VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS TRINH LAN HUONG AN INVESTIGATION IN BUILDING BUSINESS STRATEGY – THE CASE OF NAM A COMPANY Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisors: Tran Doan Kim, PhD Ha Nguyen, MBA Hanoi - 2012 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENT ACKNOWLEDGEMENTS. iv TABLE OF CONTENT. vi LIST OF TABLE. ix LIST OF FIGURE .x LIST OF CHART .3 CHAPTER 1: THEORETIC FOUNDATION .1 Strategy and strategic management .1 Definition and levels of strategy .3 Strategic management process .9 vi TIEU LUAN MOI download : skknchat@gmail.4 The role of strategic management .5 Strategic decision making .2 Five-force model .3 Value chain model .18 CHAPTER 2: INTERNAL AND EXTERNAL ANALYSIS .2 Environmental scanning and forecasting – PESTLE analysis .3 Industry analysis – Five-Force model .1 Nam A Company profile .2 Value chain analysis .3 External and internal analysis summary – SWOT analysis .58 CHAPTER 3: STRATEGY RECOMMENDATION .1 Cost leadership by cutting organization structure .2 Cost leadership by improving material using efficiency.3 Cost leadership by improving stage transfer efficiency .4 Cost leadership by improving asset utilization .70 vii TIEU LUAN MOI download : skknchat@gmail.5 Cost leadership by gaining access to lower-cost materials .6 Cost leadership by maintaining low warehousing and marketing costs .74 viii TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLE Table 2.1: Construction growth in percentage from 2005 to 2012 .2: Comparison of doors and windows’ characteristics .3: SWOT analysis of Nam A Company .1: Comparison of typical strategies in the case of Nam A Company .2: Function strategies for Nam A Company.
64 ix TIEU LUAN MOI download : skknchat@gmail.company LIST OF FIGURE Figure 1.1: Porter’s Generic Competitive Strategies .2: Strategic management process .4: Five-force model.5: Value chain model .1: Vietnam uPVC doors and windows industry life cycle .2: Correlation between product quality and price of fragmentation group in the industry .3: UPVC door and window production process .company TIEU LUAN MOI download : skknchat@gmail.company LIST OF CHART Chart 2.1: Market share in uPVC doors and windows industry .2: FDI registered capital 2000-2006 .3: Division of FDI 1988-2007 (billion USD .5: Vietnam population structure in 2009 .6: Five forces in uPVC doors and windows industry.7: Human resource distribution .8: Proportion of employee groups with different qualification.company TIEU LUAN MOI download : skknchat@gmail.company ABSTRACT AN INVESTIGATION IN BUILDING BUSINESS STRATEGY – THE CASE OF NAM A COMPANY Trinh Lan Huong MBA candidate Vietnam National University, Hanoi School of Business Supervisors: Tran Doan Kim, PhD Ha Nguyen, MBA December 2012, 86 pages UPVC door and window industry is in a difficult situation due to its maturity as well as the stagnation of construction industry in Vietnam. Because of the decrease in the quantity of customers and a great number of players, uPVC door and window industry becomes more and more competitive. It is tough for Nam A Company, whose operations belong to this industry, to survive the crisis in this condition. The purpose of this thesis is to build appropriate business strategy for Nam A Company concentrating on their main activities of producing and assembling uPVC doors and windows in order to instruct the firm to overcome this hard phase of the market.
The study indicates that cost leadership is the most suitable business strategy for Nam A Company. This is the method assisting the firm to earn more competitiveness by reducing the costs of manufacture and management. The construction of this suggestion is in accordance with the strengths and weaknesses of the company aiming at catching opportunities and avoiding threats in current industry.company TIEU LUAN MOI download : skknchat@gmail.company Then, six functional strategies are developed base on general business strategy as well as the company characteristics to give Nam A Company further suggestions in the way they should implement business strategy. Included in there are cost leadership by cutting organization structure, cost leadership by improving material using efficiency, cost leadership by improving stage transfer efficiency, cost leadership by improving asset utilization, cost leadership by gaining access to lower-cost materials, and cost leadership by maintaining low warehousing and marketing costs.
Key words: strategy, strategic management, uPVC door and window industry iii (LUAN.company TIEU LUAN MOI download : skknchat@gmail.company INTRODUCTION This chapter presents an introduction of the research. Included in this part, problem setting, objectives of this report, research questions, methodology, significance, limitation and thesis structure will be displayed in order to provide an overview of this paper for the readers. Problem statement Strategic management is a necessary job of all managers. In business operation, strategy is a tool to support the corporation in gaining its objects, mission, and vision.
Especially in competition, strategic management even keeps an important role in conducting the companies. It has a main effect on existence, growing, and developing of an enterprise. A company can win lots of success, if it has right strategy for its situation. Nam A Construction and Production Joint Stock Company is an enterprise manufacturing uPVC doors and windows.
At the time, it is facing to a hard period of time, due to the difficulty in economy and construction industry and fierce competition between uPVC companies. It is necessary to build up a business strategy for Nam A Company to direct the existence and development of the firm in Vietnamese uPVC doors and windows industry. Therefore, I decided to work on this topic in my thesis. Paper objectives To build an appropriate business strategy for Nam A Company for the next years, following objectives are focused on.
- The first objective is to provide a better understanding of theoretical foundation in constructing business strategy for enterprises.company TIEU LUAN MOI download : skknchat@gmail.company - Next, during the application of these theories into the case of Nam A Company, the report aims at figure out the company opportunities, threats, strengths and weaknesses as the foundation to form the business strategy for Nam A Company. - The final objective is to create implications for strategy implementation from general business strategy in Nam A Company. Research question In order to reach the objectives of this paper, these questions below have been developed. - What is the method used to form business strategy for an enterprise? - What is appropriate business strategy for Nam A Company to apply in the next years? - How to implement the general strategy in daily operation of the company? 4.
Methodology The research focuses on Nam A Company as a case study to make an in-depth investigation within their real-life context. Multiple sources of information have been used in this thesis. First, the documentation of both theories and company profile has been collected through public sources as books, articles, company annual reports and company capacity record. Then, open-ended interviews have been launched aiming at Nam A Company’s directors and employees.
All the information related to company operations has been achieved through these interviews. These data has been analyzed and compared with the data of other companies in the same industry to understand the position of Nam A Company in the whole market. Significance Both the economy and Nam A Company has been significantly contributed from this research.company TIEU LUAN MOI download : skknchat@gmail.company To the economy: The report provides better understanding of business strategy construction framework for enterprises in Vietnamese uPVC door and window industry. To Nam A Company: The study finds out business context, opportunities, threats, strengths, weaknesses, and suitable business strategy for the company.
Moreover, the specific functional strategies are also illustrated for the process of strategy implementation in practical situation of current market. Limitation There are certain limitations in this study. The report focuses on Nam A Company only, so the findings of it cannot be applied to other firms. Furthermore, available data of the company’s competitors is limited making the analysis process appear several weaknesses.
Thesis structure There are five parts in this thesis, namely introduction, theoretic foundation, internal and external analysis, strategy recommendation and conclusion. Among three main chapters, the chapter of theoretic foundation will review all the theories related to strategic management and analysis tools for internal and external investigation. The next chapter will show the process of examination of factors that influence Nam A Company operation in the market through the application of PESTLE, Five-force, Value chain and SWOT model. The final chapter of paper body concentrates on the formulation and implementation of strategies for Nam A Company.
The conclusion summarizes the entire paper and its findings, so the readers can revise the information that they have read earlier.company TIEU LUAN MOI download : skknchat@gmail.company CHAPTER 1: THEORETIC FOUNDATION This chapter provides necessary theories used in information analysis and solution proposal for the investigation of Nam A Company strategic management. It contains definition, role and main contents of concepts, alternatives as well as models related to strategic management. This case relies on these theoretic foundations to expand the general research into particular application.1 Strategy and strategic management Below presents the main concepts that go through this thesis from very beginning to the end. With these basics, further theories are developed to create important elements to examine the case.1 Definition and levels of strategy Defined in Exploring Corporate Strategy of Johnson and Scholes, strategy "is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".
In other words, strategy of a business is the orientation on how it can achieve its objectives by maximizing the strengths and minimizing the weaknesses in order to salvage the opportunities and overcome the threats. There are three levels of strategy in a typical company. Each level deals with different characteristics and ranges of operational activities. - Corporate strategy is the overall business orientation that forms the attitude of a corporate to management and development.
It reflects specific core features of each organization, puts forward the frame for growth and has the decisive effect on the position in the market of this company, especially in long-term.company TIEU LUAN MOI download : skknchat@gmail.company - Business strategy is applied to management of each business line to adjust the general direction into suitable plans and visions for a defined market segment. It is concerned more with product level where strategies are connected closely to business units. The attitude towards competition also is influenced by this level of strategy including competitive and cooperative strategies. A company can choose to either develop its own products and services to have stronger competitive advantages over its competitors or form alliance with other corporates in the same market.
- Functional strategy describes proposals for maximizing resource productivity in each area in the organization. It is designed distinctly depending on the particular type of activities to improve and combine organizational resources so that the advantage can be created in order to become competitive in comparison with functional processes of other corporates. Three types of strategies are utilized and combined concurrently to have the best effectiveness. It means that all strategies applied should support one another and should be corresponding to corporates’ objectives.2 Business strategies Concentrating in the competitive advantage to improve company position in a particular market, managers can decide whether they want to take competitive or cooperative strategies.
The goal of competitive strategy is to outperform competitors by building up a defendable position. To do so, there are four basic strategies introduced by Michael Porter. These strategies can be applied for organizations of all types and sizes.company TIEU LUAN MOI download : skknchat@gmail.1 Porter’s Generic Competitive Strategies Source: The Competitive Advantage of Nations by Michael E. Copyright © 1990 by Michael E.
Cost Leadership This strategy aims at being the lowest cost producer within an industry. The firm can provide goods and services either below the average price to gain market share by attracting price-sensitive customers or at average price to enjoy the higher profitability of lower costs in relation to other competitors.