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CONTENT
I. INTRODUTIOC OF THE FOCAL FIRM 3
History 3
Business snapshots 4
II. INTERNATIONAL COMPETITIVENESS AND
MODE OF INTERNATIONALIZATION 7
Key strengths 7
Market expansion strategy 9

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 I. INTRODUCTION OF THE FOCAL FIRM

A. History (highlighting the firm milestones in their international business)

1976, Vinamilk was established on August 20, 1976 on the basis of three dairy factories from
the old regime:

Thong Nhat Dairy Factory (formerly known as Foremost factory).

Truong Tho Dairy Factory (formerly known as Cosuvina factory).

Dielac Powdered Milk Factory (formerly known as Nestlé factory).

2001 Can Tho dairy factory was inaugurated and put into operation.

Equitised and officially became a Joint Stock Company (JSC) under the name of Vietnam
Dairy Products JSC.

Acquired Saigon Milk JSC (currently known as Saigon dairy factory).

2009, Environmentally Friendly Factory, Construction of Nghe An dairy farm

2010, International investment in New Zealand and over 20 other countries.

Vinamilk has made its investment in a company in New Zealand manufacturing whole milk
powder with a capacity of 32,000 tons/years.

In addition, Vinamilk also invested in the US and opened more factories in several countries.
Its export revenue accounts for 15% of total revenue and is increasing.

Vinamilk applied new technology, installed advanced equipment and modern machines to all of
its factories.

Besides, Vinamilk also established Public Health Nutrition Consultant Centers in the country
and launched over 30 new products.

2012, Inauguration of modern factories. Vinamilk inaugurated Danang Dairy Factory, Lamson
Dairy Factory, Vietnam Beverages Factory with modern production lines originated from the
US, Denmark, Germany, Italy and the Netherlands.

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 2014, Vinamilk - 38 years of innovation and development

Vinamilk has become a familiar brand to Vietnamese and international consumers after 38
years of continuous innovation and development.

Vinamilk has been proving itself of strong spirit of constantly improving, innovating, seeking
new directions so that the Company gets stronger and stronger.

2015, Raised stake in Miraka Limited Company of New Zealand. Vinamilk raised its stake in
Miraka Limited Company of New Zealand from 19.3% to 22.8%.

2016, Vinamilk official launched its brand in Myanmar, Thailand and expanded operations in
ASEAN.

2016, Inauguration of Angkormilk dairy factory invested by Vinamilk. This is the first and one-
of-its-kind dairy plant in Cambodia as of this moment

2016, Vinamilk pioneered organic market in Vietnam with USDA certified Vinamilk Organic
Fresh Milk.

B. Business snapshots (current, employees, markets, and products)

Current: (2017)

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• Total revenue 51.135 VND billion with 8,9% growth rate.

• Profit after tax 10.278 VND billion with 9.8% growth rate.

• Total assets 34.667 VND billion with 18% growth rate.

Employees: 7.845 (2017)

Products:

-Including various
products:

•Liquid milk

•Powdered milk &

nutrition powder

•Sweet
condensed
milk

•Ice-cream, cheese ·

• Soya milk, fruit juice & beverages

Markets:

Domestic: Vinamilk has 3 major branches in Hanoi, Danang, Cantho and a headquater in HCM
city.

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 Foreign: Vinamilk products has been exporting to more than 40 countries around the world
including: South East Asia, Mid- East, African,…

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 II. INTERNATIONAL COMPETITIVENESS AND MODE OF INTERNATIONALIZATION

A. Key strengths:

Long history and strong foundation is the first and foremost strength to make Vinamilk
become a leader in dairy market of Viet Nam. Thanks to the completely qualified products,
competitive with the market existing goods, throughout about 34 years operating history,
Vinamilk has undoubtedly become a familiar and trusted trademark in the mind of domestic
clients. Moreover, it has gained a great customer satisfaction and understanding as well as the
knowledge of the local market.

Vinamilk brand is associated with dairy products and trusted by millions of consumers.

This brand was voted as a "Famous Brand" and one of the 100 strong brands by the Ministry of
Industry and Trade in 2006. Vinamilk was also selected by consumers in the "Top 10
Vietnamese High-Quality Goods" from 1995 to 2009.

+ Vinamilk has owning various brands such as: Ong Tho, Ngoi Sao, Dielac, Yogurt Vinamilk.
Highly effective marketing: Advertising, PR and marketing programs are highly effective.

The product portfolio is high quality and lower price than the imported products of the same
type and the largest market share in Vietnam among suppliers of the same products.Vinamilk
has a diversified product portfolio, targeting many customers. The quality of products is not
inferior to foreign ones while prices are very competitive.

Vinamilk is the largest dairy company in Vietnam with a market share of 37%, which accounts
for 45% market share in liquid milk market, 85% market share for condensed milk and yogurts
→ Vinamilk is able to set the price on the market.

Good leadership and management: Vinamilk has a solid, experienced and ambitious team
proven by sustainable business profits.

Wide distribution network, combining many modern and traditional distribution channels.

The company has had direct dairy farming projects, in addition to supporting farmers, and to be
more active in raw materials. In addition, the company has a dairy farming project in New

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 Zealand (the country that exports the most raw milk to the market in Vietnam) to be more
active in the source material.

Strong finance: While many businesses are struggling with interest rates, Vinamilk has a
relatively safe capital structure, with a debt to equity ratio of 16.7% (2009).

Modern equipment and technology: Vinamilk uses modern production and packaging
technology in all plants. The company imports technology from European countries such as
Germany, Italy, Switzerland to apply to the production line. Vinamilk is the only company in
Vietnam that owns the Niro spray drying technology in Denmark. In addition, the company
uses internationally-standard production lines provided by Tetra Pak to produce dairy products
and other value-added products.

Core values

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B.Market expansion strategy

Overview:

A firm contemplating foreign expansion must have three basic decisions:which markets to enter,
when to enter those markets, and on what scale. The 196 nation-states in the world do not all
hold the same profit potential for a firm contemplating foreign expansion. Ultimately, the choice
must be based on an assessment of a nation's long-run profit potential. This potential is a
function of several factors; two main factors: economic and political factors, that influence the
potential attractiveness of a foreign market.

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 Furthermore, the long-run economic benefits of doing business in a country are a function of
factors such as the size of the market (in terms of demographics), the present wealth
(purchasing power) of consumers in that market, and the likely future wealth of consumers,
which depend upon economic growth rates. We will now discuss some information of that
Vinamilk penetrated three markets: Myanmar, Cambodia and the United State the group has
selected and then analyze the activities: (1) the decision of which foreign markets to enter,
when to enter them and on what scale and (2) the choice of entry mode.

1. MYANMAR.

After nearly 40 years as a leading nutrition group in Vietnam and 18 years of export experience
to the world, Vinamilk not only can meet the growing domestic demand but also expand its
activities to the foreign markets. Vinamilk's ongoing efforts are reflected in its presence in
more than 40 countries, in many continents and regions such as the US, Europe, Africa, South-
East Asia and the Middle East. Particularly in Southeast Asia, Myanmar and Thailand with
increasing demand for milk which Vinamilk considered as potentially important markets in the
company's strategy of expanding market in general and the ASEAN region in particular.

Vinamilk's official launching ceremony in Myanmar marked a milestone after a period of

exploration and penetration into the Myanmar market. Having received initial positive
feedbacks from consumers, Vinamilk was more confident in taking further steps in this market.
In addition to coordinating with Myanmar's strategic partner, Synchro World, Vinamilk also
focused on market research activities to understand the needs of local people better, invested
marketing funds to increase the level of identifying Vinamilk's products. Through the
ceremony, representatives of Vinamilk introduced to customers high-quality dairy products
which produced by modern closed lines, attracted the attention and appreciation from the high
officials such as doctors, nutritionists and journalists.

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The launch of Vinamilk in Myanmar attracted the attention of the media, local partners and
investors.

Mr. Vo Trung Hieu (second from left), Director of International Business of Vinamilk, was
talking with Yangon leaders about Vinamilk's development plan in Myanmar.

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 This was an event marking the official presence of Vinamilk in the Myanmar market along
with top quality products such as powdered milk, nutritious powder, liquid milk, condensed
milk and soft drinks at reasonable prices. They provided high-quality nutrition to meet the
diverse needs of consumers, which contributed to the physical and mental development of
local people, especially children.

2. CAMBODIA.

In 2016, Vinamilk inaugurated Angkor Milk - dairy plant in Cambodia. This is the first dairy
factory in the country of the temple.

Photo: Vinamilk inaugurated Angkor Milk.

Phase 1, Angkormilk's plant was located in Phnom Penh, Cambodia and had been in operation
in 2015 with a capacity of 19 million liters of liquid milk, 65 million yoghurts and 80 million
cans of condensed milk per year. Phase 2 - 2024, the plant will push the capacity to 38 million
liters of liquid milk, 192 million yogurts per year to serve the needs of people in Cambodia and
the region. The main product was sweet condensed milk with "Best Cow & Captain" brand.

Angkormilk with the contribution of revenues and profits was modest for Vinamilk. However,
the Cambodian market was expected to be a potential market with rapid growth.

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 Moreover, this plant was the model for Vinamilk to expand to other markets in the ASEAN
region.

3. UNITED STATE.

Vinamilk continued its expanding strategies to overseas by acquiring 70% share capital of
Driftwood Dairy Holdings Corporation in California, USA and officially own 100& of stake
in May 2016. This was a corporation specializing in the production and distribution of dairy
products (such as fresh milk, soy milk, milk cream ...), juices and snacks ... These products
were distributed in the California market and could be exported.

Photo: Products of Driftwood.

In the first 9 months of 2013, Vinamilk achieved 22.8 trillion VND in revenue.

Driftwood Dairy developed from a family dairy company in 1920 and became one of the
largest dairy producers in California. Every day, Driftwood supplied about 1.4 million dairy
products to schools. Driftwood also supplied milk to many families, restaurants, hospitals ... on
all days of the week.

After years of cooperating with Vinamilk, Driftwood has made much positive changes and has
maintained its position as one of the largest dairy producers in California. For Vinamilk,
Driftwood is the brand ambassador of Vinamilk, the gateway for dairy products made in
Vietnam to be present in the world market. This cooperation created many opportunities for
both Driftwood and Vinamilk, especially when Vietnam was integrating into the world
economy with trade agreements such as TPP.

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 Vinamilk joined the Summer Fancy Food Show with the support of Investment and Trade
Promotion Center (Agritrade). This was the first time Vinamilk had participated in this event,
along with 11 other Vietnam corporations. Here, Vinamilk and representatives of Driftwood
introduced two sweetened condensed milk and creamer with "Driftwood" brand which was
produced at Vinamilk's factory in Vietnam and exported to the US.

Photo: Overview of the Summer Fancy Food Show 2016 - New York, USA.

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 Photo: The main products of Driftwood - Vinamilk were displayed at the fair.

Photo: The main products of Driftwood - Vinamilk were displayed in the supermarket.

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 Sweetened condensed milk and creamer products - Driftwood received much attention from
visitors to the fair and opened business opportunities to export Vinamilk's sweetened
condensed milk products. After overcoming many barriers of quality and food safety of the
food product and beverage sector in general and the dairy sector in particular. Vinamilk's
products had been recognized by the FDA and USDA for quality and allowed to import. This
event had important meanings, asserted the position of Vinamilk - the leading dairy corporation
in Vietnam, brought high-quality products to international market.

Vinamilk joint in the Summer Fancy Food Fair with the aim of introducing the Vinamilk -
Driftwood Corporation and looking for distribution partners, aiming at providing high-quality
products at competitive prices to the big supermarket chains in the US. After the fair, dairy
products and condensed cream produced by Vinamilk began to be sold at supermarkets in both
Arizona and California.

Photo: Vinamilk's condensed milk and creamer products are available at American supermarkets

The Fancy Food Fair Show, which is held twice every year, is one of the largest fairs in the US
food industry and attracts thousands of well-known businesses in the world food processing
and production industry.

The Summer Fancy Food Show 2016 attracted nearly 3,000 enterprises displaying their
products at the Jacob Javits Centre in New York and more than 47,000 visiting food experts.
The Fancy Food Show is a channel connecting food processors and producers to distributors in
America.

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Analyzing mode of internationalization

1. MYANMAR
a. Market selection

With the Myanmar market, it is a potential market in ASEAN which Vinamilk wants to target.
Myanmar has population of over 50 million people, in which most businessmen can use
English, abundant resources, and the lifting of the US embargo on Myanmar created an
attractive market for international business.

Strong purchasing power and strong growth, but Myanmar's domestic consumer goods meet
just over 10% demand of market. Therefore, essential items are imported from neighboring
countries and have high prices, more than 10-30% compared with similar items in Vietnam.

Myanmar is a rare market where Vietnamese consumer goods are highly appreciated, and
"made in Vietnam" symbol is considered as a symbol of trust. Vinamilk's investment in the
milk Myanmar market is a right step, but equally risky.

b. Timing of entry

In recent years, Myanmar has been carrying out a lot of reforms related to trade and investment
towards economic development. This is the right time for Vinamilk to enter the Myanmar
market. As a result, many Vietnam companies have gained a foothold in the Myanmar market
thanks to high-quality products and affordable prices and Vinamilk is one of them.

c. Scale of entry

At the end of 2014, Vinamilk exported the first batch of fresh milk and juice products. , soy
milk to Myanmar. In May 2015, Vianamilk exported the second batch of dairy products to the
country. Currently, all Vianmilk products are available at supermarkets and traditional markets,
hospitals in Yangon, Mandalay. To survive in this market, Vinamilk's products are always
priced and competitive compared to Thai products. Small-scale entry of Vinamilk is a way to
gather information about Myanmar market before deciding whether to enter on a significant
scale and how to best enter. By giving Vinamilk time to collect information, small-scale entry
reduces the risks associated with a subsequent large-scale entry.

d. Mode of entry.

Vina Malik began their expansion as an exporter and only later switch to establishing joint
ventures with Synchro World - was responsible for expanding the distribution system. The
company focused on market research activities to understand the needs of local people, invest
marketing funds to increase the level of product awareness and raise the Vinamilk brand here.

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 The first advantage of joint ventures: Vinamilk benefited from a local partner's knowledge of
Myanmar's competitive conditions, culture, language, political systems and business. The
second advantage, when the development costs or risks of opening a foreign market were high,
Vinamilk might gain by sharing these costs or risks with a local partner.

Despite these advantages, there were major disadvantages with joint ventures. First, Vinamilk
that entered into a joint venture risks giving control of its technology to its partner. Second, the
shared ownership arrangement could lead to conflicts and battles for control between Vinamilk
and partner if their goals and objectives changed or if they took different views as to what the
strategy should be.

2. CAMBODIA
a. Market selection

When Vinamilk entered the first steps into the Cambodian market, they saw the potential for
economic and human development of this kingdom. In terms with the effective policy reforms
and investment encouragement, Cambodia had potential to attract foreign investors to here,
including Vinamilk. Cambodia, while relatively poor, are growing rapidly that Cambodia is
attractive target for inward investment.

b. Timing of entry

In 2016, Vinamilk inaugurated Angkor Milk - dairy plant in Cambodia. This is the first dairy
factory in Cambodia with international standard production technology. With the first-mover
advantages, Vinamilk have the ability to preempt rivals and capture demand by establishing a
strong brand name. Moreover, Vinamlik can build sales volume in Cambodia and ride down the
experience curve ahead of rivals, giving the early entrant a cost advantage over later entrants.

c. Scale of entry

Angkormilk's plant was located in Phnom Penh, Cambodia and had been in operation in 2015
with a capacity of 19 million liters of liquid milk, 65 million yoghurts and 80 million cans of
condensed milk per year. Entering a market on a large scale will make Vinamilk easier for it to
attract customers and distributors. Also, the large-scale entrant is more likely than the
smallscale entrant to be able to capture first-mover advantages associated with demand
preemption, scale economies, and switch costs.

d. Mode of entry

Vinamlik began their expansion as a joint venture and only later switch to acquiring an
established firm – Angkormilk, in that host nation (Cambodia) and used Angkormilk to
promote its products. When Vinamilk's competitive advantage is based on technological
competency, a wholly owned subsidiary will often be the preferred entry mode because it

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 reduces the risk of losing control over that competence. Moreover, it gives Vinamilk tight
control over operations in Cambodia.

However, establishing a wholly owned subsidiary Is generally the most costly method. When
Vinamilk did this, it must bear the full capital costs and risks of setting up overseas operations.

3. THE UNITED STATE

a. Market selection

Milk is counted among the most essential staple foods, is an important part of a balanced diet
and contains, among other vital nutrients, a high percentage of calcium. In 2017, worldwide
milk production amounted to about 502.82 million metric tons. Among the major producers,
the United States was ranked second with a milk production amounting to over 96 million
metric tons in 2016.

Chief executive officer Mai Kieu Lien said that the US is the most difficult market, thus if
Vinamilk can set a firm foothold there, it will likely be able to penetrate other markets and
boost its growth.

b. Timing of entry

Vinamilk entered the US market quite late when there were many competitors in the dairy
market in this country. Vinamilk joined the Summer Fancy Food Show 2016 held in the United
States (US) from June 26 to June 28 with the support of the Viet Nam Trade Promotion Centre
for Agriculture (Agritrade). This was the first time Vinamilk attended this trade fair. At the food
show, Vinamilk and Driftwood Dairy Inc. introduced condensed milk and creamer products
with the Driftwood brand manufactured at the Vinamilk factory in Viet Nam. Those products
were scheduled to be exported to the US. The company joined Summer Fancy Food aimed at
introducing Vinamilk – Driftwood Company and seeking distributors for supplying high-
quality products with competitive prices to large supermarket chains in the US. This is a wise
strategy when choosing this trade fair is the place and time of launching Vinamilk's product. It
does not costs much but still attracts attention of consumers.

c. Scale of entry

Small-scale entry of Vinamilk is a way to gather information about US market before deciding
whether to enter on a significant scale and how to best enter. By giving Vinamilk time to
collect information, small-scale entry reduces the risks associated with a subsequent large-scale
entry. Vinamilk may be able to find ways to differentiate itself from other competitors by
focusing on market niches that competitors ignore or is unable to serve effectively.

Mode of entry

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 III. THE GLOBAL STRATEGIC DIRECTION OF THE FIRM

A. Location of major activities

Through over 38 years of establishment and development, Vinamilk has become one of the
leading companies in Vietnam and contributed greatly to the prosperity of the country. In
Vietnam, Vinamilk's subsidiaries include 3 branches, 15 factories, 2 warehouses and 3
subsidiaries.

1. Headquarters:

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 Vinamilk is the leading dairy corporation in Vietnam, with its headquarter located at No. 10,
Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City. The company consists of
headquarters, 24 subordinate units and a satellite office with up to 5,400 staff and employees in
total.

Photo: Head Office at No 10, Tan Trao street, Tan Phu Ward, District 7, Ho Chi Minh City.

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 2. Branches:
Vinamilk is the leading corporation in Vietnam in manufacturing and trading fresh milk and
dairy products, which officially came into operation in 1976. To date, Vinamilk has
successfully developed 3 more main branches in Hanoi, Da Nang and Can Tho.

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 3. Farms:

Vinamilk has a system of 9 dairy farms throughout Vietnam that meets the Global GAP
standards for cattle imported from Australia, the US and New Zealand. The total supply of milk
to Vinamilk is over 120.000, with 750 tons of milk produced each day. It is expected that in
2020, the total number of cattle will increase to 200.000 and milk production is expected to
double by 2020.

4. Factories:
Aiming to becoming one of the 50 leading dairy companies in the world, Vinamilk is
committed to investing in state-of-the-art technology at home and abroad to create the higher
quality products in the modern competitive environment.

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 By 2014, in Vietnam, Vinamilk owns 13 modern dairy factories from the North to the South,
especially the two super dairy factories which is located in a 20-hectare area in My Phuoc 2
Industrial Zone and 100% automated from processing to packaging, ensure safety and hygiene.

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 Overseas, Vinamilk has invested in the Angkormilk dairy plant in Cambodia (Vinamilk owns
100%), held a 22.8% stake in Miraka Dairy (New Zealand), owned a 100% stake in the
Driftwood plant (USA) and invested subsidiary in Poland as a gateway to Europe.

5. Logistics:
Logistics includes 2 sectors: Warehousing (stores raw materials for production and finished
products for distribution) and Transportation (includes dairy vehicles which help transporting
and delivering products to consumers). In line with our motto "Vinamilk brings high-quality
dairy products to consumers", all the processes of maintenance, handling and transportation are
strictly managed to ensure the provision of the high-quality products to consumers.

6. Subsidiaries:
Vinamilk has always been operating in line with the goal of putting quality on top. One of the
important factors that determines the milk quality is the source of raw materials. The
subsidiaries have been established and invested to ensure the high quality and stability of raw
materials

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 B. International Strategic Direction

Because of these reasons below, Vinamilk is now heading toward international strategy.
Vinamilk standardization every single product by Codex standards (international standards in
food trade)

 The Codex International Code has more than 300 standards, codes of conduct,
codes of practice for food and food groups.
 Codex Committee on Food Hygiene - CCFH hosted by the United States of
America.
 Help countries, especially developing ones, in applying the principles of this
document to develop their microbiological criteria.
 Apply modern processing technology from G7 countries
 Materials: All of the Vinamilk products are produced on modern machinery and
equipment from Sweden, European countries - G7. At the same time, all Vinamilk
products are guaranteed to be fully disclosed in accordance with the law and
always have direct and indirect supervision of the authorities. Every day, each
factory of Vinamilk produces tens of millions of milk cans of all kinds with strict
control from raw materials; cleaning machines and workshops; production process
to shipment.
 The Group of Seven (G7) is a group consisting of Canada, France, Germany, Italy,
Japan, the United Kingdom, and the United States.
 These countries, with the seven largest advanced economies in the world,
represent more than 62% of the global net wealth ($280 trillion).

The quality of Vinamilk's food safety control system is advanced. It also conforms to
international standards.

• ISO 50001 (2011): Energy management system.

• FSSC 22000 (2005): Food safety system.

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 C. Advantages and Disadvantages

Advantages:

At the moment Vinamilk's supply chain has become very effective with their huge investments
in the recent years. Business models in Vietnam help them become acquainted with the large-
scale market expansion.

Become one of the largest corporations in Vietnam with total revenue in 2017 is 51.135 billion
vnd. There is a tremendous financial potential to support business strategies.

Possessing state-of-the-art technology, fully meet the international standards, staff constantly
learning about the habits of customers around the world… Which confirm their own quality of
products.

Disadvantages:

Their products are the same all around the world therefore they can't meet specific markets.

Can't make full use of outstanding experience and cost savings.

When there is an opponent with the same quality, consumers will choose the product with price
reduction. So if there is an opponent, the strategy will become less effective. In conclusion
International strategy is not an long-term one and the alternative may be Global standardization
strategy or Transnational strategy.

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 IV. RECOMMEND TO EXPAND TO SINGAPORE MARKET

1. Entry of mode

Figure 1. Adapted from: Burns n.d.

Figure 1 shows different foreign market entry strategies with different level of risks in which
wholly owned subsidiary has the highest risk while the lowest risk belongs to exporting
strategy. Additionally, based on the Uppsala model (figure 15), which distinguishes four
successive stages for firms to expand internationally, exporting is the first step giving no or
little market experience and requiring limited commitment of resources to the market (Forsgren
2002). He also states that as the firm is more confident and have enough market knowledge and
market commitment, it can expand its business activities, such as establishing sales subsidiaries
or even building its own factories to manufacture.
According to Vinamilk (2014a), exporting is the core strategy that the company has chosen to
enter international markets. Specifically, in 2014, Vinamilk exports to 29 nations and regions in
total (Vinamilk 2014a). The company still maintain exporting strategy to its traditional markets
in Middle East and Southeast Asia (Vinamilk 2014a). Key export products are sweetened
condensed milk and powdered milk (Vinamilk 2014a). Hence, export sales account for about
10% of the company’s total revenue (Vinamilk 2014a). Furthermore, based on Vinamilk

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 (2014a), it already had one joint venture with Miraka Limited to produce milk in New Zealand,
one production and sales subsidiary in California, USA and one sales subsidiary in Poland.
As having lots of experiences in internationalization, Vinamilk can choose to take more risks in
order to gain higher profits rather than just playing it safe through utilizing exporting strategy.
Specifically, the company could build its own office and sales subsidiaries when entering
Singaporean dairy market. By using this entry mode, Vinamilk can fully control all of its
business operations including physical distribution, marketing, promotion, and customer
service activities in Singapore instead of depending on independent agents.

Overall, the company should set up its own sales subsidiaries. Although the risks could be high,
it can bring a number of benefits for the company in increasing its brand awareness and
revenue.

Figure 2. Reproduced from: Softducks n.d.

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 2. Implementation

2.1 Internationalization Strategy

Transnational strategy with ethnocentric staffing approach is suitable for Vinamilk in
Singapore. The headquarters will take control of which products to export, amounts of products
and time to export. Vinamilk can have two PCNs who will control the operation of Vinamilk
and support HCNs. The company can hire ten Singaporean HCNs who are in charge of
managing distribution process as well as marketing and promotional campaigns to boost sales
in this country (Bartlett & Ghoshal 1994).

2.2 Set-up Cost

When setting-up sales subsidiary in Singapore, Vinamilk needs to concern about labour cost,
office rental and warehouse rental expense.

According to Expat Arrivals (n.d.), the salary for an expatriate to Singapore is S$ 250,000
(around 200,000 USD) per year due to high living cost.

Figure 3. Reproduced from: Savills World Report Singapore 2018

In the first quarter of 2018, the average gross rent for Grade A offi ce space in the CBD
strengthened for a third consecutive quarter, albeit at a slower rate of 1.3% QoQ. This growth

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 has brought rents to S$9.06 per sq ft (psf) per month. The moderate rental growth was seen in
the AAA and AA grade offi ce sectors, especially the former where rates had risen quickly - by
6.1% over two quarters - from the last trough in Q2/2017 to Q4/2017.

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 3. SWOT Analysis

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 4. Marketing plan for Vinamilk in Singapore
As it is the first time that Vinamilk moves to Singapore, promoting brand awareness is a crucial
task. Moreover, marketing campaigns should emphasize nutritious dairy products with a low
level of fat and cholesterol.

1.1.Objectives

2016 In the next 5 years

 Introduce fat-free products to  Gain market share of 3%

Singaporean market  Increase sale volume by 3% per
 Get access to Singaporean supermarkets year
and convenience stores  Rank third for fat-free dairy
 Raise brand awareness by Facebook distributor in Singapore
page

4.2. Generic Strategy

- According to Euromonitor International (2015c), value-added dairy products such as

fat-free, semi-skimmed and flavoured milk are highly demanded. Customers are
seeking for both nutritious ingredients such as calcium and protein and low fat
intake. In Singapore, the market for value-added milk products is immature as Meiji
remains the only key player.

- Simultaneously, Singaporean customers are price sensitive. According to Singapore

Business Review (2011), 62% of Singaporean customers are knowledgeable about
the price of most grocery items and noticeable to price change. This figure makes
Singapore rank second in consumers’ price sensitivity in Southeast Asia.

- herefore, cost focus strategy is appropriate for Vinamilk to apply in Singapore. This
strategy targets price-conscious dairy consumers with differentiation focus on value-
added milk.

1.3. Marketing strategies

a. Segmentation

- In Singapore, many international firms have engaged in mass marketing to reach a

large amount of customers. Furthermore, they have gained reputation for providing
high quality dairy products in this country. In order to compete successfully, Vinamilk
should concentrate on niche market with value-added products.

- Female constitutes for 50.59% of Singaporean population (CIA 2017). This is the
segment that consumes a large amount of value-added dairy products. Firstly,

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 Vinamilk should focus on young and middle-aged women whose anti-aging and skin
beauty are the leading concerns. Products with supplement collagen and antioxidant
will be attractive to female segment.

- Secondly, young Singaporean customers are seeking for healthy products to maintain
their appearance (Euromonitor International, 2015d). Moreover, 36.7% of
Singaporean population were overweight in 2017. Therefore, Vinamilk can develop
low protein and no sugar added products which reduce blood pressure and are suitable
for dieters.

b. Targeting

Concentrate Undifferentiate Differentiate

d Marketing d Marketing d Marketing

Company Finite
resources
Vast x

Product Limited x
Variability
High

Product’s Introduction
life cycle
stage Maturity x

Market Low
Variability
High x

Competitors Undifferentiate
’ marketing d
strategies
Differentiated x

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 - Vietnam Dairy Products Company (Vinamilk) set its revenue target in 2018 of VND55.5
trillion (US$2.4 billion), up 8.5% yearly. Thus, they have launched various products in
order to satisfy different customers with different tastes and preferences. For example,
Vinamilk has value-added products such as pasteurized low-fat milk and probiotic
drinking yogurt. On the other hand, their products are in the maturity stage because the
quality of products is confirmed by customers as Top 10 Vietnamese high quality product
(Vinamilk, n.d.). Finally, competitors such as Nestle and Fraser And Neave Ltd are
applying mass marketing to reach a large number of customers. Therefore, differentiated
marketing is suitable for Vinamilk.

c. Positioning

 Product: high quality dairy products to meet with strict health regulations and customers’
taste
 Vinamilk CanxiPro: contain added protein to build bones with low fat and 9% collagen.
 Pasteurized fresh milk low-fat Vinamilk 100%: reduced ⅓ milk fat which helps control
fitness
 Vinamilk Kefir Yogurt: contain Kefir which helps reduce blood cholesterol, suitable for
dieters or diabetics.
 Pro beauty Yogurt: targets at the female segment, with collagen and antioxidants to make
skin smooth and flawless.
 Price: As the market is highly price-sensitive, Vinamilk should apply market-
penetration pricing strategy. Initially, Vinamilk should set a low price to effectively
attract a large number of buyers quickly and win a large market share. Thus, the high
sales volume will lead to a decrease in distribution costs (Kotler et al., 2009).

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 5. Ease of Doing Business Index (2018)

Figure 3. Reproduced from Worldbank (2018)

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 6. Singapore Dairy Market Category Segmentation

Figure 4. Reproduced from Marketline (2015)

7. Singapore Dairy Market share

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 Figure 5. Reproduced from Marketline (2015)

8. Revenue’ s Singapore in the Milk Products segment amounts to US$557m in 2018.

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 9. The Milk Products segment is expected to show a revenue’s Singapore growth of 3.0% in
2019

Figure 6. Reproduced from staticta (2018)

Figure 7. Reproduced from staticta (2018)

10. Conclusion

It is noticeable that Singapore has a transparent bureaucracy and well-developed economy. As the
policy is favorable for FDIs, it is not time consuming and overlapping to establish sales
subsidiary in this country. However, Singaporean dairy market is quite competitive and
undifferentiated. The demand for value-added products is increasing together with concerns
about health. As Vinamilk had experience in expanding to other countries and Singaporean
market is open for FDIs, setting-up sales subsidiary is an appropriate strategy for Vinamilk to
increase market coverage.

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