Tài liệu Nâng cao chiến lược lược cạnh tranh trong lĩnh vực kinh doanh dầu mỡ tại công ty petrolimex

LUẬN VĂN THẠC SĨ NÂNG CAO CHIẾN LƯỢC LƯỢC CẠNH TRANH TRONG LĨNH VỰC KINH DOANH DẦU MỠ TẠI CÔNG TY PETROLIMEX Improving the competition strategy in the area of lubricant and grease business for PETROLIMEX Petrochemical J.S company INTRODUCTION Our country is in the beginning period of the market economy under the State management. Market economy opens the development opportunities as well as the big challenges for Vietnam's enterprises. An indispensable matter in economy - the most outstanding question of the day in the market economy that is competition. Because, in spite of any fields, any sectors, the market has the division by the domestic and international enterprises. The competition is more and more severe. The enterprises never satisfy with the occupied market (because it means they accept to be annihilated), and they always try to expand their market share. In order to reach this, the enterprises must have the suitable tools, solutions to increase the competitiveness as the foundation to ensure the enterprises to stand firmly and develop in the severe competition in the market. Petrolimex Petrochemical Joint Stock Company (PLC) is specialized in doing business on the products such as Lubricants and Grease and the products originated from petroleum like asphalt, Chemical. Through 17 development and operation years, the Company has built the position as one of the leading enterprises in Vietnam’s Lubricants and Grease market. However, PLC Company has had to confront with the strong competition from the renowned enterprises inside and outside the country such as: BP, Castrol, Shell, EssoMobil, Caltex, PVPDC, APP... in Lubricants and Grease market in Vietnam. In order to continuously develop and expand the market share, the Company needs to do research and set forth the suitable strategy to improve its competitiveness. Then, the Company could win the competitors, stand firmly in this severe competition market. Originated from the above mentioned overview, Team 2 - Class M07.09 has agreed to select “Improving the competition strategy in the area of lubricant and grease business for PETROLIMEX Petrochemical J.S company (PLC)” as the capstone project report of the course. THE CAPSTONE PROJECT REPORT OF GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION includes the main contents as followed: Introduction Chapter 1: The theories in regard to competition and competition improvement for enterprises Chapter 2: Analysis on PLC’s current competition power in lubricant and grease business Chapter 3: Improvement of competition power and solutions to be implemented within 2011 - 2015 Conclusion Chapter 1 THE THEORIES IN REGARD TO COMPETITION AND COMPETITION IMPROVEMENT FOR ENTERPRISES 1. Competition and its roles in regard to an enterprise’s operations 1.1 The roles of competition in regard to the operation of enterprises a. The concept of competition: - The business dictionary (published in Britain in 1992) defines “competition is the rivalry between the businesses striving for the same production resource” -“Competition includes attacks and counter-attacks from businesses against each other to build/ protect their competition advantages or improve their market position” (1). Businesses have to compete against each others and at the same time keep improving their competition power to be in a better position than the rivals: + The action in which businesses compete against each other in regard to some products or in some market areas are called multimarket competition. The group of attacks and counter-attacks made by the businesses is called competition motivation. + As the time goes, businesses continuously attack or counter-attack each other. This suggests that the businesses depend on each other in competition...”the more severe the competition is the less profit the businesses will gain” - Competitors that are similar in resources and market coverage will best define competition. Similarity in market means the number of markets that competitors have in common. Similarity in resources means the competitors can be compared against each other in term of tangible of intangible resources etc. Businesses that are similar in resources and market coverage will most likely be direct competitors. - The forces that lead the businesses’ competition include: perception, motivation and capabilities... - Competing includes attacks and counter-attacks made by businesses in order to be in a better market position... - In economics, competition is categorized as follows: + Competition between sectors: businesses from different economic sectors compete against each other to invest in the sectors that will benefit them best. The competition between sectors therefore motivates businesses to look for the most beneficial sectors to invest in and transfer capital from the less profitable sectors to the more profitable ones. + Competition inside the sector: the businesses/ competitors produce and market the same products/ services. The competition inside the sector therefore forms market price for one product/ service basing on its common values. In this type of competition, the competitors will eliminate each other. Winning means expansion and losing means downsizing or even bankruptcy. b. The roles of competition in regard to the operation of enterprises - Competition is rooted from the freedom in business operation for greater variety in services and products or for more participation from more competitors. Competition is a race without a finish line. Competition means not only leading but also “winning” customers by best satisfying their demand... - In a market economy, competition helps lowering prices of products services and at the same time improving their quality. + Competition will remove businesses having high costs and encourage those having lower ones. This pressurizes businesses to improve their competition power via lowering costs and improving their productivity, which eventually benefits the society in the long run but also forces some certain businesses to go bankrupt, resulting in waves of unemployment. + Competition also forces businesses to apply new technology and advanced production skills for the improvement of quality, productivity and variety of products. The businesses are also forced to faster access into information as well as take full advantage of opportunities. In summary, competition does not mean elimination but instead it helps replacing those having bad performance and wasting resources with better ones in order to better meet the social demand for the development of nations. Fair competition motivates the economies and businesses to grow... 1.2. Types of competition in business The categorization of market basing on competition is closely attached to the relationship of supply-demand. This categorization shows us the following types of competition: 1.2.1. Perfectly Competitive Market - In a perfectly competitive market, there are various competitors supplying the same products/ services. Since the businesses can not make any differences (on model, specification, quality...) from each other; none of them are therefore able to supply a quantity of products big enough to influence the price. The conditions for market entry/exit are easy. Hence, the only way for businesses in the this market is to minimize their costs for better profit. - This type of competition hardly exists in reality. 1.2.2. Imperfectly Competitive Market Imperfectly Competitive Market is a normal one as it exists in reality. There are two types of Imperfectly Competitive Market as follows: a. (Full) Cartel Monopoly There are only a few (a group of) businesses that supply the majority (or all ) of certain products/ services. These businesses are sensitive on each other’s operation. They depend on each other while setting prices and deciding on the quantity of products/ services that they are to supply. When a business in the cartel lowers its price, the others will lower their prices even more OR when one in the cartel increases its price while the other don’t, that one will finally lower its price to the earlier rate or else will lose its customers. The way for competitors of this type is to lower their costs via various ways, such as: increasing quantity... b. Cartel Monopoly (with differences) There are a few businesses producing and marketing products/ services with certain differences. The differences may be in quality, model etc. c. Monopolistic competition Many businesses are able to create differences for all or a part of their products/ services. Customers recognize each business’s products/ services via label, advertisement, packaging and other services. In this market, the businesses are able to set their own prices, but not entirely on their own. The competitors will focus on the market segments where they can better serve their customers and therefore can set higher prices. This market will best benefit big businesses. 1.2.3. Complete Monopoly There is only one business supplying a certain product/ service. This Monopoly is supported by the State or by patent, huge scale of investment, exclusive right in technology. Competition does not exist in this market. The monopolistic enterprise decides on the price. 1.3 Enterprises’ adaptability to competition a. Relying on competition advantages to win - The businesses’ common competitive weapons are structure of products, product quality, prices, sales services and others. + Competition via quality: via reliabilities, design, technology... + Competition via prices: businesses attract customers via competitive prices + Competition via services: businesses design pre and after sales services to build the prestige for their products. This is a good competitive weapon that are used more and more by businesses today. b. Building entry barriers to both new businesses and existing ones: To boost the competition advantages, the businesses usually choose to build entry barriers to new players such as: increase of size, diversifying distribution channels etc. - The businesses also build other types of entry barriers which try not to directly confront other competitors, such as: + Selecting certain segments: selecting the segments with no or only a few competitors; selecting areas with remarkable demand but with no competitors or selecting the segments where the competitors do not perform well. + Preventing other competitors’ penetration: by having big stocks, good quality, good marketing policy … + Cooperating with competitors: in such fields as science & technology etc… 1.4. Improvement of competition is vital and obvious to enterprises 1.4.1. Enterprises’ competition power a. A business will have certain competition advantages when its profit is higher than the sector’s average rate. This advantage is sustainable when it is maintained in a long period of time. The indicators for competition advantages are the values of the products/ services that customers enjoy and the involved costs. - The values that customers enjoy from a business’s products/ services are usually higher than the price they pay for those products/ services. This difference is called consumer surplus. The competition between businesses has awarded the consumers with this surplus. In other words, this is because a business can not categories its products/ services into segments that cover the customers well enough so that it can ask for the right price for the values that customers enjoy… From these this standpoint, the businesses can select either of the following competition solutions: + Creating more values for customers, exceeding the customers’ demand by outstanding design, functions, quality, etc so that the customers can feel the values and therefore they are willing to pay higher prices. + Improving the business’s performance/ operational efficiency in order to lower the costs  increasing the marginal profit. “Hence, by fully utilizing its core business to go beyond standards, a business will create added values for their customers” (2). In order to create outstanding values, it is not a must for a business to either have the lowest costs or to make products with highest quality in the sector. Instead, it is vital that the business must create a bigger difference between Value & Cost (compared to other competitors). Following M.E Porter: “competition advantage (higher profit) will be with any business that can create outstanding values. The way for creating outstanding values comes the efforts in lowering costs or/ and creating differences for its products. And thus, the customers will better realize and willing to pay an additional amount”(3) b. Competition power/ advantage may also mean “the ability that a business has to maintain its position in the market for a long period of time and to make a profit that can cover the ambition for its strategic target” Theoretically, there are various indicators reflecting the competition power. One important one is the market share that a business has. The bigger the market share, the better the competition power. To survive and develop, a business must have a market share that is big enough. 1.4.2. Factors affecting enterprises’ competition power: Four fundamental factors: - Efficiency: to a business, the inputs are labor, land, capital, management, technology and the outputs are products/ services. Efficiency can be measured by the ratio of output/input. - Quality: this factor can influence competition power as follows: 1. increase the quality of the product following customers’ feeling  higher price. 2. higher quality  higher efficiency and lower costs - Improvement: is the new idea or new way that a business operates or produces. Successful development is the development of new products or the new way of management that creates values for customers (4) - Meeting customers’ demand/ expectation: to this, a business must meet the customers’ demand better than other competitors, These include outstanding quality and other improvement for customers’ satisfaction; supplying customers with unique products/ services; time of delivery (5) 1.4.3. The tendency of competition in the 21st century: a. Competition is more and more severe because of the following reasons: + The appearance of information technology + The application of new knowledge in science & technology that has improves the quality of human resource b. The differences between sectors are disappearing. Knowledge plays a vital role in competition. c. Globalization is booming d. The competition power of a nation is combined from those of businesses/ organizations 1.4.4. Improvement of competition is vital and obvious to enterprises/ businesses - In a market economy, competition in inevitable and the businesses must accept this. Competition will improve production/ operation and at the same time competition will remove the businesses with poor performance. Hence, every business must design a reasonable competition strategy. - Together with the booming of science-technology, customers are better and better served. Presently, Vietnam has become a WTO’s member and thus the local businesses have to compete with other international players. So, they have to improve their competition power. 2. The fundamentals of strategy and business strategy 2.1. Concepts of strategy and business strategy - Alfred Chandler defines strategy to be “the specification of long term targets of a business, application of actions and the allocation of necessary resources to reach the said targets”(6). - Quinn defines strategy to be “the integrated plan aiming at major targets, policies with a closely structured actions” (7) 2.2. Strategy management and selection 2.2.1. The concepts of strategy management + Alfred Chander defines strategy management to be “the process that a business specifies its long term targets, actions and allocation of resources to reach those targets” + John Pearce II and Richard B. Robinson define strategy management to be “a system of decisions and actions designed to reach a business’s set targets” - “Strategy management” is a bit different with “business policy” in a way that strategy management not only focuses on internal functions but also on the environment and strategy (8) 2.2.2. Types of business strategy a. Functional level: focuses on how a business creates competition power following such factors as efficiency, quality, improvement and meeting customers’ demand. These aim at improving the activities of marketing, material management, development of production and customer services. b. Business unit level: focuses on how a business position itself in the market to win competition advantage. These are 3 types of strategy at this level. They are: 1. cost leader, 2. making differences and 3. focusing in certain market. c. Corporate level: focuses which product/ operation is most beneficial in the long run. d. Globalization level: in the current globalization requests a business to step out in to global arena in order to win competition advantage. When a business penetrates a new market, it needs to consider/ calculate its benefits & costs basing on the following strategies: multi-domestic, international, global and transnational. 2.3. The role of business strategy Strategy management delivers the following benefits: - Helping businesses to better realize its visions by setting targets and ways to move forward. - Improving businesses’ mindset on the changes from the environment. - Assisting businesses to focus on important issues - Assisting businesses to see its strengths, weaknesses, opportunities & threats to design relevant policies. - Assisting businesses to make right decisions. 2.4. Models of superior profit: a. As defined at point 1.4.1, a business will have competition advantages if its profit is higher than the average of the sector. There are 2 models. One is sector and the other is resource b. Sector model: - This model shows that supernormal profit is affected by external factors. - It is more affected by the sect oral factors rather than the business’s internal factors. An attractive sector is the one that bring about a profit that is higher than the average  the business will have to indentify such a sector  designing the right strategy  allocating necessary resources  continuing its strategy to succeed  gaining supernormal profit… c. Resource model - This model shows that supernormal profit is affected by the business’s internal factors - Allocating necessary resources by identifying strengths & weaknesses compared to other players  identifying which resource it has is better than its competitors  indentifying a sector that it can win by investing its resources  designing a right strategy so that it can best utilize its resources  taking actions. 3. Strategy design process The strategic management process: the details in attached Figure 1 3.1. Vision & mission a. Strategy management is to satisfy the involved parties/ stake holders - “The involved parties are those that are affected by the business’s performance and are entitled to benefit from the business’s result” (9); They include: + internal: share holders, staff, board of directors & management + External: customers, suppliers, government, trade union, public … - These involved parties are linked to the business by supporting the business with resources and at the same time benefiting from the business’s performance. b. A business’s mission & vision are what it states to gain and plan for basing on the stake holders’ request. 3.2. Objectives of strategy The objective of strategy has 4 characteristics: + Accurate & measurable + Aiming at important issues + Challenging but doable + Good scheduling - Share holders are the first and most important stake holder of a business. Hence, it must satisfy this stake holder the most. 3.3 Analysis on external enviroment External environment includes factors that are out of the leader’s control but they affect the planning and implementation of a business’s strategy. The analysis of the external environment helps the business to identify opportunities & threats to a business. External environment are divided into 2 categories: macro & micro 3.3.1. Analysis on macro environment This macro environment is analyzed by the matrix PESTLE a. Macro economy: is the state/ prosperity of a nation’s economy. This affects a business’s performance. There are 4 factors in this macro economic environment: - Growth of economy: - Interest rate - Exchange rate - Inflation b. Technology environment c. Sociological environment d. Political environment e. Legal environment 3.3.2. Analysis on micro/ sectoral environment a. Industry & competition: -An industry includes businesses supplying similar products/ services. b. Five competitive forces (the details in attached Figure 2): The five competitive forces will affect a business’s performance and profit. The strength of these forces changes from time to time  the business’s leader must see the opportunities & threat and take relevant actions. b1. Potential entrants They are not direct competitors but will be if they want to. These potential entrants are interested in the existing sector and therefore force the existing players to improve. b2. Industry competitors This is the direct competitive force to a businesses. Hence, the businesses have to indentify this force and design a right strategy. b3. Bargaining power of buyers Buyers are end users and are considered as a threat when they have the bargaining power and therefore they are able to ask for better quality with lower price  increasing a business’s costs. b4. Bargaining power of supplier The suppliers are considered as threat when they ask for higher price or deliver lower quality  lowering a business’s profit b5. Substitutes Substitutes are the products/ services from other industries. These products/ services are similar and are able to substitute for the excising products/ services provided at the existing industry. b6. The defects of “Five Competitive Forces” The model misses the importance of renovation & the differences between businesses. c. Competition changes during the life cycle of an industry -Introduction: slow growth, entry barrier is the key, technology plays a more important role than cost saving or loyalty to brand. -Growth: the businesses can increase their profit without fighting for other competitors’ market share. -Restructuring: competition is severe. The businesses’ normal strategy during this phase is lowering prices. -Maturity: demand grows poorly. The businesses try to maintain their market share. Decline: negative growth due to different reasons. Competition in prices is the most severe. 3.4. Analysis on internal environment 3.4.1. Value chain Value chain means a chain of a business’s activities/ process that convert inputs into values for customers (the details in attached Figure 3). This process includes: a. Main activities a1. Inside logistics: handling of materials, warehouse… a2. Production: converting inputs into values a3. Outside logistics: collecting, storing and delivering products to customers a4. Marketing & sales: a5. After sales service/ customer service b. Supporting activities b1. Technology R&D: focusing on the product/ service improvement b2. Human resource management: including recruitment, training, payment… b3. Business’s infrastructure: including its structure, management system, accounting & finance system, government relation… c. The above mentioned activities must be compared to other competitors’ d. The business can outsource a part of or all of main/ supporting activities d1. Why outsourcing is necessary: - Improving the business’s capabilities by hiring outside experts for technical improvement, etc. - Utilization of global resources - Increase of profit via process renovation - Risk sharing - Redirecting investment/ resources to other sectors d2. Principles for outsourcing - Searching for the best from the outstanding companies. - Evaluation of resources & capabilities: not outsourcing the services that the business is able to handle by itself. - Not outsourcing services/ capabilities that are the keys to the business’s success 3.4.2. The benefits of sustainable competition to enterprises/ businesses a. The businesses must keep focusing on the factors, described at point 1.4.2. b. The business must turn itself into a learning organization which is able to learn from the mistakes and improve. c. Benchmarking: the business must compare its products/ services to its most successful competitors. d. Overcoming its own stagnancy 3.5. SWOT analysis: 3.5.1 Concepts of SWOT: SWOT stand for Strengths, Weaknesses, Opportunities, Threats. SWOT is used when a business wants to analyze the internal & external factors while designing its strategy. 3.5.2. SWOT analysis: a. External Factor Evaluation (EFE) matrix is at the same time used. b. External Factor Evaluation (EFE) matrix is also used. c. Businesses usually use SWOT matrix to analyze and design its strategy. A business may use one or more SWOT matrix to analyze and make decisions CHAPTER 2 ANALYSIS ON PLC’S CURRENT COMPETITION POWER IN LUBRICANT & GREASE BUSINESS 1. Introduction of PLC 1.1 Establishment & development a. Earlier, PLC was a lubricant & grease trading company. Later in 2003, the company was privatized and becomes Petrolimex Petrochemical J.S company. On 27/12/2004, PLC was listed in Vietnam stock market. - Full name : Petrolimex Petrochemical J.S company (PLC) - Logo : - Office address : 195 Kham Thien Str.- Dong Da Dist- Ha Noi - Before 1994, PLC imported 100% of its products. Currently, PLC has been importing materials and blending products under PLC brand. PLC distributes its products in domestic market and exports some to Laos, Cambodia, China, Hong Kong, Taiwan and Philippines. 1.2. Business areas - Trading, import - exporting grease, lubricant, chemicals and petrochemical products. - Trading, importing-exporting petrochemical equipments. - Operating in other relating areas such as: warehousing, blending, testing, consultancy services - Currently, PLC (the parent company) is mainly dealing with lubricant & grease. PLC’s two other wholly owned subsidiaries are in charge of chemicals and bitumen… 1.3. Organization and management structure The total number of PLC’s staff is 326 people 1.4. A brief introduction of PLC’s products 1.4.1. An overview of grease & lube products -Grease & lube products are blended from base oil & additives. -Function: lubricating, etc. -The products are categorized into: + Engine lubricant: for motorbikes, commercial cars, passengers cars, certain equipment. + Industrial lubricant: including transmission lube, hydraulic lube, transformer lube and others + Marine lubricant: for marine engine & equipments. 1.4.2. PLC’s products a. PLC’s products follow international standards and can be substitutes for international brands. b. PLC has about 400 products, divided into 6 groups: - Motorbike engine lube: PLC Racer Scooter, PLC Racer SJ, PLC Racer SG, PLC Racer SF, PLC Racer SD, PLC Racer 2T, PLC Racer 2T Extra,... - Passenger vehicle engine lube: PLC Motor Oil Extra 40 & 50, PLC Komat SHD 40 & 50, PLC Komat CF, PLC Cater CH4, PLC Cater CI4,... - Commercial vehicle engine lube: PLC Racer Plus, PLC Racer HP,... - Marine lube: Atlanta Marine D, Disola, Aurelia XL, Talusia HR70,... - Industrial lube: PLC Rolling Oil 32, 46, 68,... PLC AW Hydroil 32, 46, 68,... PLC Supertrans, PLC Gear Oil MP 90 EP & 140 EP, PLC Angla 150, 220,... PLC Brake Fluid Dot 3, PLC Super Coolant 100... - Grease: PLC Grease L2, L3, L4; PLC Grease C2, PLC Grease L-EP 0, 1, 2, 3; PLC Grease BHT 252,... c. PLC’s product standards 1.5. PLC’s general process of production and business - Theoretically, the process starts from refinery and looks like: Crude  Mazut  base oil  grease & lubricant products - Currently, PLC has no refineries. Instead, it has two blending plants located in Hai Phong & Hochiminh. PLC’s production process is: Import of materials & additives  production - PLC also import 15% of its products for domestic distribution 1.6. Main materials and inputs: a. Main materials: - Main materials include: base oil, additives, steal drums and plastic cans, carton boxes. PLC imports base oil & materials from France, U.S, Japan, Korea, Taiwan, Singapore, Thailand. b. Other materials: - PLC buys other materials from both domestic & international suppliers. c. Commercial products: PLC imports some special & commercial products for its distribution 1.7. Facilities and technology 1.7.1. PLC’s facilities (warehouse, port, plants...) locates at strategic positions equiped with advanced technology. Its existing quality management is ISO 9001:2008 Can Filling Production Line a. Thuong Ly – Hai Phong blending plant: Drum Filling Production Line