GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT
| BUILDING A BUSINESS STRATEGY FOR HANH XUONG TECHNICAL SERVICES
COMPANY LIMITED IN PERIOD 2013-2018
Group Number: 06
Student’s name: NGUYEN THI THANH TAM NGUYEN HA MY
LE DAO SONG TOAN LUONG THANH TUNG
Trang 2GRATITUDE
We, group 6 — class GAMBA.M0611, would like to express our appreciation to staff and employees of Hanh Xuong Technical Services Co., Ltd for their enthusiastic
support and creating us favorable conditions to contact and work with leaders and
managers of the Company, so we gained more information to improve our knowledge
and complete this exercise
First of all, we thank all teachers in GaMBA’s program for their enthusiasm and dedication in teaching; as a result, we have achieved useful knowledge for our current
work
We also express our deep gratitude directorates, training bureaus, class management
bureaus of Global Advanced Program They really creates the most favorable conditions for all of us to complete given tasks in current office as well as to ensure the studying quality
Last but not least, we are thankful to relatives in our families and friends More than anything else, their encouragement is being a great source of inspiration to us to complete
the Report in collaboration
In our Capstone Project Report, it is inevitable for us to make some mistakes in
execution of this exercise Therefore we hope to receive advices from teachers and
Trang 3TABLE OF CONTENTS PREAMBLE
CHAPTER I: THEORETICAL BACKGROUND ON BUSINESS STRATEGY OF AN ENTERPRISE
1.1 Theory on strategy and strategy management
1.1.1 Definition of business strategy
1.1.2 Characteristics and roles of business strategy 1.1.2.1 Basic characteristics of business strategy
1.1.2.2 Roles of business strategy
1.1.3 Basic stages of strategy management
1.1.3.1 Formation of strategy 1.1.3.2 Implemenation of strategy 1.1.3.3 Evaluation of strategy
1.1.4 Process for building a business strategy 1.1.4.1 Identifying mission of an enterprise 1.1.4.2 External factor evaluation
1.1.4.3 Internal factor evaluation
1.1.4.4 Analyzing strategy and selecting strategy
1.2 Tools for building a business strategy
1.2.1 Collection of information and systematization of collected information
1.2.1.1 EFE matrix
1.2.1.2 Competitive profile matrix (CPM)
1.2.1.3 IFE matrix 1.2.2 Stage of integration
Trang 41.2.2.2 Building decisive stage
1.2.2.3 Quantitative strategy planning matrix (QSPM)
1.3 Solutions to expand business market
CHAPTER II: ANALYSIS OF BUSINESS REALTY OF HANH XUONG TECHNICAL SERVICES CO., LTD
2.1 Introduction about Hanh Xuong Technical Services Co., Ltd
2.1.1 Introduction about Hanh Xuong Technical Services Co., Ltd
Dede Organizational structure Dia Weds Vision and mission
lấn Analysis of environmental factors
2.21 Analysis of external environment 2.2.1.1 Macro environment analysis
2.2.1.2 Micro environment analysis
2.2.1.3 Evaluation of opportunities, threats 2.2.1.4 EFE matrix
2.2.1.5 CMP matrix
Dd Analysis of internal environment
2.2.2.1 Human resource
2.2.2.2 Products and services
2.2.2.3 Finance
2.2.2.4 Assessment of strengths, weaknesses
2.2.2.5 IFE matrix
Trang 53.1, 3.1.1; 3.2 3.2.1 3.2.2 3.2.3
Development direction of Hanh Xuong Technical Services Co., Ltd
Strategic targets
Core value
Proposing business strategy in the period 2013 — 2017 Proposing business strategy in the period 2013 — 2017 QSPM matrix
Content of selected plan
Solutions
E mancial thimat-resotree-solution Human resourceFinancial solution Marketing solution
Trang 6
PREAMBLE
1 General context and the essence of research topic
In recent years, along with the development of Vietnam economy, all economic
sectors have been growing significantly Particularly, the industry of supplying industrial machinery and equipment has been also in process of non-stop growth
Currently, domestic and foreign companies are all having appropriate
investments in their business There are more and more enterprises supplying industrial
machinery and equipment appearing on the markets, and this is a cause of intensive competition between the enterprises
Understanding the importance of this, all enterprises determine that it is required
to furnish themselves with the best weapons for defending from competitors and
attacking to the markets in order to exist and develop
For overcoming threats, utilizing opportunities to improve its competitive
position on the markets, each enterprise is required to have an appropriate business
strategy in accordance with each period, each development stage and global trend on
the principle of ensuring the balance between national benefits and enterprise’s
benefits For such reason, business strategy planning is an essential demand for every
enterprise in current period
Due to such facts, we decided to select the topic “Building a business Strategy
for Hanh Xuong Technical Services Co., Ltd in period 2013 — 2017” 2 Subject and scope of the study
Study subject of this exercise is business strategy of Hanh Xuong Technical Services Co., Ltd and business strategies of its competitors
Study scope of this exercise is business operation of Hanh Xuong Technical Services Co., Ltd and business operations of its competitors within the area
Trang 7Analyzing and studying the role of business strategies of Hanh Xuong Technical
Services Co., Ltd during the past time and factors affecting to the building of a business strategy for Hanh Xuong Technical Servies Co., Ltd
Analyzing and studying the current situation against business strategies of Hanh
Xuong Technical Services Co., Ltd during the past time Then, finding the causes of development limitation of the company and providing timely solutions for the
company
Finally, studying to provide solutions for the implementation of business
strategy in order to get Hanh Xuong Technical Services Co., Ltd with more and more
growth, leaving its competitors far behind
4 Study methods
+ Statistics, interviews, data collections
+ Studying situations, theory in combination with collecting and processing data in order to clear the causes of shortcomings and provide solutions, which may be applied to the practical situations
+ Besides, we also applied dialectical materialism and historical materialism
methods in our study
5.3 Structure of the Capstone Project Report
In addition to the components such as: acknowledgment, table of contents,
preamble, conclusion, reference this exercise is divided into 3 chapters Chapter I: Theoretical background on business strategy of an enterprise
Chapter II: Analysis of business realty of Hanh Xuong Technical Services Co.,
Ltd
Chapter III: Formulating business strategy in Hanh Xuong Technical Services
Trang 8CHAPTER I
THEORETICAL BACKGROUND ON BUSINESS STRATEGY OF AN ENTERPRISE
1.1 Theory on strategy and strategy management
1.1.1 Definition of business strategy
For quite long time ago the definition strategy was used to be applied in
military area In military theory, strategy is "the utilization during both peace and war,
of all of the nation's forces, through large scale, long-range planning and development,
to ensure security and victory" (Random House Dictionary) Since the 1960s, the strategy can be applied in business and the term "Business Strategy" was born The
concept of trading strategies and methods have developed over time and authors
approach it in many different ways
By the view point that business strategy is an art, Alain Threlart said “Strategy is an art which the enterprise use to fight against competition and win” M Porter also has same point of view He said “Strategy is the art of building sustainable competitive
advantage to self defense”
By the view point of management, business strategy is a plan G Arlleret said
“Strategy is the definition of roads and means to reach to established objectives
through policies” D Bizrell et al said “Strategy is likely a general plan leading or directing enterprise to its expected goals Strategy is a background for planning
operation policies and measures” And Gluecl said “Strategy is a type of
comprehensive and general plan which is designed to ensure the achievements of
organization’s objectives”
Business strategy is an art of coordinating all the activities and controlling them in order to achieve the long term objectives of the enterprise In Chandler’s opinion,
Trang 9of measures or process to perform and distribute essential resources and organize the
implementation of such objectives
In an enterprise, business strategy is “an intergrated and cordinated set of
commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product market.” (Strategic Management, Fred R.David)
1.1.2 Characteristics and roles of business strategy
1.1.2.1 Basic characteristics of business strategy
+ Business strategy identifies basic objectives and business orientation of enterprise through each period
+ Orientability of strategy is to ensure the continuous and _ sustainable
development of enterprise in changing business environments
+ Business strategy ensures for mobilizing maximum resources and combining
the exploitation, use of these resources of enterprise for now and in the future, promoting advantages and capturing opportunities in order to gain advantages in competition
+ Business strategy of enterprise is reflected through a continuous process
+ Business strategy always keeps the idea of attacking and winning
+ Business strategy is regularly built for a long term period (3 years, 5 years, 10 years)
1.1.2.2 Roles of business strategy
+ Business strategy helps the enterprise to realize clearly their goals, objectives, direction which will serve as the premises and lodestar for all the business and production activities of the enterprise
+ Business strategy enables the enterprise to realize and capture all the business opportunities, and at the same time proactively overcome all the threats on the
Trang 10* Business strategy should contribute to the enhancement of efficiency in using resources; strengthen the competitive position of the enterprise for the long term
sustainable development of the enterprise
+ Business strategy creates firmly background for working out policies and determinations on business and production activities which are going along with the market movements
1.1.4 Stage of strategic management 1.1.4.1 Formation of strategy
+ Carrying out studies: carrying out studies related to the collection and process of information on markets and business lines of enterprise Carrying out studies is aimed to determine strengths and weaknesses of enterprise
+ Incorporating guessworks with analysis: there are many tools for Strategists incorporating guessworks with analysis to provide feasible replacement strategy such
as: External Factor Evaluation (EFE) matrix, Internal Factor Evaluation (IFE) matrix, Quantitative Strategic Planning Matrix (QSPM) and etc
+ Making decisions: decisions are very important, strategic decisions have long
term, better or worse effects against enterprise 1.1.4.2 Implementation of strategy
+ Implemenation of strategy is named as action stage of strategy management Implementing strategies is required devotion, contribution and discipline from each
implenenting individual
+ Implementation of strategy including developing funds for implementation, programs, cultural environment, and conbining with promoting employees using
rewarc systems for long term and annual objectives
+ The biggest threat in implementing strategy is stimulating managers and
employees to work with proud and enthusiasm for common goals of enterprise
1.1.4.3 Evaluation of strategy
Trang 11+ Evaluation of strategy is necessary because that success at current time will not be an assurance for a successful future of enterprise
1.1.5 Process for building a business strategy 1.1.5.1 Identifying mission of an enterprise
Identifying business tasks of enterprise is mainly based on principles provided by Peter Drucker in the middle of 1970s Peter Drucker said that the question “what is our business?” has the same meaning as question “what is our mission” Identifying mission helps enterprise in directing its mission and things need to do for business
opertions
A clear and full report on mission is very important for an enterprise to establish its goals and build an effective business strategy
1.1.5.2 External factor evaluation
+ Major purpose of evaluating and controlling external factors is for developing
a limited list of opportunities that external environment can bring to the enterprise as
well as threats from external environment that the enterprise should avoid
+ External environment includes two separate environments, they are marcro
environment (PEST model) and micro (industry) environment (M Porter’s five forces model)
I.1.5.2.1._ Macro_environement: according to extended PEST model, macro
Trang 12BS ho
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Table 1.1 PEST Model
+ Political and legal factors: including features on political systems and legal documents in region, nation and the world
- Studying political and legal factors helps enterprise seeing opportunities and threats
- For enterprises operate in sectors that greatly depending on Government’s contracts or aids, political and legal forcasts may be the most important part of checking external factors
- Today legal factor trend is focused more on protection of natural environment, consumers’ rights, fair competition of enterprises and more international integration
+ Economic factors:
- Economci factors directly influence the potential attraction of different strategies
- Economic variables such as: GDP, GDP per capita, GDP growth, economic cycles, inflation, trade balance, foreign exchange
+ Sociocultural factors:
Trang 13
- Sociocultural factors consists of customs, believes and common viewpoints in the community
- Changes in society, culture may cause important effects agains products —
services, markets and consumers
- Trends of sociocultural factors: loyalty to core cultural values, focusing more
on life quality, role of women is improving, random shoppings are also increasing + Technological factors:
- Advanced technologies will have impacts on products, services, markets,
providers, distributors
- Technical progress may create new markets and certainly create new products replacing outdate products
- Scientific and technological progress also create competitive advantages for
enterprise against its competitors
- Technological trends: the development rate of technologies is quicker and quicker, lifetimes of products are shorter, leading enterprises will invest more for research and development process
+ Demographic environment
- Demographic environment affects greatly to business strategy of enterprise
Enterprise may also find opportunities and threats from demographic environment - Variables of demographic environment: population, density, natural population
growth rate, sex structure, average age
+ Global environment: including global markets relateing to economic phemomenons that are occurring and changing across the world, cultural institutions on
the world
1.1.5.2.2 Industry environment:
+ Analyzing industry environment using “five forces model” of M Porter is an effective tool for enterprise in finding out the origin of benefits
Trang 14+ Analyzing in detail and particular of industry environement will help enterprise recognizing opportunities to promote and threats to face and plan out
strategies for dealing with such difficulties, threats
Five Forces Analysis
Threat of new entrants
Bargaining =e" <— Bargaini
power of! N Y power suppliers 1 Buyers
T Threat of substitute
Products
Adapted from MLE Porter, Competitive Strategy, Free Press, 1980
Table 1.2 M Porter’s five force model
+ New entrants:
- A new entrant is a supplier who will invest in a field
- Number of new entrants is depending on: yield, market growth opportunities, number of current competitors, competition of industry and reation of competitors, entry barriers (capital, technology, goodwill )
+ Customers:
- Analyzing bargaining power of customers
- Bargaining power of customers is depending on number of customers, linking ability of customers (dispersal, concentration), number and value of each purchase, number of providers
+ Substitute products:
- The increase in number of sustitute products mean the decrease in future profitability
- For example: film camera and digital camera, softdisk and CDROM
+ Suppliers: concentration of suppliers, importance of product quantities to suppliers
Trang 15+ Competitors:
- Competitors are suppliers, who are sharing with the enterpirse consumption
amounts of customers
- Classification of competitors: competitors in the same industry (offer products of the same industry), competitors in substitute products (offer products of different indutries but for the same demand), competitors in demands (offer products for other demands)
COMPETITOR ANALYSIS DIAGRAM
Table 1.3, Competitor ananlysis diagram
1.1.5.3 Internal factor evaluation
Purpose of internal factor evaluation is to help enteprise recognizing existing and potential resources, core competencies to take advantages before competitors and identify obstacles in maintaining competitive sustainable advantages of enterprise
Core competencies of enteprise are recognized through factors such as: ability to offer customer with values that greatly affecting their choice against products, service; offer better products, services to competitors; entry to large and potential markets
+ Internal analysis and evaluation allows to recognize strengths (S) and
weaknesses (W) Then, business strategy will be selected and it is required to promote
strengths and overcome weaknesses
<=> '6
Trang 161.1.5.4 Analyzing strategy and selecting strategy
Analyzing strategy and selecting strategy are for the purpose of determinging
operation processes to be selected for implementing and completing goads of enterprise Current strategies, goads and missions of the Company will create background for forming and evaluating feasible strategies
1.2 Tools for building a business strategy
1.2.1 Collection of information and systematizaton of collected
information
1.2.1.1 EFE matrix
+ EFE matrix is a tool for evaluating external factors, it allows strategists
summarizing and evaluating socioeconomic, cultural, demographic, geograpic, political, governmental, legal, technological and war informations
+ EFE matrix can be created using following five steps:
- Step 1: Listing external factors which play a decisive role to the success of the Enteprise Including 10 to 20 factors of both opportunities and threats, which affect to
the business situation of the Enterprise
- Step 2: Assign a weight from 0.0 (being not important) —> 1 (being very
important) for each factor
- Step 3: Assign from 1 to 4 to each factor which has decisive effect on the
success of enterprise to se how its current strategies reacting to each factor Of which:
4 — superior, 3 — above average, 2 — average, 1 — poor
- Step 4: Multiple weight of each variable with its type for determining its rating
- Step 5: Get the total of rating for each variable for determining total important rating of organization
The average of total important rating is 2.5; Higher point will show good reaction of enterprise against external factors
Trang 17Competitive profile matrix (CPM) helps enterprises identifying their main competitors and strengths, weaknesses of those competitors Competitive profile matrix can be created using following five steps:
- Step 1: Listing about 10 main factors which have important role to competitiveness of the Company
- Step 2: Assign a weight from 0.0 (being not important) —> 1 (being very
important) for each factor Weight of each factor depends on effectiveness of factor
affecting the competitiveness of the Company
- Step 3: Assign from | to 4 to each factor depending on the Company’s
capabilities on each factor
- Step 4: Multiple the weight of each factor with its type for determinging rating
- Step 5: Get the total of rating for each variable for determining total rating of
matrix
1.2.1.3 IFE matrix
This matrix allows enteprise summarizing and evaluating its important strengths
and weaknesses and this is also a background for selecting strategy by the enterprise IFE matix can be created using following five steps:
- Step 1: Listing key factors Listing from 10 to 20 key internal factors
including both strengths and weaknesses
- Step 2: Assign a weight from 0.0 (being not important) — 1 (being very important) for each factor Weight of each factor shows its importance to the success of the enterprise
- Step 3: Assign from | to 4 to each factor which has decisive effect on the success of enterprise to se how its current strategies reacting to each factor Of which: 4 — superior, 3 — above average, 2 — average, 1 — poor
- Step 4: Multiple weight of each variable with its type for determining its rating
- Step 5: Get the total of rating for each variable for determining total important rating of organization
Trang 18The average of total important rating is 2.5; Higher point will show good
reaction of enterprise against external factors
The average of total important rating is 2.5; If this average rating is less than
2.5, then the company is weak in internal factors In contrary, if this average is higher
than 2.5, it shows that the company is strong in internal factors
1.2.2 Stage of intergration
1.2.2.1 SWOT matrix
+ SWOT matrix is a tool ussed to evaluate the threats — opportunities —
weaknesses — strengths, it can help managers implementing and developing four following strategy types: SO strategies (Strengths — Opportunities Strategies), WO
strategies (Strengthes — Weaknesses Strategies), ST strategies (Strengths — Threats Strategies), WT strategies (Weaknesses — Threats Strategies)
+ SWOT matrix can be created using following 8 steps: - Step 1: Listing the firm’s key external opportunities
- Step 2: Listing the firm’s key external threats - Step 3: Listing the firm’s key internal strengths - Step 4: Listing the firm’s key internal weaknesses
- Step 5: Match internal strengths with external opportunities and record the resulting SO strategies in the appropriate cell
- Step 6: Match internal weaknesses with external opportunities and record the resulting WO strategies in the appropriate cell
- Step 7: Match internal strengths with external threats and record the resulting ST
strategies in the appropriate cell
- Step 8: Match internal weaknesses with external threats and record the resulting
Trang 19WEAKNESSES SR A al A a: FN tg 2 H é j + 3 } Threats
Table 1.4 SWOT Matrix
1.2.2.2 Building decisive stage
Decisive stage is used by QSPM QSPM is a tool which allows the strategists evaluating objectively alternative strategies
1.2.2.3 Quantitative strategic planning matrix (QSPM)
+ QSPM is used for decision making stage, QSPM is a tool which allows the
strategists evaluating, in the most objective manner, the alternative strategies
ie + QSPM can be created using following six steps:
- Step 1: Make a list of the firm’s key external opportunities, threats and internal strengths, weaknesses These information is obtained from EFE and IFE
matrix
- Step 2: Assign weights to each key external and internal factor This is as
same as in EFE and IFE matrix
- Step 3: Examine the Stage 2 matrices and identify alternative strategies that the organization should consider implementing
- Step 4: Determine the Attractiveness Scores, these scores show the relative
attractiveness of each strategy in a group of alternative strategies
Trang 20
- Step 5: Calculating the total attractiveness scores Total atttrativeness scores is {the result from the multiple of weights in step 2 and attractiveness scores in step 4 at ‘each row A higher total attractive scores shows the more attractive strategy
- Step 6: Calculating the sum of attractiveness scores This is total attractiveness Scores in the strategy column of QSPM
11,3 Solutions to expand business market
Due to the importance of market research to the current period as well as the following
year must now build itself a specific market research strategy
Currently, the company does not have a separate room that stands out is responsible for
Mnarketing activities Market research is not systematic in nature Therefore, measures to &stablish_and promote the market research are imperative This measure is important to Sstrenzthen the enhanced business performance of the company
For these measures the company must follow the following steps: First is to establish Nnarketing department then develop market research strategies:
For marketing to be effective, then the need for close coordination between those Trespensible for the different arrays, each person requires to be aware of their own duties and rrespensibilities of the whole room Therefore, employees must be qualified, knowledge of nnarket research, experience Marketing department is responsible for collecting information
aind investigating the market, the competitors
-Strengthening of market research: After the establishment of corporate marketing
diepartment to develop a complete market research system
- Identify sources of goal information to build a system for collecting full information
aiboui the market as:
* Law environments in countries, the preferential policies of the developed countries for developing countries, psychology and consumer habits in different regions
* Information about firms in the world, concerns and business strategy in the coming years and other issues such as exchange rates, the banking operations
* Having good staff doing research, market analysis Thereby staffs gather
infornation, analyze and assess the type of product needs, tastes region
After market research, needs assessment analysis product on the market The company Conducted tests which assess company performance through market research capabilities meet
Prenetating customer tastes
To expand the market, close relationships with our partners, need to implement the following measures:
Trang 21
* To take all measures to maintain market and key clients major customers, the cargo hub Research the information of committed relationships with customers regularly to ensure that both parties mutually beneficial development
* Join the specialized trade fairs, through this contact with potential clients and Customers needs Also this is an opportunity for customers to know more about business products, which suggest demand, changes in demand for the real purchasing power
* The effect of market research, to be achieved by the target company's development,
to improve market research companies has given specific criteria to assess the effectiveness of
market research as:
How much is revenue growth rate? How much is profit growth rate? The percentages of the market: focus market, supplement market, How are rate of profit, revenue from
Operations to total revenue and profits of the business like?
CHAPTER II: ANALYSIS OF BUSINESS REALTY OF HANH XUONG TECHNICAL SERVICES CO., LTD
2.1 General introduction about Hanh Xuong Technical Services Co., Ltd
2.1.1 The formation and development of Hanh Xuong Technical Services Co., Ltd
HANH XUONG company has
representative offices located in the two largest Cities in Viet Nam: Ho Chi Minh City and Ha Noi
Headquarters: P007-Block H - C8 in Tan g0 0800/- 9/27, Binh - Tan Phu - HCM
Branches: No 5 Thai Thinh - Dong Da - Ha
Trang 22
Noi
Contact Website: www: hanhxuong.com.vn
HAN H_ XUONG TECHNICA L SERVICES CO LTD
Your Partner In Driver System
Was established at the end of 2004 by a rou of skillful engineers and managers experienced in the line of ower transmission like geared- motor, geared boxes, planetary gearboxes,
motors, bearings, chains conveyors, pumps with the business orientation of initial As enterprise
operating in the field of import, export,
manufacture and distribution of products in cement sector
HANH XUONG’s main products include:
+ Equipment machinery mechanics, welding
Trang 23
equipment, processing and manufacturing + Electrical equipment, automation, measurement and control
+ lypes of motors, pumps, valves,
gearboxes, industrial couplings
Hanh Xuong Company is now distributor in Vietnam for many famous brands
across the world such as REGGIANA ( Italy), ZOLLERN ( Germany) specializing
planetary gearboxes, SITI( Italy) specializing in medium sized geared-motors and
geared — boxes, KETTENWULF (Germany) specializing chains conveyor, SEIPEE (Italy) specializing Motors, NSK (Japan) specializing bearings, SAER (Italy)
specializing industrial pumps, FUJI ( Japan) specializing inverters
Trang 24
manufacturers such as: Hoang Thach Cement, Bim Son Cement, Cement Holcim, Chinfon Cement, Cement Paint, Cement The Vissai Ninh Binh, Binh Phuoc Cement, Cam Pha Cement, Thang Long Cement
The main focus for HANH XUONG is the customer’s needs and ideas However, HANH XUONG will always seek to promote their Marketing advantages of shorter accurate delivery time, competitive price with reasonable payment method
HANH XUONG?’s motivational guideline is “ PRESTIGE IS THE FIRST PRIORITY IMPORTANCE”
2.1.2 Organizational structure
Total number of officers is 35 member, holding bachelor's Employees and leaders of HANH XUONG always work with high enthusiasm, creativeness and discipline With nonstop efforts, HANH XUONG commits to contribute and offer
customers with effective and essential services
+ Organizational structure:
Table 2.1 The Organizational structure of Hanh Xuong Company
Trang 25+ Functions and tasks of departments
- Director:
* Director is person taking charge of managing daily operations of the Company He is responsible before the laws for the implementation of assigned rights
and tasks
* Director shall operate the company in accordance with the laws, Charter of the Company, labor contract signed with the Company If he manages the Company in contrary way against this provision and cause damages to the Company, he shall take
responsibility before the laws and compensate the Company - Deputy sales manager
* Helps the Director in managing and operating activities of the company under the assignment by Director
* Proactively deploys, implements assigned tasks and takes responsibility before Director for effectiveness of operations
* Directly manages the department of materials and equipment and department
of projects and design
- Deputy technical director:
* Helps the Director in managing and operating activities of the company under the assignment by Director
* Proactively deploys, implements assigned tasks and takes responsibility before
Director for effectiveness of operations
* Directly manages the department of supervision and department of warranty - Department of Materials and Equipment:
Consults Director and Deputy Sales Director on following fields: * Technical and quality management and supervision;
* Management of materials and equipment;
* Coordinates with partners in import of equipment; * Safety, labor, sanitary management in projects:
Trang 26
* Reviewing as-built documents:
* Implementing other tasks under assignment - Department of projects and design:
* Consulting the Directors of the Company in managing investment project for construction of the Company in accordance with the related laws
* Helping the Directors of the Company in implementing or holding the
implementation of project management works
* Finding projects for the Company
* Reviewing, preparing and submitting technical design, construction drawing
design for approval, evaluates construction quality, work quality - Department of personnel
* Consulting, helping Director of the Company and organizes the implementation of works such as labor organization, human resource management and
distribution, labor protection, labor health policies in accordance with the laws and
regulations of the Company
* Checking, urging divisions and units in the company complying with
regulations, rules of the company
* Playing the role of contact for any information of Director - Department of Finance and Accounting:
* Planning, consulting and proposing financial strategies for the company:
predicts financial requirements, prepares annual budget; prepare payment schedule Organizing the building of financial plan based on business plan of the Company and monitors, urges the implementation of financial plan To serve the business demand in
accordance with regulations, the company needs to consulting the proposal on mining, mobilizing and using capitals
* Managing portfolio, financial risks
Trang 27* Organizing the accounting mechanism and applying accounting settlement
- Department of supervision:
* Consulting Director and Deputy Technical Manager in supervising and managing projects of the Company
* Organizing the supervision unit, including: preparing bids, organizing works on construction supervision after awarded bid for projects until completion and handing over documents and making contract liquidation with investor
- Department of warranty:
* Department of warranty is under the management of the company, with function of consulting Director and Deputy Technical Manager on_ technical, technological works and product quality norms
* Designing, carrying out technical supervision against products as a basic for accounting, bidding and singing economic contracts
* Combined with materials and equipment room monitoring, quality control,
quantity of goods and materials was sold or in output
* Coordinating with Department of Materials and Equipment to monitor, check quality, quantity of goods, materials upon purchase or sale
* Checking, supervising, commissioning product quality * Repairing all damages arising in operation process 2.1.3 Vision and mission
+ Vision:
Becoming one of the leading companies in Viet Nam supplying manufacture lines of industrial machinery, equipment,
materials and parts with famous brands
+ Mission:
- Bringing belief, satisfaction to customers by product quality, price, execution and perfect after sales services
Trang 28- Sustainable development always bring satisfaction to customers
- Improving quality of products from time to time to satisfy increasing demands
of the markets, listening the responds from customers to improve product quality day by day
- Creating a complete working environment, helping each others to develop together for a better future
2.2 Analysis of environmental factors 2.2.1 Analysis of external environment
HANH XUONG operates in supply of various equipment, production lines for
different sectors such as: coal, cement, sugar however, in this exercise, we will focus
in building a business strategy for HANH XUONG for it’s supply of lines of
production and equipment (gear boxes for mills, electrical motors, chain conveyor, chain feed, clinker chain conveyor ) for cement sector, a market that the company is
aiming to Because business operations depend on target business lines of the
company, therefore, with external environmental factors, we will mention information
related to cement sector and then represent its effects against strategic business
operations of HANH XUONG In supply of production lines for cement sector, the development of the sector will make opportunities for the growth of the Company
2.2.1.1 Macro environment analysis
2.2.1.1.1 Political and legal environment + Political environment:
Political environment and legal corridors of a nation directly affect the business operations in general and import, export activities in particular The stable on political aspect will help the relationship between the parties being established Therefore, before making partner relationship, enterprises should understand and comply with
regulations of related countries, international customs and laws directly or indirectly concerning the import and export activities
Currently, political system in our country is stable, peace and open for
cooperating with all countries across the world Our country is also expanding and
improving external economic effectiveness, implementing multi-sector economic
Trang 29development targets which the economy playing the key role in formation of market
economic institution under the socialism orientation
Through many years, Viet Nam is evaluated as a country with stable politics The risks of terrorism, strike are very rare This stable allows the business and
production of enterprises avoiding certain risks
Political stability in Viet Nam is a positive impact on the development of the
cement industry in general and in particular HANH XUONG This is enabling for
company stable business environment
+ Legal environment:
As a company operating in Vietnamese economy, HANH XUONG is also complying with law on enterprise, law on taxation of Viet Nam and other regulations against enterprises
Due to the company’s operations depend greatly on cement sector, and cement sector depends greatly in construction sector, it is seemed to be an interactive line between the sectors Therefore, legal provisions of construction sector in the past years have affected positively and negatively on construction sector, cement sector and then
affected directly to the business situation of HANH XUONG
During the past years, there have been many policies provided to economic
sectors in general and real estate in particular, and this affected very much to cement sector and equipment supply of HANH XUONG In details:
- Decree No 71/2010/ND-CP issued on 23/06/2010 and Circular No
16/2010/TT-BXD issued on 1/9/2010 have caused concerns in both investors and
customers, especially on legacy of transaction under the capital contribution contracts The instant reaction of investors against the market is concern and wait
- Circular No 13/2010/TT-NHNN issued on 20/05/2010 increasing risk factor
for rea] estate loans to 250% from 150%, this has not encouraged banks offering real
estate loans Therefore, both customers and investors are lacking capital as a sign - Implementing resolution no 11/NQ-CP of the Government in February 2011, the Governor of the State Bank issued the directive no 01/CT-NHNN with content is focusing capital into business production, limiting loans for non-production fields
Trang 30Particularly, non-production credit ratio was reduced by 20% at the end of June 2011 and by 16% at the end of 2011
All above decrees, circulars and resolutions have affected significantly to
construction and real estate sectors, caused these sectors lacking of capital for production and as a result, cement sector was also stagnate and had inventories at
record level, cement plants reduced their capacities and refused to invest in equipment and machinery This affects seriously to HANH XUONG’s business operation
2.2.1.1.2 Economic environment + GDP growth rate:
During the period 2008 — 2012, GDP growth rate of Viet Nam has changed as
follows: 2008 2009 2010 2011 2012 GDP growth rate (%) 6.31 2 6.78 5.89 5.03
In 2008, GDP growth rate of Viet Nam was 6.31 % but in 2009, it’s only 5.32%,
so it decreased by 15.69% in comparison with 2008 Until 2010, due to economic promotion measures such as: proactive, flexible and careful currency policies, the
combination between currency policies and fiscal policies to control the growth rate of
payment means, credit and ensure interest rate at a suitable level Laws on exchange
rate management are also required to be improved and supplemented therefore, economic growth rate in 2010 increased by 27,44% in comparison with 2009 reached
6.78% However, until 2011, when the country was in difficult situation when real
estate was frozen, construction was not developed, currency policies were ineffective,
Trang 31GDP growth rate (%) oF NMP WL ODN @ flint L { > GDP growth rate (%) | 2009 2010 2011 2012
Table 2.2 GDP growth rate of Viet Nam from 2008 to 2012
GDP growth rate decreased significantly in 2011, 2012 affected greatly to the growth in industrial and building material production of Viet Nam, we can see this through data sheet on ” growth in industrial and building material production in period 2008- 2010” and following chart:
2008 2009 =| 2010 | 2011 | 2012
Growth in_ industrial
material production (%) and building 14.6 7.6 14 6.8 6.1
—®— Growth in industrial and
construction material production (%)
Growth in industrial and building material production (%) 16 144+ Hệ 12 SS 10 +— x = 6 ee 4 poco mo 2 a 0 — 2008 2009 2010 2011 2012
Table 2.4 The Growth in industrial and building material production of Viet Nam from 2008 to 2012
It’s clear that the decrease of economic growth in 2011, 2012 caused economic
sector undeveloped The most important market is real estate, there is no sign for
Trang 32
recovery of construction sector and this affects greatly to cement sector, indirectly affects HANH XUONG’s activities in supply of equipment
+ Inflation:
In contrary with GDP growth, which decreased in 2011 and 2012, inflation was
increased We can see it clearly through data sheet and following chart:
2008 2009 2010 2011 2012
CPI rate of Viet Nam
(%) 19.87 6.52 11.75 18.13 19.8 25 8ữ }—— 15 4 10 | 2008 2009 2010 2011 2012
Table 2.5 The CPI rate of Viet Nam
In 2012, inflation in Viet Nam increased 19.8% in comparison with 2011, CPI was
only 18.13% In the context that inflation jumped, spread but ineffective public investment and leading firms of economy invested to much externally, Resolution 11
(dated 24/2/2011) of the Government is deemed as an initial action for reviewing and
restructuring activities of economy, macro stability With close currency policies, strict fiscal policies, reduction of public investments, control trade deficit affected greatly to production sectors, especially building material production, including cement
When inflation increased highly, price of daily necessary products and other products also increased, this caused input materials of cement sector increased as a
result and it’s hard for enterprises increasing their price when demand was not high,
inventories increased and it’s certainly that they would not invest in equipment,
Trang 33production lines and this had significant effects on business operation of enterprises in general and HANH XUONG in particular
+ Attracting FDI:
In 2012, total registered was 14.60 billion USD, by 75% of 2011 Meanwhile,
total disbursement FDI was 11 billion USD, equivalent to 2011 Attracting FDI was
very difficult in 2012 due to the depression of global economy These figures show that
only old investors believed in new investments in Viet Nam while it is difficult to
attract new investors
FDI for real estate in 2012 sharply decreased Particularly, FDI for real estate in
2012 is the lowest one during the past 5 years In 2008, it was about 23.6 billion USD, in 2009 it was about 7.6 billion USD, in 2010it was 6.8 billion USD, but at the end of
2012, this figure was 464 million USD The cause of this decrease is that foreign investors, major funds were facing difficulties on finance Besides, real estate market
was also encountering many problems such as no liquidity, price sharply reduced Attracting FDI into real estate sharply reduced caused many construction projects have not been invested Therefore, demand on building material was not high This caused that the building material sector in 2011, 2012 was quite gloomy, inventories were high and affected to the business operation of cement sector in general
and HANH XUONG in particular
+ Interest rate
Interest rate was still remaining at high level at the end of 2012 Particularly,
loan interest rate of VND was at 19%/year and ceiling interest rate of VND was
14%/year
In addition, real estate credit debts of Viet Nam is now a concern matter when real estate for all is becoming popular With investments not only by firms within the sector but also other firms of various fields According to estimate of the State Bank,
real estate loan debts at the end of 2011 was about 228,000 billion dongs, taking
account to 8.7% total debts of entire system and by 11.5% total GDP in 2011 In March 2012, the State Bank stipulated to control criteria on non-production loan debts
(including real estate and securities), at the end of June 2012 was 22% total debts and
Trang 34
reduced to 16% total debts at the end of 2012 By this regulation, the risk of real estate
credit collapse is recognized and controlled from beginning
Interest rate increased highly in 2012 affected significantly to real estate
investors For investors used bank loans, the situation of interest and credit as in 2011
caused them mostly stopped their investments, they were in risk of sell out but the market had not much consumers High interest rate also affected enterprises when loan interest rate could not be recovered by benefits and it’s certain that enterprises
including cement enterprises would not invest in machinery and equipment The
cement sector has been seriously affected due to new projects were very rare and old
projects were maintained Therefore, it affect seriously to the business operation of
HANH XUONG
+ Real estate market:
After the gloomy real estate market in 2011 was another gloomy market in
2012, both demand and supply in 2012 were decreased, low liquidity, low price Sell
out of real estate continued happening, this made the price decreased sharply The start of sale out wave was from Petroleum Real Estate Media Joint Stock Company (PVL)
with adjustment of apartment price by up to 35% and the next one in Ha Noi was Private Construction Enterprise No 1 with its decision to reduce price from 5 to 7 million dongs per square meter for apartments at VP3 Linh Dam and CT6 Xa La under the project Bemes Cau Buou apartment
Real restate market frozen, projects for construction of apartments were not carried out or carried out but in very low speed This caused many difficulties to the production of building materials including cement Cement produced but not consumed, this caused large inventories and plants had not demand for more production, so investment is not significant
For such reasons, we can see the economic environment in 2012 has negatively affected economic sectors Most enterprises do not have the opportunity to develop and investment for expanding the production of investment is not considered for HANH XUONG, which operates based on cement sector
Trang 35The exchange rate is one of the macroeconomic policies of each country is
important Movements of the exchange rate between the dollar the euro, between USD/JPY and the exchange rate fluctuations between the USD/VND in time to see the share price is always topical issue, very sensitive In Viet Nam, the exchange rate not
only affects the import, export and trade balance, national debt, direct investment, indirect, but also affected the public's trust
The exchange rate of Viet Nam in 2012 were stable after adjustment powerful in recent years, even too strong adjustment in 2011 According to the General Statistics
Office, if the 2008 dollar price (VND / USD) rose 6.31%, 2009 up to 10.07%, up
9.68% in 2010, then in 2011 rose only and 2.2% from the beginning of 2012 dropped
by nearly 1% Specifically, in the first 10 months of 2012, the rate has increased
0.88% 271600 2 1+6 œ 23400 Bag, Sait ey 21200 “~ an 20600 — ¢ -— eS 2 = oS o Oe oo eS a ob a so ew Sg252925298258592925 2
TY @4 chert: thar ——j Tý gÉ pửu cfW thea
Table 2.6 The Exchange rate of Viet Nam in 2012
NDF 3 thang
Exchange rate movements had a positive impact in many aspects - economic society stable exchange rate has a positive impact on people's psychology, psychology
of financial markets Residents, investors believe in the stability of Viet Nam, or Viet
Nam dong respected This situation would reduce people choose to store their assets by buying foreign currency, contributing to reverse the dollarization of social status limited foreign currency reserves on account of the business
But it's more successful implementation of inflation target in the monetary policy In particular, it is Viet Nam's long-term deficit and the economy at large deficit Therefore, exchange rate fluctuations in the direction of the Viet Nam devalued lead to
"Imported inflation" in the economy in the past several years This markedly in the
—_, =
1242012
Trang 36-years 2009 - 2010, prices of many staples, strategic market increased world, plus the
VND / USD volatility is large, leading to a situation of "double import" inflation in the economy of our country This is one of the important causes leading to high inflation in Viet Nam in recent years When the exchange rate stability, the stability of imported
goods, the use of multiple items of raw materials, parts and components imported price stability as well In addition, agricultural products, seafood, procurement for exports, especially rice, coffee, rubber, cashew nuts, seafood, does not fluctuate with the fluctuation of exchange rates Actual movement which also contributes
significantly to stabilizing consumer price index in the market society in 2012
Stable exchange rate impact on export and obvious impact on the trade deficit
Conversely deficit impact is limited to the implementation target operating rate
Exchange rate stable has created favorable conditions for businesses in general and
imports in particular HANH XUONG when commodity prices are not rising.2.2.1.1.3 Cultural and social environment
+ Viet Nam is a country with the highest urbanization rate in Southeast Asia In 1986, if the percentage of population living in urban areas of Viet Nam was only 19% (about 11.8 million people) then in 2012 this figure increased to 31.5% (about 28.3 million people)
+ Viet Nam has been urbanized rapidly Urbanization is an important part for
the future of Viet Nam and ensuring cities easily for living, and having competitive capacity within the region and across the world will be a necessary part for Viet Nam in economic development strategy
+ Currently, average housing area per capita in Viet Nam is only 13 m2 The
target until 2012 under the Decision of the Prime Minister is that this figure will reach
15 m2 per capita and reach 20 m2 per capita in 2020
+ Viet Nam has now above | billion m2 of housing area, until 2020 Viet Nam will have total housing area of above 2 billion m2 This means that in the next 10 years,
we will have to construct about 1 billion m2 of housing area Average will be 100
million m2 of housing area per year
All above factors are favorable conditions for developing construction sector in
general and building materials in particular (and particularly cement sector) because
I
Trang 37the demand on houses will increase and more housing area will be constructed However, in recent two years, this trend was in contrary direction due to the stagnant of real estate market, inflation and now, cement sector is facing many difficulties due to
construction market is not increasing, demand of people is low and this indirectly affects business operation of HANH XUONG
2.2.1.1.4 Technological environment
Technology is key factor in creating economic strengths of companies in
general, particularly production companies such as cement companies, technology play a very important role in creating good products that can compete with competitors Investment in technology will reduce product price, then reduce sale price and increase price competitiveness On other hand, investment in technology will help company recycling waste materials to make valuable products
Determining the importance of technology in cement production, from early time, HANH XUONG has been aiming to supply products with high specifications, good strengths and manufactured by long-term operation firms such as:
FC Fuji Electric em @ SAER
TU - ELETTROPOMPE j2 CỤ “ZOLLERN © M0T0RI pee NSGK › PARport oR 2.2.1.1.5 Natural environment
+ Population size and structure:
With population of above 86 million people, Viet Nam is the third most populated country in Southeast Asia and keeps 12th position in the world behind
China, India, U.S., Indonesia, Brazil, Pakistan, Bangladesh, Nigeria, Japan, Mexico,
Philippines
Population density of Viet Nam is 260 people/km2, five times higher and keeps
Trang 3841st position among 208 countries and territories in the world; 2 times higher and keeps 8th out of 11 positions in Southeast Asia, 2 times higher and keeps 16th out of 50 positions among countries and territories in Asia
Viet Nam has natural population growth rate is 1.2%, keeps 8th position in Southeast Asia and 32th position in Asia, 114th position in the world This is due to
effective result of early population planning
With population size has been increasing, demand on houses is very high This
is a favorable condition for construction sector in general and material production
sector in particular, especially in cement production, and this will help for the development of HANH XUONG
+ Geographical location:
Located at the northwest of the Red River Delta center, Ha Noi is located
between 20°53' to 21°23' north latitude and 105°44' to 106°02' east longitude, bordered
with the provinces of Thai Nguyen, Vinh Phuc in the north and Ha Nam, Hoa Binh in
the south, Bac Giang, Bac Ninh and Hung Yen provinces in the east, Hoa Binh and Phu Tho in the west In addition, Ha Noi is 120km from Hai Phong City (passing Hung
Yen, Hai Duong) After the administrative boundaries expanded in August 2008, Ha
Noi now has an area of 3345.0 km 2, comprising 10 districts, 1 town and 18 outskirt
districts
Head office of the company is located in Ha Noi, where has high population density Development and urbanization created immigration from other provinces into Ha Noi for seeking jobs In the new development period of the economy, population is focused mostly in rural areas while economic growth is occurred in urban areas and industrial centers Efforts on eradication of poverty could not limit the migration from
rural areas Ha Noi is the place receiving large immigration from localities, this
immigration causes infrastructure in Ha Noi being degraded and requires to build and upgrade houses This is also a good condition for the development of the Company
+ Geography:
The company's office is located in the largest city, Ho Chi Minh City and Ha
Noi, where the population density is high Process development and urbanization have
created the migration flows from outside the province to Ho Chi Minh City and Ha Noi
Trang 39for work In the new stage of development of the economy, the population concentrated
mainly in the rural areas as economic growth takes place in the urban areas and the
industrial heartland Efforts to reduce poverty will be hard to limit the out-migration in rural areas Ho Chi Minh and Ha Noi are cities which received large number of
migrants from the provinces The migration from other provinces in these two places
have made housing infrastructure declined markedly, from that set out requirements to build new and upgrade old houses It is also an opportunity for companies to grow 2.2.1.1.6 Global environment
No one can refuse the fact that globalization is a certain process and it is creating opportunities for developing countries, which are integrating into the world
economy, then promoting economic growth and renovating technologies
Since the time of opening, integrating and developing multisector goods economy, Viet Nam attracts various foreign firms investing, trading Particularly in the trend of globalization, Viet Nam participated in world economic organization such
as BTA, AFTA, WTO This is a good change for Viet Nam economy, especially enterprise with sufficient development conditions and competitive strengths on
international markets
Globalization is also an opportunity and threat to HANH XUONG Opportunity is that when more foreign firms investing in construction projects in Viet Nam, construction sector will develop and then cement production sector will also develop However, globalization is also a threat when the company will have to compete with
foreign suppliers participating in Viet Nam markets with advanced quality and models
In general, impact of globalization against Vietnamese society is very strong
and it will continue increasing in the next years The important thing is that HANH
XUONG should know how to exploit and utilize positive aspects of globalization to
create its own strengths and overcome negative impacts 2.2.1.2 Micro environment analysis
In recent years, building material sector (including cement production) has been in the worst situation of all time when inventories of cement remained high, most of cement plants only produces with limits to wait for brighter market Particularly, due to the policy on reducing public investments of the Government many road and bridge
Trang 40for solving difficulties of the enterprises operating in this sector Slump in consumption of cement had negative effects on business operation of HANH XUONG
2.2.1.2.1 Potential competitors
Currently, the market appeared many domestic and foreign companies who have seen the potential market of machine tools, equipment and spare parts processing production lines for cement production Therefore, the company ¡is promoting investment in order to compete in the market Thus, the market has many new entrants
who are not only provides genuine products imported from abroad, but the mechanic firms in Viet Nam are now also taking opportunities on the scale, machinery and
equipment for diversifying product categories, improving product quality by investing in machinery and equipment, advanced technology, changing management methods to create new products for cement sector with lower price
Therefore, we can see potential competitors of HANH XUONG are many not only the enterprises distributing foreign products, but also domestic manufacturers and
enterprises in Viet Nam
2.2.1.2.2 Customers
Due to the characteristics of the company is providing equipment for the cement
sector such gear boxes for mills, electrical motors, chain conveyor, chain feed, clinker
chain conveyor so the company's customers are usually the large cement
manufacturers such as Hoang Thach Cement, Bim Son Cement, Cement Holcim,
Chinfon Cement, Cement Paint, Cement Ninh The Vissai Binh, Binh Phuoc cement, Cam Pha Cement, Thang Long cement
Products provided by HANH XUONG to its customers are mainly under orders and projects Competition with competitors to get orders, projects is very intensive and
it’s required the company to have specific policies
Due to customers are usually large scale companies, so customers have very
strict requirements for products and services that the company offers Thus, pressure
from customers to the company is huge Besides, the rise of the other competitors who
satisfying customer needs better than the company makes even greater pressure on