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Pestel of Vinamilk (political, environment, social, techno, economic, legal) -

PESTEL
PESTEL Analysis - Case Study of Vinamilk by Phạm Dung
Vinamilk pestel factor
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PESTEL Analysis - Vinamilk

I. PESTEL Analysis (Six forces)

- A PESTEL analysis is a strategic framework/tool used to
evaluate the business environment in which a firm/ organization
operates.
- Analyze and monitor the macro-environmental factor (It
examines the Political, Economic, Social, Technological,
Environmental, and Legal factors in the external environment.)
- Combined, the six factors can have a profound impact on risks
and opportunities for firms
II. Vinamilk - PESTEL Analysis
● Overview of Vinamilk
- Is one of brand name belong to Vietnam Dairy Products Joint
Stock Company
- Established in 1976 (The company was founded August 20, 1976
and is headquartered in Ho Chi Minh City, Vietnam.) The leading
enterprise in the field of producing dairy products in Vietnam
- Wide range of products: (fresh milk, yoghurt, drinking yoghurt,
fermented yoghurt……) through Vinamilk brand names
- Chief Executive Officer & Director: Lien Kieu Mai
- Outstanding achievements based on 2021 financial statements:
- Has nearly 250.000 retail outlets all over Vietnam
- Vinamilk has almost dominated the Vietnamese dairy
market with over 55% market share
 - 36th in Top 50 Global Dairy Companies (according to
Plimsoll revenue) (is also the only representative of
Southeast Asia in this list)
1. Political factor
● Theory: These factors are all about how and to what degree a
government intervenes in the economy or a certain industry. Basically
all the influences that a government has on your business could be
classified here. This can include government policy, political stability
or instability, corruption, foreign trade policy, tax policy, labour law,
environmental law and trade restrictions. Furthermore, the
government may have a profound impact on a nation’s education
system, infrastructure and health regulations. These are all factors
that need to be taken into account when assessing the attractiveness
of a potential market.
- Extent how and what a government intervenes in the national
economy
- Government’s influence on the business.
- A stable political institution → facilitates doing business
inVietnam
- Vietnam is a member of WTO → good sides: attract oversea
investors for accessing advanced and modern technologies →
improve productivity of Vinamilk.
→ Negative side: compete with
foreign dairy company
- Incentive policies from the Government have positive impact on
Vinamilk. (Vn market is mixed market → government stills play a
big role in market; largest shareholders is State Capital
Investment Corp. (Investment Company) (36.0%) Trang 24 -
Annual report), specifically, in 2010, Government promulgate
Approval the development plan of Vietnam's dairy processing
industry until 2020, with vision to 2025. (having many policies
supporting and incentivize dairy enterprise regarding research,
investment, Corporate taxation etc)
Ref:
https://cdn.vietnammoi.vn/171464242508312576/2022/3/19/qd3399-
16477008690451737149203.pdf
https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/
1650451537-
6f22ffdd6ecd4ea5cc133b0046bc3085a10648db1369033c5dfe1daed93f0
4a7.pdf
2. Economic factor
- Theory: Including factors such as: Growth rate; inflation rate;
exchange rate; interest rate; unemployment trends; labor
costs; the stage of the business cycle; Credit; trade flows and
related patterns; trade control; the level of disposable income
of consumers; monetary policy; fiscal policy; tax policy (fees
and incentives); price fluctuations; stock market trends. These
factors may or may not occur in the business environment and
have the potential to impact industry and organizational
performance.
- Vietnam’s GDP trend increased every day, which is a great
opportunity for business. It means that the income and life
will go up and the demand to spend money is high.
- Vietnam's economy is growing and the demand for health
care is increasing, creating favourable conditions for the
dairy industry to be increasingly popular.
- Inflation in Vietnam has been under control in recent years.
So, that makes a positive impact on purchasing power in
the country.
- With the high inflation rate, the value of VND continues to
fall slightly. The cost of production will increase.
- Vietnam is a member of WTO is a big pressure for local
businesses to compete with other foreign competitors. In
addition, it also helps the company to expand its business
scales and attract more foreign investment.
- Petrol prices are also increasing, causing a significant
impact on input materials of Vinamilk.
- The price of the dairy cow is increasing and businesses had
to push the selling price for their products.
3. Social factor:
- Social factors include cultural norms and expectations,
health consciousness, population growth rates, age
 distribution, career attitudes, health, and safety. These
factors are helpful for companies to better plan their
marketing analytics and strategy.
- These factors are particularly significant for marketers as
they target certain customers. Additionally, they also
highlight the local workforce and its zeal to operate under
certain circumstances.
- The population of Vietnam is approximately 100 million
people and has increased continuously. Vietnam has a huge
potential for development of the dairy market.
- Level of education
+ perceive milk's benefits (maintain bone density, promote
muscle growth, contain B vitamins, …)
+ Parents are concerned about their children's health and try
to buy milk as much as possible.
- People’s living standards are increasing (GDP per capita
increased year by year from 700 USD (2005) to 3694 USD
(2021), income increases with understanding of the benefits
of milk makes milk consumption demand increasing).
- More people want to improve health and beauty.
- Increasing young population in urban areas has impacted
the dairy product market. (Over 68% of the world ‘s
population is living in urban areas and this trend is increasing
everyday and is expected to surpass 75% by 2050. As the
urban population index is surging, they want to experience
more organic dairy products. This demographic change has
also influenced production of fresh milk which is 1 billion
liters by the end of 2020 which satisfied only 38% of the
domestic needs).
- However, many people (more than 80%) living in rural areas
do not have the habit of drinking milk => Milk consumption
per capita in Vietnam is quite low and the percentage of
malnourished children is still high.

https://www.studocu.com/row/document/truong-dai-hoc-
kinh-te-tai-chinh-thanh-pho-ho-chi-minh/marketing/pestel-
of-vinamilk-political-environment-social-techno-economic-
legal/20967659
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?
locations=VN

https://danso.org/viet-nam/

https://www.swotandpestle.com/vinamilk/

https://vietnamagriculture.nongnghiep.vn/vietnams-milk-
consumption-stays-quite-low-d284195.html

https://www.globenewswire.com/news-release/
2022/09/07/2511574/0/en/Vietnam-Dairy-Industry-Report-
2022-Value-of-Dairy-Products-Imported-into-Vietnam-in-
2021-was-11-8-Billion-an-Increase-of-12-4-y-o-y-Forecasts-
to-2031.html#:~:text=Milk%20consumption%20per%20capita
%20in,with%20huge%20potential%20for%20growth.

4. Technological factor

https://eastasiabr.wordpress.com/2016/05/06/34/
https://foodnhotelhanoi.com/2021/05/24/the-factory-system-helps-
vinamilk-continuously-lead-in-major-categories/?lang=en
Technological factors consider the technological innovation and
development rate that could affect a market or industry. This refers to
changes in digital or mobile technology, automation, research, and
development. There is often a tendency to focus on developments only in
digital technology, but consideration must also be given to new methods of
distribution, manufacturing, and logistics. Technological factors are very
important because They affect how an organization operates, sells its
products, interacts with, and gathers intelligence on customers, suppliers,
and competitors.

Vinamilk is still the leading enterprise in the milk processing industry of

Vietnam. Vinamilk owns production technology of global standards. Its
sterilizing equipment was imported from Sweden; all other machines
originate from European countries. International standards ISO and HACCP
are applied to control the production system.
● Vinamilk is one of the companies in Asia which has an automatic
milking system G.A.P certification. The Vietnamese dairy factory has
 automatic technology with a capacity of 800 million liters per year
(about 2.2 million liters per day).
● Rapid high-temperature sterilization technology.
● Technology of milk powder cans.
● New modern equipment in the field of product packaging
diversification
● Quality management technology product quality management
according to ISO
→ With a modern, globally standardized production system, Vinamilk
has been able to offer consumers products of international quality.
5. Environmental factor :
https://www.vinamilk.com.vn/static/uploads/article/1618816520-
d81a593920bb76205f92770d36e54f2a14d7f124f481609fac1a85a0ddf146
9a.pdf
Knowledge of Animal Welfare and Consumers’ Behavioral Intentions in China:
A Moderated Mediation Model of Product Cognition and Empathy
These factors have only really come to the forefront (initially ) in the last
fifteen years
Environmental factors are important due to the increasing scarcity of raw
materials; pollution targets; doing business as an ethical and sus’tainable
company; ‘carbon /ben/ footprint targets.
=> More and more consumers are demanding that the products they buy are
sourced ethically, and if possible from a sustainable source.
- Natural environment: The tropical monsoon climate is a challenge for
dairy farm (Cows produce milk most in the temperature range of 5-21
degree Celsius)
=> Offering choosing the right place for dairy farms such as : Đà Lạt,
Hà Tĩnh ( high technology dairy farm)
- Environment issues: pollutions from dairy farm create problems.
Managing the usage of natural resources
+ Soil : Organic livestock farming
+ Water : Consumed economically, effectively and well-
controlled
+ Energy: Exploiting sources of clean energy and renewable
energy
+ Waste: Minimizing waste
 + Carbon footprint: Minimizing carbon emissions on the green
growth pathway

- Ethical and sustainable

Eco’logical consequence of production processes are more concerned
So, Vinamilk attaches great importance to sustainable development
+ Create a Million Trees For Viet Nam Fund. In 2020 reach above 1
million green trees)
+ Top 10 VietNam sustainable development enterprises in
manufacturing sector
Ethical : the demand for animal-friendly products is increasing,
+Cow herds are respected, cared for t with their living needs to be
healthy, active and happy.

6. Legal factor:
Legal factors are those that emerge from changes to the regulatory
environment, which may affect the broader economy, certain industries, or
even individual businesses within a specific sector. They include, but are not
limited to:

● Industry regulation

● Licenses and permits required to operate

● Employment and consumer protection laws

● Protection of IP (Intellectual Property)

Legal factors affect Vinamilk:

● Vinamilk must ensure the production, which is safe and healthy for
customers by using modern systems. Companies should follow the rule
of food safety.
 ● Vietnam has many different tax rates so it will be difficult for any
company. It also affects the price decision of the company

III. In the future:

● Lead in applying highly applicable innovations
● Strengthen the leading position in VN's dairy industry
● Become the most valuable dairy company in southeast asia
Link tham khảo:
https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/1617354921
-
f48f48ff7baf40d9af270083a736eaaf0f52a6c5873367d134b4c83f193b06
77.pdf

Group Blue
6 members
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Speak louder
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Bargaining power of suppliers

Threats of substitute products

Explanation of contingency funds

The importance of contingency planning