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TABLE OF CONTENTS COMPETITIVE STRATEGY FOR GLOBAL LOGISTICS SERVICES COMPANY LIMITED STAGE 2010-2014 PageCover page CHAPTER 1.. The development obligations of the company for phase of 20

Thesis MBA

SELECTING THE OPTIMAL STRATEGY FOR GLOBAL

LOGISTICS COMPANY

We commit that this capstone project report is our actual work of research on strategy

of Global Logistics Service Co ,ltd From experience of the members in the group and one member who used to work at the Global Logistics Service Co.,ltd Data and result mentioned in the capstone project report are true The taken solutions contain many features of learning, rise from actual experience and have not ever been public

MAKERS

TABLE OF CONTENTS COMPETITIVE STRATEGY FOR GLOBAL LOGISTICS SERVICES

COMPANY LIMITED STAGE 2010-2014

PageCover page

CHAPTER 1 OVERVIEW OF THEORIES IN SELECTING AND

BUILDING BESINESS STRATEGY

1.1.OVERVIEW OF CORPRORATE STRATEGY

1.1.1 Concept

1.1.2 Classification of corporate strategy

1.1.3 Factors affacting the corporate strategy

1.1.3.1.External environment1.1.3.2.Internal environment1.2 STRATEGY FORMATION AND BUILDING

1.2.1 Analysis of Strength-Weakness-Opportunity-Threat (matrix

SWOT) 1.2.1.1.Basic factors of SWOT matric1.2.1.2 Strategy development procedure base on SWOT analysis method

1.2.2 Role of coporate stratey

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CHAPTER 2 OVERVIEW OF CURRENT SITUATION IN GLOBAL

LOGISTICS COMPANY IN THE STAGE OF 2007 – 2009

26

2.1 INTRODUCTION TO REALITY OF THE GLOBAL LOGISTICS

2.1.1 History of formation and development of the Global Logistics

2.1.2 The system of organization - management - operation at the

company2.1.3 Technical - material facilties of the company

2.3.2 Maxtrix evaluating internal factors of Global logistics company

2.4 ACTUALITY OF CONSTRUCTION OF STRATRGY OF GLOBAL

LOGISTICS IN THE STAGE 207-2009

2.5 RESULTS FROM IMPLEMANT OF THE DEVELOPMENT

STRATRGIES

2.6 GENERAL EVALUATION ON ACTUALITY OF

CONSTRUCTION OF STRATEGIES OF GLOBAL LOGISTIC

2.6.1 Achievements

2.6.2 Drawbacks

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CHAPTER 3 SELECTING THE OPTIMAL STRATEGY FOR

GLOBAL LOGISTICS COMPANY IN 2010-2014

3.1.ORIENTATION AND OBLIGATIONS FOR THE COMPANY’S

DEVELOPMENT FOR PHASE OF 2010 - 2014 3.1.1.Orientation of the company for phase of 2010-2014

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3.1.2 The development obligations of the company for phase of 2010-2014

3.2.ANALYSIS OF EXTERNAL ENVIRONMENT OF GLOBAL

LOGISTICS

3.2.1.Matrix analyzing the strength – weakness, opportunity – threat

(SWOT) for Global Logistics, 3.2.2.Choosing the development strategy for global logistics

company in stage 2010 –20143.3 SOME SOLUTIONS FOR CARRYING OUT THE DEVELOPMENT

STRATEGY FOR GLOBAL LOGISTICS COMPANY IN PERIOD

2010 – 2014

3.3.1 Solution group on operating procedure

3.3.2 Market solution group

3.3.3 Customer solution groups

3.3.4 Human resource solution groups for development

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69717171CONCLUSION

REFERENCES

REFERENCES LIST OF ABBREVIATIONS

3PL Third-party logistics

ADSL Asymetric Digital Subcriber Line

ASN Adavance Shipping Notice

BMI Business Monitor International Ltd

FMCG Fast Moving Consumer Goods

FOB Free On Board

GDP Gross Domestics Product

GFF Global Freight Forwarding

ICD Inland Clearance Depot

ILMS Inbound Logistics Management System

JBIC Japan Bank for International Corporation

JIT Just In Time

NVOCC Non – Vessel Operarting Common Carrier

R&D Research and Development

SDR Special Drawing Right

SWOT Strength-Weakness-Opportunity-Threat

TEU Twenty – Equivalent Unit

TMS Transporation Management System

USD United States Dollar

VICT Vietnam International Container Terminal: In Logistics Development Joint

Venture Company Number 1

VIFFAS Vietnam Freight Forwarders Association

VNĐ Vietnam Dong

WMS Warehouse Management System

WTO World Trade Organisation

XML The Extensive Markup Language

LIST OF TABLES AND FIGURES

Table 1.1: Strategic viewpoints of Porter

Table 1.2: Common points of active and inactive strategies

Figure 1.3: SWOT-based strategy development procedure

Table 1.4: Logistics services

Table 1.5: Governing law on transport

Table 1.6: Capital investment structure for sectors of national economy

Table 1.7: Reality of exploiting terminals

Table 1.8: Information system of some seaports of Vietnam

Table 1.9 : Assessment of service infrastructures intended for logistics activities Table 2: Vietnamese, local and global logistics market base on value and growth rate Figure 2.1 : Outsourcing percentage base on industry and form of company

Table 2.2 : Matrix of external factors

Table 2.3: Operation procedure

Table 2.4 : Operation results of the company

Table 2.5: Matrix of internal factors

Table 2.6: SWOT matrix of global logistics

Table 2.7: Quantitive assessment of endogenous growth strategies

INTRODUCTION

1 Materials

Management of the company strategy is a continuous and active process Thus, revaluation of human resource and core capacity of the company will assist it to keep and its comparative advantages when the environment changes

Being a member of the Global Group and having just been established for three years, with its effort, the company has reached some remarkable points as follows: its revenue reaches USD 2 million, the headquarter in Hanoi in initial time, presently, the company has develop a system from Lao Cai, Lang Son, Hai Phong, Thanh Hoa, Quang Binh and Ho Chi Minh City

To achieve some results above, the company has had solid steps in the initial strategy suitable with development and renovation of the market However, the author remarked that management of the company strategy brings the tactical, short-term and interrupted features

Thus, construction, execution and control of long-term strategy have become necessary for the company, because:

• Maintain growth speed and find out new model of development in stage of 2010 – 2014

• Expanding domestic and oversee market with quick speed

• Being suitable with change of the open policies of Vietnam for logistics service

• Supporting the company in process of investment decision-making to keep its competitive position in long term

Therefore, the material is that it is necessary to establish a long-term strategy for the company to maintain its current advantage and catch chances from the Vietnam logistics market

2 Target and research task

Orienting goal of the thesis is to construct and take a strategy to the company in the next stage of 2010 - 2014

To implement this task, the important step of the thesis is construction and selection of

a standard model of strategy administration for analysis Based on the model, the thesis will evaluate advantages and disadvantages in construction process of the company strategy in the stage of 2007 – 2009 Finally, the thesis must take proposal of development strategy in long-term for the global Logistics in the next stage of 2010 –

2014 on the standard model and results from the actuality of the enterprise

3 Object and range of research

Object of research of the thesis is to construct a strategy for the Global logistics

• Concentrating only into the strategy in stead of the whole strategy-management process including construction, implement and control of the strategy

• Only concentrating into the Global logistics in stead of concentrating into the whole Global group

• On time, it is to evaluate the strategy actuality in the stage of 2007-2009 and propose development strategy in time of 2010 – 2014

• The analysis method of secondary data: is used to research reasoning basis to lay the foundation for establishment of the development strategy of the company

Moreover, this method is used to research actuality of the strategy set-up of the company to determine disadvantages and advantages

• Quantitative method: is used to select and make decision on the development strategies in the stage of 2010 – 2014 By marking (quantify) the strategy, this method supports selection of the best strategy in the most suitable conditions

• Professional method: this method is used to forecast development trends of the Vietnam logistics market in next years Besides, the thesis uses methods of strategic analysis including SWOT matrix, QSPM quantitative matrix

5 Scientific and real meanings of the subject

* Scientific meaning: the thesis has filtered and selected a model of strategic development, which is proposed to use by most companies and researchers Besides, it supplements the source of the scientific documentation and topics of logistics management, administration of supply chain and management of strategies

* Meaning of reality: achievement of the thesis is the model of development strategy

of the company in the stage of 2010 – 2014 It means that the thesis also provides

“guideline” for the company on the way of stable development Additionally, the thesis takes some deficient competences in which the company needs to invest to keep the high speed of growth

6 Limitations and salient features of the thesis

* Limitations: the thesis only takes the proposed model and solution for the development strategy of the company It does mean that execution according to the proposed strategy of the company will certainly bring about success for the company Hence, the proposed strategy should have time to execute, receive feedback and adjust In addition, the matrixes of quantitative evaluation show subjective will of the generator because the method is based on the generator’s experience and opinions of

the experts

* Key points: Because the thesis generator has been in the logistics sector for ten years and he is a manager of the company, he understands all issues in the company For this reason, the thesis holds the high reality

7 Structure of the thesis

The thesis is divided into three main parts, structured into three chapters as follows:

CHAPTER 1: OVERVIEW OF THERIES IN SELECTING AND BUILDING

CHAPTER 1 OVERVIEW OF THERIES IN SELECTING AND BUILDING BESINESS

According to Feurer and Chaharbaghi, strategy derives from the Greek word

“strategia”, which means art of war Accordingly, a strategy is an important plan targeted at vanquishing the enemy In achieving this objective, the strategy also recommends how to use existing resources most effectively Over time, this concept is developed and applied to business activities

According to Chandler (1962), a strategy is to define basic objectives of a company and to pick up the action method, including allocation of necessary resources so as to achieve these objectives

Andrew (1971) thinks that strategy is a procedure in which sound decisions are made based on the appropriateness of corporate resources over opportunities available outside the company

According to an article “What is strategy?” posted in Harvard Business Review Michael E Porter (1996) expresses his viewpoint concerning strategy practice using comparison with classical viewpoint of strategy as below:

Table 1.1: Porter’s viewpoint of strategyStrategy model used over decades Sustainable competitive advantage

• An ideal competitive position within a

sector

• Making a comparison about all activities of

the company and finding out the best

activity

• Increasing outsourcing and corporation so

as to achieve the effectiveness

• Advantages based on successful factors,

key resources, and core competency

• Flexible and well responded to markets

• Dominant competitive position

• Activities supports strategy

• Selections and exchanges must be obvious compared to the

competitor

• Long-term advantage based on the entire operation of company in lieu of dependence on a

component

• Required operating effectiveness

Source: Michael.E.Porter, What is Strategy? Harvard Business Review, Nov-Dec 1996.

According to the comparison above, Porter thinks that strategy is a creation of compatibility between activities of the company If this compatibility is unavailable, there is no distinct strategy and it is hard to keep the competitive advantage alive

Using the definitions above, it can be deduced that the strategy of the company is a general entity of decisions and activities relating to the selection of means and allocation of resources so as to achieve the objective In a competitive environment, the

key objective of the company is to acquire a strategic position better than that of the competitor

To achieve this, the company must create a harmony for the entire operation so as to build and maintain a long-term competitiveness

1.1.2 Classification of corporate strategy

Because there are different definitions of strategy, there are also different methods of classification based on different criteria:

Firstly, classification is based on organization and structure of the company There are three types:

• Business strategy (so called functional strategy) This strategy is designed to identify specific capacities and competitive advantage of the company over its competitors in the same sector, of the same group of products/market

• This strategy is built to select, assess, develop/withdraw from a group of different business units Corporate strategy is greater than business strategy in terms of magnitude

• Aggregate strategy This strategy is built using activities of the company and their exchanges with exterior environments for the purpose of controlling market or changing results of environments through a network of organizations in which the company participate [Fombrun and et al,1983, p.49]

Secondly, classification is based on process There are two types:

• Proposed strategy is a set of document containing information about things that the company wants to do to achieve the proposed objective [Lam,1998,p.29] Normally, proposed strategies comprise plans and policies

• Realized strategy is a strategy expected to be realized during operation of the company Proposed strategies not to be realized are called unrealized strategy [Lam,1998,p.30]

During transition between proposed strategy and realized strategy, there are a few new emergent strategies due to change in environmental conditions called emergent strategies

Thirdly, classification is based on selection of strategy There are two types:

• Active strategy Strategies may help the company win in the competition thanks

to the leadership in the market

• Passive strategy Strategies follow leading companies in the market

Table 1.2: Things in common of active and passive strategies

o Horizontal merger

o Market development

o Market diversification

o Development of new business line

o Development of new product

o Product diversification

o Production automation

o Staff training

o Withdrawal from business lines

o Payment for technology

There are many methods of classifications upon approaches of researchers and practicers These methods are just relative and mutually supplemental In fact, boundaries between strategies classified are unobvious.

1.1.3 Factors affecting corporate strategy

Factors affect the management of corporate strategy, including strategy design, strategy development, strategy control and adjustment Accordingly, such factors are broken into two groups: factors and factors outside and inside the company

1.1.3.1 External environment

This is the group of factors providing opportunities and threats encountered by the company in competitive conditions Factors outside the company are broken into two large groups, including macro-environment and micro-environment

Macro-environment: including factors originating from the outside of the company and affecting almost all operations of the company Factors of a common environment are (1) economic factor, (2) social factor, (3) legal and political factor, (4) technological factor, and (5) ecological and economic factors

(1) Economic factors deal with nature and orientation of development of an economy

in which the company operates In fact, companies are often interested in such economic factors through economic variables such as: GNP growth tendency, inflation rate, basic interest rate, readiness of credit system, disposable income and consumption tendency of people

(2) Social factors deal with believes, values, attitudes, viewpoints, and life styles of people in a society where the company operates

(3) Legal and political factors: During creation of strategy, companies often make an assessment about orientation and stability of the legal and political system in which companies operate These factors comprise regulations to which companies

must comply, including fair trade, anti-monopoly, tax program, minimum salary, regulations on environment and prices, and some regulations aimed at labor, consumer, people and environment protection.

(4) Technological factors: Quick change of technology may exert a great influence over industries in which companies operate Technologies may give possibilities

of creation of new products or improvement of existing products Particularly, breakthrough technologies may result in company creating a new market or shortening life cycles of production equipments

(5) Economic-ecological factors represent interaction between ecological environment and business Ecological environment is defined a summary of relationships between human beings and animals; air, soil, and water are life supports Now, companies must consider tham as external factors affecting their business activities Ecological issues are global warming, biodiversity disappearance, air, water, and soil pollutions

Micro-environment: Micro-environment proposed by Michael E Porter, a professor of Harvard Business School, becomes popular for strategy planners of companies According to Michael E Porter, there are five factors creating competition in the same sector, including: (1) appearance of a new competitor, (2) strength of provider, (3) strength of consumers, (4) appearance of alternative product, and (5) sector competitors

(1) Appearance of new competitors: competitors penetrating markets usually create new competitive possibilities when they acquire existing shares Normally, when entering into a sector, new competitors encounter certain barriers, namely scale advantage, production distinction, capital demand, cost advantage, possibility of access to distribution system, and specific regulations of the Government

(2) Strength of provider: provider may influence a specific sector through increased price or decreased quality of provided service/commodity Strength of provider

may be achieved by means of monopoly in a sector, uniqueness of a product, or high transition cost of provider.

(3) Strength of customer: customers often demand on decreased price, increased quality of service, using other competitors for alternative if necessary Strength of customer may be achieved by means of great quantity of goods, not much distinction in products

(4) Appearance of alternative product: alternative products may constrain the potential of a sector or profit of a sector

(5) Sector competitors: competition in a sector may occur when competitors use their strengths to attract customers Techniques often used are competition in price, product introduction, and advertisement and marketing programs Competition level of a sector depends on factors such as the number of competitors, growth speed of such sector, high fixed cost, or fragile products, “standardization” level

of products, and barriers of such sector

In fact, when analyzing sector environment and competitive environment, strategists often give answers to four following questions: (1) What is the scope of the sector in which the company operates? (2) What is sector structure? (3) Who are competitors? (4) What are standards to identify competitors?

External environment is broken into two large groups, namely micro-environment and macro-environment In each environment, there are several factors making a direct impact on corporate strategy In fact, these factors always change and mutually closely interact In general, these factors may provide opportunities as well as risks possibly encountered by companies As a consequence, assessment of external environment is a part of strategy formation and assists companies in making full use of opportunities and reducing risks resulting from such environment

1.1.3.2 Internal environment

Including factors within the control of company Assessment of internal environment often presents both strengths and weaknesses of a certain company Factors constitute

an internal environment, including:

• Production/demonstration/action: including activities making input fuel and materials output commodities and services Normally, this function includes factors such as process, capacity, inventories, direct labors, and quality This is the core function of an enterprise, so strategists put priority on other activities

• Marketing and sales/business development: including activities from researching and defining demands of customers to satisfying defined demands of customers through products, prices, distribution, and promotion

• Finance: including activities relating to decisions about investment, capital structure, dividend payments Financial activities not only relates to the existence and development of an enterprise but influences external credit organizations/investors of such enterprise

• Human resources: including activities such us recruitment, interview, tests, selection, orientation, training, development, evaluation, encouragement intended for employees Activities in human resources play a key role in strategy implementation

• Information system: information links business functions together and provide a foundation for all managerial decisions Information system is regarded as a foundation for all organizations Its aim is to improve activities of a company through improved quality of managerial decisions

• Management: Including activities from planning, organization, implementation to control of the company Now, management play a big role in formation of strategy and competitive position of the company

In addition to that, corporate culture has a growing effect on corporate strategy Accordingly, the stronger corporate culture is, the more cultural factors influence creation of strategic actions These factors may direct strategy from time to time

There are numerous factors affecting corporate strategy In a quickly changing context

at the present, continuous reassessment of strategies when these factors are available have a significant meaning to strategic success of the company

1.2 STRATEGY FORMATION AND CREATION PROCESS

Dependent on viewpoints of corporate strategy, there are different strategy creation processes At the moment, there are several popular strategy approaches such as SWOT matrix analysis, analysis of value chain… The SWOT matrix analysis is more generalized than other approaches because analysis of value chain only specializes in external factors and competitive strategy creation However, analysis of value chain is more modern than SWOT matrix when competition becomes more and more vigorous

in markets

1.2.1 Analysis of strength-weakness-opportunity-threat matrix (SWOT matrix)

This is a traditional approach, which is still useful and popular to strategy managers This approach is based on the project of Andrew and Christiansen made in 1960s at Havard Business School Through one-way approach method, these two authors proposed a series of steps in order, including information collection and assessment, strategy development, assessment, selection, and execution of strategy The simple idea

of this approach is to find a way to combine the capacity of an organization with opportunities from the outside in competitive context The analysis allows companies have a comprehensive view over the existing situation of strategy Such combination

will result in companies making full use of its strengths and opportunities and reducing weaknesses and risks.

1.2.1.1 Basic factors of SWOT matrix

Including four key factors: strength, weakness, opportunity, and threat

• Opportunity: Including conditions in operating environment having good influences over the company Main tendencies always create opportunities for the company Besides, assessment of markets that the company has not pursued yet, changes in competition and law, changes in technology and relationships with providers and customers also create opportunities for the company

• Threat: Including conditions in operating environment having bad influences over the company Market penetration of competitors, decrease in market growth, increase in negotiation power of providers and customers, changes in technology, and new regulations may be threats to the company

• Strength: Including resources or capacities managed or available for the company

to make advantages over those of competitors in meeting demands of customers

• Weakness: Are limits or shortages of resources or capacities of the company in relationships with its competitors, which make disadvantages for the company in meeting demands of customers

1.2.1.2 Strategy creation process based on SWOT analysis

Accordingly, a strategy creation process is subject to four steps as below:

• Step 1 : Construct target/vision of the company In this step, the company needs

to determine clearly what the existing business fields are and what the potential chances in the future are

• Step 2: Analysis of environment In this step, the company should gather information on external and internal environment, information valuation and analysis for determination of changes/ risks and strengths/ weaknesses Moreover, this step determines possible combinations between factors of external environment and factors of internal environment

• Step 3: Valuating the best combination between the chances and resources

• Step 4 : Selection of strategy

Figure 1.3: the process of strategy construction in accordance with SWOT

Source: Summarized

In fact, many companies have been using the strategy establishing process based on the resources For the reason, companies will analyze and valuate strategic advantages from systematic considerations for assets, skills, capacities and intangible assets in the organization The premise of the approach states that the company operates in other ways because companies own individual capacities from combination between tangible

Valuate strengths/weaknesses

- Resources

- Special capacities

Valuate to determine the best suitability between

chances and resourcesSelect chance

assets, intangible assets and organization capacity, which they do not have To be considered as resource making core capacity for the company, it requires:

o Play an important role in satisfying demand of customers better than other replacement resources

o must be rare, meaning that there is much little companies owning those resources

o be main driving-force for making profit

o be in long term

Thus, the construction process of strategy is mostly subject to method of approach of the company If the company expects to valuate its complete actuality, it may use a process of strategy construction in accordance with the SWOT method In case that the company wants to construct a competitive strategy on its advantages, it may use a process of strategy construction based on the value chain analysis To determine actual resource to create core capacities, which bring long-term competitive advantages, the company may select approach in way of resource method However, a general strategy may be constructed for the whole graduation paper as follows:

• Determine and construct vision and task of the company They require the company to determine the current range of operation and business chances in the future On the other hand, the company must answer the question of “which business line are we operating in?” and “Where is position of our business line on the whole network?

• Valuate chances and risks from external environment of the company Target of this valuation is to support the company to use chances and avoid/reduce risks from the external environment The result of this valuation will allow the company to establish a matrix of external factors and a matrix of competitive images

• Valuate strengths and weaknesses through the internal analysis of the company The target of this valuation is to assist the company uphold its strengths and overcome risks of the company The result of this valuation will allow the company to construct a matrix of internal factors

• Based on this valuation, the company will choose strategy

1.3 ROLE OF STRATEGY CONSTRUCTION FOR THE COMPANY

According to some researches, when the company has applied strategy management, it has gained more profit and success than companies has not applied Besides, strategy-making always raises its possibility to avoid issues on organization because it raise feelings on risks from environment, increase understanding on competitors, increase working capacity of staffs, reduce change resistance and raise awareness of staffs in capacity-bonus relationship in each part of the strategic plan and as a result, raise working spirit

In range of the thesis and with analysis on strategies and strategy construction mentioned above, it may realize that strategy construction will make some fixed benefits for the company:

• Be the foundation of the execution and control for the process of the strategy management

Strategy construction is the first step in the whole process of strategy management Careful preparation for strategy construction will ensure that the process of strategy management is carried out well

• Fixing the future of the company Through determination of vision and task of the company, strategy construction will support strategists to aware which business line the company is operating? How? And how the company expects to develop in the future?

• That will assist the company use chances well and reduce risks from external environment in order to raise its effectiveness of operation Through the valuation process for the external environment, the company will have strategic decisions to support the company respond to environmental changes appropriately

• Through the control process for the internal factors, the company will recognize the main resources, the necessary skills and core capacity to make competitive advantages in comparison with its competitors, and invest to overcome weaknesses to raise its competitive capacity

• To assist the company to make decision on strategy better Because the process of analysis and strategy selection will be implemented collectively, decisions on strategies will always be the best

• To assist the company distribute resources and time to determined chances more effective Moreover, constructing a strategy well will support the company save much time and resource to adjust error decisions or special decisions

Therefore, it is possible to say that constructing and forming a strategy plays an important role as “a diagram” for all operations and decisions of the process of the strategy management This “diagram” will support the company in formation of the future and use market chances

CHAPTER 2 OVERVIEW OF CURRENT SITUATION IN GLOBAL LOGISTICS

COMPANY

2.1 INTRODUCTION TO REALITY OF THE GLOBAL LOGISTICS

2.1.1 History of formation and development of the Global Logistics

The GLOBAL Logistics is a member of the Global group Global group is a set of companies used commonly the global brand and a system of agencies on over the

world with over 115 contries and over 3000 office The members of the global group execute cross investments and operates independently on finance The core sector of the company is supply of logistics services.

2.1.2 The system of organization - management - operation at the company

Presently, the company has offices at Hanoi, Hai Phong, Lao cai, Thanh Hoa and associated companies at Ho Chi Minh City, Lang Son and Quang Binh Its offices are placed at commercial centers, international border gates and large seaports of Vietnam The office in Hanoi is the main one with support and development functions and also the decision-making center for all operations of the remaining offices

In Hanoi, the company has been organized into two divisions with the basic functions including executing operations and business/ marketing development These two divisions operate in way of mutual assistance Additionally, divisions will receive assistances from the other divisions of the global group on market and system

• Marketing and business development activities: include operations related to the market research, find out and selection of business chances, approach of target customers, introduction of types of products and attendance into price-offering and tender of the logistics project of the customers

• Support activity: includes activities, which make projects and service indirectly, but support input for all basic activities At the global logistics, these activities include:

○ Finance: includes activities related to management for receivables, repayable and cash; paying taxes for local tax authority; upholding and using capitals into development of the company; making an annual budget plan for each customer; making an analyzing financial statements

○ Human resource: include activities related to making personnel-developing plan, recruitment, training and development, establishing salary, bonus and welfare regulations

○ Office management: includes activities related to maintenance and repair of office, supplying office stationeries to divisions, implementing logistic services, i.e the services for receiving customers, working trip and document ones.

Although, they are separated, they are combined closely to supply the services “fastest, most conveniently, and cheapest” In addition, the units are directed subject to their customers in stead of the group of services / products, i.e there is a group to undertake and manage the customers in a certain geographic area

Thus, the Global Logistics’ organization is implemented in accordance with the two main functions: core activities and auxiliary activities for the core activities Moreover, these auxiliary activities are the common ones of the completely global logistics For the two things have made organization of the global logistics become simply and reduce expenses

2.1.3 Technical - material facilities of the company

The company determines that information technology is the effective factor in business activities Therefore, the company pays attention to investments and development of information system so much Expectation of the company is to construct an information technology in the whole company

Subject to the services, which the company provides for the customers, there will be other information system for support:

To executive “communication” between the customer information system and the global logistics’ information system, the company has invested into the information

exchange modes such as EDI (Electronic Data Interchange), XML (The Extensive Markup Language), data in type of basic file, Web (information interchange through Internet) and Wireless (wireless information interchange).

Instead of large investments into the fixed assets to make the material and technical foundation for operation, the company selected association/ affiliation type and rent domestic providers, container operator, and large yards in Vietnam However, the company pays attention to large investment into information technology system to raise business effectiveness and satisfy the increasing demand of customers

2.1.4 Business scope

Vision of the GLOBAL Logistics is expected to supply wholly international logistics products in the supply chain of the company through solutions on information technology and external leases Accordingly, logistics service provided by the company includes all logistics activities of the company from the time of receiving materials for production to hand-over of finished products to the final customers

Table 1.4: Logistic services:

Services of cargo consolidation /

separation

Supplier managementOrder managementManagement of storage command for

carriersImport - export managementDocument managementQuality control

International delivery service

Carrier managementMulti-modal transport Over-border delivery service

DistributionCustoms proceduresReceiving service in the plantOptimal packing / transporting

Inventory managementBonded warehouse serviceMaterial input management

Input planReturn goods managementGoods packing and collectingJIT / Production delayAuxiliary installation

Information technology service Numbering and packing

SeeChange serviceOnline command makingOnline document copyingWarehouse management systemTransport management system

Source: SCM -Supply Chain Insight - 8/2008.

However, in Vietnam, because of undeveloped infrastructure and limitations on capital, management technology, presently, the company has just provided a part of logistics products in the chain of suppliers, including customs declaration, domestic transportation and distribution and marine transportation for rent

2.1.5 Customers

On customers, presently the global logistics offer to sell the service to types of enterprises that are under operation in Vietnam Because, it is time that the company has been paying attention to developments in direction of expansion, the company has not taken any detailed strategy of customer selection There is no object discrimination between equity or geography position or business fields Objects provided by the company are domestic and oversee enterprises Oversee enterprise, association companies and private enterprises, and so forth in all the country and the world

2.2 ANALYSIS OF EXTERNAL ENVIRONMENT OF GLOBAL LOGISTICS

2.2.1 Macro environment

a Factors of Vietnamese economy:

Vietnam has gradually moved from the market economy with the management of the government in conformity with the socialist orientation since 1986 During this innovation is being carried out step by step, Vietnamese economy has grew with the high speed due to the dynamic characteristic of the private areas Moreover, the accession to the World Trade Organization (WTO) at the ending of 2006 increases the export turnover of Vietnam and reduces the trade deficit and current balance of payment within the next 5 years However, Vietnamese currency is still maintained the low pricing trend because the governments hope to hold the competitive advantages to their export goods Though the reform agenda achieves the good progress, Vietnam has worked more and more to reform the state enterprises and lack of effectiveness of bank industries

Vietnamese economy gains the economic grow speed of 5.5% in 2009 being lower than that in 2008 with 8.2%, economic growth is lower than in comparison with phase

of 2001-2005 In 2010, Vietnamese economy is estimated to get 6.2% resulting from the increasing foreign investments as joining into WTO Although, the global economy

is forecasted to gain the average growth affecting the export operations of Vietnam, the tariff barriers shall reduce and influence positively on Vietnamese export goods

Aspect of industry and construction, making up 43-44% of Gross Domestic Product (GDP), still takes the key role for the economic growth of Vietnam with the average growth speed of approximate 10% per year during phase of 2007-2011 The aspect of services, making up about 40-41% of GDP, is estimated to get around 8-9% growth mainly from services of transport, information and tourism The aspect of agriculture, holding 15-16% of GDP is estimated to gain 3-3.2% growth for phase of 2007-2011.Export, currently making up about 65% of GDP, is still the major factor to enhance the economic growth In 2009, the export turnover gained $56,6 billion, encreasing 9,7%

in comparison with that in 2008 only standing behind crude oil

However, Vietnamese economy has still faced potential risks Business Monitor International Ltd (BMI organization) reviews Vietnamese economy still getting potential risks BMI organization ranks Vietnamese economy at the 66th position This risk is higher than average in region, new markets and the world These risks are generated from:

o Lack of continuity in the State sector innovation Until now, this progress is very slow against the equalization of the State enterprises, just making up 12% of total asset value as of ending of 2005 Prime Minister Nguyen Tien Dung warned that lack of competition within Vietnamese economy should be the big challenge as Vietnam access the global economy Import commodities and foreign companies shall promptly occupy the domestic market of Vietnamese enterprises and the State enterprises shall have to cope with this challenge

o According to consideration for the field of bank, especially the State commercial banks, they are operating ineffectively in their loans as the State enterprises that borrow but not comply with the operation effectiveness

o Although the literate rate of Vietnamese people are so high, appropriate 90.3%, the graduated rate from secondary schools are so low, just about 1.4% in comparison with the average rate of Asian countries of around 4.9% Furthermore, Vietnam is lack of leading research institutes, which is the barrier for the development of industrial sectors requiring the higher technology For example, Intel group, they only invest into Vietnam with the intention of packing and examining its electronic boards instead of manufacturing

b Legal factors regulate the transportation - logistics of Vietnam:

At present, Vietnam has executed the laws to adjust the transportation and logistics activities as follows: Law of Maritime of Vietnam 2005, Law on Road Transport of

Vietnam 2001, Law on River Transport of Vietnam 2004, Law on Railway 2005, Law

on Civil Aviation 2005, and Commercial Law 2005, in particular, prescribing the logistics services

Table 1.5: Laws revising transportation activities

Law of Maritime of Vietnam 2005 - Approved in 2005 and became into effect in

2006

- Regulations on duties, limits of responsibilities and exclusion of responsibilities to legal entities joining into the activities of sea transport

Law on Road Transport of Vietnam

No 23/2008/QH12 dated November

28th, 2008

- Regulations on the road transport, conditions

on the road business, regulations on the transport of dangerous goods of oversized and overloaded means of conveyance, conditions

on the bulky goods transport, regulations on the road transport implementation

Decree No 109/2006/NĐ-CP dated

September 22nd

, 2006, stipulating details and guidance on

implementing some articles in

Law on Civil aviation in 2005 - Regulations on the carriage contracts of goods

- Regulations on methods of mixed transport

- Regulations on the responsibilities and limits for goods with volume of 17SDR/kg, unless

of packing and bar code, etc.

Decree No 140/2007/NĐ-CP dated

September 05th, 2007

Detailed regulations on Commercial law as regards conditions of logistics service business and limit of responsibilities to businesspersons

of such services

Source: General

In addition, the enterprises with foreign investment capital trade in aspects of international transport and logistics have to comply with the adjustment of foreign and domestic investment law, customs law, competition law and corporation law

Thus, system of Vietnamese law has formed the legal regulations so as to adjust the transport activities in general and logistics activities in particular Currently, the execution of such regulations is ineffective actually

c Orientation for transportation development till 2020

During the last year, the direct investment capital into systems of transportation, store site and information and communication paid attention from and invested by the Government with large amount, just standing behind Industry and process sectors

Strategies for transportation development until 2020 and vision to 2030 approved in

2009 by the Government with the following contents are: Until 2020, the transportation system of our country satisfies the demands on the diversified transportation of the society basically with the rapid growth, ensuring the quality being more and more high with reasonable price; to restrain and then reduce the traffic accidents and restrict the environment pollution Overall, it is to form the reasonable transportation system among means of transport and main corridor of transport to major goods with large volume

+ Road: Systems of national highways and provincial highway have to be complied

with engineering levels; to expand and construct new national highways meeting the large transport demands; to build systems of expressways External road lines must obtain the technical standards of regional roads; to form Road funds in order to satisfy the financial demands to the maintenance works of infrastructural system of road traffic

+ Railway: To complete the reconstruction, improvement of existing railway lines with

purpose of achieving the regional and national railway technical standards with speed

of 120km/h; to construct new express and high-speed railway lines; preferentially to build North-South high-speed railway line with speed of 350 km/h; Rapidly develop the urban railway transportation, inner-city and suburb railway to take an important role in public passenger transportation, at first, to implement in Hanoi capital and Ho Chi minh City

+ Seaway: To develop the national seaport systems including International transit port

at Van Phong, international gateway ports, deep-water ports at three key economic zones with receiving capability of new-generation container ships, mixed ports, specialized ports, passenger ports satisfying the demands of socio-economic