ESTABLISHMENT OF BUSINESS STRATEGY OF DANANG RUBBER JOINT STOCK COMPANY

THE STRUCTURE OF THE SUBJECT...4 CHAPTER II: CONTENT ANALYSIS...5 PART 1: RATIONALE OF STRATEGIC BUSINESS CONSTRUCTION IN ENTERPRISES...5 1.1 Business strategy of an enterprise...5 1.1.1

HANOI, AUGUST 2011

Table of Contents

CHAPTER I: INTRODUCTION 1

1 GENERAL CONTEXT AND RATIONALE 1

1.1 General Context 1

1.2 Rationale 1

1.3 The significance of the subject 2

2 OBJECTIVES OF THE TOPIC 3

2.1 General objective 3

2.2 Specific objectives 3

3 OBJECTS AND SCOPE OF RESEARCH 3

3.1 Research objects 3

3.2 Scope of research 3

4 METHODOLOGY 4

5 THE STRUCTURE OF THE SUBJECT 4

CHAPTER II: CONTENT ANALYSIS 5

PART 1: RATIONALE OF STRATEGIC BUSINESS CONSTRUCTION IN ENTERPRISES 5

1.1 Business strategy of an enterprise 5

1.1.1 The concept and characteristics of business strategy 5

1.1.2 Classification of business strategy 6

1.1.3 The role of strategic planning within the business activity of enterprises 7

1.1.4 The level of strategic management 8

1.2 The process of building and choosing business strategy 9

1.2.1 The process of building business strategy 9

PART 2: ANALYSIS OF THE REALITY AND STRATEGIES OF BUSINESS OF THE DANANG RUBBER

JOINT STOCK COMPANY 20

2.1 General introduction about Danang rubber joint stock Company 20

2.1.1 The history of formation and development of the company 20

2.1.2 Functions and duties of the company 21

2.1.3 Structure the Organization of company 22

2.1.4 Vision mission and core values of the business 23

2.2 Analyze the business environment of the Enterprise 23

2.2.1 Analysis of external environment 23

2.2.2 Analysis of internal business 37

2.3 General SWOT matrix 48

PART 3: OPTIONS TRADING STRATEGIES FOR THE DANANG RUBBER JOINT STOCK COMPANY PERIOD 2011-2015 AND SOME SOLUTIONS IMPLEMENTED 50

3.1 Development orientation and vision mission during the next stage 50

3.2 The goal 50

3.3 Building strategies 51

3.3.2 SWOT analysis matrix 51

3.3.3 Analysis by matrix GREAT 53

3.4 Strategic options 55

3.5 Solution implementation strategy 55

3.5.1 Current market penetration Strategy; Market Development Strategy and Product development Strategy 55

3.5.2 Built along the near future Strategy 57

3.5.3 Low-cost strategy 58

CHAPTER III: CONCLUSION 61

LIST OF REFERENCES 62

LIST OF TABLES

Table 2.1: SWOT matrix 18

Tables 2.2: The GREAT matrix 19

Table 2.4: Matrix assessment of external factors (EFE Matrix) 36

Table 2.5: Assessing the solvency and business performance (Source: Stock Analysis Report DRC, dated 10/03/2011 of the APEC Securities) 37

Table 2.6: Capital Structure (Source: Stock Analysis Report DRC, dated 10/03/2011 of the APEC Securities) 38

Table 2.7: Inventory turnover and Turnover of receivables (Source: Stock Analysis Report DRC, dated 10/03/2011 of the APEC Securities) 38

Table 2.8: Some target scale properties –VND (Source: Stock Analysis Report DRC, dated 10/03/2011 of the APEC Securities) 40

Table 2.9: Cost structure (Source: Stock Analysis Report DRC, dated 10/03/2011 of the APEC Securities) - 41

Table 2.10: The output of each product (DRC Annual report 2010)- 42

Table 2.11: The implementation of these indicators in 2009, 2010 (DRC Annual report 2010) 42

Table 2.12: The output of each product 2010 (DRC Annual report 2010) 42

Table 2.13: Product Quality (DRC Annual report 2010) 43

Table 2.14: The structure of corporate human resources at 31/12/2010 (DRC Annual report 2010) 46

Table 2.15: Matrix assessment of internal factors (IFE Matrix) 48

Table 2.16: SWOT matrix of DRC 49

Table 3.1: IE matrix of DRC 51

Table 3.2: SWOT analysis matrix of DRC 51

Table 3.3: The matrix as elements of GREAT of DRC 54

Table 3.4: Selection of strategic priorities of the DRC 55

LIST OF FIGURES

Figure 2.1: Structure the Organization of DRC (Source: DRC Annual Report 2010) 22Figure 2.2: GDP and CPI growth over the year (Source: GSO) 25Figure 2.3: The model defined business units (Source: Derek F Abell) 29Chart 2.1: The market share of some tire manufacturers in 2010 (Stock Analysis Report DRC, dated10/03/2011 of the APEC Securities) 34Figure 2.4.: Barriers and benefits (Source: Michael E Porter) 34

LIST OF ABBREVIATIONS

1 DRC: Danang Rubber joint stock Company

2 GDP: Gross Domestic Product

3 CPI: Consumer Price Index

4 GSO: General Statistics Office

During the period of developing market economies to open integration into theregional and global economies, most of all Nations must admit the vital existence ofcompetitiveness in all activities The constantly enhance the ability to adapt to fluctuations

of the environment has become a rule of thumb in business

To do this, businesses must define clear where to go, how to do and whichdifficulties and challenges to be overcome? And the more important thing is how to uniteall members of the enterprise with concentration, unanimity, and hard efforts for the success

of the business This first and foremost depends on the formulation and implementation ofbusiness strategy, accurate strategic business will be ensuring the existence, sustainabledevelopment, over the long term goals of the business More than ever the functional andfinancial leadership of CEOs in the businesses should promote maximum adaptation toexternal environment and give out solution to deal with the changes; those businesses thencan survive and grow sustainably The above fact shows us the necessity of management inthe strategy for growth adapted completely on the customers, in figuring out the solution forbusiness to best meet the needs of customers

1.2 Rationale

In the present Vietnam’s context, economic growth is relatively stable, the rate ofGDP increases steadily over the years Political stability, exchange policy in 2011 has beenunder strict control by the State Bank of Vietnam Having good relations with regional andglobal currency organizations, in 2010 Vietnam served as a Chairman of the ASEAN bloc,this is the best condition for your businesses to reach good opportunities

However after joining into WTO in the past years, Vietnam has not exerted all theadvantages that businesses are at risk of being conquered and bankrupted because most ofthem are processing companies with low value added Their supply is largely dependent onforeign partners, they failed to control domestic supply and to bring stability, on the otherhand depend on the exchange rate policy of the State

Danang rubber joint stock Company (DRC) is not the outsider The Company alsoreveals many existing problems, which need to be adjusted and solved in the right directionfor the business and sustainable development of the business

With significant practices, we have chosen the topic: "Establishment of business strategy of Danang rubber joint stock Company in 2011-2015 periods" for management

strategy subject The topic conveys brief situation of building and managing strategicbusiness; identifies strengths, weaknesses of current business, identifies opportunities,challenges for the development in the near future

The team has based on the situation and the results of previous strategy developmentassociated with the situation in the world, the situation in the country during the period2011-2015 and orientation for the development of business in the future to formulatedevelopment strategies in the period 2011-2015

1.3 The significance of the subject

On the basis of research and practice in Danang rubber joint stock Company, thereare two primary goals for the themes we set out:

- Analyze the determinants of success or failure in the operation of the company,based on which build accurate and efficient strategic business.

- Identify and offer solutions to develop and apply business strategies aimed atimproving the efficiency and sustainable development of the Company From which,

it is necessary to build a specific orientation, specific goals to promote the resourceand use it effectively to achieve their objectives

2 OBJECTIVES OF THE TOPIC

2.1 General objective

Based on the topic in research to find out the strengths, weaknesses, risks,opportunities and challenges, the general objective of the report is to assess its true powerand to come up with measures to improve competitiveness in order to reach number 1position in the field of their business

2.2 Specific objectives

Formation and development strategy for enterprise in the period 2011-2015, oursolutions focus on breakthroughs in:

• Develop of corporate culture

• Improve financial capability

• Improve the quality of service and quality of customer-oriented products

• Invest into development and expansion of market share, into new technologies inorder to meet the needs of the market

3 OBJECTS AND SCOPE OF RESEARCH

3.1 Research objects

Object of the subject focuses on the study of the business, and business situationthrough annual reports and statistics Ongoing business strategy of the company, focuses

mainly on the external factors, the inside resources from which to draw lessons and improvethe business strategies of enterprises in the period 2011-2015.

- Method of statistical analysis;

- Method of historical research;

- Comparative and synthesized method;

- Methods of prediction, authentication (explanations and predictions);

- Standard analysis Method - options and decisions;

- By the analysis tools like matrix EFE, IFE, SWOT, Pest and method of qualitative,quantitative analysis

The data are also collected through the financial sites, General Statistics Office site andannual reports of the company

5 THE STRUCTURE OF THE SUBJECT

The report consists of 3 chapters with the following content:

Chapter I: Introduction to the topic

Chapter II: Content analysis Chapter III: Conclusions

CHAPTER II: CONTENT ANALYSIS

PART 1: RATIONALE OF STRATEGIC BUSINESS CONSTRUCTION IN ENTERPRISES

1.1 Business strategy of an enterprise

1.1.1 The concept and characteristics of business strategy

There are many ways to define business strategy; different approaches bringeconomists different concepts about business strategy, such as:

- Business strategy as a tool approach: business strategy is an art of building competitive

advantages and aims to bring the most favorable condition, evaluate right time to attack orretreat to define agreed border and ensure its championship

- Business strategy as a management plan concept: business is to define basic and

long-term goals of enterprises, to choose policies, programs in order to allocate resources to getabove basic goals

- Business strategy as planning approach: business strategy is a concept or a plan

integrating main goals: policies, programs etc into one connected body to ensure basic goals

of enterprises

- The most common approach of business strategy: business strategy is the goal of

long-term policies, the allocation of, and coordination of the necessary resources and operationalbusiness unit within the overall strategy of the enterprises

Some typical characteristics of the strategy are demonstrated as follow:

- Clearly define basic objectives and directions of business in each period

- Calculate orientations of the strategy to ensure business development and sustainability

in the situation of economic fluctuations

- Business strategy ensures to maximize and combine optimum exploitation and use ofexisting resources and in the future, exert the advantages and seize the opportunity toenhance their competitiveness.

- Business strategy of the enterprise reflects throughout a continuous process and aims tosuccess in the field of business and is often built for period of 3 years, 5 years, or 10years

1.1.2 Classification of business strategy

a Classification based on the scope of the business strategy effects.

General strategy: is the strategy referring to the most important issue, having the

widest coverage and meaningful for a long time It is considered to decide survival issues

of the business

Strategies in the business level unit or business field: are the competitive

strategies, competing with low prices, with the product and service differentiation, andcreate a separate strategy part

Business unit strategy: is functioning strategy, consisting of manufacturing strategy,

finance, human resource development, marketing, communications activities, research anddevelopment etc including:

- Trading strategy: the strategy of long-term policies in order to determine the

location of the enterprise

- Financial strategy: the set of long-term policy aimed at ensuring the proper financial

need to pursue the goals of trade with the conditions set out by the capital markets

- Production strategy: a collection of long-term policies in order to determine the type

of products, the number of each type and allocate media or resources in an effectiveway to market

- Social strategy: a set of policy on establishing enterprise's behavior with regard to

labor market

- Technology innovation strategy: a set of policies aiming at research and

development of new products, new technologies and improving existing productsand methods are used

- Procurement strategy and logistics: a collection of policies to ensure that businesses

purchase and consume a good product

The above strategies impact together, one strategy is the premise to determine otherstrategy and implementing one strategy will affect the implementation of the strategy of theothers

b Classification based on the approach of business strategy

Strategy based on key factors: the guiding ideology of business activities is notspreading the resources but accrue to focus for business is of decisive significance for theproduction of business

Flexible business strategies based on the relative advantages: starting from theanalysis, comparison of your products or services against your competitors, finding out thestrengths, weaknesses to become foundation for business strategy

- Strategy of creative attack: is built by looking straight into the popularity theme

- Strategy for potential exploitation: is exploring potential of favorable factors,

potential use of excess resources, resources in support of the major business areas

So, when defining business strategy, businesses must base on the orientation ofeconomic development, social policy of the State, survey on market demand, analysisresults, calculations, predictions about the resource that businesses can exploit Because thebusiness strategy must always be adjusted, whenever large fluctuations of advocates andmajor change of the environment occur

1.1.3 The role of strategic planning within the business activity of enterprises

Strategic planning helps businesses realize clear their purpose, direction It isconsidered as the basis for all actions planned in particular, as the guideline for all activities

of business enterprises

- Business strategy helps businesses understand and take advantage of businessopportunities and actively overcome the risks and threats in the business.

- Business strategy contributes to improving the efficient use of resources, strengthenscompetitive position and enables sustainable development

- Business strategy is a basis for firms to make business decisions in accordance withthe fluctuation of the market

1.1.4 The level of strategic management

There are a variety of strategies used in an organization, but basically there are threelevels of strategies commonly used:

- Corporate level strategy: Set goals and business activities of companies; create

policies and basic plans to achieve goals

- Business level strategy: Identify market and business operations of the company, and

product segment for each type of market

- Functional level strategy: Identify solutions and plans for individual business areas.

1.1.5 Business strategies that businesses are implementing

- Strategy to consolidate market share: consolidate, enhance the image, reputation of

the business, and expand the scale of production, labor productivity growth andfurther penetration into the market

- Strategy to diversify products and services: diversify of product-oriented product to

the customer's needs; invest in modern communication line to offer a wide range ofproducts for the domestic market and export to foreign countries, especially thededicated products

- Strategy to expand network allocation: diversify and expand the distribution channel

of the business, expand the wide area in order to give customers the mostconvenience when dealing to attract clients and increase competitiveness

- Concentration strategy: business focuses all its resources to achieve their goals of

- Differentiation strategy: draw up plans based on existing strengths, peculiarities of

the business in order to achieve that goal

1.2 The process of building and choosing business strategy

Building business strategy is the process of defining goals and tasks in the businessactivities of enterprises, the best method to implement the goals and tasks The process ofbuilding strategy includes the following basic steps:

1.2.1 The process of building business strategy.

An overview of the phases and activities in the process of building a strategy isillustrated as follow:

Step 1: Systematic information.

The strategy by collecting data, in combination with intuition, analyses the fact given andselect strategic viable alternative by some technical management strategies as: matrixevaluation of external factors (EFE), matrix evaluation of internal factors (IFE)

Step 2: Merge Information to make a viable strategy business.

By using the sorted elements gathered from the environment side, outside of the business tooffer strategic business feasible by using several tools, such as SWOT matrix, the matrixSPACE etc

Step 3: Use overall information to choose a good trading strategy for businesses.

By using the information in the first step, assessing objective step 2 to choose a strategy fortrading the key through a number of tools like matrix QSPM, matrix GREAT…

To ensure the highest efficiency during operation, the strategy-makers were forced

to make decisions in choosing strategies which will benefit the company the most Thedecision in the phase strategy will add organization to products, markets, technology for aprolonged period The competitive advantage in the long term is clearly defined in thestrategy This phase is very important for the strategic decisions that will have lastingimpact or better or worse for the organization

1.2.2 Research business environment

1.2.2.1 Macro environment

Macro environment includes external factors, which influence indirectly tobusinesses and enterprises almost impossible to control These factors indicate trends orcircumstance changes, can have positive impacts (opportunities) or negative (threatening)for business However it doesn’t mean that all happens in these areas is an opportunity or athreat; many changes occurred without affect to business We are interested in the field ofmacro environment as follows:

* Economic factors: The economic sphere consists of all of the ongoing macro-economic data,

statistics, trends and changes These statistics are very useful for the assessment andcompetitive environment of the business The economic information includes: bank interestrates, exchange rates and price of the dollar, budget surplus or deficit, trade surplus or deficit,inflation, gross domestic product, the results of economic cycles, income and expenditure, thelevel of debt, unemployment rate, productivity of labor and Government policy

* Elements of the population: The population that need attention includes information such

as gender, age, income, racial, educational qualifications, interests, demographics,geographic location, rate, unemployment rate, etc The most important thing is to appreciatetrend and change of population This information will establish your current customers andpotential business in the future Furthermore, the administrators will understand more aboutopportunities to market that business and the marketplace that businesses want to penetrate

* Elements of culture and society: to be understood as the value of living the spirit of every

nation, every country that creates its own characteristics in the way people consume as well asthe intangible obstacles that businesses encounter when penetrating the market Thereforecomprehensive research is needed to avoid negative reactions of people due to the invasive andtraditional values Technical research on factors such as lifestyle, opinion, psychology, enter,the administrator will avoid the damage or impair the reputation of the business, which is alsothe base needed to establish the market properties and focus on sales

* Political law: consisting of the regulation, the laws of the State related to goods

production and trading businesses These changes are likely to alter the rules, and raise thedifficulties for the business Not only concern with legal issues businesses also payattention to the political parties involved in their own right, because each change ofGovernment is a series of new policies Political stability, policies on taxation, policyexport, and import changes seriously affect on revenue, profitability of the business, evenreduce the competitiveness of businesses

* Technological factors: the continuous improvement of science and technology has

increased labor productivity as well as the generation of new products with unique featuresand create competitiveness for businesses to catch the technology there Accompanying theprogress is the trend of social development; which can transform the needs of people fromlow to high, require businesses to put a major effort in technology to meet the needs

* There are also a number of other influential factors such as, business environment, thetrend of the world economies , the institutions of other countries, other institutions; all ofthem can affect businesses

1.2.2.2 Micro-environment

Micro environment includes the external components impacting business and directthese so-called environmental industries It can be defined as a group or group ofenterprises trading in products similar to or the same These businesses compete with eachother to gain market share and secure but necessary resources (inputs) to transform the(process) into the product (output) One of the most common ways used to analyze andevaluate information about specific environment is a pattern of five (5) forces introduced

by Michael Porter, including:

* Factor suppliers: is one important factor directly affecting the operation of the business.

When you see the business as an open system it was inevitable that businesses will havereceived the supply of inputs for production and business activities Thus, businesses willhave to rely heavily on suppliers An incorrect choice will lead to a result that the company

will not meet all needs for the production or a negative response of suppliers can alsodisrupt the continuity of production processes, for example supplier cannot deliver on time

or product quality is different from the contract commitment Therefore, the business puthigh interest on this sector Policies to choose suppliers are in need and based on theprinciple of “not put your eggs in one basket” that will allow businesses to avoid the risksbrought from providers when they have the intention to change the conditions ofcooperation On the other hand choosing the traditional suppliers is also important,ensuring that businesses exploit the business advantages such as reduced costs of inputresearch, revolving loan funds for capital goods In addition, the competition of thesuppliers is also good conditions for enterprises to determine the quality and price to buy

* Customer Factor: This is one of the most important elements of the business, all business

operations of the business effectively is to reflect clearly on this factor through the norm asrevenue, profitability, competitiveness, ability to penetrate new markets The customer'srequirements in quality and price are always a challenge for every business If you do notmeet the requirements, they will change to other alternative products or other alternativeselections of goods of other enterprises in order to satisfy their needs with the lowest cost.This forces businesses to increase the cost of research to create products that customerswant, and to seek solutions to save costs in order to reduce production costs and increaseproductivity and this is difficult because of the contradictions that exist between input costsand output prices Businesses who fail to do so, demonstrate the low competitiveness ofbusiness enterprises and high possibility of being easily knocked out of the market bycompetitors It should be remembered that the customers is the decider in the shopping andbusiness activities should be directed at the customer Establishing the different customergroups as potential customers, customers who traditionally occupy a very important role tothe business performance of the business Business will exploit the effectiveness of thecustomer if such analysis and assess the marketing that relate to customers such as income,preferences, needs, etc to offer the appropriate products to meet the needs of customers

* The threat of potential competitors: these are permanent concerns of all businesses not

only a business in particular In one industry, there is not solely a business takes part in thatalso has a lot of other businesses also had concerns in order to exploit the benefits offered tothe majority of customers Like the laws of existence, the life will belong to the strong, themarket share the same concept and there is no existence of the concept of humanity, allbusinesses have to choose for their own ways, can withstand the competition for survivaland development The competitors will use their advantage to attract and entice customerstoward their tactful policies, or by new products best meet the needs of diversity andrichness of the customers The growth of your business by venture link brings or theappearance of the other major competition comes from outside would create a hugechallenge for businesses is not exploited by the economics of scale, modern technology Butthe fact to prove the existence of these businesses in a way that convinced because smallbusinesses more competitive navigation to a different state, avoiding the phenomenonbegan hosting the big businesses Useful tools that businesses know concentrated advantagefrom it, such as: product policy, the policy on prices, policies, policies that promote andtrade promotion, etc

* The threat of substitute products: The customer's needs are always changing except the

necessities of life such as rice, water etc The desire of customers is to switch to consumer anew product that can replace, with differences The introduction of new products will be thechallenge for business because a part of customers will turn away from the old product.And so businesses lose an enormous amount of customers and ensure that businessesbenefit from the customer The question is how to cope with the alternative products;enterprises cannot dispose of their old technology to pursue a different technology Mission

is to improve the business and technology, creating features or simply changes the exterior

of innovative products to hold on and attract new customers

* The current competition among firms in the industry: An effective field is a field that

promises to bring many benefits but also the areas that attract many competitors, make the

fix extreme in that area, which is the level of competition in the sector So what affects thelevel of competition?

According to M Porter, there are the eight (8) conditions affecting the level of competitionfrom existing competitors: The number of competitors (1); slow industrial growth (2);Conditions of storage charges or high fixed costs (3); The lack of cost differences turns orconversions (4); Capacity must be increased with large (5); Enemy diversity (6); Setstrategic high (7); The existence of barriers to exports (8)

1.2.2.3 Matrix evaluation of external factors (EFE)

EFE Matrix is set sequentially in five steps:

• Make a list of factors that play a decisive role in the careers that are businessenterprises, including opportunities and challenges

• Assess the importance of each factor on a scale of 0.0 to 1.0 (increasing the level ofimportance) with a total score of the factors of 1 Rates are based on important businesssectors in which enterprises are operating

• Ratings from 1 to 4 for each factor with the degree of response of business to theelements Point 4 is the best response Point 3 is the average response Point 2 is theaverage response and less of a reaction

• Determine the total score for each factor (by volume number to get in step 1 and 2)

• Determine the total number of points about the importance of business by the totalnumber of points in step 3

The highest total score is 4 and the lowest one The average is 2.5 points The higher thescore shows that businesses respond to external factors

1.2.2.4 Matrix image competition

This matrix identifies the principal competitors of the enterprise This matrix is anextension of the EFE matrix with the importance of these factors, the significance of eachfactor score and total score is important to have the same meaning

Matrix pictures competing with EFE matrix: There are some elements within theimportant decisions are also included for comparison Total points evaluate the competitorswill be compared with the selected business modeling.

1.2.2.5 Environment internal enterprise

The construction business when the business strategy must be based always on thepossibility of their exploitation, which is the potential to create distinct competitiveadvantage to other businesses However, where that power comes from? The answer lies inthe resources that the business, including the resources inside and outside These resourcesserve as the inputs, but without them the enterprise does not work The inputs can beeffective or do not depend on the demanding requirements of each business strategy Thecontributions of the different resources does not necessarily balance, each resource willcreate a very powerful, very different power If managers know the proper analysis of thestrengths and weaknesses of each resource, they will definitely exploit it effectivelyresources, including: human resources, marketing, operations and financial accounting,research and development, production and operation, etc This is a group of factors likelyinternal regulations of enterprise resources influencing the decision to the formation ofcompetitiveness

To build competitive advantage, we need to take advantage of the special abilities ofthe business According to Fred r David, that's the strength of the business that otherorganizations could not be imitated or reproduced The design of a strategy is to improvethe weaknesses of the business, turn weaknesses into strengths, and, if possible, turn it intospecial strengths

Methods of internal analysis are done by concentrating collects information abouteach element of the business, the key information should be ranked in order of priority Onthe basis of information collected, perform analysis, assessing each factor is no comparisonwith the same type of competition directly by businesses The analysis and assessmentcould be made by the leadership, experts of the enterprise or by a method of investigating

the world's leading experts in the industry, even in the opinion of the character in otherbusinesses Results analysis of reviews is to point out the strengths and weaknesses of thebusiness.

Marketing Department: Marketing is a system of activities related to the process of

research, forecasting, identifying the needs and wants of target customers and meet theneeds that outperforms the competition in each period, at each regional market Understandthe operation, the administrator shall determine in particular the duties of the function, thework should be done in each of the phrases in order to manage your work effectively

Elements of organization internal governance:

• Organization of enterprises;

• Prestige of enterprise;

• Organize information systems internal communication;

• System control, inspection and internal audit;

• The ability to control and prevent the risks in the business of business

Human resources Department: Administer personnel actions relating to recruitment, training,

reviews, and encourage loyalty of workers for the organization Management personnel is veryimportant, the decision of the organization If there is no policy on use and abuse laborerssatisfactory then the company was unable to attract and retain skilled workers On the otherhand, management personnel contribute to the development of values and organizationalculture, creating motivating innovative enthusiasm of members of the organization

Finance and accounting Department: Functions of financial accounting relates to the

mobilization and use of the material resources of the business in each phrase,implementation of accounting economics in all aspects of work in the course of operation.Functions of financial accounting associated with the activities of the Division of functions,

to decide the viability, effectiveness of various strategies and policies of the business Inorder to give the basis for the Board of Trustees have the policy in a timely manner

The research and development Department: Research and development plays an

important role in the discovery and application of this timely new technology to createcompetitive advantage in the market, develop new products ahead of competitors, improveproduct quality, and improve processes to reduce costs

Information systems in business: Information systems that collect, classify, analyze,

evaluate, and deliver timely the data value of inside and outside elements of theadministration The data of the system information displays information about thecompetition, demonstrating the opportunities that the company can capture the order andthe risks should be dispatched to prevent or limit the process works The information helpsthe administrator should respond to the business environment in a way that is effective Assuch, analysis of internal business helps enterprises realize strengths, weaknesses in order toidentify potential sources as well as existing creates competitive advantage of enterprises

At the same time to identify the obstacles in maintaining a competitive advantage

1.2.2.6 Matrix evaluation of internal elements (IFE)

The establishment of the IFE matrix is in 5 steps:

• Create catalog elements inside has a decisive role;

• Assess the level of importance of each factor score from 0.0 to 1.0 (level of importance inascending order) with the total number of elements equal to 1 This critical level based onthe importance of it for business, irrespective of factors is the strengths or weaknesses ofthe business;

• Graded from 1 to 4 for each element with a score expressing the internal characteristics ofthe business for that element Point 1 is the biggest weakness, point 2 is the slightestweakness, point 3 is the smallest strengths, and point 4 is the greatest strength;

• Determines the total score for each of the elements (in number of scores in step 2 and step3);

• Determines the total number of points about the importance of the business (by the total

The highest point total is the lowest and 4 is 1 An average of 2.5 The important point is lessthan 2.5 shows enterprise internal weakness, points higher than 2.5 shows business greatly

1.2.3 Build and choose feasible trading strategy options

Use the matrix elements inside-outside (IE) to determine the current location of thebusiness This is the use of key points of the EFE matrix reflects on vertical axis and IFE onhorizontal axis The intersection between the EFE matrix and IFE's business will give us thecurrent businesses are in the position and business to use strategies for the future as

"strategy development and construction" (deep in the market, product development etc) oruse of the "strategic holding maintaining "; "strategy and omitted"

Use SWOT matrix to evaluate in order to determine the strengths (S-Strength),weaknesses (W – Weakness), opportunities (O-opportunities), challenge (T-Threats) fromthe effects of the business environment for enterprises to devise strategies and solutions inorder to promote the strengths, weaknesses, take advantage of the opportunity restrictionsand control challenges

Strategic analysis is largely based on the SWOT ANALYSIS This model is suitablefor assessing the current state of the company through the analysis of the situation inside(Strengths and Weaknesses) and external (Opportunities and Threats) SWOT ANALYSISperforms filtering according to an order is easy to understand and easy to handle

Table 2.1: SWOT matrix (Source: Curriculum subject Strategic Management (Griggs University – ETC))

Opportunity (O) Strategy SO: Use these

strengths to take advantage of the opportunities

weaknesses by taking advantage ofthe opportunities

Threat (T) Strategy ST: Use these

strengths to avoid threats

Strategy WT: Minimize the

weaknesses and avoid the threat

To perform a SWOT analysis for competitive business, the following factors must

be taken into account:

- Strengths: the advantage of businesses, main and essential resources

- Weaknesses: businesses must know their weakness to avoid and overcome, to

consider the matter on the basis of inside and outside and to identify whycompetitors could do better than themselves

- Opportunities: businesses must be clearly and make good use of all opportunities.

Draw lessons when there is an opportunity that does not take advantage of

- Threats: aware of the obstacles that are taking place to see a closer look at the

change of technology risk nothing with the company or not? Which weak points arethreatened to the business?

Choice of strategy is an important part of the whole process of planning and businessstrategy The strategic plan will be based on the analysis of management from input tochoose the optimal strategy to be implemented in practice Analyzing the strategy andselection mainly are the subjective decisions based on objective information, in order todetermine the progress of activities so that the company can fulfill responsibilities andgoals There are many methods and tools supporting stage reviews strategic options,however this report only mentions tools supporting the process of selecting effectivestrategies, it is the matrix by GREAT

Matrix quantified by GREAT as follows:

Tables 2.2: The GREAT matrix.(Source: Curriculum subject Strategic Management (Griggs University – ETC))

Criteria weightThe

Strategies Strategy 1 Strategy 2 … Strategy n Score Scores

equivalent Score equivalentScores Score equivalentScores

PART 2: ANALYSIS OF THE REALITY AND STRATEGIES OF BUSINESS OF THE DANANG RUBBER JOINT STOCK COMPANY

2.1 General introduction about Danang rubber joint stock Company

2.1.1 The history of formation and development of the company

Danang rubber Joint Stock Company is a member of Vietnam National ChemicalGroup, formerly a factory covering automobile tires are General chemicals over Vietnamand was officially established in December 1975

Danang rubber Joint Stock Company was established by decision 320/QĐ-TCNSĐTdated 26/05/1993 by the Ministry of Heavy industry of Vietnam (now the Ministry ofIndustry and Trade of Vietnam).On October 10, 2005 in accordance with decision No.3241/QĐ-TBCN of the Ministry of Heavy industry (now the Ministry of Industry andTrade), the Danang rubber Company was transformed into Danang rubber Joint StockCompany

On 01/01/2006 Danang rubber Joint Stock Company officially worked with chartercapital: 92.475.000.000 VND According to the certificate of business registration No

3203000850 of 31/12/2005 by the Department of planning and investment in the city of DaNang, the certificate of business have been corrected with the business registration number

is 0400101531 on 5/3/2009, the company has adjusted the certificate of registration of the

5th on 07/06/2010

The charter capital of the Company as at 31/12/2010 is 307,692,480,000 VND, ofwhich the capital of Vietnam National Chemical Group accounted for 50.5% rate Thecompany has made listing of shares at the Ho Chi Minh Stock Exchange from 29/12/2006,the stock code of the DRC

Details: Full name: DANANG RUBBER JOINT STOCK COMPANY.

Abbreviation: DRC.

Address: 1 Le Van Hien St., Da Nang, Vietnam

2.1.2 Functions and duties of the company

Main functions include: production, sales, import and export of products and

equipment for the rubber industry; essentially, installation of equipment for the rubberindustry; business and commercial services

The company's duties: conserve and use of capital to shareholders efficiently, build

and organize the production and business; create capital for production, manage and exploiteffectively of this capital; comply with the commitments in the economic contractconcerned with organizations preservation, ensure the circulation of goods, frequent andcontinuous stability in the market research and implement measures to improve businessefficiency; care and continuously improve the material and spiritual workers, regulartraining and improve professional skills of employees

THE DIRECTOR GENERAL

Deputy Director of

General Technical

Deputy Director Investment

Deputy Director o f

manufacturing

Deputy Director of sales Chief Accountant

GENERAL MEETING OF SHAREHOLDERS

2.1.3 Structure the Organization of company

Figure 2.1: Structure the Organization of DRC (Source: DRC Annual Report 2010)

2.1.4 Vision mission and core values of the business

With its position as one of the leading enterprises in manufacturing and trading ofrubber products, with years of experience and resources advantages to enterprises improvetheir competitiveness on the domestic market With vision and strategic direction incustomer confidence and determination DRC developed his business enterprise share ofVietnam's leading provider of automobile tires So over the years a large share ofenterprises in the supply of truck tires in the domestic market

With the aim of diversifying the product, DRC is striving to be the best wirelesstransmission technology, to provide good products for most Vietnamese domestic andinternational market In recent years, enterprise has exported products to foreign countrieswhich are highly specialized market The DRC is investing in manufacturing plantsannounced steel Radial truck tire capacity of 600,000 units / year It is the large-scale, withinvestment cost for large chains to meet the accelerated strategy of the business in the futureand provide the best products to market The motto "Safety on all-terrain, robust with alarge capacity, endurance time-DRC conquers all roads" will be produced throughout thecourse of its business

With above vision the DRC country always maximize their resources to create thebest product to meet the needs of the market The core values of business: With theavailable resources, the Company develops and expands its scale to provide new and high-value products, reduces production costs, lowers prices and customer-oriented From those,DRC gives out the policies and strategies to ensure benefits for three parties, customers,businesses and the state, commit to increase product quality contributed to the development

of the society, select advanced technology, preferred materials from domestic market, createflexibility in business and maximize profits from its production business

2.2 Analyze the business environment of the Enterprise

2.2.1 Analysis of external environment

2.2.1.1 Analysis environment macro

a Economic factors:

a.1 The context of the country:

Currently, the demand for travel by road transportation increases, density of vehicles

is also increasing, which leads to the increase in demand for tires for vehicles Therefore,the tire manufacturing industry has a great opportunity to develop and expand production incoming years But the industry will face great challenges when Vietnam joined the WTO,since the price of foreign tires will very stiffly compete with domestic goods However,production of car tires industry in general and the Company in particular will not decreasetheir operations It becomes a good condition for businesses to better organize the work ofproduction, enhancing the competitiveness of products internal, momentum for furtherstrong growth

World rubber demand in 2011 reached 11.15 million tons, but production of naturalrubber had just reached 10.97 million tons, so the price of rubber will remain in an uptrendbecause supply is not meeting enough demand Vietnam rubber prices continued to risenearly $ 5,000 / ton Not only the price of rubber, steel prices, petroleum and chemicalindustries producing tires in the direction of prices also put pressure on price increases forthe products of the firms in the tire

After 4 years exemption from corporate income tax, in 2010 DRC was fully exemptfrom tax policy to the company profit decline, VAT rates other large tire sizes haveincreased 10% also difficult not less in the marketing of products

a.2 The impact of economic growth trends:

The reality of the economy and the general trend in the future can affect the successand strategic operation of a business As the economy in the period high growth createsmany opportunities for investing to expand manufacturing business Conversely, when theeconomy constricts, the recession will cause a negative impact for businesses

Vietnam is a developing country, in the process of finalizing the economicinfrastructure and social architecture Economic growth of Vietnam in recent years quitehigh, in 2006 reached 8.17% in 2007 to reach 8.48% in 2008 reached 18.6% and reached5.32% in 2009 and in 2010 was 6, 78%

8,17 8,48

6,18

5,32

6,78 5,1

Figure 2.2: GDP and CPI growth over the year (Source: GSO).

The analyst said that after the economic crisis, reaching 6.78% in 2010, economicgrowth of Vietnam in 2011 was 7% -7.5% and will continue remain stable at 7% -8% / year

in the coming years is entirely feasible The development of economic optimism may wellinfluence the development of economic sectors of Vietnam, from which a positive impact

on the growth to the industry of tire, rubber tires

a.3 The risk of exchange rate and balance of payments:

Currently the Company's products not only meet the needs of the domestic marketbut also are exported to many countries in South America, Europe, Asia such as Malaysia,Indonesia, Singapore, Laos, Cambodia, China, Taiwan, Turkey, Czech Republic, Argentina,Italy, Czechoslovakia, Brazil, etc Therefore the exchange rate risk directly impacts thecompany's revenue now

Besides, most of modern equipment and machinery of the company are importedfrom Germany, Italy, Japan, Russia, China, Taiwan, India, fluctuations in exchange ratesbetween Vietnam dong and foreign currencies (especially U.S dollars) This situation willhave certain impact to the business performance of companies

a.4 Bank interest rate movements:

Bank loan accounts for high proportion of the total assets of the company, sochanges in interest rates also affect the effectiveness of the Company In addition,regulation of bank lending increasingly stringent in the company must continue to invest toimprove quality and expand production scale

Although there are risks, but in previous years the company has actively accelerateddepreciation to prepare payment plans for this year

b Political and Legal factors:

Vietnam is in the period of international economic integration and builds marketeconomies, so the laws and policies of Vietnam often have to be changed to fit the reality,

in accordance with rules International As a public company, the company is driven by thesame time the Enterprise Law, Securities Law Furthermore, when listing on the StockExchange, the operation of the company will be subject to the provisions of the Exchangefor listing of securities, the adjustments will be made to work the company's increasinglytransparent, improve corporate governance However, due to Vietnam's stock market is still

a relatively new market, the stability is not high, so the laws on securities and securitiesmarket can be confusing for businesses To limit this risk, the company always focuses onresearch to grasp the new rules of law from which to build strategic business development

in accordance with the Party and State

c Socio-cultural factors:

Society is growing, the awareness is rising, and the country's economy is moreintegrated with world economy The company has more ability to expand marketdevelopment

The process of rural urbanization are increasing the level of state more deployment,which led to the construction and architecture of the infrastructure for the development ofrural economy will be expanding much in place, increasing the demand for tires

d Technological factors:

Manufacturing technology as the labor factor is indispensable in any production ofany business By quickly adapting to market economies, recognizing the importance oftechnological factors and technical infrastructure technology, the company has quicklyliquidated the chain, invested heavily in the advanced equipment The company constantlyupdates information on new technologies, machinery and equipment investment to improveservice quality, production lines may invest more in sync with modern machinery, notably:

- Line capacity of 270 liters private practice of the Italian entry, the advancedequipment, a highly automated process, providing the rubber semi-finished products withstable quality;

- Tread extrusion system from Germany, provided the tread rubber part 3 standards

of high quality, helps tires wear resistance and increased longevity;

- System into the automobile tires to allocate structures tires evenly, ensuring tiresare heavy duty and safety;

- Computer system vulcanized tires, auto tires and controls on the flow of time, meetthe technical features of the tires etc

- Rubber finished products in the manufacturing process is rigorous inspection bythe specialized equipment such as machine check Diffusion carbon black, vulcanized speedmeter, meter Tensile strength

- Tires are finished running tests on tire gauge balance, the machine running of alldefects are removed; only the products meet quality standards, warranty card attached to themarket before selling

- Quality management system ISO 9001 for the DRC can help reliability, automobiletires - standard motorcycle industry DRC Japan JIS, tires DRC meets DOT safety U.Sstandards of 119

The modern equipment with advanced technology of Europe has helped the DRC toproduce high quality products with superior features, responsive to consumer tastes are: Theheavy duty, Score safety, and good abrasion makes the life of the tire durability.

Special DRC is the first business in Vietnam successfully produced special OTRtires with super heavy duty sizes 12.00-24; 18.00-25; 23.5-25; 21.00-33; 24.00-35; 27.00-49 Large OTR Tires is the high-tech products' serving for the species of special vehiclefor transporting heavy loads super mining; Crane container at the docks; cars, bulldozersrock in the field In Southeast Asia now, there is no manufacturing enterprise canmanufacture this product line

e Natural factors:

The development of the rubber products industry is dominated from domestic rawmaterials available in nature as well as the level of competence of the material sources Thebusiness who does not have the advantage of material sources should meet certaindifficulties about the costs, especially transportation cost The company deployed close tothe economic zone of the major cities would have the superior advantage in the process ofaccess to markets with large consumption and minimize shipping costs for delivery

Differences in climate and geographical conditions are a dominant factor toproduction and business activities of enterprises located in the central of the storm Becauseevery year, natural disasters will also somewhat affect the production and business activities

Group 1: The Distributor The consumption of this group is relatively stable throughout the

year It is also the customers who are sticking with the company Characteristic of the group

is high production consuming, ensuring safe and fast capital return