Chiến lược cạnh tranh cho công ty cổ phần VIGLACERA tiên sơn

Luận văn thạc sĩ Chiến lược cạnh tranh cho công ty cổ phần VIGLACERA Tiên Sơn MBA THESIS THE COMPETITIVE STRATEGY FOR VIGLACERA TIENSON JOINT STOCK COMPANY... One of the weak points of

Luận văn thạc sĩ Chiến lược cạnh tranh cho công ty cổ phần

VIGLACERA Tiên Sơn

MBA THESIS THE COMPETITIVE STRATEGY FOR

VIGLACERA TIENSON JOINT STOCK COMPANY

TABLE OF CONTENT

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1 General overview, the need and meaning of the studying subject 9

1.1.2.2 In regard of management category, strategy is a type of plan 121.1.2.3 In regard of combining unity, strategy is defined as follows 13

CHAPTER 2 – ANALYZING STUDYING OUTCOME ON

THE COMPANY CERTAIN CIRCUMSTANCE

27

2.2 Technology - Products – Production Management at the

2.4 Market segment and marketing activities of the company 42

LIST OF TABLES/FIGURES

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5 Table 2.1: Joint Stock Capital Structure at 31 December 2008 30

7 Table 2.2 Tiles production output in the years 2006 - 2009 32

9 Table 2.4 –Viglacera’s Balance Sheet Summary in 2006 - 2008 36

10 Table 2.5 : Report on business activity results in 2006 - 2008 36

12 Table 2.7 –Viglacera using performance in 2007 and 2008 39

13 Table 2.8 - The coefficient of liquidity in the last few years 40

14 Table 2.9 – The coefficient of performance, profitable rate 41

15 Table 2.10: THE PRODUCTION REGIONS OVER

THE WORLD

48

16 Table 2.11: TOP OF LEADING COUNTRIES OF

PRODUCTION IN THE WORLD

49

18 Table 2.13: TOP OF LEADING COUNTRIES OF

EXPORT IN THE WORLD

51

19 Table 2.14: TOP OF LEADING COUNTRIES OF

EXPORT IN THE WORLD

23 Table 2.18: Granite tiles production companies in the country 54

COMMENCEMENT: GENERAL INSTRODUCTION

1 General overview, the need and meaning of the studying subject

Most of the successful Vietnamese enterprises for the time being have been developing and growing up since the very specific overview of the Vietnamese eco-political certain circumstance Vietnam started from the centralized planed economic market, where enterprises’ economic activities were allocated from the central Government but not following the supply – demand principle, and the market was allocated unclearly and there was no competitive element Other enterprises were founded by family workshops; businessmen in this sector have early caught up opportunities and well applied them to develop till so far

Elements, which helped our enterprises succeed in the past are now whether still relevant to assist enterprises in successfully developing under new market situation when Vietnam joining WTO, a violently competitive market, a play ground with competitors are foreign companies, international groups with a decade experience, abundant capital sources, experienced talented human resources working in other different markets? It is clear that playing effectively

in the new environment, enterprises must be equipped knowledge in order to understand newly playing regulations; to have in hands business strategy in general and competitive strategy in particular in conformity with the new market demands, and competitive strategy is one of the most significant strategy for anyone, who play any role in the market today

From the private playground turning to the public one that whoever like to play

in the playground can use it, globalization have changed the core of business activities, from concentrating on producing the best, cheapest products, enterprises had moved their concentration on the market It is simply because they want customers to believe in using and buying their products other than the competitors’ one And to make it come true, enterprises must better understand customers’ needs, they need better communication on their products, and they need to build long term relationship between their product brand name and the targeted customer group For that mentioned above reasons, competitive strategy is a magnetic needle for activities to boost competitive capability and business efficiency for the sustainable development of enterprises

In the context of deeper and deeper integration into the world economy by Vietnam, enterprises are given both chance and challenges especially construction industry in general and construction materials production industry in particular One of the weak points of enterprises trading in construction materials production industry is that they do not have a right competitive strategy in order

to take full advantage of chance and overcome challenges thereby improving their competitive capability in the new business environment

This topic will build up, analyze and choose competitive strategy and propose necessary solutions to the implementation of such a strategy of Viglacera in order

to improve the competitive capability and business effectiveness, which will help secure the sustainable development of the company

2 Purposes of study

- To find out the competitive strategies of Viglacera;

- To have a clear understanding of strong points (core competence), weaknesses, opportunities and threats of Viglacera;

- To analyze and figure out the best competitive strategies as well as to sort out right methods to perform such strategies, which helps improve the competitive capability and promote sustainable development of Viglacera;

- To clarify and apply the theory of setting up of the competitive strategy to a particular enterprise;

- To specify the guideline for the enterprise in performing its strategies in order to make it the leading company in the construction materials production industry in Vietnam

3 Methods of Study

- Methods of approaching: The methods of qualitative, data analysis, statistics, and comparison to evaluate the actual situation and bring out complete solutions

- Methods of data collection: Use of secondary data from available published documentations; Use of results from market researches on the construction materials production industry and use of sources from magazines, internet, etc

- Methods of analyzing and processing data: Analysis, synthesis, and comparisons

4 Structure of essay

Setting aside the conclusion and preferences, the content of essay is divided into

three chapters as follows:

Chapter 1: COMPETITIVE STRATEGY THEORY.

Chapter 2: ANALYZING STUDYING OUTCOME ON THE COMPANY CERTAIN CIRCUMSTANCE.

Chapter 3: COMPETITIVENESS STRATEGY OF VIGLACERA.

CHAPTER I: COMPETITIVE STRATEGY THEORY1.1 Concepts

1.1.1 Strategy

There are different definitions of strategy but the most general definition is

“Strategy is series of complex actions in order to apply resources that an organization may have to its particular objective”.

Strategy means a plan that includes:

- Main long-term objectives (3years, 5 years, or 10 years) which specify the development orientations of an organization in the future

- Major policies for attracting, allocating and using resources effectively

- Decisions on the main methods of achieving the objectives

- The oriented ability of the strategy in order to ensure the continuously sustainable development of the organization in the market fluctuation.

1.1.2 Business strategy

1.1.2.1 Business strategy is an art

- Alain Threlart said that “Strategy is a technique that an enterprise uses to fight against competition and win the victory”

- M.Porter said that “Strategy is the technique of building sustainable competitive advantages for defense”

In short, these writers consider business strategy as an art of market competition and development of enterprise

1.1.2.2 In regard of management category, strategy is a type of plan

- G Arlleret said that “Strategy is to specify means and methods to achieve the intended objectives through policies”

- D.Bizrell and his co-authors said that “Business strategy is a general plan that guides and directs the enterprise to intended objectives, which is the foundation for setting up policies and operation procedures”

- Gluecl said that “Strategy is a type of unified and comprehensive plan which is designed to ensure the enterprise’s objectives to be achieved”

1.1.2.3 In regard of combining unity, strategy is defined as follows

- “Strategy is an art of combining together and controlling all activities in order to achieve long-term objectives of enterprise”

- Chandler believes that strategy implies specifying main long-term objectives of enterprise as well as choosing right methods or processes and allocating necessary resources and planning to achieve such objectives

- With regard to enterprise, “Business strategy is an art of designing and arranging means for achievement of the enterprise’s long-term objectives in connection with the fluctuation of business environment and competition”

1.1.2.4 Specific characteristics of business strategy

- Strategy specifies main objectives and business orientation of enterprise for each specific period.

- The oriented ability of strategy helps ensure the constant and sustainable development of enterprise in the fluctuation of business environment

- Business strategy helps ensure maximum mobilization and combination of exploring and using present and future resources of enterprise, upholding advantages and grasping chances in order to gain competitive advantages

- The enterprise’s business strategy is reflected through a continuous process

- Business strategy always tends to be offensive and to win a victory in the business world

- Business strategy is often designed for a long-term period (3, 5, 10 years)

1.2 The roles of enterprise’s business strategy

- Business strategy helps enterprise to recognize its objective which is the foundation and guideline for all business activities of enterprise;

- Business strategy helps enterprise to grasp and take full advantage of business opportunities in the competitive market place;

- Business strategy play parts in improving the use of resources and strengthening the enterprise’s competitive capability to ensure its sustainable development;

- Business strategy helps to create stable foundations for making policies and decisions on business activities in accordance with the market fluctuation

Being the owner/enterprise manager, you need a strategy for success Business strategy is for the upcoming future of the enterprise Owners/enterprise managers often seem to forget and ignore business strategy because they are too busy with their certain tasks In this case, you do not know how to post your business and you can not either specify your present business status Having a good strategy, you will know how to set up your business objectives and find out the right methods to achieve such objectives in the future Being an

owner/enterprise manager, you can not mandate somebody to make your policies

or business strategies You have to decide the future for your enterprise by yourself; otherwise your enterprise will lose its market share to your rivals

1.3 Business environment

1.3.1 Business environment

M1.1 - Model of Business environment

1.3.2 The Industry business environment

M1.2 - Model of the Industry business environment

Economi

c factor

Internal environment

of enterprise

Technology

factor

Political and legal factor

Natural

factor

cultural factor

Soci-Model: 5 factors affecting profitability of an industry to an enterprise by M Porter:

- Potential substitution goods and services: Does that industry have substitution goods and services and how?

- Present competitors: Who are the competitors in that industry?

- Bargain capability of suppliers: In that industry, how strong are the

Analysis of the competitive intensity in the industry

 To analyze quantity and composition of competitors

 To analyze characteristics and growth rate of the industry

 To analyze intensity between fixed costs and reserved costs

 To analyze the difference among competitors

 Barriers preventing withdrawal

Competitors in the same industry

Competition among firms in the industry

Substitution goods

Customers Suppliers

Risk of new competitors

Potential substitution goods and

services

Potential pressure from customers

Potential pressure from

suppliers

Potential competitor

Analysis of competitors

 To clearly recognize direct competitors

 To recognize and analyze competitors' strategies

 To evaluate strong and weak points of competitors

 To foresee competitors' reactions

 To build up the database of competitors

 To evaluate the power balance among competitors

1.4 Types of business strategies

1.4.1 Three main competitors by Michael Porter

Enterprises may create their competitive advantage by choosing one of the following strategies:

- Cost Leadership: means competitions by producing goods or services at

cost as low as possible Then, the enterprise can sell high volume of commodity

at the average price, which results in high profits

This strategy is to maintain the lowest cost in the industry or market Enterprises perusing this strategy needs:

+ Capital for technology in order to lower costs

+ Highly effective operation procedures

+ Low cost sources (labor, material, equipment, etc)

The highest risk when using this strategy is that your enterprise is not the only one to access low cost sources As a result, competitors can imitate your strategy Therefore, the most important thing here is whether you can remain the lower cost than that of your competitors or not

- Differentiation: means competitions by creating differentiation that makes

other enterprises find it difficult to follow This differentiation may be product quality, term of delivery, trademark recognition, and broad distribution channels The most important thing here is to make your goods/services different from and more attract (appearance, function, durability, service quality, trademark, etc) In order successfully apply this strategy, an enterprise needs:+ Research and development process (R&D), renovating high quality products+ Capability of supplying high quality goods/services+ Effective marketing and sales program to bring difference to customers and make them think they are beneficial from such program.Enterprises applying this strategy should be horse-trading in development of new products Otherwise, they will lose some “battles” to their competitors who pursue “Differentiation Focus” strategy as the following

- Concentration: means competitions by concentrating on one type of product,

one market segment or one special group of customers

Enterprises pursuing this strategy only concentrate on niche markets which are small market segment with distinctive characteristic The competitive advantage

of these enterprises is build up based on good understanding of market characteristics and capability of supplying goods/services corresponding to such characteristics

However, the concentration on a small market segment suitable to the enterprise’s sources is not completely safe strategy because bigger enterprises with its more powerful sources may involve in this segment.Because of such risk, enterprises pursuing concentration strategy have to create other advantages (by lowering costs or differentiating their goods/services) in order to bring more added value to customers in their market segment Therefore, concentration strategy is divided into two small ones: “Cost Focus” and “Differentiation Focus” Which type of strategies should be applied will

Michael Porter advised that one enterprise should not pursue, at the same times, too many types of strategies because each strategy requires a different approach method You are proposed to analyze the SWOT (Strengths, Weaknesses, Opportunities, and Threats) to evaluate your strong and weak points, chances and challenges your enterprise may face when pursuing each type of strategy Then, you will choose the best strategy for your enterprise Simultaneously, the enterprise should combine this evaluation with analysis of competitive pressure in the industry or in the market

1.4.2 Blue Ocean Strategy

The Blue Ocean Strategy creates not only a new industry or market but also a high profit market For example, Southwest Airline – US has created a new ocean – a cheap flight travel market; Yellow Tail, a wine company of Australia, has created a wine market for Americans who formerly drank beers and cocktails, not wines; Samsung expressed its monopoly with its LCD TV, etc For Blue Ocean Strategy, all companies, regardless of scale, history, budget,

location, may create valuable innovation In addition, such innovation has to be recognized and consumed by customers

When applying this strategy Enterprises should avoid a fierce competition which

is called “red ocean strategy” – means market where there are leading competitors fiercely competing for market share It will be inefficient and a waste of money for enterprises to compete against The enterprise then should choose the niche market, blue and peaceful ocean to involve in and get profit there

In other words, Red Ocean is narrow and plentiful of sharps which are always ready to fight against one another or swallow small fishes On the other hands, the blue ocean breaks down competitive principles to create new markets or spaces without competitions By establishing a blue ocean, you bring out new rules but not “old” sharps Then, you will counteract such sharps The two authors of the book “Blue Ocean Strategy” have the best saying: “The best way

of competition is to make your competitors unable to compete”

The Blue Ocean Strategy concentrates on creating and taking up new demands not fighting against competitors in the available market segment When applying the Blue Ocean Strategy, you can even change the target customers or remain the target customers with new value This is really new concept in making strategy, which brings benefits to many enterprises regardless of scales

1.5 Strategic Management

Like many other types of management, strategic management includes planning, performing, and testing The object of management here is the environmental affects (chances and challenges) and how to react to such environmental effects (by taking full advantage of divisions in the organization)

1.5.1 Procedure of strategy management

Procedure of strategy management is described in the following diagram:

M1.3 – Model of Procedure of strategy management

(Source: Book on Strategic Management by Hanoi School of Business – Vietnam National University)

1.5.2 Strategic vision and mission

- The most general saying by companies is that “who are we and what are

Analysis of internal environment

=>Strong and weak points Company’s strategy

Business strategy Functional strategy

Implementing and adjusting

+ Demands of present customers

+ Business and technology capability

- Strategic vision mentions the business orientation of enterprise in the future - “where should we go”

+ Future concentration on technology-products-customers;

+ Type of company which the management is trying to build up;

+ Type of markets to pursue;

1.5.3 Strategic thinking

- Where are we now?

- Where will we want to reach?

- What type of industry and market status should we be in?

- How is customers’ demand and who are they?

- What is output target?

1.5.4 How could we reach expected position?

The answer is that “How we could reach our expected position” is the content of

the company strategy

1.5.5 Mission of enterprises

• Customer orientation

• Specifying main business line

In fact, the way to success of each company is different Microsoft dominated the world market by establishing a standard foundation of the industry (Windows, Microsoft Office) and by associating with other companies who supplied related products Dell leaved IBM behind while Wal-Mart became the leading one due

to its effective operation and low price

Establishing and controlling standard foundation, vertical/horizontal integration

and low price is the competitive advantage that helps enterprises bring

preeminent value to customers and get high business profit

In this topic, I will mention strategic management system and action plan of a company

1.5.6 The process is as follows

1 Making strategy Specifying version and mission, core value; analyzing and building up strategy

2 Concretizing strategy; specifying strategic target and decisive ideas; specifying objectives and instruments to measure strategic spin-offs

3 Making plans for improving operation procedures; making plan for sales; plans for resources and anticipated budget

4 Carrying out plan for functional operation

5 Supervising and evaluating the discussions of adjusting the strategy and

implementation of such strategy

6 Testing and adjusting the profit and strategic analysis

Choices of strategy

Main choices of strategy:

* Enterprise’ strategy: The power of a company depends on three elements: strategic control, human resources, business operation and organization The advantage of a company depends on the effectiveness of combining such

elements together

* Competitive strategy: In order to bring much profit to its staff and

shareholders, a company must have a competitive advantage against its

competitors How to create competitive advantage and how to maintain such competitive advantage?

* Strategy on position: Up to its position in the market, a company must have a suitable strategy in order to preserve, maintain or overcome a higher position

* Strategy on orientation: Among business lines which the company is trading, each business line needs different orientation at specific time: Grasping chance to expand, temporarily secure the position or withdraw? The company needs

specific strategy for each orientation

1.5.7 Roles of business strategy

- Business strategy helps enterprise to recognize its objective which is the foundation and guideline for all business activities of enterprise

- Business strategy helps enterprise to grasp and take full advantage of business opportunities in the competitive market place;

- Business strategy play parts in improving the use of resources and strengthening the enterprise’s competitive capability to ensure its sustainable development;

- Business strategy helps to create stable foundations for making policies and decisions on business activities in accordance with the market fluctuation

1.6 Marketing: Definitions of Marketing by the American Marketing Association

Definition of year 2004

"Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."

Definition of year 2007:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for

customers, clients, partners, and society at large (Approved October 2007)

1.7 Instruments for shaping strategic ideas

Using SWOT to build up strategic ideas:

M 1.4 - Model of SWOT matrix

SWOT

STRENGTH 1.

Strategic

Taking full advantage of external opportunities to lighten internal weak

Strategic

Combination minimizes weak points and avoids

dangers

SWOT matrix (opportunities, threats, strong points, weak points) is a matrix that one axis describes strong points and weak points; other axis describes opportunities and dangers for business of enterprise in the specific strategy period Through the analysis and evaluation opportunities, threats, strong points, weak points, the enterprise has the basis to form strategic ideas and propose strategic decision

SWOT matrix has 9 squares in which 4 squares are important factors, 4 strategic squares are intersection of respective ones that describes strategy ideas and a

blank square SWOT matrix is established in accordance with basic steps as follows:

Step 1: List of opportunities List of opportunities has strong impact on the researched sector of enterprise For example, when researching the market,

we can have opportunities of market such as: opportunities of exploitation of new market segment, expanse of market to foreign countries, find of high-growth market, integration ability, etc,

Step 2: List of threats Dangers of market can occur are: high competition

of market, barrier to find new market, competitors win the market, market is saturated or products are recessionary, etc,

Step 3: List of strong points Strong points on market of enterprise include: ability of having a general view of market, ability of strong finance, ISO system, trademark, marketing, etc,

Step 4: List of weak points Weak points include: the products are not impressive, bad management; organization of production is unreasonable, bad R

& D etc,

Step 5: Combining internal strong points and external opportunities

Step 6: Combining internal weak points and external opportunities (square

of WO), taking full advantage of external opportunities to lighten internal weak points

Step 7: Combining internal strong points and external opportunities (square of SO), taking full advantage of internal strengths to repulse dangers, reduce external threats

Step 8: Combining internal weak points and external threats (square of WT), this combination minimizes weak points and avoids threats

CHAPTER 2 – ANALYZING STUDYING OUTCOME

ON THE COMPANY CERTAIN CIRCUMSTANCE

2.1 GENERAL INTRODUCTION ON VIGLACERA TIENSON

2.1.1 The company establishment and development processes

General information:

 Foreign Transaction name : Viglacera Tien Son Joint Stock Company

Summary of the company establishment and development processes:

Establishment and development processes:

 Founded in 2001 pursuant to Decision No 1866/QĐ-BXD dated 02 November 2001, Tiên Sơn Granite company was a member company that entered in the accounts depending on Vietnam Glass and Construction Ceramic Corporation (Viglacera)

 On 16 July 2003, Tiên Sơn Granite was merged into Thăng Long Enamelled Tile Company and changed name to Thăng Long - Viglacera Paving Tile Company under Glass and Construction Ceramic Corporation

following the Decision No 960/QĐ-BXD dated 16 July 2003 of the Minister for Ministry of Construction.

 On 19 January 2004, Thăng Long - Viglacera Paving Tile Company moved its headquarters from Phúc Thắng Commune, Mê Linh District,Vĩnh Phúc Province to Tiên Sơn Industrial Zone, Tiên Du District, Bắc Ninh Province pursuant to the Decision No 111/QĐ-BXD dated 19 January 2005 of the Minister for Ministry of Construction

 On 23 November 2005, Thăng Long - Viglacera Paving Tile Company changed its name into Tiên Sơn - Viglacera Granite Company based on the Decision No 305/QĐ-HĐQT dated 23 November 2005 of the Management Board Chairman for Glass and Construction Ceramic Corporation

 On 23 January 2007, Tiên Sơn - Viglacera Granite Company changed its name into Viglacera Tiên Sơn Granite Company following the Decision

No 28/QĐ - HĐQT dated 13 January 2007 of the Management Board Chairman for Glass and Construction Ceramic Corporation

 On 29 August 2007, the Minister for Ministry of Construction made the Decision No 1124/QĐ-BXD on ratifying Privatizing Plan of Viglacera Tiên Sơn Granite Company under Glass and Construction Ceramic Corporation

 On 19 October 2007, Viglacera Tiên Sơn Granite Company under Glass and Construction Ceramic Corporation was turned into Viglacera Tiên Sơn JSC following the Decision No 1309/QĐ-BXD dated 19 October

2007 of the Minister for Ministry of Construction

 On 01 November2007, Viglacera Tiên Sơn JSC officially put into operation at the form of Join Stock Company following the JSC Business Registration Certificate No 21.03.000297 granted by Planing & Investment Authority of Bắc Ninh Province dated 01 November 2007

2.1.2 The company organizational structure

Viglacera was organized and performed in conformity with the followings:

o Law on enterprise No 60/2005/QH11 dated 29 November 2005 of Parliament of the Socialist Republic of Vietnam including

o Law on stock No 70/2006/QH11 dated 29 June 2006 of Parliament of the Socialist Republic of Vietnam

o Regulations of Viglacera passed by Shareholders’ meeting to found the company dated 30 October 2007

 Headquarters:

- Tiên Sơn Industrial Zone,Tiên Du District, Bắc Ninh Province

- Tel: 0241 839 390 Fax: 0241 838917

 Middle Region Branch: Viglacera Tiên Sơn JSC Branch in Đà Nẵng ctiy

- Address: 353 Điện Biên Phủ Str, Thanh Khê Dist, Đà Nẵng city

2.1.3 Business functions, duties

Viglacera conducts the main following business sectors:

 Business sectors:

 Pursuant to Business Registration Certificate No 21.03.000297 granted by Planing & Investment Authority of Bắc Ninh Province for the first times dated 01 November 2007, changing registration for the third times dated

 Joint Stock Capital Structure

Table 2.1: Joint Stock Capital Structure at 31 December 2008

(VND)

Ratio(%)Glass and Construction Ceramic

(Source: Viglacera Tiên Sơn JSC)

2.1.4 Characteristics of Business Activities

The company management structure is organized at the form of JSC as follow

Figure 1: Management Structure of Viglacera Tiến Sơn JSC

(Source: Viglacera Tiên Sơn)

HR Administ ration Dept

HR Administ ration Dept

Financial – Accounti

ng Dept

Financial – Accounti

Productio

n workshop

Electrical Dept

Electrical Dept

PRODUCTION DEPUTY

DIRECTOR UCTIONXUẤT

PRODUCTION DEPUTY

DIRECTOR UCTIONXUẤT

Export Team

Export Team

Sales Team

Sales Team

Northern Region Business Team

Northern Region Business Team

Middle Branch

Middle Branch

Southern Branch

Southern Branch

BUSINESS DEPUTY DIRECTOR

BUSINESS DEPUTY DIRECTOR

HUMAN RESOURCES DEPUTY DIRECTOR

Direct relationship Indirect relationship Notice

2.2 Technology - Products – Production Management at the Viglacera

Table 2.2: Tiles production output in the years 2006 - 2009

(Source: Viglacera Tienson Joint stock Company)

Growth in production output was about 20% per year, private investment in 2009

by adding new production lines, the production output was planned to increase mutation

- Glaze, fritz and pigment are high-grade materials imported from Spain, Thailand-Fuel: using the coal gasification technology for drying powder spray and firing, heating products Thus it is saving 40%, fuel costs compared with the use of LPG and DO reducing the production costs and putting up competitive price

- Production technology: Using double charging powder technology to create veins with two layers, natural design on the surface of products for the large size (600-

1000 mm), which are pressed on the high hydraulic pressure machine (3000 - 6200 tons), fired at high temperature creating large sized products with high quality and production costs can be reduced by using domestic cheap materials for the bottom layer

- Product polishing technology: Investing a newly modern line with high capacity and stable grinding quality

- The products polished by Nano technology, which are upgrading the polish level and preventing from dirt sticking on the surface of tiles, increasing value of product.

2.2 .2 Granite wall and floor tiles of Viglacera

Viglacera focused on producing five production lines of wall and floor tiles in the size of 40x40, 50x50, 30x60, 60x60, and 80x80:

- The glazed and polished salt and pepper products: Using the traditional technology, mixing color with the body powder

- The matt glaze, wooden vein products: Using glazing and mesh printing technology to create porcelain vein or wooden imitation on product surface Using high quality matt glaze fired in high temperature

- Rustic and faked ancient products: Creating natural uneven surface, mesh printing with natural color

- Porcelain polished tiles with large size, double charging technology, high quality and white granite body, creating natural vein by computer system The products are polished and covered with anti-dirt chemical

- Crystal tiles with big size, combining the double charging technology and crystal material, which is polished by nano technology and covered by protecting chemical

Table 2.3: Raw material and fuel nom system of 2009

CONSUMPTION RATE For the shape of coal gasification furnace

I Shaping stage of furnace

No Item Unit Rate

1 Synchronization glaze(applied for the mesh-printed products at the size of 500, 300x600) Kg/m2 1,10 0,90

4 Chain loss

II coal gasification stage

- Size of 300x600 1,56

(Source: Viglacera Tienson Joint Stock Company)

Supply chain management: The Company set up a supply system with small

number of suppliers (10 raw material and fuel suppliers), based on evaluation of the

highly capable suppliers to meet the detail criteria

Material quality is control from mine and store of providers, sent technician to

supervise and check in location of providers, cooperate with providers to make

material primary collection and produce process, the company work it very well so

get results:

- Material quality is suitable, so product quality is stable

- Reduce material quantity in the company store, reduce Working capital

2.3 CIRSCUMSTANCE ON FINANCIAL COMPETENCE OF VIGLACERA

On 01 November2007, Viglacera Tiên Sơn JSC officially put into operation at the

form of Join Stock Company, evaluating outcomes of the company have currently

been conducted by calculating and assessing several important financial ratios Based

on the data collected from the financial statement and report on business activity results

of the company in 3 years (2006, 2007 and 2008), several important financial ratios

were figured out to generally evaluate the company financial competence as follows:

Table 2.4 –Viglacera Balance Sheet Summary in 2006 - 2008

1 Accounts payable 313.635.107.997 373.416.678.702

(Sources: Viglacera Tiên Sơn JSC’s financial statement)

Based on the above table, we can see the Company assets scale had a growth as

there was a remarkable investment to enlarge production At the time of 31 Dec

2007 total property was just 333.5 billion VNĐ, but till 31 Dec 2008 it had

increased to 430.3 billion VNĐ respective with 129% in comparison with the

end of 2007

To clearly understand the change of business scale, we can take a look at the

following report on business activity results:

Table 2.5: Report on business activity results in 2006 - 2008

(Sources: Viglacera Tiên Sơn JSC’s financial statement)

The 2007 nett revenue was 218,4 billions VNĐ; 2008 nett revenue was 263,4

billions VND increased 20,6% in comparison with 2007 due to in 2008 the

Company moved forwards the production and consumption of large sized products

with high value Therefore, although the consumption outputs in 2007 and 2008

were equivalent but 2008 turnover had growth.

2008 revenue after tax was decreased due to the inflation situation in the early months making a high increasing of input costs Despite prices of output products were adjusted but not catch up a high increasing of input costs In the III and IV of

2008, as the impact of global recession causing the slow consumption while costs for interest of loan were higher, suffering losses in the end of the year Therefore,

2008 revenue was decreased 6.5% in comparison with 2007

2.3.1 Assets Structure, Capital sources

Table 2.6: Assets Structure, company capital sources

General Debit Coefficient

(Total debt/Total capital

resources)

Donation rate (Ownership

Capital /Total Capital)

Investment Coefficient on

term assets (Total

Long-term assets /Total assets)

Investment Coefficient on

term assets (Total

Short-term assets /Total assets)

Assets Structure (Total

Short-term assets / Total Long- Short-term

assets)

(Sources: Viglacera Tiên Sơn JSC financial statements)

The above table showing that, the company long-run property obtained a higher proportion in the property structure (58.36% and 62.8% respective to the end 2007 and 2008) This mainly because at the end of 2008 the company invested to expand production capacity for the second phase of 1.5 million m2 of product yearly

bringing the total production capacity up to 4.5 million m2 per year

Capital Resources Structure: The Company capital resources were mainly loans (the debit coefficient on December 31, 2007 was 0.94 and was 0.87 at December 31, 2008) Rather high debit ratios showed that the company mainly operated by borrowing capital so that would be quite risky when interest rates rising

2.3.2 The company situation on capital use and management

To precisely assess the situation on using and managing capital in Viglacera, we take specific research on the efficiency of fixed and working capitals by the company

The efficiency of using fixed capital:

In 2008, the company carried out the procurement of a large number of fixed assets; however, the fixed assets take time to promote the efficiency of production and business This caused adverse effects to the effective use of the company fixed capital

Table 2.7: Viglacera using performance in 2007 and 2008

Working capital using

performance (Nett revenue /

Average working capital)

Profit rate of working

capital (profit after tax/

Average working capital)

Fixed capital using

performance (Nett revenue/

Average fixed capital)

Profit rate of fixed capital

Overall circle (Nett

revenue/average capital)

(Sources: Viglacera Tiên Sơn JSC)

The efficiency of using working capital:

In general, the efficiency of using working capital of company in 2008 was higher than in 2007 2008 working capital circle was 1.7 round increased 0.2 round in comparison with 2007 corresponding to the grow rate of 13.3%

In late 2008, the company average working capital was at around 153.8 billion VND (increased 10.7 billion USD over 2007) This increase showing that in 2008, the revenue grew up; however the working capital was rather high

Therefore, the company had to have a plan clear balance, reduce left-over inventory

Efficiency of using the company working capital of in 2008 was 1.71 increasing 11.76% compared with 2007 The company should strongly improve efficiency of using working capital by reducing debt, promoting the product consumption in order to increase sales, reduce left-over stock in the inventory

- Using performance of fixed capital:

Looking at the above table, we can see the company using performance of fixed capital in 2008 had decreased compared with 2007, specifically:

The using performance of fixed capital was unchanged at 1.15 times, which means

1 VND of fixed capital generated 1.15 VND of revenue It showed that the using performance of fixed capital in two years were almost the same

Profit rate of fixed capital in 2007 was 2.1%, meaning that on the average 100 VND

of the fixed capital involving in business and production will generate 2.1 VND of profit after tax

By 2008, this rate was only at 1.6% due to end of 2008, the company invested to expand production but the expanding project was still under the construction stage Therefore there were no products and sales made available at the stage It adversely

affected to the Company profit rate of fixed capital (23.8% down compared with 2007)

(Sources: Viglacera Tiên Sơn JSC financial statements)

Taking a look at the above table we see, in the last few years, liquidity of the company was maintained at the acceptable levels Goals on liquidity were

Coefficient of overall liquidity at the end of 2007 was 1.06 and was 1.17 by the end

of 2008 showing that the company's assets was greater than the payable debts, in other words liquidity of company was higher than 1 and the solvency at the end of

The current coefficient of liquidity showing liquidity for short-term debt This coefficient of Viglacera in late 2007 and 2008 were at 0.97 times and was evaluated rather low It is indicating the short-term debt was rather high; the company lost the balance of capital sources by using short-term capital for the investment of long-

Regarding the liquidity of loan interest, in 2007 this coefficient was 1.23 times and

2008 dropped to 1.19 times In general, the coefficient of liquidity of the company

2.3.4 The coefficient of performance

Table 2.9: The coefficient of performance, profitable rate

(Sources: Viglacera Tiên Sơn JSC)

Looking at the above table we can see the basic targets reflected the company performance and profitability in 2007 and 2008

After tax profit rate on sales in 2008 decreased 22.63% in comparison with one in

2007 If in 2007, each 100 VND of sales had 1.9 VND of profit after tax but in

2008, each 100 VND of sales had only 1.47 VND of after-tax profit

The main causes were because of the global economic recession seriously impacted

on the Vietnam economy in late 2008 including Viglacera Rate of Profitability of assets on ownership capital (ROA) in 2008 also dropped in comparison with 2007 was 16.67%

Rate of profitability on equity (ROE) measures the profitability of ownership capital was reduced by 53.14% due to the company had its charter capital increased from 15 billion to 45 billion VND to invest in expanding production in the 2nd

phase Nevertheless, the project still under the construction stage so that it not yet brought revenues and profits for company in 2008 This will be overcome in 2009 and the following years when the project would be put into operation bringing