10150125_Nguyen Thao Linh_BS_A1.

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 Task 1:
1.1.
a) Vision:

According to Business Strategy Course Book, vision of a company reflects what it wants
to achieve in the long and short- term future. It is also considered as guidance for the
company’s business activities to follow at the moment and in the future (Business
Strategy Course Book, n.d).

In case of Cộng Cà Phê, its vision is to preserve traditional taste of Vietnam coffee,
deliver the best quality coffee for customers and to retrace the lifestyle of Hanoians in
subsidy period (congcaphe.com, 2016)

b) Mission:

Mission statement defines what the company is and explains the reasons why it exists, it
also is the direction to help the company to achieve its vision. (entrepreneur.com)

For Cộng Cà Phê, its mission is to provide customers a place where they can find the old
Hanoi in subsidy period with nostalgic space, unique decoration, high-quality drinks and
devoted service. Besides, Cộng Cà Phê also wants to bring Vietnam traditional coffee’s
taste and antique Hanoi spirit to not only Vietnamese but also to foreigners.
(congcaphe.com, 2016).

c) Goals:

A company’s goals are parts of planning process, it shows what the company is going to
do over a period of time. The company will base on these goals to start the plan and
adjust business activities. Company’s goals also are the tools to measure the company’s
performance and to evaluate whether the company is on the right track. (study.com)

Cộng Cà Phê has two main goals. The first one is to “Preserve traditional taste and
quality of Vietnam coffee, provide much more value for customers”. And the second one
is “Introduce Vietnam coffee and culture character to other countries such as Korean,
Japan and Malaysia by expending the brand” (congcaphe.com, 2016)

d) Objectives:

According to Chron, the objectives of a company are specific steps to achieve the goals
that the company has set before. To set up suitable objectives, Cộng Cà Phê should use
SMART model as a tool to evaluate their objectives (smallbusiness.chrone.com, 2018).
As I mentioned above, Cộng Cà Phê has two main goals, therefore, to achieve these
goals, they have to set up the objectives. For the first goal, its objective is “Managing the
quality of raw materials and final products based on Ms. Linh Dung (CEO)’s standards”.
I will apply SMART model to measure this objective.

Factors Evaluate Explanation

Specific
 They could not point out exactly the ways which they
used to manage the quality of materials/products and who
would take responsibility for managing.
Measurable
 They pointed out the method which was used to measure
the quality of products/materials (CEO’s standards)
Achievable
 Based on their human resources, it is not difficult to
manage the quality of products/materials
Realistic
 Quality of products/materials is one of the factors that
help Cộng Cà Phê be different from other competitors.
Ms. Linh Dung has set many strict standards to make sure
every cup of coffee is served with best quality materials
and made with heart.
Time-bounded
 They did not mention about the time which they planned
to start and finish this objective
It can be said that this objective of Cộng Cà Phê is not really SMART since it is not
specific and does not have time-bounded.

For the second goal, the objectives is “Open one cafe of Cộng Cà Phê in Korea within the
first 8 months of 2018”

Factors Evaluate Explanation

Specific
 They pointed out exactly number of cafe and the country
that they wanted to open
Measurable
 They mentioned the number of café shop they wanted to
open
Achievable
 Cộng Cà Phê now has more than 50 stores all over the
countries and becomes one of the most successful chains
of coffee shop in Vietnam. Moreover, Korea is a country
with many similarities in culture character, weather,
lifestyle, etc. Therefore, it is achievable. In fact, Cộng Cà
Phê has opened a café shop in Korea in August 2018.
(vietnamfinance.vn, 2018)
Realistic
 Korea is a country which has similar “coffee culture” as
Vietnam. Moreover, Korea and Vietnam now has intimate
relationship in trading. Therefore, to bring Vietnam coffee
to Korean is not difficult.
Time-bounded
 They showed the time that they wanted to open cafe
 clearly in the objective
In general, this objective of Cộng Cà Phê satisfied all criteria of SMART model.

e) Core competencies:

According Michael Porter, core competencies are internal activities which are performed
well to a business’s competitiveness and profitability (BusinessStrategy). In fact, there
are many businesses chase after the opportunities that they think are attractive leading to
failure in unsuitable field because of lacking of understanding and awareness about their
core competencies.

Cộng Cà Phê has two main core competencies. The first one is high quality raw materials
and final products. To serve customers high quality cups of coffee, the CEO of Cộng has
to research and select the most suitable coffee beans suppliers from Buon Ma Thuot
which is famous for high quality and special flavor coffee. After receiving raw materials
from suppliers, they will store up to warehouse and then they will have warehouse
managers to check quality before transporting to other stores. The managers will based on
a list of criteria which is built up by the CEO to evaluate the quality of raw materials,
after that, they will eliminate unsatisfactory ones and then stored up in dry and cool
places to keep in good condition. The second competency is brand image. Established in
2016, Cộng now has more than 50 stores all over the countries, therefore, it can be said
that its chain of stores is successful leading to good image in customers’ mind.

f) Competitive advantages:

Competitive advantages are greater values that the company can bring to customers
meanwhile other competitors cannot (BusinessStrategy). In Cộng Cà Phê case, they have
two competitive advantages. First advantage is special space with ancient decoration and
peaceful, quiet atmosphere. Nowadays, most of coffee houses focus on bringing
European style to their stores because their targeted customer is young people. Young
people are very trendy and modern but easy to get bored as well. They will come to
coffee houses with European style once or twice because of curiousness but there will be
more beautiful and modern coffee houses appear in the market. The CEO of Cộng Cà Phê
has been successful in bring Hanoi in subsidy period to the present. With customers who
are nostalgic or live in subsidy days, they will have a chance to enjoy good drinks in a
familiar space with furniture, devices, decoration that are all collected and selected
carefully by the CEO. With customers who live in modern life, they will find a different
feeling when come to Cộng Cà Phê, they will have a chance to understand more about an
old Hanoi in subsidy period, to put their smart phone down, to interact more with people
around them and to muse on their life (congcaphe.com, 2016). The second advantage is
brand name. Cộng Cà Phê has transferred their core competencies to competitive
advantages. Nowadays, when mentioned “café shops with nostalgic space”, Cộng Cà Phê
is a name that must be on the list.

Cộng Cà Phê’s space and decoration (congcafe.com, 2018)

While other coffee shops’ staffs wear modern uniform, Cộng Cà Phê makes itself
different by designing uniform with army green or requiring the staffs to wear coats of
Vietnam soldier in wartime (congcafe.com, 2018)

Task 2:

2.1. Internal environment:

Value chain is created by Michael Porter, it is used to analyze the value created by a
business’ current activities. It will show how a business can add value to the chain of
activities to satisfy the customers. (Business Strategy)

Concept of Value Chain (SMstudy, 2015)

a) Inbound logistics: After meeting and discussing, we collected some data from the
manger of Cộng Cà Phê. She said that raw materials (coffee beans) were from Buon Me
Thuot, first they went to Buon Me Thuot to research which coffee plantation was most
suitable and then they bought directly from the farmers there. Later on, they kept in touch
and built a good relationship with their suppliers to make sure the quality of coffee beans
was equal, the coffee beans had have to be roasted and kept in good condition before
transported to Hanoi and to have discounts

b) Operations: Based on my observation and experience after survey, each store of Cộng
Cà Phê has a manager and this person will take responsibility for checking condition of
roasted coffee beans before grind into coffee powder. Coffee powder will be made daily
to avoid mold and to maintain flavor and smell. Moreover, this person also has to observe
and guide his or her staff during making process. Besides one manager, each store of
Cộng Cà Phê has about seven staffs in which two of them are bartenders and the
remaining are waiters.

Support activities:

Technology development: Cộng Cà Phê has brought a more modern coffee maker system
and applied to all franchises to improve productivity as well as quality of drinks
(congcafe.com, 2018). It is easy to see that technology plays an important role in
supporting for operations.

Human resources management: Every four months, Cộng Cà Phê needs to re-evaluate
their staffs so that they will have suitable plan such as training or recruitment to develop
quality of the service.

c) Outbound logistics:

As I have mentioned above, after receiving coffee beans from suppliers, Cộng Cà Phê
store it in warehouse with reasonable temperature, dry and clean place. However, Cộng
still needs to learn how other competitors preserve their raw materials or how they design
their warehouse to maintain good condition.

Support activities:

Infrastructure: It can support outbound logistics in term of facilities. For example, Cộng
Cà Phê can store coffee beans in warehouse with air-conditioner or store it in refrigerator.

d) Marketing & Sales:

Cộng Cà Phê has created many promotions s well as advertisements. For example, in
2016, Cộng cooperate with Mobifone to build up a promotion in which 900 customers
who used mConnect of Mobifone could by one cup of coffee for free.

Promotion of Cộng Cà Phê (Congcafe.com, 2016)

Recently, Cộng has released member card for customers in Sai Gon to improve sales
volume.

Member cards for Saigon customers (congcafe.com., 2018)

One of the most outstanding events of Cộng is opening a coffee shop in Korea.
Understanding “love the beauty” culture of Korean, Cộng has decorated meticulously and
carefully the coffee shop in such a way that it still maintain Vietnam culture, Hanoi color
in subsidy period combined with romantic style of Korea.

Cộng Cà Phê in Korea (congcaphe.com, Cộng cà phê chính thức đặt chân đến Hàn Quốc,
2018)

Moreover, Cộng Cà Phê used social media such as Facebook and Instagram to rising
awareness of customers. It can be said that Korea is a country which is strongly affected
by social media power. The recently years, Korea always in the top of the list “Countries
which has highest social networking using index”. By advertising through social
networking like Facebook, Cộng Cà Phê has rising awareness of both Vietnamese and
Korean. They used beautiful picture, hashtags that make Korean curious about the first
coffee shop in Korea. From this point, Cộng has gained a huge number of interaction and
attention.
Cộng Cà Phê Korea’s Decorations (congcaphe.com, Cộng cà phê chính thức đặt chân đến
Hàn Quốc, 2018)

Cộng Cà Phê’s post about the first coffee shop in Korea (facebook.com, 2018)

Moreover, Cộng Cà Phê also use “Mouth-to-mouth” marketing in which customers will
recommend the brand to their friends.
Cộng Cà Phê becomes more and more famous base on recommendations and hashtags in
social networking.

Support activities:

Human resources: To achieve success, Cộng has to have talent marketing staffs to help
them set up such a smart marketing plan.

Technology: Instead of tradition media, Cộng decided to do marketing through social

networking such as Facebook and Instagram and this is sound decision of Cộng Cà Phê
since it brings success for Cộng in raising awareness of customer and building brand
image.

e) Service:

Cộng Cà Phê collects feedback from customers by asking them to fill in feedback paper
or creates online questionnaires in Facebook fanpage. Moreover, Cộng Cà Phê can collect
customers’ feelings about the products and services through some food community such
as Foody, Lozi, etc.

Customers evaluate Cộng cà Phê through Foody.vn (foody.vn, 2018)

Support activities:

Technology: Cộng Cà Phê can do their after sale service by collecting feedback through
social networking such as Facebook, Lozi, Foody, etc.

2.2. External environment:

a) PESTEL:

Political: Vietnam is a peaceful country with stable political which facilitates doing
business in Vietnam, therefore, it is an advantage for Cộng Cà Phê. With the participation
in WTO, Vietnam has more opportunities to import and export as well as to attract
investors from foreign countries. From this point, Cộng will be able to import modern
device from developed countries without trade barrier. However, attracting more foreign
investors is attracting more competitors, in addition, Vietnam has many tax incentive for
enterprises with foreign investment, therefore, Cộng will have to face with not only local
coffee shops but also with foreign competitors. (sblaw.vn)

According to Vietnam Ministry of Finance, Vietnam is proposing to reduce cooperate

income tax for small to medium enterprises down to 15% and 17% (mof.gov.vn, 2017). It
means that loan interest cost, production cost, business cost will also be reduced leading
to raising in competitiveness and investment.

Economics: According to General Statistics Office Vietnam, the average growth rate of
GDP in Vietnam each year from 2000 to 2018 was 6.51%. GDP growth rate increased up
to 6.88% compared to the same period last year in the third quarter of 2018, it is
evaluated as the fastest GDP’s growth since 2011.

Vietnam’s average income was 4126,48 thousands VND from 2007 to 2017 and continue
raising in 2018 with the average wages about 5100 thousands VND.
From that point, it can be said that Vietnamese nowadays have better finance sources and
tend to spend more and more. Therefore, the demand of consumers will increase leading
to opportunities for enterprises including Cộng Cà Phê.

Average inflation rate 6.40% from 1996 to 2018. The inflation rate increased strongly 2%
compared to same period last year, therefore, Cộng has to be careful since their profit,
costs, salaries and prices will be affected negatively.

Social: Coffee was brought to Vietnam by Frenchin in the early of 19th century and
quickly became the drink only for the nobility or urban people. Later on, it became a part
of the culture and lifestyle of Vietnamese. Nowadays, when someone wants to meet
another to chitchat, to discuss their work, to date, etc., (s)he will say “What about going
out for a coffee?” or “ Let’s go to the coffee shop”. Coffee becomes the bridge to connect
people and people.
 Vietnam population pyramid (populationpyramid.net, 2018)

Vietnam’s population is 96,756,579 and evaluated as young population. Most of them are
from 20-34 whose lifestyles are very modern and fashion. As I mentioned, drink coffee
now becomes a trend and is followed by young people all over the countries, therefore,
with this young population structure, coffee market in general and Cộng Cà Phê in
particular will be able take advantage from this elements.

Technology: With the development of technology and Vietnam’s participation in WTO,

it is not difficult to import modern and high quality devices from other countries. Cộng
Cà Phê will have opportunities to upgrade their equipments to improve productivity as
well as products’ quality.

Moreover, social network becomes more and more famous and the number of mobile
phone users is rising day by day. Therefore, Cộng Cà Phê should take advantage from
this opportunity to deploy marketing activities through social media such as Facebook,
Instagram, websites, etc.

Environmental: Vietnam has tropical monsoon climate which is ideal for planting coffee
trees. Therefore, Vietnam now is the number one country that has highest export volume
of coffee. However, this type of climate is not ideal for preserving coffee beans. With
high temperature and humidity, coffee beans have to be maintained in dry, cool and clean
place. On the other hand, with coffee powder, it has to be preserved in clean glass bottle
and placed in airtight place. Moreover, coffee powder cannot be placed in refrigerator
because it has strong ability to absorb smell, therefore, its odor can be affected by smell
of other foods. Cộng Cà Phê has to be careful when preserve raw materials so that they
can serve the best quality final products for customers as their vision statement.

Legal: Food industry in Vietnam has many strict laws to protect consumers’ health which
were listed in Food Safety Code in 2010 (moj.gov.vn, 2010). Besides, there are many
laws that Cộng Cà Phê need to keep an eye on and follow such as Competition Law 2004,
Labor Code 2010, Enterprises Law 2014, etc.

b) Five forces:

Five forces model adapted from Michael Porter (cgma.org, 2013)

- Threat of new entrants:

Capital requirements: At the beginning, the cost to build up a Cộng Cà Phê store is
about 15 million VND since the decorations cost was not expensive, most of them were
collected and bought from the stores which sold broken and old equipments/devices.
Costs for renting coffee makers was also cheap, from 2 million to 5 million per 1
machine. However, to own a brand new and professional coffee machine, enterprises
have to spend a lot of money – from 20 million VND to 700 million VND. Besides,
enterprises have to consider renting cost. Renting costs will be based on location, the
closer to the center of city the more expensive. Besides, cost for raw materials such as
coffee beans also low. In general, capital requirements are not barrier for new entrants.

Access to distribution channels: One of the biggest competitors of Cộng is The Coffee
House. The Coffee House now has 64 stores in 5 provinces and cities in Vietnam.
Meanwhile, Cộng Cà Phê has more than 50 stores in Vietnam and one store in Korea.
New distribution channels are not difficult to establish, therefore, this is not a barrier for
new entrants.

Switching costs: Customer will not have to pay a lot of money to switch to other
suppliers. There are many existing firms in coffee market who have the same products,
same price with Cộng. However, to find another coffee house in Vietnam which provide
spiritual values like Cộng is not easy.

In general, the threat of new entrants for Cộng is high since the barriers to entry is quite
weak.

- Bargaining power of suppliers: Cộng Cà Phê proclaimed that their raw materials were
bought from Buon Ma Thuot – a coffee sanctuary of Vietnam. In Buon Ma Thuot, there
are several coffee suppliers with a wide range of quality and price. Therefore, Cộng can
choose the best supplier which satisfies their requirements such as reasonable price and
high quality. With such a large number of suppliers, if Cộng does not satisfy with any
supplier, they can switch to another one which fit them the best. In general, bargaining
power of suppliers is not high.

- Bargaining power of customers: In the market, there are many coffee houses that
Cộng has to compete with such as The Coffee House, Highland, Starbuck, etc. Besides,
drinking coffee has become a part of Vietnamese lifestyle for a very long time, therefore,
there are many burden streets which peddle coffee. From this point, cost of switching is
low so customer power is high.

- The threat from substitute product: Nowadays, besides drinking coffee, drinking
bubble tea is a trend also. That is the reason why bubble tea shops of several brands such
as Dingtea, Royal tea, Chago, etc. are excessive growing. Therefore, instead of drinking
coffee, customers can easily switch to drink bubble tea if they want somewhere to meet
others, to drink trendy drinks or to take pictures. Besides, many people drink coffee to
boost energy. In the market, the appearance of bottled energy drink such as Mountain
Dew, Monster, Redbull, etc, will be a threat since it can be the substitution of need. The
customers will use these bottled energy drink instead of coffee. In general, the threat from
substitute product is very high.

- Competitive Rivalry: Cộng has to compete with not only local brands such as Trung
Nguyên, The Coffee House, Highland, Vinacafe etc. but also foreign ones such as
Starbuck, Netcafe, etc. In terms of quality and flavor, Cộng cannot compete with
Starbuck and Highland. In terms of price, it cannot compete with Vinacafe or Nescafe.
The only thing that makes Cộng oustand in the market is spiritual values, therefore, they
need to develop this strength to be different within the market. Overall, competitive
rivalry is very high.

2.3.

According to Eden & Ackermann, stakeholders are the ones who can intervene one
business’s strategy. They affect and also be affected by the business’ achievements.
Stakeholders can be an individual or a group of individuals (Eden & Ackermann, 1998).
There are three types of stakeholders: Internal, External and Connected.

Internal Stakeholder: They are Cộng’s managers and employees. The managers will take
responsibility for creating goals and objectives, strategic plan as well as making decision
for the company. On the other hands, the employees are the ones will help the mangers to
transfer these goals and plans to actions and achievements. Cộng should make sure that
the employees are working in clean, active and friendly working environment. Moreover,
Cộng should pay reasonable salaries for suitable the employees. If the salary is too low,
the employees will lose motivation in working leading to effect on productivity and
products’ quality. If the salary is too high, it will affected on financial resources of Cộng.

External stakeholders: They are Cộng’s suppliers and Government. To attract customers,
Cộng needs to develop the quality of raw materials to enhance final product’s quality.
They should be careful when choosing suppliers. There are many suppliers from Buon
Me Thuot which means Cộng can have more choice and low switching cost but it also
means that it will be more difficult for Cộng to find the best suppliers and have a long-
term commitment with the suppliers to have discounts. As Cộng has opened a branch

Connected stakeholders: They are customers. Customers are the reason why most of
enterprises exist on the market. In Cộng’s case, they create spiritual values and special
space for customers to live again in subsidy period among this chaos life. By delivering
spiritual values, different feelings, good drinks and dedicated service, Cộng will gain
trust from customers, they will come back more and more and even introduce Cộng to
their friends, relatives and families.
2.4.

a) SWOT analysis:

Strengths Weaknesses
1. Special and unique decoration 1. Poor website
2. Special drinks with unique recipe such as 2. Poor management
Coffee with coconut milk, Coconut milk 3. Unequal quality of services
with green rice, Coconut milk with mung 4. Unstable price
bean, etc
3. Good drinks
4. Location
5. Unique and famous brand name
Opportunities Threatens
1. A wide range of suppliers 1. Many strong competitors
2. Growth of technology especially social 2. High inflation rate
media 3. Many substitute products
3. “Taking picture” trend of young people
4. Income per capital rate is raising
5. Participation in WTO

b) Combination:

SO combination:

S1O1: The more famous Cộng Cà Phê becomes, the more suppliers will proactive come to
Cộng. In this case, Cộng will be able to choose suppliers freely without spending too
much time on finding suppliers.

S1S4S5O2O3: With “taking picture” trend, unique decoration with beautiful view and
famous bran will help Cộng more famous. Customers will be attracted by nostalgic
facilities and devices, posters with funny slogan and nice view. In addition, Cộng’s drinks
are decorated with a star or communist party logo which becomes a feature of Cộng Cà
Phê. Famous brand name is also an element which makes customers come to Cộng and
take pictures to post on social networking to share memories and sometimes to show
others that they are very on trend.
 Coffee with coconut milk (congcaphe.com, Menu, 2018)

When using hashtag “Cộngcafe” on Instagram, there are many results show up
(instagram.com, 2018)
S5O5: The participation in WTO helps Vietnam to become an attractive market for
foreigners. With famous brand name, Cộng Cà Phê can attract foreign investor so that
they can help more capital to develop the brand.

ST combination:

S5T1: As I mentioned above, besides competitors who have brand name in the market,
there are many people sell coffee on the sidewalk or burden street. Famous brand can
help Cộng to defeat weaker competitors and these ones.

S1S2S3S5: Unique decoration and drinks will make Cộng different from other competitors.
Moreover, simple menu but high quality drinks is a advantage for Cộng since many
companies failed when doing business in coffee market because of complicated menu but
poor quality drinks (coffeetree.vn, 2016).

Special drink of Cộng Cà Phê: Coconut with green rice and Coffee with coconut milk
(congcaphe.com, Menu, 2018)
 Beautiful and unique decorations of Cộng Cà Phê (congcafe.com, 2018)

Some funny slogan of Cộng Cà Phê (congcafe.com, 2018)

S1S2T3: Although the threat of substitute products is high, Cộng still have special drinks
with unique recipe such as coffee with coconut milk, coffee with green rice, coffee with
mung bean, etc.

WO combination:

W1O2: With the development of technology, Cộng Cà Phê should improve their website
quality to catch opportunities which technology brings to. Maybe they can hire a
professional website designing team to recreate its structure. Moreover, Cộng should
focus more on rising interaction on Facebook. Although Cộng really take care of
uploading posts, creating events and promotions, their interactions still very low except
some posts which Cộng use boost tools.
 Website of Cộng is good-looking but the content is very simple and poor
(congcafe.com, 2018)

Facebook fanpage of Cộng has about 124,090 likes but the number of likes of one
post averages 45 likes (facebook.com, Cộng Cafe, 2018)
W2W3O2: Beside training staff to improve the service quality, Cộng can take advantage
from technology to solve this problem. They can buy managing software, camera system,
managing warehouse software, etc. to monitor and manage their staff so that they can
find out right time where any staff has wrong behaviour/attitude and fix it.
W4O4: Since income per capital in Vietnam is rising, people tend to spend more for
improving life quality. However, the price of Cộng Cà Phê’s products are still high with
customers who have not had a job yet, therefore, they should consider to reduce the price
a little bit.
WT combination:

W1W2W3W4T1: In a market, weaknesses can make the business be defeated by other

strong competitors, therefore they need to change these weaknesses to limit the threat
from competitors. In this case, Cộng should improve their website, management and
service quality by taking advantage from technology as I have mentioned above.
Moreover, they should refer other competitors’ price so they can adjust theirs in such a
way that it will be as most competitive as possible.

W4T4: Inflation will have a negative effect on the price, salary and profit of Cộng Cà Phê.
Therefore, they should fix the price according to inflation rate and competitors’ price as
well.