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CAPSTONE PROJECT REPORT Building production and business strategy in Vinh Son – Song Hinh Hydropower Joint Stock Company in the period 2020 – 2025 ACKNOWLEDGMENT Group No.4 - GeMBA01.E03 class would like to give sincerely thanks for enthusiasism from teachers and trainees in Centre for Educational Technology and Career Development – Higher Education – Vietnam National University during the process of guiding us to complete graduation research paper We also would like to give the best thankfulness to the Board of Director in Vinh Son – Song Hinh Hydro Electricity Joint - Stock Company and managers of Planing and Investment Department for enthusiasticly providing us very helpful information and data to finish our graduation research paper Despite of trying our best in researching and collecting materials, our reaserch still has some mistakes because of limitation data and acknowledge We really expect to receive the comments and guidance from teachers and colleguages to make this thesis more meaningful ENGAGEMENT Group No.4 – GeMBA01.E03 class assures that this is our own research: All statistics and data are honest and not stated in any other works of science Hanoi, 10 January 2010 Group leader Ho Sy B i LIST OF CONTENT LIST OF TABLES x LIST OF CHARTS AND GRAPHS .xi LIST OF ABBREVIATIONS AND SIGNS xii FOREWORDS CHAPTER 1: BASIC ARGUMENTS OF THE RESEARCH 1.1 Bussness strategy and the process to build business strategy for the enterprise:.3 1.1.1 The arguments of strategy: .3 1.1.2 Characteristics of strategy: 1.1.3 All kinds of business strategy: .6 1.1.3.1 Classify business strategy basing on strategy levels: 1.1.3.2 Classify business strategy basing on contents: 1.1.3.3 Classify business strategy basing overall process: 1.1.4 The importance of strategies in modern economy: 1.2 Contents of strategy development process: .9 1.2.1 Define missions and targets of the company: .10 1.2.1.1 Define missions of the company: 11 1.2.1.2 Define the strategic target: 11 1.2.2 Analyzing the business environment of the enterprise: 14 1.2.2.1 External factor effects on the enterprise: 14 1.2.2.2 Macro economy: .14 1.2.2.3 Demonstration environment: 17 1.2.2.4 Evaluation of effects from the external factor: 20 1.2.3 Internal enterprise analysis: 20 1.2.3.1 Analyse value series of the organization: 20 1.2.3.2 Financial analysis: 21 1.2.3.3 Analyse the company’s culture and the reputation: 22 1.2.3.4 Evaluation of effects from the internal factor: 23 1.2.4 Business strategy choice .26 1.2.4.1 Leading cost: 26 1.2.4.2 Product specialization strategy: 27 ii 1.2.4.3 Centralization strategy: .28 1.2.4.4 Integration growth strategy (link): 29 1.2.4.5 Diversification growth strategy: .29 1.2.4.6 Reduction strategy: 29 1.2.4.7 Mixed strategy: 30 1.2.5 Build business unit strategy: 30 CHAPTER 2: ANALYSIS OF PRODUCTION AND BUSINESS OPERATION IN VINH SON – SONG HINH HYDRPOWER JOIN STOCK COMPANY .31 2.1 General introduction of Vinh Son - Song Hinh hydropower joint stock company (VSH): 31 2.1.1 Foundation of VSH: .31 2.1.2 Main features of the company affect the construction of strategic plans: 33 2.1.2.1 Characteristics of organization: 33 2.1.2.2 Characteristics of the company’s capital: 36 2.2 Analysis of real situation of strategic building and strategic thoughts formed in VSH: 36 2.2.1 Defining customer’s need and build plan: 37 2.2.2 Setting up basics to build plans: 37 2.2.3 Defining and quantifying norms: 38 2.2.4 Approved: 38 2.3 Evaluate the situation of building strategy in VSH: 39 2.3.1 Achievements: 39 2.3.2 Shortcomings at VSH: 39 2.3.3 Causes: 40 2.3.3.1 For objectivity: 40 2.3.3.2 For subjectivity: 41 2.4 Analyse effect of environment impact to VSH: 41 2.4.1 Macro economy analysis: 41 2.4.1.1 Economic factor: .41 2.4.1.2 Political factor: 42 2.4.1.3 Technology factor: 43 2.4.1.4 Social factor: .43 iii 2.4.1.5 Natural factor: 44 2.4.2 Analysis of demonstration environment: .45 2.4.2.1 Internally competitive pressure: 45 2.4.2.2 Competitive pressure from potential competitors: 45 2.4.2.3 Pressure from buyer: 46 2.4.2.4 Pressure from suppliers: 46 2.4.3 Internal analysis in VSH: 46 2.4.3.1 String value of VSH: 46 2.4.3.2 VSH’s financial situation: 48 2.5 Evaluate effect of external and internal environmental impact to VSH: 52 2.5.1 Evaluate effect of external environmental (EFE matrix): 52 2.5.2 Evaluate effect of internal environmental (IFE matrix): 53 CHAPTER 3: BUILDING PRODUCTION AND BUSINESS STRATEGY IN VINH SON – SONG HINH HYDROPOWER JOIN STOCK COMPANY IN THE PERIOD OF 2010 TO 2015 55 3.1.1 Determine the mission and strategic goals of the company: 55 3.1.2 The strategic objectives of the company: .55 3.1.2.1 Short-term objectives: .55 3.1.2.2 Long-term objectives: .56 3.2 Choose the business strategy for VSH: 57 3.3 The strategies implementation solutions: 60 3.3.1 The leading cost strategy implementation solutions: 60 3.3.1.1 Solutions for production management: .60 3.3.1.2 Financial solution: 60 3.3.1.3 Technical solution: 61 3.3.2 The centralize strategy implement solutions group: .62 3.3.2.1 Promoting the new construction of new hydroelectric plants: 62 3.3.2.2 Solutions for personnel and labor: 63 3.3.2.3 Creating corporate culture environment supporting the implementation of strategies: 64 3.3.2.4 Strengthen of administration changes in the strategy implementation: .66 3.4 Recommendations: 66 iv 3.4.1 For the Government, Ministries: 66 3.4.2 For the provincial People's Committee of Gia Lai, Kon Tum, Quang Ngai, Binh Dinh, Phu Yen: 67 CONCLUSION .68 APPENDIX 70 LIST REFERENCES .75 v LIST OF TABLES Table 1.1: SWOT matrix 24 Table 1.2: GREAT matrix 25 Table 1.3: Table of changing integration growth strategy 29 Table 2.1: Labor structure 33 Table 2.2: Results of electricity production 35 Table 2.3: Summarization of the company’s implementation capitals 36 Table: 2.4: VSH’s capital and asset structure 48 Table 2.5: VSH’s income .49 Table 2.6: VSH’s solvency 49 Table 2.7: VSH’s capital cycle .50 Table 2.8: VSH’s profitability 50 Table 2.9: VSH’s solvency 50 Table 2.10: Compared to its compititors 51 Table 2.11: EFE matrix of VSH .52 Table 2.12: IFE matrix of VSH 53 Table 3.1: S.W.O.T matrix of VSH 57 Table 3.2: GREAT matrix of VSH 59 vi LIST OF CHARTS AND GRAPHS Figure 1.1: Chart of forming business strategy process 10 Figure 1.2: PEST model 15 Figure 1.3: Model of five competitive forces given by M.Porter 18 Figure 1.4: Value series of the organization 21 Figure 2.1: Structure of organization and management system 34 Figure 2.2: The process of building strategic plan in VSH 37 vii LIST OF ABBREVIATIONS AND SIGNS EVN - Vietnam electricity Corporation VSH - GDP - Gross Domestic Products KV - Kilovolt KWh - Kilowatt per hour MW - Megawatt MWh - Megawatt per hour Vinh son – Song Hinh Hydropower Joint Stock Company viii Forewords C hapter 3: Building production and business strategy in VSH in the period of 2010-2015 specify the terms of energy saving is the obligation that all organizations and individuals to make financial institutions and provisions strictly Currently, Vietnam has not attracted strong investment in construction of power plants because have no mechanism for electricity price really competitive With the electricity price increase plan by the Government as the current electricity price of Vietnam is still much lower than the price of electricity in the region To create the attraction for investors to participate in the construction of power plants, government has proposed regulations on electricity price under the market mechanism, especially the early formation of market competitive power generation in Vietnam Nam 3.4.2 For the provincial People's Committee of Gia Lai, Kon Tum, Quang Ngai, Binh Dinh, Phu Yen: - Steering of People’ Committee of the districts, the functional departments actively participate and coordinate environmental impact assessment, selection of plans, combined with economic security - Defense to be soon put the project into activities planned - To direct the agricultural, environmental resources branches to allot land, build works, projects, protective forest on schedule, quickly allot land to cultivation, settlement, compensation and clearance for fast soon stable life for people in those areas were relocated 62 Conclusion 63 Appendix APPENDIX Appendix 1: Consolidated income statement of VSH Unit: VND 64 Appendix Appendix 2: Consolidated balance sheet of VSH Unit: Million VND Items 2006 2007 2008 ASSETS A Short term assets 161.941 833.438 995.390 Money and equal items like money 52.759 228.784 37.989 Money 34.759 228.784 4.989 Equal items like money 18.000 Finacial items of short term 33.000 57.740 510.685 835.685 57.740 510.685 835.685 25.435 70.558 100.813 23.195 62.356 60.324 859 2.861 2.363 1.381 5.341 38.127 Commodities in stock 25.238 23.362 20.832 Commodities in stock 25.238 23.362 26.027 -2.000 -5.194 49 69 investment Short term investment Items need to be collected in the short-term period Must to reeive from the customers Must pay to sellers in advance Items of other receipts Price reduction precautions of commodities in stock Other short term assets 769 65 Appendix Expenses paid in advance Taxes and other items receiving from the government Other short term assets 25 659 106 49 44 B Long term assets 1.720.805 1.626.012 1.489.037 Fixed assets 1.711.905 1.614.584 1.478.057 Visible fixed assets 1.568.501 1.572.543 1.421.967 143.404 42.041 56.090 Long term investment items 8.517 10.419 10.419 Investment into small companies 8.517 10.419 Incomplete construction expenses Investment into associated companies 10.419 and joint venture companies Other long term assets 382 1.008 Expenses paid in advance 382 448 Income taxes of assets hangin on 560 560 560 1.882.746 2.459.449 2.484.426 A Debts must be paid 546.437 437.163 342.112 Short term debts 125.871 123.156 117.207 Total assets CAPITAL 66 Appendix Loans and short-term debts 117.823 101.279 104.310 4.753 12.782 1.308 200 600 155 762 5.976 6.942 Paying to the employees 1.022 1.436 2.115 Expenses 1.221 1.014 2.236 Must to pay the sellers The customers pay in advance Taxes and other items paying to the government Paying items and other short term items 90 141 Paying short term precautions Long term debts 420.566 314.007 Must to pay long term items Loans and long term debts 224.906 224.725 420.525 313.901 41 107 181 B Capital 1.336.309 2.022.286 2.142.314 Owner capital 1.336.121 2.020.949 2.141.016 Investment capital of owners 1.250.000 1.374.943 1.374.943 370.661 370.661 Income taxes hanging on to pay Unemployment allowance Surplus of joint stock capital 67 Appendix Other owner capital Fund stocks Funds -9.933 880 14.380 85.880 95.174 26.966 309.533 Expenses and other funds sources 188 1.337 1.298 Fund of rewards and welfare benefits 178 662 677 10 674 621 1.882.746 2.459.449 2.484.426 Benefits after taxes not distributed Expenses to form fixed assets Total capital 68 Appendix 69 Appendix 70 Appendix 71 Appendix 72 Appendix 73 Appendix 74 List references 75 ...ACKNOWLEDGMENT Group No.4 - GeMBA01.E03 class would like to give sincerely thanks for enthusiasism from teachers and trainees... guidance from teachers and colleguages to make this thesis more meaningful ENGAGEMENT Group No.4 – GeMBA01.E03 class assures that this is our own research: All statistics and data are honest and not