G1 00136 BUSINESS STRATEGY IN THE PERIOD OF 2010-2015 OF VIETTEL JSC - DEMANDS AND CHALLENGES CHIẾN LƯỢC KINH DOANH GIAI ĐOẠN 2010-2015 CỦA CÔNG TY CỔ PHẦN VIETTEL - NHU CẦU VÀ THÁCH THỨC

G1 00136 BUSINESS STRATEGY IN THE PERIOD OF 2010-2015 OF VIETTEL JSC - DEMANDS AND CHALLENGES CHIẾN LƯỢC KINH DOANH GIAI ĐOẠN 2010-2015 CỦA CÔNG TY CỔ PHẦN VIETTEL - NHU CẦU VÀ THÁCH THỨC

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

| BUSINESS STRATEGY IN THE PERIOD OF

HANOI, 2010

CONTENTS

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1.2.2 External environment anaÌyS1S . c c1 ện 17

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CHAPTER 2: OPERATION ANALYSIS OF MILITARY TELECOM

CORPORATION (VIETTEL) POST JSC St S2 ssekrerrseree 26

2.1 Introduction to Viettel Post JSC ng ghe 26 2.1.1 General IntrOUCLIOI c1 vn s TT HH Hh 26 2.1.2 Features Of pOSL S€TVIC€ SŒC[OF Sàn ng ng nh ket 29

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2.1.2.4 The stability of the growth speed che, 27 2.1.2.5 The market being a hard saturatiOn -.- c2 ssssssseeseesrs 30 2.1.3 Some points on activities of Viettel Post from 2006 to 2008 30

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2.1.4.2.1 Competition level I its Internal seCtOr . .‹ - 34

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OPENING THE URGENCY OF THE PROJECT

The project "Business strategy in the period of 2010 - 2015 of Viettel JSC - Demands and Challenges” was inspired due to the following requirements:

Firstly: "Every day I can hardly achieve anything However, there is one job that | can never complete, which is to build plans for the future." That saying of an American largest corporation's president — Mr General Motors - has firstly clarified the reason for our strong passion for this thesis That business strategy construction is ever a constant renewal demand for each enterprise Each enterprise, if ever

considered a person hiking in the woods without a clear mandate, would only to find a

way to go The more he is going, the more he is getting lost Strategy management helps organizations, enterprises clearly defined goals, directions, map out the way and reasonable allocation of resources optimally to ensure that they would travel to the target in a specified time Viettel Post JSC is not out of those needs

Secondly: Viettel Post Joint-Stock Company was actually a Limited Company which is a member of the State Postal Viettel (Viettel Post), belonging to the

Corporation Viettel - Department of Defense (Viettel), has been equitized in July

2009 During this transition, building business strategy after equitization is an urgent requirement for Viettel Post JSC, deciding the survival of the transferred business

operating under the new mechanism to meet the demands of shareholders

Thirdly: The construction and strategic management of Viettel Post JSC were

to meet the demands of Viettel development In the course of its development, Viettel Post JSC still was required to follow the strategic development of Viettel "becoming the leading postal and telecommunications enterprise in Vietnam as well as in the worldwide market The construction of business strategy to help Viettel Post JSC realize the vision and mission of itself lying in Viettel development direction became

urgent than ever

THE OBJECTIVES OF THE PROJECT

Facing the urgent demands mentioned above, our implementation of the project aims to the following purposes:

Firstly: To clarify the matters relating to strategy and strategic management in production and business activities In addition, together with systematizing knowledge

of strategic management, our thesis is also doing research on the influence of political and cultural factors upon the construction and implementation of business strategy

Secondly: Basing on the science of strategic management which has been

studied, the thesis is focusing on the complete analysis of a comprehensive business aspect of Viettel Post JSC from 2006 to 2008 to determine business objectives and development strategies appropriate for these enterprises after equitization

Research Methodology

To implement the objectives of the thesis set out:

In terms of methodology, we, authors, mainly based on the theory of strategic management and strategic management experience in Viettel Corporation (Viettel)

and Viettel Joint Stock Company in timebeing On that basis, combining with specific business environment, the writers have built business strategy in the period of 2010 —

2015 for Viettel Postal Corporation as well as set out a system of solutions to successfully implement the strategy

With logical solution as such, authors mainly use statistical and analysis methods, which is to evaluate the operation of Viettel Post JSC in the period of 2006-2008 and

to analyze the strengths, the weaknesses, the opportunities and the challenges of this enterprise, from which later on to set out appropriate strategy for the period of 2010-

2015

THE STRUCTURE OF THE PROJECT

Consistent with the meaning, purpose and research mentioned above, the project is structured into 03 chapters with the main contents as follows:

Chapter |: The scientific basis of strategies and strategic management in business activities of enterprises

Chapter 2: Status of the strategic management of Viettel Post JSC in the phase of 2006-2008 The existences and requirements for a renovation

Chapter 3: Some solutions improving management strategies and building business

strategies in the phase of 2010-2015 of Viettel Post JSC

WTO : World Trade Organization

SYMBOLS AND ABBREVIATION LIST

: External Factor Evaluation

: Voice over Internet Protocol

: Viettel Post JSC

CHAPTER | FUNDAMENTAL BASIS ON STRATEGY AND STRATEGIC

MANAGEMENT

1.1 STRATEGY AND STRATEGIC MANAGEMENT

1.1.1 Definition on strategy

The most common thing for any business to do when starting up their business

is setting goals to achieve in the long term However, in order to achieve that goal,

managers need to set up variety of measures and actions, in other word, managers

must build a specific business strategy

Currently, there are many definitions on strategy, and based on different

person’s point of view, there are somewhat different in definitions

According to Chandler,one of those who initiated the first strategic

management theory, strategy is "to identify goals, long-term basic purpose of the

business and applying a sequence of actions as well as the distribution of resources

necessary to implement this goal"”

In 1980, Quinn Glass has introduced a more general concept: "strategy is a

pattern or plan integrates major goals, policies, and action sequences into a cohesive

To have a multi-facet definition on strategy, Mintzberg had generalized aspects of

strategic management into five Ps, including:

- Plan: the action sequences have a consistent plan;

- Partern: being consistent behavior over time, may be intended or not intended;

- Position: match between the organization and its environment;

- Perspective: ways to view the world;

- Ploy: specific way to deceive opponents

' Chandler, A (1962) Strategy and Structure Cambrige, Massacchusettes MIT Press

” Quinn, J., B (1980) Strategy and Change: Logical Inscrementalism Homewood, Illinois, Irwin

* Johnson, G., Scholes, K (1999) Exploring Corporate Strategy, 5" Ed.Prentice Hall Europe

In addition, the strategy is defined by nature, of three level strategies: corporate level, business level and functional level Currently, with the trend of globalization, companies are fast diversifying their activities beyond national borders, thus global strategy always be the first economic choice upon internationalize

However, in our opinion, strategies should be defined as means or as an explanation about the direction for business to meet its objectives in the long term 1.1.2 Strategic management

1.1.2.1 Definition

Strategic management is the process of identifying the strategic objectives of the organization, building policies and plans to achieve its goals, and allocating resources for the organization to carry out those policies and plans

Strategic management is not only a science but also an art, through which managers plan, organize the implementation, control and evaluate business decisions

in order to achieve long-term business goals

With this concept, strategic management including continuous actions:

environmental analysis (internal and external); strategic building; strategy

implementation; and strategy testing and evaluation

Strategic management is the origin of business policy, strategic management

and must integrated with long-term planning strategy However strategic management

is not only interested in the integrated functions within the same policy but also focus more on the environment and strategy.” Therefore, the term strategic is used rather

than business policy."’

1.1.2.2 Tasks of Strategic Management:

Strategic management has 5 closely inter-related with each other, including:

Building scenarios of the future business, stating where a business is heading and where it wants to be?

Set goals — turn scenarios into concrete results that businesses must achieve;

Building strategies to achieve desired goals;

Implementing and managing strategy effectively and efficiently;

*R.E Hoskisson, M.A Hill, W.P.Wan, and D.Yiu, (1982), “Theory an Research in Strategic Management:

Swing of the Pendulum”, Journal of Business Vol25, No.3, pp 417 — 456

9

Evaluate performance and _ initiate adjustments on _ scenarios, long-term direction, goals, strategies or implementation based on experience, conditions for change, ideas and new opportunities

1.1.2.3 Benefits of Strategic Management:

Many studies showed that, if applied strategic management, business will achieve better performance compared to firms not implementing this process’ If achieve the appropriate environment for business strategy, structure and processes then it will

create positive effects on performance of the business’ Practically the benefit of

strategic management has been tested extensively and can be summarized into the

most basic points as following:

- Make clearer vision of business strategy;

- Focus more on the significance of the strategy;

- Improve awareness of the rapid changes of the environment.’

However, to have effective management strategies, there will always be a process of answering three questions: Where are the Enterprise?, Where is it heading?

How to get there?

1.1.3 Strategic management model

1.1.3.1 Strategic management process

Until now, scientists and managers have proposed several strategic planning models However, in general, strategic planning process can be divided into five steps, including:

Step 1 Selected mission and main objectives of the enterprise:

Mission presented by the existing management of the business and direction to what it will do The main objectives determine what companies hope to meet within the

medium and long term

Step 2 External environment analysis to identify opportunities and challenges:

External environment has three types of relationships closely link together: the industry, the country environment and macro environment

Industry analysis is evaluating the competitive structure of industries, including the competitive position of the business focus, the main competitor as well as the development stage of the industry

Country analysis to examine the national context of the country in which enterprises are operating, and its favorable conditions as well as difficulties affecting the operation of enterprises

Macro-environment analysis includes examining the macroeconomic, social, governmental, legal, international and technological factors that can impact business

Step 3 Environmental analysis is to identify the strengths and weaknesses of the enterprise:

The environmental analysis will find how to achieve business competitive

advantage, and the role of different capacities, resources and ability to create and

maintain sustainable competitive advantage for business

Step 4 Selection strategies based on the search for resources, capabilities and core

capabilities and develop it to take advantage of the opportunities and

strengths, solving the challenges and weaknesses;

Step 5 Implementation strategy

When companies have chosen to achieve strategic objectives, the strategies that

need to be put into execution Within this topic, the implementation of strategies is

divided into four parts, including: (1) building appropriate business structure, (2) building control system; (3) create a match between strategy, business structure, and control systems, (4) control conflict and change

1]

Organizational Ly Matching strategy, |_| Control building

structure and control

Ỷ

Strategic

Figure: 1.1 Strategic planning model

1.1.3.2 Strategic system in company

1.1.3.2.1 Mixed strategies

Mixed Strategy allows companies to increase control over the distributors, suppliers or competitors

The strategic combination includes:

(1) Forward Mixed strategy: a strategic increase ownership or control over the distributors or retailers (franchises to expand product distribution and services)

This strategy is used when current distribution system has low confidence or weak to enjoy the advantages of economic scale; high profit rate from the distribution

operation

(2) Backward combination strategy: is the strategy to increase the possession

or controlling over suppliers aiming to sourcing stable, competitive price input This

strategy is applied when current suppliers are too weak, unreliable, inability to meet

the production demand of the business and the profit rate from the intensive supply

(3) Horizontal combination strategy: is the strategy to seek for the possession or controlling over competitors through A&M, buy-back 1n order to achieve profit from the massive scale This strategy works when the enterprise is able to monopolize an industry or a business sector; or in a hard competition and the industry is aggressively developing; or when the competitor faces difficulties of weak management, short of resources which the enterprise has currently been possessing

1.1.3.2.2 Specially intensive strategies

Specially intensive strategies are those to strengthen the position of the

enterprise with the current products

Specially intensive strategies including:

(1) Market Penetration strategy: this strategy works through measures like increasing sales staff, advertising cost and promotion aiming to enhance the market share of a current product or service within a defined market This strategy is applicable when the defined market capacity has not been reached the saturation and

the room for product or service is still available; market share of competitors go down but the total industry sales goes up

(2) Market development strategy: the strategy related to deployment of a current product or service into a new market or geographical area The strategy

application is when the enterprise is able to research and penetrate the market,

especially, oversea ones; the production capacity of enterprise has not been fully put into operation and the distribution channel in the new market is reliable, good quality,

at a due cost

(3) Product development strategy: through investment for research and developing

activities, the enterprise is capable to launch newly improved products from current ones This strategy is used when product is about or in the saturation phase (the product is reaching

to the end of product life cycle); enterprise is operating in fast growing industry with high rate of technological application and hard competition

1 1.3.2.3 Business expansion Strategies

Business expansion strategy is the activities of enterprise to diversify its

business including the following:

(1) Diversified unanimous activity strategy: is the strategy to add more relative

or interactive products or service to current ones of the enterprise This strategy is applied when product reach the end of its life cycle and the industry growth rate is low; the new relative product which is incorporated with old one is supposed to improve the sales of enterprise

(2) Horizontally diversified activities strategy: is the strategy to explore from current customers through providing new and separated services or products This strategy 1s applicable when the turnover from current product dramatically increases

with the presence of newly separated product; the competition in industry is high and along with low rate of growth or even zero; the current distribution channel is able to

serve current customers

(3) Mixed diversified activities strategy: is to promote new and separated products or

services This is used when the industry growth rate is zero or downward; the market is saturated with product or service provided by enterprise; enterprise is affordable and

manpower-capable to buy-back or intrude into a new industry

1 1.3.2.4 Other strategies

In practice, the enterprises can define some special strategies as following:

(1) Joint venture: is the strategy to build up a new business or an association

from 2 or more origin enterprises to increase the capital, investment opportunity, new market penetration, risk dissemination Some popular joint venture types are: research and development joint venture, crossed product distribution contract, crossed

franchise contract This strategy is applied in highly return projects requiring huge

capital, management and other resources that a single enterprise cannot afford;

enterprises are confronting difficult competition or risk dissemination (especially for joint venture between local and international company); deploying or introducing a new technology

(2) Operation reduction: is the applicable strategy in case of reduction of profit

and sales due to the weak operation of one or more affiliates The enterprises usually use some of the following methods: controlling and cutting cost, eliminating unprofitable business, automating production line This strategy is used by the least Competitive enterprise of an industry; enterprise that use over-speed strategy which cannot be curbed and ineffective so they need to be restructured

(3) Operation partial cut: it can be considered as a part of operation reduction This strategy’s purpose is to eliminate unprofitable or unsuitable business for enterprise's operation This strategy is applied when enterprise pursues operation reduction strategy bui the timprovement process fails and no positive result; the enterprise has selected the core business; enterprise needs capital but no other source

other hand, the moment enterprise starts to share its resources to many goal is the best time for the attack of other competitors

1.2 CONTENTS OF BUILDING BUSINESS STRATEGY

1.2.1 Defining the business target

All enterprises has to define their own business target, in other word, they have

to find out their own target for existence A good business must be built on the basis

of research, factor analsys (internal and external factors), and effects (direct and

indirect) to business operation A business target must cover following contents:

development strategy, business philosophy, target customers and market, core products and service, applicable technology, profitability, competitiveness, social responsibility, necessary resources to achive target

1.2.2 External environment analysis

In order to keep the business strategy highly feasible, after evaluating the business target, the enterprise must analyze, evaluate the effects from outside to defined target The following features of the outside factors should be considered:

- These factors have a strong and long-term effect on business operation while the enterprise cannot manage them;

- These factors give different direction and effect from business to business, industry to industry;

- Any change among these factors may affect business’s internal environment factor

- These factors can provide direct or indirect effect to business’s operation through

relationship with other outside factors

1.2.2.2 Cultural and social factor

Cultural and social environment includes the standards and values acceptable to

a specific geography, country or civilization In general, the social and cultural transformation is later than other factor groups and influenced by other factors from

the external environment

1.2.2.3 Politic and legislation factor

This group includes politic institution, viewpoint, policy dominated by the current administration machinery, legal system, politic and external relations trend

etc A switch by this group is fully capable to bring about potential opportunities to

entrepreneur, also imposed challenges to the implementation of the set forth business

targets

1.2.2.4 Technological factor

Amidst the rapid evolution of science and technology, the technological factor

is considered as the most dynamic as well as the most unstable among the affected factors from the external environment The progress of science and technology will decide services, products’ recycle, business strategy and the implementation of long

term targets set forth by entrepreneur

4.2.2.5 Competitive factor

Base on the public benefit assessment, the competition is a driving force

toward the development However, this factor is also a biggest challenge for any entrepreneur to overcome everyday To sustain competitive advantage, necessary classifications of competitors are to be conducted by manager following different displays as influence and competitive level etc by the way, an appropriate

competitive strategy is draw up Though of conducting different classification, managers have to identify and understand their competitors before the competitive strategy to be made

1.2.3 Internal environment analysis

Each entrepreneur has its own strengths and weaknesses due to its essential features The analysis process of the strengths and weaknesses will help managers evaluate precisely entrepreneur in term of quantitive and qualitative resources So, they can work out plan to mobilize, distribute and utilize efficiently these resources in implementing the set forth business targets

1.2.3.1 Management

Planning work is associated with estimation work, target design, strategy development and appropriate strategy selection It is a fundamental to develop a strategy, also a direction for the implementation and evaluation of the strategy

Organizing is understood of a process to distribute work in appropriate parts, sections

and arrange personnel to positions through the identification of the link between responsibilities and obligations toward the effective cooperation

Supervision is a final function of the management work The supervision is mainly

involved in the phase of strategy evaluation within the overall process of the strategy

that all works include product, price, distribution channel, promotion, customer,

competitor and internal evaluation are closely linked with marketing In other words, good marketing also means there are potential opportunities for entrepreneur to

implement and develop well the set forth business strategy

I.2.3.3 Finance and Accounting

Financial factor is presented on financial indicators that are considered as a best

solution on competitive assessment, also a fundamental to work out investment

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decision by investor and entrepreneur as well Financial indicators present entrepreneur’s readiness level and financial capacity to projects to be invested following the business strategy On the other hand, these factors also reflect enirepreneur’s power to other entrepreneur and competitor

1.2.3.4 Information system

Information system plays a key role in the whole strategic management process At different stages of the strategic management, information sources are often

seen as a fundamental toward management decisions Information research is not only

necessary for different levels of strategic management, but also a compulsory work for the entire staff in an entrepreneur This work imposes a critical demand in conducting the process of information collection, analysis and exchange in a logic manner within the internal entrepreneur

1.2.3.5 Internal supervision

Internal supervision which is often associated with other factors within the

internal entrepreneur, also seen as a fundamental to identify the strength and the weakness In order to conduct internal supervision, a series of indicators raised by

managers those are linked with management, marketing, finance, capacity, workforce,

products quality, services In addition, some entrepreneurs establish a full-time unit

of internal supervision with staffs being well trained on management

1.2.4 Process on analysis and strategic selection

1.2.4.1 Input stage

-External factors evaluation matrix (EFA) is designed to evaluate external factors

how to affect entrepreneur The EFA matrix development is based on the following steps:

(1) Listing out external factors that play a key role toward the success of an

entrepreneur

(2) Identifying the importance of the factors through classification level from 0 to

1 (in which 0 - unimportance and | — most importance)

(3) Evaluating entrepreneur’s response to listed-out factors is followed marking point from | to 4 (in which 4 — strong response and | — weak response)

(4) Multiplying the importance of each factor to identify marking point for

entrepreneur

(5) Adding all factors’ marking point to identify important marking point among the total The important marking point among the total is maximum at 4 and minimum at 1 The total medium marking point is 2.5 The total important marking point under 2.5 presents the entrepreneur’s weak response against external factors’ changes The total important marking point above 2.5 presents the entrepreneur’s fairly-well response against the business environment

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Figure 1.2 Process on Strategic selection (Source: Fred R David —Definition of Strategic Management)

-Internal factors evaluation matrix (IFE) is designed to identify the strength and the weakness of entrepreneur The IFE matrix development is nearly as same as the EFE matrix development However, there is a little different through replacing

factors evaluation by the strength and the weakness evaluation

-Competitive image matrix is seen as the most importance among business events and environment trend that probably have impact on the development of

entrepreneur’s strategy The competitive image matrix is used to identify main competitors with their strength and weakness

1.2.4.2 Combination stage

There are different tools to be used at the combination stage Each tool has both advantages and limits However, the popular tool used by entrepreneur is SWOT matrin

The SWOT matrix helps entrepreneur to list out strategies in line with its Strengths, Weaknesses, Opportunities and Threats However, it does not mean all

strategies based on SWOT matrix, are being implemented by entrepreneur later The SWOT matrix analysis process is developed on the following steps:

(1) Listing out huge opportunities and threats affected by external environment as well as identifying the strengths and the weaknesses of entrepreneur

(2) Combining the internal strengths with the external opportunities to develop the

strategy

SO strategy: Bringing into | WO strategy: Overcoming

full play the internal | the entrepreneur’s Opportunities strengths to make use of | weaknesses by making use

opportunities affected by | of convenient opportunities external environment

ST Strategy: Taking | WT strategy: Minimizing advantage of the internal} the threats affected by

Threats strengths to overcome | external environment and

threats affected by external | overcoming the business environment weaknesses

Table 1.1 SWOT Matrix Model

1.2.4.3 Decision stage

1.2.4.3.1 The OSPM matrix utilizes the collected information by the input stage to evaluate the strategies’ feasibility by the combination stage In other word, the QSPM matrix provides scientific essentials in making quantitive analysis of different strategies By the ways, manager's vision becomes more objective, more accuracy before making out strategic decisions

The necessary steps to develop the QSPM matrix:

(1) Listing out external opportunities and threats as well as the entrepreneur’s strengths and weaknesses Identifying the importance of each factor following the level of marking point from | to 4

(2) Selecting the strategies underlined by the combination stage Evaluating each strategy based on opportunities, threats, strengths, weakness factors following

the level of marking point from | to 4

(3) A total mark of each strategy is accumulated between the mark of importance evaluation on each factor and the mark of strategy evaluation

1.2.4.3.2 The GREAT matrix is rather popular to be used in making analysis of strategic management, competitive strategy GREAT allows the strategy to be selected

on the basis of factors’ influence rate °

Entrepreneur’s culture is combined of value, belief, custom, interact attitude

which are recognized as its own standards These features always attach a high

stability and human being implication Therefore, confronting with tremendous transformations that probably change standard belief and value, members will have

clifferent reaction in somehow with a view to maintain or re-stabilize old cultural

* McGraw, (2007) Strategy Sydney, Hill Company

arrangement Since the cultural side, entrepreneur`s culture presentS posItIVely as it is reflected the great unity and the strengths of entrepreneur

A strategy change or new application is an enormous Issue In many cases, the business strategy becomes ieasible when it is developed on the basis of analysis and evaluation in line with the existing entrepreneur’s culture Since the cultural side, entrepreneur’s culture does not present positively and becomes a hindrance to the development Therefore, meanwhile planning and conducting the strategy, manager should not depends absolutely on the existing cultural values, it would be for manager

to change and shape up the existing cultural values in support for the business strategies to be exercised soon

1.2.5.2 Political side

Within this research, the political factor is mentioned as an individual alliance for the negative purposes For this meaning, political factor is always considered as

barriers against to working out strategy-related decisions

Political factors always exist objectively in entrepreneur Therefore, handling

political factors is always apart in the strategy management There are various

solutions to minimize negative impact from political factors However, the most essential that manager knows how to gather and bring into full play the strengths of all

internal resource, especially the human resource

CHAPTER 2 OPERATION ANALYSIS OF MILITARY TELECOM CORPORATION

(VIETTEL) POST JSC PERIOD 2006-2008

2.1 Introduction to Viettel Post JSC

2.1.1 General introduction

Previously, it was an entrepreneur belongs to the military telecommunication group Currently, it has been transferred into a joint stock company since July 2009,

known as Viettel Post JSC with the development records as follow:

- 1 July 1997, establishing the newspaper delivery agency belongs to the military electronic-telecom company that was functioned on providing newspaper delivery services for organs belongs to the Ministry of Defense and Hanoi’s military

Viettel Post Organizational Structure:

F—— ——¬

MANAGEMENT BOARD

Vv

LEVEN INFRASTRUCTURE

AREA 1 AREA 2 AREA 3 AREA 4

HA NOI DA NANG HCM CAN THO

The Viettel Post JSC organizing chart has been restructured in line with the equalization process

Figure 2.2 Structure of Viettel Post JSC

Currently, Viettel Post JSC has been providing the following services in the

nationwide and Cambodia market:

-Express delivery both at home and abroad;

-Newspaper delivery;

-Stationary supply;

-Telecommunication authorized dealer;

-Insurance authorized dealer;

-Public transportation in Cambodia (since August 2009);

Toward a convenience on analyzing this research, Viettel Post JSC’s services is

categorized into 4 groups as express service, newspaper delivery service, foreign- based service and others (stationary supply, telecommunication dealer )

The Viettel Post JSC’s stakeholders congress is determined Viettel Post JSC’s target

after 3 years of being equitised (period 2010-2012) that Viettel Post JSC will become

a leading provider in delivery service, obtain revenue of VND 1 trillion and extend its service network to 100% administrative organs at district level by 2012

2.1.2 Features of post service sector

Post sector-related products are often traditional ones, seen as the most dynamic item among business services They are both of consumption and production Services

Post-related products are consumption services when they meet the daily life communication and information demand Post-related products are production services when they involve in the production, circulation and transmission of information, service in support to the business

Post-related products are contained full general features of service products i.e immaterial, inseparable feature, production process parallels consumption process Beside these features, post-related products also have typical features as follow:

2.1.2.1 The popularity

Post-related services are influenced with high popularity Together with the

rapid evolution of technology, everybody can access and make use of post-related services Letter delivery service is a simple and essential example, also the most popular manner among the post-related services

load situations

2.1.2.4 The stability of the growth speed:

Difference from telecommunication services, post services have no

breakthrough Post services are boosted in tandem with socio-economic development

The progress of post sector is often parallel with the country GDP growth

2.1.2.5 The Market being a hard saturation:

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This is the second variance of the postal service in comparison to the telecommunications service, while as the latter has saturation point calculated by the ratio of subscription number over 100 inhabitants, the postal service always keeps on growing rate along with GDP growth but scarcely reach the saturation point

2.1.3 Some points on activities of Viettel Post from 2006 to 2008

2.1.3.1 Business Statement

7 |) Rotal assets Mil.VND | 107,128 | 75,318 100,408

2 | Ownership capital Mil.VND | 35.370 37,280 41,433

3 | Revenue Mi.VND | 91.178 | 175,124 | 240,472

5 Profit Before Tax Mil VND 4,194 | 3,537 9.619

Se ae a are

Table 2.1 Business Statement of Viettel Post from 2006 — 2009

(Resource: Business Plan in 2009 of Viettel Post)

- Total revenue of Viettel Post from 2006 — 2008 keeps on increasing year after year, however growth rate was unstable A

Total revenue of 2007 increased by 92% compared to 2006 in which revenue from delivery service increased by 63%, revenue from telecommunications service

agencies increased by 26 times The cause of this sudden growth is that year 2007 witnessed a boom in_ telecommunications service market, revenues of

telecommunications service agencies took a part from 1.39% of total revenue of

Viettel Post in 2006 changed to a risen number of 19.67% in 2007 Besides, the

expansion of delivery service supply from 23/64 provinces/cities, 132/659

districts/towns in 2006 increased to 63/63 provinces/cities, 265/659 districts/towns in

2007, which lead to increased in revenue of delivery service

” Refers to Table 2.1 Business Statement of Viettel Post from 2006 to 2008

Figure 2.3 Charts of service revenues of Viettel Post from 2006 - 2008

(Resource: Business Plan in 2009 of Viettel Post)

In 2008, the economy came to a recession stage, the delivery service (DS) still

could remain high growth compared to 2007 but showed declining signals (from 63%

to 50%), the telecommunications service started its saturation signs, income from

telecommunications service of Viettel Post decreased 0.26% over 2007, income from newspapers publishing service (NPS) only rised 5% (compared to over 13% of 2007)

Those factors caused the total revenue of Viettel Post a rise at 37% only compared to

2007

- Revenue Structure: delivery service still remains high ratio in total revenue of

Viettel Post (85% in 2006, 73% in 2007, 80% in 2008);

Fngure 2.4 Chart of revenue structure of Viettel Post’s services from 2006 — 2008

(Resource: Business Plan in 2009 of Viettel Post)

- Profit/Revenue ratio in 2007 only reached 1.45%, decreased over 2006

(3.31%), resulted from new policies of Viettel Post on increasing minimum salary

from 600,000 VND into 800,000 VND and deducting depreciation cost for the first

year on high investment costs on constructions

2.1.3.2 Service supply network

The expansion of service supply network is considered as the leading vital

factor for improving competitive capability of a postal enterprise For the past years

Viettel Post has non-stop expanded its distribution channel system domestically and

externally

By the end of 2008 service supply system of Viettel Post JSC has covered

63 63 provinces/cities, 396/659 districts/towns nationwide

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Table 2.2 Extension of service supply of Viettel Post from 2006 to 2008

(Resource: Final Report of Viettel Post for 2006, 2007, 2008) Viettel Post planned to expand its service supply expansion scale into 80% of

districts/towns in nationwide and supply service in Laos and Cambodia by the end of

2009

2.1.3.3 Delivery service Market Share

As the above analysis, from 2006 to 2008, revenue from delivery service took

the overwhelming high rate in total revenue of Viettel Post (85% in 2006, 73% in

2007, 80% in 2008) Along with the growth of revenue, market share of delivery

service of Viettel Post increased year over year, 7.3% in 2006, 9.4% in 2007, 12% in

2008 and promised to keep on increasing in the following years

Revenue of delivery service Bil VND 1.952 2.444 3.130

Revenue of domestic delivery | Bil VND 1.070 1.344 1.595

service

Revenue of delivery service of | Bil VND Wil 126,9 191,6

Viettel Post

Market share of delivery | % 7,3 9,4 12

service of Viettel Post

Profit Before Tax Bil VND 4.194 3.537 9.619

Table 2.3 Delivery service Market Share of Viettel Post

(Resource: Final Report of MIC in 2006, 2007 and 2008) 2.1.4 Assessment on present strategy

2.1.4.1 Mission and Vision

As the above analysis, on mission and vision of the enterprise, being one member enterprise under the Military Telecom Corporation (Viettel), Viettel Post is a

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