Buildng business and development strategies of Song Da 5 joint stock company - period 2012 - 2017 strategic vision to 2020

Currently, Song Da 5 Joint Stock Company has been involved in building many key industrial projects in the country such as hydroelectricity, road and bridge construction, project constru

BUILDING BUSINESS AND DEVELOPMENT STRATEGIES

OF SONG DA 5 JOINT STOCK COMPANY

- PERIOD 2012 - 2017 STRATEGIC VISION TO 2020

CAPSTONE PROJECT REPORT

Ho Chi Minh City

Table contents

1.General context, the necessity and significance of research……….………….… 6

2 The objective and scope of the study ……….…….……7

Research Methodology……… … 7

3 Structure of the Report ……….… ………8

Chapter 1: Theoretical basis of the report… ……… …9

1 The concept and classification of business strategy ……… …….9

1.1 The concept of business strategy 1.2 The role of business strategy……… 9

1.3 The basic features of the business strategy……… ………10

1.4 The construction process business strategy ……… ……… 10

2 Internal and external environment analysis…….……… 11

2.1 Analysis of the external environment factors…… 11

2.2 Analysis of the internal environment factors……… ….………….… 16

3 Develop matrix to select the business strategy the company … 16

3.1 External factors evaluation Matrix …… ……….16

3.2 Internal factors evaluation Matrix ….……….… 16

3.3 Competition profile Matrix ……….….18

3.4 SWOT Matrix……….…… 19

4 Business strategy selection……….………20

4.1 Organization and implementation ……….….21

4.2 Effective assessment strategy has established……… 21

Conclusion chapter I……….…22

CHAPTER II: ANALYSIS OF BUSINESS PRODUCTION ACTIVITIES STRATEGY OF SONG DA 5 JOINT STOCK COMPANY ………23

2.1 Introduction overview of the Song Da Corporation 5 ……… ….23

2.1.1 Formation and development of the Song Da 5:….…….………….…… 23

2.1.2 Structure organization of the company………… ……… ……… 25

2.1.3 Main Business industry.……… ……….……… 28

2.1.4 Introduction about the Company’s products……….28

2.2 The business situation in 2008 - 2011 and the first six months of 2012…… … 29

2.3 Analysis of the business situation of the Song Da 5……….…….… 31

2.3.1 External Environment Analysis ……… … 31

2.3.1.1 Macro environment Analysis……… ……….…… 31

2.3.1.2 Industrial and competitive analysis……….……… 34

2.3.2 Internal Environment Analysis ……… 41

2.3.2.1 Resources ……… 41

2.3.2.2 Strengths ………45

2.3.2.3 Weaknesses ………46

2.3.2.4 Competition in the market ……… 46

2.3.3 The strategic selection matrix ……… 47

2.3.3.1 Internal and external factor Matrix ……….………47

2.3.3.2 BCG Matrix……… 50

2.3.3.3 SWOT matrix analysis ……….…52

Conclusion chapter II ……… 56

CHAPTER III: BUILDING BUSINESS DEVELOPMENT STRATEGIES OF SONG DA 5 JOINT STOCK COMPANY - PERIOD 2012 - 2017 VISION TO 2020 ……… 58

3.1 Objectives of the Song Da 5 BY 2017……… 58

3.1.1 The basis for objective building…….……… 58

3.1.2 Vision, Mission, Core Values ……… 59

3.1.3 Objectives……… 60

3.2 Business strategy proposal Period 2012 - 2017……… 61

3.2.1 Business strategy selection……… 64

3.2.2 Business Strategies of the Song Da 5 Period 2012-2017……… 65

3.2.2.1 Company level Business Strategy ……… 66

3.2.2.2 Partial level Business Strategy ……… 66

3.3 The solutions to implement business strategy period 2012-2017 and vision to 2020 of the Song Da 5 Joint Stock Company ……… …… 66

3.3.1 Production management solutions group.……… 66

3.3.2 Marketing management solutions Group ………… ………… 68

3.3.3 The human resource management solution Group……….69

3.4 Some recommendations for the agencies and the State……… 72

3.4.1 Recommendations for the management agency on the Song Da

Corporation:……….……… 72

3.4.2 Recommendations for the Government and the State management agencies: ……….73

Conclusion Chapter III ……….73

CONCLUSION OF THE REPORT……… ……….74

REFERENCES ……….………76

Finally, our group would like to send Board of Director Songda 5 Company and the Company where we are working has created conditions in time for us to complete the course without any difficulties and obstacles

Because framework of the report and the time to learn about the company is limited, our team tried to complete in the best way by our knowledge and ability, however still having inevitable shortcomings, we look forward to receiving your valuable contribution of lecturers and friends

Member of Group 7

INTRODUCTION

1 General context, the necessity and significance of research

In 2011, the world situation still had complex problems, the global economic recovery takes place slowly, the risk of economic financial re-crisis still had implicities, but the changes has passed, it's time for global economy prepares to meet next challenges and opportunities According to many economic experts said that the global economy in 2012 is still difficult but there will also be highlights and advantages Due to the impact from the crisis of the world economy, in 2011 Viet Nam has tightened credit, reduce gradually public investment, thus, in 2012 the domestic economy is still affected

After 17 years of integration with the ASEAN countries, Viet Nam – USA relations normalization (1997-2012) and 5 years of economic integration in the world WTO (2007-2012), the construction industry has made a lot of progress and contribution effectively in the country's economic growth and creating position and capacity to enter into an implementation period of the industrialization and modernization process of the country This is the period with many significant changes

in quality and quantity in the development of the construction industry Corporations, large companies were established to consolidate and further intensive investment to technological innovation, increase production capacity and competitiveness of the products of industry, preparing the premise for regional and international economic integration in the next stage Vietnam's economy continously intergrates, develops, and become the centre of dynamic economic growth in Southeast Asia Construction industry is facing the enormous challenges and potential, which occupies an important position in the national development strategy by 2020 and vision to 2030

Song Da 5Joint Stock Company with more than 20 years of construction and development has continously developed in the organization scale, functions, tasks, job structure and the total value of business production Currently, Song Da 5 Joint Stock Company has been involved in building many key industrial projects in the country such as hydroelectricity, road and bridge construction, project construction and installation and the most advanced construction materials manufacturing Therefore,

the implementation of strategic activity and plans objectives for the company to make long-term development orientation, playing an important role in the development of the company in particular and the construction industry in general

After studying about Song Da 5 Joint Stock Company, Our group 7 decides to learn and study about "Building business and development strategy of Song Da 5 Joint Stock Company – Period 2012 - 2017 vision 2020" This is the main construction unit

of hydroelectricity and civil works projects in Vietnam, and is a reputable company of Song Da Corporation

2 Research objectives and scope

- Develop objectives business production strategy for this company form now

to 2020 and proposed that strategic objectives implementation plan helping the Company to develop sustainably in environment of competition and integration

The research object and scope:

- The research object: Song Da 5 Joint Stock Company However, to analyze and clarify the contents of the research, the report has expanded research object to competitive companies in the construction industry

- The research scope includes issues related to the business strategy of Song Da

5 Joint Stock Company in the business operation field

- Duration of studies through the company's statistics from 2008 to the end of June / 2012 and other factors affecting the business production of the Company until

2020 to analyse and evaluate the business production situation

Research Methodology

The report focuses on research and analyse the information and secondary data collected through the mass media and directly from the Song Da 5 Joint Stock Company in the most basic contents

The research and development of strategic selection matrix is implemented by expert method, means that consulting the opinions of the experts who have a deep understanding about products on the market The advantage of this method is simple to implement, but this method also has the drawback that is the level of accuracy is often not high compared to the actual survey because it comes from the subjective intentions

of experts However, this method is enough to build a good business strategy

3 Structure of the Report

In addition to the preamble, the conclusion, the report is structured into three chapters; the content summary of each chapter is presented as following:

Chapter 1: Theoretical basis of strategy and business strategy: This chapter

provides a basic concept of business strategy and business strategic planning process

It also gives the matrixes helping to select business strategies

Chapter 2: Analysis of business production operation strategy of the Song Da

5 Joint Stock Company: Introduction about the foundation and development of the company, the main business products, brief assessment of business operation situation

of the company in recent times Analyzing external and internal environments, strengths, weaknesses and setting the matrixes of IFE, EFE, and BCG The conclusion chapter evaluates the business plan implementation situation, the shortcomings and the necessity to build business strategy vision to 2020

Chapter 3: Building some measures to improve the business strategy in the

Song Da 5 by 2020: Setting the goals, vision, mission, core values, proposing and selecting business strategy period 2012-2017, the strategy implementation solution and

a number of recommendations for the senior agencies and the State in order to improve production efficiency in the company

CHAPTER 1: THEORETICAL BASIS OF THE RESEARCH

1 Concept and clarification of business strategy

1.1 Concept of business strategy

.The concept of strategy has emerged from a long time and have more specific concepts such as; Business Strategy is the operation direction of the enterprise, it specifies the type of product or services that the enterprise undertakes, business scale, production resources, profitability and growth prospects of the enterprise

In the present context, the term and concept of strategy of military strategy used

in the field of management to business strategy The figure below describes the business strategy:

Figure 1.1 Business strategy

Các

A clear concept of business strategy outlined in the syllabus of Master of

Business Administration - Griggs University as follows: "a series of commitments and actions that a company uses to gain a competitive advantage by exploiting core

capacities in a certain market''

1.2 The role of business strategy

Identifying strategy is a necessity work for the existence and development of any enterprise because; to survive and develop in the current market mechanisms, it is necessary to know the existence environment of the enterprise

Business strategy helps enterprises to capture the market opportunities and creates advantages on the mảket by applying the limited resources of enterprises with

Strategy

Strengths

Weakness

Opportunities

high results in order to achieve proposed goals, helps enterprise to consider and determine which direction should to go

Business strategy creates a solid basis for the enterprise, setting out the policies and decisions of business production that is consistent with the fluctuations of the market Besides, business strategy also reduces the risks and enhances the ability of enterprises in taking advantage of business opportunities as they emerge

1.3 The basic features of the business strategy

- Defining the basic objectives to achieve business direction

- Caculating the orientation of the business strategy to ensure enterprise to continuously develop in the business environment which has frequent changes

- Considering the reasonableness and adjusting to suit the business environment

to ensure efficiency and overcome the caused strategic orientation

- Building on the basis of competitive advantage of the enterprise to ensure maximum mobilization and good mixture of the exploitation and resources usuing, promoting the advantages, catching the opportunities to take advantage of competition

- It is reflected throughout the process, business strategy always has thought of offensive, winning in the business market and are built in a long period of 5 to 10 years or further strategic vision

1.4 The business strategy construction process

Business strategic planning process is described according to the following steps

of Figure 1.2:

Figure 1.2 Business strategic planning process

1.5 The mission or objectives of the company

Michael Porter explains the necessary of the prospect in competition "because if people do not get a clear perspect on how to become completely innovation and unique, meets requirements of different customer better than competitors, they will be swallowed alive by the violence of competition "

Theory and practice shows that: any a viable prospect must present the core ideas of the company Because vision is constituted by the core values and principles and systems guiding principles Core purpose is the most basic reason of a company to exist And there is no universality in establishment of core values, each company has its operation practices that the company builds it’s core values

2 Analysis of the Internal and External environment

Environment is existing factors, forces, institutions that having influence on operation results of the organization The role of the environmental analysis is the fundamental basis for the planning or confirming the functions and tasks of the organization Business environment of the organization, including the external environment and internal environment

Administrators can not form a long-term orientation or build a strategy if they

do not understand about the strategic situation of the company, the nature of the competition conditions that it must face, the way to create a suitability between

Mission or objectives of the enterprise

Internal environment

analysis (S,W)

External environment analysis (O,T) Strategic selection

Strategic implementation

Result checking and evaluation

Feedback

resources and capabilities with those conditions To analyze the internal and external environmental factors, we can use the available data or survey research from inside and outside the company

2.1 Analysis of the external environment factors

Reviewing the environment requires overall research of all the factors of the external environment Thanks to the review, the enterprise soon recognizes signs of potential changes in the environment and finds out the change is happening explicitly Monitoring the environment means that observing the change of environment to identify key trends arising from the signs that the environmental review has found By monitoring, the company will be better prepared for the introduction of new products

or services at the right time, gain competitive advantages from opportunities

Figure 1.3 Macro environment

General Environment:

Is the broad social aspects in the society that affect industries and companies in the industry General environment with the nature of macro includes factors such as demography, economy, politiy / law, society culture, technology and global Changes

in the general environment can have a direct impact on any force in the industry, altering the relative strength to other forces and to itself, finally, it alters the

Political and legal environment

Economic

environment

Global environment

Technological

environment

Internal enviromental of the enterprise

Demographic environment

attractiveness of an industry Therefore, the external environment analysis helps to know the organization is facing challenges and what opportunities to get the right development direction

Economic factors:

Economic environment indicates the nature and direction of the economy in which the enterprise is operating This is the most important factor in the macro environmental factors It affects directly the potential attraction of different strategies

So, the enterprise needs to study the economic environment including study of important factors such as the growth rate of the economy, interest rates, exchange rates and inflation rate to recognize the change, trends and strategic implications of this important element

The legal and political factors

Factors show the stability of political institutions, constitution, government policies directly affect the production environment and the business of industry or enterprise Enterprises should carefully analyze the management policy of the state, the laws relating to business activities or other special incentives, trade barriers

Socio-cultural factors

This is the factor which related to the attitudes of the society and cultural values because they base social basis That is the changes of living style, living standard, consumption habit, occupational expectation, population growth rate, popolation transfer, diversity of the workforce, tradition, beliefs, customs etc when these changes orcur they will create oportunities, challenges or risks for industries or enterprise

Demographic factors

Technological factors

Global factors

*Industrial Environment

Threats from new companies

Potential competitors of an enterprise are the ones which are going to join the industry, can affect to the structure in the future More or less potential competitors, strong or weak presure depend on the attractiveness through rate of profits, advantages

of scale, product differences, capital requirements, conversion charges, accession of distribution channels, cost disadvantage, goverment policies, capable of dealing actions

Threat from new companies

Potential competitors of a business enterprise is prepared to entry may affect the structure of the industry in the future Potential competitors is more or less, their pressure on industry is strong or weak will depend on the attractiveness of the industry that is reflected in aspects such as profitable rate, the scale advantages, the product differentiation, capital requirements, switching fee, access to distribution channels, cost disadvantages regardless of scale, government’s policies, actions can deal with

Power of the suppliers

The power of suppliers shows ability of deciding their transaction conditions for the enterprise Main suppliers may have to accept the terms that enterprise offers, thanks to that, the enterprise can reduce costs and increase profits in production, in contrast, large suppliers can put pressure on with production industries in many ways, such as high prices of raw materials to share the profits of the industry The determinants of supplier power is expressed through: -

Power of buyers

The new competitors risk

Competitors in the industry

The competition between the existing firms in the industry

Power of

the

suppliers

The threat of substitute products

Threat from new companies

Pressurization ability of

suppliers Pressurization ability of Customer

the risk of substitute products

and services

 The level of concentration of suppliers The power of suppliers will be great, if

their concentration is high If the supplier of a enterprise must compete with other suppliers, it is likely that they will have to accept unfavorable terms, because enterprise can quickly switch to ordering other provider, so suppliers have to accept the situation of being price squeezed

 The level of input standardization The input is standardized also increases

competition between providers and thus reduce their power

 Cost of changing suppliers The higher the cost is, the more enterprise will

must suffer unfavorable terms that set by the provider, because the transition from this

supplier to another supplier will force prodution enterprise must suffer the higher costs

 .The risk of consolidation increasing among suppliers and manufacturing

units The higher this ability, the greater the power of suppliers

 Power of the purchasing enterprise In commercial transaction, the power of

the customer, of course, will reduce the power of suppliers This strength is evidented clearly when consumers boycott and do not buy the product

Power of buyers:

The power of buyers is the impact of purchase for a particular industry Customers have great power: Customer focus, ie few customers account for a large market share Customers who bought large quantities of products produced in the context of distribution channels or standardized product or intergration ability or even buying the manufacturer Power of customers is weak in cases of intergration; product conversion costs of customers is large, because of non-standardized products, thus, customers can not easily switch to using other products; there are a lot of customers therefore, there is not any customers that have a significant impact on the product or the product price; Manufacturer provides substantial input value for the buyer's product

The threat from substitute products

Substitute products is referring to the products of other production industries Alternative risk occurs when the demand for a product is affected by changes in the price of substitute goods Elasticity of demand according to the price of a product is affected by changes in commodity prices instead More goods are replaced, the graph shows product demand has high elasticity because this time the buyers have more

choice Therefore, the existence of substitute goods limit the price increase ability of enterprise in a certain production industry Although the risk of substitute often affect the industry through price competition, but new technology also makes this threat increases

Competition intensity in the industry:

Not only current competitors create threats to enterprises in an industry, but also the ability of new firms which can joint to the industry also affects competition Each industry has its own measures to protect the high profits of the enterprises that already occurred in the market, and prevent potential competitors entering the market The barriers to entry are the characteristics of an industry These barriers and increase participation of new companies, thereby maintaining stable profitability for companies working in the industry A company which is difficult to joint to industry if existing the production secret or patented ideas; difficult to change production commodity; access to with low distribution channels and the gap between input costs compared to the output cost is too large Conversely, a company has difficulty in get out of the industry if the industry requires highly specialized assets; costs to leave the industry is high and business companies in the industry have close relation with each other

In summary, the main objective of the macro environmental analysis is to identify the changes; the expected trend from the external environment factors which

to identify opportunities and challenges to help enterprise to orient strategy in the future

2.2 Internal Environment Analysis

The main purpose of the environment analysis is to identify the existing and potential resources to create sustainable competitive advantage of the enterprise from which to discover the strengths and weaknesses of the enterprise Internal Environment Analysis consists of three main parts:

 Sustainable competitive advantage analysis: through the analysis of financial

resources, including facilities, human resources, production capacity, research and development, technology assets such as trademark rights, patents; value chain analysis through the main activities of the enterprise; relationship management analysis; sustainability and sustainable strategic assets analysis

 Strategic Analysis: including strategic analysis of the company to review the current

business units and geographic scope of operating enterprises; product-customer strategic analysis is to determine the centre that the enterprise orients in terms of product-customer segments; competitive strategy opinion to know how competitive that businesses are applying; functional strategic analysis to know whether the enterprise can make or need to link to performance that function; finally, evaluate the suitability of the above strategy

 Financial performance Analysis: The basic purpose of this section is to evaluate the

financial performance of the enterprise to make a profit Analysis of parameters is to orient four main categories which are profitability; solvency, financial leverage and operation parameters

3 Developing matrix to choose business strategy of company

3.1 External Factors Matrix

External Factors Matrix is the matrix to evaluate the external factors affecting the Company's activities, including the opportunities factors and threats factors of the Song Da

5 Joint Stock Company

* The matrix building methods:

Setting up a list of all the external environmental factors that affect the operations of the company, assess the effect level or importance level of each factor by scoring weights, the total weight scores of all the factors is equal to 1 or 100% Assess the level of company's response to these factors by classifying the factors from (1) to (4), in which (4) shows the Company has the best response and (1) is the lowest Next, caculting the importance score of each factor by multiplying the weights with the respective classification score, then adding the importance scores to find out the total importance scores of the company The highest total importance score is (4) and the lowest is (1), and the average is 2.5

If the total importance score is (4), shows that the company is catching the best opportunities and the best control threats from outside If the total importance score is (1), shows that the Company can not catch the opportunities and can not control threats from the external environment

Table 1.1: External Factor Matrix

External

Environment

factors (Listing)

Importance level (weight)

Clarification Important score

3.2 Internal Factors Matrix

Internal Factors Matrix is the matrix to evaluate the internal factors affecting the Company's activities, including strengths and weakness of the Company

* The matrix building methods:

Setting up a list of all the internal environmental factors that affect the operations of the company, assess the effect level or importance level of each factor by scoring weights, the total weight scores of all the factors is equal to 1 or 100%

Assess the level of company's response to these factors by classifying the factors from (1) to (4), in which (4) shows the Company has the best response and (1) is the lowest Next, caculting the importance score of each factor by multiplying the weights with the respective classification score, then adding the importance scores to find out the total importance scores of the company The highest total importance score is (4) and the lowest

is (1), and the average is 2.5

Table 1.2: Internal Factors Evaluation Matrix

Clarification Important score

3.3 Competitive profile matrix

In the external environment factors, competitive factor is the most important one Competitive profile matrix helps us identify key competitors, their strengths and weaknesses which helps the Company to have more appropriate strategies Competitive profile matrix is shown in the following table:

Table 1.3: Competitive profile matrix

Competitor 1 Competitor 2 Competitor 3

cation

Clarifi-Impor tance score

Clarif icatio

n

Impor tance score

Clarif icatio

n

Impor tance score

Clarif icatio

n

Impor tance score

Strategy S-O: Pursuing the most suitable opportunities to the company's strengths,

business orientation on market (Attack)

Strategy W-O: Overcoming weakness, pursuing oportunities (competition) Strategy S-T: Determining the methods that the Company used advantages to

reduce damage to the external challenges (Caution)

Strategy W-T: Establishing defensive plan to prevent weaknesses of the

company from the challenges in external environment (Defense)

On the basis of gathering the proposed strategies by a combination of factors such as: strengths - opportunities, strengths - challenge, weaknesses - opportunities and weaknesses - challenge

3 5 QSPM :

This analysis technique will show the BATNA in objective way QSPM uses input factors thanks to the analysis from EFE matrix, IFE matrix… then receives necessary information to establish QSPM from SWOT matrix Then with strategic defining tools as above analyzed, each tool will have defined strengths and weaknesses Therefore, when applying into reality, we must be flexible in selecting suitable strategies for each concrete background and conditions

QSPM will synthesize analysis results from EFE matrix, IFE matrix, matrix of competitive image, SWOT matrix which will help definer selecting an objective decision QSPM will implement the following steps:

- Step 1 List the external opportunities, threats, internal important strengths and weaknesses in the left column of QSPM The information that is directly taken from EFE matrix, IFE matrix should have 8 important external successful factors and 8 important internal successful factors

- Step 2 classify for each important internal factor and each important external factor based on the combined classifyied column of EFE, IFE matrix

- Step 3 study SWOT matrix, define the replaced strategies that enterprises should consider for implementation; note down such strategy on the top of the vertical column of QSPM

- Step 4 Define attractive score (AS), that is the value to demonstrate the relative attraction of the strategy in the replaced strategy group Attractive score will

be divided into the following levels: 4: very attractive; 3: rather attractive; 2: less attractive; 1: unattractive

Step 5 Estimat total attractive score (TAS) for each factor for each strategic solution; it is the multiplied number of classification point in step 2 with the attractive point in each row in step 4

- Step 6 estimate TAS; gather all internal and external factors impacting on strategic decisions; the high attractive point will demonstrate attractive strategy

Table 1.5: QSPM

Important influenced

factors on strategies

AS: attractive score

TAS: total attractive score

4 Business strategy selection

There are many different competitive strategies, but there are three basic approaches to build the competitive advantages, Cost leadership, product differentiation and concentration strategy The company will have to set their position, based on the objectives of the company, the internal and external situation to select appropriate business strategies

 Cost leadership strategy: are all actions providing products or services with

characteristics which accepted by customers at the lowest cost in the industry That

means the company knows to take advantages all their abilities to provide the products

or services at a lower cost than competitors Then the company gained a significant advantage in comparision with the other competitors, it is a tool to attract customers to gain greater market share in the market This strategy makes the company has the advantage of lower prices in compareison with other competitors, but with the same profit level even higher profits and the company has a stronger position in the fierce competition of the competitors in the industry, including potential competitors that are not affected by the negotiation capacity of suppliers, power of customers as well as substitute products To get this, the company might have an advantage because of its high technology, the preferences in approach of input raw materials, good production capacity, the appropriate policy etc

 Differentiation strategy which the company finds opportunities to become the

unique unit in industry of supplying unique products or services in the buyer's views under certain aspects The strategy selects one or more attributes of the products the the buyer that is evaluated as importance and self position as unique to meet that demand And the unique and particular characteristic ensures the company against competitors, creates barriers to potential competitors, attracts customer’s loyalty, unaffected by substitutes However, the company faces risks such as the imitation of competitors

 Concentriated strategy is built on the basis of choosing a narrow competitive

scope in the industry By optimizing strategies for target segment, focused strategic units and gain competitive advantage in the target segment, although in general they

do not hold an advantage Once having selected a segmental market, the company will pursue a concentrated strategy used differentiation approach, or a low-cost approach However, this approach also faces the risks of potential competitors or changes in tastes or technology

4.1 Organization and implementation

Once the strategic business is built, organization and implementation means that administrators review the strategic objectives, strategic building basis, annual objectives building, systems and policy strategy, implementation plans building, proposing programs, budgets and appropriate procedures, resources allocation (human, financial and technical facilities), selection, complete organizational structure in line

with the strategy, the formation of the Steering Committee and the operating mechanism, implementation committment organization, step-by-step deployment of strategy implementation and inspection, control and coordination in the process of adjustment to implement its strategy

4.2 Effect evaluation of strategy

After building an effective business strategy and it suits the socio-economic situation, in accordance with the actual situation of the company and can take advantage

of opportunities to achieve company’s goals Therefore, evaluating the effectiveness of business strategies is very important and it is done in the following steps:

• Checking the suitability of the business strategy before the official implementation The reason was mentioned above, the business strategy is crucial to the success or failure of the company

• Assessing the operation performance of the company for each stage of business strategies implementation in order to find defects, the shortcomings of the strategy, from there, there is the timely editing and supplementation

 The process of testing, assessing the effectiveness of strategy include: identifying inspection and assessment content, proposing standards, criteria for inspection and assessment, quantifying performance results, comparing and evaluating the results of the strategy implementation, determining the causes of errors to find the sollution

Conclusion of chapter 1

Among problems in chapter 1, we present the theoretical basis and the concept of basic terms as foundation for building business strategy of the company Presenting the concepts of business strategy of scholars to have a comprehensive view of strategic business strategy; outlined the role and characteristics of the business strategy to clarify the reasons why companies have to build business strategy, presenting the business strategy building process including the following steps: determining the mission and objectives of the company, the internal and external analysis of the company, establishing matrix building methods to select business strategy, business strategy implementation organization and the final step is implimentation evaluation

Our group used the above methods and theories to analyze operation environment operation and building strategy of Song Da 5 Joint Stock Company, specialized in the

Capstone project: "Building business strategy of Song Da 5 Joint Stock Company"

with the objective of sustainablity growth, prestigious brand in the field of construction of industrial and civil works

CHAPTER II:

ANALYSIS OF BUSINESS PRODUCTION OPERATION STRATEGY

OF CURRENT SONG DA 5 JOINT-STOCK COMPANY

2.1 Overview of Song Da 5 Joint Stock Company

2.1.1 The formation and development of Song Da 5

Name of the company: Song Da 5 Joint Stock Company

Head Office: 5th Floor, Tower B Song Da Building, My Dinh commune, Tu Liem district, Hanoi

Date of establishment: March 26, 1990

Song Da 5 Joint Stock Company, formerly known as Vinh Son Hydroelectricity Construction Company was established under Decision number 79/BXD - TCLD on May 3, 1990 of the Minister of Construction The company is now the State - a member of Song Da Corporation converted into Song Da 5 Joint Stock Company by Decision 1720/QD - BXD dated 04/11/2004 of the Minister of Construction

Song Da 5 Joint Stock Company was entrusted for construction of hydraulic concrete project and several key projects in the country such as: Vinh Son Hydroelectricity, Yaly Hydroelectricity, Can Don Hydroelectricity, Sesan 3A Hydroelectricity, Tuyen Quang Hydroelectricity, Ban Ve Hydroelectricity, Son La, Lai Chau, Hua Na, Song Bung 4, Dakdring, Song Da - Yaly Cement plant, Dieu Tri Cement .by the Song Da Corporation, EVN Group, Vietnam National Oil and Gas Group

Currently, the Song Da 5 Joint Stock Company is a leading company in the industry of concrete construction with large moulding The company has invested in the roller-compacted concrete production line and finished construction of roller compacted concrete dam in Son La Hydroelectricity projects which is assessed as good result in quality and time by EVN, the State level acceptance council and Son La Hydroelectricity project, this is completely new and complex technology, firstly applied in Vietnam The company excels in all aspects such as trademark, size, technology, skills and experiences of the laborforce, market, development strategy The company has made the key projects of the State and Song Da Group as follows:

N0 Name of project Power Investors (client)

I Hydroelectricity

1 Vinh Sơn Hydroelectricity 66 MW

Hydroelectricity Project Management

3

2 Yaly Hydroelectricity 720 MW Vietnam Electricity Group

3 Can Đon Hydroelectricity 60 MW Song Da Group

4 Se san 3 Hydroelectricity 273 MW Vietnam Electricity Group

5 Sesan3A Hydroelectricity 96 MW Song Da Group

6 Pleikrong Hydroelectricity 120 MW Vietnam Electricity Group

Hydroelectricity 210 MW Song Da Group

9 Son La Hydroelectricity 2.400 W Vietnam Electricity Group

10 Ban ve Hydroelectricity 300 MW Vietnam Electricity Group

11 Hua Na Hydroelectricity 180MW Vietnam National Oil and Gas Group

II Transport works

III Civil works

1 Economic Institute Ministry of Planning and Investment

2 Saigon Pearl Building

Saigon Urban Development Joint Stock Company SSG

3 Electricity line 500 KV Vietnam Electricity Group

Twenty years of construction and development, the company has continously developed in all aspects: the organization, functions, tasks, job structure, the value of business production is always sustained growth The company is very interested in the training, building teams of engineers , technicians, managers who are good at all aspects, and team of high-skilled workers with technical expertise Up to now, the company has built a team of well-qualified staff and workers to build the project of industry, civil, transportation and infrastructure projects

Currently, the company is applying a quality management system according to Standard of ISO 9001:2008 - infrastructure for management works The company always takes economic efficiency, product quality is the main measure for sustainable development and always wants to be a reliable partner in the field of operation

2.1.2 The organizational structure of the Company

Total number of employees is 1.847 people

In which:

 M.A: 7 people

 Engineer 235 people, College: 93 people

 Intermediate:205 people

 Technical Workers:1.307 people

* The company includes 8 function rooms (organization structure chart is attached)

* The production units consists of:

1.Song Da 5.01 Enterprise - Implementing the construction and installation tasks

in the North West regions;

2 Song Da 5.02 Enterprise - Implementing the construction and installation tasks

in the central region;

3 Song Da 5.03 Enterprise - Implementing mechanical construction contract and the machining of the Company;

4 Song Da 5.04 Enterprise - Implementing construction tasks of drill, bore and scoop, materials production in the works;

5 Song Da 5.06 Enterprise - Implementing the construction and installation tasks

in the Northwest region;

6 Song Da 5.08 Enterprise - Implementing the production tasks of providing roller compacted concrete (RCC), Common concretes (CVC) and the exploitation of material production;

7 Song Da 5.05 Joint Stock Company - Implementing construction tasks in the central region, the Central Highlands and Laos;

8 Song Da 5 Construction Investment Joint Stock Company and Energy Development (by the company holding shares) - Implementing tasks investment, construction, management and operation of Song Chay 5 Hydroelectricity in Ha Giang made by the company as an investor

9 Company branch in Hanoi - Implementing tasks: Building urban, block brick manufacture, traffic projects construction

Song Da 5 Joint stock Company is structured according to the following model:

Organizational structure of the company

Shareholders’s meeting

Board of Directors

Chief Executive Officer Board of Supervisors

Enterprise 5.08

Song Da 5.05 Joint Stock Company

Hanoi

Song Da 5 Enegy Construction &

Development Investment Joint Stock Company

Quality

Technique

Department

2.1.3 Main Business Industries

The company operates under the business license No 0100886857 dated 27/07/2011 issued by the Department of Planning and Investment of Hanoi (13th change) with many different functions; however within the assignment, our group will just focus on the main sector of constructing industrial project

2.1.4 Introduction the products of the Company

Main products of Song Da 5 are concrete production and construction units for the of hydroelectricity, civil and infrastructure works Especially with the production and construction line of roller compacted concrete made in the Son La Hydroelectricity project that is highly appreciated The company continues to upgrade mixing plant and conveyor systems to serve for Lai Chau Hydroelectricity is expected

to start main work in early 2013

Structure of products and services by revenue in 2011:

Figure 2.1: Structure of the products and services proportion by revenue in

2011

In the current period, looking at the structure of the products and services proportion by revenue in 2011, we can see that industrial production after finishing the RCC concrete construction, the volume of construction and installation accounts for

the largest proportion

2.2 The business production situation in 2008 - 2011 and the first six months of 2012

Table 2.2: Table of the of business production operations results in 2008 to June

2012

(Source: Audited financial statements of 2008, 2009, 2010,2011, and the interim

report 2012 of the Song Da 5)

+ Results of business activities from 2008 to six beginning months of the year

2012

+ Business operating results from 2008 to the first six months of 2012 profit in 2011 decreased by 26% equal to VND 330,858 million compared to 2010, with profit in

2011 decreased 51.2% of the equivalent amount of 34 656 million compared with

2010 The reason is that after finishing the RCC concrete production work, the company only focuses on the construction and installation, specific of construction and installation work is low capital turnover, the slow recovery of capital should make output decline in sales and profits decreased

Table 2.3: Chart revenue targets, profit Song Da 5 2008, 2009, 2010, 2011 and the first six months of 2012

Looking at the chart of revenue and profit targets of the Song Da 5, we see that

in 2010 and 2011 the company changed output, on 31 July 2009 the last concrete batch

of the RCC concrete project was ended The Company only has to implement the CVC concrete production serves for the construction and installation of plant items and the water intake of the Son La Hydroelectricity project, therefore, implementation volume

is not much, after the Son La Hydroelectricity finished the construction part, the company had not had any major project to increase revenue and profits

With these data, inspite of the economic crisis in the country and the world, the production and business activities of the Song Da 5 is still profitable although it is not

as high as the previous year but is still effective and trend to sustainable development

in the coming time

2.3 Analysis of the business situation of the Song Da 5

Since its foundation to the present, Song Da 5 Joint Stock Company has never built for itself a specific business strategy but mainly building short-term business production plans each year based on criteria that Song Da Corporation delivered

After finishing the construction of Tuyen Quang hydroelectricity in 2007, with the available position and capacity, the Company has been entrusted by Song Da

Group the task of building the Son La Hydroelectricity project in the category: factory water intake, diversion intake and especially produced more than 2.8 million m3 roller compacted concrete RCC In 2007, on the basis of the assignment of Song Da Corporation, Song Da 5 Joint Stock Company has invested synchronously roll compacted concrete equipment line five 720m3 / h including production systems, cooling and transport conveyor of 3 firms LIEBHERR-HANSAN-NIPPON, with a total investment of more than $ 20 million to serve for the construction of the Son La hydroelectricity dams, and other hydroelectricity projects with RCC concrete technology

2.3.1 External environment analysis

2.3.1.1 Macro Environment Analysis

Economic Environment

Economic growth rate: In recent years, the Vietnamese economy (2008-2011) has strong development steps, the annual average GDP growth rate reaches 6.07% This is a favorable factor impacting on the overall development of all economic industries in the country Curent traditional customer market the Song Da 5 Joint Stock Company in particular and in general mainly are EVN, Vinacomin, PVN with main work is the construction of Hydroelectricity projects Energy Production is paid attention by Vietnamese Government According to estimates of the Vietnam large dams Association, the total potential capacity can be exploited from Hydroelectricity

in our country about 18,000 to 20.000MW Currently, the our Hydroelectricity is only exploited around 20% The Prime Minister signed Decision No 1208/QD-TTg dated July 21, 2011 approving the national electricity development plan period 2011 - 2020

to 2030

Interest rates: With the field of construction and installation of

Hydroelectricity projects, using debt capital of the company accounts for the high rate

of business capital These are the basic characteristics of the construction industry in general in the process of operation Therefore, the variation in market interest rates always have a direct impact on current production costs of the enterprise At the time

of rising interest rates, borrowing costs increase may leading reduce the business effectiveness of the Company in the operation period Therefore, the listing of the shares on the stock trade floor will help the company reach a new channel to raise

capital, increase shares liquidity of company Since then, the company's capital structure is improved, improving financial capability, expanding the scale of current production and business activities

- The inflation rate: the consumer price index (CPI) average of the year 2011

increased 54.2% compared to the average CPI in 2010, inflation in 2011 was 18.58% When input costs increases due to inflation, output prices will increase proportionally,

so the company has signed contracts that are adjusted input material prices Thus, the impact of inflation on production and business activities of the company is at a certain level and can be controlled

- Exchange Rate: The exchange rate fluctuations are directly affecting

enterprises in the construction sector because the volatility of the exchange rate will affect the prices of key commodities such as: steel, cement, fuel, etc which are the main materials of the enterprises in the construction sector So the impact will increase production costs

The company is now no longer have the credit loans in foreign currency, so the direct effect from the change of the exchange rate is no longer significant in the company's business cost

In recent years the world's science and technology and in the country always develop powerfully, new generation of machines are invented with superior features compared to the previous generation For the construction sector there are now so many new and modern construction equipments such as MD900B, MD2200 cranes, concrete mixing plant 730m3 / h, automatic conveyor systems, new technology concrete mixing trucks, welding rods, types of copfa, scaffolding Application Environment of new science and technology is very convenient for enterprises to innovate production technology improve product quality

* Political & Legal Environment:

Vietnam has oustanding strength that is the political environment, sable national security which attracting investment and develop economy Vietnam has made an equal business investment environment by improving the legal framework, especially in finance, land, labor, simplifying administrative procedures and state

enterprise reform However, construction investment law system in Vietnam still has a lot of changes, certain influence on the domestic and foreign investors

Energy security has an important role in economic development, strengthening security and defense of the country Prime Minister signed Decision No 1208/QĐ-TTg dated July 21, 2011 approving the national electricity development planning period

2011 - 2020 vision 2030, the total investment in 2030 is about $12,5 billion with common objective is to develop the electricity industry to meet the basic needs of the national economy

* Culture and Society:

Vietnam is a country with the area of 331.698Km2 in which 3/4 of the area is hilly, with 54 ethnic groups including 53 ethnic minorities Vietnamese culture is the unity national culture on the basis of cultural and ethnic nuances diversification

With history of thousands years of the Vietnamese along with the afterward convergence of other ethnic groups With influences from ancient of China and Southeast Asia to the influence of France from in the end of 19th century, and from the West since the 20th century and the globalization integration period in the 21st century Vietnam has made a change in culture through the historical periods, some cultural aspects are lost but there are other aspects of modern culture added to the Vietnamese culture which imbued with Vietnamese national character

The current headquarters of company was moved to Ha Noi, is the political and economic center of the country so that the Company has certain advantages in access

to long-term strategic partners However, due to the characteristics of Hydroelectricity construction industry, which is a key unit in the production of concrete and construction and installation for Hydroelectricity projects, thus, the company has branches, enterprises located in the site where there are many ethnic minorities, but the relationship between company staff and local people and around the surrounding areas are always friendly and unity

* Global Environment

Due to the outbreak and development of the field of information technology and globalization under the impact of advances in the field of science and technology and the relationship between the areas in the world Especially the emergence of the Internet makes us increasingly closer, and the constant increase in the exchange of

information and mutual understanding and relationship development cooperation between countries, leading to a global civilization The globalization leads international trade increase with high speed, increased international capital flows, including foreign direct investment, increased cross-border data flows through the use

of information technology and increasing international cultural exchange, the technology gap is increasingly narrow between the developed countries and the developing countries

2.3.1.2 Industrial and competitive Analysis

* Competitive pressure from current competitors

Current industrial construction array is considered as one of the biggest and most competitive one, especially small and medium sized hydroelectric projects, in recent years, there are many enterprise which has invested in new technology and machinery for the construction and installation of hydroelectricity projects, many big general companies that do not specialize in Hydroelectricity construction as LICOGI, VINACONEX, CAVICO has oriented its subsidiaries to engage in this new industry Song Da 5 Joint Stock Company under the Song Da Corporation, which is considered

as the number one in the work of construction of Hydroelectricity projects with more than 50 years of experience, while Song Da 5 is now assessed by the Corporation as one of the major units of the Corporation in the construction of concrete in-mass With its capacity and existing technology equipment, Song Da 5 evaluates some competitors with high competition in the Hydroelectricity construction and installation according to the following analysis table:

Table 2.4: Table of direct competitive opponents comparision and analysis

Strengths and

weaknesses

Cavico Joint Stock Company

No.6 Song Da JSC Licogi13 JSC Vinavico JSC

of EVN, PVN

Implement main projects of EVN, PVN

Implement main projects

of EVN, PVN

Implement main projects

of EVN, PVN, Directr labor

force

High professional skill ; being basically

trained from national

vocational schools

Experienced of constructing hydroelectric and industrial projects, being basically trained from national vocational schools

Experienced of constructing hydroelectric and industrial projects, being basically

trained from national

vocational schools

High professional skill ; being basically

trained from national

vocational schools

Machine and

equipment

Specialized equipments of famous

enterprises

Furukawa, Tamrook

Big and modern equipments of Potain

Specialized equipments of implementing infrastructure, industrial foundation

nations

Specialized equipments of Atlas Copco, CAT

volume with

high progress

equipment with high capacity Leading

staffs

No experiences

in managing big projects

Less experiences ;

leading staffs of the group

No experiences

in managing big projects

No experiences

in managing big projects

Brand name is still weak

Brand name is still weak

No brand name within the market

Weak without division of specialized capital withdrawal

Weak without division of specialized capital withdrawal

Weak without division of specialized capital withdrawal

After considering opinions of experts on construction industry, our group will rank the importance point of competitive opponents as follows: 4: very good; 3: good; 2: average; 1: bad

.Table 2.4: table of comparision score to evaluate competitive opponents

Song Da 5

Competitors Song Da 6 Licogi 13 CavicoPC Vinavico

classific -ation (clas.)

Important point (I.P)

Clas I.P Clas I.P Clas I.P Clas I.P