Building the competitive strategy for ATS law firm co , in the period of 2018 2022

Objective of the research Purpose of the research: Basing on the theories on the business strategy management on designing the practical business strategy, and analyzing the actual imp

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

BÙI HỒNG HẠNH

BUILDING THE COMPETITIVE STRATEGY

FOR ATS LAW FIRM CO., LTD IN THE PERIOD OF 2018- 2022

XÂY DỰNG CHIẾN LƯỢC CẠNH TRANH CỦA CÔNG TY LUẬT ATS TRONG GIAI ĐOẠN 2018-2022

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

Hà Nội - 2017

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

BÙI HỒNG HẠNH

BUILDING THE COMPETITIVE STRATEGY

FOR ATS LAW FIRM CO., LTD IN THE PERIOD OF 2018- 2022

XÂY DỰNG CHIẾN LƯỢC CẠNH TRANH CỦA CÔNG TY LUẬT ATS TRONG GIAI ĐOẠN 2018-2022

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS HOÀNG ĐÌNH PHI

Hà Nội - 2017

DECLARATION

The author confirms that the research outcome in the thesis is the result of

author‟s independent work during study and research period and it is not yet published in

other‟s research and article

The other‟s research result and documentation (extraction, table, figure, formula,

and other document) used in the thesis are cited properly and the permission (if required) is

given

The author is responsible in front of the Thesis Assessment Committee, Hanoi

School of Business, and the laws for above-mentioned declaration

Date………

ACKNOWLEDGEMENT

Foremost, I would like to express my sincere gratitude to my advisor Assoc Prof Dr Hoang Dinh Phi for the continuous support of my master study and research, for his patience, motivation, enthusiasm, and immense knowledge His guidance helped me in all the time of research and writing of this thesis

Besides my advisor, I would like to thank to MBA studying course, and the team of HSB‟s lecturers and supporting staff Without partcipating the course, as well as the caring and responsibility of them, I could not have opportunity to access and absorb the useful knowdlege for framing my comprehensive understanding about business administration

My sincere thanks also goes to Ms Vu Thi Thu Ha, director and Mr Tran Gia The, managing partner of ATS law firm, for offering me the opportunities to access, interview and discover the necessary information of the firm, for completing the thesis

Hanoi, date _

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDGEMENT ii

LIST OF TABLES v

LIST OF FIGURES vi

THESIS STATEMENT 1

CHAPTER 1: BASIC THEORIES ON BUILDING THE BUSINESS COMPETITIVE STRATEGY 5

1.1 Basic definitions 5

1.1.1 Competitive strategy and its classification 5

Competitive strategy can be classified as follows : 6

1.1.2 Roles of competitive strategy 7

1.1.3 Competitive strategy of the business unit 8

1.1.4 Comprehensice competitive strategy of the business unit 8

1.1.5 Growth strategies of business units 11

1.2 Competitive strategy building process 16

1.2.1 Diagram of competitive strategy building process 16

1.2.2 Competitive strategy building process 18

CHAPTER 2: ASSESSING THE CURRENT SITUATION AND THE PRESENT COMPETITIVE STRATEGY OF ATS LAW FIRM CO., LTD 25

2.1 Introduction of ATS law firm 25

2.1.1 General introduction of ATS law firm 25

2.1.2 Vision and mission 26

2.1.3 ATS‟s business activities 26

2.1.4 Organizational structure 28

2.1.5 Current business operation 29

2.2 Analyzation of the external factors affecting the business operation of ATS law firm 30 2.2.1 Macro environment factors 30

2.2.2 Micro environment 33

2.3 Identification of opportunity and threat 38

2.4 Matrix evaluation of the external factors (EFE) 38

2.5 Analyzation of the internal factors (IFE) 40

2.5.1 Executive capability 40

2.5.2 Human resources 41

2.5.3 Marketing activities 43

2.5.4 Financial situation of ATS 44

2.6 Identification of ATS‟s strengths and weakness 44

2.7 Matrix of the internal factor analyzation (IFE) 45

2.8 SWOT matrix of ATS law firm 46

2.9 The current business strategy of ATS 48

CHAPTER 3: PROPOSAL OF SOME SOLUTIONS TO IMPLEMENT THE COMPETIVE STRATEGY IN THE PERIOD 2018-2022 49

3.1 Orientation of the Government on the economic development by 2025 and expectation of changes on environment and market, and the development of the lawyer profession 49

3.2 Development orientation and operation target of ATS law firm in the period of 2018-2022 50

3.3 Competitive strategy of ATS in the period of 2018-2022 and the action plan 50

3.3.1 Building the competitive strategy of ATS in the period of 2018-2022 50

3.3.2 Competitive strategy of ATS in the period of 2018-2022 and action plan 55

3.4 Appraisal of the supervision and result of the action plan 59

3.5 Suggestion to ATS 59

3.6 Disadvantage of the thesis and the possible next coming research 59

CONCLUSION 60

LIMITATION 61

IMPLICATION 62

REFERENCE 63

ANNEX 1 65

LIST OF TABLES

Table 2.1 Revenue in period 2014-2016 29

Table 2.2 Matrix evaluation of the external factors of ATS law firm 39

Table 2.3: Partners/Consultants/lawyers qualification analyzation sheet 41

Table 2.4: Partners/Consultants/Lawyers professional analyzation sheet 42

Table 2.5: Partners/Consultants/Lawyers hospitality analyzation sheet 42

Table 2.6 Financial situation of ATS 44

Table 2.7: Internal factor analyzation matrix 45

THESIS STATEMENT

1 Necessity of the thesis:

The thesis is necessary, because the competition in the legal industry is very hard

The barrier entry of the industry is very low Due to the low investment cost for such

an intangible service industry, it is very easy for the new competitor to join the industry

Besides, there are many law firms who have the similar strategy and market share They focus on the foreign direct investment, commercial and enterprise law consultancy, and providing such services to the foreign invested companies, and the large or medium Vietnamese companies

Meanwhile, the demand for the legal service has not developed significantly over the recent years.The acknowledgement of the public in general and the enterprise community about the importance of law compliance and role of lawyers is not high The enterprise community, sometimes, dare to violate the laws, and when they have to face with the penalties from the government authorities, they are ready to pay the under the table lobby fee to the government officers, rather than fully comply with the laws,

or hiring the lawyers to protect themselves Due to the Vietnamese old fashion culture

of respecting the “friendly and emotional relationship, and avoiding solving the dispute

or conflict through legal proceeding or lawyers”, they see the lawyer fee is an unnecessary They just find lawyers after already facing with the troubles or dispute, instead of seeking the assistance from lawyers in advance, for avoiding any possible risk in the future

Due to the economic crisis which has been happening over nearly ten years, both the foreign investment volume into Vietnam, and the domestic economic investment or commercial activities reduced or standstill, resulting in the significant reduction of demand for lawyer services

Otherwise, the legal consultancy industry is saturated, after nearly sixteen years of development

Therefore, for surviving and developing in such hardship situation is the critical target, for not only the long term established law firms, with the large market share, but also the young and medium- size law firm like ATS

From the above reasons, the writer decides to choose the topic “Building the

competitive strategy for ATS law firm in the period 2018-2022” with aims to find

out the effective strategy for the stronger stability of the law firm in the current situation, and its development in the future

2 Objective of the research

Purpose of the research: Basing on the theories on the business strategy management

on designing the practical business strategy, and analyzing the actual impact of the business environment on the company business operation, as well as basing the future business operation of ATS law fim in the period of 2018-2022, with aims to enhance its competitive advantages and development in the situation of harder competition and international economic integration

Research duties: The specified duties that the thesis aims to is as of follows:

1) Why is it necessary to research the business strategy design in ATS law firm ?

The answer of this question serves the identification of the necessity and meaning of the research purpose, research situation, the approaching method, as well as using of research methodology for achieving the planned target

2) What is the theoretical bases of the business strategy design? Which theretical models are used for analyzing and defining the business strategy of ATS law firm?

The answer of the research aims to identify the theoretical bases for defining ATS law firm‟s business strategy by using models such as five forces, value chain, SWOT matrix, etc

3)Which factors that can impact the actual business operation of ATS law firm in the period 2014-2017? Strenghth, weakness, opportunities and threats that ATS has and faces with?

The question is answered by developing the theoretical bases in Question 2 above for collecting information, analyzing data for identifying the business strategy of ATS

4) What is the competitive strategy of ATS in the future? What are the solutions for implementing the future competitive strategy?

This part will solved by suggesting the optional competitive strategies for ATS, as well

as its action plan in the next coming time

3 Subject of the research

Subject of the research include the following factors:

(a) Analyzing the current internal and external factors impacting to ATS law firm

(b) Analyzing the current strategy applying in ATS law firm, finding out its

advantages and disadvantages

(c) Suggesting the solution for improving the disadvantages of the current strategy

of ATS law firm

(d) Overseeing the future socio-economic development in the period of 2018-2022 (e) Building the future strategy for ATS law firm in the period of 2018-2022

4 Scope of the research

The scope of the research is within ATS law firm, its external and internal aspects in

the period of 2014-2017, and suggestion for the period 2018-2022

5 Research methodology

The methodology of the thesis is based on the view of dialectical materialism,

historical materialism to link theory to reality

5.1 Data collecting methods

Collecting and researching the primary information throughconducting the survey

through circulating the questionnaires to the targeted groups such as the researched object (ATS law firm), the direct competitor group, the indirect competitor group (the replacing service), the targeted client group, and the management government authority

The planned survey questionnaires to be circulated shall be about 20-30 interviewees The survey shall be done as follows:

Direct interview: with ATS law firm It is the face to face interview with the directors

of ATS, for collecting the necessary information

Indirect interview through sending the questionaires to emails of the interviewees

Location: Hanoi, Vietnam

Time for conducting the survey: October 2016-January 2017

Targeted interviewees: ATS‟s clients, including main groups of clients such as

Japanese, Korean enterprises, Vietnamese giant corporations and state owned

companies

Collect the secondary information resources such as annual comprehensive data

report of law firms and transactions issued by Ministry of Justice, annual report on socio- economic development of Vietnam in period 2014, 2015 of General Statistic Bureau, Vietnam economic situation in 2015 reported by World Bank, online articles

on business development strategies and marketing tips for law firms

5.2 Data analyzation methods

The writer uses 2 data analyzation methods: quantitative methods using excel software for evaluation through the statistical survey questionnaire; qualitative methods such as analysis of rules, synthesis, interpretation, inductive, comparative

6 Thesis structure

The thesis structure is as following:

Chapter 1: Theories on building the competitive strategy

Chapter 2: Assessing the current situation and current competitive strategy of ATS law Firm Co., Ltd

Chapter 3: Proposal of some solutions to implement the compettive strategy of ATS law firm in 2018-2022

CHAPTER 1 BASIC THEORIES ON BUILDING THE BUSINESS COMPETITIVE STRATEGY

1.1 Basic definitions

1.1.1 Competitive strategy and its classification

It is easily to see the appearance and establishment of new business in many industry every day, as well as the hard competition between the competitors Some of them exceed comparing with the other players, but many of them are left behind and many others disappear from the market

So what is the difference between the winner, the existing one, and the loser in a market, or

an industry? The answer could be the talent of the leaders of the company, their cabilities, the unluckiness that the companies may face with, etc… However, one of them, the most important factor is the business strategy that the company applies

The reason why having an effective strategy is so important is because it gives business time to get some sense of how they are performing, what their capabilities are, and if these capabilities are able to help them grow

A business strategy, in a simple term, is a documented plan on how an organization is setting out to achieve their goal A business strategy contains a number of key principles that outlines how a company will go about attaining these goals For example, it will explain, how to deal with your competitors, look at the needs and expectations of customers, and will examine the long term growth and sustainability of their organization The business strategy is an interesting topic and paid much attention by different scholars and researchers, along with the historical development of business administration

The definition of strategy are also paid much attention by the famous business strategist,

Micheal Porter, in his book “Competitive strategy” “competitive strategy is a

combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there”

Developing the definition, as well as connecting the strategy with the competitive advantages, Brace Henderson, the strategist, as well as the founder of Boston Consulting Group, stated that “Strategy is the prudent seeking of an action plan for developing and combining the competitive advantages of an organization”

Analyzing the above mentioned definitions, we can see the main common features as

follows:

- Identifying the long term target of the enterprise/organization

- Setting up the comprehensive action plan

- Choosing the performance policies, mobilizing the resources for implementing the target

Competitive strategy can be classified as follows :

(a) Managing classification:

Basing on the managing level, strategies are classified into 3 following groups:

(i) Corporate level

The corporate level strategy has the below contents:

- Identifies the target and core business activities of a corporation

- Creates the important policies and plans for achieving the corporation‟s target, mobilizing the resources among different business activities

- Corporate level strategies apply to the whole corporation

(ii) Divisional level

The divisional level has the below contents:

- Idenfies the specified products/services or markets within the internal of the corporation

- The participation that each division of the corporation has to fulfill for contributing the corporate level strategy

(iii) Functional level

The functional level has the below contents:

- Focusing on assisting the corporate level strategy

- Focusing on specified operating activities

(b) Development orientation classification

Basing on the functions, the strategies could be classified as follows:

(i) Combination strategy group

Combination strategy group includes the forward strategy, the backward strategy, and the horizontal strategy

Forward strategy: The enterprise increases expands or increase its ownership to the

distributors or retailed sale agencies, with aims to get better profit margin

Backward strategy: the enterprise expands or increase its ownership to the supplier,

with aims to control the input expenditures

Horizontal strategy: the enterprise has its own ambition to merger & acquisition with

the other competitors in the same industry, for focusing the resources; expanding the scope of business activities and increasing the competitiveness of the enterprise

(ii) Intensive strategies

There are following intensieve strategies:

Market penetration strategies: A market penetration strategy involves focusing on

selling the existing products or services into the existing markets to gain a higher market share

Market development strategies: Market development is a growth strategy that identifies

and develops new market segments for current products A market development strategy targets non-buying customers in currently targeted segments It also targets new customers in new segments

Product development strategies: This strategy is employed when a company's existing

market is saturated, and revenues and profits are stagnant or falling A product developmentdiversification strategy takes a company outside its existing business and a new product is developed for a new market

(iii) Diversification strategies

Diversification strategies include the following:

Concentric diversification strategy: Concentric diversification is a type

ofbusiness strategy where a company acquires or creates new products or services to reach more consumers These new products and services usually are closely related to the company's existing products and services

Horizontal diversification: The horizontal diversification is a type of business strategy where the company provides the new products and/or services which are not related to the current products/services to the current targeted customers

Mixed activity diversification: the mixed activities diversification is a type of business

strategy where the company provides the new products, services without any relation to the current products or services to the current market share

1.1.2 Roles of competitive strategy

(a) Role of targeting and orientation:

Competitive strategy plays an important role in mapping out the target and development orientation of the enterprise It helps the executives to identify the roadmap the enterprise should go, as well as its expected outcome

(c) Role of management:

Apart from setting up the orientation and roadmap for achieving it, it is necessary for the executive of the enterprise to mobilize, arrange and use the necessary resources effectively for implementing the action plan and obtaining the expected result

1.1.3 Competitive strategy of the business unit

Competitive strategy of the enterprise includes two following groups: the comprehensive competitive strategy, and the grow strategy

1.1.4 Comprehensice competitive strategy of the business unit

According to Micheal Porter, there are four types of comprehensive competitive strategies: low cost; diversification; focusing; and fast reaction)

(a) Low cost strategy:

The purpose of the enterprise that follows the low cost strategy is to compete by providing the products or services with lower cost compared with the same one of the similar competitors

(i) The low cost strategy has the following features:

- Focuses on renovating the technology and management process for reducing cost

- Do not focus on the diversification or differentiation

- Do not focus on R&D activities for creating the new functions of the products and/or services

- The targeted customers shall be the low- end or mid- end level who concern very much on their expenditures for buying products or services

(ii) Advantages of the low cost strategy:

- Strong competitiveness with the replacing products and/or services

- Good negotiation position with the suppliers

- Create the barrier to market entry

(iii) Risks of the low cost strategy:

- Huge investment in technology for manufacturing mass production with low cost per unit

- It is possible to be copied or imitated

- Just focusing on the basic demands of the customer, and does not take care of the added value of the products and/or services to be provided to the customer

(b) Differentiation

The purpose of the enterprise that follows the differentiation strategy is to compete by creating the unique and different features of the products, services, and satisfying the customer‟s demands exceeding what the other competitors cannot provide

(i) Features:

- The enterprise can charge higher price of the products and/or services, compared with other competitors

- Focusing on the differentiation

- Classifying the market into different segments

(ii) Advantages:

- Creating brand loyalty

- Strong negotiation force with the suppliers and customers

- Create significant market entry

- High competitiveness with the replacing products

(iii) Risks:

- It is very challenging to remain the unique features of the products and/or services

- Face with the imitation of the competitors

- The customers may not be always faithful to the products and/or services

- Too unique more than what the customers want

(iv) The relation between the differentiation and the customer’s demands

- The differentiation must satisfy the specified demands of the customers, and may be modified for the particular customer segments Beside, it must create better or more interesting features of the products and/or services, compared

with the (similar) products and/or services of the competitors

- The differentiation must create the unique features of the products and/or services that the competitors cannot imitate

- The differentiation must be based on the particular advantages of the enterprise

(c) Focusing strategy

Focus strategy is only to meet specific needs of a particular market segment by geographic feature, customer or product characteristics that specifically meet these specific needs

(i) Features:

- Can explore special capabilities of the company

- Can pursue product differentiation strategy

- Focus on the target segment

(ii) Advantages:

- Can provide unique, special products or services that other competitors cannot

- Understand clearly the target segment

(iii) Risks:

- No advantages in the company‟s relationship with the suppliers

- High production cost

- Changes in technology or customer taste

(d) Quick response strategy

In the competition, companies often start with low cost strategy, and then turn into differentiation strategy, and later on, the combination of these two strategies Today, many companies gain competitive advantages by focusing on timely delivery This is reflected in the following aspects:

- New product development

- Product personalization

- Existing product improvement

- Purchase order based product distribution

- Adjustment of marketing activities

- Taking care of customer‟s requirements

1.1.5 Growth strategies of business units

There are three growth strategies, including intensity strategy (market penetration, product development, market development), integration strategy (forward integration, backward integration and horizontal integration); diversification strategy (concentric diversification, horizontal diversification, and conglomerate diversification)

(a) Intensity strategy

(i) Market penetration

Market penetration strategy is a strategy of increasing sales and profits by striving to sell more existing products on current markets through marketing activities

With this strategy the company can increase its market share by strategic solutions:

Increase the purchasing power of customer

The purchasing power of customer is expressed in the relation between the purchasing frequency and the purchasing volume In order to increase the purchasing power of customer, the company can select suitable solutions such as product differentiation, packaging improvement, marketing & promotion, and other solutions to minimize production cost in order to have a reasonable pricing, etc

Attract competitor’s customers

The company can attract customers from competitors if it can enhance its special capabilities and especially focus on marketing activities such as product improvement, packaging, pricing, distribution system, etc

The company may consider seeking to retain greater control by acquiring one or more competitors

Under the regulation of the law on free competition protection, caution must be given when choosing this strategy to avoid violation against antitrust laws However, as mentioned above, companies rarely choose this strategy to maintain corporate culture

On the other hand, market penetration may also include the increase in the overall market size by making new customers (in the existing market) be familiar with the company‟s products

(ii) Product development

Product development strategy is a strategy to increase sales and profits by developing new products for sale in the current markets of the company New products that can be selected under this strategy are improved products and brand-new products (designed by

R&D department of the company or the patent is bought from a research institution), new products emulated from leading companies in the national or international market (socialized copyrights)

In fact, the strategy of improved products is the first priority of most companies in the world and becomes a driver of the competitive advantage in the market

It is necessary to diversify products and services in order to make use of strong capital and available human resources along with a distribution network throughout the provinces and cities Better care and services are required to satisfy the customers‟ demand Market opportunities are growing Therefore, the company has launched many service packages appropriate with customer demands as well as expanded many business areas to take advantage of all capacity of the company to occupy the market and become the leading supplier in several advantageous areas

(iii) Market development strategy

Market development strategy is a strategy to increase sales and profits by selling existing products in new markets Under this strategy, when the demand of the current market decreases, the company needs to find new markets to sell products with the following solutions:

- Find new markets in new area, including other territories and countries

This solution is selected by many companies in developed countries all over the world to boost their sales and profits However, when deciding to develop new markets, it is important to consider the opportunities and threats as well as strengths and weaknesses of the company against its competitors Also, income, expense and market development opportunities are worth considering On the other hand, the company needs to pay attention to the marketing strategy to develop new market successfully Nowadays, many enterprises in our countries have various opportunities to develop new markets in this direction, thanks to the Government‟s diplomatic activities and the enterprise‟s efforts to find new customers

- Look for new target customers

This solution includes looking for new target customer groups in the existing markets When designing its original products, many companies only targeted one

or several target customers During its development, marketing executives and salesmen found out that other audiences might also have demand for these

products through intentional or accidental market surveys

- Identify new product values

A product has many potential uses, which researchers as well as manufacturers did not discover right from the very beginning From time to time, more information about new uses can be found by product designers Then, product designers, existing users, sellers, and managers may find out new potential values Each new value can create a completely new market for the company and help the company extend the life cycle of the product

(b) Diversification strategy:

Diversification strategies are strategies to increase sales and profits by engaging in other industries that are or are not related to the current business lines of the company An enterprise can apply diversification strategy by investing in the development of completely new business units, acquiring all or a part of an enterprise facing financial difficulties, joint venturing with other enterprises, buying shares, etc

Concentric diversification strategy: a strategy to increase sales and profits by

developing new products that are related to the company's existing products and relevant with the existing technology or under new technology to supply to new markets

Conglomerate diversification strategy: a strategy to increase sales and profits by

developing new products that are not related to the company's existing products under the new technology to supply to new markets

Horizontal diversification strategy: a strategy to increase sales and profits by

developing new products that are not related to the company's existing products under the new technology to satisfy additional demand of existing markets

(c) Integration strategy

Forward integration strategy: a strategy in which a company increases sales and

profits by engaging in the distribution of its products and services

Forward integration is suitable with the following situation: Product distributors are growing rapidly with high potential profit; the company has not made full use of its available resources The company has difficulty in consuming its existing products

Backward integration strategy: a strategy to increase sales and profits by engaging in

the input supply (mainly the supply of raw materials and goods) to the current business units of an enterprise

Backward integration is suitable with the following situation: Suppliers are growing rapidly with high profit margin, and the enterprise has unused potential resources The enterprise faces difficulties in input sourcing such as unstable supply, high cost, pressure

on price or delivery conditions, unreliable delivery term

Horizontal integration strategy: to seek ownership or increase control over competitors

through M&A, cooperation, alliance, etc., allowing enterprises to scale up their businesses and improve the transfer of resources and symbiotic capacity

This strategy is applied when:

- The enterprise has monopolistic characteristics that are not influenced by the government on competition reduction;

- The enterprise operating in developing industries;

- The economies of scale provide major advantages;

- The enterprise has sufficient capital and manpower to manage the new business;

- When a competitor is weakened due to poor management capacity or requires resources that are exclusively owned by the enterprise

Market competition structure theory (M.Porter)

According to Michael Porter: Competition is to gain market share The essence of competition is to seek profit, which is higher than the average profit that an enterprise has The result of competition process is profit equilibrium in the industries, which may lead to price reduction

According to Michael Porter, an enterprise‟s competitiveness consists of four factors:

(a) Internal factors of the enterprise: Human (quality, skills); qualification (science and technology, market experience); capital, etc

These factors fall into two categories:

- Category 1: Basic factors, such as natural environment, geography, labor;

- Category 2: Advanced factors, such as information, high level labor, etc

In particular, the latter is critical to the competitiveness of an enterprise They decide competitive advantage at high level and with proprietary technologies In the long term, this is a decisive factor that must be invested adequately and properly

(b) Customer’s needs

This has a great impact on the development of the enterprise In fact, no enterprise can satisfy all the requirements of customers Normally, when it has advantages in one

aspect, it also has limitations on the others The basic point is that the enterprise must be aware of this problem and try to optimize its strengths to satisfy the requirements of customers to the best extent By trying to satisfy the needs of customers, an enterprise can take advantage of its scale, thereby improving its business and services Customer demands can also suggest the enterprises to develop many types of new products and services These new products and services can be developed extensively on the market and then the enterprise is the first to gain competitive advantage

(c) Relevant and auxiliary fields

The development of the enterprise cannot be separated from the development of relevant and auxiliary fields such as: financial market, the development of information technology, etc Today, together with the development of information technology, banks can track and participate in financial market 24 hours a day

(d) Company’s strategy, sectorial structure and competitors

The development of an enterprise will be successful if it is managed and organized in a suitable environment and stimulates its competitiveness Competition among enterprises will be the driving force for improvement and change in order to reduce costs and improve service quality

Among the four factors mentioned above, factors 1 and 4 are considered internal factors

of the enterprise, meanwhile factors 2 and 3 are factors that influence and promote its development

In addition, two factors that an enterprise needs to consider are opportunities and the role

of the Government The role of the Government has a significant impact on the competitiveness of the enterprise, particularly in defining technology, training and subsidy policies

According to Ph.Kotler, the goal of any enterprise is to provide values to customers to satisfy their needs and gain profit There are two points-of-view related to customer satisfaction value In a traditional point of view, an enterprise must first have a product

in order to provide value to customers Then, the enterprise calculates the price, informs customers, and consumes products This view is only successful in scarce market conditions

Figure 1.1 Traditional process of providing values to customers

According to modern perspectives (Ph Kotler), the process of value provision consists of

3 steps:

- Step 1: Select the values In this step you need to segment the market, select the appropriate target market, and locate the product (i.e differentiate the product from competing products)

- Step 2: Create the values In this step the company must develop products and any attached services, calculate the prices, and organize distribution network

- Step 3: Inform customers and provide values to customers In this step, the company conducts communication activities such as advertisement, promotion and sales

Figure 1.2 Modern process of providing values to customers

1.2 Competitive strategy building process

The process of building a business strategy can be based on the company‟s strategic development process and direct the company‟s business strategy to make plans for growth strategy only

1.2.1 Diagram of competitive strategy building process

Strategy building process is studied and applied through many models Each model represents a different process Among these models, strategic management model of F.David is the most popular This model does not guarantee success but provides a clear and basic approach for strategy formulation, implementation and evaluation

According to F.David, a strategy management process consists of three main phases,

Product

Customer informing consumption Product

Value selection Value creation Informing and price provision

namely strategy planning, strategy implementation, and strategy evaluation

Strategy

evaluation

Figure 1.3 Strategy management model of F.David

Strategy management is a complex and continuous process A small change at one of the key steps in the model also requires changes in several or all other steps In fact, strategy management process cannot be clearly separated and implemented in a rigorous manner

as indicated in the model Depending on the factors, such as the scale of the enterprise; management style; the complexity of the environment; the complexity of the product; the nature of the problems and the purpose of the enterprise‟s planning system, every enterprise has the most appropriate strategies to achieve its goals

Allocate resources

Measure and evaluate the performan

ce

Carry out external

evaluation, identify opportunities and

challenges

Establish long-term goals

Set annual goals

Department policy

Within the scope of this thesis, the author only focuses on strategy planning rather than the whole process of strategy management including strategy planning, implementation and assessment

1.2.2 Competitive strategy building process

1.2.2.1 Define current tasks, goals and strategies of an enterprise

This is an important step in a strategy management process Every organization has its own tasks, goals and strategies In the strategy planning process, clearly defining the tasks of the enterprise is of high interest not only to high-level planners but also to the implementers A clear goal is very useful to set goals as well as develop the strategy When defining a goal, the enterprise needs to answer the question what are its business lines? We must identify the business area of the enterprise; types of products or services that the enterprise wants to provide to the market, identify the target customer groups and market demand The goal must contain the enterprise‟s desires, which are externalized

1.2.2.2 External environment factor analysis

External business environment analysis is to see significant opportunities and threats that

an organization may encounter Managers can then develop a strategy to take advantage

of opportunities and avoid or reduce the impact of threats The operating environment of

an enterprise is divided into two categories: macro environment and micro environment (a) Macro environment of the enterprise:

The key elements of the macro environment are:

(i) Economic factor: In fact, companies often pay attention to this economic factor

through economic variables such as GDP growth rate, inflation rate, reference interest rate, the availability of the credit system, economic cycle, balance of payment, monetary and financial policies, etc

(ii) Social factor: refers to the belief, values, attitude, viewpoint and lifestyle of

people in the society in which the company operates, etc

(iii) Political and legal factors: in the process of developing the strategy, companies

often evaluate the direction and stability of the political and legal systems governing their operation These factors often include regulations that the companies must adhere to such as trade equality, proprietary prohibition, taxation program, minimum wage, environmental regulation, pricing regulation, and some

regulations to protect workers, consumers, the public and the environment (iv) Technological factor: rapid change of technology may have a huge impact on the

business lines in which the company operates Technologies can bring the possibilities of creating new products, or improving existing ones Particularly, breakthrough technologies may allow the company to create a new market or shorten the life cycle of production equipment

(v) Natural factor: Today, companies need to consider these as an external factor that

may affect their business Natural factor consist of global warming, loss of biodiversity, soil, water and air pollution

(b) Micro environment of the enterprise:

This environment has direct and frequent impacts and directly threatens the success or causes the failure of the enterprise Micro environment was proposed by Michael E Porter and became popular with corporate strategy planners According to M Porter, there are five factors to create competition in an industry These factors include the appearance of new competitors, the power of suppliers, the power of customers, the emergence of alternative products and competitors in the industry

In fact, when analyzing industry environment and competitive environment, the executives often answer the following questions: what is the scope of the industry in which the company is operating? what is the structure of the industry? which companies are the competitors? what are the criteria to identify competitors

Intra-industry competition

Competition among enterprises

on the market Suppliers

Threats from potential competitors

Negotiation Negotiation

Challenge of the

products Alternative services

Figure 1.4 Five-competitive pressure model of M.Porter

To assess the reaction of an enterprise to the effects of external business environment,

economists and managers often use such a tool, i.e External Factor Evaluation Matrix

(EFE)

The external factor and internal (which will be introduced below) evaluation matrices

have been introduced by Fred R Davidin his book „Strategic Management”

When using the EFE matrix we identify the key external opportunities and threats that

are affecting or might affect a company

Each key factor should be assigned a weight ranging from 0.0 (low importance) to 1.0

(high importance) The number indicates how important the factor is if a company wants

to succeed in an industry If there were no weights assigned, all the factors would be

Potential competitors

Alternative products

Customers, distributors

equally important, which is an impossible scenario in the real world The sum of all the weights must equal 1.0 Separate factors should not be given too much emphasis (assigning a weight of 0.30 or more) because the success in an industry is rarely determined by one or few factors.the success in an industry is rarely determined by one

1.2.2.3 Internal environment factor analysis

The internal environment of an enterprise consists of a system of tangible and intangible elements that exist in its operation and directly affects strategy management process Every enterprise has a different internal environment with strengths and weaknesses and changes from time to time

Analyzing internal business environment is to identify strengths and weaknesses, combine opportunities - threats and strengths - weaknesses to develop the strategy

(a) Tangible factors include:

(i) Governance: consists of activities from planning, organization, and execution to

control of the company Today, governance plays a big part in shaping the company‟s competitive strategy and competitiveness

(ii) Marketing: includes all activities from researching and determining the

customer‟s demands to satisfying the defined customers‟ demands through product, pricing, distribution, and promotion

(iii) Finance and accounting: Financial advantage is the most decisive factor in the

competitive position Strategies are developed based on financial strengths and weaknesses in order to have more feasible strategies and change existing strategies When analyzing financial factors, it is important to consider important indicators: solvency, ability to revolve working capital, turnover, expenses, etc (iv) Research & development: to develop new products before competitors do,

improve product quality, control costs or improve production process to reduce costs The quality of research and development efforts of an enterprise can help the enterprise to stay forward or behind its competitors

(v) Human resources: includes activities such as recruitment, interview, screening,

selection, orientation, training, development, evaluation, motivation, and support Human resources play an important role in the implementation of the strategy (vi) Information system: consists of all means to receive, process and communicate

data and information from outside and inside the enterprise to support the implementation, evaluation and control of corporate strategies

(b) Intangible factors: reputation in the leadership of managers at all levels; corporate

reputation in the process of development, credibility and loyalty of customers; creative ideas of employees; sustainable organizational culture, etc

Business managers need to clearly understand the importance of intangible resources in strategy management process, identify and properly evaluate intangible resources to create competitive advantages over competitors

To assess an enterprise‟s response to internal factors, economists and managers often use the Internal Factor Evaluation Matrix (IFE)

IFE (Internal factor evaluation) matrix is one of the best strategic tool to perform internal audit of any firm IFE is use for internal analysis of different functional areas of business such as finance, marketing,IT, operations, accounts, human resources and others depend upon the nature of business and its size

Internal factors are the the outcome of detailed internal audit of a firm Obviously, every company have some weak and strong points, therefor the internal factors are divided into two categories namely strengths and weakness Strengths are the strong areas or attribute

of the company, which are used to overcome weakness and capitalize to take advantage

of the external opportunities available in the industry The strengths could be tangible or intangible; such as brand image, financial position, income, human resource Meanwhile,

ưeaknesses are the risky areas which needs to be addressed on priority to minimize its impact The competitors always searching for the loop holes in your company and put their best effort to capitalize on the identified weaknesses

The strengths and weaknesses are organized in IFE matrix in different portions mean all strengths are listed first under internal factors and then comes the internal weakness In case if all the factors are listed altogether then the rating will help you out to identify internal strength and weakness

IFE rating is the way out to differentiate internal strengths and weakness Internal weakness are further divided in two categories namely minor weakness and major weakness same goes of the strengths (minor strength and major strength)

There are some important point related to rating in IFE matrix

 Rating is applied to each factor

 Major weakness is represented by 1.0

 Minor weakness is represented by 2.0

 Minor strength represented by 3.0

 Major Strength represented by 4.0

Major weakness needs company attention to change into minor weakness then strength and finally major strength.As compared to major strength minor weakness need little efforts of the company to change it into strength The range of rating start from minimum 1.0 which is worst and maximum 4.0 which is the best factor of the company Weight attribute in IFE matrix indicates the relative importance of factor to being successful in the firm‟s industry The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be consider correct Weighted score value is the result achieved after multiplying each factor rating with the weight

The sum of all weighted score is equal to the total weighted score, final value of total weighted score should be between range 1.0 (low) to 4.0(high) The average weighted score for IFE matrix is 2.5 any company total weighted score fall below 2.5 consider as weak The company total weighted score higher then 2.5 is consider as strong in position

1.2.2.4 SWOT analysis

SWOT analysis (alternatively SWOT matrix) is an acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four

elements of an organization, project or business venture

A SWOT analysis can be carried out for a company, product, place, industry, or person It involves specifying the objectives of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective The degree to which the internal environment of the firm matches with the external

environment is expressed by the concept of strategic fit

 Strengths: characteristics of the business or project that give it an advantage over others

 Weaknesses: characteristics of the business that place the business or project at

a disadvantage relative to others

 Opportunities: elements in the environment that the business or project could exploit to its advantage

 Threats: elements in the environment that could cause trouble for the business

Opportunity-Weakness (OW) Strategies

Overcome weaknesses by taking advantage of opportunities

Use strengths to avoid threats

Threat-Weakness (TW) Strategies

Minimize weaknesses and avoid threats

CHAPTER 2 ASSESSING THE CURRENT SITUATION AND THE PRESENT COMPETITIVE

STRATEGY OF ATS LAW FIRM CO., LTD

2.1.Introduction of ATS law firm

2.1.1 General introduction of ATS law firm

Company name: ATS Law Firm Co., Ltd

Transaction name: ATS Legal

Business activities: Law consultancy

Hanoi Office: 6th Floor, ATS Tower, 252 Hoang Quoc Viet Street, North Tu Liem District, Hanoi, Vietnam

Ho Chi Minh Office: 9th Floor, TNR Tower, 180 – 192 Nguyen Cong Tru Street, District 1,

Ho Chi Minh City, Vietnam

Website: http://atslegal.vn/about-us/

Slogan: Associate- Trust- Success

ATS Law Firm Co., Ltd, a young law firm, was established in the late of 2014, by three founding partners- 3 experiences lawyers

After 3 operation years, the law firm has graduately developed, from 3 first lawyers,

to the consulting team of 20 lawyers in two offices in both Hanoi and Hochiminh city

Over a couple of years of operation, the professionals at ATS have assisted international and local clients in many business industries including construction, trade, insurance, energy, health care and others The lawyers also serve state enterprises, non-governmental organizations, companies and investors from around the world

The firm also set up the strong association with the Chamber of Commerce of the important countries who have the significant foreign direct investment in Vietnam as follows:

▶ World Mediation Organization – WMO

▶ Canadian Business Chamber – CANCHAM

▶ Korean Business Chamber – KORCHAM

▶ Indian Business Chamber – INCHAM

▶ Vietnam Business Forum – VBF

▶ Vietnam Chamber of Commerce and Industry – VCCI

These alliances allow us to expand our ability to serve clients well Moreover, business interests and relationships between clients in ASEAN countries are facilitated for mutual benefit thanks to the highly respected ATS legal team in Vietnam

The firm also has the strong connection with the other law firms with the same networking with potential clients such as Garfield Law Group in Washington (an immigration service company), or Grand Thornton, a big name in the corporate legal consultancy field

The firm also gained the hounourable title of “one of the best law firm in Vietnam” by the international law firm ranking organization “Legal 500”

2.1.2 Vision and mission

The vision of the firm is to become the top 20 leading consultancy law firm providing the effective and practical solutions for the international clients in the fields of foreign direct investment project, merger and acquisition, tax consultancy, legal advisory, dispute settlement and labor issues

The firm‟s mission of the firm is to provide the effective and practical solutions to the clients, with the most dedicating attitude, and with the appropriate price

2.1.3 ATS’s business activities

The firm provides the main following consultancy services:

(a) Investment Project

ATS have represented and supported many foreign clients in getting their investment certificates in Vietnam, including offshore companies, joint ventures and domestic corporations operating in a variety of business industries such as banking, finance, securities, capital markets, real estate, construction, infrastructure, energy, insurance, health care, information technology, telecommunications, manufacturing, trade, distribution, retail, logistics and shipping… With the broad knowledge, experience and good relationships, transactional capability and professional skills in finance, corporate, tax, and investment law, ATS can help clients to structure, acquire, finance, implement projects and manage their investments in Vietnam at every stage

The investment project consultancy service that ATS provide to clients are as of follows:

Research, analysis and survey the market

▶ Research on the feasibility of investment projects

▶ Due diligence of the investors

▶ Consult, prepare and submit required dossier of foreign investment projects

▶ Advice on procedures and implementation of investment projects after licensing

▶ Investment projects management

▶ Handle legal issues arising from implementation process of investment projects

▶ Advice on project transfer, including licensing procedures and related matters

(b) Merger and acquisition

ATS offers comprehensive services to the clients, from gathering information on target companies to the completion of the consolidation, merger or share purchasing agreement in order to minimize potential risks and related costs

ATS also assist our clients in both cross-border M&A transactions and direct acquisition, throughout the whole process Our dedication to practical advice is highly appreciated by clients for the success of their M&A deals

The M&A service focuses on:

▶ Purchase or subscription of equity

▶ Asset or business acquisitions

▶ Mergers and consolidations

▶ Inspecting and evaluating the legal status of businesses or projects

▶ Consulting and warning of legal risks

▶ Consulting on M&A procedures

(c) Contracts & agreements

Contracts & agreements are a vital component of any company However, some of the time, they are merely an after-thought The lawyers think ahead so the clients will not have

to ATS lawyers assist clients in ensuring their contracts and agreements are comprehensive and free of loop holes, and preventing and settling contractual disputes in the following ways:

▶ Analyze risks present in contracts and agreements

▶ Prepare, draft, evaluate contracts and agreements

▶ Negotiate contracts and agreements

▶ Mediate and reconcile contractual disputes

▶ Settle contractual disputes at courts and arbitration

(d) Taxation

ATS Lawyers provides a full package of taxation services for domestic and foreign invested companies in Vietnam and deliver tailor made and beneficial solutions to its clients The firm advises cases of company acquisition, project financing, register pre-audit review of accounting books The firm advises clients on all types of tax (entire gamut of tax laws – personal, professional, sales, commercial, VAT, etc.) regarding both compliance and tax implications for specific transactions, accounting, corporate law and financial services The firm assists both local and foreign invested companies in their tax planning and represent them before any competent agencies with regard to disputed issues

ATS taxation services include:

▶ Corporate taxation incentives and non-taxation incentives

▶ International taxation services (ITS) and transfer pricing (TP)

▶ Business taxation services (BTS) and business taxation compliance (BTC)

▶ Human capital services

▶ Rulings and controversy

▶ Tax planning

▶ Cross-border taxation issues

▶ Taxation-related dispute resolution and litigation

(e) Litigation service

ATS begin litigation process by engaging in a comprehensive discussion with our clients and reviewing their documents in order to determine the most efficient approach for their situation

ATS litigation service focuses on:

(a) Board of Directors: Including the Partners of the firm They are both the owner/founding members of the firm, as well as the main managing lawyers of the firm

(b) Consultancy team: Including the professional counsel, consultants and associates who directly prepare and/or provide the consultancy services to the clients

(c) Back office department: Including the accounting, human resources and administration team

Figure 2.1 Organizational structure of ATS law firm

2.1.5 Current business operation

Table 2.1 Revenue in period 2014-2016

Unit: Vietnam Dong

(Sources: Accounting department of ATS) Despite facing the difficulties of the economy and the challenging of the young firm, ATS still remains the revenue increase It means that ATS is fully aware of its advantages and weakness, as well as identifying the opportunities and threats, for

BOARD OF DIRECTORS

finding the appropriate competitive strategy for the firm

2.2 Analyzation of the external factors affecting the business operation of ATS law firm

2.2.1.Macro environment factors

(a) Econonomic element

Economic play an inportant role to the development of the legal consultancy industry Economic development increase the excitement and quantity of the commercial transaction, which result in the demand for legal consultancy service Besides, the financial capacity of the clients for paying legal service fee is also better

However, in case the economic is slow down or in crisis, the number of commercial transaction is significantly reduced, and the financial budget that the clients can use for the legal service is reduced relatively

It is easily to see the impact of the economic fluctuation on the legal consultancy industry According to General Statistic Bureau, Vietnamese economy in 2014-2016, went along with the global economy, slowly recovered after the significant crisis

2014

2014‟s GDP increased 5.98% compared with that of 2013 Among these, CPI increased 5.06% in the first quarter, 5.34% in the 2nd chapter, and 6.07% and 6.96% in the 3rd and 4th quarter respectively

The inflation rate of 2014 was just about 4.09%, 2.5% lower than that of 2013

Figure 2.2 : Vietnamese GDP over the recent years

Foreign currency exchange rate

The credit in Vietnam Dong increased slowly in 2014 Meanwhile, the credit in foreign currency (USD) increased significantly As a result, the State Bank of Vietnam decided to increase the foreign currency exchange rate up to 21.246 VND/USD 2015 was seen as the huge changing year, when the foreign currency exchange rate continuously increased from 21.458 VND/USD in 7 Jan, 2015, to 21.673 VND/USD in 7 May, 2015, and 22.547 VND/USD in December, 2015

However, the foreign currency exchange rate was very stable in 2016, with the rate of averagely about 22.600 VND/USD

(b) Political and legal environment

(i) Political

It is advantageous that Vietnam‟s political situation is very stable political situation, creating favour condition for the domestic economic development Vietnam also has the strong and peaceful relationship with other developed countries like Japan, Korean, Taiwan, the US, and European countries The peaceful relationship also creates the investment wave of the investors from such countries into Vietnam

(ii) Legal environment

Vietnamese government has issued the fully and comprehensive regulations for rulling the establishement and operation of business in different fields, and classified from different levels as follows:

101.6 112.8

134.6 155.6 172.8

188.7 212.3 239.0 270.6

299.1 5.4%