ACKNOWLEDGEMENTS We would like to thank the Center for Educational Technology and Career Development in National University of Hanoi, the faculty and staff of the faculty has been so devoted in teaching, guiding and facilitating us during our study in GaMBA01.X03 class and successfully completing the course. We would like to sincerely thank the teachers who have directly taught and guided us enthusiastically during the research and completing the capstone project report. Thank the colleagues, friends and families for being there to encourage and help us. Thank you very much! INTRODUCTION 1.
Rationale for the project topic selection: In integrating with the development of the world economy in recent years, Vietnam's economy has achieved significant development. The innovation policy of the Party, the State and especially the development trend of the economy, culture and society have created many opportunities for foreign and domestic businesses to enter Vietnam market with certain developments. However, in the integration trend, world and regional economic globalization today, the accession into international organizations of Vietnam economy such as AFTA, WTO, etc. the energy sector has to face with a new business environment, a fierce competition in the market both in and out of the country.
It is for this reason, the urgent matters that the energy and electricity sector needs to do now is to build for its own an appropriate business strategy to continue developing in the future. Wishing to contribute to the development of the energy and electricity sector in Hanoi in particular and in Vietnam in general, to build the energy and electricity sector into a rapid developing industry across the country, this capstone project report will present the business strategy for the Hanoi Energy Joint Stock Company during 2005-2015 period. Study object: The object of our study in this report is "the strategic solutions” to improve economic efficiency in production and business operations of the Hanoi Energy Joint Stock Company and contribute to the construction and development of the energy and electricity sector for the sake of the industrialization and modernization of the country. The purpose of the project: This aims to clarify strategic solutions to improve business efficiency of Hanoi Energy Joint Stock Company for the period 2005-2015.
Thereby, the enterprises in the energy and electricity sector in the country can refer to during their operation. Research methodology: In order to have information as the basis to propose solutions, the researchers have used methods such as: - Desk study. - Observation - Statistical methods and dialectical materialism philosophy, historical materialism to analyze the environmental factors affecting the energy sector. Project scope: - Focus on evaluating the actual situation of production and business operations of Hanoi Energy Joint Stock Company and comparing it against some enterprises in the field of energy and electricity across the country such as JVC LG- VINA, Napad JVC, JVC-Vietnam Clipsal, Optical Electric Co., Matsushita Company, etc.
In the study, the report has used the documents and data from the Statistical Yearbook, Hanoi Department of Industry, published magazines, researches and reference books. Project contributions: * Systemize a number of theoretical issues related to business strategy. * Analyze to make a comprehensive evaluation of the environmental factors influencing the business strategy of Hanoi energy Joint Stock Company in particular and the energy and electricity sector in Hanoi in general. * Build a perspective as the basis for completing strategies in the business Hanoi Energy Joint Stock Company and thereby contribute to the development of the energy and electricity sector in Hanoi.
* Propose a number of strategies for the business operations of Hanoi Energy Joint Stock Company to meet the competition requirements, development and the globalization trends of the energy market today. Strategic Management CHAPTER I ENTERPRISE BUSINESS STRATEGY THEORY 1. Enterprise business strategy 1. Concept Strategy is a term that has appeared so long.
It is was at first usually associated with military field and was understood that: strategy is the means to achieve long-term goals. Business strategy is closely attached to economic field and it is understood in different ways. The followings are relatively common interpretations: - By Fred David, strategies are the means to achieve long-term goals. - By Alfred Chadler, strategy is identifying basic and long-term goals of a business, proposing a course of actions, distributing resources needed to implement those goals.
"Business strategies of an enterprise are a comprehensive action program towards realizing the goals of the enterprise" [1.14] Business strategy is not aimed at outlining specifically how to achieve that goals, because it is the tasks of many support programs and other functional strategies. It only creates the framework to guide thinking for action. Business strategy is typically defined at three levels: Corporate strategy: A model of the decisions in a company. It identifies and defines clearly the goals and objectives of the company, identifies the businesses that the company pursues, creates basic policies and plans to achieve the company objectives.
The corporate strategy is set to identify the businesses in which the company will compete and distribute resources among those businesses. Business strategy: Business strategy is made to determine the selection of specific products or types of the market for a certain business within the company and it determines how a company will compete in that businesses with its known position among its competitors. Functional strategy: Functional strategy is planned to focus on supporting the company strategy and focus on the areas of operation and businesses. Business strategy role - Firstly, the business strategy helps enterprise to see clearly the goals and direction.
It forces managers to consider and determine what direction the business should follow and when to reach certain locations. - Secondly: Business strategy forces managers to analyze and forecast environmental conditions in the near and far future. - Thirdly: Thanks to the business strategy, the enterprise will be attached its decisions to the business environment conditions. - Fourthly: Business strategy helps administrators to use effectively available resources of the enterprise and allocate them appropriately.
- Fifthly: Business strategy helps managers to coordinate functional areas in the enterprise in the best way to achieve the common goals of the business. Other concepts related to business strategy: + Mission statement: It reads out the long-term goals which show the business missions of the company with the products and services that it will provide to customers, distinguishing it with other organizations. It describes the values and priorities of the enterprise, defines the direction for the overall development of the enterprise. + Long-term goals: These are the goals showing the desired results in the long run.
Long-term goals are usually set up for the issues of: profitability, productivity, competitive position, employee development, employee relations, technical leadership and social responsibility. + Short-term goals: They are specific and give detailed aimed results. They are the specific outcomes that the company intends to generate within the next decision cycle. + Annual goals: These are the milestones that businesses must achieve to reach long term goals.
They are shown in the form of achievements in management, marketing, finance/accounting, production/operations, research & development and information systems. Annual goals are important in the period of strategy execution. + Policies: They are the tool to achieve the set goals, the guidelines for Strategic Management decision making and implementation in repeated or cyclical situations. The policies are important in the strategy implementation phase.
+ Opportunities and threats: These are the impacts of external environmental factors, beyond the control of the enterprise and can benefit or harm the business. + Strengths and weaknesses: These are the impacts of internal factors of the enterprise, within its control and are determined in relation to the competitors.1 Growth focused strategy Each corporate strategy is applied to the business unit level. However, at the business unit it is necessary to pay attention to the growth focused strategy because its core subjects are the product and market. This kind of strategy is primarily to improve the competitive position of companies with existing products on the basis of enhancing marketing activities or changing the existing market strategy without changing the products.
This category has three main strategies: + Market penetration: Searching for higher market share for current products and services in the market through the support marketing efforts. + Market development: Bringing current products and services to new areas. + Sales development: Improving, innovating available products and services. Porter’s competitive strategy perspective Michael E.
Poter, the professor at Harvard University, has launched basic competitive strategies in the book named "Competitive strategy": a. Cost leadership strategy: This strategy creates a competitive advantage in two ways: - Lower price compared to competitors in the industry to attract the target customers who are sensitive to price to increase total profit. This strategy is consistent with the large scale business units with capability of reducing costs in the operation. Strategic Management - Refrain from cutting off completely, be satisfied with current market share and use the lower cost tool to have higher actual profit margin per unit of product sold.
Differentiation strategy: The business unit focuses on creating kinds of products and marketing programs which are distinguishable from competitors to reach to the top of the industry. Then, it assigns a higher price than that of conventional products to increase sales by attracting customers who like prominently brands with features such as a unique taste, reserve capacity for delivery availability to customers anywhere, scientific applications in the design and operation, optimal service, high quality, high reputation and distinctiveness etc. Focused strategy: Under this strategy, the business unit focuses attention on the niche market. This segment can be determined according to geographical area, products and target customers.
The attractive segment selected is where there is no competitor or competitors may not be responsive enough to the needs and wishes of customers.3 Competitive strategies for the business unit based on market position Despite of belonging to the same corporate, each business unit has different market position in the market. Market leader: - Strategies to expand the total market: Looking for a new geographical area to sell more, looking for new customers, developing new uses, encouraging more usage of products. - Defense strategy: Helping business unit leading the market keep its position on the current market. The market leader is always threatened by other competitors, especially the market challengers.
Therefore, the business unit must continuously defend against the attacks of competitors. - Market expand strategy: Acquiring or buying business units of smaller rivals, attacking to seize the market share of weak competitors. Market challenger: Attacking market leaders and other competitors to increase market share or doing business in parallel with competitors and not touching the follower opponents. Strategic Management To implement the attacking strategy, business units need to perform the following steps: - Determine clearly competitors and to targets of attacking strategy.
- Select appropriate strategy: forward, side, siege attacking. Market follower: These are the business units who do not want to deal with market leaders or market challengers because of insufficient resources, fear of loss, high cost so they try to avoid by following market leader through copy strategy: - Copy completely products, distribution methods, advertising and marketing activities, product delivering for the sensitive target markets with low price. - Copy some core content in a marketing mix of the market leader and keep some differences in packaging, pricing, advertising, sales network etc. - Copy with modification to adapt to market by relying on marketing mix of market leader to improve and create own unique feature for its marketing mix to adapt to the needs and expectations of target market.
Market nicher: The market nichers always look for one some market segments which are safe and potentially lucrative. To be successful on niche market, they often make the typical specialization strategies: - Specialization to end users: Depending on the sector, the market nicher selects target customers wishing to use the product or service to serve.