CAPSTONE PROJECT REPORT DEVELOPING BUSINESS STRATEGY FOR TRANG-AN CONFECTIONERY JOINT STOCK COMPANY IN THE PERIOD OF 2011-2016 Group 4 – Class GaMBA X0510 Hanoi 2011 1 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT DEVELOPING BUSINESS STRATEGY FOR TRANG-AN CONFECTIONERY JOINT STOCK COMPANY IN THE PERIOD OF 2011-2016 Group: 04 Member: Nguyen Phuong Nam Tran Quynh Chi Phan Dieu Thuy Dinh Ke Duc Class: GaMBA X0510 Hanoi, November 2011 2 Table of Contents Table of Contents. 3 LIST OF ABBREVIATIONS. 5 LIST OF TABLES AND FIGURES. Strategic management concept.
The role of strategy to an organization. The strategic management process. Defining the organizational mission. Defining long term goals and planning for the business strategy.
Defining action plan and strategy implementation solutions. Evaluation and adjustment. Tools for creating and selecting business strategy. External factor evaluation Matrix - EFE.
IFE Internal factor evaluation matrix - IFE. 18 ANALYSIS OF CURRENT SITUATION OF TRANG AN JOINT STOCK COMPANY. General introduction of Trang-An Confectionery Joint Stock Company. History of establishment and development.
Business fields and main product offerings:. Consuming market and sales methods. Analysis of the company’s business operations situation from 2008 to 2010. Company’s performance from 2008 to 2010.
Analysis of business environment of Trang An joint stock company in 2008-2010 period. Application of analysis and evaluation models. Problems and Causes. 45 STRATEGIC OBJECTIVES FOR.
45 3 THE COMPANY’S DEVELOPMENT AND SOLUTIONS. The company’s strategic objectives by 2015. Developing strategic alternatives. The Quantitative Strategic Planning Matrix.
Business strategy analysis. Feasible strategy selection. Strategy implementation and control. Strategy implementation solutions.
62 4 LIST OF ABBREVIATIONS WTO World Trade Organization CEPT Common Effective Preferable Tariff EPS Earning Per Share ROA Return On Assets ROE Return on Equity EIU Economist Intelligence Unit GDP Gross Domestic Growth HACCP Hazard Analysis and Critical Control Points R&D Research and Development EFE External Factor Evaluation IFE Internal Factor Evaluation QSPM Quantitative Strategic Planning Matrix SWOT Strengths – Weaknesses – Opportunities - Threaths LIST OF TABLES AND FIGURES ACKNOWLEDGEMENT Our group would like to express our thankfulness to the Directors and the Faculty from Center for Educational Technology and Career Development (ETC) – Vietnam National University and Griggs University for having created us the best study conditions and have encouraged us in all the time of research and writing this capstone. We have further more to thank the Directors of Trang-An Confectionery Joint Stock Company as well as its related Departments for their provided relevant information, data and their supports for our Capstone. 5 We understand that due to our lack of experience and limited information, our Capstone would have some shortcomings. However, we would really appreciate all comments and suggestions for improvement in order to make the Capstone become, somehow, more applicable and more meaningful to the current context of Trang-An Confectionery JSC.
Even though this Capstone is our first ever carried-out research, we know that what we learn from doing the research will help us a lot not only in our professions but also in our future academic pursuits, and we believe that all the theoretical and practical business strategies withdrawn from this Capstone will bring us with success in our career. 6 WORDS OF REASSURE We affirm that the work of this Capstone is our own research and all the information and data used are true. Hanoi, Novemvber 2011 Group 04 - Class GaMBA X0510 7 INTRODUCTION In the era of industrialization and modernization, and the integration trend becomes more prevalent, Vietnam’s economy and Vietnamese companies encounter many development opportunities as well as challenges, regarding finding the right direction which suits the changing business environment. Once the domestic market is no longer the play ground of only domestic companies, that the competitive pressure becomes more intense is unavoidable to each business.
In order to reinforce the company’s brand name and enhance its position domestically and internationally, especially when Vietnam joined the WTO (World Trade Organization) and Common Effective Preferable Tariff (CEPT) come into effect, making import taxes significantly decrease, the researching of strategic direction for business model of each company is very important. All the above factors require Vietnamese enterprises, including confectionery manufactures to correctly identify their roadmap, in order to survive and prosper. Therefore, finding an effective strategy which will help the business follow the right track is essential. Trang An joint stock company is a business entity newly equitized since 2004, changing its operation format from the state-owned into corporation one.
Because of the influence of domestic and international economy regarding the fluctuation of exchange rate and high inflation, affecting living standard, the development of the company faces many difficulties. The company has to confront fierce competition among confectionery firms both inside and outside Vietnam. Besides, the demand from customers becomes higher and higher in terms of quality and packaging. In order to find a solution to maintain Trang An’s position in the future as well as apply the theory studied in Graduate level, we select the topic of: “Developing business strategy for Trang An confectionery joint stock company in the period of 2011 – 2016” as the research topic.
Researching objectives The research based on applying theories of strategic management in business and practical analysis of micro and macro environment, regarding production situation of Trang An joint stock company, to find out a suitable business strategy. Besides, some solutions are recommended in order to successfully execute the proposed strategy, assisting the company in maintain its position and grow into the leading confectionery brand in Vietnam. Researching scope The researching scope covers all issues related to production and business functioning of Trang An confectionery company from 2008 to 2010, as well as the development of the company in the years to come. Research components Besides the introduction, conclusion and appendix, the research includes three main chapters: - Chapter 1: Literature Review - Chapter 2: Analysis of current situation of Trang -An confectionery joint stock company - Chapter 3: Developing business strategy in the 2011 – 2016 period and solutions for strategy completion CHAPTER 1 LITERATURE REVIEW 1.
Strategic management concept 1. Business strategy The strategy concept has been established for a long time ago, originating from the military. Currently, there are many different definitions of strategy: - According to Pred R. David: “Strategy is the means to achieve long term goals” - According to Haroid Kooniz and other authors in “Essential issues in manage- ment”, strategy is an action plan toward achieving specific goals.
The major strate- gies of an organization involve objectives and human resource commitment to reach these objectives, and main policies to be followed when utilizing this re- source. - According to Alfred Chandler: “Business strategy involves setting up major long term goals of the business, as well as selecting the action method or process and allocate the resource to do that”. We can summarize the above and define strategy and business strategy a followed: Strategy is means, the ways built up in order to reach long term objectives. Business strategy involves unifying the goals and action methods to achieve common business’ goals in a specific period.
Business strategy can be about geographic development, di- versification, product development, new market entering, cost saving, liquidation or partnership. Strategic management Strategic management is an art and science to make, conduct and evaluate deci- sions related to different functions of an organization, so that the proposed objectives can be achieved. Strategic management concentrated on unifying the management, promotion, finance and accounting, production, research and development of the in- formation system for various business fields; all aim at achieving organizational suc- cess. Strategic management includes three stages: strategy planning, strategy imple- mentation, and strategy evaluation.
The role of strategy to an organization Business strategy in organization plays a very important role to the development of that organization. It helps the firm to define the direction in the future, point out the solution to employ and effectively utilize the resource, in order to compete successfully, specifically to allow the firm to achieve the proposed goals. Currently in Vietnam, the majority of business is small and medium ones. Strategic planning is a process to define the major directions which allow the company to change, improve and reinforce its competitive position.
The application of strategic planning is almost done by big companies. When the firm outlines the future objectives, its actions will be directed to those objectives. This will create the consistence of decisions. It can be said that an organization’s business strategy reflects the future image of itself.
Therefore it shows the qualitative and quantitative results in the future of all the company’s actions. This will gather individual contribution to the formation of that strategy. More importantly, it will encourage all the members of the company to execute that strategy. The strategic management process 3.
Defining the organizational mission Mission can be understood as the reason to survive, the meaning of the business creation and existence. The organizational mission is the company’s proclamation toward the society. Normally, mission includes issues such as target customers, the offered products or service, the market, technology, philosophies, concerns about the community, human resource, etc. Mission shows the complete picture of the company in the future.
Mission is the important basis for selecting objectives and development strategies correctly. Defining the business objectives: Objective is the specification and the motivation to successfully execute the proclamation of organizational mission. Environment analysis The operating environment of a business includes both internal and external environment. They directly or indirectly affect the existence and development of the business.
Therefore, the research on internal and external environment is very important in strategic planning. Analysis of external environment Macro environment - The economic, political and legal environment: Business has to fully understand the economic and political trends, as well as the policies of the Government be- cause these factors deeply affect the development of the business. - Technological environment: The new technology helps producing new products at lower, more competitive cost. In the same time it shortens the product life cycle, reduce production and labor costs, etc.
- Cultural–social environment: The characteristics of Vietnamese consumption at each area are different in terms of preference, and carrying the geographical dis- tinction. Lifestyle or demographic also affect the demand and preference of the consumers. - Economic factors: Because the domestic economy experiences fluctuations, infla- tion is high, and food price keeps changing, people’s life is significantly influ- enced. Those changes lead to uncertainty in consumption demand.
- Demographic environment: The population size, the growth rate of population, and the population structure also affect the business. - Natural factors: Vietnam locates in the tropical areas, so the weather’s influence makes the reservation process important. Companies also need to examine the in- put carefully so that they fit the modern machines and equipment, but suit the price level to bring adequate quality to consumers. Industry environment: The analysis of industry’s environment will examine the factors that directly affect the operation activities and results of the business.
The competitors and other competitive products will also be identified, so that the right strategy to compete with them will be established, expanding the market share and revenue. The tool to be used is Michael Porter’s five force model.1: Model of Five competitive forces by Michael Porter New Entrants Threats from the new entrants Rivalries Suppliers Customers Distributors Competition among Bargaining power existing enterprises in the Bargaining power market Challenge from substitutes Substitutes The competitive forces are: - The new entrants: When the new competitors enter the industry, the business’ mar- ket share and profits will be reduced. - The substitutes: The substitutes limit the profit potentials of the business, and threaten its market share. - Customers: How customers trust the business and the development of potential customers are very important to the success of the company.
- Suppliers: Include the partners that provide the inputs such as materials, machin- ery, finance, human resource, etc. - Competition among rivalries: This is the competitive force that always directly threatens the companies.