Luận văn MBA xây dựng chiến lược kinh doanh công ty sơn ICI

Strategies help to answer the questionfor enterprises in which industry should be participated , the position of enterprise in the business environment, and the roles of each business se

LUẬN VĂN THẠC SĨ – MBA

Xây dựng chiến lược kinh doanh công ty sơn ICI

THESIS TOPIC

TO BUILD THE BUSINESS STRATEGY FOR CO ICI PAINT

VIETNAM

LUẬN VĂN THẠC SĨ – MBA 1

THESIS TOPIC 1

1

CONTENTS 2

LIST OF TABLES 5

LIST OF FIGURES 8

FOREWORD 11

Chapter 1 SOME THEORIES OF BUILDING THE BUSINESS STRATEGY IN DECORATIVE PAINTS COMPANY 13

1.1 Concepts, classifications and the roles of business strategy in the company 13

1.1.1 The concept of business strategy in the Enterprise 13

1.1.2 Clasifying business strategy in the Enterprise 14

1.1.3 The role of business strategy 15

1.2 Content business strategy in the decorative paints company 16

1.2.1 Strategic content for businesses in the decorative paints company 16

1.2.2 The contents of strategies for functional level in the decorative paints industry 20

1.3 Grounds and procedures for building business strategy in the decorative paints company 22

1.3.1 Grounds to build business strategy in the decorative paints company 22

1.3.2 Analytical methods of environmental to build strategies of decorative paints company 23

Figure 1.1 SWOT / TOWS Matrix 25

Figure 1.2 BCG Matrix 25

Figure 1.3 Porter's Five Forces Model 28

1.3.3 The Business strategicplanning process 30

Figure 1.4 The Business strategicplanning process 30

SUMMARY OF CHAPTER 1 33

CHATER 2 STATUS OF ACTIVITIES IN ICI PAINTS CO., LTD VIET NAM 34

2.1 Overview of ICI Paints Co., Ltd Vietnam 34

2.1.1 Information of the company 34

Figure 2.1 Diagram of ICI Paint Vietnam Co., Ltd Organization System 36

2.2 Analysis, and assessment of the external environment of the company

36

2.2.1 Analysis of external environment of the company 36

Table 2.1 Country Facts in 2009 36

Table 2.2 Economic Indicators 37

Table 2.3 Effect on decorative paint market development 38

Table 2.4 Urban Migration 41

Table 2.5 Drivers of Market Size 42

A change of households classifying criteria based on relative points equivalent to their durables owned: 43

2.2.2 External assessment 48

2.3 Analysis, and assessment of the internal environment of the company 49

2.3.1 Internal analysis 49

Table 2.6 Volume and Value Share of Vietnam Paints Market in 2009 50

Figure 2.2: ICI company Historical Growth 51

Table 2.7 Financial Profit Summary 51

Table 2.8 Real labor wages in the company ICI 51

Table 2.9 Channel of Vietnam Paint market in 2009 59

2.3.2 Internal assessment 59

SUMARY OF CHAPTER 2 60

CHAPTER 3 BUSINESS DEVELOPMENT STRATEGY FOR ICI PAINT VIETNAM LTD., CO IN THE PERIOD 2010-2015 61

3.1 Summary of bases for business development strategy proposal 61

3.1.1 Vision, Mission and Strategic Intent of ICI Paint Vietnam 61

3.1.2 Applying analysis models to propose business strategies for Company 63

Table 3.1 ICI’s TOWS Matrix 63

Figure 3.1 BCG with external paint products of ICI 66

Figure 3.2 BCG with internal paint products of ICI 68

Figure 3.3 BCG of ICI with other products and services in the paint industry 70

Figure 3.4 Porter's Five Forces Model analysis of ICI 71

3.2 Company business strategy proposal 71

3.2.1 Enterprise business strategy proposal 71

3.2.2 Strategy proposal at functional levels of the Company 75

Table 3.2 ICI’s financial targets 82

3.3 Recommendation to the State and authorities 86

3.3.1 The State 86

3.3.2.Authorities 87

SUMARY OF CHAPTER 3 88 GENERAL CONCLUSION 89 LIST OF REFERENCE DOCUMENTS 90

LIST OF TABLES

LUẬN VĂN THẠC SĨ – MBA 1

THESIS TOPIC 1

1

CONTENTS 2

LIST OF TABLES 5

LIST OF FIGURES 8

FOREWORD 11

Chapter 1 SOME THEORIES OF BUILDING THE BUSINESS STRATEGY IN DECORATIVE PAINTS COMPANY 13

1.1 Concepts, classifications and the roles of business strategy in the company 13

1.1.1 The concept of business strategy in the Enterprise 13

1.1.2 Clasifying business strategy in the Enterprise 14

1.1.3 The role of business strategy 15

1.2 Content business strategy in the decorative paints company 16

1.2.1 Strategic content for businesses in the decorative paints company 16

1.2.2 The contents of strategies for functional level in the decorative paints industry 20

1.3 Grounds and procedures for building business strategy in the decorative paints company 22

1.3.1 Grounds to build business strategy in the decorative paints company 22

1.3.2 Analytical methods of environmental to build strategies of decorative paints company 23

Figure 1.1 SWOT / TOWS Matrix 25

Figure 1.2 BCG Matrix 25

Figure 1.3 Porter's Five Forces Model 28

1.3.3 The Business strategicplanning process 30

Figure 1.4 The Business strategicplanning process 30

SUMMARY OF CHAPTER 1 33

CHATER 2 STATUS OF ACTIVITIES IN ICI PAINTS CO., LTD VIET NAM 34

2.1 Overview of ICI Paints Co., Ltd Vietnam 34

2.1.1 Information of the company 34

Figure 2.1 Diagram of ICI Paint Vietnam Co., Ltd Organization System 36

2.2 Analysis, and assessment of the external environment of the company 36

2.2.1 Analysis of external environment of the company 36

Table 2.1 Country Facts in 2009 36

Table 2.2 Economic Indicators 37

Table 2.3 Effect on decorative paint market development 38

Table 2.4 Urban Migration 41

Table 2.5 Drivers of Market Size 42

A change of households classifying criteria based on relative points equivalent to their durables owned: 43

2.2.2 External assessment 48

2.3 Analysis, and assessment of the internal environment of the company 49

2.3.1 Internal analysis 49

Table 2.6 Volume and Value Share of Vietnam Paints Market in 2009 50

Figure 2.2: ICI company Historical Growth 51

Table 2.7 Financial Profit Summary 51

Table 2.8 Real labor wages in the company ICI 51

Table 2.9 Channel of Vietnam Paint market in 2009 59

2.3.2 Internal assessment 59

SUMARY OF CHAPTER 2 60

CHAPTER 3 BUSINESS DEVELOPMENT STRATEGY FOR ICI PAINT VIETNAM LTD., CO IN THE PERIOD 2010-2015 61

3.1 Summary of bases for business development strategy proposal 61

3.1.1 Vision, Mission and Strategic Intent of ICI Paint Vietnam 61

3.1.2 Applying analysis models to propose business strategies for Company 63

Table 3.1 ICI’s TOWS Matrix 63

Figure 3.1 BCG with external paint products of ICI 66

Figure 3.2 BCG with internal paint products of ICI 68

Figure 3.3 BCG of ICI with other products and services in the paint industry 70

Figure 3.4 Porter's Five Forces Model analysis of ICI 71

3.2 Company business strategy proposal 71

3.2.1 Enterprise business strategy proposal 71

3.2.2 Strategy proposal at functional levels of the Company 75

Table 3.2 ICI’s financial targets 82

3.3 Recommendation to the State and authorities 86

3.3.1 The State 86

3.3.2.Authorities 87

SUMARY OF CHAPTER 3 88

GENERAL CONCLUSION 89

LIST OF REFERENCE DOCUMENTS 90

LIST OF FIGURES

LUẬN VĂN THẠC SĨ – MBA 1

THESIS TOPIC 1

1

CONTENTS 2

LIST OF TABLES 5

LIST OF FIGURES 8

FOREWORD 11

Chapter 1 SOME THEORIES OF BUILDING THE BUSINESS STRATEGY IN DECORATIVE PAINTS COMPANY 13

1.1 Concepts, classifications and the roles of business strategy in the company 13

1.1.1 The concept of business strategy in the Enterprise 13

1.1.2 Clasifying business strategy in the Enterprise 14

1.1.3 The role of business strategy 15

1.2 Content business strategy in the decorative paints company 16

1.2.1 Strategic content for businesses in the decorative paints company 16

1.2.2 The contents of strategies for functional level in the decorative paints industry 20

1.3 Grounds and procedures for building business strategy in the decorative paints company 22

1.3.1 Grounds to build business strategy in the decorative paints company 22

1.3.2 Analytical methods of environmental to build strategies of decorative paints company 23

Figure 1.1 SWOT / TOWS Matrix 25

Figure 1.2 BCG Matrix 25

Figure 1.3 Porter's Five Forces Model 28

1.3.3 The Business strategicplanning process 30

Figure 1.4 The Business strategicplanning process 30

SUMMARY OF CHAPTER 1 33

CHATER 2 STATUS OF ACTIVITIES IN ICI PAINTS CO., LTD VIET NAM 34

2.1 Overview of ICI Paints Co., Ltd Vietnam 34

2.1.1 Information of the company 34

Figure 2.1 Diagram of ICI Paint Vietnam Co., Ltd Organization System 36

2.2 Analysis, and assessment of the external environment of the company 36

2.2.1 Analysis of external environment of the company 36

Table 2.1 Country Facts in 2009 36

Table 2.2 Economic Indicators 37

Table 2.3 Effect on decorative paint market development 38

Table 2.4 Urban Migration 41

Table 2.5 Drivers of Market Size 42

A change of households classifying criteria based on relative points equivalent to their durables owned: 43

2.2.2 External assessment 48

2.3 Analysis, and assessment of the internal environment of the company 49

2.3.1 Internal analysis 49

Table 2.6 Volume and Value Share of Vietnam Paints Market in 2009 50

Figure 2.2: ICI company Historical Growth 51

Table 2.7 Financial Profit Summary 51

Table 2.8 Real labor wages in the company ICI 51

Table 2.9 Channel of Vietnam Paint market in 2009 59

2.3.2 Internal assessment 59

SUMARY OF CHAPTER 2 60

CHAPTER 3 BUSINESS DEVELOPMENT STRATEGY FOR ICI PAINT VIETNAM LTD., CO IN THE PERIOD 2010-2015 61

3.1 Summary of bases for business development strategy proposal 61

3.1.1 Vision, Mission and Strategic Intent of ICI Paint Vietnam 61

3.1.2 Applying analysis models to propose business strategies for Company 63

Table 3.1 ICI’s TOWS Matrix 63

Figure 3.1 BCG with external paint products of ICI 66

Figure 3.2 BCG with internal paint products of ICI 68

Figure 3.3 BCG of ICI with other products and services in the paint industry 70

Figure 3.4 Porter's Five Forces Model analysis of ICI 71

3.2 Company business strategy proposal 71

3.2.1 Enterprise business strategy proposal 71

3.2.2 Strategy proposal at functional levels of the Company 75

Table 3.2 ICI’s financial targets 82

3.3 Recommendation to the State and authorities 86

3.3.1 The State 86

SUMARY OF CHAPTER 3 88

GENERAL CONCLUSION 89

LIST OF REFERENCE DOCUMENTS 90

1 Neccesary of the research project

In the present context, when Vietnam is the member of many internationalorganizations and with the trend of integration of regional economies and in theworld, the business environment of enterprises will be expanded with new factors,many opportunities that’s why challenges are more competitive fiercely.Toaccommodate the business environment is changing, a successful business companyneed to have capabilities to cope with many changing situations, to forecast thetrend of changes, to exploit the advantages, to know and promote the strengths andminimise the weaknesses of the company as well as to appraise the competitors To

do this, enterprises must be clearly outlined and built the own business strategy.Business strategy is very important for the existence and development ofenterprises The modern business management is focusing especially on themanagement of the business stratergy

ICI Paint Co., Ltd Vietnam has been established in 1995, is a member of theImperial Chemical Industry of England In Vietnam, the decorative paints of ICIcompany is a market leader in the North and the second market share in South andCentral It is so critical to build the SMART business stratergy for the company tomaintain and to strengthen and to enhance its position in the context of so fiercecompetitive environment It will make the business successful

As a National sales director of ICI Paint Co., Ltd in Vietnam, I understand anenormous role of the building business strategy for company After discussion withmembers in the group 01.M05 and we all are agreed re to select the theme: "ToBuild the business strategy for Co ICI Paint Vietnam 2010-2015”

2 Purpose of Research:

The purpose of the topic is to develop the smart business strategy for ICI Paint Co.,Ltd Vietnam in the period 2010-2015 and have the right solutions to implementeffectively this strategy

3 Objective and scope of research:

Objective of research are the problem of business strategy and build businessstrategies of company with the managerial points of view

Scope of research is the business strategy in the field of decorative paints business.Limited research is ICI Paints Co Vietnam

Mainly data have been focused on three in 2007, 2008 and 2009

4 Methodological research:

With the logical and systematic approach, the topics are being used a combination

of research methods such as secondary research materials, survey, analysis,comparison, methods specialists, methods model

5 Structure exercises great:

Besides the introduction, list of references, the content of the topic are threechapters:

Chapter 1 Some theories of the building the business strategy in the decorativepaints company

Chapter 2 Current status business of ICI Paints Co., Ltd Vietnam

Chapter 3 Solutions to build the business strategies for ICI Paint Co., LtdVietnam for the period 2010-2015

Chapter 1 SOME THEORIES OF BUILDING THE BUSINESS STRATEGY

IN DECORATIVE PAINTS COMPANY

1.1 Concepts, classifications and the roles of business strategy in the company 1.1.1 The concept of business strategy in the Enterprise

The vocabulary "strategy" is derived since a long time ago, before this term wasfirst used in the military

Today, this term is used to spread and is introduced into most areas of economic,political, social , especially in the range of macro and micro economic Since theappearance to date, both in theory and practice, exist in many concepts of strategy.There are some key concepts which have been mentioned often in the books andresearchers that:

According to Michael Porter: "Strategy is the art of building the competitiveadvantages for a firm defense “

According to Alfred Chandler: " Business strategy is to define the fundamentalgoals and longterm goals for enterprises, to choose the policies and action plans toallocate the resources to achieve the fundamental that goals.”

According to William J Glueck: " Business strategy is the plans with uniformity,comprehensiveness and coordination designed to ensure that the fundamental goals

of the business will be achieved.”

Thus, the term “strategy”of Enterprises is implied and reflected the goals of thestrategy, the time to do it, the process of decisionmaking for strategies, factors ofcompetitive environment, advantages and weaknesses of Enterprises in general andfor each activity in particular

Striking features of the strategy is its orientation and define solutions, major policyfor key objectives Along with the plans, the orientation is decisive All the goalsare qualified and linked together into a system of indicators reflecting acomprehensive production and business activities of enterprises.Therefore, building business strategy is the art of designing and organizing the

means to achieve longterm goals of the enterprise in close relationship with thebusiness environment.

1.1.2 Clasifying business strategy in the Enterprise

According to different approaches, business strategies are classified into severaltypes, typically as follows:

1.1.2.1 Based on level business strategy

Business strategy for enterprises level : General strategy, identify longterm goalsand methods to achieve goals in each period Strategies help to answer the questionfor enterprises in which industry should be participated , the position of enterprise

in the business environment, and the roles of each business sector in the enterprise Business strategy level: the strategy to indentify how enterprises should compete

in each business sector to participate Generally, enterprises are operating in variousbusiness sectors are classified into the strategic business unit (SBU: strategicbusiness unit), or called as the member units, relatively independent of each other.Each SBU are assumed that one or several business sectors which areindependentce of its own strategy but in unity with the overall strategy and interests

of the whole enterprise

Strategies for functional level : strategy must indentify what level supports forstrategies of enterprises level , is the details of strategy at its level and related tothe functional operational management They are the strategies in the functions such

as R & D, manufacturing, marketing, human resources, finance and must complyand are consistent of strategies of enterprises level

If a company is operating in a field of business then strategies of enterprise levelare coinciding with business strategy It is conventional that in this business thereare two levels of business stratergies are enterprises level and functional one

1.1.2.2 Based on the scope of the strategy

General business strategy: are refering to the most important questions, the mostextensive and longterm meaningful, deciding the vital questions to the enterprises,the longterm guideline and longterm goals

Business strategy of each area: this strategic type is to solve the problems ofproduction to implement the general strategies such as product, marketing financialstratergies and technology

1.1.2.3 Based on market direction

Business strategy is divided into four groups:

Group I: Strategies are focused to solve a critical questions, not spread of resourcesthat focus on actions to be of decisive significance for production and business ofthe enterprise

Group II: Business strategy is based on comparative analysis and relativeadvantages of enterprises to be compared with other enterprises which are beingproduced same products then to find out the own strengths to run the business.Group III: Creative strategies of attacking and discovering new products andservices

Group IV: Strategies are cultivated the possible capabilities of the surrounding tofind out key elements

1.1.2.4 Base on the process strategy

Orientation strategy is including the orientation of major functions, tasks andstrategic objectives are base on the basis of judgments of environment and analysis

of internal enterprises Orientation strategy is the fundamental projects of enterprise

Action strategic is including the plan for action in different situations andadjustment in the process of implementing strategy

With the framework of this major exercise, we are following the first approach tobusiness strategy is "Based on the business strategy level.”

1.1.3 The role of business strategy

To help the enterprise to clearly see the direction in the future then the managementadministrators to review and make decision which directions should to driveenterprises and when can achieve the goals

To help the management administrators are always initiative in any changes of theenvironment, as well help them see clear opportunities and risks can be occured inthe current business to analyze, evaluate, forecast business environment in thefuture From there to drive enterprises for taking any advantages or opportunities,and pushing back the risks to win.

To help enterprises to exploit and use up the resources, their potential Thencepromote the maximum strengths of the enterprise for going up

To help enterprises to allocate their resources in the business fields on timereasonably

To help enterprises to unite and have the engagement of employees andmanagement in implementing the objectives of enterprises Thence to create internalstrengths

To help enterprises to increase sales volume and labor productivity and increasedadministrative efficiency, can avoid risks and prevent issues to be happened

1.2 Content business strategy in the decorative paints company

Strategic systems in an enterprise are including : Strategies for Enterprises,Business strategy level and Strategy for functional level The business of ICI isdecorative paints ICI company have one business area then there are twolevels ofstrategy are Business strategy level and Strategy for function level (Strategic forcompany level is coincided with Business strategy level)

1.2.1 Strategic content for businesses in the decorative paints company

ICI business with a particular field of decorative paints, with the approach ofadministrative management then strategies for businesses are including: generalstrategy (Grand Strategies), Adaptive Strategies and Competitive strategies

1.2.1.1 Grand Strategies

Are general strategies of description of the overall ways which the business topursue Decorative paints company need to choose overall appropriate strategiesare including: stable strategies, strategic growth, strategies to narrow or strategycombination

Stable strategy is characterized by no significant changes It means that enterpriseago how is this still so now to continue to serve the group as before by providingproducts and similar services, preserve market share, and maintain interest rates andthe withdrawal of the capital as in the past.

When the company leaders to pursue this strategy? When they see just pleased withthe results the company business This strategy is appropriate to companies whichoperate in the environment is relatively stable and little changed However, It is notvery easy for any business (or individual) to define a strategy for its stability,because it seems not much of the psychology and ambition of leaders are always toexpansion and increased growth These administrators under this strategy can beprovided is not even advanced player, or an often part player

Growth Strategy: strategy to seek growth in the activities of the business Thisstrategy often involves increasing sales volume , increasing the number of workers

or increasing market share This strategy is many leaders as they pursue that, " themuch more to the much better and the most to the best.” Growth Strategy can beimplemented by the ways: direct extension (additional investment of machines,equipments, workshops …) mergers and takeovers (Mergers & Acquisitions);jointventure; diversification business fields

Narrow strategy: to seek for cutting off the scale and extent of diverse activities ofcompany

Before the 1980s, noun "cut" or "narrow" easily cause loss of sympathy for smallcompanies wanting to admit they are pursuing this strategy (which is only referring

to ongoing development as an Art language is preferred) However, to the end of

1980, people had recognized a narrow really becoming a trend and strategic, andmanegement of the narrow was one of the problems which were discoveredpositive in the field of administration There are many reasons why decorativepaints companies can look at this narrow strategy: fierce competition in bothdomestically and internationally; Reduce government intervention; Mergers and

takeovers; The important invention technology makes the business as are scaledwith the number of employees less than

Mixture strategy: to pursue simultaneously two or more of the strategies stability,growth, or shrink depending on the actual business situation

1.2.1.2 Adaptative strategy

In the period of business, decorative paints enterprises need to determine positionand orientation competition in the industry how their participation Therefore theresearch the enterprises need to research and choose business strategies to theirsuitable adaptation

Theory of adaptative strategy by both Mr Raymond Miles and Charles Snow hadbeen proponented Firstly, Mr Miles and Snow had classified into four types ofstrategy: The defender (Defenders) who seeks (Prospectors), the analysis(Analyzers )and the reactor (Reactors) Thence they demonstrated that the successachieved by only one of the three strategies if there is a joint strategy with theenvironment of the enterprise, the internal structure and management processes Thetwo men also showed that any companies follow the fourth will fail Specifically indecorative paints industry as follows:

The strategy "The defender" (Defenders): strategy to pursue stability by onlyproducing a limited paints products to be directed at a narrow piece of the overallpotential market

Initially, the defender market have penetration by offering a range of products islimited Over time, the defender eventually cut out to own a piece of the market as atheir small autonomous region, and protecting it by the way that the competitorsreached it very difficult, often through plans like the standard economicdevelopment and strengthen the prestige labels, quality of products, services,economical due to the scale

Thus, once find itself a suitable market segment, the defenders tend elusive thedevelopment and going outside "the forbidden area" of them This strategy is oftenseen in the business with relatively health, stable and predictable Defenders who

seek to grow by developing products within their paints and penetrating more newmarkets.

The strategy "The Search" (Prospectors): to pursue innovation by searching andexploring new products and new opportunities in the market

Contrary to the defenders (who is going to find stability), the searcher to pursueinnovation Strong points of the prospectors have found out and exploited newproducts and opportunities in the market, so the list of items of products are broadand often changes Searchers often are the first ones into new markets

Strategy of analysis "(Analyzers): to seek the ways for reducing risky minimum

by following the innovations of competitors, but only after the innovation has beenproved the successes

The analysis has been made by simulation and imitating Other paints companieshave been copied the ideological success of the prospectors The thought of theanalyzers is "the next life but is the overwhelming"

The first leading paints products are characterized by a hard right on the design,production, selling Thus, when competitors launch new products to market, theyresearch the situation, interview the consumers to see products that have anyadvantages or disadvantages and what innovation must do Then to start producingbetter products , overcome the disadvantages of the competitors

Thus, the analyzers have to be able to parody the new products of the keyprospectors , but at the same time it must maintain performance for the products andmarkets of their stability As a result, the analyzers often have marginal profit lessthan the prospectors, but they have better productivity The prospectors need tohave a larger marginal profit to offset the level of adventure that they incurredexpenses and other costs of their production

Thus, if the prospector is successful by moving efficiently, then the success ofanalyzer by doing both very careful way (hence, its new name is "the analyzer ").The analyzer is successful by the "fast follower” or "the second mover.”

The reactors: to have the typical of the type of decision is not stable and consistent.This strategy often is occured when one of the three above the strategies are notpursued properly Overall, the response is incorrect response of situations, poorresults and not willing to pursue any strategies properbly.

1.2.1.3.Competitive strategies

According to Michael Porter's theories of competitive strategy can be seen that inthe decorative paints industry there is no company which can achieve at the average

by "is trying to do everything to everyone" Therefore, the management board need

to choose its business strategies are simultaneous of competitive advantages of itsbusiness industry and competitive advantages of enterprise For example, decorativepaints company has to choose from the following competitive advantages: Strategy of leading prices: This strategy advocates compete by offering lowerprices for paints products than competitors

Unique strategy: This strategy focuses on providing a special service for a certainnarrow segments which the company has the advantages in the market

Strategy of leading quality: This strategy aims to conquer the customers withhigher or highest quality of paints products than competitors

Strategy of the leading to the difference: This strategy advocates the competitionsthrough the providing for our customers by differentiation of features and benifits

of the paints products comparing with competitors

1.2.2 The contents of strategies for functional level in the decorative paints

industry

Strategies of functional level (also called strategies for functions in company) Thesestrategies need to be determined what need to be done to supports for the genenalbusiness strategy They are the specefic business strategies for the functions in thecompany which have been related to general administration operations and thegeneral strategies of enterprise Requirements of the strategy for funtional level aresubject to and consistent with overall business strategy Goal is to create a frame or

diagram for direction , how to achieve setting objectives for each function incompany After brief strategy for functions are execution plans.

In decorative paint industry it is focused to research strategies: Strategy ofmanufacturing and prodution operation , marketing, strategy of research anddevelopment (R & D), strategy of finance, strategy of human resources

1.2.2.1 Strategy of manufacturing and production operation

Paints company need to have specific strategies in the management for productionwith 08 contents : Forecasting production demand; product design and technologyselection; capacity planning ; Locate businesses; layout of production; resourcesplanning ; the level of production; production control system

1.2.2.2 Marketing strategy

To make marketing strategies , Decorative paints company should proceed thefollowing steps: Identify target marketing  Market analysis Marketsegmentation Target market Define and variables Strategy marketing – mixpolicy implementation control and plan adjustment

Strategy of Marketing Mix is the core content of the marketing strategy, includingthe 4Ps : Product, Price, Place, Promotion

1.2.2.3 Strategy of Research and Development

Content of research and development in the decorative paints company to explorethe products, services and processes and then apply that knowledge to createproducts, services and new process , is calculated to improve to meet the needs ofcustomers or the market better

R & D is always the objective and important function of the advanced company,multinational companies in the world "A decorative paints company want to be theleader in the market there is no other choice that the company must always get aahead of competitors to develop products and technologies to meet customer needswith affordable and costoptimized "

1.2.2.4 Strategic Finance

Questions that paints company need to be interested are priority:

Firstly, cash flow = surplus funds of company The cash flow depends on thecycle life of products and paints business industry.

Secondly, so good credit = current low debt which banks and investors see apromising the good business A good credit allows company to expand the use ofthe loan

Third, Flexible Finance = ability to meet financial needs are not anticipating

1.2.2.6 Strategy of human resources

Human resources are the core for the sustainable development and successes ofcomapany.Therefore, Paints company should develop appropriate strategies ofhuman recources management , focused on six contents 1 human resourceplanning; 2 recruitment human resources; 3 layout human use; 4 personneltraining and delelopment; 5 evaluate human resources 6 human offer policy

1.3 Grounds and procedures for building business strategy in the decorative paints company

1.3.1 Grounds to build business strategy in the decorative paints company

Strategic selection must be based on the basic grounds:

The first, the advantages of the compan through analysis of the facts:

The strengths or relative position of the company compared to competitors

Pursuant to the profit / high capital investment in the future of the paints industry Analysis of the value chain of customers, company and competitors

The second, goals: Strategies have been selected for achieving goals like?

The thirth, resources: financial, human resources, facilities engineering,technology

The fouth, qualifications and capabilities of the company: depend on the qualityand level of capability, the ability and competencies of company that choose theappropriate strategy

The fifth, the legal basis and the reaction of stakeholders: suppliers, alliancepartners and customers

The sixth, investment opportunities

In the process of building strategies, the magement administrator must use models

of environmental analysis associated with each company to help them makeappropriate decisions

1.3.2 Analytical methods of environmental to build strategies of decorative paints

company

1.3.2.1 SWOT analysis

A scan of the internal and external environment is an important part of the strategicplanning process in the Paint firms Environmental factors internal to the firmusually can be chiến lượcassified as strengths (S) or weaknesses (W), and thoseexternal to the firm can be chiến lượcassified as opportunities (O) or threats (T).Such an analysis of the strategic environment is referred to as a SWOT analysis.The SWOT analysis provides information that is helpful in matching the firm'sresources and capabilities to the competitive environment in which it operates Assuch, it is instrumental in strategy formulation and selection The following diagramshows how a SWOT analysis fits into an environmental scan:

a) SWOT Analysis Framework

Environmental Scan / \Internal Analysis External Analysis/ \ / \Strengths Weaknesses Opportunities Threats

|

SWOT Matrix

Strengths: A Paint firm's strengths are its resources and capabilities that can be

used as a basis for developing a competitive advantage Examples of such strengthsinchiến lượcude: patents; strong brand names; good reputation among customers;cost advantages from proprietary knowhow; exchiến lượcusive access to high gradenatural resources; favorable access to distribution networks…

Weaknesses: The absence of certain strengths may be viewed as a weakness For

example, each of the following may be considered weaknesses: lack of patent

protection; a weak brand name; poor reputation among customers; high coststructure; lack of access to the best natural resources; lack of access to keydistribution channels…

In some cases, a weakness may be the flip side of a strength Take the case in which

a Paint firm has a large amount of manufacturing capacity While this capacity may

be considered a strength that competitors do not share, it also may be a considered aweakness if the large investment in manufacturing capacity prevents the firm fromreacting quickly to changes in the strategic environment

Opportunities: The external environmental analysis may reveal certain new

opportunities for profit and growth Some examples of such opportunities inchiếnlượcude: an unfulfilled customer need; arrival of new technologies; loosening ofregulations; removal of international trade barriers…

Threats: Changes in the external environmental also may present threats to the

firm Some examples of such threats inchiến lượcude: shifts in consumer tastesaway from the firm's products; emergence of substitute products; new regulations;increased trade barriers…

b) The SWOT Matrix

A firm should not necessarily pursue the more lucrative opportunities Rather, itmay have a better chance at developing a competitive advantage by identifying a fitbetween the firm's strengths and upcoming opportunities In some cases, the firmcan overcome a weakness in order to prepare itself to pursue a compellingopportunity

To develop strategies that take into account the SWOT profile, a matrix of these

factors can be constructed The SWOT matrix (also known as a TOWS Matrix) is

shown below:

Figure 1.1 SWOT / TOWS Matrix

• SO strategies pursue opportunities that are a good fit to the company's

strengths

• WO strategies overcome weaknesses to pursue opportunities.

• ST strategies identify ways that the firm can use its strengths to reduce its

vulnerability to external threats

• WT strategies establish a defensive plan to prevent the firm's weaknesses from

making it highly susceptible to external threats

1.3.2.2 BCG Matrix analysis

Figure 1.2 BCG Matrix

Base on this approach model, it has been seen that there are the products whichhave been showing the potential ones in ICI Among of them there are someproducts “ less opportunity or non opportunity” to be existed If company continues

to maintain the production then it may threaten the existence of the enterprise Thequestions are to be raised what and how company should do with these products ?Since then, based on market share (high, low) of each type of product and growth

rate forecast (high, low) in the market then BCG have been given thesegmentatation and positioning of the product (or group of products), calledproduct matrix structure of the company, with developing the appropriatecorresponding strategy for each position.

Product "Star” is just paints products have large market growth rate (demand forproducts is growing fast), have a high market share (many popular consumers likeand love these products and brand) Normally, product "Star" is the businessindustry which have the great potential growth and high profit However, due to thehigh speed of growth that’s why the products need to be required more investmentand continuous, so cash is generated in this products group can have a few or non (itcan be poured into reinvestment)

Strategies for these products is invested to continue to dominate the market Product "Cash Cows” is the paints product with relatively large market share, but

in paints business industry is ripe or growing slowly Because of ripe, the largeinvestment in equipment and advertising would not need anymore As a result, theproducts in this group have created quite a lot of cash (should be called "Thecows")

Company strategy is squeezed the cash in these products as much as possible bymaximise sales volume and limiting investment in “the cows” and keep it level can

be maintained, and usage this cash of “the cows” in order to invest in products “star” that have a potential

Product "Question marks “ are demand of these paints products is growing verystrongly in market , but market share of company is quite small

These are the products of high adventure because of demand in market of theseproducts is growing so fast but the market share of company is very small Theexpansion of production requires large capital that’s why to make "a hardthinking"…There are some companies invest bravely to increase their marketshare, meanwhile other enterprises may be "afraid" to invest in this segment andlet’s opportunity has gone

Product "Dog" is the paints products with low market share in the stagnance market(the demand is very low), or in very slow market growth rate Normally, for products group , the enterprise only lost more because its salesrevenue have not enough for the costs

Strategy for the product category is to gradually abandon the production.BCG matrix method is said that if the paints company can analysis its productsproperbly base on this model, since then can choose appropriate strategies and besacrificed shortterm profits for gaining market share, it will be profitable over inthe long term The “ star” will become the “cash cows” when market is going tomove into ripe stage.It is the most difficult decisions in the product category in

“question marks ” Some products need to have a dissolution , meanwhile otherones need to be turned into “star” The area in “question marks” is the adventure ofenterprise and business owners often are so cautious, only want to invest limited,especially in the environmental conditions and legal in our country are alsounstable Product "dog" is no doubt to have liquidation to get that money for theproduct “ star” or product “ question marks” or the changes necessary to extend thelife cycle of them

1.3.2.3 Porter's Five Forces Model analysis

A Paints company is not an isolated unit in the world and performs within a marketfull of other competitors To be able to evaluate our position on market and to actaccordingly we use the Porter's Five Forces Model This model helps ICI define andrealize our business and its surroundings and identify threats and opportunities tofocus on We review this model periodically to obtain uptodate data in this globaland turbulent environment

Figure 1.3 Porter's Five Forces Model

The Porter Model consists of 5 elements which together comprises the environmentbusiness operate in These elements are: suppliers, customers, new entrants, existingcompetition and the product itself By assessing every one of these elements we getthe whole picture of our company within the market and the rating helps ICI targetthe key areas We use the scale of 05 to evaluate the power of each element where 0means no power and 5 very high power (reffering to the number in the brackets) Five Forces Analysis assumes that there are five important forces that determinecompetitive power in a situation These are:

1 Supplier Power: Here you assess how easy it is for suppliers to drive up prices.

This is driven by the number of suppliers of each key input, the uniqueness of theirproduct or service, their strength and control over you, the cost of switching fromone to another, and so on The fewer the supplier choices you have, and the moreyou need suppliers' help, the more powerful your suppliers are

2 Buyer Power: Here you ask yourself how easy it is for buyers to drive prices

down Again, this is driven by the number of buyers, the importance of eachindividual buyer to your business, the cost to them of switching from your products

and services to those of someone else, and so on If you deal with few, powerfulbuyers, they are often able to dictate terms to you.

3 Competitive Rivalry: What is important here is the number and capability of your

competitors – if you have many competitors, and they offer equally attractiveproducts and services, then you’ll most likely have little power in the situation Ifsuppliers and buyers don’t get a good deal from you, they’ll go elsewhere On theother hand, if noone else can do what you do, then you can often have tremendousstrength

4 Threat of Substitution: This is affected by the ability of your customers to find a

different way of doing what you do – for example, if you supply a unique softwareproduct that automates an important process, people may substitute by doing theprocess manually or by outsourcing it If substitution is easy and substitution isviable, then this weakens your power

5 Threat of New Entry: Power is also affected by the ability of people to enter your

market If it costs little in time or money to enter your market and competeeffectively, if there are few economies of scale in place, or if you have littleprotection for your key technologies, then new competitors can quickly enter yourmarket and weaken your positi on If you have strong and durable barriers to entry,then you can preserve a favorable position and take fair advantage of it

Key points: Porter's Five Forces Analysis is an important tool for assessing thepotential for profitability in an industry With a little adaptation, it is also useful as away of assessing the balance of power in more general situations

It works by looking at the strength of five important forces that affect competition:

• Supplier Power: The power of suppliers to drive up the prices of your inputs;

• Buyer Power: The power of your customers to drive down your prices;

• Competitive Rivalry: The strength of competition in the industry;

• The Threat of Substitution: The extent to which different products and servicescan be used in place of your own; and

• The Threat of New Entry: The ease with which new competitors can enter themarket if they see that you are making good profits (and then drive your pricesdown).

By thinking through how each force affects you, and by identifying the strength anddirection of each force, you can quickly assess the strength of the position and yourability to make a sustained profit in the industry

You can then look at how you can affect each of the forces to move the balance ofpower more in your favor

1.3.3 The Business strategicplanning process

According to Philip Kotler (1997), the business unit strategicplanningconsists of steps shown in Figure 1.4:

Figure 1.4 The Business strategicplanning process

1.3.2.1 Business Mission and Objectives

a) Business Mission: A company's mission is its reason for being The mission often

is expressed in the form of a mission statement, which conveys a sense of purpose

to employees and projects a company image to customers In the strategyformulation process, the mission statement sets the mood of where the companyshould go

b) Objectives: Objectives are concrete goals that the organization seeks to reach, for

example, an earnings growth target The objectives should be challenging but

achievable They also should be measurable so that the company can monitor itsprogress and make corrections as needed.

1.3.2.2 Situation Analysis

Once the firm has specified its objectives, it begins with its current situation to devise

a strategic plan to reach those objectives Changes in the external environment oftenpresent new opportunities and new ways to reach the objectives An environmentalscan is performed to identify the available opportunities The firm also must know itsown capabilities and limitations in order to select the opportunities that it can pursuewith a higher probability of success The situation analysis therefore involves ananalysis of both the external and internal environment

The external environment has two aspects: the macroenvironment that affects allfirms and a microenvironment that affects only the firms in a particular industry.The macroenvironmental analysis inchiến lượcudes political, economic, social, andtechnological factors and sometimes is referred to as a PEST analysis

An important aspect of the microenvironmental analysis is the industry in which thefirm operates or is considering operating Michael Porter devised a five forcesframework that is useful for industry analysis Porter's 5 forces inchiến lượcudebarriers to entry, customers, suppliers, substitute products, and rivalry amongcompeting firms

The internal analysis considers the situation within the firm itself, such as:

Company culture

Company image

Organizational structure

Key staff

Access to natural resources

Position on the experience curve

Operational efficiency

Operational capacity Brand awareness Market share Financial resources Exchiến lượcusive contracts Patents and trade secrets …

A situation analysis can generate a large amount of information, much of which isnot particularly relevant to strategy formulation To make the information moremanageable, it sometimes is useful to categorize the internal factors of the firm as

strengths and weaknesses, and the external environmental factors as opportunitiesand threats Such some analysis often are referred to as SWOT Matrix, BCG Matrixand Porter's Five Forces Model analysis.

1.3.2.3 Strategy Formulation

Once a clear picture of the firm and its environment is in hand, specific strategicalternatives can be developed While different firms have different alternativesdepending on their situation, there also exist generic strategies that can be appliedacross a wide range of firms Michael Porter identified cost leadership,differentiation, and focus as three generic strategies that may be considered whendefining strategic alternatives Porter advised against implementing a combination

of these strategies for a given product; rather, he argued that only one of the genericstrategy alternatives should be pursued

1.3.2.4 Implementation

The strategy likely will be expressed in highlevel conceptual terms and priorities.For effective implementation, it needs to be translated into more detailed policiesthat can be understood at the functional level of the organization The expression ofthe strategy in terms of functional policies also serves to highlight any practicalissues that might not have been visible at a higher level The strategy should betranslated into specific policies for functional areas such as: Marketing; Researchand development; Procurement; Production; Human resources; Informationsystems…

In addition to developing functional policies, the implementation phase involvesidentifying the required resources and putting into place the necessaryorganizational changes

1.3.2.5 Feedback and Control

Feedback and Control are essential activities because:

The strategic planning process outlined above is only one approach to strategicmanagement It is best suited for stable environments A drawback of this topdownapproach is that it may not be responsive enough for rapidly changing competitive

environments In times of change, some of the more successful strategies emergeinformally from lower levels of the organization, where managers are chiếnlượcoser to customers on a daytoday basis.

Another drawback is that this strategic planning model assumes fairly accurateforecasting and does not take into account unexpected events In an uncertain world,longterm forecasts cannot be relied upon with a high level of confidence In thisrespect, many firms have turned to scenario planning as a tool for dealing withmultiple contingencies

SUMMARY OF CHAPTER 1

The contents of the chapter one have been summaried and the systematic whole ofgeneral knowledge of business strategies and management.Thence, can be used tobuild and delelop the business strategy for enterprises in general or decorativepaints companies in particualar There are including the follows:

Overview of business strategies such as concepts, classifications and the roles ofbusiness strategy in the enterprises

Contents of the business strategies in decorative paints business It is shown clearlythe basic contents of the strategies for enterprises and functional strategy level Methods to build business strategies in the decorative paints company , focusing onlearning about the fundamental to build business strategies and methods ofanalyzing the business environment in the process of building business strategy.The above basic knowledge and theory of business strategy and strategicmanagement will help to build the business strategy of ICI Paint Co., Ltd Vietnamand will be applied in subsequent chapters

CHATER 2 STATUS OF ACTIVITIES IN ICI PAINTS CO., LTD VIET NAM

2.1 Overview of ICI Paints Co., Ltd Vietnam

2.1.1 Information of the company

1.Name of the company: ICI PAINTS Co., Ltd VIET NAM

Headquarter: Me Linh Tower, District 1, Ho Chi Minh City The company has twofactories producing paint The factory in Ben Cat District, Binh Duong Provincewith the production capacity of 40 million liters of paint per year, and the factory inDistrict 9, Ho Chi Minh City with the production capacity of 25 million liters ofpaint per year

The company has five representative offices in Hanoi, Da Nang, Can Tho, NhaTrang and Ho Ho Chi Minh City

2 Parent company: IMPERIAL CHEMICAL INDUSTRY

The parent company of Vietnam ICI Co., Ltd is a global ICI Grouppaints whichbelongs to The U K Royal chemical Group The U.K Royal Chemical Group wasestablished in 1926, the headquarter in the UK with the sales in 2009 of £ 5.6billion pounds and net earnings of 480 million pounds This group has 35,000employees and factories, and representative offices in 56 countries

In The U K Royal Chemical Group, ICI is a main member with the sales of over40% of Group sales ( Sales in 2009 was 2.6 billion pounds), distributed in over 100countries with 90% of decorative paint products

3 The investor of Vietnam ICI Co., Ltd Vietnam: ERGON INVESTMENTS

INTERNATIONAL LTD

Establishment permit number 2074788 issued on November 17, 1986 Headquarters

at 20 Manchester Square, London WIU 3 AN UK

4 Investment License: Investment License No 344/GPKCNBD by Head of the

Management Board of Binh Duong Industrial Zone issued on December 28, 1995

ICI Co., Ltd produces and trades on decorative paint in Vietnam market Its productsare used to decorate and protect walls of buildings, offices, private houses and so on.And they are widely used for surfaces of construction plaster walls, and concretewalls.

5 Operation period: 49 years.

6 Total investment capital: 29.800.000US dollars (Twentynine million eight

hundred thousand U.S dollars) Legal capital: 9.940.000 USD (Nine million ninehundred forty thousand U.S dollars)

7 Business status: The main brands of the company are Dulux, and Maxilite.

Decorative paint products of the company have high quality and orientation to thehigh level segment of the market With sales of 46 million liters of paint in 2009, inrecent years the company has had a high speed of the average revenue (about 20%per year)

2.1.2 Organization System of Vietnam ICI Co., LTD

With nearly 250 employees, two factories and five branches, ICI has been applyingonlinemanagement function models quickly, flexibly and efficiently as follows:

SUPPLY CHAIN MANAGER

HUMAN RESOUCE MANAGER

OPERATIONS MANAGER

HO CHI MINH PLANT

OPERATIONS MANAGER BINH DUONG PLANT BRANCHES

MANAGER

Figure 2.1 Diagram of ICI Paint Vietnam Co., Ltd Organization System

2.2 Analysis, and assessment of the external environment of the company

2.2.1 Analysis of external environment of the company

2.2.1.1 Country Facts

2009 is predicted to be the difficult year toVietnam in general and paint business sector in particular, but Vietnam has initially got out of crisis, therefore paint

industry has also had better developments which are shown in table 2.1:

Table 2.1 Country Facts in 2009

Population 86 Million people, 60% < 35 years old

Urban Population 28% / Urbanization 3.1% pa

GDP/Capita (PPP) US $1.030

AB SocioEco Class 8 Million people with GDP/capita of Euro 2,500

( US$ 3400)

National GDP Euro 62 billion

Paints Market Size in

Currency Vietnam Dong – 18,500 : 1 US$ or 25,400 : 1 Euro

Inflation Rates 24% in 08; historical inflation is 7% 8% p.a

The economic indicators over the past three years are relatively good in comparisonwith the world and Vietnam is one of the few countries which can recover strongly

in the period 2010-2015; this will be very advantageous to paint industrydevelopment, shown in Table 2.2

Source: ICI Paints Asia

Table 2.2 Economic Indicators

2010 2015 assumption

Growth rate (%) in Construction

High inflation in 2008 but offset with low inflation in 2009 Face economic crisis in

2009 and expect to recover in 2010 onwards High FDI in 2008 and expect drop in

2009 – 2010 Construction Growth (20082012) in residential and commercial is78% and infrastructure is 10% 12% In detail:

 Economic Highlights

Historical highlights

• Annual GDP growth: 6.5%8.5% from 19972009

• The highestever inflation rate: 24.4% in 2008

• Recorded trade deficit in 2008: 16 bil US$ (equals to 19% GDP)

• After “bubble” experience in stock market, VNIndex lost nearly 700 points– reached 379.12 points (40% of what it used to be) in H12008

• International financial crisis > new policy challenges forcing legislators to shifttheir focus from containing inflation to supporting economic growth.

• Fiscal stimulus, estimated to be worth under US$4bn by the IMF will go towards

a raft of infrastructure projects as well as other measures that will help to boostgrowth

• Government has introduced tax breaks and delayed the implementation of thenew personal income tax regime

 however fiscal measures impact to GDP growth plan

 risk that any major effort on the part of the government to spend its way out

of the economic downturn will result in severe external imbalances

• FDI inflows are down significantly 72% year on year

• The construction industry appears to be holding up surprisingly well

 reduction in the price of building materials in the last nine months

 lower cost of borrowing to fund projectss

High inflation in 2008 (24%) but offset with low inflation in 2009 (7%)

Face economic crisis in 2009 and expect to recover in 2010 onwards

High FDI in 2008 and expect drop in 2009 – 2010, by how much?

Construction Growth (2010-2015) in residential and commercial is 78% andinfrastructure is 10% 12%

Period 20042009, the factors which directly affect decorative paint industry areConstruction, Demand for Urban Housing, Construction Industry, Tourism, Attitude

to Housing & Decoration, all these factors have positive effects on decorativepaint industry It is predicted that this impact will be better in the next period 2010-

2015 However, two factors Real Estate Laws and Availability of Credit cause badinfluences on this sector (Table 2.3)

Table 2.3 Effect on decorative paint market development

2004 2009

2015

2010-1 Construction

Driving force for the National economy fuelled by rising affluence, increasing demand for housing, office buildings, hotels, etc

2 Demand for

Urban Housing

Urban population is increasing at 3.1%

pa 28% of population is Urban, 65% Stay

in semi permanent homes

3 Construction

Industry

Growing at 10 11% pa, Approximate Government spending of 8 9% of GDP, Tourism key sector of Growth, Ownership

of property to foreigners

4 Tourism

One of the main destinations globally the government continues to focus and build hotels, resorts

5 Real Estate Laws Real estate prices very high,

Unregulated and speculative market

6 Availability of

Credit

Less than 20% of housing on formal credit, Access to loans generally limited, Loan terms generally 5 years

Note: (Good Effect) ; (Very good Effect) ; (Effect not good)

2.2.1.2 Vietnam Paints Market

The decorative paint market accounts for 48% of the paint industry and is defined as

5 categories: interior & exterior emulsions, enamel, sealer, skim coat Thedecorative paint market is split into 3 tiers namely are: Tier 1premium, Tier 2mid,Tier 3low The Country is segregated into 3 Regions – North, Central and South It

Source: ICI Paints Asia

is a developing country with crowded population, stable economic growth, and fastrate of urbanization, paint industry is growing strongly (2009, Volume 210 Mn L,Velue EUR 120 Mn), 80% of the houses have not been painted, so Vietnam is apaint market good potential developments which are shown in 6 points below:

1 Categories and Segments – 2009:

E n a m

el 21 9 M

n L

P ut

ty 9.

6 M

n E U

R

Undercoats 11.4 Mn EUR

(9%)

Exterior 31.5 Mn EUR ( 26.2%)

Interior 41.8 Mn EUR ( 34.8%)

Enamel 25.7 Mn EUR VALUE: 120 Mn EUR

Source: ICI Paints Asia