Investment in Water and Soda Water Industry in Cambodia A Case Study of J.V Water Co., Ltd.

Abstract

          The objective of this research was to explore: 1) the competitive environment in general, 2) the appropriateness of the corporate, business, and function strategies; and 3) the financial statements and the financial planning of J.V. Water Co., Ltd., Cambodia, in its water and soda business. This research was qualitatively conducted and research methodology included document research, in-depth interviews with six key informants including three owners of the company and three experts from other companies. The results were as follows:
          1) The results of the overall competitive environment revealed that the demand of consumers in a big-size drinking water market was high and tended to increasingly grow due to the current of health concern in Cambodia. For the soda water market, the market was smaller but it was found to increasingly grow as there were very few competitors manufactured and distributed soda water.
          2) In terms of its corporate strategy, the company should use growth strategies. In terms of business strategies, drinking water products should be planned through the differentiation strategy with an emphasis on the creation of the image of premium healthy products produced by a certified innovative production process. Soda water products should be planned through the focus strategy due to its small market with very few competitors. Soda water products were mainly consumed be only a few specialized groups, e.g. working groups, party lovers, etc. In terms of the function strategy, an integration of strategies related to the company's core objectives including product and operation strategies, marketing strategies, financial strategies, human resources management strategies, and research and development strategies should be used to reach the organization's core goals.
          3) In terms of its estimated 5-year financial statements and financial planning (2018-2022), it was found that the output of CFO + CFI - CFF was good, calculated from year 2-5 of investment (2019-2022). The profitability of the projects was satisfactory as reflected by the adequate investment budget meeting the expenses and the dividends. Its NPV was found to be positive, and the percentage of its IRR was higher than the financial costs, revealing the company’s profitability of potential investments. J.V. Water's return on investment in drinking water and soda water products was 34.35%, starting from the second year (2019) of operation onwards.