THEORETICAL BACKGROUND TO THE DEVELOPMENT OF THE BUSINESS STRATEGY FOR THE COMPANY ASSESSMENT OF CURRENT BUSINESS SITUATION OF VIETNAM JSCDEVELOPMENT OF COMPANY BUSINESS STRATEGYDETERMINATION OF STRATEGIC BUSINESS ACTIVITIESSPECIFIC MEASURES FOR IMPLEMENTING BUSINESS STRATEGYPOSSIBLE RISKS IN IMPLEMENTATION OF STRATEGIES AND MEASURES
THESIS DEVELOPING BUSINESS STRATEGY FOR VIET-V-STANDA JOINT STOCK COMPANY (V-STANDA., JSC) FOR THE PERIOD 2015-2020 TABLE OF CONTENTS INTRODUCTION………………………………………………………….Page I AIMs, GOALS OF THE STUDY……………………………… Page II SUBJECTS AND SCOPE OF THE STUDY III SEQUENCES OF THE STUDY .Page IV SOURCES OF THE DATA Page V METHODOLOGY ………… .Page VI CONTRIBUTION OF THE STUDY Page VII RESULTS OF THE STUDY ……… Page ……………… Page VIII ORGANIZATION OF THE CAPSTONE PROJECT Page CHAPTER THEORETICAL BACKGROUND TO THE DEVELOPMENT OF THE BUSINESS STRATEGY FOR THE COMPANY ……… Page 1.1 BUSINESS STRATEGY – THE MAIN OUTCOME OF THE BUSINESS STRATEGY DEVELOPMENT PROCESS process ……… Page 1.2 PROCEDURES OF BUSINESS STRATEGY DEVELOPMENT Page 21 CHAPTER ASSESSMENT OF CURRENT BUSINESS SITUATION OF VIETNAM VSTANDARD JOINT STOCK COMPANY (V-STANDA., JSC) ………Page 37 2.1 GENERAL INFORMATION OF V-STANDA., JSC ……………….Page 37 2.2 ANALYSIS OF MACRO ENVIRONMENT ………………………….Page 43 2.3 ANALYSIS OF TRADING SECTOR………………………………….Page 45 2.4 ANALYSIS OF INTERNAL ENTERPRISE ENVIRONMENT……….Page 53 2.5 ANALYSIS OF STRENGTH, WEAKNESS, OPPORTUNITY AND THREAT OF V-STANDA (SWOT ANALYSIS)………………………………….Page 57 2.6 IDENTIFICATION OF CORE COMPETENCE OF V-STANDA COMPANY………………………………………………………………Page 57 Page CHAPTER DEVELOPMENT OF COMPANY BUSINESS STRATEGY…………… Page 61 3.1 STATEMENT OF VISION, MISSION, TASK AND OBJECTIVE OF COMPANY BUSINESS STRATEGY ……………………………………………….Page 61 3.2 DETERMINATION OF STRATEGIC BUSINESS ACTIVITIES……………Page 62 3.3 SPECIFIC MEASURES FOR IMPLEMENTING BUSINESS STRATEGY Page 69 3.4 POSSIBLE RISKS IN IMPLEMENTATION OF STRATEGIES AND MEASURES……………………………………………………………… Page 75 CONCLUSION…………………… ………………………………………….Page 78 REFERENCES…………………… ………………………………………….Page 80 ANNEX……………………………………………………………………………… Page 81 Page CAPSTONE PROJECT REPORT Project Title: Developing business strategy for V-STANDA Joint Stock Company (VSTANDA., JSC) for the period 2010-2015 Contents I Aims, goals, subjects, scopes, and methodology II Theoretical Background III Analysis of real situation of V-STANDA Joint Stock Company IV Developing business strategy for the period 2010-2015 V Sound measures to realize the strategy INTRODUCTION Business, though possibly simple like street-vending, cannot depend on good luck or sudden inspiration That means one cannot be a newsagent today and lottery ticket seller tomorrow or tobacco seller the day afterwards A street-vendor has to make clear that he sells newspapers or lottery tickets or cigarettes in order to save money, look for customers and build up relationship, etc Then, during the business, he himself has to work out his own way to make money on the certain roads or areas, or figure out competitive advantages gradually, etc Such considerations become essential in the life of the street vendor and govern his daily actions until the market has some changes or the others have capital on hand and they find out a new business opportunity Apple used to be an unknown company 28 years ago, but now it has become a wellknown IT brand with the annual revenue of over US$ 32 billion The key for Apple's success lies in the design initiatives and flexible changes in the way to meet the demand of target customers stated in the famous speech by Steve Jobs that he wished Mac would become "the centre of digital life" Such strategies inspired the introduction of a range of its products like iPod, iPhone, iMac, or Macbook Air If Mac is the centre, iPhone (iPod as well) is the gentle satellite in accordance with the Mac system and Page draws customers to Apple's world With a sound strategy and vision figuring out consumer trends, Apple has really succeeded FPT and Vietnam Computer Company are the two enterprises in the IT area It was hard to make a difference between the two companies regarding sales, profits, capacity and potentials 20 years ago But now hardly anyone knows Vietnam Computer Company whereas FPT has become a strong economic group of Vietnam with revenue of billions of USD per year and an average turnover growth rate of 30% per year Apart from that, FPT exports its software to the world, and becomes strategic partners of the leading IT groups like HP, IBM, Intel, etc It is clear that a big difference was made in market analysis, corporate strategy development, as well as realistic measures to perform strategies Such typical examples show that if a business wishes to gain success, it should possess a sound strategy and effective measures to realize it On the other hand, due to the economic globalization, increasing scarify of resources, IT boom and fast changes in the demand of the market resulting in a more complex and fluctuating business climate, there is a must for all enterprises to work out right business strategies to grasp opportunism, avoid risks and ensure sustainable development Over 20 years since Vietnam transformed itself from a central-planning economy to a market oriented one; thousands of enterprises have emerged, including both successful and unsuccessful enterprises In general, the majority of Vietnamese businesses have developed spontaneously without a long-term vision and strategy, which is especially the true case among small and medium sized enterprises Recently, in the current trend of globalization and integration, especially thanks to the dramatic growth of the Internet, Vietnamese enterprises have availed themselves to more opportunities to learn and exchange business experiences with foreign ones Vietnam's entrepreneurs have been aware of the importance in formulating and realizing their strategies V- STANDA Joint stock Company is the case Currently, the company is working out the development of business strategy for the period 2010-2015 Based on basic information Page obtained about the company during a long process, on what the Viet-Stand gained, and what the company is going to in the following years, we found that this is a realistic Capstone project satisfying the program's requirements Thus, our group has come to agree on the name of the Capstone project title as "Developing business strategy for Viet V-Standa Joint stock Company for the period 2010-2015" I AIMs, GOALS OF THE STUDY Aim of the study To develop a business strategy of Viet V-Standa Joint stock Company for the period 2010-2015 and a vision until 2020 Goals of the study − Identifying basic values and core capacities of Viet V-Standa Joint Stock Company − Evaluating business activities of the company in the recent years (from 2006 to 2008) based on the financial criteria − Analyzing strengths and weaknesses, opportunities and challenges for the company in the period 2006-2009 − Develop business strategy for the period 2010-2015 II SUBJECTS AND SCOPE OF THE STUDY: Subjects of the study The subject of the study is the business environment of the company, including both the internal and external The external environment contains the factors directly affecting the business activities of the company; the internal environment is the internal strength of the company Studies and analysis of such environments lay the ground for latter evaluation, analysis and development of business strategies of Viet V-Standa Scope of the study: Page The research on business strategies of Viet V-Standa for the period 2010-2015 is based on financial reports from 2006 to 2008, annual sales reports, and market analysis by the business department (These are the past statistics Naturally, certain limitations in the evaluation of financial criteria may exist) Field of the study To formulate the business strategy within the framework of the overall strategy of Viet V-Standa Joint Stock company III SEQUENCES OF THE STUDY Analyzing the business environment Analyzing the production and business situation of the company Realizing opportunities and challenges Choosing strategic models Identifying business aims and goals and develop relevant strategies Conditions and measures to ensure the successful implementation of the strategies IV SOURCES OF THE DATA The secondary data − Financial and Accounting Department: Financial statistics − Board of directors: Statistics of investment projects and annual plans − Business Department: Analysis of sales reports and markets − Administrative and Human Resources: Statistics of human resources − Newspapers, Magazines, and course books Primary data − The data analysis will be based on the discussion with the Director of the Company V METHODOLOGY During the process of the study, our group will adopt the following research methods: Page Collecting the data directly at the company as well as referring the data from 2006 to 2009 to the corporate filing system of vouchers and books Referring to previous newspapers, magazines and course books as well as the Internet Analyzing, synthesizing, comparing, contrasting, explaining, elucidating, inducing, and calculating the data for reliable outcomes Adopting the consultation of experts during the study process in order to enhance the quality of the study and meet the realistic demand Adopting SWOT analysis method which is a technique used to analyze and process the results of the study concerning the business environment, helping the company to develop a sound strategy VI CONTRIBUTION OF THE STUDY To apply the theory of business strategy development in the specific case of VSTANDA., JSC To select and formulate the business strategy suitable with the core capacity, strengths, weaknesses, opportunities and challenges of V-STANDA., JSC VII RESULTS OF THE STUDY To develop the proper business strategy for V-STANDA., JSC To work out the framework for realizing the business strategy based on the implementation and supervision plans of V-STANDA., JSC To give orientations for the follow-up goals in order to develop business strategies in the next stages VIII ORGANIZATION OF THE CAPSTONE PROJECT Regardless of the introduction, conclusion, references and appendixes, the main contents of the Capstone project are divided into four chapters: Chapter 1: Theoretical Background to the development of business strategy for VSTANDA., JSC Page This chapter introduces a theoretical background to the development of business strategy for V-STANDA., JSC, serving as a foundation for the following chapters Chapter 2: Analysis of real business situation of V-STANDA., JSC An overview of the company, and an analysis of the business environment and internal strengths of V-STANDA., JSC shall be offered in this chapter Chapter 3: Development of the business strategy for V-STANDA., JSC This chapter deals with relevant solutions and a business strategy framework in line with the mission, goals and aims of the company Chapter 4: Action mottos to realize the business strategy Feasible measures to implement the business strategy shall be identified in this chapter Conclusion Annex Page CHAPTER THEORETICAL BACKGROUND TO THE DEVELOPMENT OF THE BUSINESS STRATEGY FOR THE COMPANY 1.1 Business strategy – the main outcome of the business strategy development process 1.1.1 Definitions of business strategy There are many definitions of business strategy which come from different points of view Alfred Chandler defined a business strategy as "the identification of long-term goals and aims of an enterprise and the application of a range of actions as well as the distribution of these essential resources" (Chandler, A (1962) Strategy and Structure Cambrige, Massachusetts MIT Press.) Jame Quin offered a more general view: "a strategy is a pattern or a plan to synthesize essential goals, policies, and a range of actions into an integral part" (Quin, J., B (1980) Strategy for Change: Logical Inscrementalisim Homewood, Illinois Irwin) Johnoson and Scholes perceived a strategy in a condition with many fast changes: "The strategy is the long-term orientation and size of an organization with an aim at obtaining competitive advantages for the organization through the identification of its resources in a changeable environment and meeting the market demands and expectations of relevant parties" (Johnson, G., Scholes, K (1999) Exploring Corporate Strategy, 5th Ed Prentice Hall Europe) In his definition of business strategy with five "P"s, Mintzberg generalized different areas of strategic management as follows: Plan: a range of actions consistently planned Pattern: consistent behaviors during the time either planned or unplanned Position: the organization in accordance with its environment Perspective: Ways to take an insight into the world Page 10 V-STANDA jsc Form B01-DN (promulgated with Decision No 15/2006/QD-BTC 18 nguyen chi – ba dinh – noi Dated 20 March 2006 of Minister of Finance Balance sheet 2006 - 2007 – 2008 Criteria A Mobile assets and short term investments Code 2006 2007 2008 100 10,655,549,148 14,834,217,350 24,322,716,770 I Cash 110 1,357,147,081 2,768,385,824 3,255,062,963 Cash (including NP) 111 655,962,021 853,603,113 1,452,432,992 Deposit account 112 701,185,060 1,914,782,711 1,802,629,971 Money in transfer 113 II Short-term financial investments Short term stock investment 120 121 Other short term investments Provision for price reduction of short term investment 128 III Receivables 130 8,881,390,345 11,752,127,428 20,878,862,445 Receivables of customers 131 8,821,390,345 6,710,843,471 11,137,031,775 Pre-payment for salesmen 132 60,000,000 4,735,783,957 9,630,168,545 Deducted VAT 133 Internal receivables 134 129 -274,837,875 305,500,000 386,500,000 87 Other receivables 138 Bad debt provision 139 IV Inventory 140 Goods in transfer 141 Material inventory 142 In-store tools and instruments Uncompleted production and business expense 143 Finished product inventory 145 Goods inventory 146 144 Products for sales Price reduction provision of inventories 147 V Other mobile assets 150 Advance payments 151 Pre-payments 152 In-transfer costs 153 In-progress insufficient assets 154 Deposits 155 VI Administrative payment 149 417,011,722 313,704,098 188,791,362 51,636,506 417,011,722 313,704,098 137,154,856 160 88 Administrative payment of previous year 161 Administrative payment of this year 162 B Fixed assets, long-term investments 200 9,467,673,902 18,369,837,219 27,406,725,202 I Fixed assets 210 9,304,901,902 16,790,056,469 18,239,212,269 Tangible fixed assets 211 7,108,356,902 12,452,077,322 13,519,753,122 - Cost 212 7,108,356,902 12,452,077,322 13,519,753,122 - Accumulated depreciation 213 Leasing fixed assets 214 - Cost 215 - Accumulated depreciation 216 Intangible fixed assets 217 2,196,545,000 4,337,979,147 4,719,459,147 - Cost 218 2,196,545,000 4,337,979,147 4,719,459,147 - Accumulated depreciation 219 II Long-term financial investments 220 Long-term stock investment 221 Capital contribution to joint venture 222 Other long-term investments Price reduction provision of long-term investment 228 229 89 III Uncompleted basic construction expense 230 IV Long-term deposits 240 V Long-term pre-paid expenses 241 162,772,000 1,579,780,750 9,167,512,933 250 20,123,223,050 33,204,054,569 51,729,441,972 300 10,095,746,014 19,116,558,787 27,255,183,795 I Short-term debt 310 9,786,946,014 13,936,987,819 16,907,803,827 Short-term loan 311 1,650,900,000 500,000,000 4,030,000,000 Payable long-term debt 312 Payable to salesmen 313 7,663,627,684 10,809,335,261 10,101,542,703 Pre-payment by customers 314 472,418,330 2,743,724,518 2,977,370,588 Tax and other payables to the state 315 -116,091,960 -121,844,544 Payable to laborers 316 Payable to internal divisions 317 Other payables 318 II Long-term debt 320 308,800,000 5,179,570,968 10,347,379,968 Long-term loan 321 308,800,000 5,179,570,968 10,347,379,968 Long-term debt 322 Total assets A Payable III Other debts -79,264,920 330 90 Payable expenses 331 In-process redundant assets 332 Long-term deposits 333 B Owner capital 400 10,027,477,036 14,087,495,782 24,474,258,177 I Capital, fund 410 10,027,477,036 14,087,495,782 24,474,258,177 10,027,477,036 14,087,495,782 24,474,258,177 Operating capital source 411 Asset re-evaluation difference 412 Exchange rate difference 413 Development investment fund 414 Financial provision fund 415 Accumulated profit 416 Basic construction investment capital 417 II Other financial sources, funds 420 Severance provision fund 421 Incentive and welfare fund 422 Senior management fund 423 Administrative financial source - Administration financial source of previous year 424 425 91 - Administrative financial source of this year 426 Fixed asset forming capital source 427 Total capital sources 430 20,123,223,050 33,204,054,569 51,729,441,972 92 Annex PROJECT AIR-CONDITIONER MANUFACTURING Project name: Investment in assembling production line of air conditioners Investor: Viet Standard JSC Project place: Factory of Viet Standard JSC at Quang Minh Industrial Zone, Me Linh District, Hanoi Form of investment: Investment in production expansion Target and scope of the project: Develop the industry of air-conditioner manufacturing other refrigeration electrical products Designed capacity of the production line: 50,000 – 60,000 products/year Estimated area for manufacturing: 4,500m2 (available) Total initial invested capital (exclusive from basic constructions): VND 25 billion, including: Production line and the equipments: VND 10 billion Working capital: VND 15 billion (estimated for output of 1,500 products/ months of the first year The working capital shall increase, depending on the product volume) Key economic and financial targets of the project: Simple period of payback (exlusive from the time factor of the currency) of the Project is calculated to be years months since the first date of operations Schedule of implementation: In 2009, the scheduling shall be performed as in the following table: Task Study, survey, and elaborate FS Deadline From Jan to April 2009 Remarks Completed 93 Search for partner, and select supplier From April to June 2009 Sign contract of equipment provision and July 2009 technology transfer Install, testing of the production line October 2009 Perform technique chekup and testing November 2009 Start official production December 2009 I Completed Completed PRODUCTS, TECHNOLOGY AND EQUIPMENTS OF THE PROJECT Products of the project: Air conditioner with types of unit, units, way, way, wall-mounted, ceiling suspended and colume have the capacity sizing from 7,000 Btu/h to 100,000 Btu/h, single phase and three phase In the future, other products will be further developed such as foods storage cabinet, frozen cabinet, dehumidifier, refrigerator, etc Technology of air-conditioner production: 2.1 Process of general assembling 2.1.1 Lay-out Diagram of general assembling line (Appendix 1) - Efficiency of the line: the implementation of assembling products of wall-mounted unit airconditioner with capacity from 7,000 Btu/h to 24,000Btu/h can be made - Capacity of the line: 60,000 products/year for 8-hour day 2.1.2 Process of outdoor unit assemblage: 94 Install the compressor Cover the lid Hygiene Install vaporized grid Install mid tube range and top tube range Install condensor Install electric part, blower Install copper tube Install the tube Heal Check the leak Install power supply for the compressor Seal off Absorb vaccuum Deposit the gas Package 2.1.3 Process of indoor unit assemblage 95 Install transformer into volt box Install the temperature sensor and display Install the power electric wire Install internal wire to be external Displayplate to adjust the electricity Connect power transformer and istall control disk Display the box to adjust the electricity Install heat retaining part Install temperature sensor and display Install power electric wire Install internal and external wire 2.2 Total estimated labour: 60 persons including manager, warehouse workers, service staffs, in which number of skilled workers are: 40 persons II CALCULATION OF PROJECT REVENUE Estimated consumption: (data from Marketing Dept.) year Output Estimated output 1st 2nd 3rd 4th 16,000 24,000 35,000 50,000 96 Estimated revenue for 2009: Unit: VND No Model Two-way air conditioner with units Two-way air conditioner with units Total: Capacity Quantity 9,000 500 12,000 500 Unit price 4,500,0 00 5,500,0 00 Amount 2,250,000,000 2,750,000,000 5,000,000,000 Estimated revenue for 2010: Unit: VND No Model One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Two-way air conditioner Capacity Quantity Unit price Amount 9,000 3,000 3,900,000 11,700,000,000 12,000 3,000 4,900,000 14,700,000,000 18,000 1,000 6,600,000 6,600,000,000 24,000 1,000 8,600,000 8,600,000,000 9,000 3,000 4,500,000 13,500,000,000 12,000 4,000 5,500,000 22,000,000,000 18,000 500 7,300,000 3,650,000,000 97 with units Two-way air conditioner with units Total: 24,000 500 9,500,000 4,750,000,000 85,500,000,000 Estimated revenue for 2011: Unit: VND No Model One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Capacity Quantity Unit price Amount 9,000 4,000 3,900,000 15,600,000,000 12,000 4,000 4,900,000 19,600,000,000 18,000 1,000 6,600,000 6,600,000,000 24,000 1,000 8,600,000 8,600,000,000 9,000 6,000 4,500,000 27,000,000,000 12,000 6,000 5,500,000 33,000,000,000 18,000 1,000 7,300,000 7,300,000,000 98 Two-way air conditioner with units Total: 24,000 1,000 9,500,000 24,000 9,500,000,000 127,200,000,000 Estimated revenue for 2012: Unit: VND No Model One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Total: Estimated revenue for 2013: Capacity Quantity Unit price Amount 9,000 7,000 3,900,000 27,300,000,000 12,000 7,000 4,900,000 34,300,000,000 18,000 1,500 6,600,000 9,900,000,000 24,000 1,500 8,600,000 12,900,000,000 9,000 8,000 4,500,000 36,000,000,000 12,000 8,000 5,500,000 44,000,000,000 18,000 1,000 7,300,000 7,300,000,000 24,000 1,000 9,500,000 9,500,000,000 35,000 181,200,000,000 Unit: VND No Model Capacity Quantity Unit price Amount 99 One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units One-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Two-way air conditioner with units Total: 9,000 8,000 3,900,000 31,200,000,000 12,000 8,000 4,900,000 39,200,000,000 18,000 3,000 6,600,000 19,800,000,000 24,000 3,000 8,600,000 25,800,000,000 9,000 12,000 4,500,000 54,000,000,000 12,000 12,000 5,500,000 66,000,000,000 18,000 2,000 7,300,000 14,600,000,000 24,000 2,000 9,500,000 19,000,000,000 50,000 269,600,000,000 Estimated payback period: years months 100