Strategy Management-Group 8 CAPSTONE PROJECT REPORT TO BUILD AN OUTSOURCING STRATEGY FOR SOME PRODUCTS AT AKZONOBEL PAINTS VIETNAM GROUP 8: Tran Duy Hoang: Team leader Tran Duc Dien: Member Vu Chi Kien: Member Dien Xuan Dung: Member INTRODUCTION. The reason for choosing this topic/background analysis. The objective of the report. Scope of study.
Significance of the report. The thesis structure .8 CHAPTER I – THEORETICAL BASIS. Concepts, requirements and content of the Outsourcing strategy step process. Vision, mission and strategic goals of the Company.
External environment analysis. Analysis of macro business environment (Pest). Analysis of Industry environment as per Michael Porter (5 resources) .13 Capstone Project Report Page |1 Strategy Management-Group 8 1. Analysis of competitive environment.
Analysis of the enterprise environment. 19 CHAPTER II – TO BUILD THE OUTSOURCING STRATEGY AT AKZONOBEL PAINTS VIET NAM (AKZONOBEL VN). Overview of Akzonobel Paints Vietnam Ltd. About Akzonobel Paints Vietnam Ltd.
The formation and development. Field of operations. The main products. Recent business performance.
Mission, core value and strategic goals of Akzonobel Paints Vietnam Ltd. External environment analysis. Macro environment analysis for Akzonobel Paints Vietnam Ltd. Economic environment impacts.
Political and legal environment impacts. Cultural and social environment impacts. Demographical environment impacts. Technological environment impacts.
Industry environment analysis of decorative paints (5 forces of Poster).31 Capstone Project Report Page |2 Strategy Management-Group 8 2. An analysis of potential rivals. An analysis of customer pressure. An analysis of potential alternate products.
An analysis of supplier pressure. An analysis of potential rival pressure. Internal environment analysis of Akzonobel Paints Vietnam Ltd. An analysis of marketing competence.
An analysis of management competence. An analysis of financial capability. An analysis of human resources. An analysis of employed technologies.
An analysis of the communication system. SWOT analysis for Akzonobel Paints Vietnam Ltd. Analysis for the Outsourcing strategy. Analysis for the choosing of products will be outsourced.46 CHAPTER III – SOLUTIONS, RECOMMENDATION AND CONCLUSIONS.
Building long term strategic objective. Solution for outsourcing strategic implementation.55 LIST OF TABLES Capstone Project Report Page |3 Strategy Management-Group 8 Table 1-1: SWOT matrix…………………………………………………………….18 Table 2-1: Company production and revenue over the past few years………………26 Table 2-2: Company growth rate over the past few years……………………………29 Table 2-3: Population density in cities and mountainous areas…………………….30 Table 2-4: Population density by region…………………………………………….30 Table 2-5: Formula of a paint product……………………………………………….33 Table 2-6: Advertisement costs over the past few years…………………………….35 Table 2-7: The group revenue in 2008……………………………………………….38 Table 2-8: Production of the factory in Binh Duong province………………………40 Table 2-9: SWOT of Akzonobel Paints Vietnam Ltd……………………………….43 Table 3-1: Sale records of the North…………………………………………………48 LIST OF FIGURES Figure 1-1: Steps in developing the strategy…………………………………………. Porter model of five forces……………………………………………14 Figure 1-3: Procedure for identifying sustainable competitiveness………………….17 Figure 2-1: Company organizational chart……………………………………………24 Figure 2-2: Outsourcing division organizational chart……………………………….25 Figure 2-3: Marketing division organizational chart…………………………………36 Figure 2-4: Bath-based traditional paint production procedure………………………39 Figure 2-5: IT division organizational chart………………………………………….41 Figure 3-1: Outsourcing Model………………………………………………………57 LIST OF ABBREVIATIONS SWOT matrix: Strength, weakness, opportunities, threat. Akzonbel Vietnam: Akzonobel Paints Vietnam Ltd.
EBITDA: Earning Before Interest, Taxes, Depreciation, and Amortization. OWC: Operating Working Capital. HSE&S: Health, Safety, Environment & Security. Capstone Project Report Page |4 Strategy Management-Group 8 INTRODUCTION 1.
The title of the Project: Development of an outsourcing strategy for some products at AkzoNobel Paints Vietnam Ltd. The reason for choosing this topic/background analysis. Based on the actual need and situation of AkzoNobel Paint Vietnam Co.: Limited supply to meet the market demand for paint and putty powder, particularly in the northern Vietnam where the company has no factory. By using outsourcing services, the company shall be able to meet the customers demand at the soonest and reduce the cost transporting products from the south to the north given strongly increasing gasoline and electricity price recently.
Product development strategy taken by the company and the AkzoNobel Global in general is prioritizing the development of environmentally friendly product lines. Therefore, solvent bourn paints and putty powder shall not be prioritized by the company. Thus, the outsourcing of these products would be appropriate and necessary for the time being. From the above discussions, the company management has attached special importance to the assessment of feasibility and development of a detailed and comprehensive outsourcing strategy.
The objective of the report From the above requirement, the objective of this thesis is to study and develop an outsourcing strategy for some product lines by an external party. Two main objectives of the thesis include: To assess and evaluate the efficiency/feasibility of the outsourcing strategy. To develop a complete outsourcing strategy and apply it into reality. Scope of study This is a highly practical study.
However, it only focuses on the company internal side. Study period: from 2010 to 2013 and can be extended till 2015 by basing on the actual situation (if volume is not big enough to build a new plant in North). Capstone Project Report Page |5 Strategy Management-Group 8 Spatial boundary: AkzoNobel Paint Vietnam Co. Target groups of the study: Due to time constraint, the objective of the study and data and information availability is limited.
Therefore, the study only focuses on some key issues such as environmental macro-analysis, sector environmental analysis, and company internal environmental analysis, which serve as the basis for developing a complete outsourcing strategy for some product lines of the company. Study methodology Data and information collection - Primary data is collected by actual observations at the factory based in My Phuoc Industrial Park, Binh Duong province, interviews with the management and employees and workers, etc. - Primary data is consolidated from the company reports and other references, including, books, newspapers, and reviews, etc. Data processing method - Comparison, analysis and consolidation: data from annual reports is compared, analyzed and consolidated to give comments.
- Statistics: to make inventory of tables and data to come to a conclusion and forecast possible trends to assess the company operations. - Expert knowledge: to consult with experts involved in paint production industry. - SWOT: is a technique to analyze and process the business operations by combining strengths and weaknesses, risk and opportunities to propose a proper strategy. Significance of the report In the world, outsourcing is a trend which is currently used by many companies, particularly national corporations, namely Unilever, Nike, and Idemitsu, etc.
Therefore, the study of an outsourcing strategy for AkzoNobel Paint Vietnam Co. shall be of great significance. It will help to reduce production cost, meet customer requirements in a prompt and most sufficient way (OTIF), and minimize some HSES related risks. Capstone Project Report Page |6 Strategy Management-Group 8 7.
Report expectation Given the time constraint, the thesis expectations are quite limited. Group 8 wishes to address the following issues: To assess the effectiveness of the outsourcing strategy. To establish a detailed outsourcing model, covering the assessment of contractors and until the contract completion. To assess the contractors after outsourcing assignment.
Thesis structure Exclusive of the introduction and conclusion, the thesis is comprised of 3 chapters: Chapter 1: Legal basis Chapter 2: To establish an outsourcing strategy for Akzonobel Paint Vietnam Co. Chapter 3: Solutions, recommendations and conclusion Capstone Project Report Page |7 Strategy Management-Group 8 CHAPTER I THEORETICAL BASIS 1. Concepts, requirements and content of the Outsourcing strategy step process Any company/organization shall need a proper business strategy. This is a step towards establishing sub-strategies which shall all serve that company/organization business strategy.
And the “product outsourcing by an external party” shall not be an exception. Definition: There are many definitions of “business strategy”. Nevertheless, the term “business strategy” has been commonly used and accessed by different scholars. Business strategy is considered as an art or a kind of planning (like Alain Threalart, G.
However, one definition that has received a lot of agreement is: “Business strategy is a collection of objectives and policies and plans which are set to obtain the above said objectives, and clearly reflect what business the company is and shall be doing and in what business areas”. Strategy level The strategy is planned at various levels, yet, it still has a close interlink. The strategies of different divisions shall differ from each other, but sharing one goal of serving the company/organization overall strategy. In any organization, strategies exist at various levels – covering the whole organization (or a group of enterprises) and even individuals working inside it.
Company strategy: is the strategy that mentions the whole company. Company strategy largely talks about its list of products and diversifications of these products in order to take full advantage of the company spearheads. In other word, the company strategy question would go like: “In what aspect should an organization compete?” Business strategy: or the so-called product strategy or competition strategy because an enterprise would compete in the market in with regards to individual product only. Business strategy for each product type needs to answer such questions as: What are the objectives to be achieved? What is the competitiveness needed to obtain such Capstone Project Report Page |8 Strategy Management-Group 8 objectives? Who are potential key rivals?.
Central to a business strategy is to identify and enhance organization competitiveness in the concerned market. Functional strategy: Functional strategies such as marketing, finance and human resources management, etc. need to be combined to enhance competitiveness for the business strategy. The key point of functional strategies is to specify value added that can be given to customers as well to strategies at higher levels.
Global strategy (international business): is the choice of heading towards international business issues when a company is to diversify and upholder its operations to outside the country. Major characteristics of a business strategy Business strategy specifies basic objectives and operation directions of an organization over a specific time period. The strategy orientation functionality shall help an organization to continuously develop and stand firm in its fluctuating business environment. Business strategy shall ensure the maximum mobilization and combination of the exploitation and utilization of organization available and future resources, making use of advantages and opportunities in its competition race.
An organization business strategy is reflected in a closed and continuous process. Business strategy tends to be moving forwards and winning in any business playground. Business strategy is often built up within a long time period (3, 5, or 10 years). Business strategy role Business strategy helps an enterprise to be aware of its objectives and orientations, which function as a guide to its production and operation activities.
Business strategy helps an enterprise to capture and take advantage of business opportunities and at the same time take necessary actions to overcome any threats and/or risks in the market. Business strategy contributes to improving the efficiency of resources utilization, enhancing company competitiveness and ensures its sustainable business and operational development. Capstone Project Report Page |9 Strategy Management-Group 8 Business strategy creates firm bases for policy makers to issue policies and decisions in a timely accordance with the market situation. Strategy development procedure Strategy development flowchart: Functions, duties & objectives of t company strategy (1) Internal analysis (S,W) (3) Business environment analysis (O, T) (2) Choice of strategy (4) Company level strategy (5) Business strategy, business units and functional departments Strategy implementation (6) Operation review and evaluation (7) Feedback Figure 1.1: Strategy development procedure 1.
Vision, mission and strategic goals of the Company The vision here refers to business orientations in future of the company. In identifying the vision, a company is answering the question: “where will we go?” The answers include markets that they are pursuing, future focus on technology-product- customer and lastly type of company that the management is attempting to create and drive towards. Duty reflects important duties of a company with concerned business environment and normally demonstrated in its philosophy. Capstone Project Report P a g e | 10 Strategy Management-Group 8 Objective is the desired final result that a company is attempting to attain.