Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (269)

GLOBAL ADVANCED MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT DEVELOPING BUSINESS STRATEGIES FOR THANG LONG CONSTRUCTION CORPORATION IN THE PERIOD OF 2012 – 2016 Group – GaMBA.X0710 Khuong The Duy Trinh Van Hanh Bùi Van Rang Nguyen Van Trung Ha Noi, Dec 2011 TABLE OF CONTENTS The necessity and meaning of the research topic Subject and scope of the research Research methodology Expected results .8 Structure of the research topic .8 CHAPTER 1: 10 LITERATURE REVIEW OF STRATEGY AND STRATEGIC MANAGEMENT 10 The concepts of development strategy 10 The role of business strategy 10 Strategy classification 11 The strategy development process 12 4.1 Defining mission and main objectives 12 4.2 External environment analysis: 13 4.2.1 Impacts of macro environment: 14 4.2.1.2 Technological environment 15 4.2.2 Analysis of industry environment 19 4.3 Analysis of internal environment influences 24 4.3.1 Human resource and organizational factors 25 4.3.2 Research & Development factors 25 4.3.3 Financial - Accounting factors 25 4.3.4 Production and technological factors 26 4.3.5 Marketing and sales factors 26 4.3.6 Identifying sustainable competitive advantage 27 Strategic analysis tools 28 5.1 SWOT Matrix 28 5.2 IE Matrix 28 5.2.1 EFE Matrix: Evaluation of the company’s external factors .28 5.2.2 IFE Matrix: Evaluation of the company’s internal factors .28 5.2.3 IE Matrix 30 Basic business strategies 30 6.1 Strategy foundation 30 6.2 Generic competitive strategies 32 6.2.1 Cost leadership strategy 32 6.2.2 Product differentiation strategy 33 6.2.3 Focus strategy 33 6.3.4 Combination of generic strategies 34 QSPM model to select the optimal strategies .34 Implementation and adjustment of selected strategies .35 8.1 Organizational structure 35 8.2 Strategy implementation 36 8.3 Designing a system of control and evaluation 38 CHAPTER II 40 ANALYZING THE SITUATION BUSINESS STRATEGIES OF THANG LONG CONSTRUCTION CORPORATION 40 Overview of Thang Long Construction Corporation: 40 1.1 Business fields: 40 1.1.1 Company profile: 40 1.1.2 History of development: 40 1.2 Operating Model 42 1.3 Product and market 43 1.4 Production - business performance 43 1.4.1 Output – Revenue - Earnings: 44 1.4.2 Evaluation on some other economic indicators 45 ANALYSIS OF OPPORTUNITIES AND CHALLENGES FOR THANG LONG CONSTRUCTION CORPORATION 45 2.1 Analysis of macro-environment 45 2.1.1 Economic environment 45 2.1.2 Technological environment 46 2.1.3 Social-cultural environment: 46 2.1.4 Legal-political environment 46 2.2 Analysis of industry environment 47 2.2.1 Analysis of competitors 48 2.2.2 Risk of new competitors 53 2.2.3 The customer groups 54 2.2.4 The Suppliers 54 2.2.5 Alternative products 55 2.3 Assessment of opportunities and challenges 55 ANALYSIS & ASSESSMENT THE STRENGTHS AND WEAKNESSES OF THE THANG LONG CONSTRUCTION CORPORATION 56 3.1 Human Resource Management 56 3.1.1 Structure of staff 56 3.1.2 The organization, human resource management: 57 3.1.3 The issue of training 57 3.2 Analysis of financial capacity 57 3.3 Analysis of technological capability and equipment 58 3.7 Determine the competitive advantage of the Corporation .64 4.1.3 Matrix IE: (Evaluation factors internal - external) 67 4.2 SWOT matrix 68 CHAPTER .71 PROPOSAL OF BUSINESS STRATEGIES AND IMPLEMENTATION SOLUTIONS FOR THANG LONG CONSTRUCTION CORPORATION .71 Vision, mission and general objectives 71 1.2 Vision 71 1.3 Mission 71 1.4 General objectives: 72 1.5 Operation principles 72 Proposed strategies and appropriate strategic choices .72 2.1 Proposed strategies 72 2.2 Selection of priority strategy 73 Strategic Solutions 77 3.1 Technological solutions: 77 3.2 Solutions for human resources 77 3.3 Solutions on finance 78 3.4 Solutions on Marketing and Market 79 Implementation plan for the strategic solutions and Requirements 79 Improving the organizational structure and assessment control .81 Recommendations 81 LIST OF FIGURES Figure 1.1: Micro environment Figure 1.2: M.Porter’s Five Forces Model Figure 1.3: Fundamental elements to create competitive advantages Figure 1.4: IE Matrix Figure 1.5: Strategy implementation activities Figure 2.1: Organization chart of Thang Long Construction Corporation LIST OF TABLES Table 1.2: Macro-environmental factors Table 1.3: The process of identifying sustained competitive advantages Table 1.4: Michael Porter’s Generic Strategies Table 1.5: QSPM Model Table 2.1: Production - business performance Table 2.2 Estimating total demand for construction of traffic work up to 2017 Table 2.3 Financial statement of the Corporations in 2011 Table 2.4 Financial Structure of the Corporations in 2011 Table 2.5 Proportion of qualifications of indirect employees Table 2.6: Proportion of equipment, plant and technology Table 2.7: Opportunities and challenges Table 2.8: The situation of the labor structure of the Corporation Table 2.9 : The structure of equipments & machineries of Thang Long construction corporation Table 2.10:Competitive profile matrix Table 2.11 : Matrix evaluation of external factors Table 2.12 : Matrix evaluation of internal factors Table 2.13 : IE matrix Table 2.14: SWOT matrix Table 3.1: The quantitative strategic planning matrix for optimal strategy seletion Table 3.2: Implementation plan for the seleted strategies ACKNOWLEDGEMENT First of all, the Group No.7 - GaMBA.X0710 would like to express our sincere thanks for the Master of Business Administration Program, the Affiliate Programs between Griggs University, USA and Center for Education Technology and Career Development, Vietnam University Hanoi for organize MBA course in Vietnam and facilitating our Capstone Project Report Secondly, we would like to express our sincere thanks to the Leaders and staffs of Thang Long Construction Corporation, who have fully supported our team in providing valuable input information for this Capstone Project Report Last but not least, let our thanks go to our families whose encouragement has helped us complete the course without having any difficulties We have tried to complete the assignment in the best way using our best knowledge and ability However, the shortcomings are inevitable We wish to receive valuable comments from teachers and colleagues INTRODUCTION The necessity and meaning of the research topic To harmonize with the country’s industrialization and modernization process, the transport industry must develop more to meet growing good and passenger transport demand, enhance the socio-cultural exchanges and economic integration among economic regions Moreover, the transport industry must also ensure its role as the bridge for international integration It not only plays an important part of social infrastructure which paves the way to develop other industries, but also create big changes in the process of economic restructuring and make great progresses in the social development process in general To accomplish the above tasks, it is required that traffic construction companies should enhance technical and technological innovation as well as train a highly qualified scientific and technological contingent, administrative staff, businesses, skilled workers, especially expand the relation activities to compete in the domestic and international market Therefore, enterprises must develop the strategies which go in line with the national development, globalization and regionalization trends in the world Setting up the business strategies which identify development priorities, specialization, main products for the sustainable development is essential In the plan of the strategy, it should consider many external and internal factors, analyze information as a basis for planning business activities in the short and long term, focus efforts and resources on the key objectives to achieve the best results, quickly respond to the uncertain situation and adapt to changes Like other units in the transport industry, Thang Long Construction Corporation also faces many challenges Especially after joining WTO, the economic globalization and regional economic integration has become an overwhelming and irreversible development trend, the competitive advantage of some key industries (bridge, tunnel) of the Corporation becomes more fragile than ever, when other business units in the same industry also generate and accumulate competitive advantages as that of the Corporation In such context, it is really necessary to build a stable solution or a development strategy for Thang Long Construction Corporation With these requirements above, our group- group No 07, class x0710 carried out the research topic: “DEVELOPING BUSINESS STRATEGIES FOR THANG LONG CONSTRUCTION CORPORATION IN THE PERIOD OF 2012 - 2016” with a view to using the knowledge gained at school into practices as well as contributing to the sustainable development of the Corporation in the current situation Subject and scope of the research - Subject: - Analysis on the business environment of Thang Long Construction Corporation helps us build the business strategies for the Corporation during 2012-2016 - Scope of the research: - Subjects: the business strategy of the Corporation - Scope: in curriculum frameworks and in Vietnam market Research methodology The primary source of data is from the annual report of the Corporation, other corporations in the same industry From there, we use the research methods such as data analysis and synthesis, logical thinking, deductive methods… Expected results - Improve the knowledge about strategic management in the current environment, - Analyze and judge the impact of external and internal factors on Thang Long Construction Corporation - Recommend the appropriate business strategy to improve the competitive advantage as well as to promote the efficiency in business for the Corporation during the period 2012-2016 Structure of the research topic Chapter 1: Theorecal background on business strategy development Chapter 2: Strategic analysis of Thang long Construction Corporation Chapter 3: Proposal of business strategies and implementation solution for Thang Long Construction Corporation CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND STRATEGIC MANAGEMENT The concepts of development strategy - Strategy: Currently, there are different definitions of strategy; the underlying reason of this difference is that there are different systems of concepts of organizations in general and different approaches to organization’s strategy in particular In terms of ontology, depending on the perspective of the positivism or following the constructivism trend, the nature of strategy is determined by natural laws or significantly influenced by the subject In fact, strategy is usually defined according to the practice in order to facilitate the implementation in the organization The definition of William F Gluek argues that: "Strategy is a unified, coordinate and comprehensive plan designed to ensure that the company’s basic objectives are successfully accomplished However, the viewpoint is not really complete In practice, official plans that are formulated specifically, sometimes, fail Therefore, there should be responsive plans in the business process Besides, business strategy or competitive strategy is defined according to the following six factors: product market, investment level, functional strategy, strategic assets and strategic capabilities, resource allocation, synergistic effect between enterprises In summary, formulated strategies should help businesses achieve the set goals However, in the process of strategy formulation and determination, goal orientation is not enough Strategy development should include implementation roadmap, specific timeframe and locations with certain resources The role of business strategy In the highly competitive market economy, to be successful, every business should have a strategy That means business managers must understand the changing trends the market, find out key success factors, exploit the advantages of the business, recognize the weaknesses of the business, understand competitors and the customers’ wants, know how to approach the market Thereby, the company can make creative decisions to deploy more or cut back operations activities at certain time and areas 10 need to prioritize strategies in the most orderly, effective and scientific way From time to time, we will continue to evaluate and come up with other strategies to implement In the framework of the research, we use the QSPM matrix to select a optimal strategy from the above two strategies The application model QSPM be made on the basis of expert opinion for scoring Table 3.1: The quantitative strategic planning matrix for optimal strategy seletion Key Factors Weight Strategy AS TAS Strategy AS TAS Opportunities Stable political environment, legal framework has been complet.ing Vietnam is a potential market (construction 0.1 0.3 0.3 0.1 0.3 0.2 0.09 0.27 0.18 0.1 0.4 0.2 demand increasing, particularly in the field of construction traffic) Mechanism of The Government is development priorities of the major transport corporations Investors tend to choose large contractors, experience There are many supplies and materials provided Transportation construction technology has - changed little (Threats) Low barriers to entry, high competitiveness - in the industry State’s policies are still inadequate lack of 0.09 0.27 0.27 stability The risk of inflation and high inflation, high 0.07 - 0.14 0.14 74 interest rates No detailed planning oriented transportation network The speed of disbursement not meet the 0.07 0.14 0.14 needs The standard of Transportation regulations - require higher and higher Strengths Prestige & strong brand Talent leaders Very good quality projects Construction experience is very good High rated on the progress of construction 0.02 0.08 0.02 0.12 0.15 0.1 0.48 0.24 3 0.45 0.3 0.15 0.2 0.1 0.3 0.2 0.1 0.2 0.3 0.1 0.12 2 0.2 0.24 0.3 0.24 0.11 4.18 0.22 3.3 Weaknesses Labour's quality is not high Machinery and equipment investment has not been investing & innovating; These efficiency is not well exploited Not active on finance Not appropriate investment for potential customers The research and development of new - products has not been focused 0.11 Total These strategies can be selected for its feasibility and decisiveness in the success of Thang Long Construction Corporation’s business activities in the future In the current competitive environment, the key to maintaining its leading position as a low cost provider is the implementation of key tasks At the same time, the Company should consolidate and further strengthen the longstanding relationships with our traditional customers 75 In addition, focusing on current strategic market in which Thang Long Construction Corporation is having strengths on the market share (the market of construction in the provinces in the country where the Company has long term relationship) has been maintained over the past years This is a very important factor to facilitate Thang Long Construction Corporation to maintain its position and have sustainable growth from now until 2017 and in the following years From the above results, it can be seen that all four strategies are appropriate for the Corporation However, T the priority strategies chosen to implement are the following ones which have highest scores: - Building and developing brand - Renewing equipment and facilities On the basis of selected strategies, the Corporation has set plans to realize them The strategic implementation plan is divided into specific activities (action steps); each activity will have management staff, resources and fund for implementation, and completion schedule To adapt to changes and fierce competition in the field of construction traffic, some companies tend to expand into other areas such as civil construction or real estate Although Thang Long Construction Corporation is a strong corporation with good brand and reputation in terms of quality and speed of the products However, the Company still has weaknesses of financial capability, thus not effectively investing and renewing equipment The strategy of construction openning to Laos and Cambodia as corporation of Song Da, PetroVietnam, CIENCO4 because it is the potential but difficult and risky, within the limited resources of Thang Long Construction Corporation will not to pursue this strategy in five next years Strategy to diversify into the real estate sector as CIENCO is not possible in next years due to the difficulty of the real estate market from early of 2011 76 Strategic Solutions 3.1 Technological solutions: - Investing in equipment and modern technology to meet all practical needs of the Corporation The existing equipment with the planned invested one is expected to create a complete and synchronous line of construction with high quality in the shortest time - Focusing on investment in information technology applications: Organizing a strong information department for the entire operation management activities of the Corporation; establishing an information management system as a smooth flow within the parent Company, project executive departments, construction sites, construction units Specifically: - Invest more in management software - Use the interconnection system: LAN system, Wan to manage and process information in the fastest way under an effective linking system; research on the applications of project management software on mobile phones 3.2 Solutions for human resources To achieve the strategy set out by the Corporation, the human resource matter is very important In order to have an effective strategy implementation, it is required to have a strong management team, experienced staff and stable human resource situation Therefore, the Corporation should carry out the following measures: - Having training policies with clear, specific and reasonable commitments on the basis of mutual benefits - Having reasonable compensation policies regarding to the qualifications, capabilities and results of work completion; adjusting the policies of income between the old and new employees appropriately - Developing reasonable mechanisms of reward and punishment to motivate employees The rewards should be aligned with the results of production and business, thus encourage the employees to work actively 77 - Paying attention to the psychological factors in human resource management practice and for each staff Building a friendly working environment to improve the performance, gradually build the loyalty of employees and create the corporate culture Besides, have a care for the personal lives of employees 3.3 Solutions on finance Financial transparency in the enterprise is a basis for improving the capacity on capital and management This is one of the most important criteria to help the Corporation active in planning for production The Corporations should strengthen financial management through the vertical review (the Corporation Head Office, Project Management teams, dependent – accounting units) and horizontal review (within the Corporation Head Office and units) If this work is done professionally, periodically or irregularly without affecting the operation and business results, the Corporation can avoid while still making the financial situation of the Corporation increasingly transparent and accurately reflect the operation and business results of the Corporation Conditions to apply: - Leaders of the Corporation have high determination and direct the implementation thoroughly and comprehensively - Leaders in charge of finance and accounting staff must have the high capabilities of management and checking finance - Performance management according to ISO 9001-2000 standard Setting the tables as well as professional guidance figures shown consistent and clear Enhancing the financial capacity based on the following solutions: - Getting loans from banks and credit institutions This is a traditional channel to mobilize capital In this case, the financial transparency can help the - Corporation consolidate relationships with banks, especially for the long term loans for the production expansion - Making partnership with the partners having strong financial capacity to carry out the projects 78 - Creating good relationships with suppliers of materials machinery and equipment Thus, the Corporation can take advantage of deferred payments in a reasonable level - Raising the working capital on the basis of equitization of the Corporation and attracting the capital from the financial investors 3.4 Solutions on Marketing and Market Implement the Marketing solutions to promote its brand and image to the target markets Besides, the Corporation needs to have an active plan to have market research in order to collect more information on customers, suppliers, and material agents Focus on the Research and Development activities which play a very important and dispensable role in strategy implementation Make investments in PR activities in order to consolidate and develop the relationships with partners Enhance the ability of bidding and negotiating in business, especially with the foreign partners when all of the commitment clauses are the most important basis in project implementation Research and gradually expand into the “out – of – transportation” construction market such as the civil construction In the coming time, the Corporation should boost the exploitation of the potential of the Company’s land in the areas like Pham Van Dong, Dong Anh, Gia Lam, etc Implementation plan for the strategic solutions and Requirements Leaders of the Corporation have to support the strategic planning with the right decisions in all areas: funding, policy, operation list and forms of support, rewards or punishment The implementation must follow the order from top to bottom; if in each step, there is no right decision made, the other steps in the strategy cannot be performed To ensure the inspection, monitor and evaluation of the implementation effectiveness of strategic solutions, the following schedule can be applied: Table 3.2: Implementation plan for the selected strategies 79 Specific Responsibility activities Make a list of Vice strategic Director Estimated Resources Budget General Data collection in cost, office projects Perfornamce Deadline 50 million March VND 2011 charge of market supplies Vice General Selection of Research, survey 150 million Director in alternatives and analyze data VND charge of market Assessment Allocate 170 million General Director based on expert personnel VND consultancy Communication Head of costs, and cost Economics & 260 million Planning spent on hiring Planning VND evaluation Department experts Diplomatic General Director affairs: & Vice General souvenirs, 400 million Implementation Director in sightseeing; VND/year charge of market technology Evaluation Criteria Approval from General Director March 2011 April 2011 April 2011 Anually, start from Percentage of January annual output 2012 inspection Anually, PR Advertising & General Director Contract signing 600 million start VND/year January 2012 80 from Percentage of annual output The process of implementing the strategy starts from the beginning of 2012 to the end of 2016 During the implementation process, there will be feedbacks and corrections of some issues in the strategy Improving the organizational structure and assessment control To evaluate strategies, the following basic tasks should be implemented: Define the contents to be checked Set testing criteria Measure the performance results Compare the actual performance and the standards/ targets Determining the causes of these deviations Find remedies Strategy testing and evaluation: conducted in two phases: In the process of strategic planning (decision making stage) After the strategies are implemented The assessment has to answer the following questions: Has the Corporation's strategy been successful not? Can these objectives be done? Is the Corporation's strategy still consistent with the environment? Should the strategy be adjusted? If yes, the overall plan should be adjusted or just functional strategies are subject to changes? If there is no need for adjustment, how is the Corporation’s competitiveness compared to competitors’? Recommendations With the selection of implementing the optimal strategies which focus on promoting the effectiveness in building and developing the brand as well as increasing investment in equipment, the Corporation needs: Focus on ensuring the activeness in finance to serve the investment activities Particularly, pay more attention to solutions on financial transparency, management capacity improvement and capital use Approach the lending partners which are the domestic as well as the foreign institutions 81 Propose to the Ministry of Transportation to direct and promote the equitization of the Company in order to attract financial investors to increase the charter capital The policy of exploiting the potential of the land has been started, but not brought the results because of some concerns about the policy mechanism Many investors intend to participate but not drastically This issue is beyond the Corporation’s ability and needs the supports from the Ministry of Transportation and Hanoi People’s Committee When participating in the bid, the Corporation should has a careful study, determinedly not receiving the low – price projects and only accepting ones with the guaranteed price and full funding To ensure the brand and image, in the constructions of the Corporation, although it is required to assure the quality and speed, the Corporation still needs to stress on the industrial hygiene in the construction sites, making sure of safety during working, considering the projects as opportunities to promote its image of professionalism and modern technology 82 CONCLUSIONS Business strategy has long been seen as a steering wheel leading the ship to overcome difficulties to reach the finish As the scale of production and business operation increase with the accumulation on volume, the managers are required to have further, deeper and more scientific vision on the development of their enterprises in the future In fact, for the company such as Thang Long Construction Corporation and other construction companies, the formation of business strategy is quite spontaneous and does not receive enough attention Therefore, making business strategy for the Transport Construction Corporation is very important Through the analysis and research above, the study has clarified some issues: Firstly, research on some issues of making Corporation’s business strategy: Analysis of the business environment, analysis and selection of the strategic plans, application of those plans to make business strategy for the enterprise The necessity and objectiveness of the Company’s business strategies regarding to the economic situation and regional, international integration - Secondly, evaluation on the current status of business activities of Thang Long Construction Corporation and general survey on production and business situation of some other construction enterprises in recent years On that basis, the study produces a deeper analysis of the competitiveness of the Construction Corporation The study has pointed out some strengths, weaknesses as well as opportunities and threats to the Corporation which can become the basis for solutions Thirdly, proposals of some business strategies and strategic implementation plans Despite many efforts, the project does still have some limitations which are only focus on analyzing, researching, building and selecting the business strategies for Thang Long Construction Corporation Due to limited researching time, the study can have some inevitable mistakes Our Group really looks forward to receiving the comments and opinions of teachers and colleagues With sincere thanks! 83 REFERENCES Financial statements of Thang Long Construction Corporation and other Corporations in Transportation sector during the period of 2009 – 2011, Thang Long Construction Corporation and other Corporations 2) “Rethinking the future, many authors, Rowan Gibson edit, Youth Publishing House, Hanoi, 2002 3)”The concepts of business”, Nick Jones Dr Duong Ngoc Dung, 2009, competitive strategy – theories of Michel Porter, Ho Chi Minh City General Publishing House Prof Nghiem Van Dinh, curriculum”Construction Management Mechanism”, University of Communications and Transportation, 2005 Dr Mai Van Buu, 2006, curriculum” Theories of business administration”, Scientific and Technical Publishing House Nguyen Minh Kieu, 2008, Corporate Finance, Statistics Publishing House Nguyen Thanh Hai, 2007, Business strategy planning, Post Office Publishing House Dr Dao Duy Huan, 2010, Strategic Management in economic internationalization, Statistics Publishing House 10 Prime Minister, 2009, Adjustment of Vietnam Transport Development Strategy until 2020, vision to 2030 Reference links http://vi.wikipedia.org/wiki/Qu%E1%BA%A3n_tr%E1%BB%8B_chi%E1%BA %BFn_l%C6%B0%E1%BB%A3c http://www.anbinhpaper.com/Thuc-hien-Chien-luoc-san-xuat-sach-hon-trongcong-nghiep-den-nam-2020_C15_D208.htm http://vov.vn/Home/Chien-luoc-phat-trien-kinh-te xa-hoi-2011-2020/20113/169669.vov 84 ... Implementation plan for the seleted strategies ACKNOWLEDGEMENT First of all, the Group No.7 - GaMBA.X0710 would like to express our sincere thanks for the Master of Business Administration Program,... and Center for Education Technology and Career Development, Vietnam University Hanoi for organize MBA course in Vietnam and facilitating our Capstone Project Report Secondly, we would like to express... increasing environmental pollution, depletion and scarcity of natural resources and energy, ecological imbalance… The price that people have to pay for the degradation of the natural environment is enormous