Business development strategy on real estate of Van Phuc Gia investment joint stock company in the perrion 2012-2015

: 5 PHAM XUAN TIEN PHAM TRUNG CHANH NGUYEN THI SU Class : GaMBA01.C0310 BUSINESS DEVELOPMENT STRATEGY ON REAL ESTATE OF VAN PHUC GIA INVESTMENT JOINT STOCK COMPANY IN THE PERIOD 201

Group No : 5

PHAM XUAN TIEN PHAM TRUNG CHANH NGUYEN THI SU

Class : GaMBA01.C0310

BUSINESS DEVELOPMENT STRATEGY

ON REAL ESTATE OF VAN PHUC GIA INVESTMENT JOINT STOCK COMPANY

IN THE PERIOD 2012-2015

GLOBAL ADVANCED MASTER OF BUSINESS

ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

BUSINESS DEVELOPMENT STRATEGY

ON REAL ESTATE OF VAN PHUC GIA INVESTMENT JOINT STOCK COMPANY

COMMITMENT

The Group 5, which comprises following members: Ton Nu Ngoc Han, Pham Xuan Tien, Pham Trung Chanh and Nguyen Thi Su, would like to show

its guarantee in its truthfulness that the final exercise named “Business

development strategy on real estate of Vanphucgia Investment Joint Stock Company for the period 2012 – 2015” is the joint-implementation research

work of Group 5 itself

The citation of used data in this exercise is cleary shown in the list of reference In addition, this research result has not been published in any research work up to now

Ho Chi Minh City, 15th Mar., 2012

Implementing group

Group 5 – Class of GaMBA01.C0310

ACKNOWLEDGEMENT

The accomplishment of the final exercise, a hard and difficult mission to overcome, is a result of our nearly 2-year strenuous and difficult study, as a preliminarily obtained certain achievement from our careers of study and research

In addition to our own efforts, this result is also contributed by enthusiastic interests, guidance and helps from people around us We would like to show our warmest thanks to the Center for Educational Technology and Career Development

of the Vietnam National University, Hanoi for their facilitation throughout the MBA training program of the Griggs University - America

We also would like to express our deep gratitude to our lecturers for their enthusiasms and whole-hearted conveyance and transfer of precious knowledge that are really useful for our career development

Our sincere thanks are expressed to the guiding Council, especially the lecturer and Dr Le Van Bay for his whole-hearted instructions and helps regarding the completion of this final exercise

Furthermore, we would like to send our gratitude and thanks to the management Board of the Vanphucgia Investment Joint Stock Company due to their facilitation, contribution of ideas and provision of valuable data and information for our group’s research

Our thanks are directed to our classmates who are always willing to help us acquiring practical and useful lessons by their own practical experience and knowledge

Finally, we would like to send our most sincere and grateful thanks to our families due to their constant encouragements and facilitations for the participation and the completion of our training courses

Our most sincere and deepest gratitude are expressed for everybody!

Group 5 – Class of GaMBA01.C0310

TABLE OF CONTENTS

PREFACE 1

1 Background 1

2 Research objectives 2

3 Research scope 3

4 Research methodology 3

5 Topic structure: 3

CHAPTER 1 4

THE PRINCIPLE OF BUSINESS STRATEGY 4

AND REAL ESTATE TRADING 4

1.1 The principle of strategic management 4

1.1.1 Definition of strategic management 4

1.1.2 Classification of strategic management 5

1.1.2.1 Different levels of strategy 5

1.1.2.2 Types of Strategy 5

1.1.3 Process of strategic management 7

1.1.3.1 Strategy formulation 8

1.1.3.2 Strategy implementation 19

1.1.3.3 Strategy evaluation 19

1.2 Current status of real estate market in Ho Chi Minh City 19

1.3 The necessity of real estate business trategy planning of VPG 21

CHAPTER 2 22

ANALYSIS OF BUSINESS AND MANUFACTURING STATUS AND THE REAL-ESTATE BUSINESS OF VPG 22

2.1 The establishment and development of VPG: 22

2.1.1 Company introduciton: 22

2.1.2 Business sectors of the Company: 23

2.1.3 Legal capital increase: 23

2.2 Organization structure – roles and duties of divisions: 24

2.2.1 Organizational structure: 24

2.2.2 Roles and duties of divisions: 25

2.3 Evaluation of business performance of VPG in the period 2009-2011: 29

2.3.1 Real-estate business and investment 29

2.3.2 The consultancy of design, investment project proposal and construction works 32

2.3.3 Real-estate broking service and office for lease 33

2.3.4 Business achievements of VPG in the period 2009-2011: 34

2.3.4.1 General business achievements, comments and evaluations: 34

2.3.4.2 Business achievement in real-estate investment: 40

2.3.4.3 Business achievement in construction: 41

2.3.2.4 Business achievement in consultancy and others: 42

2.4 Analysis and evaluation of the current business strategy of VPG 42

2.4.1 Advantages 42

2.4.2 Difficulties 44

2.4.3 Evaluation of achievements and existing limitations 45

CHAPTER 3 48

PLANNING STRATEGY AND SOLUTION TO DEVELOP VPG’S REAL ESTATE BUSINESS - RECOMMENDATIONS 48

3.1 Mission, vision of the VPG 48

3.1.1.Mission of the company: 48

3.1.2 Vision: 48

3.2 Strategical objectives: 48

3.3 Planning strategy: 48

3.3.1 Analysis of business enviroment 48

3.3.1.1 Macroeconomic situation 48

3.3.1.2 Analysis of external environment 51

3.3.1.3 Internal factors analysis 56

3.3.1.4 SWOT Matrix of VPG 58

3.3.1.5 SPACE Matrix of VPG 62

3.3.1.6 Competitive picture matrix (CPM) 64

3.3.1.7 Quantitative strategy picture matrix (QSPM) 65

3.4 Solutions to implementing strategies 67

3.4.1 Capital solution 67

3.4.2 Product solutions 68

3.4.3 Solutions for human resources 68

3.4.4 Solutions for cost 69

3.4.5 Solutions for quality and progress management 69

3.4.6 Solutions for Marketing and sales organization: 70

3.5 Proposed revenue and profit in 2012-2015 71

3.6 Recommendations: 72

CONCLUSION 73

REFERENCES 78

LIST OF TABLES

Table 1.1 External Factor Evaluation Matrix (EFE) 11

Table 1.2 Internal Factor Evaluation Matrix (IFE) 12

Table 1.3 CPM Matrix 15

Table 1.4 QSPM matrix 18

Table 2.1: Business achievements in the period 2009-2011 34

Table 2.2: Analysis of some basic financial indicators of VPG 39

Table 2.3: Revenue, real-estate business profit 40

Table 2.4: Revenue, construction business profit 41

Table 2.5: Revenue, consultancy profit and others 42

Table 3.1: External Factor Evaluation (EFE) Matrix of VPG 55

Table 3.2: Internal factors evaluation Matrix of VPG 58

Table 3.3: Factors plotted on the axises of SPACE Matrix 62

Table 3.4: Competitive picture matrix 64

Table 3.5: QSPM matrix 66

Table 3.6: Proposed revenue structure in 2012-2015 71

Table 3.7: Proposed profit structure 2012-2015 71

Table 3.8: Proposed business results in 2012-2015 72

LIST OF FIGURES, GRAPHS

Figure 1.1 Comprehensive model of the strategic management process 8

Figure 1.2 A model of five competitive forces designed 9

Figure 1.3 SWOT matrix 13

Figure 1.4 SPACE matrix 13

Figure 1.5 Grand Strategy Matrix 16

Figure 2.1: Organizational structure of VPG 24

Figure 2.2: Perspective of corporative housing B1 Truong SA 29

Figure 2.3: Perspective of corporative housing project Truong Dinh Hoi 3 30

Figure 2.4: Perspective of housing project in Le Minh Xuan 31

Figure 2.5: Revenues of VPG in the period 2009-2011 35

Figure 2.6: VPG’s Profits in the period 2009 – 2011 35

Figure 2.7: Revenues, costs and profits 2009 - 2011 of VPG 36

Figure 2.8: Cash and inventory 2009 - 2011 of VPG 37

Figure 2.9: Assets Structure in period 2009 - 2011 of VPG 38

Figure 2.10: Capital Structure in period 2009 - 2011 of VPG 38

Figure 3.1: SWOT Matrix 61

Figure 3.2: Competitive strategy of SPACE Matrix 63

BUSINESS DEVELOPMENT STRATEGY ON REAL

ESTATE OF VAN PHUC GIA INVESTMENT JOINT STOCK

COMPANY FOR THE PERIOD 2012-2015

PREFACE

1 Background

Real estate is considered as one of the key business sectors in the national

economy, which has obtained a great deal of profits and socio beneficial values during

its prosperous period Up to Apr 2011, a sharpest increase was remarked to the real

estate value in every channel of investment Taking the time of Dec 2000 for

comparison, USD exchange rate increased 1,5 times, saving account service roughly

scored a 2.5-fold price increase , VN-Index took an approximation of 4,8-fold mark

increase, gold reached a 7.6-fold price increase, while real estate roughly owned an

8-fold increase The huge profit in real-estate sector attracted the participation of a great

deal of investors, facilitated the newly established real-estate companies in every

economic sectors under a circumstance of severe and harsh completion Due to that

massive development, supplies have exceeded demands in some specific areas and

tended to stop and decline since mid –Apr 2011 Up to the latter half of 2011, under

the circumstances of tight monetary policy of the Government, highly increased

interest bank rate, the real estate market has entered a period of deep decline in which

some investors had to choose the dumping for capital recovery and loan redemption

while many buyers have expected a higher price decrease

While the real-estate price has only shown its decrease in the segments of

mansions and high-level corporative housing, the ground base and small-area

corporative housing segments have still run its high price due to the current large

market demand over a limited supply The slump of high-level corporative housing and

mansion ground base products have led many local and foreign large investors to focus

clients who have middle income and real demands of housing The product changes of

brand-affirmed investors with strong potential should render a picture of effervescent

market through its increasingly severe competition

The Vanphucgia Investment Joint Stock Company has been a young company

whose capital size is relatively small in the real-estate business sector In spite of being

limited the fiscal ability, the company has many advantages such as: the good leaders,

the favorite strategy partners and the high evaluation of the credit organizations, etc A

long with the desire of providing the compatible products and housing solutions for the

poor and the low-income people VPG always researches to design the suitable

products, watches strictly the performance of project which must comply with the

modern process in order to launch the high quality products with affordable costs in the

market

In front of real situations in the market and internal conditions of the enterprises

The Vanphucgia Investment Joint Stock Company together with its existing advantages

must have a business strategy to exist and develop permanently in the coming years

Arising from the actual situation above, we have chosen the theme for graduation

assignment “The Vanphucgia Investment Joint Stock Company’s development and

business strategy in real estate industry period 2012-2015”

2 Research objectives

- Systemize and make clear of basic rationale towards the business strategy and

real-estate business of enterprises in Ho Chi Minh City and other provinces

- Evaluate the economic development, politic, State’s policies relating to

real-estate business, bank credit; evaluate the competition situation of rivals in the same

industry to define opportunities and threats

- Comprehensively analyse and evaluate the current status of business

performance of Vanphucgia Investment Joint Stock Company to define strengths and

weaknesses

- The defined strengths, weaknesses and opportunities, threats are essential input

to make an appropriate business strategy for Vanphucgia Investment Joint Stock

Company Synchronized measures should be done to assure the effectiveness of the

Company’s business strategy for the period 2011 - 2015

3 Research scope

The Vanphucgia Investment Joint Stock Company has operated in different

sectors, in which real-estate business is the key activities determined by the Board of

Directors towards its long-term development direction Following the strategic

direction of the Company, we would like to focus only on the study of the real-estate

business without going into detail for other areas

4 Research methodology

Data is collected from the Vanphucgia Investment Joint Stock Company and its

direct rivals Quantitative analysis method and expert method are used to create matrix

of strategy selection and to predict the development trend in the future The statistical

analysis method is combined with the general analysis method for the purpose of the

analysis of the Company’s current status

5 Topic structure:

The topic consists of 3 chapters:

- Chapter 1: The rationale of business strategy and real-estate business of Vanphucgia

Investment Joint Stock Company

- Chapter 2: Analysis of business and manufacturing status and real-estate business of

Vanphucgia Investment Joint Stock Company

- Chapter 3: Strategy planning and measures for the development of real-estate

business of Vanphucgia Investment Joint Stock Company – Recommendations

CHAPTER 1

THE PRINCIPLE OF BUSINESS STRATEGY

AND REAL ESTATE TRADING

1.1 The principle of strategic management

1.1.1 Definition of strategic management

Definition of “strategy” was known by studies about war in the past A Greek

historian, Xenophon, is believed to be the one who gave the earliest definition of

strategy in VI century BC (before Christ) Also at that time, Sun Tzu, a military

ideologist in China, wrote The Art of War discussing about military strategies

started From many scholars, such as Drucker, Chandler, Ansoff, Andrew who

studied about great success of economic corporation in USA before and in the

World War II, to modern demonstrators and economists, such as Michael E.Porter,

Fred R David, Rudolf Grunig, Richard Kuhn, they have different ways in

approaching strategic management in business The following statements are

several definitions of strategy:

-“Strategy is the determination of the basic long-term goals and the objectives

of an enterprise, and the adoption of courses of action and the allocation of

resources necessary for carrying out these goals”- Chandler (1962)

-“Strategy is the mediating force, or match, between organization and

environment, that is, between the internal and the external context”- Mintzberg

(1979)

- “Strategy is the pattern or plan that integrates an organization’s major

goals, policies, and action sequences into a cohesive whole- Quinn (1980)

-“Strategy means deliberately choosing a different set of activities to deliver a

unique mix of value”- Michael E Porter(1996)

-“Strategy is a mean to achieve long-term goals” Strategy - Fred R David

- “Strategy is term, administrative orientation and the guarantee of

long-term finishing major goals and purpose of”- Rudolf Grunig and Richard Kuhn

(2003)

Therefore, though there are many ways in approaching and defining, a strategy

usually includes main contents listed as the followings:

goals

1.1.2 Classification of strategic management

There are different kinds of strategy in an enterprise Depending on levels and

approaching method, business strategies can be categorized as the followings:

1.1.2.1 Different levels of strategy

 Corporate - level: is heading to goals and general scale of an organization

 Business - level: relates to mode of successful competition on particular

market

 Functional - level (or Operational level): strategies at this level helps

Corporate - level and Business - level strategies carry out significantly based

on component parts on the fields of resources, human process and necessary

skills

seem to be omitted, hence existing the fourth level of strategy called Global

Strategy

1.1.2.2 Types of Strategy

Corporate-level strategies

Corporate-level strategy usually orients to basic long-term goals, hence there

are different kinds of strategy at this level known by different names According to

Fred R David, there are 14 types of basic strategy at this level that are categorized

Business-level strategy relates to mode of successful competition on particular

market Business strategy includes mode of competition that the organization has

chosen, mode of locating on the market to achieve advantages in competition and

different locating strategies that can be used in background of particular field

According to Michael E Porter, there are three general competitive strategies

Functional-level strategy is the strategy of functional departments, such as

Marketing, Finance and Human Resource, Functional-level strategy improves

benefits in business activities, supporting business strategies and business-level

strategies so that they can conduct significantly

1.1.3 Process of strategic management

Process of strategic management consists of three stages:

 Strategic determination

 Strategic practices

 Strategic evaluation

Fred R.David showed a model of global strategic management (Figure 1.1) in

which the process of strategic management consists of several steps: determination

of vision, missions and strategic goals, then analysis of external environment to

determine opportunities and threats, then analysis of internal environment to bring

out strength and weakness of the enterprise, from which determines business goals,

establishing long-term goals as well as choosing right strategies to perform The

process of strategic conduction includes distribution of resources to give annual

goals and policies The final phase is assessment and evaluation of strategic

conduction

Figure 1.1 Comprehensive model of the strategic management process

(Source: Fredr David – The principle of strategic management)

1.1.3.1 Strategy formulation

a) Analysis of external environment

The purpose of analysis of external environment is to develop list of limit

opportunities that environment brings to the enterprise and threats that the

enterprise should avoid to decrease dangers caused by external environment There

are many external environmental factors (macro-environment and

micro-environment); external environment analysis should be limited by factors that

significantly affect to the enterprise

 Macro-environment includes:

2 Analysis of internal environment, identifying strength and weakness

ơ

Choosing strategies

to conduct

ơ

Giving polocies

Strategy formulation Strategy implementation Strategy evaluation

ơ

Evaluation and assessment

of strategy conduction

ơ

Establishm ent of long-term goals

ơ

Establishm ent of annual goals

 Demoghraphic and geographical environment

 Micro- environment: Is considered as competitive environment (or so

called field environment), that closely connect to the enterprise, and most business

activities are inside this

Professor Michael E Porter, from Harvard University, provided a chart that

showing five competitive forces as hereunder:

Figure 1.2 A model of five competitive forces designed

by Professor Michael E Porter

(Source: Griggs University – Syllabus of Strategic Management)

b) Analysis of internal environment

In every enterprise, there are different strength and weakness in different

business units Strength and weakness of internal environment associated with

oppotunities and threats from external environment together with annoucement of

ơ

NEW POTENTIAL COMPETITORS

ơ

ALTERNATIVE PRODUCTS

Factors of internal environment consists of:

 Finance: includes factors about financial capability, financial management,

financial accounting…

 Management: includes all administrative activities that ensure actual results

of business activities suitable to determined results, such as: abilities in human

resources management, production management, quality management, raw

materials-finance-sales activities…

 Marketing: Marketing is described as a determined process to forecast,

establish and satisfy products and services demand Marketing management

includes market research and development, choosing target market, distribution

system, after-sale services…

 Human resources: play an important role to an enterprise success Though

an enterprise has a right strategy, there will not any benefit if it doesnot have

effective staff Human resources include several factors: organizational structure,

human resources quality, maintaining and developing policies

 Production management and operational: includes all activities to alter

inputs into commodities and servies Production and operational process include:

design of production process, choosing production lines, services, cost of

production

c) The use of evaluation matrixes (IFE, EFE, SWOT, SPACE, BCG, CPM, QSPM)

 External Factor Evaluation Matrix (EFE)

The establishment of EFE matrix allows us to summerize and determine

impacts of external factors on an enterprise, specifically on business activities,

including oppotunities and challenges

To establish this matrix, all external factors that affect to an enterprise

activities will be listed The importance level of every factor will be assessed by its

weight, and total weights always sum to 1 This classification shows significant

importance of every factor to an enterprise success

Evaluate the importance level of every factor by rating on the scale from 1 to

4, in which rating captures if the factor represent a major strength (rating =4), a

minor strength (rating = 3), a minor weakness (rating = 2) or major weakness

(rating = 1) This rating depends on how significance of the strategy carried out

The next step is determination of relative importance of each factor by

multiplying each factor’s weight by its rating This gives you a weighted score for

each factor The last step is to sum all the weighted scores to determine the total

weighted score, ranging from 1 to 4 in which 2.5 will be considered as average

If the total weighted score is 4, it means that a company is taking most

advantage of external oppotunities and good control or minimizing external threats

If the total weighted score is 1, it means that a company is not catching external

oppotunities and not decreasing external threats

Table 1.1 External Factor Evaluation Matrix (EFE)

List of all internal factors

(Source: Fredr David – The principle of strategic management)

 Internal Factor Evaluation Matrix (IFE)

To build up of Internal Factor Evaluation Matrix (IFE) allows us to summerize

as well as evaluate important strength and weakness in functional business units

This affects business activities

To build up this matrix, a list of all internal factors that affect business

activities of the company will be listed as determined in the above section, analysis

of internal environment The importance level of every factor will be assessed by its

weight, and the weights always sum to 1 This classification shows significant

importance of every factor to success in business of the company

Evaluation of importance level of every factor by rating on the scale from 1 to

4, in which rating captures if the factor represent a major strength (rating =4), a

(rating = 1) This rating depends on how significance of the strategy carried out by

an enterprise

The next step is determination of relative importance of each factor by

multiplying each factor’s weight by its rating This gives you a weighted score for

each factor The last step in constructing the EFE matrix is to sum all the weighted

scores to determine the total weighted score for an enterprise, ranging from 1 to 4 in

which 2.5 will be considered as average

If the total weighted score is 4, it means that the enterprise is having many

advantages and can be able to overcome its disadvantages On the contrary, if the

total weighted score is 1, it means that the enterprise does not have advantages and

does have so many disadvantages that are impossible to overcome

Table 1.2 Internal Factor Evaluation Matrix (IFE)

List of all internal factors

(Source: Fredr David – The principle of strategic management)

 SWOT matrix

SWOT matrix allows us to evaluate strength and weakness of the company

and estimate threats and risks from external environment From which, factors of

environmental state and the enterprise ability are combined into business strategies

SWOT matrix is constructed as the followings:

SWOT matrix

Opportunities ( O)

List of opportunities based

on important order O1, O2,

Figure 1.3 SWOT matrix

(Source: Fredr David – The principle of Strategic Management)

 The Strategic Position & ACtion Evaluation matrix (SPACE)

SPACE (The strategic Position & Action Evaluation matrix) is the

administrative tool used for strategic analysis It is used to determine which strategy

that the company should carry out

Figure1.4 SPACE matrix

(Source: Fredr David – The principle of Strateguc management)

+6 +5 +4 +3 +2 +1

0

0 -1 -2 -3 -4 -5 -6 +1 +2 +3 +4 +5 +6 -6 -5 -4 -3 -2 -1

As shown in the above graph, SPACE matrix divide the space into 4 quarters,

each quarter performs a form of strategy:

 Agrressive

 Defensive

Axis of the SPACE matrix shows 2 internal factors, Financial Strength (FS)

and Competitive Advantage (CA), and 2 external factors, Environmental Stability

(ES) and Industry Strength (IS) These 4 factors determine the position of general

strategy

Steps to develop SPACE matrix are pointed hereunder:

- Step 1: Select a group of variables representing for financial strength,

competitive advantages, environmental stability and strength of the industry

- Step 2: Stick a value, ranging from +1 to +6 in accordance with the worst to

the best of variables that create FS and IS Similarly, stick value from -1 to -6 in

accordance with the best to the worst of variables that creates ES and CA On FS

and CS axises, make comparison between competitors, on ES and IS axises, make

comparison between different fields

- Step 3: Calculate the average of FS,CA, IS and ES by plussing given values

in accordance with variables and divide to numbers of variables

- Step 4: Marking the average of FS, IS,ES and CA at corresponding axises in

SPACE matrix

- Step 5: Plus 2 points of X axis and mark the point of X result Plus 2 points

of Y axises and mark the point of Y result

- Step 6: Draw a vector orienting from the original point of SPACE matrix

through new intersection This vector indicates strategy type for the organization

 Competitive Profile Matrix (CPM)

To build up CPM matrix helps an enterprise to regconize its competitors

together with its strength and weakness, thus having suitable business strategies

This matrix includes all internal and external factors that are important to an

enterprise success In CPM, significant points of competitors are considered and

calculated After that, make comparison between competitors and the company

sample, through which, there are many information to construct business strategies

for the enterprise

Significant point List of

all

internal

factors

Total

(Source: Fredr David – The principle of Strategic Management)

 Grand Strategy Matrix

Grand strategy matrix is the tool to establish strategies that are selective All

organizations might be in either angle of the matrix Company departments might

also lie at similar positions The grand strategy matrix is based on 2 aspects for

evaluation: competitive position and the growth rate of market Suitable strategies

are listed in attractive order in each angle of the matrix

Figure 1.5 Grand Strategy Matrix

(Source: Fredr David – The principle of Strategic Management)

 QSPM matrix

QSPM matrix is used to evaluate and rank strategic plans, from which used as

evidence to select the best strategies for the company This matrix uses all

information and data from the above matrixes, IFE, EFE, CPM and SWOT

To develop and establish a QSPM matrix, there are total 6 steps needed to be

performed:

- Step 1: List stregth, weakness from within (at least 10 factors) and external

oppotunities and threats (at least 10 factors) in the left column These information

should be taken from EFE and IFE matrixes

- Step 2: Classify each important factor (both internal and external) The

classification is as similar as the one in EFE and IFE matrixes

Fast growth of market

Weak growth of market

- Step 3: Determine alternative strategies that the organization should consider

to perform These strategies are formed and gathered into seperate groups

- Step 4: Determine attration

Determination of attrative points is quanlification of significant attraction of

eachstrategy in alternative groups of strategy The attractive points are determined

by considering significant level to selection of evaluated strategies of internal and

external factors The attractive pointsare allocated to each strategy to show the

significance of each strategy as compared to the others The attractive points are

classified as the following:

1 – not attractive, 2 – little attractive, 3 – quite attractive, 4 – extremely

attractive If any factor that has no effect to the selection, there will be no point and

the row will be left in blank

- Step 5: Calculate total attraction

Calculate total attractive point (TAS) ultiply rating points with attractive

points in each row If only counting the evaluated internal or external factors, TAS

shows relative attraction of each strategy and the higher TAS is, the more attractive

the strategy will be

- Step 6: Plus all attractive points Plus total attractive points to each strategy

The total points of each strategy will show which strategy is the most attractive in

each group of strategy

3– fairly-good response, 4– highest response Classification of internal factors: 1–

weakest, 2–most weakest, 3– strongest, 4– strongest

QSPM matrix has many advantages, such as giving combination of external

and internal factors into decision-making, groups of strategy can be studied

continuously or simultaneously Though there is no limitation of strategy quantity

that can be evaluated, it still has several disadvantages: Performing QSPM matrix

requires judgments by intuition and experiences Discussion between administrators

and employees during analysis process and selection process may emerge different

opinions

d) Develop missions (business missions)

e) Establish long-term objectives

f) Generate, evaluate and select strategies

1.1.3.2 Strategy implementation

To carry out efficiently established business strategies, the company must have:

 Establishment of short-term goal

 Mediation of frame of organization

 Build up policies

 Build up budget

 Corporate Culture development

1.1.3.3 Strategy evaluation

It is very important to evaluate if a business strategy is efficient Business

strategy is efficient when it is suitable to an enterprise status and the current

socioeconomic, as well as when it can take full advantage of opportunities to

achieved determined goals:

 Check and test if the business strategies are suitable before performing

enterprise by every stage to detect deficiency in strategies, from which having

timely mediation, alteration and implementation

1.2 Current status of real estate market in Ho Chi Minh City

Although a massive price decrease of housing project happened in 2011, the

investors’ revenue In this context, some decreases were seen as promotion tactic

rather than actual decrease of price, however, it is clear that the market has been in

its difficult period through the unbalance of payment capability and market’s

requirements, whatever the purpose of price decrease is The price offer of

high-level apartment segment declined 1.3 -3.5% compared to the previous quarter The

delux segment even declined 9.1% compared to previous quarter Compared to the

end of 2010, the average price of middle segment also declined 7.5%

From the buyers’ situation, most of them has faced financial difficulties and

hence, the revenue of high-level apartment segment has found no chance to be

improved At the end of 2011, a majority of demands are from whom want to buy

apartment for the purpose of living – thus, only rational and popular price level is

acceptable to such kinds of clients

Howver, the real estate in HCM City has found no room for improvement

while difficulties are the main features of the market Delays have been so common

for most of luxury projects with large-area apartments due to the capital shortage of

capital while the output has been closed due to the unavailability of clients’

payment The only hope of the market for the time being is the segment of

small-area apartments which could be afforded by most of citizens Therefore, in the last

months of 2011 and the time before the Lunar Tet Festival, many real-estate

investors in HCM city offered products with reasonable price such as the project

Celadon City (Son Ky ward, Tan Phu district) with price starting from 19 million

price of 9.9 million VND/m2, the project The Hyco4 Tower located along the

Nguyen Xi road, Binh Thanh district has a flexible payment method of 18 months,

price starts from 1,1 billion VND/apartment

For the encouragement of trading opportunities within that sombre

circumstance, most of investors have continually launched promotion and discount

programs in order to maintain their cash flow by mobilizing the advance payment of

clients or adjusting the business tactics included but not limited to leasing or turning

some unsold housing buildings into apartments for lease The transfer of the

Diamond Island project to The Ascott apartment management company for leasing

service could be seen as a typical example

1.3 The necessity of real estate business trategy planning of VPG

Currently, the real-estate market in Vietnam is rather sombre compared to the

business of previous years, however the real demand of housing of citizens has

rapidly increased and it is an opportunity for real-estate companies to run products

that match the market’s requirements As a result, for the time being, the planning

of business development strategy is very important for VPG Company to select an

appropriate and proper direction of development and it is a shortcut to enable the

Company obtain planned objectives and sustainable survival and development

CHAPTER 2

ANALYSIS OF BUSINESS AND MANUFACTURING STATUS AND

THE REAL-ESTATE BUSINESS OF VPG

2.1 The establishment and development of VPG:

2.1.1 Company introduciton:

- Address: No 1 Tran Khanh Du, Tan Dinh ward, Dist 1, HCM City

- Legal capital: 62,500,000,000 (Sixty two billion and five hundred million VND)

The Vanphucgia Investment Joint Stock Company was established and put

and investment, erection – construction works, consultancy of housing investment,

office for lease, trading center, complexes areas and real-estate broking and trading

After 06 years of operation, the Vanphucgia Investment Joint Stock Company

has gradually affirmed its position in its acting fields, and has become one of the

reputable organizations in the sector of real-estate investment due to its continual

growth

For real-estate investment area: The Company is currently investing in

large-scale real-estate projects in HCM City such as: The housing project Truong Sa –

Binh Thanh located in the residential area Cu Lao Cha, ward 17, Binh Thanh, HCM

City; The housing project Truong Dinh Hoi 3, ward 16, District 8, HCM City; The

housing project Thanh Loc, District 12, HCM City; The city project of 80 ha, Le

Minh Xuan, Binh Chanh, HCM City

For the consultancy of investment and construction works: Van Phuc Gia has

implemented works of high value of investment: consultancy of construction of the

southern Navy Command, Navy guesthouse, the residential area Truong Dinh Hoi 2

- District 8, the residential area in Truong Tho ward - Thu Duc; construction of the

service center of Hoa Viet golf and villa and other mansions, houses in every

district of HCM City…

In addition to its business, Van Phuc Gia has also drawn its concentration to

the cooperation, partnership in order to become a strategic partner of reputable

organizations for joint-investment and business development in the sector of

real-estate investment Currently, Van Phuc Gia is the strategic partner of Binh Thanh

Housing Development Company, Petrovietnam Power Land Joint Stock Company,

District 8 Public Service Company, Housing Cooperative Association of HCM

City

2.1.2 Business sectors of the Company:

- Real-estate business and real estate-related services Service of corporative

housing management;

- Construction: Construction, erection, repair of industrial and civil works,

infrastructure of urban areas and industrial zones, traffic works;

- Consultancy: project proposal, bidding for project consultancy and management,

investment and construction consultancy, investment, business management,

consultancy of monitor of construction quality;

- Design: Total lay-out of work construction, architecture of civil and industrial

works, exterior and interior items of works Design for construction of civil and

industrial works Design for construction of urban infrastructure works;

- Trade – Service: Procurement of metalwares, steels and irons, steel billets,

construction materials, clinker, gypsum, wooden furrniture, goods for interior

decoration, materials, equipments, spare parts for construction industry, seeds of

plating tree Business of transportation of commodities by road and water way

2.1.3 Legal capital increase:

- Time 1: Stock issue for the increase of legal capital from 10 billion VND to 14.88

billion VND

From Mar - Apr 2008, the Company issued an extra amount of stock to

14.88 billion VND according to the Resolution No 01/2008/NQ-ĐHĐCĐ dated

19/02/2008

- Time 2: Stock issue for the increase of legal capital from 14.88 billion VND to 20

billion VND

From Sep – Dec 2009, the Company issued an extra amount of stock to

existing share-holders in order to increase the legal capital from 14.88 billion VND

to 20 billion VND according to the Resolution No 01/2009/NQ-ĐHĐCĐ dated

14/04/2009

- Time 3: Stock issue for the increase of legal capital from 20 billion VND to 50

billion VND

In Jul 2010, the Company issued an extra amount of stock to existing

share-holders in order to increase the legal capital from 20 billion VND to 50 billion

VND according to the Resolution No 01/2010/NQ-ĐHĐCĐ dated 22/06/2010

2.2 Organization structure – roles and duties of divisions:

2.2.1 Organizational structure:

Figure 2.1: Organizational structure of VPG

(Source: Administration Division – VPG)

Investment Project Division

Real Estate Trading Floor

Finance &

Accounting Division

Administration Division

Board of supervisors

2.2.2 Roles and duties of divisions:

2.2.2.1 Board of Directors

The Board of Directors is an entity that governs the Company, and on behalf

of the Company, is entitled to full right to determine, implement rights and

responsibilities of the Company that do not belong to the jurisdiction of the

share-holders’ meeting The Board of Directors comprises 05 members with a 5-year

term

2.2.2.2 Board of supervisors

The Board of supervisors is an entity that supervises the general management

of the Company, monitors the rationality, legality, truthfulness and carefulness of

business management, accounting, statistics and compilation of financial report

The Board of supervisors consists of 03 members with term equivalent to that of

Board of Directors

2.2.2.3 Board of General Director

The Board of General Director includes 03 persons as following:

management of routine business of the Company; is put under the supervision of the

Board of Directors and take responsibilities in front of the Board of Directors and in

front of the law regarding his/her assigned rights and obligations The General

Director is appointed by the Board of Directors to be a legal representative of the

Company

+ Implementing duties upon the authorization of the General Director

+ Implementing the Company’s business plan according to the general Plan and

detailed plan of the General Director

+ Supporting the General Director to run the Company’s business activities

2.2.2.4 Construction Division

- Design architectural solutions and perspective, compiling design interpretation

- Monitoring, accounting the volume of building projects

- Monitoring the technical aspect or this could be done by other members if support

is required

- Compiling contracts and managing expenses for the operation of technical

division

2.2.2.5 Investment Project Division

- Advising and supporting the Board of General Director for the study of investment

opportunities, middle- and long-term investment and development strategy

Implementing the investment, consultancy, quality-technical management and

progress in capital construction investment

- Making real-estate business alternate that is invested, traded or broken by the

Company Making economic contracts related to investment

- Making and verifying investment projects, managing projects invested by the

Company

- Establishing and developing relationship of investment cooperation with local and

foreign partners, looking for potential partners

- Proposing forms of investment coorporation (terms and conditions and main

cooperation articles); Making records of investment cooperation

- Bidding consultancy

2.2.2.6 Real-estate trading floor:

- Directly introducing, advising clients for their clear understanding of projects,

broking products of the Floor so that could buy, sell, transfer, rent, lease a real

estate according to the current legislation

- Organizing for the implementation of types of services: real-estate trading and

broking, consultancy of legal procedure, real-estate diagnosis and appraisal,

consultancy and support for clients of credit loan procedure or payment fiduciary

- Making plan for the monitor of market and evaluation of clients’ demand

Collecting data, information for the analysis of supply-demand and price variation

of real-estate market and other business channels in the trading Floor to promptly

advise the Board of Director of the real-estate trading Floor for the compilation of

strategy, investment and business development plan

- For broking services: Transacting to receive clients’ requirements regarding their

consignments of products for sale, purchase or lease

- For real-estate business: Monitoring the progress of contract implementation and

the amendment status of the signed contracts Preparing necessary records for

determining ownership, transferring ownership and liquidating the contract with

clients

- For legal service: Implementing legal services on housing activities: validation,

transfer, inheritance, land assignment, land lease, construction certificate

- Archive, update relevant legal documentation and study policies related to real

estate, published by the Government

2.2.2.7 Finance and Accounting Division

- Finance:

Advising the General Director regarding financial determination for optimal

selection of business and investment solutions Managing the supply of project

capital

Making long-, mid- and short-term financial plans to assure the return on

investment and the business performance of the Company Checking the

implementation of financial plans upon the investment objectives of the company

and taking the responsibility of studying, analyzing and evaluating the financial

health of the Company Verifying the investment project in term of finance aspect

Managing and monitoring share-holders’ records, payment of share-holders’

dividend

- Accounting:

Showing the accuracy of arisen economic operations and the results of

business performance in a timely, comprehensive and scientific manner upon a

period basis of month/quarter/year Being responsible for submitting reports to state

finance regime

Monitoring and completing financial obligations according to state legislation

Being responsible for the tight management of properties and cash fund of the

Company, making timely payment and recovery of respective debts

2.2.2.8 Administration and Personnel Division

- Administration:

Managing official correspondence, documentation, administrative books and

the seal of the Company Being in charge of reception and administrative activities,

security protection Managing and monitoring any property that belong to the

jurisdiction of the Company’s office, that of branches, and other properties

determined by the General Director

- Personnel

Advising the Board of General Director the organizational structure and

allocation of personnel that is appropriate to the development of the Company

Recruiting candidates Managing personnel management and developing human

resource Working with the Finance and Accounting Division for the management

of labor and salary of employees

2.3 Evaluation of business performance of VPG in the period 2009-2011:

2.3.1 Real-estate business and investment

Some typical projects:

The corporative housing B1 Truong SA

Figure 2.2: Perspective of corporative housing B1 Truong SA

(Source: Investment Project Division – VPG)

The project is conducted in a partnership with Binh Thanh Housing

Development Company (now called Binh Thanh Real Estate One-member Co.,

Ltd.), with an equal rate 50:50 of contribution The project is located in a very

favorable position in HCM City within a set of corporative housing Cu Lao Cha in

ward 17, Binh Thanh district, it runs along the Nihau Loc bank, next to District 1,

and surrounded by the main traffic roads Dien Bien Phu, Xo Viet Nghe Tinh

Project information:

- Location: Truong Sa road, ward 17, Binh Thanh district

- Total land area for construction of B2: 495m2

- Total investment capital: 220 billion VND

- Commencement time: 2009

- Completion time: 2012

Housing project Truong Dinh Hoi 3

Figure 2.3: Perspective of corporative housing project Truong Dinh Hoi 3

(Source: Investment Project Division – VPG)

District 8 is known as a center to where commodities and agro-products from

the East and the West are moved and stored in warehouses, grounds, large

wholesale market therefore there is a great pressure of housing demand from

people who live and work in District 8, especially from immigrants who live near

the boundary of the District

The housing project Truong Dinh Hoi 3 is conducted in a partnership with

District 8 Public Service Company and Cat Tong Construction and Investment Joint

Stock Company, in which the capital contribution of the Company is 45%

Project information:

- Location: Ward 16, District 8, HCM City

- Total investment capital: 1,063 billion VND

- Commencement time: 2009

- Completion time: 2013

The housing project in Le Minh Xuan

Figure 2.4: Perspective of housing project in Le Minh Xuan

(Source: Investment Project Division – VPG)

The project investor is Gia Phu là Gia Phu Urban Development and

Investment Joint Stock Company, a subsidiary of Vanphucgia Investment Joint

Stock Company

In the social housing program of the People Committee of HCM City, this is a

large-scale social housing project which is expected to match the demand for social

housing of people who own middle and low income

Binh Chanh district lies towards the south-west of urban areas of HCM City

with an area of 25,255.28 ha This is the entrance gate of the city which connects

important traffic lines such as: national road 1A, inter-province roads 10, Nguyen

Van Linh, provincial road 50 At the beginning of 2010, the highway Sai Gon –

Trung Luong whose first end is located in Binh Chanh district, was officially put

into operation This advantage should enable Binh Chanh to act as a bridge of

economic exchange and trading by road between HCM City and provinces located

in the Mekong delta and the southern key economic region Therefore, the

development potentility of the project is rather huge in the future

Project information:

- Location: next to Tran Đai Nghia and Le Dinh Chi road in Le Minh

Xuan commune, Binh Chanh district, HCM City

- Land lot area: 79.67 ha

- Land area for housing: 34.29 ha

- Total area of constructed floor: 957.966 m2 of more than 12,200

The consultancy of design, investment project proposal and erection –

construction works are currently the traditional and key sectors of the Company

With the slogan “Reliability - Quality – Rational price”, VPG has always been a

companion of its clients The Company has always met high requirements of clients

and is highly appreciated by clients upon its consultancy of design and investment

as well as its work implementation in a manner of safety, on-schedule progress,

high quality and rational and competitive price The existing clients of the Company