Formulation business strategy of Viet Nam Technology - Trading Joint Stock Company period 2013-2017

Viet Nam Technology - Trading Joint Stock Company Joint Stock Competitive strategy combines the strengths & opportunities of the Company Strengths-Opportunities Competitive strategy comb

Andrews Q University ———-

CAPSTONE PROJECT REPORT

STRATEGIC MANAGEMENT

Do Ngoc Bich Nguyen Dinh Chuong (Group leader) Tran Thi Ha

Nguyen Thi Bich Hue

Class: GaMBA.M0111

HA NOI 2012

Grice) Group 7 - GaMBA.M0III

— —

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

| CAPSTONE PROJECT REPORT

|

Formulation Business strategy of Viet Nam Technology -

Trading Joint Stock Company

Period 2013 - 2017

| Group: 07

Members: Do Ngoc Bich

| Nguyen Dinh Chuong (Group leader)

CỌNG HÒA XÃ HỌI CHỦ NGHĨA VIET NAM

Độc lập - Tự do - Hạnh phúc

Ha Noi, ngay 16 thang 11 nam 2012

GIÁY XÁC NHẠN

Kinh gut: - Truong Dai hoc Quéec gia Hà Nội

- Trung tam Cong nghé Dao tao va Hé thong viéc lam ETC

Công ty Cổ phần Thương mại Kỹ thuật Việt Nam xác nhận

Thời gian vừa qua, Nhóm 7 lớp MOITT thạc sỹ Quản trị Kinh doanh Quốc tế Trường Đại

học Griggs liên kết với Trung tâm Công nghệ Đảo tạo và Hệ thông việc làm ETC đảo tạo

Hệ thông việc làm ETC tổ chức

Công tv Cô phân Thương mại Kỹ thuật Việt Nam xin thông báo để Quý đơn vị được biết

Grice) Group 7 - GaMBA.MOII1

We would like to thank the lectures, Board of Director, managers of Global Advanced

Mager of Business Administration Program-Griggs University has dedicated teaching, guidng, support us to implement this project

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TABLE OF CONTENT

TABLE OF CONTENT serneunmowunexneanarcenenuer nee 4

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1.2 Business strategy building DFOC€SS - - LG TH ng ngư, 13

i «2,1, Analysis Content of the DUSINESS CHVITONINENE sesccimcsrsnnsrncnmeanmmmrmamcarcenvens 13 1.2.1.4 Analysis of the Gctermial GV ORIIGUE isscsaccsrcanssceri mn maerr mn nnieree 14 1.2.1.1.1 Analysis of Macro environment (STEEPLE model) .- -«- 14

1.2.1.1.2 Industrial environment analysis: (5 force model of Michael Porter) 16 1 1.1.3 Exferrnl Pnotor Evaliinfiom rraltfis TRE TH da nedapadtitidaiiiotisisiigiaorigessex 17 12.114, Conmpettiive Profil NGHI TC MÃ | diiatiidiioiieii4800046040016600003)0000033 060000704 18

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CHAPTER II: ANALYSIS OF OPERATION REAL SITUATION OF VIET NAM TECHNOLOGY = TRADING JOINT STOCK COMPANY sesissssscsscssnvisssnsonsswarvesonsese 28 2.1 Overview of Viet Nam Technology — Trading Joint Stock Company 28

2.2.2 Oreanizational Simichie ĐỀ THie CHINBHEE E se deneradenisariesod Gia con (GGIGI2/68G32E3200100u.6 29

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SR OSES Hoagidedggiitoedidededlennanesmanrinsstoogrosottrkdorrr4e90g90DI-VGIRSIESIIEPHSGIUEGINGGIESG 33 wud lL» PORES C1 Tie OXISiial GAVICRON sce oncnaanee nee eese 33 2.2.1.1 /(SWRIYSIS DĨ HE TRRHCFGO GHVIIGIHHIHE sung dang daxQiieik69340585404656nssssesseesoe 33 2.3.1.2 Analysis of industrial environment (5 force model of Michael Porter) 37

#ocliio 01100516 tỀ 1E RE HÀ seeesniennnvensnnssruetrrerdoitirNDOSOIIGGIIISIEIGAIG1JSUIGIEBBVGIESSESRUGESGI 42 Jud mnalysis of Compentive Protile Matrix (OPM) aeeveaeeaeeiaoodeediadidesilgsih 44

“102 THIA1YSIS OÍ INIEEHfRI BERIVIYOHHNGHEE sagugaa¿yZjuaudrdttiinigtbiiiibdlikiiiax041ã384368.x2ussssuses 48 CHAPTER 3: BUILDING BUSINESS STRATEGY OF VIET NAM TECHNOLOGY - TRADING JOINT STOCK COMPANY DURING PERIOD 2003-2007 64 S1: BRSIS 10Y HHHINB GHIEGLIVDNG nayadunndaararggatratounaGGilS0pIGSB4G03490080-038010003ã3G33431©dxs8e 64 3.2 Companys objectives and orientation until 20 Ì 7: s- se ve, 67

3.3.1 Strategy building through overall assessment of S.W.O.T of Vinatech 67 Jodo SUCIERY DONC? BU TINKICANION? ccc werrmonnnnnd 74 3.4 Some major measures to implement the business strategy period 2013 - 2017 81 3.4.1 Strengthening of human resources Quality® cssescsnecseeverssrseeveesaeronavevesrenneneeses 80 5,4 XHiff0ving Xiarotli ACT VINGS QUALI ncccusccnnomnmumneremecsrmnnimmmnnimvmumnmnennns 82 3.4.3 Reconstruct the organization model of the company: .:::::cccsceseseeseeeeeees 88 3.4.4 Solutions for improving activity efficiency of Finance and Accounting 89 3.4.5 Technological development - improving the information collection: 90 3:3 SY0IE6]G fffiiafetiietif ?0adtfiáp añ0 DU BE seeeeeaseeegdrdddobnebekeiokiiioiUii00S101050 0046 90 3.3, 1‹ 1TT1016Hieribitipn REHDNIEEDE neauegrdbdttsribdiodiiiidtilliagullGbllg00101gD084638810808100les0llonneoke 90

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CG Global Advanced Master of Business Adiministration

Howat

Grigcd) Group 7 - GaMBA.M0I1I

LIST OF TABLES AND FIGURES

List of table:

Table 3.1: Sưnniify öỀ HhancTal data BÍ VÌNHICH coseasseaaaaaaeeooiriioidoandkllabik4usisilis4a 32

Table 2.2: Coaitribution structure of customers in turnover of Vịnatech 40

Table 2.3: Mirket share of medical gas system supplying through bidding in the country41

‘Table 242 Amlysis OF RPE MG ceeeeecdeesuiadbokiddotksigptfdbliiL34004468210400060G16 46620030468 42 Table 2.5: Conpetitive profile matrix of major competitors with Vinatech 46 Table 2.6 Sone financial indicators of the Company as folloWS: cc 48

Table 31: Health care facilities nation-wide 19 201] sssicsssscssenesassrnvsserosumasvisenteninmnnnenn 65 Table 3.2: S.V.O.T Matrix of Vinatech - - c4 HH 00008 06 68

Sable 3.4: Vaiables calentlated for SPACE Mattie scccsssosensuumeosrasmenenenannaness 75

Table 3.55 PK Mais fof VinWetl ccm nnremmnennmmmmnmnninns 77

Table 3.6: Stritegic implementation roadmap of Vinatech Period 2013 - 2017 91 Table 3.7: Strategic implementation budget of Vinatech — Period 2013 - 2017 92 List of figure:

Figure 1,1: The process of bililding DUSiNeSS SIPALERY nc ccciccssisasccssvenssssnsreencxsaversisanesennenes 14 Figure 1.2: Value chain model of Michael E.POItt? ncnccserncncnntnnmnmcnmmnamenenceen al Popere 1.3: SPACE Matri Si ccnrecneunnnccnennnnanennmeneemmers 25 Figure 2,1 Organizational sieht’ OF Vat iscscncccacccomunumnmonmnmnamcmsmmanenn 29 Figure 2.2) Operation process OF VSMC sadaaaeaaaeeaiaidaattiidoisdtoloiil0/604464504146k08636 a2 Pigs 7.1) SPALL MaGid OF VinRtCO8 a immcncmcnnsnmnennnmmennnee EEE 76

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GRIGG Unive RSITY Group 7 - GaMBA.MOII1

Economic, Environmental,

Socio-cultural, Technological,

Political, Legal and E-business

Viet Nam Technology - Trading Joint Stock Company Joint Stock

Competitive strategy combines the strengths & opportunities of the Company (Strengths-Opportunities)

Competitive strategy combines the strengths and Threats of the

Strengths - Weaknesses - Opportunities - Threats Matrix of the Company (Strengths - Weaknesses - Opportunities - Threat) Competitive Profile Matrix

Internal Factor Evaluation Matrix External Factor Evaluation Matrix Life cycle model of the industry and product

Vietnam Dong World Trade Organization

Asian Free Trade Association Gross Domestic product

International financial companies - members of the Wolrd Bank

Common effective preferential tariff of ASEAN Return on Equity

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PREFACE

1 Reason fo- choosing the research topic:

Throughout ‘he years, the medical device sector in Vietnam has made significant

achievements, specify the policy of being equal to medium and advanced countries in the

region in tern of technical equipments Specialized staff has been trained to be able to exploit the use, maintenance, repair and calibration of medical equipment at the same time, with the development of the medical device industry to increase the proportion of domestic preduction and eventually for export However, the imported equipment manufacturec with high technology still accounts for a large proportion, plays an important role in providing qualified equipment to meet health care needs requires increasing disease Making contribution to the upgrading of medical equipment system,

patient service quality and business activities of Vinatech is more and more developed at

very high speed

However, with the changes in the socio - political - economic situation in the world and

in the country in recent times shows that the existing and potential risks no small impact

on the development of Vinatech in the long term

Therefore, research and development, planning a reasonable strategy helps Vinatech to maintain the momentum as well as the sustainable development steps in the future

Comes from the fact that, our group has chosen the topic: "Formulation of business

strategy of Viet Nam Technology - Trading Joint Stock Company for the period

2013-2017"

2 Research purpose

- Systemarize issues about the theory of strategic management

- Analyze and assess of the business situation in enterprises in the context of the economy in

Vietnam

- Support enterprise to identify their position in the market and since then having plans to build and implement strategies for sustainable development

- Provide a number of strategic solutions for enterprise in the period 2013 - 2017

3 Research Object and scope:

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straiegies including internal and external environment of the company

Secondary data analysis method: Used to study the theoretical basis in order to lay the

fourdation for building development strategy of the Company

Quantitative Methods: Used to select and determine the development strategy of the Conpany

Metiods of strategic analysis such as: EFE Matrix, CPM Matrix, IFE Matrix, SWOT Matrix

andQSPM matrix

5 Contribution of the report:

Provide the scientific methodology, assessing the real situation and propose some contents in orde to improve the building overall business strategy to ensure the development objectives

of Viet Nam Technology - Trading Joint Stock Company in the period 2013-2017

6 The layout of the report

In aldition to the table of contents, list of abbreviations, list of tables, figures, introduction, condusion, list of references, appendices, the content of report is divided into three chapters: Chapter I Theoretical basis

Chater II Analysis of the operation situation of Viet Nam Technology - Trading Joint

Grico) Group 7 - GaMBA.M0III

"strategy' became more popular and better than many different definitions of

contemporary opinion and in accordance with the capacity to make a difference and external environmental

The concept of business strategy developed over time and they approach it in different

ways

In 1962, Chandle defined: "Strategy is the identification of goals, long-term basic

purpose; carried out applying a sequence of actions and the allocation of needed

resources to accomplish this goal"

(” Source: Chandler, A (1962) Strategy and Structure Cambridge, Massachusetts MIT Press)

In 1980, Quinn defined: "Strategy is the pattern or plan to integrate key objectives, policies, and action sequences into an overall is rallied rigorously"

(” Source: Quin, J., B.1980 Strategies for Change: Logical Incrementalism Homewood,

Illnois, Inwin)

Johnson and Scholes: "Strategy is the direction and scope of an organization in the long term in order to gain competitive advantage for the organization through the format of its resources in a changing environment, to meet market demand and satisfy the expectations of the interested

(' Source: Johnson, G., Scholes, K.(1999) Exploring Corporate Strategy, 5" Ed Prentice Hall

Europe)

Protessor Michael L Porter said: "Strategy is the art of building a solid competitive advantage for defense"

(C’ Source: ME Porter, Competitive Strategy, Free Press New York)

We can give a general definition of strategy as follows: "Strategy is a series of complex

actions to mobilize all the resources of an organization / individual in order to achieve a certain purpose"

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Thus, the strategy relates to the objectives of the enterprise and strategy is the way to

implement the actions and decisions closely related to each other and selected

coordination method of the actions and decisions Strategy of enterprise must exploit the

fundamental strengths (resources and capabilities) and to take into account the opportunities and challenges of the external environment

Straiegic Management is a set of management decisions and actions determine the long-

term performance of an enterprise Strategic management includes continuous action:

enviccnmenta! review (interna! and external}, construction, implementation and

evaluation of strategic control Strategic research emphasizes on the monitoring and evaluation of external opportunities and challenges in the context of the internal strengths and weaknesses

1.1.2 The basic characteristics of the strategy

On tie basis of analysis of the origin of the above strategy, we find that so far there are still nany different views and different approaches of strategic category

Although there are many different views on the strategy but the basic characteristics of

the tusiness strategy is considered relatively uniform These characteristics are:

- 3usiness Strategy defines the basic objectives, directions and business need to

achieve in each period and is thoroughly completed in all aspects and all areas in the

management of the business activities It only oriented in practice requires a combination of strategic objectives and economic objectives of the business

- Business strategy outlines the operation direction of enterprise in long term, the operation framework of enterprise in the future

- Business strategy is built on the basis of competitive advantage of the enterprise to cnsure maximum mobilization and combine well with the exploitation and use of resources in the enterprise

- Business strategy is formed and implemented on the basis of strength, take tdvantage of business opportunities in order to achieve the highest business performance

- Construction, implementation, test, evaluate and adjust strategies are focused on

‘enior administrators of enterprise

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- Business strategy is often built in the long term: 3 years, 5 years and 10 years

The strategy is divided into three levels as follow:

+ Company leve! strategy: Towards the overall purpose and scope of the organization It identifies the actions that the company made in order to gain a competitive advantage by selecting, managing a group of different business

operations competing in some sectors and product markets

+ Business Unit level Strategy is the overall commitments and actions to help enterprises to gain a competitive advantage by exploiting their core

competencies in specific product markets It reflects the confidence of the

enterprise about location and the way it can gain a competitive advantage over its competitors The importance of business strategy is to "make the choice to act to make a difference or do activities more different than rivals."

+ Functional strategy (or operation strategies): As the strategy enables

business level strategy and corporate level achieved effectively by the

components in terms of resources, too processes, people and necessary skills

This is a strategy to improve the validity of the basic operations such as production, marketing, materials management, research and development

1.1.4 Strategic management process

Strategic Management can be defined as an art and science to set, implement and ev.aluate decisions related functions that allows an organization to achieve set goals (Source: Fredr David, Concepts of strategic management- Statistic Publishing House, 20:06)

Strategic management process consists of three phases: setting strategy, implementing strategy and evaluate strategy

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First, strategic setting phase includes the development of business tasks; identify

xternal opportunities and threats to the organization, showing the internal strengths and

‘weaknesses, setting long term targets, to create alternative strategies, and choosing particular strategies to pursue the target

Issues in strategic formulation involves deciding which new business industries should enter or withdraw, how to distribute the resources, whether or not to develop or expand Operations, participate in the world market in the world or not, link or form a joint

venture, and how to avoid an opponent's contro! power

Second, the strategic implementation phase requires the company to set annual targets, set policies, encouraging staff, and the allocation of resources to the set strategy can be done Strategic implementation includes the development of a culture supporting for strategy to create an effective organizational structure, redirecting marketing activities, preparing budgets, developing and using information systems, encourage active individuals to operate

Third, the strategic assessment phase will monitor the results of the set activities and

execute strategy This step involves measuring the achievements of individuals and

Organizations, and the necessary corrective action Despite making good strategic decisions is the responsibility of the owner or senior executive officer in the organization, the administrators and executive staff also have to contact with the activities of setting, implementing and evaluating strategy Participation is crucial to

achieve adherence to the necessary changes

(Source: Page9, 10 — Concept of strategic management (Fred R David) — Labor Publishing House, 2012, Author: Truong Cong Minh, Tran Tuan, Tran Thi Tuong Nhu)

1.2 Business strategy building process

1.2.1 Analysis content of the business environment

Generally, the strategy is understood as the result of a rational planning process is arranged carefully The management and strategic scientists and administrators have proposed many models of strategic planning In each model there is a framework for the entire process of strategic management based on some concepts that we mentioned above

Corporate strategic planning process can be divided into five main steps including:

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- Step 1: Select the mission and main objects of the company;

- Step 2: Analyze the external environment to identify opportunities and threats,

- Step 3: Analyze the internal environment to identify strengths and weaknesses;

- Step 4: Select the strategy based on seeking the resources, capabilities and core competencies and develop it to neutralize the risk, take advantage of opportunities from the external environment;

- Step 5: Implementing the strategy

Figure 1.1: The process of building business strategy

_ _| Internal environment analysis External environment ba

% (S, W) (3) analysis (O, T) (2) |

\

Business basis and functional department

1.2.1.1 Analysis of the external environment

1.2.1.1.1 Analysis of Macro environment (STEEPLE model)

Macro environment is the broad social aspects that affect an industry and the companies

in the sector, which is Economics; Political and legal: Culture and society; Technology;

( SƯ

- Economic Environment: The economic factors have a huge impact on_ the

enterprises, this is also regular mobilizing factor and most unpredictable of macroeconomic factors Its movement always contains both opportunities and challenges for enterprise, particular movement trend of: Gross domestic product and gross national product trend; interest rates; inflation; balance of payments and

exchange rates; economic policies reflect the views of the government in the

development of the industry

- The political and legal envirenment: The political and legal factors have a huge

impact on the leve! of opportunities and threats from environment, thus greatly

atfect the operation of the enterprises, it includes: political stability, system of

government policy perspective, the current legal system, the government's

diplomatic trends, the political developments in the country, the region and in the world

- The socio-cultural environment: the socio-cultural environment including norms

and values are accepted and respected by a society or a particular culture The socio-cultural environment has strong influence on the business activities, usually

the following: The change of the old tower, the rate of marriage and childbirth, the

attitude of the consumers, the concept on aesthetics, ethics, lifestyle, occupation; their customs, habits, traditions; social care priorities; awareness, education of society,

- The natural environment: Natural conditions including: geographic location,

climate, landscape, land, river and sea, the mineral resources in the ground, sea

forest resources, the clean water, air their impact on policy decisions in business has long been recognized by enterprises In many cases, the natural conditions become a very important factor to form the competitive advantage of products and services The problem of environmental pollution, poor product quality, waste of resources, along with the growing demand for limited resources forcing enterprises

to change their decisions and related operation measures

- Technology environment: Technology environment includes institutions, activities

related to the creation of new knowledge, the knowledge transfer to the output, the

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product, the process and new materials This is a very active factor, filled with

opportunities and threats to the business Therefore, enterprises must be alert to the new technology because it can make the product obsolete directly or indirectly, in addition to the benefits that the development of technology brings

1.2.1.1.2 Industrial environment analysis: (5 force model of Michael Porter)

As a series of factors that directly affect a company and the competitive actions and competitive responses of the company Main techniques used to analyze competition in the indusiry environment is five competitive forces modei of Professor Michael Porter

He made five competitive forces model within the industry, including:

1) The threats of potential competitors;

(2) The degree of competition among existing companies in the industry;

(3) The negotiation power of buyers;

(4) The negotiation power of the seller;

(5) The threats of substitute products

- Potential competitors: As the enterprises have not competed in the same industry, but be able to compete if they enter the industry Penetration ability of the potential competitors depend on the barriers to entry If enterprise has a strategy to improve the penetration barriers will limit the risk due to the penetration of potential competitors

- The suppliers: the supplier can increase the threat pressure when they have the ability to increase input price or decrease the quality of the products and services that they provide Thereby, reducing ability to seek the profits of the enterprise In

some ways, the threat creates dependency for enterprises

- The substitute products: substitute products are other products can satisfy the needs of consumers Its basic characteristics are usually the dominant product being replaced in separate features This threat requires enterprises to have the analysis and regular monitoring of progress of science technology, which is directly related to technological innovation and product innovation

- Customer Analysis: Customer is the individual or organization in need of products

or services of the enterprise Customers can be considered as a competitive threat

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when they are in a position to ask for a lower price or when they demand better services Customers can put pressure on suppliers in the following cases: The buyer is one of the few large-scale and while there are many small and medium- sized suppliers; The customer buy with a large amount of products; the supplier

depends on customers with large percentage of orders; customers have full information

- The competition between competitors in the industry: The business enterprise in

an industry often differ in the market, distribution channels, product quality, technology, price and advertising However in the same industry, there are a number of enterprises pursue and implement a strategy or similar strategies creates strategic groups in the industry The number and capacity of companies in the industry decide the nature and intensity of competition in the industry

Thus, by studying the external environment, the company can decide what it can do For successful companies, or its strategy must be consistent with the operating environment,

or company can shape the environment so that its advantage through the strategic

selection

1.2.1.1.3 External Factor Evaluation matrix (EFE):

External Factor Evaluation matrix allows strategists summary and evaluate the

information of economy, society, culture, demography, geography, polity, government,

law, technology and competition

There are five steps in developing an External Factor Evaluation matrix:

(1) Make a list of the factors that play a decisive role for the success as identified in the inspection process from external factors; including a total of 10 to 20 factors including

opportunities and threats affecting the company and the company's business

(2) Classify importance from 0.0 (not important) to 1.0 (very important) for each factor

This classification shows the respective importance of these factors for the success of the company's business The opportunities usually have higher classification than threats; however the threat may also be aware of the higher classification if it is especially severe

or threatening loss The appropriate classification level can be determined by comparing the successful competitors with unsuccessful competitors or by discussing the success

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4) Multiply importance level of each variable with its type to determine the score of the importance

(5) Add the total importance scores for each variable to determine the total importance scores for the organization

(Source: Page 178, 179 — Concept of strategic management (Fred R David) — Labor Publishing House, 2012, Author: Truong Cong Minh, Tran Tuan, Tran Thi Tuong Nhu)

1.2.1.1.4 Competitive Profile Matrix (CPM)

In all the events and trends in the environment can affect the strategic position of a company, the impact of competition is often considered the most important Competitive profile matrix identifies the main competitors with their special advantages and disadvantages

Competitive profile matrix is an extension of the external factor evaluation matrix in term of importance level, classification, and the total importance score with the same significance Competitive profile matrix differs from external factor evaluation matrix in that the internal factors has decision important for the success and can also be included in

it such as the Financial him , the effectiveness of the ad, the professional activities of

research and development In addition, the difference between two matrices is the classification level of the competitor companies are included in the Competitive profile matrix with a total importance score of these companies are also calculated Total score assessment of competitor companies over the sample companies The special classification of the competitor companies can be compared with the classification level

of the sample companies The comparative analysis provides the important strategic information

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(Source: Page 182, 183 — Concept of strategic management (Fred R David) — Labor Publishing

House, 2012, Author: Truong Cong Minh, Tran Tuan, Tran Thi Tuong Nhu)

1.2.1.2 Internal Environment analysis:

The ability of the enterprise is fundamental to decide what enterprise can do, business

strategy of the enterprise is successful or not To ensure the feasibility of the strategy,

when building the strategy we have to assess the situation, identify strengths and weaknesses, thereby determining their real ability in the enterprise The purpose of the internal analysis of the enterprise is to identify potential sources as well as existing to create sustainable competitive advantage of enterprises, and also to identify the problems

in maintaining sustainable competitive advantages manner Internal analysis content includes: sustainable competitive advantage analysis, strategic analysis, and financial performance analysis

1.2.1.2.1 Analysis of sustainable competitive advantage

There are two ways to analyze the sustainable competitive advantage that is resource analysis and value chain analysis Resource analysis to identify the core capacity at the

corporate level, and value chain analysis help company understand the cost advantage or

difference at the business unit level

Resources Analysis

Resource analysis shows that the reserve of resources, capabilities and assets available to

business units or the entire company

- Resources: The resources, broadly defined, includes a variety of factors of organization, technique, human, material and finance of the company The resources can be divided into two categories: tangible resources and intangible resources Tangible resources can be seen as resources of finance, organization, material and technological conditions Intangible resources, including personnel, improvement capabilities and reputation

- Potential Ability: Potential Ability is the ability of companies using the resources

have been integrated in an aim to achieve the desired goal state More generally,

the potential of a company is the product of the organizational structures and

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- The core capacity: core capacity is resources and the company's ability to be used

as a source creating competitive advantage Create competitive distinction of a

company and reflect the personality of the company, through which operations outperforms that the company implements the competition and activities which create unique value for their products and services over a long time

Value chain analysis

Value chain analysis allows the company to understand which chain can create value for

their products and which chain do not create value chains The term "value chain" show

the idea that a company is a sequence of activities that transforming inputs into outputs

to create value for customers That process includes main activities and support

activities, each activity adds value for the product Subsidiary activities occur within each type of main activities

- Main activities: Main activities are activities associated with the products and

services of the enterprise Those are activities of procurement, management of input factors, marketing, service and customer care activities These operations are saved, improved quality and satisfy customer needs, the company's value chain is increasingly appreciated and the company has a competitive advantage

- The support activities: Help for the main activities of the enterprise is done better, more efficiently The activities that we are mentioning are the human resource activities, technology development and purchasing

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Figure: Value chain model of Michael E.Porter

Figure: The basic blocks to create competitive advantage

Strategic Analysis

All enterprises have their own strategy; the analyst's task is to describe the current strategy of the enterprise Describing strategies often focus on strategy of product - customers, competition view and strategic logic Analysis content will focus on: strategic analysis of the company; product - customer strategy; competitive strategy perspective; functional strategies and strategic fit of the enterprise

Financial Analysis

The basic purpose of financial performance analysis is to evaluate the financial performance of the enterprise, through financial parameters analysis, the current standard and through period: profitability, solvency , the effect of leverage, operating parameters And additional economic value analysis or its variation, measuring the increase in value directly to shareholders

By studying the internal environment, the enterprises will determine what they are able

Grice) Group 7 - GaMBA.M0III

1.2.1.2.2 Internal Factor Evaluation matrix (IFE)

IFE strategic forming tool summaries and evaluates the important strengths and

weaknesses of the function business department, and it also provides the basis for

identifying and assessing the relationship between these departments To develop an IFE

matrix, intuition comments matrix is needed, so the formality of the scientific method must be interpreted to show that this is the most effective technique IFE Matrix can be developed in five steps:

(1) List the critical success factors as identified in the internal control process Use all of

10 10 20 internal factors, including strengths and weaknesses

(2) Define the importance by classifying from 0.0 (not important) to 1.0 (most important)

to each factor Importance level is defined to each of the specific factor that the relative

importance of the factor for the success of company in the industry Excluding major

factors are the internal strengths or weaknesses, the factors are considered as the most influential to the performance of the organization must be the most important Total of all this importance level must be equal 1.0

(3) Classification from | to 4 for each factor will show that factors represent the biggest weakness (classified by 1), the smallest weakness (classified by 2), the smallest strengths (classified by 3), or the greatest strengths (classified by 4) Thus, the classification based

on the company while importance level in step 2 base on the industrial basis

4) Multiply each importance level of each factor with its type to determine the importance score for each variable

(5) Add all the important scores for each variable to determine the total importance score

of the organization

Excluding how many factors does the IFE matrix have, total importance score can be classified from the lowest as 1.0 to the highest as 4.0, and the average score as 2.5 Total importance score is lower than 2.5 shows that the company’s internal is weak, and score

is higher than 2.5 shows that the company’s internal is strong An IFE matrix should have 10 to 20 key factors The amount of factor does not effect to total importance score

because the total importance score is always equal to 1.0

N NO

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(Source: Page 247, 248 — Concept of strategic management (Fred R David) — Labor Publishing

House, 2012, Author: Truong Cong Minh, Tran Tuan, Tran Thi Tuong Nhu)

1.2.1.3 Analysis of S.W.O.T matrix:

After analyzing the factors of the macro environment, business environment, enterprises

often identify the opportunities and threats from the external environment, the internal

strengths and weaknesses of the enterprise to grounds to consider and develop strategic

direction and plans Technology is widely used that is analysis technique of strengths weaknesses, opportunities and threats (SWOT)

SWOT matrix is used to form the strategic plan as following steps:

- Step 1: Synthesis of the analysis results of the business environment - opportunities

and threats

- Step 2: Synthesis of the analysis results of internal business environment - strengths and weaknesses

- Step 3: Synthesis of the results and form the SWOT matrix - Strengths and

weaknesses - Opportunities and threats

Formed strategic plans group

- SO strategy to use the strengths of the enterprise to take advantage of external opportunities

- WO strategy to overcome these weaknesses to take advantage of external opportunities

- ST Strategy uses the strengths of the enterprise to deal with external threats

- WT strategy is to overcome these weaknesses to reduce the external threats

1.2.2 Strategic selection:

1.2.2.1 TOWS matrix:

Matrix of Threats - opportunities - weaknesses - strengths is an important combination tool can help managers develop four types of strategics as following: SO, WO, ST and WT The

combination of the internal and external important factors is the most difficult task of developing

a TOWS matrix, it requires good judgment, and will be a good combination

To create a TOWS matrix must go through eight steps:

(1) List the major external opportunities of the company

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(2) List the external important threats of the company

(3) List the internal major strengths of the company

(4) List the internal weaknesses of the company

(5) Combining the internal strengths with external opportunities and record the results of the SO

strategy in the appropriate square;

(6) Combining the internal weaknesses with external opportunities and record the results of WO Straiepy:

(7) Combining the internal strengths with external threats and record the results of the WT

strategy:

(8) Combining the internal weaknesses with external threats and record the results of the WT Strategy

(Source: Page 266, 267 — Concept of strategic management (Fred R David) — Labor Publishing House,

2012, Author: Truong Cong Minh, Tran Tuan, Tran Thi Tuong Nhu)

1.2.2.2 SPACE matrix

The Strategic Position and Action Evaluation (SPACE) Matrix is widely used for selecting general strategies SPACE Matrix shows whether an enterprise should select

aggressive, conservative, defensive or competitive strategy? SPACE Matrix is presented

on a two-direction model One direction of SPACE Matrix describes two criteria for

evaluating the internal environment of an enterprise, namely Financial Strength (FS) and Competitive Advantage (CA) Another direction describes two criteria of the external

environment, including Environmental Stability (ES) and Industry Strength (IS)

SPACE Matrix is formulated with following steps:

(1) Selecting a group of variables reflecting Financial Strength (FS), Competitive

Advantage (CA), Environmental Stability (ES) and Industry Strength (IS)

(2) Fixing specific values for directions of the Matrix, specifically: defining from +1 (worst) to +6 (best) for variables reflecting Financial Strength (FS) and Industry

Strengths (IS); value -1 (best) to -6 (worst) for variables reflecting Environmental

Stability (ES) and Competitive Advantage (CA)

(3) Calculating the average scores reflecting Financial Strength (FS), Industry Strengths (IS), Environmental Stability (ES) and Competitive Advantage (CA) by adding the fixed

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values to the variables of each aspect then dividing them by variables of respective

aspects

(4) Marking the average scores of FS, IS, ES and CA on the respective axes of SPACE Matrix

(5) Summing the scores in the horizontal direction and marking it on the result of the X -

axis Summing the scores in the vertical direction and marking it on the result of the Y -

axis Marking the intersection point of the two new points on the X-Y axis

(6) Drawing a vector directing from the root of SPACE Matrix through the new

intersection point The vector shows the type of strategy of the enterprises: aggressive, conservative, defensive or competitive

Financial Strength

4, Conservativ 5 Aggressive

Figure 1.3: SPACE MATRIX

The direction of the vector shows the type of strategy that the enterprise should

follov: aggressive, conservative, defensive or competitive strategy

- When the vector located in the quarter of aggressive, the enterprise is in the best

position to use its internal strengths to make use of external opportunities

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Therefore, feasible strategies can be market penetration strategy, market development strategy, product development strategy, backward integration

strategy, forward integration strategy, horizontal integration strategy, related diversification strategy, conglomerate diversification strategy or the combination

of the above-mentioned strategies

- When the vector is located in the quarter of conservative, the enterprise should be operated with its existing capacities and should not be too adventurous Feasible strategies are market penetration strategy, market development strategy, product

development strategy, conglomerate diversification, etc

- When the vector is located in the quarter of Defensive, the enterprise should focus

on improving its internal weaknesses to avoid external threats Defensive

strategies include: retrenchment strategy, downsizing strategy, and divestiture strategy and conglomerate diversification strategy

- When the vector is located in the quarter of competitive, the enterprise should

apply competitive strategies such as backward integration strategy, forward

integration strategy, horizontal integration strategy, market penetration strategy,

market development strategy, production development strategy, join-venturing

strategy, etc

1.2.2.3 QSPM matrix

In addition to the classification of strategies for the establishment of a priority list, according to the documents, there is only one set analysis techniques to determine the relative attraction of feasible strategies can be replaced This technique is the Quantitative Strategic Planning Matrix (QSPM), it is stage 3 of the analytical framework for strategy formulation This technique shows an objective alternative strategy is best QSPM Matrix uses input factors thank to the analysis in the first stage and the combined results of the analysis in stages 2 to ‘decide’ strategic objective weights that can be

Griccs) Group 7 - GaMBA.MOII1

Well as the tool to analyze the formation of other strategies, QSPM matrix requires good intuitive judgment

Advantages of OSPM matrix:

- The strategic groups can be studied at the same time There is no limit to the number of strategies can be studied at the same time when using QSPM matrix

- Requiring the strategists must internal and external appropriate factors into the

decision-making process QSPM matrix can be used for small and large

organizations, profit and non-profit and can fit almost any type of organization Disadvantages of OSPM matrix:

- QSPM Matrix requires to have judgment by intuition based on experience basis

- QSPM Matrix is only as good as the important information and analysis that

in Chapter 2 and proposing solutions to implement business strategy for the period 2013

Griccd Group 7 - GaMBA.M0III

CHAPTER II: ANALYSIS OF OPERATION REAL SITUATION OF VIET NAM

TECHNOLOGY - TRADING JOINT STOCK COMPANY

2.1 Overview of Viet Nam Technology — Trading Joint Stock Company

2.1.1 General introduction:

Viet Nam Technology — Trading Joint Stock Company operates under the business

registration license number of 0103007137 issued for the first time in April 27, 2005, and had seven times of changing of business registration to serve the business lines expanding needs, and change the appropriate office

The company is the exclusive distributor cf the medical gas system of C & U (Japan),

and is the jawful distributor of the company ERMA firm (Japan), Beacon Medaes (UK),

‘Terumo (Japan),

Headquarters: Hai Boi hamlet, Dong Anh District, Hanoi City

Transaction Name: Vinatech., JSC

Transactions office: P213, N3A Building, Le Van Luong Street, Thanh Xuan District,

And Branch Viet Nam Technical Trade Joint Stock Company

In: 286/22 Tran Hung Dao, Nguyen Cu Trinh Ward, District 1, Ho Chi Minh City

The main business sectors:

- Consulting and installation of medical gas systems

- Repair, maintenance, maintenance of medical equipment

- Materials sale, equipment, machinery and medical technology industry

- Production and technology transfer of medical equipment

- Consulting, installation, medical gas system design (not including work design)

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- Sale of laboratory chemicals, consumables (except chemicals banned State)

The company has earlier confirmed his position and reputation in the medical equipment

market in Vietnam Currently, the equipment to which the company has provided its

business in many hospitals and health centers across the country

2.2.2 Organizational structure of the Company:

Close organizational structure with specialized functional departments but always

support each other in a unified machine creates high efficiency:

Figure 2.1 Organizational structure of Vinatech

DIRECTOR OF HR DIRECTOR OF FINANCE

BUSINESS reece a TRANSACT TECHNIQUE DESIGN

Ị ql MANAGE, eee

DEPART DEPART DEPART DEPART BEARS FINANCE DEPART DEPART DEPART

The number of employees in the company:

The company has a staff that is bachelors and engineers are trained and have many years

experience including:

Total number of current employees: 56 people

In which:

- Manager Department: 05 people

- Engineering, warranty and repair service Department: 25 people

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- Business Department: 26 people

Main business products of the Company

The equipment and instruments for medical gas system of the C & U - Japan

Drager - Germany, Cryolor - France, Kingbell - China

- Machinery, equipment used in operating rooms and other medical specialties:

Ear-Nose-Throat, Tooth - Jaws - Face, Eyes, Emergency

- General operating table and dedicated operating table of TAKEUCHI Japan

- The equipment used in the laboratory of the Hettich - Germany

- Consumable medical materials of all kinds

- Sterilized steamer, centrifugal machine, dryers of Jencon firm, USA

- Sterilized Chemicals used in hospitals and laboratories

- Set of laparoscopic surgical instrument of Karl Storz firm - Germany, Microline Surgical America

Introduction of medical gas system

The applications of medical gas system play a very important role in the modern medicine Regarding investment and construction, medical gas system is considered as a system of construction work’s equipment and is installed at the construction of buildings

in hospitals The installment of the system needs to be carried out in accordance with the

planning of other systems in the buildings Regarding medicine, the medical gas system

is considered as a system supporting treatment, so it must be compatible with other supporting systems such as anesthesia machine, inspirator, etc and must be placed in convenient position to treat patients However, in the current conditions, investment in the domestic market is limited, so only the oxygen system is completed, while the compressed air and vacuum systems are only restricted at the pipes and spare drives on

the wall

At present, the Company is the sole agent to distribute the medical gas system of C&U firm — Japan, including all parts such as: oxygen gas system, compressed air system and peripheral device system

The medical gas systems supplied to Vietnam’s medical system are often required to meet the following conditions:

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+ Sufficiently and continually supplying medical gas with international standards

Standards used for reference are EN, DIN, BSI, and FDA The systems also have

to observe existing standards of Vietnam

+ The power supply system ensures extra load, upgradability and has a spare system

+ The operating model is medical gas supplying center — transmission, controlling,

alerting system — end system

+ The whole system must ensure synchrony and compatibility

+ Organizing the output for medical gas system reasonably, conveniently and aesthetically

+ Being an independent system in hospital and only being used for medical purposes

+ Equipments are selected from well-known manufacturers in Europe, the U.S., etc and are checked with the suitability for Vietnam’s conditions

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2.1.3 Operation process of Vinatech

Figure 2.2: Operation process of Vinatech

products

1

The company has earlier confirmed its position and reputation in the medical equipment

market in Vietnam Currently, the equipment of the Company has provided in many

hospitals and health centers across the country

2.1.4 Business activities results of the Company for the last 4 years

Table 2.1 Summary of financial data of Vinatech

7 | Profit after tax 1.655,732,108 3.502.472.486 1.184.517.871 141.674.348

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2.2 Analysis of factors that affect the strategy of Viet Nam Technology — Trading

Joint Stock Company

2.2.1 Analysis of the external environment

2.2.1.1 Analysis of the macro environment:

* Economic Environment:

Drastic implement of economic stabilization policies of the Vietnamese leaders has

helped macroeconomic environment to avoid a risk of recession Inflation (compared

with same periods) has fallen for nine consecutive months - from a peak of 23 percent in

August/2011 to 8.3% in May/2012 Stable macroeconomic environment has its price, but economic instability could lead to higher losses

GDP growth fell from 6.8 percent in 2010 to 5.9 percent in 2011, and further reduced to

4 percent in the first quarter of 2012 - when the state of rising prices has reduced the

demand in the country (Source: World Bank)

Vietnam has achieved significant progress If in the report about the global business environment "Best Countries for Business" in the September / 2010 of Forbes magazine, Vietnam dropped five levels to 118th out of 128 countries and territories rated in the end

of November, Vietnam is among ten best reforming economy according to Business environment reports in 2011 published by IFC and the World bank

Report on the September/2010 of Forbes, has highly assessed the Vietnamese economy

as well as the efforts of the Government in a market-oriented economic development and international integration Percentage of contribution in agriculture to GDP decreased from 25% in 2000 to 21% in 2009; poverty rate also declined in parallel with measures to stimulate economic growth is applied to deal with the global economic depression But according to assessment of the IFC and the World Bank, the improvements in simplifying business establishment procedures, construction permits, providing credit information helping Vietnam to become one of the best 10 reformation economies

when create favorable business conditions in 2010 (Source: VCCI)

The positively simplifying administrative procedures, business establishment procedures, registration license of assets and improve credit information has helped Vietnam to

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reduce the time, cost of real estate transfers and increased national competitiveness as

well as improved the investment environment

In particular, with one-door mechanism, Vietnam has facilitated for enterprises has just established associated with the business registration certificate procedures, tax codes and

cancel the stamp license regulations makes the number of enterprises established in

Vietnam increased rapidly and make the economy more eventful In addition, the decrease 50% fee for certification and jurisdiction transfer of ownership from local

authorities to the Department of Natural Resources and Environment has made the

construction lenience easier In addition, the credit information system is also improved, allowing borrowers to check their credit report and having the right of correcting false information

Investment from the state budget for health has increased sharply in the five years from

2005 to 2009 especially by government bonds leads public spending on health tends to increase significantly In 2005 the rate of public expenditure on health is only about 30%,

but in 2009 public spending on health care services has reached 45% In 2005, spending

on health care from the state budget was only 5.22% of the market in 2009 reached 8.2% Total health care spending rose from 5.9 percent of GDP in 2005 to around 6.7% of GDP

in 2009 (source: Statistical Yearbook 2009, Ministry of Health)

* The factors of social, cultural and human dignity

- In term of Social culture:

Vietnamese people's living standard have now been significantly improved resulting many people’s needs prefer to examine in major and modern hospitals with prestigious

and modern machinery to ensure accuracy and safety in results of medical examination

and treatment This makes the demand for the purchase of modern machinery increasingly Even in public and private hospitals, has created more opportunities for Vinatech to take part in sale to hospitals

Besides, some no good habits of people, social vices such as smoking, use of alcohol beer unreasonable diet, drug use, prostitution, domestic violence with although has improved significantly, it is still quite high compared with the average rate of the world and is one of the causes affecting the quality of life, health care conditions of the

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segment of the population is difficult According to statistics, about nearly 50% of the

enterprise objects do not participate in health insurance policy even though the State has

supported 50% of the health insurance shows that large parts of the low-income

population are more limited in their access to health care services

- In term of population and living standards:

Population growth rate and living standards is one of the major factors affecting the business and expand the sales market of medical equipment This is a factor that supply

labor source for the company and is factor decide the demand for using medical equipment Vietnam's population is growing at a rapid rate and is ranked 13th in the world, estimated at over 90 million people in 2011 With living standard quality is more and more improved and increasing life expectancy, the Vietnamese population will

continue to increase at a rate estimated to be 1.077% in 2011, and this is a great potential

market Due to the higher income people, spending for the life of the people has also increased especially demand for the care and protection of their health

The urbanization in recent years has attracted more and more migration from other provinces into cities to live makes the population density is very higher, land is

increasingly crowded, thus demand for medical care also increase dramatically

Currently almost all hospitals are overloaded, patients have to wait very long for their turn for examination and treatment, and there is not enough bed for lie

* Political, legal, government factors

- The legal factor:

The government has issued and continued to complete laws such as: law on foreign

investment, commerce, value added tax, income tax to accelerate the process of

economic reform Open economic policies have encouraged the development of the economic sector has been passed creating a favorable healthy and stable business

Griccd Group 7 - GaMBA.M0III

Investment law has opened up prospects for industries including the medical equipment

industry

Vietnam's legal system is increasingly and closely improved But there are still many

inconsistent, often change and a lack of uniformity in implementation between the competent authorities, the local therefore; it also caused no small impact on work efficiency of the enterprise

According to the directives No 06-CT/TW January 22, 2002 of the Party Central Committee on strengthening and improving the network of medical facilities, so that by

2010 there will be 80% of medical station with doctors and 100% villages with health officers with intermediate level or more, strengthening procurement of suitable medical

equipment for medical facilities

- Foreign affairs and political trends:

Vietnam is considered as country with a high stable political environment Stable political environment is creating favorable conditions for ensuring the environment for the development of enterprises in Vietnam Thereby creating peace of mind for foreign investors to invest in Vietnam

Vietnam expanded foreign policy with all countries in the world according to the trend of peace, cooperation and respect for the right of self-determination of peoples Thereby, create local enterprises the opportunities to communicate with foreign countries to learn

management experience and consuming market expansion

From 2002-2006, when the ASEAN established AFTA with general preferential tariff program CEPT to promote trade relations between ASEAN countries; including Vietnam will create opportunities and challenges for the enterprises in process of integration And joining the World Trade Organization WTO of Viet Nam has created a new milestone for Vietnam to participate in the general playing field of the world, to assert on the

international stage

* Technological factors

In recent years information technology develops dramatically and penetrates most areas

of activities and brings enormous efficiency Especially with the strong development of

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the nternet, e-commerce industry has become one of the important issues for enterprises

and consumers in the purchase and goods exchange

Conputer network technology has helped many enterprises to have interests in

commodity management, customer management, data analysis, debt collection becomes mor: efficient Technology contributes to upgrade management process and distribution system helps productivity and higher profits Rapid development of technology also mak: it possible for powerful high-tech machinery and equipment developed rapidly, to better meet the increasing demand for treatment, health care of people

2.3 2 Analysis of industrial environment (5 force model of Michael Porter)

+ Provider has branches or representative offices in Vietnam: For this type of provider when signing the contract, the payment method is easy because the two parties had agreed all the terms in the agent contract.Foreign suppliers: when import goods, the company must pay in advance in form of T/T or open a letter credit (L/C) Imported source mainly from Japan, Germany, France, the United States The major import items are higher-tech equipment, advanced technology, which cannot be produced such as: medical gas system equipment,

CT scanner, MRI, ultrasound, X-rays, the table surgery, surgical lamps,

endoscopic instruments, examination tables, monitor patient monitor, anesthesia machine to help breathing, brain power meter, incubator In which, the major supplier of the Company is C&U firm (Japan) which is specializing in supplying medical products, mainly medical gas system As the

Company is a prestigious distributor and is always highly appreciated by the

firm, and distributes medical gas system in a small-scaled market, so the firm

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sull wants to sell its products through the local agent (the Company) in the

short and medium-term and give maximum supports to the Company

- Domestic supply source: For this source is small machines and equipment such as

stainless steel, retail consumables, autoclaves, hatching cabinets, drying cabinets,

hospital beds, microscopes, medicines trolley, syringe, syringes, infusion wire,

cotton, bandages

This source has not high value, but the number of demand of hospital is great, the consumption material is always needed However, the company is difficult to manage the quality of these items Besides, there are also suppliers of some other important inputs They are logistics companies, banks providing financial services such as Vietcombank, MBbank, etc However, products and services of these suopliers are quite prevalent, while the Company has real strength and is operated ina sector with high growth, so it is prioritized and can be easily find alternative

suopliers in the market

Through analysis, it can be seen that pressure of suppliers on the Company is not high and the Company is prioritized and supported by suppliers

* Potential competitors:

Currently, the demand for the Clinical of people is high, there is demand there will be supply aad private hospitals, clinics which typical as the two major cities, Hanoi and Ho Chi Mina City In Ho Chi Minh City: Tim Tam Duc Hospital, Vu Anh Hospital, Phu Tho Hospital In Hanoi are: Dong Do Hospital, Bac Ha Hospital, Thang Long Hospital and also due to the easy licensing regime, number of small private companies trade in medical equipment are very large These new companies in terms of capacity cannot compete with Vinatech or Vimedimex, Machino in bidding reputation or equipment

purchase But the appearance of more and more such companies leading the equipment

market will shrink and more and more cluttered When they participate in bidding, competiton is very tough, dumping market to control market Their initial customers towards the initial private doctors, private clinics with expensive machinery and

minimize costs Eventually these companies will expand into the public hospital, and

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when they have capable of participating in the bidding, Vinatech will have great

difficulty in competing in price

Though analysis, we can see that competitive pressure from these potential competitors

is quite high and the Company needs to find the ways to raise quality of products and services to compete with competitors having advantages and price competitiveness

* Substitute products:

Main products that Vinatech distributes are medical gas system is used primarily in

medical treatment Medical gas system installation will help hospitals and medical

centers and facilities to replace the use of oxygen vase, unsafe oxygen generator, unsafe quality, unknown origin, and poor aesthetics However, the oxygen vase and the oxygen

generator still can be used in small medical facilities, households because of portability

and low cost The market that company orients is the hospital, center, major medical facilities, these products are hard to replace, compete with medical gas system with

safety, efficiency, quality and high aesthetics and uniformity

Through analysis, we can see competitive pressure from the substitute - oxygen cylinder

is not high thanks to outstanding advantages of medical gas system such as aesthetics,

security, quality, efficiency, etc Meanwhile, there have not been more modern substitutes which are suitable with technological conditions at present and in the short

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