HAGL Furniture's Competitive Advantage

This assignment analyzes the competitive advantages of HAGL Furniture using the VRIN framework (Valuable, Rare, Inimitable, Organized). It examines specific aspects of HAGL Furniture's business model, such as its product quality, distribution network, and cost-saving strategies, to determine their value in creating a sustainable competitive advantage. The analysis highlights two main strengths: a wide distribution network and efficient production methods that prioritize material savings while maintaining high quality. The assignment also notes areas where HAGL Furniture faces potential challenges from competitors with innovative designs and a younger brand image.

ASSIGNMENT 2 FRONT SHEET
Qualification BTEC Level 5 HND Diploma in Business
Unit number and title Unit 32: Business Strategy (574)
Submission date Date received (1st submission)
Re-submission date Date received (2nd submission)
Student name Lê Ngọc Minh Đức Student ID GBH190514
Class GBH0807 Assessor name Nguyễn Thuỳ Linh
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I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I
understand that making a false declaration is a form of malpractice.
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Introduction
This assignment will explain the internal environments that directly affected the organization, in
particular the business strategy, using the SWOT analysis framework. In addition, the assignment will use
three relevant approaches, namely the value chain and value system, the benchmarking and the VRIN
framework, to define and evaluate the strategic capabilities. In addition, the study will continue to select
HAGL Furniutre to review and examine all of the above described issues.
I. The strategic capabilities of HAGL Furniture.
1. The value chain and value system of HAGL Furniture.
Figure 1 The mapping of value chain (Johnson, et al., 2017).
Primary activities:
Inbound logistics (supply chains):
HAGL Furniture’s main supplier is HAGL Wood Joint Stock Company - one of 5 corporations under the
HAGL Group, which is the leading manufacturer of wooden furniture in Vietnam market. HAGL Wood
Joint Stock Company currently owns 5 wood factories (including 1 factory in Laos) with a total capacity of

about 20,000m3 of finished wood products / year. Furniture production and trading is the oldest
traditional industry of HAGL and HAGL has many strengths that not all businesses have.
Currently, HAGL has a huge source of wood in Southern Laos (near Kon Tum province) with about
300,000 m3 of logs of all kinds. This is the source of wood from the reclaimed rubber plantations that the
Lao government licensed to HAGL as committed by the two sides. With the amount of wood mentioned
above, HAGL does not have to import wood like every year. This means creating profits for wood mills in
the years to come.
Operations:
The manufacturing and assembly of HAGL Furniture took place in their own factory with equipment
imported from Japan. Taiwan.
Fixed assembly - Storage of semi-finished products:
HAGL has a workforce of skilled, high-tech and experienced workers in charge of the assembly
department. Products after being completely assembled are checked for quality and stored in semi-
finished products.
Product finishing:
The product finishing process starts with rough sanding, polishing sanding - Priming (cooling) many times
until the surface of the product is processed really smooth.
Finishing sanding stage and 10 electrostatic paint lines operate regularly for finishing paint products of 4
factories in the company.
Packaging - storage of finished products:
After finishing painting process, an equally important step in determining each precision in every detail
of HAGL products is to check the finishing assembly after painting, which is the last step before moving
to quality control department confirms product packaging.
Outbound logistics (channel chains):

In the domestic market, HAGL is implementing a regional distribution strategy, each region (market) has
a wholesaler and a retail network.
Currently, HAGL has 4 wholesale distributors in the main regions: Northside, Midside, Tay Nguyen and
Southside with more than 70 stores, agents and showrooms. Specifically, in the South there are 24
stores, the Midside has 25 stores, Tay Nguyen has 5 stores and the North has 15 stores.
In addition, the Company also opened representative offices set up in several countries in order to
facilitate customers to easily access and transact with the Group as quickly and conveniently as possible.
In addition to maintaining and expanding export markets, HAGL Group is promoting the development of
the domestic market by forming a system of large-scale wooden furniture supermarkets in 5 urban
centers of Hanoi and Ho Chi Minh City. HCM, Hai Phong, Da Nang, Can Tho.
Marketing and sales:
In domestic market Hoang Anh Gia Lai is implementing a regional distribution strategy, each region
(market) has a wholesaler and a retail network. In foreign markets, the company sells goods through
signed contracts.
The company has mixed promotion policies such as advertising, participating in domestic and foreign
exhibitions, applying promotions, having a direct marketing team, sending catalog samples to new
customers.
After-sales services such as transporting products to home with a team of dedicated vehicles for each
factory, manual and assembly.
Various payment methods, especially online payment methods, facilitate the transaction process with
customers. In addition, flexible payment methods such as installment purchase, deferred purchase, and
bulk purchase enjoy discounted prices ...
Products and services (customer chains):

In a market economy, the consumption of products is done through many different channels whereby
products move from production and business enterprises to the end consumers.
Depending on the characteristics of consumed products and the relationship between enterprises and
consumers, enterprises using rational consumption channels have the following 3 forms of product
distribution:
Direct distribution channel: This channel has the advantage that businesses regularly contact with
customers, grasp market demand, and price situation thereby creating favorable conditions to create
sympathy and reputation for business. industry, reduce costs; new products are brought into
consumption quickly… however sales are taking place at a slow pace.
2. The benchmarking of HAGL Furniture
Definition: Benchmarking, is a tool of strategic management, that allows the organization to set
goals and measure productivity, on the basis of the best industry practices. It is a practice in
which quality level is used as a point of reference to measure items by making a comparison.
(Business Jargons, 2020)
a) Industry benchmarking

II. The VRIN framework of HAGL Furniture
Valuable Rare Inimitable Organized Competitive implications
Reliable and high-quality
products and services
Yes No Yes Yes Competitive Parity
Good reputation and brand
image
Yes No Yes Yes Competitive Parity
The product distribution system
is wide, spread evenly across
the country
Yes Yes Yes Yes Sustainable Competitive
Advantage
Maximum saving of production
materials but still ensuring
durability, rich designs.
Yes Yes Yes Yes Sustainable Competitive
Advantage
Website system between the
manufacturing company and
the stores, agents, showrooms,
and products is always updated
Yes Yes Yes Yes Competitive Parity
HAGL Furniture has 2 main Sustainable Competitive Advantage in this VRIO Framework.
1. The product distribution system is wide, spread evenly across the country:
Expanding showrooms, furniture distribution stores is one of HAGL's marketing strategies. In addition to
supermarkets in major cities such as Hanoi or Ho Chi Minh City, Hai Phong, Da Nang, Can Tho, the company also
focuses on expanding distribution channels in smaller cities and provinces towards 2020, products will be available
and spread in almost all cities across the country. Moreover, HAGL also signed a contract with Bach Hoa Xanh to
increase the strength of the distribution channel in one of the largest home appliance supermarkets in the country.
2. Maximum saving of production materials but still ensuring durability, rich designs:

The factory's products are partly consumed domestically through contracts of organizations and units, construction
contractors, restaurants, hotels, schools ... and mostly exported to countries such as UK, Netherlands, Germany,
Bulgaria, Ireland, the US and Eastern European countries. Thus, in general, the target market of the Factory is the
European market, this is a difficult market in terms of quality as well as design and design of the product.
This market selection for the Factory is a daring direction, it requires the Factory to always innovate, improve its
products and improve quality. Currently, the factory is also gradually increasing market share in the domestic market
to reduce transportation and export costs and increase profits for the factory.
The rest of the VRIO Framework shows that HAGL Furniture has parity competitiveness:
Reliable and high-quality products and services, can’t deny the fact this is an advantage for the company because
HAGL Furniture is benefiting a lot financially(valuable) from this factor. But the customer’s mindset can change very
rapidly in the long run. Especially when HAGL Furniture only focuses on wooden products such as tables and stools,
they can be very reliable on their playing field but when approaching a wider field, it’s a whole different business for
HAGL
Website system between the manufacturing company and the stores, agents, showrooms, and products is always
updated. Adaptations are essential in this modern day, HAGL has done a very good job in expanding coverage across
the country but simultaneously updating their store front experience to reach even more consumer nationwide. This
has put the reputation of HAGL Furniture to the highest rankings in Vietnam. But the problem isn’t about the
company, it’s about the new entrants to the market with a younger brand image, innovative store designs that could
be a very serious threat to HAGL in the future.