UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Pham Le Xuan Toan Enhancing the relationship between sales and marketing staffs: A case of Schneider Electric Vietnam MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2019 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Pham Le Xuan Toan Enhancing the relationship between sales and marketing staffs: A case of Schneider Electric Vietnam MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: ASSOC. DR NGUYEN THI MAI TRANG Ho Chi Minh City – Year 2019 TIEU LUAN MOI download : skknchat@gmail.com Contents EXECUTIVE SUMMARY .6 LIST OF TABLES .7 LIST OF FIGURES .2 Industry Business’s structure & mission .1 Low Voltage VSD Product line (IDVSD) and Vietnam market .2 The low growth rate of IDVSD sales in 2018 .1 Initial cause and effect map .1 Lack of market intelligence information .2 Inter-channel conflict .3 Poor marketing communications .4 Poor relationship between salespeople of Industry Expert Distributor Sales Team and marketing people of Pre-Sales & Marketing Support Team .3 Updated cause and affect map .4 Updated possible problems .1 Lack of market intelligence information .2 Inter-channel conflict .3 Poor marketing communications .4 Poor relationship between salespeople and marketing people. Main problem definition and consequences .1 Main problem definition.2 Main problem consequences .1 Lack of discussion and sharing information between sales & marketing to support the business .2 Ineffective collaboration between sales & marketing to support customer .3 Conflict of interest between sales & marketing function to support each other .24 TIEU LUAN MOI download : skknchat@gmail.1 Alternative solution 1: Encouraging knowledge sharing between sales and marketing .2 Alternative solution 2: Creating an interactive information exchange system between sales & marketing.3 Alternative solution 3: Re-training sales & marketing staffs to reduce competencies gap and re- designing job descriptions of sales & marketing and their KPIs to enhance high performance business culture. Change plan design .3 Action plan implementation .1 In-depth interview the first group .2 In-depth interview the second group .3 In-depth interview the third group.4 Qualitative research findings .74 TIEU LUAN MOI download : skknchat@gmail.com EXECUTIVE SUMMARY The purpose of this thesis is to explore the causes of poor relationship between sales and marketing staffs of Industry Business team of Schneider Electric Vietnam that lead to the low sales growth rate of its main product, Low Voltage Variable Speed Drives (IDVSD), via its main distribution channel, Industry Expert Distributor (IED) Channel, and that then consequence on the low performance of the business team in 2018.
The findings of this study reveal that ineffective collaboration between the Product Manager of IDVSD (aka. the marketing people) and the Account Manager of the IED channel (aka. the salespeople) tend to play a significant role that lead to their poor relationship in this case. The findings are discussed in detail in the research along with some recommendations for the Industry Business and the Management Board of Schneider Electric Vietnam to enhance this relationship and improving the business performance in both short-term and long-term vision.
TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT I would like to acknowledge all who supported me during my studies at International School of Business –University of Economics Ho Chi Minh City (ISB), without whom I wouldn’t be where I am today in finishing my Master of Business Administration journey. I would like to give my great appreciation to my Supervisor, Assoc. Nguyen Thi Mai Trang, who has supported me during the time doing this thesis. Without her continuously sympathy, guidance and support, my thesis cannot be completed promptly on schedule.
I also would like to show may gratitude to my colleagues at work, my partner’s customers and my classmates at ISB for their feedback and contribution for this thesis. I also send my sincere thankfulness to my parents and especially to my wife for their support and encouragement. TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 1. Industrial automation and drives in Vietnam – Market shared and CAGRs analysis 2018 Table 2.
Industry Business - Sales growth rate by product lines 2017 – 2018 Table 3. Costs for alternative solution 1 Table 4. Costs for alternative solution 2 Table 5. Costs for alternative solution 3 – Action 1 Table 6.
Costs for alternative solution 3 – Action 2 Table 7. Costs for best solution Table 8. Action plan LIST OF FIGURES Figure 1. Industry Business’s products and solutions in Vietnam by product lines Figure 2.
Industry Business’s Organization Chart 2018 Figure 3. Industry Business - Sales contribution (%) by product line 2018 Figure 4. Industry Business - Sales of Low Voltage VSD by channel 2017 – 2018 Figure 5. Primary Cause-and-Effect tree TIEU LUAN MOI download : skknchat@gmail.1 Company background Schneider Electric (SE) is the global specialist in energy management and automation.
With revenues of around €25 billion in fiscal year 2018, its 170,000 employees serve customers in over 100 countries, help the customers to manage their energy and process in ways that are safe, reliable, efficient, productive and green. From the simplest of switches to complex operational systems, their technology, software and services improve the way their customers manage and automate their operation. SE offers integrated solutions across multiple market segments in Non-residential & Residential Building, Industrial & Machines Manufacturers, Utilities & Infrastructure and Data Centers & Networks. Its connected technologies reshape industries, transform cities and enrich lives.
(1) SE sells products and solutions through 4 main Business Units in Vietnam (2): - Building & Partner Business, provided Low Voltage products, systems and solutions, is ranking number one Worldwide in Low Voltage and Building Automation. - IT (Information Technology) Business, provided Critical Power products and solutions, is ranking number one Worldwide in Critical Power and Cooling. - Industry Business, provided industrial automation & drives products and solutions, is ranking number two Worldwide in industrial automation and control. - Energy Business, provided Medium Voltage products and solutions, is raking number one Worldwide in Grid Automation and Medium Voltage.
SE has been operating in Vietnam since the 1990s, starting with the Vietnam’s 500 kV North – South Transmission Project in 1991 – 1993 and then opened its first representative office in Ho Chi Minh City in 1994. Today SE Vietnam has 2 factories in Dong Nai Province and 3 offices in Ho Chi Minh City, Da Nang and Ha Noi. The company employs more than 1000 employees and works closely with more than 500 partners in Vietnam. (2) TIEU LUAN MOI download : skknchat@gmail.com 2 After 20 years doing business in Vietnam, SE has achieved its remarkable performance record in 2017 with double-digits growth of all its business units in the country and become the top growing entity in the entire region (Asia-Pacific & Japan).2 Industry Business’s structure & mission Vietnam’s industrial automation and drives is an attractive market.
The market’s revenue was 91 million € in 2017 and the compound annual growth rate (CAGR) was 8% year on year. In recent year, as Table 1 below, SE’s products and solutions in this market have been accounted for just 5% market share with the CAGR is 12% in recent year. The main competitors of SE in the market are ABB, Siemens, and Rockwell. Their market shares were 12%, 9%, and 4% consecutively.
And their CAGRs were 9%, 3% and 15% consecutively, as showed in Table 1 below: Company Market Share (%) CAGR (%) ABB 12% 9% Siemens AG 9% 3% Schneider Electric 5% 12% Rockwell Automation 4% 15% Table 1. Industrial automation and drives in Vietnam – Market shared and CAGRs analysis 2018 (Source: SE’s internal report 2019) Via Industry Business, Schneider Electric Vietnam offers a wide range of industrial automation and drives products and solutions, as detail in Figure 1 below, for the automation and control of machines, manufacturing plants and industrial sites in Vietnam. It includes hardware, such as motion controllers (IDMOT), low-voltage variable speed drives (IDVSD), human-machines interface (IDHMI) operator panels, programable logic controllers (IDPAC and IDSAF), push buttons and signaling devices (IDSIG) and discrete sensors (IDSEN), as well as software for operations management and supervisory control systems. (2) Low Voltage VSD (IDVSD) is the main product line of Industry Business in Vietnam.
The product sales have accounted for more than 60% of business revenue with the growth rate is normally 25-30% year on year. (Source: SE’s internal report 2019) TIEU LUAN MOI download : skknchat@gmail.com 3 IDVSD – Low IDSAF – OEM Voltage Variable Safety & Speed Drive IDPAC – Process Controller IDHMI – Human Automation Control Machine Interface IDSIG – Control & IDMOT – Motion Signaling Control IDSEN – Sensors Figure 1. Industry Business products and solutions in Vietnam by product lines (Sources: SE’s Company Profile 2018) In 2018 Industry Business in Vietnam was structured, as Figure 2 below, into three sales teams (Industry Expert Distributor Sales Team, OEM & Medium Distributor Sales Team, and System Integrator & End-User Sales Team) and one Pre-sales & Marketing Support Team that help to support its five main customer types (aka. Sales Channel) in Vietnam market that are (1) Industry Expert Distributor customers; (2) Original Machine Manufacturer (OEM) customers; (3) Medium Distributor customers; (4) System Integrator customers; and (5) End-User customers.
Industry Expert Distributor (IED) channel is the main transactional sales channel of Industry Business in Vietnam. This channel contributes to around 60% of the business revenue with the sales growth rate normally 15-20% year on year. The IED channel is managed by the Industry Expert Distributor Sales Team that currently have 4 salespeople (aka. Account Manager) and 1 Sales Manager that take care of around 16 official partners for doing the business in overall Vietnam market.
TIEU LUAN MOI download : skknchat@gmail.com 4 Industry Business Sales Director Business Admin Pre-sales & OEM & Medium Industry Expert System Integrator & Marketing Distributor Sales Distributor End-User Sales Support Team Team Sales Team Team Figure 2. Industry Business Organization Chart 2018 (Source: SE’s internal report 2019) And the Pre-sales & Marketing Support Team is being responsible for supporting all three sales teams in terms of (1) technical support via two Product Application Engineers (one dedicated for IDVSD product line, and one dedicated for the rest product lines); (2) marketing support via two Product Managers (one dedicated for IDVSD product line, and one dedicated for the rest product lines). The team was managed by a Pre-sales & Marketing Support Manager, who do coordinate his team with other sales team to support their daily business and consult/ support the Sales Director and the Sales Manager of each sales team in terms of achieving both the short-term and the long-term business ambitions of Industry Business in Vietnam market. According to SE’s internal report and the business plan of Industry Business in 2018, despite of the excellent double-digits growth in 2017, the Sales Director of Industry Business and the Management Board of Schneider Electric Vietnam have not satisfied with the current performance of Industry Business in Vietnam market.
The reports show that Industry Business has normally contributed to around 22% of SE’s revenue all around the world, but in Vietnam it has just accounted for 10% currently, so there will be a lot of potential areas for developing Industry Business in the very attractive Vietnam’s industrial automation and drives market today. And the Industry Business’s TIEU LUAN MOI download : skknchat@gmail.com 5 Sales Director has defined a five-year business plan from the beginning of 2018 to help the business team double its contribution for Schneider Electric Vietnam by 2022. One-year after implementing that business plan, the sales’ growth rate of Industry Business was just nearly a half of the previous year achievement. The growth rate in 2018 was also 1% behind the worst scenario’s target that set for Industry Business from beginning of the year by the company and so that the result also too far away from its’ ambitions.