GRIGGS UNIVERSITY
CAPSTONE PROJECT REPORT Subject:
BUSINESS STRATEGY FOR PERIOD 2012 — 2015 AND VISION FOR 2020 OF SAIGON PORT ONE MEMBER
COMPANY LIMITED — TAN THUAN PORT
Group Number: 03 Student is name:
e Tran Ngoc Thach ¢ Huynh Tan Pho ¢ Ngo Minh Tinh
e Veuyen Ngoc Nhu Tam
Class: GuMBA.C0410
Hlo Chi Minh City, 20172
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INTRODUCTION
CHAPTER 1 APPLICATION OF A THEORETICAL FOUNDATION TO THE BUSINESS PRACTICES OF SEAPORTS
1.1 Overview of strategic management theory 1.1.1 Concepts of strategic management 1.1.2 The process of strate gic planning
Ls bh Ce CAOT OT CAIARIGS cciticnanenemamermnum ven rernes mony mR ERO 05 1.2 Basis of business strategy for an enterprise
1.2.1 Analysis of external environment 1.2.1.1 General environment
1.2.1.2 Specific Industry Environment
1.2.2 Analysis of internal environment of a business 1.2.2.1 Personnel
1.2.2.2 Finance
1.2.2.3 Marketing
1.2.2.4 Management activity 1.2.2.5 Information System
1.3 Theory of ports and port services:
1.3.1 Definition and classification of sea ports
1.3.1.1 The concept of port
1.3.1.2 The Classification of ports 1.3.2 Functions and Duties of a Port
1.3.2.1 The Functions
1.3.2.2 Port’s Duties:
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1.4 Tools for planning and choicing strategies
1.4.1 External Factors Evaluation Matrix (EFE)
1.4.2 Competitive Image Matrix
14.3 intemal Factors Evaluation Matni< CFE) cic ocdmimaamicmemmen 18
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1.4.4 SWOT Matrix
1.4.5 Stratepic Position and Action Evaluation Matrix (SPACTE) 1.4.6 Quantitative Strategic Planning Matrix QSPM
CHAPTER 2 INTRODUCTION AND ANALYSIS OF BUSINESS OPERATING STATUS OF TAN THUAN PORT 2.| Introduction to Tan Thuan Port
2.1.1 History and Development
2.1.2 Tan Thuan port’s functions and duties
2.1.2.1 Functions 2.1.2.2 Duties
2.1.3 Tan Thuan Port’s management system
2.2 Tan Thuan Port’s realistic business activities analysis
2.2.1 Organization’s processing model 2.2.2 Business outcomes
2.2.3 Financial situation
2.2.4 Current status of labour management situation
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2.3.1 Macro environment analysis
2.3.1.1 The economic situation of Vietnam in 2011 and early 2012 2.3.1.2 The political situation and the legality changes in
the near period
2.3.2 Industry’s environment analysis:
2.3.2.1 Advantages and disadvantages towards seaport industry
2.3.2.2 Allocation of production of goods
2.3.2.3 Vietnam’s seaport Planning 2.3.2.4 Competition in the sector
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2.3.3.2 VICT (Vietnam International Container Terminals
2.3.3.3 Ben Nghe Port
Trang 42.3.3.4 Lotus Port, Tan Thuan Dong Port, Gonden Port:
6s 3a LOEfS II VUG6 TH, Cỉ Wisp, Til Viet ss ss cies ons cs tru go Hà Hài gu 88 gi Bà 52 2.3.4 The pressure of revenue, profit from SaiGon Port Company Limited
2.4 Internal environment analysis Of Tan Thuanđi PưH, ác ca nà nn can nà nhu dang 54 2.4.1 Management
2.4.1.1 Human resource of Tan Thuan Port
2.4.1.2 Compensation and Benefits (pay, bonus ) 55 2.4.1.3 Recruitment, training, planning and development
ee a 56
2.4.1.4 Company culture 2.4.2 Marketing
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2.4.4 Investment
2.4.5 Production
2.4.6 Information system
CHAPTER 3 STRATEGIC PLANNING AND SOLUTIONS
3.1 Development orientation of seaport in Vietnam until 2020 3.1.1 Development perspectives
3.1.2 Objectives and development orientation
3.2 Missions and strategic objectives of Tan Thuan Port development from 2012 to 2015 — orientation towards 2020
3.2.1 Mission
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3.2.3 Detailed objectives
3.3 Application of strategic planning matrix to development
of Tan Thuan Port
3.3.1 External factor evaluation matrix (EFE)
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3.3.4 SWOT matrix aan diề tới ddợgtiời v35 (0014088 Hồi 00g40 es Ga i Tak a WR 7I
3.3.5 Strategic position and action evaluation matrix (SPACE) 73
3.3.6 Quantitative Strategic Planning Matrix (QSPM) 3.4 Selecting strategy for company
3.5 Strategic objectives
3.5.1 Product development strategy
3.5.2 Market entry strategies
3.5.3 Expansion strategy
3.6 Solutions for strategy implementation
3.6.1 Human resource solutions 3.6.2 Marketing solutions
3.6.3 Product management solutions 3.6.4 Financial solutions
3.6.5 Solution of science and technology investment 3.6.6 Other solutions
3.7 Recommendations CONCLUSION THE REFERENCES
Table List:
Table 1.1 : External Factors Evaluation Matrix — EFE Table 1.2: Competitive Image Matrix
Table 1.3: Internal Factors Evaluation Matrix — [FE .- 2-2 2222 22222222522s%2 19 Wie 0s PT RS a pe eres ee ee en ie ren trmeons 20 TRHE 1, 5 SÁT CÀI NHÍ nen nen nisenne ni kak ee RG a 0g Bồ HGE GSI 24
Table 2.1: Production and sale by goods (2007 — 2011)
Table 2.2 : Capital, asset and business outcomes after 5 years 2007 — 2011
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Table 2.4 : Scale and labour structure of the firm in 3 years in a row
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+
Table 3.1 - External Factors Evaluation Matnx of Tan Thuan Port - EEIE 67 Table 3.2: Competitive Image Matrix of Tan Thuan port 68 lable 3.3: Internal Factors Evaluation Matrix of Tan Thuan port- [FE- 70 Tape 34 : SWOT Nistix GF Tan THGAG DOT en cre eee ee ee ee 71
Table 3.5 | QSPM Matix OF Fant TRU OTE cic cs ccs cor ean oes es onsen exsons ot ey enreryeaeea 73
Table 3.6 : Quantitative Strategic Planning Matrix of Tan Thuan 75 port (QSPM)
Capture:
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Capture 2-1 Geographical location of Tan Thuan Port 000.000000000000ceceeeesees 28 Capture 2-2: Map position of Tan Thiên POPE sce cs cessscessss conservizn mrs werner eae em woven 29
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Capture 2.4: Organizational structure of Tan Thuan Port - 5522 s s2 sssss2 31 Capture 2-5: The process of unloading cargo from shiIps to a2
warehouse and vice versa
Capture 2-6: The process of delivery and receipt of goods 33 at the port procedures
Capture 2-7: Production and sale by goods 2007 — 2011 (million tons) 36 Capture 2-8: Revenue — Profit — Budget from 2007 — 2011 0.0 39 Capture 2-9: Chart desenbitig inflation iff 2010, ZOD D sis vis sectors aes cevcvesces cin corernaner oon 44 Capture 2-10: Output of goods through Vietnam”s seaport chart 46
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Introduction
+ The necessity of the topic
In the trend of economical integration to the region and the global, the
trading and exchanging goods among regional and international countries by sea-
ways have become more and more popular Vietnam is one of the countries that have advantages and potentials in utilizing ports However, specialized ships,
cargo vessels, oil vessels that are super long and super heavy dominate the sea
transportation worldwide and impose great challenges to the system of ports in Vietnam Therefore, the problem raised in this topic is how to check, update and modify the general plans of development of Vietnamese port system The ports must “go ahead, catch up in advance” in order to implement a roadmap for the integration consisting of modern managements and aiming at the ultimate goal which is to improve the competitiveness and efficiency of the service of Vietnamese port system Along with the trend of development of Vietnamese sea- ports system, what should Tan Thuan Port do to survive and prosper in a durable, sustainable way?
Tan Thuan Port is a part of Saigon port system that locate in a very favorable position, which is the common gateway to exchange goods among the middle and south-western provinces and other countries in the region as well After many years in operation, Tan Thuan Port has gotten several certain
achievements, however, in facing with new challenges, especially from becoming
more and more serious competitions with the other ports of the countries in the region, it has shown many weakness and many potential business hazards as well
Therefore, it is very essential to build a business strategy for the period from the year 2012 to the year 2015 and plan a vision for the year 2020
+ Research objectives:
The objective of the research is to understand the business reality in the
company, to analyze the market in order to have a suitable business strategy,
make Tan Thuan Port become an important port in Southern Vietnam
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4 Researching Methods:
Systemizing theoretical issues | such as strategic managements theories of personel managments, production managements concerning about the products, services, and applied statistics theories for business
Using two research methods : characterization and quantitation, based on market research data, the predictions of marine industry professionals, demands
forecasts, growth speed forecasts, combining with references of several successful integration service administrating models of the ports in the regional countries and in our country itself, statistic data published on the websites of government departments such as the Bureau of Statistic, the Ministry of Maritime,the Ministry of Transportation
+ The structure of topic content:
The structure of topic content includes 3 chapters:
Chapter |: Application of a theoretical foundation to develop business strategy Chapter 2: Current status of the business environment of the Tan Thuan Port Chapter 3: Strategic planning and solutions for strategic implementation
CHAPTER I
APPLICATION OF A THEORETICAL FOUNDATION TO THE BUSINESS PRACTICES OF SEAPORTS
1.1 Overview of strategic management theory:
1.1.1 Concepts of strategic management:
Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve
its objectives Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as administration, marketing,
finance, accounting, production, research & development, and information system to achieve organizational goals
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The strategic management process includes 3 stages: strategy formulation and strategic planning strategy implementation and strategy evaluation
- Strategy formulation: is the first stage laying the foundation and playing an
important role in the whole process of strategic management Define vision and mission of strategic objectives in this period Based on that foundation, establish strategies and business policies, decide which new business sectors (market,
commodities ) should be joined in and which business sectors should be drawn,
expanded or contracted In addition, focus on analyzing the external and
internal environmental factors and pinpoint the opportunities, threats, strengths and weak, thereby combining and selecting appropriate strategies
- Strategy implementation: is the action stage of the strategic management
process to achieve the planned objectives It is also an important stage because a strategy planned scientifically would be worthless as long as it is not implemented correctly In this period, need to mobilize managers and the entire staffs to implement the planned strategies Three basic activities of the implementation phase are to establish annual business plan including setting annual items, to make policies and to allocate the recources
- Strategy evaluation: ts the final stage of the strategic management process In this period, need to implement the following tasks: review of factors which are the foundation of current strategies, performance measurements and making corrective actions when necessary
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| Strategy Formulation | Strategy Implementation | Strategy Evaluatior
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Capture 1-1: Comprehensive strategic management model 1.1.2 The process of strategic planning
According to Professor Michael Porter (Harvard Business School), "Planning a strategy is nothing more than making the choice in order to lead your organization
into a unique organization and to develop competitive advantages effectively" (A crisis is also an opportunity for innovation, an interview made by the magazine TBKTSG with Professor Michael Porter by the time he visited Vietnam, The Saigon Times No 49-2008, 27/Oct/2008, pg 12, 13) However, it is not simple to
do that To develop a strategy scientifically, it is necessary to plan it in three stages
correctly: input stage, combination stage and decision stage
In order to plan a strategy, a business should be informed fully, accurately and timely, supposed to master techniques that analysis and assess the inside and
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environmental factors, correctly identify opportunities, challenges, strengths and weaknesses ‘that business is supposed to use these tools confidently to combine all the factors together then chooses the appropriate strategy
1*' period: Input stage
External Factor Competitive Image Internal Factor
Evaluation Matrix (EFE) Matrix Evaluation Matrix (IFE)
2™ period: Combination stage
Strengths, Strategic Boston Internal — Strategy
Weaknesses, Position and Consulting External matrix Matrix
Opportunities, Action Group Matrix (IE)
and Threats Evaluation (BCG)
Matrix Matrix
(SWOT) (SPACE)
3" period: Decision stage
Quantitative Strategic Planning Matrix (QSPM)
Capture 1-2 : Model of strategic planning 1.1.3 Classification of strategies
Formerly, system of strategies in a corporation is typically categorized into three levels:
- Corporate-Level Strategy (Corporate Strategy): is a strategy toward long- term basic objectives in the scope of the whole company At this level of the strategy development, a business ought to be able to answer the following
question : which activity that helps the company achieve maximum profitability, and supports its survivability and the growth? According to Fred R David, corporation-level strategies can be classified into 14 basic categories: frontward integration, backward integration, horizontal integration, market penetration, market development, product development, diversification of concentric activities, diversification of conglomerate activities, diversification of
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horizontally operating activities joint venturing, activities downsizing, activities cutting off, liquidation and synthesis
- Business level strategy (Strategy Business Unit-SBU): strategies relate to the
ways show how to compete successfully on specific markets This kind of
business strategies includes competitive methods that the organization chooses,
ways of positioning itself in the market to gain competitive advantages and various kind of navigating the corporation itself can be used depend on the
situations of every specific sectors According to Michael Porter, there are three
general competitive strategies: low-cost strategies, product strategies and strategies that focus on a specific market segment
- Functional level Strategy (Functional strategy): is the strategy of the functional departments such as marketing, customer service, production development, logistics, finance, research and development - R&D, human
resources )
- Currently, along with the trend of globalization, many companies are quickly expanding their business beyond the borders of the countries and thus, we proceed to the fourth level of business strategy: globalization strategy In the context of globalization, competition has become increasingly fierce In order to enter and compete in the global environment, companies can use the following four basic strategies: multi-domestic strategy, international strategy, global
strategy, transnational strategy
1.2 Basis of business strategy for an enterprise: 1.2.1 Analysis of external environment
The external business environment is a system of complicated factors; they
have many opportunities and risks affecting the business’ operation in different
extents No matter how huge the size of the potential resource of a business, it
cannot always react to all of the environmental movements Therefore, when performing analysis of external factors, managers want to develop a portfolio of opportunities in the environment that can bring benefits to the business and the
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risks or threats that the businesses should take into their consideration and find
ways to prevent or avoid them External environment includes general environment and environment of a specific industry
1.2.1.1 General environment
The general environment elements: are aspects of the vast socteties
influence an specific industry and companies in that industry including population, economy, politics, law, culture — society, technology, global as illustrated by Figure 1 2 in below
Economy Populatio Culture -
Industrial environment Social
Phreat of new competition
Bargainning power of suppliers Bargainning power of customers
› `
Polities Phreat of substitute products or Global
Law 211
services
N 4 ⁄
Capture 1-3 : Illustration of general environment
- Economic Environment: This kind of environmental factors impact the businesses more directly and dynamically than other factors of the
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general environment The movement of the macroeconomic environment always contains opportunities and threats that are different for every business in different industries, with potential impacts to the business strategies Several of the most concerned basic
elements are the trend of gross domestic product (GDP) and gross national product (GNP), interest rates and interest rate trends; balances of international payments; inflation, system of taxes and tariffs
Cultural - Social Environment: this kind of environment factors
include major problems such as the concept of ethics, the notion of
living, traditions, concerns and priorities of the society, the level of awareness, common education of the society
Political and law environment: including the system of points of view, the policies of the Party and laws of the State There are other issues also needed to master such as the foreign political trends of the Government, the political developments inside and outside the country
Population Environment: The population size has an important influence in almost all products, services and consumer markets Business entrepreneurs have long recognized the impact of population circumstances to their business decisions These effects include: population size, age structure, geographic distribution, racial diversity, income distribution, climate, pollution, lack of energy and wastefully using of natural resources together with the increase in demand for resources provided by nature
Technological Environmental: The impact of technologies creates opportunities and risks in the process of strategy management of the enterprises Technological advancements can create new markets, leading current products and services to become obsolete This
environment strongly affects the manufactures relating to
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technological areas such as telecommunications, computer science,
information
- Global Environment: In the global environment, changes in society and the economy in the world created by the linkers and the increasing exchanges between countries, organizations or individuals in the
aspect of cultural, economic The influences include: the important
political events, the main global markets, newly industrialized
countries, the differences between the characteristics of various cultures and institutions
1.2.1.2 Specific Industry Environment
<2 Global Advanced
Each industry has a specific characteristic, the peer entrepreneurs have to learn of their own industrial characteristic, they have also to analyze the factors in the industry, others units in the same industry have a direct impact to their units Then, the entrepreneurs consider what the chances are, what the risks are so that they could apply appropriate strategies Environmental factors in a specific industry mainly include:
Competitors: While researching on competitors, a business should pay attention to the competition, and answer the questions such as: + What do the competitors want to achieve?
+ What are the competitors doing and what can they do? + Are the opponents satisfied with their current standings?
+ How is about the possibility that they change or alternate their strategies?
+ What are the competitors’ main weaknesses?
+ What can help the competitors to retaliate the most forcefully and effectively?
Customers: Customers decide the existence of a_ business Customers’ trust in the business can be the most valuable asset Credibility can only be attained by knowing and satisfying the
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needs and tastes of the customers better compared to the competitors
Providers: providers can assert their power by the threatening to increase or decrease the quality of products and services they provide Providers will have advantages tf they have one of the following conditions:- when just only a small number of vendors sell their products or services to a large number of buyers in an
specific industry,- when the substitutes (alternative providers) are
not available
Potential rivals: Potential rivals that newly enter in the industry may
be a factor that reduces a business’ profit because they join the market with the new production capabilities and with the desire to gain market shares as well as the necessary resources Therefore, there are several kinds of protection to ensure the competitive positions of the enterprises, including the maintenance of legal barriers to prevent intrusion from the outside
Replacement Products: replacement products can reduce the potential profits of the industry by imposing a ceiling on the price that the companies in the sector can take place within a profit
margin
1.2.2 Analysis of internal environment of a business:
Analyzing the internal environment of a business is a facility to help the business aware of its strengths and weaknesses better compared to its competitors, and help the administrators know how to capture competitive advantages in every periods of time
The functional internal elements include: personnel, finance,
marketing, operations management, information systems
In the business environment full of fluctuation, in currently, personnel of the enterprise have a very important role in_ the
t — Global Advanced
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Galas STRATEGIC MANAGEMENT implementation of the strategy and decide the success or the failure of a
business If the given out strategy is right promising and feasible but the
people in the organization do not have enough capabilities to carry it out, then after all, that strategy does not work efficiently
1.2.2.2 Finance
Financial condition is often consider as the best methods to evaluate
the competitive position of a company and is the most attractive condition to investors In order to form effective strategies, one business has to identify its strengths and weaknesses financially The condition is shown through the analysis of some basic financial ratios such as liquidity, asset structure, capital structure, profitability ratio
1.2.2.3 Marketing
Marketing research is to identify market opportunities, segment the market, select the target market and position the market, as well as to analyze customers and factors relating to the formation of customer orientation marketing strategy and competitive marketing strategy
1.2.2.4 Management activity
Management includes four basic functions: planning, organizing, leadership and control
- Planning: includes all administrative activities that relate to the activities of preparing for the future Specifically, those are predicting trends, setting goals, devising strategies, developing policies, forming
plans
- Organizing: includes all administrative activities to create the structure of the relationship between rights and responsibilities Specifically, those are organizational designing, job specialization, job descriptions, work detailing, control extending, commands unifying, arrangements
coordination, jobs design and job analysis
- Leadership: includes efforts to orient activities of humans, namely leadership, communicating, jointing working groups, changing
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activities, authorization, improving the quality of work, staff's
satisfaction for works, meeting the demand, modifying the
organization, taking care of employees’ morale and the spirit of
management
- Control: relates to all management activities that ensure the results in reality should match consistently with the planned objectives The major activities are: quality control, financial control, sales, inventory, expenses, analysis of changes, rewarding and punishment
Information links all business functions together and provides the basis for all management decisions It is the foundation of all organizations Information manifests major competitive advantages and disadvantages of a business Assessment the strengths and weaknesses of the information system within a company is a vital aspect for the implementation of the internal control Information system is an important strategic resource, it monitors environmental changes, recognizes the threats of competition and supports the implementation, assessment and control the strategies
1.3 Theory of ports and port services:
1.3.1 Definition and classification of sea ports 1.3.1.1 The concept of port
Ce Global Advanced ˆ'.-:
Port is the land area including port and harbor water region, has infrastructure and installed equipments facilitating ships' transportation for
handling cargos, picking up passengers and carrying out other services A Port is a place where ships go in, out and anchor, where people
facilitate the services for ships and cargos carried on ships, a port is an
important traffic hub of the whole transportation system
Port land is the land area that is limited for the construction of wharves, warehouses, factories, offices, service establishments, facilitated with transportation system, systems of communication, electricity, water
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Griccs SPFRATEFGHI MANAGEMEN'! and other supporting buildings with installed equipments and facilities
Port water region 1s the water area that 1s limited to the water area in front of the wharves, where the ship depart, return, and anchor, Port
water region consists of transshipment zones, storm shelters, pilot
boarding areas quarantine areas, port lane-segment area and other
ancillary workplace
Seaport channel is the water region limited from sea to a port and
determined by a system of marine navigation and ancillary structures, it
ensures that ships and other waterway transporters move into and out of
the harbor safely
1.3.1.2 The Classification of ports
- Based on various standards and points of view, ports can be classified according to the following criteria:
- Depending on the functions that ports perform: cargo port, passenger port, industrial port, fishing port, the port of sports, military ports - Depending on utilizing points of view : general ports and dedicated
ports
- Depending natural or man-made ports : ports can be divided into natural seaport and man-made harbor
- Depending on maritime conditions : ports can be divided into ports that have tidal mode, the ports that do not have tidal mode, ports with frozen ices and port without frozen ices
- Depending on the techniques of port construction, ports are classified
into opening ports and closing ports, ports with piers and ports without pier
- Depending on the range of port management, ports could be sorted into national ports, local ports and private ports
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this classification of ports includes locally significant ports, regionally significant ports and internationally significant ports
1.3.2 Functions and Duties of a Port 1.3.2.1 The Functions
In classifying functions of a port depend on the utilizing criterion, port functions can be divided many kinds of functions: transportation function, commercial function, industrial function In_ classifying functions of a port depend on the spatial criterion, ports functions can
be divided into the municipally building and locally building functions - Transportation function: this is the long-time function of ports
associated with the appearance of the port system, acts as a node in transportation chain and represented by the volume of cargos handled in the ports
- The trading function of a port: this function has a very big meaning in the exchanging of goods, sales and trading This function leads to the signing of the contracts of sales, and goods exchanges, as well as promotes the development of other commercial sectors
- The industrial function has the history that originated from craft
workshops and industrial plants Seaports are convenient centers that
affect the positioning the industrial zones in order to save transportation costs
- The municipally building and locally building functions: This function describes the social relationship of the space between the port and the city through the transportation, trading and industrial activities Ports promote the formation and development of local regions and cities
1.3.2.2 Port’s Duties:
- The main duties of production activities of ports are:
+ Loading and unloading of goods from sea means of transport to
other means of transport or vice versa
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+ Storage, packaging, storage of goods + Delivery of goods between vehicles
+ Provision of food, fresh water, fuel for ships
+ Conducting ships pilotage, towage of ships in and out of ports + To the rescue and refuge for ships
+ Technical Inspection and repair of vehicles
+ Other Services
1.3.3 Technical Facilities of a port
The boundary of a port normally includes two parts: the part of the
water and land On every parts of a port situates buildings and certain equipments Technical equipments of a port can be divided into six main
groups:
Technical equipments to serve the incoming and out-coming of ships, include systems of mooring buoy, signals, floats, piers
Equipments for cargo handling : this is the most important engineering
factor in production activities of a port, it determines the loading and unloading efficiency and handling capability through the port
Equipments facilitate the containing and storing of goods Some main features are the total area of warehousing, layout of storage systems
and equipments within the warehouse
The system of roads within a port and the way how they are connected to the whole inland transport system determines the range of the rear domain serving the port
Communication system, lighting system, water supply system The flotation devices such as floating cranes, tugboats, canoes
1.4 Tools for planning and choicing strategies
1 4.1 External Factors Evaluation Matrix (EFE)
The construction of matrix evaluation of external factors will help a business to summarize and quantify the influence of external
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environmental factors to the enterprise, it affects the activities of the business, EFE factors always include opportunities and challenges to businesses
To construct the matrix, the managers proceed to make the list of all
the external factors affecting the Company's activities The importance of each factor assessed through the weighted scores, total points of all the weighted scores of the factors equal 1 This classification shows the respective importance of these factors to the success in business of a company
The evaluation of the importance of each factor is implemented by sorting factors in a point scale ranging from| to 4 Where: Level 4 is the
level that the company has the best response; 3 is above average, 2 is
average, and | being the lowest The effective rates based on the company
strategy
Next is to determine the point showing the importance of each factor by multiplying the degree of importance with the corresponding classification score After that, sum all the points of the significance of every factors up to determine the total point of significance of the company, the highest is 4 and the lowest is 1, and the average point 1s 2.5
If the total point of significance is 4, it indicates that companies are taking the advantages of external opportunities and well control or minimize the external threats to the company If the total point of significance is |, that means the company does not seize the opportunity
and fails to reduce the threats from the external environment
Table 1.1 : External Factors Evaluation Matrix — EFE
External Factors Weight Rating Weighted Score
List down external factors
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1.4.2 Competitive Image Matrix
A competitive image matrix is utilized to compare the business with its major competitors based on the factors affecting the competitiveness of
enterprises in the same industry A competitive image matrix help strategic management managers identify the major competitors with their strengths and weaknesses, and their own pros and cons as well, while also help the managers
clearly aware of their competitive advantages and their weaknesses that they need
to overcome Building an competitive image matrix consists of 5 steps:
Step 1: Make a list of about 10 factors have important effects on the competitiveness of enterprises in the industry
Step 2: Classify the point scale of importance ranging from 0.0 (not important) to 1.0 (very important) for each factor The total number of grades assigned to all factors must equal 1.0
Step 3: Rate the points from | to 4 for each element, the point of each element depending on the level of response of the company to the
elements Where: 4 - good response, 3 - reaction on average, 2 - average response, | - weak reaction
Step 4: Multiply the importance grade of each element with its type point to determine point of significance of element
Step 5: Sum the points of the importance of all factors to determine the total points of significance of the competitive image matrix for each compared enterprise
Table 1.2: Competitive Image Matrix
No
Critical Weight | Your Company | Competitor #1 | Competitor #2
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Factors | Rating | Sp 5 Rating | Sp S Rating |S S
> Nn 3 ư > ứŒ | ales oo 2 Total
1.4.3 Internal Factors Evaluation Matrix (IFE) :
The construction of internal factor evaluating matrix will help managers to summarize, evaluate the strengths and weaknesses of the important parts of various functions of a business It affects the activities
of the enterprise
To construct the matrix we proceed to make a catalog list of all the internal elements that affect the business operations of the company as defined in the internal audit business The importance of each factor assessed through weighted scores, total points of all the weight scores of all factors equal 1 The classification shows the respective importance of these factors for success in the business of the Company
The evaluation of the importance of each factor by sorting the elements from | to 4 Where: Level 4 is the level that the company has the best response; 3 is above average, 2 average and | being the lowest The effective rate based on the Company's strategy
Next is to determine the point of the importance of each factor by
multiplying the degree of importance with the corresponding classification
point After that, sum up all point of importance for each variable to
determine the total point of significance of the company, where the results range from the highest point is 4 and the lowest is 1, and an average point OF 2.5:
If total score is important 4 shows that the company has many strengths and can overcome the weaknesses Conversely, if the total score
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GiGG) SERATEGIC MANAGEMENT
is 1, indicating that company has many strengths and weaknesses that hardly to overcome
Table 1.3: Internal Factors Evaluation Matrix - 1FE |
Internal Factors Weight Rating Weighted Score
factors
List down internal | | ee 77c
|
Total Weighted
Score
1.4.4 SWOT Matrix
- SWOT Matrix is an important combination tool can help managers develop four types of strategies as follows: Strengths - Opportunities strategy
(SO), weaknesses - Opportunities strategy (WO), strengths - threats strategy (ST), weaknesses - threats (WT)
- A combination of important inside and outside factors is the most
difficult task in the developing a SWOT matrix, it requires good judgments and there is not any completely perfect combination
- SO strategies use strengths within the enterprise to take advantage of external opportunities Typically, the organization can pursue WO, ST, or WT
strategies when organizations are in the situation that they can apply SO
strategies
- WO strategies improve internal weaknesses by taking advantages of external opportunities Sometimes, great opportunities that exist in the
environment outside, but the business has some internal weaknesses that prevent
it from exploitation of these opportunities
- ST Strategies use the strengths of the business to avoid or reduce the
impact of external threats
- WT strategies are defensive strategy to reduce the weaknesses and avoid
threats from outside
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Gi Go)
- The chart of the SWOT matrix is composed of 9 cells with 4 cells
containing important elements (S W, O T) 4 cell for strategies (SO, ST WO
WT), a box is always empty which ts the upper right box Table 1.4 > SWOT Matrix
O — Opportunities T — Threats
- List down Strengths - Leverage strengths to
benefit from
- List down - List down Threats
Opportunities (4)
(3)
S — Strengths SO Strategies ST Strategies
- Use strengths to
minimize the likelihood
- List down Weaknesses - Overcome weaknesses
that prevent taking
(1) opportunities and impact of threats
(1+3) (1+4)
W - Weaknesses WO Strategies WT Strategies
- Address the weaknesses that will make these
(2) advantage of the threats a reality opportuniteis (2+4)
(2+3)
The factors should be listed fully, accurately and reflect the strengths, weaknesses, and risks that companies would encounter in implementing the strategy This is an important basis for the selection strategy of the company
1.4.5 Strategic Position and Action Evaluation Matrix (SPACE)
Matrix strategic position and action evaluation (SPACE) is a management tool used for strategic analysis It 1s used to determine which strategy the
company should do
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Grice) STRATEGIC VIANAGEMENI € OnservatIV‹ \geressive CA IS -6 -5 -4 -3 -2 -[-Ì kí l di 44 ¿S dể § 2 ; Detensive ie Competitive «3 -4 ES
Capture 1- 4: SPACE Matrix
As illustrated in the figure, SPACE matrix divided the coordination
plane into four quadrants, each quadrant representing a different kind of strategies: Aggressive, Competitive, Defensive, Conservative strategies The Axes of SPACE matrix represent two internal factors: financial strength (FS) and Competitive Advantage (CA) and two external factors:
environmental stability (ES) and Internal strengths (IS) These 4 factors are decisive factors for the overall strategic positioning
The development of a SPACE matrix as follows:
- Step 1: Select a group of variables for financial strength,
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competitive advantage, environmental stability and industry strength
- Step 2: Assign a value from +1 to +6 correspond best to worst for
the variables that make up FS and IS Similarly, assign a value from -1 to -6 correspond to the best and the worst of the variables that create ES and CA On the FS and CA axes, the managers make up the comparisons to other competitors; and on the ES and IS axes, they make up the comparisons to other industries
- Step 3: Calculate the average score for FS, CA, IS and ES by summing the values for the variables and then divided by the number of variables
- Step 4: Check the marks of the average points for FS, IS, ES and
CA in the corresponding axes in the SPACE Matrix
- Step 5: Add two numbers of the x axis and the results marked X Plus two points on the y-axis and mark the results on Y Mark the intersection of these two new points with the xy axis
- Step 6: Draw a direction vector from the origin of the SPACE Matrix through the new intersection This vector indicates the type of the organization strategy
1.4.6 Quantitative Strategic Planning Matrix QSPM
A QSPM matrix is used in order to evaluate and rank the strategic plans, from which the managers have the basis to select the best strategy for a business
The matrix uses all of the information, data from the matrices mentioned above
including: IFE Matrix, EFE Matrix, Competitive image matrix, SWOT Matrix, SPACE Matrix
QSPM matrix has many advantages as it is possible to incorporate appropriate inside and outside elements into the decision process, the strategic groups can be researched one after one or at the same time, unlimited number of
strategies can be evaluated, but it also has some limitations such as QSPM matrix
is Global Advanced \'
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implementation requires judgments based on intuition and experience The discussion among the managers and the employees in the process of strategic
analyzing and choosing can arise many different opinions To build and develop a
QSPM matrix, ones need to go through 6 steps as follows:
- Step 1: List all of the internal strengths, weaknesses and external opportunities, threats in the left column These kinds of information should be obtained from EFE matrix and IFE matrix
- Step 2: Classify every important internal and external factors The
classification 1s similar to that of EFE matrix and IFE matrix
- Step 3: Identify the alternative strategies that the organization should take into the consideration before implementation The strategies are
formed and collected into separate groups
- Step 4: Determine the aitraction score (AS) is the task to quantify the relative attractiveness of each strategy in the group of possible alternative strategies Attraction score are determined by considering the influence of the choice of the being assessed strategies for each of internal and external key factors The attraction score for each strategy is assigned to indicate the relative attractiveness of each strategy compared to other strategies Attraction score is classified as follows: | - not attractive, 2 - less attractive, 3 - quite attractive, 4 - very attractive Those factors that do not affect the selections are not scored and the rows are left blank
- Step 5: Calculate the total Score of Attraction (TAS) Multiply the classification grades with Attraction Scores in each row If only the
being assessed external and internal factors are counted, TAS
represents the relative attractiveness of each strategy and the higher the TAS, the more attractive the strategy 1s
- Step 6: Figure out the summing score of attractions Sum all the attraction scores for each strategy, the summing attraction score of each strategy represents which strategy 1s the most attractive strategy in
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Trang 30GRGG) each group STERATEGIOC VIANAGESMENI Table 1 5 : OSPMMatrix Key factor Strategic Options Weight
Option | Option 2 Option 3
Total | Total Total
Attractiv Attracti _ | Attracti
Attractive Attract Attractive
eness veness veness
ness veness ness
Scores Scores Scores
Score Score Score
Internal Factors: Administration , Finance, Accounting, Marketing, Information System External Factors: Economy, Politics & Laws, Social, Culture, Population, Technology Sum Total Attractiveness Score cS Global Advanced
Notes : Weight of external factors: | — phan ung it, 2 — phan ung trung binh, 3 - phan ứng cao hơn trung bình, 4 - phản ứng cao nhát
Weight of internal factors: | — not attractive, 2 — less attractive, 3 — quite
attractive, 4 — attractive
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CHAPTER 2
INTRODUCTION AND ANALYSIS OF BUSINESS OPERATING STATUS OF TAN THUAN PORT
2.1 Introduction to Tan Thuan Port 2.1.1 History and Development :
Business’s name (in Vietnamese): CONG TY TNHH MTV CANG SAI
GON — CANG TAN THUAN
Business’s name (in English) SAIGON PORT COMPANY LIMITED - TAN
THUAN PORT
Trading name (in Vietnamese): CANG TAN THUAN Trading name (in English): TAN THUAN PORT
Company address: 18B Luu Trong Lu — Tan Thuan Dong Ward, District 7, Ho Chi Minh City
Business activity: Port Operator
Contact number (84-08) 38724729 Fax: 84-08.38728447
- Email: cms@tanthuanport.vn
- Website:_http://www.tanthuanport.vn Milestone in development of Tan Thuan Port
e 1976: Named the Unloading
e 1978: Changed name into the Unloading I
e 1981: Changed name into Warehouse No.18 e 1983: Changed name into Zan Thuan’s unloading
e 1986: Changed name into Tan Thuan’s unloading Enterprise e 1996: Changed name into Tan Thuan’s unloading Company
e August 2009: Changed name into Saigon Port Limited Company — Tan Thuan Port
Tan Thuan Port was established on 26/03/1986 based on the term of maritime
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boundary particularly 270/TC-CB The port’s area is over 140.000 square meter and located at Tan Thuan Dong area-District 7-HCM city which has an ease of
transportation including maritime, road and river
By having an essential role in Vietnam Marine in general and Saigon port in particular, the port ts responsible for 3 to 5 million tons of goods of all kind annually
The target cargo volume is assumed by the firm Although the firm has its
owned legal status, it is incomplete (signing short-term contract only, accounting announcement with Saigon port, use its owned seal, actively open accounts at
banks and to be bound by rights and obligation toward Saigon port)
The port’s area is over 140.000 square meter and located at Tan Thuan Dong area-District 7-HCM city and it is next to Tan Thuan Dong port, Ben Nghe port
- Northern side borders Saigon River
- Southern side borders Huynh Tan Phat Street and Nguyen Van Linh Boulevard
- Western side borders Kenh Te
- Eastern side borders Tan Thuan export processing zone and Phu My Bridge
Getting an advantage from having an ideal location, it is easy for the firm in transporting goods through road and river
Currently, Tan Thuan Port has four wharves
¥ Wharf K12A: 132 meter long with a depth of waterline of 9.6 meter Y Wharf K12B: 204 meter long with a depth of waterline of 11 meter Y Wharf K12C: 188 meter long with a depth of waterline of 11 meter ¥ Wharf K12D: 189 meter long with a depth of waterline of | 1 meter Consequently, the port can receive and upload 4 vessels from 10.000 DWT to 36.000 DWT at a same time
Tan Thuan port is one of nine component ports which belong to Saigon port Moreover, the port is one of the three companies which are mainly responsible
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tor goods planning targets Therefore, the port’s history and developing process
are closely associated with Saigon port
According to the 576/ QDQT term, from 23/01/1996, Saigon port 1s an official member of Vietnam General Maritime Corporation
Capture 2-1 Geographical location of Tan Thuan Port
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MÔNG BAD GOON
tts jt
Capture 2-3: The plan of Tan Thuan Port
2.1.2 Tan Thuan port’s functions and duties
2.1.2.1 Functions
- Implement production targets and revenue assigned by Saigon Port
- Widen relationship with shippers, ship owners, agencies and enhance promoting in order to attract more goods sources through Saigon Port; create stable jobs for workers
- Use efficiently the infrastructure and equipment in order to push the productivity; unload vessel quickly; assure product safety; continually
improve the service quality of Saigon port
- Complete the company structure as well as personnel to be appropriate with new requirements; improve the quality of staff and workers; strengthen discipline and security at port
2, 1,2.¢ Daties
- Organize loading and uploading, delivery as well as storage of goods - Manage employees, personnel training, conduct sport and artistic activities
as well as emulation among employees in order to complete the assigned plan
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- Apply technological advance, organize reasonably industrial handing process working scientifically to improve quality and productivity
- Organize equipment, warehouse facilities as well as wharves management
and maintenance according to the provision of the Board of Directors
- Exploiting containers and associated services through Saigon Port
2.1.3 Tan Thuan Port’s management system e Organizational structure: DIRECTOR ‡ Deputy Director of Ỳ Deputy Director of | Deputy Director of : Ì } } Ỉ
Busin Cont Ware Engin Labor Admi Finan
eSS Manag E housi eering Prote nistra secur „8 ce
Explo ement ng Divisi ction tive te Accou
itatio Exploit Feam on Divisi Divisi beam nting
Capture 2.4: Organizational structure of Tan Thuan Port
2.2 Tan Thuan Port’s realistic business activities analysis 2.2.1 Organization’s processing model
Delivering through ports is the main function of port in general as well as Tan Thuan Port in particular There are many services mainly run by the firm:
- Loading and uploading goods
- International container transshipment
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es Global Advanced
Trang 37Grice) STRATEGIC MIANAGE MENT
- Packaging, storage, preservation and delivery of goods - Warehouse forwarding and logistic service providing - Providing container service and customs procedures
Goods processing service can be described by the below model:
“* The process of unloading cargo from ships to warehouse:
—
|
FRANSPO CRANE INTO | WAREHO_ |
VESSEI [Hk POSTTION
VEHICLE ON BRACKET Kö2x664200G02LGGiAG2 C0000
Capture 2-5: The process of unloading cargo from ships to warehouse and vice
versa
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s+ The process of forwarding goods ( Cont, bulk, break-bulk):
CLIEN Commerc Sale part Wareho Security
is ial use gate
service team
part
Provide letters of Register ['xport Check the introduction, delivery processing cargo goods and goods
order, valid Ỷ ~ * "
documents tor service at Tan issue _ before commercial a Thuan Port in ‘ | transport : leaving the
department to order ,
in stock/order order to be | rights port
inventory, order ` organized |
delivery, bill payment
and sign contract workers and depending on = reasonable required service
equipments for
customer
Capture 2-6: The process of delivery and receipt of goods at the port procedures
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' đề
GRC 69)
2.2.2 Business outcomes:
STRATEGIC VIANAGEVIENI
Table 2.1: Production and sale by goods (2007 — 2011)
cS Giobal Advanced ©): TARGETS Unit 2007 2008 2009 2010 2011 I- Criteria Ton 3.655.833 | 3.666.447 | 5.430.141 | 4.472.729 | 3.534.627 a /-xport Ton 137.394| 142.886] 890.529] 216.232] 25672 ——— = “Ea ch pita Ton 65.056| 27.555] 30370| 94.618] 121.901 mem Ton 69708| 93.410] 135489| 119.485| 131877
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C;RI(;GS
` iRATEGK VIANAGE MENT Sie Ton 2 590 4.710 9577| 16857] 21716
Stone goveler Ton 16229] 10030] 40133] 55040] 31303
ives Ton 2.600 2.500 14.001 6.301 4.042
- + ti 261%
* Aumber of vessels /imes 490 439 3/0 482 390
lI Revenue Mil VND 125.666 | 223.170| 205873| 200.827| 192.488
1, Main services Mil VND 124.791 222.82 198.028 | 200.352 | 191.546
Loding+Uploading — | Mil VND 113.750| 160441[ 167023| 165656| 153144 ‘Shpping | Mil VND 100] 4091 1.859 5.269 4.071 Waehouserening | Mil VND _ 8568| 53822| 31958| 25283| 30.524 | MiLVND 2.373 4.466 4.188 4.144 3.802 Dervery hcluding :
- Domestic ships Mil.VND
- Foreign ships Mil.VND 869 350 504 475 942
-2.Additional services Mil.VND 223 250 317 385 482 —————— - Flectricity and water
646 100 187 90 460
supply Mil VND
= Cther income Mil VND 598 465 483 497 484
ital seine J intae 34,4 60,9 37,9 44,9 54,5
labor
Prive 1000 VND/ton 6,1 7,9 HH 9 7,3
(Source: Tan Thuan Port’s Reports in 2007, 2008, 2009,2010,201 1)