MEIHO UNIVERSITY Graduate Institute of Business and Management MASTER THESIS Factors affecting Effectiveness of Petroleum Market Development of CAGICO in Ho Chi Minh City and the Neighboring Provinces, Vietnam In partial fulfillment of the requirements for the degree of Masters of Business Administration Advisor: Dr. Kuo-Hung Tseng Co-advisor: Dr. Nguyen Trung Truc Graduate Student: Nguyen Duc Thao December, 2010 ACKNOWLEDGMENTS At first, I would like to say many thanks so much to the Boards of Rector of both Meiho University, Taiwan and Ho Chi Minh City University of Industry, Vietnam for giving me the opportunity participating EMBA program in the last two years. Secondly, I would like to express my great thanks to Prof.
Kuo-Hung Tseng, Chair of Graduate Institute of Business and Management, Meiho University, Taiwan; Dr. Nguyen Trung Truc, Professor of Business Administration Faculty, Ho Chi Minh City University of Industry, Vietnam for useful guide and advice to finish the thesis. Special thanks to Associate Prof. Nguyen Minh Tuan, lecturer of Department of Business Administration, Ho Chi Minh City University of Industry; Dr.
Wei-Shuo Lo, Head of Department of Finance, Meiho University for much valuable remarks and evaluation on my thesis. Many thanks to Professors and Administrative Staffs of both of universities, EMBA2 classmates, and colleagues at CAGICO for helps, supports and encouragement throughout the study duration. Sincerely thank to Mr. Nguyen Quang Vinh, PhD candidate at the National Sun Yat- sen University, College of Management, Taiwan for consulting and sharing experience of doing research.
Finally, a deep thanks to my wife, my children and family’s people for all things sacrified to my study during the last two years, when I was in Vietnam and in Taiwan. So much appreciation to all of you! I Factors affecting Effectiveness of Petroleum Market Development of CAGICO in Ho Chi Minh City and the Neighboring Provinces, Vietnam ABSTRACT Can Gio Trading Services Joint Stock Company (CAGICO) is a 40 percent-state- owned company. However, 96 percent of total sales revenues were from doing petroleum business. Innovation process accompanying with global integration and national economic development have created fierce competition among enterprise doing petroleum business.
The Company 2009 Annual Report has clearly identified some strategic and managerial problems in which petroleum market development strategy was paid much attention by top management. By clarifying such effects via Internal Factor Evaluation (IFE) matrix and external factors via External Factor Evaluation (EFE) matrix as well as via SWOT matrix, the research findings showed that external factors as Economy, Social-Cultural- Demographic-Environmental, Political-Governmental-Legal, Technology and Competition have positive significant effect on the development of petroleum market of CAGICO. The research also showed that internal factors as Personnel Management, Marketing, Finance/Accounting, Production/Operation, Research & Development and Management information system have positive significant effect on the development of petroleum market of CAGICO. However, only the external factors including Society/Culture Demography/Geography and Competition caused significant effects on Effectiveness.
Furthermore, only two internal factors including Management and Research & Development caused significant effects on Effectiveness. In conclusion, there are four factors have a significant effects on the Effectiveness of petroleum market development. The corresponding strategies designed according to the analysis of TOWS matrix are 1) Implying good management to take advantages of current Society-Culture- Demography-Geography; 2) Implying good management to against competition; 3) Society-Culture-Demography-Geography promotes the development of R&D; and 4) Investing more to R&D to other product and service that other competitors do not offer. Keywords: CAGICO, petroleum business, strategy, market development, SWOT analysis II Factors affecting Effectiveness of Petroleum Market Development of CAGICO in Ho Chi Minh City and the Neighboring Provinces, Vietnam Contents ACKNOWLEDGMENTS .VII Chapter 1 Introduction .3 Research Scope and Limitations.4 Definition of Terms.
3 Chapter 2 Literature Review.1 Strategic Management and Market Development Strategy .1 Vietnam economic environment.2 Vietnam social, cultural, demographic, and environmental forces.3 Vietnam political, governmental, and legal forces.4 Vietnam technological forces.5 Vietnam competitive forces.5 Research and Development (R&D).6 Management Information System.4 Threats – Opportunities – Weaknesses – Strengths (TOWS) Matrix .5 Effectiveness of Development of Petroleum Market. 20 Chapter 3 Research Methodology.5 Validity and Reliability. 30 Chapter 4 Analysis and Results .1 Analysis of Demographic Data.1 Frequency analysis of gender, position and working field variables.2 Descriptive analysis of age and working time variables.1 Testing of hypothesis H1.2 Testing of hypothesis H2.3 Testing of hypothesis H3.4 Testing of hypothesis H4.5 Testing of hypothesis H5.6 Testing of hypothesis H6.7 Testing of hypothesis H7.8 Testing of hypothesis H8.9 Testing of hypothesis H9.10 Testing of hypothesis H10.11 Testing of hypothesis H11.3 Analysis on Relationship between External Factors and Effectiveness of Petroleum Market Development .4 Analysis on Relationship between Internal Factors and Effectiveness of Petroleum Market Development .5 Threats – Opportunities – Weaknesses – Strengths (TOWS) Matrix. 41 Chapter 5 Conclusions and Recommendations.2 Discussion and Recommendation.
45 Appendix 1 English Questionnaire. 46 Appendix 2 Vietnamese Questionnaire. 52 IV Tables Table 2-1 The Threats – Opportunities – Weaknesses – Strengths (TOWS) Matrix .19 Table 3-1 Reference of Questionnaire Design.27 Table 3-2 Cronbach’s Anpha Values Calculated.30 Table 4-1 Analysis on Variable of Gender, Position and Working Field.31 Table 4-2 Analysis on Variable of Age and Working Time.32 Table 4-3 Model Summary of Relationship between Economy and Effectiveness.32 Table 4-4 Linear Regression between Economy and Effectiveness.32 Table 4-5 Model Summary of Relationship between Social/Cultural/Demographic/Environmental and Effectiveness .33 Table 4-6 Linear Regression between Social/Cultural/Demographic/Environmental and Effectiveness .33 Table 4-7 Model Summary of Relationship between Political/Governmental/Legal and Effectiveness .34 Table 4-8 Linear regression between Political/Governmental/Legal and Effectiveness .34 Table 4-9 Model Summary of Relationship between Technology and Effectiveness.34 Table 4-10 Linear Regression between Technology and Effectiveness .34 Table 4-11 Model Summary of Relationship between Competition and Effectiveness.35 Table 4-12 Linear Regression between Competition and Effectiveness .35 Table 4-13 Model Summary of Relationship between Personnel Management and Effectiveness .35 Table 4-14 Linear Regression between Personnel Management and Effectiveness.36 Table 4-15 Model Summary of Relationship between Marketing and Effectiveness .36 Table 4-16 Linear Regression between Marketing and Effectiveness.36 Table 4-17 Model Summary between Finance/Accounting and Effectiveness .37 Table 4-18 Linear Regression between Finance/Accounting and Effectiveness.37 Table 4-19 Model Summary of Relationship Production/Operation and Effectiveness.37 Table 4-20 Linear Regression between Production/Operation and Effectiveness.37 Table 4-21 Model Summary of Relationship between Research & Development and Effectiveness .38 Table 4-22 Linear Regression between Research & Development and Effectiveness.38 V Table 4-23 Model Summary of Relationship between Management Information System and Effectiveness .39 Table 4-24 Linear Regression between Management Information System and Effectiveness .39 Table 4-25 Model Summary of Relationship between External Factors and Effectiveness .39 Table 4-26 Linear Regression between External Factors and Effectiveness.40 Table 4-27 Model Summary of Relationship between Internal Factors and Effectiveness .40 Table 4-28 Linear Regression between Internal Factors and Effectiveness .41 Table 4-29 The Threats – Opportunities – Weaknesses – Strengths (TOWS) Matrix .42 VI Figures Figure 2-1 The Firm’s External Environment .5 Figure 2-2 Relationships between Key External Forces and an Organization .18 Figure 3-1 Research Framework.23 Figure 3-2 Research Steps .25 VII Factors affecting Effectiveness of Petroleum Market Development of CAGICO in Ho Chi Minh City and the Neighboring Provinces, Vietnam Chapter 1 Introduction This chapter includes four sections: (1) research motivation: introducing reasons of conducting the study, (2) research purpose: stating what the study aims to, (3) research scope and limitation: mentioning scope and limitation of the study, and (4) definition of terms: referring to the definition of CAGICO, strategy, and Market Development Strategy.1 Research Motivation Petroleum business is a special type of business in Vietnam. The business is affected by global petroleum price and is strictly controlled by government agencies (Qui Long & Kim Thu, 2010, p.
In Vietnam, petroleum industry is recognized as one of the crucial industries of the country, one of the most important components of the national energy security, and one of the essential types of consumer product. Vietnamese economic development experiencing the stage of entering global integration has consequently resulted in the great demand of petroleum consuming. It has also sharpened competition between enterprises associating with petroleum industry. Therefore, a good examination, evaluation and control to both internal and external factors affecting business operation would certainly be much necessary for the consolidation of every enterprise.
CAGICO – Can Gio Trading Services Joint Stock Company – does business in Ho Chi Minh City with different products and services. However, 96% of total sales revenues are from doing petroleum business. There are 155 employees working at different business establishments. The company runs as a general agency (GA) for many primary importers of petroleum such as Petrolimex Saigon, PETEC Trading and Investment Corporation, SaiGon Petro, PMT Company, etc., There are 30 retail agencies located in Ho Chi Minh city and the neighboring provinces such as Vung Tau, Binh Duong, Dong Nai province.
Company’s customers are big manufacturing plants in industrial zones that 1 often consume great volume of petroleum such as Thu Duc Electric Power and Can Tho Electric Power. With the two company-owned petroleum bonded warehouses and the one rent in Petrolimex Saigon establishment, the company assures a quick meet great demand by its customers. According to The 2009 Business Information Report, in 2009, total revenues was appropriately equal to US$ 87.32% of the year’s objective plan. Much of efforts have been done in seeking new customers for expanding market to increase profitability.
Such achievement could be recognized as an evidence of great effort by all management and staff in the condition of being badly affected by global economic recession. Also, according to the report, there were many managerial issues still remained without effective solutions, such as in expanding market share and filling the gaps of lack of qualified staff, still remained without effective solutions. The fiercer the competition is, the harder CAGICO faces to be alive and developed. So, identifying and understanding factors that significantly affect the effectiveness of enhancing petroleum market share is much necessary for CAGICO.
That is also the motivation of this study.2 Research Purpose This study aims to identify and evaluate factors affecting effectiveness of petroleum market development strategy of CAGICO. The research findings would be considered as a basis for evaluating the existing market development as well as introducing a new market development strategy for CAGICO to achieve its new business objectives. Research objectives of the study are: 1. Identify and evaluate external factors affecting the effectiveness of petroleum market development to CAGICO.
Identify and evaluate internal factors affecting the effectiveness of petroleum market development to CAGICO. Introduce solutions of enhancing effectiveness of petroleum market development of CAGICO.3 Research Scope and Limitations As mentioned earlier, CAGICO does business in Ho Chi Minh City with different products and services, however, 96% of total sales revenues are from doing petroleum business. This research mainly focuses on petroleum business area. Furthermore, considering the real business activities at present real market, the study also focus on Ho 2 Chi Minh City and its neighboring provinces such as Dong Nai, Binh Duong, Vung Tau, etc., located in southern Vietnam.4 Definition of Terms CAGICO CAGICO is the abbreviation of Can Gio Trading Services Joint Stock Company.
Founded in 1978 by Ho Chi Minh City People’s Committee (Decision No. The company has changed its name, business function as well as organization structure many times since then by its Governing Body – Ho Chi Minh City People’s Committee. In 2002, the company was officially named Can Gio Trading Services Joint Stock Company by Ho Chi Minh City People’s Committee (Decision No. The company offers a variety of different products and services; however, purchasing and selling petroleum is its major business.
Strategy A strategy is a long-term direction that is made by the top manager of an organization. David (2003) stated that strategies are means to meet the long-term goals. A good and clear strategy can help the organization with knowing its position, ways, what, who, where, when, and how (Sirisavan Phathaphone, 2002). A strategy of the corporation forms a comprehensive master plan starting how the corporation will achieve its mission and objectives.
It maximizes competitive advantage and minimizes competitive disadvantage (Wheelen & Humger, 2002).
