development strategy of cam ranh port up to year 2015 2020 s vision

- Alfred Chandler, Harvard university : Business strategy is the determination of basic and long-term targets of a firm and in the same time is the selection of a mode or the process of

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GLOBAL ADVANCED MASTER OF BUSINESS

1 Pham Huu Tan

2 Nguyen Huy Phuong

3 Nguyen Van Thang

4 Bui Thi Le Thuy

INDEX

INTRODUCTION 6

CHAPTER 1: LITERATURE REVIEW AND PRACTICAL PREMISE FOR PLANNING THE BUSINESS OF SEA PORT EXPLOITATION 8

1.1 Theory overview on strategy administration 8

1.1.1 Concept, nature and characteristics of strategy administration 8

1.1.2 Role of strategy administration in a firm 8

1.1.3 Importance of strategy administration: 9

1.1.4 Strategy planning process 9

1.1.4.1 Stages of strategy management 9

1.1.4.2 Model of strategic management 10

1.1.5 Classification of business strategy 11

1.1.5.1 Strategic levels 11

1.1.5.2 Strategy types 11

1.2 Premise to build up a business strategy to a firm 13

1.2.1 Analysis of the external factor 13

1.2.1.1 General environment 13

1.2.1.2 Branch environment 15

1.2.2 Analysis of the internal factor of a firm 16

1.2.2.1 Personnel 17

1.2.2.2 Financing 17

1.2.2.3 Marketing 17

1.2.2.4 Administration activity 17

1.2.2.5 Information system 18

1.3 Tools to plan and select the strategy 18

1.3.1 Tools to plan strategy 18

1.3.1.1 External Factor Evaluation (EFE) 18

1.3.1.2 Internal Factor Evaluation (IFE) 19

1.3.1.3 Competitive Profile Matrix 20

1.3.1.4 SWOT analysis 20

1.3.1.5 Analysis of position strategy and evaluation of action (SPACE) 22 1.3.1.6 QSPM analysis of strategy planning 23

1.3.2 Some experiences in selection of business strategy 25

1.4 Theory on seaport and its services : 26

1.4.1.1 Concept on seaport 26

1.4.1.2 Classification of seaport 26

1.4.2 Functions and duties of a seaport 27

1.4.2.1 Functions 27

1.4.2.2 Duties of seaport 27

1.4.3 Technical material facilities of a seaport 28

1.4.3.1 The water part of a port normally consists of basin and fairway 28

1.4.3.2 The land part is mainly the yard, traffic system and workshop 28

1.4.3.3 The technical equipment of port may be divided in 6 masin groups 28 1.5 Development orientation of Viet Nam seaport 28

1.5.1 Development viewpoint 28

1.5.2 Target and orientation for development 29

CHAPTER 2: INTRODUCTION & ANALYSIS OF THE ACTUAL BUSINESS CONDITION OF CAM RANH PORT 30

2.1 Introduction on Cam Ranh port 30

2.1.1 Overview : 30

2.1.2 Summary on the formation-development process 31

2.1.3 Organization structure 31

2.2 Analysis of actual business organization and service supply conditions 33

2.2.1 Model and procedure of business organization 33

2.2.2 General results of business: 39

2.2.3 The current status about the labor management situation 45

2.3 Analysis of external factors 45

2.3.1 Analysis of macro environment 46

2.3.1.1 National economic situation in 2010 46

2.3.1.2 Economic situation in first 6 months in 2011 48

2.3.1.3 Political and legal situation 48

2.3.2 Analysis of sector environment 48

2.3.2.1 Advantages and restrictions of seaport industry 49

2.3.2.2 Allocation of goods output 50

2.3.2.3 Planning of Vietnam's seaport 51

2.3.2.4 Competition in sector 52

2.3.3 Analysis of competitors 54

2.3.3.1 Nha Trang port 54

2.3.3.3 Ports in Dong Nai and Vung Tau area 55

2.3.3.4 Cam Ranh Cement Port 55

2.3.3.5 The other competitors 55

2.4 Analysis of internal factors of Cam Ranh seaport 56

2.4.1 Managing 56

2.4.1.1 System of management, organization, human resources 56

2.4.1.2 Salary and bonus policy 56

2.4.1.3 Training and HR development activities 57

2.4.1.4 Corporate culture 57

2.4.2 Marketing 58

2.4.3 Financing - accounting 58

2.4.4 Investing: 58

2.4.5 Producing 60

2.4.6 Information system 60

2.4.7 The Potential of Cam Ranh Port 60

CHAPTER 3: STRATEGY AND SOLUTION PLANNING 62

3.1 Mission, target of development strategy up to 2015 – oriented up to year 2020 62

3.1.1 Mission 62

3.1.2 Target 62

3.2 Matrix application on the development strategy planning of Cam Ranh port: 62

3.2.1 External factor evaluation (EFE) 62

3.2.2 Internal factor evaluation (IFE) 65

3.2.3 Competitive Profile Matrix 67

3.2.4 Strengths-weaknesses-opportunities-threats analysis (SWOT) 68

3.2.5 Strategy position and activity evaluation analysis (SPACE) 73

3.2.6 Quantitative strategy planning matrix (QSPM) 74

3.2.7 Strategy selection for the company 82

3.3 Solutions on strategy performance: 83

3.3.1 Solution group on human resources 83

3.3.2 Solution group on Marketing 85

3.3.3 Solution group on Investing 86

3.3.4 Solution group on producing management strategy 87

3.3.6 Solution on restructuring company 88

3.3.7 Solution group on culture of company 89

3.4 The work of inspection and assessment 89

CONCLUSION 90

REFERENCES 91

Table list:

Table 1.1 : External factor evaluation – EFE 19

Table 1.2: Competitive Profile Matrix 19

Table 1.3: Internal factor evaluation – IFE 20

Table 1 4 : SWOT matrix 21

Table 1 5 : QSPM analysis 24

Table 2.1: Capital and property position 36

Table 2.2: Analysis of financial targets 39

Table 2.3: Analysis of key financial norms 39

Table 2.4: Scale and labor structure of the company in the latest 3 years 45

Table 3.1 : External factor evaluation (EFE) of Cam Ranh port 62

Table 3.2 : : Internal factor evaluation (IFE) of Cam Ranh port 65

Table 3.3 : SWOT analysis of Cam Ranh port 67

Table 3.4 : SPACE analysis of Cam Ranh port 68

Table 3.5: QSPM analysis of Cam Ranh port – SO strategy group 73

Table 3.6: QSPM analysis of Cam Ranh port – ST strategy group 74

Table 3.7: QSPM analysis of Cam Ranh port – WO strategy group 76

Table 3.8: QSPM analysis of Cam Ranh port – WT strategy group 77

Table 3.9 : QSPM analysis of Cam Ranh port - WT strategy group 79

Figure list: Figure 1-1 : Module of global strategy management 11

Figure 1-2 : Illustration of general factors 14

Figure 1-3 : SPACE matrix 22

Figure 2-1 Geographical position of Cam Ranh port 31

Figure 2-2: Organizational Model 33

Figure 2-3: Description of order process 34

Figure 2-4: Production plan 35

Figure 2-5: The development output by goods from 2007 to 2011 38

Figure 2-6: The revenue according to service over the years from 2007 to 2011 38

Figure 2-7 : Revenue – profits – paid to the State‟s budget from 2007 – 2011 42

Figure 2-8: Monthly inflation happening in 2010 47

Figure 2-9: Chart of commodity output through Viet Nam seaport 49

Figure 2-10: Chart of output distribution through 3 areas 51

INTRODUCTION:

The seaport is an important infra-structure of maritime economy, a terminal connecting various transportation means in a series of logistics, and contributes in determining the development and the marine economic growth speed of country The whole country owns more than 140 seaports, lying along the coast from North to South Many seaports are assessed having an international strategic position However the exploitation capacity of Viet Nam on seaport does not deserve its potentiality The seaport service activity is still spontaneous, small and lacks for cooperation resulting in inefficient exploitation of port and the handling capacity is not high as compared to the regional seaports Though the seaports are numerous but as their outputs are distributed unevenly: the ports at developed economic centers such as Hai Phong, Da Nang, Ho Chi Minh city get many commodities but as they are situated far from sea, then they have difficulty in receiving ships of big load The Central area has many advantageous locations to build the seaports , especially those of deep water but due to their slow economy development with very few industrial zones then the exploitation capacity can not reach the design target

Cam Ranh port which lies on Cam Ranh bay is one amongst 3 best bays in the world for seaport construction and is situated in the center of the Southern central part and the western highland Even having advantageous location and being the important gateway for the economic development in the region but the port size is still small The handling means are short and obsolete; the handled cargo mainly is bagged and loose one therefore the port exploitation efficiency is not high

Therefore the build up of Cam Ranh port development strategy at stage 2011 – 2015 oriented up to year 2020 is required to stabilize and develop the firm The port development strategy build up suits the Vietnamese seaport development planning and is necessary for the socio-economic development of the area

 Study target and application capacity

To study the current condition of firm, to analyze the market so as to get the plan for development investment, market expansion, quality improvement and service diversification, specific advantage exploitation so that Cam Ranh port

 Method of study and performance:

- Theory systematization: of strategy management, of theory on human resource management and on production management relating to service product

- Use of 2 study methods: to determine quality and quantity, based on the market study data, of forecasts made by maritime experts, of forecasts on use demand, of the branch growth speed, as well as to refer to some models of successful integral service management of certain ports in the area and in the country, to data published on the website of branches and industries such as General Department of Statistics, Maritime Department, Transportation and Communication Ministry

Subject content: consists of 3 chapters

 Chapter 1: Presentation of basic theories on the strategy build up relating to the study extent

 Chapter 2: Analysis of Cam Ranh port current business conditions

 Chapter 3: To buid up the development strategy of Cam Ranh port at stage

2011 – 2015 oriented up to year 2020

CHAPTER 1: THEORITICAL AND PRACTICAL PREMISE FOR

PLANNING THE BUSINESS OF SEAPORT EXPLOITATION

1.1 Theoritical overview on strategy management

1.1.1 Concept, nature and characteristics of strategy management

The business strategy is defined differently by various administrators This derives from different approaches of study

- Fred R David (2003) : Strategy is the means to achieve long- term targets

- Alfred Chandler, Harvard university : Business strategy is the determination of basic and long-term targets of a firm and in the same time is the selection of a mode or the process of an activity and a distribution of required resources aiming at performing these targets

- Michael E Porter : Strategy is the selection of what is necessary and unnecessary to do, and what is only suitable to a group of customer rather

to all the customers

In general, in spite of the difference in expression , the concepts on strategy imply the main following contents:

+ To determine the short-term and long-term targets of firm

+ To put forward and select the supporting solutions for achieving the targets

+ To deploy and distribute resources so as to carry out these targetss 1.1.2 Role of strategy management in a firm

The strategy management is the process of studying the current and future factors , planning the firm targets, putting forward, implementing and controlling the decision execution with the aim of achieving these targets in the current and future factors

- The business strategy helps the firm to see clearly the opportunities and advantages in business, to make full use of them so as to put forward the suitable strategies, policies aiming at achieving the defined targets

- The business strategy helps the administrators to forecast present and potential Since then, based on its potentiality , the firm is more proactive

in coping with these risks

- The business strategy helps the administrators to use effectively the available firm resources and to allocate them reasonably

- The business strategy combines the firm functions in the best way with the aim at achieving the common targets of firm

1.1.3 The importance of the strategy management is:

- To help the admistrators to be proactive before the factor changes: to know exploiting opportunities so as to relieve threats since then the administrators can bring out solutions, targets which accommodate to factors and achieve the firm targets

- To help the admistrators to care about and use effectively the resources (human , financial…) resulting in success and high profits in business

- To help the admistrators to fix the short-term development in the term background and focus the attention to both the productivity and the efficiency

long-1.1.4 Strategy planning process

1.1.4.1 Stages of strategy management

The strategy management includes 3 main stages which relate and support each other closely :

 Stage 1 : Stage of strategy formation

Is the process of setting up the business duties, performing study and research so as to determine the internal strengths, weaknesses; external opportunities, threats so as to put forward the long-term targets and to select the alternative strategies The analysis of the current condition shall

be based on realistic premises, reliable information – this is the first and important step for the success of a strategy

The strategy formation includes 3 basic activities : study conducting, intuition and analysis harmonizing , decision bringing forward

- Study conducting : To determine the important strengths and weaknesses

in the fields of functional business The internal factors may be determined following methods such as ratio calculation, achievement measurement, comparison versus the previous stages and versus the branch average Various surveys may be developed and performed so as to study the internal factors such as the personnel spirit, production efficiency, advertisement efficiency and the customer loyalty

- Intuition and analysis harmonizing : There are many techniques in strategy management which help strategists to unify intuition and analysis in bringing forward and selecting the feasible strategy alternatives, for example: Boston Consultant Group (BCG) matrix, strategic position and

- Decision bringing forward : The decisions in the process of strategy formation will fix firm to its products, markets, specific resources and technologies in a prolonged period The strategic decisions will affect long

or better or worse to the firm The strategists need to have long and best view so as to understand fully the sub-branches of the decision formation

 Stage 2 : Stage of strategy performance

Is the process of deploying the strategic targets and the firm activities The art of using the internal and external factors at the optimum, of creating a shortest route with cheapest and most effective expenses Three basic activities of strategy performance are :

- To establish annual targets;

- To bring forward the policies;

- To allocate resources

 Stage 3 : Stage of strategy evaluation

Is the process of evaluation, result control, solution finding so as to accommodate the strategy to the factor situation To supervise the strategy performance through every stage, to analyze the right and the wrong, the suitable and the non-suitable so as to repair timely The supervision needs

to be made regularly and continuously with the main activities as follows :

- To consider the factors which are premises of current strategies;

1.1.4.2 Model of strategic management :

The strategic management process may be studied and applied in the model usage Each model represents a certain kind of model The illustration

in Figure 1.1 is an exhaustive management model being recognized widely The model does not ensure success, but it represents a clear and practical method in the formation, the performance and evaluation of the strategies

1.1.5 Classification of business strategy

There are various strategies in a firm; subject to its level or approach the business strategy may be classified as follows:

1.1.5.1 Strategic levels

As regards level, a firm gets minimum 3 following strategic levels:

- Strategy at the firm level : It directs to the target and the overall extent of the firm

- Strategy at the business unit level : It relates to the successful competition method in specific markets

- Functional strategy (or activity strategy) : is the ones which help the strategies at business level and at firm level to carry out effectively thanks

to the elements forming on the aspect of resources, human process and necessary skills

ơ Allocation

of resources

Redetermining the business target

Analysis of internal factor

Identifying strengths, weaknesses

ơ

Selection

of strategies

to be performed

ơ

Bringing forward the policies

Strategy planning Strategy performance Quality evaluation

ơ Measure- ment and evaluation

of the strategic performan -ce

ơ Long-term target setting up

ơ

Annual target setting up

Figure 1-1 : Model of global strategic management

In a globalized environment of violent competition, the boundaries between the countries are almost deleted, therefore there is the fourth strategy presence which is the global one

1.1.5.2 Strategy types

 Strategy at firm level

The firm level strategy is normally directed to the basic long-term target therefore there are many firm level strategies with different names As per Fred R David, there are 14 types of basic firm level strategy which are classified into 4 groups as follows:

- Integrated strategy group

 Business unit level strategy

The business unit level strategy relates to the successful competition method in the specific markets The business strategy includes the competition method selected by the firm, the method of locating in the market so as to achieve the advantage in competition and other locating strategies which may

be used in the background of the industry

As per Michael E Porter, at the business unit level there are 3 general strategies of competition:

- Strategy of differentiated product

- Concentrated strategy

 Strategy at functional level

Strategy at functional level is the one pertaining to the functional units such

as Marketing, financing, human resources et cetera vv…These strategies will help improve the activity efficiency of the firm and support the business strategies, the firm level strategies to be performed effectively

1.2 Premise for firm business strategy buildup

1.2.1 Analysis of external factors

External environment is a system of complicated factors containing both opportunities and risks affecting the firm activities at different levels Even the size of resources is potentially big, the firm may not face all environmental occurrences Since then, when performing the external factor analysis, the administrators want to develop an opportunity list which may bring profits to the firm, risks or threats that the firm needs to take measures for prevention or avoidance The external environment includes: the general environment and the branch environment

1.2.1.1 General environment

The factors of general environment are aspects in the society which affect a trade and the branch firms including : population; economy; politics; law; social culture; global technology which are illustrated in Figure 1 2

- Economic environment:

This environmental impact is more direct and dynamic versus other factors of the general environment The happenings of macroscopic economy always contain different opportunities and threats to every firm of different trades and affect potentially their strategies Some basic factors which are most cared about: gross domestic product (GDP) and gross national product (GNP) trend; interest and interest trend; foreign payment balance; inflation margin; taxation and tax rate

- Socio-cultural environment:

Including essential factors such as concepts on ethics, life, habits and customs, concerns and preferences of society, awareness level, common learning of society

- Political and legal environment:

Including the system of viewpoints, policy of the Party and State legislature Besides, the diplomatic policy trend of the Government, the

Branch environment

Threats from new firms

Supplier‟s power Customer‟s power Threats from replaced products Competition intensity

Competition environment

Economy

Population

Social culture

Global Politics,

legislature

Technology

Figure 1-2 : Illustration of general environment

political happenings in and out the country need also to be thoroughly understood

- Population environment:

The population scale affect seriously almost all products, services, markets and the consumers Long time ago, the firms have recognized the impacts of natural circumstances on their business decisions Main impacts are : population scale, age structure, geographical allocation, racial diversity, income distribution, climate, pollution, energy shortage and wasteful use of natural resources and the increase of demand in natural resources

- Technological environment:

The technological impacts create opportunities as well risks in the process of firm strategy management The technical progress may create new markets, which turn the present products and services to be outdated This environment affect strongly the relevant producers such as telecommunications, informatics, information…

- Global environment:

In the global environment, the changes in the society and the global economy are created by the daily increasing connections made by countries, organizations or individuals at the angle of culture, economy… Main impacts are : important political events, main global markets, newly industrialized countries, differences between cultural characteristics and institution

1.2.1.2 Branch environment

Each branch has its specific characteristics,; firms of the same trade must enquire about the characteristics of its trade; besides they must analyze the trade factors and other trade units which affect directly them Since then they will consider where is opportunity and where is threat so as to apply the suitable strategies The factors in the trade environment include mainly:

- Competition rival: During the process of competition rival study, we must care about matters and must respond the questions such as :

+ What the competition rival would like to achieve?

+ What the competition rival is doing and may do?

+ How is the rival‟s ability to convert and to redirect his strategy?

+ What is the rival‟s weakness?

+ What will help the competition rival to retaliate strongly and effectively?

- Customer: The customer will decide the firm existence Its credit may

be the most valuable property of a firm This credit will be obtained since the firm know how to satisfy the best the customer‟s needs and predilection as compared to its competition rival

- Supplier: The supplier may assert his power by threat of price increase

or quality decrease of products or supplied services He will have more advantages if he gets following conditions: when there is only a small number of supplier to a huge number of purchaser in the same trade, when the product re placement is not available, when the supplier‟s commodities or services are the essential ones with high specialized level, when the supplier issues the reliable threat signal that he will integrate in the future

- Implicit rival: The freshly joined rival in the trade may be a factor of profit decrease as he brings in and exploit new producing capacity with the aim at disputing the necessary market share and resources Therefore, the protection of a firm for his position in the competition includes the maintenance of a legal barrier preventing any penetration from outside

- Product replacement : The product replacements will decrease the potential profit of the trade by imposing a ceiling as regards the price which may be exposed by firm of the same trade in the extent of profit gaining

1.2.2 Internal factor analysis of firm

The internal factor analysis is the premise helping a firm to know clearly its strengths as well weaknesses as compared to its competition rival, helping the administrators to know the ability of seỉzing the competition advantage in each period

The functional internal factors include: personnel, financing, marketing, administration activity, information system

1.2.2.1 Personnel

In a current business environment which is increasingly fluctuated, the firm personnel has an important role in the process of performing the strategies, and contributes to the firm success or failure If the strategies are right, promising and feasible but the personnel in this firm is unable to perform then the strategies brought forward are ineffective

1.2.2.2 Financing

The financial conditions are normally considered as a method which evaluates the best competition position of a firm and are the conditions which attract the most of investor To achieve more results, the strategies need to determined the financial strengths and weaknesses of a firm This will be realized in the analysis of some basic financial criteria such as paying capacity, property structure, capital structure, rate of return

- Organizing: includes all administration activities which create the connection between power and responsibilities Specifically are the design-organization, work specialization, work description, work detailing, supervision expansion , instruction unifying , arrangement combining, work design and work analysis

- Leading : includes the effort in orienting the human activity such as leading, liaising al work groups, changing activities, assigning, improving the work quality, work and demand satisfying, changing the organization, the personnel spirit and the administrative mind

- Supervising : relates to all administrative activities so as to ensure the

Main activities are: quality supervision, financial supervision, supervision

of sales, stored commodities, and expenses, analysis of changes, bonus and fine

1.2.2.5 Information system

The information will connect all functions in the business and supply premise to all administrative decisions It is the basis of all organizations It shows essential competition disadvantages or advantages Assessment of strengths or weaknesses on the internal information of a firm is an important aspect of the performance of the internal supervision The information system

is the important strategy source which tracks the environmental change, recognizes the threats in competition and supports the performance, the assessment and the control of strategy

1.3 Tools for strategy planning and selection

1.3.1 Tools for strategy planning

1.3.1.1 External factor evaluation (EFE)

The buildup of the external factor evaluation will help us to summarize and quantify the impacts of external factors on the firm; it will affect the business production activities of a firm; including opportunities and challenges

to the firm

To build up the matrix, we will proceed with a list stating all external factors which affect the firm activity To assess the important level of every factor by marking weighted point; the total weighted points of all factors equals to 1 The classification shows the equivalent importance of these factors

as regards the success of the firm business trade

The importance of every factor will be evaluated by classifying factors from 1 to 4 in which: level 4 is the level where the firm gets best reaction; 3 is the level over the average; 2 is average level and 1 is the lowest one These levels are based on the strategic efficiency of a firm

Next the point showing the importance of each factor will be determined by multiplying the importance with the respective classified point Then, add up the total important points to each variable so as to determine the total important points of the firm: the highest is 4 , the lowest is 1 and the average is 2,5 point

The total important point of 4 shows that the firm is making good use of the external opportunity and controlling successfully or minimizing to the

utmost the external threats The total important point of 1 shows that the firm

is not making full use of opportunity and cannot minimize the threats from external factors

Table 1.1 : External factor evaluation – EFE Các yếu tố

bên ngoài

Importance Classification Important point

Liệt kê các yếu tố

bên ngoài

Total

1.3.1.2 Competitive Profile Matrix

This matrix is the extension of the evaluation matrix of external factors

in the case the importance, the classification and the total important ratings have the same meaning

The total ratings evaluated of the competitors are compared with that of the reviewed company, the ratings of the competitors‟ companies can be compared with that of the reviewed company This analysis and comparison will provide importantly strategic information These factors include: market share, competitiveness, financial position, product quality, customers‟ loyalty

The ratings show the way that the company‟s strategies to deal with each factor: 4 is good, 3 is above average, 2 is average and 1 is weak

Table 1.2: Competitive Profile Matrix

The reviewed company Competitor‟s company 1 Competitor‟s company 2

The success factors The importance Rank The important ratings

Rank The important ratings

Rank The important ratings

1.3.1.3 Internal factor evaluation (IFE)

The buildup of the internal factor evaluation will help us to summarize, assess the important strengths and weaknesses of the functional business units

It affects the firm business production activity

To build up the matrix, we will proceed with a list stating all internal factors which may affect the firm business production activity as defined in the internal assessment of the firm To assess the importance of each factor by marking weighted point; the total weighted point of all factors equals to 1 The classification shows the respective importance of all these factors as regards the success in the firm industry

To assess the importance of each factor by classifying the factors from

1 to 4 in which level 4 is the level where the firm gets best reaction; 3 is the level over the average; 2 is average level and 1 is the lowest one These levels are based on the strategic efficiency of a firm

Next the point showing the importance of each factor will be determined by multiplying the importance with the respective classified point Then, add up the total important points to each variable so as to determine the total important points of the firm: the highest is 4 , the lowest is 1 and the average is 2,5 point

The total important point of 4 shows that the firm is getting strengths and may make good for weaknesses Adversely the total important point of 1 shows that the firm has no strengths and gets many weaknesses which cannot

be repaired

Table 1.3: Internal factor evaluation - IFE Internal factors Importance Classification Important point List of internal

factors Total

1.3.1.4 SWOT evaluation

SWOT matrix is an important combined tool which helps the administrator develop 4 types of strategy :

- Strategy of strengths - opportunity (SO)

- Strategy of weaknesses– opportunity (WO)

- Strategy of strengths – weaknesses (ST)

- Strategy of weaknesses – weaknesses (WT)

The combination of internal and external factors is the most difficult duty of the SWOT matrix development; it requires a good judgment and there will not be a good combination

The SO strategy uses the internal strengths of a firm to make full use of the external opportunities Normally the establishments will pursue the

WO, ST or WT strategy so that they are in the position where they can apply SO strategy

The WO strategies aim at improving the internal weaknesses by making full use of the external opportunities Sometimes the big external

opportunities are existing but as the firm is having internal weaknesses which prevent it to exploit these opportunities

The ST strategies use the firm strengths to avoid or minimize the impacts from external threats

The WT strategies are the defensive ones with the aim at minimizing the internal weaknesses and at avoiding the external threats

The chart of SWOT matrix includes 9 squares in which 4 contain the important factors (S, W, O, T), 4 contain (SO, ST, WO, WT), 1 empty square at the right top

Table 1.4 : SWOT matrix

(2+3)

WT strategies

- Minimizing the Weaknesses to avoid threats

(2+4)

Factors need to be listed adequately, exactly and be shown the strengths , the weaknesses as well as the threats coped with in the process of strategy performance This is the important premise in the strategy selection to the firm

1.3.1.5 Matrix is a strategic position which evaluates the action (SPACE)

The matrix which locates the strategy and evaluates the action SPACE (The strategic Position & Action Evaluation matrix) is an administrative tool which is used to analyze the strategy It is used to determine what type of strategy the firm should perform

Figure 1-3 : SPACE matrix

As illustrated in the figure, SPACE matrix divides the coordinate plane into 4

quadrant angles, each quadrant angle represents each different strategy type:

The development steps of SPACE matrix are as follows:

+ Step 1: To select a variable group of financial strengths, competitive advantage, environmental stability and internal strengths

+ Step 2: To fix a value from +1 to +6 respective to worst and best variables which create FS and IS Similarly to fix the value from -1 to -6 respective to best and worst variables which create ES and CA On the axes of FS and CA make a comparison with the rival; on axes of ES and

IS make a comparison with other trades

ES

CA

+ Step 3: Calculating the average point to FS, CA, IS and ES by adding the given values to the variables and then dividing to variables

+ Step 4: Marking the average point to FS, IS, ES and CA on respective axes of SPACE matrix

+ Step 5: Adding 2 points of axis x and marking resulting point on X Adding 2 points on axis y and marking resulting point on Y Marking the intersection point of 2 new points on this axis xy

+ Step 6: Drawing vector with direction from original point of SPACE matrix through the new intersection point This vector represents the strategy type to the firm

1.3.1.6 Matrix planning the strategy QSPM

QSPM matrix aims at evaluating and ranking the strategic project since then we have ground to select the best strategies to the firm

This matrix will use all information, data from matrixes stated above

as follows: IFE and EFE matrix, competitive figure matrix, SWOT matrix, SPACE matrix

To build up, develop and form QSPM matrix, we need to proceed with

6 steps as follows:

+ Step 1: Listing the internal strengths-weaknesses and external opportunities – threats in the left square These information should be taken from EFE and IFE matrix

+ Step 2: Classifying each internal-external important factor The classification will be similar to EFE and IFE matrix

+ Step 3: Determining this strategy may be replaced and the firm should consider for performance The strategies will be formed and gathered into separate group

+ Step 4: Determining the attractive point (AS) is the quantification of the relative attractiveness of each strategy in a group of strategies which may be replaced The attractive point is determined by considering the impact level on the selection of strategies which are being assessed through every internal-external important factor The attractive point is allocated to each strategy to show the relative attractiveness of each strategy as compared to other strategies The attractive point is classified

as follows: 1 – non-attractive, 2 – few attractive, 3 – quite attractive, 4 –

very attractive Should any factor not affect the selection then it will not be marked and this line will be left empty

+ Step 5: Totalizing the attractive point (TAS) Multiplying the classified point with the attractive point in each line If calculating only the impact of internal or external factors being considered, TAS shows the relative attractiveness of each strategy and if TAS is more and more high then the strategy is more attractive

+ Step 6: Totalizing the attractive points Adding the attractive point to each strategy The total point of each strategy will show what strategy is the most attractive in each strategic group

Attractive point

Total point

Attractive point

Total point Internal

Note : Classification of external factors: 1 – less reaction, 2 – average reaction, 3 – reaction higher than average, 4 – highest reaction Classification of internal factors : 1 – weakest, 2 – slightly weak, 3 – slightly strongest, 4 – strongest

QSPM matrix has many strengths such as helping to combine the internal-external suitable factors into the decisive process; the strategic groups may be studied continuously or simultaneously without limiting the number of strategies to be assessed but it also has some limitations such as: The performance of QSPM matrix requires an intuitive judgment and basing on experiences The discussion between administrators, staff in the analysis and strategy selection process may arise many different opinions

1.3.2 Some experiences in the business strategy selection

The buildup of a business strategy to a firm is not simple as it is subject

to many factors in the past, the present as well as the future forecasting Besides it is also subject to the trade, the business field of the firm In the process of enquiring, analyzing the document on the buildup of a business strategy to a firm, we can get the following experiences :

- Initially we need to get a suitable process of building up a business strategy to the firm

- The defined targets shall be suitable to the firm condition and to the external factors

- Collecting, analyzing all information so as to determine what advantages

of firm need to be exploited and what weaknesses need to be repaired

- Assessing opportunities and threats of firm in the market

- Focusing in the strategies which give the most outcome to the firm; as well as ensuring the uniformity between strategies and the performing solutions

1.4 Theory on seaport and seaport service :

1.4.1 Concept and classification of seaport

1.4.1.1 Concept on seaport

Seaport is a region including the port land and the port water which is built with infra-structure and is equipped with equipment allowing ship to come in and out for cargo handling, customer receiving – returning and other service supply

The seaport is the location where sea ships come in-out and moor, where ships receive service and load -unload cargo or shipment and is an important terminal in the transportation system

The port land is the land which is limited for the construction of dock,

store yard, workshop, office, service establishment, transport system, communication system, power and water, other ancillary facilities and equipment fixing

The port water is the water which is limited for establishing a water

before the dock, where ship can turn around, moor, transfer load, avoid storm, receive and return pilot, a quarantine anchorage and is an area where the seaport flow and other ancillary facilities are built

The seaport flow is the water from sea coming to the port which is

defined by the maritime signaling system and other ancillary facilities so as to ensure the sea ships sand other maritime can come in and out the port safely 1.4.1.2 Classification of seaport

Based on the norm and different viewpoint, the seaport may be classified subject to the following criteria:

- Function: cargo port, client port, industrial port, fish port, sportive port, military port

- Exploitation: general and dedicated port

- Nature: natural and artificial port

- Maritime condition: port will be classified into port with or without tidal regime, frozen or unfrozen port

- Construction technique: open or closed port, port with or withour access bridge

- Administration: national port, regional port and private port

- Cargo traffic: locality port, regional port and international port

1.4.2 Function and duties of seaport

1.4.2.1 Function

When using the standard of port use , the seaport function may be divided in: transport, commerce, industry When using the standard of space, the function may be divided in function of city construction and of locality construction

- Transport function: this is a long dated function of seaport attached to the apparition of a seaport system, with the meaning of a transport link and the representation of a quantity of cargo being handled on the seaports

- Commercial function: with a meaning in the commodity exchange, selling- buying and transactions This function leads to the signing of commercial contracts, commodity exchange and promote the development of other commercial branches

- Industrial function: having a history taking source from handicraft workshops and industrial factories The seaport is the advantageous center for the positioning of industrial zones with the aim of saving the transport cost

- Function of city and locality construction: this function shows a relationship of the spatial and social characteristics between the seaport and the city through operations of transport, commerce and industry Port will promote the formation and development of the locality and the city 1.4.2.2 Duties of seaport:

- Main duties in the production operation of a port are:

+ Loading-unloading commodities from sea transport means into other transport means or vice versa

+ Storing, bagging and commodity maintenance

+ Delivery of commodity between transport means

+ Supply of victuals, freshwater, fuel to ship

+ To proceed with the pilot and towage so that ship may come in-out the port

+ To perform the rescue and to be the refuge to ship

+ Technical control and repair of the transport means

+ Other services

1.4.3 Material and technical basis of seaport

The boundary of a seaport normally consists of 2 parts: water and land On each part of the port are certain buildings and equipment

1.4.3.1 The water part of a port normally consists of basin and fairway

1.4.3.2 The land part is mainly the yard, traffic system and workshop

1.4.3.3 The technical equipment of port may be divided in 6 masin groups:

- Technical equipment to serve ship come in-out, moorage including

- Equipment for cargo handling This is the most important technical factor

in the production operation of a port It decides the handling capacity and the abililty of customs clearance of a port

- Equipment for containing and maintaining the commodity Total area of yard, layout of warehouse, equipment inside the yard…

- Traffic system in the port and the method connecting the inland transport system will decide the extent of logistical service of port

- The communication system, lighting, power and water supply…

- Floating equipment such as floating crane, tug boat, canoe…

1.5 Development orientation of Vietnamese seaport

As per Decision no 2190/QĐ-TTg dated 24/12/2009 by the Government approving the development planning of the Vietnamese seaport system up to year 2020, orienting up to year 2030 with main contents as follows:

1.5.1 Development viewpoint

- Make use at the utmost of the geographical location and natural conditions

so as to expand wholly the seaport system, to break through the modernization , to rapidly integrate into the advanced countries of the areas as regards the seaport field with the aim at contributing to the implementation of the Vietnamese sea strategy target up to year 2020, to bring gradually the maritime economy to be the leading spearhead in 5 sea economic fields and in the same time to strengthen the security and defence of the country;

- To develop rationally between the general ports of the country, dedicated ports, local port so as to ensure the uniformity in the whole system To attach special concern in developing the deep water ports in 3 regions at North, Centre and South and in creating doors to communicate with the adjoining countries in the area; to consolidate, improve and expand step

by step the other ports; to have more concern on the maintenance work so

as to ensure the synchronous and effective exploitation ;

- To develop in a synchronous way the seaport and the infra-structure in the back of port, the seaport structural infra-structure and the public infra-structure which connects to the seaport To take more concern in ensuring the uninterrupted connection between the seaport, the national traffic network and the logistic terminal in the area

1.5.2 Target and orientation for development

- Common target:

To develop the seaport system following the master plan and unified plan with scale in the whole country so as to meet the demand on industrialization, modernization of the country ; to create the material and technical basis so as to bring our country integrating into the regional countries and be able to compete in the seaport operations with the regional and international ; to assert the position and advantage on the national sea economy; to contribute in the same time in ensuring the state security and defence To form the terminal in economical exchange with the international countries as a motive for the development of the coastal economic , urban and industrial zones

CHAPTER 2: INTRODUCTION & ANALYSIS OF THE BUSINESS STATUS

OF CAM RANH PORT 2.1 Introduce about Cam Ranh Port

2.1.1 General introduction:

Company Name (Vietnamese): CONG TY TNHH MTV CANG CAM RANH

Company Name (English): CAM RANH PORT LIMITED LIABILITY COMPANY

Abbreviated transaction name (Vietnamese) : CANG CAM RANH

Abbreviated transaction name (English) : CAM RANH PORT

Head office address: 29 Nguyen Trong Ky - Cam Ranh City - Khanh Hoa province

Business activities: seaport operation

Tel: 058 3854307 – 3854565 Fax: 058 3854536

Email: mail@camranhport.vn

Website: http://www.camranhport.vn

Operation field: service provision

Scale: small and medium business – Charter capital: 65 billion dongs

Statement of Compliance of a Port Facility no.: ISPS/SoCPF/024/VN issued on: 10/7/2009

In the Maritime Management Zone of Nha Trang Port Authority

Port‟s location (longitude, latitude): 11054‟N – 109009‟E

Pilot boarding position (longitude, latitude): 11048.5‟N – 109012.5‟E

Tidal regime: semi-diurnal (Average tidal range 1.5 m)

The Port operates round the clock, 7 days a week

The major infrastructure:

- The main wharf: 182 meters, the depth alongside berth is 12 meters for vessels of 30,000 DWT The design capacity is to receive goods of 1 million tons / year

- Turnaround equipment: a crane of 40 tons and 5 cranes of 20 - 25 tons

- Warehouse: 12 sq meters of standard warehouse and 40,000 sq meters for storing bulk goods

- The area of land planned for using: 89 hectares

Cam Ranh port is the international trade port in Cam Ranh bay in Khanh Hoa province, it is one of three good and beautiful natural bays in the world, about 60 kilometers away from Nha Trang City to the South The Port‟s location is the

concentration of the natural conditions that are very favorable for the development of seaport service such as: The bay area is nearly 60 sq kilometers, calm wind and wave The tidal regime is semi-diurnal (Average tidal range 1.5 m), deep water, the average depth is 18-30m, the alluvial is not much, it is located near the international maritime route and Cam Ranh airport, 1.5 km far away from National Highway 1A and 3 km far away from the north - south railway, 20km far away from Cam Ranh International Airport so a long time ago, it has been the important seaway transport for the area in the South of Khanh Hoa and the center of the coastal provinces in South Central and some neighboring Central Highlands provinces

Figure 2-1 The geographical location of Cam Ranh port

2.1.2 Summary of the establishment and development process:

- Cam Ranh Port Limited Liability Company, formerly known as Ba Ngoi port, was established under Decision no 589/QD-UB dated 30/05/1991 of Khanh Hoa province People‟s Committee; it is State-owned Company, directly under Khanh Hoa province People‟s Committee

- On 31/10/2007, Ba Ngoi port was transferred into State-owned company, independent cost-accounting company, directly under Vietnam National

22/10/2007 of Khanh Hoa province People‟s Committee and Decision no 1070/QD-HDQT dated 24/10/2007 of the Board of Directors of Vietnam National Shipping Lines

- On 16/01/2009, Minister of Transport issued Decision no 168/QD-BGTVT on transferring Ba Ngoi port, independent cost-accounting company, directly under Vietnam National Shipping Lines (Vinalines), into Cam Ranh Port Limited Liability Company

 Discrimination between Cam Ranh Port and Cam Ranh Military Port

Cam Ranh with its unusually favourable position on the coast of South China Sea and the international maritime route, of course, plays an important role in the military affairs Hence, it cannot be denied that the presence of a military port along with a trading port for economic development has become an indispensable part to the construction and defence of our country Cam Ranh Port and Cam Ranh Military Port are both located in Cam Ranh Bay with the same seaport and maritime passage but with a specific boundary

- Cam Ranh Port (previously known as Cam Ranh Trading Port, Ba Ngoi Port) had been an international trading port located in the west of Cam Ranh Bay and built by the Frenchmen since 1922 for the purpose of their colonial exploitation; until 1971, it was repaired and upgraded by Americans so it was capable of accommodating 5,000 DWT vessels After

1975, through 03 stages of investment in a wharf of 182 meters in length,

it has been capable of accommodating 30,000 DWT vessels

- Cam Ranh Military Port (in other words, Cam Ranh Naval Base): is located in the east of Cam Ranh Bay, all of the wharves and the ordnance depot behind the port belong to the Cam Ranh Peninsula Cam Ranh Military Port had been built by the Frenchmen at the end of the 19th century for its main use in the national defence Until 1965, the American Military built Cam Ranh Military Port; after 1975, it has been developed into Cam Ranh Naval Base by the Vietnamese Military

General Director

Deputy General Directors

Technology department

Salary organization dept

Direct Production Company

TURNAROUND enterprise Trading & service enterprise

2.2.1 The model and process of the business organization:

The seaport has the main function of receiving and delivering goods through the port The company operates in form of service The main products are: turnaround, storage, transport, and wharf The process of exploitation service provision can be described through the following model:

The organizational characteristics of the operation type of seaport development service and the operation process of the service development production related to the general planning operation and production schedule:

Product Characteristics: The product is intangible, the production and consumption are simultaneous, and there is no reservation or unfinished product It is difficult to measure the quality; it is usually unique and often interacts with customers at high level The constituent factor of production is not clearly defined, it much bases on knowledge, and often heterogeneous

Port costs Turnaround

Business Characteristics: The revenue is mainly from intangible factors, in which the sales is the main part of the service, the sellers, not the service, usually have to move, the serving position and volume are decided by customers It is difficult for the automation The port development service highly depends on the seasonal characteristics and weather

Contract (1)

Demand confirmation (3)

Supplier‟s information

Company‟s existing quantity

Existing preparation

Outsourcing Quantity

ACCOUNTING DEPT

Outsourcing cost – Revenue - Debt

The demonstration schedule of laborer, equipment and warehouse

Outsourcing order (4)

TURNAROUND – SERVICE ENTERPRISE

Development order (5) Confirmation (2)

Labor and equipment supplier

Product name Quantity

Contract value

Result Synthetic Department

Development order (5)

Development order (5)

Development demonstration

Accounting the use of internal labor & equipment

Order accounting Outsourcing accounting

Demand

+ The basis for general plan of the Company: forecast and principle contracts of the beginning of the year

Figure 2-4: Production plan

 The characteristics for establishing general plan of port service industry:

- The general plan establishment is relatively complex: Including the vessel turn, the quantity and categories of goods, the distribution by the operation process of laborers and equipment, shifts in the day

- The resources are distributed through the whole system

- The control of labor costs is the key issue in the general plan establishment:

Production capacity plan

- Equipment

- Labor

- Wharf

- Warehouse

Production demonstration plan

Reservation demand plan

customers‟ demands; Having ready reservation resources to meet the unexpected demand beyond the expectation; Being flexible for the skills of the workers; Being flexible for the output or working time

 The general business results:

Table 2.1: Output and revenue by goods (2007-2011)

1 Main services

million dong 24,167 27,285 32,336 46,455 55,810

- Loading & million 17,273 19,065 20,985 27,650 30,826

unloading dong

- Transport

million dong 2,447 2,613 4,376 9,771 15,467

- Warehouse

for rent

million dong 1,470 1,677 3,314 3,900 3,857

- Port costs

million dong 2,977 3,930 3,661 5,134 5,660

2 The sub

services

million dong 8,025 10,893 11,663 12,455 19,689

- Fuel supply

million dong 4,610 6,321 7,146 8,183 14,489

Figure 2-5: The development output by goods from 2007 to 2011 (million tons)

The density and growth rate of the export goods are high, the domestic products tend not to grow There is no import goods

Figure 2-6: The revenue according to service over the years from 2007 to 2011

(million dongs)

The data from the figure and chart shows that the volume of goods turnaround

at the port has average growth rate, about 8.5% per year The average turnaround output is 5.5 tons / person / year With the capacity through the port as mentioned above, we can see the development effectiveness of existing equipment and technical facilities and infrastructure of the port is very good (in 2011 it develops over 1.5 million tons / year, reach 150% design capacity

of the wharf) This is the strengths in human resources and labor skills of the company, but it also clearly shows the difficulty to be solved that is the the overload to the current infrastructure

The goods market at Cam Ranh port is not diversified, of which 2/3 are export goods (only mineral in bulk and agricultural products with the preliminary treatment) that area exported to the South Asian market (Korea, Japan, China)

At the port, there is no container goods and import goods is not much This is because of the receiving infrastructure capacity of the port and not knowing the good importers Domestic products account for one third of total output and tend to grow more slowly than export products (see the output chart by goods), it is mainly that cement, coal and clinker from the North; agricultural products and salt from the Central to the North Although the port is located in the South Central region and the neighboring South Highlands, it has not developed the big source of agricultural products, aquatic products for export

in this region (coffee, aquatic products are transported by road to Ho Chi Minh city or Quy Nhon port)

The main customers and partners of the port are the goods owners, vessel owners in the Northern area and the Shipping agencies in the Central and Ho Chi Minh City (representing the foreign vessel owners) Apart from the main services of turnaround, transport, warehouse, port costs, there are some other sub services providing the facilities to the vessel owners (power, water, fuel ) The growth rate of total revenue and each type of service has doubled within the past 5 years (2007-2011), but the currently average development unit price of 48.5 thousand dongs / ton is lower than the average level of the port industry This proves that as compared to the customers‟ demands, the port has not diversified the services and the port has few services creating added value This is the weakness that needs to be improved in the port‟s development strategy

2.2.2 The financial situation:

Table 2.2: The situation of capital, assets and business results through 5 years from

2007 to 2011

(From the source of financial statement independently audited of Cam Ranh Port Limited Liability Company)