Business strategy direction for vietnam singapore feeder service of vinalines container shipping company

i ACKNOWLEDGEMENT In oder to finish this thesis and EMBA course also, I have received a lot of supporting from many people I would like to take this opportunity to thank all those who in many ways have helped me complete the Master program Associate Prof PhD Vu Thanh Hung is teacher who taught international management object and also supervise me to conduct this thesis I admire his knowledge and devotion for me I would like to thank all my professor of EMBA course, who have trained and help me to improve my knowledge on business management And in fact is that I have applied it for my work effectively I also have received supporting from experts, interviewees, coworkers, and class – mates I would like to express to heartfelt thanks them who have worked hard with me in during last time to finish this thesis Finally, I want to save deeply thanks for my family It is impossible for me to finish this thesis without supports of them My husband has helped me to solve all of housework just only his Especially is my daughter who creates motivation for me to overcome difficulties to solve well my family, work, and study at the same time ii TABLE OF CONTENT ACKNOWLEDGEMENT i TABLE OF CONTENT .ii ABBREVIATION LIST OF FIGURE .2 LIST OF TABLE .3 CHAPTER 1: INTRODUCTION .8 1.1 Rationales 1.2 Research objectives 1.3 Scope of research 1.4 Research Methodology 10 1.4.1 General methods of the research 10 1.4.2 Methods of collecting data and development of research instrument 10 1.4.3 Data analyzing methods 11 1.4.4 Summary 12 1.5 Structure outline 12 CHAPTER 1: THE THEORETICAL BACKGROUND FOR STRATEGIC DIRECTION .13 2.1 Strategy concepts 13 2.1.1 Strategy definition 13 2.1.2.Vision statement 13 2.1.3 Mission statement 13 2.1.4 Strategic objectives 14 2.1.2 Strategy levels 14 2.2 Business generic strategies 16 2.2.1 Cost leadership strategies 17 2.2.2 Differentiation strategies 17 2.2.3 Focus strategies 17 2.3 Strategy formulation .18 2.3.1 Formulation model 18 2.3.2 External business environment analysis 19 2.3.3 Internal business environment analysis 24 2.3.4 Strategic decision - TOWS matrix 29 CHAPTER 3: STRATEGY ANALYSIS FOR VCSC 30 3.1 Introducing the VCSC’s background .30 iii 3.1.1.The history and development progress of VCSC 30 3.1.3 Organization Struture of VCSC .32 3.1.2 The human resource of VCSC 32 3.1.3 The business result of VCSC in the period 2009-2010 33 3.2 Business environment analyses .34 3.2.1 Overview of container feeder service 34 3.2.1.1 Containerization 34 3.2.1.2 Feeder services 36 3.2.2 External analysis of VCSC 37 3.2.3 Internal analyses .62 CHAPTER 4: BUSINESS STRATEGY DIRECTIONS FOR VIETNAM – SINGAPORE FEEDER SERVICE OF VINALINES CONTAINER SHIPPING COMPANY .76 4.1 Vision, mission, and business objective 76 4.1.1 The Company Vision .77 4.1.2 The Company Mission .77 4.1.3 Business objectives 77 4.1.4 Identifying the current business strategy of VCSC 78 4.2 Business strategic directions for Vietnam - Singapore 79 4.2.1 TOWS matrix analyse .79 4.2.2 Main business strategy directions for VCSC 80 4.3 Main business strategy solutions for VCSC .83 4.3.1 The solutions about finance 83 4.3.2 The solutions for customer .85 4.3.3 The solution of management 88 4.3.4 The solution about learning and growth 88 CONCLUSION 89 LIST OF REFERENCES 90 ABBREVIATION APEC ASEM BCG GDP HAN Asia – Pacific Economic Co-operation Asia – Europe Meeting Boston Consultant Group Gross Domestic Product Ha Noi HKG Hongkong SIN HCM HPH IT PEST PLC R&D SBU SWOT TEUS VCSC VINALINES WTO Singapore Ho Chi Minh Hai Phong Information system Political, Economic, Society, Technology Product life cycle Research & Development Strategic business Unit Strength, Weakness, Opportunity, Threat Twenty – foot equivalent units Vinalines Container Shipping Company Vietnam National Shipping Company World trade organization LIST OF FIGURES Figure 1.1: Research Methodology .12 Figure Three generic strategic 16 Figure 2 A schematic of the strategic process 18 Figure 2.3 PEST model 20 Figure 2.4 Five Forces Analysis 23 Figure 2.5 The generic value chain 26 Figure 3.1 The structure of VCSC 32 Figure 3.2 Vietnam GDP Growth Rate 2006-2010 43 Figure 3.3 Foreign Direct Investment in Vietnam (FDI) 45 Figure 3.4 Top 20 foreign investors in Vietnam in 2010 45 Figure 3.5 Vietnamese exports from Singapore in 2010 .51 Figure 3.6 Vietnamese imports to Singapore in 2010 52 Figure 3.7 Number of TEUs sent per month of enterprises 57 Figure 3.8 The demand of capacity for VSX services 57 Figure 3.9 Customer requirement for VSX services .58 Figure 3.10 The fleet of VCSC 64 Figure 3.11 The capactity of VCSC for curentcy service 64 Figure 3.12 The structure of Marketing Department in VCSC .70 Figure 4.1 Customer satisfaction 87 LIST OF TABLES Table 3.1 Business result of Vinalines Container Shipping Company in 2009, 2010 34 Table 3.2 Import- Export between Vietnam and Singapore .51 Table 3.3 VCSC - Rivalry among existing firms .55 Table 3.4 VSCS’s extenal matrix 61 Table 3.5 Schedule in time as announcement 66 Table 3.6 Responsiveness of VCSC .67 Table 3.7 The VSCS’s human resource 73 Table 3.8 VCSC’s internal matrix 75 Table 4.1 Combination of TOWS matrix for VCSC .79 Table 4.2 Technical condition of three vessels 84 EXECUTIVE SUMMARY Vinalines Container Shipping Company (VCSC) is a branch of Vietnam National Shipping Lines (Vinalines) – one of top state- owned general companies This company is established to specialize in container shipping field and to develop as one of Vinalines’ top strengths Vinalines as well as VCSC has some preparation in last few years such as budget accumulation, close relationship with many Singapore Agents, building up relationship with some Main Line Operators (MLOs) via Hong Kong- Vietnam service as potential customers in the new service, training employees, opening a Vinalines’ Singapore representative office A suitable business strategy choice which meet to business environment in new period, VCSC will suffer loss in the first period and optimize potential profit in the future It will also help VCSC to achieve a this goal as well as survive and develop in this competitive market in the difficult condition of economic crisis The thesis “Business strategy Direction for Vietnam - Singapore feeder service of Vinalines Container Shipping Company” will solve the problem which was identified above In order to summary the relevant theories of strategy to implicate Vietnam Shipping market analysis The thesis has present some basic strategy concepts consist of strategy definition, vision and mission statement, strategy levels, business generic strategies Next, in the part of internal and external business environment to identify strengths, weaknesses, oppotunites, threats of VCSC Nowadays, the shipping area is considered becoming more stable, open and transparent in the coming period: - The Vietnamese Government has introduced many policies to support and drive the development of the shipping and feeder area However, risks and shortcomings are required to be amended and modified by the Government to obtain a unified legal framework for boosting Vietnam economic growth - With the economic restructuring and liberalization, Vietnam anticipates the fastest period of growth with long-term sustainable market expansion, higher manufacturing output and investment opportunities The structural transformation has contributed greatly to the overall growth and prosperity of the country The performance of the service sector has been particularly significant - Furthermore, it can be seen that rise in inflation has been a major concern for Vietnam in the recent past High consumer prices of goods and services had adverse effects on the life of almost people - Awareness of this risk, the Government has stimulus financial packages, flexible financial and credit policies to curb inflation, stabilize macro-economy, and ensure social security and sustainable growth In conclusion, the shipping and marina field were expected to be one of the most developed sectors in the coming year, when urbanization increased and the infrastructure systems were more developed Obviously, industrialization trend will create higher demand for shipping services This shall open chance for VCSC development in the near future On the other hand, through the survey, VCSC needs to improve its services to attract customers in the current market With well-trained staff, high quality imported equipments and multinational clients, the project brings clients professional business environment and finest administrative support VCSC always aims at perfection in all of its services and in search for a perfect way for its customers and partners’ satisfaction, with respect to fairness to make sure high quality services In the near future, marine shipping area will become a rich potential area The prospects for long-term development of marine field in Vietnam are fairly good It is clearly that the market seeing signs of recovery and may be boomed in the coming years According to the survey results and in consideration to existing competitors, threats of new entrants, bargaining power of suppliers, threat of substitute products, bargaining power of buyers, VCSC will still have much room to compete with other rivals in the same market segment Despite of the challenges, VCSC will take advantages of many opportunities in the future in the context of the fierce competition VCSC has enough capabilities, resources, experience and competences to deploy the developed project as well as to carry out the marine services to the successful path Despite of some weaknesses, VCSC still gains and owns its strengths to overcome its shortcomings to strongly compete with other competitors in the same industry to strive for its success and growth By taking advantages of its strengths and by making full use of the opportunities, VCSC will try its best to avoid the threats as well as to mitigate its weaknesses for strong and sustainable development in the future Finally, the thesis also propose business direction strategies for Vietnam Singapore feeder service of Vinalines Container Shipping Company The business development strategy of the company during the period 20112015 is one of the determinants of the success of a business in the market's development strategy The strategy developed will ensure long term competitiveness of enterprises and ensure business sustainability Development strategy of business reflects the vision of the managers for the operation of the enterprise in a casual environment Corporate finance is the focus of the planned activities of the enterprise Along with the financial plan, the plan will be established to ensure the enterprise to achieve the desired objectives During the period 2011-2015, the VCSC formulated development strategies are as follows: " Broading and soliding growth in domestic market, cooperating actively with foreign counterparts, striving to put the VCSC become the Main Line Operation (MLO) by 2015" Main business strategy directions for VCSC which be proposed by the thesis are: - Increase investment & growth to expand market share - Improving quality and good services to develop brand image - Cost leadership strategy based on standard service quality - Building comprehensive organization structure, consolidate all departments, train & developing human resources - Strengthen connection with local, main lines operator and foreign partners The thesis also presents some main business strategy solutions for VCSC in financial, customer, internal and growth aspects Due to the time constraint, the thesis has not solved some opening issues: - In reality, many risks which may occur to the vessel during the operating such as technical troubles, crew matter, act of God, sea accidents, and detention or arrest which much affect to vessel’s schedule or cargo operation What are the risks VCSC may face for this feeder service and measures to protect and restrict risks happened - At present, in Vietnam- Singapore service, most of competitors have about two sailings per week As a new comer, VCSC can not canvass full cargoes for two vessels in the first years In the nutshell, opening Vietnam – Singapore service will meet much competition, which requires VCSC to consider carefully many aspects One of them is the vessel’s option The above analysis shows that the different vessel’s option leads to different business results The project gave some useful recommendations for VCSC to get high profit as well as achieve the company vision and mission in the recent future