GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT Coperate Strategic Development for Company 507 – CIENCO5 for period 2012 - 2017 BUSINESS STRATEGY DEVELOPMENT AT THE CIVIL ENGINEERING CONSTRUCTION COMPANY LIMITED 507 (2012 – 2017) Group Number: 03 1. Vu Hong Thang 2. La Xuan Hanh 3. Pham Thi Kieu Oanh 4.
Nguyen Huu Thach HANOI 2011 ACKNOWLEDGEMENTS First of all, we own our imbedded would like to thanks to the Center of Training Technology and Employment System, Ha Noi National University, who has organized successfully for their successful organization of the International Training Course of Master of Business Administration for class GaMBA01. The course has provided us with the essential knowledge in the field of business management. In particular, We have learnt numerous tools for strategic analysis and development for the studied Company, and the current global modern trends of business strategy development. Such tools and knowledge are useful to our work.
Next, we are sincerely grateful gratitude to the lecturers, who have earnestly provided us with interesting lectures throughout the course for their supervision and guidance. We are especially thankful would like to express our sincerely thank to Ms. Kim Thanh, who has enthusiastically guided us tremendous enthusiasm in guiding us in our the completion of this capstone project. Our paper would not be a success could not be success without the support from the Transport Engineering Corporation 5 and One-member Limited Liability Engineering Company 507 Civil Engineering Construction Company Limited 507, who which have provided us with the requested necessary data and information, and arranged the interviews with their key corporate leaders.
Last but the not the least, we are thankful to would like to express our deepest appreciation to the Monitor and Management Team of the Intake for their continuous support and encouragement in our completion of this assignment capstone project. i TABLE OF CONTENTS EXECUTIVE SUMMARY.2 4 Value of the Capstone project. 2 6 Structure of the Capstone project.1 Business Strategy – Definition, Role and Key features.2 The Role of Business Strategy.2 Types of Business Strategies.1 By Level of Business Management.2 By Content of the Strategies.3 By Characteristics of each Strategy.4 By Strategic Process.3 Business Strategy Development Process.1 Corporate Mission and Key Objectives.2 Business Environment Analysis.1 External Environment Analysis.2 Internal Environment Analysis.3 Crafting Business Strategies Strategy analysis and selecting strategies.1 Matrix of External Factors External Factor Evaluation Matrix (EFE matrix) 12 Resouce: Strategic Management-Concepts and cases.2 Matrix of Internal Factors (IFE ) Internal Factor Evaluation Matrix (IFE matrix) 13 Resouce: Strategic Management-Concepts and cases.14 Resouce: Strategic Management-Concepts and cases.4 Competitiveness Picture Matrix (CPM) Competitive Profile Matrix (CPM matrix) 15 Resouce: Strategic Management-Concepts and cases.15 Resouce: Strategic Management-Concepts and cases.16 Resouce: Strategic Management-Concepts and cases.4 Implementation Arrangements Strategy implementation.5 Evaluation of the Effectiveness of the Formulated Strategies.1 The introduction of Company 507 under Cienco5.2 Company Establishment and Development History.3 Main Business Segments lines.4 Business Performance Results for 2008-2010.2 Analysis of External Environmental Factors affecting CECC 507’s Business Operations.1 Investment in Civil Engineering Works Assigned by the Government Government’s Investment on Civil Engineering Works.2 Analysis of Legislative and Political Factors.3 Analysis of Economic Factors.4 Analysis of Socio-cultural Factors.5 Analysis of Technological Factors.3 Opportunities and Threats.4 Assessment of External Factors (Analysis of EFE and CPM Matrixes).5 Assessment of Internal Factors.1 Resources of Company 507.1 Management Organizational Structure.2 Analysis of Company’s Financial Potential.3 The Trademark of the Company.4 Analysis of Company’s Products and Services.5 Analysis of Company’s Human Resources.7 Production Technology and Equipment.8 Marketing capacity Competencies.9 The application of Information Technology at the Company.10 Recruitment of Sub-contractors and Suppliers.2 Analysis of Company 507’s Strengths and Weaknesses.52 Source: Cienco 507 Report 2010.55 CHAPTER 3: RECOMMENDED STRATEGIES AND SUGGESTIONS FOR BUSINESS STRATEGY IMPLEMENTATION.1 Corporate Development Orientation.2 Business Strategy Selection.1 Rationale for Strategy Selection.1 Threats – Opportunities – Weaknesses and Strengths (TOWS) Matrix Analysis 58 3.3 Recommended Business Strategy Implementation Options for Company 507 64 3.1 Company Equitization by 2012.4 Human Resources Solutions.6 Joint venture, Affiliation and Partnership.4 Strategy Implementation Roadmap Timeline.4 Annual Budget Plans.72 iv LIST OF FIGURES Figure Name Page Fig 1.1 Business Strategy 4 Fig 1.2 Business Strategy Development Process 8 Fig 1.3 External Environment 9 Fig 1.4 Michael Porter’s Five Forces Model 10 Fig 1.5 Mc Kinsey’s 7s Model 11 Fig 1.6 SPACE Matrix 17 Fig 2.1 Company’s Business Performance Results in 2008 – 2010 24 Fig 2.2 Inputs comparison in 2010 34 Fig 2.3 Organizational structure of Company 507 41 Fig 2.4 Comparison of productivity 42 Fig 2.5 Capital Structure of Company 507 45 Fig 2.6 Company 507’s labour structure by educational levels 47 Fig 2.7 Company 507’s labour structure by gender 47 v LIST OF TABLES Table Name Page Tab 1.1 External Factor Evaluation 13 Tab 1.2 Internal Factor Evaluation 14 Tab 1.3 SWOT Matrix 15 Tab 1.4 Competitive Profile Matrix 15 Tab 1.5 TOWS Matrix 16 Tab 2.1 Company 507’s Business Performance Results 23 Tab 2.2 Viet Nam’s GDP Growth Rate 28 Tab 2.3 Outputs Comparison among Leading Companies under Cienco 5 34 in 2010 Tab 2.4 EFE Matrix 37 Tab 2.5 CPM Matrix 38 Tab 2.6 List of sub-units and investors 41 Tab 2.7 Comparison of productivity between Cienco 5 and other 43 corporation under the Ministry of Transport Tab 2.8 Company 507’s Financial ratios 44 Tab 2.9 Company 507’s labour structure 46 Tab 2.10 Company 507’s markets 53 Tab 2.11 IFE Matrix 54 Tab 2.12 SWOT Matrix 54 Tab 3.1 SPACE Matrix 60 Tab 3.2 QSPM Matrix 61 Tab 3.3 Annual Budget Plans 70 vi EXECUTIVE SUMMARY 1 Rationale Amidst Along with the current trends of global economic integration in Viet Nam, any local firm that wants to survive and maintain sustainable business development is required to develop an adequate corporate growth strategy. In this regard, the study team 3 has decided to select the theme “Developing corporate business strategy for Civil Engineering Construction Company 507 - CIENCO 5 Business Strategy Developement at the Civil Engineering Construction Company Limited 507 (2012 – 2017)” for its capstone project.
Such a choice is supported by the fact that a member of the team is an employee of the Civil Engineering Construction Limited Liabilities Company 507 Civil Engineering Construction Company Limited 507 (called short as Company 507) – an independent accounting unit of the Transport Civil Engineering Corporation 5, under Ministry of Construction. It is the team’s desire that the knowledge obtained from this MBA training course can be applied to the Management of the business strategy of Company 507, in line with the modern strategic administration approaches. The team also plans to put forth recommendations for more efficient and effective management approaches to adapt to the global business environment, and the new development trends of the local economy and integration. 2 Objective The capstone project is aimed to provide in-depth analysis and assessment of the internal performance of Company 507, to identify its strengths and weaknesses, to analyze its external environment factors for determination of opportunities and challenges to the Company.
Such analysis and assessment will help the Company to craft appropriate business strategies for its future business development.1 Data Collection The paper taps on both primary and secondary data. The primary data is collected mainly via interviews of the Company’s Board of Management and the 1 observations of the team members who have been working with the Company for quite some time. The secondary data is acquired through articles, internet, and the business performance reports of Company 507 and its mother Company – CIENCO 5.2 Data Analysis The collected data will be analyzed qualitatively and quantitatively. , from which remarks on each line of the Company’s business, the opportunities and challenges to the Company will be delivered.
From those collected data, we will assess each company’s activities to identify the opportunities and challenges to the Company. Some analytical tools learnt in this MBA training course such as the SWOT analysis, Michael E. Porter’s five forces model, EFE matrix and SPACE matrix will be used for such analysis to provide the Company with better insight of its performance and craft an appropriate business strategy. 4 Value of the Capstone project This paper will provide the Company with an objective assessment of the external environment to its business operations, its internal business environment, and the importance of strategic business development.
On such basis, appropriate business orientation, and strategic measures can be recommended for more sustainable business growth for the Company in the period ahead. On such basis, the company will setup appropriate directions and strategic solutions to implement the sustainable business growth. 5 Limitations Due to the fact that most of the needed data or information of Company’s performance is confidential and for non-disclosure, Due to the needs of non- disclosure of some company’s data and information, the team’s analysis tends to be more qualitative and reflexive of the team’s observations, without the supported data or information. 6 Structure of the Capstone project The paper is composed of three Chapters: 2 Chapter 1: Theoretical background of the paper Review of litterature Chapter 2: Business performance of Company 507 Analysis on the Rationale of business strategy formulation for the Company 507 Chapter 3: Recommended strategic options and strategic development measures Recommended Strategy and Suggestions for Strategy implementation 3 CHAPTER 1: THEORIES FOR CORPORATE BUSINESS STRATEGIC DEVELOPMENT REVIEW OF LITTERATURE 1.1 Business Strategy – Definition, Role and Key features 1.1 Definition A strategy of an organization targets achieving is designed to achieve the harmonization between the abilities to create differences and the external environment, in which the organization is operating.
To this end, in In order to achieve its objectives with its strategic decisions, the organization is always required to explore new opportunities, and to prevent and block potential threats, overcome its existing weaknesses, and shift its strengths to new business areas.1 – Business Strategy Opport- Opport- Strengths Strengths unities Explore unities Maintain Maintain Explore Strategy Strategy Internal Internal External External Overcome Overcome Prevent Prevent Weaknes- Weaknes- Threats Threats ses ses There have existed numerous academic viewpoints of a business strategy from different angles, which results in the variation in its definition. Chandler, 1962 – one of the first initiators of the strategic theory considered theory as “the determination of the long-term, basic objectives and purpose of a firm, and the application of a series of actions, and allocation of necessary resources to achieve these objectives”(1). Quinn, 1980 provided a more general definition: “A strategy is a mean or plan to integrate the key corporate objectives, policies, and series of actions into a cohesive structure”(2). Later, in the socio-economic conditions full of 4 changes, Johnson and Scholes gave a varied definition “A strategy is a long-term orientation and scope of operations of an organization to gain competitive advantages through defining its resources in a changing environment to meet the demands of the market, and expectations of the parties involved”(3).
The foregoing definitions have revealed the different aspects of a business strategy. If defined by degree, there are at least three levels of strategies: corporate strategies, business unit strategies, and functional strategies. Corporate strategies describe the overall corporate oriented insight of the growth and administration of the various business activities and product lines. Business unit strategies are created in business units or at the product level, and focus on the competitiveness of the products and services of a company in a certain business sector or market segment.
Functional strategies are those strategies created by functional units to achieve the corporate and business unit objectives and strategies through the maximized utilization of the available resources. The afore-described definitions of business strategies reflect the fact that in the process of business operations, each firm is required to respond frequently to its strategic decisions. “Strategic management is a set of administrative decisions and actions to determine the long-term business efficiency of a company”(4). Strategic management process is constituted of continuous actions, including environment examination; strategic development; strategic execution, strategic assessment and control.