LUẬN văn xây DỰNG CHIẾN lược KINH DOANH CÔNG TY cổ PHẦN CHẾ tạo máy – TKV

BUILDING BUSINESS STRATEGY MACHINERY JOINT STOCK COMPANY – TKVV ACKNOWLEDGEMENT The research group would like to thank Teachers of Griggs University andCentre for Educational Technology

BUILDING BUSINESS STRATEGY MACHINERY JOINT STOCK COMPANY – TKV

V

ACKNOWLEDGEMENT

The research group would like to thank Teachers of Griggs University andCentre for Educational Technology and Career Development – Vietnam NationalUniversity for helping and instructing our group with basis and methodology of thereport

We would like to thank Dr Phung Manh Dac – Deputy General Director ofTKV Group, Chairman of Administration Board of VMC Company; Dr Ta Ngoc Hai– TKV Mechanics Department Manager; Mr Cao Ngoc Dau – Institute Head of MineEnergy Mechanics and Mr Nguyen Cong Hoan – Director of VMC company forcontributing ideas and creating conditions for us to complete this report

ACKNOWLEDGEMENT ii

APPENDIX iii

List of abbreviated words v

List of tables v

Introduction: GENERAL INTRODUCTION 1

Chapter I: REASONING BACKGROUND 4

1.1 Overview of business strategy 4

1.1.1 Concept of business strategy 4

1.1.2 Administering business strategy 5

1.1.3 Benefits and limitations in business strategy building 5

1.2 Method of building business strategy 6

1.2.1 Analyzing environmental factors affecting business strategy 6

1.2.2 Method of analyzing and forecasting strategy 9

1.2.3 Analyzing SWOT 11

1.2.4 Determining competition status of the enterprise 12

1.2 Choosing business strategy 15

1.2.1 Concentrated growth strategy 15

1.2.2 Diversification strategy 16

1.3 Implementing the strategy 18

1.3.1 Reviewing strategic environment 19

1.3.2 Evaluating, adjusting and ensuring resources 20

1.3.3 Determining organization structure to implement the strategy 20

1.4 Checking and evaluating business strategy 21

1.4.1 Controlling basic grounds of company’s strategy 21

1.4.2 Reviewing basis of the strategy 21

1.5 Research method of the report 22

1.6 Scientific and practical meaning of the report 22

Chapter II: ANALYZING REAL STATE OF VMC 23

2.1 Overview of the enterprise 23

2.1.1 Process of establishing, developing of VMC 24

2.1.2 Human resources and organizational structure 26

2.1.3 Traditional product line of VMC 30

2.2 Analyzing situation and results of business activity of VMC from 2005 - 6/2009 35

2.2.1 Business production situation 37

2.2.2 Market 38

2.2.3 Business efficiency 39

2.3 Analyzing business environment 40

2.3.1 Analyzing external environment 40

2.3.2 Analyzing internal environment 46

2.4 Results and shortcomings of VMC in the past time 49

2.4.2 Shortcomings need to be improved 50

2.5 Analyzing problems of strategy and administration of VMC 50

2.5.1 General objective of the strategy 50

2.5.2 Strategy orientation 50

2.5.3 Basic objectives 51

2.5.4 Affecting factors 52

Chapter III SOLUTIONS, RECOMMENDATIONS AND CONCLUSION 56

3.1 Recommending business strategy 56

3.2 Basic solution to implement and administer business strategy 56

3.2.1 Modernizing manufacturing technology 56

3.2.2 Modernizing repair technology 57

3.2.3 Improving energy supply system 57

3.2.4 Human resources development strategy 58

3.2.5 Technological science development strategy 58

2.3.6 Protecting environment and industrial hygiene 60

3.2.7 Ensuring labor safety, occupational disease 60

3.2.8 Expanding cooperation, association 60

3.2.9 Building and developing trade mark 61

3.3 Proposal 61

3.4 Conclusion 61

REFERENCES 64

List of abbreviated words

TKV Vietnam Coal – Mineral Industry Group

EPC Engineering - Procurement - Construction

COALIMEX Coal import and export joint stock company - TKV

MATEXIM Material and Complete Equipment Export-import CorporationLILAMA Vietnam Machinery Erection Corporation

LICOGI Infrastructure Development and Construction Corporation

VINAINCON Vietnam Industrial Construction Corporation

IMSAT Institute for Medical Science and Technology

NARIME Institute for Mechanical Engineering

List of tables

Table 1.1 Evaluating influences of business environment 10

Table 2.3 Quality of manufacturing, repairing products of VMC 29 - 31Table 2.4 Business operation results of VMC from 2005 – 6/2009

Business operation results

Table 2.7 Table of synthesizing business environment of VMC 48

Figure 1.5 Optional specialization including many parts 15

Figure 2.3 Profit rate on revenue 35

Introduction: GENERAL INTRODUCTION

Machinery Joint stock company – TKV (Vietnam Mine – Minerals),which is abbreviated as VMC (VINACOMIN- MACHINERY JOIN STOCKCOMPANY) was changed from Cam Pha Central Mechanics Company Thecompany was established in 1968, has headquarters at 486, Tran Phu Road,Cam Pha town, Quang Ninh For years of building and developing, VMC hasbecome the leading equipment, accessories manufacturing company inVietnam and is gradually reaching to international market Products of VMCmainly are equipment, accessories serving mine ores, cement, and electricityindustry in the whole country Scale of the enterprise is relatively big with

1300 staff and annual revenue is about VND 800 billion Average growthspeed of the company in the last five years has reached 20%/year VMCorganizes production into blocks: Accurate processing, Steel componentproduction, rough draft supply (founding, processing pressure) and otherauxiliary production

At present, VMC is a joint stock company under Vietnam Mine - MineralGroup The company has relatively diversified number of commodities, hasmany customers of different organizations For many years, VMC has hadmany achievements in business production, contributing to industrialization –modernization process of Vietnam mechanics sector in general and minesector in particular

To be in accordance with the market economy and internationaleconomic integration that Vietnam is building and developing, implementingDecree No 109/2007/NĐ-CP dated June 21st, 2007 of Prime Minister onchanging State owned enterprise to join stock company and Resolution ofHĐQT of Vietnam Mine - Mineral Group on changing enterprises in the group

to operate according to equitization model, from March 30th, 2008, VMC hasofficially changed operation to Joint stock enterprise model with ownership

and external shareholders hold 25% Charter capital of VMC is VND 40.850million.

Before changing to equitization, VMC operated according to StateEnterprise Law and was controlled by plan of superior, and thus businessstrategy building and administration of the company was not displayed clearly.Business production activities of VMC mainly were to ensure output andrevenue according to the assigned plan, even profit target When changing tooperate according to charter of joint stock company, it is clear that VMC has

to become more initiative and pay more attention to business strategy buildingand administration of the company This is also a common CERN of all theenterprises when changing from State owned companies to joint stock ones.From the real state above, our study group did choose the theme:

“BUILDING BUSINESS STRATEGY FOR MACHINERY JOINT STOCKCOMPANY – TKV FROM 2010 TO 2015” to be the content of Graduationbig exercise of International business administration master training program.The objective of this report is to evaluate relatively comprehensive thereal state of business production of VMC Find existing advantages, strongpoints as well as challenges, weak points of the company At the same time,discover opportunities, risks threatening the company in the future From that,build business strategy of VMC from 2010 to 2015

Study group set the mark of 2015 for business strategy of VMC to givepetition and recommend relatively comprehensive and specific solutions.However, our group also set a goal that business strategy of VMC must havelook forward to 2020 to be in accordance with the Coal development sectorstrategy which was built, as well as Decision No 186/2002/QĐ-TTg datedDecember 26th, 2002 of Prime Minister regarding ratifying developmentstrategy for Vietnam mechanics sector to 2010, looking forward to 2020

Research scale of this report is REASONING BACKGROUND onbuilding business strategy; studying, analyzing the real state of the enterprise

to build the most fundamental business strategy for studied enterprise – VMC.The report has main parts as follow:

Chapter 1: Reasoning background on business strategy In this part, the

report will show concepts of business strategy and processes to make abusiness strategy in the most fundamental way

Chapter 2: Analyzing the real state of VMC In this part, the report will

concentrate on introducing the overview of VMC, collecting and analyzing,evaluating the business production situation of VMC in 5 recent years Theresearch group finds out strong, weak points, opportunities and challenges ofthe enterprise From that, build business strategy of VMC from 2010 to 2015

Chapter 3: Solution, proposal and conclusion The research group

recommends comprehensive, specific solutions for VMC and petition forVMC, superior agency and State

Our group hopes to apply knowledge from the course of the InternationalBusiness Administration Master Training Program, Griggs University, UnitedState into practice This report both helps members of the group improveknowledge and is a useful scientific report for VMC Company to apply inpractice

Chapter I: REASONING BACKGROUND

1.1 Overview of business strategy

1.1.1 Concept of business strategy

Term “strategy” originating from Greek language with two words

“Stratos” means military, formation and word “Agoss” means leadership,control The strategy was used firstly in military to illustrate big, long-termplans which were given on the reliable basis that what the enemy could andcould not do Commonly, strategy is understood as science and art of militarycontrol, is applied to make general plan and carry out large-scale campaign.Beginning from the 1960s of the 20th century, strategy has been applied

in business area and term “Business strategy” was born Over time, peopleaccess to it in different ways According to traditional approach, strategymeans determining long-term basic targets of the enterprise and implementingaction program together with distributing necessary resources to reachdetermined targets We can also understand that strategy is a way thatenterprises use to orient the future to reach and maintain development

At present, term “business strategy” is used with three most commonmeanings: determining long-term, basic goal of the enterprise; giving generalaction programs; choosing action plans, implementing to distributing naturalresources to do that goal

Specific feature of strategy is moving and attacking In the process ofadministering strategy, we must attach special importance to forecast, takeinitiative in anticipating changes of the business environment to outlineoffensive solutions to take advantage of opportunities, restrict possible risks inbusiness environment of the enterprise

M Porter brings out three common types of competition strategy:minimal cost, special difference and central making He also give out a very

exact analysis diagram to study an operation field and develop new concept

“value series”, helping enterprises determine their own competitionadvantages

1.1.2 Administering business strategy

Is a process of determining strategic goals of the organization, buildingpolicies and plans to achieve goals and allocate resources of the organizationfor the implementation of theses policies, plans

The process of administering strategy is implemented through four mainstages:

- Analyzing the situation: includes external and internal environment.

This analysis often involves political, environmental, social, technologicalanalysis; analysis of factors affecting the organization and of strong, weakpoints, opportunities, challenges

- Building strategy: includes determination of mission, establishment of

goals, strategy and policy proposal

- Implementing strategy: includes action programs, budget, and

1.1.3 Benefits and limitations in business strategy building

In the market economy, building and implementation of business strategywill bring about following benefits for the enterprise:

- Help the enterprise know clearly its direction in the future so that the

administrator can consider and decide the direction of organization and when

to reach a certain goal

- Help administrator clearly realize opportunities and risks occurring in

business of the integration economy AT the same time help to analyze,evaluate and forecast environmental conditions in the future, take advantage ofopportunities, decrease risks, helping the enterprise overcome competition, getsuccess

- Help administrator make decisions to deal with each business

environment, improve business production efficiency, pushing the enterprise

to go forward

- Help the enterprise create better business plans through the use of

system approaches, creating basis for the increase of connection and closeness

of staff and administrator in the implementation of goal of the enterprise

- Business strategy helps the company increase the revenue, working

capacity and business production efficiency, avoid financial risks, increasepreventive ability, prevent risks that the company may face in business

However, strategy also has following limitations:

- It takes the enterprise much time, cost for strategy building.

- The strategy must be always suitable for the environment, if it is so

inflexible, the enterprise may face risks

- Limitation of shortcomings in long-term market forecast is sometimes

big If we cannot improve, it can cause high risk

- If the organization does not implement the strategy well, it may fail.

1.2 Method of building business strategy

1.2.1 Analyzing environmental factors affecting business strategy

1.2.1.1 Macro environment

Macro environment factor has long-term influence on a large scale onbusiness production sector, and business strategy of the enterprise Theenterprise, when analyzing macro environment needs to use PESLTE (Policy– Economic - Social – Technology - Law – Environment) model.

When making business on an administrative unit, enterprises need toobey legal institutions in that region If institutions have high stability, theywill create favorable conditions for business activity Enterprises shouldcarefully analyze policies related to State management Anti-monopoly law,tax, labor law, competition, commerce regulation policy, protection barrier,consumer right protection regulations, priority sectors, etc all have influences

on revenue, profit of enterprises or are challenges to them

Influences of the economy on an enterprise can change the possibility ofcreating value and income of the enterprise Four important factors of macroeconomic environment are growth rate of the economy, interest rate, exchangerate and inflation rate

Social cultural factors create foundation of society and lead otherchanges Social changes such as awareness of health, labor diversification, andattitude of working quality create opportunities and threats for many businesssectors Cultural interference of other cultures into nations will changeconsumption psychology, life style, create opportunities for some businesssectors

Technological changes continually increase It is both creative anddestructive factor, both opportunity and threat The most important influence

of technological change on height of barrier takes part in and re-makessectional structure from the root

Population environment relates to population Age structure,geographical distribution, ethnic minority group, income distribution Globalenvironment relates to important political events, basic global market, etc

Change of these environments all may create opportunities and threats tobusiness sector.

1.2.1.2 Sectional environment:

Enterprises cannot have strategic decisions if they do not have deepunderstanding of strategic situation of company, competition nature andcondition, way to create conformability between resources and capacity withsuch condition Sectional environment factors have direct influences onbusiness strategy of enterprise Enterprises should analyze influences ofsectional environment according to five-competition force model of Michael

E Porter According to him, they are (1) risk of taking part of potentialcompetitors, (2) competition degree between existing companies in the sector;(3) negotiation strength of buyer; (4) negotiation strength of seller; (5) threat

of alternative products

Potential competitors include companies which do not compete in thesector currently but they have capacity to do so if they want Identifying thesecompetitors is important as they threaten existing market share of companies

If the risk of taking part is low, current companies will use advantages of thisopportunity to increase the price

Strong competition between competitors in the sector can create bigthreat of profit making capacity If sectional competition is weak, companieswill have opportunity to increase the price and get high profit Competitiondegree in the section depends much on sectional competition structure,demand condition and high barrier of leaving section

Negotiation capacity of buyers is considered as competition threat whenthey are in the position of offering lower price or when they demand for betterservice (increasing cost)

Negotiation capacity of suppliers is considered as threat when they forceprice raise or reduce demand for input quality that they supply for companies,decrease profit making of companies.

The existence of alternative products limits possibility of setting highprice, profit making of companies

1.2.1.3 Enterprise’s internal environment:

Includes technological level, marketing, financial capacity, laborer, etc.This analysis should find out key capacity of enterprise Enterprise’s internalenvironment creates strong points, competition advantages of enterprise

1.2.2 Method of analyzing and forecasting strategy

Enterprise should have information system serving strategy forecastactivity That is information about business environment inside and outside theenterprise which is collected into a system and treated to ensure scientificnature To establish an information system of analyzing and forecastingstrategy, we need to carry out following activities:

- Determine information demand: number and type of information

which can be collected to draft many business strategies However, not allinformation is valuable and accurate Thus, administrator needs to selectinformation in accordance with requirements of business production

- Determine information sources: secondary information is the one

which is collected for any purpose to serve strategy building It includesinternal secondary information and external one Such as payment form, debtreport, accounting report, business statistics

- Ways of collecting information as follow: collect continuously,

collect periodically and collect irregularly

- Information contents need to be collected:

 Collecting and analyzing information about competition includes:

Considering whether competitor has competition strategy or not, threatens us

or not? Whether competitor can display their competition content or not, put to

customers’ conference for discussion or not Whether competitor has business

trick inside the enterprise or not

 Information about human resources: Includes evaluations on staff

capacity of enterprise, scale and characteristic of existing labor market, salary

structure of the enterprise compared with other competitors

 Information about production: Factors related to cost price includes:

labor cost, transport cost, attitude of the public about product and service’s

price, product’s quality, efficiency of production means for reserve in terms of

materials, etc

 Analyzing technological environment: technology has influences on

opportunities and threats to business production activity of the Enterprise,

thus, when drafting strategy, we must account for technology Technique

progresses can have deep influences on service products, market of suppliers,

distributors, competitors, producing process, practical marketing and

competition status of the enterprise

Expert method to forecast business environment: is a forecast method

basing on quick collection and treatment of forecast evaluations of experts

Requiring to make Synthetic table of business environment (Table 1.1)

Table 1.1 Evaluating influences of business environment []

3= high; 2=

medium; 1=

low

Classifying affecting degree

of each factor tothe company:

3= much; 2 = medium; 1=

little

Describingaffecting nature: (+)

= good;

(-)= bad

Multiplying numeric value in column 1 with column 2, column

3, showing affect degree and settingmark (+) or (-) in achieved result

Column 1 lists the most important business environment factors and theircomponents, such as international business environment factors, competitors,marketing, price, advertisement.

Column 2: is used to classify environmental factors according to theirgeneral importance degree to the sector such as price, exchange rate, bankinterest rate

Column 3: is used to illustrate influences of factors in creatingopportunities and strong points of companies which are marked with (+), andrisk and weak point factors are marked with (-)

Column 5: is adjusting coefficient for each factor, multiplyingimportance value of each factor to the section (column 2) with its influencedegree to the company (column 3) and fixing mark (-) in column 4 withcalculated result

1.2.3 Analyzing SWOT

Reviewing all strong, weak points, opportunities and risks helpingenterprises compete effectively in the market Understanding weak points willhelp enterprises manage and remove risks that they have not been aware Tomake SWOT matrix, administrator must do 8 following steps []

1 Listing opportunities mainly from external environment, according toimportance order

2 Listing threats mainly from external environment, according toimportance order

3 Listing main strong points of the enterprise, according to importanceorder

4 Listing main weak points of the enterprise, according to importanceorder

5 Combining internal strong points with external threats and writingresult of ST strategy Using strong points to avoid risks

6 Combining internal weak points with external opportunities andwriting result of WO strategy Limiting weak points to exploit opportunity.

7 Combining internal weak points and external threats and writingresult of WT strategy Minimizing risks and avoiding disaster

1.2.4 Determining competition status of the enterprise

Building Mc Kinsey matrix or GE matrix (Figure 1.1.) to determinecompetition status of the enterprise

Attractiveness

of the section

Competition status

growth Invest for growth Grow or retreat

selectively forgrowth

Grow or retreat

Grow or retreat

retreat Grow or retreat EliminateFigure 1.1 Mc Kinsey matrix []

Strategies in the matrix include 3 main areas:

o Area 1: includes 3 squares in the left corner above, enterpriseshould concentrate resources to develop

o Area 2: includes 3 squares at the cross line from left below corner

to the right corner above, enterprises should be careful when makinginvestment decision to grow, narrow or retreat from the section

o Area 3: includes three squares in the below right corner,enterprises are weak in competition status and business ection is not attractive,

so they concentrate on harvesting and eliminating strategy

To build GE matrix, enterprises need to implement following steps:

a Building attractiveness matrix of business sector reflectsattractiveness degree of business sector to enterprises according to followingorder:

+ Choosing at least 10 factors showing the attractiveness of thebusiness sector, these factors are collected when analyzing the environmentoutside the enterprise (market scale, market growth, average profit rate,number of competitors, capital, number of suppliers, preferential policies,technological development of the sector, circle nature of the demand, number

of alternative products

+ Determining coefficient of importance degree of each factor,according to evaluation of enterprises according to degree from 0 (notimportant) to 1 (very important) Total factors in the matrix must be = 1

+ Evaluating attractiveness of each factor according to mark ladderfrom 1 (not attractive) to 5 (very attractive) Multiplying coefficient ofimportance degree with attractiveness mark to determine mark for each factor

+ Adding mark of all the factors in the matrix to determine total markfor the matrix of attractiveness of the sector and determine position of thismatrix on length of GE matrix

b Building matrix of competition status of the enterprise, reflectingcompetition status of the enterprise in business sector according to followingorder:

+ Choosing at least 10 factors reflecting competition status of theenterprise in the business sector, these factors are collected when analyzingexternal environment of the enterprise (market share, product quality,distribution capacity, brand name prestige, cost price of product unit,production technology, advertising efficiency, production scale, internalfinancial capacity, R and D ability)

+ Determining weight of each factor according to evaluation of theenterprise about its importance Degree from 0 (not important) to 1 (veryimportant) Total weights must = 1

+ Evaluating attractiveness of each factor according to mark ladderfrom 1 (not attractive) to 5 (very attractive) Multiplying weight with value ofeach factor to determine mark for each factor.

+ Adding marks of all the factors in the matrix to determine total marksfor matrix of competition status of enterprise and determine position of thismatrix on the width of GE matrix

c Determining position of the enterprise on the GE matrix: is reflectedwith a circle with center is intersection point between position of matrix ofattractiveness of the sector and position of matrix of competition status Thebigness of the circle depends on sector scale, the black part is market share ofthe company in the business sector

d Based on position of the enterprise on GE matrix, determiningstrategic plan for enterprise

GE matrix has strong point as it uses many factors to determineposition of the enterprise, so it has high flexibility However it also has weakpoint as evaluation of factors is subjective and the matrix only considersenterprises at current time, not development stage of the sector

- Internal – External Matrix: based on total important marks of IFE

matrix reflected on X axis (internal) and of EFE matrix on Y axis

Strategies for the enterprise inclue three main areas:

o Area 1: enterprise lying in square I, II, III should develop and build

o Area 2: enterprise lying in square III, V, VIII should hold and maintain

o Area 3: enterprise lying in square VI, VIII, IX should harvest or eliminate

1.2 Choosing business strategy

1.2.1 Concentrated growth strategy

Concentrated growth strategy means focusing on business in a businessproduction area that has opportunity in the market currently Concentratedgrowth strategy bases on the promotion of marketing activity or improvement

of existing products and development of the market, does not need to changeany factor

Concentrated growth can follow one of the following models:

Figure 1.3 Concentrating on a market

including many fragments

Figure 1.6 Specializing products

1.2.2 Diversification strategy

Diversification strategy is a strategy implementing many businessproduction activities on different markets To implement this strategy, there

are many plans Depending on strong, weak points of enterprise in each period

to choose plan We have following plans:

- Correlative diversification: adding new products or services but they

have connection and are suitable for technology and marketing

- Uncorrelative diversification (wide diversification): adding new

products and services which have no connection for old customers It meansthat new products made by technology are not related to existing productmaking technologies

- Mix diversification: adding new products and services which have no

connection for new market It means that new products look forward to newmarket and in terms of production technology, they are not related to existingproduct making technologies

1.2 3 Integration growth strategy

Is a strategy that enterprises in the same or different sector combine toeach other to become a new organization to improve competition capacity inthe market This strategy has long and wide integration forms

1.2.4 Narrowing strategy

Strategy of narrowing business is re-arrangement, cutting of cost andproperties after a time of rapid growth to enhance business productionefficiency This strategy includes measures of cutting cost, withdrawinginvestment capital, strategy of giving up operation, etc

1.2.5 Suitable strategy for living circle of product

Depending on stages of the product, market, we give strategies as follow:

- Strategy in the market penetrating stage

- Strategy in the growth stage

- Strategy in the saturated stage

- Strategy in the market regression stage

1.2.6 Joint venture and association strategy

Is the strategy that companies associate to each other for the purpose ofexploiting any opportunity in business production Enterprises have specialpotentials, if they participate in joint venture, they will supplement mutuallyand get high efficiency

1.2.7 Competition strategy.

Means implementing measures to enhance competitiveness of theenterprise:

- Taking the lead in terms of low cost: objective of this strategy is to

produce new products, services with lowest cost among producers in the samesector This is the strategy creating competition advantage in terms of price

- Differentiating the product: objective of this strategy is to reach

competition advantages by creating products, services with unique strongpoint, satisfying special demand of customers

- Centralizing: objective of the centralizing strategy is to concentrate on

meeting demands of a customer group according to geographic area, incomedegree, consumption custom, etc

1.2.8 Trade mark strategy.

Trade mark is a new issue to Vietnam and it has been newly paidattention to by the world economists Recently, people have brought out plans

of evaluating value of a strong trade mark Trade mark value is formed due tohigher life Consumers gradually change from determining value on the basis

of usage value to trademark of the product They increasingly tend to chooseproducts having strong trademark (prestigious of quality, reliability) other thanprice

1.3 Implementing the strategy.

After choosing and deciding suitable strategy, administrator shouldcommunicate spirits of the strategy to the staff to understand every matter ofthe strategy Every member of the enterprise must be close to theimplementation of strategy and have highest effort to do it Theimplementation of business strategy must be done according to followingprocesses:

1.3.1 Reviewing strategic environment

- The first important step in implementing the strategy is to review

collected analysis results previously and decisions related to the target,environmental condition and strategy Reviewing is as the last evaluation step

of the proposed objectives and strategy It is also to evaluate whether in theprocess of building strategy, environmental factors change or not If they arethe same, there is no need to change the strategy If not, we must adjust thestrategy accordingly

- Building annual strategic objectives: big objective of the strategy is

only implemented through the building of annual objectives That is division

of general goal into specific ones to assign to specific units, individuals forimplementation This creates consensus and connection of everyone inimplementing the strategy The establishment of long-term strategic objectives

is basis for the distribution of resources; tool to control developments inreaching long-term objective; creates priorities of the company, divisions,summarizes into action instructions Annual objectives should be measurable,conformable, suitable and challenging to enhance effort of each division and

of the whole company

- Building implementation policies of the strategy, including: direction

principles; methods, procedures, rules, forms; administrative jobs to assist the

promotion of jobs according to the target; tools, mechanism scale of rewardand fine, etc create limitations to operation kinds.

1.3.2 Evaluating, adjusting and ensuring resources

After reviewing and clearly realizing given strategies and plans, weneed to carry out distribution of resources including mental power, financialand material resources factors

- Evaluating resources: the important question need to be raised is “do

we have enough resources to implement given strategies effectively: if there islack of any resources for the implementation of the strategy, we must adjusttwo big issues related to resources quality which needs to be paid attentionhere”

- Adjusting resources: to improve quality and quantity of resources

such as improving skills, training professional knowledge for human resources

to implement business strategy effectively

- Ensuring resources: ensure that there are sufficient resources to

implement the strategy Administrator must have spare measures to ensureresources despite changes of the external environment

1.3.3 Determining organization structure to implement the strategy

To implement the strategy, enterprise should determine an appropriateorganizational structure in which the first thing is organizational structuremodel There are some structure models as follow:

- Organizing according to strategic business unit: this is a model which

is organized according to market, product stages It is suitable for bigcompanies with diversified activities to some extent

- Organizational structure according to customer: this structure is

convenient for serving small customer groups in strategies of developing smallmarket fragments

- Organizational structure according to matrix: arranging functional

departments and product market stages connecting to each other throughmatrix

1.4 Checking and evaluating business strategy

The evaluation of the strategy includes three fundamental activities

1.4.1 Controlling basic grounds of company’s strategy

Is an act of checking and comparing collected results with expectedresults, receiving acts that can ensure that work is being implemented inaccordance with the plan Administrators often use four following standards toevaluate the strategy: consistency, conformability, convenience, feasibility

1.4.2 Reviewing basis of the strategy

- Considering competitors: bases on questions:

o How did competitors react to our strategy

o How do strategies of competitors changes

o Why is strategy of competitors more successful

o Are our competitors satisfied with their current position

o How can we combine effectively to our competitors

- Considering internal and external factors

o External factors include: acts of competitors, changes of theeconomy, of technological science, population structure changes

o Internal factors include: Is our selected strategy effective, targetsmaybe out of date already

- Some questions need to be raised when evaluating:

o Are our strong points still really strong

o Do we have any other weak points at present

o Do external opportunities remain opportunities

o Are there any more external opportunities at present

o Are external threats endangering us

1.5 Research method of the report

Our groups did concentrate on studying, analyzing secondaryinformation, data collected from materials, mass media and in particular directmaterials, reports from internal VMC

As time condition as well as organizing capacity of market survey of thegroup is limited, studying and building of matrixes to choose business strategyare implemented with expert method We used general data Consulted ideasfrom leading experts in the sector having deep understanding of VMC andrelevant fields such as product, quality, market, competitors On that basis, wecould establish criteria which were basis for analysis, evaluation of practicaltargets

1.6 Scientific and practical meaning of the report

- Scientific meaning: In the market economy, business strategy has

decisive nature to the success and failure of each enterprise If an enterprisewants to exist and develop, firstly, its business strategy must be appropriateand effective This report is a scientific document synthesizing REASONINGBACKGROUND of scientists to apply in practical conditions of the studiedenterprise Contents of business strategy were built to ensure scientific natureand practical conformability of the enterprise

- Practical meaning: building business strategy for VM from 2010 to

2015, looking forward to 2020 to implement effectively in the current situation

of VMC Besides, business strategy of VMC must be ensured to be suitablebusiness strategy of Vietnam Mine - Mineral Group, orientation documentspromulgated by State and current international integration tendency

Chapter II: ANALYZING REAL STATE OF VMC

2.1 Overview of the enterprise

Transaction name: Machinery joint stock company - TKV

International name: VINACOMIN- MACHINERY JOIN STOCKCOMPANY

Abbreviated name: VMC

Address: No 486, Tran Phu road, Cam Pha town, Quang Ninh Province.Telephone: (84) 33.3862319 Fax: (84) 33.3862034

VMC is a member of Vietnam Mine - Mineral Group VMC specializes

in manufacturing big mechanical equipment of Vietnam The company liesbeside Bai Tu Long Bay side, connects to China and other economic zones inthe country by National Road No 18 The company has its own lighter port,does not lie far from Cua Ong International port and Cai Lan deep water port.Thus, import, export materials and equipment are all traded conveniently withcountries in the world market

VMC is equipped with modern equipment, technological chain to meetrequirements of repair and manufacturing of 32.000 tons of products/years,serving coal exploitation sector and other economic sectors Productionworkshops in the company are arranged according to stages and are consistentaccording to close technological chain from equipment founding, hammering,mechanical processing, thermal treatment, assembling stage to repair stage.VMC has 22 ha area of workshop, including 90.000 m2 of lean-to area

In addition, VMC also has its own wharf with the area of about 31.000m2.This is a relatively favorable condition for VMC to uphold its strong points inmanufacturing heavy equipment

2.1.1 Process of establishing, developing of VMC

- On July 23rd, 1968, Cam Pha Central Mechanics Plant was establishedpursuant to decision No 739QĐ/CP of the Government, under Hon Gai Coal

Union Initial design efficiency of the plant was 16.900 tons of equipment,repair, and spare accessories/year Including:

Quantity of equipment and machine repair 13.500 tons/yearQuantity of accessories manufacturing 3.400 tons /year

- In 1979, due to requirement of developing coal sector with expected

exploitation output was up to 20 million tons of coal/year Cam Pha CentralMechanics Plant was invested for expansion in stage II, increasing efficiency

to 32.000 tons of equipment, accessories/year, including:

Repairing open-air exploitation equipment 12.900 Tons/year

Repairing selective light equipment 2.600 Tons/yearRepairing technological equipment 2.400 Tons/year

Manufacturing equipment, accessories 4.080 Tons/year

Quantity of repairing machine and equipment 26.300 Tons/yearQuantity of accessories manufacturing 5.700 Tons/year

- On May 15th, 2004, Prime Minister had Decision No TTg changing to Vietnam Machinery – Coal One member limited company,under Vietnam Coal Corporation, with total charter capital was VND26.419.178.815 and 1.345 staff

81/2004/QĐ On March 30th, 2008, the Company changed operation according tojoint stock company model with capital control rate of State was 36% Atpresent, VMC has 5 main production divisions, 16 departments and 14production workshops

o Rough draft making division: Includes Founding, Pressure

processing division; rough draft sawing division of Department of Materials,concentrated rough draft making stage of Structure 2 workshop This divisionhas duty to create rough draft for mechanical processing stages, steelcomponent and at the same time creates products (product, semi-finishedproduct) to store and sell to outside

o Mechanical processing division: includes workshops:

- Mechanical workshop 1, 2: mainly are cutting and

sharpening processing

- Electricity mechanics Workshop: manufactures accessories

serving the repair of specialized tool machines and equipment inside andoutside the company

- Installing Component Workshop I, II: manufacture steel

component products, building mechanical, and hydromechanics products

- Tool workshop: mainly process cutting and sharpening and

produce knife tool, pawning things serving mechanical processing activity

- Mechanics Workshop III: process cutting and sharpening,

component, thermal treatment, rise seeding

o Equipment repair division: includes workshops:

- Mine machine Workshop I, II: Repair or install, recover,

manufacture newly electricity, hydraulic power excavators, kiln diggingmachine, drilling machines, selecting equipment, wharf, railways, etc

- Transportation division: Ensures transportation capacity for

manufacturing, repair, at the same time takes part in repairing transportequipment and hydraulic power excavator of different types

- Electricity mechanics workshop: Repairs mechanical

processing equipment for units in Vietnam Mine - Mineral Group and externalunits

o O 2 , N 2 production division: Energy workshop: produces O2, N2

gas to make internal serving and sell in the market Ensures sufficient supply

of electricity, water, and steam energy for internal production of the company

o Basic building and precast concrete component production

division: Building and putting together workshop: builds new, repairs housing,

architectural things and produces precast concrete components servinginternally and selling to meet demand of the market inside and outside the coalsector, builds and puts together industrial and civil works

2.1.2 Human resources and organizational structure

Before 2004, due to difficulties in terms of job, low income, the number

of official engineers was not supplemented for many years, many engineersand high-level workers asked for work movement, causing remarkableshortage of technical staff While the number of indirect staff was high,causing certain difficulties in balancing labor structure

From 2004 to now, arrangement of innovation to improve labor qualityhas been implemented actively from different financial sources: subsidizingfund according to Decree 41CP; Fund for arranging labor structure innovationpursuant to Decision 971, 1139 of Vietnam Mine - Mineral Group, etcassisted, innovated more than 540 laborers who cannot meet requirements ofproduction, and through that gradually improves quality of the working staff

At present, the Company has more policies of supporting andencouraging young, newly graduate engineers, which has attracted manytechnical engineers to prepare force for the development strategy of theCompany Together with supplementation of technical officers, skillful workertraining activity is also paid attention; the number of high-grade workers hasincreased in some recent years, contributing to meet requirements in terms ofquality of worker staff From 2004 to now, the Company has recruit 295 newlaborers including workers, technical, professional engineers, supplementing

to the human resources

Human resources structure to now (compared with 2004) has increased interms of quality: Unskilled laborers decreases from 7,74% to 4,9%; technicalworkers increases by 1,7% (14,5/12,8%)

Average worker level 4,6/4,3 increases by 0,3

Age of human resources has been remarkably younger, more than 50% oflabor force has age from 36 to 45, which is red-blooded age and these peoplecan accumulate many experiences in their operation field

Current labor structure is relatively suitable at rough draft making stage,

such as steam, pressing gas, water, etc Laborers who are in charge of operation,economic, technical management execution have been more creative, active intheir job.

However, human resources of the Company still display weak points: Lacklaborers with professional capacity, deep knowledge with expert nature Sometechnical stages (metallurgy, hydraulic power, electricity and automation) still lackmanagers

Labor structure and quality of VMC are displayed in following tables

Table 2.1 Labor structure of VMC at the time of September 30 th , 2009

No List of profession

Quantity Average

of worker grade

Age

-35

36 45

46 55

56 60

Table 2.2 Labor quality of VMC