2010 │GLOBAL ADVANCED MBA PROGRAM (GaMBA01.: 11 CAPSTONE PROJECT REPORT BUSINESS STRATEGY PLANNING OF THE 3G MOBILE TELECOMMUNICATION SERVICE OF VIETTEL TELECOMMUNICATION COMPANY - MILITARY TELECOMMUNICATION GROUP Mai Vu Yen Bach Thi Minh Thuan Nguyen Thi Mai Phuong Nguyen Bich Ngoc Class: GaMBA01.N04 HA NOI 2011 Page | 1 GRIGGS UNIVERSITY GOLBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUSINESS STRATEGY PLANNING OF THE 3G MOBILE TELECOMMUNICATION SERVICE OF VIETTEL TELECOMMUNICATION COMPANY - MILITARY TELECOMMUNICATION GROUP Group Number: 11 Student’s name: Mai Vu Yen Bach Thi Minh Thuan Nguyen Thi Mai Phuong Nguyen Bich Ngoc HANOI 2010 Page | 2 Table of contents INTRODUCTION. Importance of the research:. Objectives of the Research:. Scope of the Research:.
Outline of the Capstone Report:.12 Theories on building up the enterprise’s business strategies. The concept of strategy. The concept of business strategy. Characteristics of business strategy.
The role of business strategy. The process of planning the enterprise’s business strategies. Requirements and basic principles in planning business strategy of the enterprise. Requirements in planning business strategies.
Principles in planning business strategy. Macro-environment analysis. Socio-cultural environment. Political and legal environment.
Threats of suppliers. Threats of customers. Threats of entrants. Threats of substitute products.
Threats of competitive rivalry within an industry. Analyzing the internal environment of the enterprise.1 Analyzing the sustainable competitive advantage. Analyzing the ability to create value of assisting operations. Analyzing the existing strategy.
Analyzing the financial outcome. Basic business strategies. Methods of setting up strategic tools. Developing market share matrix BCG.
33 Analyzing the business environment of. Overview about the telecommunication market in Vietnam. Viettel at a Glance. Milestones in the history of Viettel.
Business outcome of period 2000 - 2009. Organizational Chart of Viettel. The core values of Viettel Culture. Analyzing the business environment of Viettel 3G Telecommunication Service.
The social - cultural environment and the consuming habits. Political and legal environment. Analyzing the 5 competitive pressures in providing 3G service of Viettel. Internal competition analysis.
Analyzing Viettel’s internal power. Analyzing SWOT of Viettel 3G service. 58 Choosing business strategy for 3G services of.58 Viettel Corporation and the implementation plan. Overview of 3G services.
Summary of the current situation 3G. The ways to upgrade to 3G. The feasibility of upgrading the network of next generation GSM. Analysis and market forecasts.
Factors affecting the growth of 3G subscribers in Vietnam. Select business strategy for Viettel 3G services. The strategic plans. The contents of the selected strategy.
Strategy of leading cost. Locating the 3g product of Viettel. Conditions for strategic implementation. Development and developmental cooperation of the content services for 3G.
Financial Condition for Viettel’s 3G technology. Human Resource Condition. Viettel’s business strategy implementation plan for 3G telecommunication service. Subscribers development Plan.74 Source: Viettel Telecommunication.
Service Development Plan. Distribution Channels Development Plan. Plan to re-sell services through Mobile Virtual Network Operator (MVNO) 77 6. Estimated voice and non-voice revenue contribution.
Projection of 3G Average Revenue per User (ARPU).82 Page | 6 LIST OF ABBREVIATIONS VIETTEL Viettel Telecommunication Company 3G Third generation Wireless Technology 2G Second Generation Wireless Technology BTS Base transceiver station CDMA Code Division Multiple Access GSM Global System for Mobile Communications GPRS General Packet Radio Service MVNO Mobile Virtual Network Operator GSO General Statistics Office ARPU Average Revenue Per User SWOT Strength - Weakness - Opportunity - Threat : Page | 7 NAME OF TABLES Page Table 1.1: SWOT matrix 32 Table 2.1: Business outcome of period 2000-2009 37 Table 2.2: Summary of environmental analysis, the formulation of SWOT matrix for Viettel’s strategy selection 55 Table 3.1: Estimated 3G subcribers in the 5 year period 74 NAME OF CHARTS Page Graph 1.1: Porter’s five forces Model of the competitive position 23 Chart 1.2: Basic valued chain 27 Chart 2.1: The increase of mobile phone subscribers 34 Chart 2.2: Market share of mobile phone subscribers in Vietnam 34 (by the end of December 2010) Chart 3.1: Distribution channels organisation chart 76 Page | 8 INTRODUCTION 1. Importance of the research: In the highly competitive market-driven economy, effective resources mobilization and comprehensive control of influential factors are crucial to any enterprise’s survival, growth and goals achievement. This is even more plausible during the current mobile services’ booming period, when there are 7 mobile service providers in Vietnam and a potentially rising number of the like in the years to come. Furthermore, any enterprise nowadays is inevitably facing saturated service market, harsh competitiveness, and inconsistent growth in revenues and profits.
Consequently, a demand for innovative business strategies is arising. In this context, 3G (third-generation technology, which enabling the transmission of a wide range of data) is a new choice for telecommunication companies. Viettel currently holds the most market share among the existing mobile service providers in Vietnam and is one of the pioneers in establishing and providing 3G services. If this company wishes to continue the success, it is highly recommended that it have a sound business strategy which is in accordance with the firm’s competence, market characteristics, and Vietnamese culture.
Over the past few years, Viettel has proposed quite a few sound business strategies, leading to continually remarkable, even miracle, success in both national and international 2G mobile service market. However, 3G is an entirely new and challenging field to any Vietnamese telecommunication business, thus requiring sound business strategies from these firms. Page | 9 Therefore, we choose the topic “Planning Business Strategy for 3G Service of Viettel Telecommunication Company” as our research thesis with a view to moving theory into practice. When doing the research, we inevitably encountered some problems such as limited time, inexperience and insufficient resources.
Thus we are looking forward to your recommendation so that this paper can be fine-tuned and valuable to future practical use. Objectives of the Research: +Analyze, systematize theories and choose effective analysis models of planning and implementing business strategy. +Apply these systematic theories and models to the analysis and assessment of both internal and external factors in order to obtain a feasible business strategy for the 3G Mobile Telecommunication Service of Viettel Telecommunication Company – Military Telecommunication Group. Scope of the Research: Viettel Telecommunication Company – Military Telecommunication Group provides a wide range of services in the market.
However, in this paper, we only focus on the analysis of business environment and Viettel’s internal factors, and then planning the business strategy of 3G Service in the period of 2011-2015, a period that is considered to be the main development of Viettel Group. Methodology: A variety of research methods were used in this capstone report, from reasoning to realistic ones, and namely, dialectical materialistic, statistical, from abstract to objective thinking, general-to-specific, comparison and contrast, and reasoning and logical thinking. Page | 10 There are different sources of data used in this capstone report, including figures from General Statistics Office of Vietnam, specific data, secondary data on strategies, and the submitted data from Viettel Telecommunication Company and the Military Telecommunication Group. Outline of the Capstone Report: Besides the Table of Contents, Introduction, Conclusion, References, the Capstone Report is structured as follows: Chapter 1: Theories on building up the enterprise’s business strategies Chapter 2: Analyzing the business environment of Viettel’s 3G Telecommunication Service Chapter 3: Choosing business strategy of telecommunications services of 3G of Viettel Corporation and the implementation plan Page | 11 Chapter I Theories on building up the enterprise’s business strategies 1.
The concept of strategy There are assorted definitions of strategy depending on each person’s viewpoint. Basically, strategy is related to the concept of competitive advantage and the management of resources such as human, asset, finance, etc. to develop and protect one’s indispensable rights. According to Kenneth Andrews, the first person to formulate this idea in the classic book The Concept of Corporate Strategy, strategy is what an organization has to do base on its own strengths and weaknesses in the context of coexisting opportunities and threats.
In 1962, Chandler defined strategy as “the determination of the basic long-term goals and the objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (Chandler, A., 1962, Strategy and Structure, Cambridge, Massachusetts, MIT Press). Bruce Henderson, strategist and the founder of Boston Consulting Group (BCG), observed: “Strategy is a deliberate search for a plan of action that will develop a business’s competitive advantages and compound them. The differences between you and your competitors are the basis of your advantage.” (Source: Effective Business Strategy, Harvard Business Essentials, Ho Chi Minh City Publishing House, p. 10) According to Michael E.
Porter, professor of Harvard Business School, who famous for his theory on strategies: “The essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match.” Page | 12 “Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do.” “Strategy is creating fit among a company's activities. Porter, What is Strategy?, Harvard Business review, Nov. 75) What is strategy after all? It is a plan aimed at attaining a competitive advantage over one’s opponents.
It is also the goal awareness and the focus on goal achievement. “Strategy is a sequence of complex action aimed at mobilizing potential resources of an organization in order to achieve particular goals.” A strategy influences the most when its core is based on clearly defined values, which are priority of products, clients, providers, investment, shareholders, business environment, and so forth. Strategy is not a product, but a process comprising commitment, decision and moves of firms endeavoring competitive advantage. The concept of business strategy There are different concepts, which are: According to Boston Consulting Group: “The ability to use strategy is the ability to manage the natural competitive system by calculated intervention in order to produce predictable shifts in competitive equilibrium.” According to Michael E.
Porter: “Business strategy aimed at facing competitiveness is a mix of desired goals and means seeking by the company in order to reach the goals.” In a conciliatory spirit, it is stated that “Business strategy is the art of coordinating and controlling activities with a view to reaching a company’s long-term goals.” In particular, “business strategy is the art of organizing and managing resources for the purpose of accomplishing the enterprise’s long-term goals in accordance with changing business environment and competitiveness.” In conclusion, business strategy equips us with understanding of: Page | 13 Where the business is heading for in the long run (direction). In what market the company has to compete with others and by which activities it can achieve the goals (market scale). How the company outdo other opponents in the same market (advantage). How external factors affect its competitiveness (environment).
What values and expectations that the Board of Managers and competent officials need to have (stakeholders). Characteristics of business strategy Although there are varying approaches in terms of defining strategy, no conflicting perceptions is observed when it comes to the characteristics of strategy. Those characteristics include: The determination of the basic long-term goals and paths taken in order to meet demands in each period. The orientation ensuring desired continuity and sustainability of the business in the ever-changing business environment.
The company’s optimal mobilization and coordination aimed at effective exploitation of the resources (either existing or potential ones), strength promotion, and production of favorable shifts in the competitive equilibrium. The company strategic plan in a continuous process The determination for achieving success in the business - The strategic plan that set in a long-term period (3, 5 or 10 years) 1. The role of business strategy A strategy is indispensable to the survival and development of every enterprise. It goes without saying that a sound, practical strategy paves the way for a business’s success.
The role of business strategy is manifested as below: Page | 14 Strategic plan helps the enterprise to realize it goals, direction for all the business activities.