Các yếu tố ảnh hưởng năng lực cạnh tranh của doanh nghiệp trong lĩnh vực xây dựng trường hợp nghiên cứu của công ty cổ phần đầu tư phát triển xây dựng Việt Nam
INTRODUCTION
Rationale of Research
According to the socio-economic development strategy report for the period of 2011-2020 by the Government of Vietnam, the construction industry is an essential economic sector playing strategic role for the national development The construction, installation and infrastructure development sectors have thrived with an average growth rate of 9.15% per year compared to 4.75% before 2013 FPT Securities (2019) forecasted in their report on 12/2019 that the construction industry of Vietnam will have an average growth rate of 6.9% per year until 2028, with the market driving force by constructing non-living houses
There has been more attractive for private and foreign enterprises to join the construction market These two groups gradually replace the state enterprises According to the General Statistics Office of Vietnam, the state enterprises only shared 8% of total market revenue by 2016, while the major portions of the market are shared by private and foreign enterprises (87% and 5%, respectively) There are about 74,000 construction enterprises operating in the local market; most of them are small and medium enterprises This fragmentation led to the highly competitive pressure on the construction market in Vietnam
In line with the growth rate of the construction industry, Vietnam Investment Development Construction Joint Stock Company (hereafter called
“VINADIC”) has had a high growth rate in recent years VINADIC is a construction enterprise established in 2001 as a member of the AMACCAO Group It has a vision of becoming an enterprise with a prestigious brand name, sustainable development, and affirming its high position in the Vietnam
2 market of general construction works, mechanical and electrical construction, design consultancy, and real estate investment
In recent years, revenue of VINADIC mainly depends on the construction works from a group of major customers such as Vin Groups, Sun Groups, the Ministry of Transport, Hyundai E&C – Ghella, as well as self- investment on the production industry and the energy sector of the AMACCAO Group As a result, VINADIC has grown rapidly from a medium construction company with annual revenue of about VND 700 billion (2015) to a relatively large company with annual revenue of over VND 2,525 billion
(2019) It‟s now equivalent to large and long-standing enterprises in the local construction market such as Fecon Corporation, Licogi Corporation, Song Da Corporation, Delta Construction Jsc, etc The fast growth and extension have posed many challenges for corporate management and potential risks in governance The hot growth might disrupt the balance of its human resources, defined work processes and capital of the enterprise leading to delays in delivery of construction works, decrease in quality, and loss of credibility with clients The internal capabilities need to be reviewed and upgraded following the size and vision of the company In addition, in volatile real estate and construction markets, these kinds of companies always face risks related to a decline in investment or redirection of business from its clients With more substantial competitiveness, the company will be able to find new customers and provide better services to cope with risks better
Referring to the above reasons, the author chose the topic "Factors impacting corporate competitive capabilities in construction services: a case study of Vietnam Investment Development Construction Jsc” with a desire to give an objective analysis of factors that will influence the company‟s competitiveness and performance Based on that, the company can further study and strengthen its capabilities to achieve higher competitiveness and performance
Review of previous research
There are quite a lot of research on the competitive capabilities of a company Competitive capabilities are the abilities of a company to capture competitive strengths compared to its primary competitors in its target markets, Roth and Jackson (1995) Kathuria (2000) suggested that four broad competitive capabilities drive business: cost, flexibility, quality and delivery Lin et al (2012) detailed the four well-known competitive capabilities below:
Cost: the most cost-effective way to supply the product and/or to provide service to customers;
Flexibility: the ability to respond to changes in terms of product range, design and volume;
Quality: producing and delivering the product and/or service to the highest possible standards, providing outstanding products of consistent quality;
Delivery: the ability to reliably and speedily deliver product and/or service Delivery reliability is the ability to meet delivery dates with correct quantities and specifications (Sarmiento et al., 2007), while delivery speed is the ability to fulfill an order promptly
Zhang et al (2011) suggested that at least two theories emerge to explain the patterns of capabilities development: the trade-off theory and the cumulative theory The former means improving one capability is at the expense of another capability; and the latter means simultaneous improvement in several capabilities can be achieved
A number of research focused on the relationship between competitive capabilities and business performance Ferdows and De Meyer (1990), through empirical studies, have reported that competitive capabilities have an impact on business performance More recently, Swink et al (2007) showed empirically that four levels of integration (strategy, customer, supplier and
4 product/process) lead to improvement in manufacturing capabilities; and that these capabilities improve business performance
Some recent researches have proposed other capabilities in additional to the four traditional competitive capabilities Zhang et al (2011) proposed service and customization as a new capability for industries located in China and proved that the new capability is mutually supportive with flexibility and delivery capabilities Jayaram and Narasinham (2007) showed that new product development is related to project success, and therefore, it can be considered as a competitive capability
Nguyen Van Tien et al (2019) suggested that competitive capabilities are influenced by five factors: finance, management, marketing, human resources and technology Nguyen (2019) proposed that the five factors affecting the competitive capability of companies in the tourism sector are service quality, human resources, information technology, marketing activities and tourism infrastructure To another extent, Kim (2006) proved that the supply chain has interaction and positively impacts to the competitive capability of a company
Recent studies have shown that firms can have other capabilities Thurer et al (2015) confirmed that in addition to the traditional four capabilities, innovativeness is an important, fifth capability for small and medium-sized firms Likewise, the concept of knowledge management as a powerful competitive weapon has been strongly emphasized in the strategic management literature Knowledge management emerges as essential management and organizational capability in creating value through knowledge Shu-Hui Chuang (2004) confirmed the impact of knowledge management on competitive advantage The proactive management of knowledge assets is essential to achieving both innovation capability and innovation performance Through data analysis, Marianne Gloet and Danny
Samson (2020) revealed the main contributions of knowledge management to systematic and sustained forms of innovation Knowledge was described as the “key competitive sustained resource” and an organization‟s most important asset by Storey and Barnett (2000) Beijers (1999) suggested that knowledge is a primary factor of production on which competitive advantage rests Mohamad (2019) suggested that technical and administrative innovations fully mediated the relationship between knowledge management and firm competitiveness The results of his research consolidate the resource- based view on the importance of internal resources and capabilities of the firm and improve knowledge management research area It also strengthens the view that knowledge management is a critical factor for firm competitiveness
From the above background of research, this study will focus on the four traditional competitive capabilities in the case of VINADIC, which are cost, flexibility, quality and delivery In addition, the author also studies whether knowledge management has an impact as the additional competitive capability for construction contractors through the research on this particular enterprise.
Research objectives
The objectives of this study are as follows:
- Clarify impacts of Cost, Flexibility, Quality, Delivery, and Knowledge management on corporate competitive capabilities of VINADIC in the construction industry
- Suggest solutions to improve corporate competitive capabilities at VINADIC
To accomplish the above objectives, the author proposes research tasks as below:
1 Analyze the impact of Cost, Flexibility, Quality, Delivery, Knowledge management on corporate competitive capabilities
2 Propose recommendations to improve corporate competitive capabilities of VINADIC.
Research methodology
The thesis uses two main data sources for research including primary data and secondary data
The primary data is information and documents collected directly from the company's officers and employees through interviews or survey questions The sample size should fall between a low of 30 and maximum 450 cases for meaningful statistics (Wolf et al., 2013) The database will then be analyzed using in-depth tools for statistical information
Data was obtained from 100 respondents using questionnaires with a grading scale from 1 to 5 The data had been collected in approximately two weeks
The secondary data are data that have been published through research papers, financial statements, and published statistical data
The thesis uses the combined methods: qualitative and quantitative The data analysis tool is SPSS software.
Scope of research
- Service: construction works at VINADIC The other businesses of the company like real estate investment, design consultancy are not under the scope of this research
- Content: Analyzing factors affecting corporate competitive capabilities of VINADIC in the construction market, and confirming whether or not knowledge management is considered as one of competitive capabilities of the construction firm
- Timeframe: the data are mainly collected in the period 2015-2021
Hypothesis
H1: Cost positively impacts corporate competitive capabilities
H2: Delivery positively impacts corporate competitive capabilities H3: Quality positively impacts corporate competitive capabilities
H4: Flexibility positively impacts corporate competitive capabilities H5: Knowledge management positively impacts corporate competitive capabilities
LITERATURE REVIEW
Corporate competitive capabilities
Competition is a vital characteristic of the market economy There are broad and varied definitions of competition and competitiveness concept based on different streams of research and level of analysis
According to the surplus value of Marx‟s theory, competition is a rivalry among capitalists in order to seize favorable conditions in production and consumption of goods to achieve super profits In the deep study on capitalist competition, K Marx discovered that the fundamental of competition is adjusting the average profit rate among sectors Industries with high profit margins will attract more investors in terms of capital than the others Meanwhile, Samuelson (1997) mentioned the competition in the relationship between market and product consumption, in which enterprises compete for their market share to dominate the competition Under mercantilism, competitiveness is a different name of productivity, considering the rate of growth of one enterprise compared to the others in the same industry (Krugman, 1996)
There are many levels of competition, such as on national, industry, enterprise, and product scale This thesis will mainly focus on the competition and competitiveness at the enterprise level
If competition is the battle between enterprises in the same environment to increase their value, the competitiveness is about the ability to win the competition and create competitive advantage According to Michael Porter (1985), the leading researcher on competitiveness and competitive strategies, the concept of competitiveness can be understood as the company‟s ability to obtain the market share and generate higher profit than the industry
9 current average profit In the whole industry, the average profitability of the industry would be increased as a result of the competition
In deeper research, according to the UK Department of Trade and Industry (2001), competitiveness is the capacity to supply the right goods and services of the right quality, at the right price and at the right time On the other hand, Chikan (2008) defined the competitiveness of an enterprise is its capability to sustainably satisfy the requirements of customers at a profit In addition to the concept, Reiljan, Hinrikus & Ivanov (2000) took the conflict- of-interest approach to competitiveness They also identified three different levels of competitiveness as (i) ability to survive, (ii) ability to develop, (iii) superiority Of which, ability to survive is the lowest level of competitiveness, which is the capacity to adapt passively to the competitive environment without any significant change or development The medium level of competitiveness is ability to develop, in which an enterprise is considered to be competitive if they can actively respond to changes in the competitive environment, thus improving their qualities and efficiency
Superiority is the highest level of competitiveness, in which an enterprise is considered competitive if their operations are more efficient, faster development or better qualities than other competitors, thereby influencing on the competitive environment
Although there are unsettled arguments from different schools of thought, most researchers agree that competitiveness is a complex concept due to the differences in definition and methods of measurement Overall, the concept of competitiveness focuses on 3 major aspects: (1) Different parties (including individuals and organizations) compete with each other in order to improve their position in the market; (2) Competition between the parties aims to obtain specific benefits such as market share, a certain group of customers, potential benefit in order to generate higher profits or maximize
10 the firm‟s value; (3) The participants might use different approaches (via price, product, brand, marketing, quality of human resources, financial resources, capital resources etc.) to win the competition
2.1.2 Classifications and types of competition
* Competition between sellers and buyers:
It is a competition that takes place according to the "law" of buying cheap and selling high Buyers always want to buy cheap, while sellers always want to sell high This competition is carried out during the bargaining process and eventually the price is formed and the act of buying is taken
* Competition between buyers and sellers:
It is a competition based on the law of supply and demand When a certain type of good or service is supplied less than consumer demand, the competition will become fierce and the price of such goods and service will increase The end result is that the seller will gain a high profit, and the buyer will lose some more money This is a competition where buyers harm themselves
This is the toughest and fiercest competition; it is vital for any business When the production of goods develops, the number of sellers increases, the competition becomes fiercer because every firm wants to gain a competitive advantage so as to capture the market share over the competitors The results of evaluating winning in this competition is how sales and market share increase, and along with it, how profits increases and production expands In this race, firms that do not have an appropriate competitive strategy will in turn be pushed out of the market, but at the same time it opens the way for other firms who firmly grasp the "weapon" of competition and dare to accept the rules of development
2.1.2.2 Based on extent of the industry
It is the competition between firms that produce or consume the same good or service This competition includes merge and acquisition The winning firm will expand their operating range in the market while those losing firms will have to downsize their business or even go bankrupt
It is competition between different economic sectors to achieve the highest profit It can be competition between firms or allied businesses of one industry with another industry Thus, between economic sectors, due to different technical and other conditions such as business environment, regional income, demands and needs, the same amount of capital invested in one industry can yield higher profit margins than other industries That leads to the fact that many people doing business in areas with low profit margins tend to shift to production in industries with higher profit margins, which is a signal of competition between industries As a result, industries that previously had high profit margins will attract more capitals and increase production scale When supply exceeds demand, causing commodity prices to tend to fall, reducing in lower profit margins In contrast, the industries that previously had low profit margins caused some investors to withdraw their capital and move to other fields, causing the production scale of this industry to decrease, leading to a smaller supply than demand, leading to falling of commodity prices and increasing profit margin In short, the outcome of this competition forms the average rate of return for all industries through the movement of capitals and production capacity between industries
2.1.2.3 Based on the level of competition in the market
It is a form of competition in which there are many sellers and small buyers in the market, where no producer or consumer has the right or ability to control the market or influencing the prices Perfect competition is described as: All exchanged goods are considered to be the same; all sellers and buyers have full knowledge of the information related to the purchase, sale and exchange; there is nothing to prevent the entry or exit of a buyer or seller into the market To win the competition, firms must find ways to reduce expenses, lower costs or make a difference in their products compared to other competitors
If a firm can significantly affect the market price of its outputs or products, it is classified as an "imperfectly competitive firm" Thus, imperfect competition is competition in a heterogeneous market Each type of product can have many different types of brands, each type of brand has a different image and reputation, although in terms of quality, the difference between products is not significant The terms of sale are also different Sellers can compete with each other to entice customers in many ways such as: advertising, promotions, price incentives and service before, during and after the purchase This type of competition is extremely popular in the current period Imperfect competition is of two types:
- Monopoly: A competition in which one or more influential actors can force their partners to sell or buy their products at high prices, and these actors have ability to change market price There are two types of monopolistic competition: selling monopolies and buying monopolies Selling monopoly means that in the market there are few sellers and many buyers, therefore the seller can increase the price or define the buying price of the customer if they want to maximize profits, while a buying monopoly is the market which has few buyers and many sellers, then the customer is
13 considered a powerful entity and can have impact to make decision about buying price In practice, a monopoly occurs if there are no substitutes; creating a monopoly, or monopolies join together would hinder the development of production and make harm to consumers Therefore, there must be an Antitrust Act against the monopolistic union of certain businessmen or firms
- Group Monopoly: This form of competition exists in some industries where there are only a few business firms At this point, competition will occur between a small number of firms Therefore, every enterprise must realize that the price of its products depends not only on the quantity but also on the activities of other competitors in the market A change in one firm's price will also affect the equilibrium demand for the other firm's products The enterprises participating in this market often are those with strong economic potential and large investment capital Therefore, it is very difficult to penetrate the market of competitors In practice, it is possible that a group monopoly occurs if there are no substitutes for the monopoly product or the monopolistic firms are allied
Monopolies hinder the development of production and harm consumers Therefore, in some countries there are Antitrust Act against monopolistic alliances between entrepreneurs
2.1.3.1 Definitions on corporate competitive capabilities
Corporate competitive capabilities in construction industry
In general, construction industry is an industry specializing in the field of consulting, design, construction organization, management, supervision and acceptance of civil construction works, industrial construction works, infrastructure works serving human life such as houses and buildings high-rise buildings, hospitals, schools, factories, commercial centers, roads, bridges, etc
In the Project Management during Construction Stage Curriculum, Dinh Tuan Hai and Pham Xuan Anh (2021) suggested that the construction industry is an important industry to create material and technical foundations for the national economy Compared with other manufacturing industries, construction works have distinct economic - technical characteristics, which are clearly reflected in construction products and the process of creating products of the industry Some of the main characteristics of construction industry are as follows:
First, construction products are large-scale construction and architectural works, so the organization of management and pricing of construction and installation products of the investor as well as the accounting of construction and installation costs of construction contractors are complicated
Second, construction products are fixed at the place of production, while the production conditions (machineries, workforce, tools, etc.) must be moved according to the place where the production takes place This feature makes the management and use of assets and materials very complicated due
19 to the influence of natural conditions, weather, security issues and damaging of materials
Third, the production and installation process must be benchmarked with the estimate, taking the estimate as the basis, and at the same time, the involved parties must buy insurance for construction works to reduce the construction risks
Fourth, construction products are sold according to the estimated price or the price agreed with the investor through bidding and contracting The commoditization of construction products is quite special, because the exchange of goods takes place before the product is produced
Fifth, the construction period (schedule) often takes a long time from commencement to completion It depends on the scale and complexity of each project
Sixth, the construction process is phased into several stages, each stage is divided into many different activities, such activities usually take place outdoors, under the great influence of environmental factors such as rain, sun, floods…
Seventh, comparing with other industries, the technology applied in the construction industry is still backward with many jobs still being done manually by workers
Last but not least, the construction industry has shared many characteristics similar to the manufacturing and service industries Like other manufacturing industries, the construction industry also creates physical products, often dictated by factors of cost, scale, and complexity
The above characteristics have a great influence on the production process and implementation of construction projects, from the calculation of production costs and product costing in construction enterprises, to the quality assurance, quantity and time of construction Therefore, project management
20 skills are essential in the construction industry in general and construction projects in particular
2.2.1 Cost capability in construction industry
FPT Securities (2019) figured out that construction contractors often have capital appropriation by investor (or “client”) during project implementation During the contract period, if the client encounters financial difficulties and cannot pay, it will cause great damage to the contractor, especially low-margin contractors For example, if a customer is unable to pay for a project, the contractor with 20% profit margin has spent 80% of the cost on the first project and needs to undertake 4 projects of equal size to recoup this lost capital But with a profit margin of 2 - 4% of the construction industry, construction contractors need to implement 24 - 49 projects of equivalent scale to be financially recovered To limit this risk, the contractor needs to carefully consider and evaluate the financial potential of the customer before participating in the bidding and signing the contract Vietnam Association of Construction Contractors (“VACC”) has reported in 2022 that outstanding debt has been one of the most painful problems in the construction industry for many years, greatly affecting the cash flow as well as the survival of construction firms Although the problem has been stirred up many times, there is still no significant improvement up to date For example, there are many debts outstanding from public investment sectors, although the projects have ended for 2-3 years, still not being settled and paid, while construction firms have to continuously pay interest from banks as they funded for projects by bank loans
FPT Securities (2019) also suggested that the risk of material price fluctuations is the biggest risk that construction contractors have to bear, because (1) the supply of materials depends on the project location and is
21 difficult to control, (2) the cost of materials accounts for nearly 70% of total construction costs and (3) the pre-tax profit margin of the construction industry is small, on average always below 5% This risk is proportional to the size of the project, not only because of the high project value and complexity but also because the time schedule is often long Contractors can limit this risk by entering into fixed unit-price contracts with economic adjustment instead of lump-sum or fixed-price contracts, but this approach has limited effectiveness and reduces expected profits of project
According to the VACC, most investors use a fixed unit price contract without adjustment at the time of signing, so the contractors have to compensate for losses when the price of raw materials increases For example, the price of steel usually accounts for about 20% of the total project value, the sharp increase in the price of this item in 2021 and 2022 has caused the construction cost to go up aggressively Due to the impact of gasoline prices in 2022, transportation costs increased, so the prices of all construction materials increased A series of projects are negatively affected by the increase in material prices
Moreover, the construction industry is highly cyclical as construction demands are very sensitive to changes in the economic and regulatory environment The contractor's revenue depends on the signed project, so the workload of a contractor is often unstable and can fluctuate greatly between periods To limit this risk, construction contractors need to increase the flexibility of the production system by mixing the use of subcontractors, seasonal workers and hiring construction machinery
Cost is a critical competitive capability for a construction firm, as it directly impacts the firm's profitability and ability to win new business In a highly competitive industry, firms that are able to offer lower costs than their competitors are more likely to win bids and secure new projects Therefore,
Suggested research model
From the research references overview, the author proposes a research model as follow:
The research starts with interviewing several managers and directors of the company toward competitive capabilities Based on the interview results and background of research, the author shall develop questionnaires for surveying each of the competitive capabilities as variable As the survey will be performed in Vietnamese, the questionnaires must be interpreted properly between English and Vietnamese to avoid any deviation in result Then the questionnaires will be sent over the internet to the participants in order to obtain their responses
The criterion of questionnaires will be based on 5-point Likert-type scale which is commonly used to measure attitudes, knowledge, perceptions, values, and behavioral changes A Likert-type scale involves a series of statements that respondents may choose from in order to rate their responses to evaluative questions (Vogt, 1999) The respondents will evaluate and rate each statement from 1 (strongly disagree) to 5 (strongly agree)
The data will be collected and screened and put in the SPSS software to generate statistical results for evaluating the factors impacting competitive capabilities of the firm
RESEARCH DESIGN AND METHODOLOGY
Introduction about case study
This research focuses on case study of VINADIC General information about the company is as follows:
Full name (English): Vietnam Investment Development Construction Joint Stock Company (VINADIC JSC.)
Full name (Vietnamese): Công ty Cổ Phần Đầu Tư Phát Triển Việt Nam First Establishment: 12/11/2001
Representative Office: Floor 4, HH Vuon Dao Building, 689 Lac Long Quan, Tay Ho, Ha Noi
Branch office: CN6 Plot, Nguyen Khe Industrial Zone, Dong Anh, Ha Noi Legal Representative: Nguyen Trong Quynh
VINADIC was officially established from an independent construction unit in 2001 The head office is located in Lot 06, Nguyen Khue IZ, Dong Anh, Hanoi In the beginning, the company was mainly doing business on construction and installation projects like road works, land filling, irrigation (i.e., ditches, sewers, embankments, etc.) and other civil works
In 2008, VINADIC opened its branch in Lai Chau province Later, VINADIC has been expanded into production of building materials with two large-scale factories in Van Noi and Ha Nam The company expanded to construction of M&E and investment of real estate afterward
Together with the growth of the company for projects in North and Central regions of Vietnam, VINADIC has expanded to South and opened the HCMC branch office in 2013 Up to now, the company has also varied and expanded its core clients, from public investment sectors to private
38 investment sectors like Vin Group, Sun Group and foreign contractors and clients like Hyundai E&C, Posco E&C, Samsung C&T (Korean); Shimizu, Taisei (Japanese), etc
The company registered its businesses for over fifty activities
However, it can be grouped into 4 main categories:
General construction and installation works
In recent years, VINADIC has participated and completed quite a number of huge projects in Vietnam Some of projects are as following: a) High-rise buildings
Complex housing, Southwest Linh Dam 3 buildings, 12 stories
AZ Thang Long Apartment & Service Complex 4 buildings, 37 stories B1, B3, DV, CT2 apartment (Linh Dam) 2 buildings, 21 stories
ADG Garden 1 building with 3 basements CT02 Phu Thuong apartment 2 buildings, 35 stories
Ninh Binh maternity hospital 12 stories, 900 beds b) Low-rise buildings
Vinhomes Marina Hai Phong 193 apartment units
CT6 Linh Dam villas 50 units
Nam An Khanh Masteri Villas 177 units, CFA 81,000 m2 Samsung Bac Ninh car parking area CFA 25,000 m2
Vina Vodka Factory in Dong Anh, Ha Noi 1,2 ha
Parking basement for Vinhomes Dragon Bay Ha
Infrastructure for Van Don airport Area of road: 240,000 m2 Infrastructure for Kim Chung – Di Trach new urban
Vin Group IT factory in Hoa Lac, Ha Noi
Infrastructure for Ninh Binh bus station Area of road: 43,000 m2 Infrastructure for car park of Vinfast factory in
Infrastructure for Vincity Ocean Park
Infrastructure for Bitexco The Manor Central
B1, B3, DV, CT2 apartment (Linh Dam) 2 buildings, 21 stories Hateco Hoang Mai apartment 2 buildings, 28 stories
HH6 An Khanh apartment 4 buildings, 25 stories
Cat Linh – Ha Dong metro
Waste water treatment plant for Van Ha trade village
Waste water treatment plant for Yen Binh industrial zone, Thai Nguyen province
Vu Yen – Hai Phong road 9m in width
Tran Hoang Na road & bridge in Can Tho
National road #4D Width 12m, length 10km
Internal road of Lai Chau town Width 58m, length 5km
National road #53 Width 18m, length 47km
QL3 – Nguyen Khue IZ road Width 32m, length 3.5km
National road #38 (Bac Ninh – Hai Duong)
Improvement of national road #50 Width 18m, length 15km Cau Gie – Ninh Binh highway
Humbua 1 bridge in Lai Chau province
The summaries of financial status for 2017, 2018, 2019 of VINADIC are as follows:
Table 3.1 Financial Status of VINADIC in 2017, 2018 and 2019
Research design
The research methodology adopted for this study comprises two approaches: qualitative and quantitative The qualitative approach is characterized by an interpretative paradigm that emphasizes subjective experiences and the meanings that they hold for individuals This approach involves the collection and analysis of non-numerical data, such as interviews, survey and observations, with the goal of gaining a deep understanding of the research subject The qualitative approach allows for a more in-depth exploration of the experiences, perceptions, and attitudes of individuals and can provide rich and nuanced insights into complex phenomena
The use of qualitative research methods has been widely recognized in various fields, including social sciences, psychology, and business, as they enable researchers to explore complex phenomena that are difficult to capture
42 through quantitative approaches alone The interpretative nature of qualitative research allows for a more holistic understanding of the research subject, and its flexibility allows researchers to adapt their approach to fit the specific needs of the study
In combination with the quantitative approach, which involves the collection and analysis of numerical data, such as surveys and experiments, the qualitative approach provides a more comprehensive understanding of the research subject The quantitative approach allows for the statistical analysis of data, which can provide insights into the relationships between variables and enable the identification of trends and patterns
The combination of qualitative and quantitative approaches is increasingly recognized as a powerful research methodology that can provide a more complete understanding of complex phenomena By using both approaches, this research aims to provide a comprehensive understanding of the factors that influence corporate competitiveness in the construction industry
Using survey data from employees and clients can provide a comprehensive picture of a construction firm's competitiveness, as it allows for the perspectives of multiple stakeholder groups to be incorporated into the analysis This approach has been used in previous studies examining firm competitiveness in various industries (e.g., construction, manufacturing, services) (Dana & Dana, 2005)
Employees can provide valuable insights into the internal operations of the firm, such as its organizational structure, human resource management practices, and overall workplace culture This information can be important for understanding factors that may contribute to the firm's competitive advantage or disadvantage Additionally, employee perceptions of the firm's
43 performance can help to identify areas for improvement and inform strategic decision-making (Barney, 1991)
Meanwhile, clients can provide insights into the external market factors that impact the firm's competitiveness, such as customer preferences, industry trends, and regulatory requirements Understanding the needs and priorities of clients can help firms to tailor their offerings and stay ahead of competitors Moreover, client feedback can be a valuable source of information for assessing the firm's reputation and overall market position (Aaker, Fournier,
Regarding the measurement of cost capability, it may be more appropriate to use survey data rather than financial data Cost capability refers to a firm's ability to manage costs effectively in order to maintain profitability and competitiveness While financial data (e.g., income statements, balance sheets) can provide some information about a firm's cost structure, it may not capture the nuances of cost management practices within the organization By contrast, survey data from employees and clients can provide insights into specific cost management practices and strategies that are used by the firm (Brennan, Monahan, & Dodd, 2004) This information can help to identify areas for improvement and inform strategic decision-making related to cost management
The research methodology adopted for this study involves the application of statistical methods such as regression analysis and Exploratory Factor Analysis (EFA) using SPSS software The statistical analysis of the collected data is expected to provide a comprehensive understanding of the factors that affect the competitive capabilities of VINADIC The use of statistical methods, such as regression analysis and EFA, allows for a systematic exploration of the relationships between variables and enables the identification of key factors that influence corporate competitiveness The
44 results of this analysis will provide insights into the key drivers of competitiveness for VINADIC, and will inform the development of strategies to enhance its competitive capabilities
In overall, the construction industry of Vietnam is reforming from
“Quality development” phase to “Mature” phase The construction companies are facing with increasing problems at this stage
First, the construction industry is forecasted to entering its mature phase due to the declining prospective future of building construction, commercial building and infrastructure
Figure 3.1 Real growth rate of Vietnam construction industry 1990-2018
(Source: GSO) Second, the construction industry has become “crowded” with many competitors, highly fragmented due to the nature of its operations and customer base Competition in the industry is fierce, price pressure comes from project investors; and in particular, the tight regulatory environment; are major barriers facing the industry The increase in the number of workers,
Real growth rate Linear regression
45 combined with lower growth in the value of the industry, drags down the growth rate in industry productivity
Third, profit growth of construction companies tended to decrease due to the sharp increase in raw material prices and fierce competition, which reduced the gross profit margin of most construction companies
Last, the report on production and business trends of the construction industry in the fourth quarter and the forecast for the first quarter of 2020 announced by the General Statistics Office said that with a sample number of about 6,200 enterprises, representing the entire business sector with a large number of businesses construction activities of 63 provinces and centrally- run cities, up to 33.0% of enterprises rated it more difficult than in the third quarter of 2019 It is forecasted that in the first quarter of 2020, only 23.5% of enterprises rated the production and business situation better, 40.5% of enterprises said it would be stable, and 36.0% of enterprises rated it more difficult This figure shows that construction industry enterprises are facing many difficulties The reason may be due to the increasing competition in the construction industry, the slowing down of the real estate market, or the lack of good cost control by the company
FPT Securities (2019) presented the Five force model for Vietnam construction industry, in which the competition of rivalry and bargaining power of client are two factors heavily impacted to the industry competition
Figure 3.2 Competition environment of construction industry in
The current situation presents the needs of competitive advantage of construction firms to compete in the construction industry Therefore, there is demand to study about corporate competitive capabilities, which can help the company to strongly survive and develop sustainably
Data collection and analysis
Data collection refers to the systematic process of gathering and measuring information on variables of interest with the aim of answering research questions, testing hypotheses, and evaluating outcomes In this study, data is collected using an online questionnaire distributed to intended respondents from VINADIC and its clients The questionnaire utilizes a Likert-scale, where respondents are required to evaluate each question using a five-point scale ranging from strongly agree to strongly disagree
The use of an online questionnaire enables the efficient and timely collection of data from a geographically dispersed sample Respondents can complete the questionnaire at their convenience, increasing the likelihood of a higher response rate The data collection process is expected to take approximately two weeks, with a target of one hundred completed responses
The use of a Likert-scale in the questionnaire is a common and widely used approach in research, particularly in social science and business studies The scale provides a means of measuring attitudes, opinions, and perceptions, and is well-suited for assessing constructs that are difficult to directly measure The use of a Likert-scale also allows for the efficient analysis of data, as responses can be easily quantified and summarized
This is the method in which people collect data based on figures to analyze and give out the final result These data are used to prove or reject given hypotheses
After data from the questionnaires are collected, they are checked and analyzed by the SPSS software to generate results
Either correlational or experimental studies can be used to officially test the hypotheses or predict by using statistics Through these two types of studies, the results can be generalized for larger populations based on the used sampling method
After the data are collected, they need to be processed before analysis For example, the survey data may be digitalized before analyzing by using descriptive statistics or inference to answer the research questions
Descriptive statistics will provide a summary of the data, including measures of average values and changes Besides that, charts, Scatter charts, and frequency tables can be used to visualize data and check any exceptional trends
The study uses analytical techniques to evaluate the reliability of the scale through descriptive analysis, Cronbach's Alpha, exploratory factor analysis (EFA), correlations and regressions
The qualitative method is designed to help researchers understand human as well as the society and culture in which they are living It can involve more subjective concerns such as awareness, feeling, motivation, etc This method aims to find ways to identify reasons for such behaviors
Case study, which is used most in social sciences, concentrates on only one issue in the context of the topic Within the scope of the research topic, the method will focus on the employees of VINADIC and its clients.
Data analysis procedure
Hypotheses will be proposed after the data are generally tested by using different standardized and hierarchical regression models in SPSS following below procedure:
The purpose of data validation is to find out, as far as possible, whether the data collection was done as per the pre-set standards and without any bias
It is a four-step process, which includes (1) fraud, (2) screening, (3) procedure and (4) completeness
Large data sets can include errors For example, respondents may fill fields incorrectly or skip them accidentally To make sure that there are no such errors, the researcher should conduct basic data checks, check for outliers, and edit the raw research data to identify and clear out any data points that may hamper the accuracy of the results
This is one of the most important steps in data preparation It refers to grouping and assigning values to responses from the survey
Once the data is ready, it will be coded to SPSS software for running analysis Then the outcomes will be reviewed and evaluated in the next chapter
RESEARCH RESULT
Analysis of survey outcomes
The mean generally describes how much the survey subject's rating on the scale used, what is the minimum, maximum and standard deviation of each observed variable
The analysis shows the means are all over the average 3 and the standard deviation is maximum by 1.133 This standard deviation means that responses in a number of answers did not differ much The opinions of respondents have not differed much about those variables
Cronbach‟s Alpha is used to measure reliability, or internal consistency
(Lee Cronbach, 1951) According to Hair et al (2011), observed variables show low reliability as the Cronbach‟s Alpha less than 0.6 will be rejected Variables with low corrected item-total correlation will be excepted either (Nunnally, 1994)
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
>> All observed variables have a Corrected Item-Total Correlation greater than 0.3 Cronbach's Alpha coefficient of the scale is greater than 0.6, so the scale ensures reliability
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
>> All observed variables have a Corrected Item-Total Correlation greater than 0.3 Cronbach's Alpha coefficient of the scale is greater than 0.6, so the scale ensures reliability
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
>> All observed variables have a Corrected Item-Total Correlation greater than 0.3 Cronbach's Alpha coefficient of the scale is greater than 0.6, so the scale ensures reliability
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
>> All observed variables have a Corrected Item-Total Correlation greater than 0.3 Cronbach's Alpha coefficient of the scale is greater than 0.6, so the scale ensures reliability
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
>> All observed variables have a Corrected Item-Total Correlation greater than 0.3 Cronbach's Alpha coefficient of the scale is greater than 0.6, so the scale ensures reliability
Scale Mean if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
>> All observed variables have a Corrected Item-Total Correlation greater than 0.3 Cronbach's Alpha coefficient of the scale is greater than 0.6, so the scale ensures reliability
Exploratory factor analysis (EFA) is a statistical technique commonly used in research to identify the underlying factors that explain the patterns of correlations among a set of variables EFA can be a powerful tool in uncovering the underlying structure of a dataset, and is often used in fields such as psychology, sociology, and marketing research
When performing EFA, it is generally recommended to treat independent and dependent variables separately This is because the factor structure of the two sets of variables may differ, and combining them could lead to a less clear understanding of the relationships among the variables
Hair et al (2014) recommended performing separate factor analyses on independent and dependent variables to better understand the factor structures of each set of variables Separating independent and dependent variables in EFA analysis can provide additional insights into how the underlying factors relate to the outcome variable This approach can lead to a better understanding of the factor structures of each set of variables and the relationships among them, and is supported by other studies such as Abu- Khader (2007) and Garcia-Manso, Tortosa-Gil, and Fernandez-Abascal
Kaiser-Meyer-Olkin Measure of Sampling
>> The KMO coefficient = 0.828 > 0.5: factor analysis is appropriate for the research data
Barlett‟s Test result is 1575.056 with Sig = 0.000 < 0.05, this proves the data used to analyze the factors are completely appropriate
Extraction Sums of Squared Loadings
Extraction Method: Principal Component Analysis
Extraction Method: Principal Component Analysis
Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 7 iterations
>> Reject the variables DC1, QC2, QC4 because these variables are loaded in both factors Run the analysis again:
Kaiser-Meyer-Olkin Measure of
>> KMO = 0.835 > 0.5, factor analysis is appropriate for the research data
>> Sig (Bartlett's Test) = 0.000 (sig < 0.05) shows that the observed variables participating in the EFA analysis are correlated with each other
Extraction Sums of Squared Loadings
Extraction Method: Principal Component Analysis
>> There are 5 factors extracted based on the criterion eigenvalue 1,203 > 1, so these 5 factors summarize the information of 22 observed variables included in EFA in the best way The total variance of these factors extracted is 68.618% > 50%, thus, the 5 extracted factors explain 68.618% of the data variation of 22 observed variables participating in EFA
The extracted factors correspond to the factor columns in the rotated component matrix below
Extraction Method: Principal Component Analysis
Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 7 iterations
>> Factor Loading coefficient of the observed variables in the rotated component matrix is greater than 0.5, so these observed variables all contribute significantly to the model (Hair et al., 2009)
Kaiser-Meyer-Olkin Measure of Sampling
>> KMO = 0.799 > 0.5, factor analysis is appropriate for the research data
>> Sig (Bartlett's Test) = 0.000 (sig < 0.05) shows that the observed variables participating in the EFA analysis are correlated with each other
Extraction Method: Principal Component Analysis
>> The results of the rotation matrix show that there is 1 factor extracted from the observed variables included in the EFA analysis The extracted variance is explained as 60.779% at the eigenvalue of 3,647 > 1
>> Factor Loading coefficient of the observed variables in the rotated component matrix is greater than 0.5, so these observed variables all contribute significantly to the model (Hair et al., 2009)
Pearson‟s correlation coefficient is the statistics test that measures the statistical relationship, or association, between two continuous variables It is known as the best method of measuring the association between variables of interest because it is based on the method of covariance It gives information about the magnitude of the association, or correlation, as well as the direction of the relationship
To conduct Pearson correlation and regression analysis, it is needed to create representative variables from the results of rotated component matrix
A representative variable is created from group of similar observed variables (for example, CC is representative of CC1, CC2, CC3, CC4, CC5) by taking the mean of observed variables
CCC DC QC CC KC FC
** Correlation is significant at the 0.01 level (2-tailed)
>> The results show that all Pearson correlation sig values between the independent variables and the dependent variable are less than 0.05 Thus, the independent variables are all linearly correlated with the dependent variable
Linear regression is a regression that considers a linear relationship – a straight-line relationship between the independent variable and the dependent variable In research, there is a must to test hypotheses about the relationship between two or more variables, including one dependent variable and one or more independent variables If there is only one independent variable, the model is called Simple Linear Regression (SLR) In case there are two or more independent variables, the model is called Multiple Linear Regression (MLR)
In this test, the analysis was performing based on the representative variables as noted in 4.1.4
Total 33.818 99 a Dependent Variable: CCC b Predictors: (Constant), FC, CC, QC, DC, KC
>> The F-Ratio indicates the statistical meaning of the overall model The F- ratio is the result of the comparison between the amount of explained and unexplained variances The result of the regression model in the above ANOVA table shows that the overall model is different from 0 (the F-ratio 40.375) with Sig = 0.000 < 0.05, so the regression model is significant
Std Error of the Estimate
1 826 a 682 665 33808 1.952 a Predictors: (Constant), FC, CC, QC, DC, KC b Dependent Variable: CCC
>> According to statistics, the Adjusted R square presents the percentage of changes in a variable explained by other variables The Adjusted R square is 0.665 = 66.5% Thus, the independent variables included in the regression affect 66.5% of the change of the dependent variable The Durbin-Watson 2.072, within 1 and 3, there is no multi-collinearity issue in this regression
Standardi zed Coefficie nts t Sig
>> Regression results show that the all observed variables have impact on the dependent variable because the Sig t-test of each independent variable is less than 0.05
>> The Standardized Coefficients of all observed variables (DC, CC, QC, FC, KC) are all greater than 0 Thus, these observed variables confirm the positive impacts on the dependent variables
>> The VIF coefficients of the independent variables are all less than 10, so there is no multi-collinearity
From the above table of coefficients, the study confirms that four traditional factors (cost, delivery, quality and flexibility) positively impact to the corporate competitive capabilities The findings of this study on a construction company are in line with other research on other sectors that cost, delivery and flexibility positively impact the corporate competitive capabilities Among these, quality and cost are the most impact factors with standardized coefficients 0.245 and 0.270 respectively
The findings also confirm that the knowledge management has impact as a competitive capability This result is in line with outcomes of other research on knowledge management
In conclusion, the findings support below hypotheses:
H1: Cost positively impacts corporate competitive capabilities
H2: Delivery positively impacts corporate competitive capabilities H3: Quality positively impacts corporate competitive capabilities H4: Flexibility positively impacts corporate competitive capabilities H5: Knowledge management positively impacts corporate competitive capabilities
Summary
The theoretical basis of this study is based on internal capabilities under the resource-based views The findings of this research confirmed that cost, delivery, quality, flexibility and knowledge management have positive impacts to corporate competitive capabilities The construction company can spend its resource and focus on those capabilities to gain competitive advantage on the market
There is important finding of this research, which is to confirm knowledge management as a competitive capability for construction firm in Vietnam This theory can explain for the advantage of foreign construction companies over Vietnamese construction companies in the past The foreign companies in Vietnam often to own know-how in terms of technique and have a system to share it because they operate in distances The findings indicate that if local construction company increase its spending on knowledge management, it can have the competitive advantage against the local and foreign competitors
In order to improve knowledge management, it is, however, not only mere investing at system and human resource It is important to define how to manage the tacit and explicit knowledge The same applies for how to create a culture that employees are willing to share and to get experience and knowledge from others There is huge potential for local construction company to focus on improving knowledge management because in general,
67 this aspect has not been paid adequate attention in the construction industry of Vietnam.
Limitations
There are still some limitations in this study Firstly, the research design is based on information from domestic medium businesses so it may not represent for the other sizes of construction company in Vietnam The survey data is collected on a small scale which might not represent the whole population
Secondly, the author has not the chance to interview with partners of the company, especially the clients So, the area of focus might not be covering all aspects of competitive capabilities in construction industry
Thirdly, the sampling might also not represent opinions of respondents correctly The respondent can give dishonest answers so it can impact the correctness of research result The views and perceptions of respondent can be different as they are working for different departments
Lastly, the research was performed on case study of VINADIC, it may not represent for all construction companies in Vietnam
CONCLUSION AND SUGGESTION
Suggestion
The company in this research, VINADIC, has already had its positions in the construction market They are close-partners for some of famous clients and have impressive business results in recent years However, it is recommended to VINADIC managers to build and sustain its competitive advantages in the highly competitive construction market There are some suggestions to VINADIC as follows:
First, the company needs to focus on developing the knowledge management system The knowledge management system can be used to maintain and share knowledge; eventually, this system can contribute to the optimization of other capabilities like cost, quality, delivery and flexibility This has not been paid enough attention in construction industry of Vietnam Not many company in the market has good knowledge sharing system Thus, having this system shall ensure competitive advantage of the company over its competitors
Second, VINADIC can still improve the cost capability The company should review partnership and cooperation status with suppliers, subcontractors and groups of workers Then it can optimize expenses for cost inputs
Third, the company should ensure that the outstanding debts are as minimum as possible This can be done by closely supervising the project cash-flows There must be defined process that if something is not right, project team should escalate to manager or board of directors for timely resolution The company should also update financial information about its clients and potential clients periodically in order to make appropriate approach
There are many other aspects of the competitive capabilities which can be improved following the result of this research Based on desire and vision of the company, the company managers can opt to invest in all or separate trait of capabilities depending The investment needs to be balanced with the company financial plan as well.
Conclusion
This research has been able to achieve several objectives which can be taken as significant contributions to Vietnam Investment Development Construction Jsc Its findings can be applied to improve competitive capabilities of the company Firstly, it explored correlation between factors like cost, delivery, flexibility, knowledge management and corporate competitive capabilities Secondly, it confirms the knowledge management as the fifth capability for construction firm in Vietnam construction market This is important findings that there are not many firms paying adequate intention and resources on this aspect
The research contributes to the study about competitive capabilities of enterprise in general and construction firms in particular.
Limitations and further research directions of the topic
As with most organizational research studies, this study has several limitations This study was conducted specifically at Vietnam Investment Development Construction Jsc, a medium enterprise in construction industry of Vietnam Other enterprises can have different positions on the market, as well as different competitors and facing different problems The maturity of VINADIC including strength and weakness is also different with others, thus they cannot be represented for others
This research is based on several studies of abroad enterprises, which have different competitive environment Such studies might not be applicable
70 to the business situations in Vietnam The application of such findings or theory should be selected carefully
From the above, hypotheses for VINADIC might not be relevant to other enterprises The application of this result for other company must be evaluated before using There might be further studies on this direction for a group of construction company in Vietnam with a larger scale to confirm which factors impacting corporate competitive capabilities
There might also be further study on how knowledge management capability impact to corporate competitive capabilities This is interesting topic as not many construction firms in Vietnam focusing on this subject There is also not a defined frame work to manage knowledge sharing within a company or a group yet, not only construction but enterprises in other sectors as well
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I am Tran Hung Cuong I am currently conducting research on factors impacting corporate competitive capabilities in construction services in case study of VINADIC Your objective responses would partly decide the success of this study The information you responded will be kept confidential and just collected to serve the research purpose Thus, I sincerely look forward to receiving your genuine response and assistance Thank you so much! I couldn't have done it without your support
The following are statements which will be rated following your opinion or view point Please select the number representing your level of agreement with the such statements based on below scale:
CC1 - The company has ability to offer lower price than competitors
CC2 - The company has better capability in terms of finance arrangement in comparison with competitors
CC3 - The company has ability to resolve outstanding debts better than competitors
CC4 - The company can manage the direct costs for labor, materials and machineries better than competitors
CC5 - The company has lower indirect costs compared with competitor (management, engineers, clerks)
DC1 - The company is able to handover timely all of its construction projects
DC2 - The company has a good decision-making system that is prompt and transparent
DC3 - The company regularly inspects progress of its projects to early detect and resolve schedule delays
DC4 - The company has the ability to mobilize or demobilize work force, materials, machineries to recover schedule in case of delay
DC5 - The company has applied modern techniques in terms of schedule management for its projects
QC1 - The construction deliverables of the company is better in terms of quality compared with competitors
QC2 - The company can provide reliable and consistent quality outcomes from one project to the others
QC3 - The company has a good quality management in all
Statements 1 2 3 4 5 project phases, which is applicable to all of its projects
QC4 - The company has enough set forms of quality management in all project phases
QC5 - The company has well trained quality inspectors for all projects
FC1 - The company can adapt quickly in case of cost impact, schedule impact and changes in scope of works from Client during project implementation
FC2 - The company has ability to mobilize / demobilize work force, machineries and finance for many projects at the same time
FC3 - The company has ability to compete on different kinds of projects: buildings, factories, infrastructures, M&E, etc
FC4 - The company has the flexibility to cooperate with clients in public sectors, private sectors and foreign investment sectors
FC5 - The company has a effective change management system
KC1 - The company have a knowledge sharing system that can share good / bad practices from all projects
KC2 - The organizational culture of the company support better experience and knowledge sharing in comparison with competitors
KC3 - Sharing knowledge in the company is not rely on any
KC4 - Helpful documents for project execution like method statement are easily and comfortably shared to all engineers
KC5 - The knowledge sharing system of company support for handover from retired staffs to the other staff in an easy and complete way
CCC1- Comparing with competitors in the same market segment, the company has higher growth rate
CCC2 - The company has more effective business results in comparison to competitors
CCC3 - The client tends to select VINADIC because the construction schedule is more reliable
CCC4 - The client tends to select VINADIC because the offering cost is better than competitors
CCC5 - The client tends to select VINADIC because the quality of construction works is more reliable
CCC6 - The client tends to select VINADIC because the company can effectively satisfy changes of project in comparison with competitors