BUILDING BUSINESS STRATEGY FOR THE DEVELOPMENT OF THE VIETNAM POSTS AND TELECOMMUNICATIONS GROUP

Simulation of the business environment in the enterprise...13 Diagram 1.4: M.PORTER’s model of 5 forces...15 Table 1.5: List general analysis and forecasting inside and outside business

THESIS MBA BUILDING BUSINESS STRATEGY FOR THE DEVELOPMENT OF THE

VIETNAM POSTS AND TELECOMMUNICATIONS GROUP

VNPT The Vietnam Posts and Telecommunications GroupPSTN Public Service Telephone Network

DSL Digital Subscriber Line

NGN Next Generation Network

SWOT Strength, Weakness, Opportunity, Threat

BCG Boston Consultant Group

R&D Research & Development

GPRS General Packet Radio Service

INTRODUCTION 1

I The necessity of the topic 1

II The purpose of the capstone project report: 2

III.The object and scope of the research: 2

IV.Methodological method: 2

V Contribution of the capstone project report: 2

VI.The layout of the capstone project report: 2

Chapter I General Theory of BUSINESS STRATEGIES 4

I Concept, characteristics and the role of business strategy in the enterprise:4 I.1 The concept of business strategy: 4

I.2 Characteristics of business strategy: 5

II Strategic management in business 6

II.1 Concept of strategic management 6

II.2 The necessity of strategic management in the enterprise: 6

II 3 Process of business strategic management: 7

II.3.1.Internal and external environment analysis: 8

II.3.2 Strategies building: 9

II.3.3 Strategy implementation: 9

II.3.4 Strategy evaluation: 9

III Strategic planning: 10

III.1 Concept of strategic planning: 10

III.2 Process of strategic planning: 10

III.2.1 Vision, mission and strategic goals of the enterprise: 11

III.2.1.1 Vision: 11

III.2.1.2 Mission: 12

III.2.1.3 Determining strategic objectives of the enterprise: 12

III.2.2 Analysis business environment of enterprises: 13

III.2.2.1 Analysis of macro environment: 13

III.2.2.1.1 Economic environment: 13

III.2.2.1.2 Technical environment: 14

III.2.2.1.3 Socio-cultural environment: 14

III.2.2.1.4 Nature environment: 14

III.2.2.1.5 Environment, government, law, politics: 15

III.2.2.2 Analysis of environmental sectors (work environment): 15

III.2.2.2.1 Analysis of existing competitors: 15

III.2.2.2.2 Analysis of potential competitors: 16

III.2.2.2.3 Pressure from suppliers: 17

III.2.2.2.4 Customers pressure: 17

III.2.2.2.5 The substitute products: 18

III.2.2.3 Analysis of internal business environment: 18

III.2.2.3.1 Factors of human resources and organization: 19

III.2.2.3.2 Factors of research and development (R & D): 19

III.2.2.3.3 Factors of financial accounting: 19

III.2.2.3.4 Factors of production, technology: 19

III.2.2.3.5 Factors of marketing, products consumption: 20

III.2.2.4 Analysis of international environmental business: 20

III.2.2.5 Synthesis of analysis and forecasting business environment 20

III.2.3 Strategic business plan building: 24

III.2.4 Selection of the strategic plan: 25

III.2.5 Deploy, test and evaluate the results of implementation strategies: 25

III.2.6.The formation methods of strategy, strategies selection: 25

III.2.6.1 SWOT analysis and combined strategy: 26

III.2.6.2 Quantified Strategic planning matrix (Matrix QSPM): 27

CHAPTER II Analysis decisive factors of the Vietnam Posts and Telecommunications GROUP (VNPT) 31

I Overview of VNPT: 31

II Organization model: 32

III.VNPT’s production and business results in the recent 5 years from 2004 to 2008: 33

IV Analysis business environment and internal force factors of VNPT 35

IV.1 Analysis of macro environment 35

IV.1.1 Economic Environment: 35

IV.1.2 Technology environment: 36

IV.1.3 Cultural- social environment and consumer habits: 37

IV.1.4 Government, legal and political environment: 38

IV.1.5 Nature environment 39

IV.1.6 Globalization environment: 40

IV.2 Economic sector environment analysis 42

IV.2.1 Current competitors: 42

IV.2.2 Potential competitors: 50

IV.2.3 Suppliers: 51

IV.2.4 Customers 52

IV.2.5 Substitute products 52

IV.3 Evaluation external environment analysis 55

IV.3.1 Opportunities, opportunities (O): 56

IV.3.2 The threats and challenges (T): 57

IV.4 Analysis of the VNPT internal resources 58

IV.4.1 Resources: 58

IV.4.2 Organizational structure: 59

IV.4.3 Products and services quality: 59

IV.4.4 Distribution channel: 60

IV.4.5 Organization culture: 60

IV.4.6 Evaluate the power of VNPT: 62

IV.4.6.1 Some key strengths (S): 62

IV.4.6.2 Some weaknesses (W): 63

V Synthesis of internal and external environment analysis 64

VI Evaluate the current strategy of VNPT: 69

VI.1 Analysis of the current strategy of VNPT: 69

VI.1.1.On revenue: 69

VI.1.2 On market share: 71

VI.1.3 VNPT's financial strength: 75

VI.1.4 Reputation with the customer 75

VI.1.5 Technology: 75

VI.2 Evaluation on the current strategy of VNPT: 77

VI.2.1.Achievements: 77

VI.2.2 The limitations: 78

CHAPTER III PROPOSE BUSINESS STRATEGIES FOR VNPT’S DEVELOPMENT IN THE PERIOD 2011 -2015 AND IMPLEMENTATION SOLUTIONS 79

I Foundation to build strategy 79

I.2 Vision 79

I.3 Strategic objectives 79

I.4 Increase social demand for VNPT services 80

I.4.1.The demand for Postal Service 80

I.4.2.The demand for telecommunication services and informatics: 81

II Propose business strategy for VNPT’s development in the period of 2011 – 2015 and implementation solutions 82

II.1 The options for strategic business plan: 82

II.2 Propose strategies for VNPT’s development in the period from 2011 to 2015 87

II.3 Function strategies: 88

II.3.1 Strategy to switch to the model of economic group 89

II.3.2.Strategy to improve the quality of human resources: 95

II.3.3.Solution for marketing strategy 99

II.3.3.1.Solutions for products and services (P1) 99

II.3.3.2.Solution for pricing (P2) 100

II.3.3.3 Solutions for the distribution channel (P3) 101

II.3.3.4 Solutions for promotion and support (P4) 102

II.3.3.5.Solutions for human resources (P5) 103

II.3.3.6 Solutions tangible factors (P6) 103

II.3.3.7 Solutions process (P7) 104

II.4 Technological innovation strategy: 104

PETITION 106

CONCLUSION 108

LIST OF REFERENCE 110

APPENDIX 112

TABLES & FIGURES

Diagram 1.1 Process of strategic management 8

Diagram 1.2: Process of strategic planning 11

Diagram 1.3 Simulation of the business environment in the enterprise 13

Diagram 1.4: M.PORTER’s model of 5 forces 15

Table 1.5: List general analysis and forecasting inside and outside business environment: 21

Table 1.6: External factors evaluation matrix (EFE) 23

Table 1.7 SWOT matrix 26

Table 1.8: QSPM Matrix 29

Diagram 2.1: Organization model of Vietnam Posts and Telecommunication Group 33

Table 2.2 General analysis of macro-environment 40

Table 2.3: Market share of telecommunications in 2008 45

Table 2.4: Image matrix of competition 48

Table 2.5 Overall of micro environment 54

Table 2.6 Synthesis of VNPT’s internal forces 61

Table 2.7 External factor evaluation (EFE) 64

Table 2.8 Internal factor evaluation (IFE) 67

Table 2.9 VNPT's revenue from 1999 to 2008 70

Diagram 2.10 VNPT's revenue from 1999 to 2008 71

Table 2.11: Market share of telecommunications enterprises in 2008 72

Diagram 2.12: Market share of telecommunications enterprises in 2008 73

Diagram 2.13: Market share of fixed telephone 73

Diagram 2 14: Market share of mobile 74

Diagram 2 15: Market Share of the Internet 74

Table 3.1 Brief SWOT matrix for VNPT 82

Diagram 3.2: Organization model proposed for VNPT 91

Table 3.3: Human resources structure 97

Diagram 3.4.Human resources structure 97

I The necessity of the topic

We has just gone through 20 years of the country reformation, changing fromthe centrally planned bureaucratic subsidy to the market mechanism under theGovernment’s control, according to the socialist oriented direction Besides thegigantic achievements in political, economic, cultural, social field in comparisonwith the period before renewal, we must acknowledge that Vietnam still held quite

a far distant compared with other countries, that we are still poor, has low growthand are slowly integrating into the international environment

In this term, our soceity in general and our enterprise in particular is facingwith both opportunities and challenges when domestic and internationalenvironment is changing all the time Technical and scientific factors which arethe decisive factors for the economic growth, is rapidly renewed Consumptionsoceity is growing out of the framework of a country, reaching to the global needsand demand The process of international environment intergration (participationand commitment to implementing AFTA, APEC, WTO, especially Vietnam-UStrade agreement) complies with the common rule, common value and ensuring thefair security

In such circumstances, to survive and to thrive, the Vietnam Post andTelecommunications enterprises must adapt to new requirements: changingbusiness environment from monopoly to competition, with the expansion ofunlimited participation of the international factors Competition ability is thedecisive factor, determining the survival of each enterprise The post andtelecommunication enterprises, especially the system of state-owned enterprisesmust construct the strategic business planning and point out appropriate methods

of plan implementation as a weapon to compete in the market or to measure thelevel of their development In the Vietnam Post and Telecommunications Groupcurrently does exist a dependent accounting block of large scale which maintainway to build business strategies according to the central mechanism, and hasn’teffectively made use of its existing advantageous resources

From that way of thinking, our Group 5 has determined to choose the topic of

“Building business strategy for the development of the Vietnam Posts and Telecommunications Group in the period of 2011-2015”

II The purpose of the capstone project report:

Do research; build business strategy for the development of Posts andTelecommunications Group of Vietnam

III.The object and scope of the research:

- Object: The Vietnam Posts and Telecommunications Group

- Scope: Using basic reasoning method and strategy building methodology,strategy management based on the practices and trends of competition in thepostal and telecommunications service, from which contribute its part tocomplete the formulation of business strategy for the VN Posts andtelecommunications development until 2011 and sin the orientation of 2015,strive to make VNPT become one of the best enterprises in providing postaland telecommunications service

IV.Methodological method:

Our capstone project report uses the method of dialectical materialism incombination with logical and historic method, using method of analysis andsynthesis, statistical methods, survey methods, comparison and forecast

V Contribution of the capstone project report:

Our capstone project report provides scientific methodologies and assesses ofthe situation and proposes some content in order to improve the formulation ofbusiness strategies to ensure the development objectives of the Group until 2011and in the orientation to 2015

VI.The layout of the capstone project report:

Besides the contents, list of abbreviations, list of tables, drawings, introduction,conclusion, reference list, appendix, the content of the essay is divided into threemajor chapters:

+ Chapter I General theory of business strategy of the enterprise

+ Chapter II Analysis decisive factors of the Vietnam Post andTelecommunications Group

+ Chapter III: Propose business strategies for VNPT’s development in theperiod of 2011-2015 and implementation solutions

CHAPTER I GENERAL THEORY OF BUSINESS

STRATEGIES

I Concept, characteristics and the role of business strategy in the enterprise:

I.1 The concept of business strategy:

Economists and researchers are more and more interested in businessstrategy and have come up with many definitions of the term "business strategy".Each definition has its own characteristics depending on the perspective of eachauthor

Author Glueci supposed that "Strategy is a plan of uniformity,comprehensiveness, and synthesis, designed to ensure that the objectives of thebusiness will be done."

According to General Arlleret: "Strategy is the goal determination andmeasures taken to reach the goals through the policies”

Other authors such as M Porter and Alain Threlart consider businessstrategy as the art of competition on the market and achieving businessdevelopment

With Chandler, "Strategy is to identify the goals and objectives of the term business and to apply a series of actions as well as the allocation of resourcesneeded to achieve these objectives"

long-However, to sum up, strategy is a system of long-term goals, policies andmeasures on the organization, business, finance, human resources in order to reachthe business goals pointed out

From these different ideas above, the concept of business strategy which issupported by many authors are:

"

Strategy is a series of actions to mobilize resources to achieve a certain purpose"

I.2 Characteristics of business strategy:

Although there are many concepts and approaches of different categories ofstrategies, basic features of business strategy is rather united The basiccharacteristics are:

- Business strategy has its orientation in a long time It points out the target, thebusiness direction for each specific product It clearly defines the basic tasks,solutions to step by step achieve their objectives Business strategy is flexible,being built for a long time of 5 years or 10 years, and it consists of a continuousprocess from the stage of construction to the implementation, inspection andsupervision

- All important strategic decisions in the process of building and organizing theimplementation, evaluation and strategy management are focused on seniormanagement team to ensure the standards of long-term decisions and theconfidential information in competition

Thus, from the concept and these characteristics above, we can simplyunderstand that: "Business strategy is a process of identifying the overall goal todevelop business and use all of techniques element, economic organizations andbusiness to win in the competition and to achieve its objectives”

The market economy is always changing, to survive and to develop, it requiresthe adaptability to such fluctuations Modern business management supposes thatthe enterprises cannot survive in this market change without a suitable businessstrategy Only on that basis, does the enterprise recognize the need to takeadvantage of opportunities or threats occurring to timely find a best solution Lack

of a proper business strategy demonstrating the initiative and attack, lack inbuilding and developing business strategy, the enterprise can not run its businessefficiently and in many case it even leads to the bankruptcy

Business strategies help the enterprise to orient its direction to reach its goal byits own efforts; helping the enterprise determines their fundamental goals whichshould be achieved in each period These goals should be fully consistent at alllevels, all fields in business activities or organs, in order to exploit and optimizemake use of the resources, to promote the advantages and to snatch upopportunities to gain advantage in competition

II Strategic management in business

II.1 Concept of strategic management

Theory of "Strategic management" was after the birth of "strategic" theory.And there are many different ideas on strategic management But, we can simplyunderstand that:

"Strategic management is a set of management decisions and actionsdetermined for the long-term performance of the company”

Strategic management includes: Environment analysis (both internal andexternal environment), strategy building, plan implementation, and strategyevaluation process Strategic management should focus on the environmentanalysis, the external opportunities and threatens in the condition of internalstrength and weakness Strategic management is to analyze the main determiningfactors and the capability inside the company

From which we can understand the strengths and weaknesses of the company

to take the external opportunities and minimize the risks due to internal problemscaused

II.2 The necessity of strategic management in the enterprise:

Many researches by T.J Andersen have shown that organizations applyingstrategic management will achieve better performance compared to otherorganizations without using this method The match between the organizationalenvironmental, structure and processes will create positive effects for theorganization performance

Strategic management helps companies well-organize their goals and measuresthat should be taken to achieve their goals It shows where the enterprises are andwhat they should do in the future to achieve their goals

Business environment is constantly changing, and is becoming increasinglyfierce, which requires companies to have flexible reactions to survive and to grow.Strategic management requires the ability of analysis and forecast such changes inthe business environment By analyzing and forecasting, can the board of managermake a wise decision to take advantage of opportunities; minimizing the impact of

contrast, businesses which do not apply strategic management often reactpassively and come up with many disadvantages in business.

- Strategic management helps businesses implement their strategies incompliance with other departments to optimize use of their resources to achievethe objectives set out Strategic management will eliminate the overlapping amongdepartments, reasonably reallocate their resources and facilitate the inspection ofthe strategy implementation in the business

- In short, strategic management today has really become an important part ineach enterprise Without a suitable strategy and without a good strategicmanagement, businesses will be difficult to survive

II 3 Process of business strategic management:

In the process of strategic management, the manager should make a series ofactivities as follows:

Source: Strategic management lecture slide-Griggs

Diagram 1.1 Process of strategic management

II.3.1.Internal and external environment analysis:

Before deciding the direction or making an appropriate response, it is

necessary that each enterprise analyze the current situation To analyze the current

Internal Environment

External Environment

Strategic goals

Company strategy

Active Competition

Corporation strategy

Acquisition, restructure

International strategy

Cooperation strategy

Company management

Structure and control

Management strategy

Starting a business and innovation

Competition strategy and average profit

situation, it requires the consideration of organizational context, the environmentalperspective outside and inside the organization:

- The internal factors of the enterprise: strong or weak

- The environmental factors outside the business: opportunity or risk

- The willingness of the leadership: corporation value, reputation andcompetitive advantage

II.3.2 Strategies building:

Building strategies is included in the designation and the selection ofappropriate strategy for the organization To accomplish this, it should beconsidered from many organization levels, to set out different types of strategies:

- Company strategy: Take the interest in the large and long-term problems such

as how to run business, what business field to participate in, and what to do in thatbusiness type Any changes in the structure of the business organization can lead

to change in the company strategy

- Function strategy: They are the decisions and actions toward the short-termtarget to construct different function parts in each organization such as productionpart (manufacturing), marketing, research and development, human resources,financial accounting, information technology

- Competition strategy: The competition strategy researches the competitiveadvantage that organizations want to achieve and considering how to compete ineach specific business field

II.3.3 Strategy implementation:

The strategy formation or construction is not enough, it is necessary that thestrategy should be well-implemented Strategy implementation is the process toput the different strategies of the organization into practice Measures of strategyimplementation are attached with strategies construction

II.3.4 Strategy evaluation:

The final phase of strategic management is the strategy evaluation Allstrategies are subject to future change because inside and outside factors arechanging regularly Three major activities of this phase are: (1) review the basic

factors of current strategies, (2) measuring the achievements and (3) nakingadjustment in the operations Stage of strategy assessment is needed because thecurrent success does not guarantee future success Success always creates newproblems Organizations which have thought of full satisfaction would pay anexpensive price for the decline.

III Strategic planning:

III.1 Concept of strategic planning:

Strategic planning is the process of using suitable methods, tools andtechniques to determine the appropriate business strategies for the enterprises aswell as to identify function strategies for each business part in a specific period

III.2 Process of strategic planning:

This process can be generalized according to the Table below:

Source: Lecture slide of strategic management – Griggs University

Diagram 1.2: Process of strategic planning III.2.1 Vision, mission and strategic goals of the enterprise:

(3)

Analysis business environment (O, T)

Examine & evaluate implementation

results (7)

Feedback

directions, indicating the priority, being the basis for the planning and encouragingall efforts to achieve organizational goals and ideals.

III.2.1.3 Determining strategic objectives of the enterprise:

Goal is the future status which the company aims at Setting targets is a veryimportant step in the process of building strategies As the determination of propergoals is a basis for action-oriented strategies It determines the next step of theconstruction phase as well as strategies implementation Target is a base toevaluate and to adjust strategies It must have four following characteristics:

- First, the goal must be accurate and measurable

- Secondary, it should aim at the important mission of the organization

- Third, objectives must be challenging but can be performed

- Fourth, objectives must be determined in a specific period

There are short-term and long term goals

- Long-term goal: the overall desire that the business wants to achieve in a

longer period longer than one year, with specific content: the profit, productivity,competitive position, job creation, community relations, technology location, andsocial responsibility

- Short-term goal: the last desired results that companies expect to achieve in

each business cycle

III.2.2 Analysis business environment of enterprises:

The purpose of environment analysis is to identify the opportunities and risks

the process of considering various environmental factors and determining theinfluence of chance or risk on the enterprise Judge the environment (diagnostic)basing on the analysis and review of environment from which to take the initiative

to face with the risks affecting the business The environment analysis includes:analysis of the macro environment and micro-environment analysis (also known asenvironmental sector)

Source: Business strategy – by Nguyen Van Nghien - P.33

Diagram 1.3 Simulation of the business environment in the enterprise

III.2.2.1 Analysis of macro environment:

III.2.2.1.1 Economic environment:

The economy situation and its trends affect the strategy success of theenterprise, the main factors are the economic growth, interest rates, inflation,unemployment, exchange rates Variation of these factors will affect business

III.2.2.1.2 Technical environment:

Technological factors influence on the business strategy of enterprises andeven on the whole industries Therefore, it is very important to judge the trends of

Macro environment:

Economic factors Legal and political elements.

Social elements Nature element Technical elementsEconomic sector environment:

Competitors Customers Suppliers Potential competitors Substitute productsInternal enterprise environmentHuman resources

R&D Manufacturing Account and finance Marketing

Organization cultures

Macro environment consists of the

external factors that affect

business.

- Working environment includes

external industrial elements,

orient competition in that

economic sector.

- Internal environment consists

of resources inside the enterprise

industry development Changes in technology affect the life cycle of products andservices

The dimension/events in the technology may be opportunities for thosecompanies which are able to mobilize investment capital, but it would be a threat

to the companies with old technology

III.2.2.1.3 Socio-cultural environment:

For strategic management, cultural and social factors are sensitive andchangeable ones Lifestyle of the inhabitants themselves is rapidly changingtoward importing new lifestyle, which leads to change in consumer attitudes.Higher level of education helps to increase the consumer’s demand for higherquality, a wide range of products categories This is a big challenge formanufacturers

Each business enterprise is running its business in a different socio-culturalenvironment Business and socio-cultural environment have a close relationshipsand impact on each other Society provides resources for the businesses; consumeits products and services Socio-cultural environment can affect strategic decisionssuch as selecting areas and items, selecting the brand, color, style, or changing thechannels

III.2.2.1.4 Nature environment:

Environment factors include geography, climate, and ecological environment.Threats from climate change have a big impact on business Therefore anticipationthe factors of climate and weather change makes the business more active inmaking decisions about their products

III.2.2.1.5 Environment, government, law, politics:

Legal and political factors influence the development strategies of enterprises

in different directions They can be opportunities for this business but the risk forthe other enterprises Open policies encourages more open economic sectors to beinvolved in producing, but a risk for the state-owned enterprises, an opportunityfor private manufacturers business participating into the market

Working environment includes all factors that directly influence the decisions

of the enterprise in a sector Any industry consists of many businesses providingsimilar products and services or substitutes; the problem is to analyze, to judge thecompetitiveness of environment to determine the opportunities and threats to eachbusiness Hereby is a very popular model of Michael Porter with five competitiveforces:

Source: Lecture of Strategic Management – by Le Van Tam- P.45

Diagram 1.4: M.PORTER’s model of 5 forces

III.2.2.2.1 Analysis of existing competitors:

The first element in the model of M Porter is a competition scale affecting theopportunity to increase price and to earn more profit Competition betweenenterprises in the industry often focuses on the following main contents:

- Nature of competition: competition among the substitutes-competition ofpriorities when purchasing the product of different value, placing in therelationships of revenue; competition in the same category of products;competition between brands

- Competition pressure in economic sector: competition structure is thecompetition in the company population and scale competing in the same business

If the business is small, no business dominates the others; the structure ofcompetition will be distributed If market demand is huge, competition pressure

CustomersSuppliers

will decrease, in contrast, if market demand is small, the competition will becomefierce

- Barriers to exit from the industry: When business conditions deteriorate,facing with difficulties in the business, forcing the businesses to considerwithdrawing from industry sector; costs when withdrawing from the businesssector is making losses and even bankruptcy, including:

+ Cost of investment: factories, equipment, technology

+ Direct costs of investment preparation, and administrative procedures

+ Social costs: training workers, firing workers

III.2.2.2.2 Analysis of potential competitors:

The potential competitors are likely to enter the enterprise sector in the future,threatening to the current businesses Current businesses often try to prevent thepotential competitors participating into its industry because it will make thecompetition increasingly fierce and the profits will be shared, and even thelocation of the business can be changed Level of profit of potential rivals dependsmainly on the participation cost whether it is high or low (barrier industries),including:

- The higher initial capital investment is, the less ability to join the industry.When you start taking a business, you must put a certain amount for procurement

of inputs such as machinery, raw materials, to create outputs Thus, the more theoriginal investment is, the greater the risk it may encounter, traders want to enterthe industry must take consideration when making the investment decision

- Price advantage: When companies hold high technology, they are able tocreate the products with low cost, and thus, create competition advantage To keepthis advantage, businesses must always be the leader in technology; focusing onbusiness management to reduce costs, and to improve production efficiency inbusiness

- The advantage of products labels, goods and services: The customer isfamiliar with the brand name which is often used The cost of building brand newgoods usually takes more time and creates big costs

- The advantage of production scale: The large production scale help to reducsthe fixed costs per unit produced; large-scale enterprises will have a competitiveadvantage over new competitors as much.

- Legal barriers: are the provisions of the Government on the conditions toparticipate into the market such as the condition of chartered capital, theequipment, the level of the workforce this strict regulation will interfere in thebusiness sector

III.2.2.2.3 Pressure from suppliers:

Suppliers are likely to be a threat when they raise prices, limit their quantity, orstop to provide quality products Enterprises should pay attention to the negativeimpacts from the suppliers However, providers can only be pressure forbusinesses in the following cases:

- There are few suppliers

- There are few substitute products and services

- Have the special advantage of specialized products and services

- Its ability to vertically integrate to own one part or overall productioncapacity

III.2.2.2.4 Customers pressure:

Customers are common nouns to refer to people or organizations using theproduct or service business Customers can be divided into five following subjects:the final consumer; distributor’s intermediaries: agents and wholesalers; theindustry buyers

Customers are the main target to be involved in the consuming products;identifying customers and the impact on customers is to determine the basis ofproducts market, services and investment structure needed Customer’s demand isone key factor in the production and business interests to decide whether it should

or should not be maintained long-term competitive advantage for one product Thehigher pressure from customers is, the higher risk of disadvantage in businesses itmay create

Customers often make pressure for businesses in the following cases:

- They are large customers buying in large scale.

- There are many suppliers with similar product of many options

- Ability to backward integrate to own all or part of the production

When customers have the advantage over the seller, it is indispensable toreduce the price and increase product quality, service, which means that profitswill decrease

III.2.2.2.5 The substitute products:

Substitute products does not have seriously competitition but it can affect onthe making profit ability of the market, which is a threat to business It is necessary

to pay special attention to the substitute product, which are likely to improve and

to change due to advances in technology Most new replacement product is theresult of the explosion of technology To achieve success in business, enterprisesneed to spend the necessary resources to develop new technologies in developmentstrategies

III.2.2.3 Analysis of internal business environment:

Internal business environment is all elements that belongs to the enterpriseitself, which is directly involved in production and operations to identify strengthsand weaknesses; providing the basis for strategic planning and business strategyimplementation Object to be considered are the main factors occur inside theenterprise, under the control of the business The main factors are: humanresources, finance, accounting, marketing, information systems, and organizationalsystem

III.2.2.3.1 Factors of human resources and organization:

Human resources play a very important role in the success of the enterprise.People provide input material to plan the objectives, making the environmentalanalysis, selecting and testing strategies of enterprises Only people who workefficiently, create effectiveness for the enterprise, elements of human resourcesincluding:

- The leadership, professional qualifications and experience of the leadership

- The skill, the morality of the staff employees, the flexible and efficientpolicy.

III.2.2.3.2 Factors of research and development (R & D):

Research and development in the business can help companies maintain it solidleadership position in the industry Factors of production research anddevelopment, including: experience, competence, application of scientific andtechnical achievements in production to meet increasing demand in the market

III.2.2.3.3 Factors of financial accounting:

Functions of financial accounting department includes analysis, planningimplementation and inspection, helping to set up the financial statements, timelyreflecting the financial situation of the company Financial accounting departmentimpacts directly to all areas of activities, with main responsibilities related tofinancial resources, and are able to mobilize short-term and long-term capital forinvestment and development programs of the company, controlling the financialexpenditure regime, the cost of capital, the price, plan cost, financial costs andprofit

III.2.2.3.4 Factors of production, technology:

Production activities are associated with the creation of products, affecting thesuccess of the business They include all factors related to technical production,production technology, productivity, ability to control production costs, inventory,and raw materials supplement Factors of production, technical capabilities showthe enterprise’s ability to meet quality and quantity required by the marketdemand Controlling the production costs are important, which relates to pricingpolicy of goods products

III.2.2.3.5 Factors of marketing, products consumption:

Marketing department of the business is very important in the consumption itsgoods, which does the market research to set out policies on product, price,distribution channels, to improve the production of new products, to supply goods

of a large scale, to collect market information to identify appropriate policies forenterprises

III.2.2.4 Analysis of international environmental business:

Today, the trend of globalization affects the domestic production and trading,especially for those which are related to import and export The change ofinternational environment is more and more complex, more competitive, requiringbusinesses to be well-analyzed, from which creating opportunities for themselves

or to minimize the risk that the globalization, regionalization offers

Vietnam's integration into WTO and ASIAN creates more opportunities forproducts with a competitive advantage, but also bring about the forthcomingchallenge for businesses Vietnam could expand the export market to manycountries, but the challenge of competition will be much larger Tradeliberalization is also a threat to the manufacturer's business in Vietnam

Businesses which don’t directly deal with foreign countries still have toaccount for the ability to be affected by the international environment as it isaffected indirectly through macro and micro environment

III.2.2.5 Synthesis of analysis and forecasting business environment

a Table of synthesis analysis and forecasting of inside and outside business environment:

The analysis and forecasting are summarized in the following table ofenvironmental factors in business

Structure: The table has five columns

Table 1.5: List general analysis and forecasting inside and outside business

environment:

Factors Importance to

the economicsectors

Influence onenterprise

Affectingtrends

Total

Column 1: List of basic environmental factors which affect on production andbusiness activities of enterprises.

Column 2: Assessing the relative importance of each factor for the currentbusiness sector is active

Rate at levels: 3 = high, 2 = medium, 1 = low

The level of impact on business: 3 = much, 2 = medium, 1 = less

Nature of impact (+) = good, (-) = bad

Column 3: Assessment of impact of each factor for enterprises

Rate at levels: 3 = much, 2 = medium, 1 = little, 0 = no impact

Column 4: Description of the nature of each factor:

The (+) = Good, sign (-) = bad

Column 5: Identify the general trend and the trend of impact:

Total score = Column 2 x column 3 with the trend effect is in column 4

b Evaluation matrix of business environment:

* Evaluation matrix of the inside elements (IFE):

Evaluation matrix of elements inside (IFE) assesses the strengths andweaknesses of the important parts of each business functions IFE matrix is built infive steps:

Step 1: Identify the list range from 10 to 20 important factors, including thestrengths and weaknesses of the business These elements are listed in column 1.Step 2: Identify the assessment of the importance with the strategic position ofthe company from 0.0 (not important) to 1.0 (very important) for each element.Total number of the importance of all elements must be equal to 1.0 These valuesare recorded respectively in column 2

Step 3: The enterprise will assess the level of influence of each factor in theenterprises.

Levels of evaluation: 5 = very good, 4 = very, 3 = average, 2 = below average,

1 = poor Scores are recorded in column 3

Step 4: Multiply these values of each factor with its level of their influence (=column 2 x column 3) to determine the level of influence Results are recorded incolumn 4

Step 5: Sum all the total points of each factor to determine the total points ofthe organization

However how many elements the IFE matrix has, the highest points that acompany can achieve is 5.0, the lowest is 1.0 and the average is 3.0 Total score isgreater than 3.0 indicates its internal power, if it is lower than 3.0 shows itsinternal weakness

* External factors evaluation matrix (EFE):

External factors evaluation matrix summarize and quantize the external factor’simpact on the enterprise The construction of EFE matrix is similar to the IFEmatrix, which can be presented briefly as follows:

Table 1.6: External factors evaluation matrix (EFE)

element The assessment is based on the industry Total weight of the factors must

be equal to 1.0

- Columns (3) level of assessment: 5 (very good), 4 (quite), 3 (medium), 2(below average), 1 (poor)

- Column (4) points achieved = column 2 x column 3

Total number of incremental points in column 4 shows the strategy of thecompany takes advantage of outside opportunities to minimize the negative impact

of external environment

* Picture matrix of the competition:

This matrix helps us to identify the major competitors, their advantages anddisadvantages This matrix is an extension matrix evaluating the external factors

by putting into it the important internal factors to compare with other competitors

So, for businesses in this industry, the importance of the factors listed in step 1 arethe same

- Step 3: Classification from 1 to 5 for each element (which may actually belarger point of classification) The biggest weakness in a classification is 1 point,the smallest weakness is 2 point, the average point is classified by 3 point, thesmallest strength is classified by 4 point and the biggest strength is 5 Thus, it isthe score to reflect the competitiveness of enterprises compared to competitors inthe industry

- Step 4: Calculate the points for each factor by multiplying the importance ofthat element with the score classified

- Step 5: Calculate the total scores for all factors set in the matrix by adding thefactor scores Total scores show the competitiveness of enterprises.

Accordingly, if the total scores of the entire elements in the matrix are from 3.0

or more, the enterprises’ competitiveness is on an average In contrast, the totalnumber of points in the matrix is under 3.0, which means the competitiveness ofenterprises is lower than average

III.2.3 Strategic business plan building:

Construction business plan is to set out a strategic system of solutions and tools

to achieve the objective of the strategy To build strategic plans, we must base onour strategic objectives and the internal resources to ensure the suitability andfeasibility of these solutions and tools, to get effectiveness and efficiency of thestrategy

The strategic plan is also built on the basis of analysis and application oftheoretical models of strategy, experience, opinions of the experts and themanagers; from which, planning maker propose solutions and offer as manysolutions as possible On that basis the strategy contributor will analyze,synthesize these methods, and then put them into the plan strategy

III.2.4 Selection of the strategic plan:

After building a variety of different strategies, the enterprises need to select themost appropriate and feasible one This is a review process of evaluating the planproposed to select an optimal plan for the strategy; promoting the strengths ofbusiness and limiting the weaknesses, taking advantage of the opportunities andovercoming these challenges thereby achieving the strategic goals set out

The common strategy analysis models are:

Model analysis of portfolio investment as the BCG matrix, the model ofbusiness strategy by General Electric firm

Model analysis of strengths, weaknesses, opportunities and risks: SWOTmatrix

III.2.5 Deploy, test and evaluate the results of implementation strategies:

After selecting the optimal strategy, the board makes the strategic decision andinstitutionalizes the strategy in writing as a basis creating the legal foundation forthe strategy implementation, and a documentary to disseminate strategies to thesubjects involved

According to the approved strategy, the enterprise must build policy systemsand planning support; reasonably allocate the resources; select and perfect theorganizational structure in consistent with the strategy; form a strategymanagement committee to step by step implement the strategy, test, control andmake adjustment during the implementation

III.2.6.The formation methods of strategy, strategies selection:

Base on the basis of strategic tasks and evaluation of external environmentfactors as well as internal factors, the enterprise can use the strategic model tobuild its strategic business strategy and its implement solutions Hereby, wemention a number of models which are commonly used in the field of strategicmanagement of the business

III.2.6.1 SWOT analysis and combined strategy:

The purpose of the SWOT matrix analysis (Strengths, Weaknesses,Opportunities, Threats) is to coordinate the analysis of strengths, weakness of thebusiness with opportunities and risks in order to coordinate among a reasonablyfactors to evaluate and identify, and to select appropriate business strategies SWOT matrix is composed of 9 cells, in which there are 4 important cells, and 4cells are strategy intersection, 4 cells describe each strategy, and 1 empty cell SWOT matrix is built according to the following basic steps:

Step 1: List of opportunities powerfully impact on the business areas that theenterprise should research

Step 2: List the risks of the market can occur

Step 3: List the strengths of the business

Step 4: List the weaknesses of the business

Step 5: Combining the internal strengths and external opportunities in the box(S / O).

Step 6: Combine the internal weaknesses and external opportunities in the box(W / O), taking the advantage of external opportunities to overcome weaknessesinside

Step 7: Combining the internal strengths and outside threats in the box (S / T),making the most powerful internal strengths to overcome external threats

Step 8: Combine the internal weaknesses and external threats in the box (W /T), in order to take advantage of opportunities to overcome weaknesses

Table 1.7 SWOT matrix

Weakness (W)

W1, W2

W / O: Strategy take toovercome weaknesses

W / T: Reducing theweaknesses to avoidthreats

III.2.6.2 Quantified Strategic planning matrix (Matrix QSPM):

QSPM matrix uses input information from these analysis above to helpstrategist decide the most compelling strategy for the businesses to pursue for thesuccessful goals Development process of QSPM includes six steps (see the table):

- Step 1: List the external opportunities / threats and the internal strengths /weaknesses in the column (1) of the matrix These factors are taken directly fromthe IFE and EFE matrix

- Step 2: In the column (2) of the matrix, entering the numbers corresponding

to each factor in the classification column of EFE and IFE matrix

- Step 3: Study the SWOT, BCG, Hofer matrix and identify subsititutesstrategies and record this strategy in the top row of the QSPM matrix Strategiesare classified into separate groups

- Step 4: Determine the attraction scores (in the column A): 1 = not attractive,less attractive = 2, = 3 is quite attractive, very attractive = 4 The value expressesthe relative attraction of this strategy compared with others in the same group ofsubsittutes strategies

- Step 5: Calculate the total scores of each strategy, separately calculate thescores for each success factor listed in column (1) by multiplying the score ofclassification with attraction scores in each row (put in the column B)

- Step 6: Accrured score of attractions give us the total score of each strategy(consider all the inside and outside factors that affecting strategic decisions) If thetotal points is high, this strategy is appropriate and worth being selected toperform

Selected strategy Foundation

ofattractionscore

Matrix QSPM expresses the relative attractiveness of the strategies selectedand more importantly, it provides an objective basis to consider and decide themost appropriate choice However QSPM matrix has many limitations and need to

that the process of building the matrix requires the intuitive judgments to give outthe scores - though the information was based on the environmental analysisconducted before Therefore if we want to use the QSPM matrix effectively, itrequires strategist to discuss thoroughly and consistently for each number in thematrix by adding bases of point of attractions for each column.

CHAPTER II ANALYSIS DECISIVE FACTORS OF THE VIETNAM POSTS AND TELECOMMUNICATIONS GROUP

(VNPT)

I Overview of VNPT:

Full Name: The Vietnam Posts and Telecommunications Group

International name: Vietnam Posts and Telecommunications Group

Abbreviation: VNPPT

Head Office: 57 Huynh Thuc Khang, Dong Da Dist Hanoi

Charter capital of VNPT (at 01/01/2006): 36,955,000,000,000 (thirty-sixthousand, nine hundred and fifty-five billion)

Business activities:

VNPT has the task of running its business planning according to the plans andpolicies of the Government of Vietnam, including the implementation of directinvestment activities, production, trade or investment in other enterprises in somefield as follows:

+ Backbone Telecommunications Services

+ Information and Telecommunications Service

+ Re-estate, leasing office

+ Other fields according to the law