Formulating business strategy for Colliers International in Vietnam market = Hoạch định chiến lược kinh doanh cho Công ty Colliers International tại thị trường Việt Nam. Luận văn ThS. Kinh doanh và quản lý: 60 34 05

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS TRAN THUY LOAN FORMULATING BUSINESS STRATEGY FOR COLLIERS INTERNATIONAL IN VIETNAM MARKET Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Hanoi – 2013 Nguyen Viet Dung TABLE OF CONTENTS ACKNOWLEDGEMENT i ABSTRACT .ii TÓM TẮT iii TABLE OF CONTENTS iv LIST OF FIGURES vii LIST OF TABLES viii LIST OF CHARTS ix ABBREVIATIONS x INTRODUCTION CHAPTER – BASIC OF STRATEGY & STRATEGY FORMULATION 1.1 OVERVIEW OF STRATEGY AND STRATEGIC MANAGEMENT 1.1.1 What is Strategy 1.1.2 Strategic Management Definition 1.1.3 Types of Strategies 1.1.4 Levels of Strategies 1.1.5 The Strategic-Management Model 1.2 STRATEGIC FORMULATION 10 1.2.1 Business Vision and Mission 10 1.2.2 External Assessment 12 1.2.3 The Internal Assessment 23 1.2.4 Setting long-term objectives 28 iv 1.2.5 Strategy Analysis and Choice 29 CHAPTER CONCLUSION 38 CHAPTER - STRATEGY ANALYSIS CASE: COLLIERS INTERNATIONAL39 2.1 COLLIERS INTERNATIONAL OVERVIEW 39 2.1.1 Colliers International 39 2.1.2 Colliers in Vietnam 42 2.2 EXTERNAL ASSESSMENT 43 2.2.1 Macro Environment Analysis 43 2.2.2 Industry Analysis 53 2.2.3 The EFE Matrix 56 2.3 INTERNAL ASSESSMENT 58 2.4 SETTING LONG-TERM OBJECTIVES 63 CHAPTER CONCLUSION 64 CHAPTER – STRATEGY ANALYSIS AND RECOMMENDATIONS 65 3.1 BUSINESS VISION AND MISSION 65 3.1.1 Business Vision 65 3.1.2 Mission Statement 65 3.2 STRATEGY ANALYSIS AND CHOICE 65 3.2.1 Strategy Forming: SWOT Analysis 66 3.2.2 Strategy Proposal 71 3.2.3 Strategy Selection: Quantitative Strategic Planning Matrix (QSPM) 75 3.3 RECOMMENDATIONS TO COLLIERS 81 3.3.1 Strategy 1: Focus on foreign customers 81 v 3.3.2 Strategy 2: Develop the existing MIS and marketing tools 82 CHAPTER CONCLUSION 83 CONCLUSION 84 REFERENCES 85 vi LIST OF FIGURES Figure 1-1: Level of Strategies with Persons Most Responsible – Large Firm Figure 1-2: Level of Strategies with Persons Most Responsible – Small Firm Figure 1-3: A Comprehensive Strategic-Management Model Figure 1-4: PEST analysis 13 Figure 1-5: The Five-Forces Model of Competition 18 Figure 1-6: Internal Factors 23 Figure 1-7: Porter’s Value Chain Model 25 Figure 1-8: A Comprehensive Strategy-Formulation Framework 30 Figure 2-1: Colliers International's Core Services 41 Figure 2-2: Colliers International's Milestones in Vietnam 42 Figure 2-3: Colliers International's Structure in Vietnam 43 Figure 2-4: Colliers International's Value Chain 58 Figure 2-5: Colliers' Methodology 61 vii LIST OF TABLES Table 1-1: Alternative strategies defined Table 1-2: Key Economic Factors 14 Table 1-3: Key Social, Cultural, Demographc and Natural Environment Factors 15 Table 1-4: Key Political, Governmental, and Legal Factors 16 Table 1-5: The EFE Matrix .22 Table 1-6: The IFE Matrix 28 Table 1-7: Varying performance measures by Organizational level 29 Table 1-8: The SWOT Matrix 32 Table 1-9: The Quantitative Strategic Planning Matrix (QSPM) .35 Table 2-1: Colliers International Statistics for 2011 41 Table 2-2: The EFE Matrix for Colliers 57 Table 2-3: The IFE Matrix of Colliers 62 Table 3-1: SWOT Matrix for Colliers Vietnam 67 Table 3-2: SO Strategies for Colliers Vietnam 68 Table 3-3: WO Strategies for Colliers Vietnam 69 Table 3-4: ST Strategies for Colliers Vietnam 70 Table 3-5: WT Strategies for Colliers Vietnam 71 Table 3-6: QSPM for Colliers Vietnam 80 Table 3-7: Recommended Action Plan Framework for Strategy 81 Table 3-8: Recommended Action Plan Framework for Strategy 82 viii LIST OF CHARTS Chart 2-1: Vietnam GDP growth from 2007 to 2012 44 Chart 2-2: Vietnam GPD Growth decomposed by sectors from 2011 to 2012 45 Chart 2-3: Vietnam Inflation Rate from 2007 to 2012 46 ix ABBREVIATIONS EFE External Factor Evaluation IFE Internal Factor Evaluation QSPM Quantitative Strategic Planning Matrix SWOT Strengths – Weaknesses – Opportunities – Threats model VCA Value Chain Analysis WTO World Trade Organization x INTRODUCTION Thesis Title Formulating business strategy for Colliers International in Vietnam market Necessity of The Thesis Vietnam real estate market has undergone a period of rapid growth from 2006 to 2008 However since 2011, the growth has gone into decline stage A lot of businesses which were profitable during that period are facing many difficulties Real estate market promises potential profitability but also brings many challenges As an international real estate consulting firm, if Colliers does not have a clear strategy, it is difficult to survive in Vietnam market, especially when there are many international consulting firms have joined the market Objectives of The Thesis  Review and summarize the theory of strategy and strategy formulation;  Apply the theory to analyze and formulate a strategy for Colliers International in Vietnam market;  Propose some recommendations to enhance the business result of the company Research Questions  What is strategy and strategy formulation?  Which factors will affect the strategy formulation process of Colliers International?  Which strategy will be suitable for Colliers International in recent time? Scope of Work  Field: Strategy and strategy formulation  Space: All activities of Colliers International in Vietnam  Time: From 2009 to 2012 Data Sources Primary data was collected from questionnaire and interview Secondary data has been performed by research of documents, annual/quarterly reports of Colliers International and internet sources The author conducts this research by collecting both primary and secondary information To analyze the operating situation, the author use secondary with filtering the useful information to have the big picture but supportive detail This data is not only for this research, the author have the ambition to use them for the suggestions to the Board of Director because it is from the real situation Expected Results The current status of the company is assessed and some appropriate recommendations are proposed The same methodology can be applied in the scenario of other companies in commercial real estate industry with little adjustment Thesis Structure Besides the introduction, conclusions and additional parts (references and appendices), the thesis is divided into major chapters as follows: CHAPTER - Basic of Strategy & Strategy Formulation CHAPTER - Strategy Analysis Case: Colliers International CHAPTER – Strategy Formulation and Recommendation WT Strategies (W1, T1) Colliers Vietnam should develop a process to receive, review, and analyze market information and policy information needed for timely responses to economic fluctuations Economic crisis is expected to drag on and have a profound impact to all economic activities The real estate industry is no exception to this effect So, to work effectively in difficult economic times, the company needs to turn its weaknesses into strengths through predicting risks Table 3-5: WT Strategies for Colliers Vietnam After forming the strategies that can take advantage of opportunities, face challenges, develop strengths and limit weaknesses of Colliers Vietnam as above, the summary can be can be grouped into main strategic groups: Focus on foreign companies who have already known the reputation of Colliers; Develop an appropriate human resource policy system; Take advantage of existing marketing information systems and develop new marketing tools; Have activities to promote for Colliers image in Vietnam market Details of each strategy will be given in the next part 3.2.2 Strategy Proposal The four strategies which are proposed based on the SWOT analysis above are described in details as below 71 Focus on foreign companies who have already known the reputation of Colliers Identifying target customers are foreign companies, particular tasks that can be taken under this strategy are as follows  Build sales teams with target customers are foreign companies These sales teams can be divided into two groups: one team with customers currently operating in domestic market; one with prospects which are preparing to join into Vietnam market - The team whose target customers are those currently operating in Vietnam market should strengthen these relationships, find opportunities to sell more products and excellent after-sales services - The team whose target customers are those preparing to join into Vietnam market should have a close watch on those industries which are encouraging foreign investors, make timely contact and offers, support more useful information when they participate in the Vietnam market Colliers Vietnam should get support from Colliers and Colliers in Asia Pacific to well develop this aim  Develop specific marketing plans for a particular customer classification - Focus on the appropriate marketing channels to foreign companies such as sending brochures, mails, and e-mails or even direct marketing advertising - Classify customers by industry as well as operating area then to figure out the appropriate marketing plan to these specifications  Focus on market research and understanding customer needs - Invest in market research to understand the difficulties that foreign companies often encounter in the real estate sector in order to figure out the most appropriate orientation 72 - Develop and implement programs associated with the representative offices and subsidiary of Colliers to get supports in the same system Since then the company may have more information about the customers who is preparing to enter Vietnam market as well as the difficulties that they have to face Develop an appropriate human resource policy system Human resources is a key factor to the success of any business In the real estate industry, this is especially important Currently, although Colliers Vietnam has built a high qualified staff, but the number of employees is still not enough to meet the development requirements of the company On the other hand, the incentive system for current employees of the company has not been showed good results There are no clear regulations on the compensation regime To improve the incentive system, Colliers can perform the following tasks:  Measure the level of satisfaction of current staff and adjust personnel policies reasonably - Human Resource department has the responsibility to design a detail survey to get the opinion of all staff to current working conditions and incentives; - Such surveys must be conducted quarterly or semiannually; - After the survey, Human Resource department will base on these information to adjust the personnel policies in order to balance all requirements  Develop the company’s culture - Organize many team activities to engage everyone in the company - Managers must frequently communicate with their employees to enhance understanding of their needs Take advantage of existing marketing information systems and develop new marketing tools  Take advantage of the existing marketing information system 73 Marketing information system (MIS) is one of the most important communication channels in a company, especially for large companies and for ones whose activities depend on the effectiveness of marketing activities Currently, Colliers Vietnam has developed MIS quite effective In the context of economic difficulties, all industries in general and real estate sector in particular are very sensitive to market information The role of MIS so that becomes more important To promote the efficiency of the MIS, Colliers can perform the following tasks - Classify specific information flows separately and provide information to the correct department to handle promptly - Outsource some works such as collecting information and investigating market to take advantage of high-quality human resources of marketing companies So that the company's staff also focus more on their works  Develop new marketing tools Currently Colliers Vietnam pretty good use basic marketing tools like TV documentary and press release & articles However in the context of relatively fierce competition today, the company needs to develop new marketing tools Direct marketing At the same time as writing and distributing series of articles, some direct marketing tools be used such as Bill boards and press advertising Important places for Boards will be famous public areas The company should also focus on periodic insertions into Vietnam News, VIR and in flight magazines on the progress of the building and construction milestones Web Site Colliers should help the customers in the design and implementation of a dedicated web site It can help to improve brand awareness and are aimed at improving the image of the project as well as updating the market both locally and internationally about it and should be undertaken in preparation of an official launch 74 Another note is that marketing tools for the various stages of the project must also be applied flexibly Have activities to promote for Colliers image in Vietnam market Besides promoting for projects and customers, Colliers Vietnam should also focus more on promoting the image of itself The measures may be applied are as follows - Brand the Colliers image with the leasing, management or valuation projects that has been performed by the company - Promote the company's image to the public more frequently through advertising on mass media Above are the strategies built on the strengths, weaknesses, opportunities, and threats to Colliers Vietnam In terms of limited resources, the company must choose the most appropriate strategy for implementation To decide which the most effective strategy to bring is, the next section will use the tool called Quantitative Strategic Planning Matrix 3.2.3 Strategy Selection: Quantitative Strategic Planning Matrix (QSPM) The Quantitative Strategic Planning Matrix (QSPM) uses input from Stage analyses and matching results from Stage analyses to decide objectively among alternative strategies The QSPM is a tool that allows strategists to evaluate alternative strategies objectively, based on previously identified external and internal critical success factors Like other strategy-formulation analytical tools, the QSPM requires good intuitive judgment The QSPM for Colliers Vietnam with its available strategies is constructed as follows 75 Strategy Alternatives Strategy 1: Focus on QSPM for Colliers Vietnam foreign companies Key Factors Strategy 2: Develop a good human Strategy 3: Develop MIS and new resource policy marketing tools Strategy 4: Promote the Colliers brand Weight AS TAS AS TAS AS TAS AS TAS Colliers Vietnam inherits the international reputation of Colliers so it can easily access to large customers 0.20 0.80 - - 0.40 0.60 Colliers Vietnam follows market movements closely through its modern marketing information system 0.15 0.15 - - 0.60 0.30 Colliers Vietnam has been building high quality 0.15 0.30 0.60 - - - - Strengths personnel, including experienced manager, researchers, and salesmen 76 Colliers Vietnam has a good history of credit activity with foreign banks as well as domestic ones Colliers Vietnam has good property and customer databases 0.10 - - - - 0.10 0.20 0.05 0.10 - - 0.05 0.15 0.10 - - 0.40 0.30 - - 0.15 0.15 - - 0.30 0.45 0.10 - - 0.40 - - - - Weaknesses Colliers Vietnam does not have a timely response to the global economic crisis which is spreading gradually to Vietnam Colliers in Vietnam is not well known as in the world because of weak advertising for the company itself Colliers Vietnam does not have a clear incentive system to its staff Total 1.0 77 Opportunities After Vietnam joined the WTO, the number of foreign as well as domestic companies increased Therefore, the demand for office space is also increasing 0.10 0.40 - - 0.10 0.20 Vietnamese government is implementing a number of policies to reform the economy, phasing out the old administrative system cumbersome 0.10 0.20 0.20 - - - - 0.07 - - - - 0.14 0.21 0.05 - - 0.15 - - - - 0.07 - - 0.14 0.07 - - Vietnam is a country with a developing economy, rapid urbanization, and population growth These conditions also promise the development of the commercial real estate industry Human resources in Vietnam are increasingly being focused on training and improving Vietnam young population ratio is at a high level so that the demand for property is always high, especially in big cities 78 Aside from Ho Chi Minh City and Hanoi, Vietnam also has many new cities, promising a golden land for the commercial real estate industry No competitor has the capability to manipulate the market 0.10 - - - - 0.10 0.20 0.05 - - - - 0.05 0.15 0.12 0.24 0.12 0.36 - - 0.05 0.10 - - - - - - Threats The world economic crisis takes place on a large scale and for long time It has no small impact on the Vietnam economy which is on the international integration The year 2013 is expected to be a very tough year for Vietnam businesses Heavily-managed and weak Dong currency reduces incentives to improve quality of exports, and also serves to keep import costs high 79 Loopholes and discrepancies in the integration as well as in the enforcement of laws remain a big obstacle to doing business in Vietnam Pressure of customers increase because they themselves are in difficult time Corruption also raises the cost of business dealing in Vietnam Many construction projects were halted because of economy recession, causing difficulties in 0.07 - - - - 0.14 - - 0.05 - - - - 0.05 - - 0.07 - - - - 0.07 - - 0.10 0.20 - - - - - - consumption Total 1.00 2.64 2.01 2.83 2.46 Table 3-6: QSPM for Colliers Vietnam The total score for four alternative strategies are 2.64, 2.01, 2.83, and 2.46 respectively The scores of Strategy 1, and are all above midscore (2.5) and this implies that Colliers Vietnam can apply those strategies in the next period Only the score of Strategy is under 2.5, which shows that it is not so attractive to be applied But due to the limitation of resources, Colliers Vietnam is recommended to apply only Strategy and The details objective and action plan for each strategy are described in the next part 80 3.3 RECOMMENDATIONS TO COLLIERS According to this analysis, these are some recommendations for Colliers Vietnam when implementing the available strategies 3.3.1 Strategy 1: Focus on foreign customers Objective - Use the existing reputation of Colliers to access to potential customers; - Focus on the customers who have demand of high quality commercial real estate - the main product of the company Action Plan Time 2013 Tasks Build base Objectives the Have more clear understanding about the market needs Contents - Do market research; - Recruit more staff that has good relationships with target customers 2013 Build particular action plans Apply the information to action plans research - The Board of Directors particular agrees on general policies and assigns tasks to related directors The director in turn plan and report regularly to the Board of Directors to finalize action plans 20132018 Implement action plans Execute action plans that - Organize teams have been built separate tasks; to - Outsource such tasks that the company does not specify; - Report regularly to project managers for timely adjustments Table 3-7: Recommended Action Plan Framework for Strategy 81 3.3.2 Strategy 2: Develop the existing MIS and marketing tools Objective - Promote the effectiveness of the current MIS; - Develop new marketing tools to suit market requirements Action Plan Time 2013 Tasks Objectives Contents Re- Flow the information to the - Assign the task to organize right place in order to make Marketing marketing timely decisions build a new effective flow department to informatio chart of n flows information marketing - Guarantee that information arrives at the right place and is analyzed promptly 2013- Develop Adapt to the development of - Organize teams to research 2015 new marketing system all new marketing channels marketing For each new channel, tools organize separate teams to develop each one - Balance the budget to all marketing channels Table 3-8: Recommended Action Plan Framework for Strategy 82 CHAPTER CONCLUSION Chapter has been used two effective models in the final stage of strategy formulation: SWOT model and QSPM According to the result from these models, the author has built some recommendations to Colliers Vietnam in order to improve its operation in Vietnam market now 83 CONCLUSION Colliers International is a high-ranking real estate consultancy firm globally With the main services of investment and lease consulting, target customers of the company are real estate developers and investors When entering an emerging market as Vietnam, especially when the economy is fluctuating and many big names have joined the market such as CBRE, Savills, Knight Frank, formulating and implementing a suitable strategy for Colliers is an urgent task External and internal environments are analyzed in turn to come up with appropriate strategies External assessment is divided into two analyses: macro environment analysis and industry analysis This part gives us the opportunities and threats that affect the operations of Colliers Internal assessment includes value chain analysis, which shows us the strengths and weaknesses of the company After analyzing factors of the external and internal environments affecting Colliers, these strategies are recommended to the company: focusing on foreign customers and developing the existing MIS and marketing tools Each strategy comes up with a detailed objective and action plan During this research I have been received many helps and advices from Dr Nguyen Viet Dung as well as my colleagues However, due to time and resource limitations, the thesis cannot avoid some shortcomings I am expecting to receive feedbacks from the teachers and friends to complete this research 84 REFERENCES Alex Miller, Gregory G Dess (1996), Strategic Management, McGraw-Hill, New York Andrews, Kenneth R (1987) The Concept of Corporate Strategy (3rd edition), pp 13 Homewood ILL: Irwin Coulter, Mary (2002).Strategic management in action (2nd edition.), pp Upper Saddle River, NJ: Prentice Hall Hitt, Michael A., R Duane Ireland and Robert E Hoskisson (2003).Strategic Management: Competitiveness & Globalization (5th edition), pp Mason, OH: South-Western Porter, Michael E (1996), What Is Strategy?, Harvard Business Review, Harvard University, Massachusetts Porter, Michael E (1998), Competitive Strategy, Free Press, New York Porter, Michael E (Jan 2008), The Five Competitive Forces that Shape Strategy, Harvard Business Review Thompson, Arthur A and Alonzo J Strickland (2003).Strategic Management: Concepts and Cases (13th edition), pp 10 New York: McGraw-Hill/Irwin Wright, Peter L., Mark J Kroll and John Alan Parnell (1998).Strategic Management (4th edition), pp Upper Saddle River, NJ: Prentice Hall 85