Building business strategy for Hoa Binh PETRO Construction Investment Joint Stock Company in the period of 2013-2017

GRIGGS GLOBAL ADVANCED MASTER CAPSTONE UNIVERSITY OF BUSINESS ADMINISTRATION PROGRAM PROJECT REPORT BUILDING BUSINESS STRATEGY FOR HOA BINH PETRO CONSTRUCTION INVESTMENT JOIN STOCK COMPANY IN THE PERIOD OF 2013-2017 Group Number: 04 Student’s name: Nguyen Phuong Thao Pham Ngoc Tuan Nguyen Huu Tuan Vu Khanh HANOI: 2013 Vinh Hoa Binh Petro Construction Investment Join Stock Company ‘Address: 14" floor, HH3 building, My Dinh urban area, Me Tri, Tu Liem, Ha Noi http://www pvchoabinh.vn To Vhom It May Concern: We, loa Binh Petro Construction Investment Join Stock Company confirm that we agree the research group including the members mentioned below to be allowed to get access to the isternal documents, data as well as contact with the operation fact to study about the Stratgic orientations of Hoa Binh Petro Construction Investment Joint Stock Company serviig the research purpose of the group to complete the MBA course: Nguyen Phuong Thao Pham Ngoc Tuan Nguyen Huu Tuan Vu Khanh Vinh Hanoi, December 8" 2012 Hoa Binh Petro Construction Investment Join Stock Company 1⁄jÊN@IÁM % ee ey iS A cone ty Đốc ` alco PHAN BAU | ues AP DAU CN as lễA ah r iS) WW i PHÒNG Pheer ` POSH 1+ thin ⁄⁄2⁄2// ACKNOWLEDGEMENT his Capstone Project is the last and most important request of our MBA program in finance which This project focuses on the business strategy management is integrated with others such as marketing management, human resource management and corporation finance management This project helped us having an occasion to match the knowledge and skills of modern business management from MBA program with the practical situations of the medium firm in Vietnam To fulfill this project, we would Support of Griggs Development who have knowledge University, like to express our deep gratitude for the favor Center for Educational Technology and Career (ETC) of Hanoi National University and especially to the lecturers enthusiastically taught, guided and provided us with the valuable We sincere thank also to the support and assistance of the leaders and staffs of Hoa Binh Petro Construction Investment Join Stock Company (PVCS) They have spent highly valuable time on organizing surveys, providing data and discussing with us about the relation between Situations at the Company; the project contents and practical from that, helping to create a close connection between theory and practice and resulting in a high feasibility in the future We, Group No 4, would like to receive the continual support of the lectures to help us completing the course with the highest results Particularly, the support of all PVCS5’s leaders and staffs will be an coming into the Company’s practice indispensable motivation for this project TABLE ACKNOWL OF CONTENT IEI)GI.MENIT 2222222222na ""~Tˆ TABLE OF CONTIENT 212 121 HH HH 2222 HH 222020 rung LIST OF ABBREVIATIONS Q0 22101 1n HH nuea LIST OF FIGURES AND TABL,ES 1 112111111111 11 1 nha EN TROD GIG THOU nannsbsot nh A H1 4óc sàoee event ng TS 009020990 2041950750861 2894 501000331005 cu se § CHAPTER |: THEORY OF BUILDING BUSINESS STRATEGY FOR ĐàNbĐ.901S0 Ầ 1.1 11 Definition of strategy and role of strategy building cccccccceseseeeseeeseees 1] 1.1.1 Definition of strategy ccc cccccccccsccscsccsvsescstsnscatscsevsvavssscsesseescsssevevaveveveees 1] 1.1.2 Role of business strategy cccccccccccccscssescscsestesscecseseeesavatscsesaesceasseveseevsceses 1] 1.2 Process to build business strategy .0 ccccccscsscesssssesesessssssescseaceceesesssesevees 12 1.2.1 External environment analysis 0cccccccccecssssssecscsesceseacscsesecsssevsssesevevevevees 12 1.2.2 Internal environment analySis ccccccccscsessesescsessscssscsescsecscsesssesesevevesevees 13 1.3 Support tools for strategy building 0.c.ccccccecccsescsesescsesesesssesevaecssscsescevsveees 14 1.3.1 External Factors Environment matrix (EFE) 0 cccccccccscssscssscscsceesseesecesesevees 14 1.3.2 Internal Factors Environment matrix (IFE) c.c cccccccscssssssssssseeessescseseeccseeceess 15 1.3.3 Competitive Profile matrix .0 c.ccccccccscscsssssssesssevssssssstsseststereesstseseavsceseeeeees 16 1.3.4 SWOT mattix oo ec ccececcssesssesscscssessscscscscsussessversesecacarsasararsssssatasstasessveveees 17 1.3.5 QSPM matrix cccecccccccccccsccscsccseevsvevsssessvsvevsusssavscssssassesessussevsvstessasesesevesevees 18 1.4 Key business strategy ccccccccccccssescssesssscecsesseecscscevssusacscavavsssesecesescsvevevees 20 1.4.1 LOW COSỂ SITA{€BY 2 S1 221 n1 HE n1 1.4.2 Product specification strategy 11 1 su 20 - St tt Hx 11111211111111 0111011511 E xen rre 20 1.4.3 Centralization strat€gy - -Scc TT 1E E11 1111112111111 112E E12 20 1.4.4 Integrating development strategy .0 c.cccccscccsscsssscscecsestssesesessseseveveseseseevevees 21 1.4.5 Mix€d S(rat€gy S2 HH HH HH HH HH re 21 CHAPTER 2: ANALYSIS BUSINESS ENVIRONMENT OF HOA BINH PETRO CONSTRUCTION INVESTMENT JOIN STOCK COMPANY .no 22 2.1 Introduction of Hoa Binh Petro Construction Investment Join Stock Company 22 2.1.1 Gencral information öE DVCS cu 21 2.1.2 Establishment and developm€IN 2.1.3 HH reo c1 12111 1n 1n Ho Business range and companyˆs orpanizatÏONi cc ca 22 22 a3 2.1.4 Vision and MiSSion oo cccccccccccccccscscscsesvsvecsevsvevavsvsssesassevavsssevevevesvsvesesececeeees 24 2.2 Analysis external business environment of PVCS s2 Tnhh nhe 24 2.2.1 MacrO €nVITONIIIL 252 2 121111111 211111 011111111 TE E1 tt nho 24 2.2.1.1 Political and legal system Ía€tOr Sàn n n3 1211211111511 neo - 24 2.2.1.2 ECOMOMIC fACCOP eee ecccccccsecssesesesesvsvevevssseatesstsessvaasseseserssessvaveeesevevecees 26 2.2.1.3 Technological factor cccccccccccccccssesesescscsssvevsssesesevssstsevavecesesevsssvevscevevecees 28 2.2.1.4 Social fACtON 2.2.2 eee eeecececccccsssssesessescsesvevsvevsvsvetssesstssesssssvevavavesesevsseveveseseseeees 29 Micro environment analySis c.c.ccccccccssseesesssssssescsessessesssesevscevececeveceeees 30 2.2.2.1 Density Of rivals oo ccccccccccssssesssscsessssescsvsussssversesatssstuessssssasstesscsessevssessesees 30 2.2.2.2 Threat of new entrances .ccccccccccccessessssessvssesvesessesesssssesessssseevseseeseeveseeee 34 2.2.2.3 Bargaining power Of CUStOMET cccccccsssseesesssseseescsescecsesssssesacsteesevecesee 35 2.2.2.4 Bargaining power of suppliers ccccccsssesssssssssescssscsssesesesceevereeesecececee 35 2.2.2.5 Threats of subsititute .ccccccccscccsssscscscseecsescsescscacsevsvaassvscavscsssssveceereveves 36 2.2.3 Summary opportunities and threats from external evironment to PVCS 37 2.2.4 External Factors evaluation matrix of PVC5 v.cccccccccccssssssssssstssesescscesvecseesevees 38 2.3 Internal environment analysis .0 c.ccccccccsssssscsesesseseeseevecsseseseecssscsseseveseveees 39 2.3.1 PVCS’s valuable Chain .c.ccccccccccccsscsssscsscsesvsseesesessasasssacsestessstesscassseesseseeves 39 2.3.1.1 Primary aCtiViti€S tt TH 1n reo 39 2.3.1.2 Supporting aCtiVity cá tt HE 1111112111 10101 tre reroo 42 2.3.2 Ability and potentiality of financial factor 2: ¿s22 SsSE2E5 15555555 5E Ee 45 2.3.3 Summary strengths and weaknesses of PVCS5 5.22 2c2Ss S221 E2 ren, 48 2.3.4 Internal Factors Evaluation matrix of PVCS§ 2.2 St St 21221115511 nen 48 CHAPTER 3: CHOOSING BUSINESS STRATEGY AND SOLUTIONS TO APPLY STRATEGY UNTIIL, 2017 St E1 1E E513 E51511111552521155 125125511 -re 5I 3.1PVCS development objective until 2017 5á s 21212111 515511251 E51 nen 5I 3.2 Choosing business strategy for PVCS 1c S211 1211111121 na 5] 3.2.1 Summary strategy via SWOT matrix o c.cccccccccecececssesescesesececsvevssesececeveveceeeeeees 5] 3.2.2 Choosing strategy via QSPM mattrix cccccccccccccccseccececceseeseseeevevece: KH ky 35 3.3 Solutions to apply business strategy for PVCS cu, 22c 3.3.1 Production SOÏUHOH 2222222512121 1n nh HH ng HH rrrte 58 58 3.3.2 Human resource strategy oo ccccccccecceccececccececscevevsesevavavassevsescieseseeseveveveeseseeese, 58 3.3.3 Financial SOÏULON c1 1 1 1121 11111111 t HH HH nha 60 3.3.4 Marketing sOlutiOn 61 2c 111 1211111811111 trung 3.4 Roadmap to apply strategy for PVCS until 2017 s2 S25 E2 Hee 62 CONCLUSION 2022222121212 HH HH HH HH HH HH r tre 64 Q.2 2.20221212112212 111101 HH Hee 65 Wn RIEFERENCES LIST OF ABBREVIATIONS No Symbol | Mean ing | [ADB | Asia Developmen Bank t—ˆ |CM ~=————s Company profile matrix |CDM |CleanDevelopment |EFE —§ IFE r a: | External factor evaluation matrix có Internal factor evaluation matrix FDI Foreign Direct Investment GDP Gross domestic product MOC Ministry of construction PEST Political, economic, social and technology 10 | PPP Purchasing power parity II | POS Point of sale 12 | QPDS Quality, price, delivery and service 13 | QSPM Quantitative Strategic Plan Matrix 14 | ROA Return of Assets IS | ROE Return of Equity l6 Small and medium enterprises | SME 17 | WB |18 SS | WTO World Bank World Trade Organization - LIST OF FIGURES AND TABLES List of figure igure 1.1 PETS Model .cccccccccccccccccsssescscssesessessessessavsteesstsavsesavavevssisiesusasesevevevees 12 Figure: 2.2 Michael Porter’s five forces MOdeIS v c.c.ccccescscesecescsesecececececsseseeceveveees 13 Figure 2.1: Organization structure of PVC S 2.22222222 2222 nhe 22222 neete 23 Figure 2.2: Average GDP of Vietnam from 2005-2012 c.ccccccccscscscscssescssesecceseceeees 27 Figure 2.3: Urbanization trend of Vietnam until 2020 .ccccccccccsecececsecceseevesesvevecees 29 Figure 2.4: Market share for construction of Petro companies ccccccccsscesceseesesee 3] Figure 3.1 PVCS training process c.cccccccsscscsssssesesessessssescseseesseseseseseseevssveveveeeeces 59 List of table Table 1.1: External factor matrix c.c.cccccccccscccsssssescsessssesssecsssesessssssssscaveseeveveeeeeees 15 Table 1.2: Internal factor evaluation matrix (IFE) .cccccccccccccssceccecececececscececececesceees 16 Table 1.3: SWOT' Matrix 5c 2S HT HH TT HH HH He reo 18 Table 1.4: QSPM matrix 2-5 S291 E1 1111181111115 55 E21 HH re 19 Table 2.1: Ration of industries to total GDP of Vietnam cccccccceccscssecsecceceseeeee 26 Table 2.2: Some main business criteria of PVC5 in compare with direct competitors I0 30 Table 2.3: The CPM matrix of PVC5, PVC-MT, PVC-Vinaconex and PVC-HN 33 Table 2.4: Opportunities and threats for PVCS .c.ccccccccssssssecssseseesssesesesessesveveseesees 37 Table 2.5: PVCS External Factors Evaluation Matrix ccccccccsscscsesssseesesseseesesees 38 Table 2.6: Labor structure of PVCK from 2009-2011 c.ccccccccscsscscsesesessesecseesesseseeees 43 Table 2.7: PVCS’s business operation result in the period of 2009-201 45 Table 2.8: Financial ability index Of PVCS .ccccccccccccssscscscsecsesssevevsvsseveveseececevecees 46 Table 2.9: Strengths and weaknesses Of PVCS ccccccescscececesssceccssscssstsesesceveveveeceees 48 Table 2.9: Internal Factors Evaluation matrix of PVCS .ccccccccsccssesescececescssceveccesees 49 Table 3.2: SWOT matrix Of PVCS woocccccccccccceccscsssssesesesestecessevseavscssstsssesesseiteverseveces 53 Table 3.2: QSPM matrix of PVCS Q0 220 121 1n HH HH Heo 56 [able 3.3: Financial indexes improvement target from 2013-2017 nh, 61 lable 3.4: Summary of road map to implement business strategies until FY2017 63 INTRODUCTION Necessity of project In the period of integration, enterprises are facing to not only many Opportunities challenges business to grow To exist strategy and and expand develop on the basic their own enterprise of analyzing business but has to build external also great deal clear orientation environment and big of and internal factors Business strategy will help the company to exploit market’s opportunities as well as minimize challenges from external environment and limit company’s weaknesses Deriving from above situation, building business strategy becomes the most crucial to a company guides all Business strategy creates a clear business orientation and departments, localization and employees decentralization to company’s Business general environment goal then change avoids quickly, international competition require company always be active and creative to adapt these changes In the process of industrialization and modernization, heavy industry in general and metallurgical industry in particular plays an important role in deciding the success of this process PVCS is the biggest company in metallurgical industry and the company has created huge contribution to this process As all other companies, PVCS is also facing to many opportunities and challenges So building business strategy for a particular period becomes the determining factor to company’s expansion and country’s industrialization Realizing the importance of building business strategy for metal companies in particular and the whole industry in general, there are many significant projects and studies of domestic and international researchers on this topic Some significant projects are: Topic: “Vietnamese Construction industry in 2010”, Pham Chi Cuong, President of Vietnamese Construction Association The topic shown out observation identifications about recent activities of Vietnamese Construction industry in 2010: achievements and limitations From these identifications, Vietnamese Construction industry can limit its weaknesses and promote strengths in production and business Topic: converse “Vietnamese new policy”, Construction Nozomu industry Kawabata, Tohoku - A period University, of develop Japan The and topic raised out general conclusion about business situation of Vietnamese Construction industry in the context of industrialization, modernization and integration Both of above Construction profound topics have significant practical meaning to development industry, but they are macro research, it needs a more of specific and project to apply these conclusions to activity of a particular company From above reasons, researchers choose the topic: “Building business strategy for Hoa Binh Petro Construction Investment Join Stock Company” in the period of 2013 to 2017” with the objective of giving out a more specific and profound for building business strategy for the biggest Construction company in Vietnam Purposes of project Base on practical understanding about Construction industry in general and production and business of PVC5 in particular and knowledge of strategic management subject, the project shown out a comprehensive and clear picture about Strategic building and business of PVCS in Vietnam market Throughout practical analysis of production and business of PVCS in integration, the project affirmed explicitly the role of building business strategy for Vietnamese company in modern time The project not only stopped at practical analysis but also gave out specific solution for each section in each period for PVCS In chapter the project will show out forecast of Construction market till 2016 These solutions and forecast will also be guideline for other companies in Construction industry Scope and objective of project The project analyzes production and business of PVC5 in Vietnam market From this analysis the project concludes suitable strategies to expand business scale as well as company profit in both short term and long term ... ENVIRONMENT OF HOA BINH PETRO CONSTRUCTION INVESTMENT JOIN STOCK COMPANY .no 22 2.1 Introduction of Hoa Binh Petro Construction Investment Join Stock Company 22 2.1.1 Gencral information öE DVCS... Construction Investment Join Stock Company? ?? in the period of 2013 to 2017” with the objective of giving out a more specific and profound for building business strategy for the biggest Construction company. .. Analyzing business environment for PVC5 Chapter 3: Choosing business strategy and solution to apply strategy for PVCS in the period of 2013-2017 10 CHAPTER 1: THEORY OF BUILDING BUSINESS STRATEGY FOR