Trương Trung Nghĩa - CAPSTONE PROJECT REPORT DEVELOPING THE BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE YEARS 2011-2015 doc

THE CAPSTONE PROJECT DEVELOPING BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE YEARS 2011-2015 GaMBA.X0510 - Group Introduction   Necessary Objective To conduct the complete top-down and competitive analyses, develop alternative strategies and select a prioritized set of strategies that will ensure a competitive advantage for Viettel mobile in the period of 20112015  Subject & Scope of the study - Subject: Viettel group & other competitive companies in the mobile telecommunication industry - Scope: Basing on specific statistics on the macro environment, industry and organizational environment of the Viettel from 2005 to 2010 and orientation until 2015  Study Approaches Qualitative & quantitative; Statistical & analytical analyses Structure of the study  Chapter 1: Theoretical foundation of strategic management - Concept & role - Stages of strategic management - Models and matrices used  Chapter 2: Analysis of business activities of Viettel - Introduction to Viettel Group - Business situation 2005-2010 - Business environment analyze  Chapter 3: Strategy selection & Implementation solutions - Vision & mission - Strategic identification & selection - Implementation solutions & processes Chapter 1: Theoretical foundation 1 Concept & role of strategic management 1.1.1 Concept  There exist many definitions of strategic management  It is now understood to be both a scientific definition & is an art and science of planning, organization implementation and evaluation strategies 1.1.2 Roles  Help to identify opportunities and threats; Help managers and employees to understand what needs to be done to achieve success  Enable firms to match the proposed plan with the external environment; It is in the direction of future actions  Consider as the state of art in business administration 1.1.3 Types of strategy: Corporate & business Chapter 1: Theoretical foundation (2) Stages of strategic management Internal Environment External Environment Input Strategic Intent Strategic Mission Strategy Formulation Strategy Implementation Business Level Strategy Competitive Dynamics Corporate Level Strategy Corporate Governance Structure & Control Acquisition & Restructure Internation Strategy Corporative Strategies Strategic Leadership Entrepre & Innovation Strategic Competitiveness Above Average Returns Feedback Chapter 1: Theoretical foundation (3) Models & matrices used STAGE 1: THE INPUT STAGE External Factor Evaluation (EFE) Matrix Competitive Profile Matrix (CPM) Internal Factor Evaluation (IFE) Matrix STAGE 2: THE MATCHING STAGE Strengths - Weaknesses - Opportunities - Threats (SWOT) Matrix STAGE 3: THE DECISION STAGE Quantitative Strategic Planning Matrix (QSPM) Chapter 2: Business situation of Viettel Introduction of Viettel History:  The first name was Information Equipment Electronics Corporation in 1989, then Military Telecommunication Electronics Company after years & Viettel Telecom Group since Dec 2009  Headquarter: No1 Giang Van Minh, Badinh, Hanoi  Membership units: 14 and 64 branches  Own capital: VND 50,000 Billion Business areas: Supply of telecommunications services; Telecommunications, Transmission; Post Office; Terminal distribution; Finance investment; Media; Real Estate Investment; Export & Import and Foreign Investment Chapter 2: Business situation (cont.) 2 Business performance of Viettel (2005-2010)  Revenues increased by 200% year-over-year since 2005-2009, ROE: 48.3%, Global expansion (Indochina, Africa, Latin…)  Largest mobile network: 42,200 Stations, 120,000km fiber optic net, 17/17 provinces Laos cover 3G, etc Revenue & profit of Viettel (20052010) Chapter 2: Business situation (cont.) Business environment analysis 2.3.1 External environment  Macro environment (PEST) Economics (E): GDP increment, Inflation, VND rate, etc Year 2005 2006 2007 2008 2009 2010 GDP (USD) 642 730 843 1052 1064 1168 Exports (USD billion) 32 39 48 62 57 71 Import (USD billion) 36 44 62 80 69 84 Remittances (USD billion) 3.8 4.7 5.5 7.2 6.2 8.1 Total retail sales and consumer services turnover (VND1000 billion) 480 596 746 1009 1197 1561 Consumer Price Index CPI (% change over the previous year) 8.4 6.6 12.6 19.9 6.5 11.7 Chapter 2: Business situation (cont.) Business environment analysis 2.3.1 External environment  Macro environment (PEST) Politics & Legal (P): Stable environment, Administration procedures & Business law were amended and considerably improved - Science & Technology (T): Acquiring the advanced technologies (GSM, 3G and 4G testing in progress), Terminal production technology in Vietnam is limited - Social & Culture (S): Rapidly change in the trend the new lifestyle, Demand of using telecommunication increment, Awareness of Vietnamese improved - Demography: Population of 87 million, Over 50% under 27 years Chapter 2: Business situation (cont.) Viettel’s external factor evaluation matrix (EFE) Factors of external environment Weight Impact Mark GDP increases continuously 0.20 0.80 Political stability, law is gradually improved 0.10 0.30 Government’s intervention (restriction for entry) 0.04 0.08 Technology policy 0.10 0.30 Large population, big market 0.20 0.80 Competitive environment 0.05 0.15 Slowed market development speed 0.10 0.30 Pressure from customers 0.15 0.30 Challenges from new entrants, international integration 0.04 0.04 Substitutes 0.02 0.02 Opportunities Challenges Total 3.09 Chapter 2: Business situation (cont.) The CMP matrix compares with several companies Viettel Successful factors Weight Vinaphone Mobifone Rank Mark Rank Mark Rank Mark Quality of products and services 0.20 0.80 0.60 0.80 Advertisement 0.15 0.30 0.60 0.40 Competitive prices 0.15 0.60 0.45 0.30 Financial position 0.10 0.20 0.20 0.20 Customer loyalty 0.10 0.30 0.30 0.40 Market share 0.15 0.60 0.45 0.45 Diversification of products 0.10 0.30 0.30 0.30 Globalization 0.05 0.10 0.05 0.10 Total 1.00 3.20 2.95 2.95 Chapter 2: Business situation (cont.) 2.3.2 Internal environment  Resources: Tangible (Finance, Organization, Facility, Technology) and Intangible (Manpower, Ability of innovation & creativity, Reputation) No Target name Revenue (VND billion) 2005 2006 2007 2008 2009 2010 3,200 7,400 16,000 33,000 60,000 91,000 Profit (VND billion) 390 1,400 4,000 8,400 10,000 15,500 State budget payment (VND billion) 300 800 2,000 4,500 5,200 7,600 Value of investment (VND billion) 1,300 2,000 4,800 10,000 16,550 11,450 Average labor in the list (person) 4,175 6,200 8,400 12,000 18,000 24,000 Average income (VND million) 2.5 3.8 6.5 9.87 11.5 13 Subscribers of services (million subscribers) 1.0 2.7 5.5 29 44 51.5 Chapter 2: Business situation (cont.) Number of mobilephone subscribers (Left table) and marker-share of mobilephone providers in 12 Dec of Vietnam (Right figure) No Suppliers Subscribers Viettel 40,967,382 Vinaphone 32,026,915 Mobifone 32,476,589 Beeline Vietnam Mobile 3,543,028 S-Fone 1,860,793 EVN Telecom 1,629,585 187,176 Chapter 2: Business situation (cont.) 2.3.2 Internal environment  Resources   - Strengths: Widest coverage Largest market-share Attractive network package, diversification services Capital, technicians… Weaknesses: Management & operation Professional degree Loyal customers Labor productivity… Staff of Viettel 2005-2010  Evaluation of internal environment: Chapter 2: Business situation (cont.) Internal factor evaluation matrix of Viettel (IFE) Internal environment factors Weight Impact Mark Network and coverage, the ability to meet 0.15 0.60 Market share 0.15 0.45 Finance 0.10 0.30 Technology 0.05 0.10 Prestige, brand 0.05 0.15 Pricing, products and services 0.10 0.40 Structure of management organization 0.15 0.45 Quality of service 0.10 0.30 Loyal customer 0.05 0.05 Human Resources 0.10 0.20 Strengths Weaknesses Total 1.00 3.00 Chapter 3: Strategy selection & solutions Vision & Mission 3.1.1 Vision  Leading telecommunication company in Vietnam & in the Indochina area  Providing the best products and services for customers 3.1.2 Mission  Closed collaboration between economy & defense  Investment in infrastructure  Customer-oriented business  Rapid development, continuous reforms to stabilize  Talking human as core factor 3.1.3 Core values  Practice is the criterion for testing truth;  Maturing through challenges & failures;  Quick adaptation is competitive strength;  Innovation is life; Systematic thinking; East West combination; Tradition & method of soldiers; And Viettel is the public house Chapter 3: Selection & solusions (cont.) Strategic identification & selection STRENGTHS WEAKNESSES S1-Network & coverage area, its abilities W1-Management & organization S2-Largest market-share W2-Quality of services S3-Strong finance W3-Loyal customers S4-Advanced technology W4-Working staff S5-Reputation, brand S6-Pricing policy, products and services OPPORTUNITIES THREATS O1-GDP continuously grows T1-Violent competition environment O2-Stable politics, law being improved T2-Slowdown growth market O3-Government’s intervention T3-Pressure from customers O4-Technology policy T4-New entrants, Inter integration; O5-Numerous population, large market T5-Substitutes products Chapter 3: Selection & solutions (cont.) Strategic identification & selection SO strategies: Ensuring quality & network expansion; Policies on price, product, brand…to gain market-share from rivals; Development of new products and services; Promotion for subscribers outside the city; WO Strategies: Reform of the managerial structure, organizational amendments; Improvement of service quality through training Appropriate in use of labor; Policies to attract & keep talent people; Specific policies on postpaid customers, prepaid subscribers changing to postpaid; ST strategies: Maintenance of market-share, Improvement of marketing; Development of new entertainment services on mobilephone, PC & Ipad… Appropriate price to keep & attract customers; Development of new market which is less competitive, less substitute products…based on the advantages WT strategies: Enhancing supervision, management and administration reform; Strengthening training to improve service quality to limit the loss of customer; Cutting costs, appropriate prices Focusing on the loyal customers and development of new ones from the existing; Chapter 3: Selection & solutions (cont.) Strategic identification & selection  Strategy of market penetration & development  Strategy of products development  Strategy of operations diversification  Selecting strategy for Viettel in the period of 2011-2015 The QSPM Matrix for Viettel Group Strategies Important factors Weight Market Penetration & Develop Product Develop Operation Diversifi Continuously increased GDP 0.20 0.80 0.60 0.80 Stable politics, law being improved 0.10 0.30 0.30 0.30 Intervention of the government (restriction of entry) 0.04 0.16 0.12 0.12 Technology policy 0.10 0.30 0.40 0.30 Large population, market 0.20 0.80 0.60 0.60 Chapter 3: Selection & solutions (cont.) The QSPM Matrix for Viettel Group (cont.) Competitive environment 0.05 0.15 0.10 0.20 Slowed market development 0.10 0.30 0.20 0.20 Pressure from customers 0.15 0.60 0.30 0.45 Challenges from new entrants, int 0.04 0.04 0.12 0.16 Substitutes 0.02 0.04 0.06 0.08 Network coverage, ability to meet 0.15 0.60 0.30 0.30 Market share 0.15 0.45 0.30 0.15 Finance 0.10 0.30 0.40 0.40 Technology 0.05 0.15 0.20 0.10 Prestige, brand 0.05 0.20 0.15 0.10 Pricing, products and services 0.10 0.40 0.20 0.30 Management organization structure 0.15 0.30 0.45 0.30 Quality of service 0.10 0.30 0.20 0.20 Loyal customer 0.05 0.05 0.05 0.05 Human Resources 0.10 0.20 0.40 0.30 Total 2.00 6.44 5.45 5.41 Chapter 3: Selection & solutions (cont.) 3 Implementation solutions  Target market and basic policies for the market  Continuing maintenance of expansion investment and improvement of coverage quality, customer service capabilities  Continuing development of price policies for product competition and flexibility for each customer segment  Management of human resources for changing the structure and improving the quality of service from the human factor  Financial management solutions  Marketing solutions package, Chapter 3: Selection & solutions (cont.) Implementation process        Construction of annual goals Construction of policy system and support plan Development of action plans, budgets and implementation processes Allocation of human resources, finance, facilities Selection of organization structure consistent with the strategy Strategic commitment and implementation Strategic inspection control, implementation process evaluation and adjustment in the Conclusions  Development of business strategy for a service business production unit is extremely important, very complicated and not easy to perform  Using knowledge from MBA courses & our practices to formulate strategic planning for Viettel for the years 2011-2015, we chosen the best business strategy for the Group in Vietnam  It brings the Viettel leaders a overview of works, contributes to improvement of competitiveness and determines the optimal solutions for stabilization and development of the Group  However, because of limits on theoretical knowledge as well practice of the group’s members ourselves, this study cannot be avoided shortcomings/mistakes  We are very happy & looking forward to getting the comments, feedbacks from the teachers & classmates Our deeply thanks & gratitudes To:  The lecturer Dr Vu Thanh Hung and Dr Tony Sanichara who taught us dedicatedly the course "Strategic Management“, guided and facilitated our group to complete this capstone  The teachers in the ETC Center, National Economics University, VNU, Griggs - Andrews University who taught the knowledge through the courses designed by the MBA program  Advisors, managers and our friends of the class X0510… From: Group - GaMBA X0510 Mr Đỗ Anh Minh Mr Nguyễn Vinh Thư Mr Phạm Thành Công Mr Trương Trung Nghĩa ... courses & our practices to formulate strategic planning for Viettel for the years 201 1-2 015, we chosen the best business strategy for the Group in Vietnam  It brings the Viettel leaders a overview... advantage for Viettel mobile in the period of 20112015  Subject & Scope of the study - Subject: Viettel group & other competitive companies in the mobile telecommunication industry - Scope: Basing... activities of Viettel - Introduction to Viettel Group - Business situation 200 5-2 010 - Business environment analyze  Chapter 3: Strategy selection & Implementation solutions - Vision & mission - Strategic