internship report on developing business strategy in oil gas projects for mico

DAO Song Ha General Director MICO LTD – Machinery and Equipment for Heavy Industry Co., Ltd Hanoi, September 2019... This report is the result of a four-month internship at MICO LTD – MI

Submitted by: VU Thi Dan Huyen

ACADEMIC SUPERVISOR COMPANY SUPERVISOR

Dr TRAN Dinh Toan

Thang Long University

Mr DAO Song Ha General Director

MICO LTD – Machinery and Equipment for Heavy Industry Co., Ltd

Hanoi, September 2019

Besides, I would like to express my gratitude and appreciation to our team at MICO LTD for their professional guidance and insightful comments that considerably help me gain a lot of experiences in improving my skills during my internship

Last but not least, I would like to convey our gratitude to IAE School of Business Administration, University of Nice - Sophia Antipolis as well as all professors and lecturers of the course for the cooperation and kind support to us to have a very meaningful and valuable course

In short, I would like to thank to all people helping me to finish well this internship report

ABSTRACT

In order to complete the Master Course on International Business and Management, each student needs to conduct a final internship with a registered subject This report is the result of a four-month internship at MICO LTD – MICO Machinery and Equipment for Heavy Industries Co., Ltd from May 15 to September 15, 2019

The report includes contents related to my assigned job during the internship However, with the orientation of the internship subject is to develop a business strategy of MICO LTD in oil and gas projects, my report only focuses on the contents relating to inside environmental analysis of the company (SWOT), and analysis of external factors (PEST) to give specific strategies for MICO LTD in the period from 2020 to 2025 with a vision to 2030

The knowledge from the Master Course has helped me a lot in my actual job at the company to complete my internship as well as in writing this report

CHAPTER II: COMPANY STRUCTURE AND ORGANIZATION CHART 10

3 MICO LTD – MICO Machinery and Equipment for Heavy Industries Co., LTD 11

CHAPTER III: THE MISSION: ASSIGNED TASKS AND GOALS 13

2 The Relationship between the Subject Matter and the Mission 14

4 The Value of Theoretical Knowledge in Master AMI in practice 15

CHAPTER IV: DEVELOPMENT 17

5 Plan for strategy implementation 25

On January 16, 2017, the Prime Minister issued Decision No 60 / QD-TTg, approved the Planning on development of Vietnam's gas industry up to 2025, with an orientation to 2035 which clearly stated the viewpoint of development of gas industry in the development strategy of Vietnam's petroleum industry to 2025 and orientation to 2035

For a commercial company like MICO LTD, the determination of the market and its products is essential to its survival Currently, with the rapid development of the oil and gas market after more than 10 years postponed, is considered a potential market for any business, especially suppliers and contractors However, the oil and gas market requires high and advanced technology as well as safety for people and the environment Therefore, market assessment and product selection need to be carefully considered Besides, product monopoly and sales record are the major strengths of the company

The following report will describe in detail the contents related to MICO LTD's business strategy in the oil and gas sector

DEVELOPING BUSINESS STRATEGY IN OIL & GAS PROJECT FOR MICO LTD

CHAPTER I: COMPANY BACKGROUND

1 Overview

MICO Machinery and Equipment for Heavy Industries Co LTD (MICO LTD) was founded in 1993, a mother company of MICO GROUP - a company with over 25 years of experience in providing heavy industrial equipment MICO LTD is also a sub-EPC contractor for several big projects in Oil & Gas and Power Plant industries

2 A brief of history and company information

05/1993 Minh Phuong Co., LTD was founded by Mr Dao Song Ha

03/1994 Company name changed to MICO Trading and Technology Transfer Co., LTD

06/2003 Company name changed to MICO Equipment for Heavy Industries Co., LTD (MICO LTD)

2007-2012 MICO LTD’s specialized business departments were separated into independent companies MICO GROUP ‘s subsidiaries were established 05/2015 MICO GROUP’s Organization changed

Other related information: Establishment: 05/1993

Head Office: 8th floor, Ocean Park Building, 01 Dao Duy Anh street, Dong Da District, Hanoi, Vietnam

Capital: 150 billion Vietnames Dong Employee: 162 employees (by 01/2019) Tel/ Fax: (024) 39386666/ (024) 39386888 Website: http://micogroup.com.vn/index.html

With the slogan “Realizing Dream Through Technology”, MICO LTD is focusing on updating all new technology, process equipment to supply such latest technology, machinery and equipment for heavy industries and infrastructure

3 Fields of Business

No Fields of Busines Detailed Activities

1 Sub EP(C) Contractor for Utility Plant and Process

 Hydrogen Generation System

 Diesel Engine & Gas Engine Power Plant  BOG Compression System for LNG

 Passenger Boarding Bridge; Automated People Mover

 Diesel Engine for Locomotive - Bus - Machinery

3 Industrial Equipment  Diesel-Gas Engine Generator

 Diesel-Gas Engine; Engine Power Module  Air Compressor; Air Dryer

 BOG Compressor/ CNG Compressor  Gas Compressor

 MV-LV Inverter; MV-LV Motor  Switchgear; Motor Control Center

 Generator for Oil & Gas and Industrial

Parts; Service & Parts

 Welding rod & wire

 Steel Plate, Sheet, Bar, Foil  Air Filter & Oil Filter  Process Filter for Oil & Gas  Process Instrument

 Spare parts & After sales services

4 MICO Partners

4.1 Worldwide Manufacturers

MICO is the exclusive/authorized distributor of several world-renowned manufacturers:

No Names of Manufacturers Products & Equipment

- Cryogenic Heat Exchanger & Cold Box - Heat Pump

- Cooling Tower for Industrial Plant - Air & Gas Separation Plant

- Vaporizer for LNG Terminal - Screw Chiller

- Crawler Crane

- Centrifugal Chiller - Large Industrial Pump

- Passenger Boarding Bridge

- NG-LPG-LNG Gas Engine Generator

- MV-LV Inverter, DC Converter - Generator for Oil and Gas & Industry - Industrial Steam Turbine and Gas Turbine - Motor Control Center, Bussway

- MV-LV Motor, Transformer etct

- Nitrogen Generator

- Reach Stacker; Forklift for Container Handling

KAWASAKI - Wheel Loader & Special Attachment

- High Pressure Air Compressor

- Special Purpose Truck

4.2 Local Partners

MICO’s main customers are the Vietnamese leading State-owned Corporations: • Vietnam National Oil & Gas Group (PETROVIETNAM)

• Electricity of Vietnam (EVN)

• National Coal and Mineral Industries Group of Vietnam (VINACOMIN)

• Song Da Construction Industry Group (SONG DA GROUP) • Vietnam Machinery Erection Corp (LILAMA)

• Vietnam Chemical Corp (VINACHEM) • Joint Stock and Foreign Invested Companies

5 Competences and Sales Records

5.1 Competence

In terms of experience, MICO was the only local Vietnamese contractor capable of acting as

a Sub EPC Contractor for the following systems:  Boil-off Gas (BOG) Compressor System;  Hydrogen Generation System;

 Open Rack Vaporizer (ORV) for LNG terminal and regasification;

On the other hand, MICO has also supplied turnkey for the following big systems:  Open Rack Heater System

 Medium Voltage & Low Voltage (MV/LV) Electrical System/ Motor Control Center (MCC);

 Standby/ Prime Generation Systems

5.2 Significant Sales Records

In the recent years, MICO has reached many achievements in Energy Industry in Vietnam such as:

 In 2003: In Corporation with Kawasaki Heavy Industries (KHI) to install Flue Gas Desulphurization Plant (FGD) for Uong Bi Expansion No.1 Thermal Power Plant

 In 2007: In Corporation with Kubota to install Circulating Water Pumps for Nhon Trach 1 Thermal Power Plant with capacity of 450MW…

 In 2009: Cooperate with TOSHIBA/SOJITZ Corp to supply Turbine & Generator for Vung Ang 1 Thermal Power Plant with capacity of 2x 600MW

 In 2010: EPC contractor of Hydrogen Generation System under BOP package for Vung Ang 1 Thermal Power Plant

 In 2012: EPC for procurement, supply, transportation, supervisor for erection and commissioning of Low Voltage Switchboard MCC and MOV power cabinet of Vung Ang 1 Thermal Power Plant

 In 2012: EPC for designing, supplying, installing equipment for project of Treating Sludge for the preparation plant (stage 2) – Cua Ong Coal Preparation Plant

 In 2013: EPC contractor of Hydrogen Generation System under BOP package for Mong Duong 1 Thermal Power Plant

 In 2013: Open Rack Heater System for Thi Vai LPG Project

 In 2015: EPC contractor of Hydrogen Generation System under BOP package for Thai Binh 1 Thermal Power Plant

 In 2015: EPC contractor of Hydrogen Generation System in Thai Binh 1 Power Plant;  In 2015: MV-LV Electrical System/MCC: MV Electrical System for the South Rubber

Industrial Company CASUMINA and MCC for Vung Ang Thermal Power Plant;

 In 2018: EPC contractor of Boil-off Gas (BOG) Compressor System of Hai Linh Vung Tau LNG Terminal Project;

 MICO supplied thousands of Generators for industrial factories and real estate projects Most recent big ones are: 06 Gen sets for Hoa Phat Group (Dung Quat Steel Complex 2018); Standby generation system (EDG) for Vinh Tan 4 extension TPP (2017); etc

6 Financial figures

The General Balance Sheet of MICO LTD is shown in below table for fiscal year of 2016, 2017 and 2018:

BALANCE SHEET (VNĐ) 2018 2017 2016 ASSETS

A SHORT-TERM ASSETS 267,344,432,717 210,364,472,760 167,319,466,040 I Cash and cash equivalents 64,697,797,494 29,233,198,209 12,532,139,072 II Short-term investments - - -

III Short-term receivables 115,836,554,054 105,916,553,866 102,040,139,672 IV Inventories 77,596,633,436 69,560,502,339 48,537,699,301

1 Short-term prepaid expenses 6,837,174,767 4,209,487,995 4,209,487,995

3 Taxes and other receivables from government budget

2,376,272,966 1,444,730,351 -

B LONG-TERM ASSETS 7,688,398,886 8,390,532,269 9,388,184,244 I Long-term receivables - - - II Fixed Assets 7,688,398,886 8,390,532,269 9,388,184,244

1 Tangible fixed assets 7,688,398,886 8,390,532,269 9,388,184,244

D OWNER’s EQUITY 80,655,916,271 107,975,974,635 105,503,675,400 TOTAL RESOURCES (C+D) 275,032,831,603 218,755,005,029 176,707,650,284

The General Financial Income Statement of MICO LTD for 2016, 2017 and 2018 fiscal years is shown in the annex I and summarized according to the column chart below:

Figure 1: Income Statement

RevenueGross RevenueNet Profit

Unit: Billion VNĐ

Although revenue in 2018 increased significantly compared to 2017, net profit did not change much

For a commercial enterprise, the financial statements are based on the actual collection of money from the projects and based on the annual settlement, so the evaluation of business results according to the Income statement is not really accurate

Cash flow statement:

Please see the cash flow statement for the years 2016-2018 in the Appendix II

According to the figures in the reports, the company's current assets and short-term investments have steadily increased (about VND 80 billion / year) However, short-term debt of businesses also increased accordingly Therefore, liquidity remained at an average level of about 1.8

CHAPTER II: COMPANY STRUCTURE AND ORGANIZATION CHART

1 MICO Subsidiaries and Organization Chart

- MICO Machinery and Equipment for Heavy Industries Co., LTD (MICO LTD) - MICO ENERGY - Equipment and Technology for Energy and Power Plant Co., LTD - MICO MINERAL - Construction Machinery and Equipment for Mineral Industry JSC - MICO TRANSPORT - Equipment for Transportation Industry Co., LTD

- MICO ME - Mechanical & Electricity JSC

- MICO EPT - Equipment, Parts and Technical Service JSC - And Affiliated Companies (MICO LTD share < 50%)

Figure 2: Organization Chart

2 Board of Management (BOM)

The BOM includes the Chairman, Vice President and representatives of all member companies of GROUP, coordinating all activities related to common policies, common

MICO GROUP (Board of Management)

MICO LTD (Sub) EPC Contractor

Organization

MICO Energy MICO Mineral MICO Transport

MICO ME MICO EPT

Affiliated Companies*

* MICO LTD share <50%

Engineering Division Financial Division

Administration Division

Ho Chi Minh Service Center

Quang Ninh Service Center Hanoi Service

Center Da Nang

BranchHo Chi Minh

PMU Project Management

Unit (large project)

_: Executive relationship is directly from top to bottom

- - - -: supportive relationships

strategies and specific administrative regulations, equipment and finance of the group, specifically:

 Creating, implementing and communicating for the organization's overall direction Leading the development and deployment of the overall organization's strategy

 Enhancing, implementing and enforcing policies and procedures of the organization by way of systems that will improve the overall operation and effectiveness of the corporation

 Providing strategic financial input and leadership on decision making issues affecting the organization; evaluation of potential alliances acquisitions and/or mergers and pension funds and investments

 Maintaining awareness of both the external and internal competitive landscape, opportunities for expansion, customers, markets, new industry developments and standards, and so forth

3 MICO LTD – MICO Machinery and Equipment for Heavy Industries Co., LTD

The mother company of MICO GROUP, MICO LTD focuses in general management of big project in the field of haevy industry and manages almost activities under Group’s schedule MICO LTD manages overall finance, GROUP administrative department and recruiting personnel at the request of member companies

4 Other Subsidiary Companies

Member companies of MICO GROUP operate in different priority areas:

MICO Energy is responsible for projects in the field of energy and oil & gas sector

MICO Mineral is in charge of projects on supplying construction machinery and equipment for mining exploitation

MICO Transport - a new established company under MICO GROUP, specializes in supplying equipment and machinery for transportation sector: aviation, waterway, railway

MICO ME - Mechanical & Electricity JSC, specializes in supplying the emergency diesel generator (EDG) and supplying full package for many EDG system, air compresor systems for industrial plants, infrastructure, real estate and office buildings as well as chiller system MICO EPT - Equipment, Parts and Technical Service JSC is focusing on supplying of air compresor system for whole Vietnam market and supplying, installation services and spare parts of air compresor

And Affiliated Companies (MICO LTD share < 50%): MAN Motor Vietnam is one affiliated company under MICO GROUP It operates separately and reports to the Group annually

CHAPTER III: THE MISSION: ASSIGNED TASKS AND GOALS

My Internship at MICO LTD was in Overseas and Project Support Department, directly carried out the work of an ongoing project The project team consisted of 5 people, focused on the following works:

- Implementation of the on going projects;

- Overseas relationship within the handled projects;

- Market servey, proposal of a business strategy for MICO LTD in the field of oil and gas

- Other assignment as per the direction of the Board of Directors - Our Team was reporting directly to the Chairman/ CEO

1 My responsibilities

During my internship at MICO LTD, I was assigned to do the following tasks:  Project Implementation/ Admin of the project:

o Managing project documents

o Preparing foreign and local contracts

o Monitoring project activities and updating progress of the project o Reporting to the project Manager and the Chairman/ CEO  Maintaining relationships and carrying out activities with key partners:

o Keeping in touch with foreign and local partners (manufacturers and local owners/ consultants) under the project

o Updating Monthly Reports of Manufacturers and submiting to the local Owner/ Consultants

o Discussing in Team to resolve any troubles during the implementation of the project

 Market servey, proposal of a business strategy for MICO LTD in the field of oil and gas:

o Researching the oil and gas market to assess the ability to supply our equipment to this market

o Building a business strategy

 Other work assigned by Chairman/ CEO

o Logictics arrangement: international shipment under the project o Supporting work for the overseas and project support department o Sales assistant

2 The Relationship between the Subject Matter and the Mission

MICO LTD is a private enterprise with all the factors related to the knowledge that I have learned within this master's program Currently, MICO LTD does not really have a specific business strategy, so my internship at MICO LTD is very suitable for the topic I have chosen: "developing a business strategy"

My missions at the company are very diverse, I have chance to access to many different sources of information, contact with many departments of the company as well as our customers and manufacturers This helps me a lot in completing my subject matter objectively and efficiently

In addition, the direct participation in managing an ongoing project which helps me to apply the knowledge I have learned in this Master course to my work in practice: project management, international sales contract, international communication, risk management, import and export operations, taxation etc

3 The Goal to Reach

Based on the internship content, a lot of work needs to be done to accomplish the set goals

The first job is to study on company’s operation, organization, activities and cultures to know

well about its operation, its products and services, international cooperation networks, its customers and competitors I also need to read carefully the previous international commercial contracts, to communicate well with teammates and to adjusts with the GROUP’s culture

The next, it is necessary to research the market orientation for business strategy making,

which is the oil and gas market The main job is to collect information about the market and to assess the potential projects to participate in

After having all the above information, it comes to the next step to develop a business strategy

for MICO LTD with 5 main contents: i) Define the objectives of the strategy; ii) Define the

scope of the strategy; iii) Find out the competitive advantage of the strategy; iv) Define all related resources/capabilities; v) Complete the business strategy

At the same time, in the process of developing a business strategy, it is necessary to consider

building appropriate management processes

The final step is to present a comprehensive business strategy to the Board of Director of

MICO LTD to outline the objectives and plans to be implemented to ensure effective business strategy

4 The Value of Theoretical Knowledge in Master AMI in practice

During my internship, I have opportunity to building bridges between theory and practice The knowledge learned from professors and skills acquired through this internship are things that complemented and enhanced the education I obtained in the AMI courses A lot of subjects in the master courses gave me the background knowledge to apply to my daily work

such as: (1) International and Intercultural Negotiation: very useful, I knew many different

ways to communicate with people who come from many countries and cultures and gained a lot of experience during working with them under our sales contracts; understanding how to work with individuals and groups with diverse backgrounds; to become familiar with

problem-solving or negotiation approaches from other cultures (2) International

Commercial Contracts: it helps me to prepare a comprehensive sales & purchasing contracts

during the implementation of the project All related issues regarding the terms/ provisions of

a sales contract will be considered during the preparation of the contract (3) International

Strategy: helps me to deeply have understanding about how to write a real business strategy

through knowledge from the course and from developing a real business strategy at MICO LTD

The knowledge of international business strategy, management, incoterms 2010, taxation and many other knowledge also helped me during my internship, applying most of the knowledge I learned to the real job as well as in the writing this report

International Management: Legal and political systems, national cultures; Labor,

environmental, and living standards; Local and corporate culture; Foreign exchange markets and tariffs; Trade agreements, and other topics