Formulation of business strategy in period of 2012-2017, vision to 2012 for investtech gn company limited

and a long-term development strategy for the future, INVESTMENT TECHNOLOGY AND EQUIPMENT GIA NGUYEN CO.,LTD needs to build up a suitable and proper business strategy for itself, to effec

FORMULATION OF BUSINESS STRATEGY IN PERIOD OF 2012-2017, VISION TO 2012 FOR

INVESTTECH GN COMPANY LIMITED

CAPSTONE PROJECT REPORT

MEMBERS OF GROUP 10:

1 DO TRUNG HIEU (Group leader)

2 NGUYEN THI MAI HUONG

3 HO HAI QUANG

4 DAM THI HOA

5 LE QUY HOANG

GaMBA.M0210

CONTENTS

ASSURANCE 6

ACKNOWLEDGEMENT 7

INTRODUCTION 8

1 Background 8

2 Goal and subject of research 9

3 Scope of research 9

4 Methods of research 10

5 Data processing method 10

6 Topic structure 10

7 Significance of the topic 10

CHAPTER I: BASIC THEORY OF BUSINESS STRATEGY AND METHOD FOR STRAGIC FORMULATION 12

1.1 STRATEGIC OVERVIEWS 12

1.1.1 The concept of strategy - Strategic Management 12

1.1.2 Strategic requirements 13

1.1.3 Role of strategic management 13

1.1.4 Strategic classification : 14

1.2 ENVIRONMENTAL RESEARCH TO IDENTIFY MAIN OPPORTUNITIES AND THREATS 16

1.2.1 Macro environment: 16

1.2.2 Micro-environment: 17

1.3 INTERNAL CONTROL OF THE ENTERPRISES TO IDENTIFY THE STRENGTHS AND THREATS 20

1.4 ESTABLISH LONG-TERM PURPOSE: 23

1.5 METHOD OF DEVELOPMENT AND SELECTION OF STRATEGY: 24 1.6 TOOLS FOR BUILDING AND SELECTION OF STRATEGIES 25

1.6.1 The tool providing information to develop strategies 25

1.6.1.1 Matrix of Internal Factor Evaluation Matrix (IFE) 25

1.6.1.2.External Factor Evaluation Matrix (EFE) 26

1.6.1.3.The Competitive Profile Matrix (CPM) 27

1.6.2 The tools to build viable strategis 28

1.6.2.1.Matrix of strengths, weaknesses, opportunities, threats (SWOT)28

1.6.3 Tools for selection of strategies: Quantitative Strategic Planning

Matrix (QSPM) 29

CHAPTER II: ANALYSIS OF BUSINESS ENVIROMENT AND FORMULATION FOR STRATEGIES OFINVESTTECH GN CO.,LTD 31

2.1 OVERVIEW 31

2.2 ANALYSIS OF IMPACTS OF EXTERNAL ENVIRONMENT 37

2.2.1 Macro Environment 37

2.2.1.1.Economic Impact 37

2.2.1.2.Elements of law, government and politics 37

2.2.1.3.Social factor: 39

2.2.1.4.Scientific and technological factors: 39

2.2.2 Micro-environment 40

2.2.2.1.Existing rivals 40

2.2.2.2.Client: 43

2.2.2.3.Supplier 44

2.2.2.4.Potential competitors 45

2.3 INTERNAL ENVIRONMENT ANALYSIS 48

2.3.1 Finance: 48

2.3.2 MARKETING: 48

2.3.3 PERSONNEL: 50

2.3.4 MANAGEMENT: 50

2.3.5 INFORMATION SYSTEM: 51

2.3.6 RESEARCH AND DEVELOPMENT 51

2.4 SWOT MATRIX: 53

2.4.1 Basis: 53

2.4.2 SWOT MATRIX: 54

CHAPTER III ANALYSIS FORMULATED STRATEGIES AND SELECTION BUSINESS STRATEGY FOR INVESTTECH GN CO.,LTD (GNC)

IN PERIOD OF 2012-2017, VISION TO 2022 56

3.1 STRATEGY ORIENTATION 56

3.1.1 Basis for strategy orientation construction 56

3.1.1.1.From technology trend 56

3.1.1.2.From clients 57

3.1.1.3.From terminal distribution market in Vietnam 57

3.1.1.4.From telecommunication development orientation by 2010 58

3.1.1.5.Conception on development 59

3.1.1.6.Development targets by 2017 60

3.1.1.7.Development orientation by 2017 and vision to 2022 61

3.1.1.8.The Company’s strategic orientation by 2017 62

3.2 STRATEGY FORMATION 62

3.2.1 Group of S-O strategies 62

3.2.1.1.Market penetration strategies: 62

3.2.1.2.Market development strategies: 62

3.2.1.3.Joint venture strategy: 63

3.2.2 Group of S-T strategies: Strategy on product differentiations: 63

3.2.3 Group of W-O strategies: Strategy on human resource development: 64 3.2.4 Group of W-T strategies: Strategy on product differentiation: 64

3.3 SELECTION OF STRATEGIES – MATRIX QSPM 65

3.4 SOLUTIONS FOR STRATEGIC IMPLEMENTATION 67

3.4.1 Solutions and development of human resource: 68

3.4.2 Marketing solutions: 69

3.4.2.1 Solutions on products: 70

3.4.2.2 Solution on price: 70

3.4.2.3 Solution on Distribution channel: 71

3.4.2.4 Solution for public relation (PR): 72

3.4.3 Solutions on research and development: 73

3.4.4 The roadmap and budget to implement strategies of the company: 73

3.5 SOME PROPOSALS FOR THE STATE 74

3.6 CONCLUSION 74

REFERENCES 76

APPENDICES 77

LIST OF FIGURES Figure 1: Michael E.Porter’s 5 forces model5 (Duong Ngoc Dung, 2005) 17

Figure 2: Main contents need analyzing on competitors 4 (Nguyen Thi Lien Diep & the authors, 2006) 19

Figure 3:The "tripod" of business development strategy of company 23

Figure 4: The Strategy - Formulation Analytical framework 24

Figure 5: Organization Chart of Gia Nguyen Company 33

LIST OF TABLE Table 1: GDP growth rate of Vietnam in the period 2003-2011 37

Table 2: GDP per capita of Vietnam in the period 2003-2011 37

Table 1: The Competitive Profile Matrix (CPM) 42

Table 2: EXTERNAL FACTOR EVALUATION (EFE) MATRIX 46

Table 3: INTERNAL FACTOR EVALUATION (IFE) MATRIX 52

Table 4: Growth rate of terminals imported in Vietnam in types in period of 2008-2012 58

Table 5: Market shares of terminal imported in Vietnam in types (forecast within 5 years) 58

Table 6: A QSPM for GNC strategy 65

ACKNOWLEDGEMENT

Firstly, we do express our gratitude to the Board of Rectors, Professors, Experts, Lecturers and staff of the ETC Center - Vietnam National University, Hanoi and the Griggs University (United States) has always been closely together us during this course

Through this course, we have accessed a high-quality education with innovative teaching methods, how to apply and update useful information to serve the management to improve business production efficiency

Truthfully yours!

INTRODUCTION

1 Background

For years, Vietnam's economy has always achieved high growth and stability After joining the World Trade Organization (WTO), Vietnam has opened up many opportunities for Vietnam enterprises to possibly expand markets, expand production scale, and confirm its brand, but also come to new challenges The volatility of the market will increasingly faster and more complex, sales is becoming more difficult due to the enterprise’s ability in supplying goods to the market's growing, diversification in commodity and quality requirement is increasingly high, the competition to take the customers is increasingly more aggressive It requires every enterprise that wants to succeed in business must have a way of doing business, ways of thinking, new way, to know how to use the facilities, capture and process information quickly, effective application of scientific and technological solutions, making the direction and operations goal consistent in each period to possibly gain advantages in competition

Telecommunications technology is the industry which has an important role to promote the development and promote the effects of many other technologies, as the decisive basis of the innovative development of many economic sectors Moreover, telecommunications technology is also one of the industry performing the function as necessary means and conditions to ensure the development of the national economy in the trend of globalization, regionalization at present

Starting from the role and position of telecommunications technology to the requirements of national economy, the government of Vietnam has issued a number of policies in order to guide, facilitate and encourage telecommunications technology development towards "Strong development for high-tech industries, especially information technology, telecommunications, electronics and automation; paying much attention to the production of computer

software into the economic sector with remarkable growth rate”

However, according to some recent studies, about one third of small companies have failure within the first two years and about half of the remaining companies have failed in the next five years Thus, to succeed and develop in current business conditions, it is not easy to implement at all, only about 30% successful companies Therefore, as a newly-established enterprise, lacking many elements of technology, human resources, finance, etc and a long-term development strategy for the future, INVESTMENT TECHNOLOGY AND EQUIPMENT GIA NGUYEN CO.,LTD needs to build up a suitable and proper business strategy for itself, to effectively use its resources to exploit opportunities and strengths, limits the risks and weaknesses as an urgent work for the company

to stand in the market and keep up developing in the future

By these reasons, we do choose the topic: “Formulation business strategy in period of 2012-2017, vision to 2022 for Investtech GN Company Limited” for our research

2 Goal and subject of research

Through the theoretical and practical research, the subject analyzes the issues related to the operating environment and the state of INVESTMENT TECHNOLOGY AND EQUIPMENT GIA NGUYEN CO.,LTD, from that to propose the goals and strategies for development of the Company in the period

of 2012-2017, vision to 2022; as well as making a solutions for successfully carrying out the business strategies of INVESTMENT TECHNOLOGY AND EQUIPMENT GIA NGUYEN CO.,LTD

3 Scope of research

In the framework of this thesis, our group only research the issues related

to the procedure of making plan for business strategy and manipulate to make plan for business strategy for INVESTMENT TECHNOLOGY AND EQUIPMENT GIA NGUYEN CO.,LTD in the period of 2012-2017, vision to

2022, paying attention to the feasibility and effectiveness of the strategies

4 Methods of research

To collect information, our group has used the following methods:

- Collecting primary data: using qualitative and quantitative methods to collect primary data through questionnaire sent to randomly selected people (members of the company and members outside the company) The main content of the survey is to collect information about: evaluation of customer satisfaction, technical quality, operational policies, leadership at the company, the functional quality improvement

- Collecting secondary data: internal documents of GNC

- Using acquired knowledge for researching, analyzing the internal and external business environment of the company and formulating company’s business strategy in period of 2012 – 2017, vision 2020

5 Data processing method

Mainly using statistical methods, synthesis, comparison, analysis to collect assessment of inside and outside information related to the company's business operation

- Chapter 2: Analysis of business environment and formulation for

strategies of Investtech GN Co.,ltd

- Chapter 3: Analysis formulated strategies and selection business strategy

for Investtech GN Co.,ltd (GNC) in period of 2012-2017, vision to 2022

7 Significance of the topic

enterprise to use resources efficiently as well as correctly identify its direction But because of various reasons that many Vietnamese

enterprises are not properly interested in application In the current reality, there are very few Vietnamese enterprises that undertake planning their strategy for developing seriously and scientifically Therefore, this topic will present an approach for making plan for business strategy of the enterprise basing on logic basis and specific application, from that bringing the experience of business strategy for other enterprises

of business activities in INVESTMENT TECHNOLOGY AND EQUIPMENT GIA NGUYEN CO.,LTD, the group is trying to build

a suitable business strategy, focusing on the feasibility to help companies survive during the current economic crisis and have the ability to develop more powerful in the future

CHAPTER I: BASIC THEORY OF BUSINESS STRATEGY AND METHOD FOR STRAGIC FORMULATION

1.1.1 The concept of strategy - Strategic Management

The term "strategy" has appeared for a long time, it originates in the military field Currently, there are many strategic concepts At present, there are many concepts on strategy: According to FredR.David: Business strategy is the means to achieve long-term goals 1 (FredR.David,2006)

According to AlfredChadler6 (HaroldKoontz, 1993): Business strategy is the determination of the basic and long-term objectives of the enterprise as well

as map out and choose a method, the process of action and distribution of resources to fulfill that goals

According to MichaelE.Porter3: Strategy is the creation of the position and unique value include different activities, as a choice, trade-offs in the competition, as creating fit among all the company's activities

The definition of strategy but different wording, but in general, it is a combination of strategy and policy objectives as well as major plans to achieve that goals, it shows that the company is or will be made what business activities, and the company will fall into what the business sector 4 (Nguyen Thi Lien Diep

& the authors, 2006)

Definition on strategy management

Strategic Management is an art and science of establishment, implementation and evaluation of decisions regarding functions that allows an organization to achieve set objectives 1 (FredR.David, 2006)

Also, at present, there are many different concepts of strategy management, it can be divided in three common approaches, including: the environmental approach, approach by the objectives and measures, approach by

actions and it can be integrated into the concept of strategy management as

follows: “Strategic Management is the process of studying the current environment as well as future, planning the objectives of the organization; proposing, implementing and controlling the implementation of decisions to achieve the environmental objectives in the current and future situation to

Strategy formed on the basis of determining business scope, objectives and the basic conditions to achieve the objectives, overcoming the spread or unused resources

The strategy must be built based on a right mindset, the certain information and knowledge to anticipate changes of business environment in the future, limiting the actual error to the current situation

Effective strategy to combine maturity with time i.e when the planning strategy must seize the opportunity to properly implement, do not take much time processing the details and expect to complete a perfect strategy

1.1.3 Role of strategic management

Strategic Management helps the administrators define the purpose and direction of the organization to reach a certain position

The environmental conditions constantly change with the opportunities and threats for organizations Therefore, the orientation of the strategy will help organizations take advantage of the opportunities and advantages in business to make the policy consistent with development, simultaneously predict the

uncertainties and risks to face with the action for the situation based on own potential

Help the administrators to effectively use the existing resources of the enterprises, allocating them appropriately, since then, the coordination with functions in the enterprise in the best way for a common goal of the organization

The study found that the companies use strategy management is achieving better results than the previous results and than the results of the companies that do not use strategic management

1.1.4 Strategic classification :

- Base on the scope of strategy:

+ Overall strategy: referring to the common goals, key issues with survival

meaning for the enterprise

+ Partly strategy: The specific strategy on price, products, distribution, etc

for each short-term or medium term stage of the overall strategy

- Base on the growth goals:

+ Focused growth goals:

 Market Entry Strategy: to increase market share for available products

or services in the current market

 Market Development Strategy: to bring available products or services

on the new market

 Strategy for product development: to develop current market for new products

+ Integrated development strategy:

 Strategy of combining forward: to increase the ownership or control of the organization's customers

 Strategy of combining backward: to increase the ownership or control

of those units to provide inputs

 The strategy of combining horizontally: to increase the ownership or control for the same industry competitors

+ Growth strategy by diversification way:

 Strategy on concentric diversification: to market new products or new Printing & Advertising in the industry, with existing processes or new technology but are related to each other

 Strategy on horizontal diversification: to target your products or services with new technology process in new or existing production but in the current market

 Mixed Diversification strategy aimed new products or services with a completely new technology in new business

+ Reduction strategy:

 Strategic of Joint Venture: Two or more companies form a sponsoring independent company for the purpose of cooperation

 Cutting operation strategy: selling a subsidiary or a company

 Strategic narrow down activities: strengthening the business through cost cutting, the existing assets of the business in case of revenue and profit reduces

 Strategy of liquidation: piecemeal sale of assets of the enterprise The competitive strategy under point of view M.Porter 3 (Michael E.Porter, 2009):

M.Porter gives three general directions for the strategy's success can help companies operate more efficiently to other companies in an industry:

+ Low-cost strategy: This strategy is to focus how the total cost of the lowest in the industry through a group policy that aims to feature this base + Differentiation strategy products and services: This strategy is aimed at creating products and services that the industry must be considered unique Product differentiation has many forms: design or brand image, technology, customer service, etc

+ The strategy focuses on a specific market segment: This strategy is focused on a group of buyers, a segment of the industry, or geographic

market

OPPORTUNITIES AND THREATS

The research environment of the business activities focus on the identification and evaluation of trends and events beyond the control of a single company, The evaluation of external factors suggests that the assembly and the threat that an important experience to the organization can draft management strategy to take advantage of opportunities and avoid or lessen the threat Operating environment of the business is divided into two types:

1.2.1 Macro environment:

The important influence of the macro environment is:

interest rates, the stage of economic cycle, the balance of payments, fiscal policy and monetary policy

government and political influence is growing to the operation of the business Enterprise must comply with tax rules, loans, safety, price, advertising, where plants and protection of the environment

trends, recreational interests, ethics, attitudes and standards of living, business community and women workers The social factors are often slow to change are difficult to identify

problem, lack of energy, waste natural resources, along with the growing demand for limited resources

born, creating opportunities and risks for all industries and businesses The development of new technologies can make a new market, resulting

in a proliferation of new products, changing relationships in the industry

and competition for existing products become obsolete

1.2.2 Micro-environment:

We apply the model of five competitive forces MichaelE.Poter to analyze micro-environment of the enterprise (also known as analysis of industry structure)

Figure 1: Michael E.Porter’s 5 forces model5 (Duong Ngoc Dung, 2005)

- Threat of new entrants: When the new competitors entering the

industry, they will reduce the market share, profits of the enterprise To protect their competitive position, the enterprises have to increase barriers through measures such as product diversification, exploiting the inherent advantages of scale, market share, geographic location , the brand, etc to make new entrants who wish join the sector requires the large initial investment cost, slow capital recovery, less competition, etc leading to withdrawal from the market

- Threat of substitutes: Because the science and technology are rapidly

developing, it will be the conditions for the introduction of substitute products The substitute products would threaten the market share and limit the profit potential of the enterprise Therefore, the enterprises must continually apply the scientific and technological applications to improve labor productivity to the

lower cost of the products and services, while improving quality and usability of the product to increase the competitive capacity

- Customers: The trust of customers is significant for the enterprises

However, when customers get the advantages, they will put pressure and affect the enterprise, for example, they will squeeze the prices, request long-term payment, etc

- Suppliers: Including units providing inputs such as raw materials,

machinery, finance, human resources, etc When the suppliers have the advantages, they will cause adverse pressure on enterprises such as selling at high price, short-term payment, etc

− Competitors

Figure 2: Main contents need analyzing on competitors 4 (Nguyen Thi Lien Diep & the authors, 2006)

the Company However, the purchasers shall have the advantages, possibly make the profits of the sector reduce by price squeeze or require higher quality and supply more services

supplies and equipment; public finance staff When the supplier has an advantage, they can cause stress and disadvantage businesses

What do competitors want to

How do the enterprises compete?

Several issues needed to answer about competitors

- Do the content agree with the current situation?

- How is the competitors’ ability in shifting and changing strategies?

- What are weaknesses of the competitors?

-What could help the competitors retaliate most powerful and effective?

profitability of the company, they put into operation new production capacity, with the desire for market share and resources needed

sector controlled by the highest price for companies in the industry

A company does not only compete with rivals in the industry but also compete with manufacturers of products and services instead There are two types of replacement that is:

+ The substitute products

+ The alternatives products 11 (W.Chan Kim– 2006, p87-97)

+

STRENGTHS AND THREATS

According to FredR.David1, the internal situation of the enterprise shall include the main factors such as: Administration, marketing, finance – accounting, manufacture, research and development, human resource, and information system

- Management:

+ Making plans: Including all management activities related to the

preparation for the future such as: forecast, set up goals, propose the strategies, development for the policies, establish the plans

+ Organization: Included all political activities creating the structure of power

and responsibility relations The specific work is: Organizational design, work details, control expansion, command unification, coordination, arrangement, work design and work analysis

+ Leadership: Leadership includes efforts to orientate human activities,

specifically leadership, contact, working groups, change of activities, authorization, improvement of work quality, satisfaction of needs, modification of structure and spirit of staffs and management spirit

+ Inspection: Inspection is related to management activities to ensure that

actual results are consistent with planned results Main activities include quality control, financial supervision, sale supervision, inventory, costs, analysis of changes, bonus and discipline

“Marketing is a human activity in order to meet needs and desires through exchange”5 (PhilipKotler,2001) However, to complete the exchange process, it requires much efforts and professional qualification in “analysis, development of a plan, and implementation of such plan, valuation, promotion and distribution of goods, services and ideas to create exchange among target groups, meet needs of customers and organizations, that means marketing management”5

(Philip Kotler,2001) The process of marketing management includes main basic tasks (1) analysis of market capacity (2) selection of target market (3) preparation of marketing mix (including 4 basic components: product, price, distribution and advertisement) (4) implementation of marketing activities

In addition, strategic marketing also includes following 4 components:

1 Probing: analysis of market

2 Partitioning: market segmentation

3 Prioritizing: selection of priority segments

4 Positioning: positioning enterprises and services of enterprises in such

priority segments 6(TonThat Nguyen Thiem, 2005)

Financial condition is often considered as the best method for evaluating the competition position and as the best condition to attract investors The main functions of finance- accounting include decision on investment, sponsorship and decision on share earnings

Analysis of financial indexes is the most popular method to identify the strengths and weakness of the unit in term of finance and accounting Important financial index groups include solvency (evaluation of solvency for short-term and due debts), Degree of Financial Leverage (showing scope of sponsorship by debts), index of operations (measurement of effectiveness of resources), profitability ratios (showing general efficiency of management) and growth indexes of economy)

Production- Operation includes all activities related to management of inputs, organization and combination of such factors in order to convert such factors into outputs which are products or services with the highest efficiency and profit

The process of production- operation includes 5 types of decision: forecast, inventory, materials, decisions on general planning strategies (refer to decisions

on production volume and production time), decision on production progress

Strengths and threats in this functional year are decisive factors to success or failure

or an organization

Research and development for purpose of development of new products before rivals, improvement of product quality, and proper control of price or innovation of production process to reduce costs Quality of efforts in research and development made by the company can help it affirm its leading position or make it lag behind other leading rivals in the industry

Human resources play an important role in success of the company A right strategy is unable to bring about effectiveness without good employees The main functions of human resource management include recruitment, inspection, selection, orientation for training and development, attention, evaluation, reward and discipline, transfer, promotion, demotion and dismissal of employees

The information system is an important strategy because it receives rude data from external and internal environment of an organization, helping to keep track of

changes in environment, detect risks in competition and support implementation, evaluation and supervision of strategy In addition, an effective information system allows the company to gain special ability in various fields such as low cost, services meeting needs of customers

Otherwise, long-term and sustainable development must be based on core capacity and professional skills of enterprises The process of cultivation and improvement of core capacity and professional skill is the basis for not only gaining/ keeping the market share but also mainly extending market to facilitate enterprise development that is identification of strengths of enterprises

Figure 3:The "tripod" of business development strategy of company

(Core capacity and professional skill include knowledge, technology, skill, and experience gained by enterprise in professional fields which the enterprise considers as a launching ramp to create development strategy for the enterprise)

8(TonThat Nguyen Thiem, 2005)

Long-term objectives reflect expected results of pursuing strategies Strategies show methods to obtain long-term objectives Timeframe for objectives

and strategies must be in consistent with each other, normally from 2 to 5 years

Every objective is often accompanied by a period and some items such as capital growth, growth of consumption revenue, profitability, market share, level and nature of vertical combination…

Figure 4: The Strategy - Formulation Analytical framework

According to Fred R David, Process of formulating and selecting strategy consists three stages:

Stage I: THE INPUT STAGE

The input tools require strategists to quantify subjectivity during early stages of the strategy-formulation process Making smalls decisions in the input matrices regarding the generate and evaluate alternative strategies Good intuitive judgment

is always needed in determining appropriate weights and ratings

Stage II THE MATCHING STAGE

The matching stage of the strategy-formulation framework consists of five technique that can be used in any sequence: the SWOT matrix, the SPACE matrix, the BCG matrix, the IE matrix, and the Grand Strategy Matrix These tools rely upon information derived from the input stage to match external opportunities and threats with internal strengths and weaknesses Matching internal and external

critical success factor is the key to effectively generating feasible alternative strategies

Stage III THE DECISION STAGE

Analysis and intuition provide a basis for making strategy-formulation decisions The matching technique just discussed reveal feasible alternative strategies The Quantitative Strategic Planning Matrix (QSPM) uses input from stage I, analyses and matching result from stage II, analyses to decide objectively among alternative strategies The QSPM is a tool that allows strategists to evaluate alternative strategies objectively, based on previously identified external and internal critical success factors The QSPM requires good intuitive judgment

Because the company's resources are restricted and we may not choose all strategies and we can just select some strategies for implementation

Conclusion: The process of strategic management is continuous and

dynamic A change in a major component in the model may require a change in one

or all of other components Thus activities of formation, implementation and evaluation of strategies should be implemented continuously Strategic management process never really ends

2(according to Fred R.David)

1.6.1 The tool providing information to develop strategies

1.6.1.1 Matrix of Internal Factor Evaluation Matrix (IFE)

Internal Factor Evaluation Matrix (IFE): A summary step in conducting an internal strategic management audit is to construct an internal factor evaluation ( IFE) matrix This strategy formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas An IFE matrix can be developed in five steps:

Step I: List key internal factor as identify in the internal-audit process Use a total of from 10 to 20 internal factor including both strengths and weaknesses List strengths first and then weaknesses

Step II: 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 The sum weights must equal 1.0

Step III: 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 strengths (rating=3) or a major strengths (rating=4) Note that strengths must receive a 3 or 4 rating and weaknesses must receive a 1 or 2 rating Ratings are thus company –based, whereas the weights in step 2 are industry-based

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

Step V: Sum the weighted scores for each variable to determine the total weighted score for the organization

1.6.1.2 External Factor Evaluation Matrix (EFE)

External Factor Evaluation Matrix (EFE) help us summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information The External Factor Evaluation Matrix can be developed in five steps:

Step I: List key external factor as identified the external-audit process Include a total of 15 to 20 factors, including both opportunities and threats, that affect the firm and its industry

Step 2: Assign to each factor a weight that ranges from 0.0(not important) to 1.0 (very important) for each element The weight indicates the relative importance

of that factor to being successful in the firm’s industry Opportunities often receive higher weights than threats, but threats can receive high weights if they are especially severe or threatening Appropriate weights can be determined by comparing successful with unsuccessful competitors or by discussing the factor and reaching a group consensus The sum of all weights assigned to the factor must equal 1.0

Step 3: Assign a rating between 1 and 4 to each key external factor to indicate how effectively the firm’s current strategies respond to the factor, where 4= the response is superior, 3= the response in above average, 2= the response is average, and 1= the response is poor Rating are based on effectiveness of the firm’s strategies Rating are thus company-based, whereas the weights in step 2 are industry –based It’s important to note that both threats and opportunities can receive a 1, 2, 3 or 4

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

Step 5: Sum the weighted score for each variable to determine the total weighted score for the organization Regardless of key opportunities and threats included in an EFE matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score in 1.0 the average total weighted score of 4.0 indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry A total score of 1.0 indicates that the firm’s strategies are not capitalizing on opportunities or avoiding external threats

1.6.1.3 The Competitive Profile Matrix (CPM)

The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its particular strengths and weakness in relation to a sample firm’s strategic position The weights and total weighted in both CPM and an EFE as the same meaning However, critical success factors in a CPM include both internal and external issue; therefore, the ratings refer to strengths and weaknesses, where 4=major strength, 3=minor strength, 2=minor weakness, 1= major weakness The critical success factors in a CPM are not grouped into opportunities and threats as they are in an EFE In a CPM, the ratings total weighted scores for rival firms can

be compare to the sample firm This comparative analysis provides important internal strategic information

1.6.2 The tools to build viable strategis

1.6.2.1 Matrix of strengths, weaknesses, opportunities, threats (SWOT)

SWOT Matrix is an important matching tool that helps managers develop four types of strategies: The strengths opportunities (SO), the strategy aims to take advantages of external opportunities; The weaknesses opportunities (WO), the strategies aim to improve weaknesses by taking advantages weaknesses of external opportunities; The strategic strengths threatened (ST): The strategies use strengths

to avoid or reduce the impact of external threats; The risk of strategic weakness (WT): The strategies to improve the weak points in order to avoid or reduce the impact of external threats

According to Fred R David, to build the SWOT matrix, we go through eight steps:

Step I: List the firm’s key external opportunities

Step II: List the firm’s key external threats

Step III: List the firm’s key external strengths

Step IV: List the firm’s key external weaknesses

Step V: Match internal strengths with external opportunities and record the resultant SO strategies in the appropriate cell

Step VI: Match internal weaknesses with external opportunities and record the resultant WO strategies

Step VII: Match internal strengths with external threats and record the resultant ST strategies

Step VIII: Match internal weaknesses with external threats and record the resultant WT strategies

Some important aspects of a SWOT matrix is a strategy that select variable, not decide what is the best strategy For example, note that both the internal/external factor and the SO/ST/WO/WT strategies are stated in quantitative terms to the extent possible

1.6.3 Tools for selection of strategies: Quantitative Strategic Planning Matrix

(QSPM)

QSPM matrix using input from the EFE matrix, IFE, profile competition, SWOT and key strategic objective to evaluate the best strategic alternative Six steps to develop a matrix QSPM:

Step I: make a list of the firm’s key external opportunities, threats and internal strengths/weaknesses in the left column of the QSPM This information should be taken directly from the EFE matrix A minimum of 10 external key success factor and 10 internal key success factor should be included in the QSPM

Step II: Assign weights to each key external and internal factor These weights are identical to those in the EFE matrix and IFE matrix The weights are presented in a straight column just to the right of the external and internal critical success factors

Step III: Examine the step 2 (matching) matrices, and identify alternative strategies that the organization should consider implementing Record these strategies in the top row of the QSPM Group the strategies in to mutually exclusive sets if possible

Step IV: Determine the attractiveness score(AS) defined as numerical values that indicate the relative attractiveness of each strategy in a given set of alternatives

of each strategy (AS) Attractiveness score are determined by examining each key eternal or internal factor, one at a time, and asking the question “ does this factor affect the choice of strategies being made?” if the answer to this question is yes, then the strategies should be compared relative to that key factor Specifically, AS should be assigned to each strategy to indicate the relative the attractiveness of one

of strategy over others, considering the particular factor The range of the AS is 1 = not attractive, 2 = somewhat attractive, 3 = quite attractive, 4 = Very Attractive By attractive, we mean the extent that one strategy, compared to others, enables the firm to either capitalize on the strength, improve on the weakness, exploit the opportunity or avoid the threat

Step V: Compute the total AS score The total AS are define as the product

of multiplying the weights (step 2), by the AS (step4) in each row The total AS of each alternative strategy, considering only the impact of the adjacent external or internal critical success factor The higher the total AS, the more attractive the strategic alternative considering only the adjacent critical success factor

Step VI: Compute the total AS, add total AS in each strategy column of the QSPM The sum total AS reveal with strategy is most attractive in each set of alternatives Higher scores indicate more attractive strategies, considering all the relevant external and internal factor that could affect the strategic decisions The magnitude of the difference between the sum total AS in the given set of strategic alternatives indicates the relative desirability of one strategy over another

Conclusion: In order to form strategies business have to measures the effectiveness of each strategy Strategies are obsolete in the future, managers need

to regularly review these strategies Each organization should establish and communicate clear goals and specific strategies, there are such organizations exist

to help new and long-term development in the future

CHAPTER II: ANALYSIS OF BUSINESS ENVIROMENT

AND FORMULATION FOR STRATEGIES OF

INVESTTECH GN CO.,LTD

Investment Technology and Equipment Gia Nguyen Co.,Ltd officially is

opened and operates under Business Registration License No 0102007405 issued by

Business Registration Office – Hanoi Department of Planning and Investment

VISION

GNC would like to become a strong company with creative labor efforts in

science and technology, delivering products and services with the most advanced

technology to meet needs of customer, contributing to prosperity of the country,

providing its members with the best conditions for development of talent and a life

full of material and spirit

Our company provides the equipment - technology - services to domestic and

foreign clients, including Government agencies, State-owned enterprises,

multinational companies and factories- they are the units playing a critical role in

the economy of Vietnam

Co.,Ltd

Co.,Ltd

For GIA NGUYEN, human is extremely important and the most valuable asset because we understand that human is the leading factor to providing customers with excellent services

MISSION

Breaking through and applying the most advanced technologies in the world

to contribute to promoting prosperity and development of Vietnam in the 21st century

Contributing to the development of Information Technology in Vietnam with

a product distribution system, providing reputable solutions and service to ensure the smoothest and effective communications systems

Contributing to providing equipment, ensuring technical infrastructure to serve the social and economic development in the new period

Actively promoting activities for benefits of community and society; bringing about the highest satisfaction for customers, workers and communities by the performance of the Company

CORE VALUES

The core value of GNC is the sustainable values which contribute greatly to the success and nature and brand of the company, namely:

• Leading technology, and innovation for development

• Customer service comes first

• Human resource is the strength of the company

• Profit and growth is a measure of success

• Honesty, integrity and ethics on all aspects of business

ORGANIZATION CHART

To perform these functions and business development tasks, provide total solution of information technology, ensure customer support services and maintain all activities of the company effectively, the Gia Nguyen Company develops a strict organizational structure, including departments with clear tasks and goals, and appropriate personnel structure The departments have a relationship of synchronous support and coordination creating a collective power and ensure

implementation of customer services comprehensively and thoroughly

Figure 5: Organization Chart of Gia Nguyen Company

MAIN BUSINESS ACTIVITIES:

Distribution Activity of Telecom equipment of ADTRAN, RAISECOM, CTCU…

We are authorized from some manufactures in Taiwan, Beijing, USA,…with well-known name in Telecom such as ADTRAN, RAISECOM, CTCU……to sell and expand market in Vietnam

DIRECTOR

DEPUTY TECHNICAL DIRECTOR

FINANCE-

ACCOUNTING

RESEARCH AND DEVELOPMENT

SOLUTION CONSULTANCY

MARKETING

SALE MARKETING PROJECT BUSINESS

We focus almost in projects of big telecom service provider as VNPT, Viettel, EVNT, G-Tel, Vietnammobile….Customers use our equipment to provide internet service, leased line service, analog telephone, television cable …to the subscribers All of our solution to provide effective applications that Service providers need for their cable network Some pictures as bellow to show our solution and our equipment:

Solution for TDM over Ethernet:

This solution is effective in leased line service with high bandwidth over TDM network The service provider can support service for mobile BTS stations, datacenter, the Bank channels or Government Offices The equipment for this solution is Ethernet modem with high bandwidth Every year we sell about 5000 units for this type to Vietnam market All equipment can be supported by management SNMP or Webserver, Telnet…to conflict from terminals or control status of equipment but not need go to the place where equipment lay on Technology of this type is all-time to be changed by upgrade more function, more higher level standards, so that to update this changing is also the important for distributors But with support from R&D team of manufactures, we can all time to update and lead customers to new version

Solution for Ethernet carrier:

It is intelligent application which all telecom service provider use this for their internet service or multi-service Because it supports high bandwidth over optical cable Equipment is made to intergrade of switching and routing, supporting SLA control

Network Routing:

The success of your business depends on making the right connections With the NetVanta line of multiservice, modular, and fixed-port access network routers you are making the smart connection for your business Whether you work remotely or

in a company with thousands of employees, you need a network that can scale to the demands of a continuously connected world ADTRAN understands every connection must be reliable, secure, and fast For that reason, ADTRAN developed the NetVanta family of business-class network routers to provide you with a wealth

of affordable, diverse networking solutions

NetVanta routing solutions are designed to meet the need for secure, effective Internet access and multisite business connectivity for applications ranging from bandwidth expansion and VoIP to point-to-point connectivity, MPLS networking, VPN, ADSL and Ethernet access Our network routers address today's highest networking priorities with robust WAN and LAN protocols, support for next-generation technologies such as Carrier Ethernet and 3G wireless, and a differentiating set of ease-of-use, management, security, and troubleshooting features like Voice Quality Monitoring With the broadest line of routing and IP communication products on the market for SMB networks and diverse enterprise offices, NetVanta is connecting real people and businesses across the world with value-driven network routers you can count on

cost-GNC’s Products:

The Company’s product structure is unfixed and changed from time to time, which may be within 1 week, 1 month, 1 quarter or no more than 1 year Although its products change flexibly, they still base on core foundation of high-tech products, including:

TELECOMMUNICATION TECHNOLOGY PRODUCTS make up 60%

of the income and profits in the whole company (the revenue of the product line in the period of 2009- 2011 was VND 95 billion/ year in average); It mainly focuses

on terminals of access networks and other telecommunication informatics products

of famous firms in the world such as CISCO, Juniper, ADTRAN, CTCU, RAISECOM…, Meeting the targets on distribution and sales, retailing terminals and informatics- telecommunication equipment to telecom service providers and enterprise

MATERIALS AND ACCESSORIES make up 30% of the income and profits in

the whole company (the revenue of the product line in the period of 2009- 2011 was VND 54 billion/ year in average), including cable welding sleeves, pending optical cables, underground optical cables, tang, connector, equipment mounted cabinet…

TECHNOLOGY PRODUCTS AND SERVICES make up 10% of the

income and profits in the whole company (the revenue of the product line in the period of 2009- 2011 was VND 17 billion/ year in average); They are mainly cable welding services, equipment maintenance, terminal lease, etc

2.2.1 Macro Environment

2.2.1.1 Economic Impact

Since 2003, economic growth rate of Vietnam has been quite high, reflecting growth of GDP and GDP / capita This is a positive factor affecting all businesses operating in Vietnam’s economy in general and GNC in particular GDP growth rate higher than population growth rate has led to the growth of GDP per capita

Table 1: GDP growth rate of Vietnam in the period 2003-2011

Data on gross domestic product growth (GDP) over the years

Growth rate

(Source: Asian Development Bank – ADB)

Table 2: GDP per capita of Vietnam in the period 2003-2011

Unit: USD / person / year

Data on per capita GDP over the years

GDP/person 483 514 640 722 823 1,024 1,040 1,168 1,300

(Source: Asian Development Bank – ADB)

2.2.1.2 Elements of law, government and politics

Political situation of Viet Nam which has been more and more stable has

affect greatly creating belief for enterprises in development and implantation of long-term strategies Vietnamese Government is tightening and extending foreign affairs relations with countries in the world Especially, that Vietnam integrated the Free Trade Area ASEAN, signed U.S - Vietnam Bilateral Trade Agreement, integrated WTO and became a non-standing member of United Nations Security Council……created a firm position for Viet Nam in the region and in the world

In the trend of integration, National Assembly promulgated and continued to complete Economic Codes such as Foreign Investment Law, Commercial Law, Enterprise Law, Law on Value Added Tax, Law on Corporate Income Tax….to promote economic reform Open economic policies aims at stimulus of development of economic components have been also approved, so creating an advantageous business, healthy and stable business environment Transparent and stable legal environment is prerequisite to mobilizing foreign investment, especially

in current information equipment industry

In the period 2006 - 2007, many legal documents related to Information Technology development plan for the period 2006 - 2010 was approved including:

- Decree No 57/2006/ND-CP dated June 09th 2006 of Prime Minister on electronic commerce

- Decision of Prime Minister No 169/2006 QD-TTG dated July 17th 2006 on regulations on investment and procurement of IT products by the agencies and organizations using state budget funds

- Information Technology Law approved by National Assembly on June 22nd

2006 and was effective from Jan 01st 2007

- Government’s Decree 26/2007/NĐ-CP dated Feb 15th 2007 stipulating details in enforcement of electronic transactions related to digital signature and service of certification of digital signatures

- Government’s Decree No 71/2007/ND-CP dated May 03rd 2007 on specific regulations and instructions on implementation of a number of articles of Information Technology Law