Technological strategies at thai tuan textile ltd

Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C 1. EXECUTIVE SUMMARY With the “Doi moi” policy, the Vietnamese socio-economic situation has been changed fundamentally to move from a central planned economy to a market regulated one. Many companies have been established to fulfill the higher social requirements day by day. Besides the state-owned companies, a lot of private ones have been set up in all of the sectors which Vietnamese government has allowed to. In the light industry, textile sector has an important role not only for the satisfaction of basic needs but also the sense of job solution due to its labor-intensified characteristic. Therefore, Vietnamese government has provided many conditions to stimulate the establishment of textile companies, especially the private ones that are estimated to have a lot of potential and opportunity to develop. Thai Tuan Textile is a private company, established in December 1993, to produce some kinds of textile product such as embroidery silk, satin, sateen etc. for female customers. Although located in Ho Chi Minh City, its products are distributed throughout Vietnam and exported to other countries for overseas Vietnamese people through the intermediaries. In recent years, Thai Tuan Textile emerges as a successful typical of private Vietnamese company in the textile industry. The company has gained some achievements in introducing diversified and high quality products, developing new markets. Its main products are chosen as the first rank of textile products of Top Ten of Vietnamese high quality products. Thus, there is a necessary need for studying its market success in terms of technology strategies, which could help company exploit its competitive advantages to cope with the other bigger competitors and be the successful leader in the textile market. 2. PROBLEM STATEMENT Private sector has proved the effective and efficient contributions to the Vietnamese economic development. It has showed its dynamic when giving new products and services to satisfy the higher customer requirements day by day. There are numerous researches to study its role and contributions to the economic development. However, very little has been done to look into its competitive advantages because of technology transfer and renovation. In the textile industry, some researches just concern the needs of technology as the prerequisite of existence in the fierce competition of globalization. Most of them consider BUSINESS RESEARCH METHOD Page 1/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C the state-owned companies. Therefore, it is necessary to study the role of technological strategy in the private company, especially in the textile industry where the speed of technology innovation is considered one of the highest sectors. This research can give some experiments of implementing technological strategy to apply for the other private textile companies. 3. RESEARCH OBJECTIVES  To analyze business position of Thai Tuan Textile Ltd. in the Textile Industry;  To analyze some major textile market factors affecting to its Business Strategies;  To analyze Technological Strategies of Thai Tuan Textile Ltd. in terms of relationship to business strategies to exploit and create its competitive advantages in textile markets by giving continuously new products to satisfy customer requirements;  To find some experiments of implementing technological strategies to apply for the other textile companies;  To give Technology Strategy suggestions. 4. LITERATE REVIEW 4.1. Definition of Technology The first step in understanding the Technology Strategy will start with a proper definition of technology. The most comprehensive definition, however, has been attributed to Sharif (1987) who considers technology as a combination of four basic components, all of which together accomplish any transformation operation. These components are:  Production tools and facilities, referred to as object-embodied technology or technoware. This includes all physical facilities required for the transformation operation such as instruments, equipment, machinery, devices, structures, etc.  Production skills and experiences referred to as person-embodied technology or humanware. This embraces all acquired abilities necessary for the transformation operation such as expertise, proficiencies, dexterity, creativity, diligence, and ingenuity.  Production facts and information referred to as document-embodied technology or inforware. This includes all accumulated facts and figures required for the BUSINESS RESEARCH METHOD Page 2/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C transformation activity such as designs, accounts, manuals, specifications, observations, regulations, equations, charts, theories.  Production arrangements and linkages referred to as institution-embodied technology or orgaware. This includes all necessary arrangements for the transformation operation such as groupings, allocations, systematization, organizations, networks, management, and marketing. 4.2. Factors Affecting to the Technological Strategies 4.2.1. Business Strategy Managing technology is not only an operational issue, but also a major strategic issue. Unless business strategy includes the impact of technology, a major portion of the business is being ignored (Gerard H. Gaynor, 1991). Technological strategy should be formulated within the larger context of business planning, since technology is the only one component of the business system. As long as marketing strategy, technological strategy concretizes the business goals to real actions. Technological strategies must be properly integrated into overall business strategies of an enterprise and followed the product/technology life cycle (Sharif, 1991)  Technology leader strategy through generation of state-of-the-art technologies.  Technology follower strategy through the adaptation of advanced technologies.  Technology exploiter strategy through the exploitation of standardized technologies in a growing market.  Technology extender strategy through the extension of the salvage value of obsolete technologies. Within the current and future scope of the business, technological strategy is also a cross functional integrated framework for consideration and assessment of technologies available to the firm (Wilson, 1986)  Product development, the glamour side of technology on which most attention is devoted.  Process development, the shadow side of technology, too often neglected or given short shrift, and including manufacturing technology, material handling, packaging, inventory control.  Information system and office automation. BUSINESS RESEARCH METHOD Page 3/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C When considering the relationship between technological strategy and business strategy, Noori (1990) highlighted three important points:  Technological strategy must be developed collectively with manufacturing, marketing, and other functional strategies because technology decisions can have major impact on each of these areas, and vice versa.  Technological strategy must be formed in conjunction with the firm’s business strategy because a right choice of technology provides key competencies.  Technological strategy must support any future revision of the firm’s business strategy and its competitive advantage. The basic role of technological strategy in business planning is to help ask the questions of in what businesses the corporation plans to be and how positioned (Frederick Bestz, 1987). It identifies the potential impact of technological change on any part of the value chain (Porter, 1985). 4.2.2. Organizational Context Organizational context has the important role to the selection of technological strategy. It allows the firm to substitute internal selection for external selection. The effectiveness of the firm’s internal selection environment affects its capacity to deal with major strategic management challenges (Bulgelman, Mandique and Wheelwright, 1996):  The ability to exploit opportunities associated with the current strategy (induced process).  The ability to take advantage of opportunities that emerge spontaneously outside the scope of the current strategy (autonomous process).  The ability to balance these challenges at different times in the firm’s development. Organizational context reflects the firm’s administrative approaches and dominant culture. It is impacted by the background and management approaches of the firm’s founders. This expresses in the selection of technological strategy: leader or follower and technology innovation: insourcing or outsourcing. It also has a close relationship to technology capabilities in terms of deciding technological strategy (Bulgelman, Mandique and Wheelwright, 1996). In the firm, organizational capabilities must accompany technological ones (Lall, 1987). These can be reflected through some or all of the following: BUSINESS RESEARCH METHOD Page 4/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C  Separation of the different technological functions (into different units) in the organizational structure with the growth of the firm.  Giving greater autonomy and financial control to technological functions (like R&D), as these gain prominence, without letting them lose touch with day-to-day commercial needs.  Facilitation of technological information transfers across different departments and from the shop floor, and response to consumers’ feedback.  Development of technology-sensing services (technical library, patent data, data on world technological trends, etc.).  Formal documentation (in manuals, technical papers, data banks, design libraries and so on) of technical knowledge accumulated.  Link-up with technology suppliers, laboratories, industry associations, universities and drawing on in-house training programs and external programs. 4.2.3. Technological Capability Technological strategy can be conceptualized as an evolutionary organizational learning process, which links between technical competencies and capabilities, technological strategy, and experience. Technological strategy is a function of the quantity and quality of technical capabilities that feed into it. The experience that results from enacting technological strategy similarly feeds back into technical capabilities and technological strategy, thus continuing the cycle as seen in figure 1: Technological Capabilities Technological Strategy Experience Figure 1: A capabilities-based organizational learning framework of technological strategy. Technological capability is the ability to use effectively technological knowledge. It is the primary attribute of human knowledge and the know-how, which effectively combines human skills and physical capital to meet human needs. Some following elements to define technological capability had been suggested (Bell and Hill, 1978):  Executing major and/or minor innovative activity. BUSINESS RESEARCH METHOD Page 5/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C  Effecting necessary adjustments through the production system from the point of introduction of innovation.  Deciding for technical change.  Effecting technical change  Optimizing operation. The application of technological knowledge has been broken down by Dahlman and Westphal (1982) into the following activities:  Production engineering that related to the operation of existing plants.  Project execution that pertains to the establishment of new production capacity.  Capital manufactured goods that consist of the embodiment of technological knowledge in physical facilities and equipment.  Research and Development activities to generate new technological knowledge. Technological capability can be defined as a combination of three kinds of independent capabilities includes independent technology learning capability (ITLC), independent technology creating capability (ITCC), and independent world technology reconnaissance capability (IWTRC) (Dore, 1984). On the other hand, Fransman (1984) identified the elements of technologicaon in Vietnam: A VAR approach. Japan Kobe University. 64 PWC.(2013). 2013 Global Gold Price Report.London: as author. Pham, M. C. and Vuong, Q.H. (2009).Kinh tế Việt Nam: Thăng trầm đột phá. Hanoi: Chính trị Quốc gia –Sự thật. Pham, T.H.T. (2012). Các nhân tố ảnh hưởng đến thị trường vàng kinh tế Việt Nam, Hanoi: University of Economics and Business. Phan, T.H.T. (2010). Phân tích biến động giá vàng thị trường Việt Nam bối cảnh khủng hoảng tài quốc tế. Hanoi: Foreign Trade University. Ranson, R. D. (2005). Inflation protection: why gold works better than Linkers. London: The World Gold Council. The World Gold Council.(2007). Goldmarket knowledge.Full year 2007. London: as author. The World GoldCouncil.(2010). Gold demand trends full year 2010.London: as author. The World GoldCouncil.(2011). Gold demand trends full year 2011.London: as author. The World GoldCouncil.(2012). Gold demand trends full year 2012.London: as author. Vuong, Q. H. (2004). Gold and US Dollar in Vietnam’s Transitional Economy. Belgium: Universite Libre de Bruxelles. p. 7. World Gold Council.(2007). Gold's role in the International Monetary System: Past and Present. Full year 2007. London: as author. World Gold Council.(2012). The Central Bank gold Agreements: Past and Present. London: as author. World Gold Council.(2013). Changes in World Gold Official Reserves. Full year 2012. London: as author. World Gold Council.(2013). Demandand supply statistics.Full year 2012.London: as author. 65 APENDIX 1: Data of variables from January 2009 to June 2014 Time period (end of VNGoldPrice month) CPI ExRate InterestRate VNIndex 2009-01 18,170 98.09 16,975 0.1 300.4 2009-02 19,570 99.24 16,971 0.08 239.8 2009-03 19,900 99.07 16,954 0.08 278.5 2009-04 19,740 99.41 16,937 0.07 315.7 2009-05 21,270 99.85 16,938 0.07 419.4 2009-06 21,030 100.4 16,953 0.07 462.5 2009-07 21,110 100.92 16,967 0.07 457.6 2009-08 21,320 101.16 16,974 0.07 541.9 2009-09 22,260 101.79 16,991 0.07 583.2 2009-10 23,900 102.17 17,011 0.07 590.9 2009-11 28,020 102.73 17,956 0.07 494.1 2009-12 26,760 104.15 17,941 0.08 502.8 2010-01 26,440 105.57 17,941 0.08 481.5 2010-02 26,630 107.64 18,544 0.08 494.3 2010-03 26,150 108.44 18,544 0.08 501.9 2010-04 26,580 108.59 18,544 0.08 541.4 2010-05 27,740 108.89 18,544 0.08 510.5 2010-06 28,600 109.13 18,544 0.08 501.2 66 Time period (end of VNGoldPrice month) CPI ExRate InterestRate VNIndex 2010-07 27,790 109.19 18,544 0.08 491.3 2010-08 28,970 109.44 18,544 0.08 447.9 2010-09 31,270 110.88 18,715 0.08 452.7 2010-10 33,420 112.04 18,932 0.08 450.5 2010-11 35,920 114.13 18,932 0.09 450.1 2010-12 36,100 116.39 18,932 0.09 480.9 2011-01 35,560 118.41 18,932 0.09 502.8 2011-02 37,610 120.89 18,932 0.11 467.1 2011-03 36,910 123.51 20,318 0.12 462.3 2011-04 37,810 127.61 20,673 0.13 477.4 2011-05 37,890 130.43 20,713 0.14 415 2011-06 37,830 131.85 20,678 0.14 435.2 2011-07 40,180 133.39 20,622 0.14 407.6 2011-08 46,950 134.63 20,610 0.14 421.4 2011-09 44,220 135.74 20,618 0.14 428.1 2011-10 44,870 136.23 20,628 0.15 422.1 2011-11 44,860 136.76 20,708 0.15 382.9 2011-12 41,820 137.48 20,803 0.15 351.8 67 Time period (end of VNGoldPrice month) CPI ExRate InterestRate VNIndex 2012-01 45,350 138.86 20,813 0.15 390.4 2012-02 45,290 140.76 20,828 0.15 420 2012-03 44,020 140.98 20,828 0.14 442.6 2012-04 43,020 141.06 20,828 0.13 473.4 2012-05 41,450 141.31 20,828 0.12 431.8 2012-06 41,950 140.94 20,828 0.11 420.8 2012-07 42,110 140.53 20,828 0.1 415.7 2012-08 44,540 141.42 20,828 0.1 396.9 2012-09 47,420 144.53 20,828 0.1 392.1 2012-10 46,150 145.76 20,828 0.1 388.5 2012-11 47,200 146.44 20,828 0.1 380 2012-12 46,320 146.84 20,828 0.1 409.5 2013-01 4fying Criteria: what one time is considered by customers to be a valuable extra feature can, as they become used to it and technological changes, become a standard minimum requirement. Forecasts are important inputs to the process of strategy formulation and planning. They have been used to gain a better understanding of the threats and opportunities likely to be faced by established products and markets and, consequently, of the nature and magnitude of the changes needed (Bulgelman, Mandique and Wheelwright, 1996). The usefulness of technology forecasting techniques is not only in the prediction, but also in their value to business planning for systematically searching out potential and relevant technical change. The next step after technology forecasting is formulating technological strategy which is set up what will be done to use technology as the effective and efficient to get the competitive advantage (Frederick Bestz, 1993). 4.2.6. Technology Content Addition In rapidly changing environments, it is essential to sense the need to reconfigure the asset structure and accomplish the necessary internal and external transformation. This reconfiguration and transformation has to be done such that the Value Addition and the process of Technology Content Addition are aligned to each other. The technology Atlas Team (1987) defined the Technology Content Addition of a transformation activity in BUSINESS RESEARCH METHOD Page 8/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C terms of the four technology components, which are used in the transformation facility. The four technology components are considered to be equivalent to the factors of production used in the calculation of a production function. 4.3. Data collection Data for this research includes primary and secondary and will be collected as follows: 4.3.1. Secondary Data  Annual Statistical reports on the social, economic aspects from The General Department of Statistics to get general information on the macro environment.  Textile Industry’s Reports to get information on the industry’s structure.  Thai Tuan Textile Ltd. Annual report, and documents and Phuoc Long Documents.  Some magazines: such as Saigon Times Magazine, Saigon Marketing Magazine, Science and Technology Magazine, Magazine of Ministry of Light Industry and others.  From the Internet. 4.3.2. Primary Data  In-depth interview and discussion with top manager of Thai Tuan Textile Co. Ltd.: Mr. Thai Tuan Dung, Vice General Director of Permanent to obtain information related to company strategies.  In-depth interview and discussion with experts of Thai Tuan Textile Co. Ltd.: Mr. Vo Van Quyen, Director of Administration Department, Mr. Vo Van Sang, Vice General Director of Technology-Production and Mrs. Vo Thi Quy, consultant to know clearly production process and relevant technical and financial problems. 5. JUSTIFICATION This study will focus on the way of implementing of Technological Strategy of Thai Tuan Textile Ltd. to gain the competitive advantage and be the leader of Vietnamese textile market in terms of textile products for female customers. Because the technological strategy is rather a wide concept for not only Thai Tuan Textile Co. Ltd. but Vietnamese companies generally, the managers just said what they did relating to the strategy and production rather than giving systematic steps they had taken to achieve and implement technology. Some information was not available due to the business confidentiality. BUSINESS RESEARCH METHOD Page 9/30 Name: Nguyen Ngoc Sy ID: 2448471 Class: MBAOUM0512-2C 6. RESEARCH DESIGN The design for the research is presented as the following figure: COMPANY’S MISSION AND GOALS INTERNAL ANALYSIS EXTERNAL ANALYSIS BUSINESS STRATEGY TECHNOLOGICAL STRATEGY FORMULATION PROCESS TECHNOLOGICAL STRATEGY IMPLEMENTATION PROCESS EVALUATION 6.1. Company Background 6.1.1. Company History Established on 20th December 1993, Thai Tuan Textile Co. Ltd. was initially a private company acting mostly in the trading activities with its former name as Thai Tuan Producing and Trading Co. Ltd. Besides the subcontracting of making sub-products of fabrics, it still traded kinds of fabric and raw materials of textile industry such as threads and kinds of chemical. By the year 1995, the demand of fabric was high day by day and the domestic market was overwhelmed with the foreign fabrics. Realizing that this was the opportunity and there was enough capability, company carried out construction of departments, importation of equipment, materials and recruiting staff to produce the fabrics which have high quality as the import ones. In May 1996, the weaving factory was established and produced officially in October 1996. In this period, the main company product was the rough fabric, which was dyed by the other companies and consumed mainly in the HCM City and Mekong Delta. In January 1997, company went on doing the construction of dyeing factory to complete their products, step by step in their production process and cut off transportation cost. In November 1997, the dyeing factory began to start its business activities. BUSINESS RESEARCH METHOD Page 10/30 [...]... through the great efforts of company related to searching information process and promulgating human resource policies such as staffing, recruiting and training These policies have contributed greatly to the effective using technology in company and created strong brand image of Thai Tuan Textile Co Ltd in the Vietnamese textile market The competitive advantage that Thai Tuan Textile Co Ltd gains is... silk makes up 3% of consumed output  Kinds of sateen (shiny sateen, grained sateen, smoothen sateen) makes up 38% of consumed output  Silk makes up 7% of consumed output  Satin makes up 3% of consumed output Silk 7% Satin 3% Sateen 38% Embroidery Silk 52% Figure 2: Structure of ThaiTuan Textile Products Source: Thai Tuan s Documents Today, Thai Tuan textile products have been consumed all over the... MBAOUM0512-2C  Assessment Technological Capability between small and medium private companies and state-owned enterprises in Vietnamese textile industry  Technological Strategy of state-owned enterprises in Vietnamese textile industry  Role of Human Resource and Organization related to deciding Technological Strategy and deploying effectively technology  Models of calculating the economic effects... succeed The objective of strategic human resource management is to develop manpower plan that matches people with a company’s strategic requirements, both in the short run and the long run Realizing this importance, from the establishment to the present time, human resource management is always the concentration of setting company strategies in Thai Tuan Textile Co Ltd Related to the human resource,... other textile companies have been consumed hardly, Thai Tuan fabric products will get the strong support of consumers As a result, all of machinery will run at full capacity because the supply cannot satisfy the demand 6.7.2 Product Today, in the market, Thai Tuan Textile Co Ltd produces fabric products with different kinds of pattern and color Approximately, there are four fashion colors for each pattern... necessary concentrate investments related to machinery and human resource Therefore, this will make company be able to produce new high quality fabric products in the conditions of limitation resources A well-planned technological strategy will not be feasible unless it is done correctly in the implementation process In Thai Tuan, the right implementation of descriptive technological strategy is expressed... to the capital limitation, they may get this information from the Vietnamese commercial representatives in the opening country Another source comes from the database of National Science and Technology Information Center that stores almost patents and inventions of all of industries all over the world  Secondary sources are formed through the textile magazines, technical information of newspapers,... must be concerned the important role of information coming from the relatives, friends as well as competitors Most of the cases, this information is similar as orientation of searching information process 6.4.4.4 Orgaware Company has the empower policy which allows directors decide all the problems related to their responsible area Thai Tuan Textile Co Ltd has a good staffing policy Recruiting managers... And the precision of modern machines is critical to successful textile operations What people want today is softer fabrics They want to feel the softness, not just see it 6.5.2 Technological Strategy of Thai Tuan Textile Co Ltd 6.5.2.1 Product Technology Along with physical characteristics such as softness, smoothness etc., color and pattern in the fabric are the most important factors affecting directly... spare parts etc 6.7 Evaluation of Technological Strategy of Thai Tuan Textile Co Ltd So far, technological strategy of Thai Tuan Textile Co Ltd has proved its effectiveness to make competitive advantage for company Company is considered as the leader role of launching new fabric products for female customers The effectiveness of technology strategy is expressed through some aspects: 6.7.1 Production The . analyze some major textile market factors affecting to its Business Strategies;  To analyze Technological Strategies of Thai Tuan Textile Ltd. in terms of relationship to business strategies to exploit. Data  In-depth interview and discussion with top manager of Thai Tuan Textile Co. Ltd. : Mr. Thai Tuan Dung, Vice General Director of Permanent to obtain information related to company strategies. . the transformation operation such as groupings, allocations, systematization, organizations, networks, management, and marketing. 4.2. Factors Affecting to the Technological Strategies 4.2.1.