Analysis of Vinamilk's Business and Business Environment Report

This report provides a detailed analysis of Vietnam Dairy Products Joint Stock Company (Vinamilk), the largest dairy company in Vietnam. It examines Vinamilk's business environment, including its establishment as a Joint Stock Company (JSC), size, scope, and legal structure, with a focus on its ...Read More

PROGRAM TITLE: Unit1: Business and the Business Environment
UNIT TITLE: Assignment 1
ASSIGNMENT NUMBER: 1
ASSIGNMENT NAME: Business and Business Environment
SUBMISSION DATE: September 30th 2021
DATE RECEIVED: October 3rd 2021
TUTORIAL LECTURER:
WORD COUNT: 3109
STUDENT NAME: Lê Minh Hoàng Yến
STUDENT ID: BKC1946
Summative Feedback:

Internal verification:
Table of Contents
I. COMPANY INTRODUCTION4
1. General introduction: 4
2. Name, address, website, phone number, products & service: 4
II. Type of business: Joint Stock Company ( JSC ) 5
III. Size, scope, and legal structure of the company: 6
1. Size, scope & legal structure explaination: 6
2. Size, scope & legal structure contribution to company objectives analysis
9
IV. Three most important functions from the legal struture of the company:
9
1. Interrelationships among chosen functions. Evaluate Advantages and
Disvantages that each interralationship bring to the company: 9
2. Contribution of each function to business objectives: 11
References 12
COMPANY INTRODUCTION
General introduction:
Vinamilk is the biggest dairy company in Vietnam. Established in 1976, on the
basis of taking over 3 dairy factories from the old regimes. The company
proactively cooperates with other domestic exporting companies, particularly
Seaprodex, to mobilize foreign exchange for importing materials. Thanks to this
strategy, production significantly increased, helping Vinamilk to complete and

exceed the assigned State’s target, while managing to invest in innovation and
production expansion with the accumulated capital. With more than 40 years of
development, with a creative and dynamic working spirit, Vinamilk has paved the
way for becoming the leading nutrition company in Vietnam, providing millions of
Vietnamese families with high quality nutrition solutions that meet their needs and
conform to international standards. The products are produced upon great
knowledge about nutritious demand of vietnamese based on their physical
condition, especially children. Collaborating with the National Institute of
Nutrition and world-renowned experts in nutrition, Vinamilk has been providing
Vietnamese consumers with dairy products which are certified to the EU and US
standards.
Name, address, website, phone number, products & service:
Name
: Vietnam Dairy Products Joint Stock Company
Abbreviated name
: Vinamilk
Address
: No.10, Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City
Area served
: Worldwide
Website
: https://www.vinamilk.com.vn
Phone number
: (028)54-155-555
Fax number
: (028)54-161-226
Email
: [e-mail]
Industry
: Dairy products, juice
Business registration certificate and tax code: 0300588569
Products: Organic nutrients, Liquid Milk, Vinamilk Yogurt, Formula milk, Infant
Cereals, Special Nutrition Products for Adults, Condensed Milk, Beverages, Ice
Cream, Cheese, Soymilk, Viet sugar.
Services: Nutrition consulting, Investing, Real estate, General clinic, Customer
care

Type of business: Joint Stock Company ( JSC )
According to Vietnam law, a Joint Stock Company ( JSC ) is a legal entity that has
its charter capital assigned into equal portions of shares. The minimum number of
shareholders is three people. The shareholders can be of any nationality and they
are only responsible for the debts and other financial obligations of the company
within the capital contribution. A JSC can be solely owned by foreigners. Or, it can
be a joint venture between foreigners and locals.
(Cekindo, 2021)
Market capitalization: 185,588 Billion
Shares Outstanding: 2,090.0 Million
In order to prove that Vinamilk is a Joint Stock Company because its market
capitalization reached 185,588 billion and the number of outstanding shares was
2,090.0 million. Vinamilk's business institution is developed by the capital
contribution of many shareholders. In a joint stock company, the charter capital of
the company is divided into equal parts called shares. Individuals or organizations
that own shares are called shareholders. Shareholders are issued a certificate of
ownership of shares called shares.
Business objectives of the company: To meet the increasing demands of
consumers, Vinamilk has constantly renewed technology, improved product
quality management
Vision: to become a world grade brand in the food and beverage industry ( reach
the Top 30 of World’s Largest Dairy Company ). Where people put all their trust
in nutrient and health products.
Mission: to deliver the most valuable nutrition to the community with Vinamilk
respect, love and responsibility. Stand tall Vietnam, rise in the world.
Three main pillars for execution, including:
Leading in highly applicable innovations: focus on dairy industry and dairy related
products; continue to R&D to develop more new products with innovations;
expand and diversify portfolio based on consumer preferences and demands. Bring
varios and convenient experiences to customers.
Consolidating the leading position in Vietnam's dairy industry: prioritize to exploit
the domestic market which still has great growth potential. Continue to build a
large and strong domestic distribution system, increase market share and maintain
Vinamilk’s leading position in the market.

Becoming the most valuable dairy company in southeast asia: prioritize to seek
M&A opportunities with dairy companies in other countries for the purpose of
expanding the market and increasing sales. Continuing to penetrate new export
markets with the strategy of converting the traditional goods export model into
types of deep cooperation with the distribution partners in the new key markets.
(Vinamilk, 2021)
Size, scope, and legal structure of the company:
Size, scope & legal structure explanation:
Size of the company: Large company
12 GLOBAL G.A.P dairy farms with a total number more of 130,000 dairy cows
Total revenue: 15.729 Billion
Number of employees: 9.361
Managing and operating 13 dairy factories with FSSC 22000 certificate
200 distributors covering 240,000 retailers; 3,250 convenient shops and
supermarkets across Vietnam selling VNMs products
VNM’s products are exported to 55 countries
Vinamilk has the financial resources to invest in foreign markets. This means that
they can establish subsidiaries overseas and expand their market share without
having to rely on the domestic market to drive growth prospects. With strong brand
recognition, which is defined as the percentage of people aware of a company’s
name and products. Consumers will think of large companies first when making
purchase decisions. In other words, the stronger brand recognition, the more ensure
that these businesses will draw from a more-talented pool of candidates and they
will get their pick of the most qualified candidates for open positions. After that,
by taking advantage of the economies of scale, Vinamilk is able to reduce the cost
of doing business, while also maximizing their profit margins.
(Quain, 2018)
Scopes of business:
Industry: primary industries and secondary industries.
Vinamilk can produce primary products and also secondary industries. Firstly,
primary industries extract the natural resources so that they can be converted into
consumable products. Vinamilk can produce the raw materials for themselves and
turn it into a product such as: milk from raising dairy cows, coffee from farming, ...
for sales and export purposes. Secondly, they have both key benefits: specific to

their needs & control the quality; cheap & quick. Finally, as a result, Vinamilk
maintains the leading position in the Vietnam Dairy industry and stands among the
Top 30 of the world largest dairy companies in revenue.
(Bhasin, 2019)
Commerce: sell the product (consumers goods): Trade ( domestic/ foreign trade):
buying, selling, or exchanging commodities ( wholesale or retail)
Producing and trading canned milk, powdered milk, nutrient flavor, cakes, fresh
milk, soya milk, beverages and products from milk;
Producing and trading wine, beer, food and many types of coffee;
Raising dairy cows, providing dairy breeds and breeding techniques;
Other under business license
(VCBS, 2021)
Legal structure: Functional organizational structure
The organization Chart of Vinamilk is shown in functional organizational structure
in which departments are divided systematically and reasonably with specific
hierarchy of responsibility for each member and function in the company. This
structure helps the company to operate in the most effective way and fosters
collaboration among departments, thus making a strong Vinamilk. When
employees who have similar skills and experiences are grouped together, it makes
production more efficient and of a higher quality. Roles and tasks do not change
very much so there is little time spent learning, and accountability is clear. Since
the hierarchy is simple, employees know the one manager they are to answer to,
instead of multiple people. This streamlines communication and reduces confusion
among employees.
Employees can feel confident about what they're doing because it is standardized.
They are more likely to feel loyalty to their department and the organization as a
whole. This increases morale and work ethic, as there is more job security. There is
a clear path of growth for employees which provides motivation, and they are more
likely to be cooperative with people in their department. A functional
organizational structure provides a perfect environment for learning for new
employees (especially new college graduates) to be taught the real-world
application of theoretical information. (Anon., 2020)
(Vinamilk, 2021)
Production & Logistic:
13 factories in the North, Central, and South
03 sales offices in Ha Noi, Da Nang and Can Tho
02 logistics enterprises in Ha Noi & Ho Chi Minh City

Cu Chi Raw Milk Center
An Khang clinic
Domestic subsidiaries & Associates:
Vietnam Dairy Cow One Member Co., Ltd. (100%)
Thong Nhat Thanh Hoa Dairy Cow One Member Co., Ltd. (100%)
APIS Joint Stock Company (20%)
Vietnam Sugar Joint Stock Company (65%)
Asia Coconut Processing Joint Stock Company (25%)
GTNFoods JSC (75% since Dec-19)
Overseas Subsidiaries & Associates:
Driftwood Dairy Holdings Corporation (USA, 100%)
Vinamilk Europe Spóstkaz Ograniczona Odpowiedzialnoscia (Poland, 100%)
Angkor Dairy Products Co., Ltd. (Cambodia, 100%)
Miraka Limited (New Zealand, 23%)
Lao Jargo Development Xiengkhouang Co., Ltd (Laos, 85%)
(Vinamilk, 2021)
Size, scope & legal structure contribution to company objectives analysis:
As a Private Sector, the revenue of Vinamilk is usually reinvested into the business
for researching and developing new products to innovate and diversify types of
products in harmony with tastes and demands of customers. Implement and apply
the advanced methods of human resources management to improve the abilities of
managers and employees, thereby enhancing the quality of work and productivity.
Vinamilk encourages applying the knowledge and good practices all over the
world about “improving” to complete the system efficiently, neatly; optimize chain
values in operating chains as well as support chain and enhance competitiveness.
Constantly improve the corporate governance based on the best practice of
international corporate governance. Currently Vinamilk has two distribution
channels to deliver products to consumers: Distribution through traditional
channels (includes 220 independent distributors and over 250,000 retail outlets)
distributing more than 80% of the company’s products; Distribution through
modern channels (such as supermarket, Metro, etc): The advantage of the company
is having a wide and strong distribution network, through the dairy factories
invested in many places spread throughout the country (13 factories in the North,
Central, and South). The above applications are powerful tools for supporting staff
in their work, allowing Vinamilk distribution network across the country to
connect with the central information in both online and offline situations. The

focused information will help the company to make timely as well accurate support
planning. The collection and management of sales information of the agents is to
respond timely and provide customers satisfaction at higher levels. With the right
marketing strategy, Vinamilk's fresh milk scope of Vinamilk has created a large
market share in the Vietnamese market to provide value to its customers as well as
giving the company a competitive advantage for other competitors. This shows the
effectiveness and importance of the marketing mix strategy in the current business
situation for one of the big companies like Vinamilk.
Three most important functions from the legal structure of the company:
Research & Development (R&D)
Strategic Planning
Financial Department
Interrelationships among chosen functions. Evaluate Advantages and
Disadvantages that each interrelationship bring to the company:
Research & Development and Strategic planning:
The Research & Development Department is usually updated with modern
equipment and advanced production technology. Besides, the Strategic planning is
always ready to help the Research & Department Department projects for new or
improved products and continuing the strategy of leading in innovation with high
applicability. Most recently, R&D has cooperated with clinical research with the
National Institute of Nutrition to improve the quality of the product. Vinamilk's
strategy department has announced to the press its new joint venture partner in the
Philippines, Del Monte Philippines, Inc. CEO of DMPI Operations - shared: "This
is a success thanks to three factors: in-depth research on the market and
competitors to build a competitive plan; quality improvement products,
responsiveness to the nutritional needs of Filipinos; business and marketing plans
direct consumers to stick with the product.".
(Vinamilk, 2021)
Advantages: Strategic planning is responsible for understanding consumer needs
and promoting the consumption of new research products. The Research &
Development Department continues to improve products and health of customers.
To meet the increasing demands of consumers, R&D will get new plans from the
Strategic planning and continue maintaining Vinamilk’s belief in the hearts of
Vietnamese people & reach out to the world.

Disadvantages: Strategic planning is responsible for calculating risks, providing
strategic support to other departments and controlling the implementation of
projects. In case they do not keep up with customer needs, it makes the Research &
Development Department waste time and money on the wrong product. Increase
competition opportunities for rival companies.
Research & Development and Financial Department:
The Financial Department provides funding for Research & Development to
upgrade new technology for better products. Each R&D research project is
analyzed by them for financial analysis, cash flow management, project financial
management and financial planning for the product under study. Financial controls
risk, improves efficiency, and balances reasonable and flexible costs. Together,
they committed to bringing to the community high quality products at reasonable
prices with our respect, love and high responsibility for human life and society.
Advantages: The Research & Development and the Financial Department has
brought success in development and innovation. Vinamilk has opportunities for
investment and international cooperation - a strong step forward to reach out to the
world. Create more than 250 quality products with 13 categories. The Financial
Department did a great job in controlling the money poured into R&D to make it a
success today.
Disadvantages: For the Research & Development Department to continue to build
the quality of the product. The Financial Department must balance the inflow and
outflow of money. So R&D research funding needs their consent. Inevitable
conflicts in ideas and plans between the two departments.
Strategic planning and Financial Department:
It is a fact that every business has a common limitation, which is the limitation of
resources. Strategists are forced to choose which strategy brings the greatest
benefit to the business. Therefore, the Financial Department actively manages
financial resources through strict adherence to prudent financial policies and
procedures that protect the resources and produce reliable, timely financial
information to ensure financial future. They ensure a healthy financial future for
the company in general and the strategic planning department in particular. The
two departments will combine to show long-term competitive advantages. It also
has the goal of prolonging the good effects for the company.
Advantages: In March 2020, Vinamilk held an internal fundraising activity named
"Vinamilk - Million steps, Covid-19 prevention". Specifically, for each employee's

step, which is recorded by mobile applications that count the number of steps,
Vinamilk will contribute 100 VND to the fund. Through this activity, the strategic
planning department has enhanced Vinamilk's name. This also cannot be ignored
the great contribution from the Finance Department. The talent of the two
departments and their synergy not only supports poor children, fundraising by the
number of steps also encourages employees to "reduce sitting, increase walking,
and be active" in daily activities. Improving Vinamilk's performance in the period
of Covid-19. (Vinamilk, 2020)
Disadvantages: The harmony of the two departments is reflected in the working
process and the results after the project. So what if the Strategic Planning and the
Finance Department don't get along? In the strategic planning process, a clear goal
is very important. The implementation phase needs the finance department to
prepare, report and analyze the project budget. In addition, they also provide
information, promote investment, coordinate with the Strategic Department to
monitor and evaluate investment. Just one disagreement can cause the two
departments' collaborative projects to stall.
Contribution of each function to business objectives:
Research & Development (R&D): Vinamilk’s research and product development
staff always keeps up to date the latest knowledge on technology, as well as
surveys the domestic and international market to find opportunities and ideas for
product development leading to highly applicable innovations. Focus on dairy
industry and dairy related products to develop more new products with
innovations, diversify portfolio based on consumer preferences and demands.
Continue to uphold the belief of Vietnamese people and bring quality products
with convenient experiences to all over the world.
Strategic Planning: determine long-term strategic vision to orient production and
business activities, prioritize to exploit the domestic market which still has great
growth potential. It forces Vinamilk to be aware of future opportunities and
challenges in order to understand what will be needed to capture or overcome those
opportunities and challenges. Force Strategic Planning to have an overview and
catch up with consumer trends. Continue to make breakthroughs on the journey of
international conquest over the past 45 years.
Financial Department: Lead and coordinate with relevant agencies to monitor and
evaluate investment, estimate the amount of capital required and determine its
level of competition. It framed financial policies in relation to procurement,

investment and administration of funds of Vinamilk for the purpose of expanding
the market and increasing sales in the new ket markets. To become a world grade
brand in the food and beverage industry.
References
Anon., 2020. Functional Organizational Structure: Everything You Need to Know.
[Online]
Available at: https://www.upcounsel.com/functional-organizational-structure
[Accessed 1 October 2021].
Bhasin, H., 2019. Primary Industry: Meaning, Types & Example of Primary
Industry Explained. [Online]
Available at: https://www.marketing91.com/primary-industry/
[Accessed 16 September 2021].
Cekindo, 2021. How to start a Joint Stock Company in Vietnam. [Online]
Available at: https://www.cekindo.vn/blog/start-joint-stock-company-in-vietnam
[Accessed 17 September 2021].
Cekindo, n.d. [Online].
Quain, S., 2018. The Advantages of a Large Business. [Online]
Available at: https://smallbusiness.chron.com/advantages-large-business-
21007.html
[Accessed 19 September 2021].
VCBS, 2021. VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY
(HOSE). [Online]
Available at: https://www.vcbs.com.vn/en/Research/Company?stocksymbol=VNM
[Accessed 21 september 2021].
Vinamilk, 2020. Tập thể nhân viên công ty Vinamilk góp sức để chăm sóc và bảo
vệ trẻ em khó khăn trước đại dịch covid-19. [Online]
Available at: https://www.vinamilk.com.vn/vi/thong-cao-bao-chi/2063/tap-the-
nhan-vien-cong-ty-vinamilk-gop-suc-de-cham-soc-va-bao-ve-tre-em-kho-khan-
truoc-dai-dich-covid-19
[Accessed 1 October 2021].
Vinamilk, 2021. Công bố đối tác liên doanh tại Philippines, Vinamilk dự kiến đưa
sản phẩm ra thị trường vào t9/2021. [Online]
Available at: https://www.vinamilk.com.vn/vi/thong-cao-bao-chi/2318/cong-bo-
doi-tac-lien-doanh-tai-philippines-vinamilk-du-kien-dua-san-pham-ra-thi-truong-
vao-t9-2021
[Accessed 23 September 2021].
Vinamilk, 2021. Development strategy. [Online]

Available at: https://www.vinamilk.com.vn/en/development-strategy/
[Accessed 19 september 2021].
Vinamilk, 2021. Our Leadership. [Online]
Available at: https://www.vinamilk.com.vn/en/our-leadership
[Accessed 24 September 2021].
Vinamilk, 2021. Subordinate Units. [Online]
Available at: https://www.vinamilk.com.vn/en/subordinate-units/
[Accessed 26 September 2021].