Trương Trung Nghĩa - CAPSTONE PROJECT REPORT DEVELOPING THE BUSINESS STRATEGY FOR VIETTEL MOBILE IN VIETNAM FOR THE YEARS 2011-2015 doc

THE CAPSTONE PROJECT
DEVELOPING BUSINESS STRATEGY FOR
VIETTEL MOBILE IN VIETNAM FOR
THE YEARS 2011-2015

GaMBA.X0510 - Group 9


Introduction



Necessary
Objective
To conduct the complete top-down and competitive analyses, develop
alternative strategies and select a prioritized set of strategies that will
ensure a competitive advantage for Viettel mobile in the period of 20112015.



Subject & Scope of the study
- Subject: Viettel group & other competitive companies in the mobile
telecommunication industry.
- Scope: Basing on specific statistics on the macro environment, industry
and organizational environment of the Viettel from 2005 to 2010 and
orientation until 2015.



Study Approaches
Qualitative & quantitative; Statistical & analytical analyses

Structure of the study


Chapter 1: Theoretical foundation of strategic management
- Concept & role
- Stages of strategic management
- Models and matrices used



Chapter 2: Analysis of business activities of Viettel
- Introduction to Viettel Group
- Business situation 2005-2010
- Business environment analyze



Chapter 3: Strategy selection & Implementation solutions
- Vision & mission
- Strategic identification & selection
- Implementation solutions & processes


Chapter 1: Theoretical foundation
1. 1. Concept & role of strategic management
1.1.1. Concept


There exist many definitions of strategic management



It is now understood to be both a scientific definition & is an art and
science of planning, organization implementation and evaluation
strategies.

1.1.2. Roles


Help to identify opportunities and threats; Help managers and employees
to understand what needs to be done to achieve success



Enable firms to match the proposed plan with the external environment; It
is in the direction of future actions



Consider as the state of art in business administration

1.1.3. Types of strategy: Corporate & business


Chapter 1: Theoretical foundation (2)
1. 2. Stages of strategic management
Internal
Environment

External
Environment

Input

Strategic Intent
Strategic Mission

Strategy Formulation

Strategy Implementation

Business Level
Strategy

Competitive
Dynamics

Corporate
Level Strategy

Corporate
Governance

Structure &
Control

Acquisition &
Restructure

Internation.
Strategy

Corporative
Strategies

Strategic
Leadership

Entrepre. &
Innovation

Strategic Competitiveness
Above Average Returns

Feedback


Chapter 1: Theoretical foundation (3)
1. 3. Models & matrices used
STAGE 1: THE INPUT STAGE
External
Factor
Evaluation
(EFE) Matrix

Competitive
Profile Matrix
(CPM)

Internal
Factor
Evaluation
(IFE) Matrix

STAGE 2: THE MATCHING STAGE
Strengths - Weaknesses - Opportunities - Threats
(SWOT) Matrix

STAGE 3: THE DECISION STAGE
Quantitative Strategic Planning Matrix (QSPM)


Chapter 2: Business situation of Viettel
2. 1. Introduction of Viettel
History:


The first name was Information Equipment Electronics Corporation in
1989, then Military Telecommunication Electronics Company after 5
years & Viettel Telecom Group since Dec. 2009.



Headquarter: No1 Giang Van Minh, Badinh, Hanoi



Membership units: 14 and 64 branches



Own capital: VND 50,000 Billion

Business areas:
Supply
of
telecommunications
services;
Telecommunications,
Transmission; Post Office; Terminal distribution; Finance investment;
Media; Real Estate Investment; Export & Import and Foreign Investment.


Chapter 2: Business situation (cont.)
2. 2. Business performance of Viettel (2005-2010)

Revenues increased by 200% year-over-year since 2005-2009, ROE:
48.3%, Global expansion (Indochina, Africa, Latin…)

Largest mobile network: 42,200 Stations, 120,000km fiber optic net,
17/17 provinces Laos cover 3G, etc.

Revenue & profit of Viettel (20052010)


Chapter 2: Business situation (cont.)
2. 3. Business environment analysis
2.3.1. External environment


Macro environment (PEST)
Economics (E): GDP increment, Inflation, VND rate, etc.
Year

2005

2006

2007

2008

2009

2010

GDP (USD)

642

730

843

1052

1064

1168

Exports (USD billion)

32

39

48

62

57

71

Import (USD billion)

36

44

62

80

69

84

Remittances (USD billion)

3.8

4.7

5.5

7.2

6.2

8.1

Total retail sales and consumer
services turnover (VND1000 billion)

480

596

746

1009

1197

1561

Consumer Price Index CPI (%
change over the previous year)

8.4

6.6

12.6

19.9

6.5

11.7


Chapter 2: Business situation (cont.)
2. 3. Business environment analysis
2.3.1. External environment

Macro environment (PEST)
Politics & Legal (P): Stable environment, Administration procedures &
Business law were amended and considerably improved.
-

Science & Technology (T): Acquiring the advanced technologies (GSM,
3G and 4G testing in progress), Terminal production technology in
Vietnam is limited.

-

Social & Culture (S): Rapidly change in the trend the new lifestyle,

Demand of using telecommunication increment, Awareness of
Vietnamese improved.

-

Demography: Population of 87 million, Over 50% under 27 years


Chapter 2: Business situation (cont.)
2. 3. Business environment analysis
2.3.1. External environment


Industry environment (Michael Porter - 5 Forces)

-

Rivalry: Violent competition, Viettel (36.4%), Vinaphone (28%), Mobifone
(28.8%); Many promotion programs from the rivalry.

-

Threat of New Entrants: Indochina Telecom with MVNO, Winmax 4G and
other telecommunication services

-

Power of Buyers: Many providers, Loyal & Prepaid customers

-

Power of Suppliers: Financial & Terminal providers

-

Substitute Products: Voice & Video conferencing services.



Evaluation of external environment


Chapter 2: Business situation (cont.)
Viettel’s external factor evaluation matrix (EFE)
Factors of external environment

Weight

Impact

Mark

GDP increases continuously

0.20

4

0.80

Political stability, law is gradually improved

0.10

3

0.30

Government’s intervention (restriction for entry)

0.04

2

0.08

Technology policy

0.10

3

0.30

Large population, big market

0.20

4

0.80

Competitive environment

0.05

3

0.15

Slowed market development speed

0.10

3

0.30

Pressure from customers

0.15

2

0.30

Challenges from new entrants, international integration

0.04

1

0.04

Substitutes

0.02

1

0.02

Opportunities

Challenges

Total

1

3.09


Chapter 2: Business situation (cont.)
The CMP matrix compares with several companies
Viettel
Successful factors

Weight

Vinaphone

Mobifone

Rank

Mark

Rank

Mark

Rank

Mark

Quality of products and
services

0.20

4

0.80

3

0.60

4

0.80

Advertisement

0.15

2

0.30

3

0.60

2

0.40

Competitive prices

0.15

4

0.60

3

0.45

2

0.30

Financial position

0.10

2

0.20

2

0.20

2

0.20

Customer loyalty

0.10

3

0.30

3

0.30

4

0.40

Market share

0.15

4

0.60

3

0.45

3

0.45

Diversification of
products

0.10

3

0.30

3

0.30

3

0.30

Globalization

0.05

2

0.10

1

0.05

2

0.10

Total

1.00

3.20

2.95

2.95


Chapter 2: Business situation (cont.)
2.3.2. Internal environment

Resources: Tangible (Finance, Organization, Facility, Technology) and
Intangible (Manpower, Ability of innovation & creativity, Reputation)
No

Target name

1

Revenue (VND billion)

2

2005

2006

2007

2008

2009

2010

3,200

7,400

16,000

33,000

60,000

91,000

Profit (VND billion)

390

1,400

4,000

8,400

10,000

15,500

3

State budget payment
(VND billion)

300

800

2,000

4,500

5,200

7,600

5

Value of investment
(VND billion)

1,300

2,000

4,800

10,000

16,550

11,450

6

Average labor in the list
(person)

4,175

6,200

8,400

12,000

18,000

24,000

7

Average income
(VND million)

2.5

3.8

6.5

9.87

11.5

13

8

Subscribers of services
(million subscribers)

1.0

2.7

5.5

29

44

51.5


Chapter 2: Business situation (cont.)
Number of mobilephone subscribers (Left table) and marker-share of
mobilephone providers in 12 Dec. of Vietnam (Right figure)

No

Suppliers

Subscribers

1

Viettel

40,967,382

2

Vinaphone

32,026,915

3

Mobifone

32,476,589

4

Beeline

5

Vietnam Mobile

3,543,028

6

S-Fone

1,860,793

7

EVN Telecom

1,629,585

187,176


Chapter 2: Business situation (cont.)
2.3.2. Internal environment


Resources



-

Strengths:

Widest coverage
Largest market-share
Attractive network package,
diversification services
Capital, technicians…
Weaknesses:
Management & operation
Professional degree
Loyal customers
Labor productivity…

Staff of Viettel 2005-2010


Evaluation of
internal environment:


Chapter 2: Business situation (cont.)
Internal factor evaluation matrix of Viettel (IFE)
Internal environment factors

Weight

Impact

Mark

Network and coverage, the ability to meet

0.15

4

0.60

Market share

0.15

3

0.45

Finance

0.10

3

0.30

Technology

0.05

2

0.10

Prestige, brand

0.05

3

0.15

Pricing, products and services

0.10

4

0.40

Structure of management organization

0.15

3

0.45

Quality of service

0.10

3

0.30

Loyal customer

0.05

1

0.05

Human Resources

0.10

2

0.20

Strengths

Weaknesses

Total

1.00

3.00


Chapter 3: Strategy selection & solutions

3. 1. Vision & Mission
3.1.1. Vision

Leading telecommunication company in Vietnam & in the Indochina area

Providing the best products and services for customers
3.1.2. Mission

Closed collaboration between economy & defense

Investment in infrastructure

Customer-oriented business

Rapid development, continuous reforms to stabilize

Talking human as core factor
3.1.3. Core values

Practice is the criterion for testing truth;

Maturing through challenges & failures;

Quick adaptation is competitive strength;

Innovation is life; Systematic thinking; East West combination; Tradition &
method of soldiers; And Viettel is the public house.


Chapter 3: Selection & solusions (cont.)

3. 2. Strategic identification & selection
STRENGTHS

WEAKNESSES

S1-Network & coverage area, its abilities

W1-Management & organization

S2-Largest market-share

W2-Quality of services

S3-Strong finance

W3-Loyal customers

S4-Advanced technology

W4-Working staff

S5-Reputation, brand
S6-Pricing policy, products and services
OPPORTUNITIES

THREATS

O1-GDP continuously grows.

T1-Violent competition environment

O2-Stable politics, law being improved

T2-Slowdown growth market

O3-Government’s intervention

T3-Pressure from customers

O4-Technology policy

T4-New entrants, Inter. integration;

O5-Numerous population, large market

T5-Substitutes products


Chapter 3: Selection & solutions (cont.)
3. 2. Strategic identification & selection
SO strategies:
Ensuring quality & network expansion;
Policies on price, product, brand…to gain
market-share from rivals;
Development of new products and services;
Promotion for subscribers outside the city;

WO Strategies:
Reform of the managerial structure,
organizational amendments;

Improvement of service quality through
training
Appropriate in use of labor; Policies to
attract & keep talent people;
Specific policies on postpaid customers,
prepaid subscribers changing to postpaid;

ST strategies:
Maintenance of market-share, Improvement of
marketing;
Development of new entertainment services on
mobilephone, PC & Ipad…
Appropriate price to keep & attract customers;
Development of new market which is less
competitive, less substitute products…based on
the advantages

WT strategies:
Enhancing supervision, management and
administration reform;
Strengthening training to improve service
quality to limit the loss of customer;
Cutting costs, appropriate prices
Focusing on the loyal customers and
development of new ones from the existing;


Chapter 3: Selection & solutions (cont.)
3. 2. Strategic identification & selection


Strategy of market penetration & development

Strategy of products development

Strategy of operations diversification

Selecting strategy for Viettel in the period of 2011-2015
The QSPM Matrix for Viettel Group
Strategies
Important factors

Weight

Market
Penetration &
Develop.

Product
Develop.

Operation
Diversifi.

Continuously increased GDP

0.20

4

0.80

3

0.60

4

0.80

Stable politics, law being improved

0.10

3

0.30

3

0.30

3

0.30

Intervention of the government
(restriction of entry)

0.04

4

0.16

3

0.12

3

0.12

Technology policy

0.10

3

0.30

4

0.40

3

0.30

Large population, market

0.20

4

0.80

3

0.60

3

0.60


Chapter 3: Selection & solutions (cont.)
The QSPM Matrix for Viettel Group (cont.)
Competitive environment

0.05

3

0.15

2

0.10

4

0.20

Slowed market development

0.10

3

0.30

2

0.20

2

0.20

Pressure from customers

0.15

4

0.60

2

0.30

3

0.45

Challenges from new entrants, int.

0.04

1

0.04

3

0.12

4

0.16

Substitutes

0.02

2

0.04

3

0.06

4

0.08

Network coverage, ability to meet

0.15

4

0.60

2

0.30

2

0.30

Market share

0.15

3

0.45

2

0.30

1

0.15

Finance

0.10

3

0.30

4

0.40

4

0.40

Technology

0.05

3

0.15

4

0.20

2

0.10

Prestige, brand

0.05

4

0.20

3

0.15

2

0.10

Pricing, products and services

0.10

4

0.40

2

0.20

3

0.30

Management organization structure

0.15

2

0.30

3

0.45

2

0.30

Quality of service

0.10

3

0.30

2

0.20

2

0.20

Loyal customer

0.05

1

0.05

1

0.05

1

0.05

Human Resources

0.10

2

0.20

4

0.40

3

0.30

Total

2.00

6.44

5.45

5.41


Chapter 3: Selection & solutions (cont.)
3. 3. Implementation solutions



Target market and basic policies for the market



Continuing maintenance of expansion investment and improvement of
coverage quality, customer service capabilities



Continuing development of price policies for product
competition and flexibility for each customer segment



Management of human resources for changing the structure and
improving the quality of service from the human factor



Financial management solutions



Marketing solutions

package,

Chapter 3: Selection & solutions (cont.)
3. 4. Implementation process









Construction of annual goals
Construction of policy system and support plan
Development of action plans, budgets and implementation processes
Allocation of human resources, finance, facilities
Selection of organization structure consistent with the strategy
Strategic commitment and implementation
Strategic inspection control,
implementation process

evaluation

and

adjustment

in

the

Conclusions


Development of business strategy for a service business production unit
is extremely important, very complicated and not easy to perform



Using knowledge from MBA courses & our practices to formulate
strategic planning for Viettel for the years 2011-2015, we chosen the best
business strategy for the Group in Vietnam.



It brings the Viettel leaders a overview of works, contributes to
improvement of competitiveness and determines the optimal solutions for
stabilization and development of the Group.



However, because of limits on theoretical knowledge as well practice of
the group’s members ourselves, this study cannot be avoided
shortcomings/mistakes



We are very happy & looking forward to getting the comments, feedbacks
from the teachers & classmates .