CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY DEVELOPMENT FOR VIETNAM OPTICAL FIBER CABLE JOINT STOCK COMPANY IN THE PERIOD 2010 – 2015 LE KIEN NGAI NGUYEN THANH HAI NGUYEN MINH NGOC PHUNG DAC KIEN MBA01.X02 HANOI, 2010 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY DEVELOPMENT FOR VIETNAM OPTICAL FIBER CABLE JOINT STOCK COMPANY IN THE PERIOD 2010 – 2015 Group: Le Kien Ngai Nguyen Thanh Hai Nguyen Minh Ngoc Phung Dac Kien HANOI, OCTORBER 2010 1 ACKNOWLEDGEMENT We would like to express our sincere thanks to Griggs University - U. and ETC Center – Vietnam National University, Hanoi for giving us the opportunity to participate in this course. Also, our group would like to give the deepest thanks to Mr. Le Dac Kien- Chairman of the Board of Directors, Mr.
Vu Van Thang- General Director together with the Leaders, officers and employees of Vietnam Optical Fiber Cable Joint Stock Company (VINA-OFC) for allowing us to use data and for their whole-hearted assistance during our completion of this thesis. We are deeply grateful to the international and Vietnamese teachers and class management who were enthusiastic to help us during the course. Our special thanks are given to Associate Prof. Ngo Kim Thanh of National Economics University who directly and enthusiastically instructed, guided and assisted the group to complete this thesis.
Last but not least, we would like to thank our family, relatives, friends and especially students of GaMBA X02 for their sharing knowledge, assistance, encouragement and special relationship during the course. Group 6 - Class GaMBA X02 1 TABLE OF CONTENTS Contents Page ACKNOWLEDGEMENT 1 TABLE OF CONTENTS 2 Symbols and abbreviations 6 LIST OF TABLES 7 List of PICTURES AND GRAPHS 8 INTRODUCTION 9 1 Imperativeness of study topic 9 2 Purposes of study 10 3 Scope of study 10 4 Methodology of study 10 CHAPTER I: BASIC THEORIES ON BUILDING BUSINESS 11 STRATEGIES IN THE ENTERPRISE 1. Basic contents of strategy 11 1.1 Some contents of strategy 11 1.2 Concept of strategic management 13 1.3 Basic characteristics of strategy 13 1.4 Role of business strategy and need for strategic management 14 in organizations 1.1 Role of business strategy 14 1.2 Need for strategic management 14 1.5 Tasks of strategic management 14 1.6 Process of strategic management 15 1.7 Strategic commitment 16 2 Strategic analysis 18 2 2.1 External environment analysis 18 2.2 Industry environment analysis 19 2.3 Matrix of external factor evaluation - EFE 23 2.2 Internal environment analysis 24 2.1 Matrix of Internal Factor Evaluation - IFE 25 2.2 Competitive image matrix 26 3 Tools for building and strategic options 28 3.1 Identification of strength (S), weak (W), opportunity (O) and 28 threat (T) 3.2 SWOT analysis 30 4 Business strategy selection and construction 31 4.1 General strategy of Michael Porter 31 5 Deployment and Assessment 35 5.3 Building implementation roadmap 35 CHAPTER II. BUSINESS STRATEGY DEVELOPMENT FOR 36 VIETNAM OPTICAL FIBER CABLE JOINT STOCK COMPANY (VINA-OFC) IN THE 2010-2015 PERIOD 1 Introduction about VINA-OFC 36 1.1 Establishment and development process 36 1.2 Organizational structure and leadership 37 1.3 VINA – OFC’s manufacture technology and main products 38 1.4 Manufacture and business results in 3 recent years 39 2 Analysis of external and internal environments impacting on 44 the development strategy of enterprise 2.1 External environment analysis 44 2.2 Internal environment analysis 61 2.1 Enterprise culture environment 61 2.2 Current human resources (HR) status 62 2.7 Matrix of internal factors evaluation (IFE) 65 2.3 Analysis of strengths, weaknesses, opportunities and threats 66 of VINA-OFC under the SWOT model 2.4 Strategies possibly selected 69 2.1 Selected the strategy basing on the analysis results of EFE 69 and IFE 2.2 Selected the strategy basing on SWOT analysis 70 2.3 Select the possible and suitable strategy for VINA-OFC for 70 period of 2010-2015 4 CHAPTER III.
STRATEGIES, SOLUTIONS, AND 72 SUGGESTIONS 1 Strategic plan selection for VINA – OFC 72 1.1 Norms for strategy 72 1.3 Cooperation strategy 77 2 Strategic solution 78 2.1 HR development solution 78 2.2 Technology investment solution 78 2.3 Export concentration solution 79 3 Implementation roadmap 80 4 Suggestions 80 References 82 5 Symbols and abbreviations JSC. Joint stock company IT-Communications Information technology - Communications SWOT Strength, Weakness, Opportunity, Threat SMART Specific, Measurable, Ambitious, Realistic, Timely VINA - OFC Vietnam Optical Fiber Cable Joint Stock Company EFE External factors evaluation IFE Internal factors evaluation CIM Competition Image Matrix 6 LIST OF TABLES No. Table Name Page Table 2.1 VINA – OFC balance sheet (in the 2007-2009 period) 41 Table 2.2 VINA – OFC income statement (in the 2007-2009 42 period) Table 3 Matrix EFE for VINA-OFC 59 Table 4 Competition Image Matrix 60 Table 5 Matrix IFE for VINA-OFC 66 7 8 LIST OF PICURES AND GRAPHS NO. Picture Page 1 Picture 1.
Strategic management process 15 2 Picture 2. Elements of macro-environment 18 3 Picture 3. Model of 5 competitive forces 19 4 Picture 4. SWOT Model 27 5 Picture 5.
SWOT Analysis 30 6 Picture 2. Revenue growth graph of VINA – OFC (in the 43 2007-2009 period). Profit–after-tax graph of VINA – OFC (in the 44 2007-2009 period) 9 INTRODUCTION 1. Imperativeness of study topic In the market economy which is very vibrant but also much volatile, enterprises must “find the way” to survive and develop.
Each enterprise, regardless of its business lines, has its own “directions”. In other words, they set their specific development strategies in the market economy. They set not only the overall development strategies but also short-term strategies for each specific type of product, service or field. Then, it can be seen that developing strategy is the survival factor of enterprises in the market economy.
Being founded in 1993 Vietnam Optical Fiber Cable Joint Stock Company has been becoming a leading enterprise in manufacturing, trading and services of equipment, materials, specialized materials for telecommunications, television, information technology, civil informatics electronics, industry, automation control, etc. Its products and services achieve reputes in the country and area. For recent years, Vietnam has emerged as a developing country with stability of the economic development. Many domestic economic areas have development opportunities, including information technology, electronics and telecommunications.
The Vietnam government has also oriented to prioritize the development of information technology, electronics and telecommunications in the 2010 - 1025 period. The foreign investment in this field has also continued to rise. Demands of people, organizations and businesses for electronics, telecommunications, and information technology have been more and more increasing. This opens up great opportunities for enterprises in the field of electronics and telecommunications, including VINA-OFC.
However, there are big challenges of potential, products, services, partners and customers, etc. in addition to such opportunities. The best way to take full advantages of the opportunities, promote strengths, limit weaknesses and overcome challenges is to develop an appropriate and creative development strategy. Therefore, our group has chosen the study topic as “Business 10 strategy development for Vietnam Optical Fiber Cable Joint Stock Company in the 2010 – 2015 period” 2.
Purposes of study 2. Analysis of theoretical basis of strategy development applied in the business strategy development of enterprise 2. Analysis of internal powers and business environment of the enterprise to define strengths, weaknesses, opportunities and threats to it 2. Business strategy orientation and effective solution selection for the enterprise in the 2010 – 2015 development period 3.
Scope of study Summarizing theoretical bases of business strategy development; analyzing actual business status of the enterprise based on its statistics from 2007 to 2009; Orienting business strategies and solutions for the enterprise in the 2010 – 2015 period. Methodology of study 4. Data collection Industry data is collected from mass media sources such as: newspapers, internet, etc. Enterprise data is collected from its statistics.
Data analysis: Using PEST and SWOT models to analyze external and internal environments in order to point out strengths, weaknesses, opportunities and threats to the enterprise; 5. Structure of study The study is presented in 3 chapters: - Chapter I: Theoretical bases of building business strategy for the enterprise - Chapter II: Business strategy development for Vietnam Optical Fiber Cable JSC. in the 2010 – 2015 period. - Chapter III: Strategies, solutions and suggestions 11 CHAPTER I: THEORETICAL BASES ON BUILDING BUSINESS STRATEGIES IN THE ENTERPRISE 1.
Basic contents of strategy 1. Some contents of strategy The term “Strategy” was used and popular in the military first. In accordance with U. Encyclopedia, “Strategy is the science and art of military management and applied in development and deployment of the overall plan to achieve the final victory.” Today, the term “Strategy” is commonly applied in business.
However, there are many different definitions of strategy and each of which is based on a distinctive point of view depending on how the author acknowledges the matter. Some authors believe that business strategy is the competition art in the market and enterprise development. -According to Alain Threlart, “Strategy is the art used to fight against the competition and win by enterprises” - “Strategy is the art of building solid competitive advantages for defense purpose”, said Michael Porter Some other authors pursue the viewpoint of considering the business strategy as a form of plan - “Strategy is the identification of ways and means to achieve known objectives through policies” - G. Arlleret - “Strategy is similar to a general plan leading or directing the enterprise to the desired objectives.
It is the basis to form policies and operational measures” - D. Bizrell - “Strategy is a consistent, comprehensive and integrated plan which is designed to ensure that the objectives of enterprise will be done” – Gluecl - Quinn (1980) defined that “strategy is a pattern or plan which integrates basic objectives, policies and chains of actions of the organization into a coherent overall.” Some authors consider the strategy under the viewpoint of unity combination 12 - Chadler considered that “strategy involves the fixing of the enterprise’s long-term basic objectives and choice of operation manner or process and allocating necessary resources and implementing such objectives” - “Business strategy is the art of designing and organizing the means to achieve long term objectives of the enterprise and has a relationship with changes to business environment and competitiveness” - Recently, Johnson and Schole has given their definition as follows: “Strategy is the orientation and scope of an organization in the long-term so that the organization can gain advantages through its resource structure in the changing environment to meet market needs and satisfy expectations of the parties concerned.” Mintzberg summarized a multi-faceted definition of strategy with 5 P: - Plan: A sequence of consciously intended actions - Pattern: Consistency of behavior over the time with or without intention - Position: Appropriateness of the organization with its environment. - Perspective: An inveterate way to be aware of the world. - Ploy: A specific way to overcome competitors Not only including many aspects, the definition of strategy is also divided into many different levels in which at least three levels of strategy are considered: Corporate level strategy: Towards general purposes and scope of organization.
Business unit level strategy: Related to how to compete successfully in particular markets. Functional strategy: Helping the two strategies mentioned above to be implemented effectively thanks to its components in terms of resources, processes, personnel and skills needed. In summary, it can be understood in general that: Strategy is a process to determine long-term basic objectives of the company, or choose the way or direction to act and allocate necessary resources for implementing such objectives. It is also a standard format or a plan combining main objectives, policies and action sequences into a unified whole.
Concept of strategic management: Strategic management is similar to the product of a rational planning process directed by senior management, but that is not all. In many cases, valuable strategies can arise within the organization without any prior planning. The strategic management is originated from business policies, strategic management in conjunction with long-term planning strategic topics.