GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGYFOR THAI NGUYEN IRON AND STEEL JOINT STOCK CORPORATION IN PERIOD OF 2012 TO 2016 Group number: 4 Students’ name: Tran Van Thinh – Group leader Tran Kim Thanh Doan Truong Nguyen Nguyen ThiHien Diu HANOI: 2011 ii ACKNOWLEDGEMENT In the first words, I would like to send my best thankfulness to teachers and professors in Centre for Educational Technology and Career Development – Higher Education – Vietnam National University, America Griggs University for creating the best favorable situation for all trainees during the whole course, especially, when we carrying out this capstone project report. Our group also thank to Board of Directors of Thai Nguyen Iron and Steel Joint Stock Corporation and related sections for guiding enthusiastically and providing necessary data for us to complete this capstone project report. Despite of trying our best in studying and collecting data, the capstone project report still have some unavoidable shortcomings. We sincerely hope to receive comments of teachers and friends to makes it more meaning full.
COMMITMENT Our group commit that this is our special work. Data and figures in this capstone project report are accurate, our analysis and conclusions have not been announced in any other scientific research. Hanoi, November 29, 2011 Group leader Tran Van Thinh iii iv TABLE OF CONTENT ACKNOWLEDGEMENT. i TABLE OF CONTENT.ii LIST OF FIGURES AND TABLES.iii LIST OF ABBREVIATIONS.
v CHAPTER 1: OVERVIEW OF STRATEGIC BUILDING AND STRATEGIC MANAGEMENT.2 Definition, characteristics and roles of business strategy.1 Definition of business strategy.2 Characteristics of strategy.3 Roles of strategy in modern open economy.2 Procedure to build business strategy.1 Defining company’s target and vision.2 Business environment analysis.3 Internal environment analysis.4 Supporting tools for defining and choosing strategies.1 Internal Factors Evaluation matrix (IFE).2 External Factors Evaluation (EFE).1 Low cost strategy.2 Product specification strategy.4 Integrating development strategy.13 v CHAPTER 2: ANALYZING BUSINESS ENVIRONMENT OF THAI NGUYEN IRON AND STEEL JOIN STOCK CORPORATION.1 Introduction of TISCO.1 Establishment and development history.2 Company’s organization and products.3 TISCO’s vision, mission and core values.2 Analyzing business environment of TISCO.1 Basics to build business strategy in the period of 2012-2016.1 Defining necessary of building business strategy.2 Basics to build business strategy.2 Analyzing external environment.3 External factors evaluation matrix (EFE).3 Analyzing internal environment.3 Analyzing company’s valuabe chain.3 Company’s prestige and reputation.4 Internal factors evaluation matrix (IFE).4 SWOT analysis for TISCO.42 CHAPTER 3: CHOOSING STRATEGY FOR TISCO IN THE PERIOD OF 2012 TO 2016.1 TISCO’s development orientation in the period of 2012 to 2016.2 Product distribution and market share.2 Choosing business strategy for TISCO in the period of 2012 to 2016.1 Choosing strategy via SWOT matrix.2 Choosing business strategy via GREAT matrix.3 Solutions for TISCO to implement business strategy in the period of 2012 to 2016.1 Improving mining material activities.2 Improve production capacity and product diversification.3 Human resource training.1 Advertising on public communication.2 Advertising on newspaper, magazines.4 Sponsoring and other advertising methods.4 Process to apply business strategy for TISCO to 2016. 62 vii LIST OF FIGURES AND TABLES 1. List of figures Figure 1.2 Michael Porter’s five forces models.1: TISCO’s Organization Structure.2: TISCO’s product structure.3: TISCO’s and competitors share in the North of Vietnam (2005-2010).4: Turnover for TISCO’s product in the period of 2007-2010.5: Production process for TISCO’s products.1 TISCO’s SWOT matrix.4 TISCO training process.3: TISCO’s strategy applying procedure in the period of 2012-2016. List of tables Table 1.2 Factors concerning to reach customer decisions.3: Extnernal factors evaluation matrix.5: TISCO’s Expenses in the period of 2007 to 2010.6: TISCO’s profit in the period of 2007-2010.7: Financial indexes in the period of 2007-2010.8: Internal Factor Evaluation matrix.9: Total steel cosumption in the period of 2005 to 2009.10: Imported material volum for steel industry.1 Improving production plan (2012-2016).2: Product plan in the priod of 2012-2016.3: TISCO’s distribution channel in the period of 2012-2016.4: Choosing key strategy for TISCO – GREAT Matrix.53 viii LIST OF ABBREVIATIONS ADB Asia Development Bank EFE External factors evaluation FAS Food and Agriculture Services FAO Food and Agriculture Organization FTA Free Trade Agreement IFE Internal factors evaluation ISO International Standard Organization MOIT Ministry of Industrial and Trade SBU Strategic business unit TISCO Thai Nguyen Iron and Steel Joint Stock Corporation VSA Vietnam Steel Association UNIDO United Nation Industrial Development Organization USDA United State Department of Agriculture WTO World Trade Organization ix 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 metallurgical industry in particular plays an important role in deciding the success of this process. TISCO is the biggest company in metallurgical industry and the company has created huge contribution to this process.
As all other companies, TISCO is also facing to many opportunities and challenges. 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 metal 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: Topic: “Vietnamese steel industry in 2010”, Pham Chi Cuong, President of Vietnamese Steel Association.The topic shown out observation identifications about recent activities of Vietnamese steel industry in 2010: achievements and limitations.
x From these identifications, Vietnamese steel industry can limit its weaknesses and promote strengths in production and business. Topic: “Vietnamese steel 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 steel industry in the context of industrialization, modernization and integration. Both of below topics have significant practical meaning to development of steel industry, 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 business strategy for Thai Nguyen Iron and Steel Joint Stock Corporation in the period of 2012 to 2016” with the objective of giving out a more specific and profound for building business strategy for the biggest steel company in Vietnam. Purposes of project Base on practical understanding about steel industry in general and production and business of TISCO in particular and knowledge of strategic management subject, the project shown out a comprehensive and clear picture about strategic building and business of TISCO in Vietnam market. Throughout practical analysis of production and business of TISCO 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 TISCO.
In chapter 3 the project will show out forecast of steel market till 2016. These solutions and forecast will also be guide line for other companies in steel industry. Scope and objective of project The project analyzes production and business of TISCO 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.
xi Data and information in this capstone project were collected from actual production and business of TISCO in these 15 years. The project also gave out some forecasts about steel market to 2016 and business orientation for TISCO in the period of 2012 to 2016. 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 TISCO, 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, GREAT 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: Chapter1: Overview of strategic planning and strategic management Chapter 2: Analyzing business environment for TISCO Chapter 3: Choosing strategy for TISCO in the period of 2012-2016 xii CHAPTER 1: OVERVIEW OF STRATEGIC BUILDING AND STRATEGIC MANAGEMENT 1.2 Definition, characteristics and roles of business strategy 1.1 Definition of business strategy “Strategy” isoriginated from military field.
In the period of Roman, strategies were established and connected closely to empire’s wars. After the second world war, strategy was used in economic field. According to tradition conception “Strategy is a united and completed plan which is established to ensure main targets of enterprise will be successfully implemented”. In traditional conception, content and plan are main parts of a strategy, so, company’s strategy is always the result of forecasted and estimated plan.
However, business environment always changes quickly and complicatedly.it makes building business strategy become more and more difficult. Building business strategy as programming has not been suitable anymore. Then the traditional concept of strategy is step by step replaced by modern concept. New definition of “strategy” tries to ensure the nature of strategy and also keep the adaptation to changes of business environment.
According to United Nation International Development Organization: “Generally, a development strategy can be described as an outline of developing process to reach intended targets for a period from 10 to 20 years.it instruct strategic managers in attracting and allocating resources. It can be said that, strategy provides a vision for development process and the consistence for implement solutions. Strategy also can be basics for overview developing plan in long term and short term or can be general awareness of related people about prospects and willingness and challenges in a specific period”.2 Characteristics of strategy Together with the movement economy, strategic ideas are also changing to adapt to business environment. However, in any point of view and any period, 1 strategy always keeps its general characteristics,which reflects the essence of enterprise.
Most primary characteristics are: - Business strategy needs to define clearly basic targets of an enterprise in each period. Strategy must be grasped thoroughly in every sides, every sections. - Business strategy must ensure maximize mobilizing and optimum promoting all company’s resources (human, capital, technique, technology, etc), promote company’s advantages, catch company’s opportunities get comparative advantage in market. - Strategy is the tool to establish company’s long-term targets.
- Business strategy is always ideally to be successful in market. Strategy is established and implemented base on detecting and using company’s opportunities and comparative advantages to reach high economic result. - Strategy clearly shows out company’s competitive sphere. - Business strategy establishes mutual relationships between opportunities and challenges, strengths and weaknesses to create company’s comparative advantages.
- Business strategy is a clear definition of economic and noneconomic distribution of the company to its shareholders. In recent years, shareholders definitely distribute an important role to business strategy of each company. They are all people who have direct or indirect relationship to company’s profit distribution and the capital contribution to maintain company’s operation.3 Roles of strategy in modern open economy Characteristics of business environment have a big affect to existence and development of company.