Export plan for Sloten BV.

Group

: 10

By

: Anten Asihansari (306960)

Hamid Babak (312274)
Rutger Weekhout (31571)
Nguyen Thi Nguyet (313441)
Li He (307494)
Dai Yaya (306860)

Course

: International Business and Management Studies

School

: Saxion University of Applied Sciences Deventer

Lecturers

: Mr. T. Tartarin
Mr. R. E. Rietberg

Date

: 11th January, 2012

Table of Contents
1.

Executive Summary ----------------------------------------------------------------------------2

2.

Company description ----------------------------------------------------------------------------2

2.1.History ------------------------------------------------------------------------------------------3
2.2.Management----------------------------------------------------------------------------------4
2.3.Export team-----------------------------------------------------------------------------------4
2.4.Sales/Revenue/Financial stability overview-----------------------------------------4
2.5.Goals and objective-------------------------------------------------------------------------4

3.

Product description-------------------------------------------------------------------------------5
3.1.Domestic and International Product---------------------------------------------------5
3.2.Growth Potential-----------------------------------------------------------------------------5

4.

New foreign market place analysis----------------------------------------------------------6

4.1.rationale for exporting---------------------------------------------------------------------6
4.2.Rationale for selected foreign market------------------------------------------------6
4.3.Country profile--------------------------------------------------------------------------------6
4.4.Cultural profile -------------------------------------------------------------------------------8
4.5.Industry profile-------------------------------------------------------------------------------10

5.

Market entry strategies -------------------------------------------------------------------------10

5.1.Strategic alliance ---------------------------------------------------------------------------12
5.2.Target customer profile--------------------------------------------------------------------13
5.3.New foreign market product description---------------------------------------------14
5.4.Pricing Strategies----------------------------------------------------------------------------15
5.5.Sales and promotion strategies---------------------------------------------------------16
5.6.Logistics and transportation-------------------------------------------------------------20

6.

International law-----------------------------------------------------------------------------------22
6.1.Mediation/arbitration clauses and Venue--------------------------------------------22
6.2.Language consideration ------------------------------------------------------------------22
6.3.Contract terms and conditions----------------------------------------------------------22
6.4.Product liability considerations----------------------------------------------------------23
6.5.Intellectual property protection---------------------------------------------------------23
6.6.Distribution agreements-------------------------------------------------------------------23

7.

Financial analysis ---------------------------------------------------------------------------------24

7.1.Facility and equipment requirements-------------------------------------------------24
7.2.Sales forecast---------------------------------------------------------------------------------24
7.3.Cost of goods sold---------------------------------------------------------------------------25
7.4.Projected international Income Statement------------------------------------------26
7.5.Breakdown analysis-------------------------------------------------------------------------27
7.6.Financial requirements---------------------------------------------------------------------27
7.7.Financing sources ---------------------------------------------------------------------------28

8.

Risk management --------------------------------------------------------------------------------28

8.1.Country risk -----------------------------------------------------------------------------------28
8.2.Commercial risk------------------------------------------------------------------------------29
8.3.Current risk------------------------------------------------------------------------------------29
8.4.Internal risk------------------------------------------------------------------------------------29
8.5.Market risk-------------------------------------------------------------------------------------29

9.

Research methods and theoretical basis--------------------------------------------------30

9.1.The research method and the techniques-------------------------------------------30
9.2.The theoretical basis-----------------------------------------------------------------------30

10. References ------------------------------------------------------------------------------------------32

11. Appendices -----------------------------------------------------------------------------------------34

1. Executive Summary
This export plan is designed for Sloten BV in Deventer, The Netherlands. Sloten BV is an

international company which focuses on young animal nutrition. The company would like to
expand their market by doing export to new potential countries. There are three main
products; those are Sprayfo, Nuklospray, and Spraymes. However, the export plan will
concentrate on Sprayfo, which is milk replacer for calves.
In the first period, the project group analyzes about the company and the products itself.
After analyzing of six countries, which are Vietnam, Spain, The Philippines, Brazil, China, and
Russia, the project group considered Vietnam as the most potential market for Sloten BV to
enter. Therefore, in the second period, the project group goes deeper in analyzing Vietnam
market. Eventually, the project group established a market entry strategies and financial
analysis for the next three year.
The methods for this export plan are mainly done by desk research. The data from desk
research will be applied to internal and external analyses. In addition, the desk research also
provided information related to strategy and development, and how the strategy could be
implemented in Vietnam. The source of this research is based on secondary and primary
data. The secondary data were collected from the companys website, other reliable
websites and literatures. Moreover, the primary data were from the interview during the
visit to Sloten BV in Deventer and the companys presentation in Saxion University of
Applied Science.
In a nutshell, if Sloten BV is successful in exporting Sprayfo to Vietnam, the company can
increase their market share in milk-replacer industry of Vietnam.
2. Company Description
2.1 History

I.

Significant milestones in the development of the business.

Before 1958, The Sloten factory was a factory which produced butter cheese and milk. During
1958, things have changed. Sloten bought Lyempf factory where liquid raw materials can be
dried and fat can be spray-dried. After 10 years (in 1968), Sloten has two warehouses situated
Deventer. And it began focus more on export in 1984. In 1989, a new product appeared which is
Nuklospray. After 3 years (in 1992), Sloten had trial farm in Winssen, the Netherland. In 1993,
Sloten started selling Nuklospay in Italy. Two years later (in 1995), Sloten gained ISO9001
certification for Sloten Friesland and Deventer. In 1996, Sloten had a new name: Sloten B.V and
have been using this name until now. It installed 4 new silos in Deventer in 1999. At the same
time, buffalo milk was introduced to Italy. In 2008, there were new weigh feeders and two extra
silos in Deventer.1
II.

Export strategy
Sloten BV committed to be more focused on international market. Until now, Sloten BV exports
their products and delivers it to the customers through the distributors or agents. The
distributors and agents have an important role in Sloten BV business. In each country, Sloten
BV chooses the distributors or agents and they will represent Sloten BV to the end-users. Not
only relying to the distributors and agents, Sloten BV also has subsidiary offices in some country
such as Brazil, Germany, Poland, and Italy to help controlling the sales in the country. 2

III.

Corporate legal structure

Sloten BV uses distributors, agents, and has subsidiary offices in some country. Sloten BV
adjusts some legal structure which applies in each country. For the distributors, Sloten BV
already prepared a distribution agreement to make the task of both of the supplier (Sloten BV)
and the distributor clear and it is based on the Netherlands laws.

History . (n.d.). Sloten BV. Retrieved from http://www.sloten.com/index.php/en/aboutsloten/history.html

2 Sloten BV (n.d.). Subsidiasy offices. Sloten BV. Retrieved December 24, 2011, from
https://sloten.com/index.php/en/about-sloten/subsidiary-offices.html

I.

2.2 Management
Ownership of the company
The ownership of Sloten BV is 100 percent acquisitions with Nutreco. This ownership started on
August 29th 2006.3 Sloten BV has in cooperation with Nutreco a big part of the shares market,
this gives Sloten BV an edge on the market of milk replacing products.
II. Vision, Mission, Organizational structure, sustainability policy
Vision:
In a world with limited natural resources and a growing population, Nutreco plays a leading role
in developing and supplying the most efficient and sustainable feed solutions.
Mission:
Nutreco is a global leader in animal nutrition. We deliver high-quality and sustainable feed
solutions and add value to our customers businesses by developing and supplying innovative
products and concepts that support the best performance of farmed animals and fish

Organization
Sloten BV has already a successful company to fulfill the market in the Netherlands. In the
organization of Sloten BV itself, the company has a person who is responsible for the export
of Nuklospray and Sprayfo which is Mr. T. de Vries designed for some connected countries
such as Italy, Brazil and Poland, Sloten BV has a person who has control for the export to
those countries. Sloten BV has an internal organization structure which is still used
nowadays.

Organizational Structure
This is the organization structure of Sloten BV which applies in the company. The Technical
Director is Mr Steffen Rouwers, the Managing Director is Mr, Willem Kernkamp and the Finance
Director is Mr Gerro Dijkstra. Besides this structure that Sloten BV has, to expand the market,
Sloten BV has also some people who are responsible in the subsidiary offices.

3 Nutreco . (n.d.). Nutreco . Retrieved from http://www.nutreco.com/index.php?

option=com_content&task=view&id=436&Itemid=1&lang=NL\

III. Key personnel and exporting experience in past and present

The key personal for exporting products are the sales team. For Sprayfo, Sloten BV has four
export managers. Those people are responsible for the product from the factory until the
product distributed to the countries.
Sloten BV have been exporting animal feed product for more than 50 years. Sloten BV has been
successfully exporting the product to 60 countries. Nowadays, Sloten BV would like to expand
their market. Vietnam could be one of the potential markets to introduce Sprayfo among the
farmers.
2.3 Export team
Sloten BV has its own export manager team. The managers are responsible for the products
that should be delivered to the export countries. There are four export managers focusing in
Sprayfo. Those are Mr. Teun Schuurkamp, Mr. Jack van Mensvoort, Mr. Jos Gonzalez Ramos, and
Mr. Rafael Villaln Huisman. On the other hand, for Nuklospray, there are Mr. De Vries as an
export manager.4 Sloten BV hires local personnel or teams in the exporting country to help

finalizing the deal.

2.4 Sales/Revenue/Financial stability overview
Here are some facts that could prove Sloten BV has strong financial ability.

Sloten BV had a turnover of 90 million euros (that is before it was taken over by Nutreco)
in 2005 alone.
Recognitions to the take over from Nutreco, Sloten BV (in cooperation with Nutreco) now
has 20 percent shares in the market, making it become the leading in producing and
exporting milk replacing products in the world.
90 percent of Sloten BV's production in Sloten and Deventer is meant for export. The
export to countries in Western-Europe goes by truck along with a view other countries in
Eastern-Europe; the rest goes by containers.

2.5 Goals and Objectives

I. Overall goals and objectives for the company
Sloten BV goals and objectives are to meet customers need and build Sprayfos image to
become the strong brand of young animal nourishment not only in domestic market but also in
the global market.
II. Export goals and objectives
A Sloten BV export goal is to expand their market by introducing Sprayfo in Vietnam with the
help of the distributors or agents. Sloten BV is giving all the effort to understand the customer
requirements and wishes, analysis market demands so that Sloten BV will develop successfully
and effectively in new international markets.
III. Limitations:

4 Sales Team. (n.d.). Sloten BV. Retrieved from https://sloten.com/index.php/en/about-sloten/sales.html

4

Sloten BV needs to know all the situations and conditions in Vietnam. From the infrastructure
and laws in the country until the total calves and farmers. The cultural behaviour, language,
domestic policy will be the difficulties for Sloten BV to enter Vietnam. Therefore, Sloten BV
should do a research in advance. In order to get a reliable data, Sloten BV should not only do
desk reseach, but also field research. This means that a representaative from Sloten BV should
directly go to Vietnam and observe the real situation. This also cost a lot of time, energy, and
money. These aspects should be taken into account. By aware of the company limitations,
Sloten BV can decide where export strategy should they use.
3. Product description
3.1 Domestic and international product
I. Sprayfo
Sprayfo is a high-quality calf milk replacer and it is a range of products for the rearing of calves,
lambs, goats kids, foals and young buffaloes. It is specially designed for optimal digestion and
feed intake. It is also support the calves during the entire milk feeding period. 5 Moreover,
Sprayfo has different colors of packages based on the quality. There are Sprayfo green, blue,
red, violet and yellow.
II. Unique selling attribute or competitive advantage
Sloten BV has high quality and unique product which differs Sloten BV from other competitors.
These products are spray-dried milk replacers for rearing and fattening. Sloten BV is an
international company and Sloten BV stand strong against other national companies. Sloten BV
has continues contact with local authorities and advisers. Sloten BV also has a support from the
international agriculture sector. Moreover, the production of Sprayfo is only in the Netherlands.
Therefore, the quality of the product can be always controlled and that will be the advantages
of Sloten BV.
III. Typical profile of end-users
The typical end-users that Sloten BV expects are the farmers. Sloten BV more focused in
commercial farmers where the farmers have huge number of calves and the goal is for doing
business, and not for internal use such as backyard farmers.
IV. Required product modification
In order to fit the products to the countries, Sloten BV sometimes needs to do some
modifications. It can be required from the law in the country. If there are requirement to
describe the manuals in the package in the local language, Sloten BV should change the pack. It
is also possible that the name of Sprayfo means something else in other country, which makes
Sloten BV should change the name in the particular country. In conclusion, the modification is
always possible, depends on the country.
V. Seasonability and lifecycle
Sloten BV has certifications for high quality products. This means that the products that Sloten
BV makes are of high quality. Sloten BV has many certificates related to the quality of its
product and management. Sloten BV had certificate from ISO-2008, GMP+ certification, and
EFBQ certified company.6
3.2 Growth potential
I. Domestic and exciting international markets
Sloten BV has prepared an international marketing plan with defined goals and strategies.
Sloten BV exists since 1958 Sloten BV used to be a butter, cheese and milk factory. In the same
year Sloten BV changed the focus into spray-dried calf milk replacers for rearing and fattening.
Sloten BV has already 60 distributors worldwide. Their markets are in such as Western Europe,

5 Sloten BV (n.d.). Nutrition. Sloten BV. Retrieved December 24, 2011, from
http://sprayfo.com/index.php/Calves/Nutrition/nutrition.html
6 Sloten BV (n.d.). Quality. Sloten BV. Retrieved December 24, 2011, from
https://sloten.com/index.php/en/quality.html

East Europe, Latin America, Asia and The Middle East. Until now, Sloten BV is still willing to
expand their market.
II. R & D (Research and development)
Sloten BV has built up broad expertise and skills relation to the nutritional requirements of
young animals. The products of Sloten BV are based on a unique formulae developed by
Research and Development department. Formulae are tested in specific research facilities, also
in farms in practise.
The Calf Research Centre is located in Winssen, the Netherlands and the The Swine Research
Centre (SRC) is located in Boxmeer. Trials relating to weaning, feed intake, growth, health
aspects etc are tested on pig breeding farms. Sloten BV always tests the product before Sloten
BV launches it onto the market. The reason for that is that Sloten BV wants to have a high
quality product that has the most effect. This is also strength of the company. The locations
where Sloten BV tests the products are in the Netherlands, Spain and Brazil. 7
III. New intellectual property protection
The entire product and attribute that Sloten BV has is under trademark and protected by law.
Therefore, wherever Sloten BV product exported to other countries, the product and the
attribute will be secure.
4. New foreign market place analysis
4.1 Rationale for exporting
Sloten BV is an international leading company in young animal nutrition. 8 90 percent of their
business is export market.9 Focusing on young animal nutrition for more than 50 years in more
than 60 countries, Sloten BV keeps on innovating with their product and expanding their market
around the world. Cooperating with the distributors, Sloten BV is developing their sales in each
country.
4.2 Rationale for selected foreign market
Sloten BV would like to expand their sales in worldwide market, especially in Asia territory.
Vietnam is one of the countries which have the prospects as a new market for Sloten BV to
enter since the farmers are centralized located. For instance, most of commercial farms places
surround Ho Chi Minh city, which makes the distribution of Sprayfo in Vietnam easier than other
prospect country. Moreover, the total dairy cow population expanded to 27.000 heads in 2011
compared to 15.000 in 2004, which also affected the milk output in Vietnam. 10 The milk output
doubled reaching 170 tons per day. Based on the data the demand of milk and dairies are
increasing. This information will be an indicator that there is a potiental market for Sprayfo in
Vietnams commercial farm.
4.3 Country Profile
Political, economic and social conditions in Vietnam
According to the political, economic and social conditions, that can be seen as the new foreign
market place analysis in Vietnam is easier to reach the commercial farm than the other
countries. The Import duty rates in Vietnam are subject to type of goods imported and the
special tariffs status of importing countries. There are three categories of import duty rates:
ordinary rates, preferential rates and special preferential rates. Vietnam produces a large
amount of meat every year as their export products and for local sales, it means the animal
7 R&D. (n.d.). Sloten BV . Retrieved from https://www.sloten.com/index.php/en/r-a-d.html?showall=1

8About Sloten . (n.d.). Sloten BV. Retrieved December 21, 2011, from
https://sloten.com/index.php/en/about-sloten.html
9 Blackboard

10Bright prospects for local diary farming sector. (2011, March). baomoi. Retrieved December 21, 2011,
from http://en.baomoi.com/Info/Bright-prospects-for-local-dairy-farming-sector/5/126345.epi

farming is important. So there are many animal farmers need the good animal feed products
which is prospect for Sloten BV to sell their product to Vietnam.
In addition, Vietnam is a member of Participation International Organization such as
APEC( Asia-Pacific Economic Cooperation), AFTA ( Asian Free Trade Area), FAO( Food and
Agricultural Organization) , G-77(The Group of 77 - seventy-seven developing countries parties
of the Joint Declaration of the Seventy-Seven Countries), IBRD (International Bank for
Reconstruction and Development ), WHO( World Health Organization), WTO ( World Trade
Organization) which makes Vietnam market more open to international trading trends.
Vietnam does not have special restrictions for import product, but there are some complicated
in approving for product registration. For example, Bureaucratic is difficult to access, especially
in relation to customs and documentation. If Sloten BV realizes this, they have to prepare in
advance such as document ( this will be explain clearly in documentation of chapter G) In
addition, The Netherlands is one of the biggest European investor in Vietnam and ranked 11th
among 92 countries and territories investing in Vietnam.11. The trade relations between Vietnam
and the Netherlands are constantly increasing, reaching around US $2 billion in 2010 and over
US $900 million in the first half of 2011. The Netherlands is the fourth largest export market of
Vietnam in the Europe after Germany, the UK and France with 153 projects worth of US $5.6
billion. These are good chances for Sloten BV to get some advantages to export to Vietnam.

Political Legal Structure

Vietnam Government

12

Country Name (long form):

Socialist Republic of Vietnam

Country Name (short form):

Vietnam

Government Type:

Communist state

Vietnam has a communist state which can be negative for countries to export to Vietnam. But
as we know Vietnam and the Netherlands have a good trade relation that will be easier for
Sloten BV to join in Vietnam market. Because of the communist state, it is harder to get in the
country. Therefore, if Sloten BV can build good relation with the government of Vietnam they
could have a very successful business in a governmental point of view. It is not easy to build
relationship with Vietnam government in short time, it is advisable that Sloten BV contact with a
consulting firm first such as Grant Thornton Vietnam in Hochiminh city 13. It may be the quickest
way for Sloten BV to get to know Vietnam local market and building relationship with local
government.
Fiscal/ taxation structure14
According to Government of Vietnam, Vietnams import duty of animal feeds is quite reasonable
which is 7 % (final in 2010) and 5% for premixes because of its WTO commitments. This will be
an advantage for Sloten BV product price becomes more competitive to other exporters.
However, government will adjust import duties to zero over the next three years for members of
ASEAN Free Trade Area (AFTA). Also, the import duty of prepared animal feed is 5% in 2013 and
0% in 2016 for members of AANZFTA (under Asean-Australia-New Zealand Free Trade Area
agreement). This means the Australian and New Zealand products are exported to Asean

11(n.d.).http://www.vietnamembassy.nl/en/nr070521165956/news_object_view?
newsPath=/vnemb.vn/tin_hddn/ns110927142130.
12Vietnam Embassy. (n.d.). Retrieved from
http://www.vietnamembassy.nl/en/nr070521165956/news_object_view?
newsPath=/vnemb.vn/tin_hddn/ns11092714213
13 Retrieved December 24, 2011, from http://www.gt.com.vn/

14 Retrieved November 26, 2011, from http://www.ats.agr.gc.ca/ase/4776-eng.htm

7

member states will have more privilege in price competition to Sloten BV. Therefore, Sloten BV
should notice this threat to make export plan suitable in Vietnam market for short-term and
long term plan.

Communication and infrastructure15

Internet becomes more popular with 24,269,083 Internet users as of June, 2010, 27.1% of the
population, according to ITU (International Telecommunication Union)16 in Vietnam; Sloten BV
can connect with their customer by this communication. Also, the company can advertise to
communicate through internet, TV, agenda, exhibition For example, Sloten BV can join the
Vietstock 2011 Expo & Conference - Vietnam's No.1 International Feed, Livestock, Dairy & Meat
Processing Show which is held every two year. Furthermore, the development of the
infrastructure in Vietnam is increasing enormously. The country is by now investing more than
one third of its GDP which is about 9% of its GDP investing into infrastructure. But the most
improvement is still in the electrification and telephone penetration. Even though its improved
a lot there are still insufficient transport infrastructure. All urban areas in Vietnam are now
electrified. In rural areas, electrification expanded from 51% of all households in 1996 to 88
percent in 2006. The Vietnamese government also has major to develop capacity of the port
which will be easier for container transportation.

The major airports

Vietnam's major ports are Haiphong (in the north), Da Nang (central region) and Ho Chi Minh
City (in the south). To supplement these, additional ports have been developed at Cua Lo, Quy
Nhon, and Nha Trang. Vietnam has 2 international airports (Hanoi and Ho Chi Minh City) and 32
local airports.
These are the three major airports:
Haiphong: The airport is 28 miles (45km) from downtown Hanoi. Approximate travel time is 2530 minutes.
Da Nang: Da Nang International Airport is located in Da Nang and is an important gateway to
access central Vietnam.
Ho Chi Minh City: The airport is about 4 Miles (7 km) from downtown Ho Chi Minh City17

15 Vietnam ustrade. (n.d.). Retrieved from http://www.vietnam-ustrade.org/index.php?

f=news&do=detail&id=36&lang=english
16 Retrieved December 24, 2011, from http://www.internetworldstats.com/asia/vn.htm

17 International airports in Vietnam. Retrieved from http://www.business-inasia.com/airports_vietnam.html#danang

(The plane symbol means airport and the boat

symbol means harbor, in this map only the main
harbors are shown)
The major Harbors
Vietnam has 15 harbors, but there are 6 main transport
harbors, Port of Cua Cam, Da Nang Port, Port of Hai Phong,
Port of Ho Chi Minh City, Saigon Port and Port of Phu My.
Port of Ho Chi Minh City and Saigon Port are located in Ho
Chi Minh City and are both major container ports of
Vietnam. Saigon Newport Holding Company has
developed terminals and operations in the Port of Ho Chi
Minh City (or "Saigon Newport") that are a powerful part of
Vietnam's seaport system. The container traffic through
the Port of Ho Chi Minh City accounts for over 65% of Ho
Chi Minh City's market share and more than 40% of that
for the country18
Relatively seen are the harbors in Vietnam small
compared to the big harbors of other countries. But, there
are enough harbors located over the country. The
infrastructure in Vietnam is proper connected. Therefore,
Sloten BV could perfectly distribute by ship or plane and
subsequently, distribute by truck.
4.4 Cultural Profile
Hofstedes Dimensions of cultural in Vietnam
a. Power Distance
Based on Hofstedes definition, Power distance is the degree in which the less powerful
members of an organization accept that the power is distributed unequally. 19 The power
distance in Vietnam is very high. This means that people accept that their superiors which could
be parents, teachers, people who is older or even boss in the business life, have more power
than the inferiors. The level between boss and the employee are not the same. The superior are
treated different, with more respect from the inferior. Moreover, since the gap between
employee and boss are high, Vietnam people use high context communication. The high
context communication means that people have a preference for starting the conversation, and
then ends up with the main point. Therefore, if Sloten BV wanted to do business in Vietnam, it is
impolite to go directly to talk about the business. Vietnamese people like to build a relationship.
Sometimes, a formal meeting in the office is not enough. They could arrange another informal
meeting, outside the office like dinner or party.

b. Individualism and Collectivism

Vietnam is a collectivism country. This means that individuals come secondary in the group.
Families, friends and society are more important.20 Vietnamese people would be we oriented.
Even in a company, employees view their organizations as families. Usually, the decisions for

18 Major harbors in Vietnam. Retrieved from

http://www.worldportsource.com/shipping/country/ports/VNM.php
19 Nunez, I. C., Mahdi, R. N., & Popma, L. (2007). Working with Hofstede's Dimention of Culture. In
Intercultural Sensitivity. Assen , The Netherlands : Van Gorcum .
20 Kwintessential (n.d.). Vietnam Language, Culture, Customs and Etiquette. Kwintessential . Retrieved
November 26, 2011, from http://www.kwintessential.co.uk/resources/global-etiquette/vietnam.html

the company are taken by a group of people in a team such as a management team. Not only
one person who decide, but the teams are involved.
c. Masculinity and Femininity
Vietnam is a masculine country, even though not as masculine as United States of America.
However, the dominance of men in Vietnam could be seen. Women should avoid wearing halter
neck tops, or shorts in the more traditional areas
d. Uncertainty Avoidance
As a high power distance country, Vietnam is also a country with low uncertainty
avoidance. Bosses are expected to take care of their employees financially and physically. The
emotion should not be shown that why the Vietnamese are very polite people and will often
smile and agree with you when in fact they may not have fully understood what you have said.
It will be useful to give product manuals, for more complex negotiations
e. Long-term and Short-term Orientation
Vietnamese people are very long term orientation, even higher than United States of
America with total 80 scores out of 100 from Geerts Hofstede model. 21 This means that
Vietnamese people always think not only what could happen now, but further in next several
years, especially when it comes to business and investment. They have a high discipline and
responsibility in work. Therefore, doing business with Vietnamese people should prepare a
detail goal for the company in the future, in a period of time.
Public Etiquettes in Vietnam10:
. Avoid public displays of affection with a member of the opposite sex.
. Do not touch someone's head.
. Pass items with both hands.
. Do not point with your finger - use your hand.
. Do not stand with your hands on your hips.
. Do not cross your arms on your chest.
. Do not pass anything over someone's head.
. Do not touch anyone on the shoulder.
. Do not touch a member of the opposite sex.
. Shorts should only be worn at the beach.
Business Etiquettes and Protocols in Vietnam10:
- Appointments with important people from government or authorities are required and
should be made several weeks in advance. Sometimes it is more efficient to ask some
people have good relation with them to make an appointment.
. The best means of doing so is through a local representative who can act as a reference and
also translator/interpreter.
. The Vietnamese are flexible in time. But for important meeting they usually punctual and
expect the other to do so
. Dress conservatively.
. Handshakes are used upon meeting and departing. Handshakes only usually take place
between members of the same sex. Some Vietnamese use a two-handed shake, with the left
hand on top of the right wrist and always wait for a woman to extend her hand.
-

Business cards are exchanged on initial meetings and should be presented with both
hands. When receiving business cards ensure you show proper respect to it and do not
simply glance at it and put it on the table.
The spoken word is very important. Never make promises that you cannot keep to as
this will lead to a loss of face.

21 Kohl, K. S. (n.d.). Americans doing business in Vietnam. Baruch. Retrieved November 26, 2011, from
http://www.baruch.cuny.edu/wsas/student_work/documents/Kohl.pdf

10

Negotiations can be slow so it is important to bear in mind that decisions have to go through a
lot of red tape and also group consultation. Be patient.
. Business gift giving is fairly common at the end of a meeting or during a meal in honor of your
business associates. Gifts should be small but not expensive. Something with your company
logo or something typical from your country both makes excellent gifts. Do not give
handkerchiefs, anything black, yellow flowers or chrysanthemums.
. it is normal in meeting if Vietnamese will ask you how old you are at the beginning of a
conversation because there is no universal word for you in the Vietnamese language and
people need to classify you as either older or younger than themselves in order to determine
the correct form of address
. It is normal practice in Vietnam to put the surname first, followed by a middle name and then
the given name, e.g. Nguyen Hong Lan. In this case, the person should be addressed as Ms Lan.
The full name is only used on a formal occasion.22

4.5 Industry Profile

i.
Broadly identify direct customer
After researching the condition of Vietnam markets exporting Sprayfo is the best way, since
Sloten BV has never entered Vietnam before. Furthermore, since the commercial farms in
Vietnam are located in South Vietnam, Sloten BV could focus more on that part which is around
Hochiminh city. To deliver Sprayfo to the end users, which are the commercial farmers, Sloten
BV could use a distributor. In total there are 109 distributors for animal feeds in Vietnam.
However, there is one distributor company who could help Sloten BV in distributing Sprayfo. The
company is called Anhtruc Co., Ltd. This is one of the biggest distributing companies in Vietnam
which is located in Ho Chi Minh (Southern Vietnam). 23 This distributor is located in a very good
position in the middle of the provinces where the target market focuses on. Anhtruc Co., Ltd is
part of the business portals premium member which makes the company has a wide network
and connection around Vietnam. At present, the company is distributing animal feeds and milk
replacers for swine and goats. Therefore, the company could distribute Sprayfo since the
company already has knowledge about the milk replacer product itself. This is a positive aspect
of the distributor for Sloten BV.
Furthermore, a Vietnam current market trend of milk-replacer is growing. According to Ministry
of Industry and Trade, the estimate of milk consumption in Vietnam is 20kilos by 2015 and 25
kilos by 2020. Therefore, Vietnam is seeking for high quality animal food that can keep Dairy
healthy and increase the milk capacity per dairy head. 24
ii.
Competitive analysis
There is also one big company for milk replacer in Vietnam which is Vemedim 25. This company
was established in 1989. The objectives of company are to expand their market in Vietnam and
export to Asia, the Middle East and South America. Their strength is product with good quality
of veterinary, medicines and other animal health care products for livestock, poultry formulated
to international standards. This company has been successful in some international market.
Their product received certification WHO GMP (Good Manufacturing Practices) and ISO
9001:2000 (International Quality management System) and the warehousing system of
Vemedim conform to GSP (Good Storage Practices). Vemedim can export within 2 weeks and
their capacity is 10 tons per week. Also their company main market is international concentrate
not domestic market. However, Sloten BV product is unique. The company product is spraydrying technique which is make their quality is higher. Also, the raw material is from milk

22 Retrieved November 26, 2011, from http://www.austrade.gov.au/Doing-business-in-

Vietnam/default.aspx
23Anhtruc Co., Ltd. (n.d.). Anmal feed1. Retrieved December 4, 2011, from
http://http://www.animalfeed1.com/supplier/anhtruc-co-ltd-at-trading-co-ltd.html
24 Retrieved December 24, 2011, from http://dairyvietnam.com/en/Vietnam-Markets-for-milk-and-milkproduction/For-Sustainable-Development-of-Milk-Industry.html
25 Retrieved November 06, 2011, from http://vemedim.trustpass.alibaba.com/product/112143550101592772/Milk_Replacer_Product_for_Animal.html?
tracelog=ggsotherproduct2#productDetailpageLocation

11

redundant which Vemedin does not have. This factor will make Sloten BV have more
advantages in product than other competitor.

The SWOT analysis of exiting competitor which is Vemedim in Vietnam market

Strengths
Products: Presently produces more
than 500 animal health care
products which are packaged in
various sizes to meet the needs of
farming
scales
ranging
from
industrial producers to smallscale farmers.
Position: One of leading animal
health product in Vietnam and
gains a position in international
market.
Quality: Producing with good
quality of veterinary, medicines
and other animal health care
products for livestock and poultry
which
are
formulating
to
international standards.
Market: Vemedim Company has
export successfully to Southeast
Asia, South Asia, Middle East,
Africa, Taiwan, etc.
Certification:
Their
product
received certification WHO GMP
(Good Manufacturing Practices)
and ISO 9001:2000 (International
Quality management System) and
the
warehousing
system
of
Vemedim conform to GSP (Good
Storage Practices).
High export efficiency: Vemedim
can export within 2 weeks and
their capacity is 10 tons per week.

Weaknesses
The costs of Vemedim Companys
products are high as it uses hightechnologies to produce its product.
The product focusing on variety of
purpose such as: fish medicine, milkreplacer for animal foods, veterinary
medicine, poultry medicine.. which can
make it difficult in product quality
control

Opportunities
Because of the rising of global
incomes and the increase of diet
diversification, world per capita
meat
consumption
has
been
increasing steadily, particular in
low-income
and
middle-income
countries, which means the needs
of products for animals are huge.
Therefore,
the
market
for
Vemedim Company is enormous.27

Threats
Competitor: Sloten BV is one of big
competitors for Vemedim Company as
Sloten BV intends to enter Vietnam
market.
Exchange rate: The exchange rate is
a main problem for Vemedim Company
as it exports many products to
international markets.

26

26 Vemedim Vietnam. (n.d.). VIV India. Retrieved from http://www.vivindia.nl/en/Exposant/News/News

%20from%20Exhibitors/Vemedim%20Vietnam.aspx

12

Porters Five Forces Model

27 World Meat Production Shapes Feed Needs. (2011, May 7). The progress farmer. Retrieved from

http://www.dtnprogressivefarmer.com/dtnag/view/blog/getBlog.do;jsessionid=9803630FFE2F58E8A0ECCA9
58C705FDE.agfreejvm2?blogHandle=grainmarkets&blogEntryId=8a82c0bc301f591e0130faf5497c09a1

13

Threat of new entrants:

Threat of substitute products:
Bargaining power of customers:
Bargaining power of supplier:

Although Vemedim Company has much strength, Sloten BV still has its own strong point such as
the technique of spray-drying which makes its quality higher. And the raw material of Sloten BV
is from milk redundant which Vemedim does not have. Furthermore, Vemedim mainly focuses
on international markets than domestic market. According to above points, Sloten BV has high
opportunity to introduce their product in Vietnam.
5. Market entry strategies
5.1 Strategic alliances
According to the data which we found the best way to export Sloten BVs product to Vietnam is
use a local distributor. Vietnam is a new market for Sloten BV we need a distributor to sell the
product for Sloten BV otherwise it is hardly for a Dutch company to enter a new market.
Because it takes long time to figure out how to do business in Vietnam and how to reach the
local farmers. And a local distributor can handle this problem for Sloten BV, according to the
presentation gave by Mr. de Vries he said Sloten BV just want to export their product it means
they do not want to take the risk, but, the distributor can take the risk. So, Sloten BV would like
to find a local distributor to sell their product.

5.2 Target customer profile

Direct customers
The direct customer for Sloten BV is the distributor because the distributor is the one who buy
Sloten BVs product and sell it to the farmers. Vietnam is a new market for Sloten BV and it is
difficult for Sloten BV to find the customer in a new market. So Sloten BV will not sell the

14

product directly to the farmers at this situation the distributor play an important role between
Sloten BV and customer.
Purchasing decision makers
The farmers in Vietnam are the purchasing decision makers they decide whether their cattle
use Sprayfo and what benefit they will get from the product.
Actual end users
The actual end users is Vietnamese cow, because Sprayfo is a kind of product for the baby
cattle it will decrease the death of baby cattle. And there are several kinds of Sprayfo to the
cattle.
Sprayfo blue: Maximum growth and health protection (high level of milk protein, perfect
stability, high juvenile growth and less diarrhea)
Sprayfo violet: Proven results for optimal rearing (good performance, smooth feed intake and
reliable quality)
Sprayfo red: Power milk for economic rearing (cost effective rearing, healthy start and good
growth)
28
Sprayfo green: Budget milk for strong calves (economic rearing and good start) 29

De
mo
gra
phi
cs
or

company characteristic
Beef cattles farming is practiced all over Vietnam. The most of the production is taking place in
the north of Vietnam.
The south of Vietnam is the disadvantaged because of the hot tropical climate. But there is
reported that 75% of all commercial beef cattle breeding operations are located in the southern
part of Vietnam. There will be more information about this later in the milestone where we will
be more specific about which place of Vietnam would be the most potential in our perspective
in the table in the next page you can find Vietnams cattle population by region.
Vietnam's Cattle Population by Region in 2009
Region
Red River delta
Northern midlands and mountains
North central and central coast area
Central highlands
South east
Mekong delta
Total

30

'000 Head
695
1,032
2,489
717
473
697
6,103

%
11.4
16.9
40.8
11.7
7.8
11.4
100.0

28Sprayfo. (n.d.). http://sprayfo.com/index.php/Calves/Products/calf-milk-replacers.html.

29(n.d.).SPRAYFO. Retrieved from http://www.sprayfo.com/index.php/Calves/Products/products
30 Agri-Food Trade Service Vietnam Livestock Genetics. (2011, March). Retrieved from
http://www.ats.agr.gc.ca/ase/5844-eng.htm

15

Total market size and future growth potential

According to Ministry of Agriculture and Rural Development (MARD) Vietnam's largest and more
advanced beef cattle farms are mainly located in the south eastern provinces of BinhPhuoc,
BinhThuan and NinhThuan and in the Central Highlands area. These operations exist to service
the strong demand for beef that exists in the Ho Chi Minh City market. . 31
The last Vietnams survey found out that about 40% of Vietnams households consume beef,
but with less that 10 % consumer buffalo meat. The MARD had a lot of influence on this, they
supported the smallholder beef cattle farming sector through its Livestock husbandry and Stock
Breeding program 2006 to 2010. This program is now extended to 2020. The program has been
most active in the provinces of Nghe, ThanhHoa and BinhDinh over the period since 2006. The
livestock development strategy has a goal of establishing a standing inventory of 12.5 million
beef cattle by 2020 up from 5.9 million today.
5.3 New foreign market product or service description
Typical usage by the end users
Sloten BV has high quality and unique product which differs Sloten BV from other competitors.
These products are spray-dried milk replacers for rearing and fattening. The end users will be
mainly commercial farms these are the potential buyers where Sloten BV should mainly focus
on. Commercial farms are mostly based on mass production, many farms are engaged with the
rearing of animals, and therefore Sloten BV should focus on commercial farms. Backyard farms
are not applicant in this case, because backyard farms are most of the time small businesses or
just for own use, hence it is not convenient to focus on the backyard farms. Milk replacers are
not very familiar in the country, there has to be a guide delivered with the product for the new
customers to explain how to use the product. Sloten BV could also send an expert to the
country to help the farmers by using the product and explaining the differences in each Sprayfo
product.32
Unique selling attributes or competitive advantage(s)/market niche
Sloten BV has a unique spray drying process which makes their products unique compared to
the competitors. Sloten BV also has constant quality, this quality can be guaranteed by the five
certificates the company earned. Thereby Sloten BV only processes high-grade raw materials of
producers meeting our strict standards. In addition, Sloten BV has fully automated lot tracking
and tracing in place.33The constant quality pays off it in trust therefore Sprayfo is a trusted
brand in the already existing export countries.
These are all competitive advantages however in Vietnam they are not introduced yet,
therefore they should focus on these kinds of unique things in their promotion.
Required product modification
Products have to be modified for different reasons, however Sloten BV does not have to do that
because the only thing Sloten BV would have to change to the products are the labels and use
Vietnamese language on the products. Therefore, if it would be needed, Sloten BV has a good
R&D department that could make changes in the product to make it for example cheaper there
will be more about this in the Pricing Strategy cluster. If the products are too expensive they
have to change the ingredients and use cheaper raw material but still with a good quality to
meet the demands.

31Agri-Food Trade Service Vietnam Livestock Genetics. (2011, March). Retrieved from

http://www.ats.agr.gc.ca/ase/5844-eng.htm
32Commercial farm. Retrieved from
http://static5.businessinsider.com/image/4d2f183d49e2ae660c1a0000-398-298/commercial-milk-farmcows.jpg2Quality Sloten BV. Retrieved from https://sloten.com/index.php/en/quality.html

33
16

 Product specification standards

There is a standard decided by the Vietnamese Ministry of Agriculture and Rural Development
(MARD) said that animal feed can contain a maximum of 2.5mg of melamine per kg in Vietnam.
All feed that contained higher levels of melamine will be banned from import, production, trade
and use in husbandry and aquaculture. 34 Sprayfo totally meets the demand as it is high-quality
calf milk replacers. And Sloten BV also focus on the product quality, thus they only processes
high-grade materials of producers that meet their strict standards. 35 Vietnam government also
requires all organizations and individuals must have business licenses, facilities, and necessary
technologies that meet the current standards to operate in the area of livestock feed. What is
more, feeds must be stored safely and distributed in the stores or shops which have accurate
addresses.36 Aiming at this case, Sprayfo product is supplied with Sprayfo Safety Package
(S.S.P). The S.S.P. is a composition of feed supplements designed to provide natural support to
the calf, resulting in healthy and efficient digestion. 37S Sprayfo is ready to enter export market
since it has high quality. All Sloten BVs product already had ISO-2008 standards, GMP+
certification scheme, HACCP (Hazard Analysis and Critical Control Points) and EFBQ Qualified
Company. Sprayfo is also a product which has been tested and it shows a satisfying result and
giving different result to calves by using this product.
Labeling, packaging and marking
All the production activities including labeling and packaging were done in Netherlands. The
labeling for export market, Sloten BV has to do it in two languages. The first is the English
version as an international language, them the second is the language which are used in the
country. Since our export country is Vietnam, the labeling will be in English and Vietnamese.
This will help the farmers to understand about the product. In the past, Sloten BVs products
were packed in 50 kg. However, since there were new export regulations, the package reduced
into 25 kg. During the presentation which was given by Theo de Vries, said that Sloten BV also
has a consideration to reduce the package into small package, 20 kg, therefore the farmer
could easier carry the product.
Seasonability and life cycle of the product or service
Sprayfo is a product which always can be used. It is not a season product, because milk
replacers are part of the daily feed the animals need. Because the farmers need Sprayfo daily it
is not a season product. The life cycle of this product is long, the milk replacers market does not
develop hard, although sometimes there can be a small innovation on certain milk replacer
products. But overall it is not a hard growing market therefore the life cycle of Sprayfo is long.
Thus Sloten BV does not have to challenge all kinds of fast developing products.
5.4 Pricing strategies
Export coasting analysis
Overall, there are three ways of setting an export price. Those are:
A, Demand-oriented pricing
B, Competitor-oriented pricing
C, Cost-plus pricing
34 Standards Set for Animal Feeds. (2008, December 3). The poultry site. Retrieved from
http://www.thepoultrysite.com/poultrynews/16600/standards-set-for-animal-feeds

35 Quality. (n.d.). Sloten. Retrieved from https://www.sloten.com/index.php/en/quality.html

36 Kim Loan (2011, October 26). Tough regulations on import of livestock feed. Vietnam Information News.
Retrieved from http://www.vietnamimportexportnews.com/vietnam-import-export/vietnam-importingproducts/38956-tough-regulations-on-import-of-livestock-feed.html
37Sprayfo. (n.d.). Sloten BV . Retrieved November 20, 2011, from
http://www.sprayfo.com/index.php/Calves/Products/sprayfo-safety-package-ssp.html

17

Based on Sloten BV condition, demand-oriented pricing is the best option for Sloten BV to
decide the export price. In demand-oriented pricing the export price is based on anticipated
future demand in the export market. 38 Therefore, all the decision in the pricing depends on the
demand of Sprayfo in Vietnams market. Furthermore, Sloten BV needs to produce a formal
Sprayfo price list for the distributor. This price list will help we the basic guide for the distributor
to sell Sprayfo to the end users.
Pricing Constraints
The pricing constraints that Sloten BV could face is the price which affected by transportation
issue. If there are delays in the delivery from the Netherlands to Vietnam, the distributor cannot
distribute Sprayfo to the end users on time, the end users could complain and they could
possibly asked some compensation for the delays. The other issue that could affect the price is
if there is another cow disease like in the 2010, the total cows in Vietnam will be decreasing and
so does the demand of Sprayfo. If this situation happens, the price will be unstable and
unpredictable.
Legislation
Legislation in Vietnam about dumping and the normal price in the market are in Article 3,
Chapter 1, the Ordinance 2004.39 Since Vietnam is part of the World Trade Organization (WTO),
there are also WTO Anti-dumping Agreement applies in Vietnam. However, this regulation is
only valid between the members of WTO. Therefore, this regulation will not apply for Sloten BV.
Current Market Pricing
Since this was the first time Sloten BV exporting their product, there are no current market
pricing. Furthermore, there is only one competitor in Vietnam which not has much influent to
Sloten BV on deciding Sprayfo price.
Price Sensitivity
The price sensitivity in Vietnam is high. People in Vietnam are very difficult in dealing with any
types of changing, especially for price changing. Therefore, Sloten BV should decide the price
since the beginning and not change it suddenly. The price should be in a stable position.
Market penetration pricing strategy
Looking through the position of Sloten BV in entering Vietnams market, Sloten BV should use
penetration pricing. Penetration pricing is a strategy adopted quickly achieving a high volume of
sales and deep market penetration of a new product. 40 Sloten BV would like to know how their
sale in Vietnams market is.
5.5 Sales and promotion strategies.
Promotion methods41
There are many different types of promotion tools. It depends on the availability and the budget
of Sloten BV. In this case, Sloten BV mainly focuses on the distributor; therefore they will have
to train the distributor about the information of Sprayfo and the way to use it. Subsequently,
the distributor can combine with local requirement to deliver the most effective promotion
methods for their target customers. Initially, they could use below the line promotion. This is a
promotion method which is more personal and traditional. For example, Sloten BV could advise
the distributor to try a particular promotion method. For instance, if a farmer buys 1000 kg
Sprayfo at once, Sloten BV could give 10% discount for the next order to satisfy the farmer; if a

38 Harlaar, M., & De Leeuw, O. (2005). Foreign Pricing. In Export a practical guide . Groningen ,

Netherlands : Noordhoff Uitgevers.

39 Vietnam and anti-dumping. Retrieved December 9, 2011, from http://www.eai.nus.edu.sg/EWP146.pdf

40 Market penetration pricing . (n.d.). Business dictionary . Retrieved December 9, 2011, from

http://www.businessdictionary.com/definition/market-penetration-pricing.html
41 Retrieved December 15, 2012, from http://www.revisesmart.co.uk/business/marketing-mix/promotionmethods.html

18

farmer buys 120 tons Sprayfo per year, he will get a 20% discount for the order. In addition,
public relations can be a good idea for Sloten BV to introduce their product to potential
customers. Sloten need to establish a good reputation to gain support from publics. The
distributor also need to hold an exhibition for all the farmers, in order to introduce Sprayfo the
way of promoting and inviting is further explained in the advertising availability section.

Advertising availability and regulatory constraints

The best way for Sloten BV to promote their product is through magazines, advertising
specialties and newspapers. Promotion through TV will not be chosen, because this is a new
product which has to be explained to the farmers and needs more than only showing the brand.
This will not be a convincing way. Thereby, the costs for the promotion through TV commercials
are too high compared to the possible profit of Sloten BV in the short term of 2 years. The profit
and turnover is further explained in the financial analysis part. The internet usage in Vietnam is
only 27%42 of the population which is very low. This makes promotion through internet not
suitable. For the product Sprayfo it is important to give more explanation which can be
reviewed by the farmers, TV commercials are mostly just one or two minutes which is too short.
By using a magazine or an advertisement in a newspaper the information that can be given is
much more. It is important for Sloten BV to advertise through a magazine which explains the
product step by step and this is also an additional service given by Sloten BV to the farmers.
The picture below is an example of an advertising specialty that Sloten BV could use, the costs
of the production are around 260 euro for 500 pieces from vistaprint.com. 43 The advertising
costs for a magazine are around $3,875.0044 euro for a full-page black and white. There are
many factors that can influence current ad rates.

42Internet world stats.(n.d.). Retrieved December 15, 2011, from

http://www.internetworldstats.com/asia/vn.htm
43Vistaprint.(n.d.). Retrieved December 15, 2011, from http://www.vistaprint.nl/folders.aspx?
xnav=TsrItem&xnid=Business_AdvertisingMarketing_Brochures
44Gaebler.(n.d.). Retrieved December 15, 2011, from http://www.gaebler.com/Vietnam-magazineadvertising-costs++39365

19

Regulatory constraints

The table below is about the basic rules of an advertisement. There are many more regulation
constraints for advertising in Vietnam (see forms below). It is important for Sloten BV to know
what the regulations are. For example that the written language has to be Vietnamese on the
packages, Sloten has to consider the regulations first before they start producing the product
and export it. In the tables below are the main regulations for promotion in Vietnam.
The Ordinance on Advertising strictly prohibits the following:
Advertising which discloses State secrets, or which harms national independence
and sovereignty, defense and security or the safety of society;
Advertising which is contrary to the traditions, history, culture, ethics or fine
customs of the Vietnamese;
Using the national flag, the flag of the Party, the national emblem, the national
anthem or its melody;
Misleading advertising;
Advertising which has an adverse effect on urban beauty, landscape and
environment, and traffic order;
Advertising goods and services which the law prohibits to be traded or
advertised.
Language of the advertisement
The spoken or written text of an advertisement must be in Vietnamese, except
in the case of:
Internationally-known words, commercial names, or words which cannot be
translated into Vietnamese;
Advertisements in printed media permitted to be published in a foreign or ethnic
minority language or in radio and television programs in a foreign or ethnic
minority language;
In the case of spoken text, the Vietnamese language must be read first, followed
by the ethnic minority language, followed by the foreign language;
In the case of written text, the size of the text in the foreign or ethnic minority
language must be smaller than the Vietnamese text.
Demonstration and trade fairs
Demonstrations and trade fairs are important for Sloten BV to introduce Sprayfo in Vietnams
market. Demonstration is focus on using samples to show how Sprayfo works. Trade fair
concentrates on introducing Sprayfo to Vietnamese farmers, such as Sprayfos history, it more

20

likes a exhibition for introducing Sprayfo. Trade fairs are common in Vietnam to promote a
product, especially new product in a new market. Sloten BV could also do demonstration to
introduce about Sprayfo since this is not a common product in Vietnam.
Every year, around November, there is an exhibition called Viet stock 45. Viet stock is Vietnams
No.1 Feed and Livestock Industry Event. This exhibition is one of the biggest exhibitions in
Vietnam which are going to be visited by excellence business visitors who can make business
with Sloten BV. In 2010, this event was held for three days with total more than 5,000 visitors
and exhibitors reported sales of USD 12 million sales at the exhibition. This is a huge event
which Sloten BV should follow in order to expand their position in the market. To have a place in
the event, Sloten BV should prepare US$ 298 (per square meter) for bare space only or US$ 328
(per square meter) for walk on package which also include some facilities in the exhibition. 46
This price will be worth compared with the chance to meet a potential partner or buyer.
Moreover, in 2012, there will be an exhibition called Ildex Vietnam 2012. Ildex Vietnam 2011 is
The 4th International Livestock, Dairy, Meat Processing and Aquaculture. This event will be
organized by The Department of Animal Health, Ministry of Agriculture and Rural Development.
This is also an alternative trade fair for Sloten BV to join it and promote Sprayfo. The event will
take place from March 22nd -24th, 2012 at Saigon Exhibition and Convention Centre (SECC) Ho
Chi Minh City.47 Sloten BV will attend the exhibition to get more potential customers.
Promotional tools
When Sloten BV introduces Sprayfo in Vietnam, they need to join a trade fair in order to show
and introduce their product. Therefore, it is necessary for Sloten BV to bring samples to
distribute it during the trade fair and show people how to use Sprayfo. However, sampling to
farmers is not enough since the milk replacer is a long-term product, the performances of the
product will be visible after a few months. Therefore, sampling to farmers is not sufficient. There
is another promotion tool, discounts, which depends on the distributor since the distributor
determines the final price. Nevertheless, Sloten BV could still influence the distributor in order
to put discounts on Sprayfo. However, only putting discounts on products of animal feed
industry is not always smart. Farmers seldom react on discounts of other animal feed products
since the product has to be used on a long term base. The best way for Sloten to promote
Sprayfo is to establish a relationship with Vietnam biggest farms or some farms that have
influences to attract more customers. Because other farms will follow or be influenced by these
farms purchasing behavior, this is easier for Vietnamese farmers to accept Sprayfo.
Promotional message
Most advertising agencies prefer to keep the content of the message simple and clear when
doing promotion in Vietnam. Most consumers often do not understand advertising, so the
message has to be made straight-forward and the unique selling proposition has to be pointed
out. However, a study in 2003 revealed that advertising agencies should move away from hardselling and straight-forward to more sophisticated messages in Vietnam. However, there is an
important point need be focused on: Vietnamese love entertaining and storytelling
commercials. Therefore, it would be better to promote with a meaningful message in story
pattern in Vietnam. 48
Sales methods
Sloten BV could make a frame contract with the distributor to confirm how many product they
should sell per year. For instance, if they make 2000 tons frame contract for the distributor to
sell the product to the customer per year then the distributor must observe, otherwise, Sloten
BV can stop the contract with the distributor. Furthermore, there are several ways (like mail,

45Track record.(n.d.).Vietstock. Retrieved December 15, 2011, from http://www.vietstock.org/track.html

46Cost of Participation.(n.d.).Vietstock. Retrieved December 15, 2011, from
http://www.vietstock.org/booth.html
47Ildex Vietnam.(n.d.).Biztradeshows. Retrieved December 15, 2011, from
http://www.biztradeshows.com/trade-events/ildex-vietnam.html
48Heymer, F. (2008). Successful Promotion of Consumer Goods in Vietnam. (p. 204). Norderstedt,
Germany: GRIN Verlag.

21

website and phone) for the distributor to sell the product to customers in Vietnam. Selling
through internet will be not a suitable way, because only 27% of the population in Vietnam has
internet and to help that the orders from the farmers to the distributors will be done by
Telephone line where all the farmers can make their orders. There will be a minimum amount of
order that has to be ordered by the farmer at least, so the distributor could distribute it. But the
contact way between distributor and Sloten is through website, because it is more convenient
and clearer for distributor to make order from Sloten website as they do business between two
different countries.

Sloten

Distributor
Website

Farmers
Telephone

5.6 Logistic and transportation

Time lines between order processing and delivery: According to presentation on 24th
November of Mr de Vries, it takes 2 days for Sloten BV to confirm the order and prepare
invoice and at least 2 weeks to prepare the entire document for exporting. Moreover, if
Sloten BV wants to be safe in payment term, the company should open L/C (letter of
credit). It takes at least 1-2 weeks for the Vietnam bank to open L/C for distributer. In
addition, distributer also needs at least one day to deal with customer and transport
product from Hochiminh port to warehouse. Sloten BV already had contract with
distributor about product, so the company does not have to deal with this item. It means
Sloten BV takes minimum 2 week to one month to delivery product from Sloten Deventer
to distributor. Sloten should be aware of time for order processing and delivery, so the
distributor can received product in the most convenient time.

Negotiated delivery terms-incoterms: it is very important for Sloten BV to negotiate with

distributer to determine the most suitable term-incoterms. There are different type of
incoterms (international commercial terms) issued by ICC (International Chamber of
Commerce) such as incoterm 2000 or incoterm 2010. In sale transaction, agreement on
term of sale and know what is included in the sale price is very crucial. Sloten BV should
choose the Incoterm what brings most benefit for the company as well as preparation to
quote on other terms. Because this item relates to costs, risks associated with
transportation and delivery goods. According to Mr Andre Damveld, Sloten BV will
choose DDP (delivery duty paid) in Europe andCIF(cost, insurance and freight) or
DDU(delivery duty unpaid) outside of EU. It means Sloten BV will response of goods to
harbour of destination and distributor will assume the import custom clearance because
distributor used to local import requirement. 49

49Retrieved December 8, 2011, from http://www.iccwbo.org/Incoterms/index.html?id=40772

22

Requirements and availability of warehousing and storage:Sloten BV should not build

warehousing or store in Vietnam because the company has not known future business
between the company and Vietnam market yet. However, it will be better if distributor
has its own warehouse or store. According to market demand, distributor can arrange
suitable quantity of order in one time; it will save cost of transportation for distributor.

Inventory control methods: The numbers of inventory control methods are variety which
includes manual and software. It is very important to know inventory situation of
company to plan company production. Sloten BV is not only export to Vietnam but also
many other country so the company has experienced for long time. Therefore,Sloten BV
can advise distributor to use inventory method such as ABC analysis. It means
distributor separate Sprayfo in different group according to price or expired date. By this
way, distributor can organize product in proper way and know when to arrange next
order based on which groups were sold, and which groups are still remaining. 50

Freight insurance requirements:

i.
Methods of transport: According to presentation of Mr de Vries, Sloten BV will
choose shipping method to export product from Sloten Deventer to Hochiminh
port (in Vietnam). This is the cheapest and most familiar way of export to supplier
and buyers. There are about 17 tons of product are carried by 20 ft. container
and 25 tons are carried by 40ft.container. Furthermore, Sloten BV should identify
whether Sprayfo needs any special carriage like humidity. Because Vietnam is
tropical country with high humidity which may affect to Srayfo. 51
ii.
Usage of professional services intermediaries:Sloten BV focuses on animal feed,
so it is better to transfer shipping preparation to a company of freight forwarder.
This company will help Sloten BV to ship product from Rotterdam to
Hochiminhhabour. Moreover, the firm should also prepare document carefully
from The Netherlands to make it easier for custom clearance in Vietnam
iii.
Documentation52: if Sloten wants to export to Vietnam, the company need to
prepare the most documentation such as transaction document (invoices),
transportation document (B/L: bill of lading), and the export documents required
for customs and declaration. In addition, Sloten BV had better contact the
Chamber of Commerce to verify that the company use correct document. Sloten
should also consider importer in Vietnam to make sure custom clearance is done
quickly. In general, Vietnam shipping documents include commercial invoices, pro
forma invoices, bill of lading, packing list, import license, insurance certificate
and certificate of origin.
Vietnam foreign trading organization usually require a complete description of the
goods, all marks and numbers, the number of cases/bales or other shipping containers,
the net and gross weights, the net value of the good, the country of origin are included
in commercial invoice. Sometime the authority also as for number of copies and any
extra information also be contained in the import contract Certificate of Origin.
Bill of lading: in the bill of lading, the shippers acknowledge receipt of a delivery of
goods as stated in the bill.

50Retrieved December 8, 2011, from http://inventorysystemsoftware.wordpress.com/2010/10/04/4-

inventory-control-methods/
51Retrieved December 8, 2011, from http://www.mrbox.co.uk/new-used-containers/shippingcontainers.php
52Retrieved December 8, 2011, from http://www.austrade.gov.au/Doing-business-in-Vietnam/default.aspx

23

Packing list: use of packing list is not compulsory but all information from this should
follow in other document documentation. Custom uses the packing list as a check list to
verify the incoming cargo of importing in Vietnam
Certificate of origin: the original C/O form is compulsory in Vietnam and a certificate
number in the C/O. Sloten BV should sign authorization in blue or red color because the
Vietnamese customs may consider black signature as copies.
Weight and measure should be shown in kilograms. The company should ask distributor
if there is specific information by product or by standard in Vietnam.
iv.
Packing and marking requirements: According to Mr. de Vries presentation, Sloten
BV mostly use carton and paper with ecology, safety, and lightly to pack the
product. The labeling for export market, Sloten BV has to do it in two languages.
The first is the English version as an international language, them the second is
the language which are used in the country. Since our export country is Vietnam,
the labeling will be in English and Vietnamese. This will help for the farmer to
understand about the product. Based on Mr de Vries presentation, Sloten BVs
products were packed in 50 kg in the past. However, since there were new export
regulations, the package reduced into 25 kg. Sloten BV also has a consideration
to reduce the package into small package, 20 kg, therefore the farmer could
easier carry the product. Moreover, if Sloten BV wants to export the product to
Vietnam, the company should consider Degree 89/2006/ND-CP which provides
about requirement for labeling of goods produced in foreign countries that are
imported for sale in the Vietnamese market. In which, label of product must
contain clear contain on display panel. Firstly, these goods display condition
include: Name of goods; Name and address of the organization or individual
responsible for the goods; Origin of goods; Quantity; -Date of manufacture; Expiry
date; Ingredients or ingredient quantities; Hygiene and safety information,
warnings; Instructions on use and preservation. Secondly, an information section
on the right-hand side of principle display panel in which non-compulsory
contents may be represented. (As well as any compulsory contents which could
not fit in the principal display panel) provided that the non-compulsory contents
do not conceal or lead to the misunderstanding of the compulsory contents of
labels. The basic requirement of Decree 89 and accompanying regulations is that
all letters, numbers, drawings, pictures, signs, and codes on labels of goods must
be clear and must determine the substance of the goods - any ambiguous
labeling that causes confusion with other labels of goods is strictly prohibited. Be
aware of this rule will prevent any negative situation with products which were
exported to Vietnam.53 Furthermore, Sloten BV should consider also marking on
paper pack to be shipped such as: customer identification code, shippers mark,
place of origin, port of entry, gross and net weigh, ingredients Fully understand
of packing and marking requirement in The Netherland as well as in Vietnam will
support export process quickly and effectively.

6. International law
6.1Mediation/ arbitration clauses and Venue
In case of Holland and Vietnam are the parties of the international commercial arbitration.
Therefore, Any dispute arising out of or in connection with this contract, including any question
regarding its existence, validity or termination, shall be referred to and finally resolved by
arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International

53Retrieved December 8, 2011, from http://www.globaltrade.net/international-trade-import-

exports/f/business/text/Vietnam/Marketing-Regulations-Packaging-and-Labeling-Labeling-and-MarkingRequirements-in-Vietnam.html

24

Arbitration Centre (SIAC Rules) for the time being in force, which rules are deemed to be
incorporated by reference in this clause. The Tribunal shall consist of_______* arbitrator (s) to be
appointed by the Chairman of the SIAC. The language of the arbitration shall be_______.Shall be
part of the contract, then any trade disputes shall be charge by the SIAC. Any local law has its
own limited on international trade disputes and this is why Dutch law can restrict Dutch
company but not Vietnams company another four reasons Sloten BV choose SIAC are: 1 Case
of the existence of a valid arbitration agreement, the arbitration have the force of absolute
exclusion within the jurisdiction of the courts of the State. 2 If brought arbitration, for legal of
applies, full by party conventions, even may fail to method for award, and can pursuant to
any party conventions of rules, and contract terms, and modern businessman method
(LexMercatoria) and friendly arbitration of way, on entity method, full can excluded within law
of applies (mandatory rule except, but the rules number very limited). 3 Arbitration Conference
final than for the lengthy processing, to be efficient, save time. 4 Enforcement of arbitral
power is than mediation or conciliation, more efficiency.
Securing Payment
The distributor has to pay 50% for securing during they order the product. After the distributor
next order they have to pay the rest 50%.
6.2Language consideration
Sloten BV is an export company it already exports the products to 60 countries they are sure to
have the English contract. And the official language of Vietnam is Vietnamese. According these
two reasons Sloten will chooses English and Vietnamese for the contract language. The reason
why Sloten do not choose Dutch are because Sloten is an international business company, 87 %
of Dutch people can speak English well enough to have a conversation with a native speaker
54
and the official language around the world is English.
6.3Contract terms and conditions
Currency of payment and exchange rate
Sloten BV chooses Euro and USD to be paid because Sloten is located in Holland which is
currency by euro, USD is the international currency and the distributor has to pay the money to
Holland Sloten. For the exchange rate there are three situations because every day and every
hour the rate of exchange is different. First, when the Euro and USD are decrease then it is
cheaper for Vietnam distributor to pay. Second, when the exchange rate for Vietnam is decline
then the distributor will pay much more. Depend on the two situations it is fair for both Sloten
and Vietnam distributors. Third, however sometimes the exchange rate drop and rise
dramatically (10%) at this issue both distributor and Sloten can require making a new contract
of the exchange rate.

Method of payment
Sloten BV will choose letter of credit to ask the distributor to pay. Because this is the safest way
to protect both Sloten BV and the distributors right. For example, the distributor order product
on website and pay the money by letter credit to the bank after Sloten BV send the product to
Vietnam and the distributor confirm that they receive the product on website then the payment
will be succeeded. For this situation the distributor checks the goods and Sloten BV get the
money on time.
Insurance and after sale services
Sloten BV will buy the deliver insurance and make a contract with the deliver company before
they deliver goods to Vietnam by sea. If there are something wrong during the delivery the
insurance company will pay the loss. After the goods arrived at harbor in Vietnam it not Sloten

542006, February). Retrieved from http://ec.europa.eu/public_opinion/archives/ebs/ebs_243_en.pdf

25

BVs reasonability and the distributor should take the risk for save and preserve the product.
Otherwise, the distributor must shoulder the reasonability. After sale services, Sloten BV will
provide a ten-day training course to training the distributor how to use and save the goods. And
Sloten BV will also provide a website to answer distributor and customers questions.
6.4Product Liability
Sloten BV reserves the final explanation to the product. It means the distributor cannot change
anything about the product not only the cover of the product but also the ingredients of the
product except the ingredients cannot be accepted by Vietnams government and the color of
the cover is different and bad means in Vietnam. Otherwise, the distributor will be taken to the
court by interlope Sloten BVs right.
6.5Intellectual property protection
Sloten BV has a trademark to their product. All the logos, materials and the property which
Sloten BV had are under license and are protected by copyright, trademark and other
intellectual property laws. If there is anyone who take Sloten BVs product without their
permission, Sloten BV has their power to carry out the problem regarding to the law. Moreover,
Sloten BV has everything under contract. There will be specific contract for distributor and
Sloten BV has rights to give limitation such as exclusive distributors. (m9)
6.6Sales distributor agreements
Consideration of foreign laws and regulations that affect agreement
Because both Holland and Vietnam are a party to the international commercial arbitration,
Sloten BV and the distributor have to follow the laws and regulations of the international
commercial arbitration.
Commissions
Because Sloten BV only exports the product in a low price, there will be no commissions for the
distributor.
Place of the distributor
Sloten BV will use a distributor in Ho Chi Minh which is located in the Southern Vietnam. Most of
the commercial farms are located in Mekong River Delta where the distributor is also taking
place. So the distributor will take place in the whole south of Vietnam. Sloten BV will just set one
distributor in south of Vietnam by contract to protect the profit for the distributor in Ho Chi
Minh.
Duties
The distributor in Vietnam will have to duty to contact all the customers and try to customer
retention and stimulate re-buy. The main duty for the distributor is to sell the entire product
which in the contract to the customer.
Authority
Authority of the distributor will be saving and protecting the product in the right way (the
product cannot be saving in the rain weather). It is means the distributor must make sure that
the product will not be denatured. Otherwise, they need to afford losses.

7. Financial analysis
7.1 Facility and equipment requirements
Year 2012

Total

26

Machinery
Transport

Maintenance
From plant to harbor
Total

3.000
2.500
5.500

The only capital expenditure are machinery and transport, the fundament of Sloten BV is
already settled. Therefore, Sloten BV only has additional costs on the transport from the plant to
the harbor. The maintenance of the machinery will also be included in the costs. The distributor
will have to distribute and pay the costs of the warehouse.
7.2 Sales Forecast
Target market Number of cattle (x1000)
2005
2007
2008

2009

2010

Makon River
Delta
Ben Tre

537.9

689.6

713.5

696.9

691.1

124.3

157.6

170.6

172.0

166.5

Tra Vinh

117.9

145.4

158.3

154.3

152.4

An Gian

69.8

72.9

71.1

73.7

75.3

Tay Ninh

92.3

145.5

133.1

131.0

128.1

TP. Ho Chi Minh

80.3

99.4

106.0

107.4

99.4

Total number of cattle in the target market in 2010

1312.8

Only the cows till 12 months old could use the milk replacers, therefore the focus is on the
cattle till 12 months.
The collected data is about the number of cattle, the average age of cows is 6 years. In the
target market there are 1312800 dairy cows. Through dividing the total number of dairy cows
by the maximum age, which is 6 years old. It will give the following calculation:
Estimation of dairy cows till 12 months
1.312.800 dairy cows / 6 years = 218.800
218.800 is the estimation for dairy cows till 12 months in the target market.
The aim for the first year is occupying 2 percent of the market, according to the presentation of
Mr. de Vries (area export manager).
This means that the first year has to be at least 2% of 218.800. This will give the following
calculation:
Goal for the first year (2% of the market share)
218.800 x 2% = 4376 dairy
cows
According to the presentation of Mr. de Vries, the average usage of Sprayfo for a calve till 12
months is 50kg. The estimation of the number of units can be calculated by multiplying 50kg
with the total number of the target market:
Total Estimation
50 Kg x 218.800 = 10.940.000
Kg
This is the total estimation of the whole market, but the aim of Sloten BV is 2% of the market for
the first year. Therefore, the 2% has to be calculated from the total amount. This amount will be
further used in the break-down analysis. The following table shows the 2% of the total

27

estimation and the expected number of units Sprayfo selling the first year.
Forecast number of units for the first year (last 6 months)
50Kg x 4376 dairy cows = 218.800 Kg / 20 Kg (one unit) = 10940 Units
The expectation of the first 6 months in 2012 is that Sloten BV will not make any sales, because
they have to negotiate with the distributor and introduce the product. This will approximately
take 6 months. Additionally, the price of Sprayfo is 1000 per ton.
Sales forecast last 6 months of 2012
Year 2012
Units (per 20 kg)

Price (per ton)

July
August
September

1368
1368
1641

1000
1000
1000

27.360
27.360
32.820

October
November
December
Total 2012

1914
2188
2461
10940

1000
1000
1000
1000

Turnover

38.280
43.760
49.220
218.800

The sales forecast is based on a possible growth throughout the 6 months.

Sloten BV is aiming for 2% market share in the first year of entering a new country. The
expectation for the first month (July) is 12,5 % of the expected 2%. From August the sales will
increase with 2,5% per month for the following months until the end of 2012.
Sales forecast for 5 years
Year 2013 till 2016
Units (per 20 kg)

Price ( per ton)

Turnover

Year 2012 (6
months)
Year 2013
Year 2014

10940

1000

218.800

22536
22974

1000
1000

450.720
459.480

Year 2015
Year 2016

23521
24177

1000
1000

470.420
483.540

Once Sprayfo is introduced in the first year, the expected sales of Sprayfo will increase, because
once the product is introduced the Vietnamese farmers will get familiar with the product.
Therefore, the expectation is that the demand will rise.
7.3 Cost of goods sold
The costs of goods sold are the total expenses on the product.
According to Mr. de Vries, 90% is the cost of sale and 10% is the gross profit.

Turnover
Cost of sale
Gross Profit

Sloten BVs cost price

100%
85%
15%

The table below gives the expected cost of goods sold for 5 years.

28

Cost of goods sold for 5 years

Year 2013 till 2016
Units (per 20 kg)

Costs (per ton)

Costs

Year 2012 (6
months)
Year 2013
Year 2014

10940

900

196.920

22536
22974

900
900

405.648
413.532

Year 2015
Year 2016

23521
24177

900
900

423.378
435.186

Revenue
Cost of Sales
Net profit

Year 2012
218.800
196.920
21.880

Year 2013
450.720
405.648
45.072

Year 2014
459.480
413.532
45.948

Year 2015
470.420
423.378
47.042

Year 2016
483.540
435.186
48.354

7.4 Project
international

Income statement
A financial statement measures the performance of the forecast that has been made for Sloten
BV.
This financial statement shows the net profit of Sprayfo in Vietnam. In the year 2012 the net
profit will be much less than the following years, but that is mainly because the first 6 months
the product will be introduced. The cost of sales is calculated with 90% of the revenue. 55

7.5 Cash Flow

January

February

March

April

Mei

June

Inflow
Turn over
Net Cash Inflow

Outflow
Cost of sale
Promotion
Distribution
Other costs
Net Outflow
Profit/loss

2.500 *
1.000
5.000
- 5.000

1.000
1.000
3.500
- 3.500

1.000
1.000
3.500
- 3.500

1.000
1.000
3.500
- 3.500

1.000
1.000
3.500
- 3.500

1.000
1.000
3.500
- 3.500

July

August

September

October

November

December

Inflow

55 Mr De Vries (n.d.). Presentation at Saxion Deventer

29

Turn over
Net Cash Inflow

27.360
27.360

27.360
27.360

32.820
32.820

38.280
38.280

43.760
43.760

49.220
49.220

Outflow
Cost of sale
Promotion
Distribution
Other costs
Net Outflow
Profit/loss

24.624
1.000
1.500
500
27.624
- 264

24.624
1.000
1.500
500
27.624
- 264

29.538
1.000
1.500
500
32.538
228

34.452
1.000
1.500
500
37.452
828

39.384
2.000 **
1.500
500
43.384
376

44.298
1.000
1.500
500
47.298
1.922

* The promotion costs are higher in the first month, because the product has to be introduced
** The promotion costs in November are higher, because the famous Vietstock exhibition takes
place.56
7.5 Breakdown analysis
The break-even point is the point at which costs and turnover are equal.
For this calculation some numbers are necessary. First of all, the variable costs and the fixed
costs are necessary. The variable cost per unit Sprayfo is 17. However, the fixed costs are not
known yet. Therefore, the fixed costs will be calculated by the following formula: Fixed costs =
sales profit (in this case average 5 years) variables.
Fixed costs = 2082960 - 41659 - 1874664 = 166637
|Break-even point

57

Break-even point
Fixed cost
(Unit selling price Variable costs)

Fixed costs = 166.637

Unit selling price = 20
Variable costs =
17
166637
( 20 - 17)

58

56 Track record.(n.d.).Vietstock. Retrieved December 15, 2011, from http://www.vietstock.org/track.html

57 Break-even analysis. Retrieved December 20, 2011, from

http://entrepreneurs.about.com/od/businessplan/a/breakeven.htm

58Break even Calculator. (n.d.). Fast 4 cast. Retrieved from http://fast4cast.com/break-evencalculator.aspx

30

The breakeven is at 55.546

units in the total forecast
made in the calculation before.

7.7 Financing sources, identify the terms59

The term financing means mainly the act of providing money of a project. Working capital
requirements are also important for a business as Sloten for the cash that should be available
for day-to-day operations. Sloten BV invest money in their company which is called equity
investment in order to secure their needed capital requirements.
8. Risk management
8.1 Country risk
According to Vietnam Investment New reported in 10th February 2010 , Vietnam government
claimed that all organizations or individuals can only import the types of feeds that listed in the
list of imports permitted for circulation in Vietnam. As for other low-quality feeds, importers
must take measures to recycle and disposal them, and compensate for customers loss. The
document took effect from March 25, 2010. The government requires all organizations and
individuals must have business licenses, facilities, and necessary technologies that meet the
current standards to operate in the area of livestock feed. What is more, feeds must be stored
safely and distributed in the stores or shops which have accurate addresses. 60 However,
Vietnam feed association forecasted in January 14th 2011 that feeds prices would increase in
2011 due to the raising of World raw materials price and the redevelopment of feed industry. In
any case, Vietnam still remains relatively poor, although it has indeed embarked on a pace of
rapid economic growth. Foreign exports can do business in many provinces of Vietnam and not
face much interference from the state, but they have to put up with more of the states
complex rules and regulations. And there are macroeconomic risks to investing in Vietnam. 61

8.2 Commercial risk

Credit in Vietnam growth each year has averaged over 30 percent for a decade. 62 In order to
ensure credit, Vietnam's five-year credit default swaps, which reflect the cost of insurance

59Business dictionary. Retrieved December 21, 2011, from

http://www.businessdictionary.com/definition/equity-investment.html
60 Kim Loan (2011, October 26). Tough regulations on import of livestock feed. Vietnam Information News.
Retrieved from http://www.vietnamimportexportnews.com/vietnam-import-export/vietnam-importingproducts/38956-tough-regulations-on-import-of-livestock-feed.html
61 PALASH R. GHOSH (2010, August 26). Vietnam: High Potential, High Risks. International Business
Times. Retrieved from http://www.ibtimes.com/articles/46475/20100826/vietnam.htm

31

against default, are at about 245 basis points, or about 80 basis points more than regional
peers the Philippines and Indonesia. 63There is a data that collected by D&B shows about latest
proprietary cross-border payments performance: Vietnamese importers made 27.0% of
payments 30 or more days over terms in the 12 months ending the first quarter 2010.
Meanwhile, 69.6% of the payments were prompt; 14.1% were 60 or more days over terms; and
2.8% were severely delinquent with a delay of 120 days or longer. 64
8.3 Currency risk
According to the General Statistics Office in Hanoi, Vietnams trade deficit amounted from $978
million in July 2010 to $900 million in August 2010. For the eight months through August, the
deficit totaled $8.16 billion. Because of the high trade deficit, the nation's currency has
devaluated, the dong, which has slumped more than 5 percent so far this year. Moreover, the
International Monetary Fund (IMF) recently warned that Vietnam's foreign-exchange reserves
had fallen to the equivalent of seven weeks of imports from less than two-and- a-half months in
December -- raising the remote potential for a balance of payments crisis. 65 A dollar shortage in
the Vietnam banking system is also a risk that beset most foreign investors. In a word, currency
seems as a key risk in Vietnam.66
8.4 Internal risk
The price of Sloten products is a little high for Vietnamese, this may causes that there is no
market for Sloten even if Sloten has entered the Vietnam. The language is also a challenge for
Sloten. If Sloten does not have staff can speak Vietnamese, they need to find local people or
people who can speak Vietnamese to manage Vietnam market. The risk is that they need to
find a people that deserve their trust. To know about Vietnam culture is also necessary for
Sloten to have a successful business with Vietnam partners, because different cultural
background can cause an impact on business result.
8.5 Market risk
Vietnam is a big, potential market for animal husbandry. Growing rate of livestock is increasing
quite well year by year. Thus, the needs of feeds are also in a huge amount, there is the data to
show the needs:
Feed production:
Vietnam has around 241 feed mills to produce 5.2 million tons commercial feed product of
which 4.3million tons is compound feed and the balance is concrete feed annually in 2006.
In 241 factories, 43 are Joint venture or Foreign Owned factory, they took into account for 18%
total producers but getting shares of total 66% market. However this number just matched 45
50% total country demands.
In 2007, only 214 left (down 11%)
In 2008, an additional 30 40 producer has been closed.
Demand for feed products & raw material:
According to 2007 statistic, total demands for raw material at 17 million tons of which local
supplies could match at 13.3million tons and the balance quantity to be imported at 3.7 million
tons (accounting for 20%) of which:
585,000mts corn (15%)
2 million ton Soya Bean Meal (96%)
Others: 320,000 million tons

62 PALASH R. GHOSH (2010, August 26). Vietnam: High Potential, High Risks. International Business

Times. Retrieved from http://www.ibtimes.com/articles/46475/20100826/vietnam.htm

63 John Ruwitch (2010, May 27). Currency trend a key risk in Vietnam.REUTERS. Retrieved from
http://uk.reuters.com/article/2010/05/27/businesspro-us-frontiers-vietnam-idUKTRE64Q08X20100527
64 John Ruwitch (2010, May). VIETNAM. Decide with Confidence. Retrieved from
http://www.dnbcountryrisk.com/FreeSamples/samplefiles/SampleGlob30510.htm
65 PALASH R. GHOSH (2010, August 26). Vietnam: High Potential, High Risks. International Business
Times. Retrieved from http://www.ibtimes.com/articles/46475/20100826/vietnam.htm
66 John Ruwitch (2010, May 27). Currency trend a key risk in Vietnam.REUTERS. Retrieved from
http://uk.reuters.com/article/2010/05/27/businesspro-us-frontiers-vietnam-idUKTRE64Q08X20100527

32

 There is a trend of farmers now prefer to using commercial feed instead of household feed
due to quality aspects.
Compound feed is accounting for 52% of total production.
This year, Ministry of Agriculture and Rural Development plan to reach the growing rate of
local feed production up 7.8% year that equivalent to 19 million tons in total demands of
27million tons in 2020.67
According to the data, the feeds market in Vietnam is large and it seems to have a potential to
increase the import in the future.
9. Research methods and theoretical basis68
In this chapter, the project group will identify the research methods and techniques which has
been used during the research and explain why these methods and techniques are the most
suitable. The research was conducted with clear purpose that how Sloten BV will be successful
to export Sprayfo to Vietnam market and all of the dates are collected and interpreted
systematically.
9.1 The research methods and theoretical basis
Research Methods: The project group chose descriptive-explanatory research, because we
will give a precise description of Sloten BV and new foreign market analysis. The purpose is to
describe about the company conditions and whether they are capable to export and which one
is the target market. By doing description research, the project group gives the overview of
existing Vietnam market circumstance. Moreover, the project group also evaluated and drew a
conclusion from the described data. For example, the project group defined Vietnam as a
potential market for Sloten BV and explained why it is a potential market.
Approach: Inductive approach was chosen in this report, because the project group did not
know about the situation in Vietnam yet. Therefore, it is important to conduct a survey and
come up with theory and information about Vietnamese market.
Strategies: Our project group chose the survey strategy for this research. This is because this
strategy is very popular in business research and we were going to answer what, where, how
questions. There are many questions answered by interviewing representatives of Sloten BV or
by collecting quantitative data on reliable website. For example, how many commercial farms
should Sloten BV focus in Vietnam and where are they, was mentioned in this final report.
Research choice: The group chose the mixed-methods for the research of final report. This is
because the research used both qualitative data and qualitative data collection. For instance,
the group members asked Sloten BV ideas about their potential market. Furthermore, the
project group also collected quantitative data on websites about figures and facts of the
Vietnamese market. And we gave explanations based on this quantitative data.
Time horizon: This final report is cross-sectional, because we only do the research of the
Vietnamese market once and hand in the final report after about four months.
9.2 Techniques
In this final report, the project group used both primary data and secondary data collection
technique. By using the secondary sources which are already collected by others such as
information about Sloten BV and information about Vietnam on the website saved time. For
example, all databases will be searched which are available on internet (company website,
written materials). The project members only collected the most reliable sources for the
research which some were presented in the Reference Chapter. Using this technique it will
help the project group to access data quickly, and even higher quality than could be obtained
by collecting from each individual. Furthermore, this secondary data provides a source of
information that is both permanent and available form that may be checked easily by
others.However, there might be a case that the answer collected from secondary source is

67 NAM FEED AND GRAIN OUTLOOK. (2009, September 1).Midwestshippers. Retrieved from

http://www.midwestshippers.com/conferencePresentations/VIETNAM.pdf
68 Saunders, M., Lewis, P., & Thornhill, A. (n.d.). research methods for business students. (5th ed.).

33

inappropriate to project specific purposes and objectives or gains access maybe difficult or
costly. Consequently, the project group also combined with primary data such as collecting data
using interviewing. For examples, the project interviewed Sloten BV representatives to give
some specific information about product price which is not available to access by secondary
data.
9.2 The theoretical basis book or other literature that will be used
1. The literature study
In our Export plan we will use four books in order to gain more knowledge about research
strategies and marketing approaches. The books which will be used are Research methods for
business students-- fifth edition by Mark Saunders, Philip Lewis and Adrian Thornhill, Export A
practical guide by Marlies Harlaar and Otto de Leeuw, Export A practical guide by Marlies
Harlaar and Otto de Leeuw, Principles of Marketing by Philip Kotler, Gary Armstrong.
2. Interviews
We had two interviews with Sloten BVs sale manager Theo de Vries and some other staff. The
first interview was in week 1.2 (9-5-2011) when three export managers came to Saxion to give
a presentation about their products, and how they produce their product. After the presentation
it was possible to ask questions, therefore it is an interview. The second interview was week 1.9
(2-11-2011) Theo de Vries came to Saxion to join the elevator pitch of every group from IBMS
first year. After the elevator pitch we gained useful information, because Mr. de Vries explained
some things which were not clear yet.
3. internal, external analysis
For internal and external analysis we used the book, Export A practical guide written by
Marlies Harlaar and Otto de Leeuw. Internal analysis has four parts which are Strategy and
marketing mix, Production, Organization and Finance. Besides the internal analysis, there are
seven parts (Potential buyers analysis, competitive analysis, product, price, distribution,
communication and other aspects) for external analysis.

4. SWOT
SWOT is an analysing method, it is used to identify companies strengths, weakness,
opportunities and threats. Thus, the company can concentrate its sources and attention on its
strengths and the place which has the most opportunities, they can identify their weaknesses
as well and they could improve that. In the internal analysis we made a SWOT analysis of Sloten
BV in order to check their strengths, weaknesses, opportunities and threats.
5. Porters Model
Porter's five forces analysis is a framework for industry analysis and business strategy
development formed by Michael E. Porter of Harvard Business School in 1979. 69 The five forces
analyses are competitive rivalry, threat of new entry, supplier power, threat of substitution and
buyer power. By using this Model we could analyse and compare each country market and
choose the most suitable country for Sloten BV to export their product

69 Porter five forces analysis. (n.d.). WIKIPEDIA. Retrieved from

http://en.wikipedia.org/wiki/Porter_five_forces_analysis

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