MASTER IN BUSINESS OF ADMINISTRATION - MBA CAPSTONE PROJECT REPORT BUILDING COMPETITIVE STRATEGY AT VIETNAM - ITALY STEEL (VIS) 2020 -2025 1 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINEES ADMINISTRATION PROGRAM MASTER IN BUSINESS OF ADMINISTRATION - MBA CAPSTONE PROJECT REPORT BUILDING COMPETITIVE STRATEGY AT VIETNAM - ITALY STEEL (VIS) 2010 -2015 Group No: 06 Class: GAMBA 01-N02 Students: Le Quy Lan – Leader Tran Quang Duong Pham Manh Cuong Pham Thi Cam Ly. 2 COMMITMENT We hereby would like to confirm that the content of this captones has not been submitted to nay other research or training program. We also certified that we dedicated our full efforts in applying knowledge gained in the MBA program to fulfill this study. 3 ACKNOWLEDGEMENT Firstly, we would like to express thanks to the Schools, professors, experts, lectures and staffs of THE CENTER FOR EDUCATIONAL TECHNOLOGY AND CAREER DEVELOPMENT, HANOI NATIONAL UNIVERSITY and GRIGGS UNIVERSITY – USA, who were always with us during the course.
4 Via this course, we learn have chance to approach a high education with advanced teaching method, method of theoretical application and information gathering in management practices in for improved business efficiency. Regarding this captone, we would like to thank Mr. Dung for his guidance and help for its improvements. Yours Sincerely! Table of content Engagement……………………………………………………………………….
Research objective and purpose.3 CHAPTER 1: THEORETICAL BACKGROUND. Theory on business strategy.Business strategy in enterprise.Typical features of a business strategy.Role of business strategy:.2 Process of business strategy formulation. External environment analysis.2 Industry environment analysis:.Internal environment analysis 17 1.1Analysis of business results:.2Analysis of resources:.Building strategic options 24 1.2 Types of competitive strategies.1 Cost Leadership Strategy.Selecting the optimum strategy 32 1.Business strategy implementation 35 CHAPTER 2: EVALUATION ON THE CURRENT SITUATION AND COMPETITIVE STRATEGY AT VIS.1 Overview of Vietnam Italy Steel (VIS).3 Business results from production and business of VIS in recent years42 2.2 Introduction of VIS steel products.Production technology and assembly 42 6 2.VIS Steel Products 42 2.3 Business environment analysis of VIS steel products.Current situation of steel market 44 2.Macro environment analysis 46 2.2Political and legal environment:.Industry environment analysis: 48 2.1Evaluation on competitors:.2Bargaining power of buyers:.3Bargaining power of suppliers:.Internal environment analysis 54 2.1Analysis of resources:.2Current situation of business performance at VIS.4 Evaluation of opportunities, threats, strengths, weaknesses.Weaknesses : 65 CHAPTER 3: BUILDING COMPETITIVE STRATEGY AT VIS, PERIOD 2010-2015 3.1 Development orientation of VIS:.1Long term objectives:.2Shorterm objectives for 2010.Building strategic solutions: 69 3.Implementation solutions for the business strategy of VIS 74 3.1Reducing production cost:.2Improvement on the products quality.4Improving the HR quality.5Investment in transportation business.3 Neccessary condition for strategyimplementation.4 Road map for implementation solutions of business strategy.5 Recommendations and conclusion. Executive summary: The market economy, together with the trends of integration into the world economy always bring about both opportunities and challenges for enterprises.
For their survival and development in such a tough competition of market economy mechanism, enterprises need to be proactive in their business operation, always head for suitable ovements in provided circumstances to catch up all opportunities for best performance efficiency Therefore, it is definitely vital to work out how to operate efficiently for higher profit because profit will decide the survival and development of all businesses. Then, study should be conducted on strategic business planning to find out new development orientations, improve the efficiency of business performance for the enterprise. In the light of that, our group including 04 students decided to choose the topic of “Building Competitive Strategy at VIS 2010 – 2015 for our final MBA captone. We do hope that we can make analysis good contribution to the development of the enterprise thanks to our knowledge gained from the MBA program.
Research objective and purpose 2.1 Objectives: - Assessment on the business results of VIS in the period of 2006 – 9/2009 and anticipation of the market trends of these products - Evaluation on the competitiveness of steel products on the market - Study of the base for business strategy formulation, strategy formulation process, selection of the optimum strategy for the enterprise to build up the most suitable business strategy for VIS.2 Purpose: - Market development - Product competitiveness improvement - Corporate position enhancement - Increase of business performance efficiency 3. Research scope: From the theoretical background to practical analysis, this study is limited to the activities of VIS. The concrete research object would be the steel products of VIS. The study will focus on the evaluation and assessment of the current business strategy of VIS, period 2006-2009, then formulation and selection of a suitable business strategy for these products to 2015.
Research methodology: The main method used in the study of this thesis is materialist interpretation, which based on practical surveys on VIS and other enterprises. Besides, other methods are also applied such as analysis, Statistics, Synthesis. Data source: - Statistics from VIS. - Statistics from Vietnam Steel Association (VSA).
Importance: 9 - Regarding theoretical aspect: application of general theories on strategic business planning and competition on the particular case of an enterprise - Regarding the practical aspect: become premises for the business development, competitiveness enhancement for steel products of VIS, - This captone can be used as a reference of strategic business planning for other enterprise of the same industry. Limitation: The research problem mainly focuses on VIS’ activities and the scope is limited within the VIS Company. Expected outcomes: - Finding out the strengths, weaknesses of VIS Company and its steel products. An analysis of the business environment of steel products, including also the competitive factors.
- Building Competitive Strategy for VIS, period 2010-2015 9. Research structure: In addition to the introductory and conclusion, this thesis include three chapters: Chapter 1: Theoretical background Theories applied in studying the strategic business planning for steel products of VIS are theory on strategy and theory on competition. Chapter 2: Evaluation on the current situation and Competitive Strategy VIS This part will provide an overview of VIS and its steel products, including an analysis of business environment of VIS’ steel products and an evaluation on their competitiveness Chapter 3: Building Competitive Strategy for VIS, period 2010-2015 10 Defining the objectives of company and basing on that, select a suitable business strategy for these products Due to the limitation on knowledge and experience, this thesis is subjects to some shortcomings. We do hope to receive recommendations and feedbacks from professors and colleagues to get it improved.
11 CHAPTER 1: THEORETICAL BACKGROUND 1. Theory on business strategy 1. Business strategy in enterprise 1. Definition Business strategy is the foundation of successful business.
But there are, of course, different types of business strategy. The best business strategies must steer a course between the inevitable internal pressure for business continuity and the demands of a rapidly changing world for revolutionary business strategies. "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". In other words, strategy is about: * Where is the business trying to get to in the long-term (direction?).
* Which markets should a business compete in and what kind of activities is involved in such markets? (Markets; scope). * How can the business perform better than the competition in those markets? (Advantage)? * What resources (skills, assets, finance, relationships, technical competence, and facilities) are required in order to be able to compete? (Resources)? * What external, environmental factors affect the businesses' ability to compete? (Environment)? * What are the values and expectations of those who have power in and around the business? (Stakeholders) Strategy at Different Levels of a Business Strategies exist at several levels in any organization - ranging from the overall business (or group of businesses) through to individuals working in it. Corporate Strategy - is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by 12 investors in the business and acts to guide strategic decision-making throughout the business.
Corporate strategy is often stated explicitly in a "mission statement". Business Unit Strategy - is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc. Operational Strategy - is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction.
Operational strategy therefore focuses on issues of resources, processes, people etc. Typical features of a business strategy - Achieving the purpose of improving capacity of enterprise, gaining competitive advantage. Therefore, building business strategy means thoroughly explore the comparative advantage of enterprise, focus on approaches to fully employ the strengths. - Ensuring the business safety, because there are many risky factors in business.
It’s vital to minimize the risk. - Defining the business scope, objective and fundamental conditions to achieve that objective in order to avoid stretching the resources. - Forecasting the future business environment, the more exact forecast, the more feasible business strategy. - Planning a stand-by strategy to cope with the market movements.
Role of business strategy: Strategy allows the organization to make its future in an innovative and creative. In this observation organization has creativity in action and the future of the organization is under the control of its creative activities. The most important benefit that organization obtains from the strategy is that it can identify the strategic issues and find the directions which help the organizations to achieve their goals. The advantages of strategy could be listed as, “ Increase of communication between the employees, increase of commitment amongst the managers and employees, creation of staff’s power and stock purchasing opportunity, 13 allowance for opportunity recognition and their applicable use, offer of coordination and activity control, and minimizing the impact of undesirable situations and unfavorable changes.” In addition strategy also provides the following advantages: - Support of decisions that aid in predicted and long term goals achievement.
- Providence of resources allocations to more effectively explored opportunities. - Representing the principals in identifying each member’s responsibilities. Providence of the possibility for management system of the organization to be organized and formalized. - Strengthening the teamwork and emphasizing on its advantages.
- Specification of the values and interests which are not in the same direction, evaluate their basic concepts and reconciles them.2 Process of business strategy formulation 14 Figure 1.1: Strategic Planning Process Strategic planning is an overarching process used to assist council and the community to plan for the future and realize their vision. It is a continuous, systematic process for identifying intended future outcomes, how outcomes are to be achieved, and how success will be measured. External environment analysis 1.1 Macro environment The purpose of the Macro Environment Analysis is to identify possible opportunities and threats to the industry as a whole that are outside the control of the industry. There are many factors in the macro-environment that will effect the decisions of the 15 managers of any organization.
They can be divided into 6 different groups: Economic factors, technological factors, social and cultural factors, demographic factors, political and legal factors, global factors. * Economic environment: The status of macro economic environment will decide the strength and prosperity of the economy, it always have impacts on the enterprises and industries. The macro economic environment reflects the nature and orientation of the economy, in which enterprise is operating. Impacts by the macro economy on an enterprise can change its ability to create value and return.
Four important factors in the macro economy are interest rates, taxation changes, economic growth, inflation and exchange rates. * Cultural and social factors: This group includes the cultural and social aspects such as health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates.