Proposal of competitive strategy for SCE consultants (Indo China) LTD. in the period of 2011 to 2015

TRƯỜNG ĐẠI HỌC MỞ TP. HCM UNIVERSITÉ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBAVB3 DANG HOANG TUNG PROPOSAL OF COMPETITIVE STRATEGY FOR SCE CONSULTANTS (INDO-CHINA) LTD. IN THE PERIOD OF 2011 TO 2015 MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) Ho Chi Minh City (2011) i Acknowledgement I wish to express my loving thanks to my parents and wife for their spiritual support and encouragement during my study. I wish to extend my gratitude to Dr. Nguyen Quyet Thang for his valuable advice and help. Finally, thanks to all friends who share with me joy, happiness and sadness. ii Declaration This thesis is a presentation of my own study. Wherever contributions of others are involved, every effort is made to indicate this clearly, with due reference to the literature, and acknowledgement of collaborative research and discussions. The work was done under the guidance of Dr. Nguyen Quyet Thang, under the framework of the Master program in Business Administration – The join Master Program between Solvay Brussels School (Belgium) and Ho Chi Minh City Open University (Vietnam). The work was completed in February 2011, in Ho Chi Minh City – Vietnam (candidate’s name and signature) DANG HOANG TUNG In my capacity as supervisor of the candidate’s thesis, I certify that the above statements are true to the best of my knowledge. (tutor’s name and signature) Dr. NGUYEN QUYET THANG Date: iii Abstract Positioning in consultancy of high-rise building segment, in recent years SCE Consultants (Indo-China) Ltd is considered a successful company in terms of high growth rate. Nevertheless, as other consultant companies, SCE Consultants (Indo- China) Ltd is facing the question of how to develop in the environment with fiercer and fiercer competition. Hence, the purpose of this study, designing a competitive strategy for the company, becomes more necessary and crucial. In this study, based on the general process of strategy formulation, the most appropriate strategy for the company to develop will be found out. Firstly, an external scanning relied on macro environment and industry environment analysis to identify opportunities and threats for the company is carried out. Secondly, the company’s factors such as organizational structure, human resource and business activities… are examined to reveal strengths and weaknesses of the company. Thirdly, derived from the determined strengths, weaknesses, opportunities and threats, the most appropriate competitive strategy for the company is developed. Finally, recommendations that the company should pay attention to in order to successfully implement the proposed strategy are presented. iv Table of Content CHAPTER 1: INTRODUCTION 1 1.1. Rationale of the study 1 1.2. Problem statement 1 1.3. Objectives 2 1.4. Scope and limitation of study 2 1.5. Methodology and framework of the study 2 1.6. Structure of the study 4 CHAPTER 2: LITERATURE REVIEW 6 2.1. Competitive advantage 6 2.1.1. Definition 6 2.1.2. Generic building blocks of competitive advantage 7 2.2. Competitive strategy 8 2.2.1. Definition 8 2.2.2. Three levels of strategy 10 2.3. Process of strategic management 12 2.4. Strategy formulation process 13 2.4.1. Vision, mission and goals 13 2.4.2. External analysis 13 2.4.3. Internal analysis 17 2.4.4. Strategy formulation and strategic choice 18 CHAPTER 3: EXTERNAL ENVIRONMENT ANALYSIS 20 3.1. Vietnam construction industry overview 20 3.1.1. Housing construction 20 3.1.2. Infrastructure construction 20 3.1.3. Commercial construction 22 3.1.4. Retail and industry construction 22 3.2. Macro environment analysis 23 3.2.1. Political and regulatory factors 23 3.2.2. Economic factors 24 3.2.3. Social, culture and demographic factors 29 3.2.4. Technological factors 31 v 3.2.5. International factors 32 3.3. Industry environment analysis 33 3.3.1. Definition 34 3.3.2. Porter’s five force analysis 34 3.3.3. Conclusion 37 CHAPTER 4: INTERNAL ENVIRONMENT ANALYSIS 39 4.1. Introduction of SCE Consultants (Indo-China) Ltd 39 4.2. Company’s Vision, Mission and Core values 40 4.3. Organizational structure 41 4.4. Human resource management 43 4.5. Business activities 44 4.5.1. Current services 44 4.5.2. Core clients 49 4.5.3. Pricing strategy 50 4.5.4. Business achievement 51 4.6. SWOT analysis 51 4.6.1. Opportunities 52 4.6.2. Threats 53 4.6.3. Strength 53 4.6.4. Weakness 53 4.6.5. SWOT matrix 54 CHAPTER 5: FORMULATION COMPETITIVE STRATEGY 55 5.1. Foundation of the strategy 55 5.1.1. What is to be satisfied? (Customer needs and product differentiation) 55 5.1.2. Who is to be satisfied? (Customer groups and market segmentation) 55 5.1.3. How customer needs are to be satisfied? (Distinctive competences) 56 5.2. Competitive strategy for SCE 56 5.2.1. Generic competitive strategy 56 5.2.2. Proposed competitive strategy in the period of 2011 – 2015 59 CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS 68 6.1. Conclusions 68 6.2. Recommendations 69 vi 6.3. Limitation of the project 70 APPENDIX 71 Appendix A: Questionnaires for direct interview with directors and managers of SCE Consultants (Indo-China) Ltd. Company 71 Appendix B: Questionnaires for direct interview with directors and managers of key clients of SCE Consultants (Indo-China) Ltd. Company 73 Appendix C: Questionnaires for direct interview with directors and managers of partners of SCE Consultants (Indo-China) Ltd. Company 75 REFERENCES 77 vii List of Figures Figure 1.1 Frame work of study 3 Figure 2.1 Value creation to consumer and producer 6 Figure 2.2 Strategic planning process 12 Figure 2.3 Porter’s five force model for industry analysis 15 Figure 3.1 GDP and GDP per capita in the period of 2005-2015 25 Figure 3.2 Inflation in the period of 2005-2015 26 Figure 3.3 FDI in the period of 2005-2015 27 Figure 3.4 Top 10 FDI investors in the period of 2005-2015 28 Figure 3.5 Exchange rates (at year-end) in the period of 2005-2015 29 Figure 3.6 Rising urbanization level 30 Figure 3.7 Porter’s model applied to the case of SCE 38 Figure 4.1 Manpower of SCE (at year-end) in the period of 2005-2010 41 Figure 4.2 SCE’s organizational chart in 2010 42 Figure 4.3 SCE’s service line _ Service line 1 (SL1) 45 Figure 4.4 SCE’s service line _ Service line 2 (SL2) 47 Figure 5.1 SCE’s generic strategy 59 Figure 5.2 Proposed competitive strategy for SCE 59 viii List of Tables Table 2.1 Generic competitive strategies and required competencies 19 Table 3.1 Top 10 major apartment building projects in HCMC in the period of 2007-2010 20 Table 3.2 Top 10 priority projects in the period 2005-2010 21 Table 3.3 Top 10 major office developments in HCMC 22 Table 3.4 Top 10 major industrial developments in the period 2007-2010 23 Table 3.5 Top 10 highest buildings in Vietnam 32 Table 4.1 Corporate milestones 39 Table 4.2 SWOT matrix of SCE 54 ix Abbreviations (In order of appearance) C&S Civil and Structural SCE SCE Consultants (Indo-China) Ltd (Vietnamese branch) FDI Foreign direct investment CRM Customer relationship management HCMC Ho Chi Minh City R&D Research and development CAGR Compound annual growth rate sqm Square meter CBRE CB Richard Ellis Co. Ltd ASEAN Association of South East Asian Nations WTO World Trade Organization IMF International Monetary Fund GDP Gross domestic product CFIS Center for Foreign Investment Studies (University of Economics Ho Chi Minh City) pa Per annual MOC Ministry of Construction MPI Ministry of Planning and Investment IT Information technology HR Human resource SCEs SCE corporate including SCE Singapore and SCE Vietnam GD General Director SL1 Service line 1 (refer to figure 4.3) PM Project Management SL2 Service line 2 (refer to figure 4.4) ODA Official development assistance [...]... strategic issue The thesis aims to build up a competitive strategy as a recommendation for the company to move forward in the period of 2011 to 2015 The study will apply theories of competitive strategy by Michael Porter, differentiation management and CRMcustomer satisfaction Study methodology is also including a qualitative research on customer satisfaction and an in- depth analysis on information found... satisfy their needs The process of adjusting, tailoring product features to market will be crucial to company competitiveness Another aspect of customer responsiveness is customer respond-time, which is the time require company to bring a product to customer hand For manufacturing company, customer responseveness is the time needed to fill an order; for a bank, it is the time to process the loan; and for. .. ones are facing losses and have no choice but to exit the market due to fiercer and fiercer competitions Therefore, all players are forced to enhance their competences and plan properly for survival and development SCE Consultants (Indo- China) Ltd, hereafter called SCE, was established in 2005 as an entry strategy of its mother company headquartered in Singapore, SCE Consultant (Pte) Ltd, into Vietnam-Laos-Cambodia... strategy formulation process as well as the Porter’s model for analyzing industry Chapter 3 provides an analysis of external factors that help indicate the company’s strategic position The main contents of the chapter will deal with the current situation and strategic orientation for the construction industry in the future It also mentions about the structural analysis of the construction industry, the main... area of competition of SCE Chapter 4 deals with the current analysis of SCE in terms of organizational structure, human resource, business activities… The ultimate goal of the chapter is to identify strengths and weaknesses of the company in order to locate its present competitive position 5 Chapter 5 is devoted to the expected outcome of the study to develop the strategic alternatives based on the. .. building blocks of competitive advantage Many factors contribute to competitive advantage of a company But in general, they can be classified into four generic categories: • Efficiency: is the ratio between a company’s outputs to its input The more efficient the company, the more outputs it can produce from certain units of input or in other words, it can produce the same amount of outputs from less inputs,... price for its products Example of product innovation is Apple for Iphone, Hewllet Packard for lazer printer They are the poineer company in each kind of product When competitor immitate the product, Apple and HP have established leader position in the market and strong customer loyalty which is hard for competitors to attack • Customer responsiveness: to be viable, any company must find their customer... formulate the competitive strategy for the company in the medium term The depth of this study depends partly on the availability of the key data of the Vietnamese economy and the construction industry in general, especially of SCE It also depends on cooperation from the company and faces resources constraints 1.5 Methodology and framework of the study This study will begin with a review of literature... into business area are a breakthrough idea took place in the latter half of last century In the decades of 1960s and 1970s, most management definitions of strategy by many authors were emphasized on the planning theme as an important component Alfred Chandler (1962) has defined strategy as the determination of the basic long-term goals and objectives of an enterprise, and the adoption of course of. .. firstly introduced by Michael Porter (1980) [5] with the fiveforce model, identifies the important impact of five elements to the performance of an enterprise The five forces are: threat of new entrants, rivalry among existing firms, threat of substitute product, bargaining power of buyers and bargaining power of suppliers • Threat of new entrants: New entrants to an industry typically bring to it new . capita in the period of 2005 -2015 25 Figure 3.2 Inflation in the period of 2005 -2015 26 Figure 3.3 FDI in the period of 2005 -2015 27 Figure 3.4 Top 10 FDI investors in the period of 2005 -2015. key clients of SCE Consultants (Indo- China) Ltd. Company 73 Appendix C: Questionnaires for direct interview with directors and managers of partners of SCE Consultants (Indo- China) Ltd. Company. CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBAVB3 DANG HOANG TUNG PROPOSAL OF COMPETITIVE STRATEGY FOR SCE CONSULTANTS (INDO- CHINA) LTD. IN THE PERIOD OF 2011 TO 2015