| Abstract | “If you don’t have a strategy you will be . . . part of somebody else’s strategy.”
- Alvin Toffler
Cinnamon has been part of lives and culture of Tay and Dao ethnic minorities in
Yen Bai province, Vietnam for hundreds of years. Nowadays, cinnamon oil distilled from
cinnamon leaves become a highly valued product, contributing significantly to the
economic development of these ethnic minorities.
For many years, cinnamon oil has been produced by local households and some
local small enterprises, and mostly exported to Chinese market. By the end of 2014, the
tough competition happened when a Chinese company set up a factory to produce
cinnamon oil in Yen Bai and many Chinese traders imported material (cinnamon leaves) to
China. Since then, the price of material has been increasingly pushed up by these Chinese
companies while the price of cinnamon oil has been gradually decreased by Chinese
importers. As the result, cinnamon oil production has become unprofitable for the local
producers. Due to very limited capabilities, recently, many of them have suspended their
production or switched to produce perfunctorily. If lasting long, the situation could lead to
bad consequences for the local producers as well as the economic development of the
minorities.
The purpose of this case study is to help the local producers formulate strategies to
enhance their competitiveness, recovering production and developing profitable markets.
With the market data collected from the interviews and the online documents, the
macro-environment, the industry structure and the intrinsic capabilities of the local
producers were analyzed by using PEST, SWOT and Five Forces strategic analysis tools.
Then, based on the strategic analysis results and the theories of Five Forces, Generic
Strategies and Strategic Alliances, the following strategies were proposed:
(1) Creating a strategic alliance among the local producers;
(2) Cooperating with material suppliers to develop an organic material zone;
(3) Developing products;
(4) Branding products;
(5) Developing domestic retail market;
(6) Exporting products to U.S, E.U and Japan markets: focusing on aromatherapy
companies;
(7) Improving marketing competency.
In which, because of having strongest influences on the competitiveness and the
profitability, “Exporting products to U.S, E.U and Japan markets: focusing on
aromatherapy companies” were recommended as the prioritized strategy to apply for the
local producers. |