ
yourself your family member for both
=$ 9here do you usually buy 4ac0etsJ #Tic0 x in boxes you buy* you can tic0 in more than
one boxes$
Company store or sales agents Trade fair
+upermar0et 8ashion #Clothes$ +hop
+talls in local mar0et 7ther place #Please specify$

;$ 9hen buying a 4ac0et* you often:

Buy immediately -hen you find a suitable 4ac0et
Compare bet-een se'eral alternati'es then buy one
:$ Please indicate ho- much you agree or disagree to follo-ing statements about 4ac0ets #3
+trongly agree 1 Agree = !ormal ; Disagree : +trongly disagree$
8or example: Aac0et should gi'e highly -armle'el #Agree$ 3 1 = ; :
+trongly agree +trongly disagree
Aac0et should gi'e highly -armle'el and can be used in
moderate and strong cold -eather
3 1 = ; :
Aac0et can bear light rain 3 1 = ; :
8abric should be of non dust>catching material 3 1 = ; :
8abric should be of resistance to flame 3 1 = ; :
Lou need :>layer 4ac0et and ad4ustable thic0ness to use -ith
moderate and strong cold -eather
3 1 = ; :
'i
Lou need se'eral 1>= layer 4ac0ets 3 1 = ; :
Aac0et can be used in many occasions 3 1 = ; :
Color should be simple* not colorful 3 1 = ; :
Aac0et has plain color 3 1 = ; :
Aac0et -ith fashionable color 3 1 = ; :
Aac0et can ha'e 3>1 mix color 3 1 = ; :
Color should be bright and sharp 3 1 = ; :
Color should be elegance 3 1 = ; :
Aac0et -ith simple design 3 1 = ; :
Aac0et is accompanied -ith hat 3 1 = ; :
)at is flexible* can be assembled or unbinded 3 1 = ; :
Aac0et is design -ith edge line 3 1 = ; :
There are some special design features in 4ac0et 3 1 = ; :
The design should be fashionable 3 1 = ; :
Aac0et should fir your body form 3 1 = ; :
?$ Please ran0 the follo-ing items in descending le'el of importance of 4ac0et in your
opinion #3 Most important 1 +econd most important : 5east important$
8or example:
Price 3
%uality =
Color 1
+imple design pattern ;
8ashionable design pattern :
I)6,7%&$ /'3# #%)9,)1 "$#$
Price
%uality
Color
+imple design pattern
8ashionable design pattern
'ii
H$ 9hich of follo-ing companies you ha'e buy 4ac0et fromJ #Tic0 to companies you ha'e
used its products Lou can tic0 more than one companies$
Thanglong ,arment 32 Ducgiang Company
!ha Be company other companies /mported 4ac0ets
@$ Please indicate your opinion about Thanglong 4ac0et in follo-ing dimensions #Lou can
let it blan0 if do not 0no- about the product$
+trongly agree +trongly disagree
Company6 products ha'e reasonable price 3 1 = ; :
Company6 products is not more expensi'e than other companies 3 1 = ; :
%uality of product is good 3 1 = ; :
Company6 products ha'e beautiful color 3 1 = ; :
Products are offered -ith 'arious designs 3 1 = ; :
<$ Lou are Male 8emale
Married +ingle
32$ Please indicate your age
12>1: 1?>=2 =3>=: =?>;:
;: up
33$ 9hat is your a'erage income per monthJ
:22*222>3*222*222 3 >3: million 3:>1 million 1>1: million
1: million up
31$ 9hat is the 0ind of your -or0J
7ffice 7utside -or0* -or0 requires tra'elling
+tudent Engineer* -or0er -or0ing inside
other 0ind of -or0
Than0 you for your cooperation
'iii
A55$)6,2 3.3
Table 3 Age or respondents
8requency Percent
12>1: :122 =<=<
1?>=2 ;@22 =?=?
=3>=: 3=22 <@:
=?>;2 3122 <2<
;3 up H22 :=2
Total 3=122 32222
Table 1 +ex of respondents
8requency Percent
8emale @122 ?131
Male :222 =H@@
Total 3=122 32222
Table = Marital status
8requency Percent
+ingle @@22 ???H
Married ;;22 ====
Total 3=122 32222
Table ; End usage for 4ac0et
8requency Percent
for oneself ;:22 =;2<
for family member :22 =H<
for both H@22 :<2<
Missing ;22 =2=
Total 3=122 32222
ix
Table : (ser and Marital status Cross>tab
Marital status Total
single married
for oneself Count =<22 3222 ;<22
I -ithin user H<:< 12;3 32222
I -ithin Marital
status
;;=1 11H= =H31
for both Count ;<22 =;22 @=22
I -ithin user :<2; ;2<? 32222
I -ithin Marital
status
::?@ HH1H ?1@@
Chi>+quare Tests
&alue df +ig #1>sided$
Pearson Chi>+quare :@? 322 221
Table ? /ncome of respondents
8requency Percent
:22*222>3 million ?122 ;?<H
3mil to 3: mil =222 11H=
3: mil > 1 mil 3=22 <@:
1: mil > = mil 3322 @==
= mil up 3122 <2<
Missing ;22 =2=
Total 3=122 32222
Table H "espondents type of -or0
8requency Percent &alid Percent
7ffice ??22 :222 :222
+tudent @22 ?2? ?2?
other 0ind of -or0 1;22 3@3@ 3@3@
7utside* tra'elling 1?22 3<H2 3<H2
9or0er* engineer @22 ?2? ?2?
Total 3=122 32222 32222
x
Table @ !umber of 4ac0et respondents buy per year
8requency Percent
3 in 1 years ;?22 =;@:
3>1 per year H322 :=H<
=>; per year ;22 =2=
more than ; per year <22 ?@1
Missing 122 3:1
Total 3=122 32222
Table < Buying pattern
8requency Percent
buy immediately H<22 :<@:
compare among some then buy :122 =<=<
Missing 322 2H?
Total 3=122 32222
Table 32 Place to buy 4ac0et
Place Buy#I$ DonKt buy#I$
CompanyKs retail store and sales agent ;<12 :2@2
+upper mar0et @=2 <3H2
+talls in mar0et 3@<2 @332
Trade fair =332 ?@<2
8ashion shop =3@2 ?@12
7ther places <32 <2<2
xi
Table 33 Means of customer requirement of 4ac0et
! Mean +td De'iation
9arm le'el 3=122 13H 33=
fashionable color 3=122 1;H 31<
1>= color mix 3=122 1?? 33=
bright color 3=122 1H2 33:
elegant color 3=122 13? 2<2
simple design pattern 3=122 13; 2<H
-ith hat 3=122 1?2 312
flexible hat 3=122 11@ 32;
Edge line 3=122 1:2 331
special feature design 3=122 11@ 321
fashionable design 3=122 11? 32H
light rain 3=122 12< 32;
fit body form 3=122 3H< 2@H
non dust catching 3=122 3<H 322
non flammable 3=122 1=@ 33:
: layers 4ac0et 3=122 =13 3;;
1>= layer 4ac0et 3=122 1;1 333
multi>purpose use 3=122 113 33=
simple color 3=122 11H 31H
plain color 3=122 1@= 3=3
3> +trongly agree :> +trongly disagree
xii
Table 31 /mportant le'el of four dimension of a 4ac0et #I of sample$
Dimension 3U importance 1U importance =U importance ;U importance :U importance
Price ;21 11H 3;; 313 ?@
%uality =1? 1@@ 3H; 3;; =
Color H? 1=: =@? 12: :=
+imple design ;: := 3?H =2= =@?
8ashionable design 33; 3:1 @= 3@1 ;1;
Table 3= T>test for difference of men and -omen on requirement for 4ac0et #only differences
are presented$
+ex ! Mean +td De'iation
non flammable female @1 111 33H
male :2 1?; 32@
simple color female @1 1;= 3=@
male :2 121 321
plain color female @1 =2; 3;:
male :2 1:2 2<H
5e'eneKs Test for
Equality of &ariances
t>test for Equality of
Means
8 +ig t df +ig #1>
tailed$
Mean
Difference
non flammable Equal 'ariances
assumed
223 2<1 >12? 3=222 22; >2;1
Equal 'ariances
not assumed
>132 32<:? 22; >2;1
simple color Equal 'ariances
assumed
32<: 222 3@3 3=222 22H 2;3
Equal 'ariances
not assumed
3<; 31:32 22: 2;3
xiii
plain color Equal 'ariances
assumed
HH; 223 1=3 3=222 221 2:;
Equal 'ariances
not assumed
1:; 31@H? 223 2:;
Table 3; A!7&A test for difference in means of different age group #only differences are
presented$
+um of +quares df Mean +quare 8 +ig
1>= color mix Bet-een ,roups 33:@ ;22 1@< 1=? 22?
9ithin ,roups 3:?2@ 31H22 31=
Total 3?H?? 3=322
simple design Bet-een ,roups <12 ;22 1=2 1:; 22;
9ithin ,roups 33:2H 31H22 2<3
Total 31;1H 3=322
Edge line Bet-een ,roups 331= ;22 1@3 1=1 22?
9ithin ,roups 3:=HH 31H22 313
Total 3?:22 3=322
special feature Bet-een ,roups 113: ;22 ::; ?3; 222
9ithin ,roups 33;;@ 31H22 2<2
Total 3=??= 3=322
8ashionable design Bet-een ,roups 3?<? ;22 ;1; ;23 222
9ithin ,roups 3=;1< 31H22 32?
xi'
Table 3: Post hoc 5+D test for A!7&A
Mean Difference #/>A$ +td Error +ig
Dependent &ariable #/$ Age #A$ Age
simple design =3>=: 12>1: 2H< 2=2 223
1?>=2 2@2 2=2 223
=?>;2 2<= 2=@ 221
;3 up 21H 2;: 2:;
Edge line 12>1: 1?>=2 223 211 2<@
=3>=: >2@3 2=; 221
=?>;2 >2== 2=: 2=?
;3 up 2:H 2;; 212
=3>=: 12>1: 2@3 2=; 221
1?>=2 2@3 2=; 221
=?>;2 2;@ 2;; 21@
;3 up 3=H 2:1 223
special feature 12>1: 1?>=2 22H 23< 2H2
=3>=: >3== 21< 222
=?>;2 >212 2=2 2:3
;3 up >2;; 2=@ 21?
=3>=: 12>1: 3== 21< 222
1?>=2 3;2 2=2 222
=?>;2 33= 2=@ 222
;3 up 2@< 2;: 22:
8ashionable design 12>1: 1?>=2 23: 213 2;H
=3>=: >331 2=1 222
=?>;2 >23; 2== 2?H
x'
=3>=: 12>1: 331 2=1 222
1?>=2 31H 2=1 222
=?>;2 2<H 2;3 221
;3 up 33? 2;@ 221
1>= color mix 12>1: 1?>=2 23< 211 2=<
=3>=: >2HH 2=; 22=
=?>;2 233 2=? 2H?
=3>=: 12>1: 2HH 2=; 22=
1?>=2 2<? 2=: 223
=?>;2 2@@ 2;; 22:
;3 up 3=1 2:1 223
Table 3? Mean -ithin age group
12>1: 1?>=2 =3>=: =?>;2 ;3 up
Mean Mean Mean Mean Mean
1>= color mix !B1?< !B1:2 !B=;? !B1:@ !B13;
simple design pattern !B12? !B12; !B1@: !B3<1 !B1:H
Edge line !B1;1 !B1;1 !B=1= !B1H: !B3@?
special feature design !B13= !B12? !B=;? !B1== !B1:H
8ashionable design !B13< !B12; !B==3 !B1== !B13;
x'i
Table 3H A!7&A test for difference in 0ind of -or0 to 4ac0et
+um of +quares df
8ashionable design Bet-een ,roups 3;<3 ;22
9ithin ,roups 3=?== 31H22
Mean Difference
#/>A$
+td Error +ig
Dependent
&ariable
#/$ Qind of
-or0
#A$ Qind of -or0
8ashionable design 7ffice student 23; 2=< 2H1
other 0ind of
-or0
>2@? 21: 222
outside*
tra'elling
>2;3 21; 22<
-or0er* engineer >21= 2=< 2::
Table 3@ Mean of 0ind of -or0 for fashionable design
office student other 0ind of
-or0
outside*
tra'elling
-or0er*
engineer
Mean Mean Mean Mean Mean
fashionable
design
!B121 !B3@@ !B1@@ !B1;1 !B11:
Table 3< 8requency of customers ha'e used products from companies in domestic mar0et
Company I of respondents used I of respondents not use
Thaloga ;=1 :?@
!ha Be 12: H<:
,arment 32 =1? ?H;
Duc ,iang 32? @<;
7ther companies =3@ ?@1
/mported goods ;<1 :2@
x'ii
Table 12 Customer6s perception about Thaloga 4ac0ets
! Mean +td De'iation
Appropriate price @<22 1:= 331
!ot more expensi'e than other
product
@<22 1:: 2<=
,ood quality @<22 1=3 2@1
!ice color @<22 1?1 2<2
&ariety designs @<22 1H3 2@@
&alid ! #list-ise$ @<22
x'iii
,eneral Director
/nterior Director Production Director Technical Director
%uality
Control Dept
Administration
Dept
Technical
Dept
Production
Dept
8inance
FAccounting Dept
9arehouse
Dept
Domestic
Dept
Export
Dept
Production Enterprises 3>?
Bonded 9arehouse Plastic Manufacturing Plant
!amhai ,arment 8actory )aiphong ,arment 8actory
A55$)6,2 .1 Company 7rgani.ational +tructure
Managerial relation
/nteracti'e relation
xix
A55$)6,2 .2
Table 3 Qey sales figures
(nit &!D million
/tem (nit 3<<@ I sales 3<<< I sales 1222 I sales 1223D I sales
Manufacturing
'alue
&!D bil =; ;; ;1 ;1 ;H ;1 :: ;3
Total sales &!D bil H@ 322 322; 322 33=2H 322 3== 322
,ro-th rate I 1@H1 31?1 3H?=
Export re'enue &!D bil ?? @: @?; @? <1@ @1 32H @2
/n -hich 87B &!D bil :3 ?: :@ :@ ?1= :: H= ::
Domestic re'enue &!D bil 31 3: 3; 3; 121 3@ 1; 3@
87BV Domestic &!D bil ?= @3 H1 H1 @1: H= <H H=
,arment
produced #stand$
3222
piece
;*?22 :*222 :*122 ?*322
,arment
produced #real$
3222
piece
3*?22 1*:22 =*122 =*H22
Tax &!D bil 3? 1?<3 1<;3
/n'estment &!D bil <@: ;: H
+ource: Company annual report 3<<<* 1222
D Targeted
Table 1 /ncome statement
(nit &!D million
/tem 3<<@ I sales 3<<<D I sales
+ales H@*222 322 322*;222 322
Cost of good sold ?=*:3<; @3; HH*=?H@ HH3
,ross margin 3;*;@2? 3@? 1=*2=2H 11<
+ales expenditure :*?1H= H1 @*HH<H @H
Administration
expenditure
H*@?=? 323 31*?:=@ 31?
7peration income <@<H 3= 3*:<:? 3?
7ther income 1<1: 2; 222 22
/ncome before tax 3*1@=3 3? 3*:<@: 3?
D Estimate
Table = Company balance sheet
xx
(nit &!D million
Assets 3G3G3<<@ 3G3G3<<< 5iability and Equity 3G3G3<<@ 3G3G3<<<
Current assets 1=*;H1 =;*=3H 5iability =3=:; :3?=2
Cash :<@ :2H +hort>term debt 1:*<<3 =?*=H@
"ecei'ables ?*;@3 3?*?@: 5ong>term debt :*=?= 3:*1:1
/n'entories 3:*:3@ 3H*@@;
7ther current assets @H; 3*1=<
8ixed assets 1;*<3? =;*@?< 7-nerKs equity 3H*2=; 3H*::?
Plant* equipment ;3*?21 ::*=H2
5ess acc depreciation >3@*@<; >11*2H2
/n process fixed assets 1*12@ 3*:?<
Total assets ;@*=@@ ?<*3@? ;@*=@@ ?<*3@?
Table ; +ummary of 0ey profitability ratios
(nit &!D million
"atio 3<<@ 3<<< Apparel /ndustry
Total asset turno'er 3=1 3; 3?1
!et fixed asset turno'er 1H@ 1@1
Equity turno'er ;:3 ::;
,ross profit margin 3@?I 11<I =?;@I
7perating profit margin 3=I 3?I <<HI
!et profit margin 331I 32@I :<3I
"eturn on equity :2;HI ?2=1I 3@:I
+ource: Calculating from Appendix ; Table 3* 1* =
(+ apparel and accessories industry #http:GG---mar0etguidecom$
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Table : !umber of retail stores or sales agent in pro'inces
"egion Pro'ince !umber or retail stores
!orthern area )anoi and 'icinity 1@
5ang +on 3
)ai Phong :
Thanh )oa 1
)a Tay 1
Phu Tho 1
&iet Tri 1
Tuyen %uang 3
)a Tinh 3
)ue 3
+outhern area )o Chi Minh City :
!ha Trang 3
Da !ang 3
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A55$)6,2 5
Table 3 Example of costing plan for a children 4ac0et for a foreign customer
(nit: (+D
8abric item (nit !orm Price Cost I of production cost
+hell !o3 m 2<2 3=: 311 3:;@
5ining 9B:@N m 3=2 2@2 32; 3=12
5ining m 2@= 2?; 2:= ?H=
Padding Ld 21: 2?= 23? 12=
Do-n Ld 212 H:2 3:2 3<2;
Main thread roll 22H 3@= 23= 3?:
8ront .ipper pc 32= 2:2 2:1 ??2
Button pc ?12 22; 21: =3H
Elastic band Ld 2:2 233 22? 2H?
Main label pc 32= 22; 22; 2:3
+i.e label pc 32= 22= 22= 2=@
Care label pc 32= 221 221 21:
)ang tag pc 122 22= 22? 2H?
PE bag pc 32= 22= 22= 2=@
Tissue paper pc 322 223 223 23=
Carton box pc 32= 22@ 22@ 321
Embroidery pc 32= 212 213 1??
CMP pc 32= 3@2 3@: 1=;@
Test* inspector* sample pc 32= 23: 23: 3<2
Production Cost H@@ 32222
Profit* ban0 charge 3=I 321 31<;
%uota charge 21 1:;
7ffer Price <= 33@21
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Table 1 Example of costing plan for 1>layer 4ac0et offer to domestic customer
(nit &!D
/tem of fabric (nit !orm Price Cost I of production cost
Main fabric 9B:@W m 3H: 3:*222 1?*1:2 =H;@
5ining m 3:2 H*222 32*:22 3;<<
Thread m ;:222 3 ;:2 2?;
+nap pc 323 =*222 =*2=2 ;==
Dra-string m 1:2 122 :22 2H3
1>side stic0ing plaster m 22= =*222 <2 23=
+topper* ring pc ;2; 3*:22 ?*2?2 @?:
5abel pc 323 ?22 ?2? 2@H
Carton box* PE bag pc 323 @22 @2@ 33:
5abor cost pc 3:2 3;*:22 13*H:2 =32:
P#'637&,') 7'+& 57 :;,; 1;;.;;
Plus profit 32I pc HH*2;@ 33222
Plus retail margin 32I pc @;*H:= 31322
Plus &AT 32I pc <=*11@ 3==32
O(($# 5#,7$ 57 <3,5;; 133.<

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