Trương Trung Nghĩa - CAPSTONE PROJECT REPORT DEVELOPING THE BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE YEARS 2011-2015 pptx

GRIGGS UNIVERSITYGOLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAMCAPSTONE PROJECT REPORT DEVELOPING THE BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE YEARS 2011-2015

CAPSTONE PROJECT REPORT

DEVELOPING THE BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE

YEARS 2011-2015

Do Anh Minh Nguyen Vinh Thu Pham Thanh Cong Truong Trung Nghia

Class: GaMBA.X0510

HA NOI - 2011

GRIGGS UNIVERSITYGOLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

DEVELOPING THE BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE

YEARS 2011-2015

Group Number: 09

1 Do Anh Minh

2 Nguyen Vinh Thu

3 Pham Thanh Cong

4 Truong Trung Nghia

HA NOI - 2011

TABLE OF

CONTENTS

LIST OF FIGURES 6

LIST OF TABLES 6

INTRODUCTION 7

1 Necessity 7

2 Objective 7

3 Subject and scope of the study 8

4 Approaches 8

5 Outline 8

CHAPTER I THEORETICAL FOUNDATION OF STRAGIC MANAGEMENT 9

1.1 Concept and role of strategic management 9

1.1.1 Concept 9

1.1.2 The role of strategic management 9

1.1.3 Types of strategy 10

1.2 Stages of strategic management 11

1.2.1 Strategy Planning 11

1.2.1.1 Identify tasks and objectives 12

1.2.1.2 Analysis of external environment 12

1.2.1.3 Analysis of internal environment 13

1.2.1.4 Choosing the optimal strategy 13

1.2.2 Strategy Implementation 13

1.2.3 Strategy Assessment 13

1.3 Models and matrixes 14

1.3.1 Models 14

1.3.2 Matrixes 14

CHAPTER II BUSINESS SITUATION ANALYSIS OF VIETTEL GROUP 17

2.1 Introduction of Viettel Group 17

2.2 Business situation of Viettel from 2005 to 2010 18

2.3 Business environment analysis 22

2.3.1 External environment 22

2.3.1.1 Macro environment 22

2.3.1.2 Industry Environment 26

2.3.1.3 External environment evaluation 31

2.3.2 Internal environment 33

2.3.2.1 Analysis of resources 33

2.3.2.2 Strengths 38

2.3.2.3 Weaknesses 41

2.3.2.4 Evaluation of internal environment 42

CHAPTER III STRATEGY SELECTION & IMPLEMENTATION SOLUTIONS 44 3.1 Vision - Mission of Viettel 44

3.1.1 Viettel’s brand vision 44

3.1.2 Mission of Viettel 44

3.1.3 Core values 45

3.2 Strategic identification and selection 46

3.2.1 Strategy of market development 50

3.2.2 Strategy of product development 51

3.2.3 Strategy of business diversification 52

3.2.4 Strategy selection for Viettel in the period of 2011-2015 53

3.3 Implementation solutions 56

3.3.1 Target market and basic policies for the market 56

3.3.2 Continuing maintenance of expansion investment and improvement of coverage quality, customer service capabilities 58

3.3.3 Continuing development of price policies for product package,

competition and flexibility for each customer segment 59

3.3.4 Management of human resources for changing the structure and improving the quality of service from the human factor 59

3.3.5 Financial management solutions 61

3.3.6 Marketing solutions 62

3.4 Implementation process 65

3.4.1 Construction of annual goals 65

3.4.2 Construction of policy system and support plan 65

3.4.3 Development of action plans, budgets and implementation processes. 65

34.4 Allocation of human resources, finance, facilities 65

3.4.5 Selection of organization structure consistent with the strategy 66

3.4.6 Strategic commitment and implementation 66

3.4.7 Strategic inspection control, evaluation and adjustment in the implementation process 66

CONCLUSION 68

REFERENCES 70

LIST OF FIGURES

Figure 1.1 Levels of strategic management 10

Figure 1.2 The process of strategic management 11

Figure 1.3 The PEST and Five Forces models 14

Figure 1.4 The matrixes used in analyzing 15

Figure 2.1 Revenue and profit of Viettel from 2005 to 2010 19

Figure 2.2 Revenue of Viettel Mobile from 2005 to 2010 20

Figure 2.3 Manpower of Viettel Group from 2005 to 2010 37

Figure 2.4 Market-share of mobile phone subscribers in Vietnam (12/2010) 40

Figure 3.1 Hierarchy of competition in Vietnam mobile market 64

Figure 3.2 Levels of competition in Vietnam mobile market 64

LIST OF TABLES Table 2.1 Some data on Vietnam's economy in the recent 05 years (GSO) 23

Table 2.2 Viettel’s external factor evaluation matrix (EFE) 32

Table 2.3 CPM matrix compares the competition with a number of companies 32

Table 2.4 Some financial data of Viettel from 2005 to 2010 34

Table 2.5 Number of mobile phone subscribers in Vietnam (12/2010) 39

Table 2.6 Internal factor evaluation matrix of Viettel (IFE) 42

Table 3.1 Table of SWOT Matrix for Viettel Group 48

Table 3.2 QSPM Matrix for Viettel 54

1 Necessity

In Vietnam, after the conversion from the command economy to marketeconomy, the local enterprises faced many difficulties in strategic management.Businesses need to research, develop a strategic tool to have enough flexibility torespond to market changes A business strategy must be formulated on the basis ofanalysis and forecast opportunities, threats, strengths and weaknesses of the enterprise,helping businesses obtain general information about the external and internal businessenvironment

Viettel Group is one successful model of change to the market economy From asmall company, facing many difficulties, unknown brand in the market, now Viettel isone of the leading service providers in the Vietnamese telecommunication market andexpanding to neighboring countries The brand positioning parts the crucial part in thisachievement of Viettel

The planning and implementation of business strategy is very important todecide the existence and development of a company Within the limits of the subject,

our group offers the research and analysis to introduce “Developing the business strategy for Viettel Mobile in Vietnam for the years 2011-2015” The research and

analysis apply the theories from the Master of Business Administration program(MBA) offered by the Hanoi National University of Vietnam and Griggs University -Andrews University, the United States

2 Objective

The objective of this study is to conduct the complete top-down and competitiveanalyses, develop alternative strategies and select a prioritized set of strategies that willensure a competitive advantage for Viettel and above normal returns (strategy to

expand the market of Viettel Group in Vietnam during 2011 to 2015) This study based

on the analysis and application of the theories of strategic management

3 Subject and scope of the study

Subject of this topic is in-depth analysis, evaluation and provides the direction

to formulate a business strategy based on the theory of business strategic management

The scope of this study based on specific statistics on the macro environment,industry and organizational environment of the Viettel Group from 2005 to 2010 andorientation until 2015

4 Approaches

Topics of study based on the methodology of dialectical materialism combinedwith the knowledge of strategic management subject and other subjects in the MBAprogram to assess overall the business operations of telecommunications servicesViettel Group

In addition, the research also uses methods such as statistical analysis, analyticalmodeling to evaluate and develop business strategy for Viettel Telecom Group in thefield of mobile telecommunications

5 Outline

The main contents of the analysis and strategic planning for Viettel TelecomGroup in the period of 2011 to 2015 are presented in three chapters as the following:

- Chapter I The theoretical foundation of strategic management

- Chapter II Analysis of business activities of Viettel Group.

- Chapter III Strategy selection and implementation solutions

CHAPTER I THEORETICAL FOUNDATION OF STRAGIC MANAGEMENT 1.1 Concept and role of strategic management

1.1.1 Concept.

In the early stages of the development of strategic management theory, peoplehave seen the strategic long term plan, are an integral part of the planning system of theorganization and thus just press strong strategic planning function Although there aremany authors and researchers presented different ways of strategic management,strategic management but is now both a scientific definition, and is an art and science

of planning, organization implementation and evaluation strategies

Therefore, during the development, the concept of strategic management hasbeen expanded greatly At the first phase, strategic decisions are made once for a longperiod of time and it is the job of senior executives However, the process of strategicmanagement is made regularly and continuously and requires the participation of allmembers of the organization

1.1.2 The role of strategic management

In the current business environment, there are opportunities and threats.Strategic management helps us to identify opportunities and threats The perception ofdesired results and goals in the future can help managers and employees to understandwhat needs to be done to achieve success This will encourage both the above groups toachieve short-term achievements, in order to better improve the long term welfare ofthe business

Strategic management process enables enterprises to match the proposed planwith the external environment The greater the volatility is, the more effort the businesshas to take the initiative To be able to survive and grow, businesses must develop their

own strategic management systems that can adapt with the market fluctuations.Therefore, strategic management is in the direction of future action It does not followthe market but change the business environment instead

In short, strategic management is a product of modern management based practices, accumulating experiences from many companies However, thesuccess of every business depends on the capacity of implementation and control of theinternal system and is seen as the state of art in business administration

science-1.1.3 Types of strategy

Figure 1.1 Levels of strategic management

According to Red R.David the strategy includes only corporate and business

strategy However, the strategy can be divided into three main categories: (i) corporate strategy is the strategy of the corporation or company; (ii) functional strategy is to implement a strategic business areas, business specifically; (iii) operational strategy is

the implementation strategy of the operational functions of the company's HR strategy,

Operational Strategy

Corporate Strategy

Functional Strategy

1.2 Stages of strategic management

In the process of strategic management business, the administrator must perform

a series of sequential activities from strategic planning, strategy implementation and

evaluation strategy (Figure 1.2).

Figure 1.2 The process of strategic management

1.2.1 Strategy Planning

Strategic Planning is the process of identifying tasks and business objectives inorder to discover the internal strengths - weakness, external opportunities - threats tochoose an optimal strategy instead Developing strategies includes the design andselection of appropriate strategy for the organization In order to do this, it should be

External Environment

Strategic Intent Strategic Mission

Internal Environment

Strategic Leadership

Structure & Control

Entrepre & Innovation

Strategic Competitiveness Above Average Returns

Input

Feedback

considered from many different organizations and levels out the types of strategies.Thus, strategy planning includes some processes as the following:

1 Vision, Mission, Objectives

2 Top-down analysis: PEST (Macro)

3 Stage 1: Industry (Micro, 5 forces), Business CPM/IFE/EFE

4 Stage 2: SWOT matrix

5 Stage 3: Strategy selection to reach objectives (QSPM)

1.2.1.1 Identify tasks and objectives

The first stage of strategic management is identifying tasks and objectives of theorganization Tasks and objectives are the foundation to build up strategies

The main objectives determine what the organization expects to meet in themedium and long term Most organizations pursues profit, achieve goals of excellenceleading position The second target is the targets that the company deems necessary ifthey want to achieve superior capabilities Goals should be challenging, measurable,consistent, logical and clear

1.2.1.2 Analysis of external environment

The second part of the strategy is to analyze the operating environment outsidethe organization The goal of the analysis is the awareness of opportunities from whichthe business environment should capture, at the same time as the threats from theenvironment also provides, that can cause challenges for the company that it needs toavoid

1.2.1.3 Analysis of internal environment

This analysis is to find the internal strengths and weaknesses of theorganization The organization attempts to pursue strategies to take advantage of thestrengths and improve weaknesses

1.2.1.4 Choosing the optimal strategy

This was the stage to select strategies which associate with the strengths,weaknesses, opportunities and threats identified by the company A comparison of thefour factors is commonly known as SWOT analysis The purpose of SWOT analysis is

to identify strategies that direction, creating a fit or mismatch between the resourcesand capabilities of the company with the needs of the environment in which companiesoperate

Planning stage is an important stage that is meant to decide the entire strategicmanagement process It requires the strategy to combine intuitive judgments withsystematic analysis of data in making plans and choose the alternative strategy

1.2.2 Strategy Implementation

This was the action phase of strategic management To implement the selectedstrategy, the business should have specific plan for the organization, staffing andappropriate funding for the mobilization and maximum use of all resources inside andoutside the organization, creating synergy and synchronization towards agreed goals

1.3 Models and matrixes

1.3.1 Models

 PEST model: Analysis helps to identify the external factors that are capable of

being an opportunity or challenge for companies such as political, economic, social andtechnological factors…

 Five-Forces model: Analyze, forecast the competitive forces to identify

opportunities and threats According to Michael Porter, the five forces are existingcompetitors, new entrants, suppliers, buyers and substitutes

Figure 1.3 The PEST model (left) and Five Forces model (right)

1.3.2 Matrixes

 EFE (External Factor Evaluation): Allow the company to summary and

evaluate economic, social, culture, political and other information and compete throughthe grading external factors

 IFE (Internal Factor Evaluation): Summary and evaluate strengths andweaknesses of the company This matrix shows the strengths that the company needs tomaintain and the weaknesses they needs to improve to increase their competitiveposition.

STAGE 1: THE INPUT STAGE External Factor

Strengths - Weaknesses - Opportunities - Threats (SWOT) Matrix

STAGE 3: THE DECISION STAGE Quantitative Strategic Planning Matrix (QSPM) Figure 1.4 The matrixes used in analyzing

 CPM (Competitive Profile Matrix): The main study subject is mentioned in this

study specializes in the field of telecommunication that is highly competitive nowadays

in Vietnam market Some aspects of competition will be analyzed basing on the theory

of D’Avenil’s 7S framework that is a key approach, can also be used widespread in thetelecommunication industry and can be applied direct in a hypercompetitive markets.Thus, this theory is designed to enable companies sustain the momentum of theircompetitiveness through a series of initiatives that are poised to give temporaryadvantages rather than structuring the company to achieve internal/external fit aimed atmaintaining equilibrium that are designed to sustain unsustainable competitive

advantages The mentioned factors include: (i) Stakeholder satisfaction; (ii) Strategic

soothsaying; (iii) Positioning for speed; (iv) Positioning for surprise; (v) Shifting the rule of the game; (vi) Signaling the strategic intent; and (vii) Simultaneous and

sequential strategic thrust

Competitive profile matrix is used to compare the company with competitors bases

on factors that can affect the competitiveness of the companies within the industry.This matrix helps administrators to identify their major competitors together with theirown strengths and weaknesses

 SWOT (Strengths-Weaknesses-Opportunities-Threats): This is a combination of

the four factors that help managers to develop alternative strategies as identified in theIFE (SW), and the EFE (OT):

- Strengths and Opportunities (SO): to promote the strengths and capture the

- Weaknesses and Threats (WT): defensive strategy, to improve on the

weaknesses and avoid threats

 QSPM (Quantitative Strategy Planning Matrix): QSPM is analytical tool to

evaluate, prioritize, and select the best strategies to reach the business objectives Thismatrix requires sharp and accurate anticipation of an expert QSPM determines theattractiveness of different strategies by utilizing or improving external and internalenvironment factors of the company The number of strategies to be compared in aQSPM matrix is unlimited and more matrixes can be used to compare more strategicgroups

CHAPTER II BUSINESS SITUATION ANALYSIS OF VIETTEL GROUP 2.1 Introduction of Viettel Group.

In 1989, Information Equipment Electronics Corporation was found, after morethan five years of its operation was renamed Military Telecommunications ElectronicsCompany, specializing in the telecommunications services in Vietnam market.According to Decision No 2097/2009/QD-TTg dated 14/12/2009 by the PrimeMinister, it was converted into Viettel Telecom Group This is economic defensebusiness with 100% state capital, legal status, private seal, logo and organizationalcharter

 Head office: No1, Giang Van Minh St., Ba Dinh Dist., Hanoi

 Phone: 84.04 6255.6789, Fax: 84.04 6299.6789

 Email: gopy@viettel.com.vn, Website: www.viettel.com.vn

Scope of business of Viettel Group includes: Supply of telecommunicationsservices; Telecommunications, Transmission; Post Office; Terminal distribution;Finance investment; Media; Real Estate Investment; Export and Import, and ForeignInvestment The membership units of the group include:

 Viettel Import Export and Trading Company

 Viettel Telecom Company

 Viettel Construction Joint Stock Company

 Viettel Network Company

 Viettel International Investment Joint Stock Company

 Viettel Estate Investment & Trading Company

 Viettel Design Consultant Company

 Viettel Post Company

 Viettel New Services Development Company

 Viettel Technology Company

 IDC Company

 Viettel Football Club

 M1 Information Plant

 M3 Information Factory

 Viettel’s Branches at 64 provinces/ cities in the country

2.2 Business situation of Viettel from 2005 to 2010.

Since it was renamed into Viettel Telecom Group so far, Viettel constantlyevolves and expands in both size and quality of services Although Viettel mobilenetwork developed after the networks of Vinaphone, Mobifone, S-fone…, Viettel hasmade progress by leaps and bounds, the number of market share has been increased,and sales of products, services over the years constantly increase and graduallypenetrate in the foreign market The subscribers of telecommunications services,mobile subscribers, mobile phone subscribers in the International markets of Laos andCambodia have continuously grown with spectacular moves in the telecommunicationsindustry

In the five years from 2005 to 2009, Viettel continuously grew its revenues by200% year-over-year In particular, the revenue in 2005 only gained 2,500 billion, but

in 2007, it was 16,300 billion In the context of the world economy which wasdeteriorated severely, still affected by the financial crisis and economic recession,Viettel continued to maintain the high growth in consecutive years: in 2008, it was33,000; in 2009, it was 60,600 and in 2010, it was VND91,134 billion Viettel's profits,therefore, also continuously grew nearly VND16,000 billion in 2010 (Figure 2.1) In

2010, Viettel completed comprehensively the criteria of production and business planset out, leading the telecommunications industry in the country Total revenue reachedVND91.000 billion, increased 52% compared to in 2009 Payment to the State budget

was VND 7,628 billion, increased 45% and payment to the national defense budgetwas VND215 billion Percentage of return on average equity reached 48.3%.

Figure 2.1 Revenue and profit of Viettel from 2005 to 2010 (billion VND)

In the area of mobile telecom business, its revenues has continuously increasedyear over year equivalent to the growth of the comprehensive sales The revenuesaccounted for the mobile market in 2005 only gained 1,764 billion, but in 2007 was11,317 billion, in 2008 stopped 22,643 billion, and especially in 2009 it was greater47,000 billion although there were facing a lot of difficulties in this time (degradationeconomy, very high inflation and jobless) In the figure 2.2 hereinafter shows more

details and clear-cut about the revenues of Viettel mobile market in Vietnam since2005.

Apart from business situation, Viettel currently is a unit which has the largesttelecommunications network infrastructure in Vietnam and it will continue to beinvested in expanding strongly with a large scale Number of new transmission stations

in 2010 increased more 16,300 2G and 3G stations, and raised total stations up to42,200, accounting for 45% of total existing stations of the enterprises providingVietnam’s mobile information services With this station amount, Viettel has ensuredthat each commune in the country has at least one transmission station of Viettel Atthe same time, more than 32,000 km are pulled new and increasing total of fiber opticnetwork up to over 120,000 km, Viettel has made photochemistry of 82% ofcommunes and wards across the country

11,317

22,643

47,220 74,481

In addition to the above telecommunications infrastructure, Viettel hasconducted successful manufacture research and production of severaltelecommunications equipment with the Viettel brand The Group has researched,made and produced successfully wireless fixed phone Homephone HP-6800 with theoutput of 250,000 phones provided on the market Continuing with this success, Viettelhas manufactured and tested continuously other products such as special phone foroffshore fishermen SeaPhone 6810, device of Dcom 3G USB, HomeGateway 3G -modem for connection with the educational sector, for the military equipment, Viettelhas initially been successful with a number of military information machines for thefield of national security.

3G information services in 2010 was deployed and covered by Viettel in threeIndochina countries Whole 17/17 provinces/cities across Laos country, the Unitelmobile network has launched 3G services which bring Viettel to become the first 3Gcoverage telecom enterprise in all three Indochina countries To date, Viettel has over18,000 stations of 3G in the three Indochina countries With the infrastructureadvantage of a multinational investment operator, Viettel has given more incentives forcustomers as implementing roaming in those countries that Viettel invests in

In addition to the countries in Indochina area, Viettel is now stepping uppromotion of investment operation into new markets which are further and harder inthe Americas and Africa Also as the domestic market, despite late participation,Viettel has ranked the first infrastructure and subscription in Cambodia, Lao in networkinfrastructure Revenue in 2010 in Cambodia reached $161 million, increased 2.8 timeshigher than in 2009 In Laos market, it reached $61 million, increased 4.5 times.Metfone brand has been selected and awarded the best service provider of the year byFrost & Sullivan

2.3 Business environment analysis

2.3.1 External environment

2.3.1.1 Macro environment

In this section, we use the PEST model to analyze and evaluatecomprehensively the elements of macro environment affecting the mobiletelecommunications market in Vietnam in general and Viettel in particular

 Economics (E): According to economic statistics in the period of 2005 to 2010

showing that average GDP doubled after 6 years, the accumulation of internal economyreached over 30% of GDP In 2010, total state revenues exceeded 12.7% compared tothe estimate (up 17.6% over 2009), total exports increased 19.1% (3 times higher thanthe plan), the government’s debt balance was about 44.5% of GDP, foreign debtbalance of the nation was 42.2% of GDP and public debt balance was 56.7% of GDP inthe safety threshold

In terms of inflation rate, Vietnam has an average inflation rate which is ratherhigh: prior to 2005, it was 5.35%, ranked 67th in the world and in the period of 2006-

2010 was 11.5%, ranked 24th In the region, Vietnam is generally higher than othercountries, except in 2009 In 2010, the inflation was 11.75%, 1.5 times higher than inIndia, 3 times higher than in China and 8 times in Thailand Especially, in early 2011

so far, the inflation has increased 15.7%, increased 23% over the same period in 2010.Currently, the Government is implementing the policies of tightening monetary,reducing credit growth to control and prevent inflation to ensure the objectives set forth

as the total means of payment increases about 20%, the credit balance increases about25% VND exchange rate is operated more flexibly on the principle of market;operation of interest rates in the diminishing mechanism and the direction, monitoringincrease to ensure the safety of credit activities

Table 2.1 S ome data on Vietnam's economy in the recent 05 years ( GSO)

GDP-PPP / capita (USD) 642 730 843 1052 1064 1168

The rate of real GDP growth (%

change over the previous year) 8.4 8.2 8.5 6.2 5.3 6.7

Foreign Direct Investment

FDI-registration (USD billion) 6.8 12.0 21.3 71.7 23.1 18.6

Foreign Direct Investment

FDI-Implementation (billion USD) 3.3 4.1 8.0 11.5 10 11Remittances (USD billion) 3.8 4.7 5.5 7.2 6.2 8.1

Total retail sales and consumer

services turnover (VND1000

billion)

Consumer Price Index CPI (%

change over the previous year) 8.4 6.6 12.6 19.9 6.5 11.7

Hence, with the current macroeconomic situation and the trend in the future, itbrings both opportunities and advantages for certain operation fields of Viettel The

demand for mobile telecommunications services increases, but also causes difficulties,

it sought to require changes in technology, management methods to reduce costs, lowerproduction costs, the customer care, the tough competition in the market However,

in the long-term picture, Vietnam is still considered as one of the potential telecomservices markets, able to thrive in the future

 Political & Legal Environment (P): our country's politics led by the Vietnamese

Communist Party are now highly appreciated in terms of stability, ensuring thedevelopment activities of enterprises, creating safe psychology for investors toparticipate in the Vietnamese market

Vietnam’s entry in the WTO, as member of the United Nations SecurityCouncil, the issue of globalization, foreign trend tends expanded increasingly,integration into the world economy are the opportunities of Viettel to participate in theglobal market The regulations on administrative procedures are more completed,business licenses are increasingly reduced The Government is very concerned aboutthe performance of public administration, removing barriers in business operation This

is an advantage for Viettel to reduce barriers to entry the industry

Moreover, the current Vietnamese law has tended to be improved, business law isincreasingly completed Business Law after several amendments has had clearimprovement which creates a favorable legal environment for activities of thebusinesses Commercial law, antidumping, antitrust, intellectual property protection has initially promoted its efficiency in the market

 Science & Technology Environment (T): Technological factor has a major

effect on business strategies of the firms as well the industries The technology hasdecisive effect on the two basic elements which create competitiveness of enterprises,particular quality and costs of products and services that the enterprise provides for themarket

Viettel, as well as other manufacturers in Vietnam go after and acquire theexisting technologies in the world Thus, it has the conditions to select new technologythat does not take time, research and development costs This is the strength of thecountries going behind But it depends on the technology providers, developmentexpansion ability is limited Mobile technology has now two main standards includingCDMA and GSM, in Vietnam, actually CDMA technology does not develop All threemajor companies in Vietnam are using the GSM technology and have successfulapplication of 3G generation and gradually testing 4G is the latest generation.

Vietnam’s production technology of terminals almost does exist, mostequipment is imported or if producing also purchases foreign technology andcomponents

 Social & Culture Environment (S): In the business strategy management,

cultural - social factors are sensitive, often change Lifestyles of the people themselvesrapidly change in the trends of the new lifestyle leading to consumer attitudes change.When educational level is higher the increasing demand of the consumer for quality,rich in variety of products will be higher

Today, almost everyone from entrepreneurs, workers, farmers, students, civilservants until students are in need of communication and other entertainments .Hence, this will enable the demand of use of telecommunications services of Viettel.Along with the development of society in recent years, the awareness of Vietnamese isincreasingly improved; this will contribute to creating conditions for companies withmanagement and technique level with skilled staff and high qualification

 Demography: With the market more than 87 million people, the percentage ofyoung population under 27 years accounting for over 50% in need of demandtelecommunications services has been creating a vast market, and as an opportunity forViettel to expand its activities and continue to dominate this potential market

2.3.1.2 Industry Environment

The problem here is to analyze, judge the competition powers in the mobiletelecommunications industry to identify opportunities and threats for Viettel, so weconduct to apply Michael Porter’s model of five competitive forces of, including:

 Intensity of Rivalry: The telecommunications market is having fiercecompetition of the telecommunications services companies such as Mobifone,Vinaphone, EVN Telecom, S-fone, Beeline, Gtel Despite late participation intelecommunications market after the networks of Vinaphone, Mobifone, now Viettel isdominating the most market share with 36.4% However, other mobile phone networksare now approaching the equilibrium level as Mobifone has accounted for 28.8%,Vinaphone has gained over 28% If Viettel does not have appropriate policies andstrategies to maintain and develop its market share as well dominating the marketshares of competitors, then Viettel will soon give way for Mobifone, Vinaphone orother companies

According to the report from the Ministry of Communications and Information,VNPT Group has officially exceeded the revenue target of VND100,000 billion in

2010, increased 22% compared with in 2009 and paid to the budget of VND7,855billion Viettel reached 91.134 billion, growing 50% over 2009 Saigon Post andTelecommunications Services Corporation has obtained the revenue of VND1,165billion Statistics show the country has around 120 million telephone subscribers, inwhich the mobile subscribers account for over 90% General report found thattelecommunications and information technology businesses have achieved spectaculargrowth rates, nearly three times higher than GDP of Vietnam in 2010, reaching morethan 6.5%

Currently, enterprises are facing many difficulties in the development of newsubscribers, the networkers are forced to perform many programs of incentives and

new value-added services, even many units are illegal in dumping Vinaphone recentlysends message directly to the subscribers on the promotion program which offers twotimes of the free amount of Mobile Internet package and reduction of 50% chargeexceeding the package In addition, to keep the subscribers who are pupils, students,Vinaphone has launched the program of presenting online English study of BEA Card;free 1 month for service subscription fee of Ringtunes and a month of service chargesubscription of informing missed calls as activating the package of students and pupils.

Also, Mobifone has also signed the strategic cooperation with the Ho Chi MinhCommunist Youth Union Central to cooperate the organization of programsaccompanying with Vietnamese youth during the period of 2011-2014 On thisoccasion, Mobifone offers Q263 packages for Union staff in all levels with incentivesand free roaming programs and monthly subscription charges along with many otherincentives

In addition to the incentive programs to attract and retain subscribers, thenetworkers are actively developing value-added services to save the Average RevenuePer User (ARPU) from the touch of alarm bar Typically, the larger networks arepromoting the form of payment via prepaid scratch card and "shaking hands"(collaborating) with online payment gateways to promote forms of payment throughmobile phones The ARPU are currently about 3-4USD/subscriber/month, this number

is supposed to reach the alarm for revenue and profit threshold

The typical small networkers like Vietnammobile and Beeline have alsoannounced the super packages Vietnammobile has announced the deployment ofpackage "Northern SIM" for customers in 26 Northern provinces, with rates of680VND/minute for any off-net calls or internal calls With Beeline, to be able to winthe fourth position on Vietnam mobile market from Vietnammobile, this unit hasrecently launched the billionaire package Beeline’s use of billionaire package, the

subscribers charge minimum 20,000 dong to get a billion VND and free internal callsfor the first 30 days.

 Threat of New Entrants: According to the Ministry of Information &Communications, Indochina Telecom and VTC have been licensed and now inprogress of completion of the mobile telecom network on the basis of using thenetwork of BTS stations and the telecommunications frequency of other networks.MVNO cellular network model is gradually becoming popular with over 400 suppliersworldwide Countries that have most MVNO network are U.S (60 MVNO/13 MnO),Netherlands (39 MVNO / 7 MnO), and Germany (29 MVNO / 4 MnO) The biggestadvantage of MVNO Mobile is the maximum exploitation of network infrastructure.The MVNO providers will not have to invest too much capital in building the network.Besides, thanks to MVNO partners, MNO mobile operators will collect the investedcapital in infrastructure by fully exploiting the open market niche

Hanoi EVN and Indochina Telecom have signed the contract for developmentcooperation and common use of telecommunications infrastructure in Hanoi area Thisevent marks the strategic and comprehensive partnership between a telecommunicationenterprise (Indochina Telecom) leading in the field of application of 4G worldadvanced technology and Hanoi EVN, as the unit owning fiber optic transmissioninfrastructure and the system of strong transmission stations in 29 districts in Hanoi;Encouragement for businesses to share telecom infrastructure in order to save theinitial investment cost, diversification of services

Thus, Indochina Telecom and Hanoi EVN will develop and use commonsystems of telecommunications infrastructure including: the BTS, the wavetransmission columns and the entire optical fiber transmission lines which are availablefor service deployment of Wimax 4G services and other telecommunications services

in Hanoi Initially, Indochina Telecom will deploy more than 100 base transceiver

stations of 4G Wimax services and continue to expand to over 500 stations in thefuture.

However, investment in telecommunications with the network throughout thecountry like Viettel which is belonged to very large scale is the barrier of entry forcompetitors In fact, a lot of units also has potential and advantages as EVN that hasjoined and does not develop and they must sell its business, or many units that arelicensed operation but not yet implemented because if less investment can not succeed

if large investment, the size is too much which is not enough resources and time forimplementation

On the other hand, the Government's policy is not to limit the enlargement ofproviding telecommunications services to ensure the state management and protection

of consumer interests

 Power of Buyers: Mobile communication market in the country is currentlyconverged by numerous vendors of mobile services: Vinaphone, Mobifone, Viettel, HTMobile, EVN Telecom, S -fone, Vietnam mobile and Gtel However, considering theoverall level, Viettel is now the fastest growing business, with the largest number ofmobile subscribers accounting for 36.4% (Vinaphone and Mobifone networks reachover 28%) with the widest coverage, the most competitive rates and the most attractivepolicies on the products and customers

Viettel’s customers are new customers because Viettel has been established latercustomers have more choices and the majority is belonged to working age andstudents, they are divided into three main types of customers:

- Postpaid subscribers, loyal customers from 12 months and over are lesspressure than on prices because they do not want to change the phone number in the

transaction; This object needs to maintain customer service with other value addedservices as birthdays, corporate establishment, gifts, gift of 3G charges

- Type of subscribers in the remote areas, or customers who must regularlytravel to regional and remote areas are forced to use Viettel for the wide coverage Thisobject of customer is also less pressure than Viettel Viettel should continue to expandand improve the coverage quality across the country to hold this advantage

- Type of prepaid subscribers (mainly pupils, students and low income) changeseasily, other rivals continuously compete so they are ready to give up to use otherphones number to benefit This object is pressed against Viettel Viettel should quicklyrespond to competitors as they have the programs of promotion, discount

 Power of Suppliers: The largest funding suppliers for Viettel Group include theBank for Investment & Development of Vietnam - BIDV, Military Bank - MHB,Vietnam Construction Import and Export Corporation - Vinaconex, VietnamElectricity Group - EVN They are less pressure than Viettel because Viettel has strongfinancial resources, financial markets have also strong competition so Viettel is entitled

to select

In addition to the above financial providers, Viettel also works with terminal suppliers in the world as BlackBerry, Nokia, especially as one of the twoofficial distributors of Apple's iPhone phone products, the only company providingdistribution and providing total solutions for BlackBerry phone Viettel, as well asother telecom companies is under pressure from vendors because they are the big firmswith international brand and high technology, great potential including monopoly.However, because Viettel is also distributor for many companies it is also not underpressure from any supplier at all

well-Supplier of transmission systems and technologies such as switchboards, cable,base transceiver stations, Huewei software, ZTE, Acatel, Nokia, Siemens Networks,

AT & T (USA) are not under pressure much because of many suppliers, whileViettel’s finance is good In particular, with the supply of the BTS, Viettel has pressureaffecting provider very largely (Viettel request providers for investment and it re-leases);

 Substitute Products: Substitute products are not stiff competition but it canaffect the profitability of the market as a threat for the enterprise For thetelecommunications market, it should pay special attention to substitute products whichare easily capable of improvement, transformation by brought technological advances

Telecommunications services are now developing very fast and wide open, so inthe near future, there will be substitute products which will help customers more satisfytheir needs, such as: The types of information services through Internet, satellite andradio Overall assessment of the current period to 2015, the substitute products do notaffect much mobile telecommunications services, but there are the products which havestarted affecting sales as chat, voice chat, skype, etc

2.3.1.3 External environment evaluation

Through analysis of the factors from the external environment as mentionedabove, our group use EFE matrix to synthesize and evaluate the impact level of thesefactors

Table 2.2 Viettel’s external factor evaluation matrix (EFE)

Factors of external environment Weight Impact Mark

Opportunities

GDP has continuously increased for 10 years (over 6%) 0.20 4 0.80Political stability, competitive law on telecommunications,

Government’s intervention in restricting the entry of new

Challenges from new entrants, international integration 0.04 1 0.04Substitues (VoiceIP, VoiceChat, PVN, satellite mobile) 0.02 1 0.02

Table 2.3 CPM matrix compares the competition with a number of companies

Successful factors Weight Viettel Vinaphone Mobifone

Quality of products

2.3.2 Internal environment

2.3.2.1 Analysis of resources

 Tangible resources

- Finance: In past 5 years, Viettel has maintained an average growth rate of nearly

100% From a corporation with small turnover in 2005, now it is one of the five largeststate economic groups In 2010, Viettel earned VND 91,600 billion, as the thirdbusiness on revenues and profits, corporate income tax payment ranked second in

country in three years

Closed in 2010, Viettel completed comprehensively and exceeded the productionplan targets set out in business in 2010, implemented 117% plan and increased52%compared to in 2009 Net profit reached VND15,500 billion, completed 135% ofthe plan, increased 52% Paid to the State budget 7,628, reached 111% of the plan,increased 45% and paid to the national defense budget of VND215 billion Return onaverage equity reached 48.3% With these impressive results, Viettel continues to bethe leading unit on growth and return on profit in the telecommunications industry

Table 2.4 Some financial data of Viettel from 2005 to 2010

- Organization: Management structure, coordination model, information and

system control of internal report has been developed synchronization and continuousimprovement; organizational structure in the group model with the subsidiariesoperating in different areas

- Facilities: a nation-wide network includes 761 stores (branches) and 2,949 agents

in the transaction convenient locations, equipped with good facilities, better meetingcustomer service needs and needs of the employee's work; All systems of store, agentare connected online in operations business and management

- Technology: Due to going later it has the condition to select more advanced

technology and in accordance with the world technology as well as the newdevelopment of technology The company is one of the companies that have manyinitiatives and advanced technical solutions which help reduce costs and improve thequality of products and services As the first company deploying 3G technology inVietnam and now it has covered nationwide

Viettel is the only telecom company which has manufacturing system of terminals,transmission on the basis of receiving telecommunications equipment factories fromthe Ministry of Defense

It has made and tested continuously other products such as special phone productsfor offshore fishermen SeaPhone 6810, USB devices of Dcom 3G, HomeGateway 3G -modem in connection with the educational industry Now, more than 3,000 km near-shore of Vietnam has been covered mobile phone wave by Viettel In the large fishinggrounds such as Ca Mau - Kien Giang, Ba Ria - Vung Tau, the coverage area is farfrom inland with more than 200km With wide coverage, fishermen in many off-shorewaters can use mobile phones to contact their relatives in the mainland In addition,users can access the Internet via GPRS / EDGE to read news, update of prices, weather right in the middle of the sea