Se ha denunciado esta presentación.
Utilizamos tu perfil de LinkedIn y tus datos de actividad para personalizar los anuncios y mostrarte publicidad más relevante. Puedes cambiar tus preferencias de publicidad en cualquier momento.
2013
Dao Thanh Hang – s3362358
Pham Tra My – s3357655
RMIT International University
3/4/2013
Big C – Business level strate...
Big C Vietnam - Business level strategy
1
Executive Summary
This report aimed at analyzing the current business strategy o...
Big C Vietnam - Business level strategy
2
Contents
Executive Summary........................................... 1
Introduc...
Big C Vietnam - Business level strategy
3
Introduction
Big C is the biggest hypermarket that targets final consumers in Vi...
Big C Vietnam - Business level strategy
4
Macro Environment Analysis
External environment Influences
Big C is affected by ...
Big C Vietnam - Business level strategy
5
Last but not least, the economic influences on retailer cannot be ignored. With ...
Big C Vietnam - Business level strategy
6
Competitive forces
After looking at the general external factors that have impac...
Big C Vietnam - Business level strategy
7
From figure 2, threat of entry and threat of substitutes have the biggest impact...
Big C Vietnam - Business level strategy
8
competitive industry requires Big C to constantly come up with clear and effecti...
Big C Vietnam - Business level strategy
9
Micro Environment Analysis
After looking through the Macro environment, an in-de...
Big C Vietnam - Business level strategy
10
Figure 3: VRIN analysis
Nonetheless, the group has developed Big C’s private la...
Big C Vietnam - Business level strategy
11
Moreover, with the desire to compete with traditional wet markets by using its ...
Big C Vietnam - Business level strategy
12
Business Strategy
The various competences and capabilities of Big C as mentione...
Big C Vietnam - Business level strategy
13
benefits but low price.On top of that, their unbeatable weekly discounts and pr...
Big C Vietnam - Business level strategy
14
Conclusion
After looking at both internal competences and external influences, ...
Big C Vietnam - Business level strategy
15
Reference
‘Big C is full of beans despite depressed retail market’ 2012, Vietna...
Big C Vietnam - Business level strategy
16
<http://en.vietnamplus.vn/Home/Government-supports-national-brand-development/2...
Big C Vietnam - Business level strategy
17
Assignment Marking Criteria
Critical analysis and synthesis of argument {12} 0 ...
Próxima SlideShare
Cargando en…5
×

Big C business strategies

2.728 visualizaciones

Publicado el

Team assignment in Strategic Management course

Publicado en: Economía y finanzas
  • Inicia sesión para ver los comentarios

Big C business strategies

  1. 1. 2013 Dao Thanh Hang – s3362358 Pham Tra My – s3357655 RMIT International University 3/4/2013 Big C – Business level strategy
  2. 2. Big C Vietnam - Business level strategy 1 Executive Summary This report aimed at analyzing the current business strategy of a retail company, specifically Big C, in order to see the suitability of the company strategy in the retail environment. The report looked at the political, legal, social, environmental, economical and technological environment that influenced the retail industry. It was discovered that the Vietnamese government and consumers enthusiastically support the use of local- owned brands. Furthermore, the high inflation and increasing commodities price enticed consumers to opt for more promotion and bulk buying. With the being said, they still cared much about the environment when actively supported eco-friendly products and also an increased tax on plastic bag. Beside the external environment, Big C had limited direct competitors. However, the company had to be aware of the potential foreign collaboration to enter the booming retail industry like one between Co.op Mart and NTUC Fairprice Singapore. To survive and thrive in the industry, the company relied much on their internal capabilities such as unbeatably low price, strong industry relations and innovative services. These competences followed the cost leadership strategy while remaining true to the company’s visions and values.
  3. 3. Big C Vietnam - Business level strategy 2 Contents Executive Summary........................................... 1 Introduction ....................................................... 3 Macro Environment Analysis............................. 4 External environment Influences...................... 4 Competitive forces ........................................... 6 Micro Environment Analysis ............................. 9 Company resources and competences............... 9 Business Strategy........................................... 12 Conclusion....................................................... 14 Reference......................................................... 15
  4. 4. Big C Vietnam - Business level strategy 3 Introduction Big C is the biggest hypermarket that targets final consumers in Vietnam currently. The company realizes the potential of Vietnam retail industry at early stage and uses its strengths to capitalize on Vietnam growing economy (Nielsen, 2011). According to the research of Bui and Lemaire (2005), Big C Hanoi is the 7th project of Bourbon in Vietnam with a total capital of 250 million USD. Using the French group Casino’s banner “Big C”, already well- known and holding a positive image in Thailand to reach Vietnamese buyers was a wise choice of the investors. The company currently owns around 21 stores after 12 years in Vietnam and many of them are in urban areas where consumer behavior towards modern retail formats nourishes its growth of sales. Big C provides a wide selection of goods ranging from Foods, Personal Care, and Household Care to Electronics Appliances. All of these make Big C one of the biggest retailers in Vietnam, competing with many other local and international brands. This detailed data and analysis on Big C will give readers understanding about the strategies at business level, exercised by the company in order to thrive in a competitive market. The report will explain and give an objective evaluation of the business strategies based on both of the company’s external influence sand internal capabilities. In this report, we will use information from official reports, company websites, trade journals and newspaper in order to accurately assess Big C’s situation. As with analysis methodology, we will use PESTEL framework to study the external forces that have impacts on the retail industry. The Porter’s five forces framework helps to assess the competitive forces acting on Big C. Last but not least, VRIN methodologies will be used to understand the company’s strategies and how it applies to boost sales.
  5. 5. Big C Vietnam - Business level strategy 4 Macro Environment Analysis External environment Influences Big C is affected by the external environment, categorized into six main types: political, social, economic, technological, environmental and legal factors. It is important to assess the current situation to identify the position of the company before discussing its performance in the industry, thus accurately evaluate Big C’s business strategies. Figure 1: PESTEL analysis on Retail Industry As illustrated in figure 1, the external environment affects the type of products that a retailer like Big C take in then sell out. From the Political and Legal perspectives, it is advisable to take in Vietnamese brands since they are greatly supported by the government. This will not only be helpful in lowering the price, the retailer will possibly get more customers since they carry a bigger range of governmentally recognized brands. Furthermore, the tax on plastic bag affects retailer directly as they traditionally use them to contain goods. A shift from plastic to reusable bag or a charge on consumers may support the strain on retailer cost. These impacts go hand in hand with the Social and Environmental point of view in which Vietnamese consumers are getting smarter in their choice of products, ranging from national brands products to eco-friendly goods. Political and Legal • “Vietnamese uses Vietnamese brand” campaign gives price support, prestigious awards and national wide advertisments (Vietnamplus 2013) • VND 40 000/kg tax on plastic bag (Vietnamnews 2012). Social and Environmental • 87% consumer prefer promotion (Nielsen 2011) • Prefer Vietnamese products over foreign for better price and good quality • Eco-friendly conscious consumers (Thanhniennews 2011) Economic and Technological • Rise in commodities price affect consumer's confidence (Nielsen 2011) • High inflation rate (Kantarworldpanel 2012)
  6. 6. Big C Vietnam - Business level strategy 5 Last but not least, the economic influences on retailer cannot be ignored. With the budget being tightened up to spend on higher commodities price and to combat inflation, Vietnamese customers prefer more bulk buying and promotions, as shown in Social impacts. This means that retailers need to be more flexible in packaging and products offering that are economical without sacrificing quality. Through this, customers will trust retailer as their go-to destination, thus hopefully increase their market share.
  7. 7. Big C Vietnam - Business level strategy 6 Competitive forces After looking at the general external factors that have impacts on retailers, it is important to examine the competitive forces, the different competitors, which directly compete with individual retailer like Big C. In this section, the Porter’s five-force framework will be used to identify the attractiveness of the retail industry through the threat of entry, threat of substitutes, power of buyers, power of suppliers and competitive rivalry. In Vietnam’s current retail industry, there are many types ranging from big to small scale: Hypermarket (Big C, Metro), Supermarket (Intimex, Fivimart), Department store (Parkson, Vincom), Shopping Mall (Lotte) and Convenience store (Vietnamonline). By categorizing the retail industry according to different scales, it would be easier to conduct an analysis on the competitive forces that affect Big C. Figure 2: Porter's 5 forces Competitive Rivalry Threat of Entry • High barrier of entry for local business • Foreign collaboration can compete easily Threat of Substitutes • Local convenience stores are more preferable • Rise in income encourages products that improve quality of life which can be bought in big hypermarket Power of Buyers • Consumers have limited influence Power of Suppliers • Big C has strong influence on local suppliers • Big C is probably more influenced by big MNCs
  8. 8. Big C Vietnam - Business level strategy 7 From figure 2, threat of entry and threat of substitutes have the biggest impact on Big C. Though a required turnover of at least 200 million VND per 1000 square meters per day in 5 yearsis difficult for local retailers to expand and directly compete with Big C(Vietnamnet, 2011), foreign investors can sign a joint venture with local businesses to bring in international hypermarket models. This is relatively feasible, considering the joining of Vietnam to the World Trade Organization (WTO) in 2009. For example,Saigon Co.op collaborated with Singapore retail giant NTUC FairPrice to set up a chain of hypermarket in 2012 (Nguyen 2011). As such, though owning 21 outlets - the biggest number of hypermarkets in Vietnam, this new venture will definitely force Big C to up its game in order to win the hypermarket sectors as small local entrepreneurs are taking sides with foreign giants. Besides locals cooperating with foreigners, small convenience stores are formidable substitutes as they have been in the fabric of life of most Vietnamese (Maruyama & Le, 2011). They provide a personal relationship with customers, making pleasant shopping experience and any queries can be solved momentarily. However, the silver lining for hypermarket lies in the increase of income that propel customers to improve quality of life through goods imported oversea or organic products, personal care and household care which cannot be found in small local shops. Being a hypermarket, Big C has strong influence on both buyers and suppliers that they can dictate price and products. However, though limited, the mast customer preference has an impact on product stocking. Additionally, big MNCs like PepSi Co or Unilever that have a strong products influence in the market may have stronger negotiation power in contract with the company. The existing competitive rival that operates in the same hypermarket category is Metro Cash & Carry. However, Metro restricts consumer’s base to wholesalers through the use of membership cards. This leaves Big C as the sole hypermarket that caters to final buyers in Vietnam retail industry. With that being said, locally owned supermarkets like Co.op Mart or Fivimart make the environment tough to operate in as they also provide low cost yet high quality goods as well as higher end to feed the desire to improve quality of life. This has resulted in gross profit growing slowly despite increase in sales (Bui &Lemaire, 2005). The
  9. 9. Big C Vietnam - Business level strategy 8 competitive industry requires Big C to constantly come up with clear and effective strategies in order to continually being the top retailer in Vietnam.
  10. 10. Big C Vietnam - Business level strategy 9 Micro Environment Analysis After looking through the Macro environment, an in-depth analysis of internal strengths and capabilities is necessary to assess how Big C is holding up in the competitive industry. The assessment below will look into the company’s resources and competences which then later be used to examine how successful Big C’s strategies are in coping with the external impacts. Company resources and competences Competitive advantage is advantage that a firm has over its competitors, generating greater sales or margins and (or) retaining more customers, followed by greater value for the firm and its shareholders – as defined by the Investopedia (2013). There are two main types of competitive advantages: comparative advantage (cost advantage) and differential advantage. However, whether that competitive advantage can sustain throughout the rapidly changing environment depends on an organization’s capabilities being of at least threshold value in a market as well as being valuable, relatively rare, inimitable and non-substitutable (Johnson, Whittington & Scholes 2011). We shall apply those four criteria further below when addressing the resources and competences that bring about sustainable competitive advantages for Big C Vietnam. As seen from figure 3 below, Big C has created a distinctive shopping experience that is of value to customers through French style presentation of the stores like wide aisles, high ceiling, etc. that is convenient for customers. The unexpected and periodical test at Health center ensures higher food quality. High quality yet affordable price in the time of stagnant economy are not only valuable but also are inimitable capabilities of Big C. Promotional programs for 20,000 lines and 100 heavily discounted products every week, some as low as 50% off (Bui &Lemaire 2005)always make Big C an attractive destination. Also, capturing the incentives of environmental-concerned consumers, Big C spent 13 billion VND on Energy Saving Project (2010) and 11 billion VND on solar power (2012). It was the first hypermarket in Vietnam to deploy a national-scale solar power project according to Vietnam’s Breaking News Website. Clearly, the company’s great capital never goes to waste and just generates greater volume of purchase while adding to its good reputation.
  11. 11. Big C Vietnam - Business level strategy 10 Figure 3: VRIN analysis Nonetheless, the group has developed Big C’s private labels, with all kinds of products to satisfy customers, – adding to its rarity: Casino, eBon, Big C brand, just to name a few. Catching up with the changing demand of Vietnamese consumers – embracing exotic tastes, Big C also has innovative services like B bread (with French characteristics), B bar (thoughtful consultancy for electronics choices), Sandwich land (ideal fast food counter) and many other Big C owned brands provide exceptional service with highly customize selections with great quality, making Big C more than just a “one-stop shopping” hypermarket. On top of its many innovative services is the strong relation with local suppliers, producers and industry partners that secure high quality, amazingly low price for Big C’s products and impeccable care for its stakeholders. This can be seen in the 2011 comprehensive cooperation with VietinBank to provide banking services for Big C hypermarket system which allows giving wages to employees via cards, reducing the transaction time and reshaping the buying habits of Vietnamese people which are bargaining, payment method, credits usually given to loyal customers, etc. (Ho 2011) • Strong partnership boost company's expansion to eliminate competitors • Relationships with banks aid in support programs for stakeholders • Low price, quality goods • modern shopping style • guarantee hygienic food compared to traditional wet markets • private labels to satisfy customers tastes • Distinctive Shopping experience: French style presentation • Health centers • Strong networks with suppliers and producers • Value added program • Low price, quality goods Value Rarity Inimitability Non- substitutabili ty
  12. 12. Big C Vietnam - Business level strategy 11 Moreover, with the desire to compete with traditional wet markets by using its strong capabilities, Big C and its partner – Viet-Nhat Real Estate are aiming to open three more stores in northern QuangNinh before this province’s anniversary in October 2013in an effort to wipe out “wet markets” with serious hygiene issues (‘Big C is full of beans despite depressed retail market’ 2012). The health inspection mentioned before proves shopping at Big C is much more hygienic and avoids pollution problems posed by wet markets. To sum up, the resources and competences that have been providing Big C with sustainable competitive advantages are its shopping experience that is of value to customers, the inimitable price competitiveness, the distinctive company’s brands that separate it from other supermarkets, value networks and finally undeniably high quality products that can’t be substituted by traditional street shops.
  13. 13. Big C Vietnam - Business level strategy 12 Business Strategy The various competences and capabilities of Big C as mentioned above help identify the current business strategy that the group is pursuing. Apparently Big C has been following the Cost-leadership strategy. According to Robbins & Coulter (2007), the cost leadership strategy competes on the basis of having the lowest costs in its industry and proactively searching for efficiencies in production, marketing and other areas of operation. There are four key cost drivers to help achieve this strategy. Firstly, low input costs are essentials which are illustrated in Big C’s high influence over suppliers. Since their products are mainly taken from Vietnamese brands, the input costs are lower than foreign imported goods. Moreover, their good relation with Vietin Bank makes their modern payment system less costly than it should be. Secondly, economies of scale significantly lower the price. With 20 000 lines of products for each of 21 locations and increasing, Big C’s fixed costs are spread over a large number. Thus, the group can negotiate a steeper discount than other supermarkets due to their large product supplies. Thirdly, experience can be a key source of cost efficiency. One of the things that Big C is well-known of is the possession of high-skilled bakers. Their skills are afterwards transferred to the baker staff, or even other sister units, reducing the cost for training and increasing the internal linkage of the organization. Additionally, with Big C’s long standing in Vietnam industry since the early 1990s, maneuvering through the Asian financial crisis in 1997, they seized the opportunity then and constantly keeping up with “Vietnam popular discounts” motto to grow to be a giant in the retail market until now. Their experience also shows throughadopting the modern retails from the beginning as well as encouraging the usage of Vietnamese products, even before the government’s campaign, helping them avoid changing cost to fit the modern retail environment. Finally, process design also influences cost. One of the cutting-edge products that Big C currently offers in the slow-growing economy of Vietnam is under WOW! Brand – produced by leading Vietnamese factories under Big C’s requirement of quality at unbeatable price - 10% to 70% lower than leading brands (Big C’s website 2013) with reasonable value. This follows the no frills strategy, involving comparatively low
  14. 14. Big C Vietnam - Business level strategy 13 benefits but low price.On top of that, their unbeatable weekly discounts and promotional programs are designed specifically to fit Vietnamese customers who favor promotions, proving to lower the cost further. In short, every program carried out by Big C supports the bigger umbrella of company business strategy of cost leadership. They are highly attentive to pricing strategy, customer service and industry relations in maximizing on their innate capabilities and many years of experience to reach an ultimate goal of achieving the lowest price to reach the broadest target customers.
  15. 15. Big C Vietnam - Business level strategy 14 Conclusion After looking at both internal competences and external influences, it is clear that Big C is maximizing its strength to compete in the fierce retail industry through sound strategies that accurately address the market situation and consumer trend. The different facets of Big C (customer supports, products tests and innovative services) still prove to show the 5 company values of: customer satisfaction, responsibility, solidarity, transparency and innovation. Along with their vision, “Nourishing a world of diversity” ( Big C website, 2013), the hypermarket stays true to their core focus through providing diversified services (company’s unique brands) and products (local and foreign goods) in maintaining their cost leadership strategy. This strategy directly addresses to the current macro environment situation of price sensitive customers and pro-local goods mindset of the government.
  16. 16. Big C Vietnam - Business level strategy 15 Reference ‘Big C is full of beans despite depressed retail market’ 2012, Vietnam Investment Review, 2 October, viewed 20 March 2013, <http://www.vir.com.vn/news/business/property/big-c-is-full-of-beans-despite- depressed-retail-market.html> ‘Big C to Spend VND13 Billion on Energy Saving Project’ 2010, Vietnam Breaking News, 24 May, viewed 22 March 2013, <http://vietnambreakingnews.com/2010/05/big-c-to-spend-vnd13-billion-on-energy-saving- project/#.UVfYuRd8nD-> ‘Big C’s VND11 bil.on solar power’ 2012, Vietnam Breaking News, 26 Nov, viewed 22 March 2013, <http://vietnambreakingnews.com/2012/11/big-cs-vnd11-bil-on-solar-power/#.UVfYQBd8nD-> ‘Foreign supermarkets size up Vietnam’ 2011, HKTDC Research, 25 Feb, Hong Kong Trade Development Council, viewed 21 March 2013, <http://economists-pick-research.hktdc.com/business- news/article/International-Market-News/Foreign-supermarkets-size-up- Vietnam/imn/en/1/1X000000/1X07C74B.htm> ‘Government supports national brand development’ 2013, VietnamPlus, Vietnam News Agency, 8 January, viewed 20 March 2013, ‘High tax may lead to plastic-bag imports’ 2012, Vietnam News, 11 February, viewed 20 March 2013, <http://vietnamnews.vn/Environment/220663/high-tax-may-lead-to-plastic-bag-imports.html> ‘Most Vietnamese back eco-friendly products, practices: survey’ 2011, Thanhnien News, 1 September, Vietnam Ministry of Culture and Information, viewed 20 March 2013, <http://www.thanhniennews.com/2010/pages/20110901153334.aspx> ‘Supermarkets and Retailers’ 2011, Vietnam Online, viewed 20 March 2013, <http://www.vietnamonline.com/shopping/supermarkets-and-retailers.html> ‘Vietnam, consumer power at risk’ 2012, Kantarworldpanel, 22 June, viewed 20 March 2013, <http://www.kantarworldpanel.com/global/News/Press-release-June-2012-Consumer-Power-at-risk>
  17. 17. Big C Vietnam - Business level strategy 16 <http://en.vietnamplus.vn/Home/Government-supports-national-brand-development/20131/31008.vnplus> Big C supercenter 2013, Big C EBH, Vietnam, viewed 20 March 2013, <http://www.bigc.vn/Default.aspx?tabid=215&language=en-US> Bui, H &Lemaire, J 2005, BIG C IN VIETNAM – Retail challenges at corporate and country level, <vietgo.free.fr/thoa/BIGC%20CASE.doc>, viewed 20 March 2013 Ho, H 2011, ‘Comprehensive cooperation between Big C and VietinBank’, VietinBank, VietinBank Group, viewed 20 March 2013, <http://www.vietinbank.vn/web/home/en/news/11/110928.html> Investopedia US 2013, A Division of ValueClick, Inc., viewed 20 March 2013 <http://www.investopedia.com/terms/c/competitive_advantage.asp> Johnson, G, Whittington, R, Scholes, K 2001, Exploring strategy – text and cases, 9thedn, Pearson education, Essex, England. Maruyama, M & T, Le 2011, ‘Modern retailers in transition economies: The case of Vietnam’, Discussion Paper Series, Research Institute for Economics and Business Administration, Kobe University, Japan, viewed 20 March 2013 Nielsen 2011, ‘Viet Nam grocery Report, The Nielsen Company, http://www.nielsen.com/vn.html, viewed 20 March 2013 Robbins, S & Coulter, M 2007, Management, 9thedn, Pearson Education, Upper Saddle River, New Jersey Vn Charm, TựhàohàngViệt Nam 2013, HưởngứngCuộcvậnđộngNgườiViệt Nam ưutiêndùnghàngViệt Nam, Ủy ban TW MặttrậnTổQuốcViệt Nam, viewed 20 March 2013 <http://www.tuhaoviet.vn/>
  18. 18. Big C Vietnam - Business level strategy 17 Assignment Marking Criteria Critical analysis and synthesis of argument {12} 0 to 15 marks Excellentcritical analysisand evaluationshowing understandingofcomplex issues. Excellentsysthesis of complexideasintoa coherent,logicaland convincingargument Goodcriticalanalysisand evaluationof issuesand synthesis of ideasand informationintoanargument that shows somemerit Someanalysis and evaluationof issues evident. Synthesis is patchyor argumentisnot welldevelopedor lacks coherence Little or no analysisor synthesis evident in assignment,argument lackslogic Application of strategic management theory and tools {7} 0 to 10 marks Excellentapplicationof appropriatestrategic managementtheoretical frameworksandtools to supportargumentandjustify conclusion Gooduse of appropriate strategic management frameworks,but additional tools wouldhave been helpfulto justify argument Somestrategic mangementtoolsor frameworksused,but not always appropriate,or not sufficientto justify argument Little or no applicationof strategic management theoreticalframeworksor tools, or inappropriatetools usedthat didnot support argument Understanding of strategic management theory and tools, and the quality of Information sources 0 to 10 marks {6} ExcellentunderstandingofSM theory, concepts,andtools invoved andexcellentuseof widerangeof informationfrom appropriatesources GoodunderstandingofSM theory andtools involved and gooduse of a rangeof appropriateinformation sources SomeunderstandingofSM theory andtools involved and little variety of information,or not allsourcesare appropriate Limitedunderstandingof SM theory and tools involved and inappropriate informationsourcesorrelies primarilyon onlyonesource Referencing and presentation {3} 0 to 5 marks All informationisfullyand accuratelyreferenced. Assignmentis easy to read andwellpresented. Informationis mostly referencedaccurately. Assignmentmostlyeasy to readand wellpresented. Referencingisincomplete or not always accurate. Assignmentis not always easy to understandor well presented. Little referencingof informationorvery inaccuratelypresented. Assignmentis difficultto reador not wellpresented. Other Comments Total marks = 11 + 7 + 6 +3 = 27/40 (CR-68%)

×