G1_00184 BUSINESS STRATEGY IN THE PERIOD OF 2011-2015 AT KIEN VUONG COMPANY LTD CHIẾN LƯỢC KINH DOANH GIAI ĐOẠN 2011-2015 TẠI KIEN VUONG COMPANY LTD

G1_00184 BUSINESS STRATEGY IN THE PERIOD OF 2011-2015 AT KIEN VUONG COMPANY LTD CHIẾN LƯỢC KINH DOANH GIAI ĐOẠN 2011-2015 TẠI KIEN VUONG COMPANY LTD

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GRIGGS BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

UNIVERSITY _

TRAINING PROGRAM GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

ASSIGNMENT

BUSINESS STRATEGY

IN THE PERIOD OF 2011-2015

AT KIEN VUONG COMPANY LTD

Group: 04

Class: GAMBA.C03

Member of the group:

1 NGUYEN NGOC SON

2 PHAN THI MY ANH

3 LE MINH TRUNG

4 VU VAN TRANG 5S NGUYEN MINH TRUNG

HO CHI MINH CITY 2011

c2 Global Advanced Master of Business Administration

Gricod) ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

TABLE OF CONTENT

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[INTRODUCTHONN HH HH Họ TH TH nung 0g

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I.I Strategy definitions

1.2 Strafegic management definitions

1.3 The role of strategic management

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3.3.2 Matching phase — SWOT? matrix QNQUS S 00 c00ccccccccceecccesceeveceeseesees 24 3.3.3 SIrategy selection ph$œ 222 1221121115112 re 26

4 The operation of chemical manuifacturing bisiness in Vietnam 28

4.1 Overview of the chemical industry 28

4.2 The development of chemiecal technolo;is in Vietnam 28

4.3 The need for the import of chemicals ii Vietnam 29

CHAPTER E SÚT VHA RỆ scccsscassecvaxassacensnsevexcnsxnanesmunaneccscrevavessecaucsanseinsevasbieovnecarsensees 31 CHAPTER II —- CURRENT BUSINESS ACTIVITIES OF KIEN VUONG LIMITED COMPANY .ccescsssssssscsssscsscesceesscssseessccssnsessccensecsceeetecescsssssssssssseeses 32 XHHEN1EGHHENGHERSEDIGSXASIISEIEES108558058193913838g01001010004488886011405080120356ã3906235019561323ssesssnosssrssssrssossse 32 1.1 Development history 2y 32 1.2 The company’s main activiities 33

1.3 The organization’s structuire and func(on 34 I.3.] OrganizatiOH SIFMCHF€ HS SE TK HH ke 34 1.3.2 Function oƒeqaCh dÌVISIOIW Ặ.2.G SE key 35 1.3.3 Infrastructure and techmiical factlitie 0 00 000cccccccccecceeeeeececcseeseesseesees 36 1.3.4 Operation status in PreviiOUus SlAQC 20.0 ccccccccccccceceececessceseesevseeeseeeses 37

2 Some issues should be noted in tlhe historica d-velopment of the Kien Vuong

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- Analysis of factors affecting busiriness activitis f the Kien Vuong Company

3.1 Externalenvironment factoors ._Ắ12 SDD MQCKO-CCOMOMIC 0 ccc ccce ce ceceee eee e tee te veseceeeceesesetustaevstesseasesteseseestens 42 3.1.2 Business activities of cheiemical ndusy .0 0cccccccccccscececescvseeveeesees 45

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CHAPTER Tl SUMMARY scsssxsssnsvswassmvsxnnasssnsessosenasenssadessesonneterererenrnensvocesesararenesane 59 CHAPTER HI: BUSINESS STRATEC€GY FOR TII PERIOD 2011 - 2015 IN

TH KIEN VUONG COMPANTY IƯTIFD 5-5 G93 2365 se 60

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ESTABLISH BUSINE- ESS STRATEGY N HE PERIOD OF 2011-2015

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3 Objectives and key imdicatOrs ccseesessessesseesseececsssscsscsssscssscscssssssssees 61

> Specific targeis ốc CC Cố cốc ey ee ee eee 6l

“1 SWOIT analyss matrix 62 4.1.1 The Opportunities for tÌthe COHIDQWỊ cv E211 12111151 151556 62

4.1.2 _ The Thrca:s for the commpany SEN S811901/808,181.1E0.4/808.388<6xoslirindesliiimmse 63

4.1.3 The Sireng!hs for the cGCOMDđWV CHY HT HH ke 64 4.1.4 Weaknesse oƒthe comfipany (WeakHeSe) . + +eSE2E2E2EsEcxcv2 66

4.1.5 SWOIT Mqriy SĂ S5 SE E21 1kg 67

4.2.1 Group sYalegy S— ( S22 E21 E21 111111 69 4.2.2 Group strdlegy Š— T ằ SS ST HT Tuy 69

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Š "r0pose measures te implement f SfFAf€E.Y - 5-5-5 c5 c<ceccscscseseseeeseee 70

1 Solutions relaũng to humaan resources 70 ẳ2 _ Marketing-relhted solutionns 72

^®* ` L na 72 5.2.2 Producl sOIiOHS — S€FV'VỈC€S 5 5S SE SE tre, 72

., ¡ he ằa 73 3.2.4 DistriPUtiO1 SỌWIÏOH S- 225 E22 EEEE 2 E1 re 73

3.2.3 SolufioHn 2ƒDrOmOIiOH ¬ 74 5.2.6 Building ard brand pOSISIFÏOHIHE 5 SE SE rrrrryi 73

„3 Solutions relatsd to the opeerating orgarz:tion 75

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5.4 Solutions rdated to thewvcorkofR@&UD 76

s RÑ ecomme€RiEÍOLH <c << << << Hi nọ 00.00300401 77 6.1 Recommentations for Staate 17 6.2 Recommeniations for indlustry 78 6.3 Recommeniations for conmpany 78

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LIST OF CHARTS, DJIAGRAMSA'TD REPORTS

Nodeblss of the compr:hensive strategiac managemat

Prterr''s Five Forces ramework

E2meernts of competitive analysis

Oganntization Structue

Sme » [basic financialcriteria of the Kiien Vuong Onoany in the period

frm 222008 to 2010

Rvenntue growth grarhs through 20088, 2009, 2011

Rvenntue structure of Chemical for thee areas and sctrs in 2010

Sies « oof chemicals aid materials grouup achieved 1 210

Sitistittics Graphs of het profit by prooduct in 2010

Eonoormic growths ir Vietnam from 22005 to 201(

Te inntflation situation in Vietnam in t the period frm2005 to 2010

Te stitaatistics of Vietiam's import turrn-over of chmral products in

Otoboeer and first 10 nonths of 2010

Dmannnd for human r:source for indusstries

Eternnaal Factor Evahation (EFE)

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INFRODUCTION

Nowadays, chemical technology has grown strongly, the needs of chemicals for production 1s increasing, according to a recent report by the Department of Chemicals under the Ministry of Commerce and Industry, the growth rate the chemical industry will reach an average of 6-7% in 5 years The forecast growth for the chemical industry 1s a good and optimistic signal while the country's GDP growth is also forecast over 7% from the year 2011-2020; the direct contribution of industry to GDP

in 2011 1s expected to reach 2-3%

However, besides the advantages mentioned above are the threats related to the low competitiveness of the chemical industry of Vietnam, the competition is

increasing among companies in the industry as the number of active companies in this

field is constantly increasing Kien Vuong is a new brand in the chemical industry in Vietnam, therefore to participate in the business environment with many opportunities

but also challenges, company needs to take strategic steps to survive and further

develop in the future To address that, the business analysts, market research and evaluation in order to predict the development of the industry to build strategic

business development of Kien Vuong from now to 2015 are essential That is the reason that all members in our group agreed to select the topic "Building a business

strategy in the period 2011-2015 at Kien Vuong Co., Ltd" as the subject for our

graduation thesis

Therefore, the content of the thesis was studied through analysis of business, understand the need to use chemical products of businesses, the business sector in Vietnam economy; research on activities of some companies and industries and competitors to develop business strategies for Kien Vuong Company

Griccd ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

Subjects of the study include: (1) The economic sectors Vietnam have the lemand for chemicals, (2) The competitors in the industry, (3) Other information sources: the handout materials reports of the company, reports the study of relevant agencies, articles and forecasts on the media, the electronic news

The research methodologies using in this thesis include synthetic methods tatistics of secondary data, and quantitative analysis method

The thesis includes an introduction and three chapter organized as following:

- Introduction

- Chapter |: Theoretical background

- Chapter 2: Current business activities of Kien Vuong limited company

- Chapter 3: Business strategy in the period of 2011-2015 at Kien Vuong

company limited

With limited capability, mistakes cannot be avoided in this thesis We are looking forward to your input from teachers, lecturers, colleagues and friends in order for the completeness of the thesis

Sincere thanks to the dedicated guidance of Dr Le Van Bay, the involvement

of student groups of classes C03, Kien Vuong Company Limited director board, so that we are able to complete the thesis in timely manner

CHAPTER I— THEORETICAL BACKGROUND

I Strategy and Strategy management definition

The definition of strategy and strategy management varies from one researcher

tc the other, therefore in the scope of this thesis we want to present some of the ccmmon definitions about strategy and strategy management as following:

1.1 Strategy definitions

According to Johnson and Scholes: Strategy is the direction and scope of an yrzanization over the long-term: which achieves advantage for the organization

hough its configuration of resources within a challenging environment, to meet the

1e:ds of markets and to fulfill stakeholder expectations

In other words, strategy of an organization is defined to answer the following questions:

- Where is the business trying to get to in the long-term? (direction)

- Which markets should a business compete in and what kinds of activities are

involved in such markets? (markets; scope)

How can the business perform better than the competition in those markets? (Advantage)?

What resources (skills, assets, finance relationships, technical competence, and facilities) are required in order to be able to compete? (Resources)?

What external, environmental factors affect the businesses’ ability to compete? (Environment)?

According to Michael Porter (1996): Strategy is the process of harmonizing an orginization’s activities The success of a strategy depends on the synchronizing many

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activities and matching them with each other, the essence of the strategy is the choice

of what haven’t been done With this approach, strategy 1s the creation of competitive advantages through what haven't done The strategy Just exists in unique activities The objective of an overall corporate strategy is to put the organization in a unique position with unique activities

According to Fred David: Strategy is the tool to achieve the long-term goal Business strategy can include the following: expanding the territory, diversifying the products, ownership of product, develop product, penetrating market, reduce cost, partnership

1.2 Strategic management definitions

According to Fred David: Strategic management can be defined as an art and science of formulating, implementing, and evaluating of cross-functional decisions that enable an organization to achieve its objectives According to the definition, the strategic management includes three steps: Strategy formulation, strategy implementation and strategy evaluation Strategic management focuses on the administration, marketing, finance, production, research and development, information system in the business to achieve the objectives of the organization

According to Alfred Chandler: Strategic management is the process of defining the basic long-term goals of the organization, choosing the course of action and allocating the essential resources to achieve the organization’s goals

According to John Pearce and Richard B Robinson: Strategic management is the system of decision and action to formulate and implement the plan in order to achieve the organization’s goals

According to the above definitions, the strategic management has a strong relationship with the following three important questions:

- What are the objectives of the organization?

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- What are the most effective processes to achieve the objectives?

- What kind of resources needed and how to allocate resources during the implementation of the plan”

I.3 The role of strategic management

The strategic management enables organizations to formulate its objectives and direction;

Strategic management enables the administrator to capture and utilize the opportunity while minimize the risk involved in the ever-changing business

environment

By using strategic management, organization will always base the decision with the relevant environment conditions

2 Strategy classification

2.1 Classified according to the management

Strategic management can present in many level of an organization, in general

there are 3 strategic levels as following:

2.1.1 Corporate level strategy

Corporate level strategy is the guideline for the decision for the whole institution, and fundamentally concerned with the selection of objectives and the businesses in which the company should compete to create the basic policy and plan

to achieve the corporate goals

Corporate level strategy is to select the businesses in which the company should compete and manage the coordination of businesses portfolio

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G Blood) ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

2 1.2 Business level strategy

At this business level strategy, the strategy involves with the sustaining the competitiveness in a specific market and the adjusting the strategic decision with the selection of products, meeting the customers satisfaction, positioning the business against rivals and creating new opportunities

The strategy at the unit level is the process at which each business unit manages to achieve its objectives and contribute to the achievement at the corporate level

2.1.3 Functional level strategy

The functional level strategy focus on the implementation of business processes

at functional level like marketing, finance, operations, human resources, and R&D and

the development and coordination of resources

2.2 Business strategy types

Based on the scope of the strategy, we can classify business strategy into 2

types

2.2.1 General strategy

The general strategy or overall strategy usually refers to the important, long-

term, visional issues The general strategy decides the critical issues of the corporate 2.2.2 Unit strategy

Unit strategy is the secondary strategy, it usually contains: product strategy,

price strategy, distribution strategy, communication strategy

The general strategy and unit strategy incorporate with each other to become the complete business strategy The business strategy cannot be complete without the unit strategy which expresses by an objective and each objective is expressed by a speciiic criteria

¬

3

Strategic management process

3.1 Define the vision-mission and business goals

Every organization has a purpose and a reason to exist The existence of an organization 1s well represented by its vision and mission A recent research by Fortune magazine about 500 most profitable companies shows that those with a better

Lo ‘ ee |

overall mission are the ones gain more profit

2

4

The vision of an organization should have the following content:

“The corporate vision is a concise, encouraging statement looking forwards to a

successful future The statement often reflects high competitiveness of the

company The vision statement mentions about the overall vision and the positioning of the corporate towards the future The vision statement is the image

of the corporate that has specific goal before deciding the processes and actions to achieve that goal The vision statement describes the desire for the future but not

necessary needs to show the tools to achieve the final objective 7

“Mission statement represents the corporate vision in the written form It presents

the direction and objective of the corporate And the business mission is the setting

of priorities, strategies and distribution of work” °

Defining the objectives is to identify each individual object or business results that the corporate wants to achieve Objectives derived from the mission must be

separated and more specific *

Fred R David — Introduction to strategic management Thong Ke publishing house 2006”

Tran Tri Diing - http: saga.vn dictview.aspx?id 5030

Tran Tri Diing - http: saga.vn dictview.aspx?id 5034

Nguyễn Thị Liên Diệp, Phạm Lăn Nam, "Chiến Lược và Chính Sách Kinh Doanh”; Thong Ke publishing house, 2003

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ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

AT KIEN VUONG COMPANY LTD

to identify the | J | strategy , | policies strengths and to follow

Feedback

Chart: Models of the comprehensive strategic management

Where we wantto be Howwewiide it How are we doing

Source: Fred R David-Strategic

Florence, South Carolina

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Nbssion & Vision

Values / Guiding

Đr?8nc@tes Mayor Goats Speotc Otyectues

Management

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* Perlomance * Perlormence

Measurement Menagernem

* Targets / Sandards of * Review Progress -

Perlomeanoe Balanced Soorecerd

* in@aiwes and * Take Corecdve

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UNIVERSITY AT KIEN VUONG COMPANY LTD

3.2.1.1 Macro-environment of the corporate:

- Economic factor: Factors affect the business are interest rates, economic cycle

period, the balance of payments, fiscal policy and monetary policy

- Government and law factors: These factors have growing impacts on business

activities Businesses must comply with the regulations on hiring, lending, security, pricing, advertising, plants location and environmental protection

- Natural factors: The factors that affect business are pollution, lack of energy, wasteful use of natural resources and increasing demands on resources from nature These factors make the strategic manager need to change the decision and implementation of measures

- Science and technology factors: more advanced technology is developed will

directly affect the business environment of corporate, creating opportunities and risks

for all industries and businesses The advent of new technologies will create pressure

tor traditional production process; make its products become obsolete Thus, it

requires corporate to change its technology to improve competitiveness in the market

3.2.1.2 Corporate micro-environment:

Corporate micro-environment is the external forces that determine the nature of the competition in the business environment Applying the Porter's Five Forces framework to analyze the business strategy enable the business administrator

recognizes the competitive factor that directly affects the corporate

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Industry Bargaining Power| Competitors | Bargaining Power

or Service

Substitutes

Griccd) ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

- Do competitors satisfy with the current business?

- What is the possibility that

the competitor has a shift in their strategy?

- What is the weakness of the competitor?

- Which factor could help the

- Suppliers: The bargaining power of suppliers also put the company under pressure Suppliers are supplying raw materials components, labor, and finance

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- Potential entrants: The entrance of new rivalry will be a factor to decrease the company’s profit, because they introduce new production method with the hope to

gain more market share and necessary resources

- Alternatives: The pressure of the existence of alternative products will reduce the potential profit of the company due to the limitation in the product pricing

3.2.2 Collecting information

The collecting and processing information is the most important requirements

in the in the process of strategy formulation The process of gathering information is a

prerequisite to formulating strategies and decisive to the success or failure of the

strategy If the collection of information is biased it will lead to incorrect decisions ineffective strategies

In order to effectively collect information and ensure the accuracy, the collecting process need to limit the scope of information for formulating strategies and identify ways to collect information efficiently and accurately The information needed for the strategy formulation include:

3.2.2.1 Collecting external environment information:

The external environment information needed to collect includes:

- Political environment in which the companies are or will be working to understand the political institutions, political parties, legal system, political risks

- Economic environment in which the companies are or will be working to understand

the economic situation in the market such as GDP, GDP per capita, wage policies,

unemployment situation, inflation, insurance

- The regulatory environment in which the companies are operating in: to understand the legal system and consider the possibility of collaboration that the company can accept and operate business

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UNIVERSITY AT KIEN VUONG COMPANY LTD

~ Services environment and infrastructure in which the companies are working to

the company Is providing

- Thorough understanding about the population environment in which the company is working; about population, age, marital status, ethnicity, thereby determines the size

of the market

~ Understanding of the technology environment in which the company Is operating, to explore the possibility of technology in the place where the business is taking place

~ Understanding the business sector environment in which the company is operating,

how ts the sector doing? Is there any support for the industry or not?

~ Understanding the vendor environment in which the company is operating, to have the knowledge about the supplier as the capability, reputation and potential

~ Customer consumption trends

~ Understanding about the competitors, strategy and SWOT of key competitors to gain the knowledge about the main competitors, potential competitors, and their ability to finance, human resources, organizational structure, strengths, weaknesses, Opporunities and challenges of competition, the strategies that competitors are and

will be applied

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3.2.2.2 Collecting internal environment information:

The collecting internal environment information includes the following:

- Planning: including all administrative activities related to preparing for the future

The specific tasks are: prediction, goals setting, formulating strategies, developing policies and establish goals

- Organizing: The structure and governance model of the organization: clearly defined governance structure of company, authorization

- Leadership: efforts to position the activities of human resources, namely leadership, communication, working groups, shifting activities, improving the quality of work, job satisfaction, meeting demand, organizational change, employees' mental and

emotional condition and managerial spirit

- Control: relating to all management activities to ensure the results match reality,

consistent with the planned results

- Information system: understanding the management of company’s information

system

- Technology: the ability to grasp and apply technology of the company

- Human resources: knowledge and skills of staff and employees of the company

- Marketing: the process of identifying, forecasting, setting and meet the needs of the consumer desire for products or services; research on marketing environment to identify market opportunities, market segment, select targeted markets and market

positioning

- Financial resources: the financial capability of company

- Strenghs: the strengths of the company

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- Weaknesses: weaknesses of the company

- Opportunities: opportunities for company

- Challenges: current and future challenges

The collection of the above information is done in various forms such as reports and feedback from the various departments, from financial reports, from media, from state management agencies, from trade counselors, from the auditing tirm, from market survey companies, from the association, from market surveys

3.2.3 Processing information and formulating strategy

From the collected data, the strategists will take steps to process, analyze and formulate strategies from which to choose one or the most appropriate strategy to put

in implementation In the process of analyzing the data collected to formulate strategy, the following contents need to be done: Strategy formation phase

3.3 Strategy formation

3.3.1 Integration

Integration process (phase | of the strategy formulation process) is the period

to analyze environmental factors and internal factors of the organization to build the

matrices: the external factor evaluation matrix (EFE), competition profile matrix,

internal factor evaluation matrix (IFE)

3.3.1.1 External factor evaluation matrix (EFE) analysis

The External Factor Evaluation Matrix (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 macro environment of the firm include economic, social, technological, government, political, legal and competitive information The E-FE matrix consists of following attributes:

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(1) Identify a list of KEY external factors that affect the success of the company whici have been identified in the process of analyzing the external factor including the opportunities and threat towards the company

(2) The importance level: Assign the importance classification of 0.0 (not impertant) to 1.0 (very important) for each element This classification shows the impcrtance of the corresponding elements for success in the business of the company The ‘otal number assigned to these factors classification levels must be equal to 1.0; (3) Assign a 1-4 rating to each critical success factor to indicate how effectively the frm’s current strategies respond to the factor In which 4 = response is extremely

good 3 = response is above average, 2 = response is average, | = response is poor

(4) Multiply each factor’s weight by its rating to determine a weighted score

(5) Sum the weighted scores to specify the total score for the company

Regardless the major opportunities and the threat included in the EFE matrix, the sim of all weighted score is equal to the total weighted score, final value of total weigited score should be between range 1.0 (low) to 4.0(high) The average weighted score for EFE matrix is 2.5 The total weighted score of 4.0 shows good response of the company with the current opportunity and threat in the envireonment While the total weighted score of 1.0 shows that the current strategy is not able to utilize the oppotunity or avoid threat from external environment

3.3.12 Competition profile matrix

Competitive profile matrix is an essential strategic management tool to

comyare the firm with the major players of the industry Competitive profile matrix is the expansion of the EFE matrix in which measure the same critical success and same mearing on the total weighted score as well as the assigning score The CPM score of the rval company 1s compared with the sample company This type of analysis provdes valuable strategic information for the company

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The external factor evaluation matrix and competitive profile matrix enable strategists to evaluate the business environment However, this tools need to be accompanied by intuition evaluation

The formation of the competitive profile matrix is almost the same as that of the external factor evaluation matrix

3.2.1.3 Internal factor evaluation matrix analysis

IFE (Internal factor evaluation) matrix is one of the best strategic tools for internal audit of functional area of business like company strength, weakness, finance, marketing, IT, operations, accounts, human resources There are five steps in

developing the IFE matrix:

1 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

the strengths first and then weaknesses

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 1s 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 weigits must equal 1.0

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

a ma or 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 veights in Step 2 are industry based

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

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5 Sum the weighted scores for each variable to determine the total weighted score for the organization Final value of total weighted score should be between ranges 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 than 2.5 is consider as strong in position

3.3.2 Matching phase - SWOT matrix analysis

- Integration phase (phase 2 of the strategy formulation process) is the important stage

of the process of forming a strategy in the most basic way, at this stage all the data has been collected, analyzed at the integration stage will be developed further through the establishment of more complex matrices such as BCG Matrix, SPACE Matrix and

SWOT matrix (matrix analysis of the opportunities, threats, strengths and

weaknesses)

- SWOT matrix analysis:

The SWOT matrix analysis aims at defining the Strength (S), Weakness (W), Opportunities (O), and Threats (T) from the business environment, therefore an appropriate strategy can be proposed to mitigate the weakness and strengthen the strengths, and control the threats

The SWOT matrix is the integration tool that can help the strategist to develop the following 4 strategies:

- Strengths and Opportunities (SO) strategy — use our strengths to take advantage of the opportunities

- Weaknesses and Opportunities (WO) strategy —use our opportunities to overcome the weaknesses experiencing

- Strengths and Threats (ST) strategy -take advantage of our strengths to avoid real and potential threats

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- Weaknesses and Threats (WT) strategy —minimize our weaknesses and avoid threats

‘There are 8 steps in preparing SWOT matrix, according to Fred R_ David

(1) List internal strengths;

(2) — List internal weaknesses;

(3) List external opportunities;

(4) List external threats;

(5) | Combine the internal strengths with external opportunities and note in the SO strategy box;

(6) | Combine the internal weaknesses with external opportunities and note in

the WO strategy box;

(7) | Combine the internal strengths with external threats and note in the ST strategy box;

(8) | Combine the internal weaknesses with external threats and note in the

WT strategy box

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Štrengths, Weaknesses Opportunities and Threats Analysis 0PP0RTUNITIES

MyCompam Competitor { Competfor2 Competfor }

Arig beneficial trend: ?

What are your core

What areas are you

Where do you lack

Where are you losing

money? Government regulation?

(Source: Fred R David - Strategic Management Book - Francis Marion University

Florence, South Carolina)

3.3.3 Strategy selection phase

Phase 3 is the formation of strategy, at this stage; the strategy will be based on the analysis results from the matching step to choose the optimal strategy for practical

implementation There are many methods and tools to support the strategy selection

phase; however this thesis just mentioned tools support the process of choosing effective strategies, such as QSPM matrix Quantitative Strategic Planning Matrix)

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3.3.3.1 Selecting strategy: Quantitative Strategic Planning Matrix (QSPM):

Base on the Quantitative Strategic Planning Matrix - (QSPM) enable strategists to objectively assess the alternative strategy According to Fred R David, there are 6 steps in developing QSPM matrix:

(1) Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM This information should be taken directly from the EFE Matrix and IFE Matrix A minimum of 10 external critical success factors and 10 internal critical success factors should be included in

the QSPM;

(2) Assign weights to each key external and internal factor These weights are

identical to those in the EFE Matrix and the IFE Matrix

(3) | Examine the Stage 2 (matching) matrices and identify alternative strategies that

the organization should consider implementing

(4) Determine the Attractiveness Scores (AS), defined as numerical values that

indicate the relative attractiveness of each strategy in a given set of alternatives The

range for Attractiveness Scores is 1 = not attractive, 2 = somewhat attractive, 3 =

reasonably attractive, and 4 = highly attractive If the answer to the above question is

no, indicating that the respective key factor has no effect upon the specific choice being made, then do not assign Attractiveness Scores to the strategies in that set

(5) Compute the Total Attractiveness Scores Total Attractiveness Scores are defined as the product of multiplying the weights (Step 2) by the Attractiveness

Scores (Step 4) in each row The Total Attractiveness Scores indicate the relative

attractiveness of each alternative strategy The higher the Total Attractiveness Score, the more attractive the strategic alternative;

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¬

(>) Compute the Sum Total Attractiveness Score Add Total Attractiveness Scores

¡ì each strategy column of the QSPM The Sum Total Attractiveness Scores reveal vhich strategy is most attractive in each set of alternatives Higher scores indicate nore attractive strategies

4 The operation of chemical manufacturing business in Vietnam

41 Overview of the chemical industry

Chemical industry today is made great strides and got tremendous achievements From consumer goods (such as raincoats, plastic slippers etc ) to

fiel and materials used in rocket and spacecraft field are all products of chemical

industry World is entering an era where the achievements of chemical industry to afect all sectors of the national economy: the area of chemistry The building of a sxcialist society requires a strong development of the chemical industry to cater to industry, agriculture, transportation, healthcare, national defense .etc and to inprove human life

Based on current chemical change, the chemical industry and many other industries with hundreds of subjects, producing thousands of different products

including:

Inorganic substances: acids, bases, salts, chemical fertilizers, metals, adhesives, refractory bricks, pottery and porcelain, glass etc

Crganic substances: plastics, textiles, dyes and intermediate compounds,

piarmaceuticals, fuel etc

42 The development of chemical technologies in Vietnam

Chemical technology industry in Vietnam is formed from the French war in the fectory where the weapons, explosives and chemicals was manufactured in North Vietnam With special attention of the Party, Government and the help of the Soviet Union, China and other socialist countries, a series of chemical plants such as Lam

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(Source: www vinamchem.com.vn) However, comparison with the needs and development level of the world, Vietnam's chemical industry is now considered not keep up the industrialization and

modernization of the country Vietnam has huge oil and gas resources, but the chemical industry has just stopped in the construction of oil refinery factory, which may focus on technology to produce petrochemical products other than oil and gas, while this industry brings a huge benefit to the national economy

In addition, the management of chemical activities now is dispersed and

scattered in the Ministry of Industry and the Ministry of Trade and the Ministry of Science and Technology Especially, the management of chemicals and chemical

products containing substances, toxic substances, and dangerous substances was

deeply attended by the chemicals management agencies both foreign and domestic

4.3 The need for the import of chemicals in Vietnam

Currently, our country has about 10 million hectares of agricultural land, of which over 6 million hectares are for paddy land The demand of using chemical fertilizer for agricultural production was about 5 million tons yearly, of which 2 million tons of urea, phosphate types was 1.2 million tons, 800,000 tons of NPK

800,000 tons of DAP, SA and MOP was over 300,000 tons Meanwhile the

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production of the national chemical fertilizer plant cannot meet the demands Some types cannot be produced; so our country has to import about 2 million tons of chemical types yearly

Beside, even drug treatment is currently essential in life, but the national pharmaceutical industry is developed very slowly Their main operation is imported drugs & technology from foreign countries Therefore, Government has launched

several policies to promote development of the national pharmaceutical industry in

accordance with the conditions and needs in Vietnam

Outside of the chemical demand for the agriculture sector, the chemical

demand for chemical manufacturing industry in the country is now greater with requirements of types, high quality and high-technology Meanwhile, the ability to produce chemical products is still restricted because of the demand of capital and production techniques are very great Therefore, the production of chemical stops at a few basic chemical items commonly The most chemical supplier are imported from the foreign countries especially from the country chemical industry development such

as Germany, Japan, Taiwan, USA, France, Thailand, China, Singapore, It is from these needs and the current difficulties, the State has adopted preferential tax policies such as: applying tax rate 0% of import duty for some essential chemicals and

accessories used as drugs for prevention and treatment

However, the chemical distribution unit is now mostly the private sector with a relatively small scale, which is not many professional business and they concentrate

the chemicals commonly used items, so the competition of the sector is relatively

large Only some companies with good financial strength focus on commodities with high added value, modern techniques and highly profession Kien Vuong is one of

companies has the 20 experience in chemical industry and well financial capability Therefore, it is necessary to develop strategies of sustainable development for survive

and meet the needs development of the country in the next five years

(Source: Vietnam Chemical Faculty)

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CHAPTER I SUMMARY

Thesis title "Business strategy for Kien Vuong Company Limited period from

2011 to 2015" is based on strategic theory and strategic management The chapter content has introduced a radically knowledge on vision-mission statement, business environment analysis, collecting and processing information, analyzing information about competitors; The strategy formulation stage, including: initial stage, matching and strategy selection phase as well as Internal Factor Evaluation assessment tools (IFE), external factor evaluation matrix (EFE) competition profile matrix, the matrix strengths-weaknesses-opportunities-threats (SWOT) and Quantities Strategic Planning Matrix (QSPM) used to implement the setting strategies That is the basic theoretical background to apply to the analysis of the current status of the industry in general and

in particular companies from which to develop and propose solutions to implement

business strategy for Kien Vuong Company

On that basis, the contents of the second chapter will focus on business environment analysis of the company, including macro-environment, micro- environment and business activities of the company: the strengths, weaknesses, opportunities and threats in the past and present, the competitiveness of the company

From that, setting up an appropriate and effective business strategy for the

development of Kien Vuong company in the future

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Formerly it is Van Loi Company Ltd., one of the first private company under

the Enterprise Law born in 1990 (the establishment of Vietnam Co., Ltd.), specializing

in trading of chemicals, raw materials, additives and biological products for many

industries (Prior to 1990, the only type of units owned, Combination, or Cooperative)

1991 | Establishment of Van Loi company limited, 300 Lanh Binh Thang,

district 11, HCM city

1996 | Restructuring and converting to Huu Tin Trading Co., Ltd., 300 Lanh

Binh Thang, district 11, HCM city

2005 | Building and developing the network of representative office at Da Nang

Nha Trang & Can Tho

2006 | Restructuring Hữu Tin, converting to Kien Vuong company limited

Street #7, Tan Tao industrial zone, Binh Tan

4102038922, is licensed by the Department of Planning and Investment of HCMC

Business registration addresses: Block 22, Road 7, Tan Tao Ward, Binh Tan, HCMC

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1.2 The company’s main activities

Kien Vuong Co, Ltd specializes in providing raw materials and additives used

in the food industry, pharmaceuticals, cosmetics, fish processing, animal feed, aquaculture and other industries Goods are mainly imported from the famous group

of countries in Europe, the Americas and Asia More than 90% of company product

was imported from oversea

The main activities of the company are focusing to import goods and distribute

these goods in the domestic market

The company has not invested to manufactory chemical product They have

Just extracted and repackaged some of the products

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GRIGG

UNIVERSITY

ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

AT KIEN VUONG COMPANY LTD

HEAD OF IMPORT/

EXPORT DEPT

HEAD OF DISPATCHER

HEAD OF WAREHOUSE DEPT

HEAD

UNLOADING AND LABEL

HEAD OF HUMAN RESOURCE DEPT

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1.32 Function of each division

‘ontrol board) Has the task to represent on behalf of the board members and

nonitor, evaluate the work of operating, managing member of the Council and 3oard of Directors in accordance with the provisions of the Company Charter, the

Resolutions and Decisions of the General council members

security dept: assist the Board of Directors to supervise protect the assets of the

“ompany

\ssistant board to the CEO: support general manager in daily tasks, and coordinate

he implementation of management activities, logistics for the board of directors ind partners in the business trip

\dministrative management: advising the Chief Executive, Director of Public

Administration, dealing with work related to foreign relations, domestic relation,

idministrative documents, archives, receptionist, Management of fire safety, eccupational safety work; manage, and use of company cars and to carry out the

«rganization of the event, preliminary review of company

Logistics: is responsible for transportation, inventory management, warehousing, shipping materials and packaging goods

Business Development: has the main task to research and develop new products to neet market demands and implement the development strategy of the business

Besides the task of research and technology the department also needs to look for (ptimal production, processing to import for the domestic market (both old and 1ew) with the optimal quality and cost

Business: is responsible for implementation of marketing activities - sales to customers and potential customers of the Company to achieve sales targets, market siare according to Companies plan

Griccs) ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

- Finance and Accounting: To advise the CEO and direct, manage and administer the financial and economic accounting implementation of accounting work efficiently, economically and avoiding waste , following the right regulatory under the current regulations, Promotion and mobilize financial and investment management of the financial settlement of operating costs, service costs and production costs, investment projects according to regulations, supervise and

evaluate recovery of debts and other liabilities of the Company

- Human resources: responsible for training, recruitment, implementation and monitoring of the salary, bonus and other income, payment according to regulations and policies applicable to employees of the Company, administering the emulation and commendation to officials and employees

1.3.3 Infrastructure and technical facilities

Currently at Kien Vuong all employee are equipped with computers and Operating in a computerization environment All computer systems are operated by proprietary software, connected to the internet Since early 2010, Kien Vuong has built integrated system management software to help employees in the management,

control and import goods

The working conditions and facilities are relatively well, the position of the

Company and the subsidiary units are located in major city centers, close to government offices and large companies, industrial parks, economic zones

In addition, to manage, store, import and storage of continuous cargo safely, the company has invested in Selective shelf system from the early days of operation

Kien Vuong, is the first company to apply the storage and preserve systems according to standards of good practice of medicine distribution (GSP) of the Ministry

of Health

ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

AT KIEN VUONG COMPANY LTD

1.3.4 Operation status in previous stage

As mentioned above about the formation and development of the Kien Vuong, which is recently converted from Huu Tin Trading Co., Itd Therefore, this presentation are pleased to introduce a number of indicators on the status of operations during the period from 2008 to date of Kien Vuong

Table 1.1 Some basic financial criteria of the Kien Vuong Company in the period

from 2008 to 2010:

"4 | Profit after tax 10.425 9.895 10.988

5 | Return on Equity (ROE) |5213⁄% |4948% 54,94%

(Source: Financial statements 2008, 2009 and 2010 of Kien Vuong Co., Ltd)

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Fgure 1.2 Revenue structure of Chemical for the areas and sectors in 2010

ESTABLISH BUSINESS STRATEGY IN THE PERIOD OF 2011-2015

AT KIEN VUONG COMPANY LTD

DEXTROSE MONOHYDRATE FOOD GRADE | 2.20

PROPYLENE GLYCOL INDUSTRIAL GRADE jx 2.01

CITRIC ACID ANHYDROUS BH

| SODIUM BENZOATE GRANULAR (FOOD GRADE) | 1.68

Materials group achieved net profit at high level (over 3 billion per year) acccunted for 56.22% of the total net profit including: GLYCERINE, PROPYLEN

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