BASIC ISSUES ON COMPETITIVENESS AND EXPERIENCE
Competition and roles of competition in a enterprise
1.1.1 Concept and classification of competition 1.1.1.1 Competition concept
Competition is the element which appeared a long time ago and has always been attached with the establishment and development each enterprise However, what competition is up to now there have been a great number of inconsistent definitions in Vietnam as well as all over the world
According to Karl Marx (1978):” Competition is the intense battle and fight amongst the capitalists to scramble for favourable conditions in goods productions and consumption to gain the excess profits” Karl Marx discovered that the basic law of capitalism competition is the law on the adjustment of average profit rate, through that, forming the market price system This law based on the differences between the prices of production costs and the ability to sell the products at the prices below its value but still gaining profits
In compliance with Vietnamese dictionary (2002):” Competition can be construed as using endeavours to gain the better and winning to their side amongst the operating individuals and organization towards the same benefits”
Complying with Nguyen Huu Huyen (2003):” Competition is the behaviour of the separate enterprises and the competitors of each other in product and service supply in order to satisfy the similar needs with the similar lucks of each sides, which is presented through attracting or losing a number of regular customers”
Based on the concepts as above, competition can be generalized as” the intense battle amongst the subjects operating together in the market, with the same or similar substitute products in order to control the market shares, raise the sales and revenue.”
In summary, through the definitions, competition can be considered in terms of the following viewpoints:
First, mentioning competition is mentioning the battle to gain the victory of many participating subjects
Second, the direct purpose of competition is a specific subject which all sides wish to compete for (an opportunity, a product or a project, etc.); a favourable condition series: market, customers etc with the final purpose of earning high profit
Third, competition happens in a specific environment, with common bindings that the participating parties must follows including: product characters, market, legal conditions and business practice, etc
Forth, during the competition process, the subjects participating can use different tools: competition by the product characteristics and quality, competition by the art of consumption, sales services and payment etc
It is necessary for the firms to obtain proper acknowledgement of competition in order to accept competition in a positive aspect; based on that to promote the internal elements to raise the customer serving quality On the other hand, the firms should try to avoid the insensible competition which can harm the community benefits as well as weaken themselves
In accordance with Hoang Trung (2015a), based on the different concepts and roles of competition, competition can be classified into various form: a) Based on the subjects participating competition
- Competition between the buyer and the seller is the competition happens according to the law of cheap purchase and expensive sales, both sides wish to optimize their benefits The sellers wish to sell at the highest price to optimize profit whilst the buyers wish to buy at the lowest price with ensured quality and the final price level is the price agreed between two sides
- Competition between buyer and buyer is the completion in the basis of law og supply and demand when on the market, the supply is less than the demand At this time, there will be shortages The buyers in order to satisfy their wishes, are willing to buy at higher price; therefore, the competition level will be more intense amongst the buyers This leads to the increase in the prices of goods
- Competition amongst the sellers: This is the most intense and fierce competition when in the market economy, the supply is much larger than demand, customers are considered to be the gods of the sellers and the crucial element of the existence and development of an enterprise b) Based on the economic scope:
-Competition within an industry: Is the competition amongst enterprises in the same industry which produce and consume the same types of products In this competition, there are acquisitions Enterprise have to apply all the methods to earn profits including improving the techniques, raising the labour productivity, reduce the particular expenses of the goods in order to earn excess profits
- Competitions amongst different industries: is the competitions amongst different economic industries to gain the highest profits It can be the competition amongst the enterprises or allies of the enterprises in a industry with the other ones
- Competitions amongst countries is the battle amongst the countries to promote strengths of the countries to create the competitive advantages to control the global market c) Based on the characters and degrees of competition Based on this criterion, competition can be classified into two types:
- Perfect competition is solely the competition which is a simple form of the market in which the buyer and the seller are not big enough to affect the market price The group of buyers participating in this market can only adjust to the offered price level because the demand on the market is free to form, the price is set by the market
Competitiveness and the necessity to promote the competitiveness of the
1.2.1 Concept of competitiveness of the enterprise
The concept of competitiveness was first introduced in the USA in the early 1980s According to Aldington Report (1985):”The enterprise with competitiveness is the enterprise which can produce the products and services of outstanding quality and lower price than the local and international competitors Competitiveness also means the achievement of long term benefit of the enterprise and the ability to ensure the incomes of the employees and the owners” This definition was mentioned again in the White book on the Competitiveness of England (1994) In
1998, Ministry of Commerce and Industry (England) provided the definition: “ For the enterprise, competitiveness is the ability to produce the right products, determine right the price at the right moment This means that satisfying the customers’ demands with greater output and effect than other enterprises”
In accordance with the dictionary of economics terms:” Competitiveness is construed as the ability to achieve large market shares before the competitor in the market as well as the ability to re-gain partially or wholly the market shares of the competitors”
- The Organization for Economics Cooperation and Development (OECD) defined competitiveness as “The ability of companies, industries, regions, countries or supernational regions in creating higher employment and incomes in the condition of international competition on the basis of sustainability”
- On the general view point with human as the centre, the concept of competitiveness was defined by World Economics Forum as follows: ”Regarding the enterprises, competitiveness means creating new growth, bringing the values for shareholders Regarding the society, raising competitiveness means creating new employments and better living conditions”
Michael Porter (2009b) assumed that it is difficult to provide an absolute concept or definition on competitiveness According to him, “To achieve successful competition, enterprises should have competitive advantage in the form of or have the lower production costs or have the ability to differentiate products to gain the price higher than the average level To maintain competitiveness, enterprises should achieve more refined competitiveness so that they can supply the products or services with higher quality or produce at higher efficiency”
Several local authors, based on Porter’s point of view, provided their definitions of competitiveness including Nguyen Minh Tuan (2010) stated that, enterprise’s competitiveness is the ability to maintain and promote competitive advantage in product consumption, network consumption expansion and efficient use of the production elements with the aim of high economic benefits and ensurance of substantial economic development Vu Trong Lam (2006) said that, enterprise’ competitiveness is the ability to build, maintain, use and create new competitive advantage of the enterprise Le Cong Hoa & Le Chi Cong (2006) assumed that competitiveness of the enterprise is the demonstration of enterprise’s strengths and advantages in comparison with the competitors in meeting the best requirements of the customers to earn higher and higher profits
Therefore, there have been different view points on competitiveness Within the scope of this thesis, the author uses the opinion that” enterprise’ competitiveness is the ability to build, maintain, use and create the enterprise’s competitive advantages to meet the best requirements of the customers (in comparison with the competitors) and achieve the goals of the enterprises”
Enterprise’s competiveness is created firstly from the enterprise’s resources
These are the internal elements of the enterprises which should not be measured by the criteria of technology, finance, human resource, enterprise management organization etc separately On the other hands, they should be evaluated and compared with the competitors operating in the same field and in the same market
There are many enterprises participating in Vietnam real estate market, which creates the opportunity for the market to development; at the same time, it will also be a great challenge as the specialization level of the enterprises are still low, competitiveness of the enterprises are limited Generally, this leads to great inertia for the whole market
According to Nguyen Viet Lam (2014), enterprise’s competitiveness consists of several basic characters as follows:
First, enterprise’s competitiveness depends on the internal elements (strengths and advantages) and external elements (business environment)
Second, competitiveness of each enterprise is not identified separately and individually; however, it is identified in the evaluation and comparison with the competitors operating in the same field and the similar market
Third, the strengths and advantages determining competitiveness of the enterprise should aim at satisfying the customers (direct objectives) in order to achieved the best business targeted including profits (final objective)
Fourth, enterprise’ competitiveness can be reflected by a number of different targets, comprising the general target reflecting the results/ efficiency of business and production (sales, market shares, profits) and other targets reflecting business strength and advantages (technology, finance, human resource, product/ service, etc.)
1.2.3 Criteria to evaluate enterprise’s competitiveness 1.2.3.1 Group of criteria reflecting business results and efficiency a Revenue Revenue is the amount of money the enterprise earns when selling products or services Therefore, revenue can be considered as the most powerful index to assess the competitiveness of enterprises Based on the revenue targets through different periods or years, we can evaluate the business result to grow or decline, in a good or bad trend However, in order to evaluate whether such business activity could bring out efficiency or not, the expenses of such revenues should be taken into account If the revenue and expense of the enterprise both increase through the years but the speed of revenue increase is higher than the speed of expense increase, the business activity of the enterprise can be evaluated as good, the enterprise learns how to allocate and utilize effectively the expense element as a portion of such increased expense is used by the enterprise to expand the business scope, invest in purchasing equipment and construct the infrastructure, etc b Market shares Market shares can be construed as the market proportion which the enterprise holds out of the total market volume The enterprise’s market shares is identified as:
Enterprise’s revenue Enterprise’s market sharesTotal revenue of the industry The bigger this index is, the larger proportion of the market the enterprise occupies Through the fluctuation of this index, the business activity of the enterprise can be assessed to be efficient or not and the enterprise can be fixed with the advantageous position in the market If the enterprise has a small market scale, such index above will be low, reflecting the situation in which the enterprise is being blocked by its competitors By the market shares index, enterprise can preliminarily evaluate the ability to occupy the market shares compared to the whole industry
Experience withdrawn in promoting competitiveness of a number of
1.3.1 Experience of competitiveness promotion of a number of enterprises 1.3.1.1 Vietnam Construction and Import- Export Joint Stock Corporation Vinaconex
Currently, VINACONEX has over 40 units participating in 5 joint ventures and 14 associated companies operating in many fields in all regions of the countries
The employees of VINACONEX is up to more than 40,000 people including many managers, engineers, experts and employees trained and worked overseas with specialized knowledge and rich experience
In the long term business development direction, VINACONEX will focus on the development in two main fields which are their strengths with high competitive advantage of the Corporation That is construction and property investment business Besides, VINACONEX with the members, joint ventures and associated companies also participate in the various business activities including industrial and construction material production, design consultation, labour import and export, commercial services, financial development, education – training and many other fields
During its development process, VINACONEX always consider international coordination with the capable, experienced and prestige international partners This is an important element to learn and accumulate knowledge, skills and experience as well as to take advantage of the international resources to serve the development process of the Corporation With the guidelines of continuous expansion and development of the cooperation relationship with the international partners on the basis of equality, cooperation and mutual benefits, up to now VINACONEX has had the business cooperation relationship with many big companies and cooperation in 60 nations and territories in the world
International cooperation activities of VINACONEX do not only limit in the scope of the labour export activities and experts as the beginning of the establishment VINACONEX has expanded into different fields including international procurement, architect consultation, planning, machine, equipment and goods imports and exports, new technology research and application and international finance and credit VINACONEX has been has become a familiar and trustworthy name to many international partners and friends
1.3.1.2 Experience of VINCOM Joint Stock Company
Vincom JSC is the leading brand in the first class real estate with the equity of over 3900 billion dongs up to the 4 th October 2011, market capitalization of the firm is over 36,960 billion dongs Vincom possesses a big series of projects and real estate complex including Hanoi Vincom Center, Vincom Center Ho Chi Minh City, Vincom Village, Times City, Royal City etc
Starting the business activity in 2002, Vincom brings the leading ambition to become one of the top enterprises of Vietnam in real estate In order to achieve those, Vincome has been:
- Concentrating on the first class real estate projects of big scale and complex located in prime locations
- Continuing to expand the presence of the luxurious works with the brand and reputation of Vincom through out the country
- Accelerating the application and completion of the modern management principles, suitable with the domestic and international practices The young and experienced management, enhancing the coordination with the top experts in the world
Through the recent years, Vincom has never stopped expanding and developing with the good growth rates of the revenues, profits and financial index
Vincom focuses on the exploitation of their strengths in the segment of first class property with the strategy creating stable revenues and gaining more and more growth from the activities of renting and exceeding revenues from the transfer of high quality property at prime location The competition strategy of Vincom is based on the principle as follows:
- Concentrating on the investment of the luxurious real estate projects of large scope and complex at prime location: In the housing field, Vincom focuses on the implementation, construction and selling luxurious apartments, and villas at prime location The more the social income increases, the higher demand of quality is, the housing of the people and the limited supply source as current will be the element supporting the property price in short term and medium term The appearance of the credit assistance products for lending for house purchase of the banks a long with the appearance of the city middle class, the favourable demography element has made the housing property market in Vietnam a real potential
In the leasing field, Vincom assumes that the supply source of the modern commercial centres are still at the low level compared to the shopping capability is increasing of the consumers Demand on offices will raise in the medium and long term as the Vietnamese economy will grow more strongly The complexes of luxurious apartments, offices and shopping malls with modern design of international standards will raise the attractiveness of the projects which the company is implementing
- Building and developing a list of property for stable lease
Besides the completed and being exploiting projects, in the coming time, Vincom will continue to develop the list of big commercial property including the luxurious offices and commercial centers Based on that, they can ensure the stable and regular revenue sources from the leasing activities as well as improve the efficiency of the capital use
- Take advantage of the advanced payment of the customers when purchasing the apartments and villas of Vincom, which has been and will be the important financing source for project development The use of this capital will help the Company to reduce the capital raising pressure by issuing the stocks and bonds and still ensure the capital to perform the investment and development of the projects in the proper progress
- Supplying more various products by expanding the business activity in the medium and first class segment of the housing real estate market Even though up to the current point, Vincom is still focusing on the development of the luxurious property projects, Company has the plan to expand the activity to the highly medium segment through the projects of Eco City, Long Bien and Green City The new projects with the price ranges more suitable to the incomes of a large number of the citizens will create more conditions for Vincom to exploit the large potential of the real estate market of Vietnam
- Continuing to maintain and improve the competence of selling, leasing and managing the real estate projects Vincom anticipates continuing to maintain and improve the competence of selling, leasing and management the real estate projects as well as accelerating the marketing activities for the new projects of the Company
This activity includes the improvement of the process to seek for new projects, applying for the licensing, designing and construction, sales marketing, service quality management of the buildings as well as other conditions to push up the selling and leasing activities of the property products
- Maintaining the substantial development direction on the foundation: develop the firm along with the positive contribution to the society and community benefits
As the enterprise with Vietnamese brand, Vincom understands clearly its responsibility to the general development of the society Participating in the social- humanity and charity activities for development of the community is the beautiful tradition of the Company since the establishment
1.3.2 Lessons for Newland Investment Joint Stock Company
From the practical experience of the competitors, several lessons could be withdrawn for Newland Investment Joint Stock Company to promote the competitiveness as follows:
Thesis research model
Thesis research model is demonstrated by(Figure 1.2 _ Appendix 02) The author studied the elements affecting the competitiveness of Newland Invest., JSC
Based on that, the author formulated the system of the competitiveness evaluation criteria system of the Company.
CURRENT SITUTAION OF THE COMPETITVENESS OF
Overview of the business activity operation of the Newland Investment
2.1.1 History of the establishment, development, organization and business field 2.1.1.1 History of establishment and development
Newland Investment Joint Stock Company is an enterprise established under the business registration certificate No 0105006111 issued by Department of Planning and Investment of Hanoi dated 17 November 2010
Starting from the establishment based on the connection of business idea and the strengths of the General Director, along with the continuous effort and creation of the whole employees, the Company has step by step developed and begins to gain a number of success in the field of property business
Main operation field: Real estate business, Work business and construction ( civil, industrial, traffic, irrigation and technical infrastructure)
Regarding the development strategy for the period 2015-2020, the Company concentrates its key power into the property construction, investment and trading field, education investment, mining and mineral trading etc throughout the areas of the provinces, cities The company aims at continuous development, step by step to become one of the top real estate investment, construction and trading in Vietnam
- Name in Vietnamese :CÔNG TY CỔ PHẦN ĐẦU TƯ NEWLAND
- Name in English : NEWLAND INVESTMENT JOINT STOCK COMPANY
- Short name : NEWLAND INVEST., JSC
- Headquarter : 109/E11P, North Thanh Xuan, Thanh Xuan district, Hanoi
- Transaction office: T 2 nd Floor Hacisco Building – No 15 107 Alley Nguyen Chi Thanh – Dong Da - Hanoi
- Hai Duong branch office: No 12 – Duc Minh Street – Thanh Binh Ward – Hai Duong City
Legal representative: General Director Pham Trung Kien Charter capital: 258.000.000.000 dongs (Two hundred and fifty eight billion dongs)
In the roadmap od construction and development, Newland Invest., JSC Has been step by step to prove its brand, especially in the field of investment and construction The objective of the company in the period of 2015-2020 is to create a new image, with clear direction and perfect products The company commits to provide the customers with” The best product – Best service – Best price”
After 7 years of operation, the Company has overcome a great number of difficulties, challenges At the beginning of only 10 staff, up to now, the number of the employees has reached over 450 people with high specialization including masters, engineers, bachelors, technical workers etc The Company has sufficient specialized components including: the divisions of accounting, business, technical, project, urban management The company has been managing a lot of big projects, which contributes to the prove the position of Newland in the real estate field and contributes to the socio-economic development of the country
Based on the characters and the ability of the individuals in the Company and the application of the organization model (Figure 2.1_ Appendix 02), this diagram allows the Company to perform flexible implementation of different works at the same time as well as focus the manpower, equipment for the big works when necessary with the target: efficiency in production, flexibility in the market and substantiality in development
- General Director is the legal representative of the corporation who is responsible with the President for the operation activities of the cooperation
- Deputy General Directors are the ones appointed by General Director and assist the General Director in the specialized fields, and separate functions and markets The Company currently has 4 deputy general directors in charge of five specialized fields: real estate investment business, finance and accounting, investment – project, planning – technical; besides, at different time, there will be different specialized deputy general directors
- Under the general and deputy general directors are the branches, functional divisions and departments performing the specialized work under the assigned missions
- Under the functional divisions and departments are the teams of survey, building, materials, construction performing the assigned specialized work
- Control department is the independent unit to supervise and control all the activities of the corporation
- Construct different types of houses, road – irrigation work, public interest works etc
- Business, property business, business of the land property right of the owners, users or leasers etc occupies 65% of the company revenue
- Commercial – service business, authorization and authorized export and import of goods; real estate service brokerage; real estate valuation service; real estate consultation, real estate advertisement service; real estate management service
- Besides, there are other fields according to the Business Registration Certificate
2.1.2 Business activities of Newland Invest., JSC in the recent time 2.1.2.1 General situation
During the period 2014-2016, the Company invested in key project works consisting of: automobile yards for cargo transhipment Project in Ha Lang district, Cao bang province; Xuan Lam – Cong Thanh new urban area, Tinh Gia district, Thanh Hoa province (completed in July 2015); Re-investment and construction combined with management and exploitation of Lien Phuong market, Lien Phuong commune, Thuong Tin district, Hanoi (completed in October 2015); and the company is investing in the construction of the residential area in the South of Ton Duc Thang street; new residential area of Area 9 – Hai Tan ward, Bac Viet waste treatment Plant, Commercial and Service residential area in the North of Nguyen Luong Bang street, Thanh Binh residential area, Tan Phu Hung residential area, Tran Hung Dao residential area etc in Hai Duong city
The business result of the Company in the recent years is demonstrated through the basic index such as revenue and profit after tax, average income per capita Through that, it can be evaluated that the business capability and the development strategy of the company has obtained strong movement.(Table 2.1_
In Table 2.1, it can be seen that the business production result of the Newland company increased gradually through the years in term of scale and quality The revenue had the average growth rate of 17.44%/ year, which is higher than the average rate of the real estate and tourism in the area of the province (12.3%/year.) The profit after tax grew 14.4% The scale of human resource and average income also had strong change speed from over 368 people to 453 people, increased by 11.17%; average income rose from 4.2 million dongs/ person to 5.3 million dongs/ person, rose by 12.37%; the living of the staff is continuously improved
2.1.2.2 Business activities in the real estate field
Among the business investment activities of the Company, real estate is the key business field which occupies 63.5% In the period of 2014-2016, the Company mainly invested in the regions of Hai Duong City (residential area projects, Tan Phu urban residential area with the area of 45.56 hectares; Thanh Binh residential area project of 7.12 hectares, residential area in the South of Ton Duc Thang with the scope of 1.04 hectares; the project of residence and commercial-service in the North of Nguyen Luong Bang with the area of 8.3 hectares; new residential area of zone 9 – Hai Tan ward with the area of 2.9 hectares, Bac Viet waste treatment plant with the scope of 15.3 hectares; Tran Hung Dao residential area of 13.5 hectares
Besides, the Company is implementing many other projects in other big cities such as Hanoi (the project of multifunction building on the area of 1,800 m2, with 11 floors), Bac Ninh etc, mainly 80% of the business activities are in the region of Hai Duong province (Table 2.2_ Appendix 01)
During the period 2014-2016, the revenue structure changed to the trend of concentration on the real estate investment business, which always occupied the largest proportion and increased annual In 2014, real estate investment which accounted for 70.83% in the total incomes of the Company increased to 76.6% in 2016
The proportion of the construction – execution is in the second position after real estate investment, in 2014, it occupied 2413% thanks to the completion of the project of the automobile year for cargo transhipment in Ha Lang district, Cao bang province (completed in November 2014), in 2015 it accounted for 19.5% due to the completion of the project of reconstruction combined with management and exploitation of Lien Phuong market, Lien Phuong commune, Thuong Tin district, Hanoi (completed in December 2015) In 2016, it only made up for 18.1% because of the implementation progress of the residential areas on the region of Hai Duong
With the investment strategy of aiming at the medium real estate market, in order to meet the demand and the financial capability of the majority of the people, the company contributes to the stabilization of the socio-economic life and step by step develop in a substantial way The attempt to renew the thoughts of the management and the staff helped the Company to overcome many difficulties and challenges from the unfavourable real estate business environment with long freezing status The company achieved the exceeding growth speed compared to the previous period in terms of scope, quality and activity efficiency In 2014, the growth speed of investment of real estate is 32,037.8 million dongs then increased to 50,106.3 million dongs in 2016, the average growth rate of 25.55%.
Newland Current situation of competitiveness of Newland Investment
2.2.1 Analysis of the competitiveness criteria of Newland Investment Joint Stock Company
2.2.1.1 Group of criteria reflecting the results and efficiency of business a Competitiveness of revenue
* Revenues of a number of real estate companies in the area of Hai Duong province
In order to analyze the performance criteria of the Company compared to other real estate enterprise with big scopes in the area of Hai Duong province in
2016 to evaluate the competitiveness as well as the position of Newland in the real estate industry, the result is shown in the table as follows:(Table 2.3_ Appendix 01)
The comparison table demonstrated that Newland is the small enterprise which is in the second position among the real estate companies in the area of Hai Duong province, with the charter capital accounting for 16.3% compared to Nam Cuong Hai Duong, 1.5 times of Thanh Dong Real Estate and 2 times of Ha Hai Real Estate Newland has the revenue in real estate investment and business of 47.1 million dongs, which is 1.29 times of the revenue of Thanh Dong and 2.21 times of
Ha Hai Real Estate, the index of revenue of the Company accounted for big proportion in comparison with the two companies mentioned above This proved that Newland is a strong unit in terms of financial potential and performance activities; however, it is still lower than Nam Cuong Real Estate It is partial because of the payment to the customers of the Newland is really large as the character of the real estate companies are charging the customers in advance and delivering the land later so it has not been recorded
* Revenue of Newland Company Revenue of the real estate field in general and of Newland Company in particular in Hai Duong province continuously increases in the recent years.(Chart2.1_ Appendix 01)
Total revenue of the service business of real estate field of the Newland Company increased continuously from 2014 to 2016, from over 33 billion dongs in 2014 to over 38 billion dongs in 2015 and 47 billion dongs in 2016 After 3 years, the total revenue rose by 1.43 times of 2014
* Revenue structure in real estate investment and business of Newland Company
Revenue structure has many changes through 3 years The highest and most stable proportion is the product of housing land with average growth rate of 19.8%
In this new period, the new product (apartment) also had the sign of rise in terms of both revenue and quantity (49.6%) reflecting that the consumption demand and psychology is changing, this is the issue that the company should pay attention to supply the products meeting the consumers’ needs
In general, the market trend of real estate is dynamic again, which raise the number and the transaction revenue of the years This is due to the scenario that the economy is recovering, the stable employment helps the people to have stable income so they have the demand to buy the real estate products of higher class On the other side, the legal corridor of the state in general as well as of Hai Duong province in particular has created favourable conditions for the real estate service supplier to operate in the service supply, the site clearance cost is much cheaper in the scene of inflation and economic recession b Competitiveness of market shares According to the financial reports of the real estate enterprises in the province, the real estate revenues of the years(Chart 2.2_ Appendix 01)
The relative market shares of Newland through the revenue target compared to the entire real estate in the region of Hai Duong city is still a small number, which is only 18.4% in 2016, in the second position after the competitor with strong financial potential, Nam Cuong Corporation accounting for 39.2% of the market
However, the market of the region is being divided smaller and the competition is very difficult as there are new real estate companies appear with the similar price levels and targeted customer segment of Newland They launched attractive promotion programs, and committed with the fast site clearance etc such as Nam Quang Real Estate (founded in 2015) This made the market shares slumped in the region in 2016 Therefore, the company should focus more on the marketing channel in order to determine the correct direction to maintain and develop the market shares to be larger c Competitiveness of growth rate
2014 is the transitional year in the changing of the real estate market of Vietnam in general and in Hai Duong province in particular The land price was reduced dramatically in many places, the market has overcome the “freezing” period but it is still gloomy in the large scale and the real estate business finished a year in a miserable situation
In 2015, the socio-economy of our country continued to recover after the financial crisis and the global recession The production and commercial activities step by step obtained certain recovery Real estate enterprises gradually changed the product scope into the small and cheap segment The Real estate market was back
Even though the rate was not high, there were many successful transactions
In 2016, the real estate market had positive recovery sign with high speed and more successful real estate transactions
From the production business result of the Company inTable 2.1_ Appendix 01, we came up with the calculation of the growth rate as inTable 2.5_ Appendix 01
The growth rate according to the revenue is increasing more and more in each year with the average rate of 17.4%, rising from 45,234.3 billion dongs in
2014 to 63,384.4 billion dongs in 2016 This was achieved as the real estate market in 2016 had the positive and dynamic sign, as well as the economic scenario is stable, income of the people increased, leading to the rising demand in housing
The average growth rate calculated according to the profit (after tax) is 12.91% which means the company continued to have interest This was obtained as in 2016 the revenue went up and the costs went down.(Table 2.5_ Appendix 01)
In general, in the period 2014-2016, the real estate company of the whole country in general and in Hai Duong province is developing again with successful transactions The growth rate of the Company, in terms of all index, all increased but not stably Revenues and incomes all had the tendency to rise but the growth rate of the later year is slower than the previously, partially because of the matter that all the projects were in the process of investment so there had not been to final results and the revenue was low As a result, the Company should have suitable actions to accelerate the implementation of the projects, recover the capital promptly for the Company Besides, the market shares increased or decreased in an unstable manner and the proportion is not high (Table 2.5) as the products of the company was more expensive than the average price Therefore, Company should study the real estate market thoroughly as well as segment the customer reasonably to provide the products which can cover a larger market
2.2.1.2 Criteria group reflecting the business strength and advantage of Newland a) Product competitiveness
With almost 10 years operating in the real estate market, the real estate projects of the Company were and has been in the period of infrastructure exploitation or investment preparation The products launched into the market received well feedback from the customers in terms of geography, landscape etc as well as the service quality so the real estate product quality of the Company has earned its position in the market However, as the scenery of the real estate market in the recent years has unstable fluctuation so in the period 2014-2016, the Company focused selectively in the projects of the housing, residential areas, region in the East-West of Hai Duong city, which is a heating area in terms of housing as well as attractiveness of the projects with advantages of infrastructure, traffic, eco-environment, facility etc which are the products of the medium class segment constructed on clean land fund This created the premise for the development of the real estate types as:
- Tan Phu Hung project on the side of the gentle Sat river so all the houses here receive the water wealth blowing from the river slope The urban area is divided into 6 main areas with the unique architect suitable with each use demand of the citizens here: Phu Hung, Phu Cuong,Phu Thinh, Phu An, Phu Tai and Le Thanh Nghi etc
Evaluation of competitiveness of Newland Invest., JSC
2.3.1 Evaluation of competitiveness of Newland compared to competitors on the target market
In order to evaluate the competitiveness of Newland Invest., JSC compared to the competitors on the target market, the author used the competitiveness evaluation method of Thompson Strikland The main competitors on the real estate market in Hai Duong province selected to be evaluated are: Nam Cuong Real Estate group in Hai Duong, Thanh Dong Real Estate Joint Stock Company, Ha Hai Construction – Tourism Joint Stock Company Regarding the evaluation criteria of the competitiveness of the real estate enterprises, based on the survey on the opinions of the experts in this field, the author built the list of the elements affecting competitiveness consisting of 12 elements specific as mentioned in the table following Competitiveness of the enterprises only covers the subjective elements, the business environment elements and does not comprise of the foreign elements
Sum of importance coefficiency of Newland Invest., JSC = 2.35 in the second rank compared to the evaluated competitors
In the similar method, by the evaluation of the competitors, we can withdraw that the result of relative competitiveness of Newland is:
Therefore, the competitiveness of the company is lower than the competitor Nam Cuong Invest., JSC With the relative competitiveness of 0.91 This means the competitiveness of Newland is higher The reason is that Ha Hai has not paid much attention to the marketing activities to build and promote its brands Moreover, the real estate projects of Ha Hai in Hai Duong is not many and is faded so the competitiveness is lower than the competitors
In summary, in order to maintain and promote its competitiveness, Newland Investment Joint Stock Company should have the solutions in short term and long term in order to launch to the market the real estate products suitable with the consumers’ needs in Hai Duong, with reasonable prices, good customers care as well as the methods to promote the strengths of capital, human resource, reputation and infrastructure
Besides the general impacts of Vietnam economy, from 2014 to 2016, there was recovery; however, there are still many difficulties for real estate trading enterprises in general as well as Newland Invest., JSC in particular Nevertheless, with the effort of the management board and the whole employees, Newland Invest., JSC has overcome the difficult period and continues to develop The work of project investment, development, expansion and implementation etc are still maintained and basically, the targeted plan for 2014-2016 was achieved, creating the driving force as well as the direction for the plan in 2017 and the following years
The achievements of Newland Invest., JSC are mainly as followed:
- Regarding the revenue, revenue of Newland was in the second rank amongst the real estate trading enterprises in Hai Duong and had good growth in three years 2014-2016, from more than 33 billion dongs in 2014 to over 38 billion dongs in 2015 and over 47 billion dongs in 2016 After 3 years, the total revenue increased 1.43 times compared to 2014 The market shares of Newland Company in the real estate field in Hai Duong was in the second position following Nam Cuong Group This is a positive results as Newland is an enterprise which has been operating for 5 years on the real estate market in Hai Duong whilst Nam Cuong has had over 30 years of experience with strong resources Through that, it can be seen that Newland Invest., JSC has been giving best endeavor to raise competitiveness of the company on the real estate market of Hai Duong province
- Regarding competitive market, the products and services of the company in the recent time have been accepted by the consumers, standing strong and partial be able to compete with the competitors in the region The real estate projects of Newland have the trategic position in terms of economy, politics, society of the city
Particularly, with the real estates with good quality including: Tan Phu Hung, Nguyen Luong Bang Residential area, Le Thanh Nghi ward Residential area etc are highly evaluated by the customers, creating different view on the real estate projects in Hai Duong Newland aims at building the projects constructed in the model of functional residential area with full social utilities: parks, schools, hospitals, sport complex, commercial centers etc in order bring the convenience for the customers and consumers
- The distribution system of the Company is evaluated to be public, clear with the customers’ satisfaction of 64.4% The form of direct distribution of exclusive level 1 agency helps the Company to control the distribution activities better to the customers, ensuring the price consistency as well as the property transfer procedures to the customers
- The organization of the service implementation is also performed well The company focuses on the pre-sales, during sales and after sales customer services such as: providing information, consulting, guiding the process, procedure, resolving the questions for the customers etc
- Quality of human resource continues to increase in terms of quality and quantity: With the acknowledgement that human resource is the element determining the success or failure of the enterprise, Management Board of Newland Company pay much attention to the work of recruitment and training of the human resource in depth, along with an working environment providing the best conditions for the talent to compete In Hai Duong branch, after 5 years of operation, the branch has overcome great number of difficulties, challenges At the beginning, the number of employees was just over 10, now, the number of staff expands to 100 people with high professional levels including master, engineers, bachelors, technical workers, etc
- The company has the certain position in the customers’ mind: Even the company is a young enterprise which was established 7 years ago, the customers assess that the company is a prestige one with 70.8% Newland has been step by step confirm its brand especially in the field of investment and construction The aim of the Company in the period 2011-2015 was creating new image, a clear direction and a perfect product The Company committed to provide the customers with “Best product – Best service – Best price”
Newland is a newly established enterprise, the period of real estate investment and trading on the market is only 7 years and in 5 years in Hai Duong
Even though the company initially obtained several success in the projects the Company has implemented, at a straightforward point of view, Newland still has some limitations as follows:
- Real estate product segment of Newland is medium but the price is relatively high on the market Therefore, the price policy offered by the Company do not really aim at the targeted consumers Also because of the high price, the market shares of Newland in 2016 only occupied 18.4% on the market Therefore, it reduced competitiveness of the company The leader board of the company should have serious research on the customers segment and offer the product lines suitable to cover the market better
- Newland has not really paid attention to the work of promotion and advertisement of the image and brand of the Company The advertisement on the media, press and television is not many, the sponsor activities and event organization are limited and there have been no synchronized program As a result, the information source that the customers can access is mainly through the recommendation from families and friends but not the commercial information performed through the advertisement programs of the Company (Table 2.9)
-Human resource has the development of number and level but the human resource specialized in real estate and experienced are very limited According to the statistics of human resource of Newland, there were approximately 20-25% of the staff of Newland with major in real estate
MAIN SOLUTIONS TO PROMOTE COMPETITIVENES
Business direction and requirements to promote competitiveness of the
3.1.1 Current situation and requirements to promote competitiveness of the company
3.1.1.1 Current situation of the real estate market
Regarding the real estate market in general, competition in real estate is getting more and more fierce, causing difficulty for Newland Invest., JSC at the new chance: According to Mr Tran Kim Chung, Vice President, Central Institute for Economic Management, the real estate market in 2016 had major happenings
State Bank of Vietnam (SBV) amended Circular 36 to tighten the credit flow to real estate
There were many forecasts of the units that the real estate market in 2017 would be difficult On the contrary, after the first 6 months, despite of great fluctuation, the real estate market still showed a substantial development trend
According to the statistics of Ministry of Construction, in the first half of
2017, there were up to 8200 construction enterprises newly established, in which the number of real estate enterprises was 2300 This is not a small number With the strongly increasing number of the enterprises, the real estate market of the first 6 months also witnessed massive flow of capital
Evaluating the potential of real estate market of Vietnam in the second half of 2017l Dr Dinh The Hien replied to the media that the local real estate market in the second half of 2017 was still a channel attracting private investor but it would be strongly diversified and selected on the need and finance of the investors
Regarding the situation of the real estate market in Hai Duong, the real estate market in Hai Duong in the first 6 months of 2017 attracted a large amount of money, about 800 billion dongs, approximately the total revenue of the whole year in the previous timing The reasons are decrease of bank interest, creating the conditions for production, business, investment of real estate The real estate investment channel in Hai Duong is still an attractive one for investment and savings The market of currency exchange, and foreign currency were stable On the aspect of idealism, 2017 is a leap year so there are many customers choosing 2017 to purchase land and houses so the real estate market in the first 6 months had outstanding changes The customers who decided to construct houses in 2017 already decided to purchase land in the first 6 months so it is anticipated that in the last 6 months, the market will be slower as the capital sources and the number of customers reduce
In the recent time, in Hai Duong city, there is a tendency to divide land to smaller lots to sell with the amount of money from 400-500 millions, or constructing the houses for sales of 600-700 million dongs comprising of one floor and one attic Regarding the urban land, the trend to build houses for sales with the total amount of 2.6-3 billion dongs is also interested by many people, especially in the new urban area in East Nam Cuong
The real estate market of the first 6 months pushed up the price, many of the customers are worried, especially for the market of project Tan Phu Hung when in June – July, the market experience sagtation The market of the project Tan Phu Hung is having relatively large number of investors; however, on the author’s point of view, the number of customers invested in Tan Phu Hung is large and not concentrated, each customers buy several lots, and within the economic control of the customers One more point the present in very close to the period of economic- real estate crisis 2010-
2011, so a lot of customers have withdrawn the experience from such lessons to perform cautious investment Therefore, the concern of high increased price leading to imaginary market in the project Tan Phu Hung is not a big concern
In 2018, the investors will offer a series of new projects including Thien Phu
Tu Minh villa of Nam Cuong, Tan Phu Hung project, Thu group residential area of Hoang Thanh, Dinh Long school land converting of Quang Lan, Golden Land project, South of Lo Cuong bridge creating rich supply source for the market
3.1.1.2 Indispensability of promoting the competitiveness of Newland Invest., JSC
Promotion of competitiveness of real estate enterprises is indispensable in the current difficult situation of the real estate market and the economic recession
The promotion of competitiveness helps the enterprises to stand strong and develop in the following years, which contributes to raise the competitiveness of the economy
On the other hand, in the current situation of the market, if Newland Invest., JSC does not promote its competitiveness, the Company may lose because they cannot sell their products, leading to bankruptcy As we know, in the market economy mechanism, competition is an objective inevitable element Each enterprise participating in the market should accept competition, follow the competition law even though sometimes competition becomes a double edged sword One side, it eliminate with no mercy the enterprises with high expenses, products of low quality, bad consumption organization; one side, it forces the enterprises to continuously strive to reduce cost to lower the product prices, complete the use value of the product and organize the product consumption system Particularly in the current period, science and technology develop, the economy develops, the consumption need is at a much higher level In order to meet such needs timely, the enterprises should never stop promoting the competitiveness through the activities of advertisements, bazaars, after sales services etc Moreover, in such open economy as now, the competitors are not just the domestic enterprises but also the foreign enterprises and companies with much higher investment capital, technology level much so the promotion of competitiveness of enterprises of Vietnam is an objective inevitable matter for existence and development
In addition, business investment environment now is still very difficult for the enterprises The resources of the enterprises are not stable Maybe, at the moment, the enterprises are still able to sustain as they still have funds and reserves of materials from before; however, in the near future, at the time of maturity date, payment of loans, or reserve running out, the situation will be different It is anticipated that, in the coming time, enterprises will continue to face more challenges and difficulties It has to be admitted that, the number of enterprises with drawing from the market starts to increase With the scenario of the general difficult situation, high pressure for restructuring of the economy, it can be understandable; which means that the elimination ò the market economy is stronger The experts all forecasted that the number of dissolute and bankrupt enterprises will be bigger in next years Even when the macro economic situation is getting stable, inflation is lower, the number of enterprise withdrawing from the market will still increase At such time, the reasons are high pressure of competition and more equal competitive environment Particularly, in 2015, Vietnam fully joined AFTA, and in 2018, WTP, a lot of products will have import tax of 0%, protection barrier will no longer exist, the enterprises will face great stress of the equal competition
In the coming time, a fierce elimination will happen on the market on the existing one will be the strong enterprises with high capability At this time, economic restructuring will happen more strongly It is a part of restructuring The resources on the market will be accumulated for competent enterprises When suffering from competition pressure, facing such challenges, the enterprises will have to stay back, improve their basic elements, re-determine the strategies, promote the enterprise management etc Currently, the enterprises have to tighten their belts to deal with the difficulties, and stay in the situation where the macro economic is still unstable However, in the near future, the enterprises will encounter bigger difficulties in the case of totally integration; therefore, they should immediately perform the restructuring by themselves As a result, in a short time
The enterprises will have much more difficulties Even when they has not overcome a difficulty, they will face another one as the roadmap of encountering happens daily That is the cost of integration, which is the painful restructuring that the enterprises much promote their competitiveness to overcome
3.1.2 Business operation direction and the guidance to promote competitiveness of the company
The development objective of Newland Investment Joint Stock Company is striving for continuous development, step by step to become one of the top corporation of real estate investment, construction and trading in Vietnam The strategies of Newland is to target the primary and secondary real estate market in order to meet the demand and the financial capability of majority of the people; contributing to stabilize the socio-economic life; step by step develop into the direction of sustainability It can be certain that, in the near future, a series of projects invested by Newland will be formed in the whole country, contributing to the development of socio-economy in general and housing and urban in particular
In the direction to become the enterprises operating in multi industries and fields; especially the target to become of the prestige brand of real estate in Vietnam, currently, Newland Investment Joint Stock Company has participated in financing and cooperating with the big real estate companies in Hanoi such as:
Hanoi Construction Corporation, Vinaconex Construction Joint Stock Company 21;
Cong Thanh Cement Joint Stock Company; Que Vo Environment Joint Stock Company; etc
Main solutions to promote competitiveness of the Company
3.2.1 Build the development strategy for Newland Invest., JSC up to 2025
Newland Invest., JSC should design itself a long term strategy up to 2025 In order to do so, the Company should any the questions: The development objective in the coming time, mission, key value, how to deal with the changes of business environment, how to develop substantially, make the policies and plan to obtain such objective and allocate of the resources of the organization to implement such policy and plan All of these things require a general solution on development strategy building for the company with direction to 2025 In order to execute this issue, the Company should research, consider and implement the specific issues as follows:
- Establish the development strategy board with the duties of consultation, performance organization and supervision for the Board of Management and Board of Directors on the development strategy directions to 2025 Simultaneously, adjust according to the periods to be suitable with the development of the market
- Identify clearly the vision, mission and target up to 2025, where will the company go, what will it become, what field will it focus on, and what is the scope
What does the key value include? What segment, location does the Company focus on? What products will offered? In order to avoid the massive investment, Newland should have a body to analyse, evaluate the efficiency, growth rate and potential of each performance field, based on that, find the strategies products and focus the resources for such product to earn the position on the market
- Promptly apply the new management technology, modern reasoning on management to the Company to be able to compete with foreign enterprises
- Spread such thoughts to entire staff, continue to repeat and review in quarters and years
To do such work, firstly the company should pay attention to the increase of the training for the staff in preparing the business strategy for the Company To have the managers with knowledge and ability in preparation of business strategy, Company should perform the following solutions:
- Provide and training and education on business strategy for the high level employees in the company and the officer of the Planning – Technical division In order to do so, 1% of the profit will be used for the Company to hire qualified experts on business strategies or send the officers to study about business strategies
- Provide incentives both physical and mental for such officers such as bonus for tuition
This is a very important solution to the building and developing the strategy for the Company in the coming time
3.2.2 Accelerate the market research activities
One of the reasons weakening the competitiveness of the Company compared to the competitors is the issue that the Company has not had the professional market research activities; therefore, the products, prices, services supplied occasionally are not practical to the targeted customers Consequently, one of the elements leading to the success of the company is to be able to hold the information of the market especially the information about the competitors joining the market The accurate and timely and sufficient information are the conditions to identify the production and organization missions for the Company
Incorrect or late or insufficient information leafs to the situation where a lot of time, effort and money have to be paid but the desired results are not achieved
Due to the insufficient information of the market and the competitions, in many cases, the company lost the business chances Even though the Company obtained a lot of success, but the market work is still weak, cannot promote the strengths of the company in market economy
Newland should establish a body of market information which usually follow and update the development of the market through the mass media and practical surveys This is a job which not all enterprise can perform well while the real estate market information is not clear as currently When there is no state body organizing the collection and analysis of the market information, the real estate enterprises should select a unit with good reputation to negotiate the supply of suitable and necessary information for its enterprise In reality, there are many enterprises unable to perform this work themselves In case when the enterprise cannot establish and operate the team to take charge of this work, it can be executed by the units specialized in providing market information, research and consultation of real estate The establishment of the market information body should be done with the work as follows:
- Raise all the chances of research and get quick information on the market, through the market staff and marketing agent etc
- Research deeply the demand of customers for products, prices, distribution policies and promotion activities that the customers are interested
- Recruit human resource with profession of market research, establish group specialized in market research work
- Build clear and specific goals and work requirements
- Organize the connection and meeting points with the customers on mass with high frequency to implement the information collection and process it
- Propaganda and determine correctly the importance of market research work for every staff of the company to understand
3.2.3 Promote marketing activities, branding and brand promotion
Branding and reputation creation of the enterprises on the market is not simple, it must go through a long period for the Company to prove itself to the consumers who is becoming more and more intelligent In the scenario of the dull market as now, the branding is difficult, brand and reputation promotion for the Company in a substantial manner is more difficult In order to confirm its brand, Newland should focus on several solutions as follows:
Increase the activities for brand recognition: It is essential to build a roadmap and procedure regarding brand recognition in the entire system (from logo, slogan, printed, gift sets, and presenting materials, etc.) Perform with synchronization the slogan, logo at the investment projects and on the website of the Company; at the investment implementation project, arrange the large advertisement banner to advertise the project and the firm so that the brand of Newland becomes familiar with people in Hai Duong
- Create differentiation of the products and services of the Company:
Complete in terms of scope, specialization of the research and design parts for the new model of houses, types of property, types of planning architect and infrastructure architect etc.; apply the models of smart houses to save the area for the customers Through that, Newland can be located in a better place in the customers’ mind with the target to be a Company providing convenient real estate products, creating green –clean – beautiful and modern environment for the customers
- Accelerate the work of media, promotion; organize the events to attract mass community: The Company should promote the organization of the events at the real estate projects to attract the attention of the people so that can attract the targeted customers to the company including the events of ground breaking, sales launch, mid autumn festival night for the children, Christmas or sponsor for the cultural and art programs of the province that many people know such as: the city and province establishment anniversary etc especially the sports competitions in the province or in the whole country organized in Hai Duong province
- Accelerate the participation of the public relation activities, join in the social security activities comprising:
+ Establish the fund for the poor, present the houses for the poor household in the communes, districts in the province or education encouragement funds, present books, notebooks at the beginning of the years for poor pupils who strives to overcome their difficulties Such social security programs, the company can organize into the giving event under the witness of the local authorities, invite the press to join, post the news on television and local newspapers to advertise for the image of Newland
+ Press relation, post the valuable information on the mass media to attract the attention of the public to the products of the company
+ Promote the communication of the Company: they are the local and foreign affairs activities to make people know deeply of the Company
The objective of the public relation and propaganda activities: Raise the reputation of the company and the products, create the image of the prosper enterprises which cares about the society, customers and the local
The trend of branding should be combined with the brand protection
Therefore, the industrial property registration, brand registration is necessary and should be paid great attention to Along with brand protection registration, it is vital to expand the market shares, raise the quality of the products and services after sales to solidify and chance the reputation of the brand Besides, the company should focus on brand promotion in the country as well as overseas
The anticipated budget for such activities are as follows:(Table 3.1_
3.2.4 Improve the quality of the human resource