Selling activities of Ha Trung Plastic TechNology JSC

egotiation process, Viet Nam became the official one of members of WTO in January 2007. The economy have moved to implement the structural reforms needed to modernize itself and to support more competitive, export-driven industries. This fast economic development results that the main target of every Vietnamese enterprises is how to complete with other domestic and foreign enterprises. Getting to know of the importance of changing, during probation period at Ha Trung Plastic Technology Joint Stock Company( Ha Trung JSC), I have decided to choose the subject “Selling activities of Ha Trung Plastic Technology JSC” for my graduation thesis. In my view, this is interesting subject. Many researchers is trying to research and set up detail marketing plans as well as selling plans for their own product. I would like to thank my supervisor Nguyen Luong Long MBA for his coaching and comments during the carrying out of thesis. Without the intensive assistance of my supervisor the results of this thesis would never have been possible. Further, I would like to thank all professors of Hanoi University of Business and Technology and Managers of Ha Trung JSC for their support and kindness toward me. Chapter 1. theoretical and practical background I/ Theoretical background 1/ Selling: Selling is a process by which one person guides other people's behavior along a path in a desired direction, culminating in the purchase of a product or service.Good selling is convincing someone of something they didn’t think they needed, they buy it and love it and realize they did need it!! Life insurance, or car breakdown and recovery cover, or double glazing, or a mobile phone agreement. The most of the skills are out there in the public domain, more so than ever before. It’s like how we learn to use the Internet: somehow, we soak up the universal knowledge. Many people know what it takes to be good at selling, it’s just a matter of applying it. Sellers know there’s enough books and stuff on the Internet, and if sellers have got the driver and motivation to read them, then they are likely to have the same drive that makes them good and successful at selling. The selling concept is practiced most aggressively with unsought goods - goods that buyers normally do not think of buying, such as insurance and funeral plots. The selling concept is also practiced in the nonprofit area by fund-raisers, college admissions offices and political parties. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. In modern industrial economies, productive capacity has been built up to a point where most markets are buyer markets( the buyers are dominant) and sellers have to scramble for customers. Prospects are bombarded with sales messages. As a results, the public often identifies marketing with hard selling and advertising. However, marketing based in hard selling carries high risks. If assumes that customers who are coaxed into buying a product will like it: and if they don’t, that they won’t bad-mouth or complain to customer organizations and will forget their disappointment and buy it again. These are indefensible assumptions. One study showed that dissatisfied customers may bad-mouth the product to 10 or more acquaintances: today bad news travel even faster and father with the Internet. 2. Types of Selling - Service-Oriented Selling The focus is on the product -- communication information about products, merchandise or services.  The sole function of the salesperson is to process sales transactions.  Consumers make their own decisions about how the product satisfies their needs. Service sales are the easiest to make. - Developmental Selling + The focus is on the customer.  The product is positioned by the salespeople in relation to the needs of prospects. + Involves much more creativity than service selling. + Requires acquiring knowledge about the market, economy, client.. 2/ Selling process Most of sale professionals agree on the major steps ( see chart 1) involved in any effective sale process as follows: - Prospecting and qualifying: The first step in selling is identifying and qualifying prospects. The purpose of this step is to find potential buyer who have a need for your product, the ability to afford it, the authority to make the buying decision. For instance, sales representatives at Gulfs tram Aerospace, which sells corporate jets, focus their selling effort at those finite number of company that can afford to buy jets and at the top executive who will benefit most and who have authority to approve the purchase. - Preapproach: the successful salesperson prepares before actually making the first cal, learning as much as possible about the prospect (whenever a person or company) and the prospect’s want and needs. Then the salesperson should plan a strategy – including determining the best initial contact approach (phone, visit, letter, email) and selecting the right time to make that initial contact. - Approach: in the initial contact, the salesperson will want to make a good first impression and begin building a rapport with the customer. Little things – dress attire, use of language, mannerisms –may seem superficial but the contribute to that first impression. In some businesses, it can take years to make an eventual sale. For instance, a sales rep at Herman Miller, the furniture manufacturer, spent ten years calling on the Pentagon before he landed a major contact. The approach step in the sales process lays the foundation for building and continuing a relationship. - Presentation and demonstration: the presentation and demonstration must be tailored to the customer’s needs. The salesperson needs to effectively grab the customer’s interest and arouse desire. A good sales presentation will describe the product’s futures, advantage, benefits and value- all in terms of the customer’s point of view. Company like Xerox, Cisco systems and Guffstream Aerospace invest heavily in sales training to ensure that their salespeople know their products inside and out. - Overcoming objections: customer almost always have questions and doubts .It’s the salesperson’s responsibility to overcome them. Objections shouldn’t be seen as negative or threatening. They’re natural part of the sales process. But a trained and knowledgeable salesperson- one who knows both the product being sold and potential customer’s needs- is equipped to successfully overcome objections. Chart 1. The seven steps in effective selling; PrpProspecting and qualifying Preapproach Approach Presentation Demonstration Overcoming objections Closing Follow up - Closing : the successful sales has the confidence and timing to know when to “ask for the sale”. Sales training programs typically include a number of techniques that can be effective closer . - Follow-up: Selling should be viewed as part of creating a relationship. As such, the sale isn’t over when the customer says yes and an order is written. The end goal is a satisfied customers. To ensure that goal is reached, the effective salesperson makes a follow- up call to certify that the order was received in the condition expected, to make sure the customer is happy with the product, and to ask what additional service if any the sales representative can provide. 3. Practical background of VietNam Plastic Industry The plastic industry commenced almost half a century ago in Vietnam; however, the production remained limited and diminutive until recent years. Thus, the Vietnamese plastic industry is considered still in its infancy compared to that of other countries in the region like Malaysia, Singapore, Thailand and China.  By way of comparison, Vietnam’s production output of plastics per capita was 25 kg of plastic per person in 2005, and is expected to rise to 40 kg per capita by 2010.   Although this is a rapid increase, plastic output per capita of Malaysia in 1999 was 49kg, five times higher than Vietnam’s figure in the same year (9.4kg). Singapore’s output per capita for the same year was 10 times higher and Thailand’s was three times greater and even Indonesia was two times greater for the same period. Currently, there are about 2700 plastic corporations in Vietnam, 80% of which are of small or medium size and privately owned. Only 6% are state-owned, but they represent about 20% of the total capital invested in the industry. State-owned companies tend to be larger and to employee more workers and have a greater investment total than their small or medium sized private competitors.  The rest are foreign invested enterprises, with about 35% in terms of overall capital investment. Despite its somewhat smaller size than competitor markets in China, Thailand and Malaysia, plastics is a growth industry in Vietnam with an annual growth rate of around 30 percent per year in recent years. This growth has made plastics a major export earner for the country.  In 2005, Plastics was third after coal and rice as the fastest growing sector despite the rapid rise of petroleum and other inputs that caused major jumps in plastic resins prices.  This growth has been noted particularly by regional competitors such as Malaysia which has responded by investing to try to develop new markets.  Examples of this are Poly Tower Ventures Bhd, and Tong Guan Industries Berhad are both  opening factories in Vietnam shortly , in order to gain both local market share and to be able to take more orders from EU and the U.S.. Chart 2 Plastics are one of the most important and versatile materials in the global economy. Plastics are durable, strong, lightweight, and resistant to chemicals; they can be transparent, translucent, or opaque; soft, flexible, or hard; insulators or conductors of heat and electricity. They can be fabricated into almost any shape and size. And they are recyclable using multiple resource recovery options. From packaging to aerospace applications, plastics provide designers, engineers, manufacturers, and consumers with products that contribute to economic growth, sustainability of the environment, and a higher standard of living worldwide. Inherently light weight, plastics are an efficient use of natural resources. Plastic products are used as the basis for manufactured articles (such as toys) and as components of manufactured products (such as automobiles) making plastics an important and strategic factor in economies in which manufacturing plays a significant role. As developing countries enter into the manufacturing stage of economic development, plastics will continue to grow in importance. There is already international trade in end-of-life products for the purpose of reclaiming or recycling the plastic components. Plastics products figure in all nine ISO technical sectors: Agriculture and food technology; Construction; Electronics, information technology and telecommunications; Engineering Technology; Generalities, infrastructure and sciences; Health, safety and environment; Materials technologies; Special technologies; Transport and distribution of goods. The national plastic industry produces virtually all of what the domestic market consumes and production is currently more oriented toward domestic items and packaging vis-à-vis export. Vietnam’s internal market is changing and increasingly there is more demand for hi-tech plastics products.  Prior to 2004, all Vietnamese plastic products were manufactured with genuine plastic resins. Since then, to comply with the growing demand, the government has allowed the imports of cheaper plastic scrap: Vietnam is Asia’s second largest importer of plastic materials. Nonetheless, such fact is raising an issue as raw plastic material prices have soared recently. The plastics industry in Vietnam tends to be highly labor intensive.  A survey in 2004 revealed that 70% of the labor force in the Vietnamese plastic industry is unskilled, seven times higher than the combined average of other sectors. Most plastics companies employ between 10 and 50 people. The average monthly salary for a plastics industry employee is just under 2 million VND, with a large degree of variation depending on whether the company is foreign or locally owned and dependent on location of the factory facility. The development strategy of Vietnam's plastics industry to 2010 has stated that the industry will need investment of US$ 3 billion to achieve industry goals. The plan outlines an integrated plastics industry where raw materials would be almost exclusively supplied by in-country resources and product is both used for domestic selling and export. By 2005, 30% of the industry's demand on materials should be supplied domestically, lessening its heavy dependence on imports. The industry will focus on replacing and upgrading machinery and equipment for raw material production and hi-tech products such as construction materials, parts for the auto, motorcycle, and refrigeration equipment industries... The Vietnamese plastics industry is highly dependent on imports. Currently the Vietnamese plastic industry must import about 1.5 - 2 million tons of raw materials annually, plus hundreds of auxiliary chemicals used in the plastics industry.  Domestic raw materials can meet only 30 percent of the country’s demand. In 2004 Vietnam was Asia’s second largest importer of plastics materials. The Vietnamese government is attempting to promote import substitution by helping to finance several domestic production facilities but the government forecasts that Vietnam will still have to import roughly half of the resins it needs after these production facilities are completed in 2010. Vietnam is dependent upon polyethylene (PE), polypropylene (PP), polyvinyl chloride E (PVCE) and polyvinyl styrene (PS) imported from abroad. Vietnam is less dependent upon imports of B oriented polypropylene (BOPP), polyvinyl chloride S (PVCS) and dioctyl phthalate (DOP) resins as growing amounts of this are being produced domestically - supply is still inadequate to meet demand. The major plastic exporters to Vietnam are regional countries such as China, South Korea, Japan and Taiwan. In 2005, Vietnam imported 1,147 MT of both raw materials and finished products. The plastic import value was $1,426mil, equal to four times of export value of $350 in 2005. In 2004, Vietnam exported only 10 percent of total output, i.e. 90 percent for domestic demand (VPA). Vietnamese plastics products have been shipped to many countries, such as Cambodia, Laos, India, Sri Lanka, Japan, China, the EU, Taiwan and the US. Investment opportunities exist in the packaging field, plastics machinery production, plastics resin production and waste plastics reprocessing sub-sectors.  Chapter2. the situation and selling of hatrung plastic technology joint stock company I. The outlines of HaTrung JSC 1. The history of Ha Trung JSC HaTrung company is based in 551 Nguyen Van Cu, Long Bien district, Ha Noi, is a joint stock company which started on 1/6/1994 with business registration number 0103004549. Company provides a broad range of plastic bags, packaging supplies and poly tubing, food services and industrial packaging markets, nylons and super market bags, goods relate plastic...Plastic goods comes up to the standard ISO 4427 : 1996, TCVN 7305 : 2003 , BS 3505:1968, AS/NZS 1477:1996,.. Being one of a few known plastics company in Vietnam having in-line a mold design and manufacture site and workshops with blow and injection molding technology. Ha Trung is always committed to right timing and good control of quality products. Applying the quality control system ISO 9001 helps Ha Trung to make good control of the process and ensure customers’ satisfaction. Ha Trung’s factory is equipped with modern machines and tools, and they are always upgraded annually by famous providers as K Krauss-Maffei, Cincinnati, Corma,... In parallel, Ha Trung’s engineers and staffs are well and professionally trained. With these advantages, products of Ha Trung and precision molds always are the first choice of customers in the Vietnamese market. 2. Management and organization structure Ha Trung company’s organization has line-functional structure. With this structure, company has a clear line or chain of command running down from highest passions to lowest positions. All people in the organization know what decisions they are able to make, who their superior( or boss) is ( to whom they report), and who their immediate subordinates are( to whom they can give instructions). Chart3: The company organizational structure Board of director Agency management depart Production depart Accounting depart Marketing department a.Board of director: (CEO and Deputy Directorare responsible for setting sales and profit goals for every year that are elaborated into specific goals for each lower level . - The chief executive officer and his Deputy is the most important role in the management of an organization. + They are leaders of company, always give advises the board + Advocates / promotes organization and stakeholder change related to organization mission + Supports motivation of employees in organization products/ programs and operations - They have a visionary and give information bearer: + Ensures staff and Board have sufficient and up-to-date information + Looks to the future for change opportunities + Interfaces between Board and employees + Interfaces between organization and community - And they are decision marker: + Formulates policies and planning recommendations to the Board  + Decides or guides courses of action in operations by staff - They are managers in the company: + Oversees operations of organization + Implements plans + Manages human resources of organization + Manages financial and physical resource - They are a board developer: + Assists in the selection and evaluation of board members + Makes recommendations, supports Board during orientation and self-evaluation + Supports Board's evaluation of Chief Executive b. The Marketing Department + The marketing organization consists of functional specialists: geographic area, product or customer markets ( such as the sales manager and marketing research manager) who report to a marketing vice president, who coordinate their activities. They research market and give tactics, strategies to compete. + Managers finds market, makes relationship with customers, solving and customer care, increasingly please regional and local sale group, understand and deal with individual customers rather with the mass market or even market segments. + Examining whether the planned results are being achieve. Marketers study strategies, strength and weak of product to compete with competitor’s . + Marketers today are showing a growing interest in developing better marketing metrics for measuring marketing performance. c. Production department Production is the functional area responsible for turning inputs into finished outputs through a series of production processes. The Production Manager is responsible for making sure that raw materials are provided and made into finished goods effectively. He or she must make sure that work is carried out smoothly, and must supervise procedures for making work more efficient and more enjoyable. In a manufacturing company the production function may be split into five sub-functions: 1. The production and planning section will set standards and targets for each section of the production process. The quantity and quality of products coming off a production line will be closely monitored. In businesses focusing on lean production, quality will be monitored by all employees at every stage of production, rather than at the end as is the case for businesses using a quality control approach. 2. The purchasing section will be responsible for providing the materials, components and equipment required to keep the production process running smoothly. A vital aspect of this role is ensuring stocks arrive on time and to the right quality. 3. The stores section will be responsible for stocking all the necessary tools, spares, raw materials and equipment required to service the manufacturing process. Where sourcing is unreliable, buffer stocks will need to be kept and the use of computerized stock control systems helps keep stocks at a minimal but necessary level for production to continue unhindered.4. The design and technical support section will be responsible for researching new products or modifications to existing ones, estimating costs for producing in different quantities and by using different methods. It will also be responsible for the design and testing of new product processes and product types, together with the development of prototypes through to the final product. The technical support department may also be responsible for work study and suggestions as to how working practices can be improved.5. The works section will be concerned with the manufacture of products. This will include the maintenance of the production line and other necessary repairs. The works department may also have responsibility for quality control and inspection. Marketing is concerned with knowing and understanding the requirements of customers, so that Production can provide the market led products that are required. This also requires excellent communication systems to be in place. d. The Accounting department - Accounting is a process of measuring, recording, classifying, and summarizing financial data that will be useful for CEO decides in making economic plans. - The Accounting Department is in charge of the finance management for company, notice to board of management on assets and liabilities, debts, submit suggestion to make prices for product... owners of the business, creditors that have loaned money to the entity, labor unions, and taxing authorities. e. Agencies Management Department - Managing wholesale and retail sale agencies, showrooms. _ Collecting market information directly, opinion of customers to help company making competition strategies. All departments are connected each other and created a union organization which provides information which helps Management Board control annual plan of company and development strategies, II. Business activities of Hatrung JSC 1.Business activities a/ Materials: Company searches material resources itself, Hatrung usually imports material for production of customer goods from domestic companies such as HaNoi Plastic Company, Tien Phong Plastic Company, Binh Minh Company.... and Company imports PVC, PP, Dor for production of nylon bags, kinds of film, food services and industrial packaging material from foreign companies of Japan, Thailand, China, Taiwan ,... and plastic suppliers in Hung yen, Phu Ly, Hai Duong.... b/ Sales revenue and profit chart 03: result of business activities Norms 2004 2005 Disparity 2005/2004 Absolutely figure (+) (-) % turnover 3.849.188,497 5.581.834.797 + 1.732.646.300 + 45,01 expensive 2.781.713.202 4.046.545.004 + 1.264.831.802 + 45,41 Total profit 1,245.672.604 1.782.792.954 + 537.120.350 + 43,12 Tax 341,592.094 491.292.733 + 149.700.639 + 43,82 average income per person 679.274 911.919 + 232.645 + 34,25 invested capital 3.585.530.340 3.650.803.711 + 170.945.371 + 4,91 Fixed capital 1,945.434.375 1.862.073.511 - 83.360.864 - 4,28 floating capital 1,640.095.965 1.788.730.200 + 254.306.235 + 16,57 original price of fixed assets 2.324.581.809 2.353.581.809 + 29.000.000 + 1,24 After many years in business activity, Ha Trung has developed very fast. Development of company through follow figures : As you can see, goods sales are rising rapidly. Comparing 2005 to 2006, we can see good image of Ha Trung company *turnover 2006 / 2005 increase 45,01% this is largely due to improved tactics and methods in business activities which make employees concentrated on producing *total profit has increased for 43,12%. It showed that selling activity is pretty good and favors. This is a result of trying employees’ best. It proved that the capital resource of company is always stable and can ensure of business activity next year. Beside of production, HaTrung takes apart on other activities such as: confinement for other companies, importing for them and receiving commission. Commission depends on value of contract (0,9% for contract under 100.000 USD). Although this activity doesn’t bring a big profit but it’s pretty stable to increase yearly revenue and brings good relationship with other companies c/ Labor force: Labor force has an importance role in the company. They are the factor which can ensure quality, quantities of product for company. They are a main force during selling process. Chart 4: labour force Norms Unit 2004 2005 Disparity I Total of employee person 520 570 50 1. Full-time Part-time person 490 30 535 35 45 5 2. Skilled - Undergraduated High-school Tech- worker Other person 16 305 18 171 16 316 23 215 - 11 5 44 II. Salary Total of salary Avarage Income/person VN§ VN§ 475.785.337 679.274 571.773.279 911.919 95.987.942 232.645 d/ Customer market: Ha Trung’s main consumption market is HaNoi, and subordinate markets are in Vinh Phuc, Phu Ly,.... Hanoi is a large and attractive market for business investors. Similar products with good quality, attractive model, special smuggle goods with cheap prices from China appear everywhere. Customers have many chances for their selection so their needs is difficult to please. Because of this reason, Ha Trung plastic makes competition strategies, tactics to open selling channel and compete with other enterprise. Ha Trung builds long- term, profitable customer relationships by focusing on its most profitable customers, products, and channels. Managers are also shifting from making a profit on each sale to making profits by managing customer lifetime value. Customers see a provider with a full product suite with long-term staying power and commitment to the marketplace even in difficult consumer environments. e/ Types of selling To excuse strategies plan, selling plan was done as following: + Periodic purchase contract/wholesaling This way is applied with state and private enterprise what has large needs, regular visitors. They involved in selling goods or services to those who buy for resale or business use. Wholesaling also called distributor differ from retailers in a numbers of ways. Beside, company is applied with wholesales organization what has capacity on financial and has high prestige with company. On 2007, company has made 28 contracts which value appreciated 50billion. One of them is regular customer and is big partner of company. Company will have a price reduction to those buyers who buy large volume” $10 per unit for less than 100 units;$9 per unit for 100 or more units” Quantity discount must be offer equally to all customers and must not exceed the cost saving to the seller associated with selling large quantities. They can be offered on a noncumulative basic( on each order placed) or a cumulative basic ( on the number of units ordered over a given period) + Retail sales: this is direct sales channel. It consist of selling directly or intermediary to the final customer through stores which are placed at retail stores system of company. Stores provide many kinds of products not only product of Hatrung company but also other one of companies which is arranged attractively. All customers are introduced by sellers. This way will help monetary turnover faster and sellers can know needs and interested of customers faster. As the result, company can control product better. + Sales through agencies: it’s short channel. Company-agency-customer. Agencies consist of individuals who has strong financial, want to become providers for company at other areas. Agencies will receive bonus about 2% or 4% from price table of each product which they brought f. Selling channel management: With the produce new growth of customer segments and channel possibilities, more companies have adopted multichannel marketing. Multichannel marketing will help company gain three benefits. The first is increased market coverage-companies often add a channel to reach a customer segment that its current channel cannot reach. The second is lower channel cost- companies may add a new channel to lower the cost of selling to an existing customer group( selling by phone rather personally visiting small customer). The third is more customized selling- companies may add a channel whose selling feature fit customer requirements better( adding a technical sales force to sell more complex equipment). g. Selling policy + Adapting the price: Hatrung has strategies: retail and wholesales price, geographical pricing, price discounts and allowances, promotional pricing, discriminatory pricing, and product mix pricing... + Payment: Company gives many ways of paying: cash, irrevocable letter of credit, ...Customers (wholesales, agencies) can cash and carry, progress payment, lump-sum payment... Payment deadline depends on each kind of customer. A cash discount is a price reduction to buyer who pay their bills promptly. A typical examples “2/10, net 20” which means the payment is due within 30 days and that the buyer can deduct 2% by paying the bill within 10 days. Such discount is customary in many industries. chart 5: discount policy Discount (wholesales/agencies) Small quantity Big quantity 1. payment in advance 1% 1,2% 2. payment on delivery 1,3 % 1,5% 3. late payment 2,3% 2,5% + Transportation fee: Company can discount transportation fee to different customers in different locations and countries. For example, ._.