Building business strategy period of 2011 - 2015 - Ben joint stock company

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CAPSTONE PROVECT REPORT
BUILDING BUSINESS STRATEGY
PERIOD OF 2011 - 2015 — BEN JOINT
STOCK COMPANY

Nguyen Thi Kim Anh

Phung Thi Thu Ha
Vu Danh

Hiep

Do Thi Hoa

GaMBA

07.09 - HANOI

2011

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CAPSTONE
BUILDING

PROJECT

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Craduanon

REPORT

BUSINESS STRATEGY

PERIOD OF 2011 - 2015 —- BEN JOINT STOCK

Subject:

Strategy Administration

Group: 13_ Class M0709
Fullname:

= Nguyen
Phung

Thi Kim Anh
Thi Thu Ha

Vu Danh Hiep
Do Thi Hoa

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1.1. General context, necessity and importance of theme research
1. 2. Research purposes and application capacity

1. 3. Research method
CHAPTER I: THEORETICAL BASIS
1. FUNDAMENTAL PROBLEMS OF STRATEGY
11.1

Phe concepts of strategy

1.1.2 Strategic Management

1.1.3 Benefits and the role of strategic management for the development of the

_ business.
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CONTENT AND STEPS IN BUILDING STRATEGY
| I-environmental analysis
1.1 Macro environment

10
10
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10
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10
10
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kconomic factors

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1.1.2. Factors of law, government and politics
!.1.3. Social factors

ĐÓ

/.1.4.

Natural factors

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Technological factors
Worldwide
2 Micro environment
2 .1 Competitor
3
2 Customers (Buyers)
Z 3 Suppliers:
az 4 Potential rivals:

2 .) Substitution product
12.2. Internal conditions of the Enterprise
2.1, Human resources
2.2. Research and Development (R&D)
2.3. Administration:
2.4. Production - Operation

2.5. Marketing
5
.6. Information system
5
.7. Corporate culture:

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5. Select strategy:
.6. Steps to establish strategy
7. Lools to establish and select strategy.
*.1. Tool supplying information to establish strategy
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. Analyze labor forces to determine essential capacities.

4. Sep up long-term objectives

oF

~. Tools to build optional strategy
7.3.
a

Tool to select strategy - Quantitative Strategic Planning

C HAPTER

Il: ANALYZING

ACTUAL

STATE

Matrix (OSPM)

OF ENTERPRISE

2.1. Overview of Enterprise
-2.2 Analysis of factors impacting on business environment of Ben joint

stock company
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. Macro environment.
_ Industry environment of BEEN

| 3.2.

Construction development

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46

AND

| 4.1. Solution to implement strategy
4.1.1. Solution to implement the strategy of market development.

lại 1.2. Solution to implement strategies on quality improvement
| differentiation
| 4.13.Solution on implementation of human resource strategy

and

| 4.1.4. Solution on implementation of organizational re-structure strategy

| 4.1.5. Solution on implementation of other function strategies
| 4.2. Conclusion
4.3. Recommendations
REFERENCES

Global Advanced

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strategy of the company

| 3.2.1. SWOT analysis matrix to suggest strategies
| 3.2.2. The proposed strategy
| 3.2.3. Strategic choices
| CHAPTER IV: SOLUTIONS, CONCLUSIONS
| RECOMMENDATIONS

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3. Management
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. Operation analysis of Ben company
|. Iluman Resources
2 Research and Development

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_ Evaluating the opportunities and threats of BEN

». Information system
7. [he company’s culture:
3.8. General evaluation of BEN’s internal conditions
CHAPTER
II: CONSTRUCTION
DEVELOPMENT
SUSTAINABLE CORPORATION
| 3. 1. Perceptions of strategic objectives and strategy
3.1.1. BEN strategic perspective
1.2. The goal of the BEN to 2015
.1.3. Prospects and market forecast
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ABBREVIATIONS

BEN

_ Ben company

LIEEE

_ External Factor Evaluation Matrix

TFL

| Internal Factors Evaluation Matrix

SWO]
| OsPM
CNT

| Matrix Strengths - Weaknesses - Opportunities - Threats
| Quantitative Strategic Planning Matrix
| Information Technology

~ ERP

| SYSTEM SOFTWARE CORPORATE GOVERNANCE

| GDP

_ Gross domestic product

WTO

|

|

World Trade Organization

LIST NUMBER

OF DATA TABLE

|Table 1: External Factor Evaluation Matrix (EFE)

32 |

| Tasle 2: Competitive Profile Matrix of BEN

34 |

Tasle 3°: Human Resources Structure basing on
structure of BEN
Table 4: Human resources Structure basing on Age:
Tabe 5: Qualification of the Human

|

Business

35 |
36 |

Resources

|

Tabe 6: Report of business activity results in 03 years
| Table 7:

|

Internal Factor Evaluation (IFE) Matrix of BEN

| Table 8: SWOT Matrix BEN Company

36 |

40

44 |

|

49 |

|

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| [aRle T0: Stratepic Analysis Group S-T

|

58

|

60.

Ta ble 12: Summary of strategic options

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| Table 9: Strategic Analysis Group $ -O
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PREAMBLE:
I. 1. General context, necessity and importance of research

Vietnam joined the WTO organization and is now attracting investment from big
technological companies such as Intel and Microsoft. In 2006. Intel Corporation invested |
billion USD to build the largest Chip production and testing plant in Asia and it went into
Operation in October 29, 2010.
In 2008.

IDG. reputable

International

Data Group of USA

million USD into Vietnam's IT market. and disbursed to
with the $ 100-million fund of Vietnam Venture Capital
now. capital of the IDG in Vietnam will reach the figure
grow fastest with the second growth rank in Asia - Pacific

decided to invest 500

the end of 2010, Therefore. along
Fund IDG operated from 2004 to
of $ 600 million. I'l services will
region. after India.

According to data announced by GFK Market Research Company (Germany). the
market size of information technology (IT), Electronics and Telecommunications of
Vietnam in 2008 was $ 3.9 billion and was expected to reach $ 4.9 billion in 2009,

In 2008. despite the world economic downturn, the information technology industry
(IT) of Vietnam achieved the growth of 20%. Since 2007. Vietnam entered Top 30 of the

most attractive nations in the world of software outsourcing. Vietnam now ranks 18th in
the world with the number of 21 million Internet users, 6th in Asia on internet development
spccd.
The Government, together with IT enterprises and training units set a target by the
year 2015: it is estimated that Vietnam will have 600 thousand professionals in TT and
increase to one million in 2020. The government also approved funding to support the
development of software industry and IT in Vietnam. The goal is that by 2020. Vietnam
will become a powerful nation in IT.
Vietnam has 75% of young and highly educated population and more importantly.
they always have a positive attitude and really look forward to application of information
technology to life. These are good conditions for further development of Internet. in
Vietnam

and also a big opportunity for companies

Vietnam.

trading in hardware

and software in

Computer is considered a powerful and useful tool in life of a modern society. The
development of used computer generations can also show that a part of growth ofa nation.
Year 2009 is the year that Vietnam Computer market witnessed a truly domination
of the notebook computer (laptop) compared to desktop computer (Desktop). Many experts
predicted this trend would continue in 2010.
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Mr.

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in the Vietnam

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market

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in 2009

Vietnam

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previously predicted expectations and forecast of Intel.
group with the highest growth rate. about 70% in 2009,
there are three reasons

crisis.

Vietnam's

sumulation

GDP

program

growth

ior ihis result.

was.

still

lest

In particular. the laptop is a product

birst. in 2009. despite the impact ot global

positive.

The

second

reason

of the Government

is the demand

has had a direct impact to the expenditure of
Vietnam people. such as. tax reduction program from 10% to 5% for computer products.
Another reason leading thriving of Vietnam Computer market in 2009 is thanks to
great demand for purchase of computers by pupils and students in the country. Computer
now almost become an indispensable learning tool of pupils and students.
In the condition of the growth and the average need of 20-25% annually for the
information technology sector, averagely and annually. dozens of large and small
companies are formed. BEN Computer Company was formed in 2001 with a very small

scale from a computer retail store with an area of 30 m2 and total staff
of about 50 people.
From that it developed to BEN joint stock Company with its head office area up to nearly
1000 m2 with total staff of up to 200 people.
In an open economy and perfect competition environment. although Company has
had a certain place and a certain market share for customers and partners, the board of
Directors of company see that Company should have a clear business strategy planned

through the qualified experts in business to build the sustainable development competition
of the company.
For this reason, in 2009, the Board of Directors of company assigned
Managers to study MBA program of Master of International Business Administration

(GaMBA) linked to organize by Griggs University (USA) and the Center of Technology
Training and Employment System of the Hanoi National University with very clear
objectives to acquire knowledge in school and build business strategy for the company in
five years from 2011 - 2015.

The field selected by the Group 13 as the topic for graduation test is to build
business strategies for Ben Joint Stock Company to trade Notebook, set of computer,
computer assembly with Ben brand name and distribute IT products as a member of
the group is Vice Sale Manager of the Company.
1.2. Research purposes and application capacity
According to research by IDC. the PC market in Vietnam
in the first half of 2010 due to falling demand. However. the
grow despite the inventory and fierce competition on the retail
decrease due to less demand of consumer. as well as budget cuts

education.

has faced many challenges
laptop market continues to
price. Demand on desktop
for government projects on

Il Products business segment in 2011 is predicted 20% growth by IDC.

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Based on the above predictions. Ben Joint Stock Company
Strategy orienting to 2015 with the following specific objectives:
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has also built a business

disUTbuton and retait to iuily retail

* To expand the scale by opening more shops of utility at new

esumated to open 03 Ben Store

residential area: it is

+ Market share of about 10 - 15% retail market share in the North: to rank No. 1 on
sales of information technology products in the North
* Average revenue growth of 20-25% per vear
* To expand products: mobile phone. LCD TV
° To coordinate with Intel manufacturers to produce computer with BEN
with the average number of 5.000 products per year

10 brand

* To coordinate with other computer Corporate such as Acer. Toshiba. HP to build
link stores such as Hp Store: Toshiba store. Acer Store to continue success of two Stores in
2009 and 2010 namely Dell Store and Lenovo Store
+ To build a complete ERP system administration
* Applicability of theme
The Company has prepared the infrastructure and investment for long-term strategy
by hiring more spaces in 2010
According to the overall growth trend of the industry
Orientation of leaders about the possibility of sustainable and long term development
of enterprise

1.3. Research method
To complete the requirements and meet the objectives of the research process. the
group conducted concurrently the following methods:
-

Method of investigation, field surveys in the enterprise
Analysis of the overall strategy based on planning tools according to BCG Matrix.
SWOT and the theory of competitive strategy by Michael E. Porter
Comparison of evidence and from which to make comments. reviews. effectively
and feasible recommendations

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* Marketing Administration
| Corporate Finance
° Tluman Resource Administration

1.1.

* Development of leadership skills
Define the business strategy of the company: Different and low cost
FUNDAMENTAL PROBLEMS OF STRATEGY

1.1.1.

The concepts of strategy
There are many

different definitions of strategy: cach definition is more or less
varied depending on the different views of each author.
In 1962, Chandler defined strategy as “The determination of the basic long-term
goals and objectives of an enterprise and the adoption of the courses of action and the
allocation of resources necessary for carrying out these goals.”’'
In 1980, Quinn defined a more general strategy as "a strategy is the pattern or plan
that integrates an organization's major goals, policies, and action sequences into a
cohesive whole’.
Then,

Johnson

and

Scholes

have

redefined

the

strategy

in

the

changeable

environment as: "Strategy is the direction and scope of an organization over the long-term:
which achieves advantage for the organization through its configuration of resources
within a challenging environment, to meet the needs of markets and to fulfill stakeholder

expectations”

According to Mintzberg. definition of strategy can be summarized with the 5 Ps
Plan: Sequence of actions planned in a consistent manner.
Pattern: consistency in behavior. whether or not intended
Position: "match" between organization and environment
Perspective: A way of perceiving the world.
Ploy: a specific manoeuvre intended to outwit an opponent or competitor
In essence, the definition of strategy depends on standpoint. however. in the most
common, the strategic levels include: Company-level strategy. Business Unit level strategy
and functional strategy.

(handler,
(1962) Statrregy and Structure. Cambrige Massacchusettes. MIT Press.
Quin, AB O1ISOStatregies for change, Logical Incrementalism. Homewood.
Johnson. G. Scholes, K (19990 Exploring Corporate Statregy, 3 Kd. Prentice Hall.

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Fred David:

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"Strategy is the means to achieve long-term goals."

William J. Glueck: “Strategy is a unified, comprehensive and integrated plan
designed to assure that the basic objectives of the enterprise are achieved”.
Business strategy of an enterprise is a general action program towards the
implementation of the optimal objective of the enterprise. However. the strategy is not
aimed to specifically outline how to achieve those goals but only to frame to guide thinking

and action.
The important feature of all business strategies when are formed and paid attention
to is the "competitive advantage" because it is used to distinguish them from other business
plans. In fact. any competitor develops their own strategies because strategy is the only
purpose and ensures for enterprise to search and gain their sustainable advantages before

their competitors.

Through access to the above definition, whether expressed. but we can generalize
the Strategy as
“4 complex series of actions to mobilize the resources possible of an organization to
achieve a certain goal"
1.1.2. Strategic Management

According to Garry D. Smith, "Strategic Management is defined as the process of

studying

the

current

environment

as

well as

in the future,

planning

objectives

of the

organization: propose, implement and supervise the implementation of decisions designed
to achieve the objectives in current environment as well as in the future”
According to Fred R.David, “Strategic Management can be defined as the art and
sclence of formulating, implementing and evaluating cross-functional decisions that enable
an organization to achieve its objective.

Strategic Management focuses on fusion of the management, financial and UCCOUNLING
marketing, manufacture, research and development of information systems and business
sectors to achieve success."
There are many
document

different concepts of strategic management.

"Strategy & business policies” of the doctor Neuven

but according to the

Thi Lien Diep. we can set

the following three approaches:
Environmental

approach:

"Strategic

Management

is a decisive process

aimed at

commecting the internal ability of the organization with the opportunities and threats of the

outside environment."

Characteristics

of this approach

environment. exploit opportunities and deal with risk.
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Management

performance

is a part

of a company."

of

[his

upprodch allows admiiistiators to decile precisely the objectives of the organization. which
is the foundation of management as well as to use efficiently the resources of the
organizauion.
‘Approach of action: “Strategic management is carried out considering the present
and future circumstances, create goals of the organization, make decisions and control
decisions, focus on implementing objectives in the current and future situations. "
Strategic Management is defined as the process of studying the current environment
as Well as in the future. planning objectives of the organization: propose. implement and
supervise the implementation of decisions designed to achieve the objectives in current

environment as well as in the future as well as to enhance the competitiveness and position

of the business.

1.1.3 Benefits and the role of strategic management for the development of the
business.
Strategic management process helps the business recognize its purpose and direction.
The knowing of desired results and objectives in the future allows leaders and employees to
understand what they need to do to achieve success.
Environmental conditions that organizations face is rapidly changing and often makes
surprises, Strategic Management helps administrators see clearly the future environment.

there they can better hold and take advantage
reduce risks.
Strategic

Management

enterprises

and

The

researches

helps

managers

of good opportunities. and can avoid or
use

effectively

the

existing

allocating

resources

of

them appropriately. It allows the company to associate the
decisions with the environmental conditions involved. In addition, strategic management
also brings harmony between needs of the organization. through which. inducing managers
at all levels and creates resonance to achieve the overall objectives of the Company.
actual

show

that

the

companies

applying

strategic

management

often
achieve better results than the former results and compared with results of the Companies
that do not apply strategic management.
baths
1.2.1.

CONTENT

AND STEPS IN BUILDING

STRATEGY

| Environmental analysis

To build business strategies. the study of environmental factors is important. it can
help businesses identify opportunities to hold and realize the risks and challenges for a
precaution.
I:nvironment is factors. forces: institutions existing effecting the operation and
performance of the business. Business environment includes the macro environment. the
micro-environment (sector) and conditions of the enterprise.
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The combination of strong points and weak points with the opportunities and risks
allows to form SWOT
Reseaien

evaluating

matrix and the strategies enable to select.

oi operation

trends

and

environment

events

beyond

of the Company

the control

ts focused

on identiiving and

of the Company.

external factors shows opportunities, challenges that the company

The evaluation

meets. so the manager

can plan out strategies. take advantages of opportunities and minimize risks.
analyze

the operating

environment

of the enterprise

including

of

micro

We turn to

environment

and

macro environment (Sector environment).
1.2.1.1.

Macro environment

L2]

TL — Economic factors

Referring to external factors. they not only orient and affect directly management
activities but also affect the micro environment of business. These factors are also the main
reason to create opportunities and threats to cach business in different sectors. Research on
macroeconomic factors plays an important role for management activities of an enterprise.
including the following factors: economic growth. inflation. exchange rates. interest rates.
Wages and income.
1.2.1.1.2.

Factors of law, government and politics

Factors

of law,

government

and

politics

include

systems

of perspectives

and

policies of the Government, the current legal system, political and diplomatic trends with
other countries, the political happenings in the country, region and world.
Political and legal factors can create opportunities or threats for enterprises.

To take

advantage of opportunities and minimize risk, the companies must capture the perspectives.
regulations, priority programs of the Government and establish a good relationship. even
perform the lobby when necessary. in order to create a favorable environment for business
activitics.
1.2.1.1.3.

Social factors

The social factors involve recreation interests, ethics. aesthetics. lifestyle.
occupation. customs, traditions, concerns and priorities of society. level of awareness and
education of society ... The social factors often change too slowly to recognize.
1.2.1.1.4.—

Natural factors

Natural conditions consist of geographic
and

sea:

minerals

conditions

in the earth,

are important

resources

location, climate, landscape,

of sea

input factors for many

natural conditions become

forest.
economic

water

and

sectors.

land. rivers

air ... The
In many

natural

cases. the

important factors to create competitive advantage of products

and services.
L.20.1.5.
This

Technological factors
is a dynamic

factor containing

many

opportunities

and

challenges

for the

businesses. the pressures and threats derived from the technological environment are that:
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threaten the traditional

increase competitive

products.

make

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advantages

of substitute

pressure and require the businesses: to

renew technology to merease Compeuliveness.
In addition of the above threats. technological environment also creates certain
Opportunities for some businesses. such as: new technology creates conditions to
manufacture

products of higher quality. cheaper price and competitiveness.

following businesses have many

advantages to make

Usually. the

use of this opportunity

rather than

existing enterprises in the sector.
12.11.6.

Worldwide

In the trend of globalization today, the participation in associations, in international
economic

organizations

enterprise.

They

need

such

as

to identify

WTO,

APTA...

orientation

1.2.1.2.

considerable

of economic

economy in development strategy of the enterprise.
undeveloped
integration.

has

influence

integration

with

on_

the

the

world

The businesses will stay backward and

if the growth of enterprises is not located in the trend of globalization and

Micro environment:

Macro environment

includes interior and external

factors for the Company.

deciding

features and competitive levels in the business production. There are five basic factors:
Competitor,

Supplier,

Customer,

replacement

product

and

potential

rivals.

Besides.

Distributor and Creditor are factors affecting business environment of the Company.
To give a successful strategy, the Company should carefully analyze cach factor.
Understanding on these factors helps the Company realize its strengths. weaknesses

related to opportunities and threats faced by the business services.
1.2.1.2.1.

Competitor:

It is important

to understand competitors

for a Company

because

of many

reasons.

Competitors go against, deciding features and competitive levels or trick for advantages in
the industry depends on competitors.
1.2.1.2.2.

Customers (Buyers)::

Customer is an integrated part of the Company: faithful customer is a big advantage of
the Company. Faithfulness of the customer is built by satisfaction of customers and desires
for better.
1.2.1.2.3.

Suppliers:

Companies

must

link with suppliers for different necessary

resources

for their own

business production such as materials, equipment, human resources. capital and so on.
Research for understanding suppliers. human resources for the enterprise can not ignore
during environment research,
1.2.1.2.4.
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Potential rivals joining business in the industry is also a@ profitable factor of the enterprise
Deeduse Wey caploil new production capaciiies dor market shares and necessary resources.
[herefore. on building strategy and protect the competitive status. the enterprise should
maintain legal barrier from outside.
1.2.1.2.5.

Substitution product:

Substitution

product

is result of technological- technical explosion. Pressure of
substitution product limits high price for Companies in the industry. If potential substitution
products are not paid attention to. the enterprise can be backward against small markets.
Thus. the enterprises should pay attention and take human resources for development or
Operate new technologies in their strategy for success.
1.2.2.

Internal conditions of the Enterprise

l:ach Company has strong and weak points in its business. No Company is strong or
Weak in all aspects. Internal strong and weak points together with external opportunities and
threats and clear tasks are basic points concerned when objectives and strategies of the
Company are established. Companies should analyze internal factors to clearly define their
strengths and weaknesses. Base on this, they give methods to reduce weaknesses. mobilize
strengths for maximum advantages. Key internal factors include functional areas as follows:
©

Human resources

)

1.2.2.1.

Research and Development
Administration

©

Production

©

Finance

©

Marketing.

©

Information System

Accounting

Human resources
Human

resources

play

an

important

role

for success

or loss of the Company.
Although the strategy is right without excellent persons for enthusiastic and active working.
that strategy does not bring any effect. Thus, the Company should prepare human resources
lo carry out the given strategy, including recruitment. training. rewards and punishment as
appropriate.
1.2.2.2.

Research and Development (R&D)
Research and development are to create new products prior to competitors. raise
quality of the product. control or improve production process to minimize costs. Research
amd development can help the Company keep the vanguard position or be backward against
rivals in the industry.
1..2.2.3.

Administration:
Administration

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objectives. give strategy. develop policies and form plans.
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* Organization: activities creating structure of relationships between rights and
responsibilities. Concrete works are: to design organization. specialize job. describe job.
detail job. expand the control. unif¥ the order. coordinate. arrange. design and analyze job.
* |.eadership: includes attempts to orientate activities of human beings. specified:
lead. contact working groups. change method of operation. mandate. raise work quality.
sausty job. satisfy demand and change organization.
* Control: management activities to ensure real result suitable to the given one. Key
activities: check quality. finance, sale. inventory, costs. analyze changes. reward and punish
and so on

1.2.2.4.

Production - Operation

Production and operations include all activities to transform inputs into goods or

services. Administration of production - operations requires five following requirements:
Firstly. the process: design the physical production system. Second. capacity: determines
the best output. Third. the inventory: management of raw materials level. work in process

and

finished

products.

Fourth, the labor force: the management of administrative staff.
skilled workers and unskilled workers. Fifth, quality: producing high quality products.
1.2.2.5.

Finance - Accounting

l'actors are concerned by administrators, weaknesses in this work often causes
difficulties for the implementation of objectives of the enterprise. Contents to be
considered: the ability of capital compared with the performance requirements of plans of

the enterprise: the ability to raise capital from outside: the situation of distribution and use
of funds: the control of costs. the revenue - expenditure and financial relations internally
and with other units.
1.2.2.6.

| Marketing

Marketing is described as the process of identifying. forecasting. setting and meeting
the needs. desires of consumers for products and services. According to Philips Kotler.
marketing activities include four basic tasks: First. analyze the ability of the market: second.

choose target market: thirdly, draft program marketing mix (product. price. distribution and
promotion): fourth, conduct marketing activities.
1.2.2.7.

Information system
Good

information system will receive raw data from the external environment

and

inside the enterprise. help us keep track of environmental changes. identify threats as well
as support the implementation and evaluate and control strategies. Besides. an efficient
information system will create other competitive advantages for the enterprise.
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1.2.2.8.

| Corporate culture:

Corporate culture plays an important role in strategic management in the company.
Corporate culture effectively creates differences in values. norms, rituals and festivals for
the development of companies and in guiding the behavior of workers.
Image 4 - Conditional diagram inside the Enterprise

1.2.3.

Analyze labor forces to determine essential capacities.
I:very
business
has its strengths,
weaknesses
and
unique
environmental
characteristics. Therefore a strategy can help this business succeed. but not be effective in
other enterprises, situations. Development places the enterprise in front of the choice of
business domains and markets. Companies can only focus on one business area. develop
under the direction of vertical integration. or diversify new business areas.
The objective of the analysis of business structure is to choose a set of appropriate
products (services) through the review of future prospects of each business area. To

determine the structure of business. managers need to find probable strategic alternatives.
from which to choose strategies from the set of strategies according to different approaches.
If the company diversifies businesses. it can choose a set of relevant business areas
possibly achieved by using one or more the analytical tools of business structure.
Businesses

can use the analytical tools of business structure or can define positions of
businesses in two criteria: highly or lowly tangible and intangible assets. There is also able
to identify businesses in three. four or more different parameters.
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Of revenue. Capital or market share. So the Gineframe

with a certain
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and strategies should be suitable together.
It should be noted that in an era of integration and globalization trends, identifving

long-term goals should not be too ambitious for a too long period. usually from 2 to 5 vears
IS Most appropriate.
1.2.5. Select strategy:
1.2.5.1.
Viewpoints and standards to select strategy:
The choice of strategy is based on following options:
e

First.

the

advantages

of the

Company.

through

analyzing

the

following aspects:
- The

strength

or relative

position

of the company

compared

to

competitors.

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industry.
- Analyze
e

the

value

chain

of customers,

the

Company

competitors.
Second, goals: Strategies selected for achieving goals
Third. resources, financial conditions.

and _ its

e
e = Fourth, qualifications, abilities of the Company: depending on the
quality and level of ability, different capacities of the company to
choose strategies
e

Fifth, the legal basis and the reaction of stakcholders:

alliance partners, customers.

suppliers.

e = Sixth, to identify investment opportunities.
Select strategy:

1.2.5.2.
The

strategy

is long-term mode of operation. Thus the basic characteristics are
rooted in the economic nature and technology of the industry should be particularly paid
attention, much different to short-term factors which temporarily affect competition and
short-term profit of the business. The choice of strategy depends on cultural aspects.

political factors and the role of the strategic management board which is most dominant in
the selection of strategy.
Through the process of environmental analysis. the strategic makers have subjective
Judgments based on objective information about politics. culture. morals and social
responsibility: they set out the strategy combination and analysis of feasible capabilities and
select process of particular action. Under organizational structure of enterprises. the extent
and coverage scope of the strategy can be divided into three levels:
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*Company-level strategy: Focus on solving problems:
How to allocate resources
Which areas snouid be developed
Which new areas should be maintained
Which areas should be involved in
Which areas should be removed
*Monophyletic business unit level strategy: focus on defining mode
business area of a multicompany or a SBU (strategic business unit)
Strategy tocuses on the problems: how to overcome the competitive
offensive? Based on low cost or product differentiation, main-point

of operation for each

or an enterprise. This
forces? Defensive or
concentration? This is

also the focus of competitive strategy.
According to Michael :. Porter /6/: "The purpose of the competitive strategy of a business
unit in the industry is to find a position in the industry, where companies could succumb to
the competitive forces in best way or they may impact them to his advantage”
* Functional strategy: Determine mode of actions of each functional component:
Marketing. research and development of product. production. personnel. finance.

information and so on to support, ensuring the implementation of strategy of the company.
competitive strategy of the unit. Support for the implementation of strategy of the SBU and

company

includes:

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Marketing Strategy

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Administrative Strategy

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R&D

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Production strategy (services) / Activities

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Strategy (technology strategy)

Financial strategy
Human resources strategy

The majority of small and medium-sized enterprises and even some large businesses
has no strategic business divisions, strategic business tasks is also considered and settled by
the company.
1.2.6.

Steps to establish strategy

Process to build strategy is carried out through following steps:
1.2.6.1.
Phase 1: Input
[his phase summarizes basic information entered necessary to form strategies. The
formation consists of analyzing the external and internal environment. The strategic
management techniques such as matrix evaluating external factors EEE. matrix valuating
clements inside the [FE competitive image matrix and so on often used during this period,
1.2.6.2.

Phase 2: Combination

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arrangement.
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SWOT

Matrix.

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internal and external elements

Matrix and action

Matrix (1). key

strategic

TA.

In the framework of the subject and with the characteristics of the enterprise. SWO|
should be used. because it suits to the actual situation as well as the data can be met. On the
other hand. it is a method commonly used. easy to implement. fairly completed and
somewhat less time-consuming.
1.2.6.3.

Phase 3: Decision

[his is the final stage to choose strategies for businesses to pursue. The strategy
chosen must be arranged in order of priority. To pick out the strategies. managers can use
quantified strategic planning matrix (QSPM). The decision to choose the strategy falls

under the jurisdiction of the best managers in each company.
In this thread. only preliminarily selecting appropriate strategies to suggest business to
pursue based on the analysis and evaluation of the business environment of the business
such as finance, human resources, marketing, competitor, and the law and so on. Criteria to

choose strategy:

* Ensure to achieve the objectives of the Company.
* The effectiveness of enforcement of strategies.

* Feasibility

(feasibility

on

finance.

staffing,

level

regulations and so on)
All

the

techniques

in strategy

formulation

processes

of technology.
require

government

a combination

of
intuition and analysis process. The use of these techniques allows the analysis and synthesis
of many factors that impact and evaluate them objectively. interpret successfully by the

method of system thinking.
1.2.7. Tools to establish and select strategy.
1.2.7.1.
Tool supplying information to establish strategy
1.2.7.1]. External Factor Evaluation Matrix (EFE)
IIe Matrix helps summarize and quantify the influence of environmental factors for
the Company.
According to Fred R. David. the EFE matrix is established through five steps:
Step 1: Make a list from 5 to 10 external factors which have a decisive role for the
success of the Company. including the opportunities and both the threats affecting the
Company and its business industry.
Step 2: Determine the importance from 0.0 (not important) to 1.0 (very important)
for cach element. This classification shows the corresponding importance of the elements
for success in the business of the Company. Appropriate level of classification can be
determined by comparing successful and unsuccessful companies in the industry. lotal
levels of importance must be equal tol.0.
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Step 3: Classify from | to 4 for cach clement to see the company's response to these
factors. These levels are based on the effectiveness of strategies in the Company. In which:
iy 2o0d, 3 Is above-average: 2 Is average. | Is Weak.
Step 4: Multiply cach of the importance of cach
Important points.
Step 5: Plus all important
points of the company.

points of each

factor to its kinds to get some

factor to determine the total important

Regardless of EFE matrix has how many opportunities and threats. total scores of
the highest important points that a company can have is 4.0. average is 2.5 and the lowest is
1.0. If the total important points is 4, indicating that the Company reacts very well to the
existing challenges and opportunities in its environment. But total important one is 1.
showing that strategies given by the Company does not take advantage of opportunities and
avoid the external challenges.
1.2.7.1.2..

Competitive image matrix

In the events that affect a company's strategy, the impact of competition is
considered the most important. Competitive image matrix identifies the major competitors
as well as their particular strengths and weaknesses. This matrix is an extension of the

external factor evaluation matrix (EFE) in the case of important levels, classification and
total important points have the same meaning.
How to build competitive image matrix is similar to how to build the external factor
evaluation.

Classification level shows the Company's strategies response to cach factor: 4 is
good, 3 is above average, 2 averages and | is poor.
1.2.7.1.3. Internal Factors Evaluation Matrix (IF)
(Il)

Matrix

summarizes

and

evaluates

the

strengths.

weaknesses

of

functional

business divisions and it provides the basis for determining and assessing the relationship
between these divisions. IFE matrix is established through five steps:
Step 1: List from 10 to 20 key internal elements. including strengths and
weaknesses.

Step 2: define important levels from 0.0 (not important) to 1.0 (very important) for
cach factor (based on industry). This classification shows the relative importance of factors
for the success of the company in the industry. Total important levels must be 1.0.
Step 3: Classification from | to 4 for cach factor (based on the Company). in which:

lis the biggest weakness: 2 is the smallest weaknesses: 3 is the smallest strengths: 4 is the
biggest strengths.
Step 4: Multiply cach of the importance of each
IMportant points of each element.

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