ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGÔ QUỐC ANH INNOVATING BUSINESS MODEL BY USING BUSINESS MODEL CANVAS: THE CASE OF PHUC HUNG HOLDINGS J.C ĐỔI MỚI MÔ HÌNH KINH DOANH BẰNG CÔNG CỤ MÔ HÌNH KINH DOANH CANVAS: TRƯỜNG HỢP CỦA PHỤC HƯNG HOLDINGS LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH Hà Nội - 2017 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGÔ QUỐC ANH INNOVATING BUSINESS MODEL BY USING BUSINESS MODEL CANVAS: THE CASE OF PHUC HUNG HOLDINGS J.C ĐỔI MỚI MÔ HÌNH KINH DOANH BẰNG CÔNG CỤ MÔ HÌNH KINH DOANH CANVAS: TRƯỜNG HỢP CỦA PHỤC HƯNG HOLDINGS Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. NGÔ VI DŨNG Hà Nội - 2017 DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article. The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given. The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration.
th Date: 30 September, 2017. i ACKNOWLEDGEMENT I would like to acknowledge my advisor PhD. Ngo Vi Dung for his wealthy advices. He has guided and promptly given me a lot of instructions and comments in order to help me moving forward with the right direction to the completion of my final research.
I would like to express my deeply thank to PhD. Ngo Vi Dung for his support since the beginning of my research that was selecting the very interesting research topic, then going through research outline, until the end of this research. From this research, I can have a deep understanding of business administration in general and innovative business model of a business firm in particular. I would like to thank everyone who are Phuc Hung’s staffs and Phuc Hung’s customers, who have assisted me to be fulfillment with this research’s aims and scopes.
They also have spent a lot of their time with my team for the interview that my team was able to collect necessary answers serving for analyzing of current performance of Phuc Hung, as well as external environment factors affecting Phuc Hung’s business model. In addition, I would like to express my special thank to every member of the team who took part in and supported me in every study activities during implementation of the research. Without their support, I was not able to complete my assignment of the research study. Because limited time and ability so it cannot avoid some mistakes in my research.
I look forward to receiving comments from lecturers and colleagues in order have more completed and better achieved of research result. th Date: 30 September, 2017. Ngo Quoc Anh ii CONTENT CHAPTER 1. Aims of research.
Object of research. Scope of research. Definition of Business Model. Business Model Canvas and Value Proposition Design.
Business Model Canvas. Successful application of using Business Model Canvas. Value Propositions Design. Innovating Business Model.
Summary of research theoretical background. Data collection methods. Internal Interview Form. Customer Interview Form.
Design Innovating Business Model. Overview of Vietnam’s Construction Industry. Local Key Players. Introduction of Phuc Hung.
Key players’ current business models: Classification, Strength and Weakness. Current business models of key players. Phuc Hung’s current business model: Characteristics and Performance. Characteristics of Phuc Hung’s existing business model.
Performance of Phuc Hung’s current business model. Phuc Hung’s existing business model: Strength and weakness. Innovating Phuc Hung’s business model. Study external environment.
Collection of ideas and opinions. Design Business Models. Select the most satisfactory Business model. Innovating Business Model Discussion.
CONCLUSION, LIMITATION AND IMPLICATION. 61 APPENDIX A: INTERNAL INTERVIEW FORM. 63 APPENDIX B: CUSTOMER INTERVIEW FORM. 68 APPENDIX C: INNOVATIVE BUSINESS MODEL CANVAS.
71 APPENDIX D: “FIT MAP” CALCULATION SHEET. 74 iv ABBREVIATION GDP: Gross Domestic Product WTO: World Trade Organization TPP: Trans-Pacific Strategic Economic Partnership Agreement FTA: Free Trade Agreement PPP: Private Public Partners FDI: Foreign Direct Investment GSO: General Statistics Office of Vietnam MOC: Ministry of Construction HNX: Hanoi Exchange Market CEO: Chief Executive Officer VND: Vietnamese Dong FPTS: FPT Security ROE: Return On Equity ROA: Return On Assets DBB: Design – Bid – Build DB: Design and Build EPC: Engineering – Procurement – Construction BIM: Building Information Modeling ERP: Enterprise Resource Planning v LIST OF FIGURES Figure 2.1: A business model – a link between strategy and operations Figure 2.2: Business Model Canvas Figure 2.3: Value Proposition Canvas Figure 3.1: Flowchart of the Research’s process LIST OF TABLES Table 4.1: Phuc Hung’s finance performance of 2013, 2014 and 2015 Table 4.2: Customer Profile ranking result Table 4.3: Value Map ranking result of “Resource Driven” business model Table 4.4: Value Map ranking result of “Offer Driven” business model Table 4.5: Value Map ranking result of “Customer Driven” business model vi CHAPTER 1. Rationale Vietnam is one of the fastest growing countries in the last decade. As reported by World Bank: “Vietnam is a development success story.
Political and economic reforms (Doi Moi) launched in 1986 have transformed the country from one of the poorest in the world, with per capita income around $100, to lower middle income status within a quarter of a century with per capita income of over $2,000 by the end of 2014. Vietnam’s growth rate averaged 6.4% per year in the 2000s, but begun to slow in the wake of the global financial and economic crisis. However, driven by strengthening domestic demand, GDP has accelerated to 6.3% during the first half of 2015, the fastest first-half-of-the-year growth rate in the past five years” (World Bank, 2015). “GDP at market prices (current US$) of Vietnam 2014 is $186.
Since the reform launched, Vietnam has been joined with serials of economic organizations in the World. Vietnam has joined WTO since 2006 and Vietnam’s economy had stepped toward a deeper integration to global and regional market. The newest singed trade agreement TPP will be a strong motivation and will be an opportunity for domestic economic development in general and for construction industry in particular. Number of FDI (Foreign Direct Investment) firms and investment capital has been increased rapidly in recent years.
In 2014, “total FDI capital was VND 265.407 billion, equal to 22% total economic investment and increase 9.8% in comparison with 2013” (GSO, 2015). FDI become important part of Vietnam’s economic and opportunities are increased from this investment activity. In the pathway of economic development, industrialization and modernization, the construction industry has paid an important role in the aspect of economic contribution, urban and rural development, and housing increase. “The production value of the construction industry in 2014 at current prices is estimated at VND 201.203 billion and contributed 5.
The development of urban and rural areas in the recent year is growing fast. At the end of 2014, “there are 774 urban (increase 4 urban in comparison with 2013), in which 02 special urban, 15 urban Grade I, 21 urban Grade II, 42 urban Grade III, 67 urban Grade IV and 627 urban Grade V. Housing area for living also increase at high rate recently. In 2014, there are 92 million sqm of housing increased, average housing area per person nationwide is 20.6 sqm, increase 1 sqm per person in 1 comparison with 2013” (Baoxaydung, 2015).
These figures clearly show how the importance of construction industry to Vietnam economic. During the development of socio-economic, there are many opportunities created for Vietnamese contractors. In parallel challenges for local contractors are also increased from investors’ side and international contractors’ side. From investors’ side, requirements of both local and international investors are higher and higher together with economic development.
This means that local contractors has to improve their capabilities in term of corporate governance ability, technology-innovation capability, financial and accounting status, management skill, branding development, human resources management, corporate social responsibilities, environment protection, etc., to meet high requirements from investors (FPTS Report, 2015). From international contractors’ side, which are origin from America, Europe, Japan, Korea, China, etc., they have come into Vietnam market together with several advantages of high construction technology, high management skills, good finance ability, several years of experience, etc. These advantages of international contractors create a big challenge for local contractors (FTPS Report, 2015). In order to compete internally among local contractors and internationally with foreign contractors, the urgent requirement for Vietnamese contractors is to find the way to improve their capabilities, corporate strategy, as well as business model, etc., to enhance competitive advantage to survive, and sustainable develop in long-term.
There are some successful contractors in re-structuring their company. When finding the trend of development, Coteccon, Hoa Binh Construction, Cofico, Delta Construction have had early privatization process from State – Owned enterprise. Most of them today have a good position of branding, market share, and profit. Moreover, they also are able to compete equally with international contractors in the civil projects of construction industry.
Within these contractors, innovating business model is an important solution to enhance competitive advantage for them when they are facing high requirements from market. However, the above successful contractors are few in comparison with the scale of Vietnam Construction Industry. There is still a big gap among local contractors with international contractors, such as: Turner Construction from America; Vinci, Colas from Europe; Shimizu, Sumitomo Mitsui, Obayashi, Taisei, from Japan; Posco, Hyundai, Dealim, Keangnam from Korea in the field of infrastructure projects, industrial projects and airport projects. Contractors of these construction fields are still very slowly in changing their business models due to the embedment deeply with state-owned enterprise’s 2 corporate governance model.
Vinaconex, Hanoi Construction Corporation, Cienco, Contrexim, among others, are examples. Indeed, they are newly privatized, but state is still owned over 90% of total shares. They are getting several difficulties in innovating business model, enhancing capabilities as well as competitive advantage to compete with local and international competitors. Vinaconex 9 – a company of Vinaconex is an example.
Although the company's Board of Managers has made great efforts to improve the business situation, its production and business results in 2015 was be less effective than in 2014.As reported by the Board of Managers, the company's revenue in 2015 increased compared to 2014, but profit of the company in 2015 reduced more than half compared to 2014; the profitability ratio of profit after tax / net sales also decreased.The company’s Board of Directors assessed the business performance reduced its effectiveness due to several reasons that the main reason leading to this difficulty is due to the overall difficulty of the socio-economic situation. Another reason come from the high competition of domestic and international competitors.Regarding the level of construction, the company has not had a bigchange in construction technique and technology compared with other contractors; in construction management, the company also has no advantage management model compared to foreign contractors.Although the Board of Directors has strategic direction, however, the Board of Managers has not had a strong restructuring solution to innovate the business model, to meet the economic fluctuations as well as challenges from both local and international competitors. ICON4 – a company of Hanoi Construction Corporation is another example.Recent years have been seen as a step backward of ICON4 in the company's boom over the past decade. In 2015, the company's revenue and profit is both decreased at the same time in compared to 2014.
The profitability ratios of its business activities are lower than the industry average.Facing with the difficulties in business in recent years, the Board of Directors has strongly directed the Board of Directors to propose solutions to improve the situation of business development, as well as its business model to develop the company.