Subject name
Thesis title "Building Business Strategy in Hoa Binh Petroleum Construction and Investment Joint Stock Company (PVCHB) for 2019-2023".
Reason for choosing topic
After opening up and integrating into the economy, Vietnam has achieved some important achievements, the basic overview maintains macroeconomic stability, maintaining a relatively high economic growth rate, the size of the economy increased To achieve the overall objective of economic development in the five years of 2018-2022, to achieve rapid and sustainable economic development and create a foundation for the country to become a modern industrial country by 2030 The average economic growth rate of 2018-2022 is expected to be 7.0-7.5% In which, the average value added of industry and construction increased by 7.8-8%, and the construction industry structure accounted for 42% In the strategy, objectives and tasks of economic development in the next 5 years, we see the very important role of the industry - construction with the structure of 42%, which is one of the key areas for deciding to the success of the plan
To gradually realize the position and leading role of the industry - construction contributes to the common development; Every organization, economic sector, economic groups and enterprises must have strategies in line with the trend of integration and the development of the market Due to the increasing compettion of current and potential competitors, the company’s business activities show signs of moving sideways and cannot develop Starting out from that practice, building a business strategy is essential for every business
It helps enterprises have clear business direction and objectives, directing departments and individuals to the common objectives of the enterprise, avoiding the local situation, dispersing resources will weaken the business Today's business environment is changing so rapidly, global competition requires businesses to be proactive, creative to adapt to change In order to develop fast, sustainable and successful enterprises, it is necessary to pay attention to investing their time and effort in managing and developing their business development strategies
Hoa Binh Petroleum Construction and Investment Joint Stock Company (PVCHB) was established in 2007 and is a member company of Petrovietnam Construction Joint Stock Corporation (PVC) The key activities are: Investment in construction, civil and industrial construction, financial investment, real estate, industrial production, building materials, real estate trading floors The company operates in the whole country with emphasis on the northern market
Some of the business fields of the Company have specific characteristics such as construction works in the oil and gas industry, technical infrastructure works, real estate investment projects require the binding conditions about strong financial capacity, ability to raise capital, prestige, responsibility with specialized management agencies, timely orientations and decisions and strategic vision of business leaders Development strategy of PVCHB is planned in terms of time, space and competitive environment, in which there is cohesion and authenticity with the common development orientation of PVC are: strong and sustainable, combining economic development closely linked with environmental protection and national security, cooperation with domestic and foreign partners, taking full advantage of being a member of PetroVietnam Vietnam Country (PVC source)
Participated in the study of the MBA program of Hanoi National University, with knowledge gained and desired to be practiced in the working unit is PVCHB, PVCHB has a solid foundation, comprehensive development soon become a brand of investment and construction with prestige, capacity, competitiveness, breakthrough power and always bring value and high efficiency
I decided to select the topic "Building business strategy in Hoa Binh Petroleum Construction and Investment Joint Stock Company (PVCHB) for the period of
2019 - 2023" to study, this subject will be the reference document This is a very important and practical way to develop and implement PVCHB's business strategy.
Objectives of the study
To formalize the theoretical issues of strategic management;
Develop business strategy for PVCHB;
Identify the strengths and weaknesses to provide solutions to implement the business strategy of the enterprise in the period 2019-2023;
Object and scope of the study
Research subjects: Business Strategy of Hoa Binh Petroleum Construction and Investment Joint Stock Company PVCHB
Research methods
Research methods: case studies, qualitative research;
Specific research methods: comparison, analysis and evaluation.
Source of research data
Data, documents related to the construction industry, investment;
Report on the performance of PVCHB in the years (2016-2018), available materials (secondary documents) to consider the scale, structure and trend of the market.
Limitations of the thesis
Data sources are incomplete due to the limited research framework;
The scope of research is limited to construction
Expected results of the thesis Select and develop a suitable business strategy for PVCHB Specific solutions and plans to implement solutions in business strategy was built for PVCHB in the period 2019 - 2023.
The composition of the thesis
In addition to the introduction and conclusion, the main content of the topic consists of 3 chapters:
Chapter I: The rationale for developing the business strategy of the enterprise
Chapter II: Analysis of Business Environment of PVCHB
Chapter III: Selection of trading strategies and solutions for the implementation of the strategy for 2019-2023
THE RATIONALE FOR DEVELOPING THE BUSINESS
BUSINESS STRATEGY - DEFINITION, ROLE, PROPERTY AND TASKS
Business strategy involves the goals of a business, the strategies developed must help the business achieve its objectives Business strategy, however, is more concerned with how a business can compete successfully in a particular market It involves strategic decisions about product selection, meeting customer needs, gaining competitive advantage over competitors, exploiting and creating new opportunities, etc Fred R "Business strategies are the means to achieve long-term goals."
It can be said that business strategies are the means to help businesses achieve long-term goals Business strategy is not intended to outline concrete ways, but rather the overall program, the most effective means of mobilizing resources to implement identified goals Business strategy can be broadly defined as follows: Business strategy is a series of commitments and actions that a company uses to gain a competitive edge by exploiting its capabilities Core in a given market (P.Rindova & CJFombrun, 2009)
1.2 The role of business strategy
Business strategies help businesses recognize their purpose as a basis for business activities of the enterprise
Business strategies help businesses capture and utilize business opportunities and take proactive measures to address the threats and threats in the competitive marketplace
Business strategy contributes to improve the efficiency of the use of resources, strengthen the competitive position of enterprises to ensure the sustainable development of enterprises
Business strategy provides a solid basis for making policies and decisions on production and business in line with market movements
1.3 Basic characteristics of business strategy
The business strategy clearly defines the basic objectives and business direction of the enterprise in each period;
Business-oriented strategy for enterprises to develop continuously and firmly in the constantly changing business environment;
Business strategy to ensure the optimal combination of exploitation and use of resources of enterprises in the present and future; promote the advantages and seize the opportunity to win the competitive edge;
Business strategy is reflected in the continuous process;
Business strategy is forward thinking, winning the market;
Business strategies are usually built up over a long period of time (3 years,
2 THE PROCESS OF BUILDING THE BUSINESS STRATEGY OF THE ENTERPRISES
The overall business strategy is based on the vision statement of the business, oriented to the entire operation of the business and therefore strategic in the long run The process consists of the following steps:
Diagram 1-1: The process of building a business strategy
(Source: HSB Strategic Management Teaching Guide 2008) 2.1.1 Vision
Vision is understood as follows: "A vision statement is a report about the position your company expects to achieve The vision statement outlines your company's future when they achieve their goals and goals may differ from one another in terms of length, which may be a brief statement, but may also be a long paragraph, but must determine the final destination you "(Source of Vietnam Learning)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
1 Macro Analysis PEST/SLEPT model
Cơ hội và thách thức
Strategy building and selection SWOT model
Value chain model Process to recognize sustainable competitive advantage
Cost leadership strategy Differentiation strategies Strategic focus
Monitoring and evaluating the implementation of the strategy
The organizational structure is in line with the selection strategy
Mission is a statement intended to inform the existence of a business, which defines the values and rules governing the business and is an essential part of the strategic planning process
Missions can vary in length and in terms of business, purpose, and values
The mission of the company lies in the fact that the company exists in the market, who you are and what you will bring to your customers and the community
Decisions in the strategic planning process and in the dominance of the company must always be in harmony with the statement of mission
The mission statement is the foundation of the company's vision Mission Statement or can motivate employees to convey the goals and values of the company to customers and the community
The goal of external environmental analysis is to identify opportunities and challenges for the enterprise, to analyze how to implement and capture opportunities from the environment, and to avoid challenges necessary for the business
The scope and contents of environmental analysis include: macro- environmental analysis (general environment) and micro-environmental analysis, also known as the sectoral environment
Macro environment is the environment within the whole national economy, which consists of six segments: economy, technology, culture, society, demography, politics, law and the world Changes in the macro environment can have a direct impact on any force in the industry, and therefore may affect relative forces and on themselves, ultimately altering the attractive of an industry
Political and legal environment (P): Include a system of views, policies of the State, the legal system, especially laws related to business; The political developments taking place in the country and in the world, factors related to politics and the law
The economic environment (E) is a direct and powerful factor affecting the business performance of enterprises, through changes in macroeconomic variables as well as the impact of macro economic policies through the regulatory tools of the State
The state of the macroeconomic environment determines the health and prosperity of the economy, which always has an impact on businesses and industries Therefore, businesses must study the economic environment to recognize its changes, trends and implications
Socio-cultural environment (S): includes socio-cultural factors affecting human life and behavior, thereby affecting structure of demand, behavior of shopping, consumer orientation of the customer
The technological environment (T :) includes technical and technological factors that determine the birth of new products, the formation of business models, the means of satisfying demand, affecting competitiveness and business performance of the business
Population-natural environment: At present, population is often associated with development, showing the importance of this factor to the overall development of society The aspects of the population-labor environment that need to be analyzed include:
International environment: The trend of regionalization, globalization has been developing in the world, many economic relations between countries and regions have affected many areas of social life Every business, every industry, every government must take into account The rapid development of science and technology, the rapid advances of information technology, have brought nations together to form a global trade network These tremendous fluctuations have a strong impact on businesses, creating opportunities and challenges in business, which directly influence and first of all go to strategic management
STRATEGIC ANALYSIS TOOLS
SWOT analysis matrix is a very useful tool for capture and decision making in any situation for any business organization Short for the four words Strengths, Weaknesses, Opportunities and Threats, SWOT provides a strategic analysis, review and positioning tools of a company or of a business project
SWOT is suitable for work and group analysis, used in business planning, strategy building, competitor assessment, marketing, product development and services.
After gathering and listing the major elements of external and internal environmental analysis on the SWOT matrix, we combine these elements This is one of the important tasks for developing a SWOT matrix in pairs In principle, there are four types of combinations:
S-O: Build a strategy to harness the strengths of your business to take advantage of outside opportunities
S-T: Build a strategy to harness the strengths of your business to evade external threats
W-O: Develop a strategy to overcome the dangers and limitations of businesses to take advantage of outside opportunities
W-T: Developing strategies to overcome dangers and limiting weaknesses to evade external threats
After completing these four types of combinations, the business can maximize the strengths to exploit the opportunities and limit risks and challenges, while gradually limiting their weaknesses
Risk (T) (List the risks) Strength (S)
(List the strengths of the business)
Use your strengths to take advantage
Use strengths to mitigate risk
Weakness (W) (List the weaknesses of Enterprise)
Overcome weaknesses by taking advantage of opportunities
Minimize weakness and avoid risk
Planning and presenting business strategies or competitive strategies is very important and not easy In the business strategies that businesses set after analyzing every aspect, what strategy is best considered to be chosen Because, choosing the right one will contribute to the success of every business when developing and implementing business strategies
In order to choose an optimal strategy for PVCHB, the GREAT model (G: gain - R: Rick, E: Expence; A: Achievability, T - Time allows for the selection of effective strategies in the following steps:
Step 1: Score each strategic option on a scale of 1-5, according to 5 criteria:
G (Gain): The greater the benefit of the strategy (achieving the goal), the higher the score
R (Risk): If the risk of the strategy is higher, the lower the score
E (Expense): If the cost of the strategy is larger, the lower the score
A (Achivebility): If the feasibility of the strategy is higher, the higher the score
T (Time): If the time of strategy is more reasonable then the higher the score Score 5 = High; Score 4 = average; Score 3 = poor; Score 2 = weak; 1 ẵ poor
Step 2: Assign weightings to the criteria based on the importance of each criterion for the production and business activities of the company
Criterion 1: Benefits: 0.30 Criteria 2: Risk (risk): 0.15 Criterion 3: Expense: 0.20 Criteria 4: Achivability: 0.25 Criteria 5: Time (time): 0.10
Step 3: Synthesize the scores of each strategic option to choose the optimal strategy.
BASIC TRADING STRATEGY
Michael Porter has identified three general strategies that can be applied at the business unit level to create a competitive advantage The basis of competitive strategy:
(1) The needs of the customer, what will satisfy;
(2) Customer groups, who will be satisfied;
(3) Special capabilities, customer needs are satisfied
It is also central to choosing enterprise-level business strategies, as they are the source of competitive advantage over competitors, as well as to determine how competitive company
Customer demand and product differentiation
Customer demand is the desire, demand can be satisfied through the characteristics of the product or service Product differentiation is the process of creating a competitive advantage by designing products - goods and services - to satisfy the needs of customers The degree of differentiation of a company's products compared to other companies is the source of competitive advantage for the company
Companies that do not choose or are not able to differentiate by product can find ways to lower their prices and consider it a way of "differentiating" their products Meanwhile, others seek to create a unique identity for their products so that they meet the needs of customers in ways that other products can not meet
Customer groups and segmentation (array) of the market
Market segmentation can be defined as the way a company chooses a customer group based on the important differences in needs or preferences in order to gain competitive advantage It then sets out appropriate competitive strategies
Deciding to supply more products to many market segments allows the company to better satisfy its customers Consequently, customer demand for the company's products increases and generates more revenue for the company than it does for a single product for the whole market But sometimes the nature of the product or the nature of the industry does not allow for much differentiation In these cases, there is less opportunity to gain competitive advantage through product differentiation and market segmentation because there is less opportunity to serve the needs of customers and customer groups in different ways Instead, prices are the primary criteria consumers use to evaluate their products, and the competitive advantage lies with the company that is more productive and can offer the product at the lowest price
Decision on unique capabilities The third issue in enterprise-level strategy is the decision to pursue individual capabilities to best satisfy consumer needs and market segments
Special capabilities are the means companies can use to better meet the needs of their customer groups than their competitors
4.2 Types of general competition strategies
Each company locates itself in its active field by leveraging its existing strengths Michael Porter argues that the advantages of any business will always lie in one of two respects: cost advantage and product differentiation
By applying these advantages, companies will pursue three common strategies: cost leadership, product differentiation and focus They are called generic strategies because they do not depend on any business or industry
This strategy aims to become a low-cost producer in the industry with certain quality standards At that point, the company will either sell the product at an industry average price to earn a higher return than its competitor, or sell it at a lower price than the average to gain market share
In the case of a "price war", the company can maintain a certain level of profit, while its competitors are forced to suffer losses Even if there is no conflict or price controversy, the industry grows, expands and drops, companies that are able to keep production costs lower can still make a profit for a longer time This cost leadership strategy is often applied to large markets
Businesses can rely on a number of methods to outweigh the costs by improving the efficiency of their business processes, finding opportunities to access large quantities of low cost materials, optimize your business abroad and make vertical mergers decisions, or reduce some unnecessary costs If competitors are not able to cut costs to the same level, they can maintain their competitive edge on the cost leadership
Firms that successfully implement the cost leadership strategy have the following characteristics:
Good capital access to invest in production equipment This is also a barrier that many other companies can not overcome
Product design capabilities to increase production efficiency, for example, create a small detail to shorten the assembly process
There are effective distribution channels
Any common strategy has its inherent risks, and low cost strategy is no exception Risk can occur when competitors also have the ability to lower production costs Even with the help of modern technology, competitors can have unexpected breakthroughs in production, removing the competitive edge of cost- leading businesses In addition, there are a number of companies that pursue strategies that focus on niche markets where it is not difficult to achieve even lower costs in their traditional market segments, thereby forming a Group control market share is many times larger
This is a strategy for developing your product or service so that the product or service has unique and unique characteristics that are valued and appreciated by customers more than the products of the competitive firms Value added by product uniqueness allows companies to set higher prices without fear of being boycotted by buyers They hope that the higher price will not only compensate for the additional costs of product delivery, but also: due to the different characteristics of the product, if the supplier increases the price can be transferred to the customer, because customers can not easily find similar products to replace
Successful businesses in product differentiation strategies often have the following strengths:
Ability to research and access to top scientific achievements
Product research and development team with high skill and creativity
Positive sales team with the ability to successfully communicate the strengths of the product to the customer
Reputation for quality and innovation ability of the business
The risks associated with product differentiation strategies are the likelihood of competitors mimicking, or the changes in consumer tastes In addition, many companies are pursuing centralized strategies that are likely to achieve higher product differentiation in their market segments
Focused, focused strategy towards a relatively narrow market segment in which enterprises try to gain competitive advantage through low cost or product differentiation by applying the demand theory of a group can be better satisfied by being completely focused on serving the group
A centralized business strategy often keeps loyal customers loyal and discourages other companies from making them want, or daring to compete directly
By focusing only on a narrow market area, businesses that pursue this centralized strategy have lower sales, so they do not take advantage of bargaining with suppliers However, businesses that pursue a centralized strategy - product differentiation can transfer the higher costs that the vendor impose on the customer because the customer can not find the replacement product
Successful entrepreneurs in a focused strategy can change the developmental advantages of many types of products to fit the small market segment that they have studied thoroughly and thoroughly One of the risks of this centralized strategy is the ability to be imitated and the changes taking place in the target market Moreover, a leading low-cost producer in the big market can easily change their product to compete directly with a centralized business application
Companies that pursue other centralized strategies may also target some of the target market, losing a certain percentage of their market share
These general strategies are not always compatible with each other If a business tries to act in a way that prevails in every field, then the result is no gain
ANALYSIS OF BUSINESS ENVIRONMENT OF HOA BINH
GENERAL INTRODUCTION
Company name: HOA BINH PETROLEUM CONSTRUCTION AND INVESTMENT JOINT STOCK COMPANY (PVCHB)
Head office address: 14th Floor - HH3 Building, My Dinh Urban Area, Me Tri,
My Dinh Commune, Tu Liem District, Hanoi
Website: http://www.pvchoabinh.vn Tax code: 0102566108
Shareholder Structure and Ownership Ratio:
Petro Vietnam Construction Joint Stock Company owns: 30%
Management Board of Cuu Long Ecological Urban and Service Project
Hai Duong Project Management Board Nghe An Project Steering Committee
The Steering Committee of Thai Binh 2 Thermal Power Plant
Associated company PVCHB Consulting Joint Stock Company
Thanh Nam PVCHB Construction Joint Stock Company
1.2 The formation and development of PVCHB
In 2007, the economy was booming, especially in the fields of investment, finance and construction Song Da Global Investment Joint Stock Company - SDG was established in the context of many advantages in terms of financial potential, investment together with the support and cooperation of the company has the capacity and prestige of the largest Song Da Corporation, Petrovietnam Construction Corporation Right after the establishment, the company has focused on the fields of design consulting, investment projects on housing, urban ecological services, construction investment civil and industrial works, financial investment, real estate trading floors In the investment field of urban housing projects, the company has been entrusted by the provinces to deploy projects with many advantages such as the project Greenhouse area of 13.5ha in Song Phuong commune, Hoai district Duc, Hanoi, Cuu Long Ecological and Service Urban Area with the area of 60 ha in Luong Son district, Hoa Binh province About Design Consultancy Company The company has associated with a number of design consultancy companies of Korea, France, NewZealand take charge of design consultancy projects on housing, offices and hotels in Vung Tau , Da Nang, Hoa Binh
After 3 years of establishment and operation, the Board of Directors of the company determined that there should be a breakthrough in the field of production and business activities in order to seize the opportunity to overcome difficulties and challenges, position, competitive ability to better meet the needs of market development The result of this breakthrough is shown by the decision of the Board of Management of the Company through the acquisition of a portion of capital of Song Da Global Pte and became member of PetroVietnam Construction Joint Stock Corporation in July 2017 This is the moment of change in the scale and nature of the enterprise, Song Da Global Investment Corporation It was officially renamed Hoa Binh Petroleum Construction and Investment Joint Stock Company After being a member of PetroVietnam Construction Joint Stock Corporation, the company has quickly integrated with the environment, culture and management style of the oil and gas industry Besides concentrating on directing the implementation of existing production and business tasks, the Company has decided to expand the field of specialized construction and technical infrastructure, industrial and civil construction Promoting the available advantages of PVC and its partners Hoa Binh Petroleum Construction and Investment Joint Stock Company (PVCHB) has a young and dynamic leadership team, a steady and drastic management structure From the beginning, there are only 25 staffs and employees The company has over 350 staff members who are managers, architects, engineers, economics bachelors, lawyers, public employees skilled personnel specialized in investment, construction of technical infrastructure, industrial civil construction; They direct, operate and work in large investment projects such as construction of key construction works such as Polyester fiber Hai Vu Dinh Vu, Thai Binh 2 - Thai Binh Province, Quang Trach Thermal Power Plant - Quang Binh Province, Nghe An Vocational College, Dien Kha Vocational College 60 ha of Cuu Long Ecological and Service Area, Gia Loc New Urban Area, Hai Duong scale 50ha In the field of design consultancy, PVCHB has connected with a number of experts and collaborators who are foreigners with long experience in the form of partnership and cooperation for project implementation
PVCHB's strategy is to constantly build and develop its core business activities: construction of technical infrastructure, industrial and civil construction, production of new materials and construction equipment; to invest in projects on ecological real estate and services, projects on houses in big streets PVCHB always strives for the quality and added value of products for the benefit and prestige of its customers, striving to be one of the leading enterprises in PVC system, always dynamic and innovative development and strong Sustainable in both width and depth
1.3 Organizational structure and main business lines
Diagram 2- 1: Organizational structure of PVCHB
In charge of design consultancy
In charge of investment, financial
Project investment Organization and Administration
Cuu Long Project Management Unit
Interior construction team Functional departments
Major business activities of PVCHB include:
Building technical infrastructure Real estate investment, ecological resort resort Investment in industrial zones
Civil and industrial construction Manufacturing and trading building materials
1.5 Characteristics of the oil and gas construction sector
In the field of construction and installation, Petroleum Construction has its own characteristics in terms of technical factors, quality, progress, location
Petrovietnam Group trust entrusted implementation of the project construction and installation of oil and gas industry, petroleum construction and assembly corporation of Vietnam is responsible for execution of construction works in the industry such as petrochemical refinery, gas processing and industrial plants; mechanical equipment manufacturing oil and gas, industrial production; To set up a system of reserve and transportation of petroleum products; real estate business; construction and installation of oil and gas projects on the sea; high-rise buildings
Due to the specific characteristics of the industry, it is necessary to operate in the strategic areas of the country, especially in the sea and in the offshore areas
Therefore, construction of oil and gas contributes a large part to the operation and development of the oil and gas industry
PVCHB is a member unit of PVC Corporation in addition to the tasks involved in the works assigned by the Corporation has actively sought other construction projects to expand market development.
ANALYSIS OF FACTORS IMPROVING PVCHB
After more than 12 years as a member of the World Trade Organization (WTO), Vietnam is gradually implementing its commitments to the membership community In addition, Vietnam has strengthened its international standing when it became a non-permanent member of the United Nations Security Council in 2007 The government's executive apparatus with policy efforts economic - political - social, domestic, foreign relations in the past years are also highly appreciated
Vietnam's legal system is not yet complete and its application has not been appreciated The legal system of the economy is still contradictory, complicated procedures, troubles even though the Government has been reformed in the direction of more open
The application of Decree 71 from August 08, 2010 has limited the participation of speculators, and thus make the real estate market less likely to recover in the short term Moreover, the lack of this unit will make the real estate market in the coming time is likely to level off However, in the long term Decree
71 will clarify the market, making investment more professional
Real estate loans will continue to be difficult as Circular 13 begins to be effective from 01/10/2010 This Circular specifies the risk ratio of all loans for real estate business is 250% This is considered as a new barrier to this type of credit besides, the State stipulates that commercial banks are allowed to use up to 30% of short-term capital sources for medium and long term loans Not to small investors Real estate
Implementing Resolution No 11 / NQ-CP dated February 24, 2011 and Action Plan No 1893 / CTR-DKVN by the Vietnam Oil and Gas Group on restraining inflation, stabilizing the macro economy , ensuring social security, PVC, including PVCHB must review and rearrange the list and schedule of approved investment projects to focus on investment projects in the field of production and business of the Group and the units are likely to be completed in 2018-2019 Reduce, delay the project is not urgent, difficulties in arranging capital
The merger of Ha Tay province (old) in Hanoi from 01/08/2009 has had a significant impact on some real estate businesses having investment projects in Ha Tay before As a result of the change in mechanism and policies related to administrative procedures, some projects have been delayed or suspended, waiting for the development plan of Hanoi
However, the laws governing construction investment, such as the Law on Investment, the Law on Construction and the Housing Law, have not changed significantly, except for the promulgation of the Law on Real Estate Investment and the Law on Taxation personal entry These two laws have been put into practice but also have a certain impact on the psychology of investors
The political environment of Vietnam is highly appreciated for stability, creating a favorable legal corridor to ensure business development of PVCHB
However, the stable political and legal environment also created favorable conditions for many new entrants into the market to become strong potential competitors of PVCHB
In the international and domestic context, there are many difficulties and challenges in the period 2013 - 2017, especially due to the impact of the global financial crisis This has significantly affected the economic growth of Vietnam, indicators of export turnover, investment attraction are all down, however, because the economy is small and in the period Integration with the region and the world, the Government has directed the management to limit the negative impact, avoid falling into the crisis, thereby maintaining a good growth Specifically, in 2017, the growth rate of GDP growth was 6.7% - exceeding the target of 6.5% Vietnam is considered as a country with high growth rate in the region and in the world
Table 2 - 1: Vietnam’s GDP in the period 2008-2017
Year GDP according to actual prices (billions dong)
GDP by comparison prices (billion dong)
(Source: GSO Website www.gso.gov.vn)
Besides the achievements in growth, the Vietnamese economy still faces difficulties such as:
Inflation is high with the CPI rising for the whole of 2017 to 11.75%, which is the highest level since 1992 and 2018, according to the International Monetary Fund (IMF) forecast for 18.8% For example, natural disasters, rising prices, especially gold prices and world oil prices have surged recently One of the most important reasons is the inconsistent macro policy management; Inadequate monetary policy, lack of long-term orientation makes it difficult for the economy and enterprises
The VND has continuously depreciated and the interest rates have increased: In the first 10 months of the year from November 2016 to August 2017, the State Bank of Vietnam (SBV) has adjusted the USD / VND interbank rate three times, 17% Interest rates increased sharply, especially in the last months of
2017 and first half of 2018, with the deposit interest rate of 18-20% / year; Loan interest rates are up to 22-24% per annum The interest rate race has caused many obstacles for production and business activities of enterprises
Vietnam economic prospects to 2022 and future:
According to the Economist Intelligence Unit, the outlook for Vietnam's economy in the long run is bright Viet Nam still retains its advantages over other countries as political and social stability Economic growth in Vietnam in the period 2018 - 2022 is expected to average around 7.2% per year as consumption, investment and exports are likely to grow sharply It is forecasted that personal consumption will grow well due to the policy of attracting investment and development of Vietnam's strong business lines such as agricultural production, seafood processing, cottage industries and handicrafts development, industrial clusters will create more jobs to improve the labor market and improve the income level of workers
The cultural environment has a profound influence on the management and business of all businesses Socio-culture also has a direct impact on the formation of the corporate culture, the culture of the group as well as the behavior and behavior of the executives and employees in contact with the business partners as customer
According to the report of the Government at its 8th session, the XIV National Assembly, October 20, 2017, the socio-economic situation in 2017 achieved many results Business development, balance supply and demand are secured, along with measures to strengthen price control and anti-speculation, price markets have stabilized, contributing to stabilize macroeconomic promote growth and employment Better social security and welfare issues have been achieved, and new cultural lifestyles have been achieved
Thus, as the quality of life is improved, the needs, lifestyle and activities of the Vietnamese people (mainly in urban areas) have changed This has a certain impact on the structure of industry - construction and services
SELECTION OF TRADING STRATEGIES AND SOLUTIONS
GENERAL OBJECTIVES OF PVCHB
Vision: PVCHB strives to be the leading unit in the PVC system, dynamic, creative, drastic, strong and sustainable development Be ready to integrate, meet the development needs of the Vietnamese market
For the market: Provide high quality, unique and innovative products and services to meet the needs of customers
For employees: Build a professional, dynamic, creative working environment; To adopt policies to attract and train personnel with real capacity to serve the development demands of enterprises Increase income, benefits, opportunities for development, promotion and long-term commitment for all employees
For shareholders: To ensure the growth, create value added benefits and attractive investment value, shareholders for shareholders
For society: Harmonizing corporate interests with social benefits;
Contribute actively to community-based social security and environmental protection activities that contribute to the socio-economic development and development of the country
The company's focus is on three areas: construction, industrial production and real estate investment
Focusing on the field of construction and installation of civil engineering, industrial, urban technical infrastructure, traffic
To invest in the construction of mechanical production lines and lighting for urban infrastructure and transport
Regarding real estate investment: To concentrate investment and exploit effectively the projects which have been assigned by the Company to be investors such as Cuu Long 60ha in Luong Son, Hoa Binh province, Greenhouse area 13ha in Hoai Duc Hanoi, Gia Xuyen new urban area, Gia Loc district, Hai Duong province scale 50ha
Strengthening activities in the field of construction and installation of works outside the industry such as construction of large-scale civil works
Expanding, occupying the domestic market
Maintaining high growth, ensuring jobs and improving incomes for employees
Some key indicators in the company's production and business period 2019-2023
Its chartered capital is VND200 billion
Total revenue: 2,000 billion VND Paying state budget: 150 billion VND Owning 20% of the construction market in the Northern Petroleum sector Total profits: Annual average growth rate of about 16%
Average income per person is about 8.5 million
Total number of employees is about 500 people.
Market share of construction companies in 2018
Group of competitors of PVCHB is occupying a huge market share
Compared with these competitors, PVCHB only occupies 5% market share compared to the other 4 competitors This is partly due to the fact that these rivals have been in business for a long time, experiencing many ups and downs, and have recognized their real opportunities and challenges to stand up and flourish in the marketplace This is an opportunity for PVCHB to recognize and identify its true position in the market in order to have a clear orientation in the process of developing strategies for business activities and to work hard to compete In a turbulent economy, PVCHB is also a big challenge to its direct competitors in the oil and gas construction sector
Competitors considered as potential competitors in PVCHB's activities include:
Construction companies outside the oil and gas industry in Vietnam
Foreign invested companies and foreign construction companies are allowed to operate in Vietnam with financial potential as well as technology
Starting from the implementation of commitments when joining international organizations such as WTO, ASEAN, APEC , FDI and ODA loans to Vietnam increased, leading to the increase of competitors in many fields Different fields and construction industry is no exception One of the reasons is that Vietnam's financial and technological potential is far less than that of its competitors
Meanwhile, specialized equipment needs to be invested with large cost, complex technology requires skilled staff and technical workers are indispensable factors
These are barriers to potential domestic competitors but the strengths of foreign competitors These are the conditions for potential competitors to enter the market in the near future
2.2.3 The power of the customer
In addition to competitive factors, the customer factor is also a competitive pressure affecting business activities of enterprises Customers of PVCHB are investors of projects on civil engineering, industry, technical infrastructure, local agencies The power of the investors has a great influence on the work of PVCHB, investors can set very strict requirements to lower the price of contracting construction works, tend to occupy business capital or Bargaining for better quality products and services Among these customers must include: Vietnam Oil and Gas Group and its member units; Song Da Group and its subsidiaries; The transportation; Joint stock companies as project investors; The local government agencies where the projects are implemented These customers have many large projects, the focus of the state, management in accordance with the state policies require high quality volume, construction progress and price pressures for companies operating in the industry
When analyzing the supplier, the quantity, quality and ability of the supplier is very important because all the factors related to the supplier affect the quality, progress of construction, capacity the performance or business performance of PVCHB Suppliers have their power by threatening to increase or decrease the quality of products / services provided They can squeeze a company's profitability when it is unable to offset the increased cost of production
For the construction industry in general and PVCHB in particular, suppliers are firms, corporations, credit institutions providing raw materials, machinery, materials, financing
Being aware of the importance of suppliers, PVCHB has built up strong relationships with suppliers in many areas to reduce the pressure on suppliers which is considered one of the challenges of many companies:
Raw materials, machinery and equipment for construction including exclusive technological equipment: Regular relations with suppliers; PVCHB regularly updates information on prices, types and specifications to be active in the process of using and also not subject to too much pressure on quality and price
Financial resources: PVCHB always builds and actively balances its own funds, loans, other legal capital and long-term relationships with reputable credit institutions
2.2.5 Threat of alternative products or services
Theoretically, alternative products limit the potential profitability of an industry or unit by setting a maximum threshold for the price at which the company in that industry makes a profit Because the products are interchangeable, they will lead to competition in the market As the price of the main product increases, it will encourage the use of alternative products and vice versa However, due to the nature of the industry, the main products are industrial construction works and specialized oil and gas projects constructed by PVCHB according to the specific design documents of each project Replacement products are very low
According to the indispensable objective law together with the development of industrialization and modernization of the country's economy, the speed of urbanization is also faster With the analysis of such macro and micro factors, the opportunities and challenges of PVCHB are considered and determined to assess the impact of these factors on PVCHB's business strategy
Table 2-2: Opportunities and challenges of PVCHB
- The political environment is stable, creating opportunities for sustainable development of production and business activities
- The process of international economic integration is promoted as a basis for developing the economy, increasing investment opportunities for industry, energy
- The domestic legal environment is not complete; the policy environment has changed;
- The fluctuation of the world economy has a great impact on Vietnam's unstable macroeconomic policy, causing inflation, high interest rates, devaluation of the dong and infrastructure This is an opportunity for the development of the construction market in general and the field of oil and gas construction in particular
- Access to modern science and technology helps businesses have many options and options for the design, construction
- The demand for construction of industrial works and specialized works of oil and gas has increased every year
- Define your position in the market to have a clearer orientation in the process of business strategy
- The efforts of the government's executive apparatus in the formulation of socio-political, domestic and foreign policies are highly encouraged to invest in the development of industrial, civil and specialized projects high tech
- The pressure of the replacement product is low leading to higher costs private and construction The recovery of the economy will also take a long time and directly affect the results of business operations
- The trend of international economic integration alongside the stable political environment will create conditions for many new enterprises to join the market while attracting foreign investment to increase their competitors with modern management skills, advanced construction equipment technology
- Direct competitors are a big draw for PVCHB in the production process
- High quality human resources are scarce
Increasing people's income, increasing the quality of life, requiring clean environment is also one of the challenges for PVCHB in applying advanced technology to minimize negative impacts on the environment
In the period of 2016 - 2018, PVCHB has gradually developed and made a foothold in the market with great growth in both production and business as well as staff Basically, the planned targets set for the 2016-2015 period are completed and exceeded The results of production and business of the company are shown by the following main targets:
Table 2- 3: Results of implementation of some operational indicators for the period 2016 - 2018
NO INDICATOR NAME Unit Make 3 years (2016 - 2018)
- Margin Profit (Profit before tax
- Profit after tax / Chartered capital % 2,8 1,4 2,8
- ROE- Earnings after tax / average equity % 2,8 1,4 2,8
- ROA - Net Profit / Total average Assets % 0,3 0,5 1,3
10 Payable / Charter Capital Ratio Time 8,9 1,6 1,2
1 Average number of employees used Person 24,0 81,0 337
The main business activities of the company from 2016 to 2018 have high growth rate in turnover value, operating capital PVCHB has gradually gained market share in construction activities in the day of Oil and Gas, creating jobs for employees
By 31/10/2018, the number of employees and employees of PVCHB was
337 (56.7% over the same period last year), of which the office / 60.3% over the same period last year), workers / workers directly 228 people (up 55.1% over the same period last year)