THE UNIVERSITY OF ECONOMICS AND FINANCE

Name: Huỳnh Trung Nguyên Code: 185012211

MARKETING MANAGEMENT
WEEK: 03
(MKT1102E.202A06E)
MISSION STATEMENT:

Analyze: - Your choosen company industry PESTLE

- Your choosen company Porter’s 5 forces

I. INFORMATION
Name Vietnam Dairy Products Joint Stock Company (VINAMILK)
Industry | Dairy Industry
Certificate of
business 0300588569
registration
Date registered November 20, 2003
Issued by Department of Planning and Investment of Ho Chi Minh City
Address No. 10, Tan Trao st., Ward Tan Phu, District 7, Ho Chi Minh City, Vietnam
Hotline (028) 54 155 555
E-mail vinamilk@vinamilk.com.vn

II. DAIRY INDUSTRY ANALYSIS

PESTLE analysis

1. Government policies and regulations regarding agricultural products

will affect the farmer’s decisions to keep livestock and extract milk out
of them relative to other uses of livestock.
2. In Vietnam, a company that exports its dairy products must take
POLITICAL
care to comply with the regulations within the country.
1. http://www.fao.org/3/t0582e/T0582E06.htm
2. https://www.vietnam-briefing.com/news/vietnams-import-export-regulations-explained.html/
3. https://www.investopedia.com/terms/p/purchasingpower.asp

HUỲNH TRUNG NGUYÊN | 185012211

MARKETING MANAGEMENT (MKT1102E.202A06E)
WEEK: 03
 1. Milk is an essential product and people still make efforts to
purchase it regardlessly. The sales of milk wouldn’t be significantly hit
in case of a reduction in a family income.
2. Increase in purchasing power leads to an increase in pets’
ECONOMICAL acquisition.
1. https://sustainabledevelopment.un.org/content/documents/1951Sustainable%20Consumptio
n.pdf
2. https://www.investopedia.com/terms/p/purchasingpower.asp
3. https://www.nap.edu/read/10586/chapter/4

1. The sales of dairy products will have a negative affect by a move

towards vegan lifestyles.
2. The full-fat dairy products contribute towards obesity can a shift
away of these towards healthier lower-fat or skim varieties.
SOCIAL
1. https://www.vegansociety.com/go-vegan/why-go-vegan
2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5867544/
3. http://www.fao.org/3/t0582e/T0582E06.htm

1. The diversity of kinds of dairy produts along with several variants of

these at a extreme low cost.
TECHNOLOGICAL
1. http://www.fao.org/dairy-production-products/products/types-and-characteristics/en/
2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2935116/
3. https://www.investopedia.com/terms/p/purchasingpower.asp

1. Dairy manufacturers have to comply with all laws related to

advertising and product labelling in Vietnam.
LEGAL 1. https://ec.europa.eu/chafea/agri/en/system/files/ged/vietnam_handbook.pdf
2. https://sustainabledevelopment.un.org/content/documents/1951Sustainable%20Consumptio
n.pdf
3. https://www.nap.edu/read/10586/chapter/4

1. The industry is heavily dependent on the health and availability of

livestock.
2. The climate in which a dairy manufacturer chooses to operate is one
ENVIRONMENTAL of the things that have to be concerned about.

1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2935116/
2. https://www.nap.edu/read/10586/chapter/4
3. https://www.vegansociety.com/go-vegan/why-go-vegan

III. VINAMILK company

Porter’s 5 forces Analysis

Intensity of competitive rivalry

HUỲNH TRUNG NGUYÊN | 185012211

MARKETING MANAGEMENT (MKT1102E.202A06E)
WEEK: 03
Vinamilk is currently facing relatively high competition from domestic and foreign brands such as:
TH True Milk, Nesle, Abbott, Mead Jonson, .. The future dairy market will continue to expand and
Competition level increases.

Not only growing in the domestic market, Vinamilk also constantly develops export markets.
Currently, Vinamilk has exported products to more than 31 countries and territories around the
world with an annual export turnover of more than US $ 200 million. The main export markets are
the Middle East and Asia. Vinamilk is continuing to seek and expand markets to Europe, Africa,
South America, ... Export revenue accounts for 8% - 24% of Vinamilk's total consolidated revenue.
The average growth rate of exports has been 17% per year over the past 10 years. Main export
products are powdered milk and condensed milk.

Bargaining power of suppliers

Vinamilk in particular and dairy businesses in general have quite a high bargaining power with
suppliers. In terms of the size of the dairy industry, 95% of dairy cows are raised in households,
only 5% are raised in specialized farms with 100-200 heads or more (VEN, 2009). This shows that
people raise cows spontaneously, do not pay attention to the process, so the quantity and quality
are not stable, reducing the ability to negotiate with production companies. The lack of
management experience, small farm scale, and high rates of reproductive disorders and
diseases ... make dairy farmers very disadvantaged. Therefore, domestic dairy companies take the
initiative in negotiating purchasing price for input milk.

Bargaining power of buyers

The end customers, have the potential to put a great deal of pressure on companies about the
quality of their products. Brands in dairy products are very diverse and interchangeable, the price
factor is no longer so important to consumers when choosing dairy products. Companies compete
with each other by quality, product variety, brand strength,… then price. For dairy products, when
the raw material purchase price is high, the dairy company can raise the price of the product that
the customer still has to accept. Therefore, the bargaining power of buyers is low.

As for retailers, nutrition centers, companies will give discounts and commissions. Distribution
points such as nutrition centers, hospitals, pharmacies, etc. can gain considerable strength in front
of dairy companies, as they can influence the retail customers' decisions to buy dairy products. at
the end through product consultation and introduction.

Threat of substitutes

In fact, dairy products have always had a fairly stable position in the market with very few other
substitutes due to the characteristics of milk as an essential nutritional supplement. For liquid milk
products, the alternative products that have the potential to reduce the company's market share
are nut milk, soymilk, cereal drinks or soft drinks, etc. The dairy industry is less exposed to risks
from substitutes.

HUỲNH TRUNG NGUYÊN | 185012211

MARKETING MANAGEMENT (MKT1102E.202A06E)
WEEK: 03
 Threat of new entrants

In general, the entry barrier of the dairy industry is quite high with the cost of entering the industry,
product specialization and the establishment of a suitable distribution system:

- The cost of entering the industry, generally not high but must be large enough for the demand of
advertising, research / development. However, liquid milk and yogurt products are quite high.

- Product Characterization: Up to now, Vietnam's dairy market has had most of the major dairy
firms in the world, in which big dairy firms have owned a certain market share and have little
change in recent years. Therefore, new competitors who want to join must have a strong
investment to entice and change the market's loyalty to existing dairy firms.

-Distribution channels: the current distribution channels of dairy products have been used
completely by existing enterprises. Therefore, new entrants must convince these distribution
channels by accepting a high commission share. Therefore, it can be concluded that the pressure
from new competitors is insignificant, but competition will mainly take place within the current
industry.

HUỲNH TRUNG NGUYÊN | 185012211

MARKETING MANAGEMENT (MKT1102E.202A06E)
WEEK: 03