NATIONAL ECONOMICS UNIVERSITY NEU BUSINESS SCHOOL PHAN LE HOANG LINH Business strategic direction for raw tobacco of Ngan Son Joint Stock Company to 2025 Hanoi 2018 ii NATIONAL ECONOMICS UNIVERSITY NE[.]
NATIONAL ECONOMICS UNIVERSITY NEU BUSINESS SCHOOL - - PHAN LE HOANG LINH Business strategic direction for raw tobacco of Ngan Son Joint Stock Company to 2025 Hanoi - 2018 NATIONAL ECONOMICS UNIVERSITY NEU BUSINESS SCHOOL - - PHAN LE HOANG LINH Business strategic direction for raw tobacco of Ngan Son Joint Stock Company to 2025 Supervisor: PhD LUONG THAI BAO Hanoi - 2018 ACKNOWLEDGEMENT First and fore most I offer my sincerest gratitude to all Professors of Business School, National Economics University (BSNEU) for giving me knowledge that is used as basement for my thesis I am heartily thankful to my supervisor, PhD Luong Thai Bao whose precious patience, valuable guidance and support from the initial to the final level enabled me to develop an understanding of the subject, thereby applying knowledge into real cases throughout my thesis Without his encouragement and effort, this thesis would not have been completed or written One simply could not wish for a better or friendlier supervisor Secondly, I would like to express my big thank to managers and employees at Ngan Son Joint Stock Company for their persistent support and contribution to put all knowledge into real cases throughout this thesis Last but not least, I offer my regards and blessings to my family, my friends and all of those who supported me in any respect during the completion of the thesis Hanoi, December 2018 Phan Le Hoang Linh TABLE OF CONTENTS ABBREVIATIONS LIST OF TABLES LIST OF FIGURES EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Research objectives 1.3 Research questions 1.4 Research object and scope .8 1.5 Research methodology .8 1.5.1 Research process 1.5.2 Data collection and processing 1.6 Research structure CHAPTER 2: THEORETICAL BACKGROUND ON BUSINESS STRATEGY 10 2.1 Definition of business strategy 10 2.2 Relationship between business strategy and other strategies 11 2.2.1 Company strategy .11 2.2.2 Business strategy (Competitive strategy) 12 2.2.3 Function strategy 12 2.3 Process to direct the business strategy 13 2.3.1 Identify the mission of the business 13 2.3.2 Define business goals .13 2.3.3 Analyze internal and external environment 14 2.3.4 Develop business strategy 19 2.3.5 Make solutions to implement business strategy .20 2.3.6 Evaluate the effectiveness of strategy 20 2.4 Factors affecting business strategy 20 2.4.1 Internal environmental factors 20 2.4.2 External environmental factors 21 2.5 Matrices and how to choose a business strategy 22 2.5.1 External Factor Evaluation (EFE) matrix 22 2.5.2 Internal Factor Evaluation (IFE) matrix 23 2.5.3 SWOT matrix 24 2.5.4 QSPM matrix 25 2.6 Some experiences in building business strategy 27 CHAPTER 3: ANALYSIS OF FACTORS AFFECTING BUSINESS STRATEGY FOR RAW TOBACCO OF NGAN SON JSC 28 3.1 Overview of Ngan Son Joint Stock Company .28 3.1.1 History of establishing, construction and development 28 3.1.2 Role of Ngan Son Joint Stock Company in the tobacco industry of Vietnam 29 3.1.3 Organizational structure and functions .30 3.1.4 Process of technology, main products of the company 34 3.2 Business analysis 35 3.2.1 Analysis of external environment .35 3.2.2 Analysis of internal environment of Ngan Son Joint Stock Company .46 3.2.3 Analysis of overall development environment and identify opportunities and challenges .74 3.2.4 Analyzing the SWOT matrix of Ngan Son Joint Stock Company and suggesting the main business strategies for the company 77 CHAPTER 4: BUSINESS STRATEGY DIRECTION FOR RAW TOBACO NGAN SON JOINT STOCK COMPANY 84 4.1 Basic contents of the strategic framework .84 4.1.1 Mission .84 4.1.2 Vision 85 4.1.3 Core values .85 4.1.4 Strategic objectives 86 4.1.5 Business strategy direction .87 4.2 Strategy selection by using QSPM matrix .87 4.3 Specific strategic direction .94 4.3.1 Strategy on restructuring management system and human resources 94 4.3.2 Improving quality and stability of the material growing area strategy .97 4.3.3 Product diversification and recycling of post-processing tobacco waste strategy 98 4.3.4 Strategic pricing 98 4.3.5 Market development strategy 99 4.3.6 Ensuring financial resources strategy .100 4.3.7 Studying and applying scientific and technical advances strategy 101 4.4 Solutions, organization and roadmap to implement the strategic orientations of the company 102 4.4.1 Solutions for restructuring to improve the effectiveness of corporate governance 102 4.4.2 Solutions for development of raw material areas 105 4.4.3 Solutions for product pricing in the direction of enhancing competitiveness 105 4.4.4 Solutions for linking investment in production with consumption of new and breakthrough products .106 4.4.5 Solutions for domestic market development and export 106 4.4.6 Solutions for capital and finance 107 4.4.7 Solutions for research and application of scientific and technological advances 109 4.4.8 Solutions for investments in equipment, new technologies and renovating, upgrading production lines in operation 110 CONCLUSION 111 LIST OF REFERENCES 112 APPENDIX 1: IN-DEPTH INTERVIEWS FOR EXPERTS ON INTERNAL FACTOR EVALUATION 114 APPENDIX 2: IN-DEPTH INTERVIEWS FOR EXPERTS ON EXTERNAL FACTOR EVALUATION 116 APPENDIX 3: SURVEY RESULTS FOR ATTTRACTIVENESS OF EXTERNAL FACTORS 118 APPENDIX 4: SURVEY RESULTS FOR COMPANY’S RESPONSE LEVEL TO EXTERNAL FACTORS .120 APPENDIX 5: SURVEY RESULTS FOR ATTTRACTIVENESS OF INTERNAL FACTORS .122 APPENDIX 6: SURVEY RESULTS FOR COMPANY’S RESPONSE LEVEL TO INTERNAL FACTORS .123 ABBREVIATIONS ADMIN : Administration ASEAN : Association of South East Asian Nations BAT : British American Tobacco BSC : Balanced Scorecard System BSNEU : Business School, National Economics University CPI : Consumer Price Index DEPT : Department GDP : Gross Domestic Product FDI : Foreign Direct Investment HR : Human Resources HS : Harmonized System ISO : International Organization for Standardization IT : Information Technology JSC : Joint Stock Company KPI : Key Performance Indicators NGP : Next Generation Products ORG : Organization PEST : Political, Economic, Socio-cultural, Technological PMI : Phillip Morris International PR : Public Relations R&D : Research & Development ROA : Return on Assets ROE : Return on Equity ROS : Return on Sales SWOT : Strengths, Weaknesses, Opportunities and Threats VINATABA : Vietnam National Tobacco Corporation LIST OF TABLES Table 2.1: PEST analysis 17 Table 2.2: External factor evaluation matrix 23 Table 2.3: Internal factor evaluation matrix 24 Table 2.4: SWOT matrix 25 Table 2.5: QSPM matrix 26 Table 3.1: External Factor Evaluation of the Company 45 Table 3.2: Real estate status and depreciation of Ngan Son Joint Stock Company 47 Table 3.3: Actual use of capital in production and business 48 Table 3.5: Labor productivity statistics 60 Table 3.6: Profit of the company in the period of 2012 - 2016 63 Table 3.7: Financial indicators in production, business and service activities .64 Table 3.8: Internal Factor Evaluation (IFE) of the Company 73 Table 3.9: SWOT matrix analysis of the company 78 Table 4.1: The QSPM matrix for the SO - WO strategy group 88 Table 4.2: The QSPM matrix for the ST - WT strategy group .92 LIST OF FIGURES Figure 1.1: Research process Figure 2.1: Business strategic planning process .13 Figure 2.2: Operating environment of the business 14 Figure 2.3: Porter’s five-force model 18 Figure 3.1: Structure of Ngan Son Joint Stock Company .31 Figure 3.2: Production - consumption process of tobacco raw materials .34 Figure 3.3: Vietnam's average GDP for the period of 2015 - 2016 37 Figure 3.4: Ownership of shares by shareholders (January 2017) 50 Figure 3.5: Owner’s equity and charter capital of the company in the period of 2010 – 2016 50 Figure 3.6: Movements of inventory, fixed assets and liabilities 51 Figure 3.7: Investment area and procurement volume 54 Figure 3.8: Profit structure in the period of 2012 - 2016 64 Figure 3.9: Financial indicators 65 ... activities of raw tobacco of Ngan Son Joint Stock Company - To direct the strategy for raw tobacco of Ngan Son JSC from 2019 to 2025 - To propose strategic solutions to develop production and business. .. processing raw tobacco (supply of tobacco) of Ngan Son Joint Stock Company - Research scope: The operation of Ngan Son Joint Stock Company? ??s raw tobacco with being compared and reconciled in relation to. .. strategy for raw tobacco of Ngan Son JSC from 2019 to 2025 To propose strategic solutions to develop production and business activities for raw tobacco of the company to 2025 With regards to meet