Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (166)

GRIGGS UNIVERSITY Business and production strategy construction for PVNC within the GLOBAL ADVANCED MASTER BUSINESS period ofOF 2010 - 2015 ADMINISTRATION PROGRAM CAPSTON PROJECT REPORT BUSINESS STRATEGY CONSTRUCTION FOR NGHE AN PETROVIETNAM CONSTRUCTION JOINT STOCK CORPORATION WITHIN THE PERIOD OF 2010-2015 Prepared by Group: 10 Class: Gamba 01.V0110 Group members: Phan Quốc Hùng Nguyễn Đình Dũng Tạ Quang Cảnh Lê Thị Vân Huyền Vinh 9/2011 Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 ABBREVIATION LIST PREFACE The necessity of the subject Purposes of the study Object and scopes of the study Methods of the study 5 Structure of capston project report: chapters CHAPTER I: THEORITICAL BACKGROUND ON BUSINESS STRATEGY CONSTRUCTION 1.1 Concepts and role of business strategy 1.1.1 Concepts of business strategy 1.1.2 The role of business strategy for PVNC .7 1.2 Business strategy construction process for PVNC 2.1 Define vision, mission and targets of PVNC 2.2 External environmental evaluation for PVNC .8 1.2.3 Internal environmental analysis in PVNC 11 1.2.4 Models of strategic analysis .12 1.2.5 Selection of business strategy 15 CHAPTER II: 18 ANALYSIS OF BUSINESS ENVIRONMENT AND INTERNAL ENVIRONMENT FOR PVNC 18 2.1.2 Situation and Operating results from 2009 to 2011 .27 2.2 ANALYSIS OF PVNC BUSINESS PICTURE 30 2.2.1 Analysis of external environment 31 2.2.2 Analysis of internal environment 34 2.2.3 Matrix for selection of strategy .38 CHAPTER 3: PROPOSAL AND CONCLUSION 45 MISSION UNTIL 2015 45 3.1.1 Strategic mission 45 3.1.2 Specific mission 46 Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 3.2 SOME SOLUTIONS AND PROPOSALS FOR PVNC EXECUTION OF BUSINESS STRATEGY 48 3.2.1 Construction of business strategies 48 3.2.2 Selection of business strategy 51 3.3 IMPLEMENTATION SOLUTIONS .51 3.3.1 Solutions of products and services 51 3.3.2 Development solutions of organizational structure and personnel .53 3.3.3 Solutions of basic investment construction and raising capacity of machine and equipments 53 3.3.4 Solutions of science and technology .54 3.3.5 Capital mobilization and utilization 54 CONCLUSION 55 REFERENCES 55 ABBREVIATION LIST Abbreviated names PVN PVC PVNC UBND BIDV BCG McKinsey - GE SXKD CBCNV DT ĐTDH Explanation PetroVietnam PetroVietnam Construction Joint Stock corporation Nghe An PetroVietnam Construction Corporation Provincial people’s committee Bank for Investment and Development of Viet Nam (Boston Consulting Group) Strategic matrix of MC.KINSEY - GE Production and business Cadres, employees Revenue Long term investment Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 ĐTNH NH DH SWOT TK TNDN DT ROA ROE HSEQ TS TSCĐ TSLĐ PT HTK VCSH TNHH Short term investment Short term Long term Strength (S), Weaknesses (W), Opportunities (O), Threats (T) Inventory Corporate income Revenue Ratio of asset withdrawal Ratio of contributed capital withdrawal Management system of environmental safety and quality Asset Fixed asset Mobile asset Receivables Inventory Owner capital Limited Liability Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 BUSINESS STRATEGY CONSTRUCTING FOR PVNC WITHIN THE PERIOD OF 2010-2015 PREFACE The necessity of the subject On integrating WTO, the competition among domestic and foreign enterprises is more and more violent Existence and development in market mechanism is a big challenge for enterprise; to construct a sustainable developed enterprise then business strategy is a special plan that all enterprises must construct and define before going to operation Most of Vietnamese enterprises were born in a focused planning economy which is promoted to accept the rule in changed and competitive global business environment Enterprises must find out the way to maintain the sustainable existence and development Nghe An PetroVietnam Construction Corporation (PVNC) is one of company with prestige in and out of petroleum sector The corporation has new force and position to occupy regional market With diversified development of business sectors the enterprise has reached annual growth rate in term of output, revenue and annual profit equal to approximate 200% An enterprise has advantage of resources and brand name; but if annually it cannot construct a right business strategy then it will lack of competitiveness, then business effect will be low even leading to bankruptcy Coping with above challenges as well as outstanding growth of PVNC to keep up with development route of enterprises in and out of petroleum sector, PVNC must quickly construct a suitable development strategy From reality of business activities of PVNC, group 10 has decided to select the following topic “business strategy construction of PVNC within the period of 2010 – 2015” Purposes of the study To analyze factors impacting on business activities of PVNC, then construct business strategy within the period of 2010-2015, and propose functional strategies and concrete solutions on strategy selection Object and scopes of the study Study object is PVNC which belongs to PVC with trading sectors of projects construction, property project investment Methods of the study Study topic is done based on synthesizing qualitative study method such as observation, interview, group discussion then synthesize, analyze and compare primary and secondary data on business environment and operational situation of PVNC Secondary data is collected from: PVNC, PVC, PVN, Construction ministry, Planning and Investment Department, Nghe An statistical agency, papers and Internet; website of Nghe An petroleum Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 Primary data is collected by exchanging, working and interviewing leading cadre in the corporation, information dissemination board of PVNC, financial board, planning economic board of PVNC Structure of capston project report: chapters Chapter 1: Theoritical background on business strategy construction Chapter 2: Analysis of business environment and internal environment of PVNC Chapter 3: business strategy selection for PVNC within the period of 2010 – 2015 and solutions for execution CHAPTER I: THEORITICAL BACKGROUND ON BUSINESS STRATEGY CONSTRUCTION 1.1 Concepts and role of business strategy 1.1.1 Concepts of business strategy Business strategy is: The place where enterprise is trying to reach in long term Enterprise must compare within a certain market with business activities on such market Enterprise must operate more effectively than competitive opponents on such markets Resources (skill, asset, finance, relations, technical capacity, equipments) must be available to compete External environmental factors impact on competitiveness of enterprise Which values and expectation powerful individuals in and out of enterprise need? Strategy is widely used in many different sectors; in business sector, there are also many approaches of strategies According to traditional approach, business strategy is considered as total long term of an organization to reach long term targets Historic management researcher Alfred D Chandler supposed that “strategy is to define basic and long term targets of an enterprise and implement activities together with allocating necessary resources to reach such targets” Then his thought has shown that strategy is a creative defining process, out of which Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 enterprise can choose its own targets, define action plan to well fulfill such targets and allocate equivalent resources Traditional approach has the strength to help enterprises to easily imagine what to to define strategy and realize the usefulness of strategy in term of long term plan However, in a changed business environment we can realize the limitations of traditional approach because it cannot flexibly adapt to the change of business environment According to current approach, strategy can be larger than what enterprises expect or set up implementation plan According to the viewpoint of Mintzberg, he supposed that strategy is a model in the flow of decisions and action plan The model can be any kind of strategy: designed strategy or abnormal strategy He has given the following model: Modern approach will help enterprise to easily cope with the changes of business environment and promote to predict of conditions for strategy implementation and evaluate values of abnormal strategy Via above approaches, we can understand that: business strategy of an enterprise is an art to construct long term targets and implementation policies to orient and create competitive advantage for enterprise Business strategy is to analyze, learn to know and find out the basic method, think of development orbit in business and production which is the plan with comprehensiveness, coordination and consistency leading business unit to ensure its own target; business strategy is to define basic targets of business unit, select medium and action plan, allocate necessary resources to implement business targets The term of strategy is used according to three popular meanings Firstly, general action plans and main resources implementation for reaching given targets Secondly, target organizational programs; used resources to reach such targets, policies to manage income, using and arrangement of such resources Thirdly, define long term targets and select operational method then allocate necessary resources to reach such given targets 1.1.2 The role of business strategy for PVNC In front of changed market, inflate situation has increased highly, administrators of PVNC needs a strategy to find out a right orientation which can help PVNC to overcome the market storm, go ahead to the future by its own effort then make use of available potentials and resources; business strategy is constructed to help PVNC to adapt effectively with the long term changes Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 Strategic administration will help PVNC to be more active in defining future at the same time create influences in operational environment then it can make use of all capacity to monitor and adapt to all external changes Strategic administration will give cadres the realization of importance, leader and labors all understand and commit to implement enterprise’s targets Then they will feel that they are a part of enterprise then they will commit to support and raise responsibility in all business and production activities 1.2 Business strategy construction process for PVNC 2.1 Define vision, mission and targets of PVNC Vision of PVNC: try to become a leading corporation of construction and investment within the Central area; such vision is considered as an operational guideline for the corporation in all times and backgrounds to develop in sustainable way Mission of PVNC is to provide the market with products and services of construction and investment in housings, industrial zones…which can satisfy customers The targets of PVNC are to promote implementation progress of main projects; good contracting new projects; investment in short term projects to create growth rate in medium and long term; business sectors diversification to create more jobs for labors, social securities and profit maximizing for the enterprise to maintain annual growth rate from 130% - 200% in the period of strategy construction; create sustainable development for the company 2.2 External environmental evaluation for PVNC 2.2.1 Macro environment We must evaluate to see which external environmental factors impact on the enterprise? There are four main groups of factors which belong to macro environment that the enterprise must cope with: political factor; economic factor, social and cultural factor, technological factor As follows: GDP of Viet Nam in 2010 reached 6.78% Banking interest is increased together with the change of exchange rate, high material price and input human resource Political environment is stable, legal system is improved to create good condition for business enterprises Globalization process happens strongly worldwide However technological sector Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 in Viet Nam is still outdated Natural environment also impacts on capacity of exploiting, using progress of machine and implementation progress + Political and legal factors: those factors can impact on business activities of the enterprise; stable politics is defined as one of important premises for business activities of the enterprise; political and legal environment can impact on business effect of enterprise which can impact on products, business sectors…of the enterprise It can also impact on cost: production cost, circulation cost, transportation cost, interest rate…especially import export enterprises are impacted by international commercial policy, granted quota, protection law of enterprises + Economic factor: economic factors can impact on enterprises because such factors are rather large then enterprise must select to realize concrete impacts; main economic influence includes: - Interest rate: rate of lending capital often occupies high rate in total invested capital of projects then interest rate can impact on the demand of products; interest rate can also decide cost of capital then it can decide investment level; such cost is the main factor to decide the feasibility in constructing strategy to use capital - Exchange rate: this is the comparison of values of domestic currency and foreign currency; the change of exchange rate can directly impact on the competition of products within the international market; the change of exchange rate will impact on products or import export equipments - Inflate rate: with the inflate rate of 20% it has made economic growth slower at the same time trading risk will be high, trading prospect has become unpredictable for enterprise - International exchange: the change of international market will bring many investment opportunities at the same time raise competitiveness in domestic market + Social factors: all enterprises must analyze social factor to define potential threats and opportunities Social factors will change or slowly develop then their impacts will be difficult to be realized; social factors include: living standards, living style, flexibility of consumers, career, population, religion + Technological and technical factors: applying advanced technology will make the enterprise be active to raise product quality and working effect; such factors will impact on Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 products such as: output, product features, product price, competition of product; then enterprise can increase its own competitiveness, increase mobile capital rotation, increase profit to ensure reproduction process On the contrary, with low technological qualification then it can reduce competitiveness of enterprise as well as profit then hinder development We can say that technological factor is necessary and important in business and production 2.2.2 Sector environment Five main factors of business environment include: power of provider, power of buyer, replaced products, competition and sector penetration barriers - Power of provider: pressure from providers of input or negotiation capacity of provider can be shown by the following features: concentration level of providers, importance of product quantity for providers, difference of providers, influences of input factor on cost or differential products, transfer cost of enterprise in the sector, existence of replaced providers, threats to increase the merging of providers, provision cost compared to total yield of the sector - Power of buyer: pressure form customer is shown by bargaining position, quantity of buyers, information of buyers, distinction of products, sensitivity of price, differential price, concentration level of customers in the sector, available level of replaced products and motivation of customers - Competitive pressure from replaced products: replaced products and services are the ones that can satisfy equivalent demand of sector products and services Threats from replaced Group 10 - Class: Gamba01.V0110 10 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 System of administration, management and machine structure has been constantly improved according to the orientation to meet demand of administration and management in the company in the development and integration process of the corporation The main leading staffs of administration council and director board includes experienced cadres in construction sector, project management, property trading together with the business experiences as well as administration skill of the company PVNC has skilled technical and technological cadres with many experiences in construction sector of big projects of the nation The corporation is the investor of many big projects with the large area of hundreds of hectares Some projects such as Hoang Mai industrial zone, Nghi Phu apartment and attached house are supported by local authority with the whole ground clearance compensation cost All projects are supported legally from Nghe An provincial people’s committee - Weaknesses Management and administration system between the corporation and units, factories, member units are not professional and comprehensive; some member units and divisions are outdated which cannot follow common development qualification of the corporation then working effect cannot reach the maximum level Marketing activities are weak which is not focused to develop to promote the image and brand name of PVNC Labor force is plentiful but popular labor force occupies high quantity then working output is not high; capacity of creation and new technological appliance is limited - Opportunities The economy of Nghe An and the Central region can develop strongly in the coming time The Government will develop open policies to create good condition for investors in Central area Government and PVN will promote investment in the main national projects such as Vung Ang thermoelectric plant, Hua Na hydroelectric plant, Thai Binh thermoelectric plant together with the formation of big industrial zones: Hoang Mai industrial zone, Dong Hoi industrial zone, Hoang Mai urban center…Such opportunities will create good condition for PVNC in investment to construct projects, create stable jobs for cadres which will be the long term and stable income The Central construction market has less big competitive opponents; input construction material if plentiful, low labor cost Group 10 - Class: Gamba01.V0110 42 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 Population qualifications and average income of Central people are improved clearly to create good condition to develop housing and property trading of the company, etc - Threats In the current period the situation of construction material market is changed constantly; the price of steel and iron is increased, leading to high production cost In the changed national and international economy, macro policies are not stable, which can make PVNC get difficulties in capital mobilization Besides lending interest rate increases which can create pressure on PVNC in lending to invest in business activities The market has appeared many small and medium sized construction companies to occupy market share of big companies When the market develops to a certain level some big companies will merge with smaller companies to become a bigger competitive opponents Nghe An market and Central area have large land funds, then demand of buildings is not high; apartment market has not increased while supply source has increased Table 3.6: SWOT matrix of PVNC STRENGTHS (S) WEAKNESSES (W) Good prestige, brand name Incomprehensive and and strong relationship in the ineffective management system Central Weak marketing The support of Unskilled popular labor PetroVietnam Construction force inadaptable to trading Corporation as well as PVN and new technological Good capacity of capital, application Group 10 - Class: Gamba01.V0110 43 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 machines, equipments for construction of large-scaled projects Skilled technical cadres' experiences in implementing main projects Large land funds with low cost and investment COMBINATION (S/O) OPPORTUNITY (O) Increasingly strong growth of the Central regional economy especially the Northern Central area SO strategies Centralization (S1,2,3,4,5-O1,2,3) Market development (S1,2,3,4,-O1,2,3) COMBINATION (W/O) WO strategies Differentiation (W1,2,3-O1,2,3) Improvement of risk administration capacity (W1,2-O1,2,3) No existence of big competitive opponents in the construction and erection sector of the region Gradually improved qualification of population for the development of real estate sector THREATS (T) Many small and medium sized competitive opponents The economy within the COMBINATION (S/T) ST strategies Differentiation (S1,2,3,4,-T1,2) Cost leading (S1,2,3,4,5-T1,2,3) COMBINATION (W/T) WT strategies Cost leading (W1,2,3-T1,2,3) Differentiation (W1,2,3-T 1,2,3) period of recession and high inflation, increase in costs and bank's interest rate, and input materials Large land funds of the Central region, low demand of apartments and buildings (Collected information source) Group 10 - Class: Gamba01.V0110 44 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 CHAPTER 3: PROPOSAL AND CONCLUSION MISSION UNTIL 2015 3.1.1 Strategic mission • Increase in market share • Increase in profits • Increase in personnel's living standard It is specified as follow: - Executing works according to progress, proposing solutions to overcome difficulties for insurance of firm progress - Pushing the compiling of execution documents, commissioning records, and positively withdrawing capitals and debts in order to reduce costs and increase operating efficiency - Completely solving problems of finance of old works - Constructing investment project to increase constructional capacity of equipments in conformity to PVCN development strategy Striving on and directing the Corporation to take part in bidding packages under form of total EPC bidding - Perfecting mode of management towards tidy and deeply specialty form in order to increase labor productivity and operating efficiency - Concentrating resources and human resources to execute key works for handover according to given progress, quality assurance and absolute labor safety - Focusing to effectively invest the projects in order to raise up input resources of PVCN apart from construction and erection - Increasing charter capital to take initiative in capitals for investment and operations - Focusing effectively financial operations to secure production and business and increase revenue from such operations Being full member of PVC and directly under PVN, PVCN have been strongly developed according to PVC's orientation and development strategy to become the leading Construction-investment corporation in Vietnam by 2015 That means PVCN must meet the increasing demand For example, regarding standard of labor income, now PVCN has about 1,600 long-term contractual employers with average income of 5.3 million Dong/person/month compared to the same period last year, it is a high level of salary in comparison with other enterprises in Nghe An This is one of an leading important factor to ensure the utmost effort of PVNCleadership and workers to overcome difficulties and pursue big and the proposed long-term and big targets - Development of business lines Group 10 - Class: Gamba01.V0110 45 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 Table of expected time, cost and preferential order to implement strategic solutions within the period of 2010 – 2015 No a Solutions Effective capital mobilization and using Issuing stock to increase charter capital from 100 billion dong to 600 Implementation Expected cost time (dong) 2010-2015 Quarter IV of 2011 billion dong Issuing stock to increase charter b capital from 600 billion dong to 1200 Quarter IV of 2012 billion dong Solutions of products and services Improve organizational structure and 2010-2015 a b c a b c personnel Basic investment construction and equipment capacity raising Investment in equipments, construction of infrastructure Investment in factory, mechanic processing line Construction material production Science and technology solution Apply informatics technology in production Construct HSEQ process according to standards of ISO 9001,2008 Construct project management tools, project implementation progress, plan, personnel organization and 2010-2015 2011- 2015 2011-2015 2011-2015 2011-2015 2010 - 2015 2011 – 2012 2010 – 2011 2011-2015 financial management 3.1.2 Specific mission Originating from the aforementioned vision and mission, PVNC determiness the key missions of development in the coming time as follows: - Construction and erection line Group 10 - Class: Gamba01.V0110 46 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 * Construction and erection of building inside and outside the Petro and Gas industry In the current situation of nationally economic development, with nationally urban development projects, bulding construction field becomes a potential market PVNC makes effort to develop this field to be its leading key one Mission of building construction development makes up 35% of PVNC's whole revenues in 2015 The Corporation shall focus on increasing capacity in order to take the competitive advantage against other contractors in the north Central region it is estimated until 2015 to have enough capacity to compete with other regional contractors since 2025, it will be striving on making up share rate of from 20% to 30% of building constructions in this region * Execution of Petro and Gas constructions From 2011 to 2015 PVNC shall concentrating in executing projects alloted by PVC and the Group such as Accommodation for cadres in the management and operation phase of Vung Ang thermoelectric plant, Project to upgrade Anh Son cement factory, Hua Na hydroelectric factory; Quang Trach thermoelectric No.1 Plant and some other projects, etc By 2015, it will try to have enough capacity to implement a part of oil filtering factory; by 2025, the task of PVNC in oil filtering project in Viet Nam will reach 40% and PVNC will be together with PVC to join in international oil filtering projects - Real estate investment Investment in industrial zone Focus on investment to exploit effectively industrial zone especially main industrial zones such as Hoang Mai industrial zone – Quynh Luu – Nghe An, Nam Cam industrial zone; joint venture with domestic and foreign partners to invest in industrial project such as Anh Son 12/9 Cement factory, Tan Ky Cement factory, etc Investment in urban and commercial centers Within the period of 2010 - 2012, PVNC will contribute capital to improve zone A – Quang Trung apartment, Vinh city, Nghe An province, high buildings and Ky Long – Ky Lien – Ky Phuong petroleum villa, petroleum urban project; high ranking apartment, building, recreation park in the center urban area – Vung Ang economic zone in Ky Trinh district – Ky Anh – Ha Tinh; non-tariff commercial center, Ha Tan urban center (Cau Treo international border gate economic zone) - Construction material production and trade Focus on some projects of producing construction materials to be active in providing construction materials such as Canh sat stone mine, concrete factory in Nam Cam industrial Group 10 - Class: Gamba01.V0110 47 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 zone, stone mine and concrete mixture line in Vung Ang industrial zone, Quang Trach industrial zone, Tuynel brick production factory in Hoang Mai industrial zone and some other projects it is expected that by 2015 the company will be active with main constructional materials such as construction stone, construction sand, brick, etc - Mechanic erection and fabrication sector To gradually control the implementation technology, PVNC has given the target to develop mechanic sector and machine processing To focus on such sector the company will invest in the system of equipment, factory, receive and train skilled workers then by 2015 it will be expected to reach 5% to 10% total revenue of the company - Services trading In front of the multi-sectional development of PVN and policy to promote interactive support among member units in the corporation, the corporation will invest in services of product distribution of companies in the corporation such as: agency of agricultural fertilizer, Polypropylen, at the Northern Central area Besides the company will expand investment in trading recreation service in the new urban center, recreation center in Vinh city, Cua Lo town 3.2 SOME SOLUTIONS AND PROPOSALS FOR PVNC EXECUTION OF BUSINESS STRATEGY 3.2.1 Construction of business strategies After analysis of different matrix groups, we establish QSPM matrix Bảng 3.1 QSPM Matrix SO group Important factors Internal factors Qualifications of leadership Qualification and creativeness of labor Appication level of technology and information Recognization level of prestige and trade name Network of branches efficiency of operation administration Operating efficiency of subsidies external factors Stably economic growth, high income Stable politics Increasing demand of construction Classificatio n replacable strategies Market Centralizatio developmen n t AS TAS AS TAS 3 9 3 4 3 3 3 2.5 3.5 3 9 16 12 16 10.5 16 9 12 10 12 10.5 16 3 Group 10 - Class: Gamba01.V0110 48 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 Confidence of customers Quick development of science and technology 4 3.5 3.5 14 12 14 16 143 Tổng số 130.5 SO strategic group includes two key strategies of centralization and market development as for centralization, PVNC shall make use of its strengths of human resources, prestige, trade name, consumers' demand, operating efficiency to exploit projects of industrial zones and big constructions QSPM matrix of SO group enables us to have a selective result of centralization strategy (with points of 143.5 higher than that of market development) this strategy is more attractive because it keeps faithfulness of prestigious and traditional customers Table 3.2 QSPM Matrix of WO group replacable strategies Market Centralization development Important factors Classification AS TAS AS TAS Internal factors Financial potential 3 9 Risk administration 3 12 External factors Stably economic growth, high income 3.5 10.5 Stable politics 3 9 Increasing demand of real estate utilazation 3.5 14 12 Integration for increase in competitive capacity 3.5 10.5 Total 62 58 QSPM Matrix of WO group includes two key strategies of differentiation and improvement of risk administration In which differentiation strategy of 62 points is more attractive than risk administration of 58 points This helps PVNC promote its strengths and improve its weaknesses to utilize opportunities of development Table 3.3 QSPM matrix of ST group Important factors Internal factors Qualifications of leadership Qualification and creativeness of labor Application level of technology and information Recognition level of prestige and trade name Network of branches replacable strategies Market Centralization development Classification AS TAS AS AS 2.5 7.5 2.5 7.5 3 2.5 7.5 3 2.5 16 7.5 3 12 9 Group 10 - Class: Gamba01.V0110 49 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 efficiency of operation administration External factors Competition among competitors development of different investment channel Authorities' policy of development Demand in widespread use of customers Total 3 9 4 4 4 16 16 16 115 3 3.5 12 12 14 101 QSPM matrix of ST group consists of two strategies of cost leading and differentiation the mission of this strategy is to use its advantage of experience, confidence of traditional customers and its own positive policies to overcome challenging With regard to cost leading strategy, PVNC shall take advantage of prestige and development of its own various sectors, etc to reduce price of products to get market share Regarding differentiation of products, PVNC commits to provide customers with highest quality products with the leading service QSPM shows the more attractive strategy is the cost leading (of 115 points compared to 101 points of differentiation strategy) This is conformable to the market competition, development of industrial zones, apartments rising and accommodations for people of low income, etc In the under developing economy, it is only the cost leading that helps the enterprise to increase its sales figures and defeat their competitors Table 3.4 QSPM matrix of WT group Important factors Internal factors Financial potential Study, development and diversification of products and services Internal factors Competition among enterprises Relationship with authorities Recession of economy, high inflation Demand in widespread use of customers Total replacable strategies Market Centralization development Classification AS TAS AS AS 12 12 12 3 12 12 3 12 2.5 7.5 3.5 14 69.5 16 64 With WT matrix group, target of the enterprise is repairing weaknesses to avoid or overcome external challenging This group includes two matrixes of centralization and joint-venture Due to many difficulties in economic environment, increasing tendency of costs, high banks' interest rate, etc PVNC uses the business strategy associating with other companies of strongly Group 10 - Class: Gamba01.V0110 50 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 economic potential and prestige, etc in order to repair its weaknesses to overcome challenging Applying centralization strategy, PVNC shall concentrate on restructuring organization through many activities such as management grading and establishment of payment policies, etc, in order to create a dynamic operating environment for better customer care The matrix indicates that centralization strategy of 69.5 points is more attractive than Joint-venture strategy of 64 points because it is more comprehensive and direct, which increases internal forces of PVNC Therefore, it is steady - Centralization strategy - Differentiation strategy - Cost leading strategy 3.2.2 Selection of business strategy SWOT and QSPM matrix help us form three most feasible strategies that PVNC can select for implementation, As introduced in chapter 2, PVCN are operating four key lines of construction, real estate investment, constructional material trade and service Each meets with specific difficulties and strengths; therefore, there must have appropriate strategy for each Combining aforementioned analysis and judgment our group would like to select centralization against construction, differentiation for real estate investment, cost leading for constructional material trade and centralization for service business within the period of 2011-2015 - Construction line PVNC is prestigious and powerful in civil and industrial construction, the enterprise selects centralization strategy in order to segment competitive environment This strategy helps keep confidence of traditional customers and then defeat competitors when successfully achieving the strategic targets, the enterprise can expand product categories and of high exclusivity - Real estate investment The enterprise selects the differentiation strategy in order to create products special in model, quality and secure time of delivery; from such a differentiation, customers will compare and assess strong points of PVNC products compared to others - Service dealing In the Central region, PVNC has close relationship with local authorities and project administrative boards Therefore, service dealing is a great advantage and PVNC proposes centralization strategy against service dealing the existing projects including Song Lam banking residence, Cua Lo resort, Nghi Xuan ecological tourism zone shall be great advantage of the enterprise to execute the strategy - Constructional material dealing Constructional material dealing is not paid much attention in Nghe An so far because development of constructional material investment is slow After the State policies were issued and there have been many investments, constructional material dealers strongly invest In that situation, with advantage of long-term construction participation, transportation, yards, storages and many relationship the enterprise selects cost leading strategy to reject competitors This strategy enables PVNC to occupy material market for development of other sectors 3.3 IMPLEMENTATION SOLUTIONS 3.3.1 Solutions of products and services Group 10 - Class: Gamba01.V0110 51 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 Mobilize all resources to promote implementation progress of the following projects: accommodation of employees in Vung Ang Thermoelectric – Quang Trach; 12/9 cement factory, Zone A Quang Trung project, Truong Thi apartment, Thai Binh Thermoelectric plant… - Steer to fulfill investment procedures for some projects in Ky Anh – Ha Tinh; Hoang Mai town – Quynh Luu;…continue expanding investment area in some sectors of property, urban center in Ha Tinh province and Lam river - Invest in equipments, machines and personnel to focus on development to raise mechanic sectors - Construct factories of mechanic processing to implement some mechanic items such as steel frame for projects of the company; try to raise productivity to provide a part to the market of neighboring provinces to increase profit for the company - Focus on management and development of services in Hoang Mai industrial zone, Hoang Mai urban center, Vung Ang urban center…expand investment in service trading in Nghe An petroleum building commercial center, Truong Thi apartment…and some new urban centers, recreation area Train cadres and employees; accumulate and learn experiences to service trading such as purchasing products of agriculture, commerce and recreation which can create basis for development of such sectors in the coming years Continue to strengthen facilities to meet requirements of production, complete management machine to push capacity of constructional material exploitation in Canh Sat Stone mine in Ky Anh - Ha Tinh - Promptly complete procedures to increase charter capital to reliably take initiative in investment and operations - Seriously direct to perfect investment procedures against some projects in Ky Anh Ha Tinh, etc Maximally mobilize resources to push execution progress of projects including accommodation of employees in Vung Ang Thermoelectric – quang Trach; 12/9 cement factory, Zone A Quang Trung project, Truong Thi apartment, Thai Binh Thermoelectric plant, etc Continue to expand investment in real estate field such as urban residence in Ha Tinh province and Song Lam bank - Invest facilities and human resources to develop mechanical erection sector - Construct mechanical processing factories to self-execute some mechanical and fabrication items such as steel frames, steel falsework for works implemented by the Corporation; Strive on improving productivity to partially supply for adjacent provincial market in order to increase profits for the Corporation Group 10 - Class: Gamba01.V0110 52 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 - Concentrate in managing and developing services in Hoang Mai industrial and urban zone, Vung Ang urban zone, etc Strengthen to invest in service dealing in Nghe An Petro and Gas building commercial centre, Truong Thi apartments, etc and some new urban zones, entertainment zone 3.3.2 Development solutions of organizational structure and personnel - Improve organizational structure and management method according to the model of parent company – subsidiaries; increase management of contributed capital in member enterprises then raise the role and duty of capital representative - Continue consolidating leading cadres for units; master plan and evaluate cadres; the task of cadre transfer to raise management effect in member units - Combine new recruitment methods and increase training and nurturing professional skills to construct labor force according to development strategy within the period of 2011-2015 - Raise capacity of cadres to the task of human resource training and development - Implement checking and evaluation for labors to arrange suitable tasks to promote productivity, working effect, advanced thinking to appoint cadres - Continue ensuring regulations, policies to create motivation for labors Organize construction engineer recruitment as well as development and training Create suitable preferential policies for good cadres to devote to the company; salary regulations to attract high quality human resource 3.3.3 Solutions of basic investment construction and raising capacity of machine and equipments - To well implement development targets of the corporation the problem of raising machine and equipment capacity must be paid much attention based on trading sectors of the corporation as well as investment orientation of PVN; based on implemented projects then we can invest to buy equipments, machines, software…on the other hand the company will establish close relation with potential partners to lease and use distinctive machines - Continue investing in machines and equipments to serve implementing buildings; raise capacity of technical workers in constructing buildings; to raise implementation capacity of above 30-floor projects by 2015; PVNC will try to reach capacity to construct all buildings that the corporation and PVC implement Besides, PVNC will marketing task for bidding of high buildings projects which can compete with other units in Northern Central area Group 10 - Class: Gamba01.V0110 53 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 - Continue studying to invest in advanced technological equipments to timely meet current production and development orientation in the coming years which can increase quality of projects then raise prestige of PVNC in construction sector - PVNC will associate with big partners to learn organizational experiences, technology, techniques in designing, construction and implementation - PVNC must have regulations of periodical maintenance to ensure good operation 3.3.4 Solutions of science and technology - Update, apply and constantly improve new science and technology in the activities of PVNC to raise working output - Construct application programs of science and technology, technical development and quality management system of the corporation - Apply management software into personnel management, document management, planning, financial management,… - Increase international cooperation with partners of association such as Japan, Korea, Switzerland…and corporations which belong to PVN to learn experiences then improve and create technology in all sectors - Invest in modern technology; raise management qualification of cadres in construction sector as well as project management - Apply HSEQ process (health, safety, environment and quality) 3.3.5 Capital mobilization and utilization - To meet demand of development and fulfillment of given targets, PVNC must increase scale of capital according to each period; PVNC will make use of financial support of PVN Then mobilize capital via issuing stocks within securities market - Improve financial mechanism of the corporation to ensure and increase financial accumulation capacity to serve investment and development - Use mobilized capital effectively; mobilized capital must be used to implement highly feasible projects with high profitability Group 10 - Class: Gamba01.V0110 54 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 CONCLUSION Practical theory has proved that business strategy plays an important role in business activities of the enterprises which can decide the success or failure of a company in a long time; with regard to PVNC then it will be more important because it operates in a sector whose competition is very violent; then construction of a right business strategy will be very necessary to help corporation to stand tall within the market as well as expand development scale In the process of topic improvement, investment time and experiences of the group are few then we cannot avoid mistakes; we are looking forward to receiving comments of all lecturers to apply it into reality effectively Group 10 wishes to show out gratitude to leading board, cadres and employees of PVNC as well as lecturers to help the group in preparing the report REFERENCES - Deputy Professor, doctor Lê Thế Giới, doctor Nguyễn Thanh Liêm, MBA Trần Hữu Hải (2009), Strategic management, statistical publishing house Group 10 - Class: Gamba01.V0110 55 /74 Business and production strategy construction for PVNC within the period of 2010 - 2015 - Deputy Professor Ngô Kim Thanh, Deputy Professor Lê Văn Tâm (2009), Strategic management, National economic University publishing house - Deputy Professor Nguyễn Thị Liên Diệp, MBA Phạm Văn Nam (2006), Business strategy and policy, social labor publishing house, Ho Chi Minh city - Nguyễn Tấn Phước (1996), business strategy and policy, statistical publishing house - Nguyễn Hữu Lam (2009), Strategic administration to develop competitive position, statistical publishing house - Lê Văn Tâm (2000), strategic management, statistical publishing house - Phan Thị Ngọc Thuận (2005), business strategy and internal planning of enterprise, science and technical publishing house - ROWAN GIBSON (2006) re-thinking future, the Youth publishing house, Sai Gon economic times - Alex Miller (1998), Strategic management 3rd Ed Irwin/Mcgraw-Hill - Thomas L Wheelen, J.David Hnger (2004), Strantegic management and business policy 9th Prentice Hall - Business and production report of PVNC from 2007 to 2009 - Resolution of PVC to accept business strategy of PVNC from 2010 to 2015 as well as vision by 2025 - www.business.gov.vn; www.pvnc.com.vn; www.pvn.vn - Materials of course on MBA – griggs University Group 10 - Class: Gamba01.V0110 56 /74 ... Strategic mission 45 3.1.2 Specific mission 46 Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010... - GE Production and business Cadres, employees Revenue Long term investment Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010... Fixed asset Mobile asset Receivables Inventory Owner capital Limited Liability Group 10 - Class: Gamba01.V0110 /74 Business and production strategy construction for PVNC within the period of 2010