CAPSTONE PROJECT REPORT APPLICATION SWOT MATRIX AND IE MATRIX ANALYSIS MODEL ON BUILDING BUSINESS STRATEGIES FOR RANG DONG LIGHT SOURCE AND VACUUM FLASK JOINT STOCK COMPANY IN THE PERIOD 2010-2015 BÁO CÁO DỰ ÁN CAPSTONE ỨNG DỤNG MÔ HÌNH PHÂN TÍCH MA TRẬN

CAPSTONE PROJECT REPORT APPLICATION SWOT MATRIX AND IE MATRIX ANALYSIS MODEL ON BUILDING BUSINESS STRATEGIES FOR RANG DONG LIGHT SOURCE AND VACUUM FLASK JOINT STOCK COMPANY IN THE PERIOD 2010-2015 BÁO CÁO DỰ ÁN CAPSTONE ỨNG DỤNG MÔ HÌNH PHÂN TÍCH MA TRẬN SWOT VÀ MA TRẬN IE VÀO VIỆC XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO CÔNG TY CỔ PHẦN NGUỒN ÁNH SÁNG VÀ PHỦ CHÂN KHÔNG RẠNG ĐÔNG TRONG GIAI ĐOẠN 2010-2015

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CAPSTONE PROJECT REPORT

APPLICATION SWOT MATRIX AND

IE MATRIX ANALYSIS MODEL ON BUILDING BUSINESS STRATEGIES FOR RANG DONG LIGHT SOURCE

AND VACUUM FLASK JOINT

STOCK COMPANY IN THE PERIOD

2010 - 2015

Group No: 2

Student's Name: Tran Anh Tuan

Ninh Thanh Xuan Pham Van Thuy Nguyen Định Hung Class: GeMBA 01.03

HANOI, 2009

PDF Compressor FreeWepqienor CONTENTS

LIST OF ABBREVIATIONS

LIST OF TABLES

LIST OF DIAGRAMS, FIGURES, GRAPHS, CHARTS

INTRODUCTION

Chapter I - SWOT MATRIX AND IE MATRIX MODEL - AN

EFFECTIVE INSTRUMENT IN BUILDING BUSINESS

STRATEGIES

1.1 BUSINESS STRATEGIES AND BUSINESS STRATEGIES

PROCEDURES

1.1.1 Business strategy

1.1.1.1 Business strategy viewpoint

1.1.1.2 Business strategy requirements

1.1.1.3 The role of business strategy

1.1.2 Process of building business strategies for enterprises

1.1.2.1 Business environment analysis

1.1.2.2 Internal environmental analysis

1.1.2.3 Identify of strategic goals

1.1.2.4 Business strategy analysis

1.1.2.5 Business strategy selection

1.2 SWOT MATRIX AND IE MATRIX MODEL

1.2.1 SWOT Matrix

1.2.1.1 SWOT Matrix Description

1.2.1.2 SWOT Matrix Contents

1.2.1.3 SWOT Matrix Advantages - Disavantages

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1.2.2 IE Matrix

1.2.2.1 LE Matrix Description

1.2.2.2 [IE Matrix Contents

1.2.2.3 IE Matrix Advantages - Disadvantages

1.3 APPLICATION OF SWOT MATRIX AND IE MATRIX IN

BUILDING BUSINESS STRATEGIES

1.3.1 Application of SWOT matrix and IE matrix in business

environment analysis

1.3.2 Application of SWOT matrix and IE matrix in internal

environment analysis

1.3.3 Application of SWOT matrix and IE matrix in formation and

selection of business strategies

Chapter IT - APPLYING SWOT MATRIX AND IE MATRIX MODEL

IN ANALYSIS OF STRATEGIC BUSINESS FOR RANGDONG

LIGHT SOURCE AND VACUUM FLASK JOINT STOCK

COMPANY IN THE PERIOD OF 2010 - 2015

2.1 APPLICATION OF SWOT MATRIX AND IE MATRIX

MODEL IN MACRO ENVIRONMENT ANALYSIS FOR RANG

DONG COMPANY

2.1.1 Economic environment analysis

2.1.2 Political and legal environment analysis

2.1.3 Social environment analysis

2.1.4 Macro-economic environment analysis in SWOT matrix and

IE matrix Model

2.2 APPLICATION OF SWOT MATRIX AND IE MATRIX IN

MICRO ENVIRONMENT ANALYSIS FOR RANG DONG

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.2.2.1, The technology competence and production capacity

2.2.5 Analysis of substitute products

2.2.6 Analyze of sector development trends

2.3 APPLICATION OF SWOT MATRIX AND IE MATRIX

MODEL IN INTERNAL ENVIRONMENT ANALYSIS FOR

RANG DONG COMPANY

2.3.1 Organizational structure Analysis

2.3.1.1 Introduction of RANG DONG COMPANY

2.3.1.2 Organization structure of RANG DONG COMPANY

2.3.2 Analysis of technology and production capability

2.3.2.1 Machines and Facilities

2.3.2.2 Production capacity and key products

2.3.3 Analysis of research and development capacity

2.3.4 Analysis of human resources

2.3.4.1 Capacity of board of directors

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25.85 THREES eSoureh competence

2.3.6.2 RangDong Trade mark Popularization

2.3.6.3 Distribution channel System

2.3.6.4 Consumption overview

2.4 RESULTS OF SWOT MATRIX ANALYSIS FOR

RANGDONG COMPANY

Chapter III - APPLICATION OF SWOT MATRIX and IE MATRIX

MODEL IN FORMATION AND SELECTION OF BUSINESS

STRATEGIES FOR RANGDONG COMPANY IN THE PERIOD OF

2010 - 2015

3.1 BASIC VIEWPOINTS IN THE CONSTRUCTION BUSINESS

STRATEGY IN RANG DONG COMPANY IN THE PERIOD OF

2010 — 2015

3.1.1 Strategy to ensure long-term orientation

3.1.2 Ensure feasibility, synchronous

3.1.3 Ability to effective combine the resources

3.1.4 Consistent with the trend of integrations

3.2 APPLICATION OF SWOT MATRIX AND IE MATRIX

MODEL IN FORMATION OF BUSINESS STRATEGIES FOR

RANG DONG COMPANY IN THE PERIOD OF 2010 — 2015

3.2.1 SWOT Matrix

3.2.1.1 Strengths - Weakness - Opportunities — Threats

3.2.1.2 SWOT Matrix Table

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35 PPS ON OF SWOT MATRIX AND IE MATRIX

MODEL IN SELECTION OF BUSINESS STRATEGIES FOR

RANG DONG COMPANY IN THE PERIOD OF 2010 — 2015

3.3.1 Identify basic strategy groups

3.3.2 Selection of strategic scenarios

3.3.2.1 Content of scenarios

3.3.2.2 Selection of strategy by ranking method

3.4 SOME RECOMMENTDAIONS TO RANGDONG COMPANY

TO EFFECTIVELY APPLY SWOT MATRIX and IE MATRIX

MODEL

3.4.1 Building an information collection system

3.4.2 Conditions of human resources

CONCLUSION REFERENCES APPENDICES

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PDEF Compressor Free MTsWmABBREVIATIONS

ASEAN Free Trade Areas

Strengths — Weakness — Opportunities — Threats Matrix Internal — External Matrix

Internal Factors of Environment Matrix

External Factors of Environment Matrix

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Table 1.1: PLAN-DO-CHECK-ACT MODEL BY SHEWART Page 7 Table 1.2: SWOT MATRIX Page 16 Table 1.3: EFE MATRIX TABLE Page 20 Table 1.4: IFE MATRIX TABLE Page 21 Table 2.1: SWOT MATRIX - MACRO ENVIRONMENT Page 28 Table 2.2: EFE MATRIX - MACRO ENVIRONMENT Page 29

Table 2.3: SWOT MATRIX - PRODUCT AND MARKET

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(AFTA)

Table 2.14: SWOT MATRIX - SECTORAL DEVELOPMENT Page 43

TRENDS

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Table 2.15: EFE MATRIX - TRENDS OF PRODUCTION

LIGHTS

Table 2.16: SWOT MATRIX - ORGANIZATION STRUCTURE

Table 2.17: IFE MATRIX - ORGANIZATION STRUCTURE

Table 2.18: CURRENT MACHINES AND FACILITIES

Table 2.19: CURRENT PRODUCTION CAPACITY OF THE

Table 2.24: CAPACITY OF BOARD OF DIRECTORS

Table 2.25: STRUCTURE LABOR AS LEVEL

Table 2.26: STRUCTURE LABOR UNDER CONTRACT

NATURE

Table 2.27: SWOT MATRIX - HUMAN RESOURCES

Table 2.28: IFE MATRIX - HUMAN RESOURCES

Table 2.29: BUSINESS SITUATION IN 2003 - 2008 PERIOD

Table 2.30: FINANCIAL INDICATORS OF RANG DONG

- 2007 - 2008

2006

Table 2.31: SWOT MATRIX - FINANCIAL CAPACITY

Table 2.32: IFE MATRIX - FINANCIAL CAPACITY

Table 2.33: CONSUMPTION SITUATION BY MARKETS

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rable 5s SPAS PE MATER ỀWJOWKETING CAPACITY

Table 2.35: IFE MATRIX - MARKETING CAPACITY

Table 2.36: QUALITATIVE ANALYSIS RESULTS

Table 2.37: QUANTITATIVE ANALYSIS RESULTS

Table 3.1 SWOT MATRIX OF RANG DONG COMPANY

Table 3.2: EFE MATRIX OF EXTERNAL FACTORS

ASSESSMENT

Table 3.3: IFE MATRIX - INTERNAL FACTORS ASSESSMENT

Table 3.4: TABLE OF ASSESSMENT STRATEGIES FOR RANG

DONG COMPANY

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PDF Conypeppsok DREORENES, FIGURES, GRAPHS, CHARTS

Diagram 1.1: BUILDING PROCEDURES OF _ 10-STEP

Diagram 2.1: ORGANIZATION STRUCTURE

Chart 2.1: LIGHT-SOURCE MARKET SHARE IN VIET NAM

Figure 1.1: IE MATRIX TABLE

Figure 3.1: IE MATRIX OF RANG DONG COM PANY

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GRIGG GRIGGS UNIVERSITY - tron ca cào GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

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In the competitive world today, the existence and development of enterprises depend greatly on the ability of continuous innovation and adaptation with the changes of environment In order to do that, companies need to clearly identify their abilities, purposes, achievements, challenges Those firstly depend on their setup and implementation of enterprises’ business strategies Proper business strategies will ensure the existence, rapid development, long-term sustainability according to the long-term goals

There has been a lot of research on business strategy and method of business strategy Many researchers used quantitative and qualitative approaches in their works Each approach has its own advantages and disadvantages Optimal solution

is to apply these two approaches in building business strategies for enterprises to maximize advantages and minimize disadvantages

Within the research of this great exercise, two selected matrices are: Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT Matrix) and Internal — External Matrix (LE Matrix), which is representative for qualitative and quantitative methods of analysis Research methods will be applied to a specific case: Building business strategies for Rang Dong Light Source and Vacuum Flask Join Stock Company in the period of 2010 — 2015

Rang Dong Light Source and Vacuum Flask Join Stock Company (Rang Dong Company) was established in February 1961, which was originally as Rang Dong Light Source and Vacuum Flask Factory In June 1994, it was renamed as Rang Dong Light Source and Vacuum Flask Company On 30 March 2004, Ministry of Industry (now Ministry of Industry and Commerce) decided to switch the Rang Dong Light Source and Vacuum Flask Company to Rang Dong Light Source and Vacuum Flask Join Stock Company

Vietnam’s process of integration into the world economy not only affected

on the macroeconomic environment but also directly on production of individual business enterprises For Rang Dong Company, integration created not only

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-GRIGG GRIGGS UNIVERSITY — University GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

opBjM)MuG@aBw€st6evrsta:aeccV@f6lAogs which required the company to define proper

and well planned business strategies in the future However, the process of setting

up business strategies was not properly interested Therefore, a research on selecting setting up approach is unprejudiced and necessary

Third, application of research results on building the business strategies for Rang Dong Light Source and Vacuum Flask Join Stock Company in the period of

2010 - 2015

Research Objectives

Research objectives are SWOT Matrix and IE Matrix Scope of research is the ability, approach and conditions to apply both matrices in building business strategies for enterprises in general and for Rang Dong Light Source and Vacuum Flask Join Stock Company in particular

Research result to dates

Until now, there are many researches on business strategies and method of building business strategies, SWOT Matrix and IE Matrix specifically However, those researches only used either qualitative or quantitative approach Contribution

of this exercise is the ability, approach and conditions to apply both tools

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-GRIGG GRIGGS UNIVERSITY — ONIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

PDLE {r0RhÐbB€EfRSH lŒ@@j)4@KSÍWikre are not research on business strategies and

method of building business strategies The activity of business strategies, which is implemented by Accounting - Finance Department, is not the scientific and professional

Therefore the exercise of “Application SWOT Matrix and IE Matrix analysis model on building business strategies for Rang Dong Light Source and Vacuum Flask Join Stock Company in the period 2010 — 2015” is necessary and valuable in practical constraints

Structure of the exercise

Besides the introduction, conclusion, table of contents and reference

materials, the exercise is divided into three main sections:

Chapter I: SWOT Matrix and IE Matrix Model — An effective instrument in building business strategies

Chapter II: Application of SWOT matrix and IE matrix models in analyzing business strategies

Chapter III: Application of SWOT matrix and JE matrix models in formation and selection of business strategies for Rang Dong Light Source and Vacuum Flask Joint Stock Company in the period of 2010 - 2015

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PDF Compressor Free Version Chapter I

SWOT MATRIX AND IE MATRIX MODEL - AN EFFECTIVE

INSTRUMENT IN BUILDING BUSINESS STRATEGIES

1.1 BUSINESS STRATEGIES AND BUSINESS STRATEGIES PROCEDURES

1.1.1 Business strategy

1.1.1.1, Business strategy viewpoint

"Strategy" which is a term used in military, that is intrigues conducting the war It is based on the military, political, economic, geographical conditions of the two opposing forces and war situations to prepared and to use military force

There are many views on business strategy:

Strategy is the ways to achieve long-term goals Business strategy can be a strategic geographical expansion, diversification of products, mergers, product development, and market penetration, reduce or waive take-over or joint venture

Strategy is a collection of goals and policies as well as essential plans to achieve those goals Business strategy of an enterprise is an action plan to implement goals of the enterprise

Business strategy is intriguing strategy, roads, measures to ensure stable and long-term existence, development in accordance with development goals that enterprises have set based on the objective and subjective conditions, the resources

to changes of the environment

Based on the scope, business strategies are divided into two types: general strategy (or overall strategy) and partial strategy

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PDF S,9aupsassenldingelMersientegies, business strategies are divided into:

strategy of enterprise, strategy of base unit (SBU) and functional strategy

Based on the content and the field of governance, business strategies are divided in accordance with management fields in enterprises

Based on the nature and scope of work, business strategies are divided into four types: combination strategy, specialization strategy, expansion strategy and

specific business strategy (narrow, link .)

1.1.1.2 Business strategy requirements

Business strategy of an enterprise should ensure the following requirements: Firstly, business strategy has to ensure the generalization Business strategy

is an overall plan of the enterprise; it decides the relationship of the enterprise with

the outside environment Generalization is shown as followed: (i) in accordance

with conditions, development trends of the enterprise; (ii) in accordance with national conditions, development trends of the country in a certain period; (ili) in accordance with integration trends into international economy A strategy with generalization is important to ensure the judicious and sustainable development of the enterprise

Secondly, business strategy has to ensure the orientation This is important,

it ensures enterprises have a right direction in the long term, and avoids pursuiting inefficient movement To have good business strategies, it is necessary to have good forecasting socio-economic development trends Successful business strategy must base on accurate forecast

Thirdly, business strategy has to ensure the increase of internal forces to gain competitive advantage for enterprises If there are no competitors business strategy does not need to be developed Business strategy is really necessary when there is competition in the market The more severe the competition is, the more important business strategy is In order to create competitive advantages companies need to thoroughly exploit their comparative advantages, invest resources to utilize the strengths rather than invest too many resources to overcome weaknesses

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PDF KoaimpkessoiblisiaesY etfd@zy has to ensure the safety for enterprises Business activities always contain risky factors that enterprises must cope with However, higher profit rate usually connects with higher risk but the factor of safety

is very important for business To achieve this requirement, a business strategy must identify “safe scope”, at which the risk can still occur with lowest probability Do not build business strategies as the following idea "all or nothing"

Finally, it is necessary to determine the business scope, objectives, action plan and the basic conditions to achieve objectives In the present competition context, the decisions of the enterprises are always limited by resources constraints Thus business strategy has to determine the scope of business in which the enterprise must well define objectives of the business to avoid the spread of resources A well-defined business plan is a set of policies, measures and resources

- technology - labor conditions for the achievement of business objectives Requirements for the explanation of business plan are adequate, concise and clear

1.1.1.3 The role of business strategy

It is difficult to find a direct relationship between business strategy and the increase of profits However, it cannot be denied indirect contribution to the benefit

of the business strategy through the exploitation of opportunities and competitive

advantages

Firstly, business strategies help business leaders and individuals in the enterprise understand the goals and direction of their enterprise Through which people know their position, role, responsibilities and their ability to contribute to common goals So through the enterprise achievement of common goals, each

member also achieves his goals Besides, in business practices, the environment

changes also require enterprises to adjust it and to adapt to those changes Business strategy to help enterprises keep to their objectives

Secondly, when building business strategies managers must make predictions about the business environment in the future Therefore business

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1.1.2 Process of building business strategies for enterprises

In general there are many steps to build business strategies of enterprise Based on the ideas and research objective that researchers present different models and steps

The first viewpoint is Plan-Do-Check-Act Model (PDCA) by Shewart:

Table 1.1: PLAN-DO-CHECK-ACT MODEL BY SHEWART

SWOT Matrix (Strengths, Weaknesses, Opportunities, Threats)

e Review the business environment

e Effective indicators

+ In the past + In the present

-Griccd) GRIGGS UNIVERSITY — DMIVERRSIEY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

Business Strategic Strategic Path design Strategies

and fields measures to functional

achieve goals divisions

r

Business Implement Assess and improve

strategy business strategy business strategy

According to this point, the construction business strategy is 10 steps work, dividing into three main steps: analysis of objective and subjective conditions of enterprise; design of business strategy, assessment and improvement of business Strategy

Also following 10-steps procedure, the following model start from the review mission objectives and current strategies of the enterprise:

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-GRIGGS UNIVERSITY — GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

research to Set long z Set short | ;

identify main term term

opportunities goals ! goals and challenges

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3 ti

Review Distri | | Measure mission Define bute |: and objectives le» mission — of tis evaluate

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strengths proceed | nt policy | |

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There are many opinions about building business strategy of the enterprise; departing points of each model are different However, in general, the process of the business strategy must include 7 basic steps as follows:

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-GRIGG GRIGGS UNIVERSITY — DMIVERSrrv GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

IÐll ra oi1118:cPfu0ŒEĐANf£st@NSTRUCTION BUSINESS STRATEGIES

Form different business strategy scenarios

1.1.2.1 Business environment analysis

Business environment of enterprises can be divided into two levels: macro

environment (also called the national economic environment) and micro

environment (sectoral environment) When researching on business environment and influence on activities of enterprises, it needs to know that, the environment consists of factors, affecting enterprises in different ways and these factors also interact and affect themselves, on the other hand, they continuously change and are difficult to predict accurately

Macro Environment

Factors under macroeconomic environment affect all business sectors but not

in the same way Macroeconomic environment, including the following

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Political and legal environment has more and more influence on activities of enterprises The Government promulgates policies, regulations which require businesses to comply with such as the tax laws, the laws on environmental protection, the laws of international trade, law on advertisement and ensures the stability of politic and law

Social environment includes complex factors, which change slowly and are difficult to recognize When analyzing the impact of social factors, people often pay

attention to the following factors: consumption trends, living standards, age, gender

- gender equality, career and a number of population factors as speed growing rate, change trends, population density

Natural environment: for industry in general, people pay particular attention

to the impact of the manufacturing process of the enterprises to the environment Increasing treatment cost of wastewater, solid waste, gas is an important factor to consider when deciding to invest

Scientific and technological environment: Never has the science and technology developed as fast as present Modern technologies continuously create and that makes enterprises force the risk of technological lag behind

Micro environment

Micro-environment includes many factors that decide the nature and extent

of competition in the industry as current competitors, potential competitors, consumer, suppliers and substitute products

In competition, the first and most important problem that enterprises need to consider is current competitors of the enterprise: (i) current competition strategies

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dP ERE Coomp prhesso rill eReiVANSHeMDbjectives, (iii) the potentials of the competitors

on production, research, distribution, finance, human resources Research results

on competitors of an enterprise must answer four questions: Are competitors

satisfied with their current position? How do they adjust and change their strategies? What are their strengths and weaknesses?

Enterprises must also pay attention to potential competitors which can join the industry Sectoral enterprises should take advantage of legal fences to protect themselves They are the economic scale, advantages of price, ability to diversify products, sectoral entering costs, difficulties in the penetration of consumption channel, legal ability to resist and prevent of sectoral enterprises

Customers are people who decide viable opportunities and development of

an enterprise Consumer’s power depends on: (i) proportion of the volume of purchasable goods in volume of selling goods, (ii) costs and the ability to change

the new provider, (iii) customer’s ability to incorporate back (with suppliers), (iv)

impact of the monopoly and quality of selling product on consumer’s product quality

Impact of suppliers to the enterprise is contrary to the customers In relationship with this counterpart, the enterprise’s impact-bearing ability depends on the position of the enterprise in comparison with others and position of the business for suppliers

An important factor affecting the nature and extent of competitive pressure is the substitute products The enterprises pay attention to not only present substitute products but also potential substitute products Most of the substitute products are the result of technological explosion, so focus and investment of an important part

of resources in technology is strategically investment

1.1.2.2 Internal environmental analysis

When building business strategies, enterprises need to carefully analyze the internal environment to know the strengths and their weaknesses Factors which are

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-GRIGG GRIGGS UNIVERSITY — OnivensiTy GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

it is necessary to pay attention to the ability to develop new products

Labor is the factor which plays an important role and is a valuable asset of the enterprise Evaluating the human resources of the enterprise which are divided into the administrators and direct workers bases on different evaluation criteria In particular, assessment of administrators needs to pay attention to skill management, skills management, working style, ethics For direct workers, the most important aspects are working skills, qualification and discipline

Assessment of financial capacity must base on three main criteria: payment ability, rate of capital turnover and profitable ability Payment ability shows the capacity of payment of critical debts; the rate of capital turnover expresses business capacity and business management; profitable ability shows the effectiveness of business investment activities

Rating marketing capacity should pay attention to: the marketing activities and marketing activities evaluation, brand motivation activities, building and managing distribution channels, trade promotion activities Distribution channels organization and maintenance should be specially focused

Economic linkage and cooperation show the sensitive ability to capture market needs choose business partners to minimize the weaknesses and to utilize strengths

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Strategic goals of the enterprise is the results that the enterprise must achieve

in a period of time in accordance with objective and subjective conditions, and the enterprise’s ability toward defined plan

A good strategic goal need to meet "SMART" standards as _ follows: Firstly, the goal must be specific (Specific); secondly the goal is measurable (Measurable) through a set of indicators; thirdly goal must be feasible (Achievable), which an enterprise can be achieved on the basis of current capacity, fourthly the goal can be

able to be assessed and reviewed (Reviewed) and finally the goal must be defined in

a certain period of time and have a deadline to complete (Time controlled)

In different phase, different enterprises will define a different set of targets However, it may be divided into two main groups as follows: financial targets (revenue, profits, stock prices .) and non-financial targets (brand, market share, business development, product structure, new products .)

Defining goals of the business requires discussion among different management levels, the department managers and employees in enterprises Enterprise’s goals need to be classified in priority orders to follow from general objectives of the enterprise to specific objectives of each level, each department

1.1.2.4 Business strategy analysis

Next step is to use available information, based on strategic goals of the enterprise, to analyze and build business strategies

As analyzed above, the analysis of business environment and _ internal business environment provides necessary information to build business strategies

Based on this information, enterprises choose the business direction and scope,

business product, the market, the engineering field

After analyzing the business environment and internal business environment enterprises need to set out a number of business plans to achieve strategic business direction and objectives They should base on the results of the analysis and their

differences must be clear

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14-GRIGG GRIGGS UNIVERSITY — ONIVERSIFY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

PDF Cevepaessourdyreepleatienforms and methods in the formation of the

strategies in this period The use of selection models which consider data collection, data connection and information analysis, the final product is a strategy to pursue Models such as SWOT, SPACE, BCG, IE, competitive positioning Matrix CP, and

GE should be used for more accurate quantitative assessment

1.1.2.5 Business strategy selection

Once business plans have been developed it is necessary to conduct analysis and assessment of these plans to select an optimal plan Each plan has its advantages and disadvantages

There are many approaches to evaluate strategic plans It is necessary to identify standards in assessing plans Different criteria for evaluating plans could lead to different selection

The standards must consider different aspects, and help managers select a business plan which meets the following conditions: environmental conditions and circumstances, cycle life of products and market potentials, overall and long-term interests of the enterprise, utilization of enterprise’s production potentials and power; enterprise’s financial, facility and labor ability, in accordance with the internal policies, business philosophy, management style of the enterprise

1.2 SWOT MATRIX AND IE MATRIX MODEL

1.2.1 SWOT Matrix

1.2.1.1 SWOT Matrix Description

Strengths - Weaknesses, Opportunity - Threats Matrix (SWOT Matrix) is a tool to develop strategies which combines internal strengths and weaknesses of the enterprise with opportunities and risks from the environment SWOT analysis is key

to develop strategies

SWOT model enables analysis of different factors relatively influence competitiveness of an enterprise SWOT analysis evaluates SWOT data in a logical order to help readers understand as well as present, discuss the decision easier

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PDF Compressor Free}vgysien: SWOT MATRIX

S: The Strengths SO: Strategies ST: Strategies

(List) (List) (List)

W: The weaknesses WO: Strategies WT: Strategies

(List) (List) (List)

SWOT Matrix includes 9 cells of which 4 cells are used to the list strengths - weaknesses - opportunities - threats factors, and the other 4 cells to list formed strategies, top-left cell leaves blank

1.2.1.2 SWOT Matrix Contents

To analyze SWOT for an enterprise, it is necessary to analyze the environment, collect information and answer the following questions:

Strengths: What are the advantages of the enterprise? Which activities does the enterprise implement the best? Which resources does the enterprise have the best advantage? It needs to consider issues on aspects of enterprise itself and others, and to practically and objectively evaluate them

Weaknesses: What are main weaknesses? Which weaknesses can be improved? What does the enterprise need to avoid? Why can competitors do better?

It needs to play attention to market information, which weaknesses that competitors can see but the enterprise cannot

Opportunities: What are the best opportunities? Which trend is the market concerned of? The most useful search method is to review the strengths of the enterprise itself and ask the question whether these advantages can bring in new opportunities To the contrary, it is necessary to review the weaknesses and ask questions whether there is any opportunity when eliminating these weaknesses

Threats: Which obstacle does the enterprise cope with? What are competitors doing? Do specific requirements of product, service change? What are the risks of technology change to the enterprise?

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PDF C\owmpreraeix Hem Viewsieaht combination tool which can help managers

develop four following strategies: strengths - opportunity strategy (SO), weaknesses

- Opportunities strategy (WO), strengths - threats strategy (ST) and weaknesses -

threats strategy (WT)

Combination of internal and external factors is a difficult task in the development of a SWOT Matrix, it requires good judgments Looking at the table

we will see four specific types of strategy as follows:

SO strategies use the strengths of the enterprise to take advantage of outside opportunities This is a perfect location All managers expect their enterprise in this position that the strengths can be utilized to meet the outside trends and opportunities When a business has great weaknesses, it will also try to overcome While facing the serious threats, it is important to find ways to shun and focus on opportunities

WO strategies improve internal weaknesses by making use of the external opportunities With regard to external opportunities, other enterprises with weaknesses try to prevent the enterprise utilizing these opportunities

ST strategies promote the strengths of an enterprise to evade or to reduce the negative impacts of the threats from the external environment

WT strategies are defensive strategies to reduce internal weaknesses and avoid the threats from the external environment An enterprise in this position does not often have good business results, because it has to overcome many internal weaknesses while dealing with threats from the environment In this case, the enterprise must fight to survive, link or merger to avoid bankruptcy

1.2.1.3 SWOT Matrix Advantages - Disadvantages

Advantages

SWOT Matrix has the following advantages:

Data in SWOT order is very logical and easy to follow

It analyses and considers all the factors affecting the business activities of enterprises from business environment and internal environment;

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GRIGG GRIGGS UNIVERSITY — ÙMIVERSirY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

PDF GaqmparasaribiedeaNessienvith a group of strategic plans for enterprises to

assess and select;

Strategic plans are diversified, flexible It is possible to choose a major strategic plan in combination with other strategic plans to form a complete strategic plan

Disadvantages

However, SWOT Matrix also has some disadvantages as followed: it is qualitative and difficult to combine with internal and external factors It requires good judgments and difficulty to decide the final plan

1.2.2 IE Matrix

1.2.2.1 LE Matrix Description

Internal - External Matrix (IE Matrix) also called the investment analysis

matrix, because it analyses and marks enterprise’s departments in a chart Circle dimension shows percentage of sales of each department, and circle represents percentage of the profits of each department

Figure 1.1: IE MATRIX TABLE

-GRIGG GRIGGS UNIVERSITY — ONIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

PDF fformprpssar dase W8rsiOmain aspects: the total points of IFE Matrix (Internal Factor of Environment) on the X axis and the total points of EFE Matrix (External Factor of Environment) on the axis Y Theatrically, it is necessary to setup IFE matrix and EFE matrix for each department of the enterprise through which the image of each department can be seen in the IE matrix However, in practice, people often set up IFE matrix and EFE matrix at enterprise level to compare among different enterprises

EFE Matrix evaluates the response of an enterprise to the elements of external environment IFE Matrix assesses the internal strength of the enterprise

All the boxes in the same column have the same total important points of an IFE Matrix, including 3 levels of weak, medium and strong points, 1.00-1.99, 2.00- 2.99 and 3.00-4.00 correspondingly

Region I, Il, 1V: construction and development strategies should be applied Region III, V, VII: hold and maintain strategies should be applied

Region VI, VIII, [X: harvest and remove strategies should be applied

Step 1, Business environment analysis of enterprises, including all elements

of macro and micro environment which affect to the results of business strategy implementation

Step 2, Listing external factors which decide the success of enterprises as identified in step 1 Minimum factors are 5, typically 10

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PDF Gropp rennoty Inpethy eitsoe Wf this factor from 0.00 (not significant) to 1.00

(very important) These ratios show the importance of the corresponding factors to the success of the enterprise Total ratio of all these factors is always 1

Step 4 setting points from | to 4 which represent reaction of the enterprise to each key factor 4 represents excellent reaction, 3 — good reaction, 2 - average reaction and | - weak reaction

Step 5, factor ratios are multiplied with their points to make convert points of each factor

Step 6, Convert points are summed to have the total important points of

enterprises

Table 1.3: EFE MATRIX TABLE

Points Convert Order Main External Factors Ratio 1-4 Points

The process of International

Total points important from 1.00 to 2.00, the average are 2.50

Total points are 4: enterprises react very well with the opportunities and challenges from the external environment

Total points are 1: present strategy does not help enterprises take advantage

of the opportunities and limit the challenges from the environment; business strategy needs to be adjusting

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PDF (famopxessor Free Version

IFE Matrix allows managers to assess internal strength of enterprises

Table 1.4: IFE MATRIX TABLE

; Points Convert Order Main Internal Factors Ratio 1-4 Points

Like EFE Matrix, IFE Matrix construction should include 6 steps:

Step 1, analyzing the internal environment of enterprise

Step 2, listing factors which are identified in step 1 Factors typically are 10,

5 at least

Step 3, specify the ratio for each factor from 0.00 (not significant) to 1.00 (very important) Factors are reviewed their importance, even strengths or weaknesses of the enterprise Ratio is based on the comparison in the industry

Step 4, determine the points from 1 to 4 for each factor: 1 is the major weakness, 2 points and is minor weakness, 3 is small strength, and 4 points is a great strength

Step 5, factor ratios are multiplied with their points to make convert points of each factor

Step 6, Convert points are summed to have the total important points of enterprises

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PDF iCoorego Besse is H1@e@ AMear-$ONis the highest, the average is 2.50 Points lower

than the 2:50 show that the enterprise has weak internal environment and higher showed that the enterprise has strong internal environment

1.2.2.3 TE Matrix Advantages - Disadvantages

Advantages

Contrary to SWOT matrix, IE Matrix is quatitative From the analysis results, it is possible to identify strategic plan because this matrix is divided into three main regions

Disadvantages

However, application of IE matrix is quite complex because two Matrices — EFE Matrix and IFE Matrix - must be created and then General IE Matrix is created Besides, the number of strategic plans is few, and is not able to combine to form the general plan

Because of the advantages and disadvantages of each model, the application

of each model in building business strategies of enterprises will be limited and difficult On the other hand, the basis for building both these matrices is the result of analyzing the business environment and internal environment of enterprise Therefore, while applying both SWOT Matrix and IE Matrix is necessary and scientific

1.3 APPLICATION OF SWOT MATRIX AND IE MATRIX IN BUILDING BUSINESS STRATEGIES

Applying SWOT Matrix and IE Matrix in building business strategy of the enterprise will be conducted in two phases:

Phase 1, using SWOT Matrix and IE Matrix and SWOT analysis of each IE

group elements under macroeconomic environment, the environment of micro enterprises and capacity analysis of the business in its own governance This results

in phase 2

Phase 2, based on analysis results of phase 1, SWOT matrix and IE matrix

are created and analyzed at enterprise level Results SWOT and IE analysis for each

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to analyze these factors will classify the opportunities (O) and threats (T) for the

enterprises

These factors will also be analyzed in the external factors matrix EFE to quantify response capabilities of the enterprises to the impact of external factors from the outside environment

1.3.2 Application of SWOT matrix and IE matrix in internal environment

analysis

To assess the internal strengths of an enterprise, it is necessary to conduct analysis of all working fields to find out strengths and weaknesses of that enterprise SWOT Matrix is used to qualitatively evaluate and find out the strengths, weaknesses IFE Matrix is used to quantify these factors

Thus, the SWOT matrix is used to assess the strengths (S) and weaknesses (W) of the enterprise IFE Matrix is used to analyze internal strength of the enterprises to choose the right strategy

1.3.3 Application of SWOT matrix and IE matrix in formation and selection of business strategies

Using SWOT matrix and JE matrix to form business strategies of enterprises after:

Creating SWOT Matrix (OT) to analyze the opportunities and threats for enterprises toward the impact of factor from the business environment;

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-GRIGG GRIGGS UNIVERSITY — DAnveReirv— 3 GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

PDF GeaipgeS MuedxVersiaiuate response capabilities of enterprises in the

face of the change of each factor;

Creating SWOT Matrix (SW) to analyze the strengths and weaknesses of enterprises in each field;

Creating IFE Matrix to assess the strength of enterprises in each field

Based on the analysis results of these matrices, they are synthesized into the SWOT Matrix, IFE and EFE Matrix for enterprises to form four groups of business strategies They are Strengths - Opportunities strategy, Weakness - Opportunities strategy, Strengths - Threats strategy, and Weakness - Threats strategy

Business strategy Selection based on four groups of strategies needs to follow two steps:

Step 1, based on the location of enterprises in the IE Matrix, determine the overall strategy that the enterprise should apply Including one of three strategic steps strategy: construct and develop, hold and maintain, harvest and remove Then identify the main strategy from four groups of strategies in SWOT Matrix

Step 2, use the scoring method to evaluate the advantages - disadvantages of each plan to select the best strategic plan for enterprises There are many methods to choose the final strategic plan, in which scoring method is commonly used

This method has advantages which are quantitativeness, objective assessment, and multi-dimension evaluation

Selection business strategy by scoring method

Step 1, determine the criteria to evaluate business strategies, including internal and external criteria, strengths and weaknesses of enterprises

It is not necessary to select strengths or weakness, but to select the factors that affect the performance of the enterprise The criteria are determined very quickly, easily from the results of SWOT and IE analysis

Step 2, determine the ratios for each factor from 0.00 (not significant) to 1.00 (very important) The total ratio of all factors is 1

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PDF Gempressoe Kee6rWieestQ0response level to meet every criteria of each

strategic plan There are five levels as follows: very low (1), low (2), average (3),

good (4), very good (5)

Step 4, Count the total points of each strategic plan

Step 5, Select the most appropriate plan based on the results in step 4 and the real situation of the enterprise

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PDF Compressor Free VersionChapter II

APPLYING SWOT MATRIX AND IE MATRIX MODEL IN ANALYSIS OF STRATEGIC BUSINESS FOR RANG DONG LIGHT SOURCE AND

VACUUM FLASK JOINT STOCK COMPANY

2.1.1 Economic environment analysis

Economically, Vietnam now is in the period of high and quite stable economic growth In previous five years, the GDP growth rate has been approximately 7% per year; income per capita has also significantly increased Income tends to increase but population gap also remarkably rises

In late 2006, Vietnam became an official member of the World Trade Organization (WTO) This brought many advantages but also raises many

challenges for enterprises In the first hand, WTO accession means that the market

is expanding, with many opportunities for joint venture - linkage, investment and foreign direct investment, the opportunity to access modern production technology On the other hand, after joining WTO, we must make certain commitments, including commitment to open domestic market One of the signals is that import tax of products will reduce as committed

Since 2006, the route preferential tariff AFTA-CEPT, import duties for

similar products as those of the enterprise is only 5 - 10% Therefore, the abroad

products as Osram, GE, National, Philips, and Toshiba have better conditions

entering into the Vietnamese market with competitive price and quality They are well-qualified products with higher price than the domestic ones

2.1.2 Political and legal environment analysis

Politically and legally, high economic growth and political stability are the main factors attracting foreign investors to Vietnam Enterprise Law 2005 created a

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-GRIGG GRIGGS UNIVERSITY — UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

oBdàFa(&c00tpEEss@irkeeerM4FSÀlent for all types of businesses Administrative reform which is implemented at all levels and sectors facilitate the business community Reform of customs procedures are being conducted vigorously and pilot application of electronic customs in several port is well appreciated and responded by enterprises

In the past, the government has also promulgated many incentive policies especially for business sector The strongest impact was preferential policies of enterprise income tax According to Decree No 187/2004/ND-CP of the Government dated 16/11/2004 on conversion of the State enterprises into joint stock enterprises and Law on corporate income tax, enterprises were exempted of income tax in two years after completing equitization and the 50% reduction in the next two years Each joint-stock enterprise was also exempted 2-year corporate income tax if

it was listed on the Ho Chi Minh Stock Trading Center (HOSTC) before the 31/12/2006 This regulation had a great impact on enterprises because if the completion of equitization and listed on the stock market were on time, enterprises may be exempt from corporate income tax up to 4 years This incentive measure was particularly encouraging for enterprises which performed effectively and had good financial capacity

In recent years, electricity demand has increased dramatically while power supply is limited The whole nation faces a serious problem of electricity shortage Therefore, electricity saving is highly interested, which is expressed in the Project

of replacing 20 millions incandescent lamps with compact fluorescent lamps Therefore, in the next few years, domestic demand of compact fluorescent bulbs will increase, and so will its export This is a great opportunity for enterprise in the sector of electronic device production

2.1.3 Social environment analysis

Social factors also influence on building business strategies of enterprises High and stable economic growth in recent years has made people’s living standard increase remarkably Consumption trends are clearly divided into consumer groups

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aRd)lháo91eIM'esRo1PEsee:Ñ đñetofe and purchasable ability are basis for which

enterprises classify market segment

Along with economic development, urbanization process is_ carried vigorously Population density in urban areas increase remarkably especially in big cities, which lead to the increase in housing and apartment That is the reason for new needs of products which are qualified, well-packaged, well-dimensional, well- designed, comprehensive, long-lasting and economical

The demand to design and improve lighting system also increases The increasing demand of office lighting, school lighting, public lighting consumer a great volume of electricity Thus, these systems should be researched, designed and installed to achieve scientific, aesthetic requirements and especially effectiveness and economization

2.1.4 Macro-economic environment analysis in SWOT matrix and IE matrix

Model

Table 2.1: SWOT MATRIX - MACRO ENVIRONMENT

ECONOMIC ENVIRONMENT

—_ Q: Opportunities T: Threats

e High economic growth e Rigour competition in domestic

e Increase of GDP per capita market

e Opportunities of joint venture, links,

and technology transfer

e Expanding export market

e The political stability e Changes of economic policy

e Business environment improvement

e Administrative procedure reform

e Incentives on corporate income tax

SOCIAL ENVIRONMENT O: Opportunities T: Threats

e Clear demand diversification e Overdiversifed needs

e Synchronous product need e Products must have high capacity but

e Needs for lighting system be economic

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PDF Comprasané Tee Me NSOPRIX - MACRO ENVIRONMENT

ECONOMIC ENVIRONMENT

Order Factors Ratio | Score ph

score

| Economic growth and stability 0.15 3.00 0.45

2 Increase of GDP per capita 0.20 4.00 0.80

Lo 3 _ Competition in domestic market có 0.25 4.00 1.00

4 Expanding export market 0.20 3.00 0.60

5 Venture, links, technology transfer 0.20 2.00 0.40

Total 1.00 3.25 ENVIRONMENTAL POLITICS, LAW

| Political stability 0.20 4.00 0.80

2 Business environment improvement 0.20 3.00 0.60

3 Administrative procedure reform 0.15 4.00 0.60 + Preferential corporate income tax 0.20 4.00 0.80

5 Policies to attract foreign investment 0.25 3.00 0.75

Total 1.00 3.50 SOCIAL ENVIRONMENT

| Clear demand diversification 0.15 3.00 0.45

2 Overdiversifed needs 0.20 3.00 0.60

3 Synchronous product need 0.20 3.00 0.60

4 Needs for lighting system 0.20 4.00 0.80

5 High capacity, economic 0.25 4.00 1.00