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LUẬN văn THẠC sĩ xây dựng chiến lược kinh doanh cho công ty cổ phần sông đà 11 giai đoạn 2018 2023 và định hướng đến năm 2030

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Tiêu đề Xây Dựng Chiến Lược Kinh Doanh Cho Công Ty Cổ Phần Sông Đà 11 Giai Đoạn 2018 – 2023 Và Định Hướng Đến Năm 2030
Tác giả Trần Thanh Giang
Người hướng dẫn PGS.TS. Hoàng Đình Phi
Trường học Đại Học Quốc Gia Hà Nội
Chuyên ngành Quản Trị Kinh Doanh
Thể loại Thesis
Năm xuất bản 2019
Thành phố Hà Nội
Định dạng
Số trang 96
Dung lượng 1,38 MB

Cấu trúc

  • Chapter 1: LITERATURE REVIEW ABOUT DESIGNING BUSINESS (12)
    • 1.1. Concept and classification of business strategy (13)
      • 1.1.1. Concept of business strategy (13)
      • 1.1.2. Roles of business strategy (14)
      • 1.1.3. Basic characteristics of business strategy (14)
    • 1.2. Business strategy planning process (15)
      • 1.2.1. Analysis of external and internal environment (16)
      • 1.2.2. Develop matrix to select business strategy (23)
      • 1.2.3. Select business strategy (28)
  • Chapter 2: ANALYZE AND SELECT THE BUSINESS STRATEGY FOR (13)
    • 2.1. Overview about the Company (31)
      • 2.1.1. History of development, organizational structure (31)
      • 2.1.2. Business performance in the period of 2015 – 2017 (33)
    • 2.2. Analysis of external and internal environment (36)
      • 2.2.1. Analysis of external environment (36)
      • 2.2.2. Analysis of internal environment (50)
      • 2.2.3. Develop matrix to select business strategy (59)
    • 2.3. Select business strategy for SJE (72)
      • 2.3.1. Develop matrix to select business strategy (74)
      • 2.3.2. Select business strategy (77)
  • Chapter 3: SOME POSSIBLE RECOMMENDATIONS TO LAUNCH SJE (84)
    • 3.1. SJE's objectives to 2023 with visions to 2030 (84)
      • 3.1.1. Objectives to 2023 (84)
      • 3.1.2. Visions to 2030 (87)
    • 3.3. Recommendations on implementation solutions (88)
      • 3.3.1. Solutions on strategy and plan management (88)
      • 3.3.2. Production management solutions (89)
      • 3.3.3. Marketing management solutions (90)
      • 3.3.4. Solution group on human resources management (91)
      • 3.3.5. Financial management solutions (93)

Nội dung

LITERATURE REVIEW ABOUT DESIGNING BUSINESS

Concept and classification of business strategy

Each scholar is characterized by his own viewpoints on business strategy in various perspectives Michael Porter (1996), a famous strategy manager of Harvard University, revealed that the business strategy is regarded as the art of successful market competition and development because: “Business strategy refers to the art of developing reliable competitive advantages for defense” Under the perspective of management category, business strategy refers to a plan form, G.Arlleret assumed that “Strategy refers to determination of paths and vehicles to fulfill the pre-determined objectives via policies”

Nowadays, strategy concept is widely used and regarded as the background for business operations When the goods barter is increasingly developed in the society, the strategy is started to be largely applied in business with sketched model as follows:

(Source: Strategy management - Statistical Publishing House, 2009)

A concept of business strategy in MBA course books of Griggs University is: “a series of undertakings and actions that are used by a player to obtain a competitive advantage by exploiting the core competencies in a certain market.”

At least, three business strategy levels are identified; (i) Corporate level strategy: aim to the organization’s purpose and general scope; (ii) Business unit level strategy: refers to a combination of undertakings and actions to obtain the competitive advantages by exploiting their core competencies into the specific product markets; (iii) Functional strategies: refer to the strategies to help the BU and corporate level strategies are successfully launched thanks to component departments in terms of resources, processes, human and skills

 Business strategy helps the enterprise to recognize its purposes and orientations as the key guideline for any production and business activities of the enterprise The enterprise is facilitated to grasp and make use of business opportunities and take active measures to successfully overcome the challenges and threats in the marketplace

 Business strategy facilitates the performance of resources, enhancing the enterprise’s competition position in the market and ensuring the enterprise’s sustainable development The reliable background is created to design and develop the production and business policies and decision suitable with the market fluctuations

1.1.3 Basic characteristics of business strategy

- Generality: Generality is demonstrated in 3 aspects: (i) Suitable with the general development trend of the enterprise, as the directing policy for the enterprise operations; (ii) Suitable with the national development trend on socio- economics and techniques in the certain period of time; (iii) Suitable with the world’s economic integration trends The good business strategy may not be available without general viewpoints

- Far seeing: Previously, success was not obtained by many enterprises because no strategic plan was made; work was randomly conducted and flown to the movement

Enterprise's development trends were not successfully captured Therefore, in order to design a business strategy, the society's eco-techno forecast must be outperformed

Generally, a successful strategy is a strategy based on sound forecast

- Competitiveness: Competitiveness is the most basic characteristics of business strategy Nowadays, the competition market is involved by any enterprises Therefore, it is important to sketch out the business strategy that facilitates the enterprise to obtain more competitive advantages than its competitors and become the winner

- Risk: Business strategy is recognized as an enterprise's future development plan However, the enterprise’s future survival environment may be always varied

The longer the strategy timeline is, the more the uncertainty of objective circumstances shall be The higher non-feasibility is, then the more risky the strategy shall be The strategy risk requires entrepreneurs to stand afar to have far seeing, carefully and objectively observe to obtain the sound strategy The enterprise’s macro environment is significantly changed Therefore, business strategy should not cover a too long time to ensure its flexibility and practicality

- Professionalism and creativeness: The enterprise's intrinsic forces may be based to select the business line well matched with its strength to avoid the industry which is advantageous to the giants to maintain its exclusive position By doing so, most of concerned enterprises are successful, developed and prosperous The technical progress and market competition are unlimited, hence, the enterprises are required to ceaselessly develop the proper advanced techniques, specialize and create the techniques as the essential measure to ensure its survival and development This is an important feature of SMEs’ business strategy

- Relative stability: Enterprises’ business strategy must be supported by the relative stability in a certain period of time The objective environment and practical activities of the enterprises are ceaselessly driven Business strategy is required to self-adjust to be well matched with the objective circumstances The business strategy cannot be fixed but relatively stable.

ANALYZE AND SELECT THE BUSINESS STRATEGY FOR

Overview about the Company

2.1.1 History of development, organizational structure

Former a Utility Team under Thac Ba Hydropower Corporation, Song Da No

11 Joint Stock Company was incorporated on 1 st June 1961 In 1976, it was renamed as “Power and Water Assembly Enterprise” under Song Da Hydropower Construction Corporation under the Decision of the Ministry of Construction In

1989, Power and Water Assembly Enterprise was upgraded as a Power and Water Construction Company in accordance with the Decision No 03/TCT-TCLĐ of Song Da Corporation dated 12 th December 1989 In 1993, Power and Water Construction Company was renamed as “Energy Construction Company” under Song Da Corporation as decided by the Ministry of Construction On 11 th March

2002, the Ministry of Construction promulgated the Decision No 285/QD to rename as Song Da 11 Company

With response to the Resolution TW3 on renovation and restructure of the State-owned enterprises, the Ministry of Construction promulgated the Decision No

1332/QĐ-BXD on 17th August 2004 to transform Song Da 11 Company into Song

Da 11 Joint Stock Company On 14 th December 2006, Song Da No 11 Joint Stock Company’s shares were officially traded in HNX with ticker of SJE Transaction name in English: SONGDA 11 JOINT STOCK COMPANY; Abbreviated name:

SJE Registered office address: 7 th floor, Song Da Complex Building, Km10, Tran Phu, Ha Dong, Hanoi Currently, the Company’s chartered capital is: VND 115,531,050,000 (One hundred and fifteen billion, five hundred and thirty one million, zero hundred and fifty thousand Vietnam dongs)

It is possible to say that the Company’s history of development is always cemented with Vietnam key works such as Thac Ba Hydropower Plant, Hoa Binh Hydropower Plant, Yaly Hydropower Plant, Son La Hydropower Plant, Lai Chau Hydropower Plant, etc

When the transformation was initiated to the renovation period, a series of great opportunities and challenges were faced by the Company It promptly changed the management, adopted and adapted with lean and dynamic production organization to successfully adapt, survive and develop in the cut-throat market mechanism

INVESTM ENT PROJECT DEPARTM ENT

MECHANI CAL ENGINEER ING DEPARTM ENT

BRANCH OF SONG DA 11.1 BRANCH OF

SONG DA 11 THANG LONG CO., LTD

2.1.2 Business performance in the period of 2015 – 2017

According to the Certificate of Business Registration, some key business lines of the Company are described as follows:

- Construction of Hydropower plant, irrigation, traffic and post office works, etc

- Construction and installation of electric wire lines and transformer stations up to 500kV; construction and installation of urban and industrial park’s water supply and drainage system;

- Trading in construction of urban area, hi-rise buildings and industrial parks;

- Construction and installation of clean water treatment plants and wastewater treatment plants; Construction of hydropower plants;

- Management, operation and distribution of water and power to various works; management and operation of small and medium scaled hydropower plants, industrial park and city’s water plants; Management and operation of electric sales;

Production and trading in commercial electricity;

- Installation of electro-acousto mechanical system, lighting electric, ventilation, communication, air conditioning and control systems of hi-rise buildings, urban areas and industrial parks;

- Exploitation of sand, gravel and stone to build road and works;

- Supply, sales and installation of firefighting equipment and fire safety system;

- Trading in real estates and land use rights under the owner

Construction, installation, management and operation of power and water in the hydrdopower works where Song Da Corporation is the Project Owner or construction and installation of national important water supply works such as: Thac

Ba Hydropower Plant, Hoa Binh Hydropower Plant, Yaly Hydropower Plant, Son

La Hydropower Plant, Lai Chau Hydropower Plant, Sesan 3 Hydropower Plant, Sesan 3A Hydropower Plant, Sesan 4 Hydropower Plant, Pleikrong Hydropower

Plant, Sekaman 3 & Xekaman 1 Hydropower Plants in Laos, Bien Ho - Pleiku water supply system and Nha Trang water supply system, etc

Moreover, the Company has actively involved in bidding and become the bid winner of the main works, ensuring the requirements on progress and quality of the National key works where EVN is the Project Owner such as: Mong Duong Water System, 500kv Pleiku - My Phuoc- Cau Bong wireline, 500kV Son La - Hoa Binh Wireline, 500kV Son La - Lai Chau Wireline, 500kV Thach My transformer station, 500kV Quang Ninh transformer station, 220kV DakMi 4 wireline, 220kV wireline of Xekaman 3 Hydropower Plant and other key works, etc Up to now, the Company has become one of TOP 5 construction contractors of Vietnam power transmission works

With strengths in hydropower construction and extensive experience in managing and operating the electrical system, intensive investment has been launched in the BOO form of Thac Trang Hydropower Plant, To Buong Hydropower Plant, Dong Khua Hydropower Plant, Dak Glei Hydropower Plant, stone exploitation production line has been invested in Luong Son- Hoa Binh stone mine, Solar Power, etc

Table 2.1: SJE’s business performance in the period of 2015 – 2017 Unit: VND million

5 Payment to the State budget 62,150 40,673 46,440

6 Average income per capita/month 8.709 8.130 8.910

(Source: Song Da No 11 Joint Stock Company)

+ 2016 revenue and other incomes was VND 791,956 million, reducing VND 152,816 million against 2015 (VND 944,772 million, corresponding to 16.17%)

This was caused by the fact that a series of works were launched in 2015 and the delivery schedule of such works was ended in the year The works in 2016 were fewer because the bid award was not much 2017 revenue and other incomes was VND 510,615 million, reducing VND 281,341 million against 2016 (VND 2016 million, corresponding to 35.52%) The root causes included the public debts in

2017 were increasingly high, the State investment into constructing the power and water work was narrowed down Moreover, many new players were born, the increasingly cut-throat competition was recorded, market share was narrowed down, resulting in bid award of key works was impaired recently

+ the 2016 profit after tax was VND 51,572 million, reducing VND 34,154 million, corresponding to 39384% against 2015 (VND 85,726 million) The 2017 profit after tax was VND60,185 million, increasing VND 8,613 million, corresponding to 16.7% against 2016 The root causes included the revenues in the year were reduced and the company saved the management costs

+ Profit after tax percent (%) against total income and other incomes in years were 9.07%, 6.51% and 11.79%, respectively This was a relatively high percent against the same construction and installation enterprises The reason was that thee price management was applied with very good method statements, offering a high economic value

It is possible to see that the period of 2015- 2017 was recorded with the Company's effective business performance However, it was unstable, especially revenue was gradually reduced; instability of after-tax profit against total revenue and other income unveiled that the Company's management of business strategy orientation must be generally reconsidered so that it is well matched with the context to improve the competitiveness, maintain the stable growth rate, facilitating the high economic performance, improving the living standards of the employees and capital use efficiency of the enterprise.

Analysis of external and internal environment

With the extensive history of development, 55 years in the construction of wireline and transformer station, water supply and drainage system, the Company’s brand and position in the wireline and station construction field has been successfully affirmed This is one of advantageous factors when the Company involves in bidding and looking for the projects Moreover, the intensive investments have been launch to the hydropower plant project Up to 2017, the Company invested into hydropower projects with total capacity of 44MW

Particularly, the 42MW Solar Power Plant in Binh Thuan has been being invested by the Company, generating jobs and promising to offer high investment efficiency from the dividend in the future

Currently, SJE's annual sales goals are set up with over VND 1 billion and VND 1,500 billion by 2030 in accordance with the contracts signed with the customer and its great efforts However, the Company’s planning is largely depended in market factors If the Company’s existing conditions and market impacts are not carefully analyzed in the current period to release a specific business strategy, the Company shall be easily dominated by its competitors

2.2.1 Analysis of external environment 2.2.1.1 Macro-environment

- Economic growth: The last 5 years witnessed Vietnam average GDP growth of approximately 6.22% The Statistics released by the General Statistics Office revealed that 2017 GDP was US$ 220 billion by actual price; GDP per capital hit US$ 2,385 According to the economic development plan of 2011-2015 in the documents of the 12 th National Congress of the Communist Party of Vietnam, Vietnam targets to obtain the average GDP growth rate of 6.5-7%/year, by 2020, GDP per capita is US$3,200- 3,500, total average social investment capital in 5 years is 32- 24% of GDP, etc In order to fulfill the set development target, including improving quality of socio-economic structure construction plan, especially the traffic, electric, water, irrigation, education, health care network, etc., a high demand on constructing the power works and power transmission works, etc., is arisen Therefore, Vietnam construction industry in general and SJE in particular is facing with the abundant job opportunities

- Interest rate: In the past 05 years, the loan interest rate was relatively stable, varying within the range of 8%- 11%/year This was the great opportunity for Vietnamese enterprises to access to the very advantageous credit capital sources

Many players had made loans for production investment and successfully launched the investment projects Like other players, SJE seized the opportunities to invest in expanding production, especially strengthening the ongoing investment projects on Hydropower Plant and Solar Power Plants which require a relatively high loan

Such projects are the top priority of the Government

- Inflation rate: 2017 was recorded with Vietnam inflation rate of 3.53%

Currently, the 2018 inflation rate set by the National Assembly is 4% This is a great task of the Government, requiring to take a series of measures to control the inflation in accordance with the plan approved by the National Assembly It is possible to say that when the stable inflation rate is stable, the input cost shall be stable, resulting in less variation in construction costs Then, the price escalation factors may not be significantly concerned when construction works are tendered or the contract is signed

Sharp development of science and technology is the great chance for the dynamic enterprises to go ahead to catch up with the technology, but also a threat for the partners who are not interested in renovation Electric works are currently applied with remote control technology SCADA to dispatch the national electric system The National grid works are installed with the cutting-edge digital equipment in the stations and power plants to protect and control in the semi- automatic and automatic modes, etc In the fields of power works construction, technological equipment facilitates the river-crossing cabling, non-grounding wiring, affirming the outstanding capacity against the history

The problem faced by electric construction enterprises is that how to successfully exploit the plants and equipment, satisfy the technical, quality and schedule requirements Therefore, if construction technology is renovated, SJE shall obtain higher advantages in quality improvement and construction price lowering for the demanding projects

The 2014 Law on Enterprises, the 2014 Law on Investment, the Law on Corporate Income, the Law on Value Added Tax, etc., are the breakthrough in demonstrating the fair and autonomy viewpoints in business of the enterprises

Vietnam is recorded with the stable political, national defense security and creating a fair business investment environment when its legislation frame is being perfected, especially finance, land, labor and administrative procedure simplification However, the Law system related to investment and management of basic construction investment, Law on Land are changed, significantly affecting the domestic and international investors

During the works are executed in the areas, involving in the site clearance compensation for the works and adherence to the local regulations, SJE proves to be the good partner of the local authorities and the State competent authorities

The international economic integration trend in the coming time of 2018-

2023 continues facilitating the exchanges of goods and services between Vietnam and its neighbors, resulting in demand of using the hi-tech utilities Accordingly, the electric construction and installation equipment shall be facilitated in terms of quality, aesthetics as well as high technology qualification, especially digital technologies This is a great chance for the construction enterprises in general and SJE in particular

The society is now much more developed, civilized and subject to the international integration The transformation of human-centered social values is launched, much considering the increasingly high demand of spiritual life The social environment shall be significantly changed by exchanging culture between Vietnam and countries The trends in increasing spending, improving the cultural and physical life are rising, resulting in sudden climbing demand of power use in peak hours However, the power is still seriously lack to provide to consumers

The job trends in Vietnam unveiled that the labor market’s structure transformation is made from jobs in the agriculture with low productivity to higher added value industries and services invested with more technologies and finance

Select business strategy for SJE

The analysis unveiled that SJE is on the way to grow, orienting towards a prosperous development However, SJE's available business strategy is still submerged with some shortcomings Its business performance is not really high

The root causes are that the Company’s financial potential is not really powerful against some giants in the sectors, its management experience is not well matched with the integration trends, SJE branding is not really systematic and stable, etc

Therefore, the strategic tools have been applied to analyze and evaluate SJE operations to sketch out some strengths, weaknesses, threats and risks from the external environment It is described in the table below:

- O1: Vietnam economy development with high growth rate and stable politics:

- O2: Encouragement of developing small and medium hydropower plant, power industry infrastructure and urban infrastructure

- T2: Every-changing input material supply and price

- O3: Sharply developed science and technology qualification

- T3: Increasingly high and complicated requirements on workmanship

- O4: Low capacity of many power and - T4: Low and non-professional water construction companies training quality in Vietnam

- T5: Bank loan procedure and interest rate

- O6: Powerful globalization - T6: The State’s reduced investment capital of fundamental construction meanwhile the Project Owner’s poor financial potential

- O7: Population density and consumption culture of Vietnamese persons

- S1: Good relationship with the Government agencies, local authorities and customers

- S2: Human resources - W2: Low chartered capital

- S3: Prestige of enterprise - W3: Ineffective application of procedures and regulations

- S4: Good strategic vision, long term corporate development strategy

- S5: Capacity of plants and equipment

2.3.1 Develop matrix to select business strategy

Table 2.9: SWOT Matrix of SJE

- O1: Vietnam economy development with high growth rate and stable politics

- O2: Encouragement of developing small and medium hydropower plant, power industry infrastructure and urban infrastructure

- O3: Sharply developed qualification of science and technology, especially in the construction fields

- O4: Low capacity of many power and water construction companies

- O7: High population, high population density, consumption culture

- T2: Every-changing input material supply and price

- T3: Increasingly high and complicated requirements on workmanship

- T4: Low training quality in Vietnam

- T5: Bank loan procedure and interest rate

- S1: Good relationship with the Government agencies, clients, suppliers, credit Institutions and mass media

- S3: Good strategic vision, feasible business development strategy

Market expansion strategy, increase revenue and profit Particularly, expand the market with the competitive strengths,

Low cost competition strategy based on human resources, equipment, procedure and development scale

Internal factors well matched with the industry development trends

- S5: Capacity of plants and equipment

- S8: Although the Company's chartered capital is not high, the profitability against owner's equity is relatively attractive

- S9: High corporate social responsibility especially in the rural areas

S7 with O3, O6: S&T investment strategy, develop the product with high quality, ensuring the progress, offer good customer service to create the product difference, create the competitive advantages

- Combine S8 with O2, O4, O6, O7: Good financial strategy, mobilize to improve the Company’s financial capacity to ensure the stable and sustainable development

Difference-based competition strategy in terms of quality, progress and service

- Combine S1, S4 with T2: Supply source management strategy

- Combine S2 with T1, T3: Design an increasingly developed human resources management strategy

- W1: Not well-known Company trademark

- W3: Ineffective application of procedures and regulations

O1, O2, O3: Avoid price competition, specially focusing on S&T investment strategy to avoid loss on human resources and create the product differences

- Combine W1, W4 with O2, O4: Market expansion strategy to the remote areas where less competition is available

The aforesaid analysis revealed that a SWOT Matrix has been released to specify the Company’s strengths, weaknesses, threats and risks from the external environment The SWOT Matrix analysis shall be based to release the strategies to SJE by combining strengths with opportunities to minimize damages from external challenges, prevent the Company’s weaknesses out of the external challenges and overcome the weaknesses to seize opportunities By combining the strengths- of strategies, strengths- threats, weaknesses - opportunities, weaknesses - threats, the strategy is recommended by the author as follows:

- Market expansion strategy: It is formed from two combined groups, namely combination of S1, S2, S3, S4, S5 with O1, O2, O4 and combination of W1, W4 with O2, O4: Such combination may help the company to make use of market expansion opportunities to increase revenue and profit by exploiting the strengths such as good relationship with the Government agencies, human resources quality, strategic vision, the Company prestige in the construction industry, capacity of plants and equipment, etc., and overcome the shortcomings and weaknesses on financial positions, production management and control capacity, etc The strategy shall be both intensively and expansively expanded Thence, the market share expansion strategy may be designed to target the market segment that the Company has the strengths and big cities with high socio-economic growth rate By strengthening job looking in the areas where technical infrastructures of power, water supply and drainage system and hydraulic works are backward, the human resources with high qualification and extensive experience are worked with local personnel to effectively exploit the potentials in such localities As a result, development of such localities is facilitated in accordance with the master development plan

- Difference-based competition strategy: It is formed from the group combining W1, W4 and T1, T2, T3 Such combination helps the Company to create the competitive advantages from the difference through the product quality, implementation progress, product utilities, user performance, customer service, etc

Currently, the common situation shared by the Vietnam-based construction companies includes regular delay schedule, low workmanship According to unit’s available capacity, SJE shall invest into construction to create the difference in its products (for example: Investment in balloon-based wiring technology to construct the aerial wire lines, complicated terrain, etc.), ensuring progress, quality and technical-aesthetic features, good customer care services Moreover, the combination of S1, S3, S5, S6, S7, S8 with T1, T2 or W1, W2 with O1, O2, O3 is also applied with the strategy to create the product difference

- Low cost competition strategy: It is formed by combining S1, S2, S5, S6, S7, S8 with T1, T2: Such combination facilitates the Company to uphold its strengths such as human resources, equipment, effective management, resulting in cost savings to respond to the competitor’s challenges However, this is not SJE’s key strategy In the future, SJE is not targeted to low-cost competition against its competitors

- Supply source management strategy: It is formed from the group combining S1, S4 with T2: Such combination enables the Company to successfully improve the relatively restricted business accounting like now

- Human resources management strategy: It is formed from the group combining S2, with T1, T3: This is one of top priority strategies in the current period embraced by the Company Determining qualified human resources as the reliable background for the Company’s development, facilitating overcome the limitations on financial position, plants and equipment, etc The Company’s human resources shall be continued to be professionally invested and trained

Simultaneously, the “Source personnel selection” program shall be launched The selected persons are excellent, devoted and shared the same development orientation Surely, such human resources shall become the good managers, facilitating the Management to successfully launch the production and business activities in the divisions

2.3.2 Select business strategy 2.3.2.1 Selection basis

By applying SWOT analysis in combination with the internal & external factors, the proposed strategic solutions may be selected as follows: Target market expansion strategy; difference-based competition strategy; Low cost competition strategy; and production development strategy (relating to supply source management; human resources management)

Strategy selection is initiated by applying Quantitative Strategic Planning Matrix (QSPM) to help the strategists to objectively evaluate the possible strategies in accordance with the pre-determined internal and external critical success factors

According to the specific strategic solutions, QSPM Matrix is employed to select the best solution for SJE in the period of 2018- 2023:

Market expansion Differentiation Low cost

AS TAS AS TAS AS TAS AS TAS

Integrated, stable and developed politics and socio-economics of Vietnam

Demand of electric construction and installation market

The State policy on developing energy industry

Development of science and technology and technology application in the world

Pressure on increasingly cut-throat competition 0.15 2 0.3 2 0.3 3 0.45 3 0.45 Every-changing input material supply and price

The customer’s increasing high demand on product quality

Change in financial market interest rate 0.03 2 0.06 2 0.06 2 0.06 2 0.06

Production technology, plants and equipment 0.1 3 0.3 3 0.3 3 0.3 3 0.3

Capital mobilization from the stock market 0.05 2 0.1 2 0.1 2 0.1 2 0.1

(AS- Attractive score, TAS- Total attractive score)

QSPM Matrix unveiled that Market Expansion Strategy is given with the highest attractive scores, proving that such business strategy is feasible and deserved to be selected

Market expansion strategy with the highest scores of 6.15 demonstrated that this is the best strategy of SJE in this current context Basis to select the market expansion strategy is the strategy selected for SJE in the current period for some reasons as follows:

- Development potentials of the business fields:

+ For the construction and installation fields of power grid and transmission systems: In order to construct a synchronous infrastructure, it is required to ensure energy security as well as social security to serve for the economic development, construction industry and electric construction and installation in particular as the priority concern of the Party and the Government for years

It is possible to see that the power demand from now to 2023 is increasingly high The high investment demand on power source development project, power grid and transmission development projects is also specified in the 7 th Power Development Plan This is a great chance for the construction enterprises in general and SJE in particular

SOME POSSIBLE RECOMMENDATIONS TO LAUNCH SJE

SJE's objectives to 2023 with visions to 2030

With awareness of advantages, difficulties, challenges as well as strengths and weaknesses of the Company, some contents on SJE vision, missions and objectives in the period of 2018 - 2023 and orientations to 2030 are recommended as follows:

3.1.1 Objectives to 2023 3.1.1.1.Vision and missions

Become a local leading power and water construction company, available to undertake the power and water construction for the large scale hydropower plants, wire lines and transformer stations up to 500KV with modern technology and high quality; Undertake the EPC contract for the water supply & drainage systems in industrial parks, urban areas and construct the hydraulic works with high complexity and large scale

- Take economic efficiency as key measure to ensure the sustainable development, ensuring the good harmony of benefits between the enterprise, shareholders, and combined benefit groups during development

- Ensure increasingly high income for employees, attract talents with high expertise and qualification; improve the spiritual cultural life for the employees, create favorable conditions for the employees to work, engage and devote for the Company’s sustainable development

- Provide premium products, different in terms of technical functions, aesthetics and technology utilities to the highest satisfaction of the customers;

- Enhance the business cooperation position with the domestic and international partners

Phase 1 (2018 – 2020) - stable and development period:

* Complete the technical physical facilities:

- Invest in hi-tech physical facilities, technologies and different construction capacity to develop and expand SJE image and trademark;

- Refer to the existing conditions to maintain 1-3 Branches in some key economic zones to expand its business;

* Train and improve the human resources qualification:

- Train and improve the human resources qualification; gradually acquire the professional knowledge and expertise and international working capacity;

- Design and develop the treatment and talent attraction policies, ensuring the competition with other organizations

- Setup the expansive cooperation relation with the Vietnamese and international Project Owners, Principal Contractors; Involve in the Professional Associations to improve the Company prestige and cooperation and development capacity;

- Develop SJE brand in combination with other famous brands via investment cooperation and business activities;

- Create a humanism, friendly and community attachment brand for SJE

- Sharply apply IT in management and control, facilitating smooth, quick and effective communications at management levels, simplify the administrative procedures;

- Enhance the financial autonomy; increase the chartered capital by additionally issuing the shares, mobilizing the capital from the stock market

- Improve the financial picture by strengthening capital collection, payment acceptance, increasing inventory turnover, etc

* Form the product and service system and launch business:

- Sharply develop the electric construction and installation sectors for power grid and transmission system, transformer stations as well as construction, management and operation of power and water supply & drainage system to serve for hydropower plants

- Develop, construct and install the power and water systems in the industrial parks, urban areas gradually strengthen the construction of electric works in the hi- rise buildings, urban underground power network and water supply & drainage system in the cities; construct hydraulic works

- Raise some departments in the Company to a new height to raise the accountability and business capacity; continue studying to look for investment into some small and medium hydropower projects, Solar power plants in combination with job generation for the main business lines

In this phase, human resources, IT, products and services, etc., are basically completed Operation and growth should be focused by the Company

* Investment activities: Strengthen investment in improving the workmanship, creating the difference in technology, priority in investing the small and medium hydropower projects

* Business activities: Continue maintaining the traditional activities and strengthen launching the key products and services to create the new breakthrough

- Continuously invest in training and improving the human resources quality to launch the new business fields;

- Train and prepare the resources to study the solutions and products to obtain the breakthroughs when SJE is entered into the saturated phase

* Scalability: Continue enhancing the activities in the international and regional markets, focusing on new markets such as solar power and wind power, etc

Key economic index in the period of 2018 - 2023:

Strive to obtain the operating value to ensure the average annual growth rate of 10%-20%

Obtain total production and business value of over VND 1,350 billion

Obtain total revenue of VND 1,200 billion Obtain profit of VND 100 billion

Obtain value of capacity-building investment in the period of 2018-2023 worth approximately VND 150 billion

The business sector structure is described as follows:

- Value of constructing and installing wire lines, transformer stations, power transmission works, power systems: Making up 50% of total operation value

- Value of constructing and installing power works in the industrial parks, urban areas, high rise buildings, urban underground power system, making up 10% of total operation value;

- Value of constructing and installing water supply & drainage system in the industrial parks, urban areas, hydropower works and urban water supply & drainage system, making up 10% of total operation value;

- Value of industrial production and power business, making up 30% of total operation value

Construct and develop as one of the local and regional leading power and water service providers, taking construction of power works as the key Study, invest and cooperate to invest and develop the offerings to the highest satisfaction of the customers, uphold the resources, improve the competitiveness and prestige in developing SJE trademark in the marketplace

After a sharp growth period, the growth rate starts going down due to reaching the critical point on resources and restrictions on business model

Therefore, it is required to take the breakthrough renovations and reformation steps such as: Re-determine the target customers and market, expand operation to the international and regional market by gradually strengthening the business investment activities in Cambodia and Laos and studying to expand to new markets in the region such as Solar Power, Wind Power; Screen and manage risks for every aspects of the Company.

Recommendations on implementation solutions

3.3.1 Solutions on strategy and plan management

Currently, SJE is not supported by a separated department in-charge of strategy development and management The strategy development is assigned to the Economics Planning Department and only 5-10 year plans have just been designed

However, the strategy management is not really concerned, only generally

Therefore, SJE is required to establish the department in-charge of strategy development and management in accordance with the procedure: Situation analysis

- Target identification - Implementation - Evaluation and Control

- Management of situation analysis: In the ever-changing marker economy, SJE is required to quarterly analyze the situations of internal and external factors, affecting factors, strengths, weaknesses, opportunities and threats, etc., to identify the Company’s strategy to include the shortcomings to perfect Therefore, is is assumed to supplement the qualified human resources with good knowledge and capacity to analyze the strategy

- Management of target identification: From the above analysis, strengths, weaknesses, opportunities and threats are identified Accordingly, medium and long term strategies are designed or the strategy and plan adjustments are worked out to uphold the Company’s strengths, optimize the opportunities, and minimize the threats for further development

- Management of strategy implementation: Implementation is essential A good strategy and plan shall not deliver a sound result if it is not properly implemented Therefore, SJE must setup a scientific strategy program, procedure and budget, orienting towards the target system as set by the Company

- Management of evaluation and control: In an ever-changing environment, sometimes the Company’s strategy is no longer suitable Hence, it is required to evaluate whether such strategy is correct to timely take the corrective measures

Moreover, strategy is a measure to speed up and remind all employees to concentrate all efforts to successfully launch the strategy set by the Company

- Manage raw material supply source: The unexpected fluctuation of material price with the unstable exchange rate not only affect the production and business plan but also reduce the operating performance of SJE Delayed acceptance and capital collection result in late capital turnover, adversely affecting the material payments The recommended solution is: With a large number of Steel, Iron and Cement providers, in order to reduce the product price, negotiation should be made to purchase raw materials with the lowest price On the other hands, budget plan should be designed to take material plan to satisfy the production demand

- Goof production management: Damages caused by loss on norms and product defects should be minimized thanks to the system management Cost optimization is mainly initiated by productivity management to reduce the fixed costs per unit This largely decides the competitiveness and bid award capacity

- Reduce material loss norm: Material costs include: Main material costs (cement, steel, bolts, grounding wire, insulator and electric materials, etc.) and auxiliary materials (soldering rod, etc.) Loss rate should be minimized but the product quality is still assured by strict surveillance and management measures in accordance with the onsite production and construction procedure Transportation vehicles, earthworks and specific work volume should be optimized for each concrete block of foundation and column, etc

Finished products must be released with the highest quality and defective products must be minimized in accordance with the following procedures: Strictly adhere to the ISO 9001-2000 procedure: Check the product quality; the non- conformity product control procedure; preventative action procedure; corrective action procedure; strictly adhere to the State's acceptance procedure on power and water construction works

- Labor costs: Proper production organization should be made by arranging the proper production premises, locations of plants and equipment, production line assembly, outperforming the preparation of raw materials and site so that manpower is not waste Optimal method statements should be applied The unreasonable works should be minimized during production By saving labor costs, the productivity shall be increased, reducing fixed costs per unit

- Apply new technology: The new construction technology solutions should be worked out in accordance with the available background to increase the labor productivity and reduce price in using construction equipment The past time was recorded with the Leaders’ special concern about this solution of cost reduction and productivity improvement This was demonstrated by works undertaken by the company, recognized and highly evaluated by the customers Costs were saved for the Company thanks to the advanced method statements in the past time

- Market penetration: Mixed marketing policies are applied by SJE (with new advertisement campaigns to popularize the Company appearance; disseminating and enhancing the consumption network, etc.) to successfully attract the prospects, expand market share, attract customers of the competitors

Accordingly, SJE shall penetrate into the urban infrastructure traffic market in the areas Social policies for the poor shall be concerned in the places where the unit operates, occupying the relationship with the local persons and local authorities

- Customer care : SJE's available offerings are always perfected with the best quality and fastest progress with highest workmanship of workers and modern technology New techniques are studied to improve the quality and schedule to the highest satisfaction of the customer SJE always concerns and attentively listens to the partners’ and customer’s comments on the products offered by the company, even when it has been completed and put into operation for many years When technical cases are arisen to be handled beyond the warranty period, the Company is still enthusiastic and devoted to timely conduct troubleshooting for the Project Owner and clients, ensuring the company's prestige

- Product development: With the strengths in the fields of power and water construction, SJE continues upholding and expanding this market to successfully improve the corporate value and product development In addition to focus on perfecting the available product quality, SJE should take the bidding marketing policies for big projects as soon as possible Human resources should be regularly trained and improved to access to the projects

3.3.4 Solution group on human resources management

In the period of 2018 - 2023, some solutions should be outperformed by the Company as follows:

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