COMMITMENT We, members of group 14 – Class MBA01- X01, commit to choose the topic “Business strategy formulation of Vietnam Multimedia (VMM) Joint Stock Company for 2010 – 2015 period” for our thesis. And all the data concerning Vietnam Multimedia Joint Stock Company is provided by the company itself. We are totally agreed with and fully supported by the company in choosing this topic. Hanoi, 25 July 2010 Group members: Truong Minh Son (Group leader) Ta Thanh Cong Nguyen The Hung Truong Tien Phong The company’s confirmation 1 ACKNOWLEDGEMENT First of all, we, group members, would like to extend our heartfelt gratitude to the Management Board, Training Department, ETC Center as well as teachers of Griggs who have given us whole-heart support during our study and doing this report.
Our special thanks go to Dr.P Ngo Kim Thanh who directly gives us guidance and provide us with valuable ideas for the thesis. Had it not been for her support, our Capstone Project Report would not have been completed. Last but not least, we are indebted to the Board of Management and staff of all departments in Vietnam Multimedia Joint Stock Company for enabling us to conduct the study in the company and being supportive and cooperative with us during our work. Due to limitation in time and experience our report may contain unavoidable shortcomings.
We would highly appreciate your comments and suggestions to make the report more complete and practical. Ha Noi, 25 July 2010 Group members Truong Minh Son (leader) Truong Tien Phong Ta Thanh Cong Nguyen The Hung 2 LIST OF ACRONYMS AND ABBREVIATIONS GRIGGS or Griggs University. Griggs University, United States of America VNU-Hanoi. Hanoi National University, Vietnam VMM.………… Vietnam Multimedia Joint Stock Company VMM SWOT.Strengths, Weaknesses, Opportunities and Threats EFE.
External Factor Evaluation Matrix IFE.Internal Factor Evaluation Matrix IE.Internal-External Matrix 3 LIST OF TABLES Table 1. Competition Matrix Table 1.External Factor Evaluation (EFE) Matrix Table 1.Internal Factor Evaluation (IFE ) Matrix Table 1. Internal-External (IE ) Matrix Table 1.SWOT Matrix Table 2.GDP growth rate Table 2.Analysis of rivals Table 2.VMM’s External Factor Evaluation Matrix (EFE) Table 2.VMM’s Balance Sheet in 2008 and 2009 Table 2.Business Operation Report in 2008 and 2009 Table 2.VMM’s Internal Factor Evaluation (IFE ) Matrix Table 2.VMM Internal-External Matrix (IE ) Table 3.VMM’s SWOT Matrix Table 3. Selection of Business Strategy according to GREAT Model Table 3.VMM’s Strategic Solution Implementation Schedule 4 LIST OF DIAGRAMS Diagram 1.Strategic Management Process Diagram 1.
The External Environment Factors Diagram 1. Five Forces of Competition Model Diagram 2. VMM’s Organization Chart 5 TABLE OF CONTENTS Page COMMITMENT ACKNOWLEDGEMENT TABLE OF CONTENTS LIST OF ACRONYMS AND ABBREVIATIONS LIST OF TABLES LIST OF DIAGRAMS LIST OF WORK ASSIGNMENT PREFACE CHAPTER 1: THEORETICAL BACKGROUND ON ENTERPRISE BUSINESS 11 STRATEGY FORMULATION 1.1 An Overview on Strategic Management 1.1 The Concept of Strategy and Business Strategy 1.2 The Role of Business Strategy to Enterprises 1.3 Strategic Management Process 1.2 General Business Strategies 1. Low Cost Strategy 1.
Concentrated Growth Strategy 1.1 Analysis of External Environment 1.1 Analysis of Macro-environment 1.2 Analysis of Industry Environment 1.3 Analysis of Competition Environment 1.5 External Factor Evaluation Matrix (EFE) 1.2 Analysis of Internal Environment 1.4 Enterprise’s Internal Environment 6 1.5 Internal Factor Evaluation Matrix (IFE) 1.3 Internal-External Matrix (IE) 1.4 SWOT Analysis Table 1.5 Selection of Business Strategy according to GREAT Model CHAPTER 2: ANALYSIS OF VMM’S BUSINESS OPERATION 44 DURING THE PAST TIME 2.1 An overview of VMM 2.1 Establishment and Development Process 2.2 Organization and Control Structures 2.3 Business Tasks and Functions 2.2 Analysis of VMM’s External Environment 2.1 Analysis of Macro-environment 2.2 Analysis of Industry Environment 2.3 Analysis of Competition Environment 2.4 External Factor Evaluation Matrix (EFE) 2.3 Analysis of VMM’s Internal Environment 2.1 Vision, Missions and Core Values 2.2 Marketing, Finance, Activities, Human Resource and Information 2.3 Internal Factor Evaluation (IFE) Matrix 2.4 Internal-External Matrix (IE) CHAPTER 3: PROPOSED SOLUTIONS ON VMM’S BUSINESS STRATEGY FORMULATION FOR 2010 – 2015 PERIOD 74 3.1 VMM’s Business Strategy Formulation 3.1 SWOT Analysis Summary 3.2 Business Strategies formulated based on SWOT Matrix 3. Group of S – O strategies 3. Group of S – T strategies 3. Group of W – O strategies 3.
Group of W – T strategies 3.2 Selection of Business Strategy according to GREAT Model 7 3.3 Strategy Implementation Solutions 3.1 Human Resource Development Solution 3. Strategic Solution Implementation Schedule 3.1 Improvement of Organization Structure 3.3 Plans on Strategic Solution Implementation RECOMMENDATIONS CONCLUSION REFERENCES 8 PREFACE 1. The necessity of the subject Vietnam is in the process of regional and international integration, which creates favorable conditions for the development of Vietnamese enterprises. In a business environment of frequent fluctuations, besides development opportunities, Vietnamese enterprises are under pressure of mapping out appropriate business strategies for their survival and development.
During the past time, Vietnam Multimedia has always been one of the leading suppliers in information technology products, services and solutions, namely office machinery, computers, computer network systems and application soft wares. However, given the context of fierce industry competition and external challenges, in order to maintain its market share and for future development, it is necessary for VMM to formulate business strategies which are suitable to the company’s real situation and the development of Vietnam economy Therefore, the formulation of business strategies is of great essential to VMM. In meeting the need, our group chooses the topic “The formulation of business strategies of Vietnam Multimedia Joint Stock Company for 2010-2015 period” for our report. Study Objectives Based on the study of the enterprise’s basic business strategy theories, the analysis of external environment impact, SWOT analysis summary and evaluation of VMM’s position in Vietnam’s information technology market, the thesis on VMM’s business strategy formulation gives out solutions and recommendations for effective implementation of strategies.
Subjects and Scope of the Study Subject of the study: Vietnam Multimedia Joint Stock Company (VMM) Scope of the study: Hanoi and nearby provinces 4. Study Methods 9 Apply qualitative measures, namely: - Using available materials (secondary materials) to study the market scale, structure and trends. - Conducting surveys, researches and investigations to collect primary data. Expected results To help group members to put all the obtained knowledge into practice in enterprises and provide group members with a close look on real situation and identify the position of their enterprises in the market, evaluate strengths, weaknesses, opportunities and challenges, thereby formulate and implement a general strategy to improve competition capability, increase equity value and gain above – average profits.
Outline of the Subject Excluding the preface, conclusion and appendices, the subject contains the following main parts: Chapter I: Theoretical background on enterprise business strategy formulation Chapter II: Analysis of VMM’s business operation during the past time Chapter III: Proposed solutions on VMM’s business strategy formulation for 2010 - 2015 period 10 CHAPTER I THEORETICAL BACKGROUND ON BUSINESS STRATEGY FORMULATION 1. An Overview on Strategic Management 1. The Concept of Strategy and Business Strategy The concept of strategy has long existed. Many definitions have been drawn from experiences, views and perceptions of experts in different fields.
It is written by Sun Tzu, Alexander, Napoleon, Stonewall Jakson, Douglas MaArthur that the basic view of strategy is that one party can crush its opponent, even a more powerful and outnumbered opponent if it can lead the battlefield and put the rival into the battlefield which is convenient to develop its ability. In 1962, Chandler – the founder of strategic management theory defined strategy as “the determination of basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”. In 1980s, when the subject strategic management became popular, it was redefined by Quinn in a more general way: “Strategy is the pattern or plan that integrates an organization’s major goals, policies and action sequences into a cohesive whole”. After that Johnson and Scholes gave out another definition of strategy, taking into account of environment with numerous rapid changes.
According to Johnson and Scholes “Strategy is the long – term direction and scope of an organisation to achieve advantages for the organisation through its configuration of resources within a changing environment, to meet the needs of markets and to fulfil stakeholder’s expectations”. It can be seen that definitions are classified into multiple views, which demonstrates that a precise definition of strategy is very complicated. So there must be 11 multiple definitions to help better understand the strategy. Mintzberg summarized the multiple definition in 5 Ps: - Plan: A series of consciously – intended actions.
- Pattern: The consistency in behavior in accordance with time, intended or unintended - Position: The suitability between an organization and its environment. - Perspective: An ingrained way of perceiving the world. - Ploy: A specific maneuver intended to outwit an opponent or a competitor The definition of strategy not only covers many different aspects but also varies in levels. At least there are three levels of strategy that should be identified: - Corporate level: Corporate level strategy aims at reaching the overall goals and scopes of the organization - Business level strategy: Business-level strategy concerns with how to compete successfully in particular markets.
- Functional Strategy: Functional level strategy (or operational strategy) is to help corporate level and business level strategies be carried out effectively based on components of resources, processes, people and necessary skills. - In the current trend of globalization, companies have quickly diversified their activities and operate far beyond country border. Therefore, the globalization strategy has been a choice to deal with international business issues.1 Business Strategy In any scope of management, strategy remains its advantages in the following aspects: - Determining long term activities and serving as a firm basis for implementing operational activities. - Mapping out ways for enterprises to best respond to competition and market fluctuations.
- Helping enterprises to minimize uncertainties and risks and enabling the enterprises to develop a long term and stable business orientation. 12 - Acting as a bridge between enterprises’ present and future functions, tasks and objectives and integrating all kinds of decisions in the enterprises with the ultimate goal of stability and development. Business strategy is a plan to provide an organization with competitive advantages over its competitors, to understand the objectives of what is being done and focus on planning to achieve that goal. A good strategy which is effectively implemented will help business managers and employees at all levels to recognize the direction for action, contributing to the success of the organization.
In contrast, an organization with no clear strategy is like an unmanned boat, which may lead to enormous waste of time and resources. So what is business strategy? There now exists many different definitions of business strategy but none of them describes its full nature. The most common approach to strategy is that “Strategy is the direction and scope of an organisation in the long term which will bring advantages to the organisation through the best allocation of resources in a competitive environment to meet the needs of markets and to fulfil stakeholders’ expectations”. Business strategy is the overall long-term goals, major policies and solutions on production, finance and settlement of human factors in order to lift the enterprise’s business to a higher state.
Business Strategy is an Art - According to Alain Threlart “Strategy is an art used by a company to combat and win a victory”.Porter “Strategy is the art of building sound competitive advantages to defend”. Thus, these authors consider business strategy as an art to compete in the market and to develop enterprises. In view of management, business strategy is a type of planning - According to G. Arlleret “Strategy is the determination of ways and means to reach identified objectives through policies”.
While according to D.Bizrell and a group of authors “Strategy is a general plan leading or directing an enterprise to the desired goal. It is the basis for the enactment of policies and operational procedures”.