Xây dựng chiến lược lược kinh doanh của công ty cổ phần đại dương đến năm 2020

THESIS MBA FORMULATING BUSINESS STRATEGY OF OCEAN DEVELOPMENT JOINT STOCK COMPANY TOWARDS 2020 ACKNOWLEDGEMENTS This research is conducted by Group No.12 - M04 Class - Global Advanced Master of Business Administration Program - Griggs University We commit that this is our study, and that study results are accurate and unavailable in any other studies During the study, we have received valuable support from many individuals, organizations, agencies and enterprises We wish to thank leaders, managers and employees of Ocean Development Joint Stock Company for releasing the burden of data provision, cooperation, exchange and discussion We extend our special thanks and appreciation to many individuals and experts who have shared with me an opinion and response to questionnaires of the Group We would like to express our deepest thanks to lecturers, Board of Management, and managerial staffs under Global Advanced Master of Business Administration Program - Griggs University in Hanoi for communicating knowledge, creating favorable conditions in all fields for us to accomplish this project Last but not least, we would like to express our deepest thanks to all students of M04 class- Global Advanced Master of Business Administration Program -Griggs University for sharing information, material support and invaluable support to accomplish this project The authors: Tran Thi Kim Oanh Pham Duc Trung Nguyen Van Binh Luyen Xuan Trang i LIST OF ABBREVIATIONS AS: Attractive score DaiAn: Dai An Joint Stock Company EFE Matrix: External Factor Evaluation Matrix GDP: Gross Domestic Product GSO: General Statistics Office HUD: Housing and Urban Development Corporation IFE Matrix: Internal Factor Evaluation Matrix Namcuong: Namcuong Group Joint Stock Company Ocean JSC: OCEAN Development Joint Stock Company PMU: Project Management Unit QSPM: Quantitative Strategic Planning Matrix Songda: Song Da Corporation SWOT: Strengths-Weaknesses-Opportunities-Threats TAS: Total attractive score Vinaconex: Vietnam Construction and Import-Export Joint Stock Corporation VND: Vietnam Dong ii TABLE OF CONTENTS Page INTRODUCTION Chapter SOME THEORETIC BASES FOR BUSINESS STRATEGY FORMULATION 1.1 Overview on business strategy 1.2 Defining strategic targets and tasks 1.3 External business environment 1.4 Internal analysis 1.5 Selection of business strategy Chapter 10 16 20 BUSINESS ENVIRONMENT OF OCEAN DEVELOPMENT JOINT STOCK COMPANY 2.1 Introduction to Ocean Development Joint Stock Company 2.2 External environment of Ocean Development Joint Stock Company 2.3 Internal environment of Ocean Development Joint Stock Company CHAPTER 26 28 48 FORMULATING BUSINESS STRATEGY OF OCEAN DEVELOPMENT JOINT STOCK COMPANY TOWARDS 2020 3.1 Strategic Task to 2015 3.2 Formulating business strategy to 2015 for OCEAN JSC 3.3 Determination and implementation of OCEAN JSC’s strategy to 2015 3.4 Implementation solutions of business strategy Conclusions and recommendations for further research 67 69 79 80 84 References 86 Appendices 88 iii LIST OF TABLES AND FIGURES Chapter Figure 1.1: Missions of business strategy management Figure 1.2: Basic model of business strategy planning Figure 1.3: Strategy planning process Figure 1.4: Michael Porter's five competitive force model Figure 1.5 Examples of External Factor Evaluation Matrix (EFE) Figure 1.6: Examples of Internal Factor Evaluation Matrix (IFE) Figure 1.7: SWOT matrix model Figure 1.8: Example of Quantitative Strategic Planning Matrix (QSPM) Chapter Table 2.1: Key macroeconomic data of Vietnam in 2004-2008 Table 2.2: Some indicators on Vietnam Real Estate Market Table 2.3: Monthly average income per capita in 2006 Table 2.4: Development trends of Vietnam Real Estate Market Table 2.5 External Factor Evaluation (EFE) Matrix Table 2.6 Human resources of OCEAN JSC Table 2.7 Some indicators of asset and financial scale of OCEAN JSC Table 2.8: Some financial indicators of OCEAN JSC Table 2.9: Competence self- assessment of OCEAN JSC Table 2.10: Internal Factor Evaluation (IFE) Matrix Chapter Table 3.1 SWOT Matrix of OCEAN JSC Table 3.2 Primary selection of master strategy Table 3.3 Quantitative Strategic Planning Matrix – QSPM (1) Table 3.4 Quantitative Strategic Planning Matrix – QSPM (2) Chart 3.1 Strategy implementation schedule iv Page 12 15 19 21 22 31 34 40 43 48 49 50 58 61 66 70 76 77 78 79 INTRODUCTION General context, necessity and significance of the study:  Enterprises are making a significant contribution to economic growth and market economy reform in Vietnam However, it is shown that most of Vietnamese enterprises, especially private sector, are characterized by low competitiveness, a series of constraints and inadequateness in management including business strategy management  Being a private enterprise, incorporated in 2006, Ocean Development Joint Stock Company operates in a dynamic, demanding and risky market i.e Vietnam real estate market Although some achievements and growth in revenue and profit, the Company’s business operations are recently unstable, modest and unclearly-oriented due to various reasons in which the confusion when positioning market, limited competence and failure to develop a comprehensive business strategy to act as a background for specific business administration activities Therefore, investigation and application of the modern business administration concepts for Business Strategy Formulation are urgent and practical significance to Ocean Development Joint Stock Company  In such context, Group No 12- M04 Class - Global Advanced Master of Business Administration Program of Griggs University in Hanoi selects the topic “Formulating the Business Strategy for Ocean Development Joint Stock Company towards 2015” to fulfill the assignment of Strategy management module Aims and objectives of the research:  This assignment aims at applying knowledge accumulated from Global Advanced Master of Business Administration Program (Griggs University) to formulate business strategy of Ocean Development Joint Stock Company to 2015  Development of Ocean Development Joint Stock Company is supported and strengthened Research methodology: main methodologies:  Desk study: o To seek, collect, review and select theoretical documents applied for the assignment o To seek, collect, analyze and evaluate documents and data of business environment  Analyst-driven approach: o To collect opinions by questionnaire to support the business environment assessment as well as available competence of the Company o To consult directly internal and external knowledgeable experts Outline of the Study Introduction Chapter 1: Literature review on business strategy formulation Chapter 2: Business environment of Ocean Development Joint Stock Company Chapter 3: Formulating Business Strategy of Ocean Development Joint Stock Company TOWARDS 2020 Conclusions and suggestions for further studies Chapter SOME THEORETIC BASES FOR BUSINESS STRATEGY FORMULATION • Chapter aims to investigate some fundamental theories to act as a ground for developing business strategy of Ocean Development Joint Stock Company • Before investigating theories on business strategy, it is required to specify some issues relating to real estate market- where Ocean Development Joint Stock Company is operating Real estate market is a combination of market segments Each segment has various products: Products classified as per utility of property include land, commercial works, service, industrial works, tenement building, and special works Products classified as per market operation form include property for sales, purchase, transfer; property for mortgage, insurance, deposit; real estate transaction service; joint- name real estate, equitization, equity, etc Products classified as per region include urban property, rural property, and urbanization property Products classifieds as per market admission include primary property (for instance coarse building directly sold by the Project Owner) and secondary property (turn key complete building), etc [23] • Major business lines of Ocean Development JSC are: To invest in commercial real estate development (Commercial Center, head market, retailers) This is a combination of activities including: 1) Input: project design, land receipt, etc.; 2) Manufacturing and transfer: works construction; and 3) Output: Post-investment management and business Therefore, it is possible to study theoretical model on Business Strategy Formulation for manufacturers to apply for Ocean Development Joint Stock Company 1.1 OVERVIEW ON BUSINESS STRATEGY 1.1.1 Some concepts and characteristics of business strategy In different phases, contexts and approaches, theoretical research models present various concepts on business strategy Generally, there are approaches covered with “business strategy” concept [16]:  The first approach considers the business strategy as a management norm, in which, the business strategy is only a form of business plan by nature G.Arlleret revealed that strategy is the determination of how and what designed to achieve the particular goals via policies Sharing this perspective, D.Bizrell specified strategy as a master plan to direct or orient enterprises to the desired goals; acting as a background for planning policies and operation techniques Gluecl defined that business strategy is a consistent, comprehensive and synthetic plan designed to achieve corporate goals  The second approach considers business strategy as an art to compete in market and develop enterprise Alain Threlart said that strategy is an art enterprise applies to protect against competition and win M Porter also defined that: Strategy is an art of constructing reliable competitive advantages for preventative purposes  The third approach- a combination of the two aforesaid approachesconsiders business strategy as an art of consolidating and controlling operations to obtain long- term goals of enterprise Right in 1962, Alfred Chandler specified that: Business strategy includes determination of corporate long- term goals and objectives and application of a series of necessary resource allocation, to achieve these goals Later, Mintzberg introduced a general model and completely reflected various concepts on business strategy with 5’s P definitions of strategy namely Plan, Pattern, Position, Perspective, and Ploy [10] Regardless of how to access to, nature of the strategy is generally characterized by following straits [16]:  The strategy explicitly defines basic goals and business orientation of companies in each period  The strategy is oriented to the corporate continuous and reliable development in an often-fluctuating market  The strategy is used to effectively combine development and exploitation of corporate resources in the present and in future; uphold advantages and take opportunities to gain competitive advantages  The strategy is reflected in a continuous process;  The strategy is oriented to attack and win in market  The strategy is often constructed in a long period (3 years, years, 10 years and so forth) Within the scope of this study, business strategy is interpreted as the art to design and organize facilities to achieve long- term goals of companies associated with fluctuation of business environment 1.1.2 Business strategy in the corporate strategy system Various strategy levels are available in the enterprises, including:  Corporate strategy refers to the overall goals and scale of corporate to satisfy expectations of the owner This significant level orients process of making strategic decisions in the entire enterprise Corporate strategy is explicitly presented in “mission statement”  Business strategy refers to how companies can compete successfully in a particular market It involves in strategic decisions on product selection, meeting the Buyer demand and gaining the competitive advantage against others rival to exploit and generate new opportunities  Operation strategy refers to how each division in the enterprise will be organized to perform the strategic orientation at company level and every division in the company (for example marketing strategy; financial strategy; human resources development strategy, etc.)[5] 1.1.3 Significance of business strategy formulation in the strategic management o It has competence and proper investment in R&D There are members specialized in consultancy, design, R&D Many products are applied in construction structure field It is supported by the State R&D agencies (Ministry of Construction) o It gains advantages in relation with the central and local competent authorities It takes advantages of the leading State-owned enterprise under Ministry of Construction Many State senior officials are derived from SONGDA o It has advantage in access to market information from the State agencies • Weakness: o Marketing activities are not properly invested; trademark commercialization is not officially carried out; the professional retailer network is unavailable o Product images are not close and friendly with low income Buyers Product quality is not verified in the small size real estate works o At present, public opinion and the State agencies tend to restrict the multi- discipline investment activities of corporations and economic groups o Governance skills are not reformed It has the particular assignment and hierarchy system of the State – owned enterprises Self- control and clear responsibilities are not made Management and administration are not flexible and creative Post- investment project management capacity is not high o The State and Government of Vietnam apply the policy of gradually reducing the State fund investments into enterprises, including State corporations and groups like SONGDA 109 o A large number of disqualified employees are still available, but is impossible to remove due to the binding of policies for the Stateowned enterprises o The old process line is hard to change to apply new technology due to large scale o It fails to recover inherent weakness of the State enterprises including waste, ineffectiveness, loss, price increase, etc resulting in the less competitive selling price o Due to large scale, it does not make great effort to compete in the small market segments It is not allowed to participate in the bidding packages of projects under Ministry of Construction (in accordance with the Statute on Procurement) o Benefits from R&D are lower than that invested expenses Structure of R&D units is too clumsy, ineffective o It is restricted by particular regulations of the State- own enterprises, for example, the State financial management regulations prohibit expenditure for unofficial relations o It is not active and sensible to response to the market fluctuation Housing and Urban Development Corporation (HUD): HUD is a combination of the holding company and members The holding companies are the State-owned company, located at 21 Kim Dong, Giap Bat, Hong Mai, and Hanoi HUD covers development investment fields for residential areas, new urban areas, tourism area, entertainment area, economic zones, centralized industrial parks; trade in urban building and infrastructure; construction of the civil, industrial, traffic, irrigation, hydropower, posttelecommunication, infrastructure engineering works of urban areas, industrial parks; consultancy and construction of development projects of buildings, urban areas, industrial parks; investment consultancy and construction for development 110 projects of buildings, urban areas, industrial parks, tourism area, technical infrastructure, etc HUD, currently, owns 19 member companies, affiliates and joint venture companies Scale of owner’s equity to December, 2008 is over 3200 billion VND, total working capital is nearly 10000 billion VND • Strength: o It is a famous trademark in big cities with over 30 member companies, effectively supported by good ads and PR o The product images are close to the medium income Buyers, creating the particular product images for complex building for medium and high income Buyers Linh Dam is one of the first close tenement-building complexes in Vietnam o It is potential to diversify products It is transiting to multidiscipline corporation model o It is highly appreciated the after- sales management and administration capacity in terms of professionalism Managerial staffs are mainly young generation; formed from market mechanism from 1992 up to now o It is likely to access to funds from the credit institutions o Products are large residential area complex, hence, the selling price and price can be reduced (as per m2 land or floor) o It is one of the leading enterprises in the urban area market in big cities It establishes a good relation with Ministry of Construction, major provinces and cities It has advantage to access market information from the State agencies • Weakness: o It is restricted by widespread of trademark The trademark is unavailable in rural and agricultural areas The trademark is not officially valuated and commercialized The retailer system is poor 111 Buyers actively access to the company Most of Buyers though that HUD has no “luxury products” Generally, products are simple, not special in terms of architecture There are no separated commercial real estate products (For example: Commercial centers, supermarkets and market are only one part of the product composition in general) There is no special product quality Products are relatively monotonous; mainly tenement building complex in cities Product design is not modified as per Buyer o Governance and administration skills are still restricted due to the governance mechanism of the State – owned enterprises It is evaluated as non- creativeness, not dare to make breakthrough in new fields Operations are mainly in subsidiaries, therefore, uncontrollable risk of benefits of the corporation is available o The owner’s equity invested directly in the holding company is low Capital and assets are mainly in subsidiaries, hence, it is difficult to centralize the financial resources as necessary o The material drive for employees is not high because it is governed by the salary scale of the State o Several social policies are implemented resulting in price increase o Market share in rural area is less; unavailable in the small works Vietnam Construction and Import-Export Joint Stock Corporation (VINACONEX): Vinaconex is a combination of enterprises including the holding company and subsidiaries The holding company is located at Trung Hoa Nhan Chinh Urban Area, Thanh Xuan, and Hanoi Its major line of business is real estate trading, construction and installation, investment consultancy- design- planning survey, trading, import- export of equipment and materials for construction and other industries, industrial and construction material production, export of experts and human resources, etc Vinaconex is the State equitized corporation; having more 112 than 70 head subsidiaries nationwide with over 40,000 officials, engineers, and workers In 2008, total working capital of the holding company and subsidiaries was 22659 billion VND, total owner’s equity was 1636 billion VND in which the holding company had 13939 billion VND of working capital and 1493 billion VND of the owner’s equity • Strength: o Although it has been established for 20 years, Vinaconex is a powerful trademark in every real estate market segments The trademark has been assessed and commercialized and available in the TOP 30 national trademarks o The distribution system is widespread with approximately 60 member units and affiliates The retailer network is professional o It is known as the leading commercial real estate construction contractor in Vietnam (Tenement building, commercial center, architectural structures, industrial parks, etc) o It provides products in nearly all real estate market segments; not limited in scope, field and location o Good practices on corporate governance are applied Because it is listed, the transparency is higher Governance and control capacity is evaluated to be suitable with market economy demand o The financial capacity is very high because it is assigned by the State and many construction companies are accepted The credit institutions highly appreciate Vinaconex, so it does not face with difficulties when loan mobilization is need Being a joint stock company, the possibility to mobilize the owner’s equity is high o It is inherited with qualified and experienced staffs It is not limited with labor and salary scale of the State- owned enterprises, therefore employees are driven strongly 113 o It has advantage in input cost resulting in the selling price advantage because it has many member units specializing in construction material production In spite of not being a leader in the market, it posses a remarkable market share in all real estate market segments o It is acknowledged to make great effort in R&D for new products It is dynamic and sensible to response with the market fluctuation • Weakness: o It does not have special and outstanding products The specific quality advantages are unavailable o In fact, many disputes and claims of Buyers are available Product provision time is long o Investment is too extensive, not specific o It is dispersed into too many administration fields; hence, management and cooperation effect between fields is not high Failure in investment in the consecutive fiscal years is met but no special response is applied o After equitization, the State investment funds are unavailable The current ownership representative (State Capital Investment Corporation – SCIC) has no plan for supplementing capital, which can reduce the holdings The financial structure of holding company is unbalance; capital density of the holding company is mainly in subsidiaries o After equitization, it has no advantage of land and site access; relation with the State management agencies is lost Dai An Joint Stock Company: Dai An Joint Stock Company is a private company, incorporated on 12 th December, 2001 with owner’s equity of 25 billion VND, located at Km51, National Highway No 5, Hai Duong city Major line of business includes 114 investment in housing construction and trade; constructing the civil, industrial and traffic works; trade in construction materials, interior decorating goods, agricultural, forestry and fishery products; domestic and international investment consultancy, etc The company’s scope of operation is Hai Duong and neighboring provinces Employees of the company are 211 people Although this is a smallscaled private company, the company is currently the project owner of a series of great real estate works in the coverage of OCEAN JSC • Strength: o It is the famous trademark in Hai Duong and some neighboring provinces such as Hung Yen, Thai Binh, and Hai Phong It is famous for industrial parks and rural commercial real estate o It is highly appreciated in terms of infrastructure quality for industrial parks in Hai Duong The international corporate- oriented governance and management are applied due to joint venture with many overseas partners o It is supported with finance from many overseas partners Its expertise in constructing the infrastructure of industrial parks It is able to apply high technology as per request of the overseas partners o It is dominated in the industrial park infrastructure construction market The good relationship has been established with competent authorities of Hai Duong, Hung Yen and Hai Phong It is sensible to grasp demand on production site of foreign companies when investing in Hai Duong and Hung Yen • Weakness: o The trademark is unavailable in major cities The distribution network is scattered o No specific advantage of rural commercial real estate product is achieved Diversified products are unavailable 115 o Scale of funds is small o It is inexperienced in other real estate development investment fields No clear competitive advantages in the selling price are unavailable o R& D is not invested properly 116 Appendix 5: Comparing the competitiveness of main rivals Financial capacity comparison (including capital scale, property, capital mobilization, accessibility with credit fund, etc), SONGDA ranks the fist, next is Namcuong, Vinaconex, HUD, OCEAN and last is DAIAN Comparisons on management capacity in terms of business production and resources mobilization capacity to provide products: Vinaconex is the best, next is Namcuong and DAIAN they obtain the approximately equal marks, OCEAN ranks the 4th, the 5th and 6th rank is Songda and HUD, respectively This comparison is completely objective opinion of respondents, however, it has certain logic because VINACONEX is the only one out of the enterprises listed on the securities market and hired professional overseas consultancy to restructure and renovate corporate governance as well as production and business administration 117 In the real estate business industry in general and commercial real estate development investment in particular, accessibility to State land (i.e it is assigned by the State to invest in the real estate business and construction) has the significant meaning In this aspect, Songda is the highest evaluated one, the second is- surprisingly is a private company – Namcuong Vinaconex, HUD, and DAIAN are on the next position Last is OCEAN 118 Regarding cost effect, DAIAN and NAMCUONG are on the higher position against others It is noted that the State corporations including SONGDA and HUD are ranked on the bottom of the list Perhaps respondents thought that State enterprises usually cause waste, use cost ineffectively Regarding quality, design and meeting the Buyers’ satisfaction of products, SONGDA, NAMCUONG, VINACONEX rank on the top three positions DAIAN, OCEAN and HUD occupy the next rank 119 Finally, from the survey results, the Authors summary and divide arithmetical mean mark to compare general competitiveness of rivals Accordingly, Namcuong is on the top, next is Vinaconex, Songda, DAIAN, HUD and last is OCEAN JSC 120