GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT
FORMULATE BUSINESS STRATEGY FOR DINH VU PORT DEVELOPMENT AND INVESTMENT JOINT STOCK COMPANY
IN PERIOD OF 2013-2018
Class: GaMBA M0611 Group 4 Nguyen Quoc Cuong Nguyen Cao Van
Ho Chi Hoang
Nguyen Thi Ngoan
H A NO I- 2013
Trang 2DINH VU PORT INVESTMENT SOCIALIST REPUBLIC OF VIETNAM & DEVELOPMENT JOINT STOCK Independence — Freedom — Happiness
COMPANY TT a
Hai phong, March 22, 2013
LETTER OF CONFIRMATION
To: The program of training Master of international business administration,
Victnam National University, Hanoi
Dinh Vu Port Investment & Development Joint Stock Company hereby confirms and agree for Mr,/Ms of class M0611 including:
Nguyen Quoc Cuong Ho Chi Hoang
Nguyen Cao Van Ngyen Thi Ngoan
To be permitted to use figures and build the business strategies of Dinh Vu Port Investment & Development Joint Stock Company for making their graduation thesis
Kindly request the program to facilitate for the group to complete their graduation thesis in the most excellent way
DINH VU PORT INVESTMENT &
DEVELOPM OINT STOCK COMPANY
———”
GIÁM ĐỐC
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ACKNOWLEDGEMENTS
We also wish to thank all Administrative staffs of Griggs University at Global Advanced Master of Business Administration Program for assistance and kindness
throughout the process of MBA program
We sincerely thank to all lecturers in the Master of Business Administration Training Program- Griggs University in Vietnam has guided us during the research
process
We are particular grateful to the Leaders of DINH VU PORT INVESTMENT & DVELOPMENT JOINT STOCK COMPANY for support in providing time, information and advice for fulfillment of this study
Once more, we would like to express our deep gratitude and sincere appreciate to Center for Educational Technology and Career and all of professors here for all their instructions, valuable guidance and comments We also would like to thank our friends for their help and inspiration
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CHAPTER III BUSINESS STRATEGY SELECTION OF DINHVU PORT INVESTMENT & DEVELOPMENT JSC IN 2013-2018 . - vì
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LIST OF FIGURES Figure 1.1 Business strategy formulation process
Figure 1.2: Five Force Model by Michael E.Porter Figure 2.1 Location of DVP
Figure 2.2 Organization chart
Figure 2 3 Cargo throughput in 2009 -2012 Figure 2 4 Growth of revenue and profit Figure 2 5 Structure of revenue by products Figure 2.6 Seaport system of Vietnam
Figure 2 7 Import — Export balance
Figure 2.8: Structure of GDP of Haiphong in 2012 Figure 2.9 Cargo throughput in Haiphong
Figure 2.10 Comprehensive transportation system of Haiphong Figure 2.11 Cargo throughput in ports in Vietnam until 2030 Figure 2.12 Market share of cargo throughput in Haiphong in 2012 Figure 2.13 Structure of assets
Figure 2.14 : Structure of liabilities
Figure 2 15 : Structure of capital resource Figure 2.16 Human resources structure in 2012
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Table 2.1 Income statement 2010-2012 Table 2.2 Structure of revenue
Table 2.3 Economic targets in 2013 Table 2.4 Existing competitors of DVP
Table 2.5 : DVP and its rivals in 2012
Table 2.6 — Competitive Profile Matrix
Table 2.7— External Factors Evaluation matrix EFE
Table 2.8 Consolidated Balance Sheet 2010-2012 Table 2 9 — Financial indicators 2009-2012 Table 2.10 Facilities of DVP
Table 2.11 JFE matrix Table 3.1 SWOT trix Table 3.2 QSPM matrix
Table 3.3 Forecast on revenue by product Table 3.4 Forecast on revenue and profit Table 3.5 List of expenses
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INTRODUCTION 1 Significance of the research
Vietnam owns 3260km coastline Compared with other countries in the region and the strengths coastal marine terminal operators, Vietnam has superior strength Vietnam is situated among 10 countries with the highest index of coastline compared to land area
Accordingly, on average for every 100 km2 land, there is 1 km coastline, just six times
higher than the world average, the opening of coastline all three directions East, South and West creates profitable for the international trade exchanges
In 2008 due to the impact from the global financial crisis, particularly at the regional and countries, impacts are sensitive to transportation markets such as the
U.S., EU and BRIC (Brazil, Russia, India and China), sea transport markets in the
world have large fluctuations, dropped charges, the second quarter of 2009 fell by one tenth compared with the highest mid-2008 The fast movements, sudden rate has caused a severe shock, with the number of container ships operating up to 12% (1.5 million TEUs) Economic crisis leads to no goods to carry Companies such as Maesrk transport, NYK, K'Line have announced losses of 1-3 billion USD
On the contrary, the world has been undergoing, in recent years, the volume of cargo throughput of the port system of Hai Phong had fast and stable growth In 2010, Hai Phong seaport system has passed more than 44 million tons of cargo, in
2012 cargo throughput in the ports in the area reached 50 million tons, an increase of
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The sudden rise of cargo in recent years has created many opportunities and challenges to the system of Hai Phong seaport as well as Dinh Vu Port Investment and Development JSC (DVP)
With the goal of becoming a modern container terminal dedicated leading in the north, Dinh Vu Port Investment and Development JSC wishes to take advantage of the opportunities and challenges, the sustainable development as well as reputation in Southeast Asia and internationally This is the strong determination of the leaders in Dinh Vu port to overcome the recession Evaluate the importance of this issue, at the annual shareholders' meeting in 2013, the Board of Directors has set requires for business strategy development in the long term to adapt and change in line with the movement of the world economy and Vietnam, towards sustainable development
With the needs and situation as above, the leaders have supported our team to implement the thesis: "Formulate business strategy for Dinh Vu Port Investment and Development Joint Stock Company in the period from 2013-2018 ", with the desire to apply scientific theory of MBA course to contribute to the sustainable development of DVP
2 Objective of research
- Systemize of a theoretical basis for business strategy and effective method to analyze the choice of model for the business strategy development
- Apply a theoretical basis for analysis, identify opportunities, key challenges for seaports business, as well as the strengths and weaknesses of DVP
- From the analysis on DVP capacity as well as the opportunities and challenges, develop business strategy for the period 2013-2018
3 Subject and scope of research
- Subject: Dinh Vu Port Investment and Development JSC (DVP) - Scope: Business result of DVP in 3 years from 2010-2012 4, Method of research
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IFE, SWOT, and QSPM
- Information collection: Internal report of DVP from Accounting, Sales, Marketing, HR Depts and from Viernam Port Association
5 Structure of research
Chapter 1: Theoretical background of business strategy
Chapter 2: Analysis on business context of Dinh Vu Port Investment and Development JSC
Chapter 3: Business strategy selection and solutions of Dinh Vu Port Investment and Development JSC from 2013-2018
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CHAPTER I
THEORETICAL BACKGROUND OF BUSINESS STRATEGY
1.1 Concept and role of business strategy
1.1.1 Concept of business strategy
The concept “strategy” has appeared for a long time and originated from the field of military At present, there are many concepts of strategy:
According to Fred R David: “Business strategy is a mean to achieve long term objectives”
“Strategy indicates the determination of the basic long-term goals and the objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”, according to Alfred Chandler
Strategic management is the process of:
- Investigating internal and external of the enterprise at present as well as in the future;
- Defining missions and objectives to pursue;
- Deploying and checking the strategy implementation to help the enterprise effectively utilize its resources and capacities to achieve expected goals
1.1.2 Basic characteristics of business strategy
Long-term goals show the expected results from pursuing certain strategies Strategies represent the methods to achieve long-term objectives The time for realizing objectives and strategies must be suitable (normally from 2 to 5 years)
Business strategies only draft long-term orientation, while there must be a
combination of strategic goals with situational goals in the real business
All important decisions in the process of formulating, determining, organizing, checking and revising strategies must be paid attention by the top leader of the enterprise
— Business strategies are always formulated, selected and implemented based on the comparative advantages of the enterprise This requires the enterprise to correctly evaluate its business and production situation when formulating strategy
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1.1.3 Role of business strategy
- Planning: The business strategy contributes to improving the efficiency of using resources, reinforcing the enterprise's competitive position in the market and ensuring the sustainable development for the enterprise Simultaneously to create firm foundations for making policies and decisions on business suitable with market changes
- Forecasting: Help managers realize clearly opportunities and potential challenges in the present business environment or in the future so that they can analyze and predict environment business conditions in the future, to make the best of opportunities, minimize risks, increase competitive capability and to get great achievements
- Controlling: Help enterprises have a better business strategy through using systematic approach, create base for increasing connections and integration among members in materializing enterprise’s targets
1.2 Business strategy formulation process
There are many methods to formulate suitable business strategies with the
enterprise’s conditions such as scale, market share, financial capacity, etc Our group
would like to select the strategy formulation method presented in diagram 1.1 This process will be the core in the topic development of the group
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| Strategy L_ Strategy Strategy
Fomulatlon ! Implementation Evaluation
Figure 1.1 Business strategy formulation process
(Soure: Fred, David (2011), Strategic managment, Concepts and cases, 13th edition, Prentice Hall Press)
1.2.1 Step 1: Determine visibility and its mission
- Agreement on strategy formulation: is the cooperation and mutual support between strategists and participants in strategy implementation process to help:
+ Strategists understand more about the feasibility of the strategies formulated and facilitate the implementation of those strategies
+ Participants in strategy implementation process will understand more about the strategies when implementing them
+ Raising the feasibility of the formulated strategies
- Defining mission of the enterprise: Mission is perceived as the reason for existence and implication of the enterprise’s establishment and existence Mission of the enterprise is its declaration to the society Normally, mission includes some
contents such as customers, products or services, market, technology, philosophy,
interest to the community, employees, etc The mission shows the enterprise’s future
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prospect Mission is an important basis for the wise selection of objectives and development strategies of the enterprise
- Defining objective of the enterprise: Objective is the specification of contents and the means to successfully implement the enterprise’s mission statement
1.2.2 Step 2: Business environment analysis of the enterprise
Business environment of the enterprise includes internal and external environment having direct or indirect influence on its existence and development Therefore, the analysis of internal and external environment of the enterprise is very necessary to the enterprise’s strategy formulation
1.2.2.1 External environment analysis
Y Macro-environment analysis (using PEST’ Model Political- Economics- Socio-cultural- Technological )
The external environment analysis helps us recognize opportunities and threats to map out appropriate strategies for the enterprise The external environment analysis is carried out with environments related to the existence and development of the enterprise, including:
- Economic segment: The economic segment analysis is to determine the trend of product consumption demand and the capacity to supply materials, human
resources, etc for production and the enterprise management The segment includes
some major factors such as gross domestic product, income per capita, monetary policy, import-export tariff of commodities and services, international economic integration, population growth (decrease) rate, etc There must be clear understanding and evaluation on the socio-economic development planning of the government and localities
- Political and legal segment: Enterprises need to grasp political trend,
internal & external relation policies, guidelines and policies of the Party and laws of the State on the enterprise’s development
- Technical-technological segment: The appearance of an increasing number
of new technologies creates opportunities as well as threats for enterprises New technologies help produce new products with lower prices and shorten products’
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lifespan
- Socio-cultural segment: The consumption characteristics, custom, lifestyle
or culture of each locality and ethnic groups will have influence on the demand and
taste of consumers who consume enterprises’ products
- Demographic segment: The scale, growth rate and structure of the population will have influence on consumption demand and human resource supplies Y Micro-environment (industry environment) analysis New entrants Threat of new entrants Ỷ Bargaining Industry competitors Bargaining power of power of suppliers buyers Suppliers § Z2 Buyers ————-——> Rivalry among existing firms A Threat of substitute products and service Substitutes
Figure 1.2: Five Force Model by Michael E.Porter
(Soure: Fred, David (2011), Strategic managment, Concepts and cases, 13th
edition, Prentice Hall Press)
- New entrants: When new competitors penetrate in the industry, the market share and profit of the enterprise will decrease To protect its competitive position, the enterprise needs to reinforce entry barriers by some measures such as diversifying products, exploiting the existing advantages in terms of production scale, market share, geographical location, brand, etc to raise the initial investment
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capital, slow capital recovery, reduce competitiveness of the new entrants, so they will have to withdraw from the market
- Substitute products: The quick development of science and technology is the conditions for the appearance of substitute products Substitute products will threaten the market share and limit potential profit of the enterprise Therefore, the enterprise needs to non-stop apply science and technology to raise labor productivity so as to lower prices of products and services, and heighten quality & functions of services to enhance its competitiveness
- Buyers: The trust of customers is very meaningful to an enterprise However, when buyers have advantages, they will put pressure on the enterprise; for example, they will force prices down or require deferred payment, etc
- Suppliers: include enterprises providing inputs such as materials, machine, equipment, finance, human resources, etc When suppliers have advantages, they will cause disadvantageous pressure on the enterprise such as setting high selling prices, shortening the deadline of payment, etc
- Competitors: This is a regular pressure which directly threatens the
enterprise When the competitive pressure among enterprises increases, it will
threaten the position and existence of the enterprise
1.2.2.2 Internal environment (inter-company environment) analysis
Internal environment of an enterprise includes factors that the enterprise can control firmly such as management, production, finance, accounting, material supply, marketing, public relations (PR), human resources, information system, etc The internal environment analysis helps the enterprise identify its strengths and
weaknesses to formulate suitable strategies which can be implemented in the near future
1.2.3 Step 3: Defining long-term goal and formulating the enterprise’s development
Strategy
- Long-term objective is the enterprise’s expected results set out in quite a long period The time for implementing a long-term goal or a strategy is often over two years In the strategy implementation process, to achieve the long-term goal, the
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enterprise can divide it into many short-term objectives in accordance with shorter periods
- Goal setting is a process of judgment combined with the forecast on demand for the products, the sales, total costs and resources of the enterprise The forecast on demand helps the enterprise to determine the type and quantity of the products or services that they need to produce and supply in the future Through the forecast on demand, managers can decide the production scale and operation of the enterprise to set the basis for making projection on the finance and human resources in the enterprise
- There are many methods to forecast Normally, the forecast in a straight way will be used to forecast the future market demand based on the analysis of data in the
past
- Besides, another factor in the forecast that we need to pay attention is
lifespan of products It is an important factor needing to be considered carefully in the forecasting process, especially for long-term forecast
- When the objective is formulated rationally, it will be the motivation and
measure for the strategy implementation process Normally, the objective must ensure feasibility, flexibility, specification, consistency and time of implementation 1.3 Tools used to evaluate and select business strategy
To formulate a business strategy, many methods and tools of planning can be employed This topic only selects some tools introduced below because we believe that they will facilitate the development strategy formulation of Dinh Vu Port Investment and Development Joint Stock Company
1.3.1 External Factor Evaluation (EFE) Matrix
External Factor Evaluation (EFE) Matrix allows evaluating major influence of the external environment on the enterprise EFE Matrix is deployed through five
steps:
Step 1: Listing key external factors affecting the enterprise’s operation
Step 2: Assigning a weight from 0.0 (indirect, least important) to 1.0 (direct, most important) for each factor The classification shows the corresponding
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importance of factors to the success of the enterprise in the industry
Step 3: Assigning a rating from | (weak response and influence) to 4 (strong response and influence) for each critical success factor to show the response of the enterprise’s current strategy to these factors
Step 4: Multiplying the weight of each factor with respective rating to determine the total weighted score
Step 5: Adding the total weighted score of factors with the sector of the enterprise The average score is 2.5 If the total weighted score is lower than 2.5, it shows a weak response If it is above 2.5, it will show a strong and positive response to the enterprise
Advantage: Forming an overall picture about external factors affecting the
enterprise’s competitiveness
Disadvantage: The rating of each factor as well as determination of the importance of each factor remains subjective
1.3.2 Internal Factor Evaluation (IFE) Matrix
With similar steps of implementation and method of calculating weighted score of External Factor Evaluation Matrix, Internal Factor Evaluation Matrix is a tool to evaluate the strengths, weaknesses and available resources of the enterprise
Advantages: Forming an overview about the internal of the enterprise with specific strengths and weaknesses having influence on the competitiveness of the enterprise
Disadvantages: Similar to EFE Matrix
1.3.3 Competitive Profile Matrix (CPM)
Competitive Profile Matrix is formed to give out comparison between an enterprise with its major competitors in the industry The comparison is based on factors affecting the competitiveness of enterprises in the industry It helps managers recognize the strengths and weaknesses of the enterprise compared to its competitors,
define its competitive advantages and weaknesses needing to be overcome There are
five steps to form a Competitive Profile Matrix:
> Step 1: Listing about 10 key factors having strong influence on the competitiveness of enterprises in the industry
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> Step 2: Assigning a weight from 0.0 (not important) to 1.0 (very important) for each factor The weight of each factor depends on its influence on the competitiveness of enterprises in the industry The total weighted score of all factors must be equal to 1.0
> Step 3: Assigning a rating from | to 4 for each factor The rating of each factor depends on the enterprise’s response to each factor, in which 4 is superior, 3:
above average, 2: average, 1: poor
> Step 4: Multiplying the weight of each factor with its rating to find out the weighted score of each factor
> Step 5: Adding the weighted score of all factors to find out the total weighted
score of the matrix
Evaluation: Comparing the total weighted score of the enterprise with its major competitors in the industry to evaluate its competitiveness
1.3.4 SWOT Matrix (Strengths, Weaknesses, Opportunities, Threats):
- SWOT Matrix evaluates strengths, weaknesses, opportunities and threats The objective of environment analysis to recognize opportunities, threats as well as strengths and weaknesses that the enterprise has been facing in its operational process to set the basis for the enterprise’s strategy formulation SWOT analysis is a tool for summarizing the results of environment analysis and formulating strategy
- Major opportunities: are factors which product between the influence on the
enterprise when they are utilized and the probability that the enterprise can take advantage of those opportunities is very high
- Major threats: are factors which product between influence when the threats
occur to the enterprise and the probability of those threats has the highest value
- Defining key strengths and weaknesses: the process of evaluating and
analyzing internal environment of the enterprise points out many factors, but it is important to figure out key factors affecting the competitive position and implementation of the enterprise’s strategy Here, we need to consider factors as
activities in the system and compare with general standards of the industry and major competitors
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external factors, applying a process with following steps to analyze and suggest strategies:
Step 1: Listing key internal and external factors on the cells of SWOT Matrix Step 2: Combining each pair logically Formulating strategies by combining
S/O, S/T, W/O, W/T
+ S/O: Using which strengths to best exploit external opportunities? + S/T: Using which strengths to cope with external threats?
+ W/O: Overcoming which weaknesses to create good conditions for the
utilization of external opportunities Which opportunities need to be exploited to overcome the current weaknesses?
+ W/T: Which weaknesses need to be overcome to reduce the current threats? Step 3: Combining four factors S+W+O+T to form a strategy which helps the enterprise use strengths to exploit opportunities, and overcome weaknesses to reduce threats
Step 4: Summarizing and reconsidering strategies Grouping strategies and coordinating strategies into a system with mutual support
SWOT Opportunities Threats
Strengths SO strategies ST strategies
Weaknesses WO strategies WT strategies
Table 1.1: SWOT Matrix
Advantages:
- Figuring out strengths and weaknesses of the enterprise as well as external opportunities and threats
- Formulating strategies by combining specific strengths, weaknesses,
opportunities and threats for the enterprise to have solutions to implement
Disadvantages: SWOT Matrix helps map out feasible strategic alternatives
rather than selecting and deciding which strategy is the best Therefore, the selection of
which strategy to develop the enterprise has not been solved in the matrix
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1.3.6 Quantitative Strategic Planning Matrix (OQSPM)
According to Fred R.David, QSPM Matrix uses input information from IFE Matrix, EFE Matrix, Competitive Profile Matrix, SWOT Matrix and Grand Strategy Matrix to objectively evaluate which is the best strategic alternative Six steps to develop a QSPM Matrix:
Step J: Listing important external opportunities/threats and internal strengths/weaknesses of the enterprise
Step 2: Assigning a weight to each internal and external critical success factor This step is similar to IFE and EFE matrices
Step 3: Listing strategic alternatives that the enterprise should consider to implement Gathering strategies into separate group if it is possible
Step 4: Finding out the attractiveness score (AS) of each strategy The attractiveness score is rated as follows: 1- not acceptable; 2- possibly acceptable; 3- probably acceptable; 4- most acceptable If the success factors do not have influence on the strategy selection, do not mark them
Step 5: Calculating the total attractiveness score (TAS) by multiplying the weight (step 2) with the attractiveness score (step 4) in each row
Step 6: Calculating the sum total attractiveness score by adding all total attractiveness scores in each strategy column of the QSPM Higher scores point at a more attractive strategy
Each of the above-mentioned tools of strategy formulation has their own advantages and disadvantages Therefore, there must be flexible selection of strategy
te suit each specific situation and condition
Our group has an overview of the theoretical basis that we will apply to the analysis of the business environment and provide strategic development of Dinh Vu Port Investment & Development Joint Stock Company in the S-year period from 2013 -2018
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2.1 Overview of Dinh Vu Port Investment and Development JSC
2.1.1 Establishment and history:
Location: Dong Hai ward, Hai An District, Haiphong city Abrreviation: DVP Email: contact@dinhvuport.com.vn Website: www.dinhvuport.com.vn Logo: DINH VU PORT
Basing on the Decree 990/ QD-TGD dated 11th Nov 2002, the General Director of Vietnam National Maritime Company approved the Project of establishing Dinh VU Port Investment & Development JSC The initial capital was 100 billions VND in which were held by: Hai Phong Port, Vietnam National Company of Agriculture Equipment, Doan Xa Joint Stock Port, Vat Cach Joint Stock Port, Hai Phonng Port’s Poly-services Trade Company
19th Dec 2002 was a significant landmark when Dinh Vu Port Investment & Development JSC was officially established by which the first meeting of Shareholders ratified the Company’s Regulation of organizing and implementing
On 14/01/2003 DVP was officially put into operation
From the years 2002-2005, DVP deployed phase 1 construction of wharves, warehouses systems and yards, equipment investment, recruitment, staff training, improved the organizational structure to prepare for the Port operators business in 2005
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In 2010: The company increased its charter capital to VND 200 billion
In 2012, 10 years of construction and development, from being bulk operators, DVP has decided to operate container line, "encroaching" into logistics
In 2012, Dinh Vu port continued to expand its business activities in the field of logistics involved with SITC partner - a major shipping lines operating in 54 international sea routes, SITC - Dinh Vu has established with charter capital of VND
19.5 billion (Dinh Vu port contributed 51%) Location:
Length: 14 miles the fore berth’s water depth of -10.2m Current entrance channel’s depth at -6.3m (-7.3m as project) Maximum draft: -9.0 m.0 Maximum size of vessel accepted: 40,000 DWT Port of Haiphong ~ Existing Location (Main Terminal) ke on eat — Tư ớớšn
EERIE 06 coo §_c^cx ten on —325/2004 6:46
Figure 2.1 Location of DVP (Source: DVP)
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e Wharfage services; Warehouse, open storage space and jetty
e Weighing service; Freight Forwarding services e Shipping agency
2.1.4 Operation Business Result (2009-2012)
Trang 26Cargo throughput 500,000 | 462,686 | 400,000 - 595647 | ,000 | 300,000 | | 200,000 | | 100,000 | 2009 2010 2011 2012 | Unit: Teus
Figure 2 3 Cargo throughput in 2009 -2012 (Source: DVP)
In 2011, despite the difficulties by the world economic crisis, the volume container
handling, the company has completed in excess of 114.6% of the plan, up 14.6 % compared to the same period in 2010 which reached 399,647 Teus In 2012, cargo volume rose 462,686 Teus,, equivalent to 106% of the plan, up 6% compared to 2011 Table 2.1 Income statement 2010-2012 2011/2 | 2011/ 2012/20 | 2012/ 2010 2011 010 2010 2012 | 11 2011 value (%) (Value) | (%) Net Revenue 327,098 | 402,616 | 75,518 | 23% | 475,224 72,608 18% ost of goods sold 167,428 242,785 | 75,357 | 45% | 267,407 | 24,622 10% sross profit 159,670 159,831 161 0% | 207,837} 48,006 30% 10,03 ‘inancial revenue 22,844 32,879 a 44% 2| về Lái -5,567 -17% ‘inancial expense 13049 15,045 1,996 15% 9,438 -5,607| -37% Jperating expense 20,264 20,716 452 2% 24,897 4,181 20% ther income 2,549 7,596 5,047 | 198% 405 -7,191 | -95% )ther expense 94 119 Zo 27% 11 -108| -91% )ther Profit 2,454 7,477 5,023 | 205% 395 -7,082 | -95%
'rofit before tax 151,656 164,966 | 13,310} 9% | 201,208 | 36,242 22% 'rofit after tax 141,580 151,614 | 10,034 | 7% | 188,055] 36,441 24%
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Griccd) Unit: Million dong Source: DVP, 2009 — 2012 $00,000 5 475,224 450,000 402.616 400,000 - 350,000 pha 300,000 - 250,000 | ~ Net revenue 200,000 Profit after tax 150,000 © 100,000 - 50,000 2010 2011 2012 Figure 2 4 Growth of revenue and profit (Source: DVP) Generally in 3 years, revenue and profit continuously increased, as follows: In 2011, net revenue reached 402.616 million dong, an increase of 75,518 million dong equivalent to 23% compared with 2010, cost of good sold reached 242.785 million dong, an increase of 75.357 million dong equivalent to 45%, a profit
of 151.614 million dong increased 10,034 million dong, equivalent to 7% In 2011, revenue increased 23% while profit rose 7% because cost of goods sold increased
In 2012, net revenue reached 475.224 million dong, an increase of 72.608 million dong, up 18% compared to 2011, but the cost of goods sold 267.407 million dong, rising 10% and DVP reduced financing costs (down 5,607 million dong, equivalent to 37%) and other expenses, the profit reached 188.055 million dong, an
increase of 36,441 billion VND equivalent to 24% compared to 2011 This is the
impressive growth in tough economic period as today
Trang 28Table 2.2 Structure of revenue a 2,010 %| 2,011 %| 2.012 % ae en ETON 327,098 402,616 475,224 Wharfage S€TVIC€S; Warehouse, open storage
space and jetty 98,129 30% | 140,916 35% | 171,081 | 36% Shipping agency 79,232 23% | 108,706 27% | 118,806 | 25% Weighing service; Freight Forwarding services 153,736 47% | 152,994 38% | 185,337 | 39%
Unit: million dong Figure 2 5 Structure of revenue by products 100% 90% 80% 70% 60% 50% 40% - 30% - 20% 10% 0% 2010 2011 2012 ~ Weighing service; Freight Forwarding services “ Transport services = Wharfage services;
Warehouse, open storage space and jetty
Wharfage services; Warehouse, open storage space and jetty and Weighing service; Freight Forwarding services contributed nearly 80% of revenue for the DVP through the years These are the two main areas to create revenue for the company
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2.2 Analysis of business environment
2.2.1 Analysis of the external environment factors
2.2.1.1 Analysis on Macro environment (PEST model)
2.2.1.1.1 Political and legal environment
Vietnam has security political stability Since joining the World Trade Organization in 2006, Vietnam is gradually perfecting the legal system to ensure the framework and conditions of the WCO These are important factors to ensure the business environment The Vietnamese government has repeatedly organize conferences and seminars on Vietnam's Sea Strategy and determined: "Vietnam coast
has over 3,260 km long, 3 times the area of inland sea, 50% of the population live on
coastal Our sea is one important shipping route and the most crowded world "
Father of competitive strategies of the world, Mr Michael Porter, in the
speech about the advantages of Vietnam in late 2008, has put the issue: There is a favorable terrain for long coastline, why Vietnam could not become the gateway for the countries to reach the sea? Why not become a logistics center for the world while Vietnam's supply many essential commodities in the world?
On 24.12.2009, the Government of Vietnam has decided to issue the plan to develop Vietnam's seaport system in 2020, vision to 2030 in order to maximize the advantage of Vietnam Seaports in which:
The strategic objective national port system is:
- Make the most of the advantages of geographical position and natural conditions for the development of a comprehensive port system, break down into modern, fast integration with the advanced countries in the region in the field of ports to contribute to the objectives of the marine Strategy for Vietnam in 2020, boosting the
marine economy gradually become a key of top 5 sea economic sectors, and
contribute to strengthen national security defense of the country;
- Develop a system port in master plan and consistently over national scale in order to meet the requirements of industrialization and modernization of the country, creating the material and technical base to quickly make our country integrate and compete in the port operation with countries in the region and the world, position
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itself and the advantage of the country's sea economy, and contribute to ensure the security and defense of the country
Forming important economic clues to exchanges with international as a dynamic economic development zones, urban - industrial coastal
- The planning of port system in 2020:
a) In regions: Vietnam's seaport system in 2020, the development orientations in
2030 including 6 groups:
Group |: the north seaport from Quang Ninh to Ninh Binh (Hai Phong, Cai
Lan, Cua Ong and Hon Gai, etc.);
Group 2: North Central seaport from Thanh Hoa to Ha Tinh; Group 3: Central seaports from Quang Binh to Quang Ngai Group 4: South Central seaport from Binh Dinh to Binh Thuan Group 5: Southeastern seaport
Group 6: Mekong Delta seaport SNHÓIM lA BÁC BẠQ GÓM CÁC 4` %: — x TU QUANG NINH OLN NINE BIN ts m3 „Z ÀNHÓM?2;- 7 © ANG TULTHANH HOA | ik ce HA TiNN a ( „7 - = _ 1 Ỉ
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b) The scale, functions and duties:
- Integrated National Harbor: the main ports in Vietnam's seaport system, including: + International Gateway Port: Hai Phong, Ba Ria - Vung Tau;
+ Focal port areas: Hon Gai - Quang Ninh, Nghi Son - Thanh Hoa, Nghe An, Son Duong, Vung Ang - Ha Tinh, Dung Quat - Quang Ngai, Quy Nhon - Binh Dinh, Nha Trang, Ba Ngoi - Khanh Hoa, Ho Chi Minh city, Dong Nai, Can Tho
The port division by the geographic areas and function help the port operation of fair competition be aware of its strategic location On that basis to build specific targets for each stage of development, according to the plans of the state, in the northern port, the port of Haiphong is integrated national group, international gateway (type IA), with functions:
Lach Huyen: is the main port, mainly general cargo, import- export container in sea
distance route for 5 + 8 thousand DWT vessels, 4,000 + 6,000 TEU
Dinh Vu: is the main port, mainly general cargo, import- export container in sea distance route for 5 thousand DWT vessels
The planning also refers to measures to promote administrative reform in the field of maritime transport, especially the reform of administrative procedures at Vietnam ports and ship registration procedures; rapidly deploy application of information technology, electronic port implementation, electronic customs, make one door policy to create favorable conditions for vessels in the port, and also build mechanisms and policies to development to encourage investment and effective management of the cargo distribution centers, inland ports to support the development of logistics services; study mechanisms and appropriate policies to build, attract investment logistics services in Vietnam
Thus, the political & law environment is very favorable for the development of Hai Phong seaport system in general and Dinh Vu port in particular Dinh Vu Port
has plenty of opportunities to "speed up"
2.2.1.1.2 Economic environment
The shipbuilding industry is losing its leading position in 2012, so the seaport sector
in recent years has always received preferentials, policies and strategic development
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priorities of 2012 was essentially difficult and problems associated with the economic crisis,
instability At the global level, the European debt crisis is getting worse while the major
economies such as the U.S., Japan, in 2012 both did not show more positive signs The emerging economies such as China, India showed slow growth The ASEAN countries, the developing countries of Africa retains the relatively high growth rate, howerver, due to the impact of the global environment with decreasing demand for goods and services, the development achievements became unsustainable Difficulties of the world economy in
2012 continues to be more serious by the impact of turmoil in North Africa - Middle East, including the difficulties of political reform era "Spring Arab "in many countries, the tension of the Iran crisis, the risk of escalating conflict in Syria these are all factors that contains potentially high risk, may have caused the shock oil supply and seriously affect the
recovery of the global economy
In the gloomy world economy, Vietnam inevitably confronted with many difficulties
and challenges For Vietnam's economy, the key task in early 2012 has been identified as a
priority to control inflation, stabilize the macro-economy, maintain reasonable growth
associated with innovation growth model and the economy restructuring, improve the
quality, efficiency and competitiveness of the economy Results achieved until early 2013
showed the initial progress but there is still a lot of work to do to handle the difficult tasks, challenges In all cases, a positive signal was noted as inflation fell sharply compared to
2011, the exchange rate is well managed and remained stable, thanks to the support of
remittances and trade balance Surface deposit rates and lending rates fell sharply towards
the end of the year, that business access to capital was somewhat easier than before
However, besides the positive results to control inflation and macro-economic
sibility, the Government of Vietnam is under a lot of pressure on the administration, social
ard economic stability, job creation and reasonable economic growth rate As of 2012, the positive signal was clearer but if reviewing in the medium to long term, macroeconomic fectors remains potentially unstable, unpredictable, demands process of restructuring the economy, continue to be driven aggressively
Vietnam economy:
In general, the larger economic picture in the first half of 2013 is basically the renaining problems of 2012, which highlights with the bottlenecks in NPLs, remove difficulties for enterprises, reform SOEs, and manage public debt investment, warm back of
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real estate market According to the ADB (Asian Development Bank), the ability to remain
competitive and to promote economic growth back to 7-8% will be dependent on favorable conditions for food production, the stable exchange rate, successful implementation of the restructuring process and improve the business environment in a more comprehensive manner, focusing on controlling NPLs, a healthy banking system and restructuring of SOEs
Target of higher GDP growth in 2013 is quite difficult (in 2012 the GDP growth was
5.03% while in the first 6 months of 2013 it reached 4.9%), the goal of reducing inflation is
fairly certain Quarter I/2013 CPI was up nearly 37% of the target, consumer price growth of 6-6.5% for the whole year while, salary and some prices continue to increase fees by Circular 04 and school free in academic year 2013 - 2014 under Decree 49/ND-CP; pressure on electric increasing prices due to drought and rising coal prices
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Import - Export turnover in 2012 are still impressive 18.3% rise, ADB
forecasts Vietnam's trade balance surplus record of $ 12.5 billion in 2013 The trade
surplus is expected to reach a record of $ 12.5 billion in 2013 and the current account balance continued to increase this year before easing in 2014 as imports accelerated in parallel with the increase of GDP growth The increasing of imports —exports goods will be a great opportunity for the seaport sector
Regarding cargo throughput forecast: Interim Report of PortCoast Advisory JSC (
consultancy on port design - marine engineering), plans to seaport 2020 and vision to 2030 will invest in sync, modern port system and flows into the harbor; Building international
gateway ports in Hai Phong, Ba Ria - Vung Tau and the central key economic (when
available); Receiving vessels of 10 thousand DWT, container ships 9.000 TEU (Lach Huyen-Hai Phong), to 15,000 TEU (Ba Ria - Vung Tau) in combination with qualified
international container transhipment; These ports specialized in relationship to bulk cargo, liquid bulk to cater to the industrial zone 7 + 20 thousand DWT vessels (bulk terminals) and 15 + 30 thousand DWT (liquid cargo berth); Focus on improving and upgrading the port is
to overcome the poor quality and obsolete technology
Notably, during this adjustment in both 6 seaport groups, only northern group (group 1) throughput is expected to increase from the current plan Accordingly, throughput is expected to reach 112-117 million tons per year compared to 86-90 million tonnes per year (in 2015) By 2020, this number is 153-164 million tons per year compared to 118-163 million tons per year The other port groups, from group 2 to 6, the projections of total cargo throughput will be reduced In particular, the South East seaport (group 5) and Mekong Delta (group 6) have the least amount of downward adjustment
Economic development orientation of Haiphong
Hai Phong Port City has an important role in the economic, social, and security and defense of the North East and throughout the country, situated on the second corridor - a perimeter Economic Cooperation Vietnam - China , a growth pole of the northern key economy Hai Phong with geographical location is extremely convenient gateway to the sea in the most important of the northern provinces, the seaport system development from very early the 70s of the 19th century In recent
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years, the volume of cargo throughput in the seaport of Hai Phong is fast and stable growth In 2012, output through the port of Haiphong reached 48.9 million tons, up 12.3% compared with 2011, in 2013, there are potential advantages of exploiting, seaport systems, airports will be expanded, modernized, to improve the capacity and competitiveness The year of 2013 will be a pivotal year in the implementation of the 5 year plan of economic - social development in 2011-2015, the city put economic indicators: industrial development index (IIP) will rise 6.5 -7, 5%, cargo throughput reach 51 million tons, an increase in 4.29%
Hai Phong is currently focusing resources to complete three major projects Firstly, the Hanoi - Hai Phong highway project which is the junction from the Dinh Vu dam and the end of the Ha Noi - Hai Phong motorway, far from Thanh Tri Bridge (beltway 3) 1025m This is the first international standarded highway of Vietnam Cargo in northern economic triangle are ensured fast, cost reduction
Secondly, Cat Bi airport expansion projects of 3,600 billion dong plans in 2015, the international airport will serve 2 million passengers per year, equivalent to 800 passengers per peak hour and 20,000 tons of cargo per year All aircraft can take, landing at the airport
Thirdly, Haiphong International Gateway Port Project was officially launched in
Lach Huyen (Cat Ba, Hai Phong) The total project investment of international gateway port of Hai Phong is about 25 199 billion dong
Hai Phong International gateway port is expected to play a central role, the other
seaport system and inland ports are satellites Since then, the dynamics of the logistic
system effectively become transit station of international cargo, to meet the needs of
the export cargo to the North then go straight to the European market, America Vietnam goods will not transit through ports in the region such as Singapore, Hong Kong That will reduce transportation costs, increase competitiveness for Vietnam In addition, the port also attracted large transit carriages from Laos and northeastern South China through before exporting to world
When combining with the transport system, including the system of state
highways, and Cat Bi International Airport, especially Tan Vu - Lach Huyen highways investment projects and Hai Phong — Hanoi Highway Project are gearing
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(Source: www Haiphong gov.vn) The structure of Haiphong GDP shows the service sector accounts for 54% of GDP, including import and export services and tourism development
Import and export services primarily put through system of seaports Hai Phong
tourism development with Do Son beach and Cat Ba Island, however this beach
resort is only exploited 3 peak summer months of the year, most of the remaining months is only moderating Thus, from early Hai Phong has determined economic structure to exploit as the root seaport, the foundation to boost sustainable economic development
According to the statistics, the cargo throughput of Haiphong ports continues to rise over the years In 2012, a difficult year, but the cargo throughput in the seaport of
Hai Phong also reached 48.9 million tons, up 12.3% over 2011 This success is the
important location of the sea port in international trade, and this is the point to go ((known as the gateway to the northern port of Vietnam) of imported goods and especially the north is the largest source of southwestern China, a market with 320 million people, 10 times larger than area of VN Cargo from this area, if through Hai Phong port will shorten distances transportation to half, 50% cost savings compared
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to through Guangdong (China) Meanwhile, goods from the key northern economic of VN only aaccounts a small portion Cargo throughput 60 53 50 40 3 30 20 2010 2011 2012 2013f
Unit: million tons Figure 2.9 Cargo throughput in Haiphong
(Source: www haiphong.gov.vn) 2.2.1.3 Social Environment
Haiphong was traditionally called seaport city, international trade practices are linked to the conditions of delivery CIF Vietnam with HAIPHONG from 100 years Haiphong business experience is developed with the seaport Moreover, Vietnam Maritime University is located in Hai Phong, where future engineers for the industry in general will be training to supply of human resources for seaport There are nearly 10 thousand engineers, marine economy bachelors, for northern maritime sector every year In recent years, Vietnam Maritime University actively cooperate with
schools, corporations, companies around the world to take advantage of the
' opportunity to send students to practice in the maritime development, improve quality and practical skills, learn the modern technology, typically such as Shell Marine Products Corporation (Singapore), the Association of Maritime Universities International (IAMU), IT Solutions Company Co., Ltd (Japan), Korea Maritime
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University (KMU) , California Maritime Academy (United States), the Company Sugahara, K'Line Kinkai Kisen company (Japan)
With abundant young manpower, and experienced staffs in Haiphong, the average income of employees are lower than other cities in Vietnam, averaging around 300 usd per person per month, this will be a good opportunity for human resources for seaport industry
2.2.1.4 Technological enviroment
Seaport Information systems management SPM is the most modern one which is currently applied in Vietnam's ports So far, G.‘SPM has been developed and replicated in many major ports throughout Vietnam as Saigon Port, Tan Thuan, Da Nang, Hai Phong, Saigon Newport, GENPACIFIC, v v
G.SPM is software applications in the field of port operation and shipping
services, including multipurpose terminal operators and container exploiting program This is a comprehensive solution that a member of Pythis GENSOFT has developed and successfully applied in many customers G.SPM is able to meet the development needs of clients with features such as: planning, monitoring and evaluating services by port operators in closed cycle of handling ships and cargo; control evaluation and effective use of resources for port exploiting; sufficient revenue management, transparency and standards in the billing system and
accounting fully integrated production system exploitation; establish consistent
information systems throughout the production from the field to the executive, and
the entire depts, and quickly timely improve the quality of customer services and
accurate information through procedures and data management on computers
For global container management systems So far, Haiphong port or any other ports of Vietnam has not listed in tracking of this system This information technology of cargo network is connected with all the container ports in the world that have used international standarded software And thus, the shippers, no matter where in the world, can know exactly his cargo in any location, at any port transported by any ship Port exploitation will be more convenient, cost savings and increase the competitiveness of the port Even, there are not any international
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standard management software of Vietnam seaport container That is, Vietnam is still "whitespace" on port world information technology map
Currently, Chua Ve port (the port of Hai Phong) system is using modern container management, worth millions of dollars but have stopped at "handling vessel planning, yard management plan, counting, forwarding ." And this work is done within the port, but not connected to global container management systems Furthermore, to have information on cargo such as container number, date and time of incoming / outgoing ., employees still must count in the warehouse and the record books Then, data is updated in the system and transferred to shippers’ report Even Cat Lai- the largest container port — is using 2 software of port operation and management of container (TOP-X software and CMS), but workers still have to port directly involve in several stages
The technology is applied in the sea industry more and more modern, but compared to other ports in the region and the world system, facilities including communications infrastructure is not yet appreciated
2.2.1.5 Natural environment
First, we consider the strong foundation of Vietnam's seaport system Vietnam with natural advantages granted by the sea
Vietnam owns a coast of 3,260 km length, 3 times the area of inland sea, 50% of the
population lives along the coast The sea is one important shipping route and the most crowded of the world The strength- as assessed by national and foreign experts - is very favorable for the development of sea economy, especially to become logistics hub for the region and the world
Vietnam is located on strategic maritime rout and regions of the world:
Vietnam is located on the western shore of the the East Sea, a large sea of the Pacific Ocean,
rich in marine resources, which has many rare minerals, especially oil and gas Most importantly, Vietnam is located on the vital sea rout of the world between East Asia -
Pacific to Europe, Africa, Middle East and many countries and regions in East Asia such as
Japan Japan, Korea, Taiwan and Singapore The economy of these country and its regions
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According to Dr Nguyen Tuan Hoa, deputy director of Learning Development Center HCMC, Vietnam is located in a geographic location and very convenient for the development of transport and regional integration with the world Look on the map area,
Vietnam is located near the center of Southeast Asia, the coastline ownership, there are many favorable conditions for the development of maritime industry
The advantage of Vietnam is geographic
The ASEAN countries are often divided into two groups: oceanic including Brunei, Indonesia, Malaysia, Philippines, Singapore, East Timor; continent including Cambodia,
Laos, Myanmar, Thailand, Vietnam However, Vietnam can be seen as a country has both oceanic and continent Thanks terrain, Vietnam cargo, whether for domestic consumption or
for export, do not need to transit to neighbors Conversely, goods from northeastern
Thailand, Laos, Cambodia and Yunnan Province (China) to exports to other countries may
be in transit and temporary storage in Vietnam, Thailand, Myanmar and Guangxi (China) Some small and medium-sized vessels can only stop in Vietnam to unload goods of the
neighboring countries to buy more fresh food, crew rest and maintenance periodically or repair unusual This is an advantage of Vietnam because Malaysia is too close to
Singapore, the Philippines and Indonesia also are no rear archipelago Recently, according
to the news Bernama (Malaysia) agency, leading economist of the world also said that the
logistics industry in Vietnam has many favorable conditions to become the logistics hub of the region and the world But if Vietnam are not in hurry, opportunity could slip out of
reach
A series of questions were posed to Vietnam's seaport industry, with advantages for
nature, it is a paradox that Vietnam has never been called a "maritime nation" How to achieve this and further, becoming a sea power? There is a favorable terrain for long coastline, Vietnam why not become a gateway for the countries to reach the sea ? Why not become a logistics center for the world which Vietnam supply many essential commodities in the world? Facing the opportunities and advantages of natural, the government has
systematically and focusedly embarked the planning of Vietnam seaport development Formerly, the development seaport was fragmented, isolated, without the cooperation, then
the seaport is currently operating under the division of territorial and functional separate but consistent with the general picture of Vietnam's seaport industry