Luận văn thạc sĩ xây dựng chiến lược kinh doanh của công ty cổ phần PVFC chi nhánh thăng long

LUẬN VĂN THẠC SĨ Xây dựng chiến lược kinh doanh của công ty cổ phần PVFC chi nhánh Thăng LongTHESIS MBA BUILDING BUSINESS STRATEGIES OF PETROVIETNAM JOINT STOCK FINANCE CORPORATION- THA

LUẬN VĂN THẠC SĨ Xây dựng chiến lược kinh doanh của công ty cổ phần PVFC chi nhánh Thăng Long

THESIS MBA

BUILDING BUSINESS STRATEGIES OF PETROVIETNAM JOINT STOCK FINANCE CORPORATION- THANG LONG BRANCH, PERIOD 2010-2015 AND ORIENTATION TO 2020

1.

SIGNATURE OF STUDENTS

TABLE OF CONTENTS

INTRODUCTION 1

1 The subject 1

2 Reasons for choosing the subject 1

3 Purpose of research 1

4 Scope of research 2

5 Methods of implementing research 2

6 Questions of research 2

7 Implications of the subject 2

8 The limitations of the subject 3

9 Expected result 3

10 Structure of the subject 3

CHAPTER 1- RATIONALE 4

1.1 STRATEGY AND BUSINESS STRATEGY 4

1.1.1 Strategy 4

1.1.2 Business strategy and the selection of business strategy 5

1.1.3 The implication and role of business strategies 5

1.2 STRATEGY-FORMING PROCESS 6

1.2.1 Mission and vision 7

1.2.2 Strategic targets 9

1.2.3 Analyzing outside environment 10

1.2.3.1 Analyzing micro-environment 10

1.2.3.2 Analyzing micro-environment (sectorial environment) 14

1.2.4 Analyzing internal environment 17

1.2.4.1 Analyzing based on the field of doing business – Value Chain 18

1.2.4.2 The process of identifying steady competitive advantages 20

1.2.5 SWOT matrix 20

1.2.5.1 General theory of SWOT 20

1.2.5.2 SWOT matrix 21

1.2.6 Selecting strategies 22

1.2.6.1 Strategy of cost leading 23

1.2.6.2 The strategy of making products unique 23

1.2.6.3 The strategy of focusing on key things 24

1.2.6.4 The combination of those strategies 25

The summary of Chapter I 26

CHAPTER 2- BUILDING AND SELECTING BUSINESS STRATEGIES OF PVFC THANG LONG 27

2.1 AN OVERVIEW OF PVFC 27

2.1.1 Formation and development process 27

2.1.2 Types of products 27

2.1.3 Norms of business activities 28

2.1.4 Development orientation to 2015 and vision to 2020-2025 29

2.2 Overview of Thang Long branch of Petrol Vietnam Finance Corporation 30

2.2.1 The establishment and development process 30

2.2.2 Organizational structure 30

2.2.3 The targets of the main business activities 32

2.3 BUILDING AND SELECTING BUSINESS STRATEGIES FOR PVFC THANG LONG IN THE PERIOD 2010 - 2015 33

2.3.1 Outside environment analysis 33

2.3.1.1 Macro environment analysis – PEST Model 33

2.3.1.2 Inside- industry environment analysis- the M Porter’s five forces model 38

2.3.1.3 The summary of outside environment analysis result 45

2.3.2 Internal Environment Analysis – Value Chain Model 52

2.3.2.1 Value Chain Model 52

2.3.2.2 Identifying outstanding ability and sustainable competitive advantage .56

2.3.2.3 Synthesizing results of internal environment analysis 59

2.3.3 Matrix Analysis: SWOT 59

Summary of Chapter 2 61

CHAPTER 3 – SELECTED STRATEGIES AND IMPLEMENTATION MEASURES FOR SELECTED STRATEGIES 62

3.1 DEVELOPING TARGET FOR PVFC TO 2015, ORIENTED TO 2025 62

3.2 PVFC THANG LONG DEVELOPMENT ORIENTATION UNTIL 2015 64

3.3 SELECTING BUSINESS STRATEGIES 65

3.3.1 General strategies 65

3.3.2 Selecting application strategies 66

3.4 PVFC THANG LONG’S SELECTED STRATEGIES 67

3.5 IMPLEMENTATION MEASURES 69

3.5.1 Implementation measures for strategy 1 – Focal point strategy 69

3.5.2 Implementation measures for strategy 2- Distinction strategy 70

3.5.3 Measures for making breakthroughs 71

3.6 SUGGESTIONS ON SUPPORTING MEASURES 72

3.7 SHORTCOMINGS OF THE CAPSTONE PROJECT REPORT AND ORIENTATION FOR FURTHER RESEARCH 74

3.8 CONCLUSION 75

GENERAL CONCLUSION OF THE CAPSTONE PROJECT REPORT 76

REFERENCES 77

LIST OF ABBREVIATIONS

Company (Strengths - Weaknesses - Opportunities - Threats)

Opportunities of Company (Weaknesses-Opportunities)

WT Competitive Strategies combining Weaknesses and threats of

Company (Weaknesses -Threats)

LIST OF TABLES

Table 1-1: Process of building business strategies 7

Table 1-2: Three-level analysis model of external and internal environment 11

Table 1-3: Five forces competition model by Michael E Porter 15

Table 1-4: The diagram of Value Chain 18

Table 1-5: Cooperative goals of activities and Value Chain 19

Table 1-6: The process of identifying steady competitive advantages 20

Table 1-7: SWOT matrix 21

Table 1-8: The summary of relevant selections for strategies 22

Table 2-1: The structure of turnover from services of PVFC till September 30th, 2009 29

Table 2-2: Organizational structure of PVFC Thang Long 31

Table 2-3: Sale structure of service products of PVFC Thang Long in 2009 32

Table 2-4: The GDP growth rate of Viet Nam from 1999 to 2009 (%) 35

Table 2-5: The present competitors of PVFC Thang Long 39

Table 2-6: Marking the priority order rating 46

Table 2-7: Challenges assessment to PVFC Thang Long 48

Table 2–8: Structure of debt surplus according to areas and occupations 53

Table 2–9: Structure of debt according to duration 53

Table 2-10: Comparisons with competitors 57

Table 2-11: Identifying sustainable competitive advantage 58

Table 2-12: SWOT Analysis 60

Table 3-13: Strategy selection matrix 66

INTRODUCTION

1 The subject

Building strategies of PetroVietnam Finance Corporation – Thang Long Branch (PVFC Thang Long) period 2010-2015 and orientation to 2020

2 Reasons for choosing the subject

In any enterprise, the designing of operation strategies is aiming at orienting theenterprise to get the soundest step to adjust its operation In the mechanism of themarket economy, the formation of a suitable business strategy has an especiallysignificant implication; it helps the enterprise soon achieve business development goals.The effective implementation of business policies and strategies will help the enterprisedevelop sustainable

The PetroVietnam Joint Stock Finance Corporation- Thang Long Branch is one ofnine branches under PetroVietnam Finance Corporation It has come into being andoperated since August 2007 and operates in the fields of finance and currency.Although the Company has had business strategies and implemented them already; yet,they are only strategies in the initial steps and still have a lot of shortcomings and havenot been built methodically Besides, financial and monetary operation is a relativelysensitive field; thus, the formation of a proper strategy in this period is badly neededand important to orient for the business strategies of PVFC Thang Long developsustainable

To be prompted by that reality, we have chosen the subject “Building strategies

of PetroVietnam Joint Stock Finance Corporation-Thang Long Branch period

2010-2015 and orientation to 2020”

3 Purpose of research

The subject systematically collects the theoretical bases on business strategies toserve the research and building business strategies for the company Analyzing theimpact of business environment on financial trading activities Well recognizing theopportunities and challenges, strengths and weaknesses of the enterprise

From that, we have mapped out the measures on necessary business strategies toenhance the effectiveness of specific business strategies for PVC Thang Long

4 Scope of research

In the scope of this research, the authors only concentrate on studying, buildingand selecting business strategies to apply in the period from 2010-2015

5 Methods of implementing research

The subject uses following methods:

- Comparing, analyzing and generalizing: analyzing the data, comparing overperiods then generalizing to give comment

- Analyzing SWOT matrix: the technique is used to analyze and process theresearch’s result on environment, helping the enterprise formulate a strategyscientifically, etc

- Statistical method: collecting statistics from tables and charts and drawingout conclusion of trends to evaluate the operation situation of the sector andthe enterprise

6 Questions of research

- Why does the Company need to have business strategies?

- If there are, what are suitable business strategies for the Company?

- How to make selected business strategies take effect?

7 Implications of the subject

The subject has systematized the rationale on building business strategies andapplied to formulate business strategies for PVFC Thang Long

The subject analyzes the operation situation of PVFC and PVFC Thang Long andselects the appropriate business strategies for the Unit in the time to come

The subject has put forward the measures to implement the selected businessstrategies for PVFC Thang Long

Being the reference document for current branches and branches which will beopened in the upcoming time in the system of PVFC and other Finance Corporations

8 The limitations of the subject

The duration of research and the source of statistics for the research are limited Theworld’s as well as Vietnam’s economy has a lot of unprecedented fluctuations causinggreat impact on the financial and monetary market of Vietnam which results in the fact thatthe building of strategies is sometimes not close to the real situation sometimes

9 Expected result

- Selecting and building suitable business strategies for PVFC Thang Long

- Setting the oriented base for the business and development process of theCompany in the period from 2010-2015 and the vision till 2020

10 Structure of the subject

Apart from the introduction, appendix and associated tables, the structure of thesubject consists of three chapters:

Chapter 1: Rationale.

Chapter 2: Building business strategies for PetroVietnam Joint Stock Finance

Corporation- Thang Long Branch

Chapter 3: The measures to implement the selected strategies.

CHAPTER 1- RATIONALE 1.1 STRATEGY AND BUSINESS STRATEGY

1.1.1 Strategy

The term “strategy” originated from military sector with the meaning “the science

on planning and controlling military activities”, “the art to give command on means to defeat the opponents” Starting from military sector, the term strategy is used much in

business field in both macro and micro scale: socio-economic development strategy,mechanical and chemical industry development strategy; strategy to develop thecorporation and the company with the content to define the fundamental long-termtargets, action and resource allocation plans to exercise the target of the economy, thesector and the enterprise in the long run

Coming into being since the 1960s of 20th century, strategy and business strategyhave been applied in many enterprises with different conceptions

James B Quinn thought that “strategy is a model or a plan to coordinate the main

targets, policies and action process into an ensemble”

William J Glueck viewed “strategy is a uniformed, comprehensive and

coordinative plan, designed to ensure that the basic targets of the enterprise will be exercised”.

Alfred Chandler, Harvard University defined, “strategy embraces the fixation of

fundamental and long-term goals of the enterprise, at the same time selecting the method or action process and allocation of essential resources to realize those goals”

In short, strategies of an enterprise have three following most common features:

- Forming a general action plan toward the future on the basically long-termbusiness goals of the enterprise;

- Any changes of important policies and measures of the enterprises are made bythe decision of the enterprise’s owner;

- Setting up the order of action, implementing and resource allocating method torealize the goals of the enterprise

1.1.2 Business strategy and the selection of business strategy

Definition of business strategy: is the orientation of business activities havingtargets in the long run in parallel with the systems of policies, measures and resourceallocation to realize the goals of the enterprise in the same period

Business strategy of an enterprise is a general action program aiming at realizingthe enterprise’s goals Business strategy only creates a framework to guide the thought

on the orientation to do business and to act

As collected, business strategies can be classified into three groups:

- Group1: Regarding business strategy as an art, for example the art to generatebusiness advantages;

- Group 2: Considering business strategy as a special kind of plan, for example,Some definitions like “business strategy is the route and the mean to reach thegoal” or “business strategy is to determine the long-term goals”, etc;

- Group 3: Viewing business strategy both as an art and kind of program torealize strategic and long-term goals It is the ensemble of policies, programs,projects and plans

From the above-mentioned definitions, we can see that their common feature isbusiness strategy of an enterprise needs to have target orientation, long-term character,initiative thought and needs to be implemented in a systematically calculated process

1.1.3 The implication and role of business strategies

Business strategies have become increasingly important to the existence anddevelopment of enterprises, a tool helping the enterprises’ development orientationaccording to the set targets and in line with the objective conditions of businessenvironment

- Having business strategies will help enterprises clearly see their objectives andorientations Then, enterprises will find out how to organize its business apparatus?What they need to do to attain success in doing business and know when theirenterprises will reach the set targets;

- In the fast changing business environment, a lot of opportunities for seekingprofit have been created but associated with a great number of traps and risks Having

business strategies will help enterprises actively take the most advantage of newbusiness opportunities at the same time reduce risks on the market;

- Thank to applying business strategies, enterprises will match their madedecisions with conditions of the environment, helping balance between enterprise’sresources and objectives on one side and market opportunities on the other side toensure the good implementation of the set targets:

- In the tough competitive environment, analyzing the elements of macroenvironment and operational environment comprehensively and adequately will helpenterprise define its rivals and on that basis, it will work out an overall solution toenhance its competitive capacity on the market

The basic roles and implications of business strategies have affirmed theobjective necessity of strategies in administrative activities in general and businessadministrative activities in particular in a modern economy Therefore, the approachingand applying strategies is a very crucial issue at present

1.2 STRATEGY-FORMING PROCESS

The master business strategy is developed basing on the vision of the enterpriseand bears the orientation for all the activities in the enterprise and has long-termstrategic character The process of formation includes following steps: Building,Mission and Vision Statements

Table 1-1: Process of building business strategies

1.2.1 Mission and vision

a) Mission

Mission is a concept referring to the highest purpose, the meaning of cominginto being, existing and developing of an enterprise It is a statement with the view tothe usefulness of the enterprise toward the society The enterprise’s statement ofmission needs to ensure these following requirements:

- Ensuring the concord in enterprise;

- Creating conditions to mobilize resources of the enterprise;

- Establishing favorable setting and atmosphere for business activities in theenterprise;

- Being the centre to orient the concord and effort of members in the enterprise;

- Set out the conditions to concretize the targets, building strategies andmeasures for implementing;

Generally, mission of enterprise is determined right when the enterprise is established;

it exists during administrative process and it can be adjusted and changed in parallelwith the changes in functions and tasks of the enterprise

A mission of an enterprise often includes 9 components, namely:

- The enterprise’s concern about the community;

- The enterprise’s concern about employees in the enterprise

Vision/Mission

Building and selecting strategies SWOT, GREAT model

Model of value chain Process of realizing sustainable competitive edges

=> Strong & weak

Funtional Strategies

Business/competitive

StrategiesCompany’s StrategiesChiến lược toàn cầuImplementing and adjusting strategies

Supervising and evaluating the implementation of the strategy

thực thi chiến lược

Suitable Organizational

structure to the selected

strategies

The mission of the enterprise is valuable during the enterprise’s operationprocess if there are no changes or adjustments However, in each stage, that strategyneeds to be concretized into strategic targets that suit each of those stages

b) Vision

A declaration of vision is a report about the position that the company wants toreach The statement of vision drafts the future of the company about its target andpurpose The declarations of vision need to identify the final destination the enterpriseneeds to attain

Vision is the need-to-be-achieved target of the enterprise and needs to besatisfied some following factors:

- The time that the enterprise aims at and reaches the target;

- Locating the scale and stature of the enterprise in the business community andsociety;

- Setting the vision toward the highest product quality with the cheapest price;

- The enterprise needs to aim at the benefit of consumers

Vision statement is a message which concretize the mission statement into anencouraging target, mentions the necessity of vital improvement to the enterprise Itcreates the confidence in the future of the enterprise and aims at the target to makeimpossible things into possible ones

1.2.2 Strategic targets

Strategic targets are the milestone, the states which the enterprise wants to reach

in strategic stages The determination of strategic targets has a significant meaning tothe enterprise

The targets of enterprise might be very diverse and can be classified by differentcriteria:

- In the aspect of time: there might be long-term, medium-term and short-termtargets;

- With regard to the essence of the target: there might be economic, political orsocial targets;

- In term of level: including the targets at the levels of enterprise, business unit

or functional level;

- With regard to form of targets: there might be oriented or quantitative targets;

- With respect to the quality of growth: including such kinds of targets asincreasing or sustaining the stability of market share or even decreasing Thehighest target of the enterprise is the sustainable development in the market.However, it might have different specific levels depending on differentconditions Author Peter Drucker proposed a system of enterprise’s targetsfrom short-term to long-term, as follows:

- Market share of the enterprise;

- Overall business tasks of the enterprise and those in specifically strategic stages;

- Business philosophy (is represented in mission statement of the enterprise);

- General judgment on business environment and capacity of the enterprise

1.2.3 Analyzing outside environment

The target of analyzing outside environment is to define opportunities andchallenges to the enterprise, analyzing to find out the way to deploy and graspopportunities from the environment and to avoid necessary challenges to the enterprise The scope is the content of analyzing environment including: analyzing macro-environment (general environment) and analyzing micro-environment or sectorialenvironment

1.2.3.1 Analyzing micro-environment

The analysis of micro-environment will help the enterprise answer the question:What is the enterprise faced with?

Micro-environment is the environment in the scope of the whole economy,consisting of six segments: economics, technology, culture, society, demography,politics, law and globe The changes in micro-environment might have direct impact onany forces in the sector; thus, it can relatively influence other forces and on itself,finally, changing the attraction of a branch

Table 1-2: Three-level analysis model of external and internal environment

(Sources: Strategic Management - Griggs University)

Politics Laws

Tech nolog y

International environment

Culture Society

Xã hội

Populatio n Labor Potential

competitors Tiềm năng

ers hàng

Competitiv

e rivals Alternative product

thay thế

Com pany

a) Political- Legal environment (P)

This environment includes State’s policies, system of laws, especially thoserelating to business field; domestic and International affairs, factors concerning politicsand laws consist of:

- The stability of politics and foreign policy;

- The balance in the Government’s policies;

- The roles and economic development strategies of the Party and theGovernment to the fields of social life;

- The regulation and trend of intervention into economic activities of theGovernment;

- The improvement of law system and the executive effect of them in theeconomy

b) Economic environment (E)

This element has direct and strong impact on business activities of enterprisethrough the fluctuation of macro-economic variables as well as the influence of macroeconomic policies via adjustment tools of the State; these factors needing considerationhere are:

(1) The trend and GNP growth rate (or GDP);

(2) The situation of inflation and fluctuation of prices;

(3) Balance of payment;

(4) Interest and the trend of interest;

(5) Exchange rate and fluctuation trend;

(6) Real income of people;

(7) Tax policies toward enterprises

The state of macro-economic environment determines the health and prosperity

of the economy, always causes influence on enterprises and branches Hence, enterpriseneeds to study the economic environment to realize the changes, trends and its strategicimplications

Four important factors of macro-economic environment are:

- Exchange rate

- Inflation

c) Cultural- Social environment (S)

Cultural and social factors affect the life and behaviors of human and via them,influence demand structure, consuming actions and customers’ trend of consumption.Cultural and social factors include:

- Population and fluctuation trend of population;

- Households and movement trend;

- The movement of population;

- Religion;

- Way of life and attitude toward quality of life;

- Women in the labor force;

- Career;

- The flexibility of consumers

Culture and society also have influence on corporate culture connecting to therelationships among members in the enterprise and with customers

Enterprises pay attention to the fluctuation of above-mentioned factors to soonrecognize the changes in the trend and consumers’ behavior, and then enterprises willknow how to make appropriate changes to their method of doing business

d) Technological environment (T)

Technical-technological element decides the appearance of new products, theformation of business mode, requirement-satisfying mode, the influence on competitiveability and business efficiency of enterprises These factors involve:

- The current level of infrastructure and technology of the economy;

- The strategy to develop science technology and resources to develop thisstrategy;

- The level of investment for research and development of the branch and theeconomy;

- The capacity to apply technological advancement and using mechanization inbranches;

- The level of completion of technological transfer and implementing them inthe economy;

- The regulations on protecting industrial property right and the enforcement inreality

These factors are extremely dynamic On one hand, they bring about a lot ofopportunities for the enterprise On the other hand, they crate new threats tobusiness activities, etc

e) Population- natural environment

At present, population is often attached to development showing the importance

of this factor to the comprehensive development of the society The aspects ofpopulation- labor which need to be analyzed embrace:

- Size: total population and labor;

- Structure: structure and fluctuation trend of population, age, gender, region,religion, and so on;

- Quality: qualification, intellectual standards of the people, levels,constitution, etc;

- Career, income;

- Distribution according to territory

Natural conditions not only play an important role in human’s life but also have

a close tie with the determination of business strategy

f) International environment

The regionalization and globalization trend has been developing dramatically allover the world A large number of economic relations among countries, regions haveaffected many fields of social life which every enterprise, branch and government have

to take into account The strong development and rapid advancements of informationtechnology have brought countries closer, forming a globally commercial network Thegreat and profound fluctuations will strongly impact enterprises, creating opportunitiesand challenges in business activities, the main factor having direct influence on strategymanagement activities The influencing factors are:

- The impact of the world’s politics;

- The impact of the world’s economy;

- The impact of International law and common rules;

- The impact of International technical and technological factors;

- The impact of International cultural factors;

Hence, the main objective of analyzing macro-environment is to identify expected changes and trend from the elements of external environment With the focus

on the future, the analysis of external environment will allow enterprises realize opportunities and challenges Then, they will have promoting and coping measures to perfect and impetus production and business activities

1.2.3.2 Analyzing micro-environment (sectorial environment)

A narrow production industry or an economic technological industry includesmany enterprises which can produce similar products and services which can bealternated for each other The task of strategist is to analyze and make prediction aboutcompetitive forces in sectorial environment to define the opportunities and challenges

to their enterprises

Michael E Porter’s five forces model

1 Michael E Porter, a theorist and practitioner on strategy at Harvard BusinessSchool has put forth a framework to help administrators recognize opportunities

and threats which enterprises have to face in a sector (Michael E Porter,

Competitive Strategy, New York: Free press, 1980) The framework of Michael

E Porter is called five forces competition model, and it is presented by thisdiagram:

Table 1-3: Five forces competition model by Michael E Porter

Threats from potential rivals

(Sources: Strategic Management - Griggs University)

M Porter points out that when the forces become stronger, they will restrict thecapacity of existing enterprises in increasing price and getting higher profit Thestrength of competitive capacity can be changed over time when sectorial conditionschange

Competitive environment has regular and direct influence on business activities

of enterprises While analyzing competitive environment, enterprises need to considerthe inter-relations with five influencing forces, including:

a) Competitive pressure from existing rivals

The first force in five force of Michael E Porter model is the scale ofcompetition in existing enterprises of a production branch If the competitive rivals areweaker, the enterprise will have more chances to increase selling price and earn moreprofit In contrast, when existing rivals are strong, the competition in price isconsiderable All competition on price will result in damage

Competition among enterprises in a production branch often includes some maincontent like: structure of sectorial competition, real situation of sectorial and outputbarriers

b) Threat from potential rivals:

Potential rivals are enterprises which have not competed in the same sector, butthey have competitive possibility if they choose and decide to participate in the sector.This is a threat to existing enterprises The existing enterprises try to prevent potentialrivals from joining the sector because competition will become tougher when there aremore enterprises in the sector

The level of advantages and disadvantages for the participation in the sector ofpotential rivals largely rely on the sectorial-penetrating obstacles Its content oftenconsists of:

- The advantage of absolute cost

- Differentiation of products

- Economy of scale

- The response of existing enterprises in business field

c) Power of customers

Customers can be regarded as a competitive threat when they are in the position

of forcing enterprises to cut down on price or having demand for higher quality andbetter services On the other hand, when customers are weak, enterprises will haveopportunities to increase price and gain more profit Whether customers can makedemand to enterprises or not depends on the relative power of them to enterprises

d) Power of suppliers

Suppliers can be viewed as a threat when they are possible to raise input price ordecrease products’ quality which they provide; thus, reduce the profit-generatingcapacity of enterprises On the contrary, if the suppliers are weak, this will open up anopportunity for enterprises to urge suppliers to cut down prices and request highquality The ability of suppliers to press demand to enterprises is dependent on therelative power between them and enterprises

e) Threat from alternative products and services

The final force in the model of M Porter is the threat from alternative products.The alternative products are other products that can meet the demand of customers

Its ultimate feature often has more predominance than replaced products because

of distinctive features This threat requires enterprises need to have frequent analysisand observation of scientific-technical-technological advancements, in which therenovation of technology and products has a close link In addition, the change inmarket demand is also an important element generating this threat

1.2.4 Analyzing internal environment

Strategists need to study the internal environment to know the main strengthsand weaknesses in their organizations This task has a very crucial meaning because itcan point out the strong and weak points which the enterprise needs to make allowancefor when decide to select business strategies

The reality has shown that we cannot evaluate all the elements in the internal of

an enterprise because this number is very large As a result, to assess the internalenvironment of an enterprise, it is very necessary to point out the main factors whosepresence can be represent the internal operational situation of the enterprise Thesefactors are the value chain and core capacities of the enterprise

With regard to the analysis of the internal of the enterprise, there are manydifferent approaches, in the textbook on Business strategies of commercial enterprises(2005), the group of authors Ass Dr Nguyen Thua Loc and Dr Tran Van Bao thoughtthat, we need to consider following factors:

- Products and business lines of enterprise

- Human resource management of enterprise

- System of information

- Marketing activities

- Financial factors

- Brand name and reputation of enterprise

- Business culture of enterprise

The analysis of the internal of enterprise is all aiming at defining the enterprise’spotentials, strengths and weaknesses relating to the reinforcement of competitivecapacity to set the base for the firm existence and development of the enterprise.Hence, when analyzing internal environment, we need to combine the analysis

of the two models: the model of value chain and the process to recognizesustainable competitive edges

1.2.4.1 Analyzing based on the field of doing business – Value Chain

The total value made by a company is identified by customers’ payment for thecompany’s products or services, if the value is greater than the costs which are spent tocreate the volume of value, the company will get interests To achieve competitiveadvantages, companies, enterprises have to pursue a low-cost strategy or anotherstrategy of making their products become outstanding

Michael E.Porter gave the definition of Value Chain for the purpose of analyzingthe process of creating value The Value Chain is divided into main activities andsupporting activities, every product makes its contribution to increase the total value

Table 1-4: The diagram of Value Chain

Supporting

activities

Infrastructure ( structure and leadership)

Strategic goals

Human resourceResearch and developmentMaterial management

Main

activities

Input Logistics

Production,Manufacturing Output Marketingand Sales

Service,After-sales services

(Source: Strategic Management - Dr Lê Thế Giới, PhD Nguyen Thanh Liem)

Functions of each supporting activity:

Material management activity: The function is to control the materials’

movements in Value Chain including supply, production and distribution It can reducethe costs for value, so it contributes to improve the output qualities and the sellingprices

Research and development activity: The function is to push up new products and

the advanced techniques of manufacture The improvement of manufacturingtechnologies can decrease the costs, and create more fascinating products with higherselling prices This activity can have effects on manufacturing, marketing and creatingthe value

Human resource management: The function is to ensure the reasonableness of

using skillful people to implement effectively activities of creating the total value

Infrastructure of the enterprise: Infrastructure includes organizational structure,

controlling and examining systems, and working culture of the company Infrastructurerefer to general sense of the whole company, in which the activities of Value Chainwere carried out

To achieve the strategic goals mentioned above which are related to efficiency,quality, the renovation of products, and customers’ satisfaction, the enterprise need tocarry out strategies of combining many activities together to create the differences ofproducts In reality, these goals can be considered as cooperative goals which make thesame contribution to create the total value of the company Therefore, the coherenceamong activities is required essentially; it is represented in the following table:

Table 1-5: Cooperative goals of activities and Value Chain

Value Chain Cooperative goals of activities

InfrastructureHuman resourceR & DMaterial management

1.2.4.2 The process of identifying steady competitive advantages

Table 1-6: The process of identifying steady competitive advantages

Steady competitive advantages

When the company’s capacity dominatesthe one of competitor, long-term willbecome a steady competitive advantage Preponderant capacity

In case of dominating the competitor: Strongpoints: Long term (strategies) Short term (Policies:valuable, Unique, Costly to imitate, appropriatesizes, the key capacities will become preponderantcapacity

Resources: Invisible properties: Strategic location, invention, devices, techniques,

research and development (R&D)Visible properties: workshops, facilities, staff forceFor long-term goals, when the company meets 4 of 5 following criteria, thepreponderant capacity will become the steady competitive advantages

(1) Valuable; (2) Unique; (3) Costly to imitate; (4) Appropriate sizes; (5)attaching to success factors

1.2.5 SWOT matrix

1.2.5.1 General theory of SWOT

The SWOT analysis focuses on inside changing factors which are in touch withoutside factors SWOT stands for 4 words: Strengths (S), Weakness (W), Opportunities(O), and Threats (T)

This tool is very useful for investigating an issue, or making a decision oforganizing, managing as well as doing business SWOT model analyzes strengths andweakness in a specific situation with opportunities for successes and threats for failures

of an enterprise

Therefore, the SWOT analysis means to analyze outside factors which theenterprise may enjoy (opportunities) or deal with (threats), as well as considering insidefactors (strengths and weaknesses) This doing is complicated and requires theenterprise to spend much time, money, labor, income possibilities in order that theanalysis and understanding of information will be effective

1.2.5.2 SWOT matrix

SWOT matrix is used to collect all the researches on both outside and insideenvironment of the enterprise (of sector) Analyzing outside environment to identify inadvance opportunities and threats of business Analyzing inside environment to realizethe enterprise’s strengths and weaknesses On the basis of analyzing these factors andstrategic goals, orientations for developing the enterprise’s business and resources, theenterprise can establish some cooperation In theory, there are 4 kinds of cooperation:

- Combine opportunities and strengths (OS);

Combine opportunities with weaknesses (OW);

- Combine threats and strengths (TS);

- Combine threats and weaknesses (TW)

To develop strategies on the basis of the SWOT analysis, enterprises need todesign a matrix which includes both inside and outside factors This matrix is named asSWOT (or TOWS matrix), it is presented in the following table:

Table 1-7: SWOT matrix

SWOT matrix Opportunities(O)

Strategy ST

This strategy uses the enterprise’sstrong points to deal with andavoid threats from outsideenvironment (challenges)

Strategy WT

This strategy is to overcome theenterprise’s weaknesses to reducethe number of outside threats (challenges)

(Sources: Strategic Management - Griggs University)

Strategies in the SWOT matrix:

- The strategy S-O is to pursue opportunities which are fit for the enterprise’s

strong points

- The strategy W-O is to overcome weaknesses to pursue and seize opportunities

- The strategy S-T is to identify the treats or challenges which can be decreased

by the use of the enterprise’s strong points so that potential damages due tooutside factors can be reduced

- The strategy W-T is to form a prevention schedule in order that the enterprise’s

weakness can not make the enterprise become vulnerable due to threats from theoutside environment

1.2.6 Selecting strategies

In fact, there are many different competitive strategies Generally, we can apply

3 following methods to achieve competitive advantages:

- Strategy of cost leading

- Strategy of making the enterprise’s product unique

- Strategy of focusing on key things

Those strategies are considered to be overall, because they include all activities

of doing business and all occupational sectors Each of those strategies are resultedfrom the process of doing consistent activities including choosing products, market forconsumption, possibilities for being unique, these selections affect one another

Table 1-8: The summary of relevant selections for strategies

Cost leading Making products unique Concentration

Distinctive

products

Low ( mainly byprices)

High (mainly by theuniqueness)

from low to high(prices or uniqueness)Market

segments

Low ( popularmarket)

High (many marketsegments)

Low (one or somemarket segments)Unique

capacities

Production andmanaging

materials

Research, development,

1.2.6.1 Strategy of cost leading

The strategy of cost leading is an overall activity with the purpose of providingproducts or services which have accepted characteristics with the low cost in thecomparison with competitors

This strategy has 2 basic advantages Firstly, although the leader of cost can givethe lower level of price in comparison with competitors, he still gets the same benefitsand interests thanks to the lower cost Secondly, the cost leader can exist more stablythan competitors in case the number of competitors increase which forces enterprises toreduce their prices set for products to compete in prices

Advantages and disadvantages

Advantages: According to the model of 5 competitive factors, the leader of cost

is protected from competitors doing the same businesses by low-cost advantages Withthis advantage, he is affected little by the increased output prices in case suppliers makeuse of their powers

Disadvantages: Competitors may imitate easily the cost leader’s methods; thisimitation can threaten the strategy of cost leading When the cost leader focuses ondecreasing the cost for production, they can neglect some changes in customers’hobbies

1.2.6.2 The strategy of making products unique

The objective of this strategy is to achieve competitive edges by makingproducts become unique so that customers can not find those unique characteristics onother products The enterprise create those unique characteristics to satisfy customers’requirement, and other enterprises can not imitate for the purpose of increasing prices(the level of price for unique products is higher than the average level set generally forthe whole sector) The price set by the enterprises producing unique products is oftenhigher than the on set by the cost leading ones Customers don’t hesitate to buy theunique products with high prices, because they believe in the distinctive values ofunique products Therefore, the unique products are set price on the basis of thecapacities of market and customers

Advantages and disadvantages

Advantages: The uniqueness helps its enterprise win competitors, but thepossibilities of winning depend on the degree of customers’ loyalty to the enterprises’brand name The uniqueness and that kind of loyalty are precious properties to protectthe enterprise from threats, as well as cause difficulties for others in the process ofentering the sector

The enterprises enjoying uniqueness will not face challenges cause by powerfulsuppliers, because their strategy supports the tendency of requiring a higher level ofprice rather than aiming at the cost of production

Disadvantages: If competitors can imitate easily the model of others’ products,

or make copies from unique products, the enterprises can not maintain the increasedprice level When the uniqueness originated from the design or physical characters ofproducts, it is possible for designers to be imitated by others

1.2.6.3 The strategy of focusing on key things

The strategy of focusing on key things is different from 2 strategies mentionedabove, because it aims directly at satisfying customers’ requirement or segmentingmarket or customers The concentration strategy focuses on the market’s shortcomings

to identify the geographical side, the kind of customer or product segments

When the enterprise chooses a specific market segment, the enterprise willpursue a strategy of concentrating on using 2 strategies mentioned above: low cost anduniqueness Basically, an enterprise which knows how to concentrate on key thingsalways makes their products unique and tries to become the leader of cost If theenterprise concentrates on the strategy of cost leading, it will compete with the costleader in segmenting the market which is already neglected by the cost leader

a The way to choose strategies

The strategy of focusing on key things aims at relatively narrow market, inwhich the enterprises try to achieve competitive advantages thanks to low cost orunique products by applying the theory: “the customers’ demands can be met better when the enterprise concentrates fully on serving that group of customer”

b Advantages and disadvantages

Advantages of the concentration strategy originate from its resources whichmake this strategy different from 2 above strategies: efficiency, concentration,improvement, and customers’ satisfaction Another advantage of this strategy is that theenterprises always keep contact with their customers, and meet the continuouslychanging demands of customers

Disadvantages: The enterprises using this strategy often spend more money thanthe leader of cost, so the possibilities of getting benefits are decreased when theenterprises are forced to invest in making their products unique The shortcomings ofthis strategy can disappear immediately just when technology and customers’ hobbiesare changed The risk of being imitated is very high The leader of low cost is very easy

to change their products in a large market to compete directly with the enterprisesapplying the concentration strategy Other enterprises pursuing this strategy can alsoenter objective market; it can make those enterprises lose the significant number ofcustomers

1.2.6.4 The combination of those strategies

These overall strategies are not coherent at any time If an enterprise tries toachieve benefits of all fields, as the results they fail in implementing all strategies Even

when the quality of products is always good, the enterprises accidentally create anunsteady image in the viewpoints of customers Therefore, Michael Porter claimed that

to get long-term successes, each of enterprises need to choose the only one of 3strategies If the enterprises are so greedy that they pursue all 3 strategies, they will getinto trouble and can not achieve competitive advantages

In addition, according to M Porter, if enterprises can succeed in carrying outmany strategies at the same time, they have to set up separated units of doing business,

in which each unit pursues one specific strategy By separating different strategies todifferent branches which have distinct policies or culture, the enterprise can reducethreats of stagnation and underdevelopment However, someone stated that pursuingthe only strategy is not clear-sighted method Because in the same product, customershave demands for different sides such as quality, style, convenience, and reasonableprices

The summary of Chapter I

Chapter I introduces generally about the business strategies of enterprises fromthe most fundamental definitions to the origin of setting up and choosing businessstrategies In this process, the PEST model is applied to analyze micro-environment,Michael E Porter’s model of 5 competitive forces is used to investigate the sector’senvironment, and Value Chain is useful in analyzing inside environment Additionally,this chapter gives the overall understanding on SWOT matrix which is applied to set upand select strategies for doing business

Chapter I also present the model for analyzing both outside and insideenvironment of enterprises, the process of creating the enterprises’ business strategies.Owing to the analysis, the enterprises have more reasonable foundations for setting upfor themselves a successful strategy

CHAPTER 2- BUILDING AND SELECTING BUSINESS STRATEGIES OF

PVFC THANG LONG 2.1 AN OVERVIEW OF PVFC

2.1.1 Formation and development process

Coming into being since June 2000, up to now, PetroVietnam FinanceCorporation has had more than nine years of operation in the financial and monetarymarket of Vietnam The process of its operation and development has experienced a lot

of ups and downs and upheavals Since the initial step was only a Financial Companywith the scale of 100 billion VND until now its charted capital has amounted to 5,000billion VND We can say that PVFC is one of financial institutions having high speed

of development The brand name of PetroVietnam Finance Corporation has beenasserted in domestic market and started to branch out into the world’s market

On March 18th 2008, PVFC officially became PetroVietnam Joint Stock FinanceCorporation This is a turning point from a 100% State-owned Company into a JointStock Corporation This has basically changed the operational and managementmechanism of the enterprise The favorable conditions and development foundationhelp PVFC speed up business activities and set the target to become a Financial Group

by 2010

2.1.2 Types of products

With the main function of accumulating capital for PetroVietnam Corporation,most beneficial and effective operation of every source of finance for Oil and Gassector, creating supporting financial tool for personnel policy of the Corporation, a lot

of creative products of PVFC have been launched and become typical productscontributing to generating distinctive features for PVFC on the market such as: Co-financing, trust lending, trust investment, investment advisory and mediating service,giving consultancy on corporate equitization Besides, PVFC specializes in financialadvisory and changing financial structure services, and attaching enterprises in Oil andGas sector to capital market The fast and healthy development of PVFC shows thefirm position of Vietnam Oil and Gas Group

Main products and services of PVFC:

- Projects investment

- Valuable notes investment

- Mergers and acquisitions

(4) Accumulating corporate capital and credit

- Credit for economic institutions

- Trading foreign exchange

2.1.3 Norms of business activities

In 2009, the World’s and Vietnam’s financial a monetary market have shownmany signs of recovery and become effervescent again after a year with full offluctuations due to the impact of global economic crisis Overcoming the upheavals ofthe economy and the repercussion of 2008 having many difficulties, the businessactivities of PetroVietnam Joint Stock Finance Corporation still ensures visible growth

in 2009

Accounted to September 30th 2009, Corporation’s total turnover reached 3,682billion VND (up 75% compared with the total turnover of 2008), profit before tax hit

761 billion VND (has deducted credit and investment provisions) It can be said that theCorporation has made great effort to overcome difficulties After nearly two years since

it turning point, successfully shifting the operational model from a limited companyinto a joint stock Corporation, apart from the changes in ownership, operational model,management mechanism, PVFC always pays attention to enhancing and raising thequality of its services

In the context of a difficult financial market, PVFC has concentrated on boostingthe mobilization of capital from economic institutions and individuals to ensure wellmaintaining capital resources for business activities of the Corporation, and timely andeffectively implement the checking of credits items, restructuring investment portfolios

to suit the market

Table 2-1: The structure of turnover from services of PVFC till September 30 th , 2009

Unit: Million VND

(Sources: PVFC Financial Statement 2009)

2.1.4 Development orientation to 2015 and vision to 2020-2025

In the period from now to 2015, the target of PVFC is to build PetroVietnamJoint Stock Finance Corporation into a strong brand name providing various andoptimal financial services to customers, particularly Vietnam Oil and Gas Group andcustomers in the key economic fields: Energy, mineral and infrastructure

In the roadmap of converting activities into the model of a commercial bank,PVFC will expand its network nationwide and worldwide, diversify business activities,reinforce the strong apparatus, build a dynamic and professional staff, complete themanagement regulation between the Corporation, branches and member units,concentrate on developing package services on credit, investment and finance for

customers basing on four main principles: Professional- customer-oriented.

effective-transparent-2016 – 2025 period is identified as a comprehensive and sustainable developmentstage of PVFC with the view to maintaining the position in top 10 strong banks in theregion on energy, achieving stable annual average growth rate of 25%, the profit ratebefore tax/ charted capital from 20 – 25% and the value of the enterprise equal to 10USD by 2025

2.2 Overview of Thang Long branch of Petrol Vietnam Finance Corporation 2.2.1 The establishment and development process.

It is possible to say that Vietnam’s finance and stock markets have never grown

as strongly and hotly as in 2007 This was the period that Vietnam step by stepintegrated into global economy Realizing those situations, PVFC Thang Long wasestablished as planned by PetroVietnam Finance Corporation in August, 2007, whichwas the youngest branch out of 9 PVFC’s braches During the recent time, by theobvious realization about its own role and task within general tasks of the GeneralCorporation as well as taking full advantage of the inherent strong points of PV, PVFC,PVFC Thang Long has got certain success, contributing to the development of PVFC

Being well-aware of human resources as the soul and basic factor determiningthe success of the enterprise, up to now, Thang Long branch’s staff have continuouslypracticed, studied and taken part in the training and self-training courses in order toimprove knowledge and business serving skill, meet the demand about managing andoperating a modern financial institution Until now, PVFC Thang Long has built up aprofessional staff with high qualification and perfect management skill UntilDecember, 31st, 2009, the number of whole staff was 61 In which there was 11managers including leaders and the key officers like department director and deputydirector, 50 experts and officers

2.2.2 Organizational structure.

Organizational structure:

Table 2-2: Organizational structure of PVFC Thang Long

Operational mechanism:

(1) The Branch’s Director: is the head of the branch, runs all the businessactivities and takes responsibility for operation scope to the Law and the GeneralCorporation

Directly being in charge of the departments: financial services and investment,accounting department and general department

(2) 02 branch’s deputy directors, assist Branch’ director, undertake the taskswithin delegated sphere when the director is absent

(2.1) The deputy director in charge of credit: Directly manages the creditdepartment

(2.2) The deputy director 2: manages My Dinh central transaction office andassessment and risk management department

(3) The departments:

(3.1) The credit department: is the unit directly under the branch, has function asadvisor for Board of branch director in the field of providing credit services, arrangescapital for project, enterprise inter and outer Oil and Gas sector

(3.2) The investment department: is the unit directly under the Branch’sDirector, has function as advisor and assistant for Director in the field of searchinginvestment opportunities and implementing project and finance investment, structuring

DIRECTOR

DEPUTY DIRECTOR 1

General Dept

nnnt

DEPUTY DIRECTOR 2

Financial Dept

departmen

Credit Dept

Assessment and Risk mammm

Investm

ent Dpt

Educational Dept

Pḥng GD

investment and trade products, merging enterprises under the regulation of PVFC andlaw

(3.3) The assessment and risk management department: is the unit advisingboard of director considering and making decision to the files involving credit,investment, risk management at the Branch

(3.4) The finance and account department: is the unit directly under the Branch’sDirector, advising him carrying out managing tasks, implementing accounting tasks,controlling, balancing capital at the Branch It also takes the duty as administeringcapital, executing finance plans assigned by the General Corporation so as to ensure thebranch’s business activities

(3.5) The general department is the unit directly under the Branch’s Director,works as advisor for him in the field of management administration, legal system,human organization, income and training

2.2.3 The targets of the main business activities

During the 2 past years, the main business activities of Thang Long branch havebeen about credit, including credit provision for projects through direct loans, co-sponsor, delegated loans; capital service activities, including offering expert adviceabout project and business’ finance restructuring, business transfer, businessmanagement, enterprise division and mergence(M & A), investment connection, capitalarrangement and other advice

Table 2-3: Sale structure of service products of PVFC Thang Long in 2009

(Sources: PVFC financial statement 2009)

With the advantages from the beginnings and the enthusiastic, dynamic andyoung staffs, Thang Long Branch has positively implemented and connected a lot ofbusiness opportunities At the same time, it has broadened customer network so as tooffer services like credit, investment and finance advice for many units inter and outerpetrol sector

2.3 BUILDING AND SELECTING BUSINESS STRATEGIES FOR PVFC THANG LONG IN THE PERIOD 2010 - 2015

2.3.1 Outside environment analysis

2.3.1.1 Macro environment analysis – PEST Model

In that urgent situation, the United State had to “rescue” the American economy

by a demand stimulating package up to 800 billion dollars To such situation, Viet Namalso reacted immediately and quickly, “rescuing” the economy by a demand stimulatingpackage worth of 14,000 billion VND and many other reasonable policies Once again,the principal of “relying on people to overcome the difficulties” had been useful, whichGovernment had determined to stimulate the production, supporting the enterprises andcitizens to consume the products, lending capital successfully, putting down thepressure of price and increasing purchasing power

In such difficult situation, many smart and big companies had been witnessed toovercome the “regressing storm” by using new strategies which were more flexible andmore adaptable to the changing situation The most important thing was that the strongcompanies has treasured and come back to exploit the domestic market- the market, sofar, has been considered as the “root” and the advantage of Vietnamese companies but

it had been forgotten for a long time

As a result, the “ship” of Vietnamese economy had more “rowers” to over the

“regressing storm” The growth rate of Vietnam Economy was about 5.32% Although

that growth rate is the lowest rate in nearly past decade, Vietnam has been on Top 5 ofcountries who had the highest economic growth rate in the world The inflation wasmaintained at level of 7% The 2009 consumption price index was 6.88%, which wasthe lowest index in 6 recent years Industrial manufacturing got out of the slowdevelopment in some beginning months of the year, reaching the growth rate of 7.6% inthe whole year The agriculture continued to increase The rice productivity reached to38.9 million tons, increasing by 156 thousand tons in comparison with the year of 2008.

The economic downturn has being history The year of 2010 is coming, bringingmany new opportunities In 2009, Viet Nam had to face up with many challenges of theintegration process Obliviously, the spirit of Vietnam has been tested in 2009 Theacknowledged successes have proved that Vietnam had converted challenges toopportunities

Unlike 2008, the 2009 monetary policy, which was loosened at the beginning ofthe year and tightened at the end of the year, was considered stable with 2 times ofadjusting interest rate Specifically, at the beginning of February, 2009, the interest rate

of Vietnamese dong decreased from 8.5% to 7%, resulting to the decrease of maximumloan interest rate of credit agencies from 12.75% to 10.5% That level of interest ratewas valid until the end of November, 2009 Since 1st December, 2009, the interest ratewas adjusted to be 8%, resulting in the increase in maximum loan interest rate of creditagencies from 10.5% to 12%

Although the monetary was relatively stable, 2009 credit deficit reached therecord level over the past years According to the statistics, at the end of November

2009, the credit deficit of banking system rocketed by 37%, much higher than thoseplaned and estimated Such level of credit deficit was higher than the level in 2008(about 21%), being the highest level in this decade

Because of the gloomy reality at the end of 2008, many banks set target of lowlevel of profit However, thanks to the quick and surprising recover of Vietnameconomy, the banks’ profit increase strongly Some banks announced that they hadfinished profit target of the whole year at the end of November, 2009

The characteristics of Vietnam economic environment before 1010 and theprospect until 2015:

Table 2-4: The GDP growth rate of Viet Nam from 1999 to 2009 (%)

10,6 9

10,37

10,4

(Sources: Financial Newspaper; Internet)

The Viet Nam economic prospect until 1015 and future:

According to the evaluation of Economist Intelligence Unit, the long-termprospect of Viet Nam economic is good Viet Nam is maintaining the advantages incomparison with other countries such as the stability of politics and society ruled byCommunist Party in the period of 2009- 2015 In the current situation, Viet Nameconomy has to face up with some challenges, however, basing on the fact and theGovernment’s solutions gave; Viet Nam can control the situation

(2) Social-cultural-demographic environment (S)

Viet Nam is a country with the long and characterized culture Over thousandsyear of Chinese domination, Viet Nam’s culture was not assimilated, even it acquiredand created the new values which were suitable to the Vietnamese condition andsituation Therefore, Viet Nam can preserve and promote the traditionally culturalvalues together with economic development

In term of population, it is obvious that Viet Nam population increases year byyear Every year, the population increases controllably by 1- 1.2% (referring to theincrease of one million people) In 1979, Vietnam population was 52.742 millionpeople, while in 2008 it was 86.16 million people and 87.18 million people in 2009

Every year, there are more than 50 thousand of students who graduate fromeconomics departments in Vietnam, 91% of them want to work in financial andbanking sector