Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (68)

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT CAPSTONE PROJECT REPORT BUSINESS STRATEGY BUSINESS STRATEGY OF DONG ANH VIGLACERA JOINT-STOCK OF DONG ANH VIGLACERA JOINTCOMPANY PERIOD 2020 - 2025 STOCK COMPANY PERIOD 2010 - 2015 FORMULATING AND COMPLETING BUSINESS STRATEGIES OF HA NOI HOUSING DEVELOPMENT AND RESTORATION JSC FOR 2010 - 2020 Group No.57: Tran Hop DungTran Dinh Phong - Leader Pham Vinh HaHoang BUSINESS STRATEGY OF DONG ANH VIGLACERA JOINT-STOCK COMPANY PERIOD 2010 - 2015 We hereby would like to confirm that the content of this thesisCapstone Project Report is made by our full efforts during the study process, include: information collection, study, research and topic selection To complete this thesis, besides quoted references and data, we were very creative in applying the theoretical knowledge in solving practical issues that we were facing during the study We also certified that this thesisCapstone Project Report has not been submitted to other research or training program Hanoi, November 15, 2009 Group of authors TABLE OF CONTENT TABLE OF CONTENT List of Abbreviations .8 List of figures, graphs 11 INTRODUCTORY 14 GENERAL INTRODUCTION 15 Thesis title 15 Company overview: 15 Rationale 15 Research Objectives 18 Research scope 18 Research methodology 18 Data sources 19 Thesis significance 19 Thesis limitations 19 10 Expected outcomes of the thesis .20 11 Thesis Structure .20 CHAPTER 22 THEORETICAL BACKGROUND ON FORMULATION 22 OF ENTERPRISE BUSINESS STRATEGY 22 1.1.Nature of business strategy 22 1.1.1 Definition of strategy 22 1.1.2 Importance of business strategy formulation 27 1.1.3 Business strategy formulation process 28 1.2 External environment analysis 31 1.2.1 Macro environment analysis 31 1.2.2.Industry environment analysis (micro) 34 1.2.3 Synthesis of external environment analysis of the company 40 1.3 Internal environment analysis .40 1.3.1 Value Chain 41 1.3.2 Defining sustainable competitive advantage .47 CHAPTER 2: 63 ANALYSIS OF BUSINESS STRATEGY OF VIGARACERA DONG ANH JOINT-STOCK COMPANY, PERIOD 2010 – 2015 63 2.1 An overview of Dong Anh Viglacera Joint-Stock Company 63 2.1.1 History of formulation and development .63 2.1.2 Chart of Organization and Management .64 2.1.3 Current business performance of the company 65 2.2 Introduction about productsProduction and consumption .66 2.2.1 General features or products .66 2.2.2 Description of production technology: 67 2.3 External environment analysis 69 2.3.1 Macro environment analysis .69 2.3.2 Industry environment analysis 80 2.4 Internal environment analysis 95 2.4.1 Value chain: 95 2.4.2 Identifying the sustainable competitive advantage of the company 104 Conclusion on chapter 106 CHAPTER 3: 108 STRATEGY AND SOLUTIONS FOR STRATEGY IMPLEMENTATION .108 3.1 Strategic development orientation of Dong Anh Viglacera Joint-Stock Company, 2010 -2015: 108 3.1.1 Strategic commitment .108 3.1.3.The company’s objectives during 2010 -2015: 113 3.2 Selection of business strategy for Dong Anh Viglacera Joint-Stock Company 114 3.3 Groups of solutions on strategy implementation 117 3.4 A summary of strategy implementation plans .119 3.4.1 Production management 119 3.4.2.Marketing management 120 3.4.3 HR management 121 3.4.4.Financial Management .121 3.4.5 R&D investment 122 3.5.Designing the organizational structure and strategic controlling system: 122 3.5.1 Designing organizational structure: 122 3.5.2 Strategic controlling system: 125 3.5.3 Strategic Remuneration management: .129 3.6 Corporate government: 130 Conclusion of chapter 132 CONCLUSIONS AND RECOMMENDATIONS .132 A - Recommendations: 132 B - Conclusion: 133 List of references .135 TABLE OF CONTENT List of Abbreviations List of figures, graphs INTRODUCTORY GENERAL INTRODUCTION ThesisCapstone Project Report title Company overview: Rationale Research Objectives 11 Research scope 11 6 Research methodology 11 Data sources 12 ThesisCapstone Project Report significance .12 ThesisCapstone Project Report limitations .12 10 Expected outcomes of the thesisCapstone Project Report 13 11 ThesisCapstone Project Report Structure 13 CHAPTER 15 THEORETICAL BACKGROUND ON FORMULATION 15 OF ENTERPRISE BUSINESS STRATEGY 15 1.1.Nature of business strategy 15 1.1.1 Definition of strategy 15 1.1.2 Importance of business strategy formulation 20 1.1.3 Business strategy formulation process 21 1.2 External environment analysis 24 1.2.1 Macro environment analysis 24 1.2.2.Industry environment analysis (micro) 27 1.2.3 SynthesisCapstone Project Report of external environment analysis of the company 33 1.3 Internal environment analysis .33 1.3.1 Value Chain 34 1.3.2 Defining sustainable competitive advantage .40 CHAPTER 2: 56 ANALYSIS OF BUSINESS STRATEGY OF VIGARACERA DONG ANH JOINT-STOCK COMPANY, PERIOD 2010 – 2015 56 2.1 An overview of Dong Anh Viglacera Joint-Stock Company .56 2.1.1 History of formulation and development .56 2.1.2 Chart of Organization and Management .57 2.1.3 Current business performance of the company 58 2.2 Production and consumption 59 2.2.1 General features or products .59 2.2.2 Description of production technology: 60 2.3 External environment analysis 62 2.3.1 Macro environment analysis .62 2.3.2 Industry environment analysis 75 2.4 Internal environment analysis 91 2.4.1 Value chain: 91 2.4.2 Identifying the sustainable competitive advantage of the company 100 Conclusion on chapter 102 CHAPTER 3: 103 STRATEGY AND SOLUTIONS FOR STRATEGY IMPLEMENTATION .103 3.1 Strategic development orientation of Dong Anh Viglacera Joint-Stock Company, 2010 -2015: 103 3.1.1 Strategic commitment .103 3.1.2 Market forecast: SWOT matrix 103 3.1.3.The company’s objectives during 2010 -2015: 108 3.2 Selection of business strategy for Dong Anh Viglacera Joint-Stock Company 109 3.3 Groups of solutions on strategy implementation .112 3.4 A summary of strategy implementation plans 114 3.4.1 Production management 114 3.4.2.Marketing management 115 3.4.3 HR management 116 3.4.4.Financial Management .116 3.4.5 R&D investment 117 3.5.Designing the organizational structure and strategic controlling system: 117 3.5.1 Designing organizational structure: 117 3.5.2 Strategic controlling system: 120 3.5.3 Strategic Remuneration management: .124 3.6 Corporate government: 125 Conclusion of chapter 127 CONCLUSIONS AND RECOMMENDATIONS .127 A - Recommendations: .127 B - Conclusion: 129 List of references .130 List of Abbreviations Abbreviations AFTA ASEAN APEC ASEM CEPT CPI GDP GREAT JIT PEST ROA ROE ROS SWOT VIBCA WTO Full text ASEAN FREE TRADE AREA Association of southeast Asian Nations Asia-Pacific Economic Cooperation The Asia-Europe Meeting common effective preferential tariff Consumer price index gross domestic product Gain – Risk – Expense – Achievable – Time Just In Time Political, Economic, Social, and Technological Return On Assets Return On Equity Return On Sales Strengths – Weaknesses – Opportunities – Threats Vietnam Building Ceramic Association World Trade Organization 10 production chain and technology - Additional investment in production chain with modern and advanced technology Company & Production units 2011 – 2012 3.5.Designing the organizational structure and strategic controlling system: 3.5.1 Designing organizational structure: In previous parts, Dong Anh Viglacera Joint-Stock Company selected its business strategy for the period of 2010-2015 and necessary solutions Strategy implementation includes its efforts in making organizational arrangement to carry out its strategy the most efficiently Designing organizational structure is selecting a good combination between the organizational structure and controlling system to make sure that the company can achieve its objectives, create more value and sustainable competitive advantages The company’s organizational structure and controlling system play following roles: - Coordinating all activities of different functions at best efficiency to implement the strategy for higher competitive advantage Encourage employees; provide them with good momentum to work well to ensure the optimum efficiency of their performance, which results in product quality and innovation with satisfy well the customers With regards to the business characteristics of the company, including its concentration on one sole location, to adapt to strategy for next year, Dong Anh Viglacera Joint-Stock Company decided to follow the organizational structure of matrix form which brings into force 02 important pillars: function and products To realize the strategy of focusing on product differentiation, the organizational structure should be as followed: Production, includes: + Production unit for processing raw materials + Production unit for forming 121 + Production unit for kilning – drying + Production unit for arranging and firing + Production unit for collecting and classifying + Production unit for final product and packaging + Production unit for mechanics and electricity + Production unit for frames and models R&D Department Sales and Business Department Marketing Department HR Department Accounting and Finance Department Plan and Investment Department KCS and technical Department Other supporting services Organization chart is established based on the specialization for more professional functions, employees can learn from one another and get improved, more efficient At the same time, it enables the management board to better control and manages the performance of all departments Work assignment among the management board: The director supervise the operation of the whole company, concentrate on building annual business production plans, short –term and long-term investment strategies, development strategy, guidelines on accounting and financial performance and other activities which are related to the management board, shareholders and investors - Deputy directors will directly supervise such fields as: production, business, and sales HR manager, Financial Director, Technical Manager will consult CEO on specific subjects to carry out efficiently business objectives With regards to the industrial characteristic, production and sales depend much on the season In autumn, with dry weather, the demand for bricks and tiles is higher while the demand is decreased in raining and storming season Therefore, Dong Anh Viglacera Joint-Stock Company select organizational chart and assignment structure which are coherent, highly specialized, with flexible direct reporting mechanism This 122 model enables the company to be dynamic and timely in adjusting the business and production activities to meet customers’ seasonal demand The company applies modern information system: Internet connection for all departments within the company Create the company’s website Establish email communication network within the company and with customers who are distributors Equip computer with strong capacity for all departments within the company - Apply the management soft wares for HR, sales, accounting, inventories follow-up, salaries, insurance, accounting plan, financial analysis… With the application of modern information technology, the company can enhance its competitiveness on the market to carry out its strategy successfully 3.5.2 Strategic controlling system: In order to get outstanding achievement in quality improvement, innovation, customer satisfaction, controlling functions: Efficiency control: Follow up the usage of raw materials, fuel, and electricity and consumption limitation, to increase the efficiency Quality control : Control the quality of products, services to find out the methods of improving quality, and lower the cost Innovation control : enable a higher innovation level, encourage the creativity Customer satisfaction control: Raise the customer satisfaction 1.Steps of strategic control: a Establish standards and objectives for the company to evaluate its performance: - Leading cost strategy : Reduce the cost per year by 3-5% on some specific production stages - Differentiation focusing strategy: Sales services are provided to all customer in Hanoi, including goods delivery at construction site, even in small alleys or high stages of big building b Establish the supervisory system and measure the performance results to 123 know if they comply with the standards and objectives c Compare the current performance with the established objectives d Adjustment solutions will be launched when the standards and objectives can not achieved 2.Levels of strategic control : The strategic controlling system will be divided into levels: Corporate level Factory level, including departments Unit level: production units, including groups, teams Individual level The company builds specific standards and objectives with certain measuring tools in order to grade the performance with regard to the relating objectives at each level 3.Type of controlling: a Financial control: : - The most common measurement of the management board and other stakeholders to evaluate and control the company’s performance is financial controlling Strategic managers selected financial objectives such as: revenue growth, profit, profitability, shareholders’ income… Reviewing these ratio every quarters or every years to know if they are achieved in following years By reviewing the quarterly and yearly ratios on the financial report approved by the financial director, management board, and supervisory board will evaluate the performance with regards to those financial ratios, and base on that to make necessary adjustments Example : In 2009, if the profit before tax target reaches over 15 billions dongs, the General Shareholder Meeting voted that the Board of Directors will receive 50% of the profit gained over target as a bonus - Stock price is an useful measurement of the company’s productivity: as a listed company on Hanoi stock exchange, the stock price is a market signal of the expectation on the future productivity of the company In recent years, the company’s stock price keep increasing from 10 000 dongs/ stock, 20 000 dongs/ stock, 30 000 dongs/ stock, 50 000 dongs/ stock and in early November 2009, the stock price reach 124 75 000 dongs/ stock Return on Investment (ROI): which is formulated by the net income on invested capital? This is a popular financial measurement At corporate level, in one year, it’s possible to compare the productivity of the company with that of others in the same sectors such as Tu Son Viglacera, Dong Trieu Viglacera, Ba Hien Viglacera… b.Output Control : To ensure that the supervisory committee, management board of company know well if the business strategy is working well in each quarter or year by creating competitive advantage of terracotta products, it’s necessary to have output control: a system which is estimated and planned for suitable objectives of each production units, departments, individual employees, from which they can measure the performance results Example: The Company will set up advanced consumption limitation of raw materials, levels of expense attached to each production unit, and department for month After month, with concrete synthesisCapstone Project Report, a bonus will be given to the group who save well the resources If the consumption is over the limitation, punishment or reimbursement will be applied Sales department: The company will establish goal for each sales staff: the monthly sales, the returned goods, the number of complains from customers due to late… A synthesisCapstone Project Report will be conducted every month A bonus of 2-3% on the sales value will be applied for the staffs who fulfill the objectives Management by objectives: - Establish specific targets at all level within he company - Making the target establishment a stage in the whole involvement process - Regular review of the process with regards to the established objectives d Performance control: it’s the control conducted by establishing a comprehensive system of regulations and procedure to guide all the activities of departments, functions and individuals The company issues a range of regulations, rules, functions, obligations, 125 relationship among departments so that behaviors of all individuals are standardized, which will lead to an agreement on the working decision The company keep improving and applying an efficient quality control according to ISO –9001/2000 in all departments e.Organizational culture: : The company build up a corporate culture which was traditionally accepted: create an open and friendly working environment which encourage good coordination among staffs so that all groups and individuals can bring into play their full capacity, creativity to make them competitive advantage of the company All members in the company believe in the leadership by the board of directors, management board They highly appreciate new ideas, respect the customers and always listen to their feedbacks There is a clear and transparent work assignment within the company by level to ensure fairness, and good functions of the organization and then build up the prestige and culture or the company By yearly or regularly training solutions, the company will gradually make up a highly qualified and experienced management team which will then hold key senior management positions The company promoted a corporate culture which strives for: “Continuous innovation for continuous satisfaction” 3.5.3 Strategic Remuneration management: Remuneration model : - Apply a regime of productivity-based salary (for production ) - Salary on sales revenue ( For sales ) - Salary on profit, profit growth for the management board: 2% of annual profit - Salary on functional performance, tasks attached to objectives of departments and units - Bonus of 3-5 % of profit after tax to Management board, Board of directors if the company achieves the objectives 2, Types of bonus: 126 -Bonus by bonus stock to staffs and employees so that they become the shareholders of company - Monthly bonus for individual with high number of working days - Quarterly bonus for individual based on the performance review according to the standards - Irregular bonus for teams or individuals with outstanding initiatives and contribution to the common interest - Bonus for teams in the quarterly and yearly performance review and other movements - With a focus strategy which enable to lower expenses, bonus can be deducted from the gaining thanks to cost saving in raw materials usage, sales and quality improvement… Promotion types : - Irregular salary increase for individuals with outstanding performance - Salary increase for individuals upon their improvement in education qualification - Regular staff plans for departments and units to create the momentum for key managers Other remuneration types: - Support staffs with construction bricks and tile when they build their own houses: special discount, lending the goods to staffs with big contribution - Care for festival occasions, family affairs… of staffs - Offer other benefits such as traveling, training, education, child care… - Coordinate with the trade union, youth union to organize cultural activities for staffs 3.6 Corporate government: - Relationship among stakeholders is used to define and control the strategic orientation and performance results of the organization - Corporate government is used in companies to establish the relations between the owners and top management team, in which there benefits are conflict Dong Anh Viglacera Joint-Stock Company was equitized in 2004 In September 2006, the company is officially listed on the Hanoi stock exchange with 127 750 000 stocks, the chartered capital is, therefore, increased to 10 billions dongs in 2009 and 1.000.000 stocks are traded on the HXN So, the company has been well structured as a public company, which is suitable with the current company model Up to June 2009, the structure stock ownership of the company is followed: - State: 51% Other organizations: 15 % Individuals:34% On June 30, the company recorded more than 600 shareholders, including 121 foreign shareholders The General shareholder meeting is the top powerful body in the company Every year, the General Shareholder Meeting will decide important issues in the strategic development orientation of the company, including the determination of business objectives and results of planned year As a listed company, the company’s activities need to comply with the regulations and rules by the State Securities Committee The objective of company in the strategic development orientation during 2010-2015 is to ensure always the benefits of all stakeholders: Benefits of employees, Benefits of the country, benefits of shareholders with a sustainable development goal Board of Management: including members elected by the general shareholder meeting with a suitable structure for the modern model of management board 1/3 of members are independent from the Board of Management Members of management board will involve in the management, but also own the company stocks… the management is, therefore, very efficient Members of management board are experienced managers with high qualification and working ethnics to ensure the efficiency of the strategy The company issues the regulations for board of management and regulations on corporate governance, regulations on internal financial management Communication executive are selected to communicate with shareholders and state securities commission, stock exchange to ensure the timely and transparent 128 information on the business and production performance of the company in strategy implementation Quarter review will be conducted to make sure that the corporate governance of the company are will organized with an independent auditing agency who provide auditing tasks on all performance result Based on the board of management will evaluate and assess the implementation outcomes to make necessary and timely adjustments for success implementation of the company’s strategy during 2010-2015 With above management model, the company have competitive advantage to realize its strategy efficiently, make full use of its resources to generate the most benefit for the company Conclusion of chapter Based on the clear determination on the strategic commitment of the company, chapter focus on presenting strategic solutions and selecting the optimum business strategy That’s the product differentiation based focus strategy In order to achieve the objective, the company would need to define strategic solution and build up an implementation road map (specific annual action plan) Chapter also mention some proposal on organizational structure and strategic controlling system 129 CONCLUSIONS AND RECOMMENDATIONS A - Recommendations: - The government should issue more investment assistance policies, investment incentives in construction materials industry to push for the intensive development and new technology application; - The government should limit the new investments, apply strict appraisal on investment projects to ensure the project feasibility and the development planning for terracotta industry according to the market trends - Good management on development planning for construction materials and 130 upgrade the current standard on usage of terracotta products in construction - Continue to reduce the VAT on construction materials, giving more incentives on the consumption - Implementing thoroughly policy of developing accommodation for the low income people - Maintaining the preferential interest of business capital for businesses of construction materials - Be tense in removing handicraft ovens, strict management on terracotta production technology - Establish the development assistance center for industry of construction materials to conduct studies on industrial development and training for enterprises on technical services, help them to timely update with the advanced technology - Reinforce the functions of Vietnam Building Ceramic Association, Construction Materials Association and other associations, attaches their activities to practices, which can serve well the development of their member enterprises Organize seminars and workshops on industrial information at domestic and international scale - The associations will suggest the government to make necessary supplement and changes of policies to ensure an advantageous macro environment for the development of enterprises B - Conclusion: It’s strategically vital to build up a business strategy for Dong Anh Viglacera Joint-Stock company in its development orientation A sound business strategy will bring into play all resources of the company and 131 create high adaptation to external affects, it will, then, play the role of a lodestar in all production and business activities of the company in its development process Based on the conclusion from business strategy analysis and formulation by the company, the author group hope that Dong Anh Viglacera can come up with a sustainable development strategy Then, the company can work out functional strategies with suitable action plan for each period in an aim to maintain its prestige and expand its market share in the future All groups of solutions will be carried out synchronously to attach the functions with the strengths of company in strategy implementation During the implementation process, the company should regular result assessment of each stage fairly and correctly so that they make necessary and timely changes to better serve the production and business activities of the company With this formulation of business strategy based on the scientific arguments in combination with practical analysis, the determination of mission, vision and specific objectives, together with a wide and thorough range of implementation solution, including the organizational restructure and establishment of a strategic management system, Dong Anh Viglacera joint-stock company will surely achieve sustainable growth and development during 2010-2015 Finally, the author group would like to welcome all the recommendations and contributions from professors of Grigg and The international MBA program, the Board of Management of Dong Anh Viglacera Joint-Stock Company who gave us great support to complete this practical and useful study Sincerely 132 List of references Vietnamese Le The Gioi,… (2009), Strategic Management, Statistical publishing hoarse Vu Trong Hung (2003), Philip Kotler “ Marketing management”, Statistical publishing hoarse, Hanoi Nguyen Huu Lam,…(1998) "Strategic management: competitive position", Education publishing house Nguyen Thanh Thao, “Brand strategy according to the M Porter’s theory” 133 GaMBA (2009), Textbook on strategic management General statistics Department –Statistical Directory 2008 VnExpress(23/9/2009),“ADB is optimistic about Vietnam” Internal reports of Dong Anh Viglacera joint-stock company Internal information of Vietnam Building Ceramic Association 10, Vietnam Building association 11 Marketing and business magazine English Chankim W., Mauborgne R (1997), “Value Innovation: The Strategic Logic of High Growth”, Havard Business Review Dess G.G., Picken J.C., (1999), Beyond Productivity, Amacom, New York Fahey L., Narayanan V.K., (1986), Macro environmental Analysis for Strategic Ghemawat, (1991), Commitment the Dynamic Strategy, Free Press, New York John C.H.St, Harrison J.S., (1999), “ Manufacturing based relatedness, synergy, and coordination”, Strategic Management Journal Johnson G , Scholes K ,(1999), Exploring Corporate Strategy, Prentice Hall Europe Makadok R., (1999), “Inter-firm Differences in Scale Economies and The Evolution of Market Shares”, Strategic Management Journal Porter M.E., (1980), Competitive Strategy, Free Press, New York Porter M.E., (1985), Competitive Advantage: Creating and Sustainable 134 Superior Performance, Free Press, New York 11, Porter M.E., (1996), “ What is Strategy?”, Harvard Business Review 12, Stalk G., Hout T.M.,(1990), Competing Against Time, Free Press, New York 135 ... activities aiming at the mobilization of all the possible resources to achieve a defined purpose” (GaMBA, 2009, Text book on strategic management, Strategy Definition, p 1) - “Strategy includes ideas,