bachelor thesis major bachelor of business adminsstration in entrepreneurship management topic evaluating and improving the competitive advantage at sisc instrumentation joint stock company

NATIONAL ECONOMICS UNIVERSITY BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT BACHELOR THESIS Major BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEME

NATIONAL ECONOMICS UNIVERSITY

BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT

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: V6 Thi Nhi Na

HANOI, 2022

NATIONAL ECONOMICS UNIVERSITY

BACHELOR OF BUSINESS ADMINISTRATION IN

ENTREPRENEURSHIP MANAGEMENT

CE

@ ism or ⁄ 'VIỆN ĐÀO TẠO QUỐC TẾ B-BAE

BACHELOR THESIS

Topic: Evaluating and Improving the Competitive Advantage at

SISC Instrumentation Joint Stock company

Student:Vo Thị Nhị Na - Speciality: Bacherlor of Administration in Entrepreneurship Management Class: BBAII G22 nhe Student's ID: 11183439 Supervisor: Tran Huy Phuong

HANOI, 2022

CHAPTER 1: THEORETICAL REVIEW 15

1.1 Overview of Basic concepts 15

1.3.2 Competitive profile matrix 19

1.4 Factors affecting the competitiveness of enterprises 20

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 41 3.2.1 Optimizing the delivery process 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

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

1 marked and separately listed all the literature and all other sources which |

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 ccc eceececececeeeeseeceseeeceeseseesenecienenseneeeens 16 Figure 1.2 Competitive profile mafrIx exampÏE - - 5 2 3 t1 121921 1212111111112121 x2 17 Figure 2.1 Market size of the medical equipment in Vietnam in 202 Ì ‹ 5+ + 5cs+: 21 Figure 2.2 Vietnamese medical equipment market stTUCfUTe - co s2 vscsvsxve 21 Figure 2.3 Products distributed by SISC - S SH HH2 1221121111111 hy 23 D610 Sinh 08s) ( Đa vn ảỎọìịỪỪD 23 Figure 2.5 Ratio of SISCs bidding resuÏf§ c2: 21 1111112111121 10118111 HH ty 32 Figure 2.6 Ratio of Nam Viet’s bidding r€SUÏ{S - 121212121 1111211 1511111112121 E2 32 Figure 2.7 Ratio of DKSH'”s bidding resuÏfs - 2.22211012111111 1211111110111 81H re 33 Figure 2.8 A product of SISC (left) and a product of DKSH (nght) - - 2-55: 34 Figure 2.9 A product of SISC (left) and a product of Nam Viet (right) e5 34 Figure 3.1 Purchase order transaction before Integrate EDI - ¿5.5 St sisssrrses 39 Figure 3.2 Purchase order transaction after integrate EDI - c2 39

Table 2.5 Total debt and assets, net income and revenue, shareholder’ equity of SISC 2019-

Table 2.6 Evaluation of faetors that Immpact the competitive advantage of SISC 24 Table 2.7 Competitive profile matrix of SISC and 1fs compe€tIfOFS s-cccsccscsse2 26

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EXECUTIVE SUMMARY

The introduction: Gives an overview of the research topic, including the urgency of research on improving the competitiveness of SISC, stating the research objectives, scope, and research object of the project thesis and graduation thesis structure Chapter |: Theoretical review of the company's competitiveness, including Some basic concepts of competition, competitiveness, and competitive advantage; theory

of overall competitiveness assessment

Chapter 2: The current situation of the company's the production and business activities, identifying competitors of the enterprise, developing a set of criteria to evaluate the company's competitiveness, analyzing the current competitive situation

of the company through the results of data collection and processing methods, draw conclusions about the current competitive situation of the company The advantages and disadvantages of the competitive advantage of SISC, are the causes of the limitations

Chapter 3 Propose solutions to improve the competitiveness of SISC Instrumentation Joint Stock Company

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INTRODUCTION

1 The reason for choosing the topic

The main purpose of designing and implementing the organization's strategy is to obtain a competitive advantage in the competitive environment in which the organization operates (Helena, 2019)

Not to mention, competitive advantage is proven to have a positive association with business performance, which is understandable since it can be gained through internal sources, external sources, or even both of an organization (Svarova and Vrchota, 2014) Specifically, a company can have the edge over its competitors if they have quality employees, effective strategic management, technology

development, and the uniqueness of the product as internal sources Zable /./ Business results of SISC from 2019-2021

Sales 688, 178,438,721 668, 134,406,525 649,217,574,291 Revenue | 11,626,549,422 9,842,385,267 6,423,638,940

(Source: Accounting department)

In addition, looking at the sales and revenue of SISC company in the past three years, the company increase its sales and revenue every year, around 20% confirmed by interviewee 1 and 2 While the average growth rate of this market in the period 2016 - 2020 is about 22% per year in Vietnam, meaning SISC is losing its market share In conclusion, the company is unwilling to invest or pay attention

to improving its competitive advantage This could damage the company shortly because, in today’s constantly developing and innovating society, it is certain that companies need to acknowledge the importance of competitive advantage In other words, in a capitalistic society, companies must struggle to survive and make a profit Competition is fierce and unrelenting In order to prosper, much less survive; companies must have an advantage over their competition 2 General objectives Analyze and evaluate all aspects of competitive advantage, based on key success factors given by the interviewees From that, discuss and give recommendations to improve SISC’s competitive edge

3 Specific objectives

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Research on the theoretical basis of competitive advantage

Analyze and evaluate the current competitive positioning of SISC

Give recommendations following quality research and defined justifications to develop and innovate SISC’s competitive edge

4, Research subjects

Competitive advantage from internal and external sources of SISC Instrumentation Joimt Stock company

5 Scope of the Study

Subjects: The competitive advantage of the SISC group

Places: 10th floor, SISC Tower, 63 - 71 Lang Ha, Dong Da district, Hanoi Duration: From February 2022 to May 2022

6 Thesis structure

Chapter |: Theoretical basis of improving the competitiveness of enterprises Chapter 2: The reality of improving competitiveness at SISC Instrumentation Joint Stock company

Chapter 3: Solutions to improve competitiveness at SISC

7, Limitation

All participants in the survey work for SISC company So there will only be opinions from one company's side, and the competitors’ or customers’ opinions will not be involved in this study, creating a biased effect when conducting results from the survey

METHODOLOGY

13

In this study, the qualitative approach is applied To obtain information for the thesis, these methods below were used:

Primary data analysis

Observe the company’s day-to-day routine to give a practical view of the study Collect data from own experience when doing an internship at the company Second-data analysis

Data collected from the company such as profit and loss statements, other statements related to competitive advantage

Data was collected from quality research, articles

Data collected from employees of the company

In-depth interview

Interview the head of the department and the vice president to acknowledge insights about the company Each interview lasted from around one hour to one hour and thirty minutes Each participant will be asked 8 questions that have been listed in the appendix section The results will be measured by a competitive profile matrix, the key success factors will be chosen by the interviewees, and more details are presented in chapter 2 and the appendix

The interview involves 5 interviewees

Interview 1: Head of operating department

Interview 2: Vice director

Interview 3: Head of purchasing department

Interview 4: Head of accounting department

Interview 5: Assistant of Director

These 5 people were selected based on their experience and knowledge about the company and the industry All 5 participants have worked for SISC for more than 10 years, the vice director and the head of purchasing department have worked for SISC since the beginning That is why their opinion is valid and valuable to this study

CHAPTER 1 THEORETICAL REVIEW

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1.1 Overview of Basic concepts

1.1.1 Competitiveness

Competitiveness is considered the ability of companies, economic sectors, and the state to function, maintain, advance, and work in accordance with the principles of efficiency and effectiveness in order to outperform the competition Thus, competition means superiority over rivals and other market competitors (Milusheva, 2020) Competition refers to the practice of constantly competing amongst economic elements in the market in order to accomplish their economic interests and aims The economic benefits of economic self-reliance, specifically represented

in the competitive process as maintaining or growing market ownership, increasing consumption, and enhancing profits, are the intrinsic driving forces of competition The external pressure of competition involves strong competition among competitors, with the loser being eliminated (La Falce et al, 2020)

According to the Vietnam Encyclopedia dictionary: In a market economy, competition is a competition between commodities producers, merchants, and business people in order to win the most favorable production, consumption, and market circumstances

Based on the above definition, competitiveness is generally the ability of an organization to grow market share, profitability, and the industry’s size in order to outperform its competitors as well as accomplish its goals

1.1.2 Competitive advantage

Competitive advantage refers to the elements that make a company's brand, product,

or service superior to competitors in the same area As a result, these factors enable the manufacturer to make more revenue, a more advantageous market position, or a higher profit margin than its market competitors Furthermore, when a company has achieved a competitive advantage, it will possess the ability to stay one step ahead

of current or potential competition, and the superior performance achieved through competitive advantage guarantees market leadership (Wang, Lin, and Chu, 2011) According to the concept of Michael Porter (1998): “Competitive advantage will come from the value that businesses can create for customers This advantage can

be in the form of lower prices than competitors or by providing them with benefits that are superior to competitors and induce buyers to accept a higher price.” To conclude, it is considered a competitive advantage when a company’s product and 15

service create value for the clients but those values are not able to be created by other rivals to survive and guarantee a higher position in the industry

1.1.3 Sustainable competitive advantage

A firm is said to have sustained competitive advantage when it is implementing a value-creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefit

of this strategy (Barney, 1991) Moreover, competitive advantages are characteristics or strengths that are essential to your clients If the strength that has been identified as important to the company but not to the client, it is not a long- term competitive advantage A competitive advantage is a benefit or reason that customers choose your company over its competitors (Hana, 2013) A competitive advantage is sustained when it stays valuable to the customers through numerous efforts to duplicate existing and potential competitors

1.1.4 Competitive Capacity

National competitiveness is the set of policies, institutions, and circumstances that affect an economy's production, development, and sustainability Industry competitiveness is competition between enterprises in different production industries for more profitable investment Enterprise competitiveness is the exploitation and application of internal and external assets and advantages in order

to produce products or services that attract people and help them accomplish their needs Product competitiveness is determined by a comparative advantage in production costs and productivity over competitors, as assessed by the company's specific market share, and items on the market (Brinkerhoff, 2010)

1.2 Criteria to evaluate the competitiveness of enterprises:

1.2.1 Qualitative factors

Human Resources strives to achieve this by aligning the supply of skilled and qualified individuals, as well as the capabilities of the current workforce, with the organization's ongoing and future business plans and requirements, in order to ensure future survival and success (Yusof and Ismail, 2002)

1.2.2 Quantitative factors

Market share is a critical metric for assessing an enterprise's market competitiveness Each business will have a market, and the enterprise's market share 1s the percentage of the overall business market that the enterprise occupies The 16

larger an enterprise's market share in this market, the greater its dominance and position (Obi et al, 2021)

Market share formula = (your business revenue/total industry revenue) x 100% Profit is defined as the final financial result of the enterprise's business activity, output, and so on It is also the foundation for evaluating the economic effects of corporate operations

Profit formula = Total revenue - Total expenses

Profit margin is the ratio of profit to the total of fixed and working capital employed during that period Based on the profit ratio, we can calculate the actual profitability

of the business, thereby calculating the net profit of the shareholders in the company

Profit margin formula = Revenue/Total Cost

Current ratio is a measure of a company's ability to pay its short-term debts with the number of current assets that the business has

Current ratio formula = Short-term assets/Short-term debt

Quick ratio is an indicator of a company's short-term liquidity and measures a company's ability to meet its short-term obligations with its most liquid assets Quick ratio formula = (Short-term assets - Inventory)/Short-term debt

Debt ratio has a strong relationship between the total amount of debt to be paid and the total income of the borrower The debt-to-equity ratio is considered a measure of

a company's financial leverage and is calculated as a company's total interest- bearing debt (including both short-term and long-term debt) divided by its total capital

Debt ratio formula = Total debt/Total assets

If two businesses are in the same industry, their size, financial structure, and other characteristics are similar; but one has a greater rate of return, it could be because that business is more efficient

ROA (Return on assets) formula = Net income/Total assets

ROE (Return on equity) formula = Net income/Shareholder’s equity

ROS (Operating margin) formula = Net income/ Net Revenue

1.3 Frameworks to measure the competitive advantage

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1.3.1 Porter’s Five Forces framework

Porter’s Five Forces framework was established by Michael Porter, a professor at Harvard Business School in 1979 This framework is particularly effective for studying the competitive structure of an entire industry Furthermore, Porter's five forces model assists in determining where power lies in a corporate environment This is beneficial for acknowledging the strength of an organization's present competitive position as well as the strength of a position that an organization may choose to pursue According to Porter (1990), there are five forces affecting the competitiveness of an enterprise

Potential

Entrants Threat of New Entrants

¥

Industry

Competitors Bargaining Power Bargaining Power

of Suppliers of Buyers

Suppliers | Buyers

Rivalry Among

Existing Firms Threat of Substitute

Products or Services

Substitutes

Figure 1.1] Porter's five forces framework

(Source: Porter, 1990)

Supplier power: an evaluation of how easy it is for the supplier to raise prices This

is easily influenced by the number of suppliers of goods and services, the uniqueness of the inputs, and the costs incurred by the firm if it wishes to move to a different source The fewer suppliers in the industry, the more reliant the company is

on the supplier factor and vice versa

Buyer power: an evaluation of how easy it is for the customer to lower prices This

is driven by: the number of buyers in the market, the importance of each customer

to the company, and the cost of the buyer when changing from one supplier to another Customers will have more negotiating power on price and product quality

if the number of customers is minimal

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Competitive rivalry: The competitive capacity and the number of existing competitors that create the same product line, serve the same target consumer segment and satisfy the same customer need

The threat of substitution: Products and services that are able to be imitated by the competitors This leads to the possibility of the customer switching to substitute products

The threat of new entry: Potential markets attract new companies to enter which affects the company in the future Therefore, it is essential to maintain the advantageous position and rationally take advantage of it if we can establish effective and long-lasting barriers to entrance

1.3.2 Competitive profile matrix

A competitive profile matrix (CPM) enables business owners to compare their companies to their top competitors by utilizing essential success characteristics (Zimmerer, Scarborough, & Wilson, 2008) "A CPM identifies a firm's primary competitors as well as its specific strengths and weaknesses concerning a sample firm's strategic position," writes David (2011) The foregoing definitions of CPM denote two vital tasks: first, identifying rivals as well as their strengths and shortcomings, and second, identifying significant or critical success factors This tool assists managers in identifying the strongest competitors and significant factors

on a single page, as well as the areas in which they need to improve (Sohel, 2014)

Innovation 025 | 4 1.00 4 1.00 3 0.75

Advertising 020 | 2 040 3 0.60 4 0.80 Brand Name 020 | 1 020 4 0.80 2 040

Product Quality 0.15 4 0.60 2 0.30 2 0.30 Customer Service 0.10 | 3 0.30 2 0.20 1 0.10 Price Competitiveness | 0.05 | 3 0.15 3 0.15 4 0.20 Technological Competence] 0.05 | 3 0.15 1 0.05 2 0.10 Total 1.00 2.80 3.10 2.65 Figure 1.2 Competitive profile matrix example

(Source: Sohel, 2014)

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When establishing a CPM based on these crucial elements, three important actions must be taken The first stage is to identify the company's key success factors (KSFs) and assign weight to those variables based on their relative importance The following phase is for the company to identify its significant competitors and rate each competitor, including the company itself, on each of the KSFs KSFs encompass both internal and external challenges, and ratings ranging from | to 4 have been assigned based on their importance to the company with | assigned for major weakness, 2 for minor weakness, 3 for minor strength, and 4 for major strength Finally, the corporation must multiply the weight by the rating for each factor to obtain a weighted score, and then aggregate the weighted scores of each rival to obtain a total weighted score

Although Porter’s five forces provide a good beginning point for strategic analysis,

it has several drawbacks According to Porter (2001), this model assists a company

in assessing the prospective profitability of certain industries; however, Goyal (2020) contends that firm-specific characteristics such as unique endowment, person skill, and strategy are more significant to the business's profitability According to the Porter model, five forces apply equally to all firms in an industry, but the strength of those forces varies from business to business in terms of size or brand power (Campbell et al, 2002) While building a competitive profile matrix, it

is critical to identify these KSFs in order to design an effective approach Because KSFs can be used to direct a company's work in formulating strategies, they can also be used to highlight significant concerns related to strategy execution, and they may also assist managers in establishing a guideline for monitoring the company's actions Moreover, CPM contains both external and internal that most influence the competitive position of a company and identify potential competitive advantages 1.4 Factors affecting the competitiveness of enterprises

1.4.1 External factors

Economic factor

Economic development policies, trade policies, competition policies, investment policies, and so on all aim to stimulate or limit, prioritize or prevent the development of each industry, consequently affecting the competitiveness of enterprises in that industry The economic development of the country has a great impact on the production and business activities of enterprises The economy has grown steadily, national finance 1s stable, inflation is under control, and the process 20

of capital accumulation and concentration is fast, which contributes to the increased development of investment capital (Cheraghalizadeh et al, 2021)

Political factor

When participating in global integration and competitiveness, Vietnamese firms are influenced by the system of domestic and foreign legal policies, as well as laws published by international organizations The legal system and rules serve as the legal foundation for firms to engage in market production and economic operations (Jaya, 2021)

The global and national trends in science and technology development have a significant impact on the competitiveness of businesses Technology 1s a source of competitive strength and a competitive weapon for businesses operating in industries with high technical progress (Cheraghalizadeh et al, 2021)

Enterprises must continually anticipate their competitors’ moves in order to have proactive strategies and responses to strengthen and improve their market position Substitution with a high technical level, many different sorts of items that can be exchanged for each other are created This problem, which is and will continue to impede the consumption of corporate products, worsens the competitive climate This is an unexpected and difficult opponent that firms must prepare for (Stoyanova, 2018)

Financial capacity demonstrates the enterprise's competitive power Capital is one

of the requirements for businesses to continue and expand their activities As a result, the ability to mobilize and effectively use resources will strengthen the business's financial capacity However, the enterprise's financial capacity is not just reflected in the business capital scale Some businesses have a huge capital scale yet are weak because their capital asset structure is inadequate Small-scale firms, on 21

the other hand, are nevertheless considered strong since they maintain solid financial standing and know how to mobilize adequate financial resources to develop competitive products There are a lot of rivalries to service the target market So the issue is not how much cash the firm has, but how effectively it utilizes capital to suit the demands of the target customers within the business scope (Wanjiku, 2012)

Management process is represented in the management approach and _ its effectiveness, the organizational system, the corporate culture All actions will be seamless and effective if a firm has an acceptable organizational structure with clear responsibility and authority In contrast, if power is not dispersed in an overlapping organizational structure, performance would suffer

The Board of Directors, and their traits and talents, play the most essential role in the enterprise's organizational structure, defining the enterprise's success or failure Any business, regardless of size, depends on the leadership team's virtues and talents, as well as the organizational structure of the management apparatus, the determination of functions and responsibilities of each department, and individual, and the establishment of relationships between departments The organizational structure is not a fixed framework; it must evolve depending on the internal and external environments of the enterprise over each phase of the enterprise's economic activity (Aiginger et al, 2013)

Corporate policies and strategies have an impact on the formation and enhancement

of firm competitiveness On the one hand, the strategy is based on the enterprise's competitive advantages, promoting the business's strength in order to compete with competitors

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CHAPTER 2 PROJECT’S CURRENT SITUATION

2.1 Market context

Medical equipment is an essential component in determining the efficiency and quality of medical work, actively assisting doctors inaccurately and promptly identifying Today, medical equipment not only helps prolong the senses, but also allows doctors to easily access and treat injuries inside the body, such as laparoscopic surgery, surgery, robotics and they could even replace the human brain (using artificial intelligence) to help make the most informed, correct, and effective decisions in diagnosing, treating, and caring for people's health

Orthopedic & prosthetics 3,532,196 36,288

Figure 2.3 Market size of the medical equipment in Vietnam in 2021

(Source: Huong Bui) Looking at the market size of the medical equipment, diagnostic imaging and other medical types of equipment were in the highest demand while orthopedic and prosthetics and dental products were in the lowest demand The total market size was more than 39 million vnd and the total per capital spending was more than 400 thousand vnd

Vietnamese medical equipment market structure

= Self-consuming device

= Diagnostic imaging Dental products

= Orthopedic & prosthetics

= Patient support products

= Other medical equipments 1.09%

Figure 2.4 Vietnamese medical equipment market structure

2.2 Business general information

2.1.1 Overview of SISC

SISC Equipment Joint Stock company was founded in 1997 under the name ‘Sieu Viet Limited Liability company’ SISC alongside Sai Gon Equipment Joint Stock company are the subsidiary companies of the SISC Group

SISC’s areas of activity are providing research and quality testing facilities with equipment in the main sectors pharmaceutical and medical sectors, there are other sectors environment, agriculture, fisheries, materials, petrochemicals, and life sciences Consulting for customers on Technology, Equipment, and Techniques based on laboratory requirements Provide technical services for laboratory 24

equipment such as installation, warranty, repair, and relocation Offer equipment evaluation and calibration services to ensure that the equipment is constantly working within the permitted boundaries Provide training and support on equipment use, as well as analytical and application skills Provide consumable spare parts and equipment components

SISC is the representative and distributor for 16 manufacturers from the USA, Korea, Germany, Italy, Sweden and Japan With almost 100 products in terms of medical equipment

Figure 2.5 Products distributed by SISC

(Source: Main web created by SISC company) Here are some of the products that are distributed by SISC, in the order from left to right is the spectrum 3 mid-IR Infrared Spectrometer, the Speed Dogester infrared digestion system, and the biological microscope

Quality Planning Purchasing Finance Logistic L1

Assurance | | Department| |Department| | Department| | Department Sales Technicial

Department JT Department} Department

Inventory

Figure 2.6 SISC Business Structure

(Source: Operating Department)

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2.1.2 SISC% currenf sifIdtion

According to the International Trade Administration, Vietnam's imported medical device market was valued at 1,4 billion USD in 2019, while SISC was valued at around 649,2 billion VND (27,98 million USD) which accounted for 0,19% of the overall industry In the next year, the company’s market share increased by 0,1% from 0,2% However, the whole imported medical device industry was valued at 1,8 billion USD in 2021 with which SISC accounted for only 0,015% As can be seen, the growth rate of the industry was faster than the growth rate of SISC, causing the market share ratio of the company to decline

lable 2.2 The business results report of SISC Equipment Joint Stock Company in 2019-2021