Building the business strategy of M1 communication one member limited liability company (2013 - 2017)

Viettel: Viettel Group EFE: External Factor Evaluation Matrix CPM: Competitive Profile Matrix IFE: Internal Factor Evaluation Matrix S.W.O.T: Strengths, Weakness, Opportunities, Threats

Group No.: 4

1 CHU THI VAN ANH

2 LE HOA CUONG

3 TRAN QUANG HUY

4 PHAM NGOC THAI

5 DUONG HOAI NAM

TABLE OF CONTENTS

TABLE OF CONTENTS i

LIST OF ABBREVIATIONS iii

LIST OF PICTURES iv

LIST OF TABLES v

ABSTRACT vi

ABSTRACT vi

INTRODUCTION 1

I The Proposal and Signification of Business Strategy 1

II The Target of Research 1

III Objective, Scope and Methodology of Research 2

IV Research Structure 2

ACKNOWLEDGEMENT 3

CHAPTER 1: THEORY OF STRATEGY MANAGEMENT 4

1 OVERVIEW STRATEGY MANAGEMENT 4

1.1 Defining Strategic Management 4

1.2 Key Term in Strategic Management 6

1.3 Three Stages of Strategic Management process 8

1.4 The Strategic Management Model 10

2 STRATEGY FORMULATION 12

2.1 Scan External Factor 12

2.1.1 External Opportunities and Threat: 12

2.1.2 Porter Five forces analysis 12

2.1.3 Conduct a Competitive Profile Matrix (CPM) 13

2.1.4 Contrucs an External Factor Evaluation Matrix (EFE) 14

2.2 Scan Internal System 15

2.2.1 Analysis Internal Resources (Internal Audit) 15

2.2.2 Strengths and Weakness: S.W.O.T Matrix, SPACE Matrix, IFE Matrix 15 2.2.3 Selection the Most Advantages Strategy: QSPM 17

3 STRATEGY IMPLEMENTATION AND EVALUATION 18

3.1 Implementing Strategy 18

3.1.1 The Nature of Strategy Implementation 18

3.1.2 Annual Objectives 19

3.1.3 Policies 19

3.1.4 Resource Allocation 20

3.1.5 Managing Conflict 20

3.2 Strategy Review, Evaluation, and Control 21

3.2.1 Describe a practical framework for evaluating strategies 21

3.2.2 The Balanced Scorecard 23

3.2.3 Contingency Planning 23

CHAPTER 2: M1 COMMUNICATION COMPANY - EXTERNAL AND INTERNAL ASSESSMENT 25

1 GENERAL INFORMATION OF M1 COMMUNICATION COMPANY 25

1.1 History, Milestone, Organization, Culture History & Milestone 25

1.2 Vision and Culture 26

2 EXTERNAL AND INTERNAL ASSESSMENT 30

2.1 External Opportunities and Threat 30

2.2 The Internal Assessment 48

CHAPTER 3: STRATEGY IMPLEMENTATION AND EVALUATION 56

1 STRATEGY FORMULATION 56

1.1 Analysis of strengths, weaknesses, threats and challenges 56

2 IMPLEMENT STRATEGY AND EVALUATE 63

2.1 Key to Strategy Implement 63

2.2 Resource Allocation 65

2.3 Matching Struture with Strategy 66

CONCLUSION 68

REFERENCES 69

Viettel: Viettel Group

EFE: External Factor Evaluation Matrix

CPM: Competitive Profile Matrix

IFE: Internal Factor Evaluation Matrix

S.W.O.T: Strengths, Weakness, Opportunities, Threats Matrix QSPM: Quantitative Strategic Planning Matrix

AS : Attractiveness Score

TAS: Total Attractiveness Score

LIST OF PICTURES

Picture 1: Stages of Strategic Management 8

Picture 2: Three stage of Strategy Implementation 11

Picture 3: Poter’s Fivee Model 12

Picture 4: M1 Communication Company Organization Chart 27

Picture 5: The population structure of Vietnam in December 2011 32

Picture 6: The five forces model of Michael Porter 42

Picture 7: M1 Company has the model with 5 competitive forces by M Porter 46

LIST OF TABLES

Table 1: List of Products 28

Table 2: Competitive Profiles matrix of M1, Samsung and Huawei 40

Table 3: M1 current competitors 44

Table 4: Finance Report (Brief version) 48

Table 5: Cost Structure of Product USB 3G Modem 49

Table 6: Cost Structure of Product Sumo Handset 49

Table 7: Distribution of personnel qualifications 50

Table 8 The QSP Matrix 62

Table 9 Implementation roadmap 67

ABSTRACT

The global economy continued to recover since 2008, helped by a sharp growth

in the emerging world In fact, the emerging world has been largely responsible for pulling up the advanced world from the depths of the financial apocalypse When compared to advanced nations, emerging nations entered the global collapse with a much lower level of debt, perhaps more important, emerging nations continue to add to their trade surplus and bank reserves Thus, emerging nations remain on the leading edge of economic growth

In 2012, the global economy continued difficulties, economic downturn occurs

in almost all areas worldwide According to the World Bank (World Bank) and the International Monetary Fund (IMF), the global economic crisis will continue to face many challenges in 2013

Besides many of the services and manufacturing industries are fallen such as estate, shipbuilding, coal mining, cement so the growth of the Electronic Manufacturing Industry is a bright spot for the rapid and sustainable development in Vietnam since 2010 In 2011 with exports of $ 6.89 billion (accounted for 7% of total exports) and in 2012 (as of 15 October 2012) exports worth more than $9 billion (accounted for 10.2% of total exports)

M1 Communication One Member Limited Liability Company (M1 Communication Company) is a member of the Viettel Group with main business is producing military communication equipments and consumer electronics products

to continue the development trend of the industry to set up an appropriate strategy

to have one right direction Strategic planning is built based on external factors and subjective within the enterprise, systematic analysis of information from which to establish the orientation, objectives, planning the business activities in the short term and in the long term, to focus efforts and resources on the main objectives so that the most effective, response to the uncertain situation, adapt to change Recognized that the special importance role of strategic development for the

existence and development of the business, our team decided on the topic "Build the business strategy for M1 Communication One Member Limited Liability Company

in the period 2013 - 2017" with the desire to apply the learned knowledge to contribute to the sustainable development of the company in the current situation

INTRODUCTION

I The Proposal and Signification of Business Strategy

All companies have a strategy, even if it's not formal, structured and irregular All organizations are facing somewhere, but unfortunately some companies do not know where they went

The company should have a proactive way rather than just react to the operating environment, and should attempt to influence, predict and create the environment rather than just react to the events Strategic management processes this It represents a logical, systematic and objective in determining the future direction of a business

The strategic-management process does not end when the company’s leaders decides what strategy or strategies to pursue There must be a translation of strategic thought into strategic action This translation is much easier if managers and employees of the firm understand the business, feel a part of the company, and through involvement in strategy-formulation activities have become committed to helping the organization succeed Without understanding and commitment, strategy-implementation efforts face major problems

Implementing strategy affects an organization from top to bottom; it affects all the functional and divisional areas of a business It is beyond the purpose and scope

of this text to examine all of the business administration concepts and tools important in strategy implementation

II The Target of Research

The Research focus on the following issues:

- The basic theory of strategy and strategy management

- The analytical models are useful for the formation and strategic selection

- Current situation of strategic implementation process of M1 Communication Company in the context of the Vietnam economy

- Analyze the internal and external factors that have impact on the strategic implementation process of the Company

- Proposed some solutions that is suitable for the Company’s business strategy

in the period 2013-2017

III Objective, Scope and Methodology of Research

- Objects and scope: Focuses the current strategy management activities of the M1 Communication Company and provides solutions in the future

- Methodology: Research uses two main types of information, which is primary and secondary information Secondary information was collected from many different sources, including significant of which is Business Plans, Finance Statement

IV Research Structure

ABSTRACT

INTRODUCTION

ACKNOWLEDGEMENT

CHAPTER 1: THEORY OF STRATEGY MANAGEMENT

1 OVERVIEW STRATEGY MANAGEMENT

2 STRATEGY FORMULATION

3 STRATEGY IMPLEMENTATION AND EVALUATION

CHAPTER 2: M1 COMMUNICATION COMPANY – EXTERNAL AND

INTERNAL ASSESSMENT

1 GENERAL INFORMATION OF M1 COMMUNICATION COMPANY

CHAPTER 3:STRATEGY IMPLEMENTATION AND EVALUATION

1 STRATEGY FORMULATION

2 IMPLEMENT STRATEGY AND EVALUATE

CONCLUSION

REFERENCES

ACKNOWLEDGEMENT

We certify that all the content of this project is the effort during the process of studying, understanding as well as topic selection by the author team members (besides the reference document and data enclosed)

We hereby acknowledge that this written project has not been collected by any other studying or training program

Hanoi, 18 th November 2012

CHAPTER 1: THEORY OF STRATEGY MANAGEMENT

1 OVERVIEW STRATEGY MANAGEMENT

1.1 Defining Strategic Management

The Concept of Strategic Management

Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages This definition captures two main elements that go to the heart of the field of strategic management

First, the strategic management of an organization entails three ongoing processes: analysis, decisions, and actions That is, strategic management is concerned with the analysis of strategic goals (vision, mission, and strategic objectives) along with the analysis of the internal and external environment of the organization Next, leaders must make strategic decisions These decisions, broadly speaking, address two basic questions: What industries should we compete in? How should we compete in those industries? These questions also often involve an organization’s domestic as well as its international operations And last are the actions that must be taken Decisions are of little use, of course, unless they are acted on Firms must take the necessary actions to implement their strategies This requires leaders to allocate the necessary resources and to design the organization to bring the intended strategies to reality As we will see in the next section, this is an ongoing, evolving process that requires a great deal of interaction among these three processes

Second, the essence of strategic management is the study of why some firms outperform others Thus, managers need to determine how a firm is to compete so that it can obtain advantages that are sustainable over a lengthy period of time That means focusing on two fundamental questions: How should we compete in order to create competitive advantages in the marketplace? For example, managers need to determine if the firm should position itself as the low-cost producer, or develop

products and services that are unique which will enable the firm to charge premium prices-or some combination of both

Managers must also ask how to make such advantages sustainable, instead of highly temporary, in the marketplace That is: How can we create competitive advantages in the marketplace that are not only unique and valuable but also difficult for competitors to copy or substitute?

Michael Porter argues that sustainable competitive advantage cannot be achieved through operational effectiveness alone Most of the popular management innovations of the last two decades-total quality, just-in-time, benchmarking, business process reengineering, outsourcingall are about operational effectiveness Operational effectiveness means performing similar activities better than rivals Each of these is important, but none lead to sustainable competitive advantage, for the simple reason that everyone is doing them Strategy is all about being different from everyone else Sustainable competitive advantage is possible only through performing different activities from rivals or performing similar activities in different ways Companies such

- Strategic Management can be defined as an art and science to set, implement and evaluate decisions related to various functions allows an organization to achieve these goals

- The Strategic Management process can be described as a practical approach, rational and systematic to make major decisions in the organization It aims to organize information and quality manner to allow decisions to be made in conditions of uncertainty However, strategic management is not a pure science appropriate to approach carefully, closely, step by step

- The Strategic Management process is based on the belief that the organization will continue to control events inside and outside to be able to make changes when necessary The speed and extent of the changes affecting the organization is growing rapidly in a scary way To survive, all organizations must

be able to acumen to recognize and adapt to change Strategic Management process aims to enable organizations to adapt effectively to changes in the long term

1.2 Key Term in Strategic Management

- Business tasks:

The mission of the business is to set priorities, strategies, plans and the allocation of work This is the starting point for setting up task manager and especially the establishment of the management structure

Every organization has a single purpose and a reason to exist The only way this should be reflected in the report of the task Nature of business tasks can be expressed as a competitive advantage or disadvantage of the Company An organization will achieve a higher sense of purpose when strategists, managers, staff development and convey clear business mission

A good mission statement should show the customer (organization), product,

or service, concern for public image, concern for employees These basic standards serve as a framework suitable for evaluating and writing mission statements

- Assessment of the external factors:

The important influence of the environment can be divided into five main categories: (1) economic impact; (2) The impact of cultural, social, geographic and demographic; (3) Effect of law, government and politics; (4) The impact of technology; (5) The effect of competition The environmental trends and events have a huge impact on all of the products, services, and organizations in the world market

- Assessment of the Company's internal situation:

Every organization has its strengths and weaknesses in the areas of business None of the Company equally strong or weak in all aspects The strengths / weaknesses inside along with the opportunities / risks from external and obvious tasks are the basic points to consider when setting goals and strategies The objectives and strategies are designed to take advantage of the strengths and khacp

gore weaknesses within the internal control region of the strategic management process

- Strategic analysis and choice:

Strategic analysis and choice largely subjective decisions based on objective information Strategic analysis and choice in order to determine the active process may choose to ask them which company can complete its responsibilities and objectives Strategies, objectives, and current mission of the company plus the information inside and outside the control will provide the basis for the formation and evaluation of strategic alternatives feasible

- Implementation strategy: The management issues

When the company decided to pursue one or more of the strategy, the strategic management process does not mean the end There must be a shift strategic thought into strategic action The translation would be a lot easier if the administrators and staff to understand the company, feel they are part of it, and through active participation in the implementation of strategy to become attached committed to helping the company succeed Without understanding and commitment, strategic enforcement efforts will encounter many problems

Implementation strategy: The problem of marketing, finance / accounting, research and development and information systems

The strategy does not have a chance to be successful in the organization is not good marketing their goods and services, or the company does not have sufficient working capital necessary or at the tech company produce poor quality products, or

in the company information system weaknesses

Detailed issues including market segmentation, market positioning, evaluate the usefulness of business, determine the extent to which the debt and / or stock should be used as a source of capital , preparation of financial statements estimates, contract research and development with organizations outside the company, forming a system of information support The army and the participation of

administrators and course members will be crucial for the success of the activities of marketing, finance/accounting, research and development and information systems

- Evaluation of strategies:

The strategy is too rigid mold and become obsolete when the environmental conditions inside or outside the company change So the strategy required to review, evaluate and adjust the implementation strategy

Strategic management process results in decisions that can bring significant long-term results, in contrast to the strategic decision errors can cause a serious disadvantage and may be very difficult Therefore, most strategists agree that strategic assessment is essential to the prosperity of the organization, the timely assessment can alert administrators to problems or difficulties can occur before a situation becomes serious The assessment strategy consists of three basic operations: (1) control the fundamental basis of the strategy of a company; (2) Compare the results you want with real results; (3) Receiving function properly for ensuring that work is carried out in accordance with the plan

1.3 Three Stages of Strategic Management process

Picture 1: Stages of Strategic Management

- Forming strategic phase

Forming is the process of establishing strategic business tasks, perform investigations to identify defective elements inside and outside, set long-term goals and strategic choice between the change world Sometimes ia the formation of the strategy is also known as "strategic planning" The difference between strategic

Planning and

Preparation Set Direction

Review and Evaluate

planning and strategic management strategic management, including the implementation and evaluation strategies

Three basic operations in the formation of the strategy is to conduct research, intuitive harmony and analysis, and decision making Conduct research related to the collection and processing of information about the market and the business of the Company This process is sometimes referred to as "cursory review business environment." In essence, the study is important to determine the strengths and weaknesses in the areas of business functions Internal factors can be identified as ways to calculate the ratio, performance measurement, and compared to the previous period and with the industry average

- Phase implementation strategy

Implementation of the strategy is often called the action stage of strategic management Implementing means mobilizing administrators and staff to implement the strategy has been set up

Three basic operations of the implementation strategy is to establish annual objectives, policy making, and distribution of resources Often considered the most difficult stage in the strategic management process, the implementation of the strategy requires discipline, dedication and self-sacrifice of the individual Successful implementation strategy revolves around its ability to promote the management staff in the capital is an art rather than a science The strategy proposed but not implemented will not serve any useful purpose

The implementation of the strategy include the development of strategic funding to support the program, culture and environment while promoting employee linked reward systems for both the long term and annual goals Strategic enforcement activities affect all staff and administrators in organizations

- Strategic assessment period

The last phase of strategic management is a strategic assessment All strategies depending on the future change because of factors inside and outside the regular change

Three major activities of this phase are: (1) Consider the elements is the basis for the current strategy; (2) Measurement of achievement, and (3) Implement the corrective actions Strategic evaluation period is necessary because the current success does not guarantee future success The success always creates new problems, the organization thought to satisfy the expense of the decline

The active formulation, implementation and evaluation of strategies occur at all three levels in a large organization: senior, department or business unit level strategy, and functional levels By maintaining information and interaction relationships between administrators and staff in the ranks, strategic results help for

a functional division of the company into a competitive team Most small businesses and some large businesses can not supply parts or strategic business units, so these organizations have only two levels

1.4 The Strategic Management Model

- The strategic management process can be studied and applied to the use of a model Each model represents a certain kind of process

- Comprehensive strategic management model:

This process is widely accepted This model does not guarantee success, but it can make a clear and practical approach in the formulation, implementation and evaluation of strategies The relationship between the major components of the strategic management process is shown in the model

Picture 2: Three stage of Strategy Implementation

Define the tasks and objectives, the organization's current strategy is a starting point meeting in strategic management because the current situation and conditions

of the Company may exclude a number of strategies and even may impose a specific action Each organization has a mission, goals and strategies, even if these factors are not set, written or formal communication

Strategic management process is dynamic and continuous A change in any of the major components in the model may require a change in one or all of the other components Strategic management process never really ends

In fact the process of strategic management are not clearly divided and strictly implemented as indicated in the model The strategist does not make the process step-by-step manner

2 STRATEGY FORMULATION

2.1 Scan External Factor

2.1.1 External Opportunities and Threat:

Social, cultural, demographic, and environmental changes have a major impact

on virtually all products, services, markets, and customers Small, large, for-profit, and nonprofit organizations in all industries are being staggered and challenged by the opportunities and threats arising from changes in social, cultural, demographic, and environmental variables

For industries and firms that depend heavily on government contracts or subsidies, political forecasts can be the most important part of an external audit Changes in patent laws, antitrust legislation, tac rates, and loobying activities can affect firms signigicantly The increasing global interdependence among economies, markets, governments, and organizations makes it imperative that firms consider the possible impact of political variables on the formulation and implementation of competitive strategies

2.1.2 Porter Five forces analysis

Poter’s Fivee – Forces Model of competitive analysis is a widely used approach for developing strategies in many industries The intensity of competition among firms varies widely across industries According to Porter, the nature of competitiveness in a given industry can be viewed as a composite of five forces

Picture 3: Poter’s Fivee Model

- Rivalry among competing firms

- Potential entry of new competitors

- Potential development of substitute products

- Bargaining power of suppliers

- Bargaining power of consumers

The following three steps for using Porter’s Five – Forces Model can indicate whether competition in a given industry is such that the firm can make an acceptable profit:

- Identify key aspects or elements of each competitive force that impact the firm

- Evaluate how strong and important each element is for the firm

- Decide whether the collective strength of the elements is worth the firm entering or staying in the industry

2.1.3 Conduct a Competitive Profile Matrix (CPM)

Competitive Profile Matrix (CPM) is a strategic management tool which is used to identify the major strengths and weaknesses of a firm in relation to the rival’s firm strategic position On the basis of this comparison, the firm can design wise offensive or defensive strategies Two types of systems can be used for the construction of competitive profile matrix i.e weighted rating system and unweighted rating system It is important to note that the meaning of weights and total weighted scores is same in both EFE (external factor evaluation) and CPM (competitive profile matrix)

The Competitive Profile Matrix (CPM) indentifies a firm’s major competitors and its particular strengths and weaknesses in relatioin to a sample firm’s strategic position The weights and total weighted scores in both a CPM and an EFE have the same meaing However, critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness The critical success factors in a CPM are not grouped into opportunities and threats

as they are in an EFE In a CPM, the ratings and total weighted scores for rival firms can be compared to the sample firm This comparative analysis provides important internal strategic information Avoid assigning the same rating to firms included in your CPM analysis

2.1.4 Contrucs an External Factor Evaluation Matrix (EFE)

An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, envionmental, political, governmental, legal, technological, and competitive information The EFE Matrix can be developed in five steps:

- List key external factors as identified in the external – audit process Include

a total of 15 to 20 factors, including both opportunities and threats, that affect the firm and its industry List the opportunities first and then the threats Be as specific

as possible, using percentages, ratios, and comparative numbers whenever possible

- Assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (very important) The weight indicates the ralative importance of that factor to being successful in the firm’s industry Opportunities often receive higher weights than threats, but threats can receive high weights if they are especially severe or threatening Appropriate weights can be determined by comparing successful with unsuccessful competitors or by discussing the factor and reaching a group consensus The sum of all weights assigned to the factors must equal 1.0

- Assign a rating between 1 and 4 to each key external factor to indicate how effectively the firm’s current strategies respond to the factor, where 4 = the response

is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor Ratings are based on effectiveness of the firm’s strategies Rating are thus company – based, whereas the weights in Step 2 are industry – based It is important to note that both threats and opportunities can receive a 1,2,3,

or 4

- Multiply each factor’s weight by its rating to determine a weighted score

- Sum the weighted scores for each variable to determine the total weighted score for the organization

2.2 Scan Internal System

2.2.1 Analysis Internal Resources (Internal Audit)

The process of performing an internal audit closely parallels the process of performing an external audit Representative managers and employees from throughout the firm need to be involved in determining a firm’s strengths and weaknesses The internal audit requires gathering and assimilating information about the firm’s management, marketing, finance/accounting, production/operations, research and development (R&D), and management information systems operations

Performing an tinternal audit requires gathering, assimilating, and evaluating information about the firm’s operations Some researchers emphasize the importance of the internal audit part of the strathegic mannagement process by comparing it to the external audit

2.2.2 Strengths and Weakness: S.W.O.T Matrix, SPACE Matrix, IFE Matrix IFE Matrix:

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business IFE matrix also provides a basis for identifying and evaluating relationships among those areas The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation

The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company The IFE matrix method conceptually relates to the Balanced Scorecard method in some aspects IFE Matrix can be developed in five steps:

- List key internal factors as indentified in the internal-audit process Use a total of from 10 to 20 internal factors, including both strengths and weaknesses List

strengths first and then weaknesses Be as specific as possible, using percentages, ratios, and comparative numbers

- Assign a weight that ranges from 0.0 (not important) to 1.0 (all-important) to each factor The weight assigned to a given factor indicates the relative importance

of the factor to being successful in the firm’s industry Regardless of whether a key factor is an internal strength or weakness, factor considered to have the greatest effect on organizational performance should be assigned the highest weights The sum of all weights must equal 1.0

- Assign a 1-to-4 rating to ech factor to indicate whether that factor represents

a major weakness (rating = 1), a minor weakness (rating = 2) a minor strength (rating = 3) or a major strength (rating = 4) Note that strengths must receive a 3 or

4 rating and weaknesses must receive a 1 or 2 rating Ratings are thus based, whereas the weigths in step 2 are industry-based

company Multiply each factor’s weight by its rating to determine a weighted score for each variable

- Sum the weighted scores for each variable to determine the total weighted score for the organization

When a key internal factor is both a strength and a weakness, the factor should

be included twice in the IFE Matrix, and a weight and rating should be assigned to each sratement

S.W.O.T Matrix:

The Strengths - Weaknesses – Opportunities – Threats - (S.W.O.T) Matrix is

an important matching tool that helps managers develop four types of strategies: SO (strengths-opportunities) Strategies, WO (weaknesses-opportunities) Strategies, ST (strengths-threats) Strategies, and WT (weaknesses-threats) Strategies Matching key external and internal factor is the most difficult part of developing a S.W.O.T Matrix and requires good judgment – and there is no one best set of matches

There are eight steps involved in constructing a S.W.O.T Matrix:

- List the firm’s key external opportunities

- List the firm’s key external threats

- List the firm’s key internal strengths

- List the firm’s key internal weaknesses

- Match internal strengths with external opportunities, and record the resultant

SO Strategies in the appropriate cell

- Match internal weaknesses with external opportunities, and record the resultant WO Strategies

- Match internal strengths with external threats, and record the sesultant ST Strategies

- Match internal weaknesses with external threats, and record the resultant WT Strategies

2.2.3 Selection the Most Advantages Strategy: QSPM

Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating possible strategies Quantitative Strategic Planning Matrix or a QSPM provides an analytical method for comparing feasible alternative actions The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework

The Quantitative Strategic Planning Matrix or a QSPM approach attempts to objectively select the best strategy using input from other management techniques and some easy computations In other words, the QSPM method uses inputs from stage 1 analyses, matches them with results from stage 2 analyses, and then decides objectively among alternative strategies

Stage 1: The first step in the overall strategic management analysis is used to identify key strategic factors This can be done using, for example, the EFE matrix and IFE matrix

Stage 2: After we identify and analyze key strategic factors as inputs for QSPM, we can formulate the type of the strategy we would like to pursue This can

be done using the stage 2 strategic management tools, for example the S.W.O.T

analysis (or TOWS), SPACE matrix analysis, BCG matrix model, or the IE matrix model

Stage 3: The stage 1 strategic management methods provided us with key strategic factors Based on their analysis, we formulated possible strategies in stage

2 Now, the task is to compare in QSPM alternative strategies and decide which one

is the most suitable for our goals

The stage 2 strategic tools provide the needed information for setting up the Quantitative Strategic Planning Matrix - QSPM The QSPM method allows us to evaluate alternative strategies objectively Conceptually, the QSPM in stage 3 determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized upon or improved The relative attractiveness of each strategy is computed by determining the cumulative impact of each external and internal critical success factor

3 STRATEGY IMPLEMENTATION AND EVALUATION

3.1 Implementing Strategy

3.1.1 The Nature of Strategy Implementation

Successful strategy formulation does not guarantee successful strategy implementation It is always more difficult to do something (strategy implementation) than to say you are going to do it (strategy formulation)! Although inextricably linked, strategy implementation is fundamentally different from strategy formulation Strategy formulation and implementation can be contrasted in the following ways:

• Strategy formulation is positioning forces before the action

• Strategy implementation is managing forces during the action

• Strategy formulation focuses on effectiveness

• Strategy implementation focuses on efficiency

• Strategy formulation is primarily an intellectual process

• Strategy implementation is primarily an operational process

• Strategy formulation requires good intuitive and analytical skills

• Strategy implementation requires special motivation and leadership skills

• Strategy formulation requires coordination among a few individuals

• Strategy implementation requires coordination among many individuals

3.1.2 Annual Objectives

Establishing annual objectives is a decentralized activity that directly involves all managers in an organization Active participation in establishing annual objectives can lead to acceptance and commitment Annual objectives are essential for strategy implementation because they (1) represent the basis for allocating resources; (2) are a primary mechanism for evaluating managers; (3) are the major instrument for monitoring progress toward achieving long-term objectives; and (4) establish organizational, divisional, and departmental priorities

Annual objectives should be compatible with employees’ and managers’ values and should be supported by clearly stated policies More of something is not always better Improved quality or reduced cost may, for example, be more important than quantity It is important to tie rewards and sanctions to annual objectives so that employees and managers understand that achieving objectives is critical to successful strategy implementation Clear annual objectives do not guarantee successful strategy implementation, but they do increase the likelihood that personal and organizational aims can be accomplished Overemphasis on achieving objectives can result in undesirable conduct, such as faking the numbers, distorting the records, and letting objectives become ends in themselves Managers must be alert to these potential problems

3.1.3 Policies

Changes in a firm’s strategic direction do not occur automatically On a to-day basis, policies are needed to make a strategy work Policies facilitate solving recurring problems and guide the implementation of strategy Broadly defined, policy refers to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals Policies are instruments for strategy implementation Policies set boundaries,

day-constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior; they clarify what can and cannot be done in pursuit

of an organization’s objectives

3.1.4 Resource Allocation

Resource allocation is a central management activity that allows for strategy execution In organizations that do not use a strategic-management approach to decision making, resource allocation is often based on political or personal factors Strategic management enables resources to be allocated according to priorities established by annual objectives Nothing could be more detrimental to strategic management and to organizational success than for resources to be allocated in ways not consistent with priorities indicated by approved annual objectives All organizations have at least four types of resources that can be used to achieve desired objectives: financial resources, physical resources, human resources, and technological resources Allocating resources to particular divisions and departments does not mean that strategies will be successfully implemented A number of factors commonly prohibit effective resource allocation, including an overprotection of resources, too great an emphasis on short-run financial criteria, organizational politics, vague strategy targets, a reluctance to take risks, and a lack

of sufficient knowledge

3.1.5 Managing Conflict

Interdependency of objectives and competition for limited resources often leads to conflict Conflict can be defined as a disagreement between two or more parties on one or more issues Establishing annual objectives can lead to conflict because individuals have different expectations and perceptions, schedules create pressure, personalities are incompatible, and misunderstandings Establishing objectives can lead to conflict because managers and strategists must make trade-offs, such as whether to emphasize short-term profits or long-term growth, profit margin or market share, market penetration or market development, growth or stability, high risk or low risk, and social responsiveness or profit maximization

Trade-offs is necessary because no firm has sufficient resources pursue all strategies

to would benefit the firm Conflict is unavoidable in organizations, so it is important that conflict be managed and resolved before dysfunctional consequences affect organizational performance Conflict is not always bad An absence of conflict can signal indifference and apathy Conflict can serve to energize opposing groups into action and may help managers identify problems Various approaches for managing and resolving conflict can be classified into three categories: avoidance, diffusion, and confrontation Avoidance includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups) Diffusion can include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions Confrontation

is exemplified by exchanging members of conflicting parties so that each can gain

an appreciation of the other’s point of view or holding a meeting at which conflicting parties present their views and work through their differences

3.2 Strategy Review, Evaluation, and Control

3.2.1 Describe a practical framework for evaluating strategies

The strategic-management process results in decisions that can have significant, longlasting consequences Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse Most strategists agree, therefore, that strategy evaluation is vital to an organization’s well-being; timely evaluations can alert management to problems or potential problems before a situation becomes critical

Strategy evaluation includes three basic activities: (1) examining the underlying bases of a firm’s strategy, (2) comparing expected results with actual results, and (3) taking corrective actions to ensure that performance conforms to plans

Strategy evaluation is important because organizations face dynamic environments in which key external and internal factors often change quickly and dramatically Success today is no guarantee of success tomorrow! An organization should never be lulled into complacency with success Countless firms have thrived one year only to struggle for survival the following year

A revised IFE Matrix should focus on changes in the organization’s management, marketing, finance/accounting, production/operations, R&D, and management information systems strengths and weaknesses A revised EFE Matrix should indicate how effective a firm’s strategies have been in response to key opportunities and threats This analysis could also address such questions as the following:

 How have competitors reacted to our strategies?

 How have competitors’ strategies changed?

 Have major competitors’ strengths and weaknesses changed?

 Why are competitors making certain strategic changes?

 Why are some competitors’ strategies more successful than others?

 How satisfied are our competitors with their present market positions and profitability?

 How far can our major competitors be pushed before retaliating?

 How could we more effectively cooperate with our competitors?

Measuring Organizational Performance

Another important strategy-evaluation activity is measuring organizational performance This activity includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives Both long-term and annual objectives are commonly used in this process Criteria for evaluating strategies should be measurable and easily verifiable Criteria that predict results may be more important than those that reveal what already has happened Really effective control requires accurate forecasting

Taking Corrective Actions

The final strategy-evaluation activity, taking corrective actions, requires making changes to competitively reposition a firm for the future Taking corrective actions does not necessarily mean that existing strategies will be abandoned or even that new strategies must be formulated

3.2.2 The Balanced Scorecard

The Balanced Scorecard is an important strategy-evaluation tool It is a process that allows firms to evaluate strategies from four perspectives: financial performance, customer knowledge, internal business processes, and learning and growth The Balanced Scorecard analysis requires that firms seek answers to the following questions and utilize that information, in conjunction with financial measures, to adequately and more effectively evaluate strategies being implemented:

 How well is the firm continually improving and creating value along measures such as innovation, technological leadership, product quality, operational process efficiencies, and so on?

 How well is the firm sustaining and even improving upon its core competencies and competitive advantages?

How satisfied are the firm’s customers?

3.2.3 Contingency Planning

A basic premise of good strategic management is that firms plan ways to deal with unfavorable and favorable events before they occur Too many organizations prepare contingency plans just for unfavorable events; this is a mistake, because both minimizing threats and capitalizing on opportunities can improve a firm’s competitive position Regardless of how carefully strategies are formulated, implemented, and evaluated, unforeseen events, such as strikes, boycotts, natural disasters, arrival of foreign competitors, and government actions, can make a strategy obsolete To minimize the impact of potential threats, organizations should develop contingency plans as part of their strategy-evaluation process Contingency

plans can be defined as alternative plans that can be put into effect if certain key events do not occur as expected Only high-priority areas require the insurance of contingency plans Strategists cannot and should not try to cover all bases by planning for all possible contingencies But in any case, contingency plans should

be as simple as possible Some contingency plans commonly established by firms include the following:

 If a major competitor withdraws from particular markets as intelligence reports

 Indicate, what actions should our firm take?

 If our sales objectives are not reached, what actions should our firm take to avoid profit losses?

 If demand for our new product exceeds plans, what actions should our firm take to meet the higher demand?

 If certain disasters occur—such as loss of computer capabilities; a hostile takeover attempt; loss of patent protection; or destruction of manufacturing facilities because of earthquakes, tornadoes or hurricanes—what actions should our firm take?

 If a new technological advancement makes our new product obsolete sooner than expected, what actions should our firm take

CHAPTER 2: M1 COMMUNICATION COMPANY – EXTERNAL AND

INTERNAL ASSESSMENT

1 GENERAL INFORMATION OF M1 COMMUNICATION COMPANY

NAMED: M1 COMMUNICATION ONE MEMBER LIMITED LIABILITY

COMPANY

Address: An Khanh, Hoai Duc, Hanoi, Viet Nam

Tel: 069.529150 - 04.62650365; Fax: 04.62650365;

Email: m1company@viettel.com.vn

Certificate of Business Registration No: 0500141369

Capital: 190,000,000,000 VND (One hundred ninety billions Viet Nam dong)

 OWNER INFORMATION

Name of Corporation: Viettel Group

Address: No 1 Giang Van Minh, Kim Ma, Ba Dinh, Hanoi, Vietnam

 MAIN BUSINESS

- Manufacture of communication equipment

- Manufacture of consumer electronics products

- Manufacture of measuring, testing, navigating and control equipments

- Manufacture of structural metal products

- Manufacture of electronic components

- Manufacture of plastic products

- Manufacture of spare parts and accessories for motor vehicles

1.1 History, Milestone, Organization, Culture History & Milestone

 20/11/1945: M1 Communication Factory founded

 2010: M1 Communication Factory is acquired by Viettel Group

 10/2011: Change from M1 Communication Factory to M1 Communication One Member Limited Liability Company

- With a long history of 67 years of operating, M1 Communication Company

is the one of few main company produce military equipment for the demand from the Ministry of Defense

- Before 2010 year, the main business of M1 Communication Company specializes in assembly and producing the military telecommunication equipments

- From 2010 to now, with the desire to bring the company to become the modern electronic production, the Ministry of Defense assigned the M1 company to

a subsidiary of Viettel Group Beside the continuous effort to ensure the task in repair and producing military telecommunication equipments, M1 have to researched and produce the telecommunication devices for consumer market

- In early 2012, M1 has complete received and installed the new modern production line for electronic devices manufacturing with total investment about

300 billion Vietnam dong from Viettel Group The capability of production lines reached about 3 – 5 millions whole set USB 3G / year or 3 millions mobile handset/ year Moreover, these production lines can adapt with the requirement of manufacture for the infrastructure devices which use the complicated and new technology for Viettel Group’s demand

- With the total usage area more than 8,000 meter square, the human resource more than 400 employees include engineers and staff who are working in long -term

in foreign electronics manufacturing factory before like Canon, Samsung, Panasonics, Foxconn M1 Communication Company available ensure to meet the market’s requirement in strong and effective

1.2 Vision and Culture

- Led the company to high-tech manufacturing organization, ready to produce large number of telecommunications devices for domestic and international market; diversification, differentiation of products to penetrate the appropriate market segments, build M1 brand to the Electronics Manufacturing Services Company No 1 in Vietnam

- M1 Communication Company is a member of Viettel Group which have basic culture is solder’s discipline Enter the business in the electronics production sector, especially produce the telecommunications electronic equipment is characterized by fierce competition and rapidly change technology, M1’s managers and staffs always try to make a difference on all action, on all products and services and especially in innovation: ―Innovation is alive‖ Another most important point of our company is always to mention that everything in the company must be made quickly: rapid deployment of ideas, decisions, strategies and targets This point has created the working environment consensus, hard, coordinate and learn from colleagues, partners, to the common goal

 Organization, Main Market & Core Product

Picture 4: M1 Communication Company Organization Chart

 Main Market & Core Products

1 Transceivers 3,000

sets

Ministry of Defense

Ministry of Public Security; Ministry of Agriculture and Rural Development

5 USB 3G (data card) 100,000

sets Viettel Group

Consumer market: Vietnam, Laos, Cambodia, Haiti, Mozambique, Peru

6

Handset 2G

low-end

300,000 sets Viettel Group;

Consumer market: Vietnam, Laos, Cambodia, Haiti, Mozambique, Peru

Table 1: List of Products

2 EXTERNAL AND INTERNAL ASSESSMENT

2.1 External Opportunities and Threat

a Political Forces

- Global: In 2012, China have disputed, conflicted with Japan, Taiwan and

some ASEAN’s countries about the Islands and Eastern Sea’s demand This dispute has affected the social and economic’s environment and has a major impact in foreign enterprises which have invest many factories stay in the China Mainland These are the result foreign enterprice have improved up the movement planning

from China to other areas to restrict the risk of armed conflict