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Strategic Management GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING A STRATEGY OF PRODUCT DIVERSIFICATION FOR ELCOM JSC XÂY DỰNG CHIẾN LƯỢC ĐA DẠNG HÓA SẢN PHẨM CHO CÔNG TY ELCOM,BUILDING VIET NAM TRANSPORTATION MARKET PENETRATION STRATEGY FOR ELCOM COMPANY PERIOF 2012 – 2016 Group 1: Student’s name: Nguyen Thi Thanh Xuan Nguyen Duc Hieu Nguyen Quoc Cuong Le Huyen Trang Nguyen Thi Thuy Ha Group – GAMBA.X0710 – GRIGGS Page Strategic Management Ha Noi, December- 2011 Group – GAMBA.X0710 – GRIGGS Page Strategic Management TABLE OF CONTENTS COMMITMENT ACKNOWLEDGEMENT GENERAL INTRODUCTION THE NECESSARY OF THE REPORT: THE RESEARCH PURPOSE AND OBJECT RESEARCH METHODOLOGIES STUDY SCOPE THE REPORT STRUCTURE CHAPTER I – OVERVIEW OF FUNDAMENTARY THEORY .9 1.1 THEORIES OF STRATEGIC MANAGEMENT 1.1.1 Definition of Strategic Management 1.1.2 The meaning of strategic management 1.2 MISSION AND STRATEGIC TARGET OF THE ENTERPRISE 10 1.2.1 Identify the missions of the enterprise 10 1.2.2 Identify business area 11 1.3 ANALYSIS OF BUSINESS ENVIRONMENT 12 1.3.1 Macro environment analysis 12 1.3.2 Industrial environment analysis 12 1.3.3 Industrial strategy group 13 1.3.4 Matrix of competitive images 14 1.3.5 Matrix of external factor EFE (External Factor Evaluation) 15 1.4 ASSESSMENT AND ANALYSIS OF INTERNAL ENTERPRISE IDENTIFY THE STRENGTHS AND WEAKNESSES 16 1.4.1 Analysis of the internal enterprises according to business management area 17 1.4.2 Internal Factor Evaluation Matrix (IFE) 20 1.4.3 Using the BCG matrix to locate the business areas of the enterprise 21 1.5 USING THE SWOT MATRIX TO PROPOSE A SPECIFIC STRATEGY 22 1.6 CHOSING A BUSINESS STRATEGY 24 1.7 CARRYING OUT STRATEGY IMPLEMENTATION 26 CHAPTER II: ELCOM SITUATION ANALYSIS .28 2.1 GENERAL INTRODUCTION OF ELCOM COMPANY 28 2.1.1 Elcom overview 28 2.1.2 Management structure of the ELCOM Company .29 2.1.3 Business fields of Elcom 29 2.1.4 Elcom’s customers 30 2.2 BUSINESS ENVIRONMENT ANALYSIS 32 2.2.1 Macro Environment Analysis 32 2.2.2 Industrial Environmental analysis 37 2.2.3 General assessment of business environment 47 2.2.4 Matrix of external factors(EFE) 48 2.3 INTERNAL ANALYSIS OF ELCOM COMPANY 50 2.3.1 Marketing 50 2.3.2 Production 51 2.3.3 Finance and Accounting 52 2.3.4 Human resources Management at ELCOM 56 2.3.5 Encouragement policies 57 Group – GAMBA.X0710 – GRIGGS Page Strategic Management 2.3.6 The technology Research and new product Development activities and (R&D) 59 2.3.7 General evaluation of strengths and weakness of Elcom Company 60 2.3.8 Internal factors evaluation matrix(IFE) 61 2.5 Investment list analysis of ELCOM 63 CHAPTER III: STRATEGIC SOLUTIONS, RECOMMENDATION AND CONCLUSION .67 3.1 GENERAL DEVELOPMENT ORIENTATION OF THE ELCOM 67 3.2 CHOOSING THE STRATEGY FOR ELCOM COMPANY 67 3.2.1 SWOTcomprehensive matrix 67 3.2.2 Quantifiable strategy planning matrix- QSPM - 70 3.3 RECOMMEND THE CONTENT OF RELATING PRODUCT DIVERSIFICATION STRATEGY FOR ELCOM 71 3.3.1 Overview of Intelligent Transport 72 3.3.2 Overview of Electronic Tolling Collection - ETC .75 3.3.3 Market opportunities for Electronic Toll Collection Solutions ETC 77 3.4 PRODUCT ORIENTATION FOR ELECTRONIC TOLLING COLLECTION (ETC) OF ELCOM IN THE PERIOD 2012-2016 78 3.4.1 The advantages when implementing the strategy .78 3.4.2 The disadvantages when implementing the strategies 80 3.4.3 Products of competitors on the Vietnam market 80 3.4.4 The product diffirentiation characteristic of ELCOM 81 3.4.5 Human Resource Plan 82 3.4.6 Capital resource plan and projected revenue .83 CONCLUSION 86 REFERENCES 87 MATRIX OF COMPETITIVE IMAGESTRIX OF EXTERNAL FACTORS- CHOOSING A BUSINESS STRATEGYCARRYING OUT THE STRATEGY IMPLEMENTATION EVALUATING THE STRATEGY IMPLEMENTATION RESULTAPTER SITUATION ANALYSISELCOM'S BUSINESS FEILDSMATRIX OF EXTERNAL FACTORSMATRIX OF INTERNAL FACTOR EVALUATION STRATEGIC SOLUTION, RECOMMENDATION AND CONCLUSION…………… COMPREHENSIVE MATRIXMATRIX OF PLANNING QUANTATIABLE RECOMMEND THE CONTENT OF RELATING PRODUCT DIVERSIFICATION STRATEGY FOR ELCOMCOMMITMENT ACKNOWLEDGEMENT GENERAL INTRODUCTION THE NECESSARY OF THE REPORT: THE PURPOSE AND RESEARCH OBJECT RESEARCH METHODOLOGIES STUDY SCOPE THE REPORT STRUCTURE Group – GAMBA.X0710 – GRIGGS Page Strategic Management CHAPTER I – OVERVIEW OF FUNDAMENTARY THEORY .9 1.1 THEORIES OF STRATEGIC MANAGEMENT 1.1.1 Definition of Strategic Management 1.1.2 The meaning of strategic management 1.2 MISSION AND STRATEGIC TARGET OF THE ENTERPRISE 10 1.2.1 Identify the missions of the enterprise 10 1.2.2 Identify business area 11 1.3 ANALYSIS OF BUSINESS ENVIRONMENT 12 1.3.1 Macro environment analysis 12 1.3.2 Industrial environment analysis 12 1.3.3 Industrial strategy group 13 1.4 ASSESSMENT AND ANALYSIS OF INTERNAL ENTERPRISE IDENTIFY THE STRENGTHS AND WEAKNESSES 14 1.4.1 Analysis of the internal enterprises according to business management area 15 1.4.2 Internal Factor Evaluation Matrix (IFE) 18 1.5 USING THE SWOT MATRIX TO PROPOSE A SPECIFIC STRATEGY 19 1.6 USING THE BCG MATRIX TO LOCATE THE BUSINESS AREAS OF THE ENTERPRISE 21 CHAPTER II: BUILDING VIET NAM TRANSPORTATION MARKET PENETRATION STRATEGY FOR ELCOM COMPANY .23 2.1 GENERAL INTRODUCTION OF ELCOM COMPANY 23 2.1.1 Elcom overview 23 2.1.2 Management structure of the ELCOM Company .24 2.1.3 Board of Director of Elcom Company 25 2.1.4 Elcom’s customers 26 2.2 BUSINESS ENVIRONMENT ANALYSIS 28 2.2.1 Macro Environment Analysis 28 2.2.2 Transport Industrial Environmental analysis 33 2.2.3 General assessment of business environment 38 2.3 INTERNAL ANALYSIS OF ELCOM COMPANY 39 2.3.1 Marketing 39 2.3.2 Production 40 2.3.3 Finance and Accounting 41 2.3.4 Human resources Management at ELCOM 44 Group – GAMBA.X0710 – GRIGGS Page Strategic Management 2.3.5 Encouragement policies 45 2.3.6 The technology Research and new product Development activities and (R&D) 47 2.3.7 General evaluation of strengths and weakness of Elcom Company 48 2.4 Analysis and strategic options for the ELCOM .49 2.5 Investment list analysis of ELCOM 53 CHAPTER III: STRATEGIC IMPLEMENTATION AND EVALUATION 57 3.1 GENERAL DEVELOPMENT ORIENTATION OF THE ELCOM 57 3.2 CHOOSING THE STRATEGY OF VIETNAM TRANSPORT MARKET PENETRATION OF ELCOM COMPANY 57 3.3 STRATEGIC CONTENTS: 58 3.3.1 Overview of Intelligent Transport 58 3.3.2 Overview of Electronic Tolling Collection - ETC .62 3.3.3 Market opportunities for Electronic Toll Collection Solutions ETC 63 3.4 PRODUCT ORIENTATION FOR ELECTRONIC TOLLINH COLLECTION (ETC) OF ELCOM IN THE PERIOD 2012-2016 65 3.4.1 The advantages when implementing the strategy .65 3.4.2 The disadvantages when implementing the strategies 66 3.4.3 Products of competitors on the Vietnam market 67 3.4.4 The product diffirentiation characteristic of ELCOM 68 3.4.5 Human Resource Plan 69 3.4.6 Capital resource plan and projected revenue .70 CONCLUSION 72 REFERENCES 73 Group – GAMBA.X0710 – GRIGGS Page Strategic Management CONTENT OF DRAWINGS FIGUERDANH MỤC HÌNH VẼ Figure 1: The business industry identification model of D Abell 11 Figure 2: Model of five competitive forces 13 Figure 3: Diagram of strategic groups in the industry 14 Figure 4: Type of activities, the surplus and the demand for resources .22 Figure 5: Organization model of Elcom Company 28 Figure 6: Management structure of the ELCOM Company .28 Figure 7: Some main customers of Elcom 30 Figure 9: Application model of Intelligent Transport Solutions 72 CONTENT OF TABLEDANH MỤC BẢNG/BIẺU Table – Matrix of competitive images .14 Table – Matrix of external factors EFE 16 Table 3: SWOT Matrix Model 23 Table 5: Matrix of Elcom’s competitive images .43 Table 6: Opportunities and threats .46 Table 7: Matrix of external factors applied for Elcom .47 Table 8: Elcom business result 51 Table 9: Balance accounting sheet .52 Table 10: Financial statistics .54 Table 11: Strengths and weaknesses of Elcom 59 Table 12: Internal factors evaluation matrix .61 Table 13: .63 Table 14: SWOT comprehensive matrix of Elcom 66 Table 15: Quantifiable strategy planning matrix applicable for Elcom 69 Group – GAMBA.X0710 – GRIGGS Page Strategic Management trix of the competitive imagestrix of the external factors matrix's matrix of competitive imagesComprehension of Opportunities and threatsApplicable matrix of external factors for Elcom's bussiness resultFinancial balance sheetFinancial indexComprehension of Elcom's weaknesses and strengths's internal factor evaluation matrixT comprehensive matrix ofApplicable matrix of strategy planning for (This is blank page) Group – GAMBA.X0710 – GRIGGS Page Strategic Management COMMITMENT We, the research team, would like to commit that this Capstone project is our own research, which is accomplished thanks to various sources of documents and real situation The Capstone project is not copied from any other available thesis We undertake any legal responsibilities for the contents contained within this thesis Hanoi, December 15, 2011 Author group ACKNOWLEDGEMENT Strategy planning enables a company to effectively take use of its business opportunities and strengths At the same time, it helps to restrict the threats that can be badly affected to the company In addition, strategy planning also brings about the connection and association among business environment and enterprise; the past, present and future This cohesive relation is the foundation for the goals and strategies that the company plans to set in the future For gaining such research results, we would like to express our sincerely gratitude for the support of Griggs University, ETC Centre and especially the lecturers who have enthusiastically taught, guided and provided us with the valuable knowledge Our sincere thanks would also come to the support and assistance of the leaders and colleagues in ELCOM They have spent their highly valuable time on discussing with us for relation between the topic contents and practical situations at the company helping to create a close connection between theory and practice and resulting in a highly feasibility in the future We, the team of learners, would like to receive the continual support of the lecturers and our colleagues to help us completing the course with highest results Particularly, the support of Elcom will be an indispensable motivation for the success of the research Group – GAMBA.X0710 – GRIGGS Page Strategic Management GENERAL INTRODUCTION The necessary of the report: The year In 2011 was a difficult year of Vietnam's economy in general and telecommunications-, information technology in particular For the telecommunications market, there are two causes affecting the development of the industry and business activities in this area, including: Firstly, the telecommunications industry is becoming saturated in terms of subscribers and gradually turns into the creation competition in the development of technological applications Secondly, because of the difficulties of the world and Vietnam economy, the majority of industries have cut investment costs, especially in the telecommunications industry, leading to the pause of a series of major projects, or changing to investment items in the next year or extending the implement process for waiting capital lending As a Business Company doing business in the telecommunications industry, with major customers who areis the network providers, Elcom can not avoid the above mentioned negative effects Hen, And Board of Director of ELCOM consider to implement the stategy of finding new opportunities, new markets, new products, and new customers by taking advantages of the current abundant resources of the Company to gradually improve and enhance revenues and profits are considered and implemented by Board of Director of ELCOM Strategic Management is a relatively new economic science subject in our country In fact, at present, a fewlittle Vietnam enterprises conduct to build business strategy seriously and scientifically This report is expected to contribute a little practical experience in applying strategic management for ELCOM Company, thereby contributing to the strategic management experience of Vietnamese companies in general Group – GAMBA.X0710 – GRIGGS Page 10 Strategic Management transport systems meet the following objectives: reduce accidents and traffic congestion, reduce environment pollution, lower transportation costs and increase transportation efficiency, create maximum favorable conditions for travel Japan is the pioneer in the deployment of ITS and currently, in the world there has a lot of countries deployed this ITS systems Figure 9: Figure 3.1: Application model of Intelligent Transport Solutions Intelligent Transport System consists of many subsystems and application of various technologies, for example,such as the from basic management systems such as car instruction systems, the traffic control signal system, the control center, the license plate recognition automatic machine which ally the number plate, speed monitor camera and the more advanced systems such as integrated data collection system and processing from various sources such as the car-park guiding system, the weather information system, ice melting system In addition, the prediction Group – GAMBA.X0710 – GRIGGS Page 116 Strategic Management technique also allows setting the advanced models and comparison with historical datas The application related to intelligent transport solutions ITS includesing: Advanced Public Transportation Systems (APTS): is a technology that can help to improve transport services By using the global positioning system, the wireless communication systems and other devices, passengers can easily get information about roads, buses, trains and knowing the direction and time of travel The o o o o solution for APTS includes: Schedule Information system of public transport means (Public Transport) Electronic Tolling Collection - ETC for highways, bridges, parking Parking guidance system Advanced Traveler Information Systems – ATIS: Provide traffic information to drivers and passengers Information content is provided to subjects such as traffic conditions on roads, accidents, optimal routing, weather (for drivers) scheduling, waiting time (ship), driving time, the parking situation (for passengers) Advanced Vehicle Control Systems – AVCS: ATMS is a management view from the top to down, integration of advanced technologies to improve traffic flow and improve safety Video data from camera, speed sensor transferred in real time to a Traffic Management Center (TMC) to be processed and integrated (for example, to detect the problem), and may lead to action being performed (for example, the traffic routing, broadcast messages, ) with the goal of improving traffic flow Commercial Vehicle Operations (CVO): o Application of intelligent transport solutions to operate the fleet (truck, taxi, bus, specialized cars ), fleet administration o Weight-in-motion o Freight Terminal Management o Satellite navigation system Advanced Rural Transportation Systems – ARTS: is a technology that provides information on remote roads and other transport systems For example, reports on automated routes, weather condition and information about directions This type of information is very valuable for motorists, tourists… Solutions for Predict traffic congestion and Incident detection Group – GAMBA.X0710 – GRIGGS Page 117 Strategic Management Solution for real-time data will be collected, used and disseminated 3.3.2 Overview of Electronic Tolling Collection - ETC Constant increasing speed in the number of road vehicles and vehicle density cause for increasing occurrence of traffic congestion and traffic accidents and also causes environmental pollution that is becoming a serious problem not only in Vietnam but also in many countries around the world Intelligent Transport System (ITS) was formed as the high-tech applications in the fields of electronics, information technology and telecommunications to operate and manage transportation systems in order to reduce accidents and traffic jam Electronic Toll Collection - ETC is one of the important research content of the ITS ETC’s application plays an important part in reducing traffic congestion at tolling station, modernization of current manual tolling station in our country The first application of to the toll gate is in Japan in 1993, over the years, ETC has developed rapidly in this country By early 2006, there were 1,200 road toll stations in Japan using ETC technology, and approximately over 60%, or 11 million of automotive vehicles in this country using ETC technology Therefore, ETC is focused in the development of ITS, is the inevitable development trend of modern road traffic In some developed countries, the ETC system has been implemented for decades and achieved many achievements The results in the use of ETC in the countries in the world are a prerequisite for ETC applications in Vietnam Electronics Toll Collection System - ETC uses new technologies in the fields of computer, communications TV and automatic control, through roadside devices and radio communication equipment on car that automatically Group – GAMBA.X0710 – GRIGGS Page 118 Strategic Management charges without stopping the car when passing through toll station The ETC system does need traditional cash charging methods that using electronic transactions Electronic toll collection is a major characteristic of this system, besides, other characteristic of this system is that charging without stopping the car Vehicles using ETC systems only need to run with the specified speed when passing the toll station the process of tolling is completely automatic, without stopping to pay, pay tickets as before ETC system has three separate components: ETC card, transmitter on the car and ETC antenna placed on tolling station These devices are described as follows: + ETC Card ETC card is a card issued by the credit card companies (banks) It was inserted into the transmitter on the vehicle and is automatically changed on the card when passing the toll station + Transmitter on the vehicle The transmitters are usually installed on the control board of the car and it communicates with the antenna at the toll station when passing this station + ETC antenna The antenna in the automatic toll lanes almost immediately collect information from the transmitter, calculate the necessary payment and card fee for this card This process is faster than money collection process Therefore, this system can reduce the waiting time of drivers 3.3.3 Market opportunities for Electronic Toll Collection Solutions ETC Traffic toll collection station network of Vietnam includes 54 stations on 26 highway lines Most of the toll collection stations use two-stop manual toll method: one stop to buy a ticket and one stop to check a ticket Only / 54 stations using Group – GAMBA.X0710 – GRIGGS Page 119 Strategic Management semi-electronics tool collection system Because the form of manual toll collection is mainly, the requirements is that how to apply the ETC system at toll collection stations in Vietnam (Source: http://giaothongvantai.com.vn/Desktop.aspx/Khoa-hoc-Doi-song/Khoa-hoc-congnghe/He_thong_thu_phi_dien_tu_va_kha_nang_ung_dung_o_Viet_Nam/) Electronic Tolling Collect is road traffic tolling collection system through electronic cards or electronic labels that automated toll collection, not using cash, not need a direct toll collector, continuous toll collection Electronic toll system has advantages such as improving the efficiency of toll collection, improving the management at the toll collection station, increasing vehicle flow, reducing traffic jam at toll collection stations, saving fuel, reducing pollution, limiting the negative in tolling collection ETC uses DSRC technology (Dedicated Short Range Communication) Therefore, with the form of Electronic Tolling Collect (ETC), it will reduce traffic congestion at the stations, ensureing the traffic safety, limiting emissions of environmental pollutants from vehicles In addition, the highway projects are going to be deployed with routes such as Noi Bai - Lao Cai, Ha Noi - Hai Phong, Phap Van - Cau Gie, Noi Bai - Mai Dich, Ninh Binh - Thanh Hoa, Thanh Hoa - Ha Tinh, Trung Luong - My Thuan - Can Tho, Ben Luc - Long Thanh, Da Nang – Quang Ngai are also an opportunity for ELCOM Company to supply Electronic Tolling Collection products (ETC) The following is the list of products for this market segment: Infrastructure for electronic tolling collection stations (Control stations, barriers, light signal lamps, signage ) Semi-Electronic Tolling Collection System Electronic Tolling Collection System OBU equipment installed in vehicles Surveillance camera system at the toll collection stations Exploitation, operation and maintenance services at toll collection stations Equipment rental services to be installed on cars Group – GAMBA.X0710 – GRIGGS Page 120 Strategic Management 3.4 PRODUCT ORIENTATION FOR ELECTRONIC TOLLINGH COLLECTION (ETC) OF ELCOM IN THE PERIOD 2012-2016 3.4.1 The advantages when implementing the strategy As above analysis, the joining in to the Transport market through technology solutions for the transportation industry and in particular the products of electronic tolling collection ETC in particular will be more convenient for ELCOM Company because: According to the general orientation of the Company : the development of products for the Electronic Tolling Collection (ETC) is completely oriented with Technology – Product - Services of ELCOM: "Take technology as the core that from which creating advanced new products or meet market needs and thereby provide services in these products " Master some core technologies: with an abundant research and development staff, ELCOM has mastered the technology solutions related to the product development of Electronic Tolling Collection (ETC) such as: TV and surveillance camera solutions, packing software production technologies, the of technologies, automation and system integration skills related to communications (network of LAN / WAN, Wireless, NGN ) Taking advantage of available partners: while implementing the projects for the core market, ELCOM Company has built close relationships with its partners in the country as well as foreign countries, providing solutions related solutions for the transport industry such as transmission network systems, surveillance cameras, large screen systems for central administration office, and solutions for mobile networks The providers of ELCOM Company are customers, long-term partners and They have signed exclusive business cooperation contracts, therefore having high stability and willing to share risks Experience in implementing large and complex projects: with over 15 years of experience, ELCOM Company has implemented a lot of different projects; Group – GAMBA.X0710 – GRIGGS Page 121 Strategic Management therefore it is very experienced when implementing large projects, requiring abundant human resources and finance in a relatively long period (annual) Having good customer relationshirelationships p platform in transport industry: Successful implementation of projects of the driving test for driver training schools, vessels monitoring project for Customs in recent years have s helped ELCOM to develop very good relationships with some departments in the Vietnamese transport industry Having experience in working with foreign partners: with the high experience and confirmed brand, many foreign partners want to have the long-term relationship with ELCOM Company to provide products / services for the Vietnamese market Therefore ELCOM Company has extensive experience in management, selection of partners to provide suitable products and services for the market in Vietnam Taking full advantage of financial capacity: ELCOM Company has now become listed companies on HCM stock exchange with the charter capital of nearly VND 300 billions While the projects in information technology and telecommunications are reducing, it will be wasted if there are not investment opportunities into new markets such as transportation Moreover, with the confirmed brand, the addition of capital by issuing additional shares is easily implemented by ELCOM Company 3.4.2 The disadvantages when implementing the strategies Besides the advantages of product orientation for the transportation industry as above analysis, ELCOM Company also has to face some disadvantages as follows: This is a new market/field: Unlike information technology and telecommunications market, transport market is very new to ELCOM Company It is necessary to not only study in technology and engineering issues, ELCOM also has to learn and understand the business processes of this industry Resource sharing: the penetration into new markets such as transportation will make ELCOM must invest time and resources in market research and development, technology, partners, staff, leading to financial and resource structural changes of the Company Lack of partners: Currently ELCOM has not had the sufficiency of partners Group – GAMBA.X0710 – GRIGGS Page 122 Strategic Management providing products / services for the transportation market in Vietnam Lack of experience: although ELCOM Company has been very familiar in the domestic tendering, it has not really had the necessary experience when participating in the bid package in the transport industry Lack of information: not Has not had sufficient information on competitors in the Vietnam traffic market 3.4.3 Products of competitors on the Vietnam market Currently, on the market in the country, there are two companies providing products and solutions for intelligent transportation market, including products of Electronic Tolling Collection (ETC) Tien Phong Technology Joint Stock Company is the leading provider in solutions for tolling collection in the country Currently, two electronic tolling collection systems for routes on Can Tho and Phu My Bridge have been put to test Tien Phong Company's main market is projects in the Southern provinces of Vietnam Cadpro Company currently focuses on projects of providing ITS products and solutions for the highway routes that has just built The Cadpro Company's main market is projects in the Northern provinces of Vietnam Besides the two direct competitors as above mention, ELCOM Company has identified that there are many the foreign companies that is trying to penetrate in the Viet Nam Transport market through the direct bidding (for international projects) or through its partners that are small and medium companies in Vietnam Although having met the standards of tolling collection in Vietnam, the ETC products provided by these companies are having some limitations as follows: ETC solutions / products are imported from abroad, are designed and manufactured according to standards of the foreign countries (the signs, signal lights, barrier, ) which depend heavily on partners providing solutions / products The system software is provided by foreign partners, thus there are some limitations as follow: Difficulties in implementing the features requested by customers in Vietnam Not supporting the Vietnamese language Fixed report forms that is inconsistent in some pointstatistics with clients in Group – GAMBA.X0710 – GRIGGS Page 123 Strategic Management Vietnam Because of not being standardized, the products of these two Companies are not compatible with each others, customers purchase OBU terminal devices with Tien Phong Company’s card can not used for Electronic toll Collection system provided by CADPro companies and vice versa High price due to importing all the relevant accessories Cost for the services of the project is very high due to inviting theits experts from abroad to Vietnam to install, test, handing over and support system exploitation support 3.4.4 The product diffirentiation characteristic of ELCOM Understanding the limitations of the products for Electronic Tolling Collection (ETC) market being provided in the market, orientation of ELCOM’s products will obey the following basic principles: ELCOM plays a role as a system integrator, building ETC products for their own Company This will help ELCOM to master all the technologies, techniques and products, thus it is easy to meet the specific requirements of each different customer, reducing costs and increasing competitiveness of the products The main components of the solutions will be developed by ELCOM staff, including toll collection system software, surveillance camera control software / license plate identification software This helps the products of ELCOM become flexible and friendly with Vietnam consumers, Vietnamese language support, create flexible report forms and particularly having ability to develop to be compatible with ETC systems whichthat haves been deployed by the Tien Phong Company and CADPro Company and other companies in the future (if any) Other auxiliary components include barrier, signs, antennas, OBU devices; ETC cards will be provided by domestic and foreign partners Because of less important features, ELCOM Company can easily choose the domestic and foreign partners to improve the supply of their products With such product orientation, ETC products provided by ELCOM Company will completely overcome the existing disadvantages from foreign products, at the same Group – GAMBA.X0710 – GRIGGS Page 124 Strategic Management time, also reducing product costs and services of installation and system operation support in the future 3.4.5 Human Resource Plan ELCOM’s strength is a staff of young and capable engineers, with the leading research and technology, has introduced many products and solutions with high quality and flexibility consistent with the needs and characteristics of Telecommunications market in Vietnam Also, ELCOM products can be combined smoothly with the solution of large foreign firms, thereby providing products and total solutions, along with turnkey services, giving customers the service with perfect quality With the orientation of developing products for intelligent transport as above mention, and in particular products for automatic tolling collection application (ETC), ELCOM needs to build a team to develop this project as follows: + Product development research team: 10 people, with high speciality in programming, integration, familiar with video applications and automatically control Combined with the domestic and foreign product suppliers, this development research team will be the core to create products for advanced automatic tolling collection application of ELCOM compared to other products on market Pre-sale/Sale Team: people Technical Team (Project implementation): 10 people, divided in to groups Customer care Team: people 3.4.6 Capital resource plan and projected revenue The segments should be invested: Group – GAMBA.X0710 – GRIGGS Page 125 Strategic Management Human resources building costs for team: Product research and development (R&D), Sale/Marketing, Implementation, and Customer care The production cost of pattern products Marketing cost The project participation cost (the project that usually be prolonged needs to have the initial capital for the import and production ) ELCOM Company’s target in the next years as the following: set is sold with the price of billion Year Set amount is sold (ETC system) 2012 2013 2014 10 2015 15 2016 30 NPV calculatation: Cash Flow Estimation Unit : Million Dong Year 2012 2013 2014 note 2015 2016 Initial Cash flow , ICF Equipment Floating capital 23,000 Initial Cash flow 23,500 Service Equipm ent R&D 500 Operation Cash Flow, OCF Turn over Variable expense ( 60%) turnover - 2,000 20,000 30,000 60,000 - 1,200 12,000 18,000 36,000 General expense outside depreciation 100 100 300 700 2,500 Workshop and Equipment depreciation 100 100 100 100 100 Group – GAMBA.X0710 – GRIGGS Salary, project operatio n, office statione ry … Linear deprecia tion Page 126 Strategic Management ` EBIT = EBT (200) 600 7,600 11,200 21,400 Tariff ( tariff 28%) 168 2,128 3,136 5,992 10 Net Income NI 432 5,472 8,064 15,408 11 Operation Cash Flow , OCF 532 5,572 8,164 15,508 100 Termination Cash Flow, TCF 12 Floating capital withdrawal 23,000 13 net liquidation value of Assets 100 14 Termination Cash Flow 23,100 15 Project Cash Flow (23,500) 16 NPV with WACC = 12% 8,075.02 100 532 5,572 8,164 38,608 NPV (Net Present Value): is income during the project that is converted to present time, compared with initial capital This amount is the Company's income from the project, reviewed at the present time Positive NPV means profitable project, the Company can invest Turnover estimation set is sold with the price of billion Year Set amount is sold (ETC system) Equipments bought for development investment Variable expenses Linear depreciation 2012 2013 2014 10 2015 15 2016 30 500 million Group – GAMBA.X0710 – GRIGGS Page 127 Strategic Management CONCLUSION Application of strategic management theories into practical business and production activities is a condition to ensure the success of the enterprise in the modern business environment Our capstone project has studied to clarify the following major issues: Systematize basic theory of new market penetration strategic planning process that raised the importance of building and implementing a strategy in the enterprise It also pointpointed out that the theory application for building business strategy for an enterprise is not a sequential and machinery workflow It is a very flexible process based on comprehensive coordination of relevant departments in the organization Business situation analysis in ELCOM Company to take out the strengths and weaknesses, the cause of these shortcomings as a basis for the proposal of market penetration strategic in the transportation industry in each period The analysis steps are carried out properly in order: - Analysesis and evaluate the external business environment evaluation to help enterprises to identify opportunities and risks that they will have to face in the present and future; - Analyseis and evaluate theion of internal business environment to identify the strengths and weaknesses of the enterprise in comparison compared with competitors The analysis helps enterprises to build a system of product strategic goals and alternative strategic methods However, because of the limited time and knowledge, the analysis and evaluation of the report is not exhaustive and certainly has some shortcomings Our group would like to get the comments and contributions of the teachers and students in order to make the report more perfect, more useful for business development process in ELCOM Company, where a member of the group is currently working Group – GAMBA.X0710 – GRIGGS Page 128 Strategic Management REFERENCES A Vietnamese documents Fred R.David (2006), Strategic Outline, Statistic Publisher Ngo Kim Thanh (2011), Strategic Management, National Economics University, Hanoi, Vietnam Hoang Van Hai (2010), Strategic Management, Viet Nam National University Publishing house, Ha Noi Dao Duy Huan (2010) Strategic Management in economic globalize - Statistic Publisher Porter M.E ( Translated by Nguyen Phuc Hoang) (2009), Competitive advantages, Tre Pulishing house, HCM City B English Documents Hill W L Ch & Jones R G (1995), Strategic Management, Houghton Mifflin Company H Minzberg, J Lampel, J.B Quin, S.Ghoshal (2003), The Strategy Process, Pearson Education Limited Arthur A Thompson, Jr, A J Stricland III (1997), Strategic Management: Concepts and Cases, Mc Gray Hill Group – GAMBA.X0710 – GRIGGS Page 129 ... following five Group – GAMBA.X0710 – GRIGGS Page 20 Strategic Management stepsMa trận cho phép doanh nghiệp tóm tắt đánh giá thơng tin kinh tế, xã hội, văn hố, nhân địa lý, trị, luật pháp, công nghệ... dựng chiến lược kinh doanh hiệu phù hợp với tình hình kinh tế xã hội, phù hợp với thực trạng cơng ty tận dụng tốt hội để đạt mục tiêu cho cơng ty Chính đánh giá hiệu chiến lược kinh doanh quan trọng... sau: Group – GAMBA.X0710 – GRIGGS Page 35 Strategic Management Kiểm tra lại tính phù hợp chiến lược kinh doanh trước thức triển khai thực Bởi đề cập phần trước, chiến lược kinh doanh có tính định
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