IT DEVELOPMENT STRATEGY FOR SUFAT VIETNAM CORPORATION PERIOD 2013 2018

25 CHAPTER II: ANALYSIS OF BUSINESS ENVIRONMENT AND INFORMATION TECHNOLOGY IN SUFAT VIETNAM CORPORATION ...26 1.. conditions and circumstances have been taken into account in the expecte

INTERNATIONAL EXECUTIVE MASTER OF BUSINESS ADMINISTRATION PROGRAM

MỤC LỤC

INTRODUCTION 4

CHAPTER I: THEORETIC BASIS 6

I THE CONCEPTS, ROLES OF BUSINESS STRATEGY 6

1 Business strategy of the enterprise .6

2 The roles of business strategy 8

3 Factors affect the building of strategy 9

II Information management and information technology 15

1 Theory of information management system and information technology 15

1.1 Theory of information management 15

1.2 Overview of Information Technology 17

2 The roles of Information management and Information 19

Technology for the company management activities 19

3 Strategic options for information technology applications 21

III Vietnam Local Businesses’ experiences in this area 22

1 Valuable experiences that Vietnam enterprises should learn 23

2 The application of IT in business 23

4 - Challenges for CIOs in Vietnamese enterprises 25

CHAPTER II: ANALYSIS OF BUSINESS ENVIRONMENT AND INFORMATION TECHNOLOGY IN SUFAT VIETNAM CORPORATION 26

1 Enterprise overview 26

2 External environmental analysis 27

2.1 Macro environment (PEST model) 27

2.2 Business environment (5 forces) 30

2.3 Analysis of enterprise’s inside 32

3 IT Status at SUFAT VIETNAM 44

3.1 Information and Administration 44

3.2 Property relationship between IT and Business .46

3.3 Human assets 50

3.4 Summary of SWOT analysis 52

CHAPTER III: RECOMMENDED STRATEGY 55

I Vision and Mission 55

II Strategy recommendation for Sufat 56

III Implementation (Solutions) 57

1 IT solution 57

2 Detailed Action Plan 73

3 Plan for implementing the IT strategy 77

CONCLUSION 81

Nowadays, information technology (IT) becomes one of the best solutions tomanage the enterprise The suitable IT applications help transfer information in theenterprise quickly and more precisely: production manager knows the daily output

of the enterprise to compare with the proposed plan, the chief financial officerknows the cash and debt situation of the day without waiting for monthly report,

HR manager seizes the work situation of employees to have flexible plan ofpersonnel mobilization to serve objectives, production plan, and executive directorfinally seizes all those above things whenever he wants This helps executivedirector seizes the operation situation of the company in anytime and anywhere, andsimultaneously make the timely adjustment as soon as new issues arose However,the enterprise needs to know a reasonable, affordable investment for technologysolution packages promote the most effective in their admissible conditions Therequirement of effective IT system (including machines and application software)and parts in the system must be compatible with each other as well as be able totransmit information quickly Especially in the motorcycle industry where IT isincreasingly playing an important part and applied in all processes from productionmanagement, marketing, finance to expansion of business operations abroad andproduct designs based on requirement of customers

For Sufat Company – a motorcycle manufacture in the country, are suffering fiercecompetition from big Japanese manufacturers When planning IT strategy for Sufat,the following questions need to be made and answered:

- Is the motorcycle business industry of Sufat received effective support from IT?

- Can the company significantly improve when redirecting use resources and

Because of the above reasons, the research of IT factual situation in Sufat, the

application of IT deployment experiences from other countries in the world, sincethen making the plan to build strategic development of IT for Sufat in period 2013– 2018 are really essential

CHAPTER I: THEORETIC BASIS

I THE CONCEPTS, ROLES OF BUSINESS STRATEGY

1 Business strategy of the enterprise.

a Concept of business strategy:

According to the traditional approach, business strategy is considered as a long-termoverall of an organization in order to achieve long-term objectives The researcher

of management history, Alfred D Chandler said that “strategy is the determination

of basic long-term objectives of an enterprise and the operation program withallocation of the necessary resources to achieve those objectives” As such, hisideologies expressed clearly that strategy is a planning process with wisdom, in thatthe enterprise chooses their own objectives, determines the operation program tocomplete best these objectives and seeks to allocate corresponding resources Thetraditional approach has the advantage that makes the enterprise easily imagine thenecessary work to plan strategy and see the benefits of strategy with aspect of long-term plan However, in the nowadays volatile business environment it shows thelimitations of the traditional approach because it isn’t able to adapt flexibly tochanges of business environment

Under the current approach, strategy may be larger than what the enterprise intends

or plans to implement According to Mintzberg’s opinions, he thought that strategy

is a model in the flows of decisions and action programs The model can be anytype of strategies: the pre-designed strategy or mutant strategy

The modern approach helps the enterprise easily responds flexibly to the changes ofbusiness environment and promote the creativity of the members of the enterprise.However, it requires the leaders, manager must have qualification, ability to predictthe conditions for strategy implementation and evaluate the value of mutantstrategies

Through the above approach, we can understand: the business strategy of anenterprise is an art of building long-term objectives and implementation policies inorder to orient and create competitive advantage of the enterprise

Characteristics of business strategy of an enterprise:

- Long-term orientation: Business 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: business 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 business strategy need toevaluate correctly the factual situation of their business activities At the same timethey must regularly review and adjust to be suitable for environmental changes

- Continuity: business strategy must be reflected during process continuously fromthe elaboration, implementation, inspection and evaluation to strategic adjustment

- Business strategy in current conditions cannot be separated from the competitionbecause business strategy ensures competitiveness of the enterprise in the market Inthe current globalization process, the business operations are connected all over theworld creating the influence and interdependence Since then it creates fiercecompetition among enterprises in the industry as well as the industry in theeconomy

b Classification of business strategy in the enterprise:

Depending on the different classification criteria we have different types of businessstrategy

* Based on the practice of business strategy:

- The expected business strategy: is the overall combination of the objectives,policies and action plans in order to reach the expected objectives of the enterprise.This strategy is made to demonstrate the will and long-term action plans of anenterprise made by the leaders, managers

- Realistic business strategy is the expected business strategy adjusted to fit thebusiness environment factors taking place on actual when implementing Theexpected business strategy will become realistic business strategy when conditionsand actual circumstances in strategy implementation have ability suitable for

conditions and circumstances have been taken into account in the expected businessstrategy.

* Based on the level of business strategy:

- Enterprise-level business strategy: is the overall business strategy in order to orientthe enterprise operation and the allocation method of resources to achieve thegeneral objectives of the enterprise

- Business unit – level business strategy: aim to build competitive advantage andimplementation method in order to locate the enterprise in the market

- Function - level business strategies: is the strategies related to particular activities

of the enterprise in order to support enterprise-level business strategy and businessunit – level business strategy

* Based on the implementation scale of the business strategy:

- Domestic business strategies: are the long-term objectives and particular actionplans of the enterprise in order to develop their operation in the domestic market

- International business strategies: are the overall objectives in order to createcompetitive position of the enterprise in the international market

* Based on the importance of the business strategy:

- Mixed business strategy includes: horizontal mixing, vertical mixing

- In-depth business strategy: market penetration, market development, productdevelopment

- Expansive business strategy: concentric diversification, horizontal diversification,mixed diversification of activities

- Specific business strategy: Joint venture, linking, narrowing operation, liquidation

2 The roles of business strategy

Business strategy plays an important role for the existence and development of eachenterprise The right business strategy will create a good direction for the enterprise,business strategy can be considered as the Lodestar leading the enterprise in theright direction

In fact, there are many enterprises thanks to the proper business strategy thatachieve successes, overcome competitors and create its position in the market

Business strategy provides many benefits to the enterprise, the importance of itshown in the following aspects:

- Business strategy helps the enterprise orient its activities in the future throughanalysis and prediction of business environment Business is an activity that isalways under the influence of the external and internal factors Business strategyhelps the enterprise has both flexibility and initiative to adapt to the market changes,

at the same time ensure that the enterprise operates and develops in the rightdirection It can help the enterprise strive to implement objective of improving itsposition in the market

- Business strategy 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 the enterprise tolink individuals with the other benefits together towards a common purpose,develop the enterprise It creates a closed link among employees and betweenmanagers with employees Thereby to strengthen and enhance furthermore theinternal force of the enterprise

- Business strategy is the effective competitive tool of the enterprise In the currentconditions of globalization and economic integration, create the influence andmutually dependent among enterprises The process has created fierce competitionamong enterprises in the market In addition to competitive factors such as: price,quality, advertising, marketing, enterprises also use business strategy as an effectivecompetitive tool

3 Factors affect the building of strategy

If want to build its suitable strategy, the enterprise should pay attention to analyzeinfluence factors, they divide them into the following group:

- Group of factors in macro environment

- Group of factors in industry environment

- Evaluation of internal enterprise

a) Analysis of macro environment:

Macro environment is the overall factors outside the enterprise, has influence on thedemands of the industry and affects directly benefits of the enterprise.

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

The factors of economic environment can provide opportunities or challenges to theoperation of an enterprise

If the economy grows at a high speed, it will impact the income increase of thesegments 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 conveniences anddifficulties of the environment The creation of a healthy business environment ornot 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 ofstate management agencies in economy is the condition to ensure the fair businessenvironment, facilitate the enterprise to have healthy competitive opportunities andvice versa

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

- The factors of technique-technology

In the current trend of economic globalization, the rapid development of all fields oftechnique-technology, especially information technology affects directly businessactivities of all relevant enterprises The development of technique-technologymakes the product life cycle tends to increasingly shorter Thus, the good research,understand and application of technology are the prerequisite to enhance thecompetitiveness and business efficiency of the enterprise The new technique-

technology promotes business operation of the enterprise to develop by increasingthe speed, ensure the sustainable stability in business operation and environmentalprotection However, when researching to apply science and technology, theenterprise needs to pay attention to the trend of its impacts on the industries andenterprises are different so should analyze carefully its direct impacts on thebusiness operation of the enterprise.

- The factors of culture-society: culture-society affects slowly but also profoundly

to the business operation of every enterprise These factors strong impact on thedemand in the market

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

- Natural factors:

The natural factors include: natural resources, geographical conditions, ect affectingthe input resources for the production and output product consumption issues of theenterprise

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 ofnatural factors will help the enterprise to be more proactive in making theirproduction and business plans

b) Analysis of industry environment:

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

- The extent of competition among the enterprises operating in the industry

- 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 in differentextent Each impact of one of these above factors also affects directly the survivaland development of the enterprise Analysis, monitoring and fully grasp these abovefactors help the enterprises identify the opportunities and challenges in order tooffer the appropriate strategy.

c) Evaluation of internal enterprise:

The evaluation of internal enterprise is the analysis of the current factual situation

of the enterprise resources in order to see clearly strengths, weaknesses of theenterprise Since then, the enterprise can use up and promote the strengths and seek

to overcome the weaknesses of the enterprise When analyzing the factual situation

of the enterprise, we go into the analysis: financial operation, production situation,human resource, marketing, research and development, organizational structure, 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 ofproducts/ services to the market

Price: Determine price of the products except the cost of production, managementalso to other factors (the current price of competing products, promotion prices,

prices for the dealers, applied prices for other payment forms, etc.) to determine thelist price for the products.

Place: Select and manage the commercial channels to the products occupy the targetmarket at the right time and develop the logistics systems (logistics), and shipproducts

Promotion: Introduce and convince the potential market to use the products of theenterprise 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 covers all thefactors of a marketing strategy the most simply but is still relatively fullfil Ofcourse 4Ps now is defined more broadly than the beginning to more suitable for thetimes

A marketing strategy built on 4Ps frame will start from product policies This is areasonable thing because the most essential of an enterprise is to have a product orservice 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

Weaknesses

- No test the list of consumer objects yet

- Have holes in several market areas

-Produce products more superior to

competitors

- The reliability of product is better

- Experiences of employees

- 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

- The company is a small enterprise

- Having no direct marketingexperiences

- Unable to provide for foreignercustomers

- Need more sales staffs

- Funds limited

- No implementation of pilot projects

- Have no blueprint

- 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 competitors

SWOT analysis model is applied in the evaluation of a business unit, a proposal or

an idea It is a subjective evaluation of the data organized in a logical sequence tohelp us understand the problem, since then we can discuss and make decision themost reasonable and accurate

Based on the specific context, a SWOT analysis model can provide one or a fewitems 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” (Thepositive evaluation) “Weaknesses” (The remedy to repair or to get rid ofweaknesses) “Risks” (Challenges)

II Information management and information technology

1 Theory of information management system and information technology

1.1 Theory of information management

Concept of information management system

As defined at Encyclopedia “The information management system is the system provides information to the management of the organization It includes human, equipments and processes to collect, analyze, evaluate and distribute the necessary information timely, accurately for the editors of decisions in the organization.

According to Master Nguyen Anh Hao’s aggregate from the researches in the book

Management Information Systems Kenneth C.Laudon, Jane P.Laudon, Prentice Hall, 2002, then,

“The information management system is a machine that transforms data (and information) collected into useful information for the manager perform their roles

The information management system can be classified according to the level, the service purposes of output information Because of the relevance of thesubject, this assignment will only classify according to the application-level.

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

Operation-level information system: support the low management levels such as

leaders, divisional director, etc in monitoring the activities and basic transactions ofthe enterprise such as sale, invoice, cash, salary, approval, loan, material flow in thefactory The main purpose of this system is to answer common questions andmonitor 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 enterprises develop the newknowledge, design products, distribute information and handle the daily work in theenterprise

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

implement the activities of the intermediate-level managers The importance is thesystem needs to help the managers to evaluate the work status whether in good

condition or not At this level, the information provided through monthly, annualand 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?

1.2 Overview of Information Technology

Concept of Information Technology

For nearly a half of millennium ago, people could not imagine that the word

“computer” could be use d to describe an apparatus with ability to calculate andprocess data as fast as lightning The word “computer” first appeared in 1963 andwas a noun indicating the people with ability to do calculations The longdevelopment history with the continuous evolution from the beginning of the 19thcentury to 1950, the computer processing the first data storage was completed.Since then, computer develops rapidly, attached to it is the emergence of theconcept of Information Technology

In the world, the term “Information Technology” appeared in 1958, but in Vietnam,because the emergency of computers was slower than other countries, theInformation Technology concept just given in the Government Resolution No

49/CP signed on 04/08/1993: " Information Technology is a collection of scientific methods, the modern means and technical tools – mainly is computer techniques and telecommunication in order to exploit and use effectively the plentiful and potential information resources in all areas of human and society activities"

Therefore, Information Technology includes all activities and technologies containthe contents of information processing by electronic means, from the collection,storage, search, processing, transmission, etc to use the information in all areas ofproduction, economy and human life With the rapidly magical progress of

computer techniques and telecommunication techniques in recent decades,Information Technology really has widely penetrated into all aspects of humanactivities, leads to large changes in automation of production process, improvequality of available products and services, creates many new products and services,promotes the innovation processes of organizations and economic management,restructures the economy, etc.

The development process of Information Technology

The development of Information Technology has made many fields converge toeach 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 information processing

is performed mainly by the manual methods

The second stage (mechanization): Use computers to participate in some stages 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 and

processing 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 has accumulates a

very large volume of information and knowledge, very larger abilities to process,helps people to analyze situations, pick out the solution, efficiently help people toenhance knowledge, develop the creativeness abilities and the intelligence ofhuman For example, Deep Blue computer manufactured by IBM firm, thanks toaccumulation of information and experiences of experts in the field of chess canwin the world chess champion Casparop If the mechanical technology helps peopleimprove physical labor capacity, increase enforcement, the Information Technologyhelps people enhance intellectual capacity, increase the mental power

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 increasinglystronger, from just being used to support some activities in the office informationsystem have became a strategic role in the enterprise Especially the achievement inInformation Technology and their application in many businesses made theenterprise increasingly interested in the application of IT in the business andproduction processes Although an information management system doesn’tnecessarily have to use IT, but IT (hardware and software) are increasing cheap andcontribute to make the capacity of processing, storage, information distribution isincreasingly high, so the modern information management system often positivelyuse information technology

This writing will summarize some of the basic roles of information managementand IT in the company management activities

Unlike the period of the 1950s, when the enterprise mainly use the informationsystem to reduce the costs for regular work, nowadays, the information system canplay a strategic role in the organization The enterprise uses information system inall management levels in the enterprise Not only play a role as the providers reportcontinuously and accurately, information system have really become a strategictool, weapon for enterprises get the competitive advantage in the market andmaintain the existing strengths

Information Technology helps the management process become more effective.

Through that the enterprise has the ability to cut costs, increase the quality ofproducts, 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 closed relationships with the buyers, and the material supplier Almost telecom

companies are very focused on this activity They encourage customers through thesales and provision of information as fast as possible

Encourage creative activities in the enterprise: That is the process of developing

new products, new services and new production process or activity in the enterprise.This can create the business opportunities or new market for the enterprise

Create conversion costs in the relationship between the enterprise with customers or suppliers This means that customers or suppliers are closely tied to

the 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 new activity types of the enterprise.

- Virtual Organization: These organizations of this type don’t actually exist in the

physical form They are formed based on the agreement among the differentpartners A group of individuals will use the bulletin board on the computer to

communicate and exchange ideas with each other This type of activity usuallyexists 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 their businessschedule and require the small suppliers have to provide them as if it were amember of a parent organization The enterprises producing automobiles andmotorcycles often establish such relationships

3 Strategic options for information technology applications

Enterprises can select the suitable information technology strategies’ application forbusiness 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) orlegal provisions or specific industries need (software companies, online purchases)

Indispensable

Application of information technology will grow businesses’ profitability andcompetitiveness or international economic integration In short term, it is essentialfactor for companies who are planning to develop business outside the nation

al boundaries

Wish to do

This strategy applies to enterprises having long-term goals If the enterprises applyinformation technology to the management as well as production, business willhave potential growth and growth profitability in the future due to increasing brandreputation

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

The urgency of the application of information technology is ambiguousness in thisstrategy Despite we cannot deny the technological potentiality, but it is not apressing 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 business environments, wecan see that the effectiveness of strategies is important factor to evaluate thedevelopment of business in the near future when we build the strategies toinformation technology development This is a difficult question for all businesswhen they have to decide which is the best strategy?

III Vietnam Local Businesses’ experiences in this area.

In the field of motor-production in Asia, Japan is the pioneer in copying Europeandesigns Although there are many businesses invested in this sector, but until nowonly four major labels such as Honda, Yamaha, Suzuki, Kawasaki is also survived

In the 80s, the technology system transfer to Taiwan before Mainland Chinareceiving China became the imitative workshop, most large-scale replication, andlow quality products accounted for 50% of motorcycles in the world

In this market, Vietnam certainly cannot compete with China because theproduction in Vietnam is not large, and the consumer demand is not high enough.Nearly 80% of businesses closed The Sole representative of China Lifan is alsoclosed when engaged in manufacturing fitting armour motorcycles in Vietnam Ifthe organization produced by Japanese firms, the difficulties of funds as well as

technology Requires their own style design, own engine design to avoid copyrightinfringement, useful technology solutions that they have registered Vietnam is not

in their strategy transfer of technology, and businesses do not have sufficientfinancial resources The basic thing is the manufacturing and assembly businessesbordering Vietnam does not have a brand development strategy and comes with it is

a strategic of information technology application

1 Valuable experiences that Vietnam enterprises should learn

Vietnamese enterprises can develop the potential latent in every individual in theorganization to create maximum job performance Why in the same market, thesame macroeconomic environment, and a technical environmental technology, thereare some businesses exists, in contrast, another dissolution How to survive indeveloped together with leading companies According to the strategies of Japanese,firm and apply a smart suitable selection for your business is the only way forVietnamese enterprises.Referent to the enterprise who leading in the processing tomanage informations in the following diagram, also known as “informationmanagement circle”:

2 The application of IT in business

Usually, the focus on develop business, including the application andcommercialization of technology products, services or the process of working, theirmanagement Vietnam enterprises often fall into this category, for example in themanufacturing, construction and commercial services We often see the informationtechnology applications popular in the field of accounting, very simple and local.Today, the application of IT for Vietnam enterprises is not only accounting, but also

more strategy-oriented applications Increasing cooperation and further integration

is vital for the application of information technology in Vietnam enterprises.Oriental integration mainly includes:

The strategic orientation towards issues such as the form of cooperation, the verticalchange in the whole structure, methods of marketing, distribution channels

The oriented organizations on issues such as organizational structure, method ofadministration, training, labour organizations

The oriented technology products and services, manufacturing systems, informationsystems, electronic data processing

3 The difficulty in IT application for Vietnam enterprises

Particularly in small businesses, making the latest information technology model isnot always smooth These include a number of reasons for this

First, Vietnam enterprises often does not have knowledge in the field of informationtechnology, because they only pay attention to the operations, so spend a little timefor strategic activities to improve and This also prevents their own accumulatedknowledge about the latest developments

Second, Vietnam enterprises often are not aware of the information sources theyshould consult This causes them to lag in technology, not fully understanding thecapabilities of IT and not aware of the advantages of a particular application

Third, IT can lead to unpredictable advantage Many small businesses thus cannotestablish their exactly needs without the help of external experts The IT solutionproviders tend to offer open system, more complicated than necessary and often donot know the exactly information about the time it takes to learn how to operate thesystems

Fourth, IT improvement usually starts with the process of technology production,this improvement requires change many functions, duties and responsibilities of thedepartment compared with the other improvements It impacts to not only inner theorganization but also the job itself and staff’s duties The businesses leave behindthe technology mainly due to a lot of restrictions on the organization

All we needed is to set up processes and standardized information that lacking inVietnam enterprises, due to their working methods are not official Moreover, theuse of IT for the purpose of improvement also requires adequate visions.

4 - Challenges for CIOs in Vietnamese enterprises

Current difficulties of CIO management model in Vietnam is the foundation ofvertical and horizontal, strategic understanding of their business technology service

In Vietnam, people who are taking on this role is not much Although operating inany area, large or small, in the next few years, the absence of a director ofinformation technology capability and bravery will be a big disadvantage

Major challenge in the future is CIO has to faces to the opponents who has athickness in all areas: management capacity, the level of technology, distributionand supply system special is the quality of products and high services Whenintegrated, the urgent require of all businesses is a standard process, modern and

"compatible" with the changes of the new market., so the CIO must understand theenvironment, business capabilities When the information is a competitiveadvantage

In particular, they have to understand the mechanism operation of the currenteconomy, how to make the most important advice for leaders, product applicationbefore, how competitive, where efficient

CHAPTER II: ANALYSIS OF BUSINESS ENVIRONMENT AND INFORMATION TECHNOLOGY IN SUFAT VIETNAM

CORPORATION

1 Enterprise overview

Name of entity: SUFAT VIET NAM CORPORATION

Address: Lot C1, Pho Noi B Industrial Zone, Yen My Dist., Hung YenOwnership structure: Private Company

Year of establishment: 1996

No of employees: 450

Annual turnover for the last 3 years (million VND): VND 300.000 million / yearField of activity: Manufacturing and assembling of motorcycles

Head office: Pho Noi B

Industrial Zone, Yen My

Dist., Hung Yen

Model 2010: SufatFivemost

Engine ProcessingWorkshop

2 External environmental analysis

2.1 Macro environment (PEST model)

Posi tive

Littl e

Neg ativ e Politics,

The Law

- Stable political system

- The regularly amended and standardized legalsystem, such as: intellectual property; automotiveindustry standards, etc

-VN joined the WTO when automotive industryand automobile enterprises was governed by FDIpatterns Localization policy was failed completelyafter more than 10 years

- Weak effective law enforcement

- Import tariffs on components will be reduced by

2014, and permanently removed by 2018 to createthe best conditions for exports

x

x x

x

x

Economy - Economy increased at an average rate of 7-8%

Per capita income was roughly USD 1023/person(2009)

- Infrastructure was not keeping pace witheconomic development, public transportationfailed to meet the demand Motorcycles are still theprimary means in the next 10 years

- High inflation, rising interest rates causedifficulties to production

X

X

x

Society - Population: 85.789.573 (01.04.2009), this is the

golden population structure, the number ofworking – age people accounted for 51.1%

- The population distributed in 03 areas:

Urban area: 29.6%, GDP: 2000 usd/person

Rural area: 43%, GDP: $1000/person

X

x

Mountainous area:19%, GDP: $ 500/person

- Vietnamese people give priority to using foreigngoods, expensive and fashionable goods Forexample, A Honda SH motorbike is VND150.000,but it must be exported The same product fitted inHonda VN Factory, the cost reduces to half

- There are no policies supporting national brand,the Vietnamese people use Vietnamese goods

x

x

Technology - Slow speed of technological change in the

automotive industry: the recent technology iselectronic fuel injection, in the future is HybridElectric Vehicle and electric scooters

- Currently, the supporting industries in Vietnamhave met 80% of component demand for commonmotorcycles

- Viet Nam is the neighbour of China which is theworld's largest motorcycles manufacturer at lowprices (accounted for 50% of the world’sproduction)

- Information technology infrastructures developspeedily The application of Informationtechnology in automotive industry is increasinglyinterested and rapidly changed

- The qualifications of the technical workforcereached at pretty average

- Viet Nam also has capability to exportmotorcycles to other Asian countries (Laos,

Cambodia) and the African.

Therefore, with 12 positive effects and 4 negative effects, the influences of macroenvironment on the motorcycle assembly-production enterprises in general andSUFAT VIET NAM in particular are active Motorcycle industry seems poised tocontinue to grow in the future, especially exporting tendency to the 3rd countries.Thus, the strategy of Sufat Vietnam Corporation is to expand the market andadequately upgrade technology

2.2 Business environment (5 forces)

2.2.1 A brief overview of the Vietnamese motorcycle industry

The motorcycle industry of Vietnam was born and developed quickly in the past 10years, especially in the period 2001-2005 At first, four foreign-invested firms, VMEP(1984), Honda, Yamaha and Suzuki (1986), assembled motorcycles in the 1990s.Subsequently, a large number of indigenous firms entered the market to manufactureassemble motorcycles, initially with parts imported from China

After 2000, some indigenous firms invested in common assembly motorcycle linewith Chinese and Vietnamese technology Since the price matched the income level

of consumer, the domestic production volume rose sharply and occupied the marketshare of 80% in 2001

Under the price pressure from the indigenous assemblers, FDI assemblers adjustedbusiness strategies, reorganized production, changed design, developed newsupplier systems and after-sale services, reduced price and gradually regainedannual consumption Meanwhile, the living standard gradually improved caused thesales of inexpensive motorcycles with Chinese origin dropped significantly Thiswas the main reason for rapid decreasing the number of indigenous assemblers.Prior to 2005, the collective sales of FDI firms occupied the market share of61.63%, increased all the consumption of motorcycle industry

According to Vietnam Register, in the period 2001-2005, 54 motorcycle assemblersaround the country had the highest annual production of around 2.4 million units.Including 4 other local assemblers, which produced more than 100.000 units, 6

local assemblers producing more than 40.000 units, 10 local assemblers producingfrom 20.000 units to 40.000 units and 17 local assemblers producing about 10.000-20.000 units/year The rest were the local assemblers with the sales less than 10,000units/year.

Supporting production system will be gradually set up with hundreds domestic andforeign of business in the multi - sector economy

Table 11 Development of motorcycle assemble (2001-2006)

(Source: Complied from Vietnam Register data)

2.2.2 Product life and industry cycle:

(Source: Plan on Vietnam’s motorcycle industry development in period 2006-2015

,with refers to 2020)

In conclusion, based on the product and sector life cycle, the period 2012 – 2018was the flourishing development of motorcycle manufacturing and its products (notmentioned to objective factors of global economic environment) So, it is necessary

to strongly invest in information technology to support the production of productconsumption in this period

2.3 Analysis of enterprise’s inside

2.3.1 Analysis and evaluation of the resources of enterprise (7M)

Tangible resources:

2.3.1.1 Finance:

SUMMARY DATA

Profit margin MP = NI/TR

BEP Ratio = EBIT/ Total assets

ROA = Net profit / Total assets

ROE = Net profit/ Total common shares

(Compiled from Sufat Co.’s General Technical Department data – July 2012)

- All the target MP, BEP and ROA are lower compared with the correspondingtarget in sector orderly to 12%; 16% and 8% show that SUFAT VIETNAM CO., isfacing to difficulties in their production and business activities All the profit targetless than corresponding those in the sector and low production efficiency bring thebig challenges to Sufat in term of investment in modern information technologysystem In order to have the sufficient capacity and resources, Sufat has to increaseequity by issuing shares to the public.

2.3.1.2 Organization:

SUFAT VIET NAM CORPORATION was established in 1996, a private company,not to be equitized and listed on the stock exchange to become a public company.The organization diagram is as follows:

This is a weak point of Sufat if needing the capital for the big strategic project

In the near future, Sufat leaders should consider the solution when transferringcompany to public form and reasonable reorganization The organization is

needed to operate by a Chief information officer and the assisting apparatus forimplementing the IT applications.

2.3.1.3 Materials:

Facilities:

1 Injection molding machine :

- Amount: 15 units

- Clamping force: 80-1000 tons

- Manufacturer: Hai Tian-China; Taiwan

2 Aluminum pressure die casting machine::

- Quantity: 04 units

- Clamping force: 250-850 tons

- Manufacturer: UBE – Japan

3 Welding machine MIG:

- Quantity: 08 units

- Welding current (max): 320-400 ampe

- Manufacturer: KEMPPI- Finland

- Manufacturer: MITUTOYO – Japan

6 Engine test machine :

- Quantity: 01 unit

- Measured power (max): 10 kW

- Velocity (max): 10.000 rpm / min

- Manufacturer : VICTOR- Federal Republic of

Germany

7 CNC lathe :

- Quantity: 03 units

- Processing range: X = 260mm; Z = 350mm

- Manufacturer: COSMOS – Taiwan

Factory of SUFAT VIETNAM CO., LTD was fairly completed construction, andinstallation of machinery and equipment with a maximum capacity can reach100.000 units / year Favorable position for supply of inputs as well as the outputdistribution of finished vehicles for both domestic and foreign market and export.Evaluation: 4/5 point

2.3.1.4 Technology

From the early years of construction and development (2001-2005), SUFATVIETNAM CO have applied more advanced technology solutions in the field ofresearch as well as manufacturing in order to ensure the highest quality products,including:

a Injection molding

All the plastic parts, including headlight, stoplight was made by Liquid InjectionMolding at high pressures and high speed injection in closed mold to ensure theshape and size with precision and material uniformity

Maximum injection pressure: 140 bar

Maximum injection speed: 99 cm/s

b Semi-automatic MIG welding

Semi-automatic CO2 protect MIG welding machine combined with dedicatedfixtures used for mounting discrete embryous which were previously made bystamping, bending, cutting methods to the complete chassis, handle-bar, spar, shaft,chain case

Maximum amperage: 40 – 400A (15 – 34V )

Automatic pay-off speed: 0 – 18m/min

c Pressure casting

The machine parts made of aluminum alloy materials, such as: body, shears, hub,head cylinder, cylinder…was made by applying pressure die casting technology inclose mold with ultra-high speed injection to guarantee the productivity , productuniformity and highly smooth surface

Maximum firing pressure: 264.6 – 640 kN

Maximum firing speed: 1000 – 4500 mm/s

d Precision machining

Following the pressure casting stage, the machine parts, such as: body, shears, hub,rifle butts, head cylinder, cylinder… was transferred to the precision machiningstage on the chain with CNC lathe and dedicated processing machine to ensure:Size accuracy: 2 – 4 level

Surface smoothness:▼6 – ▼9

f Powder coating

In order to protect the metal parts of the motorbikes from corrosive effects of theenvironment to ensure the durability and service life, Power coating technology wasearly applied in 2 methods:

g Electrostatic painting: used as a primer for machine parts, such as: chassis,

handle bar, spar, chain case… before painting the color coating layer Theadvantage is the complex entire surfaces of the machine parts are smoothly painted

h Polyester powder: used for painting the layer of machine parts of vehicles in

relatively harsh and rubbing working conditions, such as: straight spar, motorcycleracks …with the advantages are creating the high-quality, thick and stiff coating

i General check:

The company applies a checksum on the modern test equipment for 02 finishedproducts clusters are: engine and motor The engines are checked via 3 parameterstesting equipment and the complete motorcycles are checked via 8 parameterstesting equipment Therefore, the products are ensured to reach the criteria ofSUFAT standard

Hence, the relatively modern and complete production technology and assembly areone of the strong points of SUFAT VIETNAM CO., compares to FDI assemblersand completely outstanding to the remain local firms Possessing moderntechnology help Sufat Vietnam Co., to increase competitiveness and easy to applyinformation technology to in the manufacturing process from design stage, trialproduction, to mass production.

Intangible resources:

2.3.1.5 Human resource capacity

Work skills and general knowledge level of the staff SUFAT VIETNAM CO., wasdeveloped mainly from two types: self-study training and summarizing theexperiences from actual business There is a limited recruitment of the highqualified staffs because of low salary and poor working environment

(Complied from the Human Resource Department Data - July/2012)

Moreover, the personnel change based on the the orderly process of Probationary –Routine work – Skilled work - Leave has occurred frequently causing the seriouslyaffects to the stability of productivity and work efficiency Evaluation: 3/5

2.3.1.6 Innovative thinking

The World Intellectual Property Organization (WIPO) has recently announced theranking of Global technology innovation index, in which, Vietnam was ranked 76th.According to the report, it is the second consecutive year Switzerland, Sweden andSingapore led the rankings for 141 countries The ranking of other Southeast Asia

countries: Thailand: 57, Cambodia: 129, Laos: 138, Indonesia: 100, Philippines: 95and Malaysia: 32.

(Source: http://vnexpress.net Thursday, July 5,2012)

However, in SUFAT VIETNAM CO., the tangible resources creating from thisinnovative thinking are gotten low evaluation Reasons:

- The thinking and management of the leadership team have slowly changed formany years Product diversification or other business developments still have notbeen carried out For example: During 12 years, the company just produced onlyCommon manual transmission motorbike, the other product lines, such as scooter orlarge displacement motorcycles was not produced

- There has no incentive, encouraging policy to the creative ideas The individualrole is always neglected Although, some departments raised proposals andinnovations, they are quickly overlooked

- Education, general background knowledge of the staff in company is at an averagelevel

Considering the criteria, such as: quality / motivation / and background knowledgealong with the review of the 15 years of operation, the innovation and creativitycapability is not a strong point of SUFAT VIETNAM CO., LTD., Thus, the leaders

of the company should immediately execute the renovation of management thinking

in order to promote creativity and apply the great solution of the staff Evaluation:2/5 point

2.3.1.7 Fame

Branding is a long-term strategic objective of SUFAT VIETNAM CO., The annualexpenses for communication, brand promotion and public relations costed thecompany about VND 6 - 8 billion (accounting for 2.5% of revenue)

2012 MARKET DEVELOPMENT RESEARCH PROGRAM

Target Index Target

new market

1000 cars

1000 Car

2 Integrated Marketing Communication Campaign (IMC)