Hanoi University

Faculty of Management and Tourism

Lecturer Ngô Thị Thùy Linh
Tutor Ngô Thị Thùy Linh

Tutorial Tut 3 BA17

Group Student’s full name Student’s ID

1 Pham Phuong Thao 1704000106

2 Nguyen Thi Them 1704000109

3 Nguyen Thi Hang 1704000045

4 Nguyen Khanh Linh Hoa 1704000051

Subject INTRODUCTION TO MANAGEMENT

Assignment Title/Number SWOT ANALYSIS OF HIGHLANDS COFFEE

Word Count 2,402 words

Assessor’s feedback:

Assessor’s signature (optional): Assessment:

Dated: December 2nd, 2018
 TABLE OF CONTENTS

Executive summary ......................................................................................................

1. Introduction ..............................................................................................................

2. Literature review .....................................................................................................

3. SWOT analysis .........................................................................................................

3.1. Strengths .......................................................................................................

3.2. Weaknesses ...................................................................................................

3.3. Opportunities ................................................................................................

3.4. Threats ..........................................................................................................

4. Conclusion ................................................................................................................

5. Recommendation.......................................................................................................

References

1
 EXECUTIVE SUMMARY

Vietnam market economy is currently being considered as a very dynamic and potential
destination for investments but an intensely competitive market. Therefore, the frequencies of
entries and exits of new and old companies will unexpectedly arise. Particularly, it is known that
Vietnam coffee market is considered as a not only very potential but also competitive field for
many domestic and all-over-the-world investors to pour money into. Especially, Highland
Coffee, a famous coffee shop chain in Vietnam,a brand of Viet Thai International JointStock
Companyowned by David Thai, has shown their significant development and their popularity
from customers. However, it has still encountered different competitors such as Starbucks, Trung
Nguyen, The Coffee House, Passio, Phuc Long Coffee and Tea House, Urban Station, VinaCafe,
Nest café so that they need to have efficient and sensitive strategies to overcome these other
coffee brands.

It can be said that Highland has its pros for example, theysatisfy their customers’ demand, gain
great innovations along with a bunch of attractive projects to their buyers, and create a unique
environment, which leads to the enthusiasm, the fulfillment and the memorably relaxed moments
for their clients.Nevertheness, to compete with other coffee brands, it needs minimize their cons
such as the quite expensive price of cups of Highland Coffee, the distinguished style they have
and the shortage of investments for advertising campaigns. In addition, we also claim the
opportunities for Highland Coffee to develop in the future. The rapid increase of Vietnamese for
their high income, the growth in GDP as the under instructions of Lollibee seems open promising
windows for bright development of Highland. Following these, Highland has to face up with
various challenges such as competitions from domestic and foreign brands, the interest and
curiosity of people with new things, or the traditional styles of many Vietnamese, and the more
reasonable price of other coffee brands. Thereby, we give some recommendations to help
Highland Coffee gain more innovations in planning and organization to respond the customers’
needs. To do that, Highland Coffee should create more product line with reasonable price but
quality, and develop great marketing and branding strategies to enhance their image in the eyes
of not only Vietnamese but other people on other places. It is highly evaluated that Highland
Coffee bring its own high quality in each cup of café, but to raise belief from customers, it would
be a good choice to have certificates on the website of the firm.
With a limited knowledge, abilities and conditions, it is unavoidable for us toleave some
shortcomings in our research. However, benefits of the study about SWOT (strengths,
weaknesses, opportunities, and threats) of Highland Coffee will be useful for the future
development but Vietnam coffee market in general.
 1. Introduction

Highlands Coffee is a Vietnamese coffee shop chain and manufactureraswell as distributor of

coffee products. Established in 1998 by Vietnamese American David Thai, initially Highlands
focused on packaged premium Roast and Ground coffee (R&G) sold through supermarket,
hotels, restaurants, and cafés. In 2002, the first Highlands Coffee Café was officially launched.
The founding of the Highlands Coffee company marked the first time a Vietnamese
residingabroad has registered a private company in Vietnam and it became a joint stock company
after two years. Over a long period of development, Highlands Coffee had an event to mark "The
Vietnamese coffee brand reached a target of 100 stores across nationwide” in 2016 (Wikipedia).
Currently, the company developed into one of the largest coffee chains in Vietnam when
operating 180 coffee shops in six cities and provinces across Vietnam (Soha, 2017).

According to Brands Vietnam (2014), Highlands Coffee is a registered brand of Viet Thai
International Joint Stock Company whose business are food, apparel and communication service.
Since the start of operation, the company has developed the widest distribution network and
greatly influenced on Vietnam coffee market. The principal activities of Highlands Coffee are
produce and distribute products bearing bold Vietnamese style along with the line of products
with international flavor. Moreover, they give the market a portfolio of products, flavors and
packing sizes with the most options. The company has provided three types of products in Roast
and Ground coffee including Heritage Blend, Traditional Blend, Gourmet Blend and four
espressos in ground and whole bean consisting of Full City Roast, Cinnamon Roast and Aribica
Supreme and Decaffeinated (Highlands Coffee). After a decade of establishment, Highlands now
provides a menu of Vietnamese food and drinks targeting a wider range of customer. Beside
traditional coffee products, the company introduced new products such as a Ready-To-Drink
(RTD) "Iced Coffee" in an 8-ounce can in 2009, Freeze products in 2014 and Tea-Milktea
products in 2015.Furthermore, it also supplied with pastries, salads, sandwiches and Vietnamese
office lunch. The company stated that the RTD products had been distributed to more than 17
Asian countries and the USA (Wikipedia). However, its business is still affected by many
factors, which leads to several threats that is harmful. This report will demonstrate SWOT
analysis splitting into internal factors and external factors of Highlands Coffee and our
recommendations for its business.
 2. Literature review

The method we utilized in this report is SWOT analysis, which is one of the stages in strategic
management process and is deemed to be an expedient tool for strategic planning in
organizations. The SWOT analysis helps to shed light on external and internal factors that can
provide substantial assistance for managers to make effective decisions. SWOT acronym stands
for “ Strengths, weeknesses, opportunities and threats”, which are divided into two dimensions.
Strengths and weeknesses are internal facets that come from within the organizations. In
constrast, opportunities and threats are external aspects that influence organizations from outside.
According to GÜREL & TAT (2017), by closely scrutinizing factors internally, in other words,
assessing strengths and weeknesses, an organization will be able to recognize its sources of
competitive advantages basing on the resources and capabilities it possesses. Meanwhile,
external analysis helps managers to gain more insights about the environmental opportunities and
threats confronting the organizations, therefore they will have a grasp of how competition in this
environment is likely to develope.

In general, SWOT analysis is used to identify organizational and environmental factors (GÜREL
& TAT, 2017). It assists managers to reduce weaknesses and sharpen strengths, as well as helps
them to seize favourable opportunities available and be aware of threats that facing their
constitutions. As a result, managers will have the ability to come up with right strategies,
enabling firms to operate better and more effectively.

3. SWOT Analysis
3.1. Strengths

Currently, in the coffee market, there are many different firms with a variety of models and types
for consumers to choose the best products for themselves. Therefore, each coffee company has
its own strengths and strategies to contend with other companies and HighlandCoffee is no
exception.

The first element leading to Highlands’s success is that it can meet the customers’ demand. With
the initial aim of high-level customers, the coffee chain has changed its strategy to target every-
day customers (Thanh, 2014).In addition, the Highlands continually innovates on the menu,
making it more diversed for customers to choose. There are plenty of test items to collect
feedback from customers in order to meet the needs but ensure the most streamlined operation
(Soha, 2017). Its menu offers different customer groups with various drinks and all-day dishes
(breakfast, lunch and dinner), which have traditional tastes and are suitable for Vietnamese who
prefer traditional styles. Its prices are cheaper than its competitors in the range of VND29,000
($1.35) to VND65,000 ($3.00). Besides, in order to attract more customers, Highlands also offers
discount vouchers with group of customers buying online (Thanh, 2014). Subsequently, different
groups of clients started to pay a visit to Highlands to enjoy its food and drinks after the change
in strategy. Secondly, together with coffee quality, the place and atmosphere when people enjoy
drinks and dishes of Highlands are also of great importance. According to Soha (2017), the
Highlands locations are highly homogenous, all in good locations with breathtaking views or at
the foot of office buildings. This helps the customer to clearly and uniquely identify the brand
image of the Highlands. Moreover, with the main theme is Jazz, Highlands Coffee has created a
feeling of relaxation, luxury and noble. The atmosphere in this place is comfortable and full of
enthusiasm, along with excellent service style, indispensable friendly smile and enthusiasm,
dedicated to customers which make the difference between Highlands and the other coffee
brands. Thirdly, the service quality is one of the key factors to attract customer. According to
Andrew Schnauer, a visitor from New Zealand said "My friends in Vietnam told me to go to the
Highlands, where there were delicious drinks, wifi, and air conditioning" (Vietnamnet). There is
no doubt that in the age of cutting-edge technology, high-speed wifi is an indispensable thing for
people (LaMarco, 2018). Along with this, Highlands fullfills the needs for equipment, physical
facilities and air-conditioners in hot summer weather in Vietnam. Finally, the strategy which
makes it easier for customers to access information is brand communication. Information about
Highlands coffee is updated constantly and widely advertised on the company's website
www.highlandscoffee.com.vn. The company also posts up-to-date event information, discounts
on Facebook, Email Marketing, Mobile Marketing and send advertising messages and
promotions to customers to convey the message to the users (Thanh, 2014).

3.2. Weaknesses

On the other hand, there still have some negative points needed to deal with in this well-known
coffee shop chain. First of all, Highland Coffee is quite expensive around from 30,000 VND to
70,000 VND due to high expenses in materials and operating system, especially compared with
the-not-high income of Vietnam approximately 2.500 USD per year in 2018 according to Vice
Prime Minister Vuong Dinh Hue. In addition, Highlands Coffee has been more oriented towards
Western style, which needs time in order to adapt to and meet various Vietnamese’ lifestyles
expressed by three different regions of the country (the North, the South, and the Central). In
Vietnam, people drink coffee all day from morning to even the night, a cup of delectable coffee
can be easily bought at everywhere on the street or in a well-known brand (Starbucks, Trung
Nguyen, Highland Coffee and so on). As a result, it could be one of the reasons in accordance
with its so-premium appearance that make many customers quite reluctant to enter while they
can afford.

More than that, it seems that promotion campaign and advertising of the brand are not really
prioritized by Highland Coffee’s managers, which is considered as an essential part to gain the
brand loyalty from familiar buyers and raise awareness and interests from new customers not
only Vietnamese but foreigners as well to their brand.

3.3. Opportunities

Besides the strengths and weaknesses, Highlands Coffee also has many oppoturnities which will
be of great benefits. According to the Report of Savills in Viet Nam, the rate of the rich
population in Ho Chi Minh City and Ha Noi is increasing rapidly compared to other cities such
as Malina, Jakarta, Bangkok, Kuala Lumpur and Singapore together with that is the growth in
income people gain anually (about more than $2.300/ person/ year). It is expected that in 2018
Vietnam’s GDP will increase by 6.8%. Compared with other countries in the ASEAN region, per
capita GDP of Viet Nam ranks 6/10. Apparently, this is a good oppoturnity for Highlands Coffee
to show the potential of developing products as well as developing their on brand as it is
considered as a famous coffee brand for businessmen and people with high income. Highlands
Coffe Corporation can increase its revenues through expansion of its coffee chain in developing
countries. Co-operating with one of the most popular fast-food brands of Philippines, Highlands
Coffee has oppoturnity to fulfill the dream of bringing Vietnamese brand outside the world,
especially in the era of globalization. Southeast Asia market may be the first destination for
Highlands Coffee as it is Vietnam’s neighbors and a potential market for Vietnam’s coffee
reputation to develop.Besides, the CEO of fast food supply chain, Jollibee, owns up to more than
1000 stores in Philippines and more than 300 stores in every country in the world such as
America, HongKong, UAE, Qatar, Brunei, China and Viet Nam. Therefore, this a good chance
for Highlands Coffee to get management experiences, operation and the way Jollibee to
overcome success barriers, market instrution and exploitation of controlling company.

3.4.Threats

Along with several opportunities, there are a variety of threats confronting Highlands Coffee.
The first threat is from competitors. It is true that due to globalization, nowadays there are more
and more foreign coffee giants flock into Vietnam, namely Starbucks (America), Gloria Jean’s
Coffee (Australia), Coffee Bean & Tea (America), Illy (Italy), to name but a few. Highlands
Coffee is undergoing harship trying to compete with these prestigious brands, especially with
Starbucks. With approximately 100 stores in Ho Chi Minh City and 11 stores in Hanoi, aiming
for middle-class with stable income, this brand is becoming a serious threat to Highland Coffee
in the market (Nhip cau dau tu, 2012). Besides, due to the personalities of young generation who
are curious about new things and are excited to try luxurious brands from foreign countries to
have their status strengthened, Starbucks will carry on attracting more customers below age 30
(Brands Vietnam, 2014). It is an arduous task for Highlands Coffee to compete with Starbucks
since both brands’ targeted groups are the same (middle-class people, youngsters and officers as
well as foreigners in Vietnam), and Highlands Coffee has no competitive edge over Starbucks.
Moreover, domestic competitors such as Trung Nguyen Coffee and The Coffee House are also
threats to Highlands. Vietnamese people who are traditional are likely to seek to Trung Nguyen
Coffee as its specialization is traditional Vietnamese coffee with the most famous product is G7,
while Highlands Coffee serves traditional and foreign drinks side-by-side. Trung Nguyen Coffee
won the title of the highest position in Vietnam’s coffee chain with about 10,000 shops across
Vietnam (Vietnamnet, 2016). What is more, substitute products such as beer, soft drinks as well
as milk tea are also considered to be threats to Highlands. The prices of these substitutions are
often more reasonable compared with the costs of Highlands. As a result, customers are likely to
choose these products instead of Highlands. Last but not least, these products, especially bubble
tea nowadays are gaining substaintial popularity among teenagers, which will pose a great threat
to Highlands Coffee as the demand for its product will be decreased significantly.

4. Conclusion
To sum up, SWOT analysis plays a significant role in strategic management as it concisely
illustrates the overall view of the firm’s current characteristics and promising prospects with
open windows of the present market. Particularly, Highlands Coffee could seize the initiative for
their own thank to SWOT analysis, supporting them to recognize their strengths and overcome
their weaknesses. Moreover, there are a great number of huge competitiors such as Starbucks,
Trung Nguyen and other popular coffee shops like The coffee house, Passio, Urban station,
Effoc that Highlands Coffee must confront with. However, minimizing their shortcomings and
enhancing their advantages can bring the company to precious opportunities to develop better or
even overcome and be ahead of their rivals.

5. Recommendations

In general, based on the SWOT analysis of the findings, there are some resolutions that are made
to help the company to assesses its strengths, weaknesses, oppoturnities and threats relevant to
the business in order to conduct necessary changes.According to the Vietnamese coffee drinking
habit, in average, most of Vietnamese people consume coffee less than 3 times per week; it can
be at coffee shop, at home or even at workplace. Having the understanding of the habit of
Vietnamese today, Highlands tries to develop a product line with reasonable price for those who
like to drink coffee everyday and still maintain the quality of products. Furthermore, a suitable
recommendation in this case is to implement creative marketing and branding strategies that
build Highlands Coffee’s corporate image as a contributor to community development so as to be
successfully in Vietnam coffee industry as well asforeign market. Trung Nguyen Coffee, for
example, promote the PR of products via taking advantages of the mass media such as Facebook,
website of company, media of the press... It is not denied that marketing online has the power to
attract new customers as well as keep loyal consumers. Highlands Coffee, therefore, need to pay
more attention to creating a online community for people who keen on drinking coffee and
sharing about the variety of types of coffee... Last but not least, Highlands Coffee show a strong
domestic position on the market today thanks to its quality. According to Viet Thai company,
Highlands Coffee is applying Food Safety Standards and in the near future, they should apply
international criterion HACCP, for example. Posting certificate on the websites of company in
order to raise belief of local customers in products is convenient for Highlands Coffee to reach to
foreign market. These recommendations focus on minimizing the negative impacts of the
internal and external factors enumerated in this SWOT analysis.
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