National Economics University: SK-II Beauty Store Project Analysis

This project from National Economics University provides a comprehensive cost and benefit analysis for establishing an SK-II beauty store in Vietnam. It begins with an introduction to the company background, including its history, current situation, and future orientation. The project delves into the Vietnamese cosmetic market, analyzing market trends and SK-II's market position. A detailed business strategy section includes a SWOT analysis and outlines the project's orientations, including location and human resource strategies. The core of the project involves a thorough cost and benefit analysis, covering fixed investments, working capital, and financial performance metrics like depreciation and revenue assumptions. It presents economic indicators, project cash flow statements, and concludes with an overall assessment of the project's viability, making it a valuable resource for students studying international business and project management. The project analyzes financial performance, including depreciation, revenue, and cost assumptions, and provides economic indicators and a project cash flow statement to assess the project's viability.

NATIONAL ECONOMICS UNIVERSITY
ADVANCED EDUCATIONAL PROGRAM
~~~~~~*~~~~~~
COST AND BENEFIT ANALYSIS
SK-II Beauty Store Project
Class : Advanced International Business 61A
Lecturer : Assoc. Prof. Dinh Duc Truong
PhD. Nguyen Dieu Hang
Student Name : Duong Ha Phuong – 11194193
HA NOI , 10/2021
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TABLE OF CONTENTS
I. Introduction
1. Company background …………………………………………………. 2
2. History and current situation ………………………………………….. 2
3. Future orientation ……………………………………………………... 4
II. Market Analysis
1. Vietnam cosmetic market ……………………………………………... 5
2. SK-II market in Vietnam …………………………………………….... 6
III. Business Strategy
1. SWOT analysis ………………………………………………………... 6
2. Orientations …………………………………………………………..... 7
IV. Assess Project's Impact on the Surrounding Area …………….10
V. Project Benefit and Cost Analysis
1. Total fixed investment ………………………………………………... 10
2. Working capital ……………………………………………………..... 14
3. Ba Dinh showroom construction capital ……………………………... 14
4. Funds for project implementation …………………………………..... 14
5. Capital resources ……………………………………………………... 15
VI. Analyze Financial Performance
1. Depreciation of fixed assets ………………………………………….. 16
2. Assumptions of revenue …………………………………………….... 17
3. Cost Assumption ……………………………………………………... 18
4. Economic indicators of the project …………………………….……... 21
5. Project cash flow statement …………………………………………... 22
VII. Conclusion ……………………………………………………………. 24
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I. INTRODUCTION
1. Company background
 Company’s name: Beauty Store Company
 Cooperation company: SK-II Company
 Headquartered: Japan
 Founded: 2016
 Legal representative in Japan: Hirokazu Kore-Eda – Director
 Legal representative in Vietnam: Mrs. Phung Thi Hao – Director
 Type of business: Skin care
2. History and current situation
2.1. History
Beauty Store was established on April 21, 2016 with the main purpose of bringing
beauty and youthful life to Vietnamese women. Understanding that beauty is an
endless need and cosmetics the way for women to reach true beauty, the company
decided to choose Japanese SK-II products to replicate in Vietnam – which is famous
with ingredients of natural origin. The company has nearly 5 years operation and
experience as an online shop selling hand-carried Japanese goods, currently orienting
and expanding genuine showroom stores affiliated with SK-II Japan.
2.2. Main products
For face
SK-II Facial
Treatment Mask
SK-II Whitening
Source Derm Revival
Mask
SK-II Skin Signature
3D Redefining Mask
SK-II Signs Eye
Mask
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Serum SK-II RNA
Radical New Age Serum SK-II
Genoptics Aura
Serum SK-II Facial
Treatment Repair C
Serum SK-II LXP
Ultimate Perfecting
SK-II R.N.A Power
Radical New Age
SK-II Cellumination
Deep Surge EX SK-II R.N.A Power Eye
Cream Radical New Age
SK-II LXP Ultimate
Perfecting Cream
SK-II Facial
Treatment Essence
SK-II Facial
Treatment Clear Lotion
SK-II Atmosphere Airy
Light SPF50+/PA++++
Facial Treatment
Cleansing Oil
For body
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SK-II body lotion SK-II Skin Rebooster SK-II whitening source
derm brightener
Other products
Make-up products
Pressed Powder Powder
SK-II Advanced Protect
Powder UV
Foundation Powder SK-II
Clear Beauty Artisan
Brush Foundation Moist
SK-II Color Clear
Beauty Powder
Foundation
Accessories
Face Massage Stick
SK-II Magnetic Booster Makeup brushes SK-II Makeup sponge SK-II
3. Future orientation
In the following time, our company will promote business development and exclusive
distribution of domestic SK-II cosmetic from Japan to Vietnam. In the first phase, the
company's main development goal is to open official showrooms in Hanoi - the capital
of the country and a city with a dynamic and developed economy.
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II. MARKET ANALYSIS
1. Vietnam cosmetic market
Before 1997, the Vietnamese cosmetic market had not received much attention
because women's income was still low and their budget for cosmetics was too meager.
The skin care and makeup products on the market at that time were mainly smuggled
goods from China (cheap brands) and domestic goods, a few foreign ones. However,
currently, the Vietnamese cosmetic market is very potential according to the forecast
of Nielsen Vietnam (the world's leading market research firm).
The cosmetic market in Vietnam is divided into 4 main levels:
 Level 1: The noble line (lady): Currently on the market is very rare, not widely
sold in commercial centers, supermarkets but only in spas and beauty salons.
Although the sales are small, the sales of the lady line are very high because the
price is at least 18-20 million VND/skin care set (including 3 bottles of skin
care, rose water and facial cleanser), not to mention using other products. .
Some lady brands are Wigleys, Clinique, Estee Lauder, Lancome…
 Level 2: High-class cosmetics: To be at this level, manufacturing enterprises
must be located in places with certified cosmetic scientific research institutes.
There are only 4 countries in the world that have this institute: France, Japan,
and Switzerland. Some high-class brands on the market are Shiseido, Carita,
L'Oreal, Kanebo, Clarins, Pupa...
 Level 3: Brand name cosmetics: This line is currently occupying a large
amount in Vietnam. Some typical grand name brands are DeBon, Amore,
Maybeline, Nevia…
 Level 4: Ordinary goods such as Pond, Hezaline, Essance, Rohto... and
Vietnamese brands such as Lan Hao (Thorakao), Lana, Kao (Biore), Saigon
cosmetics... With a market of 90 million people, people's income People's
population is constantly improving, especially women (accounting for more
than ½ of the population) are increasingly participating in social activities,
accessing knowledge, science, fine arts, art... so the demand for cosmetics
constantly increasing, from perfume, lipstick, makeup powder to lotion - hair
care, so Vietnam is a huge market for domestic and foreign cosmetic
manufacturing and trading enterprises.
SK-II products belong to level 2: high-class cosmetics with diverse price models.
Market trend
Nowadays, natural beauty cosmetics are receiving the attention of girls, this is also a
new trend in the cosmetic industry. After a period of neglecting available natural
ingredients, we have paid more attention to the valuable and healthy effects of skin
care products and cosmetics of natural origin. And almost in the field of cosmetic
chemistry alone, now all products derived from nature are gradually regaining their
position with higher development.
The advantages of natural cosmetics:
- Completely natural: Extracted from flowers, fruits, plants, minerals...
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- Safe use: Natural cosmetics are strictly tested and verified by dermatologists,
cosmetics are not chemically processed, do not contain synthetic and artificial
ingredients.
- High compatibility with all skin types: Compatibility with many skin types and high
skin safety index, for each skin type you can easily find the right cosmetics.
- Wide range of leather products
- Affordable: Except for cosmetics extracted from rare materials, natural cosmetics are
not expensive, suitable for all subjects.
- Not tested on animals: It is a plus point of natural cosmetics in terms of
environmental protection and human life.
- No side effects: The natural ingredients used in these products are guaranteed not to
cause any side effects; They don't clog pores, don't dry out or make skin oily, don't
irritate... so you can use them whenever you want.
SK-II in Japan is famous for its natural product line, which has good effect and no
side effects.
2. SK-II market in Vietnam
Currently SK-II cosmetics have a certain number of customers in Vietnam, but the
products of this brand line have not been officially available in the market and still
depend mainly on portable, floating and wholesale goods. directly from the wholesale
system with the title "Japanese domestic cosmetics". Currently, there is a unit to buy
wholesale directly from Japan, avoid taxes in Hanoi, also set up a showroom, but there
is no official cooperation with our distributor in Japan SK-II. Faced with great demand
and customer preference for SK-II product lines, SK-II Company will conduct
exclusive distribution and development of this brand in Hanoi.
III. BUSINESS STRATEGY
1. SWOT Analysis
Strengths Weaknesses
 Good products with power results:
SK-II produces quality premium skin care
products which are largely successful as
seen from their market share in the
fragmented markets
 Having a strong brand image and being
highly recognisable
 Loyalty customers:
Majority of the SK-II current users adore
the products and are very loyal to the
brand
 Niche market:
By capturing only the top of the pyramid,
SK-II is will not be able to maximise its
market share as there will be many
consumers unable to afford their products.
 Narrow range of product:
Khách hàng không tìm được sản phẩm họ
muốn mua của hãng SK-II, làm mất khách
hàng
 Absence of retail flagship store:
Unlike some of its competitors, SK-II does
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 Being a child brand under Procter and
Gamble also ensures strong marketing
support and other benefits associated
with the parent company such as
perceived quality and assurance since
Procter and Gamble is big and famous
international fast-moving consumer
goods (FMCG) company.
 High recognization
not own a flagship store. By operating
solely via departmental stores and specialty
stores like Sasa and Sephora, their brand
exposure is also much lesser. Competition
in departmental stores and specialty stores
are also tougher as more brands are
available for comparison.
Opportunities Threats
 Men industry:
SK-II can hop on the bandwagon and
launch a new product line targeting men.
Skin-care products targeting men are
becoming more widespread in the recent
years and this represents a new market
segment that is yet to be saturated.
 Lauching make-up series:
SK-II has also recently launched a new
product line offering make-up, which
contains their trademark Pitera, known for
their skin care properties. Expanding into
a currently unprovided market serves as an
opportunity for SK-II to better serve its
existing consumers and reach out to gain
an even wider market share.
 Collaboration:
SK-II has also rolled out their exclusive
boutique spa in collaboration with
exclusive spa company, Senze Salus.
Future collaborations with other
companies have signified a huge
opportunity for SK-II to further strengthen
their brand.
 Imitation:
The threat of imitation is constantly present
as consumers who are not well informed
about the brand may purchase counterfeit
goods online or via a third party. This could
lead to unintended negative word-of-mouth
from consumers, whom preceive
themselves using the original products
 Other strong competitors:
The beauty industry is also highly
competitive as there are countless brands
readily available for consumers to choose
from. These products do range from mass
production to premium and exclusive
selections. To gain new market share from
consumers, whom are already loyal to their
preferred brands will be challenge to all
companies across the industry
2. Orientations
2.1. Location
Choosing a business location is a very important strategy and greatly affects the
success of a business plan. Having a good business location is already 40% successful
but choosing a place to do business in a large city with 30 districts like Hanoi is a
difficult problem. The orientation of building a chain of our cosmetics stores with
famous Japanese brand SK-II for the middle and high class, targeting young people or
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active women. Stores need to be located in places which have high dense populations,
many students and many office workers. From the above criteria, we used GIS data
for analysis. Below is a map of population density distribution of 30 districts in Hanoi.
We see that when we come further into the city center, the more the population
density increases; districts such as Dong Da, Hai Ba Trung, Ba Dinh and Hoan Kiem
are all located in urban areas with a density of 25,000-35,000 people/km2 with the
most population living in the city.
Further analyzing spatially, we conduct data analysis of socio-economic points such as
schools, hospitals, and companies to analyze and select suitable locations. Through the
map, we see that the districts of Ba Dinh, Cau Giay, Hai Ba Trung are the places
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where the majority of employees and offices are concentrated in the city and are near
shopping centers, supermarkets, and commercial centers.
For showrooms in Cau Giay and Hai Ba Trung, SK-II has chosen a suitable rental
location, which is home to many other high-end product lines, to be specifically our
address for new showrooms are:
 Cau Giay: Discovery Complex: third (3rd) floor: 42m2 with price
20,000,000/month
 Hai Ba Trung: Vincom Trade Center Ba Trieu: second (2nd) floor: 36 m2 with
price 18,000,000/month
As for Ba Dinh district, our company decided to buy land and proceed to build a
suitable showroom by ourselves
Address: No. 4, Van Cao, Lieu Giai, Ba Dinh
The land price is 3.8 billion for 41m2
2.2. Human resources
Each store is estimated to have 6 full-time employees including the store manager,
salesman, security guard and 5 part-time collaborators. Employees will be equipped
with knowledge about cosmetics through training classes organized by company in
association with teachers at the parent company in Japan.
- Employees are required to have the following qualifications:
 Knowing how to display, manage and remember the items and uses of the SK-
II cosmetic line
 Knowledgeable about beauty care, have knowledge and have used many
different cosmetic lines
 Having good communication skills, cheerful spirit and enthusiasm when
consulting and selling
 Having beautiful skin, few defects and hving passion with beauty
- Marketing strategy:
 Advertise on online newspapers: hire PR articles on major websites with
beauty care categories such as vn.express, dantri.com.vn, kenh14, ngoisao.net,
soha.vn, tiin. vn, zing.vn, 24.com.vn…
 Advertise on beauty forums, share knowledge and have good review for SK-II
products
 Setting up an official website and announcing information from the co-
operarion company: the exclusive distributor SK-II in Hanoi for the purpose of
creating trust, introducing products, consulting products and sharing ideas as
well as ordering direct goods
 SEO keywords "cosmetic", "SK-II", "reduce dark spots, treat acne"
 Advertising on social networking sites: Facebook, Instagram, Tiktok in
cooperation with KOLs to promote product uses
- Discount promotion:
 Issue deals and vouchers on famous website:
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http://nhommua.com, http://hotdeal.vn, http://muachung.vn, http://cungmua.vn,
http://www.123mua.vn, http http://www.cucre.vn, http://51deal.vn,
http://khuyenmaivang.vn, http://vinadeal.vn/, http://www.diadiemvang.net/...
 Discounts on holidays and anniversaries
- Type of advertisements:
 Outdoor advertising: Pano, poster, LED light
 Advertise on means of transport (bus)
 Invite famous people to participate in the company's product promotion
program to add value and trust about the product
 Other types of advertising
+ Advertising through business directory publications (golden pages, business
information..)
+ Advertising through product introduction programs in public places:
discounts, groupon giveaways at community events (student day, International
Children's Day, International Women's Day...)
+ Advertising through packaging (bags, delivery bags)
2.3. Promotion
Promotion is an important process in making SK-II a familiar brand for everyone in
Vietnam. Since then, Beauty Store (SK-II co-opreation in Hanoi) must:
 Inform customers about the presence of genuine SK-II on the market,
especially in Hanoi.
 Encourage customers to buy products, promote faster and more purchases.
 Compare with other products for customers to see that the quality of service
and after-sales is better than other competitors in the market.
 Convince customers to believe in SK-II's product qualities.
 Remind consumers of product availability and benefits. In the initial stage of
bringing the product to the Vietnamese market, in order for customers to know
about the products distributed by the company, the company should let
customers try the product through small packages of free products. The
company should also carry out programs for the community to bring its brand
to everyone and create a beautiful image of the company in the public mind
such as campaigns to support poor children, campaigns to protect environment
IV. ASSESS THE PROJECT'S IMPACT ON THE
SURROUNDING AREA
1. For showrooms in Cau Giay and Hai Ba Trung District
The company applies the form of renting kiots at large department shopping center, so
electricity and water are relatively quite stable, we just need to fix and connect them to
a suitable location.
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However, this repairation also takes time for about 1 week and causes noise effects by
drilling machine and freight transportation. Realizing that the commercial shopping
centers start to open to welcome guests from about 9:30 am and close at 10 pm;
therefore, construction workers can start from 6 am and finish work until 9 am, which
will not affect shoppers as well as the shops around.
2. For showroom in Ba Dinh District
The entire store needs to be built from the beginning, so it may have some impact on
the residential area as well as the surrounding shops. These impacts only take place
during construction and have no impact on the environment after completion.
It is expected that the showroom will take about 4 months to build, starting from
November, 2021 and finishing at March, 2022. Below, there are steps that need to
built our new showrooms:
+ Preparing the ground, gathering materials before construction: 1 week
+ Making the foundation, pressing piles, reinforcing the foundation: about 20
days to 1 month
+ Construction of rough parts (building of walls, beams, floors, columns,
roof...): about 2 - 2.5 months depending on weather conditions (the humid
weather will be detrimental and prolong the time)
+ Completion time (ceiling, flooring, wall cladding, door installation, stairs,
wall painting, sanitary equipment installation, electrical equipment): 1 month
or 45 days.
+ Time to install furniture and decoration: 2 weeks
In 4 months of construction, the showroom has the following effects:
 Noise
Table content – Maximum permissible limits on noise
(according to sound level equivalent), dBA
No. Area From 6 a.m to 21 p.m From 21p.m to 6a.m
1 Special Area 55 45
2 Common Area 70 55
According to the table above:
+ Special areas: are areas within the fence of medical facilities, libraries,
kindergartens, schools, churches, communal houses, pagodas and other areas with
special regulations.
+ Common areas: Including: apartment buildings, separate or adjacent houses,
hotels, motels, administrative offices.
Our showroom construction area is located in the normal area, through surveying and
investigating the living rhythm of the surrounding residents, our company decided to
proceed with the construction of the project from 7 am to 11 am as well as from 2pm
to 5pm. This is the time when most people have left their houses and gone to work and
school, hence the noise can be minimized.
 Dust
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