IMPROVING THE COMPETITIVENESS OF BLACK TEA PRODUCING
ENTERPRISES IN THAI NGUYEN PROVINCE

___________________________

A DISSERTATION
Presented to the Faculty of the Graduate School
Southern Luzon State University, Lucban, Quezon, Philippines
in Collaboration with
Thai Nguyen University, Socialist Republic of Vietnam

___________________________

In Partial Fulfillment
of the Requirements for the Degree
Doctor of Business Administration

___________________________

By
TRAN THI HUYEN (MARY)
December 2013
i


APPROVAL SHEET

The Dissertation of

TRAN THI HUYEN
entitled

IMPROVING THE COMPETITIVENESS OF BLACK TEA PRODUCING
ENTERPRISES IN THAI NGUYEN PROVINCE
submitted in Partial Fulfilment of the Requirements for the Degree
DOCTOR OF BUSINESS ADMINISTRATION
A program offered by Southern Luzon State University,
Republic of the Philippines in collaboration with
Thai Nguyen University, Socialist Republic of Vietnam
has been approved by Oral Examination Committee

WALBERTO A. MACARAAN, EdD
Expert

EDWIN P. BERNAL, DBA
Expert

JOANNA PAULA A. ELLAGA, DBA
Expert

ALICE T. VALERIO, PhD
External Panel

CECILIA N. GASCON, PhD
Chairman
Endorsed by:

Recommended by:

NGUYEN KHANH DOAN, PhD
Adviser


APOLONIA A. ESPINOSA, PhD
Dean

Accepted in Partial Fulfilment of the Requirements for the Degree
Doctor of Business Administration

_____________________
Date

WALBERTO A. MACARAAN, EdD
Vice President for Academic Affairs
ii


CERTIFICATE OF ORIGINALITY

iii


ACKNOWLEDGMENT

The researcher would like to express her heartfelt gratitude to the
following:
Leaders of Thai Nguyen University in VietNam and Southern
Luzon State University in the Philippines, who created best conditions for
her to complete the course in general and finish the thesis in particular;
Dr. Cecilia N. Gascon, Dr.Melchor Melo, Dr.Alice T.Valerio, Dr.
Professor Do Anh Tai, and Dr. Tran Dai Nghia, for providing her with a rich
and fertile environment to study and explore new ideas;
Dr. Nguyen Khanh Doanh, who provided her valuable guides to

complete the dissertation;
Dr. Dang Kim Vui, the Persident of Thai Nguyen University, who
cooperated with with Southern Luzon State University, Republic of the
Philippines in offering Doctor of Business Administration through the ITCTUAF;
Dr. Tran Thanh Van, the Dean of the Graduate School of Thai Nguyen
University, for his assistance and encouragement to pursue this study;
Professor Tran Tuan Anh and Professor Nguyen Thanh Hai, who
managed the International Cooperation Program between Vietnam and the
Philippines;

iv


Thai Nguyen College of Economics and Finance, teachers,
scientists, Provincial People's Committee of Thai Nguyen, Department of
Agriculture and Rural Development of Phu Tho Province, Department of
Agriculture and Rural Development of Tuyen Quang Province, Thai
Nguyen Department of Technology, Department of Planning and
Investment of Thai Nguyen, small and medium tea enterprises in the
provinces of Thai Nguyen, Phu Tho, Tuyen Quang, who helped her to
complete the dissertation; and
My family, my husband Duong The Cao, and my children, for their
love, support and encouragement throughout my entire life.

Tran Thi Huyen – Mary

v


DEDICATION


This academic pursuit is dedicated to my family, my husband
Duong The Cao, and my children.

Tran Thi Huyen – Mary

vi


TABLE OF CONTENTS
PAGE
TITLE PAGE ………………………………………………………………..

i

APPROVAL SHEET ……………………………………………………….

ii

CERTIFICATE OF ORIGINALITY ………………………………………..

iii

ACKNOWLEDGMENT …………………………………………………..

iv

DEDICATION ………………………………………………………………

vi


TABLE OF CONTENTS …………………………………………………..

vii

LIST OF TABLES ………………………………………………………….

ix

LIST OF FIGURES ………………………………………………………...

xii

LIST OF APPENDICES …………………………………………………...

xiii

ABSTRACT …………………………………………………………………

xiv

CHAPTER
I

II

III

INTRODUCTION ……………………………………………


1

Background of the Study …………………………………..

2

Statement of the Problem ………………………………….

4

Hypothesis of the Study ……………………………………

6

Significance of the Study …………………………………..

6

Scope and Limitations of the Study ………………………

7

Definition of Terms ………………………………………….

8

REVIEW OF LITERATURE ……………………………….

10


Conceptual Framework ………………………………….…

30

METHODOLOGY
Locale of the Study …………………………………………
vii

32


Research Design ……………………………………………

33

Data Gathering Procedure …………………………………

33

Respondents of the Study ………………………………....

34

Research Instrument …………………...…........…….……

34

Methods of Analysis ….………………...…........…….……

35


IV

RESULTS AND DISCUSSIONS ………………………….

37

V

SUMMARY, CONCLUSIONS AND
RECOMMENDATIONS ……………………………………

71

Summary ……………….……………………………………

71

Conclusions …………………………………………………

72

Recommendations …………………………………………

75

REFERENCES ……………………………………………………………..

76


APPENDICES ……………………………………………………………...

79

CURRICULUM VITAE …………………………………………………….

92

viii


LIST OF TABLES
TABLE
4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9


4.10

4.11

PAGE
The Efficiency of Production and Business of Black Tea
Producing Enterprises in Thai Nguyen According to the
Capital Ownership ……………………………………………..

38

Efficiency of Production and Business of Black Tea
Producing Enterprises in Thai Nguyen According to the
Capital Scale …………………………………………………...

39

Margin / Revenue of Black Tea Producing Enterprises in
Thai Nguyen Compared to Black Tea Producing
Enterprises In Phu Tho and Tuyen Quang According to the
Forms of Ownership in 2012 ………………………………….

40

Customers’ Reviews of Black Tea Products’ Quality of Thai
Nguyen’s Tea Enterprises …………………………………….

42


Customer Reviews on the Form of Black Tea Products’
Packaging ………………………………………………………

46

Some Product Categories in the Black Tea Producing
Enterprises ……………………………………………………..

46

Products’ Brand of Black Tea Producing Enterprises in
Thai Nguyen ……………………………………………………

47

Production Costs and Profits of Black Tea Producing
Enterprises in Thai Nguyen According to the Forms of
Ownership ………………………………………………………

48

Production Costs and Profits of Black Tea Producing
Enterprises in Thai Nguyen According to Capital Scale …..

49

Forms of Advertising That Black Tea Producing
Enterprises Applied in 2012 …………………………………..

53


Forms of Advertising That Black Tea Producing
ix


TABLE

4.12

4.13

4.14

4.15

4.16

PAGE
Enterprises Applied ……………………………………………

54

Productivity of Capital and Assets of the Black Tea
Producing Enterprises in Thai Nguyen ………………………

58

Capital Turnover Ratio of Black Tea Producing Enterprises
in Some Provinces and the Forms of Ownership ………….


59

Income Affects Consumption of Black Tea Products In
2012 ……………………………………………………………..

62

Qualifications of Enterprise Leaders in the Production of
Black Tea in Thai Nguyen …………………………………….

66

Qualifications of Workers in Enterprise Producing Black
Tea in Thai Nguyen Province ………………………………...

67

x


LIST OF FIGURES
FIGURE

PAGE

2.1

Model of Five Competitive Forces ……………………………..

11


2.2

Conceptual Framework Showing Factors Affecting the
Competitiveness of Enterprises Production of Black Tea in
Thai Nguyen Province …………………………………………..

31

4.1
4.2

4.3

4.4

4.5
4.6
4.7

4.8

Black Tea Processing …………………………………………..
Packaging of Some Black Tea Products of Ha Thai
company in Thai Nguyen ……………………………………….

44

Packaging of Some Black Tea Products of Song Lo
Company in Tuyen Quang Province …………………………..


45

Cost and Profitability of Enterprises Producing Black Tea in
Thai Nguyen in the Form of Ownership ……………………….

49

Cost and Profitability of the Business of Black Tea in Thai
Nguyen in the Form of Capital …………………………………

50

System of a Distribution Channel of Some Companies and
Processing Facilities …………………………………………….

51

The Proportion of the Cost, Selling Price and Profit of the
Black Tea in Thai Nguyen Via Domestic Consumption in
2012 Promotion Activities ………………………………………

52

Structure of Exports of Black Tea Business in 2012 ………...

57

xi


41


LIST OF APPENDICES
APPENDIX

PAGE

A

Enterprises’ Survey ………………………………………….

80

B

Vote for Customer Survey …………………………………..

90

`

xii


ABSTRACT
Title of Research

: IMPROVING THE COMPETITIVENESS OF BLACK
TEA PRODUCING ENTERPRISES IN THAI

NGUYEN PROVINCE

Researcher

: TRAN THI HUYEN (MARY)

Degree Conferred

: DOCTOR OF BUSINESS ADMINISTRATION

Name and Address
of Institution

: Southern Luzon State University Lucban, Quezon,
Philippines and Thai Nguyen University, Socialist
Republic of Vietnam

Adviser

: Dr. Nguyen Khanh Doanh

Year Written
: 2013
______________________________________________________________
This study was conducted to identify and analyze the competitiveness
among enterprises producing black tea in Thai Nguyen Province. This study
aimed to identify the factors that affect competitiveness and make the
competitive strategy of enterprise production of black tea in Thai Nguyen
province.
The study results showed all the factors affecting the competitiveness

of enterprises producing black tea products, where it has achieved above
average level and competitiveness of enterprises production of black tea in
Thai Nguyen by using year as a deciding factor.
Method of system analysis, fieldwork, comparison, using quantitative
research methods and forecasting method were utilized in the study. This
study was conducted for the enterprise production of black tea in Thai Nguyen
province, and a number of corporate production of black tea in Phu Tho,
Tuyen Quang to compare competitiveness. The study was conducted with
100 customers, which were selected based on a random probability. The

xiii


results showed that the competitiveness of enterprises producing black tea
products are affected by factors such as quality, price, market, design,
distribution operations.
The

recommendations

are

developed

from

the

insights


and

conclusions. The product itself must now build the brand and the product
quality is built through customer awareness. Secondly, business strategy may
be enhanced to cope up with the competitiveness of their businesses. Also, ,
enterprises may devise a specific business plan with practical policies to help
businesses improve their competitiveness. Finally, the proposals and reco
mmendations for policy makers in the field of improving the competitiveness
of enterprises black tea in Thai Nguyen province has also been drawn from
the results of this research.

xiv


1

Chapter I
INTRODUCTION
Tea is the perennial plant that has an important role in our social
economy. Drinking tea has long become a necessity in everyday life, and a
habit brought in the culture of Vietnam. Tea is also an important export
product of agriculture. Currently, 39 countries all over the world have grown
and processed tea, Vietnam has been ranked fifth in area and eighth in
production.
For years, tea tree has held an important position in the socioeconomic development strategy of Thai Nguyen province. Tea tree is the key
to poverty reduction in agriculture and rural development. With an area of 20
thousand hectares under the tea business, farmers' average annual harvest
was 100 thousand tons, over 300 billion. Besides, there are more than 75
businesses, factories, tea processing facilities with a capacity of 10-50 tons of
fresh buds/day, dealing with the employment problem for thousands of

agricultural workers. Tea productions in recent years have contributed
significantly to poverty reduction and elevate the poor countryside. That is
something one can hardly deny.
Thai Nguyen Province is known as the "capital" of tea production. Thai
Nguyen Tea is superior to the other varieties because of its ability to grow, ,
high quality, fragrance, and nutrients.
Thai Nguyen tea plants produce high-quality tea leaves. Annual income
from tea plants accounts for over 60% of the total income from farming


2

activities. The activities of production, processing, consumption create a lot of
jobs, contributing to raising incomes and living standards for the people.
In recent years, the market has produced tea products with designs and
beautiful packaging, and high quality. Consumer tastes are shifting sharply to
the high-quality products that meet food safety. Thus, to survive and grow,
black tea products also need to shift and develop according to the trend of the
times.
Therefore, studies to evaluate the situation, identify the factors that
influence it, finding solutions to improve the competitiveness of black tea in
small and medium enterprises in Thai Nguyen province is an urgent
requirement that have scientific and practical significance. As a result, the
title “Improving the Competitiveness of Black Tea Producing Enterprises in
Thai Nguyen Province” was chosen.

Background of the Study
Competition has a great and important role for the development of the
economy in general, and each small and medium enterprise in particular. Any
economy needs to maintain the competition. From the point of view of social

benefits, competition is one of the forms that the State used to create
opportunities for consumers to choose the products with good quality and
cheap price. From the standpoint of enterprises, competition will bring
favorable conditions in order for each enterprise to assert its position in the
market. Competition forces enterprises to produce and supply the products,
goods and services that the market needs to meet the increasingly diverse
demands of customers.


3

Currently, in the economy of Thai Nguyen Province, small and
medium enterprises account for over 70% of the total number of registered
enterprises, generating about 50% of GDP and over 80% jobs for workers.
However, small and medium enterprises are facing a lot of problems affecting
efficiency and competitiveness, such as small capital, weak access to capital,
backward equipment and technology, quality of human resources, and weak
management. Due to some constraints, small and medium enterprises are
facing difficulties and challenges in competition both inside and outside the
country, especially in the context of international integration and global
markets controlled by multinational companies and transnational companies.
In the context of the general difficulties of the economy, the small and
medium tea enterprises in Thai Nguyen Province is considered to be the most
affected. The enhancement of competitiveness becomes a vital question of
the enterprises. Over the years, Tea tree has always been identified as a key
economic crop for tea growing districts. Producing and exporting tea
increasingly play an important role and become one of the key economic
sectors of the province, with 80% of the province's tea production for export.
Earnings from tea exports have contributed to socio-economic development of
the province.

However, the fact that the province's tea exports have low quality
compared to other countries in the region and the world, even in the country is
alarming. The underlying cause of this problem lies right in the beginning
stages of the production process, from the breeding and processing products.
Most processing enterprises and exporters of tea found it difficult to input
source because of fluctuation of prices, and fragmentary production which


4

face the risk of market loss. Although the majority of produced tea of the
province is for export , mainly in the form of raw materials, the tea’s brand has
not been established, therefore, the income of tea growers and producers are
not high. Producing and exporting tea has not promoted the potentials and
strengths to be confirmed as the key economic sectors of the province. The
domestic market is fiercely competing with famous tea companies in the world
such as Lipton, Dilmah, and Qualitea. The market share of tea industry
shrunk. Numerous companies are on the brink of bankruptcy. Therefore, at
this time, there should be an overview of the investment in the development
process of the tea industry. Also, analyze the causes of these problems to put
forward the solutions to have the most effective investment in order for the tea
industry to overcome the crisis. Enhancing the competitiveness for tea
products can solve a lot of problems, as well as assessing the competitive
situation of tea products, and recognizing the strengths and weaknesses.

Statement of the Problem
In the face of requirements of economic development, particularly in
the process of international economic integration today, to survive and grow
strongly, tea industry must have the appropriate solutions. In recent years, the
black tea producing enterprises in Thai Nguyen province encounter a lot of

difficulties. Black tea products of the province faced the following problems:
Export markets to countries in the Middle East were disrupted by political
instability; The Russian market is affected by imports from other teas.; and
Unfavorable weather affects tea production. This leads to reduced earnings
from tea, thus, some plants were temporarily closed. To solve this situation,


5

black tea producing enterprises in Thai Nguyen province must be developed
to ensure the following requirements: quantity, quality, competitive price,
packaging, market share, revenue, and profit. The research aimed to improve
the competitiveness of the black tea producing enterprises in Thai Nguyen
province as observed by businesses and customers. Specifically, it sought to
answer the following questions:
1. What is the position of the black tea producing enterprises in Thai
Nguyen province in the markets today in terms of:
1.1 Market Share
1.2 Quality
1.3 Price
1.4 Revenue
1.5 Profit
2. What are the competitive advantages of black tea products as
observed by the enterprises according to:
2.1 Market Share
2.2 Quality
2.3 Price
2.4 Revenue
2.5 Profit
3. What are the competitive advantages of the black tea producing

enterprises in Thai Nguyen province as observed by customers in
terms of:
3.1 Market Share
3.2 Quality


6

3.3 Price
3.4 Revenue
3.5 Profit
4. Are there significant differences between the observation of enterprises
and customers about the competitive advantage?
5. What are the factors affecting the implementation of competitive
advantage?
6. What final solutions can be introduced to improve the competitiveness
of the black tea producing enterprises in Thai Nguyen province to meet
consumer demand?

Hypotheses of the study
The following hypotheses were tested in the study:
1. There is a significant difference in competition between firms producing
black tea in Thai Nguyen than some businesses and Tuyen Quang,
Phu Tho province.
2. There is a significant difference in the competitiveness of enterprises
producing black tea.
3. Competitiveness of black tea producing enterprises is significantly
affected by the market for business, product categories, price of
products, product distribution, and promotion mix.


Significance of the Study
This study, in general, will help small and medium enterprises in Thai
Nguyen to determine the strengths and weaknesses in order to improve their


7

competitiveness. Moreover, this research will help businesses improve their
competitiveness such as market expansion, brand building, and enhancing
the competitiveness of products. Specifically, the study will be beneficial to the
following:
Tea Manufacturers. This study will help tea manufacturers

to

develop its products, increase the area of production and consumption, which
will increase the state budget, creating more jobs for local people and for
sustainable development.
Workers. This study will increase their income to have a stable life and
job.
Customers. This study will help the customers gain access to the
products conveniently and satisfy their demand.
Researcher. This study provided the author with documents for
teaching purposes.
Members of the Community. When enterprises do business
effectively, they will contribute to the state budget and social welfare.

Scope and Limitations of the Study
The study was conducted from 2010 to 2012, where the
researcher


gathered

information

about

the

black

tea

producing

enterprises in Thai Nguyen Province, Phu Tho and Tuyen Quang. It focused
on a number of issues about the competitiveness of black tea producing
enterprises and analyzed the situation of the competitiveness of black tea
producing enterprises in Thai Nguyen province.


8

Definition of Terms
The following terms are defined to aid the readers in understanding
concepts about the study:
Competition Index is the index used to assess the competitive position of
the business compared with rivals.
Competitive Factors are the ones related to the competitiveness of
products and businesses when they compete with rivals.

Competitiveness is the ability to gain the market share against competitors
in the market, including the ability to regain one or the entire market
share of competitors.
Customer is a person or an organization or an enterprise willing to buy
products to satisfy those needs.
Decisive Factor is the factor affecting the decision of the competitiveness of
tea products.
Geographical Location is the place where the enterprises or customers
stay.
Need is the demand for products in the market.
Relevant Factors are the ones that affect the performance of tea products
such as input, support activities.
Sales Area is the one where the tea products are on display, distributed.
Small and Medium Enterprises are the ones that have small-scale in
capital and labor, revenue or including 3 above factors.
Substitute Products and Services are the ones offered by the enterprises
to satisfy the customer's needs.


9

Workers are those who perform work regularly according to administrator’s
orders. They receive salaries and benefits according to the labor
contract.


10

Chapter II
REVIEW OF LITERATURE


This chapter presents related literature and researches, as well as the
conceptual/ theoretical framework which bear significance and similarities in
this study. Also, this includes the paradigm of the study that could help the
readers to fully understand the context of the study.

Concepts of Competition
In the development of market economy in Vietnam today, the concepts
related to competitiveness are very different. According to Marx, competition
is the bitter struggle and rivalry among capitalists to grab the favorable
conditions of production and consumption for the excess profits. Others view
it as striving for quality of products and services of your business that is
better than other businesses.
The following are other concepts about competition: (1) Competition is
the mutual annexation among opponents to win the market and customers
for their business; (2) Competition is the rivalry among goods producers,
traders, the businessmen in the market economy, driven by supply-demand
relationship, to gain the conditions of production, consumption and most
profitable market; (3) Competition is making tactics and strategies in line with
business potential, good handling strategies, tactics of opponents, win
advantages in trade in goods and services to maximize profits (Dr. Nguyen
Nguyen Cu); (4) Competition is the competition between individuals and
collectives that have the same function to win a victory; (5) the individual or


11

group with the same function no matter what position (Nguyen Như, 1998);
(6) Competition is the competition among the producers of goods,
merchants, traders in the market economy driven by supply and demand

relationship in order to gain the conditions of production, consumption and
most profitable market ( National Assembly, 1995); and (7) Competition is
one of the characteristics basic of market economy, the development
capacity of market economy..

Michael Porter's Model of Five Competitive Forces
In the market economy, any business that operates in the market must
be under a certain competitive pressure that depends on five basic competitive
forces, represented by the following model:

Figure 2.1. Model of Five Competitive Forces