Business Analysis for Nguyen Hoang Group in Vietnam Using BCG Matrix

Himalayan Economics and Business Management Open Access Research Article Business Analysis for Nguyen Hoang Group in Vietnam Using BCG Matrix Nguyen Hoang Tien1, Dinh Ba Hung Anh1 and Nguyen Minh Ngoc2 Van Hien University, Vietnam Ho Chi Minh City University of Finance and Marketing, Vietnam Abstract: Strategy formulation is the first important step of managers on the way to bring *Corresponding Author Nguyen Hoang Tien Article History Received: 11.04.2021 Accepted: 22.04.2021 Published: 10.05.2021 Citations: Nguyen Hoang Tien, Dinh Ba Hung Anh, & Nguyen Minh Ngoc (2021); Business Analysis For Nguyen Hoang Group In Vietnam Using BCG Matrix Hmlyan Jr Eco Bus Mgn; 2(4) xx-xx businesses to success A good strategy with a clear vision and mission, worthy of the business will help managers orient the development of the business, staunchly support the business to overcome difficulties, and maintain determination to the end selected target In the context of the increasingly integrated world, the world economy has almost no borders to divide the market, the competition between businesses is becoming more and more fierce In order to find the possibility of success in that fierce market, building a suitable strategy is a vital element to help businesses determine the difference as a foundation for development and success Managers can analyze their business to build their appropriate strategies using a variety of methods Therefore, to understand better, the author decided to perform business analysis for Nguyen Hoang Group (NHG) using the BCG matrix Keywords: Business analysis, BCG matrix, Nguyen Hoang Group INTRODUCTION Research Tools Overview Bruce Doolin Henderson (1915 -1992) was the founder of Boston Consulting Group (BCG) in 1963 as Chairman and CEO until 1980 and President until 1985 From the ideas of According to him, combined with the practical requirements of consulting large enterprises, in the early 1970s, BCG Group built a business portfolio management and analysis model as a step in the planning process strategic planning of the enterprise This model, known by various names such as the Boston matrix, Growth-Market share matrix, Portfolio Table and most commonly the BCG matrix, allows analysis of the current position and direction The strategy of the business's main business units or product lines is based on the company's market (industry) growth rate and relative market share relative to its most important competitors Urgency of the Research Problem The business model is based on providing a product or service that will be profitable for the business at the moment, but keeping the business of the business profitable in the future needs to be determined Identify factors that change in future products and services BCG matrix in marketing and strategic management, helps businesses determine where to focus development resources The development of "star" and "question mark" products will increase market share rapidly in some categories If investing in products belonging to the “dairy cow” group, business managers should pay attention to renewing the product offering through upgrading and modernizing to ensure the growth rate of this product That is why businesses should use the Boston matrix to analyze and strategize for each of their investment portfolios The Significance of the Study For Management Practice In fact, the BCG matrix is an effective and quick tool to help businesses evaluate and make the right decisions for their organization With easy-to-understand illustrations and diagrams, the matrix helps businesses see future opportunities, identify the most suitable business areas to invest in to improve profits The BCG matrix allows to analyze investment capital needs in different SBUs, showing how to best use financial resources (investment capital), in order to maximize the business structure of the company company The matrix also indicates the need to take over or give up a certain SBU, aiming to build a balanced and optimal business structure, improving the competitiveness of enterprises 24 Nguyen Hoang Tien, et al., Jr Eco Bus Mgn; Vol-2, Iss- (July-Aug, 2021): 24-31 matrix we will analyze the aspects of the matrix corresponding to the vertical and horizontal axes that are: + Market Share: The market share of the product in the market is low or high + Market Growth: Potential customers in the market have growth prospects or not However, the BCG matrix is quite simple, only assessing the potential and prospects of SBUs based on two factors: market share and industry growth rate is incomplete, in some cases even leading to mistakes For example, a low market share can still have a strong competitive position and high profits in a certain market segment because the company differentiates products that best meet customer needs In addition, this matrix has not deeply assessed the relationship between market share and costs; This relationship does not always happen in the direction as mentioned by BCG, large market share does not always create cost advantage In some industries, due to the characteristics of technology, companies with a small market share can still achieve lower production costs than companies with a large market share Or in mature, slow-growing industries, large market shares not always bring high levels of profit as said about the nature of SBU Therefore, in order to be able to make the most accurate decision for the company's business, it is necessary to combine the consideration of the BCG matrix with other analytical tools to give an objective and multidimensional view of the company's business, products and markets  McKinsey Matrix The McKinsey matrix is a more flexible, multifactor portfolio analysis model than the BCG matrix This matrix allows businesses to apply assessment of the appropriateness between their capabilities and production and business activities of products and services, and at the same time helps to predict the location of products/services, facilitating strategic planning  IFE matrix (internal factors evaluation matrix) Internal factors are considered very important in each business strategy and the goals that the enterprise has set, after considering the internal factors, the strategic manager needs to make a matrix of these factors This is to consider the ability to react and recognize strengths and weaknesses Thereby helping businesses make the most of their strengths to exploit and prepare internal resources to confront weaknesses and find ways to improve these weaknesses The IFE Matrix is used to summarize and evaluate the important strengths and weaknesses of functional business segments, and it also provides a basis for defining and evaluating the relationships between these segments Objectives of the study  General goal: to analyze the strategy and apply it to business  Specific objectives: systematize the positions of the SUBs in the enterprise, thereby determining the portfolio to be invested or eliminated to match and avoid wasting resources (because the resources of each enterprise are term) From the research results, solutions and recommendations are given to improve the business capacity of enterprises  QSPM matrix (quantifiable strategic planning matrix) The QSPM matrix uses the inputs from the analyzes at the IFE and EFE matrix formation steps to help strategists objectively decide which of the likely alternatives is the best strategy most attractive and worthy for businesses to pursue in order to successfully realize their goals THEORETICAL FRAMEWORK 2.1 Matrices for business analysis  SWOT matrix The SWOT matrix is an abbreviated collection of the first letters of English words: Strengths, Weaknesses, Opportunities and Threats, it is a wellknown model in business analysis of the enterprise Strengths and weaknesses are internal to the business, while opportunities and threats come from outside It is the best known Swot matrix concept It can be said that the SWOT matrix is the analysis of the external environmental factors that the business has to face (opportunities and threats) as well as the factors in the internal environment of the enterprise (the strengths and weaknesses)  CPM Matrix (Competitive Image Matrix) The competitive image matrix is a model that identifies a company's main competitors and its own strengths and weaknesses relative to the competitive firm's strategic position Establish a competitive image matrix to make comparative assessments of the company with major competitors in the same industry, the comparison is based on factors affecting the competitiveness of the company in the industry 2.2 BCG matrix The Boston Matrix is divided into parts based on an analysis of market growth and relative market share, as shown in the diagram below: • Dogs: These are products with low growth or market share • Question marks: Products in high growth markets with low market share  BCG Matrix BCG matrix stands for Boston Consulting Group matrix BCG matrix theory is built to help businesses orient their market share growth strategy by putting product categories into groups, determining the position of these products in the market to bring them to market make investment or exit decisions This BCG 25 Nguyen Hoang Tien, et al., Jr Eco Bus Mgn; Vol-2, Iss- (July-Aug, 2021): 24-31 • Stars: Products in high growth markets with high market shares • Dairy cows: Products in low growth markets with high market shares they are high-growth industries and very promising in terms of profits and long-term growth This SBU can be grown into a star SBU if nurtured with attention because they need a large amount of capital investment and need to properly assess the potential nature to have an investment plan at the right time How to analyze business using the BCG matrix? First, we will need data on the market share and growth rate of the product or service When examining market growth, one needs to objectively compare with one's biggest competitor and think about growth over the next three years However, if our market is extremely fragmented, we can use absolute market share as a measure Next, we can build an initial frame for the Boston matrix In the Boston matrix chart, market share is shown on a horizontal line (low left, high right) and growth along a vertical line (low low, high) The four quarters are designated stars (upper left), question mark (upper right), cash cow (lower left) and dog (lower right) Each SBU will be represented by a circle, the size of the circle will depend on the percentage of market share / total market share of the industry Put each of our products in the right bracket based on its position in market share and growth rate for the business Where we choose to place the dividing line between each quadrant depends in part on how our company compares to the competition 2.3 Strengths and weaknesses of BCG matrix in business analysis + Strengths In fact, the BCG matrix is an effective and quick tool to help businesses evaluate and make the right decisions for their organization With easy-tounderstand illustrations and diagrams, the matrix helps businesses see future opportunities, identify the most suitable business areas to invest in to improve profits The BCG matrix allows to analyze investment capital needs in different SBUs, showing how to best use financial resources (investment capital), in order to maximize the business structure of the company The matrix also indicates the need to take over or give up a certain SBU, aiming to build a balanced and optimal business structure, improving the competitiveness of enterprises + Weaknesses However, the BCG matrix is quite simple, only assessing the potential and prospects of SBUs based on two factors: market share and industry growth rate is incomplete, in some cases even leading to mistakes For example, a low market share can still have a strong competitive position and high profits in a certain market segment because the company differentiates products that best meet customer needs In addition, this matrix has not deeply assessed the relationship between market share and costs; This relationship does not always happen in the direction as mentioned by BCG, large market share does not always create cost advantage In some industries, due to the characteristics of technology, companies with a small market share can still achieve lower production costs than companies with a large market share Or in mature, slow-growing industries, large market shares not always bring high levels of profit as said about the nature of SBU Therefore, in order to be able to make the most accurate decision for the company's business, it is necessary to combine the consideration of the BCG matrix with other analytical tools to give an objective and multidimensional view of the company's business products and markets Below is the breakdown of each SBU subgroup:  Star: The SBU (portfolio) with the best market share and the most cash generation is considered a star Often exclusive products or first-time products are considered to be stars However, due to the high growth rate, the stars consume large amounts of cash Stars can eventually become cash bulls if they sustain their success until the market growth rate declines Companies should invest in stars  Cow: Cow is an SBU that has a high market share and generates more profit for the business than the money invested in it These are SBUs with high market share but low growth prospects According to NetMBA, the products that fall under the cow box provide the profitability needed to turn the question mark SBU into a market leader, including corporate administrative costs, fund research and development, and public debt servicing company and pay dividends to shareholders Companies should invest in bull SBUs to maintain current levels of productivity, or to passively increase profits  Dogs: Dogs are considered SBUs with low market share and low growth rate, often break even, not make money or require too much investment Dog SBUs are often thought of as cash traps because businesses have money tied up in them, even though they are brought in with essentially nothing in return These SBUs are prime candidates for divestment  Question marks: These are SBUs with relatively low market share and competitive position But 26 Nguyen Hoang Tien, et al., Jr Eco Bus Mgn; Vol-2, Iss- (July-Aug, 2021): 24-31 RESEARCH METHODOLOGY 50,000 students This product line is highly appreciated for its profitability and self-sufficiency in capital requirements But while it is forming, a large amount of capital is also required to maintain its leading position 3.1 Data sources and method of collection Data sources Data consists of statements that reflect reality A large class of propositions of practical importance are measurements or observations of a variable quantity Those clauses can include numbers, words, or pictures The data consists of secondary data and primary data Secondary data is data collected by others, used for purposes that may be different from our research purposes It can be unprocessed data (also called raw data) or processed data Secondary data is not directly collected by the researcher Primary data is the data that the market researcher collects directly at the data source and processes it to serve his research Primary and secondary data collection sources can come from inside and outside the business  SBU question mark The general education system consisting of three brands iSchool, UK Academy and SNA is meeting the learning needs of more than 15,000 students, of which 70% attend 34 campuses in 18 provinces and cities Eight campuses of Saigon Academy attract 1,500 children of preschool age This is a product line with a competitive position and relatively low market share But they are high-growth industries and very promising in terms of profits and long-term growth This SBU can be grown into a star SBU if nurtured with attention because they need a large amount of capital investment and need to properly assess the potential nature to have an investment plan at the right time Data collection method:  Observational method  Method of interview by letter  Telephone interview method  Direct personal interview method  Fixed group survey method  Thematic group investigation method  SBU the dairy (cash) cow Nguyen Hoang is a pioneer enterprise to launch an education city model, where all kinds of preschool schools such as SGA are concentrated, etc This product line has high profitability but they not have the opportunity to speed up the development and the industry growth is very low Therefore, the need for investment capital is not too large and is considered a widely profitable source 3.2 Research Method The systematic approach, using dialectical materialism and historical materialism as general research methods, throughout the process of considering the research problem During the research process, we apply related theories in combination with synthesizing, analyzing, and evaluating data, demonstrating strengths, weaknesses, opportunities and challenges to build a system of perspectives development direction and solutions 3.3 Research Procedure  Select research topic  Identify research questions, hypotheses methods  Develop outline and research plan  Data collection and data processing  Writing research reports  SBU dog The system of bilingual schools is mainly concentrated in big cities such as Hanoi, Da Nang, Ho Chi Minh City, and Can Tho, so Nguyen Hoang decided to build the first iSchool in Rach Gia and expand to the western provinces such as Kien Giang, An Giang This is a product line with low market share and low growth Despite being placed in the dog category, the premium price segment still contributes financially to the company and 4.2 Analysis Results Discussion A marketing strategy must ensure strengthening or maintaining support for "star" products (right from the time when the market is strong and profitable, leading to many competitors entering and invest more to increase market share) and “question mark” (to gain higher market share in attractive markets) But it is necessary to reduce investment in “dairy cows” (when the low growth rate of the market makes the market less attractive to competitors), and omit or end all “dog” products Nguyen Hoang Group includes many Star SBUs, because other product lines contribute to promoting Nguyen Hoang's education market sharply in terms of education market share, helping the group develop and attract many customers who focus on bringing main profits, becoming the leader in the private education market in Vietnam RESEARCH RESULTS AND DISCUSSION 4.1 Business analysis for Nguyen Hoang Group using BCG matrix  SBU star After 20 years of operation, Nguyen Hoang Group is considered the largest private enterprise in the field of education in Vietnam Revenue in 2018 was USD 200 million, according to self-disclosure information Nguyen Hoang is operating 50 educational institutions in 18 provinces and cities, meeting the learning needs of about 50,000 learners, from preschool to postgraduate training As of July 2019, four universities of Nguyen Hoang Group including Ba Ria - Vung Tau, Hong Bang, Gia Dinh and Hoa Sen have attracted nearly 27 Nguyen Hoang Tien, et al., Jr Eco Bus Mgn; Vol-2, Iss- (July-Aug, 2021): 24-31 strategies Identify and evaluate opportunities and threats from the external environment affecting the business Implement measures to improve the management of human resources of the company, helping the company to become more and more perfect 4.3 Improving BCG matrix The BCG matrix of investment diversification is indispensable in the process of enterprise scale development However, how to diversify to create sustainable competitive value is a headache for many businesses According to management theory, large corporations often apply the method of establishing the BCG Matrix (Boston Consulting Group) This method divides the company's activities into four groups:  -Group I: Having stable and profitable activities called dairy cows  -Group II: Activities with great profit opportunities that need investment capital are called stars.·  -Group III: Activities with high profit potential but also hidden risks are called question marks  -Group IV: Activities that are losing money and have little chance of development are called sick dogs 5.2 Recommendation For the leader of Nguyen Hoang Group * Request:  Focus on renovating the management and operation of business activities Promote marketing to capture and accurately process information about the market, on that basis, develop appropriate business solutions for each specific time and for each specific customer Promoting the strength of the group investing in modern facilities and equipment, actively reinforcing trust with customers in order to expand the market  Strengthen the innovation of management and administration of the administrative apparatus, develop specific standards and provide professional training for employees, arrange labor arrangements in accordance with the capacity of each employees Basically, to win against the opponent, it must be strong in internal resources, the activities in the business must be smooth, fast and effective Therefore, Nguyen Hoang Group must strengthen corporate governance to increase the efficiency of the group's business strategies The Group needs to be thorough and consistent in directing the development and implementation of development policies through the good implementation of strategic implementation measures * Offer:  Promote cooperation and investment in new projects to develop the business system of the enterprise  Enterprises need to actively capture information of customers and business partners to meet their needs  For leaders of the university system in Nguyen Hoang Group Along with the implementation of measures to improve human resource management, the leadership needs to organize for employees in the company to improve their professional management skills, continue to improve the organizational apparatus, the organizational neat function The management team needs to be stronger in professionalism, better in expertise to meet the needs of strategic implementation such as implementing marketing activities, developing markets, building and developing groups * Request:  Improve the quality of teaching suitable for students and students  Expand the teaching scale in line with the domestic market, strengthen cooperation with foreign universities to expand the teaching scale  Strengthening teaching management with a team of highly qualified teachers and employees Identifying and assessing the opportunities and threats from the external environment affecting the business will allow the business to develop a clear business mission, define feasible long-term goals, design a strategic appropriate strategies and appropriate policies to achieve annual goals The analysis of external factors has many shades, qualitative, intuitive and difficult to visualize In strategic management, researchers have proposed two tools that allow enterprises to score and quantify the effects of the environment on their operations * Offer:  Focus on brand promotion through community events  Improve and invest in teaching facilities in schools  Strengthen enrollment in high schools and open career orientation sessions to attract students  For leaders of the remaining business units of Nguyen Hoang Group CONCLUSION AND RECOMMENDATION 5.1 Conclusion Through the process of performing business analysis using the BCG matrix, it is possible to establish reasonable company development strategies of Nguyen Hoang Group It is to strengthen corporate governance to increase the efficiency of the corporation's business 28 Nguyen Hoang Tien, et al., Jr Eco Bus Mgn; Vol-2, Iss- (July-Aug, 2021): 24-31 * Request:  Improve product quality of the enterprise, create attractive incentives for agents and distribution channels to develop distribution channels  Strengthen management by recruiting qualified employees  Promote product promotion and marketing activities to customers Creating trust for customers is a company not only in terms of business but also responsible for the community Association, the Women Entrepreneurs Association, and industry associations Every year, there should be a coordination between the school and these units, on the one hand the school needs to promote the promotion of scientific and technological products of the school's staff to enterprises On the other hand, businesses can determine their needs and place orders with the school about the requirements in technology improvement, product research or proposing management and business solutions * Offer:  Create trust for customers about the products that the business provides by strengthening promotion and marketing  Establishing a consulting and customer care support department with a team of expertise and experience  Create many incentives on after-sales and promotions for business products of the business Fifth, schools and faculties need to have plans to strengthen the building of alumni networks, especially business alumni Consider this as a bridge between schools and businesses in strengthening cooperation between schools and businesses in general and cooperation in science and technology in particular REFERENCES: Tien, N H (2019) International Economics, Business and Management Strategy Academic Publications, Dehli Tien, N H., Anh, D B H., & Thuc T D (2019) Global Supply Chain and Logistics Management Academic Publications, Dehli Tien, N H., & Anh, D B H (2017) Global Strategic Marketing Management Ementon Publisher, Warsaw Tien, N H., & Anh, D B H (2019) Vietnam’s International Trade Policy in Context of China-US Trade War, International Journal of Commerce and Management Research, 5(3), 92-95 Tien, N H., & Anh, D B H (2019) The Role of Foreign Trade Policy in Boosting Economic Growth of Vietnam, International Journal of Commerce and Management Research, 5(3), 107112 Tien, N H (2017) Strategic International Human Resource Management Ementon Publisher, Warsaw Tien, N H (2020) Human Resource Management VHU Publisher, Ho Chi Minh City Tien, N H (2020) Principles of Management SIU Publisher, Ho Chi Minh City Duc, L D M., Thuy, H T X., Yen, N T H., & Tien, N H (2018) Corporate Social Responsibility and Corporate Financial Performance Case of Listed Vietnamese Companies, Zeszyty Naukowe Politechniki Częstochowskiej Zarządzanie, 32, 251-265 10 Tien, N H., Anh, D B H., Ngoc, N M., & Nhi D T Y (2019) Sustainable Social Entrepreneurship in Vietnam, International Journal of Entrepreneurship, 23(3), 1-12 11 Tien, N H., Thao V T T, Hung Anh, D B (2019) Sustainability issues in social model of corporate social responsibility Theoretical analysis and practical implications, Journal of Advanced Research in Management 19 (1) 5.3 Solution for coordination between universities and the remaining business units of Nguyen Hoang Group Solutions are to strengthen cooperation between universities and businesses to improve the efficiency of science and technology activities In the context of Industrial Revolution 4.0, the core element of building a higher education system is training associated with practical requirements, training to better meet the needs of society Developing a training model that links educational institutions (schools) with enterprises is considered an important requirement In the coming time, to promote the cooperation relationship between universities and businesses in the area to improve the efficiency of science and technology activities, some groups of solutions are as follows: Firstly, in order for effective research works to be accepted by enterprises, it is first necessary to further expand the scientific research movement in depth To so, it is necessary to both motivate and force lecturers to participate in scientific research activities Second, before approving an applied research project (key grassroots topics, high-level topics with large budgets), the university should request materials to assess market needs in technology by the author or ordered by an independent market research agency Third, invite reputable business managers to participate in the acceptance committee of scientific research projects in relevant fields: Increase the participation of business people in the process of evaluating research results use of the school Fourth, strengthen the relationship building between the University and business associations such as the Vietnam Chamber of Commerce and Industry (VCCI), the Enterprise Association, the Young Entrepreneurs 29 Nguyen Hoang Tien, et al., Jr Eco Bus Mgn; Vol-2, Iss- (July-Aug, 2021): 24-31 12 Tien, N H., Hiep, P M., Dai, N Q., Duc, N D., & Hong, T T K (2019) Green Entrepreneurship Understanding in Vietnam, International Journal of Entrepreneurship, 24(2), 1-14 13 Tien, N H., Minh, H T T., Ngoc, N M., & Nhan, V K (2020) Family business in Vietnam and in Poland: Review of characteristics and trend of development, Journal of Southwest Jiaotong University 54(6), 1-19 14 Tien, N H., Jose, R J S., Mai, N P., Long, N T., & Hai, T V (2020) Current State of Human Resource in International Universities of Vietnam, International Journal of Multidisciplinary Research and Development, 7(7), 22-27 15 Tien, N H., & Ngoc, N M (2019) Coping with Challenges and Taking Opportunities in International Business Strategy of Foreign Enterprises in Vietnam, International Journal of Advanced Research in Engineering and Management, 5(7), 18-23 16 Tien, N H., & T A Grzeszczyk (2019) Strategies for Human Resource Development for Thu Dau Mot University in Vietnam, International Journal of Research in Management, 1(4), 1-5 17 Tien, N H (2017) Challenges and opportunities for enterprises in the world of the 4th industrial revolution National conference on “Accounting, auditing and Vietnam economy in context of the 4th industrial revolution, 11/2017 18 Tien, N H (2018) Young University Staff Development in Context of Industrial Revolution 4.0 Proceedings of University Scientific Conference on “Developing Self-studying Skills for Students in Tien Giang University” 18 August 2018, Faculty of Education, Tien Giang University, Tien Giang, Vietnam 19 Tien, N H, & Chi, D T P (2018) Climate Change and Sustainable Architecture in Smart Cities Proceedings of ACSD University Scientific Conference on: “Architecture and Civil Engineering Sustainable Development”, Thu Dau Mot University 30 ... focus on bringing main profits, becoming the leader in the private education market in Vietnam RESEARCH RESULTS AND DISCUSSION 4.1 Business analysis for Nguyen Hoang Group using BCG matrix  SBU... Question marks: Products in high growth markets with low market share  BCG Matrix BCG matrix stands for Boston Consulting Group matrix BCG matrix theory is built to help businesses orient their... business areas to invest in to improve profits The BCG matrix allows to analyze investment capital needs in different SBUs, showing how to best use financial resources (investment capital), in