Xây dựng chiến lược kinh doanh công ty cổ phần EDH

GaMBA01.M0709 Strategic Management Xây dựng chiến lược kinh doanh công ty cổ phần EDH BUILDING BUSINESS STRATEGY IN 2011-2020 PERIOD FOR EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management TABLE OF CONTENTS Page INTRODUCTION General context, the necessity and implication of the research project Objectives of the study Methodology of the study Structure of the Capstone project Chapter 1: THEORETICAL BACKGROUND TO BUSINESS STRATEGY 1.1 Business strategy 1.1.1 Concept and role of business strategy 1.1.2 Basic characteristics of business strategy 1.1.3 System of enterprise’s strategies 1.2 Factors affecting business strategy 1.2.1 Institution - politics 1.2.2 Economy 1.2.3 Socio-culture 1.2.4 Technology 1.3 Building business strategy for enterprise 1.3.1 Vision, mission and main goals 1.3.2 Analyzing affecting factors to business strategy 1.3.3 Methods to evaluate business environment 1.4 Implementing business strategy 1.4.1 Checking goals of business strategy 1.4.2 Rechecking business environment conditions and selected strategies 1.4.3 Organizing implementing apparatus 1.4.4 Resource allocation and adjustment 1.4.5 Forming deployment plan 1.5 Summary and evaluation Chapter 2: REAL SITUATION OF BUSINESS ACTIVITIES AND BUSINESS STRATEGIES OF EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY IN 6 7 8 9 10 10 10 10 11 11 11 12 13 14 14 14 15 15 15 16 17 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management 2010-2020 PERIOD 2.1 Overview of EDH Technology Development Joint Stock Company 2.1.1 Process of establishment and development of the Company 2.1.2 Organizational structure of the Company 2.1.3 Business functions and missions 2.1.4 Awards of the Company 2.2 Business activities of EDH in 2008-2010 period 2.2.1 Business performance of EHD in 2008-2010 period 2.2.2 Analyzing production capacity and products of EDH 2.3 Auditing the Company’s position 2.3.1 Analyzing business environment 2.3.2 Analyzing customers and customer segments 2.3.3 Analyzing sectorial environment and competitors 2.3.3.1.Analyzing industrial environment 2.3.3.2 Analyzing competitors 2.3.4 Analyzing internal capacities and SWOT analysis 2.4 Vision and goal of the Company’s business strategy 2.4.1 Mission 2.4.2 Vision 2.4.3 Core value 2.4.4 Strategic objective 2.5 Business strategy of EDH Technology Development Joint Stock Company 2.5.1 Business strategy orientation of the Company 2.5.2 Production strategy and product development of the Company 2.5.3 Marketing and sales strategy 2.5.3.1 Product policy 2.5.3.2 Price policy 2.5.3.3 Product distribution and consumption policy 2.5.3.4 Promotion and sales support policy 2.5.3.5 Advantages in developing strategy and forming thinking strategy within the Company 2.5.3.6 Some shortcomings in developing business strategy of the Company 2.5.4 Training and human resources strategy 2.5.4.1 Stabilizing and maintaining the existing personnel 17 17 18 20 20 21 22 28 31 31 34 35 35 38 41 44 44 45 45 46 47 47 48 51 51 52 52 53 53 54 56 57 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management 2.5.4.2 Training and developing human resources 2.5.4.3 Talented people - retaining policy 2.5.5 Operation and quality control strategy 2.5.6 Financial strategy and budget estimate for doing the business strategy Chapter 3: SOME SOLUTIONS AND INITIATIVES TO IMPLEMENT BUSINESS STRATEGY OF EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY 3.1 Summary of chapter 3.2 Some solutions and initiatives to implement business strategy of EDH Technology Development JSC 3.2.1 Promoting market research and forecast 3.2.2 Increasing financial resources, improving infrastructure and building the factory manufacturing electric equipments 3.2.3 Selecting strategic products, reforming the sale method and developing target customers of the Company 3.2.3.1 Selecting strategic products 3.2.3.2 Identifying strategic customers to establish suitable policy 3.2.3.3 Improving sale 3.2.3.4 Solutions about organization and human resources 3.2.3.5 Solutions about technology 3.2.3.6 Intensifying checking and monitoring strategy implementation CONCLUSION REFERENCES 57 58 58 60 63 63 64 64 65 66 66 66 67 69 71 71 73 74 LIST OF TABLES AND FIGURE IN THE CAPSTONE PROJECT LIST OF TABLES Page Table 1.1- Strategic vision and historic mission 12 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management Table 1.2- Structure of capital stock on December 31, 2010 19 Table 1.3- Balance sheet 22 Table 1.4- Summary of the Company’s income statement 23 Table 1.5- Cost of goods sold 24 Table 1.6- Analyzing financial indicators 25 Table 1.7- SWOT matrix 43 Table 1.8- Projected balance sheet 62 Table 1.9- Projected income statement 62 LIST OF FIGURE Figure 2.1- Management apparatus of EDH 19 Figure 2.2- Some images of Golden cups and symbols of EDH 21 Figure 2.3- Customer segments 34 Figure 2.4- Market share 38 LIST OF ABBREVIATIONS EDH EDH Technological Development Joint Stock Company GDP Gross Domestic Products EVN Electricity of Vietnam FDI Foreign Direct Investment IEC International Electrotechnical Commission ODA Official Development Assisstance WTO World Trade Organization INTRODUCTION General context, the necessity and implication of the research project According to the development plan of electricity industry in 2015- 2025 period approved by Ministry of Industry and Trade, average growth rate of EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management production value of this industry is about 17%-18%/year and the growth of electric export 18%/year to make Vietnam’s electric industry reach an advanced level in the region in the technology for producing transformers, electric motors, generators, medium-voltage (MV) and high-voltage (HV) electrical instruments, electric wire & cable, multi-tariff meters for domestic consumption and export Electricity and electrical equipment manufacturing industry is one of the most attractive industries After joining WTO, a big market is opened but competition is tougher WTO is a playing field in which competitors are foreign companies, Multi-national Corporations with many years of experience, and strong resources; therefore, domestic enterprises need to be reinforced and need to have suitable “Business strategies” to meet the requirements of the new market At present, most enterprises in this industry of Vietnam have the same weaknesses which are developing and growing from a very specific context of the market - centrally planned, not pursuant to the demand-supply regulation of the market, having no competitive factors, and most companies not have methodical “business strategies” to make the most use of opportunities and overcome challenges to enhance the competitiveness in a new business environment and optimize the work performance After 15 years of establishment and growth, EDH Technology Development Joint Stock Company has made strong progress such as winning projects worth billions of VND Nonetheless, in the current deep international integration process and fierce competition, if the Company does not upgrade itself fully and does not have good “business strategies”, it will go backwards and lose market share in Vietnam With that idea, our group has chosen the topic “Building business strategy in 2011-2020 period for EDH Technology Development Joint Stock Company” to complete the MBA course - GAMBA and also made contribution to the sustainable development of EDH Technology Development Joint Stock Company Objective of the study EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management The study “Building business strategy for EDH Technology Development Joint Stock Company” aims at clarifying the strengths (core capacities), weaknesses of, opportunities and threats awaiting the Company Applying theories to build, analyze, and select competitive strategy, at the same time put forth necessary solutions to implement those strategies in 2011 - 2020 period to help the Company develop sustainably and become a leading enterprise in producing electrical equipments in Vietnam Methodology of the study Method of approach: Dialectical materialism and historical materialism Primary documents include original document on enterprise management, financial statements, annual review reports and regulations of the Company; Secondary documents such as annual document (copy versions) of Vietnam Trade Association, documents from the Government and relevant agencies, information from newspaper, website, etc Conducting direct interviews with the Board of Directors and heads of Departments Method of analyzing and processing data: Analyzing, summarizing and comparing Structure of the Capstone project Apart from the introduction, conclusion and references, the contents of the capstone project is divided in to three main chapters as follows: Chapter 1: Theoretical background to the development and business strategy for EDH Technology Development Joint Stock Company Chapter 2: Real situation of business and business strategies of EDH Technology Development Joint Stock Company in 2010-2020 period Chapter 3: Some solutions to implement business strategy of EDH Technology Development Joint Stock Company EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management Chapter THEORETICAL BACKGROUND TO BUSINESS STRATEGY 1.1 Business strategy 1.1.1 Concept and role of business strategy Strategy The term “strategy” originated from Greek and was initially used in the field of military to imply big and long-term plans which were set out based on the certainty about what the opponent could and could not Strategy is a plan consisting of long-term (3;5;10 years, etc.) goals to point out the development orientations of an organization in the long-run, big and important policies to attract, allocate resources and make the most use of those resources; and major decisions to realize those goals There are different definitions of strategy, but in the most general way, strategy is defined as “a series of complex actions aiming at mobilizing resources so that an organization can attain a certain purpose”.1 Business strategy According to D.Bizrell and the group of author, “Business strategy is a general plan leading or orienting enterprises to the expected target It is the basis to work out policies and procedures of operations” In enterprises, “Business strategy is an art of designing, organizing means to achieve the long-term goals of an enterprise and has a relation with the changes in business and competitive environment” Role of business strategy Helping enterprise to be well-aware of their purposes and orientations to set the basis and the guideline for all business and production activities of the enterprise Source: Document of “Strategic Management”, Global Advanced Master of Business Administration Program (B1 - T1) Source: Document of “Strategic Management”, Global Advanced Master of Business Administration Program (B2 - T1) EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management Helping enterprises grasp and make use of opportunities and take active measures to overcome risks and threats in the competitive market Contributing to raising efficiency of resource use, enhancing competitive position to ensure the sustainable development of the enterprise Providing firm bases for mapping out appropriate policies and decisions on business with the changes of the market 1.1.2 Basic characteristics of business strategy Business strategy helps define the basic goals and business orientations of enterprise in each period The characteristic of orientation of strategy ensures that enterprise can develop continuously and sustainably in the changing business environment Maximally mobilizing and optimally exploiting and using resources of the enterprise at present and in the future, promoting its advantages and grasp opportunities to gain competitive advantages, having emulative thought and achieving success Business strategy of enterprise is reflected during a continual process and often formed in a long period (3; 5; 10 years, etc.) 1.1.3 System of enterprise’s strategy Level of business strategy in an enterprise Functional level strategy: it is the strategy aiming at improving the efficiency of basic activities in the Company such as production, marketing, material management, research & development of human resource Business level strategy: it is the overall commitments and actions helping enterprise gain competitive advantages by tapping its core capacities into value of specific products and reflecting the belief of enterprise in the destination and the modes that it can gain competitive advantages compared to its competitors Global strategy: it is the strategy in which Company sells its products or services to the outside of its domestic market The expansion into the global market allows the Company to raise profitability by new methods which domestic companies not have EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY Strategic Management GaMBA01.M0709 Corporate level business strategy: determines actions that Company implements to gain competitive advantage by selecting and managing a group of different business strategies in some sectors and markets of products Types of enterprise’s business strategy The system of enterprise’s business strategies includes growth strategy of enterprise, business strategy of SBUs and functional strategy Three main business strategies that are often used include cost-leadership strategy, product differentiation strategy and centralization strategy Growth strategy consists of concentrated growth strategy (market penetration strategy, market development strategy, product development strategy); Integration growth strategy (Merging strategy, acquisition strategy and joint venture strategy); Strategy for diversifying activities of enterprise (concentric diversification strategy, horizontal diversification strategy, mix diversification strategy) 1.2 Factors affecting business strategy 1.2.1 Institution - politics Political stability is the foundation for economic activities to develop, creating an attractive investment environment for business sectors with the engagement of both national and international investors 1.2.2 Economy The underdeveloped or developed economy has a strong influence on business operations of enterprises It decides the purchasing power (demand) and via that, more or less affecting supply The developed economy also helps enterprises grow and vice versa, underdeveloped economy constrains the development of enterprises 1.2.3 Socio-culture The population, structure, age, custom, standard and income have a significant influence on the development of enterprises Vietnam’s population is approximately of 86 million people with the average income per capita of 1.200 USD/person/year GDP of Vietnam over the past years had high growing rate with the average growth rate of 7-8%; therefore, the demand for using electrical 10 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management To avoid risks of changes in material price in the market as well as overdependence on prices of firms in the world, the Company need study carefully to have a plan to reserve strategic materials, including main equipment used often in the market but has to import such as digital relays, switches, bronze and corrugated iron, etc to maintain the business production plan, especially the effective implementation of bidding contracts as the time from the beginning of taking part in a tender to the time of signing contract and doing the contract often lasts long; it is easy for the Company to suffer loss when price of materials in the market rises high However, the Company also need take account into balancing the losses caused by inventory 2.5.6 Financial strategy and budget estimate for doing the business strategy The objective of the strategy is to help the Company be healthy in finance, ensuring the development of the Company in the coming time Main contents area as follows: Make current finance healthy: including restructure the capital, ensure the harmonious balance, of which the Company has to reduce short-term loan rate and raise the capital cycles Add working capital because currently, the capital of the Company is mainly in fixed assets, and working capital is too insignificant, so it cannot meet the demand of business and production The increase in working capital can be done by issuing stocks additionally to existing shareholders and calling strategic shareholders, foreign investors When the financial market is stable again, the Company is likely to carry out IPO and register to stock transaction on stock Exchange by 2013 The Company is making efforts in entering into partnership with eL-tech (Holland) with the purpose of mobilizing foreign capital to manufacture electric panels for export in ship building industry 61 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY Strategic Management GaMBA01.M0709 It also intends to cooperate with Elster (Great Britain) to manufacture singleand three-phase electronic meters with the projected sales in 2013 as 50 millions USD which will goes up gradually year after year Contracting and cooperating with experts and specialists in science and technology from such well-known corporations as Siemens (Germany), ABB (Sweden), Schneider (France), Elster (Great Britain), eL-Tech (Holland) to promote research and development of technologically advanced products This is aimed at enhancing the technological values and the amount of grey matter in the company’s products, thus increasing their competitiveness over those produced by the company’s opponents The projected financial budget and business performance of the Company in 2011-2020 period are presented via below table of data: Table 1.8 Projected balance sheet Currency unit: VND million Criteria I Total assets Short-term assets Long-term assets II Total capital Liabilities In which:- Short-term liabilities - Long-term liabilities Resources In which: Charter capital Others 2010 428,336 225,750 202,585 428,336 263,340 2014 1,117,846 522,730 595,115 1,117,846 882,895 2017 1,953,937 1,053,824 900,112 1,953,937 1,589,701 2020 3,541,043 2,397,450 1,143,593 3,541,043 2,901,142 220,450 474,585 889,041 1,789,195 42,889 164,996 126,000 38,996 408,309 234,950 226,800 8,150 700,659 364,235 353,808 10,427 1,111,947 639,900 530,712 109,188 Table 1.9- Projected income statement Currency unit: VND million 62 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 No 10 11 12 13 14 15 16 17 Criteria 2010 2014 Sales 561,598 1,193,643 Revenue deductions 673 954 Net revenue 560,924 1,192,688 Cost of goods sold 479,311 1,017,363 Gross profit 81,612 175,325 Financial activities income 5,242 12,267 Financial activities expenses 18,022 42,172 In which: interest expenses 13,222 30,939 Selling expenses 19,001 48,168 General & Administration expenses 16,201 44,494 Net profit from business activities 33,629 52,757 Other income 1,242 2,576 Other expenses 2,565 1,814 Other profit (1,322) 762 Profit before taxes 32,307 53,520 Current business income tax charge 4,993 8,028 Deferred business income tax charge Profit after business income tax 27,313 45,492 Strategic Management 2017 2,238,081 1,119 2,236,962 1,908,128 328,833 22,082 75,910 55,691 94,078 80,089 100,836 4,452 3,135 1,317 102,153 15,323 2020 4,371,252 2,185 4,369,066 3,726,813 642,252 48,514 166,774 122,354 206,690 175,957 141,343 8,348 5,643 2,705 144,048 21,607 86,830 122,441 Chapter SOME SOLUTIONS AND INITIATIVES TO IMPLEMENT BUSINESS STRATEGY OF EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY 3.1 Summary of chapter Chapter includes the two main parts: Part 1: Overview of EDH Technology Development Joint Stock Company and its real situation and business performance in the period of 2008 - 2010 Analysis of financial cost, indices, production capacity and products of EDH, competitors, business environment, customers and segmentation of customers, and industry environment Part 2: Business strategy in 2011 - 2020 period 63 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management The introduction of “Vision”, “Goals”, “Missions” with the Slogan: “Develop with the country” of the Company Business strategy includes Business orientation and model; product manufacturing and development; marketing and sale; training and human resources; operation and quality management; budget and finance to implement the business strategy Chapter has clearly shown that after 15 years of foundation and development, EDH Technology Development Joint Stock Company has grown both in size and quality: the number of its staff increases more than 40 times; revenue and charter capital rises more than 100 times; products of the Company reach the Vietnam and International standard Furthermore, the Company has solid position in Vietnam market and exports its products to some countries in the world Nevertheless, to make business strategy in 2011- 2020 period realizable, in this chapter, we need to introduce solutions to eliminate limitations and weaknesses as well as create enough resources for the implementation of the strategy 3.2 Some solutions and initiatives to improve business strategy of EDH Technology Development JSC Business strategy of EDH Technology Development Joint Stock Company will be implemented over the period of 10 years with many things to However, due to time limitation, this capstone project mentions only six basic solution groups to improve the strategy regarding promoting the market research and forecast; promoting financial resources; enhancing material facilities and infrastructure, manufacturing factory; selecting strategic products, reforming the sale method and developing target customers of the Company; structuring organization and developing human resources; developing technology; intensifying supervision and monitoring of implementation process More details are as follows 64 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management 3.2.1 Promoting market research and forecast Forecast is the prediction based on scientific foundation about the state possible to attain in the future of research subject or about the methods and boundaries to achieve certain goals or targets Forecast is probable but reliable Therefore, during the process of managing business strategy, conducting research, survey, and forecast is indispensable and particularly important since forecast creates the real foundation and input for the right decisions of business strategy managers in the Company Furthermore, forecast is also foundation to set the targets for the Company which are not too high or too low to miss the opportunities to achieve expected results In fact, the forecast in business strategy management in enterprises is particularly important After identifying long-and short-term targets, the Company must set up plans to achieve those targets through exploiting its human material resources, and sometimes making changes to the plans when relevant Therefore, EDH Technology Development Joint Stock Company should encourage market research, survey and forecast in its business strategy management Forecast will make the Company become more active and react faster to new demands In turns, its business strategy will be implemented more smoothly Within the Company, the Business Department will undertake the work of predicting demands and researching market Nevertheless, this department does not have sufficient staff to the job Therefore, the Company needs to recruit new employees or retrain its present employees In addition, to make the job more accurate and regular, the Company should establish a marketing department or a group of its people which is specialized in market research Actually, forecast will help the Company not only be able to research market and customers but also understand more about its rivals This serves as the solid foundation for setting up plans and business strategy management policies Advisably, the Company can also, through research and forecast, get to know more 65 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management about its financial situation, thus helping them more active in spending its budget or expanding its business scale 3.2.2 Increasing financial resources, improving infrastructure and building the factory manufacturing electric equipment Over the last 15 years, EDH Technology Development Joint Stock Company paid good attention to building material facilities, infrastructure, workshops and a factory manufacturing electric enclosures Nevertheless, this factory can only produce simple products on small scale and with high price, thus unable to meet the requirements of the market and big customers, especially foreign customers from developed countries; its exports has been limited In order to achieve the targets set forth in its business strategy over the period of 10 years, the Company has to increase its financial resources by means of issuing shares, mobilizing internal capital resources, borrowing loans from banks, entering into partnerships With its strong financial state, the Company has been able to invest into building up more workshops, importing technologies and modern production lines to manufacture electrical switchboards, stations with high voltage, intelligent electric meters to cater the demands of both domestic and foreign clients According to the development strategy of Vietnam’s electric industry its growth rate will increase by 18% in the next ten years The domestic demand for enclosures, stations, big transform stations up to 500 KV of the industrial and civil sectors is really high 3.2.3 Selecting strategic products, reforming the sale method and developing target customers of the Company 3.2.3.1 Selecting strategic products Under the current market mechanism, especially when Vietnam is more and more integrated with the world economy where competitions are increasingly 66 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management fiercer, the quality, features and price of goods are becoming more and more important To satisfy particular and strict requirements of customers, the Company should not manufacture a lot of types of products but concentrate on those which are its advantage and well received by the market in the past such as super high voltage equipment 500 KV, high voltage 220 KV, 110 KV, low voltage equipment, sub-station switchboards of various types : secondary, low voltage, remote access control, SCADA, smart meters With the growth rate of 18% or possibly higher in the next decade it is predicted that the demand for this kind of goods is extremely high In addition, the substantial increase in the exchange rate between VND and USD has made it difficult and expensive for the Company to import equipment and materials Thus it is necessary for the Company now to focus on manufacturing its strong products Moreover, the Vietnamese government and Politburo has launched the movement « Người Việt Nam ưu tiên dùng hàng Việt » (Vietnamese people should use goods made in Vietnam » So attending to the products of the Company’s strength is well and scientifically-based policy 3.2.3.2 Identifying strategic customers to establish suitable policy At present, the Company provides switchboards and stations to many kinds of customers : big and small, new and traditional ; even, some place order to buy just one item of product Nevertheless, the Company mainly focuses on some following customer segments as follows : Enterprises belonging to electric industry : Electric Corporation in the North, South, Central Province, Hanoi, Ho Chi Minh City ; National electric transmission Corporation and its subsidiaries ; power plants such as Hoa Binh, Tri An, Se San, etc Contractors in construction industry: Vinaconex, Lilama, Song Da Corporation, Vietnam Construction and Industry Corporation, HUD, COMA, 67 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management Management boards of central and local industrial zones, industrial factories and businesses in industrial zones such as Thang Long Industrial Zone, NOMURA, Binh Duong and factories of Corporations and Groups, namely are Vinashin, Hoang Thach Cement, But Son Cement, Zamil Steel, Hoa Phat Steel, etc Foreign companies and groups: Franco Pacific, Comin Asia, Siemens Indonesia, ABB India, Jacobsen Elektro As-Norway, Topfrank, Enerbensa, Kinden, etc Urban lighting and urban managing companies, etc 3.2.3.3 Improving sale Apart from well implementing key jobs such as enhancing product quality, saving costs, reducing product prices, improving customer’s services, EDH need to complete and expand the product distribution network which is regarded as requisite if the Company wants to enlarge its market With a strong distribution network, they will be able to cater the needs of different customer segments Therefore, it is significant for the Company to improve its present distribution channels and possibly create more to meet the market needs Retailing: Although retailing brings not so much profit, it is still effective To promote its retail, the Company should adopt these following solutions: - Always attend to back-up production to spare for retailing; whenever need appears the Company can meet it immediately - Establish preservation rooms/stores to maintain the quality of the new products - Always check and repair faulty products immediately in the rooms, so as to supply to the market right away, no need to carry tests which take time - Carry out after-sales services promptly, fix faults or change another product for customers if necessary - Improve the delivery system including delivering goods even at weekends or during holidays, setting up outlets and recruiting coordinators in different places, especially in the city centers where the demand for the Company products is the highest 68 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management Sale through the Internet: Sale through the Internet means the Company has to complete its website on which all the information about the Company, products, price and trading method will be shown They have to check orders from customers in the Internet every day, make contact with them and trade with them In addition, the Company also needs to create its own profile on the Internet which will be sent to customers, particularly those in electric industry With all the conveniences and fastness that this form of business brings surely it will draw the attention from the customers Developing and adopting many methods of payment: Payment method is also an important factor helping the Company expand its market since each customer has their own way of paying money Therefore, by offering various methods of paying money the Company is creating favorable conditions for its customers Among ways offered, EDH should pay more attention to those that involve banks, such as hire purchase and indebted sale with the bank commitment of repayment To this, the Company needs to work with the banks to discuss the problems and reach agreements over necessary procedures At present, a lot of banks are willing to cooperate with businesses to carry out this business activity Establish close relationships with customers: Frequently contact with its traditional customers, especially customers in electric industry Furthermore, promote marketing activities to set up the relationships with new customers To step up marketing activities, the Company need pays attention to the executor, time, place, customers, contents and documents to work with customers 3.2.3.4 Solutions about organization and human resources Completing the organization structure of the Company The current organization structure of the Company has not been completed There is not a marketing department The key persons are good at their job, but are greatly inert; young staff lacks experience and has not been able to success their 69 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management predecessors There is even a shortage of key figures in management boards, especially serious in enforcing the Company strategies Usually, workers in the Company have to some jobs not of their own specialization, thus reducing their efficiency at work For example, the business department also has to the jobs of the marketing department simply because the marketing department has not been established yet while the work in the business department is quite enormous It is imperative that EDH work more on its organization structure Also, the Company should found a unit to monitor the strategy implementation process and add more staff to the planning department, set up another unit to market research and specialize in marketing, advertising products in an attempt to bring its products to the public It can appoint a marketing manager to be more flexible in handling Company businesses In its work structure, the Company must assign clearly the duties and obligations of each department to better execute its business strategy The Company should ask its staff constantly to take part in training courses to upgrade their professional skills for their own benefit, thus gradually eliminating the old thinking of subsidy and monopoly which still exist in the Company Besides, it should make all the workers aware of the important role of strategy to the survival of the Company to encourage them to work more efficiently and to make the process of conveying the Company decisions to the workers run faster Solutions about human resources Human resources is of vital importance to the development of the Company Therefore, each Company needs to work out suitable measures to maintain and develop this resources, specifically Recruiting and training To ensure the stability of this resources for development the Company should pay good attention to the recruiting and training of its new employees to make up for changes that may occur such as quitting, retiring, expanding business Besides, 70 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management equal attention should be paid to training and retraining of old employees to help them be more updated to the advances in technology and related knowledge in an effort to increase the quality of this resources comprehensively Even it can hire local or foreign experts in technology transfer or send competent workers abroad to participate in training courses to help them attain deeper knowledge in their field Recruit employees with qualifications in management, organization of strategy implementation, and high technical standards as well as take in skilled workers who have thorough understanding of electric measurement tools Incentives for employees Encouragement is an important factor in business and production management, it directly affects the attitude of employees Encouragement includes three main factors such as income distribution, complimentary and disciplinary mechanism, and favorable working conditions Currently, the encouragement policy at the Company is not very satisfactory; personal income is still low in comparison with the average income that one worker working in electric industry can get; income distribution is not equal; the rewards that individuals or groups of individuals get for their initiatives and good work completion are not fair, thus unable to promote the employees’ capacity to the fullest Income distribution in the Company must be equal and transparent to avoid disunity and decline of productivity This is the most significant issue in income distribution among workers If it is done well, it can create power for the Company Building up a good working environment Work efficiency as well as the employees’ attachment to the Company depends mostly on the working environment; therefore, the Company needs to create a good working environment, which means - The relationships between leaders and employees, among colleagues, and departments are friendly and harmonious Everyone should be helpful to one another 71 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management - Equipment and facilities such as offices, occupational protection, machines, computers, telephones, photocopiers must be user-friendly - Working space: clean, safe, unpolluted, easy to move around for the workers to feel comfortable and at ease when working in 3.2.3.5 Solutions about technology Promoting research and application of advanced technology Vietnam’s electric industry is developing rapidly, which requires other related industries that produce and supply electrical products and auxiliary materials to develop correspondingly As such, EDH Company needs to step up its research and application of technological advances to manufacture better products Cooperation for development The quickest and shortest way is to cooperate with strong partners in the world to join ventures or attain technology transfer to produce new products with more conveniences and high quality EDH has done just that to cooperate with Siemens Group (Germany), Siemens Sales Region, to get permission to use its information and intellectual property right to manufacture SIVACON type test in Vietnam 3.2.3.6 Intensifying checking and monitoring strategy implementation ‘‘If a leader does not monitor, he/she is not considered a leader’’ In fact, examination is an indispensable step in management in general and business strategy management in particular It is done with the purpose of evaluating and changing to correct mistakes and defects in the process of implementing business strategy Each Company can select suitable checking method depending on its scale and management level The checking has to be conducted from the high-ranking officials of the Company, through various processes and levels This job should be undertaken by competent people and once being carried out, not affecting the general performance of the Company 72 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management Checking should be conducted after a period of implementing a business strategy and business plan Over a period, there are usually some changes at macro level (laws, tax policies, etc.), in projects, exchange rate, even in high-ranking officials, etc Checking will help to assess the feasibility of the strategy, which may result in adaptations, modifications, additions relevant to the reality At EDH Technology Development Joint Stock Company, this work needs to be done periodically to timely discover mistakes, then adopt remedies, adjustments, and changes to the annual plans To conclude, the Company should adopt the given solutions in a consistent and scientific way; that is, they need to carry out these solutions together in order to create a comprehensive strategy Meanwhile, during the implementing process it should evaluate the results in an objective and honest manner to yield timely modifications in better service of business operation activities CONCLUSION Setting up business strategy is particularly important task of enterprises Most of the failure of businesses comes from wrong strategy There are many ways 73 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management approaching business strategy, nevertheless, it is not simple to set up a right and effective strategy Basic issues of setting up business strategy include: defining targets of business; evaluating environment factors; finding out opportunities and threats; combining the evaluation of strengths, weaknesses of business to set up strategy selection matrixes and form a perfect business strategy This research topic introduces the assessment to set up a process of setting up business strategy matching to current context This strategy is suitable and applied for EDH technology Development Joint Stock Company With respect to the Company, this research is useful to plan a business strategy, especially foster and improve image and trade mark by means of improving product quality and sale as well as after sale service efficiency The Company will have solutions to recover limitations and pay attention more to setting up business strategy As a result, the Company will have position in national market, penetrate international market and contribute significantly to the development of Vietnam Setting up strategy is a wide area Because of limited time and knowledge, this capstone project has mistakes Our group wishes to receive the contribution of teachers and members in program to make it better and have real application for EDH Technology Development Joint Stock Company 74 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY GaMBA01.M0709 Strategic Management REFERENCES Document of “Strategy Management”, Global Advanced Master of Business Administration Program, Griggs University - America Document of “Strategy Management” of Associate Professor Doctor LeThe Gioi- Dr Nguyen Thanh Lien- MA Tran Huu Hai, Statistics Publishing House Strategy Management Curriculum of GaMBA Global Advanced Master of Business Administration Program, Griggs University - America Gained knowledge from lectures in class Professor, Doctor Nguyen Thi Lien Diep (2008), Strategy and business strategy, Statistics Publishing House Doctor Nguyen Thanh Hoi (2001), Management, Statistics Publishing House Professor, Doctor Ho Duc Hung (2004), Marketing Management, Economic Development Research Institute Publishing House Harvard Business handbook (2005), Effective Business Strategy, Ho Chi Minh City Publishing House Vietnam Electric Magazine 10 Financial statements of EDH Technology Development Joint Stock Company 11 Business and production orientation after capitalizing of EDH Technology Development Joint Stock Company 12 Information about Strategy Management and electric information in websites / Duration for conducting the capstone project: From 15/ 12/2010 to 25/2/2011 75 EDH TECHNOLOGY DEVELOPMENT JOINT STOCK COMPANY ... of EDH Technology Development Joint Stock Company 2.1.1 Process of establishment and development of the Company General information Name in Vietnamese: Công ty cổ phần Phát triển kỹ thuật công. .. Management apparatus of EDH 19 Figure 2.2- Some images of Golden cups and symbols of EDH 21 Figure 2.3- Customer segments 34 Figure 2.4- Market share 38 LIST OF ABBREVIATIONS EDH EDH Technological... triển kỹ thuật công nghệ EDH, abbreviated name: EDH3 International transaction name: EDH Technology Development Joint Stock Company Number of employees : 250 people Equity : VND 126 billion Address