Building business strategy at company level for HA NOI DIEN BIEN MINERAL AND RESOURCES COMPANY LIMITED in the period 2010 – 2015

LUẬN VĂN THẠC SĨTHESIS TITLEBuilding business strategy at company level for HA NOI - DIEN BIEN MINERAL AND RESOURCES COMPANY LIMITED in the period 2010 – 2015”... Topic: “Building busine

LUẬN VĂN THẠC SĨ

THESIS TITLEBuilding business strategy at company level for HA NOI - DIEN BIEN MINERAL AND RESOURCES COMPANY LIMITED in the period 2010 – 2015”

Introduction 4

Chapter I: Theory basis on business strategy .6

I Overview of strategic management 6

1.1 Business strategy 6

1.1.1 Origin of strategy and concept of business strategy 6

1.1.2 Basic characters of strategy 7

1.1.3 Roles of strategy in business 8

1.2 Strategic Management 9

1.2.1 Definition of strategic management 9

1.2.2 Meanings of strategic management 9

1.2.3 Strategic management model 10

II Theory basis 11

2.1 Analysis of the environment within the enterprise 11

2.1.1 Analysis manpower 12

2.1.2 Analysis of the technical infrastructure and technology companies 12

2.1.2.1Technology renovation 12

2.1.2.2 Analysis of the infrastructure of an organization 13

2.1.3 Analysis of the capacity of the company 13

2.1.4 Analysis of the capacity of the company 14

2.1.5 Analyze the Marketing activities 14

2.2Analysis of competitiveness 15

2.3Analysis of Environment macroscopic 16

2.3.1 Analysis of Legal and Political factors 16

2.3.2 Analysis of the economic environment 17

2.3.3 Analysis factor in social and cultural 18

2.3.4 Analysis Factor in technological 19

2.4Analysis of the environment sector 19

2.4.1 Analysis of competitor 20

2.4.2 Analysis of customer pressure 20

2.4.3 Analysis of supplier pressure 21

2.4.4 Analysis of new product pressure 21

Chapter II: Analysis of the current status of the enterprise 23

I Company prpofile 23

II Function, obligation and strategic target 23

2.1 Fu nction of the company 23

2.2 St rategic Target 23

III Analysis of internal evironment 24

3.1 Analysis according to resources 24

3.1.1 Organization structure of the Company 24

3.1.2 Human resource management 26

3.2 Technical and technological material base of the company 29

3.3 Analyze company’s financial condition 30

3.4 Analysis of the manufacturing capacity of the enterprise 33

3.5 Analyze the Marketing activities 34

IV Analysis of competitiveness 35

V Analysis of environment macroscopic .37

5.1Analysis of Legal and Political factors .38

5.2Analysis of the economic environment 39

5.2.1 Growth speed of the economy 39

5.2.2 Inflation 39

5.2.3 Forex 40

5.2.4 Interest rate 40

5.3Analysis factor in social and cultural 40

5.4Analysis Factor in technological 41

VI Analysis of the environment sector 42

6.1World metal mineral market 43

6.2Domestic mineral market 44

6.2.1 Evaluate sources of supply in the vietnamese market 44

6.2.2 Estimation of market demand 46

6.3 Analysis of the environment sector 48

6.3.1 Analysis of potential opponents 48

6.3.2 Analysis competitor present 48

6.3.2.1Backan Mineral Joint Stock Corporation (BAMCORP) 49

6.3.2.2Hoang Bach Group 49

6.3.2.3Thanh Hoa SD Xuan Minh Joint Stock Company 50

6.3.2.4Bac Kan – Nikko Mineral Joint Venture 50

6.3.3 Analysis of customer pressure 53

6.3.4 Analysis of supplier pressure 53

6.3.5 Analysis of new product pressure 53

Chapter III: Designing strategies and solutions for the implementation of the strategies 57

I Formulating strategies 57 II Consideration of strategic target for the period from 2010 to 2015 60 III Major factors in the selected strategy 60 3.1 Market expansion 60

3.2 Investment, Process and Production 60

3.3 Strategy to develop its human resource 61

3.4 Marketing Strategy 61

IV.Investment plan and inplementation process 61 4.1Actions to be taken for solution implementation 62

4.2Person in chare of solution implementation 62

4.3Time for solution implementation : 5 years in total (From 2010 – 2015) 63

V Conclusion 67 List tables 68

List of the models 69

List of reference materials 70

Topic: “Building business strategy at company level for HA NOI - DIEN BIEN MINERAL AND RESOURCES COMPANY LIMITED in the period 2010 – 2015”

1 Necessity of the subject:

In the history of the world has observed many people integrate the business worldwith a small capital, but they were quickly then successful and gained victories andvictories thanks to the right business strategy The business strategy is comparedwith steering wheel of the ship that helps to come over the ocean to the destination,particularly at the beginning time of its operation It is also considered a gust ofwind that flies the kite higher and higher Actually, experiences of successes andfailures in business have showed some billionaires are descended from bare handswith tiny capital thanks to optimum business strategy, vice versa some ofmillionaires have to pass their fortune to their competitors in a short time due toblunder in business method Closing down of loss-making companies anddevelopment of profitable enterprises really significultly depends on businessstrategy of such companies, particularly in the market economy

Origin of success or failure is dependent on one of the important factors, which iswhat business strategy the company has

Being aware of the importance in building the company Business Strategy , with theknowledge gained from MBA course provided by ETC (Hanoi National University)

in association with Griggs University and study period in HA NOI - DIEN BIENMINERAL AND RESOURCES COMPANY LIMITED, our group would like to

choose the topic: “Building business strategy at company level for HA NOI DIEN BIEN MINERAL AND RESOURCES COMPANY LIMITED in the period 2010 – 2015”

Purpose: With this topic, we wish to help the company have right track in thecoming period.

2 Scope of research

The concentration of resources to the question on the development strategies of

HA NOI - DIEN BIEN MINERAL AND RESOURCES COMPANY LIMITED.Analysis, to study the operation of the business of the company on the followingaspects: the function, tasks and inside and Outside and environment branch Sincethe strategy of business for a period of 2010-2015 and the solutions and specificmeasures for the implementation of the strategies

3 Methods of research

Capstone project report use of scientific methods: comparison and to sum up, themethod mark; the use of statistical data for the demonstration

4 Thesis structure

Apart from the introduction and conlusion, large exercise of 3 of chapter:

Chapter I: Theory basis on business strategy

Chapter II: Analysis of the current status of the enterprise

Chapter III: Designing strategies and solutions for the implementation of thestrategies

CHAPTER I GENERAL THEORY BASIS ON BUSINESS STRATEGY

I OVERVIEW OF STRATEGIC MANAGEMENT :

Motivated by increasing internationalization trend and scarcity of resouces, storm development of technology, change of market demand, business environment

rain-is becoming more and more complicated and fluctuant Such business environmentrequires the enterprise to have a good business strategy, so that it can catch theopportunity, avoid risks, and ensure a stable and sustainable development

1.1 Business strategy:

1.1.1 Origin of strategy and concept of business strategy

“Strategy” is a term originated from Greek language, “Strategos” which is used inmilitary, the modern military theorist Clawzevit reckoned: Military strategy is thecommanding art at the optimum advantage A publication of Larous dictionaryconsiders: strategy is an art to commend all means to gain the victory

Scholar Dao Duy Anh, in Vietnamese dictionary wrote: strategy is drawn plan toachieve the victory on one or many battlefields Therefore, in army aspect, strategyterm in general is considered a commanding art aiming at victory achievement in awar

In 1962, Chandler defined strategy as “determination of long-term basic target andgoal of the enterprise and application of actions series as well as allocation ofnecessary sources to implement such targets” (Chandler, A (1962) Strategy andStructure Cambridge Massachusetts MIT Press)

Until 1980, Quinn introduced a more general definition “Strategy is a pattern orplan which integrates essential goals, policies and action series into a firmlyconsolidated general” (Quinn, J.B.1980 Strategies for Change: LogicalIncrementalisn Homewood, Illinois, Irwin)

Then, Johnson and Scholes redefined strategy in an environment with a lot of quickchanges: “Strategy is orientation and scope of an organization in long term to gainits competition power through formulation of its sources in changing environment

in order to meet market demand and satisfy shareholders” (Johnson, G.,Scholes, K.(1999), Exploring Corporate Strategy, 5th Ed Prentice Hall Europe)

A part from the above traditional approach, many business organizations approachthe strategy in a new way: business strategy is plan to control and use human,properties and finance resources aiming to enhance and ensure the indispensablerights Kenneth Andrews was the first to offer these outstanding ideas in theclassical book "The Concept of Corporate Strategy!" He introduced that the strategy

is what an organization must rely on the strengths and weaknesses of theirs in thecontext of both opportunities and threats

Brace Henderson, strategist at the same time was the founder of Boston ConsultingGroup connected the concept of strategy with competitive advantage Competitiveadvantage is setting a company in a better position than its competitor’s to create theeconomic value for customers "Strategy is a careful search for an action plan todevelop and combine competitive advantage of the organization The differencebetween you and your competitor is the basis for your advantage He believed thetwo competitors can not coexist if their business methods are identical Differencecreation can enable the existence Michael Porter also agreed with Henderson’sjudgment: "Competitive Strategy relates to differences That is a careful selection of

a series of different activities to create an unique set of values”

By what means of approach, nature of strategy is drafting the future image of theenterprise in their activities field and operation capacity According to thisunderstanding, business strategy term is used in 3 most popular meanings:

- Determination of long term goal of the enterprise

- Provision of the general action program

- Selection of action options, allocation of sources to implement such goal

“Source: Chapter 1 – General view on Strategic Management – National Economic University”

1.1.2 Basic characters of strategy

- Strategy specifies clearly fundamental objectives, business directions to be obtained ineach period and is fully consistent thoroughly in the areas of operations management of thebusiness Orientation character of the strategy is to ensure business continuous and firmlydevelopment in the usually fluctuated trading environment

- Business strategy only drafts operation course of the enterprise in long term, andoperation framework of the enterprise in future That is orienting only but inpractice, business activities require combination of strategic target and economictarget, taking into consideration of reasonability and adjusting to suit theenvironment and condition of business to ensure the business efficiency and remedyerrors caused by orienting character of the strategy

- Business strategy is built on basis of the enterprise competitive advantage toensure maximum mobilization and good combination with operation and use ofsources (manpower, asset power of both visible and invisible), core capacity of theenterprise in present and in future aiming to promote Strengths, capture the chances

to obtain upper hand in competition

- Business strategy is reflected in a continuous process from building up,implementation organization, evaluation, inspection and adjustment of the strategy

- Business strategy always carry attacking idea to gain victory in competition.Business strategy is formed and realized based on identification and utilization ofbusiness opportunities, competitive Strengths of the enterprise to achieve highbusiness efficiency

- Every important strategic decision in the process of building-up, implementationand adjustment of strategy is often focused to high rank managers group To ensurethe correctiveness of long term decisions, information secret in competition isimportant

1.1.3 Roles of strategy in business

With the above characters, it is said that in market mechanism, building andrealization of business strategy has an important meaning for the enterpriseexistence and development

- The business strategy help the enterprise recognize its target of orientation infuture as guideline for all activities of the enterprise.

- Business Strategy plays oriental role of the enterprise operation in long term, it isthe firm basis for deployment of activities Lack of strategy or unclear strategywithout firm ground will make the enterprise lose the direction, problems arisen areforeseen in short term not in long term or viewed partially not in whole operation ofthe enterprise

- Business Strategy will provide assistance to the enterprise in seizing and makinguse of trading opportunities, simultaneously proceeding countermeasures againstthreats in business market

- Business strategy contributes to enhance efficiency of sources usage, intensifycompany position to make sure of uninterrupted and unshakeable development

- Business strategy creates strong base for the enterprise to make decision suit themarket changes It gives firm basis for activities of research and development,investment to personnel training and improvement, market widening and productdevelopment In fact, almost mistakes in investment, technology, and marketing…are in consequence of building wrong strategy or wrong target

1.2. Strategic Management

1.2.1 Definition of strategic management

Some definitions of strategic management:

- Strategic management is a group of decisions and actions to decide the long termsuccess of the Company

- Strategic management is a group of decisions and measures to make plans andimplement strategies to realize targets of the Company

- Strategic management is to study existing and future conditions and to make plansfor targets of the Company; to organize and check the implementation of decisions

to realize targets in both existing and future conditions

1.2.2 Meanings of strategic management

- Help to realize, give priorities and obtain opportunities

- Point out real opinions and views on difficulties of management works

- Put forward an outline for the synchronous development of activities and control

- Minimize risks

- Help to have major decisions serving the preparation of targets

- Help to have better arrangement of time and resources for specific opportunities

- Reduce time and resources necessary to correct mistakes and wrong decisions

- Create a framework for relationships among individuals within the Company

- Help to combine individual actions into a common effort

- Create a basis to specify responsibilities of each individual

- Bring about an encouragement for good and progressive opinions

- Create means of cooperation, attachment, passion in jointly solving problems andobtaining opportunities

- Encourage active manners to changes

- Bring about an official discipline in the Company

1.2.3 Strategic management model

Strategic management process is often studied and used through models

The strategic management model created by F David is popularly accepted Thismodel does not ensure the success but provides a clear and basic approach inpreparation, implementation and evaluation of strategies The Relationship amongsteps of the strategic management process is presented in Figure 1.1

Distribute resources

Measure and evaluate the impleme- -ntation

Evaluate internal factors,

point out strengths and

weaknesse

The choice of strategy for according to to Policy unit

Model 1.1: Strategic management model of F David

“Source: Chapter 1–General of Strategic Management–National Economics

be mainly decided by its current position

2.1 Analysis of the environment within the enterprise

Purpose to identify strong and weak points which allow the enterprise to determine: What we can do?

Based on the determination of company sources and core capacity, from thatappropriate measures for the company strategy will be given in compliance withexternal conditions

* Company core capacity:

- Special production skills with high quality

- Provision of after-sales service

- Low production cost

- Advantagous location of retailing system

- New technology for product development

- High professional sale representatives, etc

* Internal sources of the enterprise

Those are input factors of production and trading process including visible andinvisible sources

* Model of value chain analysis (by M.Porter, 1985 )

In this value chain, Porter’s model divided into two main aspects of business:supplementary and key activities Basically, there are generally nine types ofactivities which creat value in the whole chain Group of key activities consists line

of five types of activities: input the materials to trade; operation, production-trading;transportation outwards; marketing and sale; providing relating services.Supplementary group contains activities which make value including: infrastructure,human resources administration, technology and procurement Supplementary onesoccur inside each key activity

2.1.1 Analysis manpower

In the way of the creation of the competitiveness of companies, the advantagethrough human rights is a fundamental factor Human being is reckoned as essentialsource and possess decisiveness thoughout ages Resources from the human factor

is sustainable and difficult to change in any organization

Capacity through manpower in company is understood as capacity of the companyemployees team This capacity is shown in aspects of figure 1.3 Human resourcecontributes to success of the company in respects of high quality, excellent services,innovation ability; skills in specific works; and capacity of employee team This isthe core factor to bring about the sucess for the organization However, not everyorganization can achieve sucess in all aspects on manpower and normally theychoose focuses suitable to the company vision and strategy

Paying attention to labor is the best way to stick them to the company Researcheswill demonstrate thoughts, attitude and indicators of changes in their works, fromthose, countermeasures of the company will be drawn out Consistent, effective andcourageous management will bring sucessfull efficience better than expected Thecompany has to confirm number of employee and their relative capacities can matchwith position and function of the current work or not?

Therefore, in long term, the company, organiztion has to control the employment,selection, training-upgrading, and complimentary Tasks and targets of theorganization will be carried out in parallel with an efficient HR strategy

2.1.2 Analysis of the technical infrastructure and technology companies

2.1.2.1 Technology renovation:

For production process, arrangement of machinary must be evaluated carefully Itwill affects on suitability in transportation, storage, smoothness of the system, thesynchorous machinery Therefore, personnel who carry out the productionadministration must answer: How appropriate the machine and equipmentarrangement in the company is now?

Motivation of technology innovation differs from motivation of innovation andimprovment of products of which market widening is the main target, whiletechnology innovation is with purpose of cost reduction or product quality rising.Technology innovation does not always require research of basic technical science,but it demands competences to exploit new science achievements

2.1.2.2 Analysis of the infrastructure of an organization.

This activity is controlled by the whole team, organization or strategic plan,including MIS, equipments and machines for implementation and monitoring them

It like an accounting department The enterprise has to maintain following elements:

- Organization structure, prestige and enterprise image

- Enterprise scores to achieve goals

- Communication system setting

- General organization monitoring system

- Atmostphere of organizational order

- Capacity, level of attention and qualification of the highest management board

- Strategic planning system

2.1.3 Analysis of the capacity of the company

Financial analysis enables enterprise in determination of its strengths and weakness

It also identifies causes and gives solutions for that issue The enterprise can onlyexist and bring in more wealth to its owner if its finance is well managed.Therefore, in any scale, big or small, the enterprise should focus on financialmanagement In order to implement the enterprise business assignments, financialmanagement activity does not taken independantly but related to other functionssuch as production, marketing, administration, human resource During analysis of

enterprise finance, it is required to conduct following steps: Selecting criteria to beevaluated; identifying those criteria; comparing with the past’s criteria and commoncriteria in the business field as well as competitor’s criteria.

2.1.4 Analysis of the capacity of the company

During business development, enterprises spend great efforts to achieve marketadvantage such as expansion of production scale, gained experience in order toreduce product price and increase competition of the product in the market; finalgoal is to increase turnover and profit for the enterprise Or enterprises carry outimprovement of their machinary, motivate development research aiming to promoteproducts having different functions to sastify customers’ demand Though theenterprise has to invest big amount for this method but owning to the difference ofproduct, consumers are willing to pay high price for it Thus, the enterprise are stillable to maintain its position in the market

Production function in business operation is a process of making inputs into goodsand service For almost businesses, major production cost to creat goods and servicemakes up large ratio in company costs The enterprise should determine: What to beproduced? How is quantity? Where to be comsumed? And when to be produced?

So, the enterprise should establish production plan, material reservation and supplyplan and product reservation and provision plan

Therefore, production function is often considered as a competition weapon in thecompany strategy

2.1.5 Analyze the Marketing activities

As definition of American Marketing Association: ”Marketing is performingbusiness activities in order to transfer goods and services from manufacturers toconsumers or users“

Marketing plays an important role in decision and coordination of integration ofenterprise’s business activities and market; ensures business activities of enterprisefollowing the market, which consider the market and consumer’s demand the basisfor business decision-making To analyse marketing performance in business, weneed to forcus on matters of analysing customer, purchasing and selling acitivities,

product and service strategies, price making, distribution, marketing study,opportunities and social obligation From such analysis, we must consider ifmarketing staff, who mainly perform marketing tasks, make a future marketprospects with newly arising consuming trends and which trend will dominate themarket Marketing attitude nowadays will strongly decide the company’s position inthe future Consequently, the system’s addtitute in term of responsibility toward theconsumer will proberly play a key role in making decision

2.2 Analysis of competitiveness

Companies pursue strategic businesses to achieve more competitive Strengths thantheir competitors’ and consequently gain an income higher than the average level.These strategic businesses are: Leading in cost saving, product differentiation andconcentration

Leading in cost saving

Product differentiation

Concentration

Product

differentiation

Low (mainly byprice)

High (mainly bythe uniqueness)

From low to high(price or uniqueness)

Any specific ability

Model 1.2: Three competitive strategy of basic M.Porter

“Source: Chapter 6 – General of Strategic Management–National Economics

University”

 Assess the competitive capacity of the whole enterprise

Business must find out its strong point that it’s performance is better than othercompetitors Such strong points that the competitors cannot copy or adopt simply.Overall frame of building business competitive Strengths is as below:

“Source: International Business Management – Commercial University”

From comments and analysis of business’s internal and external factors, we buildmatrix SWOT (identify weak point, strong point, opportunity, challenging) todetermine the suitable strategy to be executed

2.3 Analysis of Environment macroscopic

It is an environment containing huge factors that affect to long term strategicaldecision of business For example: economical, political, cultural, law factors, etc

2.3.1 Analysis of Legal and Political factors

Elements of political influence and great to the operations of enterprises They cancreate opportunities and obstacles even real risk to the enterprise for a change ofpolitical For example:

Model 1.3: Core competitive capacity

The interests of enterprises and consumers of an enterprise must comply with thepolicies of the decree of the state and have advanced according to the operation ofthe enterprises themselves.

2.3.2 Analysis of the economic environment

Economic factors can change value and turnover of the enterprise, such as: balance

of trade, foreign investment, market orientation, monetary system, distribution ofincome and purchasing capacity, inflation, economic development, infrastructureand natural resources Specifically:

- Economic environment shows nature and direction of an economy in which theenterprise operates its activities Such definition of economic environment inpresent condition should be relatively understood, since intergration of countries inover the world as a result of a global economy, thus the business itself needs toinspect, observe, calculate cost estimation and assess economic healthy of theoverseas economy

- National balance of trade shows advantage fields of a country

- Inflation can reduce stability of an economy and cause slow economic growth,higher interest and unstable exchange rate variation If the inflation increases,making a business plan becomes high risk A key feature of inflation is that it makesfuture forecast very difficult

- Investiment in morderation of companies in case of increasing inflation willslowdown economic activities, then at last put them to come into deadlock.Consequently, high inflation is certaintly a threat to company

- Economic growth leads to an outbreak of expenses of consumer, thus it can make

a more comfortable trend of competitive pressure in the same field This bringsopportunities to companies to expand their business and obtain higher profits Incontrast, economic decline will lead to decreasing consumption, as a result,competitive pressure is increased Also an declined economy normally causes pricewars in saturated fields

- Monatory system is indicated through national applicable currency and theexchang rate, which defines value of currency of different countries Exchange rate

variation directly impacts to competitiveness of companies in global market Forexample, when value of domestic currency is lower than other foreign currencies,domestic products will be relatively cheaper than foreign products Low or downvalue of domestic currency will reduce threats from foreign competive companies,

in the meanwhile, it creates opportunities for increasing export turnover

2.3.3 Analysis factor in social and cultural

Culture is a complicated concept Culture is considered as an objective existance inhuman society Each of person, manager or organization belongs to a curtainculture Moral, belief, system of values of each individual is built and grown undereach culture Similarly, business strategy is also affected by culture, it controlsconsumer’s behaviour and customer’s buying attitute

Society is a colorful picture created by individual with different life styles It is this

to control strongly the formation of demand of type, quality, quantity, shape, sampleetc of products or services characterising that life style Thus managers, unlessadjusting their activities to catch up with life style of both current and futuresociety, they hardly to make a good business The factors are as follows:

- Social organizations

- Values and criteria

- Language and religion

- Population with growth rate and aging structure

Normally, in each business, manager has to analyse population structure by gender,age to phase and determine the target market That means, by such analysis, theycan identify the actual demand of their products, then make decision of productionand consumption plan of their business

- Urbanization speed

- Fact and business behaviour

Population movement from one area to another area is also a factor affecting tomaking strategic plan and human resources management, marketing stretagy andother supporting business plan acting in the existing business environment

- Professional Capacity

Social labor specialization and cooperation is an indispensable in developmentprocess of each country, region and all over the world Obviously we can see that,the significant economic development, labor specalization and cooperation isextreamly high and vice verce This also means that professional specialization andcooperation is stronger and stronger in a developed society Besides, people havingdifferent consumption demands of food, accommodation, travelling andentertainment because of their different professions In order ton meet demand of allkinds of profession in the society, managers must consider all impacts of suchfactors on their business plan and strategy

Population and population growth in each market and each nation, as always, isfactor that causes dramatical affection to all business administration of eachcompany

2.3.4 Analysis Factor in technological

Of course, technology alternation will affect to life circle of a product or service Atheorical cycle consists of starting, growth, mature and vanish There is the fact thatafter the vanish stage, some products will have a new growth Moreover, technologyalternation also affects to production method, materials as well as labor’sbehaviours Thefefore, this is factor with significant and direct affection to businessstrategy of many companies and many sectors The 21 century is a century ofscience and information technology, therefore, analysis and prediction oftechnology alternation is very important and urgent ever, as following indications:

- Scientific and technology criteria

It is an enviroment in which the business is performing their business activities,including a set of elements directly affecting to business, and also affected by thebusiness For example: supplier, competitor, customer, etc

There is a analysis model may the force be M.Porter construction helped the seasonsthe strategy in the analysis of this The model presented a model of 1.4

Model 1.4: Five-forces model

“Source: Chapter 3 – General of Strategic Management–National Economics

University”

2.4.1 Analysis of competitor

Competitors are companies that their business providing similar products, that’smeans they satisfy the same demand of customers in the market

Competitor consists of actual competitor and potential competitor

If the sector competition is weak, company will have oppotunity to pump up priceand get more profits However, if the competition is high, highly price competitionwill lead to a price war The competition will restrict profitability due to reduce ofmarginal profit per turnover Thus, competition strength among companies of thesame business type will generate a big threat to the profitability In summary, rate ofcompetition among companies of the same business type will depend on three mainfactors: sector competitive structure, demand condition and high take-out barrier

2.4.2 Analysis of customer pressure

Threat of newEntrants

Bargaining

Power of

Customers

Competitiverivalry within anindustry

BargainingPower of Suppliers

Threat of SubstituteProducts

Second one of the five forces of Porter is buyer’s negotiation capacity Buyer of acompany can be last user or they can be distribution agency who deliver theproduct, so-called wholesale agency and retail saleman To achieve target turnover,business must deliever its products to the consumer, therefore, customer plays a keyrole in success and reputation of a company Nowadays, a business must supplyproducts that meet customer’s demand instead of selling their available products

2.4.3 Analysis of supplier pressure

Supplier can be considered a threat to a company when they press price increasing

or to reduce company’s profitability In contrast, it it is a weak supplier, it willcreate a chance for the company to press price decreasing and require high qualityproducts The same with buyer, supplier’s requirement to the company will depend

on their relative power on the company According to Porter, supplier’s power ishighest as: their product is limited, alternativable and important to the company

2.4.4 Analysis of new product pressure

Replaced products are products serving for customer’s demand, similarly to the going analyis business type Existance of replaced products reveals a competitivethreat, it restricts high pricing, therefore there is limit for company’s profitability.However, if the company has limited replaced products (in case weak competitiveproducts) and other normal factors, that company will have chance of increasingprice and getting higher profit As a result, company’s strategy will be designed togain competitive advantage from this fact)

on-External Factor Assessment Sample EFAS

Step 1: Define and set a list of 10-20 factors (opportunities and threats) which play akey role in success of the company

Step 2: Giving assessment of importance of each factor by rating from 1.0 to 0.0 on the basis of each factor’s impacts (rate, time) on the current business strategy of the compnay Suitable rating can be defined by making comparison of sucessful

competitve companies and unsuccessful ones Total of this figures equivant to1 Step 3: Giving assessment of each factor by rating from 4(outstanding) to 1 (bad) onthe basis of the company’s current strategy orientation reacts to this factors So, this

rating is for individual company, while rating at step 2 is by sector

Step 4: Multiply importace rate of each factor with its score to determine

importance score of each factor

Step 5: Plus importance score of all external factors to determine total of importancescore of the company Total of importance score from 4.0 is good, 1.0 is bad and 2.5

is average value

+ Minerals exploration, process and trading

+ Real Estate Agency

+ Real Estate Trading

2.1 Function of the company:

The company has function of Lead – nickel silver investigation and exploration inarea of Xa Nhe Commune, Mun Chung commune, Tuan Giao District, Dien BienProvince

2.2 Strategic Target:

Invest to diversify product, increasing quality of product in order to build upsustainable development for the company and meet customer’s demand better andbetter

Concentrating on setting out Marketing strategy to be strongly competitive when themarket expands for rising up quality of exported goods

Strengthening management organization model to enhance management efficiencyfor development of the Company in the coming time

Building a professional enterprise, cooperation to develop and take Strengths oflocal and foreign partners, obtain opportunities to expand its market to the regionalcountries.

In the next year, the Company will expand its share in the domestic market,especially in Cities with industrial zones Further more, the Company will pay muchattention to foreign clients from China, South Korea, Taiwan, Japan, India, etc

Internal environmental will be analyzed based on organization structure andtogether with supporting centers to implement parts of works as the below chart:

Model 2.1 Implementation process and Chain of value

3.1Analysis according to resources:

3.1.1 Organization structure of the Company

Since the Company was just established in February 2008, its organization structure

is step by step adjusted The company’s organization structure is shown in model2.1 Current organization structure of the company is a combination of FunctionalOnline Organization and Associated Matrix Organization In which, the FunctionalOnline Organization is used for high level (management) and the Associated MatrixOrganization is used for low level (execution) With this organization mode, thecompany obtains centrally control and ensures rapid decision making for executionand limit shortcoming of unique functional online organization model

Production

Processing

Outpu

t Logistics

Marketing and Sales

Input

Logis

tics

Exploration of raw materials

Regarding to the organization structure, Mr Nguyen Van Cuong is General Director

of the company He graduated from Geology and Mining University, Hanoi LawUniversity and he is also a Master of Business Administration He has seniority infield of minerals exploration Formerly, Mr Cuong was Director of RockExploration Enterprise, Song Da Corporation Therefore he has a lot of experience

as well as relationship in this field Besides, the company’s Mine Director,Workshop Manager is formerly Chief of Technical Dept working under hismanagement in the former company

Thus, qualification and capacity of Company’s Board of Directors is relatively high

GENERAL DIRECTOR

EXPLORA TION TEAM 2

EXPLORA TION TEAM 3

SECURI

TY TEAM

Financial and accounting department

BUSINESS DEPARTMENT

TECHNICAL DEPT

MACHINARY OPERATION TEAM

ELECTRICAL TEAM SUPPORTING TEAM SECURITY TEAM

DEPUTY

DIRECTOR

Office of Planning and Investment

PERSONN

EL DEPT

Model 2.2: Organization Chart

Source: Administration department

 Strong Point:

With this half-matrix organization structure, the company can change its structurevery flexible, this structure is in deed suitable to a company trading in minaralsexploration and processing like TAINGUYEN COPR

Additionally, the company maintains a structural frame consisting of functionaldepartments to perform different tasks of the company’s chain of values

Weak point of this kind of structure is that it still apply fishborn-shaped structure forthe management For example, one director in charge of certain departments, in themeanwhile, he may not be master of activities of these sector or he is not good at hisgiven field to be managed

Fishbone structure itself reveals several inherent weak points and one of those is thebureaucracy Each department has its own functions and duties but it is at the sametime less flexible Some tasks have not been assigned to any department butcontrarily some other tasks seem to be in charge of several departments in anoverlapped manner Misappointing medium level managers may stagnate theoperation of a certain department and consequently stagnate operation of the wholecompany

3.1.2 Human resource management

As the company has just been formed since February 2008, the human resourcemanagement policy is in the progress of developing

 Labor structure of the company is shown as below:

Table 2.1: Classified by labour structure

Source: Administration department

According to the above table, we can recognize that the female labour rate isrelatively lower than man labour rate and the direct labour rate is relatively high for

a mineral exploiting and processing company

Number of indirect employees, such as the high because companies exploit theexposed methods, mainly in mining machinery, bulldozers, trucks In addition,companies need to develop apparatus operating parts business to ensure businessoperations of the Company and sustainable development

In some ways, it can be considered as an advantage of the company

Table 2.2: Labour structure classified by qualification

Source: Administration department

Although the rate of staff with university degree or above has increased a bit from

2008 to 2009 but it remains relatively low The rate of staff with higher schooldegree or below is high and among them, about 90% are trained in professionalschools or by on job training (OJT) Staffs with university degree or above aremainly play the role of managers and high level leaders of the company and work inoperational office

Table 2.3: Labour structure classified by age

Source: Administration department

The average age of the whole company is 26.5 means the labour force of thecompany is relatively young and as a result, they may easily adapt themselves tonew condition and new working environment

Attractive salary, encouraging and rewarding policy may be one of the good ways toattract qualified personnel.

Two ways of remuneration calculating:

For direct production worker: paid by piece wage system

For indirect production labour: Paid by working time and volume of completedwork which divided into 2 parts: one part is the salary scale stipulated bygouvermental decree and the other is based on separated rate depend on job title

Table 2.4: Payroll and average income

Source: Administration department

Beside salary, lagniappe is also available for extra shift or overtime working, forover completion, for initiative or technical improvement We can recognize thatsuch income level is relatively high and stable in the region

Therefore, staffs of the company are somehow considered as qualified andcompetent people with research ability

 Strong Point:

Managers of the company are enthusiastic and dynamic Labour force of thecompany is mostly young and suitable for an exploiting and processing companyespecially people from 18 to 30 years old

Company has built a good recruitment policy and related documents such as WorksRegulations, Collective Labour Agreement, Corporate Bylaws, structure, functionsand duties of each department, job description and evaluation sheet of each position,

… which brings people a good image of transparency as soon as they are recruited

mid-selection for next generation managers in the next some years is not clear Trainingfor next generation managers has not been conducted and external human resourcemanagement system is very weak.

3.2 Technical and technological material base of the company

Being a business unit with above mentioned functions and duties, the technical andtechnological material base of the company includes:

- Office system and other office equipements and facilities which supportadministrational and managerial work;

- Factory and other basic facilities used for ore separating and processing like: oreseparating rack, workshop, electric system, water supply system, stores,transportation system, shot-drilling system, shoveling system, pouring system, othermodern facilities and staff dormitory

Information technology

Company has an internet infrastructure connected in office area, processing factoryand even in minery area Besides, all key officers of the Company are provided withcell phones, fax machines for their convenience in communication Furthermore,Company has website as well

Despite of the modernization in technology, a certain amount of chemical and oilslick escaped to the land and underground water layer which may directly impactsthe growth cycle of plants.

3.3 Analyze company’s financial condition

From his early time, Company has been facing a lot of huge challenges from othercompetitors in the market Together with the determination and diligence ofmanagerial team and all workers, Company has gained his stability in operation justafter a short period of time

Table 2.5 Balance sheet and Income statement

Source: Financial and accounting department

V Other current assets 911 931

4 Other current assets 905 843

I Long term account receivables - -

1 Tangible fixed assets 946 3,968

1 Short tem borrowings and debts - -

10 Provisions for short term payable - -

II Long term liabilities - -

I Capital sources and funds 17,610 42,050

1 Owners’ investment capital 18,000 41,700

10 Undistributed earnings (390) 350

11 Construction investment capital source - -

II Other funds and budget source - -

Revenue from sales of goods and rendering of

Other expense - -

Total profit before tax (390) 350

Earning per share - -

Leverage Ration 0.00 0.00

Current capital turnover (cycle/year) 0.07 0.39

Company’s Liquidity in 30th September 2009 is lower than in 2008 because theCompany has invested in fixed assets (production chain, trucks,…) and has builtlead and zinc processing factory However, this ratio is still in safety margin (>1)

- Analyze the profitability:

2008 30/09/2009

As the Company has just been established in 2008 and is in investment stage soturnover and profit could not be high After exploiting and selling lead and zinc,turnover and profit will grow higher than present

- Analyze the earnings yield:

Profit after tax / Net turnover -43.1% 8.0%

Profit after tax / Net turnover in 30th September 2009 is higher than in 2008 meanscost management work is good, cost of goods sold is relatively low in compare withturnover means profit is high However, Return on Assets and Return on Equitiesare low which means the profitability of assets and capital is low As the Companyhas just been established and is in investment stage so these low ratios areacceptable.

3.4 Analysis of the manufacturing capacity of the enterprise

Fine lead-ore and fine zinc-ore are final output of selection process The output isthen brought to metallurgical factory to make pig lead, pig zinc and many otherproducts

Ore manually exploited will be enriched in processing factory and then betransported by truck to the Company stock yard Standard products will beconsumed for domestic industrial demands as well as for exportation

 Strong Point:

Products of the Company are well known and highly appreciated in domesticmarket as well as in foreign market Company has achieved several principlecontracts for the next 5 to 10 years

Being a new company, products of the Company are not enough to satisfy alldemands of domestic and foreign customers