TABLES OF CONTENTS LIST OF ABBREVIATIONS.6 LIST OF FIGURE chart AND TABLE.Justification of the necessity of the capstone project 11 II.Research objectives and applicability 13 III.Scope of the research work 13 IV.Structure 15 CHAPTER I - THEORETICAL BACKGROUND.Fundamental issues of strategy and modern business strategy 16 1. Viewpoints about strategy. Typical features of a strategy. Types of business strategy.
Classification of business strategy by levels. Classification of business strategies by content. Classification of business strategies by process.The role of business strategies in modern business environment 20 1. Description of the formulation process of a strategy.
Identification of corporate mission and objectives. Identification of corporate mission. Identification of strategic objectives. Analysis of business environment of a firm (external environment).
Impacts of external environment on business strategy. Evaluation of the environmental impacts. Internal analysis of an enterprise. Analysis of the value chain of an organization.
Analyses of financial situation. Strategy formulation and selection. Formulation of strategy by level. International business strategy.32 1 CHAPTER II – BUSINESS DEVELOPMENT STRATEGIC PLANNING FOR Hanoi Urban Investment and Construction JSC.
Overview of the HN Urban Investment and Construction Joint Stock Company33 1. History and development. Organizational and management structure of the company.Analysis of corporate strategy and governance 35 1. External environment analysis.
The economic environment. Social and cultural environment. Political and legal environment. Analysis of sector environment.
Analysis of the construction sector from the post global financial crisis period to recently (2010). Architecture management and plan:. Urban and urban infrastructure development. Summaries of opportunities and challenges in the construction business environment for UCIC.
Five competitive forces. Threat of current competitors. Threat of new market entrants. External Factor Evaluation.
Internal environment analysis. Vision, mission statement, business principles and objectives of Hanoi Urban Investment and Construction Joint Stock Company. Business performance results of the most recent three years. Analysis on some financial criteria.
Key product and service analysis. Civil construction activities:. Industrial construction activities:. Situation of human resource.
Recruitment, training and human resources attraction. Salary, bonus and allowance policy. Analyses of sustainable comparative advantages. Internal Factor Evaluation.
UCIC’s key business strategies using SWOT matrix. STRATEGIC SOLUTIONS AND RECOMMENDATIONS. Objectives of the strategy. Strategic solution implementation.
Capital mobilization strategy. Cooperation strategy in the installation and construction activities. Shake hands with large industrial construction corporations. Form joint venture in infrastructure works.
Main estimated criteria for 2010 – 2015. Research, training and human resource attraction strategies. Human resource attraction. Formulation of market dossiers and sales projection.
Studies of customers’ behaviors. Market segmentation and location goal. Follow-up steps. Reform of the administrative structure.
Proper assessment and allocation of resources. Improvement of the steering information system for the implementation of the strategy. Management information channel:.Obstacles in the course of the studies and future orientation 91 1. Cooperation with some companies in the sector.Projects of UCIC 97 II.Names and Responsibilities of Group's Members 104 III.List of other organizations and individuals, who joined in the research process 105 4 LIST OF ABBREVIATIONS AS Attractiveness Scores TAS Total Attractiveness Scores CA Comparative Advantage ECA Equally Comparative Advantage CD Comparative Disadvantage IPO Initial Public Offering IFE Internal Factor Evaluation EFE External Factor Evaluation QSPM Quantitative Strategic Planning Matrix MI Marketing intelligence UCIC Hanoi Urban Investment and Construction Joint Stock Company SWOT Strengths, Weakness, Opportunities, Threats GDP Gross Domestic Product VND Vietnam Dong 5 LIST OF FIGURE CHART AND TABLE 1.1 – Business strategy formulation procedure 20 Figure 1.2 – Michael Porter's model of five competitive forces 24 Figure 1.3 – Value chain of an organization 27 Figure 1.4 – Internal – External Matrix 67 2.1 – Analysis of SWOT matrix 29 Table 2.2 – Changes in concentrated growth strategy 29 Table 2.3 – Changes in integrated growth strategy 31 Table 2.4 – Some major indicators in 2010 as against 2009 37 Table 2.5- External Factor Evaluation (EFE) 55 Table 2.6 –Asset and financial statement of three most recent years 58 Table 2.7 – Key financial indicators of the most recent three years 60 Table 2.8– The constructed civil works 63 Table 2.9 –The constructed industrial works 67 Table 2.10– Finished infrastructure works 68 6 Table 2.11– Assigned weighted score 73 Table 2.12– Comparison between technology equipment of UCIC 74 and four other companies in the sector Table 2.13– Outcome of combination of UCIC’s sustainable criteria 76 Table 2.14- Internal Factor Evaluation matrix 79 Table 2.15– SWOT matrix application for UCIC 80 Table 2.16– QSPM matrix 84 Table 2.17 - UCIC’s capital mobilization roadmap 2010 - 2015 88 Table 2.18–Structure of installation and construction works in 2010- 92 2015: Table 2.19–Main estimated criteria for 2010 - 2015 93 3.1 –Structure of UCIC’s groups of activities 68 Chart 3.–Number of employees by qualification level as at 70 1/2010 7 ASSERTION We – the authors of the study “Business development strategic planning for the Hanoi Urban Investment and Construction Joint Stock Company in 2010 – 2015” affirm that this is the first time this topic, which was approved by the management of UCIC before started, is studied.
Data of the report was officially provided in written by UCIC and from other official sources without breaching copyrights or being misquoted. Hanoi, November 7th 2010 THE AUTHORS 1. Nguyễn Duy Thắng (Team Leader) 2. Lê Anh Tuấn 3.
Bùi Quang Đạo 8 ACKNOWLEDGEMENT We would like to first sincerely thank the management of UCIC for enabling us to apply and practice our knowledge in analyzing the company’s current status based on factual and sufficient data, aiming at finding appropriate solutions to the study. In addition, we would like to express our grateful to our professors and PhD lecturers who enriched our corporate governance skills and knowledge throughout the course. These not only lay essential background for this study but also provide us with applicable experience for practical uses in corporate management. Last but not least, we would also like to specially thank the Academic Board of Griggs University for your supervision during our research and preparation for this study.
ABOUT THE AUTHORS 9 INTRODUCTION I. Justification of the necessity of the capstone project One year after the global financial crisis, the world’s and Vietnam’s economy in 2010 are considered being back on track with large efforts of policy makers, leaders and companies’ management. As 2009 came to its end with an impressive GDP growth rate of 9%; economists foresee a minimum GDP growth of 11. Vietnam’s GDP growth rate of the first six months was 6%; CPI has been held off in the second quarter and is expected to grow 4.78% compared with December 2009.
In the first half of the year, total value created by the construction sector increased by 25% in comparison with the same period of last year, in which installation value was 29.8 billion VND – 28% up compared with the same period of 2009. Some companies’ productivity was much higher in the first 6 months of 2010 than in 2009’s same period1. Nevertheless, going together with certain optimistic forecasts and impressive growth indicators are difficulties and instability of the world economy. As a consequence of the financial crisis, many economies have not been able to fully recover and have fallen into deep depression.
Noticeably, during the first months of the year, IMF raised red alert about Europe’s public debt 2. For Vietnam, despite the recovery of the economy, the macro balance has remained vulnerable. In 2009, the credit balance was 8 - times higher than the economy’s growth rate. The domestic construction significantly stagnated because the capital investment flows were tightened, and material prices fluctuated seriously, delaying and hindering many projects.
1 Hanoi Construction Corporation: 4,244 billion VND, increasing 33% compared with last year’s period; Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO): 1,719 billion VND - up 88.2%; Viglacera Corporation: 1,481 billion VND - up 165% 2 http://www.com/article/idUSTRE6391B620100410 10 Besides, it has not been as easy to access and mobilize loan capital sources as before. Lack of capital has made it impossible to start many projects or led to a jumping budget deficit of 6.9% of GDP and payment deficit of 1. Although the construction sector’s value has increased, there have been a number of weaknesses as a result of the economic crisis and market’s instability. During the first 6 months of 2010, many enterprises had high productivity but most are passive due to lack of capital and labour forces, and limited technology base.
Especially, newly – established medium – sized and small enterprises or those which have just been transformed from state – owned enterprises into joint stock companies have been facing difficulties in terms of capital and getting new projects. In addition, the operation and management of many of those companies have not met requirements in the new context of broad business geographical areas. Hanoi Urban Investment and Construction Joint Stock Company has been transformed into joint stock company since 2007 with register capital of 2. In 3 years following the transformation, the company’s business results and profits have been low and fluctuated.
The company’s total 3 – year profit was just 400 million VND in which that of 2008 was only 16 million VND, that of 2009 and the first half of 2010 slightly increased but remained lower than other companies in the industry. Besides, the company’s capital source is mainly loan. This reflects a risky capital base of a construction company’s credit structure. Moreover, limited capital source prevents the company from following regulations on investors and bidders in high – value bids.
Furthermore, the company’s management and lack of consensus among shareholders have prevented the company from shaping and implementing strategies and objectives. In such context, it is critical to establish suitable solutions and business development strategies for the company. These strategies not only help the company avoid being acquired or merged, get out of the situation of a small, crumbled and inactive business, but also establish the foundation for the company’s changes in terms of market position and capacity. 11 Keeping in mind the above rationales, the topic “Business development strategic planning for Hanoi Urban Investment and Construction Joint Stock Company in 2010 - 2015” is selected for its significance to the company in particular and to the construction industry in general.
Research objectives and applicability The research objective of the topic is practically meaningful. The research provides an overview of activities and development direction of Hanoi Urban Investment and Construction Joint Stock Company in the post financial crisis period as well as in the fierce competition condition among construction companies. Particularly, significant attention is paid on tunnel construction, an essential area in transportation and hydroelectric infrastructure which are considered the locomotives of the country’s economy. Therefore, the primary objects of this study are subterranean construction companies, as well as individuals and organizations operating in this field.
The study will set out a panorama of the operations in Hanoi Urban Investment and Construction Joint Stock Company in recent years, analyzes operational strategies, recommends some solutions that help reorganize management structure, strengthen business strategy and boost other operation strategies, aiming at strengthening the company in terms of entrance barrier and the company’s value in the condition of post financial crisis and growing fierce competition. Besides, the topic is used as a reference for projects and other research on management in construction industry and on operation efficiency of construction companies over the last periods. The study also has theoretical value which is a new sight into the company’s strategies and business management methods. Scope of the research work Despite the many lessons on business performance of construction companies drawn from the post financial crisis period, our research work, due to certain constraints and obstacles, concentrates only on UCIC’s business development 12 strategies, which are in central interest of its Board of Management and other subterranean construction companies.
Subsequently, the capstone project content is adhered to studying the factors that affect UCIC's sustainable growth from strategic points of view and given the post financial crisis period. Research methodology The combination of qualitative and quantitative research method has deliberately applied in this research.