GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT
BUSINESS STRATEGY OF
THAC MO HYDRO POWER PLANT JOINT STOCK COMPANY
STAGE 2010 - 2020, VISION 2025
Nguyen Thanh Phu Nguyen Van Thu Tran Le Minh
Huynh Van Khanh
Class GaMBA01.D0109
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Thac Mo hydro power plant
Without a strategy, an organization is like a ship without a rudder, going around in circles It’s like a tramp; it has no place to go
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We, all members of Group NO.6 would like to guarantee that this Capstone project report of Master Program of Business Administration of GRIGGS University is the research project conducted by ourselves
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ACKNOWLEDGEMENT
During one year and a half studied and fulfilled our graduation capstone project report of Master Program of Business Administration of GRIGGS University, we would like to give sincere thanks to MBA Program of GRIGGS University, Viet Nam national University, Ha Noi and Ho Chi Minh Electricity College for providing us the most advantageous condition for our studying We owe a debt of gratitude to our professors, whose enthusiastic teaching and valuable knowledge encouraged and motivated us all the time of study We also owe a special debt to our supervisors, who helped us a lot in fulfilling this capstone project report
In addition, we would like to give thanks to our tutors for supporting us enthusiastically, leaders of Thac Mo for valuable data and information
Finally, we would like to give special thanks to our employer and families for giving us time, financial aids and energy to accomplish the course
Please receive the deepest and the most sincere thanks from us
Authors
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Capstone prorect report GaMBAOI!.D109-Group N0.6
Griccs) „m port _ TOU TABLE OF CONTENT INTRODUC TIƠN Q22 022221111125221 111522111111 221 11 1151111111111 11 1E x kh grky 12 I — Problem staftemen( 22 22211222122 211221 112111111211 xe 12 PIN oi) nh e 13 3 SCOD€ OÍr€S€ATCHh 022002201 1211122 1101112 1121112011111 1kg 13 4 — Research method 1 2222122111211 221 115112 11121122151 821 1281181 re 14 5 Academic and practical significanes “ca ẽ so 14
CHAPTER I:_ THEORETICAL BASIC 555522cccccccccsreree l6
1 Basic definition of business sfraf€gy - S2 1 2211121122211 trg 16 2 Classification of business sfraf€gy 2c S212 2221112211132 re 17
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NA - TNG:! TH cette iptables rth bc a dt 27
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3.5.5, Strategic position and action evaluation matrix- SPACE 28 3.5.6 Internal-Extermal matrix 0 00 00cc ccc ccceecceecceeeceeeeseecsesteeeseensetees 30 3.5.7 Grand Strategy Matrix cece cece ceecessceeeeeeseeeeeecseeeeeeeeeseees at 3.5.8 | Quantitative strategic planning matrix (QSPMI 32 3.5.9 Experiences to choose busines strafegy 2222222 sse 34 CHAPTER Il: ANINTRODUCTION TO VIETNAM ELECTRICITY:
STATUS QUO AND DEVELOPMENT 35 N11 NsllaaaaẳaẳaẳaiiiiiẳiäáäẳắẳiẳiẳỎ.ẳđđá 35 I.I _ Vietnam power generating StruCfUTe ¿+ 2222 2223122211 E225c2zxxxs2 36 1.2 Electricity production ofFEVN from 01/2010 to 09/2010 38 I.3 — E]eCtTICIfV DFIC€ 2 2.0222 2111222112 2 1112k 38 131 —— ElsctrleiiyftleeinMtÌHH e« 38 1.3.2 _ Electricity price in developing counfrI€s -. 5 55555 2-<c+<ss2 39 2 Future development of electricify sources to 2020 55525 5<ss+52 4I
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1.2.4 Business flelds ẰẶ22 S222 Ằ 52 1.3 Business situation of Thac Mo hydro power JSC - 54
13.1 Product OUPtut oo o.oo Ă 54
THÁC MO JSC STRATEGY FORMULATION TO 2020 57 2.1 Business missions and obJeCfIV€S - c1 2212221222212 22212 eres aT
2.1.1 MISSIONS! 57
"` 7N: - 57
2.2 _ External and internal environment analySIs 25 222cc S52 58 2.2.1 External environment anaÌySIS - 5-2 2c 2211211521121 set 58
Ded (0i ;I85i020/0101/12 00175 aAa 67
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2.5.4 Operations managemein c c2 c2 nhanh 92 2.5.5 Corporate CuÏ{UT© ò 2222222222122 1n ynyyn 93 2.0 Strategic communIicafion SVySfem c cc c2 12 22k sesssee 95 aad RiSk TIE(HEGITEHE ác So gen enieeiiadvinnaunesusnsiiueaneanse 96 2.6 CONCLUSION 2 000 re erse 96 PE A sss stats otcsmiithnsiihtgtaiily nein int tnmnblt 98 Fa Leet x scans eh se esa Ses A Roh PR NL Oe a a 107
FIGURE INDEX:
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TABLE INDEX
Table II-I: External factor evaluation mafrIX c2 c1 2212113222222 2sx+2 25 Table [-2: Internal factor evaluation mmafTIX c2 2 1112252222222 crsxee 26 Table H-3: Competitive Profile mafrIx - - 22222232221 121 11 2521522555255 12x55 27
l l!' S 3s ; ma 28
Table I-Š: QSPM mafrIX Ỏ 2 2522221111211 111211 111111120111 201 1110211122111 1 E2 1112 11 ng 33 Table III-1: Electricity consumption 1990-2009 ooo - Q2 2111211112511 1511 12x 35 Table HHI-2: average electricity sale price in 2007-2009 - 2222221222 c2 czzxs2 38 Table HI-3: Electricity price at poWer pÏanfs - - 52c S1 12112112212 rreerrrei 39 Table III-4: Electricity demand growth and maximum capacity of three regions 09281992) 0/09//Ý/A 54s: 0v.) nn` -.-®^"”.- 42 Table IH-ŠS: Electricity sources development program period 2010-2020 43 Table III-6: Pure coal mining quantity: basic case (PAI) -: 52c 2x <2 45 Table IV=1: Brusatess TIGNIS ss.cscscosnxccwaantnacaswnssncnsiuassensasnienasadsesstansasunedsebamineansenadansas 55 Table TY-2: Elecwietty production 1995-2008 cic nnncnecnnnnenenvnnsnansinaraedinndtiimenansndinbe 54 18016 1V HUSIH@WS TGIHIHNINEE csc ncn cenenirro seneawranechdininvetesderorcsduwenveriehworeseivnksterit 55 Table IV-4: Annual goods and services value .00 00ccccceeeccseeeseeccsssetesseeessees 56 TT EG I tc acces sic wl nce tne pln elidel eden bn n7 1ãBI€ TY -G:HleCtiieitV DIOdUGEOHEoeiaaaeseenaesiuasnroaiielnaderddsrsasbblsssbkisdzlzasgsssaSsi 68 Table TY-7- HusiHess perfotrtanog 2006 TUÌỔ .Ÿ ki iii-Ỷsee 69 Table IV-8: Disposable cash flow 2008-2010 - 2 22222222212 2tsrerrrerrei 70 The LÝ-2 Exiorripnl facbor evaliinitoi THỦ vua he kuniiindieioieoddaoioakassaosssrel 72 Hi LÍ": C/00 )00 TP NGẽẽ 6U 73 Table IV-I 1: Competitive Profile Matrix for Thac Mo JSC 75 Tabl[e TV-12: riermal actor matrix fur Thao Mo TSC co -niieo 76 Table IV-13 : Matrix SWOT -1 for Thác Mo JŠC LH eeieeekẰ 77 Table IV-14 : Matrix SWOT-2 for Thac Mo JSC ccecceceeccecceeeeeeceeeeeeeeeeneeees 78 Table IV-15 : Matrix SPAC3- Score table for Thac Mo JSC - 79 Table IV-16: Grand strategy matrix for Thac Mo JSC -.¿ 55-2222 x22ccxrrss 82
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Trang 11Griccs) Capstone project report GaMBAO1!.D109-Group N0.6 INTRODUCTION 1 PROBLEM STATEMENT
Electricity is an essential energy which has highly specific character It holds a very important role in all aspects of economic, political, cultural and social conditions of a country As a secondary energy, power factors are the inputs for most business activities of enterprises, as well as the driving force for industrialization and modernization
From the very first days, a huge investment and national energetic security in most countries have made the production and trading of power a natural monopoly
Vietnam’s power sector from production, transmission and distribution, with no
exception, are within the control of the country for a long time
In the early stages of development, the Electricity Corporation of Vietnam (EVN) has successfully completed its mission as a representative of monopoly in power sector From the small grid and power scattered in different locals, Vietnam power system is connected into the unified national grid through the construction of 500kV
transmission lines, which are associated with the power scales like Tri An, Yaly,
Pha Lai, Hoa Binh, Phu My However, with continuously high growth of Vietnam’s economy and the annual electricity demand growth of 15-20% per year, it is essential to build more large power plant s with total capacity of over 2000MW per year with suitable synchronous transmission systems Despite of the assistance of national petroleum corporation of Vietnam (EVN) and Securities Group of Vietnam Coal (TKV), EVN could not ensure electricity supply for the economy Vietnam The electricity prices, which are controlled by the Government to keep out of inflation, have not stimulated investment in electricity generation process Under these circumstances, Vietnam government has decided to restructure the electricity industry and market-oriented electricity sector with the schedule of three levels To sustain and develop in this competitive environment, the power companies need to determine their business strategy in the coming years
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Thac Mo hydro power joint stock company was established on the basis of stocking
Thac Mo Hydro power Company, with a Vietnamese trade name: CONG TY CO
PHAN THUY DIEN THAC MG The company officially works with ancient forms
from 01/01/2008, for stakes of EVN To survive and develop in the present trend,
this joint stock company needs to build appropriate business strategy based on its advantages
From the demands of the allegation, we have chosen "Thac Mo Hydro power Joint- stock Company: Business strategies to 2020" as our topic for graduate assignment
2 RESEARCH OBJECTIVES
Research objectives are
- Assess Vietnam’s macro-economic development, government policy on electricity generation business as well as power competitive environment in Vietnam and other competitors to identify opportunities and connections threatening
- Make a general assessment on business activities of Thac Mo Hydropower JS Company and resources from the within to help us identify its strengths and weaknesses
- Propose suitable business strategies for Thac Mo hydropower JS Company based on internal strengths/weakness and external opportunities/threats, and also construct different solutions to support the implementation of effective business strategies outlined
3 SCOPE OF RESEARCH
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4 RESEARCH METHOD
Focus on researching and analyzing information, primary and secondary data as shown below:
- Secondary information was collected at Thac Mo hydropower JSC and some other competitoes Besides, the data also collected through the mass media, the
Bureau of Statistics, the Ministry of Industry, survey information from Thac
Mo hydropower JSC
- Primary information: The construction of matrix strategic choices was made by expert methods to identify the environmental factors inside and outside, which affected business activities of enterprises, and to determine the importance of these factors
While this method is simple to make, its disadvantage is that stem from the
subjective assessment should be limited to the level of precision However, the
opinions from leading, practical experience experts that I invited to comment in this capstone project report is more than enough to build a good business strategy
5 ACADEMIC AND PRACTICAL SIGNIFICANES
Academic significance:
In market economies, business strategy is crucial to the success or failure of one’s business To survive and sustainably develop, one enterprise needs a good business strategy and performance
There are many approaches to build a business strategy for any business This is a significant academic theory that has been synthesized from various sources to build a business strategy in a most basic, easy to understand and to use
Practical significance:
Thac Mo Hydro power Joint Stock Company is now operating under JSC model This topic will analyze strengths and weaknesses of this company to identify the core competencies which could create competitive advantage for companies, as well
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as indentify opportunities and challenges in current and future leaders to help companies develop a strategic direction
This topic would provide Thac Mo hydropower JSC a reference source in quantifying the influence of these factors that has and will have an impact on the
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1 BASIC DEFINITION OF BUSINESS STRATEGY
The concept “strategy” appeared very early from researches on historical wars The earliest definition of strategy was belonging to Greek Historian Xenophon in sixth century BC In this time, Sun Tzu, a Chinese military theorist also wrote “The Art of War” which analyzed military strategies
Till the middle of twentieth century, researches and development of business strategy did actually start to occur From scholars such as Drucker, Chandler, Ansoff, Andrew studied the successes of American economic corporations before
and within World War II, to nowadays managers, economists such as Michael E Porter, Fred R David, Rudolf Grunig, Richard Kuhn there have been many
different approaches to business strategy These are some of them:
“The determination of the basic long-term goals and objectives of an enterprise and the adoption of the course of action and the allocation of resources necessary for carrying out these goals”.- Chandler (1962)
- Strategy is a mediating force between the orginization and_ its environment: consistent patterns of streams of organizational decisions to deal with the environment (Mintzberg, 1979)
- Strategy is a framework or plan to integrate main objectives, policies and sequences of actions into a strong and robust combination - Quinn (1980) - Strategy is about being different It means deliberately choosing a
different set of activities to deliver a unique mix of value - Michael E
Porter(1996)
- Strategies are the means by which long-term objectives will be achieved - Fred R David (2003)
- Strategy is long-term, direction of management and assurance of fulfillment of basic objectives and purposes of company - Rudolf Grunig va Richard Kuhn (2003)
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Although there have been many different approaches and definitions, a business strategy consists of the following contents:
- Identifying basic long-term objectives of company - Establishing general action programs
- Choosing courses of action, deploying and allocating resources to achieve those objectives
2 CLASSIFICATION OF BUSINESS STRATEGY
There are many different types of strategies within a company, depends on level, approaches business strategy can be divided by two categories:
2.1 STRATEGY LEVEL
According to level, a company has at least three levels of strategy:
- Corporate strategies: Strategies towards general purposes and extent of the organization
- Business level: Relating to sucessful competitive methods on specific markets
- Functional strategies: Strategies which help corporate and business strategies implemented effectively by components built on resources, human process and necessary skills
In a highly competitive and globalized environment, borders between nations were almost abolished; as a result there was a fourth level of strategy called global strategy
2.2 STRATEGY TYPES
2.2.1 CORPORATE LEVEL
Corporate strategies are often towards basic long-term objectives, consequently there are many types of corporate strategies According to Fred R David, there are
Trang 17( IRIGG Capstone project report GaMBAOl [)109-Croup N0.6 3 UNIVERSITY - Forward integration - Backward integration - Horizontal integration Intensive strategies - Market Penetration - Market Development - Product Development - Related Diversilication - Unrelated Diversilication - Conglomerate Diversilication Other strategies - Joint Venture - Retrenchment - Divestiture - Liquidation Mixed strategies 2.2.2 BUSINESS LEVEL
Business strategies are related to successful competitive methods on specific markets Business strategies include competitive methods chosen by organizations, ways to position itself on the market to gain competitive advantages and different positioning strategies can be used in industrial circumstances
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2.2.3 FUNCTIONAL STRATEGIES
Functional strategies are strategies of functional units such as marketing, finance,
human resource, etc These strategies help to enhance operational efficiency of company and support to business and corporate strategies implemented effectively
3 STRATEGIC MANAGEMENT PROCESS
Strategic management process consists of three stages: - Strategy formulation stage
- Strategy implementation stage - Strategy evaluation stage
Figure I-1: Comprehensive strategic management model + Develop Vision Mission and statement | Strategy planning Implementation _, Evaluation | mĩ T T
Source: Strategic management concept-Edition 12, Fred E David Figure I-1 illustrates a comprehensive strategic management model created by Fred R David In which strategy formulation stage includes: Identifying vision, mission,
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Grigcd) Capstone project report GaMBAQO!.D109-Group N0.6
strategic objectives; analyzing external factors to identify opportunities and threats; analyzing internal factors to recognize the strengths and weaknesses of company; basing on these previous information, company identify business objectives and establishes long-term objectives and chooses strategies to implement Strategy implementation stage consists in allocating resources to set up annual objectives and policies The final stage is strategy measurement and evaluation
Strategy formulation process
According to Fred R David, strategy formulation process consists of three stages:
Figure [-2: Strategy formulation process ae Phase 1: Input
External factor Competitive profile matrix Internal factor
evaluation matrix (CPM) evaluation matrix (IFE)
(EFE)
Phase 2: Combination
Strengths, Strategic Boston Internal- Grand
weaknesses, position and consulting external Strategy opportunities and = action evaluation group matrix matrix(IE) matrix
threats matrix matrix (SPACE) (BCG) (SWOT) Phase 3: Decision Quantitative Strategic planning matrix (QSPM)
Source: Strategic management concept-Edition 12, Fred E David 3.1.1 VISION AND BASIC OBJECTIVES
This is the first stage of strategic management process, mission and basic objectives of company provide a cirumstance to build up strategies A mission presents reasons for the existence of company and points out what will company do Each company has a specific mission
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Basic objectives of company identify what company expect to meet in medium and long term; target which company will develop to They are the first and the most important foundation to formulate business strategy Mission of company is a general concept, objectives break it down into details
Objectives are built on the foundation of mission; external and internal factors of company Objectives must be appropriate to objective and subjective conditions
3.1.2 EXTERNAL ENVIRONMENT EVALUATION
Purposes of external environment evaluation are to develop a limited list of opportunities that will benefit to company and threats that company should avoid to mitigate negative impacts from external environment There are many different external evironmental factors (macro and micro), external environment evaluation just covers factors that have impacts on company
Macro environment include: - Economic environment,
- Political and legal environment, - Social and cultural environment,
- Demographic and geographical environment, - Technological environment,
- Global environment
Micro environment is competitive environment or the so-called industrial environment, is the environment affect directly to company, most of operational and competitive activities of company take place in this exvironment
Michael E Porter, Professor of business strategy, Harvard University created Five-
Trang 21GRIGG Capstone project report €GaMBA01.DTI09-Group N0.6 UNIVERSITY Figure I-3: Porter’s Five-Forces model Threat of New Entrants : HN
Bargaining Among | Bargaining
Power of Existing Power of
Suppliers Competitors Buyers + Threat of Substitute Products or Services
Source: Five Competitive Forces That Shape Strategy- Michael E Porter
3.1.3 INTERNAL ENVIRONMENT EVALUATION
In each company, there are always different strongs and weaknesses at business units Internal strongs and weaknesses in associate with external opportunities and threats, and companion with mission statement are foundations to formulate objectives and strategies of company
Internal environmental factors: Finance:
Financial capability, management, accounting,
Management:
Including all managerial activities in order to ensure operational performances in reality are corresponding to expectations such as: Ability of human resources management; production management, quality management; materials management, financial, and sale management
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Marketing:
Marketing is described as a process of identification, forecast, establish and satisfy consumer’s demand to goods and services Marketing management include: Market development research; target market selection; distributional channels system; after-
sale services,
Personnel:
Human resources play a critical role to corporate performance Despite a right strategy, it can’t bring anything to company without effective workers Human resources include: human resoureces organizational structure, human resoureces quality, maintain and development policies
Operations management:
Include all the activities in order to bring inputs to goods and services of company Operations management process consists of: Production procedure design,
technological production line selection, production scale, production position, area;
product quality, services, manufactured price
3.2 BUSINESS STRATEGY FORMULATION
Basing on corporate objectives; external environmental factors and _ internal circumstance, to formulate business strategy with the following components:
- Identifying and selecting opportunities which could help company obtain business objectives
- Selecting target markets
- Selecting goods and services for target markets
- Building and analyzing strategy matrix to choose appropriate strategies - Building up marketing-mix strategy for selected goods and services
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3.3 BUSINESS STRATEGY IMPLEMENTATION
In order to implement effectively formulated business strategies, company must have solutions to operations management, business management; human resources, finance to carry out these strategies That is, organizing and allocating corporate resources to implement sucessfully selected business strategies, 1.e.:
- Organizing an appropriate organizational structure
- Allocating properly, maintaining and develop human resources - Allocating financial resources
- Building up operations management model scientifically and effectively - Bulding corporate culture matching with selected strategies
- Building strategic communication system, PR etc
3.4 BUSINESS STRATEGY ASSESSMENT
Evaluating whether a business strategy effective or not is very important A business strategy is effective when that strategy fits to real circumstances of company and socio-economic status around it; and utilize as much as possible opportunities to obtain proposed objectives Business strategy evaluation include the following steps:
- Examining and testing effecitiveness and fitness of business strategies before put in operation
- Evaluating operational and business performance of company period by period of strategy inplementation process in order to detect mistakes, disadvantages of strategy and creating timely regulations, repairments and supplements
3.5 TOOLS AND EXPERIENCES TO SELECT BUSINESS
STRATEGY
3.5.1 EXTERNAL FACTORS EVALUATION MATRIX
Estabishing a Matrix assesing External factors will help us to summarise and quantify influences of external environment factors on businesses, it affects
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manufacturing and business operation of businesses; including many factors such as opportunities and challenges
To build a Matrix we manage to set a list containing all of the external factors affecting operation of a business Assesing the importance level of each factor by scoring weights; sum of scoring weights of all factors equals | Classification reveals the corresponding importance of those factors in business success
Assesing the importance level of each factor by classifying factors from | to 4; namely: level 4 means the company has the best reaction; level 3 is above average; 2 is average and | is the least Those levels depend on the effects of business strategy
The next step is determining weighted score of each factor by multiplying the the weight of factor with the corresponding rating Then, add sum of weighted scores with each variable to determine the total weighted score for a business; the highest is 4 and the least is 1 and average is 2,5 point
The total weighted score is 4 revealling that the company is taking advantage of external opportunities and controlling very well or minimizing external threats to the company
The total weighted score is | revealling that the company doesn’t seize the opportunities and minimize external threats
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——— een RA seb Asa 6 SSR ry oR ae ELT REE re Es SERRE —
Source: Strategic management concept-Edition 12, Fred E David
3.5.2 INTERNAL FACTOR EVALUATION MATRIX
Building internal factor Matrix will help us to summarize and asses the important strengths and weaknesses of function business department, it affects manufacturing and business operation of businesses
To build a Matrix we manage to set a list including all of the external factors affecting operation of a business as mentioned in internal business assesment part Assesing the importance level of each factor by scoring weights; sum of scoring weights of all factors equals 1 Classification reveals the corresponding importance of those factors in business success
Assesing the importance level of each factor by classifying factors from 1 to 4; namely: level 4 means the company has the best reaction; level 3 is above average; 2 is average and | is the least Those levels depend on the effects of business strategy
The next step is determining weighted score for each factor by multiplying the weight of factor with the corresponding rating Then, add sum of weighted scores with each variable to determine the total weighted score for a business; the highest is 4 and the least is 1 and average is 2,5 point
The total weighted score is 4 revealling that the company is having strengths; and can overcome weaknesses On the contrary, the total weighted score is | revealling that the company doesn’t have strengths and has too many weakness to overcome
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Total >w=l a rv
it r —— 2 C0 CÀ c Q CỘNG
Source: Strategic management concept-Edition 12, Fred E David
3.5.3 COMPETITIVE PROFILE MATRIX (CPM)
Building competitive matrix help companies to identify rivals, pros and cons which help companies to have appropriate business strategy
This matrix including all of the internal and external factors of businesses plays an important role in the business success In the competitive image matrix, the competitors are also considered and calculate the weighted scores After that, we compare the total weighted scores of those companies with the prototype competitors Thereby, we will have a lot of information to build business strategy Table I-3: Competitive Profile matrix
Weight Sample company Competitor 1 Competitor Rating Weighted Rating Weighted Rating Weighted
Scores Scores Scores R S=W*R R S=W*R R S=W*R Factor | Ww, R, » a - a " Factor n Ww Ro Si x S lũ R Ẫ Tôn M, o iY 2M oy a, a Source: Strategic management concept-Edition 12, Fred E David 3.5.4 SWOT MATRIX
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Table [-4: SWOT matrix
OPPORTUNITY (O) THEAT (T) j | | Strategy ST Xin Strategy SỐ” STRONG (S) Promote internal strengths to Promote internal strengths
take Opportunities advantage of to avoid external Threats |
[oo eee no SraegyWI =4
| WEAK (W) Overcome internal Weaknesses Overcome internal | to take advantage of Weaknesses to avoid
| Opportunities external Threats
Source: Strategic management concept-Edition 12, Fred E David SWOT matrix will help to establish 4 kinds of strategies
- Strength _ Opportunity Strategies (S_O) : Promote internal Strengths to take advantage of Opportunities
- Weakness Opportunity Strategies (W_O): Overcome internal Weaknesses to take advantage of Opportunities
- Strength Threat Strategies (S_T): Promote internal Strengths to avoid external Threats - Weakness Threat strategies (W_T): Overcome internal Weaknesses to avoid external Threats 3.5.5 STRATEGIC POSITION AND ACTION EVALUATION MATRIX- SPACE
SPACE matrix is a managerial tool used to analyze strategy It helps to identify which strategies company should carry out
Depending upon the of organization, numerius variables could make up each of the dimension represented on the axes of the SPACE matrix Factors that were included
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earlier in the firm’s EFE and IFE matrix shall be considered in developing Matrix SPACE Steps to develop a SPACE matrix:
Step 1: Choosing a group of variables represent for FS, CA, IS and ES
Step 2: Assessing from +1 to +6 for variables of FS IS and from -1! to -6 for variables of ES CA, which are worst and best respectively Basing on FS and CA to make comparision with competitors, ES and IS to make comparision with other industries
Step 3: Take average score for FS,CA, IS and ES Step 4: Plot these score into SPACE matrix
Step 5: Plus two average value on horizontal and plot this number on horizontal axis Similarly for vertical axis With these two number, we have a new point on the matrix
Step 6: Connect original point to this new point we will have a vector, this vector present the strategy of the evaluated company
Figure I-4: Matrix SPACE Conservative FS Aggressive Market penetration +6 Backward, forward, horizontal integration +5
Market development ia Market penetration Product development 43 Market development
Related diversification +2 Product development
+1 Diversification (related or unrelated ) CA 6 s8 A BB at 1 +1 42 +3 +4 +§S +6 IS
Defensive = Competitive
-3
Retrenchment A Backward, forward, horizontal integration
Divestiture -5 Market penetration Conservative -6 Market development
Liquidation " ES Product development
Trang 29wig poe ( iI ) ) CT DO! GaMBAOI 11 ()9-¢ roup N Griccd) UNIVERSITY,
Cty +1 ' ơ meant â + ` 1;tin 17 > ‘ \
Irce: Strategic management concept-Edition 12, Fred E David
Where: FS (financial strength), CA (competitive advantage), IS (industrial strengths) and ES (environmental stableness)
3.5.6 INTERNAL-EXTERNAL MATRIX
IE matrix analysis is to put every parts of company in the below figure: IE xay matrix is built upon two main factors:
Trang 30Capstone project report GaMBAO!.D109-Group NO.6
Griccd) UNIVERSITY project ou
Figure I-6: Internal-External matrix (IE)
Total weighted score IFE
Strong = Average = Weak = : TT epee '4,00-400) (2/00-299) — (1,00-199) § I " H ề (3,00-4,00) | = Medium = 2 (2,00-2,99) IV V VI š oe ee = (1,00-1,99) vn vn IX Source: Strategic management concept-Edition 12, Fred E David IE matrix includes:
- Grown and Build (area 1, I, 1V): Appropriate strategies are concentrated growth (access, develop new market, develop new product); integrated strategies (forward, backward and horizontal integration)
- Hold and maintain (area Ill, V, VID): Appropriate strategies are access new market and develop new product
- Harvest or devest (area VI, VIII, IX): cut, liquidate and abolish
ineffective units
3.5.7 GRAND STRATEGY MATRIX
Trang 31GRIGG Capstone project report GaMBAO1.D109-Group NO.6 UNIVERSITY Figure I-7: Grand strategy matrix Rapid market growth Quadrant I] Quadrant |
Market development Market development Market penetration Market penetration
Product development Product development Horizontal integration Forward Integration
Devestiture Backwar ackward Integration sa
Weak Liquidation Quis Horizonal Integration : Strong
competi Related Diversification competive
tive position iti
7 Quadrant III Quadrant IV
position
Retrenchment Related Diversification Related Diversification Unrelated Diversification Unrelated Diversification Joint venture
Horizontal Diversification Devestiture
Liquidation
Weak market growth
Source: Strategic management concept-Edition 12, Fred E David
3.5.8 QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
QSPM is used to rank strategies to find the best strategies for company This matrix
use all the information from: IFE, EFE, SWOT
To develop a QSPM, there are 6 steps:
Step 1: List strengths and weaknesses (at least 10 factors) and opportunities and threats (at least 10 factors), these factors should be taken from IFE and EFE
Step 2: Assign Weight for these factor, as did in EFE and IFE matrix
Step 3: Identify a set of alternative strategies, organize them into specific groups Step 4: Set attractive score (AS), quantify attractiveness of each alternative strategy This score depends on the impacts that strategy have on the above internal and
Trang 32apstone project report Ga MBA01.D109-Group N0.6 external factors We will set | — non-attractive, 2 — low-attractive, 3 — fair-attractive, 4 — very-attractive
Step 5: Count total attractive score (TAS) Plus weighted scores with equivalent AS High TAS, high attractiveness of the strategy
Step 6: Summarize total attractive score for each strategy This score show the attractiveness of each strategy
Table I-5: QSPM matrix | ý Important factors Strategies
Weight Strategy 1 Strategy 2 Strategy 3
AS TAS AS TAS AS TAS Internal factors: Administration, finance, | accounting, marketing, operation, R&D, infromation system External factors: Economic, political, social, cultural, technological Total
Trang 33Griccs) Capstone project report GaMBA01.DI09-Group N0.6
3.5.9 EXPERIENCES TO CHOOSE BUSINES STRATEGY
It is not simple to build up a strategy for a company because it depends on many
factors in past, present and future; furthermore, it also depends on sector, business
fields There are some experiences in formulating a business strategy: - Firstly, we need to have an appropriate process
- Business objectives must be suitable with company’s circumstance and external environment
- Collecting and analyzing information to find out strengths to enhance and weaknesses to improve
- Evaluating opportunites and threats on the market
- Focus on the most effective strategies of company and ensure the unity between implementing activities
Figure I-8 : Inside of powerhouse of Thac Mo hydro power plant
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GR UNIVERSITY ce IGG GaMBAO!.D109-Group N0.6
CHAPTER II: AN INTRODUCTION TO VIETNAM
ELECTRICITY: STATUS QUO AND DEVELOPMENT
, STATUS QUO
The 500KV ultra-high-voltage transmission lines, which was operated in 1994, has linked a power system in North, Central and Southern of Vietnam to form a electrical system Since 1996, the renewal economics reform of Vietnam
Government has led the continuously growing of the economy over many years Along with its growth, electricity demand is also developed at high speed
Table U-1: Electricity consumption 1990-2009
: he Weight | Age = Weight oe Weight Services | Weght ee - Perpason Loss
Trang 35Capstone project report GaMBA01.D109-Group N0.6 Griccd) UNIVERSITY | a T00 205 Z8 es | 5B | 13 1981 „ 42 | ` THẾ min 1 A6 226 44 %5 1 | zim | “ma | 4357 8 51468 cS ÉH- | H2 AU Z2 5 563 1 me MD H2 5884 148 Œ6 106 mse Z8H0 S4 Ml I0 Z6 46 s2 84 GH06 128 7 2 _AMĐ HSL | oe ao 288 4 5990 80 7467 133 —— - _ a a | vee Source: EVN source and Master Plan VI
The consumption of electricity in 1990 — 2008 has shown that power consumption in 2009 was 12 times higher than in 1990, with an anually average growth rate of
14 The 2000 — 2009 growth rate of average load demand was about 12.8% Figure II-1: Electricity production 2000-2009
- wet eeneeer ours _ ng Electricity production MWh 100000 90000 80000 + 70000 40008 ——— 30000 20000 10000 | Nam 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
In the first four months of 2010, EVN's electricity production and purchased increased 19.4% over the same period in 2009
1.1 VIETNAM POWER GENERATING STRUCTURE
Until July 2010, total available power of the plant s in Viet Nam was just 18.400MW, largely lower than master diagram VI which has been approved was 21.062MW Because of the late in process of the important electricity sources such
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1.2 ELECTRICITY PRODUCTION OF EVN FROM 01/2010 TO
09/2010
In the nine months of 2010, electricity production and purchase of EVN was 72.031 billion kWh, reaching 74.25% of the plan, up 15.69 % over the same period last year, including electricity production was 44.001 billion kWh, up 4,34%, outsourcing purchased electricity 28.03 billion kWh, up 39.51% over the same period last year (buying from China: 4.062 billion kWh) Because the water level in the hydropower reservoirs lower than the average 20-25% of electricity for years so the output did not meet the electricity demand, thereby rotate cutting power has to applied By exploitation of resources with high cost as oil-fired power plant s to offset the lack of hydro power power, EVN has suffered losses to 6,500 billion dong
1.3 ELECTRICITY PRICE
1.3.1 ELECTRICITY PRICE IN VIET NAM
Current retail price of electricity sold to consumers remains the Government's price controls, this make negative affects in the negotiation of electricity sale price between electrictity producer and EVN
According to EVN report, average electricity price saling to consumers in 2007- 2009 are as folloss: Table II-2: average electricity sale price in 2007-2009 Everage electricity sale price 2007 2008 2009 VNd/kwh 860.15 871.03 970.79 USD/kwh (1USD= 20.000 VNd) 0043 0.0435 0.485
With controlled electricity sale price, due to benefits EVN will not want to invest electric generating sources or buy electricity from other producers having production cost higher than average electricity sale price
The following are some electricity price that EVN buy from power plants:
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Table II-3: Electricity price at power plants
Average price | NO Name of Power plant Price unit (VND/Kwh;
USD/Kwh)
L it TBK Phu my 2-2 BOT USD 0.039
| 2 TBK Phu my 3 BOT USD 0.048
| 3 Hydropower Can Don BOT _ USD 0.045
L 4 Formusa Thermal Power USD 0.090 ES 5 Hiep Phuoc Thermal Power USD 0.186
6 TBK Ca mau USD 0.050
7 THERMAL POWER Nhon trach 1 USD 0.039
8 TQ 220 Kv- Lao cai USD 0.051
9 TQ 220 Kv- Ha giang USD 0.052
10 Na Duong Thermal Power VND 620
11 Cao Ngan Thermal Power VND 655
12 Hydropower Ngoi San VND 614
13 Hydropower Se San 3A ; VND 496 14 Hydropower Srok Phu Mieng VND 620
15 Cai Lan Thermal Power VND -
16 Hydropower Binh Dien VND 634
7 Hydropower Song Con VND 561
18 Hydropower Nam Chien 2 VND 588
19 Hydropower Bac Binh VND 525
20 Hydropower A Vuong VND 784
21 Hydropower Que Phong VND 610
22 O Mon 1 Thermal Power VND 3.687
23 Pha Lai Thermal Power VND 682
24 Ninh Binh Thermal Power VND 929
25 Thac Ba Hydropower VND 477
26 Thac Mo Hydropower VND 452
27 Vinh Son — Song Hinh Hydropower VND 428 28 Ham Thuan- Dami Hydropower VND 251
29 Ba Ria Thermal Power VND 883
30 Uong Bi Thermal Power VND 754,6
31 Can Tho Thermal Power VND 5.328 32 Thu Duc Thermal Power VND 4.177
33 Phu My Thermal Power VND 667
34 Hai Phong Thermal Power VND 385 35 Quang Ninh Thermal Power VND 462
36 Cua Dat Hydropower VND 630
| 37 Serepok 4 VND 582
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As attached in APPENDIX, electric price in developed and developing countries and countries in OECD in 2008-2009 is so higher than in Viet Nam
Average electricity price for industry: 0,133 USD/kwh Average electricity price for household: 0,199 USD/kwh Thailand: According to EGAT”’ annual report in 2009, average sales price is 2.508 Bath/kwh ~ 0.0845 USD/kwh Average Energy Sales Price Metropolitan ectricity Authority (MEA) 2.503 2.478 1.01
Provincial Electricity Authority (PEA) 2.510 2522 (0.48)
Direct customers 2.735 2.594 5.44
Standby power supply 4.15 2.498 69.53 Other minor customers 1,587 1.721 (7.79)
Jverall Average Sales Price 2.508 2.508
Source: EGAT REPORT-2009
In comparison of Viet nam electric sales price of 0,0485 USD with sales price of ).0845USD in Thailand and OECD, we realized that electricity sales price in Viet Nam is still so low and not exactly reflect production cost According to recent Feasibility study for import coal fired thermal power plants such as Long Phu 1, Song Hau, electricity sales prices have to be over 0,07 USD/kwh
Thus, once reaching competive electricity market in Viet Nam, it is necessary to put power plants having high production cost suc as coal fired , electricity sale price will at least approach to Thailand level
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UNIVERSITY Capstone project report GaMBAO! D109-Group N0.6 Griccd) | | 2 FUTURE DEVELOPMENT OF ELECTRICITY SOURCES TO 2020 2.1 LEGAL DOCUMENTS Currently, the development of Vietnam's power system need is based on the legal basis as follow: 2e
National Plan for Electric Power Development in the Period 2006 - 2015 with due consideration till 2025 prepared by Energy Institute
Ratification of national planning for electricity power development period 2006 -2015 with due consideration till 2025 — Decision No 110/2007/QD - TTg
Announcement No 106/TB-VPCP on 04/28/2010 about Conclusions of Deputy Prime Minister Hoang Trung Hai at the State Steering Committee meeting for the Electricity Planning VI
The across country electricity system connection planning for thermal power centers version 04/2009 by the Energy Institute
Statement to Prime Minister No 4011/BCT-NL of the Ministry of Industry and Trade on 05/5/2009 on electricity centers connection planning to the national electricity system
ELECTRICITY DEMAND FORECAST IN 2008-2025