G1 00155 "DEVELOPMENT STRATEGY OF BUSINESS ACTIVITIES AT THE CENTRE OF TECHNICAL SUPPORT AND TECHNOLOGY TRANSFER, MINISTRY OF FINANCE." 1 “CHIẾN LƯỢC PHÁT TRIỂN HOẠT ĐỘNG KINH DOANH TẠI TRUNG TÂM HỖ TRỢ KỸ THUẬT VÀ CHUYỂN GIAO CÔNG NGHỆ, BỘ TÀI CHÍNH.”

G1 00155 "DEVELOPMENT STRATEGY OF BUSINESS ACTIVITIES AT THE CENTRE OF TECHNICAL SUPPORT AND TECHNOLOGY TRANSFER, MINISTRY OF FINANCE." 1 “CHIẾN LƯỢC PHÁT TRIỂN HOẠT ĐỘNG KINH DOANH TẠI TRUNG TÂM HỖ TRỢ KỸ THUẬT VÀ CHUYỂN GIAO CÔNG NGHỆ, BỘ TÀI CHÍNH.”

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

| CENTRE OF TECHNICAL SUPPORT AND TECHNOLOGY TRANSFER, |

MINISTRY OF FINANCE.”

Group No.: 2 Student’s name: Nguyen Minh Tuan

Do Tat Luan Mai Xuan Thong

Trinh Mai Ly

HANOI, 2010

LIST OF FIGUES

l Figure 1.1: Model of strategic management

2 Figure 1.2: The process of strategic planning

3 Figure 1.3: Factors affecting an enterprise

4 Figure 1.4: Model of strategic evaluation

5 Figure 1.5: External factors

6 Figure 1.6: Relations amongst factors in a sector

7 Figure 1.7: Analysis of competitors

8 Figure 1.8: Procedure to build matrix EFE

LIST OF TABLES

t Table 1.1: Brief analyzing frame SWOT

Table 1.2: General strategies in model of 5 competitive forces of

2 M Porter

Table 1.3: Comparison on characteristics of general strategies in

3 the situation of five competitive forces

4 Table 1.4: Quantitative Matrix under GREAT standards

5 Table 2.1: Situation of the unit operation 03 years

Table 2.2: Comparisons between units’ prices with their market

6 shares

7 Table 2.3: EFE matrix

8 Table 2.4: IFE matrix

9 Table 2.5: Proportion of revenues

10 ~— Table 3.1: Analyzing SWOT

II Table 3.2: Strategic analysis under the GREAT model

12 Table 3.3: Business results from 2010 - 2014

TABLE OF CONTENT PREAMBLE - HH nọ TH ch th TT h 7

3 STUDY OBJECTTIVES AND STUDY SCOPPE 2.1 211121 21111 Hye 9

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CHAPTER II ANALYSIS ON DEVELOPMENT STRATEGIES AT

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CHAPTER III PROPOSAL OF STRATEGY FOR THE CENTER IN 2010-

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6

PREAMBLE

1 INTRODUCTION

"MBA gets people to Where you are you're already there why consider MBA?”

In our MBA training environment of Griggs University we meet lecturers who have solid background and deeply knowledge in combination with their abundant and working experience : In addition, they are ready to exchange and share ideas as well as help us in terms of enterprises and units problems

This training environment provides us chances to meet each other to exchange working experience, improve the social communication, and further learn from friends In addition, it brings us opportunities to equip us with useful knowledge ind to lead us to an in systematical and independent thinking as well the skills of self-control, and self-confidence and so on

Through a period of study and research, based on prepared knowledge, we apply

1 research subject for construction of corporate strategy:

Development strategy of business activities at the Centre of Technical support ind Technology transfer — Ministry of Finance”

teasons for the subject to be chosen

International globalization and integration is an inevitable trend of the present- lay world Vietnam is also involved in significant stages of international ntegration, which result in outstanding development such as_ subsidization

‘limination, relationship normalization with regional and worldwide countries,

ignatory to multilateral and bilateral Trade Agreements, participation in AFTA,

\SEAN, ASEN+3, APEC, ASEM

As membership of WTO in November 2006, Vietnam was officially recognized

is amarket economy In this trend of integration and development, many innovative

!Olicles are targeted to encourage investment and development creating ipportunities for the unit Opportunities as well as many challenges are provided to inits to be captured and used as advantages for enterprises

From such fact we can see that planning a strategy for effective use of resources

so as to exploit opportunities and limit risk is an urgent task for any unit or enterprise

The curriculums of business management programs do not mention operation models of public state non-business units - maybe this is a particular model of Vietnam; as a result, our group presume to pick up the topic “analyzing strategy development of profitable business activities of a state non-business unit, analyzing differences with other companies operating under the Law on enterprise, on that basis, applying the theory of business management to assess strengths and weaknesses of the unit to gradually improve and prepare for the transition to the fully self-controlled model as a business under the Enterprise Law

With such reasons, our group picks up the topic: Development strategy of business activities at the centre of technical support and technology transfer — Ministry of Finance”

Definition of non-business unit: "4 non-business unit forms an integral part of the organizational structure of state administrative agencies Non-business units which are established by state competent authorities has a legal statuses, bank accounts, seals, functioning state management or public product and service provision in sectors and areas in accordance with legal regulations ."

Expected results of the report

Firstly, in a severely competitive market economy, the survival and development of a unit depends on concern about and construction of a proper strategy The report is to determine the actuality in order to design development strategies to and propose development policies in the future

Secondly, the report proposes the business strategy in the period of 2010 - 2014

on the basis of analysis of internal and external environment to predict the tendency

of profitable business activities of the unit Hopefully with our wholeheartedness and knowledge, this strategy will be studied and used by the unit in the development period of 2010 — 2014

2 STUDY OBJECTIVES AND STUDY SCOPE

in regulations on organization and financial management of the center compared

to those of pure enterprises

On the basis of reasoning and study on strategy and business strategy, applying

such study to the analysis of environmental factors affecting the Center:

identifying opportunities, risks; combining them with analysis of the actuality of internal elements of the unit to pinpoint strengths and weaknesses to determine the target vision and proposing strategic development of profitable business activities for the unit in the following period:

On that basis, designing solutions and plans to implement the strategy

effectively

3 RESEARCH METHOD

This is an applicable research project on the basis of application of strategic nanagement theory Research methods used in the report is the description analysis aid summarization based on actual data provided by and operations of the Technology Transfer and Technical Assistance Center and Ministry of Finance and inormation collected from websites articles research articles from special journals, nwspapers, etc Based on knowledge of business administration together with

practical research the strategic direction and development for the center in 2014 is proposed

Drawbacks of the report

Based on the scope of research the report only mentions and revolves around profitable business activities as serviceable activities of the Center

Used data are about the result of activities in 03 years from 2007, 2008, 2009 and in next five expected years, so the report only gives out a general direction

of operation strategy but not go into details of the specific activities

Structure of chapters of the report

Preamble

Chapter |: Laying down theory of strategic management

Chapter 2: Analysis of development strategies at technology transfer and technical assistance center

Chapter 3: Proposed strategies of the center in the period of 2010 to 2014

Conclusion

10

CHAPTER I - THEORETICAL FOUNDATION OE STRATEGIC

MANAGEMENT

1 Overview of business strategy

1.1 Concept of business strategy

There are many definitions of strategy each of them have differences dependent

on conception of the author

"Business strategy is the determination of fundamental and long-term goals of

an enterprise, and selection of method and action process and distribution of necessary resources to implement such goals" said by the strategist Alfred Chandler, Harvard University in 1962

"Strategy is an model or plan integrating major goals, policies and action chains into a closely cohesive entity” said by Quinn, J., B in 1980

G Johnson, Scholes gave the definition "strategy is the long-term orientation and scope of an organization to gain competitive advantages for the organization through formation of its resources in a changing environment so as to meet market needs and meet expectations of stakeholders

M Porter said that "the strategy is to define the position against competitors," and a right strategy must create "the difference / the uniqueness" rather than making efforts to "become the 1

Strategy is to determine ways and means to acquire defined targets through

policies (General Aileret)

We realize that phrases indicating different aspects are included in all definitions

of strategy Professor Henry Mintzberg defines a general strategy in general

aspects (SP) as follows:

Plan: Consistent planned actions chain

Pattern: Consistency in behavior

Position: Appropriateness between the organization and its environment

Perspective: Awareness method

Ploy: Methods of behaving competitors

If there are many definitions it is because a strategy is a broad concept However, it

is possible to recognize business strategies of enterprises based on characteristics such as:

Business targets that enterprise desire to reach

Set out solutions and options to achieve targets

Develop and allocate resources to put targets into practice

In summary, business strategy of an enterprise is a general action plan, proposing and make decisions consistent with the trend of environmental changes to succeed in the competition, aiming at implementation of targets of an enterprise The strategy will bring advantages to organizations through the optimum arrangement of resources in a competitive environment in order to meet market demand and expectation of capital contributors Strategy is not to correctly lay down how to achieve these targets, because it is the task of numerous support programs, and functional strategies Strategy only creates a framework, which acts

as a guideline for activities of an enterprise

1.2 Basic characteristics of business strategy

Business strategy is the long-term direction and scope of an organization or a unit, including the main contents as followed:

Business strategy must pinpoint basic goals to be achieved by an enterprise in each period (direction)

Which market an enterprise competes in and what types of business activity must be carried out in such market by that enterprise (market, size)?

What should an enterprise do to operate better than its competitors in the market (advantage)?

Business strategy must ensure to mobilize and to takes full advantage of different resources in an optimal way (skills assets, finance, relationships, technical capacity equipments) in order to promote advantages and catch seize opportunities

to dominate in competition (resources)

Which factor of the external environment affects the competitiveness of an enterprise (environment)?

What values and expectations do executive people inside and outside an enterprise need (capital contributors)?

1.3 Role of business strategy for enterprises

Building and implementing business strategies are particularly significant to the survival and development of an enterprise for:

Clearly defining objectives in each stage of an enterprise, helping companies find out their future directions to achieve established targets

Fluctuation of markets always creates opportunities and threats; construction and implementation of strategies help companies catch and take advantage of opportunities to overcome threats and traps of markets

Construction and implementation of strategies complement allocation of resources logically, improving efficiency of resources, strengthening competitive position to ensure sustainable development of enterprises

Assisting business leaders in clearly seeing external opportunities and challenges, actuality, strengths and weaknesses of their enterprises, predicting future changes to find solutions to deal with and adapt with new business environment

In addition to help enterprises gain profits and avoid financial risks, strategies can direct the activities of the enterprise resulting in successful businesses, high profits and help the enterprise survive and grow, bringing about the stability of politics, organization, relationships, i.e increasing productivity and ability to prevent the enterprise from difficult problems Additionally, the success of strategy also provides regulations and order to the enterprise It may be the beginning of an effective and productive management system which restores confidence in the current business strategy or the necessity of adjustment

2 Construction and selection of development strategy

2.1 Process of strategy planning

+ Èlission and goal

TT

External analysis Construction and seletion of § Interna! analysis jin search

opportunities and threats’ » strategies of possible resourse and

Making strategy structure,

and control appropriate

{

Changing strategy

}

Figure 1.1: Model of strategic management

(Source: Lé Thé Gidi, (2009), Strategic Management, Statistics Publishing House,

Hanoi, page 32) Strategic planning is the process of environmental studies to establish strategic objectives, business policies and solutions for an enterprise; to apply business strategies and policies to its practice; to make decision about adjustment, inspection, and assessment of implementation of strategies and business policies

2.1.1 Formation of strategy

Formation of strategy 1s the process of setting up business tasks, performing researches and surveys to determine internal and external factors, laying down long-

term goals and selection of alternative strategies Process of designing a business strategy 1S summarized in the following diagram

Mission: Stating clearly reasons for survival of an enterprise and what to do Vision: is a message of concretizing missions to a general goal

Strategic targets: to specify what an enterprise hopes to achieve in the long-

term and medium term

On the basis of clear definition of corporate mission, the overview of issues related to an enterprise and separation of issues are summarized in the following

Figure 1.3: Factors affecting an enterprise

As a result, factors affecting an enterprise can be divided into two categories: external environment and internal environment

Assessment and analysis of external environment

The target of analysis of external environment is to comprehend opportunities

and risks from the environment outside the organization It includes analysis of the

macro environment and micro environment (sector) in which an enterprise operates Assessment of internal environment

Analyzing internal environment of an enterprise to find out the strengths and weaknesses of that enterprise We determine the way that companies can achieve competitive advantage, roles of different competences, resources and ability to create and maintain sustainable competitive advantage for enterprises As a result, the enterprise is required to achieve outstanding performance, quality, innovation and responsibility to customers

Analysis and selection of strategy

The resource of any organization is limited so strategists must make decisions about the most profitable alternative strategies Determining strategic plans are based on defined strengths, weaknesses opportunities and threats of the enterprise Analysis and selection of strategies are done by using SWOT analysis so that the enterprise may recognize the targeted strategies: and take awareness of the nature of competitive position based on the analysis to find out which resources, capabilities and core competence are the basis for the development of strategic options

Policies: policy is a medium to achieve goals Policies, including regulations, rules and procedures, are established as back-up for efforts to achieve given targets Policies as well as annual goals are particularly significant to implementation of strategy because they represent expectations of employees and administrators inside

In brief the implementation of strategies is considered to be the most difficult step Implementation of strategy requires the discipline devotion, and they

sacrifice A strategy is considered to successful when it focuses on promoting the

managers and the staffs that is an art other than a science Proposed strategy can not

bring any useful purposes if it is not implemented

2.1.3 Stages of strategic evaluation

Perform Making Making

x >xfe

control to Sante als

Richard Rumel proposed 4 standards of strategic assessment namely consistency suitability advantage and feasibility

2.2 Analyzing all enterprise- affecting factors

2.2.1 Analyzing external factors

of environment, age where it exists, indentifying influences of external factors over the enterprise and hence making decisions, which are suitable for strategic planning 2.2.1.1 Macro-environment

Changes in macro-environment may directly affect any force in a sector They relatively change the power between influences and attractiveness of a sector Macro-environment consists of 6 main segments: economy, technology, culture- society demography political-law and global issues

Economic environment

Status of macro-economic environment shows healthy and prosperity of an economy It always exerts influences over enterprises and the sector Main economic

19

effects consist of factors such as interest stage of economy cycle balance of payment financial and monetary policies,

to affect barrier of entrance and sector-restructure

Cultural factors

When cultural elements change, they can make an impact on enterprises in some aspects such as trend of demography, entertaining hobbies, standards of morality

and opinions on life style, business community and female laborers If an enterprise

wants a life-long existence with partners and social approval, it must appreciate cultural issues in business operations

Demographic factor

Including issues related to population, structure of age, geographic distribution, ethnic communities and income distribution such as opinions on commodity consumption, area-based services, gender, age, and occupation

Political and legal factors

Enterprises must comply with regulations on tax, insurance, environmental protection Change in political and legal environments may exert great influence over corporate performance of business strategy

International and global environment

Trend of integration and globalization in the world and in Vietnam causes enterprises to think of international factors when they want to make long-term strategies, which contain high integration and further political and geographical reach Global segment consists of related global markets current changing markets,

20

important international political events, and features of institutions and basic culture

of global markets

2.2.1.2 Micro-environment (Sector-environment)

Sector-environment is the group of enterprises specializing in provision of products or services which are alternative closely Close replacement means that products or services can meet demands of customers equally Factors in the sector environment are external factors against enterprises They determine properties and level of competitiveness in such business area Analysis of sector environment and competitiveness is a set of opinions and techniques used to clarify core issues related to:

Economic highlights of the sector

- Competitive forces are trading in the sector, nature and power of each force

- Driving forces make changes in the sector and impacts on them

- Who may create next movements in the sector?

- Core factors for the success or failure of an enterprise

- Attractiveness of the sector in terms of above-average profitability

According to M Porter, there are five forces, which orient competitiveness in the scope of sector, including:

- Initiation threats for new enterprises

- Competiveness amongst current enterprises in the sector

- Negotiability of buyers

- Negotiability of sellers

- Threat of alternative products

Hanoi, page 106) According to M Porter, the stronger factors of sector- environment are, the more they reduce capacities of current enterprises as to higher gains Therefore, managers must be aware of opportunities and threats, which may result from the change of 5 forces From that point, they will establish suitable strategies and change power of One or more competitive forces into their advantages Understanding of sources of competitiveness can assist enterprises to indentify their strengths and weaknesses related to changes and threats, which such sector meets

Competitors

Production and business in the market economy will certainly create severe competition if an enterprise is challenged by actions of another enterprise or when a certain enterprise is aware of an opportunity which can improve its position in the

market

4,9

[ools regularly used in a customer-value-making race include price, quality, difference of products and services distribution promotion, improvement and customer satisfaction Level of influence is subject to competitive structure of a sector, conditions of demand exit-sector barriers and rate of fixed cost on value added status of sector growth, output surplus difference amongst products, conversion cost, features of trademarks, diversification of competitors, and status of sector screening

Awareness of competitors brings important meanings to enterprises because of many reasons Firstly, competitors determine property and level of competition or the trick to get advantages in a sector dependent on competitors Level of severe competitiveness is subject to interaction amongst factors such as quantity of

enterprises in competition, rate of sector growth, structure of fixed cost and

diversification of products Existence of these factors is intended to increase demand

Or expectation of enterprises that want to gain or protect their market shares Therefore, they make the competition more severe Enterprises should recognize that

a process of competition is unstable Besides, new competitors and new technological solutions regularly make change to limit and nature of competition

What do competitors want ? What competitors are doing and can do?

Future objectives Some questions about Current strate

HP nh: competitors to be answered ae

ee Neate t—,! Are competitors satisfied with How do you

THANH D00 SE TÚC dt Og their current positions? currently compete?

Its influences and >| What can assist competitors, | weaknesses

industry retaliate strongly and effectively?

Customers

Buyers are considered as competitive threats when they are in position requesting lower price or when they request better services Influence is subject to position of negotiation, number of buyers information customers get features of trademarks, sensitivity to price difference of products, concentration rate of customers in a sector, rate of replacement availability, motives of customers Credit

of customers is the most valuable asset Such credit 1s only reached when an enterprise know how to satisfy demand of customers in a better way than their competitors do

Suppliers

Suppliers can be considered as threats when they are capable to increase input price or decrease quality of products and services provided by them and then resulting in decrease in enterprise’s profitability Limit of influence is subject to concentration rate of suppliers, importance of number of products to suppliers, difference of suppliers

Potential competitors

In nature, this force consists of enterprises, which do not currently compete in

the sector, but they are possible to participate in because of potential

competitiveness, attraction of a sector and entrance barriers Entrance barrier is the factor that makes difficulties and expenses to competitors when they want to enter a sector, bringing them into disadvantageous positions Sponsorship of competitive position of an enterprise in a sector consists of maintenance of legal barrier and existing advantages of an enterprise which is trading in a sector such as: trademark loyalty, absolute advantage of cost due to experience, economics of scale, conversion cost, regulations on the Government’s protection, retaliation of enterprises in a sector

It is noted that reacquisition of other facilities in a sector for the purpose of establishment of market segment is the expression of appearance of new competitors Alternative products

Pressure of alternative products can limit potential profitability of a sector because

a sector's high price is controlled If it does not pay attention to potential alternative products an enterprise can drop back with small market shares Influence of alternative products is subject to conversion cost in use of products, customers’ alternative use, relation between price and quality of alternative products Most of new alternative products are results of technology boom To have success, enterprises should pay attention to and save resources to develop or apply new technology into their strategies

2.2.2 Analysis of an internal enterprise

Internal environment of an enterprise consists of all factors and internal system

of an enterprise such as: Production, Enterprise administration, Marketing, Research and development

Factors of production

Production is field of operation of an enterprise It connects to making of products This is one of main business line of an enterprise and therefore, it can affect success of an enterprise the most Analysis of production process is to consider whether process of product production is suitable for business strategy of

an enterprise or not in order to propose improvements and completeness Analysis

of production capacity: ability to produce suitable number of products with expected standards in a certain time It expresses concentration on production factors’ capacity such as: personnel, equipment, and technology Analysis of energy supply, material and spare part supply in terms of quality, guaranty, liability, timely possibility of supply sources Analyzing suitability in organization and production process: organization, structure of operations continuality and ability of adaption

of technological equipment in case of alternative products required Analyzing quality management: role and effectiveness of a quality system

Factors in enterprise administration

Administration operation of an enterprise 1s a set of operations

Personnel administration

Human resource play important role to success of an enterprise Input suppliers tor goal planning analysis of enterprise environment Although how suitable opinions of a general planning system are they can be ineffective if there are effective-working personals

Organization of an enterprise is a set of human resources An effective organization is the one with united direction not identicalness contradiction in orders, and disturbance in an information system Managers should analyze tasks of

an enterprise and result of task performance adaption between positions and powers, relation between enterprise and divisions, relations in divisions It is easy to indentify existing matters to solve and adjust by analysis mentioned above

Financial management of an enterprise

Financial source is the most basic one and the foundation of other sources, gain final results of chain of production and business operations in an enterprise Analyzing financial sources, valuating financial capacity of an enterprise are the conditions to attract investments This is the basic condition in order to assist business strategies become more effective With financial indexes, it is possible to determine strengths, weaknesses of an enterprise on financial, investments, financial management and share interest Financial management is to ensure the control of financial expenditures

Management of materials

This function is to move material into a chain of values from purchase to production and distribution Effectiveness connected to its operations can minimize cost and hence make much more profit By controlling external commodities from suppliers through system of stores and bringing to hands of customers strictly, an enterprise can reduce inventories and cost and make much more profit

Data collecting and processing system

In the current era of information and technology, data collecting and processing system plays an increasingly important role Collecting and processing information about products customers distribution channel trademark, personnel administration

26

aim at providing processed information back to leaders of enterprises, helping them

to analyze and facilitating them to make decision of business strategy plan

Research and development factor

Research and development can make manufacturing process more effective; reduce production cost by designing over- standing products R&D may improve products’ features so that these products become more attractive to customers In both ways, R&D in enterprises can create values, which attract customers more The quality of investment in R&D will decide the leading position in that field or vice versa it can make enterprises stay behind leading enterprises in following fields: new product development, product quality, price control and manufacturing technology Scientific level, experience and capacity are not enough for a good research Division of function and R&D must frequently monitor environment condition and vice versa, information of technology innovation related to technology, products and materials Information exchange between R&D and other activities plays an extremely important role in the success of enterprises

2.3 Some assessment models

2 3.1 Assessment matrix IFE-EFE

The procedure to build matrix IFle-EFE consists of 5 steps:

of each factor

Figure 1.8: Procedure to build matrix IFE-EFE

Step 1: Make a list of decisive factors of the success of enterprise (from 10 to 20 factors)

Step 2:

important) The total level of importance in the list must be 1

Step 3:

Determine the importance from 0.9 (inconsiderable) to 1.0 (very

Determine coefficient from | - 4 of each factor in relationship with response capability of enterprise (4: Best response, 3: Above average response, 2: Average, |: Below average)

Step 4: Calculate points of each external factor by being multiplied with the coefficient of importance

Step 5: Plus points of all factors It is average if it is equal 2.5, the highest is 4,

and lowest is 1

In short, external and internal factors can be combined in various ways, may directly or indirectly affect enterprises resulting in opportunities or threats for enterprises The most important thing is such that we have to analyze and evaluate the right effect and response capability of current strategy in responding fluctuation

in order to set forth to action programs of development strategy in the future

28

This is an extremely useful tool helping us understand problems and make decision in organizing, managing as well as doing business Analyzing trame of SWOT can be shortly illustrated as follow:

Table 1.1: Brief analyzing frame SWOT

External environment Environment analyze

| O Opportunities T Threats/Challenges

‘Internal S- strengths S-O: Promote strengths | S-T: promote strengths to

| environment to take advantage of limit and avoid threats

| opportunities, orient

| business

| W- W-O: recover W-T: recover internal

| Weaknesses weaknesses to take difficulties and well-prepare

| advantage of to overcome external

Coordinate S-O from combination between main strengths with opportunities of enterprise Enterprise must use its strengths and opportunities to take advantage of competitive opportunities with other enterprises, unceasingly expand its market

W-O coordination is the combination of weaknesses of enterprise with opportunities Such combination helps the enterprise overcome weaknesses by taking advantage of opportunities

S-T coordination is the combination of strengths and threats paying attention to the use of strengths to restrict and avoid threats

29

W-T coordination is the combination of weaknesses and threats of enterprise The combination requires enterprise to have measure to handle internal difficulties and overcome external challenges

2.4 Basic business strategy

Michael Porter identified three general strategies that can be applied at business units in order to create competitive advantage General strategy which is suitable will help enterprise to maximum promote its strengths, at the same time provides enterprise self-protection against preventing impact from five market forces as above While the decisive factor of profit ability of an enterprise is the attractiveness of the field the enterprise is operating the second decisive factor is enterprise's position in that field Even when operating in a field with lower profit capacity, enterprise still can generate higher profit if it has the uttermost position Michael Porter said that enterprise’s advantage will be one of two aspects: cost advantage and product differentiation By applying these advantages, the company will follow three general strategies: leading in cost, production differentiation and concentration The strategies are applied at business units and called general strategies because they do not depend on any enterprise or field The following table illustrates general strategies of Porter:

Table 1.2: General strategies in model of 5 competitive forces of M Porter

Competitive advantage

: Strategy of leading aoe Strategy of

cost differentiating products

Focusing strategy Focusing strategy

(low cost) | (product differentiation) |

(Source: Nguyễn Thanh Thao (2007), "Branding Strategy according to

Michael Porter’s theory")

Strategy of leading cost

[he strategy is aiming at the target of becoming a manufacturer with lowest cost

in the field with a certain quality At that time company may sell products with average price for higher profit compared to competitors or sell with lower price to get more market shares In the “ price war” which is happening, the company still gains certain profit while its competitors is compulsory to suffer from loss Even when there is no price conflict the field is developing expanding and price reduces the company with low production cost still gains profit in longer time The strategy

of leading in cost is often applied in wide market

Enterprise can reply on some methods to get price advantage by improving the efficiency of business process, seek opportunities to get access with great material resource with low price, transfer business to foreign market in an optimum way and make decision of longitudinal emerge, or cut some unnecessary expenses If competitors fail to cut expenses to similar level, enterprise can maintain its competitive advantage on cost leading

Those enterprises succeeding in the application of cost leading strategy often have following features:

- Good capital access to invest in manufacturing equipments This is also a barrier that many companies can not overcome

- Product designing capacity to increase manufacturing efficiency For example, creating one small element can shorten installation

- High skill in manufacture

- Effective distribution channels

Any general strategies contain potential threats, and low cost strategy is not an exception, There is a risk when competitors are able to reduce manufacturing cost Eventually thank to modern technology competitors can have sudden jump in manufacturing removing competitive advantage of cost-leading enterprise In addition some companies pursue the strategy of focusing on narrow market where

it is not difficult to gain lower cost than their conventional markets Accordingly

they will create a control group of greater market share

Strategy of product differentiation

This is strategy to develop products or services of enterprise so that these products and services have unique characteristics, are highly appreciated by customers than other products Added values by products unique features enable enterprises to achieve higher price without customers® boycott

Enterprises that are often successful in strategy of product differentiation often have following strengths:

- Ability of research and access to leading scientific achievements

- Research and development group with high expertise and creativity

- Dynamic sale group with capacity to successfully deliver products’ strengths

to customers

- Reputation of quality and renovation ability

Risks associated with product differentiation are the possibility of being imitated

by competitors or changes in customers’ taste In addition, many companies pursuing focusing strategy are able to achieve product differentiation

Focusing strategy

The strategy is aiming at relatively narrow market in which enterprise tries to gain competitive advantage by low cost or product differentiation, applying the theory: “the demand of a group can be better satisfied by completely focus in that group’ An enterprise uses focusing strategy often maintain a certain level of customers’ faith which discourages other companies and they do not dare to directly compete By concentrating on narrow market, enterprises with focusing strategy often get lower sale, therefore they do not have great advantage when bargaining with provider However these enterprises pursuing focusing strategy- product differentiation can transfer higher expenses to customers because customers can not

find alternatives

I:nterprises that are successful in focusing strategy can change their advantages

by developing many products suitable with small market that they have detailed study and thorough understanding Further risk of this strategy is the possibility of imitation and changes happening in target market Moreover one manufacturer with leading low cost in big market can easily change their products to direct compete with enterprise who is applying focusing strategy Other companies with focusing Strategy can attack some segments in the target market, resulting in a certain loss of customers in a small market

Combine general strategy

These strategies are not always integrated with each other Therefore, Michael argued that for long -term development, each enterprise must choose only one in three above strategies If the company chooses three strategies, it will get trouble and fail to gain completive advantage

Also according to Porter, the enterprises can be successful in applying various strategies must establish the separate business units, each unit pursued a strategy

By separating strategies for different units of policy or even culture, an enterprise can reduce risks of falling into stagnation

However, the view that pursuit of a unique strategy is not only the right choice, because in the same product, customers often find satisfaction in many aspects - a combination of quality, style convenience and reasonable price In fact, certain manufacturers only trust in one strategy and are suffered heavy losses as other enterprises whose products are in low quality but meet the customers’ demands in certain aspects

General strategies in the context of five competitive forces

Such general strategies can be applied to protect enterprises against competitive forces Below is the comparison on characteristics of general strategies in the situation of five competitive forces

Table 1.3: Comparison on characteristics of general strategies in the situation of five competitive forces

(Source: Nguyén Thanh Thao (2007), Branding Strategy according to Michael

markup of supplier to customers easily

they can not find out | because they have not much the replacing goods choice

ferns en er fel ni ma

Negotiation | Better protection | Transfer the price | Weak advantage in negotiation

with suppliers because the company output is low; however, the enterprise is pursuing the centralization and product differentiation strategies, which are able to transfer the higher expenses to

| Customers have strong

_ attachments to different

features of products so

reducing the risk of | replacement |

products with highly

specialization and domination protect the company from replacement

These general strategies can be applied to protect enterprises against competitive

forces The above-mentioned diagram is to compare the characteristics of general

strategies in the situation of five competitive forces

Selection of optimal strategy

The enterprises must choose the optimal strategies because it is impossible to

simultaneously perform all or part of strategies in uncalculated order, for it will take

a lot of time, material and financial resources as well as human resources Thus it is necessary to select the most optimal strategy for the development and to consider the pros and cons gained from such strategy On the basis of strategies shown by combining such factors as Strength - Opportunity, Strength - Risk, Weakness - Opportunity, Weakness — risk, using the matrix according to GREAT standards to outline the basic features for the selection of key business strategies that enterprises

Assessment | Conversion | Assessment | Conversion Assessment | Conversion

Step 3: Assessing to mark every analysis factors in every strategy Assessed point shall be counted from | to 5 with levels: weak normal fairly good, good Step 4: Converting factors which are results of multiplication of two columns (column 2 and total column at every strategy) and then accumulating results to get total marks at the last row Step 5: Drawing from | to 3 numbers which are highest sum and these are strategies required for implementation.

CHAPTER II ANALYSIS ON DEVELOPMENT STRATEGIES AT CENTER OF TECHNICAL SUPPORTS AND TECHNOLOGY TRANSFER

1 Overview of researching institute

1.1 Regulations on function and duties of the institute

Center of Technical Support and Technology Transfer is non-business unit under directly Department of Financial Informatics and Statistics Ministry of Finance established under Decision No 2851/QD-BTC on August 21° 2006 by Minister of Finance on promulgating Rules on Organization and operation of Center

of Technical Support and Technology Transfer; Decision No 2428/QD-BTC on July 19th, 2007 by Minister of Finance concerning regulations on functions, duties organization and mechanism of operations of Center of Technical Support and Technology Transfer;

Functions of the center is to support Director Department of Financial Informatics and Statistics in training and developing computing applications in financial sector; proposing technique, constructing, verifying feasible projects on information technology application for units, organizations under Ministry of Finance and locals belong to financial system; assisting technique, maintaining computing applications developed for units; repairing and maintaining computer equipments for units under Ministry and equipments provided by Ministry of Finance to units, organizations belong to Financial sector: providing services on training, transfer, and support computing applications to internal and external units

of Financial sector

Center of Technical Support and Technology Transfer has juridical personality, private seal and opened account in Vietnamese dong and foreign currencies at State Treasury and Commercial bank according to legal regulations

Major tasks of the center:

Developing on a large scale the shared applied anh system integration services

to units under financial sector Developing on a large scale the applied services of