LUẬN văn THẠC sĩ xây DỰNG CHIẾN lược PHÁT TRIỂN CÔNG TY TNHH THÀNH LINH e

A strategy thathas ability to promote internal power and take advantage of opportunities comingfrom external environment or to avoid, limit risks and weaknesses will surely help theenter

BUILDING A DEVELOPMENT STRATEGY

FOR THANH LINH CO., LTD FOR 2013 – 2018 STAGE

EnterpriseLimited liabilityBusiness

TradeWorld Trade Organization

18

18

ABSTRACT

1 Necessity of the topic

Today, in the context of fierce competition taking place in all areas of business,

if an enterprise wants to survive and develop on the market, the most important andnecessary thing for them is to direct the enterprise to a right way and in accordancewith frequent and sudden changes of the environment to achieve high adaptability and

sustainability To achieve these, enterprises must identify and build a properdevelopment strategy for their your own business.

In 2007, the event that Vietnam formally joined World Trade Organization(WTO) marked a major turning-point for the economy of Vietnam The opportunitiesoffered by economic integration have been welcoming dynamic enterprises who know

to seek and take advantage of investment opportunities However, besidesopportunities, there are always threats and potential risks that can come at any timeand enterprises will get stuck into difficulties without good preparation and suitablemeasures to cope with In addition, the continued advance of science and technologyalso helps to shorten the development cycle of products and services, the marketglobalization helps to increase significantly existing and potential competitors Thismeans that the business world gives customers more and more freedom to choice, butalso helps to increase competitive pressure and promptness in responding to newdemand

In this context, success does not depend on the position of an enterprise at acertain time, it is just the ability to interact with competitors in the long term.Therefore, each enterprise needs to plan and implement appropriate and effectivestrategies to be able to survive and develop in a sustainable manner A strategy thathas ability to promote internal power and take advantage of opportunities comingfrom external environment or to avoid, limit risks and weaknesses will surely help theenterprise to have enough competitiveness and stand steadily on the market.Therefore, an enterprise to be successful and profitable in business must have a goodstrategy with optimal solutions

As an young enterprise in the field of petroleum, automotive andmanufacturing of biological products, Thanh Linh Co., Ltd has had right direction toovercome challenges from economic integration and effectively take advantages ofopportunities to develop the company However, in recent years, and in the future,the changes and instability of the economy in the general and difficulties on themarkets of the company create lots of complicated and unpredictable challenges to the

company To implement strategic objectives, it's necessary to determine specificdevelopment strategies to accomplish that objectives as well as to determine thepriorities of business activities, capacity and mobilizing resources; target customers;products and services objectives will provide to customer; from this background tocreate competitive position in the sector and long-term performance goals Therefore,

the author decided to choose the topic "BUILDING A DEVELOPMENT

STRATEGY FOR THANH LINH CO., LTD FOR 2013 – 2018 STAGE" for

master thesis

2 Purposes and applicability of the thesis

a- Systematize knowledges of building strategy for an enterprise

b- Analyze factors from external environment and internal business to indicateopportunities, challenges, strengths and weaknesses of the company

c - Propose orientation and strategic strategy for Thanh Linh Co., Ltd, period of2013-2018

3 Researching methods

The topic uses methods of description, information gathering, synthesis,analysis

About information gathering, the topic mainly uses secondary information such

as financial reports, market analyzing reports and other types of reports of thecompany

About information analysis, it includes information processing, aggregating,calculating, comparing, evaluating and making conclusion The information gatheredfrom the sources mentioned above is analyzed and classified to groups of importantinformation, statistical information will be handled according to the principles ofstatistical analysis Conclusion is based on the analysis and evaluation of data

4 Structure and layout of the thesis

a- Chapter I: Theoretical background for building development strategy

b- Chapter II: Analyze business situation of Thanh Linh Co., Ltd

c- Chapter III: Conclusion and recommendations

CHAPTER I: THEORETICAL BACKGROUND FOR BUILDING

DEVELOPMENT STRATEGY

1.1 Overview of business development strategy

1.1.1 Concept of "Strategy" of the company

1.1.1.1 Concept of "strategy"

The term "strategy" is derived from Greek and were first used in the field ofmilitary to indicate large and long-term plans given on the basic of certainty that thesubjects can implement and in an common manner, strategy is understood as plan andart of military commanders

There are a lot of definitions of "strategy" According to Fred R David, strategy

is considered as means to achieve long-term goals Alfred Chadler defines strategy asdefining basic and long-term goals of enterprises and means outlining a course ofaction and allocation of necessary resources to carry out that goals In general,although there is difference in strategy definitions, they still covers the content of:being the study of current and future market, planning of business goals, establishing,implementing and supervising the implementation of decisions in order to achievethat goals in current and future environment

1.1.1.2 Concept of development strategy

Today, many enterprises also apply the same concept of strategy in the military.Strategy as plan of controlling and using resources of the organization such asmanpower, assets, finance aiming to enhance and ensure its essential interests Andcurrently, there are more and more perspectives and approaches to developmentstrategy as follows:

In Kenneth's opinion,Kenneth Andrews was the first to offer these outstandingideas in the classic book "The Concept of Corporate Strategy" According to him,strategy means things that an organization must implement relying on their ownstrengths and weaknesses as well as opportunities and threats in the context

In Bruce Henderson's opinion, a strategist and founder of Boston Consulting Group had strategic connections concept with a competitive advantage Competitive

advantage is to put a company in a better position to create rival economic value tothe customer Henderson wrote that "the search strategy is a prudent action plan todevelop and incorporate competitive advantage of the organization The differencebetween you and the competition is the basis for your advantage " Hendersonbelieves that it can not coexist 2 competitors if their business practices are same Need

to create new differences may exist Michael Porter also agreed with the endorsement

of Henderson: "Competitive strategy related to differences It is the careful selection

of a different chain activities to create a set of unique values "

Under the traditional approach, the strategy is to develop long-term view of

the overall as an organization to achieve long-term goals The researcher of history ofmanagement , Alfred D Chandler said that "strategy is the determination of the basiclong-term goals of the business and operations of the program along with theallocation of resources necessary to achieve that goal." As such, his ideas reflected astrategic planning process with lucidity, in which businesses choose their goals, defineaction plans to accomplish the goals that best and find ways to allocate resourcesaccordingly Traditional approach has the advantage that helps businesses easilyimagine the work that needs doing to strategic planning and see the benefits of acomprehensive strategy for the long-term plan However, in the business environmentwith fluctuating shows the limitations of traditional approaches because it does nothave the ability to flexibly adapt to the change of business environment

Under the modern approach, the strategy can what the broader that business

plans to implement According to Mintzberg's conception, he said that strategy is apattern in the flow of decisions and action plans The pattern can be any type ofstrategy: strategies designed in advance or mutation strategies He provided models:Modern approach to help businesses easily respond flexibly to changes in the businessenvironment and promote the creativity of the members of the enterprise However, itrequires leadership, managers must have the qualifications, the ability to predict theconditions for the implementation of strategies and assess the value of the mutationstrategy

Through the above approach, we can understand that: Development strategy of

a business is the art of building a long-term goal and the implementation of policies

to guide and create competitive advantage of enterprises

1.1.2 Role of developing strategy for business

Development Strategy plays an important role for the existence anddevelopment of every business Proper development strategy will create a gooddirection for enterprise, development strategy can be regarded as a guide to lead theway in the right direction In fact, there are many small businesses have developed the

right strategy to achieve this success, surpassing competitors and make their position

in the market Development strategy brings many benefits to the enterprise, itsimportance is reflected in the following aspects:

- Development strategy helps business to guide its activities in the future by analyzing and forecasting the business environment Business as activity is always

under the influence of external and internal factors Development strategy helpsbusinesses both proactive flexibility to adapt to the fluctuations of the market, whilealso ensuring that business operations and development in the right direction Thatcan help businesses to strive to achieve the objective of improving its position in themarket

- Development strategy helps businesses to seize the opportunities as well as a full range of risk for the development of resources It helps business to operate and use

resources, promote the strength of the business

- Strategy to create a trajectory for business operations, business help link

individuals with different interests together towards a common goal, and businessdevelopment It creates a close bond between employees and between managers andstaff Thereby strengthening and further enhance the enterprise's internal resources

- Development Strategy is a tool of effective competitive business In the

conditions of globalization and economic integration now makes the influence andmutual interdependence between enterprises That process has created fiercecompetition between enterprises in the market In addition to competitive factors suchas: price, quality, advertising, marketing, business strategy also used as a tool todevelop effective competition

1.1.3 Level of business strategy

The strategy is divided into 3 main categories:

i) Business strategy is the strategy of the corporation or enterprise to guidebusiness's activity and how to allocate resources to achieve common goals Business-level strategy is a statement of the long-term goal, the development orientation of theorganization

(ii) Development strategy to implement a strategic business areas, specificbusiness activities, the overall commitment and action to help businesses to gain acompetitive advantage by harnessing their core in specific markets, only businessesconstantly upgrade their competitive ad vantage then can be used to achieve long-term success of Business-level strategy.

(iii) Functional strategy is the implementation of operational functions of thebusiness such as HR strategy, marketing strategy These are strategies related to theoperation of individual businesses to support the development strategy of enterpriseand business strategy Functional strategy as a detailed statement of the goals andmethods of short-term actions are the functional areas used to achieve short-termgoals and long term goals of the organization Functional strategy solve two problemsrelated to the functional area

o The first is the response of functional areas for operational environment

o The second, is to coordinate with the various policy functions

1.1.4 Some important strategies in business

1.1.4.1 Overall competitive strategy

Definition: Overall competitive strategy reflects a fundamental way whichbusinesses compete in the market based on two basic characteristics are low cost anddifferentiation, combined with the range of activities with two factors created Overallcompetitive strategy:

Source of Competitive Advantage

Differentiation

SCOPE OF COMPETITION

(Fred R David (2006), "Explanatory of Strategic Management", Vietnamese

version, Statistical Publishing House)

Figure 1.1: Matrix of overall competitive strategy

(i) Low-cost strategy:: By all means, companies will produce products or

services at lower cost

- Maybe sell product with the lower price than competitors while maintainingprofitability

- If there is any price war, business will cost more resistant

- Easy to withstand pressure when rising prices from suppliers

- Creating barriers to entry

Disadvantages:

- Opponents can provide a lower price;

- Easy to be imitated by competitors;

- The ability to find production methods with lower cost to competitors

- Due to target for low cost, businesses can ignore, fail to meet the changingtastes of customers

(Ii) Differentiation strategy: Businesses will create products and services that

consumers are only considered in their evaluation

Advantages:

- Maybe sell "outstanding" price compared to competitors, to increase salesand profit margins achieved over average value

- Creating customer's loyalty to the brand

- There may be an increase in raw material's prices better than the low-cost business

- Creating barriers to entry

Disadvantages:

- Easy to be imitated by competitors

- The loyal for trademarks prone to lose as information is more and productquality is constantly improving

- Businesses to take costly features that customers do not need on the product

- The change in the needs and tastes of customers very quickly that business isdifficult to meet

- Needing to communication ability to promote business

(iii) Focus strategy (based on low cost or differentiation): Enterprise will

orient satisfy of customer groups or market segments defined by pursuing a certaingoal or difference, cost

Advantages:

- Generating power for customer because corporate as unique provider ofproducts and services

- Creating barriers to entry for potential competitors

- Allows closer to customers and react to the changing needs

- Risk of changing focus market segment

- Competition from differentiation or low cost businesses on a large scale

(iv) Competitive strategy relies on other factors in the matrix of basis of basic factors:

Leading on the costs

High (moremaketsegmentation)

Low (one orseveral segments)

Capacity to make

a difference

Manufacturin

g and MaterialsManagement

R&D, salesand Marketing

Any ability tomake a difference

Figure 1.2: Matrix of basic factors

1.1.4.2 Typical strategy of enterprises

Definition: Typical strategy is a comprehensive approach, in order to achieve the overall objectives of the business The typical strategy of the enterprise:

• The diversification strategy

• The integration of strategy

• The strategic strength

• The other strategy

Search capability of symbiotic; Technology & Markets

- Concentric Diversification: Enterprise adds new products and services but

are related This strategy is used in cases such as: A competition Business in the sector

is not developed or developed slowly; When adding new products but are related tobusiness products will enhance the sales of existing products; When the new productwill be sold with a highly competitive price; When new products related and sales inseason show balance of businesses; When current products are being in a recession,when business has a strong management team

- Horizontal diversification: Business adds new products, services for their

existing customers Horizontal diversification is used in the following cases:Revenues from current products will be affected if adding non-related and newproducts, businesses have high competitive in the same sector or without growth;existing distribution channels to be used to launch new products to existingcustomers; When new product with sales model is not cyclical than the currentproduct

- Vertical Diversification (combined): Enterprise adds new business activities

not related to their current operations Vertical Diversification used for cases of:Building competitive advantage (Front: market / back: suppliers); Differentiationcompared with competitors, control of complementary technologies (in the samesector but one related to the different stages of the production process); Cuttingproduction cost

- (ii) Integrated strategy: Integrated strategy is enable businesses to gain

new resources, strengthen competitive capabilities The integrated strategy is enablebusinesses to gain control for distributors, and suppliers or competitors Theintegrated strategy includes:

- Front integration:: Enterprises applying this strategy to win the right to

ownership or increased control over distributors or retailers This strategy isappropriate if: The current distribution is expensive, unreliable, or do not meet therequirements of the enterprise is no more proficient distributors, can create acompetitive advantage for those front-integrated businesses, in the sector is predicted

to develop highly; sufficient capital and manpower to manage the distribution of itsown products; When distributors and retailers have high profit margins

- Back integration: Enterprises are seeking ownership or increased control

over suppliers Back-Integrated strategy are appropriate if: The current supply isexpensive, unreliable, insufficient capacity to meet the needs of businesses, lessnumber of suppliers, the number of major competitors; number of companies in fastgrowing sectors quickly; enough capital and manpower to manage the supply of rawmaterials, product price is stability and crucial; suppliers have high profit margins;enterprise needs to achieve the necessary resources quickly

- Horizontal integration strategy: To seeking ownership or increased control

over the competition through M&A, partnership, alliance, enables enterprises toincrease the economies under scale and improve the transfer of resources andsymbiotic capacity Horizontal integration strategy is appropriate when: Enterprisesowns exclusive features that are not affected by the reduced by the government;enterprises in the sector developing; Economy under scale are added to create themain advantages; sufficient capital and human resources to manage a new business;When competitors weakened by the lack of management capacity or demand forresources that only owns businesses

- (iii) Intensity strategy:: As the strategy requires intensive efforts to

improve the competitive position of businesses with current products / services Thereare three types of intensity strategies as follows: Market penetration, market

- Market penetration strategy: To increase the market share of products and

services through existing marketing efforts, increase the number of sales, increase

advertising costs, enhance PR, Market penetration strategy is applied when:

Market of products and services in the enterprise is not saturated; rate of consumption

of customer maybe increase, when the market share of competitors fell by the sectorsales are increasing; There are correlations between sales and marketing costs;Increasing economies of scale bring the key competitive advantage

- Market Development Strategy: to introduce products and services to

existing businesses to new markets (geographic) This strategy applies when: businessare available new reliable distribution channels with high quality, affordable,enterprise gained success in existing markets, other markets are untapped orunsaturated; There are enough resources extended enterprise management, whenenterprise is free capacity; When the product of business is fastest-growing with aglobal scale

- Strategy of product development: Enterprises looks to increase sales

through improving or modifying present products and services, however many costsfor research and development This strategy is applies when: Products and services ofthe business was on the "Ripen" stage of the life cycle, sector with rapidly-changingbusiness technology, competitors provide dominant product at the same price,enterprises must compete in the sector with a high-speed of development, enterprisecan research and strong development

(iv) Other strategies:

- Consolidation strategy: As a strategy is gathered through cutting cost and

asset to impact sales and profits declining Consolidation can lead to sell their landand homes in order to create the necessary amount of cash, closing product lines,closing the business line, closing obsolete factories, automating process, closing joband establish a system of rational spending control

- Cutting strategy: As strategic to sale a part of business Stripping is often

used to create capital for the purchase of land or investment strategy Stripping can be

a part of a strategy to consolidate the entire help business to go out from the

unprofitable sector, or require too much capital, or inconsistent with the otheractivities of the business

- Liquidation strategy:: Strategy about sale all assets of a business, or part,

by its tangible value

- Collaboration Strategy: Business to pursue a combination of two or more

strategies simultaneously

1.2 Planning business development strategy

1.2.1 The process of strategic planning for business development

1.2.1.1 Identify tasks or mission of business

A strategic plan starts with a business mission was clearly defined Mintzberg definesmission as follows: "A mission to know the basic functions of an organization in social underaspects of goods and services produced that organization to serve their customers."

The mission is a message expressed the core values of the business Itexpresses the important things, contribution of the Contribution of the businessand life, says the motto of the business, the position of enterprises in the marketand the business is committed to compliance Mission statement should be concisebut meaningful include background, should be highly motivated and the long-termstability

1.2.1.2 Define business objectives

The goal in each period can be changed, but the vision, principles andbusiness-oriented to long-term, and must be disseminated throughout the enterprise toeach member to understand, full of pride and heart, full implementation It was thiscontributes to spirit of business what we called as corporate culture

We can imagine, guiding vision and core values of a business is a pyramid with

a square bottom, the position of the vision is at the top of the pyramid, and fourbottom sides of the pyramid are four core values that business must to direct or mustsatisfy Four bottom sides of the pyramid are: Customers, workers in the enterprises,the shareholders and the communities in businesses operation This means that thedirection by that strategic vision, the business activity to bring value for all fourgroups above If you see a thing as light, direction vision will lack the solidity of a

cylindrical pyramid - symbolizes the sustainable development of enterprises.

1.2.1.3 Analysis of the business environment

According to the authors D.Smith Garry, Danny R.Arnold, Bopby G.Bizzell in

"strategy and business strategy" that the business environment includes: Internal and External business environments.

(KD strategy and tactics - Garry D.Smith, Danny R.Arnold, Bobby G.Bizzell)

Macro Environment

The economic factorThe political factorThe social factorsNatural factors:

The technological factors

Microenvironment (sector)

The competitorsCustomer

The supplyPotential rivalsSpread effects

The internal environment

MarketingProduction Technology Manpower

Finance and AccountingManagement

Figure 1.3: These factors of the business environment

a) Macro Environment

Economic Environment

This is a very important factor to attract the attention of all managers Theevolution of the economic environment always contains opportunities and threats indifferent industries and has the potential influence to strategy of business

Several factors affect the business operations of the business such as: The growth rate of the economy, interest rates;

Political Environment

- Politics:

Politics is the first factor that investors, business and managers are interested oanalysis to predict the level of safety in operation in the country, the region where therelationship is having purchase or investment Institutional factors such as political stability

or political changes in the country or a region is the original signal helps managers identifyopportunities or the risk of business to set out the investment decisions, production in theseareas

- Legislation:

The issue of suitable legal system is the first condition to ensure fair businessenvironment for enterprises The problem for businesses is to understand the spirit of thelaw and in good standing rules of law, to take advantage of opportunities from the legalterms and the timely against risks may result from the laws and regulations, avoidingdamage due to the lack of understanding of the legal

Social and cultural environment

Social and cultural environment including norms and values that they are acceptedand respected by a society or a particular culture Aspects of the socio-culturalenvironment has a strong influence to the business such as: conceptions of ethics,aesthetics, lifestyle, occupation, customs, practices, traditions, the level of awareness,education of society,

Natural environment

New potential competitors

The risk of new competitors

Supplier

The ability of the price squeeze suppliers

The ability of the customer price pressure

The competitors in the sector

Natural conditions, including geographic location, climate, natural scenery, land,rivers and sea, the mineral resources in the ground, maritime forest, purity of theenvironment, water and gas,

In many cases, the policy conditions become a very important factor to form thecompetitive advantage of products and services We can say that, the naturalconditions are always a key factor in human life (especially the factors of theecological environment), on the other hand, it also is a very input factors keyeconomic sectors such as: agriculture, sector, mining, tourism, transport,

Environmental technology

New technology can create conditions for the production of cheaper products withhigher quality, making the product with better competitiveness The introduction of newtechnology can make products with more features and can generate new markets forproducts and services of the business

However, the explosion of new technology makes technology cycles tend toshorten, this further increases the pressure to shorten the depreciation period andcreate pressure for businesses to technological innovation to increase theircompetitiveness

Impact pressure of technological development and expenditure for the development

of different technologies in the sector For those industries affected by rapid technologicalchange, the process of evaluating opportunities and threats brought the technologybecame a particularly important problem of the control of external factors

b) Environment sector (micro environment)

Customers

Risk by replacement product /

service

Replacement product

(Strategy and tactics D.Smith KD-Garry, Danny R.Arnold, Bobby G.Bizzell)

Figure 1.4 Model 5 - pressure of competitiveness of Michael Porter

The analysis of the micro-environment (competitive environment) to beaware of 5 competitive pressures in the present and the future threatening tothe business

Existing Pressure of competitors

One of 5 competitive forces by Michael Porter's model as competitivecompanies already have strong positions in the market in the same line of business The number, size and strength of each competitor will have an impact on businessoperations as well as business strategy The higher level of competition, lower priceled to profits decrease

The current competition is the organization running in the same businesssector, creating the competitive structure in the region, the constant pressure directthreat to the enterprise

The competitors are looking ways to increase sales, increase profits bypolicies and measures to create disadvantages for businesses

Because of limited market size, "competitive" business fight for market share bymeans of discounts, promotional, promotions, persuade customers, improving theproduct quality, create focus difference in providing products and services, creatingvalue for customers

There are 3 important factors forming the level of competition between thecompanies operating the same business sector, that is: Competitive structure,sector growth; barrier preventing businesses out of business

The power of customer

Customers are entitled to service by enterprises, as survival factor, not customersthen no business Buyers can be viewed as a competitive threat when they force downprices or businesses in need of high quality and better service

While purchasing, customers often use their power to make adverse claims to theseller of the purchase price, terms of delivery, product quality, payment terms .,creating pressure to reduced profitability of the business

Thus, customers have a god just as competitors of the business, customers bringbusiness opportunities to enterprises, but also can take away the profits of theenterprise

Therefore, when developing strategies for business needing to be aware of theopportunities and risks that may occur due to customers bring to the specific plan

to take advantage of opportunities and minimize these risks

The power of suppliers

Business activities and inputs required by the supplier Each advantage in tradebelongs based on the number of participants in this market, in other words, based onthe supply-demand relationship of inputs on the market

The business provides production factor for businesses such as machinery,equipment, spare parts, design consultancy services, transport services in businessnegotiations can also create pressure the price of the offer and method of payment willthreaten to the interests of the business But sometimes also create good businessopportunities for the company Creating competitive advantage in the supply process,strategic alliances, the solution is to reduce the pressure of environmental factors

In strategy development, supplier analysis to help businesses recognize theadvantages and disadvantages of supply of inputs to the production process in the currentand in the future, which set out solutions, the appropriate functional strategies to achievebusiness goals When the supplier has an advantage, they can create pressure strong anddetrimental to business

Pressure of potential competitors

Potential competitors include companies that currently do not face

competition, but still be able to compete in the future The presence of potentialcompetitors as well as increased competition for business in the sector.

Threat of this component is likely to account for the market share of the currentproduction, reducing the average profit of the sector in the future, which forcedbusinesses to judgment and response

Normally, these companies have competitive advantages in product quality, after-sales services or the possibility of product specialization The brand loyalty is preventing new participating businesses from grabbing market share in the market It’s costly for potential businesses to break the favor that has been strengthened for previous prestige brands of customers

Potential rivals may be a factor in reducing the profitability of the company asthey put into operation new production capacity, with the desire to gain market share andthe necessary resources When the analysis of threat level of the potential entrants, peopleoften come to analyze the factors that create barriers to entry, which is a combination ofthe factors preventing new entrants into the business of a certain sector If barriers is high,its threat is low and vice versa

Pressure of substitute products

Final threaten Forces of M.Porter is the threat of substitute products

The appearance of substitute products is very diverse and complex creating risks

of price competition for old products, reducing the profitability of the business.Alternative products limit potential profit of an industry by placing a maximum pricelevel that all companies in the industry can be profitable This is reflected by theelasticity of demand by cross price

Due to interchangeable products, it leads to a competitive market When theprice product increases, the trend of using alternative products is higher and viceversa The more attractive the ability to choose the price of alternative products is, thestronger the threshold for the profitability is

So, alternative products can brings opportunities for businesses to expandproduction catalogs, looking for new markets, but also brings significant challenges for

businesses if their products now do not compete with it

c) Analysis of enterprise internal environment

Internal environment includes the system of visible and invisible factorsexisting in the normal business course of enterprises or organizations and directlyinfluences the strategic management process

Therefore, analyzing the internal environment is essential for all types ofeconomical organizations; this is the basis to help businesses know the strengths andweaknesses compared to its competitors’ at the same time, help managers learn theability to grasp opportunities in the market for each period Internal environmentanalysis helps administrators clearly identify their position and give proposals ofsolutions to leverage existing strengths and limit weaknesses in order to reduce risksfrom external environment

Analysis and assessment of resources

Regular workforce analysis is the basis to help businesses and organizations topromptly assess the strengths and weaknesses of staff compared to personnelstandards required for each stage of the job and compared to competitors’ humanresources so that the company can arrange plans of using existing human resources

At the same time, objective assessment will help businesses be proactive intraining and re-training their staff from top executives to officers to implement thestrategy successfully, long-term and adaptively to the requirements of improvingcontinuously the quality of human resources

Material resources

Physical resources include such factors as: production capital, plant equipment,storage of materials, information, business environment etc Every business hascharacteristics about own physical resources, including both strengths andweaknesses compared to competitors in the sector.

Adequate analysis and evaluation of material resources is an important basis tohelp business managers understand potential material resources, limitations etc tomake management decisions to adapt to the practical situation such as: maximumexploitation of capital resources and existing facilities, selection and mobilization ofexternal funds, selection of partners to increase the scale of material resources,reserve a necessary proportion to ensure the ability to cope (defensive or offensive)with competitors on domestic or foreign markets …

Intangible resources

In addition to the resources mentioned above, every business or organization hasother resources that are identified only through perception, it is intangible resources.This resource may be the overall success of all members in the organization or aparticular individual that affects the organization’s operation

Depending on available resources, the size and value of this resource aredifferent among enterprises and change from time to time If intangible resources arenot recognized and appreciated properly, managers are easy to loose their companies’existing advantages in the production and business process

In fact that many businesses have not only recognized the importance ofavailable intangible resources yet, not taken advantage of, just looked down or wastedthem, but also fueling to competitors by selling their intangible resources to them atcheap price

In summary, the resources of every business are diverse The characteristics,activities, size, structure of these resources are different among enterprises

Adequate analysis and assessment of existing and potential resources in eachperiod will help business executives clearly determine their progress in thedevelopment process At the same time, it helps identify their strengths and

weaknesses in relation to the resources of competitors, from that the enterprise has abasis to work out effectively competitive strategies and seize opportunities or preventrisks from business environment in a timely manner.

Operation analysis of functional department of the organization

Analysis of marketing department

Marketing is a system of activities related to the process of researching,forecasting, identifying the needs and wants of target customers and better meetingthose needs by marketing mix (marketing mix) that is more outstanding than othercompetitors in each period, in each market area

In summary, business managers must always evaluate marketing activitiesbecause they are associated with competitive strategies on the market, determininglong-term survival of every business

Analysis of HR department

Human resource management means activities related to recruiting, training,using, treating, evaluating and encouraging the loyalty of staff in the organization Inthe context of increasingly fierce competition, human resource management plays avery important role in business management process; it determines the success orfailure of enterprises

Based on the information of human resource administration, businessmanagers analyze and assess the progress over time, and the strengths and weaknessescompared to competitors’ in each period This is the basis to help managers preparestrategies, policies and action programs for the next period of human resourcemanagement

Analysis of finance and accounting department

Financial and accounting functions related to the mobilization and use of materialresources of businesses in each period, economic performance recorded in all steps of theprocess operation Financial and accounting functions associated with the operation ofother functions, determine the feasibility, effectiveness of strategies and policies of theenterprise

Based on frequent or sudden analyzing results, business administrators willanalyze and evaluate the strengths and weaknesses of financial and accountingactivities compared to competitors’ by regional markets, forecast trends, outlinestrategic decisions and corporate financial policies, capital mobilizing programs andcapital allocation in accordance with the environment.

Analysis of research and development department

Research and development department (Research and Development - R & D)plays a key role in discovering and applying new technologies to create competitiveadvantages such as: developing new products before competitors, improving productquality, improving production processes to reduce costs This activity is differentamong enterprises, industries and depends on many factors such as productcharacteristics, human resources, equity, support from the government

Analysis of production and operation department

Production and operation include all activities of transforming inputs intooutput factors at each stage of business activities

This function is associated with the work of executors in all departments of thebusiness, from production department to administration department and professionaland functional departments These activities create products or services offered tocustomers inside and outside the enterprise

The quantity and quality of products or services, level of customer satisfaction,operational costs are factors that evaluate the effectiveness of production andoperation activities Depending on actual needs, this analyzing function will becarried out regularly or irregularly

Analysis of information system

In the market economy, information of business environment is an importantbasis for making management decisions Data structure of environmental informationthat enterprises collect and accumulate is considered as valuable and comparableassets and resources with competitors

These resources can help companies improve the quality of managementdecisions and the market competitiveness Indeed, an effective information systemwill allow businesses gain unique ability to support other parts to establish, organize,implement and inspect the company's strategies at any time on the market areas.

1.2.2 Strategic planning tool

1.2.2.1 Matrix of external factor evaluation - EFE:

Matrix of external factor evaluation (EEF) helps us to summarize and quantifythe effects of environmental factors to the business EFE Matrix was developed in 5steps

Table 1.1: EFE matrix model

The main external factors The relative

importance

Classification Important

PointsFactor 1

Step 1: Make a list of the factors and risks mainly, have great influence on the

success of the company in business (usually between 10 and 20 factors)

Step 2: importance assigned by sorting from 0.0 (not important) to 1.0 (most

important) to each factor It should be noted that, the importance assigned to the factor

indicates the relative importance of that factor to the success of the businessenterprise The importance of factors listed is 1.

Step 3: Classification from 1 to 4 for each factor (actual maybe wider) For

greatest weakness when sorting by 1, the smallest weakness when sorting by 2, thesmallest strengths when sorting by 3 and the biggest strengths when sorting by 4 So,here is the score reflects the level of response to the opportunities and risks from theenvironment

Step 4: Calculate each factor by multiplying the level of importance of that

factor with the corresponding classification score

Step 5: Calculate the total score for all factors in the matrix is given by adding

relevant factors of each business

Accordingly, if the total score of the entire list of factors to be taken into EFEmatrix by 4, the enterprise can respond well to the opportunities and risks from theenvironment If from above 2.50, it is now above average response In contrast, thetotal score is less than 2.50, the response is lower then average level

1.2.2.2 Internal factors evaluation matrix - IFE:

Internal factors evaluation matrix (IFE) summary and evaluate the strengthsand weaknesses of the business in function of the entire business as well as IFE wasdeveloped by 5 steps

Step 1: Make a list of factors that play a decisive role in the competitiveness of

enterprises in an sector (usually between 10 and 20 factors)

Step 2: importance assigned by sorting from 0.0 (not important) to 1.0 (most

important) to each factor It should be noted that, the importance assigned to the factorindicates the relative importance of that factor to the success of the business Thus, forbusiness in the sector, the importance of factors listed in step 1 is the same

Table 1.2: IFE Matrix model

importance

Classification Important

PointsFactor 1

Factor 2

Step 3: Classification from 1 to 4 for each factor (actual maybe wider) For

greatest weakness when sorting by 1, the smallest weakness when sorting by 2, thesmallest strengths when sorting by 3 and the biggest strengths when sorting by 4 So,here is the score reflects the competitiveness of each enterprise factor compared tocompetitors in the business

Step 4: Calculate each factor by multiplying the level of importance of that

factor with the corresponding classification score

Step 5: Calculate the total score for all factors in the matrix is given by adding

relevant factors of each business Total this score shows that, this is absolutelycompetitiveness of enterprises

Accordingly, if the total score of the entire list of factors to be included in thematrix by 4, enterprise has high absolute competitiveness If from 2.50 or above, theenterprises has absolute competitiveness over average level In contrast, the totalscore in the matrix is less than 2.50, absolute competitiveness of enterprises is belowthe average level

1.2.2.3 SWOT Matrix

SWOT Matrix assesses strengths, weaknesses, opportunities and risks Thepurpose of environmental study is to identify the threats, opportunities and strengthsand weaknesses that are now and will face in their business for the basis for thedevelopment of business strategy Technique of SWOT analysis is a tool for thesynthesis of research findings and proposing environmental strategies

- The opportunity: Where is the good chance? Interesting trend that I alreadyknow? Opportunities can come from technological change and markets or even ininternational or narrow range, from the change in government policy relating tooutsource part of the company's activities, from the change changing social patterns,

population structure or structures fashion, from the events taking place in the region.Search method is most useful as revise their advantage and ask the question whether theadvantages that is open to any new opportunities Can also do the opposite, check yourweaknesses and ask the question whether there is any chance to appear if they areremoved.

- Threat: What is obstacle? What are competitors doing? Have any change forspecific requirements of the work, product or service? Are there any risk for thecompany if changes in technology? Problems of delinquency or cash flow? Is there anyweakness threatens the company? The analysis usually helps to find out what needs to

be done and turn weaknesses into perspective

Identify core strengths and weaknesses: The process of evaluating andanalyzing the internal environment of the business draws many factors, but it isimportant to draw the core factors that affect the competitive position and theimplementation of strategies of the business It should consider these factors asoperations in the system and compared with general sector standards and keycompetitors

Links internal factors and external conditions: After determining the basicfactors of the inside and outside conditions, to apply a process including thefollowing steps to conduct analysis and propose strategies:

Step 1: List the key factors of the inside and outside conditions into the cells of theSWOT matrix SWOT stands for 4 letters of Strengths, Weaknesses, Opportunities andThreats

Step 2: Give each pair with combined logic Making strategies combined S / O,

S / T, W / O, W / T

S/O: What strength is used to best exploit from external opportunities?

S/T: What strength is used to deal with external threats?

W/O: What weaknesses do overcome to create good conditions for takingadvantage of external opportunities? Need to exploit any opportunity to gradually fill thecurrent weaknesses?

W/T: What weaknesses do need to be overcame to reduce the risk now?

Step 3: Giving combination of 4 factors of S + W + O + T This aims to createsynergy between four factors to form a strategy that businesses to use their power toexploit opportunities gradually fill weaknesses and reduce risk

Step 4: Synthesis and review strategies Grouping strategies and coordinatestrategies into systems to support for each other

Figure 1.5: SWOT Matrix

help businesses to develop strengths, take advantage of opportunities and overcomethe weaknesses and limitations of external threats TOWS matrix model

Table 1.3 TOWS Matrix SWOT

Strategic uses strengths

to overcome the risks and challenges

advantage of opportunities to overcome weaknesses

Strategies to deal with weaknesses and challenges

1.2.2.5 SPACE Matrix

SPACE Matrix is a tool used to race a strategic choice for a business based onthe factors as:

- Financial strength of the business

- Competitive advantage of business

- Advantage and stability of the business

- Stability of the business environment

Competitive Advantage

1 6

Strength of the sector

Stability of the environment

Notes: How to score for variables as follows: From +1 (worst) to +6 (best) for eachvariable / factor FS and IS group, from -1 (best) to -6 (worst) for each variable in ESand CA group).

1.2.3 Principles of strategic options

When formulating development strategies to include options, businesses must

be based on certain principles, certain facilities These principles are alwaysconsistent basis and through the process of building component of developmentstrategy

- Principle 1: Development Strategy to ensure the overall objective of theenterprise The proposed strategy can vary in the number and extent of the target, butnot different overarching goal for this is to the destination Therefore, the overarchinggoal is the common standard in the evaluation, assessment and selection and decision

- Principle 2: Development Strategy should be feasible This principle is toensure that the chosen strategy avoids mistakes, not realistic

- Principle 3: Development Strategy to ensure the dialectical relationshipbetween business and markets of interest The relationship between business and themarket relationships between producers and consumers, between buyers and sellers.Development Strategy is planned to respect the interests of the parties Business cannot plan Development Strategy according to its own goals but not on the basis ofsatisfying the needs of clients at all costs

These three principles are indispensable when evaluating, selecting adevelopment strategy

1.2.4 Strategic choices rating

- Quantitative criteria

Development Strategy is often tied to the criteria of quantity such as salesvolume, market share, revenue and profit Therefore, the standards of DevelopmentStrategy evaluation can be based on these indicators

- Qualitative criteria

In addition to the Quantitative criteria and Qualitative criteria for assessment andevaluation of Development Strategy The qualitative criteria are more business tovalued and choice: forces of business, safety in business and adapt to Strategy withthe market.

Based on the principles and standards set, business to conduct comparing theproposed strategy with the aim to find a strategy to implement The strategy is based

on the decision made is the optimal strategy or at least formidable from the developedstrategy The decision selection involves the following steps:

Step 1: Selection of common criteria to compare the proposed strategy: profits,business safe, competitive forces

Step 2: Choose the standard scale for the level of response to the standard set bythe strategy

Step 3: Scoring to the standards adopted by the analysis

Step 4: Carry out comparison and selection In principle, the strategy chosen is

the highest total score, or strategies with the highest average score, demonstrating thefeasibility

1.2.5 QSPM Matrix in strategic choice and decisions

Strategic planning matrix (QSPM) is an effective tool capable of quantitatively.Indicates the attractiveness of strategy can choose and thus provide objective basis forselecting the particular strategy

QSPM matrix using information from EFE matrix, IFE, image matrix, SWOTMatrix then to the objective assessment of possible alternative strategies Thestrategy chosen for inclusion in the QSPM matrix not all strategies found in Phase 2

To build the QSPM matrix should be taken 6 steps:

Step 1: List opportunity / threat from the outside and strengths/weaknesseswithin the left column of the QSPM matrix This information should be obtaineddirectly from IFE and EFE matrix QSPM matrix should include a minimum of 10external and internal critical success factors

Table 1.4: QSPM Matrix model

Unit price Total

Unit price Total

Unit price Total

Internal Factors

of IFE matrix

Score taken

on theEFE and IFE matrix

Attractivelevel from 1 to 4

Attractivelevel from 1 to 4

Attractivelevel from 1 to 4

Step 2: Classification for each outside and inside critical success factors

Step 3: Look at the matrix at stage 2 (combined) and identify possiblealternative strategies that the organization should consider to make

Step 4: Determine the AS-Attractiveness Score for each factor: score from 1 to

4 Attractiveness Score from 1 = Not Attractive, 2 = less attractive SommewhatAttractive, 3 = Reasonabilily Attractive, 4 = Highly Attractive

Step 5: Determine the total attractive score (TAS) by multiplying by the scoreclassified in step 2 with AS in step 4

Step 6: Calculate the total score of each strategy It is the sum of the totalattractive score in the strategy column of the matrix QSPM Total of attractive scoreindicated that the most attractive strategy for each strategic alternatives In terms ofall internal and external critical success factors can appropriately influence thestrategic decisions, if the score is higher , then the strategy market is more attractive

The most attractive strategy is strategy with total score in step 6 is the highest.Normally there are development strategy plans that businesses can select as describedabove Each strategy can be applied independently or combined with theimplementation of other strategies, such as: (1) identify current strategies of thecompany, (2) Conduct analysis of investment portfolios (3) Selecting anddevelopment strategy, (4) Evaluation of selected strategy The analysis of subjectiveand objective factors are needed during the selection of process strategy It is veryimportant to aware of the results of the analysis of investment portfolios is animportant tool but not the only one

1.2.6 Planning for Strategy implementation

This is the process of setting up mechanisms to make the plan of humanresource allocation to implement the direction of the solution of key strategy On thatbasis, contribute effectively exploiting the resources and competitive advantage ofenterprises and create synergy to achieve goals

CHAPTER II ANALYSIS OF BUSINESS OF THANH LINH COMPANY

LIMITED

1.1 Introduction to the company

1.1.1 History and development

1.1.1.1 Process of establishment and development

Thanh Linh Company Limited is a young company though newly establishedcompany, but the company has tremendous growth both in quality and quantity

Thanh Linh Company Limited

Transaction name: Thanh Linh Company Limited

Headquarters: Tan Tien - Vinh Tuong-Vinh Phuc

To be able to perform business tasks, the company has the following capitalstructure:

Total capital: 10000000000 VND

+ Fixed capital: 7.150.000.000đ

Thanh Linh Company Limited was established in 2003 and today operatedmore than 10 years Located at the main street of Tan Tien Vinh Tuong - Vinh Phucshould be very favorable for the sale of petroleum

Infrastructure covers a total land area allocated as: 2957m 2 , time of 49 years.Thanh Linh company limited invested workplace and production operation

Having been through the ups and downs, the company has positioned itself inthe market The company has a harmonious combination between market demand,business advantage with the ability to provide expanded services, an other to raiseincome stability for workers and employees, on the other hand, ensure compliancewith the trend of economic development in our country today

1.1.1.2 Functions and tasks

+ Function:

Supply of goods and equipment to serve the needs of consumers Tradingcommodities of petroleum

- Tasks:

Advertising, marketing of product to attract more consumer

- Build and education to officers and employees, strictly follow the rules andregulations on labor management, sanitation, fire protection (the rules and regulations

of labor management, sanitation and fire protection agencies (the rules and regulationsare adopted by the director)

- Fulfill policies for employees, such as salary, bonuses, Social, Health,workwear and other regimes as specified in the labor code

1.1.1.3 Apparatus

The organizational structure and management direction consistent withmanagement mechanism of the company The company has arranged apparatusreflected in the following diagram:

Figure 2.1: Organizational structure of apparatus

Notes:

Direct relationshipData Supply Relation

- Functions and duties of divisions

+ Director: In change of responsibility for executing all company, prepareplans, to sign direct economic contracts, find business partners, direct manage thecapital expenditure and management of money of the company

Board of DirectorsDirector + Vice Director

Division of Organization

Division of

Accounting

Division of Business StoreDivision of

business plan