Building business strategy at hoa binh petroleum construction investment joint stock company PVCHB in period 2019 2023

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --- TRẦN MINH VƯƠNG BUILDING BUSINESS STRATEGY AT HOA BINH PETROLEUM CONSTRUCTION AND INVESTMENT JOINT STOCK COMPANY PVCHB FOR 2019-20

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

-

TRẦN MINH VƯƠNG

BUILDING BUSINESS STRATEGY AT HOA BINH PETROLEUM CONSTRUCTION AND INVESTMENT JOINT STOCK COMPANY (PVCHB) FOR 2019-2013

XÂY DỰNG CHIẾN LƯỢC KINH DOANH Ở CÔNG TY

CỔ PHẦN ĐẦU TỪ XÂY LẮP DẦU KHÍ HÒA BÌNH - PVCHB

TRONG GIAI ĐOẠN 2019-2023

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020

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

-

TRẦN MINH VƯƠNG

BUILDING BUSINESS STRATEGY AT HOA BINH PETROLEUM CONSTRUCTION AND INVESTMENT JOINT STOCK COMPANY (PVCHB) FOR 2019-2013

XÂY DỰNG CHIẾN LƯỢC KINH DOANH Ở CÔNG TY

CỔ PHẦN ĐẦU TỪ XÂY LẮP DẦU KHÍ HÒA BÌNH - PVCHB

TRONG GIAI ĐOẠN 2019-2023

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS HOÀNG ANH TUẤN

HÀ NỘI - 2020

Hanoi, July 1st, 2019 AUTHOR

TRAN MINH VUONG

CATEGORY

UNDERTAKING

LIST OF ACRONYMS

PREAMBLE 1

1 Subject name 1

2 Reason for choosing topic 1

3.Objectives of the study 3

4.Object and scope of the study 3

5.Research methods 3

6 Source of research data 3

7 Limitations of the thesis 3

8 The composition of the thesis 3

CHAPTER 1 THE RATIONALE FOR DEVELOPING THE BUSINESS STRATEGY OF THE ENTERPRISE 5

1.BUSINESSSTRATEGY-DEFINITION,ROLE,PROPERTYANDTASKS 5

1.1.Define 5

1.2 The role of business strategy 5

1.3 Basic characteristics of business strategy 6

2.1.Vision and mission 6

2.1.1 Vision 7

2.1.2 Mission 7

2.2.Environmental analysis 8

2.2.1 Analysis of external environment 8

2.2.1.1 Macro-environmental analysis 8

2.2.1.2 Sectoral Environmental Analysis 11

2.2.2 Internal environmental analysis 15

2.2.3 Value Chain 17

2.2.4 Identify outstanding competencies and sustainable competitive advantage 19

2.3.Strategic options 20

3 STRATEGIC ANALYSIS TOOLS 20

3.1.SWOT analysis matrix 20

3.2.GREAT model 22

4 BASIC TRADING STRATEGY 22

4.1.Strategic basis 22

4.2.Types of general competition strategies 24

4.2.2 Differentiation strategies 25

4.2.4 Incorporate common strategies 26

CHAPTER II ANALYSIS OF BUSINESS ENVIRONMENT OF HOA BINH PETROLEUM CONSTRUCTION AND INVESTMENT JOINT STOCK COMPANY (PVCHB) 28

1 GENERAL INTRODUCTION 28

1.1.General information 28

1.2.The formation and development of PVCHB 29

1.3.Organizational structure and main business lines 31

1.4.Main business lines 32

1.5.Characteristics of the oil and gas construction sector 32

2 ANALYSIS OF FACTORS IMPROVING PVCHB 33

2.1.Macro Elements - PEST Model 33

2.1.1 Political and legal factors (P) 33

2.1.2 Economic factor (E) 34

2.1.3 Social cultural factor (S) 37

2.1.4 Technological factor (T) 37

2.2.Sectoral Environmental Analysis 39

2.2.1 Current competitors 40

2.2.2 Potential competitors 42

2.2.3 The power of the customer 43

2.2.4 Power of the supplier 44

2.2.5 Threat of alternative products or services 45

2.2.6 Evaluating opportunities and challenges 45

2.3.Analyze the internal factors 46

2.3.1 Analysis of resources 46

2.3.2 Assess the strengths and weaknesses of PVCHB 58

2.3.4 Synthesis assesses strengths and weaknesses of PVCHB 63

CHAPTER III SELECTION OF TRADING STRATEGIES AND SOLUTIONS FOR THE IMPLEMENTATION OF THE STRATEGY FOR 2019 - 2023 65

1 GENERAL OBJECTIVES OF PVCHB 65

1.1.Vision and mission 65

1.2.General objective to 2023: 65

2 OPTIONS OF PVCHB TRADING STRATEGY 67

3.1.GROUP IMPLEMENTATION STRATEGY 1 73

3.1.1 Solutions on science and technology 73 3.1.2 Solutions on Organization and management and development of human

resources 73

3.2.Strategy implementation team2 79

4 SOME LIMITATIONS AND CONCLUSIONS 82 CONCLUDE 83 REFERENCES

LIST OF ACRONYMS

KPI’s Key performance Indicators

ODA Official development assistance

PVC Petrovietnam Construction Joint Stock Corporation

PVNC PetroVietnam Nghe An Construction Joint Stock Company

PVC-HN Ha Noi Petroleum Construction Joint Stock Company

1

LIST OF DIAGRAMS AND TABLES

Diagram 1-1: The process of building a business strategy 7

Diagram 1-2: Model of the competitive force of M.Porter 11

Diagram 1- 3: Diagram chuỗi giá trị (value chain): 18

Table 1- 2: Process of recognition of sustainable competitive advantage 19

Diagram 2- 1: Organizational structure of PVCHB 31

Table 2 - 1: Vietnam’s GDP in the period 2008-2017 35

Table 2-2: Some business indicators of PVCHB compared with some competitors in 2018 41

Chart 2-2: Market share of construction companies in 2018 42

Table 2-2: Opportunities and challenges of PVCHB 45

Table 2- 3: Results of implementation of some operational indicators for the period 2016 - 2018 47

Table 2-5: Business results of PVCHB 51

Table 2-6: Statistics table of construction equipment 54

Table 2- 7: Summarize the evaluation results of the external expert group 61

Table 2-8: Summarize the results of the internal review team 62

Table 2- 9: Analyzes table strengths and weaknesses of PVCHB 64

Table 3-1: SWOT analysis matrix 70

Table 3-2: Choosing the optimal strategy - GREAT model 72

1

PREAMBLE

1 Subject name

Thesis title "Building Business Strategy in Hoa Binh Petroleum Construction and

Investment Joint Stock Company (PVCHB) for 2019-2023"

2 Reason for choosing topic

After opening up and integrating into the economy, Vietnam has achieved

some important achievements, the basic overview maintains macroeconomic

stability, maintaining a relatively high economic growth rate, the size of the

economy increased To achieve the overall objective of economic development in

the five years of 2018-2022, to achieve rapid and sustainable economic

development and create a foundation for the country to become a modern

industrial country by 2030 The average economic growth rate of 2018-2022 is

expected to be 7.0-7.5% In which, the average value added of industry and

construction increased by 7.8-8%, and the construction industry structure

accounted for 42% In the strategy, objectives and tasks of economic development

in the next 5 years, we see the very important role of the industry - construction

with the structure of 42%, which is one of the key areas for deciding to the success

of the plan

To gradually realize the position and leading role of the industry -

construction contributes to the common development; Every organization,

economic sector, economic groups and enterprises must have strategies in line

with the trend of integration and the development of the market Due to the

increasing compettion of current and potential competitors, the company’s

business activities show signs of moving sideways and cannot develop Starting

out from that practice, building a business strategy is essential for every business

It helps enterprises have clear business direction and objectives, directing

departments and individuals to the common objectives of the enterprise, avoiding

the local situation, dispersing resources will weaken the business Today's

business environment is changing so rapidly, global competition requires

businesses to be proactive, creative to adapt to change In order to develop fast,

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sustainable and successful enterprises, it is necessary to pay attention to investing

their time and effort in managing and developing their business development

strategies

Hoa Binh Petroleum Construction and Investment Joint Stock Company

(PVCHB) was established in 2007 and is a member company of Petrovietnam

Construction Joint Stock Corporation (PVC) The key activities are: Investment in

construction, civil and industrial construction, financial investment, real estate,

industrial production, building materials, real estate trading floors The

company operates in the whole country with emphasis on the northern market

Some of the business fields of the Company have specific characteristics such as

construction works in the oil and gas industry, technical infrastructure works, real

estate investment projects require the binding conditions about strong financial

capacity, ability to raise capital, prestige, responsibility with specialized

management agencies, timely orientations and decisions and strategic vision of

business leaders Development strategy of PVCHB is planned in terms of time,

space and competitive environment, in which there is cohesion and authenticity

with the common development orientation of PVC are: strong and sustainable,

combining economic development closely linked with environmental protection

and national security, cooperation with domestic and foreign partners, taking full

advantage of being a member of PetroVietnam Vietnam Country (PVC source)

Participated in the study of the MBA program of Hanoi National

University, with knowledge gained and desired to be practiced in the working unit

is PVCHB, PVCHB has a solid foundation, comprehensive development soon

become a brand of investment and construction with prestige, capacity,

competitiveness, breakthrough power and always bring value and high efficiency

I decided to select the topic "Building business strategy in Hoa Binh Petroleum

Construction and Investment Joint Stock Company (PVCHB) for the period of

2019 - 2023" to study, this subject will be the reference document This is a very

important and practical way to develop and implement PVCHB's business

strategy

3

3 Objectives of the study

To formalize the theoretical issues of strategic management;

Develop business strategy for PVCHB;

Identify the strengths and weaknesses to provide solutions to implement the

business strategy of the enterprise in the period 2019-2023;

4 Object and scope of the study

Research subjects: Business Strategy of Hoa Binh Petroleum Construction and

Investment Joint Stock Company PVCHB

Scope of research: 2019 - 2023

5 Research methods

Research methods: case studies, qualitative research;

Specific research methods: comparison, analysis and evaluation

6 Source of research data

Data, documents related to the construction industry, investment;

Data related to PVC;

Report on the performance of PVCHB in the years (2016-2018), available

materials (secondary documents) to consider the scale, structure and trend of the

market

7 Limitations of the thesis

Limitations on time;

Data sources are incomplete due to the limited research framework;

The scope of research is limited to construction

Expected results of the thesis

Select and develop a suitable business strategy for PVCHB

Specific solutions and plans to implement solutions in business strategy was built

for PVCHB in the period 2019 - 2023

8 The composition of the thesis

In addition to the introduction and conclusion, the main content of the topic

consists of 3 chapters:

Chapter I: The rationale for developing the business strategy of the enterprise

4

Chapter II: Analysis of Business Environment of PVCHB

Chapter III: Selection of trading strategies and solutions for the implementation of

the strategy for 2019-2023

5

CHAPTER 1 THE RATIONALE FOR DEVELOPING THE BUSINESS STRATEGY OF

THE ENTERPRISE

1 BUSINESS STRATEGY - DEFINITION, ROLE, PROPERTY AND

TASKS

1.1 Define

Business strategy involves the goals of a business, the strategies developed

must help the business achieve its objectives Business strategy, however, is more

concerned with how a business can compete successfully in a particular market It

involves strategic decisions about product selection, meeting customer needs,

gaining competitive advantage over competitors, exploiting and creating new

opportunities, etc Fred R "Business strategies are the means to achieve long-term

goals."

It can be said that business strategies are the means to help businesses

achieve long-term goals Business strategy is not intended to outline concrete

ways, but rather the overall program, the most effective means of mobilizing

resources to implement identified goals Business strategy can be broadly defined

as follows: Business strategy is a series of commitments and actions that a

company uses to gain a competitive edge by exploiting its capabilities Core in a

given market (P.Rindova & CJFombrun, 2009)

1.2 The role of business strategy

Business strategies help businesses recognize their purpose as a basis for

business activities of the enterprise

Business strategies help businesses capture and utilize business

opportunities and take proactive measures to address the threats and threats in the

competitive marketplace

Business strategy contributes to improve the efficiency of the use of

resources, strengthen the competitive position of enterprises to ensure the

sustainable development of enterprises

Business strategy provides a solid basis for making policies and decisions

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on production and business in line with market movements

1.3 Basic characteristics of business strategy

The business strategy clearly defines the basic objectives and business

direction of the enterprise in each period;

Business-oriented strategy for enterprises to develop continuously and

firmly in the constantly changing business environment;

Business strategy to ensure the optimal combination of exploitation and use

of resources of enterprises in the present and future; promote the advantages and

seize the opportunity to win the competitive edge;

Business strategy is reflected in the continuous process;

Business strategy is forward thinking, winning the market;

Business strategies are usually built up over a long period of time (3 years,

5 years, 10 years, etc.)

2 THE PROCESS OF BUILDING THE BUSINESS STRATEGY OF THE

ENTERPRISES

2.1 Vision and mission

The overall business strategy is based on the vision statement of the

business, oriented to the entire operation of the business and therefore strategic in

the long run The process consists of the following steps:

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Diagram 1-1: The process of building a business strategy

(Source: HSB Strategic Management Teaching Guide 2008)

2.1.1 Vision

Vision is understood as follows: "A vision statement is a report about the

position your company expects to achieve The vision statement outlines your

company's future when they achieve their goals and goals may differ from one

another in terms of length, which may be a brief statement, but may also be a long

paragraph, but must determine the final destination you "(Source of Vietnam

Learning)

2.1.2 Mission

Vision,mission

0 20 40 60 80 100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

East West North

Internal environmental analysis:

Value chain model Process to recognize sustainable competitive advantage

Strengths and weaknesses

Cost leadership strategy Differentiation strategies Strategic focus

Implement and adjust strategy

Monitoring and evaluating the implementation of the

strategy

The organizational

structure is in line with the

selection strategy

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Mission is a statement intended to inform the existence of a business,

which defines the values and rules governing the business and is an essential part

of the strategic planning process

Missions can vary in length and in terms of business, purpose, and values

The mission of the company lies in the fact that the company exists in the market,

who you are and what you will bring to your customers and the community

Decisions in the strategic planning process and in the dominance of the company

must always be in harmony with the statement of mission

The mission statement is the foundation of the company's vision Mission

Statement or can motivate employees to convey the goals and values of the

company to customers and the community

2.2 Environmental analysis

2.2.1 Analysis of external environment

The goal of external environmental analysis is to identify opportunities and

challenges for the enterprise, to analyze how to implement and capture

opportunities from the environment, and to avoid challenges necessary for the

business

The scope and contents of environmental analysis include:

macro-environmental analysis (general environment) and micro-macro-environmental analysis,

also known as the sectoral environment

2.2.1.1 Macro-environmental analysis

Macro environment is the environment within the whole national economy,

which consists of six segments: economy, technology, culture, society,

demography, politics, law and the world Changes in the macro environment can

have a direct impact on any force in the industry, and therefore may affect relative

forces and on themselves, ultimately altering the attractive of an industry

Inside:

Political and legal environment (P): Include a system of views, policies of

the State, the legal system, especially laws related to business; The political

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developments taking place in the country and in the world, factors related to

politics and the law

The economic environment (E) is a direct and powerful factor affecting the

business performance of enterprises, through changes in macroeconomic variables

as well as the impact of macro economic policies through the regulatory tools of

the State

The state of the macroeconomic environment determines the health and

prosperity of the economy, which always has an impact on businesses and

industries Therefore, businesses must study the economic environment to

recognize its changes, trends and implications

Socio-cultural environment (S): includes socio-cultural factors affecting

human life and behavior, thereby affecting structure of demand, behavior of

shopping, consumer orientation of the customer

The technological environment (T :) includes technical and technological

factors that determine the birth of new products, the formation of business models,

the means of satisfying demand, affecting competitiveness and business

performance of the business

Population-natural environment: At present, population is often associated

with development, showing the importance of this factor to the overall

development of society The aspects of the population-labor environment that

need to be analyzed include:

International environment: The trend of regionalization, globalization has

been developing in the world, many economic relations between countries and

regions have affected many areas of social life Every business, every industry,

every government must take into account The rapid development of science and

technology, the rapid advances of information technology, have brought nations

together to form a global trade network These tremendous fluctuations have a

strong impact on businesses, creating opportunities and challenges in business,

which directly influence and first of all go to strategic management

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As such, the main goal of macro-environmental analysis is to identify

changes and expected trends from external environmental factors with

opportunities and challenges to build clear and objective targets to promote better

production and business activities

Summary of the macro environment analysis in the following table

Table 1-1: Synthesis of macro-environmental factors

- Important political events

- Global basic market

- New industrial countries

- Differences in institutional culture

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In summary, the main goal of macroeconomic analysis is to identify

changes and trends from external environmental factors The results of external

environmental analysis will help business managers to synthesize real

opportunities and challenges for their business As a result, business executives

have the means to build and choose a development strategy that is right and

objective

2.2.1.2 Sectoral Environmental Analysis

A narrow manufacturing or technical-economic sector, including many,

can offer the same or similar products and services that are interchangeable

The task of the strategists is to analyze and judge the competitive forces within

the industry to identify opportunities and challenges for their business

Michael E Porter's Model 5 Forces: Michael E Porter, Harvard

Business School Strategist Theorist and Practitioner, provides a framework for

executives to identify opportunities and the risk faced by the business in an

industry (Michael E Porter, Competitive Stratery, New York: Freepress, 1980)

The framework of Michael E Porter is called the Competitive Force Model, as

shown in the following diagram:

Diagram 1-2: Model of the competitive force of M.Porter

M Porter pointed out that the stronger the forces, the more limited the

ability of existing companies to increase prices and get higher profits In the

Businesses and current competitors

Power supplier

Potential opponents (Potential Competition)

Customer power Power supplier

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context of Porter, a strong competitive force can be seen as a threat, because it will

reduce profits The strength of the five forces can change over time, when

conditions change so the competition forces the company to increase its

investment costs in order to differentiate its products and services from the market

or reduce the cost

Customer power

Customers can be divided into five categories: end consumers; Distributors:

agents, wholesalers; businesses; the organs of the party and the state; international

customers Customers are the object that the business serves and that determines

the success or failure of the business; because the size of the customer makes up

the size of the market; Therefore, businesses must constantly monitor their

customers and forecast changes in their needs Enterprises need to capture and

track information about customers to have appropriate business strategy In terms

of competition, customers often put pressure on the seller when conditions The

greater the pressure on the customer, the greater the risk to the business Customer

pressure is usually expressed in the following cases:

Many suppliers are small and medium in the supply chain, while buyers are

few and large This case the buyer can dominate the supplier

Customers buy in bulk

The supply chain depends on the customer with a large percentage of the

total order

Customers tend to be self-contained

It's easy and inexpensive to switch to other people's purchases

Seller's products are less important to buyers

Clients have full information about the market, demand, prices of suppliers,

the greater their bargaining pressure

Power Supplier

In order to carry out the production process, enterprises must regularly

contact suppliers of supplies and equipment, labor supply, finance, etc These

forces often also positively or negatively affect the strategy of the business

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However, these forces can only exert pressure on the enterprise in the

following cases:

There are few suppliers

There are few alternative service products

When the supplier has the advantage of differentiating the products and

services

When a business purchases a product, it is not an important customer and a

supplier's priority

When a vendor has a vertical linking strategy, ie self-contained production

Pressure from alternative products

Replacement products are the products of competitors in the same industry

or other products of the industry but capable of satisfying the same needs of the

customer With the explosion of new technologies, alternative products are

increasingly diversified, creating the risk of price competition that reduces the

company's profitability In today's era, the dangers of substitute products from

other industries often create unpredictability for all businesses

Potential competitors

Potential competitors include those that are capable of creating competitive

forces in the future The competitiveness of potential competitors is directly

related to barriers to entry into their industry There are five main barriers to entry

for each business:

Product differentiation: The trust and loyalty of customers to the image and

brand of the present enterprise, the cost of a differentiated product strategy is very

high and very risky

Absolute advantage of cost price

Advantage of scale: the costs of production, distribution, advertising,

services, research will decrease corresponding to the increase in product sales

Legal regulations: In practice, government regulations create a major

barrier to entry into many industries Through licensing or special regulations, the

government can control penetration into a sector

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Barriers to distribution have been established by existing businesses

The response of current businesses in the business sector: the speed and

intensity of retaliation of the current rivals will be a major barrier

Competitive pressure from current rivals

If the weaker the competition, the business has the opportunity to

increase sales prices and make more profits In contrast, when competitors are

strong, price competition is significant and every price competition hurts

business

Competition among enterprises in a manufacturing industry generally

includes the following: the competitive structure of the industry, the state of the

industry and the barriers that leave the industry

Competitive structure of the industry: This structure is based on the data

and distribution capacity of enterprises in the manufacturing sector Competitive

structure varies from the dispersed industry to the centralized production The

dispersed sector includes a large number of small and medium enterprises, none of

which hold the dominant position in the industry Concentration is dominated by a

handful of large businesses, even the only one called monopoly The nature and

level of competition of the industry is very difficult to analyze and predict

The demand situation of an industry is another determinant of the intensity

of internal competition Normally, demand increases, giving enterprises a great

opportunity to expand their operations and reduce demand, leading to strong

competition for enterprises to keep their market share

Barriers to leave the industry: As the business conditions in the industry

deteriorate, business difficulties forced businesses to consider withdrawing from

the industry; Withdrawal from the industry causes businesses to lose and lose If

that loss is greater, if the barriers leave the industry, the competition will be more

intense

The task for executives is to be aware of the opportunities and threats that

the change of the five forces will lead to the development of adaptation strategies

Furthermore, it is the ability of a company to adopt a strategic choice, shifting the

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power of one or more competitive forces to its advantage

In summary, analyzing the external environment is extremely important to

the business The goal of the analysis is to identify the opportunities and

challenges, on the basis of which rational management decisions Some important

points are drawn as follows:

A business that responds to market needs, its strategy will be more

effective

The main causes of growth and degradation are other changes to a large

level in enterprises that are often environmental factors rather than internal ones

The more a business depends on an environment, the more it needs to focus

on analyzing and judging the environment

The environment is variable and uncertain, and requires more analysis and

better judgment

Strategic wise and effective strategists must know themselves (internal

analysis) and know people (external environment analysis)

The final step in organizing value for the external environment is to

evaluate and rank opportunities and challenges

2.2.2 Internal environmental analysis

Strategists need to understand the internal environment in order to know

the strengths and weaknesses of their organization This is very important because

it shows the strengths and weaknesses of the business to consider when deciding

to choose business strategy

In fact, it is not possible to evaluate all the internal factors in the enterprise

because of its huge amount Therefore, in order to assess the internal environment

of an enterprise, it is necessary to point out the key factors in which their presence

may be representative of the internal performance of the business These factors

are the value chain of the business and its core competencies

The production process is the main activity of the enterprise associated

with the creation of products and services When analyzing the production process

of an enterprise, it is necessary to first assess the production equipment and

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technologies capable of producing quality products and services Can they

produce output that meets market demand? If not, how to overcome? Large-scale

production, stable input supply with reasonable price, suitable layout of means of

production, warehouses and yards make great contribution to the production

process Also consider the use of labor, satellite units, inspection of enterprises

Financial factor

Financial resources (such as cash, creditworthiness, owner capital .) are

the most basic resources of an enterprise Analysis of financial sources based on

economic and financial standards such as profitability on a capital, working

capital, ability to recover capital, cash flow, debt ratio, solvency, share capital,

ability to raise short-term and long-term capital, capital of the company, cost of

capital compared to the industry and competitors, tax issues, relationship with the

owner Analysis of financial indicators can determine the strengths and

weaknesses of enterprises in terms of investment, finance and dividends

Factors in organization, administration and governance

This analysis focuses on the following issues: How did the enterprise

conduct its management activities related to the preparation for the strategy

formulation?

Production process elements

How are the formulation processes and the content of the operational

plans?

Is the distribution of resources based on the objectives set?

Does the company have plans to deal with unpredictable situations? How

does the organization motivate employees?

How are job descriptions described?

In terms of monitoring, the analysis will answer questions such as: How

does a company have financial control, sales, production, inventory, inventory? Is

there an effective management control system? What is the quality check? What is

the information system? Is the control system of the enterprise fast and accurate?

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Marketing Factor

First of all it is necessary to analyze customer structure, consumption

channels with quantity of scope and level of control, flexibility in pricing, product

design and advertising, policy support tools consume Compare the development

of each channel type, giving the necessary guidelines for the development of

marketing strategies Attention should be paid to the potential for product sales,

the revenue structure, the profitability ratio, the variety of quality and the

reputation of the products and services, the market share of the business, the

customer loyalty, effectiveness of promotional campaigns and advertising, after

sales service and customer care instruction Then analyze the supply of inputs is

stable and favorable? Combined with the product life cycle review to test new

product research and development Analysis of business opportunities can be

promoted

R & D elements

In this field, it is necessary to consider enterprises' interest and investment

in product and technology research and development; conditions for research and

development activities; the quality and achievements of research and

development; Research and development capacity (finance, people, organization

); Results of research and development

Factor collecting and processing information

The information system is an integral part of all functional activities, and it

provides the basis for corporate governance decisions Therefore, effective

information systems will contribute to improving the operations of the business

and improving the quality of management decisions

2.2.3 Value Chain

The value of a business is measured by the amount that the buyer is willing

to pay for the product or service of the business To achieve a competitive

advantage, the functional parts of the business must either create value at a lower

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cost than the competitor or have to make the product different from the product of

the competitor Competitors create higher sales in the market This means that

businesses must pursue low-cost strategies or product differentiation strategies

Michael Porter introduces the concept of a business value chain as a way of

exposing its differences and deciding on competitive advantage, including two

value-creating activities: primary activity and supportive activity Main activities

generate material value, marketing and distribution to buyers, providing support

services or after-sales services Support activities are: material management

functions, research and development, personnel management and infrastructure of

enterprises

The value chain provides a comprehensive picture of the key activities as

well as the support of the business, thus recognizing the strategic strengths of the

business

Support

activities

The infrastructure Human Resources Research and development Material Management

Main

activities Input Manufacturing Output

Marketing, Sell

sales Services

After-Diagram 1- 3: After-Diagram chuỗi giá trị (value chain):

Source: M.Porter 1980 Competitive Advantage: Creating and Sustaining

Superior Performance, NewYork FreePress

An analysis of activities in the value chain facilitates the cost and

performance monitoring of each activity From there, it helps to improve each

activity as well as to coordinate them together At the same time, through

information gathered about competitors, it is estimated that their costs and results

to base their comparisons with their own companies, seeking to create value over

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their competitors

Material Management: Controlling the movement of materials across the

value chain from supply to production and distribution The effect is that it can

create value, contributing to control of input quality in the production process,

increasing the quality of output, facilitating the increase of selling price

Research and development functions: To implement the development of

new products and production technologies Technology development can lower

production costs, create more attractive products, facilitate price increases

Human Resource Management: Ensure that businesses have the right

skills to increase their value effectively This function is to ensure that people

are trained, trained, motivated and fully paid to perform their value-added

tasks

Enterprise infrastructure: including organizational structure, control

systems, and corporate culture Top executives can be seen as part of the

corporate infrastructure

2.2.4 Identify outstanding competencies and sustainable competitive advantage

Process of recognition of sustainable competitive advantage can be

summarized in the following table

Table 1- 2: Process of recognition of sustainable competitive advantage

Competitive

advantage

When capacity exceeds the opponent Long-term become sustainable competition Superior ability When core competences outstrip the opponent it becomes

superior

Core competencies When core competence, the key to success, becomes core

competence

- Invisible: brand, commercial advantage, prime location,

R & D

- Visibility: property, capital

(Source: IeMBA Teaching Materials - HSB, PhD student Dang Ngoc Su)

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When satisfying 4/5 of the following criteria, superior capacity becomes a

sustainable competitive advantage: (1) valuable, (2) rare, (3) difficult to imitate,

(4) sufficient distance (5) coincide with the success factor

In short, the internal analysis of the enterprise is to identify the potential

and existing resources that create the competitive advantage of the business At

the same time, identify obstacles to maintaining competitive advantage

2.3 Strategic options

In modern markets, a business can not grow sustainably without a business

strategy Business strategies help businesses plan long-term development

strategies, increase their competitive advantage through optimal arrangement of

resources in the process of implementation, there are always factors that cause

businesses to regularly consider, the adjustment of business strategies to ensure

the objectives set It can be said that adjusting the business strategy in time will

help businesses in the right direction and business more effective such as

repositioning brand new, investment direction; Choosing business strategies to

solve this problem, CEOs must consider factors such as the objectives of the

business, the desire of shareholders, the evaluation of the internal force of the

business as well as Information about the market, customers, competitors Only

one wrong decision of the CEO can make the business face many difficulties,

even at the expense of huge financial losses Deciding to adjust your business

strategy means adopting a change in core values, even changing the way you think

and work the system To execute a successful business strategy requires the CEO

not only to have a foresight, but also to convince other members of the business to

understand and agree to implement the chosen business strategy

3 STRATEGIC ANALYSIS TOOLS

3.1 SWOT analysis matrix

SWOT analysis matrix is a very useful tool for capture and decision

making in any situation for any business organization Short for the four words

Strengths, Weaknesses, Opportunities and Threats, SWOT provides a strategic

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analysis, review and positioning tools of a company or of a business project

SWOT is suitable for work and group analysis, used in business planning, strategy

building, competitor assessment, marketing, product development and services

After gathering and listing the major elements of external and internal

environmental analysis on the SWOT matrix, we combine these elements This is

one of the important tasks for developing a SWOT matrix in pairs In principle,

there are four types of combinations:

S-O: Build a strategy to harness the strengths of your business to take

advantage of outside opportunities

S-T: Build a strategy to harness the strengths of your business to evade

external threats

W-O: Develop a strategy to overcome the dangers and limitations of

businesses to take advantage of outside opportunities

W-T: Developing strategies to overcome dangers and limiting weaknesses

to evade external threats

After completing these four types of combinations, the business can

maximize the strengths to exploit the opportunities and limit risks and challenges,

while gradually limiting their weaknesses

Table 1-3: SWOT analysis matrix

Opportunity (O) (List opportunities)

Risk (T) (List the risks) Strength (S)

(List the strengths of the

W-T Strategy:

Minimize weakness and avoid risk

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3.2 GREAT model

Planning and presenting business strategies or competitive strategies is very

important and not easy In the business strategies that businesses set after

analyzing every aspect, what strategy is best considered to be chosen Because,

choosing the right one will contribute to the success of every business when

developing and implementing business strategies

In order to choose an optimal strategy for PVCHB, the GREAT model (G:

gain - R: Rick, E: Expence; A: Achievability, T - Time allows for the selection of

effective strategies in the following steps:

Step 1: Score each strategic option on a scale of 1-5, according to 5 criteria:

G (Gain): The greater the benefit of the strategy (achieving the goal), the higher

the score

R (Risk): If the risk of the strategy is higher, the lower the score

E (Expense): If the cost of the strategy is larger, the lower the score

A (Achivebility): If the feasibility of the strategy is higher, the higher the score

T (Time): If the time of strategy is more reasonable then the higher the score

Score 5 = High; Score 4 = average; Score 3 = poor; Score 2 = weak; 1 ½ poor

Step 2: Assign weightings to the criteria based on the importance of each

criterion for the production and business activities of the company

Criterion 1: Benefits: 0.30

Criteria 2: Risk (risk): 0.15

Criterion 3: Expense: 0.20

Criteria 4: Achivability: 0.25

Criteria 5: Time (time): 0.10

Step 3: Synthesize the scores of each strategic option to choose the optimal

strategy

4 BASIC TRADING STRATEGY

4.1 Strategic basis

Michael Porter has identified three general strategies that can be applied at

the business unit level to create a competitive advantage The basis of competitive

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strategy:

(1) The needs of the customer, what will satisfy;

(2) Customer groups, who will be satisfied;

(3) Special capabilities, customer needs are satisfied

It is also central to choosing enterprise-level business strategies, as they are

the source of competitive advantage over competitors, as well as to determine how

competitive company

Customer demand and product differentiation

Customer demand is the desire, demand can be satisfied through the

characteristics of the product or service Product differentiation is the process of

creating a competitive advantage by designing products - goods and services - to

satisfy the needs of customers The degree of differentiation of a company's

products compared to other companies is the source of competitive advantage for

the company

Companies that do not choose or are not able to differentiate by product

can find ways to lower their prices and consider it a way of "differentiating" their

products Meanwhile, others seek to create a unique identity for their products so

that they meet the needs of customers in ways that other products can not meet

Customer groups and segmentation (array) of the market

Market segmentation can be defined as the way a company chooses a

customer group based on the important differences in needs or preferences in

order to gain competitive advantage It then sets out appropriate competitive

strategies

Deciding to supply more products to many market segments allows the

company to better satisfy its customers Consequently, customer demand for the

company's products increases and generates more revenue for the company than it

does for a single product for the whole market But sometimes the nature of the

product or the nature of the industry does not allow for much differentiation In

these cases, there is less opportunity to gain competitive advantage through

product differentiation and market segmentation because there is less opportunity

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to serve the needs of customers and customer groups in different ways Instead,

prices are the primary criteria consumers use to evaluate their products, and the

competitive advantage lies with the company that is more productive and can offer

the product at the lowest price

Decision on unique capabilities

The third issue in enterprise-level strategy is the decision to pursue

individual capabilities to best satisfy consumer needs and market segments

Special capabilities are the means companies can use to better meet the needs of

their customer groups than their competitors

4.2 Types of general competition strategies

Each company locates itself in its active field by leveraging its existing

strengths Michael Porter argues that the advantages of any business will

always lie in one of two respects: cost advantage and product differentiation

By applying these advantages, companies will pursue three common strategies:

cost leadership, product differentiation and focus They are called generic

strategies because they do not depend on any business or industry

4.2.1 Cost leadership strategy

This strategy aims to become a low-cost producer in the industry with

certain quality standards At that point, the company will either sell the product at

an industry average price to earn a higher return than its competitor, or sell it at a

lower price than the average to gain market share

In the case of a "price war", the company can maintain a certain level of

profit, while its competitors are forced to suffer losses Even if there is no conflict

or price controversy, the industry grows, expands and drops, companies that are

able to keep production costs lower can still make a profit for a longer time This

cost leadership strategy is often applied to large markets

Businesses can rely on a number of methods to outweigh the costs by

improving the efficiency of their business processes, finding opportunities to

access large quantities of low cost materials, optimize your business abroad and

make vertical mergers decisions, or reduce some unnecessary costs If competitors

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are not able to cut costs to the same level, they can maintain their competitive

edge on the cost leadership

Firms that successfully implement the cost leadership strategy have the

following characteristics:

Good capital access to invest in production equipment This is also a barrier

that many other companies can not overcome

Product design capabilities to increase production efficiency, for example,

create a small detail to shorten the assembly process

High level of production

There are effective distribution channels

Any common strategy has its inherent risks, and low cost strategy is no

exception Risk can occur when competitors also have the ability to lower

production costs Even with the help of modern technology, competitors can have

unexpected breakthroughs in production, removing the competitive edge of

cost-leading businesses In addition, there are a number of companies that pursue

strategies that focus on niche markets where it is not difficult to achieve even

lower costs in their traditional market segments, thereby forming a Group control

market share is many times larger

4.2.2 Differentiation strategies

This is a strategy for developing your product or service so that the product

or service has unique and unique characteristics that are valued and appreciated by

customers more than the products of the competitive firms Value added by

product uniqueness allows companies to set higher prices without fear of being

boycotted by buyers They hope that the higher price will not only compensate for

the additional costs of product delivery, but also: due to the different

characteristics of the product, if the supplier increases the price can be transferred

to the customer, because customers can not easily find similar products to replace

Successful businesses in product differentiation strategies often have the following

strengths:

Ability to research and access to top scientific achievements

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Product research and development team with high skill and creativity

Positive sales team with the ability to successfully communicate the

strengths of the product to the customer

Reputation for quality and innovation ability of the business

The risks associated with product differentiation strategies are the

likelihood of competitors mimicking, or the changes in consumer tastes In

addition, many companies are pursuing centralized strategies that are likely to

achieve higher product differentiation in their market segments

4.2.3 Focus strategy

Focused, focused strategy towards a relatively narrow market segment in

which enterprises try to gain competitive advantage through low cost or product

differentiation by applying the demand theory of a group can be better satisfied by

being completely focused on serving the group

A centralized business strategy often keeps loyal customers loyal and

discourages other companies from making them want, or daring to compete

directly

By focusing only on a narrow market area, businesses that pursue this

centralized strategy have lower sales, so they do not take advantage of bargaining

with suppliers However, businesses that pursue a centralized strategy - product

differentiation can transfer the higher costs that the vendor impose on the

customer because the customer can not find the replacement product

Successful entrepreneurs in a focused strategy can change the

developmental advantages of many types of products to fit the small market

segment that they have studied thoroughly and thoroughly One of the risks of this

centralized strategy is the ability to be imitated and the changes taking place in the

target market Moreover, a leading low-cost producer in the big market can easily

change their product to compete directly with a centralized business application

Companies that pursue other centralized strategies may also target some of the

target market, losing a certain percentage of their market share

4.2.4 Incorporate common strategies

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These general strategies are not always compatible with each other If a

business tries to act in a way that prevails in every field, then the result is no gain

For example, a company that has made itself superior to its competitors by

launching very high quality products will have to take the risk of reducing the

quality of its goods if the company is still trying to keep up their position is a

leader in low cost Even if the quality of the product is not reduced, the company

inadvertently creates an inconsistent image in the customer's eyes So, Michael

Porter argues that for long-term success, every business needs to choose only one

of the three strategies outlined above If you pursue all 3 goals, the company will

fall into a state of embarrassment and not gain competitive advantage

Companies that can successfully implement multiple strategies often have

to set up separate business units, each of which pursues a strategy By separating

the strategy for different policy or even cultural units, a business can reduce the

risk of falling into inertia However, there is the view that pursuing a single

strategy is not the right choice, because in the same product, customers often seek

satisfaction in many aspects - combining quality, stylish, convenient and

reasonably priced In fact, there are manufacturers that are loyal to only one

strategy and then suffer heavy losses when another company comes to the market

with lower quality products but better meet the needs of customers

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CHAPTER II ANALYSIS OF BUSINESS ENVIRONMENT OF HOA BINH

PETROLEUM CONSTRUCTION AND INVESTMENT JOINT STOCK

COMPANY (PVCHB)

1 GENERAL INTRODUCTION

1.1 General information

Company name: HOA BINH PETROLEUM CONSTRUCTION AND

INVESTMENT JOINT STOCK COMPANY (PVCHB)

Short name: PVCHB

Head office address: 14th Floor - HH3 Building, My Dinh Urban Area, Me Tri,

My Dinh Commune, Tu Liem District, Hanoi

Website: http://www.pvchoabinh.vn

Tax code: 0102566108

Chartered capital: VND 105,000,000,000

Shareholder Structure and Ownership Ratio:

Petro Vietnam Construction Joint Stock Company owns: 30%

Other shareholders own: 70%

Directly attached units:

Management Board of Cuu Long Ecological Urban and Service Project

Hai Duong Project Management Board

Nghe An Project Steering Committee

The Steering Committee of Thai Binh 2 Thermal Power Plant

Construction Team No.1

Construction Team No.2

Construction Team No.3

Associated company

PVCHB Consulting Joint Stock Company

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Thanh Nam PVCHB Construction Joint Stock Company

1.2 The formation and development of PVCHB

In 2007, the economy was booming, especially in the fields of investment,

finance and construction Song Da Global Investment Joint Stock Company - SDG

was established in the context of many advantages in terms of financial potential,

investment together with the support and cooperation of the company has the capacity

and prestige of the largest Song Da Corporation, Petrovietnam Construction

Corporation Right after the establishment, the company has focused on the fields of

design consulting, investment projects on housing, urban ecological services,

construction investment civil and industrial works, financial investment, real estate

trading floors In the investment field of urban housing projects, the company has been

entrusted by the provinces to deploy projects with many advantages such as the project

Greenhouse area of 13.5ha in Song Phuong commune, Hoai district Duc, Hanoi, Cuu

Long Ecological and Service Urban Area with the area of 60 ha in Luong Son district,

Hoa Binh province About Design Consultancy Company The company has associated

with a number of design consultancy companies of Korea, France, NewZealand take

charge of design consultancy projects on housing, offices and hotels in Vung Tau , Da

Nang, Hoa Binh

After 3 years of establishment and operation, the Board of Directors of the

company determined that there should be a breakthrough in the field of production

and business activities in order to seize the opportunity to overcome difficulties

and challenges, position, competitive ability to better meet the needs of market

development The result of this breakthrough is shown by the decision of the

Board of Management of the Company through the acquisition of a portion of

capital of Song Da Global Pte and became member of PetroVietnam Construction

Joint Stock Corporation in July 2017 This is the moment of change in the scale

and nature of the enterprise, Song Da Global Investment Corporation It was

30

officially renamed Hoa Binh Petroleum Construction and Investment Joint Stock

Company After being a member of PetroVietnam Construction Joint Stock

Corporation, the company has quickly integrated with the environment, culture

and management style of the oil and gas industry Besides concentrating on

directing the implementation of existing production and business tasks, the

Company has decided to expand the field of specialized construction and technical

infrastructure, industrial and civil construction Promoting the available

advantages of PVC and its partners Hoa Binh Petroleum Construction and

Investment Joint Stock Company (PVCHB) has a young and dynamic leadership

team, a steady and drastic management structure From the beginning, there are

only 25 staffs and employees The company has over 350 staff members who are

managers, architects, engineers, economics bachelors, lawyers, public employees

skilled personnel specialized in investment, construction of technical

infrastructure, industrial civil construction; They direct, operate and work in large

investment projects such as construction of key construction works such as

Polyester fiber Hai Vu Dinh Vu, Thai Binh 2 - Thai Binh Province, Quang Trach

Thermal Power Plant - Quang Binh Province, Nghe An Vocational College, Dien

Kha Vocational College 60 ha of Cuu Long Ecological and Service Area, Gia

Loc New Urban Area, Hai Duong scale 50ha In the field of design consultancy,

PVCHB has connected with a number of experts and collaborators who are

foreigners with long experience in the form of partnership and cooperation for

project implementation

PVCHB's strategy is to constantly build and develop its core business

activities: construction of technical infrastructure, industrial and civil construction,

production of new materials and construction equipment; to invest in projects on

ecological real estate and services, projects on houses in big streets PVCHB

always strives for the quality and added value of products for the benefit and

31

prestige of its customers, striving to be one of the leading enterprises in PVC

system, always dynamic and innovative development and strong Sustainable in

both width and depth

1.3 Organizational structure and main business lines

Diagram 2- 1: Organizational structure of PVCHB

GENERAL MEETING OF SHAREHOLDERS

In charge of design consultancy

Deputy General Manager

In charge of investment, financial

CONTROL BOARD

Economic Planning Office

Financial Accounting Office supplies and equipment

Project investment Organization and Administration

Cuu Long Project Management Unit