2011 GLOBAL ADVANCED MBA PROGRAM (X0410) CAPSTONE PROJECT REPORT 3G BUSINESS STRATEGY BUILDING FOR VMS – MOBIFONE COMPANY Ngo Van Han Vu Xuan Phong Pham Hai Linh Dao Minh Kinh Group No. 7 Class: X0410 H A N O I 2 0 1 1 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT 3G BUSINESS STRATEGY BUILDING FOR VMS – MOBIFONE COMPANY Group 7: Ngo Van Han Vu Xuan Phong Pham Hai Linh Dao Minh Kinh HANOI 2011 3 3G Business Strategy Building for VMS – Mobifone Company ADKNOWLEGEMENTS We would like to express our sincere gratitude to Center for Educational Technology and Career Development – Vietnam National University, Hanoi for allowing us to do this study. We also send our heartiest thanks to the lecturers and staff of our faculty for their supervision, guidance and invaluable encouragement during the time when we studied at class X0410. Also we would like to thank the staff of Vietnam Mobile Telecom Services Company (VMS - Mobifone) for helping us finish our project.
Finally, we show our gratefulness to our friends, colleagues, relatives for their encouragement during this course. Sincerely yours! Group 7: 1. Ng Van Han 2. Vu Xuan Phong 3.
Pham Hai Linh 4. Dao Minh Kinh i Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company TABLE OF CONTENTS ADKNOWLEGEMENTS.i TABLE OF CONTENTS.ii LIST OF ABBREVIATION.vi LIST OF TABLES.vii LIST OF FIGURES, GRAPHS AND DIAGRAMS.4 LITERATURE REVIEW OF STRATEGIC MANAGEMENT AND BUSINESS STRATEGY CONSTRUCTION IN ENTERPRISES. Definition of strategic management.2 Strategic management process.1 Stage of strategic planning.2 Stage of strategy implementation.3 Stage of strategy evaluation.4 Internal controlling to identify strengths and weaknesses.5 Setting long-term goals.6 Strategy construction and selection.1 The input stage.2 The matching stage. 9 ii Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company 1.3 The decision stage.3 Tools for strategy construction and choice.1 Content and analysis tools for strategy construction.1 External Factor Evaluation Matrix.2 Internal Factor Evaluation Matrix (IFE).2 Tools for feasible strategies construction.1 Strengths – Weaknesses – Opportunities – Threat Matrix (SWOT) .2 Grand Strategy Matrix.3 Tools for strategy selection: Quantitative Strategic Planning Matrix (QSPM).20 EVALUATION OF BUSINESS PERFORMANCE OF VMS - MOBIFONE AND FACTUAL SITUATION OF 3G BUSINESSES.1 Overview of VMS - Mobifone.2 Function of VMS - Mobifone.3 Vision, mission and culture value of Mobifone.2 The factual situation of 3G business of VMS - Mobifone.2 Development of 3G services in the world.3 Development of 3G services in Vietnam.4 3G business performance of VMS - Mobifone.3 External environment analysis.1 Political - Legal factors.2932 iii Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company 2.3 Socio - cultural factors.
Porter’s Five Forces Model.2 Pressure from suppliers.4 The pressure from potential entrants.5 The pressure from key entrants.3 Impacts of external environment on 3G business of VMS -Mobifone.1 Opportunities and Challenges.2 External Factor Evaluation (EFE).3 Competitive Profile Matrix (CPM).4 Internal environment analysis.5153 iv Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company 2.5 Research and development.6 Evaluation of internal environment of VMS-Mobifone.2 Internal factors evaluation matrix (IFE).5557 BUSINESS STRATEGY CONSTRUCTION FOR.1 Objective setting for 3G business of VMS - Mobifone in coming time.1 Basis for objective setting.2 Objectives of VMS - Mobifone for 3G services in coming time.1 Strategic planning construction.2 Grand strategy matrix.3 Specific solutions for strategy implementation.1 Solution for Administration.2 Solution for Marketing.1 Researching market of mobile communication.2 Completing Marketing mix policies.3 Solution for Human resources.4 Solution for Finance - Accounting.5 Solution for Research & Development. 7475 v Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company LIST OF ABBREVIATION DS Direct sales BQ Average BTS Base transceiver station ICT Information – Communication technology MP Mobile phone CU Calculation unit GDP Gross domestic product MCIS Mobile communication International standard ITU International Telecommunication Union Ltd Limited MC Mobile Communication I&C Information and Communication P Property VMS Vietnam Mobile Telecom Services Company VNPT Vietnam Posts and Telecommunications Group WTO World Trade Organization vi Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company LIST OF TABLES Table 2.1 Business performance of VMS - Mobifone (2006-2010).2: Economic indicators of Vietnam.3 Revenue of VMS-Mobifone and its key entrants.3: External Factor Evaluation matrix of VMS – Mobifone.4 Competitive Profile Matrix of VMS-Mobifone.5 Basic financial index of VMS - Mobifone (2008 - 2010).6 Internal Factor Evaluation (IFE) of VMS - Mobifone.1 SWTO matrix for 3G service of VMS-Mobifone.2 Grand Strategy Matrix.62 vii Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company LIST OF FIGURES, GRAPHS AND DIAGRAMS Figure 1.David’s strategic management model. Porter’s Five Forces model.3 Main content of competitor analysis.1: Chart of revenue growth from 2006 to 2010 of VMS - Mobifone.2: Amount of subscribers until 12/2010. Comparion of total revenue of mobile companies (2008-2010).8 Subscription Growth of VMS – Mobifone from 1993 to 2010 (Source: mobifone.1 Structural organizations of VMS – Mobifone.David’s strategic management model.
Porter’s Five Forces model.3 Main content of competitor analysis.1: Chart of revenue growth from 2006 to 2010 of VMS - Mobifone.2: Forecast of global 3G subscriber development in the period of 2009 – 2014.3 UMTS/HSPA – leading technology in 3G technologies with 84 % of market share.4 GMS technology accounting for 88.11% of marketshare – premise for 3G market domination of UMTS/HSPA technology.5: Amount of subscribers until 12/2010. Comparion of total revenue of mobile companies (2008-2010).8 Subscription Growth of VMS – Mobifone from 1993 to 2010. 46 viii Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company Diagram 2.1 Structural organizations of VMS – Mobifone.48 ix Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company INTRODUCTION 1. Rationale In recent years, information and communication technology industry has made great movement, becoming one of the leading industries of national economy.
It has contributed more and more to the development of Vietnam’s socio-economic. The enormous growth of science technology led to the development of telecommunication, especially mobile communications. The recent application of 3G technology in Vietnam has opened the opportunities for the digital industry to enhance its dramatic development, promising to provide convenient services which brings outstanding performance compared to 2G services On April 2nd 2009, Ministry of Information & Communication Technology officially announced the list of four investors getting allowance for 3G implementation in Vietnam. They are Viettel Corporation, Vietnam Posts and Telecommunications Group VNPT (VinaPhone and MobiFone) and the joint venture of Electricity of Vietnam (EVN Telecom) and Hanoi Telecom Corporation.
This is not only a chance but also a challenge for both mobile businesses and Vietnamese consumers because these services are still new to Vietnamese people. Vietnam Mobile Telecom Services Company VMS (Mobifone) has gone to operation for 18 years and achieved considerable accomplishments. VMS is not only the company that marked the beginning of mobile industry but also the first company to connect Vietnam’s telecom industry with international telecom system. Since December 2009, VMS- Mobifone has officially supplied 3G services.
After one-year operation, the company has achieved encouraging accomplishments. However, business environment has experienced fierce competition day by day, and this new technology is still new to Vietnamese market. In order to help the company easily penetrate into the market, our group decided to choose this topic: "3G business strategy construction for VMS - Mobifone" as our graduation thesis. We hope that 1 Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company this study can construct effective business strategies that will help the company to penetrate more easily in Vietnamese telecommunication market.
Objectives of the study 2.1 General objective To do research on the business performance of VMS – Mobifone during the recent years and suggest business strategies for 3G services of the company in coming time. 3G services can be considered as a strategic business unit (SBU) of MobiFone because of the following reasons: - MobiFone just established an Separate Department for 3G. This department is independent and fully functional department as both cost and profit center of MobiFone. - MobiFone has fully delegates authority and responsibility to the director of the department who reports directly to the General Director of MobiFone.
- 3G services of MobiFone have their own marketing plan, budget and contribution of 3G to profit of MobiFone can be clearly calculated and closely monitored by MobiFone’s management.2 Specific objectives - To understand the literature review of strategic management and construct business strategies for the company. - To understand the business performance of VMS - Mobifone, analyze strengths and weaknesses as well as opportunities and threats of external environment to 3G services of the company. - Based on that, set up strategic plans, select and suggest solutions to help the company enhance the business effectiveness in 3G services in coming time. Scope of the study - Regarding content: The study focuses on constructing business strategy construction and suggesting solutions to implement the recommended strategies to 3G 2 Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company services of VMS -Mobifone.
- Regarding space: The study was implemented in VMS - Mobifone located in Lot VP1 Plot, Yen Hoa Ward, Cau Giay District, Hanoi. - Regarding time: + The collected data is in 2008, 2009, 2010. + The study was implemented from 25/10/2011 to 25/11/2011.1 Data collection methods - The collected data is from different sources such as VMS - Mobifone, reports, newspapers, magazines and Internet. Data includes tables of reports on business performance, reports on staff performance and other information from Financial department, Personnel and Labor department, Planning department and Marketing department of VMS - Mobifone.
- Information about 3G services in the official website of VMS - Mobifone www.vn and history of the company in the website www.vn and other information channels. - Collected information about 3G mobile markets in social network such as http://vneconomy.vn and http://dantri.2 Data processing methods - Methods of comparison, analysis, synthesis: Analyze data from financial reports, compare data of fiscal years and synthesize data to withdraw remarks. - Statistic method: Collect statistic from charts and diagrams to draw conclusions and trends to evaluate the business performance of the company as well as the telecom industry. 3 Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company - Analysis method: Analyze SWOT, EFE, IFE, QSPM, etc.
Structure of the study: Except for Introduction and Conclusion, the study contains 3 chapters: Chapter 1: Literature review of strategic management and business strategy construction in enterprises. Chapter 2: Evaluation of business performance of VMS- Mobifone and factual situation of 3G business. Chapter 3: 3G business strategy construction for VMS- Mobifone. CHAPTER 1 LITERATURE REVIEW OF STRATEGIC MANAGEMENT AND BUSINESS STRATEGY CONSTRUCTION IN ENTERPRISES 1.
Definition of strategic management Strategic management is a field that has received much attention from economists and administrators. In term of wide study scope and feature-rich forms of practical application, from each point of view, there is another different definition of strategic management. There are some definitions of strategic management. - Strategic management is a set of decisions and administrative actions which determine the long-term success of the enterprises.
- Strategic management is a set of decisions and successful methods which lead to strategic planning and implementation in order to meet the organizational goals. - Strategic management is the process of studying current and future environment, setting organizational goals and implementing and inspection implementation process in order to meet the objectives in current and future environment. Definitions of strategic management are widely used and accepted by businessmen. 4 Group 7 – X0410 3 3G Business Strategy Building for VMS – Mobifone Company - Strategic management is the art and science of constructing, implementing and evaluating the synthetic decisions which help each organization achieve its goals.