Formulation of business development strategies for song da 10 joint stock company in 2015 2020

THESIS MBA TITLE Formulation of Business Development Strategies for Song Da 10 Joint Stock Company in 2015 - 2020 TABLES OF CONTENTS LIST OF ABBREVIATIONS .7 LIST OF FIGURE chart AND TABLE ASSERTION 10 ACKNOWLEDGEMENT 11 ABOUT THE AUTHORS 11 INTRODUCTION .12 I Justification of the necessity of the capstone project 12 II Research objectives and applicability 14 III Scope of the research work 14 IV Approaches 15 V Research methodology 15 VI Structure .16 CHAPTER I - THEORETICAL BACKGROUND 17 I Fundamental issues of strategy and modern business strategy .17 Viewpoints about strategy .17 1.1.1 Typical features of a strategy 18 1.1.2 Types of business strategy .19 1.1.2.1 Classification of business strategy by levels .19 1.1.2.2 Classification of business strategies by content 20 1.1.2.3 Classification of business strategies by process 20 I The role of business strategies in modern business environment 21 Description of the formulation process of a strategy 21 1.1.3 Identification of corporate mission and objectives 22 1.1.3.1 Identification of corporate mission .22 1.1.3.2 Identification of strategic objectives 23 1.1.4 Analysis of business environment of a firm (external environment) 24 1.1.4.1 Impacts of external environment on business strategy 24 1.1.4.2 Evaluation of the environmental impacts 28 1.1.5 Internal analysis of an enterprise .28 1.1.5.1 Analysis of the value chain of an organization 29 1.1.5.2 Analyses of financial situation 30 1.1.6 Strategy formulation and selection 31 1.1.7 Formulation of strategy by level .33 1.1.7.1 Business strategy 33 1.1.7.2 International business strategy 33 CHAPTER II – BUSINESS DEVELOPMENT STRATEGIC PLANNING FOR SONG DA 10 JSC 35 I An overview of Song Da 10 Joint Stock Company (SDT) .35 History and development 35 Development and achievements 36 1.1.8 Organizational and management structure of the company 37 I Analysis of corporate strategy and governance 38 External environment analysis 38 1.1.8.1 Macro environment .38 1.1.8.1.1 The economic environment .38 1.1.8.1.2 Technological environment .41 1.1.8.1.3 Social and cultural environment 41 1.1.8.1.4 Political and legal environment 42 1.1.8.1.5 Global environment 45 1.1.8.2 Analysis of sector environment 46 1.1.8.2.1 Overview of the construction sector in 2009 46 1.1.8.2.2 Some issues regarding current underground construction in Vietnam 49 1.1.8.2.3 Summaries of opportunities and challenges for business environment of tunnel construction 51 1.1.8.3 Five competitive forces .53 1.1.8.3.1 Threat of current competitors 53 1.1.8.3.2 Threat of new market entrants 55 1.1.8.3.3 Company’s clients 55 1.1.8.3.4 The company’s suppliers 59 1.1.8.3.5 Substitute products .59 1.1.8.4 External Factor Evaluation 60 1.1.9 Internal environment analysis 62 1.1.9.1 Vision, mission statement, business principles and objectives of Song Da 10 Joint Stock Company 62 1.1.9.2 Business performance results of the most recent three years 64 64 64 64 64 64 64 64 64 64 10 64 11 64 12 64 13 64 14 64 15 64 16 64 17 64 1.1.9.3 Analysis on some financial criteria .65 1.1.9.4 Key product and service analysis 68 1.1.9.4.1 Tunnel construction activities 68 1.1.9.4.2 Dynamite drillings .71 1.1.9.4.3 Other activities 73 1.1.9.5 The SDT stock price 75 1.1.9.6 Labor policies 79 1.1.9.6.1 Situation of human resource 79 1.1.9.6.2 Salary, bonus and allowance policy 80 1.1.9.6.3 Recruitment and human resources attraction policies 80 1.1.9.6.4 Training policy 81 1.1.9.7 PR and Marketing activities 81 1.1.9.8 Technological equipment 82 1.1.9.9 Analyses of sustainable comparative advantages 82 1.1.9.10 Resources and potential competences .83 1.1.9.11 Internal Factor Evaluation 89 1.1.10 SDT’s key business strategies using SWOT matrix 92 CHAPTER III STRATEGIC SOLUTIONS AND RECOMMENDATIONS 98 I Strategic solutions 98 Strategic solutions 98 1.1.10.1 On the one hand, the mixed strategy is suitable with the company’s current situation .100 1.1.10.2 On the other hand, this strategy well serves the new plan 100 1.1.10.3 Thirdly, this strategy is suitable with Song Da Corporation 101 Objectives of the strategy 101 1.1.11 Strategic solution implementation .102 1.1.11.1 Product restructuring strategy 102 1.1.11.1.1 Product restructuring .102 1.1.11.1.2 Main estimated criteria for 2010 – 2015 .103 1.1.11.1.3 Background of profit generation 104 1.1.11.2 Capital balancing strategy .105 1.1.11.3 Research and training strategy 106 1.1.11.4 Competition strategies .107 1.1.11.5 International business strategy 110 1.1.11.6 Marketing Strategy 112 1.1.11.6.1 Marketing intelligence (MI) 112 1.1.11.6.2 Formulation of market dossiers and sales projection 112 1.1.11.6.3 Studies of customers’ behaviors 113 1.1.11.6.4 Market segmentation and location goal 113 1.1.11.6.5 Follow-up steps 113 II RECOMMENDATIONS .115 Improvement of the company structure 115 1.1.12 Proper assessment and allocation of resources 116 1.1.13 Improvement of the steering information system for the implementation of the strategy 116 1.1.13.1 Management information channel: 116 1.1.13.2 Feedback channels: 117 1.1.14 Strict inspection 117 1.1.15 Human resources attraction, staff training, recruitment and appointment of quality personnel .118 1.1.16 Technology renovation and investment 118 1.1.17 Establish the company’s peculiarities 119 II Obstacles in the course of the studies and future orientation 119 Measurements 119 1.1.18 Time for studies 120 CONCLUSION 121 BIBLIOGRAPHY .122 I Books 122 I Other publications 122 II Websites .123 Appendix 123 I Names and Responsibilities of Group's Members 123 I List of other organizations and individuals, who joined in the research process 125 II Organization structure of SDT 128 LIST OF ABBREVIATIONS SDT SWOT HASTC HosE US BM IT GDP SBU Song Da 10 Joint Stock Company Strengths, Weakness, Opportunities, Threats Ha No Securities trading center Ho Chi Minh Stock exchange The United States Board of Management Information Technology Gross Domestic Product Strategic Business Unit LIST OF FIGURE CHART AND TABLE FIGURE Figure 1.1 – Business strategy formulation procedure 23 Figure 1.2 – Michael Porter's model of five competitive forces 27 Figure 1.3 – Value chain of an organization 30 TABLE Table 2.1 – Analysis of SWOT matrix 32 Table 2.2 – Changes in concentrated growth strategy 33 Table 2.3 – Changes in integrated growth strategy 33 Table 2.4 – Some major indicators in 2009 as against 2008 39 Table 2.5 –List of capital and market share of underground construction companies in Vietnam as at 3/2010 55 Table 2.6– List of finished and under-construction works of SDT 57 Table 2.7- External Factor Evaluation (EFE) 62 Table 2.8 –Asset and financial statement of three most recent years 65 Table 2.9 – Key financial indicators of the most recent three years 67 Table 2.10– Finished hydroelectric works 70 Table 2.11 –Finished traffic works 73 Table 2.12– Finished hydraulic works 73 Table 2.13–Tangible resources 83 Table 2.14– Intangible resources 84 Table 2.15– Criteria to define core competencies 86 Table 2.16– Outcome of combination of SDT’s sustainable criteria 87 Table 2.17- Internal Factor Evaluation matrix 89 Table 2.18- Image competitive matrix 90 Table 2.19– SWOT matrix application for SDT 92 Table 2.20– Product structure in 2010 - 2015 101 Table 2.21–Main estimated criteria for 2010 - 2015 103 CHART Chart 3.1 –Structure of SDT’s groups of activities 75 Chart 3.2–The illustration of price and trading volume of SDT shares in 76 recent years Chart 3.3– The fluctuation of SDT stock price as compared with 77 MCV price in recent years Chart 3.4– The fluctuation of SDT stock price as compared with HNX-index in recent years 77 Chart 3.5–Number of employees by qualification level as at 12/2009 79 ASSERTION We affirm that we reserve the sole ownership of the topic “Business development strategic planning for Song Da 10 Joint Stock Company in 2010 – 2015” Data of the thesis was provided by Song Da 10 Up to present, this is the first time this topic is studied The members of the group are not in any conflicts with company’s interest Hanoi, March 4th 2010 THE AUTHORS Vũ Tuấn Hùng (Team Leader) Phan Thị Quế Lê Xuân Hải Nguyễn Thị Cẩm Thơ 10 Provide more trainings to the marketing team and promote their contacts with customers; to coordinate with economics universities for training of marketing personnel; Increased participation in workshops at home and abroad to project the company’s image to customers; Provide sponsorship to social activities to create good corporate influence on the potential service users; Develop a website in the English language, and promote the firm’s service products and presentation in other languages; Establish and maintain information sharing to the mass media for sound projection and location of SDT’s trademark on the market; Join signing delegations between Vietnam and other countries on finance and construction Above are groups of strategic measurements supporting the mix strategy Successful implementation of these solutions requires strong determination and skillful management In addition, the management should improve the company’s structure, allocate resources efficiently, strengthen the information system including: strictly monitoring training activities, investing on technologies and human resources training, promoting competent employees whose possess outstanding knowledge and morality; and finally, to establish a company’s peculiarity throughout the implementation process of the strategy This is a business know-how which helps maintain the company’s reputation and its products’ trademarks 114 II RECOMMENDATIONS Improvement of the company structure The so-far analyses have shown that the company’s structure is basically proper in post – transformation period Nevertheless, to catch up with the new trends, that are: large – scale specialization, efficiency improvement and profit maximization, SDT has to define specifically each strategic department’s tasks and functions for more effective implementation In particular, the company should improve capacity and self – decision making capability of departments and factories; set up a team in charge of implementing strategies; streamlining redundant departments and establishing significant ones like Marketing, PR, research and training Especially, a company specialized in urban underground construction should be found promptly This company is under SDT’s general management but obtain higher level of self – decision making than other departments The company operates independently while empowering the mother company and the corporation at any time Thus, the establishment of a specialized company will be the company’s milestone in its urban underground construction activities However, to prevent organizational activities from ending in deadlock, the company’s leaders have to “throw a sprat to catch a herring” to pursue long – term goals Besides, SDT should organize training program for employees and eliminate existence of subsidization and monopoly mindset In addition, it is essential to let the company’s staff have a clear understanding about the role of the strategy on the company’s vitality in such context of fierce competition Lastly, heads of departments and department’s self – decision making should be empowered to improve their awareness of their responsibilities, aiming at realizing the mission statement of becoming one of leading companies in Vietnam which operates on the basis of international standards and a typical enterprises in terms of management 115 1.1.12 Proper assessment and allocation of resources To successfully implement the strategy, the company should arrange assessment and resource mobilization The Human resources Departments take primary responsibilities in these activities in coordination with other functional departments, mainly staff arrangement department, department of strategy and department of research and training When aware of the possibility of a success, the strategic sections start the allocation of finances, human resources and time The allocation is made in line with the set goals, strategic measures, short-term plans and execution schedules of the Company Resource allocation has to be reflected in documents and publicized to strategic units in the company 1.1.13 Improvement of the steering information system for the implementation of the strategy The information system assists strategic management in communicating strategic decisions to subordinates and their feedback to the management team The first step in the strategic implementation is that the management team applies the information system 1.1.13.1 Management information channel: The Planning Department is assigned to issue guidelines for the implementation of a strategy, and these guidelines are annexes of of the strategy launch document approved by the Company Director The Department is also in charge of producing reports on the implementation plans of the strategy, developing and disseminating implementation regime and regulations of the strategy to the strategic sections (Mid-level) or business managers execute the business plans that are designed from the business strategy, and work out and decide on execution schedules, and disseminate their decisions in writing and other forms to lower levels The management information channel should be kept in smooth run during the execution of the strategy It is also necessary that the execution be planned and 116 regulated in an efficient manner The guidelines and documents as such are base for the execution at lower level and future monitoring If the management information is not clear, there will be duplication, confusion and obstacles in the executive stage, and the resources will be wasted Consequently, the efficiency of the strategy implementation is restricted 1.1.13.2 Feedback channels: This information system has significant role for strategic management in evaluation activities Besides, it helps the managers identify the implementation progress, and achievements from which appropriate adjustments are made to improve the implementation process and assure the strategy’s effectiveness However, the feedbacks should be regular, intensive and filtered by different management levels so that the right feedbacks reach managers Feedbacks are always associated with verification as they are collected from daily reports of lower levels, from financial reports, and monthly, quarterly and yearly performance review reports of the company 1.1.14 Strict inspection Inspection is indispensable in the general management process and business strategy management Inspection is aimed to provide assessment and remedial adjustments to constraints during the execution of a strategy Respective forms of inspection are used for different scope and level of strategic management For instance, periodical and random inspections can be conducted by a company on its key areas of operations and in its strategic units Regular inspections are held on business operations of lower level units by their managers More importantly, selfconsciousness and compliance of all staff to corporate regulations must be highlighted 117 The inspection work should be planned and done from the company’s top management The Board of Directors, through its control committee, holds random inspections, and periodical inspections through its reports The inspection team must be composed of various subjects to guarantee accuracy, adequacy and objectivity The size of the inspection team and the scope of inspection work should be reasonable so as not to obstruct the implementation of the corporate strategy 1.1.15 Human resources attraction, staff training, recruitment and appointment of quality personnel At present, the company already has thorough recruitment and salary payment procedures Though the staff has been developed in terms of qualification, number and structure as mentioned above, the talent attraction policy has not been paid appropriate attention Thus, in the next few years, this policy should be implemented thoroughly and systematically In particular, the company should have a human resources development strategy for a – year period and balance budget planning for this activity Especially, recruitment, training and retraining should be carried out strictly Lastly, it is necessary to standardize the human resources, appointing quality personnel into strategic positions with a union spirit 1.1.16 Technology renovation and investment Technology is one of three renovation keys Therefore, with the mix strategy, it is necessary to keep applying the ISO 9001-2000 quality control system Besides, the company needs to apply advanced computer programs and software in its management and operation activities It is also useful to research and apply technologies in designing and constructing to optimize production cost and maximize profit Especially, efforts should be put on transferring and liquidating new or in-use machineries whose productivity are low Liquidation and transfer of 118 this equipment will reduce significantly the number of fixed assets; in turn, the company’s productivity will jump in value 1.1.17 Establish the company’s peculiarities As stated in the company’s mission statement, SDT’s establishment, stable development and achievements rest on principal values, which are: knowledge – technology – nature – human Therefore, given the available internal and external environment, establishment of working style at various levels, of communication standards between superiors and subordinates and between staff is a necessity Orders should be transformed into flexible, effective and professional requests; at the same time, requests and reminders have to be turned into orders which are absolutely respected and followed by employees Behavior and communication standards not purely consist of standards in speech, and gestures but in all means of daily communication between staff as well, including email, shift handing – over meetings, etc When communication standards and habits are shaped, they will create a friendly atmosphere in the company, making the workspace more convenient and staff feels being respected This helps empower staff’s confidence and give them a sense of pride of the company In addition to organization activities, it is required that the company has policy to enhance individual image, making each staff the company’s trademark Through a staff’s working style and behavior manner, one can realize a company’s style This step by step shapes the company’s peculiarities II Obstacles in the course of the studies and future orientation Measurements Despite various study measurements have been applied including survey and consultation of Vietnamese and foreign underground construction specialists, the 119 collected data on the sector and the products show certain omissions Besides, due to the lack of strict control on small – scale production activities, we have been unable to collect statistics on the intensity of all of the companies’ activities on a monthly and annually basis in the same period 1.1.18 Time for studies In addition to the fact that some production activities’ data are not well organized and managed, the second influence on the study is time As this study is carried out at the beginning of the year and before Tet holiday, the authors could not spend appropriate time on conducting surveys on all groups of production and other companies in the sector Nonetheless, with the attained data and thanks to the support of the authorities, the company, its specialists and especially with the great efforts of the authors, this study has essentially described all aspects of the company and the underground construction sector 120 CONCLUSION With a long history and experience of more than 25 years in underground construction, Song Da 10 Joint Stock Company has contributed significantly to the country’s capital construction, GDP growth, income generation, and acted as the first mover in underground construction Analyses on the company’s various aspects over the last few years reflect the company’s growing strength in the sector though its stable financial status, large market share and outstanding core competences Nevertheless, the mass global economic crisis in 2008 and its consequences have still remained in the world economy Capital reduction, material market swing and macro imbalance have hindered the company’s development In addition, given the integration and fierce competition trend of potential markets and products, its strategies and entry barriers have become fragile and out – of - date On applying analysis measurements of modern strategic models using updated statistics collected from the sector and the company, the study “ Formulation of Business Development Strategies for Song Da 10 Joint Stock Company in 2010 - 2015” has partly addressed the necessity of the research in current context, aiming at assisting SDT accomplish the company’s mission of becoming a leading company in terms of quality and market share in the sector Besides, this study has clean the way for a new analysis method of a company’s business strategy relying on crystallized knowledge and human resources after years of pursuing the strategy 121 BIBLIOGRAPHY I Books Charles W.L Hill, Gareth R Joines (2002), Strategic Management: An Integrated Approach, 5th, Ed Houghton Mifflin David A Secenzo, Stephen P Robbins (2002), Human Resource Management, 7th John Wiley & Son, Inc Jack W Calhoun (2004) Fundamentals of financial management, 10th Thomson Lawrence R Jauch and William F Gluek(1989)Business Policy and Strategic Management Le The Gioi, Associate Professor, PhD., (2007), Strategic Management, page 166, Statistical Publishing House M.E Porter, Competitive Strategy (New York: Free, Press, 1980 Porter,M.E (1981) The contribution of Industrial Organization to Strategic Management New York: Wiley Quinn, J., B (1980) Strategy for change: Logical Inscrementalism Homewood, Illinois, Irwin R Lubit, 2001 “Tacut knowledge and knowledge management: The keys to sustainable competitive advantage”, organizational Dynamics, 29(3):164- 10 11 178 Rap and Tom Collins, Maxi Marketing, New York: Mc Graw-Hill, 1987 Richard Hall,(1992), The Strategic Analysis of Intangible Resources, page 135-144, John wiley and Sons I Other publications Annual Report 2007, 2008, 2009 of Song Da 10 Joint Stock Company Associate Professor, PhD Ho Si Quy, Presentation at the third International Workshop on Vietnamology on December Financial Statement of SDT 2007, 2008, 2009 122 Ministry of Construction (2010) Report on the implementation of 2009 plans; direction and key tasks of the construction industry in 2010 Hanoi: Ministry of Construction gateway J.E Barriers to New Competition (Cambridge, Mass: Harvard University Press, 1956) For a review of the modern literature on barriers to entry, see R,J Gilbert, “Mobility barriers and value on Incumbency” in R Schmalensee and R.D Willing, Handbook of Industrial Organization, (Amsterdam,, Holland 1989),I Report of the Working Division on Vietnam WTO admission /Part II – Figure of commitments on services, the list of MFNS exemptions as provided for in Article I Report of General statistics office of Vietnam (2009) Song Da 10 Joint Stock Company Board of Management (2010) Annual Report 2009 Hanoi SDT’s 2009 planning report and 2010 plan II Websites http://www.undergroundconstructionmagazine.com/ (March, 6th 2010) http://www.sciencedirect.com/science (Februa, 20th 2010) http://epress.anu.edu.au/anzsog/centrelink/mobile_devices/ch03.html (February, 26th 2010) http://www.moc.gov.vn/site/moc/cms? cmd=4&portionId=14&articleId=37029&portalSiteId=6&language=vi_VN (access time: 6h20, February, 25th 2010) http://www.strategy-business.com/ (February, 27th 2010) http://hbr.org/2010/03/bold-retreat/ar/1 http://www.gametheory.net/dictionary/MixedStrategy.html APPENDIX I Names and Responsibilities of Group's Members Full name Implemented work 123 Vũ Tuấn Hùng • Directly contact SDT to agree the contents of writing subject and requesting for provision of relevant materials • Delegation of assignment and review general work • Outline the preliminary draft • Contribute in building the Main estimated criteria for 2010 – 2015 • Check the work contents of the members Provide comments on the detailed draft • Draft Chapter and analyze the external • Lê Xuân Hải environment • Contribute in collecting financial and accounting documents, and other relevant documents • Phan Thị Quế • Provide suggestions to another writings Write the introduction, synthesize Chapters and to write Chapter and Conclusion, • Design the Powerpoint Presentation; • Analyze the financial situation of the company Nguyễn Thị Cầm Thơ • Collect illustration images • Contribute to write contents of macro 124 environment • Contribute to analyze Resources and potential competences • Collect materials of macro environment • Provide comments on the detailed draft • Present the capstone project on behalf of the group’s members; I List of other organizations and individuals, who joined in the research process No NAME Contents Academic Council of Griggs University Exposing the orientation for the subject; Instructing the volume of the subject, preliminarily offering his/her suggestion to the detail contents of the draft Evaluation council of Griggs University in Vietnam Evaluating the content, method and the group representative’s presentation in front of the Board Song Da 10 Joint Stock Company Suggesting about the indispensable issues of the Including representatives: enterprise and industry Chairman of the board, General director and Deputy general director Providing the relevant data for the working group 125 Offering the suggestion on strategical solutions Commenting and evaluating the subject and the group’s working process in the company Lung Lo Construction Company Providing some general data of the company Representative: Generally commenting on the Planning manager real situation of underground the works construction industry Cavico Vietnam mining and construction Providing some general data joint stock company of the company Representative: Generally commenting on the real Deputy director of the company situation of underground the works construction industry Works Construction JS Company – VINAVICO Providing some general data of the company Generally commenting on the real situation underground of the works construction industry Song Da Corporation Providing the corporation’s data Representative: 126 Deputy general director Suggesting the macroscopic strategies of the industry and the plans that will be implemented in the next time Evaluating and commenting the ideas of the group PhD Nguyen Hong Tien – Department of Urban Technical Infrastructure – Construction Ministry Referring issues to of opinions the on urban underground engineering Professor, PhD Do Nhu Trang – Military Technical Academy Offering the suggestion for ideas of underground engineering strategy 10 Other Japanese experts in fields of underground works construction contacted with Vietnam: that Exposing the suggestion on the indispensable issues that relate to the urban underground works and the Mr Hiroaki Todo development orientation Mr Yasuhisa Akiyama Dr Shuichi Komatsu 127 General Assembly of shareholders II Organization structure of SDT Board of Supervisors Board of management Board of TECHNICAL DEPUTY MANAGER TECHNICAL MANAGEMENT DEPARTMENT directors ECONOMIC DEPUTY MANAGER Mechanical management department Construction deputy manager MATERIAL-MECHANICAL DEPUTY MANAGER Economicproject department Administrative department Finance Accounting department material department vËt t Songda stock company 10.1 Functi onal depart ment Branc h enter prises Songda enterprise 10.2 Funct ional commi ttee Manuf actur ing Teams Songda enterprise 10.3 Funct ional commi ttee Manuf actur ing Teams Songda enterprise 10.4 Funct ional commi ttee Manuf actur ing Teams 128 Songda enterprise 10.5 Funct ional commi ttee Manuf actur ing Teams Songda enterprise 10.6 Funct ional commi ttee Manuf actur ing Teams Songda enterprise 10 Funct ional commi ttee Manuf actur ing Teams ... Business Development Strategies for Song Da 10 Joint Stock Company in 2 010 - Song Da 10 Board of Management (2 010) Annual Report 2009 Hanoi 13 2015 is selected for its significance to the company in. .. International business strategy 33 CHAPTER II – BUSINESS DEVELOPMENT STRATEGIC PLANNING FOR SONG DA 10 JSC 35 I An overview of Song Da 10 Joint Stock Company (SDT) .35 History and development. .. strategic planning for Song Da 10 Joint Stock Company in 2 010 – 2015 Data of the thesis was provided by Song Da 10 Up to present, this is the first time this topic is studied The members of the group