Đề tài Competitiveness in trading activities of Trading Scientific Technological Materials Co.,Ltd (Tramat Co.,Ltd)

differentiate their offers in whole or part. Competitors focus on market segments where they can better meet customer needs and charge more. In pure competition, many competitors offer the same product and services, without differentiation, all prices will be the same. No competitor will advertise unless advertising can create psychological differentiation, in which case the industry is actually monopolistically competitive. Entry, Mobility, and Exit Barriers: Industry differ greatly in ease of entry .It is easy to open a new restaurant but difficult to enter the aircraft industry. Major entry barriers include high capital requirements; economics of scale; patents and licensing requirements, scarce a firm enters an industry, it may face mobility barriers in trying to enter more attractive market segments. Firms often face exit barriers, such as legal or moral obligations to customers, creditors, and employees, government’s restrictions, low asset salvage value; lack of alternative opportunities; high vertical integration; and emotional barriers. Many firms stay in an industry as long as they cover tier variable costs and some or all of their fixed costs; their continued presence, however, dampens profits for everyone. Degree of Vertical Integration: Many companies benefit from integrating back-ward or forward (vertical integration).Vertical integration often lower costs in different parts of the value chain to earn profits where taxes are lowest .On the other hand, vertical integration may cause high costs in certain parts of the value chain and restrict a firm‘s strategic flexibility .This is why firms are increasingly outsourcing activities that can be done better and more cheaply by specialists. 1.1.4. Differentiation in competitive strategy A firm differentiates itself from its competitors if it can be unique at something that is valuable to buyers. Differentiation is one of the two types of competitive advantage a firm may possess. The extent to which competitors in an industry can differentiate themselves from each other is also an important element of industry structure. Despite the importance of differentiation, its sources are often not well understood. Firms view the potential sources of differentiation too narrowly. They see differentiation in terms of he physical product or marketing practices, rather than potentially arising anywhere in the value chain .Firms are also often different but not differentiated, because they purpose forms of uniqueness that buyers do not value .Differentiators also frequently pay insufficient attention to the cost of differentiation ,or to the sustainability of differentiation once achieved. Sources of differentiation: A firm differentiates itself from its competitors when it provides something unique that is value to buyers beyond simply offering a low price .Differentiation allows the firms to command a premium price, to sell more of its product at a given price, on the other hand, to gain equivalent benefits such as greater buyer loyalty during cyclical or seasonal downturns. Differentiation leads to superior performance if the price premium achieved exceeds any added costs of being unique. A firm’s differentiation may appeal to a board group of buyers in an industry or only to subset of buyers wanting traditional clothing; for example, through many buyer view Brooks Brother clothing as too conservative. Differentiation and the Value Chain: Differentiation cannot be understood by viewing the firm in aggregate, but stems from the specific activities a firm performs and how they affect the buyer. Differentiation grows out of the firm’s value chain. Virtually any value activity is a potential source of uniqueness. The procurement of raw materials and other inputs can affect the performance of the end product and hence differentiation .For example, Heineken pays particular attention to the quality and purity of the ingredients for its beer and uses a constant strain of yeast .Similarity, Steinway uses skilled technicians to choose the finest materials for its pianos, and Michelin is more selective than its competitors about the grades of rubber it uses in its tires. Value activities representing only a small percentage of total cost can nevertheless have a major on differentiation .For example, inspection may represent only one percent of cost ,but shipping even one defective package of drugs to a buyer can have majors negative repercussions for a pharmaceutical firm’s perceived differentiation .Value chain developed for purpose s of strategic cost analysis, therefore ,may not isolate all activities that are important for differentiation .Differentiation analysis requires a finer division of some value activities, while others may be aggregated if they have little differentiation impact. A firm may also differentiate itself through the breadth of its activities, or its competitive scope. Crown Cork and Seal offers crowns (bottle caps) and filling machinery plus cans. It thus offers a full line of packaging services to its buyers, and its expertise in packaging machinery gives its more credibility and access in selling cans .Citicorp’s breadth of activities in financial services enhances its reputation as well as allowing its sales channels to offer a broader product range. A number of other differentiating factors can result from broad competitive scope: Ability to serve buyer needs anywhere Simplified maintenance for the buyer if spare parts and design philosophies are common for a wide line Single point at which the buyer can purchase Single point for customer service Superior compatibility among products Most of these benefits require consistency or coordination among activities if a firm is to achieve them. Differentiation can also stem from downstream. Firm’s channels can be potent source of uniqueness, and may enhance its reputation, service, customer training, and many other factors. Firms can enhance the role of channels in differentiation through actions such as the following: Channel selection to achieve consistency in facilities, capabilities or image Establishing standards and policies for how channel must operate Provision of advertising and training materials for use by channels Providing funding so that channels can offer credit Firms often confuse the concept of quality with that of differentiation .While differentiation encompasses quality, it is much broader concept. Quality is typically associated with physical product. Differentiation strategies attempt to create value for the buyer throughout the value chain. 1.1.5 Cost Advantage in Competitive strategy Cost advantage is one of the two types of competitive advantage a firm may possess. Cost is also of vital importance to differentiation strategies because a differentiator must maintain cost proximity to competitors. Less the resulting price premium exceeds the cost of differentiating, a differentiator will fail to achieve superior performance .The behavior of cost exerts a strong influence on overall industry structure. The behavior of a firm’s costs and its relative cost position stem from the value activities the firm performs in competing in an industry .A meaningful cost analysis, therefore, examines costs within these activities and not the costs of the firm as a whole .Each value activity has its own cost structure and the behavior of its cost may be affected by linkages and interrelationships with other activities both within and outside the firm, Cost advantage results if the firm achieves a lower cumulative cost of performing value activities than its competitors. Defining the Value Chain for Cost Analysis The starting point for cost analysis is to define a firm’s value chain and to assign operating costs and assets to value activities .Each activity in the value chain involves both operating costs and assets in the form of fixed and working capital .Purchased inputs make up part of the cost of every value activity, and can contribute to both operating costs and assets. The need to assign assets to value activities reflects the fact that the amount of assets in an activity and the efficiency of asset utilization are frequently important to the activity is cost. For purposes of cost analysis, the desegregation of the generic value chain into individual value activities should reflect three principles that are not mutually exclusive: - The size and growth of the cost represented by the activity - The cost behavior of the activity - Competitor differences in performing the activity Activities should be separated for cost analysis if they represent a significant or rapidly growing percentage of operating costs or assets .While most firms can easily identify the large components of their cost, they frequently overlook smaller but growing value activities that can eventually change their cost structure. Activities that represent a small and stagnant percentage of costs or assets can be grouped together into broader categories. Activities must also be separated if they have different cost drivers, to be defined in more detail below .Activities with similar cost drivers can be safely grouped together. For example, advertising and promotion usually belong in separate value activities because advertising cost is sensitive to scale while promotional costs are largely variable .Any activity a business unit shares with others should also be treated as a separate value activity since conditions in other business units will affect its cost behavior .The same logic applies to any activity that has important linkages with other activities .In practice ,one does not always know the drivers of cost behavior at the beginning of an analysis ,hence the identification of the value activities tends to require several interactions .The initial breakdown of the value chain into activities will inevitably represent a best guess of important differences in cost behavior .Value activities can then be aggregated or disaggregated as further analysis exposes differences or similarities in cost behavior .Usually an aggregated value chain is analyzed first ,and then particular value activities that prove to be important are investigated in greater detail. 1.2. Practical Background Competitiveness of Vietnam 1.2.1. An overview of industry competitiveness in Vietnam Table 1: The Global Competitiveness Index 2008 – 2009 Country Rank Score Singapore 5 5.53 China 30 4.70 Thailand 34 4.60 India 50 4.33 Indonesia 55 4.25 Turkey 63 4.15 Vietnam 70 4.10 Cambodia 109 3.53 Source: The Global Competitiveness Report 2008 - 2009 After more than 20 years from 1986 to date, the competitive power of Viet Nam has improved. Now we set trade with more than 120 countries in the world. We have joined trade some economic organizations such as ASEAN, APEC, and WTO...GDP of Viet Nam has increased more than eight times from 2000 to 2009 (GDP in 2000 was US $31.35 billion and GDP in 2009 was US $277.700 billion). We are improving Vietnam industry competitiveness and Vietnam company competitiveness in both domestic market and international market. Many industries of Viet Nam are not only meeting the needs of domestic market but also play an important role in foreign market. Example: Vinamilk with high quality Products for domestic consumption and exports. Company’s turnover had increased to VND 10,613,771 million last year, 4.6 percent higher as compared to 2008. Industry of Vietnam is now facing with many disadvantages. Industry competitiveness is decreasing. Most of key exports from industries (such as Computer, cafe, rice, and sugar, paper....) are higher than those from the similar industries of the other countries in ASEAN from 20% to 30 %.However, some elements such as quality, sale, after sale services of Viet Nam industry are worse than those of other countries. Vietnam is also known as rice basket in Asia. In 2008 Vietnam signed a contract to export 5.1 tonnes, with 4.65 million tons; delivered at US $ 2.9 billion, more than double compared to 2007. Rice output in 2009 reached 38.9 million tons, up 116 thousand tons compared to 2008. In 2009 a "record year" for rice, but with rice price fluctuations making the value lower than that last year. Rice exports reached 5.8 million tons, turnover revenue of 2.6 billion, 22.6% higher in volume, but decreased 10, 34% in value. According to the Vietnam Food Association (VFA), the volume of our country's rice exports this year is 6 million tons the same as the record one in 2009, but turnover has increased, to the century record at 3 to US $3.2 billion. This means that rice prices will range between 500-533 dollars per ton, up by US $ 94.58 to US $ 127.58 per ton (23.33 to 31.47% as compared with that of the year 2009 is US $ 405.42 per ton .) Vietnam’s largest foreign exchange earners were garments and textiles, (US$1.2 billion, up by 32.9 per cent a year), footwear (US$290 million), and wooden products (US$27 million). Vietnam also faces a huge trade deficit with the US, US$1.967 billion in the first quarter this year. According to Customs statistics, exports in 2009 of the country's aquatic products reached 1.216 thousand tons, worth 4.25 billion dollars, down by 1.6% in volume and 5.7% in value as compared with the year 2008, the first decline after 13 years. However, this is still considered a positive outcome for the export business, in the context of the difficulties in raw materials, markets, technical barriers and tariffs of the importing country. In 2009, Vietnam exported 85 types of fish products to 163 markets.The number of export products and markets all increased as compared with 2008, thanks to the flexibility of diversifying products and markets of the exporting enterprises. In particular, frozen shrimp volume accounts for the highest proportion (39.4%), catfish, squid (31.6%), octopus (6.45%), tuna (4.26%), dry goods (3.77%) sea fish and other marine products accounting for 14.5%. 1.2.2. An overview of company competitiveness in Vietnam Obviously, the quality and competitiveness in terms of management is still poor. Team managers and company managers are still short of knowledge and management skills. The number of companies with good directors, high professional level and management capacity is not many. A large proportion of business owners have not been trained in business and management in lack of economic knowledge - social and business management skills, particularly the weak capability in international business. As a result they are mainly engaged in common business operations according to their management experience, with short strategic vision, poor knowledge on such aspects as organizational management, competitive strategy, brand development and use of computer and information technology. A number of businesses open only because the company is available and interested in business and capital, without knowledge and skills in business. Consequently they have all kinds of risks leading to failure. Secondly, it is low labor productivity, and high in production costs weakening the competitiveness of companies. Comparisons of the cost of products made in other countries such as China, Thailand, Malaysia, Philippines, ... the products produced by companies of Vietnam at the cost 1.58 to 9.25 times higher although the price of labor is lower as compared to that in other countries in the region. Thirdly, the competitiveness in financially is still weak. The scale of capital and financial capability (including the owner's capital and total capital) of many businesses are small, and with poor performances, without sustainability. The number of small companies is extremely high. Vietnam has more than 72. 000 companies which are operating, but the number has increased mainly on a very small scale. The number of companies with capital of less than VND 1 billion has accounted for 44.1%, of the total number of companies, employing less than ten workers accounting for 46.6% of the total number of workers employed. Fourthly, weakness of brand has contributed to weak competitiveness. Most of companies in Vietnam have not built strong brands, its prestige and competitiveness has not been confirmed in the domestic, regional and international market. Many companies in Vietnam still do not have strategy of brand-building, creating a reputation for quality products and services, so competitiveness is weak. According to survey data of VCCI, only 10% of businesses has often explored foreign markets and it is done mainly by large companies, state – owned companies and companies engaged in import and export ; Approximately 42% of businesses not often explore foreign markets, about 20% of businesses mainly small and medium enterprises, there are no activities in exploring foreign markets. International integration has forced companies to improve competitiveness high enough to stand in the market. The capacity of the company management is one of the most important factor affecting the decision to the competitiveness of companies. Entrepreneurs today have the higher capacity to synthesize than five years ago, in which special attention should be given to fostering knowledge and skills in building and developing brand, competitive strategy . Chapter II: The situation and competitiveness of Tramat Co.,Ltd. 2.1. An overview of Tramat Co., Ltd 2.1.1. Establishment and development process of Tramat Co., Ltd, Trading Scientific Technological Materials Company (TRAMATCO), registered address at 12 Hang Duong Street - Hoan Kiem District - Hanoi City, was established under the licence of business registration No. 040932 - registered change for the sixteenth time on October 31st 2007 by Hanoi Department of Planning and Investment. TramatCo was established in June 1993 with Legal Capital: VND 60.000.000.000 billion. TramatCo is proud of being a company with a long tradition in the chemicals sector. The company specializes in importing and supplying chemical raw materials to many industries such as: Painting, Plating, Ink, Plastic, Rubber, Textile Dyeing, Construction, Cosmetics, etc.. Company is the exclusive agent in Vietnam for its Agilent Technologies analytical equipment (gas chromatography, liquid chromatography, gas chromatography mass spectrometry, liquid chromatography mass spectrometry, etc ...). We specialized in domestic trade and supplied chemical, electrical, and scientific technological materials to the northern Vietnamese market. We currently sell a variety of laboratory, research and experimental products. Our clients include: Universities, Research Institutes, Scientific Centers and other consumers who demand our products. The line of communication throughout the company is to provide our customers with high quality products with excellent after sales service, completely meeting the research and application in current practical situations of the country. The company holds regular seminars and training courses to enhance customer awareness of the products that companies provide. Over the years, this branch has been growing, improving, and has expanded into the global market. They have built and maintained strong business relationships with their consumers and suppliers. TramatCo trademark has become synonymous with great quality and great service. They are determined to satisfy the needs of their customers. Main offices: In Hanoi: 12 Hang Duong Street - Hoan Kiem District Tel. 84 - 4 - 3828 1631/3928 2360 - Fax.84 - 4 - 3825 1746 In Ho Chi Minh City: 6B Nguyen Canh Chan Street - District 1 Tel: 84-8 3920 1183/84 - Fax: 84-8 3920 144 TRAMATCO's staff: TramatCo’s staff includes 81 in the North and 19 in the South; most of them have graduated from universities. 20 of them have obtained MSc or PhD degrees from prestigious universities in Vietnam and abroad (Australia, Japan, Russia, France, etc...) in Physics, Electronic and Mechanics, Chemistry. There are regular training programs in Singapore, Australia, Belgium, Germany, Japan, USA, and UK for sales and engineering. The engineer team of 22 engineers, including 15 in the North and 7 in the South, specifying in warranty, training and application services for their equipment. All of them are trained with specialists from manufacturers in Singapore, Australia, the Netherlands, Belgium, Germany, France, Japan, the United States of America, Thailand, Malaysia, and China... 2.1.2. Organizational structure of Tramat Co., Ltd. Tramat Co., Ltd consists of: Head Office is located in Hanoi City Ho Chi Minh Branch in Ho Chi minh City responsible for South market. Chart 2: Structure of organization of Tramat Co., Ltd General Director Sale Production Accounting Customer Service Warranty Administration Source: Internal Source General Director: Establish quality assurance policy for company Support human resource, finance resource, general managements... Ho Chi Minh Branch Manager: Establish quality assurance policy for Ho Chi Minh Branch to make it suitable with Tramat quality policy Support human resource, finance resource, technology Sale and Marketing: Fulfilling the needs of customers Care about quality management of competitors Helping customers in product specification. Co-operate with related department in customer complains Preparing contracts Training staff Customer service: Supply services and communicate with customer Responsible for Services customer complaints Shipment Training staff Administration: Identify the demand of ability of staff Motivate staff in work Organize Training Assure normal communication by telephone, fax... Guaranty: Establish input and output control management Responsible for customer complaints related to product quality Wrong product prevention Training staff Accounting: Using effective IT in work Training staff 2.2. Trading activities of Tramat Co., Ltd. 2.2.1. Trading activities Starting as the dealer for some famous chemical trading companies, TramatCo’s trading activities after 15 years of operation have been expanded to diversified fields, including: Supplying scientific and technological materials and equipment, including medical equipment, chemical analysis equipment, laboratory equipment, chemicals, etc... Supplying chemicals. Transferring hi-tech procedures. Supplying consumption goods. Services: Specializing in supplying scientific machinery, lab instruments, glassware, chemicals, and trial productions for experiments, education, and scientific research, Their experienced engineers can assemble, maintain, and repair a variety of experimental equipment and machinery. Handling all services pertaining to the importation and exportation of scientific materials. Fulfilling any orders that the customers make speedily, efficiently, and reliably. International relations: TRAMATCO has been appointed as the sole distributor for many famous and prestigious companies in the world dealing in Medical, Chemical, Glassware and other Scientific Equipment including: Agilent Technologies (Hewlett Packard) (USA): Chemical Analysis Equipment Bruker ( Germany): Chemicals and Equipment for Laboratories Whatman, Parker Hannifin (USA): Chemicals and Equipment for Laboratories Gerstel GmbH & Co. KG( Germany), MARKES (UK), WASSON (USA): Analytical Equipment for Laboratories JunAir International A/S ( DanMark): Analytical Equipment for Laboratories Pickering Laboratories Inc. ( USA): Analytical Equipment for Laboratories Philips Medical System (Formerly HP - Agilent Technologies): Patient Monitoring Products and Ultrasound Blease Medical Equipment Limited (UK): Anesthesia Machine After-sales Service Assurance: All the equipment TramatCo supplies are under 12-month maintenance of standard life cycle since the signing document of performance and productivity of the equipment (exclusive of some certain cases, duration of insurance will be prolonged), and fully installed, operated and tested by our technicians. Apart from guaranteed equipment, technical details will be examined every 03 months. TramatCo ensures to supply spare parts and accessories for 10 years after guarantee. The popular spare parts available in the stock will be provided to the user within 01 week. As for special spare parts: To customer’s requirement, they will deliver goods at the soonest time, not over 04 weeks. Experience in implementing contracts in territory: TRAMATCO is an established supplier for hospitals, universities, scientific research institutes, research centers, Company, etc... Throughout Viet Nam. Table 3: Some Customers of TramatCo., Ltd Item Name of Institute Total Value ( USD) Vietnam Institute for Tropical Technology and Environmental Protection 387,836.84 Institute of Agricultural Science for Southern Vietnam (IAS) 352,58.00 ADB Project - Preventive Health System Support Proje