GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT FORMULATING DEVELOPMENT STRATEGY FOR PHA LAI THERMAL POWER JOINT- STOCK COMPANY (PPC) A.13 CHAPTER I: THEORETICAL BACKGROUND ON STRATEGIC MANAGEMENT. What is strategic management?. Definition of strategic management. Definition of strategy.
Business strategy management. Factors influencing a firm’s business strategy.1 The external environment. Internal Environment Analysis. Identifying functions, tasks and strategic objectives.4 Foundations for choosing business strategy and strategic management process .1 Foundations for choosing business strategy:.2-Business strategic management process.30 CHAPTER II: CURRENT SITUATION OF PRODUCTION & BUSINESS ACTIVITIES OF PHALAI THERMAL POWER JOINT STOCK COMPANY (PPC).1– General introduction of the Company.1- Establishment and development process.2 Organizational structure of PPC.2- Business activities of PPC.3- Objectives of the Company.
Factors affecting business strategies. Macro-environment analysis.2 Analysis of rivals. Human resources factor. Research and Development.
The financial analysis of PPC. 59 CHAPTER III: PPC BUSINESS STRATEGY FORMULATION AND IMPLEMENTATION. Visions and perspectives on the development of Pha Lai Thermal Power Joint Stock Company by 2015.2 Selecting business strategy of PPC. Formulation of development strategy of the Company until 2015.1 Set selection criteria to implement the road map to 2015.2 Formulation of development strategy of the company until 2012.3 The company’s development strategy from 2012 to 2015.
Solutions to implement PPC’s strategies.1-Solutions on human resource management.2 Solutions to reduce costs in production and effective investment.3 Solution to environmental development and protection.4 Solutions to build communication system.5 Solutions for JPY exchange rate risks.6 Solution limit the risk of supply and price of coal:. Recommendations for EVN and the Ministry of Industry and Trade.86 LIST OF ABBREVIATIONS EVN : Vietnam Electricity G7 : Group of 7 developed industrial countries GDP : Gross Domestic Product ODA : Official Development Assistance PPC : Pha Lai Thermal Power Joint Stock Company LIST OF TABLES Table 2.1: A comparison between PPC and other electric companies.2: Some key statistics of the PPC’s Human Resources .3:An analysis of the indicators reflecting the operational capacity.5: Analysis of income statement .6: A balance sheet comparison .1 :Long-term production and business planning from 2009 to 2012. 68 LIST OF FIGURES Firgure1: Strategic management process. Porter’s generic strategies.3: The external environment .4: Industry environment analysis model .1 The map of the Company .2 :Organizational structure of PPC .1 Diagram for development of the company from now to 2015.
INTRODUCTION After ten years of implementing the renovation policies, Vietnam has achieved significant progresses, which acts as the basis for a new phase of development. The economy obtains the high and continuous growth with average GDP about 7% in the period of 2001 - 2007, stable political - social conditions, remarkably improved living standard and the extended international cooperation on all aspects. The 10th Communist Party Congress continued to affirm the cause of renovation with the orientation of promoting industrialization and modernization to move Vietnam to an industrial country in 2020. Doimoi is also hoped to push Vietnam actively into integrating in the international economy, strengthening the renovation in the state-owned enterprises, developing the collective economy, encouraging the private sector and boosting the multi-sectored economy.
In order to achieve the goal of sustainable economic growth, the spearhead economic sectors must precede all others and act as the driving force for the development of others. Power industry is seen as the key infrastructures sector that stimulates other economic sectors to develop. In the trend of the market economy and international integration, the competition among enterprises is becoming increasingly fiercer. Enterprises must compete with not only other domestic ones but also many foreign invested enterprises which are more experienced in the market economy.
An actually important factor behind any competition is that each enterprise has to find their own way and build themselves a long-term, medium-term and short-term strategy in order to set the suitable business solutions. On the basis of the medium-term and long-term strategy, enterprises will form the long-term investment plan, find the sensible steps for highly effective business and gain the sustainable development. The market economy brings about many opportunities and challenges for enterprises. In the general trend, it is essential for each enterprise and individual to keep moving forward in order not to be left behind or even dismissed because the technological achievements, the science progress as well as new ideas and business strategies changes hour by hour.
Vietnam is facing with the remarkably emergence of economic powers and must adapt itself to catch up with the general development. Each enterprise should be able to contribute to the success of Vietnam's economy as well as survive in the severe international competition. It is common knowledge that enterprises may be negatively affected or even bankrupted if they cannot choose a right strategy of development. When enterprises make a decision to invest in a new industry, they may make some mistakes such as underestimating the competitors, unsuitable organizational structure, high cost of administration etc.
which may easily lead to loss or even bankruptcy. In recent years, as a result of the economic development and population growth, the demand for electricity in the world is growing significantly. The primary energy sources such as coal, gas, oil and water are gradually used up. On the other hand, the electric industry requires the increasingly high investment, which causes an extreme difficulty for the enterprise.
These reasons result in the booming demand for power in the world. In the current international context, the demand for power in Vietnam has increased remarkably. In 2007, self-generated electricity and purchases from other sources reached more than 66,738 billion kWh; commercial electricity is 58,4 billion kWh. In 2008, self-generated electricity and purchases obtain over 74,22 billion kWh; commercial electricity is more than 65,59 billion kWh which grows 11,2% in accordance with the figures of 2007.
In 2009, self-generated electricity and purchases obtain over 81,2 billion kWh; commercial electricity is 72,32 billion kWh, which rises 9,69% in comparison with the figure of 2008. The electricity generated by EVN is 54,875 billion kWh and the one purchased from external resources is 26,325 billion kWh. Electricity of Vietnam (EVN) is one of few enterprises belonging to the spearhead industry of Vietnam which contributes to the infrastructure construction, improving the living standard, ensuring the national security. Up to now, EVN has increased significantly in the investment and the usage of both advanced technology and the ones from last generations.
Besides, EVN gets the growth of electricity consumption and meets the higher demand to support the development goals of Vietnam. Like other economic organizations, Pha Lai Thermal Power Joint-stock Company in particular and EVN in general is facing with a huge challenge in the integration in term of technology, capital, products and human resources etc. If EVN does not rapidly enhance its competitiveness, it will lose its market share as more foreign corporations enter the electricity industry and so does the domestic corporations such as Vietnam National Coal, Mineral Industries Group, Vietnam Oil and Gas Group etc. A level playing filed means fair opportunities for all players.
Electricity industry is also an appealing and attractive area in the near future. In order to gradually integrate and become a modern, competitive enterprise, Pha Lai Thermal Power Joint-stock Company needs to change their critical thinking, operation as well as business administration. Besides, setting a good business strategy is very necessary to direct and promote the development of the company. In the fiercely competitive market, it is complicated to build a successful business strategy.
Gaining competitiveness becomes more and more difficult. It takes a long time for the research with the orientation of putting the theory of business administration into practice of Pha Lai Thermal Power Joint-stock Company. The project makes an attempt at providing the proper and objective assessment of the company’s situation, on which the company may base on to set the goals and build the business strategy in the phase of 2010 – 2015 heading toward 2020 with the orientation of moving Pha Lai Thermal Power Joint-Stock Company to one of the leading companies in the electricity industry. Research purposes Apply the methodology of strategic management with the orientation of proposing the proper business strategies for Pha Lai Thermal Power Joint- stock Company.
Develop the development strategy for the company in the next five-year period, which is adequate to the national demand for energy and the enterprise’s interests. Investigate the current situation of production and business in Pha Lai Thermal Power Joint-stock Company, proposing and selecting the appropriate management tools to enhance the capacity for production management. Apply the theory of strategic management into the company’s business. Supplement the solutions of promoting the company’s production and business.
Make a research on the need of electricity in the phase of 2010 – 2020 and set the development plans for the period of 2010 - 2015 as well as find out the enterprise’s opportunities and challenges. Analyze the enterprise’s current situation and propose the strategic direction in the period of 2010-2015. The object and methodology of research Research object: the project concentrates on formulating the business strategy of Pha Lai Thermal Power Joint-stock Company. Scope of research: Conduct a thorough analysis on the current situation of production and business in Pha Lai Thermal Power Joint-stock Company as well as the enterprise’s products and services in order to make a proper business strategy.
The research methodology adopted is the quantitative methodology. For example: Qualitative Figure collecting methodology (in the power development of Vietnam, EVN and Pha Lai Thermal Power Joint-stock Company). Methodology of colleting the information on the reports, mass media, local economic-social development plans, other industries and the State. Model methodology which uses analytical models such as SWOT, five competitive forces, internal and external environment analysis etc.
to set the goals and direction for the enterprise. Data: collecting customers’ ideas, summarizing the plans board’s reports on the customer conference (especially customers’ feedbacks, processing reports of functional departments), financial reports etc. Processing tools: Analysis, comparison and summary Project’s contributions Systemize the basic theories of business strategy. Propose the superior solutions for production and business of EVN in general and Pha Lai Thermal Power Joint-stock Company in particular.
Demonstrate how to apply theory on business strategy in practice. Contribute to the theoretical background of business strategy in Vietnam as well as the world. The structure of project is as below: Regardless of the introduction and conclusion, the project includes 3 chapters with the following key contents: Chapter I: Theoretical background on setting the enterprise’s business strategy in the phase of 2010 - 2015 This chapter deals with the theoretical matters of business strategy. It includes the concepts, features, history and theoretical background of business strategy.
Chapter II: Current production and business situations in Pha Lai Thermal Power Joint-stock Company This chapter conducts a analysis on the current operation of production and business in Pha Lai Thermal Power Joint-stock Company by analyzing and applying the strategic analytical models and five competitive forces one. Based on the analysis, the project draws the assessments and problems of production and business in the enterprise. Chapter III: Formulating business strategies and solutions of promoting the business strategy application After the analysis and assessment, this chapter builds business strategies and provides general solutions as well as particular solutions in order to promote the business strategy application in Pha Lai Thermal Power Joint-stock Company. DEVELOPMENT CHAPTER I: THEORETICAL BACKGROUND ON STRATEGIC MANAGEMENT Strategy is considered as the collection of decision and action which aim at enabling the organization to respond properly to the outside opportunities and challenges.
Thus, firstly, strategy is related to enterprise’s goals. Secondly, enterprise’s strategy includes not only its goals but also the how to implement the goals as well as the means of combining them together. A proper strategy must take advantages of enterprise’s distinct strengths (resources and capacity) and take into consideration the opportunities and challenges.