An analysis of actual situation and some suggestions on overall buniness strategy and stategic solutions for company 185 - Truong Son construction corperation

Design the assignment 3 CHAPTER 1:THEORIES OF BUSINESS STRATEGIES 4 1.1 Definition, features and role of business strategy in 1.2 Business strategy administration process 7 1.3 Defin

CAPSTONE PROJECT REPORT

AN ANALYSIS OF ACTUAL SITUATION AND SOME

SUGGESTIONS ON OVERALL BUNINESS STRATEGY

AND STATEGIC SOLUTIONS FOR COMPANY 185 –

TRUONG SON CONSTRUCTION CORPERATION

Group 1 – Class V02

Student’s name:

Hoàng Mạnh Hùng Ngô Anh Tuấn

Hồ Nghĩa Đức

Lê Thị Hồng Lĩnh

VINH 2010

Acknowledgements

We wish to express our deepest gratitude to our lecturers for sharing their

expertise in their lectures and giving us their indispensable intellectual and scholarly

support during the completion of the report Their profound knowledge of

theoretical and practical issues concerning our topic is a great source of inspiration

to us

Our gratitude is also extended to the Board of Directors of Company 185 –

Truong Son Construction Corporation for their coordination and helping us in

collecting information about the Company without which we could not complete the

report

We also extend our sincere thanks to our classmates and colleagues for their

assistance and encouragement

1 The rationale for choosing the topic: 1

2 Subject and Scope of the Study 2

4 Design the assignment 3

CHAPTER 1:THEORIES OF BUSINESS STRATEGIES 4

1.1 Definition, features and role of business strategy in

1.2 Business strategy administration process 7

1.3 Define duty and system of strategic targets : 9

1.4 Analysis of business environment of enterprise 10

1.4.1.5 Governmental, legal and political envrionment 14

1.4.2 Analysis of sector environment (operational environment) 15

1.4.2.1 Analysis of current competitive opponents 15

1.4.2.2 Analysis of potential competitive opponents 16

1.4.3.1 Factors of human resource and organization 19

1.4.3.2 Research and development factor (R&D) 19

1.4.4 Analysis of international environment of enterprise 20

1.5 Distinguish business form 21

CHAPTER 2: ANALYSIS OF FACTORS AFFECTING BUSINESS

ACTIVITIES OF COMPANY 185 – TRUONG SON

CONSTRUCTION CORPORATION

33

2.1 General introduction of Company 185 33

2.1.2 Business sectors, targets and operational scope 34

2.2 Analysis of business environment of the Company 37

2.3 Setting up matrix 58

2.3.2 Mc.Kinsey – General Electric Matrix (Business strategy net) 60

2.3.3 SWOT Matrix (Only main factors are synthesized) 62

CHAPTER 3: SOME SUGGESTIONS ON OVERALL BUSINESS

TRATEGY AND STRATEGIC SOLUTIONS FOR THE

COMPANY

65

3.1 Basis for planning strategy 65

3.2 General Business Strategy 66

3.3 Some Strategic Solutions 69

3.3.1.1 Improve professional qualifications 70

3.3.1.2 Increase quality of working life 72

List of Diagrams

Page

Diagram 1: Model of Business Environment of Enterprise 11

Diagram 2: Model of 5 forces of M.PORTER 14

Diagram 3: Strategic Matrix of MC.KINSEY - GE 30

Diagram 5 - Organizational Diagram of Company 185 34

Table 4: Some Financial Norms in 2009 of the Company 49

Table 5: Machines and Equipment of Company 185 52

Table 8: Growth Rates and Relative Market Share for Business Items

of Company 185

56

Table 10: Construction Industry Attractiveness 59

INTRODUCTION

1 The rationale for choosing the topic:

In the current situation in which Vietnam has shifted to a market economy,

enterprises have strongly divided into strong and weak ones and competition among

the enterprises has become more vigorous To preserve and develop business,

enterprises must define a right strategy, as an inappropriate strategy may lead to a

failure

Activities of enterprises in the market economy are to invest, use resources to

compete with opponents to get market share The purpose of enterprises’ activities

in the market economy are to reach the possible highest effectiveness for a long

time An enterprise’s operational effectiveness is the correlative results between

profit from business activities of the enterprise and mobilized resources for such

profit For an enterprise, building up a right strategy can have a special significance;

timely strategy orientation and strategy adjustment can bring high profit for the

enterprise

In the globalization of the market, technology always changes, competition is

more and more violent, and strategy has become a really important factor Together

with scarceness of resources, demand and tastes of social consumption frequently

change which make business activities of enterprises more complex and risky To

exist and develop, enterprises must build up a strategy

Strategy is a special kind of plan that all organizations must design For

enterprises, planning is the first function in system of management functions to

reach given purposes of the organization

Defining strategy must be considered with regard to many objective external

factors and subjective internal factors of an enterprise, analyzing systematically

related information to define activities of the enterprise in short and long term, and

focusing all efforts and resources on main targets so as to meet the highest

effectiveness, cope with unexpected situations, adapt to the changes

Company 185 – Truong Son Construction Corporation (henceforth referred

to as Company) is a unit in the construction sector From the beginning years of

operation, Company has experienced many successes and failures and has gained

certain achievements It has been well proved in reality that without defining a right

strategy, Company can go into traps which is hard for it to get out, then business

effectiveness will be reduced, even bankruptcy Therefore, to continue standing in

the market and adapting to business environment, Company must build up an

appropriate strategy

Originated from the importance of planning business strategy for enterprises

together with the demand of Company 185 – Truong Son Construction Corporation

in defining an appropriate strategy; Group 1 has chosen the topic “An Analysis of

Actual Situation and Some Suggestions on Overall Business Strategy and

Strategic Solutions for Company 185 – Truong Son Construction Cooperation”

with the expectation to work out a right orientation for the Company in the future

2 Subject and Scope of the Study

Applying theories and methodologies on business strategy, the assignment

will find out bases to plan business strategy for Company 185 - Truong Son

Construction Corporation

Subject of the study: the topic will carry out an analysis, assessment

suggesting business strategy for the Company based on common theories of

planning strategy for enterprises

Scope of the study:

- Theoretical issues on strategies of enterprises,

- Bases to form strategies of enterprise,

- Building business strategies for Company in short and long term and

solutions to implement those strategies

3 Study Methods

The study is based on methods such as statistics, synthesis, analysis, contrast,

modeling and estimating as well as learned knowledge to carry out analysis and

provide assessments of the whole business activities of Company 185 – Truong Son

Construction Corporation, and suggest strategies for the Company

4 Design the assignment

Apart from the preface, the conclusion and references, the main content of

the assignment is divided into three chapters:

Chapter I: Theories of Business Strategies

Chapter II: An Analysis of Factors Affecting Business Activities of

Company 185 – Truong Son Construction Corporation

Chapter III: Some Suggestions on Overall Business Strategy and Strategic

Solutions for the Company

CHAPTER 1 THEORIES OF BUSINESS STRATEGIES

1.1 Definition, features and role of business strategy in enterprise

1.1.1 Definition of business strategies

Business strategy is a concern of many economists who have studied and

found out many different definitions of business strategy such as:

- It is associated decisions, actions or plans which are designed to implement

organizational targets

- It is the result of the process of planning strategies

- It is the art to build up competitive advantage

- It is the collection of decisions and actions oriented to the targets which

make organizational capacity and resources meet the external opportunities and

threats

- According to Alfred Chandker: “Business strategy includes the

determination of long term basic targets, at the same time choose the method of

action and allocate necessary resources to implement such targets”

- According to Wiliam.J.Gluech: “business strategy is a plan with high

consistency, comprehensiveness and coordination which are designed to ensure

basis targets to be done”

Besides, business strategy or competitive strategy is also defined according to

the following 6 factors

First is product market Opportunities of an enterprise depend on its own

products, its serving market, competitive opponents that it copes with and its own

integration level

Second is investment level We should choose the following capacity: invest

to expand or to penetrate into product market, or invest to maintain current position,

or minimize investment to withdraw, or liquidate to dissolve enterprise

Third is functional strategy Competitiveness can be focused on the

following functions: product strategy, position strategy, price strategy, allocation

strategy, production strategy, informatics strategy, segmentation strategy and

globalization strategy

Fourth is strategic asset and strategic capacity Strategic capacity is the

dominant aspect of enterprise; strategic asset is the resource power of enterprise

compared to other opponents When setting up strategies, we must focus on cost as

well as the ability to create/maintain asset and capacity to be the basis for long term

competitive advantage

Next is resource allocation Financial resources and non-financial resources

such as factories, equipments, human must be allocated Decision on allocation is

the essential factor for strategy

The final factor is cooperation among enterprises Only enterprises with

cooperation can have dominant advantage compared to such enterprises which skip

or do not exploit cooperation

In general, strategy is the collection of actions and decisions related to each

other which helps an organization to reach its given targets, and it must be built in

such a way that it can exploit basic strengths including resources and capacity of the

organization as well as consider opportunities and threats of the environment

Business strategy is recognized as a principle, a guideline in trading

Therefore, an enterprise which wants to be successful in trading must have good

business strategy and effective implementation of that strategy

1.1.2 Features of business strategy:

In spite of many different definitions and approaches to the category of

strategy, basic features of business strategy are considered consistently Basic

features are as follow

Firstly, business strategy has long term orientation which can point out

targets and business orientation for each sector and product as well as define basic

duty, solutions and steps to reach given targets

Secondly, business strategy has flexibility because it is based on prediction

of future market which will always change To make business strategy appropriate

so as to help an enterprise to reach its targets, it must be flexible in the changes of

market

Thirdly, business strategy is built up according to long term (5 years to 10

years) Therefore business strategy is itinerary When a long term strategy has been

set up, it will be concretized by shorter-term strategies which are called plans

Next, business strategy is a constant process from planning to

implementation, monitoring and checking

What is more, business strategy always attacks to win in competition

Business strategy is formed and implemented based on discovering and exploiting

business opportunities and advantages of enterprise to reach high business effects

Last but not least, all important strategic decisions in forming,

implementation, assessment and adjustment of strategy will focus on administrative

group to ensure accuracy of long term decisions and secret information in

competition

From the above definitions and features, we can simply understand:

“business strategy is the process of defining general targets to develop enterprise

and use technical factors, business organization to win in competition and to reach

given targets”

1.1.3 The role of business strategy

The market economy always changes; to exist and develop an enterprise

must be adapted to such changes Modern business administration supposes that an

enterprise cannot cope with market change if it has no strategy of business and

development that represents its competitiveness and dynamic Only on that basis

can the enterprise discover opportunities and threats to have suitable solutions Lack

of a right business strategy can make enterprise passive and uncompetitive Lack of

business strategy can make enterprise have ineffective business effect and even

bankruptcy

Business strategy helps enterprises to define orientation in the future by their

own efforts It also helps enterprises to define basic targets to reach in each period

and levels and define activities which can exploit and use resources, promote

advantage and grasp opportunities to occupy advantage in competition

Besides, process of construction of business strategy based on monitoring

constantly happened events in and out of enterprise is to grasp change trend of

market; together with implementation of business strategy, it will help enterprises to

adapt to market, and even change operational environment to occupy competitive

advantage, reach high profit, increase productivity, improve environment and image

of enterprises within the market

1.2 Business strategy administration process

In such process, administrators will implement the following activities

1.2.1 Analysis of situation

Before making decision of orientation or reaction we must analyze current

situation; situation analysis will require considering organizational background,

internal and external environmental aspects:

Internal factors of an enterprise need to be considered to see whether they are

strong or weak

External factors of an enterprise are considered to see whether they serve as

opportunities or threats for the enterprise

Expectation of leader is the value of the enterprise, the prestige and the

competitive advantage

1.2.2 Build up strategy

Building up business strategy includes designing and choosing suitable

strategy for an organization To implement this we must consider many

organizational levels and suggest strategic forms

In the first place, the company’s strategy cares for big and long term

problems such as: activities, trading sector, activities of trading sectors Any change

of trading sector structure can change strategy of company

Second is functional strategy which includes decisions and actions that orient

to short term target of different functional divisions in an organization such as

production, marketing, study and development, personnel, financial accounting, and

informatics technology

Third is competitive strategy which studies competitive advantages that

organization wish to have and consider how the organization will compete in a

trading sector

1.2.3 Strategy implementation

Planning of strategy is not enough for employees of an organization The

strategy must be implemented The implementation of strategy is the process to give

different strategies to be implemented Methods for strategy implementation will be

connected with strategy planning

1.2.4 Strategy assessment

The final period of strategy management is to assess strategy All strategies

will depend on future changes because internal and external factors can change

constantly Three main activities of such period including (1) consider factors as the

basis for current strategy; (2) measure achievements (3) implement adjusted

activities Strategy assessment is necessary because current success cannot ensure a

similar success in the future; success can create new problems

1.2.5 Requirement of business strategy construction

In business strategy construction, we must focus on the following features

Firstly, business strategy must be connected with market Enterprises will

build up business strategy based on investigation, study of market demand and

exploit opportunities, resources for producing products with suitable quantity,

quality, type and time; we can consider “strategy must indicate market controlling

of enterprise” as the principle and guideline for strategic administration In addition,

construction of business strategy must increase advantage of enterprise, occupy

competitive advantage in the market Besides, strategy must be expressed high

flexibility then construction of strategy just mentions general problems

Secondly, when building business strategy we must consider safe area in

trading, limit risks to minimum level;

Another thing that needs to take into consideration in business strategy is that

basic targets and basic condition should be clearly defined to reach such targets

What is more, business strategy must express harmonized combination

between two strategies: common business strategy including the most decisive

general problems and division business strategy including division problems such as

products, price, marketing and promotion

One more important consideration is that business strategy must not be the

common presentation Rather, it must be expressed by concrete targets and be of

high feasibility to reach maximum effect in production and business

It is not sufficient if the enterprise just builds up strategy The reason is no

matter how well-established business strategy would be, without good

implementation which turns it into suitable programs and policies, it will be useless

and costly, and will not be able to increase business

1.3 Defining duty and system of strategic targets:

1.3.1 Strategic duty

This is a long term fixed declaration of enterprise’s purposes which

distinguish enterprises with each other; such declaration can be business principle,

purposes, philosophy, and then define trading sectors of products, services and

market demand

Content of strategic duty can indicate general problems then define

operational scope of enterprise in products and market; when setting up strategic

duty we must focus on the following factors: formation history, expectation of

leading board, conditions of business environment, existing resources and capacity

of enterprise Strategic duty can help leaders to define targets more easily then

define priority of enterprise to assess potentials of trading units and orientation for

future of enterprise

1.3.2 System of strategic targets

Strategic targets: it is the main destination that enterprise wishes to reach,

which is from function and study; quantify into numbers: growth rate, profit,

revenue, market share; there are two kinds of targets, namely short and long term

targets

Long term targets are the whole final expected result that enterprise wishes

to reach within more than 1 year with following contents of profit, productivity,

competitive position, job development, public relation, technological position, and

social duty

Short term targets are the concrete results that enterprise expects to reach in a

circle which is quantified into numbers

1.3.3 Principle in target definition

Firstly, they must be clear in each development phase of the enterprise

Secondly, they must be related and supporting each other, that is, a certain target

will not hinder other targets Thirdly, there must be preferential targets; that is, the

targets should be clearly indicated principal or minor

1.4 Analysis of business environment of enterprise

The purpose of analysis of business environment is to define opportunities

and threats with enterprise, including macro and micro environment (so called

sector environment) This is the process to consider factors of different environment

and define influence level of opportunities or threats with enterprise; diagnostic

based on analysis and recognition of environment then make use of opportunities

and control threats which can impact on enterprise

Diagram 1: Model of Business Environment of Enterprise

1.4.1 Analysis of macro environment

1.4.1.1 Economic environment

Reality of economy and future orientation have impacts on success and

strategy of an enterprise The main factors are economic growth rate, interest rate,

inflation, unemployment and exchange rate Any changes of such factors can impact

the enterprise

First are the impacts from economic growth rate High rate of economic

development reflects development rate of market, and it can reduce competitive

pressure Buying of total market can create condition for development of enterprise

Second are the impacts from interest rate Interest is one of factors of

currency policy Low or high interest can impact directly on business and market

demand Interest of deposit can encourage people and enterprise to deposit leading

to limited payment capacity of market

- Macro environment will

include external factors

Third are the impacts from exchange rate Exchange rate can have influences

on enterprises’ related activities of import and export

Last but not least are the influences from inflation rate If inflation rate

increases, monitoring price and salary cannot be controlled, thus threats to ther

enterprise are increased

1.4.1.2 Technological environment

Technological environment can impact on business strategy of enterprises as

well as industries This is the time for industrial development then prediction of

industrial trend can be very important for enterprise’s development The changes of

technology can impact on living circles of products and services

Trends/events in technology can be the opportunities for enterprises with

capital mobilization but it can also be threats for enterprises that are attached to old

technology

In social development, an enterprise must use new technology However, it

is not the cause that leads enterprises using old technology to sudden loss There are

several reasons for this Firstly, old technology still has buyers for a long time as

partlybecause enterprises can continue to improve such technology Secondly, it

will be difficult to predict the appearance of new technology, because the study of

new technology is very costly and uncompleted Moreover, it often starts from

additional market; and new technology can have trend to create new market rather

than penetrate into current market Therefore, enterprises need to have right

realization of technology so as to create opportunities for enterprises in development

of products and services

1.4.1.3 Social and cultural environment

With regard to strategic administration, social and cultural factors are

sensitive and alternative Living style of people which change fast according to new

living styles leads to the changes of consumption attitudes Qualification of people

is higher, thus the demand of consumers is higher in terms of quality and types of

Each business enterprise must operate according to social and cultural

environment Enterprise and socio-cultural environment have close relation with

mutual impacts The society can provide resources that enterprise needs, and

consumes products and services that enterprise can produce Socio-cultural

environment can impact strategic decision such as choice of sectors and

commodities, labels, colors, styles and change of distribution channels

Attitudes of life value and consumption value also have influences on

business activities of enterprises The viewpoint of life will rise viewpoints of

consumption value and impact the decision to buy a certain commodity and refuse

or reduce to buy other products, which can create opportunities or threats to

enterprise

1.4.1.4 Natural environment

Natural environment including geographical factor, climates, ecological

environment; threats from the changes of climate can impact on enterprise; then

prediction of climate change will make enterprise be more active in making

decisions of products

Natural environment is bad which is threaten for most of enterprises in

different sectors: it is to provide materials, exhausted energy, increased pollution,

complex climate happening, flood and drought can create high damage; such things

can make trading cost increase due to cost, equipments to treat waste and pay more

tax due to environmental requirement

1.4.1.5 Governmental, legal and political envrionment

Legal and political factors can have impacts on development strategies of

enterprises according to different trends They can be the opportunities for

enterprises and in the meantime the threats for other enterprises The policy to

expand and encourage economic sectors to join in business activities is the threat for

State-owned enterprises but opportunities for private producers which join in the

market

We can realize the influences of governmental policy for business and

production For instance, high tax can be the disadvantage for business and low tax

will encourage business In the condition of Viet nam, enterprises not only care for

tax but also stability of tax Unstable tax can create difficulties for strategic business

of enterprises Stable politics, completion of legal system will be the high interests

of producers

1.4.2 Analysis of sector environment (operational environment)

Operational environment will include all factors which can impact directly

the decision of enterprises in one sector A production sector can include many

enterprises who supply the same products and services which can be replaced for

each other The problem is to analyze, predict competitive opponents in the sector

environment to define opportunities and threats for the enterprise The following is

popular model for Michael Porter with five competitive forces:

Diagram 2: Model of 5 forces of M.PORTER

1.4.2.1 Analysis of current competitive opponents

The first force in the model of M.Porter is competitive scale in enterprises

with the opportunties to increase price and get more profit Competition among

enterprises in production often focuses on the following contents

The first is competitiveness It is the competition among products that can

replace each other to meet the expectation It means competition of priority when

Customers Providers

New potential opponents

Competitive opponents within the sector

Replaced products and services

buying products with different uses in relation with income, competition in the same

products, and competition among brand names

The second is competitive pressure in the same sector Competitive sector is

the quantity and scale of companies that compete in the same sector If enterprises

are small, there is no enterprise dominating, the competitive structure is scattered If

market demand is high then competitive pressure will reduce, and if market demand

is small then competition will be more violent

The third is barriers out of sector When the business condition is bad, the

enterprises must withdraw out of the sector The cost of withdrawal out of the sector

can cause loss and damages to the enterprises and even bankruptcy includes

investment cost such as workshops, equipments, and technology, direct cost for

investment and administrative procedures, and social cost: train and dismiss

workers

1.4.2.2 Analysis of potential competitive opponents

Potential competitive opponents are enterprises which have capacity of

entering the sector in the future It is the threat for the enterprises who are currently

producing in that sector Those current enterprises often try to hinder potential

opponents to join in the sector because they can make the competitive market more

violent, and the market and profit will be shared, the position of enterprises can

even be changed Profit level of potential opponents depends mainly on cost for

entering the sector (industrial barriers), which includes the following elements

The first element is initial invested capital If it is high, the capacity for new

opponents to enter the sector will be less When entering a trading sector, an

investor must spend a certain amount of money to buy input factors such as

equipments, machines, materials to produce output products Then if the initial

investment is high, the risk will be higher and the enterprise must have more

consideration to make investment decisions

The second element is advantage of price When the enterprise holds high

technology for producing and providing products with low price, it will get

competitive advantage To keep this advantage, the enterprise must lead in

technology, pay attention to the management of business to reduce cost and raise

business effect

Another element is advantage of brands of products, commodity and

services When customers are used to current brandnames of certain products,

builing a new label will cost much time and money

One more element is advantage of production scale When the production

scale is big, the average fixed cost will reduce The enterprise with big scale will

have higher competitive advantage than new opponents

In addition, legal barriers are also one obstacle for potential opponents Those

legal barriers are regulations of the State in terms of conditions to join in business such as

capital, equipments, labor force, etc Strict regulations can hinder enterprises to join in

the sector and vice verse

1.4.2.3 Pressure from providers

Providers will be a threat for production sector when they increase sale price,

limit quantity and quality The enterprises must pay attention to negative effects

from providers However providers can only create pressure for the enterprises in a

production sector in the following cases First, there are few providers for the

sector Second, there are few replaced products and services Third, the providers

have the advantage of specialization in products and services Last but not least, the

providers have the ability for vertical integration and close products

1.4.2.4 Pressure of customers

Customer is a common word used to indicate people or organizations using

products or services of an enterprise We can divide customers into five following

objects: final consumers, distributors, agencies, wholesale and industrial buyers

Customers are the main object joining in the product consumption process

The enterprise needs to realize customers and impact them to have basis to define

product market, services and necessary investment structure The demand of

customers is the basic factor cared by producers to decide whether to maintain long

term trading advantage with such products The higher the customers’ pressure is,

the bigger the disadvantages are for the enterprises Customers often create pressure

for enterprises in the following cases First, they are customers who buy the

products in high quantity Second, there are many providers for the same products,

with much choice for customers Third, the customers have the capability for

reversed integration to own the whole or a part of the process of production

When customers have more advantages over sellers, naturally they must

reduce price and increase quality of products, services, then their profit will be

reduced

1.4.2.5 Replaced products

Replaced products will not compete violently but can impact profitability of

market and becomes a threat for enterprise We must care for replaced products

which are easy to improve due to high technology

Most of new replaced products are the results of technological burning; to reach

success in business then enterprise must save necessary resources to develop new

technology in development strategy

1.4.3 Analysis of internal environment

Internal environment of an enterprise is what belongs to the enterprise and

are related to business activities of enterprise to realize strengths as well as

weaknesses of the enterprise which can create basis for defining strategy and

implementing business strategy The object to be considered is main factors in the

enterprise within the control of the enterprise The main factors are human resource,

finance, accounting, marketing, information system and organizational system

1.4.3.1 Factors of human resource and organization

Human resources play a very important role in the success of an enterprise

People can provide input data to define targets, analyze environment, choose to

implement and check strategies of enterprise Only effective working can create

effectiveness of the enterprise Human resources include first, leading staff,

qualification and leading experiences; second, suitable organizational and

management structure; and third, professional skills, morality of cadres and cadre

policy

Organizational task can have very important significance which can promote

or hinder tasks of business activities of an enterprise Organizational factors can be

related to capacity and experiences of high ranking leading cadres which make

enterprise active, adapted to market changes Construction of suitable organization

can promote cadres to work harder, attached to enterprise and build up healthy

corporate culture

1.4.3.2 Research and development factor (R&D)

The tasks of R & D of enterprise can help it to maintain leading position or

vice versa; factor of R & D including: experiences, scientific capacity, perceiving,

appliance of technology and science and production to meet the higher demand of

market

R & D division must monitor conditions of business environment,

information of innovation of technology, management…to help the system to be

updated and supplemented with new information flow then have timely innovation

strategy of technology

1.4.3.3 Financial accounting factors

Functions of financial accounting division include analysis, planning and

checking implementation of common financial tasks of company, and making

financial reports to reflect common financial situation of company Financial

accounting division can be related to all aspects of other activities related to

development of company, monitor financial spending, capital cost, monitoring sale

price, price planning, financial cost and profit

1.4.3.4 Production and technical factors

Production activities are related to creation of products which can impact on

the success of enterprises including problems related to production technique,

production technology, productivity, monitoring production cost, inventory, material

provision; production factors can show capacity to meet demand of quality and

quantity according to requirements of market, monitoring production cost is very

important which is related to price policy of products and commodity

1.4.3.5 Marketing and product consumption factors

Marketing division of an enterprise has significant role in the organization of

product consumption which studies demand of the market to find out policies of

products, price, distribution channels, and product improvement; provide

commodity in high scale; and collect market information to find out suitable policy

for enterprise

Studying consumption policy and marketing, people will focus on the

following aspects: firstly, diversifying products, product structure, quality and

living circle of products, secondly, organizing activities of distribution channels,

provision capacity with big scale, thirdly, carrying out policy of price,

communication, sale promotion and product labels, and fourthly, carrying out after-sale

service, customer services

1.4.4 Analysis of international environment of enterprise

Nowadays, globalization trend has impacted on business and production of

domestic enterprise, especially sectors related to import and export The change of

international environment can be more complex, which requires enterprises to

realize, analyze then create opportunities for themselves or reduce risk from

globalization

Viet Nam’s integration into ASIAN and WTO can create many opportunities

for products with competitive advantages, but it is also the threaten for enterprises;

Viet Nam can expand export market to many countries but competition threaten will

be very high; free trade is also a threaten for producers of Viet Nam

Enterprises without direct transaction with its counterparts abroad must

estimate the possible impacts of international environment because it can directly

impact enterprises via macro and micro environment

First are the impacts on economic environment Each economic change can

impact on economy of nations in different levels; economic development of this

nation can impact on other nations and related to international economy

Second are the impacts on legal and political environemnt Based on

diplomatic relations among governments, it can form up exchange relation within

global market; any change in diplomatic relations can lead to adjustment in foreign

affair policies which can impact on enterprises

Thirdly are the impacts on technological environemnt Technological

breakthroughs can create new labor tools or new products which can impact on

technological environment within the nation

Fourthly, broad social and natural factor can impact on enterprises although

enterprises do not directly operate within global market; for instance when

exploiting petroleum, global oil price has increased which make domestic trading

cost increased Foreign customers are always potential customers then enterprise

must consider Enterprise must also consider foreign providers as potential partners

Any foreign enterprise can launch replaced products; then wemust monitor

development step of products and strategic capacity of foreign companies operating

in the same sector

1.5 Distinguish business form

We can classify business strategies into two forms: general strategy and

to build up competitive advantage for enterprise based on satisfaction of

requirements of the highest ranking leader of enterprise; division strategy is the one

to be implemented in division level of enterprise to implement targets of general

strategy

1.5.1 General business strategy

1.5.1.1 Focused growth strategy

a Market penetration

Market penetration is the strategy to look for the way for growth in current

market with producing products as the following trends

First is to increase product buying It expresses relation among buying

frequency and buying quantity; then to increase buying, we can persuade customers

to buy products more frequently or used with more quantity

Second is to attract customers of competitive opponents by marketing with

policies of products, price, consumption place and promotion, after sale services

Third is to buy and merge with competitive opponents If opportunities to

increase market share are not attractive then enterprise can consider buying or

merging with one of competitive opponents

Fourth is to increase scale of total market by making people from previous

time till now who do not consume products of enterprise will begin to look for such

products by marketing methods, demand stimulation

b Market development strategy

Searching new market to consume products of enterprise is very important to

expand consumption capacity of products and commodities

Firstly, searching new market in new area including searching new

distributors, expand sale force or new consumption network; horizontal integration

with an enterprise which needs other market

Secondly, searching new target market: searching target customers in present

market; besides, develop new consumption channels or use new advertisement

medium

Thirdly, searching new using values of products: products have many facilities

that enterprise can exploit; each of new facility can create a new market then market

strategy can create living circle of products

c Product development strategy

Product development strategy including development new products for

consumption in current market or selling to current customers; such strategy can be

targeted to private products or the whole commodity of enterprise

Private product development:

First, improve features of products by supplementing and rearranging

features and contents of old products Second, improve quality to increase trust,

durability, taste or other features of products Third, impove style, sample, size:

improve style by changing colors, designing or product structure

Sector structure development:

The main method is to supplement new products or improve current products

which are produced according to 5 ways

Firstly, lengthen commodity structure to downwards When commodity

structure of enterprise is on top of market then we must consider to increase defined

commodity to fill in the under gap which is to create products with worse features

with cheaper price to serve bottom segmentation of the market

Secondly, pull upwards to supplement products to serve upper part of the

market with more skilled products

Thirdly, pull two dimensions When enterprise occupies middle

segmentation of market then we can pull it in two dimension by giving new

products to serve uppoer and lower parts of market

Fourthly, fill in commodity structure: increase list of commodity in current

structure

Finally, modernize commodity structure: when the length of commodity

structure is accepted then it must have adjustment to renovate form or appliance of

new technology

1.5.1.2 Integrated growth startegy

This strategy is suitable to targets and long term strategies that enterprises

are implementing which can allow to consolidate position, promote fully production

capacity of enterprise; to implement this strategy enterprises can associate with

providers to create active position in production activities Association and joint

venture can create a strength which can create a trend for trading new products,

services; it includes:

a Contrariwise Vertical intergrated association

This means enterprises will search for growth by grasping authority or

increasing monitoring input (materials, equipments, capital, human resource) to be

active in quantity, quality and time for production and business

b Forward Integrated association

This is the strategy to grasp authority and increase monitoring with input

products of enterprise via distribution system; when consumers create pressure for

enterprises, it can make consumption slower To solve this problem, enterprise must

associate to ensure consumption for products

When implementing this strategy, enterprise can set up introduction stores, products

consumption; or associates with consumption centers

c Horizontal integrated association

This strategy is to search ownership and monitoring for competitive

opponents of producing and providing products and services; as usual, each product

can be produced and provided by many enterprises leading to competition among

enterprises in product consumption, difficult production as well as consumption; to

adjust this situation, enterprises must implement horizontal integrated association

by dominating weak opponents; associating with strong opponents to occupy

market controlling right

1.5.1.3 Diversification strategy

This strategy is to produce many products and services in different market to

increase revenue, profit in business activities to ensure increase of competitive

position of enterprise

a Co-centre diversification

This strategy is aimed to produce new products related to current products

which can create new products, save materials and equipments; make use of labor

force, create new market, raise business effect; the key to implement this strategy is

to make use of advantages of enterprises such as equipments, machines, human

resources, experiences of enterprise

b Horizontal diversification

It is to provide new products and services of technology not related to current

products and services; formation of such strategy is when products and services of

company come to saturated point, reducing revenue and profit of enterprise which

force it to give new products and services to create new market segmentation,

increase current market scale

c Mixed diversification

It is to provide new products and services without any connection; it means

to aimed to new market and new products, services without any technological

relation with current products and services

When implementing mixed diversification, enterprise must have enough

resources, capacity to implement; at the same time, implementing mixed

diversification can require high investment then it can reduce short term profit then

we must predict exactly then it will bet passive in business activities

1.5.1.4 Joint venture and association strategy

This will make enterprises to associate with each other to exploit a certain

opportunity in business

The reason to form such strategy is originated from labor assignment and

specialization; then an enterprise cannot produce a completed products with high

quality but depend on each other

Besides, market economy has developed which make rules operate stronger

then enterprises must associate with each other to solve some problems in business

and production; association can also create good condition for international task

assignment, solving problems in domestic and foreign markets; this is suitable to

the rule of capital concentration to expand business and production

1.5.1.5 Reduction strategy

When the sector has no chance for growth, unstable economy or enterprise

look for more attractive chances than current production we must have suitable

reduction strategy

a Cost reduction strategy

This is to reduce cost which cannot bring effect; as usual, cost reduction for

activities and increase labor productivity; concrete methods will depend on reality

including reducing hiring employees, dismissal…

b Capital withdrawal strategy

This will happen in case of enterprise selling or closing one of enterprises to

change basic operational content; this strategy will be applied to enterprises without

any development prospect; the result of capital withdrawal will lead to reallocate

resources to focus on potential divisions to create new business opportunities

c Dissolution strategy

This is the last strategy to reduce damages when enterprise has no

competitiveness within the market; this strategy is implemented when applying all

of other reduction strategies without saving enterprise

1.5.1.6 Mixed strategy

Many strategies are done in mixed way to increase business activities;

formation of such strategy is due to business production in market economy;

enterprises cannot have stable long term strategy; any strategy has its own strengths

and weaknesses then enterprise must implement mixed strategy; reality has shown

that enterprises implementing mixed strategy will be more active, less risky

1.5.2 Division business strategy (function)

1.5.2.1 Product production strategy

a Product and service strategy

Product and service strategy is to give products to satisfy demand of market

and taste of customers in each period; product and service strategy is the backbone

of business strategy; high business production and violent competition then the role

of product and service strategy is more important Without product strategy, then

there will be no price strategy, allocation, communication and promotion strategies;

if product strategy is wrong then it will lead to the mistakes of a series of marketing

activities

Product strategy can ensure to provide right products, connection among

phases of reproduction to expand implementation of general targets; product and

service strategies including:

Strategy to set up types: to maintain market by protecting prestige of an

enterprise

Strategy to limit types: to simplify type structure, focus on some products

with chosen prospect

Strategy to change types: to continue changing the methods to meet the

demand to raise quantity of customers; the change can be done by changing form,

size, colors of products to increase attraction with customers

Strategy to improve products: to improve quality parameters of products and

services; products and services will be improved according to customers’

Strategy to renovate types: to develop new services to consolidate current

market, and penetrate into new market

b Market strategy:

Market strategy is to define production place, place to provide and use

products and services of enterprise in present and in the future; in market

mechanism, enterprise will take demand of customers as trading object; without

market then enterprise will have no condition to exist and develop

Define a wrong market is to define wrong object then all efforts in

production, consumption will turn to be useless because products and services

cannot be sold; this means enterprises will have no capacity to develop

Target of market strategy is to study requirements of market in term of

mechanic and physical features; labels and quantity of products and services; study

allocation method then we can exploit maximum capacity of the market

c Price strategy

Price strategy is to define for each kind of product equivalent to each market,

period to consume many products the most effectively; it is an important factor that

can impact on product consumption because price is one of important standards that

customers must consider before deciding to buy products or services; Price is a

competitive factor in market mechanism; price strategy can impact on revenue and

profit of enterprise; set up right price strategy can help enterprises to keep, expand

market and competition; ensure business effect Price strategy includes the

following

First strategy is to stable price This strategy is to maintain current price,

applied in condition that sale price has met the target of profit maximization, revenue

maximization

Second strategy is to increase price It is to increase price higher current

price which will be applied when products and services of enterprise are popular;

customers prefer quality, style of products and services When applying this

strategy, we must focus on reaction and feedbacks of customers and competitive

opponents unless we will get loss

Third is to price reduction It is to lower current price This strategy will be

applied when appearing the sign to reduce demand or appearance of threats from

competitive opponents It can be also applied in reduction period of living circle of

products; penetrate into new market or implementing marketing program

Fourth is distinguishing price It is to use different price levels for different

customer based on buying quantity, buying time to serve special demands The

purpose of this strategy is to exploit elastic level of demand compared to price so as

to increase consumption volume, market share and profit of enterprise

1.5.2.2 Financial strategy

It includes orientations of scale and invested capital, effective mobilization

and using current capital to implement given targets Financial strategy will include

the following contents: choose channel for capital mobilization, choose method for

capital mobilization, revenue target and profit target

1.5.2.3 Human resource and organizational structure

It is to define scale, structure and quality of labor equivalent to production

and business strategies; Human resource quality can impact on business activities of

enterprises; if human resource is weak without training then limitations in

technological transfer, new technique, limited productivity and production effect

Organization of human resource plays an important role It depends on

qualification and management of high ranking leaders which decides how to

implement business strategies effectively Managers must always nurture, raise

management knowledge in market mechanism, raise administration capacity to

ensure sustainable development

1.5.2.4 Marketing strategy

Marketing function of an organization can play an important role in

purchasing sustainable competitive advantage Marketing is defined as a process to

assess and meet demand of individuals or people by creating, providing and

customers and competitive opponents; marketing strategy of an organization is

aimed to effective management of these two groups Marketin strategies including

market segmentation, target market, defining position and strategic decisions of

coordinative marketing

1.6 Methods to analyze and choose strategies

Based on defining strategic duty and assessment of external and internal

environment of enterprise, we can use strategic models to construct business

strategy for each enterprise and solutions to implement such strategy; we want to

mention some models that are used popularly in strategic administration of

enterprise

1.6.1 BCG matrix:

This is a classical model to analyze portfolio which is expressed in the form

a matrix set up by two parameters: relative market share and market growth rate;

BCG (Boston Consulting Group) model is developed from theory of experiences

curve, to analyze capacity of each operational sector of a multisectoral company

compared to other sectors in organization then we can draw suitable strategies

which are called market share and growth matrix; defining (Strategic Business Unit:

SBU) to make decisions of allocating basic resources and considering transfer of

SBU in each time

- Horizontal axis: relative market share of each strategic unit (SBU) compare

to competitive opponents (revenue of company/revenue of leading unit in the

sector)

- Vertical zxis: reflect annual growth rate of market

- Round: express growth position and market share of such unit; size of

round in direct ratio of product revenue

1.6.2 McKinsey - GE (General Electric)

This matrix is based on two general norms which are market attraction and

and competitive position including 9 squares: vertical axis can express the attraction

level of market; and horizontal axis indicates competitive position of enterprises or

business unit which are divided into three levels: strong – mean – weak; analyzed

factors including: market scale, growth rate, profit margin, competitive intensity,

season, circle Horizontal axis can indicate power and competitive capacity of

enterprise including: relative market share, competition of price, product quality,

Each round can express a business unit (enterprise competes within a sector

of a round); the width of round can express relative scale in the sector; crossing part

on each round is market share of business unit (SBU - Strategic Business Unit)

+ Area : is three 3 squares of left right angle, business units in such position can

have good advantage and growth opportunity with increased strategy of investment

+ Area : is three squares in crossing line; business units will have mean

attraction then we must be careful in supplemented investment to create income and

maintain market rather than increase or decrease

High

Mean

Low

+ Area : is three 3 squares in bottom corner of the right, strategic business units

in this area can have attractive position without using strategy of reduction and

sector withdrawal

Mc.Kinsey matrix is to assess attraction level of market and current

competition and future prospect of enterprise; however, a problem is how to assess

attraction of market and competitive advantage of activities? To do this, each

activity can be measured by many different variables To assess two factors of

competitive position and market attraction, it will depend on many factors The

influence level of each factor can depend on realization and experiences of leaders

about activeness in competition

1.6.3 SWOT analysis and strategic combination:

The purpose of SWOT (Strengths, Weaknesses, Opportunities, Threats) is to

analyze strengths, weaknesses of enterprises with opportunities and threats to

coordinate in suitable business strategy; to build up SWOT matrix, first of all we

must list all strengths and weaknesses, opportunities, threats according to priority

order in equivalent squares; then make comparison systematically with factors to

create logical pairs

Analysis of SWOT is to get many forms of coordination and then form up

strategic alternatives

Diagram 4: SWOT Matrix

SWOT Opportunities: (0): 01, 02… Threats (T): T1, T2…

W/O: make use of opportunity to adjust weaknesses

W/T: reducing weaknesses to avoid threats

CHAPTER 2 ANALYSIS OF FACTORS AFFECTING BUSINESS ACTIVITIES

OF COMPANY 185 - TRUONG SON CONSTRUCTION CORPORATION

2.1 General introduction of Company 185

2 1 1 Establishment and development of the Company

Established on 12/12/1972 in Quang Binh province, Regiment 185 had the

function to open strategic roads and ensure traffic for carrying supports to the career

to liberate the South of Viet Name as well as economic development in the locality

Together with opening road, and being well-prepared for fighting, the Regiment was

assigned task to transport weapons and foodstuffs supporting the Southern

battlefield

After 1975, the regiment continued constructing some traffic lines of railway

and roadway

In May 1978 the Regiment was assigned an international duty in Laos The

job was to build up bridges to ensure traffic on the road of 7A, 7B, Muong Phan –

Xieng Khoang, Lat Huong – Long Cheng, etc

In March 1983, the Regiment 15C merged with the Regiment 185 with the

new name of the Brigade 185 under the Army Corps 12

In February 1989 after fulfilling the international duty in Laos, the Brigade

185 returned to the nation and merged with Brigade 217 into the name of Brigade

185 Main duty was to construct National road No 8A and construct infrastructure

for Quy Hop tin mine industrial zone

On June 22, 1993 the Ministry of National Defense decided to establish

State-owned enterprise named Construction Company 185 under Truong Son

Construction Corporation (formerly the Army Corps 12)

In July 2010, implementing another innovation policy of enterprises, the

Ministry of National Defense issued a decision to transfer Construction Enterprise

185 into Company 185 under Truong Son Construction Corporation