GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION PROGRAM CAPSTONE PROJECT DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 Group No: 6 – GaMBA01.V0110 Student’s name: Nguyen Trung Kien Bui DucĐuc Duy Nguyen Viet Đuc Nguyen Van Hoa HA NOI, 2011 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 TABLE OF CONTENTS TABLE OF CONTENTS.1 LIST OF TABLES AND FIGURES. Background, the importance and necessity of the research. Subject and goal of the research. Structure of the report.8 THEORETICAL BACKGROUND FOR STRATEGY DEVELOPMENT.
The conceptConcepts of business strategy. The roleRole of business strategy to companies. Classification of business strategy. Business strategy development process.
Identifying missions and strategic visions. External environmental analysis (PEST model). Micro environmental analysis (industrial): M. Porter’s 5 force environment).
Internal company analysis. Strategy selection analysis. Strategic analysis tools. External Factor Evaluation (EFE)SWOT Matrix.
InternalExternal Factor Evaluation (IFEEFE) Matrix. SWOTInternal Factor Evaluation (IFE) Matrix. Quantitative Strategic PlanningInternal - External (IE) Matrix.21 ANALYSIS OF THE FOUNDATION.21 FOR STRATEGY FORMULATION OF PV OIL VUNG ANG. Introduction about PV OILOil Vung Ang .1 Introduction about PV OILOil Vung Ang .4 Products and services:.
Analysis of business environment.2 Political and legal factors:.3 Socio-cultural factors:.Group6 1 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 2.3 Competitors in the industry:. Opportunities and threats.3 The EFE Matrix of PV OILOil Vung Ang. Internal analysis of PV OILOil VungAng.2 Manufacturing and business activities.2 Strengths and Weaknesses.3 The IFE Matrix of PV OILOil Vung Ang. SWOT and QSPMIE Matrices of PV OILOil Vung Ang .1 The SWOT Matrix.2 The Quantitative Strategic PlanningIE Matrix.49 STRATEGY SELECTION AND IMPLEMENTATION SOLUTIONS.49 OF PV OIL VUNG ANG.
Development direction in the next period of PV OILOil Vung Ang :.2 Selection of strategies.1 Selection of strategies according to SWOT and QSPM matrices.2 The selected strategies of PV OIL Vung Ang .1 Market expansion strategy:.Selection of Strategies .2 Forward integration strategy.1 Selection of strategies according to SWOT and IE matrices.Group6 2 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 3.2 The selected strategies of PV Oil Vung Ang 51 3.1 Marketing solutionsMarket expansion strategy:.2 Backward integration strategy .3 Forward integration strategy .5 Financial1 Marketing solutions.4 Human resource solutions .55 Appendix 1: Summary of the amount of petrolium comsumed in Nghe An and surrounding areas. 56 Appendix 2: Forecast of demand for petrolium in the Northern Central province area. 60 Appendix 3 : Forecast of demand for petrolium in Ha Tinh province. 61 Appendix 4: Forecast of re-exporting or authorised importing to Laos.
62 Appendix 5: List1: Summary of investment projects in Ha Tinh province that may affect the amount of petrolium consiumption amount to use as fuel, construct buildings, operate machinescomsumed in Nghe An and vehicles.62 Appendix 6: The major projects2: Forecast of Quang Binhdemand for petrolium in the Northern Central province that are highly related to gasoline consumptionarea. 62 Appendix 3 : Forecast of demand for petrolium in Ha Tinh province.63 Appendix 4: Forecast of re-exporting or authorised importing to Laos.63 Appendix 5: List of investment projects into Ha Tinh province that may affect the petrolium consiumption amount to use as fuel, construct buildings, operate machines and vehicles. 63 Appendix 6: The major projects of Quang Binh province that are highly related to gasoline consumption.Group6 3 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 ABBREVIATIONS AbbreviationAbbreviations Meaning PetroVietnam Viet Nam Oil and Gas Group PVN PetroVietnam PV OILOil PetroVietnam Oil Corporation Viet Nam National PetroleumPtroleum PETROLIMEX Corporation LAOS Lao People's Democratic Republic Strengths, Weaknesses, Opportunities and Threats SWOT - a popular business analysis model V0110.Group6 4 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 DO Diezel Oil KO Kasosen FO Fuel oil PetroVietnam Oil Processing Distribution PDC Company DWT Deadweight tonnage ODA Official Development Assistance CPI ConsumerComsumer price index ISO International Organization for Standardization EFE External Factor Evaluation WTO World Tradetrade Orgnization IFE Internal Factor Evaluation FS FinancialFinancials Strengths CA Competitive Advantages ES EnvironmentEnviroment Stability IS Internal Strengths Internals Strenghts LIST OF TABLES AND FIGURES Figure 1.David’s Model of Strategic Management Figure 1.2 SWOT Matrix Figure 1.3 Internal - External (IE) Matrix Chart 2.1 Organizational chart of PV OILOil Vietnam V0110.Group6 5 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 Chart 2.2 OrganizationalOrganization chart of PV OILOil Vung Ang Table 2.1 Income statement of PV OILOil Vung Ang Table 2.2 Petroleum storage port system in North Central Table 2.3 External Factor Evaluation (EFE) Matrix of PV OILOil Vung Ang Table 2.4 Internal Factor Evaluation (IFE) Matrix of PV OILOil Vung Ang Table 2.5 SWOT Matrix of PV OILOil Vung Ang Table 2.6 QSPMInternal-External (IE) Matrix of PV OILOil Vung Ang Table 3.1 Business plan from period 2011 to – 2015 of PV OILOil Vung Ang Table 3. Investment plan for period 2011 – 2015 of PV OILOil Vung Ang Table 3.3 Labor and Income plan for period 2011 – 2015 of PV OILOil Vung Ang Table 3.4 Financial plan for period 2011 – 2015 of PV OILOil Vung Ang Table 3.5 Process of implementation solutions of PV OILOil Vung Ang V0110.Group6 6 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 INTRODUCTION 1.
Background, the importance and necessity of the research Oil and gas are vital energy resources for both global and national economic development. In recent years, in line with economic development, the importance of those fossil fuels to every economic activity has been growing significantly. Since 2010, the petroleum industry has been regulated under the provision of Decree 84/CP of the government. The active role of nodal enterprises has offered petroleum companies various opportunities of development.
As the business regulation has still been transforming, the company will have to face unexpected changes of the market while state agencies consistently pursue the implementation of the Decree, enterprises and customers have to adapt to price fluctuations accordingly. The government has created a series of state-owned enterprises taking part in import and export, disseminating the monopoly of already invested enterprises with long history of business, giving first time import businesses a new position and emphasizing on the advantages of invested enterprises in a new perspective in the market economy. Besides, the industry has established competitiveness among companies step by step, thus creating necessary social costs and appropriate profitability for petroleum business. In the making, this trend will provide oil and gas from nodal ports to consumption area through shortcuts, with the cheapest mode of transportation and through the least immediate processes, thus bringing about benefits for the whole society.
PV OILOil Vung Ang is a company invested by PetroVietnam Oil Corp (PV OILOil), with Vietnam Oil and Gas Group (PetroVietnam) being the authority in charge. The establishment of PV OILOil Vung Ang aims at providing oil and gas to the North Middle Coast and part of Laos. Devising business strategy for PV OILOil Vung Ang is necessary to define suitable strategy for the company, thus making its name on the market of the North V0110.Group6 7 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 Middle Coast and Laos as well as contributing to economic development in the North Middle Coast. Subject and goal of the research The subject of the study is PV OILOil Vung Ang company in terms of human resources, capital, advantage in the industry and assets of the business; information about customer, suppliers, competitors, products, etc.
Research goal: Founded on general theoretical research on business strategy and overview of Vietnam’s insurance environment, this paper focuses on the analysis of the business environment, current changes on the field and major development trends of this market. Then, it recommends needed strategies for sustainable development of the PV OILOil Vung Ang company in order for it to become one of the leading businesses in the field of petroleum industry in the North Middle Coast of Vietnam. Research methodology The main methodologies used here are analytical, theoretical, comparative, synthesis, and prediction methodologies based on data, the actual situation of the company and market research reports from recognized competitiveness evaluation organizations in order to find specific solutions for the company under certain circumstances. We also employ analytical techniques, theories of SWOT matrix (model of Strengths, Weaknesses, Opportunities and Threats), IE model (model of internal and external factors of the business), as well as Porter’s Five Forces Analysis.
Structure of the report Chapter 1: Theoretical background for strategy development Chapter 2: Analysis of the foundation for strategy formulation of PV OILOil Vung Ang Chapter 3: Strategy selection and implementation solutions of PV OILOil Vung Ang V0110.Group6 8 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 CHAPTER 1: THEORETICAL BACKGROUND FOR STRATEGY DEVELOPMENT 1. The conceptConcepts of business strategy There have been numerous perspectives in which business strategy is viewed as an art: - Alain Threlart states that “Strategy is an art which the enterprise use to fight against competition and win.” - Michael Porter states that, “Strategy is an art of creating firm competitive advantages to defend oneself”. These authors view business strategy as an art of competing inon the market and developing the company. In management perspectives, business strategy is a form of plan.
Arlleret claims that “Strategy is the definition of roads and means to reach to an established objectives through policies. Bizrell and the groups of authors define strategy as “an overall plan leading or directing the business to its desired target. It is the foundation for the determination of policies and operating approaches”; - Glueck defines that “Strategy is a unified, comprehensive, and integrated plan designed to ensure that the basic objectives of the enterprise are achieved.” In a conciliatory spirit: - “Business strategy is the art of coordinating and controlling activities with a view to reaching a company’s long-term goals.Group6 9 DEVELOPING BUSINESS STRATEGIES FOR PV OIL VUNG ANG IN THE PERIOD OF 2011 - 2015 - Chandler definessees 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 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.” Another viewpoint states that: business strategy is a series of commitments andan actions which a company employs in order to grasp a competitive advantage by the exploitation of core abilities in a particular market. The aim of business strategy is to distinguish a company’s position in relation to its competitors so as to reposition itself, and to decide whether to operate in a different way or take different actions from those of its competitors.
The roleRole of business strategy to companies - Business strategy helps companies define its goals and direction as a base for its business. - Business strategy assists companies in determining and grabbing opportunities as well as being active in dealing with threats in the market competition. - Business strategy contributes to effective resource use, improvement in competitive position, and guarantee for its sustainable development. - Business strategy establishes well-grounded foundation for policy-making and decision-making process in accordance with the market’s ups and downs.
Classification of business strategy Cost-leading strategy: A series of activities aimed at producing products and services with acceptable attributes and the lowest cost which equals to that of the counterpart of competitors. In order to implement this strategy, a business needs to take cost reducing actions: building scale effective facilities, closely monitoring manufacturing costs and management costs, minimizing costs of sales,sale and R&D and servicesservives.