Business development strategy of mercedes benz vietnam ltd , co –period 2018 20221

INTERNATIONAL EXECUTIVE MASTER OF BUSINESS ADMINISTRATION PROGRAM DISSERTATION SUMMARY BUSINESS DEVELOPMENT STRATEGY OF MERCEDES-BENZ VIETNAM LTD., CO – PERIOD 2018 - 2022 Full name : Tran Thi Xuan Thuy ID : 1001806 Class : IEMBA Intake 01 March 2018 BUSINESS DEVELOPMENT STRATEGY OF MERCEDES-BENZ VIETNAM LTD., CO – PERIOD 2018 - 2022 CHAPTER I: 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 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: " Business Development 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 Research objectives and questions General objectives Develop business strategy for Mercedes-Benz Vietnam to 2022 Detail objectives - 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 Research questions - 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: Data collection 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 - Number of samples: 10 - 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: Data processing methods The author uses Excel software to process primary and secondary data; using statistical methods, expert methods, analytical methods, comparative methods 1.5 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 ForeignInvested 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 I: Introduction 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., Company to 2022 CHAPTER II: THEORETICAL BASIS OF STRATEGIC MANAGEMENT Theoretical basis of Strategy and Strategic Management Concepts 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 Strategic formulation process 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 (reviewing business tasks) and step (policy setting) can be omitted if the goals and policies of the enterprise not make the necessary changes Research the environment to identify key opportunities and threats Research the Identify current environment toReview identify goals and key opportunities business and strategies threats tasks Identify current Review Internal control to goals and business identify strengths and strategies tasks weaknesses Internal control to identify strengths and weaknesses Strategy formulation Strategy formulation Set up long-term goals Set up long-term goals Set annual goals Set Distributio annual n of goals resources Measure and evaluate performance Build, choose strategy Distributio Set n of resources policies Measure and evaluate performance Build, choose strategy Set policies Feedback Feedback Strategic Execution Strategic assessment Strategic Execution Strategic assessment 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 Michael Porter developed a five-force model for industrial environmental analysis, as detailed below: Figure 2.3: force-model of Michael Porter, 2009 The industrial environment analysis (competitive environment) aims to recognize the current and future competitive pressures that are threatening enterprises Internal environment analysis of an organization      Marketing Production technology Human Finance, accounting Management Strategic formulation: The Strategic formulation process consists of three stages:    Stage 1: INSERTING Stage 2: COMBINATION Stage 3: DECISION Strategic formulation tools Some strategic planning analysis tools External Factor Evaluation matrix (EFE): EFE allows strategists to summarize and evaluate information of economy, society, culture, demography, geography, politics, government, law, technology, and competition Internal Factor Evaluation matrix (IFE): The final step in internal analysis is to build an internal factor evaluation matrix (IFE) The tool that formulates this strategy summarizes and evaluates the strengths and important weaknesses of the functional business divisions, and it also provides a basis for identifying and evaluating the relationship between these divisions Competitive profile matrix: Competitive profile matrix compares among enterprises to competitors, mainly based on the factors that affect the competitiveness of the enterprise, thereby helping the business executives identify the strengths, weaknesses of the enterprise and the strengths and weaknesses of competitors, determine the competitive advantage for enterprises and weaknesses that enterprises need to overcome; the comparison supplies us a lot of important strategic information The way to build competitive profile matrix is similar to EFE building SWOT matrix: The SWOT matrix is used to list all opportunities, threats, strengths and weaknesses within an enterprise with appropriate order and location Based on the relationship between the factors, analysts will select the appropriate strategic solutions through the combination: Strengths and Opportunity (SO), Strengths and Threat (ST), Weakness and Threat (WT), Opportunity and Weakness (WO) Depending on the business sector of the enterprise, the administrator will use one or more SWOT matrices to perform the analysis and select the solution Use UPSTAIR tool to select the strategy The basis for strategy choosing of the enterprise is: the attractiveness of the business industry and the competitive position of the enterprise; Strategic objectives of the enterprise; Views of senior managers; Financial ability of the enterprise; Competence and qualifications of the management team; The reaction of the stakeholders; The timing and maturity of business opportunities; The results of the current strategic analysis; Corporate culture Business strategies of the enterprise Focused growth strategies Market penetration strategy 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 Market development strategy 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 this, enterprises use market development strategies New product development strategy 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 Diversification strategies  Vertical integration diversification strategies  Horizontal diversification strategies Growth strategies by outward way  Growth strategy through merger  Growth strategy through annexation (acquisition)  Growth strategy through joint ventures Decline targeted strategies Strategies serve stability target CHAPTER III: INTERNAL AND EXTERNAL ENVIRONMENT ANALYSIS IMPACTS ON THE BUSINESS ACTIVITIES OF MERCEDES VIETNAM LTD., COMPANY Introduction about Mercedes Benz Founded in 1883 and regarded as the oldest car maker that still alive today, MercedesBenz 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, MercedesBenz 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 - Tel: +84 - 28 - 35889111 - Fax: +84 - 28 - 3895 8713 - 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 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 Chi Minh 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 Figure 3.1: Organizational structure of Mercedes-Benz Vietnam Board of Management Board of Management General Director General Director Deputy General Director Director Director – HN branch Director Manufacturing Dep Manufacturing Dep Planning Dep Admi Dep Organization Dep Planning Dep Admi Dep Organization Dep Deputy General Director Technique Material Director – HN branch Dep Dep Quality Dep Technique Dep Material Dep Quality Dep Business Dep Maintenance Division Customer care Dep Business Dep Maintenance Division Customer care Dep Vietnam Star Haxaco (Source: Human Resources Department) Analyzing external environment factors influences the strategy development of the Company External environment factors Macro environment      Political factors Economic factors Legal factors: Cultural factors Natural factors An Du Technological factor:  Real situation:  Achievement:  Limitations: Population factors: According to the world population statistics as of 26/06/2017, the population of Vietnam has 95,396,476 people Vietnam's population accounts for about 1.27% of the total population Viet Nam ranks 13th among the most populous countries in the world; the average population density of Vietnam is 308 people / km2 Population occupies 34.7% of the total population (33,121,357 people) The average age of the population is 30.8 years This is clearly shown in the table below: Micro environmental factors  Direct competitors:  Potential competitors:  Alternative products:  Customers:  Suppliers: Analysis of opportunities, challenges and external factors evaluation matrix (EFE) Table 3.7: External Factor Evaluation Matrix (EFE) of the Company No External environmental factors I Opportunities Political and social stability GDP Growth rate Technology is growing, especially technology and automation Be active in the source of the components The stable demand for luxury vehicle lines Threats Inflation rate, exchange rate tends to increase, affecting product cost Great impact from weather and climate Large customer pressure Luxury line of other manufacturers in the industry Potential competitors are a major concern affecting the luxury car market of the company Total II 10 III Importance level Classificatio n Importance score 0.09 0.1 0.093 2.5 2.7 2.8 0.225 0.270 0.260 0.12 2.8 0.336 0.1 2.7 0.270 0.09 2.6 0.234 0.13 2.8 0.364 0.086 0.095 2.6 2.7 0.224 0.255 0.0.9 2.7 0.259 2.692 Source: Summary of expert’s opinions The total score has weight of 2,692 indicates that the Company's response to external opportunities and threats is above average but not really good Analyzes strengths, weaknesses and internal factors evaluation matrix of the Company (IFE) Based on the analysis and assessment of internal factors and operational capability of MBV, compared with some competitors, the Company has the following strengths and weaknesses: Table 3.11: Internal Factors Evaluation Matrix (IFE) No I External environmental factors Importance level Weight Importance scores Strength Number of employees is very young 0.06 3.1 0.186 Modern salary policy is highly competitive 0.05 0.15 The research and improvement of the products are highly paid attention by Mercedes - Benz as well as MBV 0.1 3.4 0.34 Good financial capacity 0.09 3.6 0.324 0.08 3.7 0.296 Modern technology line, inheriting the advanced technology of Mercedes - Benz in the field of automobile production 0.1 3.1 0.31 Good products quality 0.13 3.5 0.455 Prestige, strong brand position in the market 0.12 2.9 0.348 0.05 2.3 0.115 II Good business results Weaknesses The employees integrated and has services not yet 10 High competitive working environment, large rejection 0.05 2.4 0.12 0.05 2.48 0.124 12 Marketing activity has not made any difference with competitors 0.05 2.25 0.1125 13 Price strategy and price flexibility are not paid attention 0.07 2.1 0.147 III Total 11 The policy of attracting talented people is not attractive 3.0275 (Source: summary of expert opinions) The total scores of the company are 3.0257 > 2.5, indicating MBV's internal strengths are more prominent than its competitors in the industry Besides the strengths of the company such as prestige, modern technology, good customer service, the company has some drawbacks such as marketing activities are not different from competitors in sector, price strategy is not flexible Analyzing and evaluating the results of business production of the Company in the past shows that the volatility of the business environment has a great impact on the business activities of the Company The competition among enterprises in the industry is becoming fiercer and fiercer as Vietnam's economy gradually integrates into the world economy In order to ensure the survival and development, Vietnamese enterprises in general, MBV in particular need to have a broader vision to actively respond to the challenges by the business environment, take advantages opportunities, overcome weaknesses, promote their strengths with the goal of constantly improving competitiveness To that, the company needs to develop a suitable business strategy, orientation for production and business activities of the company to meet the target CHAPTER IV: FORMULATE THE BUSIESS STRATEGY OF MERCEDES VIETNAM LTD TO 2022 Company development orientation Objectives of the Company The long-term objective is defined for a period of 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: The immediate objective of the company by 2022 SWOT matrix Table 4.1: Summary of SWOT matrix at MBV OPPORTUNITIES THREATS - (O1) Political and social stability - (T1) Inflation rate, exchange rate tends to - (O2) GDP Growth rate - (O3) Technology increase, affecting product cost is growing, especially - (T3) Large customer pressure technology and automation SWOT MATRIX - T2) Great impact from weather and climate - (O4) Be active in the source of the components - (O5) The stable demand for luxury vehicle lines - (T4) Luxury line of other manufacturers in the industry - (T5) Potential competitors are a major concern affecting the luxury car market of the STRENGTHS Take advantage of opportunities by using strengths - (S1) Number of employees is very young - (S2) Modern salary policy is S / O Combination: highly Combined O1, O2, O4, O5 - S1, S2, S3, S8 competitive implement “Market penetration strategy” - (S3) The research and improvement of the Combined O3, O4, O5 - S3, S4, S5, S6, S7, S8 products are highly paid attention by Mercedes implementation: - Benz as well as MBV - (S4) Good financial capacity - (S5) Good business results - (S6) Modern technology line, inheriting the company Use the strengths to overcome the threats strategy” “New product development S / T Combination: Combined S1, S3, S4, S5, S6, S8 - T1, T3, T4, T5 Implementation: Joint venture strategy 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 WEAKNESSES: - (W1) The employees has not yet integrated Take advantage of opportunities to overcome Minimize weaknesses to avoid threats weakness - (W2) High competitive working environment, W / O combination: large rejection - (W4) Market activity has not made any difference with competitors - (W5) Price strategy and price flexibility are not paid attention Combined: W1, W4, W5, - T1, T3, T4 Combined: W3 - O3, O4, O5 implementation: implementation: “Narrowing strategy” - (W3) The policy of attracting talented people is “Joint venture strategy” not attractive W / T combination: 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: R I A F S RESOURCES IMPLEMENTATION ADVANTAGE TIMING SIMPLE 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 - W / T combination strategy: Narrowing strategy Comment: Based on the above analysis, we have selected strategic options for the Company These are suitable, feasible and timely strategies with the situation of the company in the right time as the analysis of Upstair has given 4.4 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 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