MINISTRY OF EDUCATION & TRAINING UNIVERSITEÙ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL MBMM PROGRAM PH萎M V;N TRÍ SOLUTIONS TO IMPROVE DISTRIBUTOR’S SYSTEM OF HOLCIM VIETNAM FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Tutor: Tr亥n Xuân Kiêm, DBA Ho Chi Minh City 2007 i WARRANT STATEMENT This is my original work. Any data result or quote in the work is clearly identified. Ph衣m V<n Trí iii ACKNOWLEDGMENTS The author wishes to acknowledge to the following people for their support and assistance during the preparation of this thesis. Firstly, I would like to express my gratitude to the members of the MMVCFB program who, during the courses have delivered invaluable experience, knowledge and assistance.
The extensive assistance, guidance, advice and encouragement of my tutor Mr. Tran Xuan Kiem-DBA throughout the thesis study are sincerely and gratefully acknowledged. My thanks also go to Ms. Tran and Mr.
Serge as program coordinators, without their assistance; my work would not have been completed on time or with quality. Secondly, I would like to say thank you sales team of Holcim Vietnam who have given me invaluable assistance during my research. Special thanks must go to Mr. Suhard Amid – Special Project Manager - for his value advices and considerable assistance.
Likewise, thanks are also extended to my customers from their kindly cooperation to participate in the interview and shared their opinion and perceptions. Finally, there is an important acknowledgment and gratitude to my family. They are the foundation of my professional career and my life. iv TABLE OF CONTENTS WARRANT STATEMENT.
ii THE TUTOR EVALUATION. ii TABLE OF CONTENT. iv CHAPTER 1: INTRODUCTION .1 Background of project. 2 CHAPTER 2: HOLCIM VIETNAM OVERVIEW .1 Holcim Vietnam introduction:.7 Sales performance of Holcim Vietnam .5 CHAPTER 3: RESEARCH RESULTS .1 Finding from ODs .2 Findings from Holcim sales team.
14 v CHAPTER 4: SOLUTIONS & IMLEMENTATION PLAN.2 Strategies suggestion & evaluation of experts.3 Solution for implementation.5 Self evaluation about project. 26 LIST OF APPENDICES AND ABBREVIATES .1 Background of project Viet Nam is a developing country with a relatively high annual rate growth for recent years. Construction industry in Vietnam is growing rapidly to foster the economic development, and the development of the economy will be greatly contribution to the growth of construction industry. Vietnam cement demand is increase incredibly, the growth rate have been more than 20%/year since the last 5 years, and promising for such high rate for the coming years.
Holcim Vietnam has positioned itself as market leader in Vietnam cement market. In order to build and maintain that position, Holcim Vietnam target to develop distributors system which mainly deliver over 95% sales volume of Holcim to the southern market (form Nha Trang to Ca Mau) to be professional company in term of cement suppliers, services, resources… By studying ”Solutions to improve distributor’s system of Holcim Vietnam” I want to understand the current situations of OD system and explore the opportunities to propose solutions to improve it and strategy to develop this system to be professional one in market.2 Project objectives ̇ To regain and further develop the trust and confidence of the Holcim Distributor channel ̇ To help our OD to better manage the business and increase it’s profitability through partnership with Holcim ̇ To create an open and a transparent business relationship to the future 2 1.3 Research methods ̇ Research method: qualitative research - exploratory research on the relationship between Holcim and its OD including individual dept interviews (OD) and 02 focus group (Sales team) ̇ The research objective defined as below: 6 To understand key challenges that ODs are facing in their business including internal challenges and challenges come out due to Holcim policy 6 To explore the opportunities for the Holcim to extend their help to ODs: what sectors that Holcim needs to provide support and what sectors that Holcim needs to amend its current support or policy. 6 To gauge the satisfaction of authorized dealers and Holcim in term of what they are satisfied or unsatisfied, strengths and weaknesses and points to maintain or area to improve 6 To understand Holcim sales staff in dealing with these authorized dealers 6 To identify potential value propositions ̇ Sample size: 42 ODs is chosen as sample for the research from 58 ODS of Holcim Vietnam (the chosen criteria are distributor attractiveness, potential evaluation, loyalty assessment and sales performance, SCCC format is used as a system for choosing sample (Pls. see in the list of appendices).
3 CHAPTER 2 HOLCIM VIETNAM OVERVIEW 1.1 Holcim Vietnam introduction: Name: Holcim Vietnam Ltd Logo: Address: 2A-4A Ton Duc Thang Street, district 1, HCMC Telephone: 84 8 8244101 Fax: 84 8 8243569 Website: www.com/vn Holcim (Vietnam) Ltd is a joint-venture company between Holcim Group from Switzerland, one of the world’s leading cement producer accounts for 65% of the share and Ha Tien 1 (35%) – a member of VNCC established on 25/02/1994 Holcim is one of the world largest cement group found in 1912 in Switzerland. It has presented in more than 70 countries with more than 50,000 employees Ha Tien 1 is a state own company established 40 years ago with strong brand in South of Vietnam Total investment of Holcim Vietnam recently reaches USD 500 million with total capacity 3. ̇ Honchong cement plant located in Kien Giang province with dispatch capacity of 0.5 million tons/year – commissioned in 1997 to supply for the Mekong region ̇ Catlai Terminal: District 2, HCMC with dispatch capacity of 1.76 million/years started operation 1998 supply for HCMC, and East. 4 ̇ Thivai Grinding Plant: Phu My IP, Ba Ria Vung Tau province with the first stage capacity of 1.3 million tons/year, first product was launched in November 2004 will share the workload for Catlai terminal by taking a part of East region.2 Product Holcim Vietnam is the first Cement Company has different products for different application.
However, the main product of Holcim is Holcim Top Standard. It takes 87% sales volume every year Product Portfolio of Holcim Vietnam Product band Application 1 Holcim Ready Flow Ready mix concrete 2 Holcim Quick Cast Precast concrete product 3 Holcim Extra Durable Concrete exposed to corrosive environment 4 Holcim Mass Pour Mass structure 5 Holcim Solid Road Concrete road, runway 6 Holcim Stable Soil Soft soil stabilization, soil improvement 7 Holcim Top Standard For concrete of small and medium projects 8 Holcim Easy Wall Plastering and rendering 1.3 Price: The objectives of Holcim Vietnam are becoming the price leader in the market. In order to achieve the target, Holcim Vietnam has invested in facilities and people to add value added services to make sure customers receive a high quality product and good services with best price.4 Place Holcim Vietnam has two distributions channel which shows in the char below: 5 Distribution channel of Holcim Vietnam Holcim Vietnam 95% 5% Direct sales Distributors 15% 80% 11% 5% 4% Retail RMC Contractors CPM Small and medium projects Large Projects 1.5 Promoting ̇ Personal selling: direct marketing approach to contractors, sales call visit frequency retailer and its customers. ̇ Public relation: sponsor for sport, study, social activities 1.6 People Sales and marketing department is organized in matrix structure with four section combined in different regional operating units (ROU) with clear objectives and authorization.
The organization chart as in Figure 1-1 and 1-2 1.7 Sales performance of Holcim Vietnam Having seven years in business, Holcim Vietnam has developed rapidly. The overall growth maintain above 12%. 6 K tons Sales performance of Holcim Vietnam 3,500 3,100 3,000 2,730 2,630 2,400 2,500 2,100 1,900 2,000 1,600 1,250 1,500 1,000 1,000 400 500 200 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Sales report – Holcim Vietnam 2006 Strengths ̇ Production capacity ̇ Location advantage ̇ Company vision ̇ Product portfolio ̇ Facilities for customer service: labs, web sales, technical support… ̇ Owning of good practices and large networking Weaknesses ̇ Good sales force but not enough motivation ̇ Customers are not perceived by the value provided by Holcim Vietnam (product positioning is not quite clear) Company Vision: As part of one of the world largest cement company, Holcim Vietnam vision is to provide the foundation for Vietnam society’s future Company Mission: to be Vietnam most respected and attractive company, creating values for our stakeholder. Sales performance of OD: OD system plays a key role in distribution channel of Holcim Vietnam.
It accounts for 95% sales volume of Holcim Vietnam. Currently, 7 OD system includes 58 ODs located in all provinces from Nha Trang to Ca Mau. (See the distribution channel above) ------------------------------------------------------------------------------- CHAPTER 3 RESEARCH RESULTS 1.1 Finding from ODs 1.1 Business development: Almost OD concern on two key issues that have been significantly influence their business plan: Key issues of market impact to OD Q'ty of OD say business Yes No No concern Demand growth every year 41 0 0 More brands, more choice to make money 35 2 5 ̇ According to OD, in general, the demand in the construction industry is growing (but currently restricted by some governmental policies) due to some following reasons: ̇ High urbanization potential ̇ Higher living standard generates higher need of house construction/ renovation 6 High expectation of more investors coming to Vietnam after we become a member of WTO like office building, factories, civil projects. 8 ̇ Regarding to cement brands, OD has comments that more and more brands are coming into the market.
This is a greater choice for developing their business, OD has more opportunities to make money and do not need to depend their business on any specific brand. They recognized their role in pushing products into the market become more important, so manufacturers are expected to offer favorable policies to win their empathy. Whereas, manufacturers will face hasher situation due to higher and higher competition among brands 1.2 Key challengers: When asking about the challenges ODs are facing with, almost OD concern about competition among ODs, internal problems such as credit management, human resource management…. ̇ Credit to retailers and contractors are a constant headache: 6 Persisting debt (even bad debt for some) and sometimes in huge sum of money (at least 1 billion VND).
This impacts their cash flow and limits their re- investment opportunities and decrease significantly the profits (for bad debt). Key challegers ODs are facing 50 40 40 37 30 Q'ty OD 30 20 15 10 10 10 10 0 0 6 Higher risk with contractors than retailers: most of the time, big debt equals 5-10 billions. Contractors always on the go, so it is quite difficult to catch up 9 with them and unable to follow up tightly in fear of losing opportunities to recollect the money and ruining the long-term relationship, even in some of the civil construction projects, contractors don’t fully control their own finance because they have to wait for sponsorship from government. ̇ The construction industry is temporarily frozen while there are more distributors doing business in the same territory.
Moreover, more and more new brands come into the market with very good offers in term of allowances, price, promotion… Thus there is a highly competition among ODs. ̇ Most of ODs (mainly in provinces) mange their business with family style, so their business management is not professional and still have a lot of shortcomings in finance and resource management. For example they are: 6 Unaware of book keeping is conducted in a manual manner (mostly handwritten record). So they meet difficulties to track and follow up their finance and credit record such as missing the deadline of a debt, do not know exactly how much money they can earn by monthly.
Tool to manage accounting system Tool to manage HR 37 40 32 40 Q'ty OD 30 30 Q'ty OD 20 10 20 10 10 5 0 Computer (MS Hard writen 0 excel/sotware) record Family style Professional tool 6 Facing with difficulties in human resource management.
