The general developing strategy for vicostone in period of 2012-2013

13 2.1 Overview of Vinaconex Advanced Compound Stone joint stock Company Vicostone .... Vinaconex Advanced Compound Stone Joint-stock Company abbreviated name is Vicostone is an enterpr

CAPSTONE PROJECT REPORT

THE GENERAL DEVELOPING

STRATEGY FOR VICOSTONE

IN PERIOD OF 2012-2013

Group number: 2

Students’ name: Nguyen Viet Dung

Nguyen Chu Son Nguyen Trung Dung Doan Ngoc Dung

Class: GaMBA01.N06

HANOI, 2011

TABLE OF CONTENTS

LIST OF CHART

LIST OF FIGURES

LIST OF TABLES

INTRODUCTION 1

CHAPTER I: THEORETICAL FOUNDATION OF MARKET PENETRATION STRATEGY 3

1.1.Some concepts and definitions related to strategy 3

1.2.Process of building strategy 4

1.3.The analytical models used to build strategy 4

1.3.1.The models analyzing the factors outside the enterprise 4

1.3.2.Internal Factor Evaluation Matrix (IFE) 7

1.3.3 SWOT model 8

1.3.4 TOWS matrix model 9

1.3.5.Space Matrix 10

1.3.6 Quantitative strategic planning matrix model (QSPM) 11

1.4.The type of strategy for a company 12

1.4.1 Corporate-level strategy 12

1.4.2 Business Strategy 12

1.4.3 Functional or departmental – level strategy 12

CHAPTER 2: ANALYZING THE SITUATION OF VINACONEX ADVANCED COMPOUND STONE JOINT-STOCK COMPANY (VICOSTONE) 13

2.1 Overview of Vinaconex Advanced Compound Stone joint stock Company (Vicostone) 13

2.1.1 General Information [VIE 2, page.11] 13

2.1.2 Mission, vision, strategy[VIE 2, page.2] 13

2.1.3 Field activities, technologies, products 14

2.1.4 Relating Companies 15

2.2 Analyzing the status of Vinaconex Advanced Compound Stone Joint

Stock Company 18

2.2.1 The common conditions in Vietnam 18

2.2.2 Business development in advanced stone products 21

2.3 Strengths, weaknesses, opportunities and threats of the business 34

CHAPTER 3: PROPOSE STRATEGY AND SOLUTIONS TO IMPLEMENT FOR VINACONEX ADVANCED COMPOUND STONE JOINT-STOCK COMPANY 36

3.1 Developing direction of Vicostone 36

3.2 Analysis of strategies and decisions to choose strategy for Vicostone 37 3.2.1 The strategies can be implemented by Vicostone 38

3.2.2 Selecting the main strategy for Vicostone 44

3.3 Propose some measures to implement after choosing strategy for Vicostone 45

3.3.1 Financial solutions 46

3.3.2 Marketing solutions 46

3.3.3 Solutions in technology, research and development 48

3.3.4 Human resource orientation 49

3.3.5 Solutions in the process of managerial organizing and production 50 3.4 Propose roadmap for implementing strategy of Vicostone 51

CONCLUSION 54

REFERENCES 55

LIST OF CHART

Chart 2.1: Organization chart of Vicostone 28

LIST OF FIGURES Figure 1.1: Product Life Cycle 5

Figure 1.2: Example of EFE matrix 6

Figure 1.3: Example of IFE matrix 7

Figure 1.4: TOWS matrix 9

Figure 1.5: SPACE matrix 9

Figure 1.6: QSPM model 10

Figure 2.1: The process of producing artificial stone 14

Figure 2.2: Value of total assets over years 30

Figure 2.3: Charter capital and Equity over years 30

Figure 2.4: Revenue, pretax profit, after tax profit over years 31

Figure 3.1: Vector built from SPACE matrix of Vicostone 41

LIST OF TABLES

Table 2.1: Average per capita income for years 20

Table 2.2: Percentage of urban population of region for years 20

Table 2.3: Situation of business result of Vinanvico in 2010 25

Table 2.4: EFE matrix of Vicostone Company 27

Table 2.5: The labor structure of Vicostone 29

Table 2.6: Average income for years 29

Table 2.7: Value of assets at the end of 2010 30

Table 2.8: The basic financial indicators over years 31

Table 2.9: Estimated profit distribution of the parent Company in 2010 32

Table 2.10: IFE matrix of Vicostone 33

Table 2.11: SWOT matrix of Vicostone 34

Table 3.1: Build the TOWS matrix 38

Table 3.2: SPACE matrix 40

Table 3.3: QSPM matrix 41

Table 3.4: The implementation roadmap for Vicostone 51

INTRODUCTION

The existence of stable and sustainable development is always a top concern for every business In the context of competition and globalization are increasingly fierce as today, businesses need to take clear and solid steps to ensure the success achieved in the market

Strategic management is an important key to help the corporate determine the most appropriate way to develop Therefore, the understanding of the principles and how to conduct strategic management in forming policy for the business is very important

Vinaconex Advanced Compound Stone Joint-stock Company (abbreviated name is Vicostone) is an enterprise specializing in producing advanced artificial stone for export Therefore, for companies, Vietnam market is a market with great potential but to being ignored Vicostone is planning to research in order to develop the brand and Vicostone’s products in Vietnam market

Based on the needs of Vicostone, the group has conducted to research topic of building “The general developing strategy for Vicostone in period of 2012-2013”

The purposes of the research team to implement the project are:

• Giving a number of methods and models used for building strategy for a business

• Analyzing and evaluating the operation status of Vicostone with artificial stone products manufactured by company

• Proposing strategies and solutions needed to help Vicostone bring advanced artificial stone products gradually to penetrate Vietnam market

Object of the research is Vinaconex Advanced Compound Stone Joint-stock Company (Vicostone) with artificial stone products manufactured by using advanced Composite materials Currently this product is provided in the world market by the company However, the domestic market is of great potential to being

ignored In that context, the building a strategy to penetrate Vietnam market is an appropriate decision

Based on the data collected within the scope of research, project mainly gives the comment and assessment, forming market penetration strategy of advanced stone products of Vicostone in period of 2012 - 2013

The research is based on the theoretical basis of the Marketing subject, human resources management and especially based on the theory of Strategic Management

In addition to some traditional methods of research such as synthesis, comparison and analysis on the basis of data collected, the authors use some methodological characteristics of strategic management as a model SWOT analysis, TOWS, PEST, QSPM and some other models

Besides an introduction, conclusion, appendices, tables, table abbreviations, the capstone project report is presented in 03 chapters

Chapter I: Theoretical foundation of market penetration strategy

Chapter II: Situation analysis of factors and features works from the inside and outside of Vicostone

Chapter III: Strategy options for Vicostone and measures to implement that strategy

Our group would like to send sincere thanks and deep gratitude to the teachers

of training program of Master of Business Administration GaMBA - Grigss University organized by ETC - Hanoi National University Additionally, our group would also like to thank the whole class, management board of class GaMBA01.N06, who has many comments and are dedicated to helping groups do this research

CHAPTER I: THEORETICAL FOUNDATION OF MARKET

PENETRATION STRATEGY

1.1 Some concepts and definitions related to strategy

Before conducting a deep understanding of strategic management, we need to learn some basic concepts related to strategy and strategic management

What is Strategy? According to the slide lecture, the strategy is "a complex

series of actions to mobilize as many the resources as an organization / individual can to achieve a specific purpose." According to Fred R David, the strategy is "the means to achieve long-term goals." [VIE 1, page.20]

What is strategic management? According to Fred R David, that is "an art and

science establishment, implementation and evaluation of decisions related functions allowing an organization to achieve these goals [VIE 1, page.9]

Strategists, who are they? The strategy builders may be strategic executive

directors, president, owner, chief financial officer or some companies have titles

of chief strategy officers They are responsible for developing strategies for the organization

Objective: according to Fred R.David, that is “the determined achievements

which an organization finds the way to obtain while pursuing its main mission” [VIE 1, page.19]

Policy is the guidelines for making decisions and demonstrate the situations

are often repeated or cyclical situations"[VIE 1, page.22]

Vision: can be understood as the picture that the organization wants to reach

and achieve in the future We can see the desire and motivation of corporate activity based on the vision

Opportunity is a condition in the general environment that if a company knows

how to exploit, it will achieve strategic competitive advantage

Challenge is a common environmental condition which can interfere with a

1.2 Process of building strategy

Strategic management process includes the following stages of implementation:

+ Analysis of the organization (including external and internal) and building strategy

+ Implementing the strategies outlined

+ Reviewing implementation of strategy and controlling system to make necessary adjustments

1.3 The analytical models used to build strategy

1.3.1 The models analyzing the factors outside the enterprise

1.3.1.1 P-E-S-T Model

Models PEST (Political Factors - Economic Factors – Socio-cultural Factors - Technological Factors) is a model to study the effect of macroeconomic factors to business and industry activities These are factors outside the direct impact to the business: politics - law, economy, socio - culture and technology

Political - law factors: These are laws and rules in the legal framework that

organizations must comply The laws as law on enterprise, investment law, labor law and the tax policy, import and export policies, trade, support will affect the operations of the business

Economic factors are the elements of the current state of the economy This

includes factors such as interest rates, inflation, recession, growth rate, GDP per capita These factors will impact the business strategy

Social - cultural factors are the demographic elements such as population,

average lifespan, population distribution, education or are the elements of the customs, practices, lifestyle, trends, social movements It helps to distinguish and identify customer groups which are suitable with products and services of enterprise

Technological factors: today manufacturing sector has been growing thanks to

country is favorable condition for development Policies to promote research and application of science and technology will be the motivation to manufacture more goods of higher quality

Figure 1 1 Product Life Cycle [Eng 2]

In this model, there are four stages in the lifecycle of a product: Introduction, Growth, maturity and decline which any product has to go through Characteristics

of each stage as follows:

Introduction: This is the initial stage of the product Products are new to the market Consumers are unfamiliar with the existence of them Reasonable strategy for this stage is that the manufacturer should focus on researching products to meet consumer tastes, concentrating on production and branding

Growth: This is a period of strong growth of the product For this stage, it is necessary to promote the expansion of production in order to capture as much market share as possible, because in this stage, other competitors also begin to seeing the attractiveness of the market and join This is the stage in which the demand is greater than the supply

Maturity: the saturation stage is the stage where the number of products provided in the market is extremely abundant Prices tend to decline and the market

is in favor of the demand, it means that the profit per product will slow down and tend to decrease The strategy of this phase is to research to add value or different

Decline: This is the recession stage of the product Product is no longer attractive and the profit per product falls fast Feasible strategy is that the manufacturer needs to focus on research and bring new products to start a new cycle Manufacturers have two trends either to develop product to a new step or conduct descending scale and phase out products from the market

The model of the product lifecycle helps manufacturers have strategies which are reasonable in their operation strategy in each stage of production from which it can help maximize profits and reduce risks in production activities

1.3.1.3 External Factor Evaluation Matrix (EFE)

Figure 1 2 Example of EFE matrix [ENG 3]

EFE matrix synthesizes, summarizes and evaluates the major opportunities and risks of external environment which affect the Enterprise EFE Matrix helps strategic managers assess responses of business to opportunities and risks and make some comments on the external environment creating conveniences or difficulties for businesses

The information in the EFE matrix consists of: List of factors affect the opportunities and challenges of the business, assess their importance with scores

from 0.0 to 1.0 and evaluate the weights of the elements from 1 to 4, the points for each factor and the total score for Enterprise

The total score of 4 shows that Business has been responding very well to the opportunities and risks from the external environment In contrast, the score of 1 is

a show that business has been reacting the impact of external environment in a very weak way; the strategies set out by business are neither to take advantage of the opportunities nor avoid the risks from the external environment

1.3.2 Internal Factor Evaluation Matrix (IFE)

IFE matrix synthesizes, summarizes and evaluates the strengths and weaknesses of the business Matrix shows the strengths that businesses need to promote and weaknesses in need of improvement in order to improve the performance and its competitive position

The information in the IFE matrix includes: List of the factors affect the strengths and weaknesses of the business, assessing their importance with scores from 0.0 to 1.0 and evaluating the weights of the elements from 1 to 4, the points for each factor and the total score of Enterprise

The total average score is 2.5 The total of important point is 4 showing that business is very strong on the environment inside, which also means that the current strategy of enterprise is promoting strengths, overcoming weaknesses In contrast, the total point is 1 showing that business does neither take advantage of strengths nor overcome the weaknesses of the internal environment

Figure 1 3 Example for IFE matrix [ENG 4]

1.3.3 SWOT model

SWOT analyzing model is an useful tool for understanding and making decision in any situation for any organizations doing business SWOT stands for four letters Strengths, Weaknesses, Opportunities and Threats SWOT model provides a tool for strategic analysis, review and evaluation the position and orientation of a company The elements in the SWOT model are:

- Strengths: What are advantages of Enterprise? Which work the Business does best? What resources does the Enterprise need to use? What are advantages that other people see in the Enterprise? The advantage is usually formed when comparing with competitors

- Weaknesses: What things can be improved? What should avoid doing? The Enterprise has to consider problems on the basis of inside and outside Why can the competitors do better than the Enterprise?

- Opportunities: Identifying opportunities that the business may have Opportunities arise from external factors such as policies, industry development,

- Threats: Understanding the problems may adversely affect operations of Enterprise What are there are problems of overdue debt or cash flow? Are there any weaknesses threaten the company? This analysis helps us identify challenges of the business

SWOT analyzing model is suitable for assessing the current state of the company through analysis of the internal (Strengths and Weaknesses) and external (Opportunities and Threats) situation of the company SWOT model performs filtering information in order, which is comprehensible and easy to process

1.3.4 TOWS matrix model

In contrast to thinking positively of the SWOT matrix is the opposite approach

of the TOWS matrix The crucial nature of developing strategy is to create competitive advantages and gain market position against competitors Accordingly, the matrix will begin with the external environment first and from challenges and new threats to opportunities afterwards, it means matching pairs of TO, followed by new combinations of internal elements WS This combination will start with the weaknesses first, then the following strengths

Based on the information about the weaknesses, strengths, opportunities and treats and application of TOWS matrix, we can identify strategies appropriate to each feature of the business

Figure 1 4 TOWS matrix [Eng 5]

1.3.5 Space Matrix

This matrix helps companies choose strategies of attack (Aggressive), caution / conservation (Conservative), defense (Defensive) or competition (Competitive) as the most appropriate The axes of the SPACE Matrix represent two elements within the organization (FS - Financial Strength and CA - Competitive Advantage) and two external factors (ES - environmental Stability and IS - Industrial Strength) Four factors are important which decides the general strategic position of an enterprise

Figure 1 5 Space Matrix [Eng 6]

The way to determine the score for Space Matrix: Selecting a group of variables to show financial strength (FS), competitive advantage (CA), environmental stability (ES) and industry strength (IS ) Assign numerical values from +1 (worst) to +6 (best) for each variable of the FS and IS groups Assign a numerical value from -1 (best) to -6 (worst) for each variables of ES and CA group; plus the value assigned to the variable elements of each group and divide for the number of variables of the respective groups; Mark average point of FS, IS, ES and

CA in the appropriate axis of the matrix SPACE; Plus points of X, Y, mark the results on axes X, Y Mark the intersection of two new point on the axis X, Y; Draw the direction vector from the origin of the SPACE Matrix through the new intersection This vector represents the types of strategies that the organization should select: attack, competitive, defensive, or cautious

1.3.6 Quantitative strategic planning matrix model (QSPM)

Figure 1.6: Quantitative strategic planning matrix model (QSPM)

This is the method to establish the relative attractiveness of feasible strategies which can be replaced QSPM matrix uses external and internal factors to assess objectively the alternative strategies, firstly based on the key success factors inside and outside identified The factors in the QSPM model are obtained directly from the IFE matrix and EFE matrix

When using the matrix methods as TOWS, SPACE we can come up with many possible strategies However, when applying QSPM matrix to assess, we only evaluate a group of strategy together QSPM Matrix also requires an analysis based

on intuition

1.4 The type of strategy for a company

1.4.1 Corporate-level strategy

Corporate-level strategy directs to the long-term basic objectives within the company According to Fred R David, corporate-level strategies can be classified into 14 basic categories: backward integration, forward integration, horizontal integration, market penetration, market development and products development Each of the strategies mentioned includes several specific activities For example, market penetration strategy may include increasing sales force, increasing advertisement costs, promotion to increase market share in a geographic area

1.4.2 Business Strategy

Business strategy includes the way to compete the organization selects, the way of market positioning to achieve competitive advantage and the different strategies which can be used in the specific context of each industry According to Michael Porter, there have three strategies: low-cost strategy, product differentiation strategy and strategy focusing on a specific market segment

1.4.3 Functional or departmental – level strategy

Functional Strategy is, in other words, departmental strategy, the strategy of functional units (Producing, Marketing, Finance…).These strategies help improve and increase operational effectiveness in the scope of Company, therefore, it helps Corporate-level and Business-level strategies implemented effectively

In order to non-stop improving competitive ability, operational effectiveness of Company, meet the demand of customers and market, there is a need of building a system of strategies completing company’s operations in functional departments

CHAPTER 2: ANALYZING THE SITUATION OF VINACONEX

ADVANCED COMPOUND STONE JOINT-STOCK COMPANY

(VICOSTONE)

2.1 Overview of Vinaconex Advanced Compound Stone joint stock Company (Vicostone)

2.1.1 General Information [VIE 2, page.11]

Name of Company: Vinaconex advanced compound stone joint stock company Trading name: Vinaconex advanced compound stone joint stock company Abbreviated name: Vicostone

Address: Hoa Lac high-tech Industry Zone, Thach That Commune, Thach That District, Hanoi

Charter capital: 210,666,000,000 VND

Name of stock: Shares Corporation Vinaconex Advanced Compound Stone The number of listed shares: 21,066,600 shares at the Hanoi Securities Trading

2.1.2 Mission, vision, strategy [VIE 2, page.2]

Mission: “Become manufacturing company, leading business regionally and

internationally in the field of artificial stone and advanced eco - materials; grow fast and stably; perform business effectively, maximize the benefits of the shareholders continuously improve the material and spiritual life of workers, participate actively in social work and charity "

Vision: "Pioneer in application and development of new technologies, new

materials friendly to the environment, and eventually to specialize in producing advanced eco - materials, have long-term competitive advantage, ensuring sustainable environment"

Strategic orientation: Industrial production of new materials is the core

business, eco-materials is a key, trading in mining and real estate sectors is

supply-demand support and financial leverage serving development and expansion of industrial fields

2.1.3 Field activities, technologies, products

Field of main activities:

Core business activity of VICOSTONE is the production of artificial stones made by advanced technology sole-transferred from Breton SPA (Italy) with a total integrated capacity of the three lines of over 2 million m2 / year Orientation of VICOSTONE is taken as the leading export, the export market which will account for 95% of the total value of industrial products Additionally to create leverage for industrial activities, since 2010, VICOSTONE have stepped up their operations in two business areas are mining and minerals processing and real estate [VIE 2, page.16]

Technology, products [VIE 2, page.16-17]

VICOSTONE’s products are manufactured by technology "Compaction by Vibro compresion Under Vacuum", a new technology in the field of manufacturing artificial stone , allowing adhesions of dry aggregate particles by special adhesives

to create a type artificial stone with superior technical properties, aesthetic, which the artificial stones produced by other technologies cannot be obtained

The producing process consists of:

Figure 2 1: The process of producing artificial stone

The shaping of rock sheet is done on the system with modern equipment, high level of automation Raw materials are automatically metered according to a formula of matching material which is carefully calculated, mixing

in forming tool

Vibration pressing in the vacuum environment

product and product (large sheet)

Semi-the forming tool After automatically quantify Semi-the mass of stone sheets, mold will be put into the vibropress, where the process of vibration pressing of materials in vacuum environment will be made and put out stone with almost absolute compactness After 24 hour steady, the stone sheet will be sharpened to create the product as perfect as expected

With the nature of materials Compozite, the product of VICOSTONE is a kind

of unburned paving materials, so there are many advantages: saving energy (heat) because of being unburned at high temperatures; zero-emission from the producing process; maximum power savings due to the producing process uses circulating heat transmission oil and is controlled accurately by modern control system VICOSTONE advanced artificial Stone uses adhesive quartz aggregate by plastic Polyester Resin Some products of VICOSTONE are difficult ones, produced by very few factories worldwide nowadays

2.1.4 Relating Companies [VIE 2, page.12-13]

2.1.4.1 There is no companies holding over 50% shares of VICOSTONE 2.1.4.2 The subsidiaries (VICOSTONE holding over 50% shares)

 Vietnam Stone Work – Top Fabrication Joint Stock Company (STONE VIETNAM)

- Trading name: Vietnam Stone Work-Top Fabrication Joint Stock Company

- Abbreviated name: STONE VIETNAM

- Address: High-tech Industry Zone, Thach That Commune, Thach That District,

- Trading name: Vico Investment and Mineral Joint Stock Company

- Abbreviated name: VICOSTONE MINE

- Address: 137 Le Quang Dinh Street, Ward 14, Binh Thanh District, Ho Chi Minh

City

- Charter capital: 200,000,000,000 VND (Two Hundred Billion VND) equivalents

with 20,000,000 shares The number of shares owned by VICOSTONE according to register: 10,200,000 shares equivalent with 102,000,000,000 VND (One Hundred and Two billion VND), accounting for 51% of charter capital

2.1.4.3 Associated companies

 Tan Phuoc Real Estate Joint Stock Company (TAN PHUOC Re JSC)

- Trading name: Tan Phuoc Real Estate Joint Stock Company

- Abbreviated name: TAN PHUOC Re JSC

- Address: 137 Le Quang Dinh, Ward 14, Binh Thanh District, Ho Chi Minh City

- Charter capital: 200,000,000,000 VND (Two Hundred billion VND) equivalents

with 20,000,000 shares The number of shares owned by VICOSTONE: 9,000,000 shares equivalent with 90,000,000,000 VND (Ninety billion VND), Accounting for 45% of charter capital

 Style Stone Joint Stock Company

- Trading name: Style Stone Joint Stock Company

- Abbreviated name: STYLE STONE

- Address: High-tech Industry Zone, Thach That Commune, Thach That District,

Hanoi

- Charter capital: 150,000,000,000 VND (One hundred and fifty billion VND)

equavelents with 15,000,000 Shares

- The number of shares owned by VICOSTONE: 7,400,000 shares equivalent with 74,000,000,000 VND (Seventy-four billion VND), Accounting for 49.33% of charter capital

2.1.5.The important milestones

 2010

December: Increased the capital to 210.666 billion VND

September: implemented and applied the system for enterprise resource

planning (ERP-SAP)

June: Implemented the investment project of the production line of artificial

stone No.2; increasing the total capacity up to about 1.600.000m2/year since the end

of 2011

 2009

Products of VICOSTONE have been received many important certificates: Certificate NSF certifying safe materials in direct contact with all kinds of food;

Certificate GreenGuard certifying products safe for indoor environment and safe

for children and schools, Certificates Microbial Resistant certifying

uncontaminated materials; Certificate CE certifying paving materials meet European standard according to EN 15285:2008) ; research and successful application in laboratory technology for producing artificial stone using bio-resin, adhesives derived from vegetable oil, environmentally friendly, ensuring environmental sustainability, and first step to start program of ecological materials, open up orientation for new product strategy

December: issue individually convertible bonds worth165 billion VND for two strategic partners as Red River Holding Fund and Tien Phong commercial Bank

 2008

July: VICOSTONE officially changed operating-form into the parent -

subsidiary company

May: Issued individually convertible bonds worth 100 billion VND for a

strategic partner as Beira Limited

April: Established Vico Investment and Mineral Joint Stock Company -

VICOSTONE MINE by VICOSTONE hold controlling shares

 2006: The first year when VICOSTONE made profit

 2005: Completed the capitalization of Vinaconex Advanced Compound Stone Factory into Vinaconex Advanced Compound Stone Joint stock

 2004: Exported the first consignment to Australia on 1st September, 2004

 September, 2003: Opened Vinaconex Advanced Compound Stone Factory, using two production lines of advanced artificial stone using mould (Terastone line) and organic adhesives (Bretonstone line) with the total capacity of 920,000 m2 per year

 On 19th December, 2002: Opened the Vinaconex Advanced Compound Stone Factory, formerly of Vinaconex Advanced Compound Stone Joint Stock Company

2.2 Analyzing the status of Vinaconex Advanced Compound Stone Joint Stock Company

2.2.1 The common conditions in Vietnam

The content of this part mainly mentions the issues outside the Enterprise This part uses noticeable aspects listed in P-E-S-T model which was theoretically mentioned in chapter 1

2.2.1.1 The Political environment in Vietnam

In recent years, Vietnam is the nation having dynamic political-legal situation The policies of the Party and Vietnam Government always directs to the building and developing the economy, stabilizing society Vietnam is also strongly implementing the policies opening to partner with other nations in the world

Opening the association helps Vietnam have convenient conditions to access the foreign investment, technology transmission There have been many industries developing rapidly in recent years, among of them are the construction and constructing materials industries

The Government has many crucial policies in order to establish an institution for many industries, business fields to develop In past years, National Assembly of Vietnam passed legislations which are important for the construction industry to develop such as the Land Law (2003), Housing Law (2005), Investment Law (2005), Law on Real Estate Business (2006), Law on Regulation urban Planning

Generally, policies of the state are encouraging the development of construction and building materials in the nation, creating conditions for investment projects both inside and outside the country joining this sector

2.2.1.2 The Economics environment in Vietnam

In the early six months of 2011, Vietnamese economy is facing many challenges There are complex situations in the world such as the debt crisis in Europe, the stagnation of the Japanese economy, inflation and instability in many countries around the world, rising in prices of raw material… have dramatically affected Vietnam Economic growth tends to slow down; inflation continues to rise; high interest rates; exchange rates and gold price fluctuations; foreign exchange reserves plummets; losses due to cold weather lasting in the North and North Central adversely impacted on the agricultural production and farmers' lives The risk of higher inflation, macroeconomic instability and ensuring social welfare has become a major challenge for the economy in Vietnam in 2011

The monetary policy has been implemented tightly, cautiously and the administration has been initiative, flexible and efficient The credit capital has been given priority to production and business needs, especially agriculture and rural development, export and supporting industries, small and medium businesses; Speed and density of lending credits reduced in non-manufacturing sector Lending rates showed signs of reduction but has been still very high On the whole, there is a very difficult situation for the operation of enterprises, especially in capital

2.2.1.3 The socio-cultural, population environment

Currently, Vietnam is being evaluated as having many opportunities and challenges with the characteristics of the golden population model (it is reported the percentage of children (0-14) lower than 30% and the rate of elderly (65 or more) lower than 15%) - potential workers are plentiful

The situation of an average income of a household member per month has increased over the years in both urban and rural areas:

Table 2.1 Average per capita income for years [VIE 4, page.1]

(Current

2002 2004 2006 2008 2010 Nation wide 356,1 484,4 636,5 995,2 1387,2 Rural - Urban

Urban 622,1 815,4 1058,4 1605,2 2129,7 Rural 275,1 378,1 505,7 762,2 1070,5

Table 2 2 Percentage of urban population of the region for years [VIE 8,

Technology is the way to promote the production developing and improve labor productivity for manufacturers The technology lines have brought greater productivity, cost per product decreases In the development of the country, the Government of Vietnam encourages enterprises to accelerate the adoption of new technologies, information technology, and biotechnology into the production process

However, Vietnamese enterprises are very weak in the transfer and application

of technology Investment in science and technology in Vietnamese enterprises is accounting for a very low proportion in comparison with many countries around the world Every year, the state allocated only about 0.5% of GDP to scientific and technological activities [VIE 7].The investment proportion of business is less The reason for this situation is that most micro and small enterprises, the initial worry is

to exist in the marketplace; there are no conditions for investment in science and technology

Therefore, those enterprises which promote the application of new technologies in production will create a huge advantage in competing with the general background

2.2.2 Business development in advanced stone products

2.2.2.1 Market of advanced stone products in Vietnam

Using stones to pave in Vietnam appeared thousands of years ago In recent years, paving stones have gradually developed into the industry Production increased from 0.2 million m2 in 1990, 0.5 million m2 in 1995 to 1.52 million m2

in 2000 By 2009, the production has increased up to 6.5 million m2 as many 32 times as that in 1990 Many centers mining and processing paving stones have been formed at local level, notably the provinces of Thanh Hoa, Nghe An, Binh Dinh, Khanh Hoa, Phu Yen and some provinces at the South East Stone products have currently been used for export and the construction works In the Northwest, Northeast, Northern, North Central, South Central and Central Coast, Southeast and

Estimated reserves may be exploited over 4 billion m3 While the number of exploitation in 2009 was only about 6.5 million m2 (very low, the supply to market

is not much) Currently, the demand for high-grade paving stones for construction, especially residential buildings, office buildings, apartments is taking place actively with many projects across the three regions of Vietnam People's lives are increasingly rising so the investors are gradually favored the use of stone as building materials and decorations The urbanization takes place rapidly, the real estate market develops, industry of paving stones is forecast to have high annual growth rate estimated at 20 to 25% [VIE 9]Thus it can be seen, the potential of advanced stone market in Vietnam now is very promising in the coming years

2.2.2.2 The company supplies advanced stone products on the Vietnam market

Advanced stone products on the market are mostly exploited by the small private establishments There are very few businesses and organizations carrying out large-scale mining Businesses primarily engaged in the production and supply

to the market by exploiting natural stone quarries or importing from abroad, some companies have mining activities and stone production at relative scale in Vietnam are:

 Vinavico Joint-stock Company[VIE 10]:

Founded in 2006, renamed in 2009 to Vinavico Corporation Initial charter capital was 30 billion VND In 2010, increased capital to 92 billion VND Categories of business activities are very diverse, in which focuses on the business

"mining and mineral processing" in which stone is the key products The company has many projects such as mining projects Tham Then, Pha Xum, Khau Ca … The main products are granite, stone block, stone paving roads and public works

Development orientations: To become the leading company in the business sector, mining in Vietnam, to take economic effect as a measure for sustainable development, to take construction of mining applied modern technology with advanced management model as the leading to the development of production

business and seize opportunities to diversify business lines to create the development

Developing strategy: sustainable development, always focus on the application

of new technologies in mining, market expansion, product development and trading

of natural stone, artificial stone produced by companies, processing and importing

to exploit and process white marble, slate, and other products "

Labor force consists of 77 people Among of them there are two people over the university level; 27 people at the university level, college, 12 intermediate and technical workers, 36 labors of high school level

 Vinastone Venture Company [VIE 11]

Vision: Become the no.1 company in Vietnam specializing in producing, distributing and working natural stone products for domestic market and export in

2015

Mission: Meet the maximum needs of customers, protect the environment and develop the local community welfare where there is headquarter of company, create high added-value per product, service; promote the trend to use natural stones in constructions

Founded in 2001, after 10-year building and developing, Vinastone has been assessed as one of the leading importers and suppliers in Vietnam which specialize

in naturally mined stones

In accordance with the guideline of pioneering in supply of stone products in Vietnam, Vinastone has been actively investing, finding the best solutions to supply stones, introduce to the customers about products with diverse shapes, various colors and good quality

Vinastone now has relatively available material resources with almost 40ha of mines licensed to exploit, a factory in Hanoi, 2 factories in Thanh Hoa, Vinastone has been supplying to Vietnam market with products which have export-standard shapes and quality Vinastone is also known as a professional provider of advanced

natural stones which are directly imported from Italy, Spain, Greek, Turkey, and India…

In addition to strength of domestic market, Vinastone is also high appreciated

in export markets such as Europe, Asia, North America and Australia

Labor force: Vinastone has about four hundred employees including labor force having professional level, sound knowledge about stone and products-services

of natural stones; the staff having technical advisory experiences will be helpful assistants helping customers survey, verify, assess and consult about using stones as well as estimate the cost of each part of work optimally

Some of typical constructions completed by Vinastone: Hanoi Intercontinental five-star hotel project, Reforming project of Metropole Hanoi Hotel; Movenpick Hanoi Hotel; Hilton Hotel; Quang Binh SunSpa Resort At present, Vinastone is supplying and implementing parts of natural stones in many other construction works such as Crowne Plaza, Syrena, Movenpick Saigon Hotel… Vinastone now is having distribution agents across the country

2.2.2.3 Situation of business in Enterprises in the same industry

Currently, a majority of Enterprises producing natural stones and importing the artificial stones are companies which have not yet been listed in stock market or capitalized or have small scale Therefore, our group has met some difficulties in collecting the business result as well as the data about producing situation of companies in this industry

Table 2.3: Situation of business result of Vinanvico in 2010 [VIE 10, page.20]

2.2.2.4 Market of advanced stone products on the world

The world now has 53 companies using the technology of producing artificial stone of Breton The competition for business between the main suppliers of this product in the world is now so fierce, especially in the American market, Europe and Australia The demand for this product in the Asian market is relatively low Sales of Vicostone in those markets as follows: 40% in Oceania, 30% in Europe, the remaining approximately 30% in the Americas In Asia, there are two factories in China (two lines), a factory in Korea (two lines), a plant in Oman (one line), Vicostone ranks No 1 in Asia in term of capacity with three production lines of artificial stone

In the system of 53 companies, there are Vicostone and StyleStone (an associated company of Vicostone) currently operating in Vietnam Breton is supplying six types of production technology of artificial stone In which, the technology that

Order Indicators 2010 2009

1 Revenues 61.766.370.695 12.382.987.028

2 Net revenue 61.766.370.695 12.382.987.028

3 Gross profit 10.451.087.978 932.266.859

4 Cost of managing business (7.207.042.093) (137.026.727)

5 Profit from business activities 11.451.792.534 940.992.064

6 Other income 2.642.624.351 652.380.952

7 Other cost (31.440.564) (485.569.942)

8 Other profit 2.611.183.787 166.811.010

9 Pretax profit 14.062.976.321 1.107.803.074

10 After tax profit 10.573.590.712 968.761.406

11 Basic earnings per share 1.187 426