LV Thạc sỹ_Business strategy direction for Newtatco Corp

1 ACKNOWLEDGEMENT Writing this thesis I had a lot of encouragement along the way from my supervisor, teachers, my family, colleagues and friends I would like to take this chance to express my deep gratitude to them I am grateful for my supervisor support, Dr … I would like to thank all of my seniors, colleagues at Newtatco Corp., who have given me a lot of support and encouragement during my time of studied and finishing this thesis I would like to thank all of my interviewees who had provided me with very useful information needed for my thesis Without those precious information and material, my thesis would not have been completed I would also like to thank all the NEU Business School staff who has always been available to provide useful services Thanks to all of my classmates for their warm friendship and supports during our time of studying together Last but not least, I wish to express my deepest thank to my family, especially my wife, for their invaluable encouragements, support and tolerance Without those sources, this thesis would not have been completed TABLE OF CONTENTS ABBREVIATIONS LIST OF TABLES LIST OF FIGURES EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Research objectives 10 1.3 Research questions 10 1.4 Research methodology 11 1.4.1 Research process 11 1.4.2 Data collection and analysis 11 1.5 Research scope 13 1.6 Thesis structure .13 CHAPTER 2: THEORETICAL BACKGROUND ON BUSINESS STRATEGY DIRECTIONS .14 2.1 The nature of business strategy 14 2.1.1 The concept of strategy and strategic direction .14 2.1.2 Hierarchical levels of strategy 16 2.2 Models for business environment analysis .18 2.2.1 Models for external environment analysis .18 2.2.2 Models for internal environment analysis .24 Model for business strategy selection .28 2.3.1 TOWS matrix model 28 2.3.2 Porter’s generic strategies 30 CHAPTER 3: EXTERNAL BUSINESS ENVIRONMENT ANALYSIS FOR NEWTATCO CORPORATION 34 3.1 Analyzing general business environment of Newtatco 34 3.1.1 Newtatco's political environment analysis 34 3.1.2 Newtatco's economic environment analysis 35 3.1.3 Newtatco's socio – cultural environment analysis 36 3.1.4 Newtatco's technological environment analysis 39 3.2 Analyzing industrial environment of Newtatco .40 3.2.1 Overview of Hanoi real estate market .40 3.2.2 Analyzing five forces related to the business of Newtatco .44 3.3 Real estate industry life circle analysis 64 3.4 Opportunities & Threats of Newtatco 66 CHAPTER 4: INTERNAL BUSINESS ENVIRONMENT ANALYSIS FOR NEWTATCO CORPORATION 67 4.1 Overview of Newtatco corporation 67 4.2 Resource based view (RBV) analysis for Newtatco 68 4.2.1 Newtatco's physical resources analysis 68 4.2.2 Newtatco's organizational structure analysis 72 4.2.3 Newtatco's human resources analysis 76 4.2.4 Newtatco's other resources analysis 78 4.3 Newtatco’s value chain analysis .78 4.3.1 Newtatco’s primary activities analysis 78 4.3.2 Newtatco’s supporting activities analysis 80 4.4 Newtatco’s core competencies analysis 82 4.5 Strengths and weaknesses of Newtatco 82 CHAPTER 5: RECOMMENDATIONS FOR BUSINESS STRATEGY DIRECTIONS OF NEWTATCO CORP FROM 2011 TO 2015 84 5.1 TOWS matrix analysis for Newtatco .84 5.2 Corporate level strategy directions for Newtatco .89 5.2.1 Vision, mission, and long-term objectives for Newtatco 89 5.2.2 Business strategy directions to 2015 for Newtatco 90 5.3 Proposing solutions to implement business strategy directions for Newtatco 91 CONCLUSION .96 LIST OF REFERENCES 97 APPENDIX 99 ABBREVIATIONS VAST NEWTATCO BMS SWOT PEST ILC PR PMU R ADB VND Mil Bil CBD Sm Psm IMD HRM Viet nam academy of Science and Technology Newtechnology application and tourism Corp Building management system Strengths – Weakness – Opportunities –Threats Politic – Economic – Social – Technology Industry life circle Public relation Project management unit Real estate Asia Development bank Vietnamese Dong million Billion Centre business district Square meter Per square meter Investment management department Human resource management LIST OF TABLES Table 1.1: Secondary data collection and analysis .11 Table 1.2: Primary data collection and analysis 12 Table 2.1: Result of combination factors in RBV model 26 Table 3.1: Typical Condominium suppliers 53 Table 3.2: forces analysis for condominium, Mid.-lowend segment 54 Table 3.3: Office for lease suppliers 55 Table 3.4: Typical retail area suppliers .57 Table 3.5: Typical Apartment project & its owner 58 Table 3.6: Typical Hotel project & its owner 59 Table 3.7: Opportunities and Threats for Newtatco 66 Table 4.1: Newtatco strengths and weaknesses 83 Table 5.1: Strengths/weaknesses – Opportunities/ threats of Newtatco .85 Table 5.2: TOWS matrix analysis .86 LIST OF FIGURES Figure 1.1: Research process 11 Figure 2.1: PEST model analysis .19 Figure 2.2: Forces driving industry competition 22 Figure 2.3: Industry life cycle 24 Figure 2.4 Generic Value chain 27 Figure 2.5 TOWS Strategic Alternatives Matrix 30 Figure 2.6 Porter’s Generic Strategies 31 Figure 3.1 PEST analysis 41 Figure 3.2 Development of Real estate company in Profit 42 Figure 3.3 Development of Real estate company in Sales 43 Figure 3.4 Five forces analysis 64 Figure 3.5 Industry life cycle analysis 66 Figure 4.1: Newtatco's business process 68 EXECUTIVE SUMMARY Getting opportunities to achieve sustainable growth requires an appropreate strategy of Newtatco The company has joined in real estate industry with potential resources but has not got long term plan or strategy directions Newtatco’s practice actions are trying to produce a wide range of product by both its strengths and weakness The thesis has objectives: (1) to gather, choose suitable theoretical background related to form strategy, and review it; (2) to conduct external and internal environment analysis to find out opportunities, threats, strengths, weaknesses for Newtatco; (3) to form a suitable strategic directions for Newtatco in period from 2011 to 2015 base on the two step results Following the objectives, the thesis consist of five chapters At the first, chapter introduce the rationales, research objectives, methodology…Chapter review theoretical background related to business strategy Chapter 3, analyze external, internal business environmental In chapter 5, the author worked out suitable strategy directions and primarily solution for Newtatco base on environment analyzing result The data collected for the thesis depicted a picture of Newtatco’s business environment Base on that, the author discovered opportunities, threats, strengths, weakness of the company Secondary is collected from newspaper, industry journal, websites, and books Primary data is collected by in-depth interview (3 leaders in real estate industry, leaders of Newtatco, and managers), surveys ( staffs, potential customers), and author’s esperience in working time for the company The analysis of Newtatco’s business environment has pointed out findings: - Macro environment is favorable for Newtatco’s future growth - Real estate industry is in the early growth stage, so there are high potential growth ahead - Newtatco has values, rare, hard to imitate, hard to subtitute resources It is basement for getting sustained competitive advantage - The company has not pointed out its core competencies, has been trying to provided wide range of products by both its strengths, weakness From these finding the author prosposed business strategy direction as below:  At corporate level: o Newtatco shall create buildings that fit with new trend in consuming, ecofriendly, and leveling between modern, traditional culture o Newtatco’s Mission, vision, objectives o Products are condominium in mid-high end, office for lease grade C o Upgrading project management to be core competency o Creating supply chain to serve customer as the mission o Creating joint venture to learn partner’s experience  At business unit level: Newtatco should choose Focus cost strategy to follow in both its product lines For more feasible of strategic direction, priliminary solutions to implement the directions has been proposed That are solutions on Marketing, Finance, HRM, Technology, Information system…However, for practice, it should be develop further, create action plan to follow The thesis has been created with author’s passion Because of limited in time, finance the thesis provide directions only The writer hopes that Newtatco shall use it and gives author a chance to finish a full business strategy in period from 2011 to 2015 CHAPTER INTRODUCTION 1.1 Rationale Vietnamese real estate is a big potential market Especially in Hanoi and Hochiminh city, two growth center Hanoi has average GDP increasing 9.85% in period 2006-2010, planning continue growth 9-10% in period 2010-2020 (21) Together with GDP growth is per capita income up to 33.2% each year (2006-2010), reach to 1700 USD in 2009 Housing is an essential demand but Hanoi only gets 7-7.5m per person in 2010 (7) From the macro economy data, we can foresee a big increase in demand of real estate in future in Hanoi Knowing the potential, there are many companies belong to every economic sector business in real estate industry Very few of them are successful development in long term, taking high share of their market segment for a long time The successful one is company knows who they are, where they want to go, and have a good strategy to pursue Market is potential but challengers for a new comer in real estate industry are huge It can be lack of relationship, capital, information, management… Real estate company also have to cope with bureaucratic procedure, unfair between companies, risk of law modification….A new comer enter the industry then survive, develop is not easy Newtatco is a state own enterprise There are more constrains in doing business than private one The company has just taken part in real estate market by plan to build some office for lease, apartments block, and hotel in Northern of Vietnam, mainly in Hanoi The company has some scatter land properties in worthy location in Hanoi It has an intention to build some office building for lease, apartment, condominium for selling, and a hotel in Ha Long However, they consider each projects is a separated unit, not link together Newtatco tried to create project at all the land properties it own The company not have any imagination about future after or 10 years as well as goals & directions to reach the goals Therefore the company plan to have a diversify products while it does not know well potential customer, low capital, lack of experience in constructing As a new comer needs exist and successful development in real estate industry, Newtatco have to know where they are, where they want to go (destination) then find out directions 10 to get there Answer for all the question above is an appropriate business strategy With a strategy, the company will not surprise to changing in business environment, active in their business Being an employee of Newtatco, I have information for further understand about its culture, its resources Besides that, MBA course equipped me some tools to answer the question above Therefore, I choose topic “Business strategy direction for Newtatco Corp from 2011 to 2015” to be my thesis topic I take the research with hope that it will worth in practice 1.2 Research objectives My objectives in this research are: - Analyze internal business environment of Newtatco to show out strengths, weaknesses - Analyze external business environment of Newtatco to clarify the opportunities and threats of the company - Propose business strategy directions to 2015 for Newtatco 1.3 Research questions The thesis focuses on answering the follow questions: - What are main opportunities and threats for Newtatco in period 2011-2015? - What are strengths, weaknesses of Newtatco in real estate business? - What are Newtatco’s business strategy directions? 104 Appendix : Guide for in-depth interview for specialists GUIDE FOR IN-DEPTH INTERVIEW FOR SPECIALISTS Good evening I am conducting may MBA thesis “ Business strategy direction for Newtatco Corp from 2011 to 2015” Thankyou for paying time for my interview This interview is being conducted to get your opinion about Lastest trend and devlopment of industry, Policy of government to real estate industry, Lastest trend of consumer, Forecasting future market (Guideline questions) What are products and buyers of the real estate industry? What are entrant barriers of the real estate market, real estate products and customer segment? What are the barriers for withdrawing products, customer segment? (it is easy to liquidate property, and at what price? ?) What is the competition in each segment (numbers of companies supply same kinds of products, same customers, different customer)? What is the ability to entry the industry of product segment, customer segment? How macro economic factors (economic growth, inflation, interest, exchange rate) impact on the real estate business? What are input sources of the real estate companies? Please clarify the most valued sources How is difficult to exploit these sources? Which socio-culture, trends impact on the real estate industry’ development trend? What are the trends of land supply, capital, construction materials, construction technology, and building management during the coming years? 10 What are opportunities, threats for the real estate industry in the next 2, years? 11 Where is the real estate’s industry lifecycle in? Introduction, growth, maturity or decline? 105 Appendix : Guide for in-depth interview Newtatco top leaders GUIDE FOR IN-DEPTH INTERVIEW NEWTATCO TOP LEADERS Good evening I am conducting may MBA thesis “ Business strategy direction for Newtatco Corp from 2011 to 2015” Thankyou for paying time for my interview This interview is being conducted to get your opinion about Image in the future of company, Newtatco’s resources, its operation, plan for future, strengths, weakness, opportunities, threats of company (Guideline questions) What main business fields will be operated by Newtatco in the future? The business strategy will be focused on short-term profits or long-term profits such as: purchase – build – sell, purchase – build– lease, or trading properties? What are main products? Target customers? Can you describe the company’s image after the next 10 years? What are the company’s strengths/ weaknesses in the real estate business? What is the company’s human resource management strategy? Is the company planned to build the corporate culture? If yes, what it will be? What is the company’s business strategy? How does the company consider to the brand-name? Is the company planned to develop its brand-name? 10 How does the company’s planning/ reporting/ controlling system operate? 11 Which management technology is applied by the company? Ex: Six sigma, Pareto, ISO…? 106 Appendix : Guide for in-depth interview Newtatco middle managers GUIDE FOR IN-DEPTH INTERVIEW NEWTATCO MIDDLE MANAGERS Good evening I am conducting may MBA thesis “ Business strategy direction for Newtatco Corp from 2011 to 2015” Thankyou for paying time for my interview This interview is being conducted to get your opinion about problems in operation, the way you use resources, your mutual insight, co-operation, major weakness of company (Guideline questions) Can you describe the company’s image after the next 10 years? What is the company’s current business strategy in the real estate sector? What are the company strengths, weaknesses in this business sector? Where is the company’s position in the market? Can you name some competitors? What are your department’s inputs? What are your department’s tasks, what are your department’s outputs? Who will be delivered these outputs? Are you applied any technology in management? Ex: Six sigma, Pareto, ISO, Balance score card, etc? What are your decision-making powers? Who are your reporting to, in what issues, how is the frequency? Who are your coordinated to complete the assigned tasks? 10 What are sources of task information? 11 Is there any difficulty in coordinating with other departments? 12 How is the business plan built? 13 Is current workforce satisfied the tasks? How is it planned to further development? 14 How to coordinate with Human resource department? 15 Does the company’s brand-name support you in your work? 107 Appendix : Questionaires for Newtatco staffs NEWTATCO STAFFS (REAL ESTATE BUSINESS LINE) OPINION SURVEY Dear Sir/Madame, I am carrying out the final MBA thesis on Newtatco company Please fill in your opinions in the questions as bellows All the personal information will be kept confidential and used for the above-mentioned purpose Therefore, your right opinions will be highly appreciated Thank you for all your valuable information! (internet version is at https://spreadsheets.google.com/viewform? formkey=dDd6SkNaWlBOR1hYTmJwTG1DWWsxNEE6MQ) QUESTIONAIRES 1.Please indicate your gender? Female Male Please indicate your age? 18-30 30-40 40-50 50-60 60 and above Your current position? Economic Expert Procedures Expert Engineer Architect Your working time at the company? Over year Under year Is your assigned task detailed enough, is deadline clear or not? Detailed Not detailed Clear Not clear Do you think that your task and your professional knowledge are assigned appropriate? Very appropriate Appropriate Not appropriate No professional Do you make your working plan weekly/monthly/yearly, and send to your line managers for their supervision? Week Month Year Other time No plan Do you think that you have competence but not have opportunities to utilize in your current work? Many Little No competence Over my competence Do you know how will your career path in the company be developed? 108 Known A little Unknown 10 Do you understand your role in your department? Understand Little Unknown 11 What are you feel about the cooperation with other department as required by work? Very good, cooperation in maximum Depend on person, time Lack of operation spirit 12 Do you see Nwetatco’s brand-name is known by many people under good image when you work with partners, departments, localities? Known by many people Known by few people None Known by bad image 13 Do you think that what is the company’s issue concerned by staff? Low salary Unfair income Lack of union 14 How you think about future of the company’s real estate business sector? Very good Good Difficult No idea 15 In comparison with other similar real estate companies, you think that Newtatco is better or bellow its competitors in which fields? Proceed procedures of project development Marketing & Sales Management of project construction Provide services on real estate Thank you for spending time to giving your opinions! 109 Appendix : Questionaires for condominium potential customers POTENTIAL CUSTOMERS – CONDOMINIUM OPINION SURVEY Dear Sir/Madame, I am carrying out the final MBA thesis on Newtatco company in the fields of condominium, office, commercial center buildings In order to have information in these fields, please give your opinions by fill in bellowed forms All the personal information will be kept confidential and used for the above-mentioned purpose Therefore, your right opinions will be highly appreciated Thank you for all your valuable information! (internet version is at https://spreadsheets.google.com/viewform? formkey=dEVHQk1vekd2UnhvNHdhby1KN2ZDbmc6MQ) QUESTIONAIRES Please indicate your gender? Female Male Please indicate your age? 18-30 30-40 40-50 50-60 60 and above Do you have any plans to buy a new house in the next years? Yes Perhaps No Absolutely No If yes, please move to next questions: Which kinds of houses will you choose as bellows: High class apartments (>2500usd/m2) High class apartments (1500 -2500 usd/m2) Middle class apartments (900 -1500usd/m2) Normal apartments ($USD 40 Others 16 After signing the office leasing agreement, what kinds of agreements will you prefer: short-term or long-term ? a) Short-term: Less than months 3-6 months 6-12 months b) Long-term 12-24 months 24-36 months more than 36 months 17 By what methods you get information of investor ? Please tick as many as possible if needed Ads on mail Real estate websites Bill-board ads Yellow Page Listings Ads on newspaper Company referrals Leasing agents 18 What is area your company planned to lease ? Less than 50 m2 50 - 300 m2 300 - 500m2 500 - 1,000m2 more than 1,000 m2 Others 21 What kinds of office will your company want to lease as follows ? Office without interior Office with interior 22 Does your company use services of virtual office ? Can it replace for normal office ? 115 Yes, it does Totally replace the normal office Cannot replace the normal office but reduce the office area Totally cannot replace the normal office 24 In your opinions, the office leasing rental will be : Increase Little increase Slight decrease Strongly decrease Remain no change 25 In your opinions, what is the trend of office supply in the future ? Increase Increase over leasing demand Increase equal to leasing demand Increase slower than leasing demand Increase very slow compared with leasing demand Thanks for your valuable information! 116 Appendix 10 : Questionaires for retail area potential customers POTENTIAL CUSTOMERS – RETAIL AREA OPINION SURVEY Dear Sir/Madame, I am carrying out the final MBA thesis on Newtatco company in the fields of apartments, office, commercial center buildings In order to have information in these fields, please give your opinions by fill in bellowed forms All the personal information will be kept confidential and used for the above-mentioned purpose Therefore, your right opinions will be highly appreciated Thank you for all your valuable information! (internet version is at https://spreadsheets.google.com/viewform? formkey=dHZTZUhaaTR3WDhvSWcyelAtTEJaM1E6MQ) QUESTIONAIRES Please indicate your gender: Female Male Please indicate your age: Under 30 30-40 40-50 Over 50 What kinds of your workplace ? Specialized shops (fashion/cosmetics/jewelry…) Bazaar Self-served shop Supermarket Specialized supermarket Others Position: Leaders of the company, department Staff Secretary Assistant Supervisor When you have demands on retail space, which possibility will you pay attention to : (tick as many box as possible if needed) Lease shops in the old quarter area Lease retail space in buildings Lease space to be improved to become retail space Others Does your company have demands to lease retail space during the next years ? 117 Yes May be No Absolutely no If yes, please move to following questions: Do you want to sign the leasing agreement with investor or agents ? Which agents? Investor CBRE Savills Vietnam Colliers International Vietnamese agent Others How long does your company plan to lease retail space? Under tháng Under năm Under tháng From – năm Over năm Others 10 What kinds of area are you choose? Kind with low-cost ( in nonstandard buildings) Kind with medium cost (in grade C buildings) Kind with high cost (in grade B buildings) Kind with highest cost (in grade A buildings) Lobby at high class hotels Retail space in big commercial centers such as Big C 11 Reasons of leasing retail space? Business expansion Current area does not meet demands of service quality Change place for business convenienct Rental of existing retail space is too high 12 Location selected for leasing retail space? The centre business district area Internal district area (before merging with Hatay) Western area (My Dinh, Me Tri) 13 Can you assess the importance of following criteria: Very important important Service quality Number of provided services Architectural design Construction quality Geographical location Parking lot Security unimportant depend 118 Rental 14 Can you assess the reliability of partner who help you find the satisfied retail space ? Reliable Doubt Unreliable International consultant agents (CBRE, Savills…) Vietnamese office leasing agents (real estate transaction floors) Company referrals Ads on newspaper Ads on real estate websites 15 By what way you know investor? (Please tick on many box if needed) Ads on mail Real estate websites Bill-board ads Ads on newspaper Yellow Page Listings Company referrals Real estate consultants 16 Area which your company wants to lease? Less than 50 m2 50 - 300 m2 300 - 500m2 500 - 1,000m2 more than 1,000 m2 Others 17 What kinds of space will your company want to lease? Space without interior Space with interior 18 Does your company use retail shop online? Is this replaced for normal shop? Used but almost it cannot replace for normal shop Cannot replace the normal shop but reduce the area Totally cannot replace the normal shop 19 In your opinions, the rentals of retail space during the next years will be: Increase Little increase Remain no change Slight reduce Strongly reduce 20 In your opinions, the retail space supply in the next years will be ? Increase Increase over the leasing demand Increase equal to the leasing demand Increase slower than the leasing demand Increase very slow compared with the leasing demand Thanks for your valuable information! ... Corporate level strategy directions for Newtatco .89 5.2.1 Vision, mission, and long-term objectives for Newtatco 89 5.2.2 Business strategy directions to 2015 for Newtatco 90... analysis for Newtatco corporation Chapter 5: Recommendations for business strategy directions of Newtatco corp from 2011 to 2015 14 CHAPTER THEORETICAL BACKGROUND ON BUSINESS STRATEGY DIRECTIONS... weaknesses of Newtatco 82 CHAPTER 5: RECOMMENDATIONS FOR BUSINESS STRATEGY DIRECTIONS OF NEWTATCO CORP FROM 2011 TO 2015 84 5.1 TOWS matrix analysis for Newtatco .84 5.2 Corporate