The Business Strategy period 2011-2020 of Binh Dinh Minerals Joint-Stock Company (BIMICO)

LIST OF ACRONYMS AND ABBREVIATIONS BIMICO: Binh Dinh Minerals Joint-Stock Company EFE: External Factors Evaluation matrix IFE: Internal Factors Evaluation matrix ISO: International Or

GLOBAL ADVANCED MASTER OF

BUSINESS ADMINISTRATION

Minerals Joint-Stock Company (BIMICO)

Group members : NGUYEN MANH HUY

DO MAI LONG HUYNH TRUC PHUONG

NGO VAN TONG

DOAN DANH TUAN

LE THI HANH XUAN

HCMC – 7/2011

 Do Thanh Thao - Technical Manager, Mine Manager

 Dao Le Dung - Deputy Manager of Technology Dept., Head of Quality Control Dept

 Nguyen Cong Thanh - Manager of Mechanical Workshop

 To Van Dung - Manager of Exploitation Workshop

 Nguyen Xuan Vinh - Deputy Manager of Processing Workshop

Who have dedicated help us complete this Capstone Project Report

TABLE OF CONTENTS

Acknowledgements 2

Table of Contents 3

List of Acronyms and Abbreviations 5

List of Tables 6

List of Pictures and Appendixes 7

INTRODUCTION 1 The reason to choose the topic 8

2 The research objectives 8

3 The object and scope of research 9

4 The research methodology 9

5 The structure of Capstone Project Report 9

CHAPTER 1: LITERATURE REVIEW 1.1 The fundamental concepts about the strategic management 10

1.1.1 The concept of strategic management 10

1.1.2 Strategic planning process and implementation 10

1.1.3 The basic methods and tools for strategic planning 11

1.2 Actual situation of production and export Titan of Vietnam 19

1.3 The need of business strategy planning for BIMICO 20

CHAPTER 2: INTERNAL/EXTERNAL ENVIRONMENT ANALYSIS 2.1 Overview of Binh Dinh Minerals Joint-Stock Company 21

2.1.1 The formation of BIMICO 21

2.1.2 Organizational structure 22

2.1.3 Business scopes 23

2.1.4 Business and production results period 2006 – 2010 23

2.2 Internal analysis of Binh Dinh Minerals Joint-Stock Company 25

2.2.1 Administration 25

2.2.2 Marketing activities 26

2.2.3 Personnel operations 28

2.2.4 Financial activities 29

2.2.5 Productional activities 31

2.2.6 The Internal Factors Evaluation matrix (IFE) 33

2.3 Analysis of the environmental factors that effect on the activities of Binh Dinh Minerals Company 34

2.3.1 The macro environment 34

2.3.2 The External Factors Evaluation matrix (EFE) 37

2.3.3 The micro environment 39

CHAPTER 3: RECOMMENDING BUSINESS STRATEGY 3.1 The objectives formulation of BIMICO to 2020 49

3.1.1 Basis of target formulation 49

3.1.2 The objectives of the business-production operations of BIMICO period 2011 – 2020 50

3.2 The strategy formulation 53

3.2.1 Analysis SWOT matrix to suggest strategies 53

3.2.2 Analysis the proposed strategies 55

3.3 Solutions for strategic implementation 59

3.3.1 Human resource solutions 59

3.3.2 Organizational solutions 60

3.3.3 Informational solutions 62

3.3.4 Solutions for Research-Development 62

3.3.5 Operational solutions 63

3.3.6 Financial-accounting solutions 65

3.3.7 Solutions for Marketing 65

3.3.8 Solutions on the environment 67

3.4 Recommendations 72

3.4.1 To the Government 72

3.4.2 To the Company 73

CONCLUSION 75

REFERENCES 77

APPENDIXES 79

LIST OF ACRONYMS AND ABBREVIATIONS

BIMICO: Binh Dinh Minerals Joint-Stock Company

EFE: External Factors Evaluation matrix

IFE: Internal Factors Evaluation matrix

ISO: International Organization for Standardization

ODA: Official Development Assistance

QSPM: Quantitative Strategic Planning Matrix

SWOT matrix: the Matrix to analyze the Strenghts, Weaknesses, Opportunities and

Threatens of a company

USD: Currency unit of United States (Dollar)

VND: Currency unit of Vietnam (Dong)

WTO: World Trade Organization

LIST OF TABLES

Table 2-1: Main product of BIMICO 23

Table 2-2: Revenues and quantities of years from 2006 to 2010 24

Table 2-3: Comparision performance result with the plan of 2010 25

Table 2-4: Revenue of export from 2006 – 2010 28

Table 2-5: Structure of employees by age 28

Table 2-6: The structure of labor qualification 28

Table 2-7: Liquidity from 2008-2010 29

Table 2-8: Asset turnover 30

Table 2-9: Profitability 30

Table 2-10: Internal Factors Evaluation matrix (IFE) of BIMICO 33

Table 2-11: External Factors Evaluation matrix (EFE) of BIMICO 37

Table 2-12: The Images competitive Matrix for undeeply processed products 41

Table 2-13: The Images competitive Matrix for deeply processed products 42

Table 3-1: Objectives of criteria for financial to 2020 51

Table 3-2: SWOT matrix 53

LIST OF PICTURES AND APPENDIXES

Picture 01: The Titanium Slag Factory of BIMICO 22

Picture 02: Torsion axle system to exploit titanium 23

Picture 03: Titanium processing scheme 57

Annex 1: The Organizational Structure of BIMICO 79

Annex 2: The flow chart of production process for ilmenite 80

Annex 3: The flow chart of production process for Titanium Slag 81

Annex 4: Some of pictures about Bimico’s production activities 82

INTRODUCTION

1 Why choose the topic?

The event Vietnam joined the World Trade Organization (WTO) marked a major turning point for the economy of Vietnam The opportunities are widening to welcome the enterprises that they know to invest, search and catch opportunities But, it still exists, along with opportunities are the threats, dangers and risks that they can occur at any time They will make the businesses without prepared solutions to cope with crisis are full of hardships

Before the competition is more and more fierce in the market, every business should have the preparation in advance with effective strategies to be able to exist and develop If an enterprise has the right and appropriate business strategies and may rely on internal resources to take advantage of the opportunities coming from the outside environment or it may avoid the risks and limit its weaknesses that enterprise will be capable to compete and stand on the market

With the particular business activity in the field of mineral exploitation from

1985 and growth together with the development of the country, Binh Dinh Minerals Joint-Stock Company (BIMICO) is one of the most prestigious and pioneer companies in the field of titanium mining in Binh Dinh province as well in Vietnam Spent 25 years in development, BIMICO has stood firm and increasingly asserted its position in the market structure So the company’s business strategy not only proposes production and business programs, but also strengthens further the brand of the company on the stock market

That's the reason that we decided to choose the subject "The Business Strategy

period 2011-2020 of Binh Dinh Minerals Joint-Stock Company (BIMICO)"

business environments Identify the strengths, weaknesses affecting the development of Binh Dinh Minerals Joint-Stock Company

 Develop the business strategic direction for the company to 2020 and propose the strategies for achievement the company’s goals to help the company for sustainable development in the current competitive environment

3 Objects and Scope of research:

 Research objects: Production and business activities of Binh Dinh Minerals

Company and business environment of Titan's products of Vietnam

 Research scope: Related to the production and business strategy of Binh

Dinh Minerals Company from 2006 to now

 Period of research: through statistics the period from 2006 to 2010 to

analyze and evaluate the production and business situation of titanium products and other factors affecting the business strategic formulation of the Company to 2020

4 Research Methodology:

The Capstone Project Report was used the methods as: description, statistics, comparison, synthesis, analysis and data calculation Documents and data for the study were used from reports of Binh Dinh Minerals Joint-Stock Company, General Department of Statistics and other information gathered from the mass media more such as newspapers, magazines, internet

5 Structure of Capstone Project Report:

Structure of the Capstone Project Report includes three chapters as follows:

Chapter 1: Literature review

Chapter 2: Internal/External Environment Analysis

Chapter 3: Recommending Business Strategy

CHAPTER 1:

LITERATURE REVIEW 1.1 The fundamental concepts about the strategic management

1.1.1 Concept of strategic management

Strategic management is defined as the set of decisions and actions that result

in the formulation and implementation of plans designed to achieve a company’s objectives It comprises 9 critical tasks:

1 Formulate the company’s mission, including broad statements about its purpose, philosophy and goals

2 Conduct analysis that reflects the company’s internal conditions and capabilities

3 Assess the company’s external environment, including both the competitive and the general contextual factors

4 Analyze the company’s options by matching its resources with the external environment

5 Identify the most desirable options by evaluating each option in light of the company’s mission

6 Select a set of long-term objectives and grand strategies that will achieve the most desirable options

7 Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies

8 Implement the strategic choices by means of budgeted resource allocations

in which the matching of tasks, people, structures, technologies, and reward systems is emphasized

9 Evaluate the success of the strategic process as an input for future decision making

1.1.2 Strategic planning process and implementation

In today's highly competitive business environment, budget-oriented planning

or forecast-based planning methods are insufficient for a large corporation to

survive and prosper The firm must engage in strategic planning that clearly

defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track

A simplified view of the strategic planning process is shown by the following diagram:

The Strategic Planning Process

Mission &

Objectives

Environmental Scanning

Strategy Formulation

Strategy Implementation

Evaluation

& Control

Mission and Objectives

The mission statement describes the company's business vision, including the unchanging values and purpose of the firm and forward-looking visionary goals that guide the pursuit of future opportunities Strategic objectives are related to the

firm's business position, and may include measures such as market share and reputation

Environmental Scan

The environmental scan includes the following components:

 Internal analysis of the firm

 Analysis of the firm's industry (task environment)

 External macro environment

The internal analysis can identify the firm's strengths and weaknesses and the external analysis reveals opportunities and threats A profile of the strengths, weaknesses, opportunities, and threats is generated by means of a SWOT analysis

An industry analysis can be performed using a framework developed by Michael Porter known as Porter's five forces This framework evaluates entry barriers, suppliers, customers, substitute products, and industry rivalry

Strategy Formulation

Given the information from the environmental scan, the firm should match its strengths to the opportunities that it has identified, while addressing its weaknesses and external threats To attain superior profitability, the firm seeks to develop a competitive advantage over its rivals A competitive advantage can be based on cost or differentiation

Strategy Implementation

The selected strategy is implemented by means of programs, budgets, and procedures Implementation involves organization of the firm's resources and motivation of the staff to achieve objectives

Evaluation & Control

The implementation of the strategy must be monitored and adjustments made

as needed

Evaluation and control consists of the following steps:

1 Define parameters to be measured

2 Define target values for those parameters

3 Perform measurements

4 Compare measured results to the pre-defined standard

5 Make necessary changes

1.1.3 The basic methods and tools for strategic planning

1.1.3.1 Environmental scan to identify opportunities and threats - The External Factors Evaluation Matrix (EFE)

The firm’s macro environment

The following factors of macro environment that affect businesses are:

The firm’s micro environment

The following factors of micro environment that affect businesses are:

The external factor evaluation matrix (EFE)

EFE method is a strategic-management tool often used for assessment of

current business conditions The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing There are five steps in developing an EFE matrix:

1 List factors: The first step is to gather a list of external factors Divide factors

into two groups: opportunities and threats

2 Assign weights: Assign a weight to each factor The value of each weight

should be between 0 and 1 (or alternatively between 10 and 100 if you use the

10 to 100 scale) Zero means the factor is not important One or hundred means that the factor is the most influential and critical one The total value of all weights together should equal 1 or 100

3 Rate factors: Assign a rating to each factor Rating should be between 1 and

4 Rating indicates how effective the firm’s current strategies respond to the factor: 1 = the response is poor; 2 = the response is below average; 3 = above average; 4 = superior Weights are industry-specific Ratings are company-specific

4 Multiply weights by ratings: Multiply each factor weight with its rating

This will calculate the weighted score for each factor

5 Total all weighted scores: Add all weighted scores for each factor This will calculate the total weighted score for the company

Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5 Total weighted scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position An EFE Matrix should include from 10 to 20 key factors The number of factors has no effect upon the range of total weighted scores because the weights always sum to 1.0

1.1.3.2 Internal analysis to identify the strengths and weaknesses - The Internal Factors Evaluation Matrix (IFE)

The company’s internal environment

There are many influences that need to be considered that apply to the internal environment to an organization These influences include organization, culture, finance, research and development, production, marketing and resourcing

 Organization

 Culture

 Finance

 Research and Development

 Production

 Marketing

 Resourcing

The internal factor evaluation matrix (IFE)

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 Similar to the EFE Matrix, an IFE Matrix can be developed in five steps:

1 List key internal factors as identified in the internal audit process Use a

total of from ten to twenty internal factors, including both strengths and weaknesses List strengths first and then weaknesses Be as specific as possible, using percentages, ratios, and comparative numbers

2 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, factors considered to have the greatest effect on organizational performance should be assigned the highest weights The sum of all weights must equal 1.0

3 Assign a 1 to 4 rating to each 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 4

or 3 rating and weaknesses must receive a 1 or 2 rating Ratings are thus company based, whereas the weights in Step 2 are industry based

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

each variable

5 Sum the weighted scores for each variable to determine the total weighted

score for the organization

Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5 Total weighted scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position Like the EFE Matrix, an IFE Matrix should include from 10 to

20 key factors The number of factors has no effect upon the range of total weighted scores because the weights always sum to 1.0

1.1.3.3 Strategic formulation and choice – SWOT Matrix and Quantitative Strategic Planning Matrix (QSPM)

Strategy formulation refers to the process of choosing the most appropriate way of action for the realization of organizational goals and objectives and thereby achieving the organizational vision The process of strategy formulation and choice basically involves three main stages:

 Input stage (stage 1): analysis of environmental factors and internal

factors to build the matrices: the external factor evaluation matrix (EFE), the image competition matrix, and the internal factor evaluation matrix (IFE)

 Combined stage (stage 2): using SWOT matrix This tool is based on the

information entered is drawn from stage 1 to combine the external opportunities and threats to the internal strengths and weaknesses to establish a strategy may be realizable

 Decisional stage (stage 3): using Quantitative Strategic Planning Matrix

(QSPM) This matrix uses the inputs through the analysis of stage 1 and the combined results of the analysis in stage 2 to determine objectively among alternative strategies

The strategic formulation – SWOT Matrix

SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans SWOT (sometimes referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount

of time is available to address a complex strategic situation

The following diagram shows how a SWOT analysis fits into a strategic situation analysis

Situation Analysis

Internal Analysis External Analysis / \ / \ Strengths Weaknesses Opportunities Threats

| SWOT Profile

The internal and external situation analysis can produce a large amount of information, much of which may not be highly relevant The SWOT analysis can serve as an interpretative filter to reduce the information to a manageable quantity of key issues The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats

The strategic choice: Quantitative Strategic Planning Matrix (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 According to Fred R David, for building QSPM matrix includes six steps:

Step 1: Provide a list of internal factors - strengths and weaknesses Then

generate a list of the firm's key external factors - opportunities and threats

These factors can be taken from the EFE matrix, the IFE matrix and SWOT analysis

Step 2: Having the factors ready, identify strategy alternatives that will be

further evaluated Strategies evaluated in the QSPM should be mutually exclusive if possible

Step 3: Each key external and internal factor should have some weight in the

overall scheme These weights can be taken from the IFE and EFE matrices again

Step 4: Attractiveness Scores (AS) in the QSPM indicate how each factor is

important or attractive to each alternative strategy Attractiveness Scores are determined by examining each key external and internal factor separately, one at

a time, and asking the following question: Does this factor make a difference in the decision about which strategy to pursue?

If the answer to this question is yes, then the strategies should be compared

relative to that key factor The range for Attractiveness Scores is 1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive If the answer to the above question is no, then the respective key

factor has no effect on the decision If the key factor does not affect the choice being made at all, then the Attractiveness Score would be 0

Step 5: Calculate the Total Attractiveness Scores (TAS) in the QSPM Total

Attractiveness Scores are defined as the product of multiplying the weights (step 3) by the Attractiveness Scores (step 4) in each row The Total Attractiveness Scores indicate the relative attractiveness of each key factor and related individual strategy The higher the Total Attractiveness Score, the more attractive the strategic alternative or critical factor

Step 6: Calculate the Sum Total Attractiveness Score by adding all Total

Attractiveness Scores in each strategy column of the QSPM The QSPM Sum Total Attractiveness Scores reveal which strategy is most attractive Higher scores point at a more attractive strategy, considering all the relevant external and internal critical factors that could affect the strategic decision

1.2 The current situation of production and export Titanium of Vietnam

According to the Ministry of Natural Resources and Environment, Titanium ore reserves in the floor of red sand by up to 300 million tonnes With this huge number, Vietnam will become one of the countries to have the world's largest titanium ore However, looking at reality mining sector in Vietnam will see Titan revealed many shortcomings Currently, Vietnam mainly exports crude titanium (ilmenite ore concentrate) of approximately 500,000 tonnes per year There are also some enterprises operating in the field of titanium slag processing, but they are in state losses (because the export tax is very high in 2010) The government renewed the export of crude one time (2008-2010) and deep processing needs of Titanium in Vietnam is becoming urgent (now, the government extended more one year, to 2011) Meanwhile the demand and price of Titanium products has increased every year 2015 forecast the world’s demand is about 6 million tonnes Pigment and over 1.5 million tonnes Zircon In addition, the price of pigment is tending to increase; the price of nano pigment products can be very expensive in the future

From the above analysis we can see that the mining and deeply processing of Titanium in Vietnam are much more growth promising because there are large material areas, potential market and the government encourages and supports

To be able to develop the deep processing industry of Titanium in Vietnam, need assistance with policies, guidelines synchronization and rationality of government as well as other ministries Besides, also needs the initiative of the Vietnam Titanium Association and enthusiasm, determination of the enterprises in the industry

1.3 The need of business strategy planning for BIMICO

Currently, BIMICO is facing the increasingly competition, more competitors in Vietnam and abroad Each business item of the Company has different competitors, among them there are very strong companies

On the other hand according to the above analysis, next year the government will forbid the export of crude ore of titanium and encourage the titanium deep processing The strategy of exploitation and deep processing of titanium has been Prime Minister oriented Vietnam titanium industry in 2025, through Decision No 104/QD-TTg on 13/07/2007 This is the basis for the titanium businesses, in there BIMICO, develop the deep processing project of titanium, to increase the value for the precious resources of titanium According to the Institute of Mining and Technology - Metallurgy, the products of titanium slag or synthetic rutile have the value increased about 2.5 times; the products of the pigment have the value increased about 10 times and products of titanium metal, the value increased by nearly 80 times

So now, BIMICO needs to have a new business strategy for the deep processing

of titanium, not only increase the export value, create the advantage competition but also suitable with the current situation But the problem is how to select appropriate processing technologies, for high investment efficiency and friendly to the environment

CHAPTER 2:

INTERNAL/EXTERNAL ENVIRONMENT ANALYSIS

2.1 Overview of Binh Dinh Minerals Joint-Stock company (BIMICO)

2.1.1 The formation of BIMICO

Binh Dinh Minerals Joint Stock Company (BIMICO) - transformed from Binh Dinh Minerals Company which established in 1985 - is one of the first reputable companies in minerals exploitative field in Binh Dinh province and Vietnam as well Over 25 years of development, BIMICO was standing and increasingly asserted its position in the market

Implementing the equitization of Goverment, Binh Dinh Minerals Joint stock company was equitized by Decision No: 09/2001 QD-UB of The people's committee of BinhDinh province dated January 8, 2001

 Vietnamese Company’s name: Công ty Cổ phần Khoáng sản Bình Định

 English Company’s name: BINH DINH MINERALS JOINT STOCK COMPANY

 Cable: BIMICO

 The Paid-in capital is 82,618,200,000 VND

 Total of employees: 261 persons

Picture 01: The Titanium Slag Factory of BIMICO

Implement decisions of the Prime Minister, Binh Dinh Minerals Joint Stock Company has been promoting the necessary procedures to cater for the listing of company shares on the stock market focus In December 28th, 2006, the Company’s shares were officially the first trading session at Ho Chi Minh City Securities Trading Center (now Ho Chi Minh City Securities Exchange) with the stock is BMC

Now the company is exploiting, processing and trading Titanium minerals The company's main products are Ilmenite, the main raw material used to produce titanium dioxide pigment (TiO2) and titanium metal Besides, in processing, the company also obtained other types of products such as Zircon, Rutile, monazite, Magnetic - a compound used in the ceramic tile industry, welding rods, titanium dioxide pigment manufacturing (TiO2)

The company's products always meet the requirement for the quality of domestic and foreign customers Ilmenite ore with min 52% TiO2, Zircon fine powder having a minimum of 65% ZrO2, Rutile of 87% TiO2, monazite of > 57% REO and Magnetic of > 60% Fe3O4

In January 2009, the Company has completed construction and officially put into operation Binh Dinh Titanium Slag Plant with the investment of 97 billions VND This is an investment project to enhance significantly the value added of products, increase production efficiency, saving resources, extending the life of the mine, also in line with the planning of the Nation about the exploration, exploitation, processing and using of titanium ore period 2007-2015, the development orientation to 2025 The factory has been producing two products which are titanium slag ≥ 92% TiO2 and iron alloys with ≥ 98% Fe to meet export standards for markets as: Japan, Korea and China

2.1.2 Organizational structure (please see more Appendix 1 in page 74)

Bimico’s organization structure is including:

 Board of managers : 5 members

 Board of controllers : 3 members

 01 Diretor and 01 Vice-director

 Mining, processing and trading in Titan ore and others mineral ores

 Checking and analysing the quality of kinds of mineral ores

 Activities which is supporting mining (except survey, oil exploration)

 Trading in materials, equipments which used in manufacturing and processing mineral ores

Picture 02: Torsion axle system to exploit titanium

2.1.4 Business and production results period 2006 - 2010

2.1.4.1 Main products of Binh Dinh Minerals Joint stock company

Table 2-1: Main products of BIMICO

Tonne/year

1 Ilmenite TiO2 : 52%min; Fe2O3 : 13% max; 70,000

FeO : 30%min, Cr2O3 : 0.05% max

6 Titanium slag

TiO2 : 90% min; ZrO2: 2.0%max SiO2: 2.0%max; P: 0.03%max S: 0.03%max

12,000

Resource: Reports of BIMICO

2.1.4.2 Revenue, quantity

Table 2-2: Revenues and quantities of years from 2006 to 2010

Total revenue 1,000đ 52,758,512 112,729,351 130,166,740 101,943,046 123,941,734 Revenue from

Export products ton 42,428 57,340 61,282 50,359 42,892

- Ilmenite ton 41,743 55,015 57,766 48,261 39,674

- Monazite ton 135 237 436 344 360

Profit before tax 1,000đ 20,257,720 49,565,992 51,229,715 25,722,376 29,856,363 Profit after tax 1,000đ 19,165,937 43,267,356 46,611,150 21,618,370 23,259,547

Resource: Reports of BIMICO

2.2 Internal Analysis of Binh Dinh Minerals Joint-Stock company

2.2.1 Administration

2.2.1.1 Planning

The company's forecast is accurate, so performance result is not different

much from the plan (see Table 2-2)

Table 2-3: Comparision performance result with the plan of 2010

Items Unit Planning Performance Differance Rate (%)

Resource: Report of performing and planning in 2010 of BIMICO

Table 2-3 shows that there is not much different between plan & performance that the difference of total revenue between them is 3.94 billions (rate 3.28%) the difference of profit before tax is 1.85 billions (rate 6.61%)

2.2.1.2 Organization structure

Organization structure has not yet been clear about mission and rights of departments and sections belong to Company Management work of each division has still operated separately, not completely unified Departments are growing with staff numbers increasing, but can not avoid the cumbersome that makes management costs higher

2.2.1.3 Leadership

The leadership function has been done relatively well The capacity of the leadership team is highly qualified and well experienced Besides, there are some leaders with the ability not yet good, lack of enthusiasm

Working morale of the staffs have been very good Especially in the last three years, the income of employees increased compared with the previous years This has stimulated the ability to work as well as a long-term adherence to the company The entire employees has got determination, effort, to promote the implementation of the strategy that outlined

2.2.1.4 Controlling

The control of quality, financial, sales, inventory, expenses, analyze changes, payoffs are well implemented However, some new products have not yet determined the norm of input materials to calculate the exact cost, this thing affects the revenue and profitability of Company

2.2.2 Marketing activities

Marketing is only a group belongs to the company general department, not a separate marketing department yet The market reseach has not been done regularly Marketing activities are still passive, no any strategy for short-term and long term

2.2.2.1 Products

Categories: BIMICO’s products are diversity that meet increasingly

diverse needs of customers BIMICO has seven kinds of products

Quality: When reffering to BIMICO, the consumers often think of the

quality It is also a big advantage that the Company has achieved after years

of effort BIMICO always controlls strictly the inputs and outputs of products to ensure standards of quality, weights and types

Package: Due to the nature of the mining industry with a large output, so

most of the outputs (80%) are sold in bulk (loading in bulk to the ship) for the following products: Ilmenite, Pig iron The remaining products such as zircon, rutile, monazite, Magnetic and Titanium slag must be packaged which are supplied from domestic manufacturers Currently, there are many local and abroad companies providing packaging in markets, so the Company is not under pressure of price, payment terms, delivery…

2.2.2.2 Price:

The prices of most of products of BIMICO, been processed not crude mineral, are often at relatively high Determining the selling price is basically calculated on product cost, product quality and income of the target market Simultaneously the company also adjusts prices according to fluctuations in market, supply - demand and customer tastes research to make a decision on price

Currently, there are many competitors in the country and abroad, different competitors for each different item The company's competitors most often undervalued so the company also faced many difficulties as to fix

a price of product Besides, with the motto of serving many customers, so in Company’s strategies Company should review the pricing strategy

2.2.2.3 Distribution

Domestic market: Due to the particularity, the demand of using of

company’s products in dosmestic market is low (about 5%), so the company has not yet paid much attention to development the domestic market

Abroad market: At present, company’s products have been being

exported to Japan, Korea, China, EU and meet customers’ requirement

Table 2-4: Revenues of export from 2006 - 2010

Total revenue 1,000đ 52,758,512 112,729,351 130,166,740 101,943,046 123,941,734 Export revenue 1,000đ 51,063,463 110,181,471 126,422,494 87,819,046 116,008,590

Resource: Reports of BIMICO

2.2.3 Personnel Operations

BIMICO is using two forms: regular employees and seasonal employees

 Regular employees: work as per the labor contract

 Seasonal employees: employees are hired per season

Table 2-5: Structure of employees by age

Resource: Reports of BIMICO

Qualifications: the company has a team of qualified, skilled, experienced

employees Especially, the age from 31 to 45 is fairly large This is a young labor force which is trained and associated carefully with over 45 ages which accumulated more experiences and started to promote their high ability

Table 2-6: The structure of labor qualification

Resource: Reports of BIMICO

Training: the company has paid attention and performed many activities

such as sending engineers to participate in training abroad courses and continuing to open the professional training and skills for workers

Allocation of labor: the Company has a reasonable distribution, persons who

have graduated universities, colleges holding management positions in the Company, remaining of secondary degree, workers allocated to the production sections

Recruitment: based on relationships rather than professional capacity

Therefore, it takes costly and time to retrain

Policy on wages, welfares:

 Wages: In recent years, along with changes in wage policy of the State,

meanwhile, business activities of companies should be more effective there is a big change in wages

 Welfares: the Company has implemented many welfare policies: health

and social insurance and tourist, annual bonus, etc… for all employees

 Simultaneously, the Company also encourages employees learning to improve qualifications and professional development by funding the tuition for courses of planning the human resource

2.2.4 Financial activities

Analysis of liquidity over the years:

Table 2-7: Liquidity from 2008-2010

Current assets / Current liabilities

Fast solvency ratio = (Current

Assets-Inventory) / short-term debt

The ratio of debt / capital = total debt / total

capital

Resource: Financial reports in years 2008, 2009 and 2010 of BIMICO

BIMICO has good ability for the payment short-term debt, but poor for fast solvency (proven inventory of BIMICO has gotten a high proportion of total assets) The ratio of debt to capital in 2010 increased in comparation with 2008 and

2009 The ratio of long-term debt in 2009 and 2010 increased compared to 2008, indicating that the risk of long-term liquidity in 2009 and 2010 higher than in 2008

Analyze asset turnover rate:

Table 2-8: Asset turnover

Average receivable period = Receivable

accounts * 365/Revenue

Turnover of receivable accounts = 365 /

average receivables period

Resource: Financial reports in years 2008, 2009 and 2010 of BIMICO

Asset turnover rate of BIMICO in 2009 compared to 2008 decreased because

of the investment in machinery and equipment to develop in the future Asset turnover improved in 2010 compared to 2009 It can be said of the financial situation stabilized somewhat in 2010 than in 2009

Analyzing the profitability ratio:

Table 2-9: Profitability

Return on total assets = Net profit / total

assets

Resource: Financial reports in years 2008, 2009 and 2010 of BIMICO

The profitability ratio of BIMICO in 2010 was lower than in 2008 and 2009, which reviews the financial performance of the Company in 2010 is not improved by the influence of the world economic recession

Ability to raise capital:

BIMICO is able to raise finance through bank loans, or issuing shares to shareholders The loans for BIMICO are not difficult for business by effectively ensuring credibility in payment

In short, the company's finance has been security and strong, so the

Company has been continuing to invest the machineries and equipments to supplement for minerals deep processing line

2.2.5 Productional activities

2.2.5.1 Supply of raw materials

Ore raw materials exploited by companies in the mining granted by the Ministry of Natural Resources and Environment The Mining lisence under Decision No: 276/GP-BTNMT dated 25/02/2008 and Decision No: 418/GP-BTNMT dated 10/03/2011 of the Ministry of Natural Resources and Environment granted for Binh Dinh Minerals Joint stock company for mining minerals at South of De-Gi, with an area of the mining is 73 ha and 150 ha Minerals allowed for exploitation: sand minerals of coastal and heavy minerals ore (including minerals such as ilmenite, rutile, zircon, monazite ) Mining location: Cat Thanh commune, Phu Cat District, Binh Dinh Province Mineral Reserves are licensed: 185,715 tons and 334,597 tons

After about 15 years, when complete exploitation of the above mentioned mines, the Company would continue explorate in other mines in the province

or the country According to Decision No 104/2007/QD-TTg dated 13/7/2007 of the Prime Minister on Approval of plan for exploration, mining,

processing and use of titanium for the 2007-2015 period and orientation to

2025, the reserves of Vietnam titanium ore, including ilmenite ore forecast identified approximately 34.5 million tons in which reserves have been determined from the above C2 level about 14 million tons (41%), natural resources forecast of about 20.5 million tons (59%)

Apart from above raw materials, the Company also buys actively materials, auxiliary materials and other additives from China and at home for using in the minerals processing such as coal, coke, asphalt, electrical pole…

2.2.5.2 Production

The company produces products in accordance with the process to ensure

the quality for the aboard and domestic markets (please see Appendix 2 and 3

in page 75 and 76)

2.2.5.3 Production capacity

Currently BIMICO are using the equipments with capacity as follows:

 15 most modern equipment lines for Titanium ores exploited in comparison with the same sector companies operating in the country, with a total capacity up to 144,000 tons of raw ore per year (800 tons per line per month x 15 lines x 12 months)

 One line for processing products with a capacity of 70,000 tons of ilmenite per year

 One line for processing monazite, rutile and Magnetic with capacity of 4,000 tons per year

 One line for processing Zircon flour with capacity of 2,500 tons per year

 Two furnaces for processing Titanium slag with capacity 6,000 tons/year and 3,500 tons pig iron/year

2.2.5.4 Quality control

BIMICO has controlled quality from raw material input and material ore Materials before putting them into manuafacturing and finished products will

be carefully checked by KCS department Therefore, the company ensures the quality of products to market

2.2.6 The Internal Factors Evaluation matrix (IFE)

Table 2-10: Internal Factors Evaluation matrix (IFE) of BIMICO

importance

Classification Important

points

6 Employees with qualified, highly

skilled and experienced; good policies

to encourage the study and raise the

10 Product’s research and development has

been not effective

12 Shortcoming in collecting market

 Strengths: The company has been licensed mining by the State, thus

ensuring the active material for long-term stable operation; after 25 years

of operation, products of the Company has made a reputation with customers from Japan, Korea, China and the EU recently, so there are

strong brands in overseas markets, modern production technology to ensure meeting the requirements of product quality more and more increasing from customers Besides, the company’s employees with qualified, skilled, highly experienced and policies to encourage for improvement the professional qualifications also contribute to the strength of BIMICO

 Weaknesses: Besides the strengths, BIMICO still has some weak points

which have important effects on the ability of the business operation To increase the competitive position, BIMICO should note to overcome weaknesses as: administration activities, advertising, market information collection, research and development of new products, pay attention to the local market to ensure that BIMICO will develope rapid, strong, synchronous and unshakeable

2.3 Analysis of the environmental factors that effect on the activities of Binh Dinh Minerals Joint-Stock Company

2.3.1 Macro environment

2.3.1.1 Economics factors

Vietnam economic has been growing strong and stability, the growth is high, the physical and spiritual life of the people is more and more improved The Government has had the appropriate policies and mechanisms to encourage enterprises to be active, dynamic, creative and independent in production, making it convenient for all activities of the enterprise

In addition, the global economic regression has affected seriously the Vietnam economy in general and the businesses in the Titan Association in particular The prices of raw materials: electricity, gas, oil, coal, iron , steel, construction material, machinery, consumer goods, increase high, so the production and business operations of enterprises has been not effective, and many companies have operated moderately or been lossed

The monetary tightening by the government during the period of the global economic regression, together with the interest rate rising have lead to lower capital, projects with delayed investments or completed projects have not yet been under production or inefficient production

The local government gave the license to exploit taking all minerals for the units which they have had not enough abilities, especially the professional capacity of mining, so they did not invest devices and technologies suitable for exploitation This thing created an unfair competition with the business focusing investment in mining, processing and especially for deeply processing of minerals

Costs for compensation, site clearance and environmental re-creating are higher and higher Moreover, asking the businesses contribute funds to support locals besides to the State budget too much, but the firms have to exploit in areas with low heavy minerals So, the economical efficiency of production is low

2.3.1.2 Government and law factors

The political situation in Vietnam is stable Vietnam is improving the business environment: policies to encourage the development of economic sectors, administrative reforms, continuing modification and supplement the foreign investment law, environmental law, mineral law, land law, business law, value-added tax law… for suitability with the domestic business environment as well as provisions of international treaties

But now, our legal system has still lack specific guidelines, it has not yet been realizable, the lack of reality, especially the environmental law, mineral law Administrative procedures are cumbersome, regulations are reciprocal overlap and management responsibilities are not clearly These things have been impeding the activities of the businesses

Our consciousness in the law enforcement is not good, especially the indiscriminately mining status, this thing have made increasing the pollution

and impacted significantly on the natural environment The Government approved too many projects of titanium slag in excess the planning of the Prime Minister Policies for encouragement the investment in deeply processing have not yet been suitable with the objectives set out The license giving for the exploration and exploitation minerals for the businesses, which have many capacities, experiences and law compliance, still faces many difficulties and barriers Preventing the export of crude ore has not yet been effective, lack of coordination between local governments

Regarding the export tax for titanium slag, the Government adjusts drop

by drop: from 18% down to 15% and recently it is 10% This thing was ineffective in support and orientation for businesses which they really want

to do well and do the right the titanium deep processing policy of the State

2.3.1.3 Social factors

The Company has settled thousands of local workers in mining to have the stable jobs and incomes to ensure the life and social security The Company has also been contributing to people's lives in mine area have changed such as there are roads, electricity, schools and medical stations through investment in infrastructure construction

2.3.1.4 Natural factors

In the years 2008-2010, there were storms, tropical low pressures, hails, floods and cyclones in many localities in the country They caused great losses of lives and properties Binh Dinh could not avoid the natural clamities and the Company's production was affected much

Exploitation Environment and minerals processing have been making the pollution more and more serious, for example the long-term use of chemicals has caused serious pollution of land and it will also cause damage to plants and animals, for human health in the future Leaders and employees of the BIMICO also aware of this problem, so they have had step by step the plan

in reducing the impact of production, which cause environmental pollution

more effectively

2.3.1.5 Science – technology factors

The strong development of science and technology, especially the mining engineering and minerals processing have been contributing positively to increasing the output and quality of Titan products Therefore, in the competitive environment which is increasing more and more fierce, competitive advantage will belong to the enterprise that they know to apply new technologies for creation the new products and services to meet the customers’ diverse needs

Now, the technology for Titan slag refinement applying in Vietnam is one stage technology It has the advantages of low investment, simple equipments and convenient for the organization of production However, the costs of waste matters processing and power are high, the product quality is difficult for improvement The Company is also aware of this problem and if

in the future BIMICO continues to invest for production of titanium slag, the Company will select the two stages technology This technology has high investment capital, but the environmental remediation costs, production costs

and environmental impact are greatly reduced

2.3.1.6 International context

Vietnam joined WTO It will create many business opportunities for Vietnam enterprises such as: the market for use of minerals products is expanded; input materials are reduced taxes; approach to advanced technologies; improvement of management; attracting investment, etc The powerful integration of Vietnam in financial field and the stock market has also become an important channel so that Vietnam businesses call for investments and idle funds in public ODA is also an important contribution for the growth, the economic and social development and poverty reduction

2.3.2 The External Factors Evaluation matrix (EFE)

From information on the macro environment which was analyzed in the 2.3.1, we set the EFE Matrix of Bimico as follows:

Table 2-11: External Factors Evaluation matrix (EFE) of BIMICO

No The external factors Relative

4 Demand for Titan and Titan

products are more and more

increasing

7 Law system is adjusted in line with

the actual situation

8 Population grows; population

structure is female more than male;

a high proportion of young people

10 Threats from natural disasters,

environmental pollution and

diseases

11 Requirements of consumers is more

and more increasing and diversity

12 Requires deep processing of mineral

products from Titan

increasing of inputs costs, severe competitive environment, the dangers of environmental pollution, natural disasters and affecting of the economic slowdown , the Company also have many oportunities such as: very large potential market for titanium products, people's generally higher income… On the other hand, the political situation in Vietnam is very stable and the Government constantly improves the legal factors, and combat corruption resolutely and promote the administrative reform These advantages will contribute for the success of Bimico in the future Therefore, when formulating

strategies to 2020, Bimico should need to pay more attention to these factors 2.3.3 Micro environment

2.3.3.1 Competitors

Outlook: Up to now, BIMICO is facing to many competitors both at

home and abroad Each product of BIMICO has many different competitors, including very strong opponents

Identify the most powerful opponents such as:

The undeep processed products, such as Ilmenite, Rutile, Magnetic, … there are companies as following:

 The Ha Tinh Mineral and Commerce Company (short name: MITRACO)

Mitraco is a state-owned company belongs the People Committee of

Ha Tinh Province The form active of Mitraco is Mother model company,

it has many subsidiaries in many fields, including mineral exploitation and processing Mitraco has 30 member units, including 25 Home companies and 5 Joint venture companiesMitraco is not only a company with largest scale and organization of Ha Tinh province, but also one of the big company of the Central of Viet Nam Mitraco is a on track towards development company in order to establish a multi-sectoral group with strong economy

However, in recent years, Mitraco has not paid attention to the long term exploit planning, pushed the too fast pace exploitation, lead to the rapid exhaustion natural resources of Mitraco Up to now, if Mitraco has not an other mining licensed by the State, Mitraco will lose a competitive power in Titan mining This is also a lesson for the other mining companies

 The Thua Thien – Hue Mining Limited (one member) Company (short name: HUMEXCO)

Humexco is one of the leading companies in mineral mining and processing Titan in Vietnam, special in exploiting and processing Titan products such as: Ilmenite, Rutile, Monazite, Zircon, Zircon powder and Titanium slag… which meet the quality requirements of domestic and foreign customers The products of Humexco are used as inputs for many industries and are used widely in the production of bricks, pottery, glasses, paints, metallurgy and materials for many other industries

Humexco was established in 1983, including the system of 4 manufacturing plant was built in the Thua Thien – Hue province In recent years, Humexco have been researching continuously the exploited and processed technologies, development of high value products and seek

to expand the export market The achievements of those efforts were put Humexco to become into one of the leading Titan export companies of Vietnam Their products have been exporting to Japan, China, Malaysia and other Southeast Asian countries

The deep processed products such as Titanium slag, Zircon, Monazite, Iron Alloy, there are companies as following:

 HUMEXCO, MITRACO as mentioned above

 In addition, there is the Saigon – Quy Nhon Mineral Company (short name: SQC) SQC is a member of Saigon Invest Group (SIG) It has

invested to build a most modern and largest titanium slag plant in Binh