The common situation of other businesses is to compete to increase discounts and reduce prices to gain market share and maintain market share.
Although the discount gap between Tien Phong Plastic and its competitors is quite large, distributors still want to increase the discount to compete better. The company's price adjustment, more favorable business policies for distributors as well as flexible solutions have created conditions for distributors to improve their competitiveness in participating in the project and with the distribution systems of competitors.
2.3.1. Successes
Regarding the company's operating structure: Tien Phong Plastic's production and business operations are well-run, the coordination between functional departments is smooth and continuous, there is no lack of cooperation or jealousy because of the individual goals of each department but wholeheartedly for the common goals of the company, helping the company overcome difficulties, especially in the context of the prolonged Covid-19 pandemic.
About the brand: Tien Phong Plastic brand has penetrated deeply into the minds of customers and increasingly affirmed its strong position in the market. Besides Binh Minh Plastic and Hoa Sen Plastic, Tien Phong Plastic is in the top 3 leading plastic pipe enterprises in Vietnam.
Regarding sales network: Tien Phong Plastic has built a nationwide distribution system with 03 factories operating day and night in Hai Phong, Binh Duong and Nghe An, 09 distribution centers, more than 300 agents and nearly 16,000 stores.
About product quality: The product has high intellectual content, with large-scale production lines and high technology to ensure a positive source of goods, meeting all customer requirements.
Awards achieved: National Brand - Vietnam Value; National Quality Gold Award; Top 50 best listed companies in Vietnam.
2.3.2. Limitations and shortcomings
With the characteristics of construction plastic products, the main risks of Tien Phong Plastic will come from the operating cycle of construction and real estate enterprises. However, Tien Phong Plastic products are also an essential product of households and water supply and drainage enterprises, so in general, the risk of Tien Phong Plastic's product consumption market is relatively low.
The outbreak and spread of the Covid-19 epidemic has had an extremely negative and severe impact on the world economy in general and Vietnam in particular. Although there has been no official report on the impact of the Covid-19 epidemic on Tien Phong Plastic, based on the general decline of the construction industry, it can be seen that Tien Phong Plastic's profits could decline by 10 - 20%, which is entirely possible.
The oil war between Russia, OPEC and the US has created a sharp drop in prices, negatively impacting related industries, including the plastics industry.
Because Tien Phong Plastic uses a lot of debt to finance its production and business activities, it is also very susceptible to risks from exchange rate fluctuations.
Competitors lowering prices and increasing discounts for agents also put considerable pressure on businesses. In terms of scale and capacity, currently there are only Binh Minh Plastics, Hoa Sen Group and De Nhat Plastics - a joint venture between Taying Plastic Industry Company (Taiwan) and Hiep Hung Production Trading Company Limited (Vietnam).
CHAPTER 3: SOLUTIONS TO COMPLETE DOMESTIC MARKET PENETRATION STRATEGY OF THIEU NIEN TIEN PHONG PLASTIC JOINT STOCK COMPANY
3.1. Forecasting industry development and Development orientation of Thieu Nien Tien Phong Plastic Joint Stock Company
3.1.1. Forecasting the development of the industry
Over the past years, the growth of the plastic industry has always reached over 11%/year, with periods of 12-15%. In the coming time, the plastic industry is expected to continue its high growth momentum due to the following conditions:
Firstly, the plastic industry is a special industry because plastic products can be both input for other industries (such as textiles, footwear, electronics, etc.) and final consumer products (packaging, household appliances, construction, etc.). Therefore, when these industries develop, the demand for plastic products also increases.
Second, Vietnam is a developing country, in the past 10 years the average GDP growth rate is over 6%, production and construction activities have grown rapidly, the demand for plastic products in general and construction plastic products in particular have grown accordingly.
Third, Vietnam is increasingly opening up, the investment environment attracts many foreign investors to Vietnam, including the plastics industry, creating conditions for this industry to develop more competitively and completely, increasing development opportunities for both domestic and international markets. According to the trend, the Vietnamese plastics industry will likely develop more vibrantly and competitively in the near future.
3.1.2. Forecasting the development of Vietnam's plastic market
Demand for plastic products in Vietnam maintains a growth rate of 5-7%, with few sudden changes. Plastic pipe and door products will benefit when infrastructure and civil construction activities are boosted in 2021 and 2025.
The plastic packaging group is expected to recover and will continue to maintain a growth rate of over 10% according to the demand for food and beverage products. The technical plastics segment will benefit from supporting industries, but there will not be significant growth in the near future.
Input material prices due to scarce supply, production disruptions due to the pandemic and increased transportation costs are expected to push up input prices, reducing profit margins at some construction plastics businesses.
3.1.3. Development orientation of Thieu Nien Tien Phong Plastic Joint Stock Company
With the desire to maintain and develop Tien Phong Plastic as the largest plastic pipe manufacturer in Vietnam, the leading brand in the field of manufacturing and trading plastic pipe products in Southeast Asia. Tien Phong Plastic's Board of Directors has set out a strategic direction for sustainable development, standardizing products, management systems, human resources, sales policies and distribution systems to increase the value of association in production and business activities with many specific goals:
- Focus on developing highly qualified human resources with extensive experience in business management; Building corporate culture and promoting core values; Prestige through every action - Quality in every product - Accompanying and sharing with partners - Responsibility to the community.
- Ensure sustainable growth of Tien Phong Plastic in the future through current products and new construction material products.
- Diversify highly applicable products and apply advanced technologies to increase labor productivity.
- Build an effective distribution channel, developing to most localities nationwide. Develop and apply information technology in industry.
Manage and strictly control the distribution channel system to optimize business efficiency and promptly supply products to customers.
- Improve management capacity and apply information technology in strictly controlling financial risks, ensuring financial indicators are at a safe level, preserving and developing investors' capital.
- Provide jobs and improve the lives of employees and workers of the enterprise.
- Research and develop solutions to improve efficiency and save fuel in production.
- Seek opportunities for cooperation, joint ventures and associations with foreign partners to expand international markets.
- Build a friendly brand image towards the community, become a business close to community life and maintain Tien Phong Plastic as a Vietnamese brand.
Carry out social security work well, linking community benefits with the company's production and business results; aiming to be among the leading enterprises in environmental protection, social security and community development.
3.2. Proposal to complete the domestic market penetration strategy of Thieu Nien Tien Phong Plastic Joint Stock Company
3.2.1. Proposal for analysis of the strategic environment situation for domestic market penetration of Thieu Nien Tien Phong Plastic Joint Stock Company
Through analyzing the current situation of domestic market penetration strategy of Thieu Nien Tien Phong Plastic Joint Stock Company, it can be seen that the company has realized the importance of building a strategy and has quite specific directions and implementation of the strategy. However, the company has not used tools to analyze the steps of implementing the strategy. The market is always fluctuating and changing.
The environment is constantly changing, and Tien Phong Plastic Joint Stock Company has internal strengths and weaknesses, as well as external opportunities and challenges that the company faces.
I would like to analyze more specifically the strengths, weaknesses, opportunities and challenges through the TOWS matrix to develop the bright spots of the strategy, helping Tien Phong Plastic Company to choose the key points in the market penetration strategy.
Table: TOWS matrix diagram of Tien Phong Plastic Company
TOWS
OPPORTUNITY (O) | CHALLENGE (T) |
1. Enjoy incentives on taxes from the state | 1. Risks from products substitute |
2. Has a lot of development potential due to large population, large consumer market, products are applied in all areas of life. society. | 2. Covid pandemic leads to decline in business activities |
3. Cheap and abundant labor costs. | 3. 80% of plastic materials must be imported, so they depend on many foreign |
4. High accessibility to cheap recycled materials due to environmental management policies The school is not strict. | 4. Increasing competition |
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5. Vietnam's economy maintains stable growth | 5. Trend of limiting the use of environmentally friendly plastic products school | |
STRENGTHS(S) | SO COORDINATION | ST COORDINATION |
1. Good production capacity | => O (1, 2,4, 5) + S (1, 3, 5, 6) Domestic market penetration strategy with low price policy | => S (1, 2, 3, 4, 5) + T (1, 2, 4, 5) Domestic penetration strategy through the policy of promoting differentiated, environmentally friendly products |
2. Advanced production technology. Leading in the production of international products with quality confirmed quantity | ||
3. Distribution system throughout the country. Has 60% market share in the North, and 30% market share in the whole country. water | ||
4. Skilled workers, skill | ||
5. Long-standing brand | ||
6. The listed price does not have too much difference. big with the opponent | ||
WEAKNESS (W) | WO COORDINATION | WT COORDINATION |
1. Capital investment costs for production activities big | => W (1, 2, 3, 4) + O (1, 3, 4, 5) market penetration strategy | => W (2, 3, 5) + T (1, 2, 3, 4) Domestic market penetration strategy |
2. Input material prices are still high,
not well controlled
domestic by expanding vertical integration, perfecting closed production and distribution processes. | by completing vertical linkage |
3. Marketing activities are not focused yet right amount | |
4. Price fluctuation risk raw materials and exchange rates |
Macro factors affect the entire enterprise, deeply impacting all steps of the strategic management process. Therefore, whether the strategy is implemented in the right direction and effectively or not depends largely on the understanding of the environmental conditions in which the environment is participating. The TOWS matrix is an effective tool to help analyze the domestic market penetration strategy of Thieu Nien Tien Phong Plastic Joint Stock Company. From the analysis table above, the following market penetration strategy options can be made:
- SO strategy is a strategy to promote strengths to take advantage of opportunities. When combining O (1, 2, 4, 5) + S (1, 3, 5, 6), Tien Phong Plastic Joint Stock Company should choose to penetrate the domestic market with a low price policy. By using this strategy, Tien Phong Plastic will promote existing strengths and take advantage of available opportunities to promote the strategy more effectively. Moreover, building a complete production and distribution value chain also helps Tien Phong Plastic create a great advantage with superior product lines of high quality and environmental friendliness.