GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING INSTALLATION AND CONSTRUCTION BUSINESS STRATEGY FOR BACH DANG CONSTRUCTION CORPORATION (BDCC) 2012-2015 Group :3 Student : 1. Luu Hong Giang (Group’s leader) 2. Tran Ngoc Anh 3. Nguyen Ngoc Lan 4.
Chu Anh Tuan HANOI 2012 1 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn CONTENTs TABLE OF CONTENTS 2 COMMITMENT 5 ACKNOLEDGEMENT 5 LIST OF ABBREVIATIONS 6 LIST OF FIGURES AND TABLES 6 INTRODUCTION 7 CHAPTER 1: THEORETICAL BACKGROUND ON CORPORATE STRATEGY FORMULATION 11 1.1 Corporate business strategy 11 1.1 Viewpoints on strategy 11 1.2 Basic characteristics of strategy 12 1.3 Role of strategy 13 1.2 Types of business strategies 13 1.3 Strategy formulation process 14 1.1 Defining mission of the organization 15 1.2 Determining objectives of business strategy 15 1.3 External environment analysis 15 1.4 Enterprise’s internal environment analysis 21 1.1 Production and technology 22 1.4 Human resources and organizational structure 23 1.5 Marketing and sales 24 1.6 Determining sustainable competitive advantages 24 1.4 Techniques of strategy analysis 26 2 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn CHAPTER 2: ANALYZING BASES FOR INSTALLATION AND CONSTRUCTION BUSINESS STRATEGY FORMULATION OF BDCC 28 2.1 Overview of BDCC 28 2.1 Establishment and development 28 2.2 Vision, mission and core value 30 2.2 External environment analysis 30 2.1 Macro-environment analysis 30 2.3 Socio-cultural factors 33 2.4 Legal-political factors 33 2.2 Industry environment analysis 36 2.1 Overview on Vietnam Construction Sector in 2010 and Forecast up to 2015 36 2.2 Five Forces Model analysis of BDCC 37 2.3 Opportunities and threats to business environment of construction sector 40 2.3 External Factor Evaluation (EFE) Matrix 41 2.3 Internal environment analysis of the BDCC 42 2.1 Financial potential analysis 42 2.2 Physical resource analysis 43 2.3 Human resource analysis 44 2.6 Internal Factor Evaluation (IFE) Matrix 45 2.4 SWOT analysis of BDCC 46 CHAPTER 3: SELECTING INSTALLATION AND CONSTRUCTIONBUSINESS STRATEGY & SOLUTIONS ON IMPLEMENTATION FOR BDCC IN 2012 – 2015 PERIOD 3.1 Development orientation of BDCC in 2012-2015 period 50 3.2 Business strategy alternatives selected for 2012-2015 period 50 3 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.1 Solutions on technology 52 3.2 Solutions on human resources 52 3.3 Solutions on capital 53 3.4 Solution on marketing 54 3.4 Roadmap for strategy implementation 56 3.5 Budget for the proposed strategy 56 3.1 Improving the Corporation’s structure 56 3.2 Evaluating and allocating human resources 56 3.3 Investing and renovating technology 57 CONCLUSION 58 REFERENCES 59 APPENDIX 60 4 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn COMMITEMENT We would like to commit that the research results are the efforts of the whole group. All the data and results in this study are authentic. We also would like to guarantee that the analysis in this study is selected carefully from the references and learned theories. ACKNOWLEDGEMENT We would like to express our sincere thanks to cadres and staffs at Bach Dang Construction Corporation for having enthusiastically supported, supply data to us, as well as arranged meetings to discuss about business strategy of the Corporation.
In addition, we are also grateful for professors and doctors for equipping us with knowledge and skills on corporate management during the course. These are necessary based for research as well as useful experiences for practice. We also would like to express our special gratitude to ETC Center – Vietnam National University, Hanoi and Griggs University for their support during the completion of this study. Luu Hong Giang (Group’s leaders) 2.
Tran Ngoc Anh 3. Nguyen Ngoc Lan 4. Chu Anh Tuan 5 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn LIST OF ABBREVIATIONS BDCC Bach Dang Corporation SWOT Strengths, Weakness, Opportunities, Threats GDP Gross Domestic Product PEST Political, Economics, Socio-cultrural, Technological HUD Housing and Urban Development Holdings LIST OF FIGURES AND TABLES 1.1 – Strategy formulation process Figure 1.2 – PEST model in macro-environment analysis Figure 1.3 – Five Forces Model by Michael Porter Figure 1.4 – Value chain of an organization 2.1 – Process of recognizing sustainable competitive advantages Table 1.2 – Changes in concentrated growth strategy Table 1.3 – Changes in integrated growth strategy Table 1.4 – SWOT Matrix Table 2.1 – GDP growth by year Table 2.2 – Corporations with the same business line in Vietnam Table 2.3 – Competitive Profile Matrix (CPM) Table 2.4 – External Factor Evaluation (EFE) Matrix Table 2.5 – Some main financial items in 2008, 2009 and 2010 Table 2.6 – Some main financial items for installation & construction sector Table 2.7 – Human resource of BDCC in 2011 Table 2.8 – Internal Factor Evaluation (IFE) Matrix Table 2.9 – SWOT Matrix Table 3.1 – Quantitative Strategic Planning Matrix (QSPM) Table 3.2 – Structure of products in 2012 – 2015 period Table 3.3 – Basic targets for 2012 – 2015 period Table 3.4 – Roadmap for strategy implementation 6 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn INTRODUCTION After studying at Global Advanced Master of Business Administration Program co-organized by Center for Educational Technology and Career Development - Vietnam National University, Hanoi and Griggs University – USA in Vietnam. Members of group 03 agreed on selecting the topic: “Formulating installation and construction business strategy for Bach Dang Construction Corporation in 2012 – 2015 period".
With the expectation to formulate business strategy for the Corporation so as to find out solution to enhance its business and production efficiency in 2012 – 2015 period. The necessity of the study Over the past years, Vietnam’s construction sector has developed in both horizontal and vertical directions. However, the world economic integration of Vietnam has posed a lot of challenges to Vietnam’s economy in general and construction sector in particular. The increase in number of foreign construction corporations from Asian countries like Japan, South Korea, China, etc.
showed that competition has become tougher. The increasing entry of both domestic and foreign construction enterprises brings about both opportunities and threats for construction enterprises in integration process. To overcome challenges and utilize opportunities, construction enterprises are required to determine their strengths as well as weaknesses; and formulate appropriate business strategies for each period and each market under the principle of ensuring efficient business and production, making contribution to the development of construction sector and the country’s economy. Bach Dang Construction Corporation (BDCC), under Housing and Urban Development (HUD) – Ministry of Construction, is mainly operated in the fields of constructing industrial and civil projects.
With the history of above 53 years for construction and development, BDCC has constructed many big projects in Vietnam. However, after investigating business situation of the Corporation, we realize that there are still some shortcomings in the Corporation’s business and production activities despite its optimistic level of profit in recent years. Besides, the Corporation has not been able to make full use of its strengths to overcome 7 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn other enterprises in the industry. To develop the business and production situation of BDCC sustainably, there must the formulation of a business strategy to help it follow a right track on the integration roadmap.
Owing to the necessity and importance of business strategy formulation for the Corporation in particular and construction industry in general, we have selected the topic: “Formulating installation and construction business strategy for Bach Dang Construction Corporation in 2012 – 2015. Practical bases Along with the development of the world and International integration trend, Vietnam is renovating, stepping into the age of industrialization and modernization, constructing infrastructure, and developing the country’s economy. At present, Vietnam is building plants, industrial parks, new urban areas, etc; therefore, construction industry plays a very important role in the country’s development process. Previously, construction enterprises only bore the competition of domestic and joint-venture companies; afterwards, competition has become tougher and tougher with the occurrence of experienced foreign construction groups with 8 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn management experience, high technological level and strong financial capacity.
This has alerted the threat of contracting the market for Vietnam’s construction enterprises. The world economic is changing complicated and tends to fall into a new crisis, especially the debt crisis in Greece and some European countries have not been improved. In domestic, inflation rate, exchange rate and prices of goods are raising high, having significant impact on business and production in general and construction enterprises in particular. Therefore, each construction enterprise must have wise and appropriate business strategy for each period.
Business strategy plays a very important role in doing business, providing enterprise a proper orientation to gain their set targets. Objectives of the study Systemizing knowledge and basic theories on business strategy formulation. Analyzing the basis to form business strategy for BDCC. Giving out solutions to implement the business strategy of BDCC in 2012– 2015 period.
Object and scope of the study Object: Formulating business strategy for Bach Dang Construction Corporation. Scope of the study: Vietnam’s construction market in 2012- 2015 period. Methodology of the study Data supplied by BDCC. Information about construction market collected from the mass media.
Method of studying available document to consider the scale, structure and movement trend of the market. Comparison: Considering each criterion in both absolute and relative ways, following both movement of time and space. Particular assessment method: When analyzing each issue, criterion and phenomenon to evaluate the nature of the issue. 9 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn Comprehensive assessment method: giving general evaluation on all aspects of operations of construction sector.
Reason for selecting these research methodologies: Being able to reflect business situation at construction and installation unit in 2012-2015 period. Structure of the study: Main content of the study consists of three chapters: Chapter 1: Theoretical background on corporate business strategy. Chapter 2: Analysis on the bases for formulating strategy of BDCC. Chapter 3: Selecting business strategy and solutions for implementation of BDCC in 2012 – 2015 period.
Allocating tasks for the group’s members Member Chapter Item 1.Luu Hong Giang Introduction (Group’s leader) Chapter 2 2.4 Conclusion Tran Ngoc Anh Chapter 1 1.2 Nguyen Ngoc Lan Chapter 1 1.3 Chu Anh Tuan Chapter 1 1.5 Slides 10 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM Website: www.vn Email: gamba@griggs.vn CHAPTER I: THEORECTICAL BACKGROUND ON CORPORATE BUSINESS STRATEGY FORMULATION 1. Corporate business strategy 1. Viewpoints on strategy According to traditional viewpoint, “Strategy is studying and finding out a suitable competitive position in an industry, a major scope of operation in which there are competitive activities” – Micheal Porter. According to this definition, strategy stresses on the aspect of competition.
Meanwhile, according to Alfred Chandler “The determination of the basic long- term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” James Quinn, at Dar mouth University defined “a strategy is the pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole.” Meanwhile, as defined by Willam F.Gluck “Strategy is a consistent, comprehensive and coordinative plan designed to ensure that the basic objectives of the enterprises are successfully implemented”. The development trend of strategy based on planning has been no longer popular. The reality has proved that well-established plans are sometime ineffective, while random plans are sometime essential some operations of enterprises. In short, traditional viewpoints have exposed their weaknesses.
Nowadays, modern viewpoints on strategy have gradually replaced traditional ones. These viewpoints do not stress on the calculation, planning, but on the selection of suitable strategy with the objectives set by the organization. In general, modern viewpoints on strategy have tried to return to the nature of the term “strategy”, at the same time, ensure the adaptation of this term to the changing business environment.