Business Analysis for Nguyen Hoang Group in Vietnam Using BCG Matrix

24 Himalayan Economics and Business Management Research Article Business Analysis for Nguyen Hoang Group in Vietnam Using BCG Matrix Nguyen Hoang Tien 1 , Dinh Ba Hung Anh 1 and Nguye

24

Himalayan Economics and Business Management

Research Article

Business Analysis for Nguyen Hoang Group in Vietnam Using BCG Matrix

Nguyen Hoang Tien 1 , Dinh Ba Hung Anh 1 and Nguyen Minh Ngoc 2

1

Van Hien University, Vietnam

2

Ho Chi Minh City University of Finance and Marketing, Vietnam

1 I NTRODUCTION

Research Tools Overview

Bruce Doolin Henderson (1915 -1992) was the founder of Boston Consulting Group (BCG) in 1963 as Chairman and CEO until 1980 and President until 1985 From the ideas of According to him, combined with the practical requirements

of consulting large enterprises, in the early 1970s, BCG Group built a business portfolio management and analysis model

as a step in the planning process strategic planning of the enterprise This model, known by various names such as the Boston matrix, Growth-Market share matrix, Portfolio Table and most commonly the BCG matrix, allows analysis of the current position and direction The strategy of the business's main business units or product lines is based on the company's market (industry) growth rate and relative market share relative to its most important competitors

Urgency of the Research Problem

The business model is based on providing a product or service that will be profitable for the business at the moment, but keeping the business of the business profitable in the future needs to be determined Identify factors that change in future products and services BCG matrix in marketing and strategic management, helps businesses determine where to focus development resources The development of "star" and "question mark" products will increase market share rapidly

in some categories If investing in products belonging to the “dairy cow” group, business managers should pay attention

to renewing the product offering through upgrading and modernizing to ensure the growth rate of this product That is why businesses should use the Boston matrix to analyze and strategize for each of their investment portfolios

The Significance of the Study For Management Practice

In fact, the BCG matrix is an effective and quick tool to help businesses evaluate and make the right decisions for their organization With easy-to-understand illustrations and diagrams, the matrix helps businesses see future opportunities, identify the most suitable business areas to invest in to improve profits The BCG matrix allows to analyze investment capital needs in different SBUs, showing how to best use financial resources (investment capital), in order to maximize the business structure of the company company The matrix also indicates the need to take over or give up a certain SBU, aiming to build a balanced and optimal business structure, improving the competitiveness of enterprises

*Corresponding Author

Nguyen Hoang Tien

Article History

Received: 11.04.2021

Accepted: 22.04.2021

Published: 10.05.2021

Citations:

Nguyen Hoang Tien, Dinh Ba

Hung Anh, & Nguyen Minh Ngoc

(2021); Business Analysis For

Nguyen Hoang Group In Vietnam

Using BCG Matrix Hmlyan Jr Eco

Abstract: Strategy formulation is the first important step of managers on the way to bring businesses to success A good strategy with a clear vision and mission, worthy of the business will help managers orient the development of the business, staunchly support the business to overcome difficulties, and maintain determination to the end selected target In the context of the increasingly integrated world, the world economy has almost no borders

to divide the market, the competition between businesses is becoming more and more fierce

In order to find the possibility of success in that fierce market, building a suitable strategy is

a vital element to help businesses determine the difference as a foundation for development and success Managers can analyze their business to build their appropriate strategies using

a variety of methods Therefore, to understand better, the author decided to perform business analysis for Nguyen Hoang Group (NHG) using the BCG matrix

Keywords : Business analysis, BCG matrix, Nguyen Hoang Group

Open Access

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However, the BCG matrix is quite simple, only

assessing the potential and prospects of SBUs based on

two factors: market share and industry growth rate is

incomplete, in some cases even leading to mistakes

For example, a low market share can still have a strong

competitive position and high profits in a certain market

segment because the company differentiates products

that best meet customer needs In addition, this matrix

has not deeply assessed the relationship between market

share and costs; This relationship does not always

happen in the direction as mentioned by BCG, large

market share does not always create cost advantage In

some industries, due to the characteristics of

technology, companies with a small market share can

still achieve lower production costs than companies

with a large market share Or in mature, slow-growing

industries, large market shares do not always bring high

levels of profit as said about the nature of SBU

Therefore, in order to be able to make the most accurate

decision for the company's business, it is necessary to

combine the consideration of the BCG matrix with

other analytical tools to give an objective and

multidimensional view of the company's business,

products and markets

Objectives of the study

 General goal: to analyze the strategy and apply it to

business

 Specific objectives: systematize the positions of the

SUBs in the enterprise, thereby determining the

portfolio to be invested or eliminated to match and

avoid wasting resources (because the resources of

each enterprise are term) From the research results,

solutions and recommendations are given to

improve the business capacity of enterprises

2.1 Matrices for business analysis

 SWOT matrix

The SWOT matrix is an abbreviated collection of

the first letters of English words: Strengths,

Weaknesses, Opportunities and Threats, it is a

well-known model in business analysis of the enterprise

Strengths and weaknesses are internal to the business,

while opportunities and threats come from outside It is

the best known Swot matrix concept It can be said that

the SWOT matrix is the analysis of the external

environmental factors that the business has to face

(opportunities and threats) as well as the factors in the

internal environment of the enterprise (the strengths and

weaknesses)

 BCG Matrix

BCG matrix stands for Boston Consulting Group

matrix BCG matrix theory is built to help businesses

orient their market share growth strategy by putting

product categories into 4 groups, determining the

position of these products in the market to bring them to

market make investment or exit decisions This BCG

matrix we will analyze the aspects of the matrix corresponding to the vertical and horizontal axes that are:

+ Market Share: The market share of the product in the market is low or high

+ Market Growth: Potential customers in the market have growth prospects or not

 McKinsey Matrix The McKinsey matrix is a more flexible, multifactor portfolio analysis model than the BCG matrix This matrix allows businesses to apply assessment of the appropriateness between their capabilities and production and business activities of products and services, and at the same time helps to predict the location of products/services, facilitating strategic planning

 IFE matrix (internal factors evaluation matrix) Internal factors are considered very important in each business strategy and the goals that the enterprise has set, after considering the internal factors, the strategic manager needs to make a matrix of these factors This is to consider the ability to react and recognize strengths and weaknesses Thereby helping businesses make the most of their strengths to exploit and prepare internal resources to confront weaknesses and find ways to improve these weaknesses The IFE Matrix is used to summarize and evaluate the important strengths and weaknesses of functional business segments, and it also provides a basis for defining and evaluating the relationships between these segments

 QSPM matrix (quantifiable strategic planning

matrix)

The QSPM matrix uses the inputs from the analyzes

at the IFE and EFE matrix formation steps to help strategists objectively decide which of the likely alternatives is the best strategy most attractive and worthy for businesses to pursue in order to successfully realize their goals

 CPM Matrix (Competitive Image Matrix) The competitive image matrix is a model that identifies a company's main competitors and its own strengths and weaknesses relative to the competitive firm's strategic position Establish a competitive image matrix to make comparative assessments of the company with major competitors in the same industry, the comparison is based on factors affecting the competitiveness of the company in the industry

2.2 BCG matrix The Boston Matrix is divided into 4 parts based on

an analysis of market growth and relative market share, as shown in the diagram below:

• Dogs: These are products with low growth or market share

• Question marks: Products in high growth markets with low market share

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• Stars: Products in high growth markets with high

market shares

• Dairy cows: Products in low growth markets with high

market shares

How to analyze business using the BCG matrix?

First, we will need data on the market share and

growth rate of the product or service When examining

market growth, one needs to objectively compare with

one's biggest competitor and think about growth over

the next three years However, if our market is

extremely fragmented, we can use absolute market

share as a measure

Next, we can build an initial frame for the Boston

matrix In the Boston matrix chart, market share is

shown on a horizontal line (low left, high right) and

growth along a vertical line (low low, high) The four

quarters are designated stars (upper left), question mark

(upper right), cash cow (lower left) and dog (lower

right) Each SBU will be represented by a circle, the

size of the circle will depend on the percentage of

market share / total market share of the industry Put

each of our products in the right bracket based on its

position in market share and growth rate for the

business Where we choose to place the dividing line

between each quadrant depends in part on how our

company compares to the competition

Below is the breakdown of each SBU subgroup:

 Star: The SBU (portfolio) with the best market

share and the most cash generation is considered a

star Often exclusive products or first-time products

are considered to be stars However, due to the high

growth rate, the stars consume large amounts of

cash Stars can eventually become cash bulls if they

sustain their success until the market growth rate

declines Companies should invest in stars

 Cow: Cow is an SBU that has a high market share

and generates more profit for the business than the

money invested in it These are SBUs with high

market share but low growth prospects According

to NetMBA, the products that fall under the cow

box provide the profitability needed to turn the

question mark SBU into a market leader, including

corporate administrative costs, fund research and

development, and public debt servicing company

and pay dividends to shareholders Companies

should invest in bull SBUs to maintain current

levels of productivity, or to passively increase

profits

 Dogs: Dogs are considered SBUs with low market

share and low growth rate, often break even, do not

make money or require too much investment Dog

SBUs are often thought of as cash traps because

businesses have money tied up in them, even

though they are brought in with essentially nothing

in return These SBUs are prime candidates for

divestment

 Question marks: These are SBUs with relatively

low market share and competitive position But

they are high-growth industries and very promising

in terms of profits and long-term growth This SBU can be grown into a star SBU if nurtured with attention because they need a large amount of capital investment and need to properly assess the potential nature to have an investment plan at the right time

2.3 Strengths and weaknesses of BCG matrix in business analysis

+ Strengths

In fact, the BCG matrix is an effective and quick tool to help businesses evaluate and make the right decisions for their organization With easy-to-understand illustrations and diagrams, the matrix helps businesses see future opportunities, identify the most suitable business areas to invest in to improve profits The BCG matrix allows to analyze investment capital needs in different SBUs, showing how to best use financial resources (investment capital), in order to maximize the business structure of the company The matrix also indicates the need to take over or give up a certain SBU, aiming to build a balanced and optimal business structure, improving the competitiveness of enterprises

+ Weaknesses

However, the BCG matrix is quite simple, only assessing the potential and prospects of SBUs based on two factors: market share and industry growth rate is incomplete, in some cases even leading to mistakes For example, a low market share can still have a strong competitive position and high profits in a certain market segment because the company differentiates products that best meet customer needs In addition, this matrix has not deeply assessed the relationship between market share and costs; This relationship does not always happen in the direction as mentioned by BCG, large market share does not always create cost advantage In some industries, due to the characteristics of technology, companies with a small market share can still achieve lower production costs than companies with a large market share Or in mature, slow-growing industries, large market shares do not always bring high levels of profit as said about the nature of SBU Therefore, in order to be able to make the most accurate decision for the company's business, it is necessary to combine the consideration of the BCG matrix with other analytical tools to give an objective and multidimensional view of the company's business products and markets

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3 R ESEARCH M ETHODOLOGY

3.1 Data sources and method of collection

Data sources

Data consists of statements that reflect reality A

large class of propositions of practical importance are

measurements or observations of a variable quantity

Those clauses can include numbers, words, or pictures

The data consists of secondary data and primary data

Secondary data is data collected by others, used for

purposes that may be different from our research

purposes It can be unprocessed data (also called raw

data) or processed data Secondary data is not directly

collected by the researcher Primary data is the data that

the market researcher collects directly at the data source

and processes it to serve his research Primary and

secondary data collection sources can come from inside

and outside the business

Data collection method:

 Observational method

 Method of interview by letter

 Telephone interview method

 Direct personal interview method

 Fixed group survey method

 Thematic group investigation method

3.2 Research Method

The systematic approach, using dialectical

materialism and historical materialism as general

research methods, throughout the process of

considering the research problem During the research

process, we apply related theories in combination with

synthesizing, analyzing, and evaluating data,

demonstrating strengths, weaknesses, opportunities and

challenges to build a system of perspectives

development direction and solutions

3.3 Research Procedure

 Select research topic

 Identify research questions, hypotheses and

methods

 Develop outline and research plan

 Data collection and data processing

 Writing research reports

4.1 Business analysis for Nguyen Hoang Group

using BCG matrix

 SBU star

After 20 years of operation, Nguyen Hoang Group is

considered the largest private enterprise in the field of

education in Vietnam Revenue in 2018 was USD 200

million, according to self-disclosure information

Nguyen Hoang is operating 50 educational institutions

in 18 provinces and cities, meeting the learning needs of

about 50,000 learners, from preschool to postgraduate

training As of July 2019, four universities of Nguyen

Hoang Group including Ba Ria - Vung Tau, Hong

Bang, Gia Dinh and Hoa Sen have attracted nearly

50,000 students This product line is highly appreciated for its profitability and self-sufficiency in capital requirements But while it is forming, a large amount of capital is also required to maintain its leading position

 SBU question mark The general education system consisting of three brands iSchool, UK Academy and SNA is meeting the learning needs of more than 15,000 students, of which 70% attend 34 campuses in 18 provinces and cities Eight campuses of Saigon Academy attract 1,500 children of preschool age This is a product line with a competitive position and relatively low market share But they are high-growth industries and very promising

in terms of profits and long-term growth This SBU can

be grown into a star SBU if nurtured with attention because they need a large amount of capital investment and need to properly assess the potential nature to have

an investment plan at the right time

 SBU the dairy (cash) cow Nguyen Hoang is a pioneer enterprise to launch an education city model, where all kinds of preschool schools such as SGA are concentrated, etc This product line has high profitability but they do not have the opportunity to speed up the development and the industry growth is very low Therefore, the need for investment capital is not too large and is considered a widely profitable source

 SBU dog The system of bilingual schools is mainly concentrated in big cities such as Hanoi, Da Nang, Ho Chi Minh City, and Can Tho, so Nguyen Hoang decided to build the first iSchool in Rach Gia and expand to the western provinces such as Kien Giang,

An Giang This is a product line with low market share and low growth Despite being placed in the dog category, the premium price segment still contributes financially to the company

4.2 Analysis Results Discussion

A marketing strategy must ensure strengthening or maintaining support for "star" products (right from the time when the market is strong and profitable, leading

to many competitors entering and invest more to increase market share) and “question mark” (to gain higher market share in attractive markets) But it is necessary to reduce investment in “dairy cows” (when the low growth rate of the market makes the market less attractive to competitors), and omit or end all “dog” products Nguyen Hoang Group includes many Star SBUs, because other product lines contribute to promoting Nguyen Hoang's education market sharply in terms of education market share, helping the group develop and attract many customers who focus on bringing main profits, becoming the leader in the private education market in Vietnam

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4.3 Improving BCG matrix

The BCG matrix of investment diversification is

indispensable in the process of enterprise scale

development However, how to diversify to create

sustainable competitive value is a headache for many

businesses According to management theory, large

corporations often apply the method of establishing the

BCG Matrix (Boston Consulting Group) This method

divides the company's activities into four groups:

 -Group I: Having stable and profitable activities

called dairy cows

 -Group II: Activities with great profit opportunities

that need investment capital are called stars.·

 -Group III: Activities with high profit potential but

also hidden risks are called question marks

 -Group IV: Activities that are losing money and

have little chance of development are called sick

dogs

Basically, to win against the opponent, it must be

strong in internal resources, the activities in the

business must be smooth, fast and effective Therefore,

Nguyen Hoang Group must strengthen corporate

governance to increase the efficiency of the group's

business strategies The Group needs to be thorough

and consistent in directing the development and

implementation of development policies through the

good implementation of strategic implementation

measures

Along with the implementation of measures to

improve human resource management, the leadership

needs to organize for employees in the company to

improve their professional management skills, continue

to improve the organizational apparatus, the

organizational neat function The management team

needs to be stronger in professionalism, better in

expertise to meet the needs of strategic implementation

such as implementing marketing activities, developing

markets, building and developing groups

Identifying and assessing the opportunities and

threats from the external environment affecting the

business will allow the business to develop a clear

business mission, define feasible long-term goals,

design a strategic appropriate strategies and appropriate

policies to achieve annual goals The analysis of

external factors has many shades, qualitative, intuitive

and difficult to visualize In strategic management,

researchers have proposed two tools that allow

enterprises to score and quantify the effects of the

environment on their operations

5.1 Conclusion

Through the process of performing business analysis

using the BCG matrix, it is possible to establish

reasonable company development strategies of Nguyen

Hoang Group It is to strengthen corporate governance

to increase the efficiency of the corporation's business

strategies Identify and evaluate opportunities and threats from the external environment affecting the business Implement measures to improve the management of human resources of the company, helping the company to become more and more perfect

5.2 Recommendation For the leader of Nguyen Hoang Group

* Request:

 Focus on renovating the management and operation

of business activities Promote marketing to capture and accurately process information about the market, on that basis, develop appropriate business solutions for each specific time and for each specific customer Promoting the strength of the group investing in modern facilities and equipment, actively reinforcing trust with customers in order to expand the market

 Strengthen the innovation of management and administration of the administrative apparatus, develop specific standards and provide professional training for employees, arrange labor arrangements

in accordance with the capacity of each employees

* Offer:

 Promote cooperation and investment in new projects to develop the business system of the enterprise

 Enterprises need to actively capture information

of customers and business partners to meet their needs

 For leaders of the university system in Nguyen Hoang Group

* Request:

 Improve the quality of teaching suitable for students and students

 Expand the teaching scale in line with the domestic market, strengthen cooperation with foreign universities to expand the teaching scale

 Strengthening teaching management with a team

of highly qualified teachers and employees

* Offer:

 Focus on brand promotion through community events

 Improve and invest in teaching facilities in schools

 Strengthen enrollment in high schools and open career orientation sessions to attract students

 For leaders of the remaining business units of Nguyen Hoang Group

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* Request:

 Improve product quality of the enterprise, create

attractive incentives for agents and distribution

channels to develop distribution channels

 Strengthen management by recruiting qualified

employees

 Promote product promotion and marketing

activities to customers Creating trust for customers

is a company not only in terms of business but also

responsible for the community

* Offer:

 Create trust for customers about the products that

the business provides by strengthening promotion

and marketing

 Establishing a consulting and customer care

support department with a team of expertise and

experience

 Create many incentives on after-sales and

promotions for business products of the business

5.3 Solution for coordination between universities

and the remaining business units of Nguyen Hoang

Group

Solutions are to strengthen cooperation between

universities and businesses to improve the efficiency of

science and technology activities In the context of

Industrial Revolution 4.0, the core element of building a

higher education system is training associated with

practical requirements, training to better meet the needs

of society Developing a training model that links

educational institutions (schools) with enterprises is

considered an important requirement In the coming

time, to promote the cooperation relationship between

universities and businesses in the area to improve the

efficiency of science and technology activities, some

groups of solutions are as follows:

Firstly, in order for effective research works to be

accepted by enterprises, it is first necessary to further

expand the scientific research movement in depth To

do so, it is necessary to both motivate and force

lecturers to participate in scientific research activities

Second, before approving an applied research

project (key grassroots topics, high-level topics with

large budgets), the university should request materials

to assess market needs in technology by the author or

ordered by an independent market research agency

Third, invite reputable business managers to

participate in the acceptance committee of scientific

research projects in relevant fields: Increase the

participation of business people in the process of

evaluating research results use of the school

Fourth, strengthen the relationship building between

the University and business associations such as the

Vietnam Chamber of Commerce and Industry (VCCI),

the Enterprise Association, the Young Entrepreneurs

Association, the Women Entrepreneurs Association, and industry associations Every year, there should be a coordination between the school and these units, on the one hand the school needs to promote the promotion of scientific and technological products of the school's staff to enterprises On the other hand, businesses can determine their needs and place orders with the school about the requirements in technology improvement, product research or proposing management and business solutions

Fifth, schools and faculties need to have plans to strengthen the building of alumni networks, especially business alumni Consider this as a bridge between schools and businesses in strengthening cooperation between schools and businesses in general and cooperation in science and technology in particular

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