Developing the competitive strategy for thien hoa’s supermarket system on a retail market of the electronic and electrical appliances in Hochiminh city

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT DEVELOPING THE COMPETITIVE STRATEGY FOR THIEN HOA’S SUPERMARKET SYSTEM ON A RETAIL MARKET OF THE ELECTRONIC AN

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

CAPSTONE PROJECT REPORT

DEVELOPING THE COMPETITIVE STRATEGY FOR THIEN HOA’S SUPERMARKET SYSTEM ON A RETAIL MARKET OF THE

ELECTRONIC AND ELECTRICAL APPLIANCES IN HOCHIMINH CITY

Group number : 1 Student’s name : PHAM MAI LONG

HUYNH THI BICH LAN PHAM PHUONG MAI NGUYEN THANH THAO

INDEX

ACKNOWLEDGEMENTS

TABLE OF CONTENTS

LIST OF TABLE IN APPENDIX

LIST OF PICTURES & CHART

PREFACE 1

1 Context, the need and importance of the research topic 1

2 The purpose of research and application capabilities 2

3 Object and scope of the study 2

4 Research methodology: 2

5 Structure of the research topic 2

INTRODUCTION CHAPTER 1: THEORETICAL BASIS OF STRATEGIC MANAGEMENT AND COMPETITIVE STRATERGY 3

1.1 Strategic management 3

1.1.1 The concept of strategic management 3

1.1.2 The strategic levels 4

1.1.3 Strategic management process: 4

1.1.4 The role of strategic management: 5

1.2 Competitive Strategy: 5

1.2.1 The concept of competition: 5

1.2.2 The view of competitive strategy 5

1.2.2.1 The period 1950 - 1970 : Ansoft's market development point 5

1.2.2.2 The period 1980 -2000 : Michael Porter‟s views on competition 6

1.2.2.3 The period 2000 to the present: Opinions of W.ChanKim & Renee Mauborgne for “Blue ocean” strategy 6

1.2.2.4 Competitive characteristics of intergration 7

1.2.3.The types of competition 7

1.2.4 Competitive advantage and the origin of competitive advantage 9

1.2.5 Core competencies 10

1.2.6 Value chain 10

1.2.7.Model Michael Porter‟s five competitive pressure 11

1.2.8.Specific competitive strategy point of Michael Porter 11

1.2.8.1 Cost leadership strategy 11

1.2.8.2 Service/product differentiation strategy 11

1.2.8.3 The focus Strategy 11

1.3 Set up the strategy 12

1.3.1 Analysis of the external environment 12

1.3.1.1 Macro environment 12

1.3.1.2 Micro environment 12

1.3.1.3 External factor evaluation matrix 13

1.3.1.4.Competative Picture matrix 13

1.3.2 Analysis of the internal environment 13

1.3.2.1 Internal environment 13

1.3.2.2 Internal factor evaluation matrix 14

1.3.3 Conjoint analysis to strategy: 14

1.3.3.1 SWOT matrix 14

1.3.3.2 The strategic position and action evaluation matrix (SPACE) 14

1.3.4 Quantitative Strategic Planning Matrix (QSPM): 15

1.3.5 Goal setting to implement the strategy 15

CHAPTER 2 REALITY OF COMPETITIVE STRATEGY IN THIEN HOA SUPERMARKET SYSTEM IN HOCHIMINH CITY 17

2.1 Introduce the company: 17

2.1.1 Company overview 17

2.1.1.1 Overview 17

2.1.1.2 The achievements 18

2.1.2 Vision and mission 18

2.1.2.1 Vision 18

2.2.2.2 Mission 18

2.1.3 Business scope: 19

2.1.4 Company‟s culture 19

2.1.5 Chart of company organization: 20

2.1.6 Bussiness situation and the financial ratios of the company: 20

2.1.6.1 Result of the bussiness 21

2.1.6.2 The financial ratios of the company 22

2.2.Evaluate the effect of external environment to business of ThienHoa supermarket system 24

2.2.1 Macro environment 24

2.2.1.1 Economic environment 24

2.2.1.2 Political and legal environment 29

2.2.1.3 Socio – cultural environment 30

2.2.1.4 Natural environment 31

2.2.1.5 Science and technology environment 33

2.2.2 Micro environment – Evaluation of competitive pressure in the point of view of M.Porter 34

2.2.2.1 Competitor 34

2.2.2.2 The replacing products and services 41

2.2.2.3 The bargaining power of suppliers 42

2.2.2.4 The bargaining power of customers 42

2.2.3 External Factor evaluation Matrix (EFE) 44

2.2.4 Competitive Picture Matrix (CPM) 46

2.3 Analysis of competitive advantages of ThienHoa electronics : 47

2.3.1 Value chain analysis 47

2.3.1.1 Main activities 47

2.3.1.2 Supporting Activities 54

2.3.1.3 Marginal profit of Thien Hoa 57

2.3.2 Analysis the impact of the factor 58

2.3.3 Internal factor evaluation matrix (IFE) 59

2.4 SWOT matrix analysis: 60

CHAPTER 3 BUILDING COMPETITIVE STRATEGY AND SOLUTION TO

IMPLEMENT THE COMPETITIVE STRATEGY 62

3.1 The strategical object of Thien Hoa supermarket system to 2015 and vision to 2020 62

3.1.1 The objective of Thien Hoa supermarket to 2020 62

3.1.2 The specific objectives period 2012 to 2015 62

3.1.2.1 Expanded sales channel system 62

3.1.2.2 Restructure and improve the human resources 63

3.1.2.3 Investment management system with professional application software 63

3.1.2.4 Conducting Equitization company 63

3.1.2.5 Maintain the first position in the 500 largest companies in Viet Nam 64 3.1.3 The spcific objectives from 2016 to 2020 64

3.1.4 Competitive objectives of ThienHoa electronic supermarket system 64

3.2 Combined analysis to achieved the feasible strategies 67

3.2.1 Combine 4 factor of SWOT matrix – Strategic Plan 67

3.2.2 Analyse the SPACE Matrix 68

3.3 Decision the competitive strategies 69

3.3.1 Analyse the Quantitative Strategy Planning Matrix (QSPM) 69

3.3.1.1 Group SO 69

3.3.1.2 Group ST: 71

3.3.1.3 Group WT 72

3.3.2 Decision the feasible strategy 72

3.4 Strategic maps for Thien Hoa sellected strategic groups 74

3.5 Solutions, policies to implement the strategy and implementation roadmap 76

3.5.1 Solutions and policies to implement the strategy 76

3.5.2 The route to implement strategies 85

CONCLUSION 88

REFERENCES 90 APPENDICES

LIST OF TABLE IN APPENDIX

Table 1.1 Strategic Management process

Table 1.2 Model in competitive pressure in view of Michael Porter

Table 1.3 The external factors evaluation matrix contruction steps (EFE)

Table 1.4 Competitive picture Matrix contruction step (CPM)

Table 1.5 The internal factors evaluation matrix contruction steps (IFE)

Table 1.6 SWOT matrix

Table 1.7 Steps of quantitative strategic planning matrix (QSPM)

Table 2.1 Business situation of Thien Hoa company over the years

Table 3.1 Combined the S-O-W-T in SWOT Mattrix

Table 3.2 Strategic position and action evaluation matrix (SPACE)

LIST OF TABLES, FIGURES AND CHARTS

2.1 The financial ratios of Thien Hoa supermarket system 23 2.2 Gross domestic product of VietNam (GDP) 24 2.3 The external factor evaluation matrix (EFE) 45 2.4 The competitive pictures matrix (CPM) 46 2.5 Point of the main competitors in CPM 47 2.6 The internal factor evaluation matrix (IFE) 59

3.6 The route to implement strategy 86

applications

43

2.8 Chart of Market estimation 2013 – tech product 44 2.9 Chart of advertising and promotion budget of T.Hoa 50

2.10 Market share of Thien Hoa supermarket system in

Hochiminh city

52

3.1 Speed of develop of Thien Hoa electronics

supermarket system (2002 – 2011)

66

3.1 Strategic map for Thien Hoa strategy of service

differentiation in HCM city

74

3.2 Strategic map for Thien Hoa strategy of

marketshare maintain & stability in HCM city

75

3.3 Strategic map for Thien Hoa strategy of diverse

distribution channels in HCM city

76

PREFACE

1 Context, the need and importance of the research:

In the context of electronic supermarket chains in Ho Chi Minh City facing the challenges of the major competitors in the future, the creation of the own competitive advantages for their satisfactory business and marketing strategies is an opportunity to the company existance and development The competition in the field of the electronic supermarkets are quite sharply during the current tough economic time, and it will actually be the toughest time of screening the market competitors and the most important are the direction, way of doing business, market entry, however, the long-term strategy will decide who goes and who is in In Ho Chi Minh City are now 4-5 brands of the electronic supermarket chain with the well-known names which own the beautiful ground places in a prime location in the center as Thien Hoa, Nguyen Kim, Cho Lon, Phan Khang, Idea and the market would be very difficult to have a place for those new enterprises without the specific strategic orientation with the differentiation and catch in front

In a past time, the electronic supermarket chains in Ho Chi Minh City are scrambling to do promotions with a total of a large value on the occasion of New Year and date of the event Besides, customers also continued to receive other great promotions though not for special occasions, can say that the promotion is becoming "fashionable" continuously applied in order to attract customers, expand market share Does not stop attacks promotions that enterprises "killing" each other mercilessly in the market and the bankruptcy of the supermarket recently, the electronics supermarkets account for the overwhelming number For many reasons, but to see that the "way" continuous dumping to destroy opponents is an important reason, supermarkets continuous dumping offering low to no profit or even losses to attract customers Can be found easily race through price promotions discounts fierce place and its consequences is the enterprise 'killing" each other, weaken each

other For these reasons the above analysis, the project "Developing the

competitive strategy of Thien Hoa supermarkets in the retail market in Ho Chi Minh City" our group was formed with the desire to help enterprises improvetry

and build their competitive position on the market

2 The purpose of research and application capabilities:

 The competitive situation in the retail market in Ho Chi Minh City

 Determine the status and position of of Thien Hoa supermarkets in the retail market in Ho Chi Minh City

 Analysis of factors affecting the retail market and Thien Hoa competitive strategy

 Provide solutions to build effective competitive strategy helps Thien Hoa prestigious and brand in the retail market upon the process of the international integration

3 Object and scope of the study:

 The activities in the value chain of supermarkets Electric Thien Hoa

 The business rivals in Ho Chi Minh City

4 Research Methodology: Using practical observation, document research

method, data collection method, data synthesis method and expert method to implement the project

5 Structure of the research topic:

Chapter 1: Theoretical basis of strategic management and competitive strategy Chapter 2: Reality of competitive strategy in Thien Hoa supermarket system in Ho

Chi Minh city

Chapter 3: Developing competitive strategy and solution to implement the

competitive strategy

CHAPTER 1:

THEORETICAL BASIS OF STRATEGIC MANAGEMENT

AND COMPETITIVE STRATEGY

1.1 Strategic Management:

1.1.1 The concept of strategic management: Strategy is a term derived from the

Greek word "Strategos" used in military Dao Duy Anh scholars also wrote in the dictionary to English as follows: "Strategy is the plan in place to win on one or many fronts" From the 60s of XX century, the strategy applied in the field of business and introduced the term "Business Strategy" The concept of business strategy developed over time and they approach it in different ways In 1962, Chandler defines: "Strategy is the determination of objectives, basic long-term goals

of the business and the application of a sequence of actions as well as the allocation

of resources necessary to implement thethis objective " In 1980, Quinn had raised a more general definition: "Strategy is the pattern or plan to integrate the major objectives, policies and action sequences into a cohesive overall is rigorously" Later, Johnson and Scholes define strategy in environmental conditions have changed rapidly: "Strategy is the direction and scope of an organization in the long term in order to win the competition by the organization throughthe format of its resources in a changing environment to meet market needs and meet the expectations of stakeholders

Fred R David defines that the strategic management is "the art and science of establishing, implementing and evaluating decisions related functionality allows an organization to achieve these goals" Strategic management is an activity to solve a set of variables such as leadership, human resources, capital, marketing, production and operations, research and development, information processing to make organizations successful planned Strategic management is a continuous activity,

establish and maintain the orientation of an organization's business operations, become the core platform as the basis for the decision-making process timely response to change, challenges in the business environment

1.1.2 The strategic level: Strategy is often carried out at three basic levels consist

of the company, business unit and functional part

Company Strategy: Planning strategy for the whole enterprise based on the core competencies of the business, includes general orientation of the line and the scope and scale appropriate in each stage of business activities There are 03 types of strategies usually do is Enterprise: Growth Strategy, reduction strategy and innovation strategy

Business Unit Strategy (SBU): Focus on strategic planning to improve the competitive position of products and services in the business based on existing competitive advantage of enterprises Strategic business unit focused

on implementation modalities, the main competitors in the market, how to adapt the enterprise market positioning themselves to gain competitive advantage Strategy is often planned in the form of: competitive strategy, strategic investment strategy and the product life cycle

Functional Strategy: Planned to focus on the management and use of the most effective way of resources and enterprises of each unit member; be developed in order to successfully implement the business unit level strategy creates competitive advantage for business The strategic level functions usually are planned specifically as: Marketing Strategy, production strategies

- operational, strategic management of human resources, strategic R & D, strategic finance, strategic management systembelieve

1.1.3 Strategic management process: Typically, a strategic management process

consists of three main stages (Appedix 1.1 - The strategic management process)

- Phase of the strategic formation: To perform the business task settings, conduct investigations and studies to determine the limit inside and outside, decided to long-term objectives and strategic choices instead

- Phase of the strategic implementation: To implement the actions and it is considered the most difficult stage in the strategic management process In this phase to make up the annual goals, policy making and distribution of the resources of the business

- Phase of the strategic assessment: To implement the performance to the strategic assessment, and quantitative variables to be adjusted timely, appropriate This stage usually has three main activities: Review the elements is the basis for current strategies, measuring performance and implementing corrective actions

1.1.4 The role of strategic management: Strategic management has the positive

role business activities of enterprises, help enterprises navigate clear vision, mission and objectives from which to actively choose a good strategy to increase the efficiency of operationsbusiness, linking individuals with same goals in business

1.2 Competitive Strategy:

1.2.1 The concept of competition: Competition is trying to win over, to win for

themselves in a competitive environment with the participation of several actors together to compete in the market comply with the common bond and can occur at any time

1.2.2 The view of competitive strategy:

1.2.2.1 The period of 1950 – 1970 (Ansoft’s viewpoint of market development):

According to this view, an enterprise wants to market development model consists

of three strategies, namely: market penetration strategies, market expansion strategy

and product development strategy

Market

penetration

Increase market share

- Increased purchasing power

- Entice customers

- Buy competitors

- Enhanced Marketing activities (advertising offers, PR, etc )

- Research and Development

Market

expansion

Search for new markets and customers

- Find new target market

- Find out the value of new products

1.2.2.2 The period of 1980 - 2000 (Michael Porter's viewpoint on competition):

Michael Porter, the witch for the strategy, said that: "Competitive strategy related to the difference It is the careful selection of a sequence of different activities to create a set of unique values" With this view, M.Porter that enterprises can establish competitive strategy in three ways: low cost, differentiation and strategic focus According to him, the nature of the competition is to win market share, looking for higher returns than the average profit enterprises are

1.2.2.3 The period from 2000 to the present (Viewpoints of W ChanKim & Renee Mauborgne for "Blue-ocean" strategy): Blue-ocean strategy as defined by the two

experts W ChanKim and Renee Mauborgne (INSEAD - France Institute) does not create competitive strategies for competition or becomes no longer necessary, not exploit the existing demand in the market that focuses on the creation and capture new demand And "Blue-ocean" is a breakthrough strategy for businesses to explore their own way, looking for gaps in the market and make the opponent lose potential competitive "Blue-ocean" strategy only exists when the enterprise value to create

customer acceptance and its existence must be measured by the size of the market power

1.2.2.4 Competitive characteristics of integration: International integration

activities strengthen cohesion based on shared interests, goals, values, power, and resources to comply with the regulations, institutions between countries International integration has become a major trend and important features of the current world dachi coordinate all international relations and major changes to the

structure of the world system and national relationships

International integration helps economic growth, improve competitiveness and attract investment, to acquire new technology, international market access, opportunity to enjoy products and services at competitive prices, enhance reputationcredit and international position, maintain stability for sustainable development However, besides the positive side, there are certain limitations when integrated, there is increasing competition leads to difficulties for enterprises even bankruptcy consequences for the economy; increased dependence on the volatility

of the international market; risk of natural resource depletion and environmental degradation

Competitive integration forces all countries to accept the "rules of the game" free competition, ie market opening, loading and unloading of tariff and non-tariff barriers to foreign goods and services,remove investment restrictions In terms of economic development at a low level, free competition put the country before the enormous challenges Competition, the enterprise integration will be increased competitive pressure of imports and foreign suppliers on the domestic market, while imports diversified quality and low pricemore, the supplier has experience in international competition

1.2.3 The types of competition:

* Competition between the participants in the market:

- Between buyers and sellers: Sellers want to get the highest price and the buyers wants to buy the lowest price and the agreed price is a result of the negotiations from the two sides

- Among those who sell to each other: Competition to grab the customers and the marketshare, It is result that the price drops down for a benefit of the buyer In the competition, any enterprise does not withstand the pressure of the market so it will have to withdraw from the market and cedes marketshare to the stronger competitors

* Competition within the scope of the economic industry:

- Competition inside the industry: Competition between enterprises in the same industry with the production of the same good and service The result

of this competition is to make the development of the technology and better good or service to the customers

- Competition between the industries: Competition between enterprises in all economic sectors together to obtain the highest profit

* Base on the nature of the competition:

- Perfect competition: Competition among many sellers in the market in which there is not any control of the price in the market Products sold are similar in specifications, quality and designs And to win the competition, enterprises need to find the ways to reduce costs, lower costs or differentiation of the product/service to the competitors

- Imperfect competition: Competition among sellers of the heterogeneous products to get the advantages in the competition by using the supported tools such as advertising, promotion, service, preferential price

- Exclusive competition: The market only one or few sell a product or service that the price should be decided by the sellers not to depend on the supply-demand law

* Base on the tricks to the competition:

- Fair competition: Competition in accordance with the relevant laws and with the social recognition, it usually takes place fairly and openly

- Unfair Competition: Competition based on the legal loop-holes, contrary to

social norms and condemned by society

1.2.4 Competitive advantage and the origin of competitive advantage:

Competitive advantage is possessed of unique values, can be used to "seize the opportunity" to profit When it comes to competitive advantage, we discuss the advantages that a business is there and can be compared to their competitors Basically, the competitive advantage derived from the values that can generate business for the buyer, this value must be greater than the costs now spent Competitive advantage is a concept for now, there is micro, not macro-taking at the national level Also appearing term sustainable competitive advantage means that enterprises must continuously provide the market a special value that no other competitor can offer

The basic factor is the source to create competitive advantage is the value chain include: efficiency, quality, innovation and customer response These values make

up two basis points to create competitiveness for business: Low cost and the differentiation

- Efficiency: Target performance is often measured by output per worker and a company as efficient as it needs fewer inputs to produce a given output

- Quality: The high-quality products will reduce labor time for higher labor productivity and lower unit costs

- Improvements: Improvements in the way in which a company operates or the development of products

- Meet customers: identify and satisfy customer needs better than the competition So customers will feel the product value of the enterprise, and the enterprise competitive advantage based on the differentiation

1.2.5 Core competencies:

Core competencies of a business is the possibility that businesses can do well, but must simultaneously satisfy three conditions, including: ability to bring benefits to customers that competitors difficult to imitate and that capacity must be able to expand to other markets and products Core competencies could be technology, technical know-how, close relationships with customers, distribution system, strong brand Core capabilities to create competitive advantage for enterprises in the production and trading When developing products, services, businesses often rely

on core competencies, its existing strengths This is considered a top priority for many businesses when considering the decision to develop products and services complement of products and services available Core competencies will create a competitive business advantage, greatly reducing the risk of goal setting and strategic planning, help determine the success or failure of the project

1.2.6 Value Chain:

Integrated value chain related activities of the enterprise in order to create and add value for enterprise customers, including activities from research and development, design, production and operation,distributors and service providers in order to increase the value of tangible and intangible assets to customers Is an effective tool

to identify, build competitive advantage in strategic planning to create greater customer value chain for the cost of doing business for production and business activities of enterprises increase efficiency When analyzing the value chain, enterprises will identify the internal capacity of the organization through accurate identification of strengths and weaknesses in the current operation; determining competitive advantage, implementing effective strategies, increase the value of the

beneficiary customer, strategic decision to increase the overall performance

1.2.7 Model of the five competitive pressures as Michael Porter's viewpoint:

Model of the five competitive pressures is a tool to analyze the power of the market pressure from factors that can neutralize the pressure using appropriate strategies to minimize business risks, improvethe company's competitiveness in the market Analysis of model five competitive pressures will help businesses decide the particular strategy (Appendix 1.2 - Model of the five competitive pressures as viewpoint of M Porter)

1.2.8 Specific competitive strategy as Michael Porter's viewpoint:

1.2.8.1 Cost leadership strategy: This strategy is understood as maintaining the

lowest cost in the industry or in the market Want to pursue this strategy requires capital investment in technology, operational processes with high efficiency, low-cost platform (labor, materials, equipment, etc.) to help reduce costs Greatest risk when applying this strategy is not only our business have access to cheap resources

So, other competitors can fully copy of the business strategy The important thing is whether the business has the ability to maintain a lower cost competitors during production or business activities

1.2.8.2 Service/Product differentiation strategy: Core content of this strategy is to

make the products / services of different enterprises and more attractive products / services of competitors (in form, features, reliability, quality of service, brand image, etc.) For the successful application of this strategy, enterprises need process research and development (R & D) and innovation good product; ability to provide product / service quality; marketing and saleseffectively to ensure that customers can feel the difference and the benefits that it brings Now apply this strategy to be very quick in the new product development process If not, the business will dominate the loss of market share by more successful competitors use this strategy

1.2.8.3 The focused Strategy: Pursue business strategies focused on the niche

market, it is the small market segments with distinct characteristics Competitive advantage of these firms were created based on a deep understanding of the characteristics of the market and ability to provide the product/service in accordance with these characteristics However, the focus of the market on a small suite of enterprise resources is not necessarily safe, because large enterprises with better resources can still attack on the segment The risk that the business application focus strategy often must continue to create other advantages (cost reduction or differentiation of products /services), to bring more added value to customers in its segment Therefore, the focus strategy is also divided into two strategic: Strategy focused on low-cost platform and focused strategy based on differentiation and selection strategy is dependent on the capacity as well as the strengths of the business

1.3 Building of the competitive strategy:

1.3.1 Analysis of the external environment:

1.3.1.1 Macro environment: Analysis of the macro environment is the overall

environmental analysis to identify the opportunities or risks affecting the business activities of the enterprise Analysis of the macro environment is to evaluate the external factors indirectly impact the ability to create and profit targets of the business planning There are five external factors have a major impact on business: Economic factors, politic factors, social factors; technology factors, natural factors

1.3.1.2 Micro environment: Micro environment analysis is to analyze the

competitive environment to identify the opportunities or risks that affect business activities of the enterprise Micro environment analysis to assess the external factors impact directly on the ability to create and profit targets of the business planning

To evaluate the effectiveness of the micro environment, the strategy is often used in

the model of the five competitive pressures as Michael Porter‟s viewpoint to analyze

1.3.1.3 External factor evaluation matrix: External Factor Evaluation Matrix – EFE

Matrix enables integrated management strategies and evaluate key opportunities and threats of the external environment affect the organization of information on the economic, social, cultural, demographic, geographic,political, legal, technological and competitive EFE matrix is developed in five steps (Appendix 1.3 - The EFE matrix construction steps)

1.3.1.4 Competative Picture Matrix – CPM: Competative Picture Matrix – CPM

used to identify the major competitors in the market and compare the advantages and limitations between these competitors possesses the market Competative Picture Matrix is the expansion of the EFE matrix Competative Picture Matrix help administrators identify strategies to be the main competitor with the level of importance, and classification of critical points in order to compare and analyze the same level of significance to realize the advantagestheir competition and weak points to overcome Total score, the classification level of the company's key competitors after the evaluation are compared with the organization in order to analyze the external environment looking for the key strategic information (Appendix 1.4 - Steps to build the CPM matrix)

1.3.2 Analysis of the internal environment:

1.3.2.1 Internal environment: Internal environmental analysis is to identify the

available resources and potential, strengths and weaknesses internal to the organization now and in the future as a basis for the formulation of overall objectives of the strategy becomesimplementation and the means to implement the strategy effectively When strategic planning, internal environmental factors are often interested in analyzing mainly composed: Human resources of the

organization, ability to research and development, scale of production operations, financial capability, business accounting, perform marketing degree, culture of the organization

1.3.2.2 Internal Factor Evaluation Matrix - IFE Matrix: Internal Factor Evaluation

Matrix – IFE Matrix is synthesis tools and evaluate the strengths and weaknesses of important parts business functions within the organization, and it is also the basis for identifying and assessing the mutual relationship between the parts actually function effectively bringing high-performance work in collaboration resolve IFE Matrix is also developed in five steps (Appendix 1.5 - The IFE matrix construction

steps)

1.3.3 Conjoint analysis to build the competitive strategy:

1.3.3.1 SWOT Matrix (Strength – Weakness – Opportunity – Thread): The fact that

every business should not pursuing multiple strategies simultaneously, because each strategy requires a very different approach First, we need to use SWOT analysis model to analyze the strengths, weaknesses, opportunities and threads of the business when applied to each type of the above strategies, to understand the strategy most likely to succeed At the same time, the need to combine this result with the analysis of the competitiveness in the industry or in the market SWOT Matrix is an important tool combined help administrators on the basis of the organization's resources strategic planning groups including arc combination of four factors S – W – O – T: Strength - Opportunity (SO), Weakness - Opportunity (WO), Strength - Thread (ST), and Weakness - Thread (WT) SWOT matrix model

(Appendix 1.6 - SWOT Matrix)

1.3.3.2 The strategic positioning matrix and evaluation activities - SPACE Matrix:

The strategic positioning matrix and evaluation activities is a strategic planning tool during the combination of strategic analysis framework formed SPACE Matrix was

described as a two-dimensional coordinate axis four-quadrant framework for the choice of location is prudent strategy, attack, defense or competition The organization's overall strategic position is determined based on the evaluation of activities by the most important determinants, consists of two elements within the enterprise on the coordinate axis as the financial strength (FS), competitive advantage (CA) combine of two external factors of the business on the coordinate axis as industry strength (IS), environment stability (ES)

1.3.4 Quantitative Strategic Planning Matrix - QSPM:

Quantitative Strategic Planning Matrix is the only tool that allows strategic management decisions relative attractiveness and objective selection strategy can choose QSPM matrix is the third phase of the analytical framework for strategic planning, which uses the inputs by the analysis in the first stage and the combined results of the analysis in the second stage to determine the strategic objective of the likely alternative The attractiveness of the various strategies identified in matrix QSPM by leverage or improve key elements of the external environment and inside the enterprise The number of strategies comparison in matrix SQPM is not limited and can use many matrix to compare the strategic group, but only in a certain group strategy can be evaluated together Building process of QSPM matrix is described in six steps (Appendix 1.7 - construction steps of QSPM matrix)

1.3.5 Goal setting to implement the strategy:

The implementation of the strategy affects the entire company, a strong impact on all functional business areas and unit parts of the company The implementation strategy is linked closely with the stage of setting strategy but if the strategy sets the position of a force resource before an action, emphasis on financial performance

The process requires the knowledge of the analytical skills and intuition and needs the cooperation among groups under the leadership of the high-level management

The transition from stage of setting the strategy into stage to implement the strategy should have the participation of the functional administrators and related parts as much as possible both of the two stages of the strategy

Establishing annual goals are very necessary to implement the strategy because it is the basis for the distribution of the force resources, the evaluation mechanism for the administrators, it is a tool to control the evolution of the long-term goals and set the priorities for the company, units and departments The annual goals are published in the form of the ability to make a profit, growth and marketshare of each business unit, geographic region, customer groups and disseminate products The annual goals should be measurable, reasonable, clearable, challenging and it should be determined in an appropriate period of the time with a worthy encouragement In addition, For the effective implementation of the strategy, it is also required a policy for the control system and cooperation between the unit parts

to make it easier to solve the problems and achieve the goals

CHAPTER 2:

REALITY OF COMPPETITIVE STRATEGY IN THIEN HOA

SUPERMARKET SYSTEM IN HOCHIMINH CITY

2.1 Introduction about the company

2.1.1 Company overview:

2.1.1.1 Company overview: Starting from a small shop selling electrical goods –

electrics in Ho Chi Minh city, and to become the one of the leading retailers in electrical appliances and furniture in Vietnam, the interior electrics Thien Hoa center in District 10 was established on November 2001, officially marking the emergence of the first chain shopping mall selling electrical appliances – furniture with the name “Thien Hoa” This was the largest and the most modern shopping mall selling electrical goods in retail business in Ho Chi Minh City

This was the breakthrough in the field of professional distribution when Thien Hoa was authorized by the large foreign and domestic manufacturers to introduce their products to the end-users Following the first success, as well as to meet the market demand and the strong belief of consumers, the next centers like Thien Hoa District

12, Thien Hoa Ly ThuongKiet, Thien Hoa District 7, Thien Hoa Go Vap came to operation in 2004, 2006, 2007, 2010 In addition to the constant development of new shopping centers along with the growth in all aspects of Thien Hoa Supermarket System, a customer care center also works to ensure that all the rights, care, after-sales service of our customers in the best way On 29th September 2011, a new branch of Thien Hoa Supermarkets was located in Binh Duong in a large scale and area marked a new milestone for the development and strategic opening for the development of the best system electronics supermarket chain - modern furniture in Vietnam

2.1.1.2 The achievements: In 11 years of development, with their continuously

efforts for improving, Thien Hoa quickly became one of the leading retail distribution system selling electrical products in Vietnam and honorably were trusted and voted by the consumers to be “the most favorite brand in selling electrical products” in the local market – a project was established by Saigon Giaiphong Newspaper in 2007 – 2011, and ThienHoa was also in the top 500 companies in Vietnam by Vietnamnet organizing in 5 years continuously From a supermarket established in November, 2011 till now, Thien Hoa became a supermarket chain with more than 2000 employees, and 6 shopping mall centers, 01 repair center and a new Call Center to increase the utilities of providing more services to consumers

2.1.2 Vision and mission:

2.1.2.1 Vision: With these achievements in recent years, Thien Hoa supermarkets

would like to become one of the leading retailers in the electronics sector in Vietnam; creating their own values, development and brand positioning in the market as well as in the hearts of consumers to ensure sustainable development in the future With the current scale, Thien Hoa is confident to become the most modern electronics supermarket chain in nationwide, and is the convergence of customer trust and the world's leading electronics companies

2.1.2.2 Mission: With the ongoing development of the electronics market, Thien

Hoa has been trying its best to provide absolute customers‟ belief Set the mission

"The utility of our customers is the foundation for the existence and

development", Thien Hoa always towards perfection in the care and the best

customer service Thien Hoa will also further develop more gadgets to deserve the

core values of the brand Thien Hoa "Utilities for every home"

2.1.3 Bussiness scope: Since inception, Thien Hoa always gets the full supports

and trust from suppliers Always partnering with Thien Hoa are the important strategic companies leading the world‟s electrical industry like: Toshiba, Sony, Samsung, LG, Sharp, Daewoo, Panasonic, Sanyo, Philips, Electrolux, Canon, HP, Acer, Fujiyama, TCL, Black & White, Dell, Nokia, JVC, Reetech, Nikon…Thien Hoa always be trusted by the leading electronic corporation to be authorized to directly launch new products, the latest technology and the preferential procurement program for consumers

With more than 5.000 origin products categories such as electronics, refrigeration, electrical appliances, digital, technology, office equipment, Thien Hoa ensure to supply the variety of products, the confidence about product quality and the satisfaction of added services to consumers

2.1.4 Company culture: Trusted and voted as “the most favorite brand in selling electrical products” in the domestic market, Thien Hoa has been trying all efforts to

improve themselves constantly With the goal of becoming one of the leading retailers in the electronics sector in Vietnam together with providing genuine quality products, Thien Hoa always set the first priority of service quality to ensure the

rights, care and customer service in the best way And with slogan “Utilities for

every home” have shown the good understanding the consumer trend, as well as the

strengthen its position in the market in which Thien Hoa always strive and improve not only the company's employees must enter the mind that even customers can feel the message that Thien Hoa want a message sent Thus, training to improve professional knowledge, culture and behavior of staffs, increasing the services are the ones of Thien Hoa goals to bring the best quality in customer services, the convenience and highest satisfaction The company always has the voted emulation for all employees every month, every year to recognize the achievements of outstanding individuals and groups; unexpected bonus for the individual outstanding achievements particularly aimed at encouraging and set an example for

the employees of the company Organization for the entire company employees travel to rest with his family and loved ones every year to increase linkages colleagues, helping them to have time with family after days of hard work And with that concern, Thien Hoa helps to create a good working atmosphere, building a collective unity, commitment and teamwork together as a solid foundation for growing development objectives in the future Together with the doing business, Thien Hoa is a company making the high humanism, responsibility for the community and society during the time for development So far, Thien Hoa not only has been recognized the leading retailer in Vietnam with unique promotions, but

also the leading company in charity works Initiated the mission: "The customer's

utility is the foundation for the existence and development”, Thien Hoa has been

trying efforts toward the perfection to be worthy with the brand‟s core value and to

do that, every staff has to be responsible for the mission and goal of the company

2.1.5 Organization chart of company:

(Source: Thien Hoa’s company)

2.1.6 Business situation and the financial ratios of the company:

2.1.6.1 Result of the business: The data on the size and debt in the company's

business activities the period from 2009 to 2011 had a high rate through each year

of implementation Total assets in 2009 increased by 123.28% compared with 2008,

2010, up 35.62% from 2009, 2011 up 45.04% compared to 2010 Bank loans in

2010, up 53.19% compared with 2009, in 2011 increased by 44.86% compared to

2010 Equity in 2009 increased 318.31% from 2008, 2010 up 21.10% compared with 2009, in 2011 increased 349.87% compared to 2010 Through the data for each year that the company is in the period of increased activity scale by expanding the network of electronics stores in order to increase competitiveness in the market (the expansion) and the development of non-profit division strategy to enhance the quality of customer service in the supply chain of products and services (in-depth investment)

Figure 2.1 Revenue & COGS

VND Billion

(Source: Accounting Department of Thien Hoa Company)

The figures on business performance of the company in the three years 2009 to

2011 has an annual growth through business Specifically, the revenue achieved in

2009, up 28.73% from 2008, 2010 up 61.85% compared to 2009 (absolute value: VND 714,195,474,108), 2011 increased 97.79% from to 2010 (absolute value: 1,827,497,604,219 VND) shows operating revenue in the last three years has increased significantly, the average is 63%, a strong increase in the context of the very unfavorable business environment due to the economic recession and the high level of competition in the industry Profit after tax in 2009 increased by 147.06% compared with 2008, the 2010 increase of 107.41% compared with 2009, in 2011 increased 50% compared to 2010 (Appendix 2.1 - Business situation of Thien Hoa company over the years)

Figure 2.2 Net profit

VND Billion

(Source: Accounting Department of Thien Hoa Company)

2.1.6.2 The financial ratios of the company:

- The solvency of the company is maintained at normal operation to ensure liquidity risk management of debts or payment needs of the company

- The indicator of the debt balance and the financial structure showed that the company operation is based on their business capital, less financial pressure from commercial loans outside

- The performance indicators show that the company worked hard in the effective management of inventory, fixed assets and cash flow of the business operations through the fiscal year

- The performance indicators in the activities showed that the company's ability in making profit tends to decrease due to unfavorable business environment

Table 2.1 The financial ratios of Thien Hoa supermarket system

Payment ratios

Short –term payment ratio 1,02 0,93 1,14 Quick payment ratio 0,40 0,25 0,25

Ratio of the debt leverage

Debt ratio on the total capital 0,93 0,93 0,79

Operation ratio

Inventory cycle 9,29 10,26 12,79 Fix capital cycle 47,36 35,59 55,71 Working capital cycle 4,95 5,96 8,12 Period of average receivable 35,24 38,96 26,44

Benefit indicators

Profit of gross margin 0,03 0,06 0,07 Return on total assets (ROA) 0,83% 0,65% 0,44% Return on common equity (ROE) 11,16% 9,72% 2,14%

Ratios of financial structure

Ratio of capital structure 0,11 0,10 0,02

(Source: Accounting Department of Thien Hoa Company)

2.2 Evaluate the efffect of extenal environment to business of ThienHoa supermarkets system

2.2.1 Macro environment:

2.2.1.1 Economic environment: According vnexpress.net, the growth rate of gross

domestic product (GDP) of Vietnam in recent years is considered quite satisfactory when the international rating agencies ranked as one of the 26 countries with the world's fastest GDP growth

Table 2.2 Gross domestic product of Vietnam (GDP)

There are two main factors negatively impact the annual GDP of Vietnam One is a group of factors outside the economy by the credit crisis and global financial lasted from late 1997 to the present and global risk falling into a double-dip recession because of the lingering debt crisis in Europe and less optimistic economic outlook

of the leading economic powers such as the U.S., Japan, Germany, France, India and China One is the group of inside elements, and caused of Vietnam's economy failed with the macro policies to rescue the economy (monetary policy and fiscal policy), which has inconsistencies, lack of supports, but also consideredthe shock for the economy in general and for enterprises particularly to make the aggregate demand declined, inventories increased at an alarming rate and the bad debts in bank loans have serious signal

Up to the macro economic report for the first 10 months in 2012 from Vietcombank showed that total retail sales of goods and services reached 1,917.3 thousand billion increased 6.8% (excluding the price factor) compared with the same period last year; the inventory index for processing industry increased by 20.3% compared to the same period last year; bank bad debt is estimated at 8.8% to 10% (about 202,000 trillion VND) on total outstanding loans system, but has no plans to deal effectively while bank profits decline affecting the ability of preserving for credit losses of commercial banks

The decline of the manufacturing sector continues to influence purchases and inventory levels in 10/2012 The decreased demand for production means the purchases of goods to be cut sharply and with greater extent compared to the previous survey Based on that, the inventory purchases have fallen 12 months in a row and with the fastest speed since July Inventories of finished goods are generally not changed for 4 consecutive months October's data is consistent with the further narrowed operating profit of the manufacturer, as input costs continue to increase when the valuation capacity reduced The average purchase price has increased for the third consecutive month showed that the cost of food, fuel and transport have risen higher Meanwhile, the average output prices fell 6 consecutive months Discount output speed is faster, but significantly slower than the decline in June and July this year The average delivery time of suppliers unchanged in October after the 17-month period of performance improvement activities More

than 85% of companies said there is no change in delivery time in the most recent survey period HSBC commented: "The weak demand for international and domestic continues to affect the manufacturing sector The number of new export orders dropped fastest since the start of data collection Although the input costs increased, but the manufacturerscannot transfer the cost burden to consumers caused of weak demand Output indicators, although there are signs of decline, are stable at close to 50 shows that the economy would recover by the end of 2012 "

Changes in the consumer price index (CPI) of Vietnam is very complicated in the past years, a year increased with abnormal signal and the following year declined in long-term instability of the economy According to the General Statistics Office, CPI 2008 up two digits 19.89% but CPI 2009 only at 6.88%, CPI 2010 is 11.75% and CPI 2011 is 18.13% continued double-digit jump but CPI 2012 forecasts will not exceed 10%

Figure 2.3 Diagram of consumer price index to October, 2012

( Source: General Statistics office )

Consumer Price Index (CPI) 10/2012 up to 0.85% compared with September 2012,

so CPI ten months of 2012 only increased 6.02% compared with the end of 2011 Changes in consumer price index over the months in 2012 with less stable decrease gradually in the first five months of the year, reverses the negative light in the June

and July, a slight increase in August and jumped in September but unexpected slight increase in October Less stable evolution of the consumer price index shows that the process of policy administration is extremely difficult and is the main factor causing a direct impact on the expected consumer price index, interest rate fluctuations commercial banks and the business plan of the enterprise

Vietnam's import-export quotation of the first 10 months of 2012 with the difference in the import decreased significantly making the deficit softened Export value of goods in 10 months 2012 is estimated at $ 93.5 billion, an increase of 18.4% over the same period last year Import turnover in 10 months 2012 is estimated at $ 93.8 billion, an increase of 6.8% compared to the same period last year Deficit in ten months of 2012 is about $ 357 million, equal to 0.4% of exports

of goods Many economic experts assess the deficit reducer is the serious signal because the growth characteristics of the Vietnamese economy relies heavily on imports, this is a sign that domestic production was delays and in difficulties

As announced on the purchasing manager index (PMI) for Vietnamese industry of HSBC, in October 2012, this index has been seasonally adjusted decreased from 49.2 points to 48.7 points in September 2012 Thus, the total PMI index remained below the threshold of 50 points during the seven months of 2012 Despite the rate

of decline was faster than the previous month but still slower than in July 2012 (month of the highest decline during the 19-month data collection of HSBC) The manufacturers said output and new orders continue to fall as weakened demand in the situation of shrinking domestic market and the global trade decline Production decreased in seven consecutive months, although the rate of decline is slight on overall Both the number of new orders and new export declined for six consecutive months The company said customer demand from China, Japan and Taiwan fell Reserve production capacity is still open in October when the amount of work (but not implemented) continued to decline This not only reflects the desire to settle all outstanding work, but also shows the number of jobs increased slightly

Foreign direct investment (FDI) as of October, 2012 is estimated at $10.5 billion, equal to 75.3% compared to the same period in 2011 FDI disbursement is estimated

at $ 9 billion, down 1.1 % from the same period in 2011 Credit activities from 2008

to the present at the hot peak in 2009 is 37.73% and started to slow down in the next year, the outstanding debt over the first nine months of 2012 increased by only 2.35%, but in the first six months,the growth was in negative and actually began to recover from the July 2012, but also very weak due to the need the economy's capital which are frozen Overall, FDI implementation was decreased slightly, and FDI registration fell sharply in the first ten months of 2012 and the credit for the economy slowed down sharply from 2009, the lowest growth rate in the first ten months of 2012 showing the clear variations unpredictable dynamic complexity of the global economy, the difficulty of the domestic economy affects the confidence

of domestic and foreign investors showing the signs of decline In particular, the Vietnamese economy has not shown the competitive elements to attract investment inflows and large production

Figure 2.4 Diagram of credit growth

(Source: The State Bank of Viet Nam)

Tax policy has a strong and effective impact on the economy, so as to increase, decrease, change the preferential tax exemption or reduction will have a strong impact on the income and behavior of the investors According to analysis of statistical tools, the inventory was high in the first 6 months of 2012 due to reduced consumer demand and large overdue debts incurred in most enterprises, so the ability to pay will decrease while the tax liabilities are not in a small proportion Simultaneously with the WTO and AFTA, in addition to enjoy tax incentives for export, Vietnam must also committed to reduce tariffs and open markets as other partners in ASEAN and the world and opening the door for international brands will

be an opportunity to integrate but also a challenge to a major impact on the operation of the business on a local market like ThienHoa It requires new models in doing business, establishing linkages between suppliers, producers, distributors, consumers and customers to form a supply chain to be able to create a solid position

in the value chain in the country and the region

The overall global economic situation together with the economic fluctuations of the Eurozone block, conflicts about territorial sovereignty takes place on a large scale, especially the Japanese islands dispute between Japan and China (2 big Asian Nations) will cause unpredictable consequences According to the latest forecasts on October 2012 about the prospects for the world of ADB showed GDP growth of

2013 in the largest economies in the world and regional economic growth dynamic Asia is bleak and not seen a bright picture for the future

2.2.1.2 Political and legal environment: Vietnamese State and Local Government

always put the key tasks of maintaining political security and stability, safety, peace

in the area of Ho Chi Minh City, to create a favorable business environment for the economic sectors, especially in the supermarket business enterprises, to encourage investors in this field

Business in the electronics sector needs to review the political situation, legal rules which can affect to the business operations The political situation can completely disturb the business efficiency of enterprise Therefore, the State management system and the legal system of our country is slowly improving, creating a favorable legal framework, business environment of equality, positive impact on the development of commercial activities , increase retail sales and market stability However, a number of procedures for administrative reform have not yet synchronized, and the trained human resources are still weak, not meet the needs of large urban development, not adaptive to the open market, and global economic integration

In recent years, as Vietnam has been deeply involved in the global economic system

so we need to improve the flexible legal framework as well as the development of non-tariff tools to protect the legal rights for the domestic enterprises On the other hand, when Vietnam joined the WTO, we must commit to basic principles of WTO transparent trade law

2.2.1.3 Socio – cultural environment: Ho Chi Minh is a young, dynamic city and it

attracted a large amount of human resources to live and work with a variety of traditional culture by regions The culture in Ho Chi Minh City is diversified,

colorful and is the “cultural common roof”, the interference of harmony among

different cultures Particularly, Ho Chi Minh City is the center of the core planning economic in the South of Vietnam due to the many available advantages of socio – geography – culture

With these features, the Ho Chi Minh City has been catching and mixed into the general flow of the country's integration in the general trend of the times Culture to the market to buy consumer goods ingrained traditions of each people, now combined with modern style up to new lifestyle of society by living pressure, time and work From the birth of the supermarket, people tend to switch to buying

goods in the supermarket, where the goods are available and varied, clear pricing, quality guarantee Go to the electronics stores, consumers are not only for the shopping needs but also for the needs of entertainment, relaxation after hard working hours Currently, the standard of living and income of people in Ho Chi Minh City is quite high stimulating the consumer demand with the concept of

"Right money – Right product", and to dignify the high quality factors, aesthetic

and service rather than weak pricing contributing actively to the development of supermarkets and electrical stores in particular

2.2.1.4 Natural environment: Ho Chi Minh City territory stretching along the

northwest-southeast, is in the coordinates 10o22'33'' to 11o22'17'' north latitude and from 106o1'2'' economic to 107o1'10'' East Ho Chi Minh City to Hanoi nearly 1.730

km road, located at the intersection between international maritime routes from North to South, from East to West Ho Chi Minh City is located between the Mekong Delta and the South East; northern border provinces of Binh Duong and TayNinh Province to the Northwest, Dong Nai Province to the East and Northeast, Southeast borders the province of Ba RiaVung Tau, West and South West provinces

of Long An and Tien Giang province; South of the city adjacent to the South China Sea

The area of the city is 2,095 km2, accounting for 6.36% of the country, of which 442.13 km2 of the city and 1652.88 km2 suburbs Organic population of 6.347 million people (census 2007), but the total living working current population isin the city more than 15 million people Ho Chi Minh City is located in a subtropical monsoon climate with equatorial sunshine hours per day about six hours The average temperature is about 27 - 28oC, the highest of about 32oC in June each year and lowest around 23°C on December each year Climate divided into two distinct seasons: the rainy season from May to November, the dry season from December to April next year Rainfall average is 1.931mm/year, unevenly distributed with about 90% of the rainfall is concentrated in the rainy season The city is located in the