IMPROVING MANAGEMENT STRATEGIES AND BUILDING BUSINESS STRATEGIES IN THE PHASE OF 2015 TO 2020

Secondly: Basing on the science of strategic management which has beenstudied, the thesis is focusing on the complete analysis of a comprehensivebusiness aspect of Viettel Post JSC from

THESIS MBA

IMPROVING MANAGEMENT STRATEGIES AND BUILDING BUSINESS STRATEGIES IN THE PHASE OF 2015 TO 2020

CONTENTS OPENING 5

CHAPTER I: FUNDAMENTAL BASIS ON STRATEGY AND STRATEGIC MANAGEMENT 9

1.1 Strategy and strategic management 9

1.1.1 Definition of strategy 9

1.1.2 Strategicmanagement 10

1.1.2.1 Definition 10

1.1.2.2 Tasks of Strategic Management 11

1.1.2.3 Benefits of Strategic Management 11

1.1.3 Strategic management model 12

1.1.3.1 Strategic management process 12

1.1.3.2 Strategic system in company 14

1.1.3.2.1 Mixed strategies 14

1.1.3.2.2 Specially intensive strategies 15

1.1.3.2.3 Business expansion strategies 16

1.1.3.2.4 Other strategies 16

1.2 Contents of building business strategy 17

1.2.1 Defining the business target 17

1.2.2 External environment analysis 17

1.2.2.1 Economic factor 18

1.2.2.2 Cultural and social factor 18

1.2.2.3 Politic and legislation factor 18

1.2.2.4 Technological factor 18

1.2.2.5 Competitive factor 19

1.2.3 Internal environment analysis 19

1.2.3.1 Management 19

1.2.3.2 Marketing 20

1.2.3.3 Finance and accounting 20

1.2.3.4 Information system 20

1.2.3.5 Internal supervision 20

1.2.4 Process on analysis and strategic selection 21

1.2.4.1 Input stage 21

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1.2.4.2 Combination stage 23

1.2.4.3 Decision stage 24

1.2.5 Notes to the strategy development process 24

1.2.5.1 Culture side 24

1.2.5.2 Political side 25

CHAPTER 2: OPERATION ANALYSIS OF MILITARY TELECOM CORPORATION (VIETTEL) POST JSC 26

2.1 Introduction to Viettel Post JSC 26

2.1.1 General introduction 26

2.1.2 Features of post service sector 29

2.1.2.1 The popularity 29

2.1.2.2 The assembly 29

2.1.23 The disparity 29

2.1.2.4 The stability of the growth speed 27

2.1.2.5 The market being a hard saturation 30

2.1.3 Some points on activities of Viettel Post from 2006 to 2008 30

2.1.3.1 Business statement 30

2.1.3.2 Service supply network 32

2.1.3.3 Delivery service market share 33

2.1.4 Assessment on present strategy 33

2.1.4.1 Mission and vision 33

2.1.4.2 Analysis on competition pressure 34

2.1.4.2.1 Competition level I its internal sector 34

2.1.4.2.2 Risks of replacement products 35

2.1.4.2.3 Power of customers 36

2.1.4.2.4 Power of suppliers 36

2.1.4.2.5 Entry and exit barriers 37

2.1.4.3 Current strategy of Viettel post 38

2.1.4.3.1 Growth objectives 38

2.1.4.3.2 Strategy focus 39

2.1.4.3.3 Solutions 39

2.1.4.4 Assessment of current Viettel Post’ strategy in use 40

2.1.4.4.1 Strengths 40

2.1.4.4.2 Weaknesses 41

2.2 Business environment analysis 42

2.2.1 External environment 42

2.2.1.1 Economic factor 42

2.2.1.2 Social – cultural factor 42

2.2.1.3 Political – legal factor 43

2.2.1.4 Technological factor 43

2.2.1.5 Competitive factor 44

2.2.2 Internal environment analysis 44

2.2.2.1 Management 44

2.2.2.2 Marketing 45

2.2.2.3 Finance and accounting 46

2.2.2.4 Informatics system 47

2.2.2.5 Internal control 47

CHAPTER 3: VIETTEL POST JSC BUSINESS STRATEGY DEVELOPMENT PERIOD 2015 TO 2020 48

3.1 Purpose of the business strategy development 48

3.1.1 Strategic vision 48

3.1.2 Competitors identification 48

3.1.3 Market trend 49

3.1.4 Orientations for Viettel Post development period 2006-2008 50

3.2 Inputs for development of the business strategy 50

3.3 Business strategy development 51

3.3.1 Business targets identification 51

3.3.1.1 General targets 51

3.3.1.2 Target of the service product 51

3.3.1.3 Targets on distribution channel 51

3.3.1.4 Targets on revenue and market share 51

3.3.1.5 Targets on profit 52

3.3.2 Strategy identification 52

3.3.2.1 SWOT analysis on Viettel Post 52

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3.3.2.1.1 The strengths 52

3.3.2.1.2 The weaknesses 52

3.3.2.1.3 The opportunities 53

3.3.2.1.4 The threats 53

3.3.2.2 Strategy analysis 54

3.3.2.2.1 Strategy 1 – Low cost strategy 54

3.3.2.2.2 Strategy 2 – Distinction / Differentiation strategy 55

3.3.2.2.3 Strategy 3 – Horizontal strategy 55

3.3.2.2.4 Strategy 4 – Restructure strategy 55

3.3.2.3 Strategy selection 56

3.3.2.4 Purpose of the strategy 57

3.3.3 Process to implement strategy 58

3.3.3.1 Period 1 (2010-2012) 58

3.3.3.2 Period 2 (2013-2015) 59

3.3.4 Inspect strategy implementation 60

3.3.5 Strategy adjustment 60

3.4 Implementation solutions 60

3.4.1 Marketing policies 60

3.4.1.1 Product policy 60

3.4.1.2 Price policy 60

3.4.1.3 Distribution policy 60

3.4.1.4 Promotion policy 61

3.4.2 Revenue solutions 61

3.4.3 Organization and human resource solutions 62

3.4.4 Information of technology application solutions 62

3.4.5 Group of countermeasure on cooperation 63

3.5 Recommendations 63

3.5.1 Viettel Corporation 63

3.5.2 Ministry of information and communications 63

3.5.3 State 63

CONCLUSION 64

BIBLIOGRAPHY 65

OPENING THE URGENCY OF THE PROJECT

The project "Business strategy in the period of 2010 - 2015 of Viettel JSC

- Demands and Challenges” was inspired due to the following requirements:

Firstly: "Every day I can hardly achieve anything However, there is onejob that I can never complete, which is to build plans for the future." Thatsaying of an American largest corporation‘s president – Mr General Motors -has firstly clarified the reason for our strong passion for this thesis Thatbusiness strategy construction is ever a constant renewal demand for eachenterprise Each enterprise, if ever considered a person hiking in the woodswithout a clear mandate, would only to find a way to go The more he is going,the more he is getting lost Strategy management helps organizations,enterprises clearly defined goals, directions, map out the way and reasonableallocation of resources optimally to ensure that they would travel to the target in

a specified time Viettel Post JSC is not out of those needs

Secondly: Viettel Post Joint-Stock Company was actually a LimitedCompany which is a member of the State Postal Viettel (Viettel Post),belonging to the Corporation Viettel - Department of Defense (Viettel), hasbeen equitized in July 2009 During this transition, building business strategyafter equitization is an urgent requirement for Viettel Post JSC, deciding the

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THE OBJECTIVES OF THE PROJECT

Facing the urgent demands mentioned above, our implementation of theproject aims to the following purposes:

Firstly: To clarify the matters relating to strategy and strategicmanagement in production and business activities In addition, together withsystematizing knowledge of strategic management, our thesis is also doingresearch on the influence of political and cultural factors upon the constructionand implementation of business strategy

Secondly: Basing on the science of strategic management which has beenstudied, the thesis is focusing on the complete analysis of a comprehensivebusiness aspect of Viettel Post JSC from 2006 to 2008 to determine businessobjectives and development strategies appropriate for these enterprises afterequitization

Research Methodology

To implement the objectives of the thesis set out:

In terms of methodology, we, authors, mainly based on the theory of strategicmanagement and strategic management experience in Viettel Corporation(Viettel) and Viettel Joint Stock Company in timebeing On that basis,combining with specific business environment, the writers have built business

THE STRUCTURE OF THE PROJECT

Consistent with the meaning, purpose and research mentioned above, the project

is structured into 03 chapters with the main contents as follows:

Chapter 1: The scientific basis of strategies and strategic management in

business activities of enterprises

Chapter 2: Status of the strategic management of Viettel Post JSC in the phase

of 2006-2008 The existences and requirements for a renovation

Chapter 3: Some solutions improving management strategies and building business strategies in the phase of 2010-2015 of Viettel Post JSC

SYMBOLS AND ABBREVIATION LIST

EFE : External Factor Evaluation

GDP : Gross Domestic Product

HACCP : Hazard Analysis and Critical Control Point System

IFE : Internal Factor Evaluation R&D : Research and Development

SWOT : Strengths, Weaks, Opportunities, Threats

VoIP : Voice over Internet Protocol

WTO : World Trade Organization

Viettel

Post : Viettel Post JSC

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Currently, there are many definitions on strategy, and based on differentperson’s point of view, there are somewhat different in definitions.

According to Chandler, one of those who initiated the first strategicmanagement theory, strategy is "to identify goals, long-term basic purpose ofthe business and applying a sequence of actions as well as the distribution ofresources necessary to implement this goal”1

In 1980, Quinn Glass has introduced a more general concept: "strategy is

a pattern or plan integrates major goals, policies, and action sequences into acohesive structure” 2

Then, in 1999, Johnson and Scholes redefined strategy in an dynamicenvironment "strategy is the orientation and scope of an organization to gainlong-term competitive advantage for organizations through mobilization ofresources in the changing environment, to meet market needs and expectations

of stakeholders”3

1 Chandler, A (1962) Strategy and Structure Cambrige, Massacchusettes MIT Press.

2 Quinn, J., B (1980) Strategy and Change: Logical Inscrementalism Homewood, Illinois, Irwin.

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

To have a multi-facet definition on strategy, Mintzberg had generalizedaspects of strategic management into five Ps, including:

- Plan: the action sequences have a consistent plan;

- Partern: being consistent behavior over time, may be intended or notintended;

- Position: match between the organization and its environment;

- Perspective: ways to view the world;

- Ploy: specific way to deceive opponents

In addition, the strategy is defined by nature, of three level strategies: corporatelevel, business level and functional level Currently, with the trend ofglobalization, companies are fast diversifying their activities beyond nationalborders, thus global strategy always be the first economic choice uponinternationalize

However, in our opinion, strategies should be defined as means or as an

explanation about the direction for business to meet its objectives in the long term.

1.1.2 Strategic management

1.1.2.1 Definition

Strategic management is the process of identifying the strategicobjectives of the organization, building policies and plans to achieve its goals,and allocating resources for the organization to carry out those policies andplans

Strategic management is not only a science but also an art, through whichmanagers plan, organize the implementation, control and evaluate businessdecisions in order to achieve long-term business goals

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With this concept, strategic management including continuous actions:environmental analysis (internal and external); strategic building; strategyimplementation; and strategy testing and evaluation

Strategic management is the origin of business policy, strategicmanagement and must integrated with long-term planning strategy Howeverstrategic management is not only interested in the integrated functions withinthe same policy but also focus more on the environment and strategy.”Therefore, the term strategic is used rather than business policy."4

1.1.2.2 Tasks of Strategic Management:

Strategic management has 5 closely inter-related with each other, including:

Building scenarios of the future business, stating where a business is heading

and where it wants to be?

Set goals – turn scenarios into concrete results that businesses must achieve;

Building strategies to achieve desired goals;

Implementing and managing strategy effectively and efficiently;

Evaluate performance and initiate adjustments on scenarios, long-term

direction, goals, strategies or implementation based on experience, conditionsfor change, ideas and new opportunities

1.1.2.3 Benefits of Strategic Management:

4 R.E Hoskisson, M.A Hill, W.P.Wan, and D.Yiu, (1982), “Theory an Research in Strategic Management: Swing of the Pendulum”, Journal of Business Vol25, No.3, pp 417 – 456.

Many studies showed that, if applied strategic management, business willachieve better performance compared to firms not implementing this process5 Ifachieve the appropriate environment for business strategy, structure andprocesses then it will create positive effects on performance of thebusiness6 Practically the benefit of strategic management has been testedextensively and can be summarized into the most basic points as following:

- Make clearer vision of business strategy;

- Focus more on the significance of the strategy;

- Improve awareness of the rapid changes of the environment.7

However, to have effective management strategies, there will always be aprocess of answering three questions: Where are the Enterprise?, Where is itheading? How to get there?

1.1.3 Strategic management model

1.1.3.1 Strategic management process

Until now, scientists and managers have proposed several strategicplanning models However, in general, strategic planning process can bedivided into five steps, including:

Step 1 Selected mission and main objectives of the enterprise:

Mission presented by the existing management of the business and direction towhat it will do The main objectives determine what companies hope to meetwithin the medium and long term

Step 2 External environment analysis to identify opportunities and challenges:

External environment has three types of relationships closely link together: theindustry, the country environment and macro environment

5 T.J Andersen (2000), “Strategic Planning, Autonomous Actions an Corporate Performance”, Long Range Planning (4-2000), pp 184 – 200.

6 E.J Zajac, M.S Kraatz, R.F Bresser “Modeling of Dynamics of Strategic Fit: A Normative Approach to Strategic Change, “Strategic Management Journal (4-2000), pp 429 – 453.

7 Wilson, (1994) “Strategic Planning Isn’t Dead – It Changed”, Long Range Planning (8 – 1994), p.20.

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Industry analysis is evaluating the competitive structure ofindustries, including the competitive position of the business focus, the maincompetitor as well as the development stage of the industry

Country analysis to examine the national context of the country in whichenterprises are operating, and its favorable conditions as well as difficultiesaffecting the operation of enterprises

Macro-environment analysis includes examining themacroeconomic, social, governmental, legal, international and technologicalfactors that can impact business

Step 3 Environmental analysis is to identify the strengths and weaknesses of the

enterprise:

The environmental analysis will find how to achieve business competitiveadvantage, and the role of different capacities, resources and ability to createand maintain sustainable competitive advantage for business

Step 4 Selection strategies based on the search for resources, capabilities and

core capabilities and develop it to take advantage of the opportunities andstrengths, solving the challenges and weaknesses;

Step 5 Implementation strategy

When companies have chosen to achieve strategic objectives, thestrategies that need to be put into execution Within this topic, theimplementation of strategies is divided into four parts, including: (1) buildingappropriate business structure, (2) building control system; (3) create a matchbetween strategy, business structure, and control systems, (4) control conflictand change

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Vision and Mission

Strategies selection and

building

Functional strategyBusiness strategyGlobal strategyCorporate strategy

Internal Analysis External Analysis

Matching strategy, structure and control

Control building Organizational

structure

Figure: 1.1 Strategic planning model

1.1.3.2 Strategic system in company

1.1.3.2.1 Mixed strategies

Mixed Strategy allows companies to increase control over thedistributors, suppliers or competitors

The strategic combination includes:

(1) Forward Mixed strategy: a strategic increase ownership or control over the

distributors or retailers (franchises to expand product distribution and services).This strategy is used when current distribution system has low confidence orweak to enjoy the advantages of economic scale; high profit rate from thedistribution operation

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(2) Backward combination strategy: is the strategy to increase the

possession or controlling over suppliers aiming to sourcing stable, competitiveprice input… This strategy is applied when current suppliers are too weak,unreliable, inability to meet the production demand of the business and theprofit rate from the intensive supply

(3) Horizontal combination strategy: is the strategy to seek for the

possession or controlling over competitors through A&M, buy-back…in order

to achieve profit from the massive scale This strategy works when theenterprise is able to monopolize an industry or a business sector; or in a hardcompetition and the industry is aggressively developing; or when the competitorfaces difficulties of weak management, short of resources which the enterprisehas currently been possessing

1.1.3.2.2 Specially intensive strategies

Specially intensive strategies are those to strengthen the position of theenterprise with the current products

Specially intensive strategies including:

(1) Market Penetration strategy: this strategy works through measures

like increasing sales staff, advertising cost and promotion… aiming to enhancethe market share of a current product or service within a defined market Thisstrategy is applicable when the defined market capacity has not been reachedthe saturation and the room for product or service is still available; market share

of competitors go down but the total industry sales goes up

(2) Market development strategy: the strategy related to deployment of a

current product or service into a new market or geographical area The strategyapplication is when the enterprise is able to research and penetrate the market,especially, oversea ones; the production capacity of enterprise has not been fullyput into operation and the distribution channel in the new market is reliable,good quality, at a due cost

(3) Product development strategy: through investment for research and

developing activities, the enterprise is capable to launch newly improved

products from current ones This strategy is used when product is about or in thesaturation phase (the product is reaching to the end of product life cycle);enterprise is operating in fast growing industry with high rate of technologicalapplication and hard competition

1.1.3.2.3 Business expansion strategies

Business expansion strategy is the activities of enterprise to diversify itsbusiness including the following:

(1) Diversified unanimous activity strategy: is the strategy to add more

relative or interactive products or service to current ones of the enterprise Thisstrategy is applied when product reach the end of its life cycle and the industrygrowth rate is low; the new relative product which is incorporated with old one

is supposed to improve the sales of enterprise

(2) Horizontally diversified activities strategy: is the strategy to explore

from current customers through providing new and separated services orproducts This strategy is applicable when the turnover from current productdramatically increases with the presence of newly separated product; thecompetition in industry is high and along with low rate of growth or even zero;the current distribution channel is able to serve current customers

(3) Mixed diversified activities strategy: is to promote new and separated

products or services This is used when the industry growth rate is zero ordownward; the market is saturated with product or service provided byenterprise; enterprise is affordable and manpower-capable to buy-back orintrude into a new industry

1.1.3.2.4 Other strategies

In practice, the enterprises can define some special strategies asfollowing:

(1) Joint venture: is the strategy to build up a new business or an

association from 2 or more origin enterprises to increase the capital, investmentopportunity, new market penetration, risk dissemination… Some popular jointventure types are: research and development joint venture, crossed product

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distribution contract, crossed franchise contract This strategy is applied inhighly return projects requiring huge capital, management and other resourcesthat a single enterprise cannot afford; enterprises are confronting difficultcompetition or risk dissemination (especially for joint venture between local andinternational company); deploying or introducing a new technology

(2) Operation reduction: is the applicable strategy in case of reduction of

profit and sales due to the weak operation of one or more affiliates Theenterprises usually use some of the following methods: controlling and cuttingcost, eliminating unprofitable business, automating production line… Thisstrategy is used by the least competitive enterprise of an industry; enterprise thatuse over-speed strategy which cannot be curbed and ineffective so they need to

be restructured

(3) Operation partial cut: it can be considered as a part of operation

reduction This strategy’s purpose is to eliminate unprofitable or unsuitablebusiness for enterprise’s operation This strategy is applied when enterprisepursues operation reduction strategy but the improvement process fails and nopositive result; the enterprise has selected the core business; enterprise needscapital but no other source is available

(4) Liquidation: is the recognition of failure through selling all

enterprise’s property at its real price aiming to stop the persistently irresistiblelost This strategy is used when both operation reduction and operation partialcut do not work; enterprise goes bankrupt

(5) General strategy: is the method to combine 2 or more above

mentioned strategies With the limited resources, pursuing many strategies atthe same time may bring back difficulty for business since resources are sharedfor many goals On the other hand, the moment enterprise starts to share itsresources to many goal is the best time for the attack of other competitors

1.2 CONTENTS OF BUILDING BUSINESS STRATEGY

1.2.1 Defining the business target

All enterprises has to define their own business target, in other word, theyhave to find out their own target for existence A good business must be built onthe basis of research, factor analsys (internal and external factors), and effects(direct and indirect) to business operation A business target must coverfollowing contents: development strategy, business philosophy, targetcustomers and market, core products and service, applicable technology,profitability, competitiveness, social responsibility, necessary resources toachive target

1.2.2 External environment analysis

In order to keep the business strategy highly feasible, after evaluating thebusiness target, the enterprise must analyze, evaluate the effects from outside todefined target The following features of the outside factors should beconsidered:

- These factors have a strong and long-term effect on business operationwhile the enterprise cannot manage them;

- These factors give different direction and effect from business tobusiness, industry to industry;

- Any change among these factors may affect business’s internalenvironment factor

- These factors can provide direct or indirect effect to business’soperation through relationship with other outside factors

1.2.2.1 Economic Factor

The macro economic factors in which business operates, even in othernation global wide such as growth rate, inflation, unemployment, exchangerates… put a great effect on the decision of business strategy as well as theability to achieve expected results

1.2.2.2 Cultural and social factor

Cultural and social environment includes the standards and valuesacceptable to a specific geography, country or civilization In general, the social

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and cultural transformation is later than other factor groups and influenced byother factors from the external environment

1.2.2.3 Politic and legislation factor

This group includes politic institution, viewpoint, policy dominated bythe current administration machinery, legal system, politic and external relationstrend etc…A switch by this group is fully capable to bring about potentialopportunities to entrepreneur, also imposed challenges to the implementation ofthe set forth business targets

1.2.2.4 Technological factor

Amidst the rapid evolution of science and technology, the technologicalfactor is considered as the most dynamic as well as the most unstable among theaffected factors from the external environment The progress of science andtechnology will decide services, products’ recycle, business strategy and theimplementation of long term targets set forth by entrepreneur

1.2.2.5 Competitive factor

Base on the public benefit assessment, the competition is a driving forcetoward the development However, this factor is also a biggest challenge for anyentrepreneur to overcome everyday To sustain competitive advantage,necessary classifications of competitors are to be conducted by managerfollowing different displays as influence and competitive level etc…by the way,

an appropriate competitive strategy is draw up Though of conducting differentclassification, managers have to identify and understand their competitorsbefore the competitive strategy to be made

1.2.3 Internal environment analysis

Each entrepreneur has its own strengths and weaknesses due to itsessential features The analysis process of the strengths and weaknesses willhelp managers evaluate precisely entrepreneur in term of quantitive and

Supervision is a final function of the management work The supervision ismainly involved in the phase of strategy evaluation within the overall process ofthe strategy management.

Promotion includes both scientific and artistic feature that manager can affect

on the overall system to achieve the set forth targets

1.2.3.2 Marketing

Marketing is described as a process of identification, estimation,development and satisfaction toward meeting maximum the need of customers.This also means that all works include product, price, distribution channel,promotion, customer, competitor and internal evaluation are closely linked withmarketing In other words, good marketing also means there are potentialopportunities for entrepreneur to implement and develop well the set forthbusiness strategy

1.2.3.3 Finance and Accounting

Financial factor is presented on financial indicators that are considered as

a best solution on competitive assessment, also a fundamental to work outinvestment decision by investor and entrepreneur as well Financial indicatorspresent entrepreneur’s readiness level and financial capacity to projects to be

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1.2.3.5 Internal supervision

Internal supervision which is often associated with other factors withinthe internal entrepreneur, also seen as a fundamental to identify the strength andthe weakness In order to conduct internal supervision, a series of indicatorsraised by managers those are linked with management, marketing, finance,capacity, workforce, products quality, services…In addition, someentrepreneurs establish a full-time unit of internal supervision with staffs beingwell trained on management

1.2.4 Process on analysis and strategic selection

1.2.4.1 Input stage

-External factors evaluation matrix (EFA) is designed to evaluate external

factors how to affect entrepreneur The EFA matrix development is based on thefollowing steps:

(1)Listing out external factors that play a key role toward the success of anentrepreneur

(2)Identifying the importance of the factors through classification level from

0 to 1 (in which 0 - unimportance and 1 – most importance)

(3) Evaluating entrepreneur’s response to listed-out factors is followedmarking point from 1 to 4 (in which 4 – strong response and 1 – weakresponse)

(4) Multiplying the importance of each factor to identify marking point forentrepreneur

(5) Adding all factors’ marking point to identify important marking pointamong the total The important marking point among the total ismaximum at 4 and minimum at 1 The total medium marking point is 2.5.The total important marking point under 2.5 presents the entrepreneur’sweak response against external factors’ changes The total importantmarking point above 2.5 presents the entrepreneur’s fairly-well responseagainst the business environment

Matrix

IE Matrix

External factors

evaluation

Matrix

Competitive image matrix

Internal factors evaluation matrix

DECISION STAGE

Figure 1.2 Process on Strategic selection

(Source: Fred R David –Definition of Strategic Management)

-Internal factors evaluation matrix (IFE) is designed to identify the

strength and the weakness of entrepreneur The IFE matrix development isnearly as same as the EFE matrix development However, there is a littledifferent through replacing factors evaluation by the strength and theweakness evaluation

-Competitive image matrix is seen as the most importance among business

events and environment trend that probably have impact on the development

of entrepreneur’s strategy The competitive image matrix is used to identifymain competitors with their strength and weakness

1.2.4.2 Combination stage

There are different tools to be used at the combination stage Each toolhas both advantages and limits However, the popular tool used byentrepreneur is SWOT matrix

The SWOT matrix helps entrepreneur to list out strategies in line with its

Strengths, Weaknesses, Opportunities and Threats However, it does not

(2) Combining the internal strengths with the external opportunities todevelop the SO strategy.

(3) Combining the internal weaknesses with the external opportunities todevelop the WO strategy

(4) Combining the internal strengths with the external threats to develop the

entrepreneur’sweaknesses by makinguse of convenientopportunities

Threats

ST Strategy: Taking

advantage of the internalstrengths to overcomethreats affected byexternal businessenvironment

1.2.4.3.1 The QSPM matrix utilizes the collected information by the input stage

to evaluate the strategies’ feasibility by the combination stage In other word,the QSPM matrix provides scientific essentials in making quantitive analysis of

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different strategies By the ways, manager’s vision becomes more objective,more accuracy before making out strategic decisions

The necessary steps to develop the QSPM matrix:

(1) Listing out external opportunities and threats as well as the entrepreneur’sstrengths and weaknesses Identifying the importance of each factorfollowing the level of marking point from 1 to 4

(2) Selecting the strategies underlined by the combination stage Evaluatingeach strategy based on opportunities, threats, strengths, weakness factorsfollowing the level of marking point from 1 to 4

(3) A total mark of each strategy is accumulated between the mark ofimportance evaluation on each factor and the mark of strategy evaluation.1.2.4.3.2 The GREAT matrix is rather popular to be used in making analysis ofstrategic management, competitive strategy GREAT allows the strategy to beselected on the basis of factors’influence rate. 8

8 McGraw, (2007) Strategy Sydney, Hill Company.

1.2.5.2 Political side

Within this research, the political factor is mentioned as an individualalliance for the negative purposes For this meaning, political factor is alwaysconsidered as barriers against to working out strategy-related decisions

Political factors always exist objectively in entrepreneur Therefore,handling political factors is always apart in the strategy management There arevarious solutions to minimize negative impact from political factors However,the most essential that manager knows how to gather and bring into full play thestrengths of all internal resource, especially the human resource

CHAPTER 2

OPERATION ANALYSIS OF MILITARY TELECOM CORPORATION

(VIETTEL) POST JSC PERIOD 2006-2008

2.1 Introduction to Viettel Post JSC

2.1.1 General introduction

Previously, it was an entrepreneur belongs to the militarytelecommunication group Currently, it has been transferred into a joint stock

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-Period 1998-2000, Viettel was concentrated on extending the postservices supply to the nationwide, concurrently started express delivery serviceboth at home and abroad;

-2000, Viettel post centre was established on the basis of the newspaperdelivery agency;

-12 January 2006, Minister of Defence issued the DecisionNo.10/2006/QD-BQP on the establishment of the Viettel Post Co., belongs tothe military telecommunication group by restructuring the Viettel post centre.The Viettel Post Co’s chapter capital was registered at VND 40 billion, with itsmain operation in express, newspapers delivery and telecommunicationservices

Viettel Post Organizational Structure:

Figure 2.1 Organizational Structure of Viettel Post JSC.

The Viettel Post JSC organizing chart has been restructured in line with theequalization process

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MANAGEMENT BOARD

INFRASTRUCTURE

DISTRICTLEVEL

AREA 2

ĐÀ NẴNG

AREA 3 HCM

VIETTEL POST JOINT STOCK COMPANY

INTERPROVINCAL

CITY COMPANY

COMPANY MEMBERS

ABROARD COMPANY

BRANCH AT 63 CITY/PROVINCE

POST OFFICE AT DISTRICT LEVEL

Figure 2.2 Structure of Viettel Post JSC

Currently, Viettel Post JSC has been providing the following services in thenationwide and Cambodia market:

-Express delivery both at home and abroad;

-Newspaper delivery;

-Stationary supply;

-Telecommunication authorized dealer;

-Insurance authorized dealer;

-Public transportation in Cambodia (since August 2009);

Toward a convenience on analyzing this research, Viettel Post JSC’s services iscategorized into 4 groups as express service, newspaper delivery service,foreign-based service and others (stationary supply, telecommunicationdealer….)

The Viettel Post JSC’s stakeholders congress is determined Viettel Post JSC’s

target after 3 years of being equitised (period 2010-2012) that Viettel Post JSC

will become a leading provider in delivery service, obtain revenue of VND 1 trillion and extend its service network to 100% administrative organs at district level by 2012.

2.1.2 Features of post service sector

Post sector-related products are often traditional ones, seen as the mostdynamic item among business services They are both of consumption andproduction services

Post-related products are consumption services when they meet the daily lifecommunication and information demand Post-related products are productionservices when they involve in the production, circulation and transmission ofinformation, service in support to the business

Post-related products are contained full general features of service products i.e.immaterial, inseparable feature, production process parallels consumptionprocess…

Beside these features, post-related products also have typical features as follow:

2.1.2.1 The popularity

Post-related services are influenced with high popularity Together withthe rapid evolution of technology, everybody can access and make use of post-related services Letter delivery service is a simple and essential example, alsothe most popular manner among the post-related services

2.1.2.2 The assembly

Occupational linkage toward a completed work need to be passed throughseries of stages, cross-cutting phases The involvement of different units inproviding service is required, in some cases need the involvement at the sametime

2.1.2.3 The disparity

Diversified demands force the post service network to ensure theaccuracy and safe operation in any circumstance and situation Therefore, thereshould be a big enough and modern operation network to ensure a smoothcirculation in big and hard load situations

2.1.2.4 The stability of the growth speed:

Difference from telecommunication services, post services have nobreakthrough Post services are boosted in tandem with socio-economic

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development The progress of post sector is often parallel with the country GDPgrowth

2.1.2.5 The Market being a hard saturation:

This is the second variance of the postal service in comparison to thetelecommunications service, while as the latter has saturation point calculated

by the ratio of subscription number over 100 inhabitants, the postal servicealways keeps on growing rate along with GDP growth but scarcely reach thesaturation point

2.1.3 Some points on activities of Viettel Post from 2006 to 2008

2.1.3.1 Business Statement

Table 2.1 Business Statement of Viettel Post from 2006 – 2009

(Resource: Business Plan in 2009 of Viettel Post)

- Total revenue of Viettel Post from 2006 – 2008 keeps on increasingyear after year, however growth rate was unstable. 9

Total revenue of 2007 increased by 92% compared to 2006 in whichrevenue from delivery service increased by 63%, revenue fromtelecommunications service agencies increased by 26 times The cause of thissudden growth is that year 2007 witnessed a boom in telecommunicationsservice market, revenues of telecommunications service agencies took a partfrom 1.39% of total revenue of Viettel Post in 2006 changed to a risen number

9 Refers to Table 2.1 Business Statement of Viettel Post from 2006 to 2008

of 19.67% in 2007 Besides, the expansion of delivery service supply from23/64 provinces/cities, 132/659 districts/towns in 2006 increased to 63/63provinces/cities, 265/659 districts/towns in 2007, which lead to increased inrevenue of delivery service

Figure 2.3 Charts of service revenues of Viettel Post from 2006 - 2008

(Resource: Business Plan in 2009 of Viettel Post)

In 2008, the economy came to a recession stage, the delivery service (DS)still could remain high growth compared to 2007 but showed declining signals(from 63% to 50%), the telecommunications service started its saturation signs,income from telecommunications service of Viettel Post decreased 0.26% over

2007, income from newspapers publishing service (NPS) only rised 5%(compared to over 13% of 2007) Those factors caused the total revenue ofViettel Post a rise at 37% only compared to 2007

- Revenue Structure: delivery service still remains high ratio in totalrevenue of Viettel Post (85% in 2006, 73% in 2007, 80% in 2008);

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othersrsNPS DS NPS

Fngure 2.4 Chart of revenue structure of Viettel Post’s services from 2006 –

2008

(Resource: Business Plan in 2009 of Viettel Post)

- Profit/Revenue ratio in 2007 only reached 1.45%, decreased over 2006(3.31%), resulted from new policies of Viettel Post on increasing minimumsalary from 600,000 VND into 800,000 VND and deducting depreciation costfor the first year on high investment costs on constructions

2.1.3.2 Service supply network

The expansion of service supply network is considered as the leadingvital factor for improving competitive capability of a postal enterprise For thepast years Viettel Post has non-stop expanded its distribution channel systemdomestically and externally

By the end of 2008, service supply system of Viettel Post JSC hascovered 63/63 provinces/cities, 396/659 districts/towns nationwide

Year Provinces/cities Districts/towns Overseas

Promotion toCambodia

Table 2.2 Extension of service supply of Viettel Post from 2006 to 2008

(Resource: Final Report of Viettel Post for 2006, 2007, 2008)

Viettel Post planned to expand its service supply expansion scale into80% of districts/towns in nationwide and supply service in Laos and Cambodia

by the end of 2009

2.1.3.3 Delivery service Market Share

As the above analysis, from 2006 to 2008, revenue from delivery servicetook the overwhelming high rate in total revenue of Viettel Post (85% in 2006,73% in 2007, 80% in 2008) Along with the growth of revenue, market share ofdelivery service of Viettel Post increased year over year, 7.3% in 2006, 9.4% in

2007, 12% in 2008 and promised to keep on increasing in the following years