THE THREAT OF NEW ENTRANTS
Barriers to Entry: The technical requirements, investment, and distribution are not considered too challenging,
which means the barriers to entry are relatively small.
Economies of Scale: Vinamilk has a significant market share and a wide distribution network, which provides
economies of scale
Product Differentiation: Vinamilk offers a variety of products, which helps in differentiating from new entrants.
Capital Requirements: While the cost of entering the industry is not prohibitively high, substantial investment is
needed for advertising and R&D.
Switching Costs: For buyers, switching costs may not be significant as dairy products can be interchangeable
Access to Distribution Channels: Vinamilk's extensive distribution network might pose a challenge for new
entrants to establish their presence.
Other Cost Advantages: Vinamilk's low-cost strategy and modern technology can be a barrier to new entrants
Government Policies: Since Vietnam joined the WTO in 2006, there is a potential threat from future competitors
due to trade policies.
Incumbents' Defense of Market Share: Vinamilk actively defends its market share through various strategies
Industry Growth Rate: The growth potential of the economy indicates that the dairy sector still has room for
expansion
DETERMINANTS OF BUYER POWER
End customers have the ability to put pressure on Vinamilk regarding the quality of dairy
products. Competition in the dairy industry is very large, leading to price differences in the
milk market.
Consumers today are also becoming more knowledgeable when it is easy to find complete
information on the Internet about products and compare them to make appropriate choices.
This has a significant impact on Vinamilk's total revenue because of customer considerations.
Switching costs between Vinamilk dairy products and other brands are relatively low.
Therefore, customers can choose to use many different milk brands when they need to change
the flavor or want to try a different brand.
The bargaining power of customers when buying at small stores will not affect Vinamilk's
selling price too much. Instead, customers who are distribution agents and purchase goods in
large quantities will have the right to negotiate prices with Vinamilk.
VINAMILK
RIVALRY AMONG EXISTING FIRMS
High competition from domestic and foreign brands
Stiff competition with big milk brands: Dutch Lady, Moc
Chau, TH True Milk,...
Vinamilk is the market leader in the liquid milk industry
Diverse in product types, liquid milk and powdered milk
are still the two largest product categories today.
THE DETERMINANTS OF SUPPLIER POWER
Milk suppliers no longer have too much influence on Vinamilk.
Besides focusing on developing Marketing strategy, Vinamilk also promotes the strategy of building
dairy farms in Vietnam. This ensures supply and controls the quality of its dairy products.
The type of grass specifically for cows is also self-controlled by the brand. Therefore, milk suppliers for
Vinamilk are gradually limited, leading to the supplier's bargaining power becoming weaker.
In addition to being self-sufficient in supply, Vinamilk is still cooperating with suppliers who are dairy
farmers.
Vinamilk's raw milk purchasing activities encountered difficulties due to the covid epidemic outbreak.
Animal feed has a high price, some types are not in supply, so cows' diets change, greatly affecting
farming households, leading to many farming households being forced to quit their profession because
they do not have enough money to feed them. contrive. Therefore, in this case, the pressure from
suppliers on Vinamilk becomes strong.
THREAT OF SUBSTITUTE PRODUCTS
Relative price of substitute: If there are other dairy products available in the market at a lower price
than Vinamilk, it could increase the threat as customers may opt for the cheaper alternatives. For
example, Vinamilk's UHT fresh milk usually ranges in price from 25,000 to 30,000 VND per liter, while
similar products of competitors such as Dutch Lady, TH True Milk, and FrieslandCampina usually cost
about 5,000-10,000 VND per liter lower.
Relative quality of substitute: If there are dairy products of comparable or better quality available,
customers might consider switching away from Vinamilk, thereby increasing the threat. For
example, True Milk is famous for using pure fresh milk from its farm, while VNM also has a high-
quality production process. Both companies are focused on ensuring their milk meets ingredient and
quality standards.
Switching costs to buyers: Higher switching costs, such as adjusting to a different taste or nutritional
profile, could reduce the threat as customers may be less willing to switch from Vinamilk to other
substitutes. For example, If consumers have special preferences for product ingredients, such as
using pure fresh milk, they may choose True Milk with a potentially higher switching cost compared
to Vinamilk, depending on the specific market and location.