Business strategy of fujikura fiber optics Vietnam LTD in 2011-2015

FTTH: Fiber To The Home FTTx: Fiber To Everywhere FTTB: Fiber To The Building FTTO: Fiber To The Office FTTC: Fiber To The Center HDTV: High Definition Television VoD: Video on Demand DS

GLOBAL ADVANCED MASTER OF BUSINESS

ADMINISTRATION CAPSTONE PROJECT REPORT

BUSINESS STRATEGY OF FUJIKURA FIBER OPTICS

VIETNAM LTD

IN 2011-2015

Group : 7 Member : Trinh Xuan Quang

Chau Tuan Nguyen Quoc Huy Nguyen Huu Phuong Van Class : GaMBA01.C0310

Ho Chi Minh City, February 2012

ACKNOWLEDGEMENT

We would like to express our thankfulness to the Directors and the Faculty from Center for Educational Technology and Career Development (ETC) – Vietnam National University; ETC’s Southern Division and Griggs University for the arranging of a good study conditions In special, we would like to say thank you to all of teachers who gave us instruction, guidance and sharing your knowledge, experience then we can grow up after the class

We also have special thanks to the Board Management of Fujikura Fiber Optics Vietnam Ltd (FOV) as well as its related Sections for their provided relevant information, data and supporting to our Capstone

We understand that due to our lack of experience and limited information, limited time, our Capstone would have some shortcomings We would really appreciate all comments and proposal for improvement in order to make the Capstone become more applicable and considered as a good reference for FOV

The important is we have learned much through this capstone research So that we may able to have the good practicing and we believe that all the theoretical and practical business strategies withdrawn from this Capstone will bring us with success in our career

WORDS OF REASSURE

We affirm that the work of this Capstone is our own research and all the information and data used are true

Ho-Chi-Minh City, 5 th February 2012,

Group 7 - Class GaMBAC0310

LISTS OF ABBREVIATIONS

FOV: Fujikura Fiber Optics Vietnam Ltd

FTTH: Fiber To The Home

FTTx: Fiber To Everywhere

FTTB: Fiber To The Building

FTTO: Fiber To The Office

FTTC: Fiber To The Center

HDTV: High Definition Television

VoD: Video on Demand

DSL: Digital Subscriber Line

ADSL: Asymmetric Digital Subscriber Line

PTOs: Public Telephone Operators

NTT: Nippon Telegraph and Telephone Corporation

FPT: Financing and Promoting Technology

VNPT: Vietnam Posts and Telecommunications Group

EFE: External Factors Evaluated

IFE: Internal Factors Evaluated

IE: Internal – External

SWOT: Strengths – Weaknesses – Opportunities – Threats

SPACE: Strategic Position and Operational Evaluation

FS: Financials Strengths

CA: Competitive Advantage

ES: Environment Stability

IS: Internals strengths

QSPM: Quantitative Strategic Planning Matrix

TAS: The number of attraction

MVCV: Mission – Vision – Core Value

R&D: Research and Development

SONET: Synchronous Optical Network

ATM: Asynchronous Transfer Mode

GE-PONs: Gigabit Ethernet Passive Optical Network

V-ONU: Video – Optical Network Unit

AON: Active Optical Network

GPON: Gigabit Passive Optical Network

VDC: Vietnam Data communication Company

ROE: Return on Equity

LTEC: A Factory of Fujikura Electronics Thailand

MOQ: Minimum Order Quantity

G-FPS: Global-Fujikura Production System

H: Half (year)

Q: Quarter (year)

TPM: Total Productivity Maintenance

MTBF: Means Time Between Failure

HR: Human Resources

C&B: Compensation and Benefit

TABLE OF CONTENTS

ACKNOWLEDGEMENT II

WORDS OF REASSURE III

LISTS OF ABBREVIATIONS IV

TABLE OF CONTENTS V

LISTS OF TABLES X

LIST OF FIGURES XII

FOREWORDS 1

CHAPTER I: LITERATURE REVIEW 5

1.1 Overview of the business strategy of the organization: 5

1.1.1 Concept: 5

1.1.2 Strategic Management: 7

1.1.3 The strategies at business unit: 7

1.1.3.1 Focused growth strategy: 7

1.1.3.2 The competitive strategy for business unit placement on the market share: 8

1.1.3.3 The competitive strategy according to M.Porter: 10

1.1.4 The model of competitive strategy by M.Porter: 10

1.2 Strategy formulation process: 11

1.2.1 Identify business tasks: 12

1.2.2 Assess the external environment (O / T:) 13

1.2.3 Enterprise Internal Assessment: 14

1.2.4 Analysis and selection strategies: 14

1.2.4.1 Strategic Analysis: 14

1.2.4.2 Selection of typical strategic: 14

1.2.4.3 The tools to create business strategy: 15

1.3 Three stages of strategic business forming: 15

1.3.1 Period of data collection and systematics information: 15

1.3.1.1 External Factor Evaluation matrix: 15

1.3.1.2 Competitive Image Matrix: 16

1.3.1.3 Internal Factor Evaluation Matrix: 16

1.3.2 Combination Phase: 17

1.3.2.1 SWOT Matrix: 17

1.3.2.2 SPACE Matrix 18

1.3.2.3 Grand strategy matrix 19

1.3.3 Decision stage: 20

1.3.3.1 QSPM Matrix: 20

1.3.3.2 Five Forces model: 21

CHAPTER II: REAL SITUATION OF FUJIKURA FIBER OPTICS VIET NAM LTD 22

2.1 The overview of Fujikura Fiber Optics Viet Nam Ltd (FOV): 22

2.1.1 General introduction: 22

2.1.2 Establishment and development history: 23

2.1.3 Organization: 24

2.1.4 Mission – Vision – Core Value: 26

2.1.5 FOV’s products: 27

2.1.6 Overview of current business operation status: 31

2.2 Analysis of the effects that could impact to the business 33

2.2.1 General view of the worldwide economic status and the Fiber Optics components sector in particular 34

2.2.2 Status of the FTTH market 36

2.2.3 General situation and the strategic orientation of Fujikura group 40

2.2.4 Competitors 48

2.2.5 The Porter’s Five forces: 53

2.3 Internal environment analysis of FOV: 57

2.3.1 Production Control 57

2.3.2 Marketing/Product Distribution 58

2.3.3 Human resource 59

2.3.4 Quality Control 61

2.3.5 Management System 63

2.3.6 Financial status 64

CHAPTER III: BUSINESS STRATEGY FOR DEVELOPMENT IN THE PERIOD OF 2012-2015, DEVELOPMENT DIRECTIONS UNTILL 2020 69

3.1 Strategy analysis and selection 70

3.1.1 The External Factors Evaluation Matrix (EFE): 70

3.1.2 The Internal Factors Evaluation Matrix (IFE): 71

3.1.3 The internal – External Factors Matrix (IE) 72

3.1.4 The competitive Profile Matrix (CPM) 73

3.1.5 Analysis by the SWOT Matrix: 74

3.1.6 SPACE Matrix 77

3.1.7 The Quantitative Strategic Planning Matrix (QSPM) 79

3.2 Strategy implementation: 81

3.3 Data analysis focus to the preparation for strategy: 82

3.3.1 FOV’s sales and profit plan until 2015: 82

3.3.2 The image of deploying low-cost material (localized material) 84

3.3.3 Overview of improvement activities to reduce the processing cost and improve product quality: 88

3.4 Solutions for the strategy until 2015: 88

3.4.1 Low cost strategy: 88

3.4.2 New product development strategy: 94

3.4.3 Human resource strategy 94

3.5 Development directions until 2020: 95

CONCLUSION 97

BIBLIOGRAPHIES 98

WEBSITES 100

LISTS OF TABLES

Table 1.1: SWOT Matrix

Table 1.2: Grand strategic matrix

Table 2.1: FOV’s Function of each section

Table 2.2: Fujikura’s Business results in recent 5 years

Table 2.3: Fujikura’s Business Target

Table 2.4: Data of Market share for the Optical Connector

Table 2.5: Comparison between FOV and LTEC (FOC) Thailand

Table 2.6: Data of FOV’s production quantity from 2007 to now

Table 2.7: Data of FOV’s suggestions

Table 2.8: FOV’s Cash Flow Table

Table 2.9: FOV’s operation results from 2007 to 2010

Table 2.10: FOV’s Financial Indicators

Table 3.1: EFE Matrix

Table 3.2: IFE Matrix

Table 3.3: Matrix of Internal and External Evaluation (IE)

Table 3.4: Matrix of the Competitive Profile (CPM)

Table 3.5: SWOT Matrix

Table 3.6: SPACE Matrix

Table 3.7: QSPM Matrix

Table 3.8: Table of Selected Strategy

Table 3.9: Table of Types of Domestic Material

Table 3.10: Table of Cost Reduction by Domestic Purchasing

Table 3.11: Table of Material Price Comparison

Table 3.12: Table of Material Delivery Status Comparison

Table 3.13: Table of FOV’s Sales and Profit Target until 2015

LIST OF FIGURES

Figure 1.1: Image of Space Matrix

Figure 2.1: FOV’s Organization Chart

Figure 2.2: Picture of patch cord

Figure 2.3: Picture of ODF product

Figure 2.4: Picture of coupler product

Figure 2.5: Picture of FA products

Figure 2.6: Picture of MS product

Figure 2.7: Picture of Splitter Module product

Figure 2.8: Picture of Holley product

Figure 2.9: Picture of Closure product

Figure 2.10: Picture of Shuffle product

Figure 2.11: Picture of Cleaner product

Figure 2.12: Chart of FOV’s Sales & Operating Income

Figure 2.13: Chart of Global Market forecast of Optic Connector/Slice

Consumption value

Figure 2.14: Image of Total FTTx Solution

Figure 2.15: Image of Broadband Line Market Shares in 2011

Figure 2.16: Image of Fujikura’s change in Net Sales by Factors

Figure 2.17: Image of Fujikura’s change in Operating Income by Factors

Figure 2.18: Chart of Fujikura’s Telecommunication Segment – Net Sales and Operating Income Margin

Figure 2.19: Chart of Fujikura’s Target – Net Sales and Operating Income

Figure 2.20: Chart of Fujikura’s Telecommunication Division Target – Net Sales and Operating Income Margin until 2015

Figure 2.21: Chart of Market share for the Optical Connector

Figure 2.22: Image of Fujikura Market expansion for FTTH

Figure 2.23: The Porter’s Five Forces Image

Figure 2.24: FOV’s G-FPS activities flowchart

Figure 2.25: Chart of Qualification background of FOV’s Employees

Figure 2.26: Chart of Seniority Status of FOV’s Employees

Figure 2.27: Chart of FOV’s Customer Claim status 2007-2011

Figure 2.28: Chart of FOV’s production quantity from 2007 to now

Figure 3.1 : Space Image of FOV

Figure 3.2 : FOV’s Sales plan until 2015

Figure 3.3: Chart of Ratio of Domestic Material

Figure 3.4 : Chart of Material Delivery Status (to FOV)

Figure 3.5 : Chart of FOV’s G-FPS Activity Result in Splitter Line

FOREWORDS

Nowadays diversely of the communication means has been helping people to narrow the geographical distance, closer together The gap of the space is not important anymore thanks to the communication systems such as telephone, internet, email… The communication technologies, the telecommunications become familiar to everyone Boom in information technology have opened a new era for the whole world

In the trend of global integration, the internet is an indispensable tool to support everyone in most areas of life Currently, the existing technology of telecommunication network has begun to come to the limit when facing difficulties

in providing simultaneously high-quality service with greater data transfer speeds Along with the development of Nano technology, semiconductor technology and optical - electronic technology, FTTH (Fiber to the home) (or FTTx: Fiber to everywhere: building FTTB, office FTTO, center FTTC…) networks are beginning

to deploy and develop very quickly led by high electronics industry development countries

FTTH is a new network structure that uses fiber optics for transmission so that it may provide users a network with bandwidth, high data transfer speeds and with very good quality FTTH network capable of providing the number of subscribers is much greater than the normal internet, easy to extend the network and allows subscribers simultaneously using communications services in high speed, such as television with high-resolution HDTV, VoD with the lower cost of infrastructure investment, the supporting devices is also less costly

With that superior features, fiber optic network that is currently FTTH has become one of the strategic products of the companies providing telecommunications equipment with the harsh competition from many companies, many of the product lines with different features, more convenience for installer as well as consumers

Fujikura Ltd (Japan) is one of five manufacturers of components leading telecom world Fujikura's main customers are the largest telecommunication corporations in the world such as NTT, Acatel, Verizon Communications, focusing on major markets like U.S., Japan and some European countries, South Korea However, in the current business environment and needs of the market, many national governments are beginning to deploy FTTH system, especially the emerging economies like India, China In this context, Fujikura Ltd is beginning to expand markets to these potential developing markets In Vietnam, FPT was at the forefront

of the application of FTTH network and VNPT has been starting to deploy FTTH networks, too Vietnam is one of the high population countries and the speed of information technology development in the world is so rapidly so that Vietnam is also considered one of the potential markets Unlike the current market, to enter these markets, in addition to ensuring the quality of products, the competition in selling price is one of the prerequisites requirements, should be considered carefully Consequently, Fujikura should consider business strategy to be able to provide more options to the market, with prices more flexible in order to create competitive advantage to be able to enter the potential markets with energy population accounting for 35% world's population (1.3 billion in China, 1.2 billion

in India)

Fujikura Fiber Optics Vietnam Ltd (FOV) is one of the main manufacturers of Fujikura Ltd., belong to telecommunication division with the key products of the current products are used for the FTTH system (passive components) FOV’s model is import – processing – export with 100% original products aboard With the request from parents company (Fujikura Ltd.) as well as business policy in expanding markets, FOV need to build the business strategy in the short term, long term investment to achieve the expectations of Fujikura Ltd Japan

Our group has 4 members:

- Trinh Xuan Quang – Vice President – Sai Gon Tabaco Company

- Chau Tuan – Chief Accountant – Sai Gon Tabaco Company

- Nguyen Quoc Huy – Vice President – Vietnam Gas Corporation

- Nguyen Huu Phuong Van – Division Manager of Quality Assurance and Planning Division – Fujikura Fiber Optics Viet Nam Ltd

After discussing about the markets, the needs of the company and review the ability

as well as strengths of individual team members, we decided to select the theme of

our capstone project: “Business strategy of Fujikura Fiber Optics Viet Nam in 2011-2015” with the desired that it can be an orientation outlines for specific

strategies for the company in coming years to reach the expectations, business goals

of the Fujikura Ltd in general and the Fujikura Fiber Optics Vietnam Ltd (FOV) in particular

To carry out this capstone project, our team conducted research on the telecommunication markets, especially the group of products produced by FOV (largely focus on products for the FTTH market), learning the position of Fujikura

in the worldwide market, business strategy and direction of the Fujikura’s development as well as FOV company Since then, assess the situation and offer specific solutions to map out directions for FOV until 2015, then 2020

Objectives of the research

The Capstone focused on researching the following issues:

- Basic theories about strategy and strategy management

- Analyzing useful models used for the implementation and selection of the strategies

- The real situation of Fujikura Fiber Optics Vietnam and the overview in the Fujikura Ltd (Japan) in other to have wider image

- Analyzing internal and external factors that affected the company’s strategy implementation phase

- Select suitable solutions for setting up the development strategy of Fujikura Fiber Optics Vietnam

Beneficiary, scope and mode of researching:

- Beneficiary and scope:

The capstone focuses on researching strategic activities for FOV’s products and business then proposes solutions and suggestions in the future

- Mode of researching:

The capstone uses two main form of information: primary and secondary information The secondary information was collected from different sources, but mainly from Fujikura’s reports, the researching data/information in the market of consultant company as well as open resource on the internet

CHAPTER I: LITERATURE REVIEW

1.1 Overview of the business strategy of the organization:

1.1.1 Concept:

Currently in the business world full of competitions, the concept of “strategy’ is increasingly research and development, but all are concentrated in four main categories: plan, model, location, and vision According to these perspectives, the strategy is:

- “A unified plan, comprehensive and coordinated, is designed to ensure that the basic objectives of the business are successful implementation" (William

F Lawrence R Jauch & Gluek (1989) Business Policy and Strategic Management)

- "Determining the long-term basic objectives of the enterprise, the action plan together with the allocation of resources necessary to achieve those objectives"

(http://www.news.harvard.edu/gazette/2007/05.17/27-chandler.html January 10th, 2010)

- "Business strategy of a company is a general program of action towards the realization of the objectives of the enterprise"

Business strategy is not aimed specifically outlined how to achieve these goals because it is the duty of a multitude of assistance programs, the strategy functions It only creates the mindset guiding framework for action

Business strategies are usually defined in terms of three levels:

 Corporate level strategy: Identify and define the goals, objectives and business operations of the company, create policies and plans to achieve the basic objectives of the company

 Business level strategy: Determine the choice of specific products or types of markets for their own business activities within the company, determine how each business unit will attempt to complete its objectives to contribute to the completion of company goals

 Functional strategy level: Identify solutions and plans for each business area Around the concept of business strategy, there are some closely related concepts:

 Mission / work report: Report long-term goals that can serve the business mission of the company with products and services that the organization provides to customers which help distinguish between this organization to other one It describes the values and priorities of the organization, determine the general direction of development organization’s objectives

 Annual goals: Annual milestone that organizations must achieve to attain long-term goals It is given in the form of the achievement of management, marketing, finance/accounting, production/operations, research and development and information systems Annual goals are important in the strategy implementation phase

 Long-term objectives: is identified results that an organization seeks to achieve in pursuit of their duties Long-term goal is more than one year It must be challenging, measurable, consistent, logical and clear It is set for the whole company and for each department Long-term goals are important during setting the strategy

 Policies: is means to achieve objectives, which are guidelines for making decision and implementation situations often repeated or cyclical situation The policy is important in implementation strategy phase

 The opportunities and challenges: These are the impact of external environmental factors, outside the control of the organization and may be beneficial or harmful to the organization

 The strengths and weaknesses: This is the impact of internal factors of the organization, within the control of the organization It is determined in relation to the competitors

1.1.2 Strategic Management:

Role of Strategic Management:

Strategic management process consists of three phases: formulating strategy, implementing and evaluating strategies Strategic formulation includes the development of strategic business tasks, identify opportunities and threats to the organization from outside factors, show the strengths and weaknesses though inside factors of business, set long term goals, generate alternative strategies and select specific strategies to pursue

In the business environment conditions that are volatile and complex, strategic management activities will help management always take the initiative before the change of environment: take advantage of the opportunity and avoid the threat Since then, management will be able to create solutions adapted to the change of business environment

Strategic Management does not only help enterprises link their functions effectively but also use better use resources which leads to success, make profits

of business in the future

1.1.3 The strategies at business unit:

1.1.3.1 Focused growth strategy:

Each company's strategy is applicable to the business unit level However, at the business unit, focusing growth strategy must be first paid attention due to the focus of this strategy is market and products

This strategy is primarily aimed at improving the competitive position of companies with existing products on the basis of enhanced marketing

activities or changes the existing market strategy without changing the product This type has three main strategies:

 Market Penetration: Search market that increase market share for products and services currently available through marketing efforts

 Market Development: Provide products and services available to new areas

 Product Development: Increase sales by improving, changing products and services

1.1.3.2 The competitive strategy for business unit placement on the market share:

At the same company but each business unit has different market share position in the market

a) The market-leading business

 Expanding strategy to expand market demand: Search for a new geographical area for sales, find new customers, develop new uses, to encourage use of more products

 Defense Strategic: helps business unit market leader kept his position on the current market The market leader always be threatened by other competitors, especially those units with a challenging position in the market

So business units have to defend against the constant attacks of competitors

 Expansion market strategy: By buying back or acquired the business unit's smaller competitors, attack to the size of market share of major competitors b) Business units with market challenges:

Attack of the business unit leader and other competitors to increase market share or business may be parallel to the competitors and do not touch the opponent competition behind To implement strategic attack, the business units need to perform the following steps:

 Define the competitors to attack and strategic targets of attack

 Choose the appropriate attack strategy: attack the front, flank attack, encirclement attack

c) Business unit following the market:

In this case, the business unit did not want to deal with market leader or market challenger because of insufficient resources, fear of loss, cost .Therefore this unit should seek to avoid by following rival market leader through simulated strategic:

 Totally simulate products, distribution methods, advertising and marketing activities, supplying products to target markets with low price sensitivity

 Simulate some core content in the mixture marketing of competition leading and holds a number of different about packaging, pricing, advertising, sales network

 Ssimulate with improvement to adapt to market by relying on marketing mix

of market-leader for improvement to create distinctive marketing mix to

adapt to the needs and wants of the target market

d) Business unit hidden market

This business unit is always looking for a safe market segment or profitability market segment To be successful on narrow market segments, they often make the typical specialization strategy as:

 Specialization by the end users: Depending on the industry in which business hiding units selects one type of customers need to use the product or service

to serve

 Specialization by stages in the production process, product distribution: The business unit can choose the details, the composition of a finished product,

an additional item for this product

 Specialization by customers: the business unit can choose customer by demography to serve such as high income, medium income and low income customer or children, youths, adults…

 Specialization in sales area: Select a geographic zoning, such as domestic service, local market, regional market under the international markets

 Specialization in specific products: high quality, luxury or average

 Specialization by goods in each sector: according to one or a few items in the large industry

 Specialization in business services options that competitors do not offer

1.1.3.3 The competitive strategy according to M.Porter:

Michael E.Poter - Harvard University professor has launched the basic competitive strategy in book "Competitive Strategy" Porter's Five Forces model was first published in Harvard Business Review magazine in 1979 with the contents find out factors that make a profit in business This model offers competitive strategy to maintain or increase business profits

1.1.4 The model of competitive strategy by M.Porter:

According to M.Porter, specific strategies allow companies to get competitive advantage from three different facilities: difference, focus on key, towards the cost

b) The strategy focuses on key:

Under this strategy, the business unit to focus their attention on a narrow segment of the entire market The segment can be determined according to

geographic area, products and customers These segments were selected as attractive where there is no competition or rivals cannot meet needs and

wants of customers

c) Strategy leading low cost:

This strategy creates competitive advantage in two ways:

 The lower prices of competitors in the industry, to attract the target customers sensitive to price to increase total profits This is consistent with strategic business units of large scale, potentially reduce costs in the operation process

 Try not cut off completely price with the current market share and use cost tools to profit margins higher than the actual per unit of product sold The business that is successful with strategy of leading costs often have the following characteristics:

lower- Better ability to access capital for investment in production equipment It is also a barrier that many other companies cannot pass

 The capacity of product designed to increase production efficiency, for example, create a little detail with which to shorten the assembly process

There are high levels of production

 There are effective channels of distribution

1.2 Strategy formulation process:

Develop business strategies is the early stages of strategic management process Strategy formulation process includes four steps with different tools The performance analysis and use of appropriate tools are crucial in developing effective business strategies

1.2.1 Identify business tasks:

Duties are known as the declaration of the company mission to indicate the purpose, reason and meaning of the birth of the business exists, demonstrating social responsibility of business determining correct mission statement plays an important role for the success of the organization

The content of the mission statement often involves aspects such as products, markets, customers includes:

 Client: Who is a consumer of company products?

 Products and services: what are main products or services of the company ?

 Market: Where companies compete?

 Business philosophy: what are the beliefs, values and priorities of the business?

 Technology: Is technology is the top concerns of enterprises?

 Have interest in a matter of survival, development and profitability of the company have tied with the economic objectives or not?

Strategic business objectives:

The goal is the status, milestones, target the specific objectives that the company wants to achieve within a certain time

Define the goal is fundamental in establishment of strategic business planning of the business, depending on management practices that target is different implementations

In corporate governance, properly identifying the target plays an important role First target is the means to implement the company's goals through the identification and implementation effectively of a target in each stage from which long-term performance goals has been reach

1.2.2 Assess the external environment (O / T:)

This is a method of analyzing the macro environment to find out opportunities and threats to the business activities of companies in the market The external environment of an organization are the factors, forces, institutions outside of that business executives could not be controlled, but they affect the activities and results of operations of the The external environment can be divided into two levels: the macro environment, micro-environment

 General environment (macro environment) are the forces that affect the term strategy of the business such as economic, political, cultural, social

long- Environment sector includes micro forces such as customers, competitors, suppliers

In short, all the macro and micro factors have been affecting directly and indirectly in many different levels constitute opportunities or threats to the business activities of enterprises Therefore, analysis should assess the impact and ability to meet of current strategies to address the program's action strategy

in the future Analysis of external environmental factors will allow businesses to identify clearly what are the opportunities (O) that businesses can utilize and what are the threats (T) that businesses can face

Identify and assess opportunities and challenges from the external environment affected business will allow enterprises to build business tasks clearly, define long-term feasibility goal, design an appropriate strategy and suggest appropriate policies to achieve the annual target The analyzing of external factors is really hard to imagine such as the nature, intuition In strategic management, the researchers made two business tool that allows grading and quantification of environmental impacts to the operation of the business That is external factors evaluated matrix (EFE) and image competition matrix

1.2.3 Enterprise Internal Assessment:

Internal situation of the business is often judged by the functional areas such as Finance, Human Resources; Executive Management; Structure; Marketing; research / development, information technology

The analysis of the enterprise will allow identifying the strengths (S) and weaknesses (W) of the business Since then, the conventional business strategy

is selected to maximize the strengths and overcome weaknesses of the business Similarly in analysis technical of external factors, to quantify the internal analysis of business situation, people use "Internal Factor Evaluation matrix " (IFE)

1.2.4 Analysis and selection strategies:

1.2.4.1 Strategic Analysis:

Strategic analysis is the first stage of the process of strategic management

Meaningful tools, strategic analysis is a combination of analytical methods to make the evaluation of research results and predict the future of fundamental factors and conditions outside of the enterprise in terms of the ability to transform and develop

1.2.4.2 Selection of typical strategic:

Typical business development strategies including small strategies as:

 Strategy of Searching markets on a new area: To decide to develop new markets, enterprise need to pay attention to the opportunity, threatening

as well as the strengths and weaknesses of the business compared to other competitors in the market that enterprise want to grow, to consider the entering cost factor and to evaluate ability of market development

 Search new target market: strategies include finding the target group of completely new customers or existing in the area

 Find out the new value of the product: this is also the measures could lead

to finding a whole new market The use of new products may change its life cycle, so the market development strategy tied to business strategy

1.2.4.3 The tools to create business strategy:

According to Fred R.David, there are 3 stages to form strategic business and each stage used different tools

1.3 Three stages of strategic business forming:

1.3.1 Period of data collection and systematics information:

This stage summarizes the basic information has been collected and systematized to form the business strategy This phase uses three tools: EFE Matrix, Image Factor Matrix and IFE matrix

1.3.1.1 External Factor Evaluation matrix:

EFE Matrix is sequence set in 5 steps:

 Step 1: Make a list of factors play key role in industries in which enterprise are working in, including opportunities and challenges

 Step 2: Assess the importance of each factor on a scale from 0.0 to 1.0 (increasing degree of importance) with the total marks of elements equal to 1 Rates are based on the important business of the enterprise is active

 Step 3: Scoring from 1 to 4 for each factor with the degree of response of business with that element Point 4 is a good response Point 3 is the response above average Point 2 is the average response and the point 1 is the poor response

 Step 4: Determine the total score for each factor (by multiply numbers can be

in steps 1 and 2)

 Step 5: Determine the total number of points about the importance of business by the total number of points have been in Step 3

The highest total score is 4 and the lowest is 1 Average of 2.5 points The higher the score shows that businesses well respond to external factors

1.3.1.2 Competitive Image Matrix:

This matrix to identifies the major competitors of the business This matrix is

an extension of the EFE matrix with the importance of these factors, the significance of each factor score and total score is important to have the same meaning The difference between Competitive Image Matrix and EFE matrix

is some key elements that are also included for comparison The total assessment score of competitors will be compared to the selection of business model

1.3.1.3 Internal Factor Evaluation Matrix:

The IFE matrix also set in 5 steps :

 Make a list of inside key factors

 Assess the importance of each factor on a scale from 0.0 to 1.0 (increasing degree of importance) with the total score by a factor The relative importance based on the importance of the factor for an enterprise

 Regardless of these factors are strengths or weaknesses of the business

 Scoring from 1 to 4 for each factor with a score showing the internal characteristics of the business for that element Point 1 is the biggest weakness, point 2 is the smallest weaknesses, strengths, Point 3 is the smallest strength, is point 4 is the biggest strengths

 Identify the total number of important points for each factor (by multiply of the scores from Step 2 and Step 3)

 Identify the total number of points about the importance of the business (in total points from Step 4)

The highest total score is 4 and the lowest is 1, an average is 2.5 Some important points lower than 2.5 showed that business is weak internally, a higher score 2.5 shows business is strong internally

1.3.2 Combination Phase:

In this phase external environmental factors, internal factors will be selected, arranged and combined in order to make the feasible strategy This phase will use the matrix tool: strengths – weaknesses- opportunities - threats matrix (SWOT); strategic position and operational evaluation (SPACE) matrix and the grand strategy matrix

1.3.2.1 SWOT Matrix:

SWOT Matrix is a tool that combines the strengths (S), weaknesses (W), opportunities (O) and threats (T) to form four types of strategies:

 Step 1: List of opportunities, inside strengths, weaknesses within the cells of

the matrix and SWOT

 Step 2: Combine the inner strengths with external opportunities (SO)

 Step 3: Combine the inner weaknesses with external opportunities (WO)

 Step 4: Combine the strength inside to outside manner (ST)

 Step 5: Combine the weaknesses in the way the outside (WT)

SWOT matrix has been shown as bellows:

Table 1.1: SWOT Matrix

WO: Strategies based on their

ability to overcome the major points

of business to take advantage of

opportunities

(Threats) (T)

ST: Strategy based on the

advantages of business to

avoid the risk

WT: Strategies based on their

ability to overcome the major points

of business to avoid the risks

1.3.2.2 SPACE Matrix

SPACE Matrix shows what strategy an enterprise may to choose: Attack, caution, defense, or competition This matrix has the following meanings:

 FS: (Financials Strengths) - financial strength of the business

 CA: (Competitive Advantage) - The competitive advantage of enterprises

 ES: (Environment Stability) - The stability of the environment

 IS: (Internals strengths) - The power of the industry

To establish a SPACE Matrix should perform the following steps:

 Step 1: Select a group of factors present financial strength (FS), competitive advantage (CA), environmental stability (ES), and the power sector (IS)

Here are some criteria to be used on the spindle matrix SPACE

 Step 2: Determine the value +1 (Worst) to +6 (best) for each element of FS and IS, assign the value -1 (best) to - 6 (worst) for each element the ES and

CA

 Step 3: Calculate the average score for FS by adding the values assigned to the elements, and divide by the number of selected elements are shown in

FS Similar calculations with the IS, ES and CA

 Step 4: Average rating score of the FS, IS, ES and CA on the appropriate

axis of the matrix SPACE

 Step 5: Sum scores on the X axis marks the results on the X axis, Y axis similar to then determine the intersection point of two new points on XY axis

 Step 6: Draw the direction vector from the origin of the SPACE Matrix through the new intersection This vector given type of business strategy: Attack, competitive, defensive or cautious

Figure 1.1: Image of Space Matrix

1.3.2.3 Grand strategy matrix

Matrix including horizontal axis represents the competitive position of enterprises in the market (strong or weak) and the vertical axis represents the growth of the market (fast or slow) The appropriate strategies listed in each

of the following quarter

Table 1.2: Grand strategic matrix

1.3.3.1 QSPM Matrix:

QSPM matrix using information obtained from 3 matrix in phase 1 (phase of data collection and systematics information) and 3 matrix in phase 2 (phase combinations), so that an objective assessment the business strategy can be replaced

After company proposes strategies, QSPM matrix is used to choose a feasible and suitable strategy for the business As such this matrix is used to compare proposed strategies and select the most attractive one to pursue

To build the QSPM matrix need to make 6 steps:

 Step 1: List the factors S, W, O, T is taken from the EFE matrix, IFE

 Step 2: Classification for each element in accordance with EFE, IFE matrix

 Step 3: Look at the matrix in the second period and identify possible

alternative strategies to consider

 Step 4: Determine the number of attractions (TAS) for each element: the point is rated from 1 to 4, with 1 being not attractive, 2 being attractions a

little bit, 3 being quite attractive, 4 is very attractive

 Step 5: Calculate the total number of points of interest (TAS) in each row by multiplying the score assigned at step 2 with a score of AS in step 4

 Step 6: Calculate the total number of attractions in each strategy The most attractive strategy is the strategy there are a total score in step 6 is the highest

1.3.3.2 Five Forces model:

According to Michael Porter, the intensity of market competition in an industry affected by any of the five competitive forces follows:

 The threat of new entrances:

 Threat of substitute products:

 The bargaining power of suppliers:

 The bargaining power of customers:

 Competitive pressures at the industry internally:

In short, to form a business strategy we need to go through many different stages, from the collection of database input to the analysis to select the appropriate strategy as well as real successful implementation strategy There are many support tools to build a strategy Within this research, our team has been using some basic tools appropriate to the actual situation to build the business strategy of the Fujikura

CHAPTER II: REAL SITUATION OF FUJIKURA FIBER

OPTICS VIET NAM LTD

2.1 The overview of Fujikura Fiber Optics Viet Nam Ltd (FOV):

2.1.1 General introduction:

The story of Fujikura begins at the dawn of Japan's electric wire industry in February 1885, when Zenpachi Fujikura (Fujikura’s Founder) started manufacturing silk and cotton insulated winding wires In April 1888, the Shinijuku plan was opened, started operations with manufacturing of Tokyo wires and paraffin wire lamp cords, and also started research into rubber-insulated wires The Fujikura Electric Wire Corporation was found on March 18,

1910 by separated the electric wire division to expand the electric wire business and gradually expanded and developed to the strong and big cooperation nowadays specialize in three main areas:

1 Telecommunication: including optical fibers, optical fiber cables, equipment and components used in telecommunication, technical service and consultant…

2 Electronic and automation: to supply the electronic wires, electronic and electrical components, automotive components…

3 Metal cable and systems: Fujikura is the leading company in this field

Currently, Fujikura Ltd has approximately 50.000 employees worldwide, in which about 3.500 employees in Japan There are 17 sales branches all over the world (Japan: 10 and 7 in other countries) Fujikura Ltd has 79 member companies including 33 companies in Japan and 46 companies in other countries around the world In Vietnam, there is a representative office and four different companies

In 2010 (April 2010 ~ March 2011), total revenue of Fujikura Ltd is 521,800 million Yen (~ 6,564 mil USD) and the Operation Profit gain 16,800 million Yen (~ 211.3 mil USD), Profit after tax is 9,300 million Yen (~ 117 mil USD) Fujikura Fiber Optics Vietnam Ltd (FOV) is an import – processing – export company with 100% investment capital from Fujikura Ltd Japan, belong to Telecommunication Division Main FOV’s production is assembly components used in telecommunication system, particularly used in the “Fiber to the home” (FTTH) system Company located at the No 6, Road 9, Vietnam-Singapore Industrial Park, Thuan An, Binh Duong

2.1.2 Establishment and development history:

- Company establishment was on July 18, 2000 with originally capital invested

is 3.3 million USD (100% from Fujikura Ltd Japan), with 1 hectare wide at the No 6, Road 9, Vietnam-Singapore Industrial Park, Thuan An, Binh Duong

- April 2001: start production

- May 2001: first shipment

- November 2002: achieved ISO 9001 certification

- December 2004: achieved ISO 14001 certification

- June 2007: purchased 1 more hectare land next to the current location for secondary factory in future

- November 2007: bringing the total investment of 5.3 million USD

- August 2008: achieved Green Trademark Award (Firmly Development) handled by Vietnam Union of Science and Technology Association

- December 2009: achieved TL 9000: The Telecom Quality Management System which was consider as very strict requirements for telecommunication industry

- October 2011: started the construction for the 2nd factory in the next land

- Recently, the company has about 1,500 employees with sales in 2010 was approximately USD 75 million

2.1.3 Organization:

Company has 11 sections without Sales and Marketing section because this function is taken care by Fujikura Ltd Japan The sale function is combined to the Planning Section FOV is producing under orders from parents company and other affiliated companies within the group This is the FOV’s organization chart:

Figure 2.1: FOV’s Organization Chart

Source: Fujikura Fiber Optics Vietnam Ltd

The assigned function for sections as follow:

Table 2.1: FOV’s Function of each section

To follow company objective.

To improve productivity, reduce cost

To provide safety and productive working enviroment Training for development

To correct non-conforming and control non-conforming report

To make a correct finance data of FOV

To make a correct report for each related companies or organizations

To check the FOV's financial condition

To settle a payment

To check the accounts receivable Human resource management: Recruitment, training, compensation and benefit General affairs: Guest relation, authority contact, legal document, employee health, general contract

To make a production schedule to meet the customer's requirement

To issue a Purchase order with suitable quantity, price, delivery schedule

To think of the costdown, such as transportation, purchasing price, etc.

To control our supplier and to check the supplier's condition and performance Inventory control

To manage warehouse for the suitable stocks Logistics survey (to find the best price and route to our customers)

M anufacturing(produce conforming products)

To design package Handle production engineering ( QAD, BOM , product specification, QC,OP,Process Spec )

To control 4M change of manufacturing line but compliant with customer requirement.

To control techinical matter of material except material developed by M DP

To control FOV's EM S and QM S system

To be in charge in the new ISO/standard apply

To assure the quality of products to meet the customer's specification Incoming and outgoing inspect with refer to the customer's specification

To control of supplier evaluation

To establish inspection standard individual packaging

To receive customer complaint Report on complaints to customer Final packing

To controle CAR and PAR system

To be in charge of test report for each shipment

To control and maintain the computing, telephone system in FOV

To control FOV database and information system Internal software implementation

To install production equipments

To maintain Infrastructure and production equipments

To provide tool/jig/equipments Calibration of measuring equipments

To control and monitoring Energy consumption in FOV

To manage the whole investment amount of FOV All mission of production function

To develop low cost materials/parts

To have the collaboration with supplier for the development of low cost material

To control technical matter of material developed by M DP

To control Die/mold in supplier

To manage safety 5S activity Initial training for new operators Develop and control knowledge & skill for leader Control basic knowledge training for new engineer/staff GFPS To control for QCC, Suggestion, G-FPS and Zero defect activities.

Develop & support QCC activity for domestic supplier

2.1.4 Mission – Vision – Core Value:

This is the logo of Fujikura, using the same logo for all subsidiaries:

Fujikura’s slogan:

“Make change and change ourselves”

FOV’s slogan:

“Connect process to process, connect people to people”

as the “TSUNAGU – Connect” principle from the Fujikura Group

The “collaboration” is our policy in handling all of activities when the final result (for the processes, system) is more important than the individual one

In order to achieve the MVCV, we always focus to develop the Human Resource because it is the back bone of our system, our activities

FOV is the first company in Fujikura Group to concentrate to domestic material development and it is become our core competence when almost new demand is sent to us This result is thanks for the stable political as well

as low labor cost in Vietnam

Since we do not have R&D in this factory, we process design is becoming our strengths when we always try to set up the flexible processes which can adapt to any change in our business, minimize cost, quality assurance when it always having cross check gates

2.1.5 FOV’s products:

