Building business strategy of the Petrovietnam oil corporation - one member company limited (PVOIL) phase in 2013 to 2018 and vision to 2025

Derived from petroleum fuel needs of the country, its importance in the socio-economic development of the country, as well as oil and gas business strategy of companies in Vietnam, Group

Global Advance Master Of Business Administration

CAPSTONE PROJECT REPORT

BUILDING BUSINESS STRATEGY OF THE PETROVIETNAM OIL CORPORATION – ONE MEMBER COMPANY LIMITED (PVOIL) PHASE IN 2013 TO 2018 AND VISION TO 2025

Class: GaMBA01.C0111 Group Number: 02

NGUYEN QUANG THANH HUYNH LUONG QUANG PHAM QUANG HUY NGUYEN TUAN ANH

HO CHI MINH 2013

THANK YOU



To complete the graduation thesis as the current results, Group 2 members sincerely thank and best wishes to you Lecturer, Assistant Professor and collective staff of Griggs University and Training jobs systemsTechnology Center ETC Hanoi National University in general and Dr Hoang Lan Tinh has created favorable conditions for us access to the knowledge of modern business strategy At the same time, have been supporting us to complete the entire Global Advanced Master of Business Administration program MBA is organized by the center

Sincere thanks and best wishes to the Viet Nam oil corporation and he / she is the expert in the oil and gas industry support, make advantages, has interested and commented as well as provide data for the group to complete this graduation thesis

In addition, Group 2 also would like to thank those responsible for affiliate program of the ETC Centre in Ho Chi Minh City (Gasa), classmates member Gamba C0111 has interested, encouraged, commented to group to complete graduation report

INDEX

PREAMBLE 1

1 The necessity of the subject 1

2 Research objectives 1

3 The object and scope of the study 2

3.1 The object of the study 2

3.2 The scope of the Study 2

4 Research Methodology 2

4.1 Expert methods 2

4.2 Desk research methods 3

5 Structure of topics 3

CHAPTER 1 THE BASIS OF THE STRATEGIC THEORY MAMAGEMENT 4

1.1 THE CONCEPT OF STRATEGY AND STRATEGIC MANAGEMENT

4

1.1.1 The concept of strategy 4

1.1.2 The concept of strategic management 4

1.1.3 The benefits of Strategic management: 4

1.2 THE TYPE OF STRTEGIES 5

1.2.1 Company-level strategy 5

1.2.2 Business-level strategy (SBU) 6

1.2.3 Functional-level strategy 6

1.3 FACTORS AFFECTING STRATEGY FORMULATION 7

1.3.1 Assessment of outside factors of the organization (according to section 1.2 of Appendix 1 attached) 7

1.3.2 Assessment within situation the organization 7

1.3.3 Determined strengths and weaknesses 7

1.3.3.1 Strengths and weaknesses of the service quality 7

1.3.3.2 Strengths and weaknesses of financial 8

1.3.3.3 Sustainable competitive advantage 8

1.4 STRATEGY FORMULATION PHASE AND TOOL 8

1.4.1 EFE matrix_ External Factor Evaluation matrix 9

1.4.2 IFE matrix_ Internal Evaluation matrix 10

1.4.3 Competitive Photo matrix (CPM) 10

1.4.4 SWOT Matrix 11

1.4.5 QSPM Matrix 12

1.5 STRATEGIES, POLICIES OF TRADING 13

1.5.1 Determined the current mission, objectives and strategy 13

1.5.2 Long-term and annual goals of the company 13

1.5.3 Strategy of the SBU 13

1.5.4 The function strategies 14

1.5.4.1 Marketing strategy 14

1.5.4.2 Research and development strategy 14

1.5.4.3 Materials management and purchase strategy 14

1.5.4.4 Operational, production strategy 14

1.5.4.5 Financial Strategy 14

1.5.4.6 HR Strategy 15

1.6 SUMMARY CHAPTER 1 15

CHAPTER 2: ANALYZING SITUATION OF BUSINESS STRATEGY AND BUSINESS ENVIRONMENT OF THE PETROVIETNAM OIL CORPORATION 16

2.1 PETROLEUM MARKET SITUATION 16

2.1.1 The role of the petroleum industry and regulation petroleum in economy 16

2.1.1.1 The global oil market and development trends 16

2.1.1.2 The products characteristics and distribution of petroleum 17

2.1.2 Government regulation of petroleum markets 18

2.1.2.1 The organization 18

2.1.2.2 Production and distribution 19

2.1.2.3 Price 19

2.1.3 Petroleum demand of Viet Nam 20

2.1.4 Petroleum distribution system of Viet Nam 20

2.1.4.1 Petroleum supply 20

2.1.4.2 Market segmentation of the petroleum focal point business 21

2.1.4.3 Petroleum stored system of the petroleum focal point business. 21

2.1.5 International petroleum market 22

2.1.6 Petroleum market forecast in Viet Nam 2013 - 2018 23

2.2 OVERVIEW OF PETROVIETNAM OIL CORPORATION 23

2.2.1 Introduction 23

2.2.1.1 General Information 23

2.2.1.2 Activities of production and business 24

2.2.1.3 Ownership structure 24

2.2.1.4 The organizational structure 24

2.2.1.5 Mission, vision and goals of PV OIL 24

2.2.1.6 Management model (in Section 2.7, Appendix 2 attached): 25

2.2.2 PV OIL storage 25

2.2.3 PV OIL’s retail network 26

2.2.4 Petroleum supply chain management/ business policy of PV OIL 26 2.2.4.1 Organizational and management model of petroleum distribution system 26

2.2.4.2 Petroleum systems of PV OIL’s business organizations (Section 2.10, Appendix 2 attached) 26

2.2.5 Source policies 26

2.2.6 Price policy 27

2.2.7 Financial investment situation 27

2.2.8 Result of business activities in 2008 so far 27

2.3 ANALYSIS OF FACTORS INFLUENCING PV OIL BUSINESS OPERATION 28

2.3.1 Macro environment analysis 28

2.3.1.1 Economic factors: 28

2.3.1.2 Factors of policy from the government, law and pilitic: 29

2.3.1.3 Technology factors 30

2.3.1.4 Nature factors 30

2.3.2 Analysis of oil and petrol micro-environment 31

2.3.2.1 Infrustrucure of oil and petrol retailing system of Vietnam 31

2.3.2.2 Competitor in the sector 32

2.3.2.3 Potential competitors 33

2.3.2.4 Developing and improving product and replacement product 33 2.3.3 Analysis of internal background 34

2.3.3.1 Human resource 34

2.3.3.2 Research and development 35

2.3.3.3 Production and manufacture 36

2.3.3.4 Investment 36

2.3.3.5 Accounting Finance 37

2.3.4 Identify the strengths, weaknesses, opportunities and threats to PV OIL 40

2.3.4.1 Strengths 40

2.3.4.2 Weakness 41

2.4 ANALYSIS OF MATRIXES TO SELECT BUSINESS STRATEGY OF PV OIL 41

2.4.1 Analysis of competitive advantage and build the potential success, the success of the PV potential network OIL 41

2.4.1.1 Competitive matrix image 41

2.4.1.2 Build up successful potential and successful potential network for PV OIL 42

2.4.2 Connecting internal and external factors to set up possible strategies 43

2.4.2.1 Matrix values external factors (EFE) and internal factors (IEF) 43

2.4.2.2 Total important mark in matrix IFE and EFE 45

2.4.3 Analyze matrix SWOT 46

2.4.3.1 Quantitative analysis on macro, micro-environment and internal situations 46

2.4.3.2 Analyze matrix SWOT 49

2.4.4 Matrix analysis QSPM 52

2.4.4.1 QSPM`s quantitative Analysis Matrix for the group S.O 52

2.5.4.2 Commented the group SO, WO, ST, WT of QSPM matrix 58

2.5.5 SPACE matrix analysis-strategic location-activities evaluation 60

2.5.5.1 Analysis of value inside and outside the PV OIL 60

2.5.5.2 SPACE matrix analysis 62

2.5.6 Strategic Options for PV OIL 62

2.5.7 The options of SBU level strategy 63

2.5.7.1 How competition in the petroleum industry 63

2.5.7.2 Value chain analysis and identification 64

2.5.7.3 Market segments and value chain of goods: 67

2.5.7.4 Selection of the value chain and target market of PV OIL 70

2.5.7.5 The SBU level strategy 71

2.6 SUMMARY OF CHAPER 2 71

CHAPTER 3 BUSINESS STRATEGIC PLANING FOR THE PETROVIET NAM OIL CORPORATION IS A PERIOD 2013-2018 AND VISION TO 2025 72

3.1 BUSINESS STRATEGY OF PV OIL IN PERIOD 2013-2018 AND VISION TO 2025 72

3.1.1 Review the mission, vision and goals of PV OIL 72

3.1.2 Annual and long-term goals of PV OIL 73

3.1.2.1 Specific objectives of PV OIL 73

3.1.2.2 The objective functional units of the company 74

3.1.3 Strategic Options for PV OIL 75

3.1.4 The functional strategies of PV OIL 75

3.1.4.1 Marketing 75

3.1.4.2 Financial 76

3.1.4.3 Human resoure 77

3.1.4.4 Operation and production 79

3.1.4.5 Research and development product 80

3.1.4.6 Strategic import and export of crude oil and petroleum management 80

3.1.4.7 Combining the strategic function of the PV OIL 80

3.1.5 The relationship between the functional strategies to increase

business efficiency 81

3.2 PERFORMANCE SOLUTIONS 82

3.2.1 Developing market 82

3.2.2 Product differentiation with other petroleum enterprises 82

3.2.2.1 Creating value for customers 83

3.2.2.2 Provide value for customers 83

3.2.2.3 Product difficult to imitate 83

3.2.3 Improving risk management 84

3.2.3.1 Risks of the project (fail investment projects) 84

3.2.3.2 Risks from customers (customers leave, or not payment order) 84

3.2.3.3 Transition risks (large changes in technology or direction of strategy) 85

3.2.3.4 Risks from competitors (appears competitors can not be beat)

85

3.2.3.5 Risk of brand (brand decrease value in customer) 86

3.2.3.6 Sector risk (business to become the non-profit) 86

3.2.3.7 Risk of delayed (businessnot growth or even decline) 87

3.2.4 Venture and cooperation 87

3.3 RECOMMENDATIONS 88

3.3.1 For state and Government 88

3.3.2 For Petroleum Vietnam Oil Corporation and owned Vietnam National Oil and Gas Group 90

3.3.2.1 Short term recommendations 90

3.3.2.2 Long-term recommendations 92

3.4 SUMMARY OF CHAPTER 3 94

GENERAL CONCLUSION 95

REFERENCES 96

APPENDICES ATTACHED 97

PREAMBLE

1 The necessity of the subject

Energy with its essential importance has strong influence on economic policy, politics of every country in the world, including oil energy sources play a very important role and account for nearly absolute in the structure of energy sources used by humanity today So, the oil energy security is the country seen as

a pressing need in the life and daily activities of the people

Our country's economy is moving according to the market mechanism with the management of the state, gradual integration into the regional and world The building business strategies for each business, oriented sustainable development in the market mechanism is an essential Business strategies to help managers and all employees in the enterprise aware of the purpose and direction of their business hrough which all members of the business will know what to do, and encourage them to strive to achieve the short-term performance while improving better long-term interests of the business It helps the administrator to quickly grasp business, take advantage of opportunities and to limit the risks due to environmental changes brought

Derived from petroleum fuel needs of the country, its importance in the socio-economic development of the country, as well as oil and gas business strategy of companies in Vietnam, Group boldly chose the subject "Building business strategy of PetroVietnam Oil Corportaion - One Member Company Limited (PV OIL) phase in 2013 to 2018 and vision to 2025"as a graduation thesis

2 Research objectives

- Develop business strategies of PetroVietnam Oil Corporation based on the overall objectives of the enterprise is: "To develop and complete downstream stages in the Oil & Gas industry and strive to become the Corporation leading

in Vietnam, on a par with oil and gas companies in the region and the world "

- Analysis of demand for gasoline, the capacity in the country and abroad, the response capacity of the existing oil companies, analysis development capabilities of the distribution system through strategies

- Proposed strategy to build oil business systems to develop corporations in a sustainable way in the period 2013-2017 and vision to 2025

- Implementation of the policy, the policy of the state of the business system, towards markets in the region and the world, proposals to the government on policies to ensure implementation of development strategy petroleum Vietnamese brand in general, the oil and gas business strategy of Vietnam in particular, to create a favorable business environment and future development

3 The object and scope of the study

3.1 The object of the study

- Research on business activities in the petroleum sector of the Vietnam Oil

Corporation, from which made the business strategy of the PetroVietnam Oil Corporation, in order to increase competitiveness, increased market share, reduced intermediaries, reduce production costs in the petroleum industry in Vietnam

- For the export - import oil raw of PV OIL is an individual work of PetroVietnam and the Vietnamese Government tasked PV OIL done this work without profit, so the raw oil export-import will not be subject research in the graduation thesis of our group 02

3.2 The scope of the Study

Investment due to the oil systems business development of the PetroVietnam Oil Corporation over the years and from the predecessor company, with many different systems and policies, it is difficult for research results for consistency, to ensure the effectiveness and practicality of the subject so the author limited research data collection from 2008 until now (anniversary of the PetroVietnam Oil Corporation)

Scope of research through secondary information sources are sources of business statistics PV OIL, the Vietnam National Oil and Gas Group, the Ministry

of Industry and Trade, the primary source of information on demand for petroleum fuels domestic and region, through consultation with industry experts to classify the importance of the elements in the matrix classify level of the business response

to the elements, so that the subject will study the oil and gas business in the future through strategic

4 Research Methodology

The study is based on the business strategy management documentation, gasoline demand forecasting documents of the Ministry of Trade and Industry that the author has collected, as well as speeches, interviews, gather opinions of managers and experts of the PV OIL and experts are active staff in the field of oil and gas business in the company of Vietnam In addition, the research information and data to be gathered and analyzed based on reporting of PV OIL

In order to study the problem for results in a precise and effective when applied in practice, the team used the following research methods::

4.1 Expert methods

Consult experts in the petroleum industry, petrochemical industry, fuel storage construction industry in Vietnam

4.2 Desk research methods

The secondary information is collected and used mainly from the statistics of PetroVietnam Oil Corporation Internal information from the petroleum business reports of PV OIL from 2008 to date

5 Structure of topics

Subject consists of three chapters:

- Chapter 1 The basis of the theory of strategic management

- Chapter 2 Analyzing situation of business strategy and business environment of PetroVietnam Oil Corporation

- Chapter 3 Business strategic planning for the PetroVietnam Oil Corporation period 2013-2018 and vision to 2025

Despite our best efforts to try to study the subject, but because this is a new topic, to collect data from a variety of sectors, many different sources, but more importantly, no databe made public, should make sure that the thesis was flawed, would be teacher to guide, teachers in the board dot dissertation, the sincere reader comments to this thesis is more complete

Our warmest thanks!

CHAPTER 1 THE BASIS OF THE STRATEGIC THEORY

MAMAGEMENT

1.1 THE CONCEPT OF STRATEGY AND STRATEGIC MANAGEMENT

1.1.1 The concept of strategy

Strategy is the process of determining the long-term basic goals of the company,

option ways of action and allocation of necessary resources to implement the goals (Alfred Chander)

Strategy is a form or a plan to coordinate the objectives, policies and action

sequences into a unified whole (James B Quinn)

Strategy is a plan of consistent, comprehensive and coordinated, are designed to

ensure that the basic objectives of the company will be done (William J Glueck)

Strategy, Michael L Porter, the father of the theory of competition argued that:

- First, the strategy is the creation of unique and valuable position includes different activities

- Second, strategic is the choice, barter in competitive

- Third, the strategy is creating fit among all the Company's activities

So, first of all, strategic related to objectives of business.Second, the strategy is how to implement the actions and decisions are closely related to each other and selection methods to coordinate actions and decisions Business strategy exploit the fundamental strengths (resources and capabilities) and to take into account the opportunities and challenges of the external environment

1.1.2 The concept of strategic management

Strategic management is the process of research, analysis of the external

environment and within the company; present and future; established corporate goals, planning, implement and testing of strategies to effectively use resources to

achieve the desired objectives (according to section 1.1 of Appendix 1 attached)

1.1.3 The benefits of Strategic management:

Strategies contribute to economic organization is more responsive and dynamic before forecasts, and the volatility of the market, from which rational decision-making and control over their operations, increase the competitive strength of the business, and gradually ensure the strong position of the business in the market mechanism

- Business strategy can be considered as a "platform" activities of business, is the

target of all members to strive towards

- Strategy is an expression of the concept of enterprise value

- Strategies to help business leaders get the direction and vision of the future

- Strategy is the creation of the enterprise management

- Strategy is an expression of the competitive position of the business

Michael Porter has said in the book "Competitive Strategy" that "competitive strategy lies in the relationship between the company and its market"

Due to the importance like that, businesses needs building for themselves a term business strategy, it is essential to be able to help businesses stand and development in future However, the business environment are fluctuations, the resources of the business there are always change in strategic stages, so a business strategy needs to be flexible, changing in accordance with objective reality to ensure the survival and development

long-1.2 THE TYPE OF STRTEGIES

1.2.1 Company-level strategy

Growth and development, every company should have its own development strategy, called company-level strategy.The process of growth and development of the company can be represented: Focus on a business areas in the domestic market

=> Integration or expand markets outside, globalization works => Expand operations into new business areas

Company-level strategy is the overall strategy system, can apply for the single or multi-industry manufacturing company - business products or services on the domestic market or multinational market

These strategies have been commonly applied in the group companies of the developed countries in the world since 1980 and in the last 1990

Depending on the characteristics of the resources of the business and the attractiveness of the business industries, senior managers need to select strategies for each sector to adapt to the environment inside and outside

In fact, for business, the strategies that administrators can choose include:

- The growth strategies

- The horizontal integration strategies

- The decline strategies

- The adjustment strategies

1.2.2 Business-level strategy (SBU)

Business or enterprise level strategy is strategies to maximize competitive advantage and profitability for the company to be able to compete effectively in a particular industry has been pursuing

It includes competitive business-level strategies investment strategies

1.2.3 Functional-level strategy

Is the lowest level strategy of a company It is a set of decisions and actions targeted

in the short term (usually less than 1 year) of different functions in a company Function strategy plays an important by the implementation of strategy, managers will exploit the strengths of the resources in the company That is the basis for research building the company's competitive advantage, support for competitive strategy Usually the function components of the company such as market research and development, planning, human resources management, accounting financial, production… will build up its own strategy and be accountable main task before the Board, the Board of directors on the results achieved

Based on the strategic approach, business strategy is divided into four categories by administrators as follows:

- Strategy focuses on the key factors: Guiding ideology of the strategic planning here is not to spread resources, on the other hand need to focus on those activities is crucial for the company's business

- Attack creative Strategy:

In this strategy, the construction of access to basic way is to always look at the problem is considered to be common, difficult to do otherwise is to ask the question: "why", to review theseemingly concluded.From the row of question and doubt the immutability of the problem, there may be new discoveries, as the basis for the company's business strategy

 Strategy based on the relative advantages:

Directing thought strategic planning here starting from the analysis, comparing products or services their company compared to competitors, through analysis, to find out their strengths to support for business strategy

 Strategies to exploit the degree of freedom:

The strategy formulation here is not aimed at the key factors, which aims to exploit the possibility of the factors surrounding the key factor

1.3 FACTORS AFFECTING STRATEGY FORMULATION

1.3.1 Assessment of outside factors of the organization (according to section 1.2 of Appendix 1 attached)

1.3.2 Assessment within situation the organization

Internal situation of the business is usually assessed by functional areas such as: Finance; Human Resources; Governance; Structure; Marketing; Research /

Development; Information Technology

Chart 1.3.2 Diagram of the main activities and support activities

The internal businesses analysis will enable to identify the strengths (S) and weaknesses (W) of the business Since then, the business strategy chosen need to maximize the strengths and overcome the weaknesses of the business

Similarly in the technical analysis of external factors, in order to quantify the internal analysis of business, people use "inside factors evaluation matrix" (IFE)

1.3.3 Determined strengths and weaknesses

1.3.3.1 Strengths and weaknesses of the service quality

For a long time, many researchers have tried to define and measure service quality However, when it comes to quality of service, we can not not mention the huge contribution of Parasuraman & CTG (1988, 1991) Parasuraman & CTG defines service quality as “different level between the expectations of consumers of services and their perception of the outcome of the service” The authors initiated

and used qualitative and quantitative research to develop and test a measuring scale the components of service quality (called SERVQUAL scale) SERVQUAL scale measure five components of service quality, which is:

1.3.3.2 Strengths and weaknesses of financial

To analyze the financial situation of the business need to use the data from the financial statements of the business for some of years and compare these indicators together

The indicators can be used to analyze such as: the total capital of the business, revenue, profits and the general indicator

1.3.3.3 Sustainable competitive advantage

A company is considered to have a competitive advantage when its rate of return higher than the average rate in the industry And the company has a sustainable competitive advantage when it is able to maintain high rates of return in a long time

Chart 1.3.3.3 Standards of sustainable competitive advantage:

- Historically: Culture and unique brand

- Cause and effect is not clear

- The complexity of social

Do not replace There is no equivalent strategy

1.4 STRATEGY FORMULATION PHASE AND TOOL

There are three stages to form the business strategy and each stage using the different tools

Phase 1: The period of data collection and systematized information

This phase summarizes the basic information has been collected and systematized to form the business strategy This phase uses tools: EFE Matrix

Phrase 2: Combined period

This phase selection, arrange, combine external environmental factors, internal factors to make the strategy feasible This phase will use the matrix tool: Strengths - Weaknesses, Opportunities - Threats Matrix (SWOT)

Phrase 3: Decision period

This phase uses a only tool is the quantify strategic planning matrix (QSPM) QSPM Matrix use the information in the first period, an objective assessment of the business strategy can be selection in the second period in order to decide whether the business strategy is best for business

1.4.1 EFE matrix_ External Factor Evaluation matrix

EFE matrix sequence is set in 5 steps:

Step 1: Make a list of factors that play a decisive role in the industries in which

enterprises trading, including opportunities and challenges

Step 2: Evaluate the importance of each factor on a scale from 0.0 to 1.0 (degree of

importanceincreasing) with the sum of the elements equal to 1 This important level based on business that enterprises operating

Step 3: Scoring from 1 to 4 for each factor with score that show degree of business

reaction with that factor 4 is good reaction 3 is more than average reaction 2 is average reaction and 1 is less reaction

Step 4: Determine the total score for each factor (by the product of step 2 and step

Table 1.4.1 EFE Matrix

The main external

factors

Important level Classication

score

Important score

1.4.2 IFE matrix_ Internal Evaluation matrix

The IFE matrix settings are the same as for the EFE matrix, but with the object is reaching company, analysis to formulate strategy Determine the total score on the importance of the company (by total score in step 4) The highest total score is 4 and lowest is 1.0 average is 2.5; important score less than 2.5 shows that the company does not have many strong points and not yet overcome the weaknesses

of the company, Score higher than 2.5 shows that the company has many strengths and can overcome well the weaknesses

Table 1.4.2 IFE Matrix

The main within

factors

Important level Classification

score

Important score

1.4.3 Competitive Photo matrix (CPM)

In the external environmental factors, competitive factors are the most important factor Competitive Photo matrix is an extension of the matrix of external factors evaluation (EFE) in the case of the degree of importance, and classification and toatal of important score have the same meaning Competitive Photo of matrix identifys the major competitors and their strengths, weaknesses There by helping the Company has appropriate strategy

Classifi ca-tion score

Import ant score

Classifi cat-ion score

Impor tant score

Classific a-tion score

Impor tant score

- SO Strategy: Use the strengths within the business to exploit the opportunities

of the external environment

- WO Strategy: Take advantage of external opportunities to improve the within weaknesses

- ST Strategy: Use the strengths of the business in order to avoid or reduce the threats from the external environment

- WT Strategy: This is the defense strategy to reduce within weaknesses and external threats

A SWOT matrix is illustrated by the following boxes:

Table 1.4.4 SWOT Matrix

1.4.5 QSPM Matrix

Matrix QSPM use information obtained from the matrix in the first stage (stage to collect and systematize information) and the matrix in the second stage (matching phase), from which an objective assessment of the business strategy can be replaced

The chosen strategies for inclusion in the QSPM matrix not all strategies are found

in stage 2

To build QSPM matrix need through 6 steps:

Step 1: List the factors S, W, O, T is taken from the EFE matrix

Step 2: Classification for each factor in accordance with the EFE matrix

Step 3: Studies matrix in phase 2 and determine the replaceable strategies need to

consider

Step 4: Determine the number of the attractive score (AS) for each factor: rated

from 1 to 4, with 1 is not attractive, 2 is a little bit attractive, 3 is quite attractive, 4 is really attractive

Step 5: Total the number of the attractive score (TAS) with each row by by

multiplying the classification score in step 3 with the AS score in step 4

Step 6: Total the number of the attractive score in each strategy

The most attractive strategy is a strategy has total in step 6 is the highest score

Generally, the enterprise business process must always determine the annual goals and long term goals.Business strategy is the path and step on the path to reach the goal

II The external factors

Factor 1

Factor 2

……

Factor n

1.5.1 Determined the current mission, objectives and strategy

Mission reflects the important task of business to business environment and is often expressed through the brief philosophy of business

Mission is the reason for existence of the business shows strive direction of business during the lifetime Businesses can change the strategy to carry out the mission, but rarely change their reason for existence

The goal is the final desired result that businesses need to achieve Target point in the direction for all decisions and form the standard measure for the implementation in practice

1.5.2 Long-term and annual goals of the company

Concept: The objective is to develop the mission, but is built separately and in more detail Be shaped in long, medium or short term:

Long term: (more than a year, usually up to 10 years)

Short-term: (less than a year)

To have meaning, the goal must have the following characteristics:

1 Precise and measurable

2 Navigate to the key issues

3 Challenging but can be done (fact)

4 Period of time to perform

5 Provide tools to evaluate the performance of managers

1.5.3 Strategy of the SBU

At this level, the plan must give the overall portfolio of an organization and the most important thing is building and maintaining a portfolio of highly effective

business In general, it includes the decision to inform the company's mission; offer short and long term goals; identify strategies to improve the efficiency of each SBU; determine the strategy for coordinating results of the SBU are related to each other; redistribution of resources; strategic decision to establish and maintain the resources

to create competitive advantage; strategic decision to develop the company

1.5.4 The function strategies

1.5.4.1 Marketing strategy

Marketing strategy can be a powerful impact on the efficiency and cost structure

of a business.Through marketing strategy, the company won the position by the disposition of its pricing, promotion, advertising, product design and distribution

It can play a major role to increase the company's efficiency

1.5.4.2 Research and development strategy

The prominent role of research and development in the effort to achieve higher efficiency of two points:

- R & D function can improve efficiency by product design easily made, because it can significantly reduce assembly time, leading to higher productivity and lower costs

- The improvement process, which is an improvement on how to operate the production process to improve efficiency Process improvements are often a major source of competitive advantage

1.5.4.3 Materials management and purchase strategy

This function is considered to be scientific management methodology it is becoming an increasingly important activity in many businesses because it helps businesses create low-cost advantage Therefore, a materials management can effectively reduce the amount of cash in reserve to increase investment in machinery and equipment

1.5.4.4 Operational, production strategy

Economies of scale are reducing the unit cost of products related to large amounts One reason leading to economies of scale most obvious is the ability to allocate fixed costs for manufacturing large amount of products Fixed costs are the costs incurred to produce a product that corresponds to a level of output; this cost includes the cost of purchasing machinery and equipment, the cost of setting machinery for production time, workshop fees, advertising expenses and R & D

1.5.4.5 Financial Strategy

The objective of the financial strategy is to establish a fund and establish an

appropriate financial structure, to help businesses achieve the goals set out.Some content note in the financial strategy are: cash flow planning, consider the relationship between debt and equity; dividend policy

1.5.4.6 HR Strategy

Labor productivity is one of the key determinants for efficiency and cost structure

of a business Higher labor productivity, cost per unit of product decreases The challenge for the human resource management function in a company is to find out how to increase labor productivity There are three basic options for doing this, namely: training employees, organized labor force in self-managed groups, links between remuneration and performance

Contents of Chapter 1, setting out an overview of a theory constructs the company's business strategy 1, with 5 main parts as follows:

1 The concept of strategy and strategic management

2 The type of strategies

3 Factors affecting the strategy formulation

4 Strategy formulation phases and tools

5 Strategies and policies of trading

CHAPTER 2: ANALYZING SITUATION OF BUSINESS STRATEGY AND BUSINESS ENVIRONMENT OF THE PETROVIETNAM OIL

CORPORATION

2.1 PETROLEUM MARKET SITUATION

2.1.1 The role of the petroleum industry and regulation petroleum in economy

2.1.1.1 The global oil market and development trends

Oil is to eliminate fossil fuels, hydrocarbon, does not have the ability to regenerate and is now the main fuel not able to effectively replace

The world's oil production is approximately 90 million barrels / day, equivalent to

4440 million tonnes / year According to the OPEC output in 2011 is estimated at 82.6 million barrels / day (not including liquefied natural gas - LNG) Measure, the

12 countries of OPEC accounted for 36%

World oil demand in 2011 is estimated at 88.2 million barrels a day, up 1.1% from the previous year Oil demand increases tended to economic growth (GDP)

Refining capacity world's reserves tend to be narrow The 2001 capacity only uses the 80% of the market in 2005 - about 85% But new projects to increase refining capacity, upgrading the old factory is being done, including many factories were conducted in Asian countries

In recent years, oil prices always unstable, fluctuating and irregular, depending on the micro-economic factors Because oil is standardized commodities traded commodity exchange markets focus (Commodity Exchange) should international oil and petroleum products are subject to review Futures contracts are traded on Commodity Exchange and the transaction agreement (OTC)

The information above is led to judgments estimated trend following:

- Investment costs for refineries and refining costs tend to rise due to the quality requirements, require increased economies of scale in the oil refining process; refining stage to vertical integrate on the stage distribution to share profits from the retail stage;

- The major oil producing countries invest in refining capacity, permanent more closely associated with the stage downstream of these countries will

affect the supply of oil products in the world, and the demand for transportationcrude oil and products will change, economies of scale in importing products will increase;

- The trend of international oil company (IOC) incorporated to increase the competitiveness of the small-scale operation and fields of activity and to restrict, share risks in each separate stage of the oil and gas industry;

- national governments will continue to implement regulatory policy for the oil sector to the micro-economic stability, energy security and other national oil companies (NOC) will remain is toehold to governments implement policies;

- Petroleum products price will continue to volatility and unpredictable;

- The role and position of national oil companies will continue to reinforce; international oil companies still occupy an important position for investments

in the countries due to the main technical factors and resources;

- Economic concentration, focus resources to improve competitiveness will still

be the inevitable trend in the oil and gas sector

2.1.1.2 The products characteristics and distribution of petroleum

Oil is a strategic commodity of every nation, essential to social life, have a direct impact on economic development and national security of the country

Petroleum is one of the main energy source be balanced in energy balance policy by State and is one of the important items in the National Reserve On the other hand the Vietnamese oil and gas industry itself and the business of petroleum products is one of the key economic sectors of the country Actual development over time has shown that the development of this sector contributes greatly to GDP growth as well

as to the cause of industrialization and modernization of Vietnam

Petroleum is one of the items is very sensitive to the changes in the political and economic world The time now due to Vietnam just has the first refinery is Dung Quat, amount less than 6 million tons of products, so any fluctuations in world market prices have a strong impact on the domestic market

Particular nature of the oil industry in general and petroleum in particular fields represented by the following factors:

- Highly internationalized: Oil and oil products was high standardized

commodities; using needs is popular on a global scale, are traded in international commodity markets;

- Operations industry of multinational companies: The oil and gas sector is

risky business, especially in the upstream, requires large investments, many

activities must be conducted in foreign countries, so to developed must be basis on the scale and in areas certain, ie economies of scale and scope, field

of activity is crucial

- Economies factors by scale and areas of activity: Due to the particular nature

of fuel derived from hydrocarbons requires a huge investment costs and risks

in stages from probe, exploitation, processing, storing, transportation from the place of exploitation toprocessing and to the place of consumption, distribution organization so oil industry in general and the petroleum industry in particular costs depend greatly on the size and scope of activities

- Facilities, technical decide development: (i) the oil must have specialized

means to exploit (drilling rigs); (ii) must be processed in oil refineries with complex technology; (iii) due to petroleum is liquid , flammable, volatile and environmental pollution so be contained in the repository ensure technical and fire safety (repository); (ivdue to the consumption market is far from production and dissemination should transporter (pipelines, vessels)… To meet these requirements, petrol and oil trading businesses have to have economic potential, financial strong enough and must have long-term development strategy because cost is huge Due to the importance of physical facilities so the petroleum business group to invest in the construction of large-scale engineering and appropriate technologies to determine the development

- There is an important role for the economy: Petrol irreplaceable commodity

for each economy Any imbalance in supply and demand and movements have great impact on the socio-economic development

2.1.2 Government regulation of petroleum markets

2.1.2.1 The organization

Ministry of Industry and Trade is assigned to a unit performing the State management for oil and gas business issues, and coordinate with the Ministry of Finance and the State in the management of fuel price

he Ministry of Industry and TradeLicensed for 14 enterprises to be licensed to

operate in Vietnam include: (Section 2.3, Appendix 2 attached):

In addition, the "private company" is permitted oil and gas business, investment in storage systems and fuel retailer if they satisfy the conditions of conditional trading petroleum

Petroleum business enterprise licensed by the Government to export petrol and oil

to meet the conditions specified in Decree 84/ND-CP, including at least 15,000 m3

of storage, minimum wharf 7,000 DWT to receive the imported petroleum tanker; petroleum distribution system owned 10 CHXD minimum and 40 CHXD agent

2.1.2.2 Production and distribution

Production: Government decision approving the strategic, production planning system development petroleum products

Distribution: Organization of petroleum business agent system implemented by Decree No 84/2009/ND-CP, which provides fairly tight trading conditions export and import; production;petroleum distribution; petroleum services business For business systems, traders will directly set the system reseller or established through general agents At the same time, general agents only sell gasoline in the form of an agent for the traders as agents of their distribution system and can only be contracted as a reseller for a petroleum traders

2.1.2.3 Price

According to Decree 84, the State allows the enterprises to be decided on the market price of state management.The management of the state is reflected in the many different terms in different forms, including regulation principles, time, level, method of price changes…

The base price is the price to form the retail price of gasoline include the elements and is determined by:

- CIF Price: Petroleum product price in Platt’s Singapore news (+) Insurance fee (+) Transportation cost from oversea refinery to Viet Nam’s port

- Import tax (percentage rate)

- Specific consumption tax (percentage rate)

- Fund of stabilize price (fix amount)

- Expense through whole supply chain (from distributor to end customer): 600 VND per liter – equal to 2,86 US cent

- Marginal profit through whole supply chain: 300 VND per liter – equal to 1,43

US cent

- VAT tax (percentage rate)

- Invironment fee (fix amount)

Viet Nam’s government controls retail price in whole contry The same retail price fix by government for all stations in whole country (except some zone that’s far from terminal are permited plus more 2% in retail price comparing to another zone for transportation cost)

The import tax and specific consumption tax apply for all importers with the same tax percentage rate (subject to actual price in invoice) Viet Nam’s government keeps retail price follow international market by adjusting import tax, specific consumption tax, extracting and using fund of stabilize price

2.1.3 Petroleum demand of Viet Nam

With the collected material, the amount of oil imported for re-export in 2007-2012 are presented in the following table:

Table 2.1.5 The number of oil imported for re-export in 2007-2011 and projected

(Source: Ministry of Industry and Trade)

2.1.4 Petroleum distribution system of Viet Nam

2.1.4.1 Petroleum supply

Currently, Vietnam Dung Quat oil refinery with a capacity of 6.5 million tons of crude oil / year, to meet 30% of domestic demand for gasoline, the remaining 70%

of the demand is still importing

Petroleum import market of Vietnam today mostly from Asian countries such as Singapore, China, Korea, Malaysia, Thailand; Besides, Vietnam also imports petroleum from Russia and Japan

Every year the Ministry of Industry and Trade approved minimum petroleum import quotas of the business enterprises to export and import of petroleum based on the results of the import business of the previous year, registering import

quotaspetroleum years later, the ability to import and trading of petroleum hub and business and production plan of the Dung Quat oil Refinery

2.1.4.2 Market segmentation of the petroleum focal point business

Import volume of the petroleum focal point business:

Bảng 2.1.5.2 Production of petroleum imports of the focal 2005 - 2008

Unit: million ton

(Source: Ministry of Industry and Trade)

2.1.4.3 Petroleum stored system of the petroleum focal point business

Under the provisions of Decree No 84/2009/ND-CP of the Government on petroleum business, business to import petroleum to ensure stable fuel reserve level

of at least 30 days supplyeffects on the structure and type, according to the plan's annual consumption is determined focal point business

The focal point business is organized your storage system includes two types of storage role by providing the following:

- Terminal depots (stock level I): As the warehouse receiving petroleum

imported from abroad or from the storage of refinery products for supply to a region

or a large area This warehouse has a capacity ≥ 15,000 m3 and oil port can receive ships load ≥ 10,000

- Sstorage after lines (stock level 2.2, 2.3): including transit stock and

allocation, inventory of household consumption (airports, factories, factories, farms, etc.) Entrepot include other forms of transport: By sea, inland waterways, pipelines: Due to the nature of the geography, the country stretches over 2,000 km of coastline and river systems should be more favorable small stock to provide for an area not consume large quantities Source of this stock from the terminal depots, bonded and from the refinery; stock transit route is responsible for providing local and pumping

of stock behind

Statistical results current as of 30/06/2010 and classification are combined

(according to Section 2.4 of Appendix 2 attached):

2.1.5 International petroleum market

a) Evolution of world oil prices in 2012:

Weak economy continues to lead to reduced global growth prospects for 2012 and 2013 Slower growth not only in the difficulty of the OECD countries, but also in key non-OECD countries such as China, India and Brazil The increase

in reserves continue to be made despite the slow speed, typically in China However, geopolitical tensions, irregular production in the North Sea due to maintenance, the large inventory continues to generate optimism that the major economies of the world will take monetary policy easing to restore economic growth is the main reason for the market to recover in the past month Positive economic data from the United States and China, although limited, but is seen as positive signals pushed most commodity prices including oil prices

In the first months of 2012 the price of gasoline A92 in Singapore rose 7.7 percent, it has reached its highest level this month at $ 128.2 / barrel on Friday 13/8 and since then slightly decrease slightly inat $ 126.43 on Tuesday reported 21/8.A92 price is the lowest price in a year on 22/7/2012 at 92.9 USD / barrel and has since continued to rise so far no signs of hypothermia

World economic situation is still not the greatest prosperity that the European economy is still no sign of escape from crisis North Sea oil production facilities will end summer maintenance supplies will be more powerful and based on an analysis of supply and demand analysis below world oil prices likely to fall slightly to an average of less than 90 USD / barrel in next September

b) The world supply:

Global oil supplies rose 0.05 million barrels / day in 2012 to an average 89.43 million barrels / day The supply of non-OPEC countries increased by 0.2 million barrels, while OPEC's crude oil production fell 0.16 million barrels / day Market share of OPEC crude oil in global oil production remained steady at 35% This

estimate is based on preliminary data for the supply of non-OPEC and OPEC crude oil production

c) Consumption situation in the world:

In 2012, the economic turmoil in the OECD countries, oil consumption is continuing normally Moreover, in countries outside the OECD demand is growing strongly.The only exception is the European demand continue to trend lower Thus world oil demand forecast unchanged from previous estimates, with growth expected to reach 0.9 million b / d over the previous year to average 88.7 million barrels / day

2.1.6 Petroleum market forecast in Viet Nam 2013 - 2018

The latest report on the situation of Vietnam Oil and Gas forecasts, oil consumption in India is expected to increase 101% in the period 2007-2018 However, the increase will be reduced to about 6% by the end of the said period and in 2018, oil consumption in Vietnam is about 598,000 barrels / day

Vietnam accounts for 1.51% of total oil demand of the Asia-Pacific region and accounted for 4.52% of the region's oil supplies Oil consumption in Asia-Pacific has increased from 21.4 million b / d in 2001 to 25.68 million b / d in 2007 and is expected to average 26.32 million b / d in 2008 , can be increased to 29.65 million b / d in 2013

Forecast demand for petrol in the following countries: (pursuant to Section 2.7 of Appendix 2 attached)

2.2.1.2 Activities of production and business

PVOIL unit is a member of the Vietnam National Oil and Gas Group, is responsible for developing complete downstream stages of the petroleum industry,

to promote the business of crude oil and oil products, contributing to securitynational power, specifically:

- Import, export and trading of crude oil in domestic and foreign;

- Import, export and trading oil products in domestic and foreign;

- Import and export of equipment, materials and business services;

- Production and processing of crude oil products;

- Construction of the port system to receive, store, transport or distribution and sales of petroleum products;

- Organization of joint ventures with domestic and foreign partners business processing and crude oil products;

- Import and export of products derived from petroleum, chemicals, supplies, equipment and facilities for the processing and trading of oil products;

- Business supplies and equipment, chemical processing in the field of oil products and other consumer goods;

- Financial investment;

- Tank rental services, and petroleum storage tanks;

- Purchase and sale of fertilizers and petrochemicals

2.2.1.3 Ownership structure

Vietnam National Oil and Gas Group owns 100% of the capital of Petrovietnam Oil Corporation - Company Limited

2.2.1.4 The organizational structure

PV OIL’s operating structure operate under the parent company - subsidiary model

as follows: (Section 2.6, Appendix 2 attached):

2.2.1.5 Mission, vision and goals of PV OIL

a) Mission:

Contributing the development and completion stages downstream of the petroleum industry

Contributing to national energy security and a pioneer in the development of

clean alternative fuels contribute to environmental protection

b) Vision

Becoming a leader enterprise is in the downstream activities of crude oil and oil products in Vietnam and in the region

c) Goals of PV OIL:

- Becoming the leading corporations in the country and the Asia Pacific region

in the field of import and export business of crude oil and crude oil, oil

products and provide all inputs for the refinery in Vietnam

- Completing system of store and distribute petroleum products, ensure consumption of refinery products in Vietnam, to stabilize the domestic

petroleum market, national energy security

- Promoting the production and processing of oil and gas activities including traditional petroleum products, biofuels are renewable and environmentally

friendly

- Expanding the types of services including oil and gas activities import oil and gas equipment and technical services support for business activities such

as transportation, investment, trade,

- Improving the efficiency of research and application of science and technology to find solutions to restore and protect the environment through

the development of new alternative fuels for current products

- Investment in human resource development in order to meet the development requirements of the Corporation; build and make the best management solution to improve productivity, quality, safety and environmental health,

toCorporation developed a comprehensive, sustainable and effective

2.2.1.6 Management model (in Section 2.7, Appendix 2 attached):

- Entrepot: the entrepot capacity of PV OIL was too low compared to the country North Central and South Central Coast and Central Highlands, with narrow topography, adjacent to the sea, PV OIL can use the entrepot by sea to provide petroleum for both the regions For the northern region, the South East, South West, PV OIL plans to supplement the transit entrepot to reduce

shipping costs, to develope direct customers, eliminating the advantage of the general agent

- The total capacity of PV OIL 27% is compared to the country, while the market share of PV OIL are about 23% demonstrated regional structural capacity, inappropriate storage function, the ability to use high-capacity storage

2.2.3 PV OIL’s retail network

By the end of June 2012, the distribution system of PV OIL including 650 direct retail petroleum stores, 576 general agents / Agents with more than 2,400 retail stores across the country Details CHXD number of PV OIL as follows:

- One member Companies Limited (100% owned by PV OIL): 98 petroleum stores

- The jont stock companies (PV OIL holds on 50% of capital): 316 petroleum stores

- The jont stock companies (PV OIL holds less than 50% of the capital): 236 petroleum stores

2.2.4 Petroleum supply chain management/ business policy of PV OIL

2.2.4.1 Organizational and management model of petroleum distribution

import, transfer, borrow, buy local , approve to plan and implement sales allocation to companies

PV OIL create and deliver to the source of the entrepot of companies (Section 2.9,

Appendix 2 attached):

2.2.6 Price policy

- PV OIL determines the internal pricing for the supply unit 1, unit members, are based on the average cost of warehousing, retail price regulation by the State, market discount, which is calculated as follows:

Pi = Pr - Cb

- In which:

+ Pi: Interal prices

+ Pr (retail prices): is the retail price set by the state at the time of the internal price (does not include indirect taxes: VAT output tax, excise tax, petroleum output and fees)

+ Cb: expected trading costs are set at specific stages of business (including expenses incurred in units and customer discount for general agents, agents)

- Level 1 companies, affiliates is a right to decide the price for the lower-level business units (level 2 units, joint-stock company) and the client system (the agents, dealers and industrial customers) according to the market situation

2.2.7 Financial investment situation

The total number of subsidiaries, the company members and affiliates of PV Oil are 52 companies with a total value of contributed capital which is 4,468.7 billion VND In measuring the value contributed to 3,892.9 billion VND and the value should be combined 575.8 billion VND, as follows:

- The Company holds 100% Capital: 275.2 billion Include two foreign companies based in la PV Oil Workers and PV Oil Singapore

- The company holds 50% - 99% Capital: 2,304.8 billion Includes 31 companies based in other provinces in Viet Nam

- The company holds 49% - 29% volts: 1248.2 billion Includes 8 companies

- The company is not in the right to control less than 29%: 491.1 billion Include eight companies

- These companies operate outside the petroleum sector: 149.4 billion

Includes 7 Companies

2.2.8 Result of business activities in 2008 so far

Business situation of the PV OIL is shown in the audited financial statements for

years 2008, 2009, 2010, 2011 are due as follows: (Section 2.9, Appendix 2

a) World economy creates impact on oil demand and consumption

- World supply: global supply source increases by 0.05 million barrels/day in

2012 up to average of 89.43 million barrels/day Supply from countries not under OECD increases by 0.2 million barrels while crude oil yield from OPEC reduces 0.16 million barrels/day Market share of OPEC crude oil on global oil yield is still stable at 35% This estimate is based on preliminary statistic of supply from countries not in OPEC and OPEC’s crude oil yield

- Consumption over the world: in 2012, in the context of economic instability of OECD, oil consumption experiences indifferently Furthermore, demand of countries not in OECD significantly increases with the only exception of Europe of reducing tendency Thus, world’s oil demand forecast is unchanged comparing to estimates of increasing oil demand of 0.9 million barrels/day up against previous year to average 88.7 million barrels/day

- Oil demand remains significantly increasing in developing countries but reducing in developed ones Increasing demand in developing countries represents nearly 90% of total increasing demand over the world for the period

- In 2011, the gross domestic product (GDP) increased by 5.89%, lower than the 6.78% increase in 2010 due to the difficulties of the world economy in general Total social investment in 2011 accounted for 34% of GDP

- GDP growth forecast of the Institute of the Ministry of Planning and Investment Strategy implementation 10/2010:

- Economic development scenarios ia a period 2010-2025 (%/year)

Table 2.1.1.3 Table Vietnam economic forecasts

(Source: Institute of Economic)

- Along with transforming from centrally planned and subsidiary economy into market economy under State management, oil and petrol distribution has experienced respective periods, from quantitative distribution applying a consistent price specified by the State to trading on demand through economic contract

- To approach such changes, especially for the early period of accesing market, the State has adjussted for many times macro-management of oil and petrol business with appropriate policies to each period

- From an energy exporting country, by 2013 it is estimated that Vietnam would become an energy importing country at 25-27% by 2020, nearly 57-62% by

2050 (not excluding nuclear energy) These figures may be higher if Vietnam has no big and considerable investment for balance of energy supply and demand

- Oil demand in Vietnam is greatly affected by world’s petrol and oil price Petrol and oil is an essential commodity, therefore, it exerts adverse effect to Vietnam’s economy; increasing or reducing oil and petrol price is primary reason making Vietnam’s CPI increase or reduce

2.3.1.2 Factors of policy from the government, law and pilitic:

a) Advantages:

Currently, Vietnam’s oil and petrol business is regulated in Decree No 84/2009/NĐ-CP by the Government dated 15/10/2009 about oil and petrol business Accordingly, gross profit of oil and petrol focal trading enterprises is

300 dong/litter (including inventory, loss, management cost and transport expense, etc), and gross discount profit for general agencies and retailing agencies is 600 dong/litter (including freight charges, loss, sale cost, etc) However, under present economy state, inflation, depression, reduced domestic currency rate, increasing salary cost and depreciation loss, Ministry of Finance advices the Government to increase profit for focal oil and petrol business and discount for oil and petrol retailing agencies

Service commitment as Vietnam joins WTO of oil and petrol trading (PCP 62271) under long-term limited commodity list is regulated in “measurements applied for all sub-sector within distribution service” This is a sensitive commodity that Vietnam Government has no intention of letting foreign enterprise distribute in Vietnam Hence, foreign oil and petrol distribution of company express their wish to distribute in Vietnam, they are subjected to sell

in price specified in Vietnam and the State holds exclusive right of distributing and trading oil and petrol

b) Disadvantages:

Vietnam has not set up comprehensive legal frame towards oil and petrol trading and importing head companies Hopefully, the State would issue law on oil and petrol sector in order to manage enterprises’ operation better as soon as practicable

Method of operating price and managing the State towards oil and petrol sector remain shortcomings and awkward for the past time causing misunderstanding for people and oil and petrol trading head companies to follow Decree 84/2009/NĐ-CP issued by the Government

2.3.1.3 Technology factors

Advanced technology brings tremendous benefits for activities of oil and petrol trading are as below:

- Better administration of inventory and loss of oil and petrol;

- Better management of oil and petrol importing price through good technology and communication system

- Better innovation and establishment of warehouse for oil and petrol

Technology development appears crucial milestone for mineral exploitation in general and oil and petrol exploitation in particular

2.3.1.4 Nature factors

a) Advantages:

Vietnam has 3,260 km coastline and interlaced river system distributed nationwide and a number of bays and ports Given these geographical conditions, it is good for Vietnam’s state and enterprises to build port of storing oil and petrol

upstream; annually Vietnam suffers from ten to thirteen large and small- scale storms All these geographical conditions lead to a number of following disadvantages:

- Much rain and high humidity considerably affect equipments and oil and petrol warehouse, cause rust and waste time to repair

- High temperature increase loss from oil and petrol evaporation

- Regular flood and rain take much cost for maintenance and storage

2.3.2 Analysis of oil and petrol micro-environment

2.3.2.1 Infrustrucure of oil and petrol retailing system of Vietnam

According to statistic released by PEC, by the early 2000, there were nearly 4,000 petrol stations nationwide By early 2005, it is estimated that number of petrolium station in Vietnam were over 6,000 by 2009, this number increased to nearly 9,000 nunber of petrol stations according to statistic in some reagions are as below:

Table 2.4.22 Statistic of petrol stations in some areas

Head enterprieses frequently invest to build spacious and magnificent station

with up to 30m facade and four pumps Almost every stations under small- scale enterprises have two to four pumps, simple architechture and small ground Up to 70% existing stations are small type with total area of under 400m2 Head eterprises also pay attention to their logo and paint roof valances

in typical color; while most of private stations pay no attention to their architecture and logo

In recent years, in order to step-by-step meet the trends of industrialization and modernization and create competitiveness, oil and petrol trading enterprises have been improving their petrol stations such as widening area, increasing number of pump and using double pumps instead of previous single ones Stations built on national highways, gateway of city and town with advantage

of construction land have spacious ground and over six electric pumps and service of vehicle washing and fulling grease, etc Station’s architecture focuses much more on covering for pump, widening area to increase number of vehicle being served, takes coverage the center to create whole atchitecural mark for station Typically, private stations on National hishway No 1 passing Mid-Central are deemed stop stations despite small parking lot and motel These stations meet the requirement of vans and container trucks

Foreign companies also lay much emphasis on investing oil and petrol retailing market (signboard, advertisement) such as CASTROL, BP, ESSO, SHELL, TOTAL, CALTEX, MOBIL to sell their grease products

Along national highway No 1A and main national highways in vietnam, oil and petrol stations construction is under no master plan In the context of market mechnism, enteprises, especially local and private ones massively set up petrol stations for the period of 1993-2005 causing tremendous shortcomings The density is high in some areas; national highway No 1A, sector of Vinh city- Nghe An is a striking example, there is a street of oil and petrol station with over fifteen adjacent stations Sale volume of these stations ranges from 2

to 5m3/day, stations near city gateway reaches 40m3/day

2.3.2.2 Competitor in the sector

Ministry of Industry and Trade is appointed State management unit towards oil and petrol trading and to cooporate with Ministry of Finance in managing oil and petrol price

The Government alllows 14 head enterprises to officially authorize and limit oil and petrol importing level which are Vietnam Natrional Petrolium Group (Petrolimex), Petrovietnam Oil Corpration, Military Petrolium Corporation, PTEC Trading and Investment Company Limited, Vietnam Air

Petro Company Limited, Dong Thap Petrolium Trading Company; (acordance

with section 2.11, attached Appendix 2):

Head enterprises tend to organize various operation form, in charge of all