PREAMBLE
Reason for choosing the topic
In today's market economy, strategy plays a decisive role in the survival and development of every enterprise In the intense competition among businesses in the industry, where businesses are increasingly striving to offer the best quality products, accompanied by the perfect of service quality, distribution channels, sales systems This leads to greater interdependence among enterprises Meanwhile, the business environment is constantly changing, complex and contains many risks Therefore, to survive and develop, the enterprises must have the right, accurate and suitable development strategies, for the actual conditions of the enterprise The strategy is the direction and vision for the enterprise to target, also is the basis for the leader to make accurate decisions, even timely landmark in the development of enterprises.
As membership of the World Trade Organization (WTO), APEC, AFTA, and especially the implementation of new commitments that Vietnam has just signed (Transpacific Partnership Agreement - TPP, ASEAN Economic Community (AEC) and the FTAs with the EU, the Eurasian Economic Co-operation Association (EAPEA), are creating new opportunities, and also bring many challenges and pressures to Vietnamese enterprises.
The globalization of the market today makes the competition increasingly fierce, so the strategy is increasingly imperative to build competitive advantage With the increasing scarcity of resources, the changing needs and tastes of society are changing, making business environments increasingly difficult and risky To survive and grow, enterprises need to build their own strategy.
Strategic business planning must take into account many external and internal factors Analyze information systems to serve as a basis for planning business operations in the long run and short-term Efforts and resources on key objectives are most effective, dealing with risky situations and adapting to change.
Mercedes-Benz Vietnam is one of the companies in the automotive manufacturing and distribution industry, needs to look for its direction to meet the diverse needs of the market However, in the past time, the company has experienced many trials, including successes and difficulties, from the success and difficulties that having achieved results as today Therefore, in order to continue to stand firmly in the market, adapting to the ongoing changes and taking place in the current business environment as well as future changes, the Company is required to build a suitable strategy The topic chosen by the author is: “Formulate business strategy of
Mercedes - Benz Vietnam Ltd., Company – Period 2018 – 2022” as my dissertation.
Overview of the research topic
Business strategy plays a very important role in the survival and development of each enterprise Proper business strategy will create a good direction for the enterprise Business strategy can be a guideline for businesses in the right direction.
Therefore, studying about business strategy is of particular interest to enterprises Historically there have been several related studies:
- Research on business strategy of Ha Thanh Industrial Joint Stock Company - Ta Van Can - Master thesis in International Business Management, Hanoi National University.
- Research of the author group by the HCMC University of Economics
(2010), in a study on the competitive environment in real estate industry – strategy of Binh Chanh Construction Investment Joint Stock Company (BCCI) 2010-2015: The topic has been concluded that to exist and develop in the industry, the company must capture the main features of the industry, analyze their competitiveness and more importantly, SWOT analysis to know strengths, weaknesses, risks and external challenges This helps the enterprises to discover and know the competitiveness of the market as today.
- Business strategy of HUD4 construction company - Nguyen Thi Huong Linh – MBA thesis, Foreign Trade University.
However, from the perspective of analyzing the factors influencing Mercedes-Benz Vietnam's business operations to come up with a feasible strategy for the period2018-2022, no research has been made to clarify the content that the subject mentioned.
Research objectives and questions
Develop business strategy for Mercedes-Benz Vietnam to 2022.
- Analysis of opportunities and threats from the external environment affecting production and business of Mercedes-Benz Vietnam.
- Analyze the situation of production and business development in recent years to see strengths and weaknesses of Mercedes-Benz Vietnam.
- Formulating the business strategy of Mercedes-Benz Vietnam to 2022.
- Propose solutions according to the chosen strategy for Mercedes-Benz Vietnam.
- What are the opportunities and challenges in the field of production, business and distribution of Mercedes-Benz Vietnam?
- How has been production, business and automobiles distribution of Mercedes-Benz Vietnam from 2012 to now?
- What are the strategic orientations and basic solutions to help develop production, business and distribution of Mercedes-Benz Vietnam in the future?
Research Methods
To achieve the objective of the subject, the author uses the following research methods:
Secondary data : The thesis uses secondary information from financial reports, market analysis and other reports of Mercedes-Benz Vietnam The citations in the dissertation are cited the source clearly and listed in the reference list.
Primary data: The thesis collects primary information through interviews with experts.
- Interviewed subjects: Leaders, officers of Mercedes-Benz Vietnam.
- The questionnaire was designed on a scale to quantify and aggregate the groups of factors The authors used a 5-step scale with conventional values:
Evaluate importance (weighting): Option 1: Not important; Option 2: Less important; Option 3: Quite important; Option 4: Important; Option 5: Very important.
Evaluate the company's response level: Option 1: Weak response; Option 2:
Medium response; Option 3: Pretty response; Option 4: Good response; Option 5: Very good response.
Evaluate internal activities of the Company: Option 1: Weak; Option 2:
Average; Option 3: Fairly good; Option 4: Good; Option 5: Very good.
With the list of 10 predetermined respondents, the author has implemented the data collection as follows:
Step 1: Submit the expert questionnaire to the respondents stating the survey requirements and enclosed content for answering the questions In addition, a research outline of topic introduction is attached following the questionnaire to serve those who in need of better understanding about the subject as well as the concepts used in the questionnaire.
Step 2: Make a phone call to inform the respondents that the questionnaire has been sent and ask the respondents to respond.
Step 3 : Get responses and aggregate the results.
Step 4 : Conduct a second interview with the respondents if their answers are very different from the others.
The information from the above mentioned sources is gathered, analyzed, selected the important information; with statistical information, it will be processed according to statistical analysis Conclusions are based on the correct analysis and evaluation of the obtained data.
The author uses Excel software to process primary and secondary data; using statistical methods, expert methods, analytical methods, comparative methods.
The meaning of the topic
- Scientific meaning: The topic systematizes the theoretical issues of strategic planning; strategies formulating and application in practice.
- Practical meanings: The research results of the project are reliable sources for planning the development strategy of Mercedes-Benz Vietnam At the same time,the project also wants to contribute a small part in affirming the importance of building business strategies in enterprises in order to promote Vietnamese enterprises in general and Foreign-Invested Enterprises in particular about the importance of the strategy and the formulation of the strategy in a serious and scientific way.
Dissertation structure
In addition to the conclusion, table of contents, list of tables, short list, and list of references, appendix, and the content of the dissertation is structured with 04 chapters:
Chapter II: Theoretical basis of strategic management.
Chapter III: Analysis of the external and internal environment affecting production and business activities of Mercedes Vietnam Ltd., Company
Chapter IV: Formulate Business Strategy for Mercedes Vietnam Ltd.,
THEORETICAL BASIS OF STRATEGIC MANAGEMENT
Theoretical basis of Strategy and Strategic Management
The strategic term is derived from the Greek and is used primarily in the military field to refer to large, long-term plans given on the basis of what certainty the enemy can do, normally, strategy is understood as the plan and art of military command.
Scholar Dao Duy Anh, in the Vietnamese dictionary wrote: “Strategy is the plans set out to win on one or more fronts Thus, in the military field, the strategy term is regarded as a commanding art to win a war” (Vietnamese Dictionary of Vietnam, 2009).
By the 1980s, Quinn made a more general strategic definition “Strategy is a model or plan that integrates key objectives, policies, and action sequences into a coherent whole” (Quinn, J., B, 2005).
There are different definitions of strategies In general, the definition of strategy is different but includes the content of current and future market research, business objectives planning, decision implementation and monitoring to achieve these goals in both the present and the future environment (Fred R David, 2006).
The concept of strategic management
Strategic management is an issue that many economists and administrators are concerned about Because the content of strategic management is broad in scope and rich in practical application, people in different perspectives are given different views and definitions of strategic management Although each of these views is not completely comprehensive, but overall, those views have greatly contributed to the perception and implementation of corporate governance Here are some definitions of strategic management.
- Strategic management is the collection of decisions and management actions that determine the long-term success of the enterprise.
- Strategic management is a collection of decisions and actions that lead to the formulation and implementation of strategies to achieve organizational goals.
- Strategic management is the process of studying the current and future environments, planning the goals of the organization; Implement and monitor the implementation of decisions to achieve goals in the current and future environment.
- Finally, I would like to introduce a definition of strategic management that is widely used in intensive business management training courses in the UK and the US and is widely accepted by economists.
- Strategic management is the art and science of formulating, implementing, and evaluating integrated decisions that help each organization achieve its goals.
According to these definitions, strategic management focuses on the coordination of governance, marketing, finance / accounting, product / operations, R
& D and information systems to achieve success for enterprise.
2.1.2 The purpose and role of the strategy.
Development strategies play a very important role in the survival and development of each enterprise Proper development strategy will create a good direction for the enterprise, the development strategy can be considered as a guide for enterprises in the right direction In fact, there are many entrepreneurs who have the right strategy to succeed, overcome the competition and position themselves in the marketplace Development strategies bring many benefits to the enterprise; its importance is reflected in the following aspects:
- Development strategies help enterprises orient their activities in the future through analyzing and forecasting the business environment
Business is an activity that is always influenced by external and internal factors. Development strategies help enterprises both flexible and active to adapt to the changes of the market, while also ensuring the business operation and development in the right direction This can help the company strive to improve its position in the market.
- Development strategies help enterprises to grasp the opportunities as well as full risks to the resources development of enterprises It helps enterprises exploit and rational use of resources, promote the strength of the enterprises.
- The development strategy creates an operation trajectory for enterprises that helps enterprises link individuals with other interests towards a common goal, developing the enterprise It creates a connection among employees and between managers and employees Thereby strengthening and further enhancing the internal force of the enterprise.
- Development strategy is the effective competition tool of enterprise Given the current conditions of globalization and economic integration, it creates the influence and interdependence each other among enterprises That process has created fierce competition among enterprises in the market In addition to competitive factors such as price, quality, advertising, marketing, enterprises also use development strategies as an effective competition tool.
According to Fred David, the strategic management process consists of three stages: strategic formulation, strategic execution, and strategic evaluation (Fred R. David, 2006).
The strategic management process consists of the 10 steps described in the following model In particular, step 4 (reviewing business tasks) and step 8 (policy setting) can be omitted if the goals and policies of the enterprise do not make the necessary changes.
Figure 2.1: Strategic Management Process (Fred R David, 2006)
Because the concentration of the topic is to build strategies for enterprises, I will explore the strategy formulation phase.
2.1.3.1 Define the mission and objectives of the organization
A strategic plan begins with a clearly defined business mission Fred R David defines the mission as follows: “A mission is to know the basic function of an organization in society in terms of the goods and services that it produces in order to serve its customers object” (Fred R David, 2006)
Mission is the message that represents the core value of the enterprise It expresses important things, contributions of the enterprise in terms of business and life; Mention the business motto of the enterprise, the position of the enterprise in the marketplace and what the enterprise is committed to compliance The mission statement must be concise but full of fundamental implications, should be
Research the environment to identify key opportunities and threats
Research the environment to identify key opportunities and threats
Set up long-term goals
Set up long-term goals
Internal control to identify strengths and weaknesses
Internal control to identify strengths and weaknesses
Identify current goals and strategies
Identify current goals and strategies
The objectives of each period may change, but the vision and guiding principles of the enterprise must be long-term and must be widely disseminated throughout the enterprise so that each member can understand, be proud and whole hearted in implementation It is these things that contribute to the soul of an enterprise, which we call corporate culture.
Business strategies of the enterprise
Market penetration strategy is to find ways to grow the products that are currently in production while keeping the current market Below is a table of market penetration strategies.
Table 2.6: Changes in Market penetration Strategies
Product Market Industry Industry level Technological process
Present Present Present Present Present
When pursuing market penetration strategies, enterprise intends to increase the volume of products sold on the market In other words, enterprise will be in a position to sell more products on its target markets.
In some situations, in order to reduce the intensity of competition in the current market and seek new business opportunities when the current market is saturated, enterprise must think about exploiting new markets For example, in recent years, when the color TV market in cities has been competing strongly, market demand has been at a saturation stage As a result, some color TV manufacturers and distributors have developed into the rural market To do this, enterprises use market development strategies.
Market development strategy is a strategy by which an enterprise tries to grow by penetrating into new markets to consume products that are currently in production.
Table 2.7: Changes in market development strategies
Product Market Industry Industry level Technology
Current New Current Current Current
The new product development strategy is to find ways to grow through the development of products for consumption in markets where the enterprise is operating.
Table 2.8: Changes in new product development strategy
Product Market Industry Industry level Technology
New Current Current Current Current
Vertical integration diversification strategies are strategies to achieve the goal of increasing revenue and profit for the enterprise when the business environment has new opportunities or threats that the enterprise has the ability to evade When participating in vertical integration, the enterprise will take over the supply of inputs or the products distribution to ensure long-term competitive advantage In other words, enterprises are engaged in production and business activities of previous suppliers and customers.
This is the third phase of the enterprise-level strategy development trend At this stage, the business activities of the enterprise will expand into new fields These new field may or may not be relevant to the current business field It should be noted that the relevant or unrelated factors are only considered relatively and are generally characterized by similarities in marketing, raw materials, technology, qualifications and management skills or clients When an enterprise expands to a new business production, one or more of these factors are referred to as concentric diversification or diversification Conversely, when an enterprise extends into new production and business activities that are not related to one or more of the above, it is called as diversification.
2.2.3 Growth strategies by outward way
Growth strategy through merger is a strategy seeks growth in size and sales by merging two or more enterprises voluntarily into a single new enterprise.
Typically, consolidation takes place between enterprises with similar size;enterprises need to consolidate to share or transfer resources (finance, human resources, governance, machinery, equipment, distribution channel systems, brand names, etc.) to gain a synergy that are capable of coping with strong competitors.
2.2.3.2 Growth strategy through annexation (acquisition)
Growth strategy through annexation is a strategy for seeking growth through market competition, thanks to the competition that strong businesses have the great potential to invest in small enterprise to grow into larger and stronger enterprise.
2.2.3.3 Growth strategy through joint ventures
Growth strategy through joint ventures is a strategy of seeking growth through two or more enterprises negotiating together, sharing the risks, costs, and profits to exploit business opportunities in the marketplace.
Joint venture strategy has many basic features Firstly, in joint ventures, enterprises must share the same costs, benefits and risks to exploit business opportunities in the marketplace Secondly, despite the same purpose, enterprises must be independent and not interfere in each other's internal affairs Thirdly, in the joint venture, which enterprise has more advantages, more contributions will enjoy higher benefits.
In practice, stable strategies are often used: (1) Product stability strategy. When implementing this strategy, the enterprise tries to maintain the production scale of existing products, not to create new products (2) Consuming market stability strategy In this case, the company will maintain the target market and not develop the product into new markets (3) Business Sector Stabilization Strategy and Participation Sector Level, when implemented, will maintain the existing business sector, not enter new business sector within a sectorial level or other industry (4) Application technology stability strategy At the same time, enterprises still maintain current technology without investing in new technology.
The operation narrowing strategy is a strategy of seeking decline through the reduction of costs and assets of inefficient division in the enterprise.
This strategy is considered as a review strategy or reorganizing business activities in enterprises to strengthen competitiveness The goal of this activity is to save costs, improve productivity and increase productivity in machinery at divisions.
Operation cutting strategy is a strategy of seeking decline by dissolving or selling some of the branches or divisions of the enterprise The operation cutting will help enterprise to recover capital, eliminate inefficient business units, or business units that are not in line with long-term business strategies (though that may be a new business unit) and use the capital to invest in other more promising activities.
Liquidation strategy is the strategy of selling all the assets of an enterprise in a certain way so that the value obtained is the greatest This is the last strategy in the strategies group to serve the reduction goals to maximize business value when the enterprise pursues both strategies: narrowing down operations and cutting operations and both failed On the other hand, when the only choice of business is bankruptcy, liquidation is orderly procedures and plans to receive the largest sum of money for the property of the enterprise Finally, the shareholders of the enterprise can minimize their losses by selling the assets of the enterprise.
The cost reduction strategy is a strategy to create competitive advantage by producing low-cost products and services that can be lower than competitors in the industry to attract the most target customers that are sensitive with low prices and accounts big market share This strategy is well suited to large scale businesses that are able to reduce costs in the course of their operations, allowing enterprise to outpace competitors by producing goods and services at low cost To achieve this strategy, the goal of a low cost business strategy is to develop capabilities that allow enterprise to increase efficiency and reduce costs in comparison with to competitors.
The objective of a product differentiation strategy is to obtain a competitive advantage by creating products, goods or services that can meet the unique needs or specific needs of a different consumer group of the enterprise Product differentiation is to create products and services with features and technical features that stand out from the competition Different features of the product can be: quality, innovation,reliability, specification, service, and many other factors Enterprises that pursue this strategy are able to satisfy their customers' needs in a way that their competitors cannot, so that firms can set a higher price than the industry average.
INTERNAL AND EXTERNAL ENVIRONMENT ANALYSIS
General information about Mercedes Vietnam
3.1.1 The formation and development process of the company.
Founded in 1883 and regarded as the oldest car maker that still alive today, Mercedes-Benz is one of the most prestigious brands dominating the automobile market in the world in general and in Vietnam in particular; headquartered in Stuttgart, Germany, Mercedes-Benz mainly produces cars, trucks and buses.
Presented in over 130 countries with its distinctive three-pointed star logo, Mercedes-Benz continues to rise to the top of the list, dominating the terrestrial, submarine and sky Having experienced the economic downturn, Mercedes-Benz gradually regained its peak position in 2005 in the automobile industry In 2007, Mercedes-Benz ranked fourth in the top of leading cars in term of quality and in 2008 it ranked 3rd in the world.
Introduction about Mercedes Benz Vietnam
Mercedes-Benz continues to lead the luxury car market in Vietnam in the past
21 years with a market share of over 50%, completing the dream of owning a luxury car of more than 25,000 Vietnamese customers and becoming a key factor of the automobile industry in Vietnam.
Mercedes-Benz offers the most diversified and youngest car segment in the luxury car segment, along with a network of 12 sales and service centers nationwide.
- Company name: Mercedes-Benz Vietnam Ltd., Co
- Address: 693 Quang Trung Street, Ward 8, Go Vap District, Ho Chi Minh City.
- E-mail: mercedes-benz-vietnam@daimler.com
- Facebook: https://www.facebook.com/MercedesBenz.VietNam
Website: http://www.mercedes-benz.com.vn
Formation and development history of Mercedes - Benz Vietnam
Mercedes-Benz established its representative office in Vietnam in 1990 and licensed No 1205 / GP for the assembly of cars, light trucks and buses in Ho Chi Minh City with total capital EUR 50 billion (US $ 45.54 billion), of which Mercedes-Benz accounts for 70% of the total investment capital and Vietnamese partner - Saigon Automobile Mechanical Corporation (SAMCO) accounts for 30% of total investment capital in the form of land for lease, available workshops.
Licensed in 4/1995, after a positive preparation process, in June 1995, MBV started the construction of a factory and opened a representative office in Ho Chi Minh City In May 1996, MBV put the CKD assembly plant in operation This is a big step in technology development of MBV And also in 1996, MBV launched the Mercedes- Benz assembly line in Vietnam
In parallel with the investment in technology, MBV also expanded the sales and maintenance activities: opening Star Motor Sales and Maintenance Center in Vo Thi Sau street - Ho Chi Minh City, opened the Sales and Maintenance Center 2 at Lang Ha Street - Hanoi, sales agents in the provinces and cities were born, representative office in Hanoi was developed into Distribution branches for the northern provinces MBV's products have become popular in the market, occupying the majority of the car market in Vietnam.
Owning a large factory of 105,000 m2 and having production capacity of 3,500 vehicles per year, MBV is located in Go Vap District, Ho Chi Minh City The factory includes a Training Center, sales execution, marketing and technical training courses. Mercedes-Benz Vietnam has achieved ISO / TS 16949: 2009 and ISO 9001: 2008 certification in the quality management system and ISO 14001: 2004 in the environmental management system.
In December 2016, MBV was honored by the People's Committee of Ho ChiMinh City with “Top 21 Most Taxpayers” with a budget of more than VND 6,000 billion Notably, the proportion of domestic assembled cars in Mercedes-Benz has risen to 77% in 2016, demonstrating long-term investment commitment in Vietnam.
3.1.2 Functions, mission and business fields.
Established in 1995 and a member of Daimler Chrysler Group, Mercedes-Benz Vietnam Ltd (MBV) is one of the leading automobile manufacturers and distributors in Vietnam MBV is responsible for implementing fully the organizational structure of the unit.
On the basis of the plan of the State, synthesize the demands of domestic industries and economic sectors in order to build the capital rotation plan Build up manufacturing and assembling program for the long term plan and plan years of the company in accordance with economic conditions in Vietnam.
Organize the reception of imported machinery and equipment from abroad. Sign economic contracts with economic domestic and abroad units.
Implement production plans and payroll plans for laborers The basic construction plan is to carry out the production and business activities of the company.
To study the capability and demand of the domestic and foreign markets in order to work out market-oriented and effective production plans.
Comply with the policies, regimes and laws of the State and business regulations of the Ministry.
To prioritize the use of domestic labor, ensure the rights and interests of laborers according to the labor law, to respect the right to organize trade unions under the trade union law.
Ensure the quality of goods according to the registered standards.
Fully observe the State's regulations on environmental protection, protection of historical and cultural relics, social order and security.
Keep accounting books in accordance with the provisions of law.
In short, as an independent enterprise, MBV has full rights to take initiative in production and business to perform its functions and missions within the scope of its activities.
The main business activities of Mercedes Benz Vietnam are currently manufacturing - assembling - distributing, providing maintenance services and Mercedes automobile spare parts:
• Importing spare parts and accessories used for assembly and production at MBV's factory.
• Exporting MBV's products overseas to balance the demand for foreign currencies to expand the development of the joint venture.
• Manufacturing and trading commercial vehicles (Sprinter panel truck and Sprinter Estate bus);
• Manufacturing and trading luxury passenger cars with distribution systems including showrooms and dealers across the country Only in the year 2016, Vietnam consumed 4,400 Mercedes Benz vehicles.
• Provides maintenance services and auto parts throughout the country with the motto of providing excellent service to customers and diversified product portfolio.
The Board makes decisions at its regular meetings Regular meetings shall be organized for the necessary purposes twice a year.
The company's operation apparatus includes:
General Director and Deputy General Director: be responsible to the Board ofDirectors for such things as ensuring the implementation of the approved plan,organizing the implementation of such plan; Representing the company in relations with organizations, State agencies and courts of different countries when there is an economic dispute; solving issues authorized by the Board; Recruitment of labor through labor contracts.
Functional divisions are responsible for managing, directing professional operations and advising the Director on matters that their department is responsible for.
At the same time, under the guidance of functional directors.
Administrative Organization Department: Advise the Director on the organization of production labor, management training and use of staff Implement all policies for employees, guide staff and workers to implement all regulations of the company Manage the company's files, documents and seals.
Financial Accounting Department: Advises the Director on financial accounting, losses, interests, expenses, bonuses, corporate funds, capital and fixed assets.
Marketing Department: has the function of organizing the products distribution network of the company, organizing distribution channels, researching domestic and foreign demand Organizing customer service to attract customers and develop production and business.
Technical department: check the product before shipment.
The materials department is divided into two divisions: materials purchasing department: purchase materials for production and business from abroad or domestic. Warehousing department: Receiving and inspecting raw materials.
Production department: has the function of managing production activities,managing the production and processing lines, finishing paint and electric.
Figure 3.1: Organizational structure of Mercedes-Benz Vietnam
3.1.3 Business and production results of the Company for the period of 2013 -
Mercedes-Benz continuously lead the luxury car market in Vietnam in the past
21 years with a market share of over 50%, completing the dream of owning a luxury car of more than 25,000 Vietnamese customers and becoming a key factor of the automobile industry in Vietnam.
To date, the “3 wings star” brand continues to lead the luxury car market, with four mainstream models, the C-Class, the E-Class, the S-Class and the GLC leading the key sales segments The C-Class, the E-Class, the S-Class and the GLC dominate the segment of sales Mercedes-Benz Vietnam, however, has not stopped investing in
Star Haxaco An Du improving its service quality and developing new models with high performance and remarkable upgrades to meet the increasing demands in both aesthetic and functional features of Vietnamese consumers.
Table 3.1: Sales of Mercedes Benz Vietnam in the period of
1 Lines of passenger vehicles Vehicles 2,412 3,597 4,401 5,418
(Source: Vietnam Automobile Manufacturers Association (VAMA))
Analyzing external environment factors influences the strategy development of
Although there is much instability in the world today, big countries are trending to global world domination with arms race program, armed conflict and ethnic conflict However, in Vietnam, thanks to the leadership of the Party with the policy of national unity and the flexible domestic and foreign policies that has created a peaceful and stable country, a safe destination for investors around the world This can be considered as one of the opportunities for Vietnamese enterprises in general and for Mercedes Benz Vietnam in particular The stable political environment, safe social environment will be the favorable conditions for the Company to attract high quality human resources, creating opportunities for business cooperation in the industry.
Today, despite many efforts, the political and legal factors of our country are still affecting in many different directions Vietnam is implementing industrialization and modernization to create a premise of material and technical facilities with the goal of becoming an industrialized country towards modernity by 2020 Thus, the state considers the automobile manufacturing and assembly industry to be one of the key sectors of the economy The way of opening up to integrate with the regional and world economy of the Party and State also create favorable conditions for cooperation, joint venture and technology transfer.
However, the legal system, policies and regimes in our country are not synchronous, complete and not suitable with the current development stage And therefore, it does not create a legal framework for ensuring business autonomy and the implementation of the principle of “equality, mutual respect and mutual benefit”.
The current legal system also has issues that make it difficult for the development of the automobile manufacturing and assembly industry.
Management issues, import licensing for the import units has many barrier inadequacies, create difficulties in import activities.
In addition, the enforcement of the law has not been effective, has not created a healthy environment for the car manufacturing and assembly industry.
From 2014 to 2017, the impact of global financial economy makes our country's economy more complicated and unpredictable The living standard of the people and the demand for life is increasing
International factors: The tendency of regional development, globalization with the presence of blocks and associations is an important factor affecting the operation and development not only of one company, one branch, but also a whole nation Therefore, Vietnam's economy will be strongly affected when joining AFTA and WTO, which is a necessary step to avoid the lag of Vietnam.
Vietnam's economy has experienced a period of great difficulties due to the great fluctuations of the global economy The world economy, especially in developed countries, contains many uncertainties The most prominent of these is the fact that Britain decided to leave the European Union after a Brexit referendum and Donald Trump's victory in the November presidential election in 11/2016.
US President-elect Donald Trump is concerned about protectionism with the intention of withdrawing from the Trans-Pacific Partnership (TPP), while Britain and the EU have yet to make a formal decision on how Conduct Brexit Besides, Japan's monetary easing policy is not as expected as it is in the deepening deflationary spiral.
In contrast, China and some developing countries have relatively stable growth. China's economy is moving in the right direction under the rebalancing strategy set by the government
This is a condition for Vietnam's automobile assembly and manufacturing industry to have the opportunity to cooperate with developed countries, shorten the gap, eliminate backward technology, improve quality and expand the market in future On the other hand, the scientific and technological revolution in the world, especially information science, accelerates the formation of the knowledge economy, accelerates the economic restructuring and accelerates the cycle Capital mobility and technology require businesses to always make the change to adapt otherwise they will lag and go bankrupt The company must be aware of this problem and pay attention to the research, development and application of modern construction equipment.
Firstly, the development of the national economy: Vietnam is implementing the industrialization and modernization strategy to keep the economy out of the mark of the subsidized economy on socialism Therefore, in the past years, with the efforts of other countries, Vietnam has made remarkable progress Our country is developing under the motto of relying on internal resources and taking advantage of external forces Therefore, along with internal factors and rational policies, Vietnam will be firmly and gradually develop, as it can be seen The demand for infrastructure of the renovation and development stage of our country will open wide market and accompany it is also the requirement of higher quality.
In the context of a volatile global economy, the Vietnamese economy has shown signs of vulnerability to shocks Economic growth in 2016 and the first nine months of 2017 were 6.21% and 6.41% respectively, over the same period last year.Although being recovered in the second half of 2016, the annual economic growth was only 6.21%, lower than the rate 6.68% in 2015 and the 6.3% target set by the government in the regular session in 9/2016.
Chart 3.1 GDP growth of Vietnam over the years
According to the General Statistics Office, decline in agriculture and difficulties in the mining industry is considered as the main cause of low growth The agricultural area, which accounts for 11-13% of GDP, is estimated to grow at just 0.72% and contribute 0.09 percentages to GDP growth Meanwhile, the growth of forestry and fishery decreased slightly compared to the same period last year, making the agriculture, forestry and fishery sector increase only 1.36%, the lowest rate in the last 6 years.
The manufacturing industry sector remains the main driver of economic growth The sector's growth rate was 11.09%, higher than two years (2014: 8.45%, 2015: 10.60%).
However, with a contribution of up to 28.4% in the industrial sector's GDP structure, the decline of the mining sector has had a considerable impact on the region's growth as well as its overall economic growth By 2017, the mining sector declined by 4% over the same period last year, reducing 0.33 percentage point of economic growth.
Enterprises in industries continue to be tending to job cuts, especially in the mining sector The number of employees as of 01/12/2016 only increased 2.9% lowers than 6.4% in 2017 Of which, the labor force in the mining industry decreased by 6.9%; Power production fell by 1.3% Decline is in employment in all three SOEs, private enterprises and foreign invested enterprises Non-state and FDI sector growth was 1.8% and 4.9%, respectively down from 4.6% and 8.0% in 2015
Table 3.2 Overview of the economic situation in Vietnam over the years
No Target Unit Newest data
1 Retail growth Billion VND Nov./2017 344,809
2 GDP at constant prices (2010) Billion VND Quarter
3 Agriculture, forestry and fisheries Million people 2016 22.33
4 Industry and construction Million people 2016 13.16
10 Total Export Value Million USD Nov./2017 19,200
11 Total import value Million USD Nov./2017 19,000
16 Unemployment rate in urban areas % 2015 3.29
Second, the risk of inflation rises: No longer supported by external factors like last year, the consumer price index tends to increase again, especially in the last months of 2017 Price of basic commodity recovery combined with price adjustment of education and health services has put pressure on domestic inflation.
By the end of the year, the consumer price index rose 4.74% over the month12/2016 At the same time, core inflation has remained around 1.7-1.9% for the whole of 2017, which widens the gap between inflation and core inflation.
Third, financial market, currency and asset stability: Basically, operating monetary policy in 2017 is flexible and tight The State Bank of Vietnam (SBV) still follows the target of stabilizing inflation and is cautious with this goal. However, as the end of the year, inflationary factors appear more and more, including the recovery of energy prices and the adjustment of public service prices. The surplus on the balance of payments contributed to create favorable conditions for the State Bank to buy foreign currencies to supplement foreign exchange reserves Information at the regular meeting in December 2017, the government said, foreign exchange reserves reached $ 41 billion by the end of the year, the highest number ever.
FORMULATE THE BUSIESS STRATEGY OF MERCEDES
Company development orientation
The long-term objective is defined for a period of 5 years and the direction for
10 years of the company's BoD is stable growth in sales and quantity of cars sold in all three markets (The North, Central and South), develop after-sales service not only meet but also exceed customer's satisfaction, create a dynamic environment and orientation teamwork for employees Continuously focus on improving skills for human resources as well as professionalism in working style All three main objectives of the business activities are:
Achieving the three objectives of this business activity is not just the intention of the MBV management, but also the desire of the whole staff However, the company operates in a dynamic environment: customer needs; the surrounding social environment, the hierarchy and competencies of its competitors ; Therefore, the business strategy of the Company must also change over time The company provides the following directions:
- Building and developing the company to become a big company with an important position in the industry, is one of the leading in the segment of luxury car market in Vietnam Promoting all resources to improve competitiveness, contributing significantly to the development of the automobile industry in Vietnam.
- Diversify products and services with a view to enhancing the aesthetics and utility to suit the natural conditions as well as the tastes of Vietnamese customers. The aim is to provide products and services with quality that exceed the expectations of customers.
- Implement joint ventures with enterprises inside and outside the industry to diversify products and services as well as create more convenience for customers of MBV.
- Taking socio-economic efficiency as the main measure and the development of the company in terms of quality.
4.1.2 The immediate objective of the company by 2022.
- Increase the total annual revenue from 20 - 25%.
- Research on improving the quality of after-sales service, implementing brand and product branding activities, making a difference to competitors in the industry.
- Continue to affirm the leading position in the segment of luxury cars in Vietnam market.
- Average income per person / month increased.
SWOT matrix
By analyzing the current status of MBV's business operations in Vietnam, analyzing the Vietnamese automobile market and the strengths of competitors in the market by combining each pair, strengths and opportunities, weakness and threats. Applying SWOT analysis methodology, there may be some business strategies for MBV in the coming time Include groups of options:
- Use strengths to take advantage of opportunities
- Overcome weaknesses to take advantage of opportunities the best
- Use strengths to overcome the threats
- Overcome weaknesses to minimize threats from the environment
- Details of these strategic options will be shown in the table
4.1: “SWOT Matrix of MBV Company”.
Table 4.1: Summary of SWOT matrix at MBV
- (O3) Technology is growing, especially technology and automation
- (O4) Be active in the source of the components
- (O5) The stable demand for luxury vehicle lines
- (T1) Inflation rate, exchange rate tends to increase, affecting product cost.
- T2) Great impact from weather and climate
- (T4) Luxury line of other manufacturers in the industry
- (T5) Potential competitors are a major concern affecting the luxury car market of the company
- (S1) Number of employees is very young.
- (S2) Modern salary policy is highly competitive.
- (S3) The research and improvement of the products are highly paid attention by
Mercedes - Benz as well as MBV
Take advantage of opportunities by using strengths.
Combined O1, O2, O4, O5 - S1, S2, S3, S8 implement “Market penetration strategy”
Combined O3, O4, O5 - S3, S4, S5, S6, S7, S8 implementation: “New product development strategy”
Use the strengths to overcome the threats.
Combined S1, S3, S4, S5, S6, S8 - T1, T3, T4, T5 Implementation: Joint venture strategy
- (S6) Modern technology line, inheriting the advanced technology of Mercedes - Benz in the field of automobile production
- (S7) Good products and services quality.
- (S8) Prestige, strong brand position in the market.
- (W1) The employees has not yet integrated
- (W2) High competitive working environment, large rejection.
- (W3) The policy of attracting talented people is not attractive.
- (W4) Market activity has not made any difference with competitors
- (W5) Price strategy and price flexibility are not paid attention
Take advantage of opportunities to overcome weakness
Minimize weaknesses to avoid threats
Business strategies selection until 2022
Choosing a business strategy that is consistent with the strength of the company, will give the company new strength and position in the market, helping enterprises survive and develop The proposed strategies should meet the following conditions:
Through the Upstair analysis to review the current strategic options we can draw the following options:
- S / O combination strategy: market penetration strategy, new product development strategy.
- S / T combination strategy: Joint venture strategy
- W / O combination Strategy: Joint Venture Strategy
Based on the above analysis, we have selected 4 strategic options for theCompany These are suitable, feasible and timely strategies with the situation of the company in the right time as the analysis of Upstair has given.
Strategic Implementation Solutions
The general objective of MBV's business activities in the coming time is to achieve annual growth rate of 20-25% and pursue its business field In the condition of turbulent business environment and the fierce competition from automakers in the same segment, the luxury line of the lower segment, the company needs to maintain the existing market, and at the same time to continuously expand and occupy other market segments So I propose the following solutions:
4.2.1 Solutions for market penetration strategy implementation.
- Ensure quality and after sales service quality because this determines the prestige and brand of the unit, is the most effective adhesive of the enterprise for customers The company's view is that the service always meets the expectations of customers However, there are still shortcomings in the aftermarket and customer care policy.
- Regularly listen to feedback from customers for appropriate policies Build five star services, satisfy the highest customer satisfaction.
- Determine the main market segment of the company that luxury car market share Focus on exploiting the market expanding activities across 3 regions, penetrating the market in some big cities.
- The company needs to have a sales policy to retain its existing customers. Sales policy research offers reasonable pricing and discount rates for distributors, resellers.
- The company ensures the high customer satisfaction level, when competitors can hardly attract customers The Company can increase the financial benefits of its existing customers with tools such as discounts, discount rates and free shipping to its frequent buyers The company can strengthen its attachment to its customers by constantly communicating with customers so that they understand the needs and wants of each customer and ensure the service for each customer If possible, the company should create links as well as enhance customer care activities such as free consulting services, guiding customers to use effectively
- Strengthen the training of workers; implement the human development strategy to apply science and technology to production.
4.2.2 Solutions for implementing product development strategies
- The company can provide customers with packages of products and services designed according to specific requirements of each customer.
- Continue to implement good quality management system for checking and acceptance of product quality In which, take the prevention; improve the quality as the main task All work must be done well, done right from the beginning.
- Further improve awareness and propaganda about quality assurance for staffs in the whole company Make employees aware of their rights and obligations to ensure quality.
- Investing in equipment and machinery for quality assurance and technological research and improvement in order to raise labor productivity and reduce production costs and gain competitive advantage in the market.
- Research and improve the customer care and after-sales service, apply the achievements of modern technology in the company's activities to improve operational efficiency.
- It is necessary to have plans to pay attention to the planning and recruitment through linking with some universities, selecting students who have achieved good or better grades or set criteria in order to build human resources quality The company is committed to meeting the needs of its future development.
- Modernizing customer care management software to access advanced software in the world in order to improve the quality of after-sales service as well as to meet the needs of each specific customer
- Improve the research and development of science and technology to apply to the production process of the company.
- Besides investing in new equipment, more importantly it is the maintenance, repairing, testing equipment, raising the level, sense of using equipment and software of workers Only with a small error due to inaccurate equipment, software can also cause great damage to the economic and brand of the Company.
4.2.3 Strategic implementation solutions for joint venture strategy.
The general objective of MBV is to promote the strengths of the parties, joint ventures to carry out large-scale, multi-purpose projects, promote the strengths of the partners in the joint venture, and create synergy strength to achieve sustainable business performance; joint ventures with enterprises must share the same costs, benefits and risks to exploit business opportunities in the market However, the company must have its own independence and not interfere in the internal affairs of each other, enterprises that have more advantage, more contributions will enjoy higher benefits The specific solutions are as follows:
- Joint venture to create synergy for high quality products to meet the requirements of customers, because this is a necessary step for enterprises to share the cost, profit, risks exploiting business opportunities in the market However, the company must also have its own independence and not interfere with each other's internal affairs In a joint venture, any enterprise that has more advantages, more contributions, will enjoy higher benefits.
- Cooperate with other units in the same industry to expand into potential markets.
- Link with financial institution banks to develop flexible financial services to create favorable conditions for customers in payment and finance.
- Carrying out joint ventures with a number of units producing and supplying automobile spare parts in the country to increase the activeness in assembling and repairing activities and at the same time contributing to reducing the price and increase of the domestic ratio.
- Link with brands, products in the luxury segment such as 5-star hotel, luxury fashion lines to promote its image as well as MBV brand in the Vietnam market.
4.2.4 Strategic implementation solutions for narrowing the activity.
Currently, in the trend of integration of regional and world economy, competition by quality is increasingly dominant The luxury cars segment, competition also became extremely fierce The fierce competition with the competitors is brand with the similar product line with the product of MBV On the other hand, some markets, sales of MBV are low especially in the central provinces.
Reduce sales centers in cities and provinces with low sales volume; concentrate on resources to develop potential markets.
With product lines of sales volumes, production volume can be reduced to focus resources on sales to shorten delivery times for customers.
Narrowing the light truck business manufacturing is to reduce the management apparatus and seasonal contract workers, spend capital sources and human resources for the company's main product line.
The dissertation focuses on the following key issues:
Systematize the basic knowledge in building a business strategy.
Apply the basic theories of business strategy to analyze opportunities, threats from the business environment, strengths and weaknesses of Mercedes-Benz Vietnam and models for recognize factors affecting the business operation of the Company.
Propose the company's business strategy and solutions for implementing the strategy.
However, in the framework of my dissertation, I introduce the basic issues of business management theory and my point of view in developing the business strategy of Mercedes - Benz Vietnam.
With the limitations of my theoretical as well as practical knowledge, the dissertation cannot avoid the shortcomings; I look forward to receiving the comments of lecturers and friends.
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2 Ho Duc Hung (2000), Corporate Governance, Ho Chi Minh City National University Publisher.
3 Nguyen Thi Lien Diep, Pham Van Nam (2003), “Strategies and Business Policy”, Statistical Publishing House.
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4 Garry D.Sith Danny R.ARnold - BobbyG.Bizzell (1997), Strategy and
Business Strategy, Statistical Publishing House, Hanoi
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8 Quinn, J B, (2005), Strategies for Change: Logical Incrementalism,Homewood, Illinois, Irwin.
“For asking expert advice for research contents on Formulate business strategy of Mercedes-Benz Vietnam Ltd., Co (MBV)”
My name is Tran Thi Xuan Thuy, working for Mercedes-Benz Vietnam Ltd Co, who is researching the dissertation topic: “Formulate business strategy of Mercedes-Benz Vietnam Ltd., Co (MBV) for the period 2018 – 2022”.
In order to develop the company's development strategy, it is necessary to survey and evaluate the opportunities and weaknesses from internal factors within the Company, and compare the strengths and weaknesses of the Company with the main competitors, then select the most suitable strategy for each development stage of the company.
GDP growth of Vietnam over the years
According to the General Statistics Office, decline in agriculture and difficulties in the mining industry is considered as the main cause of low growth The agricultural area, which accounts for 11-13% of GDP, is estimated to grow at just 0.72% and contribute 0.09 percentages to GDP growth Meanwhile, the growth of forestry and fishery decreased slightly compared to the same period last year, making the agriculture, forestry and fishery sector increase only 1.36%, the lowest rate in the last 6 years.
The manufacturing industry sector remains the main driver of economic growth The sector's growth rate was 11.09%, higher than two years (2014: 8.45%, 2015: 10.60%).
However, with a contribution of up to 28.4% in the industrial sector's GDP structure, the decline of the mining sector has had a considerable impact on the region's growth as well as its overall economic growth By 2017, the mining sector declined by 4% over the same period last year, reducing 0.33 percentage point of economic growth.
Enterprises in industries continue to be tending to job cuts, especially in the mining sector The number of employees as of 01/12/2016 only increased 2.9% lowers than 6.4% in 2017 Of which, the labor force in the mining industry decreased by 6.9%; Power production fell by 1.3% Decline is in employment in all three SOEs, private enterprises and foreign invested enterprises Non-state and FDI sector growth was 1.8% and 4.9%, respectively down from 4.6% and 8.0% in 2015
Table 3.2 Overview of the economic situation in Vietnam over the years
No Target Unit Newest data
1 Retail growth Billion VND Nov./2017 344,809
2 GDP at constant prices (2010) Billion VND Quarter
3 Agriculture, forestry and fisheries Million people 2016 22.33
4 Industry and construction Million people 2016 13.16
10 Total Export Value Million USD Nov./2017 19,200
11 Total import value Million USD Nov./2017 19,000
16 Unemployment rate in urban areas % 2015 3.29
Second, the risk of inflation rises: No longer supported by external factors like last year, the consumer price index tends to increase again, especially in the last months of 2017 Price of basic commodity recovery combined with price adjustment of education and health services has put pressure on domestic inflation.
By the end of the year, the consumer price index rose 4.74% over the month12/2016 At the same time, core inflation has remained around 1.7-1.9% for the whole of 2017, which widens the gap between inflation and core inflation.
Third, financial market, currency and asset stability: Basically, operating monetary policy in 2017 is flexible and tight The State Bank of Vietnam (SBV) still follows the target of stabilizing inflation and is cautious with this goal. However, as the end of the year, inflationary factors appear more and more, including the recovery of energy prices and the adjustment of public service prices. The surplus on the balance of payments contributed to create favorable conditions for the State Bank to buy foreign currencies to supplement foreign exchange reserves Information at the regular meeting in December 2017, the government said, foreign exchange reserves reached $ 41 billion by the end of the year, the highest number ever.
In the foreign exchange market, after the new exchange rate determination mechanism has been implemented, the exchange rate movements were relatively stable in 2017 As of 21/11/2017, the reference exchange rate announced by the State Bank of Vietnam 22.697 VND / USD 1, up 1.21% compared to the beginning of the year Meanwhile, the exchange rate sold at Vietcombank also increased only 1.11% to 22,790 VND / 1 USD
Fourthly, the fact that oil exporters have reached consensus on cutting output may also push up oil prices again Average WTI crude oil price in November 2017 reached $ 45.6 / barrel, up 6.7% over the same period last year, while Australia's coal prices nearly doubled compared to the same period last year. in 2016 and reached $ 100 per ton This, though, is conducive to a balance of payments, but rising oil and energy commodity prices may put pressure on domestic inflation Although all of these issues are forecast, experts recommend that regulators should be cautious and careful in issuing policies.
These things led to the purchasing power of the economy tends to decrease compared to the previous years However, for the automobile manufacturing and trading sector, due to the fact that the policy changes and the actual demand inVietnam are still high, the industry's development potential in the coming years will still be growth.
State policies have a great impact on the industry and have a decisive influence on the development of the automobile assembly and assembly industry. Typically, a number of policies in recent years have had a great impact on the performance of the industry such as:
- The development strategy of the automobile industry up to 2025 with a vision to 2035 approved by the Prime Minister according to Decision No 1168 / QD- TTg dated July 16, 2014 with the following specific orientations: to set up the necessary business conditions for imported cars; At the same time, to complete and supplement the minimum technical standards for domestically-made automobiles in order to protect the interests of consumers in conformity with international practices
"and" to ensure consistency and stability of the system In the past 10 years, the policy has been in line with the trend of integration in order to create trust for consumers and producers as a prerequisite for investment activities.
- In addition, domestic automobile assembly, assembly and distribution activities must meet many conditions stipulated in the Decision No 115/2004 / QD- BCN dated May 12, 2004 of the Ministry of Industry (hereinafter referred to as the Ministry of Industry and Trade) on standards of automobile manufacturing and assembly enterprises and Circular No 20/2011 / TT-BCT dated May 12, 2011 of the Ministry of Industry and Trade regulating the import of automobiles 9 seat down. However, according to the provisions in Appendix 4 of the Law on Investment, Production, Import and Export of Automobiles, which are not on the list of conditional investment business lines
- The national technical regulation (QCVN: 09: 2015 / BGTVT) on quality, technical safety and environmental protection for cars stipulates the requirements for quality control, technical safety and protection Environment for vehicles manufactured, assembled and imported is defined in TCVN 6211 “Land-road traffic means - Style - Terms and definitions” and TCVN 7271 “Land-road traffic means - Automobiles - Classification by purpose” On the other hand, if the import of cars is a business line that restricts the business to ensure the interests of consumers, protect the environment and safety, life and health of the community, why not limit the import of motorcycles and other means of transport.
The excise tax is calculated in a new way.
In the beginning year of 2016, imported cars are almost meet a shock when imported cars increase retail prices due to the Decree 108/2015 / ND-CP guiding the excise tax amendment to provide new tax calculation prices to guide the Law on Amendment and Suppression of the Law on excise tax officially effective from 1/1/2016.