LUẬN văn ĐỊNH DẠNG CHIẾN lược KINH DOANH CÔNG TY cổ PHẦN VIGRACẺA ĐÔNG CHIỀU

LUẬN VĂN THẠC SĨ ĐỊNH DẠNG CHIẾN LƯỢC KINH DOANH CÔNG TY CỔ PHẦN VIGRACẺA ĐÔNG CHIỀU FORMULATION OF THE BUSINESS STRATEGY FOR VIGLACERA DONG TRIEU JOINT – STOCK COMPANY IN THE PERIOD OF 2010 - 2020 ACKNOWLEDGEMENTS First of all, the Group No.8-Class GaMBA01.x01 would like to express our sincere thanks for the Master of Business Administration Program, the Affiliate Programs between Griggs University, USA and Center for Education Technology and Career Development, Vietnam University Hanoi for organize MBA course in Vietnam and facilitating our Capstone Project Report Secondly, we would like to express our sincere thanks to VIGLACERA DONG TRIEU JOINT – STOCK COMPANY management and staffs who have fully supported our team in providing valuable input information for this Capstone Project Report Although our group has tried our best to perform this Capstone Project Report within our capacities but it definitely will have unavoidable deficiencies We are thus ` hope that we will continuously receive more valuable comments from all of you to complete this report and make it be really useful for both of the Group and the Company Once again, thank you very much! Hanoi, July, 2010 The Group No.8-Class GaMBA01.X01 ` CONTENT Order 1.1 1.1.1 1.1.2 1.1.3 1.2 1.2.1 1.2.2 1.2.2.1 1.2.2.2 1.2.3 1.2.3.1 1.2.3.2 1.2.3.3 1.2.3.4 1.2.3.5 1.2.4 1.2.4.1 1.2.4.2 2.1 2.1.1 2.1.2 2.1.3 2.2 ` Content Introduction The necessity of the research The purpose of the research The subject of the research The methodology of the research The structure of the capstone project report Chapter I: Theoretical Background on Strategy Page 7 8 10 Formulation Concepts Concept of business strategy Role of business strategy Types of business strategy The process of business strategy formulation Mission and objectives of the enterprise Analysis and assessment of the external environment Macro Environment Micro Environment Analysis and assessment of the internal environment Human resources Financial capability Production and operations Marketing activities Management activities Strategic Analysis Tools SWOT Matrix IE Matrix Chapter II : Analysis of the reality of the business 10 10 11 12 13 13 13 14 16 20 20 21 21 21 22 23 23 24 environment of Viglacera Dong Trieu Joint stock 26 company Brief Introduction of the company History of establishment and development Name, location and address of the company Fields of business Analysis of the external environment 26 26 27 27 28 2.2.1 2.2.1.1 a b c d 2.2.1.2 a b c d g f 2.2.2 2.2.2.1 2.2.2.2 2.2.2.3 2.2.2.4 2.2.2.5 2.2.2.6 2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.3.4.1 2.3.4.2 2.3.5 2.3.5.1 2.3.5.2 Macro Environment Economic Environment Economic Growth rate Inflation rate Exchange rates and banks’ lending interest rates Salary and income Social-cultural Environment Population Culture Political and Legal Environment Technological-scientific Environment Natural Factors Global environment and integration Micro Environment Analysis of market and customer conditions Analysis of Suppliers conditions Analysis of potential competitors Analysis of the intensity of rivalry in the industry Analysis of substitute products Matrix to evaluate the external environment Analysis of the Internal Environment Financial Capability Human Resources Marketing Activities Production and Operation Scale of technological lines and capacity of factories Product quality Evaluation of management activities Organizational Structure The system of planning, implementation and supervision, control 2.3.5.3 Qualification and expertise of the company’s leadership 2.3.6 Matrix to evaluate the internal factors of the company Chapter III: Selection of business strategies for 3.1 3.2 3.3 ` Viglacera Dong Trieu in the period of 2010-2020 Orientation for Development Specific Objectives Selection of business strategies for Viglacera Dong 28 29 29 30 31 32 33 33 34 35 37 38 39 39 39 41 42 43 49 49 51 51 58 59 61 61 62 62 62 64 66 67 70 70 70 71 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.3.6 3.3.7 3.4 3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 3.5 3.6 3.7 Trieu in the period of 2010-2020 Differentiation Strategy Market Development Strategies Product Development Strategies Competitiveness Enhancement Strategies Joint-venture, Alliance Strategies Business Diversification Strategies Selection of Business Strategies Solutions Solutions on human resources Solutions on Investment Solutions on Finance Solutions on Production Solutions on Marketing Organization and implementation of the selected strategies Some risks may be faced in the implementation of the selected strategies and specific solutions Recommendations Conclusion Referrence 74 74 75 75 75 76 76 77 78 78 79 79 79 80 89 90 91 92 LIST OF TABLES TABLES ` Page Table I.1 : Competitive Profile Matrix Table II.1:Competitor’s capability Table II.2: Competitor's performance comparison year of 2009 Table II.3: Competitor;s revenue comparison Table II.4:Comparison between Gieng Day JSC and Dong trieu JSC Table II.5: Compatitive profile matrix between Gieng Day and Dong trieu Table II.6: External Factor Evaluation Matrix (EFE Matrix) Table II.7: Ballance sheet 2008-2009-2010 Q1 Table II.8:Income statement year 2008-2009 Table II.9: Key financial indicators 2008-2009 Table II.10: Internal Factor Evaluation Matrix (IFE Matrix) Table III.1 SWOT matrix and strategy formation Table III.2: Quantitative evaluation for strategies Table III.2: Quantitative evaluation for strategies FIGURES Figure I.1: The model of five forces of competition Figure I.2: Effect from External environment to competition Figure I.3: Process of building EFE matrix Figure I.4: Process of building IFE matrix Figure I.5: SWOT Matix Figure I.6: IE matrix Figure II.1: Dong trieu Vigracera 's Product distribution system Figure II.2: The organizational structure of Dong Trieu Viglacera Figure III.3: Time schedule of strategies implementation Figure III.4: The company’s future organization model ` 16 41 44 45 47 48 49 52 55 56 68 72 76 78 Page 15 18 19 21 22 23 59 64 69 81 88 PREFACE The necessity of the research project Nowadays, the trend of globalization with the strong development of science and technology has been followed by the increasing scarcity of resources The business environment of enterprises is subject to heavy influence of domestic and international economic, political, cultural, social developments Since Vietnam’s entry in the World Trade Organization (WTO), Vietnam’s enterprises have been facing new opportunities to build and develop their own businesses to a new level on the international playing field However, Vietnam’s enterprises have been also coping with new challenges They have to face with fierce competition from corporations, multinational companies that have been established and developed for hundreds of years with modern technologies, advanced management levels and large capital resources In order to survive and develop, each business should study, analyze, and assess the external and internal business environment to be able to grasp opportunities, identify threats, promote strengths and limit weaknesses, thereby developing business strategies that are fit in their businesses to achieve stable and sustainable development Therefore, it is essential to develop appropriate business strategies in current situations (The fact has proved that the businesses that have wrong business strategies or without business strategy will inevitably fail) Business strategies help businesses to map out the appropriate direction, to make appropriate decisions, to concentrate resources to limit threats to overcome difficulties and gain victory Along with the guidelines of the Party and State on industrialization, modernization of the country, with the explosion of urban areas, the demand for construction materials has been on significant increase in recent years However, enterprises doing business in the field of construction materials are also facing fierce competition from foreign ` products, local enterprises manufacturing construction materials and domestic policies on natural resources and environment These issues have become more challenging especially for enterprises doing business in construction materials from burned clay Therefore, it is essential to build business strategies for the enterprise in the coming period The purpose of the research Based on the theories of strategic management and the analysis of the reality of the business environment of Viglacera Dong Trieu Joint-stock company (hereinafter referred as the Company or the enterprise), we formulate the business strategy for the company in the period of 2010 -2020 The subject and scope of the research + The subject of the research and analysis is Viglacera Dong Trieu Joint-stock company + The scope of the research: analysis of the business and production environment of construction materials from burned clay of Viglacera - Dong Trieu Joint-stock company to serve as the basis for the formulation of business strategy for the company in this field in the period of 2010 to 2020 Research Methods + Use direct research methods: Collect and gather information from newspapers, magazines, Internet sources; statistic data from published documents, financial statements, balance sheets, income statements of 2008, 2009 and early 2010, the internal rules and regulations of Viglacera - Dong Trieu Joint-stock company + Use analysis tools and methods to analyze the internal and external factors influencing the business and production operations of Viglacera-Dong Trieu Joint-stock company + Use expert methods to forecast the future business environment of Viglacera Dong-Trieu Company ` + Use comparative methods to analyze the competitors of Viglacera Dong-Trieu Company + Use synthesis methods to synthesize opportunities, threats, strengths and weakness affecting Viglacera Dong-Trieu Company + Use analysis techniques and models such as IE Matrix, SWOT Matrix to build and select the optimal business strategy for Viglacera Dong-Trieu Joint-Stock Company in the period of 2010-2020 The structure of the capstone project report Our capstone project report is structured as follows: Preface Chapter I: Theoretical background on strategy formulation Chapter II: Analysis of the reality of the business environment of Viglacera - Dong Trieu Joint-stock company Chapter III: Selection of business strategies for Viglacera - Dong Trieu Joint-stock company in the period of 2010 - 2020 Conclusion ` CHAPTER I THEORETICAL BACKGROUND ON STRATEGY FORMULATION 1.1 / The concept of business strategy 1.1 / The concept of business strategy 1 1.1 / Strategy There are many different definitions on strategy, but the most popular definition is "Strategy is a series of complex actions to mobilize the resources of an organization to achieve a certain goal." – Text book of “Strategic Management”- Global Advanced Master of Business Administration, Hanoi, 2010 Previously, people widely viewed strategy as the science and art of military command However since the '60s decade (the 20 th century), strategy has been applied in business areas, and since then the concept of "business strategy" has come into being 1.1.1.2 / Business strategy Under the traditional approach, the strategy is the determination of the basic long-term goals of the enterprise, and the implementation of action plans to allocate resources to achieve identified set goals of the enterprise Business strategy can also be defines as "An integrated and coordinated set of commitments and actions that the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets." – Text book of “Strategic Management”- Global Advanced Master of Business Administration, Hanoi, 2010 We also can say that business strategy is the way that businesses use to direct its future to achieve and sustain its development ` 10 funds from other sources valued at 110 billion dong Maintain the activities of product research 19 and development department Estimated cost of 20 billion dong With its strategic orientation focusing on developing construction material products and market development, the specific objectives in the period 2010- 2020 of Viglacera Dong Trieu Joint Stock Company are as follow: + Revenue reaches 600 billion + Turn-over reaches 60 to 62 billion + Labour income reaches 4.8 to 5.2 million dongs/cap/month Strategy implementation process is divided into stages as follow: + From 2010 to 2015 period: Focusing on deep investment in human resource development, upgrading burned clay production lines to luxury material production, specifically: * In terms of human resource: - The system should have people graduated from university - 40% of the staff be technical engineers - 100% of the staff graduated from university - 100% of the workers trained in vocational schools The total cost for training in this period is estimated as much as 10 to 15 billion dongs ` 83 * In terms of deep investment for existing production line: - Upgrading Dong Trieu into one having modern technology (Italy technology) producing luxury burned clay production The total estimated cost is:  For period 1: 80 billion Dongs (2010 to 2011)  For period 2: 40 billion Dongs (2010 to 2013) - Upgrading Dong Trieu 2, Dam Ha Factories, applying mechanized drying system in order to reduce labour force of workers The cost for these two plants is billion dongs (from 2010 to 2011) Investing in upgrading construction plant, mechanic plant with the total invest of 15 billion Dongs (2010 to 2012) * Investment in Expansion: + Set up investment projects to build a factory producing unburned construction materials in Dong Trieu - Quang Ninh with total capacity of 120 mil Pieces/yr The implementation process includes stages:  Stage (from 2011 to 2012): Installing the production line with the power of 60 million pieces/year The estimated investment cost is 55 billion Dongs  Stage (in 2015): Installing a production line with the power of 60 mil Ps/yr the estimated cost is 40 billion Dongs + Carry out investment contribution to build Clinker Factory with the investment cost of 30 billion dongs (from 2010 to 2011) * Projected Funds: + issuing additional shares earning 90 billion dongs + using estimated 20 billion dongs from spared investment funds + Borrowing loans from banks, estimated of 155 billion dongs After this stage, estimated turn-over is up to 350 billion dongs * Market development program in this phase: ` 84 Complete the organization of marketing department from human resource to specific policies Complete distribution channels, building a nationwide distribution agency system In this phase, the Company only focuses on producing and developing various types of construction material products to serve domestic demand, not yet manufacturing high-grade or advanced products to serve export demand The stage from 2015 to 2020: - In terms of human resource: Focus on training programs to improve the quality of human resources with estimated increase in expenditure by 7.5 billion dong Train staff and workers to work in the CLANHKE Project with estimated cost of billion dong - In terms of investment: Set up an investment project to build CLANHKE Factory to be implemented for years with estimated increase in investment by 500 billion dongs This investment will be funded by issuance of 4.5 millions of shares, earning 90 billion dong Disburse approximately 110 billion dongs from spared funds, profit that has not been distributed and other sources, borrow bank loans of 300 billion dongs - In terms of market development, in this phase, the Company concentrates on researching, developing markets in South East Asia, Asia, Europe and America Continents with the focus on Singapore, Japan, Laos, Cambodia, Thailand, Indonesia, Hongkong…) to serve the export demand of CLANHKE brick products This is a type of products with high quality, which is suitable for the construction of coastal work, high-class work, or work projects at areas with difficult weather conditions Therefore, the Company should understand all factors regarding market demand, culture, legal framework, economic conditions and potential competitors to find out appropriate markets ` 85 for export In the first stage, the Company plans to apply various forms of market entry to focus on regional countries such as Singapore, Japan, Laos, Cambodia, Thailand, Indonesia, Hongkong….with such producs as Clanhke non-plastered bricks, Clanhke tile bricks, Clanhke block bricks, Clanhke roofing products, advanced products… then move to other countries The cost is estimated at 25% of the export turnover (the cost will be recorded in sales expenditure) - The research group has worked with the Company to discuss about this proposed roadmap for strategy implementation, which is then appreciated by the Company as appropriate with its goals and conditions The Company has been implementing some parts of proposed solutions and roadmap for strategy implementation However, as the duration for strategy implementation is very long (20102020), the Company should adopt specific, flexible and creative solutions to customize the strategy with continuous changes of the factors in the external and internal environment whenever they come * Below is the company’s expected organization model in the future ` 86 ` 87 Board of Directors Control Board Chief Executive Officer Business deputy general manager Construction deputy general manager Transport business manager Plant DT1 ` 88 General assembly of shareholders Plant DT2 ` Clinker Plant Manufacture Damgeneralbrick deputy manager factory Ha Non calcinati on tile factory 89 Finance and accounting office Personnel organizatio n Department Investment and Planning Department Technical Technology Department Marketing manager Mechanic factory factory factory factory Figure III.4: The company’s future organization model With the above model, the company can distribute the power and responsibility specifically to each deputy general manager Their function is to supervise the implementation and consult the leaders with the problems in their specification fields 3.6/ A number of risks that may be encountered during the implementation of the strategy and solutions: + As the market is still not familiar with non-calcination and clinker products, the consumption may be slow at first The plants may not operate in full power condition, which causes difficulties in finance This problem may last for years Specific solution: Company has made a period investment program At the end of the stage 1, the total investment reaches 265 billion dongs If the plants only operate with ` 90 70% of the total power, the loan interest not distributed in cost is about 9.54 billion dongs per year The solution is to use the production efficiency of existing plants to compensate that amount Projects for the second phase of 2015-2020 The solution is to use the production efficiency of existing production lines to offset the shortage due to under capacity operations Parallel with financial problems solving, the company has to organize programs to broaden its market, making the products gradually access into habits of consumers That can be done by advertisement, support, price policy making, etc + Lack of high quality human resource: The specific solution for this problem is to hire experts in key sections, technology transfer contracts, synchronized recruitment, training, addition to this human source 3.7/ Recommendations - The Government needs to make a coherent policy mechanism for construction material development with the priority of non calcinations products, environment friendly construction materials - Have a detailed and specific plan for local construction material production area development, ensuring environment management and protection, making full use of the material and human source in the areas - Establish construction material development research center based on environmental protection and energy saving features - Establish training centers in both theory and practice, making a high quality human resource for construction material development program ` 91 - Research always needs to be along with reality making a tight relationship between researchers and real production situation focusing on high quality construction material production ` 92 CONCLUSION In the trend of globalization and economic integration, the enterprise business environment is always facing unpredictable changes A success in building and deploying a strategy means a lot of overcomes from difficulties and challenges Therefore, the ability of precise analysis and predict business environments, both internal and external plays the key role in building business strategy For Viglacera Dong Trieu Joint Stock Company, after the analysis of internal and external business environments, our group has built up and chosen specific business strategies for the company from 2010 to 2020 as follow: Product Research Strategy, Market Development Strategy The capstone project report has proposed specific solutions, execution procedure as well as some potential risks during the implementation of the strategies This capstone project helps Viglacera Dong Trieu Joint Stock Company to have an overall view of business strategy formulation It can be applied in building the development program of the company, making it become one of the leading construction material producers in Vietnam ` 93 REFERENCE 1- “Strategy Administration” course book, International business administration Master course – Hanoi, 2010 2- Strategy administration course book: edited by Associated Professor, Doctor Ngo Kim Thanh Vice Prof Dr Le Van Tam – Hanoi NEU Publisher, 2009 3- Strategy administrative in economic globalization: Associated Professor, Doctor Dao Huy Huan – Statics Publisher 4- MBA reachable on the topic Strategy Control: Author: LIAM FAHEY & ROBER M RANDALL – translated by Phan Thu – edited by Hoai Nam – Hochiminh City General Publisher 5- Vietnam Construction material Industry Development Periods – Vietnam Construction material Association - Hanoi, 2009 6- Socio-economic status in 2009 – Electronic Information gate of General Statics Office 7- Socio-economic status in Quarter I/2010 – Electronic Information gate of General Statics Office 8- Guideline for Socio-economic development of Quang Ninh to the year 2020 Quang Ninh Electronic Information Gate 9- Socio-economic duty execution situation in 2009 - Quang Ninh Electronic Information Gate 10- Socio-economic status in the Quarter I /2010 – Quang Ninh Electronic Information Gate 11- Reported statistics on capability of Thanh Tuyen Joint Stock Company, Long Hai Joint Stock Company, Thanh Dong Joint Stock Company 12- Audit Finance Report of Viglacera Dong Trieu Joint Stock Company in 2008-2009 ` 94 13- Finance Report of the Quarter I/2010 by Viglacera Dong Trieu Joint Stock Company 14- Statistics Report on total staff by Labor organization Office - Viglacera Dong Trieu Joint Stock Company 15- Report by Marketing Office - Viglacera Dong Trieu Joint Stock Company 16- Data from Technical Office – Gieng Day Joint Stock Company 17- Report by Investment and Plan Office – Viglacera Dong Trieu Joint Stock Company 18- Audited Financial Statements of Viglacera Dong Trieu Joint-stock company in 2007-2008-2009 19- Audited Financial Statements of Viglacera Tu Son joint-stock company in 2007-2008-2009; 20- Financial Statements of the first quarter of 2010 of Viglacera Dong Trieu ` 95 ` 96 ... technological potential, human resource potential, financial capability, marketing system, management activities, capacity, product quality, qualifications of leadership, thereby identifying the strengths... their financial conditions, total assets, capital, capital structure, profitability, ability to raise capital, ability to secure financing of the enterprises - The analysis and assessment of financial... production plans, plant capacity, appropriateness of scale, the efficiency of utilizing of technology line in production activities, the quality of the work force, quality of goods produced, the