CHAPTER 2. ANALYZE THE CONDITIONS FOR BUILDING A REAL
2.2. Propose and analyze the real estate business strategy of Industrial
2.2.5. The Company‟s competence assessment
First: Industrial Construction Joint Stock Company is the first-class construction company, always one of the strongest members of Urban Infrastructure Development Corporation (UDIC) and the Hanoi construction industry. Over 57 years of construction and development, the Company has met the political, economic and social requirements related to building & developing the capital as well as the country; especially for the period of renewal, modernization of the Nation, is continuously strengthening its brand-name as for building up a solid reputation over customers.
Second: As a state-owned enterprise, ICJC always receives the attention and guidance of the parent company-UDIC and the Hanoi People's Committee in implementing the tasks of business & production as well as in the field of real estate business.
Third: In the development trend of the country after the Renovation period, the Company's leaders have determined that investments in real estate will become a key business of the business operation. Being aware of the rightness and feasibility of this movement, the company's leaders have been focusing on developing a number of projects on the land which is owned by the company as well as researching and seeking to develop the lands not owned by the company. Since 1997, ICJC has successfully deployed a few of projects and gained high capital efficiency, created jobs for other industries such as building construction, housing business, service exploitation. The Company has had an experienced management team in the field of real estate business as well as construction works so far.
Fourth: As a real-estate developer and a contractor of the project, ICJC is able to actively control the progress of construction, from the input procurement stage to the completion of the project. For a With its long history in the field of construction, the Company‟s capacity in terms of equipment and machinery is well- organized and matched matches many types of construction. Many equipment &
machines have been fully depreciated but are still very useful due to the creativity of technical workers. This is an advantage to reduce the cost of project investment.
Fifth: As a real-estate developer and also a building operation and management unit after handover process, therefore, the control of the warranty &
maintenance is very well done because the Company has captured the entire features of the project as well as functions of the equipment in the building.
Sixth: ICJC always satisfies the financial obligations of the State and has a stable and transparent financial status. Annually, the Company hires reputable independent auditors to audit all the financial and accounting activities of the Company. Therefore, the Company is always appreciated and facilitated by the State management agencies as well as the banks in the production and business activities.
Weaknesses:
First: ICJC has a wide range of business, so the departments & units of the Company have to carry out many tasks that lead to a slow progress and the professionalism is not high.
Second: ICJC is lacking of lacks experts and senior engineers who are highly qualified and able to have an overall control. The Company just has a few of skilled workers on the payroll; so is still depending on seasonal workers, especially for the masonry works, formwork and iron installation, which results in being passive for matching construction progress.
Third: As a state-owned enterprise, ICJC has many limitations on the investment in construction equipment, in increasing charter capital to meet the financial capability for large-scale investments and being is constrained by a number of policies & mechanisms. The time for production and business activities has been affected because of regular visits of State inspectors, State Audit and Tax Inspectors.
Fourth: The Company has not focused on professional training courses for employees; making a barrier to keep up with the development pace of the market.
Fifth: So far, ICJC hasn‟t got a professional marketing department to carry out market research & customer care services.
General assessment:
As we can see from the strengths and weaknesses of Industry Construction Joint Stock Company, it appears that the Company has a long history for the process of formation and development. The company has significantly contributed to the process of building the country since 1960. As the market was opened, ICJC‟s leaders had an insight into the trend of social development and come came to a decision to engage in real-estate market since 1997. So far, the Company has accumulated a lot of experiences and attained substantial success in real estate business. In order to step these successes maintain its success, ICJC is always striving to build up suitable business strategies in the coming years to meet the increasing in demand of customers and the severe competition of the real estate business market. The Company also needs to focus on the available strengths to push up its production and business activities.
- Land: Trying to reach & develop effectively the land areas that are currently owned by the Company such as: land area at No.38 Dai Tu Street, Hoang Mai district, Hanoi; No.175 Tam Trinh Street, Hoang Mai district, Hanoi; Lot.166 Hong Mai Street, Hai Ba Trung District, Hanoi.
- Machines & Equipment: For the capacity of machines and equipment, many machines have been fully depreciated but the use value is high, the company should exploit them thoroughly & effectively to reduce the cost of capital and create competitive advantages.
- Human resources: The Company‟s leaders need to pay more attention to professional training courses for staff to meet the increasing demand of the domestic construction market, as well as the region and the world in the future.
2.2.6. Matrix for evaluating the internal factors of the company (IFE matrix)
Based on the results of the company's production and business as well as the consultation of ICJC‟s leaders, I analyze the Company's internal factors for finding the strengths, weaknesses and creating a reasonable strategy. The scores of importance are on a scale of 0 to 1, in which 1 is the highest score, 0.5 is the average and 0 is the lowest score.
The factors impact on the Company range from 1 to 4, in which: 1 point means having a little impact on the Company or the Company is less responsive to that factor, 2 points and 3 points are average, 4 points mean a strong impact.
The total score of importance isequal to the importance times the impacting factor on the Company. This is the basis for prioritizing opportunities and challenges.
Figure 2.6: Matrix for evaluating the internal factors (IFE matrix) (Source: Summary of surveying results)
No Important Internal Factors Important
degree Classification Score of importance 1
Passion, strategic vision, and having good contacts with the authorities of the Company‟s leaders
0.1 4 0.4
2 There are a large number of projects
and land funds 0.1 3 0.3
3 Having experiences in carrying out
project investment. 0.1 3 0.3
4 Having a good relationship with banks
and credit institutions 0.05 3 0.15
5 Competence in construction 0.08 4 0.32
6 Capacity for construction machines &
equipment 0.07 3 0.21
7 The Company‟s brand name 0.07 3 0.21
8 Management works of the departments
are not scientifically systematic 0.05 2 0.1
9 Financial capacity to carry out project
investment 0.05 3 0.15
10 Impacts of construction schedule on
profits and business opportunities 0.07 3 0.21
11
The number of skilled workers on the payroll is few, greatly depending on seasonal workers
0.08 2 0.16
12 Capital recovery 0.08 3 0.24
13 Efficiency of capital, equipment 0.1 1 0.1
Total 1 2.85
Comment:
From the table above, we realize the factors such as: Passion, strategic vision, and having good contacts with the authorities of the Company‟s leaders; there are a large number of projects and land funds; Having experience in implementing project investments; Competence in construction, are the most important. The total number of important points is 2.85, so ICJC is relatively strong at internal factors. If the strengths shall be firmly held up as well as reducing the weaknesses, the Company will develop sustainably.
2.2.7. Analysis of SWOT matrix
Applying the SWOT matrix to assess the position of the Company and propose strategies.
External environment
Opportunities (O) 1. The political
environment is stable 2. The Government and
the HPC encourage housing development 3. The real estate market
has been recovered 4. Economic growth is
stable
5. Technology and equipment for the construction industry is increasingly
developing
6. The demand for housing, especially for low-income housing is
Threats (T)
1. Housing Laws, Real Estate Business Law, Land Law, Investment Law, Bidding Law and other legal documents are still slowly enacted and overlapped.
2. With the international integration, foreign enterprises are investing heavily in Vietnam.
3. Competition in the field of real estate business is increasing.
4. The Government has removed the aiding
Internal environment
rapidly increasing.
7. Per capita income is annually increasing 8. Management of
investment
construction has been improved and reduced administrative
procedures and State intervention.
9. An increase in paying
attention to
investments in social housing of the State
package of 30 trillion dong for social housing.
5. Real estate investment is highly risky.
6. It is taking too long for the application process of investment, to complete, which affects business opportunities.
7. Difficulties in the recovery of capital.
8. Customers require high quality, technique, art and progress.
9. It is difficult to control material supply sources and price movements.
Strengths (S)
1. Passion, strategic vision, and having good contacts with the authorities of the Company‟s leaders
2. There are a large number of projects and land funds.
3. Having experience in carrying out project investments.
Strategies (SO)
1. Strategies for entering the real estate market for low income people:: ( S1, S2, S3, S5, S7, O1, O2, O3, O4, O6, O7, O8, O9) 2. Continuing to develop
and expand the commercial housing
Strategies (ST)
1. A good management and control for sustainable
competition: (S1, S3, S5, S7, T2, T3, T5, T6, T7, T8, T9).
2. Joint-ventures,
partnering and brand development
4. Having a good relationship with banks and credit institutions
5. Competence in
construction
6. Capacity for machines &
equipment for
construction
7. The Company‟s brand- name.
8. Financial capacity to carry out project investments 9. A stable annual growing
rate
market : ( S1, S2, S3, S4, S5,S6, S7, O2, O3, O6, O7 )
3. Strategy to develop, renovate and invest in
building old
apartments: ( S1, S3, S4, S5, S6, O2, O6, O8, O9)
strategies: (S1, S3, S5, S6, S7, T2, T3, T5, T7).
Weaknesses (W)
1. Marketing is not considered seriously for today's business environment .
2. Management work of the department is not scientifically systematic.
3. Technology level is not high, the system of machinery is not synchronous
4. The number of skilled workers on the payroll is low, greatly depends on
Strategies (WO)
1. Strategies to improve management &
professionalism
capacity of personnel : ( W1, W2, W4, W7, O3, O4, O7, O8)
2. Strategies for technological
innovation &
appropriate equipment investment: (W3, W4, W6, O2, O3, O4, O5, O6 )
Strategies (WT)
1. Marketing strategy for expanding distribution channel : ( W1,T2, T3, T5, T7, T8)
2. Agood training strategy for laborers and managers to meet new requirements of the construction field.
( W3, W4, W7, T2, T3, T8)
Table 2.3: SWOT MATRIX
(Strategic management syllabus: Assoc. Prof.Dr. Hoang Dinh Phi)
Conclusion: Chapter 2 focuses on analyzing the effects of the external environment and the internal environment on businesses as well as on the success of the Industrial Construction Joint Stock Company through reviewing the matrices (EFE); (IFE)and SWOT.
seasonal workers
5. Financial capacity for carrying out project investments is not good enough.
6. The efficiency of using capital and equipment is not high.
7. Lacking professional training courses for staff.
3. Improving financial capacity : ( W5, O3, O4, O6)
CHAPTER 3: STRATEGY PROPOSE, ANALYZE PROPOSE STRATEGY, SELECT STRATEGY AND SOLUTIONS FOR IMPLEMENTING THE
BUSINESS STRATEGY
After analyzing and evaluating the opportunities, challenges, strengths and weaknesses of Industrial Construction Joint Stock Company for the present period, I develop and recommend some strategies to help the Company to exploit the opportunities better, limit the risks and overcome the weaknesses: