business model analysis of vinacafe bien hoa company
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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
1
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
A Research Paper Submitted to
FTMS GLOBAL ACADEMY, SINGAPORE
In Partial fulfillment of the requirements
For the degree of
HIGHER DIPLOMA IN ACCOUNTING AND FINANCE
By
Nguyen Thi Tuyet Ngan
Student ID: A1111025
(Month/ Year) 02/2013
Ho Chi Minh City, Vietnam
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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ACKNOWLEDGEMENT
At first, I would like to extend my gratitude to my supervisor, Mrs. Duong for her
constructive advice throughout the course of this thesis. Secondly, I want to thank
members of the faculty in Nguyen Tat Thanh Institute of International Education (NIIE).
My heartfelt thanks go to Mr. Khanh for his valuable advice and his helpful ideas in
developing the research questions throughout the course of this thesis. And I would like
to thank all my friends for their encouragement and enthusiasm. Finally, I want to thank
my family members. Especially, I would live to give a thank you to my parents, who
always prayed and encouraged me and helped me complete this work successfully
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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TABLE OF CONTENT
Cover Title Page…………………………………………………………………
Acknowledgement………………………………………………………………
Table of content…………………………………………………………………
Abbreviations……………………………………………………………………
List of Tables……………………………………………………………………
List of Figures……………………………………………………………………
Abstract………………………………………………………………………….
Chapter 1: Introduction…………………………………………………………
Chapter 2: Description of Vinacafe Bien Hoa…………………………………………..
Chapter 3: Literature review……………………………………………………..
Chapter 4: SWOT Analysis and Evaluation……………………………………..
Chapter 5: Report and Recommendations……………………………………….
Chapter 6: Conclusions…………………………………………………………..
Chapter 7: Learning Points/ Future Work………………………………………..
Bibliography/ List of citations……………………………………………………
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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ABSTRACT
According to statistics, the United States, Brazil, Germany is the third leading coffee
consuming countries in the world, consuming about 37% of the world's coffee
production. And it is worth noting that growth in coffee consumption between developed
and developing markets differ. The traditional coffee consumption market in the U.S.,
Germany, and Japan maintained a relatively stable growth rate, and the market with
strong demand as emerging markets: Brazil, Vietnam, China, Indonesia, the Philippines.
Coffee consumption per capita in 2007:
Kg/person
World 1.3
Nordic 10.0
Western Europe 5.0
Brazil 5.3
U.S 4.2
Viet Nam 0.7
Indonesia 0.5
Source: World Resources Institute
Vietnam is the largest producer of Robusta coffee in the world. In particular, by domestic
coffee consumption of the two countries with large export of coffee is Brazil and
Indonesia should increase these countries to strengthen domestic demand service that
coffee production for exports will decline. This is a considerable advantage for the
Vietnamese coffee industry for our country currently exports around 90% of the total
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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coffee production. For the Vietnamese market, the company Vinacafe Bien Hoa able to
maintain its dominance in the market despite stiff competition from manufacturers the
world's oldest coffee is Nestle (Nescafe product line ) and major player in the domestic
company is Trung Nguyen (with brands G7) by well-known brand, customer loyalty and
extensive distribution system. Currently, Vinacafe Bien Hoa distributed throughout the
64 provinces in the country with the line products such as coffee roasters, instant coffee
and cereal nutrition
Beside that, Coffee business not only VINACAFE own sake but to achieve the objective
of contributing to the economy, the country's society and create conditions that promote
economic restructuring towards industrialization and modernization water. To make full
use of land, labor, markets, capital of the People's coffee industry to promote effective
development of the highest economic growth contributing to national economy. Business
must be associated with the market and should consider expanding overseas markets and
domestic survival conditions. Diversification of products, application of science and
technology, advanced media management, to increase productivity, reduce costs, improve
product quality is the key solution, throughout and the business development and also as
a measure of victory in the competition. Contributing to a clean environment.
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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CHAPTER 1: INTRODUCTION
As you know, every day millions of people drink coffee. It is gradually becoming the
most popular drinks today. Coffee aroma, taste and flavor characteristics reminiscent, that
many if not touching each cup of coffee, they will feel like missing something. Many
people prefer unleaded coffee for its taste, but also has the following advantages: it
makes us easier and more comfortable, it can help target fat in the body, coffee reduces
the risk of asthma and allergy treatment, protection against liver diseases, it stimulates
mental activity.
According to statistics, Brazil is the largest coffee producing countries in the world (36%
of total production in 2009), follow by Viet Nam (15%), Indonesia (8%) and Colombia
(6%). Coffee harvest depends heavily on climatic conditions and natural properties of
coffee- usually after a Service acquired, the coffee harvest for the following year would
decline. And specially, economic development has accelerated the process of
urbanization in many countries in the coffee and creates significant changes in the needs
of the world’s coffee consumption. And that is a reason why I chose this topic: Business
model analysis of Vinacafe Company.
Vinacafe Bien Hoa was established in 1975 in the form of an acquisition of the first
coffee processing plant in Viet Nam. The company’s product portfolio included coffee
roasting (0.6% total revenue), instant black coffee (1.5%), 3 in 1 milk coffee and ginseng
coffee (79%) and nutritious cereal (19%). The nutritious cereal products have right
revenue growth, although coffee milk is still the main product in the company. With over
30 years experience in the industry, Vinacafe Bien Hoa becomes the largest coffee
producer in Viet Nam and accounts for about 40% market share. A famous brand,
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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customer loyalty and a strong distribution system, are competitive advantages
characteristic of Vinacafe Bien Hoa. In Brief, although competing with coffee producers
of the world’ oldest coffee company was Nestle (with product lines Nescafe) and
formidable competitor in the country, Trung Nguyen company (with the brand G7), but
Vinacafe Bien Hoa has maintained its dominance in the market.
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CHAPTER 2: DESCRIPTION OF VINACAFE BIEN HOA
History: Company Vinacafe Bien Hoa precursor as Coronel Coffee Factory was
established in Bien Hoa Technology (now the Bien Hoa Industrial Zone 1) 1969. 1975:
plant Coffee Coronel is renamed the name of Bien Hoa Coffee Factory and handed over
to the General Department of Food Technology and Management, under the Enterprise
Union Confectionery Milk-Coffee-1 (this is Vinamilk). 1988: Bien Hoa Coffee Factory
switches directly under the Union of Vietnamese coffee factory (now Bien Hoa Coffee
Corporation). 29/12/2004: Bien Hoa Coffee Factory transformation of business into
Vinacafe Bien Hoa Joint Stock Company with a capital of 80 billion. 01/11/2006: Issue
of shares for existing shareholders and offered for sale to the outside, to increase charter
capital to 94.5 billion. 30/06/2007: Payment of dividends in shares, increase its charter
capital to 113,398.6 million.01/07/2008: Payment of dividends in shares, increase its
charter capital to 141,757.1 million. 25/06/2010: Payment of dividends in shares, increase
its charter capital to 177,195.16 million. 30/10/2010: Issue of bonus shares to increase
charter capital to 265,791.35 million. 28/01/2011: 26,579,135 shares of the Company are
listed and traded on HOSE
Scope of business: Manufacture, sales, import and export of coffee, tea, beverages and
fast food products other
Line of products and brands:Coffee Roasters: including coffee roasters Vinacafe Select,
Vinacafe Super, Vinacafe Natural, Vinacafe Gold. Instant coffee: includes dissolved
Vinacafe black, Vinacafe dissolving 3 in 1, Vinacafe 4 in 1. Cereals nutrition: include
Vinacafe nutritional cereals, cereal nutrition for the yeast
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Development and investment strategy: Vinacafe Bien Hoa is instant coffee processing
plant first of all Indochina. Currently the coffee processing plant the company has the
largest processing capacity in Vietnam with a total capacity of about 1,200 tons of pure
soluble coffee / year. By the end of 2009's instant coffee products Vinacafe Bien Hoa
accounted for 40% of domestic market share, accounting for the largest share of coffee.
Research and manufacturing company 4-in-1 coffee ginseng. And products consumed in
the Korean market, China. Vinacafe distributors covering 64 provinces and cities across
the country and the brand "Vinacafe Bien Hoa" registered trademark in 70 countries
around the world such as United States, Canada, Europe, Pakistan, Japan, and South
Korea... Sales Policy Vinacafe Bien Hoa stable than the competitors. Most of the
company's material used are ordered according to the standards set by the company
should give less volatile
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The organization chart of Vinacafe Bien Hoa:
General Meeting ofShareholders
Board of Supervisors
Board of Management
Board Director
Finance-Accountin
gDepartme
nt
MarketingDepartment
Advertising
Department
Organization &
Administration
Department
Department about
milk-coffee factory
Department about instant black coffee factory
Technical Departme
nt
Business Departme
nt
Deputy Board DirectorDeputy Board Director
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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CHAPTER 3: LITERATURE REVIEW
The table summarizes some of the most prevalent definitions suggested for the business
model.
Author(s)
Year
Definitions Paper citing the definition
Timmers, 1988 The business model is “an architecture of
the product, service and information flows,
including a description of the various
business actors and their roles; a description
of the potential benefits for the various
business actors; a description of the sources
of revenues” (p.2)
Hedman & Kalling, 2003
Amit & Zott,
2001
The business model depicts “the content,
structure, and governance of transactions
designed so as to create value through the
exploitation of business opportunities”
(p.511
Hedman & Kalling, 2003,
Morris et al.,2005; Zott &
Amit, 2007; Zott & Amit,
2008; Santos et al., 2009;
Bock et al., 2010; Zott &
Amit, 2010.
Chesbrough &
Rosenbloom,
2002
The business model is “ the heuristic logic
that connects technical potential with the
realization of economic value” (p.529)
Chesbrough et al., 2006;
Chesbrough, 2007a, 2007b;
Teece, 2007, 2010
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Morris et al.,
2005
A business model is a “concise
representation of how an interrelated set of
decision variables in the areas of venture
strategy, architecture, and economics are
addressed to create sustainable competitive
advantage in defined markets” (p.727).
[…]It has six fundamental components:
value proposition, customer, internal
processes/competencies, external
positioning, economic model, and
personal/investor factors.
Celia et al., 2007
The business model is the plan implemented by a company to generate revenue and make
a profit from operations. The model includes the components and functions of the
business, as well as the revenues it generates and the expenses it incurs. In other word, it
merely describes the way in which a company makes money. It is the accumulation of all
of the sales, marketing, operations, administration, R&D, finance, and everything else
that goes into a business-all the strategies and tactics-hat determine if the company makes
money or does not make money. First, every entrepreneur can pick whatever business
model they want. Second, eventually our efficient market will determine the superior
business model for each industry. Those who innovate the best model for their industry
will most likely win. Those who quickly adapt to this model will likely survive. And
those who stay entrenched in their out-dated and archaic models will die.
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Every business chooses one business model is suitable for enterprise development. And
Vinacafe Bien Hoa as well. Vinacafe gave the 10-year development strategy from 2004
to 2014. Based on the analysis of the demand for speed as well as coffee consumption
increased rapidly, we can see the coffee industry has developed well in the past as well as
promises rapid development in future. Here is the business model that the company
Vinacafe Bien Hoa doing business to grow well
Business model includes 4 aspects: infrastructure, offer, customer and finance.
Regional "infrastructure" consists of three elements: Capacity core: is the ability, or core
competencies, the things that businesses can do the best, the best. These capabilities
contribute to the competitive advantage of the business. Then, Network partners (partner
network): unit includes partnerships with business. The last, Configuration value (value
configuration): the structure of the enterprise that brings value to customers (products,
services).
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Regional "offering" (offer) including an element: word of the declaration or statement of
value (value Proposition): the affirmation of the value / benefits of the products and
services that bring business to customers.
Regional customers (customer), consists of three elements: Target (target customer): the
customers towards business. Distribution (distribution channel): is the channel through
which business to sell products and services to customers. Customer Relations (customer
relationship): a form of connection, interaction, emotional cord between enterprises and
customers.
Financial sector (finance) consists of two elements: The cost structure (cost structure): the
components that make up the cost of the business model. The revenue (Revenue streams):
cash flows of the business.
In addition, the business model of Vinacafe also focuses on the types of products to serve
customers. Vietnamese coffee market today is fierce competition between Vinacafe Bien
Hoa, Nestle, and Trung Nguyen. While, Vinacafe and Nestle to focus on market Trung
Nguyen coffee, focus more on the roasted and ground coffee market. That's one part of
the business model that the company created.
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Vinacafe Bien Hoa Nestle Trung Nguyen
Main products Coffee roasters,
instant coffee,
cereal nutrition
Coffee roasters,
instant coffee,
cereal nutrition
Coffee roasters,
instant coffee,
Design
capacity(ton/year)
1.200 1.000 3.000
Market share of
instant coffee
40% 38% 10%
In 2012, the company achieved a growth in sales and profits. Company maintains a
capital structure and properties quite reasonable at least in the situation now and avoids
the risk of the use of financial leverage. The information on the effective use of company
resources, ability to pay debt, stock form better than in 2008.The Company will review
the investment policy for the coming year to use company funds more efficient and
rational plan reserve materials imported from abroad as cream powder. In general,
operations of the company were relatively good years. Also in last year the company also
focused on implementing other important tasks: Annual Report 2012 Vinacafe -Taste of
Nature Vinacafe. Step by step the company restructured towards specialization and
division and implement decentralization clear, detailed position towards self-
determination and take personal responsibility. This is the step by step application of
governance practices best practices. Restructuring, brand repositioning, new step by step
with pictures Vinacafe strategy of "think globally, act locally", focusing on core values:
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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price natural values, values Vietnam. Prepare recognition system, focusing on the major
labels, and upgrade the system designed to meet the needs of multi-product
diversification in both vertically and horizontally. Better use of marketing tools to
promote your brand performance results.
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CHAPTER 4: SWOT ANALYSIS AND EVALUATION
1. Strength
The strength of the coffee sector is a natural condition that Vietnam has. It was a hot and
humid tropical monsoon climate, and it is suitable for the production and development of
coffee. Particularly in South Vietnam under the hot and humid tropical climate suitable
for Robusta coffee. North Vietnam with cold winters and rainfall should fit coffee
Arabica. With favorable weather conditions, Vietnam is one of the largest Robusta coffee
producers in the world. In addition, the price of Robusta coffee cheaper than Arabica
Robusta coffee so popular in developed markets such as Brazil, Indonesia… Vietnam
will have more advantages from Robusta coffee in the world market as the major
exporting countries such as Brazil and Indonesia tend to reduce output Robusta exports to
keep domestic demand service by type of coffee the average segment as soluble Robusta
is more and more popular in emerging markets compared to expensive Arabica coffee
roasters. This trend is creating favorable conditions for the Vietnamese coffee industry
because now we are exporting to more than 90% of the total domestic harvest Robusta.
Vinacafe Bien Hoa company brand and reputation for years. The company has loyal
customers and distribution network throughout 64 provinces with more than 120 dealers.
Vinacafe Bien Hoa Company is one company that has a staff of highly qualified and have
the skills and experience to the coffee industry. When employees work in the company,
they will be trained in the knowledge related to coffee. In particular, they are responsible,
dedicated and passionate about his work. And when staff encounters these problems, the
company will have direct management work and staff will be able to react acumen for the
job.
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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In addition, the main product is instant coffee market share in the country (more than
40% market share). And most of the material is taken from the company, longtime
partners in the country. Companies maximize the advantages of modern technology,
longtime production experience to boost coffee production. And production technology
does not affect the environment.
With over 30 years experience in the industry, Vinacafe BH has become the largest
coffee producer in VietNam, accounting for about 40% of the market. Famous brand,
customer loyalty and strong distribution system is the characteristic competitive
advantage of Vinacafe BH. Instant coffee products of the company stand out with bold
coffee flavors Vietnamese style than taste more prepared Western style of the
competitors. Coffee recipes of Vinacafe BH very difficult to copy. So, although
competing with coffee makers Nestlé is the world's oldest (with Nescafé product line)
and formidable competitor in the company Trung Nguyen (with brands G7) but Vinacafe
BH maintains its dominance in the market. In addition, one of the other edges of
Vinacafe BH compared to its competitors is widely distributed network with two
branches in the area and approximately 120 dealers across 64 provinces. Vinacafé BH
introduced our products to the U.S. and South Korea and are two market acceptance.
Tendency to expand the scope of activities, bringing the brand to the world is essential
for the development of Vinacafe BH in the future, especially when the new plant goes
into operation:
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2. Weaknesses:
One of the difficulties of the Vietnamese coffee industry in general and the company
Vinacafe Bien Hoa in particular, that the product is not high quality. Technology
harvesting, drying, roasting, drying coffee is made one by hand, are not equipped with the
modern technology leads to the amount of groceries in much coffee reduces the quality
and ensure the quality standards in the world. In addition to the quality of the coffee, we
need to consider the infrastructure. For example, poor roads will increase transportation
costs, reduce the purchase price at the various coffee buyers. And in particular, system
testing and monitoring product quality standards are weak and backward. Countries with
large coffee consumption seriously check and monitor the quality, origin and brand of
merchandise, while in Vietnam; this work has not paid attention to.
Besides, the brand Vinacafe Bien Hoa only attraction in the country that do not have
international power. Annual export earnings at a very modest (about 7-8% of revenue). In
addition, the company has invested heavily for communication, advertising products.
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Communications budget for only about 2% of total revenue. If the company does not give
the product advertising, the consumer will not know the company's brand coffee Vinacafe
Bien Hoa. Risks in business process are the volatility of raw material prices. Due to
production costs accounted for 80% of the selling price should be any changes in the
price of raw coffee and sugar prices have a significant impact on profit of the company.
One of the important factors that affect the company, it is the staff. They can have
negative work habits and lack of work experience. While the company facilitates
academic staff, they do not care and that the lack of formal training, basically.
Natural disasters, epidemics occur regularly and on a large scale with the level of damage
is most severe central region and the Central Highlands. The lives of the majority of
working people face many difficulties, unemployment in the urban high rise, high prices
cause the purchasing power plummeted.
3. Opportunities:
In the current period, the coffee industry has been the interest of the State and has taken
steps to facilitate development, reaching the international level. Since joining the WTO,
Vinacafe Bien Hoa has created vast consumer market. In particular, Vietnam annually
produce 1 ton of coffee, the country's second-largest coffee production in the world, after
Brazil. However, coffee consumption was modest, accounting for about 6% of total
annual production. This suggests that the coffee market potential in Vietnam is still very
large. Moreover, the annual growth rate in Vietnam is high (8-10%). In addition, the
WTO is a great opportunity for the coffee market. Because Vietnam will have access to
the modern technologies more easily. That coffee can help our country with quality
products, to meet the market demands stricter quality. Since that will improve profits
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bring the enterprise and the State. Along with access to modern science and technology,
energy, management level and working style of employees will be improved to compete
to survive in a competitive market fierce as today.
In addition, the company Vinacafe Bien Hoa is building a new coffee processing plant
with a capacity of 3,200 tons / year. When in operation, the total capacity of the
company's coffee processing will increase to 4.080 tons / year.
4. The Challenge:
Joining the WTO, Vietnam has the opportunity to join the world market. However it is a
difficult challenge. First, the WTO requires Vietnam to comply with the agreement on
sanitary and technical measures. That would put the financial burden on small non-
technical and Vietnam. Second, trade barriers will be erected Vietnamese goods as a
necessity in the global economy. In addition, we need to mention the tax policy. Vietnam
is a country not tax-preferred to soluble products when engaged in traditional markets
like the U.S., Japan, and EU ... (this tax is applied in Vietnam is from 2.6% to 3.1%).
Next is the strategic development of the company's coffee Vinacafe Bien Hoa. Currently,
the target set for the Vietnamese coffee industry in the years to not put them in the
context of the overall development of the agricultural sector as well as the Vietnamese
economy. As a result, received positive support from the development strategy of the
national agricultural sector.
For the domestic market, the price of raw material fluctuations, including coffee prices of
raw materials, the prices of sugar, cream powder. These materials are mainly agricultural
goods should be dependent on weather conditions. Since 2010, the price of raw materials
has increased dramatically, while the selling price of the company is difficult to increase
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correspondingly. In addition, fierce competition in the coffee market in Vietnam, with
many famous brands such as G7, Nescafe... Three big brands that dominate the domestic
coffee market now are Vinacafe BH, Nestlé and the Central Highlands. In as Vinacafe
BH and Nestlé focuses on market Trung Nguyen coffee, the market focus more on coffee
roasters. However, after the Central Highlands acquired factory Vinamilk coffee in
September / 2009, the company is likely to increase coffee production three-fold to 3,000
tons / year. Therefore, we expect the competition for market share between these
companies will become increasingly fierce.
Vinacafe Bien Hoa Nestle Trung Nguyen
Main product Coffee roaster,
instant coffee,
cereal nutrition
Coffee roaster,
instant coffee,
cereal nutrition
Coffee roaster,
instant coffee, cereal
nutrition
Design
capacity(ton/year)
1.200 1.000 3.000
Market share of instant
coffee
40% 38% 10%
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Development SWOT matrix reduced:
Strength(S)
∑ Like good coffee.
∑ There is prestige in Vietnam market
by leading a unit of Vietnam's
coffee industry.
∑ Understand the Vietnam market.
∑ Get support from the Government.
Weakness(W)
∑ Mainly by the office, companies,
foreign subsidiaries in Vietnam.
∑ The great difficulty of capital.
∑ Poor facilities, outdated technology
∑ Made mostly raw form, not high
quality.
∑ The research, development and
marketing have not been enough
attention.
∑ Lack of skilled professionals team
Opportunity(O)
∑ International integration, Vietnam
is entitled to the benefits of trade
liberalization.
∑ The stormy development of
information technology.
∑ The demand for coffee in the world
growing.
Threat(T)
∑ Pressure from competitors.
∑ Requirements for quality coffee
growing.
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Strategic orientation Strength-
Opportunity( SO)
Growth strategy focused on development
and market penetration.
Strategic orientation Weakness-
Opportunity(WO)
Strategic consolidation and reorganization
to centralize the financial machine, take
advantage of opportunities.
Strategic orientation Strength-
Threat(ST)
Growth strategy focused on product
development.
Strategic orientation Weakness-
Threat(WT)
Investment strategy development
production , diversify and improve the
quality of export products
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CHAPTER 5: REPORT AND RECOMMENDATIONS
About Manufacturer: Company creates products with high added value content,
competitiveness in foreign markets. Besides, Vinacafe also promote the strength of the
modern industrial, longtime production experience to boost coffee production. And
special production technology does not affect the environment.
Marketing: Vinacafe Bien Hoa was the number one brand and a market share of
Vietnam's largest coffee. In addition, the company also exports branded products
Vinacafe. The company also focuses on effective distribution channels both inside and
outside the country. And also understand the market and consumers by systematic
research.
Management and organization: the company to attract capital from outside and in
particular, safety and efficiency in the financial investment
Human resources: human resources strong enough. In addition, companies create
motivated and employee development.
In the medium term, Vinacafe Bien Hoa strive in the top 10 companies with the largest
market capitalization Vietnam operating in the food processing sector listed on HOSE in
2015
In the long term, in addition to maintaining the core product is coffee with diversified
products, the company will expand its business scope to other products in the food and
beverage industry, serving the domestic demand and the world
Below is a table of the company's revenue structure Vinacafe Bien Hoa
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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.
Can see that coffee is the company's flagship product, accounting for 78%. And cereals
account for 20% of total revenue in 2012. In the future, Vinacafe Bien Hoa tries to
produce more coffee roasters to achieve high sales.
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VINACAFE BIEN HOA COMPANY
THE BALANCE SHEET AT 31 DECEMBER 2012
THE BALANCE SHEET 31 DECEMBER 2012
CODE NOTE 31/12/2012 31/12/2011
ASSETS
Short-term Asset 100 606.591.514.523 762.111.591.781
Cash and Cash Equivalents 110 5 275.247.810.871 298.221.643.448
Cash 111 36.247.810.871 23.773.004.391
Cash Equivalents 112 239.000.000.000 274.448.639.057
Receivables 130 93.356.340.665 162.234.866.084
Customer Receivable 131 45.473.617.260 110.802.709.997
Prepayments to suppliers 132 46.233.637.411 48.738.881.714
Other receivables 135 1.705.716.110 2.693.274.373
Allowance for doubtful debts 139 (56.630.116) -
Inventory 140 6 235.125.058.511 252.328.534.372
Inventory 141 237.524.985.122 254.728.460.983
Provision for impairment of inventories 149 (2.399.926.611) (2.399.926.611)
Other current assets 150 2.862.304.476 49.326.547.877
Short-term prepaid expenses 151 - 3.669.537.281
Value-added tax deductible 152 2.054.465.851 3.809.286.020
Other current assets 158 807.838.625 41.847.724.576
Long-term assets 200 526.596.112.341 55.953.111.735
Fixed Assets 220 521.226.687.073 55.953.111.735
Tangible Fixed Asset 221 7 145.292.224.060 33.881.155.340
Cost 222 294.992.911.341 173.572.644.029
Accumulated depreciation 223 (149.700.687.281) (139.691.488.689)
Intangible Fixed Assets 227 8 16.917.097.709 17.319.885.750
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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Cost 228 17.319.885.750 17.319.885.750
Accumulated depreciation 229 (402.788.041) -
Construction in process 230 9 359.017.365.304 4.752.070.645
Other long-term assets 260 5.369.425.268 -
Long-term prepaid expenses 261 10 5.369.425.268 -
TOTAL ASSETS 270 1.133.187.626.864 818.064.703.516
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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VINACAFE BIEN HOA COMPANY
THE BALANCE SHEET AT 31 DECEMBER 2012(CONTINUE)
THE BALANCE SHEET 31 DECEMBER 2012( CONTINUE)
CODE NOTE 31/12.2012 31/12/2011
CAPITAL
LIABILIATIES 300 181.732.436.025 92.882.197.492
Short-term debt 310 181.732.436.025 89.863.136.392
Payable to seller 312 11 85.067.348.919 27.302.489.529
Advances to buyer 313 4.666.340.859 2.533.904.489
State tax payable 314 12 22.815.785.614 27.194.221.226
Pay employees 315 11.664.445.994 5.752.911.518
Accrued expenses 316 13 44.589.151.600 1.552.694.388
Payable, other payable 319 2.160.525.595 21.544.833.149
Bonus and benefit 323 14 10.768.837.444 3.982.082.093
Long-term debt 330 - 3.019.061.100
Long-term prevention 337 - 3.019.061.100
CAPITAL OWNERS 400 951.455.190.839 725.182.506.024
Capital owners 410 15 951.455.190.839 725.182.506.024
Shares capital 411 16 265.791.350.000 265.791.350.000
Surplus shares capital 412 29.974.241.968 29.974.241.968
Investment and development fund 417 17 193.925.282.879 137.456.077.032
Financial reserves 418 17 39.585.566.068 30.814.459.873
Undistributed profits 420 442.178.749.924 261.146.377.151
TOTAL CAPITAL 440 1.133.187.626.864 818.064.703.516
TARGETS OUT THE BALANCE SHEET
31/12/2012 31/12/2011
Currency 2.399.346.830 42.237.081.175
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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VINACAFE BIEN HOA COMPANY
STATEMENT INCOME FOR THE YEAR ENDED 31 DECEMBER 2012
CODE NOTE 2012 2011
Total revenue 1 18 2.141.776.188.691 1.586.025.888.575
Deductible amounts 2 18 (27.177.318.962) (453.464.823)
Net revenue 10 18 2.114.658.869.729 1.585.572.423.752
Cost of goods sold 11 (1.530.525.587.622) (1.193.485.460.589)
Gross profit 20 584.133.282.107 392.086.963.163
Financial revenue 21 19 17.377.976.589 35.466.973.189
Financial cost 22 20 (2.402.076.249) (10.402.749.967)
of which 23 (508.800.000) (3.567.025.719)
Selling expense 24 (254.799.624.784) (170.264.287.348)
Enterprise cost
management 25 (41.611.558.271) (32.184.921.309)
Net profit from
operations 30 302.697.997.392 214.701.977.728
other income 31 21 23.789.399.663 18.770.793.007
other costs 32 (318.128.588) (13.085.529)
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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Result from other
activities 40 23.471.271.075 18.757.707.478
Profit before tax 50 326.169.268.467 233.459.685.206
Current tax expense 51 22 (27.927.220.906) (22.347.148.981)
Net profit 60 298.242.047.561 211.112.536.225
Basic earnings per share 70 23 11.221 7.943
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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VINACAFE BIEN HOA COMPANY
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012
CODE 2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 1 326.169.268.468 233.459.685.207
Adjusted for losses
Depreciation 2 11.867.826.836 8.251.026.072
The provision 3 (2.962.430.984) 4.037.090.801
Foreign exchange losses unrealized exchange 4 - 436.480.000
Clear drop of fixed assets 5 4.533.282 -
Interest expense 5 (16.941.494.589) (32.747.714.181)
Interest on deposits 6 508.800.000 3.567.025.719
Profit from operating activities before changes in
working capital 8 318.646.523.012 217.003.593.617
Fluctuations in accounts receivable and other current
assets 9 110.973.609.915 (88.147.256.005)
Changes in inventories 10 17.203.476.861 (57.994.086.381.)
Changes in accounts payable and other liabilities 11 82.405.882.078 (40.482.801.369)
Changes in prepaid expenses 12 4.720.185.183 (3.669.537.281)
533.949.676.049 26.709.912.581
Interest paid 13 (508.800.000) (3.567.025.719)
Corporate income tax paid 14 (25.250.558.702) (19.386.190.716)
Other costs for business 16 (12.024.337.395) (24.974.091.035)
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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Net cash flows from operating activities 20 496.165.979.952 (21.217.394.889)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets 21 (483.566.028.626) (11.766.278.151)
Proceeds from interest on deposits 27 17.584.486.097 31.320.481.042
Net cash flows from investing activities 30 (465.981.542.529) 19.554.202.891
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
34
VINACAFE BIEN HOA COMPANY
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER
2012(CONTINUE)
CODE NOTE 2012 2011
CASH FLOW FROM FINANCING ACTIVITIES
Short-term Borrowings 33 - 18.122.657.000
Repayments of borrowings 34 - (34.354.442.636)
Cash Dividend 36 (53.158.270.000) (45.184.529.500)
Net cash flows from financing activities 40 (53.158.270.000) (61.416.315.136)
Net cash flow for the year 50 (22.973.832.577) (63.079.507.134)
Cash and cash equivalents at beginning of year 60 298.221.643.448 361.737.630.582
Effect of exchange rate changes on cash and
cash equivalents 61 - (436.480.000)
Cash and cash equivalents at end of year 70 5 275.247.810.871 298.221.643.448
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
35
Based on the business model of the company Vinacafe Bien Hoa, we can see the
company's revenue dramatically. And here are 3 table notes the financial statements for
the year ended 31/12/2012
Table 1: Revenue
Total Revenue represents the total value of goods sold, excluding value added tax
Revenue includes:
2012
VND
2011
VND
Total revenue
Sales 2.141.776.188.691 1.586.025.888.575
Subtracting deductions
Sales bounce back (7.636.794.279) (453.464.823)
Sales decline (19.480.524.683) -
Net revenue 2.114.658.869.729 1.585.572.423.752
Table 2: Revenue from financial activities
2012
VND
2011
VND
interest on deposits 16.941.494.589 32.747.714.181
foreign exchange rates have
made
436.480.000 2.719.259.008
17.377.974.589 35.466.973.189
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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Table 3: Financial costs
2012
VND
2011
VND
Interest expense 508.800.000 3.567.025.719
Foreign exchange losses
made
1.893.276.249 6.399.244.248
Foreign exchange losses
unrealized
- 436.480.000
2.402.076.249 10.402.749.967
The problem for VINACAFE in determining the development strategy is to go into depth,
sustainable development. The development of VINACAFE as follows: Care, intensive
area under coffee is, keep yields stable. Stop all development projects under coffee, not
including the area planted to replace old coffee has to liquidation period. Strongly
reduced the area under coffee production switched to aging some plants of high economic
value such as cashew, rubber, pepper...Move some Robusta coffee areas are ecologically
appropriate conditions to grow coffee as tea in Dak Nong Dakrlap, M'Drak (Dak Lak)
and some areas in Gia Lai and Kon Tum. Type out of the coffee market of poor quality.
Implementation of industrialization - modernization of harvesting and processing with
special processes to produce premium coffee. Stable markets have to urgently expand
foreign markets and encourage domestic consumption. Make quick work of equalization
VINACAFE businesses.
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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CHAPTER 6: CONCLUSIONS
World Market Vietnam’s crop drought complicated, many risk reduction in crop yield. In
addition, Indonesia crop harvested this month predicted a decrease of 16 to 30%
compared to the previous season due to bad weather. So in this season supply most likely
lower than the previous season. Arabica coffee prices on the market quickly. In addition
to the supply of coffee is extremely low. So, the roasters are facing Robusta coffee -
coffee is cheaper and capable of mixing. Robusta are high bridge will boost the price
increase. According to the World Association of coffee (ICO): "prices will increase in the
future due to global coffee market will face a shortage large in adults vu2011/12 when
there is no prospect that about the reserves are onus recovery record low today. ICO
predicts the price of Arabica coffee will soon be up to 4 USD / lb and Robusta prices will
hit $ 3,000 / ton. Domestic Market According to forecasts from the ICO: "the major
producing countries are rapidly increasing consumption in 2011, while the supply is
limited due to loss of the season.” Brazil to increase the consumption up 5% and Vietnam
forecast to rise 370,000 bags consumed this year "will do rise, however much coffee
market speculation that the coming months will be volatile with a downward trend
up advantages due to higher prices and improved supply as Brazil and Indonesia harvest
in the future.
After more than 25 years of construction and growth, Vinacafe Bien Hoa has continually
strive for improvement and has made important achievements such as increasing
productivity, expanding markets, speed of import and stable life officers and employees,
creating jobs for workers, especially in ethnic minority areas, remote ... to contribute to
the economic development of the country especially in the area battle Highlands strategy.
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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Besides the achievements Vinacafe Bien Hoa Company also face many difficulties and
challenges: capital, competition, market. By analysis of the results produced coffee
business General coffee Company of Vietnam and Vietnam in recent years, the thesis
also provided strategic direction for the total coffee export company in 2015. At the same
time, the thesis also raises a number of solutions and recommendations for the direction
of this business strategy to stabilize production and export promotion activities,
expanding markets for General Coffee Co. Vietnam
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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CHAPTER7: LEARNING POINT/ FUTURE WORK
Organize, sort and business innovation. Increase productivity by intensive, focused care,
harvesting, processing and storage of coffee. Promote cooperation, diversified investment
products: coffee processing high quality, deep processing, and finished goods coffee
.Survey research and market development
Agriculture:
Vinacafe Bien Hoa has developed a sustainable agriculture project over an area of 37,000
hectares, with coffee breeds for high yield capacity. The Corporation shall focus on re-
cultivating on an area of 11,000 hectares for the next 5 years to replace the old field of
subordinate units. Vietnam National Coffee Corporation plans to ensure a sustainable and
effective agriculture for the national coffee industry, especially for a resource of coffee
breeds.
Processing Industry:
VINACAFE has planned to construct for 8 national and international– scale processing
plants of green coffee for export with modern technology in the world in Bien Hoa, Lam
Dong, Tay Nguyen Coffee Import Export Investment Joint-Stock Company, Buon Ho,
Krong Nang of Dak Lak, Gia Lai, Kon Tom, Tu Son (Bac Ninh). Each year, VINACAFE
produces and exports about 300,000 tons of green coffee per year. The Corporation
experts to 2015 construct some new instant coffee production plants to upgrade the
capacity to 10,000 tons per year meeting the domestic and export demand. The current
capacity is 4,000 tons per year.
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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Export:
The Corporation shall try to maintain the export of 300,000tons of green coffee per year.
Green coffee product of Corporation is manufactured by modern production line which
shall increase the added value to the Vietnamese coffee. In near future, the Corporation
shall apply new regulations on the selection of green coffee product for export on basis of
geographical characteristics. In the meantime, VINACAFE shall promote the business
with reputable roasted coffee manufacturers in the world in order to enhance the position
of Vietnamese coffee. Eliminating the intermediate agents shall help selling the export
coffee at higher price.
Commercial and domestic consumption:
In its developments strategy, VINACAFE plans to set up 2 new commercial centers in
Gia Lai and Kon Tum. In Dak Lak, VINACAFE has started one commercial center in
Buon Me Thuot city. Currently, the Corporation is planning to expand the domestic
market share (which is currently 40%) with the goal to be the market leader in 2015.
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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Business plan in 2014
Targets Unit Implementation
in 2013
Plan 2014 Versus 2013
I-Major production
Types of coffee Tons 14.156 15.650 111%
Cereal nutrition Tons 3.600 4.500 125
II-Major consumption
Types of coffee Tons 14.727 15.650 106%
Coffee exports Tons 1.277 1.250 98%
Cereal nutrition Tons 3.658 4.500 123%
III-Labor and Income
Total number of
employees
Person 450 480 107%
Total payroll Million/VND 41.500 52.462 126%
IV-Business results
1.Total sales revenue Million/VND 1.021.419 1.227.097 120%
Revenue export Million/VND 77.704 71.760 92%
2.Total cost of
products
Million/VND 874.386 1.129.097 129%
3.Profit before tax Million/VND 147.033 98.000 67%
4.Profit after tax Million/VND 136.005 90.650 67%
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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In the near future, Vinacafe BH can not have a breakthrough in profit because the
existing plant has been operating near full capacity. Revenue growth rate will depend on
sales of product lines and the rising price of grain, if any.
Billion 2011 2012 2013 2014
Revenue 1.277 1.411 1.552 1.708
Net profit 136 150 165 181
Capital 266 266 266 266
Cash dividend 15% 17% 19% 21%
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
NGUYEN THI TUYET NGANID NUMBER: A1111025
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BIBLIOGRAPHY/ LIST OF CITATIONS
www.vinacafebienhoa.com.vn
www.cafef.vn
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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APPENDICES
Any research questionnaires
Project proposal
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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QUESTIONAIRES
1. Brand of coffee do you normally drink:
∑ Vinacafe Bien Hoa
∑ Trung Nguyen
∑ Nestle
2. Type of coffee you usually drink
∑ Latte
∑ Arabica
∑ Mocha
∑ Robusta
∑ Capuchino
∑ Espresso
3. The importance of coffee to your taste
∑ Important
∑ Does not important
∑ Very important
4. when do you usually drink coffee:
∑ The morning
∑ The afternoon
∑ The evening
5. Whenever drinking coffee, you usually drink:
∑ A small cup
∑ A large cup
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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6. Do you drink coffee to relax against sleepy?
∑ True
∑ False
7. How often do you drink coffee with?
∑ Your family
∑ Your friend
8. Do you have to distinguish between Vinacafe Bien Hoa and Trung Nguyen:
∑ Yes
∑ No
9. Can you feel the difference of the first phase of coffee in two different brands?
∑ Yes
∑ No
10. How much coffee you drink once a day?
∑ 1 time / day
∑ Over 1 times / day
∑ 1 times / week
∑ Over 1 times / week
∑ 1 month / time
∑ In 1 month / time
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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PROJECT PROPOSAL
I. Title of project: Business Model Analysis of Vinacafe Bien Hoa Company
II. Academic Objectives:
Applying theories for the project in practice
Analyzing and evaluation the business model of Vinacafe Bien Hoa Company.
Giving solutions for the company
III. Brief outline
Introduction
∑ If the market you are alone in the restaurant business, products, services,
and customers are required to buy any anything else that you can do that,
then you probably do not care and do not need to study this subject.
∑ In the current economy, companies need to have a business model
consistent contempt for developing markets
∑ We need to understand and consider the serious implications that we can
draw valuable lessons from the company
Description of chosen target companies:
∑ History
∑ Scope of business
∑ Line of products and brands
∑ Development and investment strategy
∑ The organization chart of Vinacafe Bien Hoa
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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Literature Review:
∑ Definition of Business Model
∑ Introduce Business Model of Vinacafe Bien Hoa Company
∑ Development strategy of Vinacafe
SWOT Analysis and Evaluation
∑ Strengths
∑ Weaknesses
∑ Opportunities
∑ Threats
Report and Recommendation
∑ About Manufacturer
∑ Marketing
∑ Management and organization
∑ Human resources
∑ The balance sheet and explain
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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IV. Scheduling management
10-Jul-12 18-Oct-12
26-Jan-13
6-May-13
14-Aug-13
Acknowlegement
Introduction
Description
Literature Review
SWOT analysis
Report andRecommendation
Conclusion
Learing Point/ FutureWork
Abstract
Questionaire
Project Proposal
Project meeting record
start date
Duration
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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V. Identification
Name: Nguyen Thi Tuyet Ngan
Id Number: A1111025
Permanent Address: 93, route 54, ward 10, district 6, Ho Chi Minh City
Email Address: tuyetngan2411@gmail.com
BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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BUSINESS MODEL ANALYSIS OF VINACAFE BIEN HOA COMPANY
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