XÂY DỰNG CHIẾN lược KINH DOANH CÔNG TY sản XUẤT PHỤ TÙNG ôtô và THIẾT bị CÔNG NGHIỆP JAT GIAI đoạn 2012 – 2020 e

Overview of the enterprise development strategy...10 1.1 The concept of enterprise strategy...10 1.2 The role of strategy for enterprise...12 1.3 The level of strategic management in

THESIS BUSINESS STRATEGY FOR JAT AUTOPART

AND INDUSTRIAL EQUIPMENTS

PERIOD 2012 – 2020

TABLE OF CONTENT

TABLE OF CONTENT 2

INTRODUCTION 8

1 Thesis significance 8

2 Thesis objectives and applications 9

3 Research methodologies 9

4 Thesis structure and layout: The thesis is divided into 3 parts as followed 10

CHAPTER I 10

THEORETICAL BASIS OF MAKING ENTERPRISE BUSINESS STRATEGIES 10

1 Overview of the enterprise development strategy 10

1.1 The concept of enterprise strategy 10

1.2 The role of strategy for enterprise 12

1.3 The level of strategic management in the enterprise 13

1.4 The development strategies of the enterprise 13

2 Strategic planning of enterprise development 15

2.1 Strategic planning process of enterprise development 15

2.2 Strategic planning tools 18

2.3 Principles of choosing strategy 25

2.4 Evaluate the selection strategy 29

CHAPTER II 31

BUSINESS AND PRODUCTION ANALYSIS OF JAT AUTOPART AND INDUSTRIAL EQUIPMANT MANUFACTURING JOINT STCOK COMPANY 31

I GENERAL INTRODUCTION ABOUT JAT AUTOPART AND INDUSTRIAL EQUIPMANT MANUFACTURING JOINT STCOK COMPANY 31

1 Foundation history and development of the company 31

1.1 Foundation process 31

1.2 Functions and tasks 33

1.3 Mission, vision, philosophy in business 34

2 Manpower of the company 37

2.1 Capital resource 37

2.3 Human resource 38

2.3 Technology 39

3.1 Investment 40

3.2 Business and production status 42

II ANALYSIS OF BESIDE FACTORS INFLUENCING THE COMPANY 45

1 Macro environment 45

1.1 Economic environment 45

1.2 Legal – politic environment 48

1.3 Social culture environment 49

1.4 Technological environment 50

1.5 natural environments 50

2 Analysis of industry environment 51

2.1 Analysis of competitive forces from potential rivals 51

2.2 analysis of customer force 52

2.3 Analysis of supplier’s force 53

3 Opportunities and challenge 55

3.1 Opportunities 55

3.2 Challenges 56

4 Analysis of competition, matrix model CPM 57

4 Matrix model EFE 58

III ANALYSIS OF THE COMPANY INTERNAL SITUATION 60

2 Analysis of supporting activities 67

2.1 Supplier management 67

2.1 Human resource management 68

2.3 General management 69

3 Analysis, recognition and evaluation of valuable and core capacity 70

5 IFE Matrix 71

IV SWOT ANALYSIS 72

CHAPTER III 73

CONCLUSION AND RECOMMENDATION 73

I ENTERPRISE DEVELOPMENT STRATEGY PERIOD 2012-2020 73

1 The strategy targets 73

1.1 For the scale and market share 73

1.2 Detailed targets 73

II TARGET SUGGESTION 74

1 TOWS matrix 74

2 SPACE matrix model 76

3 Suggestion of strategy selection through QSPM matrix 78

3.1 QSPM matrix for SO group 78

3.2 QSPM matrix for ST group 81

3.3 QSPM matrix for WO group 82

3.4 QSPM for WT group 83

III SUGGESTION OF STRATEGY IMPLEMENTATION SOLUTIONS 85

1 Human resource solution 85

2 Financial solutions 87

3 Marketing solutions 87

4 The research and development solutions 88

IV PROPOSAL TO THE GOVERNMENT 88

CONCLUSION 90

REFERENCES 91

LIST OF FIGURES

Figure 1-1 Strategic planning of enterprise development diagram 16

Figure 1-2 Diagram of comprehensive strategic management 18

Figure 1-3 Flow sheet diagram of analyzing strategy formation 19

Figure 1-4 Model of SWOT matrix 23

Figure 1-5 Model of QSPM matrix 24

Figure 1-6 The main strategic matrix 28

Figure 2-7 Chart of Structure 35

LIST OF TABLES

1 Thesis significance

Building strategies is a regular work of any enterprises The determination ofproper strategies decides the target success and the mission of the enterprises.However, not all the Vietnamese enterprises develop right strategies Failure ofthe enterprises is the evidence for the inadequacy in the strategy Therefore,strategy building is always paid special attention with its full significance andurgency even for the companies with inherent good strategy In the situation ofVietnam integration into the world economy, the strategy building is much moreimportant Good opportunities come together with bigger challenges Forcompeting successfully, the enterprises must determine the right approach, goodstrategy based on deep acknowledgement on its strength and weaknesses,opportunities and risks

In reality, many enterprises, especially small and medium enterprises pay lessattention to strategies; even they do not build a strategy for their companies Theprimary reason is because these enterprises are not aware of the significance ofstrategies

During the development history, in the sector of automobile and motorbikemanufacture, the immature and slow-developed Vietnam auxiliary industry is thelargest barrier which hinders the development of automobile and motorbikeindustry development One of the reasons for the poor development of auxiliaryindustry is that the enterprises do not focus on building the thorough businessstrategy The thesis is written as a necessary mean for building a form of small,reduced and effective business unit of manufacturing motorbike spare parts,contributing to pushing the car and motorbike industry development and itsauxiliary industry development

2 Thesis objectives and applications

- For theoretical bases:

+ All the subjects studied during the course IeMBA are used in the thesis andthen applied to the practical manufacture and business of the Jat Autopart andIndustrial equipments manufacturing Joint Stock Company in the most effectiveway

- For the practical usage:

+Help the Jat Autopart and Industrial equipments manufacturing Joint StockCompany successfully build the highly feasible business strategy for the period2012-2020

+Build the Jat Autopart and Industrial equipments manufacturing joint stock

Company to be an auxiliary enterprise which is small, reduced and effective.

+ Create a breakthrough in strategy contributing to pushing up the development

of auxiliary industry in the coming years

3 Research methodologies

- The main method used for the thesis research is the description stastistic andthe strategic planning matrix ( Internal factor evaluation matrix- IFE, externalfactor evaluation matrix -EFE, competition image matrix method, SWOT matrixand so on) The theoretical base of these matrixes is presented in the chapter 1 ofthis paper

- Information collection:

+ Primary information: collected from the Vietnam Automobile ManufacturersAssociation from the Honda Vietnam and the statistical data from the JatAutopart and Industrial equipments manufacturing joint stock company willinclude audited financial and accounting data

+ Secondary information: Direct interview with employees of sales departmentand manufacture department Give out survey sheets to customers and suppliers.Information analysis: Apply statistical techniques to handle, calculate, compareand assess, then give conclusion for each studies items.

4 Thesis structure and layout: The thesis is divided into 3 parts as followed

Introduction

Chapter I : Theoretical bases for building the business strategy

Chapter II : Analyze the current situation of the Jat Autoparts and industrialequipments manufacture joint stock company

Chapter III : Conclusion and recommendations

1 Overview of the enterprise development strategy

1.1 The concept of enterprise strategy

1.1.1 What is strategy?

Strategy (original word deriving from Greek is strategos) is a military term used

to point out array plan and force distribution with the

goal of defeating the enemy Carl von Clausewitz –

soldier in 19th century – described the strategy as

“wars planning and warfare campaigns planning”

Those campaigns will decide the participation of each

individual” More recently, historian Edward Mead

Earle described strategy as “the art of control and using the resource of a country

or a coalition of nations aim to ensure and increase efficiency for its essentialinterests”

Nowadays, business organizations also apply strategic concept

similar to in the military The strategy is control plan and using

resource of organizations such as human, assets, finance, etc

aims to enhance and ensure its essential interests Kenneth

Andrews was the first person who offered this outstanding

idea in the classic The Concept of Corporate Strategy

According to him, strategy is which an organization must do based on its strongpoints and weak points in the context of opportunities and threats

Bruce Henderson, strategist and founder of Boston Consulting Group hasconnected the concept of strategy with competitive advantage Competitiveadvantage is to put a company in a better position than competitors to createeconomic value for customers Henderson said that “Strategy is the carefulsearch for an action plan to develop and incorporate competitive advantages ofthe organization The difference between you and your competitors are the basisfor your advantage” Henderson believed that can’t remain two competitors ifthey have identical business methods You need to create the new difference soyou may exist Michael Porter also agreed with Henderson: “Competitivestrategy relates to the difference It is the careful choice of different actionsequence to create a unique set of values”

Strategy is a plan to give a competitive advantage to the organization overcompetitors A good strategy, implemented effectively, will help the managersand staff at all levels to determine objectives, identify the line of actions, andcontribute in the success of the organization In contrast, an organization that has

no clear strategy is like a ship without a boatman

1.1.2 Concept of enterprise strategy:

There are many different approaches to the concept of strategy “Businessstrategy of a enterprise is an overall action program towards the implementation

of the enterprise goals The strategy is not to devise specifically how to achievethese goals because that is the task of innumerable support programs, otherfunction strategies Strategy only creates the framework to guide thinking to act.”[2, 14] The purpose of strategic planning is to find opportunities and strive to finecompetitive position

Author Fred R.David, in “Outline of strategic management” defines: “Strategy

is the science and the art of drafting, implementing and evaluating the functiondecisions, helping enterprises to achieve the objectives”, “Strategy is the means

to achieve long-term goals Business strategy may include: expansion of theoperation areas, diversification of activities, property, product development,market penetration, cutting spending, liquidation and joint ventures” [1, 20].Recently, a new concept appeared and said that, “Strategy is both a planning processand is the process of adding new emerged problem”

1.2 The role of strategy for enterprise

- Firstly, the building strategy helps enterprises clear their purposes anddirection in the future

- Secondly, strategic management process requires specific forecast ofenvironmental changes, so that managers are able to grasp opportunitiesbetter, and minimize the risks, make business decisions in accordance withbusiness environment

- Thirdly, through the strategic management process, the decision of the enterprisewill associate with the environmental changes, helps enterprises maintain andincrease competitive position on the market, in the changing future conditions toachieve objectives

- Fourth, good strategic management is a prerequisite to achieve good businessresults, increase revenue and profits However, good strategic management is not asufficient condition to success, it only allows to reduce the risks, and increases theability to take advantage of opportunities

1.3 The level of strategic management in the enterprise

Strategic management according to management level in the enterprise isdivided into three parts:

- Company strategic management (Corporate strategy) with the scope is todetermine the purpose and objectives of the company, determine businessline, determine the core field that company need to focus and determine theresource distribution method of the enterprise

- Strategic business unit (SBU: strategic business unit): Select the product, thetarget market for the business unit; determine competitive strategy ofbusiness unit with competitors, etc

- Functionary strategic management (functional strategy): is the strategy of thedepartments, divisions of the company such as: Marketing, human recourse,finance, manufacturing, project, etc are built to implement the strategicobjectives of business unit and company

1.4 The development strategies of the enterprise

1.4.1 Classification of Strategic management by growth focused objectives

- Market entry strategy

- Market development strategy

- Product development strategy

1.4.2 Classification of strategic management by integration objectives

- Positive Integration: increase control with distribution activities

- Reverse Integration: increase control with the supply of the materials

- Horizontal Integration: acquisition of competitors in the same industry togrow

1.4.3 Classification of management strategy by diversification objectives

- Concentric diversity: further development of new product with the sameproduction technology ( For example: dairy products of Vinamilk )

- Horizontal diversity: further development of products which don’t have thesame technology but relating to marketing ( For example: new products such

as cookies, Wall ice-cream of Kinh Do)

- Mixed diversity: development of completely new products, not related totechnology or marketing

1.4.4 Other specific strategies

- Leading strategy by low cost: products or services provided by the enterpriseare completely equivalent in quantity but have lower price than competitors

- Creating Strategy of product difference: make the products or services aredifferent from competitors that customers appreciate over competitors

- “Skim oil film” strategy likes the smart mobile phone business companies

- Strategy of effective relationships with customers: strategy of relationshipswith customers must provide something that customers appreciate

- Strategy of building efficient distribution network: is a phenomenon in whichthe value of a product increases when selling more products, reduce the cost

of distribution

1.4.5 The outward-oriented strategy: joint ventures, association, outsourcing,

acquisition of merged rival company (M&A), franchise (franchising)

such as: minimize the scope of business, cut inefficient products, cut inefficient

staff, remove the inefficient field of business line, focus on inventory reduction,debt collection; disposal the inefficient SBU

2 Strategic planning of enterprise development

2.1 Strategic planning process of enterprise development

According to Fred R.David, Strategic planning process divided into 3 stages, withmany activities, such as the following diagram

Strategy formation  Strategy implementation  Strategy evaluation

Figure 1-1 Strategic planning of enterprise development diagram

Source: Fred R.David (2006), [1, 24]

2.1.1 Strategy formation stage

Strategy formation is the process of analyzing the external environment toidentify opportunities and risks; analyzing the internal environment to identifystrong points, weak points of the enterprise; establishing business missions,vision, setting long-term goals and choosing between alternative strategies.Strategy formation stage is also called “strategic planning” There are manystrategic management techniques allow making and selecting strategies Some ofthese tools are: external factors evaluation matrix (EFE), internal factors evaluationmatrix (IFE), strategic positions and activities matrix evaluation (SPACE), Boston

Consulting Group matrix (BCG), and quantitative strategic planning matrix(QSPM).

2.1.2 Strategy implementation stage:

Strategy implementation is often called operation stage of strategic management.

The basic operation of strategy implementation is to establish annual goals, adjustthe organizational structure adapt to the chosen strategy, provide the policy guidethe work to achieve the goals, build budget to effectively control financialexpenditures, distribute resources and adjust the encouragement system topromote the staff to make new goals Strategy implementation requires discipline,dedication of each individual The successful strategy implementation revolvesaround managers’ ability to promote employees

2.1.3 Strategy evaluation:

The final stage of strategic management is strategy evaluation All strategies areinfluenced by factors inside and outside capital often change Three majoractivities of this stage are: (1) review the external and internal factors are basisfor the current strategies, (2) Measure results of the strategy implementation of theenterprise and functional units, comparing with the goals, (3) implement adjustmentactivities Strategy evaluation is necessary because the current success doesn’tguarantee future success The success always creates new problem, theorganizations which have satisfied thought must pay for by the decline

Strategic management process can be studied and applied to the use of a model.The diagram below is the model of comprehensive strategic management modelaccepted widely, although it isn’t a magic warn of success, it represents a clearmethod of steps of formation, implementation and evaluation of the strategies

Figure 1-2 Diagram of comprehensive strategic management

Source: Fred R.David (2006), [1, 27]

A change in any major component in the model may require a change in one or all

of the other components Thus, activities of formation, implementation andevaluation should be done on a continuous basis

2.2 Strategic planning tools

There are many tools to plan strategy, as well as there are many kinds of strategicplanning Hereinafter is the process of forming a general strategy with thecommon tools used for almost scales and type of enterprises

Figure 1-3 Flow sheet diagram of analyzing strategy formation

Source: Fred R.David (2006), [1, 260]

Stage 1: summarize entered the basis information necessary for the strategyformation Stage 2: focus on making feasible strategies that can choose by sort,combining important internal and external elements Stage 3: is considered asdetermination stage, including a technique, quantitative strategic planningmatrix (QSPM) QSPM Matrix indicates the relative attractiveness of the strategycan be selected and thus provide objective basis for selection of specificstrategies

All six techniques in strategy formation process require a combination betweenintuition and analysis In order to serve the requirements of research topic, in thissection I would analyze specifically 4 main tools: EFE matrix, IFE matrix,

competitive imagine matrix, SWOT matrix, quantitative strategic planning matrix(QSPM).

2.2.1 EFE Matrix (External factor evaluation matrix)

EFE matrix allows the strategist to summarize and evaluate PEST information(polity, economy, culture, society, technology, and in addition there are otherfactors such as: demographics, geography, law and competition) There are fivesteps in developing an EFE matrix

Step 1: Make a list of factors that play a decisive role for the success as identified

in the inspection process of external factors; including the total from 10 to 20factors, consisting of opportunities and threats affecting the enterprise andbusiness line of this enterprise

Step 2: Classify the importance from 0.0 (unimportant) to 1.0 (very important) foreach factor The opportunities usually have higher classification than threats,though the threats may also have higher classification if it’s especially severe orthreatening nature The suitable classification level can be determined bycomparing the successful competitors with the unsuccessful competitors bydiscussing this factor and achieve the consensus of the group The total ofclassification level assigned to the factors must equal to1.0

Step 3: Classify from 1 to 4 for each factor determining the success to show themethods that the current strategy of the enterprise response to these factors, inwhich 4 is good response, 3 is above average response, 2 is average response and 1

is little one These levels are based on the effectiveness of the strategy in theenterprise Thus, this classification is based on the enterprise, while theclassification in step 2 is based on the industry

Step 4: Multiply the importance of each variable with its type to determine thescore of the importance

Step 5: Plus the total score of the importance for each variable to determine the

total score of importance for each organization.

Regardless of major opportunities and threats included in the external factorevaluation matrix, the highest total score of importance that an organization canget is 4.0 and the lowest is 1.0 The average total score of importance is 2.5 Thetotal score of importance is 4 showing that the organizations are responding verywell to the current opportunities and threats in their environment The total score ofimportance is 1 showing that the proposed strategy doesn’t take advantage ofopportunities or avoid external threats

2.2.2 IFE Matrix (Internal factor evaluation matrix)

This strategy formation tool summarizes and evaluates the important strengthsand weaknesses of functional business parts, and it also provides the basis foridentifying and evaluating the relationship among these parts To develop anIFE matrix, the intuitive comments are necessary, so the formality of thescientific method must be interpreted to show that this is the most effectivetechnique Similar to the EFE matrix, IFE matrix can be developed in five steps.Excluding IFE matrix has how many factors, the total score of importance can

be classified from the lowest is 1.0 to the highest is 4.0 and the average score is2.5 The total score of importance is lower than 2.5 showing that the enterprisehas internal weaknesses, and the score is higher than 2.5 showing that theenterprise has internal strengths Like EFE matrix, an IFE matrix should havefrom 10 to 20 key factors The number of factors doesn’t effect on the group ofthe total score of importance because the total of importance levels alwaysequals to 1.0

2.2.3 SWOT matrix

Strengths - weaknesses - opportunities – threats matrix is an important combiningtool can help managers to develop four types of strategies: strategies combiningstrengths – opportunities (SO), strategies combining weaknesses – opportunities(WO), strategies of strengths – threats (ST), and strategies of weaknesses –

threats (WT) The combination of internal and external factors is the mostdifficult task of developing a SWOT matrix, it requires good judgment and willnot have the best combination.

8-step process to form the SWOT matrix:

1 List the great opportunities

2 List the major threats

3 List the major strengths of the enterprise

4 List the major weaknesses of the enterprise

5 Combining strengths with opportunities to find the SO strategy

6 Combining weaknesses with opportunities to find the WO strategy

7 Combining strengths with threats to find the ST strategy

8 Combining weaknesses with threats to find the WT strategy

STRENGTHS – S1

2

3

WEAKNESSES – W1

THREATS – T

1

ST STRATEGIESUse strengths to avoidthreats

WT STRATEGIESOvercome weaknessesand avoid threats

3

Figure 1-4 Model of SWOT matrix

Source: Fred R.David (2006), [1, 267]

2.2.5 Quantitative strategic planning matrix (QSPM)

This matrix is an analytical technique to determine the attractiveness of feasiblestrategies can be replaced It is the third stage of analytical framework for strategyformation This technique will show objectively which alternative strategy is thebest QSPM matrix uses input factors by the analysis in the stage 1and thecombined result of analysis in the stage 2 to determine objectively in the possiblealternative strategies QSPM matrix is the tool that allows objective evaluation ofthe possible alternative strategies, first of all based on the key internal and externalsuccess factors QSPM matrix requires good intuitive judgment

Major factors

POSSIBLE SELECTED STRATEGIESClassification Strategy 1 Strategy 2Strategy 3

• Politic/law/government

• Society/culture/population

• Technique

• Competition

Figure 1-5 Model of QSPM matrix

Source: Fred R.David (2006), [1, 287]

- Ranking internal factors according to levels: 1,2,3,4  the weakest; weak;strong, the strongest

- Ranking external factors according to levels: 1,2,3,4  responses of theenterprise poor, average, good, very good

Above is the basic model of QSPM matrix The left column of QSPM matrixincludes internal and external factors (stage 1), and the top row consists offeasible alternative strategies (from stage 2) The left column of QSPM matrixincludes the information obtained directly from EFE matrix and IFE matrix.Next to the column of major success factors is the column of respectiveclassification for each factor EFE matrix and IFE matrix

The top row of QSPM matrix includes feasible alternative strategies derived fromthe SWOT matrix, SPACE matrix, BCG matrix, IE matrix and the grand strategicmatrix These strategic matrices often make the feasible alternative strategies canreplace analogously However, not every technical strategy is evaluated in QSPMmatrix Strategists should use good intuitive judgment to choose strategies ofQSPM matrix

Based on the concepts, QSPM matrix determines the attractiveness of differentstrategies by leveraging or improving the key internal and external success factors.The attractiveness of each strategy in the group of feasible alternative strategiescan be calculated by determining the cumulative effect of each key internal and

external success factor.

2.3 Principles of choosing strategy

The choice of enterprise strategy requires answering 3 questions:

1- Enterprise maintains operations in which field?

2- Enterprise withdraws from which field?

3- Enterprise extends which business forms?

The selection process of overall strategy should take the following steps:

- (1)- Identify the current business strategy

- (2)- Control the investment category

- (3)- Assess business strategy

2.3.1 Identify the current business strategy

The managers must know where the enterprise is operating and the organization ispursuing which strategy The current strategy gives us the current strategy basiswhich is new and confirmed There are internal and external factors affect theselection: (1) the framework and the difference of the enterprise; (2) the generalnature and characteristics of the recent withdrawal of the enterprise; (3) the rates,basis and trend of recent operations of the enterprise; (4) the current opportunities

to pursue; (5) the position with external threats

The key internal factors are: (1) the goals of the enterprise; (2) the resource supplystandards and model in the list of investment capital of business units in theenterprise; (3) the attitudes towards financial risks; (4) focus on research anddevelopment; (5) the functional area strategies

2.3.2 Analysis of investment portfolio

2.3.2.1 Select the management of the organization to analyze

The managers must determine the level in the organization to analyze the

investment portfolio The enterprise composes the structure of investment capitalhierarchy and the corresponding strategies Such structures must start from the level

of particular products to the culmination is the enterprise level (includinginvestment capital of all levels below) Though the traditional method of analyzinginvestment portfolio always focus on the types of products or the entire industry,but market segments also are one utility level need analysis

2.3.2.2 Define unit of analysis

After defining the level of analysis, must perform to select the unit of analysis orstrategic business units The selection of these units to continue analyzing andlocating them in the investment capital matrix which can be affected by the plannerprejudices relating to the current units and ranking diagram in the industry

2.3.2.3 Select direction (dimension) of the investment portfolio matrix

Need to select and define the direction or axis of the matrix The chosen specificdimensions are the basis and direction for data collection and analysis in the nextstep The selection of axis is to choose the number of variables to put in eachdimension of the matrix The managers should be careful while conductingselection and set up the investment capital matrix

2.3.3 Data collection and analysis

The issues should be noticed:

- The attractiveness level of the industry

- Competitive position

- The opportunities and threats

- Resources/ ability level

2.3.4 Set up and analyze the matrix of investment portfolio

- Identifying the location of each enterprise unit on the matrix Such combinationexpresses the current investment capital of the enterprise in the units Then the

managers must give the predictions about the expected positions on the matrix.

- Analyzing the deviation between the current investment capital position andthe predicted position Conducting in 3 steps:

+ Comparing and evaluating the relative attractiveness level of each enterprise inthe short-term and long-term

+ Evaluating the overall balance of investment portfolio according to thepredictions

+ Comparing the effective outlook of the entire investment portfolio with theobjectives set at the enterprise level

Depending on the result of this analysis, the board would wish to find the way topropose new investment portfolio with the desired effective characteristics

2.3.5 Identify the suitable investment portfolio

Need to select a suitable investment portfolio to create the expected efficiencythrough the implementation of the enterprise-level goals However, the seniormanagers must be aware that the proposed matrix of investment capital is not toreplace the decision draft

2.3.6 Select the strategy of the enterprise

The key influences of enterprise-level strategies are the production power, enterprisepower, objectives, the attitudes of administrative employees, financial resources,enterprise abilities, the response of the affected components and the timing

2.3.6.1 The power of the enterprise

The power of the enterprise or position relative to the competitive enterprises has amajor impact on the process of strategy selection The strong enterprises and weakenterprises often want to select variety kinds of strategy

Figure 1-6 The main strategic matrix

Source : Fred R.David (2006), [1, 284]

2.3.6.2 Targets

The selected targets are directly influenced by:

• The opinions of the most senior manager

• The attitudes of senior managers to off-chances, especially relating to the newproduction industry or new market

2.3.6.3 Financial resource

The financial base of a enterprise also affects and sometimes may determine to thestrategy selection

2.3.6.4 The commitment with the previous strategies

Although commitment to the previous strategies of the senior management boardencouraging strategy selection, it can also cause difficulties Committing and

pursuing one chosen strategy for many periods of setting plan can create theinertia reduces impacts of the next strategies.

2.3.6.5 The external dependence level

Some enterprises depend greatly on one or many external factors (a supplier or acustomer) These enterprises may have to choose a strategy that usual doesn’tchoose to maintain the necessary relationships for the key combination

2.3.6.6 Timing

The success of enterprise strategies depends heavily on the timing for them.For example: An enterprise intends to withdraw capital form a verticalintegration business unit by acquisition of another business unit to be able tofix the time carefully for each financial demand transaction Another aspectrelated to the concept of strategic window The basis thought in here is theopportunities existing in a specified time because the customers, technique,competitive enterprises, distribution lines and laws evolve and change overtime The limitation period when has strategic relevance between theopportunity and the authority of the enterprise is considered as a strategicwindow When the strategic window opens, the enterprise must invest inopportunity because the changes evolve in the next period The competitiveenterprises forced to find other opportunities

2.4 Evaluate the selection strategy

To evaluate the selection strategies, managers have to answer many questions.Here are seven listed questions can be considered as the selection criteria:

1 Does the strategy adapt to environmental circumstances or not?

a Is the strategy acceptable for the main parts of the enterprise or not?

b Can the strategy provide a competitive advantage or not?

2 Does this strategy combine with internal policies, management method,philosophy and operation modalities or not?

a Does this strategy conflict with other strategies or not?

b Does the organization structure adapt to the strategy or not?

3 Is the strategy adequate to the resources of human, material and finance ornot?

What are the financial consequences for the provision of funds for thisstrategy?

4 Are risks that go along with the strategy acceptable or not?

a Do the potential benefits justify the risk or not?

b What are failures?

5 Is the strategy appropriate for the product life cycle and potential or not?

a Is the strategy appropriate for the present and the future or not?

b Is the strategy appropriate for the product life cycle or not?

6 Will the strategy be implemented effectively or not?

a Is the strategy appropriate for the management ability and employees or not

b Is the timing appropriate or not?

7 Are there other important considerations or not?

a Are the key factors affecting the success evaluated accurately, correctly ornot?

b Are the key assumptions realistic or not?

As said in each of these standards can be used to make a myriad of questions Thesequestions must be posed and answered, some questions can be answeredimmediately and other ones will require more serious analysis

* Summary: There are many enterprise-level strategies that enterprises can choose.

Usually that is the focused growth strategy, growth by integration way (link), bydiversification of decline strategies Three types of focused growth strategy are:market penetration, market development and product development The strategygrows by the integration way includes positive vertical integration and reversevertical integration Three types of diversification strategy are: concentricdiversification, horizontal diversification and diversification combination Four

types of reduction strategy are: cut costs, collapse of investment capital, harvestand dissolution Each of above strategies can be applied independently or incombination with other strategies Merger, acquisition or joint venture is themethod that implements growth strategy by outward way A special type ofstrategy is the shift strategy To have direction of selecting the appropriate strategydepends on the development goals of the enterprise

CHAPTER II BUSINESS AND PRODUCTION ANALYSIS OF JAT AUTOPART AND INDUSTRIAL EQUIPMANT MANUFACTURING JOINT STCOK COMPANY

I GENERAL INTRODUCTION ABOUT JAT AUTOPART AND INDUSTRIAL EQUIPMANT MANUFACTURING JOINT STCOK COMPANY

1 Foundation history and development of the company

1.1 Foundation process

- Since 1998 – 2000, Japanese motorbike assembly corporations such as Honda,Yamaha, Suzuki and Taiwan’s one as SYM have been promoting their investmentinto Vietnam, a group of engineer who were working in motorbike parts producing

Joint Venture Companies, separated to establish one workshop which professionallyproduces mechanic equipments, handling accessories, checking accessories tosupply for satellite companies of these corporations.

- In 2003, mechanic workshop was expanded out for one more production field ofsome motorbike spare parts (gear stick , back grip handle, back strut, brake lever)for private low price motorbike assembly companies in Vietnam

- Until January 2008, Jat auto parts and industrial equipments manufacturing jointstock company (JAT Company) was officially found basing on the workshopmentioned as above, aim to wait in front for domestication trend of Japanesemotorbike assembly companies such as Honda, Yamaha The company operatesmainly in fields of accessories production, motorbike and motor spare parts,handling industrial equipments and other mechanic equipments

Right after being found, in order for long – term survive and development, thecompany determined that it must build the most modern management model foritself based on the selective integration management model of joint venturecompanies, foreign companies in order to be more selective and effective, with thestrategy: high stable quality – on time delivery – leading in companies operating inthe same field under the lowest cost

1.2 Functions and tasks

The company has main business and production scopes which are mentioned clearly

in the business registration license as follows:

BUSINESS REGISTRATION LISENCE

JOINT STOCK COMPANY

NO.: 0103022203

The first registration: 25th January 2008

The second registration change: 12th February 2009

1 Name of the company: JAT AUTO PARTS AND INDUSTRY EUIPMENTSPRODUCTION JOINT STOCK COMPANY

Transitional name: JAT AUTO PARTS AND INDUSTRY EUIPMENTSPRODUCTION JOINT STOCK COMPANY

2 Address of headquarter: No 504, Building P8, Viet Hung urban area, VietHung ward, Long Bien District, Hanoi

3 Business scopes:

No Scope

- Produce and trade mechanic products, industrial equipments;

- Produce and trade rubber plastic, plastic, mechanic processing machines,handing mechanic tools, welder, equipments for welding and cutting,lathing, handling accurate mechanic products as well as other mechanicproducts;

- Build civil and industrial projects, traffic, irrigation ones, technicalinfrastructure projects, urban and industrial zones, telecommunicationitems, power line from transformer stations up to 35KV;

- Produce and trade spare parts, accessories, sub items of motor,motorbike as well as equipments and facilities supporting for motorproduction and maintenance

- Produce and trade electrical, civil electrical, electronic devices

- services of repairing, installing, warranty, maintaining for machines,equipments provided by company

1.3 Mission, vision, philosophy in business

1.3.1 Mission

Mission of Jat auto parts and industry equipments

production joint stock Company is supplying products and

services in the auxiliary industrial field, always exceeds the

expectation of customers by continuously improvement for

quality management system, delivery time, product price,

ensures the harmonization between related parties; take youth dreams and aspiration

of staffs as the strength for the development

1.3.2 Vision: Developing Jat auto parts and industry equipments production joint

stock company to become one leading company in the field of auxiliary industry ingeneral and industrial equipment, motorbike and motor spare parts in particular inVietnam and Eastern Asia, to be the leading one in the auxiliary industrialproduction industry at low cost in Vietnam, meanwhile still ensure for the qualityand delivery time

- Staffs are customers being served best

- Always set customer’s benefits on top

- Ensure the harmonization on benefits between related parties

1.3.4 Structure organization

Figure 2-7 Chart of Structure

Function and task of Departments:

- Financial – Accounting Dept.: Set up financial and investment plans, managecosts, price, cash, control spending of departments according to approved budget;mobilize and balance capital resources; set up and supervise the performance of

financial policies in internal company; execute accounting operation, report Taxfollowing with legal regulations

- Human resource management dept.: form, determine strategies on humanresource to support for the development demand of company through stages;propose, set up and execute human resource management policies in thecompany’s scope, set up and organize human resource training and developmentplans annually for the company

- Administration – legislation: manage company’s asset, build good relationswith local legal organizations and authorities to bring back advantages incompany’s activities and development; consult legal issues for the manager

- Quality management Dept.: is one of key departments deciding the survivaland development of the company, the quality management department has task ofsetting up quality management system to satisfy with tight requirements fromcustomers, supervising the performance of procedures to ensure for productquality in company’s scope; ensuring and maintaining validity of quality policies,forming annual quality targets for performance

- Production plan management dept.: manages production plans on daily,monthly, annually in order to be suitable with factory’s capacity following witheach stage from short to long term, satisfies with customer’s demands with thelowest production cost through optimal production plans, minimum inventory,and the shortest product cycles

- Production technique dept.: set up preparation procedures for eachproduction stage in order to optimize the capacity of machine and workers;ensure equipments to be in the best status and ready for production at the lowestcost through on time maintenance plans and optimal spare parts inventory forreplacement

Production dept.: Execute approved production plans; ensure KP targets in theproduction, always complete and exceeding complement

- Development – research dept.: Research and develop new products to meetwith customer’s potential demands; research and develop new technologies toimprove labor capacity, reduce rejected products rate, reduce product’s price;coordinate with research and development department of partners to product newmotor and motorbike spare parts for new versions

- Marketing dept.: set up marketing strategies for the company; buildcompany’s culture “ orient to customer”; build brand name, images of JAT spareparts supplier strongly, keep loyalty in the market, consult for general managerabout customer relation strategies effectively, in order to maintain good relationwith customers and build the trust and loyalty of customers

- Business management dept.: Build business plans and strategies; developbusiness activities of the company daily Business administration departmentinclude three teams:

- Purchasing team: ensure input materials of the company to satisfy withtargets: correct quality, full quantity, on time, best price in the market

- Sale department: sign the contract and develop contracts as well as specificorder from customers; often maintain good relations with customers; resolvequickly customer’s complains

- Export – import department: execute order and sale procedures from oversea,exporting and importing procedures, foreign payment through bank

2 Manpower of the company

2.1 Capital resource

Legal capital of Jat auto parts and industry equipments production joint stockCompany is 8 billion Vietnam Dong

Table 2-1: Legal Capital Structure on 31/12/2011

Resource Value (million VND) Rate

Total number of staffs in the company until 31/12/2011 is 262 people Laborstructure is divided into education and profession levels which is presented in thefollowing table

Table 2.2 Labor Structure in JAT Company

(Unit: people)

Classification on qualification 262 100%

- Staffs are on BA and master level 28 10.7%

- Staffs are on college level 16 6.1%

- Staffs are on intermediate level 64 24.4%

- Professional and skilled workers 67 25.6%

Classification on labor contracts 262 100%

Labor contracts undefined time 18 7%

Labor contracts are short time from 1 -3 years 173 66%

Seasonal contracts (6 months) 71 27%

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

2.3 Technology

2.3.1 Equipment and machine

Since its establishment, Jat auto parts and industry equipments production jointstock Company has been improving continuously and investing into advancedequipments to meet customer’s demand best Until 31/12/2011, total value ofequipments which were invested and depreciated such as in table 2.3:

Table 2.3: Summary of Equipment and machines in JAT Company (million VND)

by production technique department or improved from old machines bought

in domestic in order to optimize the investment, use equipments mosteffectively meanwhile still meet with targets on capacity and quality

- Main equipments and production lines of the company include:

+ molding line: include bending machines from 15 tons to 150 tons

+ Welding line: include Robot welding equipments and MIG welders, SPOTwelder

+ Mechanic handling line: include hydraulic lathes, multifunctional lathe,CNC lathe, professional lathe, miller, driller, broaching machine, taro, boringmachine…

+ Swage line: include heating plant, swage mould system with local coolingdevice

2.4 Economic relation

Jat auto parts and industry equipments production joint stock company has goodrelation with customers who are foreign motorbike assembly company; withdomestic and foreign suppliers, thus always ensures the stability in materialprovision such as technical steels professionally used in producing auto andmotorbike spare parts following with Japanese international standards

3 Operation status of the company

3.1 Investment

Beside current production factory on the area of 2000m2, Jat auto parts andindustry equipments production joint stock company invested in a land lot of14,980m2 in 2011 – 2012 in Que Vo II industrial Zone, the company planned tobuild a factory with area of 4500m2 to transfer machines and equipments fromcurrent factory in Que Vo I industrial zone to new one before 1/10/2013

Targets and general view of the project

Build auto and motor spare part production factory under modern technologywith capacity of 3,000,000 motorbike spare parts/ year