Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (228)

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY FOR VAN THAI STEEL JOINT STOCK COMPANY IN PERIOD FROM 2012 TO 2017 Group: 06 Members: Nguyen Hai Van Nguyen Cong Sinh Dao Minh Phuong Nguyen Thi Lan Huong Hanoi 2011 ACKNOWLEDGEMENT In the first words, I would like to send my best thankfulness to teachers and professors in Centre for Educational Technology and Career Development – Higher Education – Vietnam National University, America Griggs University for creating the best favorable situation for all trainees during the whole course, especially, when we carrying out this capstone project report Our group also thank to Board of Directors of Van Thai Steel Joint Stock Company and related sections for guiding enthusiastically and providing necessary data for us to complete this report Despite of trying our best in studying and collecting data, the report still have some unavoidable shortcomings We sincerely hope to receive comments of teachers and friends to makes it more meaning full COMMITMENT Our group commit that this is our special work Data and figures in this report are accurate, our analysis and conclusions have not been announced in any other scientific research Hanoi, 28th November 2011 Group leader Nguyen Hai Van TABLE OF CONTENT ACKNOWLEDGEMENT TABLE OF CONTENT LIST OF TABLES AND FIGURES PART 1: INTRODUCTION Necessity of project Purpose of project Scope and objective of project8 Methodologies Structure of capstone project CHAPTER 1: LITERATURE REVIEW ON BUSINESS STRATEGY AND BUSINESS STRATEGY BUILDING 10 1.1 Definition, characteristics and role of business strategy 10 1.1.1 Definition of strategy 10 1.1.2 Characteristics of business strategy 11 1.1.3 The role of business strategy with business activities 12 1.2 Models in contributing business strategy 13 1.2.1 External Factor Evaluation Model – EFE 14 1.2.2 Internal Factor Evaluation Model – IFE 15 1.2.3 SWOT Matrix Model 17 1.2.4 Quantitative Strategic Planning Matrix (QSPM) 19 1.2.5 Five competitive forces of Michael Porter 20 CHAPTER 2: SITUATION ANALYSIS OF BUSINESS ACTIVITY AND BUSINESS STRATEGY CONSTRUCTION OF VAN THAI STEEL JOIN STOCK COMPANY 23 2.1 Introduction of Van Thai Steel Join Stock Company 2.1.1 History and Development 23 23 2.1.2 The Organizational Structure 26 1.2.3 Company Products 29 2.2 Business activity and business strategy planning at Van Thai JSC 32 2.2.1 Business and manufacture activity 32 2.2.1.1 Manufacture activity .32 2.2.1.2 Consumption activity 35 2.2.2 Situation of business strategy planning 38 2.2.2.1 Product strategy 39 2.2.2.2 Financial strategy 40 2.2.2.3 Human resource strategy 42 2.2.2.4 Marketing strategy .45 2.3 Analysis of business environment 46 2.3.1 Analysis of business environment 46 2.3.1.1 Analysis of external environment by EFE .46 2.3.1.2 Analysis the internal environment by IFE model 52 2.3.1.3 IE Combination Matrix 54 2.3.2 Competitive Profile Matrix 2.3.2 SWOT Model 55 56 2.3.2.1 Strength 56 2.3.2.2 Weaknesses 58 2.3.2.3 Opportunity 60 2.3.2.4 Challenges 62 2.3.2.5 SWOT Matrix .64 2.3.3 Quantitative Strategic Planning Matrix (QSPM) 65 2.4 Evaluation of business activity and strategic planning of Van Thai Steel JSC 68 2.4.1 Achievements 69 2.4.2 Limitations 2.4.3 Cause 69 70 CHAPTER 3: THE SOLUTIONS FOR BUSINESS STRATEGIC DIRECTION OF VAN THAI STEEL JOINT STOCK COMPANY 74 3.1 Restructuring impacts on the business development of Van Thai Vinashin Steel JSC 74 3.1.1 The impact of restructuring 74 3.1.2 Difficulty and challenge 75 3.1.2.1 Challenges 75 3.1.2.2 Opportunities 75 3.2 Strategic orientation of business development of Van Thai Vinashin Steel Joint Stock Company after the restructuring of Vietnam Shipbuilding Industry Group 76 3.3 Business development solutions 3.3.2 Marketing strategy 77 77 3.3.1 Human resource training strategy 3.3.3 Improve product quality CONCLUSION 82 REFERENCE 83 80 79 LIST OF TABLES AND FIGURES Table: Table 1.1 External Factor Evaluation - EFE 14 Table 1.2 Internal Factor Evaluation Matrix 15 Table 1.3 Internal – External Matrix 17 Table 1.4 SWOT matrix 18 Table 2.1 Van Thai Steel JSC manufacture activity 33 Table 2.2 The situation of consumption activity Van Thai Steel JSC 35 Table 2.3 The situation in commodity consumption 37 Table 2.4 Basic financial information of company over years Table 2.5 Capacity of staff in 2011 41 43 Table 2.6 Factors lead to purchase of each customer type 48 Table 2.7 External Factor Evaluation Matrix 52 Table 2.8 Internal Factor Evaluation Matrix 53 Table 2.9 Internal – External Matrix 54 Table 2.10 Competitive Profile Matrix 55 Table 2.11 Situation of common human resource variation 58 Table 2.12 Total steel consumption in period 2005 - 2009 60 Table 2.13 The number of imported raw material in steel industry Table 2.14 SWOT Matrix 64 Table 2.15 QSPM strategy - S/O strategy 65 Table 2.16 QSPM strategy - S/T strategy 66 Table 2.17 QSPM strategy - W/O strategy 67 Table 2.18 QSPM strategy - W/T strategy 68 Figure: Figure 1.1 Five-force model of Michael Porter 21 Figure 2.1 Organization structure of Van Thai 26 62 Figure 2.2 Van Thai Steel JSC manufacture activity 34 Figure 2.3 The situation of consumption activity Van Thai Steel JSC Figure 2.4 The situation in commodity consumption 38 36 PART 1: INTRODUCTION Necessity of project Strategizing is much more than just visioning, forecasting and planning In the new rapidly changing economy, all substantive issues of strategy have been redefined as issues of implementation Today, strategizing is concerned with the match between the internal capabilities of the company and its external environment "The modern subject of business strategy is a set of analytic techniques for understanding better, and so influencing, a company's position in its actual and potential marketplace" As strategy today is a subject of application, rather than a discipline, the obvious underpinning disciplines for strategy are economics and organizational sociology Organizations should employ them to define a structure in which the process of strategy formulation and its implementation are bound together For Vietnamese steel market, Steel remains one of the most essential basic raw materials and plays a central role in building the infrastructure of a modern city It is widely used in roads, power generation, railways, household appliances, and manufacturing and construction industries Growth and development of steel industry is directly related to the level of economic activities in the respective regions Steel provides a global and country overview of the steel industry It looks at production and consumption of steel in Vietnam, and the structure of steel industry It also covers the market trends and outlook, imports, tariffs, prices, foreign investment and the steel industry development plan 2007-2015 In addition it provides a comparative matrix of the industry local leading players: Vietnam Steel Corporation (VSC), Thai Nguyen Iron & Steel Corporation (TISCO), Vietnam-Australia Steel Joint Venture Company and Vietnam-Japan Steel Company Van Thai Steel Joint Stock Company is Vietnamese leading manufacturer in weld mesh with modern, advanced technology and Synchronic manufactured line of International Standard The company has gained many achievements since its operation in 1997, especially with new construction products in Vietnamese steel market such as pre-stressing steel, Vietducsteel floor panel, weld mesh, steel floor grating, box pallet and so on However, after re-structure of Vinashin Corporation which Van Thai Steel is a member, the company has encountered with lots of disadvantages in business activities Therefore, we decided to conduct this project in order to contribute some recommendations in building business strategy for the company: “Building business strategy for Van Thai Steel Joint Stock Company in the period from 2012 to 2017” Purpose of project This project aims to contribute some literature reviews of business strategy and to help building business strategy for Van Thai Steel Joint Stock Company in the period from 2012 to 2017, based on business environment and reality of production and business activities of the company Scope and objective of project The project analyzes production and business of Van Thai Steel Joint Stock Company in Vietnam market From this analysis the project concludes suitable strategies to expand business scale as well as company profit in both short term and long term Data and information in this capstone project were collected from actual production and business of Van Thai Steel in last years The project also gave out some forecasts about steel market to 2017 and business orientation for Van Thai Steel in the period of 2012 to 2017 Methodologies The project is the combination of a great theory “strategic management” on practical business strategy building of a big corporation To be successful in applying this theory on production and business of Van Thai Steel Joint Stock Company, researchers used both qualitative and quantitative method in studying These methods are: - Collecting and analyzing method - Comparative analysis method - Specialist analysis method - Economic statistic method The project also use kinds of models for analyze such as: SWOT matrix, GREAT matrix, etc A wide variety of academic researches, market report, journals are utilized to bring out the best understanding of the subject The sources of data are listed clearly in the reference Structure of capstone project Besides forewords, conclusion and list of table and abbreviation the capstone project includes three chapters as following: - Chapter 1: Literature review on business strategy and business strategy building Chapter 2: Reality of production and business situation in Van Thai Steel Joint - Stock Company Chapter 3: Solutions & recommendations to build business strategy for Van Thai Steel Joint Stock Company from 2012-2017 developing strategy of Company Contractors with some member companies like Huyndai Vinashin was delayed, the investment projects in machinery and manufacture of Lai Vu Factory was delayed or abandoned since the Group did not continue to invest The financial pressure downs the production capacity, impact on the customer’s psychology The tough competition from domestic competitors like VRC welded wire mesh, HopLuc welded wire mesh VRC Ltd is the first company manufacturing welded wire mesh in Vietnam, is the member VII Group together with Vietnam Australia Steel company (Vinausteel), Metak Roofing Company (Austnam), Australian Steel Company (SEE) and Total Building System Company (TBS), therefore, Company has the big support in input materials and output consumption VRC Weled wire mesh products are the high standard products, supply for the constructions In contrast, Song Hop Luc Welded wire mesh is a private limited company with the small capital, just 10 billion VND but Song Hop Luc take dominates the Southern market and steel frame products The common labor force is huge and fluctuated constantly affects the quality as well as the efficiency of the company Fluctuation has both objective and objective factors Subjective factor is worker’s psychology, they not want to work here permanently, especially when there are problems with leaders or family matters, they are willing to quit job Objective factors: Limited capital investment, new equity is 29 billion VND, lower than other competitors such as VRC Company Thus, Company has to loan from Group to invest in machinery, production line, assets and factory Company has not set up the solutions for reducing expense, namely:  No saving materials, fuel or reducing fuel wasting  No analyze, predict the cost of input material to have the storage plan when the price is fluctuated 70  No incentive measures, education for staff in saving and considering company assets as theirs  Insufficient marketing team, lack of market knowledge, real experience, language skill  Insufficient image, brand, website as well as the lack of information and poor introducing document  The untight coordination between departments, especially the sales office and Factory in coordinating the production and delivery products for customers, makes the psychological hinder and late shipment The human resource, remuneration is not good that makes many fluctuations in common labor In addition, the senior human resources have many changes also, specifically in years from 2006 to 2010 there are changes of Factory Director, and a department directly is responsible for the company production 71 CHAPTER 3: THE SOLUTIONS FOR BUSINESS STRATEGIC DIRECTION OF VAN THAI STEEL JOINT STOCK COMPANY 3.1 Restructuring impacts on the business development of Van Thai Vinashin Steel JSC 3.1.1 The impact of restructuring The restructuring of Vinashin Group affects dramatically on the business development of Van Thai Vinashin Steel JSC, in detail: Under the restructuring scheme of Vietnam Shipbuilding Industry Group approved by Government, Van Thai Steel JSC is not under the Vinashin Group Hence, the total capital equivalent 51% Charter capital of Company is owned by the Vinashin Industrial Development Limited Company (a subsidiary of Vinashin Group) will be withdrawn Van Thai Vinashin Steel is standing in front of choices:  Being dissolved for the withdrawal capital of shareholders  Reducing Charter Capital equivalent to the withdrawn capital  Transfer the Charter Capital of the Vinashin Industrial Development Limited Company to the other parties to maintain the Charter Capital Production and business activities of Company also suffered the impacts after the implementation of Vinashin Group restructuring However, after Vinashin Group had met difficulties and carried out reforms, Company also encountered many difficulties in connecting with customers and especially the raw material suppliers because they worry about the paying ability as well as the unclear legal status of Company Simultaneously, there appear much information worried about the legal status of Company in the future that makes the confusion to staff and affects the production and business of Company The whole project is partnered with Huyndai Vinashin Company in building Nix seed treatment factory by the loan from Group is delayed, but Company still has to make monthly interest payment for the Group 72 Because of these above causes that Van Thai Steel JSC is facing to the question: restructuring to develop or dissolve when the Vinashin Group restructuring 3.1.2 Difficulty and challenge After the restructuring of Vinashin Group, Van Thai Vinashin Steel JSC is facing with many challenges; however, there are many new chances, namely: 3.1.2.1 Challenges The biggest challenge of Van Thai Vinashin Steel JSC is finding new shareholders replacing Vinashin Group, while company’s industrial field is low-profit, the financial situation is in difficulty, has not good growth for production and business activities The second challenge of Van Thai Vinashin Steel JSC is building the reputation, popular brand in society to improve the competitive ability compared with rivals such as VRC wire mesh Limited Company, Song Hop Luc Welded wire mesh Company The third one is reducing the interest expense paid for Group for the investment of Nix Seed Treatment Factory Project; a project cooperated with Huyndai Vinashin but has to be delayed because of financial factors and the Nix seed’s environment pollution factor The next challenge is solving the human resource fluctuation of common workers, the unstable psychology of the quality staff after restructuring of Group Besides, it is necessary to solve the technology innovation, saving maximum input materials to decrease the price, increase the labor productivity Beside challenges, there are chances for company to develop, that is: 3.1.2.2 Opportunities There are some investors paying attention to replace Vinashin Group to invest in Company Such as AZ Lan JSC has plan to buy share of Vinashin, also shareholders to increase capital at the present This is important finance resort to create of chance and motive to reinstruct company and developing the business activity 73 The leadership of Company unanimously agreed to restructure the Company to continue the development and escape from this difficult period The company product had the mark on the market, the number of customers along with the output increased in the early 2011 Beside the corporate clients, some individual customers has the demand of constructing the building has ordered such as Kuong Ngan Ltd Company … In addition, 3D construction method which was applied in many countries like United State, China has applied in Vietnam at some construction in Bac Ninh, open the new direction of product development for Company The Japanese partners has paid attention and ordered the 3D product for many constructions In May, Sale Department has signed nearly 10 billion VND of business contractors with partners like Vinaconex 7, Vinaconex 12, Canon, BMC, Namyang, HC Supermarket … The early of August, the second welded mesh factory has officially put into operation, improve the capacity and ability to meet the order of companies The economy is forecasted to be stability in the end of 2011 and will grow in the middle and end of 2010 This is the good signal for Company to restructure; reform in this period and catch up with the growth of economic development 3.2 Strategic orientation of business development of Van Thai Vinashin Steel Joint Stock Company after the restructuring of Vietnam Shipbuilding Industry Group Fierceness competitive market, to survive and develop after reinstruction of Corporation, Stragegy of Van Thai Vinashin steel consolidate, and forcus business sild which can earn benefit, to reduce staff cope, to enhance competitive inffective in prices, Company has decide strategy as follow: - In the period of 2011 – 2012, implementing the restructuring of the entire production and business activity of company to reform the weaknesses and strengthen the achieved results.Strengthening new product research and development in the construction steel field 74 - Enhancing the marketing, brand identify and sales to reach the retail customers - Work with construction consultor to provide steel product to construction Improved production to improve the productivity, save budget and reduce price Streamlining the ineffective investment to reduce the interest expense Continuing investing in the current real estate project to recover the capital and limiting the expansion of new projects in the difficult economic situation 3.3 Business development solutions 3.3.1 Marketing strategy To improve the efficiency of business operation of Company, one of the most important issues is to improve the consumption To raise the consumption, it is necessary to synchronously implement these solutions: Develop the consumption system by establishing dealers in many localities across the country With the current condition, the first duty is open showroom in Hanoi and sample products for customer to easily recognize product, along with easily access the individual customer, a potential market segment that was left Besides, Company can open many dealers in provinces with the big construction speed as Da Nang … Building the reasonable price policy and the price must be flexible and appropriate The company should adopt various mechanisms to different locations or localities Specifically, Company can apply the price – sensitive mechanism, support the customers in remote provinces by shipment subsidy, bonus for customers with large amounts depending on different levels To encourage and support prices for shipment delivered for construction to gradually evaluate the quality of Company product and attract consumption from other consumers Simultaneously, the company must also apply a series of solutions are discounts, rebates, commissions paid for the customers with big and annual purchase Diversify the types of products: The product diversification will avoid the risk of concentrating on one area, and take advantage of technology, labor, and time and to 75 meet the customer demands Thus, beside the major products, Company needs to deploy new products such as 3D panel or produce products from wire mesh as fence … to improve the revenue Apply the marketing methods to enlarge and exploit maximum the market demand Company should promote the marketing, organize well the marketing process to facilitate the exploiting and enlarging strategies, go deeper in particular features of each area and market, and take the economic efficiency as a measurement of every activities The volume of consumed products on the market is assessed through the product quality, therefore, organizing marketing activities is necessary to improve the product quality, raise the business efficiency of company Besides, Company needs to boost the searching and setting up new consumers, enhance the relationship with traditional clients to maintain and enlarge the market To implement this duty, Company should move forward with the ad-deep on the magazine of construction industry, sales copy, actively participate in fairs and exhibitions of building material such as Vietbuild Fair … One of the other ways to introduce products and approach customers Company should build their own website with the full information as well as create prestigious forum in this website to attract the attention of everyone, from that finding more customers To implement this strategy, the company has to reserve following items: Unit: Million VND Activity Showroom opening in Hanoi Dealer opening in big cities Supporting customers by discounts & Amount of money 1000 500 500 sales off Marketing Total 500 2500 3.3.2 Human resource training strategy 76 Human factor is always the most important factor The problem is people are always the core issue in all areas because it is them who set goals, strategies, action plans, implementation, testing, control objectives So to be able to exploit and effectively use the company's human resources, they need to develop employee training programs How can training be accompanied in the production, organization of classes in the Company or may create conditions for workers to attend formal training classes In addition, to improve staff training for company employees should organize seminars to exchange experiences, seminars and technical exchanges, to continue the movement of production Along with professional training, the company should implement policies to encourage and reward their employers to motivate them to work The improvement of the leadership team, the administrator is a decisive factor to improve the competitiveness of enterprises The management team is involved in all business should have great influence on the performance of the company The administrator must know the ingenious combination of the interests of its members and the common interests of the Company Furthermore the company plans to recruit qualified managers, recruitment of skilled employees to create a workforce of sufficient quantity to ensure quality throughout the business process Moreover, the company should consider to reduce ineffective working departments to simplize its system in order to cut down costs Reserve for HR strategy Unit: Million VND Activity Training courses Support staffs for their higher eduation Working seminars Working contest Amount of money 50 150 100 100 77 Total 400 3.3.3 Improve product quality When buying a product or service, the customers not only want its satisfaction for a certain need, but also demand that the product has trust, safety and cost better than other products with the same kind Thus, improving the product quality is the most important factor for the existence and development of the company Recent years, product quality of the company has been improved very much more However, within the higher demand of customers toward product quality and the constant change of competitors, improving product quality still needed to be done frequently and continuously by the company To ensure product quality, the company needs to choose the prestigious makers because it is difficult to check the quality of input raw materials totally Only in use, we can know whether these raw materials meet the standard or not Moreover, because the product quality begins to take shape throughout the period of production preparation to production and in stock following the design standards, the company needs to pay attention even the product design and production planning stage Reserve for this strategy: Unit: Million VND Activity Find new supplier Check product quality frequently R&D activity Total Amount of money 100 50 500 650 78 CONCLUSION Theory and practice have proven the business strategy plays an important role in the business activity in the modern economy Working in an industry with the fierce competition, a proper business strategy is so essential for Van Thai Steel JSC on the path of integration It helps Company cope with the fluctuation of business environment flexibly, timely and rightly Business strategy planning, Company determines the correct target system, policy and solutions that Company should implement in the future However, in the fluctuated business environment, it is necessary to be “softly”, means that it is essential to choose the most feasible option to catch the desired objective Therefore, the determination and implementation of strategy in business reality of Van Thai Steel JSC in the next period is the very important mission which requires the effort of the entire staff In term of time restrictions and researching condition, this research topic is inevitable shortcomings The group would like to express sincere gratitude to the teacher’s opinions 79 REFERENCE Vietnamese Bao Viet securities company, Program to equity Van Thai Steel, 2008 Pham Chi Cuong, Steel industry in 2010, Vietnam Steel Association Nozomu Kawabata, Vietnam steel industry a period of innovation and development in 2009, University Tohoku – Japan Statistic Yearbook: 1995 – 2010, Statistic publisher Van Thai Steel, Business result reports 2007-2010 Van Thai Steel, Sale and marketing plan 2011-2016 Nguyen Hoang Viet, Strategic management text book, University of Trading Vietnam Steel Association, Steel industry report 2007-2010 Vietnam Steel Association, Competition in steel industry 2005-2009 10 Word bank, Overview of Vietnam economy in the period of 2005 to 2015 English ADB, Commercialization and Poverty Reduction, 2008, trang – Jay Barney; William Hesterly (2008), Strategic Management and Competitive Advantage: Concepts, Prentice Hall Jay Barney (2007), Gaining and Sustaining Competitive Advantage, Prentice Hall Herrington Bryce ( 2007), Financial and Strategic Management for Nonprofit Organizations: A Comprehensive Reference to Legal, Financial, Management, and Operations Rules and Gu, Jossey-Bass Nonprofit & Public Management Series Robert E Ankli, Michael Porter’s competitive advantage and business history, University of Guelph,1992, trang 288 – 300 Porter M, The competitive advantage of Nations, tạp chí kinh doanh Havard, tháng năm 1990, trang 73 – 93 Fred R.David (2008), Strategic Management: Concepts and Cases (12th Edition) Websites: http://www.vietducsteel.com http://www.xaydungvietnam.vn http://www.moit.gov.vn http://www.vsa.com.vn http://www.moit.gov.vn 80 http://www.tailieu.vn http://www.viwikipedia.org/wiki/quantrichienluoc 81