G1 00106 CAPSTONE PROJECT REPORT BUSINESS STRATEGY BUILDING FOR SUNTRAVEL CO., LTD PERIOD OF 2010-2015 BÁO CÁO DỰ ÁN CAPSTONE XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO CÔNG TY TNHH SUNTRAVEL GIAI ĐOẠN 2010-2015

G1 00106 CAPSTONE PROJECT REPORT BUSINESS STRATEGY BUILDING FOR SUNTRAVEL CO., LTD PERIOD OF 2010-2015 BÁO CÁO DỰ ÁN CAPSTONE XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO CÔNG TY TNHH SUNTRAVEL GIAI ĐOẠN 2010-2015

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

BUSINESS STRATEGY BUILDING FOR SUNTRAVEL CO., LTD PERIOD OF 2010-2015

Group No.3 Student’s name:

Pham Thi Hang - Luu Anh Tuan

Le Trung Kien - Kieu Cao Chung

Tran Thi Kim Lien

HANOI, 2010

ACKNOWLEDGEMENTS

Our appreciation goes to the Master of Business Administration Programs — the Affiliate Programs between Griggs University, USA and Center for Education Technology and Career Development (ETC), Vietnam University Hanoi facilitate this Capstone Project Report

Special mention also goes to all Lecturers of the Program provided us with valuable knowledge during the MBA course so that we can sum up into this as a final report

Our gratitude also goes to the SUNTRAVEL Directorate and its staff has facilitated our Group during the practice time there

Appreciation also goes to all the Students of GAMBAO1.M05 and “Mama” staff for encouraging and helps us during the MBA course and report time

Lastly, our appreciation goes especially to the Group’s families who facilitate us to fully participate in the MBA course

Although our Group has tried our best to perform this Capstone Project Report within our capacities but it definitely still have unavoidable deficiencies We are thus hope that we will continuously receive more valuable comments from you all for the next step — the strategy implementation of SUNTRAVEL

Group No 3 Pham Thi Hang — Luu Anh Tuan

Le Trung Kien — Kieu Cao Chung

Tran Thi Kim Lien

Hanoi, February, 2010

Add : 1B Ngo Quyen Str., Hanoi City - Vietnam

Ce: Master of Business Administration Program

In research process, the external and internal business environments as well as the strengths and weaknesses of SUNTRAVEL were analyzed to almost of comments suggested are reasonable, feasible and helpful Thus, this study will be considerer to apply for our new period of 2010-2015

Also, we would like to take this opportunity to express our appreciation on quality of the Master of Business Administration Program - The Affiliate Programs between Griggs University, USA and Center for Education Technology and Career Development (ETC), Vietnam University Hanoi

-os Yours faithfully,

Tran Thi Thu Hien

Vice Director

Page

TABLE OF CONTENTS

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6 Lay-out of Capstone Project ЀpOF << 5 5à 551010154 9

CHAPTER I: BASIC THEORY OF STRATEGIC MANAGEMENT 10

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CHAPTER II: COMPANY'S BUSINESS ENVIROMENT ANALYSIS 21

1 Overview about SUNTRA VE TL, .-. «- 5< Ă 5115130593053 9908011838095 21 11.° Foundation amd develoPHIEH ae na ng 0088839114048 050586810100 110151006 0 nesilex 21 1.2 Company’s organization Structure .cccccccceeteseeseeeneeneetetneeneeteerseseesitessesesesneens 23 1.2.1 Head office In Hanol - S121 HH Hy ghi hư Hà hườ 23

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2.1.3 Socio-cultural environmen -.- - + nh HH Hư HH HH tờ 27

2.1.4 Demographic envirOnImenl - cc chinh 28 2.1.5 _ Political- Legal Environm€Ft - chinh 28

2.1.6 Natural environmeni s «25255 cs 4181 KH H0 g4 1H nhiên ra Hee 29

22 Micro environment anaÌYSI§ :ssseneiriee pinrenersersarivee keseeekeeeeesae uncitnties 31 2.2.1 _ Bargaining power of buyer analySiS eceeesrerrrrsreroe2Ï 2.2.2 Bargaining power of suppliers 0 0cccc sce eesti: 32 2.2.3 Rivalry among competing fT « 0.0.0.0 esses carcasses eeennestoensesvaeen cocueenenansen ennvanes 33 2.2.4 — Threat of new entrants anaÌySIS «chữ 222 kẨ HH ket tre 34 2.2.5 Threat of substitute prodU€fS ác c2 thư hài 34

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3.4 Value chains and the creation of value chains of the company: ‹- 49

3.4.1 Research arid-develoBimeiit exc.«sessnsaasniusrssrettrerrtrdlstissbsas2ewrspverlsere 49 3.4.2 Marketing and sales - 0,c HH Ha 2210210 13403 150 49

3.6 Interal Factor Evaluation (IFE MatriX) - Sen 50 CHAPTER III: BUSINESS STRATEGIES OF SUNTRAVEL FOR PERIOD OF 201(0-2015, - d co S2 1H KH 0 ng 0 000564866686446048108080406000460400408064000100094700980990 52

„ Visions and missions of SUNTRAVEL for period of2010-2015 52 dấu Business strategies selection for SƯNTRAVEL period 2010-2015 54

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3.2 Trfermal - Exiernal Matrix (H.MISEBM s2 ngu nnänhoanxeitessytUArBrmiitaemsseen 55

tứ Solutions to implement strafegies ch0S€N ««sSĂSĂS nhe ee 55 3.1, SOIUỦOD Ì::wseasxe=enereaeresenaeeeeseeeesseleeeresikmsasrerssAsdensmaisl Sassa48-5546L381A079648 96 56 cE?n 0o .Ố 56 3.1 - GGI|HWĐPL .se su An há g nhgHg thinrEbgntiS40 338 90XÖESVDRINESvenrtelisrmdeenx rbeneseraenioaeBd 56 3.8, Solufiơn e -cúØ Bố 12012 0gp 90c v0S2Hl00388109 1/00EL U19 04022 xenHcze em 56

3G SolUOH ỐosssessnssasesnerseddeeeensanardrevereeerireissesnessisnlessmsinsE984 2404: 130000404 56

3.7 SGÏữHÖH ÏusiissesssbBrioiisbrririspoansagesessleevssaedisaasreserersseaeesieseseranaessseraA2636 37 RECOMMENDATIONS 0-5-9 000000008001 04008018060066401006000040040481486 58

1 Vietnam Administration Tourism and stakeholders -«<<««<<<«=+ 58

2 Higher authorities — The Union of Vietnam 'TranSpOF -<<e-«ee«+ 58

09)/90001090)0 05 — 59 RETERRECNCE cáckeeebassnieranodasiennasealeaerdasssrnsanyansgsssessssssssariassaaslSNB266848454816906/38% 60 APPENDICES - G5 < 5 <5 9 99 3 09H 90980860500480360804004040848000800000604600004400908 61

Master of Business Administration Foreign Direct Investment

Official Development Assistance Gross Domestic Product

The Meetings, Incentives, Conventions and Exhibitions

Vietnam dong

American Dollar

LIST OF TABLES AND FIGURES

TABLES

Table 1: Some results of the company’s business operation

Table 2: External Factor Evaluation Matrix

Table 3: Human resource statistic

Table 4: Company’s capital structure

Table 5: Company’s revenue over the years

Table 6: Internal Factor Evaluation Matrix

Table 7: SUNTRAVEL goals and targets till 2015

Table 8: Balance Sheet 2007, 2008

FIGURES

Figure 1: Business Strategy

Figure 2: Basic Model of business strategy management

Figure 3: Values of brand

Figure 4: SWOT Matrix

Figure 5: Internal External Matrix

24-25

35 41-42 42-43

44 50-51

53 63-68

1]

13

47

54 55

INTRODUCTION

1 The necessity of topics

Vietnam is a country located at the center of East Asia with a geographical location of advantages in economic cooperation and exchanges with other countries

in the region and international with its economy is growing and gained important achievements in the renovation of the country

With diverse and abundant natural resources of 3,200 km coastline with

diversity marine ecosystems and island; famous beautiful beaches; Ha Long Bay is recognized World Natural Heritage by UNESCO; Nha Trang Bay is considered as amongst the 29 world's most beautiful bays by The World Bay Club; Da Nang beach is rated as one of the 6 most beautiful beaches the planet by Forbist magazine (USA) In addition, many marine ecosystems, islands and beaches such as the Lang

Co Mui Ne-Phan Thiet, Phu Quoc Island etc Many caves, forests and natural

protected areas such as Phong Nha-Ke Bang, Can Gio Area Biosphere Reserves World, Ca Mau salt-marsh forest Also, Vietnam is the country with its excellent culture- history with many cultural festivals-cultural art traditions, ancient capital Hue, Hoi An, My Son relics Of these, 8 heritages were recognized as the world natural and culture heritages by UNESCO Vietnam has a stable political regime wiht hospitality people, refined food, handicrafts and traditional fine-arts is attracting more international tourists to Vietnam

Currently, tourism is one of the key economic sectors of many countries

including Vietnam Tourism is important for the country's economic development and improving people's incomes, particularly for people in the trade villages of tourist sites in the development strategies of national economy The most important

in the integration period, tourism is the opportunity to exchange, convergence of global tangible and intangible civilizations; create believe, understanding, solidarity among nations In other words, tourism is a bridge to promote the economy, is the face of a nation In order to promote economic development needs to promote

tourism development and to strong tourism development, leaders at level are required to be interested in and make suitable strategies and plans

SUNTRAVEL Co Ltd is a state-owned enterprise directly under the Union

of Vietnam Transport participating in travel field from 1998 with the precursor Is Travel Center under the Union of Vietnam Transport It officially established as a company in 2004 The company together with the whole tourism industry has been trying to make tourism position as a key economic sector of the country With more than 5 years of experience, SUNTRAVEL has continuously success and develop with many significant achievements For many years the company received certificate of merit as a good economic enterprise of Hoan Kiem District, Hanoi Capital and is continually ranked in the top 10 sales agents of Vietnam Airlines

Our Vietnam has great efforts in the process of international economic integration which create favorable conditions for business travel but also put the tourism enterprises face up with fierce competitive pressures and SUNTRAVEL is not an exception although it has some certain achievements by using its competitive advantages in accordance with the socio-economic context in the past time With current context when the world economy initially just has restored after the great financial crisis in 2008, it continuously creates new pressures for tourism enterprises to force them to method renovation in order to create added values These require necessary and urgent activities for enterprise in product positioning, business orientation in the new context

Through practice time at SUNTRAVEL, the Group found that SUNTRAVEL Directorate is too busy with current business activities and although there are many ideas for future development but they are still ideas in their mind, not specific business strategy Thus, the most important thing SUNTRAVEL should

do in this context is to build business strategies for period 2010 - 2015 urgently That’s why the Group selected topic "Building business strategy for SUNTRAVEL period 2010-2015” for our Capstone Project Report with our desire to apply theory

from MBA course to practice to support SUNTRAVEL in building its business strategies

3 Object and scope of the research

SUNTRAVEL is doing business in many fields such as tourism, trade, printing, training Among which tourism activities are identified as the company’s core competency that bring major profit The other business activities exist just to support this core competency

Within research sphere of the Capstone Project Report, the research objects and scopes of research are in tourism operations The time proposed to build business strategy is 5 years from 2010 to 2015; the research time is 3 years from 2007-2009

5 Expected output

Feasible business strategies for SUNTRAVEL, period 2010-2015

6 Lay-out of Capstone Project Report

Besides the introduction table of contents, conclusions, references, it I5 divided into three chapters as follows:

Chapter I: Basic theory of strategic management;

Chapter II: Company’s business environment analysis; and

Chapter III: Business strategies for SUNTRAVEL period 2010-2015

CHAPTER I: BASIC THEORY OF STRATEGIC

In 1980, when strategic management disciplines have become ripe, author Quinn, J., B in Strategic Change: Logical Inscrementalism was made to define a more general: "Strategy is series of patterns or integrated plans of major goals, policies, series actions into the whole closely”

After that, Johnson, G., Scholes, K in Exploring Corporate Strategy (1999)

defined the strategy in the environmental conditions have changed rapidly:

"Strategy is the direction and scope of an organization in long-term to gain a competitive advantage for organizations through the format of its resources in the changing environment, to meet market demand and satisfy the expectations of

In defining strategy with 5 P letters, Mintzberg gave general aspects of strategic management as follows:

(i) Plan: series of actions intended consistently;

(ii) Pattern: being consistent behavior over time, may be intended or not

A concise definition that is commonly used today is the definition of strategies in curriculum "strategy is a complex series of activities aimed at mobilizing the resources of an organization may have to achieve a certain goal”

1.2 Concept of business strategy

Business strategy is understood as a set of plans and actions to help business enterprises to achieve business goals The following image illustrates the business strategy of an enterprise:

Figure 1: Business Strategy

(Source: Strategic Management — Associate Prof Le

The Gio1)

Each enterprise must respond to strategic business decisions continuously However, some of strategic decisions can become more pressing in some certain periods depending on the specific context That is the process of strategic business

management

1.3 Business strategy clarification

Depending on the strategic business level, people can be divided into 3 types

of business strategy, including: company strategy; business unit strategy and function strategy

(1) Company strategies toward goals and overall scope of organization:

(ii) Business unit strategies regarding how to succeed on specific markets: (iii) Function strategies are strategies to help business strategies for companies and for proper implementation by the components on the aspects of resources of human, finance, processes and skills needed Currently, with globalization trend, enterprises are fast diversifying their activities beyond national borders, from which global strategy as a choice to face with international business

issues

1.4 Basic model of business strategy management

Basic model of business strategy management also called 5 stages model in the process of strategic planning include: (i) Select the mission and main objectives

of an enterprise, (ii) External environmental analysis to identify opportunities and threats; (iii) Internal environment analysis to identify strengths and weaknesses, (iv) Strategies selection based on the search resources, capabilities and core competency and develop these to overcome threats, utilize opportunities from external environment; (v) Strategy implementation

Task of external and internal environment analysis and then select strategies

is considered as business strategy building Strategies implementation will include designing organizational structure and control systems appropriate to put into practice strategies

Each section described in Figure 2 is a step in the order in the strategic planning process Each cycle of strategic planning begins with a mission statement and key objectives of the enterprise After mission report and main objectives of enterprise is analysis of internal and external environments and strategy selection The process ends with the design of organizational structure and control systems necessary to implement selected strategies

BASIC MODEL OF BUSINESS STRATEGY MANAGEMENT

Figure 2: Basic model of business strategy management

(Source: Strategic Management — Associate Prof Le The Gioi)

2 Strategy building for an enterprise

2.1 Business environment analysis

2.1.1 External business environment

The purpose of external environment analysis is to identify opportunities and threats from external environment for enterprise

2.1.2 Macro environment analysis

2.1.2.1 Economic environment

Economic environment show the nature and direction of that economy including enterprise operation Four important factors of macro-economic environment are: (i) growth rate of the economy, (ii) interest rates; (iii) foreign exchange rates; (iv) the inflation rate

Status of the macroeconomic environment determines the health, prosperity

of an economy It always causes the impact on business and industry Therefore, the impact of the economy to an enterprise can change the ability to create value and its

income

2.1.2.2 Technological environment

Changes in technology are the most rapidly changes and they impact on many parts of society including enterprises They are changes on creating new knowledge and the transition to the knowledge into products, processes and new materials Technology changes include creation and destruction, the risks and threats It also can shape new structure for industry

In the global space, opportunities and threats of technology to all the enterprises by buying out or self-created new technologies

2.1.2.3 Sociocultural environment

Sociocultural environment related to social attitudes and cultural values - the foundation of society Social changes also create opportunities and threats for enterprises, especially for tourism enterprises

2.1.2.4 Demographic environment

Demographic segments in the macro environment related to: population; age structure: geographic distribution: community of nations; income distribution ete 2.1.2.5 Political - Legal environment

Political - Legal factors also impact significantly to level of opportunities and threats from business environment for enterprises and mostly in how the interaction between enterprises and the government This segment will affect significantly to competitiveness of enterprises Thus, once considering political — legal

environment, it should consider the new policies relevant related to State management; law on anti-monopoly, tax law; selected priority industries; Law on

labor; the areas in which state management policies can impact operations and profitability of the ability of the industry or enterprises

In addition, it should mention a series of problems that enterprises must face

on a global scale related to politics — legal environment such as: trade policy; the national barrier protection etc

2.1.2.6 Global environment

Globalization of business market creates both opportunities and threats for enterprise include concerned global market; the current market is changing; important international political events; institutional characteristics and basic cultural on the global market

2.1.3 Micro environment analysis

Micro environmental analysis is common uses of 5 forces analysis of

Michael Porter:

2.1.3.1 Bargaining power of buyers

Buyers or customers are a competitive pressure affect directly on the entire production and business of industry Customers are divided into 2 groups of retail customers and distributor customers Both groups will pressure on companies about price, quality products, services by continue bargaining They are the persons who

control competition in the industry through their decisions of purchasing products and services

When analyzing the distributors, enterprise need to pay attention to importance of customers, they can directly go deep into internal environment of the enterprise

2.1.3.2 The Bargaining power of suppliers analysis

Number of suppliers and the size of the providers will decide competitive

pressure, the power to negotiate their industries and enterprises If the market only a few vendors have a large scale will create competitive pressure, affects the entire production and business activities of the sector So in the current era where information is a factor promoting the development of the commercial information providers have a large impact on the selection of suppliers in the business

2.1.3.3 Rivalry among competing firm analysis

Current competitors are competitors are doing production and business

activities similar with enterprise Analyzing current competitors need to analyze

strategies, objectives, evaluate strengths, weaknesses of competitors to select

suitable strategy for enterprise

2.1.3.4 Threat of new entrants analysis

The risk of appearance of new entrants or potential competitors maybe affect the industry in the future Potential competitors have more or less pressure to industry will depend on the following factors:

(i) The attractiveness of the sector: This factor is expressed through profit

indicators, number of enterprises in industry

(ii) The barriers to joining sector are the factors that make joining a sector more difficult and expensive

2.1.3.5 Threat of substitute products analysis

Substitute products and services are products and services can meet the demand equivalent to the products and services in the industry

Competitive pressure primarily of alternative products and services is the ability to meet demand in the industry adding other factors are price quality and other factors of the environment such as culture, politics, technology will also affect the threat of alternative products and services

2.1.4 Internal environment analysis

Internal environment include human resources, finance, technology,

technology, ability and capacity of core competency of enterprise Analyzing resources and capabilities of enterprise as conducted through analysis of the activities of the business functions such as marketing activities, human resources,

finance etc In addition, internal environment including culture of enterprise and

"before the leaders can shape a new strategy, they need to reach a common understanding about the current location of their enterprises" - W Chan Kim and Renee Moubourgne Therefore, the purpose of internal environmental analysis is to find the strengths and weaknesses of enterprise and from which to combine the external business environment to create appropriate strategies and solutions for the enterprise

2.2 SWOT Matrix Tool

To identify and select business strategies often use SWOT matrix SWOT is the abbreviation of the collection of the first letter of the English words: Strengths, Weaknesses, Opportunities and Threats

(i) Strengths: What are the advantages of enterprise? What kind of work the enterprise is doing best? Which resources that enterprise need and can use? What are te advantages that others see in your business? Problems from the business aspect itself and other enterprises must be considered Advantages are usually formed when compared to competitors For example, if all the competitors offer products of high quality, quality manufacturing process will not be advantage that it

is essential to have to survive on the market

(ii) Weaknesses: Anything can improve? Is task of business worst? What should avoid? Problems on the basis of inside and outside of the enterprise must be considered Others may see weaknesses that do not see themselves Why competitors can do better than them? Recognize and face with the truth

(iii) Opportunities: Where are good opportunities? What are concerned trends that enterprise has been known? Opportunities can arise from technological change and international market or even in narrow spaces, from a change in state policy related enterprise activities; from the change of social patterns, population structure or fashion etc, from the events in the region Search method is most useful review of the advantages of their own and question whether these advantages open new opportunities or not Can also do the opposite, reviewing the weaknesses of enterprise and give questions if there are any opportunities appear if removing them

(iv) Threats: What are obstacles? What are competitors doing? The specific demands of work, products or services changed or not? Technology change gets risk

or not? Is there any overdue debt or cash flow? Are there any weaknesses with enterprise? Analysis often helps to find out what to do and turn weaknesses into

prospects

Internal factors need to analyze should include: enterprise culture and image, organization structure; key persons; ability to use resources; experience; capacity

operation; Reputation and brand name; market share; finance, major contracts;

Copyright and trade secret business etc

The external factors need to analyze maybe are: Customers; competitors; market trends; suppliers; Partners; Social change; new technology, economic and Political-legal Environments etc impact on enterprises

Effective strategy is the strategy to take advantage of opportunities from external environment combine with internal strengths as well as disable or minimize the external threats and limited or overcome the weaknesses of enterprise itself So use the SWOT matrix can form the following strategies for business:

(i) S-O strategies: pursue opportunities that best suits the strengths of the enterprise;

(ii) W-O Strategies: overcome weaknesses to pursue opportunities:

(iii) S-T Strategies: determine how companies can use their advantages to reduce damage to the external challenges;

(iv) W-T: set up a defense plan to prevent weaknesses of the business from

the effects from the outside environment

2.3 External Factor Evaluation Matrix (EFE Matrix)

EFE matrix method is a strategic-management tool often used for assessment

of current business conditions The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing

External factors assessed in the EFE matrix are the ones that are subjected to

the will of social, economic, political, legal, and other external forces

The EFE matrix method conceptually relates to the Balanced Scorecard

method of external factors

2.4 Internal Factor Evaluation Matrix (IFE Matrix)

IFE matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business IFE matrix also provides

a basis for identifying and evaluating relationships among those areas The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation

The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company The IFE matrix method conceptually relates to the Balanced Scorecard method in some aspects 2.5 Internal - External Matrix (TE Matrix)

The IE matrix is another strategic management tool used to analyze working conditions and strategic position of a business The Internal External Matrix or short

IE matrix is based on an analysis of internal and external business factors which are

combined into one suggestive model The IE matrix is a continuation of the EFE matrix and IFE matrix models

The IE matrix is based on the following two criteria:

Score from the EFE matrix this score is plotted on the y-axis

Score from the IFE matrix plotted on the x-axis

The IE matrix works in a way that you plot the total weighted score from the EFE matrix on the y axis and draw a horizontal line across the plane Then

you take the score calculated in the IFE matrix, plot it on the x axis, and draw a

vertical line across the plane The point where your horizontal line meets your vertical line is the determinant of company’s strategy This point shows the strategy that the company should follow

The IE matrix can be divided into three major regions that have different strategy implications

Cells I, I, and III (horizontal) suggest the grow and build strategy This means intensive and aggressive tactical strategies Your strategies should focus on market penetration, market development, and product development From the operational perspective, a backward integration, forward integration, and horizontal integration should also be considered

Cells IV, V, and VI suggest the hold and maintain strategy In this case, your tactical strategies should focus on market penetration and product development

Cells VII, VIII, and IX are characterized with the harvest or exit strategy If costs for rejuvenating the business are low, then it should be attempted to revitalize the business In other cases, aggressive cost management is a way to play the end game

CHAPTER II: COMPANY’S BUSINESS ENVIROMENT

ANALYSIS

1 Overview about SUNTRAVEL

1.1 Foundation and development

SUNTRAVEL Co., Ltd is state-owned enterprises directly under the Union

of Vietnam Transport With annual revenues of tens billion; enthusiastic and professional employees are over 60; SUNTRAVEL contributes significantly to the state budget every year

Taking part in tourism market since 1998 with the precursor is Tourism Center under the Union of Vietnam Transport

In April 2004, the Center was strong enough to establish a company as SUNTRAVEL today In 2005, to meet demand for big volume of Chinese inbound

visitors at that time, SUNTRAVEL established a representative office in Mong Cai

and Lang Son

In 2006, after two years confirmed the existence and development, SUNTRAVEL identified its strengths is organizing outbound _ tours SUNTRAVEL’s customers are not just customers at the Northern of Vietnam but nationwide To meet customer requirements at that time, SUNTRAVEL also established representative office in Ho Chi Minh and its operation with effectiveness nowadays

Also from outbound activities are growing, SUNTRAVEL leaders realize the potential to develop MICE outbound tours for Vietnamese is very high due to demand to learn foreign experience in the integration period is increasing Thus, in

2006 the company focused on exploiting customers is agencies, companies who wished to go abroad for learning experience combined with tourism Also in 2006, with the first step to success in exploiting MICE outbound tours, the company determined that is a core competency, and the company decided to withdraw two representative offices in Mong Cai and Lang Son, only focus on focal point in

Hanoi and Ho Chi Minh

Result of this decision is scale of the company is increasing and SUNTRAVEL has been recognized by tourism market as a brand name of the professional organizer for conference program, workshops, working in conjunction with domestic and abroad tourism

The company has been setting up close relationship with international partners to meet requirements of contact information for meeting, surveys; workshops integrate to the development trend of the world In many years, company has arranged for many Ministries/ Sectors, agencies, unions to survey practice, study abroad and through the maximum exploitation of support of agencies and sectors under the Union of Vietnam Transport including: airlines, railway, road and sea transport as unique travel company of the Union of Vietnam Transport This support ensures customers to have the best way of transportation And this strong point has maintained and ensured the company’s revenue from outbound activities more than 70% annual company’s revenue and always helps company to keep the position in top 10 highest sale agents of Vietnam Airlines

An additional strong point of company is that services are more and more perfect by the professional, experienced and enthusiastic employees associated with system of modern support services from company’s bus to restaurants, hotels as well as partners in domestic and abroad

Company honor to have system customers throughout entire territories of Vietnam and some countries in region, including units, agencies and organizations

in Transport sector, the ministries, the Corporation, system of universities and colleges, multi-national companies, foreign organizations as well as medium and small enterprises in whole Vietnam includes:

- Vietnam Banks association and its members:

+ Industrial commercial Bank of Vietnam;

+ Vietnam bank for agricultural and rural development,

+ Bank for foreign trade of Vietnam

+ Habubank;

- Branches of Bank or foreign trade of Vietnam

The objective of the company not only make a profit in the tourism industry brought economic benefits to the country and society but also desire to be really cultural bridge between Vietnam and countries in the region and the world With the motto SUNTRAVEL — New style creates success, the company is ready with all our customers to open world with a lot of wonders and interesting thing

1.2 Company’s organization structure

1.2.1 Head office in Hanoi

+ Address: 1B Ngo Quyen, Hanoi

+ Tel: 84 4 9348498 Fax: 84 4 9344458

+ Email: suntravel@fpt.vn Website: www.suntravel.com.vn Total of employees in Ha noi: 45 for 5 departments:

+ Sales and Marketing Department

+ Operation and Tour guide Department

+ Trade service Department

+ Accounting Department

+ Administration — Personnel Department

1.2.2 Representative office in Hochiminh city

+ Address: 43 Hoang Du Khuong, 12 Ward, District 10, HCMC

+ Tel: 84 8 8621170 Fax: 84 8 8631693

1.2.3 Partners system

(i) Domestic: Hue, Da Nang, Lang Son

(ii) Outbound: Korea, Taiwan Singapore, Germany, China, Lao PDR, Thai Lan, Japan, Indonesia, Australia, France, Italy, Sweden, Holland, UK

1.3.Main products and services

1.3.1 Tourism products and services

Provide package tour or a part of package tour for inbound, outbound and domestic

market

1.3.2 Other kind of products and services

Visa procedure service for foreigners; Hotel, air ticket, train ticket booking;

Transfer services of cars, buses; provide translators, tour guides etc

1.4 Some results of business operations of the company

For travel activities in Vietnam, if any enterprise has customer lead to has revenue and profit except for some particular cases Below are statistics of client companies through the years SUNTRAVEL:

il 75 112 130 121 109

Total 1054 1,463 1,950 1,662 1,858

Table 1: Some results of the company’s business operation

(Source: Accounting Department of SUNTRAVEL)

The year 2008 is the year Vietnam economy affected by global financial

crisis Thus, demand of tourism also decreases (from 1,950 tourists in 2007 to 1,662

tourists in 2008, equivalent with 15% decrease) In 2009, as the world economy gradually recover, the company’s customers also increase to 1,858 tourists (increase

11.8%) In 2010, with the new context, the company customers and revenue

definitely increase

2 External business environment analysis

2.1 Macro environment analysis

2.1.1 Economic environment

Tourism is an economic phenomenon having great power worldwide; it is the key economic sector and the source of foreign exchange for many developing countries in the world.It is the foundation for the development of many multinational companies, a significant portion of the net annual earnings of many people in developing countries Sustainable tourism towards three main goals: the

goal of economic, society, and environment, in which: economic objectives

(economic life of the community and enterprises): to achieve growth of the sector,

to have profit in business, increase employment opportunities, and create interest in the destination

The economic impact study provides information to help policy makers better understand the consequences of different impacts on enterprises as well as to

other economic sectors; help us better understand about the scale and structure of

tourism enterprises in certain areas and linkages with other economic sectors This

understanding brings about the benefits in identifying potential partners for tourism enterprises

With the demonstration that tourism has great economic impact, tourism enterprises can convince policy makers to spend more resources for the tourism industry or to establish of policies to encourage tourism Looking back the economic growth of Vietnam in the field of tourism as follows

- Tourists: From 2001 - 2008 on tourist targets of domestic and international plans to achieve the objectives set out Accordingly, the international tourists to Vietnam increased from 2.33 million arrivals to 4.25 million arrivals to reach an average growth rate of 7 to 7.4% per year

- Tourism GDP: GDP growth reached about 5 to 5.5% of the same phase; higher than planned (4.5%), the proportion of GDP tourism in the total of the country's GDP increased every year

- Infrastructure facilities to serve tourism is rapidly developed in scale and quality which is gradually improved to meet the requirements for the increasing

number of international and domestic tourists As of December 31, 2008, there are

approximately 8,556 tourist accommodation establishments with a total of 170,551

compartments, in which: tourist accommodation units which have been ranked is 4,283 with 109,198 compartments

In the eight years from 2001 to 2008, the State has supported 4,136 billions Dong primarily focused on the investment in infrastructure for 4 general resorts , 17 national resorts and local tourism areas in 59 provinces and cities Although this capital only meets the needs of nearly 50% demand of tourism sector period from

2001 to 2008 but there were encouraging results, create the motivation to attract thousands billion dongs from other sources of capital to the development of tourism facilities Particularly , it has attracted 250 foreign investment projects (FDI - the end of 2008) with about billions of USD primarily invested in the areas of building

hotels, motels, tourism resorts, entertainment, traveling and transportation

During 2001 — 2008 the tourism sector attracted 43.233 millions of USD from ODA with the main donors are the Luxembourg Government WTO, UNDP,

EU, Asian Development Bank In which, non-refundable ODA is 21,033 millions of USD and ODA loans is 18.2 millions of USD ODA projects conducted by the General Department of Tourism (Ministry of Culture, Sport and Tourism) have brought about many practical effects, especially in the field of training and development of human resources, planning, investment, and propaganda to promote and advertise tourism, strengthening the tourist attraction

2.1.2 Technological environment

Technology is a key factor for the overall development today Well recognizing this problem, SUNTRAVEL has continued improving the technological equipment; apply advanced technologies to enhance the service quality of products, costs of production to generate profits for the optimal business Recently, the company has invested in upgrading the Website to prepare for attracting inbound

visitors via the Internet On the other hand, the devices of the card payment bank of

Industry and Commerce, Foreign Trade also create the quickness and convenience for inbound visitors

Besides the investment in technology, the company also continues to enhance the study ability for the staff to have the high professional qualification, to

be active, creative in order to have products which more and more meet the

diversified demand of customers

2.1.3 Socio-cultural environment

Socio-cultural environment is important to attract tourists Cultural tourism tour is also easy to make a difference in the most competitive areas for each region Each region, each nation has a separate cultural identity, which creates the attraction for foreign guests Therefore, to develop tourism, it is needed to exploit better elements of traditional culture of the nation "Culture is the soul of tourism,

tourism is a lifeless body, if there is no soul, it can not exist”, Pro Hoang Chuong

said Cultural factors are necessary both conservation and exploitation efficiency values; if forgetting investment in culture, the tourism will not develop unattainably

Besides, the educational level also affects the requirements of customers The reality shows that the ones who have higher educational level will require higher quality when they join in tourism tour

2.1.4 Demographic environment

In 2008, the population of Vietnam was about 86 millions of people the current increase in population is the concern of Vietnam but it is also a potential market for service business enterprises including SUNTRAVEL The increase in demography leads to increasing service demands

In 2008, the average income of Vietnam is about 1,030 USD This number

shows the direct impact to the consumption in service The people are ready to pay for the increasing tourism accordingly In the recent years, the domestic tourism demand and outbound of Vietnam has increased significantly One example is that

in the holiday, the situation of shortage of train tickets, airplane tickets; the crowdedness and overload in the tourism areas have happened

Vietnamese people prefer discovering and easily accept the new things Thus, the exploitation of tourism programs or renovation in the way to organize the program is always reasonable and to be the opportunity to bring out the success for the company who is the pioneer in the exploitation

The world’s population increases about 78 millions of people per year And for the foreign countries in general, the tourism habit to discover is much more before that of Vietnam people so that the exploitation of the inbound market is an unlimited potentiality to Vietnam tourism enterprises

2.1.5 Political- Legal Environment

The tourist attraction destination is the safe destination in term of politic No visitor chooses a point where there is political instability Thus, political factor is a very important factor for the development of tourism Thailand is an

example Thailand is a country strong in the service sector, especially tourism Revenues of foreign exchange from Thailand tourism play an important role Due to the unstable political situation in 2008, the volume of travel to Thailand decreased Governments of Australia, South Korea, Singapore warned citizens

when travelling in Thailand, there are some countries which do so as well Experts

predict, the tourism industry of Thailand set a goal of 700 billion of baht revenue from tourism in 2008, October to November the total revenue of the tourism industry accounts for 40% of the entire year The tourism industry in Thailand is not affected by local political area, a deficit of up to thousands of billions of dollars, making the revenue from hotel business 50% Many projects on tourism in Thailand has been cancelled and the tourism industry in Thailand collapse down low in 3 years

Preferential policies: Currently, there are no incentives for special consumption tax, value added tax, license tax related to tourism Regulations on imported equipment and fixed assets for foreign invested enterprises in the tourism sector are not specific, with the heavy elements cause difficulties for the importation business For example, electric vehicles for the golf course is not clearly to be classified into categories of equipment, machinery or transport vehicles for special use

Economy - political stability, Vietnam is a safe destination for tourists Tax policy is increasingly improved with more incentives and other items on attracting investors The administrative procedures are more simplified and also create very favourable conditions for business development Once that Vietnam has attracted investment, it will attract tourists, and develop tourism

2.1.6 Natural environment

This is the objective factors affecting enterprises in the sector, and reflects the advantages and disadvantages offered by the nature In the field of tourism, natural elements are extremely important The nature of tourism derived from the

first location toward the blessed and the special resources and tourism In Vietnam,

now it has formed the national tourist zone including:

The national general tourism area: the sea general tourism area, Halong- Cat

Ba island (Quang Ninh- Haiphong); the Canh Duong- Hai Van- Non Nuoc- (Thua Thien Hue- Da Nang) sea and sport entertainment general tourism area; the Nha Trang Bay (Khanh Hoa) sea general tourism area (replace the Van Phong- Dai Lanh general sea tourism area), the Dankia- Suoi Vang resort area (Lam Dong)

The national tourism area: Sapa resort (Lao Cai), the ecosystem tourism are-

Ba Be lake (Bac Kan); the Co Loa cultural-historical tourism area (Ha noi), Huong Son cultural tourism area (Ha Tay), the cultural-historical- ecosystem tourism area Tam Coc- Bich Dong (Ninh Binh); the Kim Lien- Nam Dan (Nghe An) cultural- historical tourism area, the Phong Nha- Ke Bang (Quang Binh) cave ecosystem tourism area; the Ho Chi Minh path historical revolution tourism area (Quang Tri); the Hoi An cultural tourism area with the My Son relic (Quang Nam); Phan Thiet- Mui Ne (Binh Thuan) sea resort; Tuyen Lam lake ecosystem resoirt (Lam Dong); Rung Thac Can Gio (Ho Chi Minh city) ecosystem tourism area; the Long Hai- Phuoc Hai (Bia Ria Vung Tau) tourism area; the historical- ecosystem area Con Dao (Ba Ria Vung Tau), Phu Quoc island tourism area (Kien Giang); the Dat Mui

(Ca Mau) ecosystem tourism area; the Ba Vi- Suoi Hai (Ha Tay) resort area

Besides it is the tourism resources with prerequisites for facilitating tourism activities, the natural environment also contains hidden risk factors such as natural disasters, climate change Natural resources and environmental tourism in some areas, local is being degraded, being violated due to the management development, exploitation and the impact of natural disasters To develop sustainable tourism, it must be based on the preservation and promotion of heritage and this requires a significant multi-sector linkages

2.1.7 Global environment

Vietnam will officially join the WTO on January 11, 2007 For tourism services, Vietnam only commit for the distribution service sector travel agent and

tour business travel service arrangements in the hotel room, food service and beverages These commitments will be applied automatically to members of ASEAN

The bilateral trade agreement Vietnamese-American (BTA), Vietnam has

made commitments which are similar to the commitments to the WTO However,

the BTA has been in force since 2001, a number of commitments under the BTA

began to take effect According to BTA, U.S enterprises currently are able to invest under the form of 100% foreign capital in Vietnam

Vietnam's commitments to the WTO in the tourism service sector will make Vietnam's tourism enterprises to survive and exist either in a professional way, or withdraw from the market by reason: (1) start to have the competition of enterprises

in Vietnam with foreign invested travel firms (100% foreign owned, joint ventures, branches) in receiving international tourists ( in-bound) and similar in distribution business hotel, restaurant, so service quality must be improved Because providers

of tourism services to foreign financial capacity is strong, professional with management skills, deep understanding of consumer behavior to international travel guests with outstanding compared to other providers of tourist services of Vietnam; (2) The commitments to WTO in tourism services has opened up huge opportunities for business travel customers to send out-bound and domestic travel business Specific commitments in commercial presence mode of the distribution market to import travel and tourist market for domestic tourism enterprises in the country; (3) from the above commitments, the business tourism industry in the country want to survive and develop must declare mission, quality policy and strategic and tactical business suit business environment

2.2.Micro environment analysis

2.2.1 Bargaining power of buyer analysis

Buyer/Customer is a competitive pressure which can directly affect the entire production and business activities of the sector in general and companies in particular Traditional customers and target customers of SUNTRAVEL are mainly