G1 00247 DIENQUANG JSC. COMPETITIVE STRATEGY FOR THE PERIOD 2011-2015 CÔNG TY CỔ PHẦN ĐIỆN QUANG CHIẾN LƯỢC CẠNH TRANH GIAI ĐOẠN 2011-2015

G1 00247 DIENQUANG JSC. COMPETITIVE STRATEGY FOR THE PERIOD 2011-2015 CÔNG TY CỔ PHẦN ĐIỆN QUANG CHIẾN LƯỢC CẠNH TRANH GIAI ĐOẠN 2011-2015

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

Group Number: 01

Student’s name:

e HO QUYNH HUNG

e DUONG HO THANG

e NGUYEN THI KIM VINH

e BUI THI DIEP

e LAI MANH CUONG

CLASS: GaMBA01.C04

Ho Chi Minh City, 2011

LIST OF FIGURES, GRAPHS 5 22222222 2c 6

HN 1l KUỦL RUN» 1.1 TT sxoggVsksgi§ iấ gãtjco« co cgg HỤ H158 SE S994 TH 12 TH 000000000005 Sạc 7

1.3 Tools to prepare business strategies SH 15

1.3.1 Collection and systemization of information .cccccscccsccsesceecseeceeeeseeceecccecceceen 16 I.3.2 Combination Stage ác t1 2E 2n 17 1.3.3 Decision making stage .cccccccsssesssesssssssessssssstssssvessteseseeeeseeesseeeeeeeeeeeceeccce 19

CHAPTER II: THE SITUATION OF DIEN QUANG LAMP 552222 21 JOINT STOCK COMPANY - 2n 21 2111121 2tr 21 2.1 Overview of Dien Quang Lamp Joint Stock Company - c sccxcsxcs 21

2.1.3 The process of establishment and developMent eccccccsssscsssestsccsesescsestscsees 23

214 The orgamization oo eeceeccccscesssesssessssssessecasssssssssessssssessteceseetseeeseeeseesceeeeeececc 24

2.1.5 Vision — Mission — Core value ¿25s 2S 225221151 25

2.1.6 Product positioning: “Safe — Economic — Environment friendly'”” 26

2.1.7 Dien Quang JSC."s logot ccccccsscssssessssssssesssussssessresssibsssiessiectieeseieees seeseeeeecccc 28 2.1.8 Slogan: "Wherever electricity goes, Dien Quang JSC., will be right there” .28

2.1.9 Dien Quang JSC.'s flag 0 S2 2n 28 2.1.10 Dien Quang JSC."s song c2 nhe 28

2.2 Dien Quang JSC., External Factors Evaluation s2 S22 28

ca Factors of politics and aW c2 28

2.2.6 The factor oftechnique s2 222112221122 ae

2.2.7 The factor Of COMPCHITION eee eeceeecccscssessessessesssessesresseeseesesssesteeteeteeersereeceee 32 2.2.8 The Dien Quang JSC., competitors .cc.ccccessssssessssssesssssissseseeesseeeeeeceeeeeeeeeecccc 33

2.3 Dien Quang JSC., Internal Factors Evaluation 222222 So 34

2.3.1 Business management activities .ccccsccesssssssesssssssssssissssseeeesseeeeeeeeeceeeeeecccce, 34 2.3.2 Company Culture e.ceecccessssssssuessssessssesessiessisvsssssssssesesieeeseeeees bese gS

2.3.3 The system of Dien Quang JSC."s moral standards 52222222 35

7.3.4 Human resOurces -sscct 21112211221 35 2.3.5 Product quality control system - 25s 222212221115 36

2.3.7 Accounting finance cc2tt 121112111121 39 2.3.8 Production and operation .-s- 2ss 221122211121 4I 2.3.9 Research and Development 55s 22E 2222111221511 42

3.1 Strategy Analysis and Selection 2-55 25c 44

3.1.1 Matrix of external factors evaluation (EFE) ST HH HH ng nen eeec + 3.1.2 Matrix of internal factors evaluation (IFE) : Q0 TH HH ngày 45 3.1.3 Competitive Profile Matrix CPM 2 2252222251122 46

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Strategy Mangement 3.3.5 Accounting and Finance tt 222112222 58 3.3.6 Production managemeit - tt 221111222122 59 3.3.7 Research and Development (R&D) 5 22222222 59 3.3.8 Information Sy§tem ác 1211 1 22h a9

Table 2.1: Assessment of Vietnam’s political and judicial factors 29

Table 2.2: Assessment of impacts of Culture and Society 30

Table 2.4: Summary of production and business result from 2006 to 2010 40

Table 3.1 Matrix of external factor analysis 45

Table 3.2 Matrix of internal factor analysis 46 Table 3.3 Competitive Profile Matrix CPM 47

Table 3.6 SWOT Matrix 52 Table 3.7 QSPM Matrix 55 Table 3.8 Financial targets from 2011 — 2015 56

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LIST OF FIGURES, GRAPHS

Figure 2.3: The process of establishment and development 23

Figure 2.5: Vision — Mission Core value a

Figure 2.9: The chart of lamp market share in Ho Chi Minh City 33

Figure 2.10: The diagram of domestic distribution channel of Dien Quang JSC 38

Figure 2.11: The diagram of the interaction between processes 42

Figure 3.1 Competitive Profile Graph 48

Our research team is consisted of 5 members Three of us work for Dien Quang

JSC., (Dien Quang JSC.); 2 other members work in finance and banking sectors Dien

Quang JSC., is a state-owned joint-stock company with a long history of 35 years Because of its reputation in Vietnam and other neighboring countries, Dien Quang JSC., is receiving many offerings on services and relationship from credit institutions

After more than a year studying for master's degree in business administration

at the American University of Griggs, our group decided to apply the accumulated knowledge to prepare the business strategy in the period of 2011 — 2015 for Dien

Quang JSC., as a contribution to the process of building company’s development Strategy

We would like to spare our sincere thanks to Graduation Assessment Council

who has guided and helped us finish the thesis Our appreciation also goes to Dien

Quang JSC., for creating favorable conditions for us to collect statistics It would be not enough if we don’t mention the Griggs University, ETC — Hanoi National University, the trainers and classmates in Gamba-C0409 for their sharing of

knowledge and useful feedback throughout the course

Group | —C0409

model, position and vision Strategy is defined as foliowing:

“One consistent, comprehensive and unified plan which is designed to ensure

the completion of basic objectives of company” (Lawrence R Jauch & William F

Gluek (1989) Business Policy and Strategic Management)

“To identify the long-term fundamental objectives of companies including action plan with allocation of necessary resources to complete them.” (http://www.news.harvard.edu/gazette/2007/05.17/27-chandler.html January

mindset frameworks for action

s* Business strategy is usually divided into three categories:

~ Company-level: To identify and define the goals, objectives and activities of the

company's business, designing the policies and fundamental plans to achieve

the objectives of the company

~ Business-level: To select specific products or types of markets for their own

business activities within the company, to determine the plan of each business

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unit to accomplish its objectives, making contribution to the overall goals of the

company

~ Function-level: To identify solutions and plans for each business unit

Some other highly relevant definitions:

- Task completion report: The report of long-term objectives demonstrates the mission completion of the company's business regarding their provision of products and services to customers It helps distinguish one company with others It describes the values and priorities and overall development orientation

of the companies

— Annual objectives: They are milestones that companies must achieve to reach

long-term objectives It is described in the form of achievements ¡n

management, marketing, finance/accounting, production/operations, and

development research and information systems Annual objectives are very important in implementing the strategy

~ Long-term objectives: They are the specific results that one company tries to

achieve when pursuing their primary missions Long-term objectives are set to

be reached within more than one year They must be challenging, measurable,

appropriate, rational and clear They are applied to the entire company and to

each unit of the company Long-term objectives are important to design the strategy

~ Policies: They are means to achieve objectives They become the guide for decision making and implementation of activities which are cyclically repeated Policies are important in the stage of strategy implementation

~ Opportunities and challenges: These are the effects from external factors,

beyond the control of the company They may become either beneficial or harmful to the companies

~— Strengths and weaknesses: These are the effects coming from internal elements

of companies They are under the control of the companies and identified in relation with other competitors

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Types of strategies in business

1.1.2.1Concentrated development strategy

Each company’s strategy is applicable to the business-level units However, the business unit must first pay attention to the concentrated growth strategy because the central objects of these strategies are the products and market

This type of strategy mainly aims at improving the competitive position of companies with existing products through enhanced marketing

activities or development in the current market strategies without changing the product:

Market penetration: To seek the increase in market share for the available products and services in current markets through marketing efforts

Market development: To introduce products and services to new markets

Products development: To increase the revenues by improving, renovating the available products and services

1.1.2.2 Competition strategies developed by Michael Porter

Professor Michael E.Poter from Havard University defined the basic

competition strategies in his book titled “Competition Strategies”:

a) Low-cost leading strategy

This strategy creates competition by:

Setting lower price than that of competitors in the same industry to attract the targeted customers sensitive to price in order to increase the total profit This

Strategy is suitable with the business of large scale, capable of reducing costs in the operation

Refraining from reducing the price greatly The company is satisfied with

current market share and use lower cost as tools to gain the actual marginal profit in each sold product

b) Differentiation Strategy

in all places, scientific applications in the design and operation, optimal service, high quality, reputation and distinctive

C) Strategy focusing on key features

This strategy states that business units focus their attention on several segments

in the markets These segments can be identified by geographical areas, products and

customers The good segments are the ones that have not been covered or serviced

badly by competitors in comparison with the demand and expectation of customers 1.1.2.3Competition strategies for business basing on their share in the

~ Defense strategy: To help the top business strengthen its current position in the market The top business always faces fierce competitions from others, especially from the challenging ones As a result, the top business has to defend constantly against the attacks of its competitors

~ Market share expansion strategy: This is carried out by acquiring or inducing

the business of smaller rivals and attacking to seize the market share of weak

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competitors and do not invade in the weaker competitors In order to implement the

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attacking strategy, business needs to take following steps:

~ Clarify the competitors to be attacked and identify the objectives of attacking

strategy

~ Select the most suitable attacking strategy: attack forward, attack from side,

surrounding attack

¢) Business following the market: This is the business who does not want to deal with

top competitors or challenge the market because of insufficient resources, fear of loss,

high cost This type of business tries to avoid competition by following the market leader through simulation strategy:

— Completely simulate products, distribution methods, marketing activities and

provide products at targeted markets with low price

— Simulate some core activities of mixed marketing campaign of top competitors

and develop the differences in package, price, advertisement, selling networks

— Simulate some initiatives to adapt to the market by basing on mixed marketing campaign of the top competitors to improve their own marketing activities to meet the demand and expectation of targeted market

d) Business behind market

Business behind market often seeks one or several safe and potentially lucrative

segments of market In order to be successful in the narrow market segments, they tend

to implement the typical specialization strategies:

— Specialization with final users: Depending on business sectors selected by the business to select targeted customers wishing to use the product or service

~ Specialization with production and distribution steps: Business can select details, components of one complete product or stand-by service to that product

~ Specialization with product features: High quality, luxurious or ordinary

— Specialization with different product lines: Selection of one or several products

in the sector

~ Specialization wiih selection of services which are not provided by the

competitors

1.2 Preparation of strategy

Preparation of strategy is the first phase of the strategy management There are

4 steps in preparing the strategy Each step includes the following tasks:

1.2.1 Identify the business tasks

The idea of business report was developed by Peter Drucker in the mid 1970s

following his research at General Motors, 21 books and hundreds of his articles

Drucker said: "The business report is the statement highlighting the 'reasons for

existence’ of the company It answers the central question: What is our business? Clear business report is inevitably essential to establish goals and to draft strategies

effectively

1.2.2 External factor evaluation

Environment of one company include factors, forces and institutions out of control of that business managers However, they have the influence over the operation and performance of that business Company environment can be divided into two

levels: the macro-environment, the micro-environment

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Macro environment affects all business in different ways They include: (1)

Economic Environment; (2) Law, Government and Politics Environment; (3) Cultural

and Social Environment; (4) Natural Environment: and (5) Technology Environment

Micro environment is identified with one specific sector Business is subject to the influence of micro environment of its business sector It includes: (1) Competitors; (2) Customers; (3) Providers :(4) Potential competitors; (5) Substitute products

Analysis of external factors allows companies to clarify the opportunities (O) that companies can take advantage of and threats (T) that companies have to cope with

Identification and assessment of opportunities, challenges from external factors helps companies to build a clearly achievable business tasks, long-term objectives,

suitable strategies and reasonable policies to reach annual objectives

Analysis of external factors is hard to imagine In strategic management, researchers offered two tools for companies to give them score and quantify the affects

of environment to the operation of business This is called matrix of external factor evaluation (EFE) and matrix of image competition

1.2.3 Internal factors evaluation

The internal situation of companies is often assessed through functional areas

including finance, human_resources, management, company chart, marketing, research/development, technology

Assessment of internal situation of companies helps to identify strengths (S) and

weaknesses (W) The assessment result, then, can be useful to become the basis for

selecting the business strategies that can bring the strengths into full play and mitigate the weaknesses of companies

Similar to the analysis of external factor evaluation, the matrix of internal factor

evaluation (IFE) is applied to carry out the assessment of internal situations of

companies

Strategic objectives, visions, tasks, core values of companies, together with

controlled internal and external information will become the basis for selection of most

feasible strategies

1.3 Tools to prepare business strategies

According to Fred R.David, there are 3 Stages to complete the business strategies with different tools

— Stage 1: To collect and systemize the information

At this stage, basic information is collected and systemized to form business strategies Three tools are mobilized at this Stage including EFE matrix, image competition matrix and IFE matrix

~ Stage 2: This is the combination stage

At this stage, internal and external factors are selected, arranged and collectively analyzed to prepare the feasible Strategies Tools that are used at this stage

include —Strength-Weakness-Opportunity-Threat (SWOT); Matrix of _ strategic positions, Activity Assessment ( SPACE) and Matrix of big strategies

— Stage 3: Decision-making stage

This stage uses only one tool of qualitative Strategy planning matrix (QSPM)

This matrix makes use of information at stage 1 to assess objectively business strategies developed at stage 2 so that the best business strategies for companies are

selected

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1.3.1 Collection and systemization of information

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1.3.1.1 EFE Matrix (External Factors Evaluation)

This EFE is implemented consequently as following:

~— Step_I: Prepare the lists of decisive factors in the business sector including opportunities and threats

~ Step 2: Assess the importance level of each factor using the ascending scale from 0,0 to 1,0 with the total score of all factors being equal to | This importance level bases on business sector of companies

~ Step 3: Give scores from | to 4 to each factor to reflect the reaction of

companies towards that factor 4 is positive 3 is above the average 2 is average

and score | is little

— Step 4: Identify the overall scores of each factors (by multiplying scores gained

in Step | and Step 2)

— Step 5: Identify the scores of importance of companies by judging score gained

in Step 3

The high score is 4 and lowest is 1 Average score is 2,5 The higher the score

is, the better companies react against external factors

1.3.1.2 Image competition matrix

This matrix identify the main competitors of companies This matrix is the

There are also 5 steps to establish IFE matrix:

~ Prepare the list of decisive internal factors

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Assess the importance level of each factor using scale from 0,0 to 1,0

(ascending level) with overall score of all factors of 1 This level bases on the

importance of each factor to companies regardless of whether they are strengths

or weaknesses

Give score from | to 4 to each factor reflecting the internal characteristics of that company ! reflects the biggest weakness, 2 the smallest weakness, 3 smallest strength and 4 biggest strength

Identify the overall scores cf each factor (by multiplying the scores gained in Step 2 and 3)

Calculate overall scores of importance towards companies

4 is highest, 1 lowest and average 2,5 The overall score lower than 2,5 reflects companies’ weak internal evaluation That higher than 2,5 shows the companies’

strong internal factors

1.3.2 Combination Stage

1.3.2.1SWOT Matrix

SWOT Matrix is the combination of strengths (S), weaknesses (W), opportunities (O) and threats (T) to form 4 types of strategies:

SO Strategy: Usage of internal strengths of companies to explore opportunity of

external factor evaluation

WO Strategy: Making use of external opportunities to improve the internal weaknesses

ST Strategy: Usage of companies’ strengths to avoid or mitigate external

This matrix includes horizontal line reflecting competition position of

companies in the market (strong or weak) and vertical line reflecting the growth of market (fast or slow) Suitable strategies are listed in below table:

Fast

Í Corner ll Corner I

1 Market development 1 Market development

2 Market penetration 2 Market penetration

3 Product development 3 Product development

4 Horizontal combination 4 Forward combination

5 Selection 5 Backward combination

6 Exclusion 6 Horizontal combination

7 Diversify concentration Weak Strong

Corner III Corner IV

L Reduce expenditure l, Diversify concentration

3 Horizontal diversification 3 Linkage diversification

stage) to make objective assessment of alternative business strategies

All the strategies developed in Stage 2 are not automatically used in QSPM

There are 6 steps to prepare QSPM:

Step 1: Make the list of S, W, O, T developed in EFE, IFE matrixes

Step 2: Categorize factors suitable to EFE, IFE

Step 3: Study the matrix in Stage 2 and identify the alternative strategies

Step 4: Identify the attraction scores (TAS): assessment score from | to 4 in

which | reflects no attraction, 2 little attraction, 3 quite attraction and 4 very

high attraction

Step 5: Calculate the overall attraction score (TAS) in each row by multiplying scores in Step 2 and AS in Step 4 (TAS)

Step 6: Calculate the overall attraction score in each strategy The most

attractive strategy is the one in Step 6 with the highest score of 6

In summary, there are different stages in developing the business strategy They include the collection of initial inputs, analysis of this information to select the suitable

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CHAPTER II: THE SITUATION OF DIEN QUANG LAMP

JOINT STOCK COMPANY

2.1 Overview of Dien Quang Lamp Joint Stock Company

2.1.1 General information about the Company

Dien Quang JSC., is an enterprise privatized from a State-owned enterprise according

to the Decision number 127/ QD-BCN dated November 10", 2004 of the Minister of Industry (now called Ministry of Industry and Trade)

DIEN QUANG LAMP JSC

Address: 121-123-125 Ham Nghi,

Nguyen Thai Binh ward,

1“ District, Hochiminh City

Produce and trade in all

lighting equipment, glass

tubes and glass products

Trade in materials, raw materials, parts for lighting equipment, industrial and civil electrical equipment, chemicals (except strongly harmful chemicals)

Trade intermediation Trade in local and interna- tional tourism

Consult, build, install and maintain low-voltage and medium-voitage _ electrical system; lighting system for public, industry and civil;

electro-refrigeration sys- tem; firefighting and fire

& drain system; automatic electrical system; electrical

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2.1.3 The process of establishment and development

Figure 2.3: The process of establishment and development

(Source: Dien Quang’s annual report)

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Figure 2.4: The organization

(Source: Dien Quang’s annual report)

nexporting Vietnam technology to international market

" CREATIVITY - TOLERANT - RESPONSIBILITY”

Dien Quang orients to develo corporation in field of ightng and electrical

Dien Quang commits to bring consumers products which ârê ˆ$af@ ~ $avino ~ environment friendlyˆ

Dien Quang commits to meet fully customers satisfaction

Dien Quang highly appreciates human resource as the

most valuable assets and a decisive factor to succeed

Figure 2.5: Vision — Mission — Core value

(Source: Dien Quang’s annual report)

for each of Dien Quang, Dien Quang maxx products, etc

* Different type of light: Daylight, | | |

sign light, etc

ANT! WET COMPACT LAMP

* Totally closed technology, 100%

anti wet

* Suitable for outdoor lighting, or highly wet environment

* Used for agriculture firms, (Flow-

er, Dragon Fruit on reverse pe-

riod) raise shrimp, fish,etc (sea- food)

Figure 2.6: Products ( Source: Dien Quang’s annual report)

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Life time: up to 8000 hours

* Powerful light, the one and only

in Viet Nam that reach 110W

* Used for factory, public, etc

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* Beautiful design, power saving + Better light and nicer than normal

* Life time: up to 6000 hours

* TCVN standard

* High diversity, nice design

* Strongly light reflective

E BALLAST, NORMAL BALLAST

* Electricity leakage resistant, Strong capacity, totally safe + Used for all types of plug

DOWN LIGHT TYPES

- TCVN standard + Diversified designs, kinds

* Highly aesthetic

Figure 2.7: Products (Source: Dien Quang’s annual report)

2.1.8 Slogan: "Wherever electricity goes, Dien Quang JSC., will be right there”

The meaning: Wherever there is electricity, there are products, services and

people of Dien Quang JSC

2.1.9 Dien Quang JSC.’s flag

2.1.10 Dien Quang JSC.’s song

The song “Dien Quang JSC., shining” is the Company’s traditional song in all activities and ceremonies The song does not only show the spirit that Dien Quang -SC.’s people and products strive to achieve but also shows the pride of all members in Dien Quang JSC., family

2.2 Dien Quang JSC., External Factors Evaluation

2.2.1 Factors of politics and law

Assessment of influence of Vietnam’s Politics — and — Law factor

Stable political | Create the feeling of safe in

environment investment and actions

Support the company and vote

?rovincial policies | the company’s products as the

major products of the city

Fail to stop fake goods,

incomplete judicial counterfeit goods and the

The preeminence of the joint

Table 2.1: Assessment of Vietnam’s Political and judicial factors

2.2.2 The economic factor

In recent years, Vietnam’s economy has witnessed high development In the last

10 years, Vietnam obtained major achievement in realizing the target of transforming from a low-income country to a medium-income country, which marks a significant

improvement in status of Vietnam

USD ngu ơi

The above chart shows that the people’s income has always been improving and increasing The GDP of 2010 has doubled that of 2004, which results in a positive impact on the domestic purchasing power, including the lighting industry Once the people's income has increased, they will pay more attention to the health and safety of their family members, especially their children: therefore, they will spend more on buying products with high quality, good appearance and high safety level However,

The habit of preferring

new products developing new products

Easy to enter the market

“Increased population | The market develops and

and income diversifies

Huge work force with} The labor cost is low and

low average age diversified

laborers are trained and

The habit of preferring goods produced by foreign

Osran, Clipsal, and National Encourage investment in | Foreign companies are strong

in R&D

Management level

and low business efficiency

Table 2.2: Assessment of impacts of Culture and Society

The lighting market is now seeing dramatic growth, especially in big cities where the industrial life is gradually shaping and developing The working force is trained,

but the management is insufficient Therefore, due attention should be paid to the improvement of management skills for the management team

of economic growth with more and more buildings constructed; as a result, the demand for electric equipment, lighting equipment is growing, and more and more Vietnamese companies as well as foreign companies are investing in manufacturing this equipment

to serve the domestic and international demand

At present, the whole country needs more than 90 million lighting products, in

which 40 million are fluorescent lamps, 30 million are bulbs, and 20 million are

compact lamps and other lighting products

Today people tend to use lighting products which are of high quality, economical, safe, and diversified in patterns and friendly with the environment This will be a potential market for lighting products in the future

2.2.4.2 Supply

At present, only few Vietnamese enterprises can manufacture lighting products

In order to serve the demand of consumers, Vietnamese enterprises have to directly compete with foreign companies, with exported goods, especially those illegally

imported from China with low price

2.2.5 The development trend of lighting industry

The market for lighting products will more and more expand in the future, for

the economy is growing, and the urbanization and industrialization are taking place vividly, which draws the rapid and sustainable development of the lighting industry

In the mid term, the economy is still in the growing stage, and experts predict that it will continue the growth despite difficulties at the moment This is the opportunity for companies to expand their activities, take advantage of the markets to

enhance the growing speed