Luận văn thạc sĩ xây dựng chiến lược phát triển kinh doanh công ty cổ phẩn nước khoáng thiên nhiên VITAL

LUẬN VĂN Xây dựng chiến lược phát triển kinh doanh công ty cổ phẩn nướckhoáng thiên nhiên VITAL THESIS MBA BUILDING DEVELOPMENT STRATEGY FOR VITAL MINERAL WATER PRODUCT OF VITAL JOINT ST

LUẬN VĂN Xây dựng chiến lược phát triển kinh doanh công ty cổ phẩn nước

khoáng thiên nhiên VITAL

THESIS MBA BUILDING DEVELOPMENT STRATEGY FOR VITAL MINERAL WATER PRODUCT OF VITAL JOINT STOCK

COMPANY

TABLE OF CONTENTS

ACKNOWLEDGEMENT 2

TABLE OF CONTENTS 3

LIST OF FIGURES 6

LIST OF TABLES 6

ABBREVIATIONS 8

INTRODUCTION 9

I Background 9

II Purposes of the research 10

III Objective, scale and methodology 10

IV Structure of the report 11

CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND STRATEGIC MANAGEMENT 12

1.1 Overview of strategy and strategic management 12

1.1.1 Fundamental definitions 12

1.1.1.1 Definition of strategy 12

1.1.1.2 Definition of strategic management 13

1.1.2 Roles of strategic management 13

1.1.3 Levels of strategic management 15

1.2 Strategic management process 16

1.2.1 Defining mission & objectives 16

1.2.2 External environment analysis 18

1.2.2.1 Macro-environment 19

1.2.2.2 Micro- environment 21

1.2.2.3 External Factor Evaluation EFE 24

1.2.3 Internal environment analysis 26

1.2.3.1 Resource evaluation 26

1.2.3.2 Evaluation of functional departments 28

1.2.3.3 Internal Factor Evaluation IFE 31

1.2.4 Strategy formulation 33

1.2.4.1 Strategy formulation process 33

1.2.4.2 SWOT Matrix 33

1.2.5 Strategy implementation 35

1.2.6 Strategy evaluation and control 36

CHAPTER II: THE REAL SITUATION OF PRODUCTION-BUSINESS ACTIVITIES OF VITAL JOINT STOCK COMPANY 38

2.1 General information of Vital Joint Stock Company 38

2.1 History and development 38

2.1.2 Operation sectors 39

2.1.3 Personnel structure 41

2.2 Situation of production and business of Vital mineral water Company in the period of 2005 – 2009 43

2.2.1 Productivity growth 43

2.2.2 Business performance and market share of Vital 44

2.3 Analysis of factors affecting on operations of Vital Joint Stock Company 48

2.3.1 External environment 48

2.3.1.1 Macro-environment 48

2.3.1.2 Micro-environment 52

2.3.1.3 External factor evaluation matrix EFE 56

2.3.2 Internal environment 57

2.3.2.1 Human resource 57

2.3.2.2 Marketing activity 58

2.3.2.3 Research & Development 59

2.3.2.4 Finance and investment 60

2.3.2.5 Internal factor evaluation matrix IFE 61

2.4 Analysis on the status of creating and performing strategy for Vital mineral water product of Vital Joint Stock Company 62

2.4.1 Market expanding strategy 62

2.4.2 The strategy of investing in infrastructure development 64

2.4.3 Product development strategy 65

2.4.4 Marketing strategy 67

2.4.5 Strategy of developing human resources 69

2.5 General review on practical results of performing strategy 69

CHAPTER 3: SOME SOLUTIONS TO BUILD DEVELOPMENT STRATEGY FOR VITAL JOINT STOCK COMPANY 72

3.1 Developing objectives of Vital Joint Stock Company 2010- 2005 72

3.1.1 Vision, mission and core value of the company 72

3.1.2 Development objectives 73

3.2 Using SWOT Matrix to making strategy of the Vital Joint Stock Company 73

3.2.2 Choosing developing strategy 76

3.3 Solutions to build development strategy for Vital JSC 2010-2015 78

3.3.1 Market expansion solution 78

3.3.2 Marketing solutions 79

3.3.3 Research & Development solutions 81

3.3.4 Personnel solutions 82

3.3.5 Financial solutions to invest in new technology and equipments 83

CONCLUSION 85

LIST OF REFERENCES 86

APPENDIX 88

Vital natural mineral water factory project in Dong Nai 88

LIST OF FIGURES Figure 1.1 Five-force model of M Porter 24

Figure 2.1 Structure of Vital product 40

Figure 2.2 Personnel Structure of Vital Joint Stock Company 41

Figure 2.3 Marketing department structure 42

Figure 2.4 Turnover growth of Vital in Hanoi, 2009 46

Figure 2.5 Turnover of Vital mineral water in term of regions (2009) 47

Figure 2.6 Market shares of various brands in Vietnam market (2009) 47

Figure 2.7 GDP growth of Vietnam over years 49

Figure 2.8 The income growth in Vietnamese rural and urban area 50

Figure 2.9 Changes in consumption belief of Vietnamese 51

Figure 2.12 Percentage of indirect sales channel (in percentage) 63

Figure 2.13 Volume of direct sales channel 64

Figure 2.14 New packaging of Vital (2009) 66

LIST OF TABLES

Table 1.1 An example of External Factor Evaluation 25

Table 1.2 An example of IFE matrix 32

Table 2.1 Vital mineral water output over the years tank 43

Table 2.2 Consumption of natural Vital mineral water 44

Table 2.3 Mineral water turnover in term of brands 45

Table 2.4 SWOT analysis of competitors 53

Table 2.5 Five-force analysis model 55

Table 2.6 External Factor Evaluation matrix 56

Table 2.7 Vital’s internal factor evaluation matrix 61

Table 3.1 SWOT analysis of Vital natural mineral water 73

Table 3.2 GREAT analysis 76

CEO Chief Executive Officer

FAO Food and Agriculture Organization

SBU Strategic Business Unit

UNIDO United Nations Industrial Development

OrganizationVital JSC Vital Joint Stock Company

I Background

Vietnam has approached the market economy for over 20 years This duration is not toolong as well as too short for Vietnamese enterprises to apply management methods ofthe market economy procedure Strategic management has been considered as one of themost useful business theories which can help enterprises to achieve successes in a long –term The way they are using these theories, however, should be re-considered in almostall organizations in Vietnam

In 1996, with the approval of Thai Binh People Committee, Vital Joint Stock Companywas established and started to build the most modern natural mineral water productionfactory in Vietnam by a technology chain from Italy All equipments of the factory arealso controlled and checked by experts from FDT – Italy Through many years ofdevelopments, Vital natural mineral water - its main product - has achieved a certainposition step by step in the market as well as in consumers’ mind

In comparison with other products in the bottled market, however, the awareness ofVital natural mineral water is not really clear If consumers know about Aquafina as one

of the most quality pure water products or Lavie as an absolute part of life, they stillconfuse about Vital’s image due to its dull position and scattered appearance incommunication vehicles Moreover, the company often encounters with the situation oflacking products for sales because the production capacity of its unique factory in ThaiBinh cannot meet the increasing demand of customers In addition, there are more and

more bottled water products and the market is becoming so competitive It is clear thatVital product is sort of clear and effective strategies, especially marketing strategy orfinancial strategy to stay stable in the bottled water which is on its way to be saturated.

Therefore, we decided to choose the topic “Building development strategy for Vital

mineral water of Vital Joint Stock Company 2010- 2015” for our capstone project This

topic does not only apply knowledge of strategic management but also contributessignificant practical recommendations for the development of Vital JSC as well as Vitalbrand

II Purposes of the research

The research focused on following issues:

- Fundamental theories of strategy and strategic management

- Useful models to analyze the process of establishing and choosing strategy

- The real situation in which Vital JSC has been implementing its strategy

- Analyze factors of the external and internal environment which affect oncompany’s strategy

- Appropriate solutions to build the development strategy for Vital natural mineralwater brand of Vital Joint Stock Company

III Objective, scale and methodology

- Objective and scale: The research focuses on current strategic managementactivities of Vital JSC and provides some solutions for the period of 2010-2015

- Methodology: The research used two kinds of information sources: Primary andsecondary information The secondary information came from various sources.However, a major percentage of them were from reports about current businesssituations of Vital natural mineral water brand which were provided by Bitexco

and Vital JSC Besides, they were also gathered from many opened sources such

as internet and books In addition, the research took uses of information fromreports of market researches of famous international research companies such as

AC Nielsen or TNS

IV Structure of the report

CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND

STRATEGIC MANAGEMENT

1.1 Overview of strategy and strategic management

1.1.1 Fundamental definitions

1.1.1.1 Definition of strategy

“Strategy” is the term which has been widely and long standing used in many fields

“Strategy” was firstly used in military then in political field From 1950s to 1960s of XXcentury, the concept of “strategy” was used in economic and social field Generally,

“strategy” was understood as trend and method to resolve long term and overviewmission According to UNIDO definition: “Generally, a development strategy can bedescribed as an outline of developing process to reach intended targets for a period from

10 to 20 years, it instruct strategic managers in attracting and allocating resources It can

be said that, strategy provides a vision for development process and the consistence forimplement solutions Strategy also can be basics for overview developing plan in longterm and short term or can be general awareness of related people about prospects andwillingness and challenges in a specific period”

There are many definition of “strategy” To Fred R David (2003), strategy includesnumbers of method to reach long term target To Michael E Porter (1996), strategy isthe creation of special and valuable positions include variable activities

In general, there are some differences in expression of concepts and definitions ofstrategy They still have some common content:

 Define company’s short term and long term targets

 Bring out solutions and methods to choose these solutions

 Deploy and allocate resource to implement these targets

1.1.1.2 Definition of strategic management

Besides understanding concept of strategy managers of company also need to know theway to manage these strategies and make right decisions to reach company’s target, thisprocess is called strategic management I can be generally said that: “Strategicmanagement is defined as a set of decisions and actions expressed via results ofplanning, implement and evaluating strategies, created to reach corporation’s long-runtargets”

Strategic management is the art and science of formulating, implementing andevaluating cross-functional decisions that will enable an organization to achieve itsobjectives It involves the systematic identification of specifying the firm's objectives,nurturing policies and strategies to achieve these objectives, and acquiring and makingavailable these resources to implement the policies and strategies to achieve the firm'sobjectives Strategic management, therefore, integrates the activities of the variousfunctional sectors of a business, such as marketing, sales, production etc., to achieveorganizational goals It is generally the highest level of managerial activity, usuallyinitiated by the board of directors and executed by the firm's Chief Executive Officer(CEO) and executive team Strategic management hopes to provide overall direction tothe company has ties to the field of organization studies

Strategic management includes these following specific steps:

 Strategic planning

 Strategic implement

 Strategic checking and evaluation

1.1.2 Roles of strategic management

Characteristics of business environment have a big affect to existence and development

of company They can create new opportunities and challenges for corporation And thecompany which wants to exist has to find out a new management method, it is exactly

“strategic management” - strategy is the basis of this management method In modelbusiness environment, strategy becomes more and more important to existence ofcompany These roles are:

 Strategy is the tool that generally shows the long-term goals of the organization

or enterprise Enterprise’s goals are special targets which it wants to reach duringits operation process Specialization and making documents these targets viastrategies will help members of enterprise or organizations when finding thetargets which they want to reach so, they will know what they have to do It willhelp the enterprise easier in reaching its goals

 Strategy connects short term targets closely in long run conditions In modelbusiness situation, every enterprise has to flexibly move to adapt to changing ofenvironment Sometimes this movement will make the enterprise be separatedfrom its long term goals In this case, strategy with strategic goals will helpmanagers of enterprise a long run direction So, resolving short term matters inlong run conditions can bring enterprise a stable development Long run goalsalso are basics for short term goals

 Strategy helps to ensure unification and make plans for enterprise’s activities Inexistence and development process, strategy provides a comprehensive andlogical point of view in resolving problems which arises in business performance.Strategy also helps to associate different sections in a company and orient them toreach to a unit goal, it is enterprise’s goal

 Strategy helps enterprises and organizations to catch up with market opportunitiesand create comparative position in the market Strategy unifies the enterprise’soperation process in order to reach to enterprise’s strategic goals It means that

enterprise will have to use its resource in most efficient way So, enterprises have

to choose fastest way to catch up with market opportunities and deploy itsavailable abilities to create new comparative advantages

From below analysis we can see very important roles of strategy in enterprise’sperformance so; strategic management becomes one of the most necessary keys whichhelp enterprise open the door to advance toward success Strategic management bringstheses following advantages:

More efficient in making plans by using more reasonable and logical approach methodwhen choosing strategies

 Widely take care of related beneficiaries of enterprises (stock holders)

 Connect short term development in long term development

 Take care of both efficiency and effectiveness

1.1.3 Levels of strategic management

In most (large) corporations there are several levels of management Strategicmanagement is the highest of these levels in the sense that it is the broadest - applying toall parts of the firm - while also incorporating the longest time horizon It gives direction

to corporate values, corporate culture, corporate goals, and corporate missions Underthis broad corporate strategy there are typically business-level competitive strategies andfunctional unit strategies

Business Strategy

Business strategy refers to the aggregated strategies of single business firm or a strategicbusiness unit (SBU) in a diversified corporation According to Michael Porter, a firmmust formulate a business strategy that incorporates cost leadership, differentiation orfocus in order to achieve a sustainable competitive advantage and long-term success inits chosen areas or industries Alternatively, according to W Chan Kim and RenéeMauborgne, an organization can achieve high growth and profits by creating a BlueOcean Strategy that breaks the previous value-cost tradeoff by simultaneously pursuingboth differentiation and low cost

Functional Strategy

Functional strategies include marketing strategies, new product development strategies,human resource strategies, financial strategies, legal strategies, supply-chain strategies,and information technology management strategies The emphasis is on short andmedium term plans and is limited to the domain of each department’s functionalresponsibility Each functional department attempts to do its part in meeting overallcorporate objectives, and hence to some extent their strategies are derived from broadercorporate strategies

1.2 Strategic management process

We are now going to analyze more deeply about the process of strategic management in

an organization from the perspective of general model of strategic management

1.2.1 Defining mission & objectives

A strategic plan starts with a business mission which has been defined clearly.Mintzberg defined a mission as “A mission describes the organization’s basic function in

society, in terms of the products and services it produces for its customers” A clearbusiness mission needs to include following factors:

 Objective

Why does the business exist? Is it to create wealth for shareholders? Does it exist to

satisfy the needs of all stakeholders (including employees, and society at large?)

 A Strategy and Strategic Scope

A mission statement provides the commercial logic for the business and so defines twothings:

- The products or services it offers (and therefore its competitive position)

- The competences through which it tries to succeed and its method of competing

A business’ strategic scope defines the boundaries of its operations These are set bymanagement For example, these boundaries may be set in terms of geography, market,business method, product etc The decisions management make about strategic scopedefine the nature of the business

 Policies and Standards of Behavior

A mission needs to be translated into everyday actions For example, if the businessmission includes delivering “outstanding customer service”, then policies and standardsshould be created and monitored that test delivery

These might include monitoring the speed with which telephone calls are answered inthe sales call centre, the number of complaints received from customers, or the extent ofpositive customer feedback via questionnaires

 Values and Culture

The values of a business are the basic, often un-stated, beliefs of the people who work inthe business These would include:

- Business principles (e.g social policy, commitments to customers)

- Loyalty and commitment (e.g are employees inspired to sacrifice their personalgoals for the good of the business as a whole? And does the business demonstrate

a high level of commitment and loyalty to its staff?)

- Guidance on expected behavior – a strong sense of mission helps create a workenvironment where there is a common purpose

In practice, a strong mission statement can help in three main ways:

- It provides an outline of how the marketing plan should seek to fulfill the mission

- It provides a means of evaluating and screening the marketing plan; are marketingdecisions consistent with the mission?

- It provides an incentive to implement the marketing plan

1.2.2 External environment analysis

No organization can exist in a vacuum; each is set in a particular country and region towhich it is inextricably linked This setting provides multiple contexts that influencehow the organization operates and how and what it produces Thus, the concept of

"external environment" is an important consideration for organizations as it attempts tounderstand the research institutions it supports An analysis of the external environment

is an attempt to understand the forces outside organizational boundaries that are helping

to shape the organization

Forces outside the institution's walls clearly have considerable bearing on that whichtranspires within The external environment can provide both facilitating and inhibitinginfluences on organizational performance Multiple influences in the immediate orproximal environment form the boundaries within which an organization is able tofunction; these influences likewise shape how the organization defines itself and how itarticulates what is good and appropriate to achieve

External environment is divided into 2 following perspectives: Macro and Micro

1.2.2.1 Macro-environment

Political environment

This is the factor which has affection to all industries in a country, factors like:regulations and legal system can affect to every industries When doing business inadministrative unit, enterprise has to follow its legal system

- Stability: when study the political factor of enterprise we will take care of

stability of conflict political factors with legal systems The country which hashigh stability in political condition will give a better environment for enterprise toexpand its activities On the contrary, instability in political conditions will givebad affection to enterprise’s performance

- Related law: investment law, enterprise law, labor law, anti monopoly and

dumping

- Regulations: Government’s regulations also can create favorability or challenges

for enterprises These regulations are: commercial regulations, industrydevelopment regulations, tax, tariff, adjusting competition regulations, consumerprotection regulations, etc

Legal environment

The administrative and legal environment in a country provides a framework withinwhich an organization operates In some countries this environment is very restrictiveand has significant impact on all aspects of the organization; in other countries theadministrative/legal context is more permissive Understanding the administrative/legalenvironment is essential to determining if organizational change can take place Theadministrative context within which the organization operates may be shaped by aunique combination of forces, including international, governmental, nongovernmentalpolicy, legislative, regulatory, and legal frameworks An organization is affected by the

policy or regulatory context that gave rise to it This includes specific laws andregulations that support or inhibit the institution's development

Economic factor

Enterprise needs to take care of economic factors both in short term and long term Italso has to take care of intervention of Government into economy In general, enterprisewill base on economic factor to decide which industry or section to invest in

- Economic situation: Any economy also has different cycles; in a specific period

of a cycle enterprise will have different decisions for its development

- Factors which affect to economy: Interest rate, inflation

- Economic regulators of Government: Basic salary law, Government’s economicdevelopment strategy, favorable regulation for a specific industry, increase tax orsubsidiary, etc

- Orientation of economy: Growth rate, GDP growth, GDP per capital

Social-culture

Any country or region has its own specific characteristics These characteristics affect toconsumer’s opinion here Valuable traditions can make a basic for a society and supportfor development of this society So, tradition factors are strictly protected, especiallymoral cultures However, we cannot deny that there is interfering in culture betweencounties This interfering will change life style, psychology and create developmentprospect for industry Besides culture, social factors and social characteristics also attractenterprise when making market research Social characteristics device society into manygroups each group has different income, psychology characteristics Other socialcharacters like:

- Average longevity, health situation

- Average income, income allocation

- Life style, life psychology, knowledge level

1.2.2.2 Micro- environment

To analyze the micro-environment, organizations often use five-force model of M.Porter – Father of competitive theories Michael Porter provided a framework thatmodels an industry as being influenced by five forces The strategic business managerseeking to develop an edge over rival firms can use this model to better understand theindustry context in which the firm operates

Potential entrants

It is not only incumbent rivals that pose a threat to firms in an industry; the possibilitythat new firms may enter the industry also affects competition In theory, any firmshould be able to enter and exit a market, and if free entry and exit exists, then profits

always should be nominal In reality, however, industries possess characteristics thatprotect the high profit levels of firms in the market and inhibit additional rivals fromentering the market.

Buyer power

The power of buyers is the impact that customers have on a producing industry Ingeneral, when buyer power is strong, the relationship to the producing industry is near towhat an economist terms a monopoly - a market in which there are many suppliers andone buyer Under such market conditions, the buyer sets the price In reality few puremonopolies exist, but frequently there is some asymmetry between a producing industryand buyers

Buyers are powerful if:

- Buyers are concentrated - there are a few buyers with significant market share

- Buyers purchase a significant proportion of output - distribution of purchases or ifthe product is standardized

- Buyers possess a credible backward integration threat - can threaten to buyproducing firm or rival

Supplier power

A producing industry requires raw materials - labor, components, and other supplies.This requirement leads to buyer-supplier relationships between the industry and thefirms that provide it the raw materials used to create products Suppliers, if powerful,can exert an influence on the producing industry, such as selling raw materials at a highprice to capture some of the industry's profits The following tables outline some factorsthat determine supplier power

Suppliers are powerful if:

 Credible forward integration threat by suppliers

so expensive that car owners give much consideration to retreading old tires But in thetrucking industry new tires are expensive and tires must be replaced often In the trucktire market, retreading remains a viable substitute industry In the disposable diaperindustry, cloth diapers are a substitute and their prices constrain the price of disposables

Competitive Rivalry

And last but not least, this describes the intensity of competition between existing firms

in an industry Highly competitive industries generally earn low returns because the cost

of competition is high A highly competitive market might result from:

 Many players of about the same size, no dominant firm

 Little differentiation between competitor’s products and services

 A mature industry with very little growth.

 Companies can only grow by stealing customers away from competitors

Figure 1.1 Five-force model of M Porter

Source: Comparative advantage theory, M Porter (1990)

1.2.2.3 External Factor Evaluation EFE

External Factor Evaluation (EFE) matrix method is a strategic-management tool oftenused for assessment of current business conditions The EFE matrix is a good tool tovisualize and prioritize the opportunities and threats that a business is facing Five steps

to create EFE matrix:

 Step 1: The first step is to gather a list of external factors Divide factors into twogroups: opportunities and threats

 Step 2: Assign a weight to each factor The value of each weight should bebetween 0 and 1 (or alternatively between 10 and 100 if you use the 10 to 100

scale) Zero means the factor is not important One or hundred means that thefactor is the most influential and critical one The total value of all weightstogether should equal 1 or 100.

 Step 3: Assign a rating to each factor Rating should be between 1 and 4 Ratingindicates how effective the firm’s current strategies respond to the factor 1 = theresponse is poor 2 = the response is below average 3 = above average 4 =superior Weights are industry-specific Ratings are company-specific

 Step 4: Multiply each factor weight with its rating This will calculate theweighted score for each factor

 Step 5: Add all weighted scores for each factor This will calculate the totalweighted score for the company

The sum of all weighted score is equal to the total weighted score; final value of totalweighted score should be between ranges from 1.0 (low) to 4.0(high) The averageweighted score for EFE matrix is 2.5 any company total weighted score fall below 2.5consider as weak The company total weighted score higher then 2.5 is consider asstrong in position

Table 1.1 An example of External Factor Evaluation

al weighted score of 2.46 indicates that the business has slightly less than average ability

to respond to external factors.

Source: External factor evaluation, Maxi-Pedia Directory, 2008

1.2.3 Internal environment analysis

The organization not only needs to be aware of the social, political and economicenvironment in which it is operating, but also its internal environment ¾ its ownstrengths and weaknesses For example, does a port have financial resources such ascash reserves and access to cheap financing from the government? Does it have humanresources with the technological skill, motivation and productivity to bring about aradical change of direction for the port if necessary? Does it have facilities that are up-to-date technologically and/or with excess capacity? Does the port have a commitment

to on-going research and development?

The organization’s resources, its capabilities and competencies make up the internalenvironment of the organization The internal environment plays a crucial role in thestrategic management process of the organization It is a direct reflection of what theorganization can do in the event of a business-related exigency The organization’s corecompetencies help sustain it in the long run in the face of competition

1.2.3.1 Resource evaluation

Resources of an enterprise include human resource, asset and visible resources Theseare factors that play decisive roles of the success of the enterprise in the market In there,human resource is considered as the most important factor In each period, each resourcehas its own strength and weakness in comparison with competitors Managers have toevaluate precisely the organization’s resource in order to compete with their competitors

Human resource

Human resource is a term used to describe the individuals who comprise the workforce

of an organization, although it is also applied in labor economics to, for example,business sectors or even whole nations Human resource is also the name of the functionwithin an organization charged with the overall responsibility for implementingstrategies and policies relating to the management of individuals

The objective of an organization's human resource management strategy is to maximizethe return on investment from the organization's human capital and minimize financialrisk Human Resources seeks to achieve this by aligning the supply of skilled andqualified individuals, and the capabilities of the current workforce, with the ongoing andfuture business plans and requirements of the organization in order to maximise return

on investment and seeks to secure the future survival and success of the entity Humanresource includes managers and followers

Assets

Assets of organization contain capitals, factories, equipments, materials and businessinformation…Each organization has its own features of assets, including strengths andweaknesses in comparison with competitors The asset evaluation is really useful for any

company This is a basic for them to know exactly how strong they really are andwhether they have to borrow assets from outside

Visible resources

Besides above resources, every enterprise has another resource which cannot be seen byeyes and is called visible resources This resource might originate from efforts of allmembers of the organization in the operation process It is expressed in many differenttypes that only senior managers can realize and understand the importance of thisresource They are vision, mission, value and many more

To sum up, resources of an organization are really plentiful Depending on specificconditions of each organization, they can evaluate their resource in order to determinetheir strength and weakness

1.2.3.2 Evaluation of functional departments

Depending on the company’s allocation, each functional department has a specific functionand mission Typical departments in an organization are: Marketing, Human Resource,Finance, R&D, production…

Marketing department:

The term marketing has changed and evolved over a period of time, today marketing isbased around providing continual benefits to the customer, these benefits will beprovided and a transactional exchange will take place The Chartered Institute ofMarketing defines marketing as 'The management process responsible for identifying,

anticipating and satisfying customer requirements profitably' If we look at this

definition in more detail Marketing is a management responsibility and should not besolely left to junior members of staff Marketing requires co-ordination, planning,

implementation of campaigns and a competent manager(s) with the appropriate skills toensure success

Marketing activities include:

 Market research: This aims to study marketing environment to determineopportunities, goals, and market position and consumer insight as well

 Marketing strategy planning: The area of marketing planning involves forging aplan for a firm's marketing activities A marketing plan can also pertain to aspecific product, as well as to an organization's overall marketing strategy

Generally speaking, an organization’s marketing planning process is derived from itsoverall business strategy Thus, when top management is devising the firm's strategicdirection or mission, the intended marketing activities are incorporated into this plan.There are several levels of marketing objectives within an organization The seniormanagement of a firm would formulate a general business strategy for a firm However,this general business strategy would be interpreted and implemented in differentcontexts throughout the firm

HR department:

Human resource management (HRM) is the strategic and coherent approach to themanagement of an organization's most valued assets - the people working there whoindividually and collectively contribute to the achievement of the objectives of thebusiness The terms "human resource management" and "human resources" (HR) havelargely replaced the term "personnel management" as a description of the processesinvolved in managing people in organizations In simple sense, HRM means employingpeople, developing their capacities, utilizing, maintaining and compensating theirservices in tune with the job and organizational requirement

An HRM strategy pertains to the means as to how to implement the specific functions ofHRM An organization’s HR function may possess recruitment and selection policies,disciplinary procedures, reward/recognition policies, an HR plan, or learning anddevelopment policies; however all of these functional areas of HRM need to be alignedand correlated, in order to correspond with the overall business strategy An HRMstrategy thus is an overall plan, concerning the implementation of specific HRMfunctional areas.

Financial & accounting department

This part of the organization relates to resource allocations in each period of stratetyimplementation Its function determines the effect of strategy implementation and thenorganization’s development Role of accounts department in a corporation is:

 Financial accounting: financial and fixed asset reporting; payroll; accountspayable

 Accounting function: maintain the general and subsidiary ledgers; process andrecord all revenues and prepare general purpose financial statements incompliance with IFRSs

 Accounting oversight and guidance to other internal departments to ensure thegaap, legal requirements, policies and procedures - all consistently applied tomaintain the integrity of the financial records

 Management accounting - budgeting, performance evaluation, cost management,asset management

R&D department

Research and development, often called R&D, is a phrase that means different things in

different applications In the world of business, research and development is the phase in

a product's life that might be considered the product's 'conception' That is, basic science

must exist to support the product's viability, and if the science is lacking, it must be

discovered - this is considered the research phase If the science exists, then turning it into a useful product is the development phase.

Research and development is an investment in a company's future - companies that donot spend sufficiently in R&D are often said to be 'eating the seed corn'; that is, whentheir current product lines become outdated and overtaken by their competitors, they willnot have viable successors in the pipeline So how much is reasonable to spend onresearch and development? That is highly dependent both on the technology area andhow fast the market is moving Two percent of company revenue, not profit, might beenough in a fairly sedate market, but to keep up in rapidly changing markets, companiesshould expect to spend fifteen percent or more in research and development just to keep

up with the rest of the pack

Management information system of the enterprise

A management information system (MIS) is a subset of the overall internal controls of abusiness covering the application of people, documents, technologies, and procedures bymanagement accountants to solve business problems such as costing a product, service

or a business-wide strategy Management information systems are distinct from regularinformation systems in that they are used to analyze other information systems applied

in operational activities in the organization This system plays an important role inmanagement It helps the organization to control and manage all activities and keep acontact with their customers

1.2.3.3 Internal Factor Evaluation IFE

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing orevaluating major strengths and weaknesses in functional areas of a business IFE matrixalso provides a basis for identifying and evaluating relationships among those areas The

Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation

This matrix is built through 5 following steps:

 Step 1: Conduct internal audit and identify both strengths and weaknesses in allyour business areas It is suggested you identify 10 to 20 internal factors, but themore you can provide for the IFE matrix, the better

 Step 2: Having identified strengths and weaknesses, the core of the IFE matrix,assign a weight that ranges from 0.00 to 1.00 to each factor The weight assigned

to a given factor indicates the relative importance of the factor Zero means notimportant One indicates very important

 Step 3: Assign a 1 to X rating to each factor Your rating scale can be per yourpreference Practitioners usually use rating on the scale from 1 to 4.Rating captures whether the factor represents a major weakness (rating = 1), aminor weakness (rating = 2), a minor strength (rating = 3), or a major strength(rating = 4) If you use the rating scale 1 to 4, then strengths must receive a 4 or 3rating and weaknesses must receive a 1 or 2 rating

 Step 4: Multiply each factor's weight by its rating This will give a weighted scorefor each factor

 Step 5: The last step in constructing the IFE matrix is to sum the weighted scoresfor each factor This provides the total weighted score

Total weighted scores well below 2.5 point to internally weak business Scoressignificantly above 2.5 indicate a strong internal position

Table 1.2 An example of IFE matrix

Source: Internal factor evaluation, Maxi-Pedia Directory, 2008

1.2.4 Strategy formulation

1.2.4.1 Strategy formulation process

Strategy formulation is the process of determining appropriate courses of action forachieving organizational objectives and thereby accomplishing organizational purpose.The strategy the company formulates should reflect environmental analysis, lead tofulfillment of organizational vision, and result in reaching organizational objectives.Special tools the company can use to assist it in formulating strategies include criticalquestion analysis, SWOT analysis, business portfolio analysis, Porter's model forindustry analysis, and resource-based model These five strategy development tools arerelated but distinct The company should use the tool or combination of tools that ismost appropriate for the company and business environment

1.2.4.2 SWOT Matrix

SWOT matrix is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies SWOT matrix usually gives out four basic strategies: (1) SO (strength – opportunity): strategies which base on company’s strengths to deploy market’s opportunities (2) WO (weaknesses - opportunities): strategies which base on ability of getting through company’s weaknesses to deploy market’s opportunities (3) ST (strengths - threats): company’s strategies to avoid market’s threats (4) WT (weaknesses- threats): company’s strategies to get through weaknesses and avoid market’s threats

SWOT MATRIX

Strengths(S)

-Weaknesses (W)

Source: Management strategy, Garth Saloner (2007)

To implement SWOT analysis we usually make some following question:

Strengths: Two factors contribute to strengths: ability and resources available.

Ability is evaluated on 3 counts:

- Versatility: your ability to adapt to an ever changing environment

- Growth: your ability to maintain a continuing growth

- Markets: your ability to penetrate or create new markets

The strength of resources has three dimensions:

- Availability: your ability to obtain the resources needed

- Quality: the quality and up-to-dataness of the resources employed

- Allocation: your ability to distribute resources both effectively and efficiently

Weaknesses: A company’s weaknesses are determined through failures, defeats, losses

and inability to match up with the dynamic situation and rapid change The weaknessesmay be rooted in lack of managerial skills, insufficient quality, technologicalbackwardness, inadequate systems or processes, slow deliveries, or shortage ofresources

Opportunities: Opportunities are abundant You must develop a formula which will

help you define what comes within the ambit of an opportunity to focus on those areasand pursue those opportunities where effectiveness is possible The formula must defineproduct/service, target market, capabilities required and resources to be employed,returns expected and the level of risk allowed

Threats: External threats arise from political, economic, social, technological forces.

Technological developments may make your offerings obsolete Market changes mayresult from the changes in the customer needs, competitors' moves, or demographicshifts The political situation determines government policy and taxation structure

1.2.5 Strategy implementation

Strategy implementation is "the process of allocating resources to support the chosenstrategies" This process includes the various management activities that are necessary to

put strategy in motion, institute strategic controls that monitor progress, and ultimately

achieve organizational goals For example, according to Steiner, "the implementation

process covers the entire managerial activities including such matters as motivation,compensation, management appraisal, and control processes"

As Higgins has pointed out, "almost all the management functions -planning,

controlling, organizing, motivating, leading, directing, integrating, communicating, andinnovation -are in some degree applied in the implementation process"

Pierce and Robinson say that "to effectively direct and control the use of the firm's

resources, mechanisms such as organizational structure, information systems, leadershipstyles, assignment of key managers, budgeting, rewards, and control systems areessential strategy implementation ingredients"

Strategy implementation includes:

- Finalize your strategic plan after obtaining input from all invested parties

- Align your budget to annual goals based on your financial assessment

- Produce the various versions of your plan for each group

- Establish your scorecard system for tracking and monitoring your plan

- Establish your performance management and reward system

- Roll out your plan to the whole organization

- Build all department annual plans around the corporate plan

- Set up monthly strategy meetings with established reporting to monitor yourprogress

- Set up annual strategic review dates, including new assessments and a large groupmeeting for an annual plan review

1.2.6 Strategy evaluation and control

Evaluation and control is the process in which corporate activities and performance can

be compared with desired performance Managers at all levels use the clear, prompt,unbiased information from the people below the corporation's hierarchy to takecorrective action and resolve problems It can also pinpoint weaknesses in previouslyimplemented strategic plans and this stimulates the control of performance Theevaluation and the control of performance complete the strategic management model.Based on the performance results, management may need to make adjustments in itsstrategy formulation or implementation or both

In conclusion, a strategic decision making process involves the following steps:

- Evaluate current performance results in terms of return on investment,

profitability in the light of current mission, objectives and policies

- Scan and assess the external environment to determine the strategic factors that

pose opportunities and threats

- Scan and assess the internal corporate environment to determine the strategic

factors that are strengths and weaknesses

- Analyze strategic factors to pinpoint a) problem areas and b) review and revise

the corporate missions and objectives as necessary

- Generate, evaluate and select the best alternate strategy in light of the analysis

conducted in step 4

- Implement selected strategies via programs, budgets, and procedures

- Evaluate implemented strategies via feedback systems and the control of

activities to ensure their minimum deviation from plans

CHAPTER II: THE REAL SITUATION OF BUSINESS ACTIVITIES OF VITAL JOINT STOCK COMPANY

PRODUCTION-2.1 General information of Vital Joint Stock Company

2.1 History and development

In 1997, with the approval of Thai Binh People Committee, Bitexco decided to build themost modern natural mineral water factory in Vietnam This product is called Vitalwhich is the combination of Vietnam and Italy Vital factory was constructed in Dong

Co village, Tien Hai town, Thai Binh province where has the most quality naturalmineral water resources in Vietnam

Bitexco is an organization which is operating in many sectors; therefore, it is better andmore effective for its subsidiaries being allowed to operate separately With this point ofview, Vital Joint Stock Company was established in 07/04/2006 after working in thenatural mineral water production and business sector for a long time

Vital Joint Stock Company is operated according to the business registration No

0103011698 which is granted by Hanoi Authority for Planning and Investment Thecompany is an independent financial unit and has its own seal based on regulations ofthe government

Company’s main product is natural mineral water with the brand name – Vital Theproduct is produced at Dong Co – Tien Hai – Thai Binh with a modern technology chainunder the close control and instruction of experienced experts from Italy Therefore, itcontains an adequate amount of mineral and is good for health The quality of theproduct is also verified by FTD – Minalo – Italy

With over 10 years operating in the market, Vital products become popular in manyeconomic, social and political events as well as to each Vietnamese people In recentyears, Vital brand is a sponsor for many big sport & cultural events VITAL mineralwater has become the first Vietnamese sponsor to sign an exclusive agreement with theorganizers of SEA Games Bitexco, the producers of Vital, has won the right to be thesole supplier of water for all athletes and officials at the games for many years It hadbeaten off in the process several well-known rivals National Sports Committee vicehead Luong Quoc Dung said Vital was selected as it had a proven track-record insponsoring regional sports meets Moreover, Vital was the first Vietnamese mineralwater-maker to get into sponsorship of regional football events like the Tiger Cup andAsian U-16 In addition, Vital often appears in important conference of government andnational assembly, in almost big restaurants and hotels Vital is also a close partner ofcustomers in domestic and international fights Furthermore, Vital is also a close friend

of many people in offices, schools, banks, hospitals, sport areas, households…

From this point of view, we can see that Vital is a quality brand which has achieved acertain reputation in the market With the upward trend in the bottled water market, VitalJoint Stock Company always efforts to innovate their products to serve customers better

2.1.2 Operation sectors

Vital Joint Stock Company is an independent financial unit and has its own seal based

on regulations of the government Their main business sectors are:

 Carbonate and non-carbonate natural mineral water production and business

 Soft drink

 Equipment trading

 Investment and production of natural mineral water

 Import-export: Carbonate and non-carbonate natural water

Besides, the company also operates in other business sectors such as real estate sector,travel agent, flight ticket booking agent…However, Vital natural mineral water businessand production is the main sector that the company is following and has achieved manysuccesses for over 10 years

Vital water with the natural mineral ingredient is controlled closely and good for healthcorresponding to requirements of food safety Currently, Vital Joint Stock Company isinvesting in their equipments in order to meet the requirements of following certificatesGMP, HACCP and ISO 9000:2002 in 2010 Till now, products of Vital Joint StockCompany have two types carbonated and non-carbonated bottled mineral water To meetdemands of customers, the company produces various types of products including:

 350ml Vital bottle

 500 ml Vital bottle

 1.5l Vital bottle

 19.5l Vital decanter

Coming with the expansion of the current factory in Thai Binh, the company is planning

to build another one in Dong Nai Moreover, the company also intends to launch newproducts decanter of 6l & 12l in order to satisfy various demand of the market

Figure 2.1 Structure of Vital product

Source: Vital Joint Stock Company (2009)

Although the company has a wide range of business sector, Vital natural mineral waterbusiness and production is its main task and play a prerequisite role in the developement

of the company

2.1.3 Personnel structure

Vital Joint Stock Company was established in 07/04/2006 after a long time operating innatural mineral water business and production Before formation, it was just a Vitalfactory and belonged to Bitexco with a simple HR structure including 2 departments:Operating and marketing department However, after formation, is works as a realindependent organization with a full structure of personnel

Figure 2.2 Personnel Structure of Vital Joint Stock Company

Board of directors

Board of managers

Administrati

on department

Financial department

Accountin

g department

Marketing department

Sales department