new strategies for market expansion at noibai catering services joint stock company

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UNIVERSITY OF NICE-SOPHIA ANTIPOLIS IAE School of Business Administration

T

HANG

L

ONG

U

NIVERSITY

INTERNSHIP REPORT

ON

NEW STRATEGIES FOR MARKET EXPANSION

AT NOIBAI CATERING SERVICES JOINT-STOCK COMPANY

Intern: Cao Thi To Hoai

Academic Supervisor: Assoc. Prof. Dr. Le Thanh Binh Company Supervisor: MBA. Le Thanh Binh

Hanoi, September 2011

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UNIVERSITY OF NICE-SOPHIA ANTIPOLIS IAE School of Business Administration

T

HANG

L

ONG

U

NIVERSITY

INTERNSHIP REPORT

ON

NEW STRATEGIES FOR MARKET EXPANSION

AT NOIBAI CATERING SERVICES JOINT-STOCK COMPANY

Intern: Cao Thi To Hoai

Academic Supervisor: Assoc. Prof. Dr. Le Thanh Binh Company Supervisor: MBA. Le Thanh Binh

Hanoi, September 2011

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ACKNOWLEDGEMENT

I owe a special debt of gratitude towards my academic supervisor, Assoc. Prof. Dr. Le Thanh Binh, for her patient and kindhearted guidance. If not for her constant encouragement and tremendously constructive supervision, my report could not have been accomplished.

I am highly indebted to my company supervisor, Mr. Le Thanh Binh, MBA and all of my teammates in Noibai Catering Services Joint Stock Company for their helpfulness and supportiveness during my internship.

I would also like to take this opportunity to express my deepest thanks to all my professors from Thanglong University and Nice University for their invaluable lectures and instructions throughout my Master AMI course.

Finally, I am grateful to all of my colleagues and my family especially my husband and my little sons for their support, encouragement, and understanding.

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ABSTRACT

This is the report on the author’s internship at Marketing and Planning Department, Noibai Catering Services Joint-stock Company from July 1st to October 31st as part of the graduation requirements for the AMI program. The internship coincided the first phase in NCS’s five-year planning which is aimed at expanding the company’s market in airline catering services. With the selected subject on marketing strategies, the goal put forward for the 4-month internship is to develop a draft product marketing plan in order to attract low cost airlines to the company’s product in the first place and to expand the market afterwards.

The objectives of this report are threefold. Firstly, it summarizes the intern’s tasks and performance during the period. Secondly, it highlights the achievements, the good and the bad points of the whole internship and finally presents recommendations for further research and for a more perfect plan.

Utilizing different analysis techniques of primary and secondary data, the intern and other members of the marketing team have developed a draft plan which is considered to be a good base for further research and for the detailed plan later on.

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1.7. Basic financial data ...4

CHAPTER II: ORGANIZATIONAL STRUCTURE...7

2.1. NCS’s organisation and the management: ...7

2.2. Marketing and planning department: ...8

CHAPTER III: THE MISSION: ASSIGNED TASKS AND GOALS...9

3.1. The position...9

3.2. The tasks assigned ...9

3.3. The link between the subject matter and the mission...11

3.4. The goal to achieve ...12

3.5. What can I bring to the company? ...12

3.6. The theoretical knowledge to be put into practice ...12

3.6.1. International Economics and Globalization ...13

3.6.2. International management ...13

3.6.3. International Business Plan ...13

3.6.4. International Strategies...13

3.6.5. International Business Communication ...13

CHAPTER IV: DEVELOPMENT...14

4.1. BUSINESS ENVIRONMENT...14

4.1.1. Global economic situation...14

4.1.2 Vietnam economic situation...15

4.1.3 The world’s aviation industry ...16

4.1.4. NCS’ SWOT analysis...17

4.2. MINOR ASSESSMENTS...20

4.2.1. Assessment on real needs ...20

4.2.2. Assessment on suppliers/competitors...20

4.3. STRATEGY AND ACTION PLAN...21

4.3.1 Product Requirements and Solutions ...21

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INTRODUCTION

Along with the dramatic development of aviation industry over the past years, aviation services especially catering are increasingly better and more innovative to meet a high demand in air travel. Despite favourable opportunities that globalization and international integration offers, caterers are facing sharp competition. In fact, many businesses are struggling hard to innovate and to develop the brands they have already had. It is, therefore, essential that catering service providers formulate appropriate strategies and take effective actions to attract more customers. In a great effort to maintain established market share and, beyond, to be more successful, Noibai Catering Services Joint- Stock Company, a well-established and popular company which provides airline catering services to over 20 big airlines coming to and from Noibai airport, is well aware that innovation along with good strategies is the priority to consider during their development journey. Accordingly, the management of NCS has decided to carry out a five-year-project (2011-2016) on product and marketing in order to attract customers, more specifically, to earn two major customers to the company’s product by the end of 2012 and three more by the end of 2016. The internship accidently coincided the first phase of the project and the subject

titled “New strategies for market expansion at Noibai catering services joint-stock company.” is chosen on that basis.

Limited to summarising the results of our work during the period and outlining a draft on which a more detailed plan can be developed, the report is organized into five chapters. Firstly, it briefs NCS’s background. Secondly, it outlines the organizational structure of the company and the Marketing and Planning department where the author has directly undertaken the internship. The intern’s mission is clearly illustrated in chapter 3 while chapter 4 presents the development of perception of problems and the way to solve them. Finally, the report highlights the good and bad points of the internship and give recommendations for future improvement.

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CHAPTER I: COMPANY BACKGROUND

Noibai catering services joint-stock company (NCS) is a well-established company with more than thirty year’s experience in airline catering service. Over the past years, NCS has made great achievements and recognizable success. Below is the brief description of the company.

1.1. Key facts

Location: Noibai Airport, Hanoi

Scope of licensed business: Airline catering, event catering, farming and food processing, import-export activities for catering business.

Experience: 33 years of airlines catering services Number of employees: 500

Quality Management Systems: ISO 9001:2000 (certified); HACCP, Halal (certified). Technical and operational data:

Plot area: 5,900 sq.m. Floor area: 3,600 sq.m. (excluding a separate office building) Distance from kitchen to ramp service area: 800 m

Average production: 12,000 meals per day Maximum production: 15,000 meals/ day

Special meals: all types of special meals except kosher meals Average number of departure flights handled: 70 flights per day

Vehicles: 12 hi-loaders which are able to serve wide-body aircraft such as Boeing 747, Airbus 340; 4 mini-vans for last-minute delivery

1978: A flight catering unit (under Airport Authority) was set up at Noibai International Airport

and started serving commercial flights.

1993: Noibai Catering Services Enterprise was founded based on the former catering unit. It

becomes an official member company of Vietnam Airlines Corporation.

1994: Noibai Catering Joint Venture Company, which was a joint-venture between Vietnam

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Catering Services Enterprise. However, the Joint Venture Project was canceled in 1998 due to unfavorable business conditions in Southeast Asia at the time.

2004: Noibai Catering Joint Stock Company (NCS) was founded. Major shareholders are:

Vietnam Airlines: 60% of shares, Southern Airports Services Company (SASCO): 10% of shares, Vietnam Air Caterers: 1.7% shares

2007: Noibai Catering Joint Stock Company put into operations a new kitchen replacing the old

one which fell into clearance site according to the new master plan of Noibai International Airport.

2008: NCS’ annual production exceeds 3 million of meals for the first time 2009: NCS welcomed Malaysian Airline as its 13th regular customer

2010: NCS welcomed 3 new customers Mekong Air, Qatar Airways, LOT Polish Airlines 1.3. Achievements

2009: ranked “Top Ten Caterer” by Korean Air

2010: awarded as the Best Caterer 2009-2010 by Korean Air

2010: presented the award “Caterer with the most efficient quality management system” by

- a variety of choices of Vietnamese delicacies.

- many traditional cuisines of the world namely French, Chinese, Japanese and Korean.

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To improve the quality and to better meet customer’s requirements, NCS is committed to establish, maintain, continuously and effectively improve the quality management system, train the staff and upgrade technical facilities.

NCS’ quality management is based in ISO 9001:2000 and HACCP systems.

The quality policy, which is the vision of NCS, has been widely communicated throughout the company for proper understanding and implementation.

It must be noted that the management of NCS keeps evaluating the effectiveness of the quality policy on regular basis.

1.6. Regular customers

NCS has gained a significant number of loyal customers over the past 33 years. Their regular

clients now are: Vietnam Airlines, Russian Aeroflot, Vladivostok Air, Korean Air, Asiana

Airlines, Hongkong Airlines, Japan Airlines, China Airlines, China Southern Airlines, Dragon Air, Malaysia Airlines, Mekong Air, Qatar Airways, LOT Polish Airlines.

1.7. Basic financial data

- Total revenue in 2009: 183,841,240,863 VND - Total revenue in 2010: 264,707,306,685 VND - Net income in 2009: 25,901,393,786 VND - Net income in 2010: 48,660,418,792 VND

The Balance Sheet and Income Statement are shown on the next page.

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NOIBAI CATERING SERVICES JOINT-STOCK COMPANY BALANCE SHEET

For the year ending 2010 (Unit: VND)

Accounts receivable 34,163,571,355 19,868,445,940 Inventory 8,398,999,895 6,007,852,112 Short-term investments 10,000,000,000 18,839,374,000 Other curent assets 75,087,373 178,501,192

Total current assets 118,759,111,262 74,654,750,493

Property, plant, and equipment 73,499,301,819 69,776,196,552 (Less accumulated depreciation) 48,968,240,849 35,900,676,076 Intangible assets 36,401,673 26,140,560

Total fixed assets 24,567,462,643 33,901,661,036

Total current liabilities 33,192,588,446 23,756,011,686

Total owner's equity 110,418,246,510 84,628,271,168

Total Liabilities and Owner's Equity 144,325,585,724 108,916,244,852

Figure 1: Balance sheet for 2009 and 2100

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NOIBAI CATERING SERVICES JOINT-STOCK COMPANY INCOME STATEMENT

For the Year Ending 2010 (Unit: VND)

Sales revenue 260,160,635,328 179,319,913,505 (Less sales returns and allowances) 2,090,309,356 324,717,997

Net Income 48,660,418,792 25,901,393,786

Figure 2: Income statement for the year 2009 and 2010

(Source: July 9th 2011 – 17:00)

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CHAPTER II: ORGANIZATIONAL STRUCTURE 2.1. NCS’s organisation and the management:

The company’s organizational structure are illustrated in the following chart:

Marketing & Planning

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The Board of Directors with two members are responsible for running and managing all the business activities of the company’s line and departments.

2.2. Marketing and planning department:

Head of the department: Mr Nguyen Van Tuy who reports to the Board of Directors

Deputy Head of the department: Mr Tran Doan Trung who reports to the Head of the

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CHAPTER III: THE MISSION: ASSIGNED TASKS AND GOALS

July 1st 2011 marked the start of my internship in the Marketing Department at NCS as a member of 5 marketing executive team. At the same time the company is launching its five-year project (2011-2016) which is composed of five basic phases as follow:

1. Market review 2. Financial review 3. Company strategy 4. Product strategy 5. Product Roadmap

3.1. The position

The intern is appointed to be a marketing executive in the Marketing and Planning Department at NCS. The position involves carrying out market research, market analysis, customer surveys and plan developing.

3.2. The tasks assigned

Our team is responsible for two major phases in the 2011-2016 project, market review and product strategy. We have been assigned a variety of tasks ranging from data analysing, needs analysing to strategic planning. More specifically, data analysis involves in-depth analyses and syntheses of data collected from market research carried out from November 2010 to May 2011 on different markets especially Asian countries. Also, our marketing team is required to perform a detailed and systematic analysis of low cost airlines’ needs for in-flight food supply. Several surveys will be conducted to find out what these airlines are really expecting from our company and what we can do to satisfy their needs. Additionally, the team is in charge of working out product strategies in order to expand the market for NCS. On the individual basis, I was assigned to perform brief analyses of background and design a draft product marketing plan. The specific tasks are as detailed as in the following table:

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Table 1: The tasks assigned over different periods

Period Tasks assigned Targets to achieve Activities

July 1st- July 14th

- get to know the company and the Department

- do brief analysis on business environment

- get deep understanding of the company’s business,

customers, ....

- bring about a summary of

Vietnam’s economy, and aviation industry

- reach sound conclusions on the business environment - point out business opportunities and risks for caterers in such business environment

- search related data from different sources, collect

synthesize and analyse them - join regular discussions and meetings of the department to exchange ideas and get suggestions from teammates - write a brief report on the business environment

July 18th – August 12th

- do an in-depth analysis of the company

- highlight the strengths - identify the weaknesses, the potential opportunities and the challenges

- define competitors

- define potential customers

- collect data on the company from reports, articles, magazines, websites...

- review previous years’ operation and financial reports to point out the success and the shortcomings - design a stakeholder matrix August 15th –

August 31st

- carry out customer survey with the team

- do need analysis

- discover Low Cost

expectations in the current situation

- identify the gaps in the market

- identify air travellers’ real needs

- join the interviews with key people of target airlines with the supervisor and teammates, record information.

- distribute and collect survey questionnaires

- interview focus groups - synthesize and analyze the collected data

- collect data on competitors

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- assist teammates in research on competitors

- define the major rivals,

September 5th - September 30th

- design a draft product plan - define the new product and strategic solutions

- define the target customers - propose distribution models

- review all the syntheses and analyses

- join team discussions and

suggestions

- write the first draft

- submit the first draft to the Head of the Department and

recommendation - write the second draft October 3rd –

3.3. The link between the subject matter and the mission

As the title of the report suggests, the focus of the internship at Noibai Catering Services Joint Stock Company is developing effective strategies for market expansion. It, therefore, can be seen apparently that the subject matter and my mission as well as well as the assigned tasks mentioned above are closely linked to each other. All of those market-related syntheses and analyses I have to carry out are basic sources of data on which efficient strategies can be created to draw

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customers’ to NCS’s product. Also, the draft plan on the strategic product is directly linked to the five year project which aims at market expansion.

3.4. The goal to achieve

In general, the intern along with the team must develop an effective marketing strategy which best serves the company’s prime target of gaining at least two major customers providing cheap airline service by the end of 2012 and turn them out to be the regular customers.

As far as the particular goal is concerned, the required outcome after my 4-month internship is a comprehensive market analysis and a draft product plan.

3.5. What can I bring to the company?

The mission along with such a great goal is, in fact , an exciting opportunity for an intern like me and I honestly hope to make significant contributions to the 5-year project in particular and to the sustainable growth of the company in general. Firstly, all the data collected from market research and analysis focusing on air travel and catering are hoped to bring about in-depth understanding of the real demand and the supply, the customers, the competitors, and the company’s capability in catering market. This kind of knowledge will surely help to create an effective strategy to attract customers to the company’s products. Besides, I do hope to discover the right customers to target at. The internship is also constructive in suggesting a new strategic product appealing to

those new targets, in order to increase NCS’s competitiveness in the post recession. Moreover, along with the new product, new distribution models which help reduce the handling cost will hopefully be recommended.

3.6. The theoretical knowledge to be put into practice

As mentioned earlier, I truly appreciate the knowledge acquired during my academic year in Master AMI and honestly value this occasion since I can put what I have learned into practice. We have covered various subjects in business which are generally beneficial to us. Each course brings us certain knowledge and skills in dealing with related issues and is vitally essential and useful in every single task during my internship at NCS.

A detailed description of how the related subjects are typically beneficial to my internship tasks is given hereafter.

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3.6.1. International Economics and Globalization

The topics discussed in this course enable me to better my knowledge in economic issues and my understanding of globalization process and its role in each nation’s development. I can also figure out the role of different organizations in the global economy as well as in each nation’s economy. These sorts of knowledge help me a great deal in dealing with economic reports and in analyzing economic background for the plan.

3.6.2. International management

After the course, I am well aware of new challenges facing a manager in today’s highly competitive environment. The course also equipped me with essential issues related to supply chain management thanks to which I know what to consider when making an analysis of external factors. I am now able to design a stakeholder matrix and define which organizational structure will be appropriate for a certain phase or project. Especially, the Tom Travis’ 6 tenets better my understanding of the key principles to run and manage a project well.

3.6.3. International Business Plan

The subject provides us with essential items we have to take into account when developing a plan. I can figure out what to consider for a business plan or a specific strategy, what should be focused on, and what sort of information should be included to make the plan realistic.

3.6.4. International Strategies

The lectures focusing on issues of market globalization, strategy preparation and strategic options are of practical usefulness. Different techniques, models and tools in strategic planning and especially in strategic segmentation such as PESTEL, Porter’s five forces, SWOT analysis have been effectively put into practice while carrying out various analyses during the internship.

3.6.5. International Business Communication

The course keep us updated the facts, the changes and the way to stay adaptable in any circumstances. I can understand generally what specific types of customers are expecting from our company basing on the geographical or cultural features and accordingly adjust our strategies to approach them. Besides the lectures related marketing issues enable me apply marketing strategies appropriately into my draft plan.

All in all, it is sincerely hoped that the missions which have been assigned will be accomplished so that we can achieve the target and bring more success to the company.

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