Tài liệu Formulation of business development strategies for song da 10 joint stock company in 2015 2020

THESIS MBA TITLE Formulation of Business Development Strategies for Song Da 10 Joint Stock Company in 2015 - 2020 1 TABLES OF CONTENTS LIST OF ABBREVIATIONS.................................................................................8 LIST OF FIGURE chart AND TABLE.................................................................9 ASSERTION..........................................................................................................11 ACKNOWLEDGEMENT....................................................................................12 INTRODUCTION.................................................................................................13 I. Justification of the necessity of the capstone project 13 II. Research objectives and applicability 15 III. Scope of the research work 15 IV. Approaches 16 V. 16 Research methodology VI. Structure 16 CHAPTER I - THEORETICAL BACKGROUND..........................................18 I. Fundamental issues of strategy and modern business strategy 18 1. Viewpoints about strategy.......................................................................18 2. Typical features of a strategy..................................................................19 3. Types of business strategy.......................................................................20 3.1. Classification of business strategy by levels...................................20 3.2. Classification of business strategies by content...............................21 3.3. Classification of business strategies by process..............................21 2 II. The role of business strategies in modern business environment 22 1. Description of the formulation process of a strategy...............................22 2. Identification of corporate mission and objectives..................................23 2.1. Identification of corporate mission..................................................23 2.2. Identification of strategic objectives...............................................24 3. Analysis of business environment of a firm (external environment).......25 3.1. Impacts of external environment on business strategy....................25 3.2. Evaluation of the environnemental impacts....................................29 4. Internal analysis of an enterprise.............................................................29 4.1. Analysis of the value chain of an organization................................30 4.2. Analyses of financial situation........................................................31 5. Strategy formulation and selection..........................................................32 6. Formulation of strategy by level..............................................................35 6.1. Business strategy.............................................................................35 6.2. International business strategy........................................................35 CHAPTER II – BUSINESS DEVELOPMENT STRATEGIC PLANNING FOR SONG DA 10 JSC........................................................................................36 I. II. An overview of Song Da 10 Joint Stock Company (SDT) 36 1. History and development.........................................................................36 2. Development and achievements..............................................................37 3. Organizational and management structure of the company.....................38 Analysis of corporate strategy and governance 1. 39 External environment analysis................................................................39 1.1. Macro environnent..........................................................................39 1.1.1. The economic environment...................................................39 1.1.2. Technological environment...................................................42 1.1.3. Social and cultural environment............................................43 3 1.1.4. Political and legal environment.............................................44 1.1.5. Global environment...............................................................46 1.2. Analysis of sector environment.......................................................48 1.2.1. Overview of the construction sector in 2009.........................48 1.2.2. Some issues regarding current underground construction in Vietnam.....................................................................................50 1.2.3. Summaries of opportunities and challenges for business environment of tunnel construction...........................................52 1.3. Five competitive forces...................................................................54 1.3.1. Threat of current competitors................................................54 1.3.2. Threat of new market entrants...............................................56 1.3.3. Company’s clients..................................................................56 1.3.4. The company’s suppliers........................................................59 1.3.5. Substitute products................................................................60 2. Internal environment analysis..................................................................63 2.1. Vision, mission statement, business principles and objectives of Song Da 10 Joint Stock Company...................................................63 2.2. Business performance results of the most recent three years...........65 2.3. Analysis on some financial criteria.................................................67 2.4. Key product and service analysis ...................................................69 2.4.1. Tunnel construction activities................................................69 2.4.2. Dynamite drillings.................................................................72 2.4.3. Other activities.......................................................................74 2.5. The SDT stock price.......................................................................76 4 2.6. Labor policies..................................................................................79 2.6.1. Situation of human resource..................................................79 2.6.2. Salary, bonus and allowance policy.......................................80 2.6.3. Recruitment and human resources attraction policies............80 2.6.4. Training policy......................................................................81 2.7. PR and Marketing activities............................................................81 2.8. Technological equipment................................................................82 2.9. Analyses of sustainable comparative advantages............................82 3. 2.10. Resources and potential competences 83 2.11. Internal Factor Evaluation 89 SDT’s key business strategies using SWOT matrix................................91 CHAPTER III. STRATEGIC SOLUTIONS AND RECOMMENDATIONS..97 I. Strategic solutions 1. 97 Strategic solutions...................................................................................97 On the one hand, the mixed strategy is suitable with the company’s current situation..............................................................................99 On the other hand, this strategy well serves the new plan..........................99 2. Objectives of the strategy......................................................................100 3. Strategic solution implementation.........................................................101 3.1. Product restructuring strategy.......................................................101 3.1.1. Product restructuring...........................................................101 3.1.2. Main estimated criteria for 2010 – 2015..............................103 3.1.3. Background of profit generation..........................................103 3.2. Capital balancing strategy.............................................................105 3.3. Research and training strategy......................................................105 5 3.4. Competition strategies...................................................................107 3.5. International business strategy......................................................108 3.6. Marketing Strategy........................................................................110 3.6.1. Marketing intelligence (MI).................................................111 3.6.2. Formulation of market dossiers and sales projection...........111 3.6.3. Studies of customers’ behaviors..........................................112 3.6.4. Market segmentation and location goal...............................112 3.6.5. Follow-up steps...................................................................112 II. RECOMMENDATIONS 113 1. Improvement of the company structure.................................................113 2. Proper assessment and allocation of resources......................................114 3. Improvement of the steering information system for the implementation of the strategy................................................................................................115 3.1. Management information channel:................................................115 3.2. Feedback channels:.......................................................................116 4. Strict inspection.....................................................................................116 5. Human resources attraction, staff training, recruitment and appointment of quality personnel.......................................................................................117 6. Technology renovation and inverstment................................................117 7. Establish the company’s peculiarities....................................................117 III. Obstacles in the course of the studies and future orientation 118 1. Measurements.......................................................................................118 2. Time for studies.....................................................................................119 CONCLUSION....................................................................................................120 BIBLIOGRAPHY...............................................................................................121 I. Books 121 6 II. Other publications 121 III. Websites 122 Appendix..............................................................................................................123 I. Names and Responsibilities of Group's Members II. List of other organizations and individuals, who joined in the research.. process 123 124 III. Organization structure of SDT 127 7 LIST OF ABBREVIATIONS SDT SWOT HASTC HosE US BM IT GDP SBU Song Da 10 Joint Stock Company Strengths, Weakness, Opportunities, Threats Ha No Securities trading center Ho Chi Minh Stock exchange The United States Board of Management Information Technology Gross Domestic Product Strategic Business Unit 8 LIST OF FIGURE CHART AND TABLE 1. FIGURE Figure 1.1 – Business strategy formulation procedure 23 Figure 1.2 – Michael Porter's model of five competitive forces 27 Figure 1.3 – Value chain of an organization 30 2. TABLE Table 2.1 – Analysis of SWOT matrix 32 Table 2.2 – Changes in concentrated growth strategy 33 Table 2.3 – Changes in integrated growth strategy 33 Table 2.4 – Some major indicators in 2009 as against 2008 39 Table 2.5 –List of capital and market share of underground construction companies in Vietnam as at 3/2010 55 Table 2.6– List of finished and under-construction works of SDT 57 Table 2.7- External Factor Evaluation (EFE) 62 Table 2.8 –Asset and financial statement of three most recent years 65 Table 2.9 – Key financial indicators of the most recent three years 67 Table 2.10– Finished hydroelectric works 70 Table 2.11 –Finished traffic works 73 Table 2.12– Finished hydraulic works 73 Table 2.13–Tangible resources 83 Table 2.14– Intangible resources 84 Table 2.15– Criteria to define core competencies 86 9 Table 2.16– Outcome of combination of SDT’s sustainable criteria 87 Table 2.17- Internal Factor Evaluation matrix 89 Table 2.18- Image competitive matrix 90 Table 2.19– SWOT matrix application for SDT 92 Table 2.20– Product structure in 2010 - 2015 101 Table 2.21–Main estimated criteria for 2010 - 2015 103 3. CHarT Chart 3.1 –Structure of SDT’s groups of activities 75 Chart 3.2–The illustration of price and trading volume of SDT shares in 3 76 recent years Chart 3.3– The fluctuation of SDT stock price as compared with 77 MCV price in recent 3 years Chart 3.4– The fluctuation of SDT stock price as compared with HNX-index in recent 3 years 77 Chart 3.5–Number of employees by qualification level as at 12/2009 79 10 ASSERTION We affirm that we reserve the sole ownership of the topic “Business development strategic planning for Song Da 10 Joint Stock Company in 2010 – 2015”. Data of the thesis was provided by Song Da 10. Up to present, this is the first time this topic is studied. The members of the group are not in any conflicts with company’s interest. Hanoi, March 4th 2010 THE AUTHORS Vũ Tuấn Hùng (Team Leader) Phan Thị Quế Lê Xuân Hải Nguyễn Thị Cẩm Thơ 11 ACKNOWLEDGEMENT We would like to thank Song Da 10 Joint Stock Company for your enthusiastic support providing us data as well as arranging meetings with regard to the company’s business strategy. Besides, we would like to sincerely thank professors and PhDs who equipped us with corporate governance skills and knowledge throughout the course. These are essential background for this study as well as applicable experience for practical uses. We would also like to express our special thanks to the Academic Board of Griggs University for your supervision during the course of our research. Finally, we are particularly thankful to the valuable tutoring from Madam Nguyen Thi Tuyet Mai – PhD, Sir Pham Ngoc Thang- MA and Sir Sean Mc Gough – PhD in our completion of this research work. ABOUT THE AUTHORS 12 INTRODUCTION I. Justification of the necessity of the capstone project 2008 is a remarkable year of the post economic crisis period in Vietnam and all over the world. As part of the economic panorama, Vietnamese and world construction industries have slowed down significantly due to tightened investment flows and slumped material price that hinder and slacken many projects. As 2009 comes to its end, total business transactions attained 123,437 billion VND, which is 14.6% higher than the same period in 2008 1; there has been many ongoing large projects and they are in the finishing phase since materials price has been on the fall, interest rates has started to take effect and public investment and ODA disbursement has been strengthened. Nevertheless, many construction companies, especially those in basic construction, have faced a number of difficulties in their operation as a result of the world economic crisis. In particular, it is not as easy to approach and mobilize capital sources for investment as before. Lack in capital has prevented many projects from starting off and slacked off construction process. Moreover, operation in some companies is inefficient and has not been able to fulfill management requirements in new conditions when business areas are enlarged. Many key activities in the industry like urban construction have yet been paid appropriate attention. At the same time, investment attraction and project implementation are not carried out in a professional manner. This has major impact on companies’ profit and other economic objectives. 1 Ministry of Construction. (2010). Report on the implementation of 2009 plans; direction and key tasks of the construction industry in 2010. Hanoi: Ministry of Construction gateway. 13 Song Da 10 Joint Stock Company which specializes in subterranean constructions of Song Da Corporation has more than 30 years of developing and growing 2. The company has run many underground construction projects and now has leading market share in the industry. However, on investigating the company’s activities, it has been found out that behind successful projects and positive profits in recent years, there still exists insufficiency in the company’s activities which also occur in other companies during post global economic crisis period. Moreover, the company has not taken its full advantages to surpass other companies in the industry. Financial results do not reflect the company’s existing potentials as well as key business activities. Following WTO membership and the integration and corporation trend with regional and world organizations, construction companies have access to a variety of modern modes and technologies. These modes have energized construction companies’ developments. However, at the same time, they are disadvantages for domestic companies in competing with foreign ones as barriers to competitive advantages in such key industries like subterranean construction have gradually shaken. Under such circumstances, it is essential to seek and establish stable solutions and business development strategies for underground construction companies. Effective business development strategies not only trigger stable and sustainable development as well as many other benefits for the company but they are also significant contributions to the development of the industry and the country’s economy. Keeping in mind the above rationales, the topic “Formulation of Business Development Strategies for Song Da 10 Joint Stock Company in 2010 - 2 Song Da 10 Board of Management. (2010). Annual Report 2009. Hanoi. 14 2015” is selected for its significance to the company in particular and to the construction industry in general. II. Research objectives and applicability The research objective of the topic is practically meaningful. The research provides an overview of activities and development direction of Song Da 10 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 Song Da 10 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. III. 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 SDT’s business development 15 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 SDT's sustainable growth from strategic points of view and given the post financial crisis period. IV. Approaches  Conduct surveys and collect information for summary and analysis, using logical approaches;  Hold field visits for assessment and comparative studies;  Conduct consultation with international experts on management of construction companies and subterranean construction companies;  Organize interviews with domestic and foreign specialists, and the Management construction companies to get their consultation ideas for improvement of the capstone project's recommendations; V. Research methodology In elaborating the whole capstone project, the dialectical and historical materialism is utilized in combination with other approaches such as analysis, statistical work, group survey, scientific abstractionism and illustrative models. In analyzing the company's financial performance, cross-sectional and time-series techniques, trend analysis, common-size statements and financial ratio analysis are tapped. In other analyses, five forces, SWOT models, and several other theoretical models are to be presented in Chapter I and used. 16 VI. Structure This research includes three chapters. Chapter one presents the theoretical background and new approaches of the capstone project. Chapter two is the core of the whole paper. It provides an analysis and assessment of current performance of SDT in view of the operations of the entire construction service. It also looks into some issues of SDT's business strategies and governance, through which constraints and the roots of such constraints can be identified. The last Chapter gives an overall briefing of the research work, puts forth measures and recommendations, and points out arising problems and obstacles that prevent the authors from fulfilling their capstone project to the desired quality. 17 CHAPTER I - THEORETICAL BACKGROUND I. 1. Fundamental issues of strategy and modern business strategy Viewpoints about strategy From the traditional viewpoint of Michael Porter3, a strategy can be defined as “the study to identify the most suitable competitive position for an industry, and major scope of activities where competition is present”. Strategy, according to him, emphasizes the point of competition. Alfred Chandler – a professor from Harvard University 4 has another idea. “Strategy", in his view, "is to define long-term key goals of a company, action programs and allocation of necessary resources to achieve those goals”. James Quinn5 from Dartmouth University defines “Strategy as the model or plan of an organization to integrate steering goals, corporate policies and priority order of actions in a unified entity”. William F. Gluek6 is of the view that “Strategy is a unified, comprehensive and integrated plan designed to ensure a firm's achievement of its business targets”. Planning-based strategy development approach is no longer in fashion. Practice shows that detailed plans that are formulated formally sometimes fail, and contingency plans, therefore, are needed in the business operations of a company. In this regards, traditional viewpoints show certain weaknesses. Strategy, in its nature, 3 Porter,M.E. (1981). The contribution of Industrial Organization to Strategic Management. New York: Wiley. 4 http://www.news.harvard.edu/gazette/2007/05.17/27-chandler.html (June, 10, 2009) 5 Quinn, J., B. (1980). Strategy for change: Logical Inscrementalism; Homewood, Illinois, Irwin 6 Lawrence R. Jauch and William F. Gluek(1989) Business Policy and Strategic Management 18 is a science and a tactic in achieving targets. Such nature, however, is not emphasized in the above viewpoints. In such context, newer concepts of a strategy gradually replace the traditional ones. Endeavors have been made to reflect the nature of the term "strategy" in these concepts while ensuring its compatibility with the changing business environment. With this approach, the modern concepts do not emphasize the projection and planning aspects but rather the selection of strategies that respond to the targets set out by an organization. It is obviously uneasy to give a clear definition of a strategy. Yet this problem can be solved if attention is paid to each strategy’s factors, which are meaningful for any organization. In any circumstance, these factors depend strictly on the current situation of each enterprise, member organization as well as organization structure. It is necessary to separate the definition of a strategy and the strategy formulation process in order to have a unified definition with the assumption that we had a consistent strategy with goal, orientation and could face with changes in a fluctuating environment. 2. Typical features of a strategy It can be seen that the concepts of a strategy are varied. Yet, a strategy, from any angles and at any time, has some most typical features that reflect the nature of the business strategies of an enterprise specified below:  A business strategy must clearly define the key goals to be achieved in specified periods and must grasp at all aspects and levels of the production and business activities of an enterprise.  Business strategies must be reflected in a continued process from development to achievement, assessment and review, and adjustment of the set goals. 19  A business strategy must ensure optimal mobilization and full exploitation of the firm’s resources like manpower, capital, technique and technology; and ensure that the firm's advantages are promoted and opportunities are grasped to gain comparative advantages in the market.  A strategy is an instrument that sets out long-term objectives of an enterprise; and  A business strategy defines the clear scope of competition of an enterprise. The essence of this characteristic is to identify clearly the business scope of an enterprise. This is an important step of an enterprise in reflecting business environment, positioning strategies, allocating resources and administering its investment portfolio. Two basic questions raised are: What are we trading in? and What should we trade in? This is a relatively complex problem since the market segmentation has a great impact on identification of organizational structure of a company.  A business strategy creates interaction between opportunities and threats of a company, and between its strengths and weaknesses, from which its competitiveness is built. This feature highlights a key aspect of strategy – the long-term sustainable competitive advantage of a firm over its major competitors in the involving business sector. It is a modern approach to make a research on competition status of an enterprise. 3. Types of business strategy 3.1. Classification of business strategy by levels The common level-based classification of a strategy is: 20