INFORMATION SYSTEM DEVELOPMENT STRATEGY FOR JAT UP TO 2020

IT applications for small and medium businesses to consider the followingaspects:- Internal business systems including customer relationship management, is aset of management, care and b

Paris Graduate School of Management Thai Nguyen University

INTERNATIONAL EXECUTIVE MASTER OF BUSINESS ADMINISTRATION PROGRAM

2.2 Analysis of the external factors affecting to JAT 34

2.2.3 Analysis of competition, matrix model CPM 43

2.3.2.Implementation of IT applications of JAT 48

3.2.Strategic recommendations for JAT 53

List of Tables

Table 2.1: Growth speed of revenue and profit 2008-2012 27

Table 2.3: Structure of employees in the company JAT 32Table 2.4: Summary of machine and equipment at JAT 32Table 2.5- Analysis of competition, matrix model CPM 43

List of Figures

Figure 3.2: ERP in production process management 68

1 The Urgency of the subject:

Internet has created a whole new atmosphere in the business world, with theadvantages and challenges In Vietnam, the business environment is increasinglycompetitive, the enterprise early in the management process improvement throughthe application of IT shall be deemed to have grasped in the hands of an effectivecompetitive tool

An ICD recent survey showed that, as of quarter 1/2012, Vietnameseenterprises are ranked top 3 in the growth area of the laptop (31.8%), followed byIndonesia and Singapore This shows that this is a good environment for theapplication of IT in the enterprise management to increase performance Whilemany SMEs use computers to perform simple office tasks, a significant numberquickly apply business management software to help businesses reduce the time andlabor savings This business agility in setting up the website to marketing and salestools, operating via internal network, perform electronic transactions, online datasharing

The obvious advantages of IT that helps product development throughautomation technologies that help improve the services and products; through ITcan develop new markets, the sale of new low cost efficiency Many SMEs overtime "digitized" admitted: by applying IT in management, company resources areused effectively There are now operating an online store is very smooth, theinvoice, tax reporting and payment of orders is done online, so the company'shuman resources "micro" - only in the number of 7 - but promote strength twice thenormal operating

IT applications in management also help to create a more professional style,better confirm the brand in the eyes of customers IT not only contribute to theexpansion, but also support its brands in creating and promoting the professionalimage of the brand to consumers

IT applications for small and medium businesses to consider the followingaspects:

- Internal business systems including customer relationship management, is aset of management, care and building relationships between customers andbusinesses, help businesses access method and communicate with customers in asystematic and efficient management of customer information such as accountinformation, demand, communication and other issues in order to better servecustomers The overall goal is to find, attract and win new clients confidence,maintaining the partnership has, entice former clients back, reduce marketing costsand to expand customer services The measurement and evaluation of therelationship with customers is very important goals implemented war luoc.He theinternal business management system document management, finance andaccounting; human resource management force

- Communication and collaboration through VoIP; Content ManagementSystem; E-mail; Voice Mail; Workshop Web; business process management

- Implementing E-Commerce - Business to Business (B2B) or Business toCustomer (B2C) through Internet shop; supply chain management; OnlineMarketing; Marketing offline

JAT is the name of the joint stock company manufacturing automobile partsand industrial equipment began to take shape in 2000 At first a group of engineersworking in the joint venture company producing motorcycle parts separatedestablished factory specializing in the manufacture of mechanical equipment,fixtures, test fixtures offer for companies satellite companies In 2003, themechanical workshop to expand the manufacturing sector a number of motorcyclespare parts (lever, hand held, tripod after, need brakes) for cheap motorcyclecompany private in writing male Production of JSC Industrial Parts and EquipmentJAT (JAT Company) is established on the basis of the above mechanical workshop,

Yamaha The company operates primarily in the areas of manufacturing parts,motorcycle parts, automotive, industrial equipment and other mechanical products.Since its inception, the company has determined to survival and developmentcompany to build yourself the most advanced management model based on theselective integration model management companies Venture , 100% foreign ownedcompany so streamlined and more efficient, with the strategy: high stable quality -Delivery time hourly meet - Leading market peers on the lowest cost.However, in the process of understanding, developing research strategies of JAT,researchers found that JAT is very weak in the application of IT in businessoperations, from production management system deployment production, customercare to participate in the process of e-commerce, marketing management not beenimplemented well Therefore, the deployment of construction a JAT andinformation system towards e-commerce activities is extremely imperative in thedevelopment strategy of the company in the current period.

2 The purposes of research:

Research status of IT applications in the process of production and businessactivities of the Company, from strategy development through the constructioncompany, promoting the development and management of information systemsJAT

3 The object and scope of the study:

Learn about stock companies manufacturing auto parts and JAT industryequipment including history and development, enterprise resource elements of thecurrent operational status; external factors affect the business; internal businessanalysis; SWOT analysis

4 The rationale and methodological practices:

Combination of theoretical knowledge of the course managementinformation system; actual deployment of information systems for small and

medium enterprises; situation applicability of the enterprise; policies to e-commercedevelopment for small and medium enterprises in Vietnam today.

5 The contributions of the thesis:

Offer applicable solution set, construction and management of informationsystems applied to the company JAT

6 Structure of the thesis:

The thesis consists of 03 chapters:

Chapter 1: The rationale

Chapter 2: Analyze the Business Invironment and IT Status of JAT

Chapter 3: Conclusions and Recommendations

Chapter 1: The Rationale

Characteristics of corparate strategy of an enterprise:

- Long-term orientation: corparate strategy set objectives and determines thedevelopment direction of the enterprise in long-term period (3 years, 5 years, 10years in order to orient operation for the enterprise in a business environment

- Objective: Strategy often determines clearly the basic objectives Thebusiness orientation of each enterprise in each period and policies in order toimplement correctly the objectives set out

- Relevance: this requires enterprises when building strategy need to evaluatecorrectly the factual situation of their business activities At the same time theymust regularly review and adjust to be suitable for environmental changes

- Continuity: strategy must be reflected during process continuously from theelaboration, implementation, inspection and evaluation to strategic adjustment

- Strategy in current conditions cannot be separated from the competitionbecause corparate strategy ensures competitiveness of the enterprise in the market

In the current globalization process, the business operations are connected all overthe world creating the influence and interdependence Since then it creates fiercecompetition among enterprises in the industry as well as the industry in theeconomy

Corparate strategy plays an important role for the existence and development

of each enterprise The right strategy will create a good direction for the enterprise,

business strategy can be considered as the Lodestar leading the enterprise in theright direction Business strategy provides many benefits to the enterprise, theimportance of it shown in the following aspects:

- Corparate strategy helps the enterprise orient its activities in the futurethrough analysis and prediction of business environment Business is an activity that

is always under the influence of the external and internal factors Strategy helps theenterprise has both flexibility and initiative to adapt to the market changes, at thesame time ensure that the enterprise operates and develops in the right direction Itcan help the enterprise strive to implement objective of improving its position in themarket

- Trategy helps the enterprise seizes opportunities as well as fulfilled risksfor the resource development of the enterprise It helps the enterprise exploits anduse reasonably the resources, promote the strength of the enterprise

- The strategy creates an orbit operation for the enterprise, helps theenterprise to link individuals with the other benefits together towards a commonpurpose, develop the enterprise It creates a closed link among employees andbetween managers with employees Thereby to strengthen and enhance furthermorethe internal force of the enterprise

- Corparate strategy is the effective competitive tool of the enterprise In thecurrent conditions of globalization and economic integration, create the influenceand mutually dependent among enterprises The process has created fiercecompetition among enterprises in the market In addition to competitive factors suchas: price, quality, advertising, marketing, enterprises also use strategy as aneffective competitive tool

Factors affect the strategy:

a Analysis of macro environment:

Macro environment is the overall factors outside the enterprise, has influence

It includes factors: growth rate of the economy, interest rate, inflation,exchange rate, unemployment rate and policy of finance-monetary, etc.

The factors of economic environment can provide opportunities orchallenges to the operation of an enterprise

If the economy grows at a high speed, it will impact the income increase ofthe segments of the population leading to increase payment ability for the demands.This leads to the diversification of demands and aggregate demand of the economytend to increase In addition, the growth rate of the high economy, the enterprise hasability to increase productivity and business efficiency items, has ability to scale upand increase accumulate capital This increases demands of the large enterprise tomake the business environment more attractive

The factors of the law and the state management:

The factors of the law and the state management also affect the conveniencesand difficulties of the environment The creation of a healthy business environment

or not isn’t entirely dependent on the factors of the law and the state management ofeconomy

The promulgation of legal system put into life and the good operation quality

of state management agencies in economy is the condition to ensure the fairbusiness environment, facilitate the enterprise to have healthy competitiveopportunities and vice versa

In addition to understand and comply with the policies and laws of the state,the enterprise has healthy competitive opportunities and vice versa

The factors of technique-technology:

In the current trend of economic globalization, the rapid development of allfields of technique-technology, especially information technology affects directlybusiness activities of all relevant enterprises The development of technique-technology makes the product life cycle tends to increasingly shorter Thus, thegood research, understand and application of technology are the prerequisite to

enhance the competitiveness and business efficiency of the enterprise The newtechnique-technology promotes business operation of the enterprise to develop byincreasing the speed, ensure the sustainable stability in business operation andenvironmental protection However, when researching to apply science andtechnology, the enterprise needs to pay attention to the trend of its impacts on theindustries and enterprises are different so should analyze carefully its direct impacts

on the business operation of the enterprise

The factors of culture-society: Culture-society affects slowly but alsoprofoundly to the business operation of every enterprise These factors strongimpact on the demand in the market

In addition, culture-society also affects directly the formation of culturalenterprise environment Thus, the enterprise needs to understand clearly about thesocio-cultural environment that they are operating

Natural factors:

The natural factors include: natural resources, geographical conditions, ectaffecting the input resources for the production and output product consumptionissues of the enterprise

The natural conditions affect in different level, different intensity with eachenterprise in different locations and it affects the enterprise in both trends: positiveand negative Therefore, the research and understand of the characteristics of naturalfactors will help the enterprise to be more proactive in making their production andbusiness plans

b Analysis of industry environment:

The industry environment includes factors in the industry or external factors.These factors determine the nature and the extent of competition in the industry.According to Michael E Porter, the core problem when analyzing the industryenvironment including:

- Competitiveness of the potential competitors.

- The extent of competition of alternative products

- The pressure of customers

- The pressure of suppliers

The impact intensity of these five factors often changes over time and indifferent extent Each impact of one of these above factors also affects directly thesurvival and development of the enterprise Analysis, monitoring and fully graspthese above factors help the enterprises identify the opportunities and challenges inorder to offer the appropriate strategy

c Evaluation of internal enterprise:

The evaluation of internal enterprise is the analysis of the current factualsituation of the enterprise resources in order to see clearly strengths, weaknesses ofthe enterprise Since then, the enterprise can use up and promote the strengths andseek to overcome the weaknesses of the enterprise When analyzing the factualsituation of the enterprise, we go into the analysis: financial operation, productionsituation, human resource, marketing, research and development, organizationalstructure, etc

Analyzing the enterprise model based on the model 4Ps (marketing mix):Product: Manage factors of products/ services (brand, functions, qualities,forms, packaging, enclosed services, warranty, etc.) and making development plans

of products/ services to the market

Price: Determine price of the products except the cost of production,management also to other factors (the current price of competing products,promotion prices, prices for the dealers, applied prices for other payment forms,etc.) to determine the list price for the products

Place: Select and manage the commercial channels to the products occupythe target market at the right time and develop the logistics systems (logistics), andship products

Promotion: Introduce and convince the potential market to use the products

of the enterprise through various types of business promotion (advertising, personalselling, public relations, journalism or Internet, etc.)

* The reason why 4Ps still exist in nearly half of a century because it coversall the factors of a marketing strategy the most simply but is still relatively fullfil

Of course 4Ps now is defined more broadly than the beginning to more suitable forthe times

A marketing strategy built on 4Ps frame will start from product policies This

is a reasonable thing because the most essential of an enterprise is to have a product

or service to put in the market After having the product, the managers will begincalculating the price policies The price policies may affect the distribution system

of the product

Finally, after determining the product distribution policy, the managers willdetermine the types of advertisement to promote the sale of products All the abovepolicies are built aiming at the target market (refer to 4Ps combination chart inmarketing strategy)

In theory, if the enterprise can perform any of a P element in 4Ps better thancompetitors, the enterprise will have competitive advantages – the sign of asuccessful marketing strategy – preferred by customers and becomes moresuccessful

Enterprise-oriented analysis according to SWOT model:

Strengths

- Control and sales orientation

- Right product, quality and reliability

-Produce products more superior to

competitors

- The reliability of product is better

Weaknesses

- No test the list of consumer objects yet

- Have holes in several market areas

- The company is a small enterprise

- Having no direct marketingexperiences

- Have list of consumers

- Have ability to communicate directly

- Conducting the product innovation

- Can to serve in places

- The products have been recognized

- Trust in this new activity

- Delivery staffs need to be trained more

- No estimation of probable situations

Opportunities

- Can develop the new products

- Quality of competitors are poor

- Profit margins will be high

- Can expand abroad

- Use the new experts

- Can cause surprise to the competitors

- Support the major business operations

- Can find the more profitable contracts

Risks

- The impact of the law

- The impacts from the environment cancreate advantages for competitors

- Create the risks to business operations

- Seasonal market demands

- Need to maintain the key employees

- Can be distracted from the mainbusiness

- Can meet the negative reactions fromthe public

- Vulnerable by big competitorsSWOT analysis model is applied in the evaluation of a business unit, aproposal or an idea It is a subjective evaluation of the data organized in a logicalsequence to help us understand the problem, since then we can discuss and makedecision the most reasonable and accurate

Based on the specific context, a SWOT analysis model can provide one or afew items in list of 6 action steps:

+ Products (What are we going to sell?)

+ Processes (How do we sell?)

+ Customers (Who do we sell to?)

+ Distribution (How can we approach the customers?)

+ Finance (How much are price, cost, and investment?)

+ Management (How do we manage all those activities?)

In any case, SWOT basically tells us what is “good” and “bad” in the currentbusiness or for a new proposal for the future If the analysis object of SWOT isbusiness, the analysis objective is to improve the enterprise so SWOT will beinterpreted as the following:

“Strengths” (Maintenance, development and being a lever) “Opportunities”(The positive evaluation) “Weaknesses” (The remedy to repair or to get rid ofweaknesses) “Risks” (Challenges)

1.1.2 Competitive Strategy (Business level strategy):

As the business unit level strategy focuses on improving the competitiveposition of the products and services of enterprises in the business or product is acombination of the Enterprise market participants business

In the small and medium enterprises, business unit level strategic industrymay just be enough enterprises but for a large enterprise especially multidisciplinaryenterprise business market in many different parts and the itself consists of manydifferent parts can be independent of each other, the analysis of business andstrategic planning is not enough If businesses want to correctly identify the targe t

as well as strategic solutions in the period, the formation of strategic business unitlevel strategy is needed Basis to build strategic business unit is the group ofcustomers for products (services) of different specific groups of customers,production technology, research and development, provision of inputs as well as theconsumption of finished products, etc

Each business unit strategy Strategy is a business division to serve groupswith their specific needs in terms of products (services) in the period of the strategy,technology products, organizations and research activities development as well as

1.1.3 Functional strategies:

The strategies identified for each specific field of activity of the enterprise Insystems that build business strategies, functional strategies serve as the strategicsolution to implement the overall strategic objectives of the business Therefore thestrategy function is formed on the basis of the overall strategy, business unitstrategy and the specific results of the environmental analysis and forecasting,especially the market Each functional strategy is both relatively independent, solvestrategic relatively complete in a specific functional areas of activity; otherwise,parts moderate strategy function have closely together Only on the basis of the bestcombination of strategic business functions together can exploit its full potential atthe right time appeared the opportunity or need to reduce or eliminate threatsappear Ensure the best coordination of field activities is always the most difficultproblems and hence also requires plan administrators to focus on strategic andprocess from the planning stage In each period of the strategy, to ensure theconditions of the target system implementation strategies, business plans andstrategy for many different functions such as: Marketing Strategy; productionstrategy; development strategy information systems; human resource managementstrategy; financial strategy

1.2 Information management and information technology:

1.2.1 Theory of information management system and information

technology:

As defined at Encyclopedia “The information management system is thesystem provides information to the management of the organization It includeshuman, equipments and processes to collect, analyze, evaluate and distribute thenecessary information timely, accurately for the editors of decisions in theorganization According to Master Nguyen Anh Hao’s aggregate from theresearches in the book Management Information Systems Kenneth C.Laudon, JaneP.Laudon, Prentice Hall, 2002, then, “The information management system is a

machine that transforms data (and information) collected into useful information forthe manager perform their roles (organizational management)”

Information system may include specific information and especially about aperson, different locations, events inside a organization or in an environment aroundthat

Classification of information management system

The information management system can be classified according to theapplication-level, the service purposes of output information Because of therelevance of the subject, this assignment will only classify according to theapplication-level

According to application-level, the enterprise is divided into 4 levels:strategy, tactics, expert and operation

Figure 1.1: Types of Information systems

Operation-level information system: support the low management levelssuch as leaders, divisional director, etc in monitoring the activities and basictransactions of the enterprise such as sale, invoice, cash, salary, approval, loan,material flow in the factory The main purpose of this system is to answer commonquestions and monitor the transaction capacity in the enterprise.

Expert-level information system: provide knowledge and data for the

researchers in an organization The purpose of this system is to help enterprisesdevelop the new knowledge, design products, distribute information and handle thedaily work in the enterprise

Tactics-level information system: designed to support, control, make

decisions and implement the activities of the intermediate-level managers Theimportance is the system needs to help the managers to evaluate the work statuswhether in good condition or not At this level, the information provided throughmonthly, annual and quarterly reports, etc

Strategy-level information system: helps the senior managers to process

and propose the strategic direction as well as long-term development trends Theobjective of information system is to help the enterprise has the best adaptability tochanges in the environment The questions are similar: How many workers doesthe enterprise need to recruit in the next 5 years? What will the trends of rawmaterial price be in long-term and what cost can the company bear? What productsshould produce in the next 5 years?

The development process of Information Technology:

The development of Information Technology has made many fields converge

to each other The capabilities of computers are increasingly strong, the utilities areincreasingly more, the size is increasingly small, the use is increasingly simpler,computers are applied more and more widely in all fields, all times and all places.The development process of Information Technology can be divided into 4 stages:

The first stage (manual): the collection of information and informationprocessing is performed mainly by the manual methods.

The second stage (mechanization): Use computers to participate in somestages in the process of collecting and processing information such as calculation,analysis, statistic, collecting information

The third stage (automation): the entire process of collecting information andprocessing information is automated on the basis of using the powerful computersystems Thanks to automation, large amount of information is analyzed, processedmuch faster Before, in the laboratory the experiments must have person to monitor,record and carry out many times to get many data sequences, then calculate, analyze

to find out the relationships, and since then have the scientific conclusion.Nowadays, those works are mostly automated The experimental data is measured,recorded, store automatically by machines and then put in the computer toautomatically process and the result is due to the general collecting information,relationships, viable solutions, etc can lead to the new discoveries, new knowledge.Similarly in scientific research, in daily life, the massive volumes of commercialinformation, information of economy, culture and society, etc also processed on acomputer to give people a lot of new knowledge, suggest new methods, newthinking

The forth stage (intelligent information): The computer system hasaccumulates a very large volume of information and knowledge, very largerabilities to process, helps people to analyze situations, pick out the solution,efficiently help people to enhance knowledge, develop the creativeness abilities andthe intelligence of human For example, Deep Blue computer manufactured by IBMfirm, thanks to accumulation of information and experiences of experts in the field

of chess can win the world chess champion Casparop If the mechanical technologyhelps people improve physical labor capacity, increase enforcement, the

Information Technology helps people enhance intellectual capacity, increase themental power.

1.2.2 The roles of Information management and Information:

Technology for the company management activities: In recent years, the role

of information system in the enterprise is increasingly stronger, from just being used

to support some activities in the office information system have became a strategicrole in the enterprise Especially the achievement in Information Technology andtheir application in many businesses made the enterprise increasingly interested inthe application of IT in the business and production processes Although aninformation management system doesn’t necessarily have to use IT, but IT(hardware and software) are increasing cheap and contribute to make the capacity ofprocessing, storage, information distribution is increasingly high, so the moderninformation management system often positively use information technology

This writing will summarize some of the basic roles of informationmanagement and IT in the company management activities

Unlike the period of the 1950s, when the enterprise mainly use theinformation system to reduce the costs for regular work, nowadays, the informationsystem can play a strategic role in the organization The enterprise uses informationsystem in all management levels in the enterprise Not only play a role as theproviders report continuously and accurately, information system have reallybecome a strategic tool, weapon for enterprises get the competitive advantage in themarket and maintain the existing strengths

Information Technology helps the management process become moreeffective Through that the enterprise has the ability to cut costs, increase the quality

of products, and complete the distribution process of products and services of it.Nowadays, many factories manufacture automobiles have used the productiontechnology with the support of computers to control the production process andcheck the product quality The distribution of automobiles and spare parts, as well

as the payment of customers and the sales information or the financial situationsamong the different areas also use telecommunication network Thanks that method,the enterprise has operated much more effectively and at the same time reduce thecost in the possible maximum In general, the method of using information system

in management is suitable for the enterprise has strategy to reduce costs

To help the enterprise have the competitive advantage by building closedrelationships with the buyers, and the material supplier Almost telecom companiesare very focused on this activity They encourage customers through the sales andprovision of information as fast as possible

Encourage creative activities in the enterprise: That is the process ofdeveloping new products, new services and new production process or activity inthe enterprise This can create the business opportunities or new market for theenterprise

Create conversion costs in the relationship between the enterprise withcustomers or suppliers This means that customers or suppliers are closely tied tothe technological changes inside the enterprise, and they will have to bearsignificant costs in term of time, money, and inconvenience if they switch over touse or supply products for another enterprise The airlines invest in building theirinformation system perfectly to help their automatic ticket booking system and it is

a manifestation of investment in information system has brought competitiveadvantages for these firms

Investing in Information Technology also has ability to create some newactivity types of the enterprise

- Virtual Organization: These organizations of this type don’t actuallyexist in the physical form They are formed based on the agreement among thedifferent partners A group of individuals will use the bulletin board on thecomputer to communicate and exchange ideas with each other This type of activity

usually exists in the scientific organizations The members can organize the periodicconferences with the agreement exchanged through e-mail system.

- Organization of agreement: There are some organizations formed through

agreements and the electronic media In there, organizations use the informationsystem to create virtual warehouses for the storage of goods Thus, an enterpriseprovides fresh flowers such as delivery service of post office can deliver freshflowers to customer anywhere and anytime

- The traditional organization with electronic components: This form of

organization is familiar with the enterprise It only replaces some departments of theenterprise by electronic communication structures The use of the electroniccommunication equipments to support the traditional organization requires themanagers always pose the questions of whether information technology has theability to replace completely the components of the organization or not?

- Organizational links: This is a form of organization established between

the customers and suppliers The big customers often send orders as in theirbusiness schedule and require the small suppliers have to provide them as if it were

a member of a parent organization The enterprises producing automobiles andmotorcycles often establish such relationships

1.2.3 Strategic options for information technology applications:

Enterprises can select the suitable information technology strategies’application for business depending on their goals General, it divides to four levels:

Enterprises bound to apply IT in their business

Virtually, specific businesses whose need the security sectors (bank finance)

or legal provisions or specific industries need (software companies, onlinepurchases)

Indispensable

Application of information technology will grow businesses’ profitabilityand competitiveness or international economic integration In short term, it is

essential factor for companies who are planning to develop business outside thenational boundaries.

Wish to do

This strategy applies to enterprises having long-term goals If the enterprisesapply information technology to the management as well as production, businesswill have potential growth and growth profitability in the future due to increasingbrand reputation

It would be better if the enterprise apply information technology for their business

The urgency of the application of information technology is ambiguousness

in this strategy Despite we cannot deny the technological potentiality, but it is not

a pressing need However the business can go ahead to welcome the application ofinformation technology if they powerful enough

Thus, the development of IT needs to put in the general strategic planning todevelop of the business to fit the environment sector as well as the developmenttrend of the future

General, in addition to analyse the impact of industry or businessenvironments, we can see that the effectiveness of strategies is important factor toevaluate the development of business in the near future when we build the strategies

to information technology development This is a difficult question for all businesswhen they have to decide which is the best strategy?

Chapter 2: Analyze the Business Invironment and IT Status of JAT 2.1 Overview of JAT:

In January 2008, JAT Industrial Equipment & Automobile Accessories Joint

Stock Company (JAT Company) is established in order to provide products and

services in the supporting industry

JAT now becomes one of the companies in the supporting industry in generaland in the branch of manufacturing and supplying accessories for automobiles andmotorcycles

JAT has 2 factories in Que Vo Industrial Park I and II, Bac Ninh Provice

Total number of labors of the company is 262

In 2012, the average salary is 4,086,654 dong/people/month

After more than 4 years, JAT always meets the high and stable growth level;the average growth speed is about 82.4%/ year, average profit growth speed is about73.7%/ year

Table 2.1: Growth speed of revenue and profit in the period 2008-2012

parties; it also regards its staffs’ dream and youth aspiration is a power for thedevelopment.

Vision

Build JAT Industrial Equipment & Automobile Accessories Joint StockCompany into the leading company in the supporting industry in general and in thebranch of manufacturing and supplying accessories for automobiles andmotorcycles and industrial equipment in particular in Vietnam and East Asia andthe leading supplier of the supporting industry with low costs but good quality andtimely delivery in Vietnam

Business philosophy

- Meet the satisfaction of all customers by improving continuously thequality of goods, delivery time and product cost

- Orient suppliers to the general objective of the company

- Staffs are customers who are served at the best

- Always regard customers’ benefit is the most importance

- Assume the mutual benefits for the related parties

Production technology

- The company is equipped machines and equipment imported from Japan,Taiwan and integrated with machines specializing for technical designs orimprovement of old domestic machine to optimize investment and use the mosteffective equipment but satisfy the quality and capacity indicator

- Main equipment of the company include:

+ Molding line: include molding machines with 15 -150 ton

+ Soldering line: include scolding equipment for Robot and MIG solderingmachines, SPOT soldering machines

+ Mechanical processing line: include hydraulic power lathe, all-purposelathe, CNC lathe, single-purpose lathe, cutting machine, boring machine, broaching

+ Heat molding line: include heating equipment, extrusion die system withthe locally cooling system.

Organization

Figure 2.1: Organization chart

Function and duties of departments:

- Finance – accounting department: Make finance – investment plan; managecosts, price, manage cash; supervise spending of the department according toapproved budget; mobilize and balance capital sources; establish and supervise theimplementation of financial policies in the internal company; make accountingreports, tax reports according to regulation of the law

Assistance/ ISO coordinator

Quality Managem ent Departme nt

Plan Departm ent

Technica l Producti on departm ent

Marketin g departme nt

Business Administrat ion department

Board of Directors

- Human resource department: Plan human resource strategies to meet thedevelopment need of the company in stages; make suggestions, create and enforcehuman resource management policies in the company; make and implement trainingplans to development yearly human resources of the company.

- Law – administration department: Manage property of the company, keepclose relationships with the current law offices and local organizations to create thefavorable conditions for the company to operate and development; give legalconsultancies to the director in relevant cases

- Quality management department: Quality department is one of the mostimportant which decides the existence and development of the company Itfunctions to make the quality management system in accordance with strictrequirement of customers, supervise the implementation of processes andprocedures to assure the quality of products; maintain the regular validity of qualitypolities; create yearly quality objectives and follow the quality objectives

- Production plan management department: Manage daily/ monthly/ yearlyproduction plans in conformity with capacity of the factory in each stage includingshort term and long term to meet customer requirement at lowest production costthrough optimize production plans, minimize inventories and keep the shortestproduct turnover

- Technical department: Make processes and operations to prepare for allproduction operations to optimize the activity capacity of machines and manpower;make sure that all machine and equipment are always in good state for productionwith the lowest cost through timely and full maintenance and availability of optimalattachment in stock

- Production section: Enforce approved production plan to assure KPI normsare always met and excess the set standard

- Research and development department: Research and develop new product

working capacity, dip the rate of non-conformity customers, lower product cost;cooperate with research and development of partners to deploy and produce newspare parts for new generations of automobile and motorcycle.

- Marketing department: Create marketing strategies for the company tocontribute to the business culture “Turn to customers”; create trade mark, make JATbecome a strong and prestigious supplier of attachment; give the board of directorseffective customer relation strategies to keep the good relationships with customersand put customers’ trust and faith in the company

- Business administration department: Make business strategies and plansand deploy to run business activities of the company Business section consists of 3groups:

+ Purchasing group: Assure input material always meet the criteria: quality,quantity, timely and reasonable price

+ Sales group: Sign and deploy contracts and purchasing orders; remain thegood relationships with customers, deal with customer claims

+ Import-export group: Make procedures for purchasing goods from foreigncountries and compose foreign contracts, carry out import – export procedures,make payment through banks

Capital resource

Now, chartered capital of JAT Industrial Equipment & AutomobileAccessories Joint Stock Company is 8 billion dong

Table 2.2: Structure of chartered capital on December 31 st 2011

Foundation sources Value (Vietnam dongs) Rate

Human resource

The cadres of the company are enthusiastic and devoted youngers who aretaught methodically at technology universities and trained by foreign experts

Total number of labors of the company is 262 according to the summarized list

on December 31st2011 The labor structure by background standard is shown on Table2.3

Table 2.3: Structure of employees in the company JAT (Unit: person)

- Labors of university level and above 28 10.7%

Short-term labor contract (1-3 years) 173 66%

Reference:http://jat-autopart.com.vn[13]

Machines & equipment

From the establishment time, JAT Industrial Equipment & Automobile

Accessories Joint Stock Company incessantly invests advanced machines and

equipment to meet customer requirement at the best Until the 31stday of December

2011, total value of invested and depreciated machines as in Table 2.4 below:

Table 2.4: Summary of machine and equipment at JAT (million dong)

Type of

machine/

Original price Remain value Rate

Plan

- Main equipment of the company include:

+ Molding line: include molding machines with 15-150 ton

+ Soldering line: include scolding equipment for Robot and MIG solderingmachines, SPOT soldering machines

+ Mechanical processing line: include hydraulic power lathe, all-purposelathe, CNC lathe, single-purpose lathe, cutting machine, boring machine, broachingmachine, taro, drilling machine…

+ Heat molding line: include heating equipment, extrusion die system withthe locally cooling system

2.2 Analysis of the external factors affecting to JAT:

2.2.1 Macroscopic environment:

Economic environment

In the last 20 years, from the early 1990s of previous century, economy ofVietnam has achieved significant achievements and has turning-point on the way toinnovation and development of the country The implementation of the open-doorpolicy with economic integration of the countries in the region and the world hasmade the Vietnamese economy developed and achieved significant achievements.The development of the economy has had a direct positive impact on people's lives,people's lives improved gradually and significantly improve, the per capita income

in 2010 is 1150USD and more and more increasing, so demand on solvency is alsoincreased clearly, it is an opportunity for developing the automotive, motorcycleand automotive spare parts markets of which there is JAT Autoparts and IndustrialEquipments manufacturing JSC

However, due to the impact of the global economic crisis in the middle of

2008, the Vietnamese economy has been impacted at great level: high inflation totwo numerals, interest rates rises at high and unstable level, especially USD/VNDexchange rate rises at high level and fluctuates continuously which makes inputmaterial prices rises at high level causing major obstacle to production and businessactivities of enterprises, including JAT Autoparts and Industrial Equipmentsmanufacturing JSC

In Vietnam, important point in 2011 is Resolution no 11/NQ-CP with theaim to curb inflation and stabilize the macroeconomy, following, orientation ofmonetary and fiscal year policies are considered to be cautious and close during theyear As a result, growth is declined in comparison with the years, but somemacroscopic instability has been mollified more as inflation is controlled well insome months of the late year, the exchange rate is relatively stable and the trade

However, these developments do not have signs to be solved stably, and infact, macroeconomic instability still continues over the years such as high inflation,persistent trade deficit and thin foreign exchange reserves, unpredictable fluctuation

of exchange rate with dollarization condition, high budget deficits with increaseddebt, vulnerable financial and monetary markets to the great risks of the system,etc

Risks of financial year deficit include: budget deficits and quickly-increasedpublic debt; unclear financial year balance; unstable revenue; persistent high budgetspending; great, spreading and inefficient public investment; many potential risksfrom the State-owned enterprise sector These risks have caused and may continue

to cause persistent inflation and high interest rates, pinched private sector, largetrade deficit and devaluation pressure on the local currency, low growth, even afinancial crisis if policy adjustments are not made in timely manner

The financial market instability: monetary policy tightened in 2011 hashelped Vietnam to successfully curb inflation and keep the stable exchange rate.However, the unwanted consequence is the strained banking system liquidity, risinginterest rates, strongly-increased bad debt and overdue debt ratio of total grossloans; asset markets, including the securities market and real estate market, areimpaired severely The cause behind this phenomenon is Vietnam's economicgrowth model using excessive reliance on investment, particularly publicinvestment and the State-owned enterprise sector for a long time too Investmentdemand is great but less efficient, while saving should tend to reduce, therefore theeconomy must be based on a policy on loosening monetary leading to inflation Thepolicy allowing the change of rural joint stock bank into urban joint stock bank isalso a cause making capital source to be pushed uncontrollably in ineffectiveprojects Bad debt, overdue debt for a system of credit institutions is more and moreincreased because the number of enterprises in the shut down, dissolution andbankruptcy state is more and more

Challenge to trade deficit: Vietnam's trade deficit caused by these fact andstructural factors Direct cause is Vietnam to be lagging very far on thecompetitiveness of technology Over the last decade, rare are changes on nationalcompetitiveness, the economy is still based on traditional competitive resources inindustries using rough natural resources or natural resources with low technologycontent, low value-added Meanwhile, the current major export industry hascompetitive position vulnerable to external shocks The root cause is the greatdifference of domestic investment-savings, derived from investment-based growthmodel, while effective investment is low and declined.

Fluctuation of labour and employment: Because economic growth tends todecline, while the growth structure also is adverse in the first quarter of 2012,agricultural growth is mitigative, industrial growth has declined significantly, ofwhich construction industry is in negative growth, due to the impact of publicinvestment cuts and freezes of the real estate market Some export industriesdeepening labour is also increased in slowdown As a result, the number ofunemployed registration employees tend to increase in the early months of 2012

The first 6 months of 2012, the market is gloomy, purchasing power greatlydecreases, inventory increases at high level, economy has many instabilities,although the Vietnam Government has have many adjustment methods such asmaximum loan interest rate of commercial banks is lowered 4 times

Political-legal environment

Vietnam is a country with relatively stable political regimes, which is one ofthe conditions for foreign investors feeling secure to invest in Vietnam, includingthe motorcycle and automobile assembly enterprises -the target customers of JATAutoparts and Industrial Equipments manufacturing JSC

Development of auxiliary industry and motorcycle and automobile spareparts industry is currently under investment intensive policy of the Party and

Vietnam Government, the enterprises that invest in this sector will be entitled thecertain preferences.

The legal system of Vietnam is more and more improved, including Businesslaw and Investment law, which contributes to create favourable conditions toincrease foreign investors investing in Vietnam, including investment intomotorcycle sector

External political trends: Vietnam integrates more and more extensively intothe global business environment, multilateralizes external politics to maximize theexternal benefits and makes anti-dependence on any mutual relationship

Legal system on environment in Vietnam has developed both content andform, fully adjusted for the elements that make up the environment The system ofenvironmental standards have also been issued as a basis for control and assessment

of environmental impact The legal documents were issued initially to create thelegal basis for the state management activities on environmental protection, improveawareness of state agencies, organizations and citizens towards environmentalissues As a member of the United Nations and the United Nations EnvironmentProgramme, Vietnam was very interested in international integration in the field ofenvironmental protection Up to now, Vietnam has joined 14 internationalconventions, agreements on the environment, as well as been very interested inbilateral and multilateral cooperation with countries in and beyond the region forenvironmental protection Thence awareness of environmental protection ofenterprises and people are improved to contribute to sustainable development andencouragement of foreign investment

- Legal risks:

+ Export and import laws are not improved, e.g definition of component setmade by the Ministry of Science and Technology lacks consistence and is not clear,which affects foreign investment in the field of motorcycle parts

+ Enforcement of law on intellectual property rights protection in Vietnam isloose leading to more enterprises that are in violation of copyright and are notprotected.

Cultural and social environment

In Vietnam, if about two decades ago, the motorcycle is in minority, isrespected as a modern product, a great asset rather than a transport means, in recentyears, the motorcycle has become more popular and almost becomes the maintransport means of the majority of people Currently, there are households with 1, 2

or even 3, 4 motorcycles In urban traffic structure involved in Vietnam, thestatistics show that: motorcycle occupies the top position with more than 60% of thetotal transport means It can tell that transport habits by motorcycle has formedtraffic culture of Vietnamese people,

Social population structure: Vietnam is a country with a very youngpopulation structure Topography, infrastructure from urban and rural areas is verysuitable for motor traffic, people's travel need is higher and higher As well as thenatural needs such as food, clothing, housing, a need also indispensable for humanlife today is vehicles, or is known as transport mean And to meet that need, series

of vehicles have been researched, produced and put into use, such as automobiles,motorcycles, electric bicycles, but motorcycles are still the number one choice forthe majority of people with medium and low incomes, and the automobile is thechoice of the middle class, upper class Social culture was formed and created amotorcycles, automobiles market more and more developed, it is an opportunity fordevelopment of motorcycle and automobile parts manufacture enterprises

Technological environment

Production technology of motorcycle and automobile parts is rich anddiverse, is easy to find and buy if required by the company, however the currentmost advanced technology has a relatively high investment costs, sometimes it is a

JAT Autoparts and Industrial Equipments manufacturing JSC has equipped withmodern machinery and equipment imported from Japan and Taiwan, combined withthe specialized machinery and equipment designed by the production technicaldivision, or improved old machines purchased in the country in order to optimizethe investment and use most effectively equipment and still meets the criteria ofproductivity, quality.

Natural environment

The geographical topography of Vietnam is mainly midland plains and delta,climate is tropical and monsoon, which is suitable for the use of manualtransmission vehicles and auto-transmission vehicles, it is an advantage On theother hand, the hot and humid climate rusts prone parts, steel details without propersurface protection

Urban and rural traffic infrastructure wide-spreading rural mountainous andmidland areas to rural areas, urban areas with millions of kilometers in length isvery suitable for development of motorcycle assembly industry and motorcycleparts manufacture industry

2.2.2 Analysis on the industry premise:

Analysis on the forces from potential competitors

They include numerous small & medium-sized enterprises manufacturing,processing mechanical products, which may jump into the field of manufacturingmachinery and automobile parts at any time According to unofficial statistics,currently there are approximately 1620 mechanical manufacture enterprises inVietnam, 465 of which have eligible technology condition for manufacturingmotorcycle and automobile parts Calculating only in Hanoi city and its surroundingprovinces, there are 156 mechanical manufacture enterprises and 38 enterpriseshave eligible technology condition for manufacturing motorcycle and automobileparts