Here we use the SPACE matrix for two purposes:
i) linking the functions strategies proposed in item 3.2 to the overall strategic direction of the company;
ii) eliminate the proposed strategy that is inappropriate.
IS(Industry Strength): score from 0-6
CA(Competitive Advantage): score from -6-0
FS(Finance Strength): score from 0-6
ES(Enviroment Stability): score from -6-0
No The assessment factors Mark Cause
1 Customer status 1 The customer’s wise and they
have too many choices.
2 Supplier status 4
3 The threat from substitutes 5 Less threatening
4 Barriers to entry 5 High
5 Exit the industry cost 4 6 Level of competition in the
industry
1 Average Score: 3.3
No The assessment factors Mark Cause 1 Flexibility: ability to meet the
different needs of customers (categories; prices; service after sales ...)
-4 Compared to its direct competitors, flexibility is not the strong point of the company.
2 Quality: The technical
characteristics; reliability; forms;
brand…
-2
3 Speed: Time from when the customer needs until served
-4 Speed is not the strong point of the company for order fulfillment time is long, intermediate warehouse network is still very weak.
4 Customers to pay costs: price;
time; effort; mind ...
-3 Average Score: -3.25
No The assessment factors Mark Cause
1 Total assets 4
2 Equity 2 SUFAT VIETNAM Company
was not stock company, so the equity is not high (more than 150 billion in 2011)
3 Margin profit MP 1 See item 2.2.1
4 Basic of earning power BEP 1 See item 2.2.1 5 Return on total assets ROA 1 See item 2.2.1 6 Ability to raise capital 1
Average Score: 2.5
We have:
The value on the horizontal axis: CA + IS = -3.25 + 3.3 = 0.05 The value on the vertical axis: ES + FS = -3.6 + 1.6 = -2
Figure 3.3
SPACE MATRIX FS
6 5 4 3 2
CA 1 IS
-6 -5 -4 -3 -2 -1 1 2 3 4 5 6
-2 -3 -4 -5 -6 ES
Remark:
Oriented vector (red colour) in the chart above shows that the proposed strategy for SUFATVIETNAM Company located at boundary region between
"Competition" and "Defend" orientation. That is just a choice of competitive No The assessment factors Mark Cause
1 GDP/population -1
2 Inflation rate, gas prices is high -5
3 Bank interest rates -4
4 Infrastructure and traffic jam in the large urban
-4
5 Exchange -2
6 Corruption -5
7 Effective law enforcement -4 Average Score: -3.6
- Diversify
- Product Innovation.
DEFENSE ATTACK
CONSERVATION COMPETITION
- Preservation of capital
- Narrowing the scope of business - Quitting capital (partial or full)
- Increase market share.
- Product development in selection market
- Market Development - Product Development - Integration / development / expansion
diversification, improved product design ... it has to be very careful to preserve capital and gradually recovered.
Therefore, the strategies SO1, ST1 and WO2 (table 3.2) will be given priority consideration.
QSPM Matrix:
Now we continue using QSPM matrix to identify which one production strategy (among 03 strategies proposed in Section 3.2) is the most suitable for priority choice for SUFATVIETNAM Company.
Table 3.3
QSPM MATRIX IN STRATEGIES CHOICE The assessment factors Weight SO1 Strategy
“Planning the entire production sector in the direction of improvement, selective upgrading of facilities and technological capabilities exsited to be able to both increase productivity, improve motorcycle quality, meeting domestic and export demand .”
WO1 Strategy
“Planning the entire production sector in the direction of restoring the facilities and technological capabilities ago to increase the current plant capacity, improve part quality motorcycles, meeting domestic and export demand.”
ST1 Strategy
“Planning the whole operational production sector oriented narrow, shortened (Lean production), giving priority to solving the stage of contraction; shorten delivery time;
reduce the cost price by the reduction of all types of waste... in the production process.”
Score Total Score Total Score Total External factors:
Oppotunities
1. The ability to export motorcycles made in Vietnam to other countries in the region such as Laos, Cambodia, Myanmar ... to compete with similar products in terms of quality and
0.15 4 0.6 3 0.45 2 0.3
design is possible.
2. Now domestic consumer trends more towards quality products, reasonable prices.
0.1 3 0.3 2 0.2 2 0.2
3. The continued retreat of some domestic businesses from industry will improve sales and market share for the remaining
0.1 3 0.3 3 0.3 2 0.2
4. The barrier to entry industry is big and the profit brought by
motorbike is smaller that makes the current competitions hard to intensive investment such as SUFATVIETNAM Company.
0.1 1 0.1 2 0.2 3 0.3
5. Except the application of electronic fuel
injection, there will be no major changes in
technology and techniques in the production of motorcycles.
0.05 3 0.15 2 0.1 1 0.05
Threats
1. Motorcycles in the saturation stage of the
0.15 1 0.15 2 0.3 3 0.45
product lifecycle, the level of competition is growing fast in industry, profits becomes smaller.
2. The material inputs of industries such as: steel, aluminum alloy; plastic particles ... continue to rise (estimated at 8-12%), but the final product is motorcycles, it is difficult to raise it’s prices.
0.15 0 0 0 0 0 0
3. The banks have
reduced interest rates (12- 14%), but businesses still do not have access to capital, difficulties continue weighing on all business activities.
0.1 1 0.1 2 0.2 3 0.3
4. FDI will continue to launch low-priced products (as Honda Waveα 2008) and expand the dealer network (heads) to the remote areas.
0.05 2 0.1 1 0.05 1 0.05
5. It’s still difficult to control inflation, the gas prices rising day after day.
0.05 0 0 0 0 0 0
Weight total: 100%
Internal Factors:
Strength
1. Facilities and current technological capability sufficient to meet a part of the quantity and quality of products according to market requirements.
0.15 2 0.3 2 0.3 1 0.15
2. Information technology system is pretty good, it’s possible to meet the requirements connected with both the supply chain and distribution within and outside the company.
0.1 1 0.1 1 0.1 2 0.2
3. Potential in the field of R & D.
0.05 3 0.15 2 0.1 1 0.05
4. Owns over 15 years of experience, professional skills in motorcycle production field.
0.1 3 0.3 3 0.3 2 0.3
5. Company's position in the industry is rather high, SUFAT motorbike brand began to be known about quality and design.
0.15 0 0 0 0 0 0
Weakness
1. Poor finance. Ratio of loans to equity
imbalance. To maintain
0.15 1 0.15 2 0.3 3 0.45
working capital for production and business activities was very difficult, not to mention the investment activities.
2. Lack of senior personnel, the highly skilled and experience staffs more and more shortages for many reasons.
0.1 1 0.1 2 0.2 3 0.3
3. Thinking of company leadership were slow, conservative, and tend to
"fix" rather than "new construction". Lack of a sustainable development strategy.
0.1 1 0.1 1 0.1 1 0.1
4. Cumbersome
organizational structure, overlapping activities, according to the
functional model but lack of separation of powers.
0.05 2 0.1 2 0.1 3 0.15
5. Production
management is not so good, there are still waste and loss. Production costs are relatively high.
Quality is not really stable.
0.05 2 0.1 1 0.05 3 0.15
6. Work environment is not good, motivation of staff is very low. Key staff quit out of job the series.
0.05 1 0.05 1 0.05 1 0.05
Weight total: 100%
Total score 3.25 3.4 3.75
Remarks:
Quantified results by scores of three strategies proposed SO1,WO1andST1 (table 3.3) showed that ST1 strategy with a total score of 3.75 is the most appropriate strategy and that will be selected for the SUFATVIETNAM Company in next years. That is:
“Planning the whole operational production sector oriented narrow, shortened (LEAN production), giving priority to solving the stage of contraction;
shorten delivery time; reduce the cost price by the reduction of all types of waste... in the production process.”
It can be interpreted more as follows:
The dominant ideology of strategic ST1 is planning the entire production process in the company Sufat VN direction narrowed and shortened. In which:
1) Dissolution some workshops or production stages, rearrange the remaining parts reasonably about equipment capacity, workers and management.
2) Take advantage of all machinery and equipment capacity in the form of co- production for outside demands.
3) Identification of all types of waste in the production process from the stage of purchase input materials and components to the warehousing, packaging.
Planning to solve each type of waste one by one.
4) Maintain the operation of the R & D because this is one of the unique strengths of the business which the competitor is difficult to imitate. But just focus on the export market.
5) Construction of standard operation procedures for each stage, a standard job description for each work site. Each worker in each production location must understand what is his input and how the output meet requirements.
6) Planning the Quality control department in accordance with the schedule as:
abolish KCS2 stage, followed by the final KCS3 and just keep only KCS1 stage (quality control input)