+ Customer factor:
Customers are an inseparable part of the enterprise. They are a factor that influences the existence and development of the enterprise and vice versa, customers are also a factor that puts pressure on the enterprise in terms of price, product quality, distribution channels, and payment terms. For Song Hong Garment Company, serving bedding and mattress products in the domestic market, attracting domestic consumer market share is only at a moderate level, even facing many difficulties in gaining market share compared to current competitors. In the export market, the company often undertakes FOB and CMT orders from major partners in the US, although the number of partners is not much, but the volume of goods ordered by them is very large and the value of each transaction is often very high, so the company often maintains long-term business relationships with them.
+ Supplier factor:
Suppliers always have an important impact on each business. Because this is the factor that ensures the output quality as well as the product price fluctuates high or low. Choosing a good supplier is also a difficult stage because it affects the production and business situation of the business as well as the continuity of performance. Therefore, the purpose of choosing a supplier of each business is also aimed at ensuring the quality, quantity and timeliness of raw materials.
Currently, the input factors in the company's supply chain include: raw materials (all kinds of fibers), auxiliary materials (packaging, core tubes, adhesive tapes, Markpen markers, etc.), chemicals - dyes, and replacement spare parts. After determining the demand, the purchasing department will search for suppliers to negotiate prices, evaluate the quality of goods, agree on payment methods, delivery schedules, and other commercial terms. The company often applies criteria to avoid risks in selecting suppliers such as: (1) The supplier's position and reputation; (2) The supplier's ability to supply goods and financial capacity; (3) The supplier's geographical location (affecting the ability and progress of delivery); (4) The ability to adapt to the Company's requirements and demands. The company conducts supplier searches in three forms:
- Advertising and introduction information on the Internet (small percentage)
- Introduction from your company, partner companies inside and outside the industry (accounting for a large proportion)
- Foreign relations of superiors (accounting for a large proportion)
Price and quality of goods are two prerequisites for both parties to agree on a contract. The price is determined based on a comparison of competitive prices from at least 3 different suppliers. The sales department will be responsible for transactions from finding suppliers to negotiating prices and commercial conditions in conjunction with the advice of the accounting department before submitting to the leadership for approval to select the supplier with the lowest supply price, quality and commercial conditions that meet the requirements. The main suppliers of raw materials for the company today are mostly from China, including: Kai Cheng Enterpriselo LTD (garment materials), Dino (Fabric), Tung Ga (Fabric), Shaoxing Jiandong (Fabric).
+ Competitors in the same industry:
Almost all industries in our country have to face competition from competitors in the same industry and the same goes for the bedding and mattress manufacturing industry. Up to now, in the Vietnamese bedding and mattress market, product competition has mainly come from domestic enterprises (Everpia, Lien A, Hanvico, Kim Cuong...) with high competition intensity. However, since Vietnam signed free trade agreements and international economic integration, the competition intensity in the industry has been pushed higher with the appearance of a series of product models from foreign brands such as: (Korean) Korea, Singapore, (Dunlopillo) Europe with superior quality and many new designs that compete directly with domestic products. Below we will mainly explore the company's two major competitors, Everpia and Hanvico, along with other small companies.
- Everpia Vietnam Joint Stock Company: With 25 years of experience in the Vietnamese market, Everpia has continuously invested in technological innovation, product design, and improved management quality to become a typical representative of the bedding and mattress manufacturing industry in Vietnam. With a production capacity of up to 10 million bedding products and 30 million yards of mattresses per year, the company always sets product quality, business reputation, and complete service as the guiding principles to bring the company sustainable development and success.
- Hanvico Company Limited: Established since 1999 until now, Hanvico Company Limited has existed for 22 years in the Vietnamese market, carrying the mission of taking care of consumers' sleep, Hanvico also always values and pays special attention to creating products with reasonable prices but with international quality. As a company that is steadfast in taking quality as the top criterion, each Hanvico product launched on the market is carefully researched, based on the needs and desires of customers to develop to optimize the value of use. Company
Always maintain and increase growth rate in all indicators: sales, market share, brand value, product quantity.
- Besides the company's two biggest competitors, there are also a number of other companies such as: Lien A Company Limited, Kim Cuong Joint Stock Company, Tuan Anh Company Limited,... The company creates a difference from its competitors by improving product quality, proactively implementing sales promotion activities to stimulate consumers to buy more and more of the company's products.
2.1.3.Main business areas
Business lines: The company's main business activities are manufacturing and trading garments, materials, equipment and goods serving textile and garment industry production and trading industrial products serving people's lives, focusing on 2 areas: export and domestic garments.
For the garment export sector: The company's garment export products are currently in two forms: processed goods (CMT) and exported garments (FOB). For the processed form (CMT), the company mainly serves the markets of Costa Rica, Guatamela, Nicaragua, Cambodia, Haiti and Vietnam with wide distribution capacity. For the FOB method, the company serves orders in two main markets: the US (accounting for 60%) and the EU (accounting for 30%), in addition to the markets of Japan, Korea and other countries (accounting for the remaining 10%).
For the field of bedding and mattress production. The company mainly produces to serve the domestic market, mainly consumed in the Northern markets through a distribution channel system including 177 agents covering 49/63 provinces and cities in Vietnam.
2.1.4.Business results for the period 2018-2021
In the period of 2018-2020, in general, the company's sales and service revenue, cost of goods sold, and after-tax profit all had a certain growth between 2018 and 2019 and decreased sharply in 2020 due to the impact of the Covid-19 epidemic. Specifically: In 2018, the company achieved revenue of 3,950.8 billion VND. Continuing its growth momentum, despite the somewhat negative impacts from the world economic situation, the company's revenue in 2019 reached 4,411.2 billion VND, an increase of 460.4 billion VND compared to 2018, equivalent to an increase of 11.6% and considered the highest revenue in the past 5 years. However, in 2020, the sudden outbreak of the Covid-19 pandemic and its rapid spread on a global scale since the end of 2019 has caused profound impacts on the entire garment, bedding and mattress industry in general and Song Hong Garment's sales in particular.
Specifically, the company's sales revenue reached VND 3,813.4 billion, down VND 597.8 billion compared to 2019, a decrease of 13.5%.
Table 2.2: Business performance of Song Hong Garment Joint Stock Company in the period of 2018-2020
Unit: Billion VND (Source: Sales Department of Song Hong Garment Joint Stock Company)
Company's business performance in the period 2018-2020
Target | Year | Difference | |||||
2018 | 2019 | 2020 | 2019/2018 | 2020/2019 | |||
Great opposite to | % | Great opposite to | % | ||||
Sales revenue goods and services | 3950.8 | 4411.2 | 3813.4 | 460.4 | 11.6 | -597.8 | -13.5 |
Cost of goods sold | 3157.3 | 3482.8 | 3062.3 | 325.5 | 10.3 | -420.5 | -12.07 |
Business management costs | 208.4 | 235.3 | 376 | 26.9 | 12.9 | 140.7 | 59.8 |
Cost of sales | 147.6 | 180.2 | 137 | 32.6 | 22.09 | -43.2 | -24 |
Profit after tax | 370 | 450 | 231.8 | 80 | 21.6 | -218.2 | -48.5 |
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Regarding the cost of goods sold over the years, specifically: In 2018, the company's cost of goods sold reached 3,157.3 billion VND. In 2019, the company's cost of goods sold was 3,482.8 billion VND, an increase of 325.5 billion compared to 2018, equivalent to an increase of 10.3%. This is an index that the company in 2019 proactively implemented a policy to control the increase in cost of goods sold in the context of imported raw materials increasing in both volume and price. By 2020, the company's cost of goods sold index decreased relatively to VND 3,062.3 billion, down VND 420.5 billion compared to 2019, equivalent to a decrease of 12.07%. The reason for the decrease in 2020 index is because the company was affected by the epidemic, orders were delayed, some orders were canceled by foreign partners and the company also had to follow the government's directive to mobilize a maximum of 50% of the capacity of garment factories.
Regarding the company's after-tax profit index over the years, there has generally been impressive growth between 2018 and 2019. However, due to the epidemic, the momentum
growth could not continue until 2020. Specifically: In 2018, the company achieved an impressive profit of 370 billion VND. Continuing the profit growth momentum, in 2019, the company's after-tax profit reached 450 billion, an increase of 80 billion compared to 2018, equivalent to an increase of 21.6%. And in 2020, the profit index decreased sharply due to the impact of the pandemic with the figure of 231.8 billion VND, a decrease of 218.2 billion VND compared to 2019, equivalent to a decrease of 48.5%.
In the period of 2018-2020, the company's business cost index has generally tended to increase over the years. Specifically: In 2018, the company's business management costs reached 208.4 billion VND. Continuing to 2019, the company's business management costs increased to 235.3 billion VND, an increase of 26.9 billion VND compared to 2018, equivalent to an increase of 12.9%. The increase in costs in 2019 can be partly understood because the company focused on increasing the import of raw material costs to promptly meet FOB orders as well as the company's focus on investing and continuing to deploy the existing ERP business management system with new software management tools and a series of satellite management software, thereby increasing the accuracy and timeliness in production and business management, maximizing all resources of the company, thoroughly saving, preventing loss and waste. Although in 2020, all costs of revenue, cost of goods sold and profit after tax decreased significantly, the company's business management costs increased sharply compared to 2019, reaching 376 billion VND, an increase of 140.7 billion VND compared to 2019, equivalent to an increase of 59.8%. The reason for such a sudden increase in costs is that during the period, the company made a provision for bad debts of 161.8 billion VND from a large customer, a long-term partner, NewYork & Company, which suddenly declared bankruptcy.
Regarding the company's sales cost index, it is generally the same as other indexes, with only an increase from 2018 to 2019 and a decrease in 2020. Specifically: In 2018, the company's sales cost was 147.6 billion VND. In 2019, the company's sales cost was 180.2 billion VND, an increase of 32.6 billion compared to 2018, equivalent to an increase of 22.09%. And it stagnated in 2020, this index decreased to only 137 billion VND, a decrease of 43.2 billion VND compared to 2019, equivalent to a decrease of 24%. In short, this index is not too large or has much impact on the revenue structure of Song Hong Garment Joint Stock Company.
Entering 2021, below is the business's 10-month business results table.
Table 2.3: Business performance of Song Hong Garment Joint Stock Company after 10 months of 2021
Unit: Billion VND
May 10, 2020 | May 10, 2021 | Difference | ||
Absolute | % | |||
Sales revenue and service provision | 2969 | 3448 | 479 | 16.1 |
Cost of goods sold | 2423 | 2765 | 342 | 14.1 |
Management costs business | 271 | 212 | -59 | -21.7 |
Cost of sales | 97 | 103 | 6 | 6.1 |
Profit after tax | 165 | 335 | 170 | 103 |
Target
(Source: Sales Department of Song Hong Garment Joint Stock Company)
Based on the business situation table of Song Hong Garment Joint Stock Company in the first 10 months of 2021 as above, it can be seen that there have been significant changes in the indicators of sales revenue and service provision, cost of goods sold and profit after tax compared to the first 10 months of 2020 in the post-Covid 19 context: both production and business to restore the economy and effectively prevent the epidemic. Specifically:
Regarding the company's sales and service revenue index in the first 10 months of 2021, it reached VND 3,448 billion, an increase of more than VND 479 billion compared to the first 10 months of 2020, a corresponding growth of 16.1%. Regarding the company's cost of goods sold index in the first 10 months of 2021, it was VND 2,765 billion, an increase of VND 342 billion compared to the first 10 months of 2020, an increase of 14.1%. In particular, the company's after-tax profit index has made a significant leap when it reached VND 335 billion in the first 10 months of 2021, an increase of VND 170 billion compared to the first 10 months of 2020, an increase of 103%. Having such positive growth signals is partly due to the company having proactive policies and more precautionary measures for production and business activities in the context of the epidemic. is still ongoing. Partly due to the fact that FOB and CMT orders from the company's major foreign partners have increased again, the domestic market's purchasing power for bedding and mattresses is on the rise, opening up a prospect of economic recovery before the pandemic for the company in the last months of 2021.
The remaining indexes including the business management costs and sales costs of Song Hong Garment Company have all had certain adjustments such as: The business management cost index has decreased from VND 271 billion in 10 months of 2020 to VND 212 billion in 10 months of 2021, a decrease of VND 59 billion and a corresponding decrease of 21.7%. The sales cost index has a slight increase in 10 months of 2021 with VND 103 billion, an increase of more than 6%.
billion VND compared to the first 10 months of 2020, an increase of 6.1%. In general, the above indicators do not have much impact on the revenue structure of Song Hong Garment Joint Stock Company.
Through the company's business performance table for the period 2018-2020, in general, Song Hong Garment Company had very good growth before the epidemic season when the company continuously achieved impressive figures in terms of revenue, however, the cost structure that the company spent also increased, causing the company's after-tax profit to not fully satisfy the company's needs. During the epidemic season, this is considered a memorable year when not only the company but all businesses in the industry in general were affected, reducing profits by nearly 50% compared to 2019. However, with the positive developments over the past 10 months of 2021, the company has an optimistic outlook for economic recovery in the final period of 2021 when import demand from partners in the US and EU markets is always high, especially when the Christmas season from these two key markets is approaching, promoting shopping demand of the two. This market is large. In addition, bedding and mattress products consumed in the domestic market are bringing in potential profits for the company, further strengthening the business's confidence in economic recovery after the pandemic.
2.2.Analyze the current situation of improving the competitiveness of Song Hong Garment Joint Stock Company in the domestic market.
2.2.1. Improve competitiveness through product quality
With the desire to bring customers the best experience from its products, Song Hong Garment Joint Stock Company always tries to improve product quality, meeting the maximum needs of the majority of Vietnamese consumers.
For bedding and mattress products, the company always focuses on the user experience factor to bring customers products with high convenience, quality almost equivalent to international products. All bedding and mattress products of the company have the same characteristics: light, soft, moisture-proof and designed to benefit consumers. When mentioning bedding and mattress products of May Song Hong, consumers will always know the brands: Urban Legend, Home Collection, Classic Collection, pure cotton mattress, mattress for children... All fabrics used for the above products are complied with by the company according to national technical standards on chemical content in products according to Circular 21/2017/TT-BCT of the Ministry of Industry and Trade. 100% of fabrics used for bedding and mattresses do not contain toxic substances such as formaldehyde, chemical fragrances in accordance with the provisions of law to ensure safety for consumers. In the domestic market
The company's blanket, sheet, pillow, and mattress brands have become a trusted choice for consumers with good quality products, diverse in designs and colors, suitable for the tastes and incomes of Vietnamese people. With constant efforts, the company's blanket, sheet, pillow, and mattress products have been continuously voted by consumers as "High-quality Vietnamese goods" for many consecutive years. It can be affirmed that the quality of the company's products has been verified by consumers' choices.
Recognizing the trust and support of its products from consumers in the domestic market, the company always sets the goal of continuous development and maintaining product quality. Because Song Hong Garment Joint Stock Company knows that this is the core issue to win in competition with businesses in the same industry.
2.2.2. Improve competitiveness through price
When choosing a product that brings a deep, good sleep and ensures health such as bedding and mattresses, the price factor always plays an important role in the product selection of Vietnamese consumers. For that reason, in recent years, Song Hong Garment has always tried to invest in modern technology, apply scientific and technical advances in production, find high-quality sources at lower prices, etc. to lower costs and reduce production costs. The company's prices are usually calculated on the following basis:
Price = Product production cost + Profit
The selling price is determined carefully and meticulously by the company. For high-end bedding products, the company's main raw materials are cotton, fiber and fabric purchased from abroad (specifically China), so the price of these products is not high. Therefore, competing on price in the domestic market of these products is very beneficial for Song Hong.
Below is a comparison table of product prices of Song Hong Garment Joint Stock Company with competitors in the same industry:
Table 2.4: Comparison of selling prices of Song Hong Garment JSC products with competitors
Unit: Thousand Dong
TT
Red River | Everpia Vietnam | Hanvico | ||||
Product line product | Selling price | Product line product | Selling price | Product line | Selling price | |
1 | Urban Collection (1 bed sheet, 1 spring and autumn comforter, 2 covers) pillow, 1 pillowcase) | 2.745- 4,660 | Everon Atermis (1 bed sheet, 1 spring and autumn blanket, 4 covers) pillow, 1 pillowcase) | 16,700- 17,500 | Royal Award (1 bed sheet, 1 winter duvet cover, 4 pillowcases, 2 covers) pillow, 1 flat sheet | 8,790- 12,650 |
2
Home collection (1 bed sheet, 1 duvet cover, 1 pillowcase, 2 pillowcases) | 1.884- 3,535 | Everon Tencel (1 sheet) cover, 2 pillowcases, 1 winter blanket cover) | 4.920- 5,770 | Blue Sky (1 sheet, 1 duvet cover, 1 comforter, 2 pillowcases, 1 cover) pillow, 1 pillow cover) | 3.780- 6,690 | |
3 | Classic collection (1 sheet, 1 blanket) Spring and Autumn, 2 pillowcases) | 1.161- 1,568 | Everon Cotton (1 sheet) cover, 1 four season blanket, 2 covers pillow) | 1,930- 4,700 | Hanvico Living (1 fitted sheet, 1 duvet cover, 2 pillowcases) | 1.310- 1,840 |
4 | Pure cotton mattress pure | 1.239- 5,382 | Cotton mattress | 2,050- 10,400 | Cotton mattress | 1,760- 17,270 |
5 | Blanket stuffing | 380- 550 | Blanket stuffing | 690- 1,430 | Blanket stuffing | 655- 1,120 |
6 | Pillow stuffing | 115- 230 | Pillow stuffing | 100-510 | Pillow stuffing | 90-350 |
7 | Children's product set (1 sheet, 1 spring and autumn blanket, 2 covers) pillow) | 1.665- 2,490 | Children's product set (1 quilted sheet, 1 spring blanket) Thu, 2 pillowcases | 1.030- 4.110 | Children's product set (1 bed sheet, 1 duvet cover, 1 spring and autumn blanket, 2 pillow case) | 3.780- 4,080 |