Andrews () University
GRiccd) GaMBA.M0210 - Group I Strategic Management
CAPSTONE PROJECT REPORT
BUILDING BUSINESS STRATEGY TRICOLOUR TRAVEL CO., LTD
FIVE YEAR PERIOD 2013-2018 Dam Anh Tu
Dang Phi Hung Duong Minh Hiep Nguyen Van Tuan
GaMBA M0210 - Group 1
HANOI! 2012
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Andrews 4) University
Gricsd GaMBA.M0210 - Group 1 Strategic Management
BUILDING BUSINESS STRATEGY TRICOLOUR TRAVEL CO., LTD
FIVE YEAR PERIOD 2013-2018
Biography of TnColour Travel Co., LTD Business License & Tax Code: #0103838354 Date of Establishment: July 2008
Business fields: Travel & recreation, hotel booking, airline and rail ticket booking, passport &
visa Services, freight forwarding and transportation, car rental, logistics and express Services Office: Suite 1502, 14 FLR, Hacisco Building
15/107 Nguyen Chi Thanh, Dong Da, Hanoi
Business Address: #21A, Lane 267 Ho Tung Mau, Tu Liem, Hanoi
Tel: 04-37676876; Fax: 04-37676875:
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CAPSTONE PROJECT REPORT GROUP01-GaMBA.M0210
CONFIRMATION
TRICOLOUR TRAVEL COMPANY LTD Suite 1502, HHACISCO Building,
¬ 15/107 Nguyen Chỉ Thanh, Dong Da Dist COLOUR Ha Noi, Vietnam
Tel: (84-4) 37676876; Fax: (84-4) 37676875
Travel | Website: www.tricolourtravel.com i
Date; 22 June 2012
To: Master of Business Administration Program, Griggs - Andrews University ETC-Vietnam National University, Hanoi
Subject: Comments of TRICOLOUR TRAVEL COMPANY LTD on Capstone Project Report of Group 01-GaMBA.M0210 - Griggs-Andrews University
TriColour Travel Company LTD certify to have provided full support to Group 1, Class M0210 when its members studied and researched at our company about the industry, business environment, the company’s operations, vision, missions and strategies
- Group members have shown serious, enthusiastic and creative attitude throughout the course of study and research
- Group have closely followed up current business situation of the company and ultimately achieved positive resuit and come up with valuable recommendation report
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Director
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GRioo3 GaMBA.M0210 - Group 1 Strategic Management
ACKNOWLEDGEMENT
This is to certify that the content of this Capstone has been completed by our group efforts of four members It was neither copied from, nor shared with any other person other than our group members and only serves the purpose of completing our group final report The information given in the Capstone including data, figures, demonstration diagrams & tables and other supporting document & materials are genuine and original which have been validated by the selected company and its board of management itself with official stamp
We, the undersigned, hereby undertake full responsibility before Griggs University of the United States of America and Educational Technology & Career Development of National University of Vietnam, should there be any sign of duplication or violation of
this document
Signatures of group members — Group 01 — Class: M0210
2) / oa wae 1 Dam Anh Tu ⁄ 4“ W
; “Duong Minh Hiep 4 Nguyen Van Tuan
il
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Gris) GaMBA.M0210 - Group 1 Strategic Management
Special Thanks
We would like to express our sincere thanks to the management board and personnel of TriColour Travel who have helped providing us with valid and authentic information and materials to complete this project
We would also like to convey our special thanks to all the program instructors, teachers and
lecturers of Griggs University of the United States of America and ETC Centre of Vietnam National University who have coached us throughout the course of study and provided us with theoretical approaches, researching directions and guidances thoroughly for us to have a complete strategic analysis of TriColour Travel Company LTD for our Capstone Project
Report
Members of Group 01 — M0210
IV
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Table and Content
CONFIRMATIONACKNOWLEDGEMENTT Q5 Ăn 9 v9 iii ACK NOW LEDGEMEN TD ssssssssssacsessasscsdccqorereerveneeenceecernrsxereentmenaenneneneenenanRTEREENAR iii txpECHII TH KS paugnanntioxesesxesrnnsesnsnnrsnveeernosshgfigsgsve,9t30985E)08186001000009/6501361305524685ey iv ee a v LIST OF TABLES, FIGURES AND PICTURE sscssssssssssscesssseeesserenneennceceemennenemenenennes Vii
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CHAPTER I: THEORETICAL BACKGROUND Go g 4 l1 BasloTheories sndole GÊSHTAI€EW seeeesnnnsenduenotdarabioudiaoaiadlisessseseeeereomsve 4
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11/2 asiEcli6raclerisHcgl BUSIHESS RHGHY? eeeeseeeesseertrenrrneooororgrrravonm 2 lJ SOI ĐI DUNHHWGSS SHNEGEY eesvreerrertoymirrtoriSEEOREOSSHDEESESN.ISE00G/000-G088 5 1.2 Tools and methods for strategy evaluation and analySiS ‹ -«‹- 7 laid Z\BIYSISGI DữSiNIESS EHVIFOIIHIỦEusmreosernstrertsrarutdeariiinibebaialsieeensessssee 7 1.2.1.1 Analysis of macro environment - (PEST' model) -«« «+- Z 1.2.1.2 Analysis of industry environment — (five forces by Michael Porter) 10 1.2.2 Matrix of External Factor Evaluation (EFE Matrix) :ssssssssseessesses 13 1.2.3 Matrix of Internal Factor Evaluation (IFE MatriX) <5 5+2 14 1.2.4 Analysis of value chain of enterprIses (M Porter): - ««-<« 15 12.) Tools of strategy location and Of Citation seseseseeaneeaaanraiorieaaaaeeeeeee 16 CHAPTER II: ANALYSIS OF ACTUAL BUSINESS OF TRICOLOUR TRAVEL RC CIMIP ANY sc getctecsdipecencemannennnenaenemamaennnomeasnenen nanan REE iverremmmerenecmmnmen 20 2.1] Introduction about TRICOLOUR TRAVEL COMPANY: - ‹- 20 21.1 History of establishment grdlđEVEIGDNREHE eessseseessaneenmassdarsam 20 21 COMmpaly's Organizational SUCHE! v.v rTermedsnddeddrdrdhdridoonaenadias 22 2.1.3 Specific characteristics, vision, task and core values of the company 23 2.2 Analysis of the external factors— EFE Matrix 5.555 +<<<<<<<<<ss 23 2.2.1 ÄïđiálYš§iS ưf mracrơ envirommentunder PEST möđ6Ï! eeeesrrreee 23
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2.2.3 Summarization of external factors — EFE Matrix -. <<5- 48 2.3 Analysis ofinternal environment of TriColour Travel ‹ -<s<<<>s 49 2.3.1 Analysis of Internal capabilItICS: .- 55c 2221 sssrvsreesreeesrves 49
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7
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2.3.1.2 Analysis of business capacity and financial capacify -+- 50 2.4108 /UTRIYSIS ƠI HS[OITNET; BEUPPITET BH PMIATKEL SY SIBIIE a acccciccninecnceosmmnerrermrenrenenes 32
202 Analysis of valic chai Of Pate prises q cece naman amnenemanamanss 55 ¿.,J.2 ST" MGTY OÍ miernal impBactã- [RE Hà KÍX sueeeaeaeaeasnnniindliddaiasexee 58 ZA SUMIMALIZALION ðÏ ãHãÌVSllimssesssesessnnndnrnarditrdiiidtiiiiaeserrirrverreeeerrirrrre 58 CHAPTER III: BUILDING NEW BUSINESS STRATEGY FOR TRICOLOUR TRAVEL AND STRATEGY IMPLEMENTATION ROADMAP IN NEXT FIVE pd 0 oe) er ee ee 64 3.1 Defining The first ODjCCtiVES GAC TASKS oe onessccvenosasnases cma sanewansmams satdernnmnnnemeenere 64 3.2 The contents of te strateay in the Cremerdl Strategy asia ncccncnnennnenemnveonnmeenmenererss 65 no , GIETECEV ĐẾCTEBTG HGW DIOONGIBI nseeeeceeeee=essseesmseesoerdổrtritdnErorrnrntirie 65 3220 strategy to develop and expand Marker q 0.: yer 67 3.2.3 Strategy to enhance the ability to control distributIon: .- 67 5.5 TĨESOlWtiof To DEFfOffhi SŒBIEBIEŠ cesensneeenennvrdrindddiiddiiiiidgllsieseesessereee 68 33:1 SØlufioBs tọ Tii@ñe¿ägi mvesHHETlsesssseseaeeioieeiesesexseeemssver 68 3.3.2 Soletions to train and develop niall FESOUTGES essereeesomre 70 3.3.4 Solutions fo apply technology SOINONS nrrcemmrrernercmmmnmrmsanmeme 7] 2.0% Solutions HOIHAFK€HHE, .e.eeenerosrrrderrrrdriddtetsuoidtrgrerggSEEARiBIEEEE 73 3,30) SOlMONS 10 OTPATIZATIONAL HUCWULCS ccc cecesnssmmrreemererasns crm masini 74 34 Kesponsibilities (6 SOCIEtY Afid COMMUNI cccesacercacvacvsscersevsnesssasee tesemariaiernaree 77 CONCLUSION naaaeeeeeererendrrnrndrmndronitantsirtitfGitinsyisgEi609568505490065ã89886ssrrssvee 78 OS leeeeeneesnreensroninnnnrnnrrdiiiigtisioipNiEi20016075551439113ãxs9s3saugssvevssrrvreve 79
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LIST OF TABLES, FIGURES AND PICTURE
Tablel.I : Porter`s Value Chain model
Tablel.2: REQUIREMENT TO COMPLETE CPM MATRIX T/ablel.3: SWOT Matrix
T able 2.1: Business result of the period 2009 — 2011 T able 2.2 Organizational chart of TriColour
Table 2.3: PEST model
Table 2.4: Paypal operation model
Table 2.5: Model of external impacts on enterprises Picture 2.6: Five forces by Michael Porter
T.able 2.7: Statistics of international travellers to Vietnam T.able 2.8: CPM MATRIX
Tiable 2.9: Matrix of external factor evaluation (EFE Matrix) of TriColour Travel T.able 2.10: Statistics of education level at TriColour Travel
Table 2.11: Revenue from key services 2009-2011 period
Table 2.12: Financial items of TriColour Travel in 2009 — 2011 period
Table 2.13: Statistics and analysis of revenue contributed regularly by customers of TriColour Travel
Table 2.14: Statistics of revenue rate in 2009- 2011 period of TriColour Travel Table 2.15: Matrix of internal factor evaluation of TriColour Travel
Table 2.16: SWOT Matrix —TriColour Travel Co., Ltd Table 2.17: QSPM Matrix
Figure 3.1: S.M.A.R.T Goal Model Table 3.2: Training process
Figure 3.3: Model of the new organizational structure
Figure 3.4: Roadmap for implementation of strategic solutions
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INTRODUCTION
» Reason to select topic:
Vietnam is a country which consists of many tourist potentials, being favored by the nature and having had many natural well-known attractions with rich variety and diversification thorough the country
On the other hand, the government is always giving great interests, aiming to create a smoother investment environment in order to favor and encourage economic sectors to invest in tourism industry with fair competition and lawful equality Competitiveness is actually an opportunity for tourist firms to compete equally, to improve service quality and to become successful and most importantly, to diversify tourist products to meet the increasing demands domestically and internationally
With the learned knowledge from the Global Advanced MBA of Griggs University and ETC of Vietnam National University, and with experience as well as expertise of a group member Mr Dang Phi Hung — founder of TriColour Travel Company, group has come to a decision to select the topic of: “Building Business Strategy for TriColour Travel for Five year period 2013-2018”
> Purposes of the study:
To have an analytical report on the impacting factors to the business situation of TriColour Travel from which help to build up a suitable strategy for the firm in the next five years
To recommend suggested solutions to implement the proposed strategies which aiming to achieve the ultimate goal that the company is heading to
> Method of study and research:
- Compiling data and figures: including basic data and supporting data Basic data: Interview management team of TriColour Travel, gathering information, figures to create a base for analysis
G Global Advanced Master of Business Acmunistratio?
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Supporting data: is gathered from many different sources such as: from the company internally, from Department of Archives, Internet Websites and other online sources etc
- The data were processed by: comparing method, general analysis, from financial balance sheets and other statistic basic data
» Structured content of the report:
The report consists of 03 main parts covering: - Chapter 1: BASIC ANALYTICAL THEORIES
This chapter covers all the related theories which helps guiding readers to a general understanding of the reporting content such as: basic theories about strategy, effective tools to analyze, orient and build up
- Chapter 2: ANAYLISIS ON IMPACTING FACTORS AND ACTUAL BUSINESS SITUATION OF TRICOLOUR TRAVEL COMPANY
The 1* part introduces a general briefing on the establishment of the company, key business activities and business results of the company for the very first 03 years (from 2009- 2011)
The following 2™ part are analysis on impacting factors from external and internal environment to the company business activities from which help building
relevant matrix (s) such as Internal Factor Environment (IFE); External Factor
Environment (EFE), CPM SWOT and QSPM
- Chapter 3: BUILDING BUSINESS STRATEGY FOR TRICOLOUR TRAVEL COMPANY AND RECOMMENDED SOLUTIONS TO IMPLEMENT FOR FIVE YEAR PERIOD 2013- 2018
In this final part, group set purposes of business strategy for the company, set goals to lead the company to reach to, build up strategies and select relevant Strategies
Introduce solutions and roadmap to implement the proposed strategies effectively
c7 Global Advanced Master of 8usiress Aaminstrato^
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Conclusion: To give a full business report of the company from the research and lessons learnt from the report project
» Meaning of the report:
Most of the business enterprises in Vietnam are medium and small scale firms and the businesses activities and operations are mostly based on experiences The concept of strategic management is somehow quite new and is rarely applied and seriously implemented in almost the business enterprises in Vietnam
With the on-going difficult business situation, companies and enterprises must adapt suitable policies, make effective decisions and apply viable strategies to stay strong on any business competition circumstance With this report, our Group wishes to contribute and share our modest knowledge about strategic management to the company with a hope that the company will have a rightful view on its business strategy
G Global Advanced Master of Busiress Adminstration
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ORIGGS GaMBA.M0210 - Group 1 Strategic Management
CHAPTER I: THEORETICAL BACKGROUND
1.1 Basic theories and role of strategy 1.1.1 Concept of strategy
“Strategy” is the term derived from Greek word “Strategos” which is used in military The modern military theorist named Clawzevit also considered: military strategy is the art of military arrangement to gain the end of war A publication of Larous dictionary regarded strategy as the art of applying different means to gain a victory Scholar Dao Duy Anh wrote in Vietnamese dictionary: strategy is a set of plans implemented to pursue desired goals in one or many fronts
Therefore, in military field, in general the term of strategy has been regarded as the art of military distribution and arrangement to gain the end of war
Since 1960s decade of the twentieth century, strategy has been applied in business and the term “Business strategy” was born The concept of business Strategy has been gradually developed over the time and it has been approached by many different ways
> Business strategy is an art:
- Alain Threlart said that ‘Strategy is an art which an enterprise uses to fight against competition and win”
M-Porter said: “Strategy is an art of building sustainable competitive advantage to self defense”
» In viewpoint of management, business strategy is a form of plan:
- G Arlleret said “Strategy is G Arlleret - “Strategy is the definition of roads and means to reach to an established objectives through policies”
- D-Bizell and his team of authors said that “Strategy is a general plan leading the enterprise to achieve its goals as desired It is the base for defining the policies and the ways to realize them”
Glueck said: “Strategy is a unified, comprehensive and integrated plan designed to ensure that the basic objectives of the enterprise are achieved”
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~ In viewpoint of combination:
- “Strategy is an art of all the activities and controlling them in order to achieve the long term objectives set by the enterprise”
- Chandler considered strategy as definition of long term objectives and selection of methods or processes, distribution of essential resources and organization for realizing such objectives
- In an enterprise “Business strategy is an art of designing and organizing means in order to reach to long term objectives, ensuring the adaptation to the change of business environment and competition”
Lido Basic characteristics of business strategy:
- Business strategy clearly defies the main goals and business policies of the enterprise for each period
- Orientation of the strategy tends to ensure the continuous and strong development of the enterprise in the changeable business environment
- Strategy ensures the maximum mobilization and coordination of the exploitation and usage of all resources of the enterprise in present or in the future, brings all advantages into play and captures all opportunities to have advantage over other competitors
- Business strategy of enterprise is demonstrated during consecutive process - Business strategy always go ahead, win victory in business
- Business strategy is always designed over long term (3, 5, 10 years) 1.1.3 Role of business strategy
In the market mechanism, the building and realization of business strategy has an important meaning for the existence and development of an enterprise The history of the world's business has witnessed so many businessmen who joined the business world with only initial capital; however, they are quickly successful owning to proper business strategy Business strategy has been compared to the rudder which help a ship overcome the big waves and storms, reach the new bank It is also compared to a gust of wind helping heighten a kite In fact, the lessons from
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success and unsuccessful in business indicated that there have been billionaire who joined business and successful with initial little money owning to optimal business strategy and conversely there have also been billionaires who have handed over property to their competitors in a short period due to wrong business policy In present market mechanism, bankruptcy of the companies due to losses or strong development of the successful companies actually depends much on their business
Strategy
Role of business strategy for an enterprise is reflected in followings aspects:
» Business strategy helps the enterprise to clearly define their goals in the future, which will serve as guideline for all of their activities Business strategy plays a role as direction for long term operation of the enterprise, as strong premises for implementation of all business activities Absence of strategy or improper Strategy or strategy without strong theoretical foundation will cause the business activities to lack of direction
>» Business strategy enables the enterprise to capture and make use of all business opportunities and take active measures to overcome all threats in the competitive market
> Business strategy contributes to the enhancement of efficiency in using resources; strengthen competitive position of the enterprise ensuring continuous and sustainable development of the enterprise
>» Business strategy creates strong premises for the enterprise to have the decisions suitable to the changes of the market, strong foundation for the research, implementation, investment, development, human resource training, and market expansion and product development activities
In fact most of the mistakes in investment, technology, market originated from improper strategy or wrong definition of strategic goal Success or unsuccessful depends mainly on one of three important factors that which business strategy the enterprise has
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1.2 Tools and methods for strategy evaluation and analysis 1.2.1 Analysis of business environment
1.2.1.1 Analysis of macro environment - (PEST model)
While M-Porter's five forces model focuses on analysis of the business environment, PEST studies the impacts caused by the macro environment factors, including:
o Political o Economics o Socio-cultural o Technological
These four factors directly exert impact on the economic industries, they are external factors of the enterprise and industry, and the industry has to endure such impacts as objective factors The enterprises which operate under such impacts will make suitable business policies and activities
> 1 Political factor This is a factor significantly affects all business industries on every territory The political factors may threaten the existence and development all industries When doing business in an administrative area, the enterprises must abide by law of such area
+ Stability: We consider the stability within political and diplomatic conflict The institution with high level of stability will provide favorable conditions for business activities; conversely, the unstable institution with conflict will cause negative impact on the business activities on its territory
+ Tax policy: Import and export duty, consumption tax, income tax will affect turnover, profit of the enterprise
+ Relevant laws: investment law, corporate law, labor law, anti-monopoly law, anti- dumping law
+ Policy: The policies made by State will affect the enterprise; they may give profit or cause challenges for the enterprise such as policies on trade industry
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development, economic development, tax, policies on competition regulation, consumer protection
» 2 Economic factors
The enterprises should pay attention to the economic factors both short term and long term and the interference by the government
Normally the enterprises make decision on investment depending on the economic factors
+ Status of economy: every economy has its own circle; the enterprise will have suitable decisions for each certain period of the economic circle
+ Factors affecting the economy: interest, inflation,
+ Economic policies made by government: Law on basic salary, State's strategies for economic development, preferential policies: tax reduction, subsidiaries
+Economic prospect: growth rate, GDP increase, GDP rate on investment capital > 3.Socio-cultural factors
Every country, territories all have their own typical cultural value and social factors which are characteristics of the customers at such places
Cultural values are the values which make up a society, contributing to such society's existence and development Therefore, normally cultural factors are closely protected, especially spiritual culture However, we also can’t deny the cultural interfere among the countries This interfere will change the customer psychology, life-style, and create the development prospect for the industries
Beside culture-social factors are also taken into account by the enterprises when they conduct market surveys The social factors will divide the community into groups of customer, each group has its own characteristics, psychology, income:
+ Average life expectancy, health, nutrition, food, drinks
+ Average income, income distribution
+ Life-style, knowledge, viewpoint of aesthetics, life psychology + Living standards
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y 4 Technological factors
The whole world is in the revolution of technology; series of new technology have made their way to the world and integrated into products, services If computer was a tool for calculation 30 years ago, now it is fully functioned to work independently taking place of human being We used to use film cameras and now no firm produces film for cameras Especially, in field of information technology, the modern communication technology has helped narrow the geographic distance + Investment by government, enterprises into research & development - R&D: in 60s-70s of previous century, Japan has been admired by other countries in the world for its economic milestone mainly human resource and new technology Presently, Japan is still a country which has the biggest investment on GDP in research in the world The combination between the enterprises and government aiming to carry out researches, introduce new technology, material will exert positive impacts on the economy
+ Speed, circles of technology, backward technology
+ Impact by information technology, internet on business activities
Beside above main factors, during market survey, the enterprises take globalization factor into account as micro factor which may exert impact on the industry
Integration factor: Nobody deny that globalization is the present tendency, and this tendency will not create opportunity for the enterprises and countries to develop production and business
+ Globalization creates competitive pressure on every competitor from every corner of the world The global integration will force the enterprises to make adjustments suitable to the comparative advantages, regional and global labor distribution
+ The :mportant thing during integration, the commercial barriers will be gradually removed, the enterprises have opportunities to do business with other partners very far, and now the customers of the enterprise are not from the domestic market where the enterprise are doing business but the customers come from everywhere
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P.e.S.F model has been extended to become the matrixes P.E.S.L.T (including Legal factors) and S.T.E.E.P.L.E (Social/Demographic, Technological, Economics, Environmental, Policy Legal Ethical) which are more and more improved to be standard, indispensable during study of the enterprise's external environment
1.2.1.2 Analysis of industry environment - (five forces by Michael Porter) Michael Porter a famous strategy administrator of Harvard University, in the book “Competitive Strategy: Techniques Analyzing Industries and Competitors” rendered a viewpoint of the competitive pressure on every production and business industry
> 1 Competitive pressure from suppliers
Number and scope of suppliers: Number of suppliers will decide their competitive pressure, bargaining power to the industry, enterprise If there are some big suppliers in the market they will cause competitive pressure, affect all production and business activities of the industry
Substitute products: in this issue, we study the substitution of input material and switching cost
Information about the suppliers: Nowadays, information is always a stimulus to the commercial development; this information exerts a significant impact on choosing the suppliers who provide input material for the enterprise
In all industries, the suppliers always exert certain pressure if they are the big ones, having precious resources Therefore, the small suppliers (farmers, craftsmen ) have little bargaining power with the enterprises in spite of their big quantity but misconduct
> 2 Competitive pressure from customers
Customer is a competitive pressure which can affect directly all business activities of the sector
Customers are divided into 2 groups:
+ Retail customers
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~ Distributors
Such two groups cause pressure on enterprises regarding price and quality of products and attached services They themselves control the competition in the sector through their decision of purchase Similar to pressure from suppliers, we consider affects on competitive pressure from customers on the sector
~ Scope
> Importance
+ Cost of customer change
+ Customer information
Particularly, when analyzing distributors, it is required to note their importance They can directly overwhelm the internal enterprises
> 3.Competitive pressure from potential competitors:
According to M Porter, potential competitors are enterprises which have currently not been present in the sector but can affect the sector in the future Quantity of potential competitors and their pressure on the sector shall depend on the following factors:
+ Attractiveness of the sector: This factor is represented by targets such as profitability, quantity of customers, and quantity of enterprises in the sector
+ Entry barriers: are factors which cause more difficulty and expense for the entry s* Technique
“* Capital
** Commercial factors: Distribution system, brand name, customer system s* Featured resources: Input raw materials (controlled) degrees, inventions,
patents, human resources, Government’s protection > 4 Competitive pressure from alternate products
Alternate products and services are the ones which can satisfy demands equivalent to products and services in the sector
Above example shows that the key competitive pressure of alternate products is its capacity of satisfying demands in comparison with other products in the same
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sector: in addition, factors such as price, quality, culture, politics and technologies Shall also affect the threat of alternate products
Accidental and unforeseen features of alternate products: Even in the internal sector the development of technology can form alternate products Mobile phone is the alternate product of fixed telephone: and in the future, Smartphone shall gradually occupy computer market
> 5.Pressure from internal competition
Enterprises in the sector shall compete directly with each other to form counter- pressure on the sector resulting in competition intensity In any sector, the following factors shall increase competitive pressure on competitors:
+ Sector situation: Demand, growth speed, quantity of competitors + Sector structure: Centralized or decentralized
e Decentralized sector has many enterprises which compete with each other but no enterprise is capable to control the remaining
e Centralized sector has only one or several enterprises which hold the controlling position (Control the competition- which is considered as monopoly)
+ Exit Barriers: Similar to entry barriers, exit barriers are factors causing difficulties to the exit of enterprises:
e Barriers of technology and investment capital e Constraints to employees
e Constraints to the Government and related organizations (Stakeholder) e Constraints to strategies and plans
> Pressure from close related parties
This pressure is not mentioned directly in matrix but in the book titled “Strategic Management & Business Policy” of Thomas L Wheelen and J David Hunger, pressure from close related parties is noted
+ Government + Community
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~ Associations
~ Creditors, sponsors + Shareholders
+ Complement (I.e, supplier of additional products for one or many other sectors: Microsoft composes software for other companies to sell computers; other
enterprises can compose documents for to sell their products ) Leda Matrix of External Factor Evaluation (EFE Matrix)
EFE matrix evaluates external factors, collecting and summarizing key opportunities and threats of the external environment which affect the operation of enterprises Thereby, managers can evaluate reaction of enterprises to such Opportunities and threats, and recommend judgments whether affects of external factors are advantage or disadvantage In order to form such matrix, five following steps should be carried out:
Y Step 1: Prepare a list of 10-20 key opportunities and threats which are considered to affect mainly the success of enterprises in the sector/lines of business
Y¥ Step 2: Classify importance of each factor under score from 0.0 (Unimportant) to 1.0 (Very important) The importance of each factor depends on influence of such factor on lines of business of the enterprises Total score of importance of all factors shall be 1.0
Y Step 3: Determine weight from | to 4 of each factor which depends on the reaction of each enterprise to such factor, of which 4 is the best reaction, 3 is moderate reaction, 2 is average reaction and | is weak reaction
v Step 4: Multiply the importance of each factor by its weight to determine score of each factor
v Step 5: Plus score of all factors to determine total score of matrix
v Evaluation: Total score of matrix does not depend on quantity of factors included in the matrix: the highest and lowest score is 4 and 1, respectively
¢ If total score is 4, the enterprise reacts well to opportunities and threats
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e If total score is 2.5, the enterprise reacts moderately to opportunities and threats
If total score is 1, the enterprise reacts weakly to opportunities and threats
Aided Matrix of Internal Factor Evaluation (IFE Matrix)
Internal factors are considered to be very important in each business strategy and targets as proposed by enterprises After taking into account internal factors, Strategy managers shall prepare this kind of matrix in order to consider reactivity and acknowledge strength and weakness: then help enterprises take maximum advantage of strength to exploit and prepare internal force to face with weakness and find out methods to improve such weakness In order to form such matrix, five following steps should be carried out:
e Step 1: Prepare a list of 10-20 factors, including basic strength and weakness which affect enterprises and targets as proposed by such enterprises
e Step 2: Classify importance of each factor under score from 0.0 (Unimportant) to 1.0 (Very important) The importance of each factor depends on influence of such factor on lines of business of the enterprises Total score of importance of all factors shall be 1.0
e Step 3: Determine weight from | to 4 of each factor, of which: 4 is the largest strength
3 is the smallest strength
2 is the smallest weakness
SN
NN
1 is the largest weakness
Step 4: Multiply the importance of each factor by its weight to determine score of each factor
e Step 5: Plus score of all factors to determine total score of matrix
Evaluation: Total score of the matrix which is from | to 4 does not depend on quantity of important factors in the matrix
- If total score is under 2.5, the firm is weak regarding internal factors - If total score exceeds 2.5, the firm 1s strong regarding internal factors
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12.4 Analysis of value chain of enterprises (M Porter):
In order to understand more activities of enterprises in order to develop competitive advantage and form added value, a useful tool to divide enterprises in a chain of activities to form added value is called value chain
Thus, value chain is understood as chain/collection of activities of enterprises that all activities shall contribute to increase value to change sources into
products/services to customers Porter’s definition on key activities and support activities to form added value is shown in the following chart:
Tablel.I : Porter’s Value Chain model
Porter’s Value Chain model
Fam infrastructure
(gerard sus maguenwid, eocanitions, fiseuncas, stag: peared)
' ' t
ị (receuiting, training, development);
: Technology Development :
RED, Product and process improvement)
Support Activities
‘ Pronuramant :
(purohaoing of raw matoseia maehirxea, supptics)
i i ‡ ‡
Inbound | Operations {| Outbound | Marketing | Service
Loyeeuce | (mach ring | Logistics | end Sates | Cinetaitation
(raw tmeventding | (weretouuny ) Redvert wing, | repulr pets)
matanaa + testing) + red i pramaheor, :
handling and | | distrioution §| pricing
werml+susdrsg | ‡ rể 'tdmlsee$ { œl4*4e:sef
' Ệ prextuc) ì ni) v — he Primary Activities
Key activities forming added value:
e Inbound Logistics: receive and store raw materials, supply raw materials as required
e Operations: processes of output treatment to form perfect products and services
e Outbound Logistics: warehouse for storage and distribution of products/services
e Marketing & Sales: market products/services and sales
e Service: support and care customers after supply of products/services Support activities:
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e The infrastructure of the firm: organizational structure, control system,
corporate culture:
e Human resource management: employee recruitment, training, improvement: e Technology development: apply technology to support value added activities Procurement: procure raw materials, supplies equipment:
faded Tools of strategy location and orientation
“+ Competitive Profile Matrix (CPM)
Tablel.2: REQUIREMENT TO COMPLETE CPM MATRIX
[ Company A | Company B | Company C
Item Factors
Weight
no 2 Score = Score = Score
s s a « =4 e4 + 1 Marketshare 2 Pricing competitiveness 3 Customer network 4 Technology
Research activities to develop
5 new products 6 Human resource 7 Brand name 8 Financial capability 9 Marketing capability
10 | Distribution control capacity
TOTAL
Competitive Profile Matrix (CPM) helps business enterprises to identify their major competitors with their respective strengths and weaknesses CPM is built through following 05 steps:
- Step 1: List out 10 major factors which are having direct impacts to the competitive capability of the company in the industry
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- Step 2: Sort out weighing importance of each factor from 0.0 (not important) — 1.0 (very important) The importance of each factor depends on its influence to the company’s compatitiveness in the industry
- Step 3: Give a rating from | to 4 for each factor item, depending on the company’s reaction & ability to that factor item
- Step 4: Mutiply weight to its rating to get a score for each factor
- Step 5: Add up all the scores to have a total one for evaluation of the matrix
<* SWOT matrix
What brings SWOT analysis such strength? Simply, it can help you consider all
opportunities which you can take advantage of And by understanding your
weakness in business, you can manage and eliminate unknown threats Moreover,
by applying SWOT comparison and analysis between you and competitors, you can draft a strategy which shall help you distinguish you from competitors; thus, you shall compete efficiently in the market
Table1.3: SWOT Matrix
Supporting Detrimental
the strategic objective | to strategic objective
3 2 §2| Strengths |Weaknesses T = F- ° 5 § | Opportunities| Threats Ww
In order to form SWOT matrix, managers shall carry out 8 following steps: e Step 1: List key opportunities from external environment (O1, O2 ) e Step 2: List key threats from external environment (T1, T2 )
e Step 3: List key strength of enterprise (S1, S2 ) e Step 4: List key weakness of enterprise (W1, W2 )
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e Step 5: Combine strength with opportunities to form strategies (SO) e Step 6: Combine weakness with opportunities to form strategies (WO) e Step 7: Combine strength with threats to form strategies (SO)
e Step 8: Combine weakness with threats to form strategies (WT) “* Quantitative Strategic Planning Matrix (QSPM)
This matrix is a technique which shows objectively which is the best alternate strategy QSPM summarizes analytic results in previous phases; helps planners select decisions objectively However, like other tools of strategic analysis and establishment, QSPM also requires good judgment by intuition
QSPM uses input data from above analysis to help strategists decide objectively which alternate strategy is the most attractive one and worthy for enterprises to follow up in realizing their targets successfully The QSPM implementation includes 6 steps as follows (see table):
- List significant external opportunities/threats and internal important strength/weakness in column (1) of the matrix Such factors are derived directly from EFE and IFE matrices
- In column (2) of the matrix, fill in figures corresponding to each factor in column of classification of EFE and IFE matrices
- Study SWOT, BCG and Hofer matrices; determine alternate strategies which enterprises should consider to carry out; note such strategies in the first row of QSPM Strategies are arranged into separate groups (if any)
- Determine score of attraction (column A): Unattractive=1, little attractive=2,
fairly attractive=3, very attractive=4 Such figures show relative attractiveness of each strategy in comparison with others in the same group of alternate strategies
- Calculate total score of attraction of each strategy regarding each important successful factor stated in column (1) by multiplying number of classification by score of attraction in each row (place in column B)
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- Accumulate scores of attraction to get total score of attraction of each strategy (taking into account all suitable internal and external factors which can affect strategic decisions) The higher and higher total score is, the more and more suitable strategy is selected for implementation
In principle, a QSPM shall include any quantity of group of alternate Strategies, and a certain group shall include any quantity of strategies; however, Strategies in the same group shall be evaluated with each other For example, a group of diversified strategies shall include concentric diversified strategies, uinitized diversified strategies; meanwhile, other group shall include vertical linked sitrategies (straight-ahead or back-end) and horizontal linked strategies Such groups aire different from each other and QSPM shall only evaluate strategies in the same group
It is noted that QSPM represents relative attractiveness of selective Sitrategies, and it is more important to supply objective basis to consider and decide the most suitable product strategies However, QSPM has many limits and certain conditions of actual use One of the largest limits in the establishment of this matrix is; that it is required to have intuitive judgment to give score of attraction of factors- im spite of basing on former information of environment analysis Therefore, in oirder to apply QSPM efficiently, strategists are required to discuss carefully and aygree with each figure in the matrix by recommending basis of score in column of
basis of attraction score
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CHAPTER II:
ANALYSIS OF ACTUAL BUSINESS OF TRICOLOUR TRAVEL COMPANY
2.1 Introduction about TRICOLOUR TRAVEL COMPANY: Logo:
(COLOUR
Travel Transaction name: TriColour Travel Co., LTD
Business Registration Certificate and Tax code: #0103838354 Date of Establishment: July 2008
Scope of business: Providing services in travel, relaxation tour, hotel booking, air- ticket, train ticket booking, visa and passport, forwarding and transportation, hiring out cars, express delivery
Head-office: Apartment 1502, 14th floor, Hacisco Building 15/107 Nguyen Chi Thanh, Dong Da, Hanoi
Transaction office: #21A, Lane 267 Ho Tung Mau, Tu Liem, Hanoi
Tel: 04-37676876; Fax: 04-37676875
Z11 History of establishment and development
TriColour Travel was established in July 2008 with transaction name in Vietnamese: Công ty TNHH Thương mại và Lữ hành Tam Sac, which is in English TriColour
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Travel Co., Ltd Its Board of Members consists of 03 persons who hold most of key positions relating to the company's all business activities Company's charter capital: VND 3.5 billion The company has four 7-seat cars for long term hire contracts and serving small and middle scale tours
The main line of business of TriColour is providing quality tourism service, inbound and outbound tours, inbound and outbound hotel booking and reservation, inbound and outbound air-tickets Further, the company is also engaged in some other services such as inbound and outbound express delivery of mail, package, transportation ‘of goods, hiring out cars for tourists, visa and passport
Over nearly 04 years of operation with the dynamic staff of leaders and employees, the company has gained certain achievement, satisfying the expectation of
tthe founders and maintaining profitable business
Table 2.1: Business result of the period 2009 — 2011
Revenue Million VND 543 3799 5366
Net Revenue Million VND 67 433 650
After tax profit Million VND 50 332 487
However, it can be said that TriColour has not been a well-known name yet and there
are so many things to do in building up its trade name The company's profit is much enough only for maintaining stable business and the company has not made use of its imternal capacity yet, has not had a detailed plan of operation, lacking a consistent strategy for long period Especially, in the context of economic recession, demanding market with so many new competitors, if TriColour Travel does not have made proper solutions in timely manner without clear strategy, the company will face losses or will soon be left behind by the new companies
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2.1.2 Company's organizational structure:
Table 2.2 Organizational chart of TriColour
Chairman of Board of Members
General Director
Vice Director
(Marketing and Sales)
Head o Travel-Tour Operation Head of Ticket Head of Accounting -
Department Department Finance Department
Hotel Booking Outbound Receivables
(Outbound Department Inbound Payables
Inbound Department Investment
(irs Management Budget
IDepartment
Wsa and Passport
With above organizational chart, the Chairman of Board of Members will hold tthe position of General Director concurrently, in charge of designing business strategy aand plan for the company
Vice Director who is a member of the Board of Members is in charge of designing tour product, directly in charge of marketing and customer care
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The Head of Accounting-Finance Department is also a member of the Board of Members in charge of general accounting, budget and investment plan
The Head of Travel - Tour Operation Department is the position functioned to be in combination with the Vice Director to make and design tour products and directly operates other departments to fulfil their tasks
The Head of Ticket Department is in coordination with Vice Director, Travel Department to seek and maintain regular customers, in charge of ticket booking and reservation, sale and have good relation with airlines firms, suppliers
2.1.3 Specific characteristics, vision, task and core values of the company The company is characterized by providing tourism and aviation services Its
organizational structure is not complicated, flexible, diversified and multi-associated
business
The vision of the company demonstrates its desire to expansion and become a renowned company with popular trade name in the country and gradually joins the international market Human factor is always on top priority as the core value of the company, especially in this field
2.2 Analysis of the external factors — EFE Matrix
2.21 Analysis of macro environment under PEST model: Table 2.3: PEST model
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> Stability: Vietnam is considered as a destination for investment in many fields in general and in tourism industry in particular owning to its favourable geographic position, stable economic growth rate, healthy investment environment and stable poitical institution Over the last many years, together with the tendency of glcbalization, Vietnam has been successful in building the diplomatic relation with many countries Its position and name has been also highly appreciated and this is als) the significant advantage for the potential tourism industry
+ “ax policy: the policies in corporate tax, consumption tax, income tax are also amended and modified in line with economic and social situation with a view to create a fair playground for the companies in Vietnam, including the tourism companies
+ Relevant laws: It can be said that currently the individuals, organizations in tourism field are not familiar with Law on Tourism as well as standards and skills required by this industry Therefore, the Law on Tourism needs to be supplemented anc completed in line with present and future situation aiming to accelerating the development of tourism industry in Vietnam, especially in the context of WTO integration Therefore, the government and leaders of this industry should improve and complete the legal frame relating to sustainable and responsible tourism indastry; recommend the legal documents protecting the tourists' benefits; provide and disseminate the new standards, skills with purpose of speeding up the application of the standards and skills required by tourism industry as well as aiming at outlying areas and other areas which have not applied the standards of the industry yet
+ Folicy: The State's policies will affect the companies, they may give profit or cause challenges for the enterprise, such as policies on trade, industry development, ecoiomic development, tax policies on competition regulation, consumer proection etc which all have been designed for supporting the enterprises and busnesses in particular In Vietnam, Vietnam National Administration of Tourism must take the initiative, play an important role in counselling the government
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acting as the pioneer in coordination with the tourism enterprises to establish the most appropriate and best policies facilitating the tourism enterprises in general and for development of Vietnam's tourism industry in particular
The publicity of the Vietnam's image and people should also be included in the policy task on top priority with a view to bring Vietnam's image to everywhere in the world Currently, in comparison with the ASEAN countries such as Thailand, Singapore, Malaysia, Indonesia, etc it can be said that Vietnam has not been successful in popularizing Vietnam's image of country, people and culture to overseas In the country, although the areas in Vietnam are rich in typical cultural characters the performing activities have been insufficient, non-professional and superficial This is the core task of the departments of culture-sports-tourism of the cities and provinces and the government and Vietnam National Administration of Tourism should make policies suitable for each locality and each area
In 2009, although it faced the global economic crisis the tourism industry has contributed about 13.1% of GDP to Vietnam's economy GDP of Vietnam tourism industry has been troubled against previous years In which, support from government is the main stimulus to the development of tourism industry The government has invested in activities publicizing Vietnam's tourism and accelerating its development
`
» 2.Economic Factors
+ Economic situation: Although Vietnam's economy has been affected by global recession over the past two years, collapse of EURO currency in Europe it maintains the steady growth rate from 6-9%
+ The factors affecting the economy: due to economic crisis, the negative factors such as high inflation, consumer price index (CPI) increased to double-digit number, high and unstable loan interest have affected the business activities of the travel enterprises more or less However, within the first quarter of 2012, the government has taken a series of economic measures and now the indexes such as inflation, consumption price have been under control Especially in field of banking
w
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Operation, government and State Bank of Vietnam have applied reasonable measures to control loan interest rate which is helpful for the travel enterprises to get loans
+ Government's economic policies: aware of the important role of tourism of the country's economic development, the government has made incentive and appropriate policies for tourism development In some provinces, tourism is always cutting edge industry in the cause of country reform and economic development
According to the new study report on "Vietnam tourism industry forecast by the year 2012", Vietnam tourism industry is estimated to grow at two-digit growth rate in the near future thanking to a rise in private sector investment Over the latest years, Vietnam has been one of the most popular destinations which attract tourists from all over the world It is also the driving force for the investors to pay their attention to Vietnam's tourism industry The baseline for the optimistic future outlook mentioned in this report is that there has been an increase number in the number of outbound and domestic tourists Owning to Vietnam rapid economic growth, increasing income and large share of young popularity, Vietnam tourism industry will show positive growth in the coming years The growth in MICE tourism will also favour the country’s tourism market over the forecast period 2010 - 2013 (Source: Report Linker)
+ Economic prospect in the future: According the latest statistical data, the tourism and travel industry have made light recovery in 2011 The same as other sectors, it has been seriously affected by the last year collapse of credit and housing market which has caused the worst depression since the Great crisis GDP of the world decreased down to 2.1% equal to its actual value The developed countries which have the main income from tourism and travel have been heavily affected The families have cut down expenses in leisure activities, replacing them by short trips with low cost, domestic travel instead of long and high cost trips and the companies have cut down their expenses for business trips, business tours The results showed that within the tourism & travel sector the investment plans have also been put on shelves or
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delayed even some dynamic and animated destinations Besides, A (HIN1) pandemic has frightened the tourism activities in many markets - at least until the less harmful nature of this disease has been recognized and government's vaccination programs have been carried out As a result, despite rapid recovery of some countries, especially Asian emergent countries - activities and jobs have been decreased within the whole sector GDP of tourism & travel sector has decreased 4.8% in 2009 globally and this caused unemployment for nearly 5 millions of workers - which may be 5.6 million in 2010 The whole sector has faced the merely reduction in the number of tourists, expenses and GDP of tourism & travel, and investment in tourism & travel decreased by over 12% The expenses have been increased by the domestic tourists, which is equal to only 0.7% at actual price However, even in the gloomy year- 2009, tourism & travel has employed more than 235 millions of workers in over the world — equal to 8.2% of the total jobs - and made 9.4% of the world's GDP
The present global economy has witnessed the period of recovery, the pick-up in the developed countries are estimated to be good as the families, companies and governments are striving to restructure their sheet of balance, making careful travel plans and reducing expenses The actual expenses are estimated to increase by 1% - while expenses in business tour will decrease nearly 2% With the present credit condition and delay in re-start of the big projects in field of tourism & travel, expenses are also estimated to decrease in the two consecutive years at 1.7% Therefore, in general GDP of tourism & travel is forecast to increase by only 0.5% in 2011 However, the general trend of the stronger second part will continue in 2012 facilitating the growth by 3.2% next year (Source: www.wttc.org)
As forecast by Vietnam National Administration of Tourism, in 2015 Vietnam's tourism industry will attract about 7-8 millions of international tourists, 32-35 millions of domestic tourists, while they were 11-12 millions and 45-48 millions in 2020 respectively Turnover from tourism will reach USD 18-19 billion in 2020 According to Institute for Tourism Development and Research, by evaluating the
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general plan of Vietnam's tourism development of the period 2010-2015, the actual situation of the tourism industry showed that the industry has gained some significant achievements but there have been many shortcomings This has not satisfied the managers of all levels as well as every Vietnamese citizen or the tourists The next decade with the orientation of economic restructure and change the growth model into intensive development, priority given to the main tourism areas with high quality and well-known trade name, with a view to have high added value, ensuring sustainable efficiency and strengthening competitiveness
» 3.Socio-cultural Factors
Every country, territory has its own typical cultural value and social factors which are characteristics of the customers at such places Cultural values are the values which make up a society, contributing to such society's existence and development Therefore, normally cultural factors are closely protected, especially spiritual culture
With more than 50 ethnic groups living together in 64 provinces and cities, it can be said that Vietnam is a multi-cultural, multi-ethnic minority and multi-religious country creating a colourful cultural and peaceful picture In Vietnam, there has never been any religious or ethnic group conflict This is also an interesting highlight in Vietnam's cultural environment which is a humanitarian factor attracting the discovery by many scholars, researchers and foreign tourists as well as attention from a great number of domestic tourists
y» 4 Technological Factors
The whole world is in the revolution of technology: series of new technology have made their way to the world and integrated into products, services If computer was a tool for calculation 30 years ago, now it is fully functioned to work independently taking place of human being Especially, in field of information technology, the modern communication technology has helped narrow the geographic distance The service sector in general and tourism in particular have witnessed the remarkable achievements in application of technology science Online hotel booking, air-ticket
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booking through internet, service provision and payment online have been more and more popular which is very convenient for the buyers and customers For air-ticket sales, the presence of the Global Distribution System such as Amadeus, Galileo, Abacus has created many favourable conditions for the air-ticket agents including TriColour With the technology, the air-ticket agents have the same and online service with the airlines firms
In term of payment apart from some traditional payment methods, there are more direct and convenient payment methods PayPal is one of online payment gateway (intermediary) helpful to transfer money into PayPal account for online transaction or transfer money from PayPal account to the bank Owning to PayPal, the transactions are much simpler and confidential Paypal is a company operating in electronic commercial field, providing online payment services and remittance which is replacing the traditional method by using cheques and remittance orders Paypal selects fees from the firms using online payment service, auction websites and other customers who are the companies In October 2002, eBay has acquired Paypal Its head-office in the area of subsidiaries of eBay, Building in North First Street, Silicon valley, San Jose, California Paypal has also carried out its important activities in Omaha, Nebraska; Dublin, Ireland; and Berlin, Germany Every customer who wants to open Paypal account must be 18 years old or older who have debit card, credit card for confirming PayPal account and used for online payment, a bank account (used for withdrawing money to Vietnam and one e-mail address The bank card and account are not necessary for registration, however, for using PayPal account for long term it is recommended that the users should open card and account with banks
Nowadays in the world there have been many companies operating in the field the same as PayPal such as: Moneybookers, Liberty Reserve, Neteller Webmoney or Ngan Luong Mobivi of Vietnam Over many years of operation, PayPal has become an online payment gateway with high level prestige and
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confidentiality in the world and this is the reason why more and more people have chosen to use it
Type of company: Subsidiary: Palo Alto, California USA (1998) Head-office: San Jose, California USA; Parent company: eBay, Home page: www.paypal.com;
PayPal operates the same as other online payment gateways as showed bellows: Table 2.4: Paypal operation model
Cus TOMER Payment Gateway Service Provider MERCHANTS BANK ACCOCHINT 5 ¢ ral oe ena MERCHANTS BANK ao 7 MERCHANT CARD Ƒ BANK'S
ISSUER < Pal PROCESSOR
nigh
CREDIT CARD INTE RO BANGE
However, in Vietnam, PayPal has just satisfied one way of payment, i.e buyers of goods and services in Vietnam can pay abroad; however, if buyers from abroad want to pay for Vietnamese sellers, Paypal has not performed this service because of many barriers of law, management of State bank and particularly, confidentiality security in Vietnam has not satisfied required standards for implementation of such service
- Investment of the Government and enterprises in R&D (Research & Development): In the 60-70s of the last century, Japan was admired by countries in the world by its economic great advances, of which mainly human and new technologies Currently, Japan has still been the country which has the largest investment in research per GDP in the world The combination between enterprises
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and Government aiming at research and launch of new technologies, new materials shall impact positively on the economy In Vietnam, although its technology has not developed to advanced standard the Government’s interest and investment in technology, learning and application of modern technologies from the world have partially contributed to helping the technology industry in general and the travel industry in particular inherit the best and optimal technological products
The company will have to explore the possibility of developing an e- Commercial solution to support online payment in both ways which helps accept outgoing and incoming payments To do this, the company will have to firstly choose a reliable service provider This may be costly for such a small company like TriColour Travel but if the company could consider cost and calculate its return of investment, this channel could be a very lucrative way of doing business and expanding the market, especially to lure business from expatriate market (embassies, international organizations, foreign companies and _factories etc) where most people are credit card owners and very familiar to on-line services and purchase We shall come back to this topic on the building up strategy part later on = Speed, circles of technology, backward technology: In the airline travel industry, firms and companies specializing in supply of technology measures have always made effort to form original and distinct technological products with high features in order to optimize capacity of satisfying buyers and service suppliers’ demand Speed of technology change in the industry is very fast with short circles For example, airways’ implementation of electronic tickets, online check-in, online purchase of added services (order of desired seats, purchase of overload luggage ) or establishment of automatic check-in counters have really changed completely the serving method, serving customers more quickly, efficiently and helping customers minimize expenses At some modern airports in developed countries, it is easily to recognize that customers are not required to carry Boarding Pass, instead, they use smart phone for check-in, then open desktop with available barcode to enter the plane without wasting time at check-in counter, printing card In Vietnam, in
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spite of technology development, it has not reached the standards which are convenient for customers There are many reasons, of which backward infrastructure that requires much time and expenses for substitution
- Impact by information technology, internet on business activities:
For the travel industry, transaction, procurement, sale, payment, canvass, information exchange, meeting, bidding, etc via tools such as email, chat box
(Skype Google, Yahoo, Face book) online meeting (internet conference call),
online video (internet video call), etc have benefited significantly travel companies with attached interests such as faster, time-saving, more accurate information transmission speed without risk or error
However, as we know, opportunities of this person can be challenges of the other For example, IDC forecast on more and more increased travel of business is good news for airline and hospitality industry because this industry serves this segment of customers This is also opportunity for service supply companies which substitute efficiently travel of business such as web, internet video call Why do we have spend much time and expense to fly to attend meeting meanwhile we can meet each other via internet or video? But success of this substitute services can become direct threat to the airline and hospitality industry
Or, the more and more increased travel of business is only one of changes of current working and living style Each change symbolizes any combination between threat and opportunity for companies in many industries Let consider the following examples:
There are more and more people working at home They depend much on system of telecommunication, personal computers and Internet Their managers have not found out the way to inspect such employees How does this situation impact on your company or which opportunity shall it bring about for new lines of business?
In summary Internet has facilitated the procurement, research and development movement and money management quickly and more conveniently