Kien Vuong is a new brand in the chemical industry in Vietnam, therefore to participate in the business environment with many opportunities but also challenges, company needs to take str
Trang 1ESTABLISHING BUSINESS STRATEGY
IN THE PERIOD OF 2011-2015
AT KIEN VUONG CO.,LTD
CAPSTONE PROJECT REPORT
Ho Chi Minh City
Group No.: 4
1 Phan Thi My Anh (Ms.)
2 Le Minh Trung (Mr.)
3 Vu Van Trang (Mr.)
4 Nguyen Minh Trung (Mr.)
5 Nguyen Ngoc Son (Mr.)
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TABLE OF CONTENT
LIST OF CHARTS, DIAGRAMS AND REPORTS 6
INTRODUCTION 7
CHAPTER I – THEORETICAL BACKGROUND 9
1 Strategy and strategy management definition 9
1.1 Strategy definitions 9
1.2 Strategic management definitions 10
1.3 The role of strategic management 11
2 Strategy classification 11
2.1 Classified according to the management 11
2.1.1 Corporate level strategy 11
2.1.2 Business level strategy 12
2.1.3 Functional level strategy 12
2.2 Business strategy types 12
2.2.1 General strategy 12
2.2.2 Unit strategy 12
3 Strategic management process 13
3.1 Define the vision-mission and business goals 13
3.2.1 Research on environment 15
3.2.2 Collecting information 18
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3.2.3 Processing information and formulating strategy 21
3.3 Strategy formation 21
3.3.1 Integration 21
3.3.2 Matching phase – SWOT matrix analysis 24
3.3.3 Strategy selection phase 26
4 The operation of chemical manufacturing business in Vietnam 28
4.1 Overview of the chemical industry 28
4.2 The development of chemical technologies in Vietnam 28
4.3 The need for the import of chemicals in Vietnam 29
CHAPTER I SUMMARY 31
CHAPTER II – CURRENT BUSINESS ACTIVITIES OF KIEN VUONG LIMITED COMPANY 32
1 Development history and business activity of Kien Vuong limited company 32
1.1 Development history 32
1.2 The company’s main activities 33
1.3 The organization’s structure and function 34
1.3.1 Organization Structure 34
1.3.2 Function of each division 35
1.3.3 Infrastructure and technical facilities 36
1.3.4 Operation status in previous stage 37
2 Some issues should be noted in the historical development of the Kien Vuong Company 40
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3 Analysis of factors affecting business activities of the Kien Vuong Company
42
3.1 External environment factors 42
3.1.1 Macro-economic 42
3.1.2 Business activities of chemical industry 45
3.1.3 Politics and legal system 49
3.1.4 Culture and society 50
3.1.5 Technology 51
3.1.6 Human resources 51
3.1.7 Competitors 52
3.1.8 Suppliers 53
3.1.9 Customers 53
3.1.10 Alternative products 53
3.1.12 Competition Matrix 55
3.2 Internal factors 56
3.2.1 Management 56
3.2.2 Human resources 56
3.2.3 Technology infrastructure: 56
3.2.5 Kien Vuong’s products: 57
3.2.6 Internal factor matrix 58
CHAPTER II SUMMARY 59
CHAPTER III: BUSINESS STRATEGY FOR THE PERIOD 2011 - 2015 IN THE KIEN VUONG COMPANY LTD 60
1 Define vision and mission 60
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3 Objectives and key indicators 61
a Objectives 61
b Specific targets 61
4.1 SWOT analysis matrix 62
4.1.1 The Opportunities for the company 62
4.1.2 The Threats for the company 63
4.1.3 The Strengths for the company 64
4.1.4 Weaknesses of the company (Weaknesses) 66
4.1.5 SWOT Matrix 67
4.2.1 Group strategy S – O 69
4.2.2 Group strategy S – T 69
4.2.3 Group strategy W – O 69
4.2.4 Group strategy W – T 70
5 Propose measures to implement strategy 70
5.1 Solutions relating to human resources 70
5.2 Marketing-related solutions 72
5.2.1 Chosen market segment 72
5.2.2 Product solutions – services 72
5.2.3 Solution price 73
5.2.4 Distribution solution 73
5.2.5 Solution of promotion 74
5.2.6 Building and brand positioning 75
5.3 Solutions related to the operating organization 75
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5.4 Solutions related to the work of R & D 76
6 Recommendation 77
6.1 Recommendations for State 77
6.2 Recommendations for industry 78
6.3 Recommendations for company 78
CHAPTER III SUMMARY 80
IN CONCLUSION 81
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LIST OF CHARTS, DIAGRAMS AND REPORTS
1 Models of the comprehensive strategic management
12 The statistics of Vietnam's import turn-over of chemical products in
October and first 10 months of 2010 Page 48
13 Demand for human resource for industries
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INTRODUCTION
Nowadays, chemical technology has grown strongly, the needs of chemicals for
production is increasing, according to a recent report by the Department of Chemicals
under the Ministry of Commerce and Industry, the growth rate the chemical industry
will reach an average of 6-7% in 5 years The forecast growth for the chemical
industry is a good and optimistic signal while the country's GDP growth is also
forecast over 7% from the year 2011-2020; the direct contribution of industry to GDP
in 2011 is expected to reach 2-3%
However, besides the advantages mentioned above are the threats related to the
low competitiveness of the chemical industry of Vietnam, the competition is
increasing among companies in the industry as the number of active companies in this
field is constantly increasing Kien Vuong is a new brand in the chemical industry in
Vietnam, therefore to participate in the business environment with many opportunities
but also challenges, company needs to take strategic steps to survive and further
develop in the future To address that, the business analysts, market research and
evaluation in order to predict the development of the industry to build strategic
business development of Kien Vuong from now to 2015 are essential That is the
reason that all members in our group agreed to select the topic "Building a business
strategy in the period 2011-2015 at Kien Vuong Co., Ltd" as the subject for our
graduation thesis
Therefore, the content of the thesis was studied through analysis of business,
understand the need to use chemical products of businesses, the business sector in
Vietnam economy; research on activities of some companies and industries and
competitors to develop business strategies for Kien Vuong Company
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Subjects of the study include: (1) The economic sectors Vietnam have the
demand for chemicals, (2) The competitors in the industry, (3) Other information
sources: the handout materials, reports of the company, reports the study of relevant
agencies; articles and forecasts on the media, the electronic news
The research methodologies using in this thesis include synthetic methods,
statistics of secondary data, and quantitative analysis method
The thesis includes an introduction and three chapter organized as following:
- Introduction
- Chapter 1: Theoretical background
- Chapter 2: Current business activities of Kien Vuong limited company
- Chapter 3: Business strategy in the period of 2011-2015 at Kien Vuong
company limited
With limited capability, mistakes cannot be avoided in this thesis We are
looking forward to your input from teachers, lecturers, colleagues and friends in order
for the completeness of the thesis
Sincere thanks to the dedicated guidance of Dr Le Van Bay, the involvement
of student groups of classes C03, Kien Vuong Company Limited director board, so
that we are able to complete the thesis in timely manner
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CHAPTER I – THEORETICAL BACKGROUND
1 Strategy and strategy management definition
The definition of strategy and strategy management varies from one researcher
to the other; therefore in the scope of this thesis we want to present some of the
common definitions about strategy and strategy management as following:
1.1 Strategy definitions
According to Johnson and Scholes: Strategy is the direction and scope of an
organization over the long-term: which achieves advantage for the organization
through its configuration of resources within a challenging environment, to meet the
needs of markets and to fulfill stakeholder expectations
In other words, strategy of an organization is defined to answer the following
questions:
- Where is the business trying to get to in the long-term? (direction)
- Which markets should a business compete in and what kinds of activities are
involved in such markets? (markets; scope)
- How can the business perform better than the competition in those markets?
(Advantage)?
- What resources (skills, assets, finance, relationships, technical competence, and
facilities) are required in order to be able to compete? (Resources)?
- What external, environmental factors affect the businesses' ability to compete?
(Environment)?
According to Michael Porter (1996): Strategy is the process of harmonizing an
organization’s activities The success of a strategy depends on the synchronizing many
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activities and matching them with each other, the essence of the strategy is the choice
of what haven’t been done With this approach, strategy is the creation of competitive
advantages through what haven’t done The strategy just exists in unique activities
The objective of an overall corporate strategy is to put the organization in a unique
position with unique activities
According to Fred David: Strategy is the tool to achieve the long-term goal
Business strategy can include the following: expanding the territory, diversifying the
products, ownership of product, develop product, penetrating market, reduce cost,
partnership
1.2 Strategic management definitions
According to Fred David: Strategic management can be defined as an art and
science of formulating, implementing, and evaluating of cross-functional decisions
that enable an organization to achieve its objectives According to the definition, the
strategic management includes three steps: Strategy formulation, strategy
implementation and strategy evaluation Strategic management focuses on the
administration, marketing, finance, production, research and development,
information system in the business to achieve the objectives of the organization
According to Alfred Chandler: Strategic management is the process of defining
the basic long-term goals of the organization, choosing the course of action and
allocating the essential resources to achieve the organization’s goals
According to John Pearce and Richard B Robinson: Strategic management is
the system of decision and action to formulate and implement the plan in order to
achieve the organization’s goals
According to the above definitions, the strategic management has a strong
relationship with the following three important questions:
- What are the objectives of the organization?
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- What are the most effective processes to achieve the objectives?
- What kind of resources needed and how to allocate resources during the
implementation of the plan?
1.3 The role of strategic management
The strategic management enables organizations to formulate its objectives and
direction;
Strategic management enables the administrator to capture and utilize the
opportunity while minimize the risk involved in the ever-changing business
environment;
By using strategic management, organization will always base the decision
with the relevant environment conditions
2 Strategy classification
2.1 Classified according to the management
Strategic management can present in many level of an organization, in general
there are 3 strategic levels as following:
2.1.1 Corporate level strategy
Corporate level strategy is the guideline for the decision for the whole
institution, and fundamentally concerned with the selection of objectives and the
businesses in which the company should compete to create the basic policy and plan
to achieve the corporate goals
Corporate level strategy is to select the businesses in which the company
should compete and manage the coordination of businesses portfolio
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2.1.2 Business level strategy
At this business level strategy, the strategy involves with the sustaining the
competitiveness in a specific market, and the adjusting the strategic decision with the
selection of products, meeting the customers satisfaction, positioning the business
against rivals and creating new opportunities
The strategy at the unit level is the process at which each business unit
manages to achieve its objectives and contribute to the achievement at the corporate
level
2.1.3 Functional level strategy
The functional level strategy focus on the implementation of business processes
at functional level like marketing, finance, operations, human resources, and R&D and
the development and coordination of resources
2.2 Business strategy types
Based on the scope of the strategy, we can classify business strategy into 2
types:
2.2.1 General strategy
The general strategy or overall strategy usually refers to the important,
long-term, visional issues The general strategy decides the critical issues of the corporate
2.2.2 Unit strategy
Unit strategy is the secondary strategy, it usually contains: product strategy,
price strategy, distribution strategy, communication strategy …
The general strategy and unit strategy incorporate with each other to become
the complete business strategy The business strategy cannot be complete without the
unit strategy which expresses by an objective and each objective is expressed by a
specific criteria
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3 Strategic management process
3.1 Define the vision-mission and business goals
Every organization has a purpose and a reason to exist The existence of an
organization is well represented by its vision and mission A recent research by
Fortune magazine about 500 most profitable companies shows that those with a better
overall mission are the ones gain more profit 1
The vision of an organization should have the following content:
- “The corporate vision is a concise, encouraging statement looking forwards to a
successful future The statement often reflects high competitiveness of the
company The vision statement mentions about the overall vision and the
positioning of the corporate towards the future The vision statement is the image
of the corporate that has specific goal before deciding the processes and actions to
achieve that goal The vision statement describes the desire for the future but not
necessary needs to show the tools to achieve the final objective 2
- “Mission statement represents the corporate vision in the written form It presents
the direction and objective of the corporate And the business mission is the setting
of priorities, strategies and distribution of work” 3
- Defining the objectives is to identify each individual object or business results that
the corporate wants to achieve Objectives derived from the mission must be
separated and more specific 4
1 Fred R David – Introduction to strategic management –Thong Ke publishing house–2006”
2 Trần Trí Dũng - http://saga.vn/dictview.aspx?id=5030
3 Trần Trí Dũng - http://saga.vn/dictview.aspx?id=5034
4 Nguyễn Thị Liên Diệp, Phạm Văn Nam; “Chiến Lược và Chính Sách Kinh Doanh”; Thong Ke
publishing house, 2003
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Source: Fred R David-Strategic Management Book-Francis Marion University
Florence, South Carolina
Implement external
control to identify opportunities
Set up long-term goals
Set up annual goals
Distributi
on of resources
Measure and evaluate the implemen tation of strategies
Implement internal controls
to identify the strengths and weaknesses
Choice the strategy
to follow
Give the policies
Feedback
Formation of
strategy
Implement the strategy
Assess the strategy Chart: Models of the comprehensive strategic management
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3.2 Study on environment – Collect and process information
3.2.1 Research on environment
The study on the environment to gather and process information is considered
the most important factor at the beginning of the process to build a strategic
management The elements of a business environment include the following
3.2.1.1 Macro-environment of the corporate:
- Economic factor: Factors affect the business are interest rates, economic cycle
period, the balance of payments, fiscal policy and monetary policy
- Government and law factors: These factors have growing impacts on business
activities Businesses must comply with the regulations on hiring, lending, security,
pricing, advertising, plants location and environmental protection…
- Natural factors: The factors that affect business are pollution, lack of energy,
wasteful use of natural resources and increasing demands on resources from nature
These factors make the strategic manager need to change the decision and
implementation of measures
- Science and technology factors: more advanced technology is developed will
directly affect the business environment of corporate, creating opportunities and risks
for all industries and businesses The advent of new technologies will create pressure
for traditional production process; make its products become obsolete Thus, it
requires corporate to change its technology to improve competitiveness in the market
3.2.1.2 Corporate micro-environment:
Corporate micro-environment is the external forces that determine the nature of
the competition in the business environment Applying the Porter's Five Forces
framework to analyze the business strategy enable the business administrator
recognizes the competitive factor that directly affects the corporate
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Diagram 1-1: Porter's Five Forces framework
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Diagram 1-2: Elements of competitive analysis
- Buyer: The patronizing of the customers is the advantage of the company
However, the bargaining power of customers, the ability of customers to put the
company under pressure which can reduce the company’s profit as well as requires
the company to offer more service
- Suppliers: The bargaining power of suppliers also put the company under
pressure Suppliers are supplying raw materials, components, labor, and finance
- What is the weakness of the competitor?
- Which factor could help the competitor to retaliate?
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- Potential entrants: The entrance of new rivalry will be a factor to decrease the
company’s profit, because they introduce new production method with the hope to
gain more market share and necessary resources
- Alternatives: The pressure of the existence of alternative products will reduce the
potential profit of the company due to the limitation in the product pricing
3.2.2 Collecting information
The collecting and processing information is the most important requirements
in the in the process of strategy formulation The process of gathering information is a
prerequisite to formulating strategies and decisive to the success or failure of the
strategy If the collection of information is biased it will lead to incorrect decisions
ineffective strategies
In order to effectively collect information and ensure the accuracy, the
collecting process need to limit the scope of information for formulating strategies and
identify ways to collect information efficiently and accurately The information
needed for the strategy formulation include:
3.2.2.1 Collecting external environment information:
The external environment information needed to collect includes:
- Political environment in which the companies are or will be working to understand
the political institutions, political parties, legal system, political risks
- Economic environment in which the companies are or will be working to understand
the economic situation in the market such as GDP, GDP per capita, wage policies,
unemployment situation, inflation, insurance
- The regulatory environment in which the companies are operating in: to understand
the legal system and consider the possibility of collaboration that the company can
accept and operate business
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- Services environment and infrastructure in which the companies are working to
understand the situation of infrastructure, technology, financial services in places of
business
- The cultural environment in which the companies are working to understand the
cultural characteristics of consumers in the market for the products and services that
the company is providing
- Thorough understanding about the population environment in which the company is
working; about population, age, marital status, ethnicity, thereby determines the size
of the market
- Understanding of the technology environment in which the company is operating, to
explore the possibility of technology in the place where the business is taking place
- Understanding the business sector environment in which the company is operating,
how is the sector doing? Is there any support for the industry or not?
- Understanding the vendor environment in which the company is operating, to have
the knowledge about the supplier as the capability, reputation and potential
- Customer consumption trends
- Understanding about the competitors, strategy and SWOT of key competitors to gain
the knowledge about the main competitors, potential competitors, and their ability to
finance, human resources, organizational structure, strengths, weaknesses,
opportunities and challenges of competition, the strategies that competitors are and
will be applied
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3.2.2.2 Collecting internal environment information:
The collecting internal environment information includes the following:
- Planning: including all administrative activities related to preparing for the future
The specific tasks are: prediction, goals setting, formulating strategies, developing
policies and establish goals
- Organizing: The structure and governance model of the organization: clearly defined
governance structure of company, authorization
- Leadership: efforts to position the activities of human resources, namely leadership,
communication, working groups, shifting activities, improving the quality of work,
job satisfaction, meeting demand, organizational change, employees' mental and
emotional condition and managerial spirit
- Control: relating to all management activities to ensure the results match reality,
consistent with the planned results
- Information system: understanding the management of company’s information
system
- Technology: the ability to grasp and apply technology of the company
- Human resources: knowledge and skills of staff and employees of the company
- Marketing: the process of identifying, forecasting, setting and meet the needs of the
consumer desire for products or services; research on marketing environment to
identify market opportunities, market segment, select targeted markets and market
positioning
- Financial resources: the financial capability of company
- Strengths: the strengths of the company
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- Weaknesses: weaknesses of the company
- Opportunities: opportunities for company
- Challenges: current and future challenges
The collection of the above information is done in various forms such as
reports and feedback from the various departments, from financial reports, from
media, from state management agencies, from trade counselors, from the auditing
firm, from market survey companies, from the association, from market surveys
3.2.3 Processing information and formulating strategy
From the collected data, the strategists will take steps to process, analyze and
formulate strategies from which to choose one or the most appropriate strategy to put
in implementation In the process of analyzing the data collected to formulate strategy,
the following contents need to be done: Strategy formation phase
3.3 Strategy formation
3.3.1 Integration
Integration process (phase 1 of the strategy formulation process) is the period
to analyze environmental factors and internal factors of the organization to build the
matrices: the external factor evaluation matrix (EFE), competition profile matrix,
internal factor evaluation matrix (IFE)
3.3.1.1 External factor evaluation matrix (EFE) analysis
The External Factor Evaluation Matrix (EFE matrix) is the strategic tool used
to evaluate firm existing strategies, EFE matrix can be defined as the strategic tool to
evaluate external environment or macro environment of the firm include economic,
social, technological, government, political, legal and competitive information The
EFE matrix consists of following attributes:
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(1) Identify a list of KEY external factors that affect the success of the company
which have been identified in the process of analyzing the external factor including
the opportunities and threat towards the company
(2) The importance level: Assign the importance classification of 0.0 (not
important) to 1.0 (very important) for each element This classification shows the
importance of the corresponding elements for success in the business of the company
The total number assigned to these factors classification levels must be equal to 1.0;
(3) Assign a 1-4 rating to each critical success factor to indicate how effectively
the firm’s current strategies respond to the factor In which 4 = response is extremely
good, 3 = response is above average, 2 = response is average, 1 = response is poor
(4) Multiply each factor’s weight by its rating to determine a weighted score
(5) Sum the weighted scores to specify the total score for the company
Regardless the major opportunities and the threat included in the EFE matrix,
the sum of all weighted score is equal to the total weighted score, final value of total
weighted score should be between range 1.0 (low) to 4.0(high) The average weighted
score for EFE matrix is 2.5 The total weighted score of 4.0 shows good response of
the company with the current opportunity and threat in the envireonment While the
total weighted score of 1.0 shows that the current strategy is not able to utilize the
opportunity or avoid threat from external environment
3.3.1.2 Competition profile matrix
Competitive profile matrix is an essential strategic management tool to
compare the firm with the major players of the industry Competitive profile matrix is
the expansion of the EFE matrix in which measure the same critical success and same
meaning on the total weighted score as well as the assigning score The CPM score of
the rival company is compared with the sample company This type of analysis
provides valuable strategic information for the company
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The external factor evaluation matrix and competitive profile matrix enable
strategists to evaluate the business environment However, this tools need to be
accompanied by intuition evaluation
The formation of the competitive profile matrix is almost the same as that of
the external factor evaluation matrix
3.3.1.3 Internal factor evaluation matrix analysis
IFE (Internal factor evaluation) matrix is one of the best strategic tools for internal
audit of functional area of business like company strength, weakness, finance,
marketing, IT, operations, accounts, human resources There are five steps in
developing the IFE matrix:
1 List key internal factors as identified in the internal audit process Use a total
of from ten to twenty internal factors, including both strengths and weaknesses List
the strengths first and then weaknesses
2 Assign a weight that ranges from 0.0 (not important) to 1.0 (all important) to
each factor The weight assigned to a given factor indicates the relative importance of
the factor to being successful in the firm’s industry Regardless of whether a key
factor is an internal strength or weakness, factors considered to have the greatest effect
on organizational performance should be assigned the highest weights The sum of all
weights must equal 1.0
3 Assign a 1 to 4 rating to each factor to indicate whether that factor represents
a major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating
= 3), or a major strength (rating = 4) Note that strengths must receive a 4 or 3 rating
and weaknesses must receive a 1 or 2 rating Ratings are thus company based, whereas
the weights in Step 2 are industry based
4 Multiply each factor’s weight by its rating to determine a weighted score for
each variable
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5 Sum the weighted scores for each variable to determine the total weighted
score for the organization Final value of total weighted score should be between
ranges 1.0 (low) to 4.0(high) The average weighted score for IFE matrix is 2.5 any
company total weighted score fall below 2.5 consider as weak The company total
weighted score higher than 2.5 is consider as strong in position
3.3.2 Matching phase – SWOT matrix analysis
- Integration phase (phase 2 of the strategy formulation process) is the important stage
of the process of forming a strategy in the most basic way, at this stage all the data has
been collected, analyzed at the integration stage will be developed further through the
establishment of more complex matrices such as BCG Matrix, SPACE Matrix and
SWOT matrix (matrix analysis of the opportunities, threats, strengths and
weaknesses)
- SWOT matrix analysis:
The SWOT matrix analysis aims at defining the Strength (S), Weakness (W),
Opportunities (O), and Threats (T) from the business environment, therefore an
appropriate strategy can be proposed to mitigate the weakness and strengthen the
strengths, and control the threats
The SWOT matrix is the integration tool that can help the strategist to develop
the following 4 strategies:
- Strengths and Opportunities (SO) strategy – use our strengths to take
advantage of the opportunities
- Weaknesses and Opportunities (WO) strategy –use our opportunities to
overcome the weaknesses experiencing
- Strengths and Threats (ST) strategy –take advantage of our strengths to
avoid real and potential threats
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- Weaknesses and Threats (WT) strategy –minimize our weaknesses and
avoid threats
There are 8 steps in preparing SWOT matrix, according to Fred R David:
(1) List internal strengths;
(2) List internal weaknesses;
(3) List external opportunities;
(4) List external threats;
(5) Combine the internal strengths with external opportunities and note in
the SO strategy box;
(6) Combine the internal weaknesses with external opportunities and note in
the WO strategy box;
(7) Combine the internal strengths with external threats and note in the ST
strategy box;
(8) Combine the internal weaknesses with external threats and note in the
WT strategy box
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(Source: Fred R David - Strategic Management Book - Francis Marion University
Florence, South Carolina)
3.3.3 Strategy selection phase
Phase 3 is the formation of strategy, at this stage; the strategy will be based on the
analysis results from the matching step to choose the optimal strategy for practical
implementation There are many methods and tools to support the strategy selection
phase; however this thesis just mentioned tools support the process of choosing
effective strategies, such as QSPM matrix Quantitative Strategic Planning Matrix)
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3.3.3.1 Selecting strategy: Quantitative Strategic Planning Matrix (QSPM):
Base on the Quantitative Strategic Planning Matrix – (QSPM) enable strategists to
objectively assess the alternative strategy According to Fred R David, there are 6
steps in developing QSPM matrix:
(1) Make a list of the firm’s key external opportunities/threats and internal
strengths/weaknesses in the left column of the QSPM This information should be
taken directly from the EFE Matrix and IFE Matrix A minimum of 10 external
critical success factors and 10 internal critical success factors should be included in
the QSPM;
(2) Assign weights to each key external and internal factor These weights are
identical to those in the EFE Matrix and the IFE Matrix
(3) Examine the Stage 2 (matching) matrices and identify alternative strategies that
the organization should consider implementing
(4) Determine the Attractiveness Scores (AS), defined as numerical values that
indicate the relative attractiveness of each strategy in a given set of alternatives The
range for Attractiveness Scores is 1 = not attractive, 2 = somewhat attractive, 3 =
reasonably attractive, and 4 = highly attractive If the answer to the above question is
no, indicating that the respective key factor has no effect upon the specific choice
being made, then do not assign Attractiveness Scores to the strategies in that set
(5) Compute the Total Attractiveness Scores Total Attractiveness Scores are
defined as the product of multiplying the weights (Step 2) by the Attractiveness
Scores (Step 4) in each row The Total Attractiveness Scores indicate the relative
attractiveness of each alternative strategy The higher the Total Attractiveness Score,
the more attractive the strategic alternative;
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(6) Compute the Sum Total Attractiveness Score Add Total Attractiveness Scores
in each strategy column of the QSPM The Sum Total Attractiveness Scores reveal
which strategy is most attractive in each set of alternatives Higher scores indicate
more attractive strategies
4 The operation of chemical manufacturing business in Vietnam
4.1 Overview of the chemical industry
Chemical industry today is made great strides and got tremendous
achievements From consumer goods (such as raincoats, plastic slippers…etc…) to
fuel and materials used in rocket and spacecraft field are all products of chemical
industry World is entering an era where the achievements of chemical industry to
affect all sectors of the national economy: the area of chemistry The building of a
socialist society requires a strong development of the chemical industry to cater to
industry, agriculture, transportation, healthcare, national defense …etc… and to
improve human life
Based on current chemical change, the chemical industry and many other
industries with hundreds of subjects, producing thousands of different products
including:
Inorganic substances: acids, bases, salts, chemical fertilizers, metals, adhesives,
refractory bricks, pottery and porcelain, glass…etc…
Organic substances: plastics, textiles, dyes and intermediate compounds,
pharmaceuticals, fuel… etc…
4.2 The development of chemical technologies in Vietnam
Chemical technology industry in Vietnam is formed from the French war in the
factory where the weapons, explosives and chemicals was manufactured in North
Vietnam With special attention of the Party, Government and the help of the Soviet
Union, China and other socialist countries, a series of chemical plants such as Lam
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Thao superphosphate, Viet Tri chemicals, Sao Vang rubber, Hanoi soap, Lao Cai
apatite mine , Van Dien battery, Van Dien phosphate was built and put into operation
so far
Through 11years, from 1998 to 2010, in the context of globalization, deeper
integration, fierce competition in both domestic and international, the chemical
industry of Vietnam has developed gigantically and comprehensively in all aspects of
production, and business Specifically, the foundation of chemical group such as
Vinachem, the chemical plants such as Tan Binh chemical factory, Bien Hoa
Chemical Factory…
(Source: www.vinamchem.com.vn)
However, comparison with the needs and development level of the world,
Vietnam's chemical industry is now considered not keep up the industrialization and
modernization of the country Vietnam has huge oil and gas resources, but the
chemical industry has just stopped in the construction of oil refinery factory, which
may focus on technology to produce petrochemical products other than oil and gas,
while this industry brings a huge benefit to the national economy
In addition, the management of chemical activities now is dispersed and
scattered in the Ministry of Industry and the Ministry of Trade and the Ministry of
Science and Technology Especially, the management of chemicals and chemical
products containing substances, toxic substances, and dangerous substances was
deeply attended by the chemicals management agencies both foreign and domestic
4.3 The need for the import of chemicals in Vietnam
Currently, our country has about 10 million hectares of agricultural land, of
which over 6 million hectares are for paddy land The demand of using chemical
fertilizer for agricultural production was about 5 million tons yearly, of which 2
million tons of urea, phosphate types was 1.2 million tons, 800,000 tons of NPK,
800,000 tons of DAP, SA and MOP was over 300,000 tons Meanwhile, the
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production of the national chemical fertilizer plant cannot meet the demands Some
types cannot be produced; so our country has to import about 2 million tons of
chemical types yearly
Beside, even drug treatment is currently essential in life, but the national
pharmaceutical industry is developed very slowly Their main operation is imported
drugs & technology from foreign countries Therefore, Government has launched
several policies to promote development of the national pharmaceutical industry in
accordance with the conditions and needs in Vietnam
Outside of the chemical demand for the agriculture sector, the chemical
demand for chemical manufacturing industry in the country is now greater with
requirements of types, high quality and high-technology Meanwhile, the ability to
produce chemical products is still restricted because of the demand of capital and
production techniques are very great Therefore, the production of chemical stops at a
few basic chemical items commonly The most chemical supplier are imported from
the foreign countries especially from the country chemical industry development such
as Germany, Japan, Taiwan, USA, France, Thailand, China, Singapore, It is from
these needs and the current difficulties, the State has adopted preferential tax policies
such as: applying tax rate 0% of import duty for some essential chemicals and
accessories used as drugs for prevention and treatment
However, the chemical distribution unit is now mostly the private sector with a
relatively small scale, which is not many professional business and they concentrate
the chemicals commonly used items, so the competition of the sector is relatively
large Only some companies with good financial strength focus on commodities with
high added value, modern techniques and highly profession Kien Vuong is one of
companies has the 20 experience in chemical industry and well financial capability
Therefore, it is necessary to develop strategies of sustainable development for survive
and meet the needs development of the country in the next five years
(Source: Vietnam Chemical Faculty)
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CHAPTER I SUMMARY
Thesis title "Business strategy for Kien Vuong Company Limited period from
2011 to 2015" is based on strategic theory and strategic management The chapter
content has introduced a radically knowledge on vision-mission statement, business
environment analysis; collecting and processing information, analyzing information
about competitors; The strategy formulation stage, including: initial stage, matching
and strategy selection phase as well as Internal Factor Evaluation assessment tools
(IFE), external factor evaluation matrix (EFE) competition profile matrix, the matrix
strengths-weaknesses-opportunities-threats (SWOT) and Quantities Strategic Planning
Matrix (QSPM) used to implement the setting strategies That is the basic theoretical
background to apply to the analysis of the current status of the industry in general and
in particular companies from which to develop and propose solutions to implement
business strategy for Kien Vuong Company
On that basis, the contents of the second chapter will focus on business
environment analysis of the company, including macro-environment,
micro-environment and business activities of the company: the strengths, weaknesses,
opportunities and threats in the past and present, the competitiveness of the company
From that, setting up an appropriate and effective business strategy for the
development of Kien Vuong company in the future
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CHAPTER II – CURRENT BUSINESS ACTIVITIES OF KIEN VUONG
LIMITED COMPANY
1 Development history and business activity of Kien Vuong limited company
1.1 Development history
Formerly it is Van Loi Company Ltd., one of the first private company under
the Enterprise Law born in 1990 (the establishment of Vietnam Co., Ltd.), specializing
in trading of chemicals, raw materials, additives and biological products for many
industries (Prior to 1990, the only type of units owned, Combination, or Cooperative)
1991 Establishment of Van Loi company limited, 300 Lãnh Binh Thăng,
district 11, HCM city
1996 Restructuring and converting to Huu Tin Trading Co., Ltd., 300 Lãnh
Binh Thăng, district 11, HCM city
2000 Building and developing branch in Hanoi, 172 Trần Duy Hưng, Hà Nội
2004 Completely rebuild headquarter office at 300 Lãnh Binh Thăng, district
11
2005 Building and developing the network of representative office at Đa Nang
, Nha Trang & Cần Thơ
2006 Restructuring Hữu Tín, converting to Kien Vuong company limited
Street #7, Tân Tạo industrial zone, Bình Tân
2008 Complete construction of Kien Vuong headquarter and officially going
to operate
(Source: www.kienvuong.com )
Kien Vuong Co., Ltd established on April 26, 2006, business registration license No
4102038922, is licensed by the Department of Planning and Investment of HCMC
Business registration addresses: Block 22, Road 7, Tan Tao Ward, Binh Tan, HCMC
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1.2 The company’s main activities
Kien Vuong Co., Ltd specializes in providing raw materials and additives used
in the food industry, pharmaceuticals, cosmetics, fish processing, animal feed,
aquaculture and other industries Goods are mainly imported from the famous group
of countries in Europe, the Americas and Asia More than 90% of company product
was imported from oversea
The main activities of the company are focusing to import goods and distribute
these goods in the domestic market
The company has not invested to manufactory chemical product They have
just extracted and repackaged some of the products
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1.3 The organization’s structure and function
F INANCE DIRECTOR
C HIEF
A CCOUNTANT
C HIEF FIANACE DEPT
H EAD OF DELIVERY AND APPRAISAL DEPT
H ANOI
B RANCH DIRECTOR
H EAD OF
D ANANG BRANCH
D IRECTOR
OF NON
-INDUSTRIAL GROUP
H EAD OF
N HA T RANG BRANCH
H EAD OF
C AN T HO BRANCH
D EPUTY -CEO
DIRECTOR
M ARKETING
H EAD DEVELOPMENT DEPT
SảN PHẩM
H EAD OF SUPPLY DEPT
H EAD OF IT
D EPT
CHIEF LOGISTICS DEPT
H EAD OF IMPORT /
EXPORT DEPT
H EAD OF DISPATCHER
H EAD OF WAREHOUSE DEPT
H EAD UNLOADING AND LABEL
ADMINIST
RATIVE
MANAGER
C HIEF DIRECTOR HUMAN RESOURCES
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1.3.2 Function of each division
- Control board: Has the task to represent on behalf of the board members and
monitor, evaluate the work of operating, managing member of the Council and
Board of Directors in accordance with the provisions of the Company Charter, the
Resolutions and Decisions of the General council members
- Security dept: assist the Board of Directors to supervise protect the assets of the
Company
- Assistant board to the CEO: support general manager in daily tasks, and coordinate
the implementation of management activities; logistics for the board of directors
and partners in the business trip
- Administrative management: advising the Chief Executive, Director of Public
Administration, dealing with work related to foreign relations, domestic relation,
administrative documents, archives, receptionist; Management of fire safety,
occupational safety work; manage, and use of company cars and to carry out the
organization of the event, preliminary review of company
- Logistics: is responsible for transportation, inventory management, warehousing,
shipping materials and packaging goods
- Business Development: has the main task to research and develop new products to
meet market demands and implement the development strategy of the business
Besides the task of research and technology the department also needs to look for
optimal production, processing to import for the domestic market (both old and
new) with the optimal quality and cost
- Business: is responsible for implementation of marketing activities - sales to
customers and potential customers of the Company to achieve sales targets, market
share, according to Companies plan
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- Finance and Accounting: To advise the CEO and direct, manage and administer
the financial and economic accounting, implementation of accounting work
efficiently, economically and avoiding waste , following the right regulatory under
the current regulations; Promotion and mobilize financial and investment
management of the financial settlement of operating costs, service costs and
production costs, investment projects according to regulations, supervise and
evaluate recovery of debts and other liabilities of the Company
- Human resources: responsible for training, recruitment, implementation and
monitoring of the salary, bonus and other income, payment according to
regulations and policies applicable to employees of the Company; administering
the emulation and commendation to officials and employees
1.3.3 Infrastructure and technical facilities
Currently at Kien Vuong all employee are equipped with computers and
operating in a computerization environment All computer systems are operated by
proprietary software, connected to the internet Since early 2010, Kien Vuong has
built integrated system management software to help employees in the management,
control and import goods
The working conditions and facilities are relatively well, the position of the
Company and the subsidiary units are located in major city centers, close to
government offices and large companies, industrial parks, economic zones
In addition, to manage, store, import and storage of continuous cargo safely,
the company has invested in Selective shelf system from the early days of operation
Kien Vuong, is the first company to apply the storage and preserve systems
according to standards of good practice of medicine distribution (GSP) of the Ministry
of Health
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1.3.4 Operation status in previous stage
As mentioned above about the formation and development of the Kien Vuong,
which is recently converted from Huu Tin Trading Co., ltd Therefore, this
presentation are pleased to introduce a number of indicators on the status of operations
during the period from 2008 to date of Kien Vuong
Table 1.1 Some basic financial criteria of the Kien Vuong Company in the period
4 Profit after tax 10.425 9.895 10.988
5 Return on Equity (ROE) 52,13% 49,48% 54,94%
6 Return on assets (ROA) 9,37% 6,66% 6,36%
(Source: Financial statements 2008, 2009 and 2010 of Kien Vuong Co., Ltd)
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Figure 1.1 revenue growth graphs through 2008, 2009, 2010
0 200 400 600
Through the chart above, we see the revenue growth over a year of Kien Vuong
always exceeded 10% However, compare with 2008 we see growth in 2009 sales
reached 190%, the reason for the unprecedented growth in 2008 is because Kien
Vuong began to shift operations from the Huu Tin and completed in 2009
Figure 1.2 Revenue structure of Chemical for the areas and sectors in 2010
Figure 1.3 Sales of chemicals and materials group achieved in 2010
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Figure 1.4: Statistics Graphs of Net profit by product in 2010:
Reviews:
Through chart 1.5 and 1.6, we see that METHYL ETHYL KETONE only
achieved net profit below amount of 1 billion per year, other remaining ingredients
reaches positive net income (over 1 billion per year)
Materials group achieved net profit at high level (over 3 billion per year)
accounted for 56.22% of the total net profit including: GLYCERINE, PROPYLEN
Net profit by product in 2010 (billion dong)
Total net profit: 55.53 billion dong
0.96 1.16 1.25 1.35 1.40 1.46 1.51 1.68 1.97 2.01 2.20 2.25 2.54 2.58 3.05 3.21 3.26 3.94 4.07 4.79
8.91
METHYL ETHYL KETONE NEOSORB 70/70 DEXTROSE ANHYDROUS INJECTION BP2005
GLACIAL ACETIC ACID ZIRCOSIL FIVE CITRIC ACID MONOHYDRATE BP98
SORBITOL SODIUM BENZOATE GRANULAR (FOOD GRADE)
CITRIC ACID ANHYDROUS PROPYLENE GLYCOL INDUSTRIAL GRADE
DEXTROSE MONOHYDRATE FOOD GRADE
MAIZE STARCH ETHYL ACETATE HYDROGEN PEROXIDE
GLYCERINE PROPYLEN GLYCOL USP CALCIUM HYPOCHLORIDE POLYVINYL ALCOHOL
TOLUENE BUTYL ACETATE TIPURE RUTILE TITANIUM DIOXIDE