VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS TRAN THUY LOAN FORMULATING BUSINESS STRATEGY FOR COLLIERS INTERNATIONAL IN VIETNAM MARKET Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Nguyen Viet Dung Hanoi – 2013 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS ACKNOWLEDGEMENT. iii TABLE OF CONTENTS. iv LIST OF FIGURES .vii LIST OF TABLES. viii LIST OF CHARTS.
1 CHAPTER 1 – BASIC OF STRATEGY & STRATEGY FORMULATION .1 OVERVIEW OF STRATEGY AND STRATEGIC MANAGEMENT .1 What is Strategy .2 Strategic Management Definition .3 Types of Strategies.4 Levels of Strategies .5 The Strategic-Management Model .1 Business Vision and Mission .3 The Internal Assessment .4 Setting long-term objectives. 28 iv TIEU LUAN MOI download : skknchat@gmail.5 Strategy Analysis and Choice. 38 CHAPTER 2 - STRATEGY ANALYSIS CASE: COLLIERS INTERNATIONAL39 2.1 COLLIERS INTERNATIONAL OVERVIEW .2 Colliers in Vietnam .1 Macro Environment Analysis .3 The EFE Matrix .4 SETTING LONG-TERM OBJECTIVES. 64 CHAPTER 3 – STRATEGY ANALYSIS AND RECOMMENDATIONS .1 BUSINESS VISION AND MISSION.2 STRATEGY ANALYSIS AND CHOICE .1 Strategy Forming: SWOT Analysis .3 Strategy Selection: Quantitative Strategic Planning Matrix (QSPM) .3 RECOMMENDATIONS TO COLLIERS .1 Strategy 1: Focus on foreign customers.
81 v TIEU LUAN MOI download : skknchat@gmail.2 Strategy 2: Develop the existing MIS and marketing tools. 85 vi TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 1-1: Level of Strategies with Persons Most Responsible – Large Firm. 7 Figure 1-2: Level of Strategies with Persons Most Responsible – Small Firm. 7 Figure 1-3: A Comprehensive Strategic-Management Model.
9 Figure 1-4: PEST analysis. 13 Figure 1-5: The Five-Forces Model of Competition. 18 Figure 1-6: Internal Factors. 23 Figure 1-7: Porter’s Value Chain Model.
25 Figure 1-8: A Comprehensive Strategy-Formulation Framework. 30 Figure 2-1: Colliers International's Core Services. 41 Figure 2-2: Colliers International's Milestones in Vietnam. 42 Figure 2-3: Colliers International's Structure in Vietnam.
43 Figure 2-4: Colliers International's Value Chain. 58 Figure 2-5: Colliers' Methodology. 61 vii TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 1-1: Alternative strategies defined .5 Table 1-2: Key Economic Factors.14 Table 1-3: Key Social, Cultural, Demographc and Natural Environment Factors .15 Table 1-4: Key Political, Governmental, and Legal Factors.16 Table 1-5: The EFE Matrix .22 Table 1-6: The IFE Matrix .28 Table 1-7: Varying performance measures by Organizational level .29 Table 1-8: The SWOT Matrix .32 Table 1-9: The Quantitative Strategic Planning Matrix (QSPM) .35 Table 2-1: Colliers International Statistics for 2011 .41 Table 2-2: The EFE Matrix for Colliers .57 Table 2-3: The IFE Matrix of Colliers .62 Table 3-1: SWOT Matrix for Colliers Vietnam .67 Table 3-2: SO Strategies for Colliers Vietnam .68 Table 3-3: WO Strategies for Colliers Vietnam.69 Table 3-4: ST Strategies for Colliers Vietnam.70 Table 3-5: WT Strategies for Colliers Vietnam .71 Table 3-6: QSPM for Colliers Vietnam .80 Table 3-7: Recommended Action Plan Framework for Strategy 1 .81 Table 3-8: Recommended Action Plan Framework for Strategy 2 .82 viii TIEU LUAN MOI download : skknchat@gmail.com LIST OF CHARTS Chart 2-1: Vietnam GDP growth from 2007 to 2012. 44 Chart 2-2: Vietnam GPD Growth decomposed by sectors from 2011 to 2012.
45 Chart 2-3: Vietnam Inflation Rate from 2007 to 2012. 46 ix TIEU LUAN MOI download : skknchat@gmail.com ABBREVIATIONS EFE External Factor Evaluation IFE Internal Factor Evaluation QSPM Quantitative Strategic Planning Matrix SWOT Strengths – Weaknesses – Opportunities – Threats model VCA Value Chain Analysis WTO World Trade Organization x TIEU LUAN MOI download : skknchat@gmail. Thesis Title Formulating business strategy for Colliers International in Vietnam market. Necessity of The Thesis Vietnam real estate market has undergone a period of rapid growth from 2006 to 2008.
However since 2011, the growth has gone into decline stage. A lot of businesses which were profitable during that period are facing many difficulties. Real estate market promises potential profitability but also brings many challenges. As an international real estate consulting firm, if Colliers does not have a clear strategy, it is difficult to survive in Vietnam market, especially when there are many international consulting firms have joined the market.
Objectives of The Thesis Review and summarize the theory of strategy and strategy formulation; Apply the theory to analyze and formulate a strategy for Colliers International in Vietnam market; Propose some recommendations to enhance the business result of the company. Research Questions What is strategy and strategy formulation? Which factors will affect the strategy formulation process of Colliers International? Which strategy will be suitable for Colliers International in recent time? 5. Scope of Work Field: Strategy and strategy formulation. Space: All activities of Colliers International in Vietnam.
Time: From 2009 to 2012. 1 TIEU LUAN MOI download : skknchat@gmail. Data Sources Primary data was collected from questionnaire and interview. Secondary data has been performed by research of documents, annual/quarterly reports of Colliers International and internet sources.
The author conducts this research by collecting both primary and secondary information. To analyze the operating situation, the author use secondary with filtering the useful information to have the big picture but supportive detail. This data is not only for this research, the author have the ambition to use them for the suggestions to the Board of Director because it is from the real situation. Expected Results The current status of the company is assessed and some appropriate recommendations are proposed.
The same methodology can be applied in the scenario of other companies in commercial real estate industry with little adjustment. Thesis Structure Besides the introduction, conclusions and additional parts (references and appendices), the thesis is divided into 3 major chapters as follows: CHAPTER 1 - Basic of Strategy & Strategy Formulation CHAPTER 2 - Strategy Analysis Case: Colliers International CHAPTER 3 – Strategy Formulation and Recommendation 2 TIEU LUAN MOI download : skknchat@gmail.com 1 CHAPTER 1 – BASIC OF STRATEGY & STRATEGY FORMULATION With the purpose to provide base knowledge about strategy and strategy formulation process, Chapter 1 is organized as follows: Section 1.1 is the overview of strategy and strategy management; Section 1.2 discusses further about strategic formulation process – one sub process of strategic management.1 OVERVIEW OF STRATEGY AND STRATEGIC MANAGEMENT 1.1 What is Strategy Strategy – the concept has a long story within the military and is rooted in the Greek word strategos – literally meaning “what the general do”. It is however not so that this meaning is directly transferred to the field of business theory. This lack of common agreement leads different authors to consider it to be necessary to define their own meaning of the word.
Here is a review of the definitions of strategy that can be found: Strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals and define the range of business the company is to pursue, the kind of economic and human organization it is or intends to be and the nature of economic and noneconomic contribution it intends to make to shareholders, employees, customers and communities.1 A company’s strategy consists of the competitive efforts and business approaches that managers employ to please customers, compete successfully and achieve organizational objectives. The Concept of Corporate Strategy (3rd edition), pp 13. Homewood ILL: Irwin.Strategic Management: Concepts and Cases (13th edition), pp 10. New York: McGraw-Hill/Irwin.
3 TIEU LUAN MOI download : skknchat@gmail.com Strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.3 Our definition of strategy is a series of goal-oriented decisions and actions that match an organization’s skills and resources with the opportunities and threats in its environment.4 Strategy refers to the top management’s plans to attain outcomes consistent with the organization’s mission and goals.5 It can be seen that although the description of strategy are different, all authors agreed at a common viewpoint that a strategy is an integrated and coordinated set of commitments and actions designed to develop and exploit core competencies and gain a competitive advantage. When choosing a strategy, firms make choices among competing alternatives as the pathway for deciding how they will pursue strategic competitiveness. In this sense, the chosen strategy indicates what the firm will do as well as what the firm will not do.2 Strategic Management Definition Strategic management can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives. As this definition implies, strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development and information systems to achieve organizational success.3 Types of Strategies Alternative strategies that an enterprise could pursue can be categorized into 11 actions: forward integration, backward integration, horizontal integration, market penetration, market development, product development, related diversification, 3 Hitt, Michael A.
Duane Ireland and Robert E.Strategic Management: Competitiveness & Globalization (5th edition), pp 9. Mason, OH: South-Western.Strategic management in action (2nd edition. Upper Saddle River, NJ: Prentice Hall. Kroll and John Alan Parnell (1998).Strategic Management(4th edition), pp 4.
Upper Saddle River, NJ: Prentice Hall. 4 TIEU LUAN MOI download : skknchat@gmail.com unrelated diversification, retrenchment, divestiture, and liquidation. Each alternative strategy has countless variations. For example, market penetration can include adding salespersons, increasing advertising expenditures, couponing, and using similar actions to increase market share in a given geographic area.
Strategy Definition Forward Integration Gaining ownership or increased control over distributors of retailers Backward Integration Seeking ownership or increased control of a firm’s suppliers Horizontal Integration Seeking ownership or increased control over Competitors Market Penetration Seeking increased market share for present products or services in present markets through greater marketing efforts Market Development Introducing present products or services into new geographic area Product Development Seeking increased sales by improving present products or services or developing new ones Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services Retrenchment Regrouping through cost and asset reduction to reverse declining sales and profit Divestiture Selling a division or part of an organization Liquidation Selling all of a company’s assets, in parts, for their tangible worth Table 1-1: Alternative strategies defined 5 TIEU LUAN MOI download : skknchat@gmail.com Many, if not most, organizations simultaneously pursue a combination of two or more strategies, but a combination strategy can be exceptionally risky if carried too far. No organization can afford to pursue all the strategies that might benefit the firm. Difficult decisions must be made. Priority must be established.
Organizations, like individuals, have limited resources. Both organizations and individuals must choose among alternative strategies and avoid excessive indebtedness. Firms spend resources and focus on a finite number of opportunities in pursuing strategies to achieve an uncertain outcome in the future. Strategic planning is much more than a roll of the dice; it is a wager based on predictions and hypotheses that are continually tested and refined by knowledge, research, experience, and learning.
Survival of the firm itself may hinge on your strategic plan.4 Levels of Strategies Strategy making is not just a task for top executives. Middle-and lower-level managers too must be involved in the strategic-planning process to the extent possible. In large firms, there are actually four levels of strategies: corporate, divisional, functional, and operational. However, in small firms, there are actually three levels of strategies: company, functional, and operational.
6 TIEU LUAN MOI download : skknchat@gmail.com Figure 1-1: Level of Strategies with Persons Most Responsible – Large Firm Figure 1-2: Level of Strategies with Persons Most Responsible – Small Firm It is important to note that all persons responsible for strategic planning at the various levels ideally participate and understand the strategies at the other organizational levels to help ensure coordination, facilitation, and commitment while avoiding inconsistency, inefficiency, and miscommunication.