Business strategic direction for raw tobacco of ngan son joint stock company to 2025

NATIONAL ECONOMICS UNIVERSITY NEU BUSINESS SCHOOL - - PHAN LE HOANG LINH Business strategic direction for raw tobacco of Ngan Son Joint Stock Company to 2025 Hanoi - 2018 Chuyên đề thực tập cuối khóa NATIONAL ECONOMICS UNIVERSITY NEU BUSINESS SCHOOL - - PHAN LE HOANG LINH Business strategic direction for raw tobacco of Ngan Son Joint Stock Company to 2025 Supervisor: PhD LUONG THAI BAO Hanoi - 2018 Chuyên đề thực tập cuối khóa ACKNOWLEDGEMENT First and fore most I offer my sincerest gratitude to all Professors of Business School, National Economics University (BSNEU) for giving me knowledge that is used as basement for my thesis I am heartily thankful to my supervisor, PhD Luong Thai Bao whose precious patience, valuable guidance and support from the initial to the final level enabled me to develop an understanding of the subject, thereby applying knowledge into real cases throughout my thesis Without his encouragement and effort, this thesis would not have been completed or written One simply could not wish for a better or friendlier supervisor Secondly, I would like to express my big thank to managers and employees at Ngan Son Joint Stock Company for their persistent support and contribution to put all knowledge into real cases throughout this thesis Last but not least, I offer my regards and blessings to my family, my friends and all of those who supported me in any respect during the completion of the thesis Hanoi, December 2018 Phan Le Hoang Linh Chuyên đề thực tập cuối khóa TABLE OF CONTENTS ABBREVIATIONS .1 LIST OF TABLES LIST OF FIGURES .3 EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Research objectives 1.3 Research questions 1.4 Research object and scope 1.5 Research methodology 1.5.1 Research process .8 1.5.2 Data collection and processing 1.6 Research structure CHAPTER 2: THEORETICAL BACKGROUND ON BUSINESS STRATEGY 10 2.1 Definition of business strategy .10 2.2 Relationship between business strategy and other strategies 11 2.2.1 Company strategy 11 2.2.2 Business strategy (Competitive strategy) 12 2.2.3 Function strategy .12 2.3 Process to direct the business strategy 13 2.3.1 Identify the mission of the business 13 2.3.2 Define business goals 13 2.3.3 Analyze internal and external environment .14 2.3.4 Develop business strategy .19 2.3.5 Make solutions to implement business strategy .20 2.3.6 Evaluate the effectiveness of strategy 20 2.4 Factors affecting business strategy .20 Chuyên đề thực tập cuối khóa 2.4.1 Internal environmental factors 20 2.4.2 External environmental factors 21 2.5 Matrices and how to choose a business strategy 22 2.5.1 External Factor Evaluation (EFE) matrix 22 2.5.2 Internal Factor Evaluation (IFE) matrix 23 2.5.3 SWOT matrix 24 2.5.4 QSPM matrix 25 2.6 Some experiences in building business strategy 27 CHAPTER 3: ANALYSIS OF FACTORS AFFECTING BUSINESS STRATEGY FOR RAW TOBACCO OF NGAN SON JSC 28 3.1 Overview of Ngan Son Joint Stock Company 28 3.1.1 History of establishing, construction and development 28 3.1.2 Role of Ngan Son Joint Stock Company in the tobacco industry of Vietnam 29 3.1.3 Organizational structure and functions 30 3.1.4 Process of technology, main products of the company 34 3.2 Business analysis 35 3.2.1 Analysis of external environment 35 3.2.2 Analysis of internal environment of Ngan Son Joint Stock Company .46 3.2.3 Analysis of overall development environment and identify opportunities and challenges 74 3.2.4 Analyzing the SWOT matrix of Ngan Son Joint Stock Company and suggesting the main business strategies for the company 77 CHAPTER 4: BUSINESS STRATEGY DIRECTION FOR RAW TOBACO NGAN SON JOINT STOCK COMPANY 84 4.1 Basic contents of the strategic framework 84 4.1.1 Mission 84 4.1.2 Vision 85 4.1.3 Core values 85 Chuyên đề thực tập cuối khóa 4.1.4 Strategic objectives 86 4.1.5 Business strategy direction 87 4.2 Strategy selection by using QSPM matrix 87 4.3 Specific strategic direction 94 4.3.1 Strategy on restructuring management system and human resources 94 4.3.2 Improving quality and stability of the material growing area strategy 97 4.3.3 Product diversification and recycling of post-processing tobacco waste strategy 98 4.3.4 Strategic pricing 98 4.3.5 Market development strategy 99 4.3.6 Ensuring financial resources strategy 100 4.3.7 Studying and applying scientific and technical advances strategy 101 4.4 Solutions, organization and roadmap to implement the strategic orientations of the company 102 4.4.1 Solutions for restructuring to improve the effectiveness of corporate governance 102 4.4.2 Solutions for development of raw material areas 105 4.4.3 Solutions for product pricing in the direction of enhancing competitiveness 105 4.4.4 Solutions for linking investment in production with consumption of new and breakthrough products 106 4.4.5 Solutions for domestic market development and export 106 4.4.6 Solutions for capital and finance 107 4.4.7 Solutions for research and application of scientific and technological advances 109 4.4.8 Solutions for investments in equipment, new technologies and renovating, upgrading production lines in operation 110 CONCLUSION 111 LIST OF REFERENCES 112 Chuyên đề thực tập cuối khóa APPENDIX 1: IN-DEPTH INTERVIEWS FOR EXPERTS ON INTERNAL FACTOR EVALUATION 114 APPENDIX 2: IN-DEPTH INTERVIEWS FOR EXPERTS ON EXTERNAL FACTOR EVALUATION 116 APPENDIX 3: SURVEY RESULTS FOR ATTTRACTIVENESS OF EXTERNAL FACTORS 118 APPENDIX 4: SURVEY RESULTS FOR COMPANY’S RESPONSE LEVEL TO EXTERNAL FACTORS 120 APPENDIX 5: SURVEY RESULTS FOR ATTTRACTIVENESS OF INTERNAL FACTORS 122 APPENDIX 6: SURVEY RESULTS FOR COMPANY’S RESPONSE LEVEL TO INTERNAL FACTORS .123 Chuyên đề thực tập cuối khóa ABBREVIATIONS ADMIN : Administration ASEAN : Association of South East Asian Nations BAT : British American Tobacco BSC : Balanced Scorecard System BSNEU : Business School, National Economics University CPI : Consumer Price Index DEPT : Department GDP : Gross Domestic Product FDI : Foreign Direct Investment HR : Human Resources HS : Harmonized System ISO : International Organization for Standardization IT : Information Technology JSC : Joint Stock Company KPI : Key Performance Indicators NGP : Next Generation Products ORG : Organization PEST : Political, Economic, Socio-cultural, Technological PMI : Phillip Morris International PR : Public Relations R&D : Research & Development ROA : Return on Assets ROE : Return on Equity ROS : Return on Sales SWOT : Strengths, Weaknesses, Opportunities and Threats VINATABA : Vietnam National Tobacco Corporation Chuyên đề thực tập cuối khóa LIST OF TABLES Table 2.1: PEST analysis .17 Table 2.2: External factor evaluation matrix 23 Table 2.3: Internal factor evaluation matrix 24 Table 2.4: SWOT matrix .25 Table 2.5: QSPM matrix 26 Table 3.1: External Factor Evaluation of the Company 45 Table 3.2: Real estate status and depreciation of Ngan Son Joint Stock Company 47 Table 3.3: Actual use of capital in production and business 48 Table 3.5: Labor productivity statistics 60 Table 3.6: Profit of the company in the period of 2012 - 2016 63 Table 3.7: Financial indicators in production, business and service activities .64 Table 3.8: Internal Factor Evaluation (IFE) of the Company 73 Table 3.9: SWOT matrix analysis of the company 78 Table 4.1: The QSPM matrix for the SO - WO strategy group 88 Table 4.2: The QSPM matrix for the ST - WT strategy group .92 Chuyên đề thực tập cuối khóa LIST OF FIGURES Figure 1.1: Research process Figure 2.1: Business strategic planning process 13 Figure 2.2: Operating environment of the business .14 Figure 2.3: Porter’s five-force model 18 Figure 3.1: Structure of Ngan Son Joint Stock Company 31 Figure 3.2: Production - consumption process of tobacco raw materials .34 Figure 3.3: Vietnam's average GDP for the period of 2015 - 2016 37 Figure 3.4: Ownership of shares by shareholders (January 2017) 50 Figure 3.5: Owner’s equity and charter capital of the company in the period of 2010 – 2016 50 Figure 3.6: Movements of inventory, fixed assets and liabilities 51 Figure 3.7: Investment area and procurement volume 54 Figure 3.8: Profit structure in the period of 2012 - 2016 .64 Figure 3.9: Financial indicators .65 Chuyên đề thực tập cuối khóa 110 must ensure comparability between periods to provide accurate assessment of the actual performance of each unit and each workshop - Applying information technology to the data processing, using the system of accounting management software to always obtain accurate and timely data Improve financial risk management by developing and issuing a strict financial supervision mechanism for investment in raw material areas through its affiliated units; issue regulations and bylaws on management of financial risks in the company such as: - Adhering to financial principles when planning investment or business; regulations on time limits in business and investment: in business, carrying out transactions with short duration; in investment, concentrating on resolving after each harvest; - Drafting regulations on periodical financial analysis to identify strengths and weaknesses of the company; - Promulgating regulations on strict management of payable debts and receivable debts; - Consolidating the financial and accounting management in order to regularly obtain truthful, accurate and complete information on the financial situation of the company in service of the analysis and management decisions 4.4.7 Solutions for research and application of scientific and technological advances Step up the research and application of scientific and technical advances in cultivation, tending, harvesting and processing of tobacco raw materials in order to achieve high productivity and quality, meeting the processing requirements of tobacco production factories and export Attach importance to studying, applying and mastering imported technologies on the basis of expanding cooperation with international organizations, providing timely and effective support for the production and processing of tobacco raw materials of the company Chuyên đề thực tập cuối khóa 111 Apply information technology in the management of material growing areas in the course of cultivation, caring and harvesting, quality control of tobacco leaves, control of drying processes in raw material processing 4.4.8 Solutions for investments in equipment, new technologies and renovating, upgrading production lines in operation The company has a strategy on investment in manufacturing breakthrough products related to the reuse of raw materials and scrap from tobaccos, so it should buy the equipment with modern technology In the years of preparation for investment, it is necessary to thoroughly study the equipment available on the market to meet the requirements of products The production lines for tobacco stem separation and tobacco cutting must be maintained regularly to ensure continuous production without interruption The technical department of the company is responsible for researching each stage of production on these lines to find solutions to improve and upgrade to increase productivity and product quality Chuyên đề thực tập cuối khóa 112 CONCLUSION Through analyzing five-force model of M.Porter, using the SWOT matrix to identify strengths, weaknesses, opportunities and threats of the company This makes sense in helping the company to plan its strategies closely with its actual situation Analyze and evaluate the company's capacity through the value chain model This clearly defines the core competencies and the added value of the company when it comes to joining the value chain, then drafting strategy for the company in the period of 2018 - 2023 Ensuring the strategy is consistent with the core competence of the company, the development requirements of the industry and the market in general Setting up a specific action plan to implement the strategy Identifying resources and roadmap to concretize the strategy to ensure successful implementation of the strategy Initiating policy formulation for strategic planning for the next 2018 phase Creating a platform to help businesses strategize in the long run However, the thesis has not specified the program of action to implement the drafted business strategy If able, the reseacher will make detailed plans for the implementation of each action plan to implement the proposed business strategy Due to limited time and knowledge, the researcher will not be able to avoid certain errors and will promptly revise upon receipt of comments from teachers and readers Thank you! Chuyên đề thực tập cuối khóa 113 LIST OF REFERENCES Vietnamese: Lê Anh Cường (2004) Tạo dựng quản trị thương hiệu – Lợi nhuận danh tiếng NXB lao động Hà Nội Dương Ngọc Dũng (2009) Chiến lược cạnh tranh theo lý thuyết Michael E Porter NXB tổng hợp TP.HCM Nguyễn Thị Liên Diệp (1998) Chiến lược sách kinh doanh Nhà xuất Thống kê, pp 185 Lê Thế Giới, Nguyễn Thanh Liêm (2008) Giáo trình Quản trị chiến lược ĐH Kinh tế Đà Nẵng Nguyễn Khoa Khôi Đồng Thị Thanh Phương (2007) Quản trị chiến lược NXB Thống kê HCM tr.4 Nguyễn Thị Mỵ (2005) Giáo trình Phân tích hoạt động kinh doanh Nhà xuất thống kê, HCM Ngô Kim Thanh (2011) Giáo trình quản trị chiến lược NXB Đại học Kinh Tế Quốc Dân Báo cáo kết hoạt động kinh doanh năm 2014, Công ty cổ phần Ngân Sơn Báo cáo kết hoạt động kinh doanh năm 2015, Công ty cổ phần Ngân Sơn 10 Báo cáo kết hoạt động kinh doanh năm 2016, Công ty cổ phần Ngân Sơn 11 Nguyễn Thị Liên Diệp Phạm Văn Nam (2003), “Chiến Lược Và Chính Sách Kinh Doanh” Nhà Xuất Bản Thống Kê 12 Garry D Sith Danny R Arnold Bobby G Bizzell (1997), “Chiến lược sách lược kinh doanh” Nhà xuất thống kê 13 Lê Thế Giới (2012), Giới thiệu quản trị chiến lược tuyên bố sứ mệnh, Nxb Đại học Đà Nẵng, Đà Nẵng Chuyên đề thực tập cuối khóa 114 14 Vũ Thị Thu Hiền (2012), Cơ sở lý luận chiến lược, Nxb Lao động Xã hội, Hà Nội 15 Hồ Đức Hùng, (2000), “Quản trị toàn diện doanh nghiệp”, Thành phố Hồ Chí Minh, NXB Đại học quốc gia 16 Micheal Porter (2009), “Lợi cạnh tranh”, tiếng Việt, Nhà Xuất Bản Trẻ, Thành phố Hồ Chí Minh 17 Philip Kotler, (2003), “Quản trị marketing”, NXB Thống kê 18 Ngô Kim Thanh (2012), Quản trị chiến lược, Nxb Đại học Kinh tế Quốc dân, Hà Nội 19 Ngô Thị Thanh Lê Văn Tâm (2009), “Quản trị chiến lược”, NXB Đại học Kinh tế Quốc dân English: Chandler A (1962), Strategy and Structure, Cambrige, Massacchusettes, MIT Press Fred R David (2016), Strategic Management: A Competitive Advantage Approach, Concepts and Cases, Pearson, 17th Edition, South Carolina Frederick W Gluck, Stephen P Kaufman A Steven Walleck (1980), Strategic Management for Competitive Advantage, Harvard Business School, USA Kenichi Ohmae (2013), The Mind Of The Strategist, McGraw-Hill Education (India) Pvt Limited, Japan Management for Competitive Advantage, Harvard Business School, USA Philip Kotler and other (1996), Principles of Marketing, Prentice Hall International Inc, sixth edition 1996, USA John, G, Scholes, K, (1999), Exploring Corporate Strategy, 5th Ed, Prentice Hall Europe Kenneth Andrews (1965), The Concept of Corporate Strategy, Cambrige, Massacchusettes, MIT Press Harvard Business Essentials, Harvard Business School Press, USA Chuyên đề thực tập cuối khóa 115 APPENDIX IN-DEPTH INTERVIEWS FOR EXPERTS ON INTERNAL FACTOR EVALUATION The following are questions related to the influence of internal factors on the business strategy and competitiveness of Ngan Son Joint Stock Company Please reply by circling, numbering or crossing (X) into a number that is appropriate for each line, showing the choice of the company's response to each of these factors as follows: Importance of internal factors of the company Scoring factors on a scale from to 1, the total score is 1.00 Key factors Comment Internal environment Capital Machinery and device Quality management Trademark Financial management Human resources Organizational structure Input materials Marketing and market development Total 1.00 Level of response to the internal factors of the Company Bad Normal Rather good Good (Circling your option) Chuyên đề thực tập cuối khóa 116 Key factor Option Internal environment Capital Machinery and device Quality management 4 Trademark Financial management Human resources Organizational structure Input materials Marketing and market development Do you have any suggestions on this evaluation or you think there are any other important factors that need to be added to contribute to the development of an effective company business development strategy? Thank you for your cooperation! Chuyên đề thực tập cuối khóa 117 APPENDIX IN-DEPTH INTERVIEWS FOR EXPERTS ON EXTERNAL FACTOR EVALUATION The following are questions related to the influence of external factors on the business strategy and competitiveness of Ngan Son Joint Stock Company Please reply by circling, numbering or crossing (X) into a number that is appropriate for each line, showing the choice of the company's response to each of these factors as follows: Importance of external factors of the company Scoring factors on a scale from to 1, the total score is 1.00 Key factors Comment External environment Growing population Favorable geography and climate conditions Entering into the international market Competitive pressure from purchasing raw materials Legal and political environment Substitutes Inflation rate Competitors GDP growth rate and per capita income Development of new technology Pressure from consumers Total 1.00 Chuyên đề thực tập cuối khóa 118 Level of response to the external factors of the Company Bad Normal Rather good Good (Circling your option) Key factor Option External environment Growing population Favorable geography and climate conditions Entering into the international market 4 Competitive pressure from purchasing raw materials Legal and political environment Substitutes Inflation rate Competitors GDP growth rate and per capita income Development of new technology Pressure from consumers Do you have any suggestions on this evaluation or you think there are any other important factors that need to be added to contribute to the development of an effective company business development strategy? Thank you for your cooperation! Chuyên đề thực tập cuối khóa 119 APPENDIX SURVEY RESULTS FOR ATTTRACTIVENESS OF EXTERNAL FACTORS No Key factor Growing population Favorable geography and climate conditions Entering into CG CG CG CG 1 1 1 0.15 0.12 0.1 0.18 0.12 0.1 0.12 0.16 0.2 0.18 0.2 0.07 0.1 0.1 0.05 0.08 0.07 0.06 0.1 0.07 CG1 Coefficient CG the international market CG CG1 CG1 CG1 CG1 CG1 1 1 1 0.2 0.16 0.1 0.16 0.1 0.11 0.1 0.12 0.18 0.12 0.1 0.18 0.2 0.1 0.08 0.16 0.06 0.1 0.06 0.1 0.08 0.1 0.08 0.07 0.07 0.07 0.06 0.07 0.06 0.06 0.1 0.15 0.1 0.1 0.12 0.16 0.12 0.16 0.06 0.1 CG4 CG8 Total Total coefficien attractivenes t s socre Weigh Ratin t g 1.82 0.13 0.13 0.12 2.1 0.15 0.15 0.08 0.07 1.12 0.08 0.08 0.12 0.1 0.09 1.16 0.08 0.08 0.06 0.1 0.06 0.12 1.43 0.1 0.1 14 Competitive pressure from purchasing raw materials Legal and political environment Substitutes 0.07 0.07 0.06 0.05 0.07 0.06 0.08 0.07 0.07 0.05 0.07 0.07 0.06 0.1 0.95 0.07 0.07 Inflation rate 0.1 0.06 0.09 0.05 0.06 0.08 0.1 0.04 0.07 0.06 0.08 0.07 0.07 0.04 0.97 0.07 0.07 Competitors 0.05 0.09 0.06 0.05 0.06 0.05 0.05 0.06 0.05 0.07 0.12 0.16 0.14 0.1 1.11 0.08 0.08 0.1 0.09 0.06 0.1 0.1 0.1 0.08 0.08 0.16 0.05 0.06 0.08 0.06 0.05 1.17 0.08 0.08 0.05 0.05 0.07 0.05 0.08 0.06 0.05 0.05 0.07 0.05 0.06 0.06 0.05 0.03 0.78 0.06 0.06 10 GDP growth rate and per capita income Development of new Chuyên đề thực tập cuối khóa 120 technology 11 Pressure from consumers Total 0.11 0.12 0.1 0.12 0.06 0.05 0.07 0.12 0.1 0.06 0.12 0.08 0.12 0.16 1.39 0.1 0.1 1 1 1 1 1 1 1 14 1 Chuyên đề thực tập cuối khóa 121 APPENDIX SURVEY RESULTS FOR COMPANY’S RESPONSE LEVEL TO EXTERNAL FACTORS No Key factor Coefficient Growing population CG CG CG CG CG CG CG CG CG CG1 CG1 CG1 CG1 CG1 1 1 1 1 1 1 1 3 4 4 4 4 4 3 4 3 3 4 4 3 3 3 4 3 3 3 3 Total Total coefficien attractivenes t s score Weigh Ratin t g 48 3.43 3.43 49 3.5 3.5 47 3.36 3.36 3 43 3.07 3.07 3 44 3.14 3.14 14 Favorable geography and climate conditions Entering into the international market Competitive pressure from purchasing raw materials Legal and political environment Substitutes 3 2 3 34 2.43 2.43 Inflation rate 2 2 2 2 2 31 2.21 2.21 Competitors 2 2 2 2 2 33 2.36 2.36 3 3 3 3 3 3 3 42 3 4 4 3 4 4 49 3.5 3.5 10 GDP growth rate and per capita income Development of new technology Chuyên đề thực tập cuối khóa 122 11 Pressure from consumers 4 3 4 Total 4 48 468 Chuyên đề thực tập cuối khóa 3.43 3.43 123 APPENDIX SURVEY RESULTS FOR ATTTRACTIVENESS OF INTERNAL FACTORS No Key factor CG1 Coefficient Capital Machinery and device CG2 CG3 CG4 CG5 CG6 CG7 CG8 CG9 CG10 CG11 Total coefficient Total attractiveness Weight Rating score 1 1 1 1 1 11 0.12 0.16 0.1 0.11 0.1 0.08 0.14 0.16 0.08 0.1 0.1 1.25 0.11 0.11 0.1 0.12 0.18 0.12 0.15 0.05 0.05 0.07 0.16 0.12 0.09 1.21 0.11 0.11 Quality management 0.1 0.1 0.12 0.1 0.09 0.1 0.1 0.1 0.1 0.12 0.07 1.1 0.1 0.1 Trademark 0.16 0.1 0.2 0.15 0.12 0.15 0.12 0.1 0.1 0.08 0.16 1.44 0.13 0.13 0.12 0.05 0.1 0.12 0.1 0.16 0.15 0.08 0.1 0.1 0.06 1.14 0.1 0.1 0.07 0.18 0.12 0.16 0.1 0.16 0.05 0.15 0.2 0.12 0.18 1.49 0.14 0.14 0.05 0.1 0.06 0.1 0.08 0.1 0.09 0.1 0.06 0.1 0.07 0.91 0.08 0.08 0.2 0.12 0.06 0.07 0.16 0.14 0.2 0.16 0.14 0.16 0.2 1.61 0.15 0.15 0.08 0.07 0.06 0.07 0.1 0.06 0.1 0.08 0.06 0.1 0.07 0.85 0.08 0.08 1 1 1 1 1 11 1 Financial management Human resources Organizational structure Input materials Marketing and market development Total Chuyên đề thực tập cuối khóa 124 APPENDIX SURVEY RESULTS FOR COMPANY’S RESPONSE LEVEL TO INTERNAL FACTORS No Key factor CG1 Coefficient Capital Machinery and device CG2 CG3 CG4 CG5 CG6 CG7 CG8 CG9 CG10 CG11 Total coefficient Total attractiveness Weight Rating score 1 1 1 1 1 11 2 2 2 2 2 23 2.09 2.09 3 3 4 37 3.36 3.36 Quality management 3 3 3 3 35 3.18 3.18 Trademark 2 2 2 2 2 22 2 3 3 3 3 3 34 3.09 3.09 2 2 2 17 1.55 1.55 2 2 2 25 2.27 2.27 3 3 3 3 33 3 3 1 3 3 25 2.27 2.27 Financial management Human resources Organizational structure Input materials Marketing and market development Total 251 Chuyên đề thực tập cuối khóa