Capstone Project Report – Group No.E03 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS-LEVEL STRATEGY NEXANS VIET NAM POWER CABLE COMPANY PERIOD 2010 - 2015 1/123 Capstone Project Report – Group No.E03 ACKNOWLEDGEMENT To complete this Capstone Project, the executing Group would like to sincerely thank to teachers of Class E03, Global Advanced Master of Business Administration Program, Griggs University, and class officer of the ETC Center of Hanoi National University for their enthusiastic and valuable assistance, guidance, comment, help and facilitating the Group during implementation. The group also would like to express our thanks to the management of Nexans Vietnam Power Cable Company who also extend great help towards the Group in providing information and data about the Company as well as giving valuable suggestions for the Group to perform and improve the Capstone Project Report. The group is committed that the information and data provided and presented in this Capstone Project Report are all from reliable and trustable sources with high accuracy. Arguments, interpretations, judgments and solutions etc.
presented herein are all performed and developed by members of the Group on the basis of high consistence, not copied from other studies; the source of references are cited fully and accurately. 2/123 Capstone Project Report – Group No.E03 TABLE OF CONTENT LIST OF ABBREVIATIONS. 6 LIST OF TABLES.7 LIST OF FIGURES, GRAPHS. RATIONALE OF THE STUDY.
SIGNIFICANCE OF THE STUDY.11 Chapter I - THEORETICAL BASIS. OVERVIEW OF BUSINESS STRATEGY. Main features of business strategy. Objective and role of business strategy.
Roadmap for planning business strategy of a company. External factors influencing business strategy. Method of strategic planning of business enterprises. SELECTING AND PLANNING BUSINESS STRATEGY.
Roadmap for creating compatitive advantages. Cost-leading strategy. Corporate-level strategy. DETERMINATION OF MECHANISM FOR IMPLEMENTING BUSINESS STRATEGY.
Product group structure. CHECKING AND EVALUATING RESULT OF IMPLEMENTING BUSINESS STRATEGY.38 Chapter II - ANALYSING CURRENT STATUS OF DOING BUSINESS OF NEXANS VIET NAM POWER CABLE COMPANY.40 3/123 Capstone Project Report – Group No. Foundation and development of the Company. Ownership, key business, product and market.
ANALYSIS OF BUSINESS OPERATION OUTCOMES IN THE LAST FIVE YEARS. Evaluation of financial status of the Company. Status of business performance. ANALYSIS OF STRATEGY, DEVELOPMENT TARGET OF THE PARTNERS.
NEXANS Group’s strategy. EVN’s development strategy. Position of the Company in development strategy of each Partner. ANALYSIS OF ENVIRONMENTAL FACTORS INFLUENCING THE COMPANY’S OPERATION.
Social - economic environmental factors. Factors of industry environment. ANALYSIS OF THE COMPANY’S INSIDE. Strength and weakness of Company’s management.
Constructing matrix SWOT.93 Chapter III - BUILDING AND MANAGING COMPANY’S BUSINESS STRATEGY. DETERMINATION OF STRATEGIC VISION, MISSION AND GOAL OF THE COMPANY.1 Strategic vision and mission. Long-run goals. Short-run goal.
SELECTION OF BUSINESS STRATEGY. The industry features. Analysis, comparison and selection of business strategy using QSPM tool. Specific content of the business strategy.104 4/123 Capstone Project Report – Group No.
SOLUTIONS AND ROADMAP FOR IMPLEMENTATION OF SELECTED STRATEGY. Constructing an effective marketing strategy. Improvement of quality control and assurance system. Investment plan of material – technical base.
Step-by-step implementation of vertical integration and effective control of input cost. Consolidation of human resource management.116 CONCLUSION AND RECOMMENDATION. NECESSITY AND IMPORTANCE OF DETERMINING AND SELECTING AN APPROPRIATE BUSINESS STRATEGY FOR A BUSINESS. PLANNING AND MANAGING IMPLEMENTATION OF BUSINESS STRATEGY.
LIMITS OF THE STUDY AND PROPOSED ACTION(S) TO BE TAKEN. 122 5/123 Capstone Project Report – Group No.E03 LIST OF ABBREVIATIONS Abbreviation Description ASEAN Association of Southeast Asian Country EPC Engineering – Procurement – Construction contractor EVN Electricity of Vietnam NVPC Nexans Vietnam Power Cable Company O&M Operation and Maintenance QSPM Quantitative Strategic Planning Matrix SWOT Strength – Weakness – Opportunity – Threat Analysis 6/123 Capstone Project Report – Group No.E03 LIST OF TABLES Table 2.1: Some key financial indicators of the Company in years 2006, 2007 and 2008.2: Financial factors of the Company over years 2006, 2007, 2008.3: Forecast of power cable demand in Vietnam market.4: Analysis of competitors.5: Summary of operation revenues of main competitors.6: Comparison of key factors leading to success of the Company to those of competitors.1: Main features of overall business strategy.3: Major investment and maintenance works planned for aluminum and aluminum alloy cable workshops period 2010 - 2011.4: Major investment and maintenance works planned for aluminum casting workshops period 2010 - 2011.112 7/123 Capstone Project Report – Group No.E03 LIST OF FIGURES, GRAPHS Figure 1.1: Strategic planning process.2: Porter’s Five Forces Model.5: Product group structure.1: Company’s asset structure period 2006 - 2008.2: Company’s capital source structure period 2006 - 2008.3: Recent status of the Company’s performance (USD).4: Worldwide map of factories and offices of Nexans Group.5: Organization structure of Hanoi Power Company.6: Trend of aluminum material price over the years vs. USD/VND ex.7: Comparison of 2008’ revenues of key competitors.8: Comparison of 2008’ market share for aluminum cable product of key competitors.9: Company’s revenues over years 2005 - 2008 based on types of sales 81 Figure 2.10: Company’s organization structure.1: Company’s targeted revenue for year 2010.97 8/123 Capstone Project Report – Group No.E03 INTRODUCTION Joining WTO means Vietnam has officially and entirely entered the international playing field, and that Vietnam businesses are facing a fiercely competitive market. Therefore, Vietnam enterprises need to build long term business strategy for purpose of survival and growth.
Market is always fluctuating, the demand of consumers is always changing, so if not building business strategy, enterprises will not have the right directions and adapt new circumstances. In addition, building a proper strategic business also combine and direct strengths of all persons in an organization for a common goal. In this era, a business will not be able to win without appropriate business strategy, since this is time of fierce competition (free and open competitive market conditions), surplus goods and diversified preferences of consumers. In order to achieve success in the market, businesses must be continuous innovation because the continuous social change, technology does not stop progress, and so on people working in businesses.
In such circumstances, it is impossible if an enterprise fixes its career over a long time period. Technical progress and improved people's living standards lead to and promote formation of many new service industries. Some people used to work in State enterprises now split business and become an independent competitor of the old business. In this situation, if the enterprise still keep foot in place it will be excreted.
Therefore, enterprises must continually renovate and must have strategies. Even though the renovation is in business, technology, products and services, manufacturing process management or field production, market works,. all need to have a strategy, based on the direction of the strategy. RATIONALE OF THE STUDY NEXANS Vietnam Power Cable Company (NVPC), which is a joint-venture company between NEXANS Group (NEXANS Korea is representative) and the Electricity of Vietnam (EVN) (Hanoi Power Company is representative), focuses on manufacturing electric cables to supply power sector and export.
During the early 9/123 Capstone Project Report – Group No.E03 time of establishment, the company was mostly considered as a dedicated company selling power cable products to EVN. Because its production capacity was not enough to meet EVN's demand, so the Company has not paid much attention on building and developing its business strategies. Up to now when the demand of power cables of EVN has almost saturated and methods of cable procurement of EVN have changed through competitive bidding, electric cable manufacturers have increased continuously (up to more than 40 electric cable manufacturers) causing stronger and fiercer competition. For a long time NVPC has had almost no preparation as well as not built a suitable business and competition strategy, so competitors inside and outside the industry infringe and dominate the market, pushing the company to difficult circumstances.
To strengthen and consolidate the position in Vietnam electric cable market as well as ensure a sustainable development, the company needs to develop a competitive strategy in the current time as well as development orientation in the near future. SIGNIFICANCE OF THE STUDY a) The goals of this research is to build a business strategy for a typical small - medium enterprise which is a common type of enterprise in the Vietnam economy, especially the type of joint-venture enterprise which has an important role in the integration process of the country with the world and regional economy. b) Analysis of the business and production environment of electric cable manufacture industry; this is a narrow field but represents all typical elements concerning production and business strategy for a small and medium enterprise in Vietnam. c) Then it can be combined with analysis of Company’s inside, strengths and weaknesses etc.
to develop business strategy of the Company in more fierce competitive environment. That also could be a model for other small and medium companies in other sectors of the economy based on small and medium enterprises of the country. OBJECTIVES Base on research of general theoretical about business strategy and overall of Vietnam’s electric cable production market, the research goes deeply to analyze the 10/123 Capstone Project Report – Group No.E03 business environment, the actual situation of Company’s production and business, from which to build up a business strategy suitable with sustainable development goals of NVPC. STUDY METHODOLOGY The main methodologies used in implementation of this research includes analysis, argument, general comparison, forecasting etc.
based on the actual data and information of the Company as well as the industry’s market data and information to find out the specific solutions for Company in specific circumstances. Subject: Nexans Vietnam Power Cable Joint-Venture Company, hereafter called NVPC or the Company. Scope of study: This research focuses on research, analyzing actual situation of the Company and the internal factors inside the Company. It also analyses situation of business environment, development of market, cable manufacturers (competitors), hereafter called Rivals.
From which it proposes the investment and development strategy of company, including competitive strategies, to ensure substantial development of Company. REPORT STRUCTURE Title of the research: "BUILDING BUSINESS-LEVEL STRATEGY OF NEXANS VIET NAM POWER CABLE COMPANY PERIOD 2010 - 2015"; except the introduction, conclusion and references, this report includes the following chapters: Chapter I: THEORETICAL BASIS Chapter II: ANALYSING CURRENT STATUS OF DOING BUSINESS OF NEXANS VIET NAM POWER CABLE COMPANY Chapter III: BUILDING AND MANAGING IMPLEMENTATION OF COMPANY’S BUSINESS STRATEGY. 11/123 Capstone Project Report – Group No.E03 Chapter I THEORETICAL BASIS 1. OVERVIEW OF BUSINESS STRATEGY 1.
Concepts * What is Strategy Firstly, the concept of strategy has appeared since ancient time, the term derives from military sector, it is used to indicate management skill to mobilize and promote the resources in order to win enemy. In business with fierce competition, although competitors do not face directly as in the military, the final result of competition is shown by the performance of each competitor in market and customer is the side who noted the success of each competitor. There are many definitions of strategy, each definition has different points depending on the opinion of each author. According to Chandler, strategy is "to identify the goals, basis purposes in long-term of business and application a series of actions as well as distribution of necessary resources to carry out these goals" ( Chandler, A.
1962); according to Quinn, "Strategy is a pattern or plan to integrate the major targets, policies and sequences of action into a closely united generalization" (Quinn, J. 1980); according to Johnson and Scholes, "Strategy is the direction and scope of an organization in a long term in order to gain a competitive advantage for organization through formatting its resources in variable environments to meet demand market and satisfy expectations of concerned parties" (Johnson, G. Therefore, the above definitions of the strategy shown different aspects including full meanings. To define a multi-faceted strategy, Mintzberg has given definitions five P character as bellows: Plan: a series of actions which intended consistently.
Pattern: is consistency of behavior chronologically, may be intended or not intended. Position: the suitability between the organization and its environment. 12/123 Capstone Project Report – Group No.