busm3097 sgs g6 a2 oneday
TRANSCRIPT
Nghia Nippers Business plan in Canada
ONE DAY TEAM 1
IN
INTERNATIONAL MANAGEMENT
BUSINESS PLAN
LECTURER: PETER TRAN GROUP: 6
TEAM: ONE DAY
Pham Huu Hoang Tran Vu Duy
Pham Tuong Vi Tran Thi Hien Khanh
Nguyen Ngoc Dai Nghia Tran Hong Lan
Nghia Nippers Business plan in Canada
ONE DAY TEAM 2
RMIT International University Vietnam Bachelor of Commerce Program
ASSIGNMENTCOVER PAGE
Your assessment will not be accepted unless all fields below are completed
Subject Code:
BUSM3097
Subject Name:
International Management
Location where you study:
RMIT Vietnam – SGS Campus
Title of Assignment:
International Business Report
File(s) Submitted
BUSM3097_SGS_G6_A2_OneDay.docx
Student name:
Pham Huu Hoang (s3210128)
Tran Vu Duy (s3209853)
Pham Tuong Vi (s3210060)
Tran Thi Hien Khanh (s3210050)
Tran Hong Lan (s3192916)
Nguyen Ngoc Dai Nghia (s3210371)
Learning Facilitator in charge:
Mr. Peter Tran
Assignment due date:
Monday 9th
May 2010
Date of Submission: Monday 9th
May 2010
Late Submission Approval NA
Number of pages including this one: 51
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Table of Contents
Executive summary……………………………………………………………………………………4
Introduction……………………………………………………………………………………………5
Country overview
1. Profile .............................................................................................................................................. 5
2. Geography ....................................................................................................................................... 5
3. Population ....................................................................................................................................... 6
4. Economy: ........................................................................................................................................ 7
5. Government ..................................................................................................................................... 9
Company overview
1. Company profile & structure ........................................................................................................ 12
2. Product Overview ......................................................................................................................... 13
International Business Environment
1. Business Practices, Cultures, Dos and Don‟ts .............................................................................. 20
2. Social Conditions .......................................................................................................................... 22
3. Economic condition ...................................................................................................................... 24
4. Legal ............................................................................................................................................. 26
5. Competitors Analysis: ................................................................................................................... 27
6. SWOT Analysis ............................................................................................................................ 32
Global Competing Strategy
1. Marketing Objectives .................................................................................................................... 33
2. Entry modes: ................................................................................................................................. 34
3. Segmentation and Targeting ......................................................................................................... 36
4. Positioning .................................................................................................................................... 38
Financial Plan
1. Financial objectives ……………………………………………………………………………....42
2. Financial Marketability…………………………………………………………………………...41
3. Projected PNL Statement for year 1 (monthly) and year 1 to year 3 (yearly) ................................ 42
International Aspect…………………………………………………………………………………48
Conclusion……………………………………………………………………………………………48
Reference……………………………………………………………………………………………...49
Appendix……………………………………………………………………………………………...51
Nghia Nippers Business plan in Canada
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Executive Summary
Nghia Nippers is established in 2000 with a view to becoming one of leading global group in
the field of producing and supplying service for caring beauty that makes women more confident,
attractive and successful in life via the promotion of “quality-care-share” international standards. With
the acquisition of more than 80% of nailing care industry in Vietnamese market and a wide
distribution coverage of more than 120 stores all over the world, Nghia Nippers Corporation hold a
firm foundation expand its business into a promising market- Canada. Based on this spirit, this
business is formulated to offer a very deep insight into how Nghia‟s Nippers will penetrate into this
market where opportunities and threats are awaiting for them.
It can be said that Canada would be a thriving land for doing business here since Canada has
possessed some competitive advantages that other countries do not have. It can be included the
strategic geography, aging population, stable government, proliferating legal social and economic
conditions which can be considered as most potential critical success factors for a newcomers like
Nghia Nippers Corporation. Based on the evidence of rigorous country analysis, the Canadian market
will be a lucrative one for Nghia Nippers to achieve viability and sustainable development since
government has gone its great length to smoothen its legal procedures allowing external business to
participate in its country. Also, the high living standard and stable economic growth will be a good
condition for Nghia Nippers to launch its long-term development plan in the foreseeable future.
Besides these advantages, there exist potential threats for Nghia Nippers since the business
practices, cultures distinction and difference in Canadian consumer behavior will mainly affect the
effectiveness when transferring its successful business model into Canada where bears little
resemblance to what Nghia Nippers has implemented in other Europe and Asian countries.
Specifically, in the Hofstede Cultural Dimension Analysis, some of culture‟s mismatches have been
identified so that Nghia Nippers can learn from the previous cultural misunderstanding in doing
business in unfamiliar environment. These experiences will be a great concern in Canada market
where Nghia Nippers has to confront with harsh competition from strong competitors in Canada
nailing care equipment industry such as Revlon, Aimex, LaCross. However, Nghia Nippers holds
more confidence in its own strength supporting by many differentiating features to be endures in this
battle.
With very deep insight into some prevalent issues in Canada business practice, environment
as well as great concern in business environment analysis, Nghia Nippers has explores the most
appropriate entry mode approach bridging its products to Canadian users. Specifically, the exporting
entry mode will be the preferable orientation in the first two years in Canada as its cost has been
outweighed by substantial benefits this method may offer including low expenditures and efficiency.
To put this entry mode into practice, Nghia Nippers has carefully designed clear market segmentation
analysis to offer the effective marketing plan in Canada with a view to raising its brand awareness in
Canada such as Advertising, Promotion Campaign, and Sponsorship.
With regard to financial aspect, Nghia Nippers will be aiming at Reach the sales revenue of
$2 million after 1 year and increase the net profit margin to approximately 40% after 1 year. These
objectives hopefully will not be beyond Nghia Nippers Control since it has done very good
performance in cost management and sale activities in other countries.
Overall, it is undeniable that Nghia Nippers‟ expansion plan to a new market especially
Canada will confront a lot of challenges; however, Nghia Nipper Management Team will try their
best to make this promising plan conform to reality.
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Introduction
Nghia Nippers Company is being the market leader in Vietnamese nail-care manufacturing
and has vision to go globalization. Meanwhile, Canada is a developed country with many
opportunities for foreign business. It is a best choice for Nghia Corporation to set up its business for
several reasons that will be illustrated in this report.
Country overview
1. Profile
Canada is a one of the world's wealthiest countries.
A member of the Organization for Economic Co-operation and Development (OECD), North-
American Free Trade Association (NAFTA) (1994), World Trade Organization (WTO) (1995)
and Group Eight (G8) (1978).
Has a closely doing business with U.S.
2. Geography
Canada occupies the vast portion of the American continent (41%) and becomes the second
largest country in the world after Russia (About website). Canada located in the northern North
America with the rich natural resources such as fish, forest and plain, etc.
Figure 1: Canada map
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Table 1 : Canadian Geographic
Land area 9,984,670 km2
Coastline 202,080 km2
Climate The south-western coast is mild in the winter
Seven months a year are very cold below freezing
In summer, the temperature can exceed 30 degree and high level
of humidity
Natural Resources Fish, forest, plain, petroleum, mineral.
Largest cities Toronto, Montréal, Vancouver, Ottawa Gatineau, Calgary, Edmonton,
etc.
3. Population
Although being the second largest country in the world, the number of Canadian population is
slowly increasing by 57,500 people in the fourth quarter of 2009 to 33.9 million and ranking the 33rd
in the world due to immigration (Statistics Canada, 2010). Thus, this is a great potential market for
Nghia Nippers as the high number of immigration from Asia where women care much about nails.
Ethics: Canada has more than 34 groups of ethics consisting of English, French, German, Italian,
Irish, Ukrainian and Chinese with high rate of immigration. To Boyd (2005), 60% of Canada‟s
population growth is contributed by immigrants and they are the potential market for any business in
Canada (figure 2).
Figure 2: Percentage of Ethics in Canada
Religions: Along with various ethics is the variety of religions; the Canadian majority follows the
Christianity, Islam, Judaism and Buddhism.
Age: Canada is seen as an aging country because the baby boomer generation is retiring and the high
quality of healthcare service.
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Gender: Statistics of Canada shows that in 2004, more than 16 million women accounted for 50.4%
of the Canadian population.
Birth and Death rate: Approximately 10% of Canadian population increases each year due to new
born babies (IndexMundi 2010) (figure 3). On the other side, the death rate of Canada is slightly low
at fewer than 8% each year due to good healthcare service (figure 4).
Figure 3: Canadian Birth rate (IndexMundi 2010)
Figure 4: Canadian Death rate (IndexMundi 2010)
4. Economy:
According to The World FactBook (2009), Canada enjoyed solid economic growth from 1993
through 2007. Furthermore, although the economy was affected by a sharp recession in the final
months of 2008 and early of 2009 which led to a significant decrease in the Real GDP (figure 5),
Canada‟s Real GDP still gained the better rate rather than other G7 countries (figure 6).
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ONE DAY TEAM 8
Figure 6: Real GDP Annualized % change
Moreover, after the global crisis, Canada has been cover much quicker than other G8
countries. For example, in the fourth quarter of 2009 the real and nominal GDP has beyond
the forecast one i.e. the actual Real GDP has been risen up to 5% and the Nominal GDP has
grown by 4.5 % (figure 7). In addition, international trading such as import and export have
been dramatically increased by 36% and 12.2 %, import and export respectively. Most
importantly, Canada has an ideal unemployment rate which is 8.6% in Jan, 2010. Comparing
to US when they both entering the crisis, Canada‟s labor market performance significantly
strong than US almost three time since Canada can maintain more than 106,000 jobs, yet US
just can save less than 104,000 jobs (figure 8) .
Although Canada has a stable economy, Canada still does not take advantages of their plenty
of resources to serve the demand of different industries in their country. Furthermore, since the GDP
contribution among the economic sectors has a huge gap i.e. 69.6%, 28.4%, and 2%,, service,
Figure 7: Canadian Labor market Figure 8: Real and Nominal GDP vs. the
forecast in 2009
Figure 5: G8 Real GDP during crisis period
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industry and agricultural respectively. Canada has to depend on the supply from other countries
(figure 9).
Figure 9: Import and Export Annualized % change
5. Government
Source: Adapted from World Fact Book, 2009
According to World Factbook (2009), Canada operates under a British-style parliamentary
system of government, with an elected House of Commons and an appointed Senate. Our
representatives in the House of Commons, comprising 305 Members of Parliament (MPs), are elected
to serve by direct popular vote. Our Senate includes up to 105 Senators who are selected on the advice
of the Prime Minister of Canada and appointed by the Governor General of Canada.
The Canadian judiciary system is independent from all branches of government and the actions and
conduct of government, and all statutory laws, rules and regulations are subject to the scrutiny of the
courts. Our Superior Court judges are appointed by the Prime Minister of Canada through the
Governor General of Canada. The courts are responsible for ensuring that all laws comply with the
principles of Canada‟s Charter of Rights and Freedoms and that all governments conduct themselves
in accordance with the Constitution.
Under the Canadian Constitution, there is a division of powers between the federal and provincial
governments. Generally, the federal government is responsible for national and international matters,
while the provincial governments are responsible for more local matters relevant to their particular
provinces/territories.
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Company & Product Overview
1. Company overview
Table 2 : Company's overview
Official Name Nghia Nippers Ltd or Nghia Nippers
Established Year September 2000
Distribution channels More than 120 stores over domestic and oversea
Market share 80%
Market leader in Vietnamese nail tool manufacturing industry
Core business Manufacturing and exporting manicure set
Export value 30% of total sale
Head office 10/20 Lac Long Quan street, District Binh Thanh, HCMC
Official website http://www.nghianippers.com
Vision Nghia Nippers brand wishes to become one of the leading global
groups in the field of producing tools and supplying services for
caring beauty that makes women more confident, attractive and
successful in their lives.
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Mission statement Affirming "Nghia Nippers" to be proud of the Vietnamese Brand in
the global market. Nghia Nippers brand meets needs of caring
beauty for women in the world through producing perfect products
as well as supplying best services for caring beauty.
Slogan For a meaningful life
Core value of brand Nghia Nippers = Quality + Care + Share
Quality: Commit to supply customers best products and
services of beauty care.
Care: Women always represents for the natural beauty. It is
respectful that its beauty is well-cared and honored.
Share: Our aim is to share responsibilities with the society, the
community and the whole nation.
Achievements 2002-2009: Vietnam High Quality Goods
2005 & 2007: Kem Nghia trademark got prize of Sao Vang Dat
Viet
2006: Vietnam Strong Trademark of 2006
2007: Gold cup of Top Integration Quality of 2007
2007: 100 Vietnam High Quality Top Trademarks of 2007
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2. Company structure
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3. Product Overview
Even though being exporting to Canada, Nghia Nippers also plans to promote its products at
the most effective marketing.
a. Product:
Strategies:
It is a fact that Nghia Nipper Company currently dominates nail care product market in
Vietnam. Regarding global business vision, they ought to apparently pursue market-development
strategy which means company will expand business scale to international segments within the same
product categories (see Appendix).
Ansoff’s Product/Market Development Grid (Adopted from Kotler 2006)
Moreover, Nghia Nippers follows focus low-cost leadership (Porter, 1980), which aims to
target nail care businesses in some dense areas and high number of Vietnamese people at first. Then,
the corporation will expand to low-cost leadership to make it popular across Canada.
Product level Description
Core product Providing nail care products
Actual product High product quality which is accredited by ISO 9001:2000
Nghia Nippers is renowned as prestigious brand in nail caring products in
Vietnam.
The design of each product categories is customized to suit changes in
customer‟s fashion preference.
Augmented
product
Customer care service: Nghia Nippers offers customer with pre-purchase
& post-purchase online and offline consultation service regarding how to
care their nails at best.
Warranties: all products are warranted for certain time which yields
trustworthiness among customers.
Installation: After purchasing the products, customers will be guided on
how to use it effectively.
Services: there is repairing/maintenance service for Nghia Nippers
products at their stores for free within warranty time.
Table 3 : Levels of product
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b. Place: Distribution spread through domestic & international market.
As Nghia Nipper brand is brandly new to Canadian market, in order to mitigate the risks of
being failure when migrating into this market, Nghia Nippers will apply selective distribution
(Kotler et al. 2009) method to distribute products in regions which gather the majority of Vietnamese
expatriates (figure 10).
Figure 10 : Vietnamese population in Canada 2001 (Statistics Canada 2001)
According to Canadian General Statistics Office (2001) the majority of Canadians of
Vietnamese live in Ontario (67,000 people), Quebec (28,000 people), British Columbia (27,000
people) or Alberta (21,000 people). Therefore, we will start out global strategy in those four areas by
find the reliable importers for our products.
c. Price:
Nghia Nippers‟ products have been known as premium products in Vietnam. However, when
exporting to Canada, Nghia Nippers‟ pricing strategy is competitor-based pricing so it has a great
competitive advantage in the price; for example, high quality of products and has cheaper price than
other main competitors in Canada:
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Figure 11 : Prices in comparison with competitors
Although Nghia Nippers has advantage in pricing, it also needs appropriate strategies to
compete with the existing competitors in Canada‟s market:
Table 4 : Pricing strategies
Penetration Pricing
To gain market share in Canada, firstly, Nghia Nippers sets the
price a bit lower than others competitors. Then, when they reach
the desirable market share, the price will steadily increase by
changing the packages, the color or design.
Product Bundle Pricing
Instead of selling single product such as one nipper for 5 CAD, one
nail file 0.5 CAD and one cuticle nipper for 2 CAD, Nghia Nippers
will combine them as a whole package which only cost 7CAD. By
doing that, Nghia Nippers will encourage customers to buy because of
cheaper price. Furthermore, Nghia Nippers can also use this strategy to
sell their old stocks.
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d. Promotion:
Advertising:
Advertising seems to the creative tools which can launch customer awareness toward Nghia
Nippers brand. That is the reason why marketing team tries to deliver company‟s message – “For a
meaningful life” to Canadian audiences in the hope he or she will react in certain way. Therefore, the
advertising campaign aims to run in the following objectives:
Announce 20% of target customers about our products and build positive manicure supplier
image in consumer perception
Convince customers that Nghia Nippers will bring the best manicure product quality with
reasonable price to Canadian buyers.
Remind Nghia Nippers brands in customer mind during low shopping seasons.
To achieve these goals, the firm invests huge budget in this campaign. Nghia Nippers firstly
introduces its goods to Canadian market, thus the company needs to spend more on promotion
activities which cost around 20% sale revenue each year. The following table presents details
advertising programs.
Key media Evaluation Vehicles Classification
Newspaper
Inexpensive
media to
produce
Reach large
number of
audiences.
In fact,
78% of the
total
Canadian
population
read a print
or online
edition of
their daily
newspaper
at least
once a
week (Sass
2010).
Halifax News Net : Weekly news from Halifax is one of
the best value print advertising
They had 51% of 117,680 readers every week are from 34 to 56
years old (Readership survey 2007). So we can estimate the
number of Nghia Nipper target customers may read this
newspaper is 60,017 readers/per week. Furthermore, we want to
reach 20% of these potential customers which is 20% of 60,000
readers = 12,000 readers/per week will notice our advertising.
The frequency = 2 times/month
Ad placement time = 16 weeks = 4 months
Gross rate point (GRP) = 2*12,000*4 = 96,000 views
Cost per thousand views (CRM) = $40 Total costs:
(96,000*40) / 1000 = $ 3840 / per year
Vancouver Sun: Canadian breaking news, sports and
business. (Daily newspaper)
They had 62% of 23 million readers every month are from 25 to
55 years old (The Vancouver Sun 2010). So we can estimate the
number of Nghia Nipper target customers may read this
newspaper is 14,260,000 readers/per month. Furthermore, we
want to reach 20% of these potential customers which is 20% of
12,000,000 readers = 2,400,000 readers/per month will notice our
advertising.
The frequency = 1 time /month (average)
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Ad placement time = 16 weeks = 4 months
Gross rate point (GRP) = 1*2,400,000 *4 = 9,600,000 views
Cost per thousand views (CRM) = $10 Total cost: (9,600,000
*10) / 1000 = $ 96,000/ per year
The Gazette: Montreal; Online Daily news
They had 62% of 7.5 million readers every month are from 25 to
54 years old (The Gazette 2010). So we can estimate the number
of Nghia Nipper target customers may read this newspaper is
4,650,000 readers/per month. Furthermore, we want to reach 20%
of these potential customers which is 20% of 4,650,000 readers =
930,000 readers/per month will notice our advertising.
The frequency = 1 time /month (average)
Ad placement time = 16 weeks = 4 months
GRP = 1*930,000*4 = 3,720,000 views
CRM = $10 Total cost: (3,720,000 *10) / 1000 = $ 37,200/ per
year
Household
magazine
Long life
and high
expectation
for next
edition
Easy to
reach
demographi
c
segmentati
on.
Canadian Family: is the only lifestyle magazine
enriching all aspects of contemporary family life in
Toronto. In here, we place our ad on “big box” layout
(300x250). This magazine only publishes 8 issues per
year.
They had around 2.5 million readers every year are from 25 to 45
years old (Canadian Family 2010). So we can estimate the
number of Nghia Nipper target customers may read this
newspaper is 208,333 readers/per month. Furthermore, we want
to reach 20% of these potential customers which is 20% of
200,000 readers = 40,000 readers/per month will notice our
advertising.
The frequency = 1 time /month (average)
Ad placement time = 8 months
GRP = 1*40,000*8 = 320,000 views
CRM = $15 Total cost: (320,000 *15) / 1000 = $ 4,800/ per
year
Canadian Living: Canada's favorite family magazine
offers solutions and information on the topics that matter
family. Present up-to-the-minute health and wellness
information; practical parenting and relationship advice
and even beauty features. (Publish 12 issues per year)
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They had around 15 million readers every year are from 24
to 55 years old (Canadian Living 2010). So we can estimate the
number of Nghia Nipper target customers may read this
newspaper is 1.25 million readers/per month. Furthermore, we
want to reach 20% of these potential customers which is 20% of
1.25 million readers = 250,000 readers/per month will notice our
advertising.
The frequency = 1 time /month (average)
Ad placement time = 4 months
GRP = 1*250,000 *4 = 1,000,000 views
CRM = $20 Total cost: (1,000,000 *20) / 1000 = $ 20,000/
per year
Internet
Low costs
in long
period of
time such
as “Pay per
click” tactic
which
means we
only pay ad
fee when
customers
click on our
ad banners.
Fast
connect to
large
number
web users
and
interactive
capability.
Nghia Nippers webste: www.nghianippers.com
E-shopping site: Best place to compare prices –
www.canada.shoplocal.com
They had around 175,000 consumers every year are from 25 to 54
years old (Shoplocal 2010). So we can estimate the number of
Nghia Nipper target customers may read this newspaper is 14,583
consumers/per month. Furthermore, we want to reach 20% of
these potential customers which is 20% of 14,583 consumers =
3,000 consumers /per month will notice our advertising.
The frequency = 10 time /month (average)
Ad placement time = 6 months
GRP = 10*3,000 *6 = 180,000 views
CRM = $30 Total cost: (180,000 *30) / 1000 = $ 5,400/ per
year
Advertising site: where manufacturers place their promotion
programs and advertising banners. We will place our ad on
“skyscraper” format (160px by 600px)
http://toronto.flyerland.ca/
They had around 100,000 visitors every month are from 25
to 54 years old (Woorank report 2010. And we want to reach 20%
of these potential customers which is 20% of 100,000 web
visitors = 20,000 visitors /per month will notice our banner.
The frequency = 12 time /month (average)
Ad placement time = 6 months
GRP = 12*20,000 *6 = 1,440,000 views
CRM = $25 Total cost: (1,440,000 *25) / 1000 = $ 36,000/
per year
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Sale promotion:
Table 5 : Sale promotion programs
Coupon
Nghia Nippers issues coupons that 5%
discount each purchase when buying at
Nghia‟s store in the holidays and for bulk-
buy customers with more than 5 tools per
time. Simultaneously, Nghia can add coupon
on Fashion Magazine to attract young women
about the brand and come for shopping. To
Armstrong (2007, p.456), it will stimulate
sale and promote brand effectively.
Premium
Every time buying a pack of nippers,
customers will receive premium such as a
free nail-color to fully decorate themselves.
More than $50 paid can get a free nail tool.
Thus, customers can get incentives to
purchase in Nghia Nippers.
Sponsorship:
Nghia Nippers can be a sponsor for Skill competences Canada (Nail Art Design) competition
which is held in from October to November 2011. Thus, by using the tools of Nghia Nippers to
perform, professional designers indirectly advertise for Nghia Nippers and enhance Canadians aware
about the brand. By that, customers can recognize the value and quality of Nghia Nippers then buy the
tools with high belief.
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International Business Environment
1. Business Practices, Cultures, Dos and Don’ts
a. Hofstede’s cultural dimensions
Figure 12: Hofsteade's cultural dimension Canada & Vietnam
Figure 13: Work-related Values of Canada
Power Distance:
Power distance of Canada is slightly low (39) in comparison with Vietnam (70). This rank
indicates that Canadian society is equal and mainly ignores the differences between people‟s power
and wealth (Hofstede 1984). Thus, with lower price of nail tools in comparison to Canadian
competitors and high quality, Nghia Nippers may catch attention from low to high income people.
-
20
40
60
80
PDI UAI IDV LTO
39 48
80
23
70
30 20
80
Hofstede's Cultural dimensions
Canada vs Vietnam
Canada
Vietnam
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Uncertainty avoidance:
Even though ranking at the average (48), Canadians are not as tolerant for social ambiguity or
uncertainty as Vietnamese people (80). It is because Canada is a developed country with strict rules,
laws in order to control their variety of immigrants and cultures while Vietnam has simpler culture
and has been developing recently. Consequently, to do business in Canada, Nghia Nippers should do
research about laws and policies about nail to ensure performance.
Individualism:
As can be seen in figure 13, Canada has the high ranking of individualism (80). Most English
speaking countries like United Kingdom or United States have high individual-focus rank as they are
self-reliant and tend to look towards themselves and close family members (Hofstede 1984).
Although Canadians are self-confident and open, they like to keep personal privacy limited except
family members or close friends. For Nghia Nippers, encouraging individual coming to the store is
rather than the group of people.
Long-term orientation:
While Vietnam scored 80 in long-term-orientation dimension as it is a typical Eastern country
where tradition is respected, Canadians with (23) score was low long-term oriented. Due to the
various races and culture-mix in Canada, this country accepts the changes or innovations more easily
without concern much about tradition and long-term orientation. Therefore, Nghia Nippers can be
successful in Canada as a new entrant as long as the quality and design are acceptable.
b. Dos vs. Don’ts:
According to World business culture (2010) and International business center (2008), there are
some points that an International enterprise need to notice as an entrant to Canada.
Table 6: Canadian business styles
Styles Dos Don’ts
Communication
Directly say what you mean
Reserved, understated communication
but straight forward.
Verbal communication rather than non-
verbal.
French Canadians are more open than
Canadians with more gestures and stand
closer.
Overtly coded language
causes suspiciousness
and bad images to
customers
Use many gestures and
movements (handshake,
touch) when speaking
with English Canadians
(except French
Canadians)
Meeting/ Behavior
A firm handshake with good eye-contact.
Do research before coming to the
meetings.
Democratic, calm and neutral
conversation is seen as politeness and
courtesy.
Well-prepared empirical facts to prove
Come to the meeting
without information
about the partners
Showing aggressiveness
and heat
Inability to give relevant
facts causes
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the ideas and taken decisions.
suspiciousness to
Canadian.
Eating while walking in
public is impolite.
Dressing
In cities, Tights and suits for men and
formal dress for women are standard in
viral meetings between companies and
customers.
Simple, classic suits and dress with are
valued in navy, grey and black.
High quality of clothes‟ material is
considered.
Relaxed, informal
costumes make
customers less believe
in the company.
New and fashionable
suits.
Culture
Show respect to diversity of cultures in
Canada by making awareness of the
business for multi-ethical people.
Business-women must show professional
and competent manner and being
respected by the partners without
encounters about gender.
Focus on original and
ignoring immigrates or
advertising about
specific regions may
lose the rest of the
customers in this
market.
2. Social Conditions
a. Lifestyle:
Figure 14: Shopping Frequency for Canadian Residents (ICSC, 2009)
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Canadians have been known as “avid shopper” since it is reported that during the recession in
2009, Canadians had just slightly cut of 19% their sending (International Council of Shopping
Centers, 2009). Furthermore, according to International Council of Shopping Centers (ICSC) within
60 days at the end of 2009, Canadians reported visiting enclosed malls nearly twice as often as US
shoppers (figure 14). Therefore, it is a great advantage for Nghia Nippers to participate in a market
that the buyer is always willing to buy their products.
In Canada, women are typically responsible for a larger share of the household shopping
(ICSC, 2009). Furthermore, woman is also Nghia Nipper‟s target customer, consequently, it creates a
good chance for Nghia Nipper to reach and influence their buying habit.
ICSC (2009) stated that Canadians are always optimistic about their financial situation because when
being asked about their expectation about the financial situation in the next 12 months, only 11%
think that it will be worse (figure 15). Since Canadians believe that their economy will not become
worse, they obviously feel wealthy and increase their expenditure and are willing to buy goods.
b. Population:
Canadian has been known as young population country since the percentage of 15-64 year
old is up to 60% which also the targeted customers that Nghia Nipper aims to serve (figure 16).
Figure 15: Over the next 12 months, do you think your financial situation will (ICSC, 2009)
Figure 16: Demographic trend by age group
Nghia Nippers Business plan in Canada
ONE DAY TEAM 24
c. Living standard:
Figure 17: Classification of Living Standard in Canada (ISCS, 2009)
The living standard of Canada is high since Canada‟s Human development index (HDI) ranks
fourth among American countries (Federal Statistical Office Germany, 2010). Moreover, the majority
occupation of the society is far and good financial level which is 35% and 40% respectively (ISCS,
2009). Furthermore only 18% of the nation is concerned as poor class (figure 17). Since Canada has a
high living standard, people will require for extra service or premium products that will enhance their
life. Nghia Nippers sees Canada as a potential market since their product is high quality which will be
consumed well in Canada.
3. Economic condition
During the global crisis in 2009, Canadian Government had implemented appropriate policy such
as financial support, expansionary monetary, fiscal policies, price stability and long-term fiscal
sustainability to eliminate the downturn of the economy. Thus, Canada has been known as one of the
stable and strong economy and fiscal position which Nghia Nippers thinks will be a good market‟s
condition for their business.
a. GDP:
Another sign that reflects the recovery of Canada‟s economy is the increase of real and
nominal GDP which has beyond the forecast. In detail, the actual Real GDP has been risen up to 5%
and the Nominal GDP has grown by 4.5 % (Statistic Canada, 2010) (figure 18). Therefore, it is less
risky for Nghia Nipper to doing business in a country that have such a stable economic condition like
Canada. Furthermore, these above numbers have shown the positive growth of almost economic
activities such as consumption, government spending and import and export which can be considered
as great advantages for Nghia Nipper‟s business.
Nghia Nippers Business plan in Canada
ONE DAY TEAM 25
b. Support the economic growth:
Although Canada suffered less than other G7 countries after the global recession, the economy still
got negative effect on the economy, thus the Government decided to support the economy by reducing
the interest rate which will encourage the people in lending money and investor in investing.
Consequently, the business within the nation as well as international business will have incentive to
operate in Canada. Furthermore, the Federal also reduces the income tax for Canadians as well as
international partnerships to support the business (figure 19 & 20).
Figure 18: Real and Nominal GDP vs. the forecast in 2009
(Statistic Canada, 2010)
Figure 20: Progress in Implementing Canada’s Economic Action Plan
(Public Works and Government Services Canada, 2009)
Figure 19 : Effective Interest Rates and Policy Rate 2009
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ONE DAY TEAM 26
4. Legal
According to International Finance Corporation (2010), Canada stands on 38 out of 183 countries in
the attractiveness of doing business 2010 (figure 21). Therefore, Nghia Nipper business would like to
comply with the regulation, rules or policies for the purpose of importing their products into Canada.
Figure 21: Trading Across Borders – Global Rank (IFC 2010)
Firstly, the nature of import procedure in Canada is quite short with 4 documents and 11 days
required (figure 22). Therefore, Nghia Nippers might find it comfortable to approach through the
registration process, import account and the range of tax duties, etc. The sooner Nghia Nippers
finalize the process, the better they generate profits.
Figure 22: The duration & US costs of import procedures (International Finance
Corporation 2010)
Secondly, Nghia Nippers should update and go along with the imported rules. For instance,
according to IFC (2010), the Canada Border Services Agency (CBSA) recently establishes the
advanced rules. By this rule, the businesses provide their information, description of imported
products, etc in order to get approval of 10-digit number of tariff classification. Therefore, the benefits
from this are disclosure on the certain type of documents such as the commercial invoice, Form C11,
etc.
Finally, the imported goods are charged 5% GST for the consumption in Canada (IFC 2010). The
numbers of tax vary from province to province such as Canadian Provincial Sales Tax (PST), Quebec
Sales Tax, etc. These taxes are added up on the GST. Therefore, Nghia Nippers should understand
clearly about these taxes before penetrating any provinces of Canada
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5. Competitors Analysis:
a. Competitor analysis:
Brand Name Products Description
Domestic competitors
La Cross is a leading brand of beauty implement in
Canada since 2002.
Be sub-brand of Sally Hansen who is the biggest
cosmetic and beauty care company takes over 50%
market share.
La Cross offers various kinds of nail implements
with attractive package and high prices (price range:
$23 $ 26 / nail nipper). (La Cross Pty Ltd 2010)
Commentary:
La Cross has more competitive advantages than Nghia
Nippers because they are domestic brand with high brand
awareness and non-tariff fee. However, Nghia Nippers can
be outstanding of lower manicure tool prices in cost
management. The reasons are low labor costs and production
expenses.
Nghia Nippers Business plan in Canada
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Revlon is found in 1932 and a world leader in
cosmetics, fragrance and personal care.
Provide glamour, excitement and innovation through
quality products at affordable prices (Price range:
$10 - $24). (Revlon Pty Ltd 2010)
Commentary:
In term of product category, Revlon is a mass producer with
wide range beauty goods and perform successfully in North
America and European.
Nevertheless, Nghia Nippers is proud of strong Vietnamese
brand reputation and wealth experiences in exporting over 20
countries in the world.
Aimex Canada Ltd. is a wholly Canadian Venture
based in Southern Ontario since 1989. (Aimex Ltd
2010)
Commentary:
Aimex caters to wholesale businesses offering good quality
products at competitive prices. However, it seems to be less
competitive advantage than Nghia Nippers because of
product appearance and design. In fact, Nghia Nipper‟s
exporting products are well-designed and made by good raw
material – stainless steel.
Nghia Nippers Business plan in Canada
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Exporter competitors
Beauty Bone is the Pakistan's Beauty Tools
manufacturer.
Established for over 10 years and carry a global
reputation for quality, excellence and outstanding
service. (Beauty Bone Pty Ltd 2010)
Commentary:
Both Beauty Bone and Nghia Nippers are market leaders of
manicure tools suppliers in their domestic nations. However,
Nghia Nippers takes more competitive advantages toward
Beauty Bone. Firstly, Pakistan has not been a member of
international trade community or organization, so they suffer
high cost of tariff and import licensing procedures. Secondly,
Vietnamese political environment are stable, so Canadian
consumers have good perception on Nghia Nippers
commodity.
Established in 1992 as a manicure set manufacturer
from China (Yangjiand FuGi Industrial Co. Ltd
2010).
Export Percentage : 85 percent to 89 percent
Capital :US$100,000 to 199,999
Current Export Markets
o Eastern Europe
o North America
o Mid East/Africa
o Central/South America
o Asia
o Western Europe
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o Australasia
Commentary:
China seems to be an exporting leader in the world of
many products‟ kinds because of cheap price goods. In
nail nipper set, Nghia Nippers can have a prestigious
position in global consumer mind with high quality
nippers with acceptable prices. The Vietnamese
manufacturer uses good quality raw materials and
conduct beautiful product design compared to Chinese
supplier.
The Salon Supply Source (SSS) is the leader of beauty
implement manufacturer in US and now brings these
values to Canada. The company knows what you want
and need: Quality Products; Service and Selection;
Low Prices! (The Salon Supply Source Co. Ltd 2010)
Commentary:
The US firm takes advantage of close geographical
distance, easy import procedures and customer
preferences. As new supplier in Canadian market,
Nghia Nippers has pressures of these issues and try to
come up effective marketing plan in order to create
brand awareness. Moreover, Vietnam has famous of
low labor costs and good quality products, hence, Nghia
Nippers can compete efficiently to SSS in term of price
and good appearance.
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b. Porter’s five forces:
Rivalry
Highly intensive of big competitors such as La Cross and Revlon which locates in evoked set of customer mind for long
time. However, Nghia Nippers can compete effectively in term of price and product quality.
The threat of substitute
products
There is low or none substitute product of manicure equipment. However, the availability of various product design and
packaging from strong competitors (Revlon and La Cross) may threat Nghia Nipper market position.
Bargaining power of
customers
Since beauty salon is very developed in Canada, so there is high demand of manicure treatments with many nail care
tools manufacturers. Therefore, customers are easy to switch other brands which provide best quality and reasonable
prices.
Supplier power
Manicure manufacturer requires raw material and technique machines. So Nghia Nipper must find best quality resource
of stainless steel and machine providers. On the other hand, Vietnamese labor source is cheap compared to other
nations, so this is a potential competitive advantage of Nghia Nipper in Canadian market.
Barriers to Entry
Nghia Nipper has strong brand name in Vietnam and exporting experience in some European areas which brings high
profits to the company.
However, there is still high barrier to entry Canadian market because of investment capital, exporting policies and
product approval.
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6. SWOT Analysis
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Global Competing Strategy
1. Marketing Objectives
Table 7 : Marketing perspectives
Perspective
Objectives
(Balance Scorecard)
Time
Frame
KPIs & Critical Success Factors
Capture the market share for Nipper
Equipments 10% each year after one
year operation. After 3 year, Nghia
Nipper Corporation will gain market
leadership in Canadian market.
After 2
year
Besides marketing campaign, Nghia Nippers will
diversify the sale channel such as via website or
telephone purchase as well as actively searching for
strategic alliance with at least 5 Canada corporate
clients such as nail shops for Nghia Nippers.
Enhance the Nghia‟s Nipper brand
awareness in the Canadian customers
„eyes.
After 3
year
Besides marketing activities, Nghia Nipper plans to
hold at least one CSR Program like Teenager
Hygiene & Health in Canada to raise customers‟
attention of Nghia Nippers brand.
Increase the customer satisfaction
index to 70% while using booking
online service and it will increase
10% in each following year
Quarter 2
in year 1
Spend 15% of sales revenue on market research to
know new users‟ tastes and trend.
Provide bigger discount for loyal customers and
some clients who buy in bulk.
Collect more than 70% of Canadian customers‟
feedback to improve our products.
Achieve sale revenue of
approximately 2 million dollars after
one year and then revenues
percentage will hopefully increase
10% the following year.
1 Year To gain higher sale revenue, besides targeting at
individual consumers, Nghia Nippers has an
intention of establishing strategic alliance with
other retailing firms to make its products more
accessible.
Nghia Nippers will be striving for
introduce new product line with a
view to meeting various customers
„needs.
Year 2 Investment of 20 % sales revenue in the second
year in R&D and review customer feedback will be
a foundation for Nghia Nippers to modify and
customize its product to a great extent.
Nghia Nippers Corporation has a
willing to open at least 5 distribution
branches over Canada after one year
Quarter 2
year 2
Nghia Nipper plan is to cut down administrative
cost to open 5 additional shops over Canada after
one year successful financial performance.
The customer satisfaction index for
Nghia Nipper Product will be
increased up to 80% after one year.
Year 1 The waiting time from customer order placement to
delivery will be shortened within one day to satisfy
even toughest customers.
After 1 year performance, Nghia
Nippers will develop online
purchasing model so that customers
can approach different channel of
Nghia‟s product delivery.
Year 2 After one year, Nghia Nippers will establish a new
customized function in Nghia websites where
customer can make order and payment online.
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Increase the customer retention rate
up to 70% after one year. By this
way, Nghia Nippers builds up
customer loyalty year by year.
Year 3 Along with setting up purchasing online function,
Nghia will develop new model call E-CRM online
to manage Canadian customer profile so that it can
launch appropriate marketing strategy for each
segment.
The staff turnover rate will be
minimized to 20% each year via
satisfactory reward system.
After
Year 1
Provide clear job promotion & career path with
detail time frame and achievements.
Offer yearly holiday packages for employees who
achieve the MVP (most valuable personnel) award
of the year.
Increase salaries if company obtains more than
$600,000 retained profit after year 1.
2. Entry modes:
Based on the company current performance and business environment, we would select to
analyze three options: exporting, franchising and strategic alliances as major modes for entering
Canadian market.
Table 8 : Entry modes
Entry modes Advantages Disadvantages
Exporting
Avoid cost of
establishing
manufacturing
operations in Canada
Advantages of low
manufacturing cost in
Vietnam
May compete with
Canadian low-cost
host country
manufacturers.
Possible high
transportation costs
Exposure to tariff
barriers
Possible lack of
control over marketing
Franchising Low cost of
establishment, low risk
Rapid geographically
expansion.
Profit from cultural
knowledge and know-
how.
Difficult to manage a
large number of
franchiser.
Diversified
franchising
management skill
requirementdifficult
to manage quality
control and brand.
Nghia Nippers Business plan in Canada
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Strategic alliance Share the cost of
developing new
products e.g
distribution cost.
Tap into competitor‟s
specific strengths
Gain access to partner‟s
channels
The alliance could
become a future
competitor.
In short-term, exporting should be considered as the number one prioritized entry mode for
Nghia Nippers Company. There are several reasons for that. Firstly, although Nghia Nippers brand is
renowned in Vietnamese market, yet it‟s time consuming to build brand awareness among Canadian.
Secondly, there is great deal of initial capital investment for company to establish new business in
Canada i.e new building, purchasing new plant, expensive labor costs which lead to higher unit cost
and against their competitive advantage (low-cost provider). Next, there is potential deficiency
regarding management skills because of differentiation in Canadian‟s enterprise legislation, tariff,
political and consumption behavior. Finally, Nghia Nippers may over-optimistic the benefits of
brand-globalization; there could be hidden costs that they do not take into consideration. Therefore,
by applying exporting model, company can effectively address those foreseeable risks. Thanks to
exporting model, Nghia Nippers enters into contract to sell company products without changing
Nghia Nippers brand. This will create solid fame for company before they actually migrate into
Canadian market in the future.
Management team:
Figure 23 : Nghia Nippers’ Export structure
In order to assure quality consistency, it is recommended that Nghia Nipper should assign
permanent team working in Canada market. This team should be divided into three different groups
which are legal & administrative, quality assurance and information buffering.
Legal & Administrative Group: this group will be responsible for legal issues i.e. import-
export contract, business license, enterprise legislation in order to ensure that all company
business activities adjusting to Canadian law.
Quality Assurance Group: this group plays the role as quality moderator which means
checking the quality compatibility between product selling in Vietnam and Canada. Also,
figuring out whether there are imitated products in the Canadian market. In case Canadian
importers do not follow the term in contract regarding product quality. Them the quality
assurance team must inform to legal group for terminating contract with them.
Information buffering Group: It is a fact that business situation will be ever changed.
Therefore, it is necessary for Nghia Nippers to keep track up with changes regarding
Import & Export Department
Legal & Administration
Group
Quality Assurance
Group
Information Buffering
Group
Nghia Nippers Business plan in Canada
ONE DAY TEAM 36
Canadian importing-exporting quota legislation, customer‟s preference, business environment
circumstance. The information will be buffered to quality assurance group and legal group,
hence, they will make changes to adjust to the market.
3. Segmentation and Targeting
a. Geographic:
Initially, Nghia Nippers will introduce its products to some main state of Canada especially at
crowded cities such as: Toronto, Montreal, Vancouver and Halifax. The reason why Nghia Nippers
Corporation chooses these strategic places lies in the fact that these crowded areas might generate
sufficient demand.
b. Demographic:
For individual segment, Nghia Nippers Corporation will target at female especially women in the
middle age (above 25 years old) in the generation X and Y and above with moderate to high
disposable income more than $1,000 per month. With this segment, Nghia Nipper holds a strong
belief as it can generate substantial demand as Nipper is an indispensable (figure 24 & 25).
For corporation segment, Nghia Nippers targets most nail shops in big cities in Canada to
establish a strategic alliance as a main supplier for nailing equipments at these shops in Canada.
c. Psychographic:
Our target customers are sociable, energetic, and outgoing in an industrial lifestyle like
Canada. Thus, the demand for nice looking appearance and hygiene is becoming indispensable trend
to create a good impression among Canadian community.
Per 1,000 Per 1,000
25
95
90
75
70
Age
85
45
0
20
15
10
80
50
60
65
100
55
5
35
40
30
12 9 6 3 012 9 6 3 0 0 3 6 9 120 3 6 9 12
Figure 25: Percentage change in the population
by age groups between 2001 and 2006 in Canada
Figure 24 : Canadian Population Structure
by gender in 2009
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ONE DAY TEAM 37
a. Online Segmentation for Nghia Nippers adapted from CACI 2008
Table 9 : Online segmentation
Segment 1 Segment 2 Segment 3 Type 2: Professionals,
spending and socializing
online
Type 4: Young, supported
networkers
Type 13: Time-short
families, functional users
.
CANADA
Age: 25-44
Gender: male, female
Income: Moderate-high
Internet usage:
Professionals
18-24
Male, female
Above Average
Professionals
Having children aging
from 5-15
Female
Above average
Professionals
They actively engage in the social
aspects of the Internet, using it to
plan their social lives as well as
reading and writing blogs, online
dating, downloading music, TV
programs and podcasts.
They are also likely to spend
time selling items on eBay.
It‟s likely that they will visit
sites such as MySpace,
YouTube and Piczo and have
probably posted content there.
This group of consumers will
typically read magazines
rather than newspapers. They
are typically comfortable with
direct forms of
communication and many use
mail order and telephone
banking.
They want to take advantage of
Internet to proliferate their social
life physically and mentally.
They will be affected by some
interesting promotion
campaign of new product like
Nghia Nipper via these pages
above.
New products should be
informed via direct contact
such as email or direct
marketing.
We will place some banner in some
popular Canadian entertainment
websites to raise Nghia‟s Nipper
brand awareness
Make a funny video clips
about Nghia Nipper‟s
products on You Tube to raise
attention among “net-tizen”.
Create a community site for
female & woman to discuss
about hot issues such as
beauty; hygiene, healthcare
etc.
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ONE DAY TEAM 38
4. Positioning
a. PROFIT Model
Resources
Characteristics Valuable/
Profitable
Rare/
Distinctive
Hard to
Copy
Can
Substitute
Competitive
Advantage
Physical Product Yes
Service Quality x Yes
Reputational History No
Organizational Management x Yes
Good Employees No
Financial Capital Investment No
Intellectual Customer Service x Yes
Industrial Contacts No
Technical Information System
with Online booking
No
Despite the fact that Nghia‟s Nipper Brand is relatively immature in Canadian market owing to lack
of capital investment and especially industrial contacts to obtain strategic alliances; however, based on the
PROFIT model above, Nghia Nippers takes prides in furnishing unique, convenient products with an
affordable price to most customers. What Nghia Nippers is adding to its product is not only its function
but its aesthetics as well. With a various products from a wide range of color and design, Nghia Nippers
Corporation hold a strong belief in outstandingly differentiating its product compared to other rivals.
Along with Product Differentiation, Service and Channel Differentiation are what Nghia Nippers is
striving to apply in Canada since Nghia has successfully applied this model in many countries.
Furthermore, most Canadian is not still familiar with its brands. Therefore, in the next 2 years, Nghia
Corporation will go great length to improve these things.
b. Value Proposition & positioning map:
Nghia Corporation defines itself in the segment of “Less
for the same” which means that Nghia Corporation will
charge customers with lower price for any items which is
relatively same function and design as other competitor.
Figure 26: Value proposition model (Kotler 2005)
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ONE DAY TEAM 39
c. Channel Map:
Figure 27 : Nghia Nippers’ Channel Map when exporting to Canadian Market
As we can see in the Channel Map above, Nghia Nipper has many alternatives in bringing its
products to Canadian customers. Initially, Nghia Nipper will search for reliable importers in Canada to
import nippers from Vietnam via the third-party logistic of Vietnamese Shipping Company: Maersk or
Vinalink. Then, Nghia Nippers will sign a contract with one delegated suppliers with high reputation to
executively distribute products to individual and corporate customers. On the other hand, Nghia Nipper
can have supermarket chain as an intermediary bridging potential customer and Nghia Nipper.
Warehousing:
At the very first stage of penetrating into Canadian market, Nghia Nipper will have no intention
of building any warehouse here as it contains a lot of risk owing to high capital investment, seasonal
demand and uncertainty about this market. Instead, Nghia Nipper will initiate Pull Marketing Strategy for
the Whole Supply Chain. To illustrate, with the support of marketing campaign, Nghia Nipper can
generate more actual demand from customers and then can estimate the relatively accurately forecast for
each year.
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Transportation:
Table 10 : Transportation modes
Transportation Mode Advantages Disadvantages Options
Water
Relatively
cheaper than
other means.
Have a lot of
domestic
company can
take this role.
Long transit time
Low accessibility (affect
by weather condition)
Unsafe for products (due
to accessible of sea-water
and vibration).
Airplane
Fastest transit
time.
High security
level.
Low rate of
damaged goods
Expensive and High
Cost.
Financial Plan
Financial Objectives
Reach the sales revenue of $2 million after 1 year
Increase the net profit margin to approximately 40% after 1 year
Achieve the net profit to approximately $3.5 million after 3 years.
Achieve the marketing budget to approximately $300,000 CAD in the first year.
Mark
etin
g &
Su
pp
ly
Ch
ain
Pu
ll
Str
ate
gy
Formulate actual demand and create a reliable
foundation for Nghia Nippers‟ forecasts or logistics
budget every year.
Take advantages of disintermediation as Nghia
Nipper can directly approach its customers.
High budget for marketing
to initiate the demand.
Good integration among
supply chain membership.
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Financial Marketability
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Projected PNL Statement for year 1 (monthly) and year 1 to year 3 (yearly)
NGHIA NIPPERS Pty. Ltd.
INCOME STATEMENT FOR THE YEAR ENDED AT 31.12.2011
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Figure 28
The income statement measures how the business enables to generate the wealth during the
financial year. In term of Nghia Nippers, there is a rapid increase in total income from $45,000 CAD in
January to $451,500 CAD in December in 2011. It indicates that the business gain the better position in
term of sales in the industry due to the effective alignment of the marketing campaign, establishing the
outlets and inventory in term of logistic issues (figure 28). The marketing campaign concentrates on some
months such as April, June and the last quarter of the year leading to the significant increase in operating
expenditure by more than $180,000 CAD. However, Nghia Nippers does not intend to reduce other
operating costs. They plan to establish more 5 outlets and transport more inventory for the purpose of
correspond with the marketing campaign. By doing these, they achieve the heightened goals of
approximately $2 million of sales revenue in the first year stemming from the significant soar in the
volume of customers.
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Table 11: Budget 2011-2013
Furthermore, on the table 11, there is an anticipation of 40% increase in total income after 3
years. Although these figures are quite high, Nghia Nippers take into account the excess of the market
growth of the next 3 years for the purpose of gaining the goal of market leader after 3 years. Therefore,
Nghia Nippers need to put more effort to achieve these heightened figures in the Canada market.
Nghia Nippers Business plan in Canada
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Figure 29
Secondly, in term of profitability ratio, gross profit margin measures how much the business can
turn the sales revenue into net profit. In this case, Nghia Nippers anticipates the 75% of gross profit
margin during 3 years (figure 29). It triggers the challenge that Nghia Nippers is required to monitor the
COGS stability occupying 25% through 3 years even though there is the fluctuation in the prices of raw
materials, oil, etc.
Furthermore, the net profit margin measures the ability of the business to generate profits from
sales revenue. In this case, there is a negative figure during the first two months and the significant
increase from 4.74% in March to 43.64% in December of the first year (diagram below). It indicates that
Nghia Nippers is quite realistic as establishing this business plan. They take into account many risks and
difficulties they have to overcome in the first two months leading to the negative net profit. After that,
they enable to manage the operating expenses effectively resulting in the increase in the rest of 10
months. As a result, they gain the beautiful figure in term of net profit $177,320 CAD in December of the
first year. Additionally, the net profit margin in the next two years also soars to 37.6% and 46.1%
respectively (figure 29). It is supported that Nghia Nippers might gain the better performance in term of
monitoring the operating expenses in the next 2 years even though there is the anticipation 40% increase
in operating expense.
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International Aspect
In long-term business vision, when Nghia Nippers brand is popularized by initial exporting mode,
company should then utilize its potential by officially allowing franchising in Canada. The reason why we
selected franchising as the next step of business vision is due to the tremendous benefits which bring
about by franchising. First, Nghia Nippers can be able to quickly expand its distribution channel cross
Canadian market without a remarkable layout of capital requirement. Moreover, the company can also
take advantages of franchisee‟s entrepreneurial abilities, inside-out local market knowledge. Although
Nghia Nippers does not directly control day-to-day operation of all outlets, but there is binding contract
between franchisor-franchisee which clearly claims the responsibilities and authorities of franchisees in
term of loyalty commitment, quality management and pricing policies. Therefore, Nghia Nippers
management board ensures that their brand quality is maintained consistently throughout all outlets.
Nevertheless, in order to mitigate the risk of franchising failures, we recommend Nghia Nippers
should primarily franchise domestically prior to internationally franchise process. By doing so, company
is not only internally well-prepared for management level with necessary franchising skills, experiences,
but also spend time enough time to raise brand awareness within Canadian market.
If things happen in order, Nghia Nippers will be internationally recognized, it is recommended
that company should consider converting franchising into wholly-owned mode. This could only be
implemented unless Nghia Nipper Company owns sufficient capital, managerial skills, knowing market
inside-out and operation costs are optimized. Wholly-own mode should not only lead to dramatic increase
in profitability, but also tighten control level over business operation.
As well, as Nghia Nippers expands market to the whole Canada, the corporation follows low-cost
leadership which aims to keep low price of product with high quality in order to take market share and
push sale revenue to become market leader of nail care tool brand in Canada within next 10 years.
Table 12 : Time of changing modes
Time frame 2011-2015 2016-2020 2021
Modes Exporting Franchising Wholly-owned
subsidiary
Strategies
Product
Focus-Low-cost
Low-cost
Low-cost
Conclusion
To conclude, with the good image of high quality, well-organized management plan and strong
financial base, it is undeniable that Nghia Nippers‟ expansion plan to a new market especially Canada
will confront a lot of challenges; however, Nghia Nipper Management Team will try their best to make
this promising plan conform to reality.
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References:
1. 21st APEC Ministerial Meeting 2009, Joint statement, Asia-Pacific Economic Cooperation
(APEC) Ministers, viewed 15 April 2010,
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Appendix
Product categories: Nipper set, Scissors, nail art dotting, pusher, tweezers, nail nipper, metal nail file.
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