T HE NEED AND SIGNIFICANCE OF THE RESEARCH TOPIC 8 2 O BJECTIVE OF THE RESEARCH 9 3 S UBJECT AND SCOPE OF RESEARCH 9 4 R ESEARCH METHOD 9 5 C OMPOSITION AND STRUCTURE OF THE PROJECT REPORT 10 CHAPTER
D EFINITION OF THE STRATEGY 11
A strategy is a comprehensive action plan designed to achieve specific objectives For an organization, this involves clearly identifying desired goals, determining the implementation methods, and allocating the necessary resources to succeed.
M.Porter says that “Strategy is the art in creating stable competitive advantages for defensive purpose.”
Alain Threlart believes “Strategy is the art that is used to fight against competition and to win a victory”.
General Ailleret thinks “Strategy is the determination of roads and the means to achieve the objectives those are identified through policies’’.
According to Gluecl, strategy is a cohesive and comprehensive plan designed to achieve an enterprise's objectives Liam Fahey and Rober M Randall further elaborate that strategy encompasses specific operations, including all activities related to processes, practices, human resources, assets, technologies, information utilization, competitiveness, and resource management.
According to the integrated perspective derived from both theory and practice in Grigg University's curriculum, strategy is defined as a series of complex actions aimed at mobilizing an organization's resources to achieve specific objectives.
1.2 The role of the strategy
Business strategy management enables enterprises to clearly define their objectives and goals while guiding them toward their desired direction It empowers managers to assess and pinpoint the company's trajectory, determining the optimal timing for achieving specific positions in the market.
Effective strategy management enables enterprises to align decisions with their environmental conditions As the complexity and variability of the environment increase, businesses must actively engage in decision-making to navigate these changes Active decision-making involves forecasting environmental conditions and taking proactive measures to influence outcomes, ensuring that corporate objectives are met Conversely, passive decision-making focuses on anticipating future conditions, allowing companies to optimize their stance by mitigating risks and seizing potential opportunities While passive strategies can be effective, a robust strategy management approach centered on environmental factors equips enterprises to better prepare for changes and manage variations effectively.
R EQUIREMENTS TO THE STRATEGY 12
Ensuring safety in business is crucial due to inherent risks, and the key lies in minimizing these risks effectively To achieve this, businesses must clearly define their scope, objectives, and the fundamental conditions necessary for implementation, thereby preventing resource wastage Additionally, forecasting the future business environment is essential for developing an appropriate action plan, as the accuracy of these forecasts directly impacts the feasibility of the business strategy A robust strategy should empower the enterprise to meet its goals, enhance its capabilities, and improve competitiveness Consequently, leveraging the enterprise's comparative advantages is vital in formulating a business strategy that emphasizes strengths Furthermore, a contingency business strategy should be established to address market fluctuations.
B ASIS FOR THE DEVELOPMENT OF THE STRATEGY 12
The business operations of an enterprise are significantly influenced by both external and internal environments External factors include the macro environment, micro environment, and industry-specific conditions, which present various opportunities and challenges Internally, an enterprise must assess its strengths and weaknesses in comparison to competitors Additionally, understanding market demand for products and services, along with the business goals and vision set by the enterprise, serves as a foundation for strategic development.
In recent years, Ha Do Group has experienced significant growth, evidenced by substantial increases in total properties, turnover, and profit The company has successfully executed numerous projects in real estate, relaxation resorts, hotels, and hydropower, solidifying its position in the real estate sector and the broader construction industry As it aims to stabilize its organization, workforce, and financial resources, this analysis will examine the internal environment of the enterprise within the context of the branch, national, and international business environments using SWOT analysis and the I.E matrix The SWOT matrix combines internal and external analyses to propose strategic orientations crucial for the enterprise, while the I.E matrix provides a qualitative assessment, enhancing the insights gained from the SWOT analysis.
In recent years, Ha Do Group has shifted its strategy from rapid development to a focus on sustainable growth as its core value The group aims to achieve a stable and high growth rate that surpasses industry standards while maintaining a strong profit-to-investment ratio This strategic pivot positions Ha Do Group as a formidable player in construction, real estate, hospitality, leisure resorts, and hydroelectric investment.
T HE DEVELOPMENT OF STRATEGY 14
Strategic management is a dynamic process that aligns strategies, operations, and business outcomes by integrating human resources, leadership, techniques, and management methods This ongoing activity is essential for establishing and maintaining an organization's strategic direction while adapting to the ever-changing business environment Enterprises must define clear operational goals in response to policy shifts and market demands, ensuring accountability in their decision-making processes Additionally, changes in partnerships can influence management approaches, highlighting the interconnectedness of strategic direction and operational adjustments.
Strategic management involves researching current and future environments to plan and implement an enterprise's objectives, ensuring that decisions align with these goals The primary aim of business strategy is to identify and enhance opportunities while securing a competitive position for the organization This process encompasses two interconnected tasks: establishing the strategy and executing it, which are further refined through a cyclical approach consisting of three key stages.
The development and analysis of business strategy involves evaluating the current circumstances and predicting future trends, followed by selecting and implementing strategies that align with the specific conditions of the enterprise.
The inspection and adaptation of the strategies is the evaluation and control of the results, the selection of solutions to adapt strategies to the situation of the business environment
1.5.2 The process of strategic management
In the past, business strategies were developed and executed infrequently by senior management; however, today, strategic management is an ongoing process that involves the active participation of all employees within the organization.
Figure 1.2 : Diagram of Procedure for building strategy
Characteristics of the effective strategy management include:
* A mechanism for accountability (with clients in meeting their expectations and focus in meeting goals and policies);
To effectively coordinate diverse objectives across various management levels, from general management to internal reporting, it is essential for managers to implement a comprehensive framework This approach enables seamless collaboration and alignment, even amidst competing job priorities and differing goals.
* A clear business strategy and vision in the future;
* A strategic direction that is approved by senior management officers including partners and fund contributors;
* The ability to exploit opportunities and respond to the external changes (uncertainty) by implementing strategic decisions;
* A strong framework for risk management – is possible to balance the risks and rewards of a business direction, to cope with changes for available risks or ensure the continuity in business?
Strategic manager is responsible for the success or failure of the enterprise including business managers and senior managing director in organizations in the public
Function, task and strategic objectives of the enterprise
Analysis of the internal enteprise (S,W) (3)
Analysis of the business environment (O,T) (2)
Strategy of company level (5) Strategy of business basis and functional unit
Check and evaluation of implementing results
In the realm of strategic planning within the public service sector, it is crucial for senior administrators to identify opportunities and be prepared to reorganize the organization in response to strategic changes They must explore effective methods to deliver essential services, while staff members play a vital role in implementing and evaluating the business strategy Respecting partners and capital contributors impacted by this strategy is essential in the broader business landscape Additionally, addressing challenges and seizing opportunities necessitates ongoing attention from senior administrators, as these factors can have long-term implications for the organization and demand significant resources.
* The decision requiring the organizations to make long-term commitment.
* The decision with big influence outside the organization.
* The decision related to the resources, finance or others including staff or equipments.
* The decision related to some big changes in the organization.
* The decision affecting the whole or a majority of the organization.
* The decision carrying risks in the business operation.
* The decision related to changes in business including products and services provided by the organization.
* The decision related to other important decisions and arising complicated interaction.
Identification of functions, tasks, and objectives
Before mobilization, it is crucial for individuals, organizations, or enterprises to clearly identify their objectives Objectives can be categorized into three main parts: functions, long-term goals, and short-term goals The largest component, functions, represents the fundamental purpose of the enterprise's existence Meanwhile, long-term and short-term objectives provide specific targets that the enterprise aims to achieve These objectives should be derived from the core tasks and functions, ensuring they align with the overall mission of the organization.
After the functions, tasks and objectives are proposed, people participating in the implementation must understand what the enterprise desires to achieve.
Basing on the level of strategic management, strategies are divided in the three groups as follows:
Enterprise-level strategy defines the company's objectives and operational purposes, guiding its overall business activities It establishes fundamental policies and plans to achieve these goals while allocating resources across various business operations This comprehensive strategy is implemented throughout the entire organization.
The business-level strategy focuses on selecting specific products and target markets for an enterprise's operations This strategy outlines the approaches each business unit must adopt to effectively execute the overarching enterprise-level strategy.
Functional strategy focuses on how various organizational units, such as Marketing, Finance, Technology, Human Resources, and Production, are organized to execute the overall enterprise strategy and the specific goals of each Strategic Business Unit (SBU) It outlines short-term objectives and action plans tailored for functional units to align with both the SBU's immediate goals and the organization's long-term vision Additionally, functional objectives address two key aspects: meeting the operational environment's demands and ensuring collaboration among different functional policies.
It is difficult to develop a good business strategy, but it is even more difficult to realize it An effective implementation must ensure the coherence between the objectives and actions.
Effective business strategy implementation relies on the strategic allocation of resources, necessitating changes in how an enterprise utilizes its assets Careful planning of these resource adjustments is crucial, as it ensures alignment with the organization's objectives Additionally, resource planning must consider different levels across various strategic tiers to optimize effectiveness.
Developing a strategic vision is essential for guiding an enterprise toward its desired goals This vision is fundamentally supported by the interests of shareholders, clients, and employees, forming the core foundation of the organization's aspirations.
A strategic vision should be simple, clear, and direct, allowing for significant changes while fostering commitment among the organization’s members It should balance long-term goals with immediate relevance, ensuring that resources are effectively allocated with consideration for scale and timing Additionally, it is crucial for senior leaders to maintain regular communication regarding the strategic vision.
A company's mission statement should clearly convey its purpose and the value it brings to its stakeholders It should highlight the significance of the enterprise's existence while addressing key aspects such as its goals, benefits, and impact on the community.
* Market: Where does the enterprise compete?
* Technology: Is technology the top concern of the enterprise?
* Customer: Who will consume the products of the enterprise?
* Product/service: What are the main products/services of the enterprise?
* The concern about the essential issue, the development and profitability: Is it required for the enterprise to commit with the economic objectives?
* Business philosophy: What are the trust, value and priorities of the enterprise?
* Self-evaluation: What is the special capacity or competitive advantage of the enterprise?
* Concern in community image: is the community image the main concern of the enterprise?
* Care about the employees: What is the attitude of the enterprise to the employees?
* The planning of business employees in the enterprise
Table 1.1: Diagram of procedure of enterprise's business task planning
Formatio n of initial ideas about business mission
Step 2 Analysis of internal and external environme nt factors
Step 3 Review of ideas about business mission
Step 4 Developm ent of business mission plan
Step 5 Pre- verificati on of business mission plan
Step 6 Impleme ntation of business mission plan
Step 7 Review and adjustme nt of the business mission plan
The strategic objectives are consisted of long-term objective (3-5 years or longer) and annual objective (< 1 year)
The long-term objective focuses on translating the enterprise's mission and vision into measurable goals These objectives serve as specific targets that the organization aims to achieve within a defined timeframe, acting as important milestones in the pursuit of its overarching aspirations.
Each unit in the enterprise needs to have specific and measurable objectives and to contribute to the achievement of the general objective proposed by the enterprise.
The common long-term objectives are business effectiveness, competitive status, the development of human resource, the relation with employees, profit, and leading possibility in technology, and social responsibility.
The basic features of the strategic objectives include the feasibility, challenge, flexibility, measurability, the promotion, rationale, and understand ability
O VERVIEW ABOUT H A D O G ROUP J OINT STOCK C OMPANY 31 2.2 A NALYSIS OF EXTERNAL ENVIRONMENT : 33 2 Analysis of macro environment
Address: No 8, Lang Ha, Ba Dinh District, Hanoi, Vietnam
Website: www.hado.com.vn
Email: hadoco@hn.vnn.vn
Account number: 0511100017002 at Military Bank
Charter capital:202,500,000,000 dongs (Two hundred and two billion, five hundred million dongs)
- Investment in infrastructure development and trade in house;
- Business in real estate service
- Business in ecological tourism area, hotels and restaurants;
- Production and business in electricity; trade in equipments and machines;
- Construction of works including industrial, civil, traffic, irrigational, hydro-power, wire line works and transformer with the voltage up to 35 KV;
- Production and business in construction material, exploitation of stones;
- Export and import in equipments, technologies, materials serving the national defense, production and research on science and technology;
- 1990: Ha Do Construction Company was established by the Decision of the Minister of National Defense;
In 1996, Ha Do Construction Company merged with the Electro-mechanic Equipment Company, as mandated by Decision No 514/QĐQP issued on April 18, 1996, by the Minister of National Defense, resulting in the establishment of Ha Do Company.
In 2004, the Minister of National Defense issued Decision No 163/2004/QĐ-BQP, transforming Ha Do Company into Ha Do Joint-stock Company, marking a significant shift towards a group-oriented operation This transition signaled the start of a new development phase for the company, reinforcing its strength and commitment to a strategic business approach aligned with the national goals of industrialization and modernization.
In 2005, following the completion of its capitalization, the Company transitioned to a holding company structure with subsidiary operations This involved converting its member factories into joint-stock companies, where Ha Do Joint-stock Company retained controlling shares of over 51% in Ha Do Joint-stock Company 1, Ha Do Joint-stock Company 2, and Ha Do Joint-stock Company 4.
Alson in 2005, the Company established Za Hung Joint-stock Company that constructed Za Hung Hydraulic Electricity Plant in Za Hung commune, Dong Giang district, Quang Nam province;
- Early 2008: Ha Do Joint-stock Company converted the three remaining factories into joint-stock companies including Ha Do Joint-stock Company 3, Ha
Do Joint-stock Company 5, and Ha Do Construction Consulting Company.
Ha Do Group, officially known as Ha Do Group Joint-stock Company, comprises six member joint-stock companies and two joint-venture companies, operating under a cohesive group structure.
After 20 years of endless effort, Ha Do Group has achieved considerable success, creating foundation for the following violent development stage that is deep integration into the international economy.
The organizational structure of the Company is consisted of the headquarter,
01 branch, 08 subsidiary companies, 02 joint-venture companies, project management boards in accordance with the following diagram:
Table 2-1: Subsidiary companies and joint-venture companies of Ha Do Group Joint-stock Company
Company name Governing shares of HaDo Sector
Ha Do Joint stock Company 1 51.0% Construction of traffic, civil works
Ha Do Joint stock Company 2 50.4% (Above)
Ha Do Joint stock Company 3 51.4% (Above)
Ha Do Joint stock Company 4 51.3% (Above)
Ha Do Joint stock Company 5 51.0% Execution of electricity, water works, civil works
Ha Do Consulting joint stock
Ha Do International Joint stock
Company 90.0% Investment in real estate
Za Hung Joint stock Company 36.5% Trade in electricity
Ha Do Trade Company 29.0% Trade in restaurant
(Source: Ha Do Group Joint-stock Company) 2.2 Analysis of external environment:
To align with World Trade Organization (WTO) standards, the Vietnamese Government is reforming its policy, political, and legal frameworks, particularly in the real estate sector These reforms aim to enhance transparency and eliminate underqualified investors, fostering a safer environment for competent investors Consequently, many small enterprises are compelled to adapt their business strategies, such as forming partnerships or selling projects to qualified investors The government is committed to creating a fair legal landscape that ensures equality among all businesses, gradually transforming state-owned enterprises into joint-stock companies under the Enterprise Law This shift promotes competitive equality but may disadvantage companies like Ha Do, as the government consolidates resources by merging corporations within the same sector Despite these advancements, weaknesses in the political and legal environment persist, affecting investment plans Frequent amendments to policies, particularly concerning land management, lead to disputes and delays in project approvals, as seen in Hanoi's recent expansion The lack of approval for the fourth amendment of Hanoi's general planning has sparked a real estate "fever," particularly in areas like Hoa Lac and Ba Vi, yet proposals for administrative shifts have been retracted, resulting in stalled transactions Regulatory measures, such as Decree No 71/2010/CP and Circular No 13/2010/TT-NHNN from the State Bank, have further constrained market activity and credit supply, highlighting the challenges enterprises face amid rapidly changing state policies.
The land compensation and recovery policy, aimed at aligning with market prices, benefits individuals whose land is reclaimed but simultaneously raises product prices, thereby limiting access to real estate offerings Additionally, inconsistencies in policy application across different localities can hinder site clearance processes, adversely affecting project investments and sometimes leading to project failures Overall, while real estate policies exist, they are often incomplete, failing to support long-term enterprise development, which results in few companies being able to formulate real estate investment plans extending beyond 5 to 10 years This situation contributes to fluctuations in pricing and competitiveness within the market.
The real estate and construction policy system in Vietnam currently favors domestic enterprises over foreign competitors, despite the latter's financial strength and experience Many foreign investors face significant barriers in navigating investment procedures, resulting in limited participation from companies such as Ciputra, Keangnam, Posco E & C, Chamvit, Tungseng, and Gamuda However, with the competitive pressures from the WTO, these protective policies may not sustain the advantages for domestic investors As foreign corporations and investment firms with advanced management skills and substantial financial resources enter the market, they are likely to intensify competition, potentially leading to the bankruptcy of weaker domestic enterprises.
With the analysis mentioned above, it is possible to draw the opportunities and challenges those are faced by the enterprises as follows:
- The social and political environment is relatively stable for the development.
- The policies are more and more complete to create fair competition for all enterprises those participate in the market.
- The world’s economic integration shall bring about many opportunities for the development of technology and management, resulting in competitive advantage for the enterprise.
The company faces immediate competition pressure from local enterprises and corporations, while the long-term threat stems from intense rivalry with foreign companies Without sufficient strength and resilience, the company risks facing potential bankruptcy.
- Unstable policies result in environment of fluctuations for the enterprise, which should be adapted timely.
2.2.1.2 – The world and local economic environment:
The 2008 global economic crisis originated from the collapse of the real estate market in the United States, which subsequently impacted the financial sector and led to slow growth or deflation worldwide, including in Vietnam Since the latter half of 2008, major economies have struggled to fully recover from the crisis, with the United States, the world's largest economy, facing an influx of negative news Notably, bankruptcy filings in America reached 770,000 in the first half of 2010, marking the highest level since 2005.
As of July 2010, the unemployment rate in the U.S rose slightly to 9.6%, reflecting a growing skepticism about economic recovery Similarly, Japan's economic growth slowed to 0.4% in the second quarter, down from 4.4% in the first, amid challenges such as an aging population, weak domestic demand, and a strong yen affecting exports Meanwhile, the Eurozone continues to struggle with a debt crisis, prompting EU nations to create a $1 trillion aid fund to support countries like Greece, Spain, Portugal, and Hungary The euro has experienced significant decline, with unemployment and low growth persisting as critical issues in the region.
China and several Asian nations are emerging as bright spots in the global economy, with China now recognized as the world's second-largest economy, surpassing Japan According to reports from the Japanese Cabinet Office and the Chinese Statistics Bureau, China's GDP reached 1,335 billion USD in 2010, compared to Japan's 1,286 billion USD With an impressive economic growth rate projected at 10% for 2010, China is on track to potentially overtake the United States by 2030, solidifying its position as the largest economy globally China's growing role and influence in the international economic landscape are increasingly significant.
2009, China surpassed Germany to become the world’s leading exporting country(source: internet).
Despite the global economic downturn, Vietnam's economy has demonstrated remarkable resilience, achieving a growth rate of 6-6.1% in the first half of 2010 compared to the previous year, with the industrial and construction sectors growing at 6-6.7% Notably, Hanoi's social economy experienced a growth rate of 10.1%, driven by a robust 11.5% increase in industry and construction These positive outcomes reflect the effectiveness of the government's economic stimulus packages implemented in 2009, which have successfully fostered development into 2010 Recent reports from the Statistics General Department further highlight key economic indicators for Vietnam in the first seven months of 2010 compared to the same period in 2009.
Table 2.2 Some main indicators of the first seven months in 2010 (increase/decrease) against the same period of the previous year (%)
Total value of commodity retail and turnover from consumption service +26.4
The state budget compared with the annual plan 62.0
Consumer price index (CPI) of the first seven months in 2010 compared with the same period in 2009 +8.67
Contrary to the gloom of the global economy, Vietnam’s economy managed to avoid the direct impact of the crisis storm to continue its fair development.
In 2009, the Government's economic stimulus package prioritized the construction sector, which, along with a rise in foreign direct investment (FDI) capital compared to the previous year, has invigorated both the construction industry and the real estate market According to the Statistics General Department, data from the first half of 2010 highlights these significant developments.
Table 2.3 The investment capital of the society in the first six months of 2010
Compared with the same period of the previous year (%)
As of June 20, 2010, foreign direct investment (FDI) reached 8.4 billion USD, accounting for 80.9% of the total from the same period in 2009 This figure includes the registered capital of 438 newly-licensed projects totaling 7.9 billion USD, which reflects a 19.9% decrease in the number of projects but a 43% increase in capital compared to last year Additionally, 121 projects from the previous year received an extra 525 million USD in registered capital FDI implementation for the first half of the year was estimated at 5.4 billion USD, marking a 5.9% increase over the same timeframe in 2009.
In the first half of the year, foreign investment capital in the processing and manufacturing industries reached $2.87 billion, representing 34% of the total registered capital Additionally, the electricity, gas, water, and air-conditioning manufacturing and distribution sectors attracted $2.2 billion, accounting for 25.5% of the total The real estate business also saw significant investment, with $1.78 billion, of which $1.75 billion was newly granted, making up 21.2% of the total foreign investment.
Despite potential impact from the world economy, the opportunities for the construction, real estate sector, as the key industry of Ha Do Group, will has advantages for development.
A NALYSIS OF THE INTERNAL ENTERPRISE : 57
The financial capacity of Ha Do Group is expressed through some evaluation index on the financial situation and business outputs of the company in 2007, 2008,
5 Fixed Asset (a + b + c) 13,193,172,478 23,357,791,717 50,268,066,598 a visible fixed asset 13,193,172,478 23,353,673,537 40,674,557,447 b invisible fixed asset 0 0 10,833,333 c basic constructing cost in progress 0 4,118,180 9,582,675,818
1 short term debt (a + b + c) 275,035,547,409 454,409,065,515 759,071,121,298 a loan and debt in short term 3,980,111,841 50,824,199,997 238,199,997 b due account 222,958,010,865 353,714,438,269 648,655,572,113 c periodical debt 48,097,424,703 49,870,427,279 110,177,349,188
+ g) 142,280,707,870 185,391,760,739 389,932,454,960 d owner investing capital 37,000,000,000 128,107,770,000 135,000,000,000 e share capital surplus 7,138,794,500 7,138,194,500 33,084,909,500 f fund of owner capital 21,575,531,390 23,674,277,588 31,860,071,864 g profit keep 76,566,381,980 26,470,918,650 189,987,473,596
(Source: Ha Do Group Joint-stock Company)
Taking a look at the asset and capital structure in 3 year, we can see: The total asset of the enterprise increased significantly, up to 54% in 2008 comparing with
Between 2007 and 2009, the enterprise experienced significant growth, with mobile assets rising sharply, leading to a total asset increase compared to 2008 The capital structure reveals that mobile assets constitute a substantial portion, while fixed assets remain minimal Additionally, the enterprise's debt exceeds owner capital, indicating a higher reliance on borrowed funds.
- Cash accounts for relevant rate in the total asset structure of the enterprise The cash has increased highly in the last three years
Accounts receivable play a crucial role in the mobile asset structure of enterprises, indicating a stable financial position This stability reflects effective policies in sales and cash management, ensuring that the organization maintains a healthy flow of income.
The increase in the value of goods in store has contributed significantly to the mobile asset structure This rise can be attributed to several projects being sold, resulting in partial payments being collected, while invoices have yet to be issued Consequently, these enterprises remain classified under goods in store.
- The total mobile asset of the enterprises have increased sharply, up to 53% in 2008 in comparing with 2007 and in 2009, up to 79% in comparing with
In 2009, the enterprise significantly increased its cash reserves, leading to a rise in inventory levels These developments indicate that the business is expanding, enhancing its market credibility while improving sales and management capabilities.
The fixed assets represent a minor portion of the enterprise's asset structure, primarily due to its focus on real estate However, with plans for significant investments in the hotel and hydropower sectors, the enterprise anticipates a substantial increase in its fixed assets in the future.
The enterprise demonstrates strong creditworthiness through its high proportion of short-term debts, primarily arising from supplier goods and advance payments from buyers, indicating excellent product liquidity Its capital structure relies predominantly on self-sufficient and retained earnings, with minimal bank loans However, to expand its market and focus on more stable products beyond real estate, the enterprise may need to seek additional bank financing in the future.
- Owner capital has increased, in 2008, up to 30% comparing with
2007, in2009, up to 174% in comparing with 2008 This shows that the business of the enterprise is on the right way and investors and shareholders trust in it
1 Sale and service provide revenue
3 Sale and service net 406,758,412,156 347,888,375,297 806,574,296,329 revenue
5 Total benefit on sale and service provide.
15 Total accounting profit before tax.
(Source: Ha Do Group Joint-stock Company)
In 2009, the company's revenue doubled compared to 2008, indicating significant growth in business activities over the past three years The decline in income in 2008, which was lower than in 2007, was primarily due to the economic downturn and unfinished projects that could not be accounted for in the income statement However, these projects are expected to contribute to the company's income in 2009 and beyond.
In 2008, the capital cost-to-income ratio reached 67%, 86%, and 67%, reflecting a significant investment focus by the enterprise The high capital costs during this year were primarily due to the allocation of all resources and expenses towards project investments, leading to a substantial listing of input costs.
Despite the lack of established real estate projects, there is potential for income generation through sales Over the past three years, the enterprise has maintained stable capital costs, indicating effective cost management and financial planning.
The analysis reveals that sales and management costs account for 3.2%, 5.5%, and 3.2% of income, indicating a relatively low proportion of these expenses This suggests a positive outlook for management and sales, as the products demonstrate high liquidity and are readily accepted in the market.
In 2009, the financial income reached 17 billion dong, primarily driven by short-term financial investments The enterprise generated revenue from selling real estate projects, which was subsequently deposited in banks rather than being reinvested immediately.
1 Profit to sale ratio (ROS) 26% 9.7% 26.7%
5 Period of credit sale collect 136 131 78
(Source: Ha Do Group Joint-stock Company)
ROS: this index is fairly high and this is a sign of effective business
The Return on Assets (ROA) index showed a decline in 2008 due to low profits and excess inventory However, in 2009, the ROA improved significantly, and projections for 2010 indicate even better performance.
(ROE) :ROE in the last three year have been in good level, especially in
2007 this index is 64% and in 50% in 2009 these numbers show that the enterprise is doing well and the capacity of capital recollect is high
Inventory cycle: this index has been low because the enterprise invests and makes money in real estate Therefore, the good in store index is relevant
Period of credit sale collect: this index has the tendency of lower and lower.
It shows that the debt management and sale expectation, goods quality and credit are getting better
The Fixed Asset turnover ratio is showing a gradual decline, indicating that the enterprise is utilizing its fixed assets more efficiently In the near future, the company plans to invest further in fixed assets to explore new areas with long-term and stable growth potential If managed wisely, this increased investment can lead to significant cost savings for the enterprise.
The mobile asset circle index has decreased, with a recorded value of 0.74 circles per year in 2009, indicating a significant correlation with income levels This figure suggests that the utilization capacity of mobile assets in the real estate sector is moderate.
The company's current payment ability remains strong, consistently below 1, thanks to its effective management of accounts receivable and a high level of cash reserves.
Immediate payment ability: Cash accounts for great part in the mobile asset of the company Therefore, the immediate payment ability of the enterprise is good
Debt index: the debt index in the last three year is low and stable; it is a sign of effective business
SWOT COMBINATION OF H A D O G ROUP : 72 SELECTION OF STRATEGIES, SOLUTIONS AND RECOMMENDATIONS
The analysis mentioned in Chapter 2 results in the table on strong points, weak points, opportunities and challenges (SWOT) of the production and business activities of HADOGROUP as follows:
Table 2.16 SWOT combination of HaDo Group
1.The financial capacity creates high competiveness for an enterprise
2 There is regular and prestigious relationship with big domestic and foreign credit organizations, which facilitates the capital promotion
3 The Company can mobilize capital in the securities market easily.
4 The employees are equal in experience, high in education.
5 The labor discipline contributes to increase the working efficiency
6 The Company has built relatively sufficient
1 The financial lever is not used effectively; the capital cost is huge
2 The insufficient employees can not meet the production demand.
3 The senior personnel is insufficient, especially key employees in project management departments and boards
4 The number of skilled workers is low; while the number of low-grade workers and normal labor is high This results in difficulty in the improvement the product quality, the application of technological science, and the renovation of technique.
5 The Company has not made use of the capacity of material, technical facilities.
7 The organizational structure and delegation of management, professionalism is ensured.
8 The land fund is large in favorable position in exploitation of land fund under Ministry of
National Defense in the country especially Ha Noi and Ho Chi Minh city.
9 Experience in investment and construction of urban areas, high buildings is good.
10 The quality of product is good, which is highly appreciated by customers technical facility, land, or factory in production
6 There is insufficiency in modern equipments; the application of new technologies, high-tech in production is limited.
7 The delegation of management in some regions is not absolute, therefore, senior personels are busy while junior employees do not have enough power This results in inefficiency in management and regulation.
8 The progress of some project is slow; the period of implementing each project is long, affecting the efficiency of business and production.
9 The Company only focuses on market of Hanoi and Ho Chi Minh and Military Sector rather than other cities, provinces and other sectors.
10 Marketing activities are not effective with inadequate attention
1 The social and political environment is relatively stable for the development.
2 The policies are more and more complete to create fair competition for all enterprises those participate in the market.
3 The world’s economic integration shall bring about many opportunities for the development of technology and management, resulting in competitive advantage for the enterprise.
4 Vietnam is a developing country with infrastructure of unsystematic development; therefore, the demand
- To make use of resources, opportunities or to apply technologies to produce high-quality and low-price products:
- To exploit the existing resources; to make of opportunities to expand production: Strategy on market development
- To complete the management mechanism, to enhance the exploitation of available resources, the application of technologies to improve competitiveness:
Strategy on strengthening the competitiveness
Maximizing opportunities by utilizing surplus resources to enhance production is essential The strategy focused on market development for investing in public works and infrastructure is on the rise, leading to job creation for construction and real estate companies.
Vietnam in general and of Hanoi, Ho Chi Minh
City, in particular are gaining high growth rate with increasing income and lifestyle of people; therefore, the demand for housing, offices is higher and higher
6 The international economic integration provides the company with opportunity to approach new technologies and services in construction management, design and execution.
7 Vietnam is well- known for the destination of investors, international visitors, which leads to demand for working office, hotel and relaxation resorts.
8 Vietnam has a crowded population with relatively high population growth; however, the housing area per capita is low.
Therefore, Vietnam will be the market of great potential for the sector of housing.
9 The living environment is higher and higher; therefore, families desire to have their own houses and the living places with systematic infrastructure, which lead to the increase in the housing demand in the locations of new construction.
- 1 The short- term challenge is the competition pressure from the enterprises, corporations, and groups; while the long- term challenge is the violent competition from foreign companies, groups.
Company is not strong enough, it may possibly be on the edge of bankruptcy.
- 2 Unstable policies result in environment of fluctuations for the enterprise, which should be adapted timely.
3 The high inflation, unstable material price, high bank interest, tightened monetary policy creates difficulties for the
- To use available resources in finance, experience to reduce product price to reduce competition pressure:
To enhance joint-venture and association, to complete the mechanism to improve competitive capacity:
Strategy on strengthening the competitiveness
- To strengthen the marketing, brand name promotion, product advertisement: Strategy on product differentiation. enterprises in capital mobilization in business, especially real estate business with the huge demand for capital.
4 The integration will create condition for powerful foreign economic corporations and international professional contractors to operate, resulting in competition pressure for local enterprises
5 People’s lifestyle is higher and higher, which requires higher and higher quality of the products and services.
SELECTION OF STRATEGIES, SOLUTIONS AND RECOMMENDATIONS
- To create trade mark of the multi-sector group that produces economic profit and social benefit
- To develop multi-sector business with focus on housing business projects, construction investment in eco-tourism areas, high-class hotels, and electric power
- To invest, upgrade and renovate execution equipments for the production and business operation;
- To carry out training, improvement for employees to satisfy the requirements of the customers;
- To strengthen the cooperation in the principle of mutual benefit, expansion of investment market to foreign countries
- To ensure the stable development, growth rate of more than 20%/year in the period of 2010 - 2015
- To achieve annual increase in profit of 20% representing 100% the total investment capital of the Owner ( EPS = 10 ).
The primary social objective is to generate numerous job opportunities while ensuring an annual income growth of 10% to 15% for employees Additionally, the organization aims to actively engage in charitable initiatives and contribute to the social and economic development of remote areas through various investment projects and construction efforts.
Qualitative method : Basing on SWOT table, we have selective groups hereinafter:
- SO strategic group: Usage of strong points to exploit chances in outer business environment.
+ Using of recourses, making use of chances, applying technology to create high quality with low price products: Differentiate the products basing on brand and low cost strategy\
+ Using the available resources, making use of chances to expand the business: Growth investment, market development
- ST strategic group: Making use of inner strong points to overcome the outer challenges.
+ Using the available resources on finance, human resource to decline the product price to deal with competitive stress: Low cost strategy
- WO strategic group : Making use of outer opportunities to overcome the inner weak points
+ Completing the management system, enhancing the exploitation of the availble resources, applying the technology to increase the competitiveness: Raising competitiveness strategy
+ Making use of chances, exploit the exceed sources to expand the production : Market development Strategy
- WT strategic group : Overcome the inner weakness to lessen the outer threats
+ Speeding up the combination and corporation to complete the system to raise the competitiveness Competitiveness raising strategy.
+ Speeding up the works of marketing, promotion the production quality:
Quantitative method : Using inner and outer matrixes of IE, we have: :
Point affected by inner factors : 2.5
Point affected by outer factors: 3.05
Basing on qualitative and quantitative methods, we can come to a conclusion that the most relevant strategic group for the business development strategy of Ha
Do in the period of 2010 – 2015 is SO, specifically:
+ Differentiation strategy basing on brand and low cost
+ Investment in grow, market development strategy.
To optimize recruitment and training processes, it is essential to focus on developing the skills and qualifications of senior employees, including department heads and production unit leaders, to ensure an adequate workforce for production needs.
To effectively implement the company's strategic objectives, it is essential to recruit and provide training that enhances the skills and qualifications of employees This initiative aims to ensure that over 70% of the workforce receives professional training, thereby meeting the company's requirements for success.
To enhance the management framework and optimize resource utilization within the Company, it is essential to reinforce the decentralization mechanism This approach emphasizes personal accountability and fosters collaboration between remuneration, material rewards, promotions, and individual performance, ultimately motivating and encouraging employees to excel.
- To develop training plan from the external source and carry out self-training for employees Organizing short-term trainings to improve skills for regular employees.
- To spend a proper financial source on the development of human resource; to estimate the annual training budget.
To improve teamwork and collaboration, it is essential to foster an environment that promotes employee potential By cultivating a competitive atmosphere focused on output and quality, organizations can enhance group performance and drive overall success.
- To re-structure the human resources in the company; to discover the surplus or shortage of employees to ensure the most effective operation of the mechanism.
To enhance the cooperation capacity between functional departments to ensure timely information circulation between departments and between departments and the management board for proper settlement.
To foster enterprise growth, it is essential to promote a professional working style and cultivate a strong company culture This involves instilling a sense of pride and responsibility among employees, encouraging them to embrace their roles as vital members of the organization.
- Setting up plan for capital usage for week, month, quather in order to use the capital effectively, avoid the ineffective usage.
- Implementing tight management methods to raise the investing results
- Tight management in the progress of projects to avoid the over time progress which can cause exceed cost and waste.
- Tight management in customer’s debt, minimizing the over due debt It can not only help to raise the capital using effectiveness but also lessen the risks
- Capical raise: effective usage of finance, flexible in loan raise for business. The existing projects are mainly from self sufficient and pay in advance loans of customer
The group's significant weakness lies in its deep financial dependence and limited ability to raise loans, which has hindered its ability to capitalize on available opportunities for securing low-cost financing in the market To address this issue, strategic solutions must be implemented.
The company is focused on enhancing its charter capital by continuously launching stocks and raising loans, initially targeting employees and shareholders Currently listed on the stock market, this initiative presents a valuable opportunity to increase capital through additional stock issuance and flexible loan options, effectively meeting growing financial demands.
Analysts predict a resurgence in the real estate market, driven by policies that promote investment in infrastructure and social housing projects This presents a valuable opportunity for companies to capitalize on Utilizing acquired credit and securing bank loans at favorable interest rates will be essential for expanding capital and business operations In the long term, fostering strong relationships with strategic banking partners is crucial to ensure payment capabilities and secure relevant financing.
Continue to complete the investing documents to raise investment from clients through capital sharing in order to gain huge, cheap capital of low risk.
To address projects with limited resources or high investment costs, companies can engage sub-bidders to enhance mobile capital This approach not only reduces expenses but also improves work quality and lowers product prices.
- Capital usage: the relevant capital structure, following the expected target and plan among activities such as business; investment; finance can ensure the effectiveness in capital using and profit increase.
Fixed assets are crucial for a company's growth, competitiveness, and overall effectiveness To maximize the utility of these assets, businesses should adopt strategies focused on their conservation and development Implementing these methods ensures that fixed assets are utilized in the most efficient manner possible.
Frequently, re- evaluate the fixed asset in period and market change times.