⁄ GRIGG UNIVERSITY GeMBA01 £02 Group 5 GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT TELECOMMUNICATIONS BUSINESS DEVELOPMENT STRATEGY OF HOCHIMINH CITY POWER COMPANY IN THE PERIOD OF 2010-2015 Group Nod: Le Van Minh Nguyen Van Tung Nguyen Thi Thanh Huong Le Thi Minh Nghia — Group leader
HOCHIMINH, 2009
(C1 Global Advanced Master of Business Administration
Trang 2GRIGG Re GeMBA01.E02 Group 5 INDEX CONTENTS PAGES Cover page l Index 2 Catalogue of tables 6
Catalogue of figures, graphs 7
COMMITMENT AND ACKNOWLEDGMENT 8
INTRODUCTION 9
1- Significance of choosing the topic 9
2- Purpose of research 10
3- Method of carrying out 10
4- Structure of the topic 10
CHAPTER 1: ARGUMENT BASIS 11
1.1 Concept of business strategy II
1.2 Administering business strategy 1]
1.3 Clasification of business strategy 12
1.4 Classification of business strategy 13
1.4.1 Company-level strategy 13
1.4.2 Strategy of business unit level 14
1.4.3 The strategy of function 14
1.5 The process of building strategy 15
1.5.1- Choosing mission and main objectives of the Company 15
1.5.2- Analysis of internal and external environment 17
1.5.3- Choose business strategy 21
1.5.4- Solutions of business strategy 21
1.6 Strategic planning tool 22
!.6.1 Matrix of external factors evaluation (EFE) ods
1.6.2 Matrix of internal factors evaluation (IFE) 23
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1.6.3 Matrix image competition 24
1.6.4 Tool for planning strategies (SWOT matrix) 25
CHAPTER II: ANALYSIS OF TELECOMMUNICATIONS BUSINESS ENVIRONMENT 29 2.1 Introduction about the Company and line of telecom business of Ho
Chi Minh City Power Company 29
2.1.1 Main points of the Company 29
2.1.2 Business situation in the past time 36
2.1.3 Result of telecom business activity 39
2.2 External environmental analysis 46
2.2.1 Economic factor 47
2.2.2 Political and law factors 48
2.2.3 Population and labor factors 49
2.2.4 Cultural and social factors: 49
2.2.5 Technological factors 50
2.2.6 Natural condition 50
2.2.7 International environment 51
2.3 Analysis of operation environment: 53
2.3.1 Threats of those who join potential telecommunications sector: 53
2.3.2 Negotiation Powers of customers: 53
2.3.3 Negotiation powers of providers: 53
2.3.4 The enterprises’ Competitiveness of the same telecommunications
sector: 54
2.3.5 Pressure of replacement products 59
2.3.6 Competitive figure matrix of Power Telecommunications 59
2.3.7 summary of opportunities and challenges 60
2.4 Analysis of internal environment: 63
2.4.1 Analysis of operation scale 63
2.4.2 Analysis of human resources 63
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2.4.3 Analysis of financial situation: 65
2.4.4 analysis of the service quality 65
2.4.5 Analysis of marketing: 67
2.4.) Analysis of management competence: 68
2.4.7 Competence of research and development: 68
2.4.3 Reputation and prestige of the company: 69
2.4.) Matrix of external factors evaluation 70
2.4 0 summary of strengths and weaknesses: 71
2.5 Conclusion and evaluation on telecom business competence of Ho
Chi Minh Power company 74
CHAPTER 3: BUILDING TELECOMMUNICATIONS BUSINESS
STEATEGY FOR HO CHI MINH CITY POWER COMPANY 76
3.1 *orecast of telecommunications services demands in HCMC
3.2 Orientations for the telecommunications development of Vietnam 76
Eledricity (EVN)
3.3 Determination of missions, targets and markets of Ho Chi Minh City
Pover Company 77
3.3 Mission determination 77
3.3.! Objectives of HCMC Power Company 79
3.3 Target markets of HCMC Power Company 81
3.4 strategy construction 81
3.4 SWOT Analysis 81
3.4.) Strategies selection 83
3.5.Solutions for business strategies performance 87
3.5 The solutions group of entrepreneur strategies planning and
organization 87
3.5.: The solutions group of service quality improvement 88
3.5 The solutions group for the distribution system 93
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3.5.4 The solutions group of finance and charge 95
3.5.5 The solutions group for advertisement and promotion works: 95
3.5.6 Solutions related to human resource development 98
COMMENTS AND CONCLUSIONS 100
REFERENCE MATERIAL 103
Appendix 1: Organization chart of Ho Chi Minh City Power One 104 Member Limited Corporation
Appendix 2: Time to implement solutions 105
CG Global Advanced Master of Business Administration
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Table 2.1: Some of main business targets 37
Table 2.2: Subscriber situation of ceasing temporarily, terminating to 40
June 30", 2009
Table 2.3 Situation of performance telecommunication investment 45 project
Table 2.4 Figures in age level 49
Table 2.5 Matrix of external factors evaluation (EFE) for HCMPC 52 Table 2.6: the total number of mobile phone subscriptions up to the end 56
of 2008
Table 2.7: Revenue and paying the State budget of telecommunications 57
enterprises, 2008
Table 2.8: Competitive image matrix of Electricity Telecommunications 60
Table 2.9 : Vietnam-economic Activity 61
Table 2.10: Matrix of internal factors evaluation 70
Global Advanced Master of Business Administration
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CATALOGUE OF FIGURES, GRAPHS
CONTENTS PAGES
Figure 1.1: Porter's 5 forces Model 19
Figure 1.2: Plan of building strategic circle 22
Figure 2.1 Graph of power revenue growth (2001-2008) 38
Figure 2.2 Graph of developing subscriberin the past years 39
Figure 2.3 CDMA service structure at the end of year 2008 4]
Figure 2.4 Current and future head office of HCM Power Company 45
Figure 2.5 Chart of telephone subscriber growth in some years and 48 subscriber growth level per density of telephone in the first months in
2009
Figure 2.6 Phone market share of telecommunications enterprises and 56
trends of development
Figure 2.7 Graph on workforce level 64
Figure 2.8 Graph on human resources growth in the period of 2003- 64
2008
Figure 2.9 Telephony activity of EVN telecom 66
Figure 3.1: The interrelation between prices and quality in regard to 84
telecom services in the market is specified as follows
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COMMITMENT AND ACKNOWLEDGMENT
To carry out this topic, my group is very grateful for the help of Master training programme, lecturers, Ho Chi Minh City Power Company, as well as
opinion contributions of our friends, colleagues in the past time
We would like to kindly send our thanks to the authors of the research work
which this thesis has referred to
[ue to our limited time and knowledge, we wish to have constructive opinion: and useful advice to complete this topic, increase feasibility of the chosen topic
Ve undertake that this is our group’s research thoughts Sncerely,
for our Group
Je Thi Minh Nghia
Cobal Advanced Master of Business Administration
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INTRODUCTION 1 Sgnificance of choosing this topic
Uneer the intergration into the world economy, Viet Nam Enterprises are facing new competitors ( transnational corporations, financial potentially multi-national coryorations, highly competitive technology, experience and competence), have to compete drastically in the new condition (the global market with the strict prin:iples of commercial institutions and international laws) The increase in competitive ability for Viet Nam Enterprises in making the best of available resoirces is to rise for gaining initiative in the period of integration, the increase in competitive ability is the striving criterion of Viet Nam Enterprises
Elecricity of VietNam (EVN) is still under this tendency, with the basic advantages
of combining in using available infrastructures of electricity power, the number of poteitial customers and over 100.000 staff contacting cusomers directly, frequently
In own _ business strategy, EVN seizes the growing commmunity
teleommunications needs In the diversification strategy in business, EVN has
chosen to invest in telecommunications and has been licensed by the Government to povide domestic and international public telecommunications services ( In
acccdance with the Decision No 66/CP-CN dated January 19" 2001 of the Gov:rnment) with the trademark of EVNTelecom
Ho *hi Minh City Power Company is a member unit of Electricity of VietNam, assimed with a duty of business in telecommunications
Hovever, Ho Chi Minh City Power Company has joined the telecommunications mar:et in 2005, business experience in telecommunications is still young To be exised in competitive environment with a lot of pressure from domestic traditional
teleommunications enterprises as well as abroad enterprises to join the market in
the iext time under the commitment of joining WTO, the company has to have an
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effective business strategy Therefore, our group has decided to choose the topic: *
Building telecommunications business strategy of Ho Chi Minh City Power
Company” as our research topic
2 Purpose of research:
Analyzing external environment to find opportunities, challenges and anaylzing real situation of the enterprise in telecommunications business, determining strengths, weaknesses of the enterprise, from that point, choosing strategy and
proposing effectively mobile solutions of the company to carry out strategy
3 Method of implementation out:
Our group has implemented to research principles of business planning strategy, such as: concepts, process of making strategies, tools for determining strategy Collecting data, analyzing, assessing external and internal environment impacting telecommunicatiosn business Applying the researched theory model to build business strategy for the company up to 2015
4 Structure of the topic:
Starting Part: General Introduction
Chapter 1: Argument Basis
Chapter 2: Analysis of telecommunicatiosn business environment
Chapter 3: Building telecommunications business strategy up to 2015 Solutions to
implement strategy, recommendation and conclusion
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CHAPTER 1: ARGUMENT BASIS 1.1Concept of business strategy
The concept “ strategy” has been from the Grecian ancient This terminology was
ee
originally from the military, originated from “ strategos” means that the role of
Major in the Military After that, the strategy was expanded to political, economic,
and social sectors
According to the Griggs material, the concept on Strategy: “a mass of compound actitivies is to mobilize resource from a company for reaching a certain goal” and The concept on business strategy: “ is a mass of commitments and activities which a company uses to gain a competitive advantage by exploiting core capacities in a certain environment”
There are many concepts on strategy, but generally the concepts on strategy consist of the following contents:
Determining targets of the enterprise Choosing strategic plans
Organize to implement and distribute resources to gain the goal 1.2 Administering business strategy
Process of Administering business strategy includes 3 steps:
Setting up strategy includes: development of business duties, determination of opportunities and risks of external organizations, internal strengths and weaknesses,
making long-term targets, creating replacement strategies and choice of specific strategies to pursue
Implementing strategy consists of: the development of a strategic supporting culture
for an effective organization, re-orientation of marketing activities, preparation of a
budget, development and usage of information systems, encouragement of
individual activities
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Assessing business strategy is to supervise results of the establishment activities, and implement the strategy of this step including measuring, determining individual
and organizational achievements , and necessary adjustments
( Source: Outline on strategic administration of the author Fred R David-
Statistics Publisher)
Responsibilities of business strategy admisnistration:
Establishing a strategy of describing the future company, stating to which the company wants to direct, how the company will become? These are to provide long-term orientaions, determine the image which the company wants to become, transmit to the company with the purposed activities
Setting up targets- transforming the strategy into specific results which the company has to reach
Building strategy to gain targets as expected
Implementation Feasibility and management of strategies have been chosen
effectively and validly
Assessing the implementation and adjustment of long- term orientation, targets,
strategies on the basis of experience, the changing conditions, new ideas and opportunities
( source: Associate Professor DSc Le The Gioi- DSc Nguyen Thanh Liem- MSc
Tran Huu Hai- Statistics Publisher, (2009))
1.3 Clasification of business strategy
Business strategy can be built on three different levels:
- Company-level strrategy
- Business unit-level strategy - Functional strategy
Strategy can be set up to increase competition or ensure the existence of enterprise, while products and service have been developed at business- unit levels The role of enterprise is to manage business units and develop products so that business
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production activities are competitive and have the ability to contribute to carrying out overall target of enterprise
1.4 Classification of business strategy : 1.4.1 Company-level strategy
A company- level strategy must answer the question: what type of business can maximum the ability to make long-term profits of the company? In many
organizations, successful competition often means that vertical amalgamation- that is an integration process of activities either against the input side of main
production process or down the distribution direction using output of main
activities Moreover, the companies which are successful in setting up sustainable
competitive advantages can arise resources beyond their investment needs in the scope of their main sector With such the company, the maximum of long-term profit making ability requires diversification into new business
Enterprisz-level Strategy is related to chosing business activities, at which business
units Must compete, concurrently develop and coordinate the units together
(source: Associate Professor DSc Le The Gioi- DSc Nguyen Thanh Liem- MSc
Tran Hut Hai- Statistics Publisher, (2009)) Overall srategy of enterprise has characteristics:
- Orientition of common target and responsibilities of enterprise includes determinng targets, forms of business activities which the enterprise will conduct and modes of management and combination of activities
- Compeitive orientation is the determination of market or market segment which the enternrise will compete
- Management of independent business activities and their relations: overall
strategy ums at developing and exploiting synergy among the activities through dividing ind combining resources among independent units or separate activities
- Practie of administration: enterprise- level strategy allows determining
managenent modes of business units or groups of activities Enterprise can carry out mangement through the direct interference ( with regard to centralism mode of
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mangement) or create management self-control for business units ( with regard to manzgement mode of decentralization) on the basis of confidence
The :mterprise has responsibilities in creating added value through the catalogue mangement of all their business activities, ensuring success for every activity in long ‘erm, developing business units and guaranteeing the activities which has been coorcinated in harmony with together
1.4.2- Strategy of business unit level
There are three main kinds of strategies of business unit level: cost leadership,
differentiation and focus on the gap of the market
(Source: Associate professor Dr Le The Gioi — Dr Nguyen Thanh Liem — MA Tran Huu Hai — Statistical publisher, 2009)
For tie business activities reach over average level, basis foundation in the long- term is sustainable competitive advantage, even though business has countless
strengths and weaks before other rivals; after all, there are two kinds of competitive
advantages which business may own: low cost or differentiation
The wo competitive advantages combine with activity scope of the business shall
create three general competitive strategies to get activity effect above average in the sector: cost leadership, differentiation and focus Focus strategy has two variants :
focus on the cost and the differentiation
Source: Associate Professor Dr Michael E Porter — Competitive Advantage —
Doarh Tri Bookstore- Nguyen Phuc Hoang translates — Youth Publisher 1.4.3- The strategy of function
Competitive advantage originates from ability of the company at the aim of
obtaining domination of effect, quality, improvement and responsibility to the
customer In regards to strategy of function level , we should consider role and
mode that the strategy improves productivity of activities in the company scope such as marketing, materials management, production development and customer
service
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(Source: Associate professor Dr Le The Gioi — Dr Nguyen Thanh Liem — MA Tran Huu Hai — Statistical publisher, 2009)
Function level of organisation mentions operation parts The strategy of this level relates to operation process of business activities and parts of value series The strategy on the function of marketing, finance, human resources or research and development aims at promoting and combining resources; through which strategies
of business unit level are implemented effectively
The strategy of function division of organisation depends on strategy of higher
level Concurrently, it plays a role as input element for strategy of business unit level and overall strategy of business For example, providing information about the resources and basis capacity which strategy of higher level should be reply on; informations about customers, products and competition Once the strategy of
higher level is established, function division will deploy this way into plans of specific action and ensuring the success of overall strategy
Methods of approaching strategy based on correlated base: Customer - Company - Competitor In order to define future business structure of the company, managers should find possible strategy projects and choose it The definition of strategic projects can be found by two ways
- Analyse business structure of company
- Choose strategies from set of strategies by the ways of different approach, called
free strategy
1.5 The process of building strategy
1.5.1 Choosing mission and main objectives of the Company The mission of company
The mission of company is a concept used to define purposes of company, reason
of company establisment and base of existence and development The mission of company is a manifesto of that company to society, it proves usefulness and
meaning of company’s existence and it can be said that manifesto itself of mission
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shows existence meaning of a organisation, things that they wish to become, customers that they wish they could serve, modes that they want to operate
Content of a manifesto
Customers: who consumes products, service of company?
Essential product or service: main what is the service or product of company?
Market: What market does the company compete?
Technology: Is technology leading concern of company?
The concern about other important matters: existence, development, ability of attaining profit: Does company bind to other business target?
Philcsophy: Where are basis faith, value, aspiration and philosophy priority of company? Evaluate ourselves : What are special abilities or chief competitive advantage of the company? The concern to community image : Is community image main concern to the company ?
The concern to employees: how is the attitude of the company to employees? The objectives of company:
Objective means future state that company tries to implement or final result of planned actions Similar to prospect and mission, objective and purpose are always used mixedly If there is any need of distinguish, purpose shows the intention need
to obtain but non-quantative and non-term, objective shows intention determined
cleary and planning the term In reality, we can understand this term on the
background According to this definition, the goal of setting up target is defining exactly what things must do if we want to obtain mission
Therefore, the objective has four characters as follows: Firstly, objective is set up well if it is accurate and measurable
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Seconcly, objective which is set up well must direct to important problems
Thirdls, objective which is set up well should be challenging but performable
Fourly objective which is set up well should define with achievable period 1.5.2 Analysis of internal and external environment
1.5.2.1 Analysis of external environment
Macrc environment
The inluence of macro environment includes elements: economy, politics, society, nature and technology The analysis of mascro environment helps organisation to know vhat do they face ?
Econony element:
This isthe most important factor of macro environment It affects directly attraction of potentiality of different strategies The factors of economy comprises: stages of econony period, source of money provision, GDP trend, inflation rate, bank
interes, policy of finance and monetary, uneployment rate and payment balance
Political and law element:
This eements are stability of polictis institution, changing of constitution, state’s
policy affects the sector that organisation pursues The regulations of state:
encouriging or limited trade, environment protection, tax decree-law, regulations of
foreigr trade field, investment at home and abroad, special preferential policy will
hawe vtal effect to production environment and business of organisation Social.cultural and geographical element:
The clange of geography, society, culture have a slow influence on organisation but dep and wide impact The factors of society include: change of living vie-wpant, living standard, consuming habit, career aspiration, population growth
rate, pcpulation change, tradition, manners and customs
Natura element
The oganisation should concern about impact of natural factors to activities:
enwiroiment pollution, energy source limitation, natural resources, natural disaster and epdemic
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Technological element:
Technology invention brings considerable changes, affects strongly organisation, it car create opportunities or dificulties for organisation The factors of technology consst of: technology development, establishment of new materials related to secto", process of transfering new technology, expenses of development research, copyight protection
The actors of macro environment have mutual effect and influence organisation, so
Trang 19GRIGG JNIVERSITY GeMBA01 E02 Potential Entrants (Threat of mobility) Group 5 Suppliers (Supplier —» power) Industry Competitors (Segment rivalry) Substitutes (Threat of
Figure 1.1 : Porter’s 5 forces Model
(Operation environment influences directly organisation, regulating nature and
competitive level of business line There are five main factors: competitor,
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competitors to define advantage defect, capacity, opportunity, threat target and their strategy is vital so that organisation can plan strategy more actively
Customer:
Customer is existing reason of organisation The more customers increase , the less
the risk level of organisation has The trust of customer may be the most valuable
asset of organisation Customer research should focus on the aspects: hobby, custom, financial ability of customers towards product, viewpoint of customer
towards organisation, shopping behaviour and ability of changing product Provider:
Research subjects of providing organisations factors: materials, equipment, labour,
finance, influence of this factor towards business production activity of
organisation
Implicit competitors:
Research organisations which will join in the market or withdraw out of the market to master opportunity or risk that appearance or withdrawal brings back
Replacing products:
Relacing new product limits profit potentiality of organisation If they do not mind implicit replacing products, they may lag behind small market If organisation would like to get success, they need save up resources to develop and apply new technology into their strategy
1.5.2.2 Analysis of internal environment
Internal environment includes:
Management: plan, organisation, promotion, personel, control
Production - operation: including all of activities in order to change input into
goods and service
Finance - Accounting: The function of finance - accounting, investment decision of finance, shares interest , kinds of basis finance index
Marketing: consist of activities: customers analysis, buying, selling, planning of
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analvsis
Research and development : include all of activities to develop new product before competitors, improve quality of product or improve production process to reduce
cost
1.5.3 Choose business strategy Present the projects to
(O —Opportunities )Take advantage of opportunities (T — Threats )Limit threats
(S - Strengths ) Promote strengths
( W — Weaknesses ) Overcoming weaknesses
To choose long- term activity strategy of company, basing on real condition, using matrix: Strengths - weaknesses - opportunities - threats (SWOT) helps us reject unnecessary or non objective strategies
Solutions of business strategy
The company allocates resources reasonably to implement successfully goals of
strategy
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Trang 22/ GRIGG UNIVERSITY GeMBAOI E02 Group 5 MISSION, TARGET INTERNAL ENVIRONMENT Implicit competitors: GTel Mobile, Dong Duong Telecom FL - Finance-accounting - Marketing Competitive barrier eT Competitors in the same sector VinaPhone, Vietel (a A — Comparison with competitors | Replacing product OPPORT THREAT STRENGTHS WEAKNESS 7 ` [ STRATEGY BUILDING ” 1 SOLUTIONS OF STRATEGY IMPLEMENTATIO
Picture 1.2: Plan of building strategic circle
1.6 Strategic planning tool
!.6.1 Matrix of external factors evaluation (EFE)
Matrix of environmental factors evaluation of Business (EFE) helps us to sunmarize and quantify some external effective factors to business EFE matrix is developed by five steps:
Step 1: list of key opportunities and threats that affect to success of company in business (common from ten to twenty factors)
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Step 2: making importance by classification from 0,0 (not important ) to 1.0 (the
most important) for each factor We know that making the importance for these factors shows the importance of the factor to the success of business in trading
.Total of importance is equal to one
Step 3: Classifying from | to 4 for each representative factor ( in the real, we can
make them larger) The maximum weakness that we divide is one and the minimum weakness is two, the minimum strength is three and the maximum strength is four Therefore, these are score to response opporrtinuites and risks of
business from environment
Step 4:Score for each factor by multiplying the importance of that factor with correcponding classification scores
Step 5: Calculation of total point for all factors in the matrix by adding the score of the factors corresponding to each business
Accordingly, if the total score of entire list of factor that are include in EFE
matrix is 4, business affect well to opportunities and risks of environment If more
than 2,5, business affects average In the contrary, total score in EFE matrix is less than 2, 5, business affects lower than average
1.6.2 Matrix of internal factors evaluation (IFE)
Matrix of internal environmental factors evaluation of business (IFE) summarizes and evaluates important weakness and strengths of business functional department as well as all business Matrix IFE is developed by 5 steps:
Step/: Setting list of factors that decide competitiveness role of business in an industry (common from 10 to 20 factors)
Step 2: Making importance by classification from 0, 0 (not important) to 1, 0 (the
most important) for each factor We know that making the importance for these
factors shows the importance of the factor to the success of business in trading So, to businesses in an industry, the importance of factors listed in step one is the same
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Step 3: Classifying from 1 to 4 for each representative factor (in the real, we can make them larger) The maximum weakness that we divide is one and the minimum weakness is two, the minimum strength is three and the maximum strength is four Therefore, these scores response competitiveness for each factor of business compare with competitors in trading
Step 4: Score for each factor by multiplying the importance of that factor with corresponding classification scores
Step 5: Calculation of total point for all factor in the matrix by adding the score of the ‘actor corresponding to each business This total score reflect absolute
competitiveness of business
Accordingly, if the total score of entire list of factor that are include in IFE matrix is 4, the absolute competitiveness of business is rather high If more than 2,
5, the competitiveness of business is over average level In the contrary, total score
in [FE matrix is less than 2, 5, the absolute competitiveness of business is lower
than average level
1.6.3 Matrix image competition
Setting up matrix identifies and evaluate the company compared to competitors in
the same industry Comparison is based on the factors affecting the competitiveness of companies in an industry Through it we get the strengths and weaknesses of company with competitors, identifying competitiveness advantages for companies
and weakness to overcome
In order to build a matrix image competition, it can be performed by 5 steps:
Step 1: Setting a list contains about 10 main factors that affect to importance of competition of company in an industry
Step 2: Making importance by classification from 0, 0 (not important) to 1, 0 (the most important) for each factor The importance for each factor depends on influence of the factor to competitiveness of companies in an industry Total score
of the importance of all factors must be 1, 0
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Step 3: Determine key number from | iv 4 of each factor , the key number of each factor depends on the ability of companies to factor, in which 4 is well, 3 is above
average, 2 is average, | is weak
Step 4: Multiplying the importance of each factor to key number to determine the scores of factors
Step 5: To sum score of all factors to determine total points in matrix
Evaluation: Compare total scores of company with that of major competitors in an
industry to evaluate the competitiveness of company
1.6.4 Tool for planning strategies (SWOT matrix) SWOT: methods of analysis of strategic environment
Searching external and internal environment of business is an important part in
planning strategy process Internal factors and environment of business is
considered strength (S-strengths) or weakness (W-weaknesses) and external factors
of business is called opportunities (O-Opportunities) and Threats (T-threads)
Strength(S-strengths)
Strengths of a business include resources and using capacity and foundation to develop competition ability such as:
-Trade mark
-Evaluated the best by customer
-Advantages of low cost due to owned production
-Ability to easily access advanced natural resources
-Ability to easily access distribution network
Weaknesses (W- Weaknesses)
No strength is considered a weakness Following features can be considered a
weakness:
-Little-known brand
-Customers that have been notorious -Operating structure requires high cost
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-.ess access natural resource
-.ess access main distribution channel Cpportunities (O — Opportunities)
The analysis of external environment may half-open new opportunities to create
profit and development such as:
- Customer’s demand has not met completely - The appearance of new technology
- Loose regulation
- Elimination of international commerce barrier
Threats ( T — Threats)
The changes of external environment can create risk towards business, such as: - Customer’s taste changes from the company’s product to other product, aypearance of replacing product
- New law regulation
- International commerce barrier more tightly Cf which:
- Strategy S-O is to pursue opportunities suitable to strength of company
- Strategy W-O is to overcome weaknesses in order to pursue and master o)portunity
- Strategy S-T is to define the mode which company can use their strength to rduce ability of loss by outside threats
- Strategy W-T is to form defensive plan to prevent weaknesses of company
which is vulnerable before external threats
The purpose of matrix SWOT is putting forward feasible strategies that can be
cloosen, not deciding what is strategy the best So, of which development strategies
¡ the matrix SWOT, only some the best strategies can be chosen to implement
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Strategies Minimum wekanesses_ to
Theats-T Using strengths to avoid | avoid threats List of threats threats
‘TD build SWOT matrix, we must carry out 8 following steps: - Step]: list important opportunities outside company - Step 2: list important threats outside company
- Step 3: list strengths inside company
- Step 4: list weaknesses inside company
- Step 5: combine strengths with opportunities to establish SO strategy and write rsult into proper box
- Step 6: combine weaknesses with opportunities to make WO strategy and write
rsult into proper box
- Step 7: combine strengths with threats to establish strategies ST and write result
to proper box
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- Step 8: combine weaknesses with threats to estabiish WT and write result into proper box
CONCLUSION OF CHAPTER 1:
Chapter 1, we research argument basis to carry out the topic, build telecommunications business strategy of Ho Chi Minh City Power company up to 2015
Through the research, we grasp some strategic concepts, process of building strategy and tools to build strategy, as follows:
Definition of strategy:
We know some definitions of strategy In general, definitions of strategy include the following contents:
- Determine targets of enterprise
- Choose strategic plans
- Carry out and distribute resources to gain targets
Process of building strategy:
The establishment of strategy shall be implemented through the following steps:
- Determine missions and targets of the company
- Analyze external and internal environment of the enterprise to draw
opportunities and threats from external environment and internal strengths and weaknesses of the enterprise to orient the establishment of strategy
- Establish the company strategy based on the analysis result of step 2
- Solutions for mobilizing resources in order to carry out the chosen strategies
at Step 3
Tool to establish business strategy: We also seek supporting tools to build strategies, such as: matrix to assess external factors evaluation, matrix to assess
internal factors evaluation, image matrix, SWOT matrix
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CHAPTER II
ANALYSIS OF TELECOM BUSINESS ENVIRONMENT
2.1 Introduction about the Company and line of telecom business of Ho Chi Minh City Power Company :
2.1.1 Main points of the Company: 2.1.1.1 Background and history:
Ho Chi Minh City Power Company , transaction name in English Ho Chi Minh
City Power Company (abbreviated name: HCMPC), is a state enterprise and member corporation independently in the finance of Electricity of Vietnam (EVN) Ho Chi Minh City Power Company was formerly Ho Chi Minh Department of
Electricity Distribution and Management which was founded on August 07th, 1976;
there were only 1,000 staffs since establishment, over 30 years of formetion and
development, up to now it includes 7,350 employees, of which direct and technical workers occupy about 68,32 per cent, cadres at the bachelor and postgraduate level
make up 20,39 per cent, remainings include other laborforce At present, there are
over 1,6 million customers for power service and more than 309 thousand
customers for telecom
Operation strategy of EVN in the coming time is multi-branch, multi-possession
trading, technology qualifications, modern management and high
professionalization; of which; fields of business and production of power, public
telecom, electricity mechanics are main business, a key factor to promote Vietnam electricity industry to develop fast and steadily, improve competitiveness and
intergate into international economy effectively EVN built up a project of restructuralising group changing operation model that from 05 Power Companies into One Member Limited Liability Company , operating by the model of head
company - subsidiary company that EVN is owner; of which, Ho Chi Minh City Power Company is chosen to change the model
Ho Chi Minh City Power Company is one of three companies with the largest power distribution of EVN in the total eleven companies of power distribution
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Power yield is always equal or more than the target of the corporation, average growth is over 7 per cent/yearly (until 2008 it obtains 12,4 billion kwh), make up
19-20 per cent total power output on the national scale (Source: HCMPC)
By geography position Ho Chi Minh City is the most active city in the country, the
change of model helps HCMPC improve independence, meet quickly the demand
of economic and social development of the city, improve competitiveness of intergration
Besides, For subsidiang electricity companies, changing from dependent posting to One Member Limited Liability Company, besides increasing initiative, enhancig
responsibility and business effect of electricity companies in the area, which join
directly and play an important role in the business production of Ho Chi Minh City Power Company it also helps Area power companies to strengthen the use of capital effectively, to save cost, to avoid waste to bring about the highest proceeds and profit for the unit and the highest contribution for general operation effect of
Corporation
In addition, the change from area power companies to independent posting companies will facilitate that units can have enough legal entity and initative of
signing contracts for customer service, economic contract, concurrently, making a
lot of channels of investment capital mobilization in order to meet the demand of electricity development investment timely to serve the need of local economy and
society development
Head office is located at No.12 Nguyen Thi Minh Khai st., Dakao ward, dist.1, Ho
Chi Minh City
Website: http://www.hcmpc.com.vn 2.1.1.2 Line of business of the company:
Ho Chi Minh City Power Company runs on the scale of Ho Chi Minh City, specializing in trade of electrical energy for serving the demand of social and economic development of Ho Chi Minh City and it is authorised by EVNTelecom,
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directly trade public telecom service in Ho Chi Minh City Line of business includes:
- Produce and trade electrical energy Repair electricity equipment
- Import and export materials, electricity equipment, other services related to
branches of electricity, telecom, IT
- Produce spare parts and grid equipment
- Design and construct the work of line and transformer stattion 220kV
- Agent for public telecom service Trade telecom equipment
- Consult construction investment of public telecom project
- Consult execution supervising of grid works 110kV
- Consult supervising of construction quality
- Consult management of construction investment project of electricity
- Manage operation of telecom net system and IT Construct telecom works and IT Consult investment of IT’s works construction
- Lease office
- Trade service of property auction
- Trade real estate (except brokery service, pricing, property trading floor) - Trade hotel (no operation at the head office of company)
- Trade inbound and outbound tours
- Trade electricity materials and equipment (compact light); - Service for commerce advertisement
- Service for provision of information in the internet (except trade agent for internet
assess Service)
Certificate of enterprise business registration of state no.102236 issued by Ho Chi Minh Department of Planning and Investment , the first registration dated March 30th, 1995 and certificate of the fourth changing registration dated October 24th, 2003 at registration capital of 241,127 billion VND
+ Fixed capital: 231,127 billion VND + Mobile capital: 10,000 billion VND
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2.1.1.3 Organisation structure of the company:
Until now, number of employees of the company is 7.392 person, of which, direct and technical workers occupy about 68.32%, cadres at the bachelor and post
graduate level make up 22%, remainings include other laborforce
Apparatus of the Company consists of Director, Vice-directors, Chief accountant,
16 departments, one health station, 15 local electricity companies, 2 enterprises, 3
centres, Board of Power Project Management of Ho Chi Minh City and Board of Project Management of production operation, one power factory
Organisation Chart of HCMPC (based on the model of General Company) (Index 1 attached ) 2.1.1.4 The relationship of EVN, EVNTelecom with
HCMPC and telecom service
Defining the relationship:
HCMPC is a member unit of EVN that runs by the model of head and subsidiary company, not only ensuring to supply electricity timely, stably and sufficiently for
the need of production and development of Ho Chi Minh City, preserving and
developing business capital, paying to State tax, HCMPC must finish the target
such as commercial electricity output, reduce electricity energy loss, increac average electricity selling price , raise turnover, decrease rate of grid problem
assigned by EVN
EVN decides the use of profit after paying tax and other financial duty, strategy of economic development , production planning of electricity business, telecom trade of HCMPC
EVNTelecom is an enterprise of EVN, EVNTelecom is allowed to provide full of
telecom service in Vietnam, build and decide price of public telecom service but
floor price should not be lower than floor price of public telecom service approved
by EVN HCMPC is general agent of telecom business of EVNTelecom in the area
of Ho Chi Minh City
According to Decision No 497B/QD-EVN dated September 29", 2009 on the
promulgation of financial management regulation towards telecom business
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activity, agent commission fee, brokery of public telecom service between EVNTelecom and HCMPC are divided through the contract of general agent
Service for telecom business, policy of commission and brokery
Rate of division towards each type of service between EVNTelecom and general azent HCMPC is determined as follwows:
\ Pre-paid and post-paid services of CDMA net : Service of wireless fixed phone E-com, local mobile E-Phone, national mobile E-mobile (096)
- Since September 30" 2009 and earlier, cost of supporting terminal equipment (BDC), turnover of arising service charge (after deducting VAT charge of other poviders and promotion cost), was divided by the rate of EVNTelecom 55% ,
Pywer company (PC) 45%,
Snce October 01°, 2009 PC takes responsibility for investment of purchasing taminal equipment and bears 100% supporting cost , PC enjoys 60% of proceeds o arising service charge ( after deducting VAT charge of other providers and
pomotion cost), EVNTelecom enjoys the remainings
- For charge package of internal, interprovince network E-Com, E-Tel at the price o 200 VND/minute, the turnover is divided into the rate of 50/50 towards incoming aid outgoing calls, EVNTelecom sets up computer software to split turnover
V Service for renting transmission channel(e-line): PC is reponsible for investing aid managing operation of local cable, terminal equipment, 50% investment capital o Metro network and interprovincial net EVNTelecom authorizes Province and aea power companies signing the contract directly with customers in the local The tunover of line subscriber service is divided as follows:
- 20% of turnover is divided for units of seeking customers, 80% of remaining tưnovers
+Local channnel : EVNTelecom 10%, PC 90%
+ Interprovincial channel: EVNTelecom 50%, 2 PC invests adjacent internal
n:twork each unit 25%
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Trang 34GRIGG GeMBA01.E02 Group 5 - International channel: EVNTelecom invests transmission path 70%, PC invests local 30% V Service VOIP179 , long distance telephone of low price nationally and internationally
- EVNTelecom co-ordinates with PC seeking customers and sharing cost to
guarantee profitable operation
V Service of Wire fixed telephone (E-Tel): PC invests the equipment installment in the local, PC enjoys 70% of call charge, EVNTelecom enjoys remainings
Ý Internet service (E-Net) includes services: internet connection LXP, direct internet
access, internet access by separate renting channel, internet access ADSL, internet access by television cable, by WLL/CDMA, television conference, wireless
broadband of high speed EV-DO, renting for installing host computer, web design,
registration and domain name maintance
- With regard to service of internet access on the television cable net
‘-EVNTelecom, PC and television station has agreed mutually commission rate by contribution rate of each party
- Service of ADSL/Etel: EVNTelecom invests core net, enjoying 50% of turnover, PC enjoys 50 %
V Terminal equipment :
- The commission of mobile phone: The PC, selling handset provided by
EVNTelecom, enjoys discount of 5% value if deposits in advance for terminal
equipment fixed subscriber phone from EVNTelecom, deposit amount is regulated
by EVNTelecom
Cost of erminal equipment : the PC bears all of expenses of erminal equipment , E-Com service ( erminal equipment is asset of power company )
The division ratio of charge between EVNTelecom and HCMPC, according to
viewpoint of the group, is not reasonable, especially for CDMA service when HCMPC invests entire transmission network, BTS and terminal equipments Due to
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lack of access of the statistics in the investment of EVNTelecom for CDMA
services, Our group can ot suggest a reasonable rate of division
2.1.1.5 The relationship between HCMPC and inferior units in the telecom business activities
Local power companies spread evenly throughout 24 districts of Ho Chi Minh City,
are HCMPC dependent posting units; they are allowed to trade electricity energy,
trade telecom service in the management area In the activity of public telecom service trade , by customer developing plan yearly, turnover is assigned by EVN, allocated by HCMPC and assigned again for the power companies public telecom
service trade cost is assigned to power companies at the rate of 19% charge
turnover divided by EVNTelecom ( 5% paid for charge collecting staff , customer service according to the regulation of EVN)
In the work of telecom trade, center for IT telecom is a clue of receiving terminal equipment hended over by EVNTelecom , checking database related to counting
charge for customers
The power companies takes responsibility for investing infrastructure: building and
managing the operation of fiber optics, seeking development, looking after customers and charge collection from them, concurrently, deploying services of promotion program of EVNTelecom and HCMPC
In the system of contribution channel, power companies are the agent of level 1 of HCMPC, power companies takes responsibility for developing distribution channel , being popular agent and freelance staffs collect charges Until now, all of companies officially signed the contracts with 117/173 popular agents , obtaining
68% plan of EVN’s assignment
HCMPC posts overall turnover related to public telecom service business activity, regulating selling price towards terminal equipment, lumpsum of some activity costs, salary cost assigned on the basis of customer development quantity according to fixed unit price for each type of service
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Trang 36/ Griccs) ŒGeMB401.E02 Group 5 According to policy of newest telecom business no.8476/DLHCM-VT & CNTT of HCMPC:
V Commission fee for agents of post-paid CDMA subscriber of brokery organisations, privates and popular agents
- E-Com, E- Phone : 60.000VND/subscriber
- E- Mobile : 80.000 VND/subscriber
( In the event of receiving raking card, multiple coefficient 1,4 )
V¥ Commission fee for wire subscription E-Tel, E-Net ADSL, E-Line for brokery
organisations, privates and popular agents
- E-Tel, E-Net ADSL: 60.000 VND/subscriber - E-Line : 1.000.000VND/subscriber
( In the event of receiving raking card, multiple coefficient 1,4 ) \Price of raking card :
- Customers buy retail at the shop with discount rate 10% of face value , power
companies retain 15%
- Brokery organisations, privates and popular agents discount 24%, Power
companies retains 1%
- The shops are sold raking cards by the agents ( no payment in advance, discount
of 20% on the face value , power companies retains 5%
Commission fee of selling terminal equipments (applying for the events of selling original price , no apply for selling promotion price) Brokery organisations,
privates and popular agents enjoys 5% real selling price (before tax) In the event of receiving raking card, multiple coefficient 1,4
2.1.2 Business situation in the past time
Table 2.1 Some of main business targets (source: Ho Chi Minh power
company)
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_ Target Unit | Year 2006] Year 2007 | Year 2008
Total assets Milton 4.798.959 5.332.657 5.604.346
VND
Business captital = - As above 1.800.743 1.888.689 2.034.178
Commercial electricity milion 10.727 11.560 12.365
kWh
Electricity energy loss | % 7,21 7,07 6.18
Average power selling price kWh 960,19 1.068,09 1.086,64 Customers household | 1.412.213 1.507.986 1.601.017 Net revenue from sale and service | Million supply MAD 10.440.992 | 12.601.483| 13.715.818 Includes + Power Asabove | 10.346696| 124407827] 13.44914653 7 + Telecom As above 9.504 50.108 83.272 + Others As above 84.792 143.548 140.893
Cost (excludes loan interest cost | As above | 10.251.514| 12.444717| 13.547.678
‘Includes + Power Asabove | 10.169.885| 12.274./072| 13.337.279
s + Telecom As above 11.992 45.215 82.957
ˆ + Others As above 69.637 125.430 127.442
Target Unit Year 2006 Year 2007 Year 2008
Trang 38oe ener GeMB401 E02 Group 5 » 23.59 $053 Tử 19.83 #1413 it _#93.1 “e753
Figure 2.1 Graph of power revenue growth (2001-2008)
The company has operated business production effectively and profitable in the most difficult conditions
Revenue of selling power of the Company has grown strongly in the past years and
occupied 4 revenue of EVN
From the year 2006-2008, the Company got over target of plan profit 11% that
EVN assigned In 2006, profit before tax is 190,9 billion, profit rate is 7% In 2008,
in the difficult background of economy domestically and internationally, commerce output grew lowest in the past years, however, the Company got profit of 96 billion
VND ~ rate of profit is 5% (Source: HCMPC)
Besides, the Company paid fully state tax at the total amount of tax for 3 years is 473 billion VND, VAT is 244,3 billion VND, business income tax is 132, 4 billion
VND(Source: HCMPC)
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Telecom business activity is gradually stable, profit of next years are higher than
previous years and gets the given plan, in the year of 2007 profit 1%,in 2008 profit is 2% in the total profit of the Company Although rate is still low, it shows trend of
development in the next years
2.1.3 Result of telecom business activity :
2.1,3.1, Developing subscriber in the past years 122.376 120.000 100 000 80 000 85.02 60 000 40 000 200 1.115 0
Figure 2.2 Graph of developing subscriber in the past years (Source: HCMPC)
2.1.3.2 Subscriber situation of ceasing temporarily, terminating to June 30",
2009
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No | Service temporarily Restore Terminate
Rate Rate Rate