Building a plan for managing changes in vietfracht

UPPSALA UNIVERSITÉT & VNU UNIVERSITY OF ECONOMICS & BUSINESS "k * -k UPPSALA UNIVERSỈTET MASTER THESIS OF MPPM Building a plan for managing changes in Vietfracht Author: Ngo Xuan Hong Supervisor: Prof Dr Lars Torsten Erikkson Locaì Supervisor: Dr Do Tien Long Class: ỈMPPM INTAKE Hanoi, January - 2015 ACK NO W LED G EM EN T During 24 years working at Vietfracht, with 10 years o f being a member o f the company’s directorate, I have always hoped to vvrite a scheme for Vietfracht’s development in the íuture Hortunately, with the knowledge that I learnt from the teachers at MPPM 07 course and especially with the help and encouragement from Prof Dr Lars Torsten Eriksson (Uppsala University, Svveden), Dr Do Tien Long (VNU University o f Economics and Business, Hanoi National University), with the urge o f changing Vietfracht according to the govem m ent’s businesses restructuring policy Today, I have íìnished the essay “ Building a plan for managing changes in Vietíracht” and I hope it will be an important document to guide Vietfracht through crisis and continue to grow in the time vvhen Vietnam is signiĩicantly integrating in the w orld’s economy Pirstlv, I would love to express my sincere gratitude to Prof Lars Torsten Eriksson and Dr Do Tien Long, who directly guided and helped me to complete this Master Program in Public M anagement’s thesis I aỉso vvant to send my thanks to the teachers; VNƯ University o f Economics and Business’s (Vietnam National University’s) administrators, Uppsala University (Sweden); leadership and staffs at Center fo r International Training and Educatiotr, triends, colleagues who helped me during the time I studied and completed the thesis I express heartíelt thanks to Vietfracht’s board o f directors, managers and staffs, the companies, organizations and individuals that assisted me in collecting datas and documents for researching and vvriting the thesis Finally, I am grateful for my family and iriends’ encouragement and support, vvhich helped me focusing on researching and completing my thesis Many thanks to you! Hanoi, November lOth, 2014 VVriter Ngo Xuan Hong Abstract Title: Building a plan fo r nianaging changes in Vieựracht Level: Final assignment fo r M aster Program in Public Management A uthors :NgoXuan Hong Svvedish supervisor: Prof Dr Lars TorstenErikkson Local supervisor: Dr Do Tien Long Date when the thesis is presented: 2014 - December Aim: The research creates plan for developing Vietỉracht in the future In detail, the research is to analyze the present situation o f Vietfracht, things that Vietíracht expect to change in the future, reasons for the changes, support and protest forces tovvard the changes, the capacity and willingness o f Vietfracht’s leaders in conducting the changes, the mechanisms and measures ưsed to support the changes and the plan that Viettracht need to follow to achieve tuture changes M ethod:T he research uses secondary data from the íìnancial statements, annual managem ent reports o f Vietữacht, reports on reviewing the World Economy and Vietnam ese Governm ent Reports on Vietnam Economy and Society Moreover, the research ưses primary data from interviews o f Vietfracht’s key em ployees and leaders to clarify the support forces, the protest íorces in the changing process, the capacity and the vvillingness in changing o f V ietfracht’s leaders, and strengths, vveaknesses, opportunities and threats o f the Corporation The researcher uses: (1) MIO Model to have a general insight on present situation and analysis o f the future o f Vietíracht; (2) The PEST framework to analyze how political tầctors, economic tầctors, social íầctors and technological tactors are changing and are likely to change in the future then draw out implications for Vietfracht bascd on those analysis; (3) SWOT analysis to analyze strengths, weaknesses, opportunities and threats o f Vietfracht,from that, it can help to choose a suitable strategy for the changes in the íuture; (4) The Force Field Analysis Method to clariíy the support tbrces, the protest tbrces in the changing process, the capacity and the vvillingness in V ietfracht’s leader change; (5) The Change Kaleidoscope to understand the capacity and vvillingness o f Vietfracht’s leaders in conducting these changes, the mechanism s and measures that are used to support these changes; (6) The C hange Model including steps o f Kotter (1995) to build the plan for changes o f Vietữacht R csult & C oncIusions:L eaders o f Vietfracht recognize that the company needs to conducts five changes in the future Firstly, V ietữ acht maintains and improves business operations o f sea transport sector at present by assigning additiona! tasks to the divisions or departments o f Container agencies in branches and subsidiary companies in order to tìnd out n e w c ustom ers for the com pany's Container tleet Secondly, the Corporation gradually liquidates and sells existing dry cargo vessels o f the C o rporation w ith p rio ritiz in g old vessels hav ing p o o r technical condition and vveak capability Thirdly, it applies methods o f loan purchase or hire purchase o f vessels in order to form and d evelop the inland Container transport vessels, and an initial amount o f at least 02 Container ships under 15 years old and 700 TEU size built by Japan or Europe The Corporation sets up the inland Container shipping routes with w eek ly schedules and it m ust associates with Container vvarehouses system o f the C orporation in Haiphong, Danang, Quynhon and Hochiminh City Fourthly, the Corporation continues to gradually choose human resources with high experience for operation, m an ag em en t, Container ship conduction in order to meet complex jo b s for sea transport block and focus much on training and retraining for existing employees to meet vvork requirements Lastly, Vietíracht positively uses the modern application o f information technology and develo ps Service quality m anagem ent system to enhance the competitive ability in the maritime requirements o f customers industry and meet the increasing Suggestions fo r íu tu re research:use the research methods having stated in this thesis to: - Hxtend the scope o f researching with a group o f Vietnam’s shipping companies From that, build a plan o f restructuring the VietnarrTs shipping companies to get over the global economy crisis, especially in this situation vvhen Vietnam’s economy is still unstable and the companies's opportunities to approach the sources are limited - Research more about the leader’s role in Vietnam’s shipping companies’ restructuring process Focus more on analyzing of: (1) orientating the changes hy building long-term plans and strategies; (2) controlling all effects and manage the risks in the vvhole restructuring process Contribution o f the thesis: The thesis has some contributions Firstly, by building the plan for management changes, Vietíracht certainly will face the diffĩculties to achieve new successes, become the leading company in maritime and logistics industry in Vietnam, and be able to compete with regional logistics enterprises In other words, the thesis helps managers o f Vietfracht to have a valid reterence instrument for proposing a plan o f management changes in the future Secondly, there are a few researches o f studying on the Vietnamese maritime industry in general and Vietíracht in particular Thereíore, the thesis contributes to an increase in literature o f evaluating the Vietnamese maritime industry in general and planning management changes o f Vietíracht in particular Thirdly, the thesis becomes a research and a construct for restructure project o f the Vietnamese state-owned shipping companies Fourthly, the thesis contributes to acceleration o f the plan tor restructuring the State Capital Investment Corporation (SCIC) Lastly, the thesis is an important document to help investors have necessary information to make right investment decisions on Vietíracht Key w ords: Vietíracht; Changes; Plan; Maritime; Logistics; Future & Leadership 3.3.2 The activities for change 40 Chapter C on clu sion s 47 4.1 Some reílections on the theory used 47 4.2 Retlections on the practical contribution to Vietíracht and other companies 48 4.3 My reílections on lessons leaming in research 50 Reterences 55 Appendix .58 Ọuestionnaires used in intervievvs 58 Appendix .59 Results o f interviews o f leaders 59 TABLE AND FIGURES TABLE Table 1: Brief results o f business operation o f Vietíracht from 2008 to 2013 Table 2: Comparison tbusiness operation results o f Vietfracht with its competitors in Table 3: The sea transport fleet o f Vietfracht 15 Table 4: PEST analysis o f the extemal business environment o f Vietfracht 28 Table 5: SWOT analysis o f V ie tử a c h t 31 FIGURES Figure 1: Total revenue, total cost and total prìt from 2008 to 2013 of V ietíracht Figure 2: Vietfracht’s market in V ie tn a m Pigure 3: The eight contextual features o f Change K aleidoscope 41 Chapter Introduction 1.1 An overvie>v o f Vietíracht and its market According to Vietíracht (2014a), detailed background o f Vietửacht as follows: Sea transport industry plays a vital role in the socio-economic development o f Vietnam because through large amount o f exports and imports by sea, it contributes to trade promotion for Vietnam Vietíracht was formerly named Vietnam Foreign Trade Transportation Corporation, known as the stateowned company and established in 1963 In October 2006, the Corporation was changed to the joint stock Company, and named Transport and Chartering Corporation (Vietữacht) Vietữacht was offícially listed on the Hanoi Stock Exchange with stock Symbol named VFR in 2006 With over 50 years o f operation and grovvth, Vietíracht has become one o f the leading shipping íìrms in Vietnam The leading position in operating the shipping íìeld, the Corporation has achieved many value avvards from the Government o f Vietnam such as First Class Labor Medal, Third Class independence Medal, Ọualitìed and Prestigious Enterprise ot' Vietnam, Labour Heroic Unit, The National Golden Cup tor Social Progress and Sustainable Development and The Vietnam Famous Trademark Winner During the period o f 2005-2015, Vietíracht will enhance its business operations in terms o f diversitìcation o f services, upgrading means o f transportation, strong improvement o f office facilities, infrastructure, and systems o f informatics, strong development o f human resources, and enhancement o f establishment o f joint stock, joint venture and subsidiary íìrms Moreover, the Corporation always enhances quality services to satisíy increasing needs o f customers and constantly strengthen its business activities with its partners around the world Business scopes o f Vietíracht are to transport goods by sea and by land, shipping, logistics and forwarding agents for air, sea and land, direct import and export o f goods for transportation industry Moreover, the company also conducts business activities related to chartering and brokerage services, intem ational express Service, booking agents for dom estic and international airline, ship-chandler, entertainment services for passengers, tallying goods, maritime brokerage, warehousing and accommodations for lease, real estate business, leveling ground suríầce o f mineral exploitation and construction, and customs clearance services The global íìnancial crisis and economic downtum from 2009 to the present have been evaluated as the vvorst one since the Great Depression o f the period o f 1929 - 1933 Maritime industry around the world has suffered serious crisis and many large shipping companies have gone bankrupt or needed to have govemment bailout to survive One o f the main reasons is the imbalance o f demand and supply In the global economic crisis, massive development in a sea transportation fleet vvhile there is only a lovv increase in needs of transportation In Vietnam, sea transportation companies have faced very serious difficulties and many companies out o f them have gone hankrupt Like see transport corporations, sea transport fleet o f Vietfracht has had prolonged difficulties intluencing on lives and works o f its employees and beneíits o f its shareholders and its other stakeholders (Vietíracht, 2013) This becomes a motivation íbr Vietíracht to build the plan íor management changes in the Corporation in order to improve and enhance its protìtability in the The Vision o f Vietíracht is to alvvays try to become a leading business company in Vietnam with a variety o f business fields, especially main business activities íbcusing on maritime field In other words, Vietfracht expects to become one o f the leading shipping corporations in terms o f high business performance, high quality services, high brand name, and high trust in the maritime industry in Vietnam Business objectives o f Vietíracht are to focus on providing high-quality services for customers, create good jobs for citizens where it is operating, create positive working environment for all its em ployees to enhance physical resources and m ental encouragem ent for its employees, increase its employees’ working pertbrmance, provide many benìts for its shareholders, protect the environment, enhance the economic and social development in communities vvhere it is operating, comply with all regulations and laws o f Vietnamese government and balance benìts o f all its stakeholders Moreover, business principles o f the Corporation are to pay much attention to innovation, renovation in business development, proíessional business activities according to international laws, enhancement o f toreign relations and increases in business co-operation with its partners so that these things enhance its business períbrm ance, m aintain and develop its brand name in its industry, ceaselessly increase stock values for its shareholders and benefits for its other stakeholders In 2013, the Corporation has a very srnall proíit o f business operation vvith VND 220 million and other iníbnnation o f tìnancial results is indicated in table Table 1: Brief results of business operation of Vietíracht from 2008 to 2013 Kinancial iníormation 2008 2009 2010 Total revenues (VND) 251.577,000.000 262,113,000,000 297,470,000.000 Total costs (VND) 218.822.000.000 245,400,000,000 Total proílts (VND) 32,755.000,000 16,713,000,000 2012 2013 552,210,000,000 432,630,000,000 354,840,000,000 271,730,000,000 438.260.000,000 428.950,000,000 354,620,000,000 25,740.000.000 113,950,000,000 2,710,000.000 2011 220.000.000 Source: Annual reports o f Vietíracht from 2008 to 2013 According to annual reports o f Vietíracht from 2008 to 2013, although the global economic crisis has occurred since 2008, total revenues o f the company fast increased because the company had many suitable and effective business approaches such as tocusing on effective business operations, and enhancing marketing strategies to enhance customer base Hovvever, its total revenues from 2011 to 2013 strongly reduced because the global economic crisis had high iníluences on Vietnam in general and Vietíracht in particular 55 References ASEM Connect Vietnam (2014) Marine transport development pỉan o f Vietnam to 2020, Vision to 2030 Retrieved 17 August, 2014, from http://asemconnectvietnam.gov.vn/default.aspx?ZID 1= 14&ID 1=2&ID8 =16363 AT Kearney (2012) shipping Rctricved Baỉancing 17 the imbaỉances August, in Container 2014, from http://www.atkeamey.com/documents/10192/254830/Balancing_the_I mbalances_in_Container_Shipping_.pdf Biggam, J (2008) Open Up Study Skilìs: Succeeding With Your Master's Dissertcition: A Step-by-Step Handbook Maidenhead, England: McGraw Hill Balogun, J and Hailey, V H (2008) Exploring strategic change (3rded.) 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Harlovv: Prentice Hall 56 Kotter, J p (1995) Leading ehange: Why transformation efforts fail Harvard Business Review, 73(2), 59 - 67 10.Levvin, K (1947) Frontiers in group dynamics: Concept, method, and reality in social Science, social equilibria and social change H u m a n Reỉations, 1(1), - 41 l.Lucintel (2012) The report o f Vietnam Country Analysis 2012-2017; An Evaluation o f Political, Social, Economic, and Business Risk Texas: Lucintel Company 12.Saunders, M., Lewis, p and Thomhill, A (2009) Research Methods fo r Business Students (5th ed.) Harlow: Prentice Hall 13.Srivastava, T N and Rego, s (2011) Business Research Methodoỉogỵ Nevv Delhi: Tata McGraw Hill 14.Trim, p R and Lee, Y I (2008) A strategic marketing intelligence and multi-organizational resilience framework European Journal of Marketing, 42(7/8), 731 - 745 15.The annual reports o f the Vietnam Shipowners, Economic Committee and Asian Shipowners Forum 16-Thomas G Cummings and Christopher G Worley (2009) Organization Development & Change South-Western, a part o f Cengage Learning 17 Vietíracht (2008) Annual report o f 2008 Hanoi City: Viettracht 18 Vietửacht (2009 ) Annual report o f 2009 Hanoi City: Vietíracht 19.Vietfracht (2010) Annuaỉ report of2010 Hanoi City: Vietíracht 20 Vietíracht (2011) Annual report o f 201Ị Hanoi City: Vietíracht 21 Vietíracht (2012) Annuaỉ report o f 2012 Hanoi City: Vietíracht 22 Vietữacht (2013) Annual report o f 2013 Hanoi City: Vietíracht 23 Vietíracht (2014a) Company profi!e Retrieved 17 August, 2014, from http://www.vietfracht.com.vn/ 24.Vietíracht (2014b) Branches Retrieved http://www.vietfracht.com vn/bran.asp?key=2 17 August, 2014, from 57 25.Vietfracht (2014c ) Shipping agency Retrieved 17 August, 2014, from http://www.vietfracht.com.vn/shipping agen.asp?key=3 26.Vietfracht (2014d) Chartering and ship-broking Retrieved 17 August, 2014, from http://www.vietfracht.com.vn/charter.asp?key=3 27 Vietíracht (2014e) Forwarding and logistics Retrieved 17 August, 2014, from http://www.vietfracht.com.vn7forward.asp?key=3 28 Vietíracht (2014f) Trucking and Warehousing Retrieved 17 August, 2014, from http://www.vietfracht.com.vn/trucking.asp?key^3 29.Warren Bennis and Joan Goldsmith (2003) Learning to lead Basic Books, a member o f the Perseus Books Group, New York 58 Appendix Q uestionnaires used ỉn interviews What are political issues o f the govemment in the Vietnamese maritime industry? What are current economic situations o f Vietnam? What are economic situations o f Vietnam in the next few years? What is the level o f technological capability in the Vietnamese maritime industry? What is labor forces’ capability in the Vietnamese maritime industry? What are strengths and vveaknesses o f Vietíracht? What opportunities and threats o f Vietfracht? What does Vietíracht expect to change in the future? Why does Vietỉracht need to conduct the changes? 10.Do you support or protest the changes? 11 Why you support or protest the changes? 12.What the capacity and willingness o f Vietfracht’s leaders in conducting the changes? 13.What are the mechanisms and measures that are used to support these changes? 14.What process or plan does Vietíracht need to follow to achieve íuture changes? 59 Appendix Results o f intervievvs o f leadcrs W hat are political issues o f the governm ent in the Vietnam ese m aritim e industry? Chairman o f broad o f directors indicates that Vietnam has a centrally planned economy because the country has opened the Vietnamese economy to íoreign trade partners and tbreign investors since the Vietnamese govemment has committed to enhance economic liberalization and modem ize the Vietnamese economy Moreover, renovation policy o f the Vietnamese government has been more enhanced since the country jointed in WTO in 2007 This has created good conditions for shipping companies to operate business in the country Three deputy director o f V ietữacht indicate that Vietnam is the country that has stable political situation and thus íoreign and domestic shipping companies can feel secure about their business operation’s future in the country The Vietnamese government has a strong interference in running operations of shipping companies, especially state-owned shipping companies Theretore, the shipping companies not try to develop and depend only on the support o f the Vietnamese government when they face business difficulties such as VINASH1N with 100 percent state-owned shipbuilding fírm has been poor financial status, and the company must be restructure all aspects related to business operations, and management issues W hat are current econom ic situations o f Vietnam? Chairman o f broad o f directors indicates that although Vietnam had the economic grovvth in 2013, the quality o f economic grovvth o f the country is evaluated as the unstable grovvth, Moreover, Vietnam íầces many difficulties in terms o f restructuring business activities o f the corporations, state-owned companies, building useful business environment tor companies in Vietnam 60 As a result, there were 61.000 companies that stopped their business activities temporarily in 2013 and the result was the same tìgure in 2012 The Vietnamese economy faces challenges related to its low tlexibility to adapt to market changes and high input costs because o f high level o f import o f materials and equipinent o f building ships Thereíbre, with input costs, Vietnamese shipbuilding companies sell ships to shipping companies with high prices Then, the shipping companies enhance freight rates to compensate for their buying costs and can reduce the competitive ability in the Vietnamese maritime industry, especially in the gloomy business period VVhat are econom ic situations o f Vietnam ỉn the next few years? Chairman o f broad o f directors o f Vietíracht indicates that the business operation in the future period must face inany diffículties Firstly, the global economic crisis is recovering slovvly and its effects on the Vietnamese economy are heavy This has caused heavy losses for shipping corporations in Vietnam in general and Vietfracht in particular Viettracht has to face many heavy difficulties to survive in the fierce industry in Vietnam Secondly, the vvorldvvide marine industry continues to tầll into the imbalance situation o f demand and supply The global economic crisis contributed to a signiíìcant imbalance between demand and supply in the worldwide shipping industry In other words, there are massive developments in a sea transportation íleet while there is only a low increase in needs o f transportations Vietíracht will continue to focus on services include sea transport, shipping agency, chartering and ship-broking, forwarding and logistics, real estate services, trucking and warehousing in the future In terms o f sea transport business operation, the 2014 year and the next years will still be gloomy and thus Vietfracht must face diffículties in management and exploitation o f the fleet W hat is the level o f technological capability in the Vietnam ese maritim e industry? Chairman o f broad o f directors indicates that Research and Development (R&D) in the global maritime industry in general and the Vietnamese 61 maritime industry in particular alvvays must be enhanced However, Vietnam’s R&D in the maritime industry is low and thus shipping companies otten prefer ships designed in íbreign countries The maritime industry in Vietnam has tầst speed o f technology transíer to meet changing demands o f customers This can cause many challenges for shipbuilding companies and shipping companies in Vietnam VVhat is labor íorces’ capability in the Vietnaniese maritime industry? Chairman o f broad o f directors indicates that the Vietnamese maritime industry has labor forces that lack practical skills and independent thinking Moreover, leaders o f shipping companies lack o f management expertise Therefore, the Vietnam needs to strengthen training programs related to practical issues for employees to enhance practical skills o f the employees VVhat are strengths and vveaknesses of Vietíracht? Chairman o f broad o f directors indicate strengths o f V ietíracht as íollovvs: Fiistly, Vietiracht is a Corporation that has traditional business related to maritime filed and its brand name is famous in marine and logistics fields in hoth domestic markets and international markets Secondly, the Corporation has established a wide netvvork o f activities and Container warehouses systern in some main ports o f Vietnam Moreover, Viettracht has built strong cooperative relationships lots o f its domestic and intemational shipping lines, forwarders and partners Thirdly, the Corporation has qưaliíied employees including officers and crew who have high professional expertise and high dedication to the Corporation The employees are invaluable assets and are main strengths o f the Corporation because they are vvilling to contribute their capability to achieve business objectives o f the Corporation Lastly, in addition to sea transport business, Vietíracht expands its business operations in some other services such as Container vvarehousing, freight 62 forwarding, marine services, etc The business services have been prìtable in the difficult economic period and the business services can compensate for business losses in sea transport business and maintain growth o f the Corporation Three deputy director of Vietíracht indicate VVeaknesses of Vietfracht as follows: Firstly, Vietíracht is a joint stock company but the Vietnamese govemment holds dominant shares with 51 percent o f share Capital Moreover, because o f the perennial business operation related to subsidy, the corporation’s structure has some inadequacies, and mechanism o f action and mechanism of finance are diíììcult and inílexible Secondly, although the Corporation has qualitìed employees who meet the job requirements, qualiĩied labor íòrces are not numerous Therore, the vvhole lab or íorces’ capability o f the C orporation staíTs capacity is uneven There are some employees who are limited in some sides and working spirits o f some employees in some places are not really dynamic and afraid to change in ways that are using to complete their works Lastly, the Corporation has no key and strong products because the sea tleet operation is considered as traditional business and the backbone o f the Corporation but it is still not stro n g a n d eíTicient eno ug h Moreover, the focus o f the Corporation is only on bulk cargos and is not linked to other business segments o f the Corporation W hat opportunities and threats o f Vietíracht? Three deputy director o f V ietíracht indicate O pportunities of V ietĩracht as follows: Pirstly, Vietnam has become one o f the official members o f WTO and TPP This has attracted the big inflow o f Foreign Direct Investment (FDI) With the big inf!ow o f FDI and intemational labor distribution, demands for cargo transports and trades o f people have strongly increased in both domestic and international markets 63 Secondly, the Corporation has available customers system around the w orld, and lots o f its customers want to co-operate vvith Vietfracht to expand business markct in Vietnam Lastly, the Vietnamese government and Ministry oíT ran sp o rt have decided to s u sp e n d licenses for íbreig n flag Container v essels sh ip p in g on dom estic routes This policy’s purpose is to promote the development o f Vietnamese Container shipping tleet, and proactively meet the needs o f Container transportation on domestic routes In other words, this policy supports and protects Vietnamese shipping companies so that they can maintain and enhance their growth o f business operations in the difficult economic condition Due to the policy, Vietíracht can have the ability to compete with international shipping companies in Vietnam and maintain its grovvth of business operations in the future Three deputy director of Vietíracht indicate Threats of Vietíracht as follows: Firstly, althoưgh the global economic crisis has a recovery sign, the recovery is very slowly Thereíore, the global maritime market in general and in Vietnam in particular is forecasted to be gloomy in the next few years This can cause business losses for Vietfracht Secondly, worldwide marine industry still continues to have the imbalance o f betvveen supply and demand Thirdly, Vietửacht continues to face fierce competitions in the business fields related to maritime transport and logistics Lastly, many traditional customers o f Vietíracht went bankrupt, and stopped operation Therefore, the Corporation loses a large num ber o f customers Some other customers o f the Corporation changed from appointing Vietfracht as general agency into establishing ịoint-venture Company with the Corporation Moreover, some joint-venture partners o f Vietfracht became a 100 percent íoreign Capital company that directly competes with the Corporation 64 W hat does V ietĩracht expect to change in the íuture? Chairman o f broad o f directors o f Vietfracht indicates that strategic objectives o f the Corporation in the íuture are to restructure the shipping tleet, and change the business method o f sea transport from bulk and cargo transport to inland Container transport The strategic objectives expect cut losses o f sea transport business, associate sea transport in the supply chain o f logistics Service o f the Corporation, maintain sustainable business períbrm ance in the global economic crisis However, it is important for leaders o f Vietíracht to suggest strategic solutions in order to achieve strategic objectives in the future The suggested strategic solutions must ensure have many support tbrces and maintain benefits o f all relevant individuals There are tìve strategic solutions for achieving strategic objectives Firstly, Vietfracht maintains and improves business operations o f sea transport sector at present by assigning additional tasks to the divisions or departm ents o f Container agencies in branches and subsidiary companies in order to find out new customers for the com pany's Container fleet Secondly, the Corporation g radually liq uid ates and sells e x is tin g dry carg o vessels o f the Corporation \vith prioritizing old vessels having poor technical condition and weak capability Thirdly, it applies methods o f loan purchase or hire purchase o f vessels in order to form and develop the inland Container transport vessels, and an initial amount o f at least 02 Container ships under 15 years old and 700 THU size and they are built by Japan or Europe The Corporation sets up the inland Container shipping routes w ith vveekly schedules and it must associates vvith Container warehouses system o f the Corporation in Haiphong, Danang, Quynhon and Hochiminh City Fourthly, the Corporation continues to gradually choose human resources with high experience for operation, m anagem ent, Container ship conduction in order to meet com plex jobs for sea transport block and focus much on training and retraining for existing employees to meet vvork requirements Lastly, Vietfracht positively uses the modern application o f information technology and develops Service quality 65 management system to enhance the competitive ability in the maritime industry and meet the increasing requirements o f customers Three deputy directors o f Vietữacht, in terms o f Service prices, Vietfracht will try to avoid increasing Service prices to compensate for input costs such as marketing costs, oil costs, and other business operation costs In addition, new promotion activities o f V ietửacht are to focus on such as advertising in social media like Facebook, and YouTube and advertising in its vvebsites With advertising in social media and vvebsites, Vietfracht can save many costs o f marketing activities compared to traditional marketing activities such as advertising in the press and seminars o f introducing shipping services W hy does V ietĩracht need to conduct the changes? Chairman o f broad o f directors indicates that the global financial crisis and economic dovvntum from 2009 to the present have been evaluated as the worst one since the Great Depression o f the period o f 1929 - 1933 Maritime industry around the world has suffered serious crisis and many large shipping companies have gone bankrupt or needed to have govemment bailout to survive One ot' the main reasons is the imbalance o f demand and supply In the global economic crisis, massive development in a sea transportation tleet while there is only a low increase in needs o f transportation In Vietnam, sea transportation companies have tầced very serious dittìculties and many companies out o f them have gone bankrupt Like see transport corporations, sea transport tleet o f Vietữacht has had prolonged difficulties iníluencing on lives and w orks o f its em ployees and benefits o f its shareholders and its other stakeholders This becomes a motivation for Vietíracht to build the plan for changes in the Corporation in order to im prove and enhance its profitability in the future 10 Do you support or protest the changes? The chairman o f broad o f directors and three deputy directors o f the company indicate that they support the changes The interviewees also indicate that minority shareholders, dominant shareholders on one condition - selling old dry cargo vessels, Broad o f Managers, Board o f Directors, leaders and 66 employees o f all business blocks o f Vietỉracht expect Sea Transport block, and domestic customers support the changes Moreover, the interviewees indicate that there are tnany restraining driving tbrces preventing the future changes o f Vietíracht They are dominant shareholders on one condition selling dry cargo vessels with high residual value, leaders and employees o f Sea Transport Block, banks who provide prior loans tòr purchasing vessels and tbreign customers o f Vietfracht The interview results o f the employees of Vietửacht indicate that employees o f Viettracht working at Sea Transport department block because they are victims of the change and then they must totally change current working ways 11 VVhy you support or protest the changes? The chairman o f broad o f directors and three deputy directors o f the company indicate that shareholders o f Vietfracht are the real bosses or ovvners o f the Corporation and thus their rights and obligations associate with business results o f Vietfracht If the goals o f the tuture changes are to improve business performance, and increase dividends, most o f the minority shareholders will support the changes For the dominant shareholders like the State shareholder, they wi 11 supporl changes that relate to sell old vessels because the vessels have small residual value and Vietfracht wi 11 gain interests from the sale o f the assets Board o f Managers are individuals who represent shareholders and three fifths o f the members o f the Board o f Managers are Representatives o f State Ca p i ta l , so they will also coincide with the view points o f dom inant shareholders Board o f Directors’ main responsibility is to ensure business prìtability, and improve business effíciency Therbre, future changes are suitable to expectations o f the Board o f Directors receive lots o f supports from them However, with three fifths o f the members o f the Board o f Directors vvorking in Sea Transport Block, the issue o f changes is a doubt related to abandoning business operations o f bulk and general cargo sea transport which have been already familiar and establishing business 67 operations related to Container ships called advanced forms o f transport Therefore, the Board o f Directors will still have many issues that need to be updated, supplemented in the operating process Leaders and employees o f all business blocks o f Vietữacht expect Sea Transport Block will surely support future changes, especially leaders and employees in branches and subsidiary companies which have Vietfracht’s vessel calling the ports weekly Domestic customers will surely support future changes but marketing issues related to developing rnore domestic customers will be a big challenge o f Vietíracht The chairman o f broad o f directors and three deputy directors o f the company indicate that dominant shareholders like the State shareholders will not necessarily support or have strong opposition to changes related to sellỉng dry cargo vessels with high residual value because the sale o f assets causes losses Leaders and employees o f Sea Transport Block are the victims o f the change and thus the place will inevitably receive the strongest opposition for the change Thirdly, banks that loan Vietfracht for purchasing vessels will not support future changes because 03 vessels which has not been tìnished debt payment o f the banks The vessels were invested at the period prior to economic crisis with high purchase prices At present, Vietíracht undoubtedly repay the total o f principal bank loans and thus in the tuture banks wi 11 have to study very caretully and provide some attached conditions to Vietíracht Foreign customers o f Vietfracht will not support the future changes The current Vietíracht fleet mainly operates on international routes and thus if the tleet o f the Corporation only operates inland, Vietfracht will deĩinitely lose the relationship vvith this íoreign customer base 12 VVhat the capacity and w illingness of V ietfracht’s leaders in conducting the changes? Three deputy directors o f Vietữacht indicate that Vietữacht has the traditional solidarity o f overcoming difficulties and thus the Corporation considers employees and leaders’ supports for tuture change as the most important 68 element o f the changes In other vvords, actors involved in íuture changes are the vvhole leaders and employees o f Vietíracht VietíVacht has lots o f capability and competences to create competitive advantages to maintain and develop its grovvth o f husiness operation in the severely difficult economic period Viettracht is a Corporation vvith lo n g history o f business in the Vietnamese maritime industry and thus its brand name is íầmous in both domestic and intemational market in marine and logistics íields When customers in Vietnam have demands o f shipping goods, they often choose shipping services o f V ietíracht because the Corporation has high position in custom ers’ minds The Corporation has built a good brand image in thoughts oí' customers through provide quick and exact shipping services and other services, tbcusing on providing services that meet all demands o f customers, pay much attention to customer values, and handling customers’ problems related to shipping issues o f their cargos quickly 13 w hat are the mechanisms and m easures that are used to su p p o rt these changes? Three deputy directors o f Vietíracht indicate tliat the mechanisms and measures that are used to support these changes are as follows: Tim e: I he Vietnamese maritime industry is engulíìng in the global economic crisis and it is predicted that the gloomy Vietnamese maritime industry will continue to prolong in at least the next tvvo years Theretbre, changes needs to start right now through liquidation or sale o f dry cargo old vessels with poor technical condition to promptly cut losses o f Sea Transport Block o f the Corporation Scope: The changes are mainly conducted in Sea Transport Block o f the Corporation Hovvever, the Sea Transport Block wi 11 need have the cooperation with all other rem aining business blocks o f the Corporation to enhance the effectiveness o f the changes and the business efíìciency im provem ent o f the vvhole Corporation 69 Preservation: young dry cargo vessels with good technical condition need to be maintained in order to continue the work o f operation Diversity: Vietfracht conducts the changes one condition: the changes ensure that various em ployees and divisions vvithin the Corporation are hom ogeneous in terms o f positive attitudes tovvards the changes, and positive supports for the changes C apability: The team o f operators, ship managers, and crew members will be available to conduct the changes The Corporation will conduct training o f new employees and nevv managers, and retraining o f existing employees and m anagers vvhile w aiting for investing in Container ships C apacity: Timely liquidation o f old dry cargo vessels will transfer from the tìxed assets to liquid assets (cash) The cash amount o f selling the old dry cargo vessels is not used to compensate for business losses but is used to invest in Container vessels and upgrade present Container warehouse systems R eadiness for change: Business tleets are not effective and less involved in the business logistics chain that the Corporation is developing Moreover, business íleets are focusing more resources that have become the burden o f the vvhole husiness system Pow er: This is a maịor issue that iníluences on all business units in the vvhole system o f the Corporation Thereíore, it is necessary to ensure full implementation o f legal procedures The Board o f Directors íìrst needs to set up the plan for change vvith the participation o f Sea Transport Block and other business units in the vvhole system and then it is necessary to report to the Board o f Managers and Shareholders General Meeting for approval to the plan for change 14 What process does Vietíracht need to follow to achieve íuture changes? Chairman o f broad o f directors o f Vietíracht indicates that the process o f the change is divided into four stages having necessary works The first stage is to make a compelling case for the changes The second stage is to inspire the signitìcant o f the new and shared Vision The third stage is to lead to the transition in the changes The last stage is to implant in the changes ... Vietfracht s board o f directors, managers and staffs, the companies, organizations and individuals that assisted me in collecting datas and documents for researching and vvriting the thesis Finally,... íùture changes? 1.3 Research data and methods The research uses both secondary data and primary data to ansvver research questions Secondary data is the data available tơ the researcher because... vessels that call at all ports in Vietnam and its range o f services covers all aspects including inward and outvvard clearance, stevedoring, crewing, and cargo handling (Vietíracht, 2014c) In terms