Building the strategy for property business of industrial construction joint stock company (ICJC) duration 2018 – 2022

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - TRẦN QUANG HIỂN BUILDING THE STRATEGY FOR PROPERTY BUSINESS OF INDUSTRIAL CONSTRUCTION JOINT-STOCK COMPANY (ICJC) DURATION 2018 – 2022 XÂY DỰNG CHIẾN LƯỢC KINH DOANH BẤT ĐỘNG SẢN CHO CÔNG TY CỔ PHẦN XÂY DỰNG CÔNG NGHIỆP GIAI ĐOẠN 2018 ĐẾN 2022 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2018 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - TRẦN QUANG HIỂN BUILDING THE STRATEGY FOR PROPERTY BUSINESS OF INDUSTRIAL CONSTRUCTION JOINT-STOCK COMPANY (ICJC) DURATION 2018 – 2022 XÂY DỰNG CHIẾN LƯỢC KINH DOANH BẤT ĐỘNG SẢN CHO CÔNG TY CỔ PHẦN XÂY DỰNG CÔNG NGHIỆP GIAI ĐOẠN 2018 ĐẾN 2022 Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS HỒNG ĐÌNH PHI Hà Nội - 2018 DECLARATION The author confirms that the research outcome in the thesis is the result of author‟s independent work during study and research periodunder the instruction of Assoc Prof Dr Hoang Dinh Phi and it is not yet published in other‟s research and article The other‟s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration Student Tran Quang Hien ACKNOWLEDGEMENT I would like to thank all my dedicatedlecturers and the members of the School of Business & Management – Vietnam National University, Hanoi for helping and providing me with particularly helpful scientific knowledge and practical business lessons Your insights and guidance areindeed a valuable source of support for my current business and my life I sincerely thank Assoc Prof Dr Hoang Dinh Phi – Head of Hanoi School of Business & Management – Vietnam National University, Hanoi Assoc Prof DrHoang Dinh Phi has spent considerable time and effort assisting me to complete my Thesis to meet academic standards You have been truly inspirational and haveignited my passion for researching and finishing this Thesis I sincerely thank the Management Board and all the Staff of Industrial Construction Joint-Stock Company-ICJC for helping me during the process of and providing me with an abundance of crucial information and references to fulfill my Thesis Thank you and Best regards! Student Tran Quang Hien TABLE OF CONTENTS TABLE OF CONTENTS ABBREVIATION i LIST OF TABLES ii LIST OF FIGURES iii INTRODUCTION CHAPTER 1: FUNDAMENTAL THEORY OF BUSINESS STRATEGIC PLAN 1.1 Fundamental concept of strategy and real-estate business strategic plan 1.1.1 Concept of strategy 1.1.2 Concept of real-estate and real-estate business strategy 1.2 Role of strategy 11 1.3 Category of strategy 12 1.3.1 Strategy of management classification grade 12 1.3.2 Classification of strategies regarding functions 13 1.4 Strategy building process 16 1.4.1 Strategic management process and model 16 CHAPTER ANALYZE THE CONDITIONS FOR BUILDING A REAL ESTATE BUSINESS STRATEGY FOR INDUSTRIAL CONSTRUCTION JOINT STOCK COMPANY – THE PERIOD 2018-2022 33 2.1 Overview of Industrial Construction Joint Stock Company-ICJC 33 2.2 Propose and analyze the real estate business strategy of Industrial Construction Joint Stock Company - the period: 2018 - 2022 39 2.2.1 Vision - Mission and development orientation for ICJC 39 2.2.2 Macro-environment analysis 40 2.2.3 Micro-environment analysis (business line environment) 49 2.2.4 Internal Business Analysis 63 2.2.5 The Company‟s competence assessment 72 2.2.6 Matrix for evaluating the internal factors of the company (IFE matrix) 74 2.2.7 Analysis of SWOT matrix 76 CHAPTER 3: STRATEGY PROPOSE, ANALYZE PROPOSE STRATEGY, SELECT STRATEGY AND SOLUTIONS FOR IMPLEMENTING THE BUSINESS STRATEGY 80 3.1 Strategy proposal 80 3.1.1 Strategy groups SO 80 3.1.2 Strategy groups WO: 83 3.1.3 Strategy groups ST: 84 3.1.4 Strategy groups WT: 86 3.2 Analysis of the proposed business strategies for Industrial Construction Joint Stock Company 87 3.2.1 Strategy groups(S,O ) 87 3.2.2 Strategy group ( W,O ) 91 3.2.3 Strategy group ( S, T ) 96 3.2.4 Strategy group ( W, T ) 98 3.3 Select a real estate business strategy for ICJC –the period: 2018 - 2022 99 3.4 Proposal of solutions to implement real estate business strategy of Industrial Construction Joint-stock Company: the period 2018 – 2022 100 3.4.1 Vision for implementing the business strategy of Industrial Construction Joint-stock Company: the period 2018 – 2022 100 3.4.2 Objectives for implementing the business strategy of Industrial Construction Joint-stock Company: the period 2018 – 2022 101 3.4.3 Solutions for achieving business strategies 102 3.4.4 Strengthen management in strategy implementation 107 3.4.5 Createa cultural environment that supports the implementation of strategy 108 3.5 Recommendation 108 3.6 Limitations of the thesis 111 CONCLUSION 112 REFERENCES 114 Appendix ABBREVIATION HĐND: Hanoi Municipal People‟s Council HPC: Hanoi Municipal People‟s Committee TQM: Total Quality Management ICJC: Industrial Construction Joint-Stock Company BOD: Board Of Directors i LIST OF TABLES Table 2.1: Matrix for evaluating the impact of external factors on the company 48 Table 2.2: Equipment capacity of the Company 66 Table 2.3: SWOT MATRIX 79 Table 3.1: Strategy groups SO; WO; ST; WT 86 ii LIST OF FIGURES Figure1.1: Model of classification of strategies for an organization 13 Figure 1.2: Strategic management model 17 Figure 1.3: External environmental factors 19 Figure 1.4: External Factor Matrix (EFE) 22 Figure 1.5: Five forces model of Michael Porter 23 Figure 1.6 Internal Factor Evaluation Matrix ( IFE ) 26 Figure 1.7: M.Porter‟s Value Chain Model 27 Figure 1.8: SWOT matrix 30 Figure 1.9: Table of optional strategies SO, WO, ST, WT 31 Figure: 2.1 Organization chart 35 Figure 2.3: M.Porter‟s Value Chain Model 63 Figure 2.3: The implementation of real estate project 71 Figure 2.6: Matrix for evaluating the internal factors (IFE matrix) 75 iii reducing processing time compared to previous forms of processing As a result, the decisions made are more solid and realistic 3.4.3.4 Marketing solution Companies need to pay more attention to marketing activities to exploit projects and sales, maintain and develop markets, customers Establish a marketing department to carry out product promotion and market development The marketing department must coordinate the Tire Research Project, the needs of customers to produce the appropriate property Having good customer research can generate huge profits and accelerate sales, capital recovery The successful implementation of the marketing department will make the company more proactive in sales, not dependent on the real estate intermediaries On the other hand, good customer care will create the psychological comfort for customers, minimize complaints, and increase the brand of the company Focus on care services, especially after-sales service, set up tracking cards, customer information, support necessary procedures for customers such as repair, warranty, support procedures for applying for land use right certificate and ownership Periodically survey the level of satisfaction of customers with the products and services provided by the company Timely respond to the complaints and inquiries of customers, to meet the needs of customers, as doing this work well will help enhance the brand of the company Strengthen social media activities to build a good image for the Company in existing and potential markets 3.4.3.5 Solutions on branding Nowadays brand value is very important to the survival and development of the business Industrial Construction Joint Stock Company has 57 years of establishment and development, has got prestige and brand in the capital‟s construction market However, the brand name of the Company in the country‟s market has not been known to many customers Since the Company has been turned into a joint-stock company until now, the board of directors has had a vision and orientation to develop the ICC brand into a strong brand that many customers 106 know In recent years, the company has developed the brand in the provinces and cities of the country in the form of bidding, and joint ventures with other companies in the provincesdeveloped the brand through website www.xdcn.com.vn,implemented PR programs to promote the image of the Company However, in the context of international economic integration, the abovementioned tasks are not enough, with the rapid development of the market as well as the quality and quantity of companies participating in the market The company needs to have specific solutions in order to build a brand to develop in the country - Build the ICC brand name in the real estate market by ensuring the best quality for real estate business products implemented by the company Carry out thoughtful marketing strategies best meet customers‟ demand Apply technology to quickly complete the project implementation, hand over products on time under signed contracts, create favorable conditions for customers to complete the interior based on the needs of each customer - Regularly update the interface and new information, corporate image, company activities on the website This work will be undertaken by the marketing department through the synthesis and writing of specialized departments -Regularly participate in social activities to build images with the social community - Build relationships with the city's authorities, and the press to timely resolve the feedback, perception, fabrications, distortions about the company 3.4.4 Strengthen management in strategy implementation In the process of implementing the business strategy, the appearance of changes is an indispensable objective It is not easy to change a custom, a habit, a way of thinking, a way of doing things, even if that change creates a positive motive, positive tendencies for action Most changes in production technology, people, organizational structure or strategy, have the power to intervene in familiar patterns In order to better manage the changes, the Industrial Construction Joint Stock Company should the following: - Make forecasts of reactions and levels of response that may occur when making changes 107 - Make workers understand and empathize with changes to minimize potential objections - Establish a new status to make the strategy implementation process proceed normally even when there are major changes - Hold meetings where all people involved in the change process express their views, aspirations, and interests related to the change - Keep people informed so people understand the purpose and nature of the change - Give detailed information on change and receive feedback to resolve problems 3.4.5 Createa cultural environment that supports the implementation of strategy Strategies are usually set up based on existing cultural backgrounds The current cultural aspects that not fit the proposed strategy must be redefined and changed accordingly Recent studies have confirmed that cultural change that fits into the new strategy is often more effective with changing the strategy in line with the current culture Changing the cultural environment consists of building cultural standards, training, and application of incentives - Identify appropriate cultural elements and sub-elements in the enterprise through meetings with individuals and groups Discuss and review until there is a central principle agreement in the cultural environment - Organize reporting and learning activities about the aspects of corporate culture such as issues of duties, powers, working style, working relationships of managers and employees - Identify the importance of cultural products and their relevance to the intended strategies as a basis for assessing the risks that corporate culture may have - Identify cultural factors of special importance for the implementation and evaluation of strategies Forecast cultural changes that are appropriate with strategic changes 3.5 Recommendation Currently, companies operating in the field of real estate business are facing 108 many difficulties in the process of production and business due to the lack of synchronization of the legal system related to the real estate market From the construction investment, real estate transactions to the management of real estate use, there are provisions in various documents that are overlapping, many regulations not keep up with the development of the field as well as the fact that many problems arise but are slowly studied, amended, supplemented and perfected In order to develop the industrial joint stock company in an active, open and sustainable manner, the author makes a number of recommendations Recommendations to the Government and local authorities: Further simplification of procedures, records from the start of the project to the acceptance of completed works put into use The process is too complicated for procedural documents that sometimes takes a lot of time, sometimes years, during the implementation of the project, not only causes trouble for the Company,in terms of expense but alsonegatively affects the quality and progress of the project Consolidate the laws, the Law on Real Estate Business, the Housing Law, the Investment Law, the Land Law, the Construction Law as a stable and solid basis, and increase the safety of companies operating in Real estate business Adopt appropriate inflation control policies to avoid the continuous price increase of construction materials in order to reduce the damage to companies in the industry and anxiety to investors when deciding to build a construction With imported materials, there should be a tax reduction policy and a stable exchange rate to make the materials more affordable, so that customers can increase their choice of goods at an affordable price Provisions on the land use levy of the project should be based on the progress of capital collection of the investor instead of a lump sum after the current determination of unit price Change the method of calculating land use levies by the present method as there are many inadequacies in determining the revenue and cost of the project Propose not to collect land rent to build roads, infrastructure of condominium projects, create conditions for real estate businesses to invest 109 Suggest the Government issue specific regulations and support enterprises in renovating and building old apartment buildings Thegovernment shall adopt policies to create conditions for social housing development in order to step by step improve houses for social policy beneficiaries, civil servants, armed forces and low-income people, contributing to Political stability, social security Create legal corridors and conditions for real estate transactions to be facilitated, publicized and transparent in the real estate market Enhance the management and control of the real estate market, the State shall manage the real estate market by means of legal instruments The State actively regulates the real estate market as a representative of land owners, regulate the supply of primary land use rights in the market and the flexible use of tax and fiscal policies Strengthen the State management role in the efficient exploitation and use of land resources The State proactively regulates the supply of real estate through sectorial development planning, urban planning and planning, especially controlling the supply of land to the primary market through the allocation of land, leasing land, changing land use purposes Restructure the real estate market, develop multiform of real estate goods, especially residential real estate properties, including apartment houses, individual houses; commercial housing, social housing; housing for sale, housing for lease, affordable housing for different groups in the society, overcome the situation of supply – demand mismatch in housing development The State shall actively provide and adopt preferential policies and encourage all economic sectors to participate in the development of social houses for social beneficiaries develop and create conditions for financial institutions, such as real estate investment funds, real estate trusts, housing savings funds, to develop and attract capital to the real estate market Flexibly adjust the credit and fiscal policies to facilitate medium and longterm capital for market participants, help businesses and citizens, especially for social beneficiaries, low income people have access to credit for the purpose of housing improvement improve policies on taxes, fees and charges related to real 110 estate to encourage the efficient use of real estate properties, reduce speculation and tax evasion as well as increase revenue for the Country Buildan information system for the real estate market as a basis for effective policy and market management 3.6 Limitations of the thesis Due to time limit, the author's thesis will be inevitably limited The business field of Industrial Construction Joint Stock Company are diversified, when discussing the scope of research to select the business strategy, the author concentrates only on real estate business research of Industrial Construction Joint Stock Company from 2018 to 2022 Therefore, the thesis lacks thecompletenessof the overall business strategy of the company - Due to time limit, the data collection for reference and analysis in the thesis is notsufficient and varied - The conclusions on the selection of real estate business strategies from 2018 to 2022 were researched based on both business theory and practice of the company The author needs to more reaearch on building the real estate business strategies for the upcoming years 111 CONCLUSION Over the past 57 years of establishment and development, Industrial Construction Joint Stock Company has got the brand products in the market and developedinto a strong business in the field of real estate, and construction However, as other enterprises are operating in the territory of Vietnam, the Company has encountered difficulties and challenges with the lack of long-term strategic thinking which causes the enterprise to risk losing imbalance in the process of development, andpassively react to changes in the market In order to bring into full play all its strengths as well as overcome all the difficulties and minimize the weaknesses and challenges, it is the sum of many factors, but the key element throughout the process is the formation of Appropriate business strategies which are the guidelines for all the activities of the business in the right direction to bring the highest business efficiency to the Company Regarding building a real estate business strategy for Industrial Construction Joint Stock Company, the thesis has analyzed and assessed in detail the business environment, the real estate market, the production and business operation of ICJC.With the desire that based on the theories learned , the application of theories of competition, models of competitive strategy development, models of external environmental analysis, analysis of the internal environment of enterprises and EFE, IFE, SWOT matrices, the thesis has built real estate business strategies for Industrial Construction Joint Stock Company from 2018 to 2022: - Strategy to enter the real estate market for low income consumers - Strategy for further development and expansion of the commercial housing market - Strategy for technological innovation, and investment in appropriate equipment - Strategy for joint venture, association, brand development Because the real estate business environment is always changing and cyclical, the strategies and solutions to implement the strategy should be selected with the actual situation of the Industrial Construction Joint Stock Company 112 The thesis of "Built a real estate business strategy for Industrial Construction Joint Stock Company from 2018 to 2022" is necessary to help the Board of Directors of ICJC get a comprehensive overview, and accurate thinking in the construction and selection of appropriate business strategies as well as offer solutions to implement that strategy, enhance the competitiveness of the Industrial Construction Joint Stock Company, build the brand, make the company grow in the market of real estate business and construction of the country 113 REFERENCES Lecture notes: Strategic management and plan: Assoc Prof Dr Hoang Dinh Phi Le Van Tam (2000), Strategic Management Textbook; Statistical publisher Hoang Van Hai; Strategic Management Textbook; Vietnam National University Hanoipublisher Phan Thi Ngoc Thuan (2005), Business Strategy and Internal Business Plan, Science and Technology Publisher Charrles W.L.Hill and Gareth R Jones (1995), Strategic Management; Fred R.David (2000), Concept of Strategic Management; Statistical publisher Garr D Smith, Danny Putti (1996), Strategy and Business Strategy, National Political publisher Philip Kotler (1997), Marketing Management; Statistical publisher Dao Duy Huan (2007), Strategic Management in Economic Globalization; Statistical publisher 10 Garry D Smith, Danny R Arnol, Bobby G.Bizzell (1997), Strategies and Business Strategies; Statistical publisher 11 All figures and information are based on reports and statistics of the Company; as well as based on all references, newspapers, statistical data of the Ministry of Planning and Investment, the Ministry of Natural Resources and Environment, and the office of Hanoi People‟s Committee 114 Appendix 01: Survey form SURVEY FORM For the purpose of reference of your opinion, who are the Leaders, Key persons of Industrial Construction joint stock company, and to complete a Master thesis on “Creating the Real estate strategic business plan for Industrial Construction JointStock Company (ICJC) – Period: 2018 – 2022” I would like to send you this survey form I look forward to your ideas Your faithfully Name :…………………………………………………………………………… Positions :………………………………………………………………………… Unit: …………………………………………………………………………… Please fill in table below Question1: Based on your opinion, what are the external elements related to Real – estate business of ICJC ? Elements Points Competitors are strong Housing demand is increasing sharply Human resources supply is plenty and cheap Building materials are available Technician execution Payback speed 7.Prices fluctuate, difficult to control, dependent on suppliers The business environment of the economy Stable political environment Total 100 115 SURVEY FORM For the purpose of reference of your opinion, who are the Leaders, Key persons of Industrial Construction joint stock company, andto complete a Master thesison “Creating the Real estate strategic business plan for Industrial Construction JointStock Company (ICJC) – Period: 2018 – 2022” I would like to send you this survey form I look foward forwardto your ideas Your faithfully Name: ………………………………………………………………………… Positions :…………………………………………………………………………… Unit :………………………………………………………………………… Please fill in table below question2: Based on Your opinion, which are the external elements that willaffectthe real- estate business of the company? Elements Strong Competitors are strong Housing demand is increasing sharply Human resources supply is plenty and cheap Building materials are available Technician execution Payback speed 7.Prices fluctuate, difficult to control, dependent on suppliers The business environment of the economy Stable political environment 116 Above avarage Avarage Few SURVEY FORM For the purpose of reference of your opinion, who are the Leaders, Key persons of Industrial Construction joint stock company, and to complete a Master thesis on “Creating the Real estate strategic business plan for Industrial Construction JointStock Company (ICJC) – Period: 2018 – 2022” I would like to send you this survey form I look foward forward to your ideas Your faithfully Name:……………………………………………………………………………… Positions:…………………………………………………………………………… Unit:……………………………………………………………………………… Please fill in table below question3: Based on your opinion, what are the internal elements shown in table below will affect the Real – estate business (Please allocate 100 points in all the elements) Elements Point The leadship are enthusiastic and have stratergic vision, have good relations with authorities There area great number of projects and grounds to implement Experienced in implementing investment projects In good relationship with banks and credit agencies Ability for constrution Ability of Equipment for construction Brand of Company Management at departmental level is not systematic Financial ability to carry out investment projects 10 Time to carry out projects affects profit and oppotunity 11 The number of workers is low and dependent onseasonal workers 12 Payback speed 13 Efficiency in using fund and equipment Total 100 117 SURVEY FORM For the purpose of reference of your opinion, who are the Leaders, Key persons of Industrial Construction joint stock company, and to complete a Master thesis on “Creating the Real estate strategic business plan for Industrial Construction JointStock Company (ICJC) – Period: 2018 – 2022” I would like to send you this survey form I look foward forward to your ideas Your faithfully Name:……………………………………………………………………………… Positions:…………………………………………………………………………… Unit:……………………………………………………………………………… Please fill in table below question 4: What you thinks about the internal elements shown in list below will impact to real-estate business plan for Industrial Construction Joint-Stock Companyand How Element Strong The leadship are enthusiastic and have stratergic vision, have good relations with authorities There area great number of projects and grounds to implement Experienced in implementing investment projects In good relationship with banks and credit agencies Ability for constrution Ability of Equipment for construction Brand of Company Management at departmental level is not systematic Financial ability to carry out investment projects 10 Time to carry out projects affects profit and oppotunity 11 The number of workers is low and dependent onseasonal workers 12 Payback speed 13 Efficiency in using fund and equipment 118 Above Avarage avarage Few Addendum2: General investigate result Table 1: General assessments important level and environment internal impact Assessment votes Impotarn Impact to company level total votes Total Internal elemen Averag Strong Abov Ave Few Total Averag e point e rage Point e point ( (Excha Avera Exchan nge) age ge) Assessm ent point The leadship are enthusiastic and have stratergic vision, have good 10 0.1 10 0 40 0.4 10 0.1 27 0.3 10 0.1 30 0.3 0.05 29 0.15 0.08 0 36 0.32 0.07 27 0.21 0.07 28 0.21 0.05 22 0.1 0.05 28 0.15 0.07 0 34 0.21 0.08 23 0.16 0.08 28 0.24 10 0.1 0 14 0.1 0.1 relations with authorities There area great number of projects and grounds to implement Experienced in implementing investment projects In good relationship with banks and credit agencies Ability for constrution Ability of Equipment for construction Brand of Company Management at departmental level is not systematic Financial ability to carry out investment projects 10 Time to carry out projects affects profit and oppotunity 11 The number of workers is low and dependent onseasonal workers 12 Payback speed 13 Efficiency in using fund and equipment 119 Table 2:General assessments important level and environment external impacts Impact to Organization Important level Asses Total votes Assessments votes Av ge e era e point point avera ge (excha Avera ( media Strong few sment Abov Total Total ge n Averag s point nge) value) External elements Competitors are strong 10 0,1 21 0,2 25 0,25 0 34 0,75 10 0,1 0 19 0,2 0,05 21 0,1 Technician execution 0,05 27 0,15 Payback speed 20 0,2 29 0,6 10 0,1 31 0,3 10 0,1 21 0,2 0,05 21 0,1 Housing demand is increasing sharply Human resources supply is plenty and cheap Building materials are available 7.Prices fluctuate, difficult to control, dependent on suppliers The business environment of the economy Stable political environment 120 ... THE CONDITIONS FOR BUILDING A REAL ESTATE BUSINESS STRATEGY FOR INDUSTRIAL CONSTRUCTION JOINT STOCK COMPANY – THE PERIOD 2018- 2022 33 2.1 Overview of Industrial Construction Joint Stock Company- ICJC... Vision for implementing the business strategy of Industrial Construction Joint- stock Company: the period 2018 – 2022 100 3.4.2 Objectives for implementing the business strategy of Industrial Construction. .. business strategy for ICJC the period: 2018 - 2022 99 3.4 Proposal of solutions to implement real estate business strategy of Industrial Construction Joint- stock Company: the period 2018 – 2022