Recommending business strategy for fico cement corporation in period 2011 - 2020

An analysis of current production and business activities of the Fico Tay Ninh Cement joint-stock company Tafico: .... MGMT 689 – Strategic Management 20 BOARD OF SUPERVISORS GENERAL DI

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

PROGRAM

RECOMMENDING BUSINESS STRATEGY FOR FICO CEMENT CORPORATION

IN PERIOD 2011-2020

Class : GaMBA01.C0110 Group number : 07

1 TRUONG ANH TUAN

2 DO THI BICH DAO

3 NGUYEN THIEU LAM

4 HOANG TUYET MAI

5 NGUYEN PHUONG TAN

HO CHI MINH CITY – 2011

All the theories and data in our thesis are conducted by our group members and partly referenced from textbooks, course books, other reference materials in Vietnamese and English as well as magazines, the Internet, etc The real data is directly collected from FICO Tay Ninh Cement Company

Based the aforementioned data source and the approved outlines, our team complete this thesis Based on theoretical background, intuition and experience of group members, the business strategies for FICO are Also, through this thesis the group members have accumulated some valuable experience for the establishment

of a practical strategy for a company

Group representative

Truong Anh Tuan

Our group would like to show our deep gratitude to the teaching assistants for supporting us We are grateful to the Board of Directors of FICO Tay Ninh Cement Company for providing us with useful data and information to complete this thesis

Finally we sincerely thank the board of management of the company where

we are working and all the group members for creating conditions for us to complete the course in terms of time and cost

Please accept our sincere and deep gratitude

Group 7 GaMBA01.C0110

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TABLE OF CONTENTS

LIST OF TABLES 6

LIST OF FIGURES 6

FOREWORD 7

CHAPTER 1: LITERATURE REVIEW 8

1.1 The concept of business strategy planning 8

1.2.The strategic planning process 8

1.2.1 Strategy formulation phase 8

1.2.2 Strategy implementation phase 8

1.2.3 Strategy evaluation phase 8

1.3 Classification / strategic levels 9

1.4 Some other related theories 9

1.4.1 PESTLE Analysis 9

1.4.2 Five forces model by Michael Porter 9

1.4.3 External Factor Evaluation (EFE) Matrix 12

1.4.4 Internal Factor Evaluation (IFE) Matrix 13

1.4.5 Competitive Profile Matrix (CPM) 14

1.4.6 SWOT Matrix 15

1.4.7 Internal-External (IE) Matrix 16

1.4.8 Quantitative Strategic Planning Matrix (QSPM) 17

CHAPTER 2: COMPANY INTRODUCTION AND BUSINESS DEVELOPMENT OF THE COMPANY 19

2.1 Company Introduction 19

2.1.1 Company Introduction and Organizational structure of the company 19

2.1.2 The process of business operation development 21

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2.2 An analysis of current production and business activities of

the Fico Tay Ninh Cement joint-stock company (Tafico): 23

2.2.1 Tafico’s current strategies 23

2.2.2 Results of general business 25

2.2.3 An Analysis of the impact of the macro environment on the business of the Tafico (PESTLE model) 25

2.2.4 Five forces model by Michael Porter 27

2.2.5 External Factor Evaluation (EFE) Matrix 29

2.2.6 Internal Factor Evaluation (IFE) Matrix 33

2.2.7 Competitive Profile Matrix (CPM) 36

2.2.8 SWOT Matrix 40

2.2.9 Internal-External (IE) Matrix 43

CHAPTER 3: STRATEGIC PLANNING AND DEVELOPMENT STRATEGY FOR TAFICO 45

3.1 Quantitative Strategic Planning Matrix (QSPM) 45

3.2 Business strategy of FICO Cement Company to 2020 47

3.3 Solutions to better the business strategy of Tafico 48

3.3.1 Human Resources Strategy 48

3.3.2 Marketing strategy 50

3.3.3 Financial solutions 51

3.3.4 Production management strategy 52

3.3.5 Corporate culture development 53

3.3.6 Other Recommendations 55

CONCLUSION 57

REFERENCES 58

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LIST OF TABLES

Table 2.1: EFE Matrix of Tafico 33

Table 2.2: The human resources of Tafico 34

Table 2.3: IFE Matrix of Tafico 35

Table 2.4: Market shares of some cement companies 36

Table 2.5: Chartered capital of some cement companies 37

Table 2.6: Selling price of one cement packet of some companies 37

Table 2.7: Types of cement plants 38

Table 2.8: CP Matrix 40

Table 2.9: SWOT Matrix 40

Table 2.10: IE Matrix 43

Table 3.1: QSP Matrix 45

LIST OF FIGURES Figure 2.1: FICO Tay Ninh Cement Joint Stock Company 19

Figure 2.2: CPI in the first 7 months of 2011 31

Figure 2.3: Market shares of cement companies 37

on the basis of analyzing and predicting the opportunities, risks, strengths and weaknesses of the business, helping them obtain general information about the external business environment as well as their internal resources As a result, firms can make correct decisions to gain their desired results

Our group chose the topic "Recommending Business Strategy For Fico Cement Corporation In The Period 2011-2020" with the desire to apply the

theory of the Strategic Management course into reality Moreover, it also helps a team member working at this enterprise have an overview of her current working area

Research methodology

The research employs a variety of methods including data collection, statistics, comparison and analysis

Research from business: internal information system, the opinion of the head

of department and staff

Research on activities of the whole industry: the national statistical agency, from specialized sites on the Internet

Consultation with experts in the field of construction materials

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CHAPTER 1: LITERATURE REVIEW

1.1 The concept of business strategy planning

In the market economy, business strategies of an enterprise are based on objective and subjective conditions as well as the enterprise's resources to identify the ways and measures to ensure the stable, long-term existence and development in accordance with the company’s objectives

According to Alfres Chandler, strategic management is the process of determining long-term goals of the company, selecting appropriate methods to carry out the activities, allocating necessary resources to achieve the objectives

1.2.The strategic planning process

1.2.1 Strategy formulation phase

Analyzing the external environment, also known as the macro economy and the industry's operating environment

Analyzing the internal environment, the operation of the enterprise

Using matrices to assess such as IFE, EFE, SWOT, SPACE, BCG, QSPM Establishing mission (business tasks)

Setting long-term goals

Proposing strategies and choosing the best strategies

1.2.2 Strategy implementation phase

Setting short-term goals

Adjusting the organizational structure

Formulating policy

Constructing budget

Developing corporate culture

1.2.3 Strategy evaluation phase

Developing evaluation criteria

Measuring performance

Implementing adjustment operations

According to the nature and importance

According to static and dynamic properties

According to functions, items

According to geographic areas

According to the method of competition

1.4 Some other related theories

1.4.1 PESTLE Analysis

– PESTLE stands for “Political, Economic, Sociological, Technological, Legal

and Environmental” factors

– Economic environment: determines the wealth and prosperity of the

economy

– Technological Environment: impacts significantly on the product life cycle

and generates fluctuations for the enterprise

– Political-legal environment: affects significantly on the enterprise through

policies and regulations

– Natural environment: creates opportunities and challenges for the enterprise 1.4.2 Five forces model by Michael Porter

This model is proposed by Michael E Porter, Professor of Harvard Business School It helps managers identify opportunities and threats that businesses face in

an industry This model has the name Five forces model by Michael Porter The five forces that Porter suggests that drive competition are: (1) Threat of new market entrants; (2) Rivalry among the existing players in the industry; (3) Bargaining power of buyers; (4) Bargaining power of suppliers; (5)Threat of substitute

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products Porter points out that the stronger these forces, the more limited

capabilities of existing companies to raise prices and earn higher profits

Competing models of Michael Porter

a Threats of new entrants

According to M-Porter, a potential rival firm is not currently available in the industry but may affect the industry in the future The number of potential opponents, the degree of their pressure will depend on the following factors:

The attractiveness of the industry: This factor is reflected by such indicators

as rates of return, the number of customers, and number of enterprises in the industry

The barriers to entry: they are the factors making entering the industry more difficult and costly such as technology, capital, commercial factors (distribution system, branding, and customer system), and unique resources (raw material, degrees, patents, human resources, the protection of the government, etc.)

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b Rivalry among the existing players in the industry

Businesses in the sector will directly compete with each other to create more pressure on the industry In one industry, the following factors will increase the competitive pressure on rivals

The sector situation: demand, growth rate, the number of competitors, etc The structure of the industry: centralized or decentralized industry

Exit barriers: Like the barriers to entry, barriers to exit are the factors making exiting from the industry difficult: Technology, investment capital barriers, Constraint with governments, relevant organizations, strategy and plan constraints

c Bargaining power of buyers

Customers are a competitive pressure which can directly affect the entire production and business activities of the industry

Customers are classified into two groups: retail customers and distributors Both groups put pressure on companies on price, product quality and services They themselves control the industry competition by their purchasing decision

The impacts of the bargaining power of buyers on industry: scale, importance, cost of converting customers, customer information

Especially when we analyze the distributors, we have to pay attention to their importance They can directly intervene in internal affairs of the enterprise

d Bargaining power of suppliers

The number and the scale of the providers: the number of providers will decide competitive pressure, their negotiating power on the industry and enterprises

If there are only a few suppliers of large scale in the market, there will be competitive pressure, which affects the entire production and business activities of the industry

The possibility to replace supplier's products: the possibility to replace the inputs from a supplier and the cost of changing providers (switching cost)

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Provider’s information: in the current era, information is always an important factor promoting the development of trade Information about providers has a large impact on the selection of input suppliers

e Threat of substitute products

Substituting products and services are those that can satisfy the customers’ demand in the way equivalent to the current products and services in the industry

1.4.3 External Factor Evaluation (EFE) Matrix

The construction of EFE matrix helps us summarize and quantify the effects

of external factors on the enterprise They affect the production and business activities of the enterprise; including opportunities and challenges to the enterprise

To construct the matrix, we have to draw up a list of all external factors affecting the operations of the company We assess the importance of each factor by the weighted score; total points of all the weighted scores equal 1 The rating shows the relative importance of these factors for success of the company in the market

The importance of each factor is evaluated by sorting from 1 to 4 Among them: 4 means the company is having the best response; 3 is above average, 2 is average and 1 is the lowest These levels are based on the strategic effectiveness of the company

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Next is to determine the importance of each factor by multiplying the degree

of importance (weight) with the corresponding rating Then, we sum the total of each factor to determine the total weighted score for the company, 4 is the highest,

1 is the lowest, and the average score is 2.5 points

If the total important score is 4, the company is good at taking advantage of external opportunities and control or minimize the threat from the outside well If the total score is 1, the company does not seize the opportunity and can not reduce the threat from the external environment

1.4.4 Internal Factor Evaluation (IFE) Matrix

To build up the matrix, we list all internal factors that affect the production and business activities of the company, as defined in the internal business assessing section We assess the importance of each factor by weighted scores, total weighted scores of all factors equal 1 The rating shows the relative importance of these factors for success of the company in the market

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The importance of each factor is evaluated by sorting from 1 to 4 Among them: 4 means the company is having the best response; 3 is above average, 2 is average and 1 is the lowest These levels are based on the strategic effectiveness of the company

Next is to determine the importance of each factor by multiplying the degree

of importance (weight) with the corresponding rating Then, we sum the total of each factor to determine the total weighted score for the company, 4 is the highest,

1 is the lowest, and the average score is 2.5 points

If the important score is 4, the company has many strengths, and can overcome the weaknesses Conversely, if the total score is 1, it indicates that the company does not have any strengths and too many weaknesses which cannot be overcome

1.4.5 Competitive Profile Matrix (CPM)

Weight Sample

competing companies

Combine S-T

Promote internal strengths

to avoid external threats

WEAKNESSES (W) Combine W-O

Overcome internal weaknesses to take advantage of opportunities

Combine W-T

Overcome internal weaknesses to avoid external threats

The SWOT matrix will help us form four types of strategies:

– Strengths - Opportunities strategies (S-O): Promote internal strengths to take

advantage of opportunities

– Weaknesses - Opportunities strategies (W-O): Overcome internal

weaknesses to take advantage of opportunities

– Strengths - Threats strategies (S-T): Promote internal strengths to avoid

external threats

– Weaknesses - Threats strategies (W-T): Overcome internal weaknesses to

avoid external threats

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1.4.7 Internal-External (IE) Matrix

IE matrix analysis is to put the departments of a company into nine boxes as follows:

Total weighted score IFE matrix

Average (2,00-2,99)

Weak (1,00-1,99) High

IE matrix is builds on two key factors:

– Total weighted score of IFE matrix (IFE)

– Total weighted score of EFE matrix (EFE)

The way to understand this matrix:

– Total score from 1.00 to 1.99: indicating the weakness

– Total score from 2.00 to 2.99: indicating the average

– Total score from 3.00 to 4.00: indicating the strength

The components of IE matrix:

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– Grow and Build (box I, II, IV): the appropriate strategies are to focus

growth (market penetration, market development, product development); combined strategies (forward, backward and combined horizontal integration)

– Hold and maintain (box III, V, VII): the appropriate strategies are market

penetration and product development

– Harvest or divert (box VI, VIII, IX): Retrenchment, Divestiture,

Liquidation ineffective departments in the company

1.4.8 Quantitative Strategic Planning Matrix (QSPM)

Total Attractiveness Scores

Total Attractiveness Scores

To develop a QSPM, we need to go through six steps:

- Step 1: List internal strengths and weaknesses (at least 10 factors), external

opportunities and threats (at least 10 factors) in the left column The information should be obtained from EFE matrix and IFE matrix

- Step 2: Assign weights to each external and internal factor These weights are

identical to those in the EFE matrix and the IFE matrix

- Step 3: Identify alternative strategies the enterprise should consider implementing

Group these strategies into mutually exclusive sets

- Step 4: Determine the Attractiveness Scores (AS), defined as numerical values

that indicate the relative attractiveness of each strategy in a given set of alternatives Attractiveness Scores are determined by considering the degree of influence the choice of strategies of each key external or internal factor Attractiveness Scores assigned to each strategy demonstrate the relative attractiveness of each strategy compared with other strategies The Attractiveness Scores (AS) are classified as follows: 1 - not attractive, 2 - less attractive, 3 - attractive, 4 - very attractive If the factor does not affect the selection, we do not mark and leave this row blank

- Step 5: Calculate the Total Attractiveness Scores (TAS) Total Attractiveness

Scores are the result of multiplying the weights by the Attractiveness Scores in each row If we only consider the influence of internal and external factors, TAS shows the relative attractiveness of each strategy The higher TAS, the more attractive the strategy is

- Step 6: Calculate the Sum Total Attractiveness Score Calculate the Total

Attractiveness Scores in each strategy column The Sum Total Attractiveness Scores indicate which strategy is the most attractive in each set of alternatives

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CHAPTER 2: COMPANY INTRODUCTION AND BUSINESS

DEVELOPMENT OF THE COMPANY

2.1 Company Introduction

2.1.1 Company Introduction and Organizational structure of the company

Figure 2.1: FICO Tay Ninh Cement Joint Stock Company

Company name: FICO Tay Ninh Cement Joint Stock Company

Trade Name: TAFICO

Headquarter: 433, 30/4 Street, Tay Ninh Town, Tay Ninh Province

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BOARD OF SUPERVISORS

GENERAL DIRECTOR BOARD OF MANAGEMENT

GERAL ASSEMBLY OF SHAREHOLDERS

SECRETARY, DEPUTY GENERAL

DIRECTORS

DEPARTMENT

OF INFORMATION TECHNOLOGY

DEPARTMENT

OF PLANNING - CONTROLLING - SUPPLIES

DEPARTMENT OF INVESTMENT AND DELOPMENT

DEPARTMENT OF QUALITY CONTROL AND TECHNOLOGICAL SERVICES

DEPARTMENT

OF FINANCE AND ACCOUNTING

DEPARTM ENT OF LAW

FICO

CEMENT

PLANT(1)

TRANSPOR TATION- HANDLING COMPANY FICO (3)

TAY NINH CEMENT PLANT (2)

SERVICES COMPANY FICO (4)

SALE-MANAGEME

NT BOARD

2 ND TAY NINH CEMENT PROJEC

BOARD OF PROJECT SETTLEMENT- TAY NINH CEMENT PROJECT

EXECUTIVE BOARD OF TAY NINH CEMENT PROJECT

MANAGEMENT BOARD TECH INNOVATION & ENVIRONMENT RENOVATION FICO CEMENT COMPANY

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2.1.2 The process of business operation development

FICO Tay Ninh Cement Joint Stock Company is established in December

23, 2004 in the certificate of business registration No 4503000030 of Tay Ninh Department of Planning and Investment The shareholders include: No 1 Building Materials Corporation (FICO), Viet Nam General Rubber Corporation, An Giang Construction Company, Development Investment Construction Corporation (DIC Corp), Hoa An Joint Stock Company The main business fields of TAFICO are manufacturing and trading of cement and other building materials Established chartered capital: VND 525 billion Current chartered capital: VND 680 billion

Immediately after its establishment, TAFICO replaced FICO to continue the construction of cement plant project in Tan Chau District, Tay Ninh Province with a capacity of 1.5 million tons cement / year with the total investment of billion

In order to supply the products in the market before Tay Ninh Cement plant project was completed, TAFICO acquired Southern Cement Company in Hiep Phuoc industrial zone and renamed FICO Cement Plant with the capacity of 500 thousand tons cement/ year TAFICO brand officially appeared in the market in October 2006 with two main products including PCB40 packet and PCB 40 station Currently TAFICO focuses on introducing brand and image to customers, developing wholesale markets, retail markets in Ho Chi Minh City and Southwest provinces

In October 2009, Tay Ninh Cement Plant officially began operation This event marked a turning point for TAFICO being one of the three leading cement producers in South Vietnam with the capacity to supply up to 2 million tons cement/year to the market For consistency in implementing business strategies, TAFICO set up Sales-Service Fico Company This company is responsible for performing all the stages in the process of selling products including proposing business strategy, building and implementing sales policies, maintaining and developing the distribution system With the motto of maintaining credibility, sharing interest with distributors, TAFICO has gained significant market shares in

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Ho Chi Minh City and Western provinces in less than 5 years, building sales network with more than 40 distributors, 10 large cement mixing stations, more than 4,500 retail stores from Ho Chi Minh City to Ca Mau In addition, with the advantage of Tay Ninh Cement Plant locating near the border, TAFICO has had first steps into the Cambodian market, which sets the foundation for exporting cement into this potential market

Due to the economic crisis in 2008, enterprises and investors encounter financial difficulties, which lead to the enterprises mergence trend Having a grasp

of this opportunity and orienting to expand and develop the Southeast market, in

2010 Tafico has been successful in purchasing the Binh Duong cement company and changing into the Binh Duong Fico cement plant which is located in Binh Duong with a capacity of 500 thousand tons of cement/year

Thanks to considering demands for cement in Vietnam in the coming years that they will increase because of the use of asphalt concrete in the road construction technology, in 2010 Tafico decided to invest in line 2 - Tay Ninh Cement Plant with a capacity of 1.5 million tons of cement/year It is anticipated that in 2012 the assembly line 2 will be completed and Tafico’s total availability of supplying will be increased to 3.5 million tons of cement/year

Therefore, after nearly 5 years of the development and the investment in constructing plants, the opponent annexation strategy for both the expansion and the domination of the market are also mainly paid attention by Tafico With this right and reckless step, currently Tafico is becoming one of the leading cement producers

in Vietnam with strong markets in HCM city and Southwest regions as well as building a large distribution network in South-East and gain initial achievements in exporting to Cambodia

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2.2 An analysis of current production and business activities of the Fico Tay Ninh Cement joint-stock company (Tafico):

2.2.1 Tafico’s current strategies

In phase 1, the Tay Ninh cement plant project aims at exploiting and using efficiently the resources of rare limestone of the region It helps to boost the strategies transferring economic development structures Tay Ninh province in the direction of industrialization and modernization

Along with the investment in the Tay Ninh cement plant’s construction project, Tafico conducted the international bidding and purchasing of Phuong Nam Cement Company in Hiep Phuoc Industrial Zone, Nha Be with a capacity of 500 thousand tons of cement/year and renamed Fico cement Factory Tafico is continuing to invest in upgrading the plant, improving the environment and increasing its capacity to 1 million tons / year to enhance the likelihood of bringing goods to market before the project is officially put into operation This is a daring step to develop the brand, to bring the brand closer to consumers in the South

In addition, when the Tay Ninh cement plant project completes and is formally put into operation, the Tafico still continues to expand production and the distribution locations with the purchasing of Binh Duong DIC cement joint-stock company with a capacity of 300 thousand tons of cement/year and changes the name into Binh Duong Fico cement Factory It is a strategic location which can provides goods to the southeastern provinces

In Phase 2, on 29.4.2008 approved by the Prime Minister on supplementing the assembly line 2 project of Tay Ninh FiCO cement with a capacity of 4000 tons

of clinker/day in the development plan of the Vietnam cement industry according to the document 2699/VPCP-KTN Also, the company receives the approval of the investment plan of assembly line 2 “XM FiCO” according to 327/BXD-KHTC on 05/3/2010 by the Ministry of Construction This is a large-scale project as well as the total investment; therefore, it plays an important role and influence in the key

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consumption market in HCM City and southern provinces Increasing the total capacity of FiCO’s cement production market is 3 million tons / year to meet the demand for cement in the South

The managerial capacity and business development strategy of the business leaders are also expressed in:

- Slogan “Linking Dreams” shows the business philosophy of the company that is looking forward to sharing the benefits and value of life in order to make life better The company believes that the close and long-term cooperation is the only way to make dreams come true It is also the social responsibility of companies to the community and the long-term orientation of Tafico

- Core Strategy: The symbol with 3 peaks on trademarks also confirms that the core strategy of the company is linking closely and sharing benefits among producers and distribution systems and consumers It also shows the determination

of the company that it is always the first company to apply advanced and modern technology to production, innovates and creates a revolution in business, customer service and marketing Meanwhile, the staff with a professional, enthusiastic, dynamic style of working and being willing to accept the challenge is constructed

- Brand vision: FICO Cement Company becomes a cement brand which always directs towards community, safety and proximity to people It is one of the leading cement brands in the South and directs toward exports

- Building "Green - Clean - Beautiful", safe and friendly environment in the company actively contributes to the activities for the sustainable development of the company and society

After nearly five years of development, the Tafico Company has gradually been building Tay Ninh Cement Plant projects, annexes the rival companies with a small scale, expands the transit point for sales, expands production and increases market share The year 2010 is the company officially conducts production and business activities and it has sold 1.4 million tons of cement (75% of design capacity) It is estimated that in 2011 2.1 million tons of cement will be sold

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2.2.2 Results of general business

Table 2.1: Results of general business

expenses

48,173,970,818 3,271,936,956 III Total pre-tax accounting profit

24,501,381,686

3,831,625,608 3.1 Current business income tax

charge

1,225,069,084 - 3.2 Total profit after corporate

income tax

23,276,312,602

3,831,625,608

2.2.3 An Analysis of the impact of the macro environment on the business of

the Tafico (PESTLE model)

- Politics and law: the political environment in Vietnam is considered a

stable one In the reform period, Vietnam has expanded its diplomatic relations with more than 200 countries and territories around the world especially countries in the

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Asean region and strengthened the cooperation with developed countries like USA, Japan, Korea, European Union, etc This opens up great opportunities for economic and social development The open-door, exchange and cooperation policy gives opportunities not only to expand production and business activities but also to challenge businesses in the country In recent years, the construction market of Vietnam has grown dramatically; hence, the amount of consumed cement in the market is great So many companies compete to build the cement plants and grinding stations In HCMC, the authority had no official documents of building the cement plants and grinding stations in the Hiep Phuoc Industrial Zone, Nha Be However, the company has a plant which is located at that place with a capacity of 1 million tons of XM / year This is very important and convenient for transportation

by road or ship to HCMC and neighbor provinces This is considered a strength of the Tafico company in the cement production and consumption

- Economic factors: In 2009, in 2010 and early 2011, Vietnam's economy

falls into inflation, pressures on interest rates and fluctuations in foreign currency exchange rates, credit limits significantly reducing, which makes the company encounter difficulties and the profitability of enterprises decrease The Tafico Company itself is also badly affected and should make a lot of effort to overcome this difficult period

- Technological factors: The boom of science and technology especially the

Internet has given humans the rapid integration of culture, economics and society Some developments in science technology can create businesses opportunities or threats The Tafico Company applies the technology of advanced cement production from the Federal Republic of Germany and the management system from the enterprise ERP and management systems of SCM supply chain to improve the quality of activities in the company

- Natural factors: Natural resources used for the cement industry is very

large, exploitable for 100 years, but they have no ability to renew The loss of karsts due to cement production raises concern for us

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2.2.4 Five forces model by Michael Porter

a Threats of new entrants

The innovation and competitiveness improvement of domestic direct and indirect competitors will create big challenges for Tafico In addition, there are more and more Cement companies, concrete stations over Southern market Cement brand names from Northern and Central regions are also bringing their products into Southern market All of them are direct and indirect competitors of Fico Cement Corporation now and in the future

b Rivalry among the existing players in the industry

The main competitors are other cement corporations with the same target market, the similar ways to approach and satisfy customers’ needs The efficient performance and available strengths of these competitors are great challenges to Tafico At this moment, companies like Holcim, Ha Tien, Nghi Son are also expanding production scale, enlarging market share They even develop better than Tafico in scale, finance, management Therefore, these companies are able to improve operation, apply new technologies, and enhance business efficiency

Besides, smaller companies like Chinfon, Cong Thanh, Ha Long, Thang Long, Cam Pha are also Tafico’s competitors Some of them appeared sooner than Tafico, but their market shares are won by Tafico These competitors may challenge the position of Tafico in the cement market They are putting efforts in reforming product quality, raising financial capacity and developing business performance

c Bargaining power of buyers

Buyers of Tifaco is a system of 200 distributors, concrete stations and big construction projects in Ho Chi Minh City, Southeastern, Western and Highland regions such as Dak Nong, Dak Lack Tifaco brings products to the market through these channels However, these distributors also work with other suppliers To dominate the market, Tafico has to have excellent sales staff, attractive sales policies and stable product quality

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d Bargaining power of suppliers

At the moment, there are a lot of difficulties in the supply of materials to produce clinker Such companies as Tafico, Holcim or Hatien are struggling with scare and expensive fuel inputs (electricity, coal and DO oil) Suppliers are nearly exclusive In order to have sufficient fuel for continuous production, the company has to order in advance and has enough cash to pay suppliers in time Smaller companies which are unable to produce clinker are very passive in cement production, maybe unable to buy clinker for production

e Threat of substitute products

There are almost no substitutes for this product So, this is still a highly potential market

f Distribution channel analysis

The distributor system (level 1)

Construction material agency system (level 2)

Projects of building roads, office buildings, and concrete stations

Overseas representative offices

May 10th, 2009 Tay Ninh Cement Plant was officially completed and began operation This event marked a turning point which made TAFICO become one of the three biggest cement production companies in Southern Vietnam with the capacity of 2million tons/year In order to be consistent in implementing business strategy, TAFICO has established Fico Service-Consumption Company This company is responsible for performing all the stages in the process of selling products including the proposal of business strategy, building and implementing sales policies, maintaining and developing the distribution system With the motto

of maintaining credibility, sharing profits with the distributors reasonably, although TAFICO has been operating for less than 5 years in the market, it has already occupied significant market shares in HCMC and the Western provinces It has built

a big sales network with over 100 wholesale distributors, 10 large concrete mixers, more than 4,500 retail stores stretching from the HCMC to Ca Mau In addition,

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with the advantage of Tay Ninh Cement Plant being located near the Cambodian border, TAFICO has put first steps into the Cambodian market, which lays the foundation for exporting cement into this potential market

In addition, after Tay Ninh Cement Plant was completed and formally put into operation, TAFICO continues to expand production and distribution locations

by the acquisition of Binh Duong DIC Cement Corporation with a capacity of 300 thousand tons cement/year and renamed Binh Duong Fico Cement Corporation It is

a strategic location which can distribute cement to the Southeastern provinces

Along with the investment in the Tay Ninh cement plant’s construction project, Tafico conducted the international bidding and purchasing of Phuong Nam Cement Company in Hiep Phuoc Industrial Zone, Nha Be with a capacity of 500 thousand tons of cement/year and renamed Fico cement Factory Tafico is continuing to invest in upgrading the plant, improving the environment and increasing its capacity to 1 million tons/year to enhance the likelihood of bringing goods to market before the project is officially put into operation This is a daring step to develop the brand, to bring the brand closer to consumers in HCMC and the South

With this right and reckless step, currently Tafico is becoming one of the leading cement producers in Vietnam with strong markets in HCM city and Southwest regions as well as building a large distribution network in South-East and gain initial achievements in exporting to Cambodia

2.2.5 External Factor Evaluation (EFE) Matrix

- Political environment: Vietnam has good political stability, strong military,

young and dynamic population, an emerging dragon in Asia Joining in WTO makes favorable conditions for foreign investors investing in Vietnam

- Economic environment:

Advantages: Vietnam's economy has been growing at a high rate and

continues for years The investment environment of Vietnam is increasingly open