MỤC LỤC
GENERAL INTRODUCTION
To be prepared ready to face with severities of the totally competitive process, actually since 2007 (since the establishment of HEID), the House in general and HEID in particular needshad to set up an activity roadmap or appropriate business strategy with extremely detailed implementation method, covering all aspects from products, market, management, human capital development and finance-accounting to ensure that the Company shall bring into play strengths, minimize, and gradually abolish limitations in order to take the advantage of opportunities and effectively cope with threats. Hence, being aware of the importance necessity of the formulation of business strategy for HEID in this period, within framework of time and regulation of the program, we decide to select subject: “Formulating business strategy of Hanoi Education Investment and Development Joint Stock Company preparing for stage of abolishing monopoly of textbooks” as the studied subject to help the Company’s Board of Directors have a more objective and actual outlook about current situation of the Company as well as the impact of macro economic environment on business production activity of the Company, helping it to take the initiative in coping with and willingly facing with threats, avoiding passive situation whatever happens.
At the same time, it is the strategy contributing to helping HEID maintain, stabilize and develop.
3 Object and scope of the study
It is the method of tabulation, charting and figure calculation to brief, summarize data, including data collection, data arrangement, data summary, data presentation, etc.
THEORETICAL BASIS ABOUT STRATEGY
1 Definition of strategy
- Diversification of horizontal operation: depending on the existing market, provides present customer group with new products or services, not relating to the existing products. In addition to the above strategies, there are, actually, some other strategies which the enterprise may apply such as joint venture, operation retrenchment, operation abandonment, liquidation, etc.
- Diversification of mixed operation: puts into the existing market new products or services, not relating to the existing products. - Operation retrenchment strategy: when the enterprise needs to restructure, implement abandonment of some products or operation fields to re-save position of the enterprise.
Mission
Target
Regardless of number of opportunity and threat in the matrix, total the highest weighted score one company might obtain is 4.0; the lowest is 1.0 and average is 2.5. Total weighted score of 4.0 shows that company’s strategy takes good advantage of external opportunity and minimizes negative impact of external environment on company.
Competitive Profile Matrix (CPM)
Based on the above model, we will in turn analyze internal environment factors, showing strengths, weaknesses creating success and threat for Enterprise in turn. Setting up IFE matrix is also similar to that of EFE matrix, from 10 to 20 factors (strengths and weaknesses) and the process is composed of 5 steps.
IE matrix (Internal – External Matrix) puts different SBUs1 of one enterprise into 01 table with 09 squares. - Total weighted scores of IFE matrix expresses on X axis - Total weighted scores of EFE matrix expresses on Y axis.
CURRENT SITUATION OF HEID
HEID aims to become one of the leading units of Vietnamese educational sector with diversified, abundant, high quality products, meeting all demands in educational, cultural products of Vietnamese market and gradually aims at regional market.
Staff development: To enhance capacity of staffs, establish enterprise culture, provide fair and rational, civilized, professional working environment. Capacity of development and profitability: To maintain stable and more rate of profit, best serving customers for their benefit, staffs and social environment.
For this type of product, the whole process of content arrangement (writer, content inspection, etc.), draft arrangement (compilation, design, engraving, proof print, lengthened print, film print, etc) implemented by the House with inspection of Ministry of Education and Training. The change of product structure shows that HEID has recognized and prepared to properly face with abolishing monopoly of textbooks by paying attention to development of the competitive product type in order to, in coming time, put this product type into major, core product type, helping HEID steadily stand in totally competitive market.
Together with the increase in income, interest and cost of the people for educational products are increasing, but requirements about quality, content, abundance of products is also increasing, making enterprises strictly invest in, research and develop products to meet the demand. Concretely, when inflation is high, input cost of production increases (materials, manpower …), causing increase in production cost, greatly affecting competitive strategy about product price of the company, not mentioning that, at present, HEID is still producing, trading the monopoly products accounting for large ratio of the company, input buying price is not controlled, but selling price is regulated by the State, so inflation directly affects effectiveness of the enterprise.
- Increasing inflation rate – Vietnam Economic and Policy Research Center (VEPR) revealed that minimum inflation rate of 2011 may be 15.5%, but if the Government is not drastic with Resolution 11, the inflation may be over 18%. Or HEID uses foreign materials, especially Couches papers, Tan Mai papers are produced by foreign pulp, it is sure that the increase in USD/VND exchange rate affects input imported price of the company, causing increase in cost, price, reduction in profit, etc.
In the majority of the Vietnamese families, expense for their children education, creating the best possible condition for them to bring into play learning capability are more developed. Now the Vietnamese people take their children to international school, overseas learning at very young age, which is also the factor affecting buying power of HEID’s products.
However, cross-culture of different cultures in the country has changed comsumptionconsumption psychology, people’s lifestyle, etc.
In higher education, colleges, people living in provinces, cities with developed economics have many times higher enrollment rate at right age than that in underdeveloped provinces, cities. Population rate graduating from high school and above in municipal area is also three times higher than that in the countryside (37.4% in municipality compared to 13.8% in the countryside), etc.
However, in this stage HEID is usually passive because the suppliers (authors) are of particularity, etc, at the same time, each different subject has different author team, so HEID’s threat is to diversify suppliers in this stage because it is impossible for HEID to use measures of gathering many enterprises to create big customer of supplier because this goods is knowledge product but with manual feature (For a long time, from several months to several years or the whole life of author, he has only one product). • For the monopolistic product type, in addition to royalty mechanism paid as per unit price/period regulation (350,000 – 450,000 VND/period), HEID pays further royalty (the State price plus a certain amount from 100,000-150,000 VND/period); according to the State regulation, for reprinted books the author only receives 50% royalty of new books, but HEID still pays reprinted books 100% as new books in the first two years reprinted; additionally there is still bonus for authors; supporting meeting expenses, campus organization, etc.
Yet, due to particularity and decentralization of the House – book company in any area is responsible for issuing monopolistic products of that area (Southern area imports monopolistic products from Phuong Nam Education Investment and Development J.S. Co., Central area imports monopolistic products from Da Nang Education Investment and Development J.S. Co.), the competitive products alone are permitted to issue nationwide. This team mainly carries out the instructions, but there are plenty of book types with specific feature, close control of content, teachers must take part in training a lot, etc, for instance, English product type as per instruction by Ministry of Education and Training, product type for graduation revision, printed products such as school books, pupil monitoring notebooks, etc.
Hanoi, Hung Yen, Hai Duong, Ninh Binh, Ha Tay, Bac Ninh, Hai Phong, Ha Nam, Thai Binh, Nam Dinh, Vinh Phuc, Phu Tho, Thai Nguyen, Bac Giang, Quang Ninh, Thanh Hoa, Hoa Binh, Nghe An, Ha Tinh, Bac Kan, Tuyen Quang, Yen Bai, Ha Giang, Cao Bang, Lang Son, Son La, Dien Bien, Lai Chau. - Although investment capital, scale of business production are big, profitable rate in business production of educational products is not high because coefficient of capital turnover, investment in the sector is low.
Competitive pressure from substitute product
+ FAHASA mainly focuses on retail network (with system of many bookstores nationwide) – there is no discount or very low discount in selling price, whereas HEID issues the monopolistic book type for system of local school equipment book companies, agents, schools in Northern area, and the competitive products are for the whole country with discount from 20-45% /retail price. Yet, due to many objective reasons, some projects about asset formulation for business and production of HEID are delayed, and officially to the end of 2011, beginning of 2012 HEID rearranged the cost, using 120 billion VND/total 150 billion VND for other business strategy, raising after tax profit in 2011 to 31 billion VND (ROE in 2011 was 20.3%) and in plan of 2012, net profit is sure to reach 40 billion VND (ROE in 2012 is 27% as the estimation).
Customers: With issuing number of this year higher than previous year, and it is estimated in 2011 there will be many customers nationwide using HEID’s products – issuing number up to 45 millions copies compared to total of 277.7 millions copies of the whole country. - Reputation with customers: HEID has created reputation with customers when realizing and meeting customer demand through massive development of product lists, meeting consumer demand all times, all places, always improving quality as well as developing new products.
• Communication with customers: Marketing staffs are young, active, enthusiastic with the job, have high profession in working and capability, which is a strength in meeting customer demand, creating customer prestige, belief, sentiment for the company. • Big amount of customers: Having inherited from the monopoly field with instructions of the Ministry, branch plus the company’s true values has created for the company big, loyal amount of customers, etc, contributing to the company’s strength in its operation.
It is the political duty in providing textbooks to pupils that creates marketing principles of sales and new product introduction in trading competitive educational products. However, while the country is in the integration process, HEID’s marketing policy is only focused on domestic market, serving national popular pupils, not having any new policies in marketing strategy to develop imported goods in order to increase trademark value as well as attracting all kinds of customers, especially customers of.
(iii) Being the subsidiary of the House, HEID inherits reputation and trademark of the House and establishes prestigious trademark after 5 years of operation, gaining position in the sector. (iii) Although staffs have experiences, high labor discipline in book production process, etc, they have certain principles, not sharp, flexible, and adaptable to market.
FORMULATION, SELECTION, SOLUTION TO BUSINESS STRATEGY OF HEID
To focus on keeping and consolidating present market by maintaining core products, basing on existing capability to develop, creating stability for the company by competitive product type. Yet, HEID needs to pay attention to quality improvement so that when this type is not monopolistic, becoming the type of competition, bidding, many competitors, etc, HEID has actual capacity to face with competitors.
At present, market of big cities like Hanoi, HCM city has been HEID’s market, but this market mainly consumes the monopolistic product types (supporting books for textbooks, revision books for exams according to instruction of the Ministry of Education and Training), and for book types like English belonging to self-selected, reference books (totally competitive type), the use rate of market of big cities is not high. Thus, since 2010, HEID has implemented product diversification, experimentally produced some products (English first) with high content, design, quality, knowledge and certainly selling price is also higher than the existing product types (lower than foreign product of FAHASA) to substantially penetrate into big cities.The strategy of product diversification also serves the development of big cities’ market.
From the analysis result of QSPM matrix, the total attractiveness scores of cost leadership strategy – maintenance of price competitiveness; strategy of maintenance and development of massive market nationwide, product developmentmarket penetration has the result of 178, 196, 1685.68; 5.63 - this result is quite high and higher than substitute strategy which is strategy of new market penetration and development in big citiesmarket penetration (in big cities for English, Informatics products only); product development. At the same time, to prepare for stage of holding and maintenance, especially the monopolistic product type, it is necessary to gather team of research, authors, editors, etc and time to better improve products, meeting requirements of Ministry of Education and Training, suitable for teaching, creating stability, strong capacity for stage of monopoly abolishment, products will be put in competition.
- In July 2010, HEID completed method of increasing charter capital to 150 billion VND from 80 billion VND, this is the first solution to budget to implement business strategies like market development, development of business scope, development of new product (including method of acquisition, merging), diversification of business fields preparing for stage of “monopoly abolishment” of textbooks. - Supporting sales work, contributing to revenue increase: Sales force of enterprise will be self-confident before customers with their appearance in a perfect system of trademark identification, at the same time, increasing customer belief when using services, products that they can also recognize that trademark anywhere.
- Creating pride for staffs: Mental value, pride when working in a professional environment brings customers famous trademark which anybody desires to own it, contributing to creating power, interest and enthusiasm of staffs in the work, adding attachment and loyalty of the staffs. Concretely, the House needs to strengthen quality of content verification to produce high quality products, actively support HEID in applying for publishing license to meet schedule requirement – a very important requirement in business.
Theme “Formulation of business strategy of Hanoi Education Investment and Development Joint Stock Company preparing for stage of abolishing monopoly of textbooks” has high realities and extremely necessary. This document will contribute to helping the Company’s Board of Directors have a more objective and practical outlook about current situation of the Company as well as impacts of macro economic environment on business production activity of the Company, helping the Company take the initiative in coping with and being prepared to face with threats, avoiding passive situation when something happens.
List of reference documents