Tài liệu Impacts of information technology to value chain in english teaching centers

Impacts of Information technology to value Chain in ENGLISH TEACHING cENTERS by TRAN THI THUY VAN SEPTEMBER 2004 ii Impacts of Information technology to value Chain in ENGLISH TEACHING CENTERS A THESIS SUBMITTED TO THE HANOI SCHOOL OF BUSINESS OF THE VIETNAM NATIONAL UNIVERSITY BY TRAN THI THUY VAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION SEPTEMBER 2004 iii Approval of the Hanoi School of Business Truong Gia Binh Dean I certify that this thesis satisfies all the requirements as a thesis for the degree of Master of Business Administration. President, Examination Committee This is to certify that we have read this thesis and that in our opinion it is fully adequate, in scope and quality, as a thesis for the degree of Master of Business Administration. Nguyen Viet Anh Co-Supervisor Roger Ford Supervisor Examination Committee Members (Title and Name in alphabetical order of last name) ............................... _____________________ ............................... _____________________ ............................... _____________________ ............................... _____________________ ............................... _____________________ iv ABSTRACT Impacts of Information technology to value Chain in ENGLISH TEACHING CENTERS TRAN THI THUY VAN MBA, Hanoi School of Business Supervisor : Mr. Roger Ford Co-Supervisor: Mr. Nguyen Viet Anh September 2004 This thesis analyzes the strategies of the English Centers to gain competitive advantage in the technology age. Keywords: Strategy, Competitive Advantage, Value Chain, Internet, Information Technology, English Centers… v TÓM TẮT ẢNH HƯỞNG CỦA CÔNG NGHỆ THÔNG TIN TỚI CHUỖI GIÁ TRỊ CỦA CÁC TRUNG TÂM TIẾNG ANH Trần Thi Thuý Vân Hướng dẫn 1: Mr. Roger Ford Hướng dẫn 2: Mr. Nguyễn Việt Anh Tháng Chín 2004 Bản luận văn này phân tích chiến lược của các Trung tâm Tiếng Anh để đạt được lợi thế cạnh tranh trong thời đại công nghệ thông tin. Từ khóa: Chiến lược, Lợi thế cạnh tranh, Chuỗi giá trị, Internet, Công nghệ thông tin, Trung tâm Tiếng Anh vi To My Parents vii ACKNOWLEDGMENTS I express sincere appreciation to Mr. Roger Ford, Mr Nguyen Viet Anh and Mr. Ha Nguyen for their guidance and insight throughout the research. Thanks go to the other faculty members, Professor Roger Ford, Mr. Jubin Kapur, Ms. Tran Phuong Lan, Dr. Ta Ngoc Cau, Mr. Meghnad Shetty for their suggestions and comments. The assistance of Ms. Huyen Huong, and Ms. Phuong Thao is gratefully acknowledged. To my parent , I offer sincere thanks for their unshakable faith in me and their willingness to endure with me the vicissitudes of my endeavors. viii TABLE OF CONTENTS INTRODUCTION ............................................................................................ LITERATURE REVIEW ................................................................................ 2.1. COMPETITIVE ADV 2.2. INFORMATION TE ADVANTAGE .............................................................................................. 2.3. VALUE CHAIN ....... 2.3.1.What is value chain? ................................................................. 2.3.2.Impact of Information Technology on Value Chain ............... 2.4. DIFFERENTIATION METHODOLOGY ......................................................................................... 3.1. 3.2. 3.3. 3.4. 3.5. 3.6. 3.7. RESEARCH PROBL RESEARCH OBJEC RESEARCH METHO RESEARCH STRAT SAMPLE SELECTIO DATA COLLECTIO DATA ANALYSIS ... EMPIRICAL DATA PRESENTATION ..................................................... 4.1. 4.2. 4.2.1. 4.2.2.Information technology in Language Link ............................. 4.2.3.Value Chain and Information Technology .............................. 4.2.4.Differentiation and Information Technology .......................... 4.3. 4.3.1. 4.3.2.Information technology in SITC .............................................. 4.3.3. Value Chain and Information Technology .................................. 4.3.4.Differentiation and Information Technology .......................... 4.4. University .................................................................................................. Item ENGLISH TRAININ CASE STUDY ONE CASE STUDY TWO CUSTOMER SAMPL .................................... DATA ANALYSIS ......................................................................................... 5.1. 5.1.1.Information technology and Value Chain ............................... QUANLITATIVE ......... ix 5.1.2. Source of differentiation.......................................................... 76 5.2. QUANTITATIVE.................................................................................... 80 CONCLUSIONS AND IMPLICATIONS................................................... 81 6.1. FINDINGS, CONCLUSIONS AND RECOMMENDATION ON RESEARCH QUESTIONS...................................................................... 81 6.2. IMPLICATIONS............................................................................ 83 x LIST OF TABLES Table 1 – The age of the students in the Sample............................................. 66 Table 2- Places of students............................................................................. 67 Table 3 - The students from Universities........................................................ 68 Table 4 – Student’s expense for learning English........................................... 69 Table 5 – The need for communicating English............................................. 69 xi LIST OF FIGURES Figure 1. Porter’s Generic Value Chain ........................................................... Figure 2 - The Value System (Porter) .............................................................. Figure 3 - Virtual Value Chain......................................................................... Figure 4 - Comparison of Transmission Mediums .......................................... Figure 5 - Traditional view of the value chain ................................................. Figure 6 - The Value Chain with the Figure 7 - Source of Differentiation i Figure 8 - Virtual Value Chain for La Figure 9 Source of D ... ..................... ........................... ............... ..................... ..................... ...... Figure 10 Figure 11 - Source of Differentiation in the Value Chain in SITC .................. Virtual Va xii VITA Ms. Tran Thi Thuy Van received her B.A. degree in Foreign Trade from the Vietnam National University (VNU) in July 2000. She worked in a Joint Stock Company as an accountant and a project Manager assistant from 2001 to 2002. At the period of learning full-time MBA Program in Hanoi School of business, she has participated in a number of projects at Vietnam Country Gateway Project funded by World Bank, Vietnam Competitiveness Initiative Project funded by USAID, Citibank (United States), Soil and Water Ltd (Finland)… 1 CHAPTER 1 INTRODUCTION 1.1. Competitive Advantage Competitive advantage is important for companies to perform in competitive market. Competitive determines the appropriateness of a firm’s activities that can contribute to its performance, such as innovations, culture, or good implementation. There are two basic kinds of competitive advantage: cost leadership or differentiation. Competitive advantage in either cost or differentiation is a function of a company’s value chain. A company’s cost position reflects the collective cost of performing all its value activities relative to rivals. Each value activity has cost drivers that determine the potential sources of a cost adavantage. Some firms view the differentiation in physical product or marketing practices, but differentiation should be viewed from anywhere in the value chain. 1.2. Competitive Advantage and Information Technology Recently, entrepreneurs, executives, investors and industries in worldwide as well as in Vietnam has paid much attention on E-business and E-commerce. With the help of information technology, the processes and operations of businesses can be shortenned. The Internet has offerred not only the advantage of low cost but also provide the smooth and linkage between different business activities. Many organizations worldwide has integrate Internet technology to redesign their business processes in ways that can strengthen their competitive advantages. 2 Businesses are incorporating electronic commerce into strategic plans, business schools are incorporating it into their curriculum, and consulting and software firms are marketing electronic commerce “solutions”. So what exactly is electronic commerce? Greenstein and Feinman define Electronic Commerce as: “the use of electronic transmission mediums (telecommunications) to engage in the exchange, including buying and selling, of products and services requiring transportation, either physically or digitally, from location to location. (Source: Greenstein, Feinman, 2000, “Electronic Commerce: Security, Risk Management and Control”. New York: The McGraw-Hill Companies, Inc.) Electronic commerce involves all sizes of transaction bases. As one would expect, electronic commerce requires the digital transmission of transaction information. While transactions are conducted vie electronic devices, they may be transported using either traditional physical shipping channels, such as a ground delivery service, or digital mechanisms, such as the download of a product from the Internet. The Internet and the world wide web provide the mechanisms to foster the growth of electronic commerce. The actual growth rates and uses of the Internet indicate that electronic commerce is no passing fad, but rather a fundamental change in the way in which busnesses interact with one another and their consumers. Please look at the General Electric example. In 1997, General Electric purchased approximately USD 1 billion worth of supplies using the Internet. Some benefits that GE has realized due to its Internet procurement system are a 50% reduction in the purchasing cycle and a 30% reduction in processing costs. General Electric Company’s 1997 Internet activity clearly demonstrate the electronic commerce can provide substantial, tangible benefits to a firm when implemented properly. 3 Another concept is E-business. It includes the exchange of information not directly related to the actual buying and selling of goods. Businesses are using electronic mechanism to distribute information and provide customer support. What benefits can business potentially gain from engaging in electronic commerce? They are: more affordable, more business partners to be reached, Internet and webbased electronic commerce can reach a more geographically dispersed customer base, procurement processing costs can be lowered, cost of purchases can be lowered, reductions in inventories, lower cycle times, better customer service and lower sales and marketing costs. Internet technology is changing the way many firm do business. With the help of Information technology, especially Internet, there are two ways for businesses to gain sustainable competitive advantage. One is operational effectiveness – doing the same thing your competitors do but doing them better. Operational effectiveness advantages include better technologies, superior inputs, better-trained people or a more effective management structure. The other way to achieve advantage is strategic positioning—doing things differently from competitors, in a way that delivers a unique type of value to customers. This can mean offering a different set of features, a different array of services, or different logistical arrangements. (Porter, 2001, “Strategy and the Internet”, Harvard Business Review, Vol, 79, No.3. Page 63-78). The Internet affects operational effectiveness and strategic positioning in very different ways. It makes it harder for companies to sustain operational advantages, but it opens new opportunities for achieving or strengthening a distinctive strategic positioning. The Internet is the powerful tool available today for enhancing operational effectiveness. By easing and speeding the exchange of real-time information, it 4 enables improvements throughout the entire value chain, across almost every company and industry. And because it is an open platform with common standards, companies can often tap into its benefits with much less investment than was required to capitalize on past generations of information technology. However, easy access to Internet technology brings new challenges to competitive advantages. Business are now looking for ways to differentiate themselves from their competitors. Creating competitive advantages is vital to sustaining growth. In Vietnam, the concept of E-commerce, E-business is still new. According to the Vietnamnews article on Octocber, 2003, A Mekong Project Development Facility survey concluded that only 3 percent of Vietnamese businesses used some aspect of e-commerce, 7 percent intended to use e-commerce and the remaining 90 percent had little knowledge of E-commerce. According to www.vietnamwebsite.net, there are only 3,400 (5% of 70,000 businesses in Vietnam) have their own website. Businesses in Vietnam in the infancy stage of E-business will consider Internet as a kind of operational effectiveness but they should bear in their mind that operational effectivenesss is not sustainable. With the lesson and experience in worldwide, Vietnamese businesses that would like to succeed must find the ways to differentiate themselves from their competitors with the help of information technology. It is clear that the trend of integrating information technology into businesses to gain competitive advantage is not advoidable not only worldwide but also in Vietnam, the economy in the infant stage of e-commerce and e-business. Recently, Ecommerce is only applied in Vietnam to exchange information, seek partners and introduce and advertise goods and services. But in the future, those businesses that can integrate information technology into its value chain and make it become a 5 competitive advantage can be outperformed and can compete not only in Vietnam but also in global. 1.3. Competitive Advantage and Value Chain Competitive advantage stems from the many discrete activities a firm performance in designing, producing, marketing, delivering and supporting its product. Each of these activities contributes to a firm’s relative cost position and creates a basis for differentiation. The Value Chain is an important concept to highlight the role of information technology in competition. A systematic ways of examining all the activities a firm performs and how they interact is necessary for analyzing the source of competitive advantages. The value chain devide a firm into its relevant activities in order to understand the behaviour of costs and the existing and potential sources of differentiation. A firm gain competitive advantages by performing these activities more cheaply or better than competitors. The ultimate purpose of value chain is to analyze to identify appropriate means of differentiation for a firm so that it can provide superior value to the customers. A firm, as a collection of activities, is a collection of technologies Technology can be in every value activity in a firm and technological change can affect competition through its impact on any activities. The value chain is used to demonstrate how a value chain can be constructed for a particular firm, reflecting the specific activities it performs. Differences among competitor value chain are a key source of competitive advantage. It is nescessary to define a firm’s value chain for competing in a particular industry. The value chain is a basic tool for finding competitive advantage and ways to create and sustain it. 6 Every firm including Vietnamese firms that seeks to be successful in the future is striving to implement Internet technology. It is important for every type of organization to improve efficiency and be better than competitors. For this reason the purpose of this thesis is to analyze the question how companies in Vietnam especially specific English Centers apply Information Technology into its value chain to get differentiation. Because the concept of E-commerce, E-business is still new in Vietnam, it is a broad concept and is under discussion in Vietnam, the scope of this thesis is only focusing on the impact of information technology to the value chain of English Teaching Centers. The Thesis consists of 6 Chapters: In Chapter 1, we give a broad description and provide a discussion of issue related to the problem area. In Chapter 2, literature review is given to provide theories relevant for the problem area. Chapter 3 represents methodology for data collection and analysis. In Chapter 4, there is empirical data presentation, consists of background of the companies and data collected. We choose Language Link and SITC because they are big enough to apply Information technology and they are two of the first English Centers applied Information technology in some activities of their business. Language Link is the company with high price service and SITC is company with premium price service. In Chapter 5, the data is analyzed and conclusions are given in Chapter 6. 7 CHAPTER 2 LITERATURE REVIEW 2.1. COMPETITIVE ADVANTAGE Competitive advantage describes the way a firm can choose and implement a generic strategy to achieve and sustain competitive advantage. The competitive advantage can come from cost advantage or differentiation advantage and the scope of a firm’s activities. Value chain is the basic tool for diagnosing competitive advantage and finding ways to enhance it. Competitive advantages is about a firm actually puts the generic strategies into practice. About cost leadership, there are various sources of cost advantage which are lower input costs, lower in-plant production costs and lower delivery costs. However, this advantage can be eroded when there are rising costs. Therefore, the advantage of differentiation offer superior performance. The differentiation can give many dimensions that can be exploited in seeking to establish a product or service superior to its competition. Competitive advantage can arise from many sources, and show how all advantages can be connected to specific activities and the way that activities relate to each other, to supplier activities and to customer activities. Advantage resting on a few activities is easier to diagnose and often easier to imitate. Only the tie linkage of many activities is difficult to imitate. 8 2.2. INFORMATION TECHNOLOGY AND COMPETITIVE ADVANTAGE Information revolution is sweeping through the economy. No company can escape its effects. Dramatic reduction in the cost of obtaining, process, and transmitting information are changing the way we do business. The technology is transforming the nature of products, processes, companies, industries, and even competition itself. Every company must understand the broad effects and implications of the new technology and how it can create substantial and sustainable competitive advantages. Organizations today frequently integrate Internet technology to redesign processes in ways that strengthen their competitive advantages. Before information technology, the costs for communicating, gathering information, or accomplishing transactions is high. The Internet’s greatest impact has been to enable the reconfiguration of industries and businesses.Many organizations are able to integrate activities of their value chain encompassing suppliers, customers, and distribution channels within an industry or across industries. With the rate of technological change in the global economy, technology and information have become as critical as capital, research and development, marketing and other previous drivers of success. Companies that thrive and survive in this global marketplace will be information based. Vietnamese firms that want to suceed locally as well as globally have to not ignore the importance of information technology impact. Business can gain sustainalbe competitive advantages by two ways. One is operational effectiveness, and another way is to achieve advantage of strategic positioning. The Internet affects operational effectiveness and strategic positioning in very different ways. It makes it harder for companies to sustain operational advantages but it gives new opportunities for achieveing or strengthening a