LV Thạc sỹ_Business strategy direction for vietnam singapore feeder service of vinalines container shipping company

Identifying the current business strategy of VCSC...69 CHAPTER 4: STRATEGY FOR OPTIONS VIETNAM- SINGAPORE SERVICE BY VINALINES CONTAINER SHIPPING COMPANY...70 4.1.. It is reason why I ch

In oder to finish this thesis and EMBA course also, I have received a lot ofsupporting from many people I would like to take this opportunity to thank all thosewho in many ways have helped me complete the Master program

Associate Prof PhD… is teacher who taught international management objectand also supervise me to conduct this thesis I admire his knowledge and devotion forme

I would like to thank all my professor of EMBA course, who have trained andhelp me to improve my knowledge on business management And in fact is that I haveapplied it for my work effectively

I also have received supporting from experts, interviewees, coworkers, and class– mates I would like to express to heartfelt thanks them who have worked hard with

me in during last time to finish this thesis

Finally, I want to save deeply thanks for my family It is impossible for me tofinish this thesis without supports of them My husband has helped me to solve all ofhousework just only his Especially is my daughter who creates motivation for me toovercome difficulties to solve well my family, work, and study at the same time

TABLE OF CONTENT

ACKNOWLEDGEMENT i

TABLE OF CONTENT ii

ABBREVIATION 1

LIST OF FIGURE 2

LIST OF TABLE 3

CHAPTER 1: INTRODUCTION 4

1.1 Rationales 4

1.2 Research objectives 5

1.3 Scope and Limitation 5

1.4 Research Methodology 6

1.4.1 General methods of the research 6

1.4.2 Methods of collecting data and development of research instrument 6

1.4.3 Data analyzing methods 7

1.4.4 Summary 8

1.5 Structure outline 8

CHAPTER 2: THE THEORETICAL BACKGROUND FOR STRATEGIC DIRECTION 9

2.1 Formulating strategies 9

2.1.1 Strategy issues 9

2.1.2 Strategy levels 10

2.2 Business generic strategies 12

2.2.1 Cost leadership strategies 13

2.2.2 Differentiation strategies 13

2.2.3 Focus strategies 14

2.3 Strategy formulation 14

2.3.1 Formulation model 14

2.3.2 External business environment analysis 15

2.3.3 Internal business environment analysis 20

2.3.4 Strategic decision - TOWS matrix 25

2.3.5 Strategic implementation 26

2.4 Overview of container feeder service 27

2.4.1 Containerization 27

2.4.2 Feeder service 29

CHAPTER 3: STRATEGY ANALYSIS FOR VCSC 30

3.1 Introducing the VCSC’s background 30

3.1.1.The history and development progress of VCSC 30

3.1.2 The human resource of VCSC 31

3.1.3 The business result of VCSC in the period 2009-2010 32

3.2 Business environment analyses 33

3.2.1 External analyses of VCSC 33

3.2.2 Internal analyses 56

3.3 Identifying the current business strategy of VCSC 69

CHAPTER 4: STRATEGY FOR OPTIONS VIETNAM- SINGAPORE SERVICE BY VINALINES CONTAINER SHIPPING COMPANY 70

4.1 Vision, mission, and business objective 70

4.1.1 The Company Vision 71

4.1.2 The Company Mission 71

4.1.3 Business objectives 71

4.2 Business strategic directions for VCSC 72

4.2.1 TOWS matrix analyse 72

4.2.2 Main business strategy directions for VCSC 73

4.3 Main business strategy direction for VCSC 76

4.3.1 The solution to achieve financial perspectives 76

4.3.2 The solution to achieve customer perspectives 78

4.3.3 The solution to achieve internal perspectives 80

4.3.4 The solution to achieve learning and growth perspectives 81

CONCLUSION 82

LIST OF REFERENCES 83

ASEM Asia – Europe Meeting

PEST political, Economic, Society, Technology

SWOT Strength, Weakness, Opportunity, Threat

R&D Research & Development

VCSC Vinalines Container Shipping Company

VINALINES Vietnam National Shipping Company

TEUS Twenty – foot equivalent units

LIST OF FIGURE

Figure 1.1: Research Methodology 8

Figure 2 1 Three generic strategic 12

Figure 2 2 A schematic of the strategic process 15

Figure 2.3 PEST model 16

Figure 2.4 Five Forces Analysis 19

Figure 2.5 The generic value chain 22

Figure 3.1 The structure of VCSC 31

Figure 3.2 Vietnam GDP Growth Rate 2006-2010 40

Figure 3.3 Foreign Direct Investment in Vietnam (FDI) 41

Figure 3.4 Top 20 foreign investors in Vietnam in 2010 42

Figure 3.5 Vietnamese exports from Singapore in 2010 48

Figure 3.6 Vietnamese imports to Singapore in 2010 48

Figure 3.7 Number of TEUs sent per month of enterprises 53

Figure 3.8 The fleet of VCSC 58

Figure 3.9 The capactity of VCSC 59

Figure 3.10 The structure of Marketing Department in VCSC 64

Figure 4.1 Customer satisfaction 80

LIST OF TABLE

Table 3.1 Business result of Vinalines Container Shipping Company in 2009, 2010 33

Table 3.2 VCSC - Rivalry among existing firms 52

Table 3.3 VSCS’s extenal matrix 55

Table 3.4 Import- Export between Vietnam and Singapore 47

Table 3.5 Schedule in time as announcement 60

Table 3.6 Responsiveness of VCSC 61

Table 3.7 The VSCS’s human resource 67

Table 3.8 VCSC’s internal matrix 68

Table 4.1 Combination of TOWS matrix for VCSC 72

Table 4.2 Technical condition of three vessels 77

CHAPTER 1: INTRODUCTION

1.1 Rationales

Vinalines Container Shipping Company (VCSC) is a branch of VietnamNational Shipping Lines (Vinalines) – one of top state- owned general companies Thiscompany is established to specialize in container shipping field and to develop as one

of Vinalines’ top strengths

At present, VCSC owns eight container vessels in three main business fields:chartering, domestic service and Hong Kong-Vietnam service Opening Vietnam-Singapore service is a big business project which VCSC studying It has not deployed

in last years because this service is strongly competitive while VCSC is not wellprepared for business and administration experiences as well as advanced technology tojoin this service The situation has changed at the current time, this project may befeasible and have chance to deploy for the following reasons:

-Government grants a priority and support for developing maritime industry inaccordance with strategy to develop coastal economy set in the CPV 10th partycongress

-This project meets the Development Plan of Vietnam National Shipping Lines(VINALINES) for the period of time 2010 - 2015 that set the mission to developcontainer fleet and logistic network

- It is an important step so that VCSC can achieve the mission to expand feedernetwork and become main line operator with worldwide network in the future

-Vinalines/VCSC has some preparation in last few years such as budgetaccumulation, close relationship with many Singapore Agents, building up relationshipwith some Main Line Operators (MLOs) via Hong Kong- Vietnam service as potentialcustomers in the new service, training employees, opening a Vinalines’ Singaporerepresentative office

-The opportunity brings back from economic crisis at the end of 2008 Thecrisis caused to give up the service from many competitors It enables Vinalines/VCSC

to join this service and find a stable stand when the world economy may bounce back

in about 2010

However, how to launch this feeder service efficiently depends much onstrategy for this project A suitable business strategy choice which meet to businessenviroment in new period, VCSC will suffer loss in the first period and optimizepotential profit in the future It will also help VCSC to achieve a this goal as well assurvive and develop in this competitive market in the difficult condition of economic

crisis It is reason why I choose the thesis “Bussiness strategy Direction for Vietnam Singapore feeder service of Vinalines Container Shipping Company” I believe that

-the study will contribute considerably to possibility of this business plan and make itdeploy in the near future

-1.3 Scope and Limitation

VCSC is doing business in various services such as domestic service, logistics,chartering, many kinds of routes HPH – DN, HPH – HCM, HPH – HongKong, HPH –China Howerver, within the scope of this study, thus the author would like to focus onVietnam – Singapore feeder service which requires careful study in all respects such asmarketing, human resources, administration, finance etc…

-Focus on shipping line industry

-Forcus on the Vietnam – Singapore feeder service, included VN – SIN andSIN – VN

1.4 Research Methodology

1.4.1 General methods of the research

In this research, the author uses two main methods consisting of comparative

and analysis methods to analyze internal and external business environment to identifystrengths, weaknesses, oppotunites, threats of VCSC; proposal business strategies forVietnam - Singapore feeder service of Vinalines Container Shipping Company andsome main solutions to implement business strategy for Vietnam -Singapore feederservice of VCSC Therefore, the research used both primary and secondary data,information provided by VCSC

Overall, the author refers to the following methods:

- Method of statistical analysis: Following the data analysis, restate the researchquestions, then present the findings and conclusions

- Method of analysis overall assessment and comparison: The author uses the complexmathematical equations, involving in-depth statistical data

1.4.2 Methods of collecting data and development of research instrument

1.4.2.1 Collecting primary data

a Interviewing

The interview method of this research involves a face-to-face meeting whichresearchers (interviewers) make interview with the director of VCSC, others leader incompetitors (02 persons), future customer (2 persons) to ask a series of questions asfollowing steps

- Prepare survey questions in advance

- Choosing people to be interviewed

- Conducting the survey in 15 minutes for each people

- Recording and take notes the dialogue

b Questionnaires

The author has applied questionaiers to collected main external informationwhich are people’s feedbacks includes information about company’s service, price,distribution, promotion and business policy, and about comparing with competitors

Because of the time limitation, the author will conducte questionaires with 60persons

c Sample collection

Primary data in 2010 and 2011 was collected from 12 departments of VCSC(Accounting-Finance department, Marketing department, Administrative department,Human resourses department,…)

In each department, the author selected two officers and interviewed themabout the strategy in the company and its influence on the business result as well as theVietnam-Singapoor feeder service

1.4.2.2 Collecting secondary data

- Secondary Data was collected mainly from the company’report, collected fromnewspaper, internet, magazine, etc, to support and develop arguments:

-External sources: containership chartering market reports from shipbrokers;transportation theory, agency

-Internal sources: Chartering report, market reports, financial, others data ofVCSC

Some information which includes figures relating to Foreign direct investment(FDI,) Import and export statistics wasere collected from formal publication ofVietnam General Statistic Office

1.4.3 Data analyzing methods

- Using some analysis menthods consisting of staticical analysis, comparison, figures,tables, charts,… to treat the data and propose comments as well as conclusions

- Using Microsoft Excel 2007 software to analyze the data

1.4.4 Summary

Figure 1.1 illustrates the process of research methodology which was used in thisresearch

Source: Made by the author

Figure 1.1: Research Methodology 1.5 Structure outline

The structure of the thesis includes three main parts as follows:

Chapter 1: Introduction

Chapter 2: Summary of relevent theories which used to analyze enviroment andformulate strategies for VCSC

Charter 3: Strategy analysis for VCSC

Charter 4: Strategy for options Vietnam- Singapore service by VinalinesContainer Shipping Company

Collecting primary data Collecting secondary

CHAPTER 2 THE THEORETICAL BACKGROUND FOR STRATEGIC DIRECTION

reality Thompson & Strickland (2003) suggest, “An organization’s strategy deal with how to make management’s strategic vision for the company a reality – It represents the game plan for moving the company into an attractive business position and building a sustainable competitive advantage”

2.1.1.2.Vision statement

Vision statement of organization is to answer the question “What do we want tobecome?” It is especcially important for any manager to set up long term objectivesand excecutives and executives to achieve good performance A clear vision providesthe foundation for setting up strategy and all orgnaization’s operations, that follow it

Developing a vision statement is the first step in strategic planning Manyvision stratements are single sentences only It may also contain a slogan, diagram,

or picture – whatever grabs attention

2.1.1.3.Mission statement

A company’s mission differs from visions in that encompasses both the purpose

of company as well as the basic of competition and competitive advantages PeterDrucker, who is often called “the father of modern management says that asking thequestion “What is our business” is synonymous

A business mission is the foundation for priorities, strategies, plans, and workassignments It is the starting point for the design of managerial jobs and, above all, forthe design of managerial structures

-Timely: There needs to be a time frame for finishing the objectives

2.1.2 Strategy levels

Strategies exist at a number of levels in an organization: Corporate levelstrategy, Business level strategy, Functional level strategy and Operational levelstrategy

2.1.2.1 Corporate level strategy

Corporate strategy can be described as the identification of the purpose of the

organization and the plans and actions to achieve that purpose (14, pp5) Corporatestrategy is the pattern of major objectives, purposes or goals and essential policies orplans for achieving those goals, stated in such a way as to define what business thecompany is in or is to be in and the kind of company it is or is to be (14, pp6)

Drucker (1955) defined corporate strategy as the pattern of major objectives,purposes or goals and essential policies or plans for achieving these goals, stated insuch a way as to define what business the company is in or is to be in and the kind ofcompany it is or is to be (17, pp8)

In conclusion, corporate-level strategy is concerned with the overall purposeand scope of an organization and how value will be added to the different parts(business units) of the organization (7, pp11).

2.1.2.2 Business level strategy

Generally, the strategy of the firm is the match between its internal capabilities and itsexternal relationships It describes how it responds to its suppliers, its customers, itscompetitors and the social and economic environment within which it operates (14,pp6) Specifically, business-level strategy is about how to compete successfully inparticular markets (7, pp11) A business strategy usually covers a plan for a singleproduct or a group of related products Today, most strategic action takes place at thebusiness unit level, where sophisticated tools and techniques permit the analysis of abusiness; the forecasting of such variables as market growth, pricing, and the impact ofgovernment regulation; and the establishment of a plan that can sidestep threats in anerratic environment from competitors, economic cycles, and social, political, andconsumer changes Each functional area of a business (e.g., marketing) makes its ownunique contribution to strategy formulation at different levels (16, pp8)

2.1.2.3 Functional level strategy

Functional-area strategies concern the actions and practices employed inmanaging particular functions or business processes or activities within a business Theprimary role of a functional strategy is to add specifics to a company’s business-levelstrategy (2, pp 39)

Within the strategy of the business, each area of value-adding activity orfunctional area will need to design and implement a strategy that supports theoverall strategy of the organization Functional strategy is of considerable importance

in the successful implementation of business strategy and in its fine-tuning or tacticalmanagement (5, pp23)

2.1.2.4 Operational strategy

Operational strategies are concerned with how the component parts of anorganization deliver effectively the corporate and business-level strategies in terms ofresources, processes and people (7, pp12)

Operational decisions are concerned with the shorter-term objectives of thebusiness and with its day-to-day management They are dependent upon strategy andtactics These decisions are made at junior managerial or supervisory level, are based

on a high degree of certainty and are not complex The procedures in a sales office aretypical operational activities – processing orders that have a tactical purpose in pursuit

of the overall strategy (5, pp21)

2.2 Business generic strategies

Business strategy is the foundation of successful business But there are, ofcourse, different types of business strategy The best business strategies must steer acourse between the inevitable internal pressure for business continuity and the demands

of a rapidly changing world for revolutionary business strategies (15).

Professor Porter argued that there were three basic, i.e generic, strategies open

The notion underlying the concept of generic strategies is that competitiveadvantage is at the heart of any strategy, and achieving competitive advantage requires

a firm to make a choice-if a firm is to attain a competitive advantage, it must take achoice about the type of competitive advantage is seeks to attain and the scope withinwhich it will attain it (10, pp 12)

The cost leadership and differentiation strategies seeks competitive advantage in

a broad range of industry segments, while focus strategies aim at cost advantage (costfocus) or differentiation (differentiation focus) in a narrow segment (10, pp 11)

2.2.1 Cost leadership strategies

Cost Leadership is perhaps the clearest of the three generic strategies (10,pp12) The essential point is that the firm with the lowest costs has a clear and possiblysustainable competitive advantage However, in order to cut costs, a low-cost producer

must find and exploit all the sources of cost advantage Low-cost producers typically

sell a standard, or no-frills, product and place considerable strategic emphasis onreaping scale or absolute cost advantages from all sources In practice, low-cost leadersachieve their position by shaving costs off every element of the value chain-the strategycomes from attention to detail To follow this strategy option, an organization willplace the emphasis on cost reduction at every point in its processes It should be noted

that cost leadership does not necessarily imply a low price: the company could charge

an average price and reinvest the extra profits generated (14, pp452-453)

2.2.2 Differentiation strategies

In a differentiation strategy, a firm seeks to be unique in its industry along somedimensions that are widely valued by buyers It selects one or more attributes that manybuyers in an industry perceive as important, and uniquely positions itself to meet thoseneeds It is rewarded for its uniqueness with a premium price (10, pp14)

Differentiation occurs when the products of an organization meet the needs of

some customers in the market place better than others When the organization is able todifferentiate its products, it is able to charge a price that is higher than the average price

in the market place (14, pp453)

2.2.3 Focus strategies

According to Porter (1985), neither a low-cost leadership strategy nor adifferentiation strategy is possible for an organization across the broad range of themarket Equally, the costs of differentiation, while serving the mass market ofcustomers, may be too high: if the differentiation involves quality, it may not becredible to offer high quality and cheap products under the same brand name, so a newbrand name has to be developed and supported For these and related reasons, it may be

better to adopt a focus strategy (14, pp454).

The third generic strategy is focus This strategy is quite different from theothers because it rests on the choice of a narrow competitive scope within an industry

The focus strategy has two variants In cost focus a firm seeks a cost advantage in its target segment, while in differentiation focus a firm seeks differentiation in its target

segment The focuser can thus achieve competitive advantage by dedicating itself to thesegments exclusively Breadth of target is clearly a matter of degree, but the essence offocus is the exploitation of narrow targets’ differences from the balance of the industry.Narrow focus in and of itself is not sufficient for above-average performance (10,pp15)

2.3 Strategy formulation

2.3.1 Formulation model

The strategy formulation process is important because a “better” process shouldproduce better strategies The strategy formulation process has to be tailored to thecurrent needs of the organization (8, pp61-63)

Figure 2 2 A schematic of the strategic process

Source: H Macmillan and M Tampoe, Strategic Management

Clearly, the overall aim of the strategy formulation process is to ensure thatstrategies are conceived which will secure the future of the enterprise The process has

to be designed within the unique concept of a particular enterprise at a particular time(8, pp69)

2.3.2 External business environment analysis

Every organization exists in a dynamic environment characterized by rapidchange Sometimes change is predictable, mostly it is not Change affects the internaland external environment and can have consequences for strategy that may requireaction It is necessary for firms to review their strategic analysis periodically to ensurethat their current strategy still fits the options criteria and can achieve their stated aimsand objectives (3, pp216) The ‘environment’ of an organization is everything around itthat affects it and that can influence its success or failure (17, pp6)

2.3.2.1 Macro environment (PEST analysis)

The most general ‘layer’ of the environment is often referred to as the environment This consists of broad environmental factors that impact to a greater orlesser extent on almost all organizations It is important to build up an understanding ofhow changes in the macro-environment are likely to impact on individual organizations(7, pp65)

macro-The macro-environment contains a range of influences that affect not only anorganization in an industry, but also the whole industry itself It follows that a singleorganization is usually unable to affect the factors in the macro environment –successful strategy usually involves learning to cope and adapt to changes (5,pp2)

The macro-environment comprises influences arising from socio-demographic,political, economic, natural and technological factors The nature of these factorsnormally means that individual businesses are unable to influence them -strategies mustusually be formulated to cope with changes in the macro-environment (5, pp133)

A PEST analysis is merely a framework that categorizes environmental

influences as political, economic, social and technological forces (9, pp 168) PEST

analysis is to explore changes in the wider industry context, and their knock on effect(19, pp12) The PEST analysis is concerned with general change in the businessenvironment This section is concerned with changes in how the enterprise views theexternal environment Changes in perspective of the external world may be assignificant as changes in the external world itself (8, pp99)

Figure 2.3 PEST model

Source: T Grundy 2003, Gurus on Business Strategy

Obviously, the PEST analysis is the most common approach for considering theexternal business environment in general The underlying thinking of the PESTanalysis is that the enterprise has to react to changes in its external environment Thisreflects the idea that strategy requires a fit between capabilities and the externalenvironment and so it is necessary for an enterprise to react to changes (8, pp96).

Political change might be expected to include general changes in the domestic political

climate, government change, world power shifts, as well as specific legislation andregulation Changes in legislation tend to occur in a cycle extending over several years.The initial ideas may first become apparent as a political concern, followed bydiscussion and policy documents before the changes become law It may therefore bepossible to discern and possibly influence the likely shape of future legislation inadvance Regulation, and particularly change in regulation, is crucial to manybusinesses Most regulation is announced some years before it becomes effective andfuture trends may become apparent even before legislation is formulated Regulationalso tends to have effects that are both wider and different from what the regulatorsintended (8, pp 96)

Economic change is likely to include the effects of economic cycles, patterns ofworld trade, currency conversion rate changes, commodity prices, changes in capitalmarkets, labour markets and rates, and economic effects on suppliers and particular

groups of customers (8, pp 96) Economic conditions affect how easy or how difficult it

is to be successful and profitable at any time because they affect both capitalavailability and cost, and demand The timing and relative success of particularstrategies can be influenced by economic conditions (9, pp 168)

Social change includes the effects of demographic patterns, tastes and habits,

and concerns about the environment and sustainable development Many products andservices tend to cater to the needs of particular age groups so that demographic trendswill affect the total number of available customers Demographic trends are morepredictable than most long-term social trends Changes in tastes and habits, on the otherhand, can occur very fast and may be totally unpredictable (8, pp 97)

Technology in one respect is part of the organization and the industry part of the

model as it is used for the creation of competitive advantage However, technologyexternal to the industry can also be captured and used, and this again can be influenced

by government support and encouragement Technological breakthroughs can createnew industries which might prove a threat to existing organizations whose products orservices might be rendered redundant, and those firms which might be affected in thisway should be alert to the possibility Equally, new technology could provide a usefulinput, perhaps in both manufacturing and service industries, but in turn its purchase willrequire funding and possibly employee training before it can be used (9, pp 170-171)

2.3.2.2 Micro environment

The micro or ‘near’ environment is the sphere in which the organizationinteracts often – usually on a day-to-day basis Any changes in the micro-environmentcan affect an organization very quickly and, sometimes, very dramatically (4, pp344)

The micro-environment comprises those influences that the organizationexperiences frequently For most businesses, it concerns the industries in which theyoperate Within this arena, businesses may compete with each other or, in somecircumstances; collaboration may be more appropriate (5, pp129) An internal analysiswill cover Porter’s Five Forces framework analysis:

Five forces model was developed by Professor Micheal Porter of the HarvardBusiness School in 1980 It is one of the most useful for scanning the micro-environment It helps analyzing the state of competition in an industry It includes fivefactors which affect firm’s position in this industry The figure 2 shows this model as akey analytical tool for diagnosing the competitive environment

The Rivalry among Competing Seller: “The strongest of the five competitive

forces is usually the jockeying for position and buyer favor that goes on among rivalsellers of a product and service” (2, pp81) The highly competitive betweencompetitors cause the pressure on price, margin, profit etc for every player in theindustry The strategies pursued by one firm can be successful only to the extent theyprovide the competitive advantages over the strategies pursued by rival firm Changes

in trategies by one firm may be with retaliatory countermoves, such as lowering price,

enhancing quality, add features, providing services, extending warranties, andincreasing advertising.

The Potential Entry of New Competitor: Whenever new firms easily enter a

particular industry, the intensity of competitive among firm increase Barriers to entry,however to include the need to gain economies of scale quickly, the need to gaintechnology and specialized know-how, the lack of experience, strong customer loyalty,strong brand preferences, large capital requirement, lack of good distribution channel,government regulation policies, tariff, etc Despite numerous barriers to entry, newfirms sometimes enter industries with highter quality product lower price, andsubstantial marketing resource

Figure 2.4 Five Forces Analysis

Source: Michale Porter, 2006 The Potential development of Substitute Product: There are many industries in

which firms are in close competition with producers of substitute products in otherindustries The presence of the substitute products puts a ceiling on the price that can

be charged before consumer will switch to the substitute product Competitivepressures arising from substitute products increase as the relative price of substitute

products declines and as consumer switching cost decrease The competitive strengthen

of substitute product it best measured by the inroad in to the market share those productobtain, as well as those firm plans for increased capacity and market penetration

The bargaining Power of Suppliers: The bargaining power of suppliers affects

the intensity of competition in an industry, especially when thereis a large number ofsuppliers, where there are only a few good substitute raw material, or the costswitching raw material is especially costly It is often in the best interest of bothsuppliers and producers to assist each other with reasonable prices, improved quality,development of new services just-in-time deliveries, and reduce inventory cost, thusenhangcing long term profitability for all concerned

The Bargianing Power of Buyer: When customer are concentrated or larger,

their bargaining power represents a major force affecting the intensity competition in

an industry Rival firms may offer extended warranties or special services to againcustomer loyalty whenever the bargaining power of customers is substantial.Bargaining of buyer is also higher when products being purchased are standard orundifferentiated When this the case, customer often can negotiate selling price,warranty coverage, etc

2.3.2.3 Oppoturnity and Threats analysis

The external limits are determine by its industry and boader environment.Industry oppoturnities and threats define the competitive environment, with itsattendant risks and potential rewards So cietal expectations reflect the impact on thecompany of such things as government policy, social concerns, evolving mores, andmany others The organization needs to understand all these external influences on itsmarket, as well as the size of the market, its likely growth or contraction and itspotential customers

2.3.3 Internal business environment analysis

After auditing firm’s external environment which finds out opportunities andthreat we scan firm’s internal environment which shows out strengthens and weakness.Normally, strengths and weakness of a firm will be found in a variety areas and

function activities: marketing, operation, logistic, finance, management informationsystem, and so on.

There are many models was used to analyze internal environment of a firm suchas: Resource-Base View (RBV), Value Chain Analyze (VCA), etc, in this thesis, authorconcerns two model that are the most useful models and great number of user areResource-Base view and Value chain model

2.3.3.1 Resource-based view (RBV)

The RBV of the firm combine two perspectives: (1) the internal analysis ofphenomena within a company and (2) an external analysis of the industry and itscompetitive environment It is helpful in developing strategies for individual businessand diversified firms by revealing in how core competencies embedded in a firm canhelp it exploit new product and market opportunities

a Tangible resources are the physical resources of the organization that contribute

to its value added These include:

 Financial Resources

Financial resources concern the ability of the business to "finance" its chosen strategy.For example, a strategy that requires significant investment in new products,distribution channels, production capacity and working capital will place great strain onthe business finances Such a strategy needs to be very carefully managed from afinance point-of-view An audit of financial resources would include assessment of thefollowing factors:

 Human Resources

The heart of the issue with Human Resources is the skills-base of the business Whatskills does the business already possess? Are they sufficient to meet the needs of thechosen strategy? Could the skills-base be flexed / stretched to meet the newrequirements

 Physical Resources

The category of physical resources covers wide range of operational resourcesconcerned with the physical capability to deliver a strategy These include: Productionfacilities, Marketing facilities, information technology

b Intangible resources are those resources that have no physical presence but

represent real benefit to the organization Intangibles include: Goodwill,reputation, brand…

2.3.3.2 Value chain model

The purpose of value chain analysis is to measure the value delivered and theprofit contributed by each link of the chain (8, pp118) Value activities can be divided

into two broad types, primary activities and support activities Primary activities are

the activities involved in the physical creation of the product and its sale and transfer tothe buyer as well as after sale assistance In any firm, primary activities can be dividedinto the five generic categories Support activities support the primary activities andeach other by providing purchased inputs, technology, human resources, and variousfirm wide functions The dotted lines reflect the fact that procurement, technologydevelopment, and human resource management can be associated with specific primaryactivities as well as support the entire chain Firm infrastructure is not associated withparticular primary activities but supports the entire chain (10, pp38)

Figure 2.5 The generic value chain

Source: H Macmillan and M Tampoe, Strategic Management

a Primary activities

There are five generic categories of primary activities involved in competing inany industry Each category is divisible into a number of distinct activities that depend

on the particular industry and firm strategy:

 Inbound Logistics Activities associated with receiving, storing, and

disseminating inputs to the products, such as material handling, warehousing, inventorycontrol, vehicle scheduling, and returns to suppliers

 Operations Activities associated with transforming inputs into the final

product form, such as machining, packaging, assembly, equipment maintenance,testing, printing, and facility operations

 Outbound Logistics Activities associated with collecting, storing, and

physically distributing the product to buyers, such as finished goods warehousing,material handling, delivery vehicle operation, order processing, and scheduling

 Marketing and Sales Activities associated with providing a means by

which buyers can purchase the product and inducing them to do so, such as advertising,promotion, sales force, quoting, channel selection, channel relations, and pricing

 Service Activities associated with providing service to enhance or

maintain the value of the product, such as installation, repair, training, parts supply, andproduct adjustment (10, pp39)

b Support activities

Support value activities involved in competing in any industry can be dividedinto four generic categories As with primary activities, each category of supportactivities is divisible into a number of distinct value activities that are specific to agiven industry (10, pp40)

 Procurement Procurement refers to the function of purchasing inputs used in the

firm’s value chain, not to the purchased inputs themselves Purchased inputs includeraw materials, supplies, and other consumable items as well as assets such asmachinery, laboratory equipment, office equipment, and buildings Though purchasedinputs are commonly associated with primary activities, purchased inputs are present inevery value activity including support activities Improved purchasing practices can

strongly affect the cost and quality of purchased inputs, as well as of other activitiesassociated with receiving and using the inputs, and interacting with suppliers.

 Technology Development Every value activity embodies technology, be it

know-how, procedures, or technology embodied in process equipment The array oftechnologies used in preparing documents and transporting goods to those technologiesembodied in the product itself Moreover, most value activities use a technology thatcombines a number of different sub-technologies involving different scientificdisciplines Technology development consists of a range of activities that can bebroadly grouped into efforts to improve the product and the process (10, pp41-42)

 Human Resource Management Human Resource Management consists of activities

involved in the recruiting, hiring, training, development, and compensation of all types

of personnel Human resource management supports both individual primary andsupport activities and the entire value chain Human resource management activitiesoccur in different parts of a firm, as do other support activities, and the dispersion ofthese activities can lead to inconsistent policies Moreover, the cumulative costs ofhuman resource management are rarely well understood nor are the tradeoff in differenthuman resource management costs (10, pp42)

 Firm Infrastructure Firm infrastructure consists of a number of activities including

general management, planning, finance, accounting, legal, government affairs, andquality management Infrastructure, unlike other support activities, usually supports theentire chain and not individual activities Depending on whether a firm is diversified ornot, firm infrastructure may be self-contained or divided between a business unit andthe parent corporation In diversified firms, infrastructure activities are typically splitbetween the business unit and corporate levels Many infrastructure activities occur atboth the business unit and corporate levels (10, pp43)

2.3.3.3 Strengths and Weeknesses analysis

The internal analysis tends to reveal the strengths and weaknesses of theenterprise.The company’s strengths and weaknesses are its profile of assets and skillsrelative to competitors, including financial resource, technology posture, brandidentification, and so on The personal values of an organization are the motivations

and needs of the key executives and other persionel who must implement the chosenstrategy Strenghths and weaknesses combined with values determine the internal (tothe company) limits to the competitive strategy can successfully adopt.

2.3.4 Strategic decision - TOWS matrix.

In generally, TOWS matrix can be useful as basis against which to judge futurestrategic choices The aim is to identify the extent to which the current strengths andweaknesses are relevant to, and capable of, dealing with the threats or capitalizing onthe opportunities in the business environment (7, pp102)

The TOWS matrix makes use of the same inputs (Threats, Opportunities,Weaknesses and Strengths), reorganizes them and integrates them more fully into thestrategic planning process

Each box of the TOWS matrix is used to identify options that address a differentcombination of the internal factors (strengths and weaknesses) and the external factors(opportunities and threats) The top left-hand box should list options that use thestrengths of the organisation to take advantage of opportunities in the businessenvironment In contrast the bottom right-hand box should list options that minimiseweaknesses and also avoid threats In this sense the TOWS matrix not only helpsgenerate strategic options it also addresses their suitability (7, pp347-348)

Figure 2.6 The TOWS matrix

Source: Adapted from Weihrich (1982)

2.3.5 Strategic implementation

The implementation of strategy involves the practical measures taken to actionthe selected strategic option or options The implementation of a chosen strategyinvariably means communicating the strategic option to other levels of managementwithin the organisation (3, pp215)

Kaplan and Norton (1996) developed the Balanced Scorecard The scorecard is

not a way of formulating strategy It is a way of understanding and checking what youhave to do throughout the organisation to make your strategy work (14, pp616).Altogether, the Balanced Scorecard translates vision and strategy into objectives andmeasures across a balanced set of perspectives The scorecard includes measures ofdesired outcomes as well as processes that will drive the desired outcomes for thefuture (13, pp29)

The Balanced Scorecard (BSC) translates mission and strategy into objectivesand measures, organized into four different perspectives: financial, customer, internalbusiness process, and learning and growth

2.3.5.1 Financial perspective

Financial measures are an important component of the balanced scorecard.Classis lagging indicators are mormally encountered in the financial perspective.Typical examples include profitability, revenue growth, and economic value added

2.3.5.2 Customer perspective

When choosing measure for customer perspective, the firm must answer twocritical questions: Who are out target customer? And what is our value proposition isserving them? This perspective will normally include measure widely used today:customer satisfaction, customer loyalty, market share, and customer

2.3.5.3 Internal perspective

The internal-business-process measures focus on the internal processes that willhave the greatest impact on customer satisfaction and achieving and organization’sfinancial objectives The internal-business-process perspective reveals two fundamentaldifferences between the traditional and the BSC approaches to performancemeasurement Traditional approaches attempt to monitor and improve existing business

processes They may go beyond financial measures of performance by incorporatingquality and time-based metrics (13, pp27).

2.3.5.4 Learning and Growth Perspective

The fourth perspective of the Balanced Scorecard, learning and growth, identifies theinfrastructure that the organization must build to create long-term growth andimprovement Organizational learning and growth come from three principal sources:people, systems, and organizational procedures The financial, customer, and internal-business-process objectives on the Balanced Scorecard typically will reveal the largegaps between the existing capabilities of people, systems, and procedures and what will

be required to achieve breakthrough performance To close these gaps, businesses willhave to invest in re-skilling employees, enhancing information technology and systems,and aligning organizational procedures and routines (13, pp28)

2.4 Overview of container feeder service

2.4.1 Containerization

Container box was firstly invented by Malcom McLean, who was often calledthe father of containerization in 1956 This invention replaced the traditional seatransport method of break bulk cargoes and revolutionized the transport of cargoes inthe world Since that time, container transportation has been growing very fast andbecome a common way to transport all most types of cargoes especially products forconsumption

Containerization is a system of inter-modal freight transport using standardinter-modal containers that are standardized by the International Organization forStandardization (ISO) It means that cargoes are put in to standardized containers andthen, these containers are loaded on transportation vehicles such as containerships,trucks, trains etc The freight is calculated based on number of standardized containers

Further details about standardized containers or standard inter-modal containers,the most common used containers are 20 foot containers, 40 foot containers, besidesthere are some other containers such as 45 foot , 48 foot and 53 foot containers (twolatter are mostly used in US domestics) Container capacity is often measured in

twenty-foot equivalent units (TEU) One TEU represents the cargo capacity of a 20 foot

container with dimension of 20 feet (6.1 m) long x 8 feet (2.4 m) wide x 8.5 feet(2.6 m) high.

Containerization brings many advantages such as decreasing time for cargooperation, increasing operation frequency, utilizing the vessel’s capacity etc Thus,total operation cost as well as freight rate are decreased in comparison with traditionaltransport, which are beneficiary for both Shippers and Ship-owners

The development of building technologies of container vessels is an outstandingexample The larger and larger size of container vessels have been introduced andoperated in sea transport to reduce operation cost and contribute to reduce sea freight

In 1980s, the largest size of container vessel was Pana-Max vessel with capacity of4,000 -5,000 teus This class of vessel was limited by the breath (33.5 m) and length(305 m) of lock chamber of Panama channel In the 1990s, with new transport networkwithout using Panama Channel, the larger size of container vessel was launched withcapacity of 6,000 – 10,000 teus and its breath and length excess the above mentionlimit This class of vessel is called post-Pana-Max vessel At present, many innovativedesign studies for new vessel generation Suez max Ultra large container vessel (ULCS)are carried out in ship building industry The first 12,000 teus container vessel wasprobably seen in 2010 In the future, the next vessel generation such as Post-Suez-Max,Post-Malacca-Max will be born together improvement of building technologies

Besides great achievements in building container vessels, international portsystems have been changed to meet container vessel sizes and the demand of loadingand discharging containers More and more multi-purpose ports in the world hasupgraded its infrastructures and technologies to meet bigger and bigger sizes ofcontainer vessels as well as a large number of new container ports has beenconstructed Accordingly, the network of hub ports and satellite ports with differentfunctions around the world was born as the result of these changes Together withnetwork of hub-port and satellite ports, many main routes for container transport arealso established to link continents of Europe, Asia, America, Africa and Australia asglobe traffic

In general, although container transport was born much latter than traditionalbreak bulk transport, it has already shown its advantages Nowadays, it becomes anessential and modern transport method which domain 80 percent of cargoes in theworld.

2.4.2 Feeder service

The dictionary of Shipping Terms, Peter Brodie (1997), defined feeder serviceas: “The service provided by a shipping line whereby small ships carry cargoesregularly between ports which are served by a large ocean ship and ports which are not,for the reason that cargoes to and from these ports are not sufficient to warrant putting

in a large ship but are transshipped to or from the ship”

The concept of feeder vessel is the ship of small sizes, the transportation ofcargoes, mostly containers, between satellite ports and central hub ports to feed thedeep sea vessels, which carry thousands of containers Satellite ports are regional portsthat the deep sea vessels can not or do not want to call Hub ports are internationalcontainer ports where can receive very large container vessels Containers of shippersare loaded to feeder vessels at satellite port then, are transshipped at hub ports ontomother vessels to carry to destination ports and deliver to the consignees Feederservice brings much benefit for shippers, consignees, carriers and society thanks to costsavings for cargo shipment

Feeder vessels are often operated by feeder operators which render feederservice in a specific route and fixed schedule (weekly, semi monthly, monthly) amongsmall ports and hub ports In reality, feeder operators often do not own vessels or justown a small fleet They may charter in vessels from the chartering market to avoidhuge initial investment and flexibility in extend or narrow their service scale Theknown feeder operators in the world are Sea Consortium Pte., Ltd, Samudera ShippingPte., Ltd, Orient Express Lines, etc

Although feeder service is only rendered in limited area in a continent, it is avery important link in logistic chain for shipping and distribution of cargoes from door-to-door

CHAPTER 3STRATEGY ANALYSIS FOR VCSC3.1 Introducing the VCSC’s background

3.1.1.The history and development progress of VCSC

In February 2009, after more than a decade of professional experience inshipping and especially container shipping, Vinalines Container Shipping Company(VCSC) was officially established as a decision of Vietnam National Shipping Lines(VINALINES) to professionalize the fleet and to improve the related services.Vinalines Container Shipping Company (VCSC) manages and operates VINALINEScontainer fleet including 8 container vessels and 1 time-chartered in container vesselfor domestic service, feeder service and time – chartered out service The relating valueadded services are also provided by VCSC As mentioned above, VCSC has capturedsignificantly large market share in transportation of domestic container market, feederservice between Hai Phong to Hongkong and vice versa

Below is some main information about Vinalines Container Shipping Company-Name: Vinalines Container Shipping Company (VCSC)

-Address: 5th Floor Ocean Park Building No1 - Dao Duy Anh Str., Dong DaDist., Ha Noi City Vietnam

Figure 3.1 The structure of VCSC

Source: Research, 2011

3.1.2 The human resource of VCSC

The experienced staffs has always been the most important resources in theenterprise Being aware of this issue, in the process of formation and development ofthe company always attaches importance to the work of the layout, arrangement,employed workforce to match the business situation in each period

VCSC has great attention in the creation, corporate culture training for staffand employees, especially staff members who work directly with customers

Technology Manager

Logistics Manager

Administrative Manager

Administrative Manager

Accounting and Finance Manager

Accounting and Finance Manager

Planning Manager

Planning Manager

Materials Manager

Materials Manager

Operating vessel Manager

Operating vessel Manager

Human Resource Manager

Human Resource Manager

Head of representative office in

in Ho Chi Minh

Frequently urging, checking staff members who work directly with customersshould also be included in the company’s plan They has reward and encouragementfor employees who have good achievement in working, especially in customerservice section VCSC needs to have the reprimand forms, discipline or transfer

to other jobs for employees with bad attitudes when working with customers Totallabours in VCSC is 355 peoples included direct and indirect labour

3.1.3 The business result of VCSC in the period 2009-2010

The results produced by the company's business during 2009-2010 Step into themarket economy, economic integration and international on a far-reaching, as well asmany other State enterprises, the VCSC met no less difficult, especially in terms ofproduction and means of transport Nowadays, more and more transport companies,large and small container services, outbound in turn become the tough competitor ofthe company Appreciating the situation that the company has implemented investmentprojects, Business Development Division, the company invested in upgrading,improvement and equipment, transportation, etc.From inception to the present, thequality of service the company's shipping Container Vinalines constantly increased,product offerings, brand companies have somewhat confirmed their status both withinand outside the country

Table 3.2 shows the results produced by the company's business VinalinesContainer Shipping Company in 2009, 2010 As of 2010, the company's revenue grewquite fast 22.23% equivalent to over 162 billion compared with 2009 This revenueincrease was due to revenues from transportation and deliver increased 24.8% whilesales of financial operations and other income decreased compared with 2008 Majorimpact on the situation of the company's business is mainly due to the constantfluctuation of the market as the price of raw fuel inputs is continuously rising whileprices of transportation so much slower growth, higher bank interest rates, debtproblems, etc However, the pace increased profits by about 25% speed increaserevenues equivalent to 5.56%, in 2010, the company's revenues increased but cost alsoincreases the strength and speed increase cost and greater growth in revenue Increaseprofits as the company is not sustainable To increase profitability, stability and

sustainability rather than requiring the entire company to constantly attempt to savecosts to achieve high performance in business.

Table 3.1 Business result of Vinalines Container Shipping Company in 2009, 2010

(Source: Accounting and Finance Department - VCSC)

Table 3.1 shows the operation result of VCSC in 2009, 2010 In 2010, thecompany's revenues increased rapidly over 22.23% equivalent to 162 billion comparedwith 2009 The increase in revenue was due to revenue from freight and servicesincreased 24.8% while revenue from financial activities and other income declinedcompared to 2009 The main reason affecting the business of the company is mainlydue to the constant fluctuation of the market as input prices constantly rising, whilefreight rates rose much more slowly, high interest rates, borrowing constraints, etc

3.2 Business environment analyses

3.2.1 External analyses of VCSC

3.2.1.1 PEST analysis of VCSC

In order to have a deeply study and detailed analysis, VCSC external businessenvironment in Vietnam will be focused on This analysis and assessment will find outopportunities and threats which VCSC can cope with at the business environment.Then, appropriate strategies can be drawn out to limit threats and make full use ofopportunities for the company’s development In this part, PEST model is used to

analyze the Political, Economic, Socio-cultural, Technological factors in the commonbusiness environment which may influence on VCSC business operation andorientation.

a Political factors (P)

Policy responsibility for the maritime sector is shared principally by Vinamarineand Vinalines under the umbrella of the Ministry of Transport (MoT) Organisationcharts show the Vietnam Register as under direct responsibility of the MoT, althoughdiscussion with agencies suggests that it is managed day-to-day by Vinamarine throughthe Ship and Seafarers’ Registry Department The origins of both Vinamarine andVinalines were combined in the Sea Transport Department in 1961; this wasreorganised in 1992 to establish (i) Vinamarine (for essentially government, non-commercial and regulatory functions) and (ii) Vietnam National Shipping Lines, nowknown as Vinalines (for all commercial/semi-commercial functions, including shippingservices and ports) A further reorganisation in 2003 put them under the Ministry ofTransport One important point on organisation of state agencies: the Port Authoritiesunder Vinamarine do not operate the ports; they are the state administrative agencies ineach port responsible for the government (i.e non-commercial) functions of port andvessel safety, entry/discharge permits, accident investigations, Port State Control(Tokyo MOU protocol), incoming/outgoing clearance and coordination of immigrationand customs services There are over 23 port authorities; only the biggest ones areshown in the organisation chart in Vinamarine's tasks and responsibilities are definedas:

- Strategies for maritime development, master-plan, draft laws, shipping policiesand regulations, rules of management and legal norms on maritime activities

- To join in and manage domestic and foreign investment projects of maritimeinfrastructure development, incl ODA funded;

- To join bilateral maritime agreements, MOU;

- To give recommendations on accession to, adoption/ratification of related international conventions/treaties

maritime To grant permission for foreign vessels to enter the territorial waters ofVietnam;

- To promulgate the statutes of port, their opening for navigation;

- To supervise maritime services;

- To carry out Search and Rescue coordination activities;

- To supervise maritime safety, conduct maritime safety inspection, includingPort State Control;

- To issue certificates of registry to sea-going vessels; certificates ofcompetency to seafarers;

-To investigate into maritime accidents and handle infringement/violations inmaritime area For the legal framework governing Vinamarine, key documents include:

+ Government Decree 10/2001/ND-CP on conditions for maritime servicesbusiness

+ Government Decree 57 /2001/ND-CP on conditions for sea transport businessGovernment Decree 125/2003/ND-CP on Multimodal Transport (note: Vietnam is alsoparticipating in an ASEAN framework agreement on multi-modal transport, now in itsfinal draft)

+ Decision 61/2003/QD-BTC of 25/4/2003 & 62/2003/QD-BTC of 25/4/2003

on port tariffs (Vinamarine is currently reviewing port tariffs in comparable countries

as part of a tariff review)

In developing the legal framework, Vinamarine and the Legal Departmentwould prepare proposals and review before submitting to the Minister, who issuesdecisions and regulations Anything higher goes to the National Assembly, the mainlegislator Below the level of a law are by-laws and ordinances issued by variousStanding Committees of the National Assembly Below them: Government decree;Minister's regulation/decision; Vinamarine notice/instruction

MoT and Vinamarine are trying to create a more competitive legal framework to allowcompanies to develop their own business more independently Some constraints,though: e.g imported ships have to be <15 yrs old; domestic companies are encouraged

to buy new capacity from Vinashin - they need a special waiver to buy overseas

Companies want to relax these controls There are other inducements to buyingdomestic ships: the Government has set up a special low-interest funding programthrough state-owned banking system.

On the operational side, there are many state-owned shipping companies,including some that are corporatised and equitised The biggest is Vinalines There aremany subsidiaries under Vinalines (e.g Vosco), some of which are wholly state-ownedand others are JVs with Vinalines There are more than 10 [19, according to Vinalines]private shipping companies, but these are mostly small Joint-stock companies alsotend to be small Since Vinalines was established in 1996 it has built up a fleet of 97ships with combined tonnage of more than one million DWT, equal to 58 percent of thetotal capacity of the nationwide fleet In 2003, as much as 32.8 million tonnes of cargowere transported via Vinalines' ports, representing 41 per cent of the total volume ofcargo transported via all ports nationwide in the year At present, the corporation iscarrying out a number of projects to develop and modernise the fleet, upgrade andenlarge ports, in particular Da Nang and Hai Phong ports, and to build the Van Phonginternational entrepot port (see under item 4, Major Port Developments below) In

2001 the Prime Minister approved a pilot project to reorganize Vinalines that allowedits subsidiaries to buy stock in the corporation The implementation of this project willlast till 2005 According to its website, by that time, the corporation will be completelyreorganized, except four seaports So far 21 enterprises managed by Vinalines havebeen privatized In 2003: the volume of cargo transported by Vinalines totalled 17.8million tonnes and the volume of cargo transported via Vinalines' ports totalled 32.8million tonnes Revenue exceeded VND6.63 trillion, three percent higher that that of

2002, including VND402.9-billion profit, eight percent higher than the 2002 profit.Promoting Efficient and Competitive Intra-ASEAN Shipping Services REPSF Project04/001: Country Report – Viet Nam

As with many national lines, Vinalines is now operating globally Previously the

Vietnamese fleet [like Indonesia's] operated world-wide but now not so It has shrunkwith competition from foreign carriers Sometimes VN carriers have to use time

charters to offer adequate export/import capacity 50% of Vinalines' VN tonnage isnow chartered by outside countries.

The structure of Vinalines and its subsidiaries and associated organisations isvery complex Their literature lists seven owned shipping companies, five ports, sevenmarine service companies, two subsidiaries, seven joint-venture companies and fifteenshare holding companies Activities include container services, ship operations andmanagement, labour services, marine consulting, sea and air freight forwarding, ICDand depot operations, and others including maritime IT and even design and supply ofoffice equipment A presentation by Vinalines indicated that in Vietnam there are 413shipping companies in all, out of which 152 are Government state-owned enterprises,

48 are shareholder companies (these have gone through equitisation, i.e the sale ofshares to third parties or government employees), 167 are limited liability companies(some of which can be government-owned), 5 Joint Ventures between governmentcompanies and foreign interests, 22 cooperatives and 19 private companies The JVs(e.g with Maersk) can have more than 50% foreign ownership There is full cabotage

on domestic movements VN-owned vessels only, VN flag, VN crew (except somespecialised officer positions) MOT, through Vinamarine (Transport & MaritimeServices Department) can issue waivers on a case-by-case (voyage) basis A very highproportion of international cargoes is carried on foreign vessels Vinamarine has aprogram to encourage fleet replacement, supported by cheap government bank loans

The Vietnam Register of Shipping is essentially a classification agency; theregistry itself is maintained by Vinamarine The Vietnam Shipbuilding Corporation isthe main ship-building company It is capable of building some quite large vessels.There are also many shipping agency and stevedoring companies, as well as around

400 freight forwarders, the latter mostly under VIFFAS Other industry associationsinclude: Ship Agents and Brokers Association; Shipowners' Association; VN PortsAssociation (very strong) In Vietnam, there is no shippers' association1, but VCCIplays a similar role

In 2010, the government embarked on an initiative involving all sectors – ports,transport, energy etc – wanting to establish large groupings to compete with overseas