Topic evaluating and improving the competitive advantageat sisc instrumentation joint stock company

NATIONAL ECONOMICS UNIVERSITY BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT BACHELOR THESISMajor BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT

NATIONAL ECONOMICS UNIVERSITY BACHELOR OF BUSINESS ADMINSSTRATION IN ENTREPRENEURSHIP MANAGEMENT

BACHELOR THESISMajor BACHELOR OF BUSINESS ADMINSSTRATION IN

ENTREPRENEURSHIP MANAGEMENT

Topic: Evaluating and Improving the Competitive Advantage

at SISC Instrumentation Joint Stock company.

Student’s name: Võ Thị Nhi Na

NATIONAL ECONOMICS UNIVERSITY BACHELOR OF BUSINESS ADMINISTRATION IN

ENTREPRENEURSHIP MANAGEMENT

BACHELOR THESIS

Topic: Evaluating and Improving the Competitive Advantage at

SISC Instrumentation Joint Stock company.

Student:Vo Thi Nhi Na

Speciality: Bacherlor of Administration in Entrepreneurship Management

Class: BBAi1

Student’s ID: 11183439

Supervisor: Tran Huy Phuong

HANOI, 2022

B-BAE

CHAPTER 1: THEORETICAL REVIEW 15

1.1 Overview of Basic concepts 15

1.3.2 Competitive profile matrix 19

1.4 Factors affecting the competitiveness of enterprises 20

2.2.1 Introduction of SISC’s competitors 30

2.2.2 Advantages and disadvantages of SISC’s competitors 30

2.2.3 Key success factors 31

CHAPTER 3: SOLUTIONS TO BUSINESS ISSUE 40

3.1 SISC's current competitive position 40

3.1.1 Strengths of the competitive position of SISC 40

3.1.2 Weaknesses of the competitive position of SISC 40

3.1.3 The cause of the weaknesses 40

3.2 Recommendations to improve the competitive advantage of SISC 413.2.1 Optimizing the delivery process 41

3.2.2 Building a healthy working culture to promote motivation 423.2.3 Create value for the society 43

3.2.4 Building after-sales service management to achieve customer satisfaction44

3.2.5 Create proper training program to the technical team 45

APPENDIX 52

STATUTORY DECLARATION

I hereby declare that I have written the submitted Bachelor Thesis

independently I did not use any outside support except for the quoted literature,and

other sources mentioned at the end of this paper

I marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content

Hanoi, 31/05/ 2022

Signature

CPM: Competitive profile matrixKSFs: Key success factorsEDI: Electronic data interchangeCSR: Corporate social responsibility

LIST OF FIGURES

Figure 1.1 Porter's five forces framework 16

Figure 1.2 Competitive profile matrix example 17

Figure 2.1 Market size of the medical equipment in Vietnam in 2021 21

Figure 2.2 Vietnamese medical equipment market structure 21

Figure 2.3 Products distributed by SISC 23

Figure 2.4 SISC Business Structure 23

Figure 2.5 Ratio of SISC’s bidding results 32

Figure 2.6 Ratio of Nam Viet’s bidding results 32

Figure 2.7 Ratio of DKSH’s bidding results 33

Figure 2.8 A product of SISC (left) and a product of DKSH (right) 34

Figure 2.9 A product of SISC (left) and a product of Nam Viet (right) 34

Figure 3.1 Purchase order transaction before integrate EDI 39

Figure 3.2 Purchase order transaction after integrate EDI 39

LIST OF TABLES

Table 1.1 Business results of SISC from 2019-2021 9

Table 2.1 The business results report of SISC Equipment Joint Stock Company in 2019-2021 19

Table 2.2 Total expenses and net profit of SISC from 2019-2021 20

Table 2.3 Professional qualification of SISC from 2019-2021 21

Table 2.4 Short-term assets, short-term debt and inventory of SISC 2019-2021 21

Table 2.5 Total debt and assets, net income and revenue, shareholder’ equity of SISC 2019-2021 22

Table 2.6 Evaluation of factors that impact the competitive advantage of SISC 24

Table 2.7 Competitive profile matrix of SISC and its competitors 26

EXECUTIVE SUMMARY

The introduction: Gives an overview of the research topic, including the urgency ofresearch on improving the competitiveness of SISC, stating the research objectives,scope, and research object of the project thesis and graduation thesis structure.Chapter 1: Theoretical review of the company's competitiveness, including Somebasic concepts of competition, competitiveness, and competitive advantage; theory

of overall competitiveness assessment

Chapter 2: The current situation of the company's the production and businessactivities, identifying competitors of the enterprise, developing a set of criteria toevaluate the company's competitiveness, analyzing the current competitive situation

of the company through the results of data collection and processing methods, drawconclusions about the current competitive situation of the company The advantagesand disadvantages of the competitive advantage of SISC, are the causes of thelimitations

Chapter 3 Propose solutions to improve the competitiveness of SISCInstrumentation Joint Stock Company

1 The reason for choosing the topic

The main purpose of designing and implementing the organization's strategy is to obtain a competitive advantage in the competitive environment in which the organization operates (Helena, 2019)

Not to mention, competitive advantage is proven to have a positive association with business performance, which is understandable since it can be gained through internal sources, external sources, or even both of an organization (Svarova and Vrchota, 2014) Specifically, a company can have the edge over its competitors if they have quality employees, effective strategic management, technology

development, and the uniqueness of the product as internal sources.Table 1.1

Business results of SISC from 2019-2021

Sales 688,178,438,721 668,134,406,525 649,217,574,291Revenue 11,626,549,422 9,842,385,267 6,423,638,940

(Source: Accounting department)

In addition, looking at the sales and revenue of SISC company in the past threeyears, the company increase its sales and revenue every year, around 20%confirmed by interviewee 1 and 2 While the average growth rate of this market inthe period 2016 - 2020 is about 22% per year in Vietnam, meaning SISC is losingits market share In conclusion, the company is unwilling to invest or pay attention

to improving its competitive advantage This could damage the company shortlybecause, in today’s constantly developing and innovating society, it is certain thatcompanies need to acknowledge the importance of competitive advantage In otherwords, in a capitalistic society, companies must struggle to survive and make aprofit Competition is fierce and unrelenting In order to prosper, much less survive;

companies must have an advantage over their competition 2 General objectives

Analyze and evaluate all aspects of competitive advantage, based on key successfactors given by the interviewees From that, discuss and give recommendations toimprove SISC’s competitive edge

3 Specific objectives

Research on the theoretical basis of competitive advantage.

Analyze and evaluate the current competitive positioning of SISC

Give recommendations following quality research and defined justifications todevelop and innovate SISC’s competitive edge

4 Research subjects

Competitive advantage from internal and external sources of SISC InstrumentationJoint Stock company

5 Scope of the Study

Subjects: The competitive advantage of the SISC group

Places: 10th floor, SISC Tower, 63 - 71 Lang Ha, Dong Da district, Hanoi

Duration: From February 2022 to May 2022

6 Thesis structure

Chapter 1: Theoretical basis of improving the competitiveness of enterprisesChapter 2: The reality of improving competitiveness at SISC Instrumentation JointStock company

Chapter 3: Solutions to improve competitiveness at SISC

7 Limitation

All participants in the survey work for SISC company So there will only beopinions from one company's side, and the competitors' or customers' opinions willnot be involved in this study, creating a biased effect when conducting results fromthe survey

METHODOLOGY

In this study, the qualitative approach is applied To obtain information for the thesis, these methods below were used:

· Primary data analysis

Observe the company’s day-to-day routine to give a practical view of the studyCollect data from own experience when doing an internship at the company

· Second-data analysis

Data collected from the company such as profit and loss statements, other

statements related to competitive advantage

Data was collected from quality research, articles

Data collected from employees of the company

· In-depth interview

Interview the head of the department and the vice president to acknowledge insightsabout the company Each interview lasted from around one hour to one hour and thirty minutes Each participant will be asked 8 questions that have been listed in the appendix section The results will be measured by a competitive profile matrix, the key success factors will be chosen by the interviewees, and more details are presented in chapter 2 and the appendix

The interview involves 5 interviewees

Interview 1: Head of operating department

Interview 2: Vice director

Interview 3: Head of purchasing department

Interview 4: Head of accounting department

Interview 5: Assistant of Director

These 5 people were selected based on their experience and knowledge about the company and the industry All 5 participants have worked for SISC for more than 10years, the vice director and the head of purchasing department have worked for SISC since the beginning That is why their opinion is valid and valuable to this study

CHAPTER 1 THEORETICAL REVIEW

1.1 Overview of Basic concepts

1.1.1 Competitiveness

Competitiveness is considered the ability of companies, economic sectors, and thestate to function, maintain, advance, and work in accordance with the principles ofefficiency and effectiveness in order to outperform the competition Thus,competition means superiority over rivals and other market competitors (Milusheva,2020) Competition refers to the practice of constantly competing amongsteconomic elements in the market in order to accomplish their economic interestsand aims The economic benefits of economic self-reliance, specifically represented

in the competitive process as maintaining or growing market ownership, increasingconsumption, and enhancing profits, are the intrinsic driving forces of competition.The external pressure of competition involves strong competition amongcompetitors, with the loser being eliminated (La Falce et al, 2020)

According to the Vietnam Encyclopedia dictionary: In a market economy,competition is a competition between commodities producers, merchants, andbusiness people in order to win the most favorable production, consumption, andmarket circumstances

Based on the above definition, competitiveness is generally the ability of anorganization to grow market share, profitability, and the industry’s size in order tooutperform its competitors as well as accomplish its goals

1.1.2 Competitive advantage

Competitive advantage refers to the elements that make a company's brand, product,

or service superior to competitors in the same area As a result, these factors enablethe manufacturer to make more revenue, a more advantageous market position, or ahigher profit margin than its market competitors Furthermore, when a company hasachieved a competitive advantage, it will possess the ability to stay one step ahead

of current or potential competition, and the superior performance achieved throughcompetitive advantage guarantees market leadership (Wang, Lin, and Chu, 2011).According to the concept of Michael Porter (1998): “Competitive advantage willcome from the value that businesses can create for customers This advantage can

be in the form of lower prices than competitors or by providing them with benefitsthat are superior to competitors and induce buyers to accept a higher price.” Toconclude, it is considered a competitive advantage when a company’s product and

service create value for the clients but those values are not able to be created byother rivals to survive and guarantee a higher position in the industry.

1.1.3 Sustainable competitive advantage

A firm is said to have sustained competitive advantage when it is implementing avalue-creating strategy not simultaneously being implemented by any current orpotential competitors and when these other firms are unable to duplicate the benefit

of this strategy (Barney, 1991) Moreover, competitive advantages arecharacteristics or strengths that are essential to your clients If the strength that hasbeen identified as important to the company but not to the client, it is not a long-term competitive advantage A competitive advantage is a benefit or reason thatcustomers choose your company over its competitors (Hana, 2013) A competitiveadvantage is sustained when it stays valuable to the customers through numerousefforts to duplicate existing and potential competitors

1.1.4 Competitive Capacity

National competitiveness is the set of policies, institutions, and circumstances thataffect an economy's production, development, and sustainability Industrycompetitiveness is competition between enterprises in different productionindustries for more profitable investment Enterprise competitiveness is theexploitation and application of internal and external assets and advantages in order

to produce products or services that attract people and help them accomplish theirneeds Product competitiveness is determined by a comparative advantage inproduction costs and productivity over competitors, as assessed by the company'sspecific market share, and items on the market (Brinkerhoff, 2010)

1.2 Criteria to evaluate the competitiveness of enterprises:

1.2.1 Qualitative factors

Human Resources strives to achieve this by aligning the supply of skilled andqualified individuals, as well as the capabilities of the current workforce, with theorganization's ongoing and future business plans and requirements, in order toensure future survival and success (Yusof and Ismail, 2002)

larger an enterprise's market share in this market, the greater its dominance andposition (Obi et al, 2021)

Market share formula = (your business revenue/total industry revenue) x 100%Profit is defined as the final financial result of the enterprise's business activity,output, and so on It is also the foundation for evaluating the economic effects ofcorporate operations

Profit formula = Total revenue - Total expenses

Profit margin is the ratio of profit to the total of fixed and working capital employedduring that period Based on the profit ratio, we can calculate the actual profitability

of the business, thereby calculating the net profit of the shareholders in thecompany

Profit margin formula = Revenue/Total Cost

Current ratio is a measure of a company's ability to pay its short-term debts with thenumber of current assets that the business has

Current ratio formula = Short-term assets/Short-term debt

Quick ratio is an indicator of a company's short-term liquidity and measures acompany's ability to meet its short-term obligations with its most liquid assets.Quick ratio formula = (Short-term assets - Inventory)/Short-term debt

Debt ratio has a strong relationship between the total amount of debt to be paid andthe total income of the borrower The debt-to-equity ratio is considered a measure of

a company's financial leverage and is calculated as a company's total bearing debt (including both short-term and long-term debt) divided by its totalcapital

interest-Debt ratio formula = Total debt/Total assets

If two businesses are in the same industry, their size, financial structure, and othercharacteristics are similar; but one has a greater rate of return, it could be becausethat business is more efficient

ROA (Return on assets) formula = Net income/Total assets

ROE (Return on equity) formula = Net income/Shareholder’s equity

ROS (Operating margin) formula = Net income/ Net Revenue

1.3 Frameworks to measure the competitive advantage

1.3.1 Porter’s Five Forces framework

Porter’s Five Forces framework was established by Michael Porter, a professor atHarvard Business School in 1979 This framework is particularly effective forstudying the competitive structure of an entire industry Furthermore, Porter's fiveforces model assists in determining where power lies in a corporate environment.This is beneficial for acknowledging the strength of an organization's presentcompetitive position as well as the strength of a position that an organization maychoose to pursue According to Porter (1990), there are five forces affecting thecompetitiveness of an enterprise

Figure 1.1 Porter's five forces framework

(Source: Porter, 1990)

Supplier power: an evaluation of how easy it is for the supplier to raise prices This

is easily influenced by the number of suppliers of goods and services, theuniqueness of the inputs, and the costs incurred by the firm if it wishes to move to adifferent source The fewer suppliers in the industry, the more reliant the company is

on the supplier factor and vice versa

Buyer power: an evaluation of how easy it is for the customer to lower prices This

is driven by: the number of buyers in the market, the importance of each customer

to the company, and the cost of the buyer when changing from one supplier toanother Customers will have more negotiating power on price and product quality

if the number of customers is minimal

Competitive rivalry: The competitive capacity and the number of existingcompetitors that create the same product line, serve the same target consumersegment and satisfy the same customer need.

The threat of substitution: Products and services that are able to be imitated by thecompetitors This leads to the possibility of the customer switching to substituteproducts

The threat of new entry: Potential markets attract new companies to enter whichaffects the company in the future Therefore, it is essential to maintain theadvantageous position and rationally take advantage of it if we can establisheffective and long-lasting barriers to entrance

1.3.2 Competitive profile matrix

A competitive profile matrix (CPM) enables business owners to compare theircompanies to their top competitors by utilizing essential success characteristics(Zimmerer, Scarborough, & Wilson, 2008) "A CPM identifies a firm's primarycompetitors as well as its specific strengths and weaknesses concerning a samplefirm's strategic position," writes David (2011) The foregoing definitions of CPMdenote two vital tasks: first, identifying rivals as well as their strengths andshortcomings, and second, identifying significant or critical success factors Thistool assists managers in identifying the strongest competitors and significant factors

on a single page, as well as the areas in which they need to improve (Sohel, 2014)

Figure 1.2 Competitive profile matrix example

(Source: Sohel, 2014)

When establishing a CPM based on these crucial elements, three important actionsmust be taken The first stage is to identify the company's key success factors(KSFs) and assign weight to those variables based on their relative importance Thefollowing phase is for the company to identify its significant competitors and rateeach competitor, including the company itself, on each of the KSFs KSFsencompass both internal and external challenges, and ratings ranging from 1 to 4have been assigned based on their importance to the company with 1 assigned formajor weakness, 2 for minor weakness, 3 for minor strength, and 4 for majorstrength Finally, the corporation must multiply the weight by the rating for eachfactor to obtain a weighted score, and then aggregate the weighted scores of eachrival to obtain a total weighted score.

Although Porter’s five forces provide a good beginning point for strategic analysis,

it has several drawbacks According to Porter (2001), this model assists a company

in assessing the prospective profitability of certain industries; however, Goyal(2020) contends that firm-specific characteristics such as unique endowment,person skill, and strategy are more significant to the business's profitability.According to the Porter model, five forces apply equally to all firms in an industry,but the strength of those forces varies from business to business in terms of size orbrand power (Campbell et al, 2002) While building a competitive profile matrix, it

is critical to identify these KSFs in order to design an effective approach BecauseKSFs can be used to direct a company's work in formulating strategies, they canalso be used to highlight significant concerns related to strategy execution, and theymay also assist managers in establishing a guideline for monitoring the company'sactions Moreover, CPM contains both external and internal that most influence thecompetitive position of a company and identify potential competitive advantages

1.4 Factors affecting the competitiveness of enterprises

1.4.1 External factors

Economic factor

Economic development policies, trade policies, competition policies, investmentpolicies, and so on all aim to stimulate or limit, prioritize or prevent thedevelopment of each industry, consequently affecting the competitiveness ofenterprises in that industry The economic development of the country has a greatimpact on the production and business activities of enterprises The economy hasgrown steadily, national finance is stable, inflation is under control, and the process

of capital accumulation and concentration is fast, which contributes to the increaseddevelopment of investment capital (Cheraghalizadeh et al, 2021).

Political factor

When participating in global integration and competitiveness, Vietnamese firms areinfluenced by the system of domestic and foreign legal policies, as well as lawspublished by international organizations The legal system and rules serve as thelegal foundation for firms to engage in market production and economic operations(Jaya, 2021)

The global and national trends in science and technology development have asignificant impact on the competitiveness of businesses Technology is a source ofcompetitive strength and a competitive weapon for businesses operating inindustries with high technical progress (Cheraghalizadeh et al, 2021)

Enterprises must continually anticipate their competitors' moves in order to haveproactive strategies and responses to strengthen and improve their market position.Substitutionwith a high technical level, many different sorts of items that can beexchanged for each other are created This problem, which is and will continue toimpede the consumption of corporate products, worsens the competitive climate.This is an unexpected and difficult opponent that firms must prepare for(Stoyanova, 2018)

Financial capacity demonstrates the enterprise's competitive power Capital is one

of the requirements for businesses to continue and expand their activities As aresult, the ability to mobilize and effectively use resources will strengthen thebusiness's financial capacity However, the enterprise's financial capacity is not justreflected in the business capital scale Some businesses have a huge capital scale yetare weak because their capital asset structure is inadequate Small-scale firms, on

the other hand, are nevertheless considered strong since they maintain solidfinancial standing and know how to mobilize adequate financial resources todevelop competitive products There are a lot of rivalries to service the targetmarket So the issue is not how much cash the firm has, but how effectively itutilizes capital to suit the demands of the target customers within the business scope(Wanjiku, 2012).

Management process is represented in the management approach and itseffectiveness, the organizational system, the corporate culture All actions will beseamless and effective if a firm has an acceptable organizational structure with clearresponsibility and authority In contrast, if power is not dispersed in an overlappingorganizational structure, performance would suffer

The Board of Directors, and their traits and talents, play the most essential role inthe enterprise's organizational structure, defining the enterprise's success or failure.Any business, regardless of size, depends on the leadership team's virtues andtalents, as well as the organizational structure of the management apparatus, thedetermination of functions and responsibilities of each department, and individual,and the establishment of relationships between departments The organizationalstructure is not a fixed framework; it must evolve depending on the internal andexternal environments of the enterprise over each phase of the enterprise's economicactivity (Aiginger et al, 2013)

Corporate policies and strategies have an impact on the formation and enhancement

of firm competitiveness On the one hand, the strategy is based on the enterprise'scompetitive advantages, promoting the business's strength in order to compete withcompetitors

CHAPTER 2 PROJECT’S CURRENT SITUATION

2.1 Market context

Medical equipment is an essential component in determining the efficiency andquality of medical work, actively assisting doctors inaccurately and promptlyidentifying Today, medical equipment not only helps prolong the senses, but alsoallows doctors to easily access and treat injuries inside the body, such aslaparoscopic surgery, surgery, robotics and they could even replace the human brain(using artificial intelligence) to help make the most informed, correct, and effectivedecisions in diagnosing, treating, and caring for people's health

Figure 2.3 Market size of the medical equipment in Vietnam in 2021

(Source: Huong Bui)

Looking at the market size of the medical equipment, diagnostic imaging and othermedical types of equipment were in the highest demand while orthopedic andprosthetics and dental products were in the lowest demand The total market sizewas more than 39 million vnd and the total per capital spending was more than 400thousand vnd

Figure 2.4 Vietnamese medical equipment market structure

(Source: Huong Bui)

The highest market share of the medical equipment sector was diagnosing imaging

at 26.57%, followed by other medical types of equipment at 25.68% Patientsupport products and self-consuming devices accounted for 17.56% and 16.04%,respectively The two lowest market shares were orthopedic and prosthetics at9.06%, and dental products at 5.09% The Covid-19 pandemic has negativelyimpacted most industries However, the pharmaceutical and medical equipment andsupplies businesses have development potential since the industry experiencedsignificantly improved revenue and profit levels compared with the same period lastyear In fact, it is not the pandemic that has increased the demand for medicaltreatment, but Vietnam has long been seen as a promising market forpharmaceuticals, medical supplies, and equipment

2.2 Business general information

2.1.1 Overview of SISC

SISC Equipment Joint Stock company was founded in 1997 under the name ‘SieuViet Limited Liability company’ SISC alongside Sai Gon Equipment Joint Stockcompany are the subsidiary companies of the SISC Group

SISC’s areas of activity are providing research and quality testing facilities withequipment in the main sectors pharmaceutical and medical sectors, there are othersectors environment, agriculture, fisheries, materials, petrochemicals, and lifesciences Consulting for customers on Technology, Equipment, and Techniquesbased on laboratory requirements Provide technical services for laboratory

equipment such as installation, warranty, repair, and relocation Offer equipmentevaluation and calibration services to ensure that the equipment is constantlyworking within the permitted boundaries Provide training and support onequipment use, as well as analytical and application skills Provide consumablespare parts and equipment components

SISC is the representative and distributor for 16 manufacturers from the USA,Korea, Germany, Italy, Sweden and Japan With almost 100 products in terms ofmedical equipment

Figure 2.5 Products distributed by SISC

(Source: Main web created by SISC company)

Here are some of the products that are distributed by SISC, in the order from left to right is the spectrum 3 mid-IR Infrared Spectrometer, the Speed Dogester infrared digestion system, and the biological microscope

Figure 2.6 SISC Business Structure

(Source: Operating Department)

2.1.2 SISC’s current situation

According to the International Trade Administration, Vietnam's imported medicaldevice market was valued at 1,4 billion USD in 2019, while SISC was valued ataround 649,2 billion VND (27,98 million USD) which accounted for 0,19% of theoverall industry In the next year, the company’s market share increased by 0,1%from 0,2% However, the whole imported medical device industry was valued at 1,8billion USD in 2021 with which SISC accounted for only 0,015% As can be seen,the growth rate of the industry was faster than the growth rate of SISC, causing themarket share ratio of the company to decline

Table 2.2 The business results report of SISC Equipment Joint Stock Company in 2019-2021