MINISTRY OF EDUCATION AND TRAINING

NATIONAL ECONOMICS UNIVERSITY



GLOBAL BUSINESS STRATEGY

GROUP ASSIGNMENT

Supervisor : Nguyen Anh Minh, Ph.D

Major : International Business Administration

Class : EEP 61A

Group : 04

Students : Nguyen Viet Ha – 11191571

Vu Dang Nguyet Anh – 11190591
Pham Thi Kieu Anh - 11190485
Vu Phuong Thao - 11194876
Vu Phuong Trang - 11195448
Nguyen Kieu Trang - 11195315
 Table of Contents

PART A........................................................................................................................ 4
I. COMPANY INTRODUCTION.......................................................................4
1. Brand name.......................................................................................................................... 4
2. Strategic vision....................................................................................................................4
3. Mission statement..............................................................................................................4
4. Core values............................................................................................................................5
5. Business model................................................................................................................... 5
6. Key product description..................................................................................................7
II. EXTERNAL ENVIRONMENT.......................................................................8
1. Macro-environment analysis (based on PESTLE model)..................................8
2. Porter’s Five Forces Model Analysis........................................................................10
2.5. Competitors:....................................................................................................................... 12
Herbie’s main competitors analysis:................................................................................12
III. SWOT ANALYSIS.........................................................................................15
IV. STRATEGIC GROUP MAP..........................................................................17
V. COMPETITIVE STRATEGY: DIFFERENTIATION STRATEGY.........18
1. WHY: Reasons to choose Focused Differentiation Strategy...........................18
2. HOW: How Herbie implemented Focused Differentiation Strategy...........20
PART B...................................................................................................................... 21
I. OVERALL STRATEGY TO PURSUE: GLOBAL STANDARDIZATION
STRATEGY...........................................................................................................21
1. WHY: Reasons to choose Global Standardization Strategy............................21
2. HOW: How we implement Global Standardization Strategy.........................21
II. FOREIGN MARKET TO ENTER................................................................22
1. General research..............................................................................................................22
2. First foreign market for Herbie to enter: South Korea.....................................23
III. ENTRY STRATEGY TO PURSUE: EXPORTING....................................24
1. WHY: Reasons to choose exporting.........................................................................24

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 2. HOW: Herbie’s exporting implementation plan..................................................25
PART C...................................................................................................................... 27
I. NEW INDUSTRY TO DIVERSIFY INTO: HERBAL TEA.......................27
1. An overview of Herbal Tea industry........................................................................27
2. Why to choose Herbal Tea industry to diversify into.......................................27
II. JUSTIFICATION FOR DIVERSIFYING....................................................28
1. The industry attractiveness test................................................................................28
2. The better-off test............................................................................................................29
III. APPROACH TO DIVERSIFY.......................................................................30
IV. STRATEGIC FIT ALONG THE VALUE CHAIN......................................30
1. Strategic Fit in Supply Chain Activities...................................................................30
2. Strategic Fit in R&D and Technology Activities..................................................30
3. Manufacturing-Related Strategic Fit........................................................................30
4. Strategic Fit in Sales and Marketing Activities....................................................31
5. Distribution-Related Strategic Fit.............................................................................31
6. Strategic Fit in Customer Service Activities..........................................................31
REFERENCES..........................................................................................................32
GROUP 4 CROSS EVALUATION.........................................................................33

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 PART A
I. COMPANY INTRODUCTION

1. Brand name
Name: Herbie
The brand provides hair care products from natural materials for Vietnamese
haircare
and also contribute to environmental protection.
2. Strategic vision
We aim to become a leading strong brand in the field of building and connecting
hair
care products extracted from nature to users, in order to cherish Vietnamese hair
and
reach out to the world market.
3. Mission statement
Herbie was born as a solution to hair injured by chemical products and styling
products. Bringing customers an experience that is both effective and green with
the

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environment.
4. Core values
“Becoming the leading symbol of trust in Vietnam about hair care products.”
● INTEGRITY: Integrity, Honesty in conduct and in all transactions.
● RESPECT: Respect yourself, Respect colleagues, Respect the Company,
Respect partners, Respect cooperation.
● FAIR: Be fair to employees, customers, suppliers and other stakeholders.
● MORALITY: Respect established standards and act appropriately morality.
● FOLLOW: Comply with the Law, the Code of Conduct and the Company's
regulations, policies and regulations.
5. Business model
● Customer segments
Herbie has a mass market business model, with no significant differentiation
between customers. The company targets its offerings at the youth who like to
style,dye their hair but still want to protect the environment.
● Value proposition
- Specialized products: Hair care products for young people who like to style,
dye their hair and are also interested in hair care from natural products,
avoiding chemicals to keep their hair style and color.
- The mission of the company: Herbie provides customers with natural hair
care products to satisfy customer’s demand.
- Scope of the market: Diversification of products which includes new
customers and in turn an expansion for the company
● Channels
- A’ main channels are physical retail outlets, which include own-retail and
mono-branded franchise stores.
- We also acquire customers through various eCommerce websites. The
company promotes its offering through its social media pages,
online/print/TV advertising, and sponsorships.
- We also sell through KOLs, influencers in the social network.
● Customer relationships
- Loyalty program: point-based loyalty, Tiered loyalty
- Self-Esteem is Beauty Community

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 ● Revenue stream
Product Sales: direct sale, B2B, retailers.
● Key resources
- Human resources
- Physical store/ Vendors
- Self-supplied materials and ingredients
● Key activities
- Manufacture
- Sales of product
- Marketing
- Customer service
● Key partners
- Material suppliers
- Vendors
- Distributors
Cost structure
- Employee salary
- Marketing
- OEM material product cost
- Physical store rental/Lease
- Manufacture

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6. Key product description

● Name: Sachi essence hairspray

● Main ingredient:
- Sa-chi oil (Inca Inchi): known as a very special oil with unsaturated fat
content up to 94%, including Omega 3,6 and 9. According to research by
scientists, the amount of Antioxidants in Sa-chi oil are 1400 times higher
than Olive Oil and 547 times higher than avocado oil. Therefore, Sachi oil
works very well in keeping and moisturizing the hair, especially very
effective when used for dry, frizzy and lifeless hair types.
- Vitamin E: An antioxidant found in Vitamin E, it helps prevent the aging
process.
● Highlights:
- 100% Vietnamese vegan friendly for hair and scalp effective & benign
- Not tested on animals
- No mineral oil
- No parabens
● The use of Sachi hair spray to restore hair:
- Restore damaged, dry, split ends hair

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 - Optimum hair protection from heat and UV rays
- Keeps hair soft and full of life
II. EXTERNAL ENVIRONMENT
1. Macro-environment analysis (based on PESTLE model)
1.1. Economics
According to data published by the General Statistics Office, in 2020, despite a sharp
decline in growth and most economic indicators, Vietnam is among the rare countries
that still maintain a positive GDP growth rate of 2. 91% (up 3.68% in the first
quarter; 0.39% in the second quarter; 2.69% in the third quarter; 4.48% in the fourth
quarter); Although inflation is the highest in the past 5 years, it is still within the scope
set by the National Assembly.
In 2021, our country's economy will remain stable amid the impact of the Covid-19
pandemic. The banking industry in general and commercial banks in particular will
continue to play the role of "athletes" to help businesses and individuals restore
production and business before the impact of the Covid-19 pandemic.

=> We can see that Vietnam's economy is very developed, even during the
epidemic period, the state still has measures to improve, promote and help
businesses. Besides, as the economy develops and people's living standards are
increased, citizens will have more demand in the fields of beauty and health. They
will want to take care of themselves more, from the inside to the outside. So
Herbie launched herbal hair dye products to meet that need.

1.2. Social factors

Population and income: currently Vietnam's population is on the rise, According to the
Bureau of Statistics in 2021:

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● We can see that the population by gender of Vietnam has a higher percentage of
women than men, creating a very high market for products in the
pharmaceutical and cosmetic industry because the demand for women is
always higher than that of men. However, besides gender, the urbanization rate
has not been high, it is easy to see that most of them are still concentrated in rural
areas. Therefore, for those who have a low standard of living but have high
demand for their own health and consumer products, it will help companies in the
pharmaceutical-cosmetic industry in Vietnam develop. Above all, for people with
improved living standards and income, they are more interested in natural
and healthy products. This helps to promote the products that are born in the
field of Oriental Medicine of the company to develop further.
● Consumption culture: Current consumption trends of Vietnam in addition to
"foreign income", Vietnamese people gradually practice the habit of "Vietnamese
people use Vietnamese products", consumers gradually trust the products created
by their own country instead. because they worry about using foreign products all
day, but encounter fake goods imported from China, this helps promote the
company's brand and at the same time affirms the quality of the pharmaceutical-
cosmetic products that the company brings. Product quality is an important factor
for Vietnamese consumers today, they accept to spend a large amount of money if
it is good and suitable for the needs of individuals and families. Therefore, for the
products that the Company will bring to consumers, both satisfied with the quality
and satisfied with the price of the product.

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1.3. Technological factors

In the pharmaceutical manufacturing industry from natural herbs to ensure a safe and
closed process to avoid errors and to save labor costs, researchers have created new
technology lines to serve the needs of the industry such as:
● Herbal cutting machine
● Herbal Crusher
● Vacuum emulsifying mixer
● Herbal dryer
● Spray bottle filling machine
1.4. Legal factors
In general, our country's legal system is quite complete, in line with international
standards and practices. However, the commercial law still has many loopholes,
causing many difficulties for foreign companies in Vietnam. Besides, the advertising
law with complicated procedures and strict review process is a big barrier for
businesses' marketing activities. On the other hand, the fight against smuggling,
commercial fraud and counterfeit goods has not been focused, affecting the business
activities of genuine enterprises like Herbie.

1.5. Environment
● With the development of the industry of the world and our country today,
people have discharged into the environment a large amount of different
wastes, the most serious impact is waste from factories and factories followed
by domestic waste.
-> People’s awareness of the environment is increasing
-> Opportunities for organic brands like Herbie to develop
● With the tropical monsoon climate, the summer weather is quite hot, which will
make the scalp sweat more, the hair more oily, helping the consumption of hair
care products to become high.
● However, the Vietnamese climate has many kinds of disasters like floods,
storms,... which directly affect Herbie’s supply management of materials and
ingredients.

2. Porter’s Five Forces Model Analysis

2.1. Threats of New Entrants
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 The cosmetic industry especially for hair and has roots in nature has a low
threat of new entrants. This is due to several factors.
- The huge costs of entry. Developing unique cosmetic products requires a lot of
resources both in terms of research and development and the actual
manufacturing process. Few middle and small-scale firms have access to the
funds and expertise required to perform this effectively.
- Huge competition is present in the industry. In addition to the huge competitors
such as Clear, Sunsilk,.. which have a large market share. According to
Unilever's market research report in 2020, Clear and Sunsilk are the two brands
with the largest market share in the hair care industry in Vietnam with 7.5%
and 7% respectively. There are also many other small-scale competitors who
also have a small market share and who reduce the overall profitability of firms
in the industry.
- The level of loyalty towards brands of Vietnamese people is not high because
products of natural origin have not yet brought about quick and obvious results.
This is a very favorable point for businesses that want to enter the industry.
➔ The threat of new entrants is low
2.2. Bargaining Power of Suppliers
- The raw materials for natural shampoo production are quite easy to find,
especially when Vietnam has an abundant supply of natural ingredients such as
coconut, pomelo, locust, ginger,... so it's easy to find suppliers and switch their
purchases from one supplier to another, the cost of switching suppliers is not
high.
- Demand for suppliers’ products is low and the products are in tall supply.
➔ The bargaining power of suppliers is relatively low
2.3. Bargaining Power of Customers
- The increasing competition and availability of hair products from a variety of
manufacturers. Since these products have high substitutes, then it is possible
for consumers to force manufacturers to reduce their product prices by
purchasing those of their competitors.
- Consumers have the power in manipulating price changes due to shifts in
demand. When consumers have high bargaining power, the manufacturers and
sellers may not adequately predict future demand by the market. This may
make them unable to achieve long-term profitability due to unpredictable
demand patterns.
- Buyers’ costs of switching to competing brands or substitutes are relatively low

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➔ The bargaining power of customers is high
2.4. Threats of substitution
- In terms of the Hair care market in Vietnam, there are many hair care products
with the same function. For example, for hair care and restoration, it can be
mentioned as shampoo, conditioner or additional products such as moisturizing
oil, hair mask, hair cream.
+ Shampoo, conditioner: This is the most popular product line for hair.
However, shampoo often only does a good job of cleaning instead of
conditioning the hair, especially for dyed and chemically treated hair.
+ Nourishing oil: The product provides nutrients that are used by many people
to restore hair, but there is a big disadvantage that it causes the hair to be
sticky.
+ Hair mask: The product is rarely used because it is not convenient and takes a
long time to brew and discharge.
- In addition, hair care products of natural origin have little or no high market
share in the industry. The top 10 leading brands in the hair care industry in
Vietnam do not use ingredients of natural origin.
➔ The pressure from substitute products for Vietnam's hair care industry is
moderate
2.5. Competitors:
Growth in the hair care market has been encouraging, which has prompted a number
of new entrants to gain a foothold in niche segments. In the coming years as well, this
trend is projected to continue, especially as millions of consumers in developing
economies are now becoming conscious about styling their hair, coloring grey hair,
and maintaining a healthy scalp. That’s why recently there has been a dramatic growth
of the number of hair care products in the marketplace.
The hair care market is highly fragmented, owing to several local and domestic
players in the global marketplace.
There are a lot of hair care brands in both domestic and international market. Here we
choose 1 domestic and 1 foreign competitor that related and most threatening to
Herbie in the market to analyze.
Herbie’s main competitors analysis:

Domestic competitor: Cocoon International competitor: L’Oreal

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 Main ● 100% ingredients of clear
characteristic origin and safe for the
s skin
● 100% vegan
● As the first Vietnamese
cosmetic brand approved
in the Leaping Bunny
program, it is committed
to not testing on animals
and cruelty to animals of
Cruelty Free International
● Having both high-end and
drugstore products
● Various rage of cosmetic
products (not only hair care
but also make-up & skincare
products)
● Many subdivisions: 36 global
Brands and 4 different
Divisions.

Mission Inspiring green living for
statement Vietnamese youth with a variety
of vegan cosmetics from
Vietnamese ingredients and
community activities.
Offering all women and men
worldwide the best of cosmetics
innovation in terms of quality,
efficacy, and safety.
-> Create the beauty that moves the
world

Vision The first and leading organic Driving the cosmetic industry with an
cosmetic company in Vietnam inclination on sustainability
with the product is extracted
from 100% natural ingredients,

Strategy Emphasis on being the first Universalization: having a truly

Vietnamese organic cosmetic global presence through a unique
brand organization.
-> Hit the psychology of That means also creating and
“Vietnamese people use producing cosmetics at a local level.
Vietnamese goods” To achieve that, they have developed
a worldwide network of Research &
Innovation and marketing hubs, one
for each of their strategic markets.

Target Vietnamese young customers ● Various age range

customers ● Multinational customers

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Strength ● Products are 100% vegan: ● High reputation in cosmetics
do not use ingredients field in general and hair care
from animals but sector in particular
completely natural. ● Reasonable price
Reasonable prices, easy to
accept for low-medium ● High quality
income people High ● International access
quality Vietnamese goods,
● Moving into organic: Natural
meeting international
components are more expensive
standards. Covering more
for firms, but L’oreal didn’t
than 1,000 systems and
hesitate.
large and small cosmetic
stores in 63 provinces and ● Endless research -> innovation
cities.
● Extremely "pure
Vietnamese" raw
materials such as squash,
gotu kola, coffee .. are
hunted in the country.

Weakness ● Fierce competition in ● Growing saturation: There’s a

terms of sources, prices,
promotions, etc.
● Fierce competition with
international cosmetics.
● Consumers are more and
more demanding,
expecting more product
value.
● Vietnamese people's
preference for foreign
goods. Challenges from
the technology platform in
the post-pandemic new
normal.
new hair care line debuting every
day now. More products for
straight hair, curly hair, blondes,
and specific ethnicities are vying
for attention.
● Too Many Subdivisions: Due to
the different divisions, the
corporation is regarded to be
slow and bulky.
● Shrinking profit margins: lower
than its competitors due to higher
investments in R&D, organic
processes, and significant
distribution expenses.

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III. SWOT ANALYSIS
1. Strengths
- Focus on a need: Herbie looks at the specific need for nourishment for hair in
the young adult category. The hair oil, for example, has ingredients like Sachi
Ichi oil, neem, and henna which increases the growth of hair and also makes it
bouncy and shiny. This focus of the product on a very specific need has made it
popular amongst a segment which faces this particular hair care problem.
- Targeting: Herbie targets a niche segment in the highly competitive hair care
market. The target segment of Herbie is young girls in their teens who are
taking the baby steps to adulthood. The oil, as well as the leave-in conditioner,
has been positioned as a solution for hair problems like dryness, itchy scalp or
dull hair which are common to this age group.
- A high brand value and brand image viewed by customers as a socially
responsible company due to its engagement in local charities and many
philanthropic activities – 64% of Herbie loyal shoppers are ready to pay more
for an ethical product.
- High quality of the products: Herbie products are made from the hands of
skilled artisans, 100% raw materials come from the field in Vietnam.
- Excellent distribution of Herbie ensures availability.
2. Weaknesses
- Unstable supply of ingredients and materials: Due to weather condition, in
some times of the year raw materials are not supplied in time
3. Opportunities
- Hair care products are increasingly interested by both men and women. Our
product has a very mild scent, so it can be used by both men and women,
- Growth potential in the shampoo market: The current trend in the hair care
market has a different variant for different needs. Some of the new needs that
have emerged include frizzy hair, itchy or dry scalp, loss of shine in hair etc.
These can all increase the scope for new variants of our products.
- Room for promoting online shopping on E-commerce Platform.
4. Threats
- Hair care industry faces a lot of competition from brands like Thai Duong,
Cocoon as well as multinationals like L’oreal, Naughty.

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 - New Legislation banning animal test products may rising competition by
marketing this policy.

SWOT Matrix of Herbie

Internal Strengths Internal Weaknesses

- Focus on a need - Unstable supply of
- Excellent ingredients and
distribution materials

- A high brand value

and image

External Opportunities Herbie would increasingly Herbie needs to find more

- Increasing interest for promote on E-commerce suppliers of input products,
both men and women platforms, as well as expand expand warehouses to store
the customer base by raw materials in case bad
- - Room for launching products for men. happens.
promoting on E-
commerce platform

External Threats Herbie needs to constantly Herbie would find new

- Competitors improve service quality, competitive advantages.
listen to customers.
- New Legislation

To conclude, The SWOT Model shows us the strengths, weaknesses, opportunities

and threats of Herbie, therefore we’re able to take actions.
It is clear that Herbie has a high brand value and image, high quality products and
excellent distribution to satisfy customers. Besides, unstable supply of ingredients and
materials reduces the ability to supply goods to customers of Herbie.
Therefore, Herbie would find more suppliers of input products, as well as improve
service quality and promote selling on E-commerce platforms. This will help Herbie
take advantage of strengths and opportunities, and overcome weaknesses and threats.

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IV. STRATEGIC GROUP MAP

Few locations Middle Many locations

Geographic coverage

We choose the two typical variables to create the strategic group map, which are
price/quality range and geographic coverage. These criteria will give you an indication
of how well hair care companies can manufacture a product and bring value to their
clients.

To draw a strategic group map and classify hair care firms into the map, we have
referred to the data from Market Research - an American consumer intelligence and
data analytics company to get to know about the market share and satisfaction index
of sales service in the hair care industry.

After the force selected Herbie 's competitive advantages over other businesses, it was
divided into 3 main groups of competitors. Group 1: Naughty and Thái Dương with
mid-low price products and domestic market size. Group 2: Mise en scene with mid-
range products with domestic and foreign market size. Group 3: L’oreal and
Moroccan Oil with high-level products and global market size.

=> After getting the data from the map, Herbie should choose to be in the middle,
which means affordable price as the first target we pursue and broader geographic
coverage than Mise en scene. The other groups had big competitors, as well as it is not
suitable with our orientation from the beginning.

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V. COMPETITIVE STRATEGY: DIFFERENTIATION STRATEGY
A focused differentiation strategy—concentrating on a narrow buyer segment (or
market niche) and outcompeting rivals by offering niche members customized
attributes that meet their tastes and requirements better than rivals’ products.
1. WHY: Reasons to choose Focused Differentiation Strategy
1.1. Objectively, the target market niche in hair production is big enough to be
profitable and offers good growth potential because:
● Industry leaders have chosen not to compete in the niche. Specifically,
according to Q&Me, Clear is the company with the largest market share and
the highest level of awareness among Vietnamese consumers. Sunsilk and
Dove ranked 2nd and 3rd respectively in the rankings. However, all three
brands are aimed at multiple market segments with common features of hair
products such as smoothing hair and reducing dandruff. So Herbie can avoid
battling head to head against the industry’s biggest and strongest competitors.

● It is costly or difficult for multi-segment competitors to meet the

specialized needs of niche buyers and at the same time satisfy the
expectations of their mainstream customers. It is understood that
multifunctional hair products will hardly give specific effects or if they do, the
cost will be very high.
1.2. Subjectively, Herbie is a start-up company that doesn't have the strong
potential in terms of breadth and depth of resources to tackle the pursuit of a broader
customer base with a more complex set of needs. Therefore, following a centralized

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differentiation strategy will help Herbie save costs and reduce the possibility of having
to compete with large enterprises.
1.3. In addition, the successful use of a focused differentiation strategy depends on
2 aspects:
● The existence of a buyer segment looking for a seller's special product
attributes or capabilities. This coincides with the research process when
statistics show that more than 50% of women who have dyed their hair at least
once have hair problems such as dry, fibrous, and broken. They are always
looking for hair restoration and hair care products to comfortably dye their hair
in a variety of colors.

● Herbie's ability to create a product or service offering that sets it apart from
those of competitors in the same market. Herbie's product is a hair spray
specifically for dyed hair, but has a different natural origin than other products
on the market that have chemicals to keep hair color.
1.4. Why Herbie doesn’t choose the other competitive strategies:
● First, Herbie does not pursue a focused low-cost strategy because our products
are of plant origin, requiring a more expensive intensive research process.
Besides that, customer psychology for beauty products often focuses more on
quality goods instead of cheap prices, especially with a new start-up like
Herbie.

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 ● Second, the hair care market has many big brands pursuing a strategy of wide
differentiation. For example, Sunsilk with its smooth hair product or Clear with
its dandruff-free product. If Herbie follow this strategy, we may against many
strong competitors.

2. HOW: How Herbie implemented Focused Differentiation Strategy

2.1. Herbie’s focused customer segments
We focus on young people who have the following in common
- Age: 16 - 30
- Psychology:
+ Young people have dynamism, personality and like to follow trends
+ Tend to have a green lifestyle and protect the environment
- Behavior
+ Frequently dyeing hair, changing many hair colors but still want to maintain
healthy hair
+ Use products of natural origin

2.2. Herbie will apply a focused differentiation strategy by:

- Create a hair care product specifically for young people who often change their
hair color and have hair problems caused by dyes or using high heat but are
still derived from nature.
- Create separate experience programs for young people who dye their hair to
use the product.

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 PART B
I. OVERALL STRATEGY TO PURSUE: GLOBAL STANDARDIZATION
STRATEGY
1. WHY: Reasons to choose Global Standardization Strategy
1.1. About the general advantages of a global standardization - “think global,
act global” - strategy:
“Companies employing a global strategy sell the same products under the same
brand names everywhere, utilize much the same distribution channels in all
countries, and compete on the basis of the same capabilities and marketing
approaches worldwide.”
● Not costly and time-consuming
● The cost reduction, the international prices reduction, the competitive
diminish, the consolidation of market position and the promotion of a
unique international image.
● Standardization generally focuses on consistency, achieved by applying
a clear set of guidelines and best practices. Standardization also has
benefits for customers, as they then know that the products or services
they buy meet certain quality standards.
1.2. The suitable of Herbie to implement global standardization strategy:
● In fact, the behaviors of youngsters dyeing and styling their hair in most
parts of the world don’t differ much.
● HERBIE’s products are diversified to be suitable for many types of hairs
- which we believe there are not much difference among people all
around the world.
-> Buyer needs are relatively homogeneous across countries and regions.

2. HOW: How we implement Global Standardization Strategy

● Manufacturing is located in Vietnam as our country has a low cost and high
quality labor force, and then go to other countries in a type of exporting.
● Herbie has a globally integrated approach to producing, packaging, selling, and
delivering the company’s products and services worldwide - selling the same
products under the brand name HERBIE everywhere, utilize much the same
distribution channels in all countries, and compete on the basis of the same
capabilities and marketing approaches worldwide.

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 ● International marketing campaign: Spreading our message about hair and the
environment.
II. FOREIGN MARKET TO ENTER
1. General research

According to professional reports, Asia Pacific held the largest share in the
haircare industry of more than 35.0% in 2020. This market is also expected to
continue rising year by year and holding the largest share by 2025 owing to the
increasing middle-class population and rising disposable incomes.

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-> As we see its growth potential and the relevance of the area to our brand, our
products and our strategic development, our target markets to enter first when starting
to go global are the Asia Pacific countries.

2. First foreign market for Herbie to enter: South Korea

A country that we feel that is really potential for our brand to enter is South Korea,
with the below reasons:
● Same culture - Same Asian hair types - Same behavior of styling and dyeing
hair with Vietnamese young generation
 It’s easier for Herbie to develop and promote our products in the market
where consumers’ behaviour of hair caring is the same as in our home
country
● South Korea is one of the top 10 beauty markets in the world, and it is
constantly growing. It is known as one of the kingdoms of cosmetics, with lots
of popular brands from skincare, bodycare to makeups. According to a survey
on the global popularity of South Korean beauty products in 2021, 35.8 percent
of respondents stated that Korean beauty products were very popular in their
country. K-beauty was widely known and popular even to the general public,
and the sale of related products was greatly desired. 
 So if our entrance into South Korea is successful, it’ll be easier for us to
expand to other markets.
● One undeniable fact is that, in the global market, global companies are
increasingly interested in the Korean cosmetics market. For example, L'Oreal,
the world's largest cosmetics company, has acquired a Korean cosmetics
company “Style Nanda”. Style Nanda originally started with an online fashion
mall and now it is more well-known for its cosmetics brand 3CE. In addition,
AHC, which is famous for its eye cream, was acquired by Unilever,
and Have&Be, which owns the Dr.Jart brand, was acquired by Estee Lauder.
● Despite the fact that there are a lot of South Korean hair care brands, there are
no brands that have built their brand’s story and strategy based on the
environment with natural and organic ingredients.
 As we see that blank space, we realize that there is a huge chance for Herbie
to enter the South Korean market.

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III. ENTRY STRATEGY TO PURSUE: EXPORTING
1. WHY: Reasons to choose exporting
Export of goods is the first form of international market penetration through the
consumption of domestically produced goods to foreign markets.
Most companies start out expanding internationally as exporters and then move from
one method to another to serve foreign markets. Especially for companies with
unpopular products and limited capital like Herbie.
1.1. Advantages of exporting (in general)

● It avoids investment costs for production activities in the host country. Since
capital is often very large, both cost advantages and location advantages can be
realized. Herbie is just a growing pharmaceutical product company in Vietnam,
never expanding its scale to other foreign markets. It is not reasonable to bring
capital to invest such as using strategies such as joint ventures or acquisitions and
mergers. Choosing an export strategy helps Herbie reduce a lot of cost risks.
● By manufacturing products in one centralized location and then exporting to other
foreign markets, a company can gain significant economies of scale through
global sales. Especially when all of Herbie's production lines are located in
Vietnam, this is a wise choice.

1.2. Why exporting is suitable for Herbie to implement (in particular)

The effectiveness of the export strategy is to satisfy the needs of customers and the
preferences of the market (or remain unchanged if it is suitable for the market). At the
same time, the implementation of pricing, distribution and communication policies are
closely linked in an overall marketing strategy:

● From the firm's perspective, Herbie believes that a company can have an
effective export strategy when it satisfies customer needs and market
preferences.

It can be seen that people today, especially young people, are more and more
interested in their beauty and are always looking for appropriate care products. In
particular, beauty cosmetics with extracts and natural ingredients are the most popular.
In Korea, young people often aim for natural beauty, smooth and shiny hair is a top
standard of beauty. Understanding this, Herbie exports many products in the land of
kimchi to meet criteria such as being user-friendly, environmentally friendly, with
completely natural ingredients... such as ( key product )

24
 ● From a business perspective, Herbie believes that a company can have an
effective export strategy when pricing, distribution and communication policies
are closely linked in an overall marketing strategy. of Korean retailers.

With no experience in supplying products to Korea, exporting not only discovered the
needs of Korean customers, but also helped Herbie reduce a lot of the burden on how
to get them. attract their attention. Because that's the job of importing companies in
Korea - supermarkets that retail Vietnamese goods in Korea and cosmetic retailers like
Sephora.

2. HOW: Herbie’s exporting implementation plan

2.1. Preparation stage
South Korean consumers have many other criteria when choosing a purchase. They
are very interested not only in natural products, but also in organic products or
products without harmful ingredients harmful to the environment (vegan),... Or
beautiful packaging, design eye-catching products,... Therefore, Herbie needs to have
a methodical strategy from factory design, technology selection, testing and product
safety assessment .. according to the guidance of current Asian standards. and the
future to keep abreast of the changes of the standard for timely adjustment solutions.
2.2. Export stage: divided into 2 stages
In the near future, Herbie's key products will be sold first at Vietnamese stores or
supermarkets in South Korea, and in the future will expand to other cosmetic retail
chains throughout South Korea such as Sephora.

● In the first stage of export - exporting to Vietnamese supermarkets in South

Korea:

The reason why Herbie chooses Vietnamese supermarkets to be the first "landing"
point of her products when exporting to South Korea. There are 2 reasons.

- First, Herbie needs to increase her brand awareness. It doesn't make any sense
if Herbie products are sold in big famous stores in South Korea but no one buys
them and uses them. The company needs contact and experience to get positive
customer experiences at first. And there is no better and easier place to go from
Vietnamese customers and especially customers who are interested in
Vietnamese products - Customers who step foot into Vietnamese stores in
South Korea.
- Second, as mentioned, the current consumption trend in South Korea is towards
products of natural origin, not harmful to the environment, good for human

25
 health. Therefore, the import of more products like Herbie's is part of the
development strategy of the cosmetic retail supermarket system in South
Korea, in the immediate future, Vietnamese supermarkets in Korea. They will
open a chain of natural beauty stores and choose Herbie's products because this
is the type of product that meets the criteria of South Korean consumers.

● The second stage of export, exporting to the chains of large cosmetic retailers in
South Korea. Once a certain level of recognition of Herbie's products from South
Korean customers has been achieved, expanding the export network is essential.
Here Herbie chooses Sephora.

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 PART C
I. NEW INDUSTRY TO DIVERSIFY INTO: HERBAL TEA
In order to diversify, Herbie Cosmetics will choose Herbal Tea, which is the related
side in the cosmetics business.
While hair care continues to grow at an exponential rate, Herbal Tea is on the rise as
consumers and brands make a connection between overall wellness and skin health.
1. An overview of Herbal Tea industry
The major market drivers of the Herbal Tea Market are increased population,
disposable income, and growing health awareness of the consumers. Social factors
like trends, awareness among the citizens of the country has a major effect on the
demand for Herbal Tea. The shift in the trend for healthy products and a nutrition-rich
diet has driven people towards the use of Herbal Tea. As Herbal Tea is free of
caffeine, the market is experiencing heavy demand from consumers in the current
times.
An increase in consumer disposable income and willingness to spend more money on
a variety of products encourages manufacturers to introduce premium and exclusive
blends. They have introduced various healthy ingredients in their tea blends, to target
some of the common health conditions such as diabetes, obesity, and heart diseases
among others. Rising application in the beauty and cosmetic industries is expected to
further fuel the market growth.
On the other hand, certain herbs present in Herbal Tea are considered to be very toxic
and can cause illnesses within the body. Due to this reason, some customers and
health consultants show unwillingness to use Herbal Tea. But apart from this due to
the many benefits of Herbal Tea, it is a popular drink.
2. Why to choose Herbal Tea industry to diversify into
● The growth of Herbal Tea industry:
Herbal Tea Market was valued at USD 3289.67 Million in 2020 and is projected to
reach USD 4877.80 Million by 2028, growing at a CAGR of 4.89% from 2021 to
2028.
Herbal Tea Market has gained momentum in recent times because of the increase in
awareness of nutritional food consumption and healthcare. Because of the use of
synthetic ingredients in packaged food people have started avoiding such kinds of
food and have shifted towards Herbal Tea. Rising trend of consumption of ready-to-
drink tea is also increasing the growth of the Herbal Tea Market. The Global Herbal
Tea Market report provides a holistic evaluation of the market. The report offers a

27
 comprehensive analysis of key segments, trends, drivers, restraints, competitive
landscape, and factors that are playing a substantial role in the market.
● Meet the need of customers:
The Herbal Tea Market is segmented on the basis of regions which are North
America, Latin America, Eastern Europe, Western Europe, Asia Pacific but excluding
Japan and the Middle East and Africa. Japan, Eastern Europe, and North America are
in increasing demand for Herbal Tea, which is the potential market and established
markets for Herbal Tea because of its anti-aging properties. New Herbal Tea brands
are appearing weekly due to the increasing demands for processed foods and ready-to-
drink beverages on a large scale.
● Why Herbal Tea is the suitable business for Herbie to develop:
Herbie cosmetic is now the top 3 largest beauty product company in Vietnam, with
more than 500 millions VND in revenue and a successful strategy of related
diversification built on leveraging a highly specialized set of resources and
capabilities. These include 2 dermatologic and cosmetic research centers, R&D
capabilities and scientific knowledge concerning body and haircare, and secret
formula for hair and body products, and applications developed specifically for testing
the safety of hair and body care products.
Especially, Herbie cosmetics has a range of manufactures to produce quality herbal
tea.

II. JUSTIFICATION FOR DIVERSIFYING

1. The industry attractiveness test
1.1. Rival sellers - Moderate:
Thirty four countries are producing herbal tea in the world in which Sri Lanka, Kenya,
India, Chain, Indonesia are major producers in the world. The herbal tea industry is
experiencing harsh competition in which Kenya, Sri Lanka, India, China and
Indonesia are the major rivals in the market. Since the demand for value added tea is
in increasing trend, the value added tea exported from SriLanka is not in significant
quantity to accomplish the requirements of the foreign markets. Another important
point to stress here is that a considerable quantity of herbal tea is being exported to
international tea processing firms to add value and to be sold by them under their own
brand.Exit barriers arise in the industry due to the huge investment in machinery and
other assets which cannot be reused if the industry is shut down. As a consequence,
exit barriers are also likely to be discouraged.
1.2. The threat of new entrants - High:

28
Although some new countries entered into the tea industry in the past decades, some
of the major producing countries are manufacturing tea at lower cost when compared
to Herbie Cosmetics. This causes threats to the new entrance. In addition to that, some
of the eminent brands in the world tea market bring premium prices and thereby the
firm earns larger margins.
In fact multinational companies are having well known brands with more than
hundred years of survival in the market. Similarly, Lipton, Tetley and PG Tips are
also marketing value added tea at premium prices. Further, the agro climatic
conditions and the duration of yield are also encouraging barriers to new entrance.
Thus, it could be stated that the threat of new entrance is positive in the tea industry.
1.3. Substitute products - High:
Even if the demand for herbal tea is increasing in the international market due to the
health benefits contained in it, the consumption of soft drinks have not fallen to that
extent of significant level. Also most of the young people leisurely want carbonated
soft drinks, not tea. Hence it can be concluded that the threat of substitutes is high.
1.4. Suppliers - Low:
Suppliers are exerting power on industry and have an impact on profitability. It is
obvious that tea industry has to depend on many foreign and local suppliers such as
companies importing agro chemicals, fertilizers, tea chests and packaging materials
which are imported from Singapore, India, Indonesia and Russia and also transport
association has leverage on the industry due to the transport form tea factory to
Colombo Auction. Analysis of competitive forces shows that these five forces are
high in the tea industry. This will have an impact on the attractiveness and
profitability of the industry. Therefore it is essential to formulate a strategy for the tea
industry to overcome competition in the industry and to gain competitive advantage in
the international tea market.
1.5. Customers - High:
Since the standardized or undifferentiated product is sold at auction, the price is
determined at the auction itself as a result of that the bargaining power of buyers has
been raised in the herbal tea industry. Further it has been identified that ultimate
consumers need value for money so that most of the developed countries’ consumers
demand for quality herbal tea from overseas retailers. Then, the overseas retailers will
demand premium quality herbal tea for gaining brand loyalty from their customers. In
this way the buyers exert more influences on the industry.

29
 2. The better-off test
Herbie could benefit from diversifying into the body care industry because
combinations allow businesses to share beauty formulas and the contemporary
manufacturing process opens up new opportunities for competitive advantage.
III. APPROACH TO DIVERSIFY
Engaging in cross-business collaboration and knowledge sharing to create new
competitively valuable resources and capabilities. Businesses engaged in closely
related value chain activities may take advantage of opportunities to join forces, share
knowledge and talents, and collaborate to develop entirely new capabilities (such as
virtually defect-free assembly methods or increased ability to speed new products to
market) that will benefit both parties. Herbie makes the decision to form a
partnership with L'angfarm:
1. About L'angfarm:
L’angfarm Store is a chain of specialty retail stores in Da Lat that directly built and
operated with the aim of: Providing the safest, most beautiful and quality products of
Dalat; Standardized goods flow at best controlled prices; Provide the most perfect
shopping experience; Listen to customers most thoroughly
2. The collaboration with L’angfarm will provide:
● Easy entry into the tea market: The joint venture with L’angfarm will help
Herbie understand the nature of the beverage market as well as develop an
appropriate business strategy. From there, business activities and profits can
be maximized.
● Establishing supplier relationships: Identifying existing suppliers that have
the potential to satisfy a company's present and future demands may imply
stable costs and a dependable supply chain - two essential components in
L’angfarm and Herbie profitability and sustainability.
IV. STRATEGIC FIT ALONG THE VALUE CHAIN
1. Strategic Fit in Supply Chain Activities
Herbie and L'angfarm that have supply chain strategic fits can perform better together
because of the potential for skills transfer in procuring materials, greater bargaining
power in negotiating with common suppliers, the benefits of added collaboration with
common supply chain partners, and/or added leverage with shippers in securing
volume discounts on incoming parts and components.

30
 2. Strategic Fit in R&D and Technology Activities
We have a strategic fit in R&D or technology development to outperform each other
because of potential cost savings in R&D, shorter time to market for new products,
and more innovative products or processes.
3. Manufacturing-Related Strategic Fit
Cross-business strategic fits in manufacturing-related activities can represent an
important source of competitive advantage in situations where a diversifier’s expertise
in quality manufacture and cost-efficient production methods can be transferred to
another business. When our company diversified into an electric vehicle, it can utilize
LG's battery manufacturing methods to reduce production cost.
4. Strategic Fit in Sales and Marketing Activities
Various cost-saving opportunities spring from diversifying into businesses with
closely related sales and marketing activities. The products of Herbie and L’angfarm
can be promoted at the same website and included in the same media ads and sales
brochures. Also, cost savings may be possible through streamlining order processing
and billing, as well as utilizing common promotional tie-ins.
5. Distribution-Related Strategic Fit
The company and L’angfarm can perform better together than apart because of
potential cost savings in sharing the same distribution facilities or using many of the
same wholesale distributors and retail dealers to access customers.
6. Strategic Fit in Customer Service Activities
When we diversified into the herbal tea industry, it can use the same customer data
network, the same call centers, and local offices, the same billing and accounting
systems, and the same customer service infrastructure of L’angfarm support all of its
products and services. Through the transfer of best practices in customer service we
can also create a differentiation advantage through higher-quality customer service.

31
 REFERENCES
1. Crafting & Executing Strategy 21th edition (Arthur A. Thompson, Margaret A.
Peteraf, John E. Gamble, A. J. Strickland III)
2. Global Hair Care Market Report 2020 (Mordor Intelligence)
3. PESTLE Analysis in Beauty Industry
https://pestleanalysis.com/pestle-analysis-in-beauty-industry/
4. L’Oreal official website
https://www.loreal.com/en/
5. Global Herbal Tea Market Size By Product Type, By Raw Material Type
(Geographic Scope And Forecast) 
https://www.verifiedmarketresearch.com/product/herbal-tea-market/#:~:text=Size
%20And%20Forecast-,Herbal%20Tea%20Market%20was%20valued%20at%20USD
%203289.67%20Million%20in,nutritional%20food%20consumption%20and
%20healthcare

32
 GROUP 4 CROSS EVALUATION

Nguyễn Vũ Phương Vũ Đặng Phạm Thị Nguyễn Vũ Phương

Student
Việt Hà Trang Nguyệt Anh Kiều Anh Kiều Trang Thảo

Nguyễn Việt
- 10 10 10 10 10
Hà

Vũ Phương
10 - 10 10 10 10
Trang

Vũ Đặng
10 10 - 10 10 10
Nguyệt Anh

Phạm Thị
10 10 10 - 10 10
Kiều Anh

Nguyễn Kiều
10 10 10 10 - 10
Trang

Vũ Phương
10 10 10 10 10 -
Thảo

33