VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Doan Tran Nhan E-COMMERCE DEVELOPMENT IN AGRICULTURAL TRADE PROMOTION IN VIETNAM. Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUMMARY Supervisor: 1. Dr. Tran Doan Kim 2. Mr. Ha Nguyen, MBA Hanoi – 2012 TABLE OF CONTENTS ACKNOWLEDGEMENTS ABSTRACT TÓM TẮT TABLE OF CONTENTS LIST OF ABBREVIATIONS LIST OF TABLES, FIGURES, CHARTS, DRAWINGS INTRODUCTION 1. The imperative of subject 2. Establish the main research subject 3. Research’s objectives 4. Research scope 5. Delimitation of the research’s contents 5.1. The basic elements of E-commerce model 5.2. Assign content to build E-commerce model for Agritrade 6. Research methods 6.1. Data collection methods 6.2. Data analysis methods CHAPTER 1: THEORETICAL FRAMEWORK 1.1. E-commerce 1.2. The formation of E-commerce 1.3. The situation of E-commerce development in Vietnam 1.4. The operation forms and E-commerce transactions 1.5. Benefits of E-commerce for businesses 1.6. The E-commerce requirements 1.6.1. Technological Infrastructure. 1.6.2. Human Infrastructure. 1.6.3. Security and safety. 1.6.4. Automatic Financial payment system. 1.6.5. Consumer Protection. 1.6.6. Economic and legal infrastructure. 1.7. Definition and content of Trade promotion 1.8. Trade Promotion in E-commerce 1.9. The difference of E-commerce applications in agricultural trade promotion CHAPTER 2: BACKGROUND AND REAL SITUATION OF AGRICULTURAL PRODUCTS PROMOTION OF AGRITRADE 2.1. Overall assessment of domestic market for Agricultural product 2.2. Overall assessment of agricultural trade promotion activity of Agritrade. 2.3. Assessing the impact of external environmental factors to E-commerce application at Agritrade 2.3.1. Impact of economic environment 2.3.2. Impact of political legal environment 2.3.3. Impact of socio-cultural environment 2.3.4. Infrastructure and Internet services for E-commerce 2.3.5. Competitors 2.3.6. Customers 2.3.7. Human resources for E-commerce 2.4. Assessing the impact of internal environmental factors to the E-Commerce applications in trade promotion activities of Agritrade 2.4.1. Impact of human resources 2.4.2. Impact of financial resources 2.4.3. Impact of technology infrastructure 2.5. Analysis the results of survey and discussions 2.5.1. The results of survey 2.5.2. Results of expert interviews CHAPTER 3: CONCLUSIONS AND THE PROPOSAL SOLUTION OF E- COMMERCE DEVELOPMENT FOR AGRITRADE 3.1. The conclusions and findings through the research process 3.1.1. The achievements and limitations of Agritrade 3.1.2. The findings of the research process 3.2. Orientation and perspective of development of Agritrade in the future 3.2.1. Development orientation of Agritrade 3.2.2. Agritrade’s views on the E-commerce application 3.3. Proposal solutions of deploying E-commerce application in Agritrade 3.3.1. Group of Human Resource solutions 3.3.2. Solutions related to infrastructure and technology 3.3.3. Solutions related to business processes 3.3.4. Solutions related to electronic marketing promotion 3.3.5. The other solutions: CONCLUSION LIST OF REFERENCES 1 E-COMMERCE DEVELOPMENT IN AGRICULTURAL TRADE PROMOTION IN VIETNAM. Doan Tran Nhan MBA Candidate, 2009-2011 School of Business - Vietnam National University, Hanoi Supervisor: Dr. Tran Doan Kim Mr. Ha Nguyen, MBA INTRODUCTION 1. The thesis title E-Commerce development in agricultural trade promotion in Vietnam 2. Necessity of the thesis Electronic commerce (E-commerce) is a new field and showing great role in trade promotion, products trading through the global Internet. E-commerce can help businesses reduce costs and attract the large customer. Due to benefits of E-commerce, now many companies over the world apply this model in their business operation. In Vietnam, purchasing through E-commerce websites only popular for some kinds of goods and services such as airline tickets, electronics, cell phones, computers, books, tours, hotels, cosmetic, etc Trade promotion is the series of activities to promote the sale of the business in general and target market. Since the traditional trade promotion activities are geographically limited, higher costs and taking long time, so the application of E-commerce seems to overcome such drawbacks. In Vietnam agriculture, the E-commerce application is concerned, facilitated and clearly oriented by the Government agencies. Besides the traditional trade promotion activities such as 2 surveys, trade fairs and exhibitions E-commerce will create a new promotion method that is simple, convenient, fast and save cost. In the present, there are some Agri-businesses applying E-commerce in marketing activities and business of their products. However, only a few businesses can achieve success from these activities. Trade Promotion Center for Agriculture (Agritrade) is a department under MARD. Agritrade’s functions are designing and implementing agricultural trade promotion activities. Besides trade promotion programs, Agritrade also developed an important promotion activity that is agricultural products displaying. The deployment of both displaying activity and organizing trade promotion events, Agritrade will perform well as connections between producers and consumers. The effective of these activities are not really high and it also faces some restrictions. Therefore, it is necessary to develop new models to improve the effective of trade promotion to the Agricultural products in particular and Vietnam Agriculture in general. According to the general trend of the times, E-commerce application seems to be the good solution for Agritrade. 3. Research aim and objectives Through the learning process, survey and investigation, the authors found that the required objectivity and subjectivity are imposed Agritrade in the short term (1-3 years) and long term are:  AGRITRADE will become a focal point for trade promotion activities in Vietnam Agriculture.  Approach E-commerce development trend and apply IT into operation on promoting agricultural products and local specialties. 3  Develop E-commerce model to provide a link between producers, traders and consumer of agricultural products. To achieve the above goal, the study needs to utilize the following objects:  To systematize basic concepts relating to E-commerce model and trade promotion.  Survey and research the activities of trade promotion activities of agricultural products and local specialties at Agritrade.  To propose solutions to develop E-commerce for agricultural trade promotion. 4. Research scope The scope of research in space: this is graduated subject so the scope of the research only for micro and limited to Agritrade. Specifically, the scope of the research is to study the basic concepts related to a review topic, agribusiness situation and propose solutions to develop E-commerce model for agricultural trade promotion activities of Agritrade. The scope of research on time: The time for studying the subject and collecting survey data from January to March 2010 at Agritrade. This data combined with secondary outside data in last three years. 5. Assign content to develop E-commerce model for Agritrade In this research, to develop E-commerce model for Agritrade, I will develop research methods to conduct surveys on the actual situation of Agritrade’s activities. Overall assessment of the impact factors inside and outside the organization. It also combined with analysis of results compiled from surveys, interviews with staffs and customers of Agritrade and agricultural expert. Since then, I will 4 assess the application ability and plans to develop an E-commerce model for Agritrade. Based on survey results, analysis of primary data and secondary sources, I will develop E-commerce model based on market factors, human resources, finance, and infrastructure for deploying this model. Moreover, I will also improve sales process, handle orders, and deliver the product and other support services. 6. Data sources and Research methods Data used in the thesis were taken from both secondary data about Agritrade’s operation, reports and statistical data of others agencies and primary data collected from interviewing Agritrade’s staff, customers and agricultural expert. There are a number of techniques used to conduct research which including: Interviewing staff, customer and expert; economic statistic method; and methods of description and comparison. 7. Structure of the thesis Apart from the acknowledgment, abstract, list of abbreviation, list of tables, figures, charts and drawings, introduction, conclusion, references and appendix, the thesis is organized in to 3 chapters. Chapter 1: Theoretical framework Chapter 2: Background and Real situation of Agricultural trade promotion of AGRITRADE. Chapter 3: Conclusion and the proposal solution of E- commerce development for Agritrade. 5 CHAPTER 1: THEORETICAL FRAMEWORK 1.1. E-commerce 1.1.1. The concept of E-commerce Electric commerce (E-commerce) is a relatively new field. In the development process it has many different names: “Online trade”, “Cyber trade”, “Electronic Business”, “paperless trade or commerce” etc. Recently the name “E-commerce” has become familiar and became the general convention, which appears in the international legal documents. Besides, another name is still used and understood with the same content. In narrow sense, E-commerce merely restricted in sale and purchase of goods and services through electronic facilities, especially Internet and other communication networks. In broad sense, E-commerce is financial and commerce transactions by electronic means such as electronic data interchange, electronic funds transfer, sending or withdrawals by credit card and other activities. 1.1.2. Characteristics of E-commerce E-commerce and traditional commerce, including the steps: 1. Consumers and providers find each other, consumers want to find a reliable supplier, while suppliers are conducting promotional activities, marketing, consulting and customer support, create trust and entice consumers to own. 2. Evaluation, negotiations and discussions; 3. Organization coordination and delivery of goods; 4. Payment; 5. Confirm the correctness of every step in the purchasing process. 6 However, the E-commerce still contains its own characteristics compared with traditional trade. It is the ability to create a “virtual store” on the Internet. 1.2. The formation of E-commerce 1.2.1. The reasons of E-commerce E-commerce was born as an inevitable development in the harsh competitive environment. To survive, Businesses must apply technological advances in effective way. The development of mature tools such as Internet, Email, and World Wide Web is the reason to release a new trading method: E-commerce. This method has greatly hindered with the international trade, especially when the trading volume is increasing. 1.2.2. The formation of E-commerce E-commerce is developing rapidly on the global scale based on the industrial development of information technology (IT). IT industry is gradually occupied the leading position in the national economy of many countries. 1.3. The situation of E-commerce development in Vietnam In 2010, almost 100% of businesses surveyed were implementing E- commerce applications in many sizes and different levels. According to survey results, 100% of surveyed businesses were equipped with computers and each enterprise has 25.8 computers on average. There are 98% of businesses have Internet connections in many different forms, in which 89% are connected by broadband (ADSL) and leased line. Businesses have also focused on exploiting Email, the basic applications of E-commerce. Based on the report, in recent years, with the strong development of Internet and E-commerce, online sales has gradually developed and become more familiar with officers, students and housewives in large 7 urban areas. Nowadays, the most popular online sales form is trading goods and services through E-commerce website. However, the statistics show that Vietnam businesses do not proper recognized the role of the website as a channel of communication and permanent interaction with customers. Thus, they do not invest appropriately the time and resources to build, maintain and exploit efficiently their website. 1.4. The operation forms and E-commerce transactions 1.4.1. The forms of E-commerce activities a. E-mail Like ordinary correspondence, partners (consumers, businesses, government agencies) use email to send information to each other "online" through the network. b. Electronic payment Electronic payment is payment via electronic messages instead of cash handing. c. Electronic purse Electronic purse, known as electronic wallets, is a place for internet cash, mainly the Internet smart card. d. Smart card It looks like a credit card, but in the back of the card, instead of the magnetic strip, it contains an electronic chip with a small memory for storing digital money. e. Digital banking and digital securities trading Electronic payment system of banks is a great system, which includes many sub-systems. f. Electronic Data Interchange Electronic Data Interchange (EDI) is the transfer of information from this computer to other computers, among other companies or [...]... advantage for businesses, and Communicate information about business and products to consumers 1.7.3 Types of Trade Promotions Trade promotion includes some typical models: Promotion, Commercial advertising, Displaying and introducing goods and services, and Fairs and exhibitions 10 1.8 Trade Promotion in E-commerce Trade promotion in E-commerce is the method of using electronic means to introduce, offer... (Agritrade) AGRITRADE is a business organization under the Ministry of Agriculture and Rural Development, Main functions and responsibilities are as the focal point of trade promotion of Vietnam Agriculture 2.2.2 Agritrade’s main missions: 12 Agritrade is responsible for consulting and implementation of agricultural trade promotion policies The main functions: Planning and implementing trade promotion programs... programs for Vietnam agriculture; Support to policies of MARD about export promotion, trade development for agricultural products; management and development e-commerce website; implementation consulting activities including training and scientific transferring 2.2.3 Recent years’ Main Activities:  Organizing various local trade fairs annually  Organizing the MARD’s trade promotion activities in overseas... Coordinating with domestic and foreign organization to organize the professional events 2.2.4 Overview of agricultural trade promotion activities of Agritrade 2.2.4.1 Main purposes To promote agricultural products and local specialties, Agritrade deploys two main activities:  Organizing trade promotion program: trade fairs, events, conferences, seminars, training, market surveys…  Establishing display... of society, including the business environment To facilitate E-commerce development in Vietnam, in last five years, the state has promulgated a series of laws, decrees, and circulars instructions to create a favorable legal framework for E-commerce development 2.3.3 Impact of socio-cultural environment Currently, E-commerce application in business is inevitable in the world and Vietnam Businessmen are... According to the Ecommerce report of the MoIT in 2009, the social environmental factors, business practices and awareness of E-commerce still are two leading E-commerce barriers 2.3.4 Infrastructure and Internet services for E-commerce Overall assessment of the environmental infrastructure and services for E-commerce in Vietnam is also not meeting the demand But in recent years the investment and development. .. 3.1 The conclusions and findings through the research process 3.1.1 The achievements and limitations of Agritrade 3.1.1.1 The achievements of Agritrade Since establishment in 2003, Agritrade has implemented successful trade promotion missions and training activities for businesses and localities Moreover, Agritrade also performed propaganda programs, advertising and selling agricultural products and... need new method to buy agricultural product; the current trade promotion activities organized by Agritrade create promotion effective to agricultural business; Agritrade staff itself aware about the role of E-commerce application 3.2 Orientation and perspective of development of Agritrade in the future 3.2.1 Development orientation of Agritrade 3.2.1.1 Vision Agritrade is strengthening IT applications... develops a database related to information of agricultural production, products and service to serve for trade promotion programs 3.2.2 Agritrade’s views on the E-commerce application According to Board of Director of Agritrade, the E-commerce application in the trade promotion activities is appropriate and necessary 3.3 Proposal solutions of deploying E-commerce application in Agritrade 3.3.1 Group of Human... expert interviews I collect the expert questionnaire and try to find the answer for the following issues: Vietnam' s agricultural products market and the integration requires; market of agricultural products and local specialties; and the need and ability to apply E-commerce into trading in agricultural products 18 CHAPTER 3: CONCLUSIONS AND THE PROPOSAL SOLUTION OF E-COMMERCE DEVELOPMENT FOR AGRITRADE . and legal infrastructure. 1.7. Definition and content of Trade promotion 1.8. Trade Promotion in E-commerce 1.9. The difference of E-commerce applications in agricultural trade promotion CHAPTER. title E-Commerce development in agricultural trade promotion in Vietnam 2. Necessity of the thesis Electronic commerce (E-commerce) is a new field and showing great role in trade promotion, . VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Doan Tran Nhan E-COMMERCE DEVELOPMENT IN AGRICULTURAL TRADE PROMOTION IN VIETNAM. Major: Business Administration