CAPSTONE PROJECT REPORT GENERAL STRATEGY ESTABLISHMENT OF PETROVIETNAM FINANCE CORPORATION PERIOD 2011-2015 AND ORIENTATION BY 2025 Group No.: 10 Student’s name: Tran Thi Van Mai Xuan Thanh Le Anh Dung Vu Duc Thiep GaMBAX04-2009 Hanoi, June 2011 Capstone Project – Strategic Management of Group 10 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT GENERAL STRATEGY ESTABLISHMENT OF PETROVIETNAM FINANCE CORPORATION PERIOD 2010-2015 AND ORIENTATION BY 2025 Group No. Tran Thi Van 2. Mai Xuan Thanh 3. Le Anh Dung 4.
Vu Duc Thiep Hanoi, June 2011 2 Capstone Project – Strategic Management of Group 10 COMMITMENT We have committed that contents in this research of Strategic Management had not been submitted for any other Master programs as well as any program. We also commit that this research reflects great effort of members in our group. Results, analysis and conclusions in this research (except for quotation) are of the whole group. STUDENT’S SIGNATURES 3 Capstone Project – Strategic Management of Group 10 WORDS OF THANK We would like to express our sincere thanks for Executive Board of Griggs University – US, training technology and job system center – Hanoi National University, lecturers and officers in the Department who have whole-heartedly taught, instructed, and created conditions for us during our attendance in GaMBA X04-2009 to complete the course.
We faithfully thank the national and international teachers who have participated in teaching our program, enthusiastically given instructions and fully been responsible for us during the process of study, research and completion of this capstone project report. We also would like to send thanks to Vietnam Oil and Gas Group, Petro Vietnam Finance Corporation have created conditions and supported us to complete this research. Thanks our colleagues, our friends and our family for encouraging us to do this research. Thank you so much.
4 Capstone Project – Strategic Management of Group 10 CONTENTS WORDS OF THANK.4 CHAPTER 1 – THEORETICAL BASE.1 STRATEGY AND CHARACTERISTICS OF STRATEGY.1 Some concepts about strategy.2 Characteristics of strategy.3 Business strategy and selection of strategy.4 Role of strategy.2 PROCESS OF STRATEGY ESTABLISHMENT.1 Mission and vision.3 Analysis of external environment.4 Analysis of internal environment.7 Strategy at company level.8 Model of analysis of strategy selection by the weight method.33 Summary of Chapter 1.33 CHAPTER 2 –THE REAL SITUATION OF FACTORS AFFECTING THE FORMATION AND SELECTION OF BUSINESS STRATEGY OF.35 PETROL VIETNAM FINANCE CORPORATION (PVFC).1 OVERVIEW ON PVFC.1 Process of establishment and development.2 Functions and tasks of PVFC.3 Organizational structure and real situation of human resources.4 Types of PVFC products .5 Targets of business operations.2 ANALYSIS OF FACTORS OF PVFC’S EXTERNAL ENVIRONMENT.1 Analyze macro environment.2 Analyze the environment of the industry.3 Internal environment analysis.4 SWOT general analysis.65 CHAPTER 3 - SELECTION OF DEVELOPMENT STRATEGY OF PVFC AND STRATEGY IMPLEMENTATION.1 INTRODUCTION OF DEVELOPMENT GOALS OF PVFC BY 2015 AND VISION BY 2025.2 SELECTION OF DEVELOPMENT STRATEGY OF PVFC.69 5 Capstone Project – Strategic Management of Group 10 3.3 SOLUTIONS FOR STRATEGY IMPLEMENTATION.1 Solutions in organizations and management.2 Solutions in human resources and corporate culture.3 Solutions in market.87 6 Capstone Project – Strategic Management of Group 10 ABBREVIATIONS Abbreviation Means GDP Gross Domestic Product PEST Political – economic – social – technology PVN PetroVietnam Group PVFC Petrovietnam Finance Corporation BLĐ Executive Board SO Strengths-Opportunities ST Strengths-Threat SWOT Strengths - Weaknesses - Opportunities – Threat TCTD Credit organization TNHH Limited Liability VĐL Charter Capital WO Weaknesses-Opportunities WT Weaknesses -Threat NHTMCP Joint Stock Commercial Bank 7 Capstone Project – Strategic Management of Group 10 LIST OF CHARTS - FIGURES Figure 1-1: Process of strategic establishment.15 Figure 1-2: Model of analysis of 3 degrees in external and internal environment.19 Figure 1-3: 5-force model of Michel Porter.24 Table 1-4: SWOT matrix.30 Table 1-5: Summary table of selections suitable to each strategy.31 Figure 2-1: Organizational chart of PVFC apparatus.36 Figure 2-2: Report of PVFC human resources up to 31 December 2010.37 Figure 2-3: Personnel classification upon age.37 Figure 2-4: Business targets in the period of 2006-2010.39 Figure 2-5: Total assets and charter capital in the period of 2006-2010.40 Figure 2-6: Revenue in the period of 2006- 2010.40 Figure 2-7: PVFC profit in the period of 2006-2010.41 Figure 2-8: Chart of inflation situation in VN from 2000 to 2008.45 Figure 2-9: Population distribution upon Urban – Rural.46 Table 2-10: Credit balance structure according to aspects, trade.48 Table 2-11: Charter of credit structure under fields.51 Table 2-12: Comparing the correlation between PVFC and 04 commercial banks.52 Figure 2-13: Graph of competitive capacity evaluation of PVFC and its rivals.53 Table 2-14: Define strong competitive advantage.62 Table 2-15: Swot analysis.65 Table 3-1: Strategy selection matrix (GREAT).69 Table 3-2: Evaluation of priority of strategy implementation according to Smart matrix. 71 PREFACE 8 Capstone Project – Strategic Management of Group 10 Petro Vietnam Finance Corporation has been established since June 2006, its former is Petro Vietnam Finance Company. It is a non-banking credit organization and a financial institution of Vietnam National Oil and Gas Group (PVN). Through more than 10 years of establishment and development, so far PVFC has become one of credit organizations with rapid development rate and the trademark as Petro Vietnam Finance has been affirmed in Vietnam’s financial market and countries in the region.
With main functions of arrangement capital resources for the Group, most profitable and efficient operation of financial resources of oil and gas industry, establishment of financial tools supporting for staff policies of the Group, many creative products of PVFC had been born in succession, becoming typical products, making contribution to create the difference and uniqueness of PVFC in the market such as co-sponsor, lending trust, investment trust, consultancy and brokerage for investment, consultancy in enterprise equitization. In addition, PVFC is a consultant in finance and transforming finance structure, bringing enterprises in oil and gas industry to attach with operation of capital market. Strong and rapid development of PVFC reflect and affirm its role as a firm financial instruction of PVN. Operation results of PVFC for the past 10 years have shown ideas-based development of PVFC has just been in its initial phase with many existing objective and subjective obstacles and challenges.
Thus, studying to discover suitable development strategy in this period is very important and necessary for PVFC to have a sustainable development orientations. From this fact, we have chosen topic “Establishment of general strategy of Petro Vietnam Finance Corporation period 2010 – 2015 and vision by 2025”. Purposes of research: Systematize theoretical basis about strategy as premise to analyze factors affecting operation of the Company, and development strategy establishment of the company upcoming time. 9 Capstone Project – Strategic Management of Group 10 Analysis of factors affecting development process of PVFC includes business operation, human resources training and development, technology, finance…of the Company so as to combine with orientations, influential factors to establish development strategy and solutions for PVFC period 2010 – 2015 and vision by 2025.
Scope of research: In the scope of the topic, our group will focus on studying, establishing and selecting development strategy for period 2010 – 2015 and vision by 2025. Method of research: Approach learned theories about strategic management; survey and collect data in PVFC, use methods such as comparison, analysis, systemization and statistics from reports and data from PVFC, State’s administration agency, and related websites… Significance of the research: The research topic has systematized theoretical basis about development strategy establishment at Company level and applied to establish development strategy for PVFC. The topic has analyzed state of PVFC and factors affecting development strategy of the Company. The topic has proposed some development strategy and solutions to take development strategies of PVFC.
In addition, the topic can be used as materials for other research works in market establishment and management, operation’s results of financial companies. At the same time, it also is significant in term of theory, it provides a new views on strategy and business activities management manner of a financial company which are differed from approach and analysis of strategy of some credit organizations over the past time. Limits of the research Time of research and figures for reference are limited. Financial market in Vietnam and in the world is recessed with many unexpected changes and adverse 10 Capstone Project – Strategic Management of Group 10 effects on economies including Vietnam, hence establishment strategy for the Company must have some adjustments to suit with happenings in the financial market.
Expected results - Analyze, select and establish development strategies which are suitable for PVFC. - Have orientations for general development process of the Company period 2010 – 2015 and vision by 2025. Structure of the research In addition to the preface, conclusion, appendixes, charts and figures, the research are divided into three chapters: Chapter 1: Theoretical base for establishment of development strategy Chapter 2: Analysis of factors affecting the strategy establishment of PVFC. Chapter 3: Some proposed strategies and solutions to implement the selected strategy.
11 Capstone Project – Strategic Management of Group 10 CHAPTER 1 – THEORETICAL BASE 1.1 STRATEGY AND CHARACTERISTICS OF STRATEGY 1.1 Some concepts about strategy The term Strategy originated in the military field, it means “A science of planning and controlling military activities”, “an art of controlling vehicles to win over opponents”. From the military field, the term strategy is used more in economy both in terms of macro economy and micro economy: socio-economic development strategy, development strategy for industries such as mechanics, chemical; development strategy for Corporation, Company.with the meaning of defining long-term basic goals, action program and resources allocation to implement goals of economies, of the industry or of the enterprises in the future. Born in the 60s of XX century, strategy and business strategy are used in almost enterprises with the different concepts According to James B Quinn “strategy is a form or a plan which coordinates main goals, policies and action orders into one” According to William J Glueck “strategy is a consistent, comprehensive and coordinated plan which is designed to ensure that basic goals of an enterprise will be reached” Alfred Chandler, Harvard university defines: “strategy includes defining long- term basic goals of an enterprise, and at the same time choose manners or process of action and allocation of indispensable resources to reach these goals” 1.2 Characteristics of strategy Strategy has three most common characteristics: +Define basic goals and business orientations need to achieved in each period which are grasped thoroughly in all fields, all aspects in management of an enterprise. 12 Capstone Project – Strategic Management of Group 10 + Strategy only sketch operation orientation of an enterprises in the long run, and operation frame in the future.
It just give orientations, but in practice it must be combined with strategic goals and economic goals of an enterprise. + Strategy of an enterprise is established on the basis of competitiveness advantage of an enterprise to mobilize maximum exploitation and utilization of resources in the enterprise.3 Business strategy and selection of strategy Definition of business strategy: Business strategy is orientation of business operation, with goals in the long run as well as policy system, methods and ways of resources allocation to achieve the goals of enterprise in respectively time duration. The business strategy is a general action program towards achieving goals of an enterprise. The business strategy only creates frameworks to guideline the logic thought about business and operation policies.
According to a summary, the definition “business strategy” can be divided into 3 groups: - Group 1: Considering business strategy to be an art, for example the art of create business advantages. - Group 2: Considering business strategy is a specific form of plan, for example, the definition: “Business strategy is a way, a mean to achieve goal” or “business strategy means defining long –term goals. - Group 3: Considering business strategy to be both art and program of implementing to perform long –term strategic goals. It is the combination of policies, programs, projects and plans.