BUILDING DEVELOPMENT STRATEGY FOR TERAZO TILES OF NAM THANG TRADE CONSTRUCTIVE INVESTMENT JOINT STOCK COMPANY

BUILDING DEVELOPMENT STRATEGY FOR TERAZO TILES OF NAM THANG TRADE CONSTRUCTIVE INVESTMENT JOINT STOCK COMPANY DURING THE PERIOD OF 2011 – 2016... The basic business strategies in the pra

BUILDING DEVELOPMENT STRATEGY FOR TERAZO TILES OF NAM THANG TRADE CONSTRUCTIVE INVESTMENT JOINT STOCK COMPANY DURING THE

PERIOD OF 2011 – 2016

TABLE OF CONTENTS

LIST OF ABBREVIATION 6

LIST OF TABLES 7

LIST OF FIGURES 7

ACKNOWLEDGEMENT 8

INTRODUCTION 9

CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND STRATEGIC MANAGEMENT 11

1.1 Fundamental definitions 11

1.1.1 Definition of strategy 11

1.1.2 Definition of strategic management 13

1.1.3 Roles of strategic management 13

1.1.4 The meaning of building the business strategy 14

1.1.5 Process of building the business strategy 15

1.2 Analyze the external environment 16

1.2.1 Analysis of macro environment 16

* Economy environment 16

* Science-technology environment 16

* Culture-social environment 17

* Demography environment 17

* Political-legal environment 17

* International environment 18

1.2.2 Analysis of micro- environment 18

2.3.1.6 External Factor Evaluation EFE 21

1.2.3 Analyze the internal environment of the company 21

1.2.4 Strategy formulation 24

1.2.4.1 Strategy formulation process 24

1.2.4.2 Analyze SWOT matrix 25

1.2.5 The basic business strategies in the practice 25

CHAPTER 2: ANALYZING THE SITUATION BUSINESS STRATEGIES ON TERAZO TILES OF NAM THANG TRADE CONSTRUCTIVE INVESTMENT JSC 30

2.1 Introduction of Nam Thang trade constructive investment Joint Stock Company 30 2.1.1 History of development - Vision of the company 30

2.1.2 Managing structure of the company 31

2.1.3 Production and business operations of the company 33

2.2 Introduction about the products 35

2.2.1 General characteristics of the product 35

2.2.2 Summarizing producing technology 35

2.2.3 Distribution methods of products and sales services 36

2.3 External environment analysis 37

2.3.1 Macro environmental analysis 37

2.3.1.1 Economic environment (E): 38

2.3.1.2 Political environment and legal (P): 39

2.3.1.3 Natural environment, culture, social (S): 40

2.3.1.4 Technology Environmental (T): 40

2.3.1.5 International environment 41

2.3.2.1 Analyze the industry environment 42

2.3.2.2 Analyzing micro-environment (analyzing five competitive forces) 43

* Bargaining power of supplier 44

2.4 Analyze the internal environment 47

2.4.1 Resources 47

2.4.2 Intangible resources 51

2.4.3 Production activities 52

2.4.4 Business activities 53

2.4.6 Internal factor evaluation matrix IFE 55

2.4.7 Using SWOT Matrix to making strategy for Terazo tiles of Nam Thang TCI Joint Stock Company 56

CHAPTER 3: BUILD BUSINESS STRATEGY ON TERAZO TILES FOR 58

NAM THANG TCI JOINT STOCK COMPANY IN 58

THE PERIOD 2011-2016 58

3.1 Developing objectives of Nam Thang TCI JSC 58

3.1.1 Mission and vision confirm of the company 58

3.1.2 Development objectives 59

3.1.3 Analyzing SWOT Matrix to making strategy on Terazo tiles of Nam Thang TCI JSC 60

3.1.4 Choosing developing strategy 61

3.1.5 Solutions to build development strategy for Terazo tiles of Nam Thang TCI JSC in the period 2011 – 2016 63

CONCLUTION 67

REFERENCE 68

LIST OF ABBREVIATION

AFTA Asean Free Trade Area

ASEAN Association of Southeast Asian Nations

APEC Asia-Pacific Economic Cooperation

SWOT strengths, weaknesses, opportunities, threats

LIST OF FIGURES

Figure 1.1: Procedures of determining strategy

Figure 1.2: Model of 5 competitive forces by Mr Porter

Figure 1.3: Process of building EFE matrix

Figure 1.4: Process of building IFE matrix

Figure 2.1: Organization structure of the company

Figure 2.2: Producing process

Figure 2.3: The market share

LIST OF TABLES Table 1.1: SWOT Analysis minimalist framework

Table 1.2: Compare the characteristics of the general strategies

Table 1.3: Quantitative matrix according to the GREAT criteria

Table 2.1: The report of result on business activities

Table 2.2: Revenue by Terazo

Table 2.3 External Factor Evaluation matrix

Table 2.4: The substitute products

Table 2.5: The competitors

Table 2.6: Ballance sheet 2009 – 6/2011

Table 2.7: Labor quality

Table 2.8: Average income per labor

Table 2.9: Internal Factor Evaluation matrix

Table 2.10: SWOT analysis

Table 3.1: GREAT matrix

ACKNOWLEDGEMENT

First of all, the Group No.4 - GaMBA01.M1009 would like to express our sincerethanks for the Master of Business Administration Program, the Affiliate Programsbetween Griggs University, USA and Center for Education Technology and

Career Development, Vietnam University Hanoi for organize MBA course inVietnam and facilitating our Capstone Project Report.

Secondly, we would like to express our sincere thanks to the Leaders andstaffs of Nam Thang trade constructive investment Joint Stock Company, whohave fully supported our team in providing valuable input information for thisCapstone Project Report

Last but not least, let our thanks go to our families whose encouragementhas helped us complete the course without having any difficulties

We have tried to complete the assignment in the best way using our bestknowledge and ability However, the shortcomings are inevitable We wish toreceive valuable comments from teachers and colleagues

INTRODUCTION

1 The title of research

“Building development strategy for Terazo tiles of Nam Thang trade constructiveinvestment Joint Stock Company in the period 2011-2016”

2 The reason of research

Vietnam has approached the market economy for over 20 years This duration isnot too long as well as too short for Vietnamese enterprises to apply managementmethods of the market economy procedure Strategic management has beenconsidered as one of the most useful business theories which can help enterprises

to achieve successes in a long – term The way they are using these theories,however, should be re-considered in almost all organizations in Vietnam

In 2002, with the approval of Hanoi Planning & Investment Department, NamThang trade constructive investment Joint Stock Company was established andstarted to build the most modern Terazo tiles in Vietnam by a technology chainfrom Italy All equipments of the factory are also controlled and checked byexperts from FDT – Italy Through many years of developments, Terazo tiles - itsmain product - has achieved a certain position step by step in the market as well as

in consumer’s mind

In comparison with other products in the market, however, the awareness ofTerazo tiles is not really clear Moreover, the company often encounters with thesituation of lacking products for sales because the production capacity of itsunique factory in Quoc Oai, Ha Tay cannot meet the increasing demand ofcustomers In addition, there are more and more tiles products and the market isbecoming so competitive It is clear that Terazo tiles is sort of clear and effectivestrategies, especially marketing strategy or financial strategy to stay stable in thematerial constructive industry

This topic does not only apply knowledge of strategic management but alsocontributes significant practical recommendations for the development of NamThang trade constructive investment Joint Stock Company as well as Terazobrand

3 Purposes of the research

The research focused on following issues:

- Fundamental theories of strategy and strategic management

- Useful models to analyze the process of establishing and choosing strategy

- The real situation in which Nam Thang trade constructive investment JointStock Company has been implementing its strategy for Terazo tiles

- Analyze factors of the external and internal environment which affect oncompany’s strategy

- Appropriate solutions to build the development strategy for Terazo brand ofNam Thang trade constructive investment Joint Stock Company

4 Objective, scale and methodology

- Objective and scale: The research focuses on current strategic managementactivities of Nam Thang trade constructive investment Joint StockCompany and provides some solutions for the period of 2011-2016

- Methodology: The research used two kinds of information sources: Primaryand secondary information The secondary information came from varioussources However, a major percentage of them were from reports aboutcurrent business situations of Terazo tiles which were provided by NamThang trade constructive investment Joint Stock Company Besides, wewere also gathered from many opened sources such as internet and books

5 Structure of the research

Introduction

Chapter 1: Literature review of strategy and strategic management

Chapter 2: Analyzing the situation business strategies on Terazo tiles of Nam Thang trade constructive investment jsc

Chapter 3: Some solutions to build development strategy on Tarezo tiles of Nam

Thang trade constructive investment jsc

CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND STRATEGIC

MANAGEMENT 1.1 Fundamental definitions

1.1.1 Definition of strategy

There are many different definitions on strategy, but the most popular definition is

"Strategy is a series of complex actions to mobilize the resources of an

organization to achieve a certain goal." – Text book of “Strategic

Management”-Global Advanced Master of Business Administration, Hanoi, 2010

We know that in all definitions of policy there is some word with differentmeaning According to Mr.Mintzberg, there is 5 words (5P): Plan, Partern,Position, Perspective, Ploy Until now, Plan is an important part in definition ofbusiness strategy Alfred Chadler (Harvard University) thinks that “strategy is todetermine long –term corporate targets, to select method or plan ofimplementation and distribution resources necessary for achieving that target” -

(Source: Johnson & Scholes- Exploring Corporate Strategy, 2009)

There is a lot of such definitions, because strategy has a large concept withcomplicated meaning However, strategy can be recognized by certifying itscharacter and by distinguishing strategy and tactics

* By characters, strategy has 3 main following contents:

- Long-term missions that company wishes to achieve

- Setting-up and selecting the solutions for achieving mission

- Implementing and distributing resources for mission achievement.Corporate business strategy is master action program to focus on missionachievement Strategy does not define exact method to achieve the mission,because this is the target of other supplemented programs Strategy makes only theframe of guidance on mind and action for corporate management leaders

* By level, in any business corporate, strategy has some different levels,

along whole the corporation (or some of corporations) to every employee whoworks in the corporation

+ Corporate strategy: is at corporate level to focus on master mission with whole

corporate scope, satisfying expectations by owners of capital contribution

+ Business strategy: is in relation with how corporation can compete successfully

in the market

+ Functional strategy – is strategy supported to corporate and business strategy

achieving the mission based on recourses, procedures, personnel and othernecessary skills

+ World-wide strategy (international business) – is a selection, facing to

international business when corporate operates multiple business outside itsborder

1.1.2 Definition of strategic management

Strategic management is the art and science of formulating, implementing andevaluating cross-functional decisions that will enable an organization to achieve itsobjectives It involves the systematic identification of specifying the firm'sobjectives, nurturing policies and strategies to achieve these objectives, andacquiring and making available these resources to implement the policies andstrategies to achieve the firm's objectives Strategic management, therefore,integrates the activities of the various functional sectors of a business, such asmarketing, sales, production etc., to achieve organizational goals It is generallythe highest level of managerial activity, usually initiated by the board of directorsand executed by the firm's Chief Executive Officer (CEO) and executive team.Strategic management hopes to provide overall direction to the company has ties

to the field of organization studies

Strategic management includes these following specific steps:

 Strategic planning

 Strategic implement

 Strategic checking and evaluation

1.1.3 Roles of strategic management

Characteristics of business environment have a big affect to existence anddevelopment of company They can create new opportunities and challenges forcorporation And the company which wants to exist has to find out a newmanagement method, it is exactly “strategic management” - strategy is the basis of

this management method In model business environment, strategy becomes moreand more important to existence of company

From below analysis we can see very important roles of strategy in enterprise’sperformance so; strategic management becomes one of the most necessary keyswhich help enterprise open the door to advance toward success Strategicmanagement brings theses following advantages:

More efficient in making plans by using more reasonable and logical approachmethod when choosing strategies

 Widely take care of related beneficiaries of enterprises (stock holders)

 Connect short term development in long term development

 Take care of both efficiency and effectiveness

1.1.4 The meaning of building the business strategy

Setting up business strategy is one of the most important activities managed by thecorporate leaders This gives to corporate the best benefits, such as:

- Define exactly the corporate mission in every business period; Support corporate

to have a future trend for achievement of targeted mission

- Help corporate leaders to see opportunities and challenges from outside, to knowthe corporate strong & weak point, to forecast the changes in the future and tohave possible solutions for competition and satisfying with new businessconditions

- Help corporate to control and use effectively all resources, to promote the most

of corporate abilities for development

- Help corporate to distribute reasonable resources in every period, to improvecorporate business result

- Improve the corporation and agreement between company leaders to get thetargeted mission

- Help corporation to increase human resource productivity, increase salesrevenue, improve corporate management, minimize the risks and stop difficultiesmay occurred with corporation

We can conclude that business strategy can help corporate leaders to define themission and ability to set up stable competitive opportunity

1.1.5 Process of building the business strategy

Setting up business strategy is a procedure of business definition It’ssummarized definition of business strategy as followings:

Figures 1.1: Procedures of determining strategy

(Source: Text book of “Strategic Management”- Global Advanced Master of

Business Administration, Hanoi, 2010)

* Definition of corporate tasks and functions

Firstly, this is to define corporate task and function, including mission and goal

- Mission: define exactly corporate problems and show how to do

-Vision: it’s mission detailed by general goal, having trust on corporate future

- Strategic target: define the corporate tasks, and other goals that corporate hopes

to achieve in medium and long term plan

Factors that can effect to corporate business are defined in two groups:

Define the strategy

Determine the functions and tasks

environment

Macro-Evaluate external environment

Industry environment

Evaluate internal environment

Analyze and choose the strategy

(i) Environment outside corporation and

(ii) Environment inside corporation

1.2 Analyze the external environment

No organization can exist in a vacuum; each is set in a particular country andregion to which it is inextricably linked This setting provides multiple contextsthat influence how the organization operates and how and what it produces Thus,the concept of "external environment" is an important consideration fororganizations as it attempts to understand the research institutions it supports Ananalysis of the external environment is an attempt to understand the forces outsideorganizational boundaries that are helping to shape the organization

Forces outside the institution's walls clearly have considerable bearing on thatwhich transpires within The external environment can provide both facilitatingand inhibiting influences on organizational performance Multiple influences inthe immediate or proximal environment form the boundaries within which anorganization is able to function; these influences likewise shape how theorganization defines itself and how it articulates what is good and appropriate toachieve

External environment is divided into 2 following perspectives: Macro and Micro

1.2.1 Analysis of macro environment

Any changes of macro environment can effect to any corporation of the industry,can change power and industry challenge Macro environment includes 6economic sectors: economy, technology, culture-social, demography, political andlaw

* Economy environment

State of economy environment defines the healthy and prosperous of the economy

It always effects to corporations and industries Economy environment certifies thenature and trend of the economy in which corporation involves The effects caused

by economy environment can change profit and earning ability operated by the

corporation 4 factors are important in macro economy: ratio of economydevelopment, foreign exchange rate, interest and inflation rate

* Science-technology environment

Changes of technology can effect to many social sectors through its products,including substance, activities related to creativeness of new knowledge,movement of new knowledge to new products or new cycle or new material Thechange of technology environment can give to corporation opportunity andchallenge; Opportunity is to improve production of new competitive product;challenge is to shorten the product life

* Culture-social environment

This is included social manner and culture value; social change can set upopportunity and challenge The corporation that wishes to be alive forever withtime and partners and wish to be recognized by social environment shouldappreciate business culture; that’s why it can lead some changes of technology,political, law, economy and demography

* Demography environment

This is related to population, age structure, geography distribution and incomedistribution Opinion of goods and service consume in different geography areaand point of consumer’s view different age or male/female or job can effect to themarket and to corporation business strategy Living style can effect to goods &service demand, including product grade, quality, form Population increase caneffect to the content of corporate business strategy

changes related to the industry, tax regulations, safety and environment protection,issuance and adjustment of regulations

Nowadays, corporation should pay more attention to Government regulations onusing and protection of natural resources Good environment protection is anessential condition for stable development

* International environment

Trend of worldwide integration asks corporation to consider international effect if

it defines a long-term business strategy with high integration and high trend inpolitical and geography International market division includes: worldwide relatedmarket, current market changeable, international political issues, government andcultural basis on the world

1.2.2 Analysis of micro- environment

To analyze the micro-environment, organizations often use five-force model of M.Porter – Father of competitive theories Michael Porter provided a framework thatmodels an industry as being influenced by five forces The strategic businessmanager seeking to develop an edge over rival firms can use this model to betterunderstand the industry context in which the firm operates

Mr Porter indicates that these forces are stronger, minimize its ability in priceincreasing and high earnings The task setting for corporate managers is torecognize the opportunity and challenger

Figures 1.2: Model of 5 competitive forces by Mr Porter

(Source: www.salesmarketinghelpcentral.blogspot.com)

* Threat of new entry can represent in these facts: In nature this force concludes

the companies that have no competition in industry, but they can enter in becausethey have implicit of competition, and industry attractiveness and other enteringbarrier Entering barrier is the most difficult for other competitive corporationsSponsor for competitive position of the company includes the maintain of legalbarrier and the current opportunity of the company It consists of:

+ Faithful to trade mark: it is a customer’s love of company current product

+ Absolute cost advantage: the best operation through experiences; control ofinput, labor cost, material, equipment, management skill,…approach to capitalwith low interest When industry companies have absolute advantage thethreatening of current companies may decrease

+ Economical scale: effective for company with many experiences when scaleincreases

+ Cost of movement appears when customer changes his shopping from thiscompany to another

+ Government barrier regulations

+ Retaliatory measure of other industry companies

+ Becoming a member and other competitive barrier

* Bargaining power of supplier can have some features, such as: Suppliers can

be a warning force when they can increase input price or reduce quality of productand service to be supplied and company profit can be decreased Level of effectivedepends on supplier’s focus, quantity of sold goods, different between suppliers,effective of input to company cost or difference between products, cost movement

of industry companies, existence of replaceable supplier, a merger of suppliers,supplying cost

* Bargaining power of customers can have such features: Buyer as threatening

when they ask lower price or better service Level of effective depends on:position in negotiation, quantity of buyers, information that buyer can have,character of product trade mark, essential level to price, product difference,existence of replaceable product, customer needs, ability of buyer when he canuse another supplier

* Threat of substitutes can have such futures: Industry products to be supplied to

the customers with the same product of industry analyzing Level effectivedepends on: cost of movement of product using, trend of using replaceableproduct, relation between price and quality

* Rivalry among existing competitors

And last but not least, this describes the intensity of competition between existing firms in an industry Highly competitive industries generally earn low returns because the cost of competition is high A highly competitive market might result from:

 Many players of about the same size, no dominant firm

 Little differentiation between competitor’s products and services

 A mature industry with very little growth.

 Companies can only grow by stealing customers away from competitors

2.3.1.6 External Factor Evaluation EFE

External Factor Evaluation (EFE) matrix method is a strategic-management tooloften used for assessment of current business conditions The EFE matrix is agood tool to visualize and prioritize the opportunities and threats that a business isfacing Five steps to create EFE matrix:

EFE Matrix

Figure 1.3: Process of building EFE matrix

(Source: Text book of “Strategic Management”- Global Advanced Master of Business Administration, Hanoi, 2010)

The sum of all weighted score is equal to the total weighted score; final value oftotal weighted score should be between ranges from 1.0 (low) to 4.0(high)

1.2.3 Analyze the internal environment of the company

The organization not only needs to be aware of the social, political and economicenvironment in which it is operating, but also its internal environment ¾ its ownstrengths and weaknesses

Nam Thang TCI JSC should know competitor about: Who is competitor? What istheir corporate business? What is their mission? What are their strong and weakpoint? How are their action? We can review these information whether they cansupport so much to corporation in definition of corporate business strategy

List of

external

factors

Thelevel ofimportance offactors0,0 ÷ 1

Shortin

g offactors

1 ÷ 4

Sum ofscoresforfactors

in thelist

Scoringthefactors

The main factors are corporate value chain and internal corporate capability, suchas: production line, Marketing, management activities, accounting-financial, studyand development, system recovering and resolving information.

* Producing activities

Analysis of production operation is to review product manufacturing cycle incompliance with corporate business policy or not and give comment forimprovement if necessary

- Analysis of production capability: production capability is ability to produce theproducts in compliance with technical norms regulated in that time It can presentability of production factors , such as equipment and technology

- Analysis of raw material, energy and spare part supply: this is to analyze mainlyquality, trust and prompt supply by supply sources

- Analysis of reasonable production: it’s mainly to analyze productionorganization and operation manual, continuous and technical equipment abilitysatisfied with product change

- Analysis of quality control: it’s mainly to analyze role of quality control systemand its efficiency

Role of customer service is to provide service or support after sales It can makegood impression by customer after they bought product

* Managing activities

Corporate management activities are a set of activities supported to main operation

in corporate value chain

Infrastructure

This is to analyze reasonable investment of building factory, utility system, infrastructure

to ensure normal operation, equipment operation and product quality

Human resource management

Corporate organization is a set of human resources Reasonable organization hasunited instruct, un-coincidence, conflict in instruct, chaos in informaticssystem .Corporate operation is a living subject Management leaders shouldanalyze its mission and results, compliance between responsibility and power,relationship between corporation and departments, functions of corporateemployees Through this analysis, we can know problems to be resolved oradjusted

Raw material management

This mission is material movement from buying to distribution So, cost can beminimizes and operation can be more effective Using strict control of inventoryfrom store house to customer, company can reduce stocks on hand, minimize costand have added value

System recovering and resolving information

System recovering and resolving information is a group of technology staff to recoverand resolve information related to product, customer, product distribution system, trademark and logo, human resource management in order to provide resolved information tocorporate leaders, helping them to analyze and set –up business strategy This system ismore important for company in current period

Financial management

Financial resources are the most basic and the first for other resources Analysis offinancial resources and appraisal of corporate financial potentiality are theconditions for investment capital This a basic factor for setting up feasiblebusiness strategy

* Research and development (R&D.)

Research and development can make production more effectively, minimize cost.R&D can improve product quantity and make it more attractive to customer Atthe current time when technology has developed too fast, research anddevelopment activities can support corporate to hold modern technology ,applying in company operation

Internal Factor Evaluation

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing orevaluating major strengths and weaknesses in functional areas of a business IFE matrixalso provides a basis for identifying and evaluating relationships among those areas The

Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation.This matrix is built through 5 following steps:

Total weighted scores well below 2.5 point to internally weak business Scores

significantly above 2.5 indicate a strong internal position

Rankthefactors

1 ÷ 4

Sum ofthescoresfor thefactors

in thelist

Scoringthefactors

Strategy formulation is the process of determining appropriate courses of actionfor achieving organizational objectives and thereby accomplishing organizationalpurpose The strategy the company formulates should reflect environmentalanalysis, lead to fulfillment of organizational vision, and result in reachingorganizational objectives Special tools the company can use to assist it informulating strategies include critical question analysis, SWOT analysis, businessportfolio analysis, Porter's model for industry analysis, and resource-based model.These five strategy development tools are related but distinct The companyshould use the tool or combination of tools that is most appropriate for thecompany and business environment

1.2.4.2 Analyze SWOT matrix

SWOT is abbreviation of English words: Strengths; Weaknesses; Opportunities;Threats This is an effective tool for more understanding or making decisionrelated to corporate organization and business management

SWOT analysis can be summarized as below:

Table 1.1 SWOT Analysis minimalist frame work

Environment analysis O opportunity Outside environment T threat

Environment

inside

S- strength S-O: encourage strong

point to get opportunity,define business policy

S-T: encourage strong

point to minimizeweakness

W- weakness W-O: overcome

weakness to getopportunity

W-T: overcome internal

difficulties and preparecarefully to overcomechallenges from outside

1.2.5 The basic business strategies in the practice

A company, focusing on market and customer is in the centre, can concentratemore on customer development during defining business strategy

(1) Customer needs: What they should be satisfied with;

(2) Group of customers: Who will be satisfied;

(3) Other special ability: How customer’s need could be satisfied

This is the main issue for selecting corporate business strategy, because it is basisfor definition of business opportunity and of competitive method

Strategy in the context of five overall competitive forces

Table 1.2: Compare the characteristics of the general strategies

Customers' loyaltycan upset new joined competitors

The focus that create specialization of the company has the effects as a barrier prevent joiningNegotiating

ability of

customers

Ability to introducelow price to

powerful customers

Powerful customers have less advantages in negotiation

because they cant find substitute products

Powerful customers have less advantages because there are fewchoice

Negotiating

ability of

suppliers

Better protection ability against powerful suppliers

Easily transfer the increase price of suppliers into customer

Lower position in negotiating with suppliers, as the company has low output, but

businesses pursuing focus strategy on differentiating

products can transfer the increased price in

to customersRisk of

substitute

Able to use lower price to protect products from being substituted

Customers become attached

to the distinguished characteristics of products, thereby reduce the risk of substitute

Products with high specialization and superiority protect company against substitution

Competitive

intension

Better competitiveness in price

Customers' loyaltyprotect company from losing customers into other competitors' hands

Competitors cannot supply the needs of customers as the company pursuing focus strategy of differentiating products

(Source: Nguyen Thanh Thao, "Brand strategy” by theory, Michael Porter)

These common strategies can be applied to protect enterprises against competitiveforces Diagram above is to compare the characteristics of the overall strategies inthe context of the environment of five competitive forces

Selection of the best business strategy

Based on a set of policies, defining the combination between Opportunity, Strength-Threat, Weakness-Opportunity, Weakness-Threat, you canuse GREAT model to make the base of business selection:

Strength-Table 1.3: Quantitative matrix according to the GREAT criteria

se nti

Policies

Step 1: Recognize main content to be analyzed or belong to column 1

Step 2: Appraise efficiency of factors to general strategy; use ratio dedicatingimportance and efficiency to strategy (ratio counting from 0 to 1 with total equal1)

Step 3: Appraise and mark every factor of strategy Mark counting from 1 to 5:weak, normal, over normal, good, best

Step 4: Convert ratio as result of column 2, then summarizes results as in lastcolumn

Finally, highlight from one to three best numbers and that is the focus strategy

which should be focused on implementation

Chapter 1 mini conclusion

Above is the basis of theoretical concepts and basic terminology as a basis for thedevelopment of business strategy for enterprises Theories and methods which are:how to understand the strategy, steps to build strategies, methods of evaluationanalysis, integrated assessment methods, methods of proposing strategies andmethods of selecting optimal strategies

Theories and methods above will be applied in the analysis of activityenvironment and building strategies on Terazo tiles of Nam Thang tradeconstructive investment Joint Stock Company

CHAPTER 2: ANALYZING THE SITUATION BUSINESS STRATEGIES

ON TERAZO TILES OF NAM THANG TRADE CONSTRUCTIVE

INVESTMENT JSC 2.1 Introduction of Nam Thang trade constructive investment Joint Stock Company

2.1.1 History of development - Vision of the company

Name in Vietnamese: Công ty Cổ phần Đầu tư xây dựng thương mại Nam Thắng

Name in English: Nam Thang trade constructive investment JSC

Nam Thang trade constructive investment Joint Stock Company was establishedunder the Decision dated 27/5/2002 of the Hanoi People Committee and theapproval of Hanoi Planning & Investment Department It has succeeded 9 years ofestablishment and development

Since late 2003, the company has invested equipment and advanced technology ofItaly in producing Terazo tiles with capacity of 0,5 million m2/year in Phu Cat –Quoc Oai - Ha Tay This is the first factory with equipment and advancedtechnology of Italy was built in Vietnam

+ Vision of Company: Manufacturer of business leading building materialsindustry in Vietnam

+ Corporate culture: responsibility, dynamic creativity, honesty and solidarity+ Company's target: All activities are creating value and direction to allcustomers

+ The value of the company: Quality is the core value of the company

* Lines of business: (According to the certificate of business registration):

Based on the Business Registration Certificate No 0103001121 issued by HanoiPlanning and Investment Department on 11/06/2002, the main business operations

of the Company are as follows:

- Production and sales of products Terazo tiles and other construction

materials

- Decoration and complete civil and industrial

- Design consultancy, technology transfer production of building materials

- Doing business in machinery and equipment, raw materials production and consumption

- Doing business in services freight by car

- Machinery, spare parts, transport vehicles;

- Industrial consumption products, materials, chemical substance, fertilizer, rubber, metallic product;

- Constructive material testing;

- Providing services: forwarding, local tourist travel, hotel, custom

declaration,;

- Consulting services: investment, commerce, equipment procurement of construction works;

- Trading automobile and motorbikes;

- Providing automobile repairing and maintain ace services;

- International tourist travel;

- Trading rescue vehicles, lifebuoy, tent;

- Business management consulting

Charter capital (at the time of company valuation): 86 billions VND

The value of share: 100,000 VND

Total shares: 860,000 shares

2.1.2 Managing structure of the company

The company’s organizational structure was built under the function model Thestructure of organizations, departments and units of promoting their potential andactively implement the objectives of the unit

Figures 2.1: Organization structure of the company

(Source: Nam Thang trade constructive investment JSC)

Brief introduction

+ The Board of Directors includes the director, deputy director of production anddeputy director of sales Board of Directors was appointed by the Board ofShareholders The CEO is the legal representative of the company, responsible forimplementation of the resolutions of the Board, the business plans and investmentplans of the Company The vice president is the chief support in the areas ofassigned work

+ Board of Control: is elected by the Board of Shareholders and is responsible forchecking the authenticity, legality and rationality in the management of theexecutive board, the board of directors

+ Functional departments: includes Organization and Administration, Planningproduction and Product quality control and Technical Department, and FinanceDepartment They perform the functions and duties in accordance with the

Board of Management

Board of Control General Director

Sales Dept

Planning &

Investment Dept

Accounting Dept

Admin & HR Dept Granito &

Terazo tiles factory at Phu Cat – Quoc Oai – Ha Tay

Director

Shareholder’s meeting

Company issued, coordinating with other departments to perform the tasks of

production and business of the company

+ Sales Department: includes 08 agents They are responsible for all products sold

by the company produced

2.1.3 Production and business operations of the company

Table 2.1: The report of result on business activities ( 2008 – 6/2011)

4 Cost of goods sold 11 4,675,084,823 8,305,084,823 8,400,086,365 4,794,121,000

5 Gross profit on sales and

In which: Cost for loans 23 325,000,000 350,000,000 280,000,000 36,750,000

8 Cost for business

tax expenses.

15 The enterprise’s profit

after tax (60 = 50 – 51) 60 1,421,097,581 1,272,402,760 1,947,810,634 1,749,547,125

(Source: Report data on the plan implementation of Nam Thang TCI JSC)

Through table 2.1, in the recent years production and business results of the

company has high growth In 2009, the company affected by economic crisis but

with the action plan adopted by Shareholder Assembly, the company has been

striving to consume inventory and financial healthy, achieve the profit nearly 86%

compared to 2008 In the years 2010, the Revenue from sales and service

providers increase14,5% compared to 2009; The enterprise’s profit after tax

increase 53,08% In harmony with the general market price increases in the first

half of year, the company has obtained remarkable results over with the same

period in the previous year, the net profit from business activities is 2,332,729,500

VND, reach 89,81% compared to 2010

However, to achieve the above results, the company is constantly confronted with

many difficulties such as: increased production costs, management cost increase,

more and more competitors in the sector, market share threatened constantly To

achieve this, the regular business production plan does not cover all the issues to

create sustainable competitive advantage for company Therefore, the company

must plan for them a long-term strategy on the basis of environmental factor

analysis affecting to the development of the company to set out the suitable

business and production strategy to develop sustainably in the future

2.2 Introduction about the products

2.2.1 General characteristics of the product

Products of Nam Thang JSC with unique designs and luxurious, stable quality,

diversity in types, duration, design and color matching with aesthetics of each

building

Some main types of products of the company:

+ Whet Terazo tiles: the sizes of 300x300mmx2,7 and 400x400mmx3,0

+ Unwhet Terazo tiles: the sizes of 300x300mmx2,8 and 400x400mmx3,1

2.2.2 Summarizing producing technology

Terazo is disburned tiles products of the company are produced in modern

factories with Italy technology The product is controlled by a team of skilled

workers before being out of the factory This is a clean production technology, not

use of toxic chemicals; reduce the effects on the environment

This technology is pressed slightly to 2,000 tons of pressure to achieve high

strength brick with bearing strength> = 200kg/cm2 simultaneously satisfy the

aesthetics of the works by rich colors with patterns consistent

Figures2.2: Producing process

(Source: Nam Thang trade constructive investment JSC)

Table 2.2: Revenue by Terazo

Million VND 1,902,600.00 2,376,290.00 2,076,290.00 1,046,629.00

Classify, package

Total 4,675,027.000 8,301,339.000 8,393,339.00 4,651,616.00

(Source: Nam Thang trade constructive investment JSC)

2.2.3 Distribution methods of products and sales services

Through analysis on the realities of production and business activities as well as

through a number of fact finding, can be basically said: Terazo tiles of Nam Thang

TCI JSC are both characteristics of the leading cost and product differentiation

products:

- The product of Nam Thang TCI JSC (sized 300x300mmx2,7; 300x300mmx2,8 ;

400x400mmx3,0; and 400x400mmx3,1) is regarded as the high-value products, but

also a much lower price than the market (price about 74% to 85% compared to the

production Others Hasicco, Tin Phuc company, Dai Thien company )

- Nam Thang TCI JSC has strongly focused Terazo products with a large number

of distinct features; this is the right direction and appropriate development of the

society especially in awareness and the increasing demand consumers

Products of company are distributed on the market at following modes:

- Direct sales to the customers whose demand for construction, renovation,

improvement of houses and constructions: the company transport the goods to the

construction site

- Direct sales to customers who are organization through organizing auction,

bidding for state construction, construction company: the goods are transported to

the construction site

Sales via agents in the northern areas, regions and provinces, from distribution

agents to final consumers: the company delivers products to more than 500 agents

to distribute to markets

- Sales over 24 h/24h everyday

With the diversified and flexible sales methods according to the customer’s

demand, products of the company are well sold