Phát triển chiến lược kinh doanh dịch vụ chuyển phát tại công ty cổ phần viettel post VTP

LUẬN VĂN THẠC SĨPhát triển chiến lược kinh doanh dịch vụ chuyể phát tại công ty cổ phần Viettel post VTP THESIS MBA DEVELOPMENT BUSINESS STRATEGY IN LOGISTIC SERVICES FOR VIETTEL POST J

LUẬN VĂN THẠC SĨ

Phát triển chiến lược kinh doanh dịch

vụ chuyể phát tại công ty cổ phần

Viettel post VTP

THESIS MBA

DEVELOPMENT BUSINESS STRATEGY

IN LOGISTIC SERVICES FOR VIETTEL POST JOINT STOCK COMPANY (VTP)

FROM 2015 TO 2020

Last but not least, we also don’t forget to send special thanks to assessment board for their invaluable comments and helps, so we can fulfill well this capstone However, our capstone was composed in a shortage of times, so we think it is still some constraints We look forward to hearings from you more comments and contributions.

With best regards,

2.1.7 Business strategy of VTP in logistic services from 2006 – 2009 33

2.2.1.3 Porter’s five forces analysis of competition 47

2.2.2.9 Evaluation strength and weakness of VTP in logistic services 55

CHAPTER III DEVELOPMENT STRATEGY IN LOGISTIC

SERVICE IN THE PERIOD OF 2010 – 2015

3.2.6 Application information technology in management 73

ABBREVIATION LIST

- VTP : Viettel Post Joint Stock Company

- VIFFAS : Vietnam Freight Forwarding Association

- GDP : Gross Domestic Product

- 1 PL : First Party logistic

- 2 PL : Second Party logistic

- 3 PL : Third party logistic

- VND : Vietnam dong

- MPI : Ministry of Foreign Investment

- USD : United State Dollar

- GPS : Global Positioning system

- ICD : Inland container depot

- WTO : World Trade Organization

- JSC : Joint Stock Company

- PR : Public Relationship

- TQM : Total quality management

TABLES LIST

Table 2.7 Classified market shares with mode of company 42

Table 2.8 Classified market shares with type of services 42

Table 2.9 Classified market shared by Vietnamese and foreign

company

43

Table 2.12 Market share of express delivery services of VTP 52

Table 3.2 Mode of distribution channel of VTP logistic in future 64

Table 3.4 Forecast revenue from 2010 to 2015 and 2020 66

I PREFACE

Along with the development of society, logistic services play very important role indevelopment of economy in the country It participates in all production processfrom raw materials until the goods are delivered to hand of consumers It isconsidered as a blood vessel to nurture the economy in every country Efficiency oflogistic services is decisive factors to create competitive advantages of eachcountry As logistic performance index statistic, Vietnam ranked 53rd in the worldand 05th in the ASEAN region Logistic market is considered as a potential marketfor investment: the total revenue of this logistic service sector accounts for a largeproportion of the total GDP of countries (often accounting for 10-15% fordeveloped countries, 20 -25% in developing countries) For Vietnam logisticsrevenue in 2008 is estimated at $18 billion larger than 3.5 times revenue oftelecommunications services Although logistic services play very important roles

in development of the economy of the country, Vietnamese logistic servicesproviders still just only meet about 25% demand and most of them just onlyparticipate in small stages of logistic services process Rest

75% revenue is flowing into pockets of foreign businesses

Furthermore, there are no logistic services providers who are competent to play aleading role to push development of logistics in particular and the economy ingeneral in Vietnam

With above analysis about potential, opportunities and urgent demands of logisticmarket in Vietnam, we select topic for our capstone is " Development business strategy in Logistic services for Viettel Post Joint Stock Company (herein called

“VTP” ) from 2010 to 2015 We hope our research will be useful references forVTP to build their business strategy We believe that with strengths and strong

increasing development of the logistics services sector, promote growth of theeconomy in Vietnam and increase more revenue and diversify business for VTP

II OBJECTIVES AND APPLICATION OF CAPSTONE PROJECT

We compose this capstone project with objectives to draw overall pictures oflogistic market in Vietnam We also analyzed external and internal environment,industry environment, competitors of VTP in order to build a good developmentbusiness strategy for VTP in period from 2010-2015 to become one of a leadinglogistic service companies in Vietnam We hope that our capstone project ispractical and applicable in reality VTP and other logistic service providers can use

it as reference document in building business strategy as well as other investmentprojects in logistic services

III SCOPE OF RESEARCH

Logistic services are wide range for companies to research to achieve theirobjectives However, in frame of capstone, we will only concentrate to researchhow VTP can build their development strategy to diversify their business in order togain more revenues from this lucrative market in period from 2010-2015

IV RESEARCH METHOD

We applied some following research methods to fulfill our capstone:

- Collecting and researching documents about logistic services in Vietnam fromdifferent sources and websites

- Working with VTP about our capstone projects, so they can allow us to approachwith necessary documents and information relating with our topic

- Consulting and interviewing experts and key staff from VTP as well as otherexperts in logistic services

- Visiting some mode of logistic service companies in Ha Noi

- Using theories in our MBA course such as marketing, finance, human resource,statistic, strategy management as theory base to build business strategy for VTP

Our capstone was composed in three chapters Chapter 1 we present strategic management theory and some concepts about logistic Chapter 2 is the most

important chapter in our capstone We conducted analysis about external andinternal environment, opportunities and threats of market and assess current

business strategy of VTP Chapter 3 we propose development business strategy in

logistic services for VTP in period from 2010-2015 and solutions to improveweakness in current business strategy

CHAPTER I – THEORITICAL BACKGROUND

Organizations are facing exciting and dynamic challenges in 21st century In thecontext of globalized business and negative influences of global crisis environment,companies are required strategic thinking, so they can build good corporatestrategies and create competitive advantages to cope with crisis A sustained orsustainable competitive advantage occurs when firm implement value –creatingstrategy of which other companies are unable to duplicate the benefit or find it toocostly to initiate Corporate strategy included commitments, decisions and actionrequired for a firm to achieve strategic competitiveness and earn above return

1.1 Concepts about strategy and strategy management

1.1.1 Strategy definition

There are many strategy definitions depending on point of views in different periods

of times Some definitions of strategy are presented in the following:

According to Chandler (1962) “Strategy is the dominator of the basic long term goals of an enterprise, and the adoption of course of action and the allocation of resources necessary for carrying out these goals”.

Mintzberg (1979) stated that “Strategy is mediating force between the organization and its environment: consistent patterns in streams of organizational decisions to deal with environment”

Prahlad (1993) noted that “Strategy is more than just fit and allocation of resources It is stretch and leveraging resources”

Johnson indicated that “Strategy is unified, comprehensive, and integrated long term plan that relates to the strategic advantages of the firm to the challenges of the environment”

Mintzberg has identified 5P’s of strategy Strategy could be a plan, a pattern, aposition, a ploy or a prospective

 A plan: A “How do I get there”

 A pattern, in consistent actions over times

 A position that is, it reflects the decision of the firm to offer particular

 A ploy, a maneuver intended to outwit a competitor.

 A perspective that is vision and direction, a view of what VTP ororganization is to become

1.1.2 Typical features of business strategy

 A business strategy must clearly define the key goals and business direction

for companies in each period

 A business strategy must be reflected in a continued process from strategy

formulation, strategy implementation to strategy evaluation and controlprocess

 A business strategy must be built based on competitive advantages of firms

to ensure optimal mobilization and full exploitation of the firm’s resourceslike manpower, capital, technique and technology, core competencies atpresent and in future in order to promote advantages and grasp opportunities

to gain comparative advantages in the market

 A business strategy must show direction and guideline for firms to develop

continuously and firmly in disturb of business environment

 A business strategy must be built with fighting spirits to win in competition

Business strategy is formulated and implemented base on realization andgrasp of business opportunities and take advantages comparative advantages

of firms to achieve higher efficiency of business performance

 A business strategy is only composed drafty about business direction of firms

in long term and frame of its business operation in future, so firms mustcombine strategic objectives with economic objectives in reality They alsomust evaluate and control it to be suitable with business environment andconditions to ensure efficiency of business operation and adjust weakness ofbusiness strategy

1.1.3 Role of strategy

Business strategy plays vital roles in business activities of companies It helpscompanies to

- Indentify their mission, objectives and business direction It also can be considered

as guidelines for all their business activities

- Seize business opportunities and build proactive measures to face with risks andthreaten on competitive market

- Use efficiently their resources and strengthen their strategic competitiveness inorder to growth in sustainable ways

- Have a firm base to build proper policies and make good decisions relating tobusiness or productions to cope with changes of market

1.1.4 Level of Business strategy

A typical business firm should consider four levels of strategies as follow:

Corporate strategy: describes a company’s overall direction towards growth by

managing business and production lines Corporate strategy will indentify industry

or industries firm have been doing or will penetrate This strategy will coverobjectives, growth strategies as well as responsibilities with communities

Business strategy or Strategic business unit (SBU): - Usually occur at business

unit or product level emphasizing the improvement of competitive position of afirm’s products or services in an industry or market segment served by that businessunit Business strategy falls in the realm of corporate strategy

Functional strategy: It is the approach taken by a functional area to achieve

corporate and business unit objectives and strategies by maximizing resourceproductivities It is concerned with developing and nurturing a distinctivecompetence to provide the firm with a competitive advantage

Divisional strategy: These are concern with how the component parts of an

organization deliver effectively the corporate, business and functional-levelstrategies in terms of resources, process and people They are at department level

1.1.5 Strategic management

1.1.5.1 Strategic management definition

“Strategic management is defined as a process to analyze external and internal environment of a company at present and in future, setting objectives, crafting strategy, implementing and evaluating of strategy in order to use efficiently their resources to achieve their objectives”

1.1.5.2 Strategic management benefits 1

Strategic management is basically needed for every organization and researchproved that organization who applied good strategic management would achievemore success than organization did not Strategic management offer several benefit

as follow:

Universal

Strategy refers to complex web of thoughts, ideals, insights, experiences, goals,expertise, memories, perceptions, and expectations that provides general guidancefor specific actions in pursuit of particular ends Nation have, in the management oftheir national policies, found it necessary to evolve strategies that adjust andcorrelate political, economic, technological, and psychological factors, along withmilitary elements Be it management of national polices, international relations, oreven of a game on the playfield, it provides us with the preferred path that weshould take for the journey that we actually make

Keeping pace with changing environment

The present day environment is so dynamic and fast changing thus making it verydifficult for any modern business enterprise to operate Because of uncertainties,threats, and constraints, the business corporation is under great pressure and istrying to find out ways and means for their healthy survival Under suchcircumstances, the only last resort is to make the best use of strategic managementwhich can help the corporate management to explore the possible opportunities and

at the same time to achieve an optimum level of efficiency by minimizing theexpected threats.

Minimizes competitive disadvantages

Organizations can analyze their internal environment to identify their opportunities,threat, weakness and strengths, so they can minimize their competitivedisadvantages and add up to competitive advantages by selecting proper strategicmanagement policies

Clear sense of strategic vision and sharper focus on goals and objectives

Every firm competing in an industry had a strategy, because strategy refers to how agiven objective will be achieved ‘Strategy’ defines what it is we want to achieveand charts our course in the market place; it is the basis for the establishment of abusiness firm; and it is a basic requirement for a firm to survive and to sustain itself

in today’s changing environment by providing vision and encouraging to definingmission

Motivating employees

One should note that labor efficiency and loyalty towards management can beexpected only in organization that operates under strategic management Everyguidance as to what to do, when and how to do and by who is given to everyemployee This makes them more confident and free to perform their task withouthesitation Labor efficiency and their loyalty which results into industrial peace andgood returns are the results of broad-based policies adopted by the strategicmanagement

Strengthening Decision-Making

Under strategic management, the first step to be taken is to identify the objectives ofthe business concern Hence a corporation organized under the basic principles ofstrategic management will find a smooth sailing due to effective decision-making.These points are out the need for strategic management

Efficient and effectives way of implementing actions for results

Strategy provides a clear understanding of purpose, objectives and standards ofperformance to employees at all level in all functional areas Thereby it makesimplementation very smooth allowing for maximum harmony and synchrony As aresult, the expected results are obtained more efficiently and economically

Improved understanding of internal and external environments of business

Strategy formulation requires continuous observation and understanding ofenvironment variables and classifying them as opportunities and threats It alsoinvolves knowing whether the threats are serious or casual and opportunities areworthy or marginal As such strategy provides for a better understanding ofenvironment

1.1.5.3 Strategic management tasks

Table 1.1: Strategic Management Steps

 Developing a vision and a mission

 Setting objectives accordingly with vision statement

 Crafting a strategy to achieve objectives

 Implementing the chosen strategies in a planned way based on budgets andallocation of resources, outlining the action program and task

Mission and Objectives

External Analysis

(opportunities and risks) Choosing and building strategies

Internal Analysis (Identifying fundamental resources, capabilities, and potentials

Business StrategyGlobal StrategyCorporate Strategy

Altering Strategy

Harmonizing strategy, organizational design, and control system

Functional Strategy

 Evaluation and adjustment strategy: create a review system to assess and

adjust strategy

1.1.5.4 Process of Strategic management

Table 1.2: The process of Strategic Management

Mission and main objectives

The first step of strategic management process is to explore and determine the

mission and main objectives of an organization This can be considered as a

background to build strategies Organizational mission is purpose for which or

reason why organization exist and it defines the culture, philosophy and grand

design of the firm Main business objectives will identify what an organization will

advantages and then they try to achieve what organization consider necessary tohave core competencies

Environmental external analysis

The second step of strategic management process is to analyze externalenvironmental This analysis will help us to identify Opportunities and Threats thatare outside the organization The external environment can be classified into twosegments:

 Macro environnent or Mega environnent

 Micro environment or Industry environment

Macro Environment

Also refer to as general or Mega environment The major constituents of mega

environment are PEST or STEP (P refers to Politico-legal environment, Economic Environment, S-Social-cultural environment and T-Technological

E-environment) These environments can further be classified into international,regional, nation etc thus, depend upon the situation; an analyst may refer to theglobal economic environment, the regional political environment or the nationalsocial environment

Micro Environment:

Micro environment includes employees, shareholders, creditors, suppliers,customers, and financial institutions, regulatory organizations, channels ofdistribution, and special interest groups like consumer associations, and communityorganizations This environment has a substantial impact on an organization currentbusiness Consequently, development in micro environment becomes dominantpreoccupation of the management for strategic decisions To avoid obsolescenceand promote innovation, a firm must be aware of technological changes that mightinfluence its industry Creative technological adoptions can improve manufacturingand marketing techniques

Internal Environment Analysis

Laurence R Jauch and William F Gleuck define interal analysis as follow:

“Internal analysis is the process by which the strategists examine the firm’smarketing and distribution, research and development, productions, corporateresources and personnel, finance and accounting factors to determine where the firmhas significant strengths and weakness Internal diagnosis is the process by whichstrategists determine how to exploit the opportunities and meet the threats theenvironment is presenting by using strength and repairing weakness in order tobuild sustainable competitive advantages”.

Strategy formulation: is long development of long –range plan for effective

management of environmental opportunities and threats, in light of corporatestrengths and weakness It includes defining the corporate mission, specifyingachievable objectives, developing strategies and setting policy guidelines

Strategy implementation: is the process by which strategies and policies are put

into action through the development of programs, budgets and procedures Thisprocess might involve changes within the overall culture, structure, and/ormanagement system of the entire organization Most of the times strategyimplementation is carried out by middle and lower level managers with topmanagement’s review, sometimes referred to as operational planning, strategyimplementation often involves day-to-day decisions in resource allocation Itincludes programs, budgets and procedures

Evaluation and control: is the process in which corporate activities and

performance results are monitored so that actual performance can be compared withdesired performance

Strategy Amendment: Manager at all levels use the resulting information to take

corrective and resolve problems

1.1.5.5 Selection of strategies

Generic strategies

The firms can select a proper competitive strategy among variety of competitivestrategies to take advantages their strategic competitive advantages (SCA) Aneconomist and a famous strategy researcher of Harvard University_ Dr Pr MichaelPorter supposed low cost strategy and differentiation strategy are typical strategiesall firms can apply and they are indispensable strategies among successfulstrategies Below is some description about these strategies

Differentiations strategy

Here the aim is to achieve class leader ship by creating some things, which isperceived as unique Company can provide clients products with differentiationthat their competitors don’t provide for example: unique brand image, uniquetechnology, unique features or unique customer services etc… so the clients will behappy with products and don’t care about prices with this differentiation strategy, socompanies can sell their products with higher price their rivals However,companies can’t increase their prices and their differentiation only is created inorder to achieve customer loyalty with their products Companies pursuing thisstrategy have major strengths in Research & Development design, quality controland marketing

Low cost strategy

In this strategy company makes all possible attempts to achieve the lowest cost inproduction and marketing for example company can reduce their cost thanks to buycheaper input resources or use modern equipment and technology to increase theirproductivities and reduce their production cost The aims are to gain a large marketshares However, company is not required to reduce their prices when they applythis strategy The company can reduce their cost in order to optimize their profits orreinvest in marketing to increase their sales

Focus strategy

The underlying assumption in “Focus” is that a firm should be able to serve a

narrow strategic target effectively and efficiently A company will able to focus to

serve a small group of their target customer in the segment of their target market.This focus strategy will create competitive advantages for firms and firms will beable to combine this strategy with two above mentions strategies (differentiationand low cost strategy)

Grand strategies

Grand strategies, which are often called master or business strategies, are intended

to provide basic direction for strategic actions Thus, they are seen as basic ofcoordinated and sustained efforts directed toward achieving long term businessobjectives Grand strategies indicate how long range objectives will be achieved,thus, a grand strategy can be defined as a comprehensive general approach thatguides major actions Grand strategies includes four categories

Horizontal diversification

When an organization adds unrelated products and services for existing customers,this is called horizontal diversification The strategy is comparatively less riskybecause the customers are known The organization is fully acquainted withcustomer’s preference and their expectation about the quality and price of the goods

and services Horizontal diversification can be accomplished by acquiring theshareholding of competitor, by purchase of the assets or by pooling of the interests

of the two organizations Horizontal diversification seeks to eliminate competitors

Conglomerate diversification

Conglomerate diversification is a growth strategy in which new products andservices are added which are significantly different from the organization’s presentproduct and services

1.1.5.6 Techniques of scanning

Porter’s five forces analysis of competition

There are many companies can produce same or similar products or services thatthey can be substitutes for each other These one can meet basis requirements ofcustomers The responsibilities of strategist are to analyze competition in micro orindustry environment to identify Opportunities and Threats with their companies

We can use Porter’s five forces mode to analyze competition to formulate businessstrategies Porter’s model provides a process to make your competitive strategyexplicit so it can be examined for focus consistency, and comprehensive Porter’sapproach is based on the analysis of five competitive forces

 Threat of new entrants

 Bargaining power of suppliers

 Bargaining power of buyers

 Threat of substitute products

 Rivalry among exiting firms

Table 1.3: Porter five force

Threat of New entrants

Firms entering an industry bring new capacity and a desire to gain market share andprofits, but whether new firms enter an industry depends on the barriers to entry Inaddition, established firms in an industry may benefit from experience curveseffects That is, their cumulative experience in producing and marketing a productoften reduces their per-unit costs below of inexperienced firms Is general, thehigher the entry barriers, the less likely outside firm are to enter the industry

Bargaining power of suppliers

Suppliers can be competitive threat in an industry because they can raise price ofraw material or reduce their quality Powerful suppliers can reduce the profitability

Threat of new entrants

Competitive rivalry within the industry Density of competitors

Bargaining power of customers

Bargaining

power of

suppliers

Threats of substitutes

of an industry if companies in the industry cannot pay higher prices to cover priceincrease that the supplier imposes.

Bargaining power of buyers

Buyer can be a threat in an industry by forcing price down, bargaining for higherquality or more services and play competitors off against each other- all at theexpenses of industry profitability

Threat of Substitute products

Substitute products are products can meet same requirements of consumers Its

basis features normally is better than substituted products

Rivalry among Existing Competitors

Rivalry determinant industry growth product and barriers This is the conventionaltype of competition in which firms try to take customers from one another.Strategies such as price competition, advertising battles, new product introductionsand increased customer services are commonly used to attract customer fromcompetitors

SWOT analysis

SWOT is an acronym for the internal Strength and Weakness of a business andenvironmental Opportunities and Threats facing that business SWOT analysis is asystematic identification of these factors and the strategy that reflects the best matchbetween them It is based on the logic that an effective strategy maximizes abusiness’s strengths and opportunities but at the same times minimizes its weaknessand threats This simple assumption, if accurately applied, has powerfulimplications for successfully choosing and designing an effective strategy

Combined strategies WO

To take advantagesexternal opportunities toimprove weakness ininternal environment of

Combined strategies

WT

Defensive strategies toimprove weakness toavoid threats fromexternal environment

Table 1.4: SWOT analysis

Opportunities

An opportunity is a major favorable situation in the firm’s environment Key trendsrepresent one source of opportunity Identification of a previously overlookedmarket segment, changes in competitive or regulatory circumstances, technologicalchanges, and improved buyer or supplier relationship could represent opportunitiesfor the firm

Threats

A threat is a major unfavorable situation in the firm’s environment It is a keyimpediment to the firm’s current and/or desired future position The entrance of new

competitor, slow market growth, increased bargaining power or key buyers orsupplier, major technologies changes, and changing regulations could representmajor threats to a firm’s future success.

Strengths

Strengths are a resource, skill, or other advantage relative to competitors and theneeds of markets a firm serves or anticipates serving Strength is a distinctivecompetence that gives the firm a comparative advantage in market place Financialresources, image, market leadership and buyer/supplier relationship are examples

Weakness

Understanding the key strengths and weakness of the firm further aids in narrowingthe choice of alternatives and selecting strategy Distinct competence and criticalweakness are identified in relation to key determinants of success for differentmarket segments; this provides a useful framework for making the best strategicchoice

1.2 Logistic

1.2.1 Logistic definition

“Logistics 2 is the management of the flow of goods, information and otherresources, including energy and people, between the point of origin and the point ofconsumption in order to meet the requirements of consumers (frequently, andoriginally, military organizations) Logistics involves the integration of information,transportation, inventory, warehousing, material-handling, and packaging, andoccasionally security Logistics is a channel of the supply chain which adds thevalue of time and place utility Today the complexity of production logistics can bemodeled, analyzed, visualized and optimized by plant simulation software” or

“Logistic is commercial activities which included transportation, material

-handling, warehouse, custom formalities services, consultancy, packing, delivering

or other services relating commodities that logistic services provider implement one

or many above-mention logistic services for owner of commodities to get

commission and allowance” ( Vietnamese commercial law)

1.2.2 Logistic classification: Logistic is classified in many criteria and ways.

However logistic can be classified as follow base on operation ways:

Table 1.5 3 : Logistic classification

1 PL First Party logistic: owners of goods and commodities organize and

implement logistic activities by themselves to meet their own requirements.Normally big companies own transportation means, loading & unloadingequipments and other resources including personnel, so they can provide logisticservices for themselves

2 PL-Second Party logistic: Logistic providers will specialize in single logistic

services such as material-handling, ware house or transportation Transactionbetween logistic providers and customer is base on single services and their contractwill be signed base on case by case

3 PL-Third party logistic is a party to manage logistic services on behalf of owner

of commodities, so 3 PL combine different logistic services including materialhandling, transportation, ware houses, inventory, tax, customer and Logistic serviceprovider sign long term contract with owners of goods and commodity

CHAPTER 2: BUSINESS STRATEGY IN LOGISTIC SERVICES OF VTP FROM 2006 TO 2009

 Telecommunication agency services

 Insurance agency services

2.1.2 History and Development of VTP

VTP is under management of Military Post and Telecommunication Corporationbefore it transformed into mode of a Joint Stock Company VTP undergo majordevelopment milestones as follows:

- VTP’s predecessor was press release division under Military Electronic andTelecommunication Corporation, which was established in July 1997 At that time,VTP just provided press release services for units under Ministry of Defense andarmy units in Hanoi

- From 1998 to 2000, VTP conducted intensively market research, so they cangradually expands their net works to many other provinces and cities, andimplement domestic and international express delivery services

- According to decision of Ministry of Defense No 10/2006/QD - BQP on January

12, 2006 VTP transformed into mode of State Company limited with one member

capital 40 billion VND It was licensed to do business in express delivery services,press release and telecommunication services.

- VTP transformed into mode of joint stock company (VTP Post JSC Company)under decision of Ministry of Defense in July 2009 with working capital 60 billionVND VTP owned 68% shares, trade union owned 3% shares, staff owned 3% andother share holders owned 26%

- In recent years, the economy of Vietnam is in the stage of industrialization,modernization and increasing integration in regions and in the world Tradecompanies and production manufacturers has been established and opened in manyindustrial zones and in new living quarter area with higher growth in quantity.Transportation demands of raw materials for producing goods and commodity hasbeen growing strongly VTP has conducted research and developed a new logisticservice system in 2009 based on existing business VTP should take advantage oftheir own infrastructure, their internal resources such as vehicles, capital withobjectives to provide professional logistics services with competitive prices and addvalues for customers, develop brand name as “VTP Logistics express”. VTPshould build development business plan in logistic services in order to become one

of a leading professional logistic services provider in Vietnam

2.1.3 Organization and management structure

VTP restructures company as follow:

VTP POST JSC

Table 2.1 4 : Organization structure of VTP

- Chairman of management board and share holders are highest managementlevel in company

- General Director is responsible for managing all business activities ofcompany and operations of departments, branch office, and subsidiarycompanies in order to achieve set objectives

- Functions Departments, branch offices and subsidiary companies responsible

to fulfill their business plans to achieve overall objectives of company

2.1.4 Vision

- VTP is under management of Military Post and TelecommunicationCorporation, so their vision can’t be separated from vision of Military Post andTelecommunication Corporation VTP that is “a leading post andtelecommunication company in Vietnam and well-known in the world Withlogistic services, VTP will develop brand name of “VTP Post JSC” as a leadingbrand name in express delivery services and “VTP Logistic-Express” as aleading brand name in field of transportation and warehouse logistic services

2.1.5 Mission

Branch offices in 63 provinces in Vietnam

Post offices in 63 Provinces

- Achieve 40% market share in logistic market in Vietnam and contribute toincrease of VTP to 1.000 billion VND in 2012.

- Complete investment of infrastructure and expanding its net works to allprovinces, towns, districts and precincts to provide 2PL and 3PL services in2010

2.1.6 Objectives and business strategic orientation in logistic services

2.1.6.1 General objectives

General objectives of VTP in period from 2009-2015 is to develop stably andsustainably in order to achieve financial objectives this year higher than previousyear, increasing incomes and living standards for employees, optimize benefit forshareholders and bring value- added services for their customers VTP set upfollowing specific objectives in order to achieve above general objectives

2.1.6.2 Specific Objectives

- Developing brand name of “VTP Post SJC Company” as a leading brand name

in express delivery services and “VTP Logistic-Express” in field oftransportation and warehouse logistic services

- Being one of two companies who have highest market shares in expressdelivery services and achieve revenue more than 1.000 billion VND in 2012

- Opening post offices in all provinces, towns and expanding its net works to alldistrict and precincts in 2010

- Penetrating in new logistic market and developing logistic products with coreexpress delivery services

- Ensuring incomes for staff at least equal with average income of othercompanies in Military Telecommunication Corporation

2.1.6.3 Business strategic orientation

- Market: continue holding firmly its market shares and expanding fully itsservices networks in domestic market Maintaining and improving relationshipwith traditional customers in domestic market, building proper after sale andcaring services

- Type of services: VTP will take express delivery services as core services todevelop other logistic services such as transportation and warehouse to createits competitive advantages VTP will develop other value- added services such

as insurances, stationery, advertisement on envelop, import & export services

- Infrastructure: VTP will invest their own infrastructure in times to serve forbusiness and operation Upgrading existing infrastructure to increase itscompetiveness

- Structure of management organization: VTP will restructure of managementorganization which is suitable with mode of business and production,increasing flexibility and self control rights for units in VTP It will establishgood relationship between function departments and units in order to developtheir general internal strengths in whole company VTP will consolidate unitedand good working culture in company Maintaining and improvingmanagement system, labor regulation to ensure discipline and effectiveness ofmanagement activities

- Treatment policy: VTP will restructure company and build good treatmentpolicies to encourage and treat well with employees who have good abilities,confidentiality with works and good contribution with development of VTP.VTP also discipline strictly with indiscipline employees, maintain good welfarepolicies to ensure good spirit and material life for all employees

2.1.7 Business strategy of VTP in logistic services from 2006 – 2009:

VTP established logistic centers and invested 60 billion VND in logistic system,but this period VTP just provide transportation services as below:

- Rail way transportation

- Air transportation

Type of logistic transportation services:

- Combination of land and air transportation services: goods and commoditieswill be transported from warehouse to airport and vice versa This combinedtransportation services will take advantages of mobile with vehicles and savingtimes with air transportation Normally these services will be provided forinterprovincial routes

- Combination of Railway and land transportation: goods and commodities will

be packed and transported to railway station and vice versa This type of combinedservices will take advantages safety and bulky delivery with railway transportationand mobile with vehicles

- Combination of land and water way transportation: commodities will betransported from warehouse to sea port and vice versa This combinedtransportation services normally applied for import-export services

2.2 Development business strategy analysis

2.2.1 External environmental analysis

will help Vietnam to assert its position in the global market and create good andstable political environment to attract more investor to invest in Vietnam in generaland in logistic services in particular.

Legal environment

Since Vietnam applied open door policy and especially before Vietnam joinedWTO, Vietnam made effort to innovate and improve weakness in its legalframework to be suitable with process of global and integration economy andinternational practices Vietnam has issued adequate laws and regulations forcommercial activities and investment Vietnam issued legal frame works for alllogistic activities in commercial law This will make investor to feel easy ininvestment in Vietnam

Economic environment

Since Vietnam applied opened door policy and especially after Vietnam joint WTO,industrial zone and manufacturer have been established in all provinces with highgrowth rate Import and export turnover has been increasing annually This is causefor increasing high demands for logistic services in Vietnam Revenue from logisticservices always account for 15%-20% GDP Potential of commodity productiondevelopment in Vietnam is very high with average growth rate from 20-25%/ year.Although global economic crisis has been strongly influenced to Vietnam economy,

as assessment of Ministry of Foreign Investment, economy of Vietnam in first half

of the year 2009 had positive signals to recover In June 2009, growth rate of GDPincreased 6.5% GDP of Vietnam in first six months achieved 3.9% Value ofindustry production in whole country increased 16.5% Production of agriculture,forestry and fish breeding increased 2.5% Productivity of aquiculture achieves2,278 billion ton, increasing 5% Although requirements of consumers decreased,revenue from commodities and services retail market still increase 2.3% Exportturnover in first six months of achieved 27.6 billion USD, decreasing 10, 1%compare with same period in 2008 Import turnover achieved 5.9 billion increasing

because as we know that logistic services is commercial activities chain includingtransportation, ware house, import-export formality, distribution, goods circulation

Social and culture environment

Living standard of Vietnamese has been improved significantly Requirements ofcommodities with high qualities are increasing Goods and commodities have beendistributed from big cities to mountainous areas and vice versa Apart fromtraditional distribution channels, customers now can approach modern distributionchannel such as super market, trading centers such as Big C, Metro, Vincom towers

in Hanoi In global and integration economy, Vietnamese culture is also influencedwith foreign culture and it is reason, Vietnamese consumer especially young peopleprefer to use foreign goods Domestic producers also face fierce competition fromimported goods This makes pressure for them to renovate their management andchange technology, so they can produce good commodity with competitive prices tocompete with foreign goods Vietnamese goods and commodities now have beenproduced with good qualities It find place not only in domestic market, but alsoabroad Vietnamese now have trend to use Vietnamese goods They have motto

“Vietnamese using Vietnamese goods is patriot”

Technology Environment

The 21st century can be century of technology revolution In Global and integrationeconomy, technology will be transferred between countries Technology has beenapplied in all industry including logistic services We can see import & exportcompanies now can fulfill their custom formalities on line in internet Customersand logistic service providers can make their transaction on internet: they can sendorder by emails and make payment by bank transaction or credit card Logisticsuppliers can use technology as GPS or other software to manage all their logisticactivities and their commodities However, application of information technology isstill limit and information technology infrastructure does not allow domesticcompanies to connect the material inputs providers with producers and customers

now in Vietnam Database of clients often are not interested and here is theweakness of logistic companies in Vietnam

2.2.1.2 Industry Environment Analysis

Potential of logistic market

Vietnam logistic market is high potential for investment Revenue from logisticservices in Vietnam achieve 18 billion USD in 2008 and bigger 3.5 times revenuefrom telecommunication services Although logistic industry play very importantrole in development of national economy, but Vietnamese logistic service providersjust met 25% demand of market 75 Revenue of this service is still flowing inpockets of foreign companies There are no Vietnamese companies who can playleading role to push logistic industry in particular and economy in general todevelop

Potential of 3PL logistic services

 After Vietnam joined WTO, Vietnam open retail markets and big foreigngroup will penetrate in this lucrative market (80 billion people) So, modernretail channel (super market, trading center) will be important distributionchannel in future economy It will account 30% equivalent with 30 billionUSD in 2020 This channel will have high demand for 3PL logistic services

 Ratio of revenue from 3PL is 4 times higher 2PL services Increasing marketshares for 3PL services will reduce logistic expenses but it make increasingrevenue Vietnam will try to reduce logistic expenses to 15% GDP in 2020

 There is 1% domestic companies who can provide 3PL services, most oflogistic service providers are foreign companies such as APL Logistic,Maersk Logistic, DHL/Excell, Kuehne&Nagel, Schenker, Lifox 99%services providers only provide 2PL logistic services

 Number of logistic companies participating in 3PL markets will be forecast

to increase 20% There are 8-10 companies participating in this market shares

in 2015

 Market shares of companies provide 3PL services will account for 22%expenses from outsources logistic services equivalent with 5 billion USD in2015

Ratio on revenue Billion USD

Table 2.2 5 : Market share of 3L in 2015

Logistic market trend

- Consumer goods will be developed strongly including electronic, homeappliances, aquaculture

n USD