i ii SUPERVISOR’S APPROVAL I hereby certify that this dissertation, submitted by Mr. Tran Quoc Viet, conforms to accepta- ble standards and is fully adequate in scope and quality to fulfill the dissertation requirements for the degree of Master of Business Administration. Bui Thanh Trang Date Supervisor iii ACKNOWLEDGMENT Firstly, my deepest thanks to my supervisor, Dr. Bui Thanh Trang, for guiding and comment- ing on various document versions of mine with attention and care.
Secondly, I would like to thank Mr. Tran Thanh Tung, CEO of Vietnam Market Intelligence Co., Ltd for giving useful remarks about the study’s quantitative questionnaire and guidelines during the execution of the study’s survey; Mr. Le Phong Dinh and Mrs. Bui Thi Hong Hai ậ my classmates ậ for reviewing my thesis and proposing corrections.
Thirdly, thanks also my staff at VIETMAI Solutions, especially Mr. Pham Quang Vinh, Mr. Nguyen Manh Tuong and Mrs. Nguyen Ngoc Suong for helping me interview retailers and synthesize survey’s results.
Last but not least, I would like to take this opportunity to express my deep gratitude and ac- knowledgement towards my family, especially my mom, my dad and my grand-mother for being a constant source of love and moral support. iv EXECUTIVE SUMMARY VIETMAI Solutions is an information technology company established and operating since 2006 with two main business areas, which are hardware reseller and software development. The company's customers are mainly domestic customers and some are outsourcing oversea customers. Activities of these two businesses in recent years have become stable and achieved high growth rates.
In 2009 and in 2010 the company achieved the ROE growth rates of 14. Beginning in 2010, recognizing the great potential of Vietnam's retail market, the company opened a new business area. This business is retail consulting, starting with a POS software and an inventory management software to support retailers. In 2010, though there were only two contracts with modest values, the business still showed a very positive signal for the fu- ture development.
In the business plan for the period 2011 - 2015, the company aims to penetrate stronger into the market. To achieve this goal, the company needs to examine, analyze the market in details to develop an effective business strategy, and this is why the study is about. The primary objective of the study is to analyze the external environment (markets, custom- ers, products, competitors.) and the internal environment of the company to develop an ap- propriate business strategy for the retail consulting division. The secondary objective of the study is to provide recommendations for revising the company’s corporate strategy based on findings from the analysis.
The study begins with an in-depth analysis of the external environment (including the macro environment, the Vietnam's retail market, the technology solutions market for retailers, cus- tomers and competitors) to identify opportunities and threats. After analyzing, the study con- tinues with an overview of current operational status and performance of the company. Inten- sive internal environmental audits are carried out to identify strengths and weaknesses of the company. Based on the analysis of the current situation, the study provides recommendations for revising the company’s mission and long-term objectives.
Alternative business strategies are evaluated to choose an appropriate strategy for the retail consulting division. v Research results show that the market of technology solutions for retailers is really a potential and attractive market. To penetrate this market, the company needs to focus on completing the current POS software and inventory management software in the direction of a differentiation strategy, and enhance marketing and sales activities to penetrate the market. Target customers of the company are FMCG and fashion retailers because these customers are much more in needs of value creation solutions from the company.
Although this study only focused on the retail consulting division, the way the research is conducted and the results achieved will be a good basis for the company to carry out similar studies for other divisions in the future. The study still has some limitations such as restric- tions on data collection, detailed information about competitors. However, the influence of these limitations to the results of the study was not high and can be eliminated when the com- pany has more information during the strategy implementation process. vi TABLE OF CONTENT TABLE OF CONTENT.
VI LIST OF FIGURES .VIII LIST OF TABLES. IX LIST OF ABBREVIATIONS. Rationale of the study. Conceptual framework of the study.
Scope, assumptions and limitations. Structure of the study. CHAPTER 2 LITERATURE REVIEW. Strategic analysis tools.
Porter’s five forces. Value chain analysis. Porter’s generic strategies. CHAPTER 3 EXTERNAL ANALYSIS.
Political, governmental, and legal factors. Social, cultural, demographic and environmental factors. Retail sector in Vietnam. Challenges for domestic retailers.
The market of technology solutions for retail sector. Products and services. Define the market. Summary of opportunities and threats.
CHAPTER 4 INTERNAL ANALYSIS. Vision and mission. Products and services. Corporate level analysis.
Finance / accounting audit. Production / operations audit. Research & development audit. Management information systems audit.
Specific analysis for the retail consulting business. Marketing and sales. Summary of strengths and weaknesses. CHAPTER 5 STRATEGY FORMULATION.
Revising corporate strategy. Redefining mission statement. Redefining and prioritizing long-term objectives. Business strategy for the retail consulting division.
Mission and objectives. Key success factors. CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS. XII APPENDIX 2 QUESTIONNAIRE (VIETNAMESE VERSION).
XX viii LIST OF FIGURES Figure 1. Conceptual framework of the study. Strategic decision making process. Porter's five forces diagram.
Value chain analysis. Porter's generic strategies. Responses for the “inventory management” operation. Responses for the “touch-screen” operation.
Responses for the “scanners and barcodes” operation. Responses for the “invoice printing” operation. Responses for the “daily sales management and reporting” operation. Responses for the “monthly sales management and reporting” operation.
FMCG stores’ responses for the importance of retail operations. Fashion stores’ responses for the importance of retail operations. F&B stores’ responses for the importance of retail operations. Responses for the uses of softwares to modernize stores.
Reasons to use technology (for those already used technology). Reasons not using technology (for those not using technology). Purchasing criteria of retailers. Factors that most impact purchase decision.
Timing plan to modernize stores. Maximum acceptable investment levels. Basic process flow of the hardware reseller division. Basic process flow of the software development division.
Basic process flow of the consulting division. Retail value chain. Value chain of retail consulting division and potential sources of uniqueness. New organizational structure.
77 ix LIST OF TABLES Table 2. Per capita income (unit: USD / year). Consumer income and spending of Vietnam (unit: million USD). Retail sales of Vietnam (unit: billion USD).
Competitors classified based on product approach. Business performance by years (unit: million VND). Detailed net revenue structure (unit: million VND). 53 x LIST OF ABBREVIATIONS CIO Chief Information Officer CRM Customer relationship management CTO Chief Technical Officer ERP Enterprise resource planning F&B Food and beverage FMCG Fast moving consumer goods FDI Foreign direct investment GSO General Statistics Office HR Human resource IMF International Monetary Fund IT Information technology MoIT Vietnam Ministry of Industry and Trade MoIC Ministry of Information and Communications POS Point of sales QA/QC Quality assurance/Quality control R&D Research and development ROE Return on equity SCM Supply chain management SME Small and medium enterprises WTO World Trade Organization 11 1.
CHAPTER 1 INTRODUCTION "To be successful, you have to have your heart in your busi- ness, and your business in your heart.” - Thomas Watson, Sr. Rationale of the study Survival and growth are the most important objective of businesses. In the competitive busi- ness environment today, to achieve this objective, businesses must be innovative and improve themselves to become stronger. To accomplish this, businesses need to have effective strategy formulation and implementation.
This study is carried out to analyze strategic factors outside and inside VIETMAI Solutions Co., Ltd to develop a business strategy for the retail consulting division -- a new business area of the company -- as well as to give recommendations to revise the company’s corporate strategy. Problem statement VIETMAI Solutions, founded in late 2006, is a company in the information technology field. Since 2007, it operates with two main business areas -- hardware reseller and software devel- opment. These two businesses have achieved positive results and become more and more sta- ble.
Beginning in 2010, realizing the potential of the Vietnam retail market, the company has launched a new business segment to provide Point of Sales solutions for retailers. The objec- tive of this business is to penetrate the market rapidly, achieve more competitive advantages and gain a leading market share. The problem is that to achieve this objective effectively, the company needs to assess the current situation clearly to build an appropriate business strategy for the new division. Objectives The primary objective of the study is to develop a business strategy for the retail consulting division of the company.
This objective can be achieved via specific objectives as follows: To understand clearly the potential and trends of Vietnam's retail market To understand clearly the market of technology solutions for retailers To analyze the current status of the company and of the retail consulting business To provide strategic directions for the development of the retail consulting business The secondary objective of this study is to provide recommendations for the company to re- vise its corporate strategy, which includes the company’s mission and long-term goals. Research methodology Both qualitative and quantitative methods are used in this study to research about the market and customers. The former is used with a focus group -- including business managers and ex- perienced retailers -- to provide directions and insight for the quantitative research. The later is used with two types of data: secondary data collected from desk-researches -- us- ing available information from the company, the Internet and various papers; and primary da- ta collected from a survey with questionnaires.
Conceptual framework of the study This study is conducted based on the strategy formulation process. First, the external envi- ronment is scanned and assessed to determine factors that pose opportunities and threats to the business. Next, every aspect of the internal environment is audited to identify factors that are the strengths and weaknesses of the company. Then, strategic factors from the above analysis are reviewed so that the company can revise its corporate mission and long-terms objectives.
An appropriate business strategy is formulated for the retail consulting division. Lastly, the study concludes with several recommendations for the implementation of the chosen strategy. Conceptual framework of the study 13 External analysis Internal analysis Analyze strategic factors Revised mission and long-term objectives Business strategy for the retail consulting division Recommendations for strategy implementation Tools such as SWOT analysis, PEST, Porter's Five Forces. are used in the strategic analysis process.
Scope, assumptions and limitations This study focused on the retail consulting business with a market of retailers in Ho Chi Minh City. The company finds this new business very potential and expects to penetrate into the market. The two existing businesses -- hardware reseller and software development -- are cur- rently operating well, and are assumed to have no need of revising business strategies. Because the business is relatively new in Vietnam, the collection of competitive information of this study is thus limited.
There is little information about competitors such as their sales, profits, market shares, strengths, weaknesses and strategies. Structure of the study The study is organized as follows: Chapter 1 - Introduction. This chapter introduces about the problem statement, objectives of the study, how the study is carried out and its scope and limitations. Chapter 2 - Literature review.