VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Nguyen Tien Dung FORMULATION AND CHOICE OF COMPETITIVE STRATEGY FOR GREEN FIBERBOARD JSC MASTER OF BUSINESS ADMIINISTRATION THESIS Hanoi 2009 VIET[.]
VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Nguyen Tien Dung FORMULATION AND CHOICE OF COMPETITIVE STRATEGY FOR GREEN FIBERBOARD JSC MASTER OF BUSINESS ADMIINISTRATION THESIS Hanoi - 2009 VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Nguyen Tien Dung FORMULATION AND CHOICE OF COMPETITIVE STRATEGY FOR GREEN FIBERBOARD JSC Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMIINISTRATION THESIS SUMMARY Supervisor: Dr Nguyen Viet Anh Hanoi – 2009 TABLE OF CONTENTS ACKNOWLEDGEMENTS …………………………………………………i ABSTRACT ……………………………………………………………….ii TÓM TẮT ……………………………………………………………… iv TABLE OF CONTENTS ………………………………………………… vi LIST OF ABBREVIATIONS …………………………………………… ix LIST OF TABLES ………………………………………………………….x LIST OF FIGURES ……………………………………………………… xi INTRODUCTION ………………………………………………………… Necessity of the Thesis ………………………………………………1 Research Purpose ……………………………………………………1 Research Scope ……………………………………………………… Methodology ………………………………………………………… Contribution of the Thesis …………………………………………….2 CHAPTER 1: LITERATURE REVIEW …………………………….… 1.1 Strategy Definition ………………………………………………….… 1.1.1 Vision ……………………………………………………………… 1.1.2 Mission …….………………………………………………………… 1.2 External Analysis ……………………………………………………….4 1.2.1 Macro Analysis ………………………………………………….… 1.2.1.1 Economic …….………………………………….………………… 1.2.1.2 Politics …….…………………………………….………………… 1.2.1.3 Socials …….……………………………………………………… 1.2.1.4 Technology …….……………………………………….…………….7 1.2.2 Micro Analysis … ……………………………………………………7 vi 1.2.2.1 Potential Competitor …….……………………………………………8 1.2.2.2 Rivalry among Established Companies …… ……………………….9 1.2.2.3 The Bargaining Power of Buyers ……… ………………….….…….9 1.2.2.4 The Bargaining Power of Suppliers ………………………… …….10 1.2.2.5 The Threat of Substitute Products ………………………………… 10 1.3 Internal Analysis …………………………………………………….…11 1.3.1 Value Chain Model … ………………………………………… ….11 1.3.2 Identify Competitive Advantage - Key Success Factors … ….….….15 1.4 Core Competences …………………………………………….…….….16 1.5 Competitive Strategy ………………………………………….…….….17 1.5.1 Cost leadership Strategy … ……………………………….……… 18 1.5.2 Differentiation Strategy … ……………………………….……….…20 1.5.3 Focus Strategy … …………………………………….………….… 21 1.6 SWOT’s Analysis to Formulate Competitive Strategy ……………… 23 CHAPTER 2: ANALYSIS GREEN FIBERBOARD’S SITUATION ….26 2.1 Introduction about the Green Fiberboard JSC …………………….……26 2.2 Analysis of Wood Industry ……………………………………….…….26 2.3 Forecast the development direction (Opportunity & Threats) …….……28 2.3.1 External Analysis in Artificial Wood Industry - PEST Model 28 2.3.1.1 Economic ………………………………………………….……… 28 2.3.1.2 Politics … ………………………………………………… 31 2.3.1.3 Socials … …………………….……………………………….……33 2.3.1.4 Technology … …………………………………………… …….33 2.3.1.5 Integration … ………………………………………………… 34 2.3.2 Internal Analysis in Artificial Wood Industry - Five Forces Model .35 2.3.2.1 Rivalry among Established Companies … …………… …… …35 vii 2.3.2.2 Potential Competitors … ………………………………………… 38 2.3.2.3 The Bargaining Power of Buyers … ………………………………40 2.3.2.4 The Bargaining Power of Suppliers … ……………………………40 2.3.2.5 The Threat of Substitute Products …… ………… ……………….42 2.4 Value Chain Analysis for Green Fiberboard JSC……… ……… ……43 CHAPTER 3: PROPOSE SOLUTION FOR GREEN FIBERBOARD 50 3.1 Orient the development strategy for Green Fiberboard JSC …………50 3.1.1 Vision …….………………………………………………….……… 50 3.1.2 Mission …….……………………………………………….…………50 3.1.3 Value …….……………………………………………………………50 3.1.4 Green Fiberboard’s Objectives to 2012 …… ……………… …… 50 3.2 Key Success Factors … ……………………………………………… 52 3.3 SWOT Analysis to Formulate Green Fiberboard’ Strategy ………… 53 3.4 Select the Competitive Strategy for Green Fiberboard JSC ………… 54 3.4.1 Focus Differentiation Strategy (S-O Strategy) …….………………….54 3.4.2 Average Pricing Strategy (S–T Strategy) …….……………………….54 3.4.3 Distribution Channel Development Strategy (W– O Strategy) … … 55 3.4.4 Branding Strategy (W– T Strategy) …….………………………… …55 3.5 Developing Competitive Strategy for Green Fiberboard JSC …………56 3.5.1 Average Pricing Strategy ((S-T Strategy) … ……………………… 56 3.5.2 Focus Strategy (S-O Strategy) …………………………………… …61 3.5.3 Distribution Channel Development Strategy (W-O Strategy) … ……63 3.5.4 Branding Strategy (W-T Strategy) … ……………………………….64 3.6 Conclusion …………………………………………………………… 65 REFERENCE viii LIST OF ABBREVIATIONS GF Green Fiberboard MDF Medium Density Fiberboard HR Human Resource JSC Join Stock Company FSC Forest Steawardship Council WTO World Trade Organization R&D Research and development KSF Key Success Factor BEPL Bajaj Eco-Tec Products Ltd FDI Foreign Direct Investment CPI Consumer Price Index PMDI Polymeric Methylene Dyphenyl Diisocyanates ix LIST OF FIGURES FIGURE 1.1: FIVE FORCES MODEL BY MICHAEL PORTER ………… FIGURE 1.2: VALUE CHAIN …………………………………….………11 FIGURE 1.3: PROCESS TO IDENTIFY COMPETITIVE ADVANTAGE 15 FIGURE 1.4: ORGANIZATIONAL OBJECTIVES …………………….24 FIGURE 2.5: VALUE CHAIN ANALYSIS FOR GREEN FIBERBOARD JOIN STOCK COMPANY ……………………………….….……….… 43 FIGURE 2.8: MDF PRODUCTION PROCESS… ……………………….45 FIGURE 2.10: GREEN FIBERBOARD’S MANAGEMENT CHART…….48 FIGURE 2.11: PRODUCTION UNIT CHART… …………………………49 FIGURE 2.12: GREEN MDF STRATEGIES .………………………….53 xi LIST OF TABLES TABLE 2.1: GDP GROWTH RATE FROM 2002 TO 2007………………28 TABLE 2.2: ANNUAL INFLATION FROM 2002 TO 2007 ……………29 TABLE 2.3: THE QUANTITY OF MDF IMPORTED IN 2007 ……… 30 TABLE 2.4: LIST OF SUGAR PLANTS AND BAGASSE ELIMINATED ……………………………………………… 41 TABLE 2.5: EVALUATE OPPORTUNITIES AND THREATS …………42 TABLE 2.7: MDF PARAMETER …….……………………………………44 TABLE 2.8: GREEN FIBERBOARD’S AGENTS ……………………….46 TABLE 2.9: TOTAL OF GREEN FIBERBOARD’S HUMAN RESOURCES …………………… …………………………….47 TABLE 3.1: GREEN FIBERBOARD’S OBJECTIVES TO 2012………….51 TABLE 3.2: DESCRIPTION OF AVERAGE PRICING STRATEGY ….56 TABLE 3.3: GREEN FIBERBOARD’S MDF PARAMETER ……………59 TABLE 3.4: DESCRIPTION OF FOCUS STRATEGY … ………………61 TABLE 3.5: DESCRIPTION OF DISTRIBUTION CHANNEL DEVELOPMENT STRATEGY ……………………………………… ….63 TABLE 3.6: DESCRIPTION OF BRANDING STRATEGY …………….64 x INTRODUCTION Necessity of the Thesis Vietnam has transformed in two decades of rapid It has opened its door to the outside world and liberalized its economy Over past decade, annual growth has average 7.5% More and more, the quality of life is improved and high Foreign investment is pouring in recent year and the competition in between domestic and oversea firms is fiercely Many enterprises are lacked of competitive competencies and strategy in the integrated economy Facing with the above opportunities and threats, the organizations and firms need to try their best to exist in the severe and violent environment With desire of developing appropriate business strategy for Green Fiberboard JSC, my thesis concentrates to the Competitive Strategy Purpose This thesis aims to find the strengths and weakness, the oppotunities and threats that Green Fiberboard needs to implement and face It also evaluates the effect of internal enviroment and external enviroment to the firm and base on the evaluation it will propose competitive strategy that is suitable for Green Fiberboard Join Stock Company Research Scope Thesis only centers the factors that effect to the production capacity of Green Fiberboard and then implement to formulate competitive strategy for this company Methodology The methodology will be base on by collecting data from newspapers, magazines, and internet, reviewing all the studies related to competitive strategies Statistic method is use to find the trends and characteristics for analysis factors Quantitative survey can help to find out directors’ opinions on the Green Fiberboard operation Contribution of the Thesis The student hopes this thesis will help other students who are interested in researching on the competitive strategy in future And the most important thing is that this thesis can help Green Fiberboard JSC., having a competitive strategy for its development