Oriental development strategy of nam duoc joint stock company to 2018

Nguyen Van Loi – IeMBA – B03 COMMITMENT -My name is NGUYEN VAN LOI, student in program international executive master of business administration Class is B03 which starts on September, 2011 The program belongs to:  Paris graduate school of Management  Thai Nguyen University I hereby commit: All contents of the thesis "Oriental Development Strategy of Nam Duoc joint stock company to 2018” by learning from my lectures of teachers, courses, own research on the Internet, books, and materials in and out of the country concerned Do not copy or use any post made by someone else I take full responsibility for my promises with you and school Student Nguyen Van Loi Nguyen Van Loi – IeMBA – B03 ACKNOWLEDGEMENTS To complete the program and graduate MBA, I would first like to thank the professors, Teacher of Thai Nguyen University and Paris Graduate School of Management have a chance the best condition so I can access and update the knowledge extremely useful and practical for the current job and my studies I would like to thank and deepest respect to Dr Pham Long - The only direct guidance during my research and complete this Thesis I would also like to thank the Executive Committee of Nam Duoc Joint stock company has facilitated and supported me to attend Masters MBA program director, would like to thank my colleagues at the Department of the Nam Duoc helped me in the data collection process to complete thesis Finally, I would like to thank family and friends encouraged cherished, encouraged me throughout the process of learning and research Sincerely thank you! Hanoi, 5th October 2013 Student Nguyen Van Loi Nguyen Van Loi – IeMBA – B03 CONTENT INTRODUCTION CHAPTER 1: THEORETICAL BASIS FOR DEVELOPINGCOMPANY’S BUSINESS STRATEGIES 1.1 Role of a strategy and a business strategy 1.1.1 Strategy and strategic levels 1.1.2 Business strategy and its orientations .5 1.1.3 Role of business strategy for a company 1.2 Model for developing a company’s business strategy 1.2.1 Analysis and development process of a comprehensive strategy [1] 1.2.2 External environment analysis 1.2.3 Internal Factors evaluation 16 1.3 Business strategy selection model 20 1.3.1 Analysis model of Threats - Opportunities - Weaknesses - Strengths Matrix (TOWS) [1], [2], [4] 20 1.3.2 Strategic Position and Action Evaluation Matrix (SPACE) 21 1.3.3 Quantitative Strategic Planning Matrix(QSPM) 22 CHAPTER 2: ANALYSIS OF ENVIRONMENT AND BUSINESS SITUATION OF NAM DUOC JOINT STOCK COMPANY 24 2.1 Introduction of Nam Duoc joint stock company 24 2.1.1 Overview of establishment and development history 24 2.1.2 Structure of Nam Duoc joint stock company 27 2.1.3 Functionally, the basic task of the management department 27 2.1.4 Status of activities Nam Duoc joint stock company period 2010 - 2012 .29 2.2 Analysis of the macro environment and industry environment of the company to identify threatss and opportunities 33 2.2.1 Analysis of the macro environment (PESTEL) .33 2.2.2 Analysis of the industry environment 40 2.2.3 Industry Analysis - external factor evaluating matrix 50 2.3 Analysis to identify the strengths and weaknesses of Nam Duoc 52 2.3.1 Marketing Capability 52 2.3.2 Operation Capacity .55 2.3.3 Financial capacity 56 2.3.4 Research and development capacity .59 Nguyen Van Loi – IeMBA – B03 2.3.5 The capacity of information systems 60 2.3.6 The capacity of human resources 61 2.3.7 Analysis of company operations:Matrix of Internal factors evaluating 62 2.4 Summary of analysis of opportunities,threatss, strengths, weaknesses 64 CHAPTER III CONCLUSIONS AND SOLUTIONS .66 3.1 Strategy selection .66 3.1.1 Model analysis of threats, opportunities, weaknesses, strengths (TOWS) 66 3.1.2 SPACE model of strategic options for the operations of Nam Duoc 68 3.2 Apply Quantitative Strategic Planning Matrix (QSPM) for strategy selection 70 3.3 Proposed corporate strategy .73 3.3.1 The objective of the main targets 73 3.3.2 Strategy for Market and Product 74 3.3.3 Propose solutions for implementation 74 3.3.4 Recommendations for implementation and strategic management 76 CONCLUSION 78 REFERENCES 79 Appendix 1: Model competitive forces of Michael E Porter [3] 81 Appendix 2: Example of strategic position and action evaluation matrix (SPACE) 82 Appendix 3: Structure of Nam Duoc joint stock company .83 Appendix 4: GDP growth in 2010-2012 & forecast 2013-2015 84 Appendix 5: Comparison of Vietnamese economic growth with the past and in comparison with other countries in the area 84 Appendix 6: Information of population concerning to health sector in Vietnam 85 Appendix 7: Value and growth of the pharmaceutical industry market segments in Vietnam 85 Appendix 8: Summary of implementation and investment in market research of Nam Duoc in 2010-2012 86 Appendix 9: Images of the factory and line production of Nam Duoc 86 (Source: Photo by Nam Duoc Co., Ltd provided in July, 2013) 86 Appendix 10: Personnel structure and staffing levels of Nam Duoc at 31th Junne, 2013 87 Appendix 11: Movements in key personnel in the first months of 2013 87 Appendix 12: The question of Drugstore and agent research in July, 2013 88 Nguyen Van Loi – IeMBA – B03 Appendix 13: The survey questionnaire, assessing the current state of strategy, management system for the chiefs of functional departments 95 LIST OF ABBREVIATIONS -List of Vietnamese Abbreviations ECO: ECO Pharmaceutical Joint Stock Company FTA: Market-Oriented research company GS.: Professor GVHD: Course Instructor Sao Thai Duong: Sao Thai Duong Pharmaceutical Joint Stock Company OPC: OPC Pharmaceutical Joint Stock Company TS.: Dr Nam Duoc: Nam Duoc Joint Stock Company Traphaco: Traphaco Joint Stock Company List of English Abbreviations BMI: Business Monitor International EFE: External Factor Evaluation Matrix ETC: Ethical GDP: Gross Domestic Products GLP: Good Laboratory Practice Nguyen Van Loi – IeMBA – B03 GMP: Good Manufacturing Practice GNP: Gross National Product GSP: Good Storage Practice HACCP: Hazard Analysis and Critical Control Points 10 IFE: Internal Factor Evaluation Matrix 11 IMS: Intergraded Management System 12 ISO 9000:2008: International Organization of Standard 13 KPI: Key Performance Indicator 14 MBA: Master of business administration 15 OTC: Over-The-Counter 16 R&D: Research and Development 17 SA 8000: Social Accountability 18 TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights 19 WHO: World health organization Nguyen Van Loi – IeMBA – B03 LIST OF TABLES Table 1.1 Definitions of particular strategies Table 1.2 Framework for strategy analysis .8 Table 1.3 Competitive Image Matrix 14 Table 1.4 Example of EFE Matrix 16 Table 1.5 Example of Internal Factors Evaluation Matrix 19 Table 1.6 TOWS Matrix 20 Table 1.7 QSPM Matrix 22 Table 2.1 Subsidiaries, associated companies of Nam Duoc 27 Table 2.2 Balance Sheet of Nam Duoc in 2010-2012 .30 Table 2.3 Business Results of Nam Duoc 2010-2012 .31 Table 2.4 Business Results of Nam Duocfirst months of 2013 compared to the same period of 2012 .32 Table 2.5 The size and growth of Nam Duoc market 2009-2017 41 Table 2.6 Matrix of image competition of Nam Duoc compared to direct competitors .48 Table 2.7 Matrix of external factors evaluating(EFE) .50 Table 2.8 Revenue and market share of the mainherbal brands in the market of sinusitis 52 Table 2.9 Number of personnel in distribution system of Nam Duoc from 2010 – June 2013 53 Table 2.10 Profitability indicators of Nam Duoc in 2010-2012 56 Table 2.11 Indicator assessment asset management capability in 2010-2012 57 Table 2.12 Indicators of the solvency in 2010-2012 .58 Table 2.13 Investments and research & development results 59 Table 2:14 Matrix of Internal factors evaluating(IFE) 62 Table 3.1 Tows Matrix 66 Table 3.2 Model selection strategies SPACE in Nam Duoc 68 Table 3.3 QSPM for Nam Duoc’s strategy selection .70 Table 3.4 Oriented targets of Nam Duoc by 2018 73 Table 3.5 Proposed strategic product groups 74 Nguyen Van Loi – IeMBA – B03 LIST OF FIGURES Figure 2.1 Structure of Vietnam's population 36 Figure 2.2 ROE of the pharmaceutical industry in Vietnam 42 Figure 2.3 The sequence of the pharmaceutical companiesare high appreciated for the customer care service 54 Nguyen Van Loi – IeMBA – B03 INTRODUCTION Purposes and reasons for the thesis topic Medicinal product is a special commodity with many specific characteristics Thanks to current trend of integration, pharmaceutical industry in Vietnam in general and herbal medicine in particular is developing quickly It is estimated that the rate of the pharmaceutical industry’s development in Vietnam to grow from 15% to 20% annually, in which herbal medicine and functional foods grew by 25% That is the reason why in the past years, the number of firms participating in this market is growing rapidly Besides, the trend of imported herbal products also increased significantly From June 2012 to the present, due to signs of difficulties in economy and adjustments in the government policies, the growth rate of this sector seems to slow down and compete fiercely Nam Duoc has been established for 10 years Since its establishment, the company has developed in-depth orientation of herbal products and natural medicines Following plant construction phase (2004 - 2006), the company sometimes struggled due to spreading investment and capital crisis (2006-2009) But from 2009 to now, the company has grown at a very rapid pace Nam Duoc is considered one of the most promising companies in the pharmaceutical industry, attracting great interest from investors However, from June 2012 to June 2013 there are signs of slowdown and potential risks in Nam Duoc’s growth rate The company began experiencing some confusion in strategy, a number of products started showing signs of revenue decline and key personnel began leaving Many projects were considered but not defined as strategic priorities, causing the Board to be confused in project selections As an MBA student and working in a management position, I chose my thesis with following research topic: “Oriental DevelopmentStrategy of Nam Duoc joint stock company to 2018.” Nguyen Van Loi – IeMBA – B03 Research Goals: a Systemize theories related to the research topic b Analyze, evaluate and realize issues related to the research topic c Propose strategies and solutions for strategy implementation of Nam Duoc joint stockcompany from now to 2018 Research Scope: Strategic management is the process of identifying strategic objectives of the organization, developing policies and plans to achieve the set objectives and allocate the organization’s resources for implementation This is a very broad field in a company’s operation and needs to be studied on large scale and for a long time Due to limited researching time, however, the thesis only focuses on analyzing and evaluating external factors and internal resources, from which I propose a comprehensive strategy for Nam Duoc jointstock company from present to 2018 Research Methodology: The author used research methods as analysis, synthesis, statistical comparisons to perform his task The author collected following external information:  General information on economy, politic, society, culture and law: annual reports made by World Bank, global economic organizations and Vietnam Government  Basic information of the industry, including: size, trend and cycles of development of the sector and sub-sectors, consumption information related to the industry, information found from reports made by World Health Organization (WHO) and Bussiness Monitor International (BMI)  The author studied information on competitive capacity including brand position, compared competitive factors by a direct survey of the