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CAPSTONE PROJECT REPORT “BUILDING AND SELECTING BUSINESS CORPORATION STRATEGY FOR SON HA INTERNATIONAL JOINT STOCKS COMPANY TILL 2020” Mr NHU VAN HOAN Mrs DINH THI THUY Mr NGUYEN DUC DUONG Mr PHAN THANH NGỌC Mr VƯƠNG QUOC THANG Class: X0610 HA NOI, 2011 TABLE OF CONTENTS LIST OF ABBREVIATED WORDS LIST OF TABLES – FIGURES INTRODUCTION TABLE 1.1 SWOT MATRIX MODEL ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.1: PEST ANALYSIS ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.1 THE VIETNAMESE ECONOMY IN KEY FIGURES ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.3/ M PORTER’S 5-FORCE COMPETITIVE MODEL ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.4/ EVALUATION OF OPPORTUNITIES FOR SON HA ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.5/ EVALUATING IMPACT OF THREATS TO SON HA ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.6/ SUMMING UP OPPORTUNITIES AND THREATS FOR SON HA COMPANY ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.7/ BALANCE SHEET OF SON HA (2007 – 2010) ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.8/ SUMMING UP STRENGTHS AND WEAKNESSES OF SON HA ERROR: REFERENCE SOURCE NOT FOUND FIGURE 3.1/ OVERALL SWOT MATRIX FOR SON HA COMPANY: ERROR: REFERENCE SOURCE NOT FOUND 2 FIGURE 3.2/ GREAT MODEL FOR CHOOSING THE OPTIMUM SSTRATEGY FOR SON HA ERROR: REFERENCE SOURCE NOT FOUND .2 INTRODUCTION CHAPTER 1: THEORETICAL BACKGROUND ON STRATEGIC MANAGEMENT GENERAL BASES OF ARGUMENT ABOUT BUSINESS STRATEGY FORMULATION .4 TABLE 1.1 SWOT MATRIX MODEL 27 CHAPTER 2: CURRENT SITUATION OF BUSINESS ENVIRONMENT OF SONHA INTERNATIONAL JOINT STOCKS COMPANY 34 FIGURE 2.1 THE VIETNAMESE ECONOMY IN KEY FIGURES 46 FIGURE 2.4/ EVALUATION OF OPPORTUNITIES FOR SON HA 53 FIGURE 2.5/ EVALUATING IMPACT OF THREATS TO SON HA 56 FIGURE 2.6/ SUMMING UP OPPORTUNITIES AND THREATS FOR SON HA COMPANY .58 FIGURE 2.7/ BALANCE SHEET OF SON HA (2007 – 2010) 59 FIGURE 2.8/ SUMMING UP STRENGTHS AND WEAKNESSES OF SON HA68 CHAPTER 3: 71 BUSINESS CORPORATE STRATEGY OF SONHA INTERNATIONAL JOINT STOCKS COMPANY TILL 2020 AND SOLUTIONS FOR IMPLEMENTATION 71 TABLE 1.1 SWOT MATRIX MODEL 73 FIGURE 3.1/ OVERALL SWOT MATRIX FOR SON HA COMPANY: 74 FIGURE 3.2/ QSPM MODEL FOR CHOOSING THE OPTIMUM SSTRATEGY FOR SON HA 80 CRITERIA 82 WEIGHT 82 ST 82 ST 82 ST 82 ST 82 ST 82 SCORE 82 ACCUMULATION 82 SCORE 82 ACCUMULATION 82 SCORE 82 ACCUMULATION 82 SCORE 82 ACCUMULATION 82 SCORE 82 ACCUMULATION 82 G 82 0.25 82 8.00 82 2.00 82 9.00 82 2.25 82 8.00 82 2.00 82 8.00 82 2.00 82 8.00 82 2.00 82 R 82 0.15 82 5.00 82 0.75 82 7.00 82 1.05 82 8.00 82 1.20 82 6.00 82 0.90 82 6.00 82 0.90 82 E 82 0.15 82 7.00 82 1.05 82 8.00 82 1.20 82 7.00 82 1.05 82 6.00 82 0.90 82 5.00 82 0.75 82 A 82 0.25 82 7.00 82 1.75 82 8.00 82 2.00 82 8.00 82 2.00 82 7.00 82 1.75 82 6.00 82 1.50 82 T 82 0.20 82 7.00 82 1.40 82 8.00 82 1.60 82 8.00 82 1.60 82 6.00 82 1.20 82 5.00 82 1.00 82 TOTAL 82 1.00 82 6.95 82 8.10 82 7.85 82 6.75 82 6.15 82 LIST OF ABBREVIATED WORDS Son Ha: Son Ha International Corporation The Company: Son Ha International Corporation GREAT: Gains – Risks – Expenses – Achievability – Timing PEST : Politics, Economy, Society, Technology SWOT: Strength, Weakness, Opportunity, Threat GDP: Gross Domestic Products LIST OF TABLES – FIGURES TABLE 1.1 SWOT MATRIX MODEL .ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.1: PEST ANALYSIS ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.1 THE VIETNAMESE ECONOMY IN KEY FIGURES ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.3/ M PORTER’S 5-FORCE COMPETITIVE MODEL ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.4/ EVALUATION OF OPPORTUNITIES FOR SON HA .ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.5/ EVALUATING IMPACT OF THREATS TO SON HA .ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.6/ SUMMING UP OPPORTUNITIES AND THREATS FOR SON HA COMPANY ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.7/ BALANCE SHEET OF SON HA (2007 – 2010) ERROR: REFERENCE SOURCE NOT FOUND FIGURE 2.8/ SUMMING UP STRENGTHS AND WEAKNESSES OF SON HA ERROR: REFERENCE SOURCE NOT FOUND FIGURE 3.1/ OVERALL SWOT MATRIX FOR SON HA COMPANY: ERROR: REFERENCE SOURCE NOT FOUND FIGURE 3.2/ GREAT MODEL FOR CHOOSING THE OPTIMUM SSTRATEGY FOR SON HA ERROR: REFERENCE SOURCE NOT FOUND To develop and focus on vital customers, the Compay need to have a private policies for these customers with more favorable condition Working with local community about environment pollution problems, having a specific plan to help and support enterprises, which are running business on the area, solving waste treatments in the first period Concentrating in big cities, industrial zones, trade villages where have high population density and large amount of waste Develop and expand market to remote or smaller market, creating favorable competitive pioneer  Strategy 4: Strategy for brand building and development Realizing the message: “for your better life” by production and business results, by product quality, by customer service, by continuously improving technical capability to meet with all needs of customers This message works as an affirmation to position Son Ha in the field of stainless steel sink This has been going with Son Ha and become the symbol of success To building brand, the Company also use some tools as below: - Usually have advertising or promotional campaigns - Attending social activities, especially the company can focus on problem which is in people’s concern such as pollution or natural energy Cooperating with government or local authorities to have campaign improving communities’ awareness of environment  Strategy 5: Strategy for differentiation in customer service Implementing post-investment management with Son Ha’s own style, creating favorable conditions for customers to use product manufactured by Son Ha 77 To use this strategy, Son need to pay attention to below issues:  Usually training its staffs about communication with customers such as skills of answering telephone, skills of solving problems, skills of taking care customers, etc  Usually improving the Company’s abilily and knowledge Encouraging its employees attending training course or higher study Ensure to contact regularly with customers   Strategy 6: Strategy for financial capability development Finance play an very importand role for any companies’ operation, it is usually considered “blood” to feed enterprise’s body In order to develop financial capability, Son Ha can attract capital from some resources:  Attractive capital resource through stock market Because the Company has been listed on stock market, so with a good status and feasible business plan, the company can sell its shares through new stock issuing plan  Cooperating with other partner is also a good way The organization can appeal other partner to attending its project It help the Company to reduce the stress of lacking finance and best use of others’ managing and operating ability 3.2 Selecting the best strategy for Son Ha: - Based on the standards and principles, we can carry out a comparison for different strategies, then select the best strategy for Son Ha to implement 78 - We can use GREAT QSPM model to choose the optimum business strategy for Son Ha from the basic strategies analyzed above: 79 Figure 3.2/ QSPM model for choosing the Optimum Sstrategy for Son Ha Key factors Opportunities ST1 Weight ST2 ST3 ST4 ST5 ST6 AS Total AS AS Total AS AS Total AS AS Total AS AS Total AS AS Total AS (%) Stable politic in Vietnam 0.05 0.05 0.05 0.05 0.05 0.15 Gradually completed legal system Recovered and developing economy Development of stock market 0.1 0.05 0.1 0.05 0.05 0.15 11 0.33 0.33 0.33 0.44 0.22 0.44 0.24 0.16 0.08 0.32 0.16 0.32 The integration into the world economy The shifting in structure economy 0.36 0.27 0.36 0.27 0.27 0.27 0.24 0.16 0.24 0.16 0.16 0.08 Higher average income 11 0.44 0.44 0.44 0.44 0.44 0.44 Conflict between law and under-law decision 0.07 0.07 0.07 0.07 0.07 0.21 High price of fuel and energy 10 0.1 0.3 0.10 0.1 0.1 0.2 Harder competition 12 0.36 0.48 0.48 0.48 0.48 0.36 0.16 0.16 0.08 0.08 0.08 0.32 0.18 0.18 0.12 0.12 0.12 0.24 Threats The trend of increasing exchange rate Big requirement of investment Total weighted score 100% Internal strengths 80 Professor managing ability 0.1 0.1 0.05 0.05 0.15 0.05 Well implemented production 0.1 0.05 0.05 0.05 0.1 0.1 High product quality 0.27 0.18 0.18 0.36 0.27 0.18 Modern technology 0.32 0.24 0.08 0.24 0.32 0.16 Good promotion activities 0.27 0.18 0.27 0.36 0.36 0.18 Large distribution network 11 0.33 0.33 0.44 0.33 0.44 0.22 High reputation 0.27 0.18 0.18 0.36 0.18 0.36 Strong potential finance 0.32 0.32 0.24 0.24 0.16 0.32 0.16 0.32 0.32 0.24 0.08 0.08 0.05 0.05 0.05 0.1 0.2 0.1 0.05 0.05 0.05 0.05 0.2 0.1 10 0.2 0.2 0.4 0.1 0.2 0.2 0.24 0.24 0.24 0.32 0.08 0.24 Internal weaknesses Higher product price Young staff, lack of experience Low rate of undergraduate and post graduate rat Not competive discount policy Limited access to international market Total weighted score 100 5.31 5.09 81 5.38 4.94 5.47 Crite ri a Wei ST ST ST ST ST g Scor Acc Scor Acc Scor Acc Scor Acc Scor h e u e u e u e u e t m m m m Acc u m u u u u u l l l l l a a a a a t t t t t i i i i i o o o o o n n n n n G 0.25 8.00 2.00 9.00 2.25 8.00 2.00 8.00 2.00 8.00 2.00 R 0.15 5.00 0.75 7.00 1.05 8.00 1.20 6.00 0.90 6.00 0.90 E 0.15 7.00 1.05 8.00 1.20 7.00 1.05 6.00 0.90 5.00 0.75 A 0.25 7.00 1.75 8.00 2.00 8.00 2.00 7.00 1.75 6.00 1.50 T 0.20 7.00 1.40 8.00 1.60 8.00 1.60 6.00 1.20 5.00 1.00 Total 1.00 6.95 8.10 7.85 6.75 6.15 Step 3: Identifying the total score of strategies based on criteria According to the analysis of weight ratio, we can see that the most suitable strategy for Son Ha’s current situation is Strategy and Strategy  Strategy 4: Strategy for brand buiding and development  Strategy 6: Strategy for financial capability development 82 These strategies can be selected as they show the achievability and they are decisive in the success of Son Ha in the future In the current competitive business environment, it is necessary to Son Ha increasing financial capicity Because it is having a lot of project need to deplay, but if there is not enough capital, the process may be temporary delay Moreover, in current situation, attracting investment capital is not easy, therefore the company must have a specific strategy for growing its business operation Besise, it is vital for Son Ha to continue to build and develop its brand Brand always play an important role for any company’s development In case Son want to appeal investment, it would be easier for them if they have a good reputation in the market This is an important factor to help Son Ha keep the stable growth from now to 2020 and afterwards The analysis of strengths as well as outstanding problems of Son Ha as mentioned above is to bring into full play the strong points, to take the opportunities, to overcome weaknesses so as to work out the direction, measures to implement the selected optimum strategy and improve the business operation during the period of 2011-2020 3.3 Solutions to strategy implementation 3.3.1 Solution to human resource development - Human resource can be allocated as follows: senior management team (Board) in charge of professional team (personel Department) and executive staff (workers, employees) Team of senior leader of the business affects strategy decision and the ability to trategy Therefore, senior leader need a clear policy relating to the Company’s 83 operation, medium and long sighted limits on certain business areas to achieve competive advantage in the world and sustainable development For workers, there should be the learning expercience and disseminate new knowledge on technologies and techniques in place should be held regularly as this the best form to improve the professional qualifications of the staff and it creates the conditions for skilled workers commonly experce for the new workers and create coherence between them - In the long-term, Son Ha should have developed recruitment policies that provide open recruitment, matching of skills and interests to the jobs, promotion and training policies, etc New employees are provided with orientation and integration support as well as capability development and leadership trainings Outstanding staff are put into an intensive management training program to acquire necessary management and leadership skills for future promotion - Find candidates through the recruitment channels such as advertising on mass media (newspaper, radio, internet ) or through the company provided professional human resource (headhunter companies) to recruite and attract talent by having a reasonable wage policy 3.3.2 Solution to Marketing plan - For the marketing plan, the campany set up a Marketing and PR department for implementation of all marketing and PR activities of the Company - Advertising: Creating strong brand impression can also affect the direct customer of the company The advetising media should apply: internet, newspapers, brochure, television Advertising content to concise, more impressive is long lines, many questions and less words 84 - Promotion: the form of promtion such as discounts, commission, gifts, discounts customer can be formed if a regualtion of the Company to creat mor credibility with customers 3.3.3 Improve the efficciency of the management information systems Currently, the company has applied information technology through the introduction of the Company on the web, finding infomation online however, such activities are not enought in the conditions of competition increasingly fierce as today To ensure business operations run well in the world constantly changes, the company should build themselves a system information such as information on business environment, information distribution system, prices, business partners To get this information system, the Company needs a serious investment for more complete information and quality Some orientation can be applied: - Make the most of information source in the internet, newspapers, other departments, branches however, for the internet, information resource needs carefully analysis to select the right information - The company has equipped the internal computer network between the parts department and Board of Directors and has contributed very effectively to the information processing activities daily In the coming time, the company continues to develop towards the application of new software on the management and communication 3.3.4 Improve the enterprise culture The company needs to a culture of good business with following: - Set a direction and strategic vision for the company This help in making the company decide to focus its resource on where to gain maximum profit Not only map out a strategic plan that lead the company’ exposure to exchange with 85 their employees and change their minds in order to achieve new development, thereby affecting the way you work of them - Develop a clear evaluation of the position and operation performance of the company: bring the strategic plan into specific jobs in each department and the mass production directly Allow the free discussion of the management of their desired goals within the specific time limit, then the implementation of new strategic plans realistic and feasible - To implement the objectives: manager suggest staff to set goals and have regular discussion with them to discuss and progress in works and achievments - Implement reward on the basis of equality: work efficiently associated with reward including physical and spiritual as the recognization of individual achievment 3.3.5 Improve financial management capacity Finance and Accounting of the Company must cooperate with other departments to establish the financial plan on a monthly, quarterly, annual and regular review the implementation of that plan to raise capital base in a timely manner Accounting systems and financials companies always evaluate the finincial indicators in each period to determine the business results to adjust timely finacial commercial loans, fixed assets 86 CONCLUSION AND PROPOSAL CONCLUSION To be successful in business, the task for enterprises in general and construction enterprises in particular is not only to set forth the business strategic target but also to analyze, investigate favorable factors that the strategies bring about On the one hand, it is necessary to find out opportunities, on the other hand there is the necessity to 87 discover threats to the survival of enterprises to timely cope with them, ensuring that the enterprise must survive and steadily develop, strengthening and expanding marketing share This project report has clearly point out the objective necessity and the urgency of establishing business strategy for Son Ha International Joint Stock Company This strategy development is considered a practical need to solve the problems that Son Ha is facing Contributions of the project report: - The project report has clarified the nature and the role of corporation strategy, especially when our country is on the way of renovation and development - The report has proposed systematically and specifically the basic issues to complete the corporation strategy of Son Ha, it is the pre-requisite for Son Ha to affirm its position and brand in the trend of integration Our group wishes to make certain contribution to the development of Son Ha in terms of both theory and practice However, the research was done in a narrow aspect and within a limited time range, although the group wanted to research from many aspects, we can only reach basic ideas Therefore, this report will surely have some short-comings or lack of adequate and deep analysis over the issues that were raised Therefore, the group wishes to receive contributing comments from the Council Board and all students of International Master of Business Administration, so that our project report can be more complete Our group would like to express our thanks to Lecturers, Professors and staff of ETC Center for Technology for creating all favorable conditions for us to be in touch with the most advanced knowledge of business management in the world, at the same 88 time to complete well the program for Master of Business Administration organized by the Center Hanoi, April 2012 89 Bổ sung phần kết luận 90 REFERENCE Strategic Management - Griggs University Son Ha International Corp (SHI) Anual Report, 2010, 2011 Chiến lược phát triển Kinh tế xã hội 2010-2020, MPI Vu Lien Son, Vietnam Economic environment and Financial Risk Vietnam Review – 2011, Country Watch Drucker, P.F “The Practice of Management” New York: Harper (1954) Porter, Michael “Competitive Strategy: Techniques for Analyzing Industries and Competitors” New York: Free Press (1985) Website, www.CafeF.vn Website, www.sonha.com.vn 10 Website, www.vneconomic.vn 11 Website of Ministry of Planning and Investment, www.mpi.gov.vn 91