Building the business strategy for Ha Tinh port joint stock company in 2011 - 2015

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING THE BUSINESS STRATEGY FOR HA TINH PORT JOINT STOCK COMPANY VINH, 2010... ACKN

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION

PROGRAM

CAPSTONE PROJECT REPORT

BUILDING THE BUSINESS STRATEGY FOR

HA TINH PORT JOINT STOCK COMPANY

VINH, 2010

TABLE OF CONTENT

LIST OF ABBREVIATION i

LIST OF TABLES ii

ACKNOWLEDGMENT iv

LETTER TO HA TINH PORT JOINT STOCK COMPANY v

FEEDBACK FROM HA TINH PORT JOINT STOCK COMPANY vi

INTRODUCTION 1

1 Necessity of the Research 1

2 Research Object and Research Purpose 2

3 Research Scope 2

4 Research Methodology 3

5 Structure of the Capstone Project Report 3

CHAPTER I 4

THEORATICAL FUNDAMENTALS OF BUSINESS STRATEGY 4

1 Definition of business strategy 4

2 Roles of a business strategy for the performance and development of a business 5

3 The Strategic Selection Process 6

Figure 1: Strategy Selection Process 6

4 Roles of Strategic Management Process 7

5 Strategy Classification 8

5.1 Corporate strategy 8

5.2 Business Unit strategy (SBU) 8

5.3 Functional strategy 8

6 Basic competition strategy 8

6.1 Cost Leadership Strategy 9

6.2 Differentiation strategy 9

6.3 Focused strategy 9

7 Business Environment Analysis 10

7.1 Macro Environment 11

7.2 Industry Environment 12

7.3 Analyzing Internal Business Environment 14

8 SWOT Analysis 14

9 Selecting Strategy by Quantitative Strategic Planning Method 15

CHAPTER II 17

ANALYSIS OF HA TINH PORT’S BUSINESS PERFORMANCE 17

1 Introduction to Ha Tinh Port Joint Stock Company 17

1.1 History 17

1.2 Business Activities 17

1.3 Organizational Structure 18

1.4 Human Resource 19

1.5 Infrastructure 19

1.6 Financial Capacity 19

2 Analysis of External Environment 20

2.1 Political and Legal Environment 20

2.2 Regional Economic Environment 20

2.3 Technological Environment 22

2.4 Natural Environment 23

2.5 Globalization Environment 23

2.6 Demographic Environment 24

3. Analysis of Industry Environment 24

3.1 Bargaining Power of Customers 24

3.2 Bargaining Power of Suppliers 25

3.3 Rivalry 25

3.4 Threat of New Entrants 27

3.5 Threat from Substitutes Products and Services 28

4 Analysis of Ha Tinh Port’s Business Performance in 2008-2010 28

4.1 Analysis of Current Business Strategy 28

4.2 Sales and Income 29

4.3 Main Customers 31

4.4 Main Competitors 32

4.5 Financial Ratios 32

5. SWOT Analysis 33

5.1 Strengths 33

5.2 Weaknesses 34

5.3 Opportunities 34

5.4 Threats 34

CHAPTER III 36

BUILDING COMPETITIVE STRATEGY FOR HA TINH PORT IN 2010-2015 AND SUGGESTED EXECUTION SOLUTIONS 36

1 Strategy Selection 36

2 Strategy Formation 38

2.1 Vision 38

2.2 Mission 38

2.3 Objectives 39

2.4 Targeted Customers and Respective Service Offerings 39

2.5 Business Philosophy 39

2.6 Key Competitive Advantages in Focus Strategy 40

3 Suggested Functional Strategies and Execution Solutions 41

3.1 Execution of Marketing Strategy 42

3.2 Execution of Product and Service Development Strategy 45

3.3 Execution of Infrastructure Development Strategy 46

3.4 Execution of Human Resource Development Strategy 46

3.5 Execution of Finance Strategy 47

4 Suggested Execution Plan for Focus Strategy 48

CONCLUSION 52 REFERENCES 53

LIST OF ABBREVIATION

Abbreviation Explanation

SWOT Strengths ,Weaknesses, Opportunities and Threats

PEST Political, Economic, Social, and Technological factors

Lao PDR People Democracy Republic of Lao

ISO International Organization for Standardization

LIST OF TABLES

Table 1: Port System in North Central of Vietnam 27

Table 2: Performance of Seaports in North Central of Vietnam 27

Table 3: Income Statement of Ha Tinh Port 29

Table 4: Revenue Structure of Ha Tinh Port since 2008 30

Table 5: Cargo through Vung Ang port 31

Table 6: Financial Ratios of Ha Tinh Port 32

Table 7: Balance Sheet of Ha Tinh Port at 31 Dec 2009 33

Table 8: Application of QSPM in case of Ha Tinh Port 36

Table 9: SWOT Matrix of Ha Tinh Port 41

Table 10: Execution Plan for Focus Strategy 48

LIST OF FIGURES

Figure 1: Strategy Selection Process 6

Figure 2: Basic Competitive Strategies 10

Figure 3: Five Force Model 12

Figure 4: SWOT Matrix 15

Figure 5: Organizational Structure of Ha Tinh Port 18

ACKNOWLEDGMENT

Dear Lecturers and Professors of GAMBA program,

Dear the Director of Ha Tinh Port Joint Stock Company;

This capstone project titled “Building Business Strategy for the Ha Tinh Port Joint Stock Company in 2011 -2015” is prepared by the Group 2 based on the knowledge collected from the GAMBA program and other business data from Ha Tinh Port Joint Stock Company

We would like to thank lecturers and staff of Global Advanced Master Business Administration Program, especially Associate Professor, Dr Nguyen Thi Tuyet Mai, Associate Professor, Dr Ngo Kim Thanh, MBA Pham Ngoc Thang, MBA Doan Hong Quan, Ms Nguyen Thi Ha Giang and others who provided the group with invaluable assistance and supports which enable the completion of this capstone project

We also would like to express our warm gratitude to Mr Nguyen The Cuong, Director of Ha Tinh Port Joint Stock Company and other managers who had

no hesitation to provide us with relevant information, data and even organized the field visit to help us fulfill the project

Due to limited time, there would be some inevitable shortcomings in the making of this project We look forwards to receiving constructive comments from faculty of Griggs’s MBA program, Hanoi National University and especially from the Board of Directors of Ha Tinh Port to further develop this project and increase its applicability in the strategic management process of the Company

Thank you very much indeed!

LETTER TO HA TINH PORT JOINT STOCK COMPANY

Dear Board of Directors, Ha Tinh Port Joint Stock Company

We have taken the Global Advanced Master Business Administration Program jointly organized by the Griggs University in the US and the Hanoi National University

To fulfill the Master Program, we need to complete a capstone project in form of four member group We are from the group No 2 out of 12 groups in GaMBA V02 class

The four members of the group are working in four different organizations in

Ha Tinh province We would like to carry out a project which contributes to the development of local businesses We have learnt that the Ha Tinh Port Joint Stock Company is facing big opportunities and challenges and has received strong attention from the local and central governments Particularly, a member of the group is working for this company Therefore, we decided to get and analyze information about the company to propose a sound business strategy for the company

Therefore, it would be highly appreciated if the Board of Directors could approve and support as well as provide information and required data to help us access to the company’s business

We hope that our willing will get your attention and the findings from this research will help the port formulate an applicable competitive strategy for its sustainable development

Thank you very much!

FEEDBACK FROM HA TINH PORT JOINT STOCK COMPANY

Dear Evaluation Committee of the Global Advanced Master of Business Administration Program, Griggs University

Ha Tinh Port Joint Stock Company received the letter from the Group No 2 regarding the capstone project titled “Building Business Strategy for the Ha Tinh Port Joint Stock Company in 2011 -2015” which relates to the business strategy of the Company We understand that this is an opportunity for the Group No 2 to access to the sea port service business which is being received great attention from the Government because this is one of the most important businesses in the country’s master development plan: maritime and sea port economic sector

Although limited time, but through the process of working with Group 2, we find that the team members worked hard to explore, study and apply the theory and the data reported by companies a reasonable level, set out the issues and the very practical question for the company's activities in general and content of research topics in particular

We highly appreciate the comments of the Group No 2 on the operation process and strategic management process of the company The Board of Directors will consider and apply flexibly the findings (strategy) proposed by the Group

On behalf of the Board of Directors, I wish the Group No2 and the GeMBA01.V02 a successful completion of the MBA Program and flexible application of the knowledge delivered by the courses that will help their companies produce appropriate strategies for further development

Wish the Global Advanced Master of Business Administration Program, the Griggs University be successful with effective programs

ON BEHALF OF HA TINH PORT JOINT STOCK COMPANY

DIRECTOR

Duong The Cuong

INTRODUCTION

1 Necessity of the Research

The history of sea transportation in the world has shown that the maritime economy is always considered the key sector with the leading role of the port In many parts of the world, the existence of the port has leaded the formation of urban area together with the development of industry, economy and trade…etc The more the port is developed, the stronger the industry sector and economy in the area and neighborhood are

The Resolution No IV of Central Committee 10th on sea development strategy of Vietnam to 2020 identified that “Vietnam must have a strong maritime economy, seek prosperity from the sea, make the best use of all sea potentials as well as developing all maritime related businesses with diversified modern structure

to speed up the development under a prompt, sustainable and effective manner in the long –term perspectives.”

The Prime Minister issued the Decision No 2190/QD-TTg dated 24 December 2009 on the approval of Vietnam port system development planning up

to 2020 and the orientation to 2030 The main objectives of the planning are to systemize the ports according to the master plan to meet the requirements of industrialization, modernization as well as facility development to make Vietnam ready in the integration process and able to compete in seaport business with other countries in the region and in the world Furthermore, this will help Vietnam maintain its position and advantages in maritime economy development, at the same time to protect the national security The port system development also helps connect Vietnam with important economic zones in the world to create dynamic growth momentum for development of coastal urban and economic zones areas

Ha Tinh Port Joint Stock Company is converted from a State owned enterprise to the Joint Stock Company according to the Decision No 2668/QD

for shifting the Ha Tinh port under the Ha Tinh Trading and Mineral Co-operation

to the joint stock company The Company’s business license No 2803000598 was issued on 05/02/2009 by Vung Ang Economic Zone Management Unit The main functions of the company are to explore and do business on the seaport including Vung Ang port located in Ky Loi commune, Ky Anh district, Ha Tinh province

In recent years, although there have been still a lot of difficulties the Board

of Directors and staff have made big efforts in exploiting the strong points of the port to improve its position in Vietnam Port System Map and in the South East Asia region

Given that it is the contact port of the Central North according to the Government’s planning, Ha Tinh port has special tasks to the continued development of Vung Ang economic zone and it will soon become a key national port in the central region

After many meetings and discussion with the company’s leaders, we get exited with its vital importance and great growth potentials so we decided to select

the topic “Building the business strategy for the Ha Tinh Port Joint Stock Company in 2011-2015” for our capstone project We do hope that our efforts and

knowledge will bring the most practical and useful information to the company’s leaders during the implementation process of its tasks and objectives

2 Research Object and Research Purpose

Research objects: business operation and the current business strategy of the

Ha Tinh Port Joint Stock Company

Research purpose: Analyze the characteristics of the port, commodity

market in the area, study and analyze the internal and external factors, using SWOT model to analyze the company and its competitors to come up with appropriate business strategy for the company from now to 2015 At the same time, solutions and the action plan are proposed to carry out the strategy, contributing to the development of the company from now to 2015

3 Research Scope

The research is carried out within the business management of Ha Tinh port, based on information published in the public media including the situation and trends of socio-economic development of Ha Tinh province, the central North region, 2 provinces of People Democracy Republic of Laos: Khammuon and Savanakhet and other provinces of Nongkhai, Sakhon Nakhon and Nakhon Phanom

in the Northern East of Thailand Besides, the development planning of Vung Ang economic zone, the Central North Region and the neighborhoods are also included

in our research This helps us find out the most appropriate strategy for the Company

4 Research Methodology

This capstone project is done through a combination of different research methods It deploys various theories on strategy building such as PEST, 5 competitive forces, SWOT analysis and Quantitative Strategic Planning Method

The research uses qualitative methods such as observation, interview, and group discussion, comparison analysis to generate, analyze and summarize both primary and secondary data on business activities of Ha Tinh port Primary data will

be collected through interview and discussion with executives and other business partners of Ha Tinh port as some important data or opinions are not publicly revealed The secondary data is gained in various reports from Ha Tinh port and other publications

5 Structure of the Capstone Project Report

Apart from the Table of Content, Introduction, Conclusion, Indexes, References, the main content of the report includes three parts:

Chapter I: Theoretical fundamentals of business strategy

Chapter II: Analysis of Ha Tinh Port’s business performance

Chapter III: Selection of strategy for Ha Tinh Port and suggested execution solutions

CHAPTER I THEORATICAL FUNDAMENTALS OF BUSINESS STRATEGY

1 Definition of business strategy

The term “strategy” is derived from the Greek word “strategos” which means

“general” Under Alexander time, (330B.C), the term "strategy" came from military activities, it shows the skills to use all forces and to create a totally dominant position with the basic arguments that those who have these skills might defeat all rivals, even though the rivals are more powerful by actively leading the game and putting these opponents on the battlefield with advantageous settings for the best performance of their capabilities

According to Chandle (1962), strategy is the defining of long-term objectives and purposes of the business, the acceptance of activity chain as well as allocating its resources to achieve these objectives

Quin (1980) shows that strategy is a pattern or an appropriate plan including basic objectives, policies and chain of organization’s activities in a closed comprehensive structure

According to Fred David, strategy is a mean to achieve the long-term objectives The business strategy may include: territory expansion, diversified operation, commodity ownership, product development, market penetration, cost reduction and joint venture

According to Michael Porter, strategy is to formulate an exclusive and valuable position which creates the differentiation by making trade-off choice to focus resources on achieving sustainable competitive advantages for the business

According to William J Glueck, strategy is a unified, comprehensive and integrated plan designed to assure that the basic objective of the business are achieved

According to Johnson and Scholes, strategy is the direction and scope of an

organization over the long-term: which achieves advantage for the organization

through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations

In conclusion, business strategy might be understood as the direction and scope of the organization in the long term; the strategy will create the competitive advantages for the organizations by optimally usage of resources in a competitive environment to meet market demands and expectations of the shareholders In other words, strategy is the answers for the following questions:

- Where is the business trying to get to in the long-term? (direction)

- Which markets should a business compete in and what kinds of activities are involved in such markets? (markets; scope)

- How can the business perform better than the competitors in those markets? (advantage)

- What resources (skills, assets, finance, relationships, technical competence, and facilities) are required in order to be able to compete? (resources)

- What external environmental factors affect the businesses' ability to compete? (environment)

- What are the values and expectations of those who have power in and around the business? (stakeholders)

2 Roles of a business strategy for the performance and development of a business

The strategy could be understood as the well-rounded and comprehensive plan of a business The business strategy has important roles as the guideline for the activity chain of the business to achieve objectives in the future, indicating the following factors:

- Identify the long-term direction for a business, certifying the core objectives

of the business and where the business wants to get, what trends will the business be developed, how will the business stay in the future market;

- Focus the business’ efforts in implementing tasks, making best use of the restricted resources, opportunities, mitigating the weak points and threats to achieve the targets;

- Identify the organization and performance methods, formulating objectives

in the changing business environment according to multi orientation and restricted resources;

- Establish the sustainability and harmonization of the business Business development must secure the sustainability and benefit harmonization The results of this development period will pave the way for the business to further speed up in the future;

Building up a proper strategy will secure the success and sustainable development for a business

3 The Strategic Selection Process

The strategic selection is a process that defines clearly required activities, arranging of researches to indicate the internal and external factors of a business, formulating the long- term objectives as well as selecting the alternative strategies Strategic selection is the first phase of strategic management process In strategic management process, execution of strategic plan and evaluation of the progress will

be proceeded after selecting the strategy

It’s very necessary to conduct the analysis and selection of a feasible business strategy that requires the business to think of some solutions in order to maximize the optimization Selection of strategy is conducted after looking at the SWOT matrix and applying strategy evaluation models to select the most appropriate strategy for the business

During the strategic selection process, it should clearly define the tasks of the business which receive attention from the policy makers and the implementers Clear objectives are very important in formulating specific purposes as well as strategic planning The strategic selection process covers the following steps:

Figure 1: Strategy Selection Process

4 Roles of Strategic Management Process

According to A.Chandler, strategic management is the process of defining the long-term basic objectives of the business, selecting the methods or performance direction as well as allocating required resources to implement these objectives

Mission statement and objectives

Analysis of the internal environment (Identifying strong and weak points)

(S & W)

Analysis of the external environment

(identifying opportunities and threats)

External factor

evaluation (EFE)

Internal Factor Evaluation (IFE)

SWOT matrix

Business Strategy and functional strategies

Combination of models, tools

Strategic management helps a business create a visionary perspective, setting

up core feasible objectives, building up successfully the strategy, conducting and steering the strategy, and finally assessing and revising the strategy

Most of the researches agree that if any business which knows how to perform the strategic management well can reach their objectives compared with those who do not have strategic management The strategic management still helps business deal with serious issues and improves the company’s ability in winning opportunities when they come

by investors in the business and acts to guide strategic decision-making throughout the business Corporate strategy is often stated explicitly in a "mission statement"

5.2 Business Unit strategy (SBU)

Business Unit Strategy is concerned more with how a business competes successfully in a particular market or sector It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantages over competitors, exploiting or creating new opportunities etc

5.3 Functional strategy

The functional strategy is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction The functional strategy focuses the issues of resources and specific implementation tactics such as product strategy, pricing strategy, distribution strategy, market penetration strategy, technology strategy …etc

6 Basic competition strategy

The competition strategy focuses on the potentials, strong points and weak points of the company in the typical connection with markets and respective potentials, strong and weak points of the competitors According to M.Porter, there are five basic competitive forces in every sector or industry In order to be able to cope up with these forces, businesses can build up their own strategies based on one

of three following directions:

- Cost leadership strategy

- Product differentiation strategy

- Focus strategy

6.1 Cost Leadership Strategy

In cost leadership, a firm sets out to produce same or similar product with lower cost in its industry The sources of cost advantage are varied and depend on the structure of the industry They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors A low cost producer must find and exploit all sources of cost advantage If a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry

average

6.2 Differentiation strategy

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions it to

meet those needs It is rewarded for its uniqueness with a premium price

6.3 Focused strategy

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others

The focus strategy has two variants

In cost focus a firm seeks a cost advantage in its target segment, while in differentiation focus a firm seeks differentiation in its target segment Both variants

of the focus strategy rest on differences between a focuser's target segment and other segments in the industry The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segments

Figure 2: Basic Competitive Strategies

7 Business Environment Analysis

All business activities can not be separated from the business environment Business environment factors have a tremendous impact on businesses because they affect formulating and implementing strategy process directly Analyzing business environment is a process of examining, considering the different environmental factors and identifying opportunities or threats to their businesses

Business environment consists of macro environment and industry environment

7.1 Macro Environment

Macro environmental factors include overall impact and operational characteristics on that business It is categorized into four factors: economic conditions, political and social, cultural and natural population, technology, and engineering Each element of the macro-environment can affect the organization independently or in association with other factors Analyzing macro environment helps businesses answer the question: what are businesses facing with? Macro environment factors include:

7.1.1 Economic Environment

Four important factors macroeconomic environment include growth rate of the economy, interest rates, exchange rates, and inflation rates

7.1.2 Political- legal environment

Stability of the political and legal policies has great influence over the enterprises activities creating opportunities or risks to the operation and development

7.1.3 Technology environment

Technology includes institutions, activities related to invention of new knowledge and transferring that knowledge into the making of products, processes, and materials Technological changes include creation and destruction meaning both opportunities and threats

7.1.4 Cultural- social environment

It is related to social attitudes and cultural values Cultural values and social attitudes create social foundations leading to changes and technological conditions, political-legal, economic and demographic conditions Social changes also create opportunities and threats for enterprises

7.1.5 Natural environment

Geographical factors, regional characteristics, weather conditions, soil, climate have an impact of business activities, bringing companies advantages or

disadvantages, especially for those business, its activities depend on weather conditions heavily

7.1.6 Global environment

Global environment includes related global market, changing current market, the internationally important political events and institutions characteristics and background cultures in the global markets

7.1.7 Demographic environment

Segmenting demography in the macro environment is related to population, age structure, geographic distribution, ethnic communities, and distribution of income

7.2 Industry Environment

Industry is a group of companies providing products or services that can closely replace each other Close alternative means that the products or services meet basically similar customer needs Industries are very different in economic characteristics, competitive situations, prospects and future profitability Economic and current competitive conditions as well as projected future of the industry are a basis to predict low, medium or high future profitability contributing sector attractiveness

Tasks of the strategic makers are to analyze and predict forces of competition

in the industry environment to identify opportunities and threats for enterprises according to model of five competitive pressure presented by M Porter

According to M Porter, there are five forces in competitive landscape within

a sector Those are threats of new entrants, rivalry, bargaining power of buyers, bargaining power of suppliers and the threat of substitute products These five forces affect business operations and profitability

Figure 3: Five Force Model

7.2.2 Competition within current industry

The second force in the competitive in the model of Michael Porter are competitors already have solid gold position on the market in the same business There are three important factors constituting the level of competition among companies operating in the same business Those are structure competition; situation-market demand; and the barrier out of the business sector Important part

of controlling the external factors is to identify all the competitors and identify the

Combination of models, tools

Threat of new entrants

Combination of models, tools

Threat of substitute products

Bargaining power of buyers

Competition within industry

Rivalry

Combination of models, tools

advantages, weaknesses, capabilities, opportunities, threats, objectives and strategies of them

7.2.3 Buyers

The third force in the Michael Porter’s 5 force model is the ability to bargaining power of customers Customers often request or require off-quality goods to better come with excellent services This makes the operating costs increase the risk of creating price competition

7.2.4 Suppliers

The fouth force is the ability of suppliers to bargain Suppliers not only supply materials, equipment and labor but also the service firms that provide services such as consulting, advertising, shipping, and training To avoid the pressure of suppliers’ bargaining, company should build mutual benefit relationships or have various choices of suppliers

7.2.5 Substitutes

Substitute products are outside traditional boundary of current industry but can satisfy same needs of customers The price change of substitute products can heavily affect the industry’s profitability if the customers’ price elasticity is high A closed substitute product will constrain the ability of firms in an industry to raise price

7.3 Analyzing Internal Business Environment

Analyzing internal business environment is to review and evaluate characteristics of enterprise, the relationship between the departments figuring out the strengths and weaknesses that company has to encounter, being premise for utilizing, and promoting the strengths, limitations, overcome existing weaknesses

Internal environment is composed of elements: human resources, finance, technical facilities and technology, machinery and equipment Analyzing internal environment can approach from forming elements, or approach from the perspective

of the field, the functions of the business

8 SWOT Analysis

SWOT stands for Strengths, Weakness, Opportunities, and Threats (risks)

A SWOT analysis provides a strategic analysis tool of quantity, review and evaluates business position and orientation or a business plan SWOT is suitable for work and analysts in groups, being used in business planning, strategies, competitor evaluation, marketing, product development, and services Strengths and Weaknesses are internal factors but Opportunities and Threats are external factors SWOT allows analyzing different factors that influence competitiveness of the company relatively

Figure 4: SWOT Matrix

SWOT matrix

Opportunities ( O)

O1: Make a list of opportunities in a priority order

O2: …

Threats ( T)

T1: Make a list of threats

in a priority order T2: …

Strategy WT

- Minimize threats and avoid troubles (W1T1,

W2T1…)

9 Selecting Strategy by Quantitative Strategic Planning Method

Quantitative strategic planning method is the only quantitative method the compare the attractiveness of different strategies to select the most appropriate one

effect of internal and external factors on each business strategy Each factor will have a weight rate and got attraction score ranging from 1 to 4 Score 1 means weak influence, score 4 show strongest influence on the strategy effectiveness After evaluate the effect of each factor on selected strategy, the total attractiveness will be summed up The strategy with highest score will be the most suitable strategy as it

has the most positive net effects of internal and external factors

CHAPTER II ANALYSIS OF HA TINH PORT’S BUSINESS PERFORMANCE

1 Introduction to Ha Tinh Port Joint Stock Company

1.1 History

Ha Tinh port Joint Stock Company is a member of the Ha Tinh Minerals Corporation and Trade, the predecessor company is Ha Tinh Shipping and Trade Company, then renamed Ha Tinh port later Ha Tinh Port Corporation was converted from a state owned enterprise into a joint stock company under the People's Committee Decision on 24/09/2008 2663/QD Ha Tinh People's Committee plans to approve transfer of the General Port in Ha Tinh Minerals Company and Ha Tinh trade company stock The company was granted the first certificate of business registration No 2803000598 in 02 May, 2009 by the Management Board of Vung Ang Economic Zone

Vietnamese name: Công ty cổ phần Cảng Hà Tĩnh

English name: Ha Tinh Port Joint Stock Company

Transaction name: Ha Tinh Port

Address: Ky Loi - Ky Anh - Ha Tinh - Viet Nam

Phone number: (84-0393) 868704/868706/868797

Fax: (84-0393) 868703

Email: hascom@hn.vnn.vn, Ha Tinh-port@vnn.vn

Website: http://www.Ha Tinhport.vn

Ha Tinh Port JSC is an enterprise with fully independent accounting with bank accounts, seal, operating under the regime of financial autonomy, have legal status and operation within the framework of state laws Socialist Republic of Vietnam, according to the market-oriented socialisms

1.2 Business Activities

- Seaport cargo loading and other port services;

- Provide ship rental agents and brokers for cargo owners;

- Import and export of materials, equipment and goods (including entrusted export and import);

- Trade, transportation, storage, distribution agents: liquefied natural gas, petroleum, construction materials and filling gas;

- Execution of civil, industrial, transportation, irrigation;

- Repairing and building ships and boats, motor driver training;

- Business hotels, restaurants, commercial exploitation of port infrastructure

1.3 Organizational Structure

The company operates under the charter and resolutions of the general shareholders meetings and Board of Directors The Director manages directly the business activities of units, departments, and plants in the company

Figure 5: Organizational Structure of Ha Tinh Port

enterpris-e

Gas and petrol business firm

Training

&

motorcycl-e driving test Center

Marketing

&

Trading departme-

nt

Technical support – supplies departme-

nt

Finance depart-ment

Adminis-trative departm-ent Supervision Division

1.4 Human Resource

- Total staff members: 250 people

o University level: 97 people

o College level: 20 people

o Intermediate level: 50 people

- Number of the fulltime employees: 180 people

- Number of the part time employees: 70 people

However, the number of officials and staff specialized in maritime and sea transport or economic organization of unloading mechanization is very low, failing

to meet the development needs of the company Young employees are very dynamic

and have fast learning ability

1.5 Infrastructure

The company is using 02 berths, including:

- Berth 1 has a length of 186m, -11m in depth; capable of receiving ships of 30,000 DWT with 7,040m2 and 2 goods storage areas for groceries with each warehouse of 3,200m2

- Berth 2 has a length of 270m; depth of -13 meters, capable of receiving ships with 50,000 DWT cargo and 17,858m2 yards, two storages contains cargo and packaging goods and each warehouse area of 2,250m2

In addition, the company also owns and uses container yard with area of 6ha Company owns and exploits 03 tug boats with a total capacity of 3900 CV, 04 shore cranes with lifting capacity from 15 to 70 tons, 02 electronic scales of 80 tons for each, the team trucks, forklifts, excavators, etc to meet sufficiently the current needs of the port operations However, these devices have not met their work for oversized cargo with weight of 50 tons or to provide logistics services

1.6 Financial Capacity

With charter capital of 45 billion VND and total equity at 30 June, 2010 was

guaranteed to operate in the present range and tissue, failing to meet the investment needs in technology and equipment to serve the operation of the port when the port should be invested to increase capacity to brings difficulty when one company needs a large capital investment for equipment such as cranes stand, specialized

forklifts, fleet vehicles in service logistics operations

2 Analysis of External Environment

2.1 Political and Legal Environment

Vietnam is considered as the country which has stable environment of politics, legislation, and society in comparison with other countries in the Asian region and the rest of the world According to the research findings of the Institute for Economic Research and Peace (GPI) located in Australia in 2010, Vietnam ranked 38 out of 149 countries in term of peace worldwide Along with the integration process, Vietnam has made great adjustments on policies, creating favorable legal conditions to encourage foreign investment in Vietnam Vietnam is also considered a safe place for investment, especially in such foreign direct investment project as the largest project worth 7.9 billion dollars (phase I) of the Formosa Group of Taiwan Investment and Vung Ang (Ha Tinh) Economics Zone

In addition, many large projects are also invested in the North Central Province as refineries in Nghi Son (Thanh Hoa), the Kobe Steel Group's project (Japan) worth $

1 billion (Hoang Mai Industrial Zone - Nghe An province), Vung Ang power plant with a capacity 1.200MW (Vung Ang Economic Zone - Ha Tinh Province)

2.2 Regional Economic Environment

In the context of the global economy and the region still has not really escape from the economic downturn, Vietnam is still faced many difficulties due to the influence of the outside world In two years, along with joint efforts of the world, the government of Vietnam has been implementing several solutions to act aggressively against inflation in 2008, to recover the economy in early 2009, and ensure macroeconomic stability, economic growth and towards sustainable growth since the end of 2009 The solutions are: tightening fiscal policy, monetary policy,

attracting investment and boosting production, expanding the market at both domestic and oversea market In 2010, the economy achieved rapid growth recovered from last year Overall, the most important targets are noticeable improvements

Recently, central region of Vietnam has become a fast developing area Provinces and government has put a lot of investment on infrastructure and huge economic zone such as Cau Treo and Vung Ang economic zones These economic zones will become a strong base for economic development in the region

For sea port business, the main influential factors are export and import activities Export turnover in the first half year reached 32.1 billion U.S dollars, up 15.7% over the same period, with those important commodities have high growth rates such as steel, wire and cable, chemicals and products chemicals, machinery, equipment, wood and wood products, electronic goods, computers, fine art handicrafts, aquatic products Price of exported goods is improved in the world markets to positively contribute to export results Until now, there are nine items with turnover of $ 1 billion include seafood, garments, crude oil, rice, footwear, equipment and parts, gems and precious metals, electronics and computer; wood and wood products Also, in first six months, enterprise imported an amount of goods with worth of 38.9 billion dollars, up 29.4% over same period last year Import turnover of most goods such as machinery, tools and spare parts, petroleum, steel, plastic, cloth, computer and electronic components all increased over the same period last year from 11.6 to 49.3% Import turnover increased to create trade deficit in the first 6 months with estimated rate was at 6.7 billion dollars, with 20.9% of total goods export turnover The unbalanced import-export turnover is a concern for the economy in general, but is influenced to some immediate sector of transport, services, and port

Along with the situation of the country, the North Central region is relatively untouched with negligible level The industrial products, agriculture, almost have no