GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY OF TAN NAM CONSTRUCTION JOINT STOCK COMPANY UP TO 2020 Group No: 5 - Gemba.v0110 Student’s name: Nguyen Van Hai Nguyen Van Phong Cao Dinh Hanh Duong Hung Cuong VINH, 2011 Glass: GaMBA0110_Group 5 INTRODUCTION 1. Rationale of the study Vietnam economy after 25 years (1986-2011) has made the economic renewal of the party and state, with the general economic model is to build a socialist-oriented market economy. Our country got rid of economic-social crisis, created the necessary premises to move to a new development period- the period of promoting industrialization and modernization. Especially after that Vietnam joins in WTO has put /make domestic businesses face many challenges in the business and production activities, the level of com petition is more fierce and drastic.
To help businesses survive and develop, they should have self-control in all aspects of production and business activities from investment, the use of capital and the organization of production, etc. Besides, they have to make use of their strengths and advantages to take advantage of opportunities and options for their business right direction. To achieve it, they have to build a business strategy. If there is not a business strategy or their business strategy is not proper, their production and business activities will certainly go to failure.
Based on researching and collecting data on production and business activities of Tan Nam Construction joint stock Company and the knowledge trained in the period/time of taking part in MBA course International business administration of the associating program between Griggs university and training and employment under Hanoi National university, our group selected the topic “Buiding business strategy of Tan Nam construction joint stock company up to 2020” to help the company have a right production and business strategy, to make Tan Nam construction joint stock company become a strong/powerful enterprise in the construction industry. Purpose of the study To research and systematize the theories of bulding and implemeting business strategies, to choose effective analyzing models for construction and performance of business strategies. 1 Glass: GaMBA0110_Group 5 To apply theoretical basis system and models to analyze, evaluate internal and external environment in order to build a business strategy for Tan Nam construction joint stock company. To propose solutions and recommendations in the implementation of business strategies to improve the business strategy the company chose.
Object and scope of the study Objective of the study is Tan Nam construction joint stock company with construction activities in the whole country, but mostly in Nghe An province. Methodology The report largely uses quantitative method of analysis: study and analysis of the situation of Tan Nam construction joint stock company. The methods of collecting data specially are listed such as interviewing experts, etc. It also uses the data of financial reports, contractor capability reports, statistical reports, and information and data of the field, the secondary data of previous strategies, studies and reports of Tan Nam construction joint stock Company.
Structure of the study Including: - Introduction - Chapter 1: (General theoretical basis of building a business strategy.)Theoretical background to business strategy building - Chapter 2: Analysis of business environment and internal Tan Nam construction joint stock Company - Chapter 3: Options of business strategies of Tan Nam construction joint stock Company up to 2020 and implemented solutions. - Conclusion - List of references and appendices. 2 Glass: GaMBA0110_Group 5 CHAPTER I: THEORETICAL BACKGROUND TO BUSINESS STRATEGY BUILDING 1.1 Denifition and Role of a business strategy 1. Definition: Historically, the term of “strategy” is used in the military with the meaning of long-term plans, established on the basis of completely trusting/believing what the enemies can do and cannot do.
There are many definitions of strategy; each definition is more or less different depending on the author’s concept. In 1962, Chandler defined “strategy” as “the identification of goals, long-term basic purposes of the enterprise and the application of a sequence of actions as well as the allocation of necessary resources to perform this objective”. Chandler is one of the first people to initiate Strategic management Theory. Until 1980s, when strategic management subject has become ripe, Quinn gave a more general definition: “Strategy is the pattern or plan integrating the key objectives, policies, and a sequence of actions into a closely united group.” After that, Johnson and Schole redefined strategy in the environmental conditions with a lot of rapid changes.” Strategy is the long-term direction and scope of an organization in order to gain/get competitive advantages for it through defining its resources in changing environment, to meet the market demands and satisfy the expectations of concerned parties.” It can be seen that all definitions of strategy appear the phrases denoting different aspects need to be included in it.
In the definition of Strategy with 5P, Mintzberg summarized all aspects of strategic management as follows: Planning: A sequence of consistently planned actions/activities Pattern: The consistency of behavior overtime, maybe intended or not intended. Position: Match between a organization and its environment, Perspective: The way to aware the world. 3 Glass: GaMBA0110_Group 5 Ploy: The specific way to deceive competitors. Not only including many different aspects, the definitions of strategy are different depending on the level.
The correct definition of strategy according to the level naturally depends on opinions. It is essential to have at least 3 levels of strategy need to be recognized: Company, business unit and business. Nowadays, strategy is used popularly and is considered as the factor increasing the success possibility and reducing the failure possibility of enterprises. In summary, although there are a lot of different definitions of strategy, in this study, this topic’s author thinks that “An orientated business strategy is all long- term goals, policies, and big solutions of production and business and finance, and the solution of human resource in order to make enterprise’s business develop to a higher state of quality.
Roles of a business strategy to an enterprise. A business strategy plays an important role for the survival and development of each enterprise. A correct business strategy will create a good direction for enterprises; it can be considered as a guideline guiding for enterprises in the right direction. The importance of a business strategy is shown in the following aspects: - It helps enterprises have a guideline for their activities in the future through analysis and forecast business environment.
- It helps enterprises grasp/get opportunities as well as forecast all risks for the development of their resources; it helps them exploit and use properly resources, promote their strength. - It creates an orbit of activities for enterprises; help them associate with individuals with other benefits together towards a common goal, and developing business/enterprises. - It is an effectively competitive tool of enterprises. Basic features of business strategy The strategy to define the basic targets of business direction must be figure out in each specific period and be fully aware in every management field of the 4 Glass: GaMBA0110_Group 5 organization.
The purpose of the strategy orientation is to assure the continuous and sustainable development in continuously flexible business environment. The business strategy only sets out operation orientation in the long term and operation frame of the organization in the future. It is only theoretical while actually, the business activities requires to combine both strategic target and economic target, to consider rationality and adjust to be suitable for the business environment and condition to assure business efficiency and overcome mistake caused by strategy orientation. The stratrgy is built up on the competititve advantages of the organization to assure mobilizing resources and to take advantage and use of the resource.
Business strategies are shown in a long period of building the organization, working, assessing, examining and adjusting the strategies of the organization.2 Process to build up a business strategy 1. Assessment of external and internal environment of the company 1.1 Assessment of external environment of the company The analysis of external environment is to realize clearly opportunities and challenges threatening business activities of enterprises. Macro environment - Economic factors: The growth of the economy gives more new demands for the developments of economic fields; the rate of inflation affects interest rates, the proportion of investment interest rates; the rate of unemployment affects the recruitment and dismissal; exchange rates affect bank rates, financial policies, labor cost control and balance pf payments. - The political factors: This group of factors is more important, including: The stability of the government, the rules of tax, fees, regulations on hiring and firing workers, the regulations of safety and environmental protection.
- The social factors: 5 Glass: GaMBA0110_Group 5 Living quality, manners and customs, regional culture, the rate of population growth. - The natural factors: Natural resources, environmental pollution, lack of energy… - The technological factors: This factor has big and direct influence on the business strategy of enterprises. Because in the age of rushing development of technology as today, the appearance and change of new technologies always create opportunities but also have other potential risks to the existence and development of an enterprise. Therefore, it is essential for enterprises to have strategies of applying technology flexibly, avoiding being passive and lagging behind.
Industry environment: Working environment includes factors in the industry and is the external factor to enterprises, determines levels and competition in that field. There are 5 basic factors (5 market forces) are: - Bargaining power of Customer - Bargaining power of Suppliers - Availability of Substitute products - Existing competitors - Potential competitors Enterprises have to analyze these factors to realize opportunities and risks that they face. Analysis of internal environment Analysis of internal environment situation of an enterprises is analyzing the internal factors (internal company) to realize strengths as well as weaknesses, and have solutions to promote strengths and overcome weaknesses. The analysis focuses on the following issues: a.
Financial analysis: 6 Glass: GaMBA0110_Group 5 Analysis of financial status is the process of reviewing, testing, and comparing the current financial data with the past one, then, it can be made comments the efficiency of business and the potentialities as well as risks of enterprises in the future. Through analysis of financial situation, administrators and interested individuals have an overall and comprehensive view of assets, debts, and capital sources, business activities of enterprises to make plans, business strategies, and financial protection solutions effectively. Aanalysis of human resources: - Human resources: including teams of senior administrators, teams of executive administrators and staff. When analyzing human resources, it needs to be paid attention to: + The leadership + The staff’s skills, ethnics + The ability to adapt to the changes… c.
Analysis of facility and technology - Financial resources: Focusing on issues such as the state of allocating capital, the effectiveness of using capital, and financial indicators. - Equipment technology resources: Including factories, system of warehouses, yards, roads, and transporting means, machines and equipments. Analysis of marketing: - This is a very important content in analyzing internal company; it allows enterprises to assess the ability to meet the market demands, focusing on issues: Categories of products, product quality, market share, price, customers; confidence. Analysis of enterprises’ competitiveness - Enterprises’ competitiveness is the capacity which enterprises can maintain their positions on the market stably and meaningfully.
The factors affect enterprises’ competitiveness. 7 Glass: GaMBA0110_Group 5 - Working atmosphere within an enterprise - The profitability of investment capital - Labor productivity - Product’s price, the possibility to reduce price - Business experience in the marketplace - The flexibility and responsiveness of the leadership of enterprises. - Quality of service products. Building Matrix of internal and external factor to select the strategy 1.1 General matrix of external factors.
From analysis of the factors, we can summarize general matrix of external factors. Enterprises often have 10 external factors and analyze step by step and we give the basic factors (Calculated based on 4). - Step 1: Make a list of factors that play a decisive role for the success of enterprises.