Building business strategy of An Phat Plastic and Green Environment Joint Stock Company - Period 2012-2016

GRIGGS UNIVERSITY
GLOBAL ADVANCED

MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE

TITLE

“BUILDING BUSINESS STRATEGY OF AN PHAT PLASTIC AND
GREEN ENVIRONMENT JOINT STOCK COMPANY - PERIOD 20122016”

Group 2
Members:

oe
2 £

1.

Khuc Dinh Dung
Nguyen The Vinh
Bui Quang Hai
Nguyen Hoang
Nguyen Xuan Truong

Ha Noi, 2012


19" December 2011

To whom it may concern

Subject:

Comments of An Phat Plastic and Green Environment Joint Stock
Company on the project of Group 2, GAMBA01.X0710 Class - Griggs
University

NN

1. The Research Team have closely followed up the current situation of the
organization structure and the business activities of An Phat Plastic and Green
Environment JSC to implement the project;

3.

The content of "Building business strategy of An Phat Plastic and Green
Environment Joint Stock Company - period 2012-2016" project mentions
the goals that An Phat JSC is trying to reach, and has high feasibility;
The content of the project is excellent.
+

For and on behalf of
An Phat Plastic and Green Environment JSC

Kiện

Nguyen Le Trung
General Director

COMMITMENT

We, the research team, would like to commit that this Capstone project is our own
research which

is accomplished thanks to various sources of documents and real

situation. The Capstone project is not copied from any other available documents.
We undertake any legal responsibilities for the contents contained within this report.
Hanoi, December 2011


ACKNOWLEDGEMENT

The Research Team would like to express our deep gratitude to: The lecturers of
the

MBA

knowledge;

training

program

Managers

of Griggs

University

and staff of the Centre

- who

provide

for Educational

and

Technology

share
and

Career Development - Hanoi National University (ETC) - who are enthusiastic and
indispensable helpers in the process of learning;
The Research Team would also like to thank the Managers and staff of An Phat
Plastic and Green Environment Joint Stock Company - who are main supporters in
the

process

opportunity,

of studying

about

provide

support

the

the

situation

of time

of the

so that

Company

members

and

create

the

of the

group

can

complete the project.
Finally, we would like to send the most sincere thanks to families, colleagues and
classmates - who are the solid basis of spirit for members of the group during the
participation of Griggs University MBA

program and the process of completing

the Capstone Project "Building business strategy of An Phat Plastic and Green
Environment Joint Stock Company - period 2012-2016"


TABLE OF CONTENTS

a

PREAMBLE
The reason for topic selection

mm
LF
4.

Purpose and scope of the study
Implementation method
Capstone Project Report’s structure

| 1.1

1.1.1
Ẫ x..

OVERVIEW OF BUILDING BUSINESS STRATEGY
Concept of strategy
Role and significance of strategy

|Chapter! | THEORY BASIS

12

Lol
1 2.2
| ik
Ì „2s22
12.3
1.3

13,1
13.1.1
13.1.2
1.3.1.3
Lou
1.3.2.1
Lo
1.3.3

PROCESS OF BUILDING STRATEGY ˆ _

The enterprise’s vision and mission determination

External environment analysis
Macro-environment analysis
Environmental analysis of industry
Internal environment analysis
STRATEGY
SELECTION
AND
ANALYSIS
TECHNIQUE
Analysis and Information collection phase
EFE matrix
IFE matrix
Competitive profile matrix
Combination phase
SWOT matrix
SPACE matrix
Strategy Decision and selection phase

Chapter II | ANALYSIS
OF
DEVELOPMENT
STRATEGY
FORMATION BASIC
OF
AN PHAT PLASTIC
AND
GREEN
ENVIRONMENT
JOINT
STOCK

COMPANY
2.1
OVERVIEW OF AN PHAT PLASTIC AND GREEN
ENVIRONMENT JOINT STOCK COMPANY
rạn
The Company’s formation and development history
Dee
Major information of the Company
243
The Company’s organizational structure
2.1.4
The company’s human resource structure
pm ee,
Business Operating result form 2008 to 2010
21,0
Mission and vision
zu
EXTERNAL ENVIRONMENT ANALYSIS
2 +.2zÌ
Macro Environmental analysis
để „is Ð „
Political environment: (P)
Đố và la: vớ
Economic environment: (E)
£ g8 si y2
Social environment: (S)
Z số mi si
Technological environment: (T)

Page

l

l
2
2

3
3
3
3

5

6
7
7
9
10
11
lì
12
13
15
16
17
19
21
24

24
24
20
28
30
31
33
a3
i
37
39
40
42


| Judo

| 22x z]
| Dee a2
| 2a 3
| 2.2.2.4
Dida

es

2.2.3.1
| eee

Industry environment analysis_

The
The
The
The

potential competitors current competitors customer’s power
supplier’s power

44

_

44
a
sổ
46

Substitution products.

47

Opportunities and Threats evaluation of An Phat JSC

49

Opportunities and their ranking
Threats and their ranking

49
49

Competitive Profile Matrix of An Phat

51

tên... External Factor Evaluation (EFE) matrix of An Phat JSC
2.2.3.4

50

2
INTERNAL ENVIRONMENT ANALYSIS
2.3.1 __| Internal Environment analysis of An Phat JSC.

52
a2

res,

54

Dash
2.5.1.2
|Zotel

Equipment resource, infrastructure capacity.
The company’s position in industry
Technological level

52

53
54

Production Management level

Detaled
2.5.1,0
Ddelat
2idelsd
dud
25

Marketing activities
Trademarks, patent and copyright
Human Resource Management activities
Finance and Accounting activities
Summary of internal environment analysis for An Phat
Internal Factor Evaluation (IFE) matrix of An Phat

2.4.1
2.4.2

SWOT synthesis matrix
The optimum strategy selection for An Phat

2.4

FORMATION
AND
SELECTION

OPTIMUM STRATEGY FOR AN PHAT

OF

THE

60
61
62
62
63
64

65

65
68

CHAPTER | SELECTED STRATEGIES FOR AN PHAT AND
II
IMPLEMENTATION SOLUTIONS
3.1
DIFFERENTIATION STRATEGY OF PRODUCTS

71

3.2

COST LEADERSHIP STRATEGY

T5

Strategic solutions

75

Deiat
5. s2
3.13

The content of strategy
Strategic solutions
Strategic Road map

32,1

The content of strategy

Saki

Road map

2Ã.

CONCLUSION
REFERENCES
APPENDIXES

71

71
#
a

T5

76

80
81
82


LIST OF ABBREVIATIONS
In this document, the abbreviations are interpreted as follows:
[

An Phat Plastic and Green Environment Joint

ie

lun

Stock Company

EFE

External Factors Evaluation

II

Internal Factors Evaluation

QSPM

Quantitative Strategic Planning Matrix

HDPE

High-Density Polyethyiene

LDPE

Low-Density Polyethylene

rr

Polypropylene

PE

Polyethylene

PVC

Polyvinyl chloride

WTO

World Trade Organization

FDI

Foreign Direct Investment

GDP

Gross Domestic Product


LIST OF FIGURES
Page
Figure 1.1:

Michael Porter’s 5 Forces Model of Competition

10

Figure 1.2

Diagram of major activities and support activities

10

Figure 2.1]

An Phat’s organizational structure chart

28

Figure 2.2

Production of plastic of Vietnam during the period

36

2000-2010
Figure 2.3

Consumption of plastic products per capital in Vietnam

40

Figure 2.4

Main Machineries and Workshop of An Phat

3ã

Figure 2.5

SWOT synthesis matrix to An Phat

67

Figure 3.1

Implementation plan of Differentiation strategy

73

Figure 3.2

Implementation plan of Cost leadership strategy

77

LIST OF TABLES
Page
Table 1.1:

EFE Matrix

4

Table 1.2:

IFE Matrix

14

Table 1.3:

IE Matrix

14

Table 1.4:

Competitive Profile Matrix

l6

Table 1.5:

SWOT Matrix

17

Table 1.6:

SPACE Matrix

19

Table 1.7:

QSPM

a

Table 2.1:

Labour structure of the Company

3]

Table 2.2:

Business result from 2008 to 2010 of An Phat

31

Table 2.3:

Summary of the general environment analysis of An

43

Matrix

Phat
Table 2.4:

Analysis of five competitive forces to An Phat

48

Table 2.5;

EFE Matrix of An Phat

50

Table 2.6:

Competitive profile matrix of An Phat

51

Table 2.7:

List of some of the major material suppliers of An Phat

a

Table 2.8:

Cost structure of An Phat from 2008 to 2010

af

Table 2.9:

Some financial ratios of An Phat from 2008 to 2010

63


Table 2.10:

© Summary of strengths and weaknesses of An Phat

64

Table 2.11:

Internal Factor Evaluation (IF E) matrix of An Phat

65

Table 2.12:

QSPM

69

matrix of An Phat

LIST OF APPENDIXES
Page

Appendix 1:

Quality Management Certificate of An Phat

82


PREAMBLE
1. The reason for topic selection:
Vietnam's economy
world,

the

is gradually integrating into the economy in the region and the

business

environment

of the enterprise

has

been

extended,

but the

competition is becoming harder. This both has created business opportunities and
contains potential risks threatening the development of enterprises.
In order to take advantage of the oppotunities and get rid of the threats, based on the
strengths, each company must have a clear business strategy in each period of time
so as to keep the company ever-growing.
An

Phat

Plastic

and

Green

Environment

Joint-Stock

Company

is the

leading

company

in Vietnam in the plastic bag manufacturing industry. Plastic industry of

Vietnam

is

now

having

many

development, evergrowing demand

oppotunities

(incentives

for

plastic

industry

for plastic products,...) as well as facing with

many threats (tax for environment protection, high interest rate,...). How do An Phat
have to build the business strategy to have competitive advantages over competitors
and thus to develop its businesses? This is the reason why our group select the title
“Building the business strategy of An Phat Plastic and Green Environment Joint
Stock Company - period 2012-2016” to study in our capstone project.
2. Purpose and scope of the study:
The

Purpose:

and the way

Researching
to select the

strategy
optimal

building
strategy

basis,

in order

to identify their best suitable business strategy. From
solutions

toimprove

Company

incurrent

the

business

strategy

conditions. At the same

strategy

building

to help An Phat
there, making

Company

proposal

and

for An

Phat

development

process

time,

the selected

giving

process

strategic

roadmap from 2012 to 2016.
Scope of the study: Going into detail of business strategy building process of An
Phat Company for the period 2012 -2016


3. Implementation method:

Specific research methods:

analysis, comparison

and synthesis of data based on

primary and secondary data
Data collection method: Based on the information obtained through meetings with
Boads of Director of An Phat, based on information and data from An Phat that has
been published in the mass media.
4. Capstone Project Report’s structure:
The report includes the Introduction

and 03 Chapter. The main content of each

chapter is presented as follows:
CHAPTER

I: THEORY

BASIS

- Overview of Building Business strategy.
- Process of Building strategy
- Strategy Selection and Analysis Technique.
CHAPTER
BASIC

OF

II:
AN

ANALYSIS
PHAT

STOCK COMPANY

OF

PLASTIC

BUSINESS
AND

STRATEGY

GREEN

FORMATION

ENVIRONMENT

- PERIOD 2012 - 2016

- External Environment Analysis
- Internal Environment Analysis
~ Formation and selecting the optimum strategy for An Phat.
CHAPTER

III: SELECTED

IMPLEMENTATION

STRATEGIES

SOLUTIONS

- Differentiation strategy of Products.
- Cost Leadership strategy
CONCLUSION.

FOR AN PHAT AND

JOINT


CHAPTER
THEORY
1.1. OVERVIEW

OF BUILDING

I

BASIS

BUSINESS STRATEGY:

1.1.1. Concepts of strategy:
Concepts of strategy:
1.

Strategy

defining

long-term

objectives

and

purpose

of a business

and

implementing a series of actions as well as allocating necessary resources to
achieve that goal. (Alfred Chander)

2.

Strategy

is the

formula

or

plan

combining

the

primary

objectives

of

enterprise, policies and sequence in a unified manner. (James B. Quinn)
3.

Strategy is a unified, comprehensive and integrated plan designed to assure
that the basic objectives of the enterprise are achieved.

4.

Strategy, Michael L. Porter, father of the competition theory said that:
e

Firstly,

strategy is the

creation

ofthe

positionwith

the

unique value and includes different activities
e

Secondly, strategy is the choice, trade-offs in competing.

e

Thirdly,

Strategy is creation of suitability among

all activities of the

Company
First

strategy

of all,

is the way

strategy

relates

to implement

to

objectives

of enterprises.

Secondly,

the

the actions and decisions that closely relating

together and choosing coordination methods of those actions and decisions. Strategy
of an enterprise must exploit the fundamental strengths (resources and capabilities)
and must consider to the opportunities and threats of the external environments.
1.1.2. The role and importance of strategy
The strategy make contribution in better acumen and dynamic of economic
organization

towards

forecast and volatility of the market, then making

suitable


decisions

and

enterprise

and

control

their

of the

operations,

business

and

increasing
gradually

the

competitive

ensure

the

strong

strength

of

position

of

enterprises in the market mechanism.
Strategy can be considered as an

"operation platform”

of an enterprise,

is the

destination of all members to strive towards:
That's how to use the optimal combination of material resources and non-material to
achieve the given strategic objectives.
Strategy is an expression of business value conception
All enterprises have differentiation and have an individual mark in their strategic
activities. That style is an expression of the value concept, progressive spirit and the
role of the leader, who led to gain the proposed strategy objectives.
Strategy helps the leader of the enterprises to get the direction and vision in the
future:
Strategy is the basis for enterprise manager to give accurate and in time decisions
even that is the turning-point for their own enterprise, is the tool to manipulate and
identify

strengths

to

promote,

overcome

weaknesses,

take

advantage

of

opportunities, and confront challenges risks to gradually raise the position of the
enterprise.
Strategy is the creation of enterprise management:
Management is a process and strategy is a stage. Based on proposed objectives of
enterprise

and

based

on

the

problem-solving

methods

that

are

combined

in

harmony, flexibility consistent with the fact of the enterprise to create competitive
advantage for the enterprise, towards the ultimate goal is to optimize the expected
value.
Straiegy is an expression of the competitive position of enterprise: from which the
enterprise has had a way
oppertunities to overcome
competitiveness

to combine
weaknesses,

the internal strength
avoiding

factors with external

the potential

risks. That

of enterprises, the ability to capture and maintain

is the

market share


against

competitors,

the

abilities

to

create

substantial

pressure

toward

the

competitors
Michael

Porter

identified

in

his

book

“Competitive

Strategy”

that

“Competitive Strategy is in the relationship between the Company and its markets”
With

such

importance,

the enterprise

need to build for itself a long-term

business strategy, it is essential to be able to help enterprise to survive and develope
in the future. However,

the business environment are highly variable and human

resources of the enterprise also changes in each stage, thus strategy of an enterprise
should be flexible, changing to suit with the objective reality to ensure the survival
and development.
Enterprises can choose strategy according to the principle of approaching database
analysis methods based on factors such as the following sequences:
1/ Resources of the enterprise
2/ Diversification of products
3/ Product’s life cycle.
4/ Strategy of the competitors
5/ Market Demand

1.2. PROCESS OF BUILDING STRATEGY:
Established

strategy

bases

on

the

Company's

mission,

is

a

basis

for

determining the objectives and what to do for customers as well as other relevant

partners.
Based

on

this

mission,

the

leaders

will

identify

the

objectives.

These

objectives indicate clearly the organization’s mission and are used to set up action
plans and evaluation processes. These objectives are guided by practical knowledge
of

both

marketing

environment/outside

business

and

the

inside

capacity

of

enterprise. Usually, strategic making is began by extensive research and analysis ,
and

implement

a process

that thence,

leaders

identify

organizations need to solve to gain success in the long term.

the

priority

issues

that


The participation in the strategic planning process of departments plays an
important role because they have extensive knowledge about the capabilities as well
as

their

competitive

organizations
planning

environment,

should

process

do.

are more

Moreover,

can

make

clear

for those

likely to support

recommendations

departments

and

implement

are

on

applied

what
in the

the proposed

plan.

Departments are the central of strategy implementation; they have the right to lead
with necessary human resources and skills for effective implementation.
With the method of jointly implementation of planning process, the leaders
and the heads of departments ensure to build a suitable, close strategy with high
success

although

that

strategy

belongs

to

the

organization

or

the

individual

department.
Strategic implementation relates to the process right work implementation of
the organization. Both executives and managers at all levels must concentrate on the
strategy implementation, because even a perfect strategy becomes meaningless if it
is not implemented properly.
1.2.1. The Enterprise’s vision and mission determination:
Vision,

mission

indicates

the destination

of the future,

oriented

long-term

goal of enterprise, as a basis for policy development, business strategy for the short
term.

Defining

the vision

is to identify desired

position of the enterprise.

The

statement of outlines vision in the future of the enterprise is to achieve their goals
and

purposes.

The

vision

statement

must

identify

the

final

destination

of the

enterprise.
To succeed, Davidson has identified six essential factors which a vision must
have:
* Provide direction for future
* Focus on benefit of consumer

=6§=


* Reality
* Create promotion
* Being fully conveyed
* Being supervised and evaluated
A mission statement defines values and the rules that govern enterprise and
is an essential part in the process of strategic planning. The company's mission is
reason for existence of the company on the market; and which products and service
will the company

bring to their customers and community.

The decisions in the

process of strategic planning are always in harmony with the mission statement.
Mission statement is the foundation for the company's vision. The mission
statement or may

be motivation

for employees

to communicate the purpose and

value of the company to customers and communities.
1.2.2. External environment analysis:
1.2.2.1 Macro-environment analysis:
PEST model focused on researching the external environment elements that
affect on the enterprise. These elements are:
+ Political (P)
+ Economics (E)

+ Social culture (S)
+ Technological (T)
These four factors have a direct impact to the economic sector, these factors
are external

factors of the enterprise

and

industry,

and

suffer their effects as an

objective fator. The enterprises base on the impact to give the suitable policies,

business activities.
* Political:
This factor has influence to all business sectors on a

territory, institutional

and ‘aw factors and can endanger the viability and development of any industry.


Vhen trading on an administrative unit, the enterprises will be required to comply
vith the legal institutional factors in that region.
+ Stability: The institution which has high stability will be able to create
+ Tax Policy: Tax Policy for export and import, consumption tax, income
ux ... will affect sales, profits of enterprises
+ The relevant laws: the Investment Law, business law, labor law, antitrust

law, anti-dumping law e.t.c.
+ Policy: The policies of the State will have an impact on businesses; it can
nake

a

profit

or

challenges

cevelopment policy, economic

for

enterprises

development,

such

as

trade

and competition

policy,

industry

regulating policies

ad consumer protection...
* Economic factors:
Enterprises should pay attention to economic

factors both in the short term, long

t:rm and government intervention to the economy.
Usually, the enterprises will base on economic factors to decide to invest in various

s:Ctors and regions
+ The state of the economy: Any economy also has cycle, in a certain stage of
e:onomic cycle; the enterprise will have their appropriate decisions.
+ Factors affecting the economy: interest rates, inflation,
+
e:onomic

The

economic

development

policies
strategy

of the government:
of the government,

the
the

basic

salary

incentives

law,

the

policies

for

industries such as tax reduction, subsidies...
+ Economic prospects in the future: Growth speed, GDP growth rate, the rate
o GDP on investment capital...
* Social cultural factors:
Each country or territory has its cultural values and typical social factors;
these factors are characteristics of consumers

in the area.


The

social

characteristics

also make

enterprises

the social factors will divide the community

interested

when

research

market,

into customer groups, each group has

the different characteristics, psychological and income...:
+ The average life expectancy, health status, nutrition regime, food
+ The average income, income distribution
+ Lifestyle, education, aesthetic attitudes, life psychology
+ Living condition
* Technology:

The world is still in the technological revolution; a series of new technology has
been invented and integrated into the products and services especially in the field of
information technology, modern communications technology
+

Investment

by

the

government

and

enterprises

in the

R

&

D:

The

combination between enterprises and government to create new technologies, new
materials ... will have a positive effect on the economy.
The speed, technology cycle, the rate of technological backwardness:
+ The impact of information technology

and Internet on operation of the

enterprises.
* Integration factors:

No one can deny that globalization is the trend, which creates opportunities and
challenges for enterprises, countries in developing production and business.
1.2.2.2. Analysis of Industry Environment:
Analysis
developed

with

of

Industry

Environment

five affect to enterprises

Competition:

v The supplier’s power
v The customer’s power
v The potential competitors.
Y Substitution products risks
v The current competitors

according

to

or it is known

Michael

Porter

as 5 Forces

model

Model

of


Figure 1.1: Michael Porter’s 5 Forces Model of Competition
Potential competitors
Threat of New
Entrants

y

Industry Competitor
Suppli

er

>

Buyer

j

Distributor

Rivalry among existing firms

Bargainin
g Power

|

Bargainin
g Power

Threat of Substitute
Products or Services

Substitutes

1.2.3. Internal Environment analysis:
Internal situation of the enterprise is often judged
such

as

Finance,

Human

Resources;

Executive

by the functional

Management;

Organization

Structure; Marketing; Research / development, Information Technology.
Figure 1.2:Diagram of major activities and support activities

(

Fim infrestrachre

xi8

Human Resource Management

4

BG

Technolgy

2

[

Procure
Inbound =o,

iss

Outbound

RNS lục

ME

+.

ấm SN Vể

AES

(Source: Strategic management textbook - Griggs University)

- 10-

areas


The analysis of the internal enterprise will allow identifying the strengths (S)
and weaknesses

(W) of the enterprise. Since then, the chosen strategy needs to be

maximized the strengths and overcome weaknesses of the enterprise.
Similarly

in technical analysis of external factors, in order to quantify the

internal analysis of the enterprise, it is used "Internal Factor Evaluation" (IFE).
1.3. STRATEGY

SELECTION

AND ANALYSIS TECHNIQUE

There are three stages to take form Business Strategy and each stage uses different
tools
Phase 1: Analysis and Information collection phase
This phase summarizes the collected and systematized basic information to take
forms

more

Business

Strategy.

This

phase

uses

three

tools:

EFE

Matrix,

Competitive Profile Matrix and IFE matrix
Phase 2: Combination phase

This phase

is selection, arrangement

and combination

of external

environmental

factors, internal factors to make the feasible strategy. This phase will use the matrix
tools: Strengths - Weaknesses, Opportunities - Threats matrix (SWOT);
Strategic Position

Action

Evaluation Matrix

(SPACE)

and

the

Grand

Strategy

Matrix.
Phase 3: Strategy Decision and selection phase

This

stage

uses

Planning Matrix (QSPM).

a

single

QSPM

tool

that

is

the

Quantitative

Strategic

matrix using information in stage 1, objectively

evaluating the business strategies that can be selected in stage 2 to determine which
strategy is the best for enterprise.

1.3.1 Analysis and Information collection phase
Summary of incorporated basic information is necessary for the formation of
strategy. Such tools EFE matrix, Competitive Profile Matrix and IFE matrix require
strategists

to identify

strategy formation.

the objective

features

during

the previous

period

of the

The small decisions of the incorporated matrix type relate to

«hi=