Building the orient strategy 2010 2015 at ben thanh general cultural joint stock company

MEIHO UNIVERSITY Graduate Institute of Business and Management MASTERS THESIS Building the Orient Strategy 2010-2015 at Ben Thanh General Cultural Joint Stock Company In partial fulfillment of the requirements for the degree of Masters of Business Administration Advisor: Dr Yi-Cheng Chen Co-advisor: Dr Nguyen Minh Tuan Graduate Student: Ngo Duc Thang December, 2010 ACKNOWLEDGMENTS I would like to show my appreciation to Ho Chi Minh City of Industry, Vietnam, and Meiho University, Taiwan of their acceptance to me as a graduate student of the Master of Business Administration program in the years 2009 – 2010 I am truly grateful for Dr Yi-Cheng Chen, professor in the Management of Information System, for his instructions, advice, and encouragement during my preparation of this thesis Also, I would like to highly appreciate Dr Nguyen Minh Tuan, the Dean of the Business Administration of Ho Chi Minh City University of Industry, for his advice and ideas to me for the completion of the master thesis Besides, my thanks are sent to the EMBA classmates, with their ideas and discussions I have obtained a lot of necessary knowledge for the thesis Last but not least, I would like to sincerely thank the colleagues in Benthanh General Cultural Corporation, my partners for their valuable answers and assessment during my preparation of the thesis, and my family members who have encouraged and supported me in the difficulties I have met during the study from the beginning to the end I Building the Orient Strategy 2010-2015 at Ben Thanh General Cultural Joint Stock Company ABSTRACT Benthanh General Cultural Joint Stock Company (“the company”), equitizated on 2005, is one of enterprises operating in the production of computer form in Vietnam The changes of the economy and the printing industry in recent years have forced the company to adjust in order to adapt with such the changes Based on the Strategic Niche Management literature by Ieromonachou at el (2004), the topic aimed at planning strategies of Benthanh General Cultural Joint Stock Company applying the approach of Strategic Niche Management Research data were collected from the interviews of key persons in the company based on the prepared questionnaire Data collected were approached in levels of landscape, regime, and niche respectively in order to find out factors affected to the transition from the macro economy to the industry, from the industry to the company, and from internal business activities to innovations Research result shows what to be implemented for the purpose of improving activities then figure out solutions of the strategy planning Keywords: Strategic Niche Management, Landscape, Regimes, Niches II Building the Orient Strategy 2010-2015 at Ben Thanh General Cultural Joint Stock Company Contents ACKNOWLEDGMENTS I ABSTRACT II Contents III Tables V Figures VI Chapter1 Introduction 1.1 Background and Motivation 1.2 Purpose – Target – Question 1.3 Research Scope and Limitations 1.4 Definition of Terms Chapter Literature Review 2.1 Strategic Management 2.2 Strategic Niche Management 2.3 Landscape 11 2.4 Regimes 12 2.5 Niches 14 Chapter Research Methodology 18 3.1 Research Method 18 3.2 In-depth Interview 18 3.3 Interviewees 19 3.4 Data Collection 19 3.5 Reliability 19 Chapter Research Results and Analysis 22 4.1 Landscape Analysis 22 4.2 Regime Analysis 23 4.3 Niche Analysis 24 Chapter Conclusions and Recommendations 28 5.1 Conclusion 28 5.2 Recommendation 29 III References 31 Attachment 33 IV Tables Table 2-1 Types of Strategies (David, 2003) .7 Table 3-1 List of Interviewees 19 V Figures Figure 2-1 A Comprehensive Strategic-Management Figure 2-2 Technological Development As Process of Variation and Selection .9 Figure 2-3 Multi Level Perspective 10 Figure 2-4 The Macro Landscape Channels Micro and Meso Developments 11 Figure 2-5 Transition by Substitution 12 Figure 2-6 Accumulation/Transformation as Transition Route .13 Figure 2-7 Competition between an Established and Invading Product 15 Figure 2-8 Linkages between Internal Niche Processes 16 Figure 2-9 Emerging Level of Niches in Relation to Local Practices in Experiments 17 Figure 2-10 Origin and Diffusion of a New Technology 17 VI Building the Orient Strategy 2010-2015 at Ben Thanh General Cultural Joint Stock Company Chapter1 Introduction Chapter include: (1) Background and motivation; (2) Purpose – Target – Question.; (3) Research scope and limitation and (4) Definition 1.1 Background and Motivation In the business environment that changes continuously with a more and more severe competition, each enterprise who wants to exist and develop has to define a right direction and a suitable strategy In reality, many small and medium enterprises in Vietnam pay a little attention to the matter of strategy, they just simply make short term plans for themselves Ben Thanh General Cultural Joint Stock Company, a member of Ben Thanh Group was established ince 1990 operating in culture and communication business, the Government made policies to support such the enterprises at a monopoly manner that time, main products were audio and video tapes, school book and notebook printing, trading of tape in reel, printing materials etc Until 2004, together with the issuance of Law of Publishing, the production of audio-video disc and printing were socialized, and private enterprises felt comfortable to join the market and invested modern machinery The company itself could not fulfill the investment in technology due to a lack of capital leading to a gradual decline of business operation On 2005 the company transferred the ownership from 100% state-owned to joint stock with 51% held by the state, the investment in technology and machinery was focused and the products met the demand in the market; however, like other small and medium enterprises, the business operation of the company from the time of mobilization onward often depended on annual plan but lacked of the strategy planning Main products of the company at the moment consist of audio video production, printing, continuous printing paper, show business etc… In such the business, the competition becoming more and more severe, and competitors developing from day to day together with highly to the worker It is the same with ideas and opinions from the customer, they should be recorded systematically in each quarter in order to the higher managers can make annual plans For the ideas from the executive members of the factory, they should be reported to the company directors Besides, at the policy side, the company directors should research and make a suitable budget for the experiment of innovation ideas in order to catch up with market opportunities The application of SNM approach should be researched together with other literatures on competitive strategy as Michel E Porter (1998) that we can analyze competitive factors in order to determine necessary source to support SNM strategy There is a necessity to establish a research and development department of the company in order to connect technological niches to market niches In each experiment we need to make an in-depth economic analysis in order to evaluate the efficiencies and determine the financial feasibility From the above recommendations, the factory can build its business strategy and contribute to the corporate strategy of the company as per literatures on strategic management mentioned in Chapter 30 References IEROMONACHOU, P., S POTTER & M ENOCH (2004), ‘Adapting SNM for evaluating radical transport policies, the case of the Durham road access charging scheme’, International Journal of Transport Management 2(2): 75-87 GEELS, F.W (2002), ‛Technological transition as evolutionary reconfiguration processes: A multi-level perspective and a case-study’, Research Policy 31(8-9): 1257-74 GEELS, F.W (2004), ‘From sectoral systems of innovations to socio-technical systems: Insights about dynamics and change from sociology and institutional theory’, Research Policy 33: 897-920 GEELS, F.W & R KEMP (2000), ‘Transities vanuit een socio-technisch perspectief’, one of three reports on transition research by Rothmans, ICIS-MERIT, Maastricht Economic Research Institute on Innovation and Technology, Maastricht HOOGMA, R (2000), ‘Exploiting technological niches’, MSc thesis, Twente University, Enschede HOOGMA, R., R.KEMP, J SCHOT & B TRUFFER (2002), Experimenting for sustainable transport: The approach of strategic niche management London and New York: Spon Press KEMP, R., P MULDER & C.H RESCHKE (1999), ‘Evolutionary theorising on technological change and sustainable development’, Working Paper Series 2, Maastricht Economic Research Institute on Innovation and Technology (MERIT), Maastricht University, Maastricht and Institute for Environmental Studies (IVM), Vrije Universiteit, Amsterdam LANE, B.M (2002), ‘Implementation strategies for fuel-cell powered road transport systems in the United Kingdom’, thesis, Open University, Milton Keynes, UK RAVEN, R (2005a), Strategic niche management voor analyse doeleinden, stappenplan voor de analyse van ontwikkeling en veranderingspotentieel van duurzame technologie niches Eindhoven: Technische Universiteit Eindhoven RAVEN, R (2005b), Strategic niche management for biomass, a comparative study on the experimental introduction of bio-energy technologies in the Netherlands and Denmark Eindhoven: Technische Universiteit Eindhoven 31 RIP, A & R KEMP (1996), Towards a theory of socio-technological change, mimeo UT, report prepared for Batelle Pacific Northwest Laboratories, Washington DC, An edited version has been published as book chapter, Technological change In: S Rayner & E.L Malone, eds (1998), Human Choice and Climate Change, an international assessment, Vol 2, Batelle Press, 1998 Washington DC, pp 327-400 JANSKE VAN EIJICK (2007), Transition towards Jatropha biofuels in Tazania? – An analysis with Strategic Niche Management, African Studies Center, African Studies Collection, Vol.3 WEBER, M., R HOOGMA, B LANE , & J SCHOT (1999), Experimenting for Sustainable Transport Innovations: A Workbook for Strategic Niche Management Enschede: Twente University Ing R C Pantoflet (2007) Strategic niche management for offshore industry, University Eindhoven Faculty of Technology and Management; course Technology and Policy Johan Schot and FrankW Geels (2008), Strategic niche management and sustainable innovation journeys: theory, findings, research agenda, and policy, Technology Analysis & Strategic Management Vol 20, No 5, September 2008, 537–554 Marjolein C.J Caniëls & Henny A Romijn, Strategic Niche Management as an Operational Tool for Sustainable Innovation: Guidelines for Practice, Paper for the Schumpeter Conference 2006, 21 -24 June, Nice, France GS-TS ĐOÀN THỊ HỒNG VÂN (2009), Quản trị chiến lược MICHAEL E PORTER (1998), Competitive Strategy 32 Attachment The records of interview Expert A: Mr Chau, Hoan Dung - Title: General Director - Company: Benthanh GCC - Major in study: economics - Duration of working: 20 years Mr Dung said: “Benthanh GCC, from the time of establishment 20 years ago, manufactured audio – video programs in the beginning and started the business in printing for 10 years (merged from a printing factory owned by the People’s Committee of District 1) with the technology of low quality products at the declining production capacity Within years from the merging time, the sales revenue just compensated the production cost only although the competition did not exist at that time The reason for the decline was out-of-date machineries and no investment capital for the new technology The factory was not closed, though, for the purpose of supplying jobs for nearly 200 workers Main operation of Benthanh GCC was in service only with an advantage in publishing audio – video programs harvesting profit and accumulating for other business From such the profit accumulating, the investment in printing business was considered, and the shift to computer form printing instead of book printing was initiated from 2001 That was a different direction the directors chose whereas there existed a few manufacturers in the same segment at the moment The new direction met difficulties in the beginning due to the limited investment in the machineries not creating a synchronized production system, and the output just fulfilled a small demand in the market The limited output could not make up a high depreciation The company directors managed to find out the way to increase the output, and found that demand stayed in various types of product, for example the market needed computer forms in multi colors but the company could only make one color products The investment needs was indicated that purchasing second-handed machinery in South East Asia region is suitable for a limited credit The expectation of mine was to rescue 33 the factory which is on a decline From that time on, the output rose times more than the existing one The output grew 20%-30% annually from 2004 (as annual income statement showed) As the sequence, the suitable direction indicated by the company directors and the market demand exploited by the factory managers were the successful factors contributed to the business outcome When the company reached a break-even output and gained profit, the capability of getting credit gradually rose from year to year The main goal was to define what market segment the company would join and what kind of product the company would manufacture The company has to determine what the macro economy is, how the printing industry is running, and what products the company should manufacture Such the activities have just been started recently when the company came to equitization, but they have not been expanded over time, just once last year People involved in the activities include the Board of Directors and the Management Board members, of whom the leading actors are the Chairman and the General Director who take the initiative to start the activities in the company mainly at a model from the highest management to lower management” 34 Expert B: Mr Do, Huy Dan - Title: Vice General Director - Company: Benthanh GCC - Major in study: economics - Duration working in printing industry: 17 years Mr Dan said: “At the beginning time when I joined the company on 1990’s, at the monopoly market the company was enjoying we did not think of the production expansion or market development; with ordinary products, the production just fulfilled planned targets imposed by the higher management particularly the People’s Committee of District The competition begun on 2000 with the upgrading in machinery and investment in new machinery of the company, but the business operation and management was implemented in old ways not developing the sales revenue and production Since 2005 when the company came to equitization, the pressure from the management board and the shareholders pushing the directors to change their ways of management and collaboration with other departments in factories, the factories had more active role in customer seeking but there was a shortage in sales executives and workers who were required suitable skills At the same time when the market was opened for private enterprises to join, changes inside the company could not follow the change of competition in the market The switch to production of computer form was considered a potential for the company At the beginning of the switch, there were many difficulties the company met, for instance unstable quality of local raw material but the imported raw material was impossible due to the limited size of order; if we bought such the imported material from importers in the market, we could not have the advantage in the buying price compared to other bigger competitors with large buying orders The quality of material plays a major role in the production line, sometimes imported stereotypes of the experiment production are different from products of the mass production It will be more secure for the production if there exist domestic suppliers On the contrary of expectations from the switch to the new direction, the possibility of development and profit seeking from above business could not reach the planned targets Therefore, some adjustment have been made such as a longer break 35 even time compared to that in the investment project, a more focusing to small customers which required more time The limited competitive capability of the company led us to choose a different type of customer which has low level consumption such as shops, small companies instead of post offices, banks We called it the ‘slow absorption’ strategy with a stepby-step output growth; that gradually increased our capability in direct negotiation with foreign material suppliers In order to know the possibilities of our company, we should implement a SWOT analysis stating our strengths and weaknesses as well as competitors’ in the market For information on our company, we should contact people in charge of Marketing, Sales, and Production departments” 36 Expert C: Ms Le, Thi Nguyet - Title: Manager of Finance and Planning Department - Company: Benthanh GCC - Major in study: finance – accounting - Duration working in printing industry: 15 years Ms Nguyet said: “To establish the production line in our company, we have to pay costs such as land renting, machinery purchasing, material buying, labor hiring, etc and even working capital We calculate sales revenue and earning from the selling of our products on a monthly basis At the time of being a stated-owned enterprise, the company invested capital in several machineries in second-handed status in order to start a new business at the factory which was computer form However, such the capital was still small not fulfilling the factory’s needs in deployment of a new business with many projects for an overall effectiveness in the company level such as supplying more jobs, growing sales revenue and profit, etc On 2005, when the company completed its equitization with a more flexible management manner consisting of financial investment, under the pressure coming from shareholders, the company directors and factory directors made and implemented more new projects in the business of computer form and other relevant products The company saved a large source of capital for the factory in the technology innovation and machinery purchasing So far the factory had stabilized and developed the production bringing effectiveness to the factory itself and the company However, if compared to that of competitors, the investment was still slower and weaker The cautiousness of the top managers in investment point of view and the lack of capital did not make a synchronized system in production although it was a new direction The production line just could make products in simple forms, when the effectiveness came then it could be upgraded based on suggestions from the factory directors along with an essential needs of investment and a slow respond to market opportunities In the printing field, new investment projects often had a long break even time with loss in the beginning years, so the possibility of change seeking or innovation often stayed at ideas without a chance of experiment 37 Expert D: Mr Nguyen, Quoc Hoan - Title: Deputy Director - Company: Benthanh Print - Major in study: human resource - administration - Duration working in printing industry: 10 years Mr Hoan said: “Besides ideas and opinions said by Mr Dung and Mr Dan, I’d like to add more ideas on the view of a human resource manager Since the switch to the new segment of printing products, besides the change of technology we also made innovation in the existing technology Those tasks were implemented in a conscious way along with the quality control process ISO 9001:2008 That pushed the workforce in every department to innovation ideas in order to increase the output or reduce the cost In the implementation of such innovation, due to unsynchronized level of skill, the workers could not apply new methods to their works other than those they were doing in daily works In order to start the activities of innovation in our company, we required a budget and time for execution During the lifetime of the innovation, the workforces are involved particularly the marketing, sales executive, and the workers themselves In the business at present, there were many companies operating for a long time which belong to people’s committees at nation and city levels enjoying an advantage of customer source Their investment projects were easily implemented creating a competitive advantage From that point we could realize that the suggestion of ideas using modern technology to make other products to potential market could be occupied by larger companies with higher and synchronized technology adding their current wide distribution channels” 38 Expert E: Mr Bui, Van Cach - Title: Sale Manager - Company: Benthanh Print - Major in study: business administration - Duration working in printing industry: 15 years Mr Cach said: “There was a significant change in the business operation of the company in recent years especially since the time of equitization, machineries were gradually upgraded from year to year creating a competitive and bidding capability, the quality of sheet-fed products was also rose due to such the upgrading since 2007 The direction of computer form production gave effectiveness since 2006, and investment projects in this field were also continuously upgraded together with the event of the purchased machinery at brand new instead of second-handed, the competitiveness was affirmed with the figures of large customers coming such as banks, processors for export, retailers outside Ho Chi Minh City making an output growth of 20%-30% per year However, there were still several difficulties in this period Firstly, the permanent shortage of imported materials due to the inventory at a low level for the cost controlling purpose of the financial department when numbers of order suddenly rose, the solution to maintain large customers was to buy back from competitors the materials leading to a growth of main material cost to 15%-20% and giving a bad effect to the profit Secondly, the shortage of a leading in the research of new products from the existing machinery system has bound the company to seek products from oversea particularly notebook, or to seek products which could be made locally with sheet-fed technology Furthermore, in the technology after successful designing and experiment, the production helped reduce 1-2 stages compared to sheet-fed method, reduce production cost and time, but the commercialization failed because the market demand was at customers with medium income other than that of popular products for students in developed nations The expectation from that research was to develop new products in a potential market with target customers of students (1,675,700 people on 2008; 1,796,174 on 2009 for the whole nation, of which 405,609 and 334,302 in Ho Chi Minh City respectively) make use of the excess capability of the existing machinery and a low possibility to access the market of competitors 39 Technologies applied in the printing industry are diversified and expensive whereas a market niche the company put into consideration like envelopes, UV coating that are made manually cannot ensure the pay-back possibility My personal assessment to the unsuccessful commercialization from the reality of product deployment was that company branches implemented it in a unsuitable manner, and that the market survey was only based on a production capability without a market demand The workforce involved as a part of the activity network is the sales and marketing executives The network between the workforce develop as an information exchange system set up between the two departments coordinated by the sales manager and marketing manager, they knew each other before entering the activities on our company There are still problems during the implementation of such the activities between the two managers due to the late of reports from the workforce” 40 Expert F: Mr Tran, Phuoc Hoang - Title: Manager of Planning Department - Company: Benthanh Print - Major in study: economics - Duration working in printing industry: years Mr Hoang said: “Late reports caused problems to the innovation in our company, and barriers were also created due to the unsystematic way of innovation implementation following the top-down model but not in a periodical duration Barriers could be counted as the problem with current technology applied at the company, the raw material supplied from different suppliers, and strong lobby from peers creating a more severe competition in the market Furthermore, the negligence from other workforces in the company was another barrier we should overcome For instance, in the effective innovation of the process of production management and customer management, information from departments such as sales, production should be reflected accurately and in time, and sales executives were required to supply enough customer information which they were in charge The information should include customer name, order volume, dimensions, delivery date, etc then the coordination staff could make a production plan for the production department The production department should feed back their information such as production capability in each specific period, problems in design (if any), finished products, etc For the collection of such above information from various departments, the managers would give out decisions in time and effectively, otherwise they could not have the right decisions That would create a negative impact to the innovation strategy of the company in production and customer management When the information system ran smoothly, the quality still not met customers’ requirement including internal and external ones, we could think of the matter of technology innovation or machinery addition; or the consistency of price, quality, delivery of materials; or the working spirit of the staffs in related departments; or even the management skill of the managers and monitors” 41 Expert G: Mr Do, Phuong Hung - Title: Production Supervisor - Company: Benthanh Print - Major in study: printing technician - Duration working in printing industry: 13 years Mr Hung said: “In my reality for years with a duty of organizing the production under a direction of innovation, with the workforce receiving payment as product volume, innovation ideas often came from team monitors (workers with high skill) Innovations in production method were often applied for a more convenient manipulation, and they were not reported to the higher management for a reason of no cost arising in experiments Other ideas related to making and installing of accessories were raised to the higher management, and the factory director would call for meetings including directors, supervisors, and monitors In the years 2008-2009, ideas on product of receipt or invoice were put into production Normally the printing of binding products on sheet-fed technology had to go through stages of printing – folding or collating – cutting, but with the method of changing the order of 2-sided printing using cross perforation and zig-zag folding, which was the main part of computer form production line, the stages was reduced to printing – cutting compared to printing – bursting – cutting That innovation was applied bringing a competitive advantage compared to competitors using sheet-fed printing Another idea needed approval by the top management was the production of computer form that consisted of 2-3 ply of carbonless paper, normally it spent stages of printing – processing each ply one time – collating That idea was to combine the printing 2-3 folds at the same time not collate reducing ½ stage and enhancing the accuracy and synchronization However, the idea could only be applied to orders with large volume due to a longer preparation time and a double control of printing units compared to the method of printing each ply The experiments also met difficulties due to the installation of unwind accessory, collator for inline machinery Those machineries had cost from USD 20,000 and up each unit and required the installation by ourselves and the delivery time from two to six months For such the cost we had to make a feasibility study approved by the management board which took a long time The rise in numbers of customer helped reduce the pressure of delivery time 42 As a sequence, the process to experiment took a long time but the feasibility sometimes was not persuasive enough because the demand of products forecasted in the future whereas orders if applied those ideas could not bring effectiveness at present Expectations in the experiments were that they could create a competitive advantage in the segment with more and more potential competitors I consider the negligence from other workforce, even from the workers in the production line is a resistance to the innovation of our company As a sequence, the expectations I had at the beginning of the innovation in our company did not come out right, but they have changed slightly during the process due to the support from the directors on the innovation activities” 43 Expert H: Ms Ly, Pham Thanh Tuyen - Title: Marketing Executive - Company: Benthanh Print - Major in study: marketing - Duration working in printing industry: years Ms Tuyen said: “In reality of the marketing activities in our company for years, I realized there was no a recording system for ideas and opinions said by customers as well as partners, that was just a verbal reflection to the Sales and Marketing Managers, and that would not be an effective way for our operation I thought we should set up a recording system in our management information system for further reference and innovation basis I believe that the future for the company will develop, and the role of our management information system for innovation would be in a higher level The most important lesson I have learnt so far is the organizational issue in the innovation, with a smooth organization from the director to the workers, the innovation would be implemented thoroughly and effectively in the company” 44 ... during the study from the beginning to the end I Building the Orient Strategy 2010- 2015 at Ben Thanh General Cultural Joint Stock Company ABSTRACT Benthanh General Cultural Joint Stock Company (? ?the. .. development of Ben Thanh General Cultural Joint Stock Company 1.2 Purpose – Target – Question The purpose of the research is to find out suitable strategy for Ben Thanh General Cultural Joint Stock Company. .. Relation to Local Practices in Experiments 17 Figure 2-10 Origin and Diffusion of a New Technology 17 VI Building the Orient Strategy 2010- 2015 at Ben Thanh General Cultural Joint Stock Company