GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING DEVELOPMENT STRATEGY FOR PETRO VIETNAM EXPLORATION AND PRODUCTION SONG HONG TO 2015 Group Number: No 5 Student’s name: 1. Nguyen Huu Nam (Leader) 2. Thai Ba Duc 3. Nguyen Ngoc Thuy 4.
Dang Thi Thuy Binh 5. Nguyen Thi Hanh HANOI: 2011 ACKNOWLEDGEMENT On behalf of the group, we would like to send gratitude to dedicated support of lecturers in Center for Educational Technology and Career Development ETC, Post University Department – Vietnam National University; Griggs University – The US. We also expressed our thanks to Board of Management of Petro Vietnam Exploration Production Song Hong, Manager in Planning – Investment department, Financial – Accounting department providing data for completion of this capstone project. Although the group tried our best to well do this capstone project, due to limited knowledge, this capstone project has limitations.
Thus, the group wishes to receive significant contribution of lecturers, colleagues and friends for the most effect. COMMITMENT Group V Of class commits this is our own research project. Data given in this capstone project is honest and has been not published in any scientific projects. Hanoi, date 23rd month Dec year 2011 Group leader Capstone Project Report Gamba01.X0610 - Group No5 2 TABLE OF CONTENT TABLE OF CONTENT.3 LIST OF FIGURE AND TABLES.6 LIST OF ABBREVIATIONS.
8 CHAPTER 1: OVERVIEW ABOUT STRATEGIC PLANNING AND STRATEGIC MANAGEMENT.1 Theories about building and managing strategy.1 Concept about strategy and strategic management.2 The role of building strategy for enterprise.2 Steps of researching strategy.1 Analyzing external environment.3 Tools used to analyze and select strategy.1 Internal Factor Evaluation Matrix (IFE).2 External Factor Evaluation Matrix (EFE).4 Strategy building and choosing key strategies.23 CHAPTER 2: ANALYZING BUSINESS ENVIRONMENT OF PETRO VIETNAM EXPLORATION PRODUCTION SONG HONG.1 Overview of PVEP Song Hong.1 Establishment and development history. 24 Capstone Project Report Gamba01.2 Products and services.2 Analyzing PVEP Song Hong business environment.1 External factors analysis.1 Macro environment analysis (PETS model).3 External Factors Evaluation matrix.2 Internal factors analysis.1 PVEP’s valuable chain.3 Company’s reputation and culture.4 Internal factors evaluation matrix.3 SWOT analysis for PVEP Song Hong.5 SWOT matrix for PVEP Song Hong.48 CHAPTER 3: CHOOSING DEVELOPMENT STRATEGY AND SOLUTIONS TO APPLY STRATEGY TILL 2015.1 Long term development target of PVEP Song Hong.2 Choosing development strategy for PVEP Song Hong till 2015.1 Choosing strategy via SWOT matrix.2 Choosing strategy via QSPM matrix.3 Solutions to apply development strategies till 2015.1 Invest in innovating technology and efficiency of exploration and exploiting.54 Capstone Project Report Gamba01.3 Solution for labor improvement.4 Improving efficiency of market forecast and marketing activities.4 Procedure to apply development strategy. 62 Capstone Project Report Gamba01.X0610 - Group No5 5 LIST OF FIGURE AND TABLES List of figure Figure 1.2: Michael Porter’s five force model.1: PVEP Song Hong’s organization chart.2: Vietnam’s GDP growth rate in recent years.3: Economic structure changing in Thai Binh from 2010-2015.4: Number of FDI project and amount into construction in Thai Binh.5: Supplier selection procedure of PVEP Song Hong.6: PVEP Song Hong’s Gaslift exploitation process.7: Financial data: Turnover, cost and profit from 2008-2011.8: Average income for PVEP Song Hong’s employees.9: Demand and exploration volume for oil and gas in South East Asia in 2001- 2015.10: Demand of Gas in the period of 2010-2015.1: Total exploration and distribution of gas in period of 2011-2025.51 List of table Table 1.2: Quantitative Strategic Planning Matrix.1: Company profile matrix for PEVVEP Song Hong.2: Main equipment suppliers for PVEP.4: PVEP Song Hong’s labor structure in period of 2008-2011.4: Basic financial data of PVEP Song Hong from 2008-2011.5: Internal factors evaluation matrix.6: SWOT matrix for PVEP Song Hong.1: Quantitative Strategic Plan Matrix of PVEP Song Hong.52 Capstone Project Report Gamba01.X0610 - Group No5 6 Table 3.2: Summary of procedure to apply development strategy.57 LIST OF ABBREVIATIONS ADB Asia Development Bank AFTA ASEAN Free Trade Area AIFTA ASEAN-China Free Trade Area ASEAN Association of Southeast Asian Nations BMI Business Monitor International EFE External factors evaluation FTA Free Trade Agreement IFE Internal factors evaluation ISO International Standard Organization MOIT Ministry of Industrial and Trade PV Petro Vietnam PVEP Petro Vietnam Exploration Production SBU Strategic business unit UNIDO United Nation Industrial Development Organization WTO World Trade Organization Capstone Project Report Gamba01.X0610 - Group No5 7 INTRODUCTION 1. Necessity of project In the period of integration, enterprises are facing to not only many big opportunities to growth and expand their own business but also great deal of challenges.
To exist and develop enterprise has to build clear orientation and business strategy on the basic of analyzing external environment and internal factors. Business strategy will help the company to exploit market’s opportunities as well as minimize challenges from external environment and limit company’s weaknesses. Deriving from below situation, building business strategy becomes of the most important activity to a company. Business strategy creates a clear business orientation and guides all departments, employees to company’s general goal then avoids localization and decentralization.
Business environment change quickly, international competition require company always be active and creative to adapt to these changes. In the process of industrialization and modernization, heavy industry in general and Petro industry in particular plays an important role in deciding the success of this process. PVEP group is the biggest group in petro industry and the company has created huge contribution to this process. One of major contribution to success of Group is the role of its business unit, in which PVEP Song Hong is an example.
As all other companies, PVEP Song Hong is also facing many opportunities and challenges in this period. So building business strategy for a particular period becomes the determining factor to company’s expansion and country industrialization. Realizing the importance of building business strategy for petro companies in particular and the whole industry in general, there are many significant projects and studies of domestic and international researchers on this topic. Some significant projects are: Capstone Project Report Gamba01.X0610 - Group No5 8 Topic: “Vietnamese petro industry in 2010”, Phung Dinh Thuc, President of Vietnamese Petro Association.
The topic shown out observation identifications about recent activities of Vietnamese petro industry in 2010: achievements and limitations. From these identifications, Vietnamese petro industry can limit its weaknesses and promote strengths in production and business. Topic: “Vietnamese petro industry - A period of develop and converse new policy”, Nozomu Kawabata, Tohoku University, Japan. The topic raised out general conclusion about business situation of Vietnamese petro industry in the context of industrialization, modernization and integration.
Both of below topics have significant practical meaning to development of petro exploration and production, but they are macro research, it needs a more specific and profound project to apply these conclusion to activity of a particular company. From below reasons, researchers choose the topic: “Building development strategy for Petro Vietnam Exploration and Production Song Hong to 2015” with the objective of giving out a more specific and profound for building business strategy for the key industry for industrialization progress in Vietnam. Purposes of project Base on practical understanding about steel industry in general and production and business of PVEP Song Hong in particular and knowledge of strategic management subject, the project shown out a comprehensive and clear picture about strategic building and business of PVEP Song Hong in Vietnam market. Throughout practical analysis of production and business of PVEP Song Hong in integration, the project affirmed explicitly the role of building business strategy for Vietnamese company in modern time.
The project not only stopped at practical analysis but also gave out specific solution for each section in each period for PVEP Song Hong. In chapter 3 the project will show out forecast of steel market till 2015. These solutions and forecast will also be guide line for other companies in petro industry. Scope and objective of project Capstone Project Report Gamba01.X0610 - Group No5 9 The project analyzes production and business of PVEP Song Hong in Vietnam market.
From this analysis the project concludes suitable strategies to expand business scale as well as company profit in both short term and long term. Data and information in this capstone project were collected from actual production and business of PVEP SONG HONG in these 5 years. The project also gave out some forecasts about steel market to 2016 and business orientation for PVEP SONG HONG in the period of 2012 to 2015. Methodologies The project is the combination of a great theory “strategic management” on practical business strategy building of a big corporation.
To be successful in applying this theory on production and business of PVEP SONG HONG, researchers used both qualitative and quantitative method in studying. These methods are: - Collecting and analyzing method - Comparative analysis method - Specialist analysis method - Economic statistic method The project also use kinds of models for analyze such as: SWOT matrix, QSPM and CPM matrix, etc. A wide variety of academic researches, market report, journals are utilized to bring out the best understanding of the subject. The sources of data are listed clearly in the reference.
Project’s structure Besides forewords, conclusion and list of table and abbreviation the capstone project includes three chapters as following: Chapter 1: Overview of strategic planning and strategic management Chapter 2: Analyzing business environment for PVEP SONG HONG Chapter 3: Choosing strategy for PVEP SONG HONG to 2015 Capstone Project Report Gamba01.X0610 - Group No5 10 CHAPTER 1: OVERVIEW ABOUT STRATEGIC PLANNING AND STRATEGIC MANAGEMENT 1.1 Theories about building and managing strategy 1.1 Concept about strategy and strategic management "Strategy" is a concept having been presented and widely used in many areas for a long time. “Strategy” was first used in military filed, then moved to politics. Since 50-60s of the 20 century, the concept of strategy was used in socio-economy area. "Strategy" is usually understood as the way and methods solving given tasks in comprehension, overall and long term.
United Industry Development Organization (UNIDO) said that: "Normally, a development strategy may be described as a draft for development process in order to gained defined goals for a term from 10 – 20 years; it drives strategy planners in mobilizing and distributing resources. In general, we can say that strategy provides a vision of an expected development process and consistency in methods of implementation. Furthermore, strategy may be foundation for comprehensive development plan in short term, midterm or a general recognition without binding of insiders in that term about outlook, challenges and satisfaction". Generally, concepts and definitions about strategy, despite being different in expression, always cover following contents: + To define short term and long term goals of enterprise.
+ To propose and select predetermined plans. + To conduct and distribute resources aimed at implementing those goals. In addition to the understanding about strategy, leaders in company also need to know to manage it and make right decisions. If applicable, their company will well do strategy known as strategic management.
In general way: "Strategic management is defined as a Capstone Project Report Gamba01.X0610 - Group No5 11 collection of decisions and actions implemented via results of planning, enforcing and evaluating strategies. It is designed to gain long term.2 The role of building strategy for enterprise 1.1 Gains Many researches show that: if enterprises have obvious business strategy, they will have more feasible action program rather than the ones not having strategy or obvious one. Business strategy is guideline for action of enterprise. As a result, enterprise will gained predetermined goals.
Furthermore, business strategy is bridge to make short term goals deviated from long term ones. The development of enterprise is compatible and comprehensive. Thus, gains of strategy and strategic management have been surveyed in many nations, industries and the new companies with different size. In summary, we have following three features: - Business strategy and strategic management help enterprise have specific action program to gained predetermined goals.
- Business strategy helps enterprise define central goals. - Business strategy helps enterprise have specific and in time measures meeting changes in business environment.