LV Thạc sỹ_Build business strategy for M1 Communication to become the No1 domestic electronics manufacturing

TABLE OF CONTENTS LIST OF ABBREVIATIONS .iii LIST OF PICTURES iv LIST OF TABLE v ABSTRACT vi INTRODUCTION I The Proposal and Signification of Business Strategy II The Target of Research III Objective, Scope and Methodology of Research IV Research Structure ACKNOWLEDGEMENT CHAPTER 1: THEORY OF STRATEGY MANAGEMENT OVERVIEW STRATEGY MANAGEMENT 1.1 Defining Strategic Management 1.2 Key Term in Strategic Management 1.3 Three Stages of Strategic Management process 1.4 The Strategic Management Model 10 STRATEGY FORMULATION 12 2.1 Scan External Factor 12 2.1.1 External Opportunities and Threat: 12 2.1.2 Porter Five forces analysis .12 2.1.3 Conduct a Competitive Profile Matrix (CPM) .13 2.1.4 Contrucs an External Factor Evaluation Matrix (EFE) 14 2.2 Scan Internal System 15 2.2.1 Analysis Internal Resources (Internal Audit) 15 2.2.2 Strengths and Weakness: T.O.W.S Matrix, SPACE Matrix, IFE Matrix 15 2.2.3 Selection the Most Advantages Strategy: QSPM 17 STRATEGY IMPLEMENTATION AND EVALUATION 18 3.1 Implementing Strategy 18 Capstone Project – M0111 – Group i 3.1.1 The Nature of Strategy Implementation 18 3.1.2 Annual Objectives 19 3.1.3 Policies 19 3.1.4 Resource Allocation .20 3.1.5 Managing Conflict 20 3.2 Strategy Review, Evaluation, and Control 21 3.2.1 Describe a practical framework for evaluating strategies .21 3.2.2 The Balanced Scorecard 23 3.2.3 Contingency Planning 23 CHAPTER 2: M1 COMMUNICATION COMPANY – EXTERNAL AND INTERNAL ASSESSMENT .25 GENERAL INFORMATION OF M1 COMMUNICATION COMPANY 25 1.1 History, Milestone, Organization, Culture History & Milestone 25 1.2 Vision and Culture .26 1.3 External Opportunities and Threat 30 1.4 The Internal Assessment 47 CHAPTER 3: STRATEGY IMPLEMENTATION AND EVALUATION .55 STRATEGY FORMULATION 55 1.1 Analysis of strengths, weaknesses, threats and challenges 55 IMPLEMENT STRATEGY AND EVALUATE 60 2.1 Key to Strategy Implement 60 2.2 Resource Allocation 62 2.3 Matching Struture with Strategy 62 CONCLUSION 64 REFERENCES 65 Capstone Project – M0111 – Group ii LIST OF ABBREVIATIONS M1 Communication M1 Communication One Member Limited Liability Company: Viettel: EFE: CPM: IFE: SWOT: QSPM: AS : TAS: Company Viettel Group External Factor Evaluation Matrix Competitive Profile Matrix Internal Factor Evaluation Matrix Strengths, Weakness, Opportunities, Threats Matrix Quantitative Strategic Planning Matrix Attractiveness Score Total Attractiveness Score Capstone Project – M0111 – Group iii LIST OF PICTURES Picture 1: Stages of Strategic Management .8 Picture 2: Three stage of Strategy Implementation 11 Picture 3: Poter’s Fivee Model 12 Picture 4: M1 Communication Company Organization Chart .27 Picture 5: The population structure of Vietnam in December 2011 .32 Picture 6: The five forces model of Michael Porter .41 Picture 7: M1 Company has the model with competitive forces by M Porter 45 Capstone Project – M0111 – Group iv LIST OF TABLES Table 1: List of Products 28 Table 2: Competitive Profiles matrix of M1, Samsung and Huawei 40 Table 3: M1 current competitors 43 Table 4: Finance Report (Brief version) 47 Table 5: Distribution of personnel qualifications 49 Table The QSP Matrix .59 Table Implementation roadmap 63 Capstone Project – M0111 – Group v ABSTRACT For nearly three years we have been discussing important global macro economic trends in order to assess the progress and risks of what has been labeled a global economic “recovery” In fact, the emerging world has been largely responsible for pulling up the advanced world from the depths of the financial apocalypse When compared to advanced nations, emerging nations entered the global collapse with a much lower level of debt, perhaps more important, emerging nations continue to add to their trade surplus and bank reserves Thus, emerging nations remain on the leading edge of economic growth In 2012, the global economy continued difficulties, economic downturn occurs in almost all areas worldwide According to the World Bank (World Bank) and the International Monetary Fund (IMF), the global economic crisis will continue to face many challenges and peak in 2013 In the context of global economic fluctuations and difficulties have a negative impact on the economy has deep integration and large aperture as the country's economy Besides many of the services and manufacturing industries are fallen on hard times such as real estate, shipbuilding, coal mining, cement so the growth of the Viet Nam Electronic Manufacturing Industry is a bright spot for the rapid and sustainable development since 2011 In 2011 with exports of $ 6.89 billion (accounted for 7% of total exports) and in 2012 (as of 15 October 2012) exports worth more than $9 billion (accounted for 10.2% of total exports) M1 Communication One Member Limited Liability Company (M1 Communication Company) is a member of the Viettel Group with main business is producing military communication equipments and consumer electronics products to continue the development trend of the industry to set up an appropriate strategy to have one right direction Strategic planning is built based on external factors and subjective within the enterprise, systematic analysis of information from which to establish the orientation, objectives, planning the business activities in the short Capstone Project – M0111 – Group vi term and in the long term, to focus efforts and resources on the main objectives so that the most effective, response to the uncertain situation, adapt to change Recognized that the special importance role of strategic development for the existence and development of the business, our team decided on the topic "Build business strategy for M1 Communication One Member Limited Liability Company to become the No Domestic Electronics Manufacturing Service Company in the period 2013 - 2015" with the desire to apply the learned knowledge to contribute to the sustainable development of the company in the current situation Capstone Project – M0111 – Group vii INTRODUCTION I The Proposal and Signification of Business Strategy All companies have a strategy, even if it's not formal, structured and irregular All organizations are facing somewhere, but unfortunately some companies not know where they went The company should have a proactive way rather than just react to the operating environment, and should attempt to influence, predict and create the environment rather than just react to the events Strategic management processes this It represents a logical, systematic and objective in determining the future direction of a business The strategic-management process does not end when the company’s leaders decides what strategy or strategies to pursue There must be a translation of strategic thought into strategic action This translation is much easier if managers and employees of the firm understand the business, feel a part of the company, and through involvement in strategy-formulation activities have become committed to helping the organization succeed Without understanding and commitment, strategyimplementation efforts face major problems Implementing strategy affects an organization from top to bottom; it affects all the functional and divisional areas of a business It is beyond the purpose and scope of this text to examine all of the business administration concepts and tools important in strategy implementation II.The Target of Research The Research focus on the following issues: - The basic theory of strategy and strategy management - The analytical models are useful for the formation and strategic selection - Current situation of strategic implementation process of M1 Communication Company in the context of the Vietnam economy - Analyze the internal and external factors that have impact on the strategic implementation process of the Company Capstone Project – M0111 – Group - Proposed some solutions that is suitable for the Company’s business strategy in the period 2013-2015 III Objective, Scope and Methodology of Research - Objects and scope: Focuses the current strategy management activities of the M1 Communication Company and provides solutions in the future - Methodology: Research uses two main types of information, which is primary and secondary information Secondary information was collected from many different sources, including significant of which is Business Plans, Finance Statement IV Research Structure ABSTRACT INTRODUCTION ACKNOWLEDGEMENT CHAPTER 1: THEORY OF STRATEGY MANAGEMENT OVERVIEW STRATEGY MANAGEMENT STRATEGY FORMULATION STRATEGY IMPLEMENTATION AND EVALUATION CHAPTER 2: M1 COMMUNICATION COMPANY – EXTERNAL AND INTERNAL ASSESSMENT GENERAL INFORMATION OF M1 COMMUNICATION COMPANY CHAPTER 3: STRATEGY IMPLEMENTATION AND EVALUATION STRATEGY FORMULATION IMPLEMENT STRATEGY AND EVALUATE CONCLUSION REFERENCES Capstone Project – M0111 – Group ACKNOWLEDGEMENT We certify that all the content of this project is the effort during the process of studying, understanding as well as topic selection by the author team members (besides the reference document and data enclosed) We hereby acknowledge that this written project has not been collected by any other studying or training program Hanoi, 18th November 2012 Capstone Project – M0111 – Group Quality Control Department plays quality management role in the company's system It controls all the stages such as buying raw materials, checking production activities, supervising the building and ensuring the implementation of the technology process, etc The Division of Quality Management has a huge role to the quality of products produced by the company and is the point of brand development for the company Application of ISO-2008 system and total quality management system (TQM), Division of Quality Management has established and successfully applied to model and criteria equivalent to the Japanese and Korean factories which has deployed in Vietnam e Planning Department Plays an advisory role and on behalf of the Board of Directors directly operates on the production schedule, coordinates the purchase of raw materials; Assign for Technical-Technology Department, Research and Development Center, Division of Quality management, Production Department and Finance and Accounting Department Due to the particular structure, Planning Department also operates directly Warehouse parts so its tasks, such as identifying and handling inventory, ensuring the preservation and inventory control systems, are very heavy and affect the company's business performance f Investment Department With the main functions and tasks is to ensure the purchase of raw materials, tools and instruments with low price, guaranteed quality and optimizing the input cost With the task of building the network of trusted suppliers, the database system of raw materials for mass production has been implemented The current situation of the M1 communication company in particular and electronic manufacturing companies in general mainly to import raw materials from abroad, because industry manufacturing components and auxiliary materials in Vietnam has not developed the work is also very difficult g Finance and Accounting Department Capstone Project – M0111 – Group 51 Accounting, recording, print, storage of documents is in accordance with accounting standards and laws Ensure timely capital and operating funds of the Company Guide departments to carry out the data processing, accounting vouchers, accounting, bookkeeping, checking accounting data on books and periodical reports, accounting reports, payments, financial statement and analysis of business performance as prescribed Monitor the company's debt, reflect and propose plans to spending cash and other forms of payment Make the payment in the domestic and international Coordinate with the Board of Investment and the relevant departments to monitor the progress of implementation of buying and selling contract and make the payments as prescribed Coordinate with the Planning Department in building and monitoring the implementation of assets management regulations Report of value added tax settlement, corporate income, personal income h Political and Human Resource Department Ensure the recruitment and management of human resources in the company; building and development the company’s culture Standardize criteria, functions and tasks of the positions in the company; training and check working quality of the departments Propose and build the reward - compensation policies, launched the movement, organize of cultural activities Internal Factors Analysis: Currently, M1 Communication have advantage with new modern production line, the quality control system at inter -standard (TQM and ISO) oppsite the disadvantage of Procuremen and Information System According to Porter, the business of company can be best described as a value chain Value Chain Analysis aims to indentify where low-cost advantage and disadvantage exist The weakness of Investment Department of Supply Chain is the most trouble of business develope in 2012 Moreover, the Information System weakness is the reason that the management is not control all funtions in company Normally, the management Information System receives raw material in input anf transformed to output But in Capstone Project – M0111 – Group 52 M1 Communication Company, the data is not become the information for support the management make the dicision A summary the internal strategic – management, thr table below is Internal Factor Evaluation Matrix of M1 Communication Company: The Internal Factors Matrix (IFE) Key internal factors Strengths Modern production line system ensure to manufacture high-tech equipment Core products exist but in a few Good quality, match of customer’s requirements The average of employee’s age is young, enthusiasm and good experience Weaknesses Research and development team is small, design circle time (from starting to mass production) is postponed (over six months) The raw materials input and produce cost’s ratio are high  lower profit The Information Systems is weak, have not capability for demand M1 is new supplier in consumer telecom devices market (under year) Not participate in domestic and foreign production chain, not take advantage of outsourcing Weight Rating Weight Score 0.15 0.6 0.12 0.36 0.15 0.45 0.15 0.45 0.1 0.2 0.1 0.2 0.1 0.3 0.08 0.16 0.05 0.1 2.82 Internal assessment conclusion: From the result of Matrix, total score evaluate internal factors of M1 communication company reached 2.82 points higher than the average score of 2.5 points In addition to the weaknesses such as purchasing system, the distribution system as well as design-performance team slower than required, but the company's long history in the manufacturing sector, the investment in new modern lines and management quality model by international standards, the Capstone Project – M0111 – Group 53 company also has the opportunity to enter market and growing up in the appropriate segment Capstone Project – M0111 – Group 54 CHAPTER STRATEGY IMPLEMENTATION AND EVALUATION STRATEGY FORMULATION 1.1 Analysis of strengths, weaknesses, threats and challenges The T.O.W.S Matrix On the basis of analysis of the company's operating environment, all the analysis - evaluating the external and internal environment results, they can identify opportunities, risks, strengths, weaknesses in order to sum up the T.O.W.S matrix to formulation strategic They must take advantage of the opportunity, exploit the strengths and limit the risk and overcome the weaknesses for a sustainable development By analyzing the factors S - W - O - T, we propose strategic plans for M1 information Company as follows: The T.O.W.S Matrix Strengths (S) Modern production line system ensure the manufacture high-tech equipment Core products exist but in a few Good quality, match of customer’s requirements The average of employee’s age is young, enthusiasm and good experience Capstone Project – M0111 – Group Weaknesses (W) Research and development team is small, design circle time (from starting to mass production) is postponed (over six months) The raw materials input and produce cost’s ratio are high  low profit The Information Systems is weak, have not capability for demand M1 is new supplier in Consumer Telecom Equipment market (no branch) Not participate in domestic and foreign production chain, not take advantage of outsourcing 55 Opportunities(O) SO Strategic Combination Expansion strategy (S1, Economic and social S3, S4, O1, O2, O3) achieve good results, WO Strategic Combination  Focus in exclusive product (W1, W4, W5, O1, O3) political stability  Dispute, conflict Product difference strategy (W1, W2, O2) between China and other Countries affected foreign investment  movement factories planning from China to others areas Government implemented policies to support the development of Industry The quantity of mobile phone still going up base on popular structure is young and the economic still develope Threats(T) ST strategic WT Strategic The rapid development Diversification strategy Loyal customer strategy of technology (S1, S3, S4, T1, T2) (W2,W4, T2) Vietnam has become a middle-income country Human resources are not meet the requirements Through the TOWS matrix, separately strategies can be combined The purpose of the business strategy is built to make the difference to position of the company in the competitive market, especially have many strong competitors With “Expansion and Diversification Strategy”, these are really “choosen” strategy depend on the Capstone Project – M0111 – Group 56 external factors like economic, political, government’s policy and the internal like the modern production lines, the quality match the standard…The result advice about the image of big company which grow up very fast, huge quantity product could be produce and sale in the market But in the back of image, the question is how to enter the market and find the right position and segment? The rest three strategy focus on the answer how to get the customer, how to take the customer remember the branch and product? The WO strategies are safety solutions depend on the weakness internal factors (design, the add in-value, information systems) These solutions is other way to enter the market but in long-term and need more creation and innovation plan The last strategy combines from the W4, T1, T2 is not the way makes company grow fast but this way is really safety for local manufacturing company Analyze the QSP Matrix From the five strategies were making by T.O.W.S matrix, the decision stage technical tool have to reveal feasible alternative strategy This analytical technique have used is quantitative strategic planning matrix (QSPM) to determine objectively what the best strategy is This technique use input EFE Matrix, IFE Matrix, Competitive Profile Matrix, TOWS Matrix to evaluate alternative strategic Us the matrix result of M1 Communication Company, we will have the QSP matrix as below: Capstone Project – M0111 – Group 57 Important factors External factors Economic and social achieve good results, political stability Dispute, conflict between China and other Countries affected foreign Weight Expansion strategy Diversification Focus in strategy exclusive product Product difference strategy Loyal customer strategy AS TAS AS TAS AS TAS AS TAS AS TAS 12 12 12 12 16 3 6 3 9 9 12 12 12 16 2 6 12 6 6 ensure the production of high-tech 4 12 12 16 12 equipment Core products exist but in a few Good quality, match the 3 3 3 9 12 12 investment  movement factories planning from China to others areas Government implemented policies to support the development of Industry The quantity of mobile phone still going up base on popular structure is young and the economic’ result is increasing The rapid development of technology Vietnam has become a middleincome country Human resources are not meet the requirements The internal factors Modern production line system Capstone Project – M0111 – Group 58 requirements of customer The average of employee’s age is young, enthusiasm and good 3 3 3 2 2 2 2 4 6 6 2 2 4 2 2 4 experience Research and development team is small, design circle time (from starting to mass production) is postponed (over six months) The raw materials input and produce cost’s ratio are high  lower profit The Information Systems is weak, have not capability for demand M1 is new supplier in Consumer Telecom Equipment market (under year) Not participate in domestic and foreign production chain, not take advantage of outsourcing Total point 92 97 113 129 111 Table The QSP Matrix Capstone Project – M0111 – Group 59 Brief Conclusion: Through QSP matrix result, the total attractiveness scores for the best alternative strategy is 129 point, the named is the difference product strategy As analyze this strategy after TOWS matrix, base on the market is very competitive, a lot of strong competitors, it is safety to enter and find the right segment But in the other hand, no more company could have the really difference product with 100% excellent like Apple’s product According to this solution, all your business will depend on the creation and innovation of not only design team but also the Board and all employees in company Strategy implementation is also quite consistent with the Vietnamese consumer culture of high moving and very active Moreover, the company’s culture is a highly disciplined environment, always looking to hard work to and to make efforts to overcome The soldier's spirit to overcome difficulties on the economic front, the high determination and spirit of consensus will be a good foundation for the implementation of business strategy in the period 2013 - 2015 IMPLEMENT STRATEGY AND EVALUATE 2.1 Key to Strategy Implement A number of key measures to implement the business strategy in the period 2013 - 2015 With the difference product strategy on the principle of moving to market entry, to avoid confrontation with major competitors, the M1 Communication Company should have the following strategic actions:  Enhance senior human resources of qualified, enthusiastic and experienced, especially experienced working in management positions in international corporations  Implement Marketing activities with efforts to distinguish the goods of the company with competitors’ ones Develop a business planning based on product differentiation, focus on niche markets or individual requirements, own creative way in the distribution and maintenance Specifically, it is the implementation of creative imitation as participating in the program "Vietnamese people use their Capstone Project – M0111 – Group 60 goods", participating in "Made in Vietnam" stores system, and popular culture by giving small distribution systems, retail (Expand distribution channels not through Viettel telecommunication company)  Develop policies to avoid confrontation with main competitors such as Samsung, Nokia, Huawei by cutting the little-used features such as FM, unnecessary accessories, added software supporting services, or product positioning in specific regions, sectors used as waterproof, impact resistant, energy saving mechanism for using in a long time or have accessories of renewable energy, etc  Reward policy as a result of completion: reward mechanisms are used for excellent staff that complete assigned tasks, praised the ones who are good, and for the ones with valuable initiatives contributed to the development company The company extracts the spiritual rewards to encourage them and others in the company  Strategy of distribution and after-sales service: Create a list of subscribers using the company's products, promotions oriented to the number of subscribers to advertising the brand, building the loyal customer team  Development of Information Systems: Information System is a crucial factor for business differentiation strategy The information collection, fast processing, making decision timely and synchronized deployment in short time, that will help companies implement the principle of "moving" when have creative ideas and get navigation in the chasing of the competitors with cost leadership strategy, focusing strategy  Lead the market to distinguish between their low end products and other ones Enlist the advantages of political, social, and psychological factors for Chinese goods to coordinate with the South Korean, Japanese company formed alliances in the telecommunications equipment manufacturers Successful strategy formulation does not at all guarantee successful strategy implementation Formulating the right strategies is not enough, because managers and employees must be motivated to implement the strategic From the key to Capstone Project – M0111 – Group 61 implement the “difference product strategy”, the main departments concern with Human Resource, Marketing, Business Development, Information System and Research & Develop Center 2.2 Resource Allocation To ensure about the strategy implementing, the Human resource’s respondsibility require HR manager work hard The requirement in Marketing, Business Development of M1 Communication Company at least 10 positions of manager and staff It is only months from now to 2013 year, this mission have to complete and two departments will be operating from quarter 1, 2013 In R&D Center, currently have 10 persons According to the strategy and funtions arrangement, the quantity have to increase two times In Information System, currtly have people in graduate certificate and need more at least people in higher experience 2.3 Matching Struture with Strategy Base on the life-cycle of consumer telecommunication devices about – 12 months, in Q1 and Q2 of 2012, R&D Center must design at least new model of core products This demand will be push other departments to improve the systems process faster and the target is have 2-3 product could enter the market Parallel the R&D team, Marketing and Business Department must plan and identify the righ segment and customers not only for 2-3 products but also 7-10 product for 2013 Other department have to follow the demand and change to match the strategy Capstone Project – M0111 – Group 62 ACTION PLAN FOR THE DIFFERENCE PRODUCTS STRATEGY INITIATIVE RESPONSIBILITY SUPPORT TIME SCHEDULE 2011 2012 2013 2014 2015 Enter the right segment, provide Marketing and Information the branch to Business Development System x x x x x x x x x x x x market Production Design new product R&D Center, Quality Technology Control, Department Invest Department Setup the supply chain Invest Department, Marketing, Business Development Information System Synchronization all functions in Information Information System Technology Department x System Table Implementation roadmap Capstone Project – M0111 – Group 63 CONCLUSION The analysis and selection of long-term business strategy for an enterprise is always difficult, especially with inexperienced business strategy like M1 Communication Company After studying Strategic Management courses and all courses in the Master Business Administration was jointly held by the University of Andrew (Griggs) and ETC under National University, base on the M1 Communication Company situation, we have built the business strategy of the Company in period 2013 - 2015 with the goal “Becoming the No.1 Electronic Manufacturing Services Company in Vietnam” Through the process of analysis, selection has helped us to identify the most alternative strategy is the difference product The strategy formulation, implementation not only once, but also it requires the test, review, evaluate on a regular basis, adjusted when elements of the business environment changed dramatically as it affects the basic elements in forming strategy to ensure that the strategy is always feasible in development process of the enterprise Our graduation thesis was completed in a short time with wide range of research However, with the desire to apply the learned knowledge in practice, we tried our best to complete the thesis Due to the short time, our research is limit of information and detail analysis in all aspects Our Group would like to receive the sincere comments from the teachers, friends to complete business strategy for the M1 Communication Company in the coming period Capstone Project – M0111 – Group 64 ... "Build business strategy for M1 Communication One Member Limited Liability Company to become the No Domestic Electronics Manufacturing Service Company in the period 2013 - 2015" with the desire to. .. areas The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation The IFE Matrix together with the EFE matrix is a strategy- formulation tool that can be utilized to. .. factors as inputs for QSPM, we can formulate the type of the strategy we would like to pursue This can be done using the stage strategic management tools, for example the SWOT analysis (or TOWS),