FORM THE BUSINESS STRATEGY OF VIETNAM TELECOM NATIONAL COMPANY

LIST OF ABBREVIATIONSDWDM : Dense Wavelength Division Multiplexing EFE : External Factor Evaluation matrix IFE : Internal Factor Evaluation matrix IP : Internet Protocol NGN : Next Gener

FORM THE BUSINESS STRATEGY OF VIETNAM

TELECOM NATIONAL COMPANY

TABLE OF CONTENTS

INTRODUCTION 1

1 STATEMENT OF THE RESEARCH 1

2 PURPOSES OF THE RESEARCH 2

3 R ESEARCH METHODOLOGY 3

4 SCOPE OF THE RESEARCH 3

5 S TRUCTURE OF THE PROJECT 4

CONTENT 5

CHAPTER I: THEORETICAL BACKGROUND 5

1.1 Overview of strategic management 5

1.1.1 Definition of strategy 5

1.1.2 Definition of strategic management 5

1.1.3 Benefits of strategic management 6

1.1.3.1 Financial benefits 6

1.1.3.2 Non-financial benefits 6

1.2 Types of strategy 7

1.2.1 Corporate strategy 7

1.2.2 Strategic business unit (SBU) 7

1.3 The process of strategic management 8

1.3.1 Strategy formulation 8

1.3.2 Strategy implementation 9

1.3.3 Strategic assessment 11

1.4 Factors affecting strategic establishment 12

1.4.1 External factors 13

1.4.1.1 Macro-environment 14

1.4.1.2 Micro-environment 16

1.4.2 Internal environment 20

1.4.2.1 Humane resource factors 21

1.4.2.2 Research and development factors 21

1.4.2.3 Production factors 21

1.4.2.4 Accounting and finance factors 22

1.4.2.5 Marketing factors 22

1.4.2.6 Enterprise culture 22

1.5 Tools for establishing strategies 23

1.5.1 EFE matrix_External Factor Evaluation matrix 23

1.5.2 IFE matrix_Internal Factor Evaluation matrix 24

1.5.3 Competition image matrix 25

1.5.4 SWOT Matrix 26

1.5.5 QSPM Matrix 27

1.6 Organizing to implement strategies 28

1.7 Inspection, adjust and summarize the strategy implementation 29

1.7.1 Concept 29

1.7.2 Inspection demand 29

1.7.3 Inspection process 30

1.7.4 Inspection guidelines 30

1.7.5 Standard 30

1.7.6 Inspection technical 31

1.7.7 Adjusting strategies 31

1.7.8 Summation to continue into the new phase 31

1.8 Summary of the Chapter I 31

CHAPTER II : STATUS OF BUSINESS PRODUCTION AND FORMING A STRATERGY OF VIETNAM TELECOM NATIONAL COMPANY 33

2.1 Overview of the telecommunication market in Vietnam 33

2.1.1 The general of the telecommunication market in Vietnam 33

2.1.2 Competitve condition on the tranmission path information (TTĐT) services market 35

2.2 Features and status of VTN 37

2.2.1 Overview on VTN 37

2.2.1.1 Establishment and development process of VTN 37

2.2.1.2 Functions, tasks and main operations of Vietnam Telecom National ( VTN ) 39

2.2.1.3 Determine the effectiveness of VTN contribute to overall results of VNPT 43

2.2.2 Features of Vietnam Telecom National (VTN) 44

2.2.2.1 Range of Operations of the company 44

2.2.2.2 Organization, production and business features 44

2.2.2.3 The feature of the company’s employees 45

2.2.2.4 The feature of technology 46

2.2.2.5 The feature of service product 46

2.2.2.6 Characteristic of customers 49

2.2.3 Business operation results of VTN in 2006, 2007 and 2008 year 50

2.3 Analysis of factors influencing on Vietnam Telecom National (VTN) 53

2.3.1 External Environment 53

2.3.3 Company’s External Factor Evaluation Matrix (EFE) 64

2.3.4 VTN’s Internal Factor Evaluation Matrix 67

2.3.5 Company’s Competitive Image Matrix 71

2.3 SWOT analysis 73

2.4 Judgment on strategy management of VTN 75

2.4.1 Advantage 75

2.4.2 Disadvantages 76

2.4.3 Analysis of causes 76

2.5 The Analysis of the current strategic management of the company 77

C HAPTER III : SOLUTIONS TO MAINTAIN THE POSITION AS THE FIRST BACKBONE-BASED SERVICE PROVIDERER OF VTN

COMPANY 79

3.1 The general overview of Vietnam Telecommunications 79

3.1.1 The Vietnam economy 79

3.1.2 Potentials and powers of telecommunication market 79

3.2 SWOT (Strengths, Weaknesses, Opportunities, Threats) for set up and select strategies and in the future 81

3.2.1 The SWOT matrix 81

3.2.2 The strategic selection by matrix QSPM 84

3.3 The proposal of specific solutions to improve the development strategy of VTN company 89

3.3.1 Vision 89

3.3.2 Mission 89

3.3.3 Targets 89

3.3.4 The specific solutions for strategic management at VTN 90

3.3.4.1 The strategic management of technique and technology 90

3.3.4.2 Strategic management on investment 91

3.3.4.3 Strategic management on training human resource 98

3.3.4.4 Financial strategic management 99

3.3.4.5 Stratigic management on Business 100

3.4 Chapter III in brief 107

APPENDICES 110

LIST OF ABBREVIATIONS

DWDM : Dense Wavelength Division Multiplexing

EFE : External Factor Evaluation matrix

IFE : Internal Factor Evaluation matrix

IP : Internet Protocol)

NGN : Next Generation Network

PSTN : Public Switched Telephone Network

QSPM : Quantitative Strategic Planning Matrix

SBU : Strategic Business Unit

SDH : Synchronous Digital Hierarchy

VTN : Viet Nam telecom national company

VNPT : Vietnam Posts and Telecommunications Group

LIST OF TABLES

Table 2.4 : Labor structure of VTN in 2008

Table 2.5 : Output of traditional telecommunication services of LT Telecommunication Company

Table 2.6 : Growth of private hiring channel from 2001 to 2008

Table 2.7 : Production and business results in 2006, 2007, 2008 of province Telecommunication company

Inter-Table 2.8 : External Factor Evaluation matrix for the company (EFE)Table 2.9 : Internal Factor Evaluation matrix (IFE) for the companyTable 2.10 : Competition Image matrix for the company

Table 2.11 : SWOT analysis

Table 3.1 : Telecommunication target of some countries

Table 3.4 : SWOT matrix for VTN

Table 3.5 : QSPM (Quantitative Strategic Planning Matrix) for VTN

LIST OF FIGURES, GRAPHS

Figure 1.1 : Business strategy management model

Figure 1.2 : Factors in business environment

Figure 1.3 : Relationship between factors in operation environment

Figure 1.4 : Analysis of competitor 13

Graph 3.2 : Annual telephone subscription development (source: MIC)

Graph 3.3 : Turnover of telecommunication enterprises in 2008 incomparison with 2007

1 Statement of the research

Information technology is gradually playing a dominant role in a national economy,becoming a giant industry generating numerous benefits for the development ofother industries A telecommunication network is considered blood vesselsspreading to all economic sectors, organizations and individuals Disseminatingrequired and important information, it is a network of information transmission tolink enterprises themselves, enterprises with consumers to serve human beings’information needs which are becoming more and more requisite in the presentcontext

In the light of current fierce competition occurring within the economy, it is a mustthat a telecommunication enterprise should take a proactive position againstenvironmental changes to succeed It certainly ought to identify appropriatestrategies (what is it doing now? What should it do? What are the possibleoutcomes?) Sound business strategies play a decisive role to the enterprise’ successand navigate it to develop in a sustainable manner in the market mechanism.Besides, those strategies also enable it to quickly grasp, make use of opportunitiesand mitigate risks generated by changes of the business environment

Vietnam Posts and Telecommunications Group takes the lead in providing,manufacturing and trading in telecommunication and postal products and servicesall over the country In the past, the Group had a near monopoly in the field oftelecommunication and postal services, which facilitated it to achieve high growthrates Entering the next stage, Vietnam Posts and Telecommunications Group ingeneral and its members in particularly will face a serious challenge Thegovernment has just allowed a large number of other enterprises to participate in themarket for telecommunication and postal services (Hanoitelecom, Vietel, SPT,EVN, FPT, VTC, etc.), as well as offered the new ones many good opportunities fortheir business, which indicates stronger pressures for competition across the sector

and regions Previous favorable conditions will become more and more scarce,demand for telecommunication and postal products will be growing higher.Together with the international economic integration tendency and the liberalizationprocess of the telecommunication market, telecommunication enterprises will stand

a valuable chance to learn from, cooperate and exchange technologies with largetelecommunication groups yet their business will also be challenged Fiercercompetition will force them to introduce numerous services and conveniences ofconsistently enhanced quality and cheaper prices to the market to lure customers Global scientific and technological achievements have had profound effects on thecompetition occurring in Vietnam’s telecommunication market Domestic serviceproviders are racing against one another for the introduction of numerous services,thereby further fueling the drastic and harsh competition This is significantlyimpacting on the growth rate and the share of Vietnam Posts andTelecommunications Group in the field of telecommunication services in generaland that of the Vietnam Telecom National Company (VTN) in particular In thetime to come, the goals that the latter aims to achieve include sustainabledevelopment, increased competitive advantage in the current competitiveenvironment and global integration Towards those aims, they should pay a betterattention to the diversification of high-quality services and the effectiveness ofservice trades

Due to those above reasons, our selection of the research project “Strategicmanagement aims to retain the leading position in the provision oftelecommunication services – A case study of VTN” has both theoretical andpractical meanings

2 Purposes of the research

The study of the project is intended to provide an overview of strategic management

at a typical telecommunication services enterprise With this project, we want to

suggest several solutions for VTN to improve its business strategies in the nearfuture.

The research aims to figure out appropriate solutions, expand the scale, enhance theeffectiveness of business activities, reduce business costs, bring about profits for theenterprise as well as increase the effectiveness of its social activities

3 Research methodology

Our group relied on instructional materials related to the management of businessstrategies, forecasts of telecommunication demand that we collected from theInternet as well as Vietnam’s forecasts for previous years, present and future Wealso consulted experts who are working in the field of fiber optics and datacommunication for Vietnam companies In order to produce precise research resultsfor future efficient application to practice, the following methods were used:

1- Expert interviewing method

Consulting experts who are currently working in the telecommunication and datacommunication field in Vietnam

2 – “At desk” method

Secondary information was collected mainly either from the statistical sources ofVNPT or from its internal reports on business activities from 1996-2000 until now

4 Scope of the research

The project puts a heavy emphasis on studying strategic management methods ofEVN Telecom – an VTN in the period of 2010-2020

The research was built on secondary information which was obtained from thestatistical sources of EVN Telecom, primary information sources about domesticand regional communication needs, questionnaires given to the experts in order toclassify the importance of factors in matrices and the degree of response of theenterprise to those factors

5 Structure of the project

Our project consists of three parts: Introduction, Content, Conclusion and the list of

references The content is comprised of the three following chapters:

Chapter 1: Background

Chapter 2: The practical situation of business activities at VTN

Chapter 3: Solutions to retaining the leading position in the provision of trunktelecommunication services in Vietnam

CHAPTER I: THEORETICAL BACKGROUND

1.1 Overview of strategic management

1.1.1 Definition of strategy

Strategy is a concept that comes from the military field to denote big and long-termplans developed upon a certainty of what the enemy could do and what they cannot The same term for the business world takes form from such a concept.Traditionally, strategy is perceived as the identification of basic and long-termobjectives of an organization, from which specific action plans are formed togetherwith effective and appropriate utilization of resources to achieve those objectives According to Alfred Chandler1, “Strategy consists of setting basic and long-termobjectives of an organization, simultaneously selecting the methods or directions,and allocating requisite resources for achieving those objectives”

William J’ Glueck2 defines strategy as “a comprehensive, uniform and cooperativeplan designed to ensure that basic objectives of an organization are achievable”.Fred R David3 argues that “Strategy refers to the means for the achievement oflong-term objectives A business strategy, possibly, consists of the geographicalexpansion, diversification of activities, ownership, product development, marketpenetration, spending reduction, liquidation and joint ventures”

Michael E Porter4 perceives strategy as “the art of building solid competitiveadvantages for defense”

1.1.2 Definition of strategic management

According to Alfred Chander5, “Strategic management is the process of specifyinglong-term objectives of an organization, selecting methods or directions andallocating requisite resources for achieving those objectives”.

Fred R David6 defines strategic management as “the formational art and sciencewhich perform and assess decisions related to a lot of functions that allow anorganization to achieve its set objectives”

According John Pearce II and Richard B Robinson7, “Strategic management is a set

of decisions and actions to develop and perform plans for achieving an enterprise’sset objectives”

1.1.3 Benefits of strategic management

1.1.3.1 Financial benefits

Research shows that companies having sound and clear strategies will earn highprofits and succeed in business The practical situation of a company with goodperformances reflects a strategic orientation that puts a heavier emphasis on thelong term Companies with remarkable financial achievements tend to develop a set

of plans to prepare for future changes in the internal and external operatingenvironment with the aim of achieving outstanding financial gains in their business

1.1.3.2 Non-financial benefits

Apart from showing how a company can achieve its expected profits and mitigatefinancial risks, a strategy also demonstrates other visible benefits With a strategy inmind, the enterprise’s activities will have an obvious direction to follow, whichfacilitates it to be successful in business and brings out high profits Such a directionwill contribute firstly to the existence and development of the enterprise and thenthe political, organizational stability and particular relationship to increase

Teaching material: Strategic management, Statistics Publisher, p 26.

material: Strategic management, Statistics Publisher, p 26.

productivity and prevent the arising of possible obstacles In addition, the success

of a strategy also result in discipline for the company which can start outestablishing an effective and useful management system, gaining the belief in thecurrent business strategy again or showing necessity for adjustments

1.2 Types of strategy

In an organization, strategic management can be performed at three basic levels:corporate, business unit, and functional The processes of strategic management ateach level are similar in form as they all include the following basic stages:environmental analysis, identification of missions and objectives, strategic analysisand choice, strategic implementation and strategic examination yet the content ofeach stage and decision making which depends on the manager are different

1.2.1 Corporate strategy

Corporate strategy is concerned with guidelines of the organization over a long term

in order to fulfill missions, achieve development objectives, for example:concentrated growth strategy (market penetration, market development and newproduct development), integration-oriented development strategy, diversifieddevelopment strategy (concentric, horizontal and mixed), joint venture strategy, etc.Based on corporate strategies, companies will deploy their own strategies

1.2.2 Strategic business unit (SBU)

Strategic business unit in a company can be a business field or a type of product,etc This strategy aims to direct the development of a single field or a single type ofproduct, contributing to fulfilling corporate strategies Towards this end, it isnecessary to identify advantages of each field against the company’s competitors inorder to formulate a strategy which matches corporate strategies, for instance:differentiation strategy, low cost strategy, defense strategy designed for reinforcingthe market, attack strategy for market development In a fiercely competing market-oriented economy, marketing strategy is considered the core of a business unit; itbridges strategies of other functional departments together

1.2 3 Functional strategy

All of the companies have functional departments such as: marketing, personnel,finance, production, research and development, etc These departments needstrategies that support the implementation of business and corporate strategies, forexample: 4Ps strategy for the marketing department, well-qualified personnelattraction strategy for the personnel department, cost minimization strategy and newproduct investment strategy for the financial department, etc Functional strategy isoften meaningful to each phase of the implementation process of business andcorporate strategies

Thus, strategies of these three basic levels are not dependent but ratherinterdependent; the higher strategy offers preconditions for the lower one, at thesame time only when the lower strategy adapts well to the higher one, theimplementation process can be successful

1.3 The process of strategic management

Concepts of management have been around for a long time yet theories ofmanagement including the ideology which is systematized and researchedscientifically and only appeared between the 19th and 20th century the reallyformation of scientific and quantitive management that met competition demand ofmodern business activities

Strategic management is the process of studying the environment to identifystrategic objectives, business policies and solutions of an enterprise in order toapply business strategies and policies to practical implementation for makingadjustment decisions, examinations and evaluations against the implementation ofthose strategies and policies

1.3.1 Strategy formulation

Strategy formulation is a process of establishing business missions, performingresearch and investigation to identify internal and external factors, suggesting long-

term objectives and selecting alternative strategies This process is sometimes called

“Strategic plan formulation” It is a combination of the three basic activities:

- Performing research concerning the collection and dealing with information aboutmarkets and business fields of a company This process is called “glancing at thebusiness environment” Naturally, performing research aims to identify importantstrengths and weaknesses in a functional business field Various investigationpatterns can be developed and implemented to examine internal factors such as:employee spirit, production effectiveness, advertising effectiveness and customerloyalty

- Combining intuition and analysis: some mangers and enterprise owners declarethat they have extraordinary special capacities in using intuition when suggestingoutstanding strategies Nowadays, although some organizations can exist anddevelop well thanks to excellent intuition of the managers, the majority of them arenot lucky like that Most of the organizations can benefit from capital strategieswhen combining harmoniously intuition and analysis to make decisions

- Decision making: As none of the organizations possess inexhaustible resources,strategists have to make decisions themselves on which alternative strategies should

be chosen to benefit the company most Decisions made during the process ofstrategy formulation will link organization with particular products, markets,resources and technologies over a long period

1.3.2 Strategy implementation

Strategy implementation is often called the action process of strategic managers.Implementation means mobilizing managers and staff to perform formulatedstrategies Basic activities of this process include:

- Setting annual objectives which an organization must achieve before reachinglong-term goals Annual objectives should be measurable, quantitive, challenging,practical, appropriate and prioritized They are often suggested at corporate,department, functional levels in a big company Annual objectives should be

worked out in the form of management, marketing, financial, accounting,information development-related achievements A series of annual objectives arenecessary for a single long-term goal Annual objectives play a vital role forstrategies as they lay the foundation for the allocation of resources.

- Policies: A policy offers a means to achieve objectives A policy coversinstructions, principles and procedures drawn out to support the efforts to fulfill setobjectives It provides instructions for decision making and illustrates repeatedcircumstances or periodical ones A policy as well as annual objectives is ofparticular significance for implementing strategies as they reflect expectations ofthe organization’s staff and managers Policies allow the cooperation andsynchronicity between departments of an organization

- Allocation of resources: Allocating resources is a central managerial activity thatfocuses on the implementation of a strategy Strategic management enablesresources to be allocated in accordance with priorities set by annual objectives.When the allocation of resources does not match those set priorities, strategicmanagement and the success of the organization will be severely harmed All of theorganizations have at least 4 types of resources that can be utilized for achievingtheir objectives:

matter of art rather than science Formulating a strategy without laterimplementation has no helpful uses.

1.3.3 Strategic assessment

Most of strategy makers agree that strategic assessment is necessary to obtainprosperity of the organization; timely assessment can alert that the management ishaving difficulties or difficulties may happen before a circumstance becomesserious

Full and timely feedback information which is basis for strategic assessment may benothing than current information Too much pressure from senior managers mayaffect junior managers so that they think of data that they deem to be satisfied.Even though one or more strategies may be correct, this way of argument may be amistake because strategic assessment includes both short-term and long-termobjectives Strategies normally don not affect short-term results until it is too late tomake necessary changes It is impossible to prove a typical strategy to be best orensure that it can work However, they can assess it through serious mistakes.Richard Rumel suggests 4 criteria to assess strategy, namely:

+ Consistency

+ Appropriateness

+ Convenience

+ Feasibility

1.4 Factors affecting strategic establishment

Since there are lots of concepts of strategy and strategic management, as a basis foranalysis of external and internal factors to establish matrix, the group select concept

of Fred R David as a basis to establish strategy for the reason that model, way ofanalyzing factors, establishing matrix and selecting matrix is suitable withenvironment of the company

Good strategic management depends much on thoroughly knowledge ofenvironment conditions that enterprise is facing Environment factors have deep

Implement external control to determine opportunitie

s and threats

Implement external control to determine opportunitie

s and threats

Review business objectives

Establish short-term objectives

Make policies

Distribute production resources

Establish short-term objectives

Select strategies

Chec

k and assess

impact since they affect all of next steps of strategic management process Finalstrategy must be made on the basis of expected environment conditions.

General environment that the enterprise is facing may be divided into 3 levels:Macro-environment, micro-environment and internal situation

1.4.1 External factors

External environment is a system of complex factors that manager can not controlbut they have impact on operation and business results of the enterprise, alwayshave opportunities and threats to affect operation of the enterprise at differentlevels Assessment of external factors to discover important factors, positively ornegatively affect operations of the enterprise is an important method for managersbehave flexibly and timely in circumstances arising out of business environment Ifenterprises do not control external environment, the will not know what they arefacing and not be able to react timely when external factors change

External factors can be divided into two groups – macro-environment and environment

micro-Enterp rise

Figure 1.2 Factors in business environment

1.4.1.1 Macro-environment

Macro-environment includes economic, cultural, social, geographical andpopulation, technological, physical factors having indirect impact on operation ofthe enterprise Possibility for enterprise to influence this group of factors is low So,enterprise should select business environment with stable macro factors especially

in terms of political and law issues to limit risks Besides, enterprise should alsoflexibly change its business policy when these macro factors change

 Economic factors give us a general overview of strength of the economy, ithas indirect impact on production and business activities of the enterpriseoperating in such economy, four important factors in macro-economicenvironment should be considered are: economic growth, interest rate,foreign exchange rate, and inflation rate

 Economic growth leads to increase in expenditure, decrease incompetition, development of market share, increase in profit,otherwise economic decline, decrease in expenditure, reduction inproduction, increase in competition, and reduction in market share

 Interest rate may affect expenditure demand of customers

 Foreign exchange rate determines currency value of countries;changes of foreign exchange rate affect competitiveness ofinternational market

 Inflation decreases stability of economy, if inflation increasesinvestment planning becomes hazardous because in inflationenvironment it I difficult to estimate exactly real value of long-termproject, making companies dare not to invest, thus the economystagnates

 Cultural, social, physical and population factors to be considered are asfollows:

 Changes of culture, society may cause difficulties or createadvantages for enterprises, even though these changes are occurringslowly and difficult to be realized such as: community life quality,norms of ethics and lifestyles, diversity of labor force, qualification oflabor force, cultural tradition, social customs.

 Physical factors have great impact on strategic management,production and resource exploitation activities of human beings havechanged physical condition much, which makes physical conditionsbecome better but environment become worse Thus, enterprises arerequired not to pollute environment, imbalance ecology, and wastenatural resources

 Population factors to which managers pay attention to when studyingsocial issues are: population size and annual population growth rate,population structure in terms of sex, age, family size, average income

of a person or household, labor movement, intellectual standard ofpeople It directly affects labor force, increases market and manygoods and service consumption channels have impact on strategy ofthe enterprise

 Political, law and government factors: political situation, stability ofgovernment is important to enterprise, thus when making strategies shouldconsider following factors:

 Stability of political system, of parties and government

 Law system in general, laws related to business such as laws onenvironment protection, tax policy, trade protection, legal businessright protection, copyright protection, monopoly opposition,recognition and equality

 Foreign affairs policy, export encouragement policy, foreigninvestment encouragement policy

 Relations with organizations and association, political organizations,local government, central government

 Technological factors: there are more and more new and advancetechnologies, creating many opportunities and threats for enterprise.Appearance of new technologies creates opportunities for enterprise toproduce new products with high competitiveness, at the same time they arethreats for enterprise which can not apply The more modern technology is,the shorter life cycle of product is

1.4.1.2 Micro-environment

Micro-environment includes internal factors and is external factors for enterprise,determining features and competition level in such production and businessindustry There are five basic factors: competitors, customers, suppliers, potentialcompetitors and substitute products To make successful strategies, it is necessary toanalyze each of those major factors, understanding of these factors helps enterprise

to realize its strength and weakness related to opportunities and threats that thebusiness is facing

Competitors in the industry

Competition among existing enterprises in the industry

Potential new competitors

ConsumerSupplier

Risks of potential new competitors

Possibility to

squeeze price of

supplier

Possibility to squeeze price of consumer

Risks from substitute

Figure 1.3 Relationship between factors in operation

environment

Since common affect of these factors is an indisposed reality for all enterprises, key

to make a successful strategy is to analyze each of those factors Understanding ofsource of competition helps enterprise to realize its strength and weakness related toopportunities and threats that such business is facing

a) Competitors

Understanding or competitors is important to enterprises for many reasons First,competitors determine extend and level of competition or techniques to gainadvantages in an industry depend on competitors Severe competition level depends

on interaction between factors such as number of enterprises competing, growthlevel of the industry, fixed expenditure structure and level of product diversity.Existence of these factors tends to increase demand or expectation of enterprises

who desire to obtain and protect their market shares Thus, they make competitionbecome more and more severe Enterprises should admit that competition process isnot stable Besides, new competitors and new technological solutions also normallymake extend and level of competition change.

Enterprises should analyze each of competitors to grasp and understand solutionsfor action and response that they can approve Major parts of analyzing competitorsare described in following figure:

Currently how

is enterprise competing?

Figure 1.4 Analysis of competitors

Issues relating to customer is indispensable in competitive environment Trust ofcustomers is the most valuable Such trust is obtained due to the fact that theenterprise knows how to meet demand of customers in comparison withcompetitors Another key issue is customers’ capacity to bargain Buyers can reduceprofits of an industry be squeezing price or demand for higher quality and moreservices.

c) Supplier

Business enterprise must have relations with suppliers of different sources of goodssuch as materials, equipment, labor and finance

- Supplier of materials and equipment:

Organizations supplying materials, equipment can “squeeze” profits by reducingquality of products or reduce extend of attached services Factors increasingstrengths of supplying organizations are the same as factors increasing strengths ofcustomers In particular:

+ The number of suppliers is small

+ No substitute products are available

+ No suppliers offering products with different features

Selecting suppliers depends on analysis data of sellers It is necessary to analyzeeach of suppliers in terms of factors important to each enterprise In certain point oftime, most of enterprises, including effective enterprises, must borrow temporarycapital from financial community This source of money can be short-term or long-term or from issuing shares When enterprises analyze financial community, theyshould first pay attention to determine its position in comparison with othermembers in the community

Labor force is a major part in competitive environment of the enterprise Ability toattract and keep competent employees is prerequisite to ensure success for theenterprise Main factors to be assessed are labor ally, including professional and

training qualification, relative salary attraction of enterprise as labor and popularsalary user.

d) Potential competitor

Competitors newly joining business industry is a factor reducing profit of enterprisesince they introduce to exploit new production capacity, with a desire to obtainmarket share and necessary resources It should be noted that purchasing othercompanies in the industry with intention to build market is normally an indication ofappreance of new competitors Even though, enterprise does not always have newcompetitors, new competitors entering the industry is affected and affect strategies

of enterprise A barrier preventing entrance of potential new competitor is a strongdefense of strong enterprises

e) Substitute products

Pressure by substitute products limits profit potential of the industry since theindustry constrained high price level If enterprises do not pay attention to potentialsubstitute products, they may lag behind with small market share Thus, enterprisesshould constantly investigate and check potential substitute products Most of newsubstitute products are results of technology break-out To be successful, enterprisesshould pay attention to and use resources to develop or apply new technologies intotheir strategies

1.4.2 Internal environment

Internal environment of the enterprise include all internal factors and systems of theenterprise Enterprises must try to analyze carefully those internal factors to reducetheir weaknesses and promote their strengths to obtain maximum advantages.Internal factors include:

+ Human resource

+ Production research and development

+ Accounting and finance

+ Marketing.

+ Enterprise culture

1.4.2.1 Humane resource factors

Humane resources play important role in successful implementation of enterprises.Personnel provide input data to plan objectives, analyze environment context ofenterprise Even though opinions of general planning system are correct at anyextend, they can not be effective without effective working personnel

1.4.2.2 Research and development factors

Quality of research and development of enterprises keeps leading position in theindustry or vice verse it makes enterprise lag behind leading enterprises in fieldssuch as developing new products, product quality, and price control and productiontechnology Qualification, experience and scientific capacity are not enough forgood research Functional section in research and development must constantlycheck environment conditions and vice versa, information about technologyinnovation is associated with technology process, products and materials Effectiveinformation exchange among research and development section and other operationfields plays important roles in ensuring success of enterprise

production is weak products can not be sold, obviously leading to loss of financecausing indifference among employees.

1.4.2.4 Accounting and finance factors

Function of finance sections includes analyzing, planning and checkingimplementation of financial plan and financial situation of the enterprise Smallenterprises may use a staff in charge of all of financial issues and as accountantkeeping accounting books, as manager or financial managers; large enterprises mayorganize many sections such as finance section, accounting section, inspection andauditing section, etc

Like other fields financial field has main responsibility relating to resources such as:

- Seek for resources including source of money

- Control of financial expenditure belonging to duties of finance section

1.4.2.5 Marketing factors

Functions of marketing section includes analyzing, planning, implementing andchecking programs in which focus is placed on training and maintaining relationsand communication with customers on the basis of both parties are beneficial Thus,generally task of marketing is to adjust extend, time and level of demand helpingorganizations to obtain targeted objectives and plan effective strategies in terms ofproducts, communication assessment and distribution suited with the market that theenterprise is heading towards

1.4.2.6 Enterprise culture

Each enterprise has its culture orienting for most of affairs in the enterprise Itaffects the manner through decisions of managers, their opinions about strategiesand environment conditions of the enterprise Such culture may be weaknessespreventing them from planning and implementing strategies or may be strengthspromoting those activities Enterprises with strong, positive culture have moreopportunities to succeed than enterprises with weak and negative culture

Enterprise is like a living body – it is because humans help enterprise operate andform meaning and purpose of the enterprise’s operation Culture of an organization

is a collection of experience, characteristics and atmosphere of the enterprise whichare interrelated to form “the manner in which we complete out task” In fact,organization culture of the enterprise is a mechanism interacting with environment

1.5 Tools for establishing strategies

According to Fred R David8 important techniques for establishing a strategy includethree phases, tools used for this process may be applied for all scales and types oforganization, it helps managers determine, assess and select strategies, which ismanifested in following phase:

Phase 1: Input phase includes EFE matrix and IFE matrix, competition image

matrix, this phase summarizes basic information input necessary for establishingstrategy

Phase 2: is called combination phase giving feasible strategies that can be selected

by arranging, combining important internal and external factors In this phase weselect one of matrixes such as SWOT, BCG, SPACE… in this topic the author onlyuses SWOT matrix – and then combines factors to make suitable strategy

Phase 3: decisive phase includes only one technique, which uses strategic planning

matrix that is able to assess QSPM (Quantitative Strategic Planning Matrix) Thismatrix uses information input in phase 1 to assess objectively feasible strategies thatcan be selected in phase 2 to select a suitable strategy

1.5.1 EFE matrix_External Factor Evaluation matrix

External factor evaluation matrix allows strategy makers summarize and evaluateeconomic, social, cultural, population, geographic, governmental, law,technological and competitive information There are five steps to develop anexternal factor evaluation matrix

Step 1: Make a list of 10 to 20 factors of major opportunities and threats decisive to

success of the enterprise as identified during checking external factors process

Step 2: Categorize significance from 0.0 (not significant) to 1.0 (very significant)

for each factor This category shows respective significance of such factor to thesuccess in business of the enterprise, total – significance of all factors must be equal

to 1.0

Step 3: Category from 1 to 4 for each factor decisive to success shows that the way

that current strategies of enterprises react to those factors, in which 4 means goodreaction, 3 means above medium reaction, 2 means medium reaction and 1 meanslittle reaction These levels depend on effectiveness of strategy of the enterprise Sothis category in this step depends on size of enterprise, while category in step 2depends on industry

Step 4: Multiply significance of each factor with its category to determine scores of

significance of each factor

Step 5: Total up all scores of significance of factors to determine total score of

significance of matrix for enterprise

Total scores of matrix do not depend on number of factors in the matrix, the highest

is 4 points, and the lowest is 1 point If total score is 4, this means enterprise reactswell to opportunities and threats; if total score is 2.5, this means that enterprisereacts medium to opportunities and threats, if total score is 1 this means enterprisereacts weakly to opportunities and threats

1.5.2 IFE matrix_Internal Factor Evaluation matrix

Final step in analyzing internal situation is to establish internal factor evaluationmatrix (IFE) Tools for establishing this strategy summarize and evaluate importantstrengths and weaknesses of functional business sections, and they also providebasis for determining and assessing relations among these sections IFE matrix may

be developed in five steps:

Step 1: Make a list of 10 to 20 factors including strengths and weaknesses affecting

greatly development of enterprise

Step 2: Define significance from 0.0 (not significant) to 1.0 (very significant) for

each factor Significance defined for each certain factor shows relative significance

of that factor in the success of the enterprise in the industry Regardless of majorfactors, internal strengths and weaknesses, factors deemed to have biggest impact

on operational results of the organization must be considered as having biggestsignificance Total significance of all factors must be equal to 1.0

Step 3: Category from 1 to 4 for each factor shall show factor representing for

biggest weakness (category equal to 1), smallest weakness (category equal to 2),smallest strength (category equal to 3), and biggest strength (category equal to 4)

So this category depends on the basis of enterprise, while significance in step 2 isdepend of industry basis

Step 4: Multiply significance of each factor with its category to determine score of

significance of each factor

Step 5: Total up significance score of all factors to determine total score of

significance of the matrix Total score of the matrix is in range of 1 and 4, notdepending on number of factors in the matrix If total score is below 2.5 this meansenterprise is weak in terms of internal factors, if total score is above 2.5 this meansenterprise is strong in terms of internal factors

1.5.3 Competition image matrix

Competition image matrix comparing enterprises with their competitors mainlydepends on factors affecting competitiveness of enterprises in the industry, and thenhelps strategic managers realize strengths, weaknesses of the enterprise along withstrengths and weaknesses of competitors, determine competitive advantages for theenterprise and weaknesses that the enterprise should overcome In order to build acompetition image matrix, five following steps should be done:

Step 1: Make a list of 10 to 20 factors including strengths and weaknesses affecting

greatly development of enterprise in the industry

Step 2: Categorize significance from 0.0 (not significant) to 1.0 (very significant)

for each factor This category shows respective significance of such factordepending on extend of impact on competitiveness of enterprises in the industry,Total significance of all factors must be equal to 1.0

Step 3: Determine significance score for each factor, significance score of each

factor depends on capacity of the enterprise for that factor, in which 4 means good,

3 means above medium, 2 means medium and 1 means weak

Step 4: To multiply importance of each element with its weight to determine

number of elements

Step 5: To add the number of all elements to determine total marks of the matrix.

To compare total number of the enterprise with the one of main competitors in thesector to assess competitive capacity of the enterprise

1.5.4 SWOT Matrix

SWOT Matrix is used to list all opportunities, risks, strengths and weakness in theenterprise in appropriate order and position Based on relationship amongstelements, analyzers will select the appropriate strategic solutions by combinations:Strength _Opportunity (S_O), strength _Threat (S_T), Weakness _Threat (W_T),Weakness_ Opportunity (W_O) According to the enterprise’ business objects, themanager will use one or more SWOT Matrix to implement analysis and selectsolutions SWOT model usually include 4 groups of basic strategies:

S_O: The strategies are based on the enterprise’s strength to exploit external

to develop To establish a SWOT Matrix, in accordance with FERD R DAVID9 ,must complete the eight following steps:

1) To list opportunities out of the company

2) To list the important threats out of the company

3) To list the main strengths in the company

4) To list weaknesses in the enterprise

5) Combine the internal strengths with the external opportunities, record results ofthe S_O strategy into suitable boxes

6) Combine the internal weaknesses with the external opportunities, record results

of W_O strategy into suitable boxes

7) Combine the internal strengths with the external threats, record results of S_Tstrategy into the appropriate boxes

8) Combine the internal weaknesses with the external threats, record results of W_Tstrategy into suitable boxes

1.5.5 QSPM Matrix

QSPM Matrix is type of instrument used to re-quantify information analyzed in theinitial stage and allow managers to select the best strategy, QSPM Matrix, asopinion of Ferd R David10 , include the 6 basic Steps as follows:

Step 1: To list the large external opportunities/ threats and the important internal

weaknesses/ strengths

Step 2: To classify each of the internal and external important elements, this

classification is as same as it is in EFE matrix, IFE matrix

Step 3: To determine the alternative strategy that the enterprise should consider to

implement

Step 4: To determine numbers of the attractive points in each of strategies The

attractive point shows the relative attraction in each of strategies in comparison withother strategies, the scoring system from 1 to 4: 1 - nonattractive, 2 – a littleattractive, 3 – rather attractive, 4 – very attractive

Step 5: To Calculate total attractive points, this is the results of multiplying number

of classification points (Step 2) with number of the attractive points (Step 4) in eachrow The total higher attractive points is, the more attractive strategy is

Step 6: To add number of the attractive points That is the addition of total

attractive points in the same column of QSPM Matrix Difference between addingthe total attractive points in a group of strategies is that the higher number of pointsmeans the more attractive strategy

1.6 Organizing to implement strategies

1- Established operating division (usually part of the marketing business) 2- Publish the common goal to achieve, the policy solutions, the resources will beused

3- Established objectives of the strategic components (function) 4- Established network map (Pert) implementation progress

PERT (Program Evaluation and Review Technique) is scientific of sort, arrange thework to find the weakest point for measuring the layout of materials, equipment andstaff ; that is how to work for understanding the global issues has been held in partspecific details Outstanding points of the model network is the clearly link of work

in real time: the plan is done by the network map can be specify any leveldepending on the requirements of the entire work order system and real-time tasks

1.7 Inspection, adjust and summarize the strategy implementation.

1.7.1 Concept

Business owners must have measures to check the implementation of theirstrategies This is a process of inspection, a work by the business owners toinvestigate and control the work instructions are made or done Inspection ismeasurement and redress to ensure the implementation of the objectives ofenterprises and outlines strategies to reach, the goal was, is being completed Thuscheck the function of all managers from the business owner to the person in charge

of parts of the business, the nature of the testing business is the ability to fix themaximum number of big mistakes in a minimum time in business

- Inspection is also the needs of all members of the business properly

- Inspection is needs to ensure that businesses associated with the environmentthrough its foreign relations with other systems

- Inspection is a need to improve decisions on many aspects, many areas of thebusiness

- Inspection is needs to ensure implementation of power management director

1.7.3 Inspection process

1.7.6 Inspection technical

ADMINISTRATOR

PRINCIPLE INSPECTIONCONTENT

INSPECTION FORMCOST

STANDARD

TOOL

INSPECTION SYSTEMADJUST

The inspection usually through two main tools used alternative combination that is:

a Table of contents to check

b Using PERT and statistics indicators

1.7.7 Adjusting strategies

a Concept: Adjusting strategy is the process of active business adaptation for thefluctuations occur

b Principles adjustment

- Only if you really adjust to that

- Adjusting based on fluctuations

+ Adjust opinion

+ Adjustment of enterprises

+ Adjust marketing strategies, etc

1.7.8 Summation to continue into the new phase

a Evaluation results, compared with the expected target, analyze causes ofdifference

b Find potential sources of excess not used

1.8 Summary of the Chapter I

In the nation’s the currently integrating economy with the international economy,the sharp competition, success or unsuccessful of an enterprise is subject to theconstruction of its strategy, and whether the strategies is effectively implemented ornot, that is subject to the strategic administrative capacity of managers in theenterprise

If managers do not thoroughly understand the basic principles of the strategyconstruction and performance process as stated in the Chapter 1, it is difficult toestablish a suitable strategy for the enterprise and manage the strategy performance

Advice method from experts in telecommunication field

For the reason, the Chapter 2 will analyze and propose solutions to implement thestrategies

CHAPTER II : STATUS OF BUSINESS PRODUCTION AND FORMING A STRATERGY OF VIETNAM TELECOM NATIONAL COMPANY

2.1 Overview of the telecommunication market in Vietnam

2.1.1 The general of the telecommunication market in Vietnam

For the previous years, our country has gained the important achievements inimplementation of the economic targets, Gross Domestic Product (GDP) from 2003

to 2008 averagely increase about 7,5% /year Although, in 2009, the globaleconomy is in serious crisis, Vietnamese economy has grown over 5% as estimated.People’s material and spiritual life has improved International exchange has beenexpanded Demand on using telecommunication services and value added services

of telecommunication services has been increasing Telecommunication is the mostuseful mean to serve information exchange, study and business, and the bridge toconnect persons not living together This is the main reason to make opportunitiesdevelop telecommunication In the late 1990s and in the early 2000, Vietnamesetelecommunication development speech ranked the second position in the world.Vietnam is the member of INTERNATIONAL TELE COMMUNICATIONUNION – ITU

Figure 2.1: Number of subscriptions available in the network and its density

until 7/ 2009 ( Data from Berua )

Bảng 2.1 Mật độ điện thoại

Telephonemachine/100dân

98,16 100,19 105 105 108 117,6  126,3

To be a member of WTO is opportunity but threat to Vietnam Posts andTelecommunications Group (VNPT), in negotiation to become a member of WTO,Vietnam must commit to open telecommunication trade market to encourage

foreign investors to invest into Vietnam There are many enterprises established inthe country that makes a sharp competition in telecommunication market

- The enterprises are allowed to establish telecommunication network infrastructure.(Calculated until July 1st 2009 )

Nguồn Vụ Viễn thông

1 Vietnam Posts and Telecommunications Group (VNPT)

2 VIETTEL CORPORATION (Viettel)

3 Saigon Portel Corporation (SPT)

4 EVN Telecom

5.Hanoi Telecom Corporation

6 Vietnam Maritime Communication and Electrocnics Company (VISHIPEL)

7 Vietnam Multimedia Corporation hay Vietnam Television Corporation

(VTC)

8 FPT Telecom

9 Global Telecommunications (GTEL)

10 Indochina Telecom

11 CMC Telecom Infrastructure (CMC TI)

- To provide the domestic long distance services of fixed telephones and to leasetransmission channels: 5 enterprises including VNPT, VIETTEL, EVN, FPT, VTC