Development stratery of Binh Phuoc power company to 2015 and vision to 2020

The necessity and significance of the topic "Building Strategy Development of Binh Phuoc Power Company to 2015 and vision to year 2020" We think that the topic "Building strategic deve

FOREWORD

Finally, it is time for the course’s completion after fifteen months studying and researching The course was rather short

but they left in our hearts the good feeling and highly valuable

knowledge Finish this course, we come back to the work and

never forget the enthusiastic and interesting discussions in the

class

The feeling to be nervous when preparing quiz tasks, be palpitated with fear once lecturers ask tough questions at

presentation of group tasks, or the parties at the end of each

subject, gathering together and be saturated and filled with

affection and gratitude between lecturers and students, even

he/she is a Vietnamese or foreign lecturer

Oh! How beautiful that student time is

Give us a thousand times for our sincere gratitude to the lecturers who have brought all your enthusiasm, dedication and

best to communicate to us with extensive and practical

knowledge Thanks to the extremely valuable knowledge that

shall help us live and work in each working position

Thank you very much the university, class managers and service personnel have enabled us to complete the course

Dear our classmates, Please give a nostalgic moment about our old dear days!

MEMBERS OF GROUP 5: SANG – THIEN – VAN – THAO

ANNEX

Sub - cover page

Remarks of the company

Commitment

Annex

List of abbreviation

List of tables

List of figures and diagrams

Foreword

PREAMBLE: GENERAL INTRODUCTION

1 General background, necessity and significance of the topic

1.1 General Background 1

1.2 The necessity and significance of the topic "Building Strategic Development of Power Company No 2 to 2015 and 2020 vision" 2

2 Objectives of research 4

2.1 Scope of research 4

2.2 Objectives of research 4

3 Approaches 5

3.1 Qualitative research 5

3.2 Quantitative research 5

4 Structure of Task 6

CHAPTER I: THEORETICAL BASIS - OVERVIEW OF STRATEGIC MANAGEMENT 7

1.1 Strategic Management 7

1.1.1 Concept 7

1.1.2 Requirements on building and implementing the strategies 8

1.1.3 Role and importance of Strategies and Strategic Management 9

1.1.4 Stages of Strategic Management 11

1.1.4.1 Strategy formation 11

1.1.4.2 Strategy implementation 11

1.1.4.3 Test and assessment of strategies 12

1.1.5 Levels of Strategic Management 13

1.1.5.1 Company - level strategy 13

1.1.5.2 Business - level strategy 13

1.1.5.3 Function - level strategy 13

1.1.6 Mission and Objective Identification 13

1.1.6.1 Mission 14

1.1.6.2 Objectives/Goals 14

1.2 The methods and tools used to develop strategies 20

1.2.1 Research on macro and micro environment 21

1.2.1.1 Macro environment 21

1.2.1.2 Micro environment 26

1.2.2 Analysis on internal environment 29

1.2.2.1 Value chain analysis 30

1.2.2.2 Analysis on factors outside the value chain 31

1.2.3 Develop strategies on SWOT matrix 33

CHAPTER II: ANALYSIS ON THE CURRENT STATEMENT OF BINH PHUOC POWER COMPANY 35

2.1 Background of Vietnam Electricity Corporation 35

2.1.1 Functions, duties 36

2.1.2 Organization of the corporation 36

2.1.3 Relations between Vietnam Electricity Corp with Power Companies 38

2.1.3.1 Business Manufacturing Plan 38

2.1.3.2 Electricity Business 38

2.1.3.3 Financial Works 39

2.2 Background of Vietnam Electricity Corporation (EVN – SPC) 41

2.2.1 Functions, duties 42

2.2.1.1 Functions 42

2.2.1.2 Duties 42

2.2.2 Organization of Southern Power Company 44

2.2.3 Relations between the Southern Power Company and Provincial Power Companies 45

2.2.3.1 Entitlements of SPC 45

2.2.3.2 Obligations of the Southern Power Company 47

2.3 Background of Binh Phuoc Province 48

2.4 Background of Binh Phuoc Power Company 51

2.4.1 Foundation and Development Process of BPPC 52

2.4.1.1 Foundation Process 52

2.4.1.2 Development Process 52

2.4.2 Functions, duties 55

2.4.2.1 Functions 55

2.4.2.2 Duties: Business lines of the Company 55

2.4.3 Organization of Binh Phuoc Power Company 57

2.4.3.1 Organization of the company 57

2.4.3.2 Technological Process of Production 61

2.4.4 Overview of the current statement and business performance at Binh Phuoc Power Company in recent years 62

2.4.4.1 Business Capital, the actual value of the Company and the actual value of the State capital in the Company 63

2.4.4.2 Results on business performance of the company in recent years 65

2.5 Analysis on strategic issues and administration of the company in recent years72 2.5.1 External environment analysis 72

2.5.1.1 Macro environment 72

2.5.1.2 Micro environment 77

2.5.1.3 Matrix of external factors 80

2.5.2 Internal Environment Analysis 84

2.5.2.1 Value chain analysis 85

2.5.2.2 Analysis of factors outside the value chain 100

2.5.2.3 Matrix of internal factors 106

2.6 SWOT matrix analysis 110

2.6.1 Opportunities – Threats 110

2.6.1.1 Opportunities 110

2.6.1.2 Threats 111

2.6.2.1 Strengths 112

2.6.2.2 Weaknesses 112

2.7 Matrix of strategy position and performance evaluation (SPACE Matrix) 113

2.8 Grand Strategy Matrix 116

2.9 Strategy Selection 118

CHAPTER III: SOLUTION – RECOMMENDATION & CONCLUSION 125

3.1 Orientation for electricity sector in National Energy Development Strategy of Vietnam up to the year 2020 and vision to 2050 of the Prime Minister 124

3.2 Development strategy of Electricity of Vietnam 126

3.3 Development plan for national electricity for period 2006 - 2015 and vision to 2025 of Binh Phuoc province 127

3.3.1 Objective 127

3.3.2 Objective of electricity sector 128

3.4 Development strategy of Southern Power Company 128

3.4.1 Development strategy 128

3.4.2 Forecasting some key strategic index of EVN - SPC 129

3.4.2.1 Forecast sale electricity in 2015 and vision to 2020 130

3.4.2.2 Forecast turnover – average selling price in 2015 and vision to 2020 130

3.4.2.3 Forecast electricity loss in 2015 and oriented to 2020 130

3.5 Forecasting and matters related to BPPC development strategy 130

3.5.1 Objectives of Binh Phuoc electricity sector 130

3.5.2 Forecasts 131

3.5.2.1 Forecasting Sale electricity to the year 2015 and oriented to 2020 134

3.5.2.2 Forecasting revenue – average price until 2015 and oriented to 2020 134

3.5.2.3 Forecasting power loss in 2015 and oriented to 2020 137

3.6 Identify strategy, vision, mission and target 140

3.6.1 Identify vision 140

3.6.2 Mission 140

3.6.3 Target to 2015 and orient to 2020 141

3.6.4 Analyze SWOT matrix to build strategy for BPPC 143

3.6.5 Strategic solutions 147

3.7 Selecting strategy for BPPC in 2015 and oriented to 2020 148

3.7.1 Strategies selected at company level 148

3.7.2 Strategies selected at functional level 148

3.8 Implementing measure and action plan 149 3.8.1 Measures for company leve 149

3.8.1.1 Measures for market development strategy 149

3.8.1.2 Solutions for entering and enlarging international market 150

3.8.1.3 Solution for product development strategy 150

3.8.1.4 Diversify strategy, joint venture, growth by toward integration 151

3.8.2 Measures for functional strategy 152

3.8.2.1 Measures for financial strategy 152

3.8.2.2 Measures for Marketing strategy 153

3.8.2.3 Measures for human resource strategy 155

3.8.2.4 Measures for strategy to develop trade and rural electricity 155

3.8.2.5 Measures for financial strategy 156

3.8.2.6 Measures for telecommunication development strategy 158

3.8.2.7 Measures for power loss reduction 158

3.8.2.8 Measures for electricity agents, departments and the agencies belong to the company 159

CONCLUSION AND RECOMMENDATION 162

RECOMMENDATION 162

1 For the State 162

2 For Binh Phuoc province 164

3 For EVN and Southern Electricity Company 165

CONCLUSION 166

REFERENTIAL DOCUMENTS 169

LIST OF FIGURES AND DIAGRAMS

Figure 1.1 SWOT general model 20

Figure 1.2 Model of five competitive pressures 26

Figure 1.3 Model of SWOT matrix 34

Figure 2.1 Map of area management of EVN 35

Figure 2.2 Organization of EVN 40

Figure 2.3 Office of EVN - SPC 41

Figure 2.4 Map of area management of PC2 42

Figure 2.5 Organization of SPC 45

Figure 2.6 Office of Binh Phuoc Provincial People’s Committee 48

Figure 2.7 Office of Binh Phuoc Power Company 51

Figure 2.8 Organization of Binh Phuoc Power Company 61

Figure 2.9 Management Area of Power Grid of BPPC 63

Figure 2.10 Diagram of power distribution grid growth in period 2000 - 2009 87

Figure 2.11 Diagram 110kV grid growth in period 2000 - 2009 87

Figure 2.12 Diagram of 110kV grid incidents in period 2000 - 2009 89

Figure 2.13 Diagram of distribution grid incidents in period 2000 - 2009 89

Figure 2.14 Diagram of Labor structure by level 91

Figure 2.15 Diagram of customer growth in period 2000 - 2009 94

Figure 2.16 Diagram of commercial electricity columns in period 2000 - 2009 96

Figure 2.17 Diagram of commercial electricity of five economic sectors in 2009 97

Figure 2.18 Diagram of commercial electricity of five economic sectors in 2000 - 2009 97

Figure 2.19 Diagram of power losses of BPPC in period 2000 - 2009 99

Figure 3.1 Diagram of BPPC sale electricity and direction function for period 1998 - 2009 133

Figure 3.2 Forecast diagram of billed electricity from 2010 to 2020 134

Figure 3.3 Diagram of revenue and direction function for period 2000 - 2009 135

Figure 3.4 Forecasting growth revenue for period 2010 - 2020 135

Figure 3.5 Diagram of power loss 2000 - 2009 and forecast function 137

Figure 3.6 Power loss rate chart in 2010 - 2009 138

Figure 3.7 SWOT matrix for strategy building 147

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LIST OF TABLES

Table 2.1 Results on business performance of BPPC in period 2005 - 2009 66

Table 2.2 Wire infrastructure and transformer station of BPPC in period 2005 - 200966 Table 2.3 Volume and capital for basic construction investment of BPPC in period 2005 - 2009 67

Table 2.4 Some main targets of business performance 2005 - 2009 69

Table 2.5 Macro economic Data of Vietnam in period 2004 - 2008 60 72

Table 2.6 Volume of transmission lines and transformer stations managed 86

Table 2.7 Status of grid incidents 88

Table 2.8 Structure of labor qualification 91

Table 2.9 Disposition of employees in Binh Phuoc Power Company 92

Table 2.10 Number of customers buying power of BPPC in period 2000 - 2009 94

Table 2.11 Commercial electricity under 5 economic sectors of BPPC in period 2000 - 2009 95

Table 2.12 The proportion of commercial electricity in period 2000 - 2009 96

Table 2.13 Power losses of BPPC in period 2000 - 2009 99

Table 2.14 Accounting Balance Sheet in period 2005 - 2009 100

Table 2.15 Report on the business results of BPPC in period 2005 - 2009 101

Table 2.16 Results on financial analysis of BPPC in period 2005 - 2009 101

Table 2.17 Assessing matrix of internal factors of a company 108

Table 2.18: Competitive Criteria of BPPC and the Cambodia Royal Electricity and a small power company 109

Table 3.1 Sale electricity 1998 - 2009 131

Table 3.2 Forecasting sale electricity for period 2009 - 2020 132

Table 3.3 Revenue – average price from 2000 - 2009 134

Table 3.4 Forecast revenue – average price from 2010 until 2020 136

Table 3.5 Power loss 2000 - 2009 137

Table 3.6 Power loss forecast in period 2010 - 2020 139 Table 3.7 Summarized targets and investment fund for period 2009 - 2020 161

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LIST OF ACRONYMS, ABBREVIATIONS

- ADB: Asian Development Bank

- AFD: Agence Française de Développement

- APE: Asia Pacific Economic Cooperation

- ATM: Automatic Teller Machine

- ASEAN: Association of South East Asia Nation

- CBCNV: Employees

- CMIS: Customer Management Information Network

- CN - XD: Industry - Construction

- CNTT: Information and Technology

- DSM: Demand Side Management

- EVN: Electricity of Vietnam

- FDI: Foreign Direct Investment

- FMIS: Financial Management Information Network

- GBBQ: Average price

- GDP: Gross Domestic Product

- GENCO: Generation Company

- GNP: Gross Nation Product

- JBIC: Japan Bank for International Cooperation

- JICA: Japan International Co - operation Agency

- KCN: Industrial Park

- KCX: Export Processing Zone

- LAN: Local Area Network

- NMĐ: Power Plants

- ODA: Official Development Assistance

- PC2: Power Company number 2

- QLTDDC: Residental Consume Management

- QTCL: Strategic Management

- ROA: Return on total assets

- ROE: Return on common equity

- SADA: Supervisory Control And Data Acquisition

- SMS: Short Message Service

- SRP: South Region Power Company

- SWOT: Strength, Weakness, Opportunity, Threat

- TN KS - NH: Commercial Hotel– Restaurant

PREAMBLE: GENERAL INTRODUCTION

1.1 General Background

Binh Phuoc is one of eight provinces of the southern key economic zones In the industrialization and modernization of the country, Binh Phuoc also has remarkable progress, the economy is initially developed, live of local people are improved During the process of development, it has been promoting the province's comparative advantages and has a larger contribution to the general growing and important target

of socio-economic development of the southern key economic development in particular and national development in general

However, compared to its position, potential and comparative advantages, the province has not still promoted its fast, efficient and sustainable development One of the main reasons to that development includes an important contribution of the electricity industry

Today in the world of science and technology and human civilization, power energy is essential and indispensable No one can imagine how a world will look like without power For power is an essential energy source to maintain life activities of people, directly impacts on the economic development and issues of social security in the country in general and in Binh Phuoc province in particular Electricity has penetrated

to almost every corner, created favorable conditions for developing communication systems, and opportunities for progressing up of mountainous people with citizens in some aspects of knowledge, to be the lighting source for childhood education, to be the happiness of humanity The image of the 80-year-old man in remote areas was crying when electric light shining between the house on stilts, crying in happiness for the light has come to ethnic minorities, to the village, such feeling has been remained

in the memories of many people Like fresh air to breathe, like clean water for drinking and daily life, like rice to eat everyday Electricity has come to life and become so familiar to everyone that we can not recognize the existence of electricity, but just one day even an hour without electricity, all activities were paralyzed; fan

stopped returning; newspapers stopped printing, information interrupted; machine stopped weaving, steel furnace stopped; doctors surgeries stopped and many other great damages Unfortunately, recent times due to lack of electricity capacity and production so the power shortages happened too much, causing urgent and discontented issues in society

Electric Power shortages in Vietnam at present should not have reached such critical issues if the development strategy of EVN was in the right direction and the consulting and planning of EVN was good to adapt "ahead of anticipation" to provide electricity for demands of economic growth and the increasing demands of the people There were more power plants operated on schedule should help reduce the shortage

in electric power

So, that why we choose this topic with highly agreement and desire it become the truth in future

1.2 The necessity and significance of the topic "Building Strategy Development

of Binh Phuoc Power Company to 2015 and vision to year 2020"

We think that the topic "Building strategic development of Binh Phuoc Power Company to 2015 and vision to year 2020” is very necessary for all Electric power Companies in general and Binh Phuoc Power Company in particular, it is also a requirement of the whole society and especially for leaders of Binh Phuoc Power Company for the following reasons:

- The Binh Phuoc Electric Power Company is going to change the accounting system from dependent into independent with the Mother Company and become the Limited Company is operated with larger scale, advanced technology, approaching to the advanced modern methods in the world, exploiting the maximum advantages of the company Become an independent accounting company, he can be operated more active, more advanced capabilities, production and business efficiency and competitiveness in the market mechanism, ensuring the important role of the provincial economy If the change is successful, Binh Phuoc Power Company will

sector, the domestic markets in conditions of international economic integration and contribute to the country's international economic integration effectively

- Building the development strategy is the first task of the company, and a continuous innovation of enterprises If enterprises want to survive and develop must constantly renew as society is constantly changing, techniques are constantly advanced, employees who work in the enterprises are constantly changing

- Technical progress and people's living standards are constantly being enhanced are promoting the formation of many new services, if the enterprises are stalled will be soon eliminated Therefore, the enterprises must continually renew, but

if they want to renew, they must have clear strategies Whether on business field, technology, service products and services, manufacturing process, manufacturing management, marketing works all must have a strategy, based on the direction of the strategy

- Building business strategy is the need of international economic integration For businesses, the internationalization of business will happens, but to do that there are the strategy We are proceeding to participate in the world trade organization That means the enterprises are facing a situation of a more fierce competition Foreign goods will be more and more in the domestic market Domestic and International market shall be treated exactly alike and the competition will be more violent It will

be difficult if the enterprises have not the business strategy

- In recent years, theoretical and practical management have greatly changed and strategic management has received a special attention of all the theorists and administrators Indeed, the process of internationalization is taking place worldwide, revolutionary of scientific technology happened with rushing speed, rapid change of business environment, those things that create opportunities and challenges for the enterprises Facing with that situation, the enterprises must set out their strategies for their enterprises and strategic management to "achieve the goals of the organization, have a broad interest to the concerned characters, and shall attach short-term development to the long-term context"

For these reasons, the topic "Building strategic development of Binh Phuoc Power

Company to 2015 and vision to year 2020" is very practical and has great

significance for Leaders of Binh Phuoc Power Company in order to adapt to rapid changes of business environment and meet the requirements of local leaders, the

society and customers

2 Objectives of research

2.1 Scope of research

Scope of Research of this topic is the matters related to strategy development of Binh Phuoc Power Company and to study the views on the restructuring direction any clearly see the purpose, orientation and desired results creatively

+ Helping the company achieve an objective effectively thanks to its ability to capture opportunities, limit risks, better use of resources of the company

+ Helping the company create and sustain a competitive advantage to better adapt to market needs and customer goals in order to maintain position and maximize profits in the long term

Applicability: The group has two members who are key officials, including one who

is the leader of Binh Phuoc Power Company, and two members are the leaders of other companies, so the applicability of this topic to reality at the company will be very high

In the process of implementation, the methods used are as follows:

Methods of collecting information:

Secondary information received from

- Internal documents of the company: The records, statistics, stored documents, reports, business plans, etc

- External resources: Newspapers, radio, statistical documents, internet, etc

Primary information received from

- Opinion from customers through interviews, consultation, etc

Methods of processing information:

Application of technical and strategic administration tools to implement:

- Analyze the business environment to identify opportunities, risks, strengths and weaknesses of the Binh Phuoc Power Company

- Apply SWOT analysis to incorporate the opportunities, risks, strengths and weaknesses in order to propose strategies for Binh Phuoc Power Company

4 Structure of Task

This task includes an introduction and three chapters, as follows:

• Preamble: Introduction

• Chapter 1: Theoretical basis - Overview of Strategic Management

• Chapter 2: Analyzing the current business of the Company

• Chapter 3: Solutions and Strategy for the company to 2015 and vision to year

2020 and Conclusions

CHAPTER I

THEORETICAL BASIS - OVERVIEW OF

STRATEGIC MANAGEMENT 1.1 Strategic Management

Strategic Management is the first task of any high-level administrator, sometimes it is not only duty of an individual but also for a collective leadership of organizations and enterprises This term, although frequently be used and discussed, not all of administrators can understand it properly, leads to making mistakes while implementation, sometimes by high price even by life of organizations and enterprises What is strategic management?

• The approach on objectives and measures:

"Strategic Management is a part of decisions and administrative actions, determine long-term performance of the company" This approach allows administrators to define more precisely the objectives of the organization as well as allowing them to use more efficiently the resources of the organization

• The approach on actions:

"Strategic Management is conducting the current and future environmental review, creating goals of the organization, decision-making, implementing and controlling decisions implementation, to achieve the objectives in the current and future environment"

From the approach above, we can concept as follows:

"Strategic Management is an art and science, is the process of studying the current as well as future environment; is planning of the basic and long-term objectives of the enterprise; selects the action plans, implement and allocate all the resources of company Propose, implement and inspect the implementation of decisions to achieve these objectives in the current and future environment"

Thus, strategic management task consists of three main parts:

+ Setting the Goal: Determine where is the position and the goal of the

company?

+ Building Plan: Identify the ways by which the enterprise will go the goal

+ Arrange and allocate the Resources: Determine what tools and means that the company is using to reach goal

1.1.2 Requirements on building and implementing the strategy

• First: The business strategies are to achieve the aim of increasing the power of the enterprise and gain competitive advantages Therefore, when building the strategy, the company has to exploit his comparative advantages, to focus on measures of taking advantages, not too much effort improving weaknesses

• Second: The business strategies are to ensure the business safety for the enterprise Business activities contained risks that enterprises often face with them Therefore, the business strategies must have a safe zone, in which potential risks can

occur but are in minimum

• Third: We have to determine the business scope, objectives and the basic conditions to achieve the objectives The determination of the business scope in the business strategies must ensure the spread of resources, avoid or do not use up the resources The goals must be appropriate with the specific conditions of the enterprise,

to be clear and point out the most basic and critical goals Associated with goals, should have a system of policies, measures and material and technical conditions, labor as a precondition for the implementation of that goals

• Fourth: We have to predict the business environment in the future The prediction is more accurate the more appropriate business strategies So should have a certain volume of information and knowledge, as well as accurate thought methods to get real and wisdom overview about everything that the enterprise may face with in the future

• Fifth: There should have standby strategies Business strategy is to execute in the future, but the future is an unknown quantity, so when developing business strategies, it should take into account the worst possibility that the enterprise may encounter Which strategy will be replaced in that such situation?

• Sixth: We have to combine mature time with chances If the business strategies are not mature, the business plan will certainly be failed, but there seemed a paradox that some business strategies have been failed because too mature That is the reason of perfectively ideas in building the strategy for company; take too much time working the details for expecting to have a perfect strategy Until the strategy building

is completed, it has become obsolete compared to changes of the market daily

1.1.3 Roles and importance of Strategies of Strategic Management

The strategy helps the company to be more active and keener with forecasts and fluctuation of the market, then shall have appropriate decisions and control its activities, increase competitiveness of the company and gradually ensure strong position of the company in the market mechanism

• Strategic management process enables organizations to find his purposes and directions It causes administrators to consider and determine where and when to reach a certain position

• Strategic management helps administrators to find out opportunities and risks

in the future, in the varied environmental conditions that the enterprise always face with, to help administrators take advantage of opportunities and minimize risks

• Thanks to the strategic management process, the enterprises will attach to the proposed decisions with relevant environmental conditions, try to assume the active position or passive attacks, to cope with changes in the environment and master the situation

• Most researches showed that which enterprises apply strategic management would achieve better results than the results they achieved earlier and compared with other enterprises that do not apply the strategic management

However, strategic management also has its disadvantages:

• The establishment of strategic management process requires more time and effort

• Strategic Management often wrongly applied, rigidly as they are set in writing

• Limitation of errors in predicting long-term environment can sometimes be very large

• Some enterprise are likely to remain at the planning stage and too little attention to implementation issues, this phenomenon led the administrator to doubt about the usefulness of the strategic management process

Strategy is an important role for enterprises/companies Strategic planning that means

to identify where we are; where we want to go, how we will get there but how to do it

is more important The strategy do not action, it is just a dream

1.1.4 Stages of Strategic Management

The strategic management includes 03 stages: Strategy formation, strategy implementation, and checking and assessment of strategy

1.1.4.1 Strategy formation Stage

This stage is to set up the business mission and make investigations to determine the strengths, inner weaknesses and opportunities, external risks, set long-term goals, building and selecting alternative strategies The three basic activities in this stage are:

• Researching Activity: Including the activities relation to the collection and processing of information on markets and businesses of the enterprise in order to identify key strengths and fundamental weaknesses in the business works The decisions in the strategic forming stage will attach company to products, market, resources and technologies

• Reconcile intuition: There are many strategic management methods enable intuitive integration with analysis in making and selecting feasibly alternative strategies

• Making decisions: There are any organization has infinite resources, so administrators must make decisions regarding the selection of alternative strategies that will get most benefit the company Strategic decisions have long-term effects or better or worse impacts on the organization Strategists need to have good foresight to understand the stages of the formation of decisions

1.1.4.2 Strategy implementation

This is a stage of doing strategic management The basic operation is to set short-term goals, set up the policy and distribution of resources Strategy implementation is the most difficult stage in the process of strategic management The strategy implementation requires discipline, dedication and sacrifices virtue of all members of the company In this time, the role of administrators is very important, shall express leadership arts, ability to promote staff to implement the strategy in order to achieve

Strategy implementation includes financial policies, programs and cultural environment, preferential policies of encouragement and reward for employees Challenges in implementing the strategy is how to stimulate the administrators and staff throughout the company to work hard with pride and enthusiasm towards achieving the ultimate goals set out by the company

1.1.4.3 Test and evaluate the strategy

The final stage of strategic management is testing and evaluating the strategy Test and evaluation of strategies is to monitor the results of operations of setting and implementing the strategies This is essential work for current results may not result successes in the future

The main activities of this stage are as following:

+ Review the factors that are basis for the current strategy

+ Measure the results are achieved

+ Carry out all necessary activities for adjustment

Despite the responsibility of the managers is making good strategic decisions, but both managers and executive staff also have to connect with the practical activities, implement, test and assess the strategies All the members of the company participate

in doing the strategy will to get the success of the company, and to achieve adherence

to necessary changes

1.1.5 Levels of Strategic Management

1.1.5.1 Company strategy Level

This level is model of decisions in a company It is to identify and define the purposes and objectives of the company, identifies the business activities that the company is pursuing, creates policies and plans to achieve the basic objectives of the company In

a company with diversified scale and organization, we apply the Company-level strategy for all the branches of company Company-level strategy is set out to identify the business activities in which the company will compete and distribute resources between such business activities

1.1.5.2 Business strategy Level

This level is planned to identify the selection or use specific products for its own business within the company, and it determines how a company to compete with others through a business activity with known position of the company Business-level strategy shall determine how each business unit will try to accomplish its objective to contribute to accomplishing the company-level goal

1.1.5.3 Function strategy Level

The strategy is tofocus on supporting the arrangement of company strategy and on the operational sectors and business sectors

1.1.6 Vision, Mission and Objective Identification of the Company

Define vision, mission and objective of the company is one of the first content that is very important in strategic management, it creates the scientific basis for the analysis and selection of the company strategy The determination of the mission statement for the company is not only the newly established companies, but also the companies that have long-term development process in the business production The mission of the company can change when the environment changes

1.1.6.1 Vision

The vision of the company is to determine what the position of the Company will be

in the future, the highest goal that the company wants to reach in a long-term future

Vision can be one year, two years, decades, even centuries for the company

1.1.6.2 Mission

The mission of the company is a reason for living of the company, used to refer to the company's purpose, reason and meaning of the birth and survival of the company It is the company's statement on society Actually, the mission of the company focuses on clarifying a very important issue: "What is the purpose of the business works in the

company? " During last times in Vietnam, the term "mission" is rarely used, but there

are still the same terms as "principles and purposes" or "functions and tasks"

• The role of the mission:

According to King and Cleland, the mission of the company must achieve the following requirements:

1 Ensure the determination and consistency of purpose within the company

2 Provide the basis for mobilizing resources of the company

3 Provide a basis or standard for distribution of the company resources

4 Form the favorable business scenery and atmosphere

5 People agree with the purpose and direction of the company

6 Facilitate transformation of organization purposes into appropriate objectives

7 Facilitate transformation of the objectives into strategies and measures for specific activities

• The content of the mission:

The basic content of the mission often relates to products, markets, customers, technology and philosophy that the company is pursuing Hereinafter there are nine components of the mission:

1 Customer: Who are consumers of the company products?

2 Products or services: What are main products or services of the company?

3 Markets: Where is the competitive market of the company?

4 Technology: Is technology a leading concern of the company or not?

5 Concerns on survival, growth and profitability: The company is tied to the economic objectives or not?

6 Philosophy: What are the basic beliefs, values, aspirations and priorities of the company's philosophy?

7 Self-assessment: What is the special capacity or major competitive advantage of the company?

8 Concern for public image: Is the public image is a primarily concern of the company or not?

9 Concern for employees: How does the company's attitude to employees like?

• The requirements of the mission:

1 The scope of the mission should not be too broad or too narrow If too wide,

it will become vague and does not create goals and incentives for the organization in the development process If it is too narrow, it will bind the company's activities and can ignore the business opportunities brought by the environment Therefore, the mission must be limited enough to eliminate risks and shall be large enough to create conditions for creative growth

2 Content shall be relatively clear to everyone in the organization Content of the mission is to guide and manifest opinions, attitudes, create motivation, image, tone, philosophy to guide the company but not to show the specific objectives We need consider the specific and detailed issues when determining the organization's goals in each period

3 A good mission must be built based on customer-orientation, meaning that it must be built on the basis of accurate forecasts of customer demands, then identify technology to be used and products and services to be manufactured The mission statement must show the meaning and benefits of the product and activities of the company to their customers

4 The time that companies review the mission is usually when there is a big change in the business environment, or when they fail in business, the company has no active interest, or do not promote the strengths or its competitive advantages Then, the mission that the company has done which is not appropriate anymore and the company shall force to change its mission to suit the new situation

1.1.6.2 Objectives / Goals

The mission is the axis throughout the development process of the company, is a term goal of the company The goal is to concretize the content, the means that the company uses to implement the mission statement successfully Determining the right goals is crucial for the company

long-• Concept: The goal is status, milestones, specific objectives that the company wants to achieve within a certain time

• Roles:

1 Means to achieve the goals of the company

2 The identification of the specific objectives of the company in each stage to help administrators identify priorities in implementing the objectives and resource

3 Objectives serve as criteria for the performance, the basis for planning activities, implementation, testing and evaluating activities

4 If we set up the objectives reasonably, it will attract the concerned subjects (customers, shareholders, employees and staff, )

• Objective classification

1 Based on time

The classification has a relative nature

- Short-term objectives: implementation time is usually less than a year, often

associated with tactical and operational decisions, specific and quantifiable, such as increasing revenue up 20%, save 10% of revenue for research and development works

- Medium-term objectives: implementation time ranged from 1 year to 3 years

- Long-term objectives: usually 5 years or more, often associated with strategic

decisions, large scale, such as profitability, productivity, competitive position, job development, internal relations, social responsibility, listening position

2 Based on the nature of objectives

- Economic objectives: profit, revenue, market share, productivity, product

quality, competitive position

- Social objectives: jobs settlement, engage in charitable activities,

environmental protection, ecology

- Political objectives: maintain good relations with local authorities, change

policies and regulations that is advantageous to the activities of the company, access and create good relations with other governmental agencies to capture timely information, provide an opportunity to receive orders of government

3 Based on the levels of objectives

- Company-level objectives: comprehensive, long-term, provide the basis and

direction for the lower-level objectives

- Business-level objectives: support for the implementation of company-level

objectives and in accordance with the conditions and circumstances in specific business sectors

- Function-level objectives: refer to the activities in each specific function such

as manufacturing, finance, and marketing

4 Based on the form of objectives

- Qualitative objectives: showed as a trend, not the nature of specific quantities

- Quantitative objectives: showed in specific numbers and we can measure

them These objectives are important, a good basis for planning, implementation and evaluation

5 Based on growth speed

- Rapid growth objectives: the company tries to achieve a growth rate faster

than its competitors, or more than the generally average growth rate of the industry

- Stable growth objectives: growth rate determined equivalent to the generally

average growth rate of the industry, or maintain a growth rate as the previous years

- Stable and maintainable objectives: As the company has growth rapidly in

previous or when the market was difficult, the company can set an objective to maintain and strengthen the achievements

- Decreasing objectives: We reduce the growth rate lower than the average

growth rate of the industry, or even limit the scope of the company's operations, due to objective reasons such as economic depression, high inflation, fierce competition, etc In addition, due to subjective reasons such as the company wants to consolidate

the past growth, enhance efficiency

• The requirements on objectives

1 Specificity: the objectives must be clarified that what problem it is related to,

time for implementation and specific results to be achieved

2 Flexibility: the objectives must be flexible enough to be able to suit the

environmental conditions changed

3 Quantitative: the objectives should show as criteria that can evaluate, as a

basis for monitoring implementation of the strategy

4 Feasibility: the objectives must be feasible, if not, shall waste time or

sometimes anti-effectiveness

5 Consistency: the objectives must be consistent with each other, fulfilling this

goal is not to hinder other goals To ensure consistency of objectives is very difficult

If we want to minimize the differences that may occur in the objectives, they shall be put in order of priorities and seek to reconcile

6 Acceptability: true objectives are objectives that the concerned subjects must

approve and the responsible person implements Leaders and employees who decide

to implement the objectives successfully

1.2 The methods and tools used to develop strategy

Things that are bad now, they

repair, change or stop them

plan or access them

Figure 1.1: SWOT general model

SWOT is a planning tool used to understand the strengths, weaknesses, opportunities, and threats related to a project or business It involves determining the objectives of the enterprise or project and identifying the internal and external factors that support

or disadvantage to achieve that objectives We often use SWOT as a part of the process of strategy planning

SWOT stands for Strengths, Weaknesses, Opportunities and Threats

1.2.1 Research on macro and microenvironment

Environment includes factors, forces and institutions that are outside enterprises, so the administrators do not control, affect to the business operations of the enterprises The changes to the environmental impact of the change-moving consumer demand for products, services and industrial consumers The influence of environment will affect the type of product is developed, the nature of strategic product positioning and market segment, services offered and the choice to buy or sell businesses The environment also affects the direct impact to both suppliers and distributors The control of external factors, identification and accurate assessment of environmental opportunities and threats along with its allowed managers to take advantage of opportunities and avoid or reduce the impact of threats, develop a clear mission, design strategy closely with the actual situation in order to achieve short term goals and long term

1.2.1.1 Macro environment

The analysis of the macro environment helps enterprises answer to the question:

"What does the enterprise has to face?" The administrators often apply PEST model to study macro environment factors that affect the company, the factors are:

+ Political and Legal factors

Including a system of opinions, guidelines and policies of the Government, current legal system and political and diplomatic trends of the Government, the political situations in the country, in the region and in all over the world The company must

comply with the regulations on hiring, lending, security, pricing, advertising, the location of plant, environmental protection, etc Government only has duty in monitoring, maintenance, enforcement of law and protection of national interests The Government has crucial role in regulating the macro-economy through economic policies, fiscal, monetary, and his spending programs In relation to businesses, the Government both serves as a controller, incentives, financing, regulations, prohibit, limit, and serves as important customers for the enterprises (in the Government’s expenses) and finally the Government also plays a role as a provider of services for businesses, such as: provision of macro information, and other public services

Today, political forecasting can be especially important and complicated for the company; most companies are doing business with foreigners Therefore, the strategy must have the skills to better relations and more to the political issues and legislation,

to take more time to anticipate and influence the macro policy Strategists also have to spend more time to meet with government officials, in contact with the heads of government agencies Must also understand the political process and the decision by leaders of the locality where the company perform business activities

+ Economic factors

This is an important factor to attract the attention of all administrators, have direct effects and more dynamic than some other factors of macro environment Administrators often consider the following factors

* The trend of the GDP and GNP: data on the annual growth rate of GDP and GNP will indicate the growth rate of the economy and the growth rate of per capita income, thus allowing we predict market size and market share of each sector of the enterprise

* Interest rate and interest rate trends: affecting the trends of savings, consumption and investment and thus affecting the operation of the enterprise Rising interest rates will limit the demand for loans to invest in expanding business operation; affect to the rate of interest of enterprises, and rising interest rate will also

* The trend of reducing and increasing real income: has directly affects to the size and nature of future market

* The level of inflation: high inflation but not encourage saving and creating significant risks for the investment of enterprises, the social purchasing power is declined and the economy stalled Conversely, deflation also makes the economy stagnated It is necessary to maintain a moderate inflation rate, encourage investment

in the economy, and stimulate market growth

* Tax system and tax rates: tax changes may create opportunities or risks for enterprises because it makes the cost or income of the enterprises changed

* Fluctuation of the stock market: change values of stocks, so affect the overall economy as well as create opportunities or risks to the financial activities of enterprises

+ Socio-cultural factors

Including standards, values accepted and respected by a society or a specific culture Changing cultural and social factors partially as a result of the long-term impact of other macro-economic factors, so it usually occurs more slowly, taking long-term and more subtle, making them sometimes difficult to be realized On the other hand, the scopes of the impact of socio-cultural factors are often very large, it defines how people live, work, produce, and consume products and services The socio-cultural aspects have a strong influence to the business environment such as notions of

morality, aesthetics, lifestyle, occupation, customs, habits, traditions, concerns and priorities of the society, level of awareness, and general education level of the society The socio-cultural factors differ in each country, and differ in different parts of the country

+ Technological factors

Advances in technology and technical innovation has brought about significant changes such as the superconducting technology, robotics or computer thinking, space communications, lasers, communications, etc are asexual have a profound impact on businesses

This is one of the factors that are very active and contains many opportunities and threats for enterprises

The pressures and threats may be the appearance and explosion of new technologies:

- Present and enhance the competitive advantages of alternative products, threatening the traditional products of the existing industries

- Make the existing technologies to be obsolete, requiring enterprises to innovate new technologies to enhance competitiveness

- Create favorable conditions for new entrants and increasing pressures threaten the existing businesses in the industry

- Make the technological life cycle tend to shrink, and increasing pressures to shorten the depreciation period than before

Besides, opportunities may be:

- New technologies can create conditions for cheaper products, higher quality, increasing competitiveness

- The appearance of new technology and the ability to transfer this technology into other industries could create important opportunities for development and

production of products in the industries

- The appearance of new technology can make products cheaper, better quality and more features, then new markets can appear

The existing P.E.S.T model has being improved and popularized as an indispensable standard to apply for studying externally environmental factors of the companies Out of four above factors, natural factor is also rather important

+ Natural factors

Natural conditions include geographic location, climate, landscape, land, rivers and sea, mountain and forests, minerals, environmental purity of water and air In many cases, the natural conditions are a very important factor to form the competitive advantage of products and services Today, with environmental pollution caused by humans, the business strategy of the enterprises must meet the following requirements:

- Prioritize the development of business activities or services in order to exploit the conditions and advantages of the natural environment basing on ensuring the maintenance, regeneration, especially if you can contribute further to enhance the natural conditions

- There is the consciousness in saving and using the natural resources efficiently, changing the use of resources that can not be regenerated naturally to the use of artificial materials gradually

- Promote research, technology and products development to help protect the environment, ecology, minimize the effects of environmental pollution caused by the operations of the business

1.2.1.2 Micro environment Figure 1.2: Model of five competitive pressures

Including factors in the industry and

external factors to the enterprise,

decide on the nature and extent of

competition in the production of

such business Michael Porter, a

famous professor on business

strategy of the Harvard

University-United States, made five models of

competitive pressures such as

Figure 1.2 (Source: -Competitive strategy Book of Michail E.Poter)

+ Competitors

Competitors are people who share each other's customers Direct competitors are competitors who satisfy customer needs in the same industry, in one way Indirect competitors compete in different forms Intensity of competition depends on the number of competitors; growth of the industry; fixed costs in investment; costs of transferring industry; or uniformity or differentiation of product; the diversity of industry Administrators must identify all the competitors and identify advantages, disadvantages, capabilities, Olympics, threats, objectives and their strategies Collecting and evaluating information from the competitors is essential to formulate strategies successfully Identify the major competitors need to know:

* What do the competitors want to achieve?

* What are competitors doing and can do to success?

* Are the satisfied with the current location or not?

* How can the Competitors change and shift their strategies?

* What is the weak of competitors?

* What makes competitors retaliate forcefully and effectively?

+ Customers

Customers are subjects that served by companies, and customers can be considered as

a key factor for the existence and development of the companies Customer loyalty is

an asset of the company The prestige, trade name of the company will create loyalty

of the customer, including the satisfaction and the desire of customer needs from the companies Another issue related to customers is that with their advantage, they may exert pressures on sellers by their bargain ability and selection of suppliers The buyer has an advantage that can reduce profits of a product by reducing the price down or require higher quality and do much service jobs, the high pressure of customer bargaining make difficulties for business Signs appear bargaining pressure:

* The buyers require discounts

* Require the better conditions of service, higher quality

Reasons cause pressures of customer bargaining increased:

* The more sellers but there are fewer to buy

* Customers have full information

* Products are not distinct and there are only the basic ones

* The customers have ability to integrate backwards

Enterprises need to make classification table on existing and future customers The information obtained from this table is an important basis of orientation for planning, especially the plan directly related to marketing