Topic evaluating and improving the competitive advantageat sisc instrumentation joint stock company

NAM E MAJ OR YEA R NATIONAL ECONOMICS UNIVERSITY BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT B-BAE BACHELOR THESIS Major BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT Topic: Evaluating and Improving the Competitive Advantage at SISC Instrumentation Joint Stock company Student’s name: Võ Thị Nhi Na HANOI, 2022 NATIONAL ECONOMICS UNIVERSITY BACHELOR OF BUSINESS ADMINISTRATION IN ENTREPRENEURSHIP MANAGEMENT B-BAE BACHELOR THESIS Topic: Evaluating and Improving the Competitive Advantage at SISC Instrumentation Joint Stock company Student:Vo Thi Nhi Na Speciality: Bacherlor of Administration in Entrepreneurship Management Class: BBAi1 Student’s ID: 11183439 Supervisor: Tran Huy Phuong HANOI, 2022 ACKNOWLEDGEMENTS This study was conducted as our graduation thesis during my last semester at National Economics university in 2022 Within the graduation thesis with the topic ‘Improving the competitive advantage of SISC Instrumentation Joint Stock company’, I had the chance to independently apply the knowledge achieved from my years of participating in the program to the individual degree project I would like to mention a number of people who have helped me during this journey Firstly, I would like to express my deep gratitude to my tutor Phd Tran Phuong Huy for dedicating effort to devote valuable commends and feedbacks Lastly, I would like to thank the board of director and the management staff of SISC Instrumentation Joint Stock company for the time and support during my internship TABLE OF CONTENTS COVER PAG ACKNOWLEDGEMENTS STATUTORY DECLARATION ABBREVIATIONS LIST OF TABLES LIST OF FIGURES 10 EXECUTIVE SUMMARY 11 INTRODUCTION 12 The reason for choosing the topic General objectives 12 Specific objectives 13 12 Research subjects 13 Scope of the Study Methodology 13 14 Thesis structure 13 CHAPTER 1: THEORETICAL REVIEW 15 1.1 Overview of Basic concepts 15 1.1.1 Competitiveness 15 1.1.2 Competitive advantage 15 1.1.3 Sustainable competitive advantage 16 1.1.4 Competitive Capacity16 1.2 Criteria to evaluate the competitiveness of enterprises: 16 1.2.1 Qualitative factors 16 1.2.2 Quantitative factors 16 1.3 Frameworks to measure the competitive advantage 1.3.1 Porter’s Five Forces framework 18 17 1.3.2 Competitive profile matrix 19 1.4 Factors affecting the competitiveness of enterprises 1.4.1 External factors 20 1.4.2 Internal factors 21 CHAPTER 2: PROJECT’S CURRENT SITUATION 20 23 2.1 Market context 23 2.2 Business general information 2.1.1 Overview of SISC 24 24 2.1.2 SISC’s current situation 26 2.2 Findings 30 2.2.1 Introduction of SISC’s competitors 30 2.2.2 Advantages and disadvantages of SISC’s competitors 30 2.2.3 Key success factors 31 CHAPTER 3: SOLUTIONS TO BUSINESS ISSUE 40 3.1 SISC's current competitive position 40 3.1.1 Strengths of the competitive position of SISC 40 3.1.2 Weaknesses of the competitive position of SISC 40 3.1.3 The cause of the weaknesses 40 3.2 Recommendations to improve the competitive advantage of SISC 3.2.1 Optimizing the delivery process 41 41 3.2.2 Building a healthy working culture to promote motivation 42 3.2.3 Create value for the society 43 3.2.4 Building after-sales service management to achieve customer satisfaction 44 3.2.5 Create proper training program to the technical team REFLECTION 46 CONCLUSION 47 REFERENCES LIST 48 45 APPENDIX 52 STATUTORY DECLARATION I hereby declare that I have written the submitted Bachelor Thesis independently I did not use any outside support except for the quoted literature, and other sources mentioned at the end of this paper I marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content Hanoi, 31/05/ 2022 Signature ABBREVIATIONS CPM: Competitive profile matrix KSFs: Key success factors EDI: Electronic data interchange CSR: Corporate social responsibility LIST OF FIGURES Figure 1.1 Porter's five forces framework 16 Figure 1.2 Competitive profile matrix example 17 Figure 2.1 Market size of the medical equipment in Vietnam in 2021 21 Figure 2.2 Vietnamese medical equipment market structure .21 Figure 2.3 Products distributed by SISC 23 Figure 2.4 SISC Business Structure 23 Figure 2.5 Ratio of SISC’s bidding results 32 Figure 2.6 Ratio of Nam Viet’s bidding results 32 Figure 2.7 Ratio of DKSH’s bidding results 33 Figure 2.8 A product of SISC (left) and a product of DKSH (right) 34 Figure 2.9 A product of SISC (left) and a product of Nam Viet (right) .34 Figure 3.1 Purchase order transaction before integrate EDI 39 Figure 3.2 Purchase order transaction after integrate EDI 39 LIST OF TABLES Table 1.1 Business results of SISC from 2019-2021 Table 2.1 The business results report of SISC Equipment Joint Stock Company in 20192021 19 Table 2.2 Total expenses and net profit of SISC from 2019-2021 .20 Table 2.3 Professional qualification of SISC from 2019-2021 21 Table 2.4 Short-term assets, short-term debt and inventory of SISC 2019-2021 21 Table 2.5 Total debt and assets, net income and revenue, shareholder’ equity of SISC 20192021 22 Table 2.6 Evaluation of factors that impact the competitive advantage of SISC .24 Table 2.7 Competitive profile matrix of SISC and its competitors 26 10 system installations When the customer turns on the system, their specialists will be there to assist They provide installation and commissioning services such as visual examination of the unit and installation, performance verification testing, operator training, and ensuring the unit is correctly functioning with the equipment for maximum performance Even though SISC can not respond as quickly as DKSH staff, they have excellent repair services with fast repair turnaround and reduced instrument downtime, the company also offers longtime insurance to increase customer retention rate Delivery speed is affected by the Covid pandemic, the process of importing has become more difficult Consequently, SISC has been affected as the company could not meet the deadline to deliver products to the customer The process of creating commodity mobilization orders and the economy contracts is time-consuming since the operating department does not have enough employees, the employees also keep messing up the number of products that need to be delivered, and they constantly have to redo the process because of those mistakes About DKSH, they have an effective transportation system because it is greatly outsourced to specialized local logistics companies, contrary it raises the costs for logistics and distribution For the operation of the distribution centers, they procure the services of foreign workers engaged via specialized labor service providers where there is a shortage of local labor This includes workers for the adaptation or customization of products to local market conformity (e.g repacking or labeling) For Nam Viet, the paper process is fast but lacks accuracy, the delivery time is reasonable since they focus on speed rather than correctness Overall, the total score of SISC is 3.02 which is higher than Nam Viet at 2.84 but lower than DKSH at 3.31 Based on the profile competitive matrix, the competitive advantage of SISC is 1.06 times higher than the competitive advantage of Nam Viet which indicates the competitor is close to surpassing SISC While SISC is 1.09 times lower than DKSH, this competitor is strong as they earn the highest score in four key success factors: brand image, quality of products, quality of technical staff, and after-sale services, Nam Viet only earns the highest score in the price of the products, SISC earns the most important sector which is bid capacity This shows the urgency to improve SISC's competitive advantage before being left behind by DKSH and being outperformed by Nam Viet 2.4 Discussion 2.4.1 Strengths of the competitive position of SISC 39 SISC’s strongest competitive advantage is the bidding capacity since this is the most effective method to generate profit and attract more customers for the company They train their purchasing and operating employees on the details of the equipment to analyze every requirement of the contractors on a specific bidding package That is why the percentage of the expected price to the actual price of the winning bid is high SISC’s product quality is another benefit that SISC has over competitors The company has a quality control department which is the final step in the medical device manufacturing process Quality control ensures that the soon-to-be-delivered product is free of faults Following the quality management standard ISO 9001:2015, ISO 9001 provides standards to build a scientific quality management system, control risks, prevent errors, help businesses operate more efficiently, and improve customer satisfaction, as stated by interviewee At the same time, it contributes to raising the awareness of responsibility and awareness of employees, directing the business to the strategic direction of stable and long-term development 2.4.2 Weaknesses of the competitive position of SISC According to the competitive profile matrix, two major disadvantages of SISC are brand image and delivery speed On the other hand, the company's brand image is one of its weaknesses as the company is more focused on retaining loyal customers rather than generating new customers They have not been able to show the community and the employees their value The delivery speed of the company is not as great as the other two competitors because there are still problems in the process After-sale services, quality of technical staff, and price of the products are not necessarily weaknesses, but certainly not benefits, there is still room for development in those areas 2.4.3 The cause of the weaknesses 2.4.3.1 Subjective causes The reason for the poor brand image is that the corporation did not prioritize the marketing stage of sales According to research conducted during the internship, there are only two people in the company's marketing department, so the problem of proposing ideas for sales promotions is still limited; there are not many new and unique ideas, so the company continues to sell products in the same manner as competitors Moreover, the poor brand image refers to the image of the company not only to customers but also to the community and the employees Furthermore, 40 the company does not hire more people equal to the amount of work, the employees are overloaded and tend to make small detail mistakes, also the remuneration policy and the working culture of the company are unclear and cannot motivate the customer to work more effectively SISC also have problems with delivery speed because they not adjust to the current situation to reach optimal performance Furthermore, a few steps in the import process are handled manually, leading to unnecessary procedures with a high potential for errors 2.4.3.2 Objective causes Poor marketing activities are also a problem since the costs of advertising or sales promotion are extremely expensive The corporation is still hesitant to invest in marketing and is learning to develop particular strategic directions to ensure the company's costs and smooth operation Building remuneration programs, like marketing, is an extremely expensive issue Furthermore, as life improves and science and technology advance, the company importing equipment must be sensitive to the changing technological scenario in order to rapidly grasp the trend and avoid becoming obsolete 41 CHAPTER SOLUTIONS TO BUSINESS ISSUE 3.1 Recommendations to improve the competitive advantage of SISC 3.1.1 Optimizing the delivery process To minimize errors in the delivery process, Electronic Data Interchange (EDI) could be the solution to eliminate human errors According to Swatman (2002), electronic data interchange is a method of exchanging business information and documents between business partners, and businesses These documents can be anything from delivery notes, invoices, purchase orders, and receipts EDI in supply chain management is used to arrange the transfer of many types of documents such as bills of lading, customs documents, shipping status, routing instructions, invoices, and many other related documents With EDI, transactions are automated and organized to facilitate the creation and transmission of invoices and other necessary data This system replaces the existing manual method which consumes a lot of human resources of enterprises The supply chain can be very difficult without EDI to serve the process of synthesizing and analyzing data for planning, synchronizing information flow between actors in the chain: suppliers, manufacturers, distributors, and consumers, and smooth connection of logistics activities: transportation, warehousing, customs clearance, and risk management thanks to flexible and timely traceability of goods origin, and at the same time trust in consumers (Jansees, 2011) Figure 3.12 Purchase order transaction before integrate EDI (Source: Hong Dao) 42 Figure 3.13 Purchase order transaction after integrate EDI (Source: Hong Dao) Taking Big C - a large-scale retail business with the second largest market share in Vietnam as an example Big C has used the auto fax system combined with the portal to support the exchange of orders and receipts with suppliers However, this system has not fully met the expectations of Big C's management as well as the important requirements of the increasingly competitive retail industry in the Vietnamese market In order to improve supply chain efficiency, better support suppliers to deal with Big C Big C decided to apply EDI electronic data exchange technology and ERP integration solution successfully (Dao, 2021) 3.1.2 Building a healthy working culture to promote motivation Enabling personal growth and recognition, to grow business, we also need to enable our people to grow The diversity of our business and the industries we serve to offer significant learning and development opportunities Emphasize hands-on experience, empowerment, and stretch assignments as our primary way of developing employees This, combined with feedback and learning from others, provide a balanced development approach known as “70-20-10” The 70-20-10 model is a training process that includes: 70% “real world experience” through daily work, challenges and practice; 20% “social learning” through learning, discussing with others, or communicating online; and 10% “education” through training courses and events This is a solution to the learner's experience and an effective method to improve the capacity of the individual These ratios are not fixed but will be distributed depending on the nature of the job and the size of the business, but the difference will not be too much and the 70-20-10 ratio is considered a "standard milestone" for each person Developed since the 1980s by leading experts, 70-20-10 can be called a breakthrough in training and development in large enterprises (Arets, 2016) According to Mr Schmidt - former CEO of Google: " This is a great way to promote a change in mindset for employees, creating a culture of willingness to say "yes" instead of 43 saying "no" It also encourages new ideas to the company and make them come true.” Encouraging our people to own their professional development We promote internal talents whenever possible instead of hiring externally All open positions are advertised in an internal job market and we enable internal mobility including international assignments For management-level positions, the ratio of internal promotions versus external hiring is a closely monitored performance indicator Performance and feedback culture can be expressed through mutually agreed quantitative and qualitative objectives and is linked to remuneration All employees participate in a formal annual appraisal with their manager For management-level employees, an online performance and talent management solution includes a personal development plan Regular dialogues between managers and employees on development objectives, including constructive feedback, are also a part of the development journey 3.1.3 Building after-sales service management to achieve customer satisfaction Installation and training are considered two methods of after-sales service that are applied in SISC In order to improve these two methods, the company needs to establish an effective training program specifically for the technical staff as stated by interviewee 2, medical equipment is complex to install, and it is much-required training to handle these kinds of equipment If an installation goes wrong, it may cost the organization additional money since the customer may file a claim, and the organization may have to pay a large sum to the consumer (Wetmore, 2004) Documentation is a form of information on equipment operation, maintenance, installation, and repair of a product It is basically guidance on how to use, install and maintain the products Good documentation may lead to reduce support costs, and ultimately, an improvement in the company’s status (Jonke, 2012) The company needs to obtain information and create a document of each product to send to the customer every time they purchase equipment Update new information about the product's technology regularly via email for customers who have purchased that product to prevent causing confusion Thereby minimizing problems and reducing the cost of after-sales service (Jonke, 2012) Online support is typically experts provide online advice to consumers on how to use the product more efficiently and, on occasion, to assist them with issues The cost of online problem solving is substantially lower than that of a physical visit, 44 and customers are delighted to get solutions faster with less time and money spent on product installation and usage (Purwati, 2020) Feedback has become increasingly crucial these days Organizations are more and more customers oriented, thus they want to know what their customers want in a product or service Such data can be used to create more beneficial products and services for clients who are more likely to buy their products and hire their services When a consumer is unsatisfied with a product or service, he or she has two options The first is to abandon the specific product in favor of one of the alternatives The second option is to make comments or complaints about the same product, consumer feedback is critical for the business to develop (Barlow and Moller, 1996) 3.1.4 Create proper training program to the technical team Suggested by interviewee 2, fostering, retraining, and improving the qualifications of medical technicians according to the requirements to standardize professional skills as well as expand training forms such as an address-based link Reviewing, investigating, and forecasting the training needs of the technical team to adjust the size, structure, qualifications, and training methods appropriately On the other hand, focus on building training programs, especially in the direction of diversification, standardization, and modernization; to keep up with the development of science - technology, in line with the requirements of the country in the field of medical technology On the basis of the approved planning project, strengthen the completion and improve the professional qualifications for the teaching staff; increase investment in modern medical technical equipment for training and scientific research, striving to become a center for training high-level medical technicians 45 REFLECTION Being an intern has brought a new perspective into my life, I used to think very simple and all of my decisions were all based on vague assumptions, but since I become an intern, I suddenly have more responsibility in my decision because now, not only it affects my life, it also affects others and especially my company performance The internship plays as stimulation of real-life working experience, I have to participate in the company activities like an official employee which will help me have a clear concept of what to be expected of me from the company when I apply for jobs in the future During the internship period, one of the most valuable lessons I have learned was always at your best concentration and carefully review every project that is assigned to you Of course, we are going to make mistakes along with the way, what is more, important is to realize where you were wrong, learn from it and never make those mistakes again 46 CONCLUSION Through research on the current situation of production and business activities of the company and analyzing the competitive advantage by using the profile competitive matrix the company has achieved growth in business activities well as competitive position in recent years However, SISC faces difficulties in managing the delivery process, brand image, and the quality of the technical staff, as can be seen, the company 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Who are considered the main competitors of the business? What are the pros and cons of the competitors above? Which policies were applied in order to enhance the competitiveness of the business? Mentioning the personnel training, which part requires the most development? Fill in the table below which displays the importance of each factor The numbers indicate each level means extremely unimportant, is neutral, is important, is quite important, and is extremely important Explain the reason why you chose them Key Success Factors Brand image Bid capacity Price of the products 52 Quality of the products Quality of the technical departments After-care services Delivery speed Fill in the table below with numbers that assess the level of meeting the criteria of the company SISC and competitors The numbers indicate each level: for major weakness, for minor weakness, for minor strength, and for major strength Explain the reason why you choose them Key Success Factors Name of the companies SISC DKSH Nam Viet Brand image Bid capacity Price of the products Quality of the products Quality of the technical departments After-care services Delivery speed To enhance the competitiveness of the business, which recommendations you suggest? 53