BTEC Level 4 Business Environment Analysis: TH True Milk Report

This report provides a comprehensive analysis of TH True Milk, a leading dairy company in Vietnam. It begins by examining the positive and negative impacts of the macro environment, employing tools such as the Five Forces model to assess the competitive landscape, including threats of new entrants, competitive rivalry, and the bargaining power of suppliers and customers. A PESTEL analysis is then conducted to evaluate the political, economic, social, technological, environmental, and legal factors influencing the company. The report further delves into an internal analysis of TH True Milk, identifying its strengths and weaknesses by examining its vision, mission, core values, brand value, organizational structure, human resources, assets, financial strength, and technological base. The report then explains the interrelation between the company's strengths and weaknesses and the external macro factors. Finally, the report references key sources and provides a well-rounded understanding of TH True Milk's position within its business environment.

ASSIGNMENT 2 FRONT SHEET
Qualification BTEC Level 4 HND Diploma in Business
Unit number and title Unit 1: Business and Business Environment
Submission date 23-8-2021 DateReceived1stsubmission
Re-submissionDate DateReceived2ndsubmission
Student Name Nguyen Thi Ngoc Anh Student ID BHBF200099
Class PBA17101 Assessor name Ngo The Nam
Student declaration
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.
Student’s signature Ngoc Anh
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P4 P5 P6 M3 M4 D2

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Table of Contents
I. Identify the positive and negative impacts the macro environment has upon
the chosen company. ............................................................................................................ 5
1. The Competitive Environment (Five Forces Model). ......................................................... 5
2. TH True Milk ‘s P.E.S.T.E.L ................................................................................................. 8
II. Internal and external analysis of TH True Milk in order to identify strengths and
weaknesses. .......................................................................................................................... 11
1. Vision. ............................................................................................................................. 11
2. Mission. .......................................................................................................................... 12
3. Core Values. .................................................................................................................... 12
4. Brand value. .................................................................................................................... 12
5. Organizational Structure. ................................................................................................ 13
6. Human resources. ........................................................................................................... 14
7. Fix/physical assets. ......................................................................................................... 14
8. Financial strength/ factors. ............................................................................................. 14
9. Technology base or Research and Developement........................................................... 15
III. Explain how strengths and weaknesses interrelate with external macro factors.
16
IV. REFERENCES ..................................................................................................... 20

TH True MilkCompany Profile
INTRODUCTION
Company name: TH True Milk (one of three companies under the TH Group)
Establish year: 24/2/2009
Address: Location production: Nghi Son Commune, Nghia Dan District, Nghe An Province.
Headquater: 166 Nguyen Thai Hoc Street, Quang Trung ward, Vinh City, Nghe An
Province
Founder &
Chairman of the
Strategy Council:
Mrs.Thái Thị Hương
Tel no: 1800 54 54 40
Email: [e-mail].
Website: http://www.thmilk.vn/ (TH True Milk)
Primary
Industry: Production, Processing and Trading Milk and Dairy Products.
Ownership
Status:
Privately Held
Company type: TH Milk Joint Stock Company (TH Milk JSC)
Description: TH True Milk (true happiness and true milk) is the top milk producer in Vietnam
with the slogan “"Truly natural, quintessential nature-truth in every drop of clean
fresh milk". First milk company applies the most technology into produced milk,
nearly 100% imported foreign countries such as New zealand, Germany, Israel. To
date,TH true Milk products have been registered in more than 60 countries around
the world.

TH Milk Joint Stock Company belongs to TH Group was established with the financial advice of Bac A
Commercial Joint Stock Bank, the first company of TH Group to have an investment project in an industrial
dairy farm.TH Group always focuses on developing to become a manufacturer and supplier of food and
natural products of international quality. The company's criteria is to always keep each product intact with the
essence of nature. Therefore, TH Group is equipped with and possesses the latest and top technologies,
equipment, and resources in the world.
In addition, TH Group applies a high-end management system, all regulated products are closed, automatic
and co-mode technology from farming to distribution to consumers to ensure product quality. TH true milk is
a prominent product line of TH Group today. The dairy market is one of the most competitive in Vietnam with
many famous domestic and imported brands such as Vinamilk, Nestle, Dutch Lady, NutiFood… Although
participating in such a competitive market, TH True Milk still has certain tools. The 30% figure is proof of TH
True Milk's efforts In order to ensure convenience for customers and consumers to have access to milk
everywhere, TH Group is also gradually developing many retail stores of TH true Milk to provide milk to
customers' hand with high quality products.
In order to clearly understand the impact of the macro environment on TH True Milk, this report will analyze
the positive and negative impacts of the macro environment on business operations. Conduct internal and
external analyzes of specific organizations to identify strengths and weaknesses. Beside, explain how
strengths and weaknesses interact with external macro factors.
I. Identify the positive and negative impacts the macro environment has upon
the chosen company.
1. The Competitive Environment (Five Forces Model).
• Threat of new entrants: LOW
Barriers to entry into the industry:
- Capital requirements: For businesses that want to
enter the industry, the capital factor is the most
noticeable issue, especially with the dairy industry
characteristic that there is a fairly high barrier to entry,
requiring a lot of capital for production, research,
promotion and especially product distribution.
- Product differentiation: Currently, the products of
famous dairy companies such as Vinamilk, Dutch Lady,
and Abbot have gained a foothold in the hearts of
consumers with specific product lines as well as a stable
market share. New businesses must make strong efforts
and investments to overcome this barrier.
- Access to distribution channels: The current large
dairy enterprises in Vietnam mostly have a large and
professional distribution system, so new businesses that
want to access these distribution channels will have to
spend more a lot of money.

In the dairy industry the brand factor is very important, it affects quite a lot of the company's market share,
thereby impacting the revenue and profitability of the business. For businesses that want to enter the
industry, the question of how to build a brand, win consumer loyalty from big businesses in the industry is not
easy to answer.
Thus, it is easy to see that capital factors, distribution channels and brand recognition are among the biggest
barriers for muoons entering the dairy industry. In addition, the Vietnamese market is dominated by Vinamilk
with long experience and great potential plus a solidly built brand and products that can make it difficult for
any business to enter the market.
• Competitive Rivalry: HIGH
Vietnam dairy industry market share 2021
By market share, VINAMILK 43,3%, Friesland Campina 15,8% and Vinasoy 14,3% are the 3 brands with a very
large market share in the dairy industry of the country. TH True Milk, holds only 6,1% market share. In 2021,
VINAMILK still holds the highest market share in Vietnam’s dairy industry, so VINAMILK has the strongest
competitiveness and responds well to external factors. VINAMILK is the number one competitor of TH True
Milk holds the largest market share (with multiple market segments, some market share is almost exclusive)
and is still maintaining and constantly increasing market share. Although the competitiveness of TH true MILK
is lower than that of VINAMILK, it does not mean that TH's competitiveness is poor. (Ngành sữa năm 2021 sẽ
tăng trưởng theo kịch bản nào ?, 2021)
In reality, these businesses have been associated with the Vietnamese dairy market for a long time and have
made a certain impression on the subconscious of consumers. Moreover, these brands also constantly invest
in technology to make the product quality even higher. This is also one of the biggest pressures when TH True
Milk enters the dairy industry. However, despite many economic difficulties in 2009, the dairy industry is one
of the industries with good growth rates when the demand for repair is increasing. This is an opportunity for
TH True Milk to create success when they know how to find their own direction.
Thus, for current competitors in the industry, TH True Milk can easily see the pressure from the brand identity
factor, the question of requirements that constitute a barrier to the industry. In addition, the dairy industry
has a high growth rate, stable profits but requires a relatively large market share, so TH True Milk is currently
under a lot of pressure from the problem of market share competition.

• Bargaining power of suppliers: HIGH
Of TH True Milk's 5 competitive pressures, this is probably the most difficult. Because of the dairy market in
Vietnam, the source of input materials is mainly dependent on imported raw materials from countries with
leading cow breeding backgrounds such as NewZealand, USA, Netherlands with about 70%. Meanwhile,
domestic raw materials are mainly supplied from small operating households and have been largely consumed
by old dairy enterprises. Thus, in the first period of operation without its raw material area, TH True Milk
faced a lot of difficulties negotiating with domestic and foreign fresh milk suppliers. If the negotiating capacity
is not good, the unstable raw milk source will seriously affect the production situation of the company.
• Bargaining power of customers: HIGH
The core factor when entering TH True Milk's dairy market is to sell its products to consumers. Meanwhile,
dairy agents have been cooperating with other dairy companies for quite some time. So for them to change to
selling TH True Milk products, there needs to be effective policies. Because currently, the main milk
distribution channel in Vietnam is still through retailers, they are a person who has great ability to influence
the choice of buyers.
There are a variety of dairy products available, which can be substitutes for each other. Price is not the most
important factor to consumers in their consumption decision. Therefore, companies have to compete with
each other by the quality of product and brand power, before competing by price.
Direct customers such as distribution agents or nutrition centers have a great impact on consumers’
purchasing decisions. Domestic dairy companies and sole agents of foreign dairy companies have to compete
to scramble for strategic distribution points, mainly by discount and commission for retail agents could have
considerable bargaining power, as they can influence users’ purchasing decisions through product consulting
and introduction.
In parallel with the process of creating good sales policies, TH True Milk needs to actively inform consumers
more about its products through the mass media channel. With TH True Milk's way of doing things today is
always towards consumers, always trying to bring consumers the best dairy products.
• Threats of substitute products. LOW TO MEDIUM
Although TH True Milk clearly defines the participating market segment as sterilized fresh milk products. But
now there are many similar types of products and dairy substitutes on the market such as nutritious cereal
powder, health drinks.... but these products in terms of nutrition and quality do not completely replace milk.
Currently, there are many types of products competing with dairy products such as green tea, coffee cans,
soft drinks....reducing the market share of dairy products but due to the cultural and health characteristics of
Vietnamese people, no product can replace milk. However, the characteristics of alternative products are
unexpected and unable to predict, so the dairy industry is in a high position but still faces pressure from
alternative products
On the other hand, many people are allergic and intolerant to lactose from cow's milk and the need to find
products that can replace milk but still provide enough nutritional value for customers is always parallel for
the development of dairy businesses. Nowadays, people create quite a number of milk substitutes and
intermediate drinks. Even more, other companies will launch newer, superior products to compete and
replace TH True Milk's products. Because old dairy companies are fully capable and capable when they have
been involved in the dairy industry for a long time.Soy milk is just one example of the above drinks that we
can find everywhere. Thus, soy milk or cereals, juices, yogurt or cheese… they are all potential competitors
and may one day become real competitors.

2. TH True Milk ‘s P.E.S.T.E.L
• POLITICAL & LEGAL
Policy of tax: Tax on imported dairy products is high and will continue to increase in the future.
➢ Opportunities: increase the competitiveness of TH True Milk with imported dairy products.
➢ Challenges: fierce competition with the domestic dairy market.
Regulations in foreign trade: Decree 3399/QD-BCT Approving the development planning of Vietnam's dairy
industry until 2020, vision to 2025. (Decision 3399/QD-BCT approving the Industry Development Plan, 2021)
➢ Opportunities: reduce the cost of raw materials, expand the cow farm, create a large source of self-
sufficient raw materials. Increase competitiveness, proactively integrate with the region.
➢ Challenges: competitors with TH are also ready to seize the opportunity to create a potential
competitive threat. Raw material suppliers can also become big potential competitors.
Special offer: Large enterprises mainly focus on breeding animals, technical services and product
consumption, and family raising households focus on raising dairy cows and exploiting milk.
➢ Opportunities: In order to expand production, upgrade and expand the scale of cow farms, high
growth, aiming to dominate the domestic dairy market.
➢ Challenges: Competitors are also ready to seize the opportunity to create a potential competitive
threat. Raw material suppliers can also become big potential competitors. If TH True Milk does not
take advantage of these advantages, TH True Milk will easily be surpassed by competitors and lose the
market.
(*) Political & legal opportunities and challenges for the dairy industry:
➢ Opportunities: Develop, expand production, upgrade and expand scale. Getting closer in dominating
the domestic dairy market, surpassing competitors. Create strengths when competing with foreign
dairy products.
➢ Challenges: Fierce competition for domestic milk processing enterprises.
Beside, Thanks to the positive contributions of TH True Milk, it has received praise and support from leaders
and consumers nationwide.
• ECONOMICAL
Inflation: CPI peaked in January 1.23% and fell the most in April 1.54%.
The consumer price index in October inched up 0.09% month-on-month and 2.47% year-on-year, according to
the General Statistics Office of Vietnam. (CPI in October inches up 0.09 percent, 2021)

Average CPI growth rate in 2020 (%)
The average consumer price index in 2020
increased by 3.23% over the previous year,
achieving the target of controlling inflation,
keeping the average CPI in 2020 below 4% set by
the National Assembly in the context of a year
with many fluctuations. unpredictable. CPI in
December 2020 increased by 0.19% compared to
December 2019, the lowest level in the period
2016-2020.
Income: the average income in 2020 will reach about 4.23 million VND/person/month, down about 2%
compared to 2019. However, in the period 2016-2020, the average income per capita/month increased by
8,1%. By region, the average income in urban areas is 5,538 million VND/person/month, nearly 1.6 times
higher than in rural areas. (Per capita income in 2020 will decrease by 2%, 2021)
➢ Opportunities:The dairy market will be expanded more and more, opening a path for TH True Milk.
➢ Challenges: Low inflation, lower prices for other foods, and an increase in the relative minimum wage
make consumer choices more diverse.

• SOCIAL
- Includes norms and values that are accepted by a particular society or culture.
- There is a close relationship with other macro factors.
- Long-term, large impact range.
"Fresh":
✓ The situation of “more chemicals than food”
✓ Education level, awareness of medical, health, food hygiene and safety issues are improved.
 And naturally, TH quickly satisfied customers with the motto "clean milk".
Impacts of the external environment: the content of melamine in milk exceeds the allowable level of other
dairy companies, contaminated milk, and psychological effects on consumers.
➢ Opportunities: By creating the motto "clean milk", TH can easily convince difficult customers, putting
pressure on rival brands.
➢ Challenges: consumers will be wary of buying dairy products, potentially reducing sales of TH's
products.
“People”:
- Population environment is a very important factor that affects other factors of the macro
environment, especially social factors and economic factors.
- Vietnam's population tends to age clearly with a decreasing proportion of the young population and an
increasing number of elderly people.
- The population is growing, the needs are also increasingly diverse depending on age.
The graph shows the aging index (number of elderly people / 100 children)
According to the industry and Trade Information Centre under the Ministry of Industry and Trade, a market
research by Euromonitor showed that in 2020, Vietnam's milk consumption was 1.76 million tonnes of milk
and dairy products, an increase of 8.6 per cent compared with that of 2019. Vietnam's per capita milk
consumption stood at 26-27 kg per year – a quite low rate as the world’s average per capita milk consumption

was about 100 kg per year and the average consumption in Asian countries was 38 kg per person per year.
(Vietnam's milk consumption stays quiet low, 2021)
➢ Opportunities: Develop more diversified products, expand production scale and distribute in the
market.
➢ Challenge: There are many competitors in the field of milk for children and the elderly. If it does not
expand its products to those subjects, TH True Milk risks losing a huge market share to competitors.
• TECHNOLOGICAL
In the future, milk production technology will be continuously updated. As can be seen, Tetra Pak Group
continuously builds milk production plants with more modern equipment and machinery.
➢ Opportunities: Modern technology will increase product productivity and quality, as well as diversify
TH True Milk's products such as yogurt, live yeast drink, cheese etc.
➢ Challenges: New technology comes with very high investment capital, competitors will strongly invest
in computer equipment to gain profits.
• ENVIRONMENT
Nghia Dan (Nghe An) has a severe climate, influenced by the hot and dry West wind (Lao wind), so it is often
drought (May-July), the temperature can exceed 40 degrees Celsius and the humidity is low. less than 30%.
Less affected by rainstorms, but often heavy rains and floods.
TH True Milk has a large field of raw grass used as food for dairy cows, irrigated with water from the So River,
and fertilized from organic fertilizers.
➢ Opportunities: Minimize costs thanks to self-sufficient raw materials. Because of the right investment
from the beginning, when facing severe weather, the cows are still well taken care of.
➢ Challenges: However, the diseases that threaten TH's cows, geniuses, can appear with unpredictable
magnitude.
II. Internal and external analysis of TH True Milk in order to identify strengths
and weaknesses.
1. Vision.
In the future, TH Group aims to become a leading manufacturer in Vietnam in the field of food derived from
nature. With strong investment and determination along with the world's leading modern technologies, TH is
determined to become a world-class food and product brand, besides, it will be a product that trusted home
users, people support and love.

2. Mission.
In the spirit of always being close to nature, TH Group dedicates its best to cultivate and nurture the soul and
body of the Vietnamese people by providing consumers with products and foods derived from nature, safe,
clean and nutritious.
3. Core Values.
(*)5 Core Values of TH Group:
- For true happiness.
- For public health.
- Completely from nature.
- Environmentally friendly & Out-of-the-box thinking.
- Harmonize interests.
For the mission, vision, and core values, these are all strengths of TH true Milk.
The mission and vision of the business will help define the desired results and goals. These criteria will be
ingrained in employees' subconscious, thereby helping them to have goals and work more effectively, vision
and mission are like a compass to help TH True Milk orient and guide employees. on the right track in your
career path.
The strategies outlined in the strategic vision can help realign resources for better implementation, thereby
creating a sure and long-term success in the future.
Provide a focal point that helps orient employees to the main goal and brings everyone together as a team. As
a result, work efficiency and productivity will be increased.
Besides, Core Values are a guideline to navigate all behaviors, decisions and actions of TH True Milk.
▪ Help the company make many right decisions based on the core values that have been outlined.
▪ Link between employees and businesses.
▪ Engrave impressive brand images in the minds of customers.
▪ Build lasting relationships with the vast majority of potential customers.
▪ Help customers have more confidence in the company and business.
▪ Build brand consistency.
▪ Promote brand loyalty of potential customers.
4. Brand value.
Brand is a special element to identify a product. The group's name is TH, which stands for "True Happiness",
which means 'True Happiness.' TH Group is committed to strictly following the rules of quality, always
ensuring authenticity and seriousness. and consistent, creating strong trust for Vietnamese consumers as well
as TH's partners. Therefore, TH true MILK was born with 3 elements: Seriousness - Pride - Integrity. Pride is
the first brick-laying unit for the clean dairy industry in Vietnam. Through the above characteristics, TH true
MILK shows customers its Happiness brand.
Building trust: in order to build strong trust for Vietnamese partners and consumers, TH Group is committed
to complying with strict quality regulations, ensuring the provision of information and products in a timely
manner. the most serious and honest way.
Spreading strength: Not only providing nutritious products for Vietnamese consumers' health, TH Group has
passion and efforts to help individuals and organizations build a healthy community together. happier, more
joyful and more prosperous.