3.1 Ha Phuong’s long term development objectives
The period of 2012 to 2016 is considered to be the most important preparation for company’s incredible development. In this period the company set up the objectives
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of building stability the technology system and company’s structure to completing necessary factors to become one of the strongest companies in construction sector of Ha Nam.
With the objective of expanding company’s strengths in basic construction sector and the youth and enthusiasm of employee the company will establish from 5 to 7 new branches in the period of 2012-2016.
From 2012-2016: Developing to become a strong company with product distribution system in surrounding provinces. Cooperating with 5 to 10 units in different business sectors. Building and improving management skill in all sides.
Employee’s income increase from 15-20% per year. Growth rate of profit is more than 10% per year. The details of company’s objective can be seen as below table:
Table 3.1: Ha Phuong’s growth index in the period of 2012-2016
A. Turnover
1/ Construction 130% 150% 120% 110% 115%
2/ Precast concrete
production 150% 200% 150% 120% 120%
3/ Construction
material extraction 200% 200% 150% 150% 150%
B. Gross profit 120% 118% 110% 125% 125%
Source: Product planning section, Ha Phuong Co, Lid
Company’s most important objective in this period is: Improving profit couple with upgrading employee's life. Besides expansion the business and profit company’s long-term objective is always attached with development of human skill and human lite.
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3.2 Choosing business strategy for Ha Phuong in the period of 2012 to 2016 3.2.1 Choosing business strategy via SWOT matrix
From analysis of company’s strengths, weaknesses, opportunities and threats in the strategic period 2012 to 2016, the combination strategy for Ha Phuong are:
SO Strategy:
SO1: Deploying the strengths of human resource with low price and active material providing to produce products with lower price than competitors to attract customer from inside and outside of Ha Nam.
SO2: With the advantage of suitable production expense, stable capacity of stone extraction and precast concrete production, Ha Phuong will upgrade its production equipment and technology to create products with unique function which are suitable for specific type of customers.
ST strategy:
ST1: Expanding market share by using internal capital to develop and create new products
ST2: Limit the affection of external factors like the fluctuation of financial market, monetary market via capital storing.
WO strategy:
WO1: Choosing new market and new strategy
WO2: Improving quality of market research, and deploying market opportunities to change new development strategy.
WT strategy:
Changing the new organization structure, building new products and service to change the company’s operation totally and improving quality of construction products and service. This strategy can be strong enough to limit the affection of market and improve company’s internal power to maintain its scale and profit.
Base on the actual situation of Ha Phuong and the forecast about market trend in the period of 2012 to 2016 and the recovering of the country’s economy as well. the
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strategies for Ha Phuong in this period are: leading cost strategy (SO1) and product specification (SO2). These strategies help the company expand its production and operation. They also help Ha Phuong to advertise its image outer Ha Nam province and create customer’s loyalty.
3.2.2 Choosing strategy via QSPM matrix
From the result of SWOT matrix, the strategies for Ha Phuong in the period of 2012 to 2016 are: leading cost by providing cheaper products and services, specifying products for each type of customers. To maintain and prove for the accuracy of chosen Strategies the project used QSPM method to find out the most suitable strategy for Ha Phuong.
Table 3.2: Quantitative Strategic Plan Matrix of Ha Phuong
- Stable and loyalty human resource 0.15 3 | 0.45 3 | 0.45 2} 0.30 2 | 0.30 - Suitable working environment 0.10 3 | 0.30 3 | 0.30 1{ 0.10 0| 0.00 - Active and stable material source 0.15 2 | 0.30 3 | 0.45 2} 0.30 1 | 0.15
- Reasonable capacity 0.12 3} 0.36} 2] 0.24 2] 0.24 0| 0.00
- Low production cost 0.08 4| 0.32 2] 0.16 1| 0.08 0| 0.00
- Active in product development 0.05 3} 0.15 3} 0.15 2] 0.10 1 | 0.05
Weakness 0.05 0.00 0.00 0.00 0.00
- Product’s quality need to be improved 0.10 2] 0.20 2] 0.20 2} 0.20 2 | 0.20 - Quality of marketing activity 0.05 3 | 0.15 1} 0.05 2} 0.10 1} 0.05
- Lack of experience 0.10 3| 0.30 2] 0.20 1} 0.10 2 | 0.20
- Financial management 0.05 3 | 0.15 2| 0.10 2} 0.10 IỊ 0.05
1.00
- Demand of construction for industrialization | 005] 4| 020| 2| 010] 3| 015] 1| 020
- Development of technology 0.15 3 | 0.45 3 | 0.45 4| 0.60 0| 0.00 - Development of transportation 0.10 3 | 0.30 2 { 0.20 2| 0.20 1 | 0.430 - Development of bank’s service 0.15 2] 0.430 2] 0.30 3| 0.45 0| 0.00 - Ability of cooperation and technology transfer 0.10 2] 0.20 3 | 0.30 4| 0.40 1} 0.20
Threat 0.00 0.00 0.00 0.00
- High pressure of competition 0.15 3} 0.45 2 | 0.30 1 {| 0.15 2 | 0.90 - Financial crisis and fiscal tightening policy 0.10 1{ 0.10 1} 0.10 2| 0.20 1} 0.10 - Increase in interest rate 0.10 2) 0.20 2| 0.20 2| 0.20 1 | 0.20 - Fluctuation of material price 0.10 2| 0.20 2] 0.20 I| 0.10 2} 0.40
1.00
TOTAL 5.08 4.45 4.07 3.30
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With highest score from QSPM matrix. SOI and SO2 strategy are the most suitable strategy for Ha Phuong in the period of 2012 to 2016. With current strengths of human resource. production cost Ha Phuong has big opportunities in expanding market share by development of transportation and irrigation construction. By using SO1 and SO? strategies (leading in low cost and product specification) Ha Phuong can attract more and more customers to expand its profit and scale in the specific period 2012 to 2016.
3.3 Strategy applying solution for Ha Phuong
3.3.1 Solutions to reaching the “The lead in cost” strategy 3.3.1.1 Manufacturing management solutions
+ Strengthen control in all fields; enhance labor, technological and operational management level; do periodical maintenance to lengthen equipments’ life and ensure a stable and safe production.
+ Improve workers’ skill, check usually operation process in stone extraction plant and precast concrete factory.
+ Manage well all construction sites to ensure safety, avoid wasting of materials and hold up right progress of the project.
+ Study to improve and upgrade the equipment to raise the stability in facility operation, absolutely guarantee laborers.
3.3.1.2 Invest to renovate the production technology, raising the productivity With regard to precast concrete product, now company still uses cupola furnaces. This is the oldest type of furnaces bringing a small capacity of 85.000 tons per year. This furnace can not be run constantly, after take a precast concrete batch out of the furnace, workers have wait and fall new materials into the furnace. Therefore, productivity is not high.
Now Vietnam enterprises use a new technology: rotary kiln, bringing the capacity from 2 to 3 million tons per year. This kiln can be used constantly, so enterprises \vill save cost for labor, materials and fuel. Technological improvement is
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an urgent requirement to become stronger by 2016. With current capacity of 0.85 million tons, Ha Phuong Co.. Ltd only can provide precast concrete for partners in Ha Nam, and some partners in nearby provinces, but meet the great market’s demand.
I" solution: Invest to buy new foreign technology.
Price of a medium rotary kiln (produce from 2 to 3 million tons per year) is USD 12 million. With Ha Phuong’s potentiality, it is possible to borrow capital from State government. However, USD 12 million is a so big investment while its market is rather small, Ha Phuong may get risk in taking back investment and developing.
2" solution: Co-operate with others
Co-operate with some of big cement companies as Hoang Thach, Chinfon ... to hand over technology will more economical and suitable with Ha Phuong Co., Ltd.
Profit ratio from this business was calculated by Engineering Department. If we compare between investing new equipments and handing over technology from Vietnam’s factories, we can see that handing over technology will bring more benefits because of lower cost and higher capacity. Handing over technology from domestic companies will cost USD 2 million. Therefore, Ha Phuong should choose handing over technology solution and the best partner for Ha Phuong should be Hoang Thach Cement Company due to this company had the similar organization framework, capital source, material sources with Ha Phuong when it started operating.
3.3.1.3 Financial solutions
+ Save cost and reduce product’s price to raise the competition.
+ Actively find partners, investors and borrowed capital sources to enlarge and improve the business.
+ Effectively use the depreciated capital source and annual retain profit.
Financial activities have a deep and wide influence on enterprises’ activities.
Financial situation of enterprise is shown by some main norins: credit solvency index, debit indicator, operating index. profit index. Studying enterprise financial is to consider, assess strong and weak points of the enterprise in order to find the best
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solution to improve business and reduce the risk. Ha Phuong Co., Ltd should to well these main financial solutions:
- Maximizing profits by comparing businesses, competitors such as: analysing the indexes of flexible ability, capital using effect, profitable ability.
- Intensifying and diversifying capital mobilization activities to ensure financial resource for the company’s business. To recover capital invested and_ attract investment, the company could do below methods:
+ Managing the source of revenue, ensuring to collect all debts, avoiding oustanding debt.
+ Maintaining friendly relations with Banks by ensuring prestige to have the support always from them.
+ Maximizing cost saving.
3.3.1.4 Labor solutions
Labour capacity is one of the factors determining the effect and structure of enterprise’s cost, the higher capacity, the lower cost per an unit product. Therefore, setting up the appropriate labour solution for business will help to bring a high effective strategy in the business. Ha Phuong Co., Ltd’s lobour improvement plan is constantly rasing managing capacity, specialist knowledge for managers and workers, renewing the management, reducing production and business cost. If these plan is not well done, the company’s business will lag behind economically and loses its competitiveness due to the high cost price for completed works impacts on the paracticability of choosed strategic plans.
It’s also need to reinforce and supply labour source for company’s units, specially project managers, facilities setup and operations managers. The company has to make labour framework plan according to requirement of each work; has training and re-training plans, gives continuation education to both direct and indirect labour.
particularly technical workers and specialist engineers. Furthermore, Ha Phuong should
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have cultivated plan for each of leadership position from company level to deparment level to meet the faster and more multiform business improvement.
3.3.2 Product specification strategy solutions 3.3.2.1 Engineering solutions
In the next period. Ha Phuong Co., Ltd continues to strengthen and complete organization, raise the production and business effect in precast concrete factory, Kim Bang quarry and construction excuting units. The company also has to enhance the posibility of producing types of building stone with different dimensions to meet requirement of building projects and customer's demand. Besides, Ha Phuong Co., Ltd needs to improve technology of recent concrete production equipments to produce building components with special types, good quality and durability which suit with solid big building.
3.3.2.2 Enlarge market research to raise competitive ability of products
At present economy, the enterprises have to find their customers themselves.
Meanwhile, each enterprise have to try its best to struggle for a high position in the market. Therefore, enterprises’market research is the most important foundation to setup production plan and design product models to get the trust from customers and attract customers so that they could control the market. Tir do đề ra những chính sáh về san pham.
Doing well the market research will help to specify the right standard and design of products which have demand and meet the consumer preference, then define policies for products. The company has to orient the activities according to market demand.
However, firstly the company must know the way to maintain the existing market, then go towards extending more. To do these measures, steering committee has to direct these work s:
+ The market researcher team has to collect information about quality, types of product, market demand. then improve and disign types better by far than compertitors’. After that. new products will released onto the market to explore
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consumer response. Base on the market demand and customer preference, the company will assess the situation by comparing and synthetizing methods, analysis and plan to make good shortcomings and promote strengths, such as appreciating product quality level in comparing with the market demand and competitors’ products. The company will get many experiences from these points and also need to continue researching technical proposals to heighten product quality by doing these:
+ The director board should highly appreciate the important role of both researching market in the enterprises’ existence and development and raising competitive ability as well as business result in present market mechanism. Then the directors will request Planning department to do above tasks and ask Sales department to survey the market to provide information for research.
+ The compulsory requirements for researchers are marketing and cement manufacturing knowledge, information collection and processing skills, creative and active at work. The researchers aslo have to cooperate with engineering department to design original product types which suit with the market trends.
+ Office must be fitted with all needed equipments for researching, so that the researchers will complete their job with the best result.
3.4 Procedure to apply business strategy
With a selected strategy as leading cost and specifying products, enhancing service quality to expand market and increase market share in area of material!
construction; the key solutions that Ha Phuong selects in strategic period 2012-2016 are: improving production process, consolidating quality of financial and marketing activities, human resource training and upgrading the equipments. To maximize the effectiveness of strategies during above period. Ha Phuong also has taken necessary action plans with specific steps.
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Table 3.3: Strategy applying process in the preiod of 2012-2016
Program
Global Advanced Master of Business Administration
efficiency
Innovating equipment | - Invest to buy some | Purchasing | 1000 6 months and production | new equipment for | dept, | million (From process to raising | precast production and | production | VND for January product’s quality and | stone extraction. engineerin | equipments | 2012 to capacity - Co-operate with | g dept, and 200 June 2012)
Hoang Thach to receive | marketing , | million their technology | subsection | VND for
transference in marketing
production of concrete subsection
| Establish marketing | - Implementing | Directors, | 200 million | January subsection company’s marketing | human VND and | 2012
activity and support for | resource monthly production and sale | section and | salary for 5 section to promote sale | sale section | marketing
and profit. members
- Support to introduce company’s image outside Ha Nam province
- Searching for new partners
| Training for all - Improving | Human 120 million | 36 months mernbers In the managemen. skill for | resource VND/ year | (from
company company’s leaders _ training March
- Improving capacity | subsection 2012 to
and of | and related March
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information such as
consuming magazine, woman magazine, student in order to introduce retail products Fund events with
participation and concern of crowd such
as game shows
workers and officers. sections 2015)
Promote the |}- Marketing section | Production | 250 million | 48 months development and | apply market research to | engineerin | VND/year_ | (Mar/2012 research activities to | find out customers need | g section, -
cr:ate new type of | - Production | marketing Mar/2015) | products with suitable | engineering section | subsection | function for each type | study and develop
of customer specific products
| Piomote Marketing Promote marketing Communic | 10 billion | 48 months activity for retail cooperation with ation center | VND/year | (13/2012 — benking service magazines specializing | of retail T3/2015)
on providing consuming | block
With specific action program, estimated cost for each unit and department in the yank, predetermined strategies for Ha Phuong are willing to gain feasible achievements hat make the bank become leading construction company in Ha Nam in 2016 and rovide utilt: for customers as well as improve quality of construction works for
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development of the country’s modernization and industrialization. The company .|so can achieve the target of improving quality of life for all employees.
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CONCLUSION
In the fluctuation business environment with challenges and opportunities, the establishment of business strategy for enterprises is very important. Strategic management tools help the company to have scientific look to evaluate opportunities and threats from outside and improving inner strengths to limit its weaknesses.
To Ha Phuong business area, these past year created the company stable premise to reach new opportunities in the next few vears. With suitable production scale and active change to satisfy market demand Ha Phuong has big change to apply leading cost and product specification strategy to expand company’s profit and market share in the period of 2012 to 20123.
The strategies mentioned in the project are most general and common for all sections in the company. To achieve outstanding success in this strategic period Ha Phuong need further study and strategies for each section of the company. The project opened many study directions to improve company’s operation in each section and each employee. The comprehensive applying of these projects will help Ha Phuong to expand its production and sale in the next years.
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REFERENCE English documents:
ADB. Effective trading strategy. 2008. pp. 12-18.
ADB. Commercialization and Poverty Reduction, 2008. pp. 3 — 5
Jay Barney: William Hesterly (2008). Strategic Management and Competitive Advantage: Concepts. Prentice Ha!lJay Barney (2007), Gaining and Sustaining Competitive Advantage. Prentice Hall
Herrington Bryce ( 2007), Financial and Strategic Management for Nonprofit Organizations: A Comprehensive Reference to Legal, Financial, Management, and Operations Rules and Gu. Jossey-Bass Nonprofit & Public Management Series
Robert E. Ankli, Michael Porter’s competitive advantage and business history, University of Guelph.1992. trang. 288 — 300
Porter. M. The competitive advantage of Nations, Havard business times, Mar 1990, pp. 73 — 93
Fred R.David (2008), Strategic Management: Concepts and Cases (12th Edition) Vietnamese documents:
Michael E. Porter (2009), Competitive strategy, Youth Publisher.
Ha Phuong Company Limited, annual report over years.
Vietnam joint stock commercial bank for foreign trade of Vietnam, annual report over years.
Statistic year book, annual report over years.
Ministry of Agriculture and Rural Development, annual report over years
|} Vietnam State Bank. annual report over years.
| Ministry of Construction (2005), Construction development strategy to 2010 and vision to 2020, Eastern Publisher. Hanoi.
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(!5} Meritorious teacher -Doctor. Nguyen Thi Minh Hien (2003), Small and Medium enterprise strategic development, Statistics Publisher, Hanoi.
(16} Associate Professor.Doctor. Le The Gioi — Doctor. Nguyen Thanh Liem —
Master. Tran Huu Hai (2009). Strategy Management, Statistics Publisher. Hanoi.
{17} Associate Professor.Doctor. Ngo Kim Thanh, Business Strategy.
118} Associate Professor.Doctor. Nguyen Ngoc Son. Strategy Management Curriculum, Vietnam Education Publisher.
Webside:
{19} www.saga.vn
{20} www.congthongtindientuhanam.gov.vn {21} www.hanam.gov.vn
{22} www.vcb.com.vn {23} www.sbv.gov.vn
{24} www.vneconomy.com.vn {25} http://my.vnexpress.net
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