Building up business strategy for investment contruction and application Joint Stock Company of new technologies in stage of 2012-2016

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GAN ¬

GRIGGS UNIVERSITY & INTERNATIONAL ACADEMY @ aT

CAPSTONE PROJECT REPORT

BUILDING UP BUSINESS STRATEGY FOR INVESTMENT CONTRUCTION AND APPLICATION JOINT STOCK COMPANY

OF NEW TECHNOLOGIES IN STAGE OF 2012 - 2016

GROUP NUMBER: 01 - GaMBA.V0210 STUDENT’S NAMES

1 Tran Hai Minh 2 Tran Dinh Toan

3 Tran Thi Hong Anh —

4 Nguyen Thi Thanh Hoa

Vinh - 2012

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G09) Group No 01 - Class: GAMBA V0210

GRIGG Building up business strategy for TECCO in 2012 - 2016 TABLE OF CONTENTS CONTENTS TABLE OF CONTENTS ACKNOWLEDGEMENTS LIST OF ABBREVIATIONS LIST OF FIGURES AND TABLES INTRODUCTION 1 The need for research 2 Research objectives 3 The object and scope of research 4 Research Methodology

5 The structure of the assignment

CHAPTER I: GENERAL THEORETICAL BASIS OF BUILDING _ BUSINESS STRATEGIES

1 General theory of business strategy 1.1 The concept of business strategy

1.2 The role of business strategy for enterprises 2 Process of building business strategy

2.1 Define the vision, mission and objectives of the enterprises 2.2 Assess the external business environment

2.2.1 Macro environment 2.2.2 Sector environment

2.3 Analysis of internal business environment 2.3.1 Financial Analysis

2.3.2 Analysis of human resources

2.3.3 Analysis of infrastructure and technologies 2.3.4 Analysis of the competitiveness of enterprises

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UNIVERSITY

G09 Group No 01 - Class: GAMBA V0210

GRIGCS puitding up business strategy for TECCO in 2012 - 2016

2.5 McKinsey matrix model - GE 2.6 Choosing business strategies 2.6.1 Strategy of business unit level

2.6.2 Enterprise-level strategy (multidisciplinary) 2.7 [IE Matrix and QSPM

CHAPTER I: ANALYSIS OF BUSINESS ENVIRONMENT AND ENTERPRISE

2.1 Introduction about Investment Construction and

Application Joint Stock Company of New Technologies

t2 _1.1 General Information

to .1.2 History and development

t2 .1.3 Functions, tasks and business

t2 .1.4 Current development orientation

b2 .1.5 Organizational structure 2.2 Analysis of macro environment 2.2.1 Politics and legal environment 2.2.2 Economic environment 2.2.3 Social environment 2.2.4 Technology environment 2.3 Current mainstream business environment 2.3.1 Supplier 2.3.2 Customers 2.3.3 Barriers to entry

2.3.4 Alternative products and services

2.3.5 Competition among existing enterprises in the market 2.4 Internal environment of the enterprise

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GRIGG Building up business strategy for TECCO in 2012 - 2016

G09 Group No 01 - Class: GAMBA V0210 Jr 2.5.1 Strengths 3 SF 2.5.2 Weaknesses tO 5.3 Opportunities NO 5.4 Challenge

CHAPTER Ul: BUSINESS STAIEGY OF INVESTMENT CONSTRUCTION AND APPLICATION JOINT STOCK COMPANY OF NEW TECHNOLOGIES IN 2012-2016 AND IMPLEMENTATION SOLUTIONS

3.1 Company-level strategic choices

3.2 Options of business strategies for each target sector 3.3 Selecting strategy for construction sector

3.3.1 Restructuring strategy for the establishment of General Corporate TECCO

3.3.2 Management strategy by the parent - subsidiary company 3.3.3 Innovation strategy of management policy

3.3.4 Marketing Strategy

3.3.5 Human resource development strategy

3.3.6 Science and technology development strategy

3.4 Implementation solutions 3.4.1 Investment solutions

3.4.2 Solutions for organizational structure and human resources development

3.4.3 Solutions for enhancing capability of steering and construction management at the works and projects 3.4.4 Science and technology solutions

3.4.5 Economic and financial solutions

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ACKNOWLEDGEMENTS

Group 01 - Class GAMBA V0210 would like to express our sincere gratitude to the leaders of Center of Technology and Employment System (ETC) of the National University of Hanoi, the teachers of Griggs University and the supervisors who always show enthusiasm and support the group to complete this graduation assignment

We would like to express our profound gratitude to Investment Construction

and Application Joint Stock Company of New Technologies (TECCO) and other

agencies which we have met, surveyed and experts in the related fields who have

contributed precious information and relevant ideas so that we can make this assignment significant

We also would like to thank friends, colleagues and family members, who have always supported, created favorable conditions, shared difficulties and often sent us warm encouragement during the study and research

Group01 - Class GaMBA V0210

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6o) Group No 01 - Class: GAMBA V0210

GRIGG9 guyyyg up business strategy for TECCO in 2012 - 2016

LISTS OF ABBREVIATIONS

Contents

Investment Construction and Application Joint

Stock Company of New Technologies Matrix McKinsey — GE Strategic matrix of MC.KINSEY — GE Matrix of Strengths Weaknesses Opportunities and SWOT Threats Analysis

- JSC Joint Stock Company

/ ROA Return on Asset

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GRIGG unt VERSITY

609) Group No 01 - Class: GAMBA V0210 Migure 1.1: Figure 1.2: Figure 1.3: Figure 2,1: Figure 22! Figure 2.2; Figure 3.1: Figure 3.2: Table 2.1; Tablé 2.2: Table 2.3: Table 2.4: Table 2.5: Table 2.6: Table 3.1: ‘Table 3.2: Table 3.3: Table 3.4: Table 3.3:

Building up business strategy for TECCO in 2012 - 2016

LIST OF FIGURES AND TABLES

FIGURES

Basic SWOT

SWOT Matrix

The strategy matrix of MC.KINSEY — GE

Diagram of organizational structure - Investment Construction and Application JSC of New Technologies

Diagram of equity capital in 2009; 2010 and 2011

Diagram of Revenue and Pre-tax Profitl in 2009; 2010 and 2011

McKinsey matrix of TECCO

Sale proportion of main industries of TECCO

TABLE

Financial data synthesized from 2009 to 2011 Typical projects of TECCO

Projects of TECCO

Financial indicators in 2011 of TECCO Machinery capacity of TECCO

Competitiveness comparison of large construction companies in the Central Region and HoChiMinh city

Attractiveness of the sector

Competitiveness analysis of the sector

Sale proportion of main industries of TECCO SWOT Matrix of TECCO

List of subsidiaries by TECCO owning over 51% of the charter capital at the time of 9/2011

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GRIGGS Building up business strategy for TECCO in 2012 - 2016

List of associated companies by TECCO holding less than 51%

lable 3.6: ; ;

of the charter capital at the time of 9/2011

_ Percentage of holdings of TECCO in the associated companies

lable 3.7: -

after the restructure

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Group No 01 - Class: GaMBA V0210

Gricos) Univensiry Building up business strategy for TECCO in 2012 - 2016

INTRODUCTION 1 The need for research

Currently, most of enterprises all over the world consider building business strategy as the most important task The directors of large enterprises often use up to 40% of their time annually to study the business strategy

In 1947, only 20% of U.S firms are run with business strategy In 1970, this number was up to 100% Many American entrepreneurs consider that building business strategy is time-consuming, very important and difficult work Mr Wilson, CEO of GE America once said: "Every day | do not do much work, but one type of work that is never complete is planning the future." This shows that many firms in countries attach great importance to the development of business strategy

In the past, many businesses have gained success because they only paid attention to the internal functioning and performing their daily tasks in a most effective way Currently, most of the enterprises are facing increasingly volatile, complex and risky business environment So, just paying attention to the internal functions and routines is not enough, to survive and grow enterprises need to outline the policies and business strategies in order to fully take advantage of opportunities business and limit risks to the minimum level, thereby improve the efficiency and competitiveness of the business Business practices within country and abroad also request how for enterprises to success and make profits in the changing conditions of the increasingly fierce competitive environment and scarce resources Therefore, the business strategy is indispensable; it is of particularly important significance for the development of the company in the future

Basing on the volatile state of the business environment as well as from real life our group (No 1) implement this topic to analyze and select business strategies and at the same time, to give out necessary solutions regarding these strategies for Investment Construction and Application Joint Stock Company of New

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GRIGG: Building up business strategy for TECCO in 2012 - 2016 G09 Group No 01 - Class: GAMBA V027T0

lechnologies (TECCO) in the period of 2012-2016 in order to improve the competitiveness and business performance for the sake of sustainable development of the company

2 Research objectives

Research objective of this graduation assignment is to analyze the factors affecting specific business operations of Investment Construction and Application Joint Stock Company of New Technologies in order to build the business strategy for phase 2012-2016 and propose the strategy, function and particular solutions for the successful implementation of selected strategy

3 The object and scope of research

Research object is Investment Construction and Application Joint Stock Company of New Technologies with 04 main areas of activity: construction, real estate, business investment and services

4 Research Methodology

This study used synthetic qualitative research methods such as observation, interviews, focus group discussions from which to synthesize, analyze and compare the primary data and secondary data about the business environment and the operation of Investment Construction and Application Joint Stock Company of New Technologies

Secondary data was collected from various sources such as: The management report, finance, personnel, production and business plan of Investment Construction and Application Joint Stock Company of New Technologies and members of the company; from Ministry of Construction, Industry and Trade Planning and Investment; Nghe An Department of Statistics; Nghe An Department of Construction, newspapers and Internet; from enterprises: Investment and Development Joint Stock Company No 30: Nghe An Petroleum Construction Corporation; Hoa Binh real estate joint stock company

Primary data was collected through discussions work, and interviews directly with officials in charge of Finance and Accounting, HR planning

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organizations, and leaders of the companies provide some additional information

about the plans and strategic direction of the company in the coming vears 5 The structure of the assignment

Assignment consists of three chapters as belows:

Chapter 1: General theoretical basis of building business strategy

Chapter 2: Analysis of the current status of Investment Construction and Application Joint Stock Company of New Technologies

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CHAPTER I: GENERAL THEORETICAL BASIS OF BUILDING BUSINESS STRATEGIES

1 General theory of business strategy 1.1 The concept of business strategy

Why some companies are more successful than other companies for a long time? In fact, the road to the success of the company is different Microsoft has reached to dominate the world market by setting an industry standard platform (Windows, Microsoft Office) and links with other companies of related products business Dell surpassed IBM while Walmart becomes the number one thanks to performance efficiency creating the advantage of low cost

Traditionally, enterprises make businesses with a product and face with business competitors, deal with customer requirements, and deal with changes in the business environment by adjusting production products, services and policies, and they manage to survive in the market

Today even if enterprise is your personal business and you own it, to increase control, reduce risks, to be able to measure the business performance of each industry, each market, or to be able to raise additional capital from credit organizations and individuals, you need to work with the plan Large companies increasingly need to have specific plans and strategies Today's business world has shifted from the dealing, managing to plan Everything needs to be calculated, considered and shown in tables of plan and strategy

According to McKinsey (1978): "Strategy is a collection of a series of activities designed to create a sustainable competitive advantage” The essence of

strategy is based on the business environment, so to go for consideration, choosing a

strategy, We need to study the business environment of the enterprises The analysis tools are used to collect information about the business environment, capacity and location of the business, and then analyze to identify important input factors as a basis for designing an appropriate strategy

1.2 The role of business strategy for enterprises

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Defining a strategy is for survival and growth of any business, because in order to survive and grow in the current market mechanisms it is necessary to know the existence of the business environment career

Business strategies that will help capture market opportunities and create a competitive advantage in the market by applying the limited resources of enterprises with high results in order to achieve goals making business to consider and determine which direction to go towards?

Rapidly changing business environment create opportunities and risks in the future, therefore business strategies will help enterprises make good use of

opportunities and reduce risks related to the business environment On the other

hand, strategy help enterprises better prepare to cope with and master the movements of the market

Business strategy helps each employee in the business master the objectives of the business so that they understand what businesses are being done and why need to do so, so that they feel part of the business and they will provide all the

ability, intellect devoted to the development of the business

2 Process of building business strategy

Building a complete business strategy including many steps but in the scope of this assignment we will focus on the first step to strategic analysis and selection

Steps

2.1 Define the vision, mission and objectives of the enterprises

The vision is the statement of the enterprise about its position in business environment in a certain period of time It is considered as a guideline for all activities of the enterprise

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The mission of the company ts the reason that companies exist in the market who are you that vou will bring to customers and society with products services and the value The decisions in the strategic planning process and under the control of the company must always be in harmony with the mission statement The goal is the status, milestones that the business wants to achieve in a certain time period

* The importance of defining the vision, mission and objectives:

Defining the vision, mission, business objectives plays an especially significant role for the success of the business because it gathers everyone's

expectations in the organization and mobilizes efforts to achieve the organization's

purpose, career and ideals In addition, it can evaluate the gained results, suggesting that the resource allocating priorities, development cooperation, providing a basis for effective planning

2.2 Assess the external business environment

2.2.1 Macro Environment

Macro Environment is the environment that covers all the business activities,

has a direct or indirect impact on the operation of all businesses Macro environmental analysis gives the basic answer to the question: Enterprises are influenced by the factors from the external environment This environment is set by macroeconomic factors such as: the economic conditions, political-law, socio- culture, nature, science, engineering and technology These factors affect the

organization independently, but can also be mixed with other effects

* Political factors and the legal system: the elements of the legal and political environment strongly dominate business activity of the business Political stability was identified as one of the important premises for the business activities of the enterprise The change of political environment can affect beneficially for a

business group but hold back the development of other business groups and vice

versa Complete and unbiased is one of non-economic premise of business Completion level, changes and law enforcement in the economy have a major

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impact on the planning and implementation of the business strategy of the enterprise Political and legal environment directly impacts business performance of the enterprise as they affect products, industry and business methods of the enterprises Not only that it also affects costs: production costs circulation costs, transportation costs, the level of tax rates especially the import and export businesses also affected by international trade policy, the quota assigned by the State, the law of protection for enterprise engaged in business In short the political and legal environment has a huge impact on improving the efficiency of enterprise by affecting business activities of enterprises through the legal system tools and macro economic regulating tools

Political environment includes state, laws and the state's operating activities For full understanding the political environment including the system of perspectives, the government's policy, the current legal system, the political trend of foreign affairs of the governments and political movements in the country the region and the world

The complex changes in the political and legal environment create Opportunities and risks for businesses The impact of political and legal environment for business is shown as follows:

- Law: Giving out the rules to allow or not allow, or other constraints require businesses to comply with The problem for enterprise is to understand the spirit of the law and comply with the rules of law

- Government is the agency monitoring, maintaining, implementing law and protecting national interests Government plays a key role in regulating the economy through macro-economic policies, fiscal monetary, and spending programs In relation to business, government plays a role in control, incentives financing, regulations, prohibiting, restricting, and also is an important customer for enterprises Furthermore, government also acts as a service provider for businesses such as: macroeconomic information, and other public services

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- The trend of political and foreign policy: contain the signal and the seeds for change of business environment Therefore the strategic management should be sensitive to these changes

Thus, to take advantage of opportunities and minimize risk, businesses must capture the views, rules, priorities, governmental spending programs and also to establish good relationships to create a favorable environment for their activities

* The economic factor: the economic environment shows the nature growth and development of the economy in which businesses operate Analysis of the economic environment has important implications, because it includes factors that affect purchasing power and consumption structure Every business strategy relates to output and the market Markets require purchasing power and humans So economic factors have a direct impact on business strategy, particularly important are the following factors: economic growth, interest rates exchange rates and inflation rate

- Interest rate: The interest rate has direct and great influence on the profit margin of the business Rising interest rates will limit demand for loans to expand business investment The interest rate also determines the cost of capital and affects investment level This cost is a major factor in deciding the feasibility of strategy

- Exchange Rate: The exchange rate changes can directly affect the import and export activities and affect the operation of the economy For enterprises it can alter trading conditions, particularly in terms of integration, this effect is greater Rate factors create different opportunities and risks for different enterprises; especially it has impact on adjusting import and export relations

- Inflation: High or low inflation can affect the rate of investment in the economy If inflation is too high, it will create major risks for the investment of enterprises, social purchasing power declined and the economy stalled Maintaining a moderate rate of inflation has the effect of encouraging investment in the economy and stimulating market growth

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In addition to the above factors a number of other factors can affect the external environment as business: import and export activities attracting foreign investment, the tax system and tax rates changes In market stock

* The socio-cultural factors: These include norms and values that are accepted and respected by a society or a particular culture The impact of socio- cultural factors are often more subtle and of long-term compared to other factors, sometimes even difficult to recognize On the other hand the scope of the impact of the socio-cultural factors is very broad: "it defines the way people live work, produce and consume products and services." Thus the analysis of the socio-culture will be the important basis for the managers in the strategic management process in the organization Various aspects of socio-cultural environment with strong influence on business activities such as: The concept of ethics, aesthetics, lifestyle, career; traditional customs; concerns and priorities of the society

* Technology and technical factors: Technology and technique environment are forces that create new technologies, new products and new opportunities These factors are very dynamic, filled with opportunities and risks for businesses In a flat world with the scientific and technological revolution fast rushing, technology and technical environment has a huge impact on business strategy Changing technology allows you to create a series of new products, features, outstanding quality in one night, but also the changes in technology will make existing products obsolete, discarded only overnight Thus, technological change includes creation and destruction, brings both opportunities and risks

* Factor of integration and globalization: In terms of integration and globalization, businesses often have direct or indirect relationship with the world economy These relationships have strong growth, diversity, complexity and impact on the business The change in the global environment will affect the strategic

decisions of the business

2.2.2 Sector environment

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GRIGG Umivensity Building up business strategy for TECCO in 2012 - 2016

Besides the elements of the macro environment enterprises also bear direct impact of the business environment in which they exist According to Michael Porter, the five key elements of the business environment are competitive pressure of suppliers, competitive pressure of customers, competitive pressure from potential competitors, competitive pressure from substitutes and competitive pressure from the very internal sector

* Competitive pressure of suppliers:

- The number and scale of the supplier: The number of suppliers will decide to competitive pressures, their negotiating power for industry, business If in the market there are only a few large-scale suppliers then they will create competitive pressures affecting the entire industry's production and business activities

- Ability to replace the vendor's products: In this problem we study the ability to replace the input by the supplier and the cost of switching suppliers - Information on the supplier: In the current age, information is always a factor to promote the development of trade Information about providers have a major influence on the choice of input suppliers for business

* Competitive pressure of the client: The client is a competitive pressure that can directly affect the entire production and business activities of the industry Customers are classified into two groups including: retail customers and distributors, both groups put pressure on businesses in terms of price, product quality, service and it is they who control competition industry through the purchase decision

* Competitive pressure from potential competitors: According to M-Porter, potential rivals are firms that are not yet available in the industry but may affect the industry in the future More or less potential competitors, their pressure on the industry strong or weak will depend on the following factors:

- The appeal of the sector: This factor is expressed through indicators such as rates of return, the number of customers, and the number of firms in the industry

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GRICGS Building up business strategy for TECCO in 2012 - 2016

- Barriers to entry: Are the factors making the industry entry more difficult and expensive including techniques; capital: commercial factors and specific

resources

* Competitive pressure from substitute products:

Alternative products and services are the products and services that can satisfy the needs of equivalent products and services in the industry Main compeiitive pressure of replacement products is the ability to meet the demands compared to other products in the industry Moreover, the factors of price, quality, envirormental factors such as culture, politics, technology will also affect the threat of substitute products

* Competitive pressure from internal sectors: business enterprises in the industry will be in direct competition with each other to create reverse pressure on the incustry to create a competitive strength In a sector, following factors will increas: competitive pressure on rivals including sector status (demand, growth, numbe: of competitors, etc.); industry structure (centralized or decentralized); retreat barriers (factors causing the retreat from the business sector becomes

difficut)

2.3 Analysis of internal business environment

internal business environment of an enterprise includes al] elements and

systems inside it To survive and grow, all businesses must conduct the following

activits: administration, finance, accounting, manufacturing, research and develooment, marketing, information systems, management systems and functional

parts

Analysis of internal environment is for the purpose of in-depth of business, in ord:r to determine the strengths and weaknesses of the business, of each functimal department in the enterprise

Ihe accurate determination of the strengths weaknesses special abilities (strenghs of a business that competitors can not easily copy) will help businesses choosc the right strategy case

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2.3.1 Financial Analysis

Financial analysis is the application of analytical tools and techniques for integrated financial statements to make useful predictions and conclusions in the analysis of business operations Financial analysis is the use of financial statements to analyze the capacity and the financial position of the business, and to assess the financial capacity in the future To analyze the financial situation need to use the data from the financial statements of the business for a number of years and compare these indicators together The indicators can be used to analyze such as: total enterprise revenue, profit and synthetic indicators

2.3.2 Analysis of human resources:

This covers considering people management or current human resources and predicting future use of human resources including: management salaries, bonuses, benefits recruitment, training and re-training, the location, layoffs labor management relations, encourage and create fair working conditions, professional development, human research, public relations, policies and regulations on labor discipline, strike

2.3.3 Analysis resources infrastructure and technologies

Assessment of facilities and technology that enterprises are using is aimed to analyze the ability to meet the needs of business and strategic development of the business in the future

2.3.4 Analysis of the competitiveness of enterprises

Analyze the competitiveness of the business to other competitors through competitive matrix The evaluation factors may include: market share growth, competitiveness, external financial support, product quality, unit costs, customer loyalty, and the ability to cope with the change

2.4 Model of strategy analysis SWOT

SWOT analysis is the analysis of the external environment factors that enterprises face (opportunities and threats) as well as the elements of internal environment of enterprises (strengths and weaknesses) SWOT analysis is one of 5

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steps forming a firm's business strategy include: establishing principles of the business SWOT analysis defining strategic goals building objectives and strategic plan and determining strategic control mechanism It does not only make sense for enterprises in shaping domestic business strategy, but also do a great significance in the formation of international business strategy to meet the development needs of the business Once enterprises want to grow, gradually establish credibility and brand in a solid and sustainable way, the SWOT analysis is an indispensable step in the strategic planning process of the enterprise business

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ORIGG9 guitaing up business strategy for TECCO in 2012 - 2016

Strengths

The strength of an enterprise is the skills resources and advantages that the enterprise gets ahead of the competition (the key capacity of enterprises) such as owning many talented managers dominant technology, well-known brand, available cash, being a good image in the eyes of the public or having a substantial market share in key markets can be used as the basis, the foundation to develop a competitive advantage These resources and capabilities are identified and assessed on a scale higher than other competitors and this is the key factors paid special attenttion in the process of implementing business strategies, such as:

- Copyright, inventions, patents, or proprietary products - Brand company and product brands

- Customer reviews as good reputation with high satisfaction

- Own production secret creates advantage of low production costs, and/or have the advantage of technology, equipment

- Easy accessibility with natural resources,

- The ability to easily access to the distribution network system Weakness

Weaknesses are limitations of enterprises, these weaknesses are selected through the evaluation that businesses do not have, or have but not an advantage, sometimes there are certain strengths and potential weaknesses in which there exists shortcomings or weaknesses and skills, resources or other factors that limit the competitiveness of enterprises The following characteristics may be considered weaknesses:

- There is no patent protection, - Unknown trademarks and brands

- Receiving customer complaints not satisfied with the product or service quality

- High operating cost of production, backward technology

- Less access to natural resources

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GRIGG Building up business strategy for TECCO in 2012 - 2016 - Less access to key distribution channels

- New set up, small-scale do not have the market share

In some cases, the main weaknesses can be the strengths, if considered from a different angle Try to find out the case of a production unit with a large producing capacity, we can see this clearly Although capacity can be seen as a strong point that the company's competitors do not have, but it can also be seen as a weakness, if the focus of major investments in capacity makes it difficult for companies to be quickly adjusted to suit the changing environment

Opportunities

Opportunity for any enterprise is open and the most favorable conditions for enterprises to achieve the goals of development, such as sales, profits, market share The analysis of the external environment point out new opportunities, such as:

- The increasing market demand in terms of quantity and quality

- Technology and modern production processes help businesses have the ability to change and meet the needs of new markets, new segments

- The sanctions, loose regulations, or new rules abolishing restrictions on the circulation of goods, removal of technical barriers, non-tariff barriers facilitate market penetration

Threats

Businesses operate in a global business environment, under the influence and control of the market as an invisible hand These changes of the external environment can create risks for enterprises They are barriers and limitation to enterprises in the implementation of the strategic objectives set out, such as:

- Customer tastes change from the company's products to other products - The emergence of substitute products

- The provisions of the new law

- Stricter barriers to international trade

A company does not necessarily have to pursue the best opportunities but can instead create the ability to develop a competitive advantage by understanding

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the relevance between your strengths and upcoming opportunities In some cases, companies can overcome their weaknesses to win’ attractive opportunities To develop strategies based on the SWOT analysis, the company needs to design a

matrix of factors called SWOT matrix (also known as matrix TOWS) as shown Internal intemal Strengths Weaknesses below External S.O W.O Opportunities đế TT: Strategies External

Threats i Strategies kuải Strategies

Figure 1.2: SWOT Matrix Of which:

- S-O strategy to pursue opportunities in line with the company's strengths - W-O strategy to overcome weaknesses to pursue and seize opportunities - S-T strategy to identify ways in which the company can use its strengths to reduce the possibility of damage due to external threats

- W-T strategy to establish a defensive plan to prevent the main weaknesses of the company making it becomes vulnerable to external threats

2.5 MacKinsey matrix model - GE

This matrix is built on two criteria that are the attractiveness of the market and competitive position, including 9 cells: The vertical axis represents the level of attractiveness of the market, the horizontal axis represents competitiveness of the business or individual business units, 1s divided into three levels: strong - medium - weak The factors included in the analysis include: market size, growth rates, profit margins, competition intensity, seasonality, cyclicality The horizontal axis represents the strength and competitiveness of the enterprise, including: relative market share, competitive pricing product quality market capacity

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GRIGGS Building up business strategy for TECCO in 2012 - 2016 Strong Medium Weak << * High 4 Medi- um Low Ỷ

Figure 1.3: The strategy matrix of MC.KINSEY - GE

Each circle represents a business unit (enterprise that competes in an industry with a circle) The size of the circle represents the relative size of the sector, the slashes on each circle is the market share of the strategic business unit (SBU - Strategic Business Unit)

+ Region : is 3 cells in the square corner on the left, the business unit in

this position in a favorable position and growth opportunities are relatively attractive, increasing investment strategy

+ Region C_] : is 3 cells located diagonally, the business unit has an average attractive, should be careful in additional investments to generate income, it 1s necessary to maintain market rather than up and down

+ Region > 1s 3 cells in the lower right corner, the strategic business unit in this position unattractive, it should use the harvest strategy, declining strategy or withdrawing from the industry

Matrix Mc.Kinsey is to assess the attractiveness of the current market and the competitiveness and prospects for the future of the business However, a question 1s how to assess market attractiveness and competitive strength of the activity? To do this, each activity is measured by many different variables To evaluate the two factors competitive position and attractiveness of the market depends on many

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GRIGG Building up business strategy for TECCO in 2012 - 2016 G09 Group No 01 - Class: GaMBA V0210

factors: the degree of influence of each factor depends on the awareness and experience of the leaders on the dynamics of competition

2.6 Choosing business strategies

After analyzing the external environment and the internal environment, determining the development trends of the economy the business sector as well as strengths, weaknesses, opportunities and threats enterprises can choose a proper business strategy and the most appropriate based on the matrix QSPM (Quantitative Strategic Planning Matrix) This model evaluates the importance of each factor in groups of four major factors are the opportunities, threats, strengths, weaknesses and the points of impact of each factor to a specific strategy After calculating the total impact of the four groups of factors to each strategy and business strategy will be selected at the highest level, i.e the optimal strategy and best suit the specific conditions of this business

2.6.1 Strategy of business unit level

Overall, the strategy is usually formed in one of three levels - corporate, business unit and functional units, in which the business unit level segment is mainly taking place in the sector competition In order to respond to market forces, Michael Porter has identified three general strategies that can be applied at the business unit level in order to create competitive advantage

a Cost leadership strategy

This is a series of actions to produce goods or services with features that customers can accept with the lowest cost.This strategy aims to become low-cost producers in the industry with certain quality standards Meanwhile, the company will sell the product at an average price of the entire industry to gain higher profits than the competition rivals, or will sell for less than the average price in order to gain more market share

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drops, then these companies are able to keep costs to a similar level the enterprise

can maintain their competitive advantage based on cost — leadership

The enterprises that success in the application of cost leadership strategy often has the following characteristics:

- Good access to capital to invest in production equipment This is the barrier that many other companies can not pass

- Product design capability to increase production efficiency, for example creates some more small details to shorten the assembly process

- There is a high level of production - Efficient distribution channels

Any general strategy has its risks underlying, and low-cost strategy 1s not an exception Risks can occur when competitors also have the ability to lower production costs Even with the help of modern technology, competitors may have unexpected spurt in production, remove the competitive advantage of enterprises that are leading costs In addition, a number of companies pursuing a strategy focused on the narrow market, which is not difficult to achieve even lower cost in their traditional markets, which will also create a control group controlling many times larger market share

b Differentiation strategy

Differentiation strategy is a series of actions needed to produce goods and services (at an acceptable price) with the difference value to target customers This is a strategy to develop products or services of the business so that your product or service has unique characteristics valued and appreciated by customer than the product of its competitors Value added by the uniqueness of the product allows businesses to set higher price rates without fearing buyers boycott They hope that higher prices will not only allow to cover the increased costs in the course of providing products, but also much more: thanks to the different characteristics of the product if the supplier price increases businesses can convert the difference to customers, because customers can not easily find a similar product instead

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Gi {IGG Building up business strategy for TECCO in 2012 - 2016

The enterprises that success in differentiation strategy have the following

idvantages:

- Ability to research and access to leading scientific achievements - The research and development (R & D) with high skills and creativity - Positive sales team with the ability to convey the strength of the product to he customer successfully

- Reputation for quality and innovation ability of enterprises

Risks associated with differentiation strategy are likely to be that the yroducts are imitated by competitors, or major changes in consumer tastes In iddition, many companies pursue strategic focus be able to achieve higher product jifferentiation in their market segments

c Centralization strategy

Centralized strategy is a series of actions need to be performed to produce he goods and services that focus on serving the needs of a targeted competitive

narket segment

An enterprise using centralized strategy often retains a high level of customer loyalty and loyalty is to discourage the competition that they do not want or do not dare to confront directly

Due to only focus on a narrow market sector, the enterprises that pursue centralized strategy usually have lower sales so they do not take advantage when bargaining with suppliers However, enterprises pursuing centralized strategy and the differentiation of products can transfer higher costs imposed by suppliers to customers because customers can not find substitutes

The successful enterprises in focus strategy can change the advantage of developing a variety of products to fit the small market segment that they have researched and thorough understanding Not to mention a risk of this focus strategy is the ability to imitate and the changes taking place in the target market Moreover a leading manufacturer of low cost in large markets can easily change their products to compete directly with the enterprises applying focus strategy Other company

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GRIGG Gnavensire Building up business strategy for TECCO in 2012 - 2016

pursuing focus stategy can attack a number of objects in the target market losing a certain number of customers in the narrow market share of the enterprise

2.6.2 Enterprise-level strategy (multidisciplinary )

When companies choose to diversify beyond a single industry and business operating in many industries they have to use strategy to diversify the company Diversification strategy allows companies to use its core competencies to pursue opportunities in the external environment

If competitive strategy shows how enterprises to compete then business-level strategy help companies identify the industries that enterprises will participate in competition and how to create competitive advantage from the diversity of

industries

2.6.2.1 Integration strategy a Reverse integration and links

Reverse integration is that businesses seek growth by power or increased control over inputs (materials, equipment, capital and human resources) to be fully active in number, quality and production time for business

b Forward integration and links

This strategy aims to control power or increase the output control for enterprise products through the distribution system When consumers put pressure on businesses and make slow consumption To solve this problem, enterprises have to link to make sure the consumption of their products

When implementing this strategic plan, businesses can set up the showrooms, consumer products: or associated with the consumption base

c Horizontal link and integration

This is the strategy of seeking ownership and control over the manufacturing competitors on providing products and services Typically each product can have multiple businesses manufacturing and supplying in the same market leads to the competition between businesses in difficulties in production as well as consumption of products To remedy this situation, enterprises have to make strategy of

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GRIGG: Building up business strategy for TECCO in 2012 - 2016

iorizontal integration by taking over weak opponents: link, compromise with a 1umber of strong opponents to dominate the market control control of the ‘emaining competitors

2.6.2.2 Diversification strategy

This is the strategy of implementation of many kinds of products and services on different markets to increase sales increase profits and growing duSINess actiVities to ensure increased competitive position of the business

a Concentric diversification

This strategy is to put into production new products but associated with ‘xisting products, creating new products, saving materials and equipment, take idvantage of labor resources, create new markets, improve production efficiency <ey to perform the concentric diversification is taking advantage of the advantages yf the business such as machinery and equipment, human resources and marketing

:xperience of enterprise products

b Horizontal diversification

This plan put into production to provide new products and services echnologically unrelated to the products and services currently produced The ormation of this strategy is that when products or services of the company to the yoint of saturation, reduce turnover, profits, forcing businesses to market new roducts and services to new market segments, increase market size 1s

c Diversification of mixed type

This plan put into production to provide new products and services not elated to each other That is aimed at new market with new products and services echnologically unrelated to the existing products and services manufacturing ‘Nterprises are providing

When making strategy of mixed diversification enterprises must have enough esources and implementation capacity At the same time the strategy of mixed liversification requires large investment therefore cause immediate profit decline,

0 it Is necessary to accurately predict otherwise they will be passive in business

0N ¬

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2.2 HE Matrix and SQOPM 2.7.1, EFE Main

I:xternal factor evaluation matrix allows strategy makers summarize and evaluate economic, social, cultural, population, geographic governmental — law, technological and competitive information There are five steps to develop an

external factor evaluation matrix

Step 1: Make a list of 10 to 20 factors of major opportunities and threats decisive to success of the enterprise as identified during checking external factors process Step 2: Categorize significance from 0.0 (not significant) to 1.0 (very significant) for each factor This category shows respective significance of such factor to the success in business of the enterprise, total — significance of all factors must be equal

to 1.0

Step 3: Category from | to 4 for each factor decisive to success shows that the way that current strategies of enterprises react to those factors, in which 4 means good reaction, 3 means above medium reaction, 2 means medium reaction and | means little reaction These levels depend on effectiveness of strategy of the enterprise So this category in this step depends on size of enterprise, while category in step 2 depends on industry

Step 4: Multiply significance of each factor with its category to determine scores of

significance of each factor

Step 5: Total up all scores of significance of factors to determine total score of

significance of matrix for enterprise

Total scores of matrix do not depend on number of factors in the matrix, the highest is 4 points, and the lowest is | point If total score is 4, this means enterprise reacts Well to opportunities and threats; if total score is 2.5, this means that enterprise reacts medium to opportunities and threats, if total score is | this means enterprise reacts weakly to opportunities and threats

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2.7.2 IFE Matrix

bing! step in analyzing internal situation is to establish internal factor evaluation matrix (IFE) Tools for establishing this strategy summarize and evaluate important strengths and weaknesses of functional business sections, and they also provide basis for determining and assessing relations among these sections IFE matrix may be developed in five steps:

Step I: Make a list of 10 to 20 factors including strengths and weaknesses affecting greatly development of enterprise

Step 2: Define significance from 0.0 (not significant) to 1.0 (very significant) for each factor Significance defined for each certain factor shows relative significance of that factor in the success of the enterprise in the industry Regardless of major factors, internal strengths and weaknesses, factors deemed to have biggest impact on operational results of the organization must be considered as having biggest significance Total significance of all factors must be equal to 1.0

Step 3: Category from | to 4 for each factor shall show factor representing for biggest weakness (category equal to 1), smallest weakness (category equal to 2), smallest strength (category equal to 3), and biggest strength (category equal to 4) So this category depends on the basis of enterprise, while significance in step 2 is

depend of industry basis

Step 4: Multiply significance of each factor with its category to determine score of

significance of each factor

Step 5: Total up significance score of all factors to determine total score of

significance of the matrix Total score of the matrix is in range of | and 4, not

depending on number of factors in the matrix If total score is below 2.5 this means enterprise is weak in terms of internal factors if total score is above 2.5 this means enterprise 1s strong in terms of internal factors

G2 to

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Internal

Building up business strategy for TECCO in 2012 - 2016

table of 9 squares This matrix is based on two main aspects:

- Sum of scores of IFE shown on X-axis - Sum of scores of EFE shown on Y-axis

The company creates IFE and EFE first, then forms IE matrix

X-axis reflects total scores of IFE in which:

Total score ranging from otal score ranging from 1.0 to 1.99 indicates a weak internal stat 1.0 to 1.99 indicates a Weak internal state Total score ranging from 2.0 to 2.99 indicates an average internal state Total score ranging from 3.0 to 4.0 indicates a strong internal state

Y-axis reflects total scores of EFP in which:

external matrix allocates various capabilities of a company into a

Total score ranging from 1.0 to 1.99 indicates the least favorable external state Total score ranging from 2.0 to 2.99 indicates a neutral external state

Total score ranging from 3.0 to 4.0 indicates the most favorable external state Figure 1.4: Total scores in IE marix BFE 1,99

+ Any companies falling in I, I], 1V zones should expand; + Any companies falling in III, V, VII zones should maintain:

Total scores in IFE

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GRIGG! Building up business strategy for TECCO in 2012 - 2016

By building up the IE Matrix and using SWOT analysis, a company can identity some feasible strategies then apply the Strategic Quantitative Planning Method (SQPM) to select the best strategy SQPM is a tool to compare the impact of different strategies based on SWOT factors and their respective weighted impact on the expected effectiveness of each strategy The strategy with the highest score after applying QSPM will be selected as the best one

QSPM Matrix is type of instrument used to re-quantify information analysed in the initial stage and allow managers to select the best stratergy with 6 basic steps as follows:

Step 1: To list the large external opportunities/ threats and the important internal weaknesses/ strengths

Step 2: To classify each of the internal and external important elements, this classification is as same as it is in EFE matrix, IFE matrix

Step 3: To determine the alternative strategy that the enterprise should consider implementing

Step 4: To determine numberr of the attractive points in each of strategies The attractive point shows the relative attraction in each of strategies in comparision with other strategies, the scoring system from | to 4: 1 - nonattractive, 2 — a little attractive, 3 — rather attractive, 4 — very attractive

Step 5: To calculate total attractive points, this is the results of multiplying number of classification points (Step 2) with number of the attractive points (Step 4) in each row The total higher attractive point is, the more attractive strategy is

Step 6: To add number of the attractive points That is the addition of total attractive points in the same colume of QSPM Matrix Difference between adding the total attractive points in a group of strategies is that the higher number of points

means the more attractive stratergy -

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eo Group No 01 - Class: GAMBA V0210

CHAPTER II

ANALYSIS OF BUSINFSS ENVIRONMENT AND ENTERPRISE

2.1 Introduction about Investment Construction and Application Joint Stock Company of New Technologies

2.1.1 General Information

Domestic name: INVESTMENT CONSTRUCTION AND

APPLICATION JOINT STOCK COMPANY OF NEW TECHNOLOGIES

International name: =INVESTMENT CONSTRUCTION AND

APPLICATION JOINT STOCK COMPANY OF NEW TECHNOLOGIES Abbreviation: TECCO Address: 148 Dien Bien Phu Street - Ward 17, Binh Thanh District, Ho Chi Minh City Phone: (08) 35122600 - 8.3991.674 Fax: (08) 38991674 Website: www Teccorp.com.vn Logo: ‘@ TECCO

Capital: 200,000,000,000 VND (two hundreds billion Vietnam Dong) 2.1.2 History and development

In the early 2000s, the process of urbanization taking place faster in most other cities in the country Private sector growth 1s stimulated by the replacement of the Enterprise Law in 2003 by the Law on Enterprises 2005 Production share of the construction industry since the reform of the public sector declines and growth trend Is easy to see in the private sector

Investment Construction and Application Joint Stock Company of New Technologies (TECCO) was established on the basis of deep understanding of technology and the support, trust in the innovation process from the government,

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Gnivensiy Building up business strategy for TECCO in 2012 - 2016

with the expected implementation of the works with high aesthetic quality, in accordance with the development plans in the region TEC stands for Technology CO for Corporation TECCO means the company of technology applications into investment and construction works

On 17.12.2001, TECCO received from Department of Planning and Investment of Ho Chi Minh City the business registration certificate No 4103000739 and commenced operations with two key areas of investment and construction

On 23.07.2009, TECCO received from Department of Planning and Investment of Ho Chi Minh City the 7th changed registration certificates After nearly 11 years of operation, at present, in the field of investment and real estate business, TECCO brand has been confirmed and is becoming more valuable and for creating many projects, large projects by system of 10 subsidiaries and 04 associated companies across the country, including: JSC of Central Region TECCO; Corporation TECCO Ha Tinh; Urban Development Corporation of Vinh; Southern JSC of Investment and Application; Hydropower Investment Corporation of DakPri; Corporation TECCO Hanoi; Real Estate Company TECCOREALS; Southern Construction Company; SacViet Tourism JSC; NhaAn Trade Co., Ltd HonDau Hotel JSC; Film JSC of 12/9; BinhHoa Electronic Joint Stock Company:

NamViet Medical JSC

2.1.3 Functions, tasks and business

Business investment: Real estate investment, real estate trading floor,

trading infrastructure investment, new urban and industrial areas, tourism and

investment business travel, investment and industrial production, hydropower investment, health investment, leasing office

Construction: Construction of civil, industrial, transport irrigation, construction and post construction works up to 35KYV grid

Consulting, design: Consulting and foreign investment, construction consulting civil-health Design: Architectural, structural civil engineering industry

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Services: Support Services building construction supervision, business, advertising restaurants hotels health care tourism logistics

2.1.4 Current development orientation 2.1.4.1 Vision

Become the leading enterprise of Vietnam in the field of construction and real estate investment and create sustainable development

2.1.4.2 Mission

Bring to life the value of technology art and efficient to use 2.1.4.3 Target

Construction TECCO becomes a strong unit, with great competitiveness on the basis of sustainable development Strive to 2016, become the brand of construction and real estate investment that bring reputable service in Vietnam and gradually expand into international markets

2.1.5 Organizational structure

The company has the organizational structure by functional departments thus this should limit the overlap while ensuring coherence and cooperation between the

departments

With the labor force of large numbers and strong quality Investment Construction and Application JSC of New Technologies has superior advantages to competitors, always make a firm belief to customers and investors, especially staff engineer forces highly qualified and having many years’ experience in the field of construction and construction works Wages are paid according to job titles and products made with increasing average wages should encourage and promote creativity and dedication of the staff and employees of the Company

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GRIGG Building up business strategy for TECCO in 2012 - 2016 2.2 Analysis of macro environment

2.2.1 Political and legal environment

Credit institutions related to the ability to lending TECCO especially in recent years when the government applied measures to support and develop the economy For the real estate sector, the Prime Minister issued Directive No 2196 dated 6/12/2011 instructed ministries, sectors and localities to further strengthen the management of the real estate market, implement appropriate restructuring of goods to market needs, complete the development of forms of social housing,

Legal system is more complete and effective as the Law on Enterprises, the Law on Value Added Tax, Corporate Income Tax Law; the Law on Insurance

Business, procurement law, construction law create a legal framework clearly for

TECCO production business

Although the world currently contains more instability, armed conflict and ethnic conflict are frequent But in Vietnam, thanks to the leadership of the Party and the State, along with the policy of national unity and the internal and external

policy flexibility has made Vietnam a country of peace and stability, assessed as

safe destination for investors around the world This can be seen as a chance for

Vietnamese businesses in general and TECCO in particular

Currently, although there have been many efforts, political factors and laws of our country still have an impact in many different directions Vietnam is carrying out the process of industrialization and modernization to create the material and technical base premise towards socialism So the state considered the construction industry is one of the basic and mainstream industries of the economy so that the construction industry has certain advantages due to the government's priorities The open pathway to integrate into regional and world economy of the State and the Party also create more favorable conditions for cooperation, joint ventures and technology transfer

2.2.2 Economic Environment

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G09 Group No 01 - Class: GaMBA V0210

GRIGG! Building up business strategy for TECCO in 2012 - 2016

Year 2011 saw many economic fluctuations such as 18.58% inflation: interest rates remain high while the interest rate ceiling of 14° the stock market dlunge, gold market fluctuations, the real estate market shows no sign of prosperity with most real estate companies fell into capital shortage Under these circumstances, many real estate companies in the country have sought foreign brand partners of experience and financial strength

FDI flow in real estate sector in 2011 declined approximately $ 464 million [his is a record low over the past five years However, the higher amount of remittances sent in all past year, hoping to support positive for the real estate market

Apartment market in 2011 still does not have many positive signals, buyers Waiting for prices to continue to reduce and cause investors fall into difficulties Apartment segment almost frozen, only transactions in the apartment segment of

average and ordinary level, but the number are not much

In recent years, the government has made drastic and synchronized big package of measures to stabilize and develop the economy, giving priority to

remove the constraints of enterprises such as tax, bad debt to unfreeze the funds,

reduce interest rates, etc In 2012, in addition to the priority areas, the State Bank has policies for the real estate market, securities, consumption In addition, the National Assembly adopted the socio-economic development targets in 2012, of which 15-17% for bank credit State Bank will regulate commercial banks to achieve this objective, to contribute to macroeconomic stability, continued controlling inflation in the next year but at the same time ensuring the development of the economy around 6 to 6.5% So the real estate and construction market also had more positive signal to create confidence for businesses operating in this area

2.2.3 The social environment

Along with the country's economic development physical, spiritual, cultural quality of life is significantly improved in the safe and healthy environment This makes the demand for housing the residential real estate business investment strong

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