ACKNOWLEDGEMENTS We would like to send our most sincere thanks to our professors, doctors of the Masters Program in International Business Administration (MBA) by Griggs University collaboration with ETC. They have dedicated teaching and guiding us during the training process. This knowledge is the foundation to assist us in developing this topic and then it can apply in practical work. Especially, we sincerely thank the Academic Council of Griggs University, for guiding us in the process of conducting research.
We would like to thank Petro Vietnam Construction Joint Stock Corporation for supporting and allowing our group to study the Corporation and providing enthusiastically data for us to complete the task. Hanoi, December 2010 Group 4: Trinh Van Dien (Group Leader) ` Trinh Van Thao Pham Van Hiep Hoang Trung Hung.X03 Strategic Management COMMITMENT We, Group 4 - Class MBA01-X03, declare that this topic: “Business strategy formulation of Petro Vietnam Contraction Joint Stock Corporation in period 2011- 2015” is the subject of research by our group. The Corporation related data includes the data provided by the corporation itself, the prospectus filed with the State Securities Commission, data of public companies registered with the State Securities Commission, and other data compiled from the stock markets. Up to the present time, we believe the first topic study at the first time.
None of our group members has any conflict of interest to the Corporations in the report. Hanoi, December 2010 Group 4: Trinh Van Dien (Group Leader) ` Trinh Van Thao Pham Van Hiep Hoang Trung Hung 2 Group No.X03 Strategic Management TABLE OF CONTENTS CAPSTONE PROJECT REPORT BUSINESS - STRATEGY FORMULATION OF PETRO VIETNAM CONSTRUCTION JOINT STOCK CORPORATION (PVC) IN PERIOD 2011 – 2015 Page COVER ACKNOWLEDGEMENTS COMMITMENT 2 TABLE OF CONTENTS 3 LIST OF TABLES 5 LIST OF FIGURE, LIST OF ACRONYMS AND ABBREVIATIONS 7 FORDWORD 8 CHAPTER I: THEORY OF COMPANY’S BUSINESS STRATEGY 9 FORMULATION 1. Overview about company strategy 9 1. Definitions and roles of strategy 9 1.
Processing of strategic formulation 9 1. Generic Business Strategies 10 1. Overall cost leadership strategy 10 1. Note of strategy selection 13 1.3 Processing of business strategic formulation 14 1.1 Analysis for company internal factors 14 1.1 Mission, vision, and core valuation 15 1.2 Analysis for current strategy 15 1.3 Natural analysis for competitive benefits 16 1.2 Analysis for company external factors 18 1.
Analysis for macro- economic environment 18 1.2 Analysis for industrial environment 18 1. Tools of business strategic formulation 22 3 Group No.2 Matrix EFE, IFE, IE 22 1.3 Matrix IE 25 CHAPTER II: ANALYSIS FOR PVC’S BUSINESS STRATEGIES 27 2.2 Structure of PVC’ stockholders, organizations and controls 30 2.3 Products and services of PVC 30 2.2 Analysis for factors internal to PVC 32 2.1 Mission, vision and core valuation of PVC 32 2. Review for operational conditions of PVC in 2007, 2008, and 33 2009 2.3 Planning and forecasting 42 2.4 Decision making for target markets 45 2.5 Analysis for Core Capabilities 47 2. Analysis for company external factors 49 2.1 Analysis for macro - economic environment 49 2.2 Analysis for industrial environment 50 2.
Overall Results of PVC by SWOT Model 60 CHAPTER III: CHOOSING FOR BUSINESS STRATEGIES AND SOLUTIONS FOR PVC’ BUSINESS STRATEGIC FORMULATIONS IN 63 PRIOD 2011 - 2015 3.1 Choosing to business strategies for PVC 63 3.1 Analysis for combined table of SWOT 63 3.2 Analysis for Matrix EFE, IFE, IE 64 3.3 Choosing for PVC’ business strategies 66 3. Some solutions for business strategic formulations of PVC 69 3.4 Limitations of risks and researches 74 CONCLUSIONS 75 REFERENCES 78 INDEX 79 4 Group No.X03 Strategic Management LIST OF TABLES Table 1-1: Source of sustainable competition.17 Table 1-2: General table of Competitor Analysis.21 Table 1-3: SWOT Analysis sheet. 22 Table 1-4: EFE Matrix. 23 Table 1-5: IFE Matrix .24 Table 1-6: IE Matrix.25 Table 2-1: Some typical projects which PVC has been implementing over the past years 31 Table 2 -2: The Common - size Balance Sheet of PVC of 2007 – 2010: 33 Table 2- 3: The Income Statement Report of PVC in period of 2007 – 2010: 37 Table 2-4: profitability and growth ratios 39 Table 2-5: Ratios for asset usage assessment 40 Table 2-6: Solvency ratios 40 Table 2-7: Solutions for markets 47 Table 2-8: Source of sustainable competition 48 Table 2 – 9: material vendors 49 Table 2-10A Analysis of competitors – Reviews Objectives 53 Table 2-10B Analysis of competitors – Reviews Assumptions 55 Table 2-10C Analysis of competitors – Reviews Current Strategy 56 Table 2-10D Analysis of competitors - Reviews Capacities 58 Table 2-10E Analysis of competitors - Evaluate the ability to attack or defend 59 Table 2-11 SWOT table of PVC 60 Table 3-1: EFE Matrix valuates the PVC response capacity to outside 64 Table 3-2: Evaluation on capacity of understanding of the internal environment 65 Table 3-3: Selection of Business Strategy 67 Table 3-4: Applicable Strategy and Market 68 5 Group No.X03 Strategic Management Table 3-5: Roadmap for Strategy Implementation 73 LIST OF FIGURE Figure 1-1: Strategy Making Procedure 10 Figure 1-2: Business strategy 11 Figure 1-3: Forces Driving Industry Competition.
19 Figure 1-4: The analysis part of the competition 20 Figure 2-1: Organizational structure of PVC 28 Figure 3-1: IE Matrix 66 LIST OF ACRONYMS AND ABBREVIATIONS GRIGGS or Griggs University .Griggs University, USA VNU-Hanoi .National University of Hanoi, Vietnam PVC. Petro Vietnam Construction Joint stock Cooperation PVN………………………………………………… Vietnam Oil and Gas Group SWOT.Model of competitiveness analysis (Strengths, Weaknesses, Opportunities and Threats) 6 Group No.X03 Strategic Management FORDWORD Why we choose the topic In the stock market, among many stocks, investors have chosen to invest in the group of Petro family stocks since 2007. It has become one of the notable events in the stock markets. Moreover, it is necessary to study and subsequently provide a report on the business strategy of the enterprise.
In addition, our group has two members working at the manager position in the Petro Vietnam construction Joint Stock Corporation. Our group reaches the consensus to study the topic: “Business strategy formulation of Petro Vietnam Construction Joint Stock Corporation in period 2011 – 2015” with the desire of the knowledge application to improve individual capacity and to contribute to the sustainable development of the corporation. Research objectives and Research applicability: - To understand the system of theoretical issues on strategy; - To analyze and assess the business situation in the Corporation within the context of the current Vietnamese economy; - To recommend some strategic solutions to the Corporation during the period 2011 – 2015; - To assist the Corporation in identifying its position in the market, therefore it could produce plans to develop and implement other strategies for the cause of sustainable development. Object and scope of research - Object is corporate business strategy - Scope of research is within the framework of training programs and the Vietnamese markets.
Research methods Major data sources come from the prospectus, annual reports of the Corporation and other companies in the industry, and data on public companies in the markets. The research methods include literature reviews on materials in local 7 Group No.X03 Strategic Management and international, site visit and study at the actual companies, collection of the data resources at the company, and reference of expert opinions on PVC. Expected Results - To increase the knowledge yourself/group management strategies in the current environment; - To assist the Corporation in recognizing its current position related to the company's competitive environment; - To identify and determine the relationship with the Corporation's stakeholders - To develop, as the result, a comprehensive strategy and implementation for competitiveness, shareholders’ values and profits increase at the higher level than average. The layout of this topic: Besides the introduction and conclusion, the main content of the topic consists of three parts: Chapter I: Theory of an enterprise business strategic formulation Chapter II: Current business strategy analysis for PVC Chapter III: Choosing for business strategies and Solutions for PVC’ business strategic formulations in period 2011 – 2015 8 Group No.X03 Strategic Management CHAPTER I: THEORY OF COMPANY’S BUSINESS STRATEGY FORMULATION 1.
Overview about company strategy 1. Definitions and roles of strategy 1. What is a strategy? In general, when running a business, each enterprise shall develop its own strategy. If an enterprise has a clear strategy and everyone in the enterprise understands well this strategy, then it should achieve success in the markets.
In contrast, an enterprise that does not have a clear strategy, soon or later, it could fail in the markets. Hence, what is a strategy? Simply, a strategy is a gather of plans, methods, and objectives to gain higher profits than the average or to provide competitive advantages to an enterprise. So far, there are several opinions on strategies. For example, there are opinions of Alain Threlart, M.
However, they all revolve around the main content as: “Strategy is work of art”, Strategy is a special plan, or Strategy is both plan and work of art. In summary, strategies built should assist the enterprise in gaining expected objectives. However, development and making decisions on objective based strategy are not sufficient; the strategy should lay out implementation roadmap with detailed time and periods in connection with certain resources. Processing of strategic formulation Strategy developing procedure is series of activities, including analysis, assumptions, decisions and actions of an enterprise, which carried out to achieve strategic/sustainable competitive advantages with higher profits gained than the average.X03 Strategic Management Functions, tasks and objectives of strategy of an enterprise (1) Analysis of Internal Analysis of Business Enterprise (S, W) (3) Environment (O, T) (2) Strategy Choices (4) Company Level Strategy (5) Business unit level and Functional Division level Strategy Strategy Implementation (6) Checking & Assessment of Business performance (7) Feedback Figure 1-1: Strategy Making Procedure (Source: the lecture on Strategic Management – International MBA Training Program – Ngo Kim Thanh, 2010) In generally, a strategy making procedure includes four (04) stages: Stage 1: To determine targets of enterprise by matrix SWOT Stage 2: To develop and choose appropriate strategy for the enterprise Stage 3: To implement strategy Stage 4: To check and to assess strategy implementation, to adjust strategy if necessary 1.
Generic Business Strategies As mentioned above, strategy related to long-dated objective of enterprises. These strategies already built have to help enterprise achieve stated objectives. However, the business strategy relates to how a firm can compete successfully in a 10 Group No.X03 Strategic Management specific market. It involves the strategic decisions about choice of products to meet customer needs and gain competitive advantage over competitors, exploiting or creating new opportunities, etc.
Hence, we should understand “Business strategy is series of commitments and actions which an enterprise uses to gain a competitive advantage via exploiting core resources in a certain market”. Strengths Ongoing Exploitatio Opportuni application n ties STRATEGY (Inside) (Outside) Weakness Pass Preventio Threats through es n Figure 1-2: Business Strategy (Source: Business Strategy, authors: Le The Gioi, Nguyen Thanh Liem) A business strategy is good when it correctly answer three basic issues are: Who is the person to be serving. Which requests should be satisfied? How these requests should be satisfied? Therefore, the essential content of business strategy is that companies should choose the target customers, the target markets based on core capacities as well as opportunities from environment. According to ME Porter, a business strategy types mainly: Overall cost leadership strategy; Differentiation strategy; and Focus strategy.
Here are some of the content of these strategies. Overall cost leadership strategy 1. Definition: This strategy focuses on activities in order to produce goods and services with characteristics accepted by customers with the lowest costs, which are lower than costs of competitors for products with characteristics accepted by clients. Contents and applicable conditions: 11 Group No.X03 Strategic Management This strategy understands as maintaining the lowest costs in the industry or in the markets.