Evaluate the competency of the construction machinery corporation’s division 2 implication and improvement

Ming – Kun Lin Keywords: Sales performance, telecommunication The thesis is to evaluate the competency of the Construction Machinery Corporation division 2 COMA2, a member of the Constru

Lunghwa University of Science and Technology Department of Business Administration

Thesis for a Master’s Degree

EVALUATE THE COMPETENCY OF THE

CONSTRUCTION MACHINERY

CORPORATION’S DIVISION 2 –

IMPLICATION AND IMPROVEMENT

Researcher: Nguyen Huu Toan Supervisor: Nguyen Phu Hung (Ph.D.) Supervisor: Ming-Kun Lin (Assoc Prof.)

Lunghwa University of Science and Technology

Approval Certificate of Master's Degree Examination Board

This is to certify that the Master’s Degree Examinations Board has approved the thesis Evaluate the competency of the construction machinery corporation’s division 2 – implication and improvement published by Mr Nguyen Huu Toan in the Master Program of Graduate School of Department of Business Administration

Master’s Degree Examination Board

Board Members： Prof.PhD Tsan Eric

Assoc Prof PhD Nguyen Van Dinh

Dr Doan Thu Trang

Advisors： Dr Nguyen Phu Hung

Prof.PhD Ming – Kun Lin

Chair： Prof.PhD Tsan Eric

Date： 2018 ／11 ／24

ABSTRACT

Thesis Title: Evaluate the competency of the construction machinery corporation’s division 2 – implication and improvementPages: 59

University:Lunghwa University of Science and Technology

Graduate School: Department of Business Administration

Date: November, 2018 Degree: Master

Researcher: Nguyen Huu Toan Advisor: Dr Nguyen Phu Hung

Assoc.Prof PhD Ming – Kun Lin

Keywords: Sales performance, telecommunication

The thesis is to evaluate the competency of the Construction Machinery Corporation division 2 (COMA2), a member of the Construction Machinery Corporation(COMA), a state-owned construction company, and discuss the implications

to how COMA2 could improve the performance The research helps to understand the current situation, advantages and difficulties of COMA2 at the moment

The thesis uses the SWOT model to analyze the secondary data collected from academic journals, websites, and governmental offices to draw a comprehensive picture

of the whole construction industry, assessing the competitive position of the COMA2 Company in this context The thesis also uses the Five-Force Model of the Harvard Business School to craft theoretical explanation of COMA2 competitiveness in the context of the construction SMEs and the construction sector All data is taken

There are 4 focal points that the Board of Directors of COMA2 must pay attention

to in finding relevant measures to improve the competitiveness of COMA2 First, COMA2 should improve reputation to bring a better performance to the market; customers gave poor rating in their assessments on COMA2 technology and working

improve human resource management activities

The research provides recommendations on ways in which COMA2 can directly engaged in the design and improvement process First, COMA2 must improve its brand image in the market (e.g., with better construction quality and quicker response to repair recalls, etc.) Second, make partnership with suppliers to ensure the quality, lower the costs, and the on-time material delivery Third, improve the quality of the human resources

Importantly, it provides a road‐map for COMA2 for improving customer experiences For the implementation, the COMA2 must have clear objectives and balance actions among three areas: customers, internal workforce, and cost‐efficiency I would like my proposals would provide valuable contribution to COMA2 to make its business better

ACKNOWLEDGEMENT

It is a great pleasure for me to work with this dissertation I would especially like to thank all teachers, professors for all knowledge, skills and information I received It is very wonderful chance to work with so excellent and enthusiastic professors

I am also very grateful to my tutor, Professor Nguyen Phu Hung, for his support I appreciate all his time and efforts to encourage and guide me during my dissertation writing

I would like to thank my colleagues, my customers for helping me to support me information to complete this dissertation and answer the questionnaire for my research This thesis cannot be done without their help

Finally, I would like to thank and dedicate this dissertation to my family for the unconditional support, who consistency motivated me to complete the thesis

TABLE OF CONTENTS

ABSTRACT iii

ACKNOWLEDGEMENT v

TABLE OF CONTENTS i

LIST OF TABLES iv

LIST OF FIGURES vii

1 INTRODUCTION 1

1.1 Rationale of the thesis 1

1.2 Research objectives 1

1.3 Research questions 2

1.4 Data…… 2

1.5 Plan of report 2

2 BACKGROUNDS OF THE COMA2 4

2.1 Overview of COMA2 4

2.1.1 Missions 4

2.1.2 Visions 5

2.1.3 Major works 5

2.1.4 Workforce 6

2.1.5 Organizational structure 7

2.2 Current situation of COMA2 8

2.2.1 Key Financial and Operating Statistics 9

2.2.2 COMA2 problems 10

3 LITERATURE REVIEW 14

3.1 The Definition and Concept of Competitiveness 14

3.1.1 Competitiveness 14

3.1.2 Drivers of Competitiveness 15

3.2 Methods to increase competency of company 16

3.2.1 Improve Recruitment and selection to get the better employees 17

3.2.2 Career development to retain qualified staffs 18

3.2.3 Train and develop employees 18

3.3 Five-forces model 18

3.3.1 Threat of entry 20

3.3.2 Substitute products 21

3.3.3 Bargaining power of suppliers & buyers 21

3.3.4 Threats of Competitors 22

3.4 Lessons of success and failures from literature 22

3.5 Chapter summary 23

4 METHODOLOGIES AND DATA 24

4.1 Methodology 24

4.2 Data……… 24

4.3 Survey description 24

4.4 Measurement 25

5 SURVEY RESULTS AND FINDINGS 26

5.1 Survey results 26

5.1.1 Assessment of Customers 26

5.1.2 Assessments from Suppliers and other partners 30

5.1.3 Assessment of Staffs 32

5.1.4 Assessments from Managers 37

5.2 Findings and Implications 42

5.2.1 Traditional markets get tougher competition 42

5.2.2 The human resource and working environment should be improved 43

5.2.3 Threats of new entrants in the industry is not high 43

5.2.4 Customers are diversified and thus need different approach manners 44

5.2.5 COMA2 can no longer benefit from the supports of Government policy 44

5.2.6 Analysis of the Competitive Environment of by applying Five Forces Model 45 5.2.7 Analysis of the Competitive competency by SWOT 47

5.2.8 Conclusion 48

6 PROPOSALS FOR IMPROVEMENT 50

6.1 Introduction 50

6.2 Lessons of successful improvements from literatures 50

6.3 Improve quality reputation to improve the brand of COMA2 in market 51

6.4 Partnership with other competent sub-contractors 53

6.5 Improve internal performance to increase corporate competency 54

6.5.1 Improving human resource 54

6.5.2 Improve customers approach 57

6.6 Strategic future direction 57

6.6.1 Invest in new techniques, techno, equipment and vehicle 57

7.2 Limitation of the research 59 7.3 Directions for further research 59

LIST OF REFERENCES 60

LIST OF TABLES

Table 2-1: Composition of workforce 6

Table 2-2: Composition of workers 7

Table 2-3: Key performance indicators 9

Table 5-1: Customer’s assessment on Comparative Overall Quality 27

Table 5-2: Customer’s assessment on Brand of COMA2 in the market 27

Table 5-3: Customer’s assessment on Technology quality 27

Table 5-4: Customer’s assessment on Construction working quality 28

Table 5-5: Customer’s assessment on Quality of supporting service 28

Table 5-6: Customer’s assessment on Price to value 28

Table 5-7: Customer’s assessment on Collaborative interaction quality 29

Table 5-8: Customer’s assessment on Compliance the contract 29

Table 5-9: Customer’s assessment on Quality competency in the market 29

Table 5-10: Customer’s assessment on Company Experience in the market 29

Table 5-11: Customer’s assessment on Ability of dealing with contingency situation 30

Table 5-12: Customer’s assessment on the ability of COMA2 to satisfy the demands of customers/suppliers 30

Table 5-13: Supplier or partner group’ assessment on Comparative Overall Quality 31

Table 5-14: Supplier or partner group’ assessment on Company brand identify in the market 31

Table 5-15: Supplier or partner group’ assessment on Interaction between COMA2 and supplier 31

Table 5-16: Supplier or partner group’ assessment on Compliance to the original contract 32

Table 5-19: Staff assessment on Company brand in the market 34

Table 5-20: Staff assessment on Company orientations in line with the market 34

Table 5-21: Staff assessment on Adapting and responding ability of COMA2 in the market 34

Table 5-22: Staff assessment on Expanding market ability 34

Table 5-23: Staff assessment on the COMA2’s ability to satisfy the demand of customers/suppliers 35

Table 5-24: Staff assessment on the business system 35

Table 5-25: Staff assessment on COMA2’s network of suppliers 35

Table 5-26: Staff assessment on business and production policies 36

Table 5-27: Staff assessment on Staff working competency 36

Table 5-28: Staff assessment on Working environment 36

Table 5-29: Staff assessment on Interaction between employee and supervisor in works 36

Table 5-30: Staff assessment on Human resources development policy 37

Table 5-31: Staff assessment on the supports from policies of State 37

Table 5-32: Staff assessment on COMA2 capital resource to respond to the needs 37

Table 5-33: Assessment of ManageronComparative Overall Quality 37

Table 5-34: Assessment of ManageronBrand of COMA2 in the market 38

Table 5-35: Assessment of ManageronOrientations of the company in line with the market 38

Table 5-36: Assessment of ManageronAdapting/Responding ability to markets 38

Table 5-37: Assessment of ManageronExpanding market ability 39

Table 5-38: Assessment of Manager on the COMA2’s ability to satisfy the demands of customers/suppliers 39

Table 5-39: Assessment of Manageron Interaction between company and customers/suppliers 39

Table 5-40: Assessment of ManageronCOMA2’s business system 40

Table 5-41: Assessment of ManageronCOMA2’s network of suppliers 40

Table 5-42: Assessment of ManageronStaff working competency 40

Table 5-43: Assessment of Manageron Working environment 41

Table 5-44: Assessment of ManagerontheInteraction/relationship between supervisor and employee 41

Table 6-1: Ranking of different sources of competitive advantages 50

Table 6-2: Other actions to improve COMA2 reputation 52

Table 6-3: Actions to improve COMA2 Corporate Social Responsibility 53

Table 6-4: Actions to improve COMA2 innovation 58

LIST OF FIGURES

Figure 2-1: Fabrication and installation space roof of Phu Tho swimming pool in 2007 6

Figure 2-2: Fabrication and installation steel structure for Athletic Competition Indoors

Hanoi 6

Figure 2-3: Electricity Hydro plant 6

Figure 2-4: Organizational structure of COMA2 8

Figure 3-1: Components of competitiveness 14

Figure 3-2: Five-force model 19

Figure 5-1: SWOT analysis 48

1 INTRODUCTION

1.1 Rationale of the thesis

The Construction Machinery Corporation (COMA) is a well-known Vietnam industrial construction group(COMA2, 2017, p 9) COMA is a state-owned enterprise COMA was established in 1976 as a Factory for Automobile Overhaul and Reparation

In 2004, the Factory for Automobile Overhaul and Reparation company was transformed into Ha Bac Construction Machinery Joint Stock Company COMA2 is a subsidiary of the COMA, locates at Tan Dinh Commune, Lang Giang District, Bac Giang Province

COMA2 has become a reliable partner for domestic companies and government, providing services and products in machine installs, fabrication and installation steel structures, non-standard equipment manufacturing COMA2 was major subcontractor for SONG DA corporation, VIN-GROUP, VINACONEX, NARIME, MISUBISHI, MITSSUI, BABCOCK, ABB, LURGI, DENSIT, HUYNDAI, An Duong – China Chemical industry group, PILKINGTON, VIN GROUP, NSRP, POSCO E&C

However, in recent years, COMA2 is facing a number of difficulties Like all other construction enterprises, COMA2 suffers from issues like inefficient procurement procedures, inefficient prequalification, inefficient bid evaluation practices, inequitable contracts In addition, the competitions in the industry is increasingly tough COMA2 needs to improve its competency in order to sustain its development This is the reason I choose the topic EVALUATE THE COMPETENCY OF THE CONSTRUCTION MACHINERY CORPORATION’S DIVISION 2 – IMPLICATION AND IMPROVEMENT for my thesis By analyzing COMA2, we will understand general problems of state owned companies and development trend at Bac Ninh city This report is expected to diagnose current difficulties of COMA2 and suggest measures to address them effectively and efficiently

COMA2 and propose potential solutions or directions on building the capacity to meet with growing market requirements The results of the research is solutions that potentially can make COMA2 more competitive and sustainable

1.3 Research questions

Thesis include 3 research questions:

 What the perception of customers, workforce about major challenges facing COMA2?

 What are the strength and weakness, as well as opportunities and threats of COMA2?

 What are solutions to deal with the problems identified?

1.4 Data

The primary source of data comes also from additional interviews with governmental construction management officers, contracting officers of certain construction firms, construction consulting firms This source of information serves to draw up an overall image of the sector and its competitiveness as viewed by the experts This would help identify problems of current institutions and how new institutional developments would affect or constrain the competitiveness of construction firm like the COMA2 company in practice This source also provide useful recommendations on what and how the COMA2 Company should do in order to sustain its competitiveness

in current context

The secondary source of information and quantitative data includes websites of the Vietnam Ministry of Construction, which provides annual reports on the construction sector, as well as websites of some state construction enterprises

1.5 Plan of report

1 Introduction

2 Part 1: Problems and Environment of COMA2

2.1 Chapter 1 Introduction of COMA2

2.2 Chapter 2: Results of the Analytical Survey

3 Part 2: Findings and Improvement

3.1 Chapter 1: Findings and discussions

3.2 Chapter 2: Recommendations to improve the job satisfaction

4 Conclusions

4.1 Implication of study to COMA2

4.2 Limits of the thesis

4.3 Conclusions

2 BACKGROUNDS OF THE COMA2

2.1 Overview of COMA2

The Construction Machinery Corporation (COMA) is a well-known Vietnam industrial construction group(COMA2, 2017, p 9) COMA is a state-owned enterprise COMA was established in 1976 as a Factory for Automobile Overhaul and Reparation

In 2004, the Factory for Automobile Overhaul and Reparation company was transformed into Ha Bac Construction Machinery Joint Stock Company COMA2 is a subsidiary of the COMA, locates at Tan Dinh Commune, Lang Giang District, Bac Giang Province, Viet Nam whose Charter Capital is equivalent to 953,410 USD in

2004

COMA2 has become a reliable partner for domestic companies and government, providing services and products in machine installs, fabrication and installation steel structures, non-standard equipment manufacturing COMA2 was major subcontractor for SONG DA corporation, VIN-GROUP, VINACONEX, NARIME, MISUBISHI, MITSSUI, BABCOCK, ABB, LURGI, DENSIT, HUYNDAI, An Duong – China Chemical industry group, PILKINGTON, VIN GROUP, NSRP, POSCO E&C

However, in recent years, COMA2 is facing a number of difficulties COMA2 is typical a state owned company which has problems from globalization, economic integration, public spending contraction More over, COMA2 locates in Bac Ninh province – a very potential market with high industrial zone developments and FDI enterprises COMA2 needs to improve its competency in order to sustain its development The difficulties of COMA2 will be analyzed further in the Chapters below

2.1.1 Missions

COMA2 provide products and services in the areas below (COMA2, 2017, p 10):

 Manufacturing spare-parts and equipment for construction;

 Producing building materials for buildings (i.e., elevator, screw, conveyors,

2.1.2 Visions

COMA2 vision is to keep its market share in the Bac Ninh province until 2020, and double its market share to 1% in 2025 To do so, COMA2 will have to fundamentally reform its mechanism

2.1.3 Major works

The construction works that COMA2 has done include projects in industrial zones, residential buildings, transport system, and irrigation system COMA2 also has been subcontractor for many projects in urban infrastructure, transmission line and transformer station to 110 KV COMA2 is the major contractor for ABB Viet Nam in manufacturing of transformer tank

The following pictures describe key products of COMA2 (Source: COMA2, 2017)

Figure 2-1: Fabrication and installation space roof of Phu Tho swimming pool

in 2007

Figure 2-2: Fabrication and installation steel structure

for Athletic Competition Indoors Hanoi

years

Over 5 years

Over 10 years

Over 15 years

Over 20 years

No Technical Professional

Experience Under 5

years

Over 5 years

Over 10 years

Over 15 years

Over 20 years

There are almost 300 workers with the composition below (COMA2, 2017, p 24)

Table 2-2: Composition of workers

No

Technical profession Total

Professional degree (from 1 to 7)

5 Blasting & painting

Figure 2-4: Organizational structure of COMA2

(Taken from the main website of COMA2, 2018)

2.2 Current situation of COMA2

Nowadays, economic integration is increasingly deep and wide, requiring upgrades and investments in infrastructures to meet with the new requirements of the fast growing economy In recent years, together with the gigantic development at economic motive forces such as Hanoi, Ho Chi Minh city, etc… economic developments of local areas have also been being attached special importance Bac Giang province, 50 km north of Hanoi, has many potentials in economic development with national roads, the national North - South railway To go on par with the development of the local economy, the construction enterprises - which are building the infrastructure in service

of the economy - play very important roles

Previously, Bac Giang province is mostly agricultural, thus construction is of low importance Nowadays, thanks to the economic growth of the area, construction sector has been considered a leading industry With the tentative vision that Bac Giang will strive for becoming an industrial province by 2020, investments in infrastructure are indispensable requirement Thus, the operations of construction enterprises grow quickly in volumes and scales, to a level that is well above the current managerial capacity of construction enterprises For example, the construction sector suffers from many issues, including inefficient procurement procedures, inefficient prequalification, inefficient bid evaluation practices, inequitable contracts, etc In addition, the construction enterprises are also facing hard competitions from increasingly more numerous foreign construction enterprises

Placed within such an environment, COMA2 is facing a number of challenges Most of clients of COMA2 are governmental agencies Due to global and local economic crisis, in this time, most of them are cutting public spending, especially in construction investments, thus demands are contracting dramatically The requirements

to build construction sites less costly has become more pressing than ever This makes COMA2 rate of successful bidding has dropped dramatically, threatening its survivability

This paper is expected to diagnose current difficulties of COMA2 and suggest measures to deal with them effectively COMA2 is facing a number of challenges, including internal problems

2.2.1 Key Financial and Operating Statistics

The tables follow provide KPI of COMA2 (COMA2, 2017)

Table 2-3: Key performance indicators

Unit: VND; 1 $ is equal to 22,000 VND

Content 2013 2014 2015

Profit after tax of

Profit after tax of

(Source: COMA2, 2017)

2.2.2 COMA2 problems

2.2.2.1 COMA2 management structure

At the moment, the COMA2 workforce has over 40 persons, of which 10 are managers of different layers The COMA2 management structure is said to be unsystematic, disconnected one to another; the managers tend to handle their works case

by case, rather than by following a systematic procedural approaches pre-defined by the company Thus, time in job is a criteria more important when appoint a manager than any other criteria, such as diversified experience or educational levels

2.2.2.2 Human resources

COMA2 does not have a properly designed human resource policy The most troublesome issue for COMA2 is that the company has recruited many family members, making the company become almost a kind of family business The advantage side of this the trust among employees seems to be higher, thus confidential information can be more secured The dark side of this is it would be very hard for a manager to force peoples comply to company rules because managers tend to hesitate to punish subordinates who violated internal rules as they are close family members - the culture

of Vietnam do not let them to do so at ease This in turn is the second most critical reason for poor performance of COMA2 In addition, to fulfill construction projects,

COMA2 has recruited many very short-termed, seasonal, and for-specific-project labors, who do not have the loyalty to the company, thus lack of motivation to keep the performance high

COMA2 has 40 years of experience in the industry with the unity of leaders and staffs However, the level of workers is limited lead to inefficient in work In particular,

in short of skilled employees for large and demanding projects This issues negatively influence the performance of the project

One of the most challenging problems for enterprises in construction sector is low labor quality The enterprise owners and managing cadres of enterprises extremely lack

of management knowledge and management skills It is said that majority of enterprise owners and directors of private construction SMEs have not been trained methodically

on business knowledge in the context of international integration The outcomes can be seen in that many enterprises do not comply well with the regulations on tax, personnel management, financial management, goods quality, industrial property

2.2.2.3 Business orientation

2.2.2.3.1 Business direction

Many contend that COMA2 lacks strategic business direction COMA2 to now has not defined a vision for 5 or 10 years to come COMA2 has not decided whether it will play as a primary vendor or secondary vendor to other construction companies In recent years, COMA2Board of Director is taking any business opportunity to have jobs for the company employees, rather than take opportunities selectively COMA2 also has not defined its core products and services clearly Its major products include construction in traffic infrastructures, water infrastructure, civil housing, and power construction systems This is quite large ranges of products that require higher levels of expertise, experience, capital, equipment, and technical capacity that are well over the current resources and capability COMA2 has Whenever COMA2 takes a construction project,

it will have to outsource heavily to external vendors, making itself very dependent to

2.2.2.3.2 Long-term investment

COMA2 lack of long-term investment plan on technical capacity, including construction equipment, techniques and measures of construction for specially designed buildings At present, machines and equipment used in Vietnam enterprises have only

10 % to be modern, 38 % to be average and 52 % to be backward and very backward; the rate of using high technology is only 2 % (meanwhile that number is 31 % in Thai Lan, 51 % in Malaysia, and 73 % in Singapore) The proportion of enterprises capital invested in technology renovation is very low, only about 0.2 %-0.3 % total revenue The technology equipment knowledge of private small and medium sized enterprises is only equal to 3 % technical equipment level in big industrial enterprises This actual situation is putting forth big challenges for competitive capacity of the area of small and medium sized enterprises, especially in the context of deep and wide international integration at presence

2.2.2.3.3 Capital requirements

Capital is necessary not only for fixed facilities but also for customer credit, inventories, and absorbing start-up losses (Faulkner, 2002) As a SME, COMA2 just has insufficient credit limit with small state capital which affect the operating and financial policies of the company With limited capital, COMA2 should have effective investment plans, intensify management more strictly, tightening of costs, etc In addition, the development of brand credibility market, affirmed business efficiency to increase credit limit We should describe the difficulties and potential of the company to obtain financial support from the mother company and the state

2.2.2.3.4 Product differentiation

Product differentiation plays a major role Differentiation means providing a range

of unique offer to the market, something that is easy to understand but difficult for other competitors to copy, mimic, and achieve The most importance is that being different in

a positive way in a market can make the business stand out from other competitors Where the customers cannot see any point of difference, then they have little option but

to compare prices Many customers will do this anyway, but it is more difficult to make

a comparison if products and services appear to be different If the customers cannot

compare prices and performance clinically, then some value judgments must be made where the customers try to balance less factors against differences in price, but then the customer will be less sensitive to price Creating positive points of difference in the products or in the mind of the customers is one way of achieving profitability above the average In many mass consumer product markets, the accepted way to differentiate is

to advertise Differentiation can be a key to success in services marketing but company will challenge the relevance of advertising to a service business as the best way to create difference in the way a service is perceived

In a service organization (like construction companies), the nature of a service makes it more difficult to achieve differentiation Services can be copied more easily than products can be They are then difficult to defend through patenting or through claims of intellectual property rights One method to achieving differentiation, without necessarily creating a real difference in the product or service on offer, is by creating an image for being different, and the most common way of doing this is by branding Branding is a highly relevant topic and will be covered later as having an important influence on our approach It is possible to achieve cost leadership in a service business, but again only a minority can expect to use this approach successfully We believe that there has to be something more tangible than advertising, in short that the service experience has to be really different.To differentiate from the competitors and possible new entrant the management COMA2 company has to build up brand identification.This creates an automatic barrier by forcing their competitors to find ways

to compete customers loyalty - thus spending a lot of money It is important to build on customer care and to establish a network of loyal and satisfied client who are willing to recommend one’s services To create high fences around their businesses, COMA2 brand identification with economies of scale in not only advertising but also cost leadership and experience

Porter’s model identifies four sets of components concerning regional-level competitiveness, including firm strategy, demand conditions, related and supporting industries, and factor conditions (Porter M E., Competitive Advantage, 2002)

Figure 3-1: Components of competitiveness

(Source: Porter M E., Competitive Advantage, 2002)

Another way to think about key concept of “competitiveness” (Porter M , 2008) :

- Productivity:Competitiveness is determined by the productivity with which a

location uses its human, capital, and natural endowments to create value

- Microeconomic Foundations: Productivity ultimately depends on improving the

microeconomic capability of the economy

- How, Not What: It is not what a location competes in that determines its

prosperity, but how productively it competes

3.1.2 Drivers of Competitiveness

The drivers of "competitiveness" include factors that are strongly linked to macroeconomic issues or microeconomic issues Competitiveness may be linked to entrepreneurship and excessive bureaucratic regulations on business These clearly influence business competitiveness but they are insufficient to deal with the challenges

of a global economy when there are many foreign competitors come to the domestic markets or there are many domestic competitors in the foreign markets where the company export its products to (HSB Institute For Strategy & Competitiveness, 2014c) Different scholars gave different drivers for competitiveness, including:

(1) Physical assets: companies build competitiveness from owning better stocks of physical assets – they invest in their infrastructures to increase the capacity;

(2) Financial resources: companies build competitiveness by gaining better and lower cost access to financial resources; Especially, companies are seeking to lower cost of capital to make them more advantageous to competitors in bidding for contracts; and (3) Human resources: companies build competitiveness by recruiting human resources better than that of competitors, they create proprietary intellectual assets Competitive advantage can be achieved when managers succeed in stockpiling the very best physical, financial, and human resources This is to create very high barriers

so that the potential entrants could not overcome to enter the market, or at least so that rivals cannot easily get over Better infrastructure would enable them to charge higher prices and sustain better margins (Rosa Chun, 2003) Company can also enhance its competitiveness through higher productivity in labor and in manufacturing.Productivity measure by output per input Labor productivity would be the most common measure

3.2 Methods to increase competency of company

There is a strong association between Competitive advantage and Competitiveness and Business performance The management has long been focusing on how to achieve and sustain of a strong market position They research particularly strategy formulation,

as it examines factors and processes controlled, changed, or somehow influenced by the firm The major measures to improve competency of the company include:

 Invest in Marketing to improve the brand

 Invest in new techniques, techno, equipment and vehicle

 Update new techniques by designing a project for employees to learn, apply, and develop new method

 Base on new technology situation, build a clearly plan to choose suitable equipment and budget

 Partnership with other sub-contractors: Ask the parent company for new opportunities; Extend and expand relationships with current and perspective business partners through social state

 Team deployment and job-matching: By identifying an individual manager’s competency profile and reconciling this against the competency profile for a particular role or position, the degree of fit can be established (Spencer & Spencer,

1993, p 254) The better the fit, the more likely an individual is to be satisfied and

so the better their performance and likelihood of being retained

 Link compensation with performance

Elkin (1990) states that it is easier to apply the concept of competence to employee selection and management development – where underlying personal characteristics are the key determinant of success – than it is to the assessment of job performance This is because focusing on job performance results in long detailed lists of job task micro-competency statements that can be difficult to measure performance against Thus, competency profiles arguably offer an improved benchmark against which managers’ performance can be assessed

Abraham et al (2001) found that many organizations fail to appraise their

managers against the competencies identified as desirable within their performance

management processes However, failure to link competencies to appraisal and reward seriously delimits their value in underpinning organizational growth and development Competency-based pay schemes seek to reward managers for developing their competencies in line with organizational requirements By empowering managers to take action to address deficiencies in their own competency profile and by regularly monitoring their development via an appropriate performance management system, the aim is to reward those who make efforts to align their performance with that required by the organization

Applying the competency framework to these key HRM activities has the potential

to improve the ways in which construction companies manage, develop and retain their key managerial resources Notably, they should be able to engender a more participative, developmental approach to the HRM function, thereby helping to ensure sustained performance improvements in the future However, the competency model only provides a framework, and so requires further development in order that is aligns with the values, culture and business environment of the organization within which it is being applied

3.1.3 Improve Recruitment and selection to get the better employees

Recruitment is often a problematic process in construction projects, even in times

of high unemployment, since both applicant and advertiser will have specific needs and expectations that will have to be matched Any mismatch provides a potential basis for a conflict of interest manifested through the expectation of differing outcomes and behaviors from an individual (Katz and Kahn, 1978) This is termed ‘role conflict’ (Argyle, 1994) and suggests expectations with regard to the level at which performance

is deemed to be superior may vary between individuals and groups carrying out the assessment The effective use of the model in the recruitment process demands that the characteristics of the various behaviors (and particularly the two predictive competencies) are clearly identifiable through that process Fortunately, both composure

as an initial screening process when there are large numbers of candidates for a post

3.1.4 Career development to retain qualified staffs

The competencies can be used to assess the managerial potential of young and inexperienced managers, as well as to identify deficiencies in the profile of experienced managers who, with further development, could be groomed for senior management positions Identifying candidates for future senior management positions allows training and development activities to be tailored to their needs in order to improve organizational preparedness

3.1.5 Train and develop employees

Reducing training, or cutting it all together, might seem like a good way to save company time and money (learning on the job is said to be an effective way to train, after all) However, this could ultimately backfire Forcing employees to learn their jobs

on the fly can be extremely inefficient So, instead of having workers haphazardly trying to accomplish a task with zero guidance, take the extra day to teach them the necessary skills to do their job This way, they can set about accomplishing their tasks

on their own, and your time won’t be wasted down the road answering simple questions

or correcting errors

Past their original training, encourage continued employee development Helping them expand their skillsets will build a much more advanced workforce, which will benefit your company in the long run There are a number of ways you can support employee development: individual coaching, workshops, courses, seminars, shadowing

or mentoring, or even just increasing their responsibilities Offering these opportunities will give employees additional skills that allow them to improve their efficiency and productivity

3.3 Five-forces model

In the fight of market share, competency not only is a tool that a company can use

in order to demonstrate a high standard of performance but also are characteristics that

we use to achieve success Competition is rooted in its primary economics, and

competitive forces exist that go well beyond the established competitors in a particular industry All challengers that may be more or less prominent or active base on the industry are customers, suppliers, potential entrants, and substitute product (Porter M E., Competitive Advantage: Creating and Sustaining Superior Performance, 1985)

Figure 3-2: Five-force model

(Source: Porter M E., 1985)

The state of competition in an industry depends on five basic forces (which are diagrammed in the figure above) The strongest competitive force or forces determine the profitability of an industry and so are of greatest importance in strategy formulation All this factors determines the ultimate profit potential of an industry Five-force model are so helpful in growth of present competence, explaining what makes the industry vulnerable to new entrants, what determines the bargaining power of suppliers? Understanding these helps to highlight strengths and weaknesses of the company, enhance company to higher performance level, and signify the opportunities and threats

of development

doing business, the key forces are foreign competitors and substitute materials In such situation, coping with the substitute product becomes the number one strategic priority (Faulkner, 2002)

3.1.6 Threat of entry

New entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources Companies diversifying through acquisition into the industry from other markets often leverage their resources The seriousness of the threat

of entry depends on the barriers present and on the reaction from existing competitors that entrants can expect

There are lists of barriers to entry (Porter M E., 1985):

 Economies of scale: new entrants would have lower demands thus low productivity

 Product differentiation: Differentiation means having a unique offer in the market, something that is easy to understand and difficult to achieve The most important is that being different in a positive way in a market can be good for business Creating positive points of difference in the product or in the mind of the customer is one way of achieving above average profitability

 Cost disadvantages independent of size: Such advantages includethe effects of the learning curve (and of its first cousin, the experience curve), proprietary technology, access to access to unique assets, assets purchased at pre-inflation prices, favorable supply agreements and government subsidies

 Access to distribution channels: Distribution channels consist from all companies involved in that process including producer, wholesale, retail, insurance companies, transport companies, banks, warehouses and key accounts, particularly those from industrial markets For many consumer goods, the supply-chain is controlled by a small number of participants in each segment, which often includes the wholesale or retail channels The more that existing competitors have these tied up, obviously the tougher that entry into the industry will be

3.1.7 Substitute products

Porter notes that where a product or service is unique (and therefore has no substitutes), companies are able to charge much higher prices than if the face competition from alternatives(Porter M , 2008) Substitute products that deserve the most management [and investor] attention are those that (a) are benefiting from trends improving their price-performance trade-off with the industry’s product, or (b) are produced by industries which earned high profits Substitutes often arrive rapidly into market if some development increases competition in their industries and causes price reduction or performance improvement

3.1.8 Bargaining power of suppliers & buyers

Suppliers can exert poweron participants in an industrydue to their possession of a stronger competitive positionby raising prices and/or restrictof purchased goods and services Powerful suppliers can thereby squeeze profitability out of an industry unable

to recover cost increases in its own prices By raising their prices, soft drink concentrate producers have contributed to the erosion of profitability of bottling companies because the bottlers, facing intense competition from powdered mixes, fruit drinks, and other beverages, have limited freedom to raise their prices accordingly

Customers likewise can force down prices, demand higher quality or more service, and play competitors off against each other—all at the expense of industry profits.A buyer group is more powerful when it purchases in large volumes or in a concentrated industry (Porter M , 2008) An example of this is the automotive manufacturing industry, which purchases many relatively undifferentiated components from suppliers who have few – if any – other customers Large volume buyers are particularly potent forces if heavy fixed costs characterize the industry—as they do in metal containers, corn refining, and bulk chemicals, for example—which raise the stakes to keep capacity filled The products a buyer purchases from the industry form a component of its product and represent a significant fraction of its cost(Porter M , 2008)

The power of each important supplier or buyer group depends on a number of

industry’s product (Porter M , 2008)

3.1.9 Threats of Competitors

The comparative competitiveness of a firm is critical to sustain growth Any firm needs to understand its industry rivals to successfully market its products and services The understanding of rivals helps to position the firm in the market, to make the public perceives its products and services differently, and distinguish it from competitors A business must study its competitors marketing strategy and pricing and also be reactive

to any changes made

The threats of competitors could be determined by the following factors(Porter M , 2008):

 The intensity of competitive rivalry in the industry

 Sustainable competitive advantage through innovation

 Competition between online and offline companies

 Level of advertising expense

 Powerful competitive strategy

 Firm concentration ratio

3.4 Lessons of success and failures from literature

Major lessons of success are recommended by scholars in the literature, including:

 Improve the capability in techniques and technology

 Promote the efforts of staffs through job satisfaction, compensation linked to performance, career promotion opportunity

 Expand, extend, and sustain the current business partnership

 Improve company’s brand identify

 Repositioning company

3.5 Chapter summary

This Chapters has reviewed literatures in the competitiveness The final Chapter will provide recommendations basing on lessons of success The next Chapter will talk about the methodology to collect opinion of different stakeholders of COMA2