MỤC LỤC
In the previously mentioned economic context, this research on business strategy formulation for Viglacera Float Glass Company by 2015 is useful as it may present an overview of the current situation as well as a suggestion for the company’s future business strategy. The results will probably be directly applied to Viglacera Float Glass Company’s operation to seek future business opportunities on the basis of strength intensification and the grab of market prospects, while limit potential threats during operation, direct the development of the company in the right way, earning it the leading position in the construction glass industry.
- Identify the current situation to develop business strategies and suggest implementation solutions by 2015 for Viglacera Float Glass Company.
Research scope and methodology
Of all events and environmental trends that can affect the strategic position of a company, competitive influences are often the most highly regarded.
Internal Factor Evaluation (IFE) Matrix
SWOT Matrix
Strength O: Promoting strength to utilize opportunities,
T: Promoting strength to limit and avoid threats
Weakness O: Repair weakness to utilize opportunities
Strategy implementation is a process of managing the working resources with the concentration on performance and efficiency.
Evaluate the effectiveness of the strategy
From this tank furnace, the fluid glass flows into tank of tin (for shaping) and forms a glass band at 1100oC, floating on the surface of melting tin. Thanks to the distinct characteristics of float technology, the construction glass products of VIFG have become the standard for engineering and aesthetics.
Mixed materials are spread evenly like a carpet on the surface of melting glass at a temperature of 1600oC in tank furnace. Leaving the tin tank with the temperature of 600oC, the glass band becomes solid and is transferred to the annealing furnace to remove elongation.
Meanwhile, the serenity of the real estate market in 2010 and the first 9 months of 2011 has made the construction material market in general and the construction glass market specifically experience many difficulties coming from the Government’s monetary policy that aimed at reducing inflation, stopping the disbursement of capital for non-production projects. Therefore, the Company has to create a long – term strategy based on analyzing environmental factors affecting the Company’s development; thus, a new and suitable production and business plan can be set out, bringing a sustainable growth for the Company in the future.
Assessing the demand of domestic glass market regarding to the GDP growth rate of Vietnam and forecast of growth rate of Vietnam's construction glass industry through market reports of ASAHI Corp (one of the largest construction glass corporations in the world), up to now, the supply and demand in the domestic glass market has been quite balanced. In the coming years, competitive pressures are great for VIFG for a number of reasons: (1) the production capacity of domestic manufacturers has been balanced and in the excess over the domestic demand; decline in import tax (down to only 0- 5% level) according to WTO commitments will create favorable conditions for foreign glass imported into Vietnam; (2) the competitiveness issue is quite tough due to the unique characteristic of glass industry which is the high costs of raw materials that account for up to 40% of production costs and are very susceptible to changes when the world oil price fluctuates. - For flat glass products: Among 4 major construction glass manufacturers using FLOAT technology, there are 2 companies newly entering the industry who are Vietnam Glass Industry Co., Ltd (VGI) with the designed capacity of 30 million m2/ year and Chu Lai Company (of Vietnam Coal and Mineral Corporation) with the capacity of 42 million m2/ year.
With the advantage of preferential policies for export products and import fuel oil for production, the mechanism of importing goods into Vietnam may avoid the rather sketchy control of Vietnam; foreign glass is storming Vietnamese construction glass market with cheap glass line, difficult to control the safety of users. Overall, compared with the level of competition in the international glass market, the competitiveness of Vietnamese glass industry is rather weak due to inadequacies in the managing FO price of the Government (FO is the indispensable fuel for construction glass industry and accounts for 30-40% price of the glass products).
- Scale of workshop: Located in Binh Duong industrial zone with the area of about 14 ha, VIFG built an office area for the staff of the Company; a workshop to produce construction glass; a workshop to produce post-glass products; a warehouse to store the production materials; a warehouse to store the finished products before distributing to the market. - In opinions of some key officials of the Company, VIFG is evaluated to have superiority in terms of 7 criteria:(1) Human resources, (2) The quality and range of products,(3) Leadership and management, (4) Brand, (5) Distribution system, (6) Operational experience, technological mastery, (7) The capacity and origin of equipment. With that recognition, in order to become the leading glass manufacturer, VIFG determine to continuously innovate production technology, mixing materials, varying in size in the work application to satisfy customer demand, managing production according to standard procedure and control tightly in all production stages, limit waste and activities that affect the quality of the product.
In order to withstand in the current market competition, the officers and employees in the Company have to constantly trying their best to enhance the collective strength and together going to the success in the business. Assessment on the current position of VIFG on the float glass market The identification of VIFG’s position in the float glass market is made based on creating the competitive profile matrix as in the Table 2… below. According to this matrix, with the total importance point of 2.4, VIFG is one of the highest companies and Chu Lai is the most powerful competitor with the total importance point of 2.6 if we consider their strategic effectiveness in responding to key success factors of the a company.
- Making forecast on market demand as well as researches on market and customers, building the implementation steps, developing new products for the future and on that basis, putting back a question on production to ensure the entire product consumption during the business period. - Completely focus on resources that differentiate safety glass product in terms of leading quality and quantity, need satisfaction in respect of product size, especially large-sized products and installation technique; concentrate on focal market niche which includes construction bidders in order to fully exploit the capacity of current facilities, raise revenue, and increase efficiency. Now in Vietnam, besides VIFG, there are other float glass producers including Vietnam Float Glass Co., Ltd (VFG), a joint venture of VIGLACERA Corporation and Nippon Steel Corporation (Japan), whose plant is located in Bac Ninh Province and has a capacity of 28 million m3a year, while VIFG has a capacity of only 19 million m3 a year.
As a result, VIFG has to seek for other capital mobilization sources and adopt appropriate strategies in order to gain a competitive edge in the future such as looking for chance to cooperate with domestic or foreign enterprises in forms of joint venture. All external and internal factor evaluations and recognition of the company’s opportunities – threats and strengths – weaknesses are compiled into the following SWOT matrix in order to formulate a business strategy for VIFG, take advantage of its opportunities, exploit its strengths, minimize its potential threats and tackle its weaknesses, serving the purpose of promoting VIFG’s sustainable growth. O5: Production technology in the world and in Vietnam are increasingly focused and has developed rapidly O6: Vietnam's accession to the international economic institutions O7: Compulsory norms on use of safety glass and a high demand for living space.
O1: Stable political and legal environment, economy is rehabilitating O2: Managing policy of Government create good condition for manufacturers recover production and export. O3: Life quality improvement make people want to live close to nature O4: The process of migration, urbanization in Vietnam is going strong.
With each suggested strategy, as can be seen from previous analysis, the company can make use of its strengths and take advantage of opportunities from the market when implementing them. However, in a particular stage, some factors may affect these strategies, making it impertinent or obsolete in terms of either their implementation or the company’s development goals. This strategy aims at improving operation capability of the company through following the quality polity, utilize the strength of the company on finance, human resource, marketing, … to lower cost, improve the quality of the products, meanwhile concentrating in controlling the domestic construction glass market.
This strategy aims at improving competition capability of the company by proposing new products to prepare for the next stage of development. With the market selection strategy is in the southern and northern areas where the need of construction glass is high enough. In addition, with the strategic of new product development, VIFG have initially studied and put into test the low-energy glass which can regulate the ambient temperature outside the building, eco-friendly and cost savings in use.
- Decentralize management; strictly implement the regime of maintaining and upgrading equipment; tightly control to reduce the cost without affecting the product quality; Stabilize to produce large amount and minimize staging loss to reduce costs. Moreover, it has to concentrate on the quality of its labor force so as to meet division’s demand for employees, introduce appropriate policies to attract and recruit skilled, competent workers, and provide training and retraining for employees. It is estimated that to obtain a market share of 45% (which is 40% for the time being), the company has to recruit an addition of 100 workers ranging from direct labor, transportation workers, market analysts and business development analysts.
Focus on image promotion, ads on benefits stemming from glass products (living space, convenience, functions that large- sized, high-quality float glass and safety glass offer) for the market niche of construction bidders in villa, office and first class mansion block projects aimed at well-off customers. Standardize the manufacturing and cost management procedures such as the bidding of input materials, delivery into/out of warehouse; organize its workforce efficiently to improve productivity; closely supervise the allocation and management of capital to obtain optimal material accounting norm. For each solution to implement strategy, during and after implementation, there is a requirement to specifically and objectively assess, then determine the effectiveness of the solution, from which there may be appropriate adjustment or use as a basis for building strategy in later stage.
Finally, it is recommended that the company proactively observe, keep up with and predict the tendency of market trends, through which devise production plans which can maximize expected results. On the basis of previous analysis and formulation of business strategy, Group 5 – X0410 hope that VIFG will have a sustainable development strategy, resulting in functional strategies and implementation plans for each development stage so that it can retain the reputation and expand new markets in the future. With a view to taking suggestion from industry experts for the preparation of Capstone Project on “Business strategy formulation for VIGLACERA Float Glass Company by 2015,” we are honored to hand you this questionnaire.