Đề tài Market research on plywood & notepaper

sfy the factory’s need in procession, it does not take more concern about finding material suppliers. In spite of paper procession, the factory still independent on consuming goods, however, producing and trading plans are made by its parent company. At the present time, the factory is making a deal with selling-agencies net, directly trading with end-users by its own distribution network has not been organizing yet. All these above reasons led to an indirectly affectation on splitting up the net profit into parts of Cau Duong factory. Lighter competitive situation of paper production compare to plywood manufacture, is probably a consequence of social’s strong demand that has not satisfied. However, in the first quarter of the year 2000, Vietnamese producers are facing up to unforeseeable losses owing to the sharp rise of paper-pulp price that indeed is still on the upward trend (the average increasing of 29%). Bai Bang Paper Company’s annual designed capacity is about of 55000 tons. It is estimated that Bai Bang would produce 65000 tons in 2000. In order to steady the output, it must import 10000 paper-pulp tons, take 15% of demand in this year, result to at least VND 23 billion decline of profit (Business and Marketing News - March, 2000). In this circumstance, paper branches are petitions for lessening the 10% Value-added Tax to 5% or correcting its selling price. Summary In order to exist and develop in competitive law of market economy, the important thing to every firm is to get exact information, determine the target consumers, finding potential market. Marketing research appearance aims to do these things for them. In addition, this activity provides serviceable information in helping the managers’ decision making process, strengthening the adaptation ability to the changes and consolidating the competitive power. The thing is that, the objective world is always in motion and ceaselessly change, so does the market. As an indispensable result, market research becomes an uninterrupted and regular activity in such unstable market. Marketing research is not only the most important factors, but also a starting point in building a firm’s strategies, in which they establish and implement business plans or perfect their market policy in order to gain the best result in business activities. For these above reasons, all the firms need to build up their own market policy, so that they can gather valuable and exact information for their activities. An enterprise’s effective activity can greatly depends on the consequence brought by market research. People consider it as the first step to run a business, to orient the way of developing, and to enlarge activities of a firm. With the purpose of providing connected information to the company, market research consists of determination the position of a firm in the market, a product or merchandise groups’ selling ability in an elsewhere market. Base on this foundation, the firm enhances its supply capacity to satisfy social requirement. In the economic market, the major substance of market research drives at studying and finding the development penetrable aptitude of the firm in the future. Chapter IIi Research methodology In this chapter, readers will clearly understand how the researcher did to meet the established goals. With the purpose of achieving the objectives this investigation, the study is implemented rely on both primary and secondary research. The first phase involved the review of desk-research of publications and analysis of the available publication and information by means of different sources: * Economic / Industrial reports on the sectors / sub - sectors to be studied * Previous market studies. * Some print matters: Vietnam Economic Times (VET), Vietnam Investment Review (VIR), Business and Marketing News. The second phase was the primary research that included questionnaires and face-to-face interviews to get feedback from the customer. However, the sample size was not enough to achieve the research objectives or to give a complete exact assessment. In arriving at an appropriate method of primary data collection, the researcher consulted these documents: * Principles of marketing * Marketing research on life insurance market in Hanoi (Tran Doan Kim, Boise State University, 1999) According to these documents, the researcher found that the most effective way is to conduct a survey using structure questionnaire, which aim to get the exact objectives of the study. Place of the survey: Eight urban districts of Ha Noi Sample size: Resulting from the time limited, the sample of this research is restricted by 30 respondents and 10 directly interviewers. Sample profiles: + Nationality: Vietnamese. + Sex: Approximately 50% male and 50% female + Occupation: Personnel in construction companies or having knowledge of construction. Sampling method: * With water resistance Plywood: Since plywood production closely related to construction activities, chosen respondents must be involving in building. The respondents’ number of each kind in this research area included: + 30 respondents were given questionnaires and time for answering last for 5 days. + 10 interviewees were chosen randomly. * With Note-paper processing: The market research on note-paper is fulfilled with the purpose of providing some base-line information about the present matter of taste of consumers and defines the future tendency. + 30 respondents were given questionnaires, including pupils in high schools, primary schools, students at universities and some pupils’ parents. Questionnaire design : After 3 days of studying models in textbooks and previous researches with the supervisor’s comments, questionnaires were sent to the respondents. Questions were divided into 2 parts: + General questions which asked the respondents to provide some personal information such as age, sex, occupation. + Specific questions which investigate customers’ feedback about the product. Most of the questions were made in a simple way so that respondents could easy to answer. The survey took about 10 days to complete. Chapter IV Results/findings I. Results. 1. Business activity analysis. Table 5: income statement Criteria Unit 1997 1998 1999 Density 98/97(%) 99/98(%) 1. Revenue VND 8076235783 8540633712 10415743802 +5.7 +22 2. Main products + Plywood m3 769 801 810 +4.2 +1.12 + Note-paper Tons 0 1250 1461 0 +16.8 3. Total cost of selling VND 265023651 367677486 416850793 +38.7 +13.4 4.Total management cost VND 397535172 427030642 542700619 +7.4 +27 5. Hand in State’s budget VND 727042653 762436012 805571496 +4.9 +5.7 6. Total capital A thousand VND 10607869 11748533 12453672 +10.8 +6 +Fixed capital 7481546 8032578 8822396 + 7.37 + 9.83 +Liquid capital 3126323 3715955 3631276 + 18.86 - 2.27 7. Labor force Person 293 298 300 +1.7 +0.7 8. Income per person VND 540000 584000 600000 +8.2 +11.3 9. Profit VND 18147568 17598482 35726563 -3 +103 (Source: Cau Duong Factory) As can be seen from the chart above, in 1998, Cau Duong factory has achieved growth ration in turn over with the increase of 5,7% compare to the previous year. For the pass 3 years, index of goods quantity and turn-over were on the upward trend; in concrete, owing to the procession of note-paper, a sharp rise in total revenue of 1999 (22% bigger than 1998) was made. Also, the amount of money that handed in State’s budget is on the rise with increasing rate of 4,9% in1998 and 5,7% in 1999. All these figures have shown that the satisfactory result on revenue not only contributes to State’s budget, but also puts up the incomes of labor force with a noticeable ratio (8,2% (1998) higher than 1997 and 11,3% (1999) bigger than1998). In contrast, the high total costs of the factory still remain problem. Especially, total costs of selling in 1998 of 38,7% are higher than they were in 1997 because of the more quantity of selling-goods, and the total management expense in 1999 exceeds its ratio in 1998 about 27%. If the growth rate of costs and growth rate of total revenues is put in comparison, the first seems much higher than the latter. The above problems have reflected on poor profit, it can be easily realized by seeing the figures from the table. For example, total revenue in 1998 was 5,7% was bigger than in 1997. However, the profit had got felt by 3%. In fact, high expenditures and business capital altogether have impacted the number of profit lost in 1998, which also affect on low competitive ability of Cau Duong factory. Doing business in such high cost, in order to strengthen effective activity, this factory is trying to find the way to step by step in minimizing the cost. A promising sign has appeared in turn-over report of 1999 with total revenue and total profit of 22% and 103% bigger than 1998. However, its financial scantiness limited the liquid asset mobilization for machinery and equipment improving, quality enhancing and product diversification. 2. Competition situation 2.1. Domestic competitors. Domestic rivals are the main opponents of Cau Duong factory, consisting of private economic sectors and some State-owned companies such as Tan Mai factory, Dong Nai timber factory, Dong Ha hardboard factory, etc. State-owned opponents: All of them located on the Central and South area of Vietnam, hence, their market is mainly in these provinces, included Hue and some provinces in the South of the Central region. They were built at the same time with the same size and capacity as Cau Duong factory in producing plywood. Their annual out-put capacity can produce 1100m3 of plywood and 10000 tons note- paper for each. However, in the domain of paper production, according to Vietnamese Paper Cooperation’s plan, they will be continued reformed and enlarged manufacture dimension in this year. Hence, they have more chances to strengthen their competitive ability against Cau Duong factory. At this time, their market-share of plywood production is about 33%, and note- paper of 28%. Particular trait of State-own antagonists. + Providing product with lower price than Cau Duong factory (From 5% to 10%). + Product’s quality is not as good as products of Cau Duong factory. + In field of paper production, they are direct branch companies of Vietnam Paper Cooperation. Thus, they have more chances to well-equip and to enlarge their efficiency for producing this product. * Private economic sectors: they have small size and faculty of production; specialize in processing Note-paper, normal plywood, which does not need precision and high technique requirement. However, they are huge-numbered factor in the economy with the market-share of 22% for note-paper and of 4% for water resistance plywood. Moreover, they have ability to meet narrowed and sub - market’s demand, together with satisfy the requirement of customers with scantily fund and do not require much about product’s quality. Private providers can use up their strong points in competition as follow: + Satisfying all kinds of customers and their requirement, due to providing low-price product (25% to 30% lower than Cau Duong’s price). +Quickly getting information, can probably a consequence of ample-net. +Tax-avoidance ability contributes to low cost price. +Buying material at low price, having enough input material for producing. They make purchase from various sources, mainly from illegal and adrift sources. Especially, in furnishing construction plywood, private sector can only supply goods to small and private construction projects…as a result of producing poor qualification products, tax avoidance and a situation of consuming goods without bills. All these reasons caused difficulties in consuming goods because, in big construction projects, constructors, who bought material without bill are not easy to have their projects checked and taken over. In general, product’s price of Cau Duong factory is usually from 20% to 25% higher than that in other domestic manufacturers, and its consuming activity now greatly depend on reputation of product’s quality. 2.2. Foreigner rivals. Major foreigner providers come from some Asia neighboring countries as Indonesia, Malaysia... (in producing plywood) and China (in providing note-paper). These products have their own competitive capability in quality and reasonable price (Only 5%higher than Cau Duong factory’s price of sales), owing to modern machinery, equipment, standard of management. In some cases, sensible price of imported product was given rely on the law breaking by importing illegal product or birbing officials for tax preferential. That made the local commodities less competition in price and quality. In addition, Vietnamese consumers often prefer foreign product to domestic one. Branch names are always considered in purchasing. Price and quality remain the most important competitive factors. Like the trend today, inland producers in general and authorities of Cau Duong, in particular, should make plan for market approaching, getting knowledge about consumers’ demand, in order to minimize the cost, to reform quality of product, to improve machinery. These works aim to use-up the resources, strengthen competitive ability of the firm against goods made by foreigners. Imported product become more attractive to local consumers than other interior one for some reasons: + Modern and well-equip facilities, equipment, etc. + Advanced technology, easy to form belief from consumers in quality. + Strong potential of finance have ability to adapt to the market changes + Deeply research on the market tendency, quickly catch up with consuming habit, satisfy customers in a fastest way In big contracts attended by foreign partners, domestic product is rarely used by reason of their idea of domestic product. Comparing to imported product, local products are a bit inferiors in quality, solidity and reputation. In addition, conception of Vietnamese people about foreign value that they make goods above also takes part in difficulties of domestic manufacturers. 2.3. Position of Cau Duong factory in the market. In order to assess activities of a company, people always put it in a concrete circumstance by defining its position in the market. Position of a firm always gives the most truthfully expression to its effective activity or success. With the superiority of large square of forest, wood-processing industry in Vietnam has fast expanded and been considered as a complex trade. Nevertheless, in recent years, this branch has been affected by some elements as: The government policy of resource prevention, result from large side of deforestation, short of material for producing because of forest resources exhaustion, etc. Besides, high competition has put pressure on activities of this branch. Holding market share of 26% (plywood) and 5% (Note-paper) there has been a great ability for the factory to make full use of present market. But running business in such a high competitive environment, the factory must find the way to develop internal force it self. They indicated the fundamental question to Cau Duong factory now as a deficient in absolute exploitation of its existing efficiency. In spite of high capability in producing plywood and note- paper, its annual output stand at 30% of designed capacity, about 800 m3 of plywood and 1500 tons of notepaper. This real state has made a drawback that is high lever of producing cost, which is resulted from high depreciation expense. In fact, due to its lower product quality, the selling-price of Cau Duong factory’s goods normally 15% cheaper compare to compare to imported one. However, its price is above other domestic products, especially from the private (about 20% to 25% dearer) Therefore, the factory is presently in competition with the two forces, price competition with local products and quality rivalry to foreign made goods. The main reasons for lacking-of competitive ability in Cau Duong factory: Backward machinery, cumbrous equipment (70% of facilities has been using since 1960s). Hence, its product is not better than imported goods, and ineffective action, waste in using time and material, defect of technique, etc. Standard of labor force’s knowledge in new technology assessment. Financial scantily causes restriction in technology renewable ability, production modernization, and quality enhancement. The more developmental the market is, the higher level it requires to enterprises. Thus, the main issue of Cau Duong factory at present time is trying its effort, aim to rationalize manufacturing process for meeting social and market demand, minimum the expense and gain the maximum profit. However, only by gathering exact information about the actual and potential market, this target can be implemented in order to reinforce its existing position and enlarge the market in the future. For this, it is indispensable to form a market research staff that helps Cau Duong factory to perfectly finish its target. In discussing about the competitive environment of Cau Duong factory, the researcher would like to show that its business surrounding is rather complex with plenty of competitors. Each kind has its own features but determinants are created by the firms it self. At present, Cau Duong’s less effective activity would seem to stem for insufficiency of a section which takes the lead in target selection and defining line of action. For example, The customer’s requirement satisfaction is implemented base on information about the market trend, purchasing habit, the firm can be successful if they answer all the determination questions for their existence. Marketing research presence in this firm is indispensable, its existence make the factory easier to have the sense of initiative in dealing with social trend, competitor’s strategies, market characteristic. Economic market application in Vietnam since 1989 has changed many things. Vietnamese enterprises no longer depend on the State’s protectorate. They need the way to affirm themselves. In high lever competition market, like other firms, Cau Duong factory’s actual difficulties will be surmounted base on real-strengthen promotion, shortcoming restriction, competitors researching, decision making... by market research activity. 3. Potential market. 3.1. Notepaper production. Presently, Cau Duong factory is processing note-paper for its parent company with the major market in the north provinces as Ha noi, Thai nguyen, etc. and some in the South: Da nang, Quy nhon... Annual total supply from 5% to 7% of market demand (about 75 million products), in which, approximately 57 million products appear in every new school year. According to these collected figures, total supply of Bai Bang Paper Company takes 30%. Product quantity of Cau Duong factory is restricted by machinery capacity, affected on paper processing; demand of its present market has not been satisfied yet. In some years coming, they intent to develop actual ability as well as enlarging its machinery capacity with the anticipatory production ability of 1700 products (increase 16,4% to 1999), that aim to make full use of present market. Besides, They are also planning to deeply infiltrate in Middle and South area market, lean on setting up small selling agencies net at the first step, which creates a basis for another construction plan. In ten years coming, a paper factory of modern technology will be built with the designed capacity of annual 30million product. In the field of high-class tissue paper production, including tissue paper, table-cover paper, toilet-paper...local manufacturers still open to foreign suppliers as Thailand, Indonesia, Japan, etc. due to their technique and production capital insufficiency. In this circumstance, Cau Duong factory will assemble a production process for these above products, which is used in hotel and airline. It is plan to begin to work in the third quarter of the year 2000 and put in operation in 2002. They estimated the initial investment about VND 100 billion with the capacity of 100,000 tons of product per years. 3.2. Market of plywood for construction. This product is very closely related to urbanization rate in Vietnam, the market for this product is very fragmented with many kinds of customer. However, its major consumers are construction companies and constructors such as Joint - venture LELEX- Ho Chi Minh City, Ha Noi Construction Cooperation, Corporation LICOGI 18... with the purchasing volume of 65% the total sales, the private and infrequent customers hold the rest 25%. In North area market, although Cau Duong factory only meet the social demand of 22% (result from abundant of competitors), chance to make full use of this present market is feasible in order to reinforce actual position and better satisfy its consumer’s need. As plan of this year, this factory is going to produce 1200 m3 of plywood in the next few years. Annual output rises of 20%-25%. In the market of Ho Chi Minh City, the consumer now tend to use local made goods, owing to the same quality and less expensive than imported (about 15%). Therefore, domestic wood is strengthening its price competitive superiority against imported one. Up to now, from 25% to 30% of product has been sold in Ho Chi Minh City, its become a potential large market to the factory. With annual demand stand at 60% of the whole country, Ho Chi Minh City is the most crowded and the fastest Leading City of economic growth in Vietnam. Because foreign investment projects mostly implemented and the fast speed of urbanization has changed Ho Chi Minh City the most modern city in Vietnam. In conclusion, the market enlargement strategies of Cau Duong factory should be carried-out by fully exploitation of the actual market and searching for the new market policy. 4. Political and legal factors. Political and legal institutions are considered as a foundation and frame, in which, people must obey. Its existence is not only in social category, but also is in economic activities. Political and legal environment consists of the government policies, political structure, and administration management system that effect on all fields of a country. Regulation and law content in legal environment can create a favorable or obstruction condition to marketing activities. (Truong, Marketing in business management, 1998) In Vietnam today, the real state of political and legal factors is that law corruption, rampant smuggling, confusing legal system... should have been recognized as the main factor, which discouraged foreigner investors and weaken the economy. The disadvantage of Vietnam legal system are shown in cumbersome provision, unstable, inexactitude...that have not attracted overseas businessmen and hold back domestic manufacturers. Vietnam’s political stability coupled with its leaders’ commitment to economic growth created a reason for economic factors to maintain a fairy optimistic of further economic growth prospect. The major instrument that the government uses to act upon economic activities is tax-policy. Vietnamese government has been applying a Value-added-tax policy to all the firms since 1999. This policy drives at getting more income to State’s budget with 10% worth of selling-price. Being affected by Value-added-tax, all kinds of product in Cau Duong factory has increased 4% in selling-price as a result of maintaining the old price before applying this policy. The main reason to maintain the price is that, this actual price is being in the minimum but it is still from 20% to 25% higher than other firms are. If Cau Duong calculated value-added-tax into its selling-price, it would far more expensive and affect to consume ability. Like the trend to day, Vietnam is on the way to attend the international economy, the government must initiated many concrete solutions to continued improve the investing environment. That consists of the policy system issue and perfection, qualitative delineation improvement, investing stimulation, State management effectiveness strengthen...(VIR, March 2000) However, according to Financial Ministry, Vietnam has just crossed out the tariff impose on some imported products in April 2000, following the international integration commitment. It means, protective tariff mechanism of State to domestic product has been come down and many foreign manufacturers will build up competitive intensity. In this circumstance, local enterprises and Cau Duong factory in particular must be more and more dynamic, active and try their best to be steady, to develop and enhance its competition power. 5. Demographic factors Vietnamese people well known for its population crowded, approximate of 80 million people with the annual average growth of 9%. The po