GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY OF THE POWER ENGINEERING CONSULTING JOINT STOCK COMPANY No.1 (PECC1) IN THE PERIOD OF 2011-2015 Group Number: 6 Student’s name: Dang Trung Kien Le Minh Tuan Do Huy Cong Tran Thi Ngoc Tai HANOI 2011 i ACKNOWLEDGEMENTS This capstone project of our group would not have been possible without the support and encouragement of many people. We would like to express, first and foremost, my sincere gratitude to our supervisors on strategic management, who have supported us throughout our study with their patience and knowledge. Their encouragement, supervision and supports enabled us to complete this paper successfully. Special thanks to all of the lectures and staff at Global Advanced MBA program (GaMBA), Vietnam National University.
There are not enough words to describe your excellent work. Last but not the least, we are deeply grateful thanks to Power Engineering Consulting JSC No1’s colleagues for the trust and supports that they sent us the opportunity to carry out this research, and for their ongoing interest in our writing. Their valuable insights and perceptive comments are big help for us. ii TABLE OF CONTENTS ACKNOWLEDGEMENTS.i TABLE OF CONTENTS.
ii LIST OF TABLES.iv LIST OF FIGURES, GRAPHS. The necessity of the research. Objectives and Expected result. Research method, Data resources and processing.
Scope of work and Limitations. The structure of the writting.2 CHAPTER 1: THEORIETICAL BASIS OF BUIDING BUSINESS STRATEGY OF COMPANY. Three Competitive Strategies of Michael Porter. Strategic management process.
Vision and Mission.The best practice of business strategy building and relevant writings12 CHAPTER 2: STRATEGIC ANALYSIS AND BUSINESS STRATEGY FORMULATION. About the Power Engineering Consulting service and the Power Engineering Consulting Joint Stock Company No. Introduction of the Power Engineering Consulting Joint Stock Company No. The Power engineering consulting service.
External analysis of PECC1.2 Industry environment analysis. Intensity of present competitor. The threat of new Entrants. The Power of Suppliers.
The Power of Customer. The threat of Substitute products. External environment assessment. Internal analysis of PECC1.
Structure and Leadership. Assessment of Human Resource and Motivation at work. Procurement- Technology Research and development. Competitive advantage assessment.
Strengths and Weakness conclusion.40 CHAPTER 3: STRATEGY SELECTION, RECOMMENDATIONS AND CONCLUSION. Briefing about SWOT of PECC NO.1 in the period of 2011-2015. Briefing about the strategies for PECC1 in the period 2011-2015. Selection of the appropriate business strategy (GREAT).
Proposal of action plans for the chosen strategy. Proposal of action plan for the chosen strategy (1)- Differentiation. Proposal of action plan for the chosen strategy (3)- Maintaining the possessing key success factor-HR.55 APPENDIX 3 PECC1, ACHIEVEMENTS AND REWARDS.57 APPENDIX 4 SOME TYPICAL PROJECTS COMPLETED BY PECC1.58 APPENDIX 5 PECC1- CAPABILITY OF INVESTIGATION EQUIPMENT, TESTING .59 v LIST OF TABLES Table Name of table Page(s) Table 1.1 Example of possible factors in a PEST analysis 6&7 Table 1.2 Industry’s entry and exit barriers 8 Table 1.3 Bargaining power of buyers 9 Table 1.4 Bargaining power of suppliers 9 Table 1.5 GREAT model 12 Table 2.1 Several financial figures of PECC1 from 2005-2010 17 Table 2.2 The demanded growth of electric to the growth of GDP from 23 2011-2015 Table 2.3 External environment assessment for the industry power 29 engineering consulting service in Vietnam by the end of 2010 Table 2.4 Several key financial criterions of PECC1 in 2008, 2009, 30 2010 Table 2.5 The proportion of Human resource on Field of jobs, PECC1- 34 2010 Table 2.6 The allocation of Human resource on branches, PECC1 2010 34 Table 2.7 Human resource training condition of power engineering 35 consulting companies, Vietnam-2010 Table 2.8 KSF selection results 40 Table 2.9 KSF Assessment results 41 Table Strengths and Weakness conclusion 42 2.1 SWOT matrix for PECC1 by 2011 44 Table 3.2 Strategy assessment/selection using GREAT model 45 Table 3.3 Plan of action for differentiation strategy 48-50 Table 3.4 Plan of action for the strategy of maintaining the possessing 52-54 key success factor-HR vi LIST OF FIGURES, GRAPHS Figure Name of figure Page(s ) Figure 1. Porter’s generic strategies 4 Figure 1.2 Formulation strategy chart 5 Figure 1.3 Porter’s five forces diagram 7 Figure 1.
Porter’s Value chain 10 Figure 1.5 SWOT analysis framework 11 Figure 1.6 SWOT matrix 11 Graph Name of graph Page(s) Graph 2.1 Organizational Structure of PECC1 17 Graph 2.2 Vietnam GDP growth 24 Graph 2.3 Power consumption by economic sector 26 Graph 2.4 Market share 28 Graph 2.5 Revenue per person 37 vii INTRODUCTION 1. The necessity of the research The power engineering consulting is one of the very specific technological services. Currently, the power engineering consulting industry is no longer a monopoly in Vietnam. Since 2008, PECC1 is no longer the preferential appointed bidder in the field of power engineering consulting in Vietnam when it was equatized.
The integration process to WTO of the Vietnam economy leads to the rush of foreign firms operating in all areas, power engineering consulting is not an exception. Thus, the rivalry of completion is increasing, not only in terms of market share occupying but in terms of attracting and maintaining effective human resource of one another as well. Despite of that fact, most of the participating companies have been without a long- term strategic development but based on the relationship with the authorities and some customers in the market. Once there was a research named “Building strategy for PECC1” in 2005 but on the standpoint of a state-owned company in a monopoly market, the writing was more like a plan of action to achieve the assigned duties, which is not appropriate with the current circumstance any more.
The reasons above lend us the strong stage enough to choose “Building Business Strategy for PECC1 in the period 2011-2015” to be our capstone project. Objectives and Expected result Aiming to contribute to PECC1’s competitive and sustainable development by suggestions related to business strategy, the objectives of this research are: - Review the theory of building business strategy - Present about PECC1 and analyze its business environment - Formulate an appropriate business strategy for PECC1, with corresponding detailed plan of action There might be a following research on assessing the implemented strategy in order to have certain adjustment. Research method, Data resources and processing Case study and Descriptive analysis method is applied to analyze and build business strategy for PECC1 - Secondary data from Industry/company report, internet, newspaper - Primary data from Interviews with Focus group and a group of interviewees selected 4. Scope of work and Limitations - Research on PECC1 in the industry of Power engineering consulting service.
- A business strategy for PECC1 in the period of 2011-2015 is recommended. The research is limited in terms of case study approach that allow the writer to skip the preciseness in detail in analyzing on existing competitors of PECC1, though that is not change the final conclusion of the paper. The result of this project is not directly applicable for companies operating in other industry. The structure of the writting Excluding the Table of content, Introduction, Reference and Appendices, The Project covers 3 main parts as below: Chapter 1: A fundamental review of strategy theory focusing on building business strategy Chapter 2: Strategic analysis on external as well as internal environment of PECC1 to identify opportunities and threats as well as strengths and weaknesses that are based to build the company’s business strategy Chapter 3: Formulation of an appropriate business strategy and suggestions of strategy implementation 2 CHAPTER 1: THEORIETICAL BASIS OF BUIDING BUSINESS STRATEGY OF COMPANY The importance of strategy and strategic management for organizational success is now recognized in both the literature and practice.
Strategy and strategic management are necessary for an organization to achieve its objectives, enhance competitive advantages and improve its value. This chapter provides the basic understanding of strategy, business strategy and strategic management. The chapter focuses on strategy formulation as a part of the strategic management. Strategy Strategy may be understood in different ways and in various contexts; Strategy, in this paper, describes the way that the organization will pursue its goals, given the threats and opportunities in the environment and the resources and capabilities of the organization.
According to this definition, the organization’s strategies are based on the result of analyzing the external environment, the internal environment, and the goals that are being pursued. Strategies exist at several levels in any organization ranging from the overall business entity to individuals working in it. Depend on the scope of strategy there are corporate strategy, business strategy, and functional strategies. Business Strategy Most businesses have strategies which may not be formally written but still exist.
Business strategy is a plan for how a firm will compete, what its goals should be and what policies will be needed to achieve goals. Business strategy is narrower in scope than corporate strategy but bigger than functional strategies. It is a combination of the investment decision and the development of a sustainable competitive advantage. Three Competitive Strategies of Michael Porter Competition is inevitable in almost every industry around the world.
According to Michael E. Porter, competitive strategy is the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition. Therefore competitive strategy is a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.
Porter presents the three generic strategies: Figure 1. Porter’s generic strategies Competitive advantage Low cost High cost Competitive scope Overall cost Broad Differentiation leadership Differentiation Narrow Cost focus focus Source: [2, P. Strategic management process A company has competitive advantage whenever it can attract customers and defend against the competitive forces better than its competitors. Companies should aim to develop competitive advantages that are sustainable.2: Formulation strategy chart Vision/ Mission External Analysis Formulation and Internal Analysis Opportunities and choice of Strengths and Weakness Threat appropriate strategy - Value Chain Model - Macro Analysis - Process to Identify - Industry Analysis Sustainable Competitive Advantages Competitive Strategy - Cost Leadership Strategy - Differentiation Strategy - Focus Strategy Strategy Implementation and Adjustment Source: [2, P.
Vision and Mission Before build up any strategy for a company, the important thing is that we must clearly understand what the vision and mission of that company are. Vision describes aspirations for the future without specifying the means to achieve desired ends. A vision becomes more visible when it is expressed in the form of a mission statement. Meanwhile, mission describes the company’s business vision, including the unchanging values and purposes of the firm and forward-looking visionary goals that guide the pursuit of future opportunities.
Strategy formulation Strategy formulation includes identifying an organization’s external opportunities and threats, analyzing internal strengths and weaknesses, generating alternative strategies, and choosing the most appropriate strategies to pursue. External analysis The external analysis enables the company to obtain a clear picture of the threats and opportunities prevalent in the company’s external environment. It has two aspects: the macro-environment that affects all firms and the micro- environment that affects only firms in a particular industry. In this project I would like use the PEST analysis to understand the macro-environment and the Porter’s Five-force Model to understand the micro-environment.
PEST analysis Many macro-environment factors are country-specific and the number of them is unlimited. The factors can be classified as economic, technological, social, and political factors, in which some examples can be given in the table below: Table 1.