BUILDING BUSINESS DEVELOPMENT STRATEGY OF SONG DA THANG LONG JOINT STOCK COMPANY

THESIS MBA BUILDING BUSINESS DEVELOPMENT STRATEGY OF SONG DA -THANG LONG JOINT STOCK COMPANY Group No.: 03 Student’s name: Trinh Thanh Hung Vu Viet Son Cao Tung Lam Le Thi Tuyen Ha

THESIS MBA BUILDING BUSINESS DEVELOPMENT STRATEGY OF SONG DA -

THANG LONG JOINT STOCK COMPANY

Group No.: 03 Student’s name: Trinh Thanh Hung

Vu Viet Son Cao Tung Lam

Le Thi Tuyen

Ha Noi, 2010

First of all, the group of authors would like to express our deep gratitude to: Thelecturers of the MBA training program of United State Griggs University - whoprovide knowledge; Managers and staff of the Centre for Educational Technologyand Career Development - Hanoi National University(ETC)-who are enthusiasticand indispensable helpers in the process of learning;

The authors would also like to thank the Managers and staff of Song Da – ThangLong Joint Stock Company- who are main supporters in the process of studyingabout the situation of the enterprise and create the opportunity, finance, provide thesupport of time so that members of the group can join and complete the trainingcourse

Finally, we would like to send the most sincere thanks to families, colleagues andclassmates -who are the solid basis of spirit for members of the group during theparticipation of Griggs University MBA program and the process of completing

major assignment Capstone Project "Building business development strategy of Song Da – Thang Long Joint Stock Company for the period 2010-2015"

We also wish to thank all the Lecturers and Administrative staff of GriggUniversity, Global Advanced Master of Business Administration Program forassistance and kindness throughout the process of MBA program

TABLE OF CONTENT

1.2.1 The enterprise’s vision and mission determination 9-10

1.3.2.3 Grand strategy matrix 19

21

STOCK COMPANY

21

2.1.1 The company’s formation and development history 21-22

2.1.3 The company’s organizational structure and management

machinery

24-25

2.2.2.6 The industry’s development prospect 36-392.2.3 Evaluating opportunities and challenges of Song Da –

Thang Long

39

2.2.3.3 External factor evaluation (EFE) matrix of Song Da –

Thang Long

44-45

2.2.3.4 Competitive profile matrix of Song Da – Thang Long 45-48

2.3.7 The status of product/service quality control 63

2.3.8 The quality of big works which have been constructed by

the company

66-68

2.3.10 Synthesis of SONG DA - THANG LONG internal

STRATEGIES AND SELLECTING THE OPTIMUM STRATEGY FOR SONG DA – THANG LONG

72

2.4.2 The optimum strategy selection for Song Da – Thang

Long

76-78

CHAPTER

III

CONTENTS OF SELECTED STRATEGIES.

STRATEGIC SOLUTIONS AND PLANS OF IMPLEMENTATION

IMPLEMENT STRATEGIES SUCCESSFULLY

95-96

LIST OF ABBREVIATIONS

In this document, abbreviations are understood as follows:

SONG DA – THANG LONG Song Da – Thang Long Joint Stock Company

Stock Company

Stock Company

LIST OF FIGURES

Page

Figure 1 2 Model of five competitive forces created by M Porter 13Figure 1 2 Diagram of main and support activities 14Figure 2.1 Song Da – Thang Long’s organizational structure chart 24Figure 2 2 The company’s qualification level structure 26

Figure 2 3 Model of five competitive forces by M.Porter 33

LIST OF TABLE

Page

Table 2.1: Human resource situation in the company by December

Table 2.3: Forecasted GDP growth rate of regions and countries in

2009 and 2010 compared to the one in recent years

Table 2.8: Competitive profile matrix of Song Da – Thang Long 47Table 2.9: The company’s capital and asset status from 2008 to

Table 2.15: Some key works that have been constructed by the

INSTRODUCTION

1 The reason for topic selection:

In the context of globalization and Vietnam’s access to the World TradeOrganization in particular, the global economy’s changes will directly effect onVietnamese economy for sure That is more confirmed after financial crisishappenned in the United States Each case obviously consists of positive andnegative aspects, as a result, from this financial crisis, we have condition to reviewthe economy’s strengh as well as weakness thereby find out our appropriate wayand create condition for steady development in the future

With developing countries, construction industry is always considered as one of thekey economic industries playing special important role in economic and socialdevelopment career, in particular in national industrialization and modernizationperiod

With market economy, competitive laws exist at any sector and business line andconstruction industry is not naturally out of such laws, therefore, organizations have

to find out their own way, make detailed and appropriate business strategy to existand develop steadily

The forerunner of Song Da - Thang Long Joint Stock Comany (SONG DA –THANG LONG) is a branch of Song Da Investment and Development Joint StockCompany founded in June, 2005 operating in the field of investment, business anddevelopment of housing services, urban areas, medium and small hydroelectricwork, civil and industrial work construction and erection and so on In September,

2006 Song Da Investment and Development Joint Stock Company sold this branch

to Song Da 1 One Member State-owned Company Limited and became a branch ofSong Da 1 One Member State-owned Company Limited at Hanoi

On December 5th, 2006 Song Da – Thang Long Joint Stock Company was officiallyfounded under business license no 0103014906 dated December 5th, 2006 by

Hanoi Department of Planning and Investment with business line of investing andproviding housing services, urban areas; trading medium and small hydroelectricwork, constructing civil, industrial, traffic and hydroelectric ect work withregistered capital of VND 25.000.000.000 The company repurchased total thebrand of Song Da 1 One Member State-owned Company Limited at Hanoi.

On December 6th, 2006, the company carried out general shareholders meeting andagreed to adopt adjustment on the first registered capital from VND 25 billion toVnd 40 billion and finished collecting equity share capital before December 20th,

2006 On December 20th, 2006, it completed capital contribution for companyfoundation with total quantity of 171 shareholders and total equity capital of Vnd 40billion As a result, it carried out changing business license of increasing registeredcapital to Vnd 40 billion (According to business license changed for the first time

on September 29th, 2006)

With international and national economic changes, the most important matter forSONG DA - THANG LONG now is to plan overall development strategy for allproduction and business activities aiming at competing and dominating marketshare against foreign and domestic businesses to meet growth targets in all aspects

in 2010-2015 period, creating condition for steady development in the incomingyears This is the reason why the group of authors selects the topic “Makingdevelopment strategy for Song Da – Thang Long Joint Stock Company for theperiod 2010 – 2015”

2 Purposes and scope of the study:

Purposes: Studying the basis of making strategy, procedure of making strategy and

the way of making the right choice for optimum strategy aiming at helping SONG

DA - THANG LONG to determine its most reasonable production and businessstrategy in current condition and situation thereby, presenting proposals andsolutions aiming at improving process of making production and business strategy

for SONG DA - THANG LONG in current condition together with planningimplementation schedule for selected strategy from 2010 to 2015.

Scope of study: Getting in close contact with analysis, construction, selection,

solution and implementation schedule of production and business strategy forSONG DA - THANG LONG for the period 2010 – 2015

3 Conducted methods:

Qualitative method: Studying cases of SONG DA - THANG LONG

Detailed study method: Analysing, comparing and summarizing data based on figures: Primary and secondary

Data collection method: Basing on data released in public media and capacityintroduction document of SONG DA - THANG LONG

4 Exercise’s structure:

The exercise consists of introduction part and 03 chapters The main content of eachchapter is presented as follows:

CHAPTER I : THEORY BASIS

- Overview of strategy and strategic management

- Content of strategic management

- Strategic construction, selection and implementation

- Conclusion

CHAPTER II: ANALYSING CURRENT SITUATION AND MAKING

DEVELOPMENT STRATEGY FOR THANG LONG - SONG ĐA JOINT STOCK COMPANY IN 2010 – 2015 PERIOD

- External environment analysis

- Internal environment analysis

- Production and Business strategies and optimum strategy selection for SONG DA

- THANG LONG

CHAPTER III: CONTENTS OF SELECTED STRATEGY, STRATEGIC SOLUTION AND PLAN OF OPERATION.

- Cost leadership strategy

- Strategy of concentrating on strategic customers

- Limitations of big exercise

- Orientation of continuous study

- Conclusion

CHAPTER I THEORY BASIS 1.1 OVERVIEW OF STRATEGY AND STRATEGIC MANAGEMENT: 1.1.1 Concept of strategy and strategic management:

Concept of strategy:

1 Strategy is a process of determining long-term basic targets of a business,

selecting method or guidelines for action and distributing essential resources

to achieve such targets (Alfred Chander)

2 Strategy is a format or a plan of coordinating main targets, policies and

action order into united whole (James B Quinn)

3 Strategy is a unified, comprehensive and coordinative plan made to ensure

that the company’s major targets will be reached (William J Glueck)

4 Strategy, Michael L Porter, the Father of competitive theory thought that:

 Firstly, strategy is to create valuable and original position consisting of different operation.

 Secondly, strategy is selection and swap in competition.

 Thirdly, strategy is to create coherence among all activities of a company.

In conclusion, strategy firstly involves in a business’s targets Secondly, it is amethod to perform actions and decisions which are closely involved in each otherand select method of coordinating such actions and decisions (Strategy of acompany must make full use of major advantages and capacity as well as foreseeexternal environment’s opportunities and challenges)

Concept of strategic management:

Strategic management is a process of studying, analyzing external and internal environment of a company at present as well as in the future, determining the

company’s targets, planning, implementing and examining the strategy aiming at using efficiently resources to achieve expected targets

Figure 1.1 The strategic management process

(Source: Strategic management textbook - Griggs University)

1.1.2 Role and significance of strategy and strategic management:

Strategy helps economic organizations to be keener and more dynamic with themarket’s forecast and changes, thereby they can make reasonable decisions andcontrol their operation to enhance corporate competitive strength and step by stepensure the company’s powerful position in the market mechanism

The StrategicManagementProcess

External environment

Internal environment

Strategic Intent

Strategic Mission

Strategy Formulation Strategy Implement

Business-Level

Strategy Competitve Dynamics

level Strategy

Corporate-International strategy Cooperative

and Control

Strategy Leadership Enterpreneurs hip $

A company’s strategy can be considered as “guiding outlines" in a business’soperation and the destination of all members to strive for reaching to: That is amethod of optimum coordination of material resource with immaterial resourceaiming at achieving proposed targets.

Strategy is expression of business value concept: All businesses have difference andtheir own mark in their strategic operation That typical style tells value concept,ambitious spirit and managing role of the leaders to meet targets proposed by thestrategy

Strategy helps leaders of companies to have clear orientation and vision in thefuture: Strategy is the basis for business managers to make decisions which areproper, timely and even create break-through in their firms It is an instrument tomake use of and determine the strength to promote and the weakness to overcome,

to take full advantages of opportunities and cope with challenges and threats togradually build up the company’s position

Strategy is creation in business management: Management is a process, strategy is aperiod Basing on targets set by a firm and method and manner of handlingproblems which are harmonious and flexibly combined in accordance with reality ofthe firm to create competitive advantages for company forward the final targetwhich is expected value optimization

Strategy is expression of a company’s competitive position: Thereby anentrepreneur established a method of coordinating of internal strength with externalopportunity to overcome weakness and avoid hidden risks They are corporatecompetitive ability, ability of dominating market, maintaining market segmentagainst competitors and ability of creating significant pressure to competitors

Michael Porter said in "Competitive war" that "competitive strategy lies inrelationship between firm and its market"

Thank to such importance, business circle needs to make long-term businessstrategy This is essential to help company to be well-established in the market and

develop in the future However, business environment always changes, so doescompany’s resources in each strategic period, as a result, strategy of company must

be flexible and changeable in accordance with objective reality to ensure existenceand development

The company can select strategy under the rule of applying data analysis methodbasing on factors in order arranged as follows:

1.2 CONTENT OF STRATEGIC MANAGEMENT

Strategy is made on the basis of company’s mission It is basis to set goals and whatshould be done for customers as well as other involved partners

Basing on this mission, leaders at all levels will decide to set goals Such goals areclear expression of organization’s mission and are used to make action plan andassess process They are guided by actual knowledge of both external marketing orbusiness environment and company’s internal capacity In common, makingstrategy starts with wide investigation and analysis and also making a process which

by it, leadership levels recognize top prioritized problems that organize needs todeal with for succeeding in the long term

Departments’ participation in planning strategy plays an important role becausethey own plentiful knowledge of competitive environment in which their company

is operating in as well as good ability and can make lucid proposals on what should

be executed by organization Moreover, departments involved in the process ofplanning have more abilities of supporting and implementing proposed plans Themajor department is the strategy implementation centers because they havehegemony, human resource and required skills to do well

By gathering together to implement the process of planning, leadership level andmanagers of departments ensure to make appropriate, coherent and feasible strategywhether the strategy made by organization or department.

Implementing strategy relates to carrying work in accordance with the process ofthe whole company Leaders and managers at all levels must highly concentrate onimplementing strategy because even a perfect strategy will also become valueless if

it is not executed in the right way by organization managers

1.2.1 The enterprise’s vision and mission determination:

Vision and mission point out destination in the future and long-term targets whichcompany aims at They are basis to make short-term policy, strategy and businessstrategy

Vision determination is to define the position that the company expects to reach to.Vision statement draws up the company’s future when it meets targets andpurposes Vision statement must enable to determine the final destination of thecompany

To succeed, Davidson defined 6 essential factors which a vision must contain:

* Providing direction in the future

* Attaching much importance to the consumer’s benefit

* Be practical

* Creating motivation

* Being absolutely fully communicated

* Being always closely followed and assessed

Mission statement determines values and rules dominating company and is essentialpart of the process of making strategic plan The company’s mission is the reasonwhy it exists in the market and what product and services which the company brings

to customers and community The decisions in the process of making strategic planmust always harmonize with mission declaration

Mission statement is the foundation of the company’s vision Mission declaration orcan be motivator encouraging staff when sending the company’s purposes and value

to customer and community

1.2.2 External environment analysis:

 Political factors:

These are factors with range of influence on all business line all over the territory.Political factors can threaten existence and development of any industry Whendoing business under administrative unit, entrepreneur is compelled to abide bypolitical regulations at that area

+ Stability: Institution with high stability will create good condition to do business

and vice versa

+ Tax policy: Import and export tax policies, sales tax, income tax and so on will

impact on revenue, profit of a business

+ Involved laws: Investment law, business law, labor law, antimonopoly law,

antidumping law and so on

+ Policy: The state policies will impact on a business, they can produce profit or

challenges for a company such as trade policy, industry development policy,

economic development policy, competitive regulation policy, consumer protectionpolicy and so on.

+ Economy situation: Any economy has it own cycle, in each certain period of economic

cycle, a company will make its own reasonable decision

+ Factors effecting on economy: Interest rate, inflation etc

+ The government’s economic policies: Basic salary law, the government’seconomic development strategies, preferential policies for industries such as taxreduction, subsidy and so on

+ Economic prospect in the future: The speed of growth, GDP growth, GDP ratio

on investment capital etc

+Average duration of life, health situation, nutritive regime and fare

+ Average income and distribution of income

+ Life style, knowledge, viewpoint of aesthetics and living psychology + Living condition

 Technological factors:

The whole world is in the technological revolution, series of new technologiesappear and are applied to products, services, in particular to the field of moderninformation technology and communication technology

+ Investment from the government, businesses on R&D work: Combination

between businesses and the government aims at studying to produce newtechnologies and material etc which will positively effect on economy

+ Speed, cycle of technology, the rate of out-of-date technology:

+ Influence of information technology and internet business operation.

 Integrative factors:

No one disagrees that globalization is a trend and this trend induces opportunities aswell as challenges for businesses and nations in developing production and businessoperation

P.E.S.T model is now expanded into S.T.E.E.P.L.E matrix (Social/demographic, Technological, Economics, Environmental, Policy, Legal, Ethical) and more and more improved as an indispensable standard to apply research on external environment of a company.

1.2.2.2 Environmental analysis of industry:

Environmental analysis of industry by the model of Michael Porter built with 5impacts on a business or called as 5 competitive forces, they are:

 The power of the provider

 The power of the customer

 Hidden competitors

 The threat from substitution product

 Current competitors

Figure 1.2: Model of five competitive forces created by M Porter

(Source: Strategic management textbook - Griggs University)

BUYERS

1.2.3 Internal environment analysis:

Internal situation of a business is regularly assessed by functional sectors such asfinance, human resource, management, organizational structure, marketing;research/development and information technology

Figure 1.3:Diagram of main and support activities

(Source: Strategic management textbook - Griggs University)

Corporate internal analysis will allow us to realize strenghs (S) andweaknesses (W) of an entrepreneur Thereby, selected business strategy need topromote maximally strengths and deal with weaknesses of the company

Similar to techniques applied to analyse external factors, aiming at quantificationfor analysis of the company’s internal situation, “ internal factor assessmentmatrix” (IFE)

1.3 STRATEGY CONSTRUCTION, SELECTION AND IMPLEMENTATION

There are 3 phases to create a business strategy and each phase uses differentinstrument

Phase 1: Information collection and systematization phase

This phase summarizes collected basic information and systematizes to formbusiness strategy It use 3 instruments: EFE matrix, competitive image matrix and

IFE matrix.

Phase 2: Coordination phase

This phase selects, arrange and coordinates external environmental factors withinternal factors to make feasible strategy It uses matrix instrument: Strength –Weakness – Opportunity – Challenge matrix (SWOT); strategic position andaction evaluation matrix (SPACE) and big strategy matrix

Phase 3: Decision phase

This phase uses the only instrument which is quantitative strategy planning matrix(QSPM) QSPM matrix uses information in phase 1 and objectively assessesbusiness strategies that can be chosen in phase 2 aiming at making decision of what

is the optimum strategy for company

1.3.1 Information collection and systematization phase

1.3.1.1 EFE matrix

EFE matrix is established in the order of 5 following steps:

Step 1 : Indexing factors playing a decisive role in the field which company isdoing business in, including both opportunity and challenge

Step 2 : Evaluating significance of each factor according to score band from 0,0 to1,0 (significance increases score by score) with total score of factors equal to 1.This significance relies on business industry in which company is operating

Step

3 : Giving mark from 1 to 4 to each factor with score telling the company’sreaction level with such factor Mark 4 is good reaction Mark 3 is above averagereaction Mark 2 is average reaction and mark 1 is little reaction

The highest total score is 4 and the lowest one is 1 The average is the score of2,5 The higher score, the better reaction from company with external factors.

1.3.1.2 Competitive profile matrix:

This matrix identifies a business’s major competitors It is an expansion of EFEmatrix with factors’ significance level, score signification of each factor andimportant total score at the same meaning

Competitive profile matrix differs EFE matrix by the fact that: there are a fewinternal factors with decisive significance which are also mentioned to compare.Total score used to assess competitors will be compared with the firm chosen as ansample

1.3.1.3 IFE matrix

Establishment of IFE matrix also follows 5 steps:

- Indexing internal factors playing decisive role

- Assessing significance of each factor according to score band from 0,0 to 1,0(significance increases score by score) with total score of factors equal to 1 Thissignificance relies on significance of such factors with a business withoutdiscriminating that this factor is strength or weakness of the business

- Giving mark from 1 to 4 to each factor with score telling internal features of acompany with such factor Mark 1 is the biggest weakness, mark 2 is theshallowest weakness, mark 3 is the shallowest strength and mark 4 is the biggeststrengh

- Determining total score of importance for each factor (by the product of scoresachieved in step 2 and step 3)

- Determining total score about significance of company (by the total score get

in step 4)

The highest total score is 4 and the lowest one is 1 The average is 2,5 The score ofimportance below 2,5 shows that the company is weak inside and the mark over 2,5shows that the company is strong inside

1.3.2 Co-ordination phase

1.3.2.1 SWOT matrix

SWOT matrix is a tool to form four strategies with the combination of Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T):

- SO Strategy: Using the internal strength of business to explore the opportunities

in the external environment

- WO Strategy: Taking advantages of external opportunities to improve theinternal weakness

- ST Strategy: Using the strength of business to avoid or to decrease the threatens

of external environment

- WT Strategy: This is a defensive strategy to decrease the internal weakness andexternal threatens

SWOT matrix is illustrated by the following diagram:

Table 1.1 SWOT Matrix

(Source: Strategic management textbook - Griggs University)

1.3.2.2 SPACE Matrix

SPACE matrix includes two internal factors: Finance Strength (FS) andCompetitive Advantages (CA); two external factors: Environmental Stability (ES)and Industry Strength (IS)

SPACE Matrix is established through these steps:

- Select a group of representative variables for FS, CA, ES and IS

- Fix a value from 1 (the worst) to 6 (the best) for FS and IS, from -1 (the best) to -6(the worst) for ES and CA

- Calculate the average score of FS, IS, ES and CA

- Mark the average score of each aspect

- Adding two those values and mark the result, adding two values on the vertical axis and mark the result Mark the co-ordinate of this point

- Draw a vector with the direction of from point of origin to this new point

Table 1.2 SPACE Matrix

FS

Cautious strategy 6

543

Offensive strategy

CA -6 -5 -4 -3 -2 -1

-1-2-3

-4

0 1 2 3 4 5 6 IS

(Source: Strategic management textbook - Griggs University)

If vector is at the point of origin of offensive: The business at the best position

where it can use up the internal strength Strategies are market penetration, marketdevelopment, product development; combining with the front side, back side andhorizontal side according to the specific situation of each business

If vector is at the point of origin of caution: The business should operate with its

basic capacity, don’t be reckless Available strategies are market penetration,market development, product development and focus diversification

If vector is at the point of origin of defensive: The business should focus on

improving the weakness and avoid the external threatens The strategy fordefensive: cost cut-down, liquidation and focus diversification

If vector is at the point of origin of competitiveness: Competitive strategies are

combining with the front side, back side and horizontal side, market penetration,

market development, product development and joint-venture participation

1.3.2.3 Grand strategy matrix

Matrix include: horizontal axis shows the competitive position of business inmarket (strong or weak) and vertical axis shows the growth of market (slow orquick) The appropriate strategies are listed in the following right angle:

Table 1.3 Grand strategy matrix

Quick Angle II

The strategies are selected to put in QSPM matrix, not all the found strategies in thephase 2

Formation of QSPM matrix must be implemented through six steps:

- Step 1: Listing the factor of S, W, O, T from the EFE, IFE matrix

- Step 2:.Classifying the appropriate factor for EFE, IFE matrix

- Step 3: Study about the matrix in stage 2 and determine which strategy needs

to be considered

- Step 4: Identifying total attractiveness scores (TAS) according to each factor: theevaluated score of 1 to 4: 1- the least attractive, 2 – a little bit attractive, 3 – quiteattractive, 4 – very attractive

- Step 5: Calculating total attractiveness scores (TAS) based on each row bymultiplying the classified score by average score (AS) in step 4

- Step 6: Giving out the total score of each strategy

The most attractive strategy is the one which have the highest score in step 6

In summary, enterprises in the business process must always define its annual targets and long-term target Business strategy is the way and steps to achieve the target

CHAPTER II ANALYSING CURRENT SITUATION AND MAKING BUSINESS DEVELOPMENT STRATEGY FOR SONG DA – THANG LONG JOINT

STOCK COMPANY IN THE PERIOD 2010 – 2015

2.1 OVERVIEW OF SONG DA–THANG LONG JOINT STOCK COMPANY 2.1.1 The company’s formation and development history

On December 5th, 2006 Song Da – Thang Long Joint Stock Comany was officiallyfounded under business license no 0103014906 dated December 5th, 2006 byHanoi Department of Planning and Investment The forerunner of Song Da - ThangLong Joint Stock Comany (SONG DA - THANG LONG) is a branch of Song DaInvestment and Development Joint Stock Company founded in June, 2005 operating

in the field of investment, business and development of housing services, urbanareas, medium and small hydroelectric work, civil and industrial work constructionand erection and so on

In September, 2006 Song Da Investment and Development Joint Stock Companysold this branch to Song Da 1 One Member State-owned Company Limited andbecame a branch of Song Da 1 One Member State-owned Company Limited atHanoi

On December 5th, 2006 Song Da – Thang Long Joint Stock Comany was officiallyfounded under business license no 0103014906 dated December 5th, 2006 byHanoi Department of Planning and Investment with business line of investing andproviding housing services, urban areas; trading medium and small hydroelectricwork, constructing civil, industrial, traffic and hydroelectric ect work withregistered capital of Vnd 25.000.000.000 The company repurchased total the brand

of Song Da 1 One Member State-owned Company Limited at Hanoi On December

6th, 2006, the company carried out general shareholders meeting and agreed to adoptadjustment on the first registered capital from Vnd 25 billion to Vnd 40 billion andfinished collecting equity share capital before December 20th, 2006 On December

20th, 2006, it completed capital contribution for company foundation with totalquantity of 171 shareholders and total equity capital of Vnd 40 billion As a result, itcarried out changing business license of increasing registered capital to Vnd 40billion (According to business license changed for the first time on September 29th,2006).

The company was inherited total material base, staff togerther with developingbusiness process and all achievements which were built and owned by the brand ofSong Da 1 One Member State-owned Company in Hanoi In June, 2007 thecompany issued additional shares to raise its registered capital to Vnd100.000.000.000 (One hundred billion Vietnam dong) from Vnd 40.000.000.000(Fourty billion Vietnam dong)

At present, the company has been taking part in numerous technical infrastructureconstruction project, civil and technological construction and working as an investor

of big projects such as housing complex of Van Khe urban area (Vnd 1.006 billion),Phong Phu Plaza trade center (Vnd 419 billion), Song Da – Thang Long city viewextended high-ranking apartment and office complex building (Vnd 988 billion),Van Khe extended urban area (Vnd 10.000 billion), Phu Lam urban area (Vnd 5.000billion) and Tran Xuan Soan apartment building (Vnd 412 billion)

2.1.2 Major information of the company:

 The company’s name: Song Da - Thang Long Join Stock Company

 Abbreviated name : SONG DA - THANG LONG., JSC

 Headquarter: Van Khe Complex, La Khe Dist.,, Ha Dong City, Ha

Noi, Viet Nam

Investment on December 5 th, 2006, changing the 8th time on October 10th, 2008.

 Registered capital: VND 100.000.000.000 (One hundred billion Vietnam

dong)

 Quantity of shares: 10.000.000 shares (Ten million shares)

 Song Da – Thang Long Joint Stock Company owns 4 branches, 2 projectmanagement unit and 3 subsidiary companies

 Business line:

- Investing, trading housing services, urban area;

- Investing, trading small and medium – scale hydroelectric power plant;

- Building civil, industrial and traffic works, irrigation structure, post office,engineering works, urban infrastructure, industrial zones, water supply anddrainage works, line construction work and transformer station;

- Producing, merchandizing building material, construction machinery andequipment (without waste material reprocessing, metallurgy and electricalcoating);

- Transporting materials, construction and industrial equipments;

- Hotel and restaurant business and investment (without including bar,karaoke rooms and dance hall);

- Producing commercial concrete and concrete member;

- Trading material, building material, construction equipments, interior andexterior ornament;

- Managing projects of civil and traffic construction works and up-to-group

A urban technical infrastructure

2 1.3 The company’s organizational structure and management machinery:

The company’s management machinery and organizational structure are

constructed under joint stock company model as follows:

Figure 2.1: Song Da – Thang Long’s organizational structure chart

(Source: Song Da – Thang Long Joint Stock Company - year 2009)

PROJECT MANAGEMENT UNITS

GENERAL ASSEMBLY OF SHAREHOLDERS

BOARD OF MANAGEMENT

CHIEF EXECUTIVE OFFICER

SUPERVISORY COUNCIL

PLANNING AND ECONOMY

–DEPT OF FINANCE AND ACCOUNTING

–DEPT OF PLANNING AND ECONOMY

–DEPT OF HUMAN RESOURCE

INVESTMENT PROJECT DEPARTMENT

CONSTRUCTION AND ERECTION TEAMS

+ Holding company’s corporate office block contains: Department of materialsengineering; department of finance and accounting; department of planning andeconomy; department of human resource; investment project department;

+ Member units include: 2 project management units under the company; 03subsidiary companies and 10 joint venture and associated companies; real estateexchange

2 1.4 The company’s human resource structure

The quality of human resource is one of important factors deciding the company’sdevelopment, as a result, it always lays the targe of building professional staff inthe top priority in its development strategy By December 31st, 2009, thecompany’s number of official staff has been 158 people

Table 2.1: Human resource situation in the company by December 31 st , 2009

(person)

The average salary (Vnd/person/month) 4,5 triệu

Figure 2.2 : The company’s qualification level structure

(Source: Song Da – Thang Long Joint Stock Company - year 2009)

The company’s labour force is mainly concentrated in managing staff It doesn’town common labour force because its nature of industry is the construction workcontractor, furthermore, the construction works sporadically locate at manydifferent regions so that in each area the company hire local common labour force

to minimize cost of labour using

2.1.5 Operating result form 2007 to 2009.

For having overview of the company’s operation situation over the past 3 years, we synthesize by following spreadsheet:

Table 2.2: Operating result form 2007 to 2009 of SONG DA - THANG LONG

Unit: dong

Total assets value 314,099,711,251 1,078,570,880,409 3,278,016,612,077 Net turnover 397,427,566,361 501,458,558,804 737,970,382,823 Profit from trading

activities

41,979,506,184 30,532,791,234 45,754,255,841

Before-tax profit 42,088,557,187 32,064,792,591 56,217,867,407 After-tax profit 30,288,053,174 23,284,125,602 47,484,390,175

(Source: Audited financial statement 2007, 2008 and 2009 of the Company)

Financial situation of the Comppany is relatively stable, fixed capital dominate intotal capital for manufacture and business of the Company In 2008 alone, inspite ofbeing affected by global economic crisis, the Company still had growth in totaloutput since the Company further develops project investment Project investmentincreasingly accounts for high density in business manufacture structure of theCompany

Profit from project investment accounts for high density in profit structure of theCompany

2.1.6 Misison and vision confirm

Construct company to be the leading construction, project investment and real estatebusiness firm in Vietnam Develop to invest in project and real estate business is thetop objective and is main development trend in the future of company Objective of

substainable development, has high responsibility to society and contributes moreand more for the development of the country is operation policy of the company.Train and develop continously human resources, unify, cooperate in work,discipline and industrial style is the main value, is cultural tradition of company Incessantly to study, learn and apply new technology, continuously invest advancedequipments in order to satisfy requirements of market.

Costumer is center of every work, is the most important objective of company Bestquality of produce and service in every business operation of company is thenumber one objective, continuously improve to satisfy high demand of customers.Profit is a vital requirement for the survival and growth of the Company

The company wish to be a good customer and expand cooperative relationship in allfields with a norm of good quality, efficiency and mutal benefits

2.2 EXTERNAL ENVIRONMENT ANALYSIS

2.2.1 Macro-environment analysis

Figure 2.3/ Model of PETS analysis

2.2.1.1 Economic and politic environment: (P)

It is the stability of politics, law system and policy mechanism which is issued by theState, has been synchronized and bring into full play It encourages the enterprises toimplement its operation and business based on the market mechanism

However there are some governmental policies which raise the difficulties forconstruction industry, such as monetary policy, interest policy and especially thepolicy of urban re-planing

Stability of politics, labor force and development in recent years and the next yearshas create the favorable condition for national economy development in general andfor enterprises in construction sector in particular

WTO joining of Viet Nam makes a positive effect and creates the job as well asincreases the incoming of labors WTO participation will help Vietnam to improvetrading exchange and to increase FDI (foreign direct investment) into Viet Nam.The change in law will create a powerful effect on the production and business oflegal entity State management is implemented by law system which avoids theadministrative interference towards the activities of enterprises and market Thestability of politics, labor force and development

With the powerful international integration, Viet Nam becomes the attractivedestination for foreign investors and great-scale economic groups Besides theadvantages, Vietnamese enterprises will must face with a considerable competition,tariff barrier and priorities forces them to comply with the international law system.The enterprise must improve the level of management and invest into thetechnology in order to produce the high quality product with the lowest price It is achallenge for construction and real estate industry in general and for Thang Long –Song Da Joint Stock Company in particular

2.2.1.2 Economic environment: (E)

In common with the powerful development of economy, GDP growth rate in 2007

is 8,48%/year which is rather high compared to other countries in the world an inthe region GDP growth rate in 2008 is only 6,23%/year (www.vnexpress.net) due

to economic depression The advantages leading to the development of company arethe development of the country, the continuing improvement of people’s lives, andgrowing invesement into basic construction Whereas the increasing inflation rate,

the unstable finance market and the escalation price makes a negative impact on theeconomy, leading to the serious loss of economy, threatening the invesment into thebasic construction of investors and the Government

At present, the Government has been focusing on the consuming demandstimulating programs and investment into the construction industry, especially thebasic infrastructure for society and for the poor Despite the forecast about thedifficulties of industry production in 2009 due to global economic crisis, consumingdemand stimulating policies for economy recover create the chance for constructionindustry to development

Due to economic crisis, Vietnamese enterprises, especially the construction onesmust face a lot of difficulties in recent time On the 16th April 2009, Prime Minsterhas make a decision of 50% VAT cut down for some of goods, constructionmaterials for example, leading to the decrease of price of construction products

Table 2.3: Forecasted GDP growth rate of regions and countries in 2009 and 2010

compared to the one in recent years:

2.2.1.3 Cultural and social environment: (S)

With the advantages of geographic location for open-door policy and integration,Viet Nam is favorable to eonomic and experience exchanges with other countries inthe world

The fast growth of population leads to the booming of urban area and infrastructuredevelopment project; however, the limited number of skilled labor interupts theeconomic development and integration

In addition, the customer has a increasingly higher knowlege so they will choose thebest product with perfect services It is a chance for great-scale enterprise but achallenge for small ones

In brief, structural shift in the economy of the world and in the region makes a considerable impact on Viet Nam, opportunites and challenges in the next phase are:

Vietnamese enterprises will not endure the discrimination in the internationaltrading They will have more chances of investment attraction, technology exchangeand advantages promotion towards the cheap labor force and open investmentenvironment Especially, Viet Nam has more chances of benefitng form the priorityfor developing countries in order to improve the intenrational position and to ensurethe nationality interests It requires the Government to boost the economic re-structuring, administration reform and law system establishment in order to improvethe capacity of competition

In the phase of economic shifting period with the low starting point, Viet Nam faceswith a lot of challenges besides the opportunities The route of tax cut-down makes

a considerable impact on the budget of the Government It requires Vietnamesenterprises to have a good preparation otherwise they will be eliminated in thecompetiton rule of the global economy

According to the Decision No 76/2004/QĐ-TTg issued on 6th May,2004 by PrimeMinister about the housing development orientation, until 2020, the urban housing rate