Evaluation of business strategy of song da 4 joint stock company

EVALUATION OF THE EXISTING BUSINESS STRATEGY OF SONG DA 4 JOINT STOCK COMPANY .... Aims of the study Based the theoretical issues, the fundamentals of business strategy, how to set up a

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

-

NGUYỄN TIẾN DŨNG

EVALUATION OF BUSINESS STRATEGY

OF SONG DA 4 JOINT STOCK COMPANY

ĐÁNH GIÁ CHIẾN LƯỢC KINH DOANH

CỦA CÔNG TY CP SÔNG ĐÀ 4

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020

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

-

NGUYỄN TIẾN DŨNG

EVALUATION OF BUSINESS STRATEGY

OF SONG DA 4 JOINT STOCK COMPANY

ĐÁNH GIÁ CHIẾN LƯỢC KINH DOANH

CỦA CÔNG TY CP SÔNG ĐÀ 4

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

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

HÀ NỘI - 2020

DECLARATION

The author confirms that the research outcome in the thesis is the result of author‟s independent work during study and research period and it is not yet published in other‟s research and article

The other‟s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business, and the laws for above-mentioned declaration

TABLE OF CONTENTS

DECLARATION i

LIST OF FIGURES v

INTRODUCTION 6

CHAPTER 1 THEREOTICAL FOUNDATION OF BUSINESS STRATEGY 9

1.1 General theories of business strategy 9

1.1.1 Concept of Strategy, Business strategy 9

1.1.2 Characteristics of Business strategy 10

1.1.3 Role of Business strategy 11

1.1.4 Levels of strategy 12

1.2 Business strategy development process of the enterprise 15

1.2.1 Determination of the current business mission and goals of the company 16

1.2.2 Evaluation of the external environment of the enterprise 18

1.2.3 Internal environment analysis of the enterprise 24

1.2.4 Strategic plan development 28

1.2.5 Strategy implementation 30

1.2.6 Strategy inspection and analysis 31

Table 1.3 Overall business strategy evaluation matrix 32

CHAPTER 2 EVALUATION OF THE EXISTING BUSINESS STRATEGY OF SONG DA 4 JOINT STOCK COMPANY 34

2.1 General introduction of the company 34

2.1.1 Overview 34

2.1.2 Establishment and development process 34

2.1.3 Main business lines 34

2.1.4 Achievements 35

2.2 Overview of the existing strategy of Song Da 4 Joint Stock Company 36 2.2.1 Business strategy options 38

2.2.2 Evaluation of strategy options 39

2.2.3 Business strategy selection 40

2.3 Evaluation of the existing strategy of Song Da 4 Joint Stock Company 41

2.3.1 Evaluation of environmental change 41

2.3.2 Evaluation of the achievement of the goals of the existing strategy70 CONCLUSION OF CHAPTER 2 80

CHAPTER 3 PROPOSED SOLUTIONS TO IMPROVE BUSINESS STRATEGY OF SONG DA 4 JOINT STOCK COMPANY 81

3.1 Vision, mission and development goals 81

3.1.1 Vision and mission 81

3.1.2 Goals of Song Da 4 Joint Stock Company by 2020 81

3.2 Proposed solutions to improve business strategy of Song Da 4 Joint Stock Company 84

3.2.1 Strategy Management and Planning Solution 84

3.2.2 Production management solutions 85

3.2.3 Marketing management solutions 87

3.2.4 Human resources management solutions 88

3.2.5 Financial management solutions 90

3.3 Proposal for Song Da Corporation: 92

CONCLUSION 93

LIST OF TABLES

Table 1.1 SWOT Matrix–Strengths-Weaknesses-Opportunities-Threats 28

Table 1.2 Quantitative Strategic Planning Matrix – QSPM 29

Table 2.1 SWOT mode of the existing strategy of Song Da 4 Joint Stock Company 36

Table 2.2 Evaluation of the change in external environment 46

Table 2.3 Change of 5 competitive forces 56

Table 2.4: External factor evaluation matrix (EFE) of Song Da 4 57

Table 2.5 Typical hydropower plant and irrigation projects 59

Table 2.6 Civil works and industrial infrastructure projects 60

Table 2.7 Solar Power construction works 61

Table 2.8 Construction equipment for hydropower and irrigation projects 61

Table 2.9 Implementation capacity of the main construction volume 63

Table 2.10 The company‟s current human resource structure in 2 latest years 64

Table 2.11 Analysis of labor use efficiency 66

Table 2.12 Production and business condition in the 2013 – 2017 period 66

Table 2.13: Internal Factor Evaluation Matrix 67

Table 2.14 IE maxtric 69

LIST OF FIGURES

Figure 1.1 Business strategy development process of the enterprise 16

Figure 1.2 External environmental analysis model (business environment) 18 Figure 1.3 PESTEL macro-environment analysis model 20

Figure 1.4 Michael Porter‟s Five Forces Model 22

Figure 1.6 Business strategy evaluation matrix 32

Figure 2.1 Organizational chart of Song Da 4 Joint Stock Company 58

INTRODUCTION

1 Rationale

The company‟s current strategy is built for the 2014 – 2017 period and vision to 2020 In the context of changing the economy day by day, the internal and external factors have changed Meanwhile the studied and applied strategy of Song Da 4 Joint Stock Company has revealed limitations and some goals have not been realized This fact has motivated the author - who directly performs the leadership and management at Song Da 4 Joint Stock Company, to study and re-evaluate the strategy after 3 years of application; thereby finding out disadvantages and limitations and having solutions to overcome those existing limitations Therefore, the author

chooses the topic: “EVALUATION OF BUSINESS STRATEGY OF

SONG DA 4 JOINT STOCK COMPANY” as my master‟s thesis topic in

Business Administration

2 Literature Review

The Strategy has always been an attractive topic for researchers, so in the world as well as Vietnam, many authors have chosen this topic as their direction On the side of Song Da Corporation and other member companies, there are also many research works on construction and strategic planning According to the author‟s research, these works are mainly at the level of the master‟s thesis topic Some topics known by the author are as follows:

 Tran Dinh Vinh (2012); Business Strategy Planning for Song Da 6 Joint Stock Company in the 2012-2015 period; Hanoi University of Science and Technology; Master‟s thesis

 Bui Tuan Dung (2013); Building business strategy for Song Da 5 Joint Stock Company in the 2013-2015 period; Water Resources University; Master‟s thesis

As mentioned above, the strategy is a familiar topic Besides, Song Da Corporation and its member companies are considered a common research subject of many researches and dissertations However, the author has not found out any research on improving the strategy of Song Da 4 Joint Stock Company quite apart from that fact that access to documents on the actual applied strategy of Song Da 4 JSC is not simple Therefore, the author can confirm the novelty and practicality of his topic when he is a member of the strategy development team and directly plays an executive management role

at Song Da 4 Joint Stock Company

3 Aims of the study

Based the theoretical issues, the fundamentals of business strategy, how

to set up and evaluate a business strategy, the author analyzes and evaluates the existing strategies of Song Da 4 Joint Stock Company After that, the author analyzes the changes of the internal and external environment to see the nonconformity of the existing strategy Thereby, the author proposes a number of solutions to improve the strategy of Song Da 4 Joint Stock Company

of the company

Regarding the data collection method, the author uses primary and secondary data sources, particularly:

 Primary data: are collected through surveys, interviews with experts, leaders, employees and field surveys

 Secondary data: are collected from the Company‟s departments, books, newspapers, magazines, specialized research articles

7 Structure of the thesis

In addition to the introduction and conclusion, the thesis is expected to

be divided into 3 chapters, namely:

 Chapter 1 Theoretical foundation of business strategy

 Chapter 2 Evaluation of the existing business strategy of Song Da 4 Joint Stock Company

 Chapter 3 Some proposed solutions to improve business strategy of Song Da 4 Joint Stock Company

CHAPTER 1 THEREOTICAL FOUNDATION OF BUSINESS

STRATEGY

1.1 General theories of business strategy

1.1.1 Concept of Strategy, Business strategy

“Strategy” term is derived from ancient military art Borrowed from military terminology, the “strategy” term has been used quite commonly in economic life both on a macro scale such as nation, government as well as a micro scale such as economic organizations, businesses In fact, there are many different views on the strategy Depending on the research purposes and

at different periods of socio-economic development, economists have different conceptions of strategy However, from an enterprise research perspective, most economists reach an agreement on the concept of Strategy and Business strategy According to the traditional approach, typically Alfred

Chandler (1962): “The strategy involves setting the basic, long-term goals of

the enterprise, at the same time, applying a series of actions and allocation of the necessary resources to achieve these goals” According to this approach,

the strategy is understood as a system of long-term goals, key policies and measures on business and production, finance and human resources in order

to promote the enterprises‟ qualitative development However, along with the development process, today the concept of strategy have also changed

According to the modern approach like McKinsey (1978): “Strategy is a

series of activities designed to create sustainable competitive advantage” or

Johnson & Scholes (1999): “Strategy is the long- term orientation and the

scope of an organization to gain its competitive advantage through the identification of its resources in a changing environment to meet market needs and satisfy the expectations of the relevant parties” Thus, according to

the new approach, the Strategy is a system of perspectives, aims and basic

goals, solutions and policies to make the best use of resources, advantages and opportunities of the enterprise in order not only to achieve the set goals but also to bring favorable conditions such as competitiveness and distinguishment, thereby creating its competitive advantage and sustainable development

Theoretically, most economists in the world have unified business strategy and business development strategy Accordingly, the business strategy or business development strategy is a part of the overall strategy of the enterprise, including the components of the secondary strategy: marketing strategy, financial strategy, research and development strategy Through business strategy, the most favorable conditions will be established to create competitive advantage for the enterprise Therefore, it can be understood that

“Business Strategy is a combination of long-term goals, key policies and

solutions on production, business, finance and human resources in order to promote the qualitative development of business activities to a state It can be also understood that business strategy is a general action program of an enterprise in order to achieve its goals in a given period.”

1.1.2 Characteristics of Business strategy

- Business strategy is the overall strategy of an enterprise that defines its business goals and directions over a relatively long period, 5 years or 10 years, and is fully applied in all its production and business activities to establish favorable conditions, contribute to creating competitive advantages and ensure its sustainable development

- Business strategy is a sketch of the future image of an enterprise, including the goals that it must achieve as well as the necessary means to accomplish those goals Besides, it is necessary to combine strategic goals and situational goals, strategy and tactic and short-term and long-term Only

by this way, the enterprise can maintain business efficiency and correct the errors caused by the strategy

- All important decisions in the process of forming, deciding and organizing the implementation, checking, evaluating and adjusting strategies must focus on the top leader of the enterprise, which ensures the accuracy of long-term decisions and the information confidentiality

- Business strategies are always built based on comparative advantages

It requires that in the process of developing a strategy, an enterprise must properly assess the status of its production and business to find its strengths and weaknesses and regularly revise internal factors during the strategy implementation

- The business strategy is first and foremost built for specialized, traditional and strong business lines and business fields Therefore, an enterprise must build, choose and implement strategies as well as participate

in business in the markets where it has prepared and has strengths

1.1.3 Role of Business strategy

The formation and implementation of business strategy is extremely important to the survival and development of an enterprise Four main roles of business strategy in enterprises is pointed out by Ngo Kim Thanh (2011), specifically:

- Business strategy helps enterprises clearly see their purpose and direction in developing their business activities It helps the business administrator consider and determine which direction the enterprise will go and when it will achieve the desired development results

- The process of analyzing and planning a business strategy not only helps enterprises clearly see their strengths and weaknesses but also identifies their opportunities and challenges at present and in the future Thereby, they can

take advantage of strengths to seize opportunities and prevent and minimize risks as well as promote their competitiveness to win in the market

- Business strategy helps administrators utilize and allocate their existing resources optimally as well as effectively coordinate their functions to achieve the common goal

- Business strategy creates solid bases to help enterprise proactively make solutions suitable to market fluctuations, which are the foundation for their research and development activities

1.1.4 Levels of strategy

According to Johnson, Scholes and Whittington (2008), there are different levels of strategy in organizations It is possible to distinguish at least three strategic levels as follows:

a Company-level strategy

The highest level is the company-level strategy, which relates to the overall scope of an organization and how to create added value for different parts of the organization (business units) This strategy may include issues such as the geographical scope of the business, the diversity of products or services and how resources are allocated among different departments of the organization Company-level strategies can include mergers, acquisitions and sales of businesses, decisions to enter or exit the market In general, company-level strategies are concerned with the expectations of the owners - shareholders and the stock market A company-level strategy is expressed through a clear or implicit statement of „mission‟ that reflects those expectations It is very important to understand the company-level strategy: determination of the scope of business is the basis of other strategic decisions

At the company level, there are the following strategies:

Growth strategies:

In pursuing these strategies, the company strives to exploit all opportunities of products and services currently being produced, sold or markets where the products are consumed and provided by better performing what they are doing Growth strategies include:

+ Centralized growth strategy: A strategy to increase market share for existing products or services in the existing markets with strong marketing efforts Particularly:

 Market penetration strategy: A strategy that seeks growth by entering new markets to sell products or services currently being produced or provided by the company

 Market development strategy: A strategy to seek growth by entering new markets to sell products or services currently being produced or provided by the Company

 Product development strategy: A strategy to seek growth through the development of new products and services for consumption in markets where the Company is operating

+ Integration growth strategy

 Vertical integration: A strategy to take over the production and supply inputs for the production process or self-solve the consumption of its own products

 Horizontal integration: A strategy to seek growth through mergers, acquisitions or joint ventures with competitors

+ Diversification strategy

 Relevant diversification: means diversification into new business activities that are related to an existing business activity or existing business activities through similarities in production, marketing, technology, etc

 Diversification means seeking growth by moving towards new markets with new products that are technologically unrelated to the products being produced by the Company

Stabilization strategies

Stabilization strategy is a strategy that the company maintains its production and business scale as well as its stability in the strategic period

 Business line is stalling or underdeveloped

 Market expansion costs are too high to be effective

 Business and production scale is small and the company has weak potentialities

 The Company focuses on specialization to serve narrow markets

 The Company encounters unusual fluctuations in the market

Decline strategies

 Cost reduction strategy: means a temporary short-term strategy aimed

at reducing inefficient components or temporary problems related to environmental conditions

 Investment recovery strategy: is applied when a Company sells or closes one of its subsidiaries in order to substantially change the contents of its operation and recover investment capital The investment recovery leads to the reallocation of resources to revive its subsidiaries or create new business opportunities

 Harvesting strategy is a strategy to maximize cash flow and stop investment

 The exit strategy is based on the idea that the company can maximize its investment recovery in the business by selling it before it goes into recession

b Business unit-level strategy

The second level is the strategic business unit (SBU) strategy, which refers

to the way that different units of the company compete in their markets in their own way Consequently, a business unit-level strategy is sometimes referred to as

a “competitive strategy.” A strategic business unit is a part of an organization that has an outside market for goods or services different from other SBUs

c Functional strategy

The third level of strategy is in the operational part of an organization There are functional strategies related to the way components and departments of the organization implement company-level and SBU-level strategies well in terms of resources, processes and human resources In fact,

in most enterprises, successful business strategies depend very much on the decisions or the activities that occur at the functional unit level

1.2 Business strategy development process of the enterprise

As stated in section 1.1.1, business strategy plays a very important role

in the existence and sustainable development of all enterprises in the medium and long term The development of a business strategy, therefore, is not only a sketch

of the future image of the enterprise that is planned based on the feelings of the leader but also requires a completely rational, methodical and scientific approach According to Ngo Kim Thanh, the business strategy development process is divided into 7 steps and is a closed and continuous process

Figure 1.1 Business strategy development process of the enterprise

Determination of mission and goals

Evaluation of the external environment

Internal factor analysis

Strategy option development

Strategy Analysis and Selection

Strategy implementation

Implementation inspection and evaluation

appropriate goals and mobilize resources to achieve these goals At the same time, the mission statement will provide the basis for the managers to plan the most appropriate business strategy

According to Philip Kotler (2003): “A company‟s mission is its manifesto to society It proves the useful and meaningful existence of a company

to society” Thus, the mission reflects the business purpose, the reason and meaning of the birth and existence as well as the corporate social responsibility It expresses the important things and the contributions of the Company to business and life; reflects its business motto, its position in the marketplace and its commitments When building a mission, it is necessary not only to consider the wishes of the owner and the leader but also to pay attention to the internal impact factors (products, services, different capabilities of the company) and the external impact factors (customer needs, competitors)

If the mission is the company‟s manifesto to society; in order to pursue its mission, the enterprises must set business goals to determine the achievements to be achieved in the relatively long period (over a year) Long-term goals are essential for the success of a company because they demonstrate the results to be achieved when it pursues its business mission When defining goals, the enterprise needs to answer the question: What are its business lines? In the goal, it is required to identify its business area of and the type of product or service that it wants to provide to the market and determine the basic customer group as well as market demand The goal must contain its externally expressed wishes Business goals must show the following characteristics: specificity, consistency, measurability, feasibility, challenge and flexibility

1.2.2 Evaluation of the external environment of the enterprise

Figure 1.2 External environmental analysis model (business

environment)

The business environment analysis is a process of analyzing and inspecting various environmental factors The external business environment analysis helps enterprise see its important opportunities and threats Thereby, the manager can draft a strategy to take advantage of the opportunities and avoid or reduce the impact of threats posed by the business environment The scope and content of the business environment analysis are macro environment, microenvironment (also called industry environment or

operational environment) and internal environment (also called the internal environment of the company)

a Macro environment analysis of the enterprise

The macro environment consists of many different factors that indirectly affect the operation of an enterprise through its impact on factors of the industry environment In fact, many different models support the macro-environment analysis of an enterprise The most popular model is PESTEL, which is an effective and simple tool used in case analysis to identify the major impact forces from external environmental factors (macro environment) that may affect the organization These forces can create both opportunities and challenges for the organization The macro-environmental factors mentioned by the PESTEL Model are Political factors (P), Economic factors (E), Socio-cultural factors (S), Technological factors (T), Ecological factors (E), Legal factors (L)

Figure 1.3 PESTEL macro-environment analysis model

- Economic factors: In fact, economic environment factors have a great influence on enterprises and the most frequent and unpredictable movement among macro-environmental factors The movement of economic factors always contains both opportunities and challenges for enterprises Therefore, companies often pay attention to these economic factors through economic variables such as growth trend of gross national product, economic development index, interest rate, exchange rate, inflation, balance of payments, monetary and fiscal policy

- Political and legal factors: In fact, the political and legal factors can have impacts on business activities of enterprises in many different directions They can create opportunities or challenges, even threats to enterprises Therefore, in the strategy development process, the companies often assess the orientation and stability of the political and legal system in their business area These factors are political stability, a system of points of view, policies, statutes, laws, procedures, decisions on business procedures, import and export, taxes, labor, the environment, the social order, etc

- Cultural and social factors: In fact, in the medium and long- term, the cultural and social factors have direct impacts on the consumption trend of society The cultural and social environment includes such factors as population structure, customs, beliefs, values, attitudes, point of view about consumption and lifestyle of people in the society where the company operates

- Technological factors: In fact, technological factors have a direct, immediate and broad impact on the business strategy of many enterprises, especially those doing business in high-tech fields The introduction of new technologies will increase the superiority of substitutes, improve products, reduces product prices; thereby increasing competitiveness As a result, the strategic planning process should consider timely grasping the changes of the technological environment and making a great investment in research and development activities to take advantage of the technological advantages for improving its competitiveness

- Ecological factors or natural environment factors: are one of the important factors in human life and also an input for many production industries In fact, natural environment factors are considered less volatile However, the negative trends of the natural environment such as global warming, loss of biodiversity, exhaustion of renewable resources, increasing

environmental pollution and climate change have become challenges that threaten the movement trend of enterprises Therefore, in the strategic planning process, enterprises must properly analyze and evaluate the opportunities and challenges that the natural environment affects their production and business activities

b Micro environment analysis of the enterprise

Micro or industry environment is associated with the operation of enterprises The factors of the industry environment will determine the investment environment, the intensity of competition and profitability in the industry According to the Five Forces Model of Michael Porter (1979), the following forces influence the industry environment context of the enterprise

Figure 1.4 Michael Porter’s Five Forces Model

Source: M Porter’s Five Forces (1979) Harvard Business Review

- Competition among competitors in the industry: The first force mentioned

by M Porter in the model is competition among competitors in the industry Competitors are constant pressure and directly threaten the company The greater the competition of existing companies in the industry is, the more it

threatens the company‟s profitability, existence and development Therefore, the company must increase investment costs to differentiate its products and services or reduce costs As a result, the business strategy planning process requires enterprises not to ignore the analysis of competition among competitors in the industry In the analysis of competition among competitors

in the industry, it is necessary to pay attention to factors such as Number of competitors in the industry, growth of the industry, diversity of competitors, characteristics of products and services, fixed and storage costs, barriers to entry and exit from the industry

- Potential competitors: are the second force mentioned by M Porter Potential competitors are companies that are not currently involved in the industry but are likely to enter the industry Their appearance will reduce the market share and profits of existing enterprises in the industry, at the same time, increase the intensity of competition in the industry However, the penetration of potential competitors depends heavily on barriers to entry, namely: the economy of scale, product differentiation, initial investment capital needs, conversion costs, access to distribution channels and government policies Therefore, these potential competitors should be also considered fully by the enterprise in its business strategy planning process

- Suppliers‟ bargaining power: In fact, suppliers may exert pressure on the company through a request to raise prices or lower the quality of its inputs It directly affects the price and quality of products and services; thus it will impact on customer response, market share, revenue and profitability of the company Pressure from suppliers often appears in contexts such as: the market has only one or a few suppliers, no substitutes or the company does not have alternative suppliers; raw materials bought from suppliers is an important input of the company; the supplier change cost is high, etc

- Buyers‟ negotiation rights: Buyers herein are understood as customers, intermediaries and industrial buyers The pressure from buyers comes from their own bargaining power, which is in the form of the ability to require a discount and the ability to require the higher quality of products and services When the buyers‟ bargaining power increases, enterprises are forced

end-to meet their needs, i.e reduce product price or pay more related costs end-to improve product quality As a result, their profits will decline Pressure from customers often appears in situations, namely: customers buy in a large amount of products, the enterprise depends on a small number of customers, customers have full information of product prices and quality of other suppliers, etc

- Threat from alternative products and services: Alternative products and services are different products and services that meet the same consumer needs The emergence of alternative products and services creates a risk of competition, a decrease in market share, a decrease in revenues and profits of the enterprise Besides, changes in consumption trends are also an important factor contributing to the creation of threats from alternative products and services Therefore, in the strategic planning process, managers also need to consider the risks and challenges from the threat of alternative products and services in a comprehensive manner

1.2.3 Internal environment analysis of the enterprise

The internal environment analysis of the enterprise - Analysis and evaluation of the resources: An enterprise company‟s resources are human resources, material assets and intangible resources (Hamel & Prahalad 2006) This group of factors determines the enterprise‟s operation ability, its success

or failure in the market In particular, the most important resource is human resources In each period, each resource has its own strengths and weaknesses compared to competitors in the industry, so managers at all levels, especially

senior managers, must always have information of existing resources, the potential analysis and evaluation to properly utilize its available resources to create its long-term competition advantages

b Material resources

Material resources include factors such as capital, factory, machinery, equipment, raw materials, business environment information, etc Each enterprise has specific characteristics of material resources, including both strengths and weaknesses compared to competitors in the industry

Therefore, the proper analysis and evaluation of material resources is an important basis for business managers to understand potential material resources and limitations, etc.; thereby making the appropriate management decisions such as: maximizing the capital sources in cash and available infrastructure, selecting and mobilizing external capital sources if really needed, choosing the objects to

be cooperated in order to increase the size of material resources and making necessary reserves to ensure the ability to cope (defend or attack) with competitors in domestic and international markets, etc In fact, managers perform the analysis of resources through the main activities such as:

 Firstly: Classify the existing material resources of the enterprise: capital sources in cash, machinery, factories, warehouses, land, reserve materials

 Secondly: Determine the size of the structure, quality and characteristics of each material resource

 Thirdly: Assess the ability to meet the actual needs of each resource in the action programs of the Departments of the enterprise from time to time

 Fourthly: Assess and identify the strengths and weaknesses of each material resource compared to the main competitors in the industry and

in the market by geographic area

Subject to the type of resources, this analysis should be conducted regularly or irregularly to serve the decision-making needs of the competent managers For example, marketing managers who need to make or adjust competition strategies must always have information of customers and competitors in the market; financial regulators should regularly obtain information of the periodical demand for fixed capital, working capital of the Departments under the enterprise and capital sources in cash or in kind, credit resources, etc which are possibly mobilized to meet the needs of operating processes, projects, etc Every year, business managers need to assess resources to make action plans for the following year, etc

c Intangible resources

In addition to the above resources, each enterprise or organization also has other resources that people only identify through perception, which are intangible resources These resources may be a joint achievement of the members of the organization or a specific individual and affect the operation process Intangible resources are manifested through many factors and manager at all levels need to have all the basic knowledge to be aware of the presence and the importance of these resources

Depending on the available resources, the size and value of these resources of each enterprise varies and changes over time If intangible resources are not identified and evaluated properly, business managers are

likely to lose their available advantages in the production and business process

For long-term success in the domestic and international markets, business managers need to see the importance of intangible resources in the strategic management process; properly identify and evaluate available intangible resources; know unavailable intangible resources to make efforts to build and develop them in the future

The analysis steps of intangible resources are:

Step 1: Identify and classify the intangible resources of the enterprise Managers need to ask questions and answer themselves to know what intangible resources the enterprise or organization has to evaluate and compare them with competitors

Step 2: Compare and evaluate its intangible resources with competitors After answering the questions, managers can make a list of available intangible resources in order, compare them to the main competitors and evaluate the strengths and weaknesses according to the system on the list Depending on the fact, the analyst will establish a rating system of + or-1 to +

or -5 to determine the strengths or weaknesses of each competitor, which may vary overtime due to the potential growth and decline of each enterprise

Step 3: Identify intangible resources that need to be built and developed In fact, an enterprise has this intangible resource but may lack other intangible resource or this intangible resource is strong but that intangible resource is weaker than that of competitors, etc Therefore, when analyzing and evaluating intangible resources, managers need to clearly identify related issues, the causes of weaknesses and propose solutions to build and develop them in the future

In summary, the resources of each enterprise are diverse These resources are different in enterprises in terms of their activities, scale,

structure and characteristics The comparative analysis and proper evaluation

of existing and potential resources in each period will help business managers clearly see their progress in the development process; at the same time, identify their strength and weakness compared with competitors; thereby having effective competition strategies and deciding to seize opportunities or prevent or limit risks in business environment in a timely manner

1.2.4 Strategic plan development

After identification of the mission and goals and analysis of the internal and external environment of the enterprise, the next step is to make feasible strategies This phase will use the SWOT matrix for analysis

Matrix of Strengths-Weaknesses-Opportunities-Threats, also known as the SWOT Matrix, provides a tool to analyze, form, select and evaluate strategies; review and assess the position and business strategy orientation of the enterprise In fact, the SWOT matrix is a combination of Strengths, Weaknesses, Opportunities and Threats to form four types of strategies, namely:

Table 1.1 SWOT Matrix–Strengths-Weaknesses-Opportunities-Threats

Strengths

List the most important strengths from the internal environment summary of the enterprise

List the most important

opportunities from the

summary of the enterprise

SO strategy: use strengths

within the enterprise to exploit opportunities of the external environment

WO strategy: take advantage of external opportunities to improve internal weaknesses

Threats

List the most important

risks from the external

environment summary

ST strategy: use the

strengths of the enterprise

to avoid or reduce threats

environment

WT strategy: a defensive strategy to

After the combination phase, there will be feasible strategies that can

be selected This phase uses a unique tool, Quantitative Strategic Planning Matrix (QSPM) QSPM uses information in phase 1 to objectively evaluate the business strategies that can be selected in phase 2 to decide which strategy

is the most optimal for the enterprise

It is an effective tool to quantify and indicate the attractiveness of a selectable strategy, so it provides an objective basis for the selection of separate strategies The QSPM uses information obtained from the EFE, IFE and SWOT matrices to objectively evaluate replaceable strategies The QSPM development process consists of the following steps:

Table 1.2 Quantitative Strategic Planning Matrix – QSPM

Important factors

(1)

Classification (2)

Selected strategies Strategy

Source: David, Fred (1986, 2009)

The QSPM development process consists of the following steps:

 List important opportunities, external threats and important internal strengths and weaknesses This information should be taken directly from the analysis results of EFE and IFE matrices

 Categorize each important internal and external factor The classification is similar to that done in the EFE and IFE matrices

 List the optimal strategies (strategy 1, strategy 2, etc.) that the enterprise should consider to implement based on the analysis results of SWOT matrix, IE matrix, etc

 Determine AS-Attractiveness Score in order to show the relative attractiveness of the strategy compared to other strategies according to each factor: the score is assessed from 1 to 4, where 1 means not attractive, 2 means less attractive, 3 means quite attractive and 4 means very attractive

 Determine Total Attractiveness Score (TAS) by each row by multiplying the classification point in column (2) by AS

 Calculate Total Attractiveness Score of each strategy It is the addition

of Total Attractiveness Score (TAS) in the strategy column of QSPM The higher Total Attractiveness Score of a strategy is, the more appropriate it is; therefore, it deserves to be selected

1.2.5 Strategy implementation

It is an important step, turning paper-based strategies into concrete actions Based on the goals and through analysis of competitive advantages, identification of opportunities, threats, strengths and weaknesses, the enterprise will find out solutions on human resources, financial resources, business and production management organizations, etc to implement the established business strategies In other words, it is the arrangement and

allocation of business resources to successfully implement the chosen business strategy such as:

 Mix Marketing solutions: products, prices, distribution and promotion

 Human resources solutions

 Raw material solutions

 Financial solutions

1.2.6 Strategy inspection and analysis

In the strategy implementation process, it is necessary to regularly check and review whether the strategies are implemented as planned or not There are many reasons why strategies fail to reach their goals These causes are changes in environmental circumstances or the failure to attract human resources Therefore, it is necessary to check, monitor and evaluate the strategy implementation through feedback systems and measures

To answer the question of whether your business strategy is still suitable for the business environment or not, there may also be many different methods One of the feasible methods is to evaluate business strategy by matrix According to the matrix assessment method, it is first necessary to ask and answer questions related to the key factors of the business environment (external and internal environments) affecting business strategies From the answers for each type of question, an extensive business strategy evaluation matrix can be summarized as shown in the table below:

Figure 1.6 Business strategy evaluation matrix

At the same time, the questionnaire is also answered:

Table 1.3 Overall business strategy evaluation matrix

Are the goals of the enterprise done?

Conclusion

Strategy adjustment Strategy inspection and evaluation

Are there any differences to be adjusted? Yes

es

No

Implementation inspection Adjustment of implementation plan

Are there any differences to be adjusted?

No

Implementation plan inspection Adjustment of implementation plan

Are there any differences to be adjusted?

No

Continue to follow the existing strategy

Business strategy adjustment and evaluation model

Yes

es

Yes

es

4 Yes No Yes Take corrective actions

strategic direction Thus, for the topic: “Some proposed solutions to improve business strategies of Song Da 4 Joint Stock Company”, the author needs to prove that the existing strategy is “incomplete” and corrective actions are needed For this goal, the strategy evaluation according to the overall business strategy evaluation matrix must fall into groups 1-7

CHAPTER 2 EVALUATION OF THE EXISTING BUSINESS STRATEGY OF SONG DA 4 JOINT STOCK COMPANY

2.1 General introduction of the company

2.1.1 Overview

 Company name: Song Da 4 Joint Stock Company

 The company has operated as a joint stock company since October 26,

2007

 Abbreviated name: Song Da 4 (SD4)

 Head office: Floor 3, TM building, Van Khe Urban Area, La Khe Ward, Ha Dong District, Hanoi City

 Charter capital structure: The company‟s charter capital is VND 103 billion, of which Song Da Corporation holds 65.0%, other shareholders hold 35,00% of charter capital

 Website: www.songda4.com.vn; Email: info@songda4.com.vn

2.1.2 Establishment and development process

Song Da 4 Joint Stock Company was established on May 18, 1989, formerly known as Central Hydropower Construction Company directly under Song Da Construction Corporation After nearly 30 years of construction and growth to suit the assigned tasks, the Company has changed its name many times It was renamed Song Da 4 Joint Stock Company and a member unit of Song Da Corporation on October 26, 2007 under Decision

No 1329/QD-BXD by the Ministry of Construction

2.1.3 Main business lines

At present, the Company has the following main construction fields:

 Construction of reinforced concrete structures (concrete work, reinforced concrete, formworks);

 Production of construction materials for concrete construction (sand, crushed stone);

 Production and trade in electricity

2.1.4 Achievements

Over nearly 30 years of construction and growth, the company has constantly developed in all aspects: the size, functions, tasks, industry structure, total annual production and business value, specifically:

 Regarding Certificate of merit, title: On May 13, 2014, Song Da 4 Joint Stock Company was awarded the second-class Labor Medal by the President

 Regarding human resources: With the core business of construction and installation of hydropower projects, the Company has paid attention to training and developing a team of engineers, technicians, good managers and skilled workers In 2018, the whole Company has over 1,000 employees in total

 Regarding construction machineries and equipment: According to the production and business plan implementation requirements, the Company has continuously invested in improving new and advanced construction equipment Some main devices are: Iagrai 3 power plant‟s equipment (7.5MW), 250m3/h roller-compacted concrete mixing plant, RCC concrete mortar transport conveyor system (500m), CVC 60 -:- 120m3/h concrete mixing plant, 6 -:- 25T tower cranes, 35 -:- 50T chain cranes, CVC concrete mortar trucks, material-transporting trucks, etc

 Regarding the works that have been involved in construction: In recent years, Song Da 4 Joint Stock Company has been participating in the construction of many major and key projects of the country such as Yaly Hydropower plant (720MW), Ho Chi Minh Highway, Hien-Thach

My section, Sesan 3 Hydropower plant (290MW), Se San 4 Hydropower plant (320MW), Ban Ve Hydropower Plant, Xekaman1 Hydropower Plant in Lao PDR, Huoi Quang Hydropower plant, Lai Chau Hydropower Plant, Nam Na 2 and Nam Na 3 hydropower power plants, etc

2.2 Overview of the existing strategy of Song Da 4 Joint Stock Company

After studying the internal and external environment, leaders and researchers of Song Da 4 Joint Stock Company have come up with the SWOT model as shown in Table 2.1 below

Table 2.1 SWOT mode of the existing strategy of Song Da 4 Joint Stock

Company STRENGTHS (S)

- Song Da brand in construction

field has been confirmed

- Song Da 4 Joint Stock Company is

a reputable unit in the construction

market in terms of quality of

works, progress and construction

methods and trusted by customers

- Song Da 4 Joint Stock Company

has a team of experienced and

high-quality managers

resources, meeting the strict

construction requirements and

stressful construction schedule

- Investment and technology and equipment innovation are still slow

- The training and recruitment of human resources are still passive, has not really met the needs

- Creativity, independence, discipline

equipment are advanced and

diversified for construction and

installation

- Financial condition is healthy;

annual financial statements and

auditor‟s reports are public

departments has not been good; principles and procedures have not been standardized

- The difficult financial situation is shown in the following points: (1) Net Income Before Tax / Total

expected; (2) The company is having large loans at high interest rate; (3) Balance of cash flow in the cash flow statement in 2013 was -

45 billion dong

OPPORTUNITIES (O)

- The world and Vietnam economy

are on the way to recover after the

economic crisis; thereby creating

development; the projects of the

Industry and the Corporation are

started construction; Demand for

economic zones, civil works, etc

has the capital resources to

continue construction

industry segments (hydropower,

irrigation, thermal power, nuclear

THREATS (T)

- Vietnam‟s economy has had many bright points but there are still many threats and risks in the operation of

interest rates have decreased but are still high; therefore, enterprises are difficult to access to loans

- Basic construction procedures are cumbersome and capital payment is

investment capital is stilled not disbursed fully

- Foreign companies with strong financial potentiality, advanced

power; civil works, industrial

infrastructure, anti-climate change,

etc.) in the development direction

still has great potentiality

- Construction market in Lao PDR,

especially in the segment of

construction of irrigation works,

infrastructure still has great

potentiality

- The development speed of science

and technology, integration creates

opportunities for the Company to

grasp the level of science and

technology applied in production

- Loan interest rate is at a

reasonable level

- Potential low- paid labor sources

in the localities are involved in the

construction of works

- The choice of material suppliers is

competitiveness

penetrate into the market

- There is a fierce competition among enterprises in the same industry and members of Song Da Corporation

increasingly high, reflected in the following aspects: Discount on bidding packages, construction progress and quality of works

- The labor source with professional qualifications and skills is still scarce, so the recruitment and employment of this force are difficult due to competition among recruitment companies

Source: Organization – Personnel Department of Song Da 4 Joint Stock Company

2.2.1 Business strategy options

From the above analysis and based on SWOT model, the company proposes the following strategic solutions to make good use of opportunities, overcome threats, promote strengths and limit weaknesses: