STRATEGIC MANAGEMENT VIETTEL TELECOM GROUP STUDENT ID STUDENT NAME 17 EXECUTIVE SUMMARY Management is a process of manipulating various functions into a big picture of a business A Strategic managemen[.]
STRATEGIC MANAGEMENT VIETTEL TELECOM GROUP STUDENT ID STUDENT NAME EXECUTIVE SUMMARY Management is a process of manipulating various functions into a big picture of a business A Strategic management requires managers to combine all range of business sectors into a set of identification which is to identify the strengths to maintain and the weaknesses to improve of an organization This essay is a strategic analysis of Viettel telecom Group into its internal and external environment The result of this essay is to express the suggestion to Viettel managing board the strategic implementation process This process aims to maintain the leading position of Viettel within the domestic and international markets, and improve the management policies for future development TABLE OF CONTENTS EXECUTIVE SUMMARY .1 TABLE OF CONTENTS INTRODUCTION .4 VIETTEL - BUSINESS ANALYSIS 2.1 Overview about Viettel - Business nature 2.1.1 Vision 2.1.2 Mission 2.1.3 Structure of the ownership 2.1.4 Core competencies .6 2.1.5 Economic objectives 2.2 Balanced Scorecard 2.3 PESTLE analysis .8 2.3.1 Political factor 2.3.2 Economic factor 2.3.3 Social factor .9 2.3.4 Technological advance .10 2.3.5 Legal factor 10 2.3.6 Environmental factors 10 2.3.7 Overall discussion 11 2.4 Porter’s Five Forces model analysis 11 2.4.1 Explanation of competitive forces 11 2.4.2 Threat of substitute 11 2.4.3 Industry rivalry 12 2.4.4 Power of buyer 12 2.4.5 Power of supplier .12 2.4.6 Threat of new entry 12 2.5 Strategy implementation method .12 2.5.1 Conduct annual goals setting 13 2.5.2 Conduct policy setting and support plan 13 2.5.3 Development of action plans, budgets and implementation process 13 2.5.4 Allocation of human resources, finance, facilities 13 2.5.5 Strategic commitment and implementation 13 2.5.6 Strategic inspection control, evaluation and adjustment in the implementation process 14 Recommendation and conclusion 15 3.1 Recommendation .15 3.1.1 Maintain the investment on expansion and the improvement of customer service quality and capabilities 15 3.1.2 Strategic plan of pricing policies for competitiveness and service flexibilities 15 3.1.3 Improving service quality via human resource strategic management toward changes 15 3.1.4 Financial management solution 16 3.1.5 Marketing solution 16 3.2 Conclusion .16 REFERENCES 17 INTRODUCTION In today's dynamic market economy, the sustainability growth of a business requires a set of strategic management to ensure its presence in the marketplace Literally, strategic management is considered as the process in which the manager formulates and allocate resources in order to achieve a goal of developing competitive advantages within the specific industry (Cox, Daspit, McLaughlin and Jones, 2012) This purpose of strategic management is to help an organization to plan for its future development and fulfill the gaps within the firm’s responsibilities This plan is also considered as the direction for the organization and employees movement The result from implementing the strategic management would be a greater operational efficiency, market share and profitability In this report, Viettel Telecom Group is taken into consideration for the strategic management analysis There would be a top down analysis, from external environment analysis to internal environment analysis in order to figure out the appropriate balanced scorecard and strategic implementation of Viettel Telecom Group VIETTEL - BUSINESS ANALYSIS 2.1 Overview about Viettel - Business nature In Vietnam, a shift from the command market to the market economy, domestic companies have faced many challenges in important administrative management Organizations need to check and build critical equipment to be flexible enough to respond to market changes Business processes must be identified based on the results of the survey and the strengths, weaknesses, quality and shortcomings of the business must be estimated to help the organization obtain general data about business situations outside and inside the organization The Vettel Group is one of the effective models for adapting to the market economy In the past, Viettel was a small organization with many troubles and no market-known brands Nowadays, It is currently one of the leading providers of media telecom services in Vietnam and on its way to the international market In Viettel's achievements, brand positioning has developed to the extreme 2.1.1 Vision A pioneer in modern and innovative technology applications, groundbreaking provider of solutions create new high-quality products and services at affordable prices to meet the needs and options of customer expectations (Vietteltelecom.vn, 2019) Being born in difficult circumstances with the spirit of soldiers, Viettel is not afraid of difficulties to reach out to distant lands, with philosophy "to the death to seek the way to survive" is well aware in the business, along with the attention and deep understanding of customers to continuously improve their products and services, Viettel is introducing its best to the world 2.1.2 Mission Caring innovator - Creativeness is to serve human beings 2.1.3 Structure of the ownership Viettel is a defense economic enterprise with 100% state capital and is owned by the Ministry of National Defense The leadership apparatus has included Major General Le Dang Dung the company general manager and deputy general directors with the highest management function of the board of directors of the corporation There are five deputy directors of the Viettel Telecom Group Vietnam has assigned roles and responsibilities for the four major sectors of the Viettel Telecom Group Master Plan, which is domestic communications management, global market management, research and development management, and relationship management Its main role is in military status 2.1.4 Core competencies Practice is the standard for truth testing Mature through challenges and failures Quickly adaptive to change is the power of competitiveness Creativeness is to survive System of reflection East-West combination Tradition and method of soldier Viettel is a shared house Business philosophy 2.1.5 Economic objectives Viettel Telecommunications Group continues to expand aggressively to a larger scale In particular, in 2010, an increase of 16300 2G and 3G stations, accounting for 45% of the total number of existing stations of the total number of other mobile information service providers in Vietnam Moreover, Viettel Telecom Group promises to increase investment in optical networks nationwide This shows that, despite being a state-owned enterprise, Viettel has an effective strategy to become a leader in the telecommunications network infrastructure in Vietnam and in other invested countries Overall, although Viettel has been a late participator in the telecommunication sector, it has been ranked the first place in domestic, Vietnam market, as well as the winner in terms of telecom subscription in Cambodia and Lao The previous report in 2010 recorded the revenue in Cambodia reached $161 million and $61 million respectively Also in this year, telecom operator Metfone (Viettel's brand in foreign markets) received the award for the best service provider of the year form Frost & Sullivan Following successful strategies and tactics in the international market, Viettel Telecom Group is pushing to invest in new markets over Asia, the Americas and Africa 2.2 Balanced Scorecard Balanced scorecard is a system of strategic planning and management, used by business, nonprofit and governmental organizations to guide business operations according to vision and strategy of the organization, improve the efficiency of internal and external marketing, track the performance of the business compared to the target (Kaplan and Norton, 1996) Financial performance and the use of financial resources Financial measures include factors such as fixed costs, depreciation expenses, return on investment, profits earned, revenue growth Organizational performance from the point of view of the customer Customer satisfaction is an indicator of business success, because it directly affects both current and future revenue This measure is to answer the question: How are customers seeing the business? The quality and efficiency related to our product or services This scorecard refers to the internal business process The indicators in this scorecard allow managers to understand the business situation, and whether the product or service meets the needs of customers Signs of a smooth operating business are gathered from many small indicators such as the growth rate of scale, the increase in the number of employees attached to the work, and the percentage of time for handling official duties are shortened Human capital, infrastructure, technology, culture This scorecard includes staff training and attitudes about corporate culture related to personal and business progress With constantly changing technology, employees must be always ready to learn at any time Indicators can be used to help managers allocate training budgets in the most effective and reasonable manner In any case, the ability to learn and develop creates a solid foundation for the development of the business The Balanced Scorecard provides a framework that shows the causal relationship between the target elements The result of implementing these target elements is the pieces to create a complete picture of the company’s business strategy Once the company has a complete strategic picture, it will be easier for the company to implement a business marketing plan, including both external and internal marketing The Balance Scorecard model not only helps the company's partners and employees better understand the strategic content, but also is impressive and easy to remember for each advantage, disadvantage, of the measures it is making Mission Creative to serve people Vision A pioneer in modern and innovative technology applications, groundbreaking provider of solutions create new high-quality products and services at affordable prices to meet the needs and options of customer expectations strategy Implementing the 5-year plan from 2015-2020 In 2020, become a global corporation, a production resource group both civil and military Balanced Scorecard Element Finance Target Growth of 15 -20% in 2019, reaching revenue of 435,000 billion VND Maintain the growth rate to 2020, striving to reach 450,000 billion VND in revenue Customer/Stakeholder Bringing information technology into every area of customers' lives Promote and improve broadband service business to enhance customer experience Increase market share of domestic customers, dominant market share of international customers Internal Process Promote acquisition and merger of companies in the field of telecommunications and information technology Diversified products to attract more customers both civil and military Organizational Capacity Increase investment in research and application of modern technologies to improve service quality and increase defense capacity 2.3 PESTLE analysis The macro-environment factors consist of socio-cultural, technological, political-legal, economics and international variables Each impact on the macro environment has potentially impacted organizational strategies Therefore, PESTLE analysis is an effective method that helps companies identify the external risks beyond their control (Rastogi & Trivedi, 2016) 2.3.1 Political factor How stable is the government now and in the future Vietnam is one of the socialist countries led by the Communist Party Recently, under the leadership of the Communist Party of Vietnam, Vietnam has been highly appreciated for stability, ensuring the development of businesses and investors in the Vietnamese market In addition, Vietnam’s legal system is constantly being refined and developed to comply with international agreements that have been successfully ratified in recent years With the warming of international relations, Vietnam’s politics is expected to remain stable in the future Diplomatic relationship Since the successful signing of the WTO accession agreement in 2008, Vietnam has joined regional and international associations, thereby promoting its globalization process In particular, GAT, AFTA, ASEAN, APEC, etc are all international associations that have recently accepted Vietnam 2.3.2 Economic factor Exchange rate Interest rates, inflation, exchange rates and taxes are factors that affect the telecommunications industry In the case of the Viettel Telecom Group, the exchange rate is a direct impact as it will result in an increase in the cost of building the tower to improve the communication connection For example, in recent days, the trade war between China and the United States has caused market exchange rate fluctuations This has led to difficulties in bargaining international supply materials Fiscal policies After the global crisis of 2007-2008, Vietnam’s fiscal policy has actively and effectively applied some changes in accordance with international agreements and the open economy Although the inflation rate remains at the planned level, Vietnam's GDP still maintains a steady growth of 7% per year In the telecommunications sector, Vietnam encourages domestic suppliers to adopt policies Even during the telecommunications reform period, foreign investors are welcome to join the industry, and domestic service providers are still government-led and subsidized 2.3.3 Social factor Vietnam's telecommunications growth has soared in recent years The meaning of telecommunication is greater than mobile phones Now it's a combination of mobile phones, the Internet and cable networks and so forth Ten years ago, rural areas had limited access to the Internet and mobile phones, but now they are potential customers for the growth of the telecom business All service providers currently manage internet, mobile and cable network operators Customers prefer these service packages over single services Therefore, communication has become a very important aspect in everyone's daily life 2.3.4 Technological advance The evolution of telecommunications lies in both needs and requests For example, copper is outdated and is replaced by fiber optic cables for a better and smoother connection The phone is now smarter and integrates more features to use the phone and internet connection on the same device This leads telecommunications to the wireless business Therefore, people now need an Internet connection anytime, anywhere In response to the demands of technological advances, providers are forced to increase their investments to have a significant impact on the telecommunications industry 2.3.5 Legal factor Legal document to regulate to the operation of business In Vietnam, telecommunications technology is on the rise The Vietnamese government has approved a number of long-term plans to make Vietnam a strong information technology by 2020, especially the 1755 / QD-TTg Decision issued on September 22, 2010 And the project "improving computer usage and accessibility on public Internet." was launched in Hanoi on December 26, 2011 Therefore, under the urgency of the government's development support and the growth of information technology, Vietnam's telecommunications industry is developing rapidly Due to the large population, people's connection potential is expected to increase Legal framework The telecommunications industry in Vietnam is strictly regulated by the government, especially the legislative issue However, in response to the demand for technological advancement, the approval of import and export technology products has brought tremendous growth opportunities for the telecommunications industry 2.3.6 Environmental factors The factors that have the greatest impact on the development of the telecommunications industry related to environmental issues are climate change and people's understanding of the environmental impact of telecommunications technology However, technological advances have their advantages and disadvantages People need natural resources to produce technology products, but these products are used to help humans avoid disasters and save the planet Therefore, the demand for the development of telecommunications technology is continuing to grow steadily 2.3.7 Overall discussion External analysis using the PESTLE model can help companies identify and plan for the unexpected impact of the external environment on the business However, it has been suggested that PESTLE is not the only reliable source of strategic planning, but collaboration with internal analysis, especially SWOT method, is critical for more effective analysis (Perera, 2017) 10 2.4 Porter’s Five Forces model analysis Subtitute: Mobifone Vinaphone Customer power: easily change the use of service Competitors: Mobifone Vinaphone Viettel Telecom Group Supplier power: Leading in accessing point Potential competitor: Vietnammob ile 2.4.1 Explanation of competitive forces The purpose of analyzing five forces models is to help a company understand its industry structure and determine its position in a profitable way (Porter, 2008) These five forces directly affect each of the company's business strategies, especially the Viettel Telecom Group 2.4.2 Threat of substitute In the 4.0 technology era, the threat of alternatives is less competitive due to the interdependence and dependence of everyday communications and networking around the world At the same time, Viettel Telecom Group provides telecommunications services covering almost all areas and meeting the service needs of domestic and foreign companies 2.4.3 Industry rivalry Company Price Viettel Telecom Group Ranging from VND10,000 to VND 300,000 monthly Market growth 46.7% market share 11 Mobifone Ranging from VND 30,000 to VND 1,500,000 monthly 26.1% market share Vinaphone Ranging from VND 10,000 to VND 300,000 22.2% market share 2.4.4 Power of buyer The target customers of the Vettel Group are the general public with low to medium income Therefore, its price range is set to meet and adapt most of the basic needs of its monthly use of telecommunications Price-sensitive consumers say that as long as there is a better offer, service subscribers can easily turn to competitors' services 2.4.5 Power of supplier Viettel Telecom Group is a major telecommunications provider in the Vietnamese market They have a lot of international suppliers, but they all agree with the government Therefore, the power of the internal suppliers of the Viettel Group depends entirely on the government's successful agreement 2.4.6 Threat of new entry There are small competitors involved in telecommunication services But their market share and financial position are not enough to compete with participants in the current market Therefore, the threat of this new entry is small 2.5 Strategy implementation method The process that follows the strategic evaluation and control is called strategic implementation This process including: Constructing the possess of putting the strategies into action Provide capable resources for the act of strategies Build policies for strategy implementation and improvement Reward structure for the achievable result These processes are crucial for the company’s success It relies on the business environment, SWOT analyses as well as the risk assessment The implementation aims to turn strategies and plan into action which accomplish toward objectives and goals (Atkinson, 2006) Here are several steps that help Viettel accomplish its strategies successfully 12 2.5.1 Conduct annual goals setting Follow balance scorecard, the development strategy for the market growth should aim at the increase of 15% and account for more than 70% domestic market share until 2020 In accordance with the 5-year plan and the performance report of Viettel in 2018, this goal is not really challenged and achievable 2.5.2 Conduct policy setting and support plan Implementing a policy and plan is tightly correlated with the specific annual targets and achievable result In the Viettel’s condition, the policy should focus on different perspectives such as investment, financial management, marketing, price and product and so forth Moreover, it should include the action plan and the implementation organization 2.5.3 Development of action plans, budgets and implementation process From the perspective of annual goals and strategic objectives, systematic policies can be used to transfer into action plans through the implementation of process and action plans The action plan must include at least the main contents: implementation object, implementation time, work content, supporters, supervisors, reporters, and resource budgets requirement 2.5.4 Allocation of human resources, finance, facilities The particular action plan must allocate the resources in personnel, finance, time and facilities to set up for the implementation From this, the annual goals and essential strategic objectives can be accomplished in compliance with policies 2.5.5 Strategic commitment and implementation To the successful strategy implementation, internal marketing plays an important role in delivering understanding of strategy through the company's employees From this, the core value, mission, vision are being seen plain in employee’s awareness In consequence, they feel certain about their performance in the contribution to the complete strategy plans and objectives of the company The communication of strategic execution commitments between employees and company leaders is very important, and this is a commitment by both parties to implement and work towards achieving the identified strategic goals 2.5.6 Strategic inspection control, evaluation and adjustment in the implementation process Supervision must be carried out during the implementation of the business strategy There are many different forms of testing, depending on the purpose The inspection system organized by the Vettel Group is as follows: 13 The Control Committee regularly reviews the activities of the Group's Board of Directors, the Viettel Telecom Centre and the Departments; Inspect the activities of the member units constantly and then submit a report to the Board of Directors; The General Director and the supporting department conduct irregular or regular inspections of the member units Internal communication channels include financial reports, quarterly preliminary reports; summary year-end reports Viettel also organizes the collection of external information, such as feedback from customers (contributions to notebooks), information about competitors Based on the information gathered, the team's leaders will analyze and evaluate the progress of the strategy implementation and assess and adjust the strategy based on the environmental conditions Every year, the Group will adjust its strategic objectives and implementation in the annual plan; implement the adjustment; and improve the financial management mechanism During the implementation of the strategy, the Group must always pay attention to inspection, supervision and collection of necessary information, and make reasonable adjustments in a timely manner It is hoped that Viettel will continue to achieve greater success through the proposed goals, helping the Viettel brand to stand firmly in the hearts of customers in Vietnam, Southeast Asia and emerging markets With the right strategy and the efficient utilization of Group's resources, the leadership committee's guidance and the consensus of the group's employees will help Viettel gain a foothold during the economic crisis and continue its growth and market expansion Recommendation and conclusion 3.1 Recommendation 3.1.1 Maintain the investment on expansion and the improvement of customer service quality and capabilities Regarding the competitive advantages of Viettel in recent years, in domestic as well as international markets, it is important for Viettel to maintain the current competitiveness Meanwhile, a proper investment for upgrading diversity sectors of business to ensure the sustainable future development Particularly, the investment should cover different aspects of the business including telecommunication technologies, transmission systems, research and development of new products, new technologies as well as strategic plan for cost reduction of current service and product packages 14 3.1.2 Strategic plan of pricing policies for competitiveness and service flexibilities In comparison to the competitors’ service packages, the price offered by Viettel is highly competitive However, as the market keeps upgrading and developing new strategies to attract users, Viettel should maintain its budgets on developing new policies for a better offered service package at the most competitive but the cost is lower than current policies In the meantime, there are the presence of new competitors on the telecommunication sectors with the support of foreign investment Even Though their size of business and market share is tight, this is a notification of the rivalry on this business sector 3.1.3 Improving service quality via human resource strategic management toward changes In the increasing competitiveness of the market economy, the nature of business environment and the changing demand of customers has been dynamic and forced companies invest a great deal of attention on the development of human resource capabilities Particularly, as a military business direction, the human resource of Viettel is under heavy controlled by the state It may lead to the delay in responding to the changes on the market place toward the service improvement and customer’s demand complexity Therefore, the strategic plan on managing and comprehensive human resource in terms of training and adapting changes are vital within Viettel business This action would help Viettel to be more responsive to the competitors’ actions and the changes of customer’s expectations The management of human resource development may include a clear organizational chart, efficient labour force, policies, which then is to ensure the appropriate personnel in accordance with the right functional tasks and responsibilities 3.1.4 Financial management solution Apparently, the world economy is in a period of recovery, but it is still in a very fragile and unstable state Vietnam’s economy struggles many difficulties In particular, inflation is rising while trade is unbalanced Therefore, the Group’s financial risks still exist and affect enterprises, business operation and expansion of the Group's share in the local and international markets Therefore, the financial management of the Group during this period must always focus on the ability to raise working capital and use funds effectively and avoid waste The capital mobilization plan must be consistent with business plans and investments, not passive capital 15 Viettel's finance and accounting department should coordinate with other departments, such as planning and investment, to establish financial plans on a monthly, quarterly, and annual, constantly review the implementation of these plans to raise funds in a timely manner Financial plans must always consider alternate capabilities and changes to suit demand Financial planning also requires special attention to how to use financial resources in the most efficient way to bring the lowest operating costs, while at the same time having sufficient resources to invest in 5G, terminal production technology and new technologies such as expanding and improving coverage quality 3.1.5 Marketing solution This is one of the important measures that have contributed to Viettel's great success Here, we focus on the segments of workers, civil servants, students, rural and urban areas The middle-income class is crucial Based on the analysis and evaluation of the business environment and the review of identified goals and tasks, managers should select a development strategy to enhance the Group's position by focusing on the development of products and services that have advantages At present, Vietnam's telecommunications market is growing very strongly Operators are vying for market share Therefore, Viettel should try to introduce a low-cost package to support strong marketing advertising for students and students to increase their market share In addition, Viettel should continue and strengthen promotions, such as offering cheap packaging to attract new customers to become civilians 3.2 Conclusion In conclusion, Viettel is on the upper position in terms of competitive advantage within the telecommunication industry However, in order to maintain the effectiveness as well as develop its market shares domestically and internally, Viettel is suggested to follow a strategic management implementation for control and actively respond to the changes within the market 16 REFERENCES Atkinson, H., 2006 Strategy implementation: a role for the balanced scorecard? Management Decision, 44(10), pp.1441-1460 Cox, M.Z., Daspit, J., McLaughlin, E & Jones,Raymond J., I.,II 2012, "Strategic Management: Is it an Academic Discipline?", Journal of Business Strategies, vol 29, no 1, pp 25-42 Kaplan, R.S and Norton, D.P., 1996 Using the balanced scorecard as a strategic management system Perera, R., 2017 The PESTLE analysis Nerdynaut Porter, M.E., 2008 The five competitive forces that shape strategy Harvard business review, 86(1), pp.25-40 Rastogi, N.I.T.A.N.K and Trivedi, M.K., 2016 PESTLE technique–a tool to identify external risks in construction projects International Research Journal of Engineering and Technology (IRJET), 3(1), pp.384-388 Vietteltelecom.vn, 2019 Giới thiệu Viettel [online] Available at: https://vietteltelecom.vn/tin-tuc/chitiet/gioi-thieu-ve-viettel/16659712 [Accessed 26 Jul 2019] 17