Building multi-sectoral business strategy for Ha Tinh trading and mineral corporatinon within the period of 2010 - 2020

DTNH Short term investment EBIT Pre-tax interest and lending interest EFE External factors evaluation IFE Internal factors evaluation IE Matrix for internal – external factors evaluation

GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

Capstone project REPORT

BUILDING MULTI-SECTORAL BUSINESS STRATEGY FOR HA TINH TRADING AND MINERAL CORPORATION

WITHIN THE PERIOD OF 2010 - 2020

Group: 11 Group members:

1 Nguyễn Anh Tuấn

2 Nguyễn Đăng Quang

3 Trần Hoài Nam

4 Phạm Văn Tình

VINH, 2010

ACKNOWLEDGEMENT

To complete this assignment, our group wishes to show our gratitude to teachers who have transferred knowledge to us during the process of learning and instructing to do graduation assignment; in addition we also wish to show great attitude to the program of Global advanced master of business administration organized by Griggs University of the US and ETC of Ha Noi National University which has created good condition in term of material and spirit for us during recent time

Then, we also wish to show our great gratitude to Leading board, cadres of

Ha Tinh Trading and Mineral Corporation and member units of Corporation that have created the best condition and suggestions for our group during the process of topic implementation

Due to limited time and qualification, it can be sure that the topic “build up multisectoral business strategy for Ha Tinh Trading and Mineral Corporation during

2010 – 2020” cannot avoid mistakes; then we are looking forward to receiving the helps and suggestions of teachers and leading board, cadres of Ha Tinh Trading and Mineral Corporation and program of Global advanced master of business administration organized by Griggs University of the US and ETC of Ha Noi National University, then we can improve and complete this topic better

Best regards!

Group 11 – Class: GeMBA01.V02

TABLE OF CONTENT

ACKNOWLEDGEMENT……… …….ii

TABLE OF CONTENT ……… …… iii

LIST OF ABBREVIATIONS……… … vii

LIST OF TABLES ……… ix

PREFACE: ……… …1

1 The need of topic study 1

2 Study purposes 2

3 Study object and scope 2

4 Study methos 2

5 Structure of assignment: 3

Chater 1: THEORY BASIS FOR STRATEGIC CONSTRUCTION.……4

1.1 Basic definition of business strategy 4

1.2 Strategic system of enterprise 4

1.2.1 Strategy in company level 4

1.2.1.1 Growth strategy: 4

1.2.1.2 Stable strategy 5

1.2.1.3 Withdrawal strategy 5

1.2.2 Competitive strategy: 5

1.2.3 Functional strategy: 5

1.3 Method for business strategy construction in enterprise 5

1.3.1 Macro environment 5

1.3.2 Sector environment 6

1.3.3 Analysis of internal environment of enterprise 7

1.3.4 Analysis of trading sectors of enterprise (portfolio) 8

Chapter 2: COMMON INTRODUCTION AND ANALYSIS OF BUSINESS ENVIRONEMNT OF HA TINH MITRACO ……….13

2.1 Common introduction: 13

2.1.1 Enterprise’s name: 13

2.1.2 Address: 13

2.1.3 Tel:……… 13

2.1.4 Website: 13

2.1.5 Trading sectors: 13

2.1.6 Organizational diagram: 14

2.2 Analysis of external business environment of Mitraco 15

2.2.1 Analysis of macro environment: 15

2.2.1.1 Economic environment: 15

2.2.1.2 Legal and political environment: 15

2.2.1.3 Technological environment: 15

2.2.1.4 Cultural and social environment : 16

2.2.1.5 Natural environemnt: 16

2.2.2 Analysis of sector environment: 16

2.2.2.1 Pressure from customers: 16

2.2.2.2 Pressure from providers: 17

2.2.2.3 Current competitive opponents : 17

2.2.2.4 Potential competitive opponents : 20

2.2.2.5 Replaced products: 20

2.3 Analysis of internal environment of Mitraco 22

2.3.1 Analysis of resources 22

2.3.1.1 Human resources 22

2.3.1.2 Finance : 24

2.3.1.3 Technical infrastructure: 31

2.3.1.4 Technology, machine and equipments: 32

2.3.2 Supplemented analysis: 32

2.3.2.1 Management and administration in Mitraco: 32

2.3.2.2 Company structure 33

2.3.2.3 Brand name of Mitraco 34

2.4 Analysis of trading sector in Mitraco (portfolios) 34

2.4.1 Reality 35

2.4.1.1 Mineral sector 35

2.4.1.2 Construction materials 36

2.4.1.3 Seaport services 37

2.4.1.4 Raising and raising food processing sector 37

2.4.1.5 Commercial and service sector 38

2.4.2 Common assessment of business sectors of Mitraco 38

2.4.2.1 Core business sector of Mitraco: 38

2.4.2.2 New investment sectors of Mitraco 39

2.5 SWOT matrix construction 42

2.6 Construct matrix for internal – external factors evaluation (IE) of business sectors in Mitraco 48

2.6.1 External factors evaluation (EFE) 49

2.6.2 Internal factors evaluation (IFE) 52

2.6.3 Matrix for internal-external factors evaluation (IF) 54

2.7 Construct BCG matrix (Boston Consulting Group) 56

2.7.1 Market and market share growth rate in some business units of Mitraco 56

2.7.2 BCG matrix 57

Chapter 3: CONSTRUCTION BUSINESS STRATEGY FOR HA TINH MITRACO WITH THE PERIOD OF 2010 – 2020 ……… 59

3.1 Strategy choice 59

3.2 Vision, mission and targets of Mitraco 61

3.2.1 Vision of Mitraco by 2020: 61

3.2.2 Mission of Mitraco: 61

3.2.3 Strategic targets of Mitraco 62

3.3 Solutions to implement strategy within 2010 - 2020 62

3.3.1 Organizational reconstruction of company 62

3.3.1.1 Implementation method: 62

3.3.1.2 Targets: 62

3.3.1.3 Implementation orientation: 63

3.3.2 Sector and portfolio reconstruction 66

3.3.2.1 Implementation time: 66

3.3.2.2 Targets: 66

3.3.2.3 Implementation orientation: 66

3.3.3 Development of high quality human resource 73

3.3.3.1 Implementation time: 74

3.3.3.2 targets: 74

3.3.3.3 Implementation orientation: 74

3.3.4 Build up effective management information system 75

3.3.4.1 Implementation time: 75

3.3.4.2 Targets: 75

3.3.4.3 Implementation orientation: 76

3.3.5 Develop brand name and corporate culture 76

3.3.5.1 Implementation time: 76

3.3.5.2 Targets: 76

3.3.5.3 Implementation orientation: 76

3.3.6 Build up standard operational process: 77

3.3.6.1 Implementation time: 77

3.3.6.2 Contents: 77

3.4 Limitations of process and study orientation in the future 799

3.4.1 Limitations of process 79

3.4.2 Study orientation in the future 80

CONCLUSION.……… …… 82

REFERENCES……… 83

DTNH Short term investment

EBIT Pre-tax interest and lending interest

EFE External factors evaluation

IFE Internal factors evaluation

IE Matrix for internal – external factors evaluation

Mitraco Ha Tinh mineral and trading corporation

NVNH Short term capital

RMS Relative market share

SWOT Strengths (S), weaknesses (W), opportunities (O), threatens (T)

SWOT matrix is the most typical model in building business

strategy of the enterprise

LIST OF TABLES

Table : 2.01 Table of opportunities (O) and threatens (T) 20

Table: 2.02 Table to compare some index of labor productivity of

Table: 2.03 Table of trading results in 3 years 24

Table: 2.04 Balance sheet on 31/12 of every year 25

Table: 2.05 Table of financial norm analysis 27

Table: 2.06 Table of strengths (S), weaknesses (W) 40

Table: 2.08 Table of symbols of analyzed sectors 48

Table: 2.09 Table to evaluate external factors (EFE) of mineral sector

Table: 2.12 Table to evaluate external factors (EFE) of raising and

Table: 2.13 Table to evaluate external factors (EFE) of commercial

material sector (C)

Table: 2.16 Table to evaluate internal factors (IFE) of seaport service

Table: 2.17 Table to evaluate internal factors (IFE) of raising and

Table : 2.18 Table to evaluate internal factors (IFE) of commercial

Table: 2.19 Table of market growth rate and relative market share of

Table: 3.01 Table of revenue density of mineral sector and other sectors 59

Table ; 3.02 Expected time, cost and order of strategic solutions within

PREFACE:

1 The need of topic study

Vietnamese economy is operating according to market economy under State’s management and global economic integration; to exist and develop, each enterprise must have suitable strategy with integration and common development of the market; Enterprise without business strategy will be like a boat without boatman and if the strategy is not suitable or not well implemented then enterprise cannot reach success In other words, the destiny of enterprise will depend much on administration, strategy construction and strategy implementation

Ha Tinh trading and mineral Corporation (Mitraco) is a strong State-owned enterprise which has reached many achievements in recent years; However, operational background of Mitraco has got many changes which creates high pressure to force Mitraco to build up general strategy for itself; High pressure for Mitraco including:

Firstly: core traditional trading sectors of Mitraco (mineral exploiting,

especially Ilmenite) at traditional area (Hà Tĩnh) has coped with limited development due to exhausted reserves This can make business effect of Mitraco reduced in the coming times; If there is no timely adjustment, then Mitraco can get financial difficulties in the future

Secondly: Development of market economy and global economic integration

as well as innovation trend of State-owner enterprise have created high pressure for Mitraco

Thirdly: Strong development trend of Vietnamese economy in general and

HA Tinh in particular, especially in associated international relation with Laos and other partners have created opportunities and threatens for enterprises within Ha Tinh province including Mitraco – the currently biggest enterprise within Ha Tinh province

In such background, Mitraco cannot just focus on tactics solution but focus

on building, implementing and monitoring long term strategy to maintain growth rate, make use of advantages and core capacity which are suitable to economic and legal environment and support Mitraco in making investment decision; Therefore, Mitraco must build up and implement general strategy from 2010 to 2020, to maintain position and basis for development in the coming periods

2 Study purposes

Study purpose of the topic is to build up general strategy of Mitraco to anser the question: (i) Which sector should Mitraco join in? (ii) And how to make brain agency of Mitraco manage business activities of member units in the most effective way?

3 Study object and scope

Assess business activities of enterprise: define business activities that enterprise will maintain, newly establish or remove; define and assess strategic choice and necessary methods to maintain or expand business activities

4 Study methos

In study process, we have use main study methods in economic study such as method of analysis and synthesis, method of statistics and comparison; analysis of macro environment, sector environment and reality of enterprise; Then we build up SWOT matrix, IE matrix, BCG matrix combine theory and reality to make up strategy of Mitraco

5 Structure of assignment:

The assignment is divided into three chapters:

Chapter I: Theory basis for strategic construction

Chapter II: common introduction and analysis of business environment of Ha

Tinh Mitraco

Chapter III: construction of business strategy for Ha Tinh Mitraco during 2010 –

2020

Chater 1: THEORY BASIS FOR STRATEGIC CONSTRUCTION

1.1 Basic definition of business strategy

Strategy is understood as compound action to exploit and mobilize resources

in an enterprise to reach a defined purpose; There are many different definitions of business strategy but the most common definition currently is: Strategy is: “a series

of complex actions to mobilize all resources of an organization to reach a defined purpose” [6, page.1]

Chamdler considered strategy as including stability of long term targets of enterprise, choice of methods or action process as well as allocation of necessary resources to implement such targets [4, page.2]

Alain Threlart supposed that “Business strategy is an art that enterprise uses

to cope with competition and win” [4, page.2] Business strategy can help enterprises to realize targets and orientation to promote and make use of all resources, opportunities to have the best competitiveness with other enterprises at the same time have methods and large vision for enterprises to overcome threatens

on competitive market then help enterprises to exist and develop

1.2 Strategic system of enterprise

With regard to each enterprise, there are many strategies which are suitable

to each type, period and different targets, including:

1.2.1 Strategy in company level

1.2.1.1 Growth strategy:

▪ Strategy of focused growth

- Strategy of market penetration

- Strategy of market share development

- Strategy of product development

▪ Growth strategy by integration:

- Merging

- Taking over

- Joint venture ▪ Diversification of enterprise’s activities

1.2.2 Competitive strategy: there are three basic types of competition

which are: strategy of cost influence, strategy of product difference, and strategy of concentration

1.2.3 Functional strategy: including Marketing, human resource,

investment…[4, page.11 - 12]

1.3 Method for business strategy construction in enterprise

Based on above theory, in current economy and future trend, the topic will analyze internal environment of enterprise in sector environment, acro environment with SWOT analysis, analysis of competitive capacity, portfolios…

1.3.1 Macro environment

Macro environment is the place where enterprises will look for opportunities and limit threatens including: economic environment; technological environment; social and cultural environment; natural environment; legal and political environment

Model of macro environment

Source: [4, page 6]

1.3.2 Sector environment

This is pressure for enterprise including: pressure from providers, pressure from customers, pressure from competitive opponents, and pressure from replaced products; we must analyze and predict pressures in sector environment to define opportunities and threatens for enterprise then give suitable solutions

Macro environment sector environment

environment within enterprise

economic environment

Culture - society

politics- law Technological environment

Natural environment

Source: [4, page 6]

1.3.3 Analysis of internal environment of enterprise

As we have known, within enterprise, there are many factors that can impact

on activities of enterprise; then we can go on analysis of enterprise’ resource including: human resource, finance, technical infrastructure, technology and machine, equipments; indicate strengths and weaknesses of enterprises, then have solutions to promote strengths, limit and adjust weaknesses

Threatens of replaced products and services

negotiation power

Negotiation power

threatens of new competitive opponents

Competitive opponents in

the sector

Competition among existing enterprises in the

sector Potential opponents

replaced products

Customes Provides

Enterprise’s resources

(Source: Analyze by Group)

1.3.4 Analysis of trading sectors of enterprise (portfolio)

Analyze reality of trading sectors of enterprise, assess competitiveness and

development level

From above analysis we go on building SWOT matrix , IE matrix of business sectors of enterprises and BCG matrix of some distinctive business units of enterprise which is the basis for choosing business strategy for enterprise, then define vision, mission, targets and suggest solutions for implementing strategies

 SWOT matrix

To build up SWOT matrix we must implement the following eight steps:

 Step 1: list main opportunities from external environment ( O1, O2…)

 Step 2: list main threatens from external environment ( T1, T2…)

 Step 3: list main strengths of enterprise ( S1, S2…

 Step 4: List main weaknesses of enterprise ( W1, W2 )

 Step 5: combine strengths with opportunities to form strategies ( SO)

Human financial resource resource

Machines, technical Equipments, infrastructure Technology

 Step 6: combine weaknesses with opportunities to form strategies ( WO)

 Step 7: combine strengths with threatens to form strategies ( ST)

 Step 8: combine weaknesses with threatens to form strategies ( WT)

Threatens (T)

T1: List of threatens according to importance order T2:

 Total point of IFE on horizontal axis

- If total point is from 1.0 – 1.99 then it is internal factor

- If total point is from 2.0 – 2.99 it is mean

- If total point is from 3.0 – 4.0 it is strong

 Total point of EFE on horizontal axis

- If total point is from 1.0 – 1.99 then capacity to cope with external environment of enterprise is low

- If total point is from 2.0 – 2.99 l then capacity to cope with external environment is on mean level

- If total point is from 3.0 – 4 then capacity to cope with external environment is high

IE matrix

Internal factors evaluation (IFE) of sectors

High Mean Low

- If business unit/sector is located in squares i, ii, iv: it must be developed and constructed

- If business unit/sector is located in squares iii,v,vii: it must be maintained

If business unit/sector is located in squares vi, viii, ix: it must be harvested and removed

 BCG matrix:

This matrix is given by the leading administration consultancy company of the

US (Boston) to help bog companies to assess activities of strategic business units Then it will help administrators to allocate capital to SBUs and assess financial situation of the company This matrix is a table of 4 squares:

 Horizontal axis: relative market share of SBU is defined by the rate between

revenue of SBU with revenue of leading opponent or the secondly ranked opponent

- If SBU does not have leading revenue then relative market share of SBU

will be equal the rate between revenue of SBU with revenue of leading opponent within the sector

- If SBU has leading revenue then relative market share of SBU will be equal the rate between revenue of SBU with revenue of the secondly ranked opponent

 Vertical axis: indicates annual growth of market of products that SBU

trading by percentage; if SBU has percentage higher than 10%, it will be considered as high level

BCG matrix

relative market share of products (%)

Source: [4, page 8]

- SBUs located in question mark are newly established with high growth rate but small market share and revenue Company must consider to invest capital for such SBUs to increase market share

- SBUs located in star square often have leading market share in the sector with high growth rate, but must cope with violent competition then company must invest much capital; according to time, if such SBUs can keep high market share then such sector will go on stability with reduced growth rate, SBUs will transfer to milk cow square

- SBUs located in milk cow square is the financial source of the company; then

if SBUs cannot keep the first position then they will transfer to dog square

- SBUs located in dog square have less capacity to bring profit to company then company should consider whether to get or remove such SBUs

Chapter 2: COMMON INTRODUCTION AND ANALYSIS OF BUSINESS ENVIRONEMNT OF HA TINH MITRACO

2.1.5 Trading sectors: Ha Tinh Mitraco is the State-owned enterprise

directly under Ha Tinh Provincial People’s Committee established according to Decision No 61/2003/QĐ-TTg of Prime Minister The corporation is operating and trading according to model of parent company – subsidiaries on many sectors including:

- Exploit and process minerals

- Trading supermarkets, hotels, restaurants, tourism, informatics technology, transportation service, labor export

- Produce and trading construction materials

- Exploit and trading hydroelectric

- Raising and processing raising foods

- Repair machines and equipments

- Export garment

- Manage, exploit, seaport services; commodity appraisal

2.1.6 Organizational diagram:

(Source: provided by organizational office of Mitraco)

Administration council

Ky Anh mineral enterprise Exploiting enterprise

Cam Xuyen Titan enterprise

zircon processing enterprise

Thach Anh mineral company

Vu Quang hotel

Labor export company

Subsidiaries

Mangan joint stock company Agricultural and forest company Raising food company

Raising company

Construction material JSC

Thach Khe iron company

Viet Laos Ltd

Nam-company

Ha Tinh port JSC

Commercial JSC

Thien y JSC

Lam Hong JSC

Transportatio

n and construction JSC

Mechanic and construction JSC

associated company

Thach Khe iron JSC

Huong Son hydroelectric JSC

Vung Ang petroleum JSC

Dioxititian JSC

Vinatex Hong Linh JSC

Ha Tinh garment JSC

Construction material JSC

2.2 Analysis of external business environment of Mitraco

2.2.1 Analysis of macro environment:

2.2.1.1 Economic environment:

Ha Tinh Mitraco is trading in common economic environment which is developing; trading products of Mitraco are mainly exploiting and processing minerals; consumption market including both domestic and foreign market then it can get much troubles; but it also has many advantages: our nation is in the first period of market economy which in on growth rate then there are many products to

be used; especially Ha Tinh is implementing many big projects such as: Thach Khe iron mine exploiting; Formosa project; Vung Ang economic zone;…This is the opportunity for Mitraco to diversify sectors and expand production; common assessment: Vietnamese economic environment in general and Ha Tinh province in particular is the opportunity for Mitraco but also opportunity for other enterprises

2.2.1.2 Legal and political environment:

Trading sectord of Mitraco are adjusted by law including corporate law, labor law, environmental law, land law, investment law…besides, Mitraco also implements some regulations according to sector; in general, Viet Nam is assesses

to have stable social political environment compared to other nations in the area; After giving many policies for innovation, Viet Nam has reached stable growth rate

of GDP Political and economic of macro economy is maintained; Viet Nam is assessed to be a safe place for investment; besides, currently Ha Tinh province also has some big policies to create good condition for development of Mitraco, such as policy of issuing mine, supporting investment…This is really an opportunity for Mitraco

2.2.1.3 Technological environment:

Sector of mineral exploiting and processing in Viet Nam is in lower level than the world with low technology; then Mitraco get much difficulties, especially

technology to process deeply minerals Meanwhile minerals are non-recycled resources then deep processing, effective using, exploiting mineral are very important for the development of Mitraco and the nation This is also a threaten that requires Mitraco to transfer quickly advanced technology in the world to raise capacity of deep processing, raise capacity and business effect and meet the policy

of the Party and the State

2.2.1.4 Cultural and social environment :

Mitraco is trading within Ha Tinh province which is an area of fondness of learning tradition, hard working and couraged in revolution; high self-respecting, sacrificed for common development of society, long term culture and healthy traditions and custom This will be an advantage for business development of enterprise; However, economic innovation thought is limited due to undeveloped economy

2.2.1.5 Natural environemnt:

With trading sectors of Mitraco we must consider processing environment according to right requirements to reduce environmental pollution; on the other hand, Mitraco is located in Northern Central area with unfavorable climate, high rainy quantity, influence of Laos wind then it will be not good for exploiting minerals as well as other trading sectors This is threatens for Mitraco

2.2.2 Analysis of sector environment:

2.2.2.1 Pressure from customers:

Products of Mitraco are mainly consumed in international markets then it must follow international standards of techniques as well as price and other trading conditions; However, Mitraco has advantage in which there are many traditional customers who have attached to Mitraco in recent years and Mitraco also has prestige with domestic and foreign customers then it will get sharing of difficulties with each other

2.2.2.2 Pressure from providers:

In term of materials of mineral processing, Mitraco is –self-exploiting but content is lower and reserves are exhausted then the lack of materials can happen; Then it requires Mitraco to quickly exploit in nearby provinces and have policy to buy materials of domectic and foreign units for providing materials or deep processing of minerals; This is a great threaten for Mitraco, which needs a concrete route to implement

Besides, fuels and power also increase price which forces the unit to accept then it is a high pressure for business effect of enterprise

2.2.2.3 Current competitive opponents :

a, Minerals: there are many domestic and foreign units of exploiting and

processing minerals such as Trị, Thừa Thiên - Huế, ,

, Bình Định…

- Ilmenite: nationwide, there are about 30 companies that officially have

exploiting mine and trading products of Ilmenite Most of such companies are private companies or joint stock companies; to assess opponents of Mitraco, we will consider norms of technology – machine, equipments, exploiting quantity, consumption, revenue; according to such norms, there are only three units with competitiveness with Mitraco including: Quang Tri Mineral company; Hue Mineral one member Ltd Company and Binh Dinh mineral JSC; currently, in term of Ilmenite exploiting, Miltrraco is the enterprise with highest competitiveness

- Zircon: Currently, nationwide, there are 7 units of producing Zircon, but

we can assess that Mitraco is the unit with the modernist machine and equipment which is the only unit to have Zircon products of 5 micro met max meeting demand

of Ceramic sector, and hygiene porcelain in Việt nam With regard to this product, within the nation Mitraco has no competitive opponents; with regard to foreign

companies, Mitraco can strongly compete in price due to high import price of other units

Other Zircon products (45 micro met max and 75 micro met max) are exported to China, India and Japan; three strong competitive opponents of Mitraco nationwide are: Hue Mineral one member Ltd company; Binh Dinh mineral JSC; Hai Tinh Joint Venture company But Mitraco is still in leading position due to stable products quality

Common assessment of mineral sector of Mitraco, in term of competitiveness, then Mitraco has higher competitiveness than other units; on the other hand, demand of market on such products is high which is favorable for Mitraco

b, Construction materials:

- Plaster: currently, in Viet Nam apart from Mitraco, there are only 2 units

producing and trading plaster which are Hue Plaster and Cement JSC and Military zone 4 Mineral development company Currently in term of market share then Hue Plaster and Cement JSC ranks the first, Mitraco ranks the second, but in term of reserves, Mitraco has higher reserves and Mitraco has dominant qualification, experiences, machines and equipments

- High quality Tuynel brick and tile: within Ha Tinh province there are 11

units of producing tuynel brick and Tile with industrial scale but there are only 3 opponents which are joining in the same market as Mitraco which are: Ky Giang Brick enterprise, Cau Ho Brick and Tile JSC, Thach Vinh Brick enterprise; such units have no tile products; In term of scale, technology and equipments of the factory, Mitraco ranks the first of Central area In term of market demand, in the future demand of Ha Tinh market will be still high; competitiveness of product quality of tuynel brick and tile, Mitraco ranks the first compare to other units within the area of Nghe An, ha Tinh and Quang Binh; however in current period, competitiveness of price of Mitraco is lower because the factory has just come in

operation from the beginning of 2010, then strategy of Mitraco is to bring quality of product to the leading position

- Construction stone: there are 52 mines for exploiting construction stone

within 10/12 district and town of Ha Tinh, mines have big reserves, high quality and provides a big quantity in the same market as Mitraco (Southern area of Ha Tinh) which are: Lac An JSC, Western JSC, Central Cosevco JSC In term of competitiveness, Mitraco ranks the first

c, Seaport exploitation: Vung Ang port of Mitraco has private advantage

which is the unique port in Northern Central receiving vessels of 45.000 tons Products via port for providing Vung Ang economic zone, exporting to Laos and Northern east of Thailand are very plentiful

d, Agriculture:

- Super-meaty pigs: according to Ha Tinh statistical agency, within Ha Tinh

province there are about 25 centres for raising according to industrial model; however with current scale of thousands of sow in Mitraco, we can say that super-meaty pig products of Mitraco will have no opponents within Hà Tĩnh province However, nationwide, Mitraco cannot compare with big raising centres in Thanh Hóa, Thái Bình, Đồng Nai,… within the market then market share of meaty pig

Mitraco is very low

- raising food: in term of competitiveness of raising food, Mitraco has lower

competitiveness than othes units in Viet Nam due to unstable product quality; Competitiveness of price of raising food of Mitraco is low because Ha Tinh is not material area for producing raising food which has low labor productivity and low technical qualification

e Service and trading: current competive opponents in the same market as

Mitraco is stronger; activities of service and trading of Mitraco has small scale, unfocused, weak competitiveness, inconsiderable market share

2.2.2.4 Potential competitive opponents :

Currently there are some unit investing in processing minerals such as Binh Dinh minerals JSC …and some private companies invest in Central area which requires Mitraco to invest in improving technology and consolidating organization

of production to lower price to compete better within the market

From above analysis we can set up table of opportunities and threatens for Mitraco as follows:

Table of opportunities and threatens

Table: 2.01

1 Economic development of Ha Tinh

province and nearby provinces have

created many choices for new trading

sectors

2 Ha Tinh has many preferential

treatments for investment attraction

Ha tinh also has big policy of

training human resource to meet the

demand of enterprises investing in

Ha Tinh and policy to attract high

1 Development of main trading sector which is mineral trading has come to critical point will have less capacity for development in long term due to exhausted reserve of mines that Mitraco have been issued

enterprises, Central State-owned companies or companies from nearby provinces is more and more violent

quality human resource including

enterprises which attract talented

people will enjoy preferential

treatments

3 HA Tinh has private policy and

regulation to provide mineral mines,

material mines for producing

construction materials, metal

procesisng for Mitraco as well as

support Mitraco to expand trading

sector to be the main enterprise of the

province to attract investment

4 Requirements of enterprise

innovation on forcing State-owned

enterprises to operate according to

corporate law, and new management

model will create an opportunity for

Mitraco to adjust operational model

and new management methods

5 Ha Tinh people has revolutional

tradition, high awareness of national

and provincial common development

then they are ready to support

policies of the Party and the State

which creates good condition for

enterprises to invest and develop

in many sectors (from mineral, construction materials, infrasrcuture, services…)

3 Legal regulations of mineral management has created new burdens for Mitraco, which can create pressure in investment in deep processing of mineral

4 Technological qualification of deep processing of Viet Nam is low then it can create much difficulties for Mitraco

5 In the future there will be some corporations to come to Ha Tinh to invest in the same sector Mitraco

6 Rigid climate condition can create much troubles for Mitraco in business and production process

7 Available labor force; but tradining workers is limited because they are famers Especially in area that Mitraco invests, labor force has low qualification then training and using labors can get much difficulties

2.3 Analysis of internal environment of Mitraco

2.3.1 Analysis of resources

2.3.1.1 Human resources

Currently, Mitraco had 2.670 labors Average income per capita is about 2.1 million dong/person/month Density of popular labor occupies 58%, and labor has rather high age Density of cadres with college qualification upwards is 18%, which

is not so low; however, this number cannot reflect the essence of management qualification of the whole corporation; out of 18% cadres with college qualification upwards, only 1/3 are in official training; the remaining is on the job training and distance learning

Number of people really have high qualification and professional technique

is low; Mitraco is bearing violent competition of human resource, especially in the background of more and more domestic and foreign investors investing in HA Tinh

as well as attracting cadres with high management skills from companies to work

Current operational mechanism of Mitraco cannot promote the contribution

of qualified cadres, especially cadres in medium level for implementing plans of company Mitraco has not formed a mechanism to create motivation for cadres to improve and raise capacity, active in working and improving business activities of corporation; management activities still bear steering quality downwards which cannot create gap for cadres to make economic decision and bear responsibility for such decisions

Mitraco also lacks of a plan for human resource training in long term to attract qualified labors It has not built up regulations for recruitments, training, using labors which can stimulate creation, learning spirit and long term attachment

to company

Unsuitable labor arrangement: allocation and using labors in corporation and member units among divisions in corporation still have many problems to be adjusted to improve labor productivity

Labor productivity of Mitraco reaches low level compared to average level

of other State-owned enterprises, average level of private sector and foreign enterprises

Table to compare some norms of labor productivity in Mitraco in 2008

Mean of private enterprises

Mean of foreign enterprises

Average income per labor

2.3.1.2 Finance :

♦ Brief report and financial norms of Mitraco in 2007, 2008 và 2009

Report on business results within 03 years

ASSET STRUCTURE AND CAPITAL

Ratio of asset

Mobile asset and short term revenue/fixed asset and long term revenue

TôngN N H HàngTK TSLD P hait hu TongN N H HangTK T ôngTS Tô n g TS TSLD T S C D DT DT DT DT CDDC360

Lã iro n g cu a Lãiròngcua Lãiròngcua Tôngv ônC PD T ôngTS T ôngno DT C DDC C DDC C

times Mobile asset/total

Short term index

(short term

payment capacity)

times Cash capital/ total

ASSET MANAGEMENT CAPACITY

Debt payment

Receivable x

Mobile asset circle rounds Revenue/mobile

LOAN MANAGEMENT CAPACITY

Net interest of popular shareholders/total asset

ROE %

Net interest of popular shareholders/total stock capital

- From table 2.03 we can see that: In 2009, sales reached only 91,1% and profit after tax reached 87,2% compared with 2008 The main cause is, in the first 6 months of the year 2009, the government prohibited the export of ilmenite raw ore, since July 2009 the government permitted again some units to export ilmenite raw ore including Mitraco, therefore the revenue in 2009 is lower than in 2008 In 2009, because of still being affected by the world economic crisis, therefore the price of ilmennite reduced, although Mitraco saved on selling expenses and administrative costs but the reducing of ilmenite content in licensed mines led to the increasing of exploiting costs (especially diesel oil and electricity costs), led to the rate of profit after tax on sales in 2009 is lower than in 2008

- From table 2.05 we can see that: ROE (profit ration on owner capital) is low which proves the low business effect of Mitraco Similarly, ROA (profit ration