GROUP 2-42k18.

3-CLC

INTRODUCE

CHUONG DUONG BEVERAGES JOINT STOCK COMPANY

Abbreviation form: CDBECO

Stock code: SCD (Listed shares: Ho Chi Minh Stock Exchange)
Head Office: 606 Vo Van Kiet, Cau Kho Ward, District 1, Ho Chi Minh City
Phone: (08) 3836.7518 – 3836.8747
Fax: (08) 3836.7176
Website: www.cdbeco.com.vn
The company mainly produces two items: beer and beverage.
Beverage:
+ Soft drink
+ Non-gas beverage
Traditional products of the company are carbonated soft drinks and products with
unique flavor of Vietnam, are very popular with customers.

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A/ INDUSTRY ANALYSIS

I/ Competitive force 1 - Rivalry among existing firms:

1.Industry growth: in a slow growth market, SCD company can only grow
by capturing market share from each other , which leads to increased competition
by push prices towards the marginal cost of production
2/ Concentration: - Industry is many competitors (such as AGC,
TRUNGNGUYEN, VCF) SCD company tend established degree of price
competition. When companies are relatively balanced in strength, they are more
likely to engage in competitive battles and attack and retaliate as they strive for
market leadership which get more profit.
3. Difference and switching costs: When SCD company produce beverage
which are lacks of differentiation also switching costs, choice is often determined
by price and service, which then leads to increased competition in price and service
to make more capturing market share by decreasing price of products, supporting
good service to likely competion with other companies
4/ Excess capacity: Industry have many competitors about drinks, the
industry supply balance is more than the industry demand balance so SCD tends
decrease price to benefits of competition
5/ Low exit barriers: SCD company can easily leave the industry when they
are earning low or negative returns on investments
Conclusion: Higher degrees of competion among firms

II/ Competitive force 2 - Threat of New Entrants:

1/ Economies of scale:
-Competitive pressure in the beverage industry of Chuong Duong is
very large because there are many product lines in the market and many companies
participate in fierce competition.
-Marketing strategy does not attract consumers
-Advertising is not very effective.

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-Do not compete the price of the same product line.

So, the company is gradually losing market share and distribution
channels to competitors.
2/ First mover advantage:
-The company has no first mover advantage
3/ Relationships with supplies and customers:
-Chuong Duong advocates on the loyalty of the old, who are attached
to company since childhood.
-The company gradually loses its advantage in the market when it
does not capture trends, targeting young people who are constantly changing and
adapting to the new.
4/ Legal barriers:
-Chuong Duong Company is a State-owned enterprise so it must
comply with the State's regulations and strictly comply with the State's regulations.
Therefore, the company depends on investment policies from the state and faces
many difficulties in investment policies for technical equipment.
Conclusion: The profitability of Chuong Duong company is low because it does
not compete with strong competitors in the market such as Coca-cola, Pepsi,
Tribeco, Tan Hiep Phat.

III/ Competitive Force 3: Threat of Substitute Products:

1/ Relative price and performance:
-The degree to which substitute products of SCD high lead to the
SCD's influence with suppliers and customers low
-Specifically: SCD provides almost full range of beverage products
(milk, carbonated drinks, spring water, wine, tea, milk tea ...) so leading to SCD big
picture in beverage market, which leads to stable profit of SCD.
2/ Buyer’s willingness to swich:
-The degree to which substitutes exist depends upon the relative price
and performance of competing products of SCD, and the willingness of customers
to accept substitutes.

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-Specifically: The strength of SCD is the Xa Xi soft drink product line

which is very suitable for the taste of the people of the South and the Western
people, or the unique and almost unique product in the market is Chuong Duong
Silver, The price of SCD products is not much higher than the competitor's product
price (the 24 cans of Chuong Duong Peppermint 330ml is priced at 129,000 VND,
while the barrel of 24 bottles of C2 green tea Lemon flavor 360ml costs 138,000
VND.
Conclusion: The level of replacement of Chuong Duong's products and services is
quite high in beverage industry

IV/ Bargaining Power of Buyers:

-The soft drink market is the large group in the beverage industry. There are a
large number of customers consuming soda a year.Customers of the SCD company
are shops, retailers, consumers ...
-Because the soft drink industry is very competitive, switching suppliers is
relatively easy and the price difference is rather small. Difference can occur based
on geographic location and product brand. But brand of SCD company is not so
popular so it is difficult to compete with famous and popular brands.
-The buyer is not aware of the need for additional information because all the
information that is needed is provided. There are no steps to using the product and
all nutrition facts and ingredients are listed on the label.
-Customers are highly sensitive to the price of soft drinks and are willing to
change brands if one becomes much more expensive than the other. Soft drinks are
not a need and people won’t pay any price for it. So small companies like SCD are
hard to compete on price for big brands like Pepsi, Coca, ...
-People are very brand loyal to the drink of their choose. SCD Company has not
brought many of its products into good products for consumers.
-The company SCD few offer incentives to customers so it is difficult to
compete for big companies with many incentives.
Conclusion: Bargaining power of buyers is weak in beverage industry.

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V/ Bargaining Power of Suppliers:

-The materials of SCD company are extremely differentiated as firm is trying to

create the best product. Each type has a different formula, color, and flavor for their
beverage. Product innovation is necessary to fill the buyers.
-SCD company can switch between suppliers very quickly and easily. Suppliers
are bottling equipment manufacturers and packaging suppliers. The number of
equipment suppliers is very much, so it is fairly easy for a company to switch
suppliers. This takes away much of suppliers’ bargaining power.
-SCD companie will choose the suppliers that do the best job and have the best
price. If another supplier does the same job but is cheaper, the firm can
switch.There are many current and potential suppliers in this industry. Company are
willing to switch suppliers whenever is necessary.
Conclusion: Bargaining power of suppliers is strong in beverage industry.