Building the development strategies of Tri An hydropower company stage from 2010 to 2015

TABLE OF CONTENTS 1.1.4 Company Strategy and Competitive Strategy 5 1.2.2 The Origin of sustainable competitive advantage 11 1.3.3 The advantages of strategic of leading cost 16... Ta

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

BUILDING THE DEVELOPMENT STRATEGIES OF TRI AN HYDROPOWER COMPANY STAGE FROM 2010 TO 2015

Group 8:

Vo Tang Ly

Vo Tan Nhan Phan Van Khuyen Tran Duc Minh

HO CHI MINH CITY, JAN 2010

PREFACE

First, our group would like to thank Pr JONH VONG who has taught us the knowledge of management strategy and the valuable experiences in management in general and strategic management in particular and Dr Hoang Lam Tinh who has guided us implementing the subject

We sincerely thank the lecturers of the professional group - Griggs University in Vietnam who have contributed to complete the subject

We sincerely thank the lecturers who have been communicating the useful knowledge throughout the course to use in this thesis

We respectfully thanks the leaders, the colleagues in the Tri An hydropower company (TAHPC), the experts in the electricity sector and the members of the GEMBA01.E04 class have enthusiastically cooperated during the survey assessment of the internal force of the TAHPC

We sincerely thanks the supervisors who have supported our class in the process of subject implementation as well as during the course

We sincerely thank Electric Power College Ho Chi Minh City that has given us the best facilities and equipment during the course

This is an exercise showing full knowledge that we have been digested in the learning process This is a scientific research of our group During the process of writing this scientific research, we also used the references that have been presented in the reference part

Sincerely,

GROUP 8

TABLE OF CONTENTS

1.1.4 Company Strategy and Competitive Strategy 5

1.2.2 The Origin of sustainable competitive advantage 11

1.3.3 The advantages of strategic of leading cost 16

1.5.2 Matrix assessment of internal factors 20

1.6.1.2 The basic content of total quality management TQM 24

1.6.4.1 What is the organizational culture? 28 1.6.4.2 Culture and strategic leadership 28 1.6.4.3 The adaptable and stagnant culture 28 1.6.5 System of remuneration and rewards 28

2.1 PROCESS OF FORMATION AND DEVELOPMENT OF THE

2.1.2.1 Characteristics of the organizational structure of the

2.1.2.2 The Organizational chart of the company 33

2.2.1 Operation management analysis of the company 34

2.2.2.1 Main activities for increasing the value chain 35

2.2.2.1.1 Equipment operating 35

2.2.2.1.2 The maintenance and repairing 36

2.2.2.1.4 The output operation 36

2.2.2.1.5 Marketing and Services 37

2.2.2.2.1 Structure of infrastructure 37 2.2.2.2.2 Human Resource Management 37

2.4 ENVIRONMENTAL ANALYSIS OF 5 PRESSURES IN

2.4.5 The pressure from potential competitors 49

2.5 ASSESSMENT SURVEY OF THE COMPANY‟S INTERNAL

2.5.5.1 Survey sample characteristics 55

2.5.5.2 Testing Cronbach's ANPHA liability 56

2.5.5.3 Analysis of descriptive statistics variables 57

2.9 SWOT MATRIX 69

Chapter 3:

BUILDING THE DEVELOPMENT STRATEGIES

3.1 THE DEVELOPMENT STRATEGIES OF THE COMPANY

3.1.3.6 Basis for company strategies development 75

3.2.2.2 Strategies to achieve the goal 80

3.3.1.1 Recruiting and training human resources 82

3.3.1.2 Policy for motivating employees 82

3.3.2 Organizational solution 83

3.3.4 Solution to work toward competition strategy leading cost 84

Appendix 2: List of customers using large power in Dong Nai province 100 Appendix 3: List of customers using large power in Binh Duong province 103 Appendix 4: Implementing schedule of building center for consulting,

LIST OF CHARACTERS AND ABBREVIATIONS

Symbols,

abbreviations

Full Text

EVN The electricity of Vietnam corporation

LIST OF TABLES

No Name Page

Table 1.4 Result of combination of sustainable criteria 14

Table 1.7 The total significance mark in the IE matrix 21

Table 2.3 Production cost of electricity (by year) of TAHPC 40 Table 2.4 Capacity of electric power plants in Vietnam (years 2008 and

Table 2.7 Characteristic of sample surveys 55 Table 2.8 Results of Cronbach‟s Anpha reliability test 56 Table 2.9 Response capacity of the company through the experts‟

evaluation

57

Table 2.11 Matrix of internal factor evaluation ( IFE ) 62 Table 2.12 Matrix of external factor evaluation ( EFE ) 64 Table 2.13 Power consumption structure and GDP structure 65

Table 3.2 Personnel planning of the company to year 2015 83

LIST OF FIGURES

No Name Page

Figure 2.5 Frame plan for responding descriptive statistics 59

Figure 3.3 The combined strategy period 2013-2015 81

BUILDING THE DEVELOPMENT STRATEGIES

OF TRI AN HYDROPOWER COMPANY STAGE FROM 2010 TO 2015

Figure 1.0: Overview of TAHPC

OVERVIEW OF THE THEME:

 General background of the theme:

In order to achieve growth rate of 1% in total national income (GDP) we need to

increase about 2% in electric power The power industry has been under high pressure

from increasing the demand of electricity from 13 to 15% every year This is difficult

to do, especially for investment capital mobilization Currently, the demand for electric capacity is 12,000-13,000 megawatt (MW), while the ability to provide all types of power plants is only about 12,000 MW Because there isn‟t enough reserve capacity, the nationwide shortage of electricity will be about 1,000MW in peak hours every day Therefore, the happening stress of power is unavoidable

In this situation, maintaining the existing electric resources stably is also an urgent solution to maintain the system stability Although TAHPC is only a plant of small capacity comparing to the electric system (400MW/12,000MW), but it plays an important role in maintaining a stable power system, is a plant compensating reactive

power mainly in the South Operating four generating units effectively, safely, stably

is an extremely important task of TAHPC

On 1 July 2010, the Law on State Enterprise will be unvalid, all State Enterprises will have to convert existing forms to act in accordance with the provisions of the Law TAHPC is a state-owned enterprise directly under the EVN According to the route and the structure of the EVN, TAHPC will become a 1 member limited liability company in 2010 and this is an intermediary preparation step for equitization that‟s expected to implement in 2013.The economic structure continues towards increasing the proportion of industry, services and decreasing the proportion of agriculture, etc…This is an opportunity and a challenge for the company Development strategy of the company must be appropriate to the change of environment In this situation, we choose the theme:

“Building the Development Strategies of Tri An Hydropower Company

Stage from 2010 to 2015”

 The significance of the theme:

From now to 2015 EVN in particular and the state-owned enterprises in general will undergo large fluctuations in the business structure, it is indispensable for the development of market economy If you want to survive and develop, you must change business mind Building the development strategies of the company will mean extremely important, this can create a good foundation for the development of the company in the market economy

 The purpose of the theme:

Building the development strategy in the company is to exploit optimally the available resource, improve reliability, safety and efficiency in electricity production; diversifying of types of services such as consultancy, installation and maintenance; exploit , conserve and develop the capital after equitization and make high profits for shareholders

 Research method:

Analyze the impact of macro and micro environment to determine opportunities and challenges for the company

Analyzing the actual operation to determine strengths and weaknesses for the company

Survey assessing the response of the company to clients, using the SPSS to analyze and assess strengths and weaknesses

Analysing the activities to increase the chain of value of the company Surveying and determining the original structure of electricity system and demands for services in the future

Since then building the development strategies of the company to promote the company strengths, take full advantage of opportunities to overcome weaknesses and limit the threats to the business environment of the TAHPC

Structure of the exercise:

BUILDING THE DEVELOPMENT STRATEGIES

OF TRI AN HYDROPOWER COMPANY TO YEAR 2015

PROPOSALS, CONCLUSIONS

Chapter 1:

BASIS OF METHODOLOGY OF STRATEGIC MANAGEMENT

1.1 STRATEGY MANAGEMENT

1.1.1 The concept of strategy

Strategic management is the science and art to build direction and business objectives and implementing short and long term plans based on the available resources to help each organization achieve its long-term goals

What is strategy?

Strategy is the direction and field of activity of an organization for long-term target to achieve business advantage through the determination of resources in business environment to satisfy the market needs and ensure benefits for all agents involved (stakeholders, personnel, customers,…)

A more specific strategy is to:

 Achieve long-term business goals (business and social responsibility) in a sustainable manner

 Market or market segment that the company will operate and business strategies will be used

 Business should know how to dominate against competitors in the market with specific customers

 What resources need to use (people, skills, assets, finance, technology secrets, etc…) to achieve that goal

 The outside threats can affect the strategic performance such as environment, competition, politics, resources and plans for risk prevention

 The values that the enterprise will bring the owner and society as a member

In terms of process, strategic management is regarded as a management process including the establishment of a strategic vision, setting goals, drafting strategy, implementing strategy and adjusting appropriately

1.1.2 Tasks of strategic management

1 Identifying objectives and business purposes

2 Strategy and scale of business strategy

3 Strategy and business morality standards

4 Culture and basic values of business

5 Commitments to community, society and shareholders

At least there are three types of strategies in the business world They are strategy or normal strategy, company strategy and competitive strategy

1.1.3 General strategy

A common strategy will reflect how to achieve goals Therefore, a normal strategy will relate to the relationship between the ultimate goal and ways to perform Strategies and tactics will be perform exactly to gain specific objectives In most cases, the strategy was set up with available resources Anyway, strategy is a combination between the achieved goals and ways of implementation

1.1.4 Company strategy and competitive strategy

An enterprise will operate with the cooperative strategy of identifying market and business areas Competitive strategy or business strategy is a way of determining basis of doing business for competition Company strategy is a kind of plan in the context of the specified mission and vision of the company This means to introduce who you are, reason for establishment, and trend of development Competitive strategy focuses on business capacity, strengths, weaknesses relating to market features and its potentials, strengths and weaknesses of the competitors

According to Prof Michael E.Porter in Harvard University and his colleagues when analysing the competitive strategy, competition starts from 5 factors:

Figure 1.1 Model of 5 competitive factors (Michael E.Porter )

The potential competitors

According to Michael E.Porter, the potential competitors are businesses affecting to the industry in future Pressures from potential competitors to the industry depend on these following factors:

 The attraction from the industry

The attraction from the industry: this factor can be expressed by these figures such as profitable ratio, numbers of customers, numbers of businesses

 Barriers for entering in this industry: these are factors which affect to the industry entrancing

 Technology and capital

 Business factors: distribution system, brand name, customer system, etc…

Negotiation

ability of

suppliers

Negotiation ability of buyers

Threats from substitute

 Specific potentials: materials, degrees, inventions, human resources, government protection

Competition in the industry

The businesses will compete directly to create high competitive pressure in the industry In each field, competitive pressure among competitors can be based on these factors:

 Condition of the industry: demand, speed of growth, numbers of competitors, etc…

 Structure of the industry: concentrating or spreading

 Exit Barriers: like entering barriers, exit barriers are the factors affecting to the retired businesses seriously

Negotiation ability of buyers

As a competitive threat when they suggest lower price or a better service (increasing the cost of operation)

 When the buyers are low, the company can increase price and get high profit

 The buyers are the most powerful in these cases:

 The industry including many small companies and there are not many buyers

 The buyers charge with a large quantity

 The industry depends on customers

 The buyers can change the supply with the low cost

 The buyers don‟t have to spend much money when they buy from several companies at the same time

 The buyers can have the vertical amalgamation

 The relative power of the buyers and suppliers can be changed in future

Negotiation ability of the suppliers

The suppliers have to encounter with the pressure of raising prices or the input quality

 Opportunities for decreasing prices and high quality requirement

The suppliers are the most powerful when:

 The products of the suppliers are not capable to replace and they play an important role in the company

 The company is not a main customer to the suppliers

 The suppliers‟ products are different and these can not be economical for the company

 Integration threatening and the direct competition with the company

Substitute products

Substitude products and services can be satisfied the demand of products and services in the industry These are very sophisticated and diversified These can create price competition to the former product The most important factor of substitute products is scientific-technological progress

In order to deal with 5 above-mentioned factors, the competition strategy can use the

following elements: (1) cost, (2) differentiation, (3) focus

In short:

Feedback

Feedback Establishment Operation

Figure 1.2 Model of total strategic management

1.2 COMPETITIVE ADVANTAGES

1.2.1 The nature of competitive advantages:

The value that the customers can be recognized goods or services and manufacturing cost

External evaluation to determine opportunities and threats

Setting objectives annually

Vision,

Mission,

Objective

Selecting trade strategy

Natural resources disitribution

Measuring and evaluating performance

Implementing internal control,

examining,analizing strengths

and weaknesses

Policy proposal

Solutions of strategic implementation

Figure 1.3 : Foundation of the customers’ value

Ways to have competitive advantage:

1 The company will try to give more advantages to the customers to satisfy their expectation They will to try to make an effort to create high quality product for the customers The customers will enjoy great value (V)and offer higher price(P)

2 The company will work effectively to reduce cost As a result, the marginal profit increase competitively

“Creation is the main value of competitive advantage” 1

“Therefore, having potential ability or competitive advantage are to meet competitive demands and create the value of the customers.”2

According to Michael E.Porter, “ the competitive advantage (higher profit) to any companies can create dominated value, reduce business expense and make different products, so the customers will accept and offer a higher product.”3

1: P.Ghemawat(1991), commitment the dynamic strategy, Free Press, New York 2: R.R Wiggins & T.W Ruefli, 2002, Organization Science, 13: 82-105

3: M.E.Porter (1980), Competitive strategy, Free Press, New York

Fugure1.4 The basic models of competitive advantage

1.2.2 The origin of sustainable competitive advantage:

“In the broad sense, the resources consist of organizational, technical, human resources, materials, financial factors of the company These can be divided in 2 types: visible and tangible resources”1

1:B.Wernerfelt (1994), “Aresource Base of the firm”, Strategy Management Journal, 5 (1994) 171-180

Quality domination

Meeting the customers‟

demand

Innovation domination

Effectiveness

Domination

-Competitive advantage

-Low cost -Difference

Table1.1 Tangible resources

 Self finance ability Organizational resource  Structure of official statement,

planning system, controlling, official coordination

allocation, machine

 approachingMaterial resource Technical resource  Technical resource such as :

copyright, trademarks, patent, business secret

“ In the progress of creating the basic capacity, in comparison with visible resources, tangible resources are more effective and dominant”.1

“ The achievement of a company depends on the intelligence and resources systematically These are more important than its property Moreover, understanding the intelligence and using it as services successfully are becoming the managerial skill nowaday”2

1: Brush & Artz “Toward a contingent resource-base theory”

2: J.B.Quinn, P.Anderson, & S.Finkelstein, 1996 “Making the most of the best”

Harvard business review, 74(2): 71-80

 Scientific ability

 Innovation ability Reputation resources  Reputation to customers

Difficult imitated

ability

 History: Culture, valuable and original brand

 Unclear causes and effects: causes and function of

an unclear ability

 Social complicacy:

Internationarelations,reliability, relations among managers, staffs, suppliers and customers

Unchangeable ability  Not have equivalent strategy

Table 1.4 Results of combination of sustainable standards

Valuable Scare Easy to

intimate Unchangeable Result

Implementing implication

competition

Below average income

competitive advantage

Average income to over average income

competitive advantage

Over average income

1.2.3 Value chain of company

The term of value chain shows that the company is a chain of many activities to change the inputs into the outputs to create the values for the customers This changing process consists the main activities and the mutual activities

Values chain is an academic creation of Prof Michael E.Porter, a famous marketing scholar This term was first used in 1985 in the book of analysing the competitive advantage when he researched the production systems, trade and services This research has a great effectiveness in the USA and other developed countries This

is a initial stage in the Rostow model of economic growth, the highest stage

In this chain of value, the Porter model is divided into types of business: the mutual and main activities Basically, in general, there are 9 activities to create the total chain

of value:

Group of 5 main activities:

1- Bringing materials in doing business

2- Operating, manufacturing- trading

3- Outside transfering

4- Marketing and sales

5- Providing services

(this is a group which creates values of products)

The mutual group consists of:

1- Infrastructure

2- Human resources management

3- Technology

4 – Buying

These activities happen inside each of main activity

Besides that, chain of values can be pointed from the processes of main business, including:

(a) Process of product technology development

(b) Process of managing warehouse and input materials

(c) Process of payment

(d) Process of supplying services

1.3 STRATEGY OF LEADING COST

1.3.1 Implication of strategy

Implication of strategy is “total activities to provide products or services to satisfy customers‟ demands with a lower cost comparing to other competitors.”

( M.E.Porter, 1980, Competitive Strategy, New York : Free Press 35-40)

If this strategy is done successfully, the price leader will have 2 competitive advantages:

Firstly, the price leader can suggest a lower price compared to the competitors, although the profit is the same

Secondly, the price leader can be more sustainable than the competitors Therefore, the price leader can have a higher profit than the average level

1.3.2 The strategic options:

The price leader can choose a low different level because a high one is often very expensive, but it needs to be not too much lower than the making variance competitors

The price leader does not pay much attention to the nick market segmentation and they use their products to attract the ordinary customers

In order to achieve low cost, the company must be flexible in manufacturing and effective management

1.3.3 The advantages of strategy leading costs

We analyse them based on 5 competitive factors of M.E.Porter

To the competitors in the same industry

The price leader must have an important role comparing to the competitors They feel nervous if they compete to the price leader The price leader has a higher cost, so the competitors use to avoid by using specific ways

The negotiation ability of suppliers

The price leader will have many advantages in case the suppliers are powerful With the higher margin of profit, the price leader can be easy to enjoy the

increasing price from the suppliers

In case the industry is influenced by the increasing price, the price leader can offer a higher price and they still have the average or above average level of profit

At last, the price leader can suggest the suppliers to decrease the price Moreover, the price leader often has a large market share, they will buy in a big

amount of products Then they can increase their negotiation ability

The negotiation ability of suppliers

The powerful customers can suggest the price leader to reduce the price in case the price is suitable in the market Since then, the price leader can have a more

important role The customers will not be more powerful, so the price leader will have

no any competitors

Substitute products

In comparison with many competitors, the price leader has a lower position when the products are changeable When the products are changeable, the price leader will be more active than their competitors If the substitute products enter the market, the price leader will reduce the cost to compete to these products and have a stable market share

Participants

At last, the competitive advantage of the price leader create a barrier Other companies can not enter the industry The price leader still enjoys the profitable price

The disadvantages of strategic leading costs

The main disadvantages of the price leader are in the competition to produce with a lower cost Changing technology can make a backward experience curve The new companies can apply new technology with a lower cost in the competition The competitors can save the labor cost

The competitors can be easy to intimate ways of the price leader

At the end, the strategy of leading cost can be in trouble The price leader try to reduce production cost, so they make the customers change their interests The price leader can not create the different products

1.4 EXTERNAL ENVIRONMENT ANALYSIS

Economic environment

 Macro economic environment are the strengths and prosperity of the economy

These can affect to the businesses and other industries

 The economic environment points out the nature and orientation of the economy

 The impact of the economy to a company can change the value of the company and its profit

 Four important factors in the macro economy:

 Economic growth rate

 Interest

 Exchange rate

 Inflation rate

Technological environment

 Technology changing can influence in many parts of society

 The technology includes:

 Institutions

 The activities relating to the creation of new knowledge

 Using these knowledge to the output products and materials

 Technology changing include the creation ,destruction, opportunities and threats Technology changing can affect the structure of the industry

 Threats and opportunities can be influenced to the businesses worldwide through buying external products or inventing new technology

Social and cultural environment

 Relating to social attitudes and cutural values

 Social attitudes and cultural values can create the social foundation

 Changing in technological condition, politics , legislation, economy and demography

 Social changing can create opportunities and threats

 Demography segment in macro environment relates to:

 Population

 Distribution of income

Political and legislative environment

 Political and legislative factors can also effect the opportunities and threats to the

environment

 The main feature bases on the interaction among the businesses and the government

 This segment can influence to the competition

 It‟s necessary to analyse :

 The new policies of government administration

 Antimonopoly law, tax law

1.5 THE BASIC MATRIX OF STRATEGY FORMATION

1.5.1 External factor evaluation matrix

The external factor assessment enables strategists to summarize and assess information of economy, society, culture, population, geography, policy, Government, law, technology and competitiveness

There are five steps to develop an external factor evaluation matrix:

 Step 1 – Forming an external factors rating which play decisive roles in

the company success, including opportunities and threats influencing on company and its business fields

 Step 2 – Classifying the significance from 0.0 (not significant) to 1,0

(extremely significant) for each element This rating indicates the relevant importance of the element to the company business field success

The opportunities rating is usually at higher level as compared to threats; however, threats can be rated at high level in case of serious or threatening traits

The whole rating specified for these factors must be equal to 1.0

 Step 3 – Rating from 1 to 5 for each factor determining success to show

how the company current strategies react to these aspects, among which response 5 is the best, and responses 3, 2 and 1 are above mean, mean and the worst respectively These levels are rated, depending on the company strategy performance Therefore, the rating is originally based on the company

 Step 4 – Multiplying the significance of each variable with its kind to

determine the significance mark

 Step 5 – Adding the total mark of significance to each variable to define

the total significance mark for organization

Regardless of any major opportunities and threats included in the external factor evaluation matrix, the total maximum significance mark possibly achieved by an agency is 5.0 and the lowest mark is 1.0; the total mean significance mark is 2.5

Evaluation: the total significance mark of 5 points indicates that the agency‟s

response is very positive to current opportunities and threats in their environment Meanwhile, the total mark of 1 point suggests that the company‟s proposed strategies

do not utilize opportunities or avoid external threats

Table 1.5: External factor matrix

External factors Significance

1.5.2 Internal factor evaluation matrix

The internal factor matrix is one used for assessing internal elements influencing

on company activities, including strong and weak points of company

How to build this matrix:

- Forming the list of all internal elements influencing on company activities, then evaluating the effect or significance of each factor by marking weight and calculating whole weights equal to 1 or 100%

- Assessing the company response rates for elements by classifying aspects from 1

to 5, among which the rates 5 and 1 are the best and the worst responses of company respectively Next, marking the significance of each element by multiplying the weight with the corresponding rating mark, and then adding them together in order to find out the total significance mark for company Significance marks of the highest, lowest and mean are points of 5, 1 and 2.5 respectively

Evaluation: If the total significance mark is 5, it is meant that the company has a

lot of strengths and is capable of overcoming weaknesses Meanwhile, if the total

significance mark is 1, it is indicated that the company lacks strengths and unable to overcome its weaknesses

Table 1.6: Internal factor matrix

Internal factors Significance

1.5.3 Internal-External factor matrix ( IE)

 The total significance mark of the IFE matrix shows on the X axis:

 If the total mark from 1.0 - 1.99 is weak on internal

 If the total mark from 2.0 - 2.99 is mean

 If the total mark from 3.0 - 5.0 is strong

 The total significance mark of the EFE matrix shows on the Y axis:

 If the total mark from 1.0 - 1.99 is low on external

 If the total mark from 2.0 - 2.99 is mean

 If the total mark from 3.0 - 5 is strong

The total significance mark of the IFE matrix

Strong 3.0 – 5.0

Mean 2.0 – 2.99

Weak 1.0 – 1.99

+ If the company mark is in the cells II, I or IV : should develop and construct + If the company mark is in the cells III, V or VII : should hold and maintain + If the company mark is in the cells VI, VIII or IX: should harvest or remove

1.5.3 SWOT Matrix

SWOT analysis is an analysis of external factors (opportunities and threats) as well as the internal factors (strengths and weaknesses) This is a difficult task that the companies have to take time, cost, income to implement effectively Strengths and weaknesses are from the internal factors of the company Opportunities and threats relate to the external factors

Table 1.8: SWOT matrix

OPPORTUNITY: O THREATS: T

Promoting strengths to catch opportunities

To form a SWOT matrix, it is required to carry out the following eight steps:

External factors

Internal factors

Step 1- Listing key strengths inside the company

Step 2 – Listing key weaknesses inside the company

Step 3 – Listing great opportunities outside the company

Step 4 - Listing important threats outside the company

Step 5 – Associating internal strengths with external opportunities and noting

results of SO strategy in appropriate boxes

Step 6 – Associating internal weaknesses with external opportunities and

recording the WO strategy‟s results

Step 7 – Associating internal strengths with external threats and recording ST

strategy‟s results

Step 8 – Associating internal weaknesses with external threats and recording WT

strategy‟s results

The analysis of SWOT model is a useful and quick technique to summarize key issues

arising from the internal and external effects evaluation to the entrepreneur

1.6 ORGANIZATION TO IMPLEMENT THE STRAGY

1.6.1 Total quality management TQM

TQM is the way to improve activities of the companies to gain the objective for the quality, effectiveness of products or services

1.6.1.1 Concept

TQM (Total Quality Management) is a managerial skill of an organization or business which bases on quality and the participation of members to achieve long- term objective Since then, the company will improve rapidly to satisfy the customers‟ demands and ensure the benefit of members and society

The definition of TQM was first developed by some American consultants, including H.W Edwards Deming, Joseph Juran and V.Faigenbaun Then basic philosophy of TQM was based on relative chain of 5 steps:

 Improving quality of activityes, so saving the time and materials, reducing mistakes and cost

 As a result, productivity will be improved

 A better productivity can create larger market share and the company can increase the price of the products

 Good quality makes profits and maintains the business operation

 Therefore, there will be many employment opportunities for the employees

1.6.1.2 The basic content of total quality management TQM:

1- Quality is first priority

2- Orienting on the consumers, not on the producers

3- Ensuring the information and considering the survey as an important tool

4- Management on humanism

5- The next process is the customer of the last process

6- Synchronization on quality management

7- Management on functions and board of functions

Table 1.9: 14 TQM items of Deming:

1 – Creating an orientation to improve products and services in the competitive power industry.Therefore, there will have many career opportunities

2 – Applying a new philosophy We are in the new economic situation Management bases on many challenges They have to be responsible for their work and change their role in the company

3 – Terminating the testing to gain the quality Terminating the testing of quantity

to have good quality at the beginning

4 – The main purpose of business advantages bases on the price in spite of the medium expenses

5 – Improving the system of production and services to improve quality and the output and reduce cost

6 – Implementing job skills

7 – Establishing the leadership to help people, machine and others to operate better

8 – Removing the fear, therefore everyone will work effectively

9 – Removing the barriers among the departments in researching, designing , selling and producing.Then they can predict the problems happening in manufacturing and using products or services

10 – Removing the slogans, the requirements of the labor force Since then, they can improve the quality and productivity

11 – Creating an orientation to improve products and services in the competitive power industry Therefore, there will be many career opportunities

12 – Applying a new philosophy We are in the new economic situation Management bases on many challenges They have to be responsible for their work and change their role in the company

13 – Terminating the testing to gain the quality Terminating the testing of quantity

to have good quality at the beginning

14 – The main purpose of business advantages bases on the price in spite of the medium expenses

1.6.2 Designing organizational structure

1.6.2.1 Overview

Strategic implementation is a way to implement their strategy effectively Designing organizational structure is a combination between organizational structure and system control to create a sustainable competitive advantage Determining the relations, procedures, instructions, the system power and thedecision-making processes

1.6.2.2Horizontal Assignment

Concentrating on the group division, the tasks to meet the business objective The organizational structure depends on the company strategy The organizational structure can be changed when they change their strategy

Functional structure

is a combination of experienced and professional staffs with the same resources

Advantages of functional structure:

At first, if everyone can work together with the same task, they will become profestionally and effectively

Secondly, they can examine together to ensure their responsible and sufficient work As a result,the working process will become more effectively, reduce production cost and increase the flexibility in operation

Thirdly, the managers can control perfectly the company activities

1.6.2.3 Disadvantages of funtionl structure

When the company applies the functional structure, the company will increase the horizontal assignment level to control other complicated tasks This structure can

be used to control when they become rising The beginning period and diversification can create a good influence to the company If the company has many geographic differences and begins working and producing widely, the controlling will be induced

to reduce the operations and increase the cost

1.6.3 Controlling

1.6.3.1 What’s strategic controlling?

Strategic controlling is a process of evaluation the operation of a company as well as its members to determine their working ability Then they can improve themselves better Strategic controlling is not only a good evaluation in the company but also a good way for businesses to use their resources It can help and promote staffs to offer many useful solutions

1.6.3.2 The importance of strategic control:

In order to determine how to exploit the resources effectively, the managers can offer how many outputs are necessary They also know the outputs (products, services) A system control can allow the managers evaluate how the products and services are Therefore, they will suppose a better solution in production

At last, the managers can help their companies meet the customers‟ demands Evaluating can help the managers to explore the process of working implementation of the staffs and they can work more effectively Moreover, they will concentrate on their customers

1.6.3.3 Controlling systems:

The strategy controlling systems allow the managers evaluate their operation in quality, innovation, customers‟ demands and implementation This system consists of

3 features:

 Firstly, this is flexible enough to meet the unexpectable events

 Secondly,this has to provide information exactly and a real prospect of the company

 Thirdly, this provides the managers information appropriately to have a good decision-making

Picture 1.5 points out 4 ways of designing the controlling systems

1.6.3.4 Steps for strategic control

Figure 1.5 Steps for designing the controlling systems

Setting up standards and objectives

Creating systems of measurement and supervisory

Comparing objective implementation

Implementation result and solutions if necessary

1.6.4 Organizational culture

1.6.4.1 What is organizational culture?

Corporate culture is a group of specific values They can be shared with every one inside and outside the company The corporate values are beliefs and ideas to achieve company objectives

1.6.4.2 Culture and strategic leadership

Corporrate culture is provided by the company founder and the managers.The company founder is important to the culture determination in the company and their managerial skill The leadership style is influenced to the leaders in the companies This attracts many managers and staffs when the company develops These values and cultures can improve the relations in the company

1.6.4.3 The adaptable and stagnant culture

This is not stable in long term Therefore, if the company want tobe existed, the managers should allow the company adapting to the environmental changing

The managers can create the culture to encourage the staffs to find out new ways to develop their ability and adapt to the new environment

The adaptable culture encourages the managers to give their new ideas

Stagnant culture is a social and careful factor These ideas are not encouraged in the

company

1.6.5 System of remuneration and rewards

The company tries to control the staffs‟ behaviors through relating remuneration hand rewards system Based on the company strategy (for example: low cost), the managers have to decide their behaviors After that they offer the system control to measure these behaviors and combine with remuneration and rewards system This is a basic strategy to determine the ways to behave to the staffs and departments in the company This is an important factor in the controlling progress

1.6.6 HUMAN RESOURCES MANAGEMENT:

1.6.6.1 Function:

Picture 1.6 Functions of HR management

1.6.6.2 Working analysis

These are works and procedures, rights and responsibilities, skills basing on the

HR management to regulate effectively

These determine the standard features of working description The working description is a document that shows the responsibilies, relations, standards to achieve The working description a summary document of personal qualification, main features, educational backgrounds, ability, expectation, hobbies, etc…

This is a basic foundation for selecting and training, evaluating and rewarding staffs

1

HR management

HR development

Personels

Labours and their relation

Safe and health

reward