G1_00140 HOA SEN GROUP'S COMPETITIVE STRATEGY FOR THE PERIOD 2011 - 2015 CHIẾN LƯỢC CẠNH TRANH CỦA TẬP ĐOÀN HOA SEN GIAI ĐOẠN 2011 - 2015

G1_00140 HOA SEN GROUP'S COMPETITIVE STRATEGY FOR THE PERIOD 2011 - 2015 CHIẾN LƯỢC CẠNH TRANH CỦA TẬP ĐOÀN HOA SEN GIAI ĐOẠN 2011 - 2015 COMPETITIVE STRATEGY: A CAPSTONE PROJECT OF HOA SEN GROUP, IN BINH DUONG PROVINCE, VIETNAM by Thoai Quang Tran Huy Ngoc Nguyen Nhan Le Thi Ai Dung Tri Pham

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GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

HOA SEN GROUP’S COMPETITIVE STRATEGY

FOR THE PERIOD 2011 - 2015

Group No.: 5 Student’s name:

THOAI QUANG TRAN HUY NGOC NGUYEN NHAN LE THI Al DUNG TRI PHAM NGHIA TRONG NGO

HA MANH NGUYEN

HO CHI MINH CITY, 2010

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ACKNOWLEDGEMENTS

After a long time to study in the Master of Business Administration, learn and research the Hoa Sen Group to write this topic, our group has received guidance, help and suggestions from

teachers of Griggs University and the Educational Technology and Career Development Center - Hanoi National University

First, our team would like to thank Griggs University’s teachers and other universities in Ho Chi Minh City, especially with teachers who have taught us throughout the studying period We would like to send our gratitude to Professor - Soren Kirchner who |

help us to make our research more appropriate

By the way, our team would like to thank the program’s leaders have created favorable conditions for us to better learning and

completion of this course

| would like to thank to Mr Vu Phuoc Le , General Director,

Mr Chu Ngoc Tran , Vice General Director, Mr Hung Manh Pham , Planning Director for their help, support and co-operation to make this research in Hoa Sen Group

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REASSURE WORD

Our group commitment that the entire contents of this topic is because we ourselves have researched, surveyed, collected information

to perform this Capstone Project

Students who made this Capstone Project

Thoai Quang Tran

to Huy Ngoc Nguyen Nhan Le Thi Ai Dung Tri Pham Nghia Trong Ngo

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COMPETITIVE STRATEGY:

A CAPSTONE PROJECT OF HOA SEN GROUP,

IN BINH DUONG PROVINCE, VIETNAM

by Thoai Quang Tran

Huy Ngoc Nguyen

Nhan Le Thi Ai

Dung Tri Pham

Nghia Trong Ngo

Ha Manh Nguyen

A capstone project submitted in partial fulfillment of the requirements for the degree of Master of Business Administration

Professor Soren Kirchner

MBA Ha Thai Vu

Griggs University

USA Nov 2010

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ABSTRACT Hoa Sen Group, Established on Aug 08'" 2001 with the present turnover of $

47 billions Hoa Sen Group basically developed on the mother — subsidiary companies, orienting to the target to become the strong & stable economic group on the fields of iron — steel building materials, real-estate, financial investment marine port & logistics

Together economic development, the Vietnamese steel industry has developed and the Vietnamese steel market becomes fiercely competitive The reality has proved that without a right development strategy, a company is most likely to head into unavoidable traps, resulting in stagnant business or even bankruptcy The company is facing the question of how to protect its leading position in the market, to withstand in the market and cope with constant changes in

the business environment as well as to increase market share

This research deals with the formulation of competetive strategies for Hoa Sen Group in Viet Nam Thus, it is necessary to analyze external factors, operating factors including political factors, economic factors, social factors, technological factors, competitors, suppliers, customers, Intra-industry competition to identify Opportunities and threats in business environment in which the Group operates moreover, the analysis and assessment of hoa sen group’s internal factors such as brand name, distribution channel, technology, production process, price policy, marketing activities., human resource, financial resource, production costs need to discuss to find out its strengths and weaknesses Following the analysis the Opportunities and threats as well as strengths and weakness, the competetive strategies and solutions also are formulated to achieve Hoa Sen Group’s objectives

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‘PART I: THEORETICAL FRAMEWORK OF COMPETETIVE 4

STRATEGY

‘Il THE BUSINESS VISION 4

1 Identify current tasks, objectives and strategies of the organization 5

| COMPANY GENERALINFORMATION, sss 6

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5 Strategic Objectives NàNHHHaa 20

L4 Hoa Sen Group Organizational Structure (HGS's Business Lines) | 30 -

|5 Listof members oftheCompay =s—(<i‘ ‘(a até‘ !!”!t*dSCS 30 —

ie 6 3 Considering the age structure ofLabor i (atti (tsti(‘Sé*rCOC; 3 3 x

WEAKNESSES

ie L 5 HSG Business’s Report in 2 years’s Evaluation 4]

‘IM, EXTERNAL ENVIRONMENT ANALYSIS - OPPORTUNITIES AND | 57

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2 The overall objective

1 Concentrated Growth Strategies of Hoa Sen Group 104

Ill EXAMINATION ANDEVALUATION ~ 17

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“Appendix 04: Hoa Sen Group’s present value chain Ô 37 ¿

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Association of Southeast Asian Nations AuViet Seccurities Corporation

Bureau Veritas Quality International Competitive advantage

Consumer price index

Competitive Profile Matrix

Dept/Equity Dead weight tonnage Earning Before Interest and Tax External factor evaluation Enterprise Resource Planning Environmental stability Foreign Direct Investment Financial strength

Gross domestic product Hot Galvanized Iron (Hot Dip Galvanized Iron & Steel Strip) The Stock Exchange Symbol of Huu Lien Asia Joint Stock Company

Corporation The Stock Exchange Symbol of Hoa Phat Group Joint Stock Company

The Stock Exchange Symbol of Hoa Sen Group

Internal factor evaluation

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Information technology Japanese Industrial Standard

Joint Stock Company The Stock Exchange Symbol of Produce and Trading Metal Join Stock Company

Symbol for kiloampere

Number Non — Oxidizing Furnaces/ Non — Oxidizing heating Furnaces The Stock Exchange Symbol of Nam Vang Corporation

Official development assistance Political - Economic — Social — Technological factor Price-to-Book ratio

Price to Earning ratio

The Stock Exchange Symbol of PhucTien Joint Stock Company

Quantitative Strategic Planning Matrix Reseach & development

Return On Assets Return On Equity The Stock Exchange Symbol of SMC Trading- Investment Joint Stock Company

Strengths — Opportunities Strategic Position & Action Evaluation The Stock Exchange Symbol of Steel Structure Manufacture Joint Stock Company

Southern Steel Sheet Limited Company Strengths — Threats

Strengths - Weaknesses - Opportunities - Threats

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United State American United State Dollar Value Added Tax The Stock Exchange Symbol of Vietnam Germany Steel Pipe Joint Stock Company

The Stock Exchange Symbol of Vietnam - Itaty Steel Joint Stock Company

Viet Nam Dong

VietNam Rubber Corporation

Vietnam Steel Corporation

Weaknesses — Opportunities

Weaknesses — Threats World Trade Organization

Pre-Painted Galvanized steel sheet

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Figure 1.3.4 | The principal needs analysis on competitors L5

Figure 2.1.1 | Image of a typical product of Hoa Sen Group 34

Figure 2.2.1 Hoa Sen Group’s galvanizing steel production 47

technology

Figure 3.2.2 | SPACE’s matrix of Hoa Sen Group 00

Figure 3.2.3 | Grand strategy matrix of Hoa Sen Group IÚI

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lable 2.1.3 | Structure of human resources under the age of Labor 33

Table 2.2.6 | The basic financial ratios of companies in the sector in 43

2009

lable 2.2.7 | Comparison criteria for production cost of Vietnam steel 53

industry

lable 2.3.2) | Viet Nam GDP growth rate in recent years 6&8

lable 2.3.7 Í-EFÍ- matrix of Hoa Sen Group `

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projects that have been approved

lable 2.4.3 Factors that show Hoa Sen Group's scope of business x |

lable 2.4.4 | Commodity market development plated corrugated 88 lable 34.5 | Competitive profile matrix of Hoa Sen Group (CPM 69

Matrix)

lable 3.1.1 forecast the needs in use steel to 2025 year 05 lable 3.1.2 | Development plan the manutacture ingot steel to 2010 94

lable 3.2.3 | Strateies proposed at each matrix of Hoa Sen Group 103

lable 3.2.4 | QSPM — Concentrated Growth Strategies of Hoa Sen 104 fable 3.2.5 | QSPM - Integrated growth strategies of Hoa Sen 105

lable 3.3.1 | Indicators measure the strategic objectives and action} 119

plans

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Chart 3.1.3 | Hoa Sen Group `s emplovees through the vears 32

Chart 2.2.2 | Hoa sen group’s revenue through the years 1Ì

Chart 3.2.3 | Hoa sen group’s income through the years 42

Chart 2.3.1 | The situation of production and consumption of rolled 64

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INTRODUCTION

Vietnam’s WTO accession has been a great landmark in the economy A lot

of opportunities have been opened for several potential entrepreneurs who can prove their wisdom in investment and research to take advantage of them However, there are always co-existing threats and risks to bring trouble to enterprises without well considered counter-measures With an increasingly fierce competition in the market, every company should equip itself with effective competitive strategies to assure a sustainable and strong development A company with proper business Strategies deploying its own resources to make use of opportunities from outside

environment or avoid risks and overcome its weaknesses will totally be able to

compete and sustain in the market

Competitive strategy is a special plan that every organization must set out For an enterprise, planning competitive strategy is the first function in the management system to achieve its targets This process must take into consideration several objective factors of the business environment as well as subjective ones of the organization, analyze information to provide a basis for business operations in

short term and long term, direct efforts and resources to main targets in the most

effective way, respond to certain situations and adapt to changes

After 8 years of developing, from a company with a chartered capital of 30

billions dong, Hoa Sen Group (HSG) has become the leading manufacturer of

galvanized steel in Vietnam In 2009, Hoa Sen Group continued to consolidate its top position in the industry with a market share of 29%, a sharp increase in comparison with a figure of 21% in 2008, which is by far above other businesses in

the industry

With a nearly closed production process of plated steel, Hoa Sen Group can proactively enhance its value added chain of all stages: material import, production, distribution and retail of galvanized steel sheet, pre-painted galvanized steel sheet,

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zinc- aluminium alloy coated steel sheet pre-painted Aluzinc steel sheet black steel pipes, purlins and dominate in low production costs

Hoa Sen Group has been currently searching for a proper way in line with the market economy In the beginning years of the market economy, Hoa Sen Group has gone through a few experiences, with both successes and failures to obtain the achievements as today It is also a typical example of the role of business strategy The reality has proved that without a right developing strategy, a company is most likely to head into unavoidable traps, resulting in stagnant business or even bankruptcy Therefore, in order to withstand in the market and cope with constant changes in the business environment, Hoa Sen Group is required to build a business strategy applicable to different development periods That is the reason why we choose this topic “Hoa Sen Group’s competitive strategy for the period 2011-

2015” as our final assignment of the module

The member of group 5:

1 Thoai Quang Tran

2 Huy Ngoc Nguyen

The thesis “Hoa Sen Group’s competitive strategy for the period 2011-

2015” aims at these following targets:

- Indentify important opportunities and threats to the steel industry as well as the Company’s advantages and disadvantages

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- Qutline a competitive strategy for Hoa Sen Group in the period 2011-2015,

on which basis overcome its disadvantages and promote its advantages to make full use of business opportunities to maintain the sustainable and stable

development

1.2 The scope of research

Hoa Sen Group acts in some fields such as cement production and trading, real estate, production of galvanized steel sheet, pre-painted galvanized steel sheet, zinc-aluminium alloy coated steel sheet, pre-painted Aluzinc steel sheet, black steel pipes, purlins, etc However, Hoa Sen Group has determined galvanized steel as its key product from the beginning In order to develop Hoa Sen Group, a decent concentration on galvanized steel plays an essential role Moreover, every business

area of Hoa Sen Group has its own independent elements Within the limited timeframe, the research only focuses on the galvanized steel industry

2 Theoretical framework and method of research

- Theoretical framework: dialectical reasoning

- The method of research: using a combination of different methods like quantitative and qualitative methods, analysis, statistics, modeling, forecast and our knowledge to assess the whole business operations of Hoa Sen Group and set out business strategies for the Company

3 The structure of the essay

In addition to the introduction, conclusion and list of reference sources, the

main content consists of 3 parts:

Part 1: THEORETICAL FRAMEWORK OF COMPETETIVE STRATEGY Part 2; ANALYSIS OF HOA SEN GROUP

Part 3: HOA SEN GROUP’S COMPETITIVE STRATEGY FOR THE PERIOD 2011-2015

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PART I: THEORETICAL FRAMEWORK OF COMPETETIVE STRATEGY

l STRATEGY CONCEPT AND STRATEGIC MANAGEMENT

| Strategy concept

Strategy is the process of identifying long-term goals of the enterprise, or how to choose the direction and allocation of necessary resources to implement the objectives

2 Strategic management

Strategic management is the process: scan internal and external environment

of the organization at present and future:

- Establish goals and tasks should pursue

- Plan for implementing and supervising the implementation of strategies to help entrepreneurs to effective resources and their potential to achieve the desired objectives

ll THE BUSINESS VISION

The mission statement describes the company's business vision, including the unchanging values and purpose of the firm and forward-looking visionary goals that

guide the pursuit of future opportunities

Guided by the business vision, the firm's leaders can define measurable financial and strategic objectives Financial objectives involve measures such as sales targets and earnings growth Strategic objectives are related to the firm's business position, and may include measures such as market share and reputation

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Ý

Source: Fred R David

Figure 1.2.1: Model of Strategic Management

1 Identify current tasks, objectives and strategies of the organization

This is a reasonable starting point in strategic management because the current situation of the company can help eliminate some of the strategies, or even help select specific action Every organization has the tasks, goals and strategies,

even when these factors are not set or no formal communication

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2 Business mission

Business mission creates the priority, strategies, plans and assignment This

is a Starting point for establish the management especially in management structure

It allows the firm to have outline of direction and set up the targets

3 Research on business environment

Researching the activities of firm concentrate on identify and assess the tendency and events beyond of the sole firm It is divided two types: macrosscopic

and demonstrator environment

Il STRATEGY FORMULATION AND SELECTION

According to Fred R David, strategic management process includes three stages: strategy formation, strategy implementation and strategy evaluation

1 Long-term goals establishment

The long term goal expressed the expected results of the pursuit of that

strategy The strategy indicates the measures to achieve long-term goal The time frame for objectives and strategies must be consistent each other, usually from 2 to

5 years

Each target is often accompanied by a period and associated with some indicators such as growth of capital, revenue growth rate of consumption, the level

of profit, market share, extent and nature of the combination Longitudinal

2 Strategy formulation and selection

The process of formation and selection strategy consists of four stages:

2.1 Stage 1: Data input

This phase summary of basic information has been entered necessary for the formation of strategies During this period, we will build the matrix: Internal Factor

Evaluation Matrix External Factor Evaluation Matrix, the matrix evaluation

of external factors and Competitive Profile Matrix, The SWOT Matrix

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2.1.1 Micro environment of business

The Value Chain framework of Michael Porter is a model that helps to analyze specific activities through which firms can create value and competitive

Source: Michael E Porter

Figure 1.3.1: Value Chain model of Michael Porter

Inbound Logistics: Includes receiving, storing, inventory control,

transportation scheduling

Operations: Includes machining, packaging, assembly, equipment

maintenance, testing and all other value-creating activities that transform the

inputs into the final product

Outbound Logistics: The activities required to get the finished product to the customers: warehousing, order fulfillment, transportation, distribution

management

Marketing and Sales: The activities associated with getting buyers to purchase the product including channel selection, advertising, promotion, selling, pricing, retail management, etc

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- Service: The activities that maintain and enhance the product's value, including customer support, repair services, installation, training, spare parts management, upgrading, etc

- Procurement: Procurement of raw materials, servicing, spare parts, buildings, machines, etc

- Technology Development: Includes technology development to support the value chain activities, such as Research and Development, Process

automation, design, redesign

- Value Chain model of Michael Porter: Human Resource Management: The activities associated with recruiting, development (education), retention and compensation of employees and managers

- Firm Infrastructure: Includes general management, planning management,

legal, finance, accounting, public affairs, quality management, etc

From a Value Based Management point of view, the Value Chain Framework helps to build a relative competitive advantage, together with Porter's

Competitive Advantage thinking The Value Chain Framework can be seen as one

of two dimensions in maximizing corporate value creation The other value creation

dimension is the Market/Industry Attractiveness for which another model from

Porter is often used: the Competitive Forces model

2.1.2 Internal factor evaluation matrix ( [FE Matrix)

IFE matrix is one of the best strategic tool for internal audit of the company IFE is use for internal audit of functional area of business such as finance,

marketing, IT, operations,accounts and others depend upon the nature of business

and its size

Steps to develop IFE Matrix

| List key internal factors as identified in the internal audit process Use a total

of from ten to twenty internal factors, including both strengths and weaknesses List

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strengths first and then weaknesses Be as specific as possible, using percentages ratios, and comparative numbers

2 Assign a weight that ranges from 0.0 (not important) to 1.0 (all important) to each factor The weight assigned to a given factor indicates the relative importance

of the factor to being successful in the firm’s industry Regardless of whether a key

factor is an internal strength or weakness, factors considered to have the greatest

effect on organizational performance should be assigned the highest weights The sum of all weights must equal 1.0

3 Assign a | to 4 rating to each factor to indicate whether that factor represents

a major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating = 3), or a major strength (rating = 4) Note that strengths must receive a 4 or

3 rating and weaknesses must receive a | or 2 rating Ratings are thus company based, whereas the weights in Step 2 are industry based

4 Multiply each factor’s weight by its rating to determine a weighted score for each variable

5 Sum the weighted scores for each variable to determine the total weighted score for the organization

Total Weighted Score

The sum of all weighted score is equal to the total weighted score, final value

of total weighted score should be between range 1.0 (low) to 4.0 (high) The average weighted score for IFE matrix is 2.5 any company total weighted score fall below 2.5 consider as weak The company total weighted score higher then 2.5 is consider as strong in position

2.1.3 Macro environment of business

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Political Factors: Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must

operate

Economic Factors: Economic factors affect the purchasing power of

potential customers and the firm's cost of capital

Social Factors: Social factors include the demographic and cultural aspects

of the external macroenvironment These factors affect customer needs and the size of potential markets

Technological Factors: Technological factors can lower barriers to entry,

reduce minimum efficient production levels, and influence outsourcing decisions

A PEST analysis fits into an overall environmental scan as shown in the

Figure 1.3.2: Model of Pest analysis

2.1.3.2 External Factor Evaluation matrix ( The EFE matrix )

The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE matrix can be defined as the strategic tool to evaluate external environment or

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macro environment of the firm include economic, social, technological,

government, political, legal and competitive information

Steps in developing the EFE matrix

t2) Assign a weight to each factor, ranging from 0 (not important) to 1.0 (very important)

3 Assign a 1-4 rating to each critical success factor to indicate how effectively the firm’s current strategies respond to the factor (1 = response is poor, 4 = response is extremely good)

4 Miultiply each factor’s weight by its rating to determine a weighted score

5 Sum the weighted scores

Total Weighted Score

The sum of all weighted score is equal to the total weighted score, final value

of total weighted score should be between range 1.0 (low) to 4.0(high) The average weighted score for EFE matrix is 2.5 any company total weighted score fall below

2.5 consider as weak The company total weighted score higher then 2.5 is consider

as strong in position

2.1.4 Operational environment of enterprises

2.1.4.1 Porter’s Five Porces

To analyze operational environment (or micro-environment and environment sectors) of the enterprise, we apply the model in work force by Michael E Porter (1980) shown in the diagram below:

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SUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in

industry

Bargaining leverage -Exit barriers

Buyer volume -Industry concentration

Buyer information -Fixed costs/Value added Brand identity -Industry growth

Price sensitivity -Intermittent overcapacity Threat of backward integration -Product differences Product differentiation -Switching costs Buyer concentration vs industry -Brand identity Substitutes available -Diversity of rivals Buyers’ incentives -Corporate stakes

Figure 1.3.3: Porter's Five Forces

- Rivalry: In the traditional economic model, competition among rival firms drives profits to zero But competition is not perfect and firms are not

unsophisticated passive price takers Rather, firms strive for a competitive

advantage over their rivals The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences

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- Threat Of Substitutes: Substitute products are different products that can satisfy customers’ demand The main feature of substitute products is its unique specifications Similar substitute products are a competitive force

- Buyer Power: The following tables outline some factors that determine buyer power

"——————

Buyers are concentrated - there are a

few buyers with significant market

share

Producers threaten forward integration - producer can take over own distribution/ retailing

Buyers purchase a significant

proportion of output - distribution of

purchases or if the product is

standardized

Significant buyer switching costs -

products not standardized and buyer cannot easily switch to another product

Buyers possess a credible backward

integration threat - can threaten to buy

producing firm or rival

Buyers are fragmented (many, different) -

no buyer has any particular influence on product or price

buyers’ input - distribution of purchases

Source: http://www.quickmba.com/strategy/ Table 1.3.1: Some factors of Buyer Power

- Supplier Power: The following tables outline some factors that determine supplier power

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Significant cost to switch suppliers Credible backward integration threat by

- Barriers to Entry / Threat of Entry: Some of an industry's entry and exit

barriers can be summarized as follows:

Lasy to Enter if there is: Difficult to Enter if there is:

e Little brand franchise e Difficulty in brand switching

e Access to distribution e Restricted distribution channels

lasy to Exit if there are: Difficult to Exit if there are:

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:.1.4.2 Competitive Profile Matrix ( CPM )

CPM is an essential strategic management tool to compare the firm with the najor players of the industry Competitive profile matrix show the clear picture to

he firm about their strong points and weak points relative to their competitors The CPM score is measured on basis of critical success factors, each factor is measured

nm same scale mean the weight remain same for every firm only rating varies The est thing about CPM that it include your firm and also facilitate to add other competitors make easier the comparative analysis

IFE matrix only internal factors are evaluated and in EFE matrix external actors are evaluated but CPM include both internal and external factors to evaluate

‘verall position of the firm with respective to their major competitors

The competitive profile matrix consists of following attributes mentioned

lelow:

Competitors:

analan

quickly to competitors

+ Are Competitors satisfied with the current potition?

+ How are The ability of Competitors shift or change their strategy?

+ What are the weaknesses of competitors?

+ What stimulates the competitors react strongly and

in effectively?

Source: Michael Ek Porter

Figure 1.3.4: The principal needs analysis on competitors

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> Rating: Rating in CPM represent the response of firm toward the critical success factors Highest the rating better the response of the firm towards the critical success factor, rating range from 1.0 to 4.0 and can be applied to any

factor

There are some important point related to rating in CPM Rating is applied to each factor

° The response is poor represented by 1.0

° The response is average is represented by 2.0

° The response is above average represented by 3.0

ˆ The response is superior represented by 4.0

we

» Total Weighted Score: The sum of all weighted score is equal to the total

weighted score, final value of total weighted score should be between range

1.0 (low) to 4.0(high) The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak The

company total weighted score higher then 2.5 is consider as strong in position The other dimension of CPM is the firm with higher total weighted

score considered as the winner among the competitors

2.1.4.3 SWOT analysis

A scan of the internal and external environment is an important part of the strategic planning process Environmental factors internal to the firm usually can be

classified as strengths (S) or weaknesses (W), and those external to the firm can be

classified as opportunities (O) or threats (T) Such an analysis of the strategic environment is referred to as a SWOT analysis

The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates As such, it is instrumental in strategy formulation and selection The following diagram shows how a SWOT analysis fits into an environmental scan:

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—_

| Environmental Scan

SWOT Matrix

Figure 1.3.5: SWOT Analysis

2.2 Phase 2: General Strategic Planning

The tasks of this stage is the long-term direction for the business The strategy at this stage is oriented to next steps, including proposing specific strategies and selection strategies The technique used in this stage include: The SWOT

Matrix, price sensitivity/perceived differences, the Matrix range of activities - competitive advantage; Matrix number of competitive advantage - the value of

competitive advantage

2.2.1 The SWOT Matrix

To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed The SWOT matrix (also known as a TOWS Matrix) is shown below:

Opportunities S-O strategies W-O strategies

‘Th reats S-T strategies W.-T strategies

Figure 1.3.6: SWOT / TOWS Matrix

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- §-O strategies pursue opportunities that are a good fit to the company's strengths

- W-O strategies overcome weaknesses to pursue opportunities

- §-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats

- W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats

2.2.2 The sensitivity of pricing - the level of interest in Perceived Differences

This is a two-dimensional grid that focuses on the choice between reducing costs or building in more value to the customer Each of the four quadrants has different implications in terms of suggested strategy

Price Sensitivity /Perceived Differences

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Hh Price Sensitivily || High Price Sensitivily || Low Price Sensitivily || Low Price

Emphasize the quality

of your product, but be ready to respond to competitor product improvements that

or continue efforts

to differentiate your offering

Table 1.3.4: Analysis of Enterprise Position

Source: http www brs-inc.com models

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2.3 Phase 3: Formulation of the specific strategy

This phase concentrate on offering the feasible strategy which can have choise by arrange the combination of internal factors and important external factors Technique used in this phase includes strategy matrix, SPACE matrix and matrix of strength — weakness — opportunity — threaten (SWOT matrix)

2.3.1 SPACE matrix

The SPACE matrix is a management tool used to analyze a company It is used to determine what type of a strategy a company should undertake The Strategic Position & ACtion Evaluation matrix or short aSPACE matrix is a strategic management tool that focuses on strategy formulation especially as related

to the competitive position of an organization

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> Steps to Developing a SPACE Matrix

2 Assign a numerical value: From +1 to +6 to each FS & IS dimension, From -

1 to -6 to each ES & CA dimension

3 Compute an average score for each FS, CA, ES, & IS

4 Plot the average score on the appropriate axis

5 Add the two scores on the x-axis and plot the point Add the two scores on the y-axis and plot the point Plot the intersection of the new xy point

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6 Draw a directional vector from the origin through the new intersection point

2.3.2 The Internal-External Matrix (IE matrix)

This is also an important matrix of matching stage of strategy formulation This

matrix already explains earlier It relate to internal (IFE) and external factor evaluation

(EFE) The findings form internal and external position and weighted score plot on it It

contains nine cells Its characteristics is a s follow

Steps for the development of IE matrix

1 Based on two key dimensions IFE and EFE

2 Plot IFE total weighted scores on the x-axis and the EFE total weighted scores on the y axis

3 On the x-axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position; a score of 2.0 to 2.99 is considered average: and a score of 3.0 to 4.0 is strong

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4 On the y-axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99 is medium; and a score of 3.0 to 4.0 is high

5 IE Matrix divided into three major regions: Grow and build — Cells I, II, or IV; Hold and maintain — Cells III, V, or VII ; Harvest or divest — Cells VỊ, VIII, or IX

2.3.3 Grand strategy matrix

This is also an important matrix of strategy formulation frame work Grand strategy matrix it is popular tool for formulating alternative strategies In this matrix all organization divides into four quadrants Any organization should be placed in any one of four quadrants Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix

It is based two major dimensions: Market growth; Competitive position

All quadrant contain all possible strategies

— Quadrant Ill Quadrant IV =

| 3 Horizontal diversification 3 Conglomerate diversification ⁄

Source: Fred R David

Figure 1.3.10: Grand strategy matrix

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Tiêu đề	Hoa Sen Group's competitive strategy for the period 2011 - 2015
Tác giả	Thoai Quang Tran, Huy Ngoc Nguyen, Nhan Le, Thi Ai Dung, Tri Pham, Nghia Trong Ngo, Ha Manh Nguyen
Người hướng dẫn	Dr. Bay Van Nguyen (Chairman), Professor Soren Kirchner, MBA Ha Thai Vu
Trường học	Griggs University
Chuyên ngành	Master of Business Administration
Thể loại	Capstone project report
Năm xuất bản	2010
Thành phố	Ho Chi Minh City

Định dạng
Số trang	150
Dung lượng	21,29 MB