Setup strategic development for petro VietNam urban development joint stock company period 2011- 2015 and vision to 2025

To survive and develop, businesses need to build their own orientations, appropriate business strategy based on research, analysis of the external business environment, its internal envi

CAPSTONE PROJECT REPORT

SETUP STRATEGIC DEVELOPMENT FOR PETROVIETNAM URBAN DEVELOPMENT

JOINT STOCK COMPANY PERIOD 2011- 2015 AND VISION TO 2025

Group No.: 6 Student’s name:

Nguyễn Thị Ngọc Chân Nguyễn Quang Tuyển Nguyễn Quốc Hưng

GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

-o0o -

CAPSTONE PROJECT REPORT

SETUP STRATEGIC DEVELOPMENT FOR PETROVIETNAM URBAN DEVELOPMENT

JOINT STOCK COMPANY

PERIOD 2011- 2015 AND VISION TO 2025

Group 6 Student’s name:

Nguyễn Thị Ngọc Chân Nguyễn Quang Tuyển Nguyễn Quốc Hưng

LIST OF FIGURES AND DIAGRAMS

- Figure 1: Set up business strategy framework 9

- Figure 1.1: Comprehensive strategic management by Fred R David 11

- Figure 1.2: Five forces model by Michael Porter 15

- Figure 2.1: Organization chart of PVC - Mekong 24

- Figure 2.2: GDP index of Mekong Delta region 28

- Figure 2.3: GDP index of Can Tho city 29

- Figure 2.4: Economic structure of Can Tho 29

- Figure 2.5: Population and labor chart of Can Tho 31

- Figure 2.6: PetroVietnam’s portfolio in Mekong delta region 35

- Figure 3.1: Re-Organization chart of PVC-Mekong 63

LIST OF TABLES

Table 2.1: Business result of PVC-Mekong in 2008-2010 period 25

Table 2.2: Total revenue of PVC-Mekong 2009-2010 26

Table 2.3: GDP Index of Can Tho city 28

Table 2.4: Population and labor data of Can tho in 2008-2010 period 30

Table 2-5: GDP growth by sector in 2004-2009 period 33

Table 2.6: PVN portfolio in Mekong delta region 34

Table 2.7: Balance sheet of PVC-Mekong (2009 and 2010) 40

Table 2.8: Business result of PVC-Mekong (2009 and 2010) 40

Table 2.9: Business Index analysis of PVC-Mekong (2009 and 2010) 41

Table 2.10: PVC-Mekong External Factors Evaluation (EFE) 43

Table 2.11: PVC-Mekong Internal Factors Evaluation (IFE) 45

Table 2.12: Competitive Profile Matrix of PVC-Mekong 47

Table 2.13: SWOT Matrix of PVC-Mekong 48

Table 2.14: Quantitative Strategic Planning Matrix (QSPM) 50

TABLE OF CONTENT

INTRODUCTION 7

1 The need for thesis research 7

2 Research objective 8

3 Objects and scope of the study 8

4 Methodology 9

5 Structure of the study 9

CHAPTER 1 10

1.1 The concept of strategy and strategy management 10

1.1.1 The concept of strategy 10

1.1.2 The concept of strategy management 10

1.1.3 The role of Strategy management 11

1.2 Classification of business strategies 12

1.2.1 Corporation-level strategy 12

1.2.2 Strategic Business Unit (SBU) 12

1.2.3 Function-level strategy 13

1.3 Strategic management process 13

1.3.1 External evironment analysis 13

1.3.2 Macro environment 13

1.3.3 Analysis of industry environment (micro-environment) 15

1.4 Internal environment analysis 16

1.4.1 Human resources 17

1.4.2 Finance 17

1.4.3 Management Activities 17

1.5 Strategy tools 17

1.5.1 External Factor Evaluation (EFE) 18

1.5.2 Internal Factor Evaluation (IFE) 18

1.5.3 Competitive profile matrix (CPM) 18

1.5.4 SWOT matrix 19

1.5.5 Internal/External matrix (IE) 19

1.5.6 Quantitative Strategic Planning Matrix (QSPM) 20

CHAPTER 2 21

2.1 General information of PVC-Mekong 21

2.1.1 Company introduction 21

2.1.2 The PVC-Mekong organization structure 23

2.1.3 Operation Markets and the key partners of the Company 24

2.1.4 Business results of PVC-Mekong in three years (2008-2010) 25

2.2 Analysis of environmental factors affecting to the operations of the Company 27

2.2.1 Macro Environment: 27

2.2.2 Micro Environment 36

2.3 Analysis of internal environment 39

2.3.1 Financial capability 39

2.3.2 Human Resource Management 41

2.3.3 Marketing 41

2.3.4 Product Quality 42

2.3.5 Leadership and management of the executive 42

2.3.6 External environmental evaluation matrix (EFE) 42

2.3.7 Internal environmental evaluation matrix (IFE) 45

2.3.8 Competitive Profile matrix of PVC-Mekong 47

2.3.9 SWOT Matrix 48

2.3.10 QSPM Matrix 49

2.4 Determine the need to develop strategies for PVC-Mekong 50

CHAPTER 3 53

3.1 Set up business strategy for PVC-Mekong 54

3.1.1 Development and investment strategy 55

3.1.2 Marketing and brand development strategy 56

3.1.3 Enterprise restructuring strategy 56

3.2 Implementing solutions 58

3.2.1 Developing investment solutions 58 3.2.2 Marketing and brand development solutions 58 3.2.3 Business restructuring solutions 60

INTRODUCTION

1 The need for thesis research

In the competitive situation taking place in all areas of business, if a company would like to survive and develope in the marketplace, the most important and necessary is to identify and orient business objectives, consistent with the frequent changes and suddenly the business environment to ensure sustainable development for business Besides, Vietnam joined the World Trade Organization (WTO) and the trend of globalization today, businesses are facing great opportunities to build and develop a new level, while also facing the challenges and potential risks To survive and develop, businesses need to build their own orientations, appropriate business strategy based on research, analysis of the external business environment, its internal environment to be able to leverage opportunities and minimize the risk from the business environment, as well as promoting the strengths and minimize the weaknesses of the business

Construction is a specific business, requiring special conditions such as strong financial resources, ability to raise capital, good relationships with agencies and specialized management function, the direction as well as long-term vision of leaders Construction activities also have a potential risk, but comes with big risks is very attractive profit has attracted so many companies participate The economy structure of Mekong Delta region in general and Can Tho city in particular is changing towards increasing industrial and construction In particular, the projected growth rate of the construction industry in 2011 will be getting 16.4% (period 1997-

2001 is 14.79%) In addition, forecasts of population growth of the Mekong Delta during this period has increased about 22.1 million people with GDP expected to 7,755,000 VND /person/year Since it can be seen the demand for housing, office buildings, shopping centers, hotels, industrial parks, infrastructure for subsistence needs and work of man will certainly increase in general and the Mekong Delta

region I general and Can Tho in particular, this is also the opportunity and challenge

of each enterprises in construction industry, including PVC-Mekong company Reference from the practical situation, to set up the business strategy for every construction business is very essential, it helps the business has right way to develop, clear business objectives, to direct every agencies and individuals to general objectives of the business, avoiding sectional status, disperse the resources that could be weakening the business Today's business environment is rapidly changing, globally competitive businesses always require active and creative to

adapt to such changes That's the reason why group No 6 selected the subject “Set

up the developing strategies for PVC-Mekong Company in 2011-2015 and orientation to 2025”

3 Objects and scope of the study

Object of the study is PetroVietnam Urban Development Joint Stock Company (PVC-Mekong) that is a company has multi business lines in which the main field

of activity is the civil and industrial construction Operating areas of the company is mainly in Can Tho city and the neighboring provinces in the Mekong Delta region The range of research topics mainly focus on analyzing and evaluating business environment of the PVC-Mekong in the period since its establishment in 2008 up to

now from which to build development strategies of the PVC-Mekong in 2011-2015 period and vision to 2025

Figure 1: Set up business strategy framework

On analysis the PVC-Mekong business environment we focused on analyzing the factors: economic, industry and internal environmential of the company

On defined goals based on the previous period, current capacity and direction in the coming years, then offers solutions and suggestions on development investment, human resources, financial and production

4 Methodology

- Desk research method: the information is collected from books, lectures, specialized reports, newspapers, magazines, statistics, information from the website

- Sources of internal information is the balance sheet, statement production and business activities, the annual financial reports from 2008 to 2010

- The thesis also uses meta-analysis method, comparative method, methods experts to analyze the production and business operations of the company

5 Structure of the study

Introduction

Chapter 1: Literature review

Chapter 2: Analyzing the business environment of PVC-Mekong

Chapter 3: Set up strategic business for PVC-Mekong

Conclusions and recommendations

CHAPTER 1 LITERATURE REVIEW 1.1 The concept of strategy and strategy management

1.1.1 The concept of strategy

The term strategy derives from the military field with the sense to point out the large and long-term plans based on what is sure that the enemy can do, what the enemy can not do Since then the term business strategy was born, according to the traditional strategy is to identify the fundamental long-term goals of an organization from which to make concrete action plans with the use resources appropriately to achieve the goals set forth

According to Alfred Chandler: "The strategy includes the basic long-term

goals of an organization, and choose the measures or process of actions, allocate resources necessary to implement those goals"

According to Michael E Porter: "Strategy is the art of building a solid

competitive advantage to the defense."

1.1.2 The concept of strategy management

According to Alfred Chander:"Strategic management is the process of

determining the basic long-term goals of the organization, selection or way of action and distribution of resources necessary to implement that goal."

According to Fred R David: "Strategic management can be defined as an art

and science establishment, implementation and evaluation of decisions related functionality allows an organization to achieve goals out "

According to John Pearce II and Richard B Robinson:"Strategic

management is a set of decisions and actions to establish and implement plans to achieve business goals."

Figure 1.1: Comprehensive strategic management by Fred R David

1.1.3 The role of Strategy management

Strategic management helps companies assess the current status of business development, identifying opportunities and risks from external environment, the strengths and weaknesses of the enterprise from which to promote the strengths, minimize weaknesses, seizing opportunities and take measures to prevent threats from outside In addition, strategic management helps businesses define the purpose and direction to be able to make business decisions in accordance with the business environment in order to improve efficiency and productivity in production business and competitive selection of appropriate business environment is always changing, find out how to survive and grow to enhance the competitive position of enterprises Specific strategic management role as follows:

- The planning role: business strategy helps businesses find out the purposes

and their direction It points out for the managers to review and determine the direction should go and how and when to achieve the desired results

- The prediction role: In a fluctuating environment, opportunities and risks

always appear at the same rate Strategic planning process helps managers analyze the business environment and give forecasts to make a reasonable strategy Thus managers can catch the opportunities better, take advantage of the opportunities and reduce risks related to the business environment

- The controlling role: business strategy could help the manager use and

distribute the available resources in the most effective way and coordinate the functions of the organization efficiently to achieve set goals

1.2 Classification of business strategies

1.2.1 Corporation-level strategy

Corporate-level strategy to identify and define the orientation of the organization over the long term to complete tasks, achieve the growth target, for example, focused growth strategy (market penetration, development market, new product development), growth and integration strategy (front side and back side), growth strategy to diversify (concentric, horizontal, mixed), strategic joint ventures, etc Based on firm level strategy, the organization will develop its own strategy

1.2.2 Strategic Business Unit (SBU)

Strategic Business Unit (SBU) in a company can be a business or a product category, etc This strategy is aimed at the development of each sector or product categories contributed complete the corporate strategy, must clearly identify the advantages of each sector compared to the competitors to make the strategy consistent with corporate strategic level, for example, differentiate strategy, strategy costs low-defensive strategy to consolidate the market, offensive strategy for market development In market economies there is fierce competition, the marketing strategy is considered the core strategic business unit level, acts as a link with the strategy of the other functions

1.2.3 Function-level strategy

The company has the functional departments such as marketing, human resources, finance, manufacturing, research and development, etc The department should have a strategy to support the strategies implementation for business units and corporate level, for example, marketing department has 4Ps strategy, human resources department has a strategy to attract talent to the company, the finance department with cost reduction strategies, investment strategies for new product, etc… Function-level strategy valid in each period of the strategic business implementation process of unit level and corporate level

1.3 Strategic management process

1.3.1 External evironment analysis

Analyzing the external environment focused on the identification and evaluation of trends with events beyond the control of the company, such as growth

of national economy, foreign competition, explosion of information technology will show the opportunities and threats that an important experience to the organization managers can draft strategy to take advantage of the opportunities and avoid or reduce the image effects of such threats; External environment including the macro environment and micro environment

1.3.2 Macro environment

Macro environment factors including economic, legal, political and social culture, geography and population, technology, nature, indirect impacts to business operations The impacts of the business to the group of factors is low, so companies should choose the business environment for stable macro factors, especially political issues and legislation to limit the risks In addition, businesses also need flexibility to change business policies as macro factors change The analysis of the macro environment to help businesses answer to the question: Enterprises are faced with what?

1.3.2.1 Economic factors

Economic factors have a direct impact on the potential attractiveness of various strategies The influence of economic factors such as economic growth, inflation, business cycles, the increase or decrease interest rates, stock prices, trends in the value of the dollar, the tax system and tariff; etc

1.3.2.2 Legal and political factors

Legal and political factors more and more affect on the operation of the business

1.3.2.5 Technology and technical factors

Technical progress can make new competitive advantages which are stronger than the present advantages

1.3.2.6 International factors

The trend of globalization, international economic integration and trade liberalization are the outstanding issues of the world economy today Strategists need to utilize the advantages that globalization trend and international economic integration give over, at the same time limiting the risks from the international environment, which are the rival competitions

1.3.3 Analysis of industry environment (micro-environment)

Micro-environment factors including industry factors and external factors of business, deciding the nature and extent of competition in that industry, there are five basic elements are: competitors, customers, suppliers, new potential competitors and substitutes To work out successful strategies need to analyze each

of the key factors that understanding the factors that help companies identify their strengths weaknesses related to the opportunities and risks that the business that encounter

Figure 1.2: Five forces model by Michael Porter

(Source: Michael Porter, “Competitive Strategy”, 1980)

1.3.3.1 Competitors

Competitors are companies have the same kind of goods to the company, competitors will share the market with the company, and it will pass if a higher competitive advantage, the nature of competition in the industry to increase or reduce dependence on market growth, investment and the level of competition

1.3.3.2 Customers

Customers are part of the company, customer loyalty is created by the satisfaction of customer needs and wants are better served and also a great advantage for the company

1.3.3.3 Suppliers

Enterprises have always associated with the vendor to be provided with resources such as materials, equipment, labor, capital The provider may cause pressure in the operation of the business, for should the research to provide understanding of the business resources that can not be ignored in the process of environmental studies

1.3.3.4 New potential competitors:

New potential competitors are competitors could be enter the market in the future and the formation of new competitors, which market share is, corporate profits are falling, presence of competitors will affect the business strategies of enterprises So to analyze the potential rivals to assess the risks they create for business

1.4 Internal environment analysis

Environmental analysis within the company is the identification and evaluation

of strengths and weaknesses in relation to the strategic level functions of the

company To improve the company's weaknesses, making it a strong point, and if possible, become the special ability of the company

1.4.1 Human resources

Human is the most important resource of an organization The objective of the human resources strategic management is to develop a suitable staff planning with the requirements of the company's strategy, both short and long term

1.4.2 Finance

Financial condition is often considered as methods to evaluate the best competitive position of the company and is the most attractive condition for investors Financial factors often influence to present strategies and plan implementation The functions of finance including: the ability to raise capital; Financial risk management; Fertility interest

1.4.3 Management Activities

Planning includes all administrative activities related to preparing for the future The specific duties are expecting, setting goals, advancing strategies, developing policies and establishing goals

Controlling relates to all management activities to ensure appropriate actual results, consistent with the results which were planned, such as quality control, financial control, sales, inventory, analyzing changes, ete

1.5 Strategy tools

According to Fred R David, the important techniques to form a strategy consists of three phases, the tools used for this process can be applied to all sizes and types of organizations, it help administrators can identify, evaluate and select strategies, it is expressed through the following stages:

- Phase 1: Input phase included EFE Matrix, IFE matrix, CPM matrix, this

stage summarizes the basic information needed has been entered for the formation of strategy

- Phase 2: Call a combined phase out feasible strategies can be selected by

arranging, combining the elements inside, outside is important At this stage

we choose one of the SWOT matrix, BCG matrix, In the subject the authors only use BCG matrix and SWOT of the factors that combine to make the appropriate strategy

- Phase 3: Phase decided to include a technique is to use the Quantitative

Strategic Planning Matrix (QSPM) by using information entered at stage one,

to objectively evaluate feasible strategies can be selected in the second stage

from which to choose the appropriate strategy

1.5.1 External Factor Evaluation (EFE)

External Factor Evaluation (EFE) matrix allows strategists to summarize and

evaluate the information of economic, social, cultural, demographic, geographic, political, government, law, technology and competition EFE matrix is a strategic management tool commonly used to assess current business conditions EFE matrix

is a good tool to visualize and prioritize the opportunities and threats that an enterprise faces

1.5.2 Internal Factor Evaluation (IFE)

Internal Factor Evaluation matrix (IFE) is a strategic tool to help business summary and assessment of strengths and weaknesses of key business function, and

it also provides the basis to identify and assess the relationship between these components

1.5.3 Competitive profile matrix (CPM)

Competitive profile matrix (CPM) is a strategic management tool necessary to make comparative evaluation of companies with major competitors in the industry,

the comparison is based on the factors affecting competitiveness of companies in the industry Thereby it gives the manager recognized the strengths and weaknesses

of the company with competitors, identify competitive advantages for the company and weaknesses should be overcome

IFE matrix is only evaluate internal factors and EFE matrix evaluate of external factors, however CPM matrix evaluate both internal and external factors, the overall assessment of the role and position of the company for the competitors

1.5.4 SWOT matrix

SWOT matrix is used to list all the opportunities, risks, strengths and weaknesses within the enterprise, in order and the appropriate position Based on the relationship between these factors, the analysis will be conducted to select appropriate solutions through strategic combinations: strengths-opportunities (SO), strengths-threats (ST), weaknesses-threat (WT) and weaknesses-opportunities (WO) Depending on the business of that enterprise managers will use one or more matrices to conduct SWOT analysis and solution options SWOT groups are offered four basic strategies:

- S-O: based on the strengths of the business to exploit outside opportunities

- S-T: based on the strengths of the business to prevent or limit the threats

from the outside

- W-O: These strategies reduce the internal weaknesses to take advantage of

external opportunities

- W-T: These strategies reduce the internal weaknesses to prevent or limit the

outside danger

1.5.5 Internal/External matrix (IE)

IE Matrix is a strategic management tool used to analyze the working conditions and the strategic location of a business Internal/external matrix or short

IE matrix is based on a short analysis of business factors internal and external conditions that are combined into a model suggests

1.5.6 Quantitative Strategic Planning Matrix (QSPM)

Quantitative Strategic Planning Matrix (QSPM) is a method to approach high level strategic management to assess strategy; it can be use the input data from the IFE, EFE, SWOT matrix and key strategic objective to evaluate the best strategic alternative QSPM method in step 3 of the strategic framework and building analysis

CHAPTER 2

THE BUSINESS ENVIRONMENT ANALYSIS OF PVC-MEKONG

2.1 General information of PVC-Mekong

2.1.1 Company introduction:

- Company name: PetroVietnam Urban Development Joint Stock Company

- Abbreviation name: PVC-Mekong

- Head office: No 131, Tran Hung Dao street, An Phu Ward, Ninh Kieu District, Can Tho City

- Chapter capital: 500 billion VND (Five hundred billion Vietnam dong)

PVC-Mekong was established on 02/2008 based on the comprehensive development of cooperation between the National Oil Corporation and Vietnam Ca Mau province PVC-Mekong operates under the Business law, and performing the tasks assigned by PetroVietnam Construction Company (PVC) to provide construction services in Mekong Delta region, with the main following businesses:

- Engineering consultancy, urban design planning, construction investment consultancy;

- Civil and industrial construction, urban and rural infrastructure, including EPC contracts and turnkey contracts;

- Producing and trading construction materials;

- Real estate business

- Financial investments

Design Consultancy is one of the first field operations of the company, the design products created by PVC-Mekong are highly appreciated, affirmed its impressive style This area by Enterprise consulting and construction done, the advisory function of investment and construction investment project, procurement consulting, consultancy and supervision of project management, consultancy device

technology consultancy topographical, geological, surveying work; experimental design; examination of investment projects, technical designs and total cost estimates for planning and control quality of works, etc However, due to the policy of developing internal resources, use of services in the Oil and Gas Industry

of PetroVietnam (PVN), PVC-Mekong was appointed as EPC contractor to perform

a number of key projects which invested by PVN, all resources of the PVC-Mekong focus on the implementation of these projects to achieve superior results, step by step as confirmed role of PVC-Mekong Thus, the proportion of consultancy work

in the outside market is very low, and the competitiveness of the market consultation in the area of the company is not high

In the field of construction and installation, PVC-Mekong efforts to growth as well as with the sustainable development goal strategies, maximum satisfy the needs of customers, continue investing new equipments and apply advanced technology in construction With nearly 300 well-qualified forces personnel, experienced and skillful staffs, engineers, specialists and workers, PVC-Mekong has mastered many modern technological construction, ready to meet the rigorous requirements in construction, and PVC-Mekong trademark has been affirmed in the construction market, get fully belief from the investors Construction market of the company now also focuses on projects invested by the petroleum industry in the form of appointment, has not penetrated the market outside the Petroleum industry Building material production plays an important role, helps to provide material for construction projects and shortens construction time actively and has sustainable development for the entire company The industrial production products of PVC-Mekong are crucial to social life, with high technology, are produced in the modern technology lines and have competitiveness in the market such as: commodity concrete, precast concrete and other products The company's products are mainly provided for the projects that PVC-Mekong is implementing

At present, the investment and real estate business field of PVC-Mekong undeveloped but it is the long-term development strategy of the PVC-Mekong In

the coming years, real estate business is one of the main activities of the company Besides profits, this sector also supports the construction field, industrial building materials and other fields to develop

With long-term development, financial investment an important field of activity, PVC-Mekong will actively participate in the currency market The funding channels will be done through strengthening the internal accumulation of retained earnings, increasing charter capital, issuing more shares, corporation bonds, project bonds and attracting capital from the outside stock At the moment this function has not been implemented to promote strongly, with long-term development strategy this area will be focused to develop by PVC-Mekong

2.1.2 The PVC-Mekong organization structure

PVC-Mekong is an economic unit, which has independence finance, legal status, own seal in the form prescribed by the State and the account opened at the bank The company takes responsibility for the results of its operations, ensures the accumulated interest, expands business, preserves capital and takes financial obligations of the State

The organizational structure of PVC-Mekong started from the Director Board, where planning all the strategies of the company, making important decisions about the development and investment of the company PVC-Mekong has 4 functional departments, 1 project management board, 3 firms and 13 construction teams arranged by online functional organization structure to take advantage of the online structure and the functional structure and allow young leaders chances to develop their ability and their leadership However, this structure also exist some disadvantages such as unclear responsibility, a lot of controversies and requires a specific solution to overcome this problem

Vice Director (Trade & Planning)

Vice Director (Technical) Vice Director

(Project)

Planning Dept Financial Dept Technical Dept Administrative Dept Projet management

Board

Housing Management Firm Mechanical

construction Firm

Construction Executing Firm Engineering

consultancy Firm

Preschool

Figure 2.1: Organization chart of PVC-Mekong

2.1.3 Operation Markets and the key partners of the Company

Main market of PVC-Mekong is the Mekong Delta region and some neighbouring provinces, in recent years PVC-Mekong mainly has activities in Ca Mau, Bac Lieu, Soc Trang, Hau Giang, Can Tho and Tien Giang The key projects implemented by the company are mainly invested by the Vietnam Oil and Gas Group (PVN) and the member unit, the rest (very little) is invested by local (mainly

in Ca Mau)

Major partners of the PVC-Mekong are mainly members of Vietnam Oil and Gas Group (PVN) and the petroleum industry units that PVN may contribute capital Work sources in the company mainly from two sources: directly specified and implemented as the task from the mother company-PetroVietnam Construction Company (PVC)

2.1.4 Business results of PVC-Mekong in three years (2008-2010)

PVC-Mekong was established in 2008, up to now have been active for more than three years In this period, Vietnam economy is difficult due to the financial crisis of some major economies, pushing Vietnam economy into recession, especially in 2008 To be dependent on the sensitive, timely, direction and control

of Vietnam government has prevented the economic downturn, maintained and enhanced the growth, achieved positive results in many domain areas However, besides the highlight achievements economy still reveals many shortcomings and challenges In this situation, with the strategic direction of PVN and drastical instructions of PVC along with the efforts of the Director Board and all officer employees of PVC-Mekong, the Company has attempted to overcome these difficulties, grasp opportunities sensitily and take advantage from the unique advantages of the petroleum industry, PVC-Mekong has gradually asserted its trademark in Mekong Delta Continuously in three years, PVC-Mekong always completes the task in production and business, as follows:

Plan in

2011

2011 plan compared with 2011 plan

VND)

VND)

Table 2.1: Business results report from 2008-2010 period

Source: Finance and Accounting Dept (PVC-Mekong)

In 2010, total output value of the PVC-Mekong has increased 132.81% compared to the plan; total revenue increased 141.90% compared to the plan However, profit targets are only 89.57%, lower than plan because in 2010 The company’s main business activities are investment and construction consultancy and construction and installation (mainly implementing projects in Oil and gas industry, accounted for 95% of output in the year) with interest at the levels prescribed by the State is 5.5% of the total project estimates, while under the direction of PVN, the construction projects in Oil and gas industry must be discounted 5% to the value of works and pay for management fees on the PVC from 1% to 3% of the works

In 2010, inflation makes prices of raw materials increase rapidly as a result the business production cost becomes higher However, PVC-Mekong tries to ensure the dividend payment to its shareholders and stable personnel when moving the head office to Can Tho city That is remarkable effort of the Director Board and all

of officers and employees in Mekong This is also the foundation for Mekong to try its best to complete the business target in 2011

PVC-No Targets Unit Implt

in 2009

Year 2010 Compared

Plan Implt TH2010

/KH2010 (%)

Table 2.2: Total revenue of PVC-Mekong 2009-2010

Source: Finance and Accounting Dept (PVC-Mekong)

2.2 Analysis of environmental factors affecting to the operations of the Company:

The major operation area of PVC-Mekong mainly in Can Tho city and in Mekong Delta provinces, to study and analyze the issues deeply, the author would like to focus on analyzing the external environment - the main field of action of PVC-Mekong in Can Tho city and in Mekong Delta provinces where the projects are invested by PVN and the member units and are implemented by PVC-Mekong The analysis of external environment of the PVC-Mekong will show the opportunities and risks that company may face from the business environment so that the company will have the appropriated strategy to minimize risk and take advantage from opportunities for the development of the company

External environment affecting the Company's activities includes the macro environment and micro environment

2.2.1 Macro Environment:

2.2.1.1 Economic Environment:

a Gross domestic product (GDP):

Mekong Delta, one of the large and fertile delta in Southeast Asia and the world, among an active and developed economic sector, close to the southern key economic area - the most dynamic growth area of Vietnam to the South East Asian countries (Thailand, Singapore, Malaysia, Philippines, Indonesia ) a dynamic and developed economic region with the market and important investment partners Mekong delta is in the area with important international maritime traffic and aviation, mineral resources, abundant forests with oil and gas resources and large power In recent years, Mekong delta economy has significant improvement; the economic structure shifted towards positive, people's income and lives has been more and more improved GDP index of Mekong Delta has continued to increase, specific data is shown in the following chart:

Figure 2.2: GDP index of Mekong Delta region

Source: Can Tho Statistics Department

Mekong Delta also applies scientific advances into production; develops trade, services, tourism, (especially eco-tourism and water tourism) strongly; gradually turns Can Tho city into an industrial, commercial trade and service centre and become a motivation for the entire region

Can Tho is the 5th largest city in Vietnam, the political-administrative, industrial, trade and service, tourism, educational and training, scientific and technological, health and cultural centre in Mekong Delta In addition, Can Tho is also an important traffic hub in the region and over the world, in the period 2010-

2015 the average GDP growth 17.1%/year, in which services increased 16.2%, industry and construction 20.6%, agriculture-forestry-fisheries 6%/year The economic structure in 2015: service 42.34%, industry and construction 51.35%, agricultural-forestry-fishery 6.33%

Total national income Value (GDP) of Can Tho

Table 2.3: GDP Index of Can Tho city

Source: Can Tho Statistics Department

Figure 2.3: GDP index of Can Tho city

b Economic structure:

Total revenues in 2008 of CanTho reached 3782.1 billion VND Average economic growth in 5 years was 15.5%, income per capita in 2008 reached $ 1,444, the poverty rate 6.04% CanTho is the economic, cultural, educational-training centre, important region in local transportation and international transportation of Mekong Delta and Vietnam

Figure 2.4: Economic structure of Can Tho

c Average income per capita:

In 2010, income per capita in CanTho city was estimated about 1.950USD, increased 437USD compared with 2009, more than two times the average increase

of all Mekong Delta, ranks first in Mekong Delta

d Interest

Interest rates on the interbank market are often from 12%/year VND interest rates of credit institutions at a common rate 1.67%/month, VND lending rates about 16%/year if short-term, about 17%/year if medium-term and long-term USD deposit rate 6.5% - 7%/year, USD interest rates are less volatile

2.2.1.2 Legal-political environment:

Can Tho has been completed and supported on procedures to make it attractive

to investors, given many suggestions and new directions in attracting investment into key economic areas As the result, in the last years, the investment promotion from the Mekong Delta has many thriving and achieving remarkable results thanks

to the timely measures from the Government and the Foreign Investment Department (MPI) The Mekong Delta provinces should quickly set up an information centre to support for investors to have a closer relationship between management agencies and investors

Nowadays, Can Tho in particular and the Mekong Delta in general have a very stable political situation, creating favorable conditions for attracting investment capital into Vietnam A number of investment and construction policies are gradually improved to provide a good competitive environment for investor, make construction industry become diversified and fairer

2.2.1.3 Working population environment:

Table 2.4: Population and labor data of Can tho in 2008-2010 period

Source: Can Tho Statistics Department

Figure 2.5: Population and labor chart of Can Tho

Can Tho City is the 5th largest city of Vietnam, with a population of 1,187,089 people, is a potential market Urban population is 781,481 people, accounted for 65.8% and rural population is 405,608 people, accounted for 34.2%

2.2.1.4 Advantages when Vietnam joins WTO:

After four years joining WTO Vietnam's economy has made significant progress although in recent years, the complicated global economy, such as

"dizziness" changing of energy prices, food and many other materials, along with the crisis of financial global system have influenced to most of the economies and world trade These effects also have a strong influence on small-scale capital and less developing economy and trade of Vietnam

However, most of the industries of our country still remain a high growth rate compared to many countries in the region According to calculations, in 2008, total retail sales of goods and services increased 31% compared to 2007 (if the price increase factor is excluded, the increase was 7%), exports reached $ 62, 9 billion, increased 29.5% compared with 2007; imports reached 79.9 billion USD, increased 27.5% compared with 2007 In general, staples export in industrial sector, agriculture and services have increased markedly For example, electronic and computer components reached 2.7 billion USD, increased 25.5% compared with 2007; textiles reached 9.1 billion USD, increased 17.5%; wood products reached 2,

78 billion USD, increased 15.6%, coffee reached 2.02 billion USD, increased 5.8%; rubber reached 1.6 billion USD, increased 14.6%

To achieve such results, Vietnam has focused on perfecting the business environment to comply with multilateral commitments on opening up markets for goods and services as well as reform all-sidedly to take good advantages in opportunities and overcome challenges Vietnam has become an attractive land for foreign investors in some sectors such as electronics, information technology, textiles, steel industry, shipbuilding, bank, financial, insurance, etc The foreign investment has and will continue to bring modern technology, advanced management methods into Vietnam, giving favorable conditions for development Being WTO member brings both opportunities (have a positive impact) and negative effects and difficulties due to increased competition Specifically, the opening of markets has increased more competitive, Vietnamese firms compete not only in Vietnam but also in the world market So, the Vietnamese firms must take good advantage of every opportunity, overcome the challenges to survive and develop sustainably

Trade; minor repairs 7,82 8,34 8,55 8,81 6,42 7,67

Hotels and restaurants 8,12 17,04 12,42 12,82 8,63 2,29

Transport, storage and communications 8,12 9,61 10,13 11,40 13,16 8,48

Finance and credit 8,07 9,37 8,18 8,84 6,63 8,70

Scientific and technological activities 7,42 7,85 7,39 7,66 6,14 6,40

Property trade and advisory services 4,35 2,92 2,94 4,06 2,50 2,54 Agricultural management and security and

defense, social security

Education and training 7,68 8,26 8,42 8,75 8,04 6,56

Health and social relief activities 7,86 7,75 7,84 8,05 8,30 6,73

Cultural and sports activities 7,51 8,31 7,67 8,12 6,52 7,20

Activities of Party and associations 6,23 7,05 7,33 8,15 6,92 6,72

Personal and community service activities 5,90 7,20 7,25 7,92 6,30 5,90

Table 2-5: GDP growth by sector in 2004-2009 period

Source: Calculated by the Institute of Economic according to the GSO

2.2.1.5 Priority policy in using the services of PVN:

Resolution 233/NQ-DU of the Party Committee Petro Vietnam is a correct and timely policy in order to regulate activities in the service providing sector, a basis for other units support actively and mutual cooperation in production and business Resolution not only facilitates to expand investment, focus on developing the main operations and business to enhance the scale and capacity to deliver services but also facilitates for the units using the services to receive high quality, stable and fast services with competitive prices, reduces the time and resources for the tender bid,

as well as reduces the risk of getting the inferior quality products and services 2.2.1.6 Investment Development Orientation of PVN and PVC in Mekong Delta

provinces

With strategic vision of PVN, realizing the potential of a dynamic region with the advantage of the labor force as well as the trend of development in Mekong delta region, PVN step by step invested in the fields serving for the petroleum industry besides the infrastructure and social amenities areas Several typical projects invested by PVN in the Mekong Delta and PVC-Mekong participate in as a construction contractor such as: