Luận văn xây dựng chiến lược kinh doanh công ty du lịch viettravel

Internal - External Matrix IE Matrix...20 CHAPTER II: COMPANY’S BUSINESS ENVIROMENT ANALYSIS...22 1.. tourism development and to strong tourism development, leaders at level arerequired

FLUẬN VĂN THẠC SĨ Xây dựng chiến lược kinh doanh Công ty Du Lịch Viettravel

THESIS TITLEBUSINESS STRATEGY BUILDING FOR

VIETTRAVEL CO., LTD

Our appreciation goes to the Master of Business Administration Programs – Special mention also goes to all Lecturers of the Program provided us withvaluable knowledge during the MBA course so that we can sum up into this as afinal report

Our gratitude also goes to the VIETTRAVEL Directorate and its staff hasfacilitated our Group during the practice time there

Appreciation also goes to all the Students of and “Mama” staff forencouraging and helps us during the MBA course and report time

Lastly, our appreciation goes especially to the Group’s families whofacilitate us to fully participate in the MBA course

Although our Group has tried our best to perform this Capstone ProjectReport within our capacities but it definitely still have unavoidable deficiencies Weare thus hope that we will continuously receive more valuable comments from youall for the next step – the strategy implementation of VIETTRAVEL

TABLE OF CONTENTS

ACKNOWLEDGEMENTS 1

LIST OF ABBREVIATIONS 5

LIST OF TABLES AND FIGURES 6

INTRODUCTION 7

1 The necessity of topics 7

2 Research purposes 9

3 Object and scope of the research 9

4 Research methodology 9

5 Expected output 9

6 Lay-out of Capstone Project Report 10

CHAPTER I: BASIC THEORY OF STRATEGIC MANAGEMENT 11

1 Basic theory of strategic management 11

1.1 Concept of strategy 11

1.2 Concept of business strategy 12

1.3 Business strategy clarification 12

1.4 Basic model of business strategy management 13

2 Strategy building for an enterprise 15

2.1 Business environment analysis 15

2.1.1 External business environment 15

2.1.2 Macro environment analysis 15

2.1.3 Micro environment analysis 16

2.1.4 Internal environment analysis 18

2.2 SWOT Matrix Tool 18

2.3 External Factor Evaluation Matrix (EFE Matrix) 20

2.4 Internal Factor Evaluation Matrix (IFE Matrix) 20

2.5 Internal - External Matrix (IE Matrix) 20

CHAPTER II: COMPANY’S BUSINESS ENVIROMENT ANALYSIS 22

1 Overview about VIETTRAVEL 22

1.1 Foundation and development 22

1.2 Company’s organization structure 24

1.2.1 Head office in Hanoi 24

1.2.2 Representative office in Hochiminh city 24

1.2.3 Partners system 25

1.3 Main products and services 25

1.3.1 Tourism products and services 25

1.3.2 Other kind of products and services 25

1.4 Some results of business operations of the company 25

2 External business environment analysis 26

2.1 Macro environment analysis 26

2.1.1 Economic environment 26

2.1.2 Technological environment 28

2.1.3 Socio-cultural environment 28

2.1.4 Demographic environment 29

2.1.5 Political- Legal Environment 29

Page

2.1.6 Natural environment 30

2.1.7 Global environment 31

2.2 Micro environment analysis 32

2.2.1 Bargaining power of buyer analysis 32

2.2.2 Bargaining power of suppliers 33

2.2.3 Rivalry among competing firms 34

2.2.4 Threat of new entrants analysis 35

2.2.5 Threat of substitute products 35

2.3 External Factor Evaluation 36

3 Internal environment analysis 37

3.1 Analysis of current strategy 37

3.2 Competitive edges 38

3.3 Origin of sustainable completion advantage 41

3.3.1 Resources 41

3.3.2 Market 45

3.3.3 Brand Image 49

3.3.4 Brand loyalty 49

3.3.5 Other values of the brand 50

3.4 Value chains and the creation of value chains of the company: 50

3.4.1 Research and development 50

3.4.2 Marketing and sales 50

3.5 Out sourcing 51

3.6 Internal Factor Evaluation (IFE Matrix) 51

CHAPTER III: BUSINESS STRATEGIES OF VIETTRAVEL FOR PERIOD OF 2010-2015 53

1 Visions and missions of VIETTRAVEL for period of 2010-2015 53

2 Business strategies selection for VIETTRAVEL period 2010-2015 55

2.1 SWOT Matrix 55

2.2 Internal - External Matrix (IE Matrix) 56

3 Solutions to implement strategies chosen 56

3.1 Solution 1 57

3.2 Solution 2 57

3.3 Solution 3 57

3.4 Solution 4 57

3.5 Solution 5 57

3.6 Solution 6 57

3.7 Solution 7 58

RECOMMENDATIONS 59

1 Vietnam Administration Tourism and stakeholders 59

2 Higher authorities – The Union of Vietnam Transport 59

CONCLUSION 60

REFERENCES 61

APPENDICES 62

LIST OF ABBREVIATIONS

ASEAN Association of Southeast Asian Nations

UNESCO United Nations Educational Scientific and Cultural Organization

MICE The Meetings, Incentives, Conventions and Exhibitions

LIST OF TABLES AND FIGURES

Page TABLES

FIGURES

1 The necessity of topics

Vietnam is a country located at the center of East Asia with a geographicallocation of advantages in economic cooperation and exchanges with other countries

in the region and international with its economy is growing and gained importantachievements in the renovation of the country

With diverse and abundant natural resources of 3,200 km coastline withdiversity marine ecosystems and island; famous beautiful beaches; Ha Long Bay isrecognized World Natural Heritage by UNESCO; Nha Trang Bay is considered asamongst the 29 world's most beautiful bays by The World Bay Club; Da Nangbeach is rated as one of the 6 most beautiful beaches the planet by Forbist magazine(USA) In addition, many marine ecosystems, islands and beaches such as the Lang

Co Mui Ne-Phan Thiet, Phu Quoc Island etc Many caves, forests and naturalprotected areas such as Phong Nha-Ke Bang, Can Gio Area Biosphere ReservesWorld, Ca Mau salt-marsh forest Also, Vietnam is the country with its excellentculture- history with many cultural festivals-cultural art traditions, ancient capitalHue, Hoi An, My Son relics Of these, 8 heritages were recognized as the worldnatural and culture heritages by UNESCO Vietnam has a stable political regimewiht hospitality people, refined food, handicrafts and traditional fine-arts isattracting more international tourists to Vietnam

Currently, tourism is one of the key economic sectors of many countriesincluding Vietnam Tourism is important for the country's economic developmentand improving people's incomes, particularly for people in the trade villages oftourist sites in the development strategies of national economy The most important

in the integration period, tourism is the opportunity to exchange, convergence ofglobal tangible and intangible civilizations; create believe, understanding, solidarityamong nations In other words, tourism is a bridge to promote the economy, is theface of a nation In order to promote economic development needs to promote

tourism development and to strong tourism development, leaders at level arerequired to be interested in and make suitable strategies and plans.

VIETTRAVEL Co., Ltd is a state-owned enterprise directly under the Union

of Vietnam Transport, participating in travel field from 1998 with the precursor isTravel Center under the Union of Vietnam Transport It officially established as acompany in 2004 The company together with the whole tourism industry has beentrying to make tourism position as a key economic sector of the country With morethan 5 years of experience, VIETTRAVEL has continuously success and developwith many significant achievements For many years the company receivedcertificate of merit as a good economic enterprise of Hoan Kiem District, HanoiCapital and is continually ranked in the top 10 sales agents of Vietnam Airlines

Our Vietnam has great efforts in the process of international economicintegration which create favorable conditions for business travel but also put thetourism enterprises face up with fierce competitive pressures and VIETTRAVEL isnot an exception although it has some certain achievements by using its competitiveadvantages in accordance with the socio-economic context in the past time Withcurrent context when the world economy initially just has restored after the greatfinancial crisis in 2008, it continuously creates new pressures for tourismenterprises to force them to method renovation in order to create added values.These require necessary and urgent activities for enterprise in product positioning,business orientation in the new context

Through practice time at VIETTRAVEL, the Group found thatVIETTRAVEL Directorate is too busy with current business activities and althoughthere are many ideas for future development but they are still ideas in their mind,not specific business strategy Thus, the most important thing VIETTRAVELshould do in this context is to build business strategies for period 2010 - 2015urgently That’s why the Group selected topic "Building business strategy forVIETTRAVEL period 2010-2015” for our Capstone Project Report with our desire

to apply theory from MBA course to practice to support VIETTRAVEL in buildingits business strategies.

3 Object and scope of the research

VIETTRAVEL is doing business in many fields such as tourism, trade,printing, training Among which tourism activities are identified as the company’score competency that bring major profit The other business activities exist just tosupport this core competency

Within research sphere of the Capstone Project Report, the research objectsand scopes of research are in tourism operations The time proposed to buildbusiness strategy is 5 years from 2010 to 2015; the research time is 3 years from2007-2009

5 Expected output

Feasible business strategies for VIETTRAVEL, period 2010-2015

6 Lay-out of Capstone Project Report

Besides the introduction, table of contents, conclusions, references, it isdivided into three chapters as follows:

Chapter I: Basic theory of strategic management;

Chapter II: Company’s business environment analysis; and

Chapter III: Business strategies for VIETTRAVEL period 2010-2015

CHAPTER I: BASIC THEORY OF STRATEGIC

In 1980, when strategic management disciplines have become ripe, authorQuinn, J., B in Strategic Change: Logical Inscrementalism was made to define amore general: "Strategy is series of patterns or integrated plans of major goals,policies, series actions into the whole closely”

After that, Johnson, G., Scholes, K in Exploring Corporate Strategy (1999)defined the strategy in the environmental conditions have changed rapidly:

"Strategy is the direction and scope of an organization in long-term to gain acompetitive advantage for organizations through the format of its resources in thechanging environment, to meet market demand and satisfy the expectations ofstakeholders "

In defining strategy with 5 P letters, Mintzberg gave general aspects ofstrategic management as follows:

(i) Plan: series of actions intended consistently;

(ii) Pattern: being consistent behavior over time, may be intended or notintended;

(iii) Position: match between the organization and its environment;(iv) Perspective: how to identify deeply about the world;

(v) Ploy: how specific to be able to fool rivals

A concise definition that is commonly used today is the definition ofstrategies in curriculum "strategy is a complex series of activities aimed atmobilizing the resources of an organization may have to achieve a certain goal”

1.2 Concept of business strategy

Business strategy is understood as a set of plans and actions to help businessenterprises to achieve business goals The following image illustrates the businessstrategy of an enterprise:

Each enterprise must respond to strategic business decisions continuously.However, some of strategic decisions can become more pressing in some certainperiods depending on the specific context That is the process of strategic businessmanagement

1.3 Business strategy clarification

Depending on the strategic business level, people can be divided into 3 types

of business strategy, including: company strategy; business unit strategy andfunction strategy

Figure 1: Business Strategy

(Source: Strategic Management – Associate Prof Le

The Gioi)

Internal

OpportunitiesStrengths

Weaknesses

(i) Company strategies toward goals and overall scope of organization;

(ii) Business unit strategies regarding how to succeed on specific markets;(iii) Function strategies are strategies to help business strategies forcompanies and for proper implementation by the components on the aspects ofresources of human, finance, processes and skills needed Currently, withglobalization trend, enterprises are fast diversifying their activities beyond nationalborders, from which global strategy as a choice to face with international businessissues

1.4 Basic model of business strategy management

Basic model of business strategy management also called 5 stages model inthe process of strategic planning include: (i) Select the mission and main objectives

of an enterprise, (ii) External environmental analysis to identify opportunities andthreats; (iii) Internal environment analysis to identify strengths and weaknesses, (iv)Strategies selection based on the search resources, capabilities and core competencyand develop these to overcome threats, utilize opportunities from externalenvironment; (v) Strategy implementation

Task of external and internal environment analysis and then select strategies

is considered as business strategy building Strategies implementation will includedesigning organizational structure and control systems appropriate to put intopractice strategies

Each section described in Figure 2 is a step in the order in the strategicplanning process Each cycle of strategic planning begins with a mission statementand key objectives of the enterprise After mission report and main objectives ofenterprise is analysis of internal and external environments and strategy selection.The process ends with the design of organizational structure and control systemsnecessary to implement selected strategies

BASIC MODEL OF BUSINESS STRATEGY MANAGEMENT

Figure 2: Basic model of business strategy management

(Source: Strategic Management – Associate Prof Le The Gioi)

VISIONS AND MISSIONS

VISIONS AND MISSIONS

Strategies Selection and Building

Strategies Selection and Building

Internal Analysis (to find resources and core competency)

2 Strategy building for an enterprise

2.1 Business environment analysis

2.1.1 External business environment

The purpose of external environment analysis is to identify opportunities andthreats from external environment for enterprise

2.1.2 Macro environment analysis

Economic environment show the nature and direction of that economyincluding enterprise operation Four important factors of macro-economicenvironment are: (i) growth rate of the economy, (ii) interest rates; (iii) foreignexchange rates; (iv) the inflation rate

Status of the macroeconomic environment determines the health, prosperity

of an economy It always causes the impact on business and industry Therefore, theimpact of the economy to an enterprise can change the ability to create value and itsincome

2.1.2.2 Technological environment

Changes in technology are the most rapidly changes and they impact onmany parts of society including enterprises They are changes on creating newknowledge and the transition to the knowledge into products, processes and newmaterials Technology changes include creation and destruction, the risks andthreats It also can shape new structure for industry

In the global space, opportunities and threats of technology to all theenterprises by buying out or self-created new technologies

2.1.2.3 Sociocultural environment

Sociocultural environment related to social attitudes and cultural values - thefoundation of society Social changes also create opportunities and threats forenterprises, especially for tourism enterprises

2.1.2.4 Demographic environment

Demographic segments in the macro environment related to: population; agestructure; geographic distribution; community of nations; income distribution etc2.1.2.5 Political - Legal environment

Political - Legal factors also impact significantly to level of opportunities andthreats from business environment for enterprises and mostly in how the interactionbetween enterprises and the government This segment will affect significantly tocompetitiveness of enterprises Thus, once considering political – legalenvironment, it should consider the new policies relevant related to Statemanagement; law on anti-monopoly, tax law; selected priority industries; Law onlabor; the areas in which state management policies can impact operations andprofitability of the ability of the industry or enterprises

In addition, it should mention a series of problems that enterprises must face

on a global scale related to politics – legal environment such as: trade policy; thenational barrier protection etc

2.1.2.6 Global environment

Globalization of business market creates both opportunities and threats forenterprise include concerned global market; the current market is changing;important international political events; institutional characteristics and basiccultural on the global market

2.1.3 Micro environment analysis

Micro environmental analysis is common uses of 5 forces analysis ofMichael Porter:

2.1.3.1 Bargaining power of buyers

Buyers or customers are a competitive pressure affect directly on the entireproduction and business of industry Customers are divided into 2 groups of retailcustomers and distributor customers Both groups will pressure on companies aboutprice, quality products, services by continue bargaining They are the persons who

control competition in the industry through their decisions of purchasing productsand services

When analyzing the distributors, enterprise need to pay attention toimportance of customers, they can directly go deep into internal environment of theenterprise

2.1.3.2 The Bargaining power of suppliers analysis

Number of suppliers and the size of the providers will decide competitivepressure, the power to negotiate their industries and enterprises If the market only afew vendors have a large scale will create competitive pressure, affects the entireproduction and business activities of the sector So in the current era whereinformation is a factor promoting the development of the commercial informationproviders have a large impact on the selection of suppliers in the business

2.1.3.3 Rivalry among competing firm analysis

Current competitors are competitors are doing production and businessactivities similar with enterprise Analyzing current competitors need to analyzestrategies, objectives, evaluate strengths, weaknesses of competitors to selectsuitable strategy for enterprise

2.1.3.4 Threat of new entrants analysis

The risk of appearance of new entrants or potential competitors maybe affectthe industry in the future Potential competitors have more or less pressure toindustry will depend on the following factors:

(i) The attractiveness of the sector: This factor is expressed through profitindicators, number of enterprises in industry

(ii) The barriers to joining sector are the factors that make joining a sectormore difficult and expensive

2.1.3.5 Threat of substitute products analysis

Substitute products and services are products and services can meet thedemand equivalent to the products and services in the industry

Competitive pressure primarily of alternative products and services is theability to meet demand in the industry, adding other factors are price, quality andother factors of the environment such as culture, politics, technology will also affectthe threat of alternative products and services.

2.1.4 Internal environment analysis

Internal environment include human resources, finance, technology,technology, ability and capacity of core competency of enterprise Analyzingresources and capabilities of enterprise as conducted through analysis of theactivities of the business functions such as marketing activities, human resources,finance etc In addition, internal environment including culture of enterprise and

"before the leaders can shape a new strategy, they need to reach a commonunderstanding about the current location of their enterprises" - W Chan Kim andRenee Moubourgne Therefore, the purpose of internal environmental analysis is tofind the strengths and weaknesses of enterprise and from which to combine theexternal business environment to create appropriate strategies and solutions for theenterprise

2.2 SWOT Matrix Tool

To identify and select business strategies often use SWOT matrix SWOT isthe abbreviation of the collection of the first letter of the English words: Strengths,Weaknesses, Opportunities and Threats

(i) Strengths: What are the advantages of enterprise? What kind of work the

enterprise is doing best? Which resources that enterprise need and can use? Whatare te advantages that others see in your business? Problems from the businessaspect itself and other enterprises must be considered Advantages are usuallyformed when compared to competitors For example, if all the competitors offerproducts of high quality, quality manufacturing process will not be advantage that it

is essential to have to survive on the market

(ii) Weaknesses: Anything can improve? Is task of business worst? What

should avoid? Problems on the basis of inside and outside of the enterprise must beconsidered Others may see weaknesses that do not see themselves Whycompetitors can do better than them? Recognize and face with the truth

(iii) Opportunities: Where are good opportunities? What are concerned

trends that enterprise has been known? Opportunities can arise from technologicalchange and international market or even in narrow spaces, from a change in statepolicy related enterprise activities; from the change of social patterns, populationstructure or fashion etc, from the events in the region Search method is most usefulreview of the advantages of their own and question whether these advantages opennew opportunities or not Can also do the opposite, reviewing the weaknesses ofenterprise and give questions if there are any opportunities appear if removing them

(iv) Threats: What are obstacles? What are competitors doing? The specific

demands of work, products or services changed or not? Technology change gets risk

or not? Is there any overdue debt or cash flow? Are there any weaknesses withenterprise? Analysis often helps to find out what to do and turn weaknesses intoprospects

Internal factors need to analyze should include: enterprise culture and image,organization structure; key persons; ability to use resources; experience; capacityoperation; Reputation and brand name; market share; finance, major contracts;Copyright and trade secret business etc

The external factors need to analyze maybe are: Customers; competitors;market trends; suppliers; Partners; Social change; new technology, economic andPolitical-legal Environments etc impact on enterprises

Effective strategy is the strategy to take advantage of opportunities fromexternal environment combine with internal strengths as well as disable or minimizethe external threats and limited or overcome the weaknesses of enterprise itself Souse the SWOT matrix can form the following strategies for business:

(i) S-O strategies: pursue opportunities that best suits the strengths of theenterprise;

(ii) W-O Strategies: overcome weaknesses to pursue opportunities;

(iii) S-T Strategies: determine how companies can use their advantages toreduce damage to the external challenges;

(iv) W-T: set up a defense plan to prevent weaknesses of the business fromthe effects from the outside environment

2.3 External Factor Evaluation Matrix (EFE Matrix)

EFE matrix method is a strategic-management tool often used for assessment

of current business conditions The EFE matrix is a good tool to visualize andprioritize the opportunities and threats that a business is facing

External factors assessed in the EFE matrix are the ones that are subjected tothe will of social, economic, political, legal, and other external forces

The EFE matrix method conceptually relates to the Balanced Scorecardmethod of external factors

2.4 Internal Factor Evaluation Matrix (IFE Matrix)

IFE matrix is a strategic management tool for auditing or evaluating majorstrengths and weaknesses in functional areas of a business IFE matrix also provides

a basis for identifying and evaluating relationships among those areas The InternalFactor Evaluation matrix or short IFE matrix is used in strategy formulation

The IFE Matrix together with the EFE matrix is a strategy-formulation toolthat can be utilized to evaluate how a company is performing in regards to identifiedinternal strengths and weaknesses of a company The IFE matrixmethod conceptually relates to the Balanced Scorecard method in some aspects.2.5 Internal - External Matrix (IE Matrix)

The IE matrix is another strategic management tool used to analyze workingconditions and strategic position of a business The Internal External Matrix or short

IE matrix is based on an analysis of internal and external business factors which are

combined into one suggestive model The IE matrix is a continuation of the EFEmatrix and IFE matrix models.

The IE matrix is based on the following two criteria:

Score from the EFE matrix this score is plotted on the y-axis

Score from the IFE matrix plotted on the x-axis

The IE matrix works in a way that you plot the total weighted score from

the EFE matrix on the y axis and draw a horizontal line across the plane Thenyou take the score calculated in the IFE matrix, plot it on the x axis, and draw avertical line across the plane The point where your horizontal line meets yourvertical line is the determinant of company’s strategy This point shows the strategythat the company should follow

The IE matrix can be divided into three major regions that have different

strategy implications

Cells I, II, and III (horizontal) suggest the grow and build strategy This

means intensive and aggressive tactical strategies Your strategies should focus onmarket penetration, market development, and product development From theoperational perspective, a backward integration, forward integration, and horizontalintegration should also be considered

Cells IV, V, and VI suggest the hold and maintain strategy In this case,

your tactical strategies should focus on market penetration and productdevelopment

Cells VII, VIII, and IX are characterized with the harvest or exit strategy If

costs for rejuvenating the business are low, then it should be attempted to revitalizethe business In other cases, aggressive cost management is a way to play the endgame

CHAPTER II: COMPANY’S BUSINESS ENVIROMENT

ANALYSIS

1 Overview about VIETTRAVEL

1.1.Foundation and development

VIETTRAVEL Co., Ltd is state-owned enterprises directly under the Union

of Vietnam Transport With annual revenues of tens billion; enthusiastic andprofessional employees are over 60; VIETTRAVEL contributes significantly to thestate budget every year

Taking part in tourism market since 1998 with the precursor is TourismCenter under the Union of Vietnam Transport

In April 2004, the Center was strong enough to establish a company asVIETTRAVEL today In 2005, to meet demand for big volume of Chinese inboundvisitors at that time, VIETTRAVEL established a representative office in Mong Caiand Lang Son

In 2006, after two years confirmed the existence and development,VIETTRAVEL identified its strengths is organizing outbound tours.VIETTRAVEL’s customers are not just customers at the Northern of Vietnam butnationwide To meet customer requirements at that time, VIETTRAVEL alsoestablished representative office in Ho Chi Minh and its operation witheffectiveness nowadays

Also from outbound activities are growing, VIETTRAVEL leaders realizethe potential to develop MICE outbound tours for Vietnamese is very high due todemand to learn foreign experience in the integration period is increasing Thus, in

2006 the company focused on exploiting customers is agencies, companies whowished to go abroad for learning experience combined with tourism Also in 2006,with the first step to success in exploiting MICE outbound tours, the companydetermined that is a core competency, and the company decided to withdraw tworepresentative offices in Mong Cai and Lang Son, only focus on focal point inHanoi and Ho Chi Minh

Result of this decision is scale of the company is increasing andVIETTRAVEL has been recognized by tourism market as a brand name of theprofessional organizer for conference program, workshops, working in conjunctionwith domestic and abroad tourism

The company has been setting up close relationship with internationalpartners to meet requirements of contact information for meeting, surveys;workshops integrate to the development trend of the world In many years,company has arranged for many Ministries/ Sectors, agencies, unions to surveypractice, study abroad and through the maximum exploitation of support of agenciesand sectors under the Union of Vietnam Transport including: airlines, railway, roadand sea transport as unique travel company of the Union of Vietnam Transport.This support ensures customers to have the best way of transportation And thisstrong point has maintained and ensured the company’s revenue from outboundactivities more than 70% annual company’s revenue and always helps company tokeep the position in top 10 highest sale agents of Vietnam Airlines

An additional strong point of company is that services are more and moreperfect by the professional, experienced and enthusiastic employees associated withsystem of modern support services from company’s bus to restaurants, hotels aswell as partners in domestic and abroad

Company honor to have system customers throughout entire territories ofVietnam and some countries in region, including units, agencies and organizations

in Transport sector, the ministries, the Corporation, system of universities andcolleges, multi-national companies, foreign organizations as well as medium andsmall enterprises in whole Vietnam includes:

- Vietnam Banks association and its members:

+ Industrial commercial Bank of Vietnam;

+ Vietnam bank for agricultural and rural development;

+ Bank for foreign trade of Vietnam

+ Habubank;

+ MHB Bank

+ Techcombank Vietnam

- Branches of Incombank: Representative office II in HCMC; branches Ba

dinh, Thanh Xuan, Khanh Hoa, Chuong Duong, Dong Anh, Northern Hanoi

- Bank for investment and development of Vietnam: Head office,

Transaction III, Quang Trung, Hai Duong, Hung Yen, Ha Tay, Thanh Xuan, Bac HaNoi, Ha Noi,

- Branches of Bank or foreign trade of Vietnam

The objective of the company not only make a profit in the tourism industrybrought economic benefits to the country and society but also desire to be reallycultural bridge between Vietnam and countries in the region and the world With the

motto VIETTRAVEL – New style creates success, the company is ready with all

our customers to open world with a lot of wonders and interesting thing

1.2.Company’s organization structure

1.2.1 Head office in Hanoi

+ Address: 1B Ngo Quyen, Hanoi

www.VIETTRAVEL.com.vn

Total of employees in Hà nội: 45 for 5 departments:

+ Sales and Marketing Department

+ Operation and Tour guide Department

+ Trade service Department

+ Accounting Department

+ Administration – Personnel Department

1.2.2 Representative office in Hochiminh city

+ Address: 43 Hoang Du Khuong, 12 Ward, District 10, HCMC

1.2.3 Partners system

(i) Domestic: Hue, Da Nang, Lang Son

(ii) Outbound: Korea, Taiwan, Singapore, Germany, China, Lao PDR, ThaiLan, Japan, Indonesia, Australia, France, Italy, Sweden, Holland, UK

1.3.Main products and services

1.3.1 Tourism products and services

Provide package tour or a part of package tour for inbound, outbound and domesticmarket

1.3.2 Other kind of products and services

Visa procedure service for foreigners; Hotel, air ticket, train ticket booking;Transfer services of cars, buses; provide translators, tour guides etc

1.4 Some results of business operations of the company

For travel activities in Vietnam, if any enterprise has customer lead to hasrevenue and profit except for some particular cases Below are statistics of clientcompanies through the years VIETTRAVEL:

Table 1: Some results of the company’s business operation

(Source: Accounting Department of VIETTRAVEL)

The year 2008 is the year Vietnam economy affected by global financialcrisis Thus, demand of tourism also decreases (from 1,950 tourists in 2007 to 1,662tourists in 2008, equivalent with 15% decrease) In 2009, as the world economygradually recover, the company’s customers also increase to 1,858 tourists (increase11.8%) In 2010, with the new context, the company customers and revenuedefinitely increase.

2 External business environment analysis

2.1 Macro environment analysis

2.1.1 Economic environment

Tourism is an economic phenomenon having great power worldwide; it is thekey economic sector and the source of foreign exchange for many developingcountries in the world It is the foundation for the development of manymultinational companies, a significant portion of the net annual earnings of manypeople in developing countries Sustainable tourism towards three main goals: thegoal of economic, society, and environment, in which: economic objectives(economic life of the community and enterprises): to achieve growth of the sector,

to have profit in business, increase employment opportunities, and create interest inthe destination

The economic impact study provides information to help policy makersbetter understand the consequences of different impacts on enterprises as well as toother economic sectors; help us better understandabout the scale and structure oftourism enterprises in certain areas and linkages with other economic sectors Thisunderstanding brings about the benefits in identifying potential partners for tourismenterprises

With the demonstration that tourism has great economic impact, tourismenterprises can convince policy makers to spend more resources for the tourismindustry or to establish of policies to encourage tourism Looking back theeconomic growth of Vietnam in the field of tourism as follows

- Tourists: From 2001 - 2008 on tourist targets of domestic and internationalplans to achieve the objectives set out Accordingly, the international tourists toVietnam increased from 2.33 million arrivals to 4.25 million arrivals to reach anaverage growth rate of 7 to 7.4% per year.

- Tourism GDP: GDP growth reached about 5 to 5.5% of the same phase;higher than planned (4.5%), the proportion of GDP tourism in the total of thecountry's GDP increased every year

- Infrastructure facilities to serve tourism is rapidly developed in scale andquality which is gradually improved to meet the requirements for the increasingnumber of international and domestic tourists As of December 31, 2008, there areapproximately 8,556 tourist accommodation establishments with a total of 170,551compartments, in which: tourist accommodation units which have been ranked is4,283 with 109,198 compartments

In the eight years from 2001 to 2008, the State has supported 4,136 billionsDong primarily focused on the investment in infrastructure for 4 general resorts , 17national resorts and local tourism areas in 59 provinces and cities Although thiscapital only meets the needs of nearly 50% demand of tourism sector period from

2001 to 2008 but there were encouraging results, create the motivation to attractthousands billion dongs from other sources of capital to the development of tourismfacilities Particularly , it has attracted 250 foreign investment projects (FDI - theend of 2008) with about billions of USD primarily invested in the areas of buildinghotels, motels, tourism resorts, entertainment,traveling and transportation

During 2001 – 2008, the tourism sector attracted 43,233 millions of USDfrom ODA with the main donors are the Luxembourg Government, WTO, UNDP,

EU, Asian Development Bank In which, non-refundable ODA is 21,033 millions ofUSD and ODA loans is 18.2 millions of USD ODA projects conducted by theGeneral Department of Tourism (Ministry of Culture, Sport and Tourism) havebrought about many practical effects, especially in the field of training and

development of human resources, planning, investment, and propaganda to promoteand advertise tourism, strengthening the tourist attraction…

2.1.2 Technological environment

Technology is a key factor for the overall development today Wellrecognizing this problem, VIETTRAVEL has continued improving thetechnological equipment; apply advanced technologies to enhance the servicequality of products, costs of production to generate profits for the optimalbusiness Recently, the company has invested in upgrading the Website to preparefor attracting inbound visitors via the Internet.On the other hand, the devices of thecard payment bank of Industry and Commerce, Foreign Trade also create thequickness and convenience for inbound visitors

Besides the investment in technology, the company also continues toenhance the study ability for the staff to have the high professional qualification, to

be active, creative in order to have products which more and more meet thediversified demand of customers

2.1.3 Socio-cultural environment

Socio-cultural environment is important to attract tourists Cultural tourismtour is also easy to make a difference in the most competitive areas for eachregion Each region, each nation has a separate cultural identity, which creates theattraction for foreign guests Therefore, to develop tourism, it is needed to exploitbetter elements of traditional culture of the nation "Culture is the soul of tourism,tourism is a lifeless body, if there is no soul, it can not exist”, Pro Hoang Chuongsaid Cultural factors are necessary, both conservation and exploitation efficiencyvalues; if forgetting investment in culture, the tourism will not develop unattainably

Besides, the educational level also affects the requirements of customers.The reality shows that the ones who have higher educational level will requirehigher quality when they join in tourism tour

2.1.4 Demographic environment

In 2008, the population of Vietnam was about 86 millions of people thecurrent increase in population is the concern of Vietnam but it is also a potentialmarket for service business enterprises including VIETTRAVEL The increase indemography leads to increasing service demands

In 2008, the average income of Vietnam is about 1,030 USD This numbershows the direct impact to the consumption in service The people are ready to payfor the increasing tourism accordingly In the recent years, the domestic tourismdemand and outbound of Vietnam has increased significantly One example is that

in the holiday, the situation of shortage of train tickets, airplane tickets; thecrowdedness and overload in the tourism areas have happened…

Vietnamese people prefer discovering and easily accept the new things.Thus, the exploitation of tourism programs or renovation in the way to organize theprogram is always reasonable and to be the opportunity to bring out the success forthe company who is the pioneer in the exploitation

The world’s population increases about 78 millions of people per year Andfor the foreign countries in general, the tourism habit to discover is much morebefore that of Vietnam people so that the exploitation of the inbound market is anunlimited potentiality to Vietnam tourism enterprises

2.1.5 Political- Legal Environment

The tourist attraction destination is the safe destination in term of politic No

visitor chooses a point where there is political instability Thus, political factor is avery important factor for the development of tourism Thailand is anexample.Thailand is a country strong in the service sector, especiallytourism.Revenues of foreign exchange from Thailand tourism play an importantrole Due to the unstable political situation in 2008, the volume of travel to Thailanddecreased.Governments of Australia, South Korea, Singapore warned citizens whentravelling in Thailand, there are some countries which do so as well Expertspredict, the tourism industry of Thailand set a goal of 700 billion of baht revenue

from tourism in 2008, October to November the total revenue of the tourismindustry accounts for 40% of the entire year.The tourism industry in Thailand is notaffected by local political area, a deficit of up to thousands of billions of dollars,making the revenue from hotel business 50%.Many projects on tourism in Thailandhas been cancelled and the tourism industry in Thailand collapse down low in 3years.

Preferential policies: Currently, there are no incentives for specialconsumption tax, value added tax, license tax related to tourism Regulations onimported equipment and fixed assets for foreign invested enterprises in the tourismsector are not specific, with the heavy elements cause difficulties for the importationbusiness For example, electric vehicles for the golf course is not clearly to beclassified into categories of equipment, machinery or transport vehicles for specialuse

Economy - political stability, Vietnam is a safe destination for tourists Taxpolicy is increasingly improved with more incentives and other items on attractinginvestors The administrative procedures are more simplified and also create veryfavourable conditions for business development Once that Vietnam has attractedinvestment, it will attract tourists, and develop tourism

2.1.6 Natural environment

This is the objective factors affecting enterprises in the sector, and reflectsthe advantages and disadvantages offered by the nature In the field of tourism,natural elements are extremely important The nature of tourism derived from thefirst location toward the blessed and the special resources and tourism In Vietnam,now it has formed the national tourist zone including:

The national general tourism area: the sea general tourism area, Halong- Cat

Ba island (Quang Ninh- Haiphong); the Canh Duong- Hai Van- Non Nuoc- (ThuaThien Hue- Da Nang) sea and sport entertainment general tourism area; the NhaTrang Bay (Khanh Hoa) sea general tourism area (replace the Van Phong- Dai Lanhgeneral sea tourism area), the Dankia- Suoi Vang resort area (Lam Dong)

The national tourism area: Sapa resort (Lao Cai), the ecosystem tourism

are-Ba Be lake (are-Bac Kan); the Co Loa cultural-historical tourism area (Ha noi), HuongSon cultural tourism area (Ha Tay), the cultural-historical- ecosystem tourism areaTam Coc- Bich Dong (Ninh Binh); the Kim Lien- Nam Dan (Nghe An) cultural-historical tourism area, the Phong Nha- Ke Bang (Quang Binh) cave ecosystemtourism area; the Ho Chi Minh path historical revolution tourism area (Quang Tri);the Hoi An cultural tourism area with the My Son relic (Quang Nam); Phan Thiet-Mui Ne (Binh Thuan) sea resort; Tuyen Lam lake ecosystem resoirt (Lam Dong);Rung Thac Can Gio (Ho Chi Minh city) ecosystem tourism area; the Long Hai-Phuoc Hai (Bia Ria Vung Tau) tourism area; the historical- ecosystem area ConDao (Ba Ria Vung Tau), Phu Quoc island tourism area (Kien Giang); the Dat Mui(Ca Mau) ecosystem tourism area; the Ba Vi- Suoi Hai (Ha Tay) resort area

Besides it is the tourism resources with prerequisites for facilitating tourismactivities, the natural environment also contains hidden risk factors such as naturaldisasters, climate change Natural resources and environmental tourism in someareas, local is being degraded, being violated due to the management development,exploitation and the impact of natural disasters To develop sustainable tourism, itmust be based on the preservation and promotion of heritage and this requires asignificant multi-sector linkages

2.1.7 Global environment

Vietnam will officially join the WTO on January 11, 2007 For tourismservices, Vietnam only commit for the distribution service sector travel agent andtour business travel service arrangements in the hotel room, food service andbeverages.These commitments will be applied automatically to members ofASEAN

The bilateral trade agreement Vietnamese-American (BTA), Vietnam hasmade commitments which are similar to the commitments to the WTO However,the BTA has been in force since 2001, a number of commitments under the BTA

began to take effect.According to BTA, U.S enterprises currently are able to investunder the form of 100% foreign capital in Vietnam.

Vietnam's commitments to the WTO in the tourism service sector will makeVietnam's tourism enterprises to survive and exist either in a professional way, orwithdraw from the market by reason:(1) start to have the competition of enterprises

in Vietnam with foreign invested travel firms (100% foreign owned, joint ventures,branches) in receiving international tourists (in-bound) and similar in distributionbusiness hotel, restaurant, so service quality must be improved Because providers

of tourism services to foreign financial capacity is strong, professional withmanagement skills, deep understanding of consumer behavior to international travelguests with outstanding compared to otherproviders of tourist services of Vietnam;(2) The commitments to WTO in tourism services has opened up huge opportunitiesfor business travel customers to send out-bound and domestic travelbusiness.Specific commitments in commercial presence mode of the distributionmarket to import travel and tourist market for domestic tourism enterprises in thecountry; (3) from the above commitments, the businesstourism industry in thecountry want to survive and develop must declare mission, quality policy andstrategic and tactical business suit business environment

2.2.Micro environment analysis

2.2.1 Bargaining power of buyer analysis

Buyer/Customer is a competitive pressure which can directly affect the entireproduction and business activities of the sector in general and companies inparticular Traditional customers and target customers of VIETTRAVEL are mainlythe direct customers from agencies and enterprises Customers distributed inVietnam are not much because customers tend to find the service directly.VIETTRAVEL also have a few customers distributed when these customer can notbook the ticket and want to get great rates, they could book via the company Inaddition, in a number of outbound market which there is little customers and almost

there is no providers, they order through VIETTRAVEL However, the number ofcustomers is not much

Even direct customers or distributed customer, they both cause pressure forthe company in term of price, service and product quality even the time and they arethe ones to control the competition in the tourism sector via the decision to buyproduct, service of the sector

2.2.2 Bargaining power of suppliers

For the travel business companies who need to use suppliers as follows:Transportation branch (aviation, railway, waterway, road)- Hotel- Restaurant

- Airlines At present, Vietnamese customers select Vietnam Airlines as apriority to ensure safety and quality of care the situation of seat handling oftenhappens with companies especially in the peak season Vietnam Airlines alwaysfalls into the overbook status However, if you use other airlines, the seat situation isnot much because foreign airlines effectively exploit the far distance and the Asianroute is a transit route in fact On the other hand, the price of foreign airlines usuallyhigh and there is not much incentive for customers such as Vietnam Airlines

- About the hotel suppliers: the situation that everywhere in the worldespecially where there are tourism areas, hotels in centers are always not enough tomeet the demand of customers The tourists except for those who are tourist taking arest, the remain will order the center hotel for the convenience of traveling andshopping Moreover, for over the past 4-5 years, due to the overbook situation ofhotel, tourism companies nearly do not receive much preference of hotel in price,the central hotels always serve walk-in customers so that their profit will be higher

Restaurants in the center, in the tourism area are also overload Therefore,quality of meals and the service quality is not high The quality is not equivalent tothe price which customers have to pay

For the outbound tourism tour, there are many traveling branches providingthe service but in order to well do and understand Vietnam customers, there is notmuch And the difficulties which foreign tourism Partner Company faces with are

similar to those in Vietnam: can not book the airplane ticket; can not book the hotelespecially in the peak seasons This problem makes the price high and customerswill be the ones bearing the disadvantages while the service provides companiesalso face the difficulties.

In summary, it is the fact that, VIETTRAVEL as well as companies in thesector stands the great pressure from the suppliers due to the limitation in thenumber of providers and the ability to replace these suppliers is low so that tourismcompanies have little selection of suppliers

2.2.3 Rivalry among competing firms

The company identify that the products provided are normal products.Therefore, competitors are always everywhere and their objective is mainly profit

In Vietnam now the prices for travel tour is generally not much different and profitfrom this activity is not high Therefore, in order to gain competitive edge, touristcompanies need to make a difference to attract new customers and at the same timerealize services commitments to traditional customers for the purpose ofmaintaining the number of customers

In transportation sector, VIETTRAVEL has to face with huge competitor –VIETTRAVEL At the time of VIETTRAVEL establishment in 2004,VIETRAVEL has nearly 10 years experience in tourism with total of employees are263; revenue is 303,000 million dongs and tourist guests for 2004 are 107,400.Especially, at the time of establishment of VIETTRAVEL, VIETRAVEL is the firsttravel company belonging directly to Ministry of Transport Thus, VIETTRAVELutilized advantages of the pioneer in investment attraction and real estate That isone of the main sources for current fixed asset of VIETTRAVEL It also contributesimportant part of current VIETTRAVEL success

Face up with such a huge competitor, from the beginning VIETTRAVELdefined its target customers must be different and therefore, incentive customers arestrategic customers of VIETTRAVEL and VIETTRAVEL has its own market sharethat VIETTRAVEL could not easily to penetrate