A STUDY OF EXPORT DEMAND FOR COFFEE: THE CASE OF INTIMEX VIETNAM JSC _ 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 NGUYEN GIA PHUC (CLINTON) December 2013 i APPROVAL SHEET ii CERTIFICATE OF ORIGINALITY iii ACKNOWLEDGMENT The researcher would like to thank Dr Eduardo T Bagtang and the International Center Education of Thai Nguyen University, Southern Luzon State University for guiding the researcher throughout this research and for providing me with the opportunity to conduct this research and for helping me to carry out the necessary revisions to this dissertation He also like to express his deepest gratitude to Vietnam Intimex Company for providing him with useful and necessary information for doing this research, to his wife, son and daughter for giving him inspiration, and to his colleagues for encouraging him to finish this research and giving him necessary feedbacks for making this dissertation successful Finally, he would like to thank all of his classmates for giving him constant support and encouragement as well as helping him with the needed materials and references for this study NGP iv DEDICATION This research is heartily dedicated To my family and to all my relatives, my colleagues, friends, classmates, administrators, staffs and employees of Intimex Vietnam JSC PQV v TABLE OF CONTENTS PAGE TITLE PAGE ……………………………………………………………… i APPROVAL SHEET ……………………………………………………… ii CERTIFICATE OF ORIGINALITY ……………………………………… iii ACKNOWLEDGEMENT ………………………………………………… iv DEDICATION ……………………………………………………………… v TABLE OF CONTENTS ………………………………………………… vi LIST OF TABLES ………………………………………………………… viii LIST OF FIGURES ……………………………………………………… x ABSTRACT ………………………………………………………………… xi CHAPTER I II III IV INTRODUCTION …………………………………………… Background of the Study ………………………………… Statement of the Problem ………………………………… Objectives of the Study …………………………………… Hypothesis of the Study …………………………………… Significance of the Study ………………………………… Scope and Limitations of the Study ……………………… 10 Definition of Terms ………………………………………… 10 REVIEW OF LITERATURE ……………………………… 29 Conceptual Framework ………………………………….… 71 METHODOLOGY ………………………………………… 74 Locale of the Study ………………………………………… 74 Research Design …………………………………………… 74 Respondents of the Study ………………………………… 75 Data Gathering Procedure ………………………………… 75 Statistical Treatment ……………………… …….…… 77 RESULTS AND DISCUSSIONS ………………………… 80 vi 4.1 The Current Status of the Coffee Exporting Companies of Vietnam ……………………………… 80 4.2 Qualitative Data Analysis ……………………….…… 100 4.3 To determine the model that fits the coffee price in the USA, commodity beverage price index of the US, tea price in the US, with the market share of Vietnam in the US with the coffee export to the US V 106 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Summary of Findings ……………………………………… 127 Conclusions ………………………………………………… 131 Recommendations ………………………………………… 133 REFERENCES ……………………… ………………………………… 135 APPENDICES …………………………………………………………… 137 Appendix A …………………………………………………………… 138 CURRICULUM VITAE …………………………………………………… 146 vii LIST OF TABLES TABLE PAGE International Coffee Export of Vietnam …………………… 42 Business Feature of INTIMEX Vietnam …………………… 51 List of Major Companies on Coffee Business in Vietnam and their Coffee Production and Volume of Coffee Export 81 Current Status of Coffee Companies in Vietnam ………… 82 No of Companies where Coffee is the Major Export Product ………………………………………………………… 83 Coffee Export Destinations ………………………………… 83 Type of Coffee being Exported to USA …………………… 84 Problems Encountered by Vietnam Coffee Enterprises in the US Market ………………………………………………… 84 Opportunities for Vietnam Coffee Exports ………………… 86 10 Solutions to the Problems Encountered by the Coffee Exporters ……………………………………………………… 87 US Import Policies that Affected the Coffee Export Business of Intimex Vietnam JSC to US …………………… 88 Factors that Affected the Market Share of Vietnam Coffee Export as Identified by Intimex Vietnam JSC ……………… 89 13 Vietnam Government Interventions to Help Coffee Industry 90 14 Vietnam’s Considered Competitors in the International Coffee Export Industry ……………………………………… 91 Marketing Strategies Adopted and Found to be Effective by Intimex Vietnam JSC ……………………………………… 93 Product Policies Adopted and Found to be Effective by Intimex Vietnam JSC as Marketing Strategies ………… 94 Distribution Chain Policies Adopted and Found to be Effective as Marketing Strategy as Identified by Intimex Vietnam JSC …………………………………………………… 96 11 12 15 16 17 viii TABLE 18 PAGE Price Policies Adopted and Found to be Effective as Identified by Intimex Vietnam JSC ……………………… 97 19 Advertisement Policies Adopted by Intimex Vietnam JSC 97 20 Challenges Experienced by Intimex Vietnam in Exporting Coffee ………………………………………………………… 98 Measures and Strategies Recommended by Intimex Vietnam JSC to Increase Volume of Coffee Export to the US ……………………………………………………………… 99 22 Data Sheet for Statistics Models …………………………… 107 23 Analysis of Covariance ……………………………………… 111 21 ix LIST OF FIGURES FIGURE PAGE Organizational Chart of Intimex Vietnam …………………… Coffee Productivity, Area, and Output in Province Daklak from 2006–2012 ………………………………………………… 31 Vietnam Coffee Export Market Share 2nd Half of 2013 …… 32 Amount and Value of Coffee Export in the US Market from 2006–2012 ……………………………………………………… 33 International Coffee Market Share …………………………… 50 The Input-Process-Output of A study of Export Demand for Coffee: The Case of Intimex Vietnam JSC ………………… 72 Data Collection and Procedure ……………………………… 77 Coffee Market Shares ………………………………………… 92 World's Export Value of Coffee ……………………………… 101 10 Heteroskedasticity Graph ……………………………………… 121 x 133 Recommendations With reference to the major findings of the study, the researcher recommends the following: With the status of Vietnam as one of the major coffee exporting country in the world, it is recommended that the companies should exert efforts to improve the quality of products through research and development They may consider creating a department for research and development that will focus in discovering technologies to improve the quality of Vietnam coffee The companies must adopt strategies to improve their product brand and company image It is recommended that the companies must hire consultants and professional relations officers to handle the promotion of the product brand the image of the company That the Vietnam government should increase the support provided to the coffee farmers It may consider providing incentives to farmers who engage in coffee farming and for those who will expand their coffee farms like providing soft loans to defray the cost of farming The government may also consider coffee as a national commodity In this way, farmers will be encouraged to produce more coffee The government should endeavor to strengthen its ties with the U.S government in order to get some leverage on the export of coffee to the U.S If bilateral trade agreements will be forged between the two (2) countries, the Vietnam Government may be able to assist the coffee exporting companies comply with the import policies of U.S Government 134 The companies should organize conferences for businessmen on marketing strategies and awareness of other countries’ business policies This will help businessmen from Vietnam understand the complexities of complying with the importation policies of other countries such the U.S The other companies may take a look into and adopt the experiences and marketing of Intimex Vietnam JSC The Vietnam government should convene the coffee exporting companies to draw its roadmap for the coffee industry of Vietnam which include measures and strategies that would increase the volume of coffee export to the U.S and other countries The measures and strategies may include the recommendations of Intimex Vietnam JSC to increase the volume of coffee export to the U.S such as (1) improving quality of coffee products; (2) improving the product brand; (3) conducting research and development for coffee products; (4) creating and maintaining a solid company image; and, preparing the marketing roadmap It should also include a strategy for a strong government support for the coffee industry That researchers should conduct more researches on the socioeconomic impact of the coffee industry of Vietnam which may serve as a basis of the Vietnam Government to seriously consider providing a solid support to the coffee industry 135 REFERENCES Armstrong Gary, Harker Michael, Kotler Philip, Brennan Ross (2009) Marketing: An Introduction.: Financial Times Prentice Hall Bennett Roger & Blythe Jim (2002) International marketing: strategy planning, market entry &implementation.:Kogan Page Cateora Philip R., John Graham International Marketing with Power Web.: McGraw-Hill/Irwin Czinkota Michael R., Illka A Ronkainen International Marketing.: SouthWestern College Duong Hanh H (2005) Cac chien luoc va cackehoach marketing xuatkhau.: NXB Thongke Gilligan Colin, Hird Martin (1986) International marketing: strategy and management.:CroomHelm Haight Collen (2011) The Problem with Faid Trade Coffee Leland Stanford Jr University Hoang Nguyen (2013) Gain Report Number vm3026 (gain.fast.usda.gov) Hollensen Svend (2007) Global marketing: adecision-orientedapproach.: Financial Times Prentice Hall Johansson Johny K Global Marketing: Foreign Entry, Local Marketing, and Global Management.: McGraw-Hill/Irwin Justin Paul (1966) International Marketing : Text and Cases.: Tata McGrawHill Kaynak Erdener (2002) trends.:Routledge Strategic global marketing: issues and Keegan Warren J., Mark Green, Paperback Global Marketing.: Prentice Hall Kotabe Masaaki & Helsen Kristiaan Global Marketing Management.: Wiley Kotler Philip, Keller Kevin, Brady Mairead, Goodman Malcolm, Hansen Torben (2009) Marketing management: Pearson Prentice Hall Loudon David L., Stevens Robert E., Wrenn Bruce (2004) Marketing Management: Text and Cases.: Routledge Mooij Marieke K (2009) Global Marketing and Advertising: Understanding Cultural Paradoxes.: SAGE 136 Moore Karl & Pareek Niketh (2009) Marketing: the basics.: Taylor & Francis Mühlbacher Hans & Leihs Helmuth, Lee Dahringer (2006) International marketing: a global perspective Cengage Learning EMEA Newison John (2007) De Xay Dung Chien Luoc Marketing Hieu Qua.: NXB Lao Dong XaHoi Nguyen Dung V (2009) Chien luoc marketing tong the toancau.: NXB Giaothong van tai Nguyen Huy Q, Coffee (www.docstoc.com) Production and Consuption in Vietnam Nguyen Huyen TT (2005) Giaotrinh marketing canban.: NXB Ha Noi Nguyen Lam V (2007) Nghiencuumarketing.: NXB DH Kinh te quoc dan Nguyen Quang X (2005) Giaotrinh marketing thuongmai.: NXB Lao dong xahoi Nguyen Tuan M (200`5) Nguyen lymarketing.: NXB Ha Noi Terpstra Vern & Russow Lloyd C International Dimensions of Marketing.: South-Western College Weiss Kenneth D Building an Import/Export Business.: Wiley 137 APPENDICES 138 Appendix A Questionnaire Dear Sir / Madam, I am conducting a study titled, “An analysis of international marketing in coffee export industry: The case of Intimex Vietnam JSC” as a Doctoral of Business Administration (DBA) student in International Doctoral Program Cooperation between Southern Luzon State University and Thai Nguyen University Therefore I would appreciate if you could spend some minutes answering questions in my questionnaire; as the information provided by you will be more helpful to complete this dissertation successfully Your personal information and your responses to the questions will be kept secret Please take your valuable time for answering the attached questionnaire If there are any queries, kindly contact me at nguyengiaphuc141@gmail.com Finally, I would like to express my sincere grateful ness for your help! Thank you, Yours sincerely, Nguyen Gia Phuc DBA in International Training Center, Thai Nguyen University Thai Nguyen, Viet Nam 139 Part I: Background information of respondents Name of firm ……………………………………………………… Address ………………………………………………………………… Phone number …………………………………………………………… Fax ………………………………………………………………… …… E-mail ……………………………………………………………… …… Name of interviewee ……………………………………………………… Position …………………………………………………………………… Part II and III: Questions about the US market and recommendations The research questionnaire has 10 questions which are related to coffee export to the US When did your company start exporting coffee to the US market? Is coffee export a major business area of your company? a Yes b No Please list out most important markets of your company for coffee exports! What are the main types of coffee does your company export to the US? 140 What are the possible disadvantages when doing business with US partners? Is there any restriction in terms of government policies of VN? If yes, please list out! Is there any barrier of US import policies which influence your export activities? What potentials is your company considering in the US market? Is your company planning to expand coffee export to the US? 10 What are your possible solutions to deal with difficulties in coffee export to the US? 141 Questionnaire to INTIMEX Q1 What are the specific Import policies of US that affected the Intimex Vietnam JSC coffee export business to the US? Listed below are Import policies of US, which of these policies you think can affect your coffee export business (Please Check and Rank which is most affect your export business, Start from as the most difficult): Please check Rank It is difficult to secure Permit _√ _3 The Tariff or import duties are expensive It is difficult to comply with the Labeling and marking regulations √ _ _2 It is difficult to comply with the US Product standards √ _ _1 It is difficult to comply with the Anti-dumping actions policy _ _ Others (Please specify): _ Q2 What are the factors that affected the market share of Vietnam coffee exporting companies to the US as per experience of Intimex Vietnam JSC? Listed below are factors that may affect the market share of Coffee exporting companies to the US (Please check and Rank Number as the factor that greatly affects the market share) Please Check Rank Coffee price in the _√ _ Commodity beverage price index of the US _√ _ Tea Price in the US √ _ _ Q3 What are the interventions that the Vietnam Government have Introduce to help coffee export to the US? Listed below are possible government interventions (Please check and Rank Number as the most important) 142 Please check Rank Enacted laws to provide credit assistance to the companies’ _√ _ _√ _ Enacted laws to relax export policies Provided trainings to improve quality of coffee exports _ Provided support to coffee producers to increase production _√ _ _1 Established relations to the US government to support coffee export _ Q4 What are the countries that Vietnam would consider as competitors in terms of coffee export to the US? Listed below are the countries (Please check and rank according to the highest exported of coffee) Please check Rank Brazil _√ Colombia √ _ _ Mexico √ _ _ Indonesia Others (Please specify): _√ _ _2 Q5 What are the experiences of Intimex Vietnam JSC that helped the company became Successful in terms of the following: 5.1.1 Marketing strategy Please check and rank which of the listed strategies were adopted and effective Multinational Customers were categorized into: 143 Acquainted Customer Please check Rank _√ Customer brokered via abroad agents and transaction outlets Customer Known after display or fairs _ _ _√ Customer via advertisement and Introduction from industry _√ _ Others (Please specify) _ 5.1.2 Product Policies Products are of standards and quality √ _ _1 Excellent packaging √ _ _ Selected raw materials _ _ Complete labeling _√ _ Others (Please specify) 5.1.3 Distributor chain Policies Adopt the Intimex Vietnam JSC to Importers to Customer chain _√ _ _ Adopt the Intimex Vietnam JSC to importers to retailers to Customer chain _√ _ _ Others (Please specify) 5.1.4 Price Policies Reduce transport cost √ _ _2 Reduce storage cost _ Reduce package cost _√ _ Reduce Commission expense √ _ _1 _ 144 Others (Please specify) 5.1.5 Advertisement Policies Listed below are advertisement policies or strategies (Please check and rank) Please check Rank Distribution of Printed Catalogs _√ _ Advertise in printed newspaper _√ _ Advertise in On line news papers _ Advertise in Vietnam directory books _√ _ _ Maintain Display room’s _ Participation in market fairs, seminars, or exhibitions _√ _ Maintains Us Partners to promote product abroad √ _ _ Others (Please specify) Q6 What are the challenges experienced by Intimex Vietnam in exporting coffee Listed below are challenges (Please check and rank Rank number Most Challenging experience) Please Check Rank Management lacks the knowledge of export and import marketing √ _ _ The export quota limits the exploration of import markets √ _ _ The low effectiveness of business operations The low quality of raw coffee beans _ _ _√ _ The lack of facilities and technology to improve production of coffee √ _ _ 145 The strict implementation of international standards on products _ _ The lack of coordination between coffee farmers and enterprises _√ _ The lack of knowledge on technologies by the coffee farmers’ _ _ The Vietnam enterprises lack the knowledge on international marketing 10 The fluctuation in coffee prices √ _ _3 _√ _2 11 Others (Please specify) _ Q7 What Measure and strategies can INTIMEX Vietnam JSC propose to increase Volume of coffee export to the US? Please enumerate below Listed below are possible measures and strategies to increase coffee volume of export to the US Please check Prepare a marketing roadmap _√ Rank _ Conduct Research and Development for coffee products √ _ Improve Product Branding _√ Aggressive marketing strategies _ Maximize On Line Marketing _ Improve Quality of coffee products √ _ Created and maintain a solid company image √ _ _ _ _ _ _1 _ Adopt new technology _ _ Know your international customers _ _ 10 Exposure to international market _ _ 11 Others (Please specify) 146 CURRICULUM VITAE I Personal Information Fullname : NGUYEN GIA PHUC Birthdate : September 25, 1963 Gender : Male Instituton Hanoi Industrial Vocational College & Address : 131 Thai Thinh Str., Dong Da Dist., Hanoi Office Tel No : (+844) 62753403 Mobile phone : (+84) 912424123 Email : nguyengiaphuc141@gmail.com II Educational Qualifications Years Academic institutions Major/ Specialty 1990 Hanoi University of Science and Technology Mechanical Engineering 2007 Le Quy Don University Science and Technology Administration Southern Luzon State University, Philippines 03/2010 Business (International Joint Graduate current Administration Programs at Thai Nguyen University) Academic degree Bachelor of Mechanical Engineering Master of Science and Technology Administration Student DBA 147 III Employment History Employer Name Country of Employment Start End Lecturer Hanoi Industrial Vocational College Vietnam 1984 1997 Department Head of Information Technology Hanoi Industrial Vocational College Vietnam 1997 now Job Title IV Publications and accomplishments No Authors Name of publication (papers, patents, monographs) Journals/ Publisher Nguyen Gia Phuc Curriculum program for industrial vocational college Hanoi Industrial Vocational College Nguyen Gia Phuc Curriculum program for e-marketing subject Hanoi Industrial Vocational College Nguyen Gia Phuc Auto cad textbook Hanoi Industrial Vocational College Nguyen Gia Phuc Basics of Computer Science Hanoi Industrial Vocational College Nguyen Gia Phuc Vietnam has become the Vietnam Culture world’s largest coffee exporter Window Nguyen Gia Phuc Thực trạng xuất cà phê Việt Nam Tạp chí Con số kiện ... LIST OF TABLES TABLE PAGE International Coffee Export of Vietnam …………………… 42 Business Feature of INTIMEX Vietnam …………………… 51 List of Major Companies on Coffee Business in Vietnam and their Coffee... Organizational Chart of Intimex Vietnam Vietnam is the second largest producer after Brazil, accounting for 14.3 per cent of the world market share (World Bank, 2010) The quality of the beans,... policies of US that affected the Intimex Vietnam JSC coffee export business to the US? To determine the factors that affected the market share of Vietnam coffee exporting companies to the US as per