Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (252)

CAPSTONE PROJECT REPORT DEVELOPING BUSINESS STRATEGY FOR TRANG-AN CONFECTIONERY JOINT STOCK COMPANY IN THE PERIOD OF 2011-2016 Group – Class GaMBA X0510 Hanoi 2011 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT DEVELOPING BUSINESS STRATEGY FOR TRANG-AN CONFECTIONERY JOINT STOCK COMPANY IN THE PERIOD OF 2011-2016 Group: 04 Member: Nguyen Phuong Nam Tran Quynh Chi Phan Dieu Thuy Dinh Ke Duc Class: GaMBA X0510 Hanoi, November 2011 Table of Contents Table of Contents LIST OF ABBREVIATIONS LIST OF TABLES AND FIGURES ACKNOWLEDGEMENT INTRODUCTION .8 1.Researching objectives 2.Researching scope 3.Research components .9 CHAPTER LITERATURE REVIEW 1.Strategic management concept 1.1.Business strategy 1.2.Strategic management 10 2.The role of strategy to an organization .10 3.The strategic management process 11 3.1.Defining the organizational mission 11 3.2.Environment analysis 11 3.3.Defining long term goals and planning for the business strategy 14 3.4.Defining action plan and strategy implementation solutions 14 3.5.Evaluation and adjustment 14 4.Tools for creating and selecting business strategy 14 4.1.External factor evaluation Matrix - EFE 14 4.2.IFE Internal factor evaluation matrix - IFE 15 4.3.SWOT Matrix 15 4.4.QSPM Matrix 16 CHAPTER 17 ANALYSIS OF CURRENT SITUATION OF TRANG AN JOINT STOCK COMPANY17 1.General introduction of Trang-An Confectionery Joint Stock Company 17 2.Analysis of the company’s business operations situation from 2008 to 2010 21 2.1.Company’s performance from 2008 to 2010 21 2.2.Analysis of business environment of Trang An joint stock company in 2008-2010 period 24 2.4.Problems and Causes 42 CHAPTER 44 STRATEGIC OBJECTIVES FOR 44 THE COMPANY’S DEVELOPMENT AND SOLUTIONS 44 2.Developing strategic alternatives 45 3.Strategy selection 51 3.1.Business strategy analysis 51 3.2.Feasible strategy selection 53 4.Strategy implementation and control 54 4.1.Strategy implementation solutions 54 4.2.Recommendations 57 CONCLUSIONS .58 REFERENCES 59 I.BIBLIOGRAPHIES .59 II.WEBSITES 59 LIST OF ABBREVIATIONS WTO World Trade Organization CEPT Common Effective Preferable Tariff EPS Earning Per Share ROA Return On Assets ROE Return on Equity EIU Economist Intelligence Unit GDP Gross Domestic Growth HACCP Hazard Analysis and Critical Control Points R&D Research and Development EFE External Factor Evaluation IFE Internal Factor Evaluation QSPM Quantitative Strategic Planning Matrix SWOT Strengths – Weaknesses – Opportunities - Threaths LIST OF TABLES AND FIGURES ACKNOWLEDGEMENT Our group would like to express our thankfulness to the Directors and the Faculty from Center for Educational Technology and Career Development (ETC) – Vietnam National University and Griggs University for having created us the best study conditions and have encouraged us in all the time of research and writing this capstone We have further more to thank the Directors of Trang-An Confectionery Joint Stock Company as well as its related Departments for their provided relevant information, data and their supports for our Capstone We understand that due to our lack of experience and limited information, our Capstone would have some shortcomings However, we would really appreciate all comments and suggestions for improvement in order to make the Capstone become, somehow, more applicable and more meaningful to the current context of Trang-An Confectionery JSC Even though this Capstone is our first ever carried-out research, we know that what we learn from doing the research will help us a lot not only in our professions but also in our future academic pursuits, and we believe that all the theoretical and practical business strategies withdrawn from this Capstone will bring us with success in our career WORDS OF REASSURE We affirm that the work of this Capstone is our own research and all the information and data used are true Hanoi, Novemvber 2011 Group 04 - Class GaMBA X0510 INTRODUCTION In the era of industrialization and modernization, and the integration trend becomes more prevalent, Vietnam’s economy and Vietnamese companies encounter many development opportunities as well as challenges, regarding finding the right direction which suits the changing business environment Once the domestic market is no longer the play ground of only domestic companies, that the competitive pressure becomes more intense is unavoidable to each business In order to reinforce the company’s brand name and enhance its position domestically and internationally, especially when Vietnam joined the WTO (World Trade Organization) and Common Effective Preferable Tariff (CEPT) come into effect, making import taxes significantly decrease, the researching of strategic direction for business model of each company is very important All the above factors require Vietnamese enterprises, including confectionery manufactures to correctly identify their roadmap, in order to survive and prosper Therefore, finding an effective strategy which will help the business follow the right track is essential Trang An joint stock company is a business entity newly equitized since 2004, changing its operation format from the state-owned into corporation one Because of the influence of domestic and international economy regarding the fluctuation of exchange rate and high inflation, affecting living standard, the development of the company faces many difficulties The company has to confront fierce competition among confectionery firms both inside and outside Vietnam Besides, the demand from customers becomes higher and higher in terms of quality and packaging In order to find a solution to maintain Trang An’s position in the future as well as apply the theory studied in Graduate level, we select the topic of: “Developing business strategy for Trang An confectionery joint stock company in the period of 2011 – 2016” as the research topic 11 Researching objectives The research based on applying theories of strategic management in business and practical analysis of micro and macro environment, regarding production situation of Trang An joint stock company, to find out a suitable business strategy Besides, some solutions are recommended in order to successfully execute the proposed strategy, assisting the company in maintain its position and grow into the leading confectionery brand in Vietnam 11 Researching scope The researching scope covers all issues related to production and business functioning of Trang An confectionery company from 2008 to 2010, as well as the development of the company in the years to come 11 Research components Besides the introduction, conclusion and appendix, the research includes three main chapters: - Chapter 1: Literature Review Chapter 2: Analysis of current situation of Trang -An confectionery joint stock - company Chapter 3: Developing business strategy in the 2011 – 2016 period and solutions for strategy completion CHAPTER LITERATURE REVIEW Strategic management concept 1.1 Business strategy The strategy concept has been established for a long time ago, originating from the military Currently, there are many different definitions of strategy: - According to Pred R David: “Strategy is the means to achieve long term goals” - According to Haroid Kooniz and other authors in “Essential issues in management”, strategy is an action plan toward achieving specific goals The major strategies of an organization involve objectives and human resource commitment to reach these objectives, and main policies to be followed when utilizing this resource - According to Alfred Chandler: “Business strategy involves setting up major long term goals of the business, as well as selecting the action method or process and allocate the resource to that” We can summarize the above and define strategy and business strategy a followed: Strategy is means, the ways built up in order to reach long term objectives Business strategy involves unifying the goals and action methods to achieve common business’ goals in a specific period Business strategy can be about geographic development, diversification, product development, new market entering, cost saving, liquidation or partnership 1.2 Strategic management Strategic management is an art and science to make, conduct and evaluate decisions related to different functions of an organization, so that the proposed objectives can be achieved Strategic management concentrated on unifying the management, promotion, finance and accounting, production, research and development of the information system for various business fields; all aim at achieving organizational success Strategic management includes three stages: strategy planning, strategy implementation, and strategy evaluation The role of strategy to an organization Business strategy in organization plays a very important role to the development of that organization It helps the firm to define the direction in the future, point out the solution to employ and effectively utilize the resource, in order to compete successfully, specifically to allow the firm to achieve the proposed goals Currently in Vietnam, the majority of business is small and medium ones Strategic planning is a process to define the major directions which allow the company to change, improve and reinforce its competitive position The application of equipment The company has built a good supply chain, enabling the company to develop 0.11 0.44 0.44 0.12 0.48 0.48 0.10 0.40 0.30 0.14 0.42 0.42 0.13 0.52 0.39 0.12 0.48 0.48 0.12 0.36 0.36 stably and offer competitive price Diversified and high-quality products meeting international standards, hygiene requirements and food safety Strategic product differentiation External factors There are more and more ompetitors, especially when Vietnam joins the World Trade Organization (WTO) The intensity of competition between enterprises in the industry is increasingly high Science and technology have been increasingly advanced, leading to the fact that the life expectancy of technology has been shortened; product life cycle is getting shorter and shorter There are more types of fast food available in the market as the substitute products Export markets due to increasingly difficult given the many physical and chemical standards for food Sum Total Attractiveness Score 3.67 3.44 From the above matrix, we select the product development strategy Therefore, through the SWOT matrix and the Quantitative Strategic Planning Matrix, we select strategies to be focused as follows: - Market development strategy - Product development strategy Strategy selection 3.1 Business strategy analysis 3.1.1 Focus growth strategy with market development orientation The company can take advantage of its brand, relatively large - scale production capacity and stable supply chain; actively improve its labour productivity in order to meet increasing demands of the market - For the domestic market: It is important to improve the distribution system, try to bring products to remote areas where people still use poor - quality confectionery products, fake and imitation products from small manufacturers At the same time, the company should educate its customers through reports, introduction films and coordinate with the local preventive medicine center - For foreign markets: The company should strengthen trade promotion activities, find foreign clients, participate in fairs and exhibitions, send staff to research foreign markets and seek foreign partners, co-operate closely with Vietnam's commercial counsellors in other countries The task of "taking advantage of the long-standing brand and actively improving labor productivity" requires the company to first of all maintain its production capacity It requires the company to maintain and repair its machinery and equipment system The company also needs to ensure stable human resources and especially the ability to mobilize human resources at peak seasons when the confectionery consumption increases dramatically Besides, the company must maintain the operational efficiency of its strong distribution network in the North and open representative offices in the Central and South It is also important to overcome the imbalance of the distribution network between regions in order to ensure the distribution channel’s coverage and efficiency To enhance the efficiency of its existing distribution system, the company should offer its agents appropriate policies such as discounts, sales or giving reward if they meet or surpass the expected targets Professional training for sales staff should be organized periodically At the same time, sales staff will have to review and evaluate the market that they are in charge of in order to promptly detect new problems and make appropriate adjustments Taking advantage of the company’s strengths will not cost huge additional investment This explains why this is the plan that has fairly high attractiveness score when analyzing strategies 3.1.2 Growth strategy with product development orientation Product development strategy is to increase revenue by improving the company’s strong products such as Snack products and marshmallows in accordance to the company’s development roadmap or modify existing products to increase sales in existing markets Trang An needs to further increase the funds for RD activities, personnel and equipment in order to produce high-quality and nutritious products The company should also ensure that packaging forms can always meet the consumer trend To this, the company may ask for support from national and foreign nutrition research institutes and universities With this plan, the company has to synchronize its machinery and equipment system It should be willing to invest in new production lines replacing old and backward ones; promote research and technology innovation; apply scientific and technological advances in production; and improve labor productivity To operate the apparatus efficiently and synchronously, the company has to invest heavily in human resources combined with product research and development at a reasonable cost and with responsible work force Profesional training programs should be organized regularly to improve the managers’ technical level and the workers’ skills Research seminars on scientific and technological advances, innovation and technical improvements in production should be organized Advertising activities should be adjusted so that the company’s products and image can be widely communicated to customers The company needs to spend more funds on advertising activities with an appropriate proportion of the production and sales costs Imposing advertising campaigns should be started when launching new products to the market Effectively implementing this strategy will allow the company to have a diverse range of products suitable to the customers’ needs and tastes Focusing on advertising activities stimulates the consumption of products in the market Thus, all of these activities aim at taking advantage of the market’s increasing demands However, investing in new production lines and imposing advertising activities requires large expenditure, while the company's financial condition is not so good In order to have diverse products suitable to the tastes of consumers, it is required to have adequate investment in product research and development This activity requires not only relatively large expenditure but also qualified personnel to perform the job 1.3 Management efficiency improvement strategy The main resources used for this strategy are human resources Changing the corporate governance is a very difficult task in a state-owned joint stock company This strategy requires a long time and specific plan in order not to affect the operations of the whole apparatus 3.2 Feasible strategy selection From the above main feasible strategies and by analyzing the QSPM and SWOT matrix, we can select the main strategies for the development of Trang An company from 2011 to 2016 as follows: For the period of 2011 to 2014, the most appropriate strategy is market development strategy By now, Trang An is still a business unit which has relatively small market share and lacks of experience to compete with foreign and domestic enterprises The company’s product quality and packaging design have not met the customers’ requirements Therefore, the implementation of market development strategy in the period of 2011-2014 through commercial activities and advertising promotion is really necessary Besides, the company should maximize its existing strengths namely: the brand that has been built and developed over the past 30 years, the honor awards that have been achieved in recent years such as "Vietnam Golden Star" and stable skilled workers The willingness to invest in advanced technology lines is consistent with the development trend Effectively managing the available human resources will help fulfill the company’s mission which is to expand the market with the target of 30% market share in 2014 and gradually impove the potential position and competitiveness in the market For the period of 2014 to 2016, the most appropriate strategy is product development strategy Product diversification will bring more benefits to consumers such as preferences, tastes, hygiene and health safety that will, in turn, ensure the growth of revenue and profit For this stage, Trang An has sufficient financial conditions and brand reputation to attract its favorable suppliers and distributors On the other hand, with today’s global economic integration trend, Trang An will go beyond the domestic market and gradually exploit the regional and international markets The company’s target is to achieve the revenue annual growth rate of 25% until 2016 Strategy implementation and control 4.1 Strategy implementation solutions With the analysis of the company’s operational aspects and environment, and the strategic plan for the development of Trang An Joint Stock Company to 2016, we strongly suggest some following solutions to sucessfully implement the selected strategies In long-term and in general, the company’s strategies will not change much according to the plan However, the company’s focus orientation in 2012 is to strengthen the product advertising campaigns in key markets to stabilize the number of loyal customers and search for potential customers In parallel with the market expansion from 2013 to 2014, it is necessary to invest in upgrading modern equipment of technology, invest in human resources comprehensively from the stage of operating machinery and technology to the next stage of identifying customers’ psychology, selling skills and customer care in order to meet the domestic customers’ needs in the continuously developing digital society In the period of 2014-2016, with stable economic potential, solid market share, the company will begin to develop a range of products with diverse types, attractive forms and competitive product quality in local and regional markets 4.1.1 Marketing solutions The company should develop maketing strategy for each product line and brand effectively, avoid too many names for the confectionery products if their components and tastes are not much different Otherwise, consumers will be "confused" by numerous names; consequently, they not remember and are not impressed by any brand at all Another solution is to open branches in key markets to distribute their products in order to reduce the disadvantageous pressure from distributors and help the company rapidly capture market information The company should have plans to participate in national and overseas fairs and exhibitions to find more distributors and promto the company’s brand Additionally, the company should increase the investment in online sales This is a form of distribution that has become increasingly popular in the world as it can save time and costs Another solution is to sign longterm contracts with major and renowned distributors and customers; at the same time apply supportive policies such as: credit, reward in order to minimize the cases that distributors find other suppliers Because, in today’s fiercely competitive market; the risk of losing distributors for competitors is very high 4.1.2 Financial solutions In business activities, the main purpose of enterprises in general and Trang An Joint Stock Company in particular is to ensure profitability and sustainable development To achieve this main goal, it depends heavily on many factors including production cost saving factor To ensure cost-effective production, the company should take the following solutions: Firstly: it should promote the forecasts of production output and the consumption of products to reduce the cost of product storage and preservation Secondly: It needs to calculate the standard of using materials for the manufacturing process and have specific plans to avoid wastes It should choose reputable suppliers with competitive prices and establish good diplomatic relations with them to enjoy preferential treatment from suppliers Thirdly: the company should consider reasonable mobilization and outsourcing to avoid dependence on outside partners The time limit for payment of Trang An is appreciated to be fairly good compared to other companies in the industry, On the one side, it "attracts" providers; on the other hand, it also creates unreasonable costs to Trang An as the company has to maintain large mobile assets Therefore, the company needs to review the payment time limit for each group of suppliers to reduce bank borrowing costs The company should assign fixed expenditure for each department, at first the raw materials purchasing department The company should have a reward policy when they use lower costs than expected in order to stimulate departments to find suppliers with competitive prices This means ensuring the economic production costs For main distributors, the company should have credit support policies such as reasonable discounts depending on their payment period In contrast, when distributors have financial difficulty, the company may extend the payment time limit 4.1.3 Personnel solutions It is important to improve the human resource qualifications as at the present, the percentage of employees with high qualifications is low compared to the company’s total number of employees The company can send employees to attend trainning programs or hire new qualified employees from outside High priority should be put in recruiting highly qualified personnel for the RD, human resource management, maketing, and import and export business departments The company should apply appropriate compensation and reward policies in order to retain the company’s capable employees as well as to attract good employees from outside Only by this, the company can meet the needs of human resources for the company's development Another solution is to associate the employees’ income with their work results, reward employees that have good performance, especially for business and mamketing departments in order to stimulate their maximum efforts 4.1.4 Production solutions The company needs production plans to exploit full capacity of the machineries, quickly depreciated value of current machineries and equipments and reinvest in advanced technologies It also needs to pay attention to reducing production costs by keeping rate of loss at the lowest level, and by purging unnecessary and non value-generating processes It needs to encourage engineers to research measures to improve labor productivity, to replace of imported machinery and equipment to save even more spending 4.1.5 Technological solutions The company needs to invest more in additional staffs and financial resources for research and development department It should apply a fair compensation policy based on business results of the research products in order to stimulate them to create value added products, creating competitive advantages It must encourage employees to participate in public technology fairs and exhibitions to seek new technologies, modern machines to launch new product lines to meet increasing demand from consumers 4.2 Recommendations 4.2.1 To the Government - It is recommended that Government should organize national or overseas food exhibitions so that it will be easier for the enterprises in the food industry to access to the domestic market and especially the export markets - The government should find solutions to cope with counterfeit goods, imitation goods, and other forms of tax evasion - The Government should apply simple loan policies and procedures to encourage preferential interest loans so that enterprises can have opportunities to invest in facilities and market expansion - The Government should reduce the gap in living standards between urban and rural areas and improve the living standards of rural people Only when rural people's living standards are improved, these people accounted for 75% of the population will create a huge and stable market, ensuring the sustainable development of the food industry 4.2.2 To the industry The association of confectionery manufacturers should be established to support each other to develop and compete with rivals from other countries in the region and in the world Annually, this association should organize conferences and seminars for the enteprises in the industry to express their opinions, enhance the cooperation, and implement the industry’s general development strategy CONCLUSIONS In production and business activities of each enterprise, developing and selecting the most appropriate busines strategy is extremely significant because it plays a very important role in ensuring a company’s survival and being the basis for formulating and implementing plans for the comprehensive development of the company Although there has been extensive experience in planning and selecting business strategy as well as product strategy; in our country, for companies in gerneral and Trang An Joint Stock Company in particular, this is a quite new problem that needs to be clarified in terms of both theory and practice Based on the general theory of the strategic management subject, combined with the analysis of external environment and internal environment to identify the opportunities, threats, strengths and weaknesses of the company, the group of authors have developed business strategies for Trang An Confectionery Joint Stock Company in the period of 2011 2016 and recommended some practical implementation solutions The solutions presented in this research only address the most basic aspects and some action solutions that the company should follow to successfully implement the most feasible strategic plan Throughout the period of doing research in the company and conducting practical research with the title of: Developing business strategies for Trang An Joint Stock Company in the period of 2011-2016, we have chosen the most accurate and appropriate strategic plan suitable to the company's current position With the desire to combine the scientific basis of strategy development with the efforts of all staff members in the company, we hope that in the up-coming time, Trang An Joint Stock Company will affirm its firm position and achieve great success in the national and overseas markets Due to some limitations in the research time and analysis, it is unavoidable that the project may contain some shortcomings We look forwards to receiving comments from the program and the leader team of Trang An Joint Stock Company REFERENCES I BIBLIOGRAPHIES Fred R David - “Strategic Management” - Fracis Marion University Florence, South Carolina.2011 Ass Prof Ph.D Le Van Tam - “Strategic Management Textbook” - National Economics University - Statistics Publishing House - Hanoi, 2005 Prof Ph.D Vu Thi Ngoc Phung - “Business Strategy Textbook” - National Economics University WEBSITES II Vinabico Joint Stock Company http://www.vinabico.com.vn/ Hai Chau Confectionery Company http://www.haichau.com.vn/ Bien Hoa Confectionery Joint Stock Company http://bibica.com.vn Kinh Do Joint Stock Company www.kinhdofood.com The Ministry of Planning and Investment: Growth rate of the confectionery industry http://www.mpi.gov.vn/ttkt-xh.aspx?Lang=4&mabai=1415 The Ministry of Finance: 10 http://www.mof.gov.vn/Default.aspx?tabid=612&ItemID=38660 11 Development orientation of the country’s processing industry in the period of 2000 - 2020: http://vst.vista.gov.vn/home/item_view? objectPath=home/database/an_pham_dien_tu/nong_thon_doi_moi/200 5/2005_00024/MItem.2005-06 12 Ministry of Science and Technology : http://www.most.gov.vn/ 13 Financial Report - Trang An Joint Stock Company - period 2008 - 2010 ... 2011-2016 Group: 04 Member: Nguyen Phuong Nam Tran Quynh Chi Phan Dieu Thuy Dinh Ke Duc Class: GaMBA X0510 Hanoi, November 2011 Table of Contents Table of Contents LIST OF ABBREVIATIONS... research and all the information and data used are true Hanoi, Novemvber 2011 Group 04 - Class GaMBA X0510 INTRODUCTION In the era of industrialization and modernization, and the integration trend... companies in the field This indicator of Bibica is 28.98%, of Hai Ha is 38.89% and of Northern Kinh Do is 62.66% The rate of investment in long term assets increases from 50.81% by the end of