Xây dựng chiến lược kinh doanh công ty cổ phần địa ốc MB land

PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATIONLUẬN VĂN THẠC SĨ Xây dựng chiến lược kinh doanh công ty Cổ phần địa ốc MB Land THESIS SUBJECTBUILDING THE REAL-ESTATE BUSINES

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

LUẬN VĂN THẠC SĨ

Xây dựng chiến lược kinh doanh công ty Cổ phần địa ốc MB Land

THESIS SUBJECTBUILDING THE REAL-ESTATE BUSINESS STRATEGY OF MILITARY BANK LAND JOINT STOCK COMPANY PERIOD 2010 - 2015

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COMMITMENT

We do hereby assure this graduation capstone project is the result of an independent research by our team The data and findings described in this study is honest and quoted from a clear source, the prediction about market is completely based on scientific basis

We also confirm that the analysis in the capstone project is the achievement of entire group’s efforts based on data provided by Military Bank Land Joint Stock Company, reference materials, learning and practical experience of all members Also, analyses in this capstone project is not statement of any single individual in the role of an officer working for their company

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ACKNOWLEDGEMENT

Over the time studying and completing major task of Strategic Administration Subject, we can get further learning of subjects in the MBA course help by the University of Griggs in the association with center of technology and work system – Hanoi National University Thanks to theory taught by of professors, Doctor of Philosophy, and lecturers of the university combining with our own practical experience, by scientific researching method we have completed this report in the best way during such as short time

We would like to express our sincere thank-you to:

- Management and Steering Board of Military Bank Land Joitn Stock Company;

Especially, we would like to express our great thank-you to the enthusiastic and direct help of:

- Associate Prof Dr Ngo Kim Thanh – Head of Business Administration Department – National Economics University

- Lieutenant-general Pham Tuan – Chairman of Management Board of MBLand

- Colonel Pham Viet Thich – Vice Chairman of Management Board of MBLand

- Colonel Ho Sy Mau – General Director of MBLand

Teachers and lecturers who have spent time teaching and helping us complete this graduation thesis

Management and Steering Board of Military Bank Land Joint Stock Company has provided data, given advice, discussion and help us complete this report timely.Members of group 2 - GaMBA01.M03 Class

Le Minh Huyen Nguyen Trung Kien Lam Thi Hoan Pham Viet Thuong

LIST OF SYMBOLS AND ABBREVIATION

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Table 1.1 Analysis of Swot matrix of the Company 32Table 1.2

Evaluation of strategy performance sequence according to Smart matrix

Price trend from 2001 to 2008 of apartment classification

in the Hanoi compass

81

Table 2.5 Supplying source of apartments in years 81

Table 2.7 Swot analysis of office market segment 98Table 2.8 Swot analysis of housing market segment 98Table 3.1

Evaluation of strategy performance sequence according to Smart matrix

106

Table 3.2 MBLand’s route of strategy performance 107Table 3.3 Evaluation of strategic target performance 110

LIST OF FIGURES

Figure 1.1 Process of building business strategy 22

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Chart 2.2 GDP growth rate of Vietnam (Forecast for the year 2009 and 2010) 61

Chart 2.4 Happening of inflation in Vietnam from 2000 until now 65

Chart 2.5 FDI capital invested in Vietnam from 2001 – 2009 (Unit: billion USD) 65Chart 2.6 Rate of operated FDI compared to commitment 66Chart 2.7 Population divided in urban – rural area 69Chart 2.8 Urban population: nationwide – Hanoi – Ho Chi Minh City 70Chart 2.9 Supplying source in Hanoi and Ho Chi Minh City in development process 77Chart 2.10

Demanding source and price for leasing real estate in Hanoi over the past years

FOREWORD

1 Necessity of the research topic

Real-estate is a big property of a nation, a special commodity, and the estate transactions and business activity there of have strong influence on most of the socio-economic activities

real-The economic development and the real estate have a close relationship with each other, which is closer than that of other sectors When the economy develops leading to the raised standard of living and an increase in the housing demands, the real-estate market accordingly develops and vice versa Reality in Vietnam for

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up, the open market policy has been opener and the real-state demands has strongly gone up, making Vietnamese real-estate market become quite exciting

Due to considerable value as a feature, the investment capital into the real estate is usually mobilized more, so development of the real estate market will bring about the development of the finance-bank systems According to the experience of the developed countries, the money banks lend on mortgage occupies more than 70% total credit funds As a result, development of the real-estate investment and business plays an important role to turn the assets into plentiful capital sources to serve the socio-economic development, especially the investment in the economic infrastructure

In Vietnam, by the end of 2007, the account outstanding of the real-estate loans in 2007, particularly from the beginning of Quarter III, strongly accelerated The account outstanding of the real-estate loans in Hanoi increased from 2-3 % (at the end of 2006) to 10% of the total account outstanding in the middle of 2008 At some times, density of the real-estate loans, in some banks, reached to 40% of total account outstanding At the end of Quarter I of 2008, the account outstanding of the loans increases approximately by 12% (4% per month on average) in comparison with that at the end of 2007; but in April 2008, credit growth slowed down much, just by more than 1% In particular, the account outstanding of the real-estate loans

is VND135,000 billion, including loans for house purchase, lending the enterprises

to invest in the infrastructure serving their production, business, loans for constructing the houses for sale and offices for rent, 1

In addition, the real-estate market has direct relationship with other markets related to construction, construction materials, interior decoration, architecture and labour, According to analysis and evaluation of the economists in the developed countries, if the investment in the real estate increases by one billion USD, it is possible to speed up other relevant sectors to increase by 1.5 – 2 USD Sound development and governance of the real-estate market will impulse the economic growth through incentives for lands, establishment of the projects, factories, structure, and since then to make a significant movement in respect of structure in

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the sectors, territorial regions and in the whole country It could be said that construction materials is a factor reflecting the demands in the real estate The strong development of the real estate market along with highly-increased demands bring about large demands on the construction materials consumption and vice versa

As a result, development of the real-estate has direct and indirect influence on development of the national economy and social culture of each nation Simultaneously, the real-estate market is one of the important markets of the economy because it is directly related to extreme big amount of properties in size, nature as well as value of the aspects of the national economy Real-estate business activities in the market much depend on the operations of the real-estate enterprises and individuals, which is the factor deciding existence and development of the real estate market

MB Land Joint stock Company, a real-estate business, was founded in January

2006 by 6 shareholders, of whom two main shareholders are Military Commercial Joint stock Bank and Service Flight Cooperation of Vietnam with the initial charter capital of VND 475 billion From the foundation date, MBLand worked out its

mission statement: “MBLand will make efforts to introduce the dominant estate products in term of quality and value to every client MBLand ceaselessly creates and maintains the most equal development environment for all the staff and officers MBLand will develop for the sustainable development

real-of the real-estate market real-of Vietnam.” To gain that goal, a business strategy for

the company is needed and required to be used as basis for all the business activities toward correct directions, to gain the given goal and to follow the selected mission assigned by the shareholders

On that basis, along with enthusiastic support and approval of leaders of the MB Land Company, our group selects the research topic of final-course assignment as:

“Building the real-estate business strategy of the Land Joint-stock Company –

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Vietnam for recent time; analyze the environments inside and outside the company and at the same time work out appropriate business strategies in coming time so as for the Company to develop strongly; make the best of any opportunities, limit the weakness and overcome any threats, helping the Company achieve its given strategic goals quickly

2 Purposes of the research and applications in reality

Research purposes: Systematizing the argumentative basis of the strategies to

be premise for analysis on the factors affecting the company’s operations, the business strategy construction in next periods

Analyzing the factors which affect the real-estate business environment, production and operation of the company and since then combining with orientations and goals of MB Land to build the real-estate business strategies of MBLand

Studying the topic is very important practically It provides a comprehensive view about the operation and development trend of MB Land Joint stock Company

at the moment Objects of this topic are real-estate companies, organizations and individuals taking part in the real-estate market – one of the most exciting developing markets at the moment which a lot of organizations and individuals at home and abroad pay special attention to

The research provides MB Land Joint-stock Company a panorama about real state of fevers in the real-estate market of Vietnam since Law on Land (1993) was promulgated It also analyzes opportunities and threats brought by the external environment, and simultaneously points out the company’s advantages to be promoted and disadvantages to be repaired, analyzes strategies concerning the company’s operation Thus, several measures are proposed to implement the strategies and accelerate the others in respect of stabilization and development of the business strategy of the company in a context of increasingly critical competitions

Moreover, it is possible to use this research as a materials for other works, researches in respect of the market management, operation effectiveness of the land

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and/or real-estate companies Furthermore, the research also has argumentative value, providing a new view about strategy and methods of the operation management of the real-estate company, other than the approach and analysis on the strategy of some real-estate companies for recent time

3 Scope of the research

Strategies proposed by MBLand Company are based on assumptions, and current situations of the Company as well as forecast of the market at level of serious and careful research

Assumptions:

Period of the strategy is from 2010 to 2015 The business strategy is designed for the Real-estate Business according to the definition in the Law on Real-estate Business dated 2006

Geographic market scope: MBLand’s headquarter is located in Hanoi Its registered main business line is real-estate business, so the strategic report will concentrate on the real-estate business strategy of MBLand in Hanoi The report, however, will analyze the statistic data of the real-estate market in Ho Chi Minh City to sum up the overall evaluations about the real-estate market of Vietnam Market segments are currently selected on basis of the first key project that is MBLand Tower, of which segments of High and Middle class houses; Office class

B has been chosen for investment by MBLand based on results of the market evaluation studies conducted by MBLand’s executive board as well as opinions of the experts and/or specialists

Real conditions

However, besides the assumptions, making those strategies true or not depends

on the following important elements:

- Common consent of the general meetings of the shareholders, the Management Board and the control board

- Coordination and mutual support between shareholder companies within MB

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- Unity of the officers and staff

4 Research methodology

Information to make the report is mainly collected from books, magazines, statistics data in the electronic website of the press agencies at home and abroad, information, statistic data, reports of real-estate management consultants and researches on the real-estate market of Vietnam and other countries

Interal information sources include the operation charter of the company, production and business by-law, the balance sheets, reports on operation results, financial statement of the year 2008 and the first six months of 2009

After that it is possible to use methods of synthetic analysis, comparison and expert to analyze situations in the production and business and select the business strategy for the company as well as procedures of the strategy performance

5 Limitations of the research process and future research orientation

Sensitivity of the data

Real-estate market is a high-level market, the market of information and psychology Consequently, information from both the government and the real-estate companies, even just a small issue, may make the market fluctuate and be affected Therefore, analyzing the topic can mention any matters and/or problems generated from the recent financial crisis in detailed and sufficiently Some information cannot be disclosed without permission of MBLand and competent authorities This aims at keeping information security of MBLand away from its competitors and for its own benefits As a result, this research will not mention all the aspects of the issue to repair any problems happening to MBLand thoroughly

Time for the research

Except for the aforesaid factors, the time also affects our group during the research However, with data availbale and support from MBLand and experts in the sector, particularly efforts of the group members, the topic basically reflects full

of aspects of MBLand and the real-estate market in the context of the global financial crisis at present

6 Outline of the research

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Besides the foreword and the conclusion, the research focuses on three main parts:

Chapter 1: Argumentative basis to build the business strategy

Chapter 2: Building the real-estate business strategy of Military Commercial Joint stock Bank Land Joint stock Company

Chapter 3: Selecting strategies, schedule of implementation and measures of strategy implementation

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CHAPTER 1:

ARGUMENTATIVE BASIS OF THE BUSINESS STRATEGY

CINSTRUCTION

1.1 Basic issues about strategy and modern business strategy

1.1.1 Origin of the strategy and definition of the business strategy

In competitive world, people sometimes wonder why some companies achieve success while others fail? Actually, each enterprise has its own method for existence and development In order to see how companies in different industries with different conditions and situations develop strategies to gain competitive advantage, it is first to understand source of strategy and concepts of business strategy

”Strategy” is the term originating from Greek “Strategos” used in military Modern military theorist Clawzevit thinks that: “Military strategy is the art of commanding in advantageous position” A publication of Larous dictionary presents: “Strategy is the art of commanding tools for victory.”

Strategy has been applied to business since 60s of twentieth century and the term “business strategy” emerged The concept of business strategy has been developed through the time and people accessed it in different ways

In 1962, Chandler gave definition of strategy as “Identifying long-term basic goals, purposes and applying activities as well as distributing necessary resources to achieve this goal1

In 1980s, Quin gave a more general definition: “Strategy is the patterns or plans integrated key goals, policies and action chains into a general united properly”2

After that, Johnson and Scholes re-defined strategy in changing conditions:

“Strategy is the orientation and scope of an organization in long term to gain competitive advantage for the organization by formatting its resources in changing environment to meet demand of the market and satisfy expectation of related parties”3

1 - Chandler, A (1962) Strategy and Structure Cambrige, Masacchusettes MIT Press

2 - Quin, J., B.1980 Strategies for Change: Logical Incrementalism Homewood, Illnois, Inwin

3 - Johnson, G., Scholes, K.(1999) Exploring Corporate Strategy, 5 th Ed Prentice Hall Europe

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Apart from above traditional approach, many business organizations approach strategy in new method: Business strategy is the plan to control and utilize resources, assets and finance in order to enhance and ensure its essential rights Kenneth Andrews is the first person to pose this outstanding idea in classic book

“The Concept of Corporate Strategy” In his opinion, strategy is what an organization has to do on the basic of strong and weak points in the context of both opportunities and threads

Professor Michael Porter, father of competitive strategy said: “Competitive advantage relates to the difference That is the careful selection of different activity chain to create original value set”4

Whatever the approach is, business strategy nature is to outline future image

of the enterprise in activity area and exploration ability It can be said that strategy construction and implementation becomes the top task and important content, function of business administration It is widely applied in enterprises The common viewpoint shows that: “Business strategy is the combined art of activities and controls them to achieve long term goals of the enterprises” Therefore, a good strategy is not enough but there needs a good organization to ensure success of the enterprises

1.1.2 Basic characteristics of the strategy

By analyzing the origin of the strategy previously, we can see that strategically there are still different opinions and approaches However, at any angle and in any period of time, the basic characteristics of the business strategy are considered in a rather unified look, that is:

+ Business strategy identifies basic targets that the business policy should reach and should be grasped through in all aspects and all fields of the enterprises’ administration

+ Business strategy only sketch out long term operating directions of the enterprise and the future operating frame of the enterprise Therefore, it is only directional In the reality, it quires the combination of strategy’s target and the

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+ Business strategy of the enterprise is built basing on the competitive advantages of the enterprise to mobilize at maximum level the deployment and using of enterprise’s resources

+ Business strategy is reflected in a continual progress from its establishment

to its implementation, assessments and adjustment

+ Business strategy is formed and implemented by taking advantage of strong points and making the most of business opportunities to achieve the highest operational efficiency

+ The establishment, organization, examination, assessment and adjustment of the strategy are focused on the group of senior administrators of the enterprise

By analyzing the characteristics of the strategy, we can see that its remarkable problem is the production of ideas, plans and supports for an enterprise to compete successfully against its competitors This is a modern approach to study the competitive position of an enterprise

1.1.3 Strategy system in an enterprise

- Functional strategy: Functional strategy is the strategy leading to the improvement of the effect of basic activities in a company such as production, marketing, material management, human resource study and development

- Business unit level strategy: “Business unit level strategies are the whole of commitments and actions that help the enterprise gain the equal competitive advantage by deploying their essence of capacity into specific markets of products”5 Three type of business unit level strategies: Strategy of leading in expense, strategy of making different and the strategy of focusing in the gaps of the market

- Global strategy: In the context of present market and global competition, having a competitive advantage and maximizing company’s capacity require that the company should expand its activity outside the country On seeking for the way

of global access, the company should weight the benefit and expenses basing on four strategies: National strategy, international strategy, global strategy and multinational strategy

- Company level strategy: Company level strategy indentifies actions that the company executes to gain the competitive advantage by selecting and

5 - P.rindova & C.J.Formbrun, (1999), ”Constructing competitive advantage: The role of firm – constitute interaction”, Strategic Management Journal, 20: 691-710

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administrating a group of different business activities in some branches and markets

of products

1.1.4 Roles of business strategy

In market mechanism, the construction and implementation of business strategy are playing an important role in the existence and development of the enterprises An organization without strategy is like a ship without steering wheel Almost all failure in business is because of lackage of proper strategy or strategy implementation in right direction The role of business strategy for the enterprises is presented in the following aspects:

- Business strategy helps enterprises recognize goals in each stage and see direction in the future for the guideline of all activities of the enterprises

- Business strategy helps enterprises catch and take advantage business oppotunitiess as well as take the initiative in applying measures to deal with and prevent dangers and risks in the competitive market

- Help enterprises exploit and maximize their resources and promote available strength as well as overcome existing shortcomings existing in the enterprises

- Business strategy helps allocate resources properly in each stage and enhance enterprises’ position to ensure the continuous, stable and sustainable development

of the enterprises

- Business strategy creates solid base for the enterprises to make reasonable decisions in consistent with changes of the market It is also the solid base for the study, implementation, investment and development of the human resources and for technology renovation, market expansion and development, product development and labour productivity increase as well as business administration effectiveness enhancement

- In addition, business strategy helps enterprises increase closeness and consensus of staff and leaders in the implementation of common goals of the enterprises

Therefore, strategy is the tool to express general long term goals of the organizations and enterprises Strategy helps enterprises quickly complete the goals The key causes of success or failure of the enterprises depend on the very important

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1.2 Process of business strategy planning

Generally, strategy is understood as the result of proper planning process carefully arranged Up to now, administrative and competitive scientists have recommended various strategic planning models In each model, there exists a framework for the whole strategic administration process based on the concepts mentioned above However, the review of planning process as a starting point is useful for our journey to the strategic world

The strategic construction process can be divided into five main steps including:

Step 1: Identify strategic tasks and goals of the enterprises

Step 2: Analyze external environment to realize oppotunitiess and risks

Step 3: Analyze internal environment to identify strengths and shortcomings

of the organization

Step 4: Select strategies (on the basis of searching resources, possibilities and core abilities and develop them to overcome risks and take advantage of the opportunities from external environment)

Step 5: Strategy implementation

Figure 1.1: Business strategy construction process

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Strategic plans induced from this process take about 5 years and are updated yearly Therefore, strategic planning is the orientation of resources distribution in the organization Details of the steps in business strategy construction are as follows:

1.2.1 Identify strategic tasks and goals of the enterprises

Identifying strategic tasks and goals of the enterprise is the first and important stage in the whole process of business strategy construction and strategic administration process Administrator needs to answer two key questions: Which field of business does the enterprise participate? And why does the enterprise exist and do business in that field? Those contents are expressed in the mission statement

of the company

Mission of the company is the concept to identify purpose of the company,

Strategic function, task and strategic goal of the

enterprise (1)

Internal enterprise analysis

(S, W) (3)

External environment analysis (O, T) (2) Strategic selection (4)

Corporate strategy (5) Business bases and functional section strategy

Deployment and implementation of strategy (6) Inspection and evaluation of the result (7)

Feedback

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purpose does the company business aims at?” Scope of the mission statement

usually refers to technological products, markets, customers and other philosophies the enterprises are pursuing Therefore, it can be said that it is the mission statement that shows existence meaning of an organization, the thing that they wish to be, the customers they wish to serve and the methods that they are operating

A mission statement of an enterprise should include the followings:

+ Customer orientation and business definition: The first and important step in building a mission statement is to identify business activities of the organization The key in this identification is to answer a question: What kind of business we are doing?” What will it be” and “What should it be” 6 It is the answers that will guide the construction of the mission statement

+ Values: Values of a company clearly confirm manner administrators intend

to control, the way they do business and characteristics they wish to build for the organization Values adjust behaviors in the organization They are considered company’s organization culture base and a competitive advantage leader

+ Goals: are future state company is trying to implement or the final result of

the planned activities Goals of an organization can be regarded as the cause for

the organization’s existence Therefore, approach of strategic planners to target

problems will create orientation for the strategy formation and impact to contents of

the strategy

Goals pay the way for orientation to pursue and affect kinds of activities of the enterprise Goals are the motivation and can be used as a tool for assessment and control Goals also play central role as the result of comparison For each enterprise, goals can be long term, medium term or shot term Economists assume that enterprises set the goals in the following 8 areas: Market position, renovation, productivity, finance source and logistics, profit, development and efficiency of officers, attitude and efficiency of workers, responsibilities for society

1.2.2 External environment analysis for identifying opportunities and risks.

6 - FF Drucker Management – Task, Responsabilities, Newyork: Harper & Row, pp 74-94

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External environment is the factor that has influence on the implementation of goals that enterprise wishes to achieve The goal of external analysis is to identify opportunities and risks from external environment of the company External environment analysis includes macro-environment analysis and industry environment The analysis of those factors help enterprises determine their position and particularity of environment and era they are living, shape influence of external environment to the enterprises and goals of the enterprises, then make decision in planning business strategy to take maximum advantage of the opportunity and minimize threats as well as apply reasonable management decision

1.2.2.1 Macro-environment:

Macro-environment is the large aspect in the society having great influence on

an industry and companies in that industry, …economy; politics and law; culture and society; technology, natural factors

Figure 1.2: Factors of macro-environment

Economy factor

Internal enterprise environment

Politics and law factor

Natural

factor

Culture and society factor Technology

factor

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macro-factors Their changes contain both opportunity and threats for enterprises of which the most prominent ones are the change trend of: Trend of Gross Domestic Product and Gross National Product; interest rate; inflation rate, balance, foreign exchange rate; economic policies expressing government’s opinion in the industry development

- Politics and law environment: Politics and law factors have great impact on

level of opportunity and thread from the environment; therefore, they have great influence on enterprises’ activities including: politic stability, system of opinions and policies of the government, existing law system, diplomatic trends of the government, local, regional and international politic happenings

- Culture and society environment: Culture and society environment include

norms and values accepted and respected by a specific society or civilization Culture and society environment have strong impacts on business activities, mainly the following factors: change in age pyramid, marriage and maternity create, attitude of consumer, opinion of aesthetics, ethics, lifestyle, profession; custom, practice, tradition; priority of the society; general awareness and literacy of the, …

- Natural environment: Natural conditions include: geological location,

climate, natural landscape, land, river, sea, underground mineral resources, forest and sea resources, purity of water and air environment…

Their impacts to decision making have been recognized by enterprises so far

In many cases, natural conditions become very important factors to form competitive advantage of the products and services Environmental pollution, low quality products, resources waste together with increasing demand for limited resources make enterprises change their related decisions activities

- Technology environment: Technology environment includes institution,

activities related to creation of new knowledge, transition of the knowledge to outputs, products, processes and new materials This is one of the very dynamic factors containing various opportunities and threads to enterprises Therefore, enterprises should pay attention to new technologies because it can make the

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product out of date directly or indirectly, besides profits that technology development brings

1.2.2.2 Industry environment:

Industry environment is the range of facts directly impacting on a company and competitive activities and competitive response of that company Main technique used to analyze competitive competence in industry environment is the model of five competitive pressures of Pro Michael Porter: Risks due to penetration

of potential opponents, competitive intensity of companies in industry, buyer and seller’s strength and threat of substitution products

Figure 1.3: Model of five competitive pressures according to M Porter 7

- Potential opponents: are companies which do not compete in the same

production at the moment, but capable of competitiveness if they join the industry Penetration capability of these potential opponents depends on industry penetration barriers If enterprises have a strategy to enhance penetration barriers, its risks will

be limited

Risk of potential opponent

Negotiation

competence of

supplier

Threat of substitution product

Negotiation competence

of purchaser

Competition between opponent in profession

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competition of companies in industry increases, the more profit capability, existence and development of the company is threatened Therefore, this competition forces the company to enhance investment expenses to create differentiation of product, service approaching to market or price reduction

- Supplier: Suppliers can increase the pressure when they can raise input price

or reduce quality of product, service they offer that leads to decrease in seeking for profit of enterprise In other words, this threat creates more or less dependence for enterprises

- Substitution product: Substitution product is other products which can meet

demand of customer Basically, this has the strong point over substituted products in specific features This threat requires that enterprises must analyze, keep track of technological advance regularly, in which related to innovation of technology and product

- Competition between opponents in the industry: Enterprises doing business

in one industry is usually different in terms of market, distribution channel, product quality, technology, sale price and promotion However, in the same industry, some enterprises follow and implement one strategy or similar ones creating group of strategies Number and capability of companies in industry decides property and competitive intensity in industry

Thus, by researching external environment, companies can decide what they can do In order to succeed, either its strategy must be suitable with operation environment or company can shape the environment to take its advantages throughout strategy selecting process

1.2.3 Analyzing internal environment to recognize strong and weak points

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sustainable competitive benefits of enterprise, at the same time, defining obstacles

in maintaining these benefits The internal analysis includes: analyzing sustainable competitive benefits, analyzing strategy and financial efficiency

1.2.3.1 Analyzing sustainable competitive benefits

There are two ways to analyze the sustainable competitive benefits namely resource analysis and value sequence analysis The former helps to recognize core competence in range of the company and the latter helps the company understand expense benefits or the difference in range of business unit

a Analyzing resource

Resource analysis shows reserves of resources, capacities and assets available for the business unit or the whole company

- Resources: ”Resources, as widely accepted, include a range of elements of

organization, technique, material, human resource, finance of company Resources can be classified into two types: tangible and intangible resources”8 Tangible resources are resources which can be seen such as finance resources, organization, physical conditions and technology Intangible ones include human resources, innovation capability and reputation

- Potential capability: ” Potential capability is the company’s capability of

using integrated resources in purpose to gain desired goad state”9 General speaking, potential capability of one company is the product of organizational structure and control system

- Core competence : resources and capabilities of the company are used as

resource of creating competitive benefit, competitive distinction of that company, through activities that company conducts extra-over as compared with opponents and those activities create unique value for its products and services over time

b Analyzing value sequence:

Analyzing value sequence enables the company to understand chains which create its product value and chains which do not The term “value sequence” refers

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to the idea which considers a company as a sequence of activities transforming input into output to create value for customer The process includes main and supportive activity; each one increases the product value Supportive activities take part in each main activity

- Main activities: The activities associated with enterprise’s products and

services Those are purchase activities, input management, marketing of service and service after sales The more economical and more satisfying these activities, the higher the value sequences of the company are evaluated and the more competitive benefit the company has

- Supportive activities: Help main activities of enterprises be executed better

and more efficiently The mentioned main activities mean human resource administration, technology development, and purchase

Figure 1.4: Model of company value sequence of Micheal E.Porter 10

In short: Analysis of sustainable competitive advantage is a result of

resources and unique capability of using on value creation activities according to the ways that the opponents cannot copy or be stripped by other partners Factors create sustainable competitive advantages: efficiency, quality, innovation and customer’s demand meeting

Figure 1.5: Basic blocks creating competitive advantage 11

10 - Charles, Hill and Garth, Jone, 1995, Strategic Management, Washington

11 - M.E Porter, Competitive Strategy, Free Press New York, 1980

24

Dominant quality

Dominant

effect

Dominant customer response

Competitive advantage Differential low cost

tŕnh)

Procurement activity (mua nguyên vật liệu thô, máy móc

thiết ḅ, cung cấp)

Internal

Logistics

Produc tion

External Logistics

Marketing

and sale

Service Infrastructure of organization

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1.2.3.2 Analyzing strategy

All enterprises have their strategies so task of analyst is to describe their current ones Description of strategies focuses usually on product strategy – customer, competitive viewpoint and strategy logics Analysis will concentrate on: company’s strategy; product strategy; competitive strategy viewpoint; functional strategy and goodness of current strategy

1.2.3.3 Analyzing financial efficiency

Basic purpose of analyzing financial efficiency is to evaluate financial efficiency of the enterprise through analyzing financial parameters, current standards and time: profitability, liquidity, leverage effect, operation parameters along with increase economic value or its fluctuation, measuring direct increase price for shareholders, etc

Conclusion: By researching internal environment, enterprises will determine

what they are capable

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From the analysis table SWOT above, companies take advantage of strong points to optimize business objectives; limit weak points to fulfill the scheduled objectives, use up all opportunities in order to overcome threatss to achieve fully business success

Table 1.1: Table of analyzing matrix SWOT of the company

(Listing main opportunities from +9 to +1)

1

2

Combination S/T

Overcoming risks by strong point

it wastes a lot of time, material, and manpower Therefore, it should have a choice

to bring out the optimal one for developing and considering benefits, damage, gain and loss from this strategy

On the basis of the pointed strategy set by combining the strong point- opportunity, strong point – risk; weak point – opportunity; weak point – risk, matrix

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according to Smart criterion is used to sketch basic lines for selecting key business strategy which the enterprise needs follow Assessing and ranking priority order based on discussion with leaders of company and experts in the field to determine and implement suitable path

Table 1.2: Evaluating capability of implementing strategy in accordance with Smart matrix

Aggregate

Mark

Aggregate

Mark

Aggregate

Mark

Aggregate

Step 3: Evaluating mark for each analyzed factors at each strategy, mark from

1 to 5 corresponding to levels: weak, average, above average, good, very good.Step 4: Converting coefficients is the result of multiple of two columns (the second column and evaluation column at evaluation mark of each strategy), then

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Lastly, some high-score strategies of the total highest marks and these are focal strategies necessary to focus on implementing

1.2.5 Strategy performance

It is necessary to show the performance plans for each important issue as well

as consider the combination of functional components in the company in giving out plans and the way to perform From these important issues and plans, it also need draw up performance plan and give out path to execute objectives and plans

Together with strategy performance, the company need prepare the plan to test and evaluate the results of each period The objective of test is to instruct operations, determine differences between plan and performance cause to these differences and propose completing solutions The final objective of a business strategy is to ensure that these objectives must support and impact one another; and the way that these objectives impact on performance of functional strategy and company’s strategy

1.3 Feartures of the real-estate business strategy governing construction

of the real-estate business strategy.

1.3.1 Concepts of the real estate and the real estate market

1.3.1.1 Concept of the real-estate

The definition of real estate comes from ancient Roma, accordingly, “Real estate is not only land, assets under the ground but also anything created by human’s labour on that land Real estate includes construction engineering, crops, and plants, etc and anything relating to or attached to the land, things on the earth surface as well as components of territory”12

Pursuant to Civil Law No 33/2005/QH11 dated June 14th, 2005 of the Socialist Republic of Vietnam, at Chapter XI, Article 17, it is regulated that: “Real Estate is assets including: Land; Housing, construction work attached to the land, also including assets attached to that house, work construction; other assets attached

to the land as regulated by the law”

12 - Source: Management Department Real estate assets – Administration of Housing management – Ministry

of Construction

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Thus, regulations of the law on division of assets which is movable and which

is real estate vary among countries as well as there is no common definition of real estate among regional countries

1.3.1.2 Real estate business

Pursuant to Article 4, the Law on real estate business No 63/2006/QH11 dated June 29th, 2006 of the Socialist Republic of Vietnam:

- Real estate business operation includes real estate business operation and real estate service business operation

- Real estate business operation is investment capital in establishing, receiving from assignment, hiring, or buying real estate for selling, assigning, leasing again for getting profit

- Real estate service business operation is activities supporting real estate business and real estate market such as brokerage services, valuation of real estate, real estate transaction center, consultancy, advertisement and management of real estate

- Real estate transaction relating to real estate business is purchasement, assignment, renting real estate among organizations, individuals who do not trading

in real estate

- Real estate transaction center is the place where happens real estate transaction and providing services to real estate business

1.3.1.3 Real-estate market

Economists as well as real estate researcher has given out different definitions

of real estate market, but the most common is: Real estate is transaction process of real estate assets among related parties, is the “place” occurring activities such as purchasing, assigning, leasing, pledging and related services including mediation, brokerage, consultancy among subjects of market where state management play a decisive role in promoting development or inhibiting business operation in real estate business operation in real estate market

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On the basis of research findings and evaluation of scientists, it can be said that our real estate market is divided into primary and secondary real estate market 13

1.3.2 Characteristics of the real estate business governing the construction

of the business strategy

- The real estate is a fixed commodity and unmovable in respect of position, and it suffers from customs, psychology and taste The real estate market is deeply regional, and it does not spread, concentrate over the regions of the country

- The real estate is a commodity with considerable value, so the real-estate business has its own characteristics, enormous investment capital, fixed position and it serves certain objects

- Enormous loan is a characteristic of the real-estate business

- In the field of the real-estate business, operation effectiveness of the enterprise depends much on the economic situation of the country and the life of common people

- Charateristics of the real-estate business ly in the products, services and goods in the real-estate market, such as house, construction work including investment and establishment of house or building for sale, rent; real-estate brokerage; real-estate pricing; real-estate management service; real-estate transaction center,

- Concurrently, it can be seen via the organizations and individual taking part

in the real-estate market, who are investors of the new urban area, apartment blocks, industrial infrastructure; investor of land reformation and infrastructure built for transferrence or rent; individuals take a direct or indirect part in the real-estate business and services

- Decree no 153/2007/ND-CP dated 15th Octorber 2007 stipulating details and guidance to implementaion of Law on Real estate Business, in which conditions for the organizations and individuals to participate the real-estate business are specified For instance, the Real-estate Enterprise or a Real-estate co-operative must

13 - Administration of Housing management – Ministry of Construction

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have legal capital of 6 billion Vietnam Dong; the individual broker, who evaluates the real-estate, manages and/or runs the real-estate transaction center, must pass the training course(s)

In conclusion, the real-estate business has more characteristics than others, so

it will decide the business strategy because the real-estate business strategy orients the enterprise to its own characteristics

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2.1.2 Process of establishment and development

MILITARY BANK LAND JOINT STOCK COMPANY is a Real Estate Company established in January 2008 by 6 shareholders including two main shareholders: MILITARY BANK and SERVICE FLIGHT CORPORATION OF VIETNAM with charter capital of 475 billion dong Up to now, total asset of MBLand reaches over 500 billion dong14 The rest shareholders include Hanoi Investment Fund, Thang Long Securities Company and subsidiaries of SFC

2.1.3 Management organizational structure

Figure 2.1: Present organizational structure of MBLand 15

14 - Report of Business Activities in 2008 of MBLand

15 - Operational Charter of MBLand

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General Shareholders Council

Board of Directors

Permanent Board of Directors

Board of General Directors

Accounting – Financial Department

Planning – Investment Department

Business Department

MBLand Project Unit

Hotel branches

MB Consultancy & Design JSC (MBID)

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The Company currently has 4 functional departments: Administrative Department, Accounting – Financial Department, Planning – Investment Department, Business Department; 1 Project Management Unit with 28 officers and staffs, branch of ASAN International Hotel with separate system and dependent accounting; member company is MBID Joint Stock Company with separate system and accounting

Board of General Directors includes one General Directors and two Deputy General Directors General Director is responsible for general management and all activities of the Company, directly responsible for accounting – financial segment, personnel organization and strategic issue of the Company, business activities of Asean Hotel as well as PR and foreign issues The first Deputy General Director is

in charge of project development, directly guidance for MBLand Tower project implementation and interior issues of the Company The second Deputy General Director is in charge of other business activities of the Company, capital mobilization and consultancy for General Director in financial issues

2.1.4 Business activities of the Company

- Real estate trading: Investing for creating, buying, receiving transfer,

hiring, renting real estates for selling, transferring, renting, re-renting

- Trading in real estate services: Services of real estate brokerage, real

estate evaluation, real estate transaction floor, real estate consultancy, real estate auction, real estate advertisement, real estate management

- Trading in hotel and restaurant services: Resort, entertainment areas,

supermarket, commercial centers, exhibitions, fairs, football grounds, golf grounds, tennis grounds, bowling floors, swimming pools, stadiums, etc

- Trading in Transportation – Stores

- Minerals: Exploitation, processing and purchasing minerals.

- Export – Import Trading: Export – Import Trading in products of

business companies

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Among them, the real-estate business is the main and key business line of MBLand comany in the current period

2.2 Building the real – estate business strategies of MBLand Joint Stock Company in the period from 2010 to 2015

2.2.1 Overview on Vietnam’s Real Estate Market

2.2.1.1 Several fevers of Vietnam’s Real Estate Markets 16

The first fever occurred in two years (1993 – 1994): The Real Estate Market got deep fever in land segment and land use rights The reason is the greater increase of dwelling houses and land of residents and land for production and trade, especially in urban areas where land transfer and purchase relationship in the community appeared in the years without Law on Land (1993) Law on Land (1993) becomes valid and has strong effect on Real Estate Market – hot market in Land and Land Use Right Segment The investors focusing on land of first fever are the companies like Epco – Minh Phung, Tamexco, etc., with loans from the banks Second investors are individuals with majority of free investment capital Then, after the fever is freeze (for the first time) lasting in five years (1995 – 1999) When the State applies administrative method (Decree 18) to intervene the first fever, several investors hurriedly sell land and revoke capital to pay for the banks

The beginning sign of second real estate fever is Decree 80 of the Government issued in 2001 The second fever (2001 – 2003) occurred due to the investors’ assessment that the trend of allowing Viet Kieus to buy houses and issuing new land prices will be prosperous for land – house market, so many investors buy land

in the edge of the city According to the estimate of Ho Chi Minh City Economic Institute, this amount of investment reaches about 6 billion USD The statistics of Land and House Department shows that there is only 10% of over 6,000 ha of urbanized land in the edge of the city which has been used to build infrastructure and dwelling houses! Therefore, it can be concluded that the demand of land-house market in the second fever is unreal and the prices are speculated and not real

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Strong hot segment in the market is front houses and project land Then, second freeze lasts in five years (2002 – 2006) When People’s Committee of Ho Chi Minh City issues several intervening methods such as Instruction 05 dated 15 April 2002

on household plot division termination, Instruction 08 dated 22 April 2002 These methods cool down land-house market for striking the benefits creating speculation prices However, because the majority of these investments are free from individuals, the demand of quickly selling and revoking capital to pay for loans does not occur as in the first fever Therefore, although the fever has stopped, land prices do not decrease down to the prices before the fever

The third fever occurs in 2007 Unlike the first two fevers, this one focuses strongly on high-level apartments and villas There need to emphasize on several key causes: Firstly, FDI increases strongly for investment in Vietnam and leads to impressive economic growth in 2003 – 2007; Secondly, the year 2006 – 2007 can

be considered as a splendid year of Vietnam’s securities market and all people participate and easily earn money from securities market This creates a large surplus of securities winners to real estate market When the securities market rises

up and lowers down depressfully with the policy of tightening credits to prevent inflation of the Government, the capital for real estate market becomes exhausted High-level segment completely freezes and real estate market falls into long-time hibernation

Many experts realize that: “Real Estate Market regression in 2008 is completely different from market freezes in 1994 – 1995 and 2003 - 2005 in terms

of nature That is, in the past freezes, land-house prices preserves but do not decrease However, in the market hibernation in 2008, these prices fall depressfully With big projects with geodesic position, land prices rise up high such as Him Lam – Kenh Te (sometimes, up to 90 – 100 million dong/m2), An Phu – An Khanh (at the highest time, up to 45 – 60 million dong/m2), Thanh My Loi (35 – 40 million dong/m2, but dropping down to 20 – 25 million dong/m2 (Him Lam) or 18 – 20 million dong/m2 (An Phu – An Khanh), Thanh My Loi (15 – 20 million dong/m2)

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It can be then realized that real estate market is always hot in some special segments such as land and land use rights (in 1993 – 1994), projected land and front land (in

2000 – 2001) and high quality departments and villas (in 2006 – 2007)

Diagram 2.1: Vietnam’s real estate market fevers

MBLand’s point of view:

- The time of real estate market’s dropping is when it assembles for a new growth cycle

- Through regression, RE market filters weak companies, makes the market healthy and decreases competitors

- MBLand comes out at the time of next growth period (from recovery – hotness) of the market

2.2.1.2 Hot segments forecast in the future

1st RE fever:

1993

- 1995

2nd

RE fever:

2001

- 2003

3rd RE fever:

2007 – early 2008

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belief that RE market is recovering However, this also leads to the concern that RE market shall follow the fall down as in the end of 2006 and at the beginning of

2007 Some experts on RE market believe that: economic situation and conditions

of this time and in the end of 2006, at the beginning of 2007 are completely different, thus it is difficult for a new land price fever with the same hotness as in

2007 to form

Many experts think that this fever can not happened with high-level apartments due to two reasons: Firstly, “land fever” is mostly due to “prices abuse circumstance” of a group of speculators and brokers Therefore, the Government is currently making many bills and policies for brokers and project apartments are dealt clearly through transaction floor This helps minimize “virtual prices” and

“virtual fever” Secondly, currently, many projects of high-quality apartments are formed in the market in 2009 – 2011 This make supply exceed demand in high-quality apartment segment thus it can not become the “promising sector” for speculators This segment thus stops at hot level and can not become a fever

It is estimated that when RE market warms, retail segment shall develop most powerfully because in the past time, while other segments freeze, retail segment remains eventfully Vietnam is assessed as potential for retail market Especially since 2009, Vietnam opens retail market as in the commitment with WTO Therefore, domestic and foreign retail dealers have the demand of finding new agents for market share competition However, retail market is still considered as under developed and changeable with small scale If the investors do not form investment strategies and create competitiveness for commercial market under the circumstance of sharp competition, products of commercial market shall not become the investment resulting in the profits as expected

In report “Vietnam’s Real Estate 2009 and Prospect 2010” made by Viet Nam Report, most of the leading real-estate experts of Hanoi and Ho Chi Minh city said that Vietnam’s real-estate market will recover in 2010 – 2011; and the strongest and most sustainable increase in price will be in 2011 or 2012 For high-grade apartment

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block market, there is no many changes; however, the common-price aparment block market tends to increase slightly because of tendency of the urbanization and city expansion

Mr Marc Townsend, Chief Executive Officer of Richard Ellis Vietnam Company said that, in 2009, many codes and regulations would take effect, such as: Personal Income Tax, Value-added Tax, Ownership law in the retail markey and Law on Housing for Foreigner; increase in the car registration fee and real-estate transferrenc fees, increase in bank interest rate, implementation of the second

stimulus package would make it difficult to predict any changes of the domestic real-estate market Moreover, the real-estate investors are standing in front

of big threats because the economic recession is directly affecting the Vietnam Where the real-estate will go in future is still a question not only for the investors but also for the managers and policy-makers

2.2.1.3 Influences of law policies on real estate market

In recent years, real estate market, especially property market in our country has developed strongly, playing an important role in promoting development of economy-society, industrializing and modernizing economic mechanism, and changing faces of rural and urban areas

However, Vietnamese real estate market still remain in several defects, namely speculation and bull of some investors, intransparency of market information, illegal transferring, land dispute, etc All these factors impact negatively on real estate business Thereby, State has issued a series of legal documents on real estate market and real estate trading, and they remain in force until this moment:

- Real estate trading Law No 63/2006/QH11 dated 29 June 2006 of Socialist Republic of Vietnam

- Decree No.11/2007/CT-TTg dated 8/5/2007 of President of Government on Real estate trading Law implementation

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- Decree No.153/2007/ND-CP dated 15 December 2007 of Government on detail regulations and instructions on Real estate trading Law implementation

- Ciricular No.13/2008/TT-BXD dated 21/5/2008: Instructions on implementation of several contents of - Decree No.153/2007/ND-CP on 15 December 2007 of Government on detail regulations and instructions on Real estate trading Law implementation

- Ciricular No.84/2008/TT-BTC dated 30/9/2008 of Ministry of Finance, providing guidelines on individual income tax (come into force and effect since 01 January 2009)

- Ciricular No.161/TT-BTC dated 12/8/2009 providing guidelines on individual income tax in case of transferring, inherit, and gift in form of real estate

In progress of complete access into WTO of Vietnam, Vietnamese real estate market needs to be gradually completed Transparency and competitiveness of real estate market, from establishment to trading process, is restricted: investors encounter difficulties in searching and deploying investment projects, and local residents encounter difficulties in buying houses directly On the other hand, domestic investors are facing with overseas investors who are gradually occupying real estate market share This is an obstacle for investors in general and for real estate investors in particular to promote real estate market to develop sustainably and stably in a fairly competitive environment

In 2008, Vietnamese real estate reveals some unstable signs The rapid inflation, and then the increase in construction price forced credit to be tightened; therefore, the capital reimburment of projetcs was slow The negative effects of financial crisis all over the world continues to make real estate decline and make transactions work moderately

In 2009, real estate investors are facing with big threatss caused by economic crisis which is directly affecting Vietnam; Real estate tends to lose transactions considerably and go down However, real estate is still potention and has opened many opportunities The expansion of urban and quick urbanization as well as

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