Building business strategy of An Phat Plastic and Green Environment Joint Stock Company - Period 2012-2016

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE TITLE “BUILDING BUSINESS STRATEGY OF AN PHAT PLASTIC AND GREEN ENVIRONMENT JOINT STOCK COMPANY - PE

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE TITLE

“BUILDING BUSINESS STRATEGY OF AN PHAT PLASTIC AND

GREEN ENVIRONMENT JOINT STOCK COMPANY - PERIOD 2012-

2016”

Group 2 Members:

1 Khuc Dinh Dung Nguyen The Vinh Bui Quang Hai Nguyen Hoang

19" December 2011

To whom it may concern

Subject: Comments of An Phat Plastic and Green Environment Joint Stock

Company on the project of Group 2, GAMBA01.X0710 Class - Griggs University

1 The Research Team have closely followed up the current situation of the organization structure and the business activities of An Phat Plastic and Green Environment JSC to implement the project;

NN The content of "Building business strategy of An Phat Plastic and Green Environment Joint Stock Company - period 2012-2016" project mentions the goals that An Phat JSC is trying to reach, and has high feasibility;

3 The content of the project is excellent

+

For and on behalf of

An Phat Plastic and Green Environment JSC

Kiện

Nguyen Le Trung

General Director

COMMITMENT

We, the research team, would like to commit that this Capstone project is our own research which is accomplished thanks to various sources of documents and real situation The Capstone project is not copied from any other available documents

We undertake any legal responsibilities for the contents contained within this report

Hanoi, December 2011

ACKNOWLEDGEMENT

The Research Team would like to express our deep gratitude to: The lecturers of the MBA training program of Griggs University - who provide and share knowledge; Managers and staff of the Centre for Educational Technology and Career Development - Hanoi National University (ETC) - who are enthusiastic and indispensable helpers in the process of learning;

The Research Team would also like to thank the Managers and staff of An Phat Plastic and Green Environment Joint Stock Company - who are main supporters in the process of studying about the situation of the Company and create the opportunity, provide the support of time so that members of the group can complete the project

Finally, we would like to send the most sincere thanks to families, colleagues and classmates - who are the solid basis of spirit for members of the group during the participation of Griggs University MBA program and the process of completing the Capstone Project "Building business strategy of An Phat Plastic and Green Environment Joint Stock Company - period 2012-2016"

TABLE OF CONTENTS

Lol The enterprise’s vision and mission determination 6

TECHNIQUE

AND GREEN ENVIRONMENT JOINT STOCK COMPANY

ENVIRONMENT JOINT STOCK COMPANY rạn The Company’s formation and development history 24

pm ee, Business Operating result form 2008 to 2010 31

dud Summary of internal environment analysis for An Phat 63

25 Internal Factor Evaluation (IFE) matrix of An Phat 64

OPTIMUM STRATEGY FOR AN PHAT

Consumption of plastic products per capital in Vietnam Main Machineries and Workshop of An Phat

SWOT synthesis matrix to An Phat Implementation plan of Differentiation strategy Implementation plan of Cost leadership strategy

LIST OF TABLES

EFE Matrix IFE Matrix

IE Matrix Competitive Profile Matrix SWOT Matrix

SPACE Matrix QSPM Matrix Labour structure of the Company Business result from 2008 to 2010 of An Phat Summary of the general environment analysis of An Phat

Analysis of five competitive forces to An Phat EFE Matrix of An Phat

Competitive profile matrix of An Phat List of some of the major material suppliers of An Phat Cost structure of An Phat from 2008 to 2010

Some financial ratios of An Phat from 2008 to 2010

17

19

a 3]

Table 2.10: © Summary of strengths and weaknesses of An Phat

LIST OF APPENDIXES Appendix 1: Quality Management Certificate of An Phat

64

65

69

Page 82

PREAMBLE

1 The reason for topic selection:

Vietnam's economy is gradually integrating into the economy in the region and the world, the business environment of the enterprise has been extended, but the competition is becoming harder This both has created business opportunities and contains potential risks threatening the development of enterprises

In order to take advantage of the oppotunities and get rid of the threats, based on the strengths, each company must have a clear business strategy in each period of time

so as to keep the company ever-growing

An Phat Plastic and Green Environment Joint-Stock Company is the leading company in Vietnam in the plastic bag manufacturing industry Plastic industry of Vietnam is now having many oppotunities (incentives for plastic industry development, evergrowing demand for plastic products, ) as well as facing with many threats (tax for environment protection, high interest rate, ) How do An Phat have to build the business strategy to have competitive advantages over competitors and thus to develop its businesses? This is the reason why our group select the title

“Building the business strategy of An Phat Plastic and Green Environment Joint Stock Company - period 2012-2016” to study in our capstone project

2 Purpose and scope of the study:

The Purpose: Researching strategy building basis, strategy building process and the way to select the optimal strategy in order to help An Phat Company

to identify their best suitable business strategy From there, making proposal and solutions toimprove the business strategy development process for An Phat Company incurrent conditions At the same time, giving the selected strategic roadmap from 2012 to 2016

Scope of the study: Going into detail of business strategy building process of An Phat Company for the period 2012 -2016

4 Capstone Project Report’s structure:

The report includes the Introduction and 03 Chapter The main content of each chapter is presented as follows:

CHAPTER I: THEORY BASIS

- Overview of Building Business strategy

- Process of Building strategy

- Strategy Selection and Analysis Technique

CHAPTER II: ANALYSIS OF BUSINESS STRATEGY FORMATION BASIC OF AN PHAT PLASTIC AND GREEN ENVIRONMENT JOINT STOCK COMPANY - PERIOD 2012 - 2016

- External Environment Analysis

- Internal Environment Analysis

~ Formation and selecting the optimum strategy for An Phat

CHAPTER III: SELECTED STRATEGIES FOR AN PHAT AND

IMPLEMENTATION SOLUTIONS

- Differentiation strategy of Products

- Cost Leadership strategy

CONCLUSION

CHAPTER I THEORY BASIS

1.1 OVERVIEW OF BUILDING BUSINESS STRATEGY:

1.1.1 Concepts of strategy:

Concepts of strategy:

1 Strategy defining long-term objectives and purpose of a business and implementing a series of actions as well as allocating necessary resources to

achieve that goal (Alfred Chander)

2 Strategy is the formula or plan combining the primary objectives of enterprise, policies and sequence in a unified manner (James B Quinn)

3 Strategy is a unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved

4 Strategy, Michael L Porter, father of the competition theory said that:

unique value and includes different activities

e Secondly, strategy is the choice, trade-offs in competing

e Thirdly, Strategy is creation of suitability among all activities of the Company

First of all, strategy relates to objectives of enterprises Secondly, the

strategy is the way to implement the actions and decisions that closely relating together and choosing coordination methods of those actions and decisions Strategy

of an enterprise must exploit the fundamental strengths (resources and capabilities) and must consider to the opportunities and threats of the external environments 1.1.2 The role and importance of strategy

The strategy make contribution in better acumen and dynamic of economic organization towards forecast and volatility of the market, then making suitable

decisions and control their operations, increasing the competitive strength of enterprise and of the business and gradually ensure the strong position of enterprises in the market mechanism

Strategy can be considered as an "operation platform” of an enterprise, is the destination of all members to strive towards:

That's how to use the optimal combination of material resources and non-material to achieve the given strategic objectives

Strategy is an expression of business value conception

All enterprises have differentiation and have an individual mark in their strategic activities That style is an expression of the value concept, progressive spirit and the role of the leader, who led to gain the proposed strategy objectives

Strategy helps the leader of the enterprises to get the direction and vision in the future:

Strategy is the basis for enterprise manager to give accurate and in time decisions even that is the turning-point for their own enterprise, is the tool to manipulate and identify strengths to promote, overcome weaknesses, take advantage of opportunities, and confront challenges risks to gradually raise the position of the enterprise

Strategy is the creation of enterprise management:

Management is a process and strategy is a stage Based on proposed objectives of enterprise and based on the problem-solving methods that are combined in harmony, flexibility consistent with the fact of the enterprise to create competitive advantage for the enterprise, towards the ultimate goal is to optimize the expected value

Straiegy is an expression of the competitive position of enterprise: from which the enterprise has had a way to combine the internal strength factors with external oppertunities to overcome weaknesses, avoiding the potential risks That is the competitiveness of enterprises, the ability to capture and maintain market share

against competitors, the abilities to create substantial pressure toward the competitors

Michael Porter identified in his book “Competitive Strategy” that

“Competitive Strategy is in the relationship between the Company and its markets”

With such importance, the enterprise need to build for itself a long-term business strategy, it is essential to be able to help enterprise to survive and develope

in the future However, the business environment are highly variable and human resources of the enterprise also changes in each stage, thus strategy of an enterprise should be flexible, changing to suit with the objective reality to ensure the survival and development

Enterprises can choose strategy according to the principle of approaching database analysis methods based on factors such as the following sequences:

1/ Resources of the enterprise

2/ Diversification of products

3/ Product’s life cycle

4/ Strategy of the competitors

5/ Market Demand

1.2 PROCESS OF BUILDING STRATEGY:

Established strategy bases on the Company's mission, is a basis for determining the objectives and what to do for customers as well as other relevant

partners

Based on this mission, the leaders will identify the objectives These objectives indicate clearly the organization’s mission and are used to set up action plans and evaluation processes These objectives are guided by practical knowledge

of both marketing environment/outside business and the inside capacity of enterprise Usually, strategic making is began by extensive research and analysis , and implement a process that thence, leaders identify the priority issues that organizations need to solve to gain success in the long term

The participation in the strategic planning process of departments plays an important role because they have extensive knowledge about the capabilities as well

as their competitive environment, can make clear recommendations on what organizations should do Moreover, for those departments are applied in the planning process are more likely to support and implement the proposed plan Departments are the central of strategy implementation; they have the right to lead with necessary human resources and skills for effective implementation

With the method of jointly implementation of planning process, the leaders and the heads of departments ensure to build a suitable, close strategy with high success although that strategy belongs to the organization or the individual department

Strategic implementation relates to the process right work implementation of the organization Both executives and managers at all levels must concentrate on the strategy implementation, because even a perfect strategy becomes meaningless if it

is not implemented properly

1.2.1 The Enterprise’s vision and mission determination:

Vision, mission indicates the destination of the future, oriented long-term

goal of enterprise, as a basis for policy development, business strategy for the short

term

Defining the vision is to identify desired position of the enterprise The statement of outlines vision in the future of the enterprise is to achieve their goals and purposes The vision statement must identify the final destination of the enterprise

To succeed, Davidson has identified six essential factors which a vision must have:

* Provide direction for future

* Focus on benefit of consumer

=6§=

* Reality

* Create promotion

* Being fully conveyed

* Being supervised and evaluated

A mission statement defines values and the rules that govern enterprise and

is an essential part in the process of strategic planning The company's mission is reason for existence of the company on the market; and which products and service will the company bring to their customers and community The decisions in the process of strategic planning are always in harmony with the mission statement

Mission statement is the foundation for the company's vision The mission statement or may be motivation for employees to communicate the purpose and value of the company to customers and communities

1.2.2 External environment analysis:

* Political:

This factor has influence to all business sectors on a territory, institutional and ‘aw factors and can endanger the viability and development of any industry

Vhen trading on an administrative unit, the enterprises will be required to comply vith the legal institutional factors in that region

+ Stability: The institution which has high stability will be able to create

<ood conditions for business and vice versa

+ Tax Policy: Tax Policy for export and import, consumption tax, income

ux will affect sales, profits of enterprises

+ The relevant laws: the Investment Law, business law, labor law, antitrust law, anti-dumping law e.t.c

+ Policy: The policies of the State will have an impact on businesses; it can nake a profit or challenges for enterprises such as trade policy, industry cevelopment policy, economic development, and competition regulating policies

+ Factors affecting the economy: interest rates, inflation,

+ The economic policies of the government: the basic salary law, the e:onomic development strategy of the government, the incentives policies for industries such as tax reduction, subsidies

+ Economic prospects in the future: Growth speed, GDP growth rate, the rate

o GDP on investment capital

* Social cultural factors:

Each country or territory has its cultural values and typical social factors;

these factors are characteristics of consumers in the area.

The social characteristics also make enterprises interested when research market,

the social factors will divide the community into customer groups, each group has the different characteristics, psychological and income :

+ The average life expectancy, health status, nutrition regime, food

+ The average income, income distribution

+ Lifestyle, education, aesthetic attitudes, life psychology

+ Living condition

* Technology:

The world is still in the technological revolution; a series of new technology has been invented and integrated into the products and services especially in the field of information technology, modern communications technology

+ Investment by the government and enterprises in the R & D: The combination between enterprises and government to create new technologies, new materials will have a positive effect on the economy

The speed, technology cycle, the rate of technological backwardness:

+ The impact of information technology and Internet on operation of the enterprises

* Integration factors:

No one can deny that globalization is the trend, which creates opportunities and challenges for enterprises, countries in developing production and business

1.2.2.2 Analysis of Industry Environment:

Analysis of Industry Environment according to Michael Porter model developed with five affect to enterprises or it is known as 5 Forces Model of Competition:

v The supplier’s power

v The customer’s power

v The potential competitors

Y Substitution products risks

v The current competitors

Figure 1.1: Michael Porter’s 5 Forces Model of Competition

y

Industry Competitor Suppli Buyer

1.2.3 Internal Environment analysis:

Internal situation of the enterprise is often judged by the functional areas such as Finance, Human Resources; Executive Management; Organization Structure; Marketing; Research / development, Information Technology

Figure 1.2:Diagram of major activities and support activities

10-The analysis of the internal enterprise will allow identifying the strengths (S) and weaknesses (W) of the enterprise Since then, the chosen strategy needs to be maximized the strengths and overcome weaknesses of the enterprise

Similarly in technical analysis of external factors, in order to quantify the internal analysis of the enterprise, it is used "Internal Factor Evaluation" (IFE) 1.3 STRATEGY SELECTION AND ANALYSIS TECHNIQUE

There are three stages to take form Business Strategy and each stage uses different tools

Phase 1: Analysis and Information collection phase

This phase summarizes the collected and systematized basic information to take forms more Business Strategy This phase uses three tools: EFE Matrix, Competitive Profile Matrix and IFE matrix

Phase 2: Combination phase

This phase is selection, arrangement and combination of external environmental factors, internal factors to make the feasible strategy This phase will use the matrix tools: Strengths - Weaknesses, Opportunities - Threats matrix (SWOT);

Strategic Position Action Evaluation Matrix (SPACE) and the Grand Strategy Matrix

Phase 3: Strategy Decision and selection phase

This stage uses a single tool that is the Quantitative Strategic Planning Matrix (QSPM) QSPM matrix using information in stage 1, objectively evaluating the business strategies that can be selected in stage 2 to determine which strategy is the best for enterprise

1.3.1 Analysis and Information collection phase

Summary of incorporated basic information is necessary for the formation of strategy Such tools EFE matrix, Competitive Profile Matrix and IFE matrix require strategists to identify the objective features during the previous period of the strategy formation The small decisions of the incorporated matrix type relate to

«hi =

fairly importance of internal and external factors, will allow the strategist to make the last decisions that more effective

1.3.1.1 EFE Matrix

This is a strategic management tool used to evaluate the current business situation that is a good tool to visualize and set the priority level of opportunities and risks that an enterprise has to face

The external factors are under the influence of the actions of society, economy, and polity and legal the process of conducting an EFE matrix consists

Step 3: Ranking factors to see how the current strategy of the enterprises response

to factors, in which 4 is a good response, 3 is the normal response, 2 is average

response, | is the less response

Step 4: Multiplying the weights with the rankings to determine the importance score

for each factor

Step 5: Adding all weight scores to determine the total of weight scores of the enterprises

The highest total score of each enterprise can gain is 4.0 showing that the enterprise is responding very well with the current opportunities and threats in the environment In other words, the strategies of the enterprise take effectively advantages of existing opportunities and minimize the threats, negative impacts of external threats The lowest score of 1.0 indicates that the proposed strategies do not

take advantage of opportunities or not avoid external opportunities and total score

Scoring from 0 to 1, ;

the higher score it is,

This is a strategic tool to test and evaluate the key strengths and weaknesses

in functional departments (fields) of the enterprise IFE matrix also provides a basis

to identify and evaluate the relationship between these fields that is a tool to shape strategy Implementation steps:

Step I: The internal key factors: To inspect and identify the strengths and weaknesses in all areas of business (can be from 10 to 20 internal factors)

Step 2: Assign weights: After identifying the strengths, weaknesses, assigning weights to each factor, showing the relative importance of factors

Step 3: Rank: Ranking the importance level for each factor according to scores (can

be from | to 4; in which | and 2 show weaknesses; 3 and 4 show strengths)

Step 4: Multiplying the weight with the ranking, we have the weight of each factor

« {3 -

Step 5: Adding the weight of cach factor, we have a total of weight score: total weight score can range from | to 4, if total is less than 2.5, it will be the internal weaknesses, above 2.5 is considered as internal strength

Development process of an IFE matrix is similar to EFE matrix but differs only in step 3: Classification score is considered as | if it is the weakest, as 2 if it is the smallest weakness, 3 if it is the smallest strength, 4 if it is the largest strengths

Table 1.2 IFE Matrix

factors in internal | importance 3 Strength

enterprise corresponding 4 The most important

Synthesis of EFE matrix and IFE matrix will form IE matrix to identify and evaluate the right position of the business strategy Corresponding to the position of the enterprise, there will be the appropriate strategic direction

- The cells: I, H, IV 1s the fastest srowing areas

- The cells: Il, V, VII is the areas that should be selective growth or using stable strategy

- The cells: VI, VIII, [X is the best area, as an harvest orientation and gradually withdrawing, even trying to flee to preserve force

1.3.1.3 Competitive Profile matrix

Setting this matrix to identify the comparative evaluation of companies with major competitors in the same industry, the comparison is based on the factors affecting the competitiveness of companies in the industry Thereby it makes Administrators recognize the strengths and weaknesses of the Company with competitors and identify competitive advantages for the company and weaknesses should be overcome To build a competitive Profile matrix, it should be taken through 05 steps:

Step I: Making a list of about 10 key factors with major affect to the competitiveness of companies in the industry

Step 2: Classifying importance level from 0.0 (not important) to 1.0 (very important) for each factor The importance of each factor depends on the effect level of the factors to the competitiveness of companies in the industry The total score of the importance of all factors must equal 1.0

Step 3: Determining the weight from | to 4 for each factor, the weight of each factor depends on the ability of the company with the factors, of which 4 is good, 3 is above average, 2 is average, | is weak

Step 4: Multiplying the importance of each factor with its weight to determine the score of factors

Step 5: Adding scores of all the factors to determine the total score of the matrix

Assessment: Compare the total scores of companies with major competitors

in the industry to assess the competitiveness of the company

-15-The example table illustrates some competitive assessment criteria of the company with competitor

Table 1.4: Competitive Profile Matrix

Assessment factors Import | Unit /| Competitor 1 | Competitor

level Classifi | Impor | Classifi | Impor | Clas | Impor

cation | tance | cation | tance | sific | tance

Market share

Competitiveness

Financial support from

outside

Product quality

Cost/product

Loyalty of customers

1.3.2 Combination phase

Combination phase: Focus on making viable strategy that can be chosen by arranging, combining important internal and external factors The used techniques including: SWOT Matrix, Space Matrix, BCG Matrix, IE Matrix, Taxis matrix and Grand Strategy Matrix Phase based on the incorporated information is drawn from phase | to combine the external opportunities and threats with the internal strengths

-16-

and weaknesses Combining the internal and external critical success factors is the key to get success in viable strategies

1.3.2.1 SWOT Matrix

SWOT is the first phase and helping the strategist to make decision to focus

on key issues, a key tool for senior officials of the enterprises in the formation of strategic plan

SWOT Matrix is a useful tool to help us understand the problem or decision

in the organization and management as well as in business SWOT is theory frame that we can revise strategies; determine the position and direction of an organization

or a company, analyzing the business proposal or any ideas relating to the interests

of the business In fact, the use of SWOT in business planning, quality planning, competitor evaluation, market control, product analysis and in research reports that more and more companies choice To set a SWOT matrix, it should be taken through 8 steps:

Step 1: Making all major opportunities from the external environment (O1, O2 .)

Step 2: Making all of the major threats from the external environment (T1, T2 )

Step 3: Making all major strengths of the enterprise (S1, S82 )

Step 4: Making all of the major weaknesses of the enterprise (W1, W2 .)

Step 5: Combining the strengths with opportunities into strategies (SO)

Step 6: Combining the weakness with opportunities into strategies (WO)

Step 7: Combining the strengths with threats into strategies (ST)

Step 8: Combining the weakness with opportunities into strategies (WT)

Table 1.5 SWOT Matrix

ot

alliances - Price competition

- Group monopoly or monopoly

- Tax policies Strengths (S)

- Weak Administration

- Poor Customer Service

- Poor marketing and sales

- Indifferent Products and

The rules in the SWOT analysis

- Be realistic: Trying to assess the situation objectively, better or more pessimistic about the weaknesses and challenges and less optimistic about the strengths and opportunities

- Distinguish between the present and the future: When analyzing the SWOT, let’s make a distinction between the current situation of the enterprise and future expectations Confusion between expectations with the actual situation will lead to misleading results

- Make simple: SWOT matrix should be short and simple, avoiding complicated and too much analysis

Albert Humphrey, economists have concretized SWOT into 6 items:

1 Product (What we sell?)

2 Process (How we sell?)

= lÑ=

3 Customers (Whom we sell to?)

4 Distribution (How we approach customers?)

5 Finance (How much price, cost, investment?)

6 Management (how do we better manage all the activities?)

- External strategic aspects: The Environment Stability (ES) and the Industry strength (IS) specific to industry and price competitiveness of the company, the economic growth situation such as GDP growth, inflation, the price elasticity coefficient, technology, joining barriers, competitive costs, industry growth potential , these factors can be analyzed by Michael Porter model

Table 1.6 SPACE Matrix

Steps for creating SPACE matrix:

Step 1: Choosing a group of factors showing financial strength (FS), Competitive Advantage (CA), the Environmental Stability (ES) and Industry Strength (IS)

Step 2: Assessing the factors used specific evaluation system to each aspect Assessing competitive advantage (CA) and Environmental Stability (ES), using scales ranging from (-6: worst) to (-1: the best) Assessing the Industry Strength (IS) and financial strength (FS) using assessment scale (+1: worst) to (+6: the best) Step 3: Finding the average score of the CA, IS, ES, FS (For exampie finding average score of FS by adding the values for selected factors shown in FS)

Step 4: Plot average scores of FS, IS, ES and CA on the main axis of SPACE matrix

Step 5: Adding the scores of X axis matrix and plot results on the X axis, similar to

Y axis, then determine the intersection point of two new points on XY axis

Step 6: Drawing vector with direction from the origin of the SPACE matrix through the new intersection This Vector shows kinds of business strategy: attack, competitive, defensive or cautious

If the vector is on attack lines: the enterprises are in the best position to use those internal strengths The strategies: market penetration, market development,

combination is feasible depending on the specific circumstances of each enterprise

If the vector is on cautious lines: The enterprise should operate with their basic capabilities rather than reckless The strategy can be selected: market penetration, market development, and product development and concentration diversification

20

-If the vector is on defensive lines: The enterprise should focus on improving weaknesses and avoid external threats The defense strategy: spending limitation, elimination, and liquidation and concentration diversification

If the vector is on competitive lines: Competitive strategies can be combination, back combination, horizontal combination, market penetration, market development, product development and Joint-venture participation

1.3.3 Strategy Decision and selection phase

Decision phase only includes a technique, Quantitative Strategy Planning Matrix (QSPM) QSPM matrix using the input factors through the analysis of phase

1 and the combination results of the analysis in phase 2 to "decide" objective of the alternative strategic It is a tool that allows the strategist evaluates objectively alternative strategies, based on the identified internal and external success factors and the other strategic formation analytical tools Strategists need to have good judgments intuitively to choose the strategies of the QSPM matrix

Table 1.7 QSPM Matrix

Polity /LP /CP /Society /Culture

Step 1: Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses

Step 2: Assign weights to each key external and internal factor

Step 3: Examine the phase 2 (matching) matrices and identify alternative strategies that the organization should consider implementing

Step 4: Determine the Attractiveness Scores (AS)

Step 5: Compute the Total Attractiveness Scores

at

Step 6: Compute the Sum Total Attractiveness Score Higher scores indicate more attractive strategies

In summary, enterprise in the business process must always determine their annual targets and long-term targets Business strategy is the way and steps on the path to achieve that goal Nowadays, the strategic management process is increasingly widely used to help them proactively anticipate and actively create influence to the environment from there helping strategist, administrators and staff understand activities, the priority of the enterprise with logic methods, systems and objective in determining the future development of the enterprise, helping them operate efficiently Strategic management has not ensured to bring success for the enterprise, but it helps strategist make more active decisions, creating a positive change of direction and consistent objectives in business of enterprises

When building strategy, it need to have properly measure and review how to make current activities more effective, basing on the process, the concept of strategic formation tool through periods, the tool of SWOT matrix, SPACE matrix, BCG matrix, IE matrix, QSPM matrix can significantly increase the quality of strategic decisions Aspects of formation and strategic choices, such as behavior, culture and politics is important issues that need to be reviewed and managed Building strategy successfully does not guarantee of that strategy is successful, to be successful must have the support of discipline and encouragement attached with achievement, salary and award and efforts from the administrators and staff that create an advantage organization environment to perform the strategy

CHAPTER H ANALYSIS OF BUSINESS STRATEGY FORMATION BASIC OF

AN PHAT PLASTIC AND GREEN ENVIRONMENT JOINT STOCK

COMPANY PERIOD 2012 - 2016 2.1 OVERVIEW OF AN PHAT PLASTIC AND GREEN ENVIRONMENT JOINT STOCK COMPANY

2.1.1 The Company’s formation and development history

- Name: An Phat Plastic and Green Environment Join Stock Company (Abbreviation: An Phat JSC)

- Address: Lot CN 11 + CN 12, An Dong Industrial Park, Nam Sach, Hai Duong, Vietnam

Pursuant to the certificate of business registration No 0800373586 issued by the Department of Planning and Investment of Hai Duong province at 14th change

on 21 May 2010, main business of the Company includes: Purchase machinery, equipment, raw materials of plastic products, and all kinds of bags; Manufacture of plastic products (PP,PE); Printing and advertising services on the bags; Construction of civil works; Installation of equipment for construction work; Real estate business; Trade in garments products; Purchasing machinery and spare parts; Technology Transfer; Sales agents, consignment, commercial brokers, commodity trading trust; Transporting goods and passengers by automobile and auxiliary activities for transportation; The collection and handling of waste disposal, recycling of waste materials; Pollution treatment and other waste management; Manufacture of machinery and equipment for plastics industry

Milestones

September 2002, Anh Hai Duy Company Limited, the predecessor of An Phat Plastic and Green Environment Joint Stock Company, was founded by two partners with registered capital of 500 million VND

April 2004, the Company has leased 10.000 m2 of lands in Nam Sach Industrial Park for investment of plastic recycling plants and plastic bags production

June 2005, Hai Duong province People's Committee approved the company

to hired 19,967 m2 of land in CN11 project plot An Dong Industrial Park with the period of 25 years, to build plastic bags factory

March 2007, An Phat Plastic and Green Fnvironment Join Stock Company was established with the original registered capital ef VND 30 billion under business registration license for the first time issued by the Department of Planning and Investment of Hai Duong province on 09 March 2007

On April 6th 2007, the Company decided to increase the registered capital to

60 billion On 13 December 2007, the Company decided to increase its registered capital to VND 66 billion On 17 April 2010, the Company adjusted to increase registered capital to VND 99 billion

As an experienced company in manufacturing plastic products, An Phat has set up a firm position in business field and established nice business relationships with many well-known corporations and companies from Japan, Taiwan, Korea, Philippines, Singapore, Thailand, Ireland, UAE, USA, EU With the slogan

"Sharing prosperity", nearly 100 young staff and employees with high qualification, and nearly 1,000 skilled workers of the company are striving their best, constantly improving technological lines, production technology, deserving as the biggest plastic bag manufacturer of Vietnam

2 1,2 Major information of the Company

Currently, An Phat has three factories:

Factory No 1: Located on an area of 14,000 m2 at Nam Sach Industrial Zone - Nam Sach District - Hai Duong Province, Factory No | of An Phat specializes in recycling plastic, making food-covered bags, garbage bags, nylon films for agriculture production and recycled HDPE and LDPE plastic pellets

~ 95 «

With more than 300 workers on modern lines imported from Taiwan and Italy, the productivity of the factory ~ 1,000 tons/month The nylon bags that produced here is not only the first choice of organizations and individuals in domestic market but also the favorite items of foreign customers

Factory No 2: Constructed in May 2007 in An Dong Industrial Park with the area of more than 40,000 m2, Factory No 2 has a the designed output of 700 tons of products per month and has over 500 skilled workers who are supported by modern production lines imported from Taiwan, Korea, Japan, Singapore and China

The fact that Factory No 2 came into operation has marked a new step forward in term of producing and recycling plastic of An Phat in particular and Vietnam plastic industry in general A long with operating production lines, An Phat will also launch a lot of new products satisfying a great demand of the market,

in which the priority is “biodegradable bags” - the product to bring great success in the market of Vietnam and worldwide

Factory No 3: Was constructed in the third quarter in 2008 and completed in September 2009, this factory belongs to the development strategy of the scale and diversification of company products With a design capacity of 700 tons/month, the factory 3 specializes in roll bags, advanced zipper bags for the food product, health

or electronics in two main markets of Europe and the United States Also, here, An Phat has been conducting research, producing biodegradable nylon bags - a friendly product with environment

With advanced production lines of many modern machines imported from Taiwan and Japan, Factory 3 committed to satisfy all customers from all five continents, including customers from the high-demanding market such as Germany, Italy or Spain

Summary: As a young enterprise, but what An Phat has achieved in recent years has demonstrated the business capacity and right investment direction in times

of fierce competition increasingly in market today

Since its inception, the name An Phat has set up a firm position in the business field and established nice business relationships with many well-known corporations and companies from USA, Singapore, Thailand, Taiwan, Korea, Philippines, Ireland, The Arab emirates,

An Phat’s products have all been highly appreciated by both domestic and international customers In March 2007, the products were certified with the Quality Management Standard (ISO 9001-2008) by Quacert recognizing An Phat products are quality products and reputation in the market

During its operation, An Phat has gained a great number of national certificates of merit such as Good Managers Award, Outstanding Entrepreneur and Enterprise Award, the gold medal Vietnam 2007, 2009, Vietnam Excellent Brand, Gold Cup ISO 2007, Integration and Development enterprise, gold EXPRO 2007,

2008, the best products and services in 2009, the best Entrepreneurship and business nationwide in 2009, the leader joint stock brands Award in Viet Nam — reputation stock brand in 2008, 2009, Vietnam Gold Star 2009

Shareholders’ Board: Shareholders’ Board is the highest authority of the Company, deciding key matters of operation organization, business production, investment and development of the Company according to regulation of the Charter Shareholders’ Board elects the Management Board and the Supervision Board that is the agency on behalf of the Shareholders' Board managing company between two congresses

The Management Board: The Company’s business and other activities must be managed and guided by Management Board The Management Board has authority to act on behalf of the Company except for those of the Shareholders' Board The Management Board has five members

Supervision Board: Supervision Board is on behalf of shareholders to supervise the rationality and legitimacy in management and business operations of the Company The company's Supervision Board has of three members

Board of Directors: Board of General Directors includes General Director and Deputy General Directors General Director is person who leads the company’s operations and is responsible to the Management Board on the implementation of the assigned rights and duties The General Director and the Deputy General Director are appointed and dismissed by Management Board Currently, Board of Director consists of two members

Secretariat: is the advisor department for Chairman of the Board of the company Secretariat has function of collecting requirements and recommendations

of the departments sent to Chairman of the Board and Management Board, perform the procedures on the shareholder management and legal of the company

Internal inspection board: is the advisor department for Chairman of the Board and Board of Director in supervising the work implementation of the departments, divisions, units in the company system, having responsible for proposing resolution, requiring the implementation of remedial measures and review the issues found in the parts

Project Development Department: is responsible for maintaining and developing the management tools that built by the Company and IMPAC Consultant Organization to improve the production efficiency of the factory and departments Project Development Department is the leader in finding the inappropriate points, or the better methods to advise and support for factories, improving management efficiency

Business Center: is the advisor and support department for the General Drecior in market research, product consumption and business production development of Company Business Center includes two groups: The import - export and general trading

Accounting Department: is the department performing work of accounting and financial statistics of the company Chief Accountant is person who directly helps the General Director to lead and organize the work of accounting and firancial statistics of the company

Product quality control (KCS): is the advisor and support department for the General Director in inspecting product quality before and after production and shpments to ensure the company's products in standard KCS Department is responsible for inspection in the areas: Raw materials, waste materials, auxiliary meterials into production, goods, stored finished product, goods and finished products to market; other goods when requested

Technical Department: is the advisor and support department for the Geeral Director and Director of the factory in technical issues of production This Department is directly responsible for the normal operation condition of the preduction line and other technical problems at the factory

2 1.4 The company’s human resource structure

People are always an important part in contributing to the success of every enterprise For enterprises operating in the manufacturing sector, the human factor becomes more important With this character, An Phat has equipped an advanced

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work force, which includes of skilled technicians employees, and qualified staff in the economic field Number of employees at 31 December 2010 is 1036, details as

follows:

Table 2.1: Labour structure of the Company

2.1.5 Business Results from 2008 to 2010

Business results in 3 years from 2008 to 2010 as follows:

Table 2.2: Business result from 2008 to 2010 of An Phat

(Unit: Million VND)

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