Tài liệu Building business strategy in real estate for company 59, the ministry of defense

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN VĂN ANH BUILDING BUSINESS STRATEGY IN REAL ESTATE FOR COMPANY 59, THE MINISTRY OF DEFENCE XÂY DỰNG CHIẾN LƯỢC KINH DOANH BẤT ĐỘNG SẢN CÔNG TY 59, BỘ QUỐC PHÒNG LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2018 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN VĂN ANH BUILDING BUSINESS STRATEGY IN REAL ESTATE FOR COMPANY 59, THE MINISTRY OF DEFENCE XÂY DỰNG CHIẾN LƯỢC KINH DOANH BẤT ĐỘNG SẢN CÔNG TY 59, BỘ QUỐC PHÒNG Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. TRẦN HUY PHƯƠNG Hà Nội - 2018 COMMITMENT The author undertakes that the results of the study in the dissertation are the results of the author's own work primarily obtained during study and research and not yet published in any other research by others. Research results and other people's materials (quotations, tables, formulas, graphs and other materials) used in this dissertation have been approved by the authors and cited in detail. I am fully responsible to the scientific council on thesis defence, Hanoi School of Business and Management and the law for the above commitments. Student Nguyen Van Anh ACKNOWLEDGEMENT During my study and thesis writing process, I received valuable guidance from lecturers at the Hanoi School of Business and Management – Vietnam National University, Hanoi. First of all, I would like to thank the leaders and lecturerer for their hard work. I would like to thank for the heartedness of Ph.D. Tran Huy Phuong to instruct me in the preparation of graduation thesis. I also sincerely thank the staff of Company 59 to support, provide information and facilitate me for completion of my research. I give my thanks to my wife and two lovely children for their spiritual support motivating me to complete the dissertation at the time of busy and pressure from many factors. With the supports from many sides, I also made great efforts to complete the thesis in the best way but due to certain limitations on knowledge, time and information, the work has certainly existed shortcomings. I hope to receive the sympathy, contributions and supports of lecturers and readers to complete the topic. Thanks and best regards. TABLE OF CONTENTS LIST OF TABLES ...................................................................................................... i LIST OF FIGURES.................................................................................................... ii INTRODUCTION .......................................................................................................1 2. Overview of the research status ..............................................................................2 3. Objectives of the research .......................................................................................4 3.1 General objectives .............................................................................................4 3.2 Specific objectives ............................................................................................4 4. Subjects of the research ...........................................................................................5 5. Scope of the reseach ................................................................................................5 6. Methods of the research ..........................................................................................5 CHAPTER 1: THEORETICAL BASIS OF BUSINESS STRATEGY IN REAL ESTATE ......................................................................................................................7 1.1. The general theories of business strategy ............................................................7 1.1.1. Concept of strategy and business strategy ....................................................7 1.1.2. Characteristics of business strategy ..............................................................8 1.1.3. The role of business strategy .........................................................................9 1.1.4. The levels of strategy ....................................................................................9 1.2. The process of building business strategy of enterprises ...................................12 1.2.1. Identification of the mission, the current business objectives of the business .13 1.2.2. Assessment on the external environment of the business ...........................15 1.2.3. Analysis on the internal business environment ...........................................20 1.2.4. Development of strategic options ...............................................................23 1.2.5. Analysis and selection of strategy ...............................................................24 1.2.6. Strategy implementation .............................................................................25 1.3. The concept of real estate and property characteristics .....................................29 1.3.1. Real estate concept ......................................................................................29 1.3.2. Characteristics of real estate business .........................................................30 1.3.3. Impact of real estate business characteristics on building business strategy......30 CHAPTER 2. CURRENT SITUATION OF THE COMPANY'S REAL ESTATE BUSINESS STRATEGY AT COMPANY 59 OF MINISTRY OF DEFENSE ...........32 2.1. About the Company 59 of Ministry of Defense .................................................32 2.1.1. Introduction of Company 59 of Ministry of Defense .................................32 2.1.2. Organizational structure of company 59, Ministry of Defense...................34 2.1.3. Functions and missions of the Company 59 under Ministry of Defense ....35 2.1.4. Objectives and core values of the company 59 under Ministry of Defense36 2.1.5. Business results of the company 59 under Ministry of Defense .................36 2,2. Analysis of the external business environment of company 59, Ministry of Defense ......................................................................................................................37 2.2.1. Macro-environmental analysis ....................................................................37 2.2.2. Micro-environment analysis (sectoral environment) ..................................47 2.2.3. Identification of opportunities - challenges ................................................55 2.3. Analysis of internal environment of company 59, Ministry of Defense............56 2.3.1. Human resources of company 59 ................................................................56 2.3.2. Physical resources .......................................................................................59 2.3.3. Other intangible resources...........................................................................62 2.3.4. Determining of strengths and weaknesses ..................................................64 CHAPTER 3. BUILDING BUSINESS STRATEGY IN REAL ESTATE FOR COMPANY 59, THE MINISTRY OF DEFENSE AT THE STAGE OF 2018-2022 AND RECOMMENDATIONS. ...............................................................................65 3.1. Defining of the mission, goals, vision of the business .......................................65 3.2. Development of strategic options ......................................................................65 3.3. Analysis and selection of strategic options ........................................................67 3.4. Recommendations of implementation of the strategy........................................71 3.4.1. Marketing mix solution ...............................................................................72 3.4.2. Human resource solutions ...........................................................................74 3.4.3. Solutions on raw materials ..........................................................................75 3.4.4. Financial solution ........................................................................................75 3.5. Some recommendations to the management level .............................................76 CONCLUSION .........................................................................................................78 REFERENCES ..........................................................................................................79 LIST OF TABLES Table 1.1. SWOT matrix - Strengths - Weaknesses - Opportunities - Risks ............24 Table 1.2. Quantitative Strategic Planning Matrix - QSPM .....................................25 Table 1.3. Matrix of Strategic Business Review .......................................................28 Table 2.1. Major business lines of the company 59 ..................................................32 Table 2.2. List of typical works have been implemented .........................................34 Table 2.3. List of capacity of technical workers .......................................................35 Table 2.4. Summary of financial data .......................................................................36 Table 2.6. Comparison table between units ..............................................................53 Table 2.7. Comparision of revenue between company 59 and CC1 .........................54 Table 2.8. Opportunities and challenges ...................................................................55 Table 2.9. Statistics of the land fund allocated for management use ........................60 Table 2.10. Strengths and weaknesses ......................................................................64 Table 3.1. SWOT matrix proposed business strategy for Company 59....................65 Table 3.2. Matrix quantitative strategic planning .....................................................68 i LIST OF FIGURES Figure 1.1. The process of building business strategy of enterprises .......................13 Figure 1.2. Model of external environment analysis (business environment) ..........15 Figure 1.3. PESTEL model of macro environment analysis ....................................16 Figure 1.4. Model 5 Competitive Force M. Porter....................................................18 Figure: 1.5. Business Strategy Evaluation Matrix ....................................................27 Figure 2.1. Organization chart 59 .............................................................................34 Figure 2.2. Vietnam's GDP over the years ................................................................37 Figure 2.3. Total state budget revenue 2017 .............................................................38 Figure 2.4. Total budget of 2017 ...............................................................................38 Figure 2.5. CPI Index 2017 .......................................................................................39 Figure 2.6. Speed of urbanization in Vietnam ..........................................................41 Figure 2.7. Real estate market in Vietnam 2016 .......................................................41 Figure 2.8. Survey the sales team through survey questionnaire form 1 ..................57 Figure 2.9. Survey the sales team through survey questionnaire form 2 ..................57 Figure 2.10. Survey qualifaction of management and leadership through survey questionnaire form 1 .................................................................................................58 Figure 2.11. Survey of technological capacity in group 1 ........................................59 ii INTRODUCTION 1. Overview Vietnam's economy has developed with high growth rate strongly and sustainably. A series of outstanding events taking place in the world and in domestic strongly impact on our economy as Vietnam joined the WTO in late December 2006 to be in tune with the world and take many advantages, which have made Vietnam become an attractive investment destination in the region for domestic and foreign investors. Or the fact that Vietnam has been voted by nonpermanent members of the United Nations has shown the trust of its friends in the world with Vietnam, its belief in Vietnam's economy and the political stability of our country. And in the most recent, Vietnam became an official member of the Trans-Pacific Partnership Agreement - TPP in February 2016. With the potential economy, there has already been many real estate investment projects in Vietnam. The types of investment are very diverse such as high-end apartment buildings, office buildings for rent, shopping centers, etc., creating a tremendous impetus for social and economic development and changing the face of urban in Vietnam. However, real estate has been a very specific business area that requires special conditions such as strong financial resources, ability to raise capital, good relationships with specialized regulatory authorities, orientation as well as longterm vision of business leaders. In addition, the real estate business is cyclical, thus the risk is very large so in the recent years, a series of businesses operating in this field went bankrupt owing to bank debt, lack of capital, no output and others. Company 59 of the Ministry of Defense is a state-owned enterprise under the Ministry of General Staff has many years of implementation and trading real estate projects. Like other real estate businesses, the company is facing many challenges that affect the company's business. The real estate sector is the spearhead and dominates almost all activities of other fields such as construction consultancy, construction and installation and others. Therefore, the difficulty of this scetor shall pull a series of other business areas of the affected company. The management of 1 the company has assessed and seen the demand for housing, buildings, offices and types of vacation resort is still high, especially in developed cities such as Hanoi, Da Nang, Ho Chi Minh City and new urban areas such as Phu Quoc, Nha Trang and others also urgently review their internal capabilities to build a complete real estate business strategy - in line with the current situation. Starting from that demand, the research topic: “Building business strategy in real estate for Company 59, the Ministry of Defense” is very necessary for the development of the company. 2. Overview of the research status Real estate business has only grown since the early 1990s, but the business is now an important economic sector in the country. Because real estate business is directly related to a tremendous amount of assets in terms of scale, nature and value of the aspects of the national economy. Real estate shares account for about 40% of the country's wealth, while real estate-related activities account for 30% of total economic activity. In developed countries, the amount of money that a bank lends through mortgages through real estate accounts for over 80% of the total loan portfolio. Therefore, real estate investment and development plays an important role in transforming assets into abundant financial sources for socio-economic development, especially development investment. the infrastructure of the economy. Due to the above reasons, many researches related to this field have been published. Below, I would like to mention some case studies:  Competitive environment of real estate sector - strategy of Binh Chanh Construction Investment Shareholding (BCCI) for the period of 2010 2015; Author’s group of the University of Economics Ho Chi Minh City (2010). In this study, the authors focus on the real estate market in Vietnam when Vietnam becomes an official member of the World Trade Organization. The real estate market gradually followed the trajectory, the real estate market of Vietnam from the non-ranked transparency index has risen in the top of the transparent market. Commitment to WTO accession has helped real estate developers such as Savills, Collier, CBRE and others develop. In addition, the author analyzes 2 competency and, more importantly, analyzes the SWOT matrices of Binh Chanh Construction Investment Shareholding to point out strengths, weaknesses, risks and external challenge. This will help the company to discover and gain a competitive edge in the real estate market. However, the authors have not evaluated the construction of real estate business strategies in the company so the solutions that the authors have not put into practice the situation of the company.  Preparation of a real estate investment strategy at Vinapol Joint Stock Company; Cao Xuan Cuong (2010) In the implementation of the research, the author has achieved the following objectives: systematizing the theoretical basis of real estate investment strategy and assessing the current ability of the business, explore the investment opportunities on real estate market and conduct analysis of the opportunities for challenge. Based on the theory of the author applied the strategy of real estate investment of Vinapol Joint Stock Company in the next 10 years. The author then proposed to develop solutions to effectively implement the established strategies. In addition to the above mentioned objectives, the research still has limitations, including the author has not conducted external matrix analysis and internal matrix analysis, so the opportunities and challenges as well as strengths and weaknesses that the author analyzes in the SWOT matrix is sketchy and undetailed.  Real estate business in Vietnam, current situation and solutions; Nguyen Manh Hung (2013) In his study, the author mentions the following main contents such as general information on real estate and real estate business, rules of real estate market, relationship of real estate business with real estate other business, experience in real estate business in a number of countries in the world from which to draw lessons for Vietnam. At the end of the study, the author proposed solutions to promote real estate business. However, due to the author's research on the macro level, the author has not built a real estate business development strategy based on the strengths, weaknesses, opportunities and challenges of each application. The author of this book is just learning about the experience of countries in the world to apply and business strategy in Vietnam. 3  Establishment of a strategy for the development of the Company 59 of Ministry of Defense by 2015; Ngo Vinh Tu (2007), master thesis, University of Economics Ho Chi Minh City. In this essay, the author has codified the rationale for business strategy in general and has come up with strategies: • Strategy to maintain and increase market share • Marketing strategy • Strategy for enhancement of competitiveness • Strategy for development of new product In this study, the author focuses on developing a joint development strategy for the Company 59 of Ministry of Defense, not to delve into the real estate business strategy. In addition, the 2007 context when research is outdated and needs more adjustment to suit the current context. Accordingly, after studying the previous works, the author will synthesize the success of the works that continue to study the “gaps” to complete the subject in his research. 3. Objectives of the research 3.1 General objectives Set up a real estate business development strategy at the Company 59 of Ministry of Defense for the five years from 2018 to 2022. 3.2 Specific objectives (1) Systematize the theoretical basis for strategy and strategy development. The concept of real estate business strategies, factors influencing the construction business strategies of real estate (2) Analyze internal and external factors affecting the real estate business of the Company 59 of Ministry of Defense. (3) Make proposal of strategy for real estate business development at Company 59 of Ministry of Defense and propose several conditions to implement the strategy. 4 4. Subjects of the research Business strategy in real estate for Company 59, the Ministry of Defense 5. Scope of the reseach For space: The study was conducted at the Company of Ministry of Defense For time: Data was collected over the last five years (2014, 2015, 2016, 2017); The given strategy is valid until 2022 Focus on real estate business strategy. Real estate business activities are understood to include the activities of buying and selling land and assets on land, investment activities for lease, basic construction activities. 6. Methods of the research Use the case study method at the Company 59 of Ministry of Defense; thesis mostly uses qualitative methods. In addition, use the method of comparison and synthesis. Data collected includes:  Secondary data collection: collect from books, newspapers, magazines, statistical reports of the industry. Books on strategic management. This is the basis for the author to build the theoretical framework in Chapter 1. Data from the company, from departments and reports on the performance of the Company 59 under Ministry of Defense and others.  Primary data collection: The author combines a variety of methods including in-depth interviews with experts and sociological survey methods. In-depth interview methodology: Expert method is used to interview experienced professionals in the field of real estate and management of Company 59 - Ministry of Defense. The purpose of the expert interview is to get expert opinion on the real estate business environment today: the internal environment, the external environment, the competition and others. In addition, the interview with the management of Company 59 - Ministry of Defense to see the real status of the whole picture of the company's activities in the field of real estate. In addition, specialists in strategic management are instructors, strategic consultants and others. 5 Sociological survey method (questionnaire) with experts and board of company, customers. The number of votes is 100, the number of votes is 87 votes. Questionnaires were divided into 2 groups:  Group 1: Company leaders and experts: 33 questionaire forms.  Group 2: Corporate customers: 54 questionaire forms. 7. Thesis structure The thesis is structured into three chapters, namely: INTRODUCTION Chapter 1: Theoretical basis of Business Strategy in Real estate Chapter 2: Current Situation of the Company's Real Estate Business Strategy at Company 59 of Ministry of Defense. Chapter 3: Building Business Strategy in Real estate for Company 59 of the Ministry of Defense at the stage of 2018-2022 and recommendations. CONCLUSION 6 CHAPTER 1 THEORETICAL BASIS OF BUSINESS STRATEGY IN REAL ESTATE 1.1. The general theories of business strategy 1.1.1. Concept of strategy and business strategy The term of strategy is derived from ancient military art. Borrowing from military terms, the term “strategy” has been used quite commonly in the economic life of the macro as nation, government and others as well as micro as economic organizations. Actually there are many different views on strategy. Depending on the purpose of research and in different periods of economic development, economists have different views on strategies. However, in terms of business research, most economists agree on the concept of strategy with business strategy. With a traditional approach, as illustrated by Alfred Chandler (1962): “The strategy involves setting the basic long-term goals of the business and applying a series of actions as well as the division Necessary resources are needed to achieve these goals”. Under this approach, the strategy is defined as a system of long-term goals, key policies and measures on business production, finance and human factor-based solutions to help businesses grow. Take a new step on the substance. However, along with the development process, today's strategic concept has also changed. With a modern approach, according to McKinsey (1978): “Strategy is a series of activities designed to create sustainable competitive advantage”, or Johnson & Scholes (1999): “Strategy is the direction and the scope of an organization in the long run to gain competitive advantage for the organization by formatting its resources in a changing environment to meet market demand and meet the expectations of the parties”. With the new approach, the strategy is a system of perspectives, goals and basic objectives and solutions, policies for the best use of resources, the advantages and opportunities of enterprises not only aim to achieve the objectives but also bring favorable conditions such as competitiveness, different positions in order to create competitive advantage and sustainable development for businesses. 7 Theoretically, most economists in the world have unified business strategies with business development strategies. Accordingly, business strategy or development is a part of the overall strategy of the business, including the components of the secondary strategy: marketing strategy, financial strategy, research strategy and development and others. Through business strategy will establish the most favorable conditions to create competitive advantage for businesses. So it can be easy to understand, Business strategy is to synthesize longterm goals, policies and solutions of business production, finance and people to bring the business operations of a business state higher in quality. Can understand business strategy is a general program of action that the business outlined to achieve the objectives in a certain period. 1.1.2. Characteristics of business strategy - Business strategy is the overall strategy of the business that determines the objectives and business direction in a relatively long, five-year or ten-year period and is fully understood in all production activities to create favorable conditions and contribute to creating a competitive advantage, ensuring the sustainable development of enterprises. - A business strategy is an outline of a business's future, including goals that the business must achieve as well as the means needed to accomplish those goals; meanwhile, in reality, the business shall combine strategic and situational objectives, strategy and tactics, short-term and long-term. This will ensure the business efficiency and overcome the deviations caused by the strategy. - Any decision that is important in the process of formulating, deciding, implementing, and evaluating, adjusting the strategy must focus on the highest leader of the business. This ensures the accuracy of long-term decisions, for confidentiality of information. - Business strategy is always built on the basis of comparative advantages. This requires that in the process of developing the strategy, enterprises must properly assess their production and business situation in order to find 8 strengths and weaknesses and regularly review the internal factors when implementing the strategy. - Business strategy is primarily and primarily built for business lines, specialized business areas, traditions, strengths of enterprises. This puts the business in the right place, must choose and implement strategies as well as engage in business in the market has prepared and strength. 1.1.3. The role of business strategy The formation and implementation of business strategy is extremely important to the existence and development of the business. The role of business strategy for enterprises is shown by Ngo Kim Thanh (2011) with four main roles: - Business strategies help businesses clearly see their goals and direction in the development of their business. It shows business executives how to look at and determine where the organization goes and when it will achieve the desired results. - The analysis and planning for business strategy not only helps businesses clearly see their strengths and weaknesses, but also identifies the opportunities and challenges that occur in the present and in the future. From there, businesses can take advantage of the opportunities to grasp the opportunities, while preventing and reducing risks for businesses, helping businesses have the competitive strength to win the market. - The business strategy helps administrators use and allocate existing resources in an optimal way as well as effectively coordinate organizational functions to achieve common objectives. - The business strategy creates strong bases to help businesses proactively work out solutions to market fluctuations, as the basis for their R & D activities. 1.1.4. The levels of strategy According to Johnson, Scholes and Whittington (2008), the organization has different levels of strategy. It is possible to distinguish at least three levels of strategy as follows: a. Company-level strategy The highest level is the company level strategy, which relates to the overall scope of an organization and how it creates added value for different parts of the 9 organization (business units). This strategy may include issues such as the geographic scope of the business, the diversity of the product or service, and the distribution of resources between the different parts of the organization. Companylevel strategies may include mergers, acquisitions, and sales of businesses, decisions to join or withdraw from the market. In general, business-level strategies are concerned with the expectations of owners - shareholders and the stock market. The form of a company-level strategy is reflected in a clear or implicit statement about the 'mission' that reflects that expectation. Understanding the company level strategy is important, as specific, defining the scope of business as the basis for other strategic decisions. At the company level there are strategies that include: Growth strategy: By pursuing this strategy, businesses are trying to exploit every opportunity they have for existing, currently market-driven products or services, provided by better performing companies. what they are doing. Growth strategies include: + Centralized Growth Strategy: A strategy that seeks to increase market share of existing products or services in existing markets through strong marketing efforts. Specifically:  Market entry strategy: It is a strategy to find ways to grow by penetrating into new markets to sell products and services currently being produced or supplied by enterprises.  Market development strategy: It is a strategy to find ways to grow by penetrating into new markets to consume products and services currently being produced or supplied by enterprises.  Product development strategy: A strategy to find ways to grow through the development of new products and services for consumption in markets where the business is operating. + Integration Strategy  Vertical integration: A strategy of self-sufficiency in production and supply of inputs to the production process or the selfconsumption of products. 10  Horizontal integration: A strategy to find ways to grow through mergers, acquisitions or joint ventures with competitors. + Growth strategy through diversification  Diversification: is the diversification into new business that is related to current operations or business activities by analogy of production, marketing, technology and others.  Diversification is to seek the methods to grow by targeting new markets with new products that are technologically unrelated to the products that businesses are producing. Stability strategy Stability strategy is the strategy of maintaining business scale as well as stability in the strategic period.  Business field is slowing down or slowing down  Expenses for market expansion are too high to be effective  Scale of small business, weak potential  Enterprises go deep into specialization serving narrow markets  Encounter unusual fluctuations in the market Strategy of decline  Cost-cutting strategy: This is a temporary short-term strategy aimed at reducing ineffective parts or temporary problems related to environmental conditions.  Strategic return on investment: This strategy applies when the enterprise sells or closes one of its businesses to fundamentally change its activities, recover investment capital. The resulting return on investment leads to the reallocation of resources to revitalize businesses or create new business opportunities.  Harvest strategy is a strategy that seeks to maximize the flow of money, without further investment. 11