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Research__Retailing Activities

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Research__Retailing Activities

  1. 1. 1 FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION GRADUATION REPORT Major: INTERNATIONAL BUSINESS MANAGEMENT DEVELOPING THE RETAIL ACTIVITIES AT HA TINH BOOK AND EQUIPMENT EDUCATION JOIN STOCK COMPANY (HBE) Student name : Duong Duc Tung Student code : 1001020172 Class : A1 – High quality class Intake : Course 49 – Faculty of Business Administration Supervisor : Ms. Nguyen ThuyAnh, PHD
  2. 2. 2 Table of content List of tables....................................................................................................................4 List of charts ...................................................................................................................4 List of abbreviation........................................................................................................5 Chapter 1 Introduction..................................................................................................6 1.1 Research Background..........................................................................................6 1.2 Research Objectives.............................................................................................7 1.3 Research Tasks.....................................................................................................7 1.4 Research Methodology ........................................................................................7 Chapter 2 Literature Review ........................................................................................8 2.1 The definition of retailing....................................................................................8 2.2 The roles and purposes of retail activities .........................................................8 2.3 The types of retail activities ................................................................................8 2.4 The Retail Theories............................................................................................10 2.4.1 Central place theory.......................................................................................10 2.4.2 Supply chain theory.......................................................................................12 2.4.3 Merchandise placement theory. ....................................................................13 Chapter 3 Fact of retail activities of HBE..................................................................16 3.1 Overview of HBE ...............................................................................................16 3.1.1 Establishment and development of HBE......................................................16 3.1.2 Organizational structure of HBE..................................................................19 3.1.3 Financial situation of HBE...........................................................................21 3.1.4 Significant achievements of HBE.................................................................25 3.2 Overview of Vietnam Retail Market................................................................26 3.2.1 Vietnam’s Retail Industry and the Cases from Giant Retail Brands ..........26 3.2.2 The Situation of Book and Equipment Retail Market in Vietnam..............30 3.3.1 Infrastructure.................................................................................................32 3.3.2 Human resources...........................................................................................33 3.3.3 Logistic System...............................................................................................35 3.4. Evaluate the situation of retail activities of HBE...........................................36 3.4.1 Strengths ........................................................................................................36
  3. 3. 3 3.4.2 Weakness........................................................................................................36 Chapter 4 Recommendations for developing retail activities in HBE ....................38 4.1 Corporate with other local retailers in order to improve financial capability and logistic systems ....................................................................................38 4.2 Enhancing Customer Service............................................................................39 4.3 Creating an appealing store atmosphere .........................................................40 4.3.1 Lighting..........................................................................................................41 4.3.2 Highlighting Merchandise ............................................................................41 4.3.3 Energy-Efficient Lighting .............................................................................42 4.3.4 Color...............................................................................................................42 4.3.5 Music..............................................................................................................42 4.3.6 Scent ...............................................................................................................42 Chapter 5 Conclusion...................................................................................................43 References .....................................................................................................................44 Appendices ....................................................................................................................46 HBE’s human resources qualifications..................................................................46
  4. 4. 4 List of tables Table 1 : HBE’s organization structure 18 Table 2 : Revenue of HBE from 2010 – 2013 22 Table 3 : Profit of HBE from 2010 -2013 23 Table 4 : Asset of HBE from 2010-2013 24 List of charts Chart 1 : Revenue growth of HBE from 2010 - 2013 22 Chart 2 : Profit growth of HBE from 2010-2013 23
  5. 5. 5 List of abbreviation AFTA ASEAN FREE TRADE AREA GDP GROSS NATIONAL PRODUCT GRDI GLOBAL RETAIL DEVELOP INDEX HBE HA TINH BOOKS AND EQUIPTMENT EDUCATION JOIN STOCK COMPANY IMF INTERNATIONAL MONETARY FUND IGD THE INITIATIVE FOR GLOBAL DEVELOPMENT SCM SUPPLY CHAIN MANAGEMENT WTO WORLD TRADE ORGANISATION
  6. 6. 6 Chapter 1 Introduction 1.1 Research Background In any economy, retail activities always play a very foundation and beginning role of exchanging commodities process, encouraging consumption and creating added values, growth for any countries. It is possible to compare retail activities as the back bones of the whole economy. The back bones must stay strong then the body would have developed sustainable. In normal life, we could see the retailing existing anywhere around us without us realizing. In the morning village market, we can see many women riding bicycles with some kilogram of mango, watermelon, bananas… or a man with a table full of pork, cow…or an elder with a pack of tea leafs, few rolls of vegetables harvesting from their own garden. In company store level, retail activities is the direct way to supply goods and commodity to consumers, which helps customers realize brand name, trade mark and is the very first step to generate profits for company. But how to develop a suitable retailing model for the products of company, as well as analyze the impact of these model on the effective of company operation. Since I always feel attracted to books and retailing, and by the way talking about books, from my point of view, books contain the unlimited knowledge, all of the mind of wises man all over the world from past to present, it is the precious material which helps self-study if we know the way to use it. Books help open our mind, calm the helpless soul, erase the evil in each of us and spread the emotion… with books, the life is become easier, worth living and everything becomes clear. That’s why, in this graduate report, I choose the topic: “Developing the retail activities at Ha Tinh Book and Equipment Join Stock Company”. I hope I could apply the knowledge that I gain during school time as well as these I absorb myself from society to discover more deeply about this topic, and find out how to apply the results from this research in to the real life.
  7. 7. 7 I am truly indebted to Ms. Nguyen Thuy Anh, PHD who has helped and encouraged me from the very first step of the report. Within my limited knowledge and difficulties in filing materials for new topic, mistakes and faults are unavoidable. Therefore, I appreciate all the comments from readers to improve my report. 1.2 Research Objectives I desire to achieve the following objective: Finding out the solution to which improve retail activities in HBE within their limited sources in order to increase company’s profit. 1.3 Research Tasks I have been wondering so many issues about retail activities. Since the time and my ability are limited, I would hope to clear some following questions: - What is the insight of retail activities? - What is the definition of retailing? - What are the roles and purposes of retail activities? - How many types of retail activities? - How to improve retail activities at retail store? - How do the situation of retail activities in HBE, as well as Vietnam retail market look like? - What are strengths and weakness of HBE’s retail activities? - What are opportunity and threats toward HBE’s retail activities? - What could be made to improve the retail activities of HBE? 1.4 Research Methodology My research methodology requires gathering relevant data from the specified documents and compiling databases in HBE in order analyze the material and arrive at a more complete understanding of the situation of HBE.
  8. 8. 8 Chapter 2 Literature Review 2.1 The definition of retailing “Retailing is the set of business activities that adds value to the products and services sold to customers for their personal or family use. Often people think of retailing only as the sale of products in stores, but retailing also involve the sale of services such as overnight lodging in a motel, a doctor’s exam, a haircut, a DVD rental, or a home-delivered pizza. Not all retailing is done in stores.” (Michael Levy & Barton A.Weitz, p.6) 2.2 The roles and purposes of retail activities In the value chain, the retailer is the final link connecting the producers to consumers. Retail activities are often aimed at three mains purposes: Firstly, sales function – it means put the products to consumers. Secondly, use point of retail as a communication channels to interact with consumers. Thirdly, do verifiable price channel and product quality for customer services. 2.3 The types of retail activities Mom-And-Pop Stores: is a retail outlet that is owned and operated by individuals. The range of products are very selective and few in numbers. These stores are seen in local community often are family-run businesses. The square feet area of the store depends on the store holder. Specialty Stores: A typical specialty store gives attention to a particular category and provides high level of service to the customers. A pet store that specializes in selling dog food would be regarded as a specialty store. However, branded stores also come under this format. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores. Department Stores: often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment
  9. 9. 9 at average price. They offer considerable customer service. For example: Food World in Bangalore. Discount Stores: offers extensive assortment of merchandise at affordable and cut-rate prices. Normally retailers sell less fashion-oriented brands. However the service is inadequate. Convenience Stores: is essentially found in residential areas. They provide limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases. Hypermarkets: provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats. Supermarkets: is a self-service store consisting mainly of grocery and limited products on nonfood items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000-40,000 square feet. Malls: has a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof. Category Killers or Category Specialist: By supplying wide assortment in a single category for lower prices a retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the center of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity. E-tailers: The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However it is important for the customer to be wary about defective products and non-secure credit card transaction. Example: Amazon and EBay.
  10. 10. 10 Vending Machines: This is an automated piece of equipment wherein customers can drop in the money in machine and acquire the products. This kind of system is currently not widely used in India. For example: Soft drinks vending. Retailers can opt for a format as each provides different retail mix to its customers based on their customer demographics, lifestyle and purchase behavior. A good format will lend a hand to display products well and entice the target customers to spawn sales. ( Thejeswini. G, 2010) 2.4 The Retail Theories Retailers achieve their financial objectives by effectively managing their five critical assets: locations, merchandise inventory, stores, employees, and customers. Beside, retailing activities including many activities as specified follow: 1. Merchandise management involves  Managing the merchandise planning process  Buying merchandise  Retail pricing  Planning retail communication program 2. Store management involves Managing the store  Store layout, design and visual merchandising  Customer services In this study, I will only focus on the three theories that are most relevant to the three factors that affect retail activities. That is location, merchandise inventory and stores. 2.4.1 Central place theory Retailing is a highly location-sensitive economic activity. Due to the nature of the transactions carried out in various types and sizes of stores, they are likely to be found in regional centers (urban cores) or in close proximity to such centers. Where proximity to demand and being located within a retail cluster are crucially important for an individual shop, the high rental costs in such places produce an aversive impact. Where proximity to demand and being located within a retail cluster are crucially important for an individual shop, the high rental costs in such
  11. 11. 11 places produce an aversive impact. We all know that stores with large establishment sizes, which also often sell durables for less frequent purchase, are more likely to be located further from the core of the retail cluster. Meanwhile, the retail cluster in the urban core is more likely to be occupied by small-scale stores and/or downtown shopping centers where several shops are nested together. Nevertheless, it is an acknowledged fact that stores are not distributed across space randomly. One important about spatial regularity in the retail industry is that many retail services are likely to be located close to each other. This co-location phenomenon in retailing is driven by consumers’ as well as suppliers’ desire to have a critical mass of shops in a marketplace. Also, for a store, being located close to different and similar kinds of retailing activities is necessary for survival due to complementarities between the retailing services. (Johan P.Larsson & Özge Öner , 2014). Choosing a particular location type requires evaluating a series of trade-offs. These trade-offs generally involve the size of the trade area, the occupancy cost of the location, the pedestrian and vehicle customer traffic generated in association with the location, the restrictions placed on store operations by the property managers, and the convenience of the location for customers. The trade area is the geographic area that encompasses most of the customers who would patronize a specific retail site. (Michael Levy & Barton A.Weitz, 2011, pp.168). Considering the focus of this study, the most relevant theories are the ‘central place theory’ of Christaller (1933) and its later extensions, which specifically deal with retail location. In fact, the use of central place theory for retail can be traced back in history in many countries with strong retail planning traditions, like Sweden and the UK (Dawson, 1980; Sparks & Dawson, 1989). According to the theory, the demand at any location is expressed roughly as the number of consumers within a large area. This very basic idea of spatial demand allows one to map a retail center by taking the surrounding geography into account. The intuition behind the use of this theory for retail location investigation is that in each location it is possible to describe a spatial dimension of consumer demand, which attenuates as we move outwards from the location in question. Thus, the
  12. 12. 12 demand is not uniform but subject to distance decay. This decline in potential demand with increasing distance is due to consumers’ decreasing willingness to travel greater distances. This phenomenon is referred to as a spatial demand cone by Lösch (1940), and Huff (1964) explicitly discusses the decreasing shopping probabilities radiating outward from a center in his work. Central place theory suggests that cities are connected in systems of cities and that they are hierarchically ranked, a proposition that is extensively analyzed in the rank–size literature. Large cities are likely to be closely linked to cities of a smaller size, and they are also likely to influence the growth of the smaller places connected to them. This type of hierarchical order that we observe for cities is in fact very similar to the hierarchical order between different retail markets. By dividing the trading areas into separate hierarchical circles of demand, Applebaum and Kaylin (1974) distinguish between a primary area where the demand is at its highest level, secondary areas where the demand is lower and a peripheral ring where consumers have a tendency to shop elsewhere. (Johan P.Larsson & Özge Öner, 2014). 2.4.2 Supply chain theory Retailers are the connection between customers and product manufacturers. It is the retailers’ responsibility to gauge customers’ wants and needs and work with the other members of the supply chain—distributors, vendors, and transportation companies—to make sure the merchandise those customers want is available when they want it. Supply chain management is a set of activities and techniques firms employ to efficiently and effectively manage the flow of merchandise from the vendors to the retailer’s customers. These activities ensure that the customers are able to purchase merchandise in the desired quantities at a preferred location and appropriate time. Retailers are increasingly taking a leadership role in managing their supply chains. When retailers were predominantly small businesses, larger manufacturers and distributors dictated when, where, and how merchandise was delivered.
  13. 13. 13 But with the consolidation and emergence of large, international retail chains, retailers now play an active role in coordinating supply chain management activities. The size of these international retailers typically makes them more knowledgeable and powerful than their vendors and thus better able to control their supply chains. Retailers are in a unique position to collect information about customer shopping behavior and purchases. This information is being shared with suppliers to plan production, promotions, deliveries, assortments, and inventory levels. Efficient supply chain management is important to retailers because it can provide a strategic advantage that increases product availability and an inventory turnover that produces a higher return on assets. (Micheal Levy & Barton A.Weitz, 2011) In this conceptual, with the purpose of this study, we will look more deeply into a concept named outsourcing logistics. Outsourcing Logistics To streamline their operations and make more productive use of their assets and personnel, some retailers outsource supply chain functions. Many independent companies are very efficient at performing individual activities or all the supply chain activities. There are a large number of companies that can transport merchandise from the vendor to distribution centers or from the centers to the retailer’s stores. Rather than owning warehouses to store merchandise, retailers can use public warehouses that are owned and operated by an independent company. Rather than outsource specific activities, retailers can use freight forwarders to arrange for the storage and shipping of their merchandise. Freight forwarders usually provide a full range of services including tracking inland transportation, preparing shipping and export documents, warehousing, booking cargo space, negotiating freight charges, consolidating freight, insuring cargo, and filing insurance claims. (Michael Levy & Barton A.Weitz, 2011) 2.4.3 Merchandise placement theory. Some store design objectives are to (1) implement the retailer’s strategy, (2) build loyalty by providing a rewarding shopping experience, (3) increase sales on a
  14. 14. 14 visit, (4) control costs, and (5) meet legal requirements. (Michael Levy & Barton A.Weitz, 2011) There are many different floor designs in grocery and department stores today. Many of these designs are carried over from previous years, and have nothing to do with how consumers shop. This is not just a U.S. phenomenon, as many businesses in many countries set stores up with the same traffic pattern in mind. These practices typically involve placing higher-frequency products near the back of the store, with low-margin merchandise on the perimeter and higher margin goods near the center. There is a science to some of this, but old methods seem to prevail against science. There have been many studies carried out, predominantly by the consumer packaged goods companies, on what shelves to put products on (high shelf versus low shelf). One inherent problem is that these packaged goods companies are responsible for only a small amount of merchandise in a store and have little say regarding what counter the product sits on, only where it sits within their small area. All store designs are intended to alter or force a particular consumer traffic pattern within a store. The grocery store industry goes to great lengths to set predetermined traffic patterns, all with the hope of building bigger baskets. There are some newer specialty chains that have designed destination departments within their stores (mobile phones, computers, appliances, and flat- screen televisions). These departments are heavily signed as you come into the store and guide the consumer to the area they are interested in. These stores are built on service and cross selling, the art of selling other items related to the primary item (for example, expensive cables that go with the flat screen TV). Old Theories of Merchandise Placement Some theories seem to live on forever. Many supermarkets even today will put eggs, milk, and most dairy products in the location farthest from the front entrance. The reasoning is simple: Make consumers past as much merchandise as possible so they will pick up more stuff. Although this seems logical, it is not always the case. This rule started (and was widely used) back in the 1940s and 1950s and has been used ever since. It was common back then to have single- income households, so time was not as critical and limited a resource for the
  15. 15. 15 shopper as it is today. In the 1950s, shopping, even for groceries, was a pleasant afternoon trip, not an exercise in time management. This was a family trip, with the kids included. The grocers would plan the design of the store knowing that the family would be spending time in each aisle. Products that occurred most frequently on shopping lists would be placed near the back, with aisles designed to make you wander the store. Retailers didn’t want shoppers to have a direct path to the items, but forced them to go down certain aisles, just to remind them of other products they may have left off their shopping lists. This method worked well, and is still being used today in many locations. The longer you stay in the store, the better the chance you will pick up those items you didn’t intend to buy when you came in. These are not necessarily impulse items, but could be additional dinner side dishes, a new type of pasta, or an end-cap special promotion. New Theories of Merchandise Placement In the mid-1990s and early 2000s, many research firms posted studies about the ever-shrinking hour. The emphasis everywhere was on time management, with the ever-increasing trend toward dual-income families. Shopping began to be a necessity, not an enjoyable pastime. Retail organizations began to develop stores with smaller footprints, where the selection was smaller but the emphasis was on convenience. Neighborhood markets were being opened up wherever space was available. Gas stations added food to the line of goods sold along with cigarettes in their now increasing C-channel (convenience store) locations. These new channels were big moneymakers, taking sales and margin from grocery stores and mass merchandisers alike. Again, the new designs were based on the time pressures these new families were under, convenience was the goal, and consumers were willing to pay more for this, hence the term time value of time.(Emmett Cox, 2012)
  16. 16. 16 Chapter 3 Fact of retail activities of HBE 3.1 Overview of HBE 3.1.1 Establishment and development of HBE  Overview of HBE Name: HATINH EQUIPMENT BOOK AND EDUCATION JOINT STOCK COMPANY § Abbreviation: HTBEEC0 § Stock Code: HBE § Head Office: 58 Phan Dinh Phung Street, Ha Tinh city, Hatinh Province § Phone: 0393. 893 399 § Fax: 0393. 852 352  Scope of business:  Selling education books, textbooks, journals, maps, writing paper, all kinds of VPP and publications  Producing Joint Venture types of school equipment; printing documents, records, books and serving the education sector  Buying, selling and consigning goods, commercial brokerage;  Travel, restaurants, refreshment.  Joint training, professional training in the fields of library, school equipment, Business Administration, Finance and Accounting, Computer Science; Foreign Languages  Training Professional Director; Provide legal advices in the areas: labor safety, service tax; Vocational and technical composite  Real estate office; consulting study.  School services.  The History of Establishment The predecessor of the company HTBEECO Books - Ha Tinh School was established in November 1991 under the state enterprise model, under the Department of Education - Training in Ha Tinh province.
  17. 17. 17 On 11/12/2004 : Company moved from state enterprise model into a joint stock company under certificate of business registration of joint stock company number 2803000151 issued by the Department of Planning and Investment of Ha Tinh, first registration date November 12, 2004 . The company moved into the enterprise directly under the People's Committee of Ha Tinh province with an initial charter capital of VND 1.25 billion. In 2005, the charter capital increased to VND 2,250,000,000. In 2006, the charter capital increased to VND 6,000,000,000. In 2008, the charter capital went up to VND 10,000,000,000. And by 2010, which is VND 22.31058 billion charter contract. (Source: HBE’s financial statement, 2010) Listed shares in the Securities Trading Center in Hanoi on 22/02/2008.  Development Strategy The main objective of the company: Developing with stable growth rate, doing business effectively by increasing profitability and economic benefits for investors, creating jobs and maintaining income of workers, perform better tax policy for the state. (Source: HBE’s Website http://hbec.com.vn/hbec/vi/)  Subsidiaries  HBE Educational Co., Ltd. established on 05/06/2012 with charter capital of VND 13.5 billion by the parent company holds 100% of the charter capital.  HBE Trade Co., Ltd. established on 11.13.2012 with charter capital of 4.5 billion contracts with the parent company holding 100% of the charter capital.  HBE Aggregate Distribution Co., Ltd. founded on 03/01/2013 4.35 billion contract with a charter capital; in which, the Company undertakes to contribute 2.784 billion dollars east, respectively 64% rate of capital. The company was dissolved on 09/30/2013. (Source: HBE’s financial statement, 2013)
  18. 18. 18 HBE General Meeting of Shareholders Board of Management Board of Directors General Director Deputy General Director Accounting department Business planning department Organized and administrative department Legal department Retailing department Supervisory Board Table 1: HBE’s organization structure Source: HBE’s Database
  19. 19. 19 3.1.2 Organizational structure of HBE The management structure of Company § General Meeting of Shareholders: Including all shareholders with voting rights, is the highest authority of the company and decide the issues in term of law and charter provisions. Specifically, the shareholders will approve the annual financial statements of the Company and the financial budget for next year. § Board of Management: The management agencies which have full authority to represent the company to decide all matters relating to the purposes and interests of the Company, except for those matters within the competence of the General Assembly Shareholder. Board of Directors is responsible for supervising the CEO and other managers. The rights and obligations of the Board of Directors are regulated by law and charter, the internal regulations of the Company and the Shareholders' Meeting Resolution Provisions. § Supervisory Board: The agency under the Shareholders' General Meeting which is elected by General Meeting of Shareholders. Supervisory Board is responsible for checking the reasonableness and legality of business operations, financial statements of the Company. Supervisory Board operates independently to the Board of Management and the Board of Directors. § Board of Directors 1 - General Director General Director is the legal representative of the Company in conducting all business activities. General Director are appointed and dismissed by the Board of Management and he/she is not necessarily a member of shareholders and could be the member of Board of Management. General Director is responsible to the Board of Management and the law in term of Business Operation Effective. 2 - Deputy General Director The Deputy General Director has missions to assist the General Director in term of activities in areas as assigned and authorized by the General Director and responsible to the General Director and the law in assigned and authorize tasks.
  20. 20. 20 § Advice Block: Including the departments, unit members, and the board which has the function of advising and assisting the Board of Directors, directly operating expertise and functional direction of the Board of Directors. Advice Block of the Company consists of department, the unit member function is specified as follows: 1 - Business Planning Department: Business Planning Division has the following functions: Organizing business plans under the categories of business of the Company Planning to Supply materials for Equipment education and Toys manufacture. Giving guidelines at selling commodities of Trading Company and General Services. Organizing joint trainings Collecting Debts 2 – Accounting Department Accounting Department has functions to implement the company’s financial regulations and account proactive capital supply -demand business plan aimed at developing production and building infrastructure for the company. Chief Accountant has duty to assist the General Director in term of directing and organizing the implementation of accounting and finance of the Company under the provisions of law. 3 - Organized and Administrative Department Organized and administrative department shall assist the Company’s leaders and its affiliated entities in term of the management staff, the administrative work. In addition, the department's function is to make car rental services while operating freight cars and ensure the best facilities to the Company. The department cooperating with Department of Accounting managing company’s assets and Appraising shopping facilities. 4 – Legal Department Legal department shall assist the Company’s leaders and its affiliated entities in term of the legal advices and the legal work.
  21. 21. 21 (Source: HBE’s Website http://hbec.com.vn/hbec/vi/) 5 – Retailing department Retailing department has the following functions:  Controlling retail activities of HBE.  Organizing market exploration and customer care.  Selling goods and commodity of HBE at the retail outlet. 3.1.3 Financial situation of HBE Finance always plays an important role to corporation. In fact, the weak points of Vietnamese retailers in general as well as HBE is the capital and business strategies usually only up for a short-term.
  22. 22. 22 The business activities result of HBE from 2010-2013 Table 2: Revenue of HBE from 2010 – 2013(VND 10 BILLION) 2010 2011 2012 2013 Q1 3,08 4,01 3,81 4,50 Q2 13,31 14,01 18,95 7,78 Q3 20,27 26,01 23,74 17,65 Q4 10,77 10,37 10,27 9,04 Total 47,43 54,4 56,77 38,97 (Source: HBE’s Financial Statement 2010-2013) Chart 1: Revenue growth of HBE from 2010 - 2013 From 2010 to 2013, the overall trend of revenue is increasing. In 2010, the total revenue is VND 470,43 billion and the year later it increase to VND 540,4 billion in 2011 and went up to VND 560,77 billion in 2012. Within 2 years the revenue had been increased nearly VND 100 billion. But in 2013, there is a huge deficit, the revenue had fall dramatically to VND 380,97 billion.
  23. 23. 23 Table 3: Profit of HBE from 2010 -2013(VND 1000) 2010 2011 2012 2013 Q1 12,15 -45,70 -51,70 -33,03 Q2 343,04 -33,94 -215,94 -248,63 Q3 630,44 504,00 732,74 347,52 Q4 -541,7 -111,42 -295,61 -14,09 Total 443,93 312,94 169,49 51,77 (Source: HBE’s Financial Statement 2010-2013) Chart 2: Profit growth of HBE from 2010-2013
  24. 24. 24 Table 4: Asset of HBE from 2010-2013 Asset (VND1000) 2010 2011 2012 2013 Total Short-term liquid asset 17,603,935 15,022,056 13,411,030 3,010,985 Total asset 42,318,042 39,252,891 36,074,955 26,315,031 Short-term debt 12,083,904 12,020,350 8,837,408 2,857,856 Total Debt 18,254,180 14,687,577 12,112,408 2,857,856 Owners’ capital 24,063,862 24,565,314 23,962,548 23,457,175 (Source: Financial statement of HBE 2010-2013) As you can see, HBE own small capital and do not increase much over the year, in order to operate business, the company must mobilize capital from outside’ sources. The mainly sources is the commercial bank, development fund and credit association. Overall, the short-term liquid asset has tendency to fall from the year 2010 to 2013. In 2010, the short-term liquid asset is nearly VND 17, 6 billion and by 2013 it decreases more than VND 14 billion, which is about VND 3 billion. It would mean that company has spending more and more money on the short-term over 4 year. And the total asset of company had happened to exactly the same trend. The total asset of HBE had been fall out up to 38% within three years, from VND 42,3 billion in 2010 to VND 26,3 billion. Why is there a VND 16 billion deficit in the total amount of asset within three years? It could because the company had spent more assets in paying the debt over the year. Just look at the table how the total debt had been decreased.
  25. 25. 25 Noticeable, the owners’ capital had remained nearly unchanged over this period of time, which is around VND 24 billion. Thus, despite the company has spending more money, the owners did not seem to earn much wealth though. A good new that comes from the table is that the debt of company has dramatically decreased in 4 year. From about VND 18, 2 billion in 2010 falling to just about VND 2,8 billion in 2013, which is more than VND 15 billion. We can say that the financial resources are a key measure to assess the competitiveness of an enterprise. Especially in the field of retail distribution, the economic efficiency of scale is quite clear, the potential of finance play a decisive role in the business strategies of enterprises. To better understand why you need to improve financial capability, let’s take a look. Financial capability enables enterprises to reduce the purchase price. Therefore, when a company has great financial potential, it's usually means that have large distribution systems respectively. At purchase contract with the manufacturer, they will sign the contract at the same time for all the primary basis of their distribution, rather than buying each individual facility. This helps to increase the order value, so that retail business is easy negotiating with partners to increase production over sales discounts, or decrease in other costs that the retailer must pay the manufacturer. 3.1.4 Significant achievements of HBE Since its establishment, especially after converting into a joint stock company, HBE has achieved steady growth, becoming the main provider of books, and equipment in the province of Ha Tinh and some central provinces nearby. Along with a high demand for books, school equipment, children's toys, wide field of activities of the Company will be increasingly affirmed and occupies an important position. The company went on Securities Trading Center in Hanoi on 22/02/2008 which marked a very important point in the road of development. So far, by 2010, the charter capital was VND 22.31058 billion. At the moment, the company creates jobs for 56 staffs, which contribute a wide amount of jobs to the labor market. (Source: HBE’s database)
  26. 26. 26 3.2 Overview of Vietnam Retail Market 3.2.1 Vietnam’s Retail Industry and the Cases from Giant Retail Brands Vietnam retail value sales slowed down in 2012 due to unstable state of Vietnam’s economy, including the country's high inflation rate and interest rate. Based on AT Kearney’s Global Retail Development Index (GRDI), Vietnam retailing ranked in sixth place in 2009 but dropped to 14th in 2010 and 23rd place in 2011. By the end of 2012, it was not listed in the top 30 most attractive retail countries in the world. Despite of this, Vietnam retail value sales still shows double digit growth due to rapid urbanization, relatively large young population and increasing middle income population. Despite the fact that Vietnam's economy has had a significant downturn in growth within the past two years the retail market continues to attract global and regional players. In addition to Big C and Metro C&C who have been ever present within Vietnam over the past number of years, there are several others who have attempted to strengthen their presence or attempted to penetrate the modern trade sector which accounts for just 20% of the whole market at this point in time. Different operators from various segments: shopping malls, grocery retailers and supermarkets, and convenient stores have been continuously working to attain new market share. Existing operators such as Parkson, Lotte Mart, Family Mart, and Circle K are competing with newcomers such as Aeon, E-Mart, NTUC Fairprice. Vietnam was ranked as one of the top emerging markets for retail in 2008- 2009 but since then its rankings have continued to fall as the Vietnamese economy has not performed as well and or with the same stability as others. There are several reasons for that downturn in retail but it cannot be denied that the potential is great and is still very much exists. An ever increasing demand of consumer goods and rising disposable incomes will drive potential growth in a 90-million-population economy. (Source: General Stastic Office, 2012). Also, rising urbanization and expanding rural retail area promoted by improved infrastructure will be facilitating such growth. Within the past few years, market players have been increasing their presence in Vietnam. The number of modern stores, supermarkets, and shopping malls has increased tremendously. So has the number of foreign brands been
  27. 27. 27 penetrating into the market. Market volume is estimated at US$ 123.8 billion by end of 2013. (Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.2013) That’s the reason why, despite falling out of the Top 30 attractive retail markets in the world two years ago, but with 90 million people, Vietnam has proved attractive to foreign investors. In recent years, foreign investors are always the most exciting areas in the retail sector. In Ho Chi Minh City, Parkson has invested $ 8 million to open shopping center in Vietnam its 9th called Parkson Cantavil. This is considered a string of high -level commercial center with the largest number in the country today. The older retailers in Vietnam as Big C, Metro ... Big C state that “no restrict on selling place as long as there is space." French giants are gradually expanding into the rural market, after contemplating the big city is about to become saturated. Not only the enterprise specialized in retail expand system, the famous companies in the field of real estate and industrial also investment in supermarkets. Son Ha Group supermarket chain founded Hiway. Vingroup also engaged in the retail market by development plan of VingKC nationwide chain. Alphanam Group will also participate in the market in 2014 with 79 Mart supermarket chain. Ocean Retail - Group of Ocean (Ocean Group) joined the market in 2013, after the hypermarket opened in Royal City and Times, has announced it will launch added a commercial center and a super- market in two districts of Hanoi. Meanwhile, a supermarket with the same brand also prepares to go into operation in early 2014 in Ha Tinh. Saigon Co-op, the largest supermarket chain in Vietnam, in 2013 announced that along with NTUC FairPrice Singapore opened two supermarket chains which are Xtra Co-op and Co-op XtraPlus. It is expected that the number of supermarkets will continue to increase sharply in 2014. In particular, Saigon Co-op specifies the strategic North when opening 2 more stores in Hoang Mai district with an investment of over 110 billion. (Trang Lam, 2014) During the period – one where Vietnam entered the WTO in 2007 – several new investors entered the market, namely Metro, PCSC, Dairy Farm, Lotte, Couche-Tard, SPAR and FamilyMart. Two groups 15 of multinational retailers
  28. 28. 28 undertook FDI in the Vietnamese retail market: first tier, rapidly globalising leading retail TNCs such as Casino, Metro Group, Couche-Tard as well as second tier regional retailers including Dairy Farm, Lotte, PCSC, Seiyu, and FamilyMart. The rapid diffusion of retail TNCs was mainly through hyper/supermarket formats and, more recently, convenience store formats. Notably Metro Group has developed its Cash & Carry business since its entry in 2002, growing store numbers to 13 by 2010 with total sales of US$552m (IGD, 2011). It has also made a concerted effort to embed itself within the Vietnamese market through its ‘Made in Vietnam’ programme that promotes Vietnamese sourced products and involves co-operation with local authorities to support agriculture (IGD, 2011; cf. Coe and Hess, 2005). Meanwhile, Casino’s Big C portfolio has expanded through the acquisition of a controlling stake in the Vindemia/ Groupe Bourbon joint venture in 2005 to control a portfolio of 11 hypermarkets by the end of 2010, which generate sales of US$236m (IGD, 2011). In order to protect domestically owned supermarkets, the government of Vietnam did not historically encourage 100% foreign-owned investment in the retail industry. However, the regulations of foreign and domestic enterprises were significantly modified after July 1st 2006, when the Foreign Investment Law and Domestic Enterprise Law were replaced by the Unified Investment Law. Since then, foreign investors can invest in any area not prohibited, instead of merely areas allowed by state agencies. This principle has been applied to the domestic private sector since 2000 and to foreign investment from 2006. Moreover, in accordance with the country’s commitments to regional and international integration namely: ASEAN Free Trade Area (AFTA), WTO, Vietnam-US Bilateral Trade Agreement and the Japan-Vietnam Investment Agreement, the retail market gradually opened to foreign investors. The permitted foreign capital share was raised to 50% in 2008, while, from 2009, Vietnam allowed 100% foreign owned retailers to operate within its borders (under the pre-2009 regulations, the foreign partner could only hold up to 49% of capital). Throughout the ‘transition’ and into the ‘globalization’ periods, Vietnamese domestic retailers attempted to firm-up their competitive position prior to TNC
  29. 29. 29 entry when de-regulation loosened the restrictions on expansion. These domestic retailers not only focused on developing the supermarket format, but also cultivated new formats such as: The supermarket, trade center and Domestic retailers such as Maximart; Co- op Mart developed this format that was subsequently developed by retail TNCs through some Lotte stores in 2008, 2011 and a selection of Big C stores in 2009, 2010, 2011. The convenience store format has been developed in the Vietnamese retail market both by domestic small store operators and by multi-format retailers, typically those that specialize in supermarket retailing. Domestic supermarket specialists that have developed c-stores include Hapro, Citimart and Saigon Co-op. Meanwhile convenience store specialists include both domestic and foreign retailers. At times, these small stores have been located at petrol filling stations (such as Day & Night convenience stores, owned by Phu An Thinh Company). Frequently the development of the convenience store within Vietnam stemmed from upgrading the small domestic independent operators and consolidating them into a larger and centralized retail operation. For example, Hoang Corporation introduced two approaches to convenience store development: Firstly, upgrading the existing traditional family-owned store into standard 24Seven store with all-in support from design, layout to sales training. Secondly, via a BOT (Build-Operate-Transfer) contract; an all-in franchise whereby the owner could operate without the concerns of store establishment and goods supply. By far the largest convenience store operator was G7Mart, founded by the owners of Trung Nguyen Coffee Company, which set about ‘upgrading’ existing grocery stores. G7 trained the owners/sellers, in the process applying information technology to coordinate the store systems and standardized the store signage (Saigon Times, no date). The units were then re-branded either G7Mart or as a G7 member store. Clearly, G7 Mart capitalized on the existing customer bases of ‘mom and pop’ stores but gained from better in-store standards, product ranges and service levels. By August 2006, G7 had opened 500 G7marts, 9,500 G7 member stores and 70 wholesale distribution centers. However, consumer acceptance of the
  30. 30. 30 retail format and recognition of the retail brand was mixed – an issue exacerbated by the separation of G7mart from its parent company, Coffee Trung Nguyen Company. Consequently, many of the independent operators suspended their contracts with G7 Company and returned to independent status in 2008. (Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.2013) 3.2.2 The Situation of Book and Equipment Retail Market in Vietnam Books, equipment and supplies Market for training is still very wide. According to the International Monetary Fund (IMF), income per capita in Vietnam improve each year; in 2013 was USD 1704 , increasing 12% compared with 2012.(Source : World Economic Outlook Database, April 2013).(For a countries with young populations such as Vietnam, expected demand for educational products and books the equipment for training is very large. These are factors that facilitate potential develop in business and production activities of educational products and high feasibility in the implementation of the business plan of the sector in the coming years. Like clothing shops, while some bookstores in Vietnam are scattered along streets and even leave no trace down narrow alleys, other shops are close together on some streets so-called book streets such as Dinh Le Street, Trang Tien Street, Lang Street in Hanoi and Tran Huy Lieu Street in Ho Chi Minh City. Other shops are located in shopping centers and in areas surrounding schools, universities and research institutes. Interestingly, pavements are the ideal places for unsettled bookshops to display their books spaciously and sell them with highest discount rates, ranging from 30% to 50% off the publisher’s recommended retail price. In bookstores, you do not have to waste your time bargaining as books are sold at their retail prices and sometimes discounts are available for those who buy in large quantity or for frequent customers only. Academic year 2013 - 2014, in order to meet market demand, the manufacturers and the issuance of school equipment and books , school supplies has launched several new products which is rich and diverse in form codes and categories but prices remain relatively stable . Instead of choosing a small retail
  31. 31. 31 stores sold the product of books, notebooks, school supplies for their children as the year before, the first destination of many parents this year is the supermarkets, bookstores, bookstore systems. In addition to ensuring product quality, clear origin, supermarkets, bookstores were associated with the manufacturers to offer discounts. This year the number of items in learning services of Vietnamese brands in supermarkets, bookstores accounted for about 70-85 %. The previous year, consumers often preferred the products with nice designs, low price. This criteria is easily found in the products of Chinese origin as pens, pencils, wax, animal shaped erasers, rulers ... Although no studies have pointed out the real school supplies products by Chinese manufacturer harmful to the user but more recent information Chinese products containing toxic additives, does not guarantee safety for many users appear to most people consumers tend to choose domestic products. The brand has been gained the market 's trust in paper notebooks is Hong Ha , Hai Tien , Tien Thanh , Vinh Tien ; Thien Long Pen , Ben Nghe and the type of book bags , backpacks produced by Vietnam . Notebook type 72 pages - 96 pages from VND 3500-7500 at the same price / book ; type 120 pages VND 6000-15000 copper price / book ; type 200 pages VND 12000-16000 copper price / quality notebooks and paper manufacturers. In addition to the advantages bright white paper, white paper various types of inorganic natural anti -glare, eye strain, the price difference is about VND 500/ book. Pens can vary in price VND15000-70000 / medal ; ballpoint pen types priced from VND 2000-7000/unit ; pencil, crayon from VND 3000-10000 unit; Text boxes cost VND 5000-35000/medal depending on type (plastic, cloth or tin). The type of backpack, briefcase Vietnamese brands like Ming Tien, Ladoda, Hami ... were put on the market with a sleek, durable and popular. The advantage of this product is light; the strap can be moved back and look under the age of each user, angled scratch ... with prices ranging from 200-550 thousand VND / unit. Although the price of this product increased 10-15 % compared to last year but still a lot of people choose to buy. This year, many kinds of school supplies for students appearing fancy designs as backpacks, notebooks, rulers, pencil case... are printed animals, cartoon characters with funny colorful collection were thronged with customers chatter. Other products such as table lamps, lamp against myopia,
  32. 32. 32 student desks, pocket PC ... Vietnamese brands are also sold with many designs, colors and quality not inferior to imported goods. In the case in this report Ha Tinh province has a lot of schools: 340 elementary schools, 200 junior high schools, 45 secondary schools and the University of Ha Tinh.(Source : HBE’s website http://hbec.com.vn/hbec/). Therefore, the demand for school equipment and toys are great. Moreover, the company is the main producer, supplier and distributor of school equipment and children's toys in the province and neighboring provinces. Currently, the Company's products produced are consumed virtually entire products. In the future, the increasing demand of the market is a promising development for the Company. 3.3 The Situation Analysis of Retail Activities in HBE 3.3.1 Infrastructure One of the most important factors of retail industry is the retail place. The suitable place is the very first criteria which bring the strength to retail brand. Other factors such as product, price comes after. Every retail enterprise or trade has its own criteria. For example, a donut shop needs in a convenient way on the way to work. On the other hand, wine shop is located on the side of the road under the way home from work place. The choice of location has a huge impact to chances of success. In this report’s case, HBE’s stores locate on the main street, in the center part of the city which covers a geographical area of market to share the cost savings and product distribution. Company has two store account for more than 1000 square meter placed at 58 Phan Dinh Phung street, the main street in Ha Tinh City. On the first floor, there is many education services stuff and Vietnamese- English dictionaries, great section in Vietnamese on history, culture, and political. On upstairs is the best selection of French and English children's books - lots of education services materials, school facilities such as chairs, table... Etc. On the top floor they have office supplies, gift section, toys, and various other random things. Due to its daily activity, this place draws many people and employees into the area during business hours. The place is also the hub for public transportation, and there is a high level of pedestrian traffic. In addition, it has a large number of
  33. 33. 33 residents living in the area, passersby are crowd which is convenient for the retail place, but also where there are high land rents. Moreover, limited parking and longer driving times can discourage suburban shoppers from patronizing stores in this place. Shopping flow in the evening and on weekends is a little also slow in this place. Shoplifting is also a concern, requiring increased security costs and/or inventory losses. To select the appropriate location, HBE used different methods for assessing the statistical location as vehicle traffic through the investigation of the shopping habits of consumers, the local analysis competition points. HBE usually evaluate sales performance of a particular store by the criteria: the number of people who go through the store in a day average, the proportion of people in the store passing of the stores, proportion of persons in the total number of people shopping in the store, the average amount spent for the purchase of a customer. One can shop for weakness lies in the unfavorable position, or at least bear had passersby into the store or more people into the store just to surf rather than buy, or not buying many goods. All these problems could be overcome. In HBE, Traffic density problems are solved by choosing more appropriate location; number of people in the store raised by more attractive advertising and display rows in a beautiful glass counters to attract attention and customer interest, and some shoppers and purchases primarily a matter of quality, product pricing and sales of art. 3.3.2 Human resources There are eight people take part in the managing process of HBE. Most of them do not have qualification that suit the business of company. And in this kind of dynamic business sector, some of them are really old for the job, could not stand the change. (See more at appendices). And along with these leaders are nearly 56 workers, most of them are related with these leaders, together contribute and develop company. (Source: HBE’s database)
  34. 34. 34 According to Mr. Bao Ho Gia (General Director of HBE) and Mr. Toai Nguyen Thai (Manager of Organized and Administrative Department) at the moment, in HBE, the situation of human resource in staff could be summarized as below: - Lack of professional in working, being late and lazy at work - Lack of confidence in communication led to the lack of present ability, influence and persuasion; - Lack of creativity, passive thinking leading to difficulties when cope with situations need to take proactive measures; - Lack of ability to control emotions, especially when they are put into solving situations with difficult customers or the conflict of interests; - English proficiency is not met the basic requirements to serve foreign customers at the counter; On the other hand, the leaders are not very well training at management skill as well as specialized. (See more at appendices). Not much man being unable to take high pressure from work because of the age. They are a little too old for the job. To be honest, it is very hard to find out a man who is well trained in term of retail management major, mostly doing business based on experience and intuition, do not own any long-term strategy. In addition, the high position is rarely delegate any important mission to their staff, they like to do it on their own because in their mind, no one can do it better than them, consequently, the staff are not received many chances to develop. And moreover, company does not pay much attention at human resource training activities. They are only good at adaptation under the dynamic change of the market, able to meet the trend of customer demand. Developing retail market requires certain conditions: extensive networks, fixed costs (retail location, infrastructure investment) large, professional workforce suitable for retail properties. In three major conditions mentioned above, the first two conditions can quickly establish if there are sufficient material resources. However, the third condition is not easily created by them related to human factors - the most important factor in the process of reform and development. Best human
  35. 35. 35 resource not only master all these networks, the technology but also is the decisive factor improvement network, technology, processes ... and what is more important is to create and maintain sustainable relationships with customers 3.3.3 Logistic System HBE do self- made logistics services which means that company take care from A to Z, from the stage of warehousing, freight to distribution centers or retail stores. Company own two large trucks to do the goods transportation on the end of each month, and they store the inventory in the warehouse where is wide about 50 square meters in backward of the two stores. There are two drivers, whenever needed they bring new product from the manufacture replacing the old inventory as well as supply the deficit amount of goods. The manufacture placed at Hoang Ha, Tan Trung Village, Thach Trung, Ha Tinh City, Ha Tinh Province, about 15 kilometer far from the store, which take about 20 minutes for driving. Companies do self-made logistics services is a huge obstacle to competition, resource waste and inefficiency. Because companies have spent large sums of money, usually borrowed to invest in systems infrastructure, technical facilities like cargo warehousing, loading and unloading equipment, transportation, human resources management ... at that time, in addition to financial pressures, apparatus bulge, company also most at risk, if the waste of storage capacity, means not being fully exploited, or are stuck in a row in several stages. Thus, self- service logistics enterprises only fit the huge hypermarket chains internationally. Logistics system of HBE as warehouse storage, specialized vans asynchronous, not qualified under state regulations. In addition, system protection and management of goods are not absolutely safe Efficient supply chain management provides two benefits to retailers and their customers: (1) fewer stock outs and (2) tailored assortments. These benefits translate into greater sales, lower costs, higher inventory turnover, and lower markdowns for retailers. Logistics, as Peter F. Drucker, the father of modern school management industry, has predicted “Logistics is the driving force for innovation and new opportunities that we have not touched. It was “hidden shelf “of the economy.”
  36. 36. 36 Logistics today solve three simultaneous flow of important and crucial that the world economy is the flow of material, financial flows (capital) and information flow. If there is an effective solution and the most effective for three flow control on the business as well as in each country, this is logistics flow that the ultimate goal is to help people save resources , and resources enjoyment right time, right place , right cost , quality and price. The challenge remains the largest global logistics is a blockage of these three flows. Where we have found that the material is still distribution gap, where full inventory, where the lack of resources, high logistics costs and poverty, and meet customer satisfaction remains a gap! Besides, the coordination of the delivery vehicle type, right place, and right time still operates quite simple. This does not only affect the business but also increase labor costs as well as management. 3.4. Evaluate the situation of retail activities of HBE 3.4.1 Strengths The company has always focused on exploration and creative ways to develop; taking advantage available is Vietnam's retail market development potential. Company knows to invest in important factors such as human and trade promotion. The advertising activities, promotion ...Vietnamese style initially be used effectively. Having the ability to update information quickly, understand consumer tastes, easily adapt to business environment and react promptly against market fluctuations. The retailer is in direct contact with the consumer, have the opportunity to closely understand the needs and cultural traits, traditions and mentality of each customer segment. 3.4.2 Weakness Financial capacity of HBE still weak. Scale low amount of capital, the ability to access loans from banks Trade and other financial institutions also very difficult. This makes enterprise scalability limited scale of operations, the first investment projects, advertising campaigns, market research ...
  37. 37. 37 Logistics system is very weak, did not meet the requirements. From system trucks, warehouses, storage methods to protect systems and cargo management are outdated, not competitive enough. This can easily lead to shortages as demand rises and not preserved when excess merchandise. Work style is still unprofessional, qualifications of leaders is limited, lack business management skills, lack of knowledge and practical experience. Scientific technical and technology is low. Use of equipment, old technology, and means of payment is outdated, making it difficult for shoppers. The ability to apply information technology in business processes is still very limited.
  38. 38. 38 Chapter 4 Recommendations for developing retail activities in HBE 4.1 Corporate with other local retailers in order to improve financial capability and logistic systems In the business situation of Vietnam at present, namely the majority of small, sporadic and disjointed business, only a handful of now regarded as " big" as the domestic retail Saigon Co-op, Phu Thai, Satra ,Hapro ... but only has low financial compared with the set Foreign retail groups like corporations in Vietnam Metro Cash & Carry, Big C ,Parkson .... , the association is an inevitable trend if local retailers to survive and development in their home market. Because there is currently no common definition of what about legal issues links between businesses, the division of the form of association are also many different ways, so in this section I will only raise a number of effective ways of association which is capable of high practical applications in the current circumstances of HBE. There are many forms and levels of various cooperate, from one section to full associate. To achieve economic efficiency from the association, the joint companies should at least link the point of purchase, which means companies general will agree to buy goods together. Doing this will increase the number of units traded goods in one order, and thus easier proposed increase in the discount or rebate related costs from the producers, through which the retailer in the collaboration can reduce purchase costs, create competitive advantage when compared with others . This form is quite easily done as it does not require too much from retailers. However, in order to achieve greater discount or related costs requires linkages must also be large enough to some extent that is enough to cause the producer accept the offer. The next form of cooperation is in which retailers can make the link in transport logistics, storage and distribution of goods from the warehouse to the retail store. If retailers only link in the point of purchase, the purchase of goods
  39. 39. 39 arriving gathered, owners will automatically transfer their goods through the warehouse the various transport services. But in this form of association, cargo will be transferred to the general gathering of unified storage, and transportation services from where the goods to the warehouse, from warehouse to distribution facilities will be agreed to use the same logistics system. All activities will take place such as a large retail enterprise storage and transport rather than separated out various as other small retailers. As well as common purchases, links in logistical help to the members minimizing cost quite a lot compared to when there is no link. There's also a few other forms of association like affiliate support stitched together in sales, affiliate promotion activities , links in the search for market information ... all for the purpose of minimizing costs for members and creating linkages are the positive effects greater retail distribution operations . 4.2 Enhancing Customer Service Attracting new customers is difficult, retention of old customers, making them became patrons even more difficult. Meanwhile, patrons bring 60-70% of revenue for the retail store. Therefore, HBE need to pay attention to these measures build trust and retain its customers. The customer back regularly shop at a store or a supermarket is for any reason? That is because they feel satisfied when buying and shopping there. So the art to retain customers is to give them comfort when they are shopping. In situation of retail in Vietnam today, the price competition with foreign retailers are notoriously difficult for internal retailers. Therefore, instead of trying to entice customers by offering lower price, the retailers should follow trends make an impression by serving customers more professionally. In order to improve the quality service, the first thing that the retailers need to do is to improve the capacity of the serving staff. A retail store have good customer service is the place where customers feel respected, feel comfortable while shopping. The sales staff, billing staff, the direct contact with customers should have a friendly attitude, welcome customers. Moreover, a salesman not only know divestiture unloading cargo or sale to consumers , but also need to understand
  40. 40. 40 the goods to be able to help, advise customers when interrogated . Moreover, the staff needs to be proactive asked to advise clients. Service attitude towards customers is also manifested in term of management of treat customers like, especially when the service receives the complaint from consumers. In the modern retail stores today, being complained, complaints from shoppers are not infrequent. Of course, the cause of the malfunction is not always from the retailers; even when it was due to reckless or understand know of the consumer. However, a good manager, a thing act wisely will always seek to resolve issues quickly and to satisfy the customer. Based on the experience of the manager’s reputation, once there incident occurred complaints, should quickly analyze the causes and offer solutions appropriate. In case of error from the consumer or from any third party, should be explained clearly with customers and quickly take measures to compensate satisfactorily. Shouldn’t for that little bit of profit to offend customers, so as not to prolong the matter resolved because that will make thing worse. One thing that managers should keep in mind, a when customers are dissatisfied with a retail store, they will not return it again, and they will continue to complain to those around when given the chance. In addition, retail quality service is also built through the development modern payment system, fast; or the supply of quality products good quality; the convenience store layout and eye-catching. 4.3 Creating an appealing store atmosphere The environment in a store, the design of the store & the presentation and location of merchandise in the store has a significant impact on shopping behavior. The design of a store or Web site can attract customers to visit the location, increase the time they spend in the store or at the site, and increase the amount of merchandise they purchase. Store design can also have long-term effects on building customer loyalty toward the retailer by enhancing the retailer’s brand image and providing rewarding shopping experiences that encourage repeat visits.
  41. 41. 41 There are six factors that can creating an appealing atmosphere, which I think it can be apply easily in order to improve retail activities in HBE. That is lighting, highlighting merchandise, color, music, scent and energy efficient-lighting. 4.3.1 Lighting Good lighting in a store involves more than simply illuminating space. Lighting can highlight merchandise, sculpt space, and capture a mood or feeling that enhances the store’s image. Retailers are exploring ways to save energy with technologically advanced lighting. Having the appropriate lighting has been shown to positively influence customer shopping behavior. 4.3.2 Highlighting Merchandise A good lighting system helps create a sense of excitement in the store. At the same time, lighting must provide an accurate color rendition of the merchandise. For instance, Walmart has been putting skylights into the roofs of its stores. This addition cuts energy costs and creates more natural light, which is excellent for hardware and home goods. However, it is best to use artificial light for apparel so that customers can clearly see details. Another key use of lighting is called popping the merchandise —focusing spotlights on special feature areas and items. Using lighting to focus on strategic pockets of merchandise trains shoppers’ eyes on the merchandise and draws customers Pike Place Fish Markets’ employees play a major role in creating an entertaining and rewarding shopping experience. Strategically through the store, Nike, for example, uses a lot of contrast and shadows, highlighting the merchandise but not necessarily the architecture. Mood Creation Traditionally, U.S. specialty and department stores have employed incandescent lighting sources to promote a warm and cozy ambience. Overall lighting sources were reduced, and accent lighting was pronounced to call attention to merchandise and displays. It was meant to feel like someone’s home—dim lighting overall, with artwork and other areas of interest highlighted. Many stores and boutiques in department stores use low levels of light to coordinate with their overall ambience of resembling a townhouse. Department and mass- market retailers, in contrast, tend to be more brightly lit overall.
  42. 42. 42 4.3.3 Energy-Efficient Lighting As the price of energy soars and retailers and their customers become more energy-conscious, retailers are looking for ways to cut their energy costs and be more ecologically friendly. One obvious source of energy consumption is the lighting in a store. Stores are switching from incandescent lighting to more energy- efficient fluorescent lights. 4.3.4 Color The creative use of color can enhance a retailer’s image and help create a mood. Warm colors (red, gold, and yellow) produce emotional, vibrant, hot, and active responses, whereas cool colors (white, blue, and green) have a peaceful, gentle, calming effect. 4.3.5 Music Like color and lighting, music can either add to or detract from a retailer’s total atmospheric package. Unlike other atmospheric elements, however, music can be easily changed. For example, one retailer has a system that allows certain music to be played at certain times of the day. It can play jazzy music in the morning and adult contemporary in the afternoon. These selections mirror the findings that most of its morning shoppers are older, whereas afternoon shoppers tend to be in the 35- to-40-year age range. Retailers also can use music to affect customers’ behavior. Music can control the pace of store traffic, create an image, and attract or direct consumers’ attention. Managers realized that although children are the consumers of their products, adults are the customers. In general, though, slow is good. A mix of classical or otherwise soothing music encourages shoppers to slow down, relax, and take a good look at the merchandise. 4.3.6 Scent Smell has a large impact on customer’s mood and emotions. Scent, in conjunction with music, has a positive impact on the customer’s level of excitement and satisfaction with the shopping experience. Scents that are neutral produce more positive feelings toward the store than no scent. Customers in scented stores think they spent less time in the store than do those in unscented stores.
  43. 43. 43 Chapter 5 Conclusion In this graduation report, I choose the topic: “Developing the retail activities at HBE”. Opening up with the only objective is to find out the solution to improve the retail activities in HBE, i mainly focus on three retail theories: central place theory, supply chain theory and merchandise placement theories as fundamental theories to apply into analyzing HBE’s retail activities. After that, by giving an over view of HBE in term of establishment and development, organizational structure& finance situation, as well as Vietnam retail market, along with the situation analysis of retail activities in HBE concluding three main factors: infrastructure, human resources& logistic system; and then i come up with an evaluation of situation of retail activities in term of strengths and weakness. Based on what I have found, I shall then give three recommendations to develop retail activities of HBE; firstly, corporate with other local retailers in order to improve financial capability and logistic systems; secondly, enhancing customer services; thirdly, creating an appealing store atmosphere. Moreover, I have gained for myself a lot of useful knowledge in the retail sector during the research process. The market change every day, the policy changes every day as well as customer demand, interest rate…You cannot affect these factors. But, as a retailer, you can to develop a vaccine in order to overcome difficulty in front of you. In case of HBE, the most important thing now is to identify the right business direction long-term as to enhance the financial resources and infrastructure through solutions such as corporation. The corporation is essential to do because it not requires multiple procedures that are consistent with the retailers which has small scale as HBE. Next, HBE need to focus on the work of opening markets towards rural areas , work to promote the brand and customer retention familiar ... The proactively training human resource to meet the requirement of modern and professional are extremely important when in become scarce in term of human at both levels of management as well as salesman.
  44. 44. 44 References 1. Applebaum, W., & Kaylin, S. O. (1974). Case Studies in Shopping Centre Development and Operation.New York: International Council of Shopping Centers 2. Christaller, W. (1933). Central Places in Southern Germany. London: Prentice-Hall [1966]. 3. Coe, N. and Hess, M. (2005), "The internationalization of retailing: implications for supply network restructuring in East Asia and Eastern Europe", Journal of Economic Geography, Vol. 5 No. 4, pp. 449-473. 4. Dawson, J. A. (1980). Retail Geography. London: Routledge. 5. Emmett Cox. (2012), Retail Analytics, The Secret Weapon, John Wiley & Sons, Inc., pp 76-78. 6. Financial Statement of HBE from 2010-2013 7. Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.(2013), The Emerging Food Retail Structure of Vietnam: Phases of Expansion in a Post-Socialist Environment, p.14-18 8. Huff, D. L. (1964). Defining and Estimating a Trade Area. Journal of Marketing, 28(3), 8-38. 9. HBE’s website and database. Accessed at http://hbec.com.vn/hbec/ 10.Johan P.Larsson & Özge Öner.( 2014), LOCATION AND CO- LOCATION IN RETAIL: A probabilistic approach using geo-coded data for Swedish metropolitan retail markets, pp.5 11.Lösch, A. (1940). The Economics of Location.Jena: Fischer, 1940. English translation. New Haven: Yale University Press. 12.Michael Levy & Barton A.Weitz.(2011), Retail management, 8th edition, Irwin/McGraw Hill 13.Sparks, L., & Dawson, J. A. (1989). Land Use Policy: Institute for Retail Studies. 14.Thejeswini. G. (2010), “Retail Formats”, Ezine Article.
  45. 45. 45 15.Trang Lam.(2014), “Bán lẻ : Ngành hot ở VN 2014” , Trí Thức Trẻ. Accessed at http://www.gocnhinalan.com/bai-cua-khach/bn-ngnh-hot-vn- 2014.html
  46. 46. 46 Appendices HBE’s human resources qualifications 1. Ho Gia Bao – General Director of HBE and also the Chairman of Board of Management of HBE Qualifications: - Bachelor of Business Development - National Economics University - Bachelor of Mathematics - University of Pedagogy 2. Ho Phuong Nam – Deputy General Director of HBE,the member of Board of Management Qualifications: - Bachelor of University of Pedagody 3. Nguyen Thai Toai – member of Board of Management, Manager of Organized and Administrative Department. Qualifications: - Intermediate School 4. Ho Thi Nga – Deputy General Dicrector of HBE Qualifications: - Intermediate – Da Nang TW2 Food Intermediate School 5. Nguyen Thi Thu Hang – Deputy General Director of HBE, Chief Accountant Qualifications: - Bachelor of Economics - University of Finance and Accounting 6. Nguyen Thi Yen – Manager of Board of Supervisory Qualifications: - Intermediate of Finance and Accounting 7. Nguyen Thi Lan – member of Board of Supervisory Qualifications : - Bachelor of Economics - University of Finance and Accounting
  47. 47. 47 8. Truong Thi Ninh – member of Board of Supervisory Qualifications: - Intermidate school

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