Luận văn business strategy of siemens ltd's product in vietnam's market the case of high voltage power transmission

However, there were still flaws im the operation imandgement that if they do not pay attention tn, the company would slip in the long term: Some strategies were suggested to improve the

LETTER OF DECLARATION

Thereby deciare that the Graduation Project “Business strategy of Siemens Ltd’s product in Viemnam’s market: the case of High-voltage Power Transmission” is the results of my own tesearch and has never been published in any work of uthers During the implementation process of this project, I have seriously taken research etbics; all findings of this projects ane results of any own research and surveys; all references in this project are clearly cited according to regulations

J bear full responsibility for the fidelity of the mumber and data and other conletils of any graduation project

Hanoi, #4 June 2019

Pham Thu Trang

wa

ACKNOWLEDGEMENT

All of my appreciations go to Intemational School ~ Vietnam National

University, Siemens Ltd Vietnam and my supervisor, PhD Mai Anb Without their supports, I coulda’t have finished my graduation thesis in the most desirable way

J would like tw thank International School ~ Victnam National University for providing effeclive environment for every student to be able to study in the past four years (2015 — 2019) All ths icoturers and coordinators had done their jobs well teaching us academic knowledge, sharing practical experiences and showing important skills to apply in reality

Tam pratefil to Siemens Ltd for giving me the chance to learn, widen knowledge and gather data Especially, | would like to thank Ms, Pham Hoai Anh Head of Finance of Siemens Ltd for cheering, helping me so much as well as providing valuable information that enabled me to complete my graduation thesis

‘Last but not the Ieast, I would like to express my sincere gratitude to PhD Mai Anh for always supporting, accompanying, and guiding me to the right direction in the time of doing research | appreciate every knowledge he provided me Without his help, I couldn’l have reached important theory, developed great ideas and completed the graduation thesis

Jam muly appreciated for all the people that had gone with me through

J also assure that this thesis is my own study work The data were collected by

me, referenced and used as prescribed, Knowledge taught and instructed by teachers

in the classes were also applicd in completing my thesis Shortcomings canaot be

avoided I look forward to receiving sincere opinions from advisors and classmates

io complete the thesis

we

1,1 The necessities for topie seleetion

1.2 Objectives of the study

1.3 Scope of the study

LA Significance of the study

2.2 Introduction te some business strategies

2.2.1, Low-cost provider strategy

@, Macro Envirenment (PESTEY, Model) "_—-

4.3, Siemens’s long-lern sirategy

4.4, Analysis of Siemens’ business envionment in the casc of High-voltage

LIST OF FIGURES AND TABLES

Figure 2.1- Five Generic Competitive Swrategics

Figure 2.2- Porter's § forces Model,

Figure 2.3- SWOT Analysis Model

igure 4 l- History of Siemens Vietnam (Siemens, 2018)

Figure 4.2- Organizational structure of Siemens {adapted by author)

Table 2.1- SWOT analysis questions

Table 3.1- List of interviewees

Table 4.1- Siemens Revenue in 2016, 2017, 2018 (

ABSTRACT

Vietnam is adapting to the world economy integration Therefore, competition

in the market is becoming more and more intensive In this case, a company with

“proper business strategy can exist stably and achicve successes Besides, electricity prices have become « wide concen over the country and High-voltage Power Transmission product is one of the factors that affect to the cost of electricity Those

are the reasons why the topi¢ was chosen with the purpose ol seeing through the

specific case of High-voltage Power Transmission of Siemens Ltd The study showed essential probieras of company, evaluated recent strategy and recommended new strategics that mect the long’ vision to deal with existed impacts and become more competitive `

ˆ “Thị study developed a comprehensive research framework that foouses on the

strategy of Siemens Ltd using information and data collected from interviewing

experts related to the research field through inlerview questionnaire Moreover, (here

are also sevundury resourees within and without the company Strategy analyzing

model such as PESTEL, Porier’s 5 forces and SWOT models were applied and used

to analyze the collected data

The study discovered that the recent strategy of Siemens was good cnangh for

it to stand still in the market However, there were still flaws im the operation

imandgement that if they do not pay attention tn, the company would slip in the long

term: Some strategies were suggested to improve the situation such as making the

workforce to take it serious as Siemens was their own company, focusing on

developing products of futuré era and shortening delivery time as well as cutting cost for after service,

Additional research might be conducted t explore about other products of the

company or business strategy of other companies,

CHAPTER 1: Introduction

1.1 The necessities for tapic selection

Vietnam is in the process of integrating with the world economy Integration Tmeans expanding opportunities for products, services and images of the country te teach out to the world However, it also brings many big companies with high reputations to Vietnam This is why the competitive environment is becoming more and more severe For already existed foreign gusinesses in Vietnamese market, the competition density becomes even morc worrisome when at the same time, ncw foreign companies enter the marketplace and domestic companies might be helped

Just by observation, we can see that if a company has the proper business strategy with a long-term vision and precise orientation, that company can exist stably and achieve successes In contrast, they may fall into a state of loss, uncertainty und

even bankruptcy

Siemens is a corporation specializing in the supply of essential electrical and other energy, digital imdustry, infrastructure and mobility products Currently, electricity prices have been controversial all over the country on hew to calculate the price of electricity to meet the most suitable situation for customers All factors affect the cost of the product and the High-voltage Power Transmission product is one of

those factors Siemens is not the only company in Vietnamese market providing this

product Therefore, obtaining a suitable business strategy for Tligh-veltage Power Transmission product will bring long-term contracts to the company, tighten relationship with EVN (Bleotcicity of Vietnam - state-owned utility) and help the company remain stable in the market,

Ag the result from mentioned factors above, f would like tn choose the topic

“Business strategy of Siemens T.td’s product: in Viewwam’s market: The case of High-

voltage power transmission” for my thesis with a desire to be able to pot out

essential probleas ðÊ cornpany, evaluate recerti siraicpy and reoominenid new strategy

that meet the long vision to deal with existed impacts and become more competitive

1.2 Objectives of the stady

Studying basis for building sirategies process of building strategies and

methods of analyzing and selecting the best strategies aiming to help company

choosing the most suitable stalegies

Defining and applying theories of building business strategies into realities to analyze, develop and choose the best business strategy for Siemens Ltd in the period

from 2019 to 2023

Recommending groups of solutions to implement aad successfully perform selected business strategies lo lead Siemens Ltd becoming a strong company in the

field of High-voltage Power Transumission in Victnana’s market

1.3, Scope of the study ˆ

This topic is studied in the scope of Siemens Timited Company in Vietnam combined with the introduction and analysis of the environment affecting the

company, in comparison with those rival companics in the same industry Research

data is provided from departments and experts approved by the company’s leaders

and the company's performance over the past three years,

1.4, Significance of the study

_ Apply theories studied through leaming process in 4 years in ‘International

Shool — Vieinam National University to build the business strategy with specific situation of Siemens Ltd, the case of High-voltage Power Transmission

Build and develop a suitable business strategy for Sicmens Ltd to maximize the strengths of Iligh-vollage Power Transmission, taking advantage of market opportunitics.

Become reference to other studies

1,5 Methodology of the study

_ Primary research methodology/ Qualitative method

Secondary research methodology

{ s methodology

L6 Limitations of the study

‘This study focuses on building and developing business strategies for High- voltage Power Transmission products of Siemens Ltd, so all conchusions drawn as

well as the strategy selection applied only to this product of Siemens,

T's required additional research 1 apply the conclusions or stratogics for other

sectors or olber companies.

CHAPTER 2: Theoretical basis of business strategy

2.1 Concepts of business strategy and strategic management

2.1.1 Concepts of strategy and business strategy

214d, Strategy

Stratogy has many meanings used in many situations ‘Iherefore, the definition

of “strategy” extended through time as well,

Alfred D Chandler, a business history professor at Harvard Business School and Johns Hopkins University, was the first to state the theory of strategy In the bovk

“Strategy and Structure”, he defined strategy as “the determination of the basic long-

term goals and objectives of an enterprise, and the adoption of courses of action aud

the allocation of resources for carrying out these goals.” (Chandler, 1962)

Kenneth Andrews, another seasoned long sianding Harvard professor, also formed the definition in his book “The Cuncept of Corporate Strategy” The book was published in 1971 and continued updating in 1980, which included strategy’s defi

objectives, purposes ar goals, produces the principal policies and plans for achieving

ition as: “the pattern of decisions in a company that determines and reveals its

those goals, and defines the range af businesses the company is w pursue, ihe kind of

economic and human organization it is or intends to be, and the nature of the

economic and non-economic contribution it intends to make to its shareholders,

employees, customers, and communities.” (Andrews, 1980)

In 1979, George Steiner, a literary critic, professor and co-founder of The

Califomia Management Review, released a book called “Strategic Planning: What Every Manager Must Know” He did not even mention about the definition of

strategy However, he showed some remarkable points such as:

1 Strategy is that which top management does that is of greal importance to the

organization

2 Strategy refers to basic directional decisions, that is, to purposes and

missions

3 Strategy consists of the important actions necessary ic realize these

directions

4 Strategy answers the question: What should the arganization be doing?

5, Strategy answers the question: What are the ends we seek and how should we

achieve them? (Gearge, 1979)(Nickols, 2016)

In 1980, there were quite a few mere strategy-related books published “Top

Management Strategy” by Benjamin B Tregoe and John W Zimmerman was onc of

them Strategy was explained as “the framework which guides those: choices that

determine the nature and cirection of an organization.” (Iregoe & Zitamerman, 1980)

In “Strategy for Change: Logical Incrementalism”, Quinn defined strategy as “a

strategy is the pattern or plan that integrates an organization's mejor goals, policies,

and action sequences into a cohesive whole” (Quinn, 1980)

Michael Porter, a well-known Harvard professor for his theories of strategy,

released his book “Competitive Sirategy” in 1980 describing competitive strategy as

“g broad formula for how a business is going to compete, what its goals should be,

and what policies will be necded to carry out those goals.” (M F Porter, 1980) Later

in a Harvard Business Review, he mentioned again it is “about being different.” and

“choosing a different set of activities to deliver a unique mix of value." (M Porier, 1996)

In 1994, Henry Mintzberg explained strategy in a more detailed way in “The Rise and Pall of Strategic Planning” He interpreted strategy in multi-tasks as: a plav

(“how” - course of action), a pattern (emergent strategy), a position (matches hetween,

organization and environment) and a perspective (vision, direction), icing more

in the footnote, a “ploy” (a spacitic manoeuvre inrended on competitor) can also be

an element according to the McGrill University’s professor (Mintzberg, 1994)

In 1996, John M Bryson - McKnight Presidential Professor of Planting and Pubiie Affairs at the IIubert H, Humphrey School of Public Affairs at the University

of Minnesota'— published his book called “Strategic Planning for Public and

Nonprofit Organizations" In the book, the definition of strategy is said to be “a

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pattern of puxposes, policies, programs, actions, decisions, or resource allocations that

define what an organization is, what it docs, and why it does it.” (Bryson, 1996} In

the latest edition, he represented strategy as “a deliberative, disciplined approach to producing fundamental decisions and actions that shape and guide what an

organization (or other entity) is, what it does, and why." (Bryson, 2018)

in the boak “Crafting & Executing Stategy”, strategy was defined briefly as

“the set of actions that its managers (ake Lo outperform the company’s competitors

and achieve superior profitability”, The authors also mentioned ahout competing with

opponents in diverse ways Being stmd-out among many competitors is the shurtest way fo get to customers (Lhompson, Peteraf, Gamble, & Strickland IU, 2018}

2.1.1.2 Business strategy

There is no exactly definition for business steategy Bach person, each

‘businessman or strategy expert have their own perspectives for what is called business

strategy However, ane problem must be clarified is thal “business strategy” is not

“corporate strategy” Business straiugy is in a smaller and more specific ficld than

corporate strulegy Business strategy focuses on how a company competes in 8

specific industry or uarkei and is interested in how to gain a competitive advantage

over competitors in that area, In two journals in 1996, 1997, the McKinsey research

pointed out business strategy in 4 elements: strategic posture, competitive advantage,

business concept and value delivery system (Courtney, Kirkland, & Viguerie, 1997; Coyne & Subramaniam, 1996) In short, business strategy can be understood as the direction and major target of the business operations Depending on the

characteristics of each industry, the business strategy can be built in a relatively long

time (3 years to 5 years) or can be shortened.

2.1.2, Strategic management

2121 Concept of strategic managenent:

In the book of straregic management, the word was pointed out to be a factor

that leads to a formulation of an enterprise by the two authors In detail, “it is the set

of decisions and actions resulting in formulation and implementation of strategies

designed to achieve objectives of an organization” (Pearce é Robinson, 2007)

According to Fred R David, a strategic planning scholar, author aad consultant,

“strategic management can be defined as the art and science of formulating,

implementing, and evaluating cross-functional decisions that enable an organization

to achieve its objectives.” (David, 2011)

In the latest edition of John M Eryson’s book, the definition of straiegic

management is clarified as “the reasonable integration of strategic planuing and

implementation across an organization (or other entity) in an ongoing way t enhance

the fulfillment of mission, meeting of mandates, contiauous learning, and sustaincd creation of public value” (Bryson, 2018)

‘There is one question that could be asked to look for the answer any enterprise

need: “What do we need to do to win in our market?” This is the key question needed

to answer when an enterprise develop a strategy ‘his question also demonstrates that developing a strategy doesn't invalve analyzing just one thing Tt involves understanding one’s business in detail, and then mapping out the best possible route

to success,

According to “Crafting & Dxecutlng Strategy”, the process of strategy-making,

strategy-executing consists of 5 stages as following:

Stage 1: Developing a strategic vision, mission and core values

Stage 2: Setting objectives

_ Stage 3: Crafting a strategy

Siage 4: Executing the strategy

+ _ Stage 5: Evaluating performance and initiating corrective adjustments

(Thompson et al., 2018)

Nevertheless, it is the most important step to everyone, whether in life or in

business ficld, that cach of them must acknowledge their own position Rnterprises

need to answer the questions: “Who are you?", “Where are you in the market?",

“What do you have”, “What do you want?” and “How do you make it happen?”

Knowing your business well can bring a Jot of benefits such as choosing the right path to go, developing the corect strongest side of the business, avoiding uncertaintics and being able to have time-saving and cost-saving ideas Those are the

reasons why a business should know itself before head

After finding business’s strengths and wealeesses, it is a need to gather the facts and cary out an environmental analysis Future problems will come from both extemal and intemal environments Speuding enough time investigating and

undersianding the market will create more opportunities in sketching out valuable

strategies The following steps then should be according to those stages listed above This will create a complete strategic planning,

2.1.2.2 Levels in strategic management

Strategy development needs to happen on 3 levels:

_ Corporate strategy: For atganizations with many different business units, this

determines how the organization, as a whole, supports and enhances the value of the

business units within it

_Business Unit Strategy (SBU): This describes how individual business unite

compete and win in their own, individual markets The objectives in the business unit strategy must be in line with the objectives of the corporate strategy

_Team strategy (functional level): Hach team within a business uitit has its own contribution to make, which means that it necds its own strategy to accomplish the

Jasger goals and objectives of the organization,

Bach level is necessary, and important, to the success of the organization

2.1.3 Role of business strategy

Business swategy is- the most important part of the whole strategy of the

business, especially for the existence and operation of the business Other parts of the overall strategy must be based on the business strategy to build and calibrate Tt scts out the key objectives, which help to mobilize beth short and long term resources It

ensures all plans aze not misteading, A good business strategy helps the business get more profit, sct a stable position in the market and proactively adapt to the

eavionment So the cnterprise needs to build 2 business strategy suitable with each

condition and circurastance, This is a necessary requirement for any enterprise

Business sirategy brings a lot of benefits Jor enterprises, its importance is

reflected in the following aspects:

_Busineas strategy helps enterprises orient their operations in the future through the analysis and forecast of the business environment

_It is a tool for businesses to capture opportunities as well as the full risks to

enterprise resource development Jn another way, it helps to reduce risks and enhance

the ability take advantage of emerging busimess opportunities

_The sirategy creates an operating circle for businesses, helping busincsses Tink individuals with other interests towards a commen goal, jointly developing businesses

_Busincss strategy is an effective competitive tool for businesses Gtobalization and economic integration have created fierce competition among businesses in the

market Not mentioning about price, quality, marketing , business stralegy in this

era is also used as an effective competitive tool fur enterprises who want to stand out from one another, (Ngoc Aub, 2017),

2.2 Introductioa to some business strategies

According to “Crafting & Executing Strategy”, there are five main competitive strategies that can applied into most of enterprise cases as described below

Five Generic Competitive Strategies

A Rraud Crosa-Seatian|

A Narvow Buyer Sagment (or Market Niena)

Figure 2 §- Five Generic Conapatitive Strategies

(Thompsem et al, 2018)

2.2.1 Low-cost provider strategy

The low-cost provider strategy seeks to achieve lower general costs than competitors in competitive goods that create opportunities to attract target customers

wiho are sensitive to low prices ad capture a large market share By managing cost

of value chain activities effectively and inmproving the value chain sysiem to reduce

costs, enterprises can perform low-cost strategy well Whoever becomes the cost

leadership will be able to gain a huge advantage in the macket Because of the low

cost, businesses can sct prices lower than their competitors but still have the same

profit as them If businesses in the industry set the same price for their products, low- cost businesses will earn higher profits Moreover, they are able to withstand better competition than other businesses

In order w achieve this strategy, the goal of enterprises under low-cost stratepy need ie be developing capabilities [hat allow businesses io ingrease efficiency and

reduce costs compared to competitors Reinforcing different capacities in production

and raw material management is a core issue to achieve this goal For example,

enterprises can consider different types of inputs, IF there js a suitable substitute with

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ore reasonable price, changing inputs to a new one will help reduce price in the first step of valuc chain, Or else, companies can usc bargaining power to negotiate prices with suppliers Furthermore, taking full advantage of operating facilites also can, maximize productivity per working day Instead of designing new product, Research and Development department can focus on product improvement On the other field,

Human Resource department should focus on training programs and remuneration systems in order to improve labor productivily Besides, there are much more ways

to tinimize costs such as selling directly to customers, cancelling unnecessary

uetivities that cause low-value-added results or reducing shipping cost by relocating important working places (Thompson et al., 2018)

Low cost will heip enterprises achieve higher profit than the average of all other companies in the industry in spite of tough competition

2.2.2, Broad differentiation strategy

‘The broad differentiation strategy aim at distinguishing the company's products from competitors with characteristics that can reach to a broad range of myers This means creating products, goods or services that can satisfy unique or specific types

of needs of a different group of customers 1o gain competitive advantage The stand- out attributes of product can be: quality, imovalion, reliability, specifications, product offerings, and ntany oiher factors

Enterprises pursuing this strategy are able to satisfy customer demand in a way that competitors cannot do, se businesses can bid higher than the industry average

‘The ability to increase income by setting a high price (not hy reducing costs like

businesses under a low-cost strategy) allows husinesses to follow different strategies

to outmaneuver their competitors and get high profits more than average [lowever,

customers at this sector are stil] willing to pay because they belicve the different

characterislies of the product deserve that price Therefore, the selling price of products and serviecs is calculated on the basis of how much and how long the market

can withstand.

‘The strategy can be inplemested under many different ways sach as:

_Focusing on functional divisions capable of facilitating their differences such

as R&D, marketing and sales to create competitive advantage in the market;

_Controlling all costs without creating a distinct advantage lo how product

prices do not exceed customers willing to puy:

improving service quality;

_Taking advantages of ieclmological advances

_Paying more attention at employees’ quality and human resource management Creating good relationships with parmers and supplicrs to gain valuable

information as well as best bargaining prices (Thompson st al., 2018)

2.2.3 Focused low-cost strategy

Focused low-cost strategy focuses on the demands of the narrow segment of buyers (or niche markets) and strives to meet these needs at a Tower cost than

competitors (thus heing able to provide niche clients with lower prices) (Thompson

et al., 2018) in other wonds, a focused strategy dedicare to surve a particular market

niche or specific niche divided by geography, customer class or smal] segment on a specific product ling

Base on different types of segmentation, businesses using this kind of strategy

will set low-cust for products following investigated information For example, a fashion company sells their uniform collection at low prices for classes have intention

to onder a large amount of uniform T-shirt, bag of shoes in year book seasons,

2.2.4 Focused differentiation strategy

Focused differentiation strategy aims at a narrow segment of buyers (or niche

matkets) and overcomes compelitors by providing niche elicnts with customized

atiributes that better meet their preferences and requirements than thase products of

competitors (Thoropson ct al, 2018) The same as focused low-cost strategy, focused

differentiation strategy also focuses in serving a particular market niche or specific

niche divided by geography, customer class or sinall segment on a specitic product

line

Base on different types of segmentation, businesses using this kind of strategy

will produce specific unique goods or provide stand-out services fur the chosen

segmentation, For example, Disney Co produces their wa chain of products for Disney lovers and people whe come to Disneyland for a visit

2.2.5 Bost cost provider strategy

‘The best cost provider strategy outlines the company plan for high-end products

at lower costs than opponents As the "best cost” provider ofa high-cad, smultifeatured

product, it creates opportmities for compavies to bring more value tw customers by

cheapening competitors’ products with similar characteristics (Thompson et al.,, 2018) This strategy has elements that are combined from the previous four strategies,

so it brings with it unique elements and often achieves efficiency

Recently, the change in production technolagy - especially he development of flexible production technology - has made the choice of low-cost strategy or

differentiated strategy uo longer clear Due to the development of technolegy,

‘businesses Find that it is easy ta benefit from both strategies New cra technologies provide chances for businesses to pursue differentiated strategies at low cost,

Using flexible robats and production facilities can support reducing costs on production lines and costs associated with small production Rusinesses may also

reduce production and marketing costs if businesses limit the number of products by offering a range of options rather than letting customers decide which options they

require (Ngọc, n.d.-a)

By applying this strategy, euterprises will be able w reduce costs as well as keep

loyal customers beside The profit, therefore, right increase more and then remain,

stably duc io the fact of base customers’ foyalty

2

2.3 Process of strategic management

2.3.1 Determining Objectives, Vision, Mission and Core values

Objectives

Every business reed to start the strategic management with determining

objectives and goals They are the keys to business success, Long or short-term

objectives are cumpany’s desires te reach in a specific time Whatever the objectives

are, they should include important characteristics of a SMART goal which are:

Strategic and Specitic (be accuracy}, Measurable, Atiaizable (can be donc), Results based (be directed tn the important issues), and Time bound (specific period of time can he achieved) (Conzemius & 0’Neill, 2009)

Objectives of a company tiostly be proposed by Board of Directors or General Director of Corporate-level, Usually, the new objectives will be based cn previous

year’s results such as from external environment impacts, resourees of company,

policies situation or the changes in leader position

Vision

Vision focuses on future It is the inspiration and motivation for businesses in general and at the same time directs cnployces to work for the same hig goais of the company Morcover, it associates with value and corporate culture, desires practicality and can be achicved The vision states waere, when and how businesses want to go That is the interference between the value and purpose: of the business It

answers the question "Where do we target?"

Mission

Mission focuses on preseat toward the future It identifies the customer, the impoctant processes and it directs businesses to know the level of activity to be deployed, Missiun is how to get where businesses want to ge Ideatify goals and key objectives related to customer needs and the value of the whole business It answers

the question "What do we do? What makes us different?”

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Core values

Core values are everything a company consiđers to be impossible t pay with money or cannot change ‘They are the soul of the organization la addition, cure values are essential and long-term principles of an organization - a very small set of

guiding rules that have a profound effect on how people in organizations think and

act

2.3.2, Environmental Analysis

2

3.2.1 Analyzing External FHvi0HIHENE

a Macro Environment (PESTEL Madel)

Although PESTEL is a well-known tool to help analyze macro environment of

an enterprise, there is no original documentation of credits about PESTEL analysis model The model is developed through times by many individuals and organizations with different understandings yet still remain similarities Some of the versions that can be listed are: ETPS, STEP, STEPE, PEST, STEFPLE However, according tomy observation, PESTEL is the most widely used recently due to its advantage of

providing a big picture to analyze outside environment, People can base on six factors

ta make it clear for macro analyzing

Politics

This is an influential factor for all businesses in a tecritory, institutional factors, and laws can rape.tc the viability and development of any industry Business on an adaninistrative unit, businesses will have tc comply with legal institutions in the area

Political institutions and national stability

“Breedom of the press, the rule of law and the level of bureaucracy and

corruption

_Tegal and regulatory trends.

_ Social law and labor use policy

_Tax policy, trade protection and taritf barriers

_ Regulations on environmental protection and consumer protection

_ Probability of turning (TA, 2018)

Economic

The economic environment indicates the nature, growth and development orientation of the economy ia which businesses operate The analysis of the economic environment is very important because it includes factors affecting purchasing power and consumption stricture, in other words, this is the most direct aud powerful factor affecting enterprises

_The stage of the business cycle

Current and projected economic growth in the future, inflation and interest rates,

Unemployment and labor supply

_Labor casts

_Available income and income distribution

_ The impact of globalization

_The impact of lechnology

_Changes in the business environment (Ti, 2018)

Social

Hach country and territory has its own cultural values and social factors, and these are characteristics of consumers in Lhose areas, Along with the integration process, cultural factors have a profound effect on the activities of organizations and

‘businesses Therefore, research un social and cultural factors is also indispensable in

the analysis of maci cnvironsnent

_Population growth rate and age structure.

Tiealth, educational level, population đynammiss and their attitudes abom those factors

_Structure of industries, freelance jab market and attitude in work

_Views of the press, public opinion, views and discrimination in society

_Litestyle and perspective of life,

_Socio-cultural changes (Ti, 2018)

Technolvgy

‘Lhis is an environment that contains very dynamic elements such as:

_The birth of new icchnologies

_ Speed of invention and application of new technology

Government incentives and finding for research and development activities, _Effect of rechnology transfer

Thesc factors contain many opportunities and risks for busitesses Technology change allows the creation of a range of products with outstanding features and quality but.can also create extremely dangerous products Thus, technological change

includes both creativity and destruction, opportunities and risks

Eavironment

Environment is one of the most important factors in our sustainable

development Most people are aware of this Therefore, whether the products of the

enterprise are environmentally friendly is also a factor affecting the buying behavior

of customers, thereby atteoting the business

Legal

We all have tu live and work according to the constitution and the law, which is

a common will to build an increasingly civilized and better world Every country has its own busincss law and the whole world has common laws The long-term

development of the business depends on the legal comuplianee of that cuterprise, ifthe

‘business does what the law prohibits itself, it also expels itself from the market

CIT Vietnam: 20%

b, Micra Environment (Michael Porter's 5 forces Model;

Michael Porter's Five Forces framework was first published in 1980 in the author’s bock called “Competitive Strategy: Techniques for Analyzing Industries and

Competitors" The framework is understeod as the business analysis model that

provide analysts a deeper look al the rufero environment of an enterprise,

capabilities, you can protect your position end take advantage of opportunities from

ynarket entry

Factors fo coasider about the risk of market penetration include:

_ Time and cost of entering the matket

- bigger for you

Factors to consider about Pawer of product distributors include:

Number of product distributors

Scale of product distributor _ Uniqueness of products

Ability to search for alternalive products

_ Replacement cost (Mindi ools, n.cl.)

Customers

Customers often lend to tower the cost of products of businesses Customers impact your business through a number of criteria such as the number of customers, the importance of customers, the cost of customers paying for your products or services, The customers have high power capable of out conditions with your

business

27

Factors to consider about Customer Power include:

Number of customer

_ The size of each product package

_ Differences between competitors

if your product or service is more of less replaceable products or services, your power

Factors to consider Risk of replacement include:

Replacement process

_ Replacemem cost (MindTools, n.d.)

Competitors

Consider the number and capabilities of your competitive businesses If you

have many competitors, distribute the same product or service again, your power will

be reduced as customers may consume the same products or services from other

businesses Conversely, if there is no business that sells the item you have, your

power will be huge

Factors to consider about compeiitocs include:

2.3.2.2 Analyzing Internal Environment

Haman resources

Analyzing the intemal environment of the business, itis a need to mention both managers and employees When analyzing human resources, analysts need to consider and evaluate the following basic aspects:

~ Skills:

Jn order to implement effective governance functions, managers at all levels need to have basic skills such as technical skills, personnel skills or skilis to work with others and thinking techniques, In particular, the requirements for HR skills are the same af all levels of governance, but the requirements for thinking skills and specialized technical skills vary from level to level (senior managers need skills thinking more than the subordinates, the grassroots administrators need specialized technical skitls higher than the superiors) Meanwhile, employees also uewd basic knowledge about what they ate doing as well as yarious skills supporting at workplace Not only working skills, soft skills are important inmer resourecs that help

people deat with daily situation fluently and flexibly

- Profes

Tn practice ethics is reflected in the basic aspects such as the: snotivation to work properly, discipline self-discipline, honesty and frankness in conscientious communication, responsibility in all work aad dare to bear responsible for the behaviors that | have done or are involved in, have goodwill with those who work together, have the spirit of advancement, are grateful for people or organizations that have helped me, etc Today, professional ethics is highly appreciated in enterprises with cuslle-oriented business, this is the basis for forming business ethics - an indispensable eloment in the era of cooperation

- The results echieved in the process of implementing the management functions and the benefiis that managers oring to businesses:

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ln addition to evaluating standards, analysts need to determine the results thal both managers at all levels or cmployees achieve in each period, especially the

ouistanding achievements recognized by peaple during the process of working with others This demonstrates the specitic streagths or weaknesses of workers at all levels

when compared to human resources uf other businesses or organizations in the

indvstry When analyzing the results, the researcher should focus on assessing the

ability to perform administrative functions such as planning, organizing, operating,

and contrulling administrative tasks in the organization Each fonction has its own

role and affects the performance of business members (Nygyc, a.d.-b)

Physical resources

Physical resourves include factors such as production capital, machinery and

equipment facturies, reserve materials, business environment information, etc Each

enterprise has the characteristics of physical resources Particularly, there are both

strengths and weaknesses compared to competitors in the industry

Therefore, proper analysis and evaluation of physical resources is ap important hasis for enterprise managers to understand potential physical resources, limitations, etc., to make management decisions adapting to the reality such as maximizing the capital resources with the existing capital and facilities, selecting aad mobilizing extemal capital sources when really in need, selecting the objects 10 cooperate with

in order to increase the sale of physical resources, carry out a necessary reserve ratlo

to ensure the ability to confront (defend or attack) with competitors in the domestic

and foreign markets (Ngoc, n -h)

Analysis of resources caa be done threugh major activities such as:

_Classify existing material resources of enterprises: capital sources in cash,

machinery, workshops, warehouses, land, reserve supplies

Determine tho structure, quality and characteristics of each physical reseurce _Evaluate the ability to meet the actual needs of each resource ia the action programs of departments within the enterprise each period

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_Evaluate and identify strengths and weaknesses of each physical resource compared to majar competitors in the industry and in the market by geographic arca,

Intangible assets

In addition to the above resources, each entorprise or organization has other resources that people only recognize through perception, which are invisible

resources, They can be listed as: -

Major thought in business philosophy

~_ Business strategies and policies adapted to the euvironment

_ Pffective organizational structure

_ Prestige in the leadership of managers at afl levels

Prestige businesses in the development process

Prestige and market share of product brands in the market

_ Customer trust and loyalty

Prestige of the seller

_ Creative ideas of employees

_ Sustainable organizational culture

Depending on the available resources, the size and value of these resources of

each enterprise varies and changes over time Without proper recognition and appreciation of intangible resources, business executives easily Jose their available

advantages in the praduction and business process (Ngọc, m.d-b)

23.2.3 SWOT analysis

Thanks to Albert S Humphrey, a business and management consultam at

Stanford Research Institute, we are now inheriting his research of SWOT analysis, a

strategie planning tool to evaluate important factors in business, to use widely in daily

learning

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SWOT ANALYSIS

io Helpfot invari nd tio

Threats

_ Factors outside business (business market, society, government ) that are

negative or make it difficult to achieve the goals

_Should be included in the plan to develop prevention, resolution and

management options

Some areas can be used as a hasis to find Strengths and Wealnesses:

_ Resources, assets, people

Experience, knowledge, data

_ Process and technical system

_ Inheritance, culture, administration

Some areas can be used as # basis to tind Opportunities and Threats:

The develupment, blooming of the market

Opponents are slow, weak, bad

_ Technology trends change

Tuble 2.1- SWOT analysis questions

_ What factors help you sell goods?

_ What advantages does your product

Ị stand out from compatitors' products?

_ Is your product ptice cheaper in the

What factors lose revenue?

What are your disadvantages

‘ compared to competitors? i

_ Is the product price more expensive

| than other products of the same type on

the market?

Customer support services are really fast and meet customer requirements? _ Why do customers choose

sumpetitors' products instead of your products?

_ Has the previous advertising program

been effective?

Opportunities

| What good trends do you notice?

_ Useful opportunities can come from

| chings tie:

+ Changes in technology and markets are

both wide and narrow,

+ Change government policies related to

your field

+ Changes in social models, population

structure, lifestyle changes

_ Does the advertising cost you spend

| break even with the number of products

| you sell?

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1.3.3 Analyzing and identifying strategy

Purposes of analyzing strategy are to build tactic plans which can help business achieve its targets and determine key strategies to implement applying for both main

and ahernative strategies In addition, it is necessary to choose suitable strategies for each type of strategic levels: corporate level, business level or functional level by

evaluating each industry of the company (B Van Anh, 2008}

2.3.4, Implementing strategy

Strategy implementation is a vilal stage to carry out series of actions as planned

Tt requires skills from each individual cither managers or employees Most of

onexpected problems will appear in this stage Sticking into the first objective and

being flexible in solving problems will help implementing strategy follow the right

path, Sometimes, it is a need to bave Tewards for employee encouragement during strategies performing time (F Van Anh, 2008)

2.3.5 Controlling aud evaluating strategy

Daring and after (he implementation, enterprises must review and assess the process frequently to make surc everything gnes right after proposed plan Strategy's

faifuxe might happen due te many reasons such as changes ‘n environments, flaws of

goods or services, wrong aititudes of employee, lack of budget Therefore,

businesses have better build processes to track progress & modify plans based on

changes from the environment (B Van Ảnh, 2008)

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