Hình thành chiến lược cạnh tranh của tổng công ty VINACONEX giai đoạn 2015 2020

During the research process, competitive strategy is set by analyzing thecompany’s competitive advantages in comparison with competitors to find the bestway to compete in two main busine

THESIS SUBJECTFORMING UP VINACONEX’S COMPETITIVE STRATEGY FOR THE PERIOD FROM 2010 TO 2015

I.3 Basic characteristics and business strategy administration role 8

I.6.2 Micro- environment 19

I.7.4 Selection and assessment of selected strategy 24

I.8 Implementation and examination of selected strategy 24

II.1.3.3 Present competitive and business strategy 37II.1.3.4 Production and business result from 2006 to prsent 38

II.2.2.1 Strength 49

II.3.1 Analysis of some major competitors in the market: 55II.3.2.The advantages of VINACONEX as compared with competitors 60

CHAPTER III: PROPOSED STRATEGY SOLUTION AND

III.1 Judgment on construction and real estate markets 2010 – 2015 63

III.3 Competitive strategy and selected solutions for business 70

III.5 Project proposed for the implementation of the development

strategy of Vinaconex in detail 79

REFERENCES 81

LIST OF TABLES

Table II.1: Indicators show the development of VINACONEX

Table II.2: Business activity’s result of VINACONEX in the latest 3 years Table II.3: Turnover structure in the period from 2006-2008

Table II.4: Profit before tax structure in the period from 2006-2008

Table II.5: Summarized SWOT analysis

Table II.6: Business result of Song Da Corporation

Table II.7: Business result of HUD

Table II.8: Comparison of business result

Table III.1: Budget spending figures

Table III.2: FDI figures

LIST OF FIGURES

Figure II.1: Organization structure of VINACONEX

Figure II.2: Assets structure of VINACONEX

Figure II.3: Turnover structure of VINACONEX

Figure II.4: Profit structure of VINACONEX

Figure III.1: Market for rental office

Figure III.2: Domestic arrival to major cities

Figure III.3: Arrival to Da Nang

Figure III.4: International arrival

The Master of Business Administration Course (referred to as GaMBA here)

is run by the Technology Training Center and Employment System – HanoiNational University The Course provides students with theories of differenteconomic and administrative subjects in modern methods The last subject –strategy administration – collect and co-operate taught programs; provides companymanagers or directors with a vision and business strategies

VINACONEX, is a very large construction company, which was changedfrom a state owned company to a joint-stock company complying with BusinessLaw and it is appropriate to apply with modern international administrationmethods, our group 1 – M03 includes:

- Nguyen Tuan Anh

- Nguyen Thuy Hang

- Lam Tuan Hung

- Le Doan Thanh

- Hoang The Trung (Leader)

We decided to choose this as our final project: Forming up VINACONEX’s

Competitive Strategy for the period from 2010 to 2015

In performing research for the subject, we consolidated general knowledge toanalyze, to assess company situation, to develope tendency, and to establishbusiness vision and suitable competitive strategies

The final research results can be put in real practice by the company andtheir staff joining in this course

During the research process, competitive strategy is set by analyzing thecompany’s competitive advantages in comparison with competitors to find the bestway to compete in two main business sectors of construction and investment, andreal estate business, then, set suitable competitive strategies in period from 2010 to

2015 The details are as follows:

- Analyze company current business activities;

- Analyze strengths, weaknesses, opportunities, challenges SWOT;

- Analyze market trends in company’s business sectors;

- Assess the company’s core value and competitive advantages in comparisonwith competitors;

- Propose competitive strategies and solutions for the period of 2010 – 2015;The project is presented into 3 chapters:

Chapter I: Basic theory of competitive strategy

Chapter II: Analyze Company’s business situation

Chapter III: Propose a competitive strategy and recommended solutions for

the period of 2010 - 2015

And Conclusion

We would like to extend our appreciation to our enthusiastic lecturers toVINACONEX Corporation Management Boards, and related divisions thatsupported us during our research process

Group 1 – GaMBA 01 M03

CHAPTER I: BASIS OF THEORY

Activities of a corporation must be in closel association with the wholeeconomy, the integration to regional and international economy by seeking,developing comparative advantages in order to gain success in tough competition inall national, international or global ranges Therefore, in order to adapt to the higheffective business environment and long lasting success, corporations in general andVietnamese companies in particular need to obtain strategic thinking, which meanslong vision aiming at needed flexible action that ensure the corporation is existingand developing activities in current environmental changes

I.1 Basis theory of business administration strategy

Business Strategy administration is the collection of business strategyforming, organizing, examining, adjusting activities, that happen repetitively incompliance and non-compliance with periods of time in order to ensure thatcompanies make good use of all opportunities, as well as reduce all challenges andtraps in meeting target goals

I.2 Specific characteristics and the role of business administration strategy

Strategy administration helps companies in orienting their own strategicvision, mission and targets In order to get successful and effective strategy,companies must manage business environment information system Based on that,administrators can estimate changing tendency and determine where the companies

go and what they do to get long lasting achievements

Strategy administration gives companies excellent and well adapted environmentstrategies Strategies are general solutions that assist companies in obtaining longterm targets This is significantly important in the complicated, changeable andcompetitive global business environment

Strategy administration helps companies initiatively make decision to take

opportunities timely and reduce risks in external environment, promote ability andlessen weaknesses in internal companies Moreover, this means a lot in reducingrisks when facing serious problems, increasing and grasping developing chances

I.3 Three - stage process in strategy administration

Stage 1: Forming strategy

The main content in this stage is to examine both internal and external factors todetermine strengths and weaknesses, opportunities and challenges, to set targets, toselect and to decide final strategy

Stage 2: Operating strategy

The main duty of this stage is to check the whole organisation, to proposeconsiderable policy for the operating process, to sett up targets, short term, mediumterm, and annual solutions, and to distribute resources as set plans

Stage 3: Assessing and adjusting strategy

This stage is mainly for examining, assessing internal and external factors,measuring, and evaluating results, comparing with “limited” criteria, implementingtargets adjustment, policy or solution to get adapted to new activities in businessenvironment

I.4 Strategy levels at Multi-branch Corporation

The strategy might be run in different levels in corporation in general;however, there are 3 basic levels

I.4.1 Company level

The company level includes enterprise’s general orientation aboutadministration development in subsidiary companies, distributes financial resourcesand others sources among member companies determines a desired structure ofproducts, services and business sectors involved and determine how the businesscategories are being and will be run

I.4.2 Business division level

The business division level focuses on improving competitive advantages ofcompany products and services or a combination product in the market where thecompany is involved

I.4.3 Functional strategy

Focus on administration and effective usages of all company’s resources Thefunctional strategy is being developed to get success from Business division level toCompany level

I.5 Competitive strategy

Each company runs their own strategies that suit their organisation structure.Parents Company’s strategy (Corporation) includes general orientation ondevelopment, administration of all member companies and product lists Therefore,Parents Company might choose some suggested solutions as follows:

Development strategy through mergence, takeover or cooperation.Development through mergence is to merge 2 or more divisions to raise strengthagainst challenges or make goods use of development advantages Developmentthrough taking over is that big company tries to take over smaller ones to get biggerand stronger associations Development through cooperation is to gather strengthsand resources from different partners to raise competition ability and to disperserisks

A company using mergence strategy might improve its competitive position

in main business sectors by: Firstly, limitingthe competition in internal sectors of

business, allowing company to quote higher price and get higher profits Forexample, in the 1930s, Alcoa and Alcan Companies (America) used reversemergence to control boxit mine on an island of Caribe sea, Jamaica This mergenceprevents new competitors from involving in the sector as their cost might be higher

than above 2 companies Secondly, guaranteeing the product quality, for example,

Duc Viet Sausage Company manages a supplying system that ensures company’s

“clean” sausage Thirdly, merged company is self-motivated in setting plans,

cooperating and arranging suitable periods in purchasing elements and distributingproducts to customers For example, GM Motor manufactures 68% car componentsinside the company, but their cost is the highest in cars manufacturers in the world.When the technology is rapidly upgraded, this type of mergence might bound thecompany with backward technology in changing the suppliers which causesdisadvantages in competition

The diversifying strategy is to invest in different business sectors whencompany gets competitive advantages in their current businesses For example,Philip Morris tobacco is diversified by buying Miller Brewing Beer Company;combined diversification (entering in the new area without any relationship withcurrent business); horizontal diversification (developing one or more new products

to serve current customers)

Corporation uses diversifying strategy when they make profits out of needs

in order to maintain competitive advantages in their traditional trade fields Thisstrategy creates its value throughout 3 aspects: Firstly, buying and re-organizingnew companies to help those companies efficiently operate, secondly, transferringabilities between member companies These corporations can put their hope on thespecial abilities in some areas which are transferred to new corporations in order toimprove their positions Miller Company which was re-bought by Phillip Morrishad reached from the 6th to the 2nd position However, if the number of businesssegments is of great number, their operation can not get efficient and their cost willincrease For example, General Motors had 40 members in 1970, then they had toreduce its members to decrease management cost and to manage their membersbetter

I.5.1 Three main competitive strategies:

When following above mentioned strategies, businesses can concretize thesemain strategies into competitive strategies Based on the customers’ demands and

the differences of products, customer groups and market segments, and abilities ofcompany; the competitive strategies include:

I.5.1.1 Strategy of leading its expenses:

It means Business create products which have lower cost than competitors,thereby, company is able to set lower price than competitors Businesses often skipdifferent market segments and focus on serving “middle income customers” whenthey follow this strategy The essential abilities should be focused on special abilitydevelopment in providing in-put factors and production processes Business canalso prevent other competitors’ involvement and reduce the risks of substitutes.Nevertheless, it is also necessary to focus on product quality other than too muchfocus on decreasing cost Furthermore, it is difficult to run after trend: “vision ofnumber” when company wants “to be the all” because it is not easy to balance

customers’ demands

I.5.1.2 Strategy of differentiation

It means Business can create unique products and can meet customers’demands Therefore, business is able to set higher price than its competitors Whenfollowing this strategy, Company implements market segments and product supplylinked to each segment Marketing, studying and developing areas are key abilitieswhich are necessary to be concentrated on Business should select this differencebased on three ways: quality, renewal, satisfaction to customers’ demands

I.5.1.3 Strategy of Centralization

In fact, business which follows this strategy is a specialization, having smallscale, implementing difference of product or leading costs at selected market.Business just focuses on meeting limited customers’ groups or market segments.Market segments can be identified by geographical criteria or a branch of products.Corporations can enhance some key abilities in order to create favorable conditionswith low cost or differences when following this strategy Changed technology orchanged demands are existing disadvantages which can delete market segments or

customer groups served by business For example, Black and white TV technologychanged to colorful TV one

These above strategies propose linked decisions which relate to products,markets, and essential abilities of business as well as relate to competitiveadvantages

I.5.2 Competitive advantage and essential ability.

It is necessary to identify competitive advantages; especially, essentialcompetitive ability to build and select

Competitive advantages can be understood as factors, abilities, resources that

corporations could use to implement business in a more efficient way as comparedwith competitors These factors are:efficiency, quality, renewal, and satisfaction tocustomers’ demands

If other factors do not change, business which has high labor productivitywill have competitive advantages about costs Mark & Spencer (M&S) – businessretailer in England – has a good relationship with suppliers and it is loyal to thosesuppliers On the other hand, this company does not need to advertise programs.This company also builds high professional staff due to welfare commission Thosefactors make a favorable competition with low cost of M&S

Product quality means the faith in implementing work function followeddesign of products High quality goods can create the difference of products andlow cost production Product quality plays an important role in increasingly settingcompetitive advantages In fact, product quality is not only a method to gaincompetitive advantages but also a key factor to maintain business development.High quality cars are produced to help Mercedes Company set higher price than itscompetitors

Innovation includes product improvement, production progress, managementsystem, structure and strategies that company is carrying out Innovation is the most

important factor to build competitive advantages For example, Hewlett Packardlaser – printer, Nike high-tech sneakers, Sony Walkman, etc

Meeting customers’ demands means supply of products when they need.Greater efficiency, higher quality and implementation of innovation are intended forfurther satisfaction to customer needs An example for this is that A branch ofGeneral Motor Company had produced cars following individual order and letcustomer free in choosing design of products

Business needs essential abilities to achieve greater efficiency, better quality,and more innovation or meet customer needs These abilities are formed from twocomplementary sources to bring resources and abilities together

Business resources include finance, materials, labor, and technology andbusiness methods resources These resources are divided into two types: visibleresource (land, factories, machinery, people, and members); invisible resource(reputation, copy-right, know-how, marketing methods, relationships withauthorities) Capability is business skills to coordinate and use resources efficiently.Those skills are in the ways to decide and manage domestic processes in order toachieve the goals Furthermore, capabilities are products of business structures andcontrol methods inside that company

Business resources need to be unique and valuable, to be able to exploit or tomanage and to use normal resources originally so that the essential abilities can beachieved For example, essential ability of Polaroid firm of photograph isimmediately taken based on technology in print faster which is a unique resource.Resource which can make high demand of product is valuable So Polaroid firm hashigh value because it created large demands for photograph products

In order to gain competitive advantages, a business needs to implementstrategies which base on its resources and current ability (its capability); and then itmust build strategy up to create more resources and abilities (develop newcapability) It had been shown in Disney development history In 1980, Disney felt

into financial difficulties but its revenue increased from 1.66 billion to 3.5 billionUSD per year in 1984 after having new president This evolvement was fromdetermination of exploiting resources and current abilities including a large library

of Disney, skills in home movie maker Besides, movie makers are developedsimultaneously This force was able to launch such special movies that was notmade by all other movie firms

However, essential ability would be copied sooner or later Businesspossibility is harder to be copied because it is not easy to realize Essential abilitieswhich base on original possibility are sustainable Three main points needed to carefor are: (1) focusing on factors which make competitive advantages (efficiency,quality, innovation, satisfaction of customers’ needs, special developing ability), (2)practicing Benchmarking (study process, followed products’ standard, services andbusiness practice of business that are most efficient all over the world), (3)overcoming stagnation (breaking barrier against innovation)

Enterprises need to pay attention to build business strategy bases on theircompetitive advantages, especially bases on essential ability in order to maintainand develop

I.5.3 Building process of business strategy.

(1) Defining business vision, mission as well as locating the difference ofbusiness in comparison with other corporations

(2) Defining business mission and strategy

(3) Analyzing external business environment to identify main opportunities andchallenges

(4) Analyzing internal business environment to identify advantages anddisadvantages

(5) Setting long-term aims

(6) Choosing strategies to carry out

(7) Setting up short-term aims

(8) Proposing policies

(9) Coordinating resources

(10) Measuring, assessing result of implementation and adjustment to businessstrategies (if necessary)

I.5.4 Tools to create competitive advantages

- Product and service quality: if products, services have same functions orprices, customer will be ready to buy higher-quality products or services

- Product and service price: If products, services have same functions,quality, customer will buy cheaper products and services

- Application of science – technology and modern management: if price ofproduct, service is lower than middle price at the market, theircompetitive ability will be improved

- Information: information is a competitive tool of business Informationabout trading market, information about customer demand, about priceand competitors ……….are the decisive factors in enterprise’s business

- Methodology of service and payment of business is a relativelyimportant and competitive tool The winner of competition is who holdsthis tool, because this tool create the convenience for customer

- Uniqueness of product: All products in the markets have brought acertain circle of life, especially, its circle of life would be shorter whencompetition appears

- Reputation: Reputation is a competitive tool of business In businessprocess, corporations have used many methods to scramble customers;especially, contract implementation and flexible payment Thesebehaviors will be carried out in better ways if business and customer hastheir faith to each other Therefore, reputation becomes a strong tool incompetition

- New factors of creation and risks: Business profit is often proportional

with risks.

I.5.5 Process of Strategy Planning

Step 1: Researching philosophy, objective and task

That means philosophy, objectives and tasks of business need to beresearched again, researching intentions, opinions, as well as the desire of businessleaders in the period of business strategy

Step 2: Analyzing external environment

The objective of this step is to determine all the opportunities and threats thatmay appear in the period of business strategy

Step 3: Analyzing inside internal environment is to determine the

strengths, weaknesses of the business compared with competitors in the period ofbusiness strategy

Step 4: Reviewing goals and tasks of the enterprises in the strategic period This step is based on the task of research results in the above steps that re-

evaluate what are objective tasks for the business in the strategic period? Are theobjectives, tasks still appropriate with the objectives and tasks which are definedwhen building business or they are needed to be changed? If they must be changed,should business change more or less, follow expansion, narrowness or change allbusiness mission?

Step 5: Deciding business strategy Strategy decision of business is a step

to identify and select specific business strategy in the period of strategies

Step 6: Resources distribution is to distribute needed resources in process

of implementing organization’s specific strategy

Step 7: Building appropriate business policies is to develop business

policies consistently with the business conditions of the strategy period Policies arethought to be business policies linked directly to each field of function operationsuch as marketing or manufacturing

Step 8: Developing and implementing the short-term plans.

Depending on the short period of strategies, short-term business plans are setfor more appropriation.

Step 9: Testing, assessing and adjusting in the process of building and

organizing the implementation of strategy are indispensable activities to determine howbusiness environment has been changed With these changes, does business need tochange, adjust business strategy, business policy and / or business plan?

I.6 Controlling and predicting business environment.

Analyzing and predicting the business environment is an indispensablerequirement in the work of strategy administration because system of environmentalfactors is a complex entity, with continuous fluctuation; especially factors ofexternal environment

I.6.1 Macro environment

I.6.1.1 Political, legal environment.

- Politics: is the first factor that investors, business administrators are interested in

analysis to predict the safety of operations in the country, areas where companieshave business relationship or investment

- Law: Creating a healthy or unhealthy business environment depends on elements

of law and state management of the entire economy Issuing qualitative legal system

is the first condition to ensure equal business environment for businesses, forcingenterprises to handle with responsibility

- Government: plays an important role in regulating the macro economy through

economic policies, finance, monetary and spending programs In a relationship withenterprises, government both plays a role in control, encouragement, support,regulation, forbiddance, restriction and plays a role as important customer as well as

a provider of services to business such as macro information, and other publicservices

I.6.1.2 Economic environment

The evolutions of the economic environment always contain different

opportunities and threats for each business in different sectors and affect businessstrategies potentially.

- The economy growth: The economy at the stage which has high growth will

create many opportunities for investment to expand production and businessactivities of enterprises in contrast, when the economy slowdowns, it will lead tolower consumer costs while increasing competitive forces

- Interest rate and interest rate trends in the economy: have an effect on the

trend of savings, consumption and investment so they also affect the operation ofenterprises Increased interest rate will limit demand for loans to invest inexpanding production and business activities, affecting the profit of the business

- Monetary policy and exchange rates: monetary policy and exchange rates not

only create a good chance for business but also would be a risk for the development

of the business; especially it has impact on changing import-export relationship

- Inflation: when inflation is too high, it will discourage saving and create high

risks for the investment of enterprises; the consuming ability of society is alsoreduced and the economy is stagnated In contrast, deflation has also made economystagnated

I.6.1.3 Social, cultural environment

Includes standards and values that are accepted and respected by a society or aspecific culture The partial change of the social, cultural factors is a consequence ofthe long-term impact of other macro factors, so it often happens more slowly thanother factors in each business

I.6.1.4 Natural environment

Natural conditions include geographic location, climate, and natural landscape;land, river and sea, underground mineral resources, sea and forest resources, a cleanenvironment, water and air

I.6.1.5 Technological environment

This is one of the dynamic factors contained opportunities and threats for

enterprises such as the release of new technology creates and increases competitiveadvantages of substitute products which make circle life of technology tends toshorten, which pushes more pressure to shorten the depreciation period than before.

I.6.2 Micro- environment - Model of 5 competitive forces (M.E.Porter)

There are five oriented competitive forces in sphere of sector:

+ The risk of joining of other competitors;

+ The competition between existing companies;

+ The negotiation power of buyers;

+ The negotiation power of sellers;

+ The threats of substitutesThe power of these above forces can be changed chronologically when conditions

of sector changed

1/ Potential competitors: include companies which do not appear to compete but

still have competitive ability in future The appearance of potential competitor alsoincreases the competitive among businesses The competitive ability of potentialcompetitors is appreciated through “barrier” definition, preventing other accesses tobusiness sector

2/ Current competitive enemy: competitive companies had sustained position in

the market at the same business sector Capacity, scale and strength of eachcompetitor will affect business operations and strategy There are three importantfactors constitute the competitive level among companies such as:

* The competitive structure

* The speed of sector growth

* The barriers preventing enterprises getting out from industry

3 / Customers: Customer is a individual organization that has demands for products

or services provided by that businesses Customers are objects with strong influence

in the strategic business deciding existence and long-term development ofenterprises

The basic information of customer which strategy administration

administrators should collect includes many contents depending on the objectives ofthe study and characteristics of customers The administrator will chooseappropriate information such as:

- Who are objectives customers of business and what are theircharacteristics?

- The scale of current and potential demand

- What are customers’ desires when buying products or service ofbusiness?

- The ability to pay or economic status of customers

- Factors affecting customer behavior and buying decision process

- Do customers have enough information about the product or service ofbusiness?

- How customers respond to marketing activities from main competitors?

- What are advantages in negotiating of customer?

- What are the main activities of customers?

- Which brand of products are customers buying and why do they buythem?

- Do they have any ability to integrate if customers are organizations?

- The consumption trend

4/ Suppliers: suppliers are enterprises, individuals who have the ability to produce

and supply invested factors such as factory machinery and equipment, materials ofall kinds of alternative products, labor services, information of energy and transportmeans for business

5 / Alternative products: Broadly, businesses in the sector have to compete with

businesses in other sectors whose products can replace the products of industry.Replaceable products limit the potential profit of the sector by setting a maximumprice that the companies in the sector can gain profit

I.6.3 Control over internal environment of enterprises

Internal environment includes system of tangible and intangible elements

existing in the operation of business or organization and directly influence on thestrategy administration process.

Therefore, internal environment analysis is necessary for all types oforganization in the economy which is the basis to help companies know thestrengths and weaknesses as compared with its competitors as well as helpadministrators know the ability to capture the market opportunities in each period.Analyzing strengths and weaknesses of the internal environment is done through thebasic contents of the following:

I.6.3.1 Assessed analysis of resources

Resources of a business include labor resources, physical assets, intangibleresources This is a decisive factor group deciding the ability of business and thesuccess or failure in the market, in which the most important resource is people

I.6.3.2 Labor resource

People are essential factor in all activities of all kinds of enterprises, decidingthe success of businesses, organizations in each country

The administrators at all levels: This is an important human resource whoplays a role as the conductor of the music orchestra of business that high-leveladministrators plays the most important role because all decisions, all actionsincluding style and attitude in domestic, foreign relation are affecting the wholeenterprise

I.6.3.3 Material resource

Material resource includes factors such as capital for production, factorymachinery, equipment, reserved material, the information of business environment

In fact, administrators perform the analysis of resources through the primaryactivities such as:

Firstly, sort material resources existing in business: the capital in cash,

machinery, factories, warehouses, land, and reserved materials

Secondly, identify scale of structure, quality and features of each material

resource

Thirdly, assess the ability to meet the actual needs of each resource in

activity programs of the division within the business for each period

Finally, assess and identify strengths, weaknesses of each material resources

as compared with major competitors in the industry and the market by geographicarea

I.6.3.4 Invisible resources

In addition to the above resources, the enterprise or organization also hasother resources that people only recognize by perception; it is the invisibleresources Intangible resources are expressed by many factors and administrators atall levels should have sufficient knowledge to beware the presence and know theimportance of this resource

I.7 STRATEGIC FORMING

I.7.1 Vision and mission

In each enterprise, identification of the mission is an important periodensuring the success of the entire process of strategy administration In fact, firmstypically invest too much time on choosing and deciding the strategy and assumethat the strategy will happen naturally The strategic goals can not achievethemselves, business must analyze thoroughly, form policies and allocate resources

by any reasonable short-term plan and organizational practices to turn them intoreality required In the period implementing mission, the oriented plans will beconverted into concrete actions

+ Determine the goal: The goal is an expected result and requirement of

organization after a certain time Answer the question: What our business exists to

do It consists of the following characteristics:

* Target must provide quantitative characteristic

* Target must take feasible characteristic that is to be able to implement in practice

It is the result of expectations of the business; therefore, it should be undertaken andcompleted in reality, otherwise it would become meaningless

* Target must bring consistency characteristic: is the target corresponding to eachother Accomplishing this goal does not harm the other target; nevertheless it hasinteractions to form unite system in an organization in order to reach the commongoal of the enterprise

* Target must be a reasonable characteristic: without acceptance of the people, theprocess of developing and implementing goals faces many difficulties People areimportant factors because they are both subject and object

* Target must provide flexibility to get adapted to the fluctuations of theenvironment, preventing and reducing the risk of structure broken

* Target must be specific: that is the specialization of objectives and goals must beassociated with each unit and must be special The more specific objectives set out,the easier strategies are set to complete

Planning goals is often under some pressure from:

* Business owners towards increase in profitability

* Staff force tends to protect their safety and stability

* Customers want their demand to be met

* The habit of development affects administrators

Therefore, when formulating the strategic objectives, administrators must combine,harmonize and resolve conflicts between the pressures

I.7.2 Identify current strategy of the enterprise:

Getting to know the exact current strategy is a basis for confirming the strategy aswell as selecting new strategy Identifying the current strategy is to clarify issuessuch as locations, strengths, weaknesses and the cause of the strengths andweaknesses associated with the current strategy of the business

I.7.3 Analyze the list of capital investment:

Main point of the analysis of capital investment list is the consideration of strategicbusiness units in different situations with various competitive abilities of differentgrowth, which need to form different strategies List of capital investment orientsrotated monetary flow

I.7.4 Selection and assessment of selected strategy:

This is a step depending on selected strategic objectives and used appropriate tool todetermine the strategy of the specified period

It is necessary to assess selected strategic goals and strategies in accordance withspecific terms of the environment and the market or not The assessment of selectedstrategy ensures strategic planning has scientific basis and ensure the feasibility tobring products to market

I.8 Implementation and examination of selected strategy

I.8.1 Regulations on implementing selected strategy

- Business strategies must be logically implemented, and they must be incompliance with strategic target system

- In case business environment does not exceed forecast limit, they must be inconsistency with implementing strategic targets

- The longer term plans is, the more general it is The shorter term plans are, themore detail they are

- Corporation must ensure sufficient reserved resources for the whole process

- Plans must be disseminated to every single staff

- Forecast and discover unexpected changes early to find relevant solutions

I.8.2 Implementing process in details

Firstly, set shorter targets and business plans

Secondly, change, adjust current organisation structures to strategic targets,

and determine missions for each division

Thirdly, distribute resources.

Fourthly, form and implement business plans

Fifthly, get used to work process by setting information system, improving

cultural procedures, and controlling changes, adaptation between production andmanagement

I.8.3 Examination and Assessment

The main purpose for these activities is to examine and evaluate whether thebusiness plans are proper or not (business strategic plan is suitable with theenvironment or not.)

* Examining, assessing, and adjusting requirements

- Suitable with examinee and administration periods

- Flexible examining activities

- Ensure of anticipating actions

- Focus on essential points

* Business plans adjustment

Based on the result of assessment, there must be suitable adjustments to meetbusiness targets Adjustments must be in relation to suggest solutions to meet thetargets

I.9 Research methods

The research process is in accordance with the following stages:

Stage 1: Assembling figures

 Business activities reports of years from 2006 to 2008 and the first 6months of 2009

 Financial reports and formal released information on stock market

 Construction and real estate information relating to VINACONEX’sactivities

 Real research and survey in VINACONEX

 Interview managers and directors

Stage 2 : Analysing methods

- The comparative and general methods: periods to periods, years to years,and to competitors

- The inductive method is the way from detail to general conclusion

- Analysing SWOT method: is used to set competitive strategy ofVINACONEX, it helps managers identify both internal and externalenvironment problems and set appropriate strategy In fact, SWOT canshow close association in 4 elements, then can form effective plans toexplore opportunities and reduce or avoid risks and improve the strengthand overcome the weakness on that basis to

- Environment analysing method by Micheal Potter: with this method wealso can realise corporation situations such as competitors, customers,replacing products or pressure, then propose closer competitive strategiesThe above mentioned are fundamental steps to set competitive strategies The stepsare in the three – period process of forming, implementing, and controlling strategy.From the research of general theory of business strategy, competitive advantagesand steps to build business strategies in general and competitive strategies inparticular of Vietnamese companies in current integrated period are essential for thecompany to build a strategy to improve its own competitive capability, which ismentioned in the following Chapter II

CHAPTER II ANALYSIS OF THE REALITY OF COMPANY

II.1 INTRODUCTION OF VINACONEX JOINT STOCK CORPORATION II.1.1 Formation history

According to the decision No 1118 BXD/TCLD on September 27, 1988 ofthe Ministry of Construction, Overseas Construction and Service Company,commercial name is VINACONEX, whose main task was selecting and managinglocal construction workers and employees working overseas mainly in Socialistcountries in Eastern Europe

In the early 90 of century XX, when Soviet Union and the Socialist system inEastern Europe collapsed, co-operated labor forces must come back to the country

At that moment, the production of domestic construction businesses also facedmany difficulties, lack of employment, redundant labor, so the number of co-operated labor could not return to work in previous offices In order to create workfor workforce that was selected before and was trained with competent skills andadvanced discipline), VINACONEX proposed Ministry of Construction allowmerging some weak construction companies, re-organizing them to become directsubsidiaries On August 10, 1991, Minister of Construction signed the decisionNo.432 BXD/TCLD to change from Overseas Construction and Service Company

to Vietnam Construction and Import – Export Corporation with the core business ofconstruction, material, equipment import-export and manpower export From acompany which managed employees working overseas, VINCONEX has built step

by step force, joint venture cooperate with local as well as overseas businesses todevelop and become the leading Corporation in construction

To implement the policy of restructuring state-owned company, inNovember 20, 1995, Ministry of Construction issued Decision 992/BXD-TCLD onthe establishment of Vietnam Construction and Import-Export Corporation followed

90 Corporation model Accordingly, Vietnam Construction and Import-Export

Corporation could receive some companies under Ministry of Construction to be itsown subsidiaries Identifying objective multi-business, diversified product, multi-field, VINACONEX has developed continuously; in December, 2006,VINACONEX had 88 affiliated companies, in which VINACONEX hascontributed capital (over 51%) in 45 companies, with the workforce of 42,283staffs, engineers, specialists, employees operating in the whole country

To implement the Decision 84/2004/QD-TTG dated May 13, 2004 of thePrime Minister, VINACONEX was one of the first State-owned Corporationsimplementing pilot equitization among all corporations In November 27, 2006, theshareholder meeting was held to establish Joint-stock Corporation and fromDecember 1, 2006 VINACONEX was officially operated in the model of joint-stock Corporation with the capital 1,500,000,000 VND (one thousand five hundredbillion Vietnam dong), according to the certificate of business registration No

0103014768 was first registered on December 1, 2006 by Hanoi Authority forPlanning and Investment

II.1.2.Development period of VINACONEX

1988 – 1995 period: was the newly established period, main operating field

of Corporation was labor export and import-export business Since 1991,VINACONEX began expanding to the construction field In this period,VINACONEX was the top company in import-export business and labor exportfield in Vietnam

1995 – 2006 period: Since 1995, VINACONEX has operated in 90

Corporation model Accordingly, VINACONEX has identified multi-field businessmotto with strategy through the process of operation, striving to become a powerfuleconomic group

In this period, VINACONEX was considered one of the leadingCorporations in construction and installation field and was a powerful corporation

in the field of labor export and import-export business at the same time Inconstruction and installation field, the Corporation has significant changes Beside

traditional civil engineering field, VINACONEX expanded scope of activities totransport, wharf and industrial construction field VINACONEX also began tooperate in investment, firstly in the real estate projects including residential centersand commercial centers, hotel, recreation centers, etc

Period from 2007 up to now: Operating in joint-stock company model, not

only traditional business fields such as construction, labor export, material andequipment import-export were still developed but the investment field ofCorporation was strongly developed In addition to investing in real estate,VINACONEX invested in industrial production projects, building materials,consumer products and also expanded in other fields such as financial investment,education training, etc

Some indicators show the development of VINACONEX (including memberunits) through each development period as follows (Table II.1):

Table II.1 - Indicators showing the development of VINACONEX

1 Human resource

2 Production value

(VND) 3 billion 1,845 billion 14,500 billion

3 Profits (VND) 200 million 24 billion 596.3 billion

(Source: Website vinaconex com.vn)

II.1.3 VINACONEX Corporation at present

JOINT-STOCK CORPORATION

Headquarters: VINACONEX BUILDING, 34 LANG HA, DONG DA, HA NOI

Business fields: Civil engineering construction, industry, transport, irrigation,

hydroelectric engineering, thermo-electric, wind-electric, nuclear-electric,transmission line and transformer station up to 500kV, technical , socialinfrastructure engineering, urban, industrial zone, hi-tech center, undergroundworks, cultural, sports, entertainment, travel works, hotel and other public works.Business areas permitted of VINACONEX by certificate of business include:

 Construction Investment and real estate business;

 Commercial electricity production;

 Exploitation, production of clean water, products for waste water treatment,waste and environmental protection;

 Exploitation, manufacturing and processing of components and constructionmaterials include stone, sand, gravel, brick, tile, cement, glass, roofing,asphalt, concrete components, artificial stone and other constructionmaterials, etc.;

 Exploiting and processing mineral;

 Hotel business investment, motels, supermarket and other tourists;

 Managing and operating trade center, supermarket, urban, industrial zones,hi-tech centers, export processing zones;

 Import-export materials, machinery, equipment, accessories, automatictechnology chain, transport vehicles, motorcycles, material production andconsumption, handicraft and fine arts, farm, forestry and maritime products,good transport and delivery service, super-field components, super-weight,sale service of alcohol, beer, cigarette, catering service business, beverage,confectionery, factory made goods, cosmetics and souvenirs;

 Gasoline retail agent;

 Labor export business;

 Design master plan, interior and exterior architecture of industrial and civilengineering construction, design town planning, design structure of industrialand civil engineering construction, design water supply and sewerage, water

environment for industrial, civil engineering construction, waste treatmentengineering project; geodetic survey, design transport infrastructure,leveling, drainage construction works, design electric of civil, industrialengineering, consulting investment and construction

 Business registration, Establishing and verifying investment projects,consulting tender and managing projects, consulting new equipmenttechnology and automatic equipment;

 Investing, contributing capital to set up new joint-stock companies, limitedliability companies, investing and contributing capital to operating joint-stock companies and limited liability companies;

 Shares, promissory notes, bonds and other valuable certificates businessinvestment;

 Overseas engineering construction and installation;

 Investing to set up joint venture enterprises and enterprises with 100%capital of the corporation operating in foreign;

 Implementing supply, installation, repair service, warranty for airconditioner, refrigeration, fire prevention equipment, elevator

 Sale, buy and bailment agents;

 Ticket sale agent for domestic and foreign firms;

 Textile and garment industry;

 Buying, selling and processing service of agricultural, forestry products,round wood, primarily processed wood, refining wood, coffee and varioustypes of agricultural products (except woods prohibited by the state);

 Planting, caring, maintaining, preserving forest, planting industry tree andraising animals and poultry, exploiting and manufacturing pure water;

 Exploiting business dock, marine and highway good load and yard for lease;

 Goods transport by highway, river-way and sea-way;

 Organizing educational activities, training from kindergarten to high school,education-vocational training; foreign language training and overseas studyconsultant

II.1.3.1 Organization and operation model

Since December 1, 2006, Vietnam construction and import-export joint-stockCorporation – VINACONEX is organized and operated under joint-stockCorporation model according to the adjustment of Vietnam Enterprise Law,accordingly, the Corporation is the parent company of member companies and isjoint-venture capital contributed partners or partner with some other units As themoment of March 31, 2008, VINACONEX has 42.283 personnel working in 88focal elements About Organization, beside the Corporation’s Head Office,VINACONEX has 28 affiliated units (04 units of production, accounting dependbusiness, 05 training schools, 15 management boards, executive committee, projectpreparation board; 04 representative office over the country and overseas)implement strategic objectives, projects and production tasks of the Corporation, 46member companies (that VINACONEX hold dominant shares) and 14 joint-ventures and joint-coordinations (02 joint-ventures, 12 joint-coordination.Economic relation between Corporation and member companies and joint-venture isrelation between legally independent entities through economic contracts

Organization structure of VINACONEX is shown in chart below

Figure II.1 - Organization structure of VINACONEX

Shareholder assembly

Board of directors

Board of manager

Subcommittee of financial Subcommittee of investment

Subcommittee of listing Subcommittee of secretary

Subcommittee of policies and treatment regimes

Board of legal &

foreign affairs Board of human development constructionBoard of Board of planing

financial

Board of financial supervision

Board of investment

office

Member

units

Board of management and PMU

Local and overseas Representative offices

Administrative unit with income, private school

Accounting depended units

Joint-ventures, coordinati-on Board of control

Some major operation of VINACONEX

Real estate business is an great potential area for high effectiveness and Vinaconex identified it as a key business area, especially for a business which is a capable of construction, production of building materials, import-export, and has experienced in management construction investment At present, Vinaconex is implementing series of real estate investment projects in Hanoi, Ho Chi Minh City and other provincial cities.

Real estate business and investment

Engineering construction

Vinaconex is known as a leader in construction and installationfield of Vietnam with capability of implementing large projectssuch as civil construction, industry, urban infrastructure,transport, irrigation, etc in the form of contractor, constructiongeneral contractor, EPC contractor This is a key activity area,will always be increased with resources, innovative technologyand equipment to take the implementation of larger-scale andmore complex projects

Industrial production

Linked between real estate business and design consultant,construction, industrial production and building materials arethe major activity areas of Vinaconex Industrial products areessential products to social life, contain hi-tech elements, areproduced on modern production line and competitive in themarket which offer a variety of new materials with superioradvantages

In machinery and equipment, building materials business,Vinaconex has been a reputable supplier for businesses inconstruction, transport, irrigation areas, especially buildingmaterial synchronous production line, equipment and materials

in water supply and environment treatment for a long time Atpresent, Vinaconex also expands its operations to import andexport all kinds of goods for production and consumption

Import-export

II.1.3.2 Core competition

The core competition or the capability in which VINACONEX excels and thatbrings benefits to the customers, having features that are hard to be copied by itscompetitors and can be applied to diversify products and expand its market,consisting of:

1/ Capability to search for new direction to invest and develop

Labor export

With experience as the leader in the field of labor export,Vinaconex has made contribution to the resolution of theemployment, benefits for workers and businesses With highquality engineers and workers in combination with theeffective management of the workforce and experts workingoverseas, the prestige of Vinaconex on the internationalmarket has been increasingly well known and partnersassessed Vinaconex as a reliable partner

Financial investment

VINACONEX has been expanding in financial investment,participating in capital market, money market, improving theefficiency of the capital of state and shareholders, expandingpartnerships with banks, credit and financial institute in andout of country Strategic orientation in the field of financialinvestment will motivate and support activities of productionand business development

Other areas

Always persist with the motto of multi-business, diversification of activity areas and products, Vinaconex hascontinuously expanded trade-tourist-hotel business,

entertainment, education and training, football, insurance, security service, urban service

2/ Capability to think logically and solve problems

3/ Capability for administration and organizational development

4/ Capability to manage and develope human resource

5/ Capability of sound and transparent finance

6/ Capability in construction and execution

7/ Capability in real estate investment

8/ Capability to research and use technical and scientific applications

9/ Capability to build up and develop brand name

Core competition of VINACONEX can be realized through analyzing of thefollowing possibilities:

- Ability to participate in almost areas: labor export, construction, investment(urban, technical infrastructure, trade, travel infrastructure, social,educational and training infrastructure), industrial production and buildingmaterials, design, planning and investment consultancy Derived from themanagement of construction labor cooperating-working overseas change toimplement construction and installation and in operating process Vinaconexdoes not hesitate to invest, implement projects in other areas Workforce,equipment and gathered experience that are always reinforced, improvedhave become the essence capability of the Corporation

Being a strong construction contractor, having many experience inorganizing, implementing and being able to meet technical requirements,state-of-art building in construction, with ability to complete projects on timeand ability to comply with high economic, technical indicators Thanks tomany members in different activity areas followed the orientation of theCorporation, VINACONEX is able to organize and mobilize needed force tomeet the requirements

- Having many ideas to invest in innovative projects with high technology,large scale, using new materials “New urban center” projects (Trung Hoa -Nhan Chinh), modern industrial production, with the largest capacity inVietnam (Cam Pha Cement Factory), implemented follow to the policy ofsocialization (Song Da - Hanoi Water Supply System) which show the ideas

of continuing research to lead innovation of VINACONEX

- The Business culture of Vinaconex is one of the key factors to raise the tradename of Vinaconex The Business culture of Vinaconex is represented in twosides: business purpose and business method, in which business purpose isthe key factor Business purpose, firstly, is for benefit of investors, eachcompany, of the whole Corporation, community and the nation, secondly,not less important, is the benefit of workers working at VINACONEX So,culture of VINACONEX has become the essence capability of theCorporation

II.1.3.3 Present competitive and business strategy

- Business strategy: Multi-business, diversification for products with majorbusinesses are construction, investment, labor export, import-exportmachinery and equipment, industrial production, service commercial,education and training Not only deal with traditional areas: import-exportand construction, VINACONEX also operated in other areas such a:education and training, trade, tourist, electric power, clean water

- Competitive strategy: Follow three ways: cost, quality and unique.Production and management cost are identified to make a reasonable productcost at the lowest prices Apartments in VINACONEX apartment buildingare always highly appreciated by customers, large construction engineeringprojects are always certificated by quality management authorities andinvestors These show the competitive strategy through quality of

VINACONEX, not for any reason including for cost that the product quality

is lower Unique product, always led by the researching and developing newmarker is also a competitive strategy of VINACONEX

II.1.3.4 Production and business results from 2006 to present

Business activity’s result of VINACONEX in the latest 3 year is shown intable II.2 below with some main indicators as follows: