Team assignment in Strategic Management course

1. 2013
Dao Thanh Hang – s3362358
Pham Tra My – s3357655
RMIT International University
3/4/2013
Big C – Business level strategy

2. Big C Vietnam - Business level strategy
1
Executive Summary
This report aimed at analyzing the current business strategy of a retail company, specifically Big C, in order
to see the suitability of the company strategy in the retail environment. The report looked at the political,
legal, social, environmental, economical and technological environment that influenced the retail industry. It
was discovered that the Vietnamese government and consumers enthusiastically support the use of local-
owned brands. Furthermore, the high inflation and increasing commodities price enticed consumers to opt
for more promotion and bulk buying. With the being said, they still cared much about the environment when
actively supported eco-friendly products and also an increased tax on plastic bag.
Beside the external environment, Big C had limited direct competitors. However, the company had to be
aware of the potential foreign collaboration to enter the booming retail industry like one between Co.op
Mart and NTUC Fairprice Singapore. To survive and thrive in the industry, the company relied much on
their internal capabilities such as unbeatably low price, strong industry relations and innovative services.
These competences followed the cost leadership strategy while remaining true to the company’s visions and
values.

3. Big C Vietnam - Business level strategy
2
Contents
Executive Summary........................................... 1
Introduction ....................................................... 3
Macro Environment Analysis............................. 4
External environment Influences...................... 4
Competitive forces ........................................... 6
Micro Environment Analysis ............................. 9
Company resources and competences............... 9
Business Strategy........................................... 12
Conclusion....................................................... 14
Reference......................................................... 15

4. Big C Vietnam - Business level strategy
3
Introduction
Big C is the biggest hypermarket that targets final consumers in Vietnam currently. The company realizes
the potential of Vietnam retail industry at early stage and uses its strengths to capitalize on Vietnam growing
economy (Nielsen, 2011).
According to the research of Bui and Lemaire (2005), Big C Hanoi is the 7th project of Bourbon in Vietnam
with a total capital of 250 million USD. Using the French group Casino’s banner “Big C”, already well-
known and holding a positive image in Thailand to reach Vietnamese buyers was a wise choice of the
investors. The company currently owns around 21 stores after 12 years in Vietnam and many of them are in
urban areas where consumer behavior towards modern retail formats nourishes its growth of sales. Big C
provides a wide selection of goods ranging from Foods, Personal Care, and Household Care to Electronics
Appliances. All of these make Big C one of the biggest retailers in Vietnam, competing with many other
local and international brands.
This detailed data and analysis on Big C will give readers understanding about the strategies at business
level, exercised by the company in order to thrive in a competitive market. The report will explain and give
an objective evaluation of the business strategies based on both of the company’s external influence sand
internal capabilities.
In this report, we will use information from official reports, company websites, trade journals and newspaper
in order to accurately assess Big C’s situation. As with analysis methodology, we will use PESTEL
framework to study the external forces that have impacts on the retail industry. The Porter’s five forces
framework helps to assess the competitive forces acting on Big C. Last but not least, VRIN methodologies
will be used to understand the company’s strategies and how it applies to boost sales.

5. Big C Vietnam - Business level strategy
4
Macro Environment Analysis
External environment Influences
Big C is affected by the external environment, categorized into six main types: political, social, economic,
technological, environmental and legal factors. It is important to assess the current situation to identify the
position of the company before discussing its performance in the industry, thus accurately evaluate Big C’s
business strategies.
Figure 1: PESTEL analysis on Retail Industry
As illustrated in figure 1, the external environment affects the type of products that a retailer like Big C take
in then sell out. From the Political and Legal perspectives, it is advisable to take in Vietnamese brands since
they are greatly supported by the government. This will not only be helpful in lowering the price, the retailer
will possibly get more customers since they carry a bigger range of governmentally recognized brands.
Furthermore, the tax on plastic bag affects retailer directly as they traditionally use them to contain goods. A
shift from plastic to reusable bag or a charge on consumers may support the strain on retailer cost. These
impacts go hand in hand with the Social and Environmental point of view in which Vietnamese consumers
are getting smarter in their choice of products, ranging from national brands products to eco-friendly goods.
Political and
Legal
• “Vietnamese uses
Vietnamese brand”
campaign gives price
support, prestigious awards
and national wide
advertisments (Vietnamplus
2013)
• VND 40 000/kg tax on
plastic bag (Vietnamnews
2012).
Social and
Environmental
• 87% consumer prefer
promotion (Nielsen 2011)
• Prefer Vietnamese products
over foreign for better price
and good quality
• Eco-friendly conscious
consumers (Thanhniennews
2011)
Economic and
Technological
• Rise in commodities price
affect consumer's confidence
(Nielsen 2011)
• High inflation rate
(Kantarworldpanel 2012)

6. Big C Vietnam - Business level strategy
5
Last but not least, the economic influences on retailer cannot be ignored. With the budget being tightened up
to spend on higher commodities price and to combat inflation, Vietnamese customers prefer more bulk
buying and promotions, as shown in Social impacts. This means that retailers need to be more flexible in
packaging and products offering that are economical without sacrificing quality. Through this, customers
will trust retailer as their go-to destination, thus hopefully increase their market share.

7. Big C Vietnam - Business level strategy
6
Competitive forces
After looking at the general external factors that have impacts on retailers, it is important to examine the
competitive forces, the different competitors, which directly compete with individual retailer like Big C. In
this section, the Porter’s five-force framework will be used to identify the attractiveness of the retail industry
through the threat of entry, threat of substitutes, power of buyers, power of suppliers and competitive rivalry.
In Vietnam’s current retail industry, there are many types ranging from big to small scale: Hypermarket (Big
C, Metro), Supermarket (Intimex, Fivimart), Department store (Parkson, Vincom), Shopping Mall (Lotte)
and Convenience store (Vietnamonline). By categorizing the retail industry according to different scales, it
would be easier to conduct an analysis on the competitive forces that affect Big C.
Figure 2: Porter's 5 forces
Competitive
Rivalry
Threat of Entry
• High barrier of entry for
local business
• Foreign collaboration
can compete easily
Threat of
Substitutes
• Local convenience stores
are more preferable
• Rise in income
encourages products that
improve quality of life
which can be bought in
big hypermarket
Power of
Buyers
• Consumers
have limited
influence
Power of
Suppliers
• Big C has strong
influence on local
suppliers
• Big C is probably
more influenced by
big MNCs

8. Big C Vietnam - Business level strategy
7
From figure 2, threat of entry and threat of substitutes have the biggest impact on Big C. Though a required
turnover of at least 200 million VND per 1000 square meters per day in 5 yearsis difficult for local retailers
to expand and directly compete with Big C(Vietnamnet, 2011), foreign investors can sign a joint venture
with local businesses to bring in international hypermarket models. This is relatively feasible, considering
the joining of Vietnam to the World Trade Organization (WTO) in 2009. For example,Saigon Co.op
collaborated with Singapore retail giant NTUC FairPrice to set up a chain of hypermarket in 2012 (Nguyen
2011). As such, though owning 21 outlets - the biggest number of hypermarkets in Vietnam, this new
venture will definitely force Big C to up its game in order to win the hypermarket sectors as small local
entrepreneurs are taking sides with foreign giants.
Besides locals cooperating with foreigners, small convenience stores are formidable substitutes as they have
been in the fabric of life of most Vietnamese (Maruyama & Le, 2011). They provide a personal relationship
with customers, making pleasant shopping experience and any queries can be solved momentarily. However,
the silver lining for hypermarket lies in the increase of income that propel customers to improve quality of
life through goods imported oversea or organic products, personal care and household care which cannot be
found in small local shops.
Being a hypermarket, Big C has strong influence on both buyers and suppliers that they can dictate price and
products. However, though limited, the mast customer preference has an impact on product stocking.
Additionally, big MNCs like PepSi Co or Unilever that have a strong products influence in the market may
have stronger negotiation power in contract with the company.
The existing competitive rival that operates in the same hypermarket category is Metro Cash & Carry.
However, Metro restricts consumer’s base to wholesalers through the use of membership cards. This leaves
Big C as the sole hypermarket that caters to final buyers in Vietnam retail industry. With that being said,
locally owned supermarkets like Co.op Mart or Fivimart make the environment tough to operate in as they
also provide low cost yet high quality goods as well as higher end to feed the desire to improve quality of
life. This has resulted in gross profit growing slowly despite increase in sales (Bui &Lemaire, 2005). The

9. Big C Vietnam - Business level strategy
8
competitive industry requires Big C to constantly come up with clear and effective strategies in order to
continually being the top retailer in Vietnam.

10. Big C Vietnam - Business level strategy
9
Micro Environment Analysis
After looking through the Macro environment, an in-depth analysis of internal strengths and capabilities is
necessary to assess how Big C is holding up in the competitive industry. The assessment below will look
into the company’s resources and competences which then later be used to examine how successful Big C’s
strategies are in coping with the external impacts.
Company resources and competences
Competitive advantage is advantage that a firm has over its competitors, generating greater sales or margins
and (or) retaining more customers, followed by greater value for the firm and its shareholders – as defined
by the Investopedia (2013). There are two main types of competitive advantages: comparative advantage
(cost advantage) and differential advantage. However, whether that competitive advantage can sustain
throughout the rapidly changing environment depends on an organization’s capabilities being of at least
threshold value in a market as well as being valuable, relatively rare, inimitable and non-substitutable
(Johnson, Whittington & Scholes 2011). We shall apply those four criteria further below when addressing
the resources and competences that bring about sustainable competitive advantages for Big C Vietnam.
As seen from figure 3 below, Big C has created a distinctive shopping experience that is of value to
customers through French style presentation of the stores like wide aisles, high ceiling, etc. that is
convenient for customers. The unexpected and periodical test at Health center ensures higher food quality.
High quality yet affordable price in the time of stagnant economy are not only valuable but also are
inimitable capabilities of Big C. Promotional programs for 20,000 lines and 100 heavily discounted products
every week, some as low as 50% off (Bui &Lemaire 2005)always make Big C an attractive destination.
Also, capturing the incentives of environmental-concerned consumers, Big C spent 13 billion VND on
Energy Saving Project (2010) and 11 billion VND on solar power (2012). It was the first hypermarket in
Vietnam to deploy a national-scale solar power project according to Vietnam’s Breaking News Website.
Clearly, the company’s great capital never goes to waste and just generates greater volume of purchase
while adding to its good reputation.

11. Big C Vietnam - Business level strategy
10
Figure 3: VRIN analysis
Nonetheless, the group has developed Big C’s private labels, with all kinds of products to satisfy customers,
– adding to its rarity: Casino, eBon, Big C brand, just to name a few. Catching up with the changing
demand of Vietnamese consumers – embracing exotic tastes, Big C also has innovative services like B bread
(with French characteristics), B bar (thoughtful consultancy for electronics choices), Sandwich land (ideal
fast food counter) and many other Big C owned brands provide exceptional service with highly customize
selections with great quality, making Big C more than just a “one-stop shopping” hypermarket.
On top of its many innovative services is the strong relation with local suppliers, producers and industry
partners that secure high quality, amazingly low price for Big C’s products and impeccable care for its
stakeholders. This can be seen in the 2011 comprehensive cooperation with VietinBank to provide banking
services for Big C hypermarket system which allows giving wages to employees via cards, reducing the
transaction time and reshaping the buying habits of Vietnamese people which are bargaining, payment
method, credits usually given to loyal customers, etc. (Ho 2011)
• Strong partnership boost
company's expansion to
eliminate competitors
• Relationships with banks
aid in support programs
for stakeholders
• Low price, quality goods
• modern shopping
style
• guarantee
hygienic food
compared to
traditional wet
markets
• private labels to
satisfy customers
tastes
• Distinctive Shopping
experience: French style
presentation
• Health centers
• Strong networks with
suppliers and producers
• Value added program
• Low price, quality goods
Value Rarity
Inimitability
Non-
substitutabili
ty

12. Big C Vietnam - Business level strategy
11
Moreover, with the desire to compete with traditional wet markets by using its strong capabilities, Big C and
its partner – Viet-Nhat Real Estate are aiming to open three more stores in northern QuangNinh before this
province’s anniversary in October 2013in an effort to wipe out “wet markets” with serious hygiene issues
(‘Big C is full of beans despite depressed retail market’ 2012). The health inspection mentioned before
proves shopping at Big C is much more hygienic and avoids pollution problems posed by wet markets.
To sum up, the resources and competences that have been providing Big C with sustainable competitive
advantages are its shopping experience that is of value to customers, the inimitable price competitiveness,
the distinctive company’s brands that separate it from other supermarkets, value networks and finally
undeniably high quality products that can’t be substituted by traditional street shops.

13. Big C Vietnam - Business level strategy
12
Business Strategy
The various competences and capabilities of Big C as mentioned above help identify the current business
strategy that the group is pursuing. Apparently Big C has been following the Cost-leadership strategy.
According to Robbins & Coulter (2007), the cost leadership strategy competes on the basis of having the
lowest costs in its industry and proactively searching for efficiencies in production, marketing and other
areas of operation. There are four key cost drivers to help achieve this strategy.
Firstly, low input costs are essentials which are illustrated in Big C’s high influence over suppliers. Since
their products are mainly taken from Vietnamese brands, the input costs are lower than foreign imported
goods. Moreover, their good relation with Vietin Bank makes their modern payment system less costly than
it should be.
Secondly, economies of scale significantly lower the price. With 20 000 lines of products for each of 21
locations and increasing, Big C’s fixed costs are spread over a large number. Thus, the group can negotiate a
steeper discount than other supermarkets due to their large product supplies.
Thirdly, experience can be a key source of cost efficiency. One of the things that Big C is well-known of is
the possession of high-skilled bakers. Their skills are afterwards transferred to the baker staff, or even other
sister units, reducing the cost for training and increasing the internal linkage of the organization.
Additionally, with Big C’s long standing in Vietnam industry since the early 1990s, maneuvering through
the Asian financial crisis in 1997, they seized the opportunity then and constantly keeping up with “Vietnam
popular discounts” motto to grow to be a giant in the retail market until now. Their experience also shows
throughadopting the modern retails from the beginning as well as encouraging the usage of Vietnamese
products, even before the government’s campaign, helping them avoid changing cost to fit the modern retail
environment.
Finally, process design also influences cost. One of the cutting-edge products that Big C currently offers in
the slow-growing economy of Vietnam is under WOW! Brand – produced by leading Vietnamese factories
under Big C’s requirement of quality at unbeatable price - 10% to 70% lower than leading brands (Big C’s
website 2013) with reasonable value. This follows the no frills strategy, involving comparatively low

14. Big C Vietnam - Business level strategy
13
benefits but low price.On top of that, their unbeatable weekly discounts and promotional programs are
designed specifically to fit Vietnamese customers who favor promotions, proving to lower the cost further.
In short, every program carried out by Big C supports the bigger umbrella of company business strategy of
cost leadership. They are highly attentive to pricing strategy, customer service and industry relations in
maximizing on their innate capabilities and many years of experience to reach an ultimate goal of achieving
the lowest price to reach the broadest target customers.

15. Big C Vietnam - Business level strategy
14
Conclusion
After looking at both internal competences and external influences, it is clear that Big C is maximizing its
strength to compete in the fierce retail industry through sound strategies that accurately address the market
situation and consumer trend. The different facets of Big C (customer supports, products tests and
innovative services) still prove to show the 5 company values of: customer satisfaction, responsibility,
solidarity, transparency and innovation. Along with their vision, “Nourishing a world of diversity” ( Big C
website, 2013), the hypermarket stays true to their core focus through providing diversified services
(company’s unique brands) and products (local and foreign goods) in maintaining their cost leadership
strategy. This strategy directly addresses to the current macro environment situation of price sensitive
customers and pro-local goods mindset of the government.

16. Big C Vietnam - Business level strategy
15
Reference
‘Big C is full of beans despite depressed retail market’ 2012, Vietnam Investment Review, 2 October,
viewed 20 March 2013, <http://www.vir.com.vn/news/business/property/big-c-is-full-of-beans-despite-
depressed-retail-market.html>
‘Big C to Spend VND13 Billion on Energy Saving Project’ 2010, Vietnam Breaking News, 24 May, viewed
22 March 2013, <http://vietnambreakingnews.com/2010/05/big-c-to-spend-vnd13-billion-on-energy-saving-
project/#.UVfYuRd8nD->
‘Big C’s VND11 bil.on solar power’ 2012, Vietnam Breaking News, 26 Nov, viewed 22 March 2013,
<http://vietnambreakingnews.com/2012/11/big-cs-vnd11-bil-on-solar-power/#.UVfYQBd8nD->
‘Foreign supermarkets size up Vietnam’ 2011, HKTDC Research, 25 Feb, Hong Kong Trade Development
Council, viewed 21 March 2013, <http://economists-pick-research.hktdc.com/business-
news/article/International-Market-News/Foreign-supermarkets-size-up-
Vietnam/imn/en/1/1X000000/1X07C74B.htm>
‘Government supports national brand development’ 2013, VietnamPlus, Vietnam News Agency, 8 January,
viewed 20 March 2013,
‘High tax may lead to plastic-bag imports’ 2012, Vietnam News, 11 February, viewed 20 March 2013,
<http://vietnamnews.vn/Environment/220663/high-tax-may-lead-to-plastic-bag-imports.html>
‘Most Vietnamese back eco-friendly products, practices: survey’ 2011, Thanhnien News, 1 September,
Vietnam Ministry of Culture and Information, viewed 20 March 2013,
<http://www.thanhniennews.com/2010/pages/20110901153334.aspx>
‘Supermarkets and Retailers’ 2011, Vietnam Online, viewed 20 March 2013,
<http://www.vietnamonline.com/shopping/supermarkets-and-retailers.html>
‘Vietnam, consumer power at risk’ 2012, Kantarworldpanel, 22 June, viewed 20 March 2013,
<http://www.kantarworldpanel.com/global/News/Press-release-June-2012-Consumer-Power-at-risk>

17. Big C Vietnam - Business level strategy
16
<http://en.vietnamplus.vn/Home/Government-supports-national-brand-development/20131/31008.vnplus>
Big C supercenter 2013, Big C EBH, Vietnam, viewed 20 March 2013,
<http://www.bigc.vn/Default.aspx?tabid=215&language=en-US>
Bui, H &Lemaire, J 2005, BIG C IN VIETNAM – Retail challenges at corporate and country level,
<vietgo.free.fr/thoa/BIGC%20CASE.doc>, viewed 20 March 2013
Ho, H 2011, ‘Comprehensive cooperation between Big C and VietinBank’, VietinBank, VietinBank Group,
viewed 20 March 2013, <http://www.vietinbank.vn/web/home/en/news/11/110928.html>
Investopedia US 2013, A Division of ValueClick, Inc., viewed 20 March 2013
<http://www.investopedia.com/terms/c/competitive_advantage.asp>
Johnson, G, Whittington, R, Scholes, K 2001, Exploring strategy – text and cases, 9thedn, Pearson education,
Essex, England.
Maruyama, M & T, Le 2011, ‘Modern retailers in transition economies: The case of Vietnam’, Discussion
Paper Series, Research Institute for Economics and Business Administration, Kobe University, Japan,
viewed 20 March 2013
Nielsen 2011, ‘Viet Nam grocery Report, The Nielsen Company, http://www.nielsen.com/vn.html, viewed
20 March 2013
Robbins, S & Coulter, M 2007, Management, 9thedn, Pearson Education, Upper Saddle River, New Jersey
Vn Charm, TựhàohàngViệt Nam 2013, HưởngứngCuộcvậnđộngNgườiViệt Nam ưutiêndùnghàngViệt Nam,
Ủy ban TW MặttrậnTổQuốcViệt Nam, viewed 20 March 2013 <http://www.tuhaoviet.vn/>

18. Big C Vietnam - Business level strategy
17
Assignment Marking Criteria
Critical analysis and synthesis of argument {12} 0 to 15 marks
Excellentcritical analysisand
evaluationshowing
understandingofcomplex
issues. Excellentsysthesis of
complexideasintoa
coherent,logicaland
convincingargument
Goodcriticalanalysisand
evaluationof issuesand
synthesis of ideasand
informationintoanargument
that shows somemerit
Someanalysis and
evaluationof issues
evident. Synthesis is
patchyor argumentisnot
welldevelopedor lacks
coherence
Little or no analysisor
synthesis evident in
assignment,argument
lackslogic
Application of strategic management theory and tools {7} 0 to 10 marks
Excellentapplicationof
appropriatestrategic
managementtheoretical
frameworksandtools to
supportargumentandjustify
conclusion
Gooduse of appropriate
strategic management
frameworks,but additional
tools wouldhave been
helpfulto justify argument
Somestrategic
mangementtoolsor
frameworksused,but not
always appropriate,or not
sufficientto justify
argument
Little or no applicationof
strategic management
theoreticalframeworksor
tools, or inappropriatetools
usedthat didnot support
argument
Understanding of strategic management theory and tools, and the quality of Information sources 0 to 10 marks {6}
ExcellentunderstandingofSM
theory, concepts,andtools
invoved andexcellentuseof
widerangeof informationfrom
appropriatesources
GoodunderstandingofSM
theory andtools involved and
gooduse of a rangeof
appropriateinformation
sources
SomeunderstandingofSM
theory andtools involved and
little variety of information,or
not allsourcesare
appropriate
Limitedunderstandingof
SM theory and tools
involved and inappropriate
informationsourcesorrelies
primarilyon onlyonesource
Referencing and presentation {3} 0 to 5 marks
All informationisfullyand
accuratelyreferenced.
Assignmentis easy to read
andwellpresented.
Informationis mostly
referencedaccurately.
Assignmentmostlyeasy to
readand wellpresented.
Referencingisincomplete
or not always accurate.
Assignmentis not always
easy to understandor well
presented.
Little referencingof
informationorvery
inaccuratelypresented.
Assignmentis difficultto
reador not wellpresented.
Other Comments
Total marks = 11 + 7 + 6 +3 = 27/40 (CR-68%)