Giải pháp triển khai chiến lược kinh doanh tại các doanh nghiệp phát điện thuộc tập đoàn điện lực (TT)

The reasons for choosing the research topic In Vietnam, the strategies of electricity industry in general and power generation sector have been formulated through 2 documents: 1 The dev

INTRODUCTION

1 The reasons for choosing the research topic

In Vietnam, the strategies of electricity industry in general and power generation sector have been formulated through 2 documents: (1) The

development strategy of EVN period of 2012-2015, towards 2020 by EVN; và (2) The master plan for national electricity development period 2011 – 2020 and 2030 (Master Plan VII) However, the operations of a competitive power

market from July 1st 2012 as instructed by the Prime Minister have made the power sector no longer a monopoly in the economy VCGM is introduced and developed through 3 levels: (1) Competive generation market until 2014; (2) towards competitive electricity wholesale market from 2015 to 2021; and (3) develop to competitive electricity retail market after 2021 and after 2023 will

be perfect competitive electricity retail market Business strategy has been implemented by EVN to its generation companies for 4 years to adapt to VCGM level 1 However, most of EVN’s generation companies even don’t have an implementing plan that can achive to high business performance for recent strategy and for the appear of competitive electricity wholesale market

in 2021, only 06 years from now There is a number of projects, papers related

to implementing business strategy in general and in electricity sector in particular However none of them directly researches on how to perfect business strategy implementing of EVN’s generation companies From this situation and the objective demands of practice, the author has chosen the

topic "Solutions for Implementing Business Strategy (IBS) at EVN’s generation companies" as the topic for PhD dissertation

2 Overview of the research situation

2.1 Overview of the research situation oversea

Oversea reseaches have just limited to functional areas of power generation The implementing BS at corporation’s subsidiaries in general and at electricity corporation’s subsidiaries is the direction that has not been researched much and has much space for researching

2.2 Overview of the research situation in Vietnam

Strategy implementing in general and BS implementing have not been researched much even though all of strategy textbooks have chapters about strategic implantation theory Researches concern to electricity industry, power generation sector and EVN from 2000 until now mainly focus on perfecting produce organization model, perfecting salary management, developing the humance resource, restructuring… There is the only strategy of EVN where highlight some solutions for implementing strategy but they are too general and are not in details for generation companies

2.3 Conclusion: So far there is no comprehensive study on theoretical and

application of IBS for EVN’s generation companies both in Vietnam and oversea Therefore “Solutions for Implementing the business strategy of

EVN’s generation companies” is a new study and needed to research

3 Objectives and tasks of the research

3.1 Research Objectives: Research the space in theory and practice about the relationship of strategies from corporation to electricity generation

companies and the ways to implement strategies from top organization (EVN) to subordinate organizations (electricity generation companies) Base

on that a set of scientific and practical will be highlighted to promote and perfect for implementing busisness strategy at EVN’s electricity generation companies period until 2021, vision to 2030

3.2 Research Tasks

- Establishing a basic theoretical and practical framework for IBS from EVN

to electricity generation companies suited for competitive oriented market

- Analyzing and sssessing the recent situation of IBS at EVN's generation companies

- Identifying the orientations, points of view and solutions for IBS at EVN’s generation companies, period to 2021, vision to 2030

4 Objects and scope of the research

4.1 Research Objects: The objects of the dissertation are theoretical and

practical factors in IBS at EVN's generation companies in the context of developing VCGM from commercial business point of view

4.2 Research scope

- Content: focusing on implementing EVN’s business strategy at generation

companies that start from formulating and implementing BS at generation companies In details, the dissertation studies on impact factors to business strategy performance (BSP) that presented in research model

- Space: limiting the choice of study in SBUs of EVN’s Genco1, Genco 2

and Genco 3, that are EVN’s generation companies

- Time: generating data from 2011 until now to research the situation of

implementing business strategy at EVN’s generation companies; proposing solutions to 2021, vision to 2030

5 Research Methodology

The methodology of this dissertation is to approach the system dialectical

logic and history to consider the study of the relationship between the general (EVN), and the individual (generation companies); research RBS of generation companies in the overall strategy of companies across the supply chain (Generation - Transmission - Power Purchase) and the relationship between three strategy levels (corporate - business and functional level)

General research methodology for IBS is the research method from abstract to

concrete, generalized method to describe the state of the IBS at EVN’s generation companies because most of generation companies haven’t had an official strategy plan yet Based on that, the research procedure is described in Figure 1

Figure 1 Research procedure

6 New contributions of the dissertation

- Theoretical contributions: Codifying some basic theory about BS,

implementing and managing BS from corporate level to SBUs level;

building hypothesis, research model scale factors in research model and test

them in the power generation business conditions in Vietnam to build

realistic model for implementing BSs at EVN’s generation companies

- Practical contributions: through the application of suitable research methods and

models, the dissertation identified and clarified the practical arguments for IBS at

EVN’s generation companies: systematically analyzed and objectively evaluated

the status of elements and content of IBS at EVN’s generation companies Since

then the dissertation derives the overall assessment of recent situation and the

causes of restrictions exist in IBS at EVN’s generation companies

- Regarding research objectives: The dissertation reached to research

objectives through applying above scientific argument, proposed orientations,

opinions, goals, general IBS solutions for EVN’s generation companies to

achieve high BS performance in period to 2021, vision to 2030

7 Structure of the dissertation

The dissertation was structured in 03 chapters

CHAPTER 1: SOME THEORETICAL AND PRACTICAL BASICS OF

IMPLEMENTING BUSINESS STRATEGY IN GENERATION COMPANIES

In the first chapter, the author has hoghlighted basic related concepts as: product,

market and electricity market; Electricity supply chain; BS and its position, the

contents of BS that is deployed at corporation’s subsidiary According to that,

when implementing BS at corporation’s subsidiaries, it means that the

corporation has formulated its BS already and actualizing its objectives and

choices into actions at subsidiaries It also means that subsidiaries haven’t had

detailed BSs and therefore implementing BS at subsidiaries start from

formulating BSs for them and then formulating BS implementing plan

Implementing BSs Implementing BSs at corporation’s subsidiaries therefore

includes 02 main tasks: (1) formulating BSs for corporation’s subsidiaries, and

(2) formulating the above BS implementing plans

Implementing BSs at corporation’s subsidiaries is a phase of BS

management Regarding position, it mainly belongs to implementation

phase in strategic management of entire the corporation, but for at

corporation’s subsidiaries, it includes all formulation, implementation and

control phase Therefore, implementing BSs at corporation’s subsidiaries is

known as procedure of development and implementation the contents of BS

that is formulated and maintaining their compatibility with regular changes

and uncertainty from competitive electricity market to ensure achieving

objectives that has been established by the corporation After reviewing

theory of the basic content of implementing BSs at power generation

enterprises as in Table 1, 07 hypotheses have been created as basis for

establishing research model and scale factors as follows (Figure 1)

Table 1 Synthesis of theoretical studies about implementing BS at generation companies

strategic

positioning in

competitive market

Holman, P (1999), D.Aaker (2001), Esteban R Brenes el al (2008), Ralf Muller

el al (2008), Gary L Neilson, Karla L Martin và Elizabeth Powers (2008), Verlyn Klass (2010), M.Prabavathi và R.Gananadass (2014), Kepha Otieno Omuoso (2013)…

Implementing

strategies that create

sources of sustainable

competitive advantadge

Flood, P.C., Dromgoole, T., Carrol, S.J & Gorman, L (2000), Gary L Neilson,

Karla L Martin và Elizabeth Powers (2008), Hobbs, B F., Metzler, C and J S Pang (2000), Esteban R Brenes el al (2008), Firdaus Alamsjah (2011), Astif Osmani el al (2013), Giorgos el al (2014)…

Business strategy

performance

Henderson, B (1984), Pearce, J.A & Robinson, R.B, (2007), Esteban R Brenes

el al (2008), Gary L Neilson, Karla L Martin và Elizabeth Powers (2008), Qin Li, Xin Li & Ping Zhou (2010), Verlyn Klass (2010)

Figure 1 Research Model Source: Author

Qualitative method is used through expert workshops and interviews with

16 CEOs of generation companies, tranmission companies, power tradding

company, EVN; Government officers from the over power sector under

MOIT; strategy management researchers to develope officials the scale of

the research model At the workshop the scales and the theoretical

background were infroduced and discussed The results of the scale research

are summarized in Table 1

Table 1 The items and meanings in implementing BS at power generation companies

SA2 Applying BCG, GE/McKinsey for analysing SBUs

SA3 Applying TOWS for identifying the BS implementing orientation

SA4 Building Business information Management based on electronic database

Items Meanings

functional

strategies (FS) operational efficiency.FS4 Implementing market oriented and value based marketing

FS5 Corporate finance development and effective development portfolio management

FS6 Oriented organization and development of quality, professional and high

efficiency human resources

PR1 Sharing information and knowledge about the market and business timel,

comprehensively and reliable

PR2 Sharing and collaborating in operational and sales planning timely and

efficiently

PR3 Reasonable sharing and harmonizing of EVN about benefits /costs in

accordance with the level of contribution of power generation enterprises throughout the power chain

PR4 Practicing internal strategic alliance in EVN to better promote independence, autonomy and accountability of chain members

CA4 Effectively activate the value chain

CA5 Skilled and effective exploiting of the experience curve

generators’dynamic compentence in market

BC5 Leadership capacity in BS implementing based on knowledge

BSP1 Quality of technology system for production, power generators and

corporate social responsibility are appreciated

BSP2 Quality of roaming services and meet orders is trusted

BSP3 The benefits and services that the customer obtained is much higher than the cost spent to buy electricity

BSP4 Imlementing current BS will ensure that the company obtains

competitiveness, brand value and high business efficiency

Source: The author

Quantitative research method through survey with the structure of sample as Table 3

Table 3: The structure of sample Structure of respondents/Experts Số lượng

mẫu Tỉ lệ (%)

2 CEOs of companies in EVN’s supply chain 32 19,75%

5 Officiah from provinces that has generation companies 21 12,96%

6 Researchers on Strategy Management and Power sector 19 11,73%

Source: author

Results tested by Cronbach Alpha scales are summarized in Table 4

Table 4: Reliability Analysis through Cronbach Alpha

Items Scale Mean if

items deleted

Scale Variance if items deleted

Corrected item – Total correlation

Cronbach Alpha if item deleted

Quality of implementation strategic information and strategic analysis (SA), Cronbach Alpha =

Quality of implementation strategies that create sources of sustainable competitive advantage

(CA), Cronbach Alpha =0.718

Source: Results from analyzing data

Table 3 shows that: Cronbach Alpha of 6 components are all above 0.7, therefore

all 6 items are accpeted and are used for further analyze However, 4 items (FS1, CA3, CA4 and BC5) are elimilated out of resecrh model because its total correlation <0.3 or Cronbach Alpha if item deleted is increase After conducting multiple draft of EFA, final outcome of EFA after deleting 4 observed variables (FS1 , CA3 , CA4 and BC4) with Alpha < 0.3 for the results of KMO = 0.712 with sig < 0.000 and 6 factors in eigenvalues = 1.791 (> 1) Therefore it meets the

requirements for total variance extracted = 66.938% To enhance the ability to explain the factors, the authors selected Varimax rotation method - this procedure will swivel the factors to minimize the number of variables that have large coefficients at the same factor Thus, the scale after assessing has 6 components and consists of 24 items Moreover, factor loadings are all > 0:55 so the observed variables are important factors and have practical significance Each variable has difference in loading factor were ≥ 0:30 ensure the distinction between factors KMO = 0.712 so EFA is matching data Chi-square statistics of Bartlett's significance is 0.000 Thus the variables are correlated overall

The concept of "Business Strategic Performance - BSP" is assumed to be a unidirectional concept EFA factor analysis for this concept study showed that Cronbach alpha = 0.802; Eigen value is 2.249; variance extracted = 74.968; all factor loadings are greater than 0.80, therefore conclusions are: after elimilating 4 items, all existing items can present the value of business strategic performance and they reach convergence In other words, the observed variables are representative for the concept that need to be measured The paper using Pearson's coefficient to analyze the relationship between the independent variables with business strategy performance of EVN’s generation companies Results showed business strategy performance has correlation to most of other variables and tthe correlations reached statistical significance (p <0.01) Putting 6 such components named above to run a regression to assess the suitability of a multiple regression model using the Enter method, final results show that: Adjusted = 0.937 demonstrates all factors can explain 93.7 % of business strategy performance of EVN’s generation companies The value of adjusted has reliability and consistent with business conditions in current Vietnam power context

In conclusions, by combining both qualitative and quantitavive method, practical research model with practical scale factors of implementing BSs at EVN’s generation companies have been built

Moreover, some typical cases study that have similar context to recent Vietnam electricity generation industry are also studied to

to draw lessons for implementing BSs at EVN's generation companies Those cases study are: Implementing BS at Komipo – Korea in 1999, at Kansai Jsc – Japan in 2001, at Genesis Energy – New Zealand in 2002

CHAPTER 2 RECENT STATUS OF IMPLEMENTING BUSISNESS STRATEGIES AR EVN’S GENERATION COMPANIES

After generalizing the process of business and market development of EVN

in general and EVN’s power generation enterprises in particular at Section 2.1, Section 2.2 showed that the process of implementing BSs at EVN's electricity generation companies included 02 steps: (1) formulating BSs for

EVN's electricity generation companies, and (2) formulating the above BS

implementing plans (Figure 2)

Figure 2 the process

of implementing BSs

at EVN's electricity generation

companies

Source: Interview EVN’s CEOs

Section 2.3 of the dissertation studied the recent status of implementing BS

at 4 typical generation companies, those are: Hoa Binh hydropower, Central hydropower Jsc, Thac Ba hydropower Jsc and Baria thermal power Jsc, and

06 conclusions are drawn:

- The chosen generation companies are aware of strategic in implmenting phase therefore they have strategic orientation and clear focus on implementing BS However, they have just used SWOT analysis and have not applied BCG, SPACE or TOWS

- The generation companies often implement strategic position as cost leadership and optimize power generation capacity Morever, due to the characteristics of Vietnam's power sector, some companies implement strategic position as businesses providing ancillary services, to be multipurpose hydropower

- The EVN’s power generation enterprises often focus on technological strategy, marketing startegy, productional and operational strategy when orient functional strategies compatible with the competitive market:

 Regarding technological strategy: plants built after 2000 have the new technology, are in a suitable condition; the plant was built during 1980-1995

as the Hoa Binh hydropower, Thac Ba hydropower Jsc mainly consists of equipments from the former Soviet Union, so they have a lower efficiency than new plants Among power generation technologies, hydropower has the lowest production costs and then to coal thermal power and gas; thermal oil power currently has the highest production costs

 Regarding productional and operational strategy: taking advantage of existing infrastructure to optimize performance and meeting international

standards on indicators such as net operating margin, current ratio, operating time, OPEX / MW is always on top priority

 Regarding marketing strategy: the independent companies focus more

on marketing strategy to attract investment, but the power generation companies who are dependent to EVN are less focus on marketing strategy

- Most of EVN’s generation companies implement well strategic alliances and partner relationship with sppliers and with transmission company, distribution companies because they are all EVN’s companies and are in power supply chain of EVN However this strategic alliances and partner relationship does not reflect the "competitive level" required under the recent roadmap of competitive electricity market when EVN is still an organization that held coordinating all activities and all entities in the supply chain are not really independence, they depent much on the decision of EVN This makes the implementation BSs at EVN's power generation enterprises faces to many difficulties because the companies don’t have necessary independence in their management decisions

- To create a source of sustainable competitive advantage in implementing BSs, generation companies often choose to focus on best practice of lean production; fast roaming power supply system; suitable, safe, modern and efficient infrastructure for electricity, better expoilting the experience curve

- The selected generation companies often concentrate on upgrading BS implementing capacity, leadership and BS execution capability, however risk management in BS implementation at those companies deployment is currently poor, particularly hydrological risk management and financial risk management

2.4 Current situation of implementing the contents of business strategies at EVN's electricity generation companies through multiple choice survey

From sample of quantitative research in Chapter 1, the author filtered 47 questionaires for the CEOs of 16 companies, including hydro power companies, thermal power companies; generation companies from Genco1, Genco2, Genco3 and who directly managed by EVN as the sample for researching the current situation of implementing the contents of business

strategies at EVN's electricity generation companies following results : 2.4.1 The current quality of implementing strategic information and strategic analysis

First, the application of SPACE model to assess environmental situation has

not been properly respected by EVN’s generation companies when it is below average (Mean = 2.05)

Second, when diagnosing and analyzing the situation of SBUs, EVN's

generation companies are all identifying different situations of their SBUs However, only 31.25 % of them pay attention to analysis and timely update,

50% of them just use general information, lack of identification in identifying situations of SBUs, particularly 18.75% of companies barely undertand their SBUs situation

Third, companies those understand and timely update the situation of SBUs

usually apply TOWS model well and identify the orientions for implementing BSs and companies those don’t understand and timely update the situation of SBUs usually poorly apply TOWS model and poorly identify the orientions for implementing BSs

Fourth, quality of building business management information system based on electronic database is evaluated at fair level (Mean =3.2)

2.4.2 The current quality of implementing strategic positioning in competive market

First, most generation companies are not properly aware of the importance

of implementing strategic positioning in competitive electricity market when all items in this groups achieve below average (Mean <3)

Second, most of companies position towards cost leadership through exploiting

operation and inbound logistics in value chain

Third, implementing strategic position as more added value to customers is

position trends of generation companies in the world However, it has just been interested in EVN’s power generation companies

Fourth, relatively few EVN’s generation companies implement strategic position as friendly and safety to environment in CSR the evaluation for as friendly and safety to environment rather low (Mean = 2,327)

Fifth, relatively few EVN’s generation companies care about implementing strategic

position as higher quality/higher price in the market when Mean is lowest 2.27

2.4.3 The current quality of implementing functional strategies

compatible with competitive market changes

2.4.3.1 The current status of development orientation and generation technology innovation management

- The selection of electricity production technology associated with the position of primary energy sources EVN's power generation enterprises including hydro, gas thermal power, thermal power stretching from North

to South In particular, coal-fired power plants are mainly concentrated in the north, oil and gas thermal power in the south, hydropower allocations are from North to South

- The technology of thermal power plants are using pure condensing technology, using natural circulation boiler with many old plants, technology and equipment for environmental treatment has not been sufficient attention

- The main equipments in hydropower plants built after 2000 are new

technology, suitable for their age; Equipments of the plants built during

1980-1995 as the Hoa Binh hydropower, Thac Ba hydropower are old technology, from former Soviet Union and therefore, they have lower efficiency than new plants

- The orientation of development, innovation technology development of EVN’s generation companies achieves above average (Mean = 3.25)

2.4.3.2 The current status of orientation of organization and operational management

- Operational strategy is one of functional strategies that is most focused by generation companies when they inplement their BS (Mean = 3.70)

- Implementing operational strategy, levels of non-scheduled outages which are by far above best international standards

- Most of EVN’s generation companies perform capacity factor according to international benchmarks However, capacity of gas thermal power has just achieved above 50%

- Most of generation companies present operating costs well below international benchmarks However it’s because the cheaper labour costs in Vietnam

2.4.3.3 The current status of market oriented and value based marketing

- The practice of market oriented and value based marketing has not been

widely appreciated in implementing BS at EVN’s generation companies (Mean = 3.05)

- The wholesale price of electricity to EVN enterprises depends on the size and type of generation company: In the plants that have installed capacity greater than 30 MW (except multi-target-strategy-hydropower plants, BOT plants, and renewable energy plants), the price is stipulated under EVN’s power purchase agreement (PPA) with each plant; In the plants that have a capacity of less than

30 MW (small hydropower plants), electricity price based on costs avoided are issued annually by the Ministry of Industry and Trade

- EVN's generation companies have no right to decide on the retail pricing

of electricity; the current retail electricity price is decided by the Ministry of Industry and Trade When wanting to change the price, the Ministry must submit plans and sent to the Prime Minister to get through In addition, although the retail price of electricity increased steadily in recent years (5-10

%/year), but it is still below the long-term marginal costs, and the State must compensate the current price

- For power generation enterprises, good business communication one hand help those businesses attract the attention and investment of strategic investors; on the other hand it helps to build good image of the company thereby facilitating retail prices for consumers in a convenient way However, both above purposes of business communication are not fully understood by EVN's generation companies