Building a business strategy for Hoang Gia Viet Joint Stock Company in the period of 2013-2018

GaMBAOT C0411- Group 06 - Strategic Management Andrew University GRIGG Global Advanced Master of Business Administration BUILDING A BUSINESS STRATEGY FOR HOANG GIA VIET JOINT STOCK

GaMBAOT C0411- Group 06 - Strategic Management

Andrew University

GRIGG) Global Advanced Master of Business

Administration

BUILDING A BUSINESS STRATEGY FOR

HOANG GIA VIET JOINT STOCK COMPANY IN THE PERIOD OF 2013-2018

Group Number: 06 Student’s name:

I- Dinh Van Hieu 2- Nguyen Dinh Son 3- Pham Van Sang 4- Nguyen Thanh Tan 5- Le Thị Lan Huong

Ho Chi Minh City - 2013

G Global Advanced Master of Business Administratio

GRIGGS GaMBAOI.C0411- Group 06

DECLARATION

We hereby declare this report is the result of our team work The figures mentioned in the report are true and provided by Hoang Gia Viet Joint Stock Company

Based on knowledge and reference sources, our team has researched, agreed

on common goal of the essay to solve problems The results are all our collective

and unified work of all the members

Dinh Van Hieu

Nguyen Dinh Son

Pham Van Sang

Nguyen Thanh Tan

Le Thi Lan Huong

Hochiminh city, June 2013

CF Global Advanced Master of Business Adimunistration

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ACKNOWLEDGEMENTS

We would like to give our sincere thanks to Board of Graduation Judges, lecturers of the Master Business Administration program- Griggs University in Vietnam, instructors, opponents and ail who helped us complete this essay

In particular, we would like to thank the Board of Directors and all staff of Hoang Gia Viet JSC who enthusiastically helped us in the process of gathering documents, data and in organizing of working sessions for us to have a realistic view of building a development strategy of the Company

In addition, we would like to express our sincere thanks to Professors, PhDs

who shared us their knowledge and skills in business administration during the

course This knowledge is fundamental to our implementation of the graduation report as well as to apply in actual work

Author Group:

1 Binh Van Hieu

2 Nguyen Dinh Son

3 Pham Van Sang

4 Nguyen Thanh Tan

5 Le Thi Lan Huong

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TABLE OF CONTENTS DEAR LARA, UAW cccneceesicsasaunsnrnsnanannnscninnansenicsentcantuansensiinuuiinninesucnincaanmcnumunietinnceusuiile li

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CHAPTER I THEORETICAL BACKGROUND OF BUSINESS STRATEGY 4 1,1, Cöncept 0F HHSTHESS ®ÍTPHÍEDY oan da nha k26216606224142416463004430549480s514848008A 0686 4 1:1: 1„ GIPBIEDV HGRSIDEGHHVD eniccrennmnmama a itcintiomcttarnnememmmanmonmanamana 4

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CHAPTER HII ANALYSIS OF BUSINESS SITUATION OF HOANG GIA

2.1 Overview of Hoan Gia Vitt INC wsciecsssasesisstonscsissanssnnsunacizcesiasiennanncnecanes 25

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2.1.1 History of establishment and development 25

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£45 CADSCity tò SrOVICE PYOUUCIS ANG SETVICES wscscicreasessaunncrensennomnwxvannecs 39 2.4.6 Ability to research and development (R & D) .0.0.cccceeetceteeteee: 59

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CHAPTER III BUILDING A BUSINESS STRATEGY FOR HOANG GIA

VIET JSC_IN THE PERIOD OF 2013-2018 wiscsssssssisscasscssssenscossssvonsasseviessvcsnsaeceeses 64

3.1 Vision, mission, core values and strategic objectives of the company 64

3.1.4 The strategic obJectives of the company c 222cc 64

3.2 Analysis and selection of strategic OpfÏOIS Ăn, 65

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3.3.3 Solution 3: Improving the quality of after-sales services professionism FOR SEALE: oxancsces ee SH Số TRE BG SnELEBAð we ET 3.3.4 S0iufioni.4: Proliofe markelfng ad ĐINH: ca ieeeisaneeoiasieasaaaoee Tỉ 3.3.5 Solution 5: Investment in research, education and exchange 79 3.3.6 Solution 6: Develop distribution system throughout Vietnam southern WOO meee 1ẽnnesearnrarrerrrrểrSOtrrrrrrurriaiahtrrttGiDNEOogaxe 79 CONCLUSION ssccessenssessversenenermseanceecenssnesennecenreniinensenennniessesiiinaannsinasinessyenseubioomaenuaniet 84 EEII buÊC Họ VỤ Hộ saeynd28tgiadiuiiokigi050011014259058100103000616 000108 8G60n60810466ã46009000000040734304008406944808 85

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LIST OF SYMBOLS AND ABBREVIATIONS

AS (Attractiveness Scores): Attractivenesss score in QSPM matrix

CP (Cong ty Cé phan): Joint Stock Company

EFE: External Factor Evaluation

GDP: Gross Domestic Product

GNP :Gross National Product

GNP:Gross National Product

IFE: Internal Factor Evaluation

IFE: Internal Factor Evaluation

KPO: Key Performance Objective

OBM: original brand manufacturing

ODM : original design manufacturer

PEST: analysis of macroeconomic factors

QSPM : Quantitative Strategic Planning Matrix

ROE: Return on equity

ROA: Return on asset

SBU: Strategic Bussiness Unit

SWOT: Strength — Weaks — Opportunities — Threats

TAS: Total Attractiveness Scores

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Wilertal: Giotof Evaltiilofi ĐA TS eeesseeseennsenerbiiGO816nnsiaABI4G9360000E01880088a0088 61 Coordinating SWOT matrix 65 Expected Revenue Flag Tor the 96a 201 20 Screens 93

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LIST OF FIGURES AND GRAPHS

Figure 1.1: Mutation and consideration strategies

Figure 1.2: Analysis of five forces model of M Porter

Figure 1.3: The model of strategic planning

Figure 2.1: Organizational structure diagram of the company

Figure 2.2: Workflow of OBM / ODM

Figure 2.3: Vietnam's GDP Chart from 2000 to 2012

Figure 2.4: Figure 2.4: Chart of Vietnam's CPI movements from 2002 — 2012

Figure 2.5: Vietnam’s Population Chart from 1950 - expected 2100

Figure 2.6: Five forces model of M Porter

Figure 2.7 (a, b): Segment of product with a number of brands in the current market

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PREFACE NECESSITY OF THE TOPIC:

Demand for decoration in living space which is comfortable, contemporary or

in setting learning space professional and courteous working place Is increasing as the economy of Vietnam ts shifting markedly during integration with the global trend With abundant labor resources and labor costs lower than other countries in the region, Vietnam’s furniture industry has many advantages in development orientation towards

2020

A recent survey shows the housing market contributes 90% of demand for the

interior furniture market, but furniture enterprises have not captured consumer’s needs

to make appropriate design for interior space It is a major fault of the manufacturer They almost only work hard on mass production line for exports and will get much difficulty in manufacturing model for retail domestic market

However, due to the impact of the world economic crisis, European countries have fallen into economic stagnation, government and people cut unnecessary spending, unemployment rate in USA has fallen but remains high, leading the world economy to not escaped from this trend, Japan has experienced the tsunami and are

also driving economic development, and China is decreasing growth rate to alleviate

the consequences of the economic boom in recent years, the Southeast Asian countries are still struggling to find out solutions to escape from the crisis

In the situation the world economy is focusing back to strengthen domestic

development, export markets for Vietnam's furniture industry is gradually shrinking Companies in the industry will compete more fiercely to get orders Hoang Gia Viet JSC is not out of this cycle of furniture industry Therefore, Hoang Gia Viet JSC needs

to figure out a new business strategy for tts development On that basis, the 6" group decided to choose subject "Building a business strategy for Hoang Gia Viet JSC in the

period of 2013 to 2018."

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Using analysis tools such as EFE, IFE, PEST, Porter's 5 forces

Then, our group makes application of SWOT, QSPM matrix to choose a

business strategy for the company

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STRUCTURE OF THE ESSAY

Chapter |: Theoretical background of business strategy

Chapter 2: Analysis of business situation of Hoang Gia Viet JSC

Chapter 3: Building a business strategy for Hoang Gia Viet JSC in the

cÝ period of 2013-2018

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CHAPTER I PHEORETICAL BACKGROUND OF BUSINESS STRATEGY

1.1 Concept of business strategy

1.1.1 Strategy perspectives

According to Alfred Chandler's strategy 1s the determination of basic long-term goals

of an enterprise, and implementation of action plans together with allocation of resources necessary to achieve these goals." Thought was defintely presented in Chandler's definition as a planning process with rational planning, an enterprise is described as choosing its goals, defining action plans (strategy) to the best fulfill those goals, and to allocate resources accordingly Similarly, James B Quinn defined strategy as follows: "It is the pattern or plan of an organization to coordinate major goals, policies and actions order in a master unity"

Although there are many attractions, planning — based definitions have encountered some criticism: this approach implicitly acknowledged a wrong assumption that company's strategy has always been results of predestined planning process Definitions emphasize aspects of a plan but ignore that a company's strategy can emerge within a company without going through any formal plan (see Figure 1.1) That is, a company's strategy can be explained by ordinary employees who are nominated not even predestined by their company In fact, a company's strategy can emerge from a resolution of unpredictable situations With this mindset, strategy is a pattern in a flow of decisions and action plans The pattern can be any a product of any Strategy — strategy is designed in advance and actually conducted, or an emergent strategy — which often brings success, and may be more appropriate than intended Strategies

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Unrealised Strategy Emergent

strategy

(Sources: H Mintzberg, J Lampel, J.B Quin, S Ghoshal, The strategy process,

Pearson Education Limited, 2003, p.5.)

Thus, it can be concluded that strategy 1s a decision chain to guide development and to create substantial changes within an enterprise This concept clarifies the actual role of

a strategy: Strategy not only helps enterprises win in a competition but furthermore

does for an enterprise’s development

1.1.2 Definition of types of strategy

a) Corporate-level strategy

Corporate-level strategy identifies business (or businesses industry) that a company do or will conduct, how each business sector should be (for example, links with other branches of the company or independent business, or acquisition, or new

Speculation, what business needs to continue, what needs removing, what new

businesses should be involved) and how its relationship with society is, in other words, any strategy of a company is the selection of business sectors According to that company's strategy must propose development direction for business unit as well as

multi-sectoral units

b) Business-level strategy or abbreviated as business strategy

Business strategy determines how an enterprise competes in pre-identified industry or

In a specific area For a sustainable development in a certain area, a company must establish a competitive advantage over rivals; as such business strategy 1s also

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considered a competition strategy Competition strategy of an enterprise is the way an enterprise creates a valuable position in that sector This includes a far vision (literally and figuratively) on the clients whom the enterprise will serve and how an enterprise bring value to customers However, a competitive strategy is not just a mere vision; it

is coordination of activities and of specitic processes of the entire operation of an enterprise, helping the enterprise create unique value for customers So, a strategy also leads to harmony tn activities of an enterprise, so that persistent efforts of the entire enterprise will enhance the company’s potential advantage of the competitive position, Business strategy determines how each enterprise can fulfill its functions (and thus how it contributes to complete a company strategy) in its respective fields

Business strategy 1s of equal importance to single business units and to separate

enterprise in a multi-sector industry

c) Function-level strategy

Function-level strategy focuses on supporting a corporate strategy and a business strategy For single-industry business units and each business establishment in multi-

functional industry Function level strategy is similar These Function-level strategies

form basis for other strategies such as marketing strategy, financial strategy, strategic research and strategic activities to strengthen competitive strategy of an enterprise and

determine actions and processes to achieve benefits from its competitive position

d) Global strategy

Today, in the world of global markets and global competition, to gain a competitive advantage and to maximize the performance of a company it is increasingly requiring

companies to expand operations beyond the borders of their home countries Thus, a

company needs to consider different global strategies to pursue Benefits and costs to expand markets beyond local borders will be evaluated and considered in the process

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1.1.3 Characteristics of a business strategy

We find the point of this strategy has yet unity However, no matter what viewpoint, in any stage, strategies have the most common characteristics which reflect the nature of the business strategy of an enterprise The most basic features are:

Y Business Strategy is to define basic objectives to be reached in each period and to be grasped in all respectes and at all levels of operation of an enterprise

Y Business Strategy of an enterprise is reflected in a constant process from construction to implementation, assessment test, adjusmentt implementation progress of the set objectives

¥ Business Strategy 1s to ensure maximum mobilization and promotion of optimal exploitation and use of corporate resources (labor, capital, technology .) to promote advantages, seize opportunities to take a competitive advantage in the marketplace

vé Strategy is a tool to set long-term goals of an enterprise

v¥ Business Strategy defines the scope of competition of an enterprise

One key issue of this characteristic is to clearly define business scope of an enterprise This is an important step for an enterprise in business environment analysis, strategic direction, resource allocation, and portfolio management Two basic questions that

should be asked are: what we are trading? What we should trade? This 1s a relatively

complicated issue because a segment process has a huge impact in determining the Organizational structure of an enterprise

Business strategy establishes a mutual relationship for external opportunities and

challenges of an enterprise, internal strengths and weaknesses of an enterprise to create

its Competitive advantages

This feature highlights a key issue of this strategy This is to create a competitive advantage In a long-term sustainability of an enterprise over its main rival in the field

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of business that the enterprise engages This 1s a modern approach to study competitive position of an enterprise

1.2 Planning a business Strategy

To analyze, synthesize external elements of an enterprise which have a decisive influence on the survival and development of an enterprise, an enterprise must recognize business opportunities and challenges that objective environment brings to

1.2.1 Macro Environment Analysis - PEST model

PEST is a model which studies effects of four major factors in the macro

environment These factors are:

¢ Political

¢ Economics

¢ Socio cultural

¢ Technological

These four factors have a direct impact on economic sectors, these factors are

external factors of an enterprise and an industry, and the industry must suffer their effects as objective factors

Political-legal factors

+ Stability: Stability is here considered in a conflict in politics, foreign affair of

legal institutions

+ Tax Policy: Tax Policy on exporting, importing, consumption tax, income tax

which will affect revenue and profit of an enterprise

+ Relevant laws: Law on Investment, business law, labor law, antitrust law,

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+ Other Policies: State policies will have an impact on enterprises; it can make profits or challenges For example, there are trade policy, industry development policy, economic development policy interest rate policy, competition governing policy, consumer protection

+ Ability to enforce and implement the provisions of organizational structure, ability to intervene of foreign organizations in political legal system by participating

in international conventions, bilateral agreements and multilateral, international organizations such as WTO, IME

Economic Factors

Enterprises should pay attention to economic factors in short-term, long-term

and government intervention on the economy

Typically an enterprise will base on economic factors for investment decisions in

sectors, and regions

+ Economy situation: Any economy has cycles, in each stage of the cycle of an economy, enterprises will have appropriate decisions for themselves It is flexibility

in business strategy

+ Factors that impact strongly on economy performance: interest rates, inflation + Government’s economic policies: basic wage law, economic development strategy of the government, incentives for industries: tax breaks, subsidies , orientation and planning for economic development for each industry, for each region, and planning for 5 years, 10 years and vision

+ Economic outlook in the future: growth, increase of GDP, GDP ratio on investment, ability to attract foreign investment, openness, economic integration, the

route of tax cuts and investment incentives

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+ Average life expectancy, health, nutrition, food

+ Average income, income distribution

+ Style, lifestyle, education, aesthetic perspective, psychological factors

+ Living Conditions

+ Ethnic group, gender

Thus there are certain customer segments in order to help enterprises to have a clearer view in identifying consumer behavior to make appropriate decisions when choosing options in a strategy

transport

+ Government's Policies, investment, enterprises’ development of transportation infrastructure, technical infrastructure, research, science and technology applications

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+ Speed, cycles of technology, the rate of technology backwardness

+ Impact of information technology, internet on business operations

+ Research and development of new technologies new materials and applications in business activities

+ The ability to update and change technology, technology is closer to

environment

Geography

In addition to the above basic elements, at present for a market research, enterprise incorporates globalization as a macro-economic factor affecting the whole windustry

No one would deny globalization is a trend, and this trend does not create

opportunities for enterprises, countries in an operation development

+ Globalization creates competition presssure, competitors from all areas The process of integration will cause enterprise to adjust in accordance with comparative

advantage, division of labor in a region and the world

+ It is important in the integration that trade barriers will be gradually removed,

enterprises have opportunities to trade with partners in distant geographic areas,

customers at this time are not only in domestic market but also from all over the world

+ Exploiting advantages of geographical location is significant opportunity in terms of free trade, in order to obtain broader market

1.2.2 Analysis of an industry environment

In any industry, any company is under competition pressure in 5 aspects

5 forces analysis Model of E.Porter Michel helps strategists to analyze the above forces - competitive structure of an industry 1s summarized in the following diagram

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Figure 1.2: Analysis of five forces model of M Porter

Threat of substitute products

Power of suppliers is indicated in the following characteristics:

- Concentration of suppliers

- Importance of the number of products to suppliers

- Differentiation of suppliers

- Impact of inputs on cost or product differentiation

- Switching costs of firms in an industry

- Existence ofsubstituing suppliers

- Increase the risk of merging of suppliers

- Cost of supply compared with the sector's total income

Substitue risk is reflected in:

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- Switching cost in using a product

- Trends in using of substitues of customers

- Correlation between price and quality of substitue items

Entry barriers are presented as beiow:

- Absolute cost advantage

- An understanding on cycles of market fluctuation

- Cost of business switching

- Accessibility to distribution channels

- The possibility of retaliation,

- Proprietary products

Customer power is reflected in:

- The bargaining position

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- The concentration level of customer in an industry

- Availability of substitute goods

- Incentives of customers

Degrees of rivalry are presented in:

- Exit barrier 1f you want to "escape" from an industry

- Concentration of an industry

- Fixed costs / Added Value

- Growth Status of an industry

- Screening status in an industry

In summary, analysis of business environment is extremely important for each

enterprise Business environment includes macro environment and industry

environment The goal of analysis 1s to identify opportunities and threats, and based on that basis reasonable management decisions are made

1.2.3 Analysis of internal factors of an enterprise

For a comprehensive overview, besides analyzing external environment to help

an enterprise to identify external opportunities and threats, strategists need to understand internal environment to know more about internal strengths and weaknesses in their organizations

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1.2.3.2 Ability of research and development (R & D)

Research and development efforts can help an enterprsie hold leading roles in industry or vice versa, making an enterprise to lag behind leading firms Therefore, enterprises must constantly change in technological innovation related to construction technology, products and materials

1.2.3.3 Production Capacity

Manufacturing 1s one of the major activities associated with products manufacturing of an enterprise, a strong influence on success of an enterprise Manufacturing products with relatively high quality at relatively low price will bring many benefits to an enterprise because the product is easier to sell, save financial resources to create positive attitudes in employees

Content should be noticed when analyzing factors of production are: price and supply level of raw materials, level of inventory turnover, arrangment for means of production, performance and cost of equipment, cost and capacity of technological compared with industry and competitors

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1.2.3.4 Financial Potential

function ot finance department includes analysis, planning, checking tinanctal plan, and financial situation of enterprises Finance department influences thoroughly the whole enterprise When analyzing financial and accounting factors, managers should focus on contents: ability to raise short-term and long-term capital, total capital

of an enterprise, flexibility of capital structure, ability to take advantage of financial strategies, ability to control cost, accounting system is effective and serves cost planning, financial and profit planning

1.2.3.5 Marketing Capacity

Function of marketing department includes analyzing, planning, implementing and checking implementation of program which have been set up, maintaining relationships and communicating with customers on the principle of mutual benefit Thus, in general tasks of marketing management is to adjust level, duration and nature

of demand

1.3 Tools for building strategy

According to Fred R David important techniques to form a strategy consist of

three stages, tools used for this process can be applied to all sizes and types of organizations, it helps administrators to identify, evaluate and select strategies, it is expressed through the following stages:

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Figure | 3° The model of strategic planning

“ The input stage

External Factor Evaluation Competitive Profile Internal Factor Evaluation

Matrix (EFE) Matrix (CPM) Matrix (IFE)

The matching stage Surengths-Weaknesses- Boston Consulting Group Extemal — Internal Grand Strategy

Opportunities- Threats Matrix (BCG) Matrix (IE) Matrix

Matrix (SWOT)

The decision stage

`: Quantitative Strategic Planning Matrix (QSPM) A

Source: Fred R David, Strategic Management Concepts and Cases, Figure 6-2, P.222

Stage 1: The input stage consists of EFE matrix, IFE matrix, Competitive

Profile Matrix, this stage summarizes basic information necessary for making a

Strategy

Stage 2: is called matching stage offering feasible strategic options by arranging, combining important internal and external factors In this stage we select

one of the SWOT, CG, IE, SPACE matrices in this subject the author uses SWOT

matrix elements which combine to make appropriate strategies

Stage 3: The decision stage to include a technique that uses Quantitative Strategic Planning Matrix- QSPM matrix This matrix uses information entered in the

first stage, to evaluate objectively feasible strategies which can be selected in second stage to choose appropriate strategies

1.3.1 External factors Evaluation Matrix (EFE matrix)

Matrix evaluates external factors for strategists to summarize and evaluate economic, social, cultural demographic, geographic, political, governmental, legal,

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technological and competition information There are five steps to develop an matrix

iO evaluate external elemenis

Step 1: Make a list of major 10 to 20 factors of opportunities and risks which play decisive role for success of an enterprise as identified in the inspection process of

external elements

Step 2: importance Classification trom 0.0 (not essential) to 1.0 (very

important) to each factor This classification shows the relative importance of the

factors for success in the business of an enterprise, the importance of all the factors must equal 1.0

Step 3: Classification from | to 4 for each determinant of success shows how the current strategy of an enterprise responses to these factors, of which 4 is good

reaction, 3 is above average, 2 is average and | is little These levels are based on the effectiveness of enterprise strategies So classification at this stage is based on firm

size, whereas the classification in step 2 1s based on industry

Step 4: Multiply the importance of each element of its kind to identify score of importance of each factor

Step 5: Add up points of all the important factors to determine the total importance score of the matrix Total points of the matrix is in a range from | point to

4 points, not depending on number of elements in the matrix If total score is under 2.5 points, an enterprise has internal weakness, 1s 2.5 points, has internal strenghts

1.3.2 Internal factor evaluation matrix (IFE Matrix)

Tools for forming this strategy summarize and assess important strengths and weaknesses of functional business departments, and it also provides a basis to identify and assess relationship of these departments IFE Matrix can be developed in five

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Step 1) Make a list of 10 to 20 factors including strengths and weaknesses difecuny development of ati enierprise

Step 2: Classification of importance 0.0 (not essential) to 1.0 (very important)

to each factor The importance assigned to each factor shows the relative importance

of that factor to the success of an enterprise in an industry Not mentioning key factors are internal strenghts or not, factors considered to have the greatest impact on performance of an organization are to be the most important Total of all levels must equal 1.0

Step 3: Classification from | to 4 for each determinant of success shows how

the current strategy of an enterprise react to these factors, of which 4 is good reaction,

3 is above average, 2 is average and lis little These levels are based on the

effectiveness of enterprise strategies So classification at this stage is based on enterprise, while the classification in step 2 1s on the basis of industry

Step 4: Multiply the importance of each element of its kind to identify score of

importance of each factor

Step 5: If total score is 2.5, the enterprise reacts on average to external

enviroment If total score is 4, the enterprise reacts well to external enviroment

1.3.3 Competitive Profile Matrix

Competitive Profile Matrix compares competition between firms with

competitors primarily based on factors affecting competitiveness of enterprises in an

industry, thereby helping strategy administrators identify strengths and weaknesses of

an enterprise and of competitors, identify competitive advantages for an enterprise and

weaknesses which need addressing To build Competitive Profile Matrix there are 5 steps:

Step 1: Make a list of 10 factors that influence critically competitiveness of firms in an industry

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Step 2° Classification of importance 0.0 (not essential) to 1.0 (very important)

io each factor The imiportanee assigned to eacn factor shows the relative iunportance

of that factor to the success of an enterprise in an industry Total importance scores of all levels must equal 1.0

Step 3: Classification trom | to 4 for each determinant of success shows how the current strategy of an enterprise react to these factors, of which 4 is good reaction,

3 1s above average, 2 1s average and 1is little

Step 4: Multiply the importance of each element of its kind to identify score of importance of each factor

Step 5: Add up total scores of all the factors to determine total scores of matrix Compare the total score of enterprises with major competitors in the industry to

evaluate the competitiveness of enterprises

1.3.4 SWOT Matrix

While the PEST analysis is tool related to external factors, the SWOT analysis focuses on changes in external factors

SWOT is an extremely useful tool to help us understand a problem or a decision

making in organizing, managing and in business In other words, SWOT is a

framework upon which we can review strategy, determining position and direction of a company, analyzing business proposals or any ideas relating to corporate interests SWOT analysis is key to develop strategies, to clarify an organization's internal strengths, weaknesses and external opportunities and risks

SWOT matrix is used to list all internal opportunities, threats, strengths and Weaknesses of an enterprise, in order and proper position Based on relationship of these factors, an analysis will be conducted to select appropriate solutions through Strategic combinations: Strength Opportunity (S_O), Strength Threat (S_T), Weakness Threat (WT), Weakness Opportunity (W_O) Depending on_ business

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S_T: The strategy is based on strengths of an enterprise in order to prevent or

limit external risks

W_O: This strategy reduces internal weaknesses to take advantage of external Opportunities

W_T: This strategy reduces internal weaknesses to prevent or limit the external

risks

Strategists never consider all feasible strategies which are beneficial to a

company because there are countless possible solutions and countless ways to implement this measure Therefore, only a group of the most attractive strategic

options will be chosen for development To establish a SWOT matrix, according

FERD DAVID R (8) there are following eight steps:

1) List external opportunities of a company

2) List critical external threats to a company

3) List major strengths of a company

4) List internal weaknesses of a company

5) Combining internal strengths with external opportunities, record S_O

strategy results in the appropriate box

6) Combined internal weaknesses with external opportunities, record W_O strategic result the appropriate box

7) Combining internal strengths and external threat, record result of S_T Strategy in the appropriate box

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8) Combine internal weaknesses with external risk, record W_T strategy results

In tie appropriate box

Table 1.1: SWOT Matrix

SWOT Matrix Opportunities Threats (T)

lass

Strengths (S) SO Strategy ST Strategy

Đạo The Strategy uses corporate’s | The Strategy uses corporate’s

De strengths to take advantage of | strength to cope, to avoid

3 external opportunities external threats (challenges)

Đềm yếu (W) WO Strategy WT Strategy

Weaknesses (W) Strategies to overcome | The Strategy overcome

Ls weaknesses of an enterprise to | weaknesses of an enterprise to Z.- take advantage of external | reduce external threats Sac opportunities (challenges)

In he context of current globalization, opening up, economic — cultural exchange with other countries is inevitable and risks for enterprises in the market are not small SMOT analysis will help enterprises measure correctly before deciding to enter the

intanational market

1.3.5 QSPM Matrix

QSPM Matrix is a tool used to quantify information which has been analyzed in the first phase to allow administrators to select the optimal strategy, according Ferd R Da‘id QSPM matrix basically consists six steps as follows:

Step 1: List major external threats, internal strengths and weaknesses of an enterprise

Step 2: Classification for each critical internal and external success factors, this

classification ts the same with that of EFE Matrix, IFE Matrix

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Step 5: Calculate the total attractiveness score, this 1s the result of the

classification score (step 2) points (step 4) in each row The higher total attractiveness

points is, the more attractive the strategy 1s

Step 6: Add attraction points It is the sum of the total points in strategy column of QSPM matrix For difference between the total points in a strategy group, the higher score indicates more attractive strategy

Table 1.2: QSPM Matrix

Replaceable Strategies Strategy | Strategy | Strategy

GRÍGGS) GaMBAUI.C0411- Group 06

CONCLUSIONS FOR CHAPTER IT:

This chapter has outlined concepts, rationales and strategy theories, the content

of strategic planning, the tools for analysis of, evaluation on factors, environments which play important role for the development of business strategy

The following chapters will use necessary theoretical framework and tools to

further analyze business environment of a company

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CHAPTER I

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ANALYSIS OF BUSINESS SITUATION OF HOANG GIA VIET JSC

2.1 Overview of Hoang Gia Viet JSC

Trading Office: 333 Binh Duong Avenue, Hoa Lan 2, Thuan An Town, Binh Duong

2.1.2 Structure of the Company

Figure 2.1: Organizational structure diagram of the company

2.1.3 Main current products and services

The main activity of the company: Manufacturing and trading of household

furniture, office furniture with two main forms:

- Producting first, and then selling on the market

- Production as per orders (agents’ orders, winning work bid)

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2.2 Business Status of Hoang Gia Viet JSC

2.2.1 Production and busitiess process of the C oinpaity

Currently company organize business under implementation stages from

prototyping design — product manufacturing (OBM / ODM) — sales with brands

LUX=N and LUXE=N - 3B Funiture on market This is form of OBM / ODM

However, the actual process is now to adjust to be more efficiently

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Responsibilities

Figure 2.2 Workflow of OBM / ODM

Content Documents and records

Develop production plans

| | | Management

Warehouse 10 Finished products

Showroom lÌ Sales Accounting

According to the above procedure the company pays great attention to product design

stage to create the highest value for funiture Currently, the company is using 01

architect and 03 architecture designers for this department to deliver the best quality

design at request of customers

2.2.2 Customers, Product, Brand

The company have brought to market only products with Luxen brand with

medium and luxury household furniture (account for 20% - 30% of sales) and Luxen -

3B Funiture for office furniture (70% - 80% of sales)

Products Kitchen cabinets, dining table, | Desks, conference tables,

sofa, bed, wardrobe, TV file cabinets, student desk,

shelves, dressing table,

Terget customers People with high incomes: Office: State agencies,

Target Market Southeast market and Southeast market and

Hochiminh city Hochiminh city

Logo 5 LUX=N WwW LUXEN - 3B Funiture pepe b

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In April 05, 2012 the company opened Luxen Show Room at HPT Plaza commercial center which 1s a large shopping center on Highway L3 of Binh Duong This is a significant milestone marking the company's development, as well as increased product interface with customers

The company with will to meet desire of Vietnamese house which 1s fully equipped and comfortable living space, a complex of living room, bedroom, dining room , harmony between architectural design and interior from color, lighting and

layout provide a comfortable and luxury living space for customers Thus, LUXEN

was born to meet these criteria

Household furniture includes design, construction and installation for all product lines which are made from natural wood, Malaysia MFC, Veneer, Natural and

industrial Plywood for dining room, kitchen and bedroom Office Furniture always

changing new unique designs with professional staff will give customers more convenience and reasonably

Recognizing the importance of distribution system through agents, the company has focused its resources to expand distribution network through dealers in every province in the country, particularly associated with the distribution network system of some supermarkets To date the company has 2 outlets in both urban area, that 1s 333 Binh Duong boulevard, Binh Duong province and 37 Ngo Gia Tu District 10, Ho Chi Minh City The Company has invested in Show Room building with luxury image in accordance with brand positioning systems to unify brand identity of the company from right now

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