G1_00208 FORMULATION OF REAL ESTATE BUSINESS STRATEGY FOR OCEAN GROUP COMPANY In Vietnamese: XÂY DỰNG CHIẾN LƯỢC KINH DOANH BẤT ĐỘNG SẢN CỦA CÔNG TY CỔ PHẦN TẬP ĐOÀN ĐẠI DƯƠNG

G1_00208 FORMULATION OF REAL ESTATE BUSINESS STRATEGY FOR OCEAN GROUP COMPANY In Vietnamese: XÂY DỰNG CHIẾN LƯỢC KINH DOANH BẤT ĐỘNG SẢN CỦA CÔNG TY CỔ PHẦN TẬP ĐOÀN ĐẠI DƯƠNG

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GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

GaMBA.X0410 class

CAPSTONE PROJECT REPORT

In English:

FORMULATION OF REAL ESTATE BUSINESS STRATEGY FOR OCEAN GROUP COMPANY

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Oooan Group Companys

Center for Educational Lbechnologs and C arcer

Hanon Natronmal © miversats

(slobal Advanced Master of Business \dministration Program

Carivus bo omiversity

Agreement

Company has created favorable conditions to collect and complete this

Capstone, but ask to keep confidential all information disclosed to conceming Company's business and will not make publie of such

Information

We will consider such solutions and proposals would usetul in actual

bus» Stratevies loi (CO HHHĐ YCATS

Lễ Ehị Anh Tuyết

Deputy General Director

Nhom soa Ôö

Mae ton Chuan tee C finer boron

Now dung pho trach cua cae thank vien nho xó 6 và thong nhất đăng kx xố lượng các thanh

viên tham gia thavet took bao cao Har tap lon totaghiep thee thu tu mhu sau

| hư tụ Thanh sien Noi dung phu trach Noi dung dam trách

Bae cae Kai tap tom Bao cao Bai tap ton

L Phan Thi Ngee Soạn thao Ív thuy! và chuân | hú ớt trựnh ( Š sháe

ven by các cứu tra lớa C hướn | chương 1) va tra fon cầu how

2 La llowng Sowart thee hap các strate [ lx et trinh (391 xi le

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3 Nguyễn View Noạn tao lý thuy et và chuân Chuvet trinh (4 slide

Hiện Bị các câu tra lòa ( hương © chireme 9) va tra bon câu hóa

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Nhóm trương Các thành viện nhóm

Lạ Hoang Í tuần Deo Thi Noi Noobs Phan Thi Ngoc Ven

Pe Naan Phang Neuven Viet Tien

We are particular grateful to the Leaders of Ocean Group Company for granting scholarship and for support in providing time, information and advice for fulfillment of this study We also wish to thank the Leaders and Colleagues who have provided with support during conducting this Capstone

We also wish to thank all the Lecturers and Administrative staff of Griggs University at Global Advanced Master of Business Administration Program for assistance and kindness throughout the process of MBA program

For all the support in researching period, we want to express our heartily thanks to

our friends in Ocean Group, our classmates and program coordinators who gave us good condition and useful information that made us be easier in researching and completing capstone project

For fulfilling the requirements under Master of Business Administration program,

we submit this final capstone project to Griggs University

Once more, we would like to express our deep gratitude and sincere appreciate to

Center for Educational Technology and Career and all of professors here for all

their instructions, valuable guidance and comments We also would like to thank our friends of GAMBAO01.X0410 for their help and boundless inspiration

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| - \ Global Advanced Master of Business Administration

GRIGGS) Praga

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LIST OF ABBREVIATIONS

In this document, the abbreviations as follow:

¢ UBND: People’s Committee

e HCSN: Non-business administration

e KBNN: State Treasury

e NSNN: National budget

e ARPU: Average Revenue Per User

e BCC: Bilateral Corporation Contract

e BTA: Bilateral Trade Agreement

e FDI: Foreign Direct Investment

e 1D: Identify

e PR: Public relation

¢ R&D: Research and Development

e JV: Joint Venture

e EPC: Engineering Procurement Construction

¢ ODA: Official Development Assistance

e WB: World Bank

e WTO: World Trade Organization

¢ OGC: Ocean Group Company

e OJB: OceanBank

¢ OCS: Ocean Securities

¢ OMC: Ocean Media

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GRIGGS) | i 3

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Lable T.SWOT analysis Stmewtiir yivcsscsvucsecessisssccrssinsvevsesvivssississuasisseesssbasesvverisiussiviie 22 Table 2 Economic growth of Vietnam in recent years s.ssessssessesssssssssesseseessesees 31

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we have realized clear influences of foreign economic organizations, groups on our country’s economy Foreign economic organizations, groups have potentials in terms of capital, management competence and will become big competitors of domestic businesses

Although the State have intervened with economic policies for foreign organizations to protect domestic businesses, integration roadmap in long-term must base on inner strength of domestic businesses themselves, as joining commitment is required to go according to a certain roadmap, the State cannot intervene forever Thus, the problem for businesses is how to build for themselves a strategy to exist and develop To solve this problem, businesses must have intelligent coping ability

to changes of the market, know to exploit their advantages, understand their strong

as well as weaknesses and of competitors’, know to approach market to find out

business opportunities and correct way for them Thus, businesses are necessary to build a long-term development strategy for themselves

Ocean Group Company was established in 2007, when being affected by global economic crisis In the past three years, the Company has built plans to orient its

development in certain periods To now, standing in front of the process of

international integration, globalization, the application of short-term plans are no longer suitable, it is required that the Company to build strategy in accordance with requirement of developing business production in new period

The enterprise clearly determines the emphasis on the implementation of investment

in real estate business projects This is a specific business with extremely severe industry and business competition pressure, thus, building a right strategy for the Company is very necessary

Standing in front of such opportunities and threats, making a clear, correct strategy

is the key factor, premise for the development and status affirmation of the Company in the business world This shows objective necessity of the research of

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the theme: “Formulation of Real Estate business Strategy for Ocean Group Company”

Objective and scope of the study

In the trend of global economic convergence, Vietnam is gaining importance on an international scale The economy enjoys consistently strong growth rates over the years, and foreign business partners are recognizing the changes

Due to time and resource limitations, our group will only focus on researching the business strategy relating to the company business

e Studying real estate and result of the implementation of plans of the Company in

from 2007 to 2011

e formulation of Real Estate business Strategy for Ocean Group Company in the period of 2012 to 2015

Keeping in mind the above research objectives, the chosen methodology originates

from the need to form a thorough outline that incorporates the guidance and

instructions from the Expert Panels with appropriate modification and improvements that suits our group’s scope of study

Furthermore, we will spend the majority of time to familiarize ourselves with the real life business environment of Ocean Group Company and in the mean time, we will try to collect information as well as conduct essential interviews to support the propositions derived

Finally, through the classification, grouping and analysis of the collected resources,

we will form our opinions and evaluations on the research topics to complete our Major exercise

Methodology of the study

To solve our research issues quoted in the capstone, we adopt a dual approach that

combines both quantitative and qualitative analysis, with an emphasis on qualitative discussions

¢ Quantitative study: Applied to areas that calls for numeric illustrations or the calculation of evaluation criteria

¢ (Qualitative study: This is the approach to aims at describing and scrutinizing the issues embedded in our research hypothesis in light of the research group's viewpoints This methodology is very important to the substance of our Capstone because it contains unique contributions from the group that could overlook by other studies

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About our evidence collection, the preliminary information is collected through the usage of questionnaires and interviews The other secondary information such as MBA curriculum, newspapers, research journals, internet, and statistical data are

collected from well-established studies nationwide

Structure of the capstone project

The main content of topic has 3 chapters:

Chapter |: Theoretical framework

Chapter 2: Actually Real estate business of Ocean Group Company

Chapter 3: Strategic formulation

1 CHAPTER 1 THEORETICAL FRAME WORK

The term “strategy” originates from military art from the old days, it was considered

as the art directing means to win Being borrowed from military terms, the word

“strategy” has been used quite commonly in economic life in both macro and micro scale in which there are many notions on strategy such as:

e Strategy is the art of building firm competition advantages to defend (M.Porter)

e Strategy is determination of ways and means to reach determined objectives through policies (General Aileret)

¢ Strategy of enterprises is total decisions aiming to obtain important positions, defend and create exploitation results which can be used immediately

(F.J.Gouillart)

e Strategy is the art of combining actions and controlling them to reach long-term

objectives (G.Hirsch)

e Strategy of enterprises is the outlining of firm and long-term development orbits,

we may arrange accurate decisions and actions of the enterprise around those orbits This is conception of Alain Charles Martinet, author of the book

“Strategy”, who was granted with big award of Havard I' Expansion in 1983 According to another approach, “Strategy” is a tool for enterprise to answer questions: where do we want to go? Where can we go and how to go there? What

do we have? What do others have?

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Through the development of time, conceptions on strategy also changes towards rising Up to now, there are a lot of notions on business strategy, however two of them are considered to be common as follow:

Business strategy is the plan of making and controlling business activities of the enterprise including objective determination of business strategy (3 years, 5 years 10 years, etc); the process of making decision of the enterprise and analysis of business climate; or in other words, business strategy is a “product” Which can combine what the environment has, can have and wants to have (hus, real nature of business strategy is the tool to reach long-term objectives, and idea of business strategy aims at attacking to win victory in competition and

in the market

Business strategy is set of long-term objectives, big policies and solutions about business production, finance and solving human factor to put business activity of the enterprise to a new state of business activity which is higher in terms of quality

In brief, business strategy is the art of organizing to combine optimally resources, proposing and implementing decisions in conformability to changing tendency of

the environment to obtain success in competition to reach long-term objectives in

business

From the above comception, we can clearly see basic features of business strategy,

which are:

Business strategy must clearly determine basic objectives which need to be obtained in each period and grasp thoroughly in every aspect, every level in business production activity of the enterprise

Business strategy must ensure maximal mobilization and optimal combination of

exploitation and use of resources (human and tangible and invisible assets) At

present and in the future must uphold advantages, catch opportunities to get advantages in competition

Business strategy of the enterprise is reflected in a whole continuous process, trom building strategy to implementing, evaluating, checking and adjusting the strategy

Business strategy is built for implementation in a quite long time (usually 3 years 5 years 10 years, etc)

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© With those features it can be said that in market mechanism the construction implementation of business stra egy have particularly important meaning to the

existence and development of enterprise, as:

¢ It helps enterprise realize its objective heading which is basis to determine what tendency the enterprise must follow in business production and when it can reach certain objectives

e Changing of the market always creates opportunities and risks, building strategy helps enterprise hold, take advantage of opportunities to overcome risks, traps of the market

e [building strategy creates firm basis for enterprise to propose decisions suitable for the development of the market

e Building and implementing strategy makes decisive contribution to increasing efficiency of using resources, enhancing competition status, ensuring sustainable development of the enterprise

e Analyze environment effect to real estate business

e Analyze opportunities and threats, company’s weakness and strengths

e Apply theory of strategy building into specific enterprises to build solutions Figure 1 The progress of strategic administration

Revenues

Strategic objectives Value proposition Strategy and initiatives

Threats and Strengths and

oppertunities | Vision, options & weaknesses

scenario’s

4

identification Mission: identity, identification

reason for existence

4

Socialization Shared practices: Socialization

symbols, heroes & rituals

[1.2.1.1 Strategy forming stage

Forming strategy is the process of setting up business tasks, implementing research investigation to determine inside and outside factors, proposing long-term objectives and choosing alternative strategies Sometimes the process of forming

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strategy is called: “making strategy plan” Strategy forming consists of three basic

e Harmonizing intuition and analysis: some administrators and owners of enterprises declare that they have special gift in using intuition when giving excellent strategies Although at present, some organizations can exist and develop prosperously thanks to intuition geniuses in management, however, the majority is not as luck as that Most of organizations can make profit from strategy on capital based on harmonious combination between intuition and analysis in decision making

¢ Making decision: as not any organization have limitless resources, strategists are compulsory to make decisions related to selecting which alternative strategy will bring about most benefit to the company Decisions in the process of forming strategy will fix organization to specific products, markets, resources and technology in a long time

/.1.2.1.2 Process of implementing strategy

Implementing strategy is often called action stage of strategy administrators Implementing means mobilizing administrators and staff to implement established

strategies Basic activities of this stage are:

e Establishing annual abjectives: are landmarks that organizations must reach to come to long-term objectives It is a must that annual objectives can be measured, have quantity, challenging, practical, conformable and are given priority These objectives are often proposed in company level, division and function level in a big company Annual objectives should be proposed under the form of achievements on management, marketing, finance, accounting, administration, information study and development A series of annual objectives is necessary for each long-term objective Annual objectives are particularly important in strategy, it is the basis for resources distribution

e Policies: Policy is a tool to reach objective Policy consists of instructions principles and procedures which are established to support efforts to obtain set

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objectives Policies are instructions for making decision and show repeated or

implementing strategy because thay can embrace expectations of staff and administrators in the organization Policies allow cooperation and_ internal consistency between departments of the organizations

e Distributing resources: distributing resources is a central administration activity paying to the implementation of strategy Strategy administration allows resources to be distributed according to priorities which are established due to annual objectives There is nothing causing more harm to strategy administration process and success of the organization when resources are distributed in unsuitable ways to priorities pointed out by approved annual objectives All the organiations have at least 4 types of resources which can be used to reach objective

© Financial resource

© Material resource

o Technological technique resource

In brief, the strategy implementing stage is considered as the most difficult one Implementation of strategy requires discipline, devotedness and sacrifice of each individual Success strategy implementation turns around staff promotion ability of administrators, which is an art other than science If proposed strategy is not implemented, it will not serve any useful purpose

/./,.2.1.3 Strategy evaluation stage

Most of strategy makers agree that strategy evaluation is necessary to reach

prosperity of the organization, timely evaluations can alert administration about

difficulties before a situation become severe

Sufficient, timely feedback is the basis of strategy evaluation which is not different

from current information Too much pressure from leading administrators can affect lower administrators in discovering data that they think to be satisfied

Although one or more strategies maybe right, this type of reasoning maybe wrong

as strategy evaluation includes both short term and long term objectives Stategies

do not often affect short term operation result until too late to make necessary changes We cannot prove a typical strategy to be the best or ensure that it can work However, people can evaluate it through severe errors Richard Rumel recommends 4 standards to evaluate strategy, which are:

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Studies show that if companies have good and clear strategies, they will get high benefit and success in business In practice, companies with good results reflect a strategic orientation and emphasizes more on long-term Companies getting better financial results tend to plan systematically to make preparation for future changes

in inside and outside operating environment and bring about outstanding financial results in their business profession

Strategy, in addition to show that companies get benefits as expected, can avoid financial risks, also show other benefits When having strategy, operation of enterprise will go according to a clear direction, this easily brings about success in business, high benefit, the first thing is to help the enterprise exist and develop,

pulling the stability in terms of politics, organization, relationships, etc; specifically,

increase efficiency, enhance prevention ability to difficulties of the company In

addition, the success of strategy also brings about order and discipline for the

company It may be the beginning of an effective administration system, recovering belief in the current business strategy or showing the necessity of having adjustment activity

Define vision and mission meanwhile understand differences in comparison with

other enterprises

e Plan activities and strategies

e Research and analyze external business market to specify opportunities and risks for enterprise

e Analyze internal environment to define strengths and weakness

e Define long-term objectives

e Select strategies

e Define short-term objectives

e Plan policies

e Combine different sources

e Measure and evaluate implementation results and adjust business

Figure 2 Vision and Mission

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Where Are We Today?

(And what are the implications”) : ` vaca

How Do We Get There?

What Does the Future Hold? ’ Three and One Year Strategic Goals

(And what are the implications?) “ Action plans

~ En\onmental Assessment ¥ Balanced Scorecard

- MedTrend List of Industry Trends

v Scenano Planning Creating Our Future _ +

e Core Ideas include two parts:

o Core value: Basic and stainable principles of enterprises These have internal value and importance in enterprises

o Core purpose: enterprise existing

e Future vision: Objectives in time period from 10 to 30 years and description of expected implementation results

[1.3.2 Mission

Mission Declaration is one key order on requirements for relating units Mission

also considered as basis for Vision Mission is focus and order to use capacity and potentiality, but it also shows what enterprises gain Mission declaration creates basis for planning and are reference for evaluating objectives and strategies

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12 PROC ESS OF STRATEGIC FORMULATION

I.2.Í Analyze external environment

y j?

PEST analysis is a technique used to identify, assess and evaluate external factors affecting the performance of an organization A PEST analysis is undertaken to help an organization gain an understanding of the wider business environment and may be carried out as part of an ongoing process of environmental analysis or scanning The aim

is to provide information to assist those responsible for strategy development and decision-making PEST analysis may be used in the context of overall organizational strategy or more specifically to evaluate the feasibility of a new product or service, or expansion into a new market

To facilitate the analysis, environmental scanning has traditionally focused on four types

of factors, which may have an impact on the success of an organization: political, economic, social (or sociological) and technological factors These four areas form a

simple framework for the analysis, although it should be borne in mind that there will be varying degrees of overlap and interrelation between them

Analysis of general environment helps recognize and evaluate:

e Opportunities in the environment a certain enterprise can take advantage

e Threats are what enterprise can have to cope with Next, it allows organizing and constructing specific business tasks, defining long term and feasible targets and designing a strategy in accordance with business targets

We can use such a model as PEST to analyze the general environment This model uses factors as follows:

e Politically

e Technological

These are four factors, which directly influence on economic sectors as they are out

of the enterprise and the sector The sector has to suffer from its impact considered

as objective factor Based on impacts, enterprises will put forth policies and business activities in an appropriate manner

Today, some theory add Environmential and Legal factors to become PESTLE model

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political ideology

Political factors, or how and to what degree a government intervenes in the economy Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit good or merit bad) Furthermore, governments have great influence on the health, education, and

infrastructure of a nation

These factors have the influence on all business lines in a certain territory They can also threaten the existence and development of any sector When operating in a certain administrative area, enterprises will have to conform to institution and legislation factors in that area

2.1.1.2 Economic factors:

This part of the analysis is concerned with overall prospects for the economy Key measures would include GDP/GNP, inflation, interest rates, exchange rates, unemployment figures, wage and price, controls, fiscal and monetary policy Issues such

as the availability of raw materials and energy resources and the state of infrastructure

and distribution networks may also be relevant

Economic factors include economic growth, interest rates, exchange rates and the inflation rate.These factors have major impacts on how businesses operate and make

decisions For example, interest rates affect a firm's cost of capital and therefore to what

extent a business grows and expands Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

Enterprises need to pay attention to economic factors in aspects of short term, long term and government interference in the economy

Often based on economic factors, enterprises will decide to make investment in lines and sectors of business

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e fconomic situation: Every economy has its own cycle and during a certain period of the economic cycle culerprises Will Make their own Gecisions li li appropriate manner

e There are such factors to affect the economy as interest, inflation

e conomic government policies: basic wage law government strategies on economic development, preference policies: tax reduction, subsidy

e future economic outlook: speed of growth, GDP increase, GDP rate per investment

bocddsS Social fac {ors

These are probably the most difficult factors to and predict, as personal attitudes, values and beliefs are involved Demographic factors such as birth rates, population growth,

regional population shifts, or a change in the age distribution of the population are also

important Factors that may be relevant include levels of education, employment patterns, career expectations, family relationships, lifestyle preferences, trends in fashion and taste, spending patterns, mobility, religious beliefs, and consumer activism

Social factors also include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety Trends

in social factors affect the demand for a company's products and how that company operates For example, an ageing population may imply a smaller and less-willing workforce (thus increasing the cost of labor) Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older

workers)

Each nation or territory has its specific cultural values and social factors and these

factors are customer characteristics in those regions

Cultural values are to create a society so they can make that society exist and

develop Therefore, cultural factors are often protected in a close manner and

especially they are spirit cultures However, we cannot deny cultural interferences The cultural interference will change consumption psychology, lifestyle and create the prospect of development in different sectors

In addition to culture, social characteristics also make enterprises pay attention when surveying the market Social factors will divide the community into customer groups and each group has its own different characteristics, psychology, income etc:

e Life expectancy, health status regime of nutrition, diet

e Life style Knowledge viewpoints of aesthetics and life psychology

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"Mastering the Business Environment" (2001) is a further development which also encompasses cultural, aesthetic, customers and sectored factors

Technological factors include ecological and environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change They

can determine barriers to entry, minimum efficient production level and influence

outsourcing decisions Furthermore, technological shifts can affect costs, quality, and lead to innovation

Related to the level and direction of technological advance or innovations in the society there are products, technological process or new materials; common level of science and scientific advances in a basic manner

»

lL.2./.2 Porter's Five Forces evaluation

The model of pure competition implies that risk-adjusted rates of return should be

constant across firms and industries However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure

Michael Porter provided a framework that models an industry as being influenced

by five forces The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm

operates

Figure 3 Porter’s Five force figure

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of suppliers existing firms of buyers

Threat of substitute products or services Substitutes |

/.2./.2.1 Pressure from suppliers

A producing industry requires raw materials - labor, components, and other supplies

This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products Suppliers, if powerful, can exert

an influence on the producing industry, such as selling raw materials at a high price to

capture some of the industry's profits The following tables outline some factors that

determine supplier power

Suppliers can cause the pressure on enterprises as follows:

e Number of suppliers: it will decide the pressure of competition, the right of negotiation in the sector If in the market, there are only some big scale suppliers, which will create the pressure of competition to affect all production and business activities in the sector

¢ Scope of supplier: Suppliers, which have their big scale of operation, will gain a stronger position than customers will

* Quantity of appropriate substitute products: the pressure of a supplier will go up

if there are a few appropriate substitute products

e High quantity of individual customers compared with big customers: Suppliers will have more pressure than individual customers will

e The product importance of a supplier in the success of a customer: A product of the supplier plays a very important role in activities of the customer so the supplier will cause a higher pressure

e The level of cost is applied to converse the product if it is required to replace the supplier: The supplier will have its higher pressure if the level of cost so that the customer converses to use any other product is rather high

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¢ [he penetration of a supplier in the business field of a customer: If the supplier

hus ihe capacity io enter the ficid where ihe cusiomer is operating so it will make

a higher pressure than that of the customer

1.2.2 Pressure from Buyers

The power of buyers is the impact that customers have on a producing industry In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monophony - a market in which there are many suppliers and one buyer Under such market conditions, the buyer sets the price In reality, few pure monopolies exist, but frequently there is some asymmetry between a producing industry and buyers

Buyers make a pressure of competition, which can directly affect all production and business activities in the sector

Buyers cause a pressure to the enterprise on price, quality of product or service attached and they control the competition themselves in the sector through the decision of buying

The customer has his increasing right of negotiation when:

e There are a limited number of buyers, who are big customers

Buyers consume most of products in a certain sector

The buyer account for a high rate of annual revenue of a seller

e Expense to change into using any other product is low

The buyer has enough information on market and business lines of the seller The buyer has the capacity to enter a certain sector of the seller

/.2./.2.3 Pressure from potential entrants:

According to M Porter, potential entrants are enterprises, which have not yet existed in the sector, but they can cause any impact on the sector in the future How much or little pressure potential competitors make in the sector is subject to the followings:

e Sector attraction: This factor is shown through such criteria as rate of return, quantity of customers and quantity of enterprises in the sector

e Barriers of entry: they are factors which make the accession into a certain sector more difficult and more expensive (scope advantage: product difference: demand of capital: cost of conversion; access to distribution channels: disadvantage of cost: government policy: possible action)

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o [tis not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firnis may enter the industry also affects competition in theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market These are barriers to entry

o Barriers to entry are more than the normal equilibrium adjustments that markets typically make For example, when industry profits increase, we would expect additional firms to enter the market to take advantage of the high profit levels, over time driving down profits for all firms in the industry When profits decrease, we would expect some firms to exit the market thus restoring market equilibrium Falling prices, or the expectation that future

prices will fall, deters rivals from entering a market Firms also may be

reluctant to enter markets that are extremely uncertain, especially if entering involves expensive start-up costs These are normal accommodations to market conditions However, if firms individually (collective action would be illegal collusion) keep prices artificially low as a strategy to prevent potential entrants from entering the market, such entry-deterring pricing establishes a barrier

o Barriers to entry are unique industry characteristics that define the industry Barriers reduce the rate of entry of new firms, thus maintaining a level of profits for those already in the industry From a strategic perspective, barriers can be created or exploited to enhance a firm's competitive advantage

/.2.1.2.4 Pressure from substitutes

In Porter's model, substitute products refer to products in other industries To the economist, a threat of substitutes exists when a product's demand is affected by the price

change of a substitute product A product's price elasticity is affected by substitute

products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives A close substitute product constrains the ability of firms in an industry to raise prices

The competition engendered by a Threat of Substitute comes from products outside the industry The price of aluminum beverage cans is constrained by the price of glass bottles, steel cans, and plastic containers These containers are substitutes, yet they are not rivals in the aluminum can industry To the manufacturer of automobile tires, tire retreads are a substitute Today, new tires are not so expensive that car owners consider rethreading old tires Nevertheless, in the trucking industry, new tires are expensive and

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tires must be replaced often In the truck tire market, rethreading remains a viable substitute industry ln ihe disposable diaper industry, cloth diapers are a substitute and their prices constrain the price of disposables

is

!.2.5 Pressure of Competitors

Enterprises, which are operating in the sector, will directly compete with each other

to put pressure on the sector and create a certain intensity of competition The intensity in the sector will go up when:

e [here are many competitors or competitors have the same strength

e hat sector has its sluggish or declining growth: All competitors find out the Way to increase competitiveness to exist in the market

e Fixed cost or store cost is high: It is a rare possibility to converse into other sectors or other products

e It is a rare chance to create any difference or low conversion cost: Competitors have similar operations, products, prices, after-sale services

e When the strategic benefit is high: All competitors find out the way to exist in the market

e Exit Barriers: Like entry barriers, exit barriers are obstacles in the path of an organization, which wants to leave a given industrial sector (including factors involved in technology, high investment capital, redundancy costs, government

and other relevant stakeholders, strategies and plans)

Internal environment comprises of all factors and systems currently existing within

a business

Constantly analyzing these factors is critical to overcoming the company’s weaknesses and enhancing its strengths

To facilitate the internal analysis, Porter’s Value Chain Model is used:

Figure 4 Michael Porter’s Value Chain Model

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5 Product and Product and process design, production

~ technology engineering, market testing R & D

2 development

Procurement Supplier management, funding, subcontracting, specification `

LOGISTICS LOGISTICS MARKE TING

y | Examples: Examples Examples Examples

= Quality control, —§ Manufacturing, — Finishing goods Customer

>| receiving, packaging: order handling: management,

ọ raw materials production dispatch; order taking:

| Control: control, quality delivery; promotion

= supply schedules control: invoicing sales analysis

Upon information system evaluation, we will have to consider related aspects such

as the completeness, reliability, timeliness and modernity of the system

In the market economy, enterprise is a business unit, a lively corp, in the economic and

social life, Enterprises want to survive and develop should be good at organizing

functional activities such as managements and control, financial production, HR management, raw materials supply, and especially marketing activities and product consumption in am aim to connect the enterprises’ activities to the market

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» Sales and Marketin

Marketing analysis is usually the first step in the internal analysis of the company This study usually focuses on the following areas: product categories and qualities, market share, product prices, customer perception on product, quality and distribution costs, as well as marketing effectiveness and sales activities

Research on consumption policies and marketing strategy, it should focus on following

aspects:

e Organization and operation of distribution channels

e Price policy, promotion communication, sales promotion

After sales service, customer care

l.2.2.1.4 Servicing

A company’s customer services contain after-sales supports or services This

function could create the perception on customer’s mind on the differential value

through the ability to solve their problems and provide value-added services such as information provision, effective product usage guidance, etc

2 Supporting activities

/.2.2.2.1 Administrative, finance Infrastructure

The functional unit of finance and accounting can deeply and widely influence the whole enterprise, the finance and accounting unit is directly concerned all other activities Financial elements to be considered are Mobilization capability; cost, Profitability, capital structure

/.2.2.2.2 Human resources management

Resources play a key role for the business success Human beings provide the inputs for the objective planning, analysis of environment, selection and control strategies of enterprise Only people who can work effectively can create outcome for enterprise Human resource elements include Leadership mechanism, organization, professional level, ethnic and attitudes of the employees, employment policies

| 2.2.2.3 Product and technology development

Quality of efforts on business development can help the enterprise to maintain the leading position in the industry or the other way Elements conceming R&D in production include experience, scientific capacity, adoption ability, and science and technology application to meet the increasingly high need of the market Production is one operation of enterprise, which is closely related to product creation; this is one of the

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key activities of enterprise because it remarkably affects other activities and partly builds the business success Production and operation factors to be considered include:

> 2.2.4 Procurements

Procurements and inbound logistics refer to the management of inputs from purchasing to production and distribution The results from this process could significantly reduce the costs hence create greater values to the company

In summary, conducting internal analysis would help the company to identify its competitive advantages, as well as the obstacles to maintaining such competitive positions In other words, this process assists management in pointing out the srengths and weaknesses of the company and base on that, leveraging the strengths and minimizing the weaknesses to increase the competition capacity of the

company

| ˆ.Ý.Í kvtcrHal Factor Evaluation Matrix EFI

External Factor Evaluation Matrix is a strategic management tool, which is used to

know whether the firm is able to effectively take advantage of existing opportunities

aong with minimizing the external threats The analysis helps in formulating new

stategies and policies based on existing position of the company Some of the important opportunities, which can be included in the analysis, are new geographic markets, online sales, forward or backward integration, expanding the company’s product line, increasing demand for the industry’s product etc Similarly, threats irclude; slow down in market growth, increasing competition, shift in buyer needs aid taste, loss of sales to substitute products, likely entry of potent new competitors

ec

P-ocess of building EFE matrix includes five steps:

e Step |: Making category of factors having decisive role to the success of the enterprise (10-20 factors)

e Step 2: Determining the importance level from 0.9 (do not care) to 1.0 (very important) Total important level on the category must be 1

Rate factors: Assign a rating to each factor Rating should be between | and 4 Rating indicates how effective the firm’s current strategies respond to the factor 1 = tte response is poor 2 = the response is below average 3 = above average 4 =

stperior Weights are industry-specific Ratings are company-specific

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e Step 4: calculating point of each peripheral factor by multiplying coefficient

with importance degree

e Step 5: Add total points of the whole category of factors If it reaches 2.5, it is medium and highest is 4 and lowest is 1

Figure 5 Process of building EFE

peripheral

factors

[.~ Ì.” ( ompetitive Profile Matrix analysis CPM

Here we will be using weighted rating system for the construction of competitive profile matrix Some of the important steps involved in the construction of

competitive profile matrix are as below

e In the first column, lists down all the key success factors of Industry (usually

from 6 to 10)

e In the second column, assign weights to each factor ranging from 0.0 (not important to 1 (most important) Give greater weights to those factors, which have grater influence on the organizational performance The sum of all weights must equal 1

e Now rate each factor ranging from | to 4 for all the firms in analysis Here, rating | represents major weakness, rating 2 shows minor weakness Similarly, rating 3 indicates minor strength whereas rating 4 shows major strength It means that weakness must receive | or 2 rating while strength must get 3 or 4 rating

e Calculate weighted score by multiplying each factor’s score by its rating

e Find the total weighted score of all the firms by adding the weighted scores for each variable

| Ÿ Ý Jaternal Factor Evaluation Matrix TKI

This matrix summarizes and evaluates the most important strengths and weaknesses

of different business functions as well as the entity as a whole The IFE matrix is

developed through 5 steps, similar to that of EFE matrix, the only major difference

is the type of factors that are included in the model: they are the key influencers over a business’ competitive competency in a given industry

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Total Weighted Score: The sum of all weighted score is equal to the total weighted score; final value of total weighted score should be between 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 then 2.5 are considering as strong in position

f / SHOT] analy SZ‘

Ihe SWOT analysis/ model are a tool that allows a company to contemplate its competitive positioning This method uses the same name SWOT matrix to evaluate both internal and external factors that influence a business operation The SWOT framework is a tool for auditing an organization and its environment

SWOT is the first stage of strategic planning that helps decision makers to focus on key issues It is also a critical tool for company top management to formulate strategic plans Each letter in the SWOT acronyms represents one meaningful word:

S = strengths, W = weaknesses, O = opportunities, T = threats

se Combining S/O collected from the combination between strengths and opportunities of enterprise Enterprise need to use its strengths and opportunities

to compete to other enterprises, continuously expand market

¢ Co-coordinating W/O is the combination of weaknesses of enterprise and opportunities This combination opens to enterprise ability of overcoming weaknesses by taking advantage of opportunities

e S/T co-ordination is combination of strengths and threats; it needs to pay attention to the use of strengths to overcome threats

e W’/T co-ordination is the combination between weaknesses and threats of enterprise This combination establishes requirement to the enterprise that it needs to have measure to reduce weaknesses, avoid threats by setting up defensive strategies

To build a SWOT Matrix, the first step is listing down the strengths, weaknesses, opportunities and threats of the entity, then comparing them in a systematic way based on the relative importance of each of the factors to arrive at possible strategy combinations, as illustrated in the below table:

Table 1 SWOT analysis summary

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S: Strengths _S-O strategies S-T strategies

Use strengths to take advantage Use strengths to

\V: Weaknesses W-C) strate: W-I strategies

Minimize weakness ind take Minimize weaknesses and

advantage olf opportunities ivoiding threats

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The IE matrix (Internal — External Matrix) organizes the different SBU-level

srategies (SBU= Strategic Business Unit) into a table with 9 separate cells The iratrix is built on two major aspects:

he total weighting score for IFE matrix on the X- axis

The total weighting score for EFE matrix on the Y- axis

e Each SBU would form its own IFE and EFE matrices and base on these, the IE matrix would be formed for the whole company

e Interpretations of the X-axis scores (IFE matrix):

+ If total score ranges from 1.0 — 1.99: weak

+ If total score ranges from 2.0 — 2.99: Average

+ If total score ranges from 3.0 — 4.0: strong

e Interpretations of the Y-axis scores (EFE matrix):

+ If total score ranges from 1.0 — 1.99: Low

+ If total score ranges from 2.0 — 2.99: Medium

+ If total score ranges from 3.0 — 4: High

Tie Quantitative Strategic Planning Matrix or a OSPM approach is the method that

uses inputs from initial stages of analyses, and allows the company executives decisively to select the best strategy to the firm QSPM approach includes the

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e Step 3: Determining the alternative strategies, which will be considered by the firm tor implementation

e Step 4: DeterminingAttractiveness Score (AS) for each alternative strategies Attractive Score indicates the relative importance or attractiveness of one alternative strategy compared to other strategies The range for Attractiveness Score 1s between | to 4: / not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive

Attractiveness Scores are defined as the product of multiplying the classified weights (step 2) by the Attractiveness Scores (step 4) in each row: the higher Total Attractive Score, the more attractive the strategy

e Step 6: Calculate the Sum Total Attractiveness Score by adding all Total Attractiveness Scores in each strategy column of the QSPM The QSPM Sum Total Attractiveness Scores reveal which strategy is most attractive Higher scores point at a more attractive strategy, considering all the relevant external and internal critical factors that could affect the strategic decision

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CHAPTER 2 ACTUALLY REAL ESTATE BUSINESS OF OGC

Ocean Group is a public enterprise listed on the stock exchange with the chartered capital of 2,500 billion of VND Market capitalized value as in March, 2011 was about 5,000 billion of VND Currently, OGC is holding dominant shares in many affiliate companies operating in real estate, hotel, finance & telecommunication media industries OGC is also known as the strategic shareholder of Ocean Bank, one of the youngest and most dynamic banks in Vietnam

e 6/2007: Ocean Group Established with an initial chartered capital of VND 2,000 billions

e 01/01/2009: OGC implementation of investment and holding controlling shares

in the Ocean Securities Company:

e 31/12/2009: OGC implementation of investment and holding controlling shares

in the Ocean Media Company, Ocean Hospitality, VNT company Itd;

e 31/12/2009: OGC holds 50% in the control of Trang Tien Ice Cream Company;

e 1/1/2010: This date marked a new period of growth and development in scale and business operations when Ocean Group published new corporate identity system with new images and values showing a multi-functional, dynamic and sustainably developing group

e 9/4/2010: Labor Union — Ocean Group was officially established Labor Union

is the representative of the whole staff and employees of Ocean Group, helping the laborers to work better and contribute more effectively to the organization and society

e 16/4/2010: Ocean Group Joint-stock Company was approved by the Ho Chi Minh City Stock Exchange to be listed on 16/4/2010 with the chartered capital

of 2,500 billion of VND The liquidity of OGC was rather high and therefore this stock was frequently ranked among top 10 most transacted stocks Currently, OGC is a blue-chip on HOSE

se 14/7/2010: Ocean Group Joint-stock Company cooperated with SSG_ to construct a large Trade center in Van Thanh, Binh Thach District - HCM City Under the agreement with SSG Ocean Group will be entitled to use the first 5 floors of the tower at the Trade center

7/10/2010: Ocean Group together with Ocean Bank and PetroVietnam Construction Joint-stock Corporation — PVC — signed a joint investment agreement with value of over | million of USD

17/12/2010: Ocean Group Joint-stock Company signed join a joint-venture agreement with Legamex and GDI on the cooperation of constructing Lega fashion House Project in HCM City — this is a complex of Fashion - Commerce Service Center and Office building with floor area of 60,000 m? Total investment capital of this Project was 800 billion of VND

31/12/2010: Opened the 5-star StarCity Saigon hotel which is among the first hotels in the series of StarCity Hotels of Ocean Hospitality & Service Joint- stock Company, a member of Ocean Group

See more in Appendix

peel | Ế mánteeo | PR and

des soak | © construction | Marketing

¬———- ` S —

| Project

NManagement xwidttÊ À | Managem ert

department department | fe partment

fy Real estate and assets

With over 56% of revenue and 83% of profit, this business is the strategic business area of Ocean Group Company

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Recently, Company’s implement nearly 30 projects from M&A; get authority,

to design and construction

In the next few years, the Group will invest in those projects of large investment capital, locating on breeding streets of cities such as: Trang Tien, Le Van Luong, Truong Chinh (Hanoi), Tran Phu (Nha Trang), Hoi An (Da Nang), Nguyen Van Troi, Thu Thiem (Ho Chi Minh City), Ha Long (Quang Ninh), etc These projects will provide many apartments, resorts, trade centers and high-quality hotels with full services

11.3.1 VNT Nguyen Trai project

This project is located at the crossroad of Nguyen Trai and Truong Chinh street It takes only 10 minutes to drive to the center and 5 minutes to big commercial centers such as Parkson, Pico mall; top universities such as National University, Hanoi University of Foreign Studies and entertainment as theatre, restaurants, cafeteria The Intersection “Nga Tu So” is the most active and busy in Hanoi and life shall be

so easy for families to ‘settle’ here

Location: number 19, Nguyen Trai street, Thanh Xuan district, Hanoi

Project overview: VNT Nguyen Trai provides 3,500 m? community area, 14,655 m’ of apartment, 3.923 m’ garden houses and 5,835 m? offices and supermarket The complex includes services block with theatre and public services such as sport,

swimming pool, culture accommodation ; a block of commercial centre and

offices with two basements and a block of apartments with area from 90 to more

than 200 m’

A self contained combination with full services shall meet all demands of a luxury and convinient life of young and successful families

Location: Located on Le Van Luong street, opposite to 18T building, Trung Hoa Nhan Chinh town, StarCity Le Van Luong brings the most convenient life for

families by travelling to schools, banks, hospitals, supermarket within 1 km

Project overview: StarCity Le Van Luong — a luxury 27 storey — combination built

on area of 3.724 m? with total investment of 760 billion dong The foundation of the building includes 5 floors of offices, sport and entertainment, shopping area

Service conveniences:Swimming pools, shopping area, entertainment for kids, massage & spa Kindergarten, display area, conference room Health club

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Interior: StarCity Le Van Luong apartment shall be fully furnished with most of the furniture and equipment such as full-furnished kitchen, toilet, air conditioner, floor, doors, electric system, security system

! 1.3.3 Starcity Nha Trang

Owning the most beautiful location in Nha Trang at the centre of Tran phu street and opposite to the sea, StarCity Nha Trang is a special gift for sea lovers who want

to dip their lives into fresh nature From the hotel, the condotel owners could easily access to famous spot such as Ponagar temple, Yanbay cascade, Long Son

pagoda

Condotel model (hotel renting management) began in South Florida (USA) in the 80s and now expands all over the world and valuated as “hottest trend” on real estate market Condotel is tourism real estate model or the ‘second home’ for high class relaxing demand To own the Condotel is the choice of not only noble but also

successful people

Investor: Ocean Hospitality & Service JSC

Location: Number 74, Tran Phu, Nha Trang, Khanh Hoa province

Project overview:StarCity Nha Trang is a 21 storey — 4 star hotel built on area of 2.454 m’ with 217 hotel rooms and 92 condotel flats The 2 foundation floors shall

be service area of shopping, bar/restaurants, swimming pool, healthcare and spa, etc Hotel rooms for tourists are arranged from 3th to 15" floor and condotel apartments are on 16" to 21th floors

Services conveniences: Restaurants; Swimming pool, entertainment, sport area

e Investment in shares of Commerce Bank Ocean (OJB) 20% of chartered capital

of OJB, equivalent to 400 billion The company is one of strategic partners, major shareholders of OJB:

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e Investments in Ocean Securities Company (OCS) 75% of OCS capital equivalent to 225 billion and is the parent company of the OCS:

e Investment in joint stock company Ocean Hospitality (OCH) 79% of OCH capital, equivalent to 420 billion and is the parent company of OCH:

¢ Investment in joint-stock company Ocean Media company (OMC) 50% of chartered capital of the OMC, equivalent to 10 billion:

e Investment in Joint-Stock Company Investment in infrastructure development VNT Co.ltd (owner of Minh Duc Industrial Park, Hung Yen) 50% of chartered capital of the VNT, the equivalent of 40 billion

e Investment Corporation Real Estate Management Ocean 90% of chartered capital

e Investment in joint-stock company 75% Ocean Thang Long capital

/.2.1 Mission

e Continuously improve the quality of products and services to meet all customer needs

e To maintain the prestige of the company in the market

e Sustainable Growth has responsibility to society

e Profit is a vital necessity for the survival and growth of the company

2.1.2.2 Vision

"In line with the development and integration of Vietnam and its achievements, Ocean group is trying to become a multi-industrial and multi-national economic

group With its members in Financial-Banking, Securities, Media, Real Estate, and

Construction which have different business but cooperate well in works, Ocean

Group want to have the support, cooperation and efforts from partners, Customers, Shareholders, and all its staffs to successfully achieve the goals of Ocean Group." 24.2.3 Core value

e Overlooking the Ocean

e Along with the development and integration of Vietnam and the successes have been achieved, Ocean Group is trying hard to rise to become a multi-sectored economic groups and multinationals With active members in the field of Banking and Finance, Securities, lelecommunications, Real Estate and Construction functions, different industries, but relatively good support for the operation of each other, forming their own Ocean Group a strong individual to survive and grow Ocean Group called for the support cooperation and efforts

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development objectives of the Group

> 4.] Hotel

Ocean Hospitality & Service Joint-stock Company under Ocean Group has invested

in a series of exclusive hotels with the brand name of Starcity Hotel, ranked 4-star

or higher, in HCM City, Nha Trang, Hoi An, Hanoi and Ha Long, increasing total number of rooms to be served to over 1,300 rooms With the chartered capital of 1,000 billion of VND, the Company has listed on HNX stock exchange since October 2010

2.1.2.4.2 Financial Service

Ocean Securities Joint-stock Company has its chartered capital of 300 billion of VND The company has oriented its future businesses on investing in high

technology, improving the quality of human resource and providing security

services meeting the national and regional standards

Ocean Group owns 20% of total shares of Ocean Bank With continuous effort, this

bank has affirmed its status in the belief of the public Ocean Bank has been

approved the plan to increase its chartered capital to 4,000 billion of VND

Ocean Group owns 50 % of chartered capital of Ocean Media Joint-stock company (OMC) Incorporated since 2006, up until now, OMC has become the leading unit

in telecommunication media, television, radio, and commercials OMC is currently

the production and exploitation partner of the first economy-finance specialized TV

program — INFOTV finance INFOTV currently has 2.5 million of subscriptions and is a popular TV program with domestic and foreign audience

Real estate Business was second level after the service sector accommodation and dining with U.S $ 7.6 billion and registered capital increase To attract investment from foreign direct investment in 2010 reached 18.6 billion USD to 21/12/2010, by 82.2% over same period in 2009, including registered capital of 969 newly licensed projects reached 17.2 billion USD registered capital of 269 additional projects are licensed respectively from the previous year to 1.4 billion USD Capital of foreign

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