BASIC OF STRATEGY & STRATEGY FORMULATION
OVERVIEW OF STRATEGY AND STRATEGIC MANAGEMENT
Strategy – the concept has a long story within the military and is rooted in the Greek word strategos – literally meaning “what the general do” It is however not so that this meaning is directly transferred to the field of business theory This lack of common agreement leads different authors to consider it to be necessary to define their own meaning of the word Here is a review of the definitions of strategy that can be found:
Strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals and define the range of business the company is to pursue, the kind of economic and human organization it is or intends to be and the nature of economic and noneconomic contribution it intends to make to shareholders, employees, customers and communities 1
A company’s strategy consists of the competitive efforts and business approaches that managers employ to please customers, compete successfully and achieve organizational objectives 2
1 Andrews, Kenneth R (1987) The Concept of Corporate Strategy (3 rd edition), pp 13 Homewood ILL:
2 Thompson, Arthur A and Alonzo J Strickland (2003).Strategic Management: Concepts and Cases (13 th edition), pp 10 New York: McGraw-Hill/Irwin
Strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage 3
Our definition of strategy is a series of goal-oriented decisions and actions that match an organization’s skills and resources with the opportunities and threats in its environment 4
Strategy refers to the top management’s plans to attain outcomes consistent with the organization’s mission and goals 5
It can be seen that although the description of strategy are different, all authors agreed at a common viewpoint that a strategy is an integrated and coordinated set of commitments and actions designed to develop and exploit core competencies and gain a competitive advantage When choosing a strategy, firms make choices among competing alternatives as the pathway for deciding how they will pursue strategic competitiveness In this sense, the chosen strategy indicates what the firm will do as well as what the firm will not do
Strategic management can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives As this definition implies, strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development and information systems to achieve organizational success
Alternative strategies that an enterprise could pursue can be categorized into 11 actions: forward integration, backward integration, horizontal integration, market penetration, market development, product development, related diversification,
3 Hitt, Michael A., R Duane Ireland and Robert E Hoskisson (2003).Strategic Management: Competitiveness
& Globalization (5 th edition), pp 9 Mason, OH: South-Western
4 Coulter, Mary (2002).Strategic management in action (2 nd edition.), pp 7 Upper Saddle River, NJ: Prentice Hall
5 Wright, Peter L., Mark J Kroll and John Alan Parnell (1998).Strategic Management(4 th edition), pp 4
Upper Saddle River, NJ: Prentice Hall unrelated diversification, retrenchment, divestiture, and liquidation Each alternative strategy has countless variations For example, market penetration can include adding salespersons, increasing advertising expenditures, couponing, and using similar actions to increase market share in a given geographic area
Forward Integration Gaining ownership or increased control over distributors of retailers
Backward Integration Seeking ownership or increased control of a firm’s suppliers
Horizontal Integration Seeking ownership or increased control over
Market Penetration Seeking increased market share for present products or services in present markets through greater marketing efforts
Market Development Introducing present products or services into new geographic area
Product Development Seeking increased sales by improving present products or services or developing new ones
Related Diversification Adding new but related products or services
Unrelated Diversification Adding new, unrelated products or services
Retrenchment Regrouping through cost and asset reduction to reverse declining sales and profit
Divestiture Selling a division or part of an organization
Liquidation Selling all of a company’s assets, in parts, for their tangible worth
Many, if not most, organizations simultaneously pursue a combination of two or more strategies, but a combination strategy can be exceptionally risky if carried too far No organization can afford to pursue all the strategies that might benefit the firm Difficult decisions must be made Priority must be established Organizations, like individuals, have limited resources Both organizations and individuals must choose among alternative strategies and avoid excessive indebtedness
Firms spend resources and focus on a finite number of opportunities in pursuing strategies to achieve an uncertain outcome in the future Strategic planning is much more than a roll of the dice; it is a wager based on predictions and hypotheses that are continually tested and refined by knowledge, research, experience, and learning
Survival of the firm itself may hinge on your strategic plan
Strategy making is not just a task for top executives Middle-and lower-level managers too must be involved in the strategic-planning process to the extent possible In large firms, there are actually four levels of strategies: corporate, divisional, functional, and operational However, in small firms, there are actually three levels of strategies: company, functional, and operational
Figure 1-1: Level of Strategies with Persons Most Responsible – Large Firm
Figure 1-2: Level of Strategies with Persons Most Responsible – Small Firm
It is important to note that all persons responsible for strategic planning at the various levels ideally participate and understand the strategies at the other organizational levels to help ensure coordination, facilitation, and commitment while avoiding inconsistency, inefficiency, and miscommunication Plant managers, for example, need to understand and be supportive of the overall corporate strategic plan (game plan) while the president and the CEO need to be knowledgeable of strategies being employed in various sales territories and manufacturing plants
The strategic-management process can best be studied and applied using a model
Every model represents some kind of process The framework illustrated in Figure 1-3is a widely accepted, comprehensive model of the strategic-management process This model does not guarantee success, but it does represent a clear and practical approach for formulating, implementing and evaluating strategies These are three important questions to answer in developing a strategic plan: “Where are we now?”, “Where do we want to go?” and “How are we going to get there?”
Identifying an organization’s existing vision, mission, objectives and strategies is the logical starting point for strategic management because a firm’s present situation and condition may preclude certain strategies and may even dictate a particular course of action Every organization has a vision, mission, objectives and strategy, even if these elements are not consciously designed, written, or communicated
The strategic-management process is dynamic and continuous A change in any one of the major components in the model can necessitate a change in any or all of the other components Therefore, strategy formulation, implementation and evaluation activities should be performed on a continual basis, not just at the end of the year or semiannually
Generate, Evaluate and Select Strategies
Implement Strategies – Marketing, Finance, Accounting, R&D and MIS Issues
Measure and Evaluate Performance Business Ethics, Social Responsibility and Environmental Sustainability
STRATEGY ANALYSIS CASE: COLLIERS INTERNATIONAL39
COLLIERS INTERNATIONAL OVERVIEW
We will look at some basic information about Colliers International and its operations in Vietnam
Colliers International has evolved from enterprising, independent local business owners to an organization of 522 offices and 12,300 employees around the world with headquarters in Seattle, Washington It is Australia’s own global real estate success story A vision of entrepreneurship was what brought the founders of Colliers International together in the mid 1960's when three independent and well established professional real estate services firms located in different states throughout Australia decided to join forces The firms formalized their partnership in 1976 as "Colliers" and just two years later, began down the road of international expansion
Two decades of global expansion ensued by attracting the best and brightest local real estate companies around the world With expertise in the major markets, Colliers International is also committed to providing their clients with access to emerging markets and was one of the first global companies to enter into Asia, Eastern Europe and Latin America
Colliers International obtained a new majority shareholder in 2004, FirstService, who has continued to help the company accelerate its vision of providing the best property services in the world FirstService is a Canadian-based, institutional grade, public company that has an exclusive focus on the services sector
In Australia, 2006 and 2007 saw two major acquisitions of market-leading companies, PRD nationwide and Roberts Weaver Group, positioning Colliers International as the strongest and most dominant real estate services provider in Australasia 2010 saw a significant milestone in the history of Colliers International Colliers International has combined its operations with FirstService Real Estate Advisors, bringing its clients the stability of a strong capital partner and the flexibility of its local accountability
Over 30 years after its inception, the foundations of what the Colliers International brand were built on can still be found in today - innovative and enterprising people providing world-class local knowledge and expertise
Colliers International provides a full range of services to real estate owners and occupiers worldwide, including corporate solutions, sales and lease brokerage, property and asset management, project management, investment sales and consulting, property valuation and appraisal, mortgage banking and market research Its core services are:
Figure 2-1: Colliers International's Core Services
These are some statistics of the company in 2011:
*Square footage includes office, industrial and retail property under management
Residential property is excluded from this total All statistics are for 2011
Table 2-1: Colliers International Statistics for 2011
Colliers International is a subsidiary of FirstService – one of the largest property managers in the world In 2011, revenue from Colliers International is about 80% of FirstService total revenue Compared to 23,000 professionals working in FirstService, Colliers International also has an impressive number of 12,300 6 These statistics prove the leading position of the company in commercial real estate industry
Colliers International has established a strong presence in Vietnam real estate market, utilizing the skills and experience of a qualified and knowledgeable team of property professionals
1 Some Milestones in Vietnam Market
* HCMC: Ho Chi Minh City
Figure 2-2: Colliers's Milestones in Vietnam
Today, Colliers International (Vietnam) Limited continues to break new ground in advising clients on strategic real estate transactions, and helping them achieve their property investment goals
Figure 2-3: Colliers's Structure in Vietnam
EXTERNAL ASSESSMENT
As have discussed in the previous chapter, external assessment is the next step in strategic formulation This sub process consists of two techniques: macro environment analysis and industry analysis
According to PEST analysis technique, we will analyze the impacts of the following factors to detect opportunities and threats from the external macro environment: economic; social, cultural, demographic and natural environment; political, governmental and legal; technological
The year of 2012 was still a difficult time for Vietnam economy Some highlights about the economy can be mentioned below
GPD Growth: 2012 reached 5.03%, 2013 forecasted in the range of 5.5 – 5.7%
General Statistics Office (GSO) has announced that Vietnam’s GDP growth in 2012 increased by only 5.03% compared to 2011; including the first quarter rose 4.64%, the second quarter rose 4.8%, the third quarter rose 5.05% and the fourth quarter rose 5.44%.The growth rate of the fourth quarter (5.44%) did not reach the expectation so that the annual GDP growth is much lower than the expected figure of 5.2% The chart below shows that Vietnam's economic growth tends to increase slowly in recent years
Chart 2-1: Vietnam GDP growth from 2007 to 2012 7
Decomposed by sector, GDP growth has occurred in all sectors Service sector kept the best growth rate though it was still lower than2011.Conversely, growth in Agriculture sector was only 2.72% compared with 4.01% in the previous year The decline of Industry sector had a large effect on the economy growth because it holds the largest proportion of more than 40%
Chart 2-2: Vietnam GPD Growth decomposed by sectors from 2011 to 2012 8
Forecast: With a series of restructuring schemes and "rescue" packages expected to launch in the near future, the economy will have many opportunities to gradually recover in 2013 However, with the central goal is to curb inflation and stabilize the macro economy, GDP growth in 2013 is difficult to outstanding flourishes GDP growth in 2013 is forecast in the range of 5.5 - 5.7%
Inflation: Under control but suffering implications from tightening policy
GSO announced the consumer price index in December rose by 0.27% compared to the previous month and by 6.81% compared to the end of 2011 This can be considered as a macro successful effort in 2012
Inflation in 2012 showed some differences compared to the previous year: (i) only a slow increase in the last months, especially after the sudden increase in September, (ii) food and catering services was no longer a major pressure to the price index but some controlled sectors such as health, electrical, petroleum
Chart 2-3: Vietnam Inflation Rate from 2007 to 2012 9
Forecast: With the orientation to curb inflation and stabilize the macro economy, changes in the price index in the year 2013 can be better controlled if there are not many sudden changes in commodity prices in the world This will create opportunities to ease the macroeconomic policy
Social capital: Decline along with macroeconomic policy tightening 2013 forecasted to increase slightly again
Export and trade balance: Trade balance in 2012 had a surplus for the first time in nearly 20 years
Balance of payments surplus of $10 billion Foreign exchange reserves of
$23 billion 2013 forecast exchange rate remained stable
2 Social, Cultural, Demographic and Natural Environment Factors
Social, cultural, demographic, and environmental changes have a major impact on virtually all products, services, markets, and customers Small, large, for-profit, and nonprofit organizations in all industries are being staggered and challenged by the opportunities and threats arising from changes in social, cultural, demographic, and environmental variables
Nowadays, education has been still considered as one of the most important issues that the country has to pay great attention Recently, at the 11 th Party Congress, the government is determined to develop a national education policy as one of the priorities of the country As a result, the country has gained big success in education Concretely, according to the 2009 Census results, there are only nearly four million people who have never attended school (5% of the total population aged 5 years and over) and as compared with the 1999 Census this number has decreased 5% (6.9 million people, account for 10% of population aged 5 and over)
This shows the significant progress of Vietnam’s education sector in minimizing the number of people who never go to school The official figures also point out that the literacy rate for the population aged15 years and over increased by 3.7% (from 90.3% in 1999 to 94% in 2009) The female literacy rate increased 4.9%, while the male literacy rate increased 2.2%, significantly narrowing the literacy rate gap between men and women Ha Noi, Hai Phong and Ho Chi Minh City are three provinces having the highest literacy rate (97.9%) while Lai Chau has the lowest (59.4%) This data shows that the literacy rate was not only increased quite rapidly but also express successes of Vietnam’s gender equality work in the education sector
Certainly, besides such successes, Vietnamese education system also has faced many challenges, including poor infrastructure, lack of equipment and teaching materials, low wages precipitating an acute shortage of skilled teachers and academic staff, a relatively poor linkage of higher education with research, production and employment, and some contradictions of the system
The national average population in 2012 estimated 87.84 million, up by 1.04% compared to 2011, including male population 43.47 million, (49.5%), and female population 44.37 million, (50.5%) Urban population is 26.88 million, (30.6%); rural population is 60.96 million (69.4 %)
According to the official report, the population structure by age in Vietnam is in a positive change The population in the working age is 46.48 million, increased 0.12% compared to 2010 The proportion of workers in the agriculture, forestry and fisheries declined from 48.7% in 2011 to 48.0% in 2012; in industry and construction rose from 21.7% to 22.4%; and in the services maintained at 29.6%
The unemployment rate in the working age was 2.27% in 2012, of which the urban areas account for 3.6%, the rural areas 1.71% This is the period of the country with advantages in labor force, also known as the "demographic window period", which began in 2003 and may last from 30 to 50 years This is considered as a big advantage for the industrialization and modernization of the country, if it takes advantage of the superiority Vietnamese on the labor force
Vietnam is blessed by the nature, with a great ecological and hydrological diversity
The country is made up of equatorial lowlands, high, temperate plateaus and cooler mountainous areas It lies in the inter-tropical zone and local conditions vary from frosty winters in the far northern hills to the year-round subequatorial warmth of the Mekong Delta At sea level, the mean annual temperature is about 27°C in the south, falling to about 21°C in the far north Geographically, it stretches over 1,600km along the eastern coast of the Indochinese Peninsula; and has the main cultivated areas, that are the Red River Delta (15,000 sq km/5400 sq mi) in the north and the Mekong Delta (60,000 sq km/23,400 sq mi) in the south Vietnam also has diverse wildlife, with rare and precious fauna such as elephants, rhinoceros, tiger, leopard, black bear, snub-nosed monkey, crocodile, and turtle Forest area accounts for 2% of total forests in East Asia and Pacific Fish catch is among the 10 highest countries in the world, with 1,451,800 tons per year
However, as there port of the World Bank on the environment in Vietnam, the rapid economic growth in Vietnam over the last ten years, and its associated industrialization, urbanization, as well as increased exploitation of natural resources, has created significant pressures for the environment For example, the diverse wildlife is in precipitous decline because of the destruction of habitats, illegal hunting, and pollution In fact, Vietnam Rhino was officially extinct in 2011
Vietnam is among the countries that can be seriously affected by climate change
INTERNAL ASSESSMENT
Internal assessment is the third step in strategic formulation It is conducted in order to find out the organization’s strengths and weaknesses, so that the strategist can form the most suitable strategies based on those factors
Value Chain Analysis (VCA) is a common and useful tool to assess a company’s internal factors The value chain in Colliers can be described as follows
Management of a building begins a couple months before its completion with the setting up of systems and the training of staff It is important that the management systems and management personnel including office assistants, reception, cleaning and security personnel be trained and in place at the time of opening Occupiers expect quality and professionalism from the day the building opens (and before)
This period is critical to the establishment of good property management During this time a property manager would make sure all property management systems and training would be in place
An example of some of the tasks the property manager would perform for a project at this stage would be as follows:
Review/Comment on the property from a management perspective;
Prepare, advise appropriate and critical operating procedures for the development for approval by relevant party;
Prepare, advice staffing structure, job description, staff handbook, salary scale, recruiting plan for approval by relevant party;
Prepare operational budgets and advise the developer on the levels of service charge payable by the occupiers;
Prepare the appropriate documents for a successful and smooth takeover of property from the contractors as well as handing over to the occupiers;
Responsible for the management office staff and training to answer queries relating to property management with confidence and accuracy The staff training process will be on going but an intensive period will proceed before completion
Pre-opening management staffing will include:
Strategizing and planning for employee requirements;
Employee selection process - advertising, interview and selection of staff;
A detailed job description for all staff;
An organizational chart with all positions and salaries
Cost-benefit analysis of all work that can be contracted out or completed in- house
Colliers is consistently in touch with the market through its over 11,000 staff operating worldwide and via a unique set of property tools It uses this knowledge of the requirements and desires of investors in the market to actively solicit expressions of interest for a particular project
This combined with its marketing strategy for the property allows its marketing and communications team to effectively communicate the buildings benefits to prospective tenants both locally, regionally and internationally
Once the building opens, it becomes the property manager’s task to not only ensure compliance to systems put into place prior to opening but to supervise and support staff and contractors with continual training and instruction In addition, the property manager will be responsible to ensure that any outstanding construction issues will be resolved in a timely matter This period permits the staff of the building to fully understand their roles and functions within the building and for the occupiers
The aim of effective and successful property management is to make life as simple and hassle free as possible for the occupiers of a managed building To achieve this, the procedures for managing the building must be open, clear, and efficient enabling the occupiers to gain full trust in the management company, without any concerns for day to day issues, such as security, maintenance, cleaning, refuse collection, etc
Colliers’ marketing objective is to align marketing and leasing resources in a way that assists its projects Through creative thinking, innovation and experience they will develop unique marketing concepts that communicate appeal to all the appropriate end users, in order to, maximize value in the shortest possible time
This is achieved through a combination of strategies, plans, and implementations:
Image and target market identification;
Planning, strategizing and developing an effective sales and marketing program;
On-going progress reports, monitoring and evaluations
Colliers has undertaken numerous similar projects both in Vietnam and globally It has developed a “Colliers Methodology” that draws from years of experience to ensure all the right questions are asked and the different scenarios are assessed allowing them to maximize the opportunities This methodology is demonstrated in the following flowchart
Throughout the entire marketing and sales process, Colliers will be reporting, monitoring and evaluating the success of the marketing program This will be done by monitoring adverts, keeping in clear and constant communication with the marketing staff and the landlords by constantly reviewing and making further recommendations so as to ensure the approach is on-target and successful
A summary step in conducting an internal strategic-management audit is to construct an Internal Factor Evaluation (IFE) Matrix This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business and it also provides a basis for identifying and evaluating relationships among those areas
Key Internal Factors Weigh t Rating Weighte d Score
1 Colliers Vietnam inherits the international reputation of Colliers so it can easily access to large customers
2 Colliers Vietnam follows market movements closely through its modern marketing information system
3 Colliers Vietnam has been building high quality personnel, including experienced manager, researchers, and salesmen
4 Colliers Vietnam has a good history of credit activity with foreign banks as well as domestic ones
5 Colliers Vietnam has good property and customer databases
1 Colliers Vietnam does not have a timely response to the global economic crisis which is spreading gradually to Vietnam
2 Colliers in Vietnam is not well known as in the world because of weak advertising for the company itself
3 Colliers Vietnam does not have a clear incentive system to its staff
Table 2-3: The IFE Matrix of Colliers
The total weighted score of 2.55 is above the average (midpoint) of 2.5, so Colliers is doing pretty well.
SETTING LONG-TERM OBJECTIVES
Based on those assessments, the next step is setting long-term objectives for the company
Designing, developing, managing, and leasing real estate properties
Preparing studies and providing consultations on all types of real estate fields
Owning and managing hotels, health clubs, tourism developments, as well as leasing and renting them
Performing maintenance work related to buildings and real estate owned by the company, including performing civil, mechanical, electrical, lifts and air- conditioning work to guarantee maintenance of the buildings and their safety
Ownership, management, and leasing of commercial properties, office space properties, mix-use properties and residential properties
Establishing and managing real estate investment funds
Utilizing financial surpluses available with the company through investing them in financial portfolios, managed by specialized companies and authorities
Direct contribution in laying down the infrastructure of residential, commercial, and industrial areas and projects according to the build, operate, and transfer system and managing commercial utilities
Through Chapter 2, external and internal environments are analyzed in order to get the opportunities, threats, strengths, and weaknesses of the company This is also the basis for Colliers’ long-term objectives Chapter 3 is the next step of strategy management process, which will form effective strategies based on these analyses.
STRATEGY ANALYSIS AND RECOMMENDATIONS
BUSINESS VISION AND MISSION
Before forming strategies for Colliers based on the analyses from Chapter 2, we must address its vision and mission clearly
The vision of the company is stated on their website: “Our client’s smile is our specialty” At Colliers International, they believe they will be successful if their clients are successful For that reason, their values are the pillars of their position, reflecting the essential character and quality of their relationship with their clients
The company’s management has stated that its mission is to assist the client to obtain the highest possible rental yields in the marketplace, secure the best quality occupiers, efficiently obtain full occupancy, and provide a safe, healthy, and clean environment for personnel in order to maximize sustainable revenue
Although stated from the beginning, these visions and missions are still suitable for the company in this period.
STRATEGY ANALYSIS AND CHOICE
Based on the opportunities, threats, strengths, and weaknesses which have been evaluated and analyzed in the previous chapter, this chapter will utilizes these input to form and select optimal strategies for Colliers in Vietnam market SWOT analysis in section 3.1.1 will aid in setting up a range of suitable strategies; QSPM- based analysis in section 3.1.3 provides a framework to select the optimal ones
Opportunities, threats from the outside environment, strengths and weaknesses of the company itself are summarized in the matrix below
S1 – Colliers Vietnam inherits the international reputation of Colliers so it can easily access to large customers
S2 – Colliers Vietnam has been building high quality personnel, including experienced manager, researchers, and salesmen
S3 – Colliers Vietnam follows market movements closely through its modern marketing information system
S4 – Colliers Vietnam has a good history of credit activity with foreign banks as well as domestic ones
S5 – Colliers Vietnam has good property and customer databases
W1 – Colliers Vietnam does not have a timely response to the global economic crisis which is spreading gradually to Vietnam
W2 – Colliers in Vietnam is not well known as in the world because of weak advertising for the company itself
W3 – Colliers Vietnam does not have a clear incentive system to its staff
O1 – After Vietnam joined the WTO, the number of foreign as well as
Threats T1 – The world economic crisis takes place on a large scale and for long time domestic companies increased
Therefore, the demand for office space is also increasing
O2 – Vietnamese government is implementing a number of policies to reform the economy, phasing out the old administrative system cumbersome
O3 – Vietnam is a country with a developing economy, rapid urbanization, and population growth These conditions also promise the development of the commercial real estate industry
O4 – Human resources in Vietnam is increasingly being focused on training and improving
O5 - Vietnam young population ratio is at a high level so that the demand for property is always high, especially in big cities
O6 – Aside from Ho Chi Minh City and
Hanoi, Vietnam also has many new cities, promising a golden land for the commercial real estate industry
O7 – No competitor has the capability to manipulate the market
It has no small impact on the Vietnam economy which is on the international integration The year 2013 is expected to be a very tough year for Vietnam businesses
T2 – Heavily-managed and weak Dong currency reduces incentives to improve quality of exports, and also serves to keep import costs high
T3 – Loopholes and discrepancies in the integration as well as in the enforcement of laws remain a big obstacle to doing business in Vietnam
T4 – Pressure of customers increase because they themselves are in difficult time
T5 – Corruption also raises the cost of dealing business in Vietnam
T6 – Many construction projects were halted because of economy recession, causing difficulties in consumption
Table 3-1: SWOT Matrix for Colliers Vietnam
Based on this matrix, SO, ST, WO and WT strategies are proposed as follows
SO strategies use a firm’s internal strengths to take advantage of external opportunities All managers would like their organizations to be in a position in which internal strengths can be used to take advantage of external trends and events
(S1, O1) After Vietnam joined the WTO, the number of new companies is increasing, especially foreign ones With the advantage of inheriting the global reputation of Colliers, Colliers Vietnam should focus on foreign firms who has already been in Vietnam or are preparing to join this emerging market
(S2, O4) Vietnam's young human resources have been training well For a real estate company, especially foreign companies, to maximize the advantage of capital and technology, skilled human resources is a factor that should be considered carefully
Colliers Vietnam should focus on recruitment and continually enhance the staff’s knowledge
(S3, O2) The real estate business is very sensitive to market information, especially the rules and policies of the host country’s government Colliers Vietnam already has a modern marketing information system, so the company should take advantage of this system to promptly update the new policies and regulations
Table 3-2: SO Strategies for Colliers Vietnam
WO strategies aim at improving internal weaknesses by taking advantage of external opportunities Sometimes key external opportunities exist, but a firm has internal weaknesses that prevent it from exploiting those opportunities
(W1, O4) Before the worse changes of the domestic economy, Colliers
Vietnam did not have a timely and appropriate response Having high quality human resources but the number of employees of Colliers Vietnam is not sufficient Therefore, the company should outsource a number of tasks such as collecting market information or advertising, public relations in order to take advantage of good quality human resources from other companies
(W2, O1) The name of Colliers in Vietnam has not been widely known as in the world because the company has not focused on promoting its own image Currently there are many foreign companies that have been doing business and are preparing to join to the domestic market These are companies that have already known the worldwide reputation of Colliers So the company should take advantage of this opportunity to widely promote its image
Table 3-3: WO Strategies for Colliers Vietnam
ST strategies use a firm’s strengths to avoid or reduce the impact of external threats
This does not mean that a strong organization should always meet threats in the external environment head-on
(S2, T1) Human resources is one of the important advantages of Colliers
Vietnam Facing with the difficulties caused by the global economic crisis, Colliers need to build appropriate human resource policies to retain talent, from which the company can take steps to overcome difficulties
(S3, T2) As a subsidiary of a multinational corporation, Colliers Vietnam has been deeply influenced by the fluctuations in exchange rates, especially when the exchange rate VND/USD is subject to government regulation With the advantage of a modern marketing information system, Colliers should use it to predict the market, thereby reducing the risks brought by not only exchange rate fluctuations but also other information
(S4, T4) Having good relationships with domestic and foreign banks,
Colliers Vietnam should use risk hedging tools offered these financial institutions, especially in difficult economic times and many businesses went bankrupt When clients have difficulty in paying charges, with firm contracts and effective hedging tool, Colliers can avoid those risks
(S5, T6) Slow consumption situation in the real estate sector is currently very popular due to economic difficulties All economic activities are limited However Colliers Vietnam has the advantage of owning a good customer database At this time, the company should pay attention to fully exploit these databases by marketing methods which are designed specifically for each target customer classifications If fully exploited, the company can remove difficulties due to stagnation which the market brings
Table 3-4: ST Strategies for Colliers Vietnam
WT strategies are defensive tactics directed at reducing internal weakness and avoiding external threats An organization faced with numerous external threats and internal weaknesses may indeed be in a precarious position
(W1, T1) Colliers Vietnam should develop a process to receive, review, and analyze market information and policy information needed for timely responses to economic fluctuations Economic crisis is expected to drag on and have a profound impact to all economic activities The real estate industry is no exception to this effect
So, to work effectively in difficult economic times, the company needs to turn its weaknesses into strengths through predicting risks
Table 3-5: WT Strategies for Colliers Vietnam
After forming the strategies that can take advantage of opportunities, face challenges, develop strengths and limit weaknesses of Colliers Vietnam as above, the summary can be can be grouped into 4 main strategic groups:
1 Focus on foreign companies who have already known the reputation of Colliers;
2 Develop an appropriate human resource policy system;
3 Take advantage of existing marketing information systems and develop new marketing tools;
4 Have activities to promote for Colliers image in Vietnam market
Details of each strategy will be given in the next part
The four strategies which are proposed based on the SWOT analysis above are described in details as below
1 Focus on foreign companies who have already known the reputation of Colliers
Identifying target customers are foreign companies, particular tasks that can be taken under this strategy are as follows
Build sales teams with target customers are foreign companies
These sales teams can be divided into two groups: one team with customers currently operating in domestic market; one with prospects which are preparing to join into Vietnam market
- The team whose target customers are those currently operating in Vietnam market should strengthen these relationships, find opportunities to sell more products and do excellent after-sales services
RECOMMENDATIONS TO COLLIERS
According to this analysis, these are some recommendations for Colliers Vietnam when implementing the available strategies
3.3.1 Strategy 1: Focus on foreign customers
- Use the existing reputation of Colliers to access to potential customers;
- Focus on the customers who have demand of high quality commercial real estate - the main product of the company
Have more clear understanding about the market needs
- Recruit more staff that has good relationships with target customers
Apply the research information to particular action plans
- The Board of Directors agrees on general policies and assigns tasks to related directors The director in turn plan and report regularly to the Board of Directors to finalize action plans
Execute action plans that have been built
- Organize teams to do separate tasks;
- Outsource such tasks that the company does not specify;
- Report regularly to project managers for timely adjustments
Table 3-7: Recommended Action Plan Framework for Strategy 1
3.3.2 Strategy 2: Develop the existing MIS and marketing tools
- Promote the effectiveness of the current MIS;
- Develop new marketing tools to suit market requirements
2013 Re- organize marketing informatio n flows
Flow the information to the right place in order to make timely decisions
- Assign the task to Marketing department to build a new effective flow chart of marketing information
- Guarantee that information arrives at the right place and is analyzed promptly
Adapt to the development of marketing system
- Organize teams to research all new marketing channels
For each new channel, organize separate teams to develop each one
- Balance the budget to all marketing channels
Table 3-8: Recommended Action Plan Framework for Strategy 2
Chapter 3 has been used two effective models in the final stage of strategy formulation: SWOT model and QSPM According to the result from these models, the author has built some recommendations to Colliers Vietnam in order to improve its operation in Vietnam market now
Colliers International is a high-ranking real estate consultancy firm globally With the main services of investment and lease consulting, target customers of the company are real estate developers and investors When entering an emerging market as Vietnam, especially when the economy is fluctuating and many big names have joined the market such as CBRE, Savills, Knight Frank, formulating and implementing a suitable strategy for Colliers is an urgent task
External and internal environments are analyzed in turn to come up with appropriate strategies External assessment is divided into two analyses: macro environment analysis and industry analysis This part gives us the opportunities and threats that affect the operations of Colliers Internal assessment includes value chain analysis, which shows us the strengths and weaknesses of the company After analyzing factors of the external and internal environments affecting Colliers, these strategies are recommended to the company: focusing on foreign customers and developing the existing MIS and marketing tools Each strategy comes up with a detailed objective and action plan
During this research I have been received many helps and advices from Dr Nguyen Viet Dung as well as my colleagues However, due to time and resource limitations, the thesis cannot avoid some shortcomings I am expecting to receive feedbacks from the teachers and friends to complete this research.