Business Model Analysis of Vinacafe Bien Hoa Company

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY


A Research Paper Submitted to FTMS GLOBAL ACADEMY, SINGAPORE In Partial fulfillment of the requirements For the degree of HIGHER DIPLOMA IN ACCOUNTING AND FINANCE

By Nguyen Thi Tuyet Ngan

Student ID: A1111025

(Month/ Year) 02/2013 Ho Chi Minh City, Vietnam

NGUYEN THI TUYET NGAN ID NUMBER: A1111025

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ACKNOWLEDGEMENT

At first, first, I would like like to extend my gratitude gratitude to my supervisor, supervisor, Mrs. Mrs. Duong for her her constructive advice throughout the course of this thesis. Secondly, I want to thank members of the faculty in Nguyen Tat Thanh Institute of International Education (NIIE). My heartfelt heartfelt thanks go to Mr. Khanh for his valuable valuable advice and his helpful helpful ideas in developing the research questions throughout the course of this thesis. And I would like to thank all my friends for their encouragement and enthusiasm. Finally, I want to thank my family members. Especially, I would live to give a thank you to my parents, who always prayed and encouraged me and helped me complete this work successfully


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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY TABLE OF CONTENT

Cover Title Page…………………………… Page………………………………………………………… …………………………………… ……… Acknowledgement……………………………………………………………… Table of content………………………… content……………………………………………………… ……………………………………… ………… Abbreviations…………………………………………………………………… List of Tables………………………… Tables…………………………………………………… ………………………………………… ……………… List of Figures……………………… Figures………………………………………………… …………………………………………… ………………… Abstract………………………………………………… Abstract…………………… ……………………………………………………. ………………………. Chapter 1: Introduction……………………… Introduction…………………………………………………… ………………………………… …… Chapter 2: Description of Vinacafe Bien Hoa………………………………………….. Chapter 3: Literature review…………………………………………………….. review…………………………………………………….. Chapter 4: SWOT Analysis and Evaluation…………………………………….. Chapter 5: Report and Recommendations………………………… Recommendations………………………………………. ……………. Chapter 6: Conclusions……………………… Conclusions………………………………………………… ………………………………….. ……….. Chapter 7: Learning Points/ Future Work……………………………………….. Work……………………………………….. Bibliography/ List of citations…………………………………………………… citations……………………………………………………


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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY ABSTRACT

According to statistics, the United States, Brazil, Germany is the third leading coffee consuming countries in the world, consuming about 37% of the world's coffee production. And it is worth noting that growth g rowth in coffee consumption between developed and developing markets differ. The traditional coffee consumption market in the U.S., Germany, and Japan maintained a relatively stable growth rate, and the market with strong demand as emerging markets: Brazil, Vietnam, China, Ch ina, Indonesia, the Philippines. Coffee consumptio consumption n per capita in 2007:

Kg/person World

1.3

Nordic

10.0

Western Europe

5.0

Brazil

5.3

U.S

4.2

Viet Nam

0.7

Indonesia

0.5 Source: World Resources Institute

Vietnam is the largest producer of Robusta coffee in the world. In particular, by domestic coffee consumption of the two countries with large export of coffee is Brazil and Indonesia should increase these countries to strengthen domestic demand service that coffee production for exports will decline. This is a considerable advantage for the Vietnamese coffee industry for our country currently exports around 90% of the total


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coffee production. For the Vietnamese market, the company Vinacafe Bien Hoa able to maintain its dominance in the market despite stiff competition from manufacturers the world's oldest coffee is Nestle (Nescafe product line ) and major player in the domestic company is Trung Nguyen (with brands G7) by well-known brand, customer loyalty and extensive distribution system. Currently, Vinacafe Bien Hoa distributed throughout the 64 provinces in the country with the line products such as coffee roasters, instant coffee and cereal nutrition Beside that, Coffee business not only VINACAFE own sake but to achieve the objective of contributing to to the economy, the country's society and create conditions that promote economic restructuring towards industrialization and modernization water. To make full use of land, labor, markets, capital of the People's coffee industry to promote effective development of the highest economic growth contributing to national economy. Business must be associated with the market and should consider expanding overseas markets and domestic survival conditions. Diversification of products, application of science and technology, advanced media management, to increase productivity, reduce costs, improve product quality is the key solution, throughout and the business development and an d also as a measure of victory in the competition. Contributing to a clean environment.


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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER 1: INTRODUCTION

As you know, every day millions of people drink coffee. It is gradually becoming the most popular drinks today. Coffee aroma, taste and flavor characteristics reminiscent, that many if not touching each cup of coffee, they will feel like missing something. Many people prefer unleaded coffee for its taste, but also has the following advantages: it makes us easier and more comfortable, it can help target fat in the body, coffee reduces the risk of asthma and allergy treatment, protection against liver diseases, it stimulates mental activity. According to statistics, Brazil is the largest coffee producing countries in the world (36% of total production in 2009), follow by Viet Nam (15%), Indonesia (8%) and Colombia (6%). Coffee harvest depends heavily on climatic conditions and natural properties of coffee- usually after a Service acquired, the coffee harvest for the following year would decline. And specially, economic development has accelerated the process of urbanization in many countries in the coffee and creates significant changes in the needs of the world’s coffee consumption. And that is a reason why I chose this topic: Business model analysis of Vinacafe Company. Vinacafe Bien Hoa was established in 1975 in the form of an acquisition of the first coffee processing plant in Viet Nam. The company’s product portfolio included coffee roasting (0.6% total revenue), instant black coffee (1.5%), 3 in 1 milk coffee and ginseng coffee (79%) and nutritious cereal (19%). The nutritious cereal products have right revenue growth, although coffee milk is still the main product in the company. With over 30 years experience in the industry, Vinacafe Bien Hoa becomes the largest coffee producer in Viet Nam and accounts for about 40% market share. A famous brand,


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customer loyalty and a strong distribution system, are competitive advantages characteristic of Vinacafe Bien Hoa. In Brief, although competing with coffee producers of the world’ oldest coffee company was Nestle (with product lines Nescafe) and formidable competitor in the country, Trung Nguyen company (with the brand G7), but Vinacafe Bien Hoa has maintained its dominance in the market.


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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER 2: DESCRIPTION OF VINACAFE BIEN HOA

History: Company Vinacafe Bien Hoa precursor as Coronel Coffee Factory was established in Bien Hoa Technology (now the Bien Hoa Industrial Zone 1) 1969. 1975: plant Coffee Coronel is renamed the name of Bien Hoa Coffee Factory and handed over to the General Department of Food Technology and Management, under the Enterprise Union Confectionery Milk-Coffee-1 (this is Vinamilk). 1988: Bien Hoa Coffee Factory switches directly under the Union of Vietnamese coffee factory (now Bien Hoa Coffee Corporation). 29/12/2004: Bien Hoa Coffee Factory transformation of business into Vinacafe Bien Hoa Joint Stock Company with a capital of 80 billion. 01/11/2006: Issue of shares for existing shareholders and offered for sale to the outside, to increase charter capital to 94.5 billion. 30/06/2007: Payment of dividends in shares, increase its charter capital to 113,398.6 million.01/07/2008: Payment of dividends in shares, increase its charter capital to 141,757.1 million. 25/06/2010: Payment of dividends in shares, increase its charter capital to 177,195.16 million. 30/10/2010: Issue of bonus shares to increase charter capital to 265,791.35 million. 28/01/2011: 26,579,135 shares of the Company are listed and traded on HOSE Scope of business: Manufacture, sales, import and export of coffee, tea, beverages and fast food products other Line of products and brands:Coffee Roasters: including coffee roasters Vinacafe Select, Vinacafe Super, Vinacafe Natural, Vinacafe Gold. Instant coffee: includes dissolved Vinacafe black, Vinacafe dissolving 3 in 1, Vinacafe 4 in 1. Cereals nutrition: include Vinacafe nutritional cereals, cereal nutrition for the yeast


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Development and investment strategy: Vinacafe Bien Hoa is instant coffee processing plant first of all Indochina. Currently the coffee processing plant the company has the largest processing capacity in Vietnam with a total capacity of about 1,200 tons of pure soluble coffee / year. By the end of 2009's instant coffee products Vinacafe Bien Hoa accounted for 40% of domestic market share, accounting for the largest share of coffee. Research and manufacturing company 4-in-1 coffee ginseng. And products consumed in the Korean market, China. Vinacafe distributors covering 64 provinces and cities across the country and the brand "Vinacafe Bien Hoa" registered trademark in 70 countries around the world such as United States, Canada, Europe, Pakistan, Japan, and South Korea... Sales Policy Vinacafe Bien Hoa stable than the competitors. Most of the company's material used are ordered according to the standards set by the company should give less volatile


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The organization chart of Vinacafe Bien Hoa:

General Meeting of Board of Supervisors Board of Management

Board Director

Deputy Board Director

Marketing Department

Business Departme nt

Deputy Board Director

FinanceAccountin g Departme nt


Advertisi ng Departm ent

Technical Departme nt

Departme nt about instant black coffee factor

Departme nt about milkcoffee factory

Organizati on & Administr ation Departme nt

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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER 3: LITERATURE REVIEW

The table summarizes some of the most prevalent definitions suggested for the business model. Author(s)

Definitions

Paper citing the definition

Year Timmers, 1988

The business model is “an architecture of Hedman & Kalling, 2003 the product, service and information flows, including a description of the various business actors and their roles; a description of the potential benefits for the various business actors; a description of the sources of revenues” (p.2)

Amit & Zott, The business model depicts “the content, Hedman & Kalling, 2003, 2001

structure, and governance of transactions Morris et al.,2005; Zott & designed so as to create value through the Amit, 2007; Zott & Amit, exploitation

of

business

opportunities” 2008; Santos et al., 2009;

(p.511

Bock et al., 2010; Zott & Amit, 2010.

Chesbrough & The business model is “ the heuristic logic Chesbrough

et

al.,

2006;

Rosenbloom,

that connects technical potential with the Chesbrough, 2007a, 2007b;

2002

realization of economic value” (p.529)


Teece, 2007, 2010

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Morris et al., A 2005

business

model

is

a

“concise Celia et al., 2007

representation of how an interrelated set of decision variables in the areas of venture strategy, architecture, and economics are addressed to create sustainable competitive advantage in defined markets” (p.727). […]It has six fundamental components: value

proposition,

customer,

processes/competencies, positioning,

economic

internal external

model,

and

personal/investor factors.

The business model is the plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs. In other word, it merely describes the way in which a company makes money. It is the accumulation of all of the sales, marketing, operations, administration, R&D, finance, and everything else that goes into a business-all the strategies and tactics-hat determine if the company makes money or does not make money. First, every entrepreneur can pick whatever business model they want. Second, eventually our efficient market will determine the superior business model for each industry. Those who innovate the best model for their industry will most likely win. Those who quickly adapt to this model will likely survive. And those who stay entrenched in their out-dated and archaic models will die.


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Every business chooses one business model is suitable for enterprise development. And Vinacafe Bien Hoa as well. Vinacafe gave the 10-year development strategy from 2004 to 2014. Based on the analysis of the demand for speed as well as coffee consumption increased rapidly, we can see the coffee industry has developed well in the past as well as promises rapid development in future. Here is the business model that the company Vinacafe Bien Hoa doing business to grow well

Business model includes 4 aspects: infrastructure, offer, customer and finance. Regional "infrastructure" consists of three elements: Capacity core: is the ability, or core competencies, the things that businesses can do the best, the best. These capabilities contribute to the competitive advantage of the business. Then, Network partners (partner network): unit includes partnerships with business. The last, Configuration value (value configuration): the structure of the enterprise that brings value to customers (products, services).


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Regional "offering" (offer) including an element: word of the declaration or statement of value (value Proposition): the affirmation of the value / benefits of the products and services that bring business to customers. Regional customers (customer), consists of three elements: Target (target customer): the customers towards business. Distribution (distribution channel): is the channel through which business to sell products and services to customers. Customer Relations (customer relationship): a form of connection, interaction, emotional cord between enterprises and customers. Financial sector (finance) consists of two elements: The cost structure (cost structure): the components that make up the cost of the business model. The revenue (Revenue streams): cash flows of the business. In addition, the business model of Vinacafe also focuses on the types of products to serve customers. Vietnamese coffee market today is fierce competition between Vinacafe Bien Hoa, Nestle, and Trung Nguyen. While, Vinacafe and Nestle to focus on market Trung Nguyen coffee, focus more on the roasted and ground coffee market. That's one part of the business model that the company created.


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Vinacafe Bien Hoa

Main products

Design

Nestle

Coffee

roasters, Coffee

instant

coffee, instant

Trung Nguyen

roasters, Coffee

roasters,

coffee, instant coffee,

cereal nutrition

cereal nutrition

1.200

1.000

3.000

38%

10%

capacity(ton/year) Market

share

of 40%

instant coffee

In 2012, the company achieved a growth in sales and profits. Company maintains a capital structure and properties quite reasonable at least in the situation now and avoids the risk of the use of financial leverage. The information on the effective use of company resources, ability to pay debt, stock form better than in 2008.The Company will review the investment policy for the coming year to use company funds more efficient and rational plan reserve materials imported from abroad as cream powder. In general, operations of the company were relatively good years. Also in last year the company also focused on implementing other important tasks: Annual Report 2012 Vinacafe -Taste of Nature Vinacafe. Step by step the company restructured towards specialization and division and implement decentralization clear, detailed position towards selfdetermination and take personal responsibility. This is the step by step application of governance practices best practices. Restructuring, brand repositioning, new step by step with pictures Vinacafe strategy of "think globally, act locally", focusing on core values: NGUYEN THI TUYET NGAN ID NUMBER: A1111025

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price natural values, values Vietnam. Prepare recognition system, focusing on the major labels, and upgrade the system designed to meet the needs of multi-product diversification in both vertically and horizontally. Better use of marketing tools to promote your brand performance results.


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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER 4: SWOT ANALYSIS AND EVALUATION 1. Strength

The strength of the coffee sector is a natural condition that Vietnam has. It was a hot and humid tropical monsoon climate, and it is suitable for the production and development of coffee. Particularly in South Vietnam under the hot and humid tropical climate suitable for Robusta coffee. North Vietnam with cold winters and rainfall should fit coffee Arabica. With favorable weather conditions, Vietnam is one of the largest Robusta coffee producers in the world. In addition, the price of Robusta coffee cheaper than Arabica Robusta coffee so popular in developed markets such as Brazil, Indonesia… Vietnam will have more advantages from Robusta coffee in the world market as the major exporting countries such as Brazil and Indonesia tend to reduce output Robusta exports to keep domestic demand service by type of coffee the average segment as soluble Robusta is more and more popular in emerging markets compared to expensive Arabica coffee roasters. This trend is creating favorable conditions for the Vietnamese coffee industry because now we are exporting to more than 90% of the total domestic harvest Robusta. Vinacafe Bien Hoa company brand and reputation for years. The company has loyal customers and distribution network throughout 64 provinces with more than 120 dealers. Vinacafe Bien Hoa Company is one company that has a staff of highly qualified and have the skills and experience to the coffee industry. When employees work in the company, they will be trained in the knowledge related to coffee. In particular, they are responsible, dedicated and passionate about his work. And when staff encounters these problems, the company will have direct management work and staff will be able to react acumen for the job.


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In addition, the main product is instant coffee market share in the country (more than 40% market share). And most of the material is taken from the company, longtime partners in the country. Companies maximize the advantages of modern technology, longtime production experience to boost coffee production. And production technology does not affect the environment. With over 30 years experience in the industry, Vinacafe BH has become the largest coffee producer in VietNam, accounting for about 40% of the market. Famous brand, customer loyalty and strong distribution system is the characteristic competitive advantage of Vinacafe BH. Instant coffee products of the company stand out with bold coffee flavors Vietnamese style than taste more prepared Western style of the competitors. Coffee recipes of Vinacafe BH very difficult to copy. So, although competing with coffee makers Nestlé is the world's oldest (with Nescafé product line) and formidable competitor in the company Trung Nguyen (with brands G7) but Vinacafe BH maintains its dominance in the market. In addition, one of the other edges of Vinacafe BH compared to its competitors is widely distributed network with two branches in the area and approximately 120 dealers across 64 provinces. Vinacafé BH introduced our products to the U.S. and South Korea and are two market acceptance. Tendency to expand the scope of activities, bringing the brand to the world is essential for the development of Vinacafe BH in the future, especially when the new plant goes into operation:


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2. Weaknesses:

One of the difficulties of the Vietnamese coffee industry in general and the company Vinacafe Bien Hoa in particular, that the product is not high quality. Technology harvesting, drying, roasting, drying coffee is made one by hand, are not equipped with the modern technology leads to the amount of groceries in much coffee reduces the quality and ensure the quality standards in the world. In addition to the quality of the coffee, we need to consider the infrastructure. For example, poor roads will increase transportation costs, reduce the purchase price at the various coffee buyers. And in particular, system testing and monitoring product quality standards are weak and backward. Countries with large coffee consumption seriously check and monitor the quality, origin and brand of merchandise, while in Vietnam; this work has not paid attention to. Besides, the brand Vinacafe Bien Hoa only attraction in the country that do not have international power. Annual export earnings at a very modest (about 7-8% of revenue). In addition, the company has invested heavily for communication, advertising products. NGUYEN THI TUYET NGAN ID NUMBER: A1111025

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Communications budget for only about 2% of total revenue. If the company does not give the product advertising, the consumer will not know the company's brand coffee Vinacafe Bien Hoa. Risks in business process are the volatility of raw material prices. Due to production costs accounted for 80% of the selling price should be any changes in the price of raw coffee and sugar prices have a significant impact on profit of the company. One of the important factors that affect the company, it is the staff. They can have negative work habits and lack of work experience. While the company facilitates academic staff, they do not care and that the lack of formal training, basically. Natural disasters, epidemics occur regularly and on a large scale with the level of damage is most severe central region and the Central Highlands. The lives of the majority of working people face many difficulties, unemployment in the urban high rise, high prices cause the purchasing power plummeted. 3. Opportunities:

In the current period, the coffee industry has been the interest of the State and has taken steps to facilitate development, reaching the international level. Since joining the WTO, Vinacafe Bien Hoa has created vast consumer market. In particular, Vietnam annually produce 1 ton of coffee, the country's second-largest coffee production in the world, after Brazil. However, coffee consumption was modest, accounting for about 6% of total annual production. This suggests that the coffee market potential in Vietnam is still very large. Moreover, the annual growth rate in Vietnam is high (8-10%). In addition, the WTO is a great opportunity for the coffee market. Because Vietnam will have access to the modern technologies more easily. That coffee can help our country with quality products, to meet the market demands stricter quality. Since that will improve profits


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bring the enterprise and the State. Along with access to modern science and technology, energy, management level and working style of employees will be improved to compete to survive in a competitive market fierce as today. In addition, the company Vinacafe Bien Hoa is building a new coffee processing plant with a capacity of 3,200 tons / year. When in operation, the total capacity of the company's coffee processing will increase to 4.080 tons / year. 4. The Challenge:

Joining the WTO, Vietnam has the opportunity to join the world market. However it is a difficult challenge. First, the WTO requires Vietnam to comply with the agreement on sanitary and technical measures. That would put the financial burden on small nontechnical and Vietnam. Second, trade barriers will be erected Vietnamese goods as a necessity in the global economy. In addition, we need to mention the tax policy. Vietnam is a country not tax-preferred to soluble products when engaged in traditional markets like the U.S., Japan, and EU ... (this tax is applied in Vietnam is from 2.6% to 3.1%). Next is the strategic development of the company's coffee Vinacafe Bien Hoa. Currently, the target set for the Vietnamese coffee industry in the years to not put them in the context of the overall development of the agricultural sector as well as the Vietnamese economy. As a result, received positive support from the development strategy of the national agricultural sector. For the domestic market, the price of raw material fluctuations, including coffee prices of raw materials, the prices of sugar, cream powder. These materials are mainly agricultural goods should be dependent on weather conditions. Since 2010, the price of raw materials has increased dramatically, while the selling price of the company is difficult to increase


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correspondingly. In addition, fierce competition in the coffee market in Vietnam, with many famous brands such as G7, Nescafe... Three big brands that dominate the domestic coffee market now are Vinacafe BH, Nestlé and the Central Highlands. In as Vinacafe BH and Nestlé focuses on market Trung Nguyen coffee, the market focus more on coffee roasters. However, after the Central Highlands acquired factory Vinamilk coffee in September / 2009, the company is likely to increase coffee production three-fold to 3,000 tons / year. Therefore, we expect the competition for market share between these companies will become increasingly fierce. Vinacafe Bien Hoa Main product

Nestle

Trung Nguyen

Coffee roaster,

Coffee roaster,

Coffee roaster,

instant coffee,

instant coffee,

instant coffee, cereal

cereal nutrition

cereal nutrition

nutrition

1.200

1.000

3.000

40%

38%

10%

Design capacity(ton/year) Market share of instant coffee


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Development SWOT matrix reduced: Strength(S)

Weakness(W)

∑

Like good coffee.

∑

There is prestige in Vietnam market

∑

by leading a unit of Vietnam's

Mainly by the office, companies, foreign subsidiaries in Vietnam.

∑

The great difficulty of capital.

coffee industry.

∑

Poor facilities, outdated technology

∑

Understand the Vietnam market.

∑

Made mostly raw form, not high

∑

Get support from the Government.

quality. ∑

The

research,

development

and

marketing have not been enough attention. ∑

Opportunity(O) ∑

Threat(T)

International integration, Vietnam

∑

Pressure from competitors.

is entitled to the benefits of trade

∑

Requirements for quality coffee

liberalization. ∑

Lack of skilled professionals team

The

stormy

growing. development

of

information technology. ∑

The demand for coffee in the world growing.


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Strategic

orientation

Strength- Strategic

Opportunity( SO)

orientation

Weakness-

Opportunity(WO)

Growth strategy focused on development Strategic consolidation and reorganization and market penetration.

to centralize the financial machine, take advantage of opportunities.

Strategic

orientation

Strength- Strategic

Threat(ST)

Growth

strategy

orientation

Weakness-

strategy

development

Threat(WT)

focused

on

development.

product Investment

production , diversify and improve the quality of export products


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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER 5: REPORT AND RECOMMENDATIONS

About Manufacturer: Company creates products with high added value content, competitiveness in foreign markets. Besides, Vinacafe also promote the strength of the modern industrial, longtime production experience to boost coffee production. And special production technology does not affect the environment. Marketing: Vinacafe Bien Hoa was the number one brand and a market share of Vietnam's largest coffee. In addition, the company also exports branded products Vinacafe. The company also focuses on effective distribution channels both inside and outside the country. And also understand the market and consumers by systematic research. Management and organization: the company to attract capital from outside and in particular, safety and efficiency in the financial investment Human resources: human resources strong enough. In addition, companies create motivated and employee development. In the medium term, Vinacafe Bien Hoa strive in the top 10 companies with the largest market capitalization Vietnam operating in the food processing sector listed on HOSE in 2015 In the long term, in addition to maintaining the core product is coffee with diversified products, the company will expand its business scope to other products in the food and beverage industry, serving the domestic demand and the world

Below is a table of the company's revenue structure Vinacafe Bien Hoa


25


.

Can see that coffee is the company's flagship product, accounting for 78%. And cereals account for 20% of total revenue in 2012. In the future, Vinacafe Bien Hoa tries to produce more coffee roasters to achieve high sales.


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VINACAFE BIEN HOA COMPANY THE BALANCE SHEET AT 31 DECEMBER 2012 THE BAL ANCE SHEET 31 DECEMBER 2012 CODE

NOTE

31/12/2012

31/12/2011

606.591.514.523

762.111.591.781

275.247.810.871

298.221.643.448

ASSETS Short-term Asset

100

Cash and Cash Equivalents

110

Cash

111

36.247.810.871

23.773.004.391

Cash Equivalents

112

239.000.000.000

274.448.639.057

Receivables

130

93.356.340.665

162.234.866.084

Customer Receivable

131

45.473.617.260

110.802.709.997

Prepayments to suppliers

132

46.233.637.411

48.738.881.714

Other receivables

135

1.705.716.110

2.693.274.373

Allowance for doubtful debts

139

(56.630.116)

-

Inventory

140

235.125.058.511

252.328.534.372

Inventory

141

237.524.985.122

254.728.460.983

Provision for im pairment of inventories

149

(2.399.926.611)

(2.399.926.611)

Other current assets

150

2.862.304.476

49.326.547.877

Short-term prepaid expenses

151

-

3.669.537.281

Value-added tax deductible

152

2.054.465.851

3.809.286.020

Other current assets

158

807.838.625

41.847.724.576

Long-term assets

200

526.596.112.341

55.953.111.735

Fixed Assets

220

521.226.687.073

55.953.111.735

Tangible Fixed Asset

221

145.292.224.060

33.881.155.340

5

6

7

Cost

222

294.992.911.341

173.572.644.029

Accumulated depreciation

223

(149.700.687.281)

(139.691.488.689)

16.917.097.709

17.319.885.750

Intangible Fixed Assets


227

8

27

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY Cost

228

17.319.885.750

17.319.885.750

Accumulated depreciation

229

(402.788.041)

-

359.017.365.304

4.752.070.645

5.369.425.268

-

5.369.425.268

-

1.133.187.626.864

818.064.703.516

Construction in process

230

Other long-t erm assets

260

Long-term prepaid expenses

261

TOTAL ASSETS

270


9

10

28


VINACAFE BIEN HOA COMPANY THE BALANCE SHEET AT 31 DECEMBER 2012(CONTINUE) THE BAL ANCE SHEET 31 DECEMBER 2012( CONTINUE) CODE

NOTE

31/12.2012

31/12/2011

CAPITAL LIABILIATIES

300

181.732.436.02 5

92.882.197.492

Short-term debt

310

181.732.436.02 5

89.863.136.392

Payable to seller

312

85.067.348.919

27.302.489.529

Advances to buyer

313

4.666.340.859

2.533.904.489

State tax payable

314

22.815.785.614

27.194.221.226

Pay employees

315

11.664.445.994

5.752.911.518

Accrued expenses

316

44.589.151.600

1.552.694.388

Payable, other payable

319

2.160.525.595

21.544.833.149

Bonus and benefit

323

10.768.837.444

3.982.082.093

Long-term debt

330

-

3.019.061.100

Long-term prevention

337

-

3.019.061.100

CAPITAL OWNERS

400

951.455.190.839

725.182.506.024

Capital ow ners

410

15

951.455.190.839

725.182.506.024

Shares capital

411

16

265.791.350.000

265.791.350.000

Surplus shares capital

412

29.974.241.968

29.974.241.968

Investment and development fund

417

17

193.925.282.879

137.456.077.032

Financial reserves

418

17

39.585.566.068

30.814.459.873

Undistributed profits

420

442.178.749.924

261.146.377.151

TOTAL CAPITAL

440

1.133.187.626.864

818.064.703.516

31/12/2012

31/12/2011

2.399.346.830

42.237.081.175

11

12

13

14

TARGETS OUT THE BA LA NCE SHEET

Currency


29


VINACAFE BIEN HOA COMPANY STATEMENT INCOME FOR THE YEAR ENDED 31 DECEMBER 2012 CODE

NOTE

2012

2011

Total revenue

1

18

2.141.776.188.691

1.586.025.888.575

Deductible amounts

2

18

(27.177.318.962)

(453.464.823)

Net revenue

10

18

2.114.658.869.729

1.585.572.423.752

Cost of goods sold

11

(1.530.525.587.622)

(1.193.485.460.589)

Gross profit

20

584.133.282.107

392.086.963.163

Financial revenue

21

19

17.377.976.589

35.466.973.189

Financial cost

22

20

(2.402.076.249)

(10.402.749.967)

of which

23

(508.800.000)

(3.567.025.719)

Selling expense

24

(254.799.624.784)

(170.264.287.348)

25

(41.611.558.271)

(32.184.921.309)

operations

30

302.697.997.392

214.701.977.728

other income

31

23.789.399.663

18.770.793.007

other costs

32

(318.128.588)

(13.085.529)

Enterprise cost management

Net profit from


21

30


Result from other activities

40

23.471.271.075

18.757.707.478

Profit before tax

50

326.169.268.467

233.459.685.206

Current tax expense

51

(27.927.220.906)

(22.347.148.981)

Net profit

60

298.242.047.561

211.112.536.225

Basic earnings per share

70

11.221

7.943


22

23

31


VINACAFE BIEN HOA COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012 CODE

2012

2011

CASH FLOWS FROM OPERATING A CTIVITIES Profit before tax

1

326.169.268.468

233.459.685.207

Depreciation

2

11.867.826.836

8.251.026.072

The provision

3

(2.962.430.984)

4.037.090.801

Foreign exchange losses unrealized exchange

4

-

436.480.000

Clear drop of fixed assets

5

4.533.282

-

Interest expense

5

(16.941.494.589)

(32.747.714.181)

Interest on deposits

6

508.800.000

3.567.025.719

8

318.646.523.012

217.003.593.617

assets

9

110.973.609.915

(88.147.256.005)

Changes in inventories

10

17.203.476.861

(57.994.086.381.)

Changes in accounts payable and other liabilities

11

82.405.882.078

(40.482.801.369)

Changes in prepaid expenses

12

4.720.185.183

(3.669.537.281)

533.949.676.049

26.709.912.581

Adju st ed f or lo ss es

Profit from operating activities before changes in working capital Fluctuations in accounts receivable and other current

Interest paid

13

(508.800.000)

(3.567.025.719)

Corporate income tax paid

14

(25.250.558.702)

(19.386.190.716)

Other costs for business

16

(12.024.337.395)

(24.974.091.035)


32


Net cash flow s from operating activities

20

496.165.979.952

(21.217.394.889)

Purchase of fixed assets

21

(483.566.028.626)

(11.766.278.151)

Proceeds from interest on deposits

27

17.584.486.097

31.320.481.042

Net cash flow s from investing activities

30

(465.981.542.529)

19.554.202.891

CASH FLOWS FROM INVESTING ACTIVITIES


33


VINACAFE BIEN HOA COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012(CONTINUE) CODE

NOTE

2012

2011

CASH FLOW FROM FINANCING ACTIVITIES Short-term Borrowings

33

-

18.122.657.000

Repayments of borrowings

34

-

(34.354.442.636)

Cash Dividend

36

(53.158.270.000)

(45.184.529.500)

Net cash flow s from financing activities

40

(53.158.270.000)

(61.416.315.136)

Net cash flow for the year

50

(22.973.832.577)

(63.079.507.134)

Cash and cash equivalents at beginning of year

60

298.221.643.448

361.737.630.582

cash equivalents

61

-

(436.480.000)

Cash and cash equivalents at end of year

70

275.247.810.871

298.221.643.448

Effect of exchange rate changes on cash and


5

34


Based on the business model of the company Vinacafe Bien Hoa, we can see the company's revenue dramatically. And here are 3 table notes the financial statements for the year ended 31/12/2012 Table 1: Revenue Total Revenue represents the total value of goods sold, excluding value added tax Revenue includes: 2012

2011

VND

VND

Total revenue Sales

2.141.776.188.691

1.586.025.888.575

(7.636.794.279)

(453.464.823)

(19.480.524.683)

-

2.114.658.869.729

1.585.572.423.752

Subtracting deductions Sales bounce back Sales decline Net revenue

Table 2: Revenue from financial activities

interest on deposits foreign exchange rates have

2012

2011

VND

VND

16.941.494.589

32.747.714.181

436.480.000

2.719.259.008

17.377.974.589

35.466.973.189

made


35


Table 3: Financial costs

Interest expense Foreign exchange losses

2012

2011

VND

VND

508.800.000

3.567.025.719

1.893.276.249

6.399.244.248

-

436.480.000

2.402.076.249

10.402.749.967

made Foreign exchange losses unrealized

The problem for VINACAFE in determining the development strategy is to go into depth, sustainable development. The development of VINACAFE as follows: Care, intensive area under coffee is, keep yields stable. Stop all development projects under coffee, not including the area planted to replace old coffee has to liquidation period. Strongly reduced the area under coffee production switched to aging some plants of high economic value such as cashew, rubber, pepper...Move some Robusta coffee areas are ecologically appropriate conditions to grow coffee as tea in Dak Nong Dakrlap, M'Drak (Dak Lak) and some areas in Gia Lai and Kon Tum. Type out of the coffee market of poor quality. Implementation of industrialization - modernization of harvesting and processing with special processes to produce premium coffee. Stable markets have to urgently expand foreign markets and encourage domestic consumption. Make quick work of equalization VINACAFE businesses.


36

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER 6: CONCLUSIONS

World Market Vietnam’s crop drought complicated, many risk reduction in crop yield. In addition, Indonesia crop harvested this month predicted a decrease of 16 to 30% compared to the previous season due to bad weather. So in this season supply most likely lower than the previous season. Arabica coffee prices on the market quickly. In addition to the supply of coffee is extremely low. So, the roasters are facing Robusta coffee coffee is cheaper and capable of mixing. Robusta are high bridge will boost the price increase. According to the World Association of coffee (ICO): "prices will increase in the future due to global coffee market will face a shortage large in adults vu2011/12 when there is no prospect that about the reserves are onus recovery record low today. ICO predicts the price of Arabica coffee will soon be up to 4 USD / lb and Robusta prices will hit $ 3,000 / ton. Domestic Market According to forecasts from the ICO: "the major producing countries are rapidly increasing consumption in 2011, while the supply is limited due to loss of the season.” Brazil to increase the consumption up 5% and Vietnam forecast to rise 370,000 bags consumed this year "will do rise, however much coffee market speculation that the coming months will be volatile with a downward trend up advantages due to higher prices and improved supply as Brazil and Indonesia harvest in the future. After more than 25 years of construction and growth, Vinacafe Bien Hoa has continually strive for improvement and has made important achievements such as increasing productivity, expanding markets, speed of import and stable life officers and employees, creating jobs for workers, especially in ethnic minority areas, remote ... to contribute to the economic development of the country especially in the area battle Highlands strategy.


37


Besides the achievements Vinacafe Bien Hoa Company also face many difficulties and challenges: capital, competition, market. By analysis of the results produced coffee business General coffee Company of Vietnam and Vietnam in recent years, the thesis also provided strategic direction for the total coffee export company in 2015. At the same time, the thesis also raises a number of solutions and recommendations for the direction of this business strategy to stabilize production and export promotion activities, expanding markets for General Coffee Co. Vietnam


38

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY CHAPTER7: LEARNING POINT/ FUTURE WORK

Organize, sort and business innovation. Increase productivity by intensive, focused care, harvesting, processing and storage of coffee. Promote cooperation, diversified investment products: coffee processing high quality, deep processing, and finished goods coffee .Survey research and market development Agriculture: Vinacafe Bien Hoa has developed a sustainable agriculture project over an area of 37,000 hectares, with coffee breeds for high yield capacity. The Corporation shall focus on recultivating on an area of 11,000 hectares for the next 5 years to replace the old field of subordinate units. Vietnam National Coffee Corporation plans to ensure a sustainable and effective agriculture for the national coffee industry, especially for a resource of coffee breeds. Processing Industry: VINACAFE has planned to construct for 8 national and international– scale processing plants of green coffee for export with modern technology in the world in Bien Hoa, Lam Dong, Tay Nguyen Coffee Import Export Investment Joint-Stock Company, Buon Ho, Krong Nang of Dak Lak, Gia Lai, Kon Tom, Tu Son (Bac Ninh). Each year, VINACAFE produces and exports about 300,000 tons of green coffee per year. The Corporation experts to 2015 construct some new instant coffee production plants to upgrade the capacity to 10,000 tons per year meeting the domestic and export demand. The current capacity is 4,000 tons per year.


39


Export: The Corporation shall try to maintain the export of 300,000tons of green coffee per year. Green coffee product of Corporation is manufactured by modern production line which shall increase the added value to the Vietnamese coffee. In near future, the Corporation shall apply new regulations on the selection of green coffee product for export on basis of geographical characteristics. In the meantime, VINACAFE shall promote the business with reputable roasted coffee manufacturers in the world in order to enhance the position of Vietnamese coffee. Eliminating the intermediate agents shall help selling the export coffee at higher price. Commercial and domestic consumption: In its developments strategy, VINACAFE plans to set up 2 new commercial centers in Gia Lai and Kon Tum. In Dak Lak, VINACAFE has started one commercial center in Buon Me Thuot city. Currently, the Corporation is planning to expand the domestic market share (which is currently 40%) with the goal to be the market leader in 2015.


40


Business plan in 2014 Targets

Unit

Implementation

Plan 2014

Versus 2013

in 2013 I-Major production Types of coffee

Tons

14.156

15.650

111%

Cereal nutrition

Tons

3.600

4.500

125

Types of coffee

Tons

14.727

15.650

106%

Coffee exports

Tons

1.277

1.250

98%

Cereal nutrition

Tons

3.658

4.500

123%

Person

450

480

107%

Million/VND

41.500

52.462

126%

Million/VND

1.021.419

1.227.097

120%

Million/VND

77.704

71.760

92%

Million/VND

874.386

1.129.097

129%

3.Profit before tax

Million/VND

147.033

98.000

67%

4.Profit after tax

Million/VND

136.005

90.650

67%

II-Major consumption

III-Labor and Income Total number of employees Total payroll IV-Business results 1.Total sales revenue Revenue export 2.Total cost of products


41


In the near future, Vinacafe BH can not have a breakthrough in profit because the existing plant has been operating near full capacity. Revenue growth rate will depend on sales of product lines and the rising price of grain, if any. Billion

2011

2012

2013

2014

Revenue

1.277

1.411

1.552

1.708

Net profit

136

150

165

181

Capital

266

266

266

266

Cash dividend

15%

17%

19%

21%


42

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY BIBLIOGRAPHY/ LIST OF CITATIONS

www.vinacafebienhoa.com.vn www.cafef.vn


43

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY APPENDICES

Any research questionnaires Project proposal


44

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY QUESTIONAIRES

1. Brand of coffee do you normally drink: ∑

Vinacafe Bien Hoa

∑

Trung Nguyen

∑

Nestle

2. Type of coffee you usually drink ∑

Latte

∑

Arabica

∑

Mocha

∑

Robusta

∑

Capuchino

∑

Espresso

3. The importance of coffee to your taste ∑

Important

∑

Does not important

∑

Very important

4. when do you usually drink coffee: ∑

The morning

∑

The afternoon

∑

The evening

5. Whenever drinking coffee, you usually drink: ∑

A small cup

∑

A large cup


45


6. Do you drink coffee to relax against sleepy? ∑

True

∑

False

7. How often do you drink coffee with? ∑

Your family

∑

Your friend

8. Do you have to distinguish between Vinacafe Bien Hoa and Trung Nguyen: ∑

∑

Yes No

9. Can you feel the difference of the first phase of coffee in two different brands? ∑

∑

Yes No

10. How much coffee you drink once a day? ∑

1 time / day

∑

Over 1 times / day

∑

1 times / week

∑

Over 1 times / week

∑

1 month / time

∑

In 1 month / time


46

BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY PROJECT PROPOSAL

I. Title of project: Business Model Analysis of Vinacafe Bien Hoa Company II. Academic Objectives: Applying theories for the project in practice Analyzing and evaluation the business model of Vinacafe Bien Hoa Company. Giving solutions for the company III. Brief outline Introduction ∑

If the market you are alone in the restaurant business, products, services, and customers are required to buy any anything else that you can do that, then you probably do not care and do not need to study this subject.

∑

In the current economy, companies need to have a business model consistent contempt for developing markets

∑

We need to understand and consider the serious implications that we can draw valuable lessons from the company

Description of chosen target companies: ∑

History

∑

Scope of business

∑

Line of products and brands

∑

Development and investment strategy

∑

The organization chart of Vinacafe Bien Hoa


47


Literature Review: ∑

Definition of Business Model

∑

Introduce Business Model of Vinacafe Bien Hoa Company

∑

Development strategy of Vinacafe

SWOT Analysis and Evaluation ∑

Strengths

∑

Weaknesses

∑

Opportunities

∑

Threats

Report and Recommendation ∑

About Manufacturer

∑

Marketing

∑

Management and organization

∑

Human resources

∑

The balance sheet and explain


48


IV. Scheduling management

Project meeting record

Project Proposal

Questionaire

Abstract Learing Point/ Future Work Conclusion

start date Duration

Report and Recommendation SWOT analysis

Literature Review

Description

Introduction

Acknowlegement

10-Jul-12 18-Oct12


26-Jan13

6-May13

14-Aug13

49


V. Identification Name: Nguyen Thi Tuyet Ngan Id Number: A1111025 Permanent Address: 93, route 54, ward 10, district 6, Ho Chi Minh City Email Address: [email protected]


50



51

Business Model Analysis of Vinacafe Bien Hoa Company

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