Tài liệu Xây dựng chiến lược kinh doanh cho sản phẩm title viglacera thăng long

LUẬN VĂN THẠC SĨ XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO SẢN PHẨM TITLE VIGLACERA THĂNG LONG BUILDING STRATEGIES TO DIFFERENTIATE TILE PRODUCTS OF VIGLACERA THANG LONG JOINT STOCK COMPANY 1 GRIGSS UNIVERSITY GLOBAL ADVANCE MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING STRATEGIES TO DIFFERENTIATE TILE PRODUCTS OF VIGLACERA THANG LONG JOINT STOCK COMPANY Group No: 12 1. Nguyễn Văn Minh – Team Leader 2. Đỗ Duy Hưng 3. Lôi Thị Mai Hồng 4. Đỗ Việt Thắng HANOI, 2011 2 TABLE OF CONTENT Content page TABLE OF CONTENT 3 LIST OF TABLES AND FIGURES 6 INTRODUCTION 7 Chapter 1. THEORETICAL BACKGROUND I. OVERVIEW OF BUSINESS STRATEGIES 9 1. Concepts 9 2. Strategy classification 9 3. Factors affecting a company’s strategies 10 II. PROCEDURE IN BUILDING STRATEGIES 16 1. SWOT Analysis 16 2. Basic business strategies 18 3. Selection of the optimal strategies 24 Chapter 2. BUSINESS REALITY IN VIGLACERA THANG 25 LONG JOINT STOCK COMPANY I. GENERAL INTRODUCTION ABOUT VIGLACERA THANG 25 LONG JOINT STOCK COMPANY 1. Establishment and development 25 2. Organization structure 26 3. The main business activities, products and technology process 28 II. PRODUCTION AND BUSINESS REALITY 31 1. Production 31 3 2. Sales 3. Finance 34 4. Investment and basic construction 38 38 III. BUSINESS STRATEGIES BEING APPLIED 39 Chapter 3. BUILDING STRATEGIES TO DIFFERENTIATE TILE PRODUCTS OF VIGLACERA THANG LONG JOINT STOCK COMPANY I. BASIC ANALYSIS FOR BUILDING STRATEGIES 40 1. Macro environment analysis 40 2. Industrial environment analysis 43 3. Internal company analysis 48 II. DEVELOPMENT ORIENTATION OF THE COMPANY 51 1. SWOT synthesis 51 2. Strategic orientation 53 3. Strategic aims 53 III. IDENTIFYING VISIONS, MISSIONS, AND OBJECTIVES 54 IV. STRATEGY SELECTION 55 V. STRATEGIC SOLUTIONS 57 1. Maximize the available resources to maintain stable production 59 and reduce production costs, maintain stable revenue and profits 2. Investment in repair, renovation or replacement of some major 59 equipment 3. Marketing, enlisting the customers’ support to promote the 4 61 consumption of the products. 4. Research and Development 64 5. Finance 64 6. Organization of human resources 64 CONCLUSION 66 REFERENCES 67 LIST OF TABLES Tables Page Table 2.1: Production Results in 2010 33 Table 2.2: Revenues by regions 35 Table 2.3: Consumption by regions 35 Table 2.4: Average selling price by regions 35 Table 2.5: Revenue by product lines 36 Table 2.6: Consumption by product lines 36 Table 2.7: Average selling price by product lines 37 Table 2.8: Basic financial expense 38 Table 2.9: Analysis of competitive wall tiles 45 Table 2.10: Analysis of competitive floor tiles 46 5 Table 2.11: Analysis of competitors 47 Table 3.1: SWOT analysis 51 Table 3.2: Selecting strategy basing on GREAT model 56 Table 3.3: Prices of products 57 Table 3.4: Lists of investment equipment 61 LIST OF FIGURES Figure 1.1: Simplest SWOT analysis model 17 Figure 2.1: Organization structure 26 Figure 2.2: Technology Flowchart 29 6 INTRODUCTION 1. The necessity of the capstone project report In the business world, gaining competitive advantage and successfully competing against competitors is a challenge for any business. Therefore, every business must get a business strategy right, and then implement it effectively. Business strategy must be built on the basis of accurate assessment, opportunities and challenges delivered by the external environment as well as strengths and weaknesses in the internal business. Viglacera Thang Long Joint Stock Company is an enterprise specializing in manufacturing and trading ceramic tile products. In the period of 10 years, though there were many good conditions, Viglacera Thang Long could not achieve the desired effects. One of the main causes affecting the production efficiency of Viglacera Thang Long is the orientation and development of the product range. Through knowledge of strategic business management acquired during the training program, we analyzed and suggested "Building strategies to differentiate tile products of Viglacera Thang Long Joint Stock Company" and selected as the topic of our capstone project report. 2. The aims of the capstone project report The aims of the research are synthesizing, analyzing and proposing strategies, as well as offering specific solutions to implement the strategies in Viglacera Thang Long Joint Stock Company. 3. The subject and scope of the capstone project report The range of issues affecting directly and indirectly to the business reality of Thang Long Viglacera as well as the influential factors in the process of building strategies to differentiate the product range are discussed. 7 Spacial scope: Viglacera Thang Long Joint Stock Company. Time scope: The period from 2009 till the end of 2010. 4. Report structure This capstone project report consists of 3 chapters: Chapter 1: Theoretical background of the building business strategies. Chapter 2: Business reality in Viglacera Thang Long Joint Stock Company. Chapter 3: Building strategies to differentiate tile products of Viglacera Thang Long Joint Stock Company. 8 Chapter 1 THEORETICAL BACKGROUND I. OVERVIEW OF BUSINESS STRATEGIES 1. Concepts We consider some definitions of business strategy by some scholars to draw the fundamental characteristics of business strategy. According to Chandler (1962), the strategy identifies goals and objectives of long-term basis, applies a sequence of actions, allocation of necessary resources. According to Quinn (1980), strategy is a pattern or plan to integrate the major objectives, policies and action sequences into a cohesive and rigorous whole. Johnson and Scholes explained that strategy is the direction and scope of an organization to gain long-term competitive advantage for organizations to adopt the format of its resources in a changing environment, to meet market demand and satisfy the expectations of our stakeholders. Through the above definitions, we can draw conclusions that strategy of a business is the combination of decisions and decisions relating to the choice of facilities and the allocation of resources to achieve goals. Important goal of a business is to achieve a better strategic position than its competitors. 2. Strategy classification Basing on the different views, we should have correct identification of the strategic level. However, commonly strategies are divided into three levels as follows: 9 Group-level strategies (Company-level strategies): Towards a general purpose and scope of the organization, they are statements about long-term goals and the development orientation of that company or corporation. Business unit-level strategies: Related to how a company can successfully compete in a market (or a market segment). It reflects the business’s beliefs in where and how they can gain a competitive advantage over its rivals. Functional strategies (Action strategies): is the detailed proclamation about the objectives and methods of short-term action that are used by the functional departments (Production, Marketing, Finance, R & D ...) to achieve short-term goals of the SBU and long-term goals of the organization. 3. Factors affecting a company’s strategies 3.1. External environment This is a group of factors that create opportunities and threats for companies in competitive conditions. 3.1.1. Macro environment + Macroeconomic environment It causes impacts on businesses and industries. States of the macroeconomic environment determine the health and prosperity of the economy. Most of these strategies in a certain degree depend on what is happening in the local, regional or global economy. The important factors in the macroeconomic environment include the growth rate of the economy, interest rates, exchange rates and inflation rates, etc. + Technology environment Technology includes institutional activities related to the creation of new initiatives and then applying it to meet the output that is products, processes and new materials 10 ... The changes and technological developments may affect the height of entry barriers and reshape the industry structure. + Socio-cultural environment It is related to social attitudes and cultural values. These social changes have created opportunities and challenges for enterprises because the cultural values and social attitudes form the foundation of society, it often leads to changes in the technological, political - legal, economic and demographic conditions. + Demographic environment Demographic segments in the macro environment are in relation to population, age structure, geographic distribution, ethnic communities, and income distribution. + Politics - law environment Politics and laws factors have a major impact on the level of the opportunities and challenges from the environment. Enterprises need to analyze the relevant new policies of the state management, the industry or government sector to adjust the selection or priority of the labor law, antitrust law, tax law, etc. In the global scale, the enterprises should also pay attention to political matters, commercial law such as trade policies or protection barriers that are nation-specific. + Global environment It concludes relevant global markets such as current changing market, the international important political event, and institutional and cultural characteristics in global market. Globalization of business markets creates both opportunities and challenges. We need to have an awareness of the different characteristics of social and cultural institutions of the global market. 11 3.1.2. Micro environment in the industry Industry and competition analysis is a set of concepts and techniques for clarification of key issues, which are prominent features of the economic sector, competitive forces, the impact causing changes in the industry; position of enterprises, other factors affecting the success or failure in competition and attractiveness in terms of the ability to gain profit on average. According to Michael E. Porter, there are five factors that create competition within the sector: + The enter of potential competitors; + Level of competition between existing businesses in the industry; + Bargaining power of buyers; + Bargaining power of sellers; + Threats of substitute products. The appearance of competitors When new competitors enter the market, they often create new competitiveness. When entering a new industry, new rivals will face certain barriers. Typically, business is always trying to prevent potential competitors, make it difficult for them to join the industry. The emergence of new competitors put pressure on the existing business operations to more efficiently and gradually adapt to compete with new properties. Suppliers’ power Suppliers can affect a particular industry by raising prices or reducing quality of input requirements. Supplier has power when: 12 + A business is not an important client to the supplier. + Supplier’s goods or services are very important to businesses and it is less likely to replace the goods or services of different suppliers because it causes costly damage to businesses. + It threats downstream integration toward the industry and direct competition with the business. Buyers’ power Buyers often ask for a discount, demand higher quality goods and services. They even use the competitors’ goods or services if necessary. Buyers are most powerful in the following cases: + Buy in bulk. + The buyer is satisfied with the purchase from several suppliers at once. + The buyer can choose, change suppliers at lower costs. + The buyer is capable of vertical integration. The presence of substitute products Substitute products may limit the potential development of an industry or its profit. They limit the ability to set high prices, and lead to limiting the profitability of the business. An industry is considered unattractive if the entry barriers are low, the threat level from strong competition with substitute products and intensity of competition in the industry is high. Competitors in the industry 13 Competition in a sector can take place through intense rivalry when being challenged by the actions of competitors or when businesses realize an opportunity to improve its position in the market. Enterprises in the sector are of mutual dependence, often attack and response to each other. Level of competition in the industry depends on competitive industry structure, the conditions of demand, and high barriers when leaving the industry. The growth of demand tends to reduce competition and vice versa, the competition is more intense as demands reduce. 3.2. Internal environment Internal environment includes internal factors which businesses can control. The internal environmental analysis is for determining the businesses’ strengths and weaknesses to maximize their strengths and limit their weaknesses and try to turn strengths into special ability if possible. 3.2.1. Resources, capabilities and core competencies. Resources can be divided into two categories: tangible and intangible. Tangible resources They are the visible elements and can be measured (for example: equipment, factories ...). Thus, tangible resources can be valued with financial reports. Intangible resources Invisible resources are potential factors that contribute to the core of the business. These factors are not visible, so the competitors often do not know. As a result, enterprises tend to use those resources as a base for your core competencies. Basing on the theory and reality, invisible resources are more sustainable, so it is a more solid basis for competitive advantage. Capacities 14 Capacity is the business’s ability to mobilize resources gathered by purpose to achieve the desired results. Knowledge of human resources enterprise owns is one of the most important ability of the business; it can be the starting point for competitive advantages. Core competences Core competencies are resources and abilities used to form competitive advantage to overcome the opponents. Businesses are always aiming to identify their core competencies on the basis of available resources and capacity. Building up core competences There are four standards for core competencies. They are value, rareness, and difficulty in imitation and replacement. + Value Valuable capacities are entered as the capacity to create value for business by exploiting opportunities and reconciliation the risks and challenges in the external business environment. + Rareness These are abilities that many businesses could find, even existing or potential competitors could. Competitive advantage can be formed when the businesses grow and exploit their own abilities that rivals do not have. + Difficulty in imitation (or expensive if imitation) This capacity must be that opponents are difficult to imitate or have to spend great expense to copy. Capacity becomes difficult to be imitated when cause-effect relationship between the ability of the business and competitive advantage is confusing. A certain number of capabilities in enterprises were formed and 15 developed, but maybe because of their own historical conditions (Businesses could develop because they started in the right place and at right time). +Capacities that cannot be replaced They are the capacity at no strategic equality. Intangible capacities are often difficult to alternative and create more difficulties than the tangible abilities for opponents to search for resemblance. Capacity to participate in competitive advantage should not be equally valuable in strategies with other resources that are not rare or imitable. 3.2.2. Outsourcing It is the purchase of the value-creating activities from external sources. The main cause of the outsourcing due to the business’s limited capacity and lack of ownership of resources and capacities needed to be able to perform better than functional and supporting activities in the chain value. Today, the trend of outsourcing is increasingly growing. II. PROCEDURE IN BUILDING STRATEGIES In this thesis, the authors approached the strategy building procedure basing on the SWOT analysis (Matrix of Opportunities - Threats and Strengths – Weaknesses) 1. SWOT analysis SWOT analysis allows businesses to see clearly these above issues, which is the base of the building up ad selection of the right strategies. Opportunities: The environmental conditions of operation have impacts on the business’s benefit. Some main trends such as relationships with suppliers and 16 customers, technological developments and changes in competition, and the law can create opportunities for businesses. Threats: They are the environmental conditions of operation that have bad impacts on businesses. For example, the market penetrations of the competitors’, the increasing power of suppliers or customers, a decrease in the growth of the market ... are always a risk for enterprises Strengths: They conclude resources and capabilities of the business that are controlled and managed so that they can create advantages compared to other competitors in meeting customer needs. Weaknesses: Restrictions, the lack of resources and capabilities of enterprises in relation to competitors create disadvantages for businesses in meeting customers' needs. Figure 1.1 : Simplest SWOT analysis model O – Opportunities T – Threats S – Strengths S – O: Capitalize on your strengths to take advantage of opportunities. S – T: W -Weaknesses Internal environment analysis External environment analysis W – O: Troubleshoot weak points, took advantage of opportunities. 17 Capitalize on your strengths to limit and avoid risks. W – T: Troubleshoot weak points to overcome difficulties. Business will determine the overall strategies through the results integrated by SWOT analysis. It may be one of four parties following strategies: + S - O Strategy (Strengths - Opportunities): Use internal strengths to exploit business’s opportunities of the external environment. + S - T Strategy (Strengths - Threats): Use the strengths of the business to avoid or reduce the threats from the external environment. + W – O Strategy (Weaknesses - Opportunities): Overcome the weaknesses within by utilizing the opportunities from the external environment. + W – T Strategy (Weaknesses – Threats): Try to avoid, reduce weaknesses inside, from outside threats. Here are strategies to minimize weaknesses inside and avoid external threats. 2. Basic business strategies Main clients are the foundation for successful business strategy. A business that is customer-centered and market-oriented focuses more on customer development when planning their strategies. There are some factors that need to be determined: The groups of customers - who will be satisfied? Needs of target customers - what to satisfy? How to satisfy customers’ needs through the implementation of business strategies? According to Michael Porter, the advantages of a business will always be in one of the two factors, which are the cost advantage and product differentiation. Based on the advantages, enterprises will pursue three strategies: cost leadership, product differentiation and focus strategy. 18 + Cost leadership strategy (low cost strategy): When determining the leading of cost, enterprises will choose to focus on the size and product differentiation will be little. Leader in the costs are often concerned with large market and regular priced products and services that are lower than its competitors to attract customers. To gain a business advantage on costs, there are some affecting factors, for example, large production scale, raw material incentives, technology proprietary and service levels. .. Businesses have to perform better than their competitors through all activities in order to produce goods or services at lower cost than competitors’. Businesses that have advantages in costs can resist the pressure of encroaching competition from low-cost sector. When there are alternative products to penetrate the market, enterprise can be applied discounts to be ready to compete and maintain stable market shares because their price is always a key factor to the large buyers. When other business sectors join, usually one of the conditions must be consistent with the cost or value of the leader (as one of the elements of the fence to join). Thus, leading in the cost will be safe to some extent if we maintain our cost advantage. Cost-leading strategy has some potential risks, for example, competitors try to produce at lower costs and stay competitive. In case equipment, production technology is old and outdated, the opponents’ application of new technologies or improved technology systems and equipment investment in new, modern production allows them to produce at lower costs. Another risky factor for cost-leading strategy is imitation. Rivals are sometimes successful in imitating what the leader does about the costs. Thus, there will be 19 fierce competition on prices, businesses are forced to attempt to lower price or add additional features to products but keep the original purchase price. If the leaders focus too much on costs through reducing costs, they tend not to track changes in consumer tastes and competitive scale. Therefore, businesses may forget the consolidation and development of the market. + Product differentiation Strategy- This is the strategy chosen as the research subject of the authors. The aim of differentiation is to achieve competitive advantage by creating products / services with different features that consumers think are unique. Businesses apply this strategy to satisfy the needs of consumers in a way that competitors can not have; thereby allowing them to set product prices significantly higher than the industry average. Unlike the strategy of leading on costs, product differentiation is aimed at increasing revenue by setting high prices, while customers are willing to pay that price because of belief in quality and different value in unique products. Basis for differentiation is potential. For example, with a product line, differentiation is in space and time, in conformity with the age and socioeconomic groups, etc. Typically, businesses with product differentiation expect to have level of differences as much as possible to gain competitive advantage. Product differentiation mainly has three basic criteria: innovation, adaptation to customers, and quality. New features are the source of differentiation. When the characteristics and features of the product have real appeal to customers, it is reflected in the ability to meet the customers’ expectations and psychology, it is more associated with their status, pride ... differentiation strategy will promote the power. 20