Business strategy of housing and urban investment and development joint stock company 8 (hud8) in period of 2011 - 2015

MBA GRADUATION REPORT GROUP 12 2 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM BUSINESS STRATEGY OF HOUSING AND URBAN INVESTMENT AND DEVELOPMENT JOINT S

Class: GaMBA01.X0810

MBA GRADUATION REPORT GROUP 12 2

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

PROGRAM

BUSINESS STRATEGY OF HOUSING AND URBAN INVESTMENT AND DEVELOPMENT JOINT

STOCK COMPANY 8 (HUD8)

IN PERIOD OF 2011 - 2015

Phung Ngoc Tu Tran Dang Kien Phung Quoc An

HA NOI 2011

ACKNOWLEDGEMENT

We would like to thank guiding teachers who helped us to research the theory and analyze business environment of Housing and Urban Investment and Development Joint Stock Company 8 (HUD8) and give out business strategic methods On the basis of analyzing, we proposed the choice of business strategy for HUD8 in the next 5 years, our group stated some solutions on both macroscopic and microcosmic aspects The solutions show necessary orientations that need to be changed and improved in order to implement business strategy of the Company However, due to the limited time and qualification, this capstone project report can not avoid mistakes We hope to receive the contributions from teachers to improve the report

We thank teachers for helping us to finish this report

Hanoi, December 2011

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TABLE OF CONTENTS

ACKNOWLEDGEMENT 3

TABLE OF CONTENTS 4

LIST OF TABLES 7

LIST OF FIGURES 8

INTRODUCTION 9

1 General environment, content of the report 9

2 Researching objects and scale 9

3 Researching method 10

4 Layout of the thesis 10

CHAPTER 1 11

BASIC THEORY ON CONSTRUCTING STRATEGY FOR ENTERPRISE 11

1 Mission and main targets 11

2 Strategy constructing process 11

3 Analyzing external environment 12

3.1 Analyzing macroscopic environment 12

3.2 Analyzing environment of business line 13

4 Analyzing environment inside the enterprise 16

4.1 Resource 16

4.2 Financial capacity 16

4.3 Enterprise administration 16

5 Selecting business strategy method 16

5.1 SWOT matrix 16

5.2 Setting up QSPM matrix 18

5.3 Selecting business strategy 19

CHAPTER 2 21

ANALYZING BUSINESS ENVIRONMENT OF HOUSING AND URBAN INVESTMENT AND DEVELOPMENT JOINT STOCK COMPANY HUD8 (HUD8)21 1 INTRODUCTION ABOUT THE ENTERPRISE 21

1.1 Production and business fields 21

1.2 Organization structure of the Company 22

1.3 Features of business activities 23

1.4 Visibility 23

2 ANALYZING EXTERNAL ENVIRONMENT OF HUD8 24

2.1 Analyzing macroscopic environment: Analyzing the influences of environment to HUD according to groups of factors 24

2.2 Analyzing line environment of HUD8 according to the model of 5 competition forces Michael Porter 36

2.3 Competitive Profile Matrix (CPM) 47

3 ANALYSIS OF INTERNAL ENVIRONMENT OF HUD8 48

3.1 Analysis of Strengths and Weaknesses of HUD8 48

3.2 Evaluation of internal environment of HUD8 55

CHAPTER 3 58

SELECTION OF BUSINESS STRATEGY OF HUD8IN PERIOD OF 2011 - 2015 58

1 TARGETS OF HUD8 IN PERIOD OF 2011 - 2015 58

1.1 Missions of HUD8 58

1.2 5-year economic target in period of 2011 - 2015 58

1.3 Structure of business lines: 59

1.4 Main tasks: 59

2 STRATEGIC SOLUTIONS OF HUD8 IN PERIOD OF 2011 - 2015 60

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2.1 Analysis of SWOT matrix for HUD8 60

2.2 The QSPM matrix 63

2.3 HUD8‟s strategy selection in the 2011-2015 period 67

3 STRATEGIC SOLUTIONS FOR PERIOD OF 2011 - 2015 69

3.1 Solutions of market: 69

3.2 Solution of enterprise organization: 70

3.3 Solution of investment: 71

3.4 Solution of finance: 72

3.5 Solution of product quality management 73

3.6 Solution of building and developing human resource 74

CONCLUSION 76

REFERENCE 77

LIST OF TABLES

Table 1.1: SWOT matrix 17

Table 2.1: Overview of Vietnam economy 27

Table 2.2: Credit sections 28

Table 2.3: Gold market 30

Table 2.4: Population in 2009 according to local area 32

Table 2.5: EFE Matrix 34

Table 2.6: Synthesizing advantages of HUD8 in comparison 39

Table 2.7: Intensity of 5 kinds of pressure 46

Table 2.8: Collection of opportunities and Threats 46

Table 2.9: Competition image matrix 47

Table 2.10: Cash balance and bank deposit 50

Table 2.11: Basic financial targets 50

Table 2.12: Solvency of HUD8 51

Table 2.13: A number of typical projects of HUD8 52

Table 2.14: Summary of Strengths and Weaknesses of HUD8 55

Table 2.15: IFE Matrix 56

Table 3.1: Economic expenditure for 5 years of 2011 - 2015 58

Table 3.2: SWOT Matrix 60

Table 3.3: The QSPM matrix for SO strategy group 64

Table 3.4: The QSPM matrix of ST strategy groupError! Bookmark not defined.

Table 3.5: The QSPM matrix of WO strategy groupError! Bookmark not defined.

Table 3.6: The QSPM matrix of WT strategy groupError! Bookmark not defined.

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LIST OF FIGURES

Figure 1.1: Model of five competition forces of M Porter 14

Figure 2.1: Diagram of organization structure and management mechanism of HUD8 22

Figure 2.2: Stock market 28

Figure 2.3: Population density of Vietnam in comparison with 33

Figure 2.4:Population density in Hanoi and Ho Chi Minh city 33

Figure 2.5: Equity structure of HUD8 49

INTRODUCTION

1 General environment, content of the report

In the current context of global real estate investment, Vietnam real estate market proved the attraction from domestic demands and recovering ability of the economy, with the supports from factors such as: economic growth, fast urbanization process and the forming of new middle class Although there are many challenges in the investment environment, Vietnam real estate market is still drawing the attentions from global investment organizations

Since the depression time in 2008, there have been many projects being started on every fields, with the remarkable increasing of providing sources in office markets in Hanoi and Ho Chi Minh city, as well as houses and resorts Since the beginning of 2011, because there is the threat of falling into new crisis in world economy, public debts in developed countries such as: Greek, Ireland, Spain, Italy and possible in Japan and USA

In 2001, our economy is not the exception, Public debt is at warning level, public investment is reduced , credit finance is tightened, CPI is increasing highly, exportation is decreased, FDI is decreased thus the two important markets of our economy, stock market and real estate market, are the most severely affected, The market is ”frezzed”, the customers change to other investment lines, Project owners can not implement as planned because of undercapitalization

Starting from the facts, enterprises participating in Vietnam real estate need

to make specific, basic business strategy and define the right and professional direction for business target Current business environment changes very fast, global competition requires each enterprise to be active, creative to get used to such changes every day, every hour

2 Researching objects and scale

Housing and Urban Investment and Development Joint Stock Company 8 (HUD8) is operating in real estate field which owns some large projects Target of

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the Company is to become one of Vietnam leading companies in real estate, real property business, urban and industrial zone development investment in the general strategic orientation of the Corporation Therefore, researching contents focused on analyzing business environment of HUD8, forming the methods and selecting business strategy for HUD8 in the next years

3 Researching method

On the basis of collecting primary and secondary figures, direct investigating method, economy statistic and analyzing method, the group used SWOT matrix, I.E matrix to analyze and select the strategy for HUD8

4 Layout of the report

Layout of the report is as follows:

Introduction Chapter 1 BASIC THEORY ON CONSTRUCTING STRATEGY FOR

ENTERPRISE

Chapter 2 ANALYZING BUSINESS ENVIRONMENT OF HOUSING

AND URBAN INVESTMENT AND DEVELOPMENT JOINT STOCK COMPANY HUD8 (HUD8)

Chapter 3 SELECTING BUSINESS STRATEGY FOR HUD8 IN

PERIOD OF 2011 - 2015

Conclusion

CHAPTER 1 BASIC THEORY ON CONSTRUCTING STRATEGY FOR ENTERPRISE

Nowadays, Our country develops economy according to market economy with socialist orientation, the Enterprises have good conditions to promote their creativity, ability to best satisfy customers‟ requirements Moreover, Vietnam Economy is participating in global integration deeply and widely, is member of organizations such as: AFTA, APEC, WTO Thus, the competition in business environment is severe, violent So each enterprise must find out suitable way for market reality, which means business strategy for the enterprise scientifically and correctly

“Strategy is a series of complex actions in order to mobilize all possible

resources of an organization/individual to achieve a given purpose”

1 Mission and main targets

Mission and main targets are for companies to construct strategies Mission

is given out to show the reason for existence and tasks of a company Main targets define what a company hopes to satisfy in long term

2 Strategy constructing process

Business strategy construction helps the enterprise to be clearly aware of their purpose, orientation which will be the basis, guideline for every business operations of the enterprise The process of planning strategy can be divided into following main steps:

- Selecting mission and main targets of the company

- Analyzing external environment: Find out opportunities and challenges

- Analyzing internal environment: Show strengths and weaknesses

- Selecting strategies: Use up core abilities and abilities, reduce threats, take

full advantages of opportunities from external environment

- Implementing strategy

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3 Analyzing external environment

3.1 Analyzing macroscopic environment

The target of external analysis is to be aware of opportunities and threats from external environment of a company including considering macroscopic economic factors, society, government, law and technology that can affect the company

3.1.3 Culture and Society

Each nation, territory has cultural values and there are differences in culture

in each region, area of a nation Culture and society deeply affect the operations of administrating and trading of an enterprise The enterprise has to analyze cultural, social factors in order to recognize possible opportunities and threats Each change

of cultural forces can make a new business line as well as erase a business line Any enterprise who wants to be successful can not omit the cultural factors, then use up opportunities and influences to business strategy The enterprises researching market will learn and evaluate the social factors such as: living style, income, population, psychology, education level… These factors will affect decisions on products, services, markets and consumers

3.1.4 Technology and technique

This is the factor that affects enterprises strongly and directly Technical factors are usually represented as: new producing method, new technique, new

material, producing equipment, tricks, inventions, application software… When technology develops, enterprises have conditions to apply technological achievements to make products, services of higher quality in order to develop business, improve competitive capacity However, it also brings the threats of falling behind, reducing competitive capacity to enterprises if they don‟t innovate technology timely Nowadays, advanced technical factors can be considered as opportunities as well as threats for enterprises while planning enterprise development strategy

3.1.5 Natural factors

Infrastructure: make great influence to business activities of the enterprise Basically, it usually affects activities of the enterprise adversely, especially business and production enterprises which relate to the nature such as: agricultural and food products seasonal production, hotel, tourism business… In order to actively deal with influences by natural factors, the enterprises must pay attentions to relating natural factors through the activities of analyzing, forecasting by themselves and evaluation of professional offices The enterprises usually use following methods: providing for, smoothing, predicting and other methods… Besides, it also affects enterprises in problems such as: noises, environmental pollution… and the enterprises must solve together So, the enterprises need to recognize influences of natural factors affecting business decisions of each company

3.2 Analyzing environment of business line

Use the model of 5 competition forces of Michael Porter to study, analyze competition pressure for the enterprise

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Figure 1.1: Model of five competition forces of M Porter

According to Michael Porter, competition intensity on the market in any production line is affected by following 5 competition forces:

3.1.1 Current competitor

According to Michael Porter, current competitors have already had their positions on the market, this makes competition level higher It is important to recognize competitors and define their strengths, weaknesses, threats, targets and strategies

These two groups make great pressure to enterprises in price, product quality, accompanied services and they are the people who control competition in the line through decisions on purchasing goods However, customer is always the vital factor to every enterprise, business strategy of each enterprise must be oriented

to customers

3.1.3 Provider

Quantity and scale of providers: Quantity of providers will decide their competition pressure, negotiating power to the line, enterprises If there are several large-scale providers on the market, the competition pressure will be created, and the whole producing and trading activities in the line will be affected

The ability to replace products of providers: In this point, we study the ability to replace input materials by the providers and providers switching cost

Information about providers: In current era, information is always the factor that impulses the development of commerce, information about providers makes a great influence to the process of selecting input provider for enterprises

3.1.4 Latent competitor

Latent competitors are enterprises who have not appeared in the line yet, but they can affect the line in the future There are many or a few latent competitors, their pressure to the line is strong or weak, these depend on following factors: attraction of the line, entering barriers (Technique, capital, commercial factors, particular resources…)

3.1.5 Alternative products

Main competition pressures of alternative products are:

+ The ability to satisfy demands in comparison with products in the line, in addition, the factors of price, quality, other factors of environment such as culture, politics, and technology will also affect the threats of alternative products

+ Incidental, unpredictable characteristics of alternative products: Even in internal line, the development of technology can also create alternative products for their own line

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+ Switching cost

4 Analyzing environment inside the enterprise

Target of internal analysis is to find out strengths and weaknesses of the company, including some following factors: Resource, finance, business administration…

4.2 Financial capacity

Financial capacity plays a very important role, it is usually evaluated highly

in competition and is the condition to attract investors Defining strength of financial capacity is the condition to select correct and effective strategy

4.3 Enterprise administration

Enterprise administration is connecting limited resources to achieve the highest effect Administration is performed by making decisions Requirements to decisions in enterprise administration must have scientific bases, be unified, comply general regulations, institutions, have orientations, be specific in terms of time, satisfy requirements timely

5 Selecting business strategy method

Strategy decides future of the enterprise or it will lose position in the market

to other competitors Each business unit must select a business strategy such as its competition method in a given market – product

5.1 SWOT matrix

SWOT is abbreviated from 4 words Strengths, Weaknesses, Opportunities and Threats SWOT analyzing model is a very useful tool for catching and making decisions in every situation for any business organization SWOT provides a

strategic analyzing tool, checking and evaluating position, orientation of a company

or a business project SWOT is suitable for working and analyzing in groups, it is

used in making business plan, constructing strategy, evaluating competitor, marketing, developing products and services…

Table 1.1: SWOT matrix

SWOT matrix

Opportunities (O)

- O1: Listing opportunities according to the order of importance

- O2:

- O3:

Threats (T)

- T1: Listing threats according to the order

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− Make a list of the enterprise‟s key external opportunities/threats and internal strengths/weaknesses into the column (1) of the matrix These factors should be taken directly from the EFE matrix and the IFE matrix

− In the column (2) of the matrix, complete weights which are corresponding to each factor in the categorized column of the EFE matrix and the IFE matrix

− Examine SWOT matrices and identify alternative strategies that the organization should consider implementing, recording these strategies in the top row of the QSPM matrix; group the strategies into mutually exclusive sets (if possible)

Table 1.2: QSPM matrix

Key factors (1)

Weight (2)

− Calculate the total attractiveness scores of each strategy, considering only each critical success factor in the column (1) by multiplying the weights

by the attractiveness scores in each row

− Calculate the sum total attractiveness score of each strategy (considering all the relevant external and internal factors that could affect the strategic decisions) Higher scores indicate more attractive strategies

In principle, the QSPM matrix can include any groups of alternative strategies and each group can include any number of alternative strategies but only strategies in the same group are evaluated with each other For example, a group of diversification strategies can include concentric diversification ones, aggregated diversification ones, meanwhile other group can include vertical integration strategy, and horizontal integration one These sets of strategy are different and the QSPM matrix only evaluates strategies in the same given set

5.3 Selecting business strategy

Selected strategy must be the optimal strategy or the most suitable for conditions, circumstances of the enterprise Based on proposed principles and standards, the enterprise compares expected strategic methods with purposes in order to find out a suitable business strategy to implement

While selecting strategy, the enterprise needs to consider some factors affecting strategy selection Strategic target of the enterprise, attitude of General

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executive director, financial source, ability and level of administrator, power of the line and enterprise in comparison with competitors…

CHAPTER 2 ANALYZING BUSINESS ENVIRONMENT OF HOUSING AND URBAN INVESTMENT AND DEVELOPMENT JOINT STOCK COMPANY 8

(HUD8)

1 INTRODUCTION ABOUT THE ENTERPRISE

Name: Housing and Urban Investment and Development Joint Stock Company 8

Address: Lot CC3 – My Dinh II new urban area – Tu Liem – Hanoi Website: http://www.hud8.com.vn

Business registration license No 0103018830 issued by Department of Planning and Investment of Hanoi on August 02nd, 2007, modified for the 2nd time

on December 31st, 2008

Charter capital: VND 50.000.000.000 Stock code: Has not been posted in stock market yet

1.1 Production and business fields

1.1.1 Group of Real estate investment and trade

Trading real estate is the main business line of HUD8, in this field, the Company invests to construct urban areas, industrial zones, buildings and offices, business centers to sell or lease This activity consists of following professional skills:

1 Establishing and managing construction investment projects, trading residential areas, urban areas and industrial zones

2 Trading and exploiting services on housing, urban areas and industrial zones

3 Consulting technical design, planning urban areas and industrial zones in detail; consulting designs for civil and industrial works

4 Trading real estate and other services

5 Trading hotel, restaurant services

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After 5 years of establishment and development, HUD8 has had good projects, products of HUD8 are highly evaluated and the brand name of HUD8 is gradually affirmed on real estate market HUD8‟s products mainly are investment, construction and housing business (apartment block, low-rise apartment Target customers are low- and middle- income people, location of the project is far away form the center of the city It can be said that this is the crucial field for HUD8‟s development and immortality

1.1.2 Group of construction materials erection, production, trade:

This activity occupies a small density in revenue, benefit of the Company (about 2% – 5%), however, it is very important, it make the Company active in providing input factors and able to promote general strengths for production and business activities Including following professional skills:

1 Producing and trading construction materials, interior equipments

2 Trading, importing, exporting machinery equipments

3 Exploiting and processing minerals

1.2 Organization structure of the Company

Figure 2.1: Diagram of organization structure and management mechanism

of HUD8

1.3 Features of business activities

Real estate business requires very large capital, long capital payback time and dependent on land management policies of the State, nowadays in Vietnam, real estate business brings much profits and risks as well In order to be successful in the field of real estate, it is necessary to have not only financial ability but also good relations with state management offices and bank credit organizations, financial companies

1.4 Visibility

HUD8 is trying to become a leading company in the field of real estate, real property business, urban area, industrial zone investment and development in Vietnam

Play the role of orienting, implementing the strategy of developing urban areas and houses in Vietnam

Participate in real estate regulation, focus on developing houses for objects

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Orient multisectoral business, focus on developing urban areas and houses, closely connect to the fields of civil works and technical infrastructure construction, construction materials production

2 ANALYZING EXTERNAL ENVIRONMENT OF HUD8

2.1 Analyzing macroscopic environment: Analyzing the influences of environment to HUD according to groups of factors

2.1.1 Analyzing influences of political and law environment

Real estate market is a very important market, it can cause good or bad influences to general development of a nation, so the state always intervenes, regulates in order to stabilize this market through the system of policies and laws

Politics: Vietnam is one of the nations that have stable and safe political

situation in the world This creates an attractive investment environment in the region, encourages foreign and domestic investors to invest in production and business in Vietnam

Policies affecting real estate market, including political factors such as: policy of extending, upgrading, merging, splitting localities, policy of planning land uses, policy of compensating and clearing lands, policy of allowing people of other locality, people of domestic origin, foreign people to participate in real estate market, tax policy in order to regulate real estate market, policy of encouraging external investment into localities

Law: law system of a nation will define ownership, land uses, the right to

buy, sell, lease, mortgage, pooling by real estate In fact, this factor can promote, restrict or erase the existence of real estate market because special features of real estate goods are associated with land, this has always been controlled by the States

in every periods (except primitive commune)

In Vietnam, the law defines that lands belong to the whole people; individuals, organizations can only use land, Land Law was issued according to following periods:

1 Land Law in 1987 defined “strictly forbid land trading, encroaching, renting

land and getting land rent in any forms”, which means forbidding land business

2 Land Law in 1993 defined in item 2 clause 3 “Households, individuals who

were delivered with land by the state can change, transfer, lease”

3 Land Law in 2003 and implementation instruction documents defined the

rights and obligations of land users, order, procedures to establish rights, obligations and order of transferring, changing, leasing, giving to inheritance, mortgaging land use right This created legal frame for goods exchanging activity in the market

4 Real estate business law No 63/2006/QH11 on 29/06/2006 defined the

regulations for real estate business; right, obligation of organizations, individuals who are trading and real estate transaction relating to real estate business

5 Law on Houses No 56/2005/QH11 valid since 1/7/2006 defined the

regulations for owning houses, developing, managing use, business of houses and state management on houses The law allowed overseas Vietnamese people to buy and own houses in Vietnam, this extended estate market for the objects of overseas compatriots who have the demand for owning houses

in Vietnam

6 Decree No 71/2010/NĐ - CP on 23/6/2010 closely tightened the activity of

raising internal capital of customers According to Decree 71, real estate owner can raise capital from individuals and organizations to invest in houses construction and get profit share, or divided with goods of houses according to agreement and contribution rate, without trading floor, but this rate does not exceed 20% total products of each component project Simultaneously, Decree 71 also affirmed that the investor can raise advanced capital of customers when the foundation has been completed

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In recent years, the State, National Assembly, Government has tried to construct, modify, add series of important laws in order to improve business environment, attract investment such as: real estate business law, Investment law, Land law, tendering law, law on houses… which contribute to make real estate business activities more and more clear, explicit, although there are some inadequate problems such as: real estate business is still unprompted, implicit businesses occupy high rate, planning information is not clear, goods does not come

to people who have the demand for using but the speculators The price of houses lands does not express real value

Especially in 2011, global economy is in the risk of financial crisis and economic depression, public debts in developed countries such as: Greek, Spain, Italy and possible USA and Japan… are extending, becoming hard to be controlled Now the target of Vietnamese government from 2011 to the en of 2012 is to tighten credit, reduce public investment and restructure Enterprises including banks system

So, the economy in 2011 and 2012 is very difficult, unstable including real estate market

Politics and law factors give real estate trading enterprises in general and HUD in particular following opportunities and challenges:

Opportunities:

1 Political situation is stable, which creates good conditions for strong, term development strategy

long-2 Law system is gradually perfected which makes real estate market healthier

3 The government has policies to encourage real estate business investment, mechanism, policies to stabilize real estate market in cases of displacement, ensure profits for investors and customers

Threats:

1 Administrative procedures order is still prolix with many levels which obstruct the operation and takes back opportunities of enterprises

2 Land use management mechanism, real estate investment, business management are tightened, which makes the activities of developing land, compensating and clearing spaces, mobilizing investment capital of investors more and more difficult

3 Legal documents in land management, real estate investment and business do not match the reality, overlap that make it difficult for the enterprise to participate and implement

2.1.2 Analyzing influences of economic environment:

Table 2.1: Overview of Vietnam economy

(Source: Data from General Statistics Office and BMI report 2001)

In 2006 – 2010, economic growth achieves 7.01%/year in average, foreign investment in 2010 decreased 18 projects and increase 54.9% in registered capital in comparison with 2006 In each year from 2006 to 2010, there are 1253 foreign investment projects were licensed with the average registered capital of 29.4 billion USD

However, in 2010 and 2011, engaged capital is 17 – 18.6 billion USD has been kept at high level in which there are 6 – 6.8 billion USD invested into real estate market This shows that domestic real estate market is still very attractive with many potentialities to develop

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Nowadays, due to the pressure of price increasing from external and domestic In cases when the buying power and income have not been improved, enterprises have to adjust to increase prices

Table 2.2: Credit sections

In the policy of currency, since beginning of 2010 to now, credit market has been strongly tightened, lending interest is high, according to monitoring statistics,

it is likely that credit achieves the growth of 17% in 2011, in which Real estate market and stock market are reduced the most, this affects business activities of enterprises because it is hard to approach loans of banks Credit for real estate has not shown any positive signal, the project can not be implemented according to plan

In recent time, the Government drastically directs to stabilize macroscopic economy such as: promoting importation - exportation in order to reduce threats of overbalance of import and deficit of balance of payments, weakening VND, the method of ceiling-mounted USD deposit, restructuring enterprises, bank organizations… now, the Government preferred to stabilize macroscopic problems,

so GDP growth may be lower than defined target, however, this will make the economy more stable and stronger

Figure 2.2: Stock market

In 2010, VN-Index changed in the range of 400 - 600 points Actually, the economy in 2011 is still having many difficulties with macroscopic problems such

as inflation, exchange rate, overbalance of import, it is hard to expect that the market grows as previously Policy of currency and conditions of credit market will

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be the important which leads displacement of the market In 2011, VN-Index changed in the range of 300 – 400 points

Table 2.3: Gold market

As natural rule, when world economy is in crisis, Gold market will be the safest investment Vietnamese people always hoard gold rather than VND or foreign currency, especially when the economy is unstable, because gold is more stable than stock and has faster liquidity than real estate Accordingly, price of gold has increased continuously since 2009 to now

Mobilization channel through stock market faces many difficulties because the market is in the stage of depression and quietness Gold market is not stable recently, which makes investors change the direction to estate market, this market is considered to be relatively stable and give high profits, which contributes to promote the demand for real estate

Average per capital income of Vietnamese people was USD 1160 in 2010, this is 1.6 times higher than such figure in 2006 According to the report of “Human development in 2010” in United Nation Development Program (UNDP) acknowledged that in the last 4 decades, average per capital income of Vietnam has increased 5 times Vietnam is at the 8th place in the list of nations that make greatest progress in improving average per capital income

It is clear that people’s lives are growing everyday, the appearance of new middle class makes the demand for consumption increase The demand for houses, especially the segment of medium and high level houses will increase according to

common ground of social life This is the market opportunity for enterprises that are trading real estate

Through above analysis, Vietnam economy has created many opportunities and challenges to enterprises that are trading real estate:

Opportunities:

4 Macroscopic economy grows at high level (forecasted to grow 6.1% in 2012), average per capital income increases makes the demand for houses, offices, industrial zones, resorts increase

5 Speed of urbanization is high accompanied with the demand for extending urban areas, therefore, the State pays attentions to giving special treatment to investments into new urban areas

6 International integration and trend of globalization creates many opportunities for development to the line of real estate business Attracting foreign investment, creating chances to co-operate, associate and investigate

7 Depressed stock market and unstable gold market make monetary flows come

to real estate market

2.1.3 Analyzing influences of social and cultural environment

Population growth: According to the report on World population 2010 of

United Nations, population of Vietnam will increase to 111.7 million people in

2050 Vietnam is one of the nations which have youngest population in Asian

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nations Vietnam is stepping in “the stage of golden population structure” “This special stage happens only once in development history of any nation”

Growing population makes the demand for real estate increase, this is possible to be realized in the growth in demand for houses while land resource is limited, which make real estate market more and more eventful, price of real estate increase higher and higher; Population makes labor force increase, so it is indispensable to extend production and business, this will make the demand for land use increase, especially agricultural land Moreover, transferring agricultural land to other fields creates a large pressure on demand for land use for living and producing, trading, which is solved mainly through real estate market; In addition, growing population brings about the demands for social activities, services, business, health, education, entertainment activities, sports… these demands are factors that make real estate extend and develop everyday

Customs, traditions and tastes of people: Customs, traditions directly

affect the way of implementing purchase, sale, hire, mortgage… transactions in real estate market, it can hasten or restrict the transactions, ensure the reliability between buying, selling sides, leasing-renting sides…, it can also hasten or slow down the process of paying between sides Taste also affects real estate market directly, for example, the attention of people who have the demand for real estate in locations, shapes, directions, architecture, model, modernity, classicality… of real estate suitable for specific using purpose such as office, house

Mechanical move on population: because large economic areas concentrate

in cities, there has been a phenomenon of emigrating from rural areas to cities which causes much pressure to transport infrastructure development, houses… especially in 2 big cities Hanoi and Ho Chi Minh city This is also the factor that impulses the process of urbanization

Table 2.4: Population in 2009 according to local area

Average population

(Thousand people)

Area

(km 2 )

The whole country 86024.6 331051.4

Figure 2.3: Population density of Vietnam in comparison with

Standards of United Nations and China

Figure 2.4:Population density in Hanoi and Ho Chi Minh city

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2.1.4 Analyzing the influences of Technological – Technical environment

The whole world is still in the technological revolution, a series of new technologies are created and integrated into products, services…

In the trend of integration, with the influences of information technology, internet, Vietnam quickly acquired and applied new technologies in construction, shortened execution time, increased works quality and reduced construction prices

Combination between enterprises and the government in order to research and give out new technologies, materials will make positive influences to the economy

2.1.5 External Factors Evaluation Matrix (EFE)

Table 2.5: EFE Matrix

No Opportunities and Challenges

(1)

Level of importance (2)

Classification (3)

Key points (4)=(2)*(3)

2 Policy to encourage investment of the Government

3 The market is increasingly healthier 0.06 2 0.12

4 Preferential Policy for low-paid

5

Opportunity to coordinate from international economic integration trend

6

Other investment channels instable that attracts cash flow for real estate market

7 Increasing population and urbanization speed

8 Mechanical transformation of the

9 Application of new technologies to

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Comments: The total important point of HUD8 is 3.09 It shows that HUD8

is responding well to opportunities and challenges from the external environment; thus, the business strategies of HUD8 can effectively utilize the opportunities from the external environment and minimize influence due to the risks of external environmental

2.2 Analyzing line environment of HUD8 according to the model of 5 competition forces Michael Porter

2.2.1 Trends of real estate market in stage 2011 - 2015

Global economic crisis since 2008 is still causing negative influences to current economy Vietnam real estate market was also in a year which is full of ups and downs, transactions are quiet and prices of houses and lands decreased continuously in many segments We can realize that real estate market recently has following features:

1 Decree 71/2010/ND-CP defined in details and instructed Law on Houses

execution and Circular 16 issued with the orientation to a clearer and more favorable real estate market

2 Mini apartment buildings are admitted and welcomed by the market

3 The trend of investing green real estate, resort real estate

4 Many projects of social houses/ for people of low income

5 Real estate credit – still hard to approach

6 Vietnam real estate is still the investment trend of FDI

One of important features of Real estate market in 2010 is promoting the potentiality of real estate market investment and development, investment policies

of foreign investors, especially Singapore and the policies of promoting houses purchasing potentiality of overseas Vietnamese While world real estate market has not shown any signs of recovery after economic crisis, Vietnam still attracted about 8 billion USD of FDI capital resource in real estate, although this capital resource was reduced in comparison with previous years, it was at the 3rd position

in the list of fields that attracted the most foreign investment capital into Vietnam Average investment capital of a project is about 145 million USD

However, there are some difficulties for real estate market in 2011 such as bank loans approach becomes more difficult, loan interest rate tends to rise highly, production costs increase (steel, cement, petrol ), these will cause great influences

to the development of real estate market

According to the consideration, evaluation of domestic economic experts and experts in the world, the economy will face many difficulties in 2012, public debts

in some countries such as UAS, EU countries, Japan is at warning level with the risk of bankruptcy (Greek, Spain, Italy ) The economy will only recover at the end

of 2012, it will be stable and develop since 2013 – 2015 Policies on economy in the world in general and Vietnam in particular in 2012 will take the priority to ensure stabilization of macroscopic economy: reducing public investment, tightening credits, re-structuring enterprises

In long term, in domestic real estate market, “demand > provision”, this is still a “fat” market and brings high profits The survey of AFIRE shows the attentions of international investment to Vietnam real estate market, the trend is raising clearly since beginning of 2010, and may be continued if Vietnam economy still grows optimistically Because commercial real estate market and house market are being perfected, the long-term attentions of foreign investors into Vietnam will become greater and greater

2.2.2 Analyzing business line environment of HUD8

2.2.2.1 Analyzing competition intensity of current competitors

Nowadays, in the field of real estate investment and business, a series of real estate companies are established and developing with high speed

In the North:

- Song Da Urban & Industrial Zone Investment and Development Joint Stock Company (SUDICO)

- Vinaconex Corporation

MBA GRADUATION REPORT GROUP 12 38

- Binh Minh Import & Export Business Co., Ltd (Bitexco)

- Vincom Joint Stock Company

- Ha Do Group

- Tu Liem Urban Development Joint Stock Company (Lideco)

- Hanoi Construction Investment Joint Stock Company (Hancic)

In the South:

- Phu My Hung Joint-venture Company

- Tan Tao Industrial Zone Investment Joint Stock Company

- Him Lam Joint Stock Company

- Hoang Anh Gia Lai Joint Stock Company

These are the companies that participated in the field of real estate business very early, so they time held great real estate projects at central position, they also hoarded a strong finance resource, this is a great competitive advantage of such Companies against newly entering competitors

In current real estate market, HUD8 must compete against strong competitors such as:

- Song Da Urban & Industrial Zone Investment and Development Joint Stock Company (SUDICO): Investor of My Dinh urban area, An Khanh;

- Binh Minh Import & Export Business Co., Ltd (Bitexco): Investor of Hoang Mai urban area – Hoang Mai district – Hanoi

- Vincom Joint Stock Company (Vincom): Investor of Vincom Village urban area, Times City, Royal City

- Hanoi Construction Investment Joint Stock Company (Hancic): Investor of Trung Van new urban area, Xuan La buildings area…

- Ha Do Group: Investor of An Khanh new urban area – An Thuong; Dich Vong new urban area…

- Tu Liem Urban Development Joint Stock Company (Lideco): investor of Dich Vong new urban area, Hoa Son new urban area; Tay Do – Hoai Duc