group assignment group of student implementations

law does business in Vietnam, this will limit the State's protection for Vietnam Airlines 1.2 SWOT 1.2.1 Strengths - Strong and ambitious management with clear vision - A national brand

VNU UNIVERSITY OF ECONOMICS & BUSINESS

Institute of Business Administration

VNU UNIVERSITY OF ECONOMICS & BUSINESS INSTITUDE OF BUSINESS ADMINISTRATION

Hà Nội — 2022

Contents

I External Environment of VietNam Airline 5

rIZấ m 5

L.1.1 ECOMOMIC 5

INUAI loi 5

I2 2000100 7n 5

In 6 6

I0.) 0 6

LQ SWOT 7

IV 7

ID C¡i h 7

1.2.3 Opportunities hố Ầ.ẦỐ 8

1.2.4 Threats 8

II Internal Environment of VietNam Airline 8 QD RESOULCES 0 cccecccccccecceeseesceesseseeseesseesseesacesseeseeeseeaeeaeeeseecseeeaeeececeeeeeeeeeeeeeeeeeeaees 8 VN Nghi v6 vi nh 8

2.1.2 Proprietary application SOẨWAT€ cc+e ket HH HH HH TH HH HH TH Hi, 9 Vy hon 9

2.1.4 Brand Reputaton (Tang1ble TeSOUTC€§) . S5 S5 +1 10 VN 2 02 an ốốốốố.ốố.ốốốố.ốằố.e 11

2.2.1 Premium airline DOSIfIO'ITE . 5 SĂ SH key 11 2.2.2 Nationwide Dealer DIstrIbUfIOI - - <1 HH HH key 11 "ca ốc ốc ố ẻốốằ 11

VY 99) àiri0ir 209 0000000508 12 2.2.5 Self-training transshipment PTOBTATm1 5 55 S5 SE + 12 2.2.6 Building Corporafe CUÏfUIe - 5 S5 S411 SS3 A11 9 1 HH hư 13

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2.3.1 Skill and experience human - < S4 se k1 HH HH HH HH hư 13 2.3.2 Supply chain nh 14 2.3.3 Technologtcal integration and advancemen[ -+s<++ex+ee+sexse 14 2.3.4 Communication, PR and building a beautiful image ee 15 2.3.5 Corporate leadership and ViSIOTI - S5 S1 re 15 2.4 Sununary 0ƒ VRÑIQ FTGI1€WOTĂ ẶẶ ST SH HH HH key 16 III Functional Level Strategy of Viet Nam Airline 18 E82, ammẽnh 18

“An Lci(c an 18 3.1.2 Materials Management and Supply Chain - eee eects 22 3.1.3 Research & Development Šfraf€BV - - LH HH HH HH, 24 3.1.4 Human Resource SŠfTrafegV HH HH» HH HH Hit 26 3.1.5 Information SYSÍ€THS 5 S5 S4 SH HH HH TH HH HT HH HH TH HH 28

CN lo an 29

BD QUALI nh 30 K0 NNnN G Gố 31 3.4 CHSÍOIHGT FESPONSIVENESS SG TH HH HH HH Hit 32 3.4.1 Improvements 1n øroundl S€TVIC€S -.- 5 S5 + s ke +1 HH it 32 3.4.2 Improvements 1n 1n-flighi S€TVIC€S - 2Á S SH HH, 33 3.4.3 Customer safisfaction 1ICAfOFS 5 +5 << SE HH it 35 3.4.4 Orlentation toward 5-sfar service quaÌÏIfy .c~-cScSekeeeeexke 35

I External Environment of VietNam Airline

1.1 Pestel

LI Economic

Business activities of Vietnam Airlines are not immune to the influence of fluctuations in the economy, such as factors such as GDP growth rate, economic inflation rate, tax policy, etc The fact that Vietnam joins the World Trade Organization - WTO has created a premise for our country's air transport industry to have better opportunities in the future

The average income of our people increases, so the demand for transportation and transportation by air transport will also increase

The crisis in the kerosene market caused fuel prices to increase dramatically from 2004 until now, causing difficulties for businesses when the ticket price

remained the same but the cost increased

In addition, Vietnam's economy last year was affected by the Covid epidemic, which forced the transport industry to suspend flights for a long time And having to overcome many consequences after the epidemic caused many difficulties

1.1.2 Technological

The peculiarity of the air transport industry is the speed of application of new and advanced technologies because this is a special type of business that requires high operational safety, if negligence leads to an accident The consequences are dire and almost impossible to recover the damaged property

for international aviation the construction of a route network between the US and Australia with short flights in Southeast Asia and inland of Vietnam

With the characteristics on the route network of Vietnam Airlines built according to the model of "shaft-spoke” with high operating frequency, good transit service in Hanoi and Ho Chi Minh City, creating a competitive advantage with other airlines international freight flows to/from Indochina, Southeast Asia; gradually turning Vietnam into a regional air hub, competing directly with major hubs such as Hong Kong, Bangkok, and Singapore

1.1.4 Social

Vietnam is a country with a diverse and advanced culture Preserving national cultural identity and absorbing the cultural quintessence of humanity Thanks to that, Vietnam's tourism is on the rise, helping VNA expand the market to welcome

international customers to Vietnam

Depending on the culture of each region, people in the North have a habit of saving money, so choosing a plane to travel is lower than that of people in the South

or developed countries with high income, so they have a habit of traveling Much 1.1.5 Political/Legal

The stability of the political system is one of the factors that greatly affect the development of enterprises Because of the nature of the aviation industry, in addition

to domestic flights, international routes are also dependent on the politics of countries other than Vietnam For example, the security situation in Iraq, in Lebanon due to political instability caused many VNA flights to be canceled, causing damage to

businesses

Currently, the political and legal situation is very stable for businesses to develop Vietnam Airlines is among the companies under the management of the Government, this is an advantage due to its capital support, business protection, and financial policies, especially in difficult times due to the influence of the government terrorist activities, wars and epidemics and fuel prices, etc But international aviation

law does business in Vietnam, this will limit the State's protection for Vietnam

Airlines

1.2 SWOT

1.2.1 Strengths

- Strong and ambitious management with clear vision

- A national brand airline, growing in domestic and international

- The government is quite supportive

- Strong Financial capability and capital mobilization

- Good product and services which are being further enhanced

- Leading among domestic airlines in market share on routes including domestic and international flights

- Leading the trend of development and application of aircraft technology compared to

other domestic airlines

1.2.3 Opportunities

- Vietnam has a steady economic growth in the region

- Stable political and social situation

- Higher income per capita and much better living conditions

- Fast growing domestic travel demands

- Stronger brand name; known world-wide after joining SkyTeam Alliance, the 2nd largest in the world

1.2.4 Threats

- Macro-economic risks are always present affecting the company's revenue like higher and higher inflation rate, World economy being affected by the many crisis world-wide, Higher prices for raw materials may rise cost

- The outbreak of the Covid-19 pandemic has severely affected the tourism industry and put great pressure on finances

- Service quality compared to regional airlines is still low

- Fierce competition from domestic and European airlines

II Internal Environment of VietNam Airline

The huge financial strength enables the company to become one of the largest airlines in Vietnam, diversifying its products and services (air passenger transport, air freight transport, etc.), transport-related services, etc Besides, ensuring the ability to maintain and develop large-scale companies

Viet Nam currently has only four airlines, only Vietjet Air has similar financial resources as Vietnam Airline with total assets of VND 49.855 billion

— Finance is a resource that satisfies the V, R, and O factor

2.1.2 Proprietary application software

Vietnam Airlines has application software from marketing, customer care, support for online booking procedures, check-in and check-out procedures to replace traditional procedures such as building the website vietnamairlines.com, kiosk check-

in systems, web checks in-system, mobile check-in system Vietnam Airlines’ online system provides passengers with convenience when traveling by flight and helps reduce the load on airport terminal check-in counters

Custom applications create a unique interactive environment between the company and its customers, manage information, analyze customer behavior and increase brand awareness

The use of technology applications by airlines is not rare Other airlines also use technology to manage, book, check-in and check-out Even Vietjet Air is a pioneer

in providing kiosk check-in systems, mobile applications

— Vietnam Airlines’ technical software resources satisfy the V, O factor

Regarding labor quality, the workforce of Vietnam Airlines is basically young 72.5 percent are under the age of 40, with 32.6 percent under the age of 30 (statistics

as of 31/03/2015) Employees with university and post-graduate degrees made up 45 percent of the workforce The management team is basically trained, has solid knowledge, expertise and experience

Many colleges and universities train in aviation-related fields ->the number of skilled workers grows -> Vietnam Airlines will be able to employ a nice staff However, to hire a team of experienced employees-> companies must spend a lot of money to own it

— Humans are a resource that satisfy factors V, I, and O

2.1.4 Brand Reputation (Tangible resources)

VietNAm Airlines was established in 1993 A modern airline with a brand that

is widely known for its distinct cultural identity

Vietnam Airlines has just been honored in the Top 10 strongest brands in Vietnam by Campaign Asia-Pacific (2020) in cooperation with market research company Nielsen VNA is honored to be in the top 10 strongest brands in Vietnam besides major international brands: Samsung, Honda, Apple and Vietnamese brands: Vinamilk, Vingroup, Trung Nguyen Coffee,etc

In the aviation industry, Vietnam currently has only 4 domestic airlines: Vietnam Airlines, Vietjet Air, Jetstar Pacific and Bamboo Airways In the top

of prestige and quality of Vietnam Airlines > challenge for any competitor to surpass

— Takes a lot of time and money to surpass prestige and quality because VNA is a leading company in the field of aviation products industry and have gained the trust

of customers since before

— Brand Reputation is a factor that satisfy V, R, I, O

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2.2 Distinctive competency

2.2.1 Premium airline positioning

Compared to other competitors in the market, Vietnam Airlines has a superior advantage when called "Vietnam National Airlines" This is seen as its advantage in attracting customers to its services Vietnam Airlines affirms the status of the national brand airline, along with the quality of flight safety and service, helping customers to

be truly assured and satisfied when participating in Vietnam Airlines flights

— This is factor V, I and O

2.2.2 Nationwide Dealer Distribution

With a rapidly growing distribution network of 10,240 ticket offices (as of December 2016) and 31 branches and representative offices across 20 countries and

territories, Vietnam Airlines covers the market on 4 continents to meet the needs of customers around the world In Vietnam, Vietnam Airlines has 5 subsidiaries, 25

branches and is present in 20 major provinces/cities in Vietnam (according to Vietnam Airlines Annual Report 2019) Ticket offices located in major cities are the official trading point of the company, assisting customers to solve problems related to booking, issuing tickets, refunding tickets, exchanging tickets But many companies are also opening branches to increase coverage

— This is factor V, R

2.2.3 Service quality

Vietnam Airlines, in particular, was recognised as a 4 - star airline by SkyTrax for four consecutive years from 2016 to 2019 due to its consistent service level (Vietnam Airlines 2020) and is appreciated for its quality of service, prestige and becoming a familiar companion of many passengers It also offers service improvements so that it can deliver a world-class experience when it comes to using its services For example, the program "Service uplifting", "Service uplifting culture”, However, many airlines now also focus more on improving the quality of

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customer service because service is the second highest factor of airlines after safety factor

— Service quality is a responsive factor V, I, R, O

2.2.4 Digital transformation

Vietnam Airlines’ distribution channel also focuses on digital transformation, implementing “digitization” through many projects such as improving website infrastructure and mobile applications, automating the customer care cycle such as ticket exchange, online payment procedures to help customers more conveniently and quickly implement Vietnam Airlines’ services As the first Vietnamese airline equipped with Wireless streaming system on A321neo, Vietnam Airlines changed the

“concept” and gave passengers a completely new in-flight entertainment experience It has also promoted online procedures via websites, mobile apps and strengthened Kiosk check-in desks at many domestic and foreign airports Since 2019, the airline has launched a mobile app version to help passengers search for flights, look up itineraries, book tickets online, timely update incentive programs, look up flight maps In addition, Vietnam Airlines also expanded many payment methods on the new technology platform such as QR code, while adding online payment services SOFORT Banking in foreign markets It has shown its ability to capture technology, trends in digital transformation in a timely and fast manner However, many airlines are also pursuing to not fall behind due to the fast growing era

— The frequency conversion is carrying the following factors V, R

2.2.5 Self-training transshipment program

With 4 new cockpit simulators (SIM), Vietnam Airlines is fully able to train transfer pilots in Vietnam with the highest quality and international standards In parallel with training on cockpit simulators, Vietnam Airlines pilots also experienced many other skills training tasks of pilots such as physical training, responding to dangerous situations, In addition, VNA also invites experts and professors of world- famous universities to exchange knowledge and experience as well as CADRES and employees at the agency In addition, VNA also focuses on English for staff, which

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has advanced English training courses on very quality aviation from New Zealand Self-training is a necessity for each airline because the aviation market is constantly changing in terms of machinery and technology, so it is important to improve and learn knowledge in order to succeed

— The self-training factor of VNA is factor V

2.2.6 Building Corporate culture

The airline is a long-standing traditional airline in Vietnam, so it always keeps

a good image, does not follow the market trends but always keeps its status as a leading airline — a pioneer bird in the aviation industry The company always offers the best services, finds the best technologies and above all the safest to provide the best experience for customers in every flight VNA is ranked 7/7 stars for aviation safety according to AirlineRatings - the world's most prestigious website dedicated to assessing the safety and quality of service of 435 global airlines To achieve that, VNA always follows the culture of the groin as "Safety culture" VNA has gone through a process of dozens of years of exploring, researching, building and developing a "Safety culture" management system in the business, always consistent with the core goals and values of the business "Safety is number one”

— Corporate culture factors are V, O factors

2.3 Capabilities

2.3.1 Skill and experience human

- The staff of Vietnam Airlines are experienced, skilled and well-trained in professional

- Human resource development plays a core role in the value system that Vietnam Airlines builds and pursues Therefore, Vietnam Airlines has worked actively to organize training programs, encourage and create conditions for all employees to access intensive training programs to improve knowledge and experience

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- Organized training courses in Safety - Security for more than 11,000 turns of pilots, flight attendants, operators, and ground operators in accordance with IOSA requirements and aviation regulations

- Organized 05 English training classes in 2019 in New Zealand with 91 students who are excellent officers and experts of the Corporation

- Training 05 Master of Science (MSc) at Cranfield University - UK and ENAC

- Vietnam Airlines focuses on developing elite people to create top quality products and services And the cost and time invested in training personnel in the aviation industry is not very large, forcing businesses to consider

+V,R,L0

2.3.2 Supply chain

- VNA’s supply chain includes purchasing and servicing aircraft from manufactures like Airbus, which offers the most contemporary and fuel-efficient aircraft on the market

- Air carriers, parts, gasoline, and other equipment are provided

- Vietnam Airlines is an airline that accounts for 90% of the international freight market share and 60% of the domestic market share

— Supply chain is a factor that satisfy V, R, I, O

2.3.3 Technological integration and advancement

- The technological advancements and integration at the VietNam Airlines are also an important resource for developing competitive advantage The technological advancement allows the VietNam Airlines to maintain effectivity and efficiency in its various business processes and operations

+ The technological advancement and integration also allows a smooth management

of global operations for the company which is important to maintain effective logistic

management

+ The technological advancements and systematic integration is a competency that allows the VietNam Airlines to build long term competitive advantage over competition

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— Technology is a factor that satisfy V, O

2.3.4 Communication, PR and building a beautiful image

Vietnam Airlines’ communication and PR strategy is marked with a beautiful image, no games to help customers feel their professionalism and premium service Vietnam Airline conducts short commercials to introduce the company's image and increase the frequency of news coverage of commercial activities on domestic and foreign news reports With the status of "Vietnam National Airline", TVCs advertised

or appeared on Vietnam Airlines news reports have attracted the attention of many people and widely advertised to many different customers

— This is factor V, IO

2.3.5 Corporate leadership and vision

The corporate leadership and vision are also non substitutable, and cannot be applied to other firms in the industry

In order to improve leadership and management capacity for mid-level leaders

in Vietnam National Airlines Corporation, on September 8-9, 2011, CEMD

cooperated with Tan Son Ground Services Enterprise Nhat (TIAGS) implemented a training course on “Leadership & Management Skills” for 25 officers from units in the Corporation

The participants of the course confirmed that the Course provides a large, comprehensive, and very new knowledge about Leadership, especially new knowledge about Modern Leadership in the context of globalization and competition fierce global competition, the rapidly changing business environment, science and technology, and the needs and requirements of customers The course has helped students systematically synthesize leadership concepts in their practice, gain modern knowledge and develop skills to work better and more effectively in his working position

The leadership also plays an important part in motivating employees and setting business goals and targets to be achieved VietNam Airlines’s expansion and growth is directly related to the leadership it has

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— Corporate leadership and vision is a factor that satisfy O

2.4 Summary of VRIO Framework

VRIO ANALYSIS TABLE VIETNAM AIRLINES Capabilities Valuable | Rare | Inimitable | Organized | Competitiveness

(V) (R) (I) (O)

Financial resource YES YES NO YES Temporary

advantage Proprietary YES NO NO YES Parity application

Communication, YES NO YES YES Temporary

PR and building a advantage beautiful image

Corporate NO NO NO YES Disadvantage leadership and

vision

Based on the VRIO analysis, we can see that the core competitiveness of Vietnam Airlines lies in the brand reputation, service quality, skill and experienced human and supply chain Vietnam Airlines is known as the national airline of Vietnam, so its reputation is guaranteed Vietnam Airlines’ supply chain is highly appreciated for its modern aircraft, which has the leading international freight market

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share in Vietnam The personnel of Vietnam Airlines are also very well trained, so they have experience and the ability to serve customers very well

e« A competitive advantage is what sets a company apart from its competitors, in the eyes of its consumers

e These advantages allow a company to achieve and maintain superior margins, a better growth profile, or greater loyalty among current customers

« A competitive advantage is often referred to as a “protective moat.”

e Strong and repeatable competitive advantages can create sustained success for

a business and attract capital more readily and cheaply

A differential advantage is when a company’s products are seen as both unique and of higher quality, relative to those of a competitor

III Functional Level Strategy of Viet Nam Airline

3.1 Efficiency

3.1.1 Marketing

Marketing 7P analysis

a, Product

%& Product category policy

- Route network: 49 airports to 26 countries and territories In addition, Vietnam Airlines also has a joint venture agreement with 23 airlines => helping the route

network to cover Asia, Europe, Africa, Australia, and North America

Flight services: VNA provides a full range of services including: ground service; in- flight services; after-flight service

- Service class: VNA exploits 02 main service classes including Business class and Economy class

%& Product quality policy

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