(LUẬN văn THẠC sĩ) improving the competitiveness of construction steel products of vietnam steel corporation in the period 2018 2022

65 CHAPTER 3: SOME SOLUTIONS TO IMPROVE THE COMPETITIVENESS OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION... Vietnam Steel Corporation is a joint stock company operating in

TRẦN TUẤN DŨNG

IMPROVING THE COMPETITIVENESS

OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION IN THE PERIOD 2018-2022

NÂNG CAO NĂNG LỰC CẠNH TRANH ĐỐI VỚI CÁC SẢN PHẨM THÉP XÂY DỰNG CỦA TỔNG CÔNG TY

THÉP VIỆT NAM TRONG GIAI ĐOẠN 2018-2022

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019

-

TRẦN TUẤN DŨNG

IMPROVING THE COMPETITIVENESS

OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION IN THE PERIOD 2018-2022

NÂNG CAO NĂNG LỰC CẠNH TRANH ĐỐI VỚI CÁC SẢN PHẨM THÉP XÂY DỰNG CỦA TỔNG CÔNG TY

THÉP VIỆT NAM TRONG GIAI ĐOẠN 2018-2022

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS PHẠM VĂN HỒNG

HÀ NỘI - 2019

author’s independent work during study and research period and it is not yet published

in other’s research and article

The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Date………

Author

Trần Tuấn Dũng

Vietnam steel corporation in the period 2018-2022" is the content chosen by the

author to study and make a graduation thesis after two years learning a master's program in business administration organized by Hanoi School of Business and Management (HSB) - Hanoi National University

First of all, I would like to express my sincere thanks to the faculty leaders, teachers who have devotedly taught in the course of studying In particular, I sincerely thank Associate Prof Dr Hoang Dinh Phi helped me to gain valuable knowledge about the subject of Planning and Strategic Management and Technology and Innovation Management

I sincerely thank Dr Pham Van Hong was very devoted to caring, guiding and instructing me in the process of implementing the graduation thesis

I also sincerely thank the staff of Vietnam Steel Corporation (VNSTEEL) for their help in providing information and giving favorable conditions for me to complete

Sincerely thanks !

Date………

LIST OF TABLES, FIGURES ii

TITLE CHAPTER 1

1 RATIONALE 1

2 LITERATURE REVIEW 2

3 AIMS OF RESEARCH 3

4 OBJECTS OF RESEARCH 4

5 SCOPE OF THE STUDY 4

6 RESEARCH METHODOLOGY 4

7 THESIS STRUCTURE 6

CHAPTER I: BASIS THEORY ON COMPETITION AND PRODUCT COMPETITIVENESS 7

1.1 BASIS THEORY ON COMPETITION AND COMPETITIVENESS 7

1.1.1 Concept of competition 7

1.1.2 Concept of competitiveness 8

1.2 CRITERIA FOR EVALUATING COMPETITIVE RESULT OF PRODUCT 10

1.2.1 Market 10

1.2.2 Market share 11

1.2.3 Profit 11

1.3 BASIC FACTORS OF PRODUCT COMPETITIVENESS 13

1.3 1 Technology 13

1.3.2 Product price 13

1.3.3 Distribution system 14

1.3.4 Promotion 15

1.3.5 Financial capacity 16

1.3.6 Human resources 17

1.3.7 Management system 18

1.4 EXTERNAL FACTORS AFFECT PRODUCT COMPETITIVENESS 19

1.4.1 Factors of macre environment 20

1.4.2 Factors of industry environment 21

CHAPTER 2: CURRENT SITUATION OF COMPETITIVENESS OF

CORPORATION 23

2.1 OVERVIEW OF VIETNAM STEEL CORPORATION 23

2.1.1 General introduction 23

2.1.2 Business results of VNSTEEL 2015-2017 29

2.2 THE CURRENT COMPETITIVENESS OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION 32

2.2.1 Situation of criteria to evaluate the competitive results of construction steel products of Vietnam Steel Corporation 32

2.2.1.1 Market 32

2.2.1.2 Market share 33

2.2.1.3 Profit 37

2.2.2 Current situation of basic factors affecting the competitiveness of VNSTEEL’s construction steel products 39

2.2.2.1 Technology 39

2.2.2.2 Product price 43

2.2.2.3 Distribution system 47

2.2.2.4 Promotion 48

2.2.2.5 Financial capacity 52

2.2.2.6 Human resources 54

2.2.2.7 Management system 56

2.3 ASSESSING THE COMPETITIVENESS OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION 57

2.3.1 Strengths 57

2.3.2 Weaknesses and causes 59

2.4 EXTERNAL FACTORS AFFECT PRODUCT COMPETITIVENESS 62

2.4.1 Factors of macro environment 62

2.4.2 Factors of the industry environment 65

CHAPTER 3: SOME SOLUTIONS TO IMPROVE THE COMPETITIVENESS OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION 68

3.1 ORIENTATION TO DEVELOP VNSTEEL'S STEEL PRODUCTS IN THE COMING TIME 68 3.2 SOME SOLUTIONS TO IMPROVE THE COMPETITIVENESS OF

CORPORATION 69 CONCLUSIONS 72 REFERENCES 74

ABBREVIATION

Abbreviated letters

ASEAN Association of Southeast Asian Nations

VTM Viet-Trung Minerals and Metallurgy Company Limited VICASA Vicasa Steel Joint Stock Company - Vnsteel

Hòa Phát Hoa Phat Group Joint Stock Company POMINA Pomina Steel Joint Stock Company Vina Kyoei Vina Kyoei Steel Company Limited

EAF Electric arc furnace (steel making)

LIST OF TABLES, FIGURES

1 TABLES:

Table 2.1 Production and Consumption of Construction steel 2015-2017 29

Table 2.2 Consolidated business results of the Corporation 2015-2017 30

Table 2.3 Business results of the Parent Corporation 2015-2017 31

Table 2.4 Consumption of construction steel by market in 2017 32

Table 2.4 Situation of consumption and market share 33

Table 2.5 Situation of consumption and market share in the Northern market 34

Table 2.6 Situation of consumption and market share in Central market 35

Table 2.7 Situation of consumption and market share in the Southern market 36

Table 2.8 Situation of export and market share 37

Table 2.9 Business results of the Corporation 2015-2017 38

Table 2.10 Classify production capacity by technology 40

Table 2.11 Comparison of technical indicators of blast furnace technology 41

Table 2.12 Compare technical indicators of electric furnace technology 41

Table 2.13 Comparing labor productivity in iron production 42

Table 2.14 Comparing labor productivity in billet production 42

Table 2.15 Comparing labor productivity in the production of coke 42

Table 2.16 Comparing labor productivity in rolling 43

Table 2.17 Situation of selling prices of southern producers 45

Table 2.18 Customer reviews of customer care services 49

Table 2.19 Customer survey results on sales staff 50

Table 2.20 Some financial indicators 2015 - 2017 52

Table 2.21 Compare financial capacity of VNSTEEL with other enterprises 53

Table 2.22 Labor quality statistics of VNSTEEL 2017 54

Table 2.23 Import situation of billet and steel products 2015-2017 65

Table 2.24 Export situation of steel products 2015-2017 65

Table 2.25 Apparent construction steel consumption in Vietnam 2015-2017 66

2 FIGURE:

Figure 1.1 Product distribution system model 15

Figure 1.2 Factors affect product competitiveness 19

Figure 2.1 VNSTEEL operating areas 26

Figure 2.2 Organizational structure of VNSTEEL 27

Figure 2.3 Production and Consumption of VNSTEEL 29

Figure 2.4 Situation of consumption and market share 33

Figure 2.5 Situation of consumption and market share in the Northern market 34 Figure 2.6 Situation of consumption and market share in Central market 35

Figure 2.7 Situation of consumption and market share in the Southern market 36 Figure 2.8 Situation of export and market share 37

Figure 2.9 Technology process of construction steel production 40

Figure 2.10 Situation of selling prices of northern producers 45

Figure 2.11 Situation of selling prices of southern producers 46

Figure 2.12 Distribution model of other steel producers 47

Figure 2.13 Distribution model of VNSTEEL 48

TITLE CHAPTER

1 RATIONALE

In the current period, when the globalization of the world economy is going on strongly, we all have the recognition that in all activities there must be competition, competition is not only the environment and motivation for the development of society

in general, but also promote production and business, increase labor productivity, increase the efficiency of enterprises in particular

The importance of competitiveness for enterprises today should be considered

in a broad framework of the environment created by the forces of globalization and technological progress, in which knowledge is the most important resource These factors add to new challenges and opportunities for businesses and policymakers in countries The key to success is that businesses must set strategies to take full advantage of the potential advantages that globalization, technology and competition bring The main issue is how to create, maintain and further improve the competitiveness of products and businesses effectively

Vietnam Steel Corporation is a joint stock company operating in the steel industry including more than 40 subsidiaries and affiliated companies operating in the country, with chartered capital of VND 6,780 billion, of which 93.93% is owned by the state, 6, 07% is owned by other shareholders, the corporation model was born in the pilot program of building strong economic corporations of the Government at the beginning of in 1990 Through over 25 years of operation under the corporation model, Vietnam Steel Corporation has achieved significant results with high growth rate, increased production capacity due to intensive investment and expand production The competitiveness of Vietnam Steel Corporation has been gradually increased significantly

However, in recent years, the participation of many FDI enterprises and the private sector in the steel industry in Vietnam has been associated with a sharp increase in new investment capacity in steel production, causing oversupply for steel products in the country more severe By 2017, the total capacity of billet production is

12 million tons/year, while total consumption for construction steel of Vietnam in

2017 reached 9.12 million tons Private sector competitors have rapidly grown in terms

of production scale, market share and operating areas (such as Hoa Phat, Pomina in long products segment and Hoa Sen, Dong A in flat, galvanized and pipe products segment) Foreign investment projects have become increasingly active and dominate the market in both segments of long and flat products (such as POSCO Vietnam, CSVC-Sumikin, Formosa ) Competition between steelmakers is increasingly fierce

In addition, competition with imported steel has been accelerated by the impact of international integration and trade liberalization Therefore, the opportunities for steel products of Vietnam Steel Corporation are narrowing and the operating environment is increasingly difficult for the development of the market share of Vietnam Steel Corporation

In conditions and business environment increasingly fierce competition requires the steel enterprises in the country must constantly innovate, enhance competitiveness and improve its position in the market to maintain the market share and compete not only with domestic steelmakers and also with foreign steelmakers will enter the market

in the near future

Based on mentioned reasons and analyzing, the author decides to select the research topic "Improving the competitiveness of construction steel products of Vietnam Steel Corporation in the period 2018-2022"

The second research was the study of “Improving the competitiveness of Vinaphone mobile telecommunication services of Yen Thanh Telecom Center” prepared by Mr Truong Van Thai, National Economics University (2013) The author Researched framework on competitiveness of mobile telecommunication services of telecommunication enterprises, assessment of the competitive capacity of Vinaphone mobile telecommunication services of Yen Thanh Telecommunications Center and propose some solutions to improve competitive capacity of Vinaphone mobile information services of Yen Thanh Telecommunications Center

The third research was the study of "Improving the competitiveness of plastic pipe products of Dong Nai Plastic Joint Stock Company" prepared by Mr Hoang Anh Tuan class EMBA (2014) The research has defined the theoretical framework of competitiveness of plastic pipe products of plastic companies, analyzed the current competitiveness of plastic pipe products of Dong Nai Plastic Joint Stock Company and proposes some solutions to improve competitiveness of plastic pipe products of Dong Nai Plastic Joint Stock Company to 2017

Another research was the study of "Improving the competitiveness of stainless steel products of Nhat Quang Steel Co., Ltd." prepared by Mr Pham Cong Danh class EMBA (2016) The research has defined 5 direct factors impacting the competitiveness of stainless steel products (human resources, financial capacity, technology, management system, marketing activities) and analyzed the current competitiveness of stainless steel products Nhat Quang Steel Co., Ltd and proposes some solutions to improve competitiveness of stainless steel products of the company

The above mentioned studies have given the author more insight knowledge on such topic to start working on the thesis

3 AIMS OF RESEARCH

The overall purpose of the thesis is to analyze the competitiveness of construction steel products of Vietnam Steel Corporation on the basis of identifying the basic factors impacting the competitiveness of construction steel products of Vietnam Steel Corporation

The aims of research are following:

- Reviewing related theories of competitiveness to identify the basic factors impacting product competitiveness

- Evaluate the capability of basic factors impacting the competitiveness of construction steel products of Vietnam Steel Corporation

- Giving some recommendations to improve the competitiveness of construction steel products of Vietnam Steel Corporation

RESEARCH QUESTIONS:

1 What is the current competitiveness of construction steel products of Vietnam Steel Corporation? And which factors affect competitiveness? Which aspects are advantages and disadvantages?

2 What should Vietnam Steel Corporation do to maintain and improve the competitiveness of construction steel products?

4 OBJECTS OF RESEARCH

Objects of research are the competitiveness of construction steel products In this study the author focus on the product competitiveness and the basic factors affect

to the competitiveness of construction steel products

5 SCOPE OF THE STUDY

- Content:

Research focus on assessing current the competitiveness of construction steel products of Vietnam Steel Corporation, identifying the strengths and limitations from which to propose solutions to improve the competitiveness of construction steel products of Vietnam Steel Corporation

In order to evaluate product competitiveness, it is necessary to evaluate comprehensively on many factors: technology, product diversity, product price, distribution system, promotion, finance, personnel, management system and marketing system, security, culture etc However, in this thesis, the author evaluates on 7 most basic factors that affect to the competitiveness of products, including: technology, product price, distribution system, promotion activities, financial capacity, human resources, and management system Specifically, the theoretical framework evaluates

as follows:

6.2 Research process

The author follows 6 steps which are described in the figure following:

6.3 Data collection

- Secondary data: In this study, secondary data is collected from literature review on previous studies and researches related to Vietnam steel industry In detail, the study will use reports about steel industry in Vietnam and Vnsteel’s annual reports and other reports from various agencies such as Vietnam Steel Association, World Steel Association, Business Intelligent Monitor, World Steel Dynamic, and SEAISI…

- Primary data: The author collects primary data through questionnaire survey and interview (if any)

6.4 Analyzing data

The author uses several methods of analysis, synthesized as follows:

+ Composite analysis, time series comparison (Period 2015-2017) + Cross Comparative Analysis (comparable with other steel enterprises) + Comparative analysis with the potential of Vietnam Steel Corporation

+ Comprehensive analysis by problem group, target group

7 THESIS STRUCTURE

Excluding the Introduction, Conclusion and Reference, the thesis includes three chapters as below:

 Chapter 1: Basis theory on competition and product competitiveness

 Chapter 2: Assessing the competitiveness of construction steel products of Vietnam Steel Corporation

 Chapter 3: Propose solutions to improve competitiveness of construction steel products of Vietnam Steel Corporation

CHAPTER I: BASIS THEORY ON COMPETITION AND PRODUCT COMPETITIVENESS 1.1 BASIS THEORY ON COMPETITION AND COMPETITIVENESS

1.1.1 Concept of competition

In the view of political economy research, competition is a complex economic phenomenon with many different approaches Therefore, there are many different concepts about competition

socio-Two American economists P.A Samuelson and W.D Nordhaus in Economics (12th edition) stated that "Competition is the rivalry between companies for achieving customers or markets."

According to the Vietnam Encyclopedia [4, Vol 1] defines: "Competition in business is a rivalry activity between goods producers, between traders, businessmen

in a market economy, dominated by supply-demand relations, in order to gain the most favorable production, consumption and market conditions ”

According to the Marxist-Leninist political economics textbook [Vol 1], it defines the definition: "Competition is rivalry, struggle in economic between entities involved in production - business together to win the favorable conditions in production - business, consumption of goods and services to gain the most benefits for themselves The goal of competition is to gain the greatest benefits and profits, ensuring the existence and development of the competing participants

Through the above concepts, the author found that competition includes some basic contents:

- Firstly, competition is rivalry and contests in order to win of participants

- Second, the direct purpose of competition is often a specific object such as product, project, and customer However, the ultimate goal of all competition is to maximize the benefits of competing entities

- Thirdly, competition always takes place in a specific environment with common constraints that all participants must comply with such as market, legal regulations, and business practices

- Finally, in the competition process, competing participants can use different competitive tools such as product quality and characteristics, selling price, sales art, sales service and payment tools

Thus, in the most general sense, competition in business is understood as an economic relationship in which economic entities compete to find all measures including art and tricks to achieve economic goals In fact, it is common to dominate the market, gain customers as well as the most profitable production and market conditions, with the ultimate goal of maximizing the interests of the subject

In the field of construction steel, competition is a rivalry between steel producers to achieve business goals Therefore, in order to compete, each business must create advantages in providing products and applying it in business The advantages can be better product quality, lower prices, better distribution systems, compared to other manufacturing enterprises to achieve specific objectives such as profit, market share, improving its position in the market than other businesses

1.1.2 Concept of competitiveness

The concept of competitiveness was first mentioned in the US in the early 1990s According to Aldington Report (1985): "A competitive enterprise is an enterprise that can produce products and services with outstanding quality and prices are lower than other domestic and international rivals Competitiveness means achieving long-term benefits of businesses and the ability to secure income for employees and business owners”

In 1998, the British Ministry of Commerce and Industry defined "For businesses, competitiveness is the ability to produce the right product, determine the right price and at the right time That means meeting customer demands with more performance and efficiency than other businesses”

According to Randall, enterprise competitiveness is the ability to gain and maintain market share with a certain level of profit

According to Hoang Dinh Phi, 2015 Lecture on management of technology and innovation “Firm’s competiveness is a degree to which a firm, under normal market conditions, can develop its capabilities to produce goods or services that can be marketed with profit”

From concepts on competitiveness can be understood as the ability of a company to survive in competition, implying that companies succeed by trying to rise

to the top, by reducing prices, by increasing Quality of current products and services and by creating new products Competitiveness of a company is a function of factors such as: (i) The company's own resources (such as human resources, finance and technology); (ii) Market power of the company; (iii) The company's attitude toward competitors and other economic agents; (iv) The capacity of the company to adapt to changing situations; (v) The capacity of the company to create new markets and (vi) Institutional environment, widely provided by the government, including the physical infrastructure and the quality of government policies

Thus, in fact, there are many different views about the competitiveness of enterprises on many different perspectives However, when approaching the competitiveness of enterprises, the author found that the competitiveness of enterprises is the ability to create competitive advantages, capable of creating higher productivity and quality than competitors, dominate large market share, create high income and sustainable development Competitiveness of enterprises covers some of the following basic contents:

- In a market economy, the requirements of customers (markets) must become the standard to assess the competitiveness of enterprises This comes from the objective that the customer's request is both a goal and a driving force for production and business

- The main factor that creates the strength in attracting customers is the strength

of the business This force must be derived from the intrinsic factor of the business, reflected in the prestige of the business

- Competitiveness of enterprises, in itself, refers to the comparison with competitors operating in the same market In order to create a real competitive power, businesses must create comparative advantages with competitors in order to attract customers

- The competitiveness of enterprises always has a binding relationship A business has a strong competitiveness when it meets the requirements of customers in the best way However, in fact, it is very difficult to meet the customer's requirements because sometimes the business has the advantage of this point but is weak in some

other areas Therefore, finding and assessing the strengths and weaknesses of enterprises is important in proposing solutions to improve competitiveness

Competitiveness at the enterprise level includes enterprise competitiveness and product competitiveness In this thesis, the author only focuses on product competitiveness A commodity product is considered to be competitive when it meets the needs of customers in terms of quality, price, and brand far superior to products

of the same type But the competitiveness of products is determined by the competitiveness of enterprises There will be no competitiveness of products when the competitiveness of enterprises is low

From the above approaches, it is understandable that product competitiveness is the ability of enterprises to create, maintain and develop the advantages of products so that they can maintain and develop market, market share and profits for businesses

1.2 CRITERIA FOR EVALUATING COMPETITIVE RESULT OF PRODUCT 1.2.1 Market

Market is a category of commodity economy The market is defined by many economists Some consider the market a market, a place to buy and sell goods The American Society for Scientific Management considers: "the market is a combination

of forces and conditions in which buyers and sellers make decisions to transfer goods and services from sellers to buyers" There are economists who conceive: "markets and exchanges in which buyers and sellers compete with each other to determine prices of goods and services", or more simply: the market is aggregated buyer's numbers for a product or service Recently an economist has defined: "the market is a place to buy and sell goods, is a process in which buyers and sellers of a commodity interact to determine prices and quantities of goods, and is the place where buying and selling activities are conducted in a certain time and space "

In a market economy, the market plays an important role with a central position The market is both a goal of producers and an environment of goods production and trading activities The market is also a place to transfer production and business activities In the market, buyers, sellers and middlemen meet to exchange goods - services

The process of social production has 4 stages: production, distribution, exchange, consumption, the market consists of two stages of distribution and exchange It is a necessary intermediary, a bridge between production and consumption So it has a multifaceted impact on production, social consumption

In this thesis, the construction steel market is understood to be associated with a certain location such as the Northern market, the Central market and the Southern market through which to measure market parameters such as:

+ Total construction steel products supplied to the market in a period of time, in

a certain market area

+ Revenue and growth rate of enterprises in each period for each market

1.2.2 Market share

Market share is the portion of a market controlled by a particular company or product Market share clearly states the product consumption of the enterprise as compared to the total product consumed in the market To win market share in front of competitors, businesses often have to have appropriate price policies through necessary discounts Especially when starting to penetrate new markets

Market share plays an important role in modern marketing and strategic management Companies that have a large market share will have the advantage of dominating the market Because of the strategy of gaining market share, many companies are willing to spend big money and sacrifice other benefits However, gaining large market share also gives the company countless benefits

Market share of enterprises can be measured as follows:

+ Market share = Number of products sold by the enterprise / Total consumption products of the market

+ Market share = Sales of enterprises / Total market sales

1.2.3 Profit

The profitability of an enterprise is the difference between the revenue and the cost that an enterprise spends on that revenue from the activities of the enterprise Profit is the final financial result of production, business, financial activities and other

activities, which is a quality indicator to evaluate the economic efficiency of business activities

Profit rate is a relative indicator that allows comparing the production and business efficiency between different periods in an enterprise or between businesses The high rate of profitability proves that the production and business activities of enterprises are more effective

Any business that operates in the market mechanism, the first thing they care about is profit This is a comprehensive economic indicator reflecting the efficiency of the business process, which is a vital element of the business Enterprises only exist and develop when it creates profits, if the enterprises operate ineffectively, the revenue

is not enough to offset the expenses already spent, the enterprises will be eliminated,

go to bankruptcy Especially in the context of market economy, competition is becoming more and fiercer, so profit is an extremely important factor and decides the existence of enterprises:

- Profit affects all activities of the business It directly affects the financial situation of enterprises, is an important condition to ensure the payment ability of the business If businesses do business effectively, have high profits, their payment ability

is strong, businesses can repay all due debts and vice versa

- Profits ensure extended reproduction Profitable production and business activities will give enterprises an undistributed after-tax profit, which is a basis for supplementing re-investment capital; applying scientific and technical advances through the exchange new equipment expanding the scale of operations is a basis for businesses to develop steadily in the market, as a basis for businesses to borrow capital from outside easily

- Profit target is also a basis for assessing human resource capacity, financial capacity, management and operating capacity of enterprises

- High profits have conditions to improve income, improve the lives of workers, create excitement to stimulate creativity, maximize the ability of employees in the enterprise, is the basis for next steps development

Profit and profit ratio of enterprises are determined as follows:

+ Profit = Revenue - Cost

+ Return on equity (ROE) = Profit / Equity + Return on Assets (ROA) = Profit / Total assets

1.3 BASIC FACTORS OF PRODUCT COMPETITIVENESS 1.3 1 Technology

Technology is an important factor in the business operations of each business, especially the manufacturing enterprises; the technology plays the core role that every business needs to meet business requirements Enterprises based on the advantages of equipment and technology capacity are the foundation to create the initiative in business, contributing to increasing competitive advantage for businesses

The modern level of machinery, equipment and technology has a great influence on the competitiveness of businesses It is the material factor that plays the most important role in expressing the production capacity of the business and directly affecting the quality of products Technology, the modern and advanced level of equipment affects the cost of products A business with advanced equipment, modern technology, their products are of high quality and increase competitive advantage

1.3.2 Product price

The rule of value clearly tells us that the same quality product, which has the lower price, will have a big advantage in competition and win Therefore, in parallel with improving product quality, enterprises need to find all measures to reduce production costs, management costs, selling expenses, and financial costs Selling prices are an important factor in Competition of enterprises, and each enterprise must have a specific selling price policy to promote consumption, bring the highest benefits

to businesses and customers in each period Selling prices are constituted mainly from the following main expense items:

- Production cost or product import price

- Administration costs are general management expenses of the enterprise, including expenses for employees in the management department, expenses for office materials, labor tools, depreciation of fixed assets used for management…

- Selling expenses are expenses for the consumption of products of the enterprise, including the costs of offering, product introduction, product advertising, sales commissions, warranty costs of products, storage costs, packaging, shipping…

- Financial expenses are the interest expenses that enterprises have to pay to credit institutions to borrow capital for use in production and business purposes of enterprises

- Expected profit of the enterprise (if any)

In general, the selling price of enterprises in each stage is different Therefore, businesses that are eligible to build lower selling prices than their competitors have higher competitiveness, attracting customers

1.3.3 Distribution system

The distribution system is to gather channels to bring products of enterprises from production to consumption quickly, stably and effectively The essence of distribution is the art of bringing enterprise products to consumers Distribution system

is a component of competitiveness of products A good distribution system will help bring your products to customers quickly and effectively and vice versa, the poor distribution system will result in stagnant products, losing the opportunity to dominate the market

Depending on the characteristics of the business, the product and the market, enterprises apply a type of channel or collection of consumption channels, using them

as a competitive tool to promote product consumption Currently businesses often use mixed distribution channels including direct distribution channels and indirect distribution channels However, the proportion of sales through indirect distribution channels still accounts for a large proportion in the distribution model of manufacturing enterprises

- Direct distribution channels: Enterprises organize direct distribution channels

to advise, introduce and supply products to customers The advantage of direct distribution channel is that business enterprises will reduce brokerage costs and control the customer portfolio However, the disadvantage of this channel is that the business apparatus will be large, leading to high sales management costs even when the product cannot be sold

- Indirect distribution channel: is a distribution channel in which business and production enterprises sell their products to users through intermediate buyers (level 1 distributors / level 2 distributors) ) Goods change ownership over a number of times depending on each case Direct customers of enterprises are level 1 distributors Enterprises do not directly sell goods to users The advantage of indirect distribution channel is to increase the specialization in production and trade, products are widely distributed, limit capital stagnation and reduce risks However, the disadvantage of this channel is to prolong the distance between manufacturers and consumers, manufacturing enterprises have difficulty in grasping customer and market information, increasing commercial operation costs of enterprises

Figure 1.1 Product distribution system model 1.3.4 Promotion

This is a business activity aimed at promoting and communicating products to customers Promotion activities have a rather important position in business activities

of enterprises, help increase sales, build a good image of businesses, thereby improve the competitiveness of businesses, and attract more customers Business promotion capacity is also an important criterion to assess competitiveness Enterprises create quality products, competitive prices but ineffective promotion and communication activities, fail to convey the superiority of products to customers, the consumption of products will also hard So if businesses have the ability to promote, sales will be more favorable

Product promotion activities include the following contents:

- Direct sale is a one-to-one communication method, sellers will help, advice, convince customers to buy products of their business Unlike advertising, direct sales have direct contact between sellers and buyers through a number of means

- Advertising includes all forms of communication indirectly enhancing the product image of the enterprise The company uses forms of brand advertising through media such as television, social networks, newspapers, and advertising publications

- Promotion is an immediate short-term impact measure to encourage product purchases, activities that encourage customers to buy products by increasing benefits for customers

- Public relations are indirect, non-personal communication activities of enterprises, products of enterprises without having to pay directly or hidden in the form of sponsorship activities, to cause sympathy with public, such as support, sponsorship, building houses of gratitude, cultural and sports exchanges

1.3.5 Financial capacity

The financial capacity of enterprises is reflected in many criteria such as total assets, profitability, but the most important indicator affecting the development of enterprises is equity This is the measure of the strength of a business in a certain time

A business with a weak financial capacity means that borrowing capital mainly leads

to a reduction in competitiveness and a gradual loss of market Financial capacity not only shows how much equity capital an enterprise has, but more importantly, how much capital it can mobilize, in how long and how much it will cost Capital to develop products including equity and mobilized capital

Indicators assessing the financial capacity of enterprises: There are many criteria to assess the financial capacity of enterprises such as payment ratio, capital structure ratio, profitability ratio:

+ Payment ratio: To assess the solvency of the enterprise, it can be evaluated according to the following criteria:

Overall payment ratio = Total assets / Total liabilities + Capital structure ratio: To assess the level of risk in the borrowing of enterprises, two factors can be used:

Debt ratio = Total Liabilities / Total Assets Debt-to-equity (D/E) ratio =Total liabilities / Equity These two indicators tell us how much money a business will have and how much money to borrow

+ Profitability: To evaluate profitability, it is possible to use 2 indices: Return

on Assets (ROA) and Return on Equity (ROE)

ROA = Profit after tax / Total assets ROE = Profit after tax / Equity

1.3.6 Human resources

Workforce is a resource, an important input factor in the production and business activities of enterprises Labor is always the first factor as well as the last factor to create the success or failure of a business, must have human resources we create products directly or indirectly Human resources are the entire professional process that people accumulate, potentially bringing in income in the future Today science and technology have changed the way people work in many areas The human resources of the enterprise must ensure sufficient physical, qualification and mental capacity to meet the requirements of the job

Assessing human resources in enterprises based on the following criteria:

- Structure and quantity of labor: In order to produce products, enterprises have

to go through many steps, for a long time, with the participation of many production departments, functional departments In order for enterprises to operate smoothly, they must build a rational personnel structure with sufficient professional skills, create flexibility in their operations, and contribute to raising labor productivity and reducing costs, thereby enhancing their competition capabilities

- Labor quality: assessed through professional criteria of employees such as sales skills, creativity in production labor, safety assurance skills Labor quality not only demonstrating in professional skills, but also in quick, dynamic, professional, professional ethics, motivating and sticking with businesses

- Recruitment policy: Enterprises base on development strategy to build annual recruitment plan, in each stage Recruitment policies are very important, allowing the

objective recruitment policies, the closer the reality is, the better the chance to choose the right staff Scientific and objective recruitment policies, close to reality, have the opportunity to accurately select employees Enterprises with good human resource policies will promote their employees' capacity while increasing labor productivity and reducing product costs, thereby contributing to improving competitiveness

- Training and remuneration policies: Depending on each technology, production equipment, enterprises need to have training and remuneration policies that are essential for employees to ensure safe operation No incidents, safety for people and equipment An organization always interested in training employees and having appropriate remuneration policies will always ensure that the organization always innovates, operates effectively and the capacity of employees is improved

1.3.7 Management system

Competitiveness of enterprises is assessed by the flexibility and ability to know the practices of enterprises to meet the changing market Flexibility and know-how in management will capture market opportunities; reduce management costs, thereby enhancing product competitiveness In the same business environment, any enterprise with better management capacity will surely prevail in competition

Management activities include the following basic stages:

- Orientation of business development strategy: The level of management capacity shown in determining the vision, mission and core values of the business so

as to determine short-term, long-term and planning objectives plan business strategies, plan to achieve defined goals on the basis of the most efficient use of enterprise resources Enterprises with reasonable business strategies will win a competitive advantage better than their competitors

- Organizational structure of enterprises: This is an important indicator reflecting the mechanism of allocation of resources of enterprises The organizational structure is also reflected in the division of functional departments, divisions and subordinate units The effectiveness of the management mechanism depends on the coordination between departments and units in implementing business strategies, daily professional activities

- Capacity of management team: The management team is the one who outlines strategies, directions, policies and controls all activities of the business The capacity

of the management team depends on the ability to analyze the market, forecast the development trends in the country and in the world to provide solutions that are consistent with the general trend and product development orientation

- Inspection and supervision activities in enterprises: This is an important tool

to help enterprises verify the implementation; comply with the plans, principles and processes that have been outlined to detect errors in the process from which there are appropriate adjustments and modifications

The author can describe the factors affecting the competitiveness of products by following figure:

Figure 1.2 Factors affect product competitiveness 1.4 EXTERNAL FACTORS AFFECT PRODUCT COMPETITIVENESS

The business environment plays an important role in determining the competitive strategy of a business According to many experts, the business environment of enterprises still has many factors affecting the competitiveness of products

1.4.1 Factors of macre environment

Business activities of enterprises are affected by many factors in the macro environment such as political environment - law, economic environment and natural environment

- Political and legal environment: World political trends, policies of protection and opening, war situation, political instability, economic situation globally and regionally directly affect the activities of the product consumption market as well as the choice of inputs of enterprises Therefore, it directly affects the competitiveness of enterprises' products Vietnam is considered one of the countries with political stability, which has given Vietnam many investment opportunities from foreign businesses Political factors are very interested by investors when deciding on investment, so political institutions in Vietnam are a great premise to attract and develop the economy The legal system and policies are the legal basis for enterprises

to implement It creates an operational framework for businesses, ensuring a healthy and fair competition environment

Vietnam is in the development phase so the legal system is also gradually improving, flexible change policies to suit each stage of economic development Therefore, legal documents inevitably overlap and overlap, causing difficulties for enterprises

- Natural environment: Elements of natural conditions and infrastructure Natural conditions such as mineral resources, geographical location, climate, natural disasters, storms and floods affect the cost of using raw materials, fuels, energy, and business products, productivity, product quality, seasonal supply and demand thus affecting product competitiveness of enterprises in the geographical area Business and production enterprises operating in the region have abundant natural resources, potentials in land, natural resources and minerals with valuable mines such as coal, iron, limestone, rare earth and multi needle, multi mineral and hydropower will be a great advantage for development Conversely, if any business is located in a resource-poor area, severe weather conditions will not develop and reduce competitiveness compared to competitors

- Economic environment: Vietnam's economic environment is regulated by the market economy has become an opportunity as well as pressure on businesses Economic development policies of the state, national economic growth rate, inflation rate, average income per capita, These macroeconomic policies create priority or pliers restrain the development of each industry, each economic region, thus directly impacting the business results and efficiency of enterprises in certain sectors and economic regions In order to survive and develop businesses must improve their competitiveness in the market Competitiveness is a vital element of business in the current economic environment

1.4.2 Factors of industry environment

- Current competitors and potential competitors: Business plans and policies of competitors have a direct impact on business operations of enterprises For example, the price reduction of competitors will also affect the price strategy and competitiveness of businesses in the market Competitors include businesses from other places and businesses that are intending to participate in the same product business In a market economy, competition among businesses is inevitable Competitors in the market have a direct impact on business operations In order to be able to stand firm in the market in addition to planning reasonable business strategies, businesses must also study business strategies of competitors on the same market scale

to take advanced measures competing capability

- Supplier: The input resources of an enterprise are provided mainly from other businesses and business units Ensuring the quality, quantity and price of inputs of enterprises depend on the nature of those factors, depending on the behavior and nature of the supplier So must avoid the monopoly of suppliers, reduce input costs, increase business efficiency To ensure stable supply of input products with competitive prices, businesses need to maintain relationships with many suppliers Good relationships with many clues provide input products to help businesses stabilize the quantity and types of goods and compete on price Suppliers of products have a direct impact on product competitiveness, if the input products are of good quality and reasonable price, they will attract more customers, thereby improving their

is not competitive; it will directly affect the output, revenue of the business and reduce the competitiveness of that enterprise

- Customer: Is the decisive factor to the success or failure of the business Therefore, many businesses affirmed that "The most precious thing of our company is CUSTOMER" It is easy to understand products manufactured to meet customers' purchasing needs If there is no customer, the product will be stagnant and cannot be consumed As a result, the business goes bankrupt

In the context of economic development and fierce competition, customers have become a very important role for each business, which is the cause of the enterprise's existence

For steel products, customers are construction enterprises, contractors implement industrial and civil construction projects Customers are divided into two groups that are large customers and small customers The goals and product choices of different customer groups are different Therefore, enterprises need to grasp the needs

of customers to choose to market the superior products, suitable for many customers, thereby enhancing the competitiveness of products of enterprises

CHAPTER 2: CURRENT SITUATION OF COMPETITIVENESS OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL CORPORATION 2.1 OVERVIEW OF VIETNAM STEEL CORPORATION

2.1.1 General introduction

General information

- English name: VIET NAM STEEL CORPORATION

- Abbreviated name: VNSTEEL.CORP

- Establishment date: 4/1995

- Logo:

- Business registration certificate number: 0100100047

- Charter capital: 6,780,000,000,000 VND (Six thousand seven hundred and eighty billion Vietnamese dongs)

- Owner's investment capital: VND 6,780,000,000,000 (Six thousand seven hundred and eighty billion Vietnamese dongs)

- Address: 91 Lang Ha, Dong Da, Hanoi

History of establishment and development

Vietnam Steel Corporation - CTCP was formerly a State-owned Corporation (Corporations 91) established under Decision No 255 / TTg of April 29, 1995 of the Prime Minister on the basis of merging two State Corporations: Vietnam Steel Corporation under the Ministry of Industry and Metal Corporation under the Ministry

of Trade under the model of establishing a business group under Decision No 91 / TTg of March 7, 1994 of the Prime Minister

The Corporation has transformed into a parent-subsidiary company operation model since 2007 Implementing the Government's policy on continuing to innovate

and develop state-owned enterprises, in 2011 Steel Corporation Vietnam was approved

by the Prime Minister to equitize and officially went into operation in the form of a joint stock company from October 1, 2011 under the name of Vietnam Steel Corporation - CTCP (VNSTEEL)

The main task of the Corporation is to build and develop a multidisciplinary business model with core activities of producing and trading steel products The main business activities of the Corporation include but are not limited to exploiting iron ore, coking coal, auxiliary materials; production of cast iron, steel and metals, steel products; import and export of steel, materials and equipment and equipment for metallurgy, technology transfer and technical support; design, manufacture, construction and installation of equipment for metallurgy and civil construction works; business hotels, restaurants and synthetic materials; vocational training, scientific and technological research; investment, joint venture, economic cooperation and labor cooperation with foreign countries

Historical milestones

April 29, 1995: The Prime Minister signed Decision No 255 / TTg to establish Vietnam Steel Corporation on the basis of consolidating and merging many enterprises and units in the steel production industry, including General Corporations Vietnam Steel Company belongs to Ministry of Industry and Metal and Metal Corporation under Ministry of Trade

November 23, 2006: Establishment of Parent Company - Vietnam Steel Corporation

June 21, 2007: The Prime Minister approved the Organization and Operation Charter of the Parent Company - Vietnam Steel Corporation

July 1, 2007: Officially operated under the model of Parent Company - Vietnam Steel Corporation

December 31, 2009: The Government Office issued Official Letter No 373 / TB-VPCP announcing the Prime Minister's conclusion: "Agree to equitize the parent company of Vietnam Steel Corporation, the State holds hold over 65% of charter capital”

January 15, 2010: Minister of Industry and Trade issued Decision No 0256 / QD-BCT on the equitization of the parent company - Vietnam Steel Corporation September 29, 2011: Vietnam Steel Corporation officially operates under a joint stock company model

Business activities:

According to the Business Registration Certificate, Joint Stock Company No

0100100047 issued by the Department of Planning and Investment of Ha Hoi on February 5, 1996 (registered for the 9th change on January 4, 2017), operating Business of Vietnam Steel Corporation includes:

a) Exploiting iron ore, coking coal and supporting materials for steel production industry;

b) Production of steel and other metals, refractory materials, metallurgical equipment and steel products after rolling;

c) Business logistics services; import and export and trading: steel products and materials for metallurgy, steel rolling; metal scrap; rubber, gasoline, oil, grease, gas and other materials, spare parts and equipment for steel, construction, transport, mechanical and other industries;

d) Design, manufacture and construction of steel production works, industrial and civil projects; producing and trading construction materials;

e) Design consultancy for metallurgy, steel rolling and civil construction projects: Investigation, survey and establishment of investment projects; design and estimation of works; prepare bidding documents and evaluate and verify design projects, cost estimates and bidding documents, bidding results; management of investment projects, supervision of construction and equipment installation

f) Trading in gaseous oxygen, nitrogen and argon, liquid form used in industry, health and defense Installation and supply of equipment for conducting oxygen, nitrogen and argon;

g) Operating and exploiting ports and forwarding services, warehouses, factories, offices, houses; investment in infrastructure of industrial parks and urban areas; home and real estate development business;

h) Business hotels, restaurants, travel, travel, advertising services;

i) Agents buy and sell items within the scope of business of the Corporation; j) Business finance, banking, securities and other financial services;

k) Labor export;

l) Investment, joint venture with economic partners with domestic and foreign partners; Training, scientific and technical research, technology transfer and vocational training for steel production and metal material production;

m) Other branches and trades not prohibited by law

The operational objective of the Corporation is to develop sustainably, improve competitiveness, efficient production and business in order to maximize the value of benefits for shareholders, contribute to the state budget and create public employment, stable income for workers

Business areas: Hanoi, TP Ho Chi Minh City and provinces and cities nationwide

Figure 2.1 VNSTEEL operating areas

Organizational structure

Figure 2.2 Organizational structure of VNSTEEL

Southern Steel Company Limited - VNSTEEL Phu My Flat Steel Company Limited - VNSTEEL

Hanoi Metal VNSTEEL HCM Metal JSC- VNSTEEL MDC-VNSTEEL Consulting Company Limited VICASA JSC- VNSTEEL JSC Nha Be JSC- VNSTEEL Thu Duc JSC- VNSTEEL Vingal JSC- VNSTEEL VNSTEEL Thang Long JSC VINATRANS JSC- VNSTEEL

JSC-Phuong Nam Hotel Center for labor cooperation with foreign countries Ferrous metallurgy Institute Thai Nguyen

Iron and Steel JSC

VNSTEEL- Quang Huy Real Estate JSC

Đà Nẵng Steel JSC

Tân Thuận Steel JSC

Binh Tay Steel Grid Joint Stock Company Southern Investment and Construction JSC Metallurgical Engineering JSC Nipponvina Co LTD

Sounthen Steel Sheet Company Ltd Saigon Steel Processing and Service Company Limited Tay Do Steel Ltd

Viet Nhat Mechanical Co., Ltd Viet Trung Minerals and Metallurgy Company Limited

Nippon Vietnam Steel Pipe Co., Ltd

VSC-Posco Steel Limited Company

Vinausteel Steel Joint Venture Company Vina Kyoei steel Co., Ltd Vietnam Steel Pipe

Co Ltd International Trade Center joint venture company Trúc Thôn JSC

Thi Vai International Port Co., Ltd Central Metal Joint Stock Company Thach Khe Iron Joint Stock Company Thong Nhat flat Steel Joint Stock Company Thai Nguyen Metallurgy and Electrical JSC Tan Thanh My Joint Stock Company Nam Ung Refractory Material JSC

VNS-Daewoo Company Limited

NatsteelVina Company Limited

Administrative offices

Market Planning Department Finance and accounting Dept

Investment Department

Human resource Department

Technical Department

Thanh tra

Pháp chế

Representative office in HCMC

Headquarters

The subordinate

Associated Companies

Board of Directors

đốc

GM of Shareholders

VNSTEEL's current organizational structure includes VNSTEEL's parent company and 40 subsidiaries and associated companies At the end of 2017, the parent company invested capital in 40 enterprises with a total investment of VND 7,264,823 million Which includes:

- 12 subsidiaries have dominant contributed capital from 51% or more with the amount of VND 3,150,009 million, accounting for 43.4% of the total investment capital (including 02 One-member limited liability companies of the Corporation company with investment capital of VND 1,800 million);

- 28 associates have dominant contributed capital of less than 51% with the amount of VND 4,114,814 million, accounting for 56.6% of the total investment capital

- The Corporation performs the management of subsidiaries and associates through authorized representatives of capital in the governance and administration structure of such companies, thereby taking control of the company's operations according to the capital contribution ratio and according to the charter of the enterprise

The parent company VNSTEEL is a large-scale public company, operating under the Enterprise Law, securities law and current legal regulations Although it is a joint stock company, the ratio of state capital currently accounts for 93.93% of the charter capital, so it must still be under the strict management of state agencies like before equitization That leads to the decision of the management issues still slow, less flexible in response to the fluctuations of the business environment, reducing business efficiency in general and the efficiency of State investment in particular

The apparatus and mechanism of operating corporate governance in the parent company have not changed much to adapt to a modern market-oriented business environment; management processes are sometimes rigid and lack of creativity, resulting in unsatisfactory management effectiveness and effectiveness VNSTEEL's investment portfolio is also spreading, many clues, and many small-scale, duplicated and low-effective investments Some companies have large investment capital but have not promoted their advantages; some subsidiaries in the commercial sector have limited potential, small scale, low operational efficiency

2.1.2 Business results of VNSTEEL 2015-2017

Production and consumption of construction steel production and operation efficiency of the whole Corporations in the period 2015-2017 are as follows:

Table 2.1 Production and Consumption of Construction steel 2015-2017

Source: Vietnam Steel Corporation

Figure 2.3 Production and Consumption of VNSTEEL

Through the above table, it can be seen that the construction steel production volume in the period of 2015-2017 of the whole system of the Corporation has increased by 12.4% in 2016 and then decline, only increasing by 1% in the year 2017

Sales volume of the whole system has recovered with a relatively high growth rate, reaching 16.6% in 2016 and declining in 2017 (down 0.2% in 2017)

Due to a strong increase in steel production from private enterprises in recent years, the market share of construction steel of the entire Corporation in Vietnam Steel Association decreased sharply from 49% in 2010 to 41.7% in 2015 and only 34.5% in

2017 Especially, the construction steel market share of subsidiaries dominated by the Corporation is sharply reduced in the period 2015-2017, 2015 accounted for ~ 22 % of market share decreased to ~ 17.8% in 2017 Meanwhile, the area outside VNSTEEL tended to increase its market share from 59.7% (2015) to ~ 66.1% (2017), including some competitors have a relatively fast market share growth like Hoa Phat, Pomina, PoscoSS

Table 2.2 Consolidated business results of the Corporation 2015-2017

Net profit in associates

Source: Financial Statements of Vietnam Steel Corporation