GRIGG)
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT
Subject:
BUILDING THE BUSINESS STRATEGY FOR LOGISTICS SERVICE IN VIETNAM OCEAN
SHIPPING JOINT STOCK COMPANY — VOSCO PERIOD OF 2014 - 2018 Group 2 Class : GaMBA.C0112 1 Doan Thi Hang 2 Vu Minh Hien
3 Tran Quyet Thang | 4 Dang Thi Dieu Lien
Ho Chi Minh City , 2013
“————————=————ễễễỄễễỄễ ee
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ACKNOWLEDGEMENT
Firstly, we would like to express our sincere thanks to the Professors The teachers of GRIGGS University, The Center for Educational Technology and Career Development (ETC) - Vietnam National University who have enthusiastically instructed us during the MBA course and our research
Especially thanks to the Board of Management and all the staffs in Vietnam Ocean Shipping Joint Stock Company for help during our accomplishing this assignment The intimate, candid exchanges and seminars in your company help us to have a realistic look and analytical data in accomplishing this topic “Building the business strategy for logistics service in Vietnam Ocean Shipping Joint Stock Company, period of 2014 - 2018”
Group 02 — C0112 included 04 members who come from Interni Forwarding Company, Vietcombank, Saigon New Port and Vosco decided to research the topic: “Building the business strategy for Logistics service in Vietnam Ocean Shipping Joint Stock Company, period of 2014 — 2018” as the respectful gift to express our sincere thanks to all the Professors, all the Teachers of Griggs Andrew University who provided us the valuable skills and knowledge during the course of Master of Business Administration
Ho Chi Minh City, Sep 2013 Group 02 — C0112
Trang 3Capstone Project Report — Ga.MBAOI.CO112 — Group 02 INDEX C Gnieni Page Acknowledgement: I Indexs Co Fee HE Categories symbols and abbreviations T1 VỊ Model table "TT ”, — II elite t ttt Vill 0N U U - a.iiII_a.aa IX CHAPTER | >THE THEORY OF BUILDING THE BUSINESS STRATEGY FOR LOGISTICS SERVICE 2222222222202 22 |
|| The concept of business strategy 2222222220202 na | [II The defnition 22222222022 nu l [I2 The kinds oFbusiness strat€Ðl©S: 2.2222 2222222nrc l 1.1.2.1 Enterprise SrateBV - 222222 2n nhe | [122 Business Strat€gy: 2 2222222220 | 1.1.2.3 Functional stratEBy: 222 2222 nu 2
1.1.2.4 Global Strategy ooo ce ceetetevevsveveeveveveieesssveveeeevevevevenses 2 1.1.3 The strategy`s basie rules TH na 2
1.14 The roles of business strategy 9 nó ai 3 |.2_ Planning the business StrateBy- 2222222 20222 ‡ |.2.1 The external environment analysis : 222 4 [2311 PEST Model analysis 222222222222 4 1.2.1.2 M Porter 5 forces model: analysis the factors in the business environment effected to the enterprise's business cic 6
|3” Analyzing the external environment 0 icccceecececececete cette 7 1.3 The tools of building and implementing the business strategies 0 9
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3.10 ERE matrix iD 12 TPR mau 1) 3.3 Competitors Profile Matrix 22c II
34° SWOT Matnx ee MA"
35 QSPM matrix TỪ ad 3
CHAPTER 2 -VOSCO S SITUATION ANALYSIS i)
21 Vietnam Ocean Shipping Joint Stock Company `s general view 15 211 Thehistory: "` 15 2.12 The currentS€TVICS- 2222222222 22022222 se l6 2.13 The company’s business situation 222cc na 16 2.14 Current Situations of Logisties BusinesS 2222222 17 2.].5 _ Customer, logisties service and branch: 18 2.1.6 — Result of operation activities: ooo 22222 za 20
2.1.6.1 Revenue Target 2.0 2222 yc Zl
2.1.6.2 Expense targ€( 2.220 no 21 2.1.6.3 Revenue target 222022 no 23
2.2 Analyzing the external factors : 2.22222222220222 ao 23
2.2.1 The macro environment factors - PEST MODEL: 22 222222 2s 23 2.2.1.1 Ecomomic FactOrS 22 2222222 25 Z.2.12 Social and Culture Fa€tOFS 22 2222222222 27
2.2.1.3 Scientific, technical and technology environment factors 27
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23 Internal Enterprise analysis cóc - MT ~.3.1,1 Tiuman Recourses ton xe ¬——
232 Marketing abilities cà '-caiiẳaẳẳỖÀỤỘ +33 Technology Abilities "“ Ow 4l 234) Financial Capability TH n2 4] 2341 The situation of production and business activities (00000000000 4] 2342 Analysis of balance sheet ccc ccecece cece tee ee 43
CHAPTER 3 >CHOOSING AND BUILDING THE BUSINESS STRATEGY OF LOGISTICS SERVICES FOR ENTERPRISE IN PERIOD OF (2014-2018) 55
3] Enterprise`s MISSION 22222 55 3ˆ an viv ietet vette 56 3.2.1 The solution of Business strategy with SWOT matrix : 56 3.2.2 Choosing the optimum strategy base on the QSPM matriX S.22 2n 60 3.2.2.1 Financial SolutiONS - 2.2222222 202022222 xe 62 3.2.2.2 Restructure solution : 2.2222 2222222 nnrse 64 3.2.2.3 Technology & procedure solutIONS 2222222222222 ng 65 3.2.2.4 Technology & procedure solutlOfS 2.222222 222222 uờc 66
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CATEGORIES SYMBOLS AND ABBREVIATIONS AS - Attractiveness Scores
APEC - Asia Pacific Economic Cooperation
CSCMP - Council of Supply Chain Management Professional ISM CODE : International Safety Management Code
LSP - Logistics Service Provider SCM : Supply Chain Management
SQEMS - Safety Quality and Environmental Management System TAS - Total Attractiveness Scores
VOSCO - Vietnam Ocean Shipping Joint Stock Company VIFFAS - Vietnam Freight Forwarders Association
VITRANSS2: Vietnam Transportation Sustanable Development Project WTO : World Trade Orgnization
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Capstone Project Report — Ga.MBAOI.COT112 -
CHART, TABLE
Group 02
Model! !) Overall business strategy model 4 [able 1.1 SWOT matfIN 222 13 Table 1.2 QSPM form 14 Model 2.1 > Company organization chart nu 15 Model 22 - Vosco's logistles operatlon model l6 Table 2.1: Summary of operation results trom 2010 to 2012 17 Table 2.2 - Domestie logIistles account HSL nu 18 Table 2.3 - The market share of domestic container transportation 19 Table 2.4 : Data of logistics service in the domestic business 20 Table 2.5 : The proportion of operating costs on net revenue- 21 Table 26: CPM mafrIN 2.2222222222222222222 vee eeeee 33 Table 27: The survey of EFE resultS 22222222 222222222 34 Table 2.8 - The result of evaluation oŸ EFE su 222220222 36 Table 2.9: EFE matrix 2.222222202202 2n nu 36 Table 2.10 : VOSCO’s human resources statistic 38 Table 2.11: The machines list 39
Table 2.12 : The warehouse facilities HSE 22222222 222222 vette 39 Table 2.13 : The years of ship ÍiSt 2222222220222 re 4I
Table 2.14 : Report of Cash FlOW 222222022220 4]
Table 2.15 : Consolidated Balance Sheet 43
Table 2.16: Financial mndicator GrOUp: 222 2222222 45 Table 2.17 : The survey of Internal Factors 50
Table 2.18: Internal factor surVey r€SUÏL 222222 na 52
Table 2.19: the matrix ofFevaluation öFIEE 22222222 D2
Table 220 SWOT analysis 222222222222 53
Table 3.1.) SWOT matrix of combination 56 Table 3.2) Choosing the strategy as QSPM matrix ee 60 Tabble 3.3) The planning of revenue 63 Table 3.4 The planning of cost 63
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CHART
Chart 2.1) The domestic container transportation’s market share 19 Chart 2.2 > Revenue of logistics Services 222222220 eee 2l Chart 2.3 Comparison of depreciation cost and administration cost 22 Chart 2.4 - Prolfit afer tax of Logistiles Serviees business 23
Chart 25: Enterprise Asset SIUALION S222 ee 47
Chart 2 6: CapHal reSOUTCC ieee 48
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INTRODUCTION
i, the introduction
Shipping transportation is one of the important links in the logistics supply chain Since 2014 as the commitment joining WTO the foreign enterprises have the right to invest 100% foreign capital in Vietnam so the Vietnamese logistics enterprises will be facing the fierce competition There are about 900 logistics companies with different scales in Vietnam now, in which 70 to 80% are small and medium scales According to Mr Nguyen Cam Tu — Deputy Minister of Industry and Trade said ~ the potential of — logistics development is even greater as our trading turnover considered as the country’s fastest growth rate in the region with speed of 18 to 20 % per year and turnover nearly reached usd130 billion However the same with the other developing countries in the region, the logistics business in Viet Nam are mainly small and medium enterprises, so the business structure is tragmented, non-professional and limited human recourse
Mr Bui Ngoc Hoan — The Chairman of Freight Forwarders Association Vietnam (VIFFAS) said: "4bout 90% of export import goods in Vietnam are transported by sea However, the Vietnam fleet covered about 18-20% of the transported goods The total volume of export import cargo in Vietnam in 2007 was 181.12 million tons, in which containerized cargo was 49.29 million tons (4,489,165 TEUs) Multimodal Transportation is an important factor of logistics services in Vietnam shipping plays a very important role in the strategy of developing the logistics services in Vietnam”
Theretore, the logistics services sector has played a very important role in Vietnamese economic development in general and maritime industry in particular With the hope of contributing our efforts to our country’s logistics service development, by the knowledge gained from the lesions in the program Global Advanced Master of Business Administration CO112 the exchange experiences learned from the partners in Asian (Japan China Singapore ) and EU (Holland Germany Belgium ) as well as in the daily works our group members come Page vill
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from Saigon New Port, Vietcombank Interni Logistics Company and Vosco decided to research the topic "Building the business strategy for logistics service in Vosco JSC, period 2014 — 2018”
According to Dr Nguyen Van Chuong — The Deputy Director of Vietnam fransportation Strategic Development Institute's said) “Vietnam has actually entered the WTO, as the other manufacturing business sectors the transport sector in general and the marine transport industry in particular has changed positively to improve their competitiveness, the service quality and efficiency There are some important directions in this process 1s the expansion of logistics services and value added services in the supply chain”
The Vietnamese enterprises in general and Viet Nam Ocean Shipping JSC in particular have to strengthen and expand the logistics services and value added services in the supply chain, as well as promote the strategy of logistics business in the period of fierce competition with participating of 100% foreign capital companies in the process of integration WTO
In order to building the effective solutions in the field of logistics service in general and in Viet Nam Ocean Shipping JSC — VOSCO in particular, firstly, we would like to introduce the concept of logistics, the concepts of supply chain as well as the roles of the stakeholders in the supply chain
1 The concept of Logistics:
In fact, the term “logistics” already had two centuries ago, considered to have originated in the military’s need to supply itself with arms, ammunition and rations as it moved from a base to a forward position So far, this term referred to in English as ‘logistics’ and widely used in a lot of fields to specify many diverse activities, focus on providing the correct amount of fuel needed, at the right time and in the right places As the settlement of the transportation, storage or commercial production and logistics services of different companies in each way or another, so there are a lot of definitions of “logistics ‘as The Council of Supply Chain Management Professionals (CSCMP) © -'Logistics management is a part of
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supply chain management that plans implementation and delivery flow control ‘torage of goods services and information between the starting point and the ending point 1s the initial consumer yield and efficiency, in order to meet the customer’s requirements” But in this definition: it is not only for the consumer goods flow but including the services with the main purpose to satisfy the customers” requirement; it means the reasonable cost for the cargo services
Following the development of the productive forces and the active supports of the revolution in the field of science and technology in the world, the volume of cargo and material products increasing and the distance in the field of traditional competition as the product quality or price dwindling, the manufacturers have switched to the competition of inventory management, speed of delivery, the flow of raw material and semi — finished products in the management system of physical distribution Logistics services have the opportunity to develop powerful in the business
In the field of military, logistics is defined as the science of planning and carrying out the movement and concentration of forces the military operations related to the design and development, acquisition, storage, movement, distribution, concentration of ammunition and equipment
On the other hand, according to the Vietnamese Trade Law of 2005 (Article 233):
In the Vietnamese Trade Law of 2005, it is the first time that the concept of logistics services are codified Logistics services are the commercial activities whereby traders implementation of one or more processes including receiving, shipping, storage warehousing, customs clearance, the paper procedures other documents, client consultation, packaging, and mark, delivery or other services relating to goods as agreed with the customer to remuneration '
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CSCMP (wwwecsemp.org) the Logistics Chain Management — Logistics Supply Chatn is” Supply Chain management includes the planning and management of all involved activities in sourcing and the acquisition, conversion and all logistics management activities it 1S important that it includes the collaboration and combined by the partner channels, the partner can be the suppliers, the intermediaries the third suppliers and the customers In the essence the supply chain management combines with the supply and demand management in the companies
/n this definitions: the scope of supply chain management (SCM) is the expanding of Logistics (Logistics): SCM also is about the source (around the world) and the procurement of raw materials, where production etc .; SCM optimizes the flow of goods not only in the company and also between companies; SCM promotes the cooperation of companies (independent) and the cooperation, which combines the approach of many activities, from product design to consumer stage (and even higher is the reproduction of the product used)
Since the above definitions we can see: Logistics service includes the processes of Importing fuels, inputting materials for production processes, goods production and distribution channels to the consumers It help to separate the individuals suppliers
as transport services, forwarding, customs clearance, distribution, manufacturing
support service, management consulting
Since then, the logistics concept is understood in a broad sense, it is always associated with the concept of supply chain logistics services logistics and is built basing on the implementation cycle Logistics service Supply chain as launched and presenting in the flow chart below: Sell Logistics Supply Chain etter Buyer Customs Forwarder yoker |
x2 (SểEnSƯUNG [Shipping Lina]
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3 The role of the stakeholders in the Logistics Service Supply Chain
In the above supply chain flow chart the stakeholders includes The Government, The Shippers The manufacturers and business, the logistics service providers and the consumers
* Shippers be understood in a broad sense (not just in terms of ownership) including the following subjects: The manufacturers, the suppliers (export Import trading companies): the wholesalers, the retailers the consignors, the consignees
* The logistics service providers include:
The freight carriers, the shipping lines, the air lines, the trucking companies, the warehouses tirms, the freight forwarders, the third party logistics
* The Logistics Service Providers: In order to minimize the logistics cost (transport cost, data processing cost ) to meet the customer’s demand
* The consumer: They want to maximize their demand of consumer goods with the reasonable prices and the goods price is one of the sectors that effected to the consumers’ satisfaction and it’s important that they spend much for the good quality goods and delivery on time But the consumers have affected by the traffic jam and the environment pollution so they hope that these problems will be solved
* The Government: having responsibility to maximize the social’s interest (the
total social interest — the total social cost) The Government’s intervention made
the potential resource having equal distribution as well gaining the highest result and sustainable development for logistics service
The shipping lines participated in one stage of supply chain in case of providing the cy to cy contract for transportation and the same situation for the airlines and rail transportation
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It The research objective and scope : I The research subject and scope
- Topic: Building the business strategy for logistics service in Vosco, period of
2014 — 2018
- Scope: Vietnam Ocean Shipping Joint Stock Company 2 The research objective:
Logistics industry is a new and young industry in Vietnam, so it has lack of experience, the management system of information technology is not synchronized and the competition is rather low
Vosco has 04 scope main business includes domestic shipping transportation, oversea shipping transportation, ship management and operation, warehouse management but in this assignment, our Group focus on researching the shipping domestic transportation and the value- added logistics services
For the purpose of applying the new business management methodology, in order to improve the quality of logistics services in Vietnam as well as integration with common development of the world, our Group believe that the research The business strategy for Logistics Service development in Vietnam Ocean Shipping Joint Stock Company — Vosco period from 2014 to 2018 is useful and essential topic especially at the present the world economy in general and Vietnamese economy turndown
3 The research methodologies:
® The research basic: Collecting and analysis the financial reports, cash flows, balance sheet in recent 03 years of Vosco logistics service
e Study and analysis the logistics market information on the communication erannels as well as the magazines radio, televisions
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e Keference and study the data provided by the domestics and international lovisties association
e Reference and study the data provided by the World Bank
¢ Research the logistics market trends in the coming time and analysis the EFE, IF}: matrix, PEST, M Porter 5 forces, SWOT, QSPM matrix for the best business
Strategy
EH Research Structure includes:
4 Chapter 1: Theoretical background for formulation of business strategy for logistics service
4 Chapter 2: Analysis of situation and logistics business in Vosco at
present
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CHAPTER EL: THE THEORY OF BUILDING THE BUSINESS STRATEGY FOR LOGISTICS SERVICE
I.I The concept of business strategy 1.1.1 The definition
"Strategy is a complex series of actions to mobilize all the resources of an organization or an individual in order to achieve a certain goal"
‘Strategic management can be defined as the art and science that establishing, implementing and evaluating the decisions related to many functions that allow an organization to achieve its objectives"
Vosco’s Strategic Management focus on the integration of management, marketing, Accounting and finance, manufacturing, research and development of information systems to the business success of the organization
‘The policy" the last important term means achieving the politic goals; it includes instructions, rules and procedures established to support efforts to achieve the objectives
1.1.2 The kinds of business strategies: 1.1.2.1 Enterprise strategy :
Enterprise strategy includes the corporate general orientation about sales growth in the membership management, resource allocation and financing between member units, Determining the structure of the desired product; the business services that the enterprises participating, identifying the business (or businesses) that will be conducted each business sector should be (egg inter-with the other branches of the company or independent business etc .)
1.1.2.2 Business strategy:
[he Business strategic focused on improving the competitive position of the products and services of the enterprise in the business or the combined products
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that the enterprise participating The business strategy includes the competitive topics that firms choose to emphasize the way it positioned itself in the market to gain a competitive advantage and using in different contexts of each industry
1.1.2.3 Functional strategy:
Focusing on management and use effectively the human resources of enterprise and the member units The functional strategy development is successfully implemented the enterprise strategy and thus successful implemented the business strategy
1.1.2.4 Global Strategy
Nowadays, the globalization trends expresses over the world so the logistics enterprises have to consider expanding their services over the world, globalizes their services to increase the profit
1.1.3 The strategy’s basic rules
The strategic management process is composed of three phases: setting strategy, Strategy implementation and evaluation strategies
The stage of setting strategy: Vosco have develop the business tasks, identify the
opportunities as well as the risks effected to the organization from the outside,
indicating the strengths and the internal weaknesses, establishing long-term goals, creating the alternative strategies and selecting the pursuing specific strategies The stage of implementation phase that requires Vosco has to establish the annual targets, setting out the policies to encourage the staff and allocating resources to implement the strategy
The stage of evaluation of strategic’ monitoring the performance and implementation strategies Through the power of the elements the implementation of business processes in the enterprise
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1.1.4 The roles of business strategy :
- Planning roles Business strategy helps enterprises clearly recognize the goal direction of their own in future; orient operation in the long run which are the firm basis for the implementation of business activities and helps the managers know take Into account and orient the organization which direction to go how to go and When to obtain results
- Forecasting role: in the trend of globalization, business environment always changes Theretore the analysis of the environment and formulation of a business strategy will help managers to realize clearly opportunities and threats as well as lind out strengths and weaknesses within the enterprise
- Controlling role’ Business strategy helps managers to employ and allocate resources appropriately, make the decisions corresponding to each condition of the business environment, enhance the connection and attachment of personnel system,
fortity the risk prevention ability, prevent from potential threats
(>> Pave 3
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1.2 Planning the business strategy:
Model 1.1: Overall business strategy model
Analysis and forecast the Planning and implementation —— external environment yearly and periodly
Study the
business ì )
philosophy Review Decide the — -
oe Distribute Checking mission objective strategy >
resource appraise, adjust and ‡
objective '
Analysis, forecast the Planning
internal environment the policy
+ _* >
Set up the strategy Implementation the strategy Appraise and adjust 1.2.1 The external environment analysis :
The external environment ts a system of complex factors, there are always
opportunities and risks affecting to the business activities with the different levels
The variation of these factors are beyond the control of the business, they intertwined effects affecting the strategic management of the business
These factors are PEST model, the macro environment factors create the
Opportunities and threats for businesses
1.2.1.1 PEST Model analysis :
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These 4 factors have direct impact on the economy, they are external factors of the enterprises and have affection as the objective factor
The political factors
+ The stability: the stability 1s considered as the political conflicts
+ Tax policy: the imp-export tax policy, consumer tax, income tax policy have effected to the enterprise's turnover and profit
+ The relevant laws: investment law, business law, labor law, antitrust law
+ The other policies: The government policies have an impact to the enterprises, it can give the enterprises the advantages or challenges as_ the commercial policies, economic development policies
+ The impact of the international conventions, mutual agreement to the implementation of the legal, policies
The economic factors
The enterprises should pay attention to the short term and long term
economic factors and the government intervention to the economy As usually, the
enterprises will decide their invested plans basing on the economic factors
+ The economic situation: any economy has its own economic cycles and the enterprises will have their right decision for their strategies It’s the flexibility of the business strategies
+ The affection of interest and influence
+ The Government’s economic policies: The basic salary law, the strategy of economic development
+ The economic outlook in the future’ The speed of economic growth, the speed of GDP growth the GDP ratio on the investment the attraction of foreign investment the intergrate
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The social culture factors
Pach country has own culture value and specrfig social factors and these factors are the characteristics of the natives
Besides that the other social characteristics are the concerns as: + The average life health nutrition food
+ The average income, income distribution + Styles, lifestyles, knowledge standard + Living condition
+ Ethnic group, gender Technological factors
The technology revolution has expressed over the world, a series of new technology has been launched and integrated in the new products and services the development of technology has been shorten the distance of geography, communication
+ The Government’s policy, investment in development of traffic structure applying the technology
+ The affection of technology to the business
+ Researching and developing the new technology in business 1.2.1.2 M Porter 5 forces model: analysis the factors in the business
environment effected to the enterprise’s business :
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{Threat of
Mobility)
Suppliers ị Industry ị Buyers
(Supplier Power) Rivalry {Buyer Power)
Substitutes
(Threat of Substitutes)
Analyzing this model that the opportunities and risks to the enterprise’s business
The elements of analysis PEST and M Porter 5 Forces will be synthesized and evaluated in the External Factors Evaluation matrix (EFE Matrix:
1.2.2 Analyzing the external environment : The company culture:
In such a large enterprise as VOSCO there are a lot of different professional
proficiency, educational level, cognitive level, social relations, geographic, cultural
thought this difference creates a working environment diversely and complexly In order to develop all human resources, contributing to the sustainable development of the business that requires the company maintains the particular cultural to promote the contributions of everybody on achieving the overall goals of the organization - it is corporate culture
The human resource:
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Ihe members of the board of management have influenced to the enterprise 's manufacturing results is one of the factors affected to the company’s competition
The management
The management are the key man who have full experience management style, decision making ability it will be the company’s advantage The management during their work with the staffs will create new ideas for the company s development
The lower level management and staffs
The working skills and the work hard passion is one of the strength of the company
The finance
The finance plays an important role in the decision of implementation or not any investment, purchase or distribution of the business Enterprises have the financial resources to have many advantages in terms of technological innovation, investment In equipment, ensuring enhanced quality, lower costs in order to maintain and enhance competitiveness, improve trying to position in the market
The technology and equipment
The machinery and technology have profoundly affected to the competitiveness of enterprises It is the most important physical elements of the production capacity of each enterprise and directly impact on the quality of the product and the selling price It is sure that a company with a system of modern machinery combined with good management ability will make a high quality product at low cost thereby Improving their competitiveness
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The distribution network
It the distribution network 1s operated properly it would be an effective means in reaching the customers The enterprises attracted the customers by serving process (sales forms billing, shipping) effectively VOSCO now has many branches over the country, facilitate the coordination and receive orders over the country such as Har Phong Port, Da Nang Ho Chi Minh City This is the foundation for the development of domestic logistics services
1.3 The tools of building and implementing the business strategies
According to Fred R David the important techniques built a strategy consists of three stages, the tool used for this process can be applied to all sizes and types of organizations, it helps the administrator can identify, evaluate and select strategies, it is expressed through the following stages:
The first stage: Using the EFE matrix, IFE matrix, CPM matrix to sumalize the basis information for the building the strategy
The second stage: combining the internal and external factors using the SWOT matrix to point out the potential strategies
The third stage: using the QSPM matrix to analysis chosing the most potential Strategies
1.3.1 EFE matrix
EFE matrix (Extenal Factors Evaluation) allows the strategists to summarize and evaluate the economic information, social, culture demographic, geographic, political, governmental legal technological and competition There are five steps to develop an external factors evaluation matrix
The first stage: list out about 10 — 20 factors included opportunities and threads that effected directly to the enterprise’s success
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Ihe second step: Classificating the importance from 0.0 (not important) to 1.0 (very Important) to each factor This classification shows the relative importance of the lactors for the success of the enterprises the total of all the factors must equal 1.0 The third step: Classificating from | to 4 for each determinant of success shows how the current strategy of the business response to these factors including reaction 4+ 1s good 3 Is the reaction average, the average response 2 and | little reaction These levels are based on the effectiveness of business strategies So at this stage classification based on firm size whereas the classification in step 2 based on industry
The forth step: calculating the importance of each factor to determine its type to score the importance of each factor
The fifth step: Summing up all the important scores of all the elements to determine
the total scores If the total scores of the matrix is in the range from | point to 4 points, it will not depend on the element in the matrix If the total score is under 2.5 points, the internal factors of the interprises is weak and if the total scores is over 2.5 points the enterprises have strong internal factors
1.3.2 IFE matrix
It summaries and accesses the both the streng and the weakness of the enterprises as well as providing the basis elementation to identify and access the relationship between them The IFE matrix may develop by the following steps: The first step: Summary the list about 10 — 20 factors included the streng and weakness that effected to the enterprises’ development
The second step: Classificating the 0.0 (not important) to 1.0 (very important) for all the factors The important factors shows its importance to the enterprises’s success Not concern about the internal streng or internal weakness the factors that effected to the results of enterprises will be the most important factors The total
scores 1s 1.0
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The third step: Classification from | to 4 for each determinant of success shows how the current strategy of the business response to these factors including reaction + Is good, 3 Is the reaction average, the average response 2 and | little reaction These levels are based on the effectiveness of business strategies So at this stage classification based on business while the classification in step 2 on the basis of the industry
The forth step: calculating the importance of each factor to determine its type to score the importance of each factor
Summing up the total scores to determine the total scores of the matrix If the total scores 1s in the range of I to 4, it will not depend on the sumary of the factors in the matrix If the scores is over 2.5 points, the enterprises have a strong internal factors 1.3.3 Competitors Profile Matrix
Competitors Profile Matrix is an effective tool to provide a clear picture of the strengths and weaknesses of the business compared with the main competitors in the industry, thereby determining the competitive advantage Point in the matrix is given from | to 4, to evaluate the success factors of the industry and enterprise were compared between the competitors
In order to analysis the competition in the market, the collection and analysis of the main competitors of Vosco will be conducted as the following:
Step 1: Identify, list and classify the competitors in the market Step 2: Collect and evaluate the competitors’ information Step 3: Predicting the response of competitors
Step 4: Selection of competitors to dodge attack or cooperate 1.3.4 SWOT Matrix
SWOT matrix is used to list all the opportunities, threats, strengths and Weaknesses in the enterprises in order and proper position Based on the relationship
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between these factors, the analysis will be conducted to select appropriate solutions through strategic combinations the strengs — opportumities (SO) the strengs threats (S_T) the weakness (W_T), the weakness — opportunities (WO) Depending on the field of business that the management will use one or more matrices to conduct SWOT analysis and solution SWOT model often offer 04 basic Strategies:
SO: the strategies basing on the enterprises’s strengths to expand the external opportunities
S_T: The strategies basing on the enterprises” strengs to limit the external threats W_O: The strategies limit the internal weakness by the external opportunities
W_T The strategies limit the internal weakness and external threats
According to FRERD R DAVID, there are 08 steps to build the SWOT matrix as below
|) List out the external opportunities 2) List out all the external threats 3) List out all the internal strengths 4) List out all the internal weakness
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Table 1.1: SWOT matrix
SWOT Opportunities (O) Threats (T) | |
2 |2
Strengths (S) SO strategy _ ST strategy
| Using the internal strengths to” Using the internal strengs to 2 expand the external limit/refusing the external 3 opportunites threats | Weakness (W) WO strategy WT strategy
| Limiting the internal Limiting the internal weakness — 2 /weakness to expand the and external threats | 3 ' external opportunities | { | | | | hn
In the present globalization period, analyzing the SWOT matrix carefully will help the enterprises have the correct decisions in grating the international market
1.3.5 QSPM matrix
QSPM Matrix is a tool used to quantify the information has been analyzed in the first phase which allows administrators to select the optimal strategy, according FERD R DAVID, the QSPM matrix included 6 basic steps below:
Step 1: List out all the external threats and the internal weakness and strengs
Step 2: Classificating the internal and external important success factors as in EFE IFE: matrix
Step 3: Determining the replaceable strategies that can be applied
Step 4: giving the scores for each strategies from | to 4: | no attractive 2 a little attractive, 3 rather attractive, 4 quite attractive
Step 5: Calculating the total scores of attractions this is the result of the classification score (step 2) with the result of attraction (step 4) in each row The higher attraction 1s the more attractive strategy is
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Step 6 summing up the total scores It is the sum of the total scores in the column ol the matrix OSPM strategy The higher score 1s the more attractive Strategy 1s Table 1.2: QSPM form | Replaceable strategies The — important to
No factors weight Strategy | : Strategy 2 7 Strategy n
| _Score Total Score Total | Score _total ị _ External factors | a | + + + - + - đe==neesee + + 2 | | ; + + + + + : { | | | | | | | | _ Internal factors | F | FT | | 1 | | | | | | | | | | | | 1 poo po | | | | ' | | | | | | Total a a | Chapter | conclusion:
This chapter has outlined the concept, the rationale and strategy theory, the content of strategic planning, the tools needed for the analysis, evaluation factors, the Important role of enviroment for the development of business strategy
In the following chapters we will use the theoretical framework and necessary tools analysis of the business environment of Vosco
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CHAPTER 2: VOSCO’S SITUATION ANALYSIS /.4 Vietnam Ocean Shipping Joint Stock ( oMpany ‘s general view Head office 215 Lach Tray Ngo Quyen Dist Hai Phong City, Vietnam Tel: (84-31) 3731090
Fax (84-31) 3731007
Email: PID@ vosco vn, drycargo/@ vosco vn
Website: http://www vosco.com vn: http://www vosco.vn
2.1.1 The history:
Vietnam Ocean Shipping Joint Stock Company (VOSCO) commenced operations on Ist January 2008, based on the foundations laid by Vietnam Ocean Shipping Company, which itself was established on Ist July 1970
Since its founding in 1970, Vosco has made great efforts to continuously develop and improve its their services VOSCO wishes to express a special note of their appreciation and sincere gratitude to the clients, business partners and friends for their continued support and co-operation during the past years They also wish to have further opportunities to serve the domestic and overseas clients and to Cooperate with other potential partners all over the world on the basis of furthering mutual interests Model 2.1 : Company organization chart | GENERAL | DIRECTOR
MET & a or Technical Accountin Safety | Material
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2.1.2 The current services :
logistics 1s the process of planning, implementing and controlling the effective and efficient flow of goods and services from the point of origin to the point of consumption Vosco’s logistics services includes: the domestic shipping transportation and the value added logistics services
Model 2.2 : Vosco's logistics operation model ey PICK & PACK inland transport
-Hai Phong Port Manufacturing
2.1.3 The company’s business situation :
The result of business period 2010 — 2012: this period the shipping industry has been faced a lot of difficulties and Vosco’s turnover and profit strongly decreased
After a successful first step in the field of domestic container shipping transportation, Vosco has built up a reputation and good image for the client container on the north-south line in the 2010-2012 strategic development of the company Basing on the market recovery of the international container shipping the company will invest more gradually container tonnage pair 1000Teu to participate in the Asian shipping market
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However, the repercussion of the financial crisis and global economic downturn has lasted a strong Impact on the world economy in general and the transport industry of Vietnam in particular Vosco is one of the logistics and shipping operator in Vietnam so has been under strong influence as the other shipping and logistics operators Vosco has continued to reduce the ocean freight, the shipping market competition is flercer and fiercer
Meanwhile, the lifting volume of domestic shipping industry occupies a very small market share compared with the oversea cargo
2.1.4 Current Situations of Logistics Business
Facing difficulties and fluctuations of the world shipping market, in 2013 Vosco decided to focus on the maximization development of Logistics Services Logistics Services is the binding of the service supply chains that the marine transportation transport 1s one of these chains However, while focusing in marine transportation business with high borrowing costs and competitive rates results to financial difficulties, logistics services is more profitable than shipping business with low business costs
The result of domestic logistics services as below:
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2.1.5 Customer, logistics service and branch: The domestic shipping transportation:
Vosco has joined the domestic shipping market since 2008 by 02 vessel of capacity 650 teus with fixed weekly schedule trom Hochiminh Port to Haiphong conversely on every Tuesday and Friday Vosco also invest to build 3400 teus new containers at Vinaship TGC Hai Duong for this trade Basing on these advantages Vosco decided to develop the value adding logistics to create the competition in this field Table 2.2 : Domestic logistics account list
No A/C | Services | Commodity
| Honda SSS Domestics logistics 'Sparlink -
— 2|Uniever | Domesties logisties | consumer goods `
| 3°PNI | Domestics logistics - consumer goods | 4 Tan Hiep Phat Domestics logistics | Drink | | 5 | Sai gon beer — Domestics logistics Drink
| ~ eustomerelearane | -
| 6 Blue scope steel Domestics logistics steel
| Nomura | logscustomerclearanc rubber -
| 8 Geruco / logs, customer clearance rubber
9 Vinafood Domestics logistics 'Rie —
Storage management and 'Food.consumer -
10; METRO VN
| distribution — | | goods ] |
“The domestics shipping transportation and the value added logistics services:
~ Logistics services are commercial activities whereby traders implementing one or more of work including reception, transportation storage warehousing customs clearance, and other paperwork such as client consultation packaging, signs and symbols, delivery or other services related to the goods as agreed with customers to
remuneration
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Vosco is one of the logistics companies who have created their own internal strenghs combining with the others to develop their logistics service to be come one of the famous and full options services recently
With these efforts, Vosco reached about 26% market share in the domestic transportation market it means that Vosco’s logistics service have remarkable development and high competition
Trang 352.1.6 Result of operation activities:
Capstone Project Report — Ga.MBAO1.CO112 — Group 02
Table 2.4 : Data of logistics service in the domestic business Items | Revenue from sales | _{ 176,545,917,015_ _ and service — 2 Revenue 2010 | -2,220,731,545 j 2011 _190,694.782.330 , 207.960.555.21 3L The growth rate (%) 2012 2011/ 2010 2012 /2011 108.01 | 109.05 | | i deductions _0 0 —_ _ 3 Revenue from sales _ and services 174,325,185,470 | 190,694,782,330 | 207,960,555,215 | 109.39 | 109.05 | a - | = | | _4 Cost of goods - | 106,384,352.680 | 119,529,854,235 124,672,071,225 | 112.36 | 104.30
| 5 Gross profit from
Trang 362.1.6.1 Revenue Target : Revenue of logistics services = 100.000 S 5 c 2 E 50,000 a 2 > Domestics Cont Transportation by sea Chart 2.2 : Revenue of logistics services Capstone Project Report — Ga.MBA01.CO112 — Group 02 warchousing services Value-added Trucking Services (multimodal) services # 2010 @ 2011 at 2012
According to the graph, domestics logistics service revenue grows over the years, in which, domestics marine transport services occupies the highest turnover rate domestic container transportation by sea is around 42% of revenue, warehouse
services 18%, Value-added services 23%, multimodal services 17% 2.1.6.2 Expense target Table 2.5 : The proportion of operating costs on net revenue: <3 Global Advanced Items 2010 2011 2012
Prime cost / net profit 61.03% 62.28% 59.95% Sale expenses / net profit 13.56% 12.63% 14.38% Administration expense / net
sales 15.31% 14.47% 15.93%
Interest expenses / net profit 1.83% 2.79% 2.36%
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Prime cost is higher than other costs in which costs for inland transport shipments accounting for the highest rate of 58% value-added service 12% storage service 10 % multimodal services 15%, as for not having warehouses, to serve a tull-service, the company must pay for additional costs of warehouse lease to stock the merchandise cost of warehouse lease accounts for 5%
Sale expenses administration expenses also accounts a quite high proportion compared to the revenue and did not change in last 3 years for the company has actively seek for new clients and paid an additional cost to keep old clients 35,000 30,000 25,000 20,000 ® depreciation costs 15,000 @ admunistration cost UNIT: milion dong 10,000 5,000 2010 2011 2012
Chart 2.3 : Comparison of depreciation cost and administration cost Total depreciation costs for vessels accounted for 70% of the administration cost Administration expenses in 2012 were still increase due to incurrence of additional current bad debt provisions
), age ih add
Trang 38Capstone Project Report ~ Ga.MBAOL.CO112 — Group 02 2.1.6.3 Revenue target : OG UU 5,000 Đô § 4.000 5 6 = 3,000 % 2010 = @ 2011 2 20 > Mỹ 2012 1,000 Domestics cont Wareshousing Value-added Multimodle
transportation by Services Services services
sea
Chart 2.4 : Profit after tax of Logistics Services business
In addition the company also has other income and expenses from: transfer or liquidation of fixed assets and penalties due to breach of contract, but this income is not critical in the revenue and costs structure of the business In recent 3years it consumes a huge profit for the company liquidates some of fixed assets no longer in use so the profit 1s high
2.2 Analyzing the external factors :
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The political environment legislation directly affects to the business operations of the enterprise This factor can impact business activities of enterprises in two directions: to encourage or inhibit the development of enterprise
Political and security situation, the operating mechanism of the government This is considered a strong point of the business environment in Vietnam Political and security situation is assessed as high stability in the region and in the world only a political party operates in Vietnam - the Communist Party leadership does not exist multiparty systems as in the other countries in the region The operating mechanism of government ts relatively clear and high stability
+ The legal system and the legal documents: especially the economic policies to regulate business behavior, consumption, trade relations have not been finalized
and is still limited In the Doing Business 2010 report of the World Bank and
International Finance Corporation IFC, Vietnam, ranked the 93th falling 02 units from the previous year due to the regulatory environment is limited and low transparency
+ The administrative procedures in Vietnam: still insufficient, cumbersome causing many obstacles to business activities of enterprises Back to business registration procedures in Vietnam, although the Enterprise Law 2005 has now officially run, the date of registration of business enterprises is shortened but the procedures are still cumbersome and complicated
+ Tax policy: Tax Procedures in Vietnam is still insufficient, cumbersome procedures, and waste a lot of time According to the IFC study, the businesses in Vietnam spend a lot of time in tax procedures with the average business must file and pay taxes 32 times with 1.050 hours worked while in Indonesia is 266 working hours
+ The legal system protects the business, consumer and antitrust has not yet run as the lack of regulations to enforce, especially some form of monopoly still exists that caused major damage to consumers The market share of international transport by sea in Vietnamese market almost belongs to some of international
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carriers resulted some of international carriers gathering to offer the general freight rate so the Vietnamese imp- exporters have to accept that there is no other choice In addition violations of intellectual property rights is exits in many areas that makes the competitive environment in Vietnam weaker
+ The policies of Vietnamese Communist Party: Developing the market economy basing on the socialist orientation Party and State constantly advocated giving policy direction to encourage, promote and facilitate the domestic and international business development
+ The policy stance and regional, international relations policy: Joining the Association of Southeast Asian Nations (ASEAN), ASEAN - Japan ASEAN - India) ASEAN - Republic of Korea: participating the Asian Pacific Economic
Cooperation = (APEC), Asian - Europe Meeting (ASEM), World Trade
Organization, WTO These are the factors that facilitate the import and export
operations of the business, Although, the production and import procedure in
Vietnam has been improved but it have to spend a lot of time on paper procedure For example, it takes 24 days, 06 type of document and average of ussd699 to export 01 x 20° container from Vietnam to oversea on contrary it takes 21 days and usd390 in China
2.2.1.1 Economic Factors
+ The World economic situation: the world economy is turndown with a lot of potential risks, since the end of 2008, the economic crisis started from the U.S housing market has made the world economy turndown, the difficulty and the turning down of the leading economies such as the U.S., Japan, China ; the crisis of sovereign debt restructuring in EU countries: the activities economies in ASEAN but still hidden the sustain, the weaknesses of the global economy 1s exposed as recession debt crisis and until now many potential risks, especially in some countries of the Communist European economy The political unrest in some countries of the Middle East and North Africa have made oil price Increasing and that is still quite high due to concerns about the possibility of oil supply for the
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