The necessity of the research
Power engineering consulting is a specialized technological service that has evolved significantly in Vietnam Since 2008, the industry has become competitive, with PECC1 no longer holding a monopoly as the preferential appointed bidder in this sector following its equitization.
The integration of Vietnam's economy into the World Trade Organization (WTO) has sparked a surge of foreign companies entering various sectors, including power engineering consulting This influx has intensified competition, not only for market share but also in the recruitment and retention of skilled human resources.
Many participating companies lack long-term strategic development, relying instead on relationships with authorities and select customers A 2005 study titled "Building Strategy for PECC1" approached strategy from the perspective of a state-owned monopoly, presenting more of an action plan to fulfill assigned duties rather than a relevant strategy for today’s market conditions.
The reasons above lend us the strong stage enough to choose “Building Business Strategy for PECC1 in the period 2011-2015” to be our capstone project.
Objectives and Expected result
Aiming to contribute to PECC1’s competitive and sustainable development by suggestions related to business strategy, the objectives of this research are:
- Review the theory of building business strategy
- Present about PECC1 and analyze its business environment
- Formulate an appropriate business strategy for PECC1, with corresponding detailed plan of action
There might be a following research on assessing the implemented strategy in order to have certain adjustment.
Research method, Data resources and processing
Case study and Descriptive analysis method is applied to analyze and build business strategy for PECC1
- Secondary data from Industry/company report, internet, newspaper
- Primary data from Interviews with Focus group and a group of interviewees selected
Scope of work and Limitations
- Research on PECC1 in the industry of Power engineering consulting service.
This article recommends a business strategy for PECC1 for the period of 2011-2015 While the research utilizes a case study approach that may overlook detailed analysis of PECC1's existing competitors, it does not alter the overall conclusions drawn in the paper.
The result of this project is not directly applicable for companies operating in other industry.
The structure of the writting
Excluding the Table of content, Introduction, Reference and Appendices, The
Project covers 3 main parts as below:
Chapter 1: A fundamental review of strategy theory focusing on building business strategy
Chapter 2 provides a strategic analysis of both the external and internal environments of PECC1, aiming to identify key opportunities and threats alongside the company's strengths and weaknesses This assessment serves as a foundation for developing a robust business strategy that aligns with the company's goals and market dynamics.
Chapter 3: Formulation of an appropriate business strategy and suggestions of strategy implementation
THEORIETICAL BASIS OF BUIDING BUSINESS STRATEGY OF COMPANY
Strategy
Strategy can be defined in multiple ways depending on the context, but in this paper, it refers to the approach an organization takes to achieve its goals while considering external threats and opportunities, as well as its internal resources and capabilities This definition emphasizes that effective strategies stem from a thorough analysis of both the external and internal environments, alongside the specific objectives the organization aims to accomplish.
Strategies within an organization operate at multiple levels, encompassing the entire business entity as well as the individual roles within it These strategies can be categorized into three main types: corporate strategy, business strategy, and functional strategies, each serving a distinct purpose based on their scope and focus.
Business strategy
Many businesses operate with informal strategies that guide their operations A business strategy outlines how a company intends to compete in the market, defines its objectives, and establishes the necessary policies to reach those goals.
Business strategy is narrower in scope than corporate strategy but bigger than functional strategies It is a combination of the investment decision and the development of a sustainable competitive advantage.
1.2.2 Three Competitive Strategies of Michael Porter
Competition is a fundamental aspect of nearly every industry globally, as highlighted by Michael E Porter, who defines competitive strategy as the pursuit of a favorable position within an industry This strategy focuses on achieving a profitable and sustainable stance against competitive forces, blending the firm's goals with the policies employed to reach them Porter identifies three generic strategies that organizations can adopt to navigate this competitive landscape effectively.
Figure 1.1 Michael E Porter’s generic strategies
Competitive scope Low cost High cost
B ro ad Overall cost leadership Differentiation
Strategic management process
A company has competitive advantage whenever it can attract customers and defend against the competitive forces better than its competitors Companies should aim to develop competitive advantages that are sustainable
Before build up any strategy for a company, the important thing is that we must clearly understand what the vision and mission of that company are.
Vision describes aspirations for the future without specifying the means to achieve desired ends A vision becomes more visible when it is expressed in the form of a mission statement.
Meanwhile, mission describes the company’s business vision, including the unchanging values and purposes of the firm and forward-looking visionary goals that guide the pursuit of future opportunities.
Formulation and choice of appropriate strategy
Internal Analysis Strengths and Weakness
- Process to Identify Sustainable Competitive Advantages
Strategy formulation includes identifying an organization’s external opportunities and threats, analyzing internal strengths and weaknesses, generating alternative strategies, and choosing the most appropriate strategies to pursue.
The external analysis provides companies with a comprehensive understanding of the threats and opportunities in their external environment, encompassing both macro and micro aspects The macro-environment, which impacts all firms, can be effectively assessed using PEST analysis, while the micro-environment, specific to individual industries, can be analyzed through Porter’s Five Forces Model This project aims to leverage these analytical tools to gain insights into the external factors influencing business operations.
Macro-environment factors are diverse and specific to each country, encompassing an unlimited range of influences These factors can be categorized into four main types: economic, technological, social, and political.
Table 1.1: Example of possible factors in a PEST analysis
Government intervention in the market Economic growth
Comparative advantages of the company
Infrastructure quality Skill level of workforce Labor costs
Attitudes to health, environmental consciousness, work and leisure
New discoveries and development Speed of technology transfer Energy use and costs
Government’s and companies’ spending on research Impact of change in information technology
Michael E Porter’s theory posits that industry competition is fundamentally linked to its economic structure, extending beyond the actions of existing competitors The competitive landscape is shaped by five key forces: the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, the threat of new entrants, and the rivalry among current competitors.
Figure 1.3: Porter’s five forces diagram
The five competitive forces are present in every industry and market, shaping the level of competition and the overall profitability and appeal of the sector By analyzing these forces, managers can strategically influence or leverage specific industry traits to enhance their firm's competitive position.
Competition in an industry is influenced not only by existing rivals but also by the potential entry of new firms, which can increase competitive pressure and diminish market appeal Barriers to entry and exit play a crucial role in determining a firm's ability to enter or leave the market, and these barriers can originate from various sources.
Table 1.2: Industry’s entry and exit barriers
Patented or proprietary know-how Difficulty in brand switching Restricted distribution channels
Specialized assets High exit costs Interrelated businesses
• Intensity of rivalry among existing competitors
This force describes the intensity of competition between existing players in an industry in which firms strive for a competitive advantage over their rivals.
Economists measure rivalry by indicators of industry concentration
The intensity of rivalry is commonly based on the firms’ aggressiveness in order to gain an advantage It is influenced by the industry characteristics such as:
The number of competitors; Market growth; Level of fixed costs; Level of product differentiation; Switching Cost
Substitute products refer to alternatives that fulfill the same function as a specific industry product Companies face challenges in increasing prices and boosting profits when there are readily available close substitutes and minimal switching costs for consumers.
The threat of substitutes is influenced by several key factors, including customer brand loyalty, the strength of customer relationships, the costs associated with switching to alternatives, the comparative price-to-performance ratio of substitutes, and prevailing market trends.
Table 1.3: Bargaining power of buyers
A few buyers with significant market share and many sellers
The industry is not a key supplying group
Low switching costs; products are standardized
Many different buyers; no buyer has any particular influence on product or price
Producer can take over own distribution or retailing Significant switching costs
Table 1.4: Bargaining power of suppliers
Many buyer and few dominant suppliers
No substitutes for the particular input
High switching costs from one supplier to another
The industry is not a key customer
Many competitive suppliers Low switching costs; products are standardized
Purchase commodity product The industry is a key customer Buyers threaten backward integration
Every firm is a collection of activities that are performed to design, produce, marketing, deliver, and support its product All these activities can be presented using value chain
Critical resources/factors in the chain are analyzed, based on what the core competency is defined.
Conducting a thorough analysis of both the internal and external environments is crucial for effective strategic planning Internal factors within a company are typically identified as strengths (S) or weaknesses (W), while external factors are categorized as opportunities (O) or threats (T) This comprehensive evaluation of the strategic landscape is known as a SWOT analysis, which aids organizations in making informed decisions.
Utilizing a SWOT analysis, a company can establish a competitive advantage by aligning its strengths with emerging opportunities while addressing weaknesses to effectively capitalize on promising prospects.
Pursue opportunities fitting to the company's strengths.
Overcome weaknesses to pursue opportunities.
Identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
Establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
Selecting the right strategy requires thoughtful evaluation to ensure its practical effectiveness It is essential to compare various strategic options that may be applicable in different scenarios, weighing their merits against one another.
The GREAT Model, which stands for Gain, Risk, Expense, Achievable, and Time, enables managers to effectively evaluate and compare potential strategies by assigning weighted importance to each criterion Strategies are rated on a scale from 1 to 5, with 1 being the lowest and 5 the highest Companies are encouraged to focus on strategies that receive favorable ratings, ensuring they align with their overall objectives for optimal decision-making.
Criteria Weight Strategy 1 Strategy 2 Strategy 3 Strategy 4
Once a strategy is analyzed and chosen, it is translated into actionable organizational steps This selected strategy is executed through specific programs, budgets, and procedures, relying heavily on the firm’s resources and the motivation of its staff to meet objectives The effectiveness of the strategy's implementation plays a crucial role in determining its overall success.
1.4 The best practice of business strategy building and relevant writings
The success of global brands like Google, Microsoft, Harvard Business School, and McDonald's is rooted in meticulously crafted strategies that have shaped their narratives.
In examining the case of PECC1, we recognize two significant Vietnamese writings from 2005: one detailing the "Marketing Strategy of PECC1" and the other focused on "Building Business Strategy for PECC1 from 2006 to 2010." These documents were created when PECC1 was still a state-owned entity, reflecting strategies aligned with goals set by EVN However, given the changes in both the industry and the organization since then, these strategies are no longer relevant Therefore, this capstone project is grounded in the current context, ensuring that we do not rely on these outdated strategies.
This literature review outlines the essential steps in strategy formulation, emphasizing the importance of analyzing both external and internal factors It highlights established practices in strategy development and references two significant writings that contribute to the understanding of this process.
STRATEGIC ANALYSIS AND BUSINESS STRATEGY FORMULATION
About the Power Engineering Consulting service and the Power
Engineering Consulting Joint Stock Company No.1
2.1.1 Introduction of the Power Engineering Consulting Joint Stock Company
On January 7, 1982, the Power Investigation and Designing company was formed through the merger of three entities: the Power Designing Company, the Hydropower Research and Designing Center, and the Geolo-Hydropower Investigation Company In 1999, it was rebranded as Power Engineering Consulting Company 1 (PECC1), and on February 1, 2008, PECC1 transitioned into a joint-stock company.
Head Quarter; Km 9+200 Nguyen Trai street, Thanh Xuan district, Hanoi, Vietnam Website: www.pecc1.com.vn
Graph 2.1: Organizational Structure of PECC1
Source: Human Resource department, PECC1
Service : Four major services provided by PECC1 are:
- Electric network planning for provinces, cities, industrial and residential zones.
- Master plan study, investment preparation and review/appraisal for projects related to hydropower development
- EIA study, Survey of losses, resettlement Action planning and design of Electric projects
← - Consulting supervision of power, transmission line, sub-station, distribution network and other irrigation, civil projects under construction.
← - Survey and Investigation of topography, geology, hydrology, environment and socio-economic conditions…
← -Observation of project deformation, construction of evaluation and coordination network to measure and prepare topography map.
← - Trial testing of foundation and road surfaces
- Analysis of chemical water used for construction
Investment and management of projects
← - Investment of constructing power plants
← - Produce and make business of electricity energy
← - Investment of constructing and make business of immovable property
← - Manage investment of constructing projects.
← - Grouting curtain and consolidation’s foundation of constructing projects
← - Construct small hydropower, distribution network and civil projects.
Some of the projects that PECC1 involved in are listed out in the appendix 4
Achievements and Rewards (listed in the appendix 3)
PECC1 has established itself as a trusted brand in power consulting since its inception, as evidenced by its extensive project history (see Appendix 4) Over the past five years, following its equitization, PECC1 has consistently enhanced its business performance, reflected in various positive financial metrics.
Table 2.1: Several financial figures of PECC1 from 2005-2010
From 2008 to 2009, the revenue increased by 7.96% with the amount of 35,764 million dongs From 2009 to 2010, the revenue increased by 0.88% with the amount of 4,253 million dongs.
2.1.2 The Power engineering consulting service
Investment decisions are fundamentally based on thorough analysis of essential information, particularly in the complex field of electric power To obtain critical data for informed investing, specialized technological processes are employed Power engineering consulting services play a vital role in this process by offering expertise in planning, locating, and designing projects, grounded in meticulous surveys and investigations of topography, geology, hydrology, environmental factors, and socio-economic conditions Typically, consulting firms adhere to four major steps to deliver their services effectively.
(1) Investigate and report on the project locating or investment report
(2) Investigate and report on the infrastructure design and purchasing
(3) Submit technical proposal and budget
(4) Submit the implementation map and bidding documents
The scrupulous job requires specialized tools and machines; experienced knowledge in the field as well as the operating license Therefore, it is hard to find a substitute
Electricity is “a special good”, in terms of un-storability Thus, the development of this consulting market has a strong attachment to the electric demand.
The customers for this service are investors for power source or power network. They can be EVN, local authorities, private investors or foreign investors.
Under the Power Law 28/2004/QH11, enacted on December 3, 2004, and Decision No 32/2006/QĐ-BCN issued by the Ministry of Industry on September 6, 2006, only licensed firms are permitted to provide power engineering consulting services.
Before 2005, Vietnam's electric market was a monopoly with appointed power engineering consultants However, the introduction of the Power Law, which permitted firms of all ownership types to enter the consulting market, along with Vietnam's WTO integration, led to an influx of foreign enterprises joining the five existing oligopolies.
External analysis of PECC1
Vietnam is recognized as one of the safest political nations, and the government is committed to maintaining this reputation by enhancing its legal framework and social policies As a result, companies like PECC1 benefit from a conducive environment for growth and development.
The Power Law (28/2004/QH11), enacted on December 3, 2004, along with Decision No 32/2006/QĐ-BCN issued by the Ministry of Industry on September 6, 2006, permits firms of all ownership types to engage in the power market as suppliers, buyers, or consulting entities, provided they obtain the necessary licenses This regulatory framework fosters a competitive environment for enterprises looking to enter the Vietnamese market, significantly increasing competition from both local and international companies.
Due to sensitive political factors outlined by the government, Vietnam currently lacks a truly competitive market, which benefits local firms like Lucky PECC1 As a result, the unique Vietnamese business culture and historical influences provide local companies with a significant advantage in balancing competition against foreign entities.
In 2009, Vietnam's economy demonstrated remarkable resilience by achieving positive growth despite facing significant challenges, a feat that only a handful of Asian nations could claim that year This recovery was largely attributed to a comprehensive set of economic stimulus measures implemented through both monetary and fiscal policies, which effectively revitalized the economy The accompanying graph illustrates the impressive growth of Vietnam's GDP during this period.
The growth and stabilization of enterprises in all fields require the development of supporting electric industry
The demanded corresponding growth of electric to the growth of GDP for the period 2011-2015 is as below i :
Table 2.2: The demanded growth of electric to the growth of GDP from 2011-2015
GDP growth Corresponding growth in power to support
To address the increasing demand for electricity, the Power industry plans to invest 101.6 trillion dongs (approximately 5.33 billion US dollars) annually from 2011 to 2015 This strategic investment will total 508.6 trillion dongs (around 26.6 billion US dollars) over the five-year period, aimed at enhancing power sources and infrastructure.
The amount shows the opportunity for the power engineering consulting market to expand.
After Vietnam’s integration in WTO, geographical borders are removed in business
Vietnam's commitment to integration fosters an environment conducive to foreign consulting firms equipped with skilled personnel, efficient organizational structures, and advanced customer relationship management tools This diversification and globalization of foreign participation extend to various industries, including power engineering consulting services.
The competition from foreign firms such as Fichtner, Lahmeyer International, Siemens, Startkraft Engineering, Poyry, Nippon Koei, NewJec, Sweco, Electrowatt, Coyne et Bellier, and Sogreah has significantly pressured local consultants to enhance their operational efficiency and competitiveness This rivalry highlights the necessity for local entities to adapt and innovate in order to thrive in a challenging market environment.
Despite being classified as a developing nation, Vietnam has seen significant improvements in living conditions, evidenced by the minimum wage increasing to VND 830,000 per month as of May 2011 and an average income of approximately $1,160 in 2010 These enhancements in living standards have led to a rise in the consumption of electrical goods across various sectors.
2010 is presented in the graph 2.2 below:
Graph 2.3: Power consumption by economic sector
The positive growth indicators for the power engineering consulting industry highlight a promising future Both the power source construction market and the network and station construction sectors are experiencing significant expansion, driven by various technological factors.
Local experience and understanding are crucial, but technology plays a vital role in enhancing consulting reports that inform decisions on constructing electric source network systems The application of advanced technology leads to more accurate, timely, and relevant consulting reports In certain situations, leveraging advanced technology alongside thorough investigations can bridge existing gaps in knowledge and decision-making.
Foreign firms excel in regular and effective research and development activities, which serve as a significant competitive advantage In contrast, such efforts in Vietnam often remain limited to paperwork, typically only gaining traction when a customer places a relevant order.
This vulnerable situation raises threats to PECC1 in competing after Vietnam joining WTO with its commitments on marketization.
2.2.2 Industry environment analysis a Intensity of present competitor
Present competitors & the differentiation in service providing
The market features participation from five Vietnamese companies and approximately twenty foreign firms from regions including Europe, America, Canada, and Japan The Ministry of Industry has authorized power engineering consulting organizations to operate within the same scope However, each firm has its own focus based on its core competencies and reputation.
The 5 local companies include: PECC1, is well-known for its Hydro-power projects; PECC2, that majorly involves in the works in the south and the middle of Vietnam; PECC3, PECC4 and the Institute of Energy (IE)’s is the strong customer relations, in compare to that of PECC1.
Among the 20 foreign companies, Fichtner and Poyry are the two names that are considered as the most competitive participants in the market.
Founded in 1922, Fichtner is Germany's largest independent consulting engineering firm and a leading player on the international stage The Fichtner Group boasts a global network of branches and affiliated companies, emphasizing its commitment to client-focused management of complex interdisciplinary projects With a team of 1,800 experienced engineers, economists, and consultants, Fichtner excels in a diverse range of specialized fields.
The Pửyry story began in 1958 when it agreed to do the basic engineering for the Äọnekoski sulphate pulp mill in Finland As the company grew the culture did too.
Püryry distinguished itself early on through its unwavering integrity and commitment to client relationships With a network of 7,000 experts across approximately 50 countries, clients rely on Püryry's engineers and consultants for honest and straightforward advice This extensive knowledge base has propelled Püryry to success in multiple markets, positioning the company as a global thought leader in engineering balanced sustainability for a complex world.
The three pie charts below present the market share based on the revenue in 3 years of the organization which can reflect high intensity of competition in the industry
Graph 2.4: Market share (calculated in revenue (trillion dongs))
Source: Aggregating the Financial reports of the organizations in 3 years
Internal analysis of PECC1
The company's structure was reorganized through an equitization process to promote the independence and proactivity of its subsidiaries, shifting from project-based management to a focus on individual subsidiary management However, PECC1's leadership weaknesses—particularly in vision-setting, critical analysis, and market sensitivity—have hindered the achievement of the new structural objectives Despite a long history of development, PECC1 faces challenges in enhancing its management effectiveness and leadership culture, even as external improvements are evident.
Organizational structure and Leadership are the weakness of PECC1 in compare to other competitors in the industry iii
Table 2.4: Several key financial criterions of PECC1 in 2008, 2009, 2010
Current assets/short-term debt
Cost price of goods sold/Average inventories
The company's liquidity ratio has been well-managed and showed consistent improvement from 2008 to 2010, with the short-term liquidity ratio rising from 1.06 in 2008 to 1.08 in 2009, and reaching 1.30 in 2010 Although the quick ratio remained below 1 during these three years due to delays in significant projects like the SongBung5 hydro power project, it notably improved in 2010, reaching 0.97.
PECC1 effectively utilizes financial leverage, as indicated by its debt ratio of approximately 0.7 to 0.8, typical for the consulting service industry Acknowledging the associated risks, the company has made strides in enhancing its financial health through equitization and stock issuance This effort has successfully reduced its debt-equity ratio from 4.24 in 2008 to 3.77 in 2009, ultimately reaching 2.89 in 2010.
PECC1 demonstrates strong operational efficiency, as indicated by its inventory turnover ratio, which has fluctuated around 2 over the past three years—reflecting effective management for a company focused on long-term projects Additionally, the total revenue turnover showcases PECC1's asset management efficiency, despite a decline in 2010 when the ratio dropped from 0.74 in 2009 to 0.57; nonetheless, a value above 0.5 remains acceptable and indicates solid performance.
From 2008 to 2010, the profit margin experienced a steady increase, rising from 6.1% in 2008 to 7.11% in 2010, although these figures are still considered relatively low due to the high costs associated with power project surveys and investigations During the same period, the company's total assets surged by 32%, growing from 656 billion dongs in 2009 to nearly 865 billion dongs in 2010, primarily driven by a significant 63% increase in equity, which rose from approximately 136 billion dongs.
From 2009 to 2010, PECC1 experienced significant growth, increasing from 2009 to over 222 billion dongs Despite a decline in Return on Assets (ROA) and Return on Equity (ROE), this trend is not necessarily alarming The rising profit margin and the ratio of profit to revenue indicate that PECC1 maintains acceptable profitability levels.
In summary, PECC1 demonstrates strong financial capabilities, effectively managing liquidity, leveraging financial resources, and optimizing asset and inventory management while maintaining satisfactory profitability However, the significant increase in total equity from 2009 to 2010 has resulted in a decline in the company's return on equity (ROE) ratio.
2.3.2 Assessment of Human Resource and Motivation at work
The Quantity of Human resource, PECC1-2010
Human resources are the most valuable asset of PECC1, strategically assigned to various job roles based on their contribution to revenue generation The majority of these resources are concentrated at the headquarters, as illustrated in tables 2.4 and 2.5.
Table 2.5: The proportion of Human resource on Field of jobs, PECC1- 2010
Source: Human resource department report, PECC1-12/2010[9] Table 2.6: The allocation of Human resource on branches, PECC1 2010
No Headquarter/ Subsidiaries Number of people
Power Engineering Investigation and Design
Power Engineering and Investigation One member limted company2 51
Power Engineering Investigation and Design
Source: Human resource department report, PECC1-12/2010[4]
The Quality of Human resource in PECC1-2010
Among the five local enterprises, PECC1 has the dominant advantage in the number of trained Engineers.
Table 2.7: Human resource training condition of power engineering consulting companies, Vietnam-2010
Number of specialized Doctors, Masters and Engineers
Number of specialists and staff
Source: Aggregating the data from 5 organizations, 2010 [4, 9]
The advantage in the human resource quality of PECC1 is clearly shown through the chart of Revenue per labor in the year 2010 below of the five Vietnamese participants.
Source: Aggregating the data from 5 organizations, 2010 [4, P20]
PECC1 generates revenue per person that is 5% higher than PECC2 and 11% higher than the average revenue of PECC4, highlighting its superior financial performance among its peers.
Human resources are emphasized as the most critical input factor in this discussion, with the quality and quantity of human capital serving as a core competence for PECC1, enabling it to compete effectively against four local rivals Managing and retaining this valuable asset remains a significant challenge for the organization.
The annual average turnover rate of PECC1 in recent years is significant at the level
A concerning trend for PECC1 is the departure of skilled engineers and consultants, whose contributions account for approximately 5% of the organization's annual revenue.
Motivation at work & Corporate culture
Motivation in the workplace encompasses both physical and mental factors, yet PECC1 primarily relies on a physical motivation system, which contributes to its high turnover rate In this context, physical motivation is linked to income, comprising a fixed salary of 20-30% and a variable salary of 70-80% based on performance evaluated through the K factor system However, the criteria for assessing job quality remain unclear and insufficiently fair, leading to a lack of strong motivating effects for demanding roles, such as survey engineers who often work in hazardous conditions far from home.
PECC1's lack of a well-developed promotion and career advancement framework, coupled with inadequate corporate culture and team-building initiatives, hinders its ability to motivate and retain employees This shortcoming often drives employees to seek better opportunities at foreign companies like Fichtner and Poyry, which offer more competitive compensation packages, or domestic firms like PECC2, which boast more developed corporate cultures.
2.3.3 Procurement- Technology Research and development
PECC1 is committed to enhancing project quality and job effectiveness by investing significantly in advanced machinery and tools for surveying and investigation, with expenditures reaching tens of billions Notable equipment includes the Russian LongYear 38 driller, capable of drilling up to 450 meters, a GPS satellite signal receiver, the Japanese SET2C total survey station, and the Swedish Karota digital technology station As the only organization in Vietnam to possess these modern specialized tools, PECC1 ensures greater precision in consulting reports, positioning itself as a pioneer in equipping projects among Vietnamese companies.
PECC1 actively engages in research and development (R&D), resulting in over 100 software tools that enhance survey, calculation, and mapping tasks Notable R&D achievements include stability calculations for concrete dams, slope stability assessments, and optimization of energy systems, as well as heat and smoke calculations for thermal power plants and hydropower plant technology designs Although PECC1 has made significant strides as a newly equitized company from a state-owned enterprise, it still lags behind foreign firms in the increasingly globalized market regarding the straightforwardness, practicality, and comprehensiveness of its R&D efforts.
STRATEGY SELECTION, RECOMMENDATIONS AND CONCLUSION
Briefing about SWOT of PECC NO.1 in the period of 2011-2015
The result of critical analysis on both external environment and internal factors are briefed and presented in the table 3.1 below.
The SWOT matrix indicates the 3 recommended strategy should be implemented:
(1) Differentiate the services provided by taking full advantage of brand- recognition, Company’s loyalty, experienced HR, and by catching the opportunity to approach with the modern technology from abroad
PECC1 aims to expand its services to foreign investors and international projects, creating a mutually beneficial scenario By leveraging its local expertise and geographical knowledge, PECC1 not only enhances its offerings but also provides its workforce with valuable exposure to Western working environments This experience allows employees to develop their skills in customer relationship management, particularly in building strong connections with foreign investors.
(3) Strategic adjustment in Human resource management system by improving the motivation at work to maintain the good employees, avoid the threat of brain- drain.
Table 3.1: SWOT matrix for PECC1 by 2011
1 High and increasing intensity of competition
2 There are more categories of customers in the market which are more and more diversified and globalized
1 Very good quality of HR
3 Good brand- recognition in an important market segmentation
=> Approach to the most state of the art of technology, purchase S3 + O1
=> Expand the targeted market, to different sectors & regions
=>Expand the targeted market, to different sectors & regions
1 Weak motivation and allowance system leading to high turnover rate.
3 Lack of corporate culture care
=>Improve the motivation and corporate culture, maintaining the good HR.
3.2 Briefing about the strategies for PECC1 in the period 2011-2015
Strategic goal: Consolidating for market position maintaining, accelerating for industry competition, stabilizing for global integration
In a highly sensitive industry characterized by significant entry barriers and rising competition, PECC1 should adopt a Differentiation-Focus strategy to leverage its strong brand loyalty and skilled workforce while addressing weaknesses such as poor customer relations and ineffective R&D This approach will enable the company to capitalize on available opportunities and mitigate potential threats effectively.
Providing as much additional services as possible, affording to the packaged consulting/supervising service;
Enhancing cooperation with foreign partners to create customer relations with foreign partners and investors
Maintaining and spreading the loyalty of experience and HR quality; Approaching with the state of the art technology and researches; strategically investing for systematical procurement
Taking the full of advantage, Focus on the hydro-power segment, expanding the targeted market to foreign investors, abroad projects.
(3) Maintaining the possessing key success factor-HR
Improving the motivation at work to maintain the good employees, avoid the threat of brain-drain.
3.3 Selection of the appropriate business strategy (GREAT)
The selection of a strategy hinges on the company's primary objectives, the feasibility of the strategy, and the associated costs, time, and risks involved in its implementation To identify the most suitable strategy for PECC1, the GREAT model is utilized, assigning specific coefficients to each criterion for a comprehensive evaluation.
Table 3.2: Strategy assessment/selection using GREAT model:
Criterions Weighted Strategy (1) Strategy (2) Strategy (3)
The weighted assessment shows that strategies (1) and (3) are the most appropriate ones in the current conditions of PECC1 for the period 2011-2015.
To effectively compete for a larger market share, PECC1 should leverage its valuable resources, including skilled human capital, extensive experience, and strong brand recognition, to differentiate itself from domestic competitors By maintaining its workforce strengths and fostering collaboration with foreign partners and customers, PECC1 can enhance its competitive edge in the market.
In conclusion, the two strategies selected to implement at the current are: a Differentiation
Providing as much additional services as possible, affording to the packaged consulting/supervising service;
Enhancing cooperation with foreign partners to create customer relations with foreign partners and investors
To foster and enhance loyalty in experience and HR quality, it is essential to leverage cutting-edge technology and research Strategic investments in systematic procurement are crucial for maintaining the key success factor of human resources.
Improving the motivation at work to maintain the good employees, avoid the threat of brain-drain.
3.4 Proposal of action plans for the chosen strategy
3.4.1 Concrete objectives o Forming the marketing and sales department which is responsible for marketing, sales, customer care, PR activities. o A standardized, professional process of customer care is implemented, periodically checked, adjusted and improved o After 6 months: the number of clients increases by 3%, the number of approached investors increase by 15% o Setting partnership relation with 5 to 7 foreign companies/agencies o The turnover rate decrease by 1% after 6 months
3.4.2 Proposal of action plan for the chosen strategy (1)- Differentiation
Differentiation involves delivering superior service that meets diverse customer demands more effectively than competitors The goal is not only to enhance brand awareness but also to establish a commitment system that strengthens client relationships and reinforces the brand image.
In order to implement the differentiation strategy, several below strategic solutions must be implemented:
(1) Forming the marketing and sales department which is responsible for marketing, sales, customer care, PR activities.
(2) Complete and detail the service providing process; the process of handling the abnormal issues including the complaints.
(3) Enhancing the relations with technological partners to approach with the state of the art technology (purchasing or leasing or partnership linking);
Standardize the process of information providing for internal and external users
(4) Building the culture of “customer orientation” by comprehensive training program and setting up premising environment in the whole company.
Table 3.3: Plan of action for differentiation strategy
1 Forming the marketing and sales department
A professional team selected from experience consultants and newly recruited who is responsible for marketing, sales, customer care, PR activities.
The Board of Management, HR department
2 Complete and detail the process of service providing
A task force team (combined using outsource consulting) complete and detail a professional and commonly applied in service providing
Task force assigned by the Board of
Complete and detail the process of handling abnormal issues including the clients’ additional requirements & complaints.
As a part of service providing process, but more important and more regularly existence than that in other industry, thus the process should be detailed and practice smoothly and professionally
The above task force team
Time technological partners to approach with the state of the art technology
PECC1, as a top company in Vietnam to create as many partnership as possible
- Partnership appears as an asset of PECC1 in customers’ recognition in considering choosing the service supplier
Management or functional departments are quantitatively assigned to develop relations in their line dongs/ year
Standardize the process of information providing for internal and external users
-The image of a modern, active PECC1 that is always afford to serve the best to the customers is pushed to both internal and external clients.
Marketing and sales department with the support from functional departments
5-6 weeks for system building and monthly updated
“customer orientation” by comprehensive training program and setting up premising environment in the
The concept of “customer orientation” is absorbed in the scale of the whole company from the management level to the specialists
-HR department (outsource training order)
Time satisfaction Practice the recognition and appreciation for the stories of success/failure. practice the premising environment)
3.4.3 Proposal of action plan for the chosen strategy (3)- Maintaining the possessing key success factor-HR.
PECC1 benefits from a strong human resource base, but faces significant challenges due to rising competition, particularly from foreign firms that offer higher salaries and actively attract skilled local talent To combat the risk of brain drain, it is essential for PECC1 to enhance both physical and mental motivation among its workforce.
In order to implement the strategy, several below strategic solutions must be implemented:
(1) Standardize the system of job title in the scale of the whole company, in which job description including core competency requirements and corresponding income, reward/allowance.
(2) Build up and public the career route in PECC1 Detail and clarify reward system for in time, motivating recognition; appropriate allowance for hard-working position.
(3) Short coaching course/ trip to enhance the teamwork culture in PECC1.
Table 3.4: Plan of action for the strategy of maintaining the possessing key success factor-HR
1 Standardize the system of job title in the scale of the whole company, in which job description including core competency requirements
-A clarified system of job titles covers the job description, required competencies.
A task force team with the support from the Board of Management, HR department and other functional departments
A system of corresponding income, reward/allowance to each job title
-Afford aiming to the most appropriate treatments to the contribution of labors
HR department approved by the board of management
2 Build up and public the career route in PECC1
-Motivate the employees by a clear and fair enough route to attempt and contribute at work
The task force above with the support of HR department and approved by the Board of management
Detail and clarify reward system for in time, motivating recognition; appropriate allowance
-Show off the recognition, appreciation, respect of the company to the contributors
HR department , approved by the Board of management
3 Short coaching course/ trip to enhance the teamwork culture in PECC1
-Enhance the corporate culture and leadership, started from the level of teams
-Spread the proudness of being a member of PECC1.
Power engineering consulting in Vietnam has evolved significantly, transitioning from a monopoly to a competitive industry following the country's WTO accession This integration has led to an influx of foreign firms and substantial modernization among local companies As a result, competition has intensified, with firms not only vying for market share but also striving to attract and retain skilled human resources.
The writers have chosen to develop a strategic plan for PECC1 as their group capstone project, focusing on the company's long-term growth Titled "Building Business Strategy for PECC1 from 2011 to 2015," this paper aims to serve as a valuable resource for other organizations in the same industry.
This article reviews literature on business strategy development, focusing on the analysis of both external and internal factors affecting PECC1 It aims to propose a suitable business strategy for PECC1 for the period of 2011 onwards.
2015 with corresponding specific plan of actions.
This capstone project was successfully completed through the collaborative efforts of our team, leveraging our acquired knowledge and experience Nonetheless, we acknowledge certain limitations in our writing and sincerely welcome feedback from professors and colleagues to enhance our work.
Sincerely thank you very much!
QUESTIONAIRE
A group of MBA students at Griggs University is conducting a survey as part of their capstone project for their Master of Business Administration degree The survey aims to collect expert assessments to develop a business strategy for PECC1 To ensure confidentiality, all responses will be kept private and combined with those of other participants Your participation is crucial for achieving valid results in this study.
Thank you so much for your support.
When evaluating the key success factors (KSFs) for PECC1 in the power engineering consulting industry, four critical elements emerge: a strong reputation for delivering high-quality services, the ability to innovate and adapt to industry changes, a skilled and experienced workforce, and robust client relationships that foster trust and loyalty These factors collectively position PECC1 as a leader among its competitors, driving sustained growth and success in a competitive market.
When assessing the performance of various power engineering consulting companies, please evaluate each based on the criteria outlined in the table, using a scale of 1 to 10, where a higher score indicates superior service quality.
# Criterions PECC1 PECC2 PECC3 PECC4 IE Fichtner Poyry
PECC1, ACHIEVEMENTS AND REWARDS
• Labor Hero in the renewal process in 2005
• A Second - Class Independent Medal in 1994
• 30 Labor Medals including the first, second and third grade
• 245 Diplomas of Merit from Primer Minister, Ministries and Sectors
• Triumphant banners of occasion from Government and EVN
SOME TYPICAL PROJECTS COMPLETED BY PECC1 .57 APPENDIX 5 PECC1- CAPABILITY OF INVESTIGATION EQUIPMENT, TESTING.58
1 Hoa binh Hydropower Project: Labor medals of the third grade in1983, 1984,
2 North- South 500KV high voltage transmission line (circuit 1): Second- class Independent medal in 1994, labor medals of the First and Second grades in 1994
3 Yaly Hydropower Project: Labor medal of the third grade in 2002
4 Song Hinh Hydropower Project: Diplomas of merit and Triumphant banners of occasion from Primer Minister
The 500KV high voltage transmission line projects, including Pleyku-Phu Lam, Pleyku-Doc Soi-Da Nang, and Ha Tinh-Nho Quan-Thuong Tin, were recognized for their excellence, receiving the Third Class Labor Medal and a Diploma of Merit from the Prime Minister in 2006.
PECC1- CAPABILITY OF INVESTIGATION EQUIPMENT, TESTING
Name of equipments Quantity Manufacturers
2 Total station (NIKO, LEICA) Japan
5 Sample testing drilling machine Russia
2 CBR,JYE200,50-c46G2- Testing compressive durability
3 WE-3008-Testing compressive, tensile durability
8 Device measuring density and Italy humidity by radioactive
9 Apparatus testing rock stresses China
10 Apparatus testing concrete setting Italy
11 Multipurpose tensile bending machine 30 tones
PECC1- SOFTWARE OF CONSULTING SPECIALITIES
GEO.SLOPE SLOPE/W: Geotechnique of soil
SLEEP/W: Leakage SIGMA/ W: Stresses QUAKE/W: Seismic
Geotechnique of Soil & rock, vision of 5 users, 3D modulus
Solvia Static and dynamic analysis of concrete gravity dam
MIKE 11 HD: Hydraulic modeling, GT, ST & ACS, reservoir sedimentation
PHASE 26.0 Stresses in rock mass, Tunneling supports and rock slopes
Unwedge 3.0 Stability, consolidation of cupola and wall of underground structures
FENAS E.F method for analysis of structures Canada Auto CAD
PSS/E Regime of electric power system USA
PROMIS-E Design Secondary electric power system USA
STRUCAD Architectures of power house UK
EMTP-RV Electromagnetic transition zone Canada