Global advanced Master of Business Administration GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION ESSAY ASSIGNMENT
BUSINESS STRATEGY BUSINESS OF SOUTH HATINH SEA PRODUCT IMPORT AND EXPORT JOINT STOCK COMPANY UNTIL 2015
Group 7 — Class: GAMBA V0110
Learners’ full name:
1 Nguyen Manh Tuong 2 Tran Tu Anh
3 Tran Thanh Hai 4 Le Ngoc Huan
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TABLE OF CONTENT
Approval of South Hatinh Sea Product Import and Export Joint Stock
Company (Shatico) i
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SOUTH HATINH SEA PRODUCT IMPORT AND EXPORT JOINT STOCK COMPANY
‘aN Vung Ang Industrial Zone - Ky Thinh — Ky Anh — Hatinh
Tel: 039.3868333 -Fax: 039.3868309 - Email: shaticof.45@gmail.com
September 12th, 2011
APPROVAL OF SOUTH HATINH SEA PRODUCT IMPORT AND EXPORT JSC
Subject “Business strategy construction of South Hatinh Sea Product Import and
Export Jsc.” is implemented by learner group 7 of class GAMBA V0110 under Global
advanced master of business administration of Griggs university on the basis of application of learnt knowledge associated with acutal practice of South Hatinh Sea Product Import and Export Jsc
We acknowledge this is a good quality subject that can be applied to our operations for strategy development of the Company
ON BEHALF OF EXECUTIVE BOARD CHAIRMAN
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Global advanced Master of Business Administration
List of signs and abbreviated letters - PS: Personnel
- JSC.: Joint stock company
- CU: Calculation unit - EU: European Union
- EFE: External factor evaluation matrix
- HACCP: Hazard analysis and critical control points
- IFE: Internal factor evaluation matrix
- ISO: International organization for standardization - PQI: Product quality inspection
- RD: Rural developmement
- PD: Product - PTV: Productivity
- FA: Fixed assets - CA: Circulating assets - P’C: People’s committee
- VASEP: Vietnam Association of Seafood Exporters and Producers
- FHS: Food hygiene and safety - WTO: World Trade Organization - El: Export-import
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Global advanced Master of Business Administration
List of tables, drawings and graphs
- Diagram 1.1 Process on comprehensive strategy administration - Figure 1.2 Michael Porter Five Forces Model
- Table 1.3 - Consolidation of Opportunities and threats (OT)
- Table 1.4 — Summary of Strengths and weaknesses (SW) of enterprise - Table 1.5 - SWOT matrix
-Table 2.1 — Summary of opportunities and threats (OT) against Shatico
- Table 2.2- External factor evaluation matrix
- Diagram 2.3- Shatico’s structure and organization of machinery - Table 2.4 — Manufacturing process in Shatico
- Table 2.5 - Financial quotas of Shatico
- Table 2.6 - Some principal quotas in comparison with industry average
- Table 2.7 — Summary of strengths (S) and weaknesses (W) of Shatico
- Table 2.8 - IFE matrix
- Table 3.3 - SWOT analysis
- Table 3.3.1 Consolidation of internal and external factors
- Table 3.4 — Process on realization of resolution
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OPENINGS 1 Rationale for choosing the study subject
For stable and prompt development each enterprise must construct its own
reasonable business strategy so as to determine and execute its missions
South Hatinh Sea Product Import and Export Jsc is a member of VASEP
Shatico’s annual export of sea products accounts for high proportion of the whole country’s exprot turnoever In 2009 it reached USD four billion and USD five billion in 2010 Vietnam export products spread over 130 countries mainly in USA, EU, Japan,
China and Korea, etc
With desire to construct a business strategy for the steady and long-term development of South Hatinh Sea Product Import and Export Jsc, group 7 of class
V0110 chooses the subject “Business strategy construction for South Ha Tinh Sea
Product Import and Export Jsc until 2015” by applying learnt knowledge of Global advanced master of business administration of Griggs university
2 Objects and aims of the study
The subject emphasizes on study, evaluation and analysis of internal and
external environment of the enterprise, since then determine steady and long-term development strategy based on theoritical anf realistic science
3 Methods of the study
- Synthetically using methods of qualitative survey based on analysis and
synthesis of collected data fron different sources 4 Structure of the subject
- Chapter I: Theoritical background on business strategy construction
- Chapter II: Analysis of business environment and practice of South Hatinh Sea Product Import and Export Jsc
Trang 9CHAPTER I THEORITICAL BACKGROUND ON BUSINESS STRATEGY CONSTRUCTION
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1.1 Fundamental issues of business strategy 1.1.1 Concepts of business strategy
We can see some concepts of business strategy as follows:
- The concept refers business strategy to an art, Alain Threlart said “Strategy is
an art which the enterprise use to fight against competition and win” and Michel Porter
Stated “Strategy is the art of building sustainable competitive advantage to self
defense”
- Business strategy is considered as one form of plan, Gluecl said “Strategy is a type of comprehensive and general plan which is designed to ensure the achievements of organization’s objectives”
As consequence, we can generally define “the strategy is a set of long-term principal aims that are defined conformable to the organization’s vision and mission and the most optimal methods and means for achieving those so that organization’s strengths are promoted and its weaknesses are overcome, opportunities are
immediately hold, and damages caused by external threats are restricted”
1.1.2 Roles of business strategy
Business strategy has important roles specified as follows:
- Business strategy helps the enterprise to realize clearly its goals, objectives and
direction in each specific period
- Business strategy enables the enterprise to realize and capture all the business opportunities, overcome weaknesses and avoid external threats in order to minimally decrease business losses
- Business strategy should contribute to the enhancement of efficiency in using
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Business strategy creates ways of decision im conformity to market movements Simultaneously it helps the enterprise to have its own orientation on development of human reosurces market and products
- An enterprise that owns a sound business strategy shall surely succeed,
otherwise it shall fail on the market
Strategy process includes strategy planning, strategy implementation and performance evaluation that are required to be operated methodically and regularly
1.1.3 Process on business strategy administration
This subject emphasizes on stage of planning and proposal of methods for
strategy implementation of South Hatinh Sea Product Import and Export Jsc Diagram 1.1 Process on comprehensive strategy administration Strategic functions, missions and targets of the 4————- enterprise
Analysis of internal Analysis of business ‘ ›
enterprise (S, W) environment (O, T)
cere Selection of strategy >
Trang 11GRIGGS em Le Global advanced Master of Business Administration 1.2 Relevant concepts 1.2.1 Vision
Vision is a mental image of the most generally desirable future state of the
enterprise it has an important role because it gathers expectations of organization's
member and motivates all efforts to obtain mission, career and ideals
1.2.2 Mission
Mission is a declaration having long-term purposeful value and distinction of each company It is also regarded as business phylosophy, business principles and confidences of the company
1.2.3 Aims
Aims are defined achievements that the enterprise strives on obtaining when
pursuing its mission Accurate determination of aims has great significance for success
of the organization
One aim must are sufficiently full of measurably realistic factors, of clear apportionment and outstanding focus, of challenge but of feasibility and within required time
1.3 Study of external environment
Externam environment includes macroscopic (general) and microcosmic (industry) one
1.3.1 Macroscopic environment
Legal and political environment refers to the State, law and administrative operations of the State including the system of State viewpoint and polices, law in
force together with politic and diplomatic trends and domestically and globally politic
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- Economic environment includes growth orientation on development of economy, interest rate, exchange rate, inflation rate, which directly affects development strategy of enterprises
- Social and cutural environment refers to manners and customs, socio-cutural
and aesthetic values, education, and populational factors such as density, aging scale, gender and occupation, etc influencing orientation on development fo the enterprise
- Technological environment are related to birth of new technology applied to
create new products , together with inventation and application of new technology, copyright and authors
- Natural environment includes factors such as geographical position, weather, land, resources and mineral; Study of the enterpise’s strategy must focus on
economical use of resources for steady development and protection of natural
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1.3.2 Microcosmic environment
Professor Michael E Porter proposed five forces model Figure 1.2 M Porter five forces model Hidden competition Danger of new competitor appearance Competitors Suppliers’ force posibility Suppliers Global advanced Master of Business Administration Competition between existing enterprises within an industry Danger of replacements Replacement
Analysis of microcosmic environment should focus on: - Competitive force from hidden competitors
- Competitive force from suppliers - Competitive force from customers - Competitive force from replacement - Competitive force within the industry
Table 1.3 — Consolidation of opportunities and threats (OT)
Opportunities (O) Threats (T)
Customers
Opportunities of investment and business Challenges, threats and risks against the
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1.4 Study of internal enterprise
Analysis of internal environment shall emphasize on the following resources: - Human resources here can be analyzed into three levels including senior and medium level and human resources employed through policy of attraction,
employment, training and development
- Regarding financial resources, analysis is implemented on solvency, efficiency
of capital utilization, coefficients, and profits, etc
- With regards to material base and machinery and equipment, capacity of the enterprise is considered and evaluated on these and plant condition, storages and
transport for production and business process
- Technology and techniques are important factors expressing strengths and
advantages of the enterprise, related to development and innovation of production process and specifications, application of new technology to production, and employment of advanced management programs in order to create better and better productivity and product quality
After analysis of internal enviroment, strengths, weaknesses and restrictions of
the enterprise are synthetically manufested on SW summary table
Table 1.4 — Summary table of the enterprise strengths and weaknesses
(SW)
Strengths (S) Weaknesses (W)
Advantages and strengths of the enterprise Restrictions and weaknesses of the
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1.5 Strategy planning
Strategy planning has importantly fundamental role in the whole process on the enterprise’s strategy admnisitration Strategy planning should focus on determination of vision, mission and aims in order to establish the strategy
1.5.1 Steps of strategy planning
- Analyzing external environment to define opportunities and threats for the enterprise;
- Analyzing internal environment to determine strengths and weaknesses of the
enterprise;
- Combining strengths and weaknesses with opportunities and threats to identify
plan of business strategy for the enterprise
- Using reasonably analytical tools to specify optimal strategy
- Deciding to select business strategy for the enterprise 1.5.2 Analytical tools
- EFE is external factors matrix It synthetizes, summarizes and evaluates main
Opportunities and threats of external environment, and then helps to evaluate response
level of the enterprise against opportunities and threats Since then we can consider the external environment as advantage or disadvantage for the enterprise
- IFE indicates internal factors matrix that synthetizes, summarizes and
evaluates strengths and weaknesses of the enterprise and then helps them to promote
strengths and restrict weaknesses to increase competitive capacity
- SWOT are English abbreviations including Strengths, Weakness,
Opportunities, and Threats
SWOT is theoritical frame on which we reply to reconsider and reapprove
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Table 1.5 —- SWOT matrix table Principal opportunity Principal threats (T) (O) SO strategies ST strategies Strengths (S) Use strengths to utilize Use strengths to avoid threats opportunities WO strategies WT strategies
Weakness (W) Overcome weakness by Overcome weakness to avoid
utilizing opportunities threats
1.6 Solutions for strategy execution
Strategy planning is an important phase establishing the strategy for the
enterprise, but for sucessful implementation of strategy the Company must propose solutions conformable to its business environment and capacity
Solutions focus on human resources management, marketing, production,
research and developemnt
CHAPTER II ANALYSIS OF BUSINESS ENVIRONMENT AND PRACTICE OF SOUTH HATINH SEA PRODUCT IMPORT AND EXPORT
JSC
2.1 Genral introduction of South Hatinh Sea Product Import and Export
Jsc
Company name: South Hatinh Sea Product Import and Export Jsc
Trade abbreviations: Shatico
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Email: shaticof.45(@ gmail.com Website: http://www.shatico.vn 2.1.2 Process on formulation and development
In 1993 the Company was established according to Decision no 196/QD-UBND
dated March 26, 1993 by Ha Tinh People’s committee with its principal function of
export sea products processing
Development process of the Company can be summarize as follows: - Establishment year: 1993
- 1995: Operating Sea Products processing factory with capacity of 550 tons of end-products per year
- 2003: Moving the factory to Vung Ang Industrial Zone — Ky Anh — Ha Tinh
- 2004: Building new factory of 1500 tons per year with total investment of USD
2 million Its products satisfactorily meet strict requirements of EU and Japan market
In early 2005, it was officially operated
- 2005: Compliance with policy of State enterprise capitalization, the Company was capitalized according to Decision no 1105/QD-UBND dated July 24, 2005 by Ha Tinh People’s committee
- 2006 until now: the company has operates according to mechanism of joint stock one with the following characteristics:
+ South Hatinh Sea Product Import and Export Jsc + Abbreviation: SHATICO
+ Charter capital: VND 5.8 billion + Total shareholdings: 580 thousand
+ Face value of one share: VND 10 thousand
+ Shareholdings of the company’s employees account for 78% with face value
of VND 452,400; external auction shares make up 22% with nominal value of VND
127 thousand No holding is owned by the State
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2.1.3 Business line
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The company specializes in processing export and domestic sea products Main
products of high value added tax includes:
+ Ready-to-eat squids, sepias of high quality + Shelled prawns and sugpo prawns
+ fish fillets
2.2 Analysis of external environment 2.2.1 Macroscopic environment - PESTE
- Legal and political environment
In the trend of current globalization, Vietnam has become increasingly
integrated with the world Vietnam has stably politics and a system of increasingly
improved laws such as law on foreign investment and enterprise law, which creates competitively economic environment in order to boost sharp development of economy
During last years the State and local authorities had been issuing many important policies positively affecting production and export of sea products, specified: + Decision no 224/1999/QD-TTg by Prime Minister and Decision no 77/2005/QDUB by Ha Tinh province People’s committee regarding development of aquaculture These creates condition for the growth of input raw material for the enterprise
+ Decision no 288/2005/QD-TTg by Government on approving construction of
storm shelters for fishing ships up to 2010 and ‘East Sea - Islands”’ Program, in which Support in building fish wharfs is condition for development of marine material
exploitation supplying enormous raw material for the enterprise
+ Decision no 09/2011/QD-UBND dated May 30, 2011 by Provincial People’s
committee issuing mechanism of export assistance and encouragement Thereon, an enterprise manufacturing export sea products shall be assisted in funding, interest rate
and human resources training, etc
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+ Vietnam implements the socialist oriented market economy development policy under the State regulation In recent years generally the growing rate of the economy has been convenient for the enterprise
+ The increasing trend of United States Dollar will be advantage for export
enterprises
+ Joint stock banks regularly afford to lend the enterprises especially financing for export including crediting, investment and circulating credit In particular, in 2004 the Company borrowed VND 2 billion for building Export sea product processing factory in Vung Ang Economic Zone or in 2009 it was supported by VND 360 million in the interest from Government support policy under the Government incentive package
+ Since Vietnam entered into WTO in 2006 the Company has receive many
favorable terms on tariff when importing Sea products to member nations; for example, Japan decreases tariff to 5% from 15% for frozen Sea products
+ According to Decision no 72/TTg-QDCP by Prime Minister, the enterprises investing in Vung Ang economic zone shall receive favorable terms on land tax and income tax allowances
However Vietnam economy has been ever-fluctuating, control of macrocosmic
economy meets with many difficulties, and lending rate of commercial banks is still
high These are unfavorable for the enterprises in operations - Social and cultural environment
+ Ha Tinh people are hard-working and like working in their own hometown,
which is a very convenient condition for human resources of the company
However, most of them are unskilled and of low degree; therefore training of
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may bring about the bacterial contamination of products Consequently such bacterially contaminated products can be refused or returned by customers, resulting in enormous losses for the enterprise
+ Vung Ang economic zone with many convenient conditions and attractively
preferential mechanisms has been increasingly attracts many big investment projects of USD ten billions, which brings about many people for living and working in Vung Ang This is convenient condition for the enterprise to expand domestic sea products,
etc
+ Demand of sea products in the advanced countries has been increasing by 17 —
19 kg per person per year, resulting in increase in world demand of sea products by 120
~ 130 million tons from 2010 to 2020 in addition, with population of 86 million Vietnam will be also a sound domestic market if the Company has reasonably domestic supply policy
- Technological environment
Newest food processing technologies of advanced countries have been always available for selling to Vietnam For example, Japan and Germany have shrimp
sorter, metal detector, IQF freezer in bulk used to produce end-products for end-
user through supermarkets This is convenient for the enterprise to renovate its facilities
However, technology transferring is of high expense and import price of machinery is very expensive
- Natural environment
Ha Tinh is in strong position of sea Sea product output annually reach 22 thousand tons, aquaculture productivity achieves 16 thousand tons, which creates
abundant supply of raw material for the enterprise Nevertheless, supply of raw
material is not stable because Ha Tinh is severely affected by northeastern monsoon
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exhausted and sharply decreased, which will be challenging for the enterprise
The company located in Vung Ang Economic zone has advantages of water navigation and road traffic, and stable power supply
However, because Ha Tinh is far from Hai Phong port Expense for import and export is very high
2.2.2 Microcosmic
- Competitive force from suppliers
The company has system of sea product supply agents spreading out from Thanh Hoa to Quang Tri About 16 agents mainly supply the company with raw
material, two agents located in region of abundant raw material and one in that of few raw material These agents regularly bring pressure to increase pricing on the enterprise to ensure their profits
On the other hand, transport and containers of picking-up houses are damaged or unreliable, resulting in high contamination risk of harmful microorganisms Furthermore, market price is sharply fluctuated and ever-changed, which is difficult for
the enterprise to control input price In addition, increasingly domestic demand of fresh and live products severely creates competitive pressure on the company in purchase of
raw material
In order to support the enterprises in raw material supply, the Government allows import of raw material for processing according to Circular no 25/2010/TT-
BNNPTNT dated September |, 2010 this helps the enterprises to ensure enough raw
material for stabilization of production - Forces from customers
Main export market of the company is Japan accounting for 65 — 70% Remaining export volume is for EU, Korea and China, making up 20 -25%
Japanese group of customers includes
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These companies purchase products of the Company on CFR Japan basis under
monthly contracts Having many partners enables the Company not be catch in price squeeze Yet the Company meets difficulty on negotiating price of some specific
products with customers
Major pressure from Japanese customers is attached to product quality that must
comply with regulations and standards and high food hygiene and safety Product
quality are controlled by Japan customs If they detect product quality not pursuant to
their standards the shipments shall be refused and immediately shipped back In 2003
the company had a load of I5tons at the value of US Dollar 67,500 refused and
returned due to stapilococcus contamination caused through workers’ hands * Other group of EU, Korea and China has
- LP Food Co LTD — ITALIA - JOESEA.Co LTD — Korea - LUONG YONG SHAN - Chine
Their requirement of quality is reasonable but purchase price is not as high as
Japanese ones
Their pressure on the company refers to some technical barriers such as IUU (illegal unreported and unregulated foshing-evidence of origin law) of EU food
management organization This is a barrier challenging the enterprise to export its
products to European market According to annual statistic data, the average annual export sales of company to the aforementioned market reaches from 12% to 15%
Domestic market makes up approximate 10% of annual turnover Frozen
products difficultly assess domestic consumers due to their buying habit of live ones
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Global advanced Master of Business Administration _
In fact, in ten recent years in region of the Northern central from Thanh Hoa to
Quang Tri, there has been existed about eight enterprises processing export sea products, but four ones was bankrupted due to severe competition and inconvenient factors, two other enterprises perfunctorily operate, and two remaining ones are
successfully processing export products, namely Nghean Sea Product Company and SHATICO However, Shatico has its own product strategy, therefore: competitive
force within the industry is not severe for Shatico And the company has certain
advantages of production capacity and condition such as the factory of international
standards and traditional customers of over 15 years
- The company is also under the competitive pressure of raw material purchasing from other companies in the South and the North of Vietnam;
however purchasing local raw material of high quality at the low price creates the advantage for the company
- Regarding globally competitive pressure, the currently main market of the
company is Japan, making up 70 — 75% of annual sales figures This is also the target market of Thai and Chinese suppliers who are indirect competitors against the company They have the advantage of marketing and processing technology, but Vietnamese enterprises has the advantage of cheaper labor payment and products of higher quality
In order to clearly see the competitive pressure from domestic competitors, we
compare the competitive capacity of the company to that of other domestic competitors
by tabulating the following the competitive capacity:
Table 1.6: Matrix of CPM competitive pictures
Nghean Sea Products
Evaluation Degree o Hue Sea Products
SHATICO Export and Import
factors importan Company
Company
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| Clasifving | Point of | Clasifying Point of | Clasifyin{ Point of | importance importance importance 2 4=2x3 | 5 6=2x5 8=2x7 | Quality of raw 0.10 0.40 3 0.30 0.30 material | Condition of 0.20 040 1 1 0.20 0.60 production facilities | Skills of workers) 0.15 0.60 3 0.45 0.60 | Salary charge 0.15 0.45 3 0.45 2 0.30 | Confidence levell 0.15 0.60 3 0.45 2 0.30 of partners | Distribution 0.15 0.45 3 0.45 0.45 system | Dealing ability 0.10 0.30 2 0.20 0.30 | against changes Total 1,0 3.20 2.50 2.85
The analysis of competitive capacity of Shatico compared to that of other enterprises shows that South Hatinh Sea Product Import and Export Jsc has the overall
competitive capacity 1.28 times higher than Nghean Sea Products Export and Import Jsc and 1.12 times of Hue Sea Products Company
- Competitive pressure from hidden competitors
The rennovative and open-door policy of Vietnamese government allows participation of economic sectors on a level playing field So, a number of small competitors can be formed and entered into the market at any time
Yet the field of sea product processing meets with many difficulties of technology and management, therefore; number of hidden competitors is not remarkable and can not bring pressure upon the Company
- Competitive force from replacement
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Sea products are still good choice of consumers at any nations Nevertheless the increasing tendency of their price makes consumers to choose replacement of livestock
or poultry origin Without reasonable policy, the Company difficultly sells its
commodities
So, analysis of general environment and marine products industry enables to
tabulate the opportunities and threats as follows:
Table 2.1 -Summery table of opportunities and threats (OT) for Shatico Opportunity (O)
1 Many policies of export assistance and
encouragement issued by the State and local authorities
2 High demand of sea products and increasing expansion of sea _ product
market
3 Easy borrowing from joint stock banks 4 Change in exchange rate favorable for
export
5 Decrease of import duty thanks to Vietnam’s entering into WTO
6 Abundance female labor force favorable for production of the company
7 Sharp increase of product processing
technology
8 High quality raw material supply for sound end-products
9 Convenient infrastructure, good power
and water supply for production
Threats (T)
1 Insecure world economy, crisis of some
economies
2 Unstable raw material supply due to monsoon and storm Suppliers’ increase in price
3 High bankers’ rate making difficulities
for the company
4 Unskilled labor force, danger of commodity refusal
5 Strict requirement of market on food hygiene and safety, increasingly technical barriers
6 Low domestic demand of frozen
processed products and their request on
low price
7 Remarkable pressure from replacement of livestock and poultry products
8 Long distance from export port, high
transportation cost
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Through OT summary table influence of external factors is evaluated to build
EFE matrix as follows
Table 2.2 External factors evaluation matrix Coefficient ; Major external factors Degree of of Point of
importance Liassifiesfion importance I Many policies of export assistance and
encouragement issued by the State and local
authorities 0.07 2 0.14
2 High demand of sea products and increasingg =| ast tid
expansion of sea product market 0.08 3 0.24 3, Easy borrowing from joint stock banks 0.05 3 0.15 l4, Change in exchange rate favorable for export 0.03 3 0.09 5 Decrease of import duty thanks to Vietnam’s
entering into WTO 0.04 3 0.12
6 Abundance female labor force favorable for
production of the company 0.06 4 0.24
7 Sharp increase of product processing technology 0.07 4 0.28
8 High quality raw material supply for sound end- 7
products 0.09 4 0.36
9 Convenient infrastructure, good power and water
supply for production 0.05 3 0.15
10 Insecure world economy, crisis of some |
economies 0.03 2 0.06
LH Unstable raw material supply due to monsoon
Trang 27Grigod ¢ ETC ) da exe a Global advanced Master of Business Administration a —— - oe 112 High bankers’ rate making difficulties for the | | | company 0.09 2 0.18 13 Unskilled labor force, - danger of commodity | refusal | 0.05 2 0.10
14 Strict requirement of market on food hygiene T—
and safety, increasingly technical barriers 0.07 2 0.14 15 Vietnamese low domestic demand of frozen
processed products and their request on low price 0.06 2 0.12 16 Remarkable pressure from replacement of |
livestock and poultry products 0.03 2 0.06
17 Long distance from export port, high
transportation cost 0.05 3 0.15
Total points 1 2.66
EFE matrix shows us total EFE points of the company of 2.66 — fairly average level against external factors
2.3 ANALYSIS OF SHATICO INTERNAL ENVIRONMENT 2.3.1 Human resources and control level
- Until December 31, 2010, total employees of the enterprise are 426, of which + Executives and direct workers: 58
Education level: 02 masters
21 graduates
35 high-school graduates + Direct workers: 368
Of which: Intermediate level: 30 people
Primary level: 338 people
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Diagram 2.3 SHATICO ORGANIZATIONAL STRUCTURE Stockholder's meeting | Board of directors Pa >| CONTROL BOARD |, ' MANAGEMENT COMMITTEE + 3 = ~ 20 5 et Og 2 sšrg l|šg ||šz sD #8 2 se 5S es S SE 2 2 0 a ư 9 = Or #&E = & SE n os BNE “A's & b0 as St |8 Oo a =o OD aa = đâ = -= Ep a Ơ Oo 2 o, â ee? a7 aU mo} Oo < < tr A A A A A Ÿ Ÿ AT Ỷ
- Control level and production
With nearly eighteen years of building and development, until now the
Company has a relatively completed management machinery to the satisfaction of
operations Indirect labor force and key executives are engineers, bachelors or skillful
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employees who were trained in professional universities such as Nha Trang Fishery
university, National economic university, Financing and accounting university, etc Besides, the company has a staff of qualified workers who are proficient in
operating system of production line and equipments in order to produce or process
high-grade products
However, few staff is proficient in foreign language, only English and no one
knows other languages such as Japanese, Chinese or Korean Therefore, export to those
countries meets with challenging On the hand, human resources training and development are restrictive, which affects motivation of development
The present restriction of the company is the high rate of job jumping
According to the Personnel department, the job jumping rate is 18-21%, consequently the company must yearly recruits and trains approximate from 50 to 70 new workers
Regarding production control level, the Company is currently applying HACCP
program of United states
Production process are summarized on the following table:
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Table 2.4 Production process in Shatico Acceptance of raw Packed and vacuum-suction material a | Storage Product freezing storage r Treatment I r Consumption Ỳ Product fining r Product freezing
- Management mode and salary payment in Shatico
Shatico implements heading mode, in which director is responsible for all activities according to issued statute, two deputy directors who are in charge of
processing and sales are helps for director Departments and sectors are under direct
control of directorate
Salary payment of the Company is relatively reasonable, which creates internal
balance and encourages employees at different position by combining coefficient of title based on the State salary scale with coefficient of assignments together with price unit of salary based on fixed products
In addition, the company must ensure other allowances such as mid-shift meal,
mileage allowance, experience subsidy and encouragement payment for labor man-day
Apart from main salary and allowances, employees of the company receive monthly bonus based on monthly achievements voted by members of department
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2.3.2 Analysis of financial resources of the Company
Based on Shatico finance statement in 2008, 2009 and 2010 we establish the
following primary financial indicators:
Table 2.5 - Financial indicators of Shatico
No Indicator unit | *°" Year2009| 2008 | YS" 2010
1_ Structure and balance between assets and capital resources
Ratio of asset structure (%) 11.49 | 137.36 127.00
Ratio of fixed assets and regular capital) (%) 96.13 | 83.89 91.03 resources Ratio of circulating assets and short-term) % 103.61 | 116.25 108.00 capital resources Ratio of fixed asset self financing (%) 39.11 46.60 58.00 2 |Liquidity
Current index Time 1.04 1.16 108.38
Express index Time 0.83 0.87 0.82
Immediate index Time 0.38 0.21 0.39
3 |Asset manageability —
[Inventory turnaround _ | Circle 16.40 15.43 18.02 Credit sale collection period Day 47.43 52.08 34.88 Fixed asset tumaround Circle 3.4) y.32 5.54 Circulating asset turnaround Circle 3.26 3.87 4.35 ¡4 JBorrowing resources manageability
Debt index Time 0.82 0.80 0.74
| |General solvency Time 1.22 | 1.24 1.34 5 |Profitability
Marginal profit % 1.24 1.61 2.54
| _|Return of assets ratio ROA % 2.17 3.60 6.20 Return of equity ratio ROE % 12.03 19.19 24.00
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+ Global advanced Master of Business Administration
Table 2.6 - Some principal indicators in comparison with industry average Year 2010 No Indicator Unit Industry | : — Shatico Difference (+/-) average
‘1 (Current payment index — Time 1.08 2.05 -0.97
2 Express payment index | Time 0.82 1.28 -0.46
/3 Debt index/total assets || Time| 0.74 0.54] — -0.20
| 4 |Marginal profit % 2.54 250] +0.04 | 5 [Return of assets ratioROA | % 6.2 3.00| — +3.20 6 |Return of equity ratio ROE % 24.00 6.00 +18.00
* Evaluation and analysis
a) Structure and balance between financial resources and assets
- Rate of company asset structure over years is above 115%, so the Company
must mobilize capital to purchase and process sea products This is acceptable
- Ratio of regular fixed asset/ financial resources over years reaches 100% and
that of short-term circulating asset/ financial resources achieves above 100%, which shows that the enterprise has not use regular financial resources in full, resulting in waste because fixed capital is used for circulating
- Ratio of fixed asset backing tends to increase from 39.11% in 2008 to 58.00% in 2010, a positive signal However it indicates that the Company is using long-term borrowings to invest in fixed assets at approximate 50%
b) Liquidity
Company expenses for liquidities are very low In 2010 expenses for current
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of industry average As consequence the Company can meet remarkable disadvantage when paying for long-term borrowings or unusual problem may occur
c) Asset manageability
Credit sale collection period tends to decrease from 52 days to 34 days per circle
- a positive signal However, the company must find out a solution to reasonably reduce credit sale collection period to 15 days per circle Regarding turnaround of total
assets, the company reaches approximate average of two circles compared to double obtainment of industry average, which is a good signal
d) Borrowing resources manageability
Debt index of the Company tends to gradually decrease from 0.82 in 2008 to 0.74 in 2010, which means that the Company mobilized own fund However, this
indicator at high rate contains high risks in business in case of unusual breakdown
+ Profitability
* Return of asset ratio of 2.17 is lower than industry average But it increased to 3.6 in 2009 and in 6.2 in 2010, double increase compared to industry average This is a
positive signal
* Return of equity ratio (ROE) is quite high Although the own capital of the company accounts for low proportion and the company mainly borrows from bank its operation is effective Especially in 2010 ROE is higher than industry average by 18%
2.3.3 Analysis of material base
Actual condition of Shatico material base
With lay-out of 3.7 hectares and plant area of 3100 m” processing factory meets standards on food hygiene and safety System of Japanese modern facilities includes:
- 05 product freezers and storage system of 300 tons - Q3 vacuum extractors
- 01 microorganism analyzing lab
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With the aforementioned material base the company can produce 1500 tons of products per year Manufacturing condition of SHATICO are always evaluated at
grade A of standard that is annually assessed by Quality control department for agricultural, forestal and aquacultural products
- However, being built in 2004 the factory currently has some points not
matching standard to a modern processing factory On the other hand, cold storage system can not contain 500 tons of raw material for stabilization of production Partial shortage of raw material is caused by effect of monsoon and storms
- System of machinery and facilities for management
The Company has 31 computers connecting with LAN network It applies Misa accounting software, electronic Customs declaration software and other equipments
such as facsimile device, printer, camera, scanner, etc
Equipment of facilities and software makes contribution to good management of
the Company
2.3.4 Products and consumption
- Products of the Company include cuttle-fish, shrimp, fish based on two product line
+ High-grade kind includes products of high quality, of high value added such
as sushi cuttle, Ebi shrimp This product line is only exported to Japan
+ Average kind refers to universal products such as cuttle, shrimp, fish pillets,
shelled shrimp, etc This line is exported to many countries and for domestic
consumption
- Market: annually mean export to Japan, main market makes up 60 -70% of output, EU and Korean market for 20% and remaining 10% for domestic consumption
- Selling price: the Company regularly signs the contract on C&F (CFR) term or
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2.3.5 Marketing
- Actual situation of market expansion
The business guidelines are attached to keep prestige from maintenance and improvement of product quality Therefore, the company regularly meets traditional
customers to discuss market and products in order to adjust purchasing order in
conformity to market demand
- As for some mean product lines, the company always finds out marketing resolution for market expansion to increase number of oversea customers and domestic
consumption according to the following project:
+ Promoting products on company website or Vasep website or prestigious
acquacultural magazines
+ Participating in domestic and international fairs twice every year such as
Vietfish and fairs in EU nations (Bremen)
In fact, products are currently sold out The Company signs the principal contract on large quantity with import customers at beginning year
However, regarding mid-grade product line, the company has a few customers, so it can not produce and export them although raw material supply is abundant and production capacity can afford
Analysis of internal environment allows us to summarize Shatico strengths and
weakness on the following table:
Table 2.7 - Summary table of Shatico strengths (S) and weakness
Strengths (S) Weakness (W)
1 Completed organizational machinery 1 Restrictive qualifications of multi-
and structure, experience and ability of languages
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Global advanced Master of Business Administration
3 Salary policy effectively encourages 5 Low density of domestic market of 10% employees 6 Unsatisfactory marketing, insufficient
4 Good technical and material base customers for mid-grade product line conformable to EU standard
S Healthy financial situation, high
profitability
6 Products of high quality compared to
high value added interested by customers
In order to evaluate importance of internal factor through the summary table of
strengths and weakness we use IFE matrix
Table 2.8 IFE matrix Degree of Coefficient Major internal factors importance of Point of classificatio| importance n
1c ompleted organizational machinery and structure,
experience and ability of production management 0.12 4 0.48 2 Application of advanced production management
program (HACCP) 0.12 3 0.36
3 Salary policy effectively encourages employees 0.05 3 0.15 4 Good material and technical basis conformable to
EU relations 0.11 4 0.44
5S Healthy financial situation, high profitability 0.11 4 0.44 6 Products of high quality compared to high value tax
added interested by customers 0.08 3 0.24
7 Restrictive qualification of multi-languages of staff 0.06 0.12
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& Restrictive personnel training gt
9 Shortage of cold storage system es ee
0.08 l 0.08
10 Low density of own capitals SỐ 0.06 2 0.12
1 Low density of domestic market of 10% = — 0/05 2 0.10 12 Unsatisfactory marketing insufficient customers for
mid-grade product line 0.06 l 0.06
Total points co 1.00 2.71
IFE matrix indicates total points of 2.71, providing that the company has inside force above average
CHAPTER III PROPOSAL OF BUSINESS STRATEGY 3.1 Strategy orientation
3.1.1 Vision
Shatico strives on becoming a leading enterpise of sea product export in the North central in 2015 Shatico products penetrate into and maitain in EU, Asian market and domestic Vietnamese market on in foundation of modern production technology and advanced management system together with a stable development strategy
3.1.2 Mission
Shatico creates high quality sea products of high value added and of food
hygiene and safety for domestic and oversea customers 3.1.3 Core values
- Professionality: high technique, principle and activeness and creativeness in business operation
- Production technology: high quality product, good design, favorable pricing
and reliable food hygiene and safety especially ready-to-eat products
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- Being rtendly with environment production process always ensures environmental hygiene and does not polute
- Steady development: relationship with strategic partners, distributors, suppliers and fishmen are emphasized
3.1.4 Determination of strategy aims
Shatico determines to become a leading enterprise in region of the North central in 2015 This target is specified by numbers:
- Annual average growth of revenue increases by 15% per year
- Until 2015 processing capacity of the factory is 2000 tons of products - Shatico trade mark is recognized by Japanese, EU and Vietnamese market 3.2 Choice of business strategy
In order to choose business strategy for the Company we must synthetize scientific
grounds based on SWOT analysis in combination of internal and external factor
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3.2.1 SWOT analvsis for functional strategy proposal Table 3.1 - SWOT analysis table Opportunities (O): 1 Many policies of export assistance and encouragement issued by the State and local authorities
2 High demand of sea products and increasing
expansion of sea product market
3 Easy borrowing from joint stock banks
4 Change in exchange
rate favorable for export
5 Decrease of import
duty thanks to Vietnam’s entering into WTO 6 Abundance labor force favorable for female production of the company 7 Sharp increase’ of product processing technology 8 High quality raw Sỹ Threats (T):
1 Insecure world economy, crisis of some economies 2 Unstable supply due to monsoon and raw_ material storm Suppliers’ increase In price
3 High bankers’ rate making
difficulities for the company 4 Unskilled danger of commodity refusal 5 Strict of market on food hygiene and labor force, requirement safety, increasingly technical barriers
6 Low domestic demand of frozen processed products
and their request on low price 7 Remarkable pressure from
replacement of livestock and
poultry products
8 Long distance from export
Trang 40Gricad € EỊC tư Vp HT V Max, wats )
material supply for sound
Global advanced Master of Business Administration end-products 0, Convenient infrastructure, good power and water supply for production Strengths (S): l Completed organizational machinery and Structure, experience and ability of production management 2 Application of advanced _ production
management program SO combinations ST combinations
(HACCP) 1 Increase of production 1 Labor quality training and XÃ Salary policy capacity improvement (SI + T4+ TS)
effectively encourages (S1+2+3+4+5+6)+(O1+2 2 Upgrade of product quality
employees +3+6+9) (S2+4+5+6)+(T5+6+7)
4 Good technical and 2 Market expansion and