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CAPSTONE PROJECT REPORT FORMULATING BUSINESS STRATEGY FOR SONG DA JOINT STOCK COMPANY IN THE PERIOD 2011 - 2015 Le Ngoc Minh Nguyen Thi Mai Huong Hoang Viet Thanh Nguyen Thi Hien Nguyen Thi Hoa Class GAMBA01 X03 HANOI 2010 TABLE OF CONTENTS TABLE OF CONTENTS ii LIST OF DIAGRAM iii PREFACE General context and the essence of research topic .6 Objectives, Scopes and Studying Method of the research Structure of the Capstone Project Report .8 CHAPTER 1: BASIC THEORIES OF THE CAPSTONE PROJECT REPORT 1.1 Definition and classification of business strategy 1.1.1 Definition of business strategy 1.1.2 Role of business strategy .3 1.1.3 Basic features of business strategy 1.2 Process of business strategy formulation .3 1.2.1 Mission or Goals of the company .3 1.2.2 Internal and External Environment Analysis .3 1.2.2.1.External Environment Factor Analysis 1.2.2.2.Internal environment analysis 1.2.3 Developing matrix to select business strategies for the company 1.2.3.1External Factor Valuation Matrix 1.2.3.2 Internal Factor Evaluation Matrix 1.2.3.3 Competitive Image Matrix 19 1.2.3.4 SWOT Matrix .19 1.2.4 Business Strategy Selection 19 1.2.5 Organization and Implementation .3 1.2.6 Evaluating the effectiveness of strategy Conclusion of Chapter I .3 CHAPTER II: ANALYSIS OF BUSINESS REALTY OF SONG DA JSC 2.1 General introduction: .3 2.1.1 The formation and development of Song Da 5: 2.1.2 Organizational structure of the company 2.1.3 Main business scopes 2.1.4 Introducing products of the company 29 2.2 Business results of Song Da JSC from 2007 to Sep 2010 2.3 Analyzing the business reality of Song Da 2.3.1 External environment analysis 2.3.1.1 Macro environment analysis 2.3.1.2 Sector analysis and competition 2.3.2 Internal environment analysis iiii77 ii 2.3.2.1 Resources .3 2.3.2.2 Financial situation 2.3.2.3 Strengths .3 2.3.2.4 Weaknesses 2.3.2.5 Competitiveness in market 2.3.3 Strategy selection matrixes 2.3.3.1 Internal – external factor evaluation matrix 2.3.3.2 BCG matrix 2.3.3.3 SWOT matrix Conclusion of Chapter II CHAPTER III: FORMULATING BUSINESS STRATEGIES AND SOLUTIONS TO IMPLEMENT BUSINESS STRATEGYIN SONG DA JSC IN THE PERIOD 20112015 3.1 Goals of Song Da to 2015 .3 3.1.1 Foundations for setting up goals 3.1.2 Vision, mission and core value 59 3.1.3 Goals 59 3.2 Proposing business strategy in the period 2011 – 2015 3.2.1 Business strategy selection 3.2.2 Business strategy of Song Da in period of 2011-2015 3.2.2.1 Business strategy in company grade 3.2.2.2 Department strategy .3 3.3 Solutions to business strategy in the period 2011-2015 3.3.1 Solution groups for production management 3.3.2 Solution group for marketing management 3.3.3 Solution group for human resources management 3.3.4 Solution group for financial management 3.4 Recommendations to Song Da Group and State Management Organs 3.4.1 Recommendations to Song Da group: 3.4.2 Recommendations to Government and State management organs: Conclusion for Chapter III .74 CONCLUSION 75 The contribution of the topic 75 Limitations of the Capstone Project Report and following research orientation 76 References 77 iiiiii77 iii LIST OF DIAGRAM Diagram 1.1: External factor matrix 18 Diagram 1.2: Competitive image matrix 19 Diagram 1.3: SWOT matrix 19 Diagram 1.4 : Strategy selection 21 Diagram 2.1: Business results from 2007 to Sep 2009 30 Diagram 2.2: Comparison of competitors 38 Diagram 2.3: List of some vendors supplying major material for Song Da 39 Diagram 2.4: External Factor Evaluation Matrix of Song Da (EFE) 47 Diagram 2.5: Internal Factor Evaluation Matrix of Song Da (IFE) 49 Diagram 3.1: SWOT Matrix of Song Da 62 Diagram 3.2: Comparison table of implementable strategies 64 Diagram 3.3: GREAT model to select strategy 65 Diagram 3.4: Total cost to manufacture RCC concrete in reality 68 iviv77 iv GRATITUDE To finish the Global Advanced Master of Business Administration Program and conduct this Capstone Project Report, we have received instruction and contribution of many people Furthermore, we will not gain achievement without their valuable support First of all, we thank all teachers from Hanoi National University and Griggs University (USA) for their enthusiasm and dedication in teaching; as a result, we have achieved useful knowledge for our current work We also express our deep gratitude to all members of Global Advanced Program; they are Directorate, Training Bureau, Class Management Bureau and so on The program really creates the most favorable conditions for all of us to complete given tasks in current office as well as to ensure the studying quality Last but not least, we are thankful to relatives in our families More than anything else, their encouragement is being a great source of inspiration to every single group member to complete the Report in collaboration without any difficulties and barriers We complete the Capstone Project Report as good as possible with our knowledge and competences Nevertheless, we cannot avoid mistakes and we hope to receive valuable comments from all teachers and students Members of Group vv77 v PREFACE General context and the essence of research topic The world is gradually overcoming the economic crisis which is considered the worst one in many past decades During 15 years of integration, construction industry has had many progresses and significantly contributed to the national economy growth rate as well as created an important position and strength to enter the modernization and industrialization of the country Furthermore, this is the phase having many noticeable turning points in quality and quantity in the development of construction industry Corporations and big companies have been established to foster and invest in the depth with the aims of changing technology, increasing production capacity and competitive capacity of products in line as well as making foundation for the regional and international economy integration in following times Additionally, Vietnamese economy ceaselessly integrates, develops and becomes the central of dynamic economy growth in South East Asia As a result, construction industry is also facing with huge challenges and potential since this industry plays an important role in national target program in period from 2010 to 2015 More than 20 years of establishment and development, Song Da Joint Stock Company has strongly developed in organizational scale, functional scale, sector structure and total business value Currently, Song Da Joint Stock Company has been taking part in many major projects of the country such as hydroelectric power plants, bridges and high-ways, engineering and manufacturing the most advanced construction materials Therefore, setting up goals and business strategies namely the long-term development trend has the significant contribution in the development orientation of the company in particular and the construction industry in general As a result, our group chooses the topic in line with the theme “Formulating business strategy for Song Da Joint Stock Company from 2011 to 2015” which is participating in implementation of key hydroelectric power plants in Vietnam as Hoa Binh, Yaly, Tuyen Quang and Son La 6677 Objectives, Scopes and Studying Method of the research Objectives: - Setting up methodogical foundation of business strategy formulation for Song Da Joint Stock Company - Analyzing and evaluating micro, macro and internal environment of the company in order to realize opportunities and threats from business environment; strengths weaknesses affecting sustainable development of the company - Setting up business strategies for the company in the period 2011-2015 and proposing an implementation plan, whereby, the company will achieve sustainable development in the competitive and integrated environment From our point of view, this is an application of management theories provided in Global Advanced Master of Business Administration Program to practical business problems related to the real-world responsibilities Scopes: - -Research Subject: Song Da Joint Stock Company Nevertheless, in order to carry out the overall analysis and clarification of the research contents, the Report widens the Research Subject to competitors in construction industry - Research Scopes: All issues relating to business strategy of Song Da Joint Stock Company in field of concrete manufacturing - The Research refers to statistics data from 2007 to 2009 and factors affecting business operations of the company until 2015 to analyze and evaluate business reality Studying Method: Capstone Project Report focuses on researching, analyzing information and secondary data collected through public communication and internal data resources of Song Da in the most basic contents The research and development of strategy matrixes are conducted by expertise method, it means that we consult ideas of experts who have deep knowledge about CVC and RCC products and market context in Vietnam in order to specify criterion and to evaluate those criterion The advantage of this method is simply and easily to 7777 execute However, this method also has a limitation due to low rate of accuracy compared with field survey as well as it is the subjective perspectives of experts Despite that, this method also meets necessary requirements to formulate a positive business strategy for a company Structure of the Capstone Project Report Main content of the Capstone Project Report consists of chapters excluding the preface, conclusion and references attached: Chapter 1: Basic theories of strategy and business strategy formulation Chapter 2: Comprehensive analysis of current business reality of Song Da Chapter 3: Formulating business strategies and practical solutions to business strategy implementation in Song Da in the period of 2011-2015 8877 CHAPTER 1: BASIC THEORIES OF THE CAPSTONE PROJECT REPORT Definition and classification of business strategy Definition of business strategy The definition of strategy has presented for quite long time ago This is a science of planning and controlling operations Nevertheless, this definition used to be applied in military area in the past The basic theory of strategy is the ones who can defeat a rival that was even stronger in qualitative aspect if they can lead or force rival to their advantage battlefield to deploy the strongest power When the good exchanging behavior has been more and more developed in society, the strategy is also applied in business with the general model as followings : Diagram 1.1: Business strategy Strengths Discovering Applying, Maintaini ng Strategy Inside Overcoming Opportu nities Outside Preventing Weaknesse s Threats Scholars have had many opinions or outlooks of business strategy from many different points of views According to Michael Porter (1996), a famous strategy manager of Harvard University, business strategy is considered as the art to compete in market and the development of company since: “Business strategy is the art of building up stably competitive advantages to defend” In the aspect of management category, business strategy is a form of planning; G.Arlleret said that “Strategy is to seek ways and find out means to reach the expected goals by policies” At least, there are three identified business strategies regarding as corporate level aiming at business goals and overall scale of an organization; business-unit level is 9977 being commitments and actions to support an industry achieving competitive advantages by exploiting their core resources to specific products and marketplace; and functional strategies assists two above strategies to take effect through components of resources, processes, manpower and essential skills A quite obvious definition of business strategy stated in Master of Business Administration curriculum of Griggs University is : “An intergrated and cordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product market.” 1.1.2 Role of business strategy Business strategy helps companies to realize the objectives and orientation as a guideline for every business operation and to catch up with and make use of opportunities as well as to formulate proactive solutions to overcome risks and threats in competitive market Business strategy not only contributes to the using efficiency of resources, but also promotes competitive positions and ensures sustainable development of the company Besides, business strategy creates a solid foundation for developing polices and making appropriate decisions adapted to fluctuation of marketplace 1.1.3 Basic features of business strategy Business strategy determines clearly major goals and business orientation of the company in a certain period The orientation of strategy ensures the continuous and solid development in fluctuated business environment On the other hands, business strategy also ensures the maximum mobilization and optimal combination between exploiting and using resources of the company at present and in the future, promotes advantages and obtains opportunities to hold competitive advantages With the feature of being Missionbusiness or Goal of Business reflected in continuous process, strategy always has a trend of striving and winning in market Additionally, business strategy will be established in a long term External Environment Analysis (O, T) Internal Environment from 3,Analysis and 10(S, years W) or further 1.2 Process of business strategy formulation Strategy Selection Diagram 1.2: Process of planning business strategy Strategy Implementation 101077 Review and Evaluation of Strategy Implementation 10 Feedback  Human resources management strategy: Is formed from the combination between W2, W5 with T1, T2: This combination lets the company improve the lack of senior human resources as well as promote the streamlining 3.2.1 Business strategy selection By using SWOT analysis and combining internal environment factors (Strengths, weaknesses) and external environment factors (opportunities, threats) of Song Da 5, we introduce possible strategic projects as following: - Market expansion strategy - Production development strategy - Competitive strategy with low cost - Competitive strategy by differentiation - Providing source management strategy - Human resources management strategy Basing on possible strategic projects, our group uses the strategy comparison table to set up GREAT model and select the most optimal project for Song Da in period of 2011-2015: Table 3.2: Possible strategy comparison Criteria Market expansion Gains Penetrate market, increase market share, revenue and earning as well as develop new implementation sectors Risks Cannot penetrate market as having to compete with other Competitive strategies Production Low cost development Increase product Fight against price quality, create pressure from belief and competitors, satisfaction of pressure from customers as well potential as increase the competitors as well competitive as attract customers capacity with about price to others penetrate market Have to overcome barriers of Create a price battle, awareness and decrease revenue changes of a and earnings of the production company procedure Expense High Significant high Low Achievable Remarkably Achievable Achievable 636377 63 Differentiation Satisfy demand and desire of customers Create the difference without imitating Differentiation is difficult to recognize and implement Average, nevertheless, the adjustment is difficult Weakly achievable achievable In continuous time Time Long time In continuous time Long time and waste Table 3.3: GREAT Model for strategy selection Market expansion Strategies Production development Low cost Evalua tion point Conve rsion point Evaluat ion point Conve rsion point Evalua Conv tion ersio point n point Differentiati on Evalu ation point Conv ersio n point Criteria We igh t Gains (G) 0.3 0.9 0.9 0.6 0.6 Risks (R) 0.1 0.3 0.2 0.2 0.2 Expense (E) 0.25 0.5 0.25 0.75 0.5 Achievable A) 0.2 0.6 0.2 0.4 0.2 Time (T) 0.15 0.3 0.45 0.3 0.3 Total 2.6 2.25 1.8 With the evaluation: point for the weakest strategy and for the best strategy according to criteria and weights in GREAT above, the market expansion strategy (leading cost) has the highest point as 2.6, it is the most optimal strategy of Song Da in current context  Foundations to select the market expansion strategy: - Market expansion strategy is the selected option for Song Da at present as following reasons: + Until now, big hydroelectric power plants of Vietnam have been planned and implemented To 2015, Vietnam will complete the development of hydroelectric power basically Besides, this is one of the main tasks of Song Da Therefore, the company has to expand market right now to seek for new and potential works regarding as: thermoelectric, nuclear electric and traffic infrastructure 646477 64 Song Da has created detail action plans with the existing resources and experiences on concrete production when the projects of hydroelectric power contructions will be absolutely completed in near future as followings: * To focus on research and conduct marketing activities to hydroelectric power plants in Laos and Cambodia in 2011 that are relating on concrete production, or especially, on hydroelectric power plants required RCC production like Luangfabang, XECAMAN… as Song Da 5’s having the most up-to-date RCC production line in South East Asia * To conduct R&D activities in 2015 to launch new specific concrete products for at Long Phu 1, Thai Binh… thermo-electric power plant and Ninh Thuan and nuclear power plants and other high way contruction projects that require RCC products + With experienced officers in construction and a large amount of current machines, the company can undertake big construction projects as being EPC general contractor for traffic and thermoelectric projects + The financial situation of the company is relatively stable, revenue and earnings of following year are always higher than the previous one, in 2009 earnings reached the number of 68 billion VND, and in 2010 this number is expected as 75 billion VND, with current plan for 2010, the company entirely can achieve the expected results Especially, when entering securities market, the company can mobilize the capital when they have demand on expanding production and trading operations + It is imperative for the company to expand market to maintain annual and revenue with the number of over 1000 billion VND - Production development strategy requires a big expense and long term as well as faces up with a variety of barriers regarding as organizational machine restructure, working style changes, technological line purchase and training the technical worker staff to be able to access and control technology Currently, Song Da can undertake key and the most difficult projects with experienced officers and modern machines 656577 65 - Central competitive strategy by differentiation is the introduction of some implementation technology with typical difference Currently, Song Da is the concrete production and implementation one with typical technique and machine to implement hydroelectric power engineering’s and customer oriented as Song Da group and Vietnam Electricity group (making up 98% revenue), therefore, the selection of central competitive strategy by differentiation is not suitable and important at present - Competitive strategy by low cost: This strategy ranks the second position and is very important, nevertheless, Song Da is the dependent unit of Song Da group with the number one trade mark in hydroelectric power implementing and more than 20 years of formation and development, the company has established a strong trade mark in concrete implementation and it is not necessary for them to reduce the price of some key products as they are assigned most of hydroelectric power projects The price reduction will significantly affect to revenue and earnings of the company, however, the company also must think about this when the assignment of bidding is gradually eliminated 3.2.2 Business strategy of Song Da in period of 2011-2015 Coming from objectives, market, reality in Song Da and selected strategy matrix mentioned above, the production and trading strategies of Song Da in period of 2011-2015 are demonstrated as following: 3.2.2.1 Business strategy in company grade Song Da has been marking their position and trade mark of concrete production and implementation in market In order to become the leading one in area of concrete production and implementation, the company selects the market expansion strategy to make use of available advantages for expanding production and trading operations, maintaining position and trade mark in market 3.2.2.2 Department strategy Business strategy in company grade is the general one to achieve goals To reach the goals of comprehensively general strategy, the company has to establish department strategies and solutions to successfully implement those strategies As 666677 66 mentioned above, the reason why Song Da select the market expansion strategy as they determine their position in market, understand strengths, weaknesses as well as opportunities and challenges from external environment Market expansion strategy needs having solutions as well as human to undertake the bidding work The key to successfully implement the market expansion strategy is the marketing management 3.3 Solutions to business strategy in the period 2011-2015 3.3.1 Solution groups for production management - Materials supplying management: Because of financial crisis and global economy recession, price of material fluctuates together with the increasing of forex rate This issue not only affects production and trading projects of Song Da but also reduces efficiency of the company as material gains 80% of cost price Furthermore, capital recovery leads to the low rotation of capital, it also affects to the material payment Given solutions is the company can negotiate to purchase material with the cheapest price On the other hands, Song Da should set up the budget plan closely to reality to have a material purchase plan satisfied production requirements The budget plan has to come from setting up consuming plan, after that setting up production plan and suitable material plan - Production management: Competing by low cost means the optimization in production cost since the material norm cannot reduce much, the company only save the damages and mitigate error products by system management Optimization by productivity increasing management is to reduce fix cost per one product This decides the competitiveness and contract wining capacity No Table 3.4: Production and implementation cost per 1m3 concrete Cost/1 product Criteria (VND) Rate (%) Material cost 84.2 500,000 Labor cost 8.4 50 Depreciation cost (2%) 1.7 10 General cost (6%) 5.7 33.6 Sum 100 593,000 Source: Unit price for SD5 concrete production The production and implementation cost per m3 concrete in reality in Song 676777 67 Da shows that the material cost structure (main material and sub material) making up 84% in total production cost Therefore, cost optimizing solutions will focus on material optimizing cost  Reducing material loss rate from 2% to 1% Material cost includes primary material cost (iron, steel) and secondary material cost (soldering iron) According to the rules of the State with respect to material used for steel construction, the loss rate is set at 2% for materials The company reduces the loss rate to 0.8%-1% However, it is necessary to ensure the can save 1% of loss rate - Manufactured products ensure the highest quality as well as minimize errors by following procedures: Abide by procedures of ISO 901-2000: checking product quality and unsuitable control process; prevention process and recovery implementation process  Reducing labor cost from 7% to 5% Organize the suitable production through allocating production ground, machine and line complex allocation place, good preparation of material in order to mitigate the waste in labor cost The retrenchment of labor cost will increase labor productivity and amount of products in a certain period; as a result, fix cost per product will be decreased - Using new technology: The company needs to research new technology solutions basing on available resources to increase labor productivity Over the past years, leaders of the company have focused to solution to decreasing cost and increasing labor productivity If you visit Tuyen Quang and Son La work, you will know that Song Da has had the latest high-tech solution that can make use of available human resources and machinery such as faceplate concrete production solution, copper sheet bending machine, bitum mixing machine and so on Recently, these solutions helps to save billions VND for Song Da JSC 3.3.2 Solution group for marketing management  Changing management awareness of Company Leaders: 686877 68  Positive in finding projects or works sources Low level of marketing knowledge Numerous hydroelectric power constructors -> stability of working sources in short-term  SD5 is a join stock company State owns high percentage of the shares Limited benefit of other shareholders especially of Management Board -> Low sense of responsibility for revenue and profit  Create motivation policies to enhance company development and finding new projects   Trademark expansion and proliferation Market penetration: Song Da implements complex marketing policy (with new advertising propaganda to expand the company; widen and promote the consuming system) to attract potential customers, expand market share as well as attract customers of competitors  Product development: Current products of Song Da have been always improved the best quality by skillfulness of workers and applied modern technology Furthermore, Song Da researches new technique to increase quality and progress with the aim of satisfying demands of customers the best  Diversification: The main products of the company are concrete production and implementation and hydroelectric power plants Basing on available resources, the company diversifies new products namely traffic infrastructure, civil engineering, real estate investment and hydroelectric power projects  The process of deployment and implementation of Marketing policy  Customer care Since the establishment, concrete production is one of the traditional business sectors of Song Da It is considered as an available strength of the company during the operation process With the position of main contractor of investors as traditional customers (Song Da group, EVN, Son La project management board and some other relating offices), Song Da is highly appreciated as the hydro-technical concrete unit reaching quality requirement and progress of project Especially, with the production line for roller compacted concrete in Son La, the company carried 696977 69 out installation of RCC production line in months with 1.000.000m3 This is really a miracle achievement evaluated by foreign consultancy and investors  Product development With current strengths in concrete production, Song Da is promoting and expanding market in the field Apart from focusing on completion of available product quality, creating its prestige in market, Song Da must have stipulate bidding marketing policy for following specific projects: +Hydroelectric power projects in Lao and Cambodia for RCC production (since this product brings the highest revenue for Vietnam and there is a few of projects using above technology) + Traffic projects like Ha Noi – Lao Cai, Ha Noi – Hai Phong, Da Nang – Quang Ngai highway and other planning projects Marketing and bidding progress for the above major projects have to be deployed right now as well as taken into resolution of administrative council in development strategies and creating marketing department to access to those projects 3.3.3 Solution group for human resources management In current market economy, fluctuated trading environment, more and more violent in competition as well requirements and demands of officers have been being the pressure to business  Human resources recruitment and training To ensure stable human resources for the development of company to 2015, Song Da has to always pay attention to recruitment process to select skill and experienced applicants, train to meet the current demands, develop to prepare for strategies in the future Besides, Song Da also needs to have providing human resources to compensate for fluctuation and meet production and trading expansion demand, especially, to increase the quality of human resources  Encouragement policy If recruitment is to select suitable profession, training and development are to prepare essential skills serving for current and future, encouragement policy for laborer will be to maintain the stable human resources meeting production and trading demand 707077 70 Encouragement for laborer is shown in financial and non-financial factors as income distribution, rewarding system and the satisfaction with working environment The average income of Song Da in 2009 was 4,6 million VND, it is not too low in comparison with companies with the same scale and industry but there is still brain drain as the far working condition On the other hands, the income distribution system has not been equal, rewarding and discipline system is not suitable, and as a result, officers will not promote their capacity Therefore, Song Da needs to improve the treatment system for laborer as following:  Improvement of benefit polity: The leading matter of concern of laborer is income, thus, to encourage and promote laborer working, Song Da has to have suitable income distribution system including two aspects: - Income of laborer has to increase gradually over years and ensures the compensation for price increasing of consuming goods and inflation in market On the other hands, income in Song Da has to be higher than the ones with the same scale and in the same industry to avoid the brain drain phenomenon as well as attract talents from competitors - Income distribution regulation has to be set up basing on working efficiency of laborer, title coefficient and responsibility coefficient Furthermore, Song Da also has to ensure the equality to make laborer increase responsibility and promote capacity  Suitable rewarding and discipline system: The system includes suitable rewarding for individuals, collectives having achievements and initiatives Furthermore, Song Da also should have discipline to prevent actions affecting to the company  Working environment: Working environment becomes more and more important and decides to productivity, quality and efficiency of laborer: - Create friendly working environment between leader and employees, department and employees 717177 71 - Allocate material and equipments regarding as: accommodation, machine, table, labor protection as well as create favorable conditions for operation - Allocate the airy, clean, safe and scientific working space to make laborers have convenient operations and increase working efficiency 3.3.4 Solution group for financial management In spite of difficult financial resources, Song Da has set up a safe financial structure with high economic efficiency This is core factor to make Song Da confidentially overcome the most difficult phase of financial crisis and global economy recession, the company also keeps the growth rate over years Nevertheless, the company needs to implement following solutions to increase financial capacity: - Mitigate inventory value: The Company has to predict production demand and fluctuation of material price in market, especially material importing from foreign countries to have suitable inventory plan It not only meets sale process but also avoid big inventory With respect to unqualified inventory without using demand, the company needs to have plan selling or liquidating to decrease inventory - Debt recovery improvement: To recover capital early, the company needs to quick implement the handling, investigation and accounting file as well as debt recovery This needs to be performed immediately by means of establishing a department with function of completing file and recovering capital The company also has specific capital recovery every month, basing on that, they will pay salary for manager board - Capital restructure: Capital loan makes up average rate in total capital of Song Da 5, about 50%, in which the concentrated, long term capital make majority and have tendency to reduce as the company is focusing on paying the loan for the investment of roll compaction concrete technology line Conversely, short term loan capital loan has tendency to increase quickly, therefore, Song Da needs to determine suitable rate of floating capital loan In fact, the problem is not much or less, it is the suitability If Song Da uses the capital loan effectively with quick capital recovery and possibly determining the project of payment, the loan will be the effective financial leverage increasing revenue and earnings Conversely, if the 727277 72 company does not use capital loan effectively with long capital recovery, they will have to burden the interest and be always in pressure - Charter capital increase: Currently, Song Da has listed securities in Hanoi Securities Transaction Department Therefore, issuing more shares to increase charter capital is convenient With current production scale (annual output > 1,000 billion VND), the company has to have about 150 billion VND Charter capital increasing will reduce the capital loan, whereby, they will reduce the payment for interest, increase earnings and mitigate risks in trading Furthermore, charter capital increasing also helps the company have capital to expand production scale, improve technology line matching to long term strategy of the company 3.4 Recommendations to Song Da Group and State Management Organs 3.4.1 Recommendations to Song Da group: - Support the company by legal personality of the group about capacity and finance in marketing big packages with high requirement in capacity and finance Support the company in solving investment and purchase procedure more flexibly and quickly Create open mechanism to make business operated actively and flexibly - Support the guarantee for contract implementation, guarantee for payment in advance and guarantee when Song Da signs implementation contracts with big packages with EVN and other units - Support the company about payment and management mechanism with investors in projects which Song Da group is the EPC General contractor 3.4.2 Recommendations to Government and State management organs: - Promote the development of current energy industry and traffic infrastructure as well as the deployment of projects: thermoelectric, nuclear electric, highway, etc to create market expansion opportunities for the company - Continue introducing supporting solutions in areas of market, capital and tax by means of supporting form, preferential interest, imposing 0% with imported material and lasting exemptions of corporate income tax 737377 73 - Support the units in implementing engineering’s in foreign countries as Lao, Cambodia through embassy The company will implement roll compaction concrete in LUANGFABANG hydroelectric in Lao and some other projects in Cambodia Conclusion of Chapter III Coming from objectives, market situation and reality of Song Da as well as strategy selection matrixes, our group compares possible strategies and uses GREAT model to select the most optimal strategy for Song Da in period of 2011-2015 – Market expansion strategy Furthermore, the group also introduces solution group for production management, marketing management, human resources management and financial management to recover limitations, promote advantages with the success implementation for general strategy of the company The key point in the effective Song Da strategy is the awareness that the success comes from not only the changes in production management, marketing management, human resources management and financial management but also the combination of changes In the context of fluctuated global economy, setting up a long term strategy is the survival factor for the existence and development of Song Da Nevertheless, similar to other strategies, market expansion strategy which our group introduces to Song Da is not invariable Depending on the fluctuation of external environment as well as internal strength, Manager board of Song Da needs to have flexible adjustments in each phase matching to the general development trend of society and ensure the completion of given tasks Changes cause difficulties for the business, our group believes that with glorious tradition, experience together with social responsibilities and laborers, manager board and all employees of Song Da will over come difficulties, implement the business 747477 74 strategy in period of 2011-2015 successfully and become the leading position in concrete production and implementation in Vietnam CONCLUSION The contribution of the topic The research topic not only points out suitably scientific theories but also has significant conntribution to business in setting up business strategy Scientific meaning: in the market economy, business strategy has decisive factor to the success and failure of company Business strategy is particularly important to all companies not only for any specific one If company wants to survives and develops, they should have a good and effective business strategy at first There are many approaches to set up a business strategy for a company The scientific meaning of research topic is that it is the collection of available theories from different sources to set up the most basic business strategy for a company Furthermore, the strategy is easy to understand and apply Reality meaning: Business strategy has survival meaning for companies, in fact, state enterprises (Joint stock one with state capital making up more than 51%) as Song Da has been not paid more attention Therefore, the topic contributes to the importance of setting up business strategy, provides enterprises an accessment to business strategy setting method Furthermore, other mechnic enterprises can apply or learn experiences to set up their own business strategy In the violent competition of market economy, it is difficult and complicated to set up a business strategy successfully There are many approaches to set up a business strategy, however, setting up a right and effective business strategy is not simple 757577 75 This topic points out approaches to set up business strategy procedure matching to reality in Vietnam It is not only applied for Song Da Joint Stock Company but also has real meaning for many other enterprises Basic factors of setting up business strategy include: Determine goals of business; evaluate environment factors affecting to businesses, find out oppotunities and threats to the operations together with evaluate strengths and weaknesses From that, set up strategy selection matrixes and from a perfect business strategy With respect to Song Da 5, this topic is valuable and manager board of the company can plan the business strategy, especially, foster and increase the trade marek by means of improving product quality and sale and after service efficiency to bring high efficiency for the company Limitations of the Capstone Project Report and following research orientation - Research conclusions orginate from reality in Song Da 5, therefore, the applying of these solutions and conclusions to other companies need to have further research - Although the group tries our best to research learned documents, theories, this essay also has limitations as we have to both go to work and participate to lesson With the whole-hearted instructions of lecturers as well as the encouragement of students in Global Advanced Master of Business Administration, we completed this exercise as good as possible We hope and continue researching the topic in further way in theory as well as applying to the operations of Song Da with the contribution to the success and sustainable development of the company in the competitive and integrated environment 767677 76 References: Stratergic Management Textbook by Griggs University USA Presentation ducuments of professors Website www.evn.com.vn Website www.Chinhphu.vn Internal data provided by/from Song Da including audited financial reports, Report on Business Activities in 2007 to Sep 2010, Human Capital Report Website www.Songda5.com.vn Website www.cophieu68.com/category_finance/php Marketing Strategic Plan on website http://tailieu.vn/xem-tai-lieu/chuongiii-hoach-dinh-chien-luoc-marketing.319223.html Other public data via internet 777777 77