Building business strategy for Viet Nam I industrial joint stock company in 2010-2015

In study time, via reality of trading and exploiting stone of the company, our group decides to choose the topic “construct business strategy of construction stone in Viet Nam I Industri

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

CAPSTON PROJECT REPORT TOPIC: BUILDING BUSINESS STRATEGY FOR VIET NAM I

INDUSTRIAL JOINT STOCK COMPANY IN 2010-2015

Prepared by: Group 12 Class: GeMBA01.V02

Ha Tinh, September, 3 rd , 2010

TABLE OF CONTENT PREFACE

CHAPTER II: REALITY OF CONSTRUCTION STONE TRADING

2.4.1 Main strengths 41

CHAPTER III: BUILDING BUSINESS STRATEGY FOR VIET NAM

I INDUSTRIAL JOINT STOCK COMPANY IN 2010 – 2015

45

PREFACE

1 NECCESSITY OF THE STUDY

After Viet Nam’s integration into WTO, it means that Viet Nam has

officially “jumped into” international playground therefore Vietnamese enterprises

must cope with violently competitive environment

An enterprise which wants to exist and develop in the market then the most

important and necessary thing is to orient company to go on a right way, suitable to

constant change of business environment to reach high adapting and ensure

enterprise’s sustainability

Therefore, centre and main problem of enterprises currently including

enterprise of producing construction materials is to build up a right and suitable

business strategy with competitive environment and how to adapt to conditions and

existing capacity of enterprise

In addition, together with common development orientation of the whole

nation, in recent years, economic structure of Ha Tinh province has transferred into

increase of construction and tourism, reduction of agriculture; Many main projects

are implemented then demand of construction materials has been increased highly;

this is the opportunity for enterprises in construction sectors including Viet Nam I

industrial Joint Stock company However, big opportunity as well as many threatens

have been raise, how to make company exist and develop within the market? Then

Viet Nam I industrial Joint Stock company, must have a good business strategy

which is suitable to short term period from 2010 to 2015

In study time, via reality of trading and exploiting stone of the company, our

group decides to choose the topic “construct business strategy of construction stone

in Viet Nam I Industrial Joint Stock Company

2 PURPOSE AND SCOPE OF STUDY

2.1 Study purpose

This topic will study business strategy of construction material sector, which

is the business strategy of construction stone in Viet Nam I Industrial Joint Stock

Company Studying strategy will help enterprise to discover weaknesses to adjust,

promote profit increase, and create prestige of brand name within the market

Based on such spirit, choosing topic “construct business strategy of

construction stone in Viet Nam I Industrial Joint Stock Company” is to reach the

following targets:

 Analyze environmental impact on trading activities of construction stone

in Viet Nam I Industrial Joint Stock Company

environment

 Build up a suitable strategy for business activities of construction stone in

Viet Nam I Industrial Joint Stock Company based on limiting and

adjusting weaknesses and promoting strengths to raise business effect and

maintain development of company

2.2 Study scope

- Survey object: internal and external factors impact on business activities of

Viet Nam I Industrial Joint Stock Company

- Study time: within the period from 14/07/2010 to 25/08/2010

- Study space: Viet Nam I Industrial Joint Stock Company

- Study limit: Viet Nam I Industrial Joint Stock Company operates in trading

construction stones and due to features of construction stones then this assignment

will focus on analyzing business strategy of construction stone of Viet Nam I

Industrial Joint Stock Company within Ha Tinh area

In this topic, we will go ton study and analyze some direct competitive

opponents within Hong Linh town, Ha Tinh province such as Viet Nam – Czech

economic cooperation company; Ha Tinh industrial development Joint stock

company, 999 stone exploiting company

3 STUDY METHODOLOGY

3.1 Methods to collect data

 Collect primary data: via following methods:

- The method of direct observation of daily activities in the company

including mainly working process, communication with partners….in Viet Nam I

Industrial Joint Stock Company

- Interview leaders and employees in the company (business office,

accounting office, administrative office) to understand customers, providers,

partners related to business activities of Viet Nam I Industrial Joint Stock

Company as well as personnel policies that the company is implementing;

Besides, we can interview workers of company to understand their attitude with

Viet Nam I Industrial Joint Stock Company

- Interview competitive opponents: with sample size of 3, sampling is the

most convenient method which is simple to approach object of interview; Out of

which object of interview will be mainly director of divisions and managing cadres

of company; interview is done within 14/07/2010 – 20/07/2010 to collect

information of activities of company (products, distribution system, operational

area…) as well as their definition of influence which impact on construction sector

within Ha Tinh…

- Interview customers: with sample size of 20 (chosen according to

convenient method), quantity of samples will be distributed to customers who buy

company’s products (mainly transportation companies to buy stone to provide

customers, contractors within the area) Interview is done within 14/07/2010 –

05/08/2010 to get opinions of customers of products (quality, price…) as well as

policies to care for customers of Viet Nam I Industrial Joint Stock Company

 Collect secondary data: by recognizing from resources:

- Reports and materials of Viet Nam I Industrial Joint Stock Company and

competitive opponents of company; providing divisions include: planning office,

trading office, accounting and marketing office of the company

- Report of trading results within 2007 – 2009, detailed report of related

factors of financial index such as asset structure, capital structure …(accounting

office)

- Materials of partners of Viet Nam I Industrial Joint Stock Company such

as providers, customers, lending units…(trading office)

Besides, there are also direct instruction and direct information provision of

Mr Tran Quoc Huong – Director of the company

- References from materials, papers, manual book of strategic administration

edited by Griggs University as well as materials on Internet

3.2 Data analysis

 Method of comparison and synthesis: compared to reached norms of

company with norms that competitive opponents have reached in the following

conditions: space, time, economic content, measurement unit, estimation method,

scale, and business condition

 Inductive method: realization from small and detailed problems to

common conclusion of analyzed problems

 Analysis of SWOT: it is the main method in building business strategy

to find out strengths, weaknesses inside enterprises as well as opportunities and

threatens of external environment which can impact on enterprise

Besides, analysis also uses other matrix such as: main strategic

matrix,…such methods will be presented in the part “theory basis of strategic

construction of enterprise

4 SIGNIFICANCES OF STUDY TOPIC

Studying topic can orient to construction of business strategy in term of

construction stone of Viet Nam I Industrial Joint Stock Company, then we hope that

the results that topic can bring will be experiences that enterprises in the sector as

well as other sectors can study and consider to draw experiences in construction of

business strategy of enterprise At the same time, topic study can prove importance

of construction of business strategy in enterprise and then enterprises will clearly

realize importance and role of strategy then build up development strategy strictly

and scientifically

CHAPTER I THEORY BASIS OF BUSINESS STRATEGY

1 Definition of strategic management

1.1 Definition of strategic management

Strategic management is the study process of current as well as future

environment, define organizational targets, suggest, implement and check

implementation of decisions to reach such targets in current as well as future

environment (Garry D Smith, 1991)

1.2 The role of strategic management

- The role of defining:

Business strategy will help enterprise to see clearly its own purpose and

orientation It can indicate administrators to consider and define orientation

for organization and when to reach expected results

- The role of prediction:

In a variable environment, opportunities as well as threatens always appear

In the process of defining strategy, it can help administrators to analyze

environment and make prediction to find out suitable strategies Then

administrators can grasp opportunities, make use of opportunities and reduce

threatens related to environment

- The role of controlling:

Business strategy will help administrator to use and allocate existing

resources in the best way as well as coordinate effectively functions in

organization to reach given targets

1.3 Classification of business strategy

Business strategies are formed within three levels: company level strategy,

functional division strategy and business unit strategy; out of which, business unit

strategy is the main segmentation with sector’s competition

- Company level strategy:

It is to define purposes and targets of the whole company, define business

activities that company can pursue, create policies and plans to reach targets,

allocate resources among business activities

- Functional division strategy:

In the strategy of functional division, we will focus on operational fields,

business sectors with outstanding advantage to the company

- Business unit strategy:

It is defined to define product choice or market form for business activities of

the company; within business unit strategy, we must define the method that each

business unit to implement to contribute to target fulfillment within company level

1.4 Process of business strategy building

1.4.1 Strategic vision

Strategic vision is the instruction diagram to indicate the method that

company must implement to develop and strengthen competitive power in business;

it will draw a picture of destination and reason to go to such destination

Strategic vision development include development of strategic thought on

future development of the company and the change of products – market –

technology to increase current position within the market and future prospect of the

company

Development of strategic vision is via analysis of PEST – factors in macro

environment and SWOT model of enterprise to find out a suitable vision for

enterprise

1.4.2 Macro environment of enterprise

1.4.2.1 PEST analysis

Analysis of PEST is to analyze macro environment to answer the questions:

with what does enterprise cope? There are four factors which belong to macro

environment that enterprise must cope with: legal and political factors; economic

factor; social factor; technical and technological factor Such factors can impact on

organization independently which can combine with other factors

 Factors of legality, government and politics: influence of legal,

governmental and political factors are high on activities of enterprise;

enterprise must follow regulations of leasing, lending, safety, price, advertisement;

competition, tax

 Economic factor: main influences of economy including: inflate rate;

banking interests, periods of economic circle, payment scale, financial and currency

policy

 Cultural and social factors: can impact on enterprise in term of living

viewpoints, moral standards, community and female labors, consumption

habits…social factors often change slowly then it is difficult to realize

 T echnological factors: can impact on enterprise: once many advanced

technology appears then it can create opportunities as well as threatens for all

sectors and enterprises Technological development can make up new market then

change competitive relations in the sector and make existing products outdated

1.4.2.2 Five – force analysis

To analyze industry environment of an enterprise, we can apply the model of

five force of Michael E.Porter (1980) as follows:

Pressure from providers: including objects: materials and equipment sellers;

financial community; labor force; when provider has advantage then they can create

strong competitive pressure and create disadvantage for enterprise

Replaced products or replaced threatens are indicated by: transfer cost in

using products; using trend of replaced products of customers; relation between

price and quality of replaced products

Threats from new opponents indicated by: advantage of absolute cost;

knowledge of market fluctuation; approach of input factors; governmental policies;

economic scale, capital requirements, distinction of product label; change cost of

business sector, approach of distribution channel; retaliation, monopoly products

Pressure from buyers or negotiation capacity of customers is indicated by:

bargain position, quantity of buyers, information of buyers, distinction of product

label; sensitivity of price; product differential, concentrated level of customers in

the sector; available level of replaced products; motivation of customers

Existing opponents or competitive intensity of the sector is indicated by:

concentration of sector; difficult to withdraw out of the sector, fixed cost, added

value, sector’s growth, redundant capacity, product differences, change cost,

distinction of brand name, diversification of competitive opponents

1.4.3 Internal environment analysis within the enterprise

According to Fred R.David, internal background of enterprise including

main factors such as: administration, marketing, financial accounting, production,

study and development, human resource and information system

 Administration:

Definition: including administration activities related to future preparation

such as: prediction, target establishment, strategy suggestion, policy development,

plan formation

Organization: including all administration activities which can create

structure of relation between right and responsibility; concrete tasks are: design

specialization of tasks, task description, tasks concretizing, monitoring

expansion, consistent order, coordination, arrangement, task designing, and task

analysis

Leadership: including efforts to orient to human activities including:

leading, contact, group work, change of operation, mandation, raise working

quality, satisfy tasks, satisfy demand, organizational changes, spirit of employees

and managers

Monitoring: related to all management activities to ensure realistic results

suitable to define results; main activities are: testing quality, financial control, sale

control, inventory, cost, analysis of changes, reward and punishment

 Marketing:

According to Philips Kotler, Marketing including four main tasks: analyze

market capacity; choose target market; draft marketing mix program (including 4

main elements: products, price, allocation and promotion);implement marketing

activities

 Financial accounting:

Financial condition is considered as the best competitive assessment method

of position which is the most attractive condition for investors Main function of

financial accounting includes: investment decision, supporting decision and

decision of stock interest

Analysis of financial index is the most popular method to define strengths

and weaknesses of organizations of financial accounting

 Production and operation:

It includes all activities to turn input materials into products and services;

process of production and operation including 5 types of decision (functions)

including: process, capacity, inventory, labor force and quality:

Strengths and weaknesses in five functions can be together with success and

failure of organization

 Research and development (R & D):

This activity is aimed to develop new products, raise product quality, control

price or improve production process to reduce cost; quality of efforts to study and

develop can help company to keep leading position and make company outdated

compared to opponents in the sector

 Human resource:

Human resource plays important role in company’s success; in spite of right

strategy, it can not bring high effect without effective labors; company must

prepare human resource so that it can reach given targets

 Information system:

Information system is the important strategic resource which approaches

raw data from both of internal and external environment of organization , helps to

monitor changes of environment, realizes threatens in competition and supports

implementation, assessment and controlling strategies

1.4.4 Model of strategy choice

 SWOT:

SWOT will help us to develop four kinds of strategies:

- Strategies of strengths-opportunities (SO): such strategies are aimed to

use internal strengths to make use of external opportunities

- Strategies of weaknesses-opportunities (WO): such strategies are aimed to

improve internal weaknesses to make use of external opportunities

- Strategies of strengths-threatens (ST): such strategies are aimed to use

strengths to avoid or reduce influence of external threatens

- Strategies of weaknesses-threatens (WT): such strategies are aimed to

improve internal weaknesses to avoid or reduce influence of external threatens

According to Fred R.David, to build up SWOT, we must follow 8 steps:

Step 1: list important opportunities out of company

Step 2: list important threatens out of company

step 3: List strengths in company

Step 4: List weaknesses in company

Step 5: combine strengths with opportunities to form SO strategies and write in

suitable square

Step 6: Combine internal weaknesses with external opportunities and down

results of WO strategies and write in suitable square

Step 7: Combine internal strengths with external threatens and write down

results of ST strategies

Step 8: Combine internal weaknesses with external threatens and write

down results of WT strategies

Purposes of SWOT matrix is to find out feasible strategies to choose which

cannot decide the best strategy; therefore, in development strategies in SWOT, only

some best strategies are chosen to implement

Table 1.1: model of SWOT matrix

(Weaknesses ) WO strategies WT strategies

 QSPM matrix:

The followings are six steps QSPM:

Step 1: List external opportunities and threatens and internal strengths and

weaknesses in company

Step 2: classify for each external and internal successful factors

Step 3: define replaceable strategies that company should consider to

implement; gather them into private groups

Step 4: define attraction point of each strategy (AS) attraction point can

indicate attraction of each strategy compared to other strategies; just strategies in

one group can be compared to each other; attraction point is as follows: 1 is

unattractive; 2 is rather attractive, 3 is fairly attractive and 4 is very attractive If

attraction does not impact on choice of strategy then we will not mark for such

groups of strategies

Step 5: estimate total attractive point (TAS), which is the result of

multiplying classification point (step 2) with attractive point (step 4) in each row

Step 6: estimate total attractive point for each enterprise in strategic column;

If the point is high then strategy will be more attractive

Due to limited resources of company then we cannot implement all feasible

strategies but choose some best strategies that QSPM has indicated to implement

1.5 Basic competitive strategies

in two factors: cost advantage and product difference; by applying such advantages

company will pursue three common strategies:

- Leading cost

- Product differential

- Concentration

Table 1.2: Common strategies in five-competitive force model 5 of

Micheal Porter

Competitive advantage Low cost

Concentrated strategy (Differential products)

- Strategy of leading cost:

This strategy will orient to the target to become producer with low cost in the

sector with a defined quality standard; then company will sell product with mean

price of the whole sector to get higher profit than competitive opponents or with

lower price to occupy market share; leading cost strategy will be applied in large

market

Successful enterprises in applying leading cost strategy always have the

following features:

 Good capital for capital approach to invest in production equipment; this is

also the barrier that many other companies cannot overcome

 Capacity of production designing to increase production effect such as create

a small detail to shorten assembly

 High production qualification

 effective distribution channels

Any common strategy has hidden risks and low cost strategy is not an

exception; with the help of modern technology, competitive opponents can have

surprised breakthrough in production, delete competitive advantages of enterprise;

besides, some companies follow concentrated strategy into narrow market where it

is not difficult to reach lower cost in a traditional market then create a much bigger

monitoring group of market share

- Differential product

This is to develop products or services of enterprise so that products and

services have distinctive features which are highly appreciated by customers rather

than other products of opponents Added value due to distinctive products can allow

enterprise to set higher price which can be accepted by customers They hope that

such higher price will not only compensate added cost in providing products but

also more than that; thanks to product differences, if providers increase price then

enterprise can transfer the differential part to customers because customers cannot

easily find out similar products to replace

Successful enterprises in such strategy can have the following advantages:

 Capacity to study and approach scientific achievements

 Group of R&D with high skills and creation

 Positive sale group with successful communication capacity of product’s

power to customers

 Fame of quality and innovation capacity of enterprise

Risks together with differential product strategy is the capacity in which

competitive opponents imitate or consumers change consumption tastes; besides,

many companies also follow concentration to reach higher differential products

within the market

Conclusion: the process of strategic administration is always active

and constant; a change in some main elements in the model can change one or all

of other elements; therefore, activities of formation, implementation and

assessment of strategies should be done constantly; process of strategic

administration really never ends

CHAPTER II REALITY OF CONSTRUCTION STONE TRADING IN VIET NAM I

INDUSTRIAL JOINT STOCK COMPANY

2.1 General Introduction

Viet Nam I industrial JSC is established according to business registration

certificate No 2803000282 on 25/10/ 2004

Total charter capital: 11 billion dong

Chairman of administration board – general director: Trần Quốc Hương

Vietnamese name: CÔNG TY CỔ PHẦN CÔNG NGHIỆP VIỆT NAM I

Address : 70 Nguyễn Đổng Chi street –Hồng Lĩnh town, Hà Tĩnh province

Tel: 0393.570570 – Fax: 0393.836129

Company has many trading sectors, as follows:

- Produce and trading construction materials; exploit and process

construction stone for serving civil and industrial projects

The new line of stone grinding of Hoa Phat corporation

- Main function of the company is to exploit stone, sand on mines which are

issued certificate by Provincial People’s Committee to provide for provincial

agencies or for construction projects

- Main duty of the company is to be in charge of financial activities such as

management of capital, asset, funds, accounting…publicize financial reports

- Pay tax and budget item as defined by the State

- Actively construct and implement business plan

OPERATIONAL RESULTS IN RECENT TIME

Table 2.1 Revenue and profit of VN I industrial company

(Source: Accounting department of VN I industrial company)

Diagram 2.1: Revenue and profit of VN I enterprise via recent years

In general, since establishment, Viet nam I industrial JSC has stable

development and on growth rate; current growth rate of company is not high and

annual profit is low but company has gradually defined firm basis to have high

development potential in the future This is the premise for company to build up a

right strategy The revenue was increase gradually year after year but the profit was

declining because the company has been investing intensively on new equipment

and production technology

2.2 Analysis of external environment

2.2.1 Analysis of PEST model

* Legal, governmental and political influence

Currently the world has considered Viet Nam as one of nations with stable

politics which can create good condition for national economic development

The Party and Government always care for economic development which

creates good condition for enterprises to develop and raise living standards of

In the process of modernization – industrialization of the nation, Viet Nam

government really cares for technological transfer to modernize industry out of

which construction material sector is paid much attention Within recent time,

Government has implemented many projects of construction such as:

consolidate power, road, school, station; construct projects of traffic,

irrigation…

Currently, the State has encouraged foreign invested projects into Viet Nam

related to infrastructure construction

Together with national political stability, Ha Tinh also has many supporting

policies, create legal corridor, and solve related problems of administrative

procedures for enterprises investing in Ha Tinh

Then, legal and political environment is very favorable for Viet Nam I

industrial Joint Stock company as well as all enterprises operating within the

area

* Economic influence

The year 2010 is the final year to implement five-year socio-economic development

plan within 2006-2010 and ten-year socio-economic development strategy within

2001-2010 Then business activities of the sectors within 6 beginning months have

reached positive results for fulfilling socio-economic development targets in 2010

as follows: total domestic products in quarter I/2010 increases 5,83% compared to

the same term of 2009, quarter II/2010 increases 6,4%, equal 109,8% growth rate of

quarter I/2010 Within six beginning months, total domestic products increase

6,16% compared to the same term of previous year, including area of agriculture,

forestry and seafood increase of 3,31%, contribute 0,59 % in total increase; industry

and construction increase 6,50% Growth rate of total domestic products within 6

beginning months is not equal to target of 6,5% but 1,6 times higher than Growth

rate of 6 beginning months in 2009 and increase in three sectors This can show that

our economy is on quick recovery

Together with economic development, situation of infrastructure investment

of the whole nation has been cared; within hundreds of sector then rate of

construction investment is rather high and stable

FDI by 20/6/2010 reaches 8,4 billion USD, equal to 80,9% compared to the

same term of 2009, including: registered capital of 438 projects reaching 7,9 billion

USD, reducing 19,9% in term of quantity of project but increase 43% in term of

capital; registered capital of 121 projects previously issued certificate is 525 million

USD FDI within six beginning months of the year reaches 5,4 billion USD,

increase 5,9% compared to the same sector in 2009

Within six beginning months of the year, the whole nation has 35 provinces

and cities directly under the Central with FDI projects out of which Ba Ria Vung

Tau province has the biggest registered capital of about 2,2 billion USD, occupying

27,3% total new registered capital; the next is Quang Ninh of 2,1 billion USD,

occupying 27,2%; Ho Chi Minh city of 1,1 billion USD, occupying 13,6%; Nghệ

An 1 billion USD, occupying 12,7%; Quảng Ngãi 340 million USD, occupying

4,3%; Hà Tĩnh 206,1 million USD, occupying 2,6%

( Source: website of foreign affairs of viet nam)

Above situation has shown that VN I enterprise as well as other companies within

the sector has got opportunity for its own investment sector because construction if

one of main investment sector within short term period of 2010 – 2015; the

opportunity for enterprise especially stone exploiting enterprises is the preferential

treatment from the State, especially loans from the bank which can borrow more

with lower interest via demand stimulus packages in recent time; Moreover the high

rate of construction leads to the increased demand of construction stone which can

create good condition for enterprise to promote sale revenue

Condition for business development is more favorable when economic norms of Ha

Tinh have reached plan especially industrial development

Economy of Ha Tinh has rather high growth rate reaching mean of 9,6%

year; economic structure transfer according to increase density of industry, service

and reduce density of agriculture-forestry- aquaculture; mean income per capita in

2010 increase more than 2 times compared to 2005 Mean increase of foodstuff

quantity increases 5,6%/year Domestic budget reaches from 435 billion dong in

2005 to 1.400 billion dong in 2010

* Social and cultural influence

Currently, Vietnamese living standard in general and Ha Tinh people in

particular is higher and higher; demand of self-satisfaction is paid much attention

Apart from eating delicious foods, beautiful dressing then there is also desire to

live in beautiful houses with distinctive designing Modern and clean streets have

become essential demand of people currently, especially modern technological

period

Then construction materials and stone are more and more developed

according to the changes of consumers’ demand

* Influence of geographical and natural conditions

Ha Tinh is the Northern Central Coastal province with geographical co-ordinate

from 17053'50'' to 18045'40'' Northern latitude 105005'50'' to 106o30'20'' Eastern

Longitude

It is bordered with Nghe An province in the North; bordered with Quang Binh

province in the South, bordered with eastern sea in the East and bordered with Laos

in the West

Feature of climate: Ha Tinh is in the area of tropical monsoon climate with

Northern climate in which it is cold in winter

However, due to influence of Northeastern monsoon from China is weakened

then it is less cold in winter and winter is shorter than northern provinces with two

main seasons of hot and cold seasons

Mean temperature in Ha Tinh is high Land temperature is from 18-22oC on

average, Land temperature is from 25,5 – 33oC on average in summer However, it

can be changed according to type of land, color of land, coverage and moisture of

land

With climate condition of two clear seasons then construction material sector

including construction stone will mainly operate in hot season because in rainy

season it cannot be exploited; this is an unfavorable factor for constant production

then enterprise should arrange suitable production to avoid wastes

* Technological influence

Fast development of science and technique has provided sector of

production and processing with better equipments and machines; this is also the

opportunity for enterprises to care for innovation of technological line and

machines to avoid being outdated; currently, production line of construction stone

has been designed and produced by modern machine with suitable price

2.2.2 ANALYSIS INFLUENCE OF OPERATIONAL ENVIRONMENT

2.2.2 1 Customers

The mentioned survey has shown the features of factors to impact on

decision to buy construction stone that customers of VN I enterprise care for:

Diagram 2.2: Factors to impact on decision to buy construction stone

Comment: there are 50% total customers to answer that important and

necessary factor impacting on buying decision is price; price of products must be

suitable to economic capacity of customers which can help customers to save cost to

use in other purposes; Such number is a good sign for price policy that company has

been implementing In term of quality (style and durability) there are 20%

customers to assess it as very important This means consumers always expect to

own products with high quality but suitable price; besides, 20% in total customers

suppose that brand name is the most important factor which impact on buying

decision; although company has not constructed brand name but the name Viet Nam

I industrial JSC has been known as a provider of construction stone

2.2.2.2 Current competitive opponents

Times of appeara nce

Rate %

Bran name 4 20

Style sample 0 0 Durability

With above analysis of customers, target customers of Viet Nam I industrial

JSC are transportation companies and construction companies, and a small part of

people via agencies…This will be the basis for defining competitive opponents of

Viet Nam I industrial JSC currently:

Analysis of main competitive opponents

Current competitive opponents of VNI

Table 2.2: Charter capital of competitive companies at the time of

business registration

cooperative company

stone 999

(Source: VNI, Viet Nam – Czech cooperative company and stone company 999)

Table 2.3: advertisement form of VNI and two typical opponents

(Source: VNI, Viet Nam – Czech cooperative company and stone company 999)

Comment: advertisement task of Viet Nam – Czech cooperative company really

focuses on advertisement cost in recent time

Currently, Viet Nam – Czech cooperative company and other joint venture

companies have advantages when exploiting stone with strong financial power,

modern equipments and big scale Annual stone exploiting quantity has been

increased Implementing many promotion and advertisement programs; However,

all of beginning cost and time for capital withdrawal is long On the other hand,

invested projects of stone exploiting have been implemented for 1 – 2 years then

places for exploiting are further than companies with investment of more than 5

years and traveling of big companies are not convenient like other companies

With regard to company 999 and similar companies of small invested capital

and tidy machine: many enterprises use labors in the form of family; such

companies sell products depending on regular customers; low quantity is due to low

capacity and less participation in advertisement and marketing programs

After analyzing two competitive opponents and representatives of other

enterprises within Ha Tinh market, we can see that each company has its own

strengths Then, in the process of business construction, Viet Nam I industrial

Joint Stock Company enterprise must realize and exploit main strengths –

management, relations Besides, VN I must adjust limitations of input

management system, better adjust financial capacity by making use of capacity to

mobilize and borrow capital and increase marketing system of company

Potential competitive opponents:

To analyze competitiveness as well as appearance capacity of potential

opponents of company in the coming time, we must realize the relation between

barriers of penetration and barriers of withdrawal to help enterprises to have

prevention such capacity because pressure from opponents can impact and threaten

the existence and development of enterprise; as follows:

Diagram 2.3: Barriers and profit

Lợi nhuận thấp,

ổn định

Lợi nhuận thấp, mạo hiểm

Currently, stone exploiting companies within the province can raise capacity

as well as potential opponents can invest in modern technology although stone

exploiting is a distinctive sector within condition Then with opportunities from

supporting policy of local authority and fast growth rate of the sector then stone

exploiting can have some new competitive opponents; VNI enterprise must be

put in ready status fighting in case of any opponents’ a ppearance

2.2.2.3 Replaced products:

Construction stone rarely has replaced products; currently there are some

gravels in streem and river to be replaced stone of 1x2 but quantity is low to provide

to a small locality then for a long term, demand of stone is high for construction

sector

2.2.2.4 Providers:

material zone:

Stone material zones are mines; most of companies exploit and process at the

place to save loading cost and waste of time impacting on exploiting

Providers of technology and equipments

High profit with advantures

low and stable profit

low profit with advantures

high and table profit

high

Profit

Equipments and machines for exploiting stone have appeared for tens of

years; currently some Vietnamese companies actively import comprehensive

Equipments and machines such as Hoa Phat corporation, Thien Hoa An…

Many equipments and machines are imported from Germany, the US,

Russia, Japan; and some other equipments are imported from China

Capital providers

Main capital source of Viet Nam I industrial Joint Stock Company is

mobilized from shareholders and bank’s loans In the future, to expand activities, it

must mobilize capital by issuing more stocks within the market

Labor force

Currently, labor force in company has met position and qualification of each

cadres; However company must also increase to raise professional skills and have

standby labor information to supplement if necessary

Then currently, providers are rather stable which has good condition for

company to implement production

2.3 Analysis of internal environment

2.3.1 Administration

2.3.1.1 Definition

Prediction task of Viet nam I industrial JSC is mainly based on intuition of

leading board, without using demonstrative data as well as scientific prediction;

Leading board of company mainly based on policy, development strategies of the

provinces on construction sector to predict norms of company; then prediction based

on intuition cannot reach 100% as planned but implemented results are

approximately equal to given plan

Table 2.4: Comparision of implemented results with plan in 2009

(Source: Annual report of 2008, 2009 of VN I)

The above table has shown that predicted norms have difference between

reality and given plan, in 2009 such differences are not considerable; then it can

claim experiences of leading board of company and prediction quality that leading

board has made according to experiences and intuition is rather accurate but not

trusted to be the basis for planning

In brief, although supporting information for definition is not

comprehensive, it is just based on intuition, due to many experiences in

activities as well as right appliance of strategic construction of leading

board then we can say that strategy definition of company is rather well

done

2.3.1.2 Organization

Organizational designing: organizational structure of company is

maintained according to structure applied since 2008 This is a management

structure which is organized closely downwards; functional divisions will help

leader to find out the best solutions in all activities of company; out of which

decision right belongs to director which is implemented downwards

(organizational structure of company is presented in diagram 2.2)

As in the diagram, structure has been changed based on old structure via

many years and such organizational structure is very close; in which director board

of company will manage generally all enterprises as well as divisions of company

Diagram 2.4: organizational structure of VNI

Chairman of administration council – general director: Trần Quốc Hương is

the one who will bear responsibility and highest right in leading and managing all

activities of company Director can delegate employees and bear responsibility

within such delegation

Deputy Director 1: Nguyễn Đình Thắng: support director to be in charge of

exploiting stone to ensure technical safety, quality, quantity to meet demand of

customers

material supply division

Deputy director

1

trading division

accounti

ng division

administrative division

stone grinding division

assistance division

Chairman of administration council – general director

Deputy director

2

Deputy director 2: Bùi Tiến Thành: support director to be in charge of

trading activities of company; sale task for agencies and final consumers or be in

charge of contracts to provide stone for construction companies

Administrative division: be in charge of implementing orientation and

policy given by director and bear responsibility in front of director of all related

problems; consult director to manage personnel, assets, give plan for activities of

company; make recommendation of related problemd of labors: salary, bonus to

encourage employees and social policy

Accounting division: bear responsibility in front of director in term of

financial accounting of company as defined by accounting law

Material supply division: be in charge of searching (materials, providers)

and buying materials for company to ensure materials for production division

Transportation division: be in charge of transporting materials from

providers to store and to mixed area; at the same time transport finished products to

store and to agencies or construction projects ( according to order )

Production division: be in charge of techniques of production process,

manage production shifts to ensure right progress of company

Coordinate and arrange task: task coordination and arrangement between

leading board and employees as well as among employees in company are well done

with high effect

2.3.1.3 Leadership

Leadership: function of leadership is well implemented in which the whole

company from director board to head of divisions always have smooth coordination

in management of divisions and units

Capacity of leader: Viet Nam I industrial Joint Stock Company has 1

director with many experiences of more than 15 years of management and

administration and good qualification Besides, other members of leading board also

have many experiences, capacity and enthusiasm which contributes to the results

that company has reached in present and in the future

Organizational and operational change: leading board of company is very

satisfied with organizational structure and operational method as currently; then in

the near future leading board of company has no intention to change such factors

Employees spirit: i n g e n e r a l , most of employees are satisfied with

personnel policies that company is implementing (salary, bonus, welfares….), then

it can promote working spirit as well as enthusiasm and fidelity of employees with

company; however some employees cannot fulfill all given tasks with collective

spirit

Management spirit: with capacity and working enthusiasm, most of

managing cadres care for common business of company for the common

development of company

2.3.1.4 Corporate governance

The function of corporate governance is done rather well by leading board of

company; as usual, leading board of company will check production shits suddenly

to consider progress as well as working attitude of workers Besides, this function is

rather well done in term of cost and quality; financial situation of company is

closely monitored

In brief, with administrative function, strengths of Viet Nam I industrial

Joint Stock Company is that leading board has much experiences and good

qualification as well as suitable personnel policy to encourage spirit of employees

in company

2.3.2 Personnel

With more than 6 years of operation, it can be said that Viet Nam I industrial

Joint Stock Company has got professional labor force with quantity of 80 people in

2 0 0 9 a nd i n cr e as e t o 1 0 1 in 2 0 1 0 (excluding seasonal labors) professional

capacity and labor quality of such labor force are as follows:

Table 2.5: labor structure of Việt Nam I industrial JSC

(source: administrative office of VN I)

With such personnel structure, it can show that Viet Nam I industrial Joint

Stock Company has employees with suitable capacity with necessary qualification

including post-graduate, university, intermediate school; a no so new staff together

with experienced leaders then it can help the company to have effective trading

and bring stable income which can create premise for future development

2.3.3 Marketing

In previous time, marketing task of company is not focused to implement;

marketing office is not established; marketing tasks has been implemented via

trading office of company; since implementation, situation is as follows:

2.3.3.1 Products

Product development: due to distinction of construction materials

of stone exploiting then some kinds of stone such as stone 1x2; 2x4;

4x6; Base Company is studying to apply some products such as stone powder in

producing block brick…

2.3.3.2 Price

Based on price situation of construction stone, based on product price of

company, leading board of company has given some following price policies:

- Product of type A: price will fluctuate from 120.000đ/m2 to 260.000đ/m2

(products of type A including green stone of 1x2; 2x4; 4x6; 0.5)

- Product of type B: price will fluctuate from 90.000đ/m2 to 190.000đ/m2 Via

survey that author did in recent July (within Ha tinh area with interview objects

which are customers using products of Viet Nam I industrial Joint Stock Company)

Price that companies apply for construction stone has survey results as follows:

Diagram 2.5: customers’ opinion on price of VN I compared to

opponents

Survey information has shown that 60% total customers of Viet Nam I

industrial Joint Stock Company suppose that stone price of the company is cheaper

than opponents, 30 % suppose that stone price of VN I is equal to that of Viet Nam

– Czech Cooperative company and company 999 Then price of company can

impact on buying behaviors of customers; customers always want to buy high

quality products with competitive price Then in coming time, company must care

for price policy especially the period of market penetration as currently

more expensive equal cheaper

much more expensive

cheaper 8 40 Much

cheaper

20 100

Company has been developed, apart from two main channels to provide

transportation companies and construction companies within Ha Tinh province

F i g u r e 2 1 : c u r r e n t d i s t r i b u t i o n c h a n n e l o f V N I

2.3.3.4 Advertisement

Advertisement: currently, advertisement of Viet Nam I industrial Joint

Stock Company is low; due to distinction of products which are construction

stones and serving two sale channels which are transportation and construction

companies then customers will know company via introduction for each other;

annually products of company will appear twice or three times on local paper;

besides company also has posters on transportation vehicles then advertisement

effect is very good

Via investigation of customers’ opinion in term of effect of advertisement

that company has applied, we have the following feedbacks:

transportati

on companies