Competitive strategies the care of hapro travel

T A B L E A C K N O W L E D G E M O F C O N T E N T S E N T S i A B S T R A C T ii T Ó M T Ấ T iv T A B L E O F C O N T E N T S vi L IST O F T A B L E S ix L IST O F F IG U R E S X IN T R O D U C T IO N 1 R esearch P rob lem s O b jectives and A im s R esearch Q u e stio n s S cop e o f W o r k R esearch M eth o d o lo g y S ig n ific a n c e L im ita tio n s .3 E xpected R e s u lts T h esis S tr u c tu r e C H A P T E R 1: L IT E R A T U R E R E V IE W 1.1 Competitive Strategies and The Importance o f Competitive Strategies 1.1.1.Definition o f Competitive Strategies 1.1.2.The 1.1 Importance o f Competitive Strategies Kinds o f Competitive Strategies 1.2 Process to F orm ulate C om petitive S tr a te g ie s 1.2.1 V ision/M ission 10 1.2.1.1 V issio n 10 1.2 M i s s i o n 1.2.2 External A n alysis 14 1.2.2.1 Macro A nalysis 14 1.2.2.2 Industry A n alysis 17 1.2.2.3 Opportunities & T h reats 19 1.2.3 Internal A n alysis 20 1.2.3.1 Value Chain M odel 21 1.2.3.2 Process to Identify Sustainable Competitive Advantages 27 1.2.3.3 Strengths & W eaknesses 30 1.2.4 Formulation and Choice o f Appropriate Competitive Strategies 31 1.2.4.1 SWOT M atrix 31 1.2.4.2 GREAT M o d e l .32 1.3 T he Best P ractices o f C om petitive Strategy F orm u lation .33 C H A P T E R 2: F O R M U L A T IO N AND C H O IC E O F A P P R O PR IA T E C O M P E T IT IV E ST R A T E G IE S FOR H A PR O T R A V E L 36 2.1 An In trod uction o f H apro T v el 36 2.1.1 General Information .36 2.1.2 Organizational Structure and L eadership 36 2.1.3 Business Results 37 2.1.4 O bjectives 37 2.1.5 Current Strategies and Im plem entation 38 Scope o f Strategy Form ulation .38 2.2 F orm ulation and C h oice o f A ppropriate C om p etitive Strategies for H apro T r a v e l 39 2.2.1 V ision /M ission 39 2.2.2 External A n a ly sis 39 2.2.2.1 Macro A nalysis 39 2.2.2.2 Industry A nalysis 47 Ranking o f Opportunities and Threats for Hapro T ravel 52 2.2.3 Internal A n alysis 52 2.2.3.1 Value Chain M o d e l 52 2.2.3.2 Process to Identify Sustainable Competitive Advantages 59 Ranking o f Strengths and W eaknesses for Hapro T ravel 62 2.2.4 Formulation and Choice o f Appropriate Competitive Strategies 62 2.2.4.1 SW OT M atrix 62 2.2.4.2 GREAT M O D E L 67 CHAPTER 3: MEASURES TO IMPLEMENT THE CHOSEN STRATEGIES 70 3.1 M easures to Im plem ent the D ifferentiation F ocus Strategy Through P roduct A ttr ib u te s 73 3.2 M easures to Im p lem en t the D ifferentiation F ocus Strategy Through C u stom er S e r v ic e s 74 C O N C L U S IO N 77 REFERENCES L I S T T a b l e 1.1: T h e P rim a ry A ctiv ities a n d O F T A B L E S F a c t o r s f o r A s s e s s m e n t Table 1.2: The Support Activities and Factors for Assessment 25 Table 13: Sustainable Competitive Advantage 29 Table 1.4: Comparative Competitive Analysis 30 Table 1.5: Strategy Formulation 32 Table 1.6: GREAT Model 32 Table 2.1: Types o f the Tour in Vietnam 44 Table 2.2: Travel Spots in Vietnam 46 Table 23: The Number o f Transport Means in Flanoi 48 Table 2.4: Ranking o f Opportunities and Threats for Hapro Travel .52 Table 2.5: Comparative Competitive Analysis for Hapro Travel 61 Table 2.6: Ranking o f Hapro Travel’s Strengths and Weaknesses 62 Table 2.7: Differentiation Strategy Details (O-W) 65 Table 2.8: Cost Leadership Strategy Details (O-T) 67 Table 2.9: GREAT Model for 1lapro Travel 68 Table 2.10: GREAT Model for I lapro Travel’s Differentiation Focus Strategy 68 Table 3.1: Implementation o f Product Attribute Differentiation Focus Strategy for Hapro Travel 73 Table 3.2: Implementation o f Customer Service Differentiation Focus Strategy for Hapro Travel 75 L I S T F i g u r e 1 : P r o c e s s to F o r m u l a t e O F F I G U R E S C o m p e t i t i v e S t r a t e g i e s F igure 1.2: Elem ents o f Macro A n a ly sis 15 F igure 1.3: Five Forces M odel by M ichael Porter 17 F igu re 1.4: Value Chain M o d e l 21 F igure 1.5: Process to Identify Sustainable C om petitive A dvantage 27 F igure 1.6: SW OT A nalysis Fram ework 31 F igure 2.1: Organizational Chart o f Hapro T r a v el 37 Figure 2.2: Consumption Structure o f Flouseholds and Individuals in H anoi 40 F igure 2.3: Top Ten Most Reliable Travel A g en ts 50 Figure 2.4: Five Forces Model o f Tourism Industry in H an oi 51 Figure 2.5: SW OT Matrix o f Hapro T ravel .63 Figure 2.6: Strategy Formulation for O-W Quadrant 64 F igure 2.7: Strategy Formulation for T-W Q uadrant 66 F igure 3.1: Com ponents o f Strategy Im plem entation 70 X INTRODUCTION Research Problems Competitive strategy helps firms find out the ways to compete against competitors so it is very important for the firms to stay comfortable in the market Companies with appropriate strategies will lead to growth and expansion In contrast, companies with inappropriate strategies will lead to failure or even collapse In order to formulate competitive strategy, managers need to scan external and internal environment with some models and analysis tools For companies with chosen strategies already, they also need to monitor the environment and adjust their strategies appropriately because the environments are always changing Hapro Travel, a new company in tourism industry, already has the competitive strategy by differentiating their products The problem is that the company did not pay enough attention to the implementation and adjustment o f the chosen strategies This research will test again if the chosen strategy o f Hapro Travel is the appropriate one and provide some measures to implement the suggested strategies for the company The tourism industry in Vietnam now is very fierce with strong and numerous competitors Therefore, it is very necessary for Hapro Travel to have appropriate competitive strategies and implement them in a right way to compete against other rivals O bjectives and Aim s The objectives o f this thesis are as below: - To provide a better understanding o f com petitive strategy including the definition, the importance and the formulation o f com petitive strategy - To provide a better understanding o f tourism industry in Hanoi and review the business operation o f Hapro Travel Then, to apply the theory into the case study o f this company in order to formulate the right strategy - To give out som e conclusions and suggestions for the implementation o f the chosen strategies for Hapro Travel The aim o f this thesis is to provide guidance for anyone w ho wants to formulate competitive strategies R esearch Q uestions In order to obtain the objectives and aim, the follow ing questions have been developed: - Why is it necessary for Hapro Travel to have com petitive strategies? - What does it have to to formulate and choose the appropriate com petitive strategies or to adjust the existing strategies? - How does Hapro Travel implement the chosen strategies? Scope o f W ork This thesis focuses on the formulation and choice o f appropriate competitive strategy for Hapro Travel up to 2013 R esearch M ethodology The qualitative method (ease study) is applied for this thesis A detailed review o f literature was undertaken to understand the process to formulate and choose the appropriate strategies Both primary and secondary data were used for this thesis The literature review involved a study o f books, newspapers and Internet sources The primary data was collected through indepth interviews with management board o f Hapro Travel and self­ observation The data was processed by M icrosoft Excel and Word S ign ifican ce This thesis will help Hapro Travel to understand more about strategy, recognize opportunities, threats, strengths, and w eaknesses, and then exploit them in an appropriate way to achieve objectives o f the company This thesis is highly applicable for Hapro Travel L im itations The formulation and choice o f appropriate strategies in this thesis are applied in the case o f Hapro Travel only In order to be applied in the cases o f other companies, it requires further researches E xpected R esults F ollow ing are som e expected results o f this thesis: - Review the process to formulate and choose appropriate competitive strategy for a company; - Successfully formulate and choose appropriate competitive strategies for Hapro Travel - Suggest som e appropriate measures for Hapro Travel to implement the chosen strategies T h esis Structure The thesis consists o f three main parts: Introduction, Content and Conclusion The introduction part deals with the m ethodology to carry out the research This part includes research problems, objectives and aims, research questions, scope o f work, research m ethodology, significance, limitations and expected results The content part begins with the literature review and then the application o f theory into the case o f Hapro Travel The final part draws out som e conclusions and suggestions for the implementation o f the chosen strategy for Hapro Travel C H A P T E R I: L IT E R A T U R E R EV IEW 1.1 C o m p etitiv e S trategies and The Im portance o f C om p etitive Strategies The term “strategy’' was firstly used in military and literally meant how military forces were used to win a battle, but with the notion that “business as war”, it was quickly and w idely adopted in the world o f business In business, there are many definitions o f strategy, som e are very lengthy and some are very short H owever, in summary, strategy can be understood as “a way to achieve an organization’s objectives and m issions” In a company, there are four levels o f strategy at functional, business, corporate and global level Functional strategy answers the question o f how to improve and combine resources to achieve competitive advantages Functional strategy is also a measure to achieve strategy at business level Business or competitive strategy answers the question o f how to compete in a given business area Corporate strategy answer the question o f what businesses should the company enters and how to allocate resources between these businesses And finally, global strategy answers the question o f where and how to compete in international market Competitive strategy is the strategy that this thesis focuses on to build strategy for Hapro Travel C om petitive strategies answer the question o f how to compete against competitors According to M ichael Porter in his book published in 1986, C om petitive Strategy ’, he defines a competitive strategy as "a com bination o f the ends (goals) fo r which the firm is striving and the means (policies) by w hich it is seeking to get there ” Basing on this definition, competitive strategy is understood more deeply as both plan and position rivals, high threats o f substitutes and new entrants, and small number o f suppliers will make it more difficult for Hapro Travel to compete In this context, Hapro Travel should build cost leadership strategy to retain individual custom ers and differentiation focus for organizational customers since the trend o f using paid vacations as an indirect financial compensation is increasing am ong com panies and organizations ^Shrali number of tours pfg| - Littledifferentiat ton of tours - Low Brand name - Rx>f distribution network *Weak sales forces &tour guides - Unsatisfactory services -Fborwebsrte r - High Inflation &CR - Intensive existinorivalry -Highthreat of substitutes - Snail number of suppliers - Highbrand Identity - Highthreat of entrants F igure 2.7: Strategy F orm u lation f o r T - W Q uadrant The cost leadership strategy can be done through the efficiency o f operations In order to so, Hapro Travel needs to design processes for all work flows to make the operations run smoothly It is also essential for Hapro Travel to increase productiv ity o f all employees, equipments and devices To have low cost tours, it must have low input costs by developing good relationships with suppliers o f hotels, restaurants, transport, etc Moreover, reducing mistakes in serving customers is a good way to retain them and reduce the costs to acquire new customers It is also a good way to increase word-of-mouth advertising from them and consequently save advertising costs T he differentiation differentiation focus strategy strategy already is built not m uch above different How ever, from this is the for organizational and corporate customers only C om pared with differentiation strategy, the risk and expenses for differentiation focus strategy would be low er but the achievabi 1ity would be h igh er and the tim e-bound would be shorter attributes H apro Travel should make some adjustm ents by providing product that are suitable for them like gam es, training course, and investm ent opportunities T able 2.8: Cost L eadership Strategy Strategy C ost L ead ersh ip P rim ary roles M easures O perations - D esigning processes for all w o rk ­ flows - Increasing productivities o f all em ployees, equipm ent and devices - D eveloping good relationships with suppliers to have low input costs - Increasing custom er satisfaction to reduce advertising costs 2.2.4.2 H a p ro T ravel's G R E A T Model So far, three strategies have been form ulated for Hapro Travel The next step is to ch oose the m ost appropriate ones by using the G R E A T model to com pare them For a new com pany like H apro Travel with easy access to finance, the w eight o f Gain and A chievable should be the highest Risk, Expense and T im e-b oun d should have lower weights Table 2.9: GREAT Model for Hapro Travel Criteria Weight Strategies and Measures Differentiation Cain 0.3 Risk 0.2 Expense 0.1 Achievable 0.3 j Time-bound 0.1 17 Total Cost Leadership 0.6 - 0.3 _ _ _ 0.9 0.3 ' Differentiation Focus 1C 0.8 0,5 0.4 'rv-.-0 *9- r' 1.5 a > - 20 23 ETif& - ■ 0.5 4.7 " ' _ Differentiation focus is the strategy with the highest score o f 4.7 so it should be chosen for H apro Travel for the next five years Differentiation focus strategy is done through product attributes, image and custom er services and it is necessary to build another G R E A T M odel to choose the m ost appropriate and specific one for Hapro Travel T a b le : G R E A T M o d el for H a p r o T r a v e l ’s D iffe r e n tia tio n F o cu s S tr a te g y - Criteria Product Attributes Gain ~ Differentiation Focus Weight Image Custom er Services 0.3 M W H Risk 0.2 Expense 0.1 A chievable 0.3 ■ :4 ^ h - ' *•X • B IW ' or, ppgpw f 0.3 5 05 r l.J M m lm f | | | | m $ Total 0.1