Building the development strategy for the period 2007 to 2010 for Vietnam schréder Co., ltd

UNIVERSITEÙ OUVERTE DE HCMV UNIVERSITEÙ LIBRE DE BRUXELLES
ECOLE DE COMMERCE SOLVAY
MMVCFB
PROGRAMME DE MAITRISE EN MANAGEMENT VIETNAM-COMMUNAUTE
FRANCAISE DE BELGIQUE
TRAN VINH QUANG
BUILDING THE DEVELOPMENT STRATEGY FOR
THE PERIOD 2007-2010
FOR VIETNAM SCHREÙDER Co., Ltd.
MASTER DEGREE THESIS
In MANAGEMENT
MMVCFB6
HO CHI MINH CITY
YEAR 2007
UNIVERSITEÙ OUVERTE DE HCMV UNIVERSITEÙ LIBRE DE BRUXELLES
ECOLE DE COMMERCE SOLVAY
MMVCFB
PROGRAMME DE MAITRISE EN MANAGEMENT VIETNAM-COMMUNAUTE
FRANCAISE DE BELGIQUE
TRAN VINH QUANG
BUILDING THE DEVELOPMENT STRATEGY FOR
THE PERIOD 2007-2010
for VIETNAM SCHREÙDER Co., Ltd.
MASTER DEGREE THESIS
in MANAGEMENT
MMVCFB6
GUIDING PROFESSOR:
Prof. Dr. HO DUC HUNG
HO CHI MINH CITY
YEAR 2007
ABSTRACT

The lighting industry is in a growth stage in Vietnam. The market is attributed
as small but promising of high demand in the future. The situation of
competition among lighting companies, the growth trend and the failure or the
success of the companies requires domestic lighting companies to have
suitable development strategy.
Vietnam Schreùder company is one of the most successful companies in terms
of high market share. It has assembled lighting products of various kinds in
which public and industrial lighting is the core product of the company. Those
products account for 45 % of the market share. However, in the competitive
environment, Vietnam Schreùder company has faced various difficulties
especially the lack of the vision in the long term. The objective of the study
will therefore design a development strategy for the company in the long term.
Based on the examination and analysis of the external and internal
environment, the study will determine strengths, weaknesses, opportunities
and threats (SWOT). Derived from the SWOT and based on the general
process of strategy formulation, the study will develop the most appropriate
development strategy for the company. Finally some recommendations are
suggested for the company to be able to implement the proposed strategy.
COMMENTS FROM GUIDANCE COUNSELOR
TOPIC: BUILDING THE DEVELOPMENT STRATEGIES FOR THE
PERIOD 2007-2010 FOR VIETNAM SCHREÙDER
PERFORMED BY: TRAN VINH QUANG
GUIDED BY: Prof. , Dr. HO DUC HUNG
    
1. The topic that the author selects for his MBA thesis obviously has both
meanings of current events and values of theoretical research.
2. The structure of the thesis is logical and compatible with the topic title
already specified. Meanwhile this also targets at answering the three majors
objectives that mentioned in the Chapter 1 (page 02).
So based on these objectives, I think the thesis has provided the main

fundamental solutions for these posed objectives.
3. The literature review of the Chapter 2 provides a theoretical framework of
the thesis, especially to point out the process of the strategic management
and standard tools for strategies formulations and selections.
This theoretical background is rather sufficiently for the research of the
thesis.
4. The Chapter 3 and 4 provide and overview of the external and internal
environment analysis. The analysis is rather of high value. But it will be
more convincing if the author uses the quantitative method to analyse
SWOT model.
5. The writer’s efforts have been revealed distinctly in the strategy evaluation
and solution. So I highly appreciate his attempts.
6. I am in agreement with the author’s conclusion and recommendations
The thesis, on the whole, is eligible for the MBA degree. As the guidance
counselor, I evaluate the quality of this thesis at the level: Great
Distinction with mark of 17/20
Ho Chi Minh city, 25 February 2007
Prof., Dr. Ho Duc Hung
Guidance Counselor
iii
Development strategy for Vietnam Schreùder for the period 2007-2010 Table of Contents
TABLE OF CONTENTS
Chapter Title Page
Acknowledgement i
Abstract ii
Table of Contents iii
List of Figures vi
List of Tables viii
List of Abbreviations x
1. INTRODUCTION

1.1. Rationale of the Research 01
1.2. Statement of the Problem 02
1.3. Objectives of the Research 02
1.4. Research Methodology 02
1.5. Scope and Limitations of the Research 04
1.6. Structure of the Research 04
2. LITERATURE REVIEW
2.1. Strategy and strategic management perspectives 06
2.1.1. Definition of strategy 06
2.1.2. Definition of strategic management 07
2.2. Process of the strategic management and standard tools for
strategies formulation and selections
08
2.2.1. Visions and Missions 11
2.2.2. External Analysis and Michael Porter’s five forces model 11
2.2.3. Internal Analysis and SWOTanalysis 17
2.2.4. Strategy formulation and selection 18
2.2.5. Strategy Implementation 19
2.2.6. Hierarchy of Strategy 20
2.3. Selecting development strategies 21
3. EXTERNAL ENVIRONMENT ANALYSIS
iv
Development strategy for Vietnam Schreùder for the period 2007-2010 Table of Contents
3.1. Macro-environment analysis 26
3.1.1. Political and legal factors 26
3.1.2. Economic factors 28
3.1.3. Social Factors 35
3.1.4. Technology factors 36
3.2. Current situation of Vietnam lighting industry 37
3.3. Orientations in development of the Vietnam lighting industry

to the year of 2010
45
3.4. Industry environment analysis 48
3.4.1. Potential competitors 49
3.4.2. Rivalry among established companies 50
3.4.3. Bargaining power of buyers 57
3.4.4. Bargaining power of suppliers 58
3.4.5. Substitute products 59
3.5. Summaries of opportunities and threats for Vietnam Schreùder
60
4. INTERNAL ENVIRONMENT ANALYSIS
4.1. Company Profile 63
4.1.1. History of the Vietnam Schreùder Company 63
4.1.2. Organisation structure 65
4.1.3. Human Resources 67
4.2. Sales and Market Analysis 68
4.2.1. Sales performance 68
4.2.2. Market segmentation and targeted market 71
4.2.3. Products positioning 77
4.2.4. Pricing and Promotion 77
4.2.5. Distribution 79
4.2.6. Advantages and disadvantages & difficulties 79
4.3. Assembling capacity analysis 8
1
4.3.1. Assembling process, quality control and technology83
4.3.2. Advantages and disadvantages & difficulties 83
4.4. Profitability, financial performance and financial resources 84
v
Development strategy for Vietnam Schreùder for the period 2007-2010 Table of Contents
4.5. Management Information System 86

4.6 Summary of Strengths and Weakness for Vietnam Schreùder
86
5.
DEVELOPING STRATEGIES FOR VIETNAM SCHREÙDER
5.1. Company Visions and Missions
88
5.1.1. Visions
88
5.1.2. Missions
88
5.2. SWOT analysis
89
5.2.1. Summary of strategic situation for the company
89
5.2.2. SWOT strategies
92
5.3. Generating Development Strategies
94
5.3.1. Cost leadership strategy
94
5.3.2. Differentiation strategy
96
5.3.3. Focus strategy
97
5.4. Strategy evaluation and selection
98
5.4.1. Cost leadership strategy
98
5.4.2. Differentiation strategy
99

5.4.3. Focus strategy
100
5.5. Some specific solutions proposed for development strategy
for Vietnam Schreùder
100
6.
CONCLUSION AND RECOMMENDATIONS
6.1. Conclusions
106
6.2. Recommendations
108
6.2.1. What could be done further
110
6.2.2. Critical success factors 110
REFERENCES
xi
APPENDICES
xi
vi
Development strategy for Vietnam Schreùder for the period 2007-2010 List of Tables and Figures
LIST OF FIGURES
Figure Page
Figure 1.1 Research Methodology 03
Figure 2.1 The Determinants of Company Performance 06
Figure 2.2 The Determinants of Process of Strategic Management 08
Figure 2.3 Strategic management process 09
Figure 2.4 The Main Components of the Strategic Planning Process 10
Figure 2.5 Components of External Environment 11
Figure 2.6 Requirements for Competitive Success 12
Figure 2.7 SWOT Matrix 19

Figure 2.8 Hierarchy of Strategy 21
Figure 2.9 Development strategies 23
Figure 3.1 GDP during the period of 1995-2006
(f)
29
Figure 3.2 GDP growth rate in the period of 1995-2006
(f)
29
Figure 3.3 Vietnam: Headline Inflation 1999-2006 32
Figure 3.4 Emerging Asia: Heading Inflation 2003-2006 32
Figure 3.5 Managerial structure of lighting system in Vietnam 39
Figure 3.6 The mapping of competitors 54
Figure 3.7 The nationwide market share of lighting products 57
Figure 3.8 The Five forces effected the lighting industry 60
Figure 4.1 Vietnam Schreùder organizational structure 65
Figure 4.2 Sales over years from Year 2000-Chart 70
vii
Development strategy for Vietnam Schreùder for the period 2007-2010 List of Tables and Figures
Figure 4.3 Sales growth rate from Year 2000-Chart 70
Figure 4.4 Markets map for Vietnam Schreùder 75
Figure 4.5 Assembling capacity from 2003-2006 82
Figure 4.6 Productivity factors from 2003-2006 82
Figure 4.7 Resources analysis from 2000-2006 86
     
viii
Development strategy for Vietnam Schreùder for the period 2007-2010 List of Tables and Figures
LIST OF TABLES
Table Page
Table 2.1 Generic strategies 24
Table 2.2 Product / Market / Distinctive competence - Choice and

generic competitive strategy
24
Table 3.1 GDP structure in the period of 1995-2005 31
Table 3.2 List of lighting companies 49
Table 3.3 Potential competitors Assessment 50
Table 3.4 Rivalry among established companies Assessment 53
Table 3.5 Summary of strength and weakness of lighting companies 54
Table 3.6 Products categories of lighting companies in Vietnam 56
Table 3.7 The bargaining power of buyers Assessment 58
Table 3.8 Suppliers for lighting manufacturers in Vietnam 59
Table 3.9 The bargaining power of suppliers Assessment 59
Table 4.1 Schreùder Group’s Lighting Areas (consolidated data) 64
Table 4.2 Sales over years from Year 2000 69
Table 4.3 Sales structure by functionality from Year 2000 69
Table 4.4 Sales growth rate (year on year) from Year 2000 69
Table 4.5 Quantity of fittings sold by regions from 2000-2006 76
Table 4.6 Product type average pricing 77
Table 4.7 Assembling capacity 81
Table 4.8 Combined profit and loss from 2000-2006 84
Table 4.9 Performance analysis 85
ix
Development strategy for Vietnam Schreùder for the period 2007-2010 List of Tables and Figures
Table 4.10 Combined balance sheets 85
Table 5.1 SWOT matrix for Vietnam Schreùder 92
Table 5.2 Summaries of strategy valuation 100
     
x
Development strategy for Vietnam Schreùder for the period 2007-2010 List of Tables and Figures
LIST OF ABBREVIATIONS
5S Sort, Straighten, Shine, Systemise and Sustain

ASEAN Association of Southeast Asian Nations
BCC Business Cooperation Contract
CPI Consumption Price Index
CRM Customers Relation Management
EC&EE Energy Conservation and Energy Efficiency
ERP Enterprise Resources Planning
FDI Foreign Direct Investment
GDP Gross Domestic Products
IMF International Monetary Fund
ISO International Standards Organisation
MIS Management Information System
MIT Massachusetts Institute of Technology
PR Public Relations
RD&A Research, Development and Applications
ROE Return on Equity
SA Socieùteù Anonyme ( Corporation)
SOE State Owned Enterprise
SWOT Strengths, Weaknesses, Opportunities and Threats
UK United Kingdom
ULB Universiteù Libre de Bruxelles
US United States of America
USD United States Dollar
VND Vietnamese Dong
WB World Bank
xi
Development strategy for Vietnam Schreùder for the period 2007-2010 List of Tables and Figures
WTO World Trade Organisation
     
Development strategy for Vietnam Schreùder for the period 2007-2010 Chapter 1-Introduction
CHAPTER 1

INTRODUCTION
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Development strategy for Vietnam Schreùder for the period 2007-2010 Chapter 1-Introduction
CHAPTER 1
INTRODUCTION
1.1. Rationale of the study.
One of the highlighted trends that characterize today’s business environment is
fiercer and fiercer competition. This brings business organizations a wide array of
opportunities and threats that require the design and implementation of strategy or
strategic planning in doing business.
In Vietnam, on the course of rapid developing for the last several years, the
transforming of economy has created a lot opportunities for lighting industry to
develop. Last decade was remarked by the booming of infrastructure
development, one of the most critical factors for the development of lighting
industry in Vietnam.
The upcoming unavoidable fact is the opening wider of Vietnam’s economy as
Vietnam has integrated more and more to the world economy. This fact has been
creating both opportunities and threats for Vietnam lighting companies.
Vietnam Schreùder is a typical medium FDI lighting development company. It has
a full potential to be a main player in the market, being able to compete with
domestic giants and foreign companies. The fast growth of lighting industry, the
desire to be leading company and the fact of tough competition lead to the need
to establish a development strategy. In fact, there is still a gap in strategy research
for lighting companies like Vietnam Schreùder. Hence, this research could
effectively dedicate to how to develop a strategy for a particular lighting
company – Vietnam Schreùder.
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Development strategy for Vietnam Schreùder for the period 2007-2010 Chapter 1-Introduction
1.2. Problem statement
Based on the examination and analysis the external and internal environment, the

study will formulate the development strategy for the Vietnam Schreùder
Company in the long term.
1.3. Objectives of research
The study is an attempt to establish the development strategy for the Vietnam
Schreùder Company. The following are the specific objectives of the study:
• To review literature dealing with the strategic management process,
especially the process of strategy formulation.
• To identify strengths and weaknesses as well as opportunities and threats that
the Vietnam Schreùder Company has been faced with.
• To assess the current situation of the company to develop its competitive
profile.
• To formulate the development strategy for the Vietnam Schreder Company in
the long term.
1.4. Research Methodology
The study begins with the literature review which concerns the strategic
management process, particularly the process of strategy formulation. It refers to
the concepts and principles of the Porter Model to analyze the competitive
environment of the industry. Data for the study are collected from 2 main sources:
• Primary data: Interviews with by persons of Vietnam Schreùder Company
as well as other lighting companies.
• Secondary data: Annual reports and other relevant data about the Vietnam
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Development strategy for Vietnam Schreùder for the period 2007-2010 Chapter 1-Introduction
Schreùder Company. Relevant data about the lighting industry and the
Vietnam economy will be collected from Ministry of Industry, the National
Statistics Office, Ho Chi Minh City Statistics Office, Ho Chi Minh
Department of Industry and Commerce, from newspapers, magazines and
from Internet and media as well.
The framework of the study can be illustrated by Figure 1.1.
Figure 1.1 Research Methodology

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Development strategy for Vietnam Schreùder for the period 2007-2010 Chapter 1-Introduction
1.5. Scope and limitations of the study
The study is about the Vietnam Schreùder Company. It aims at the formulation of
the development strategy for the company in the long term.
The research study is undertaken focused in one case study regarding strategy
respective; study about other aspects is not done in a deep manner.
The study is focused on outdoor lighting companies. Other lighting industry such
as indoor lighting is not within the scope of the study.
Limitations
By doing so, the research has some limitations due to following reasons: (i)
Relevant data on several market segments is inconsistent and sometimes, not
available for public and research documentation; (ii) Data on the market share of
the Company and other competitors in various market segments are not fully
available. Primary data is collected in limited number, though try to widespread
among the different economic sectors but still not sufficient. That could cause the
bias for the analysis and results to some extent.
1.6. Organization of the study
The study report is organized as follows:
Chapter 1 presents an introduction including the rationale of the study, and
statement, the objectives, the scope and limitations as well as the methodology
and framework of the study.
Chapter 2 summarizes the literature review and contains the fundamental ideas
on strategy, strategic management, and strategy formulation process as well as
the Porter Model for analyzing industry.
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Development strategy for Vietnam Schreùder for the period 2007-2010 Chapter 1-Introduction
Chapter 3 provides and analysis of external factors to identify the company's
strategic position as well as strategic orientations and investment opportunities for
the Vietnam plastic industry in the coming years. Based on the Porter model for

examining the plastic industry environment, the opportunities and threats for the
Vietnam Schreùder company is found out.
Chapter 4 includes the current analysis of the Vietnam Schreùder Company in
terms of organizational structure, production, sales, marketing and finance. The
goal is to identify strengths and weaknesses of the company to depict its current
competitive situation.
Chapter 5 presents the design, evaluation and selection of the development
strategy for the Vietnam Schreùder company.
Finally
Chapter 6 includes recommendations on the implementation of the
proposed strategy.
Development strategy for Vietnam Schreder for the period 2007-2010 Chapter 2-Literature review
CHAPTER 2
LITERATURE REVIEW
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Development strategy for Vietnam Schreder for the period 2007-2010 Chapter 2-Literature review
CHAPTER 2
2 LITERATURE REVIEW
2.1 Strategic management perspective
The central objective of strategic management is to assess why some
organizations succeed why others fail. Three broad factors determine a
company’s success: the industry where it is based, the country (or countries)
where it is located, and its own resources, capabilities and strategic. It is
illustrated in Figure 2.1:
Figure 2.1 - The Determinants of Company Performance
Source: Hill / Jones 1995
Before mentioning the strategic management process in greater detail, we need to
define: “What is strategy?”
2.1.1 Definitions of strategy
Reflecting the military roots of strategy, The American Heritage Dictionary

defines strategy as “the science and art of military command as applied to the
overall planning and conduct of large - scale combat operations” (Boston:
Houghton – Mifflin, 1992). The planning theme remains an important component
Company resources,
capabilities &
strategies
National contextIndustry context
Company
performance
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Development strategy for Vietnam Schreder for the period 2007-2010 Chapter 2-Literature review
of most management definitions of strategy. Chandler defined strategy as “the
determination of the basic long-term goals and objectives of an enterprise, and
the adoption of courses of action and the allocation of resources necessary for
carrying out these goals” (Cambridge, Mass.: MIT Press, 1962). The main idea in
Chandler’s definition is that strategy involves a rational planning process. The
organization is depicted as choosing its goals, identifying the courses of action (or
strategies) that best enable it to fulfill its goals, and allocating resources
accordingly.
Quinn of has defined strategy as “the pattern or plan that integrates an
organization’s major goals, policies, and action sequences into a cohesive whole.
(Hill / Jones 1995)
However, planning-based definitions of strategy have been strongly criticized. A
new approach based on Henry Mintzberg’s definition of strategy as “a pattern in a
stream of decisions or actions” the pattern being a product of whatever intended
planned strategies are actually realized and of any emergent (unplanned)
strategies (Management Science, 24-1978).
2.1.2 Definition of strategic management
Strategic management is the process of specifying an organization's objectives,
developing policies and plans to achieve these objectives, and allocating

resources so as to implement the plans. It is the highest level of managerial
activity, usually performed by the company's Chief Executive Officer (CEO) and
executive team. It provides overall direction to the whole enterprise. An
organization’s strategy must be appropriate for its resources, circumstances, and
objectives. The process involves matching the companies' strategic advantages to
the business environment the organization faces. One objective of an overall
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Development strategy for Vietnam Schreder for the period 2007-2010 Chapter 2-Literature review
corporate strategy is to put the organization into a position to carry out its mission
effectively and efficiently. A good corporate strategy should integrate an
organization’s goals, policies, and action sequences (tactics) into a cohesive
whole
2.2 Processes of the strategic management
Why do some organizations succeed while others fail? According to Hill and
Jones (1998, 3), the strategies in an organization pursues have a major impact
upon its performance relative to that of a competitor. A strategy is a specific
pattern of decisions and actions that managers take to achieve superior
organizational performance. A strategy allows an organization to be proactive
rather than reactive in shaping its own future.
Figure 2.2 - The Determinants of Process of Strategic Management
In order to formulate a set of strategies for the organization, it is firstly necessary
to have an overview of the strategic management process. Many authors have
Company’s Strategic Situation
Craft
the
strategy

External Factors

Internal Factors

Social,
political,
regulatory
and
community
factors
Competitive
conditions
and industry
attractiveness
Company
opportunities
and threats to
company’s
well-being
Resource
strengths,
capabilities,
and
weaknesses
Influences of
key
executives
Shared values
and company
culture
Identify
and
evaluate
alternatives

Determine
relevance
of internal
and
external
factors
- Page 9-
Development strategy for Vietnam Schreder for the period 2007-2010 Chapter 2-Literature review
defined strategic management. However, there is no significant difference in
defining major components/steps of strategic management.
Wheelen and Hunger (2000, 8) defined “Strategic consists of four basic elements:
environmental scanning (both external and internal), strategy formulation,
strategy implementation,andevaluation and control”.
Hill and Jones (1998,5) broke the strategic management process into five steps:
Figure 2.3 - Strategic management process
Source: Hill / Jones 1998
• Development of the strategic corporate visions and mission;
• Analysis of the external competitive environment to identify opportunities and
threats;
• Analysis of internal operating environment to identify the organization’s
strengths and weaknesses;
Analysis of
internal
environment to
identify
strengths and
weakness
Analysis of
external
environment to

identify
opportunities
and threats
Develop a
Strategic
Vision
and
Mission
Strategy
Selection
Improve/
C
h
a
n
ge
Revise as
Needed
Revise as
Needed
Revise as
Needed
Recycle
as Needed
Strategy
Implemetation
( including
monitoring,
evaluating,
taking

corrective
actions)