The development strategy of Gia Lai power company from 2013-2018 and vision 2025

Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 1



Global Advanced Master of Business Administration






THE DEVELOPMENT STRATEGY
OF
GIA LAI POWER COMPANY FROM 2013-2018
AND VISION 2025





CLASS: GaMBA01.D0111
Group 1: 1/ MANG DOAN
2/ NGUYEN ANH DIEN
3/ VAN DINH HAU
4/ LE ANH QUANG

HCM City– April /2013
Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 2
CONTENTS
Items Page
OPENING 03
1. The essential of the subject. 03
2. Studying objectives. 05
3. Scope of researching. 06
4. Researching methods. 06
5. Layout. 06
CHAPTER I: RATIONALE OF THE COMPANY STRATEGY 08
1. The basic concepts of strategy and strategic management. 08
2. Classification. 09
3. Specific strategies. 09
4. The basis for building business strategy for company. 10
5. Tools for planning and strategic choices. 16
CHAPTER 2 - SITUATION ANALYSIS 23
1. Gia Lai Power Company summary. 23
2. Analysis of the external environment. 28
3. Internal environment of company. 39
4. The strategy determining matrixes of Gia Lai Power Company. 44
5. Identifying strategies. 55
CHAPTER 3 - THE SOLUTIONS 56
1. Vision and strategic objectives of the company. 56
2. Planning stages of implementing strategy of Gia lai Power Company. 56
3. Solutions for human resource development. 59
4. Marketing solutions. 68
5. Business plans. 73
6. Financial solutions. 77

COMMENTS 79
CONCLUSIONS 80
REFERENCES 81
Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
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OPENING:
1. The essential of the subject:
In recent years, Vietnam has been intergrating deeper and deeper into
regional and international economies, which create favourable conditions for
development. However, aside from those opportunities, such a votile business
environment also causes pressures, which ask Vietnams businesses to have
strategies in accordance with the actual situations.
Competitiveness of businesses is the base for the competitiveness of the
economy. After joining the WTO, along with an itinerary to cut down taffifs, the
penetration of goods, services and foreign investors increases the competitition in
most of the fields of local economy. Economy crisis, in addition to corollaries that
afftect almost every country, also creates and increases the opportunities to
penetrate and control the market of investors with sharp, strong and creative
business minds.
Facing that situation, Vietnam businesses have to solve the issue: competing
successfully in the local market and gradually penetrating international market. The
only solution to this challenge is to have suitable and strong business strategies to
increase their competitiveness.
Business strategies must identify operating methods in order to put higher,
stronger competitiveness. Implement methods to improve the factors that containing
the competitiveness of businesses. These factors are: the ability to offer products
and services, the application of new production technologies, quality's control
procedures, marketing, ability of production, human resources. Through the
theoretic study, it is shows that, there is a close relationship between competitive
factors and performances of the businesses.

As for the field of producing and commercializing energy in general and
electricity in particular, the current trend of globalization and extensive
globalization act as a leverage to create momentum for rapid development,
satisfying the demand of the economy. In Vietnam, due to its own characteristics,
Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 4
the production and supply of power are still regulated by the Government, through
Electricity of Vietnam (EVN)
In other word, the production and commercialization of electricity in
Vietnam (except for a few small non-state businesses) are now under monopoly
mechanism (the State monopoly). However, with the current trends of intergration
and globalization, especially after Vietnam became a member of the World Trade
Organization (WTO), Vietnam businesses now have to compete in a market with
common rules. As a result, the production and commercialization of electricity of
the country must operate towards a competitive market.
Facing the inevitable demands, on 26.01.2006, the Government issued
Decision No. 26/2006/QD-TTg: "Approving routes, conditions of formation and
development of different levels of electricity market in Vietnam" to:
a) Step-by-step develop the competitive electricity market stability,
elimination of subsidies in the power sector, increases the right of choosing
electrical suppliers for electrical customers.
b) Attract the investment from all domestic and foreign economic
backgrounds to participate in electricity, reducing the State's investment for the
electricity sector.
c) Strengthen the efficiency of the production and commercialization the
power sector, reducing the pressure to increase the price
d) Ensure the power supply is stable, reliable and as well as increase its
quality
e) Ensure the sustainability of the development of the electricity sector.
As a result, the electricity market in Vietnam will be formed and developed

through three levels:
- Level 1 (2005 - 2014): competitive electricity generating market.
- Level 2 (2015 - 2022): competitive electricity wholesale market.
- Level 3 (from 2022): the competitive electricity retail market.
Each level is performed in two steps: the pilot and complete.
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The most important to businesses which operate in the electricity distribution
field (as Gia lai Power Company - The studying object of the CAPSTONE) be
specified in this decision is starting to format the pilot competitive wholesale
electricity market (from 2015 to 2016) by allowing the selection some large
distributors and large customers to pilot. Allow to take form new wholesale units to
enhance the competition in the electricity wholesale process.
More importantly, from 2017 to 2022, Vietnam aims to have a complete
competitive electricity wholesale market. In this period, the Government will allow
the electricity distribution companies that currently belong to EVN to convert into
independent companies (state or joint-stock companies) to purchase electricity
directly from generating units and, vice versa, the generating units can compete to
sell electricity to these companies. The wholesale units also compete to sell
electricity to distribution companies as well as big customers.
From 2022 to 2024 will appear pilot competitive electricity retail market
through choosing pilot appropriate distribution regions. By the consumption of
electricity by the National Electricity Regulatory fixed, the customers may select
their electricity providers (retail units). Business functions of the retail of
distribution companies pilot selected will separated from the function of
management and operation of the distribution network; retail units will compete to
sell electricity to each customer and compete for buying electricity from the
wholesale units.
Finally, from 2024, Vietnam will have full and complete electricity retail
market. Depending on the level of electricity consumption provided by the National

Electricity Regulatory, the consumers can choose their electricity suppliers (retail
units) or purchase directly from the market. Organizations, individuals that meet the
requirements of power operation are allowed to establish retail units to compete in
the retail market. These units can buy electricity from the power units or from the
market to resell to customers.
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A problem arise as Gia Lai Power Company, as well as other companies
under EVN, since the beginning and through different stages of developments has
operated completely in the subsidizing, central planning and bureaucratic
mechanism. Consequently, how will the electricity industry intergrates, operates
and develops in the market as planned by the Government as the above decision?
As those who are very dedicate to the development of the Vietnam electricity
industry in general, and as those who were and have been working, contributing to
the development of Gia Lai Power Company in particular, our group decided to
apply the knowledge acquired from ANDREW-GRIGGS University to build the
development strategy of Gia Lai Power Company period 2013-2018, with vision to
2025, expecting that the company will penetrate sucessfully into a competitve
electricity market, continue to affirm, enhance the brand image and position after
many years to build.
2. Studying objectives:
With this topic, we hope to achieve the following objectives:
- Build the business strategies for Gia lai power Company by analyzing the
environment to identify the current strengths and weaknesses as well as the threats
and opportunities affecting the development of the company.
- Propose solutions to the above strategies.
3. Scope of researching:
Focusing on planning strategies for Gia Lai Power Company in a market that
is opening to investors, the research scope is in accordance with the schedule of
building a competitive electricity market by the Government. However, it will

emphasize on the first phase (2013 – 2018) because it is the turning point, deciding
the ability and adaptability of the company to the new business environment. The
strategies are built on a company level and the solutions are identified to support the
implementation of the strategies.
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4. Researching methods:
Use the described method, the statistical analysis, synthesis methods, based
on the data and management documents of Gia Lai Power Company, the data of
EVN, EVN CPC; The Energy professional journals, economic journals; Intenet
During the research, the following methods are used:
Information collecting methods:
Secondary information from:
- External data: Documents, documentations of the relating authorities;
newspapers, radio, statistics, internet
- Internal data of the Company: The documents, statistics, storage, reports,
business plans
Primary information from:
- Opinion of leaders and experts of the company.
- Opinion of employees and leaders who are retired.
Information processing method:
Implementing technical and strategic managements to:
- Analyze business environment to identify opportunities, threats, strengths
and weaknesses of the company.
- Apply the SWOT analysis to combine the opportunities, threats, strengths
and weaknesses in order to set out the strategies for the company.
- Use QSPM matrix to compare, evaluate and select the high attractive
strategy for implementation.
5. Layout:
 Introduction

 Chapter 1: Rationale of the competitive strategy of the company
 Chapter 2: Analysis of current situation
 Chapter 3: Solutions.
 Reviews.
 Conclusions.
 References.
 Annex.
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CHAPTER I: RATIONALE ABOUT THE COMPANY STRATEGY
1. The basic concepts of strategy and strategic management.
1.1 Concepts:
1.1.1 What is Strategy?
According to Alfred Chandler, strategy is the determination of basic and
long-term goals of a business, choose the way or course of action and allocating
necessary resources to implement those objectives.
Fred R. David (2003) said that, strategy is the means to reach long-term
goals.
Rudolf Grunig and Richard Kuhn (2003) said, strategy is long-term, it
orientates to manage and ensure the completion of long-term objectives, the main
purposes of the company.
In summary, business strategy includes the followings:
- Identify the basic long-term goals of the organization.
- Provide general action programs.
- Select the action plans, deploy and allocate resources to accomplish that
goal.
In other words, strategy is a series of operations that established in order to
create competitive advantage of the business compared to other competitors. The
strategy represents a creation of unique value, the selection, the evaluation of
competitors in the competition. When building business strategy, have to determine

where you are, where businesses want to come and how to come.
1.1.2 What is Strategic Management?
Fred David pointed out that, Strategic Management is the art and science to
establish, implement and evaluate decisions related to various functions, allows
organizations to achieve the objectives.
In conclusion, strategic management is the implementing and evaluating
decisions related to various activities, allowing an enterprise to achieve strategic
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objectives. Strategic management focuses on integrated management of all
operational fields of the business to achieve success.
1.2 The importance of strategic management to enterprises:
Strategic Management enables a company to stay active in responding to the
market. It allows the company to create and influence (rather that responding) to the
environment and thus control its own destiny.
Strategic management helps the organization in clarifying its goals and
direction. It forces the managers to consider and identify how and when the
organization can reach its expected position. By identifying goals and missions,
managers as well as the enterprises understand what needed to be done to achive
those norms.
2. Classification:
2.1. Company strategy:
It is the pattern of decisions in a company, it is to identify and define the
purpose and objectives of the company, identify the business, which the company
pursues, create policies and fundamental plans to achieve the goals of the company.
In an organization with the diversity of size and level, the company strategy usually
applied to the entire enterprise. Company strategy set out to identify the business
activities in which the company will compete and distribute resources between
business activities.
2.2. Business-level strategy (SBU-Strategic Business Unit):

"Strategic Business Unit" planned in order to determine the selection of
products or markets for private business activities in internal company. This
strategy determines how each business unit will try to complete its goal to
contribute to the completion of the company norms.
2.3. Functional-level strategy:
This strategy focuses to support on the allocation of the company's strategy
and focus on the fields of operation and business.
2.4. Operational-level strategy:
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Make more detail for the functional-level strategy and business-level
strategy. This is the narrow strategy in basic operation management, so should
identify clearly the responsibilities of the lowest-level managers in the
implementation of strategy.
3. Specific strategies:
According to Fred R. David (2003), business strategies are divided into the
following types:
+ Forward-combined strategy: Increase ownership or control to distributors.
+ Rear-combined strategy: Increase the ownership or control to the suppliers.
+ Horizontal-combined strategy: Create ownership or control to competitors.
+ Market penetration strategy: Look for increasing market for existing
products and services in existing markets through more marketing efforts.
+ Market developing strategy: Put the existing products and services into new
areas.
+ Product developing strategy: Increase sales by improving or modifying
existing products or services.
+ Concentric operation diversification strategy: Add new products or services
that relate to current products or services.
+ Operation diversification strategy: Add new products or services, which
have not contact to each other.

+ Horizontal-operation diversification strategy: Add to new products or
services to existing customers.
+ Joint-venture strategy: Form a separate company form two or more
companies for the purpose of cooperation.
+ Operation-narrowed strategy: Consolidate through cutting costs and assets
to save revenue and profits that are decreasing.
+ Operation cut-off strategy: Sell a branch or a part of the company.
+ Liquidation strategy: Sell all tangible and intangible assets.
+ Synthetic strategy: Pursuit two or lots strategies simultaneously.
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4. The basis of the business strategy for company:
4.1. Analysis the external environment:
External environment is a system of complex factors, containing
opportunities as well as risks affecting the opration of the business in different
levels.
Even with huge potential resources, a company could not respond to all that
are happening in the market. Therefore, when analyzing the external factors,
managers need to collect information of opportunities that can bring benefits to the
company as well as threats so that company can find solutions to prevent or avoid.
External environment includes: General environment and industry
environment.
4.1.1. General environment.
Factors of general environment include economic environment; political and
law environment; natural environment; population and social environment;
technology environment.
+ Economic environment:
The economic environment effects more directly and activity than some
other factors of the general environment. Changes of the marco-economic
environment always contain opportunities and threats to each business in different

industries, potential impact to the business strategy.
Some basic factors that are most interested by businesses include: the trend
of gross domestic product (GDP) and gross national product (GNP); interest rates
and interest rate trends; international balance of payments; inflation; tax system and
tax rates
+ The political and legal environment:
Include the system of viewpoints and policies of the Party and State, the
current legal system. There is also need to understand the political-diplomatic trends
of government, domestic and foreign political evolutions. These factors affect the
formation and development of the businesses.
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+ The natural environment:
For a long time, businesses have recognized the impact of the natural
circumstances in their business decisions. Natural influences includes: geographical
location; climate; pollution; lack of energy and wasteful-use of natural resources
and the increase in the demands of natural resources, social awareness, education of
society. These factors affect the business of the enterprises. Therefore, enterpriseses
should pay attention to these factors when planning business strategies.
+ Environmental technology:
Technology creates opportunities and risks to businesses. Development in
technology can create new markets, resulting in creating new products and making
existing products and services become outdated. This influences strongly to those
relating to telecommunications, informatic technology, electronic industry.
Therefore, businesses operate in electrical and electronic equipments should also
pay attention to this factor in the process of negotiating with suppliers of goods in
order to create opportunities for themselves.
4.1.2. Industry environment:
Applying the 5 resource model of Michael E. Porter (1985) to analyze the
industry environment of the businesses (also known as the analysis of the

competitive structure in an industry), we can see the relationship between these
factors are reflected in Figure 1.1
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(1) Competitors: The key contents of the competitive analysis presented in
Figure 1.2

Picture 1.2: The principal contents required for competitor analysis.
(2) Customers: Customers decide the fate of a business, customer confidence
could be the most precious asset of the business. Credibility achieved by satisfying
the needs and tastes of customers better than competitors. Customer's pressure come
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from the following conditions: When the amount of buyer's goods larger the amount
of seller's goods; When the buyers move to purcharse to others but not more costly;
When buyers to bring out credible threat signals that would combinate to the rear
with suppliers; When the goods that customers buy belong to the low level of
specialization.
(3) Suppliers: Suppliers may assert their power by threatening to increase
prices or reduce the quality of products and offered services. Suppliers will have the
advantage if they have the following conditions: when only a small number of
vendors selling for a large amount of buyers in an industry; when substitutes are not
available, when the goods or services of providers belong to essential goods and
high level of specialization; when vendors give credible threat signals of forward
integration.
(4) The potential competitors: New competitors in the industry reduce profits
because they contribute new production capacity, with the desire to gain market
share and the necessary resources. Therefore, the protection of company’s position
includes maintaining legal barrier to prevent the penetration of new players is very

important. The main barriers are: the advantage due to large-scale production;
products diversity; the requires of large financial resources; high commodity-
converted costs; the strong consumption channels and cost advantages that
competitors can not create.
(5) Replacing goods (products): The substitutes reduces potential
profitability of the industry by imposing a ceiling price compared to current
competed price; fields that have high profits; alternative products enter the market
massively will increase competition in the industry, create price reduction or
improvement in product quality.
Strong competitive forces limit the ability to increase price thus gaining higer
profit from existing companies, or it is can be viewed as a threat will make lower
profits.
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The strength of the five forces can change over time as conditions of the
industry changed. We need to be aware of the opportunities and risks from changes
in five forces to develop according strategies.
4.2. Analysis the internal environment of the business:
Analysis internal environment of the business is the base to help business
understand the strengths and weaknesses compared to competitors; to help
managers learn the ability to capture competitive advantages in each period. Internal
factors such as: HR, finance, marketing, operations management, information
systems.
4.2.1. Human resources: Today, in a volatile business environment,
company’s human resources play a very important role in the process of
implementation of the strategies and decide the success or failure of the business.
Even if the strategies are right, promising and feasible, but the people in the
organization are not qualified to perform, those strategies will not succeed. The
main functions of human resource activities are selecting, recruiting, training, using,
treating, evaluating, encouraging, dismissing.

4.2.2. Finance: Financial condition is often said to be a factor to evaluate the
competitive position of the company and is the most attractive condition for
investors. To determine the effectiveness of the strategy is to consider the strengths
and weaknesses of the business's finance. It shown through analysis of basic
financial indicators such as solvency, asset structure, capital structure, profitability
ratio this will make the construction of the company's strategy more feasible.
4.2.3. Marketing: Marketing research to identify market opportunities,
market segmentation, selects target market and market positioning; implement and
test products and price strategies, distribution network and sales promotion.
Understand marketing activities, managers will determine specifically tasks
of this function, the jobs should be done in each period.
4.2.4. Management operation: Management consists of four basic functions
such as planning, organizing, leading and controlling.
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- Planning: Include all administrative activities related to the preparation for
future. Specifically, forecasting, seting goals, planning strategies, developing
policies and creating plans.
- Organization: Includes all management activities to create the relationship
between rights and responsibilities. Specifically, organization creation, job
specialization, job description, work details, extend control, unify commands,
coordinate to arrange, design job, analysis and job.
- Leadership: Includes efforts to orient human activities, namely leadership,
communication, team working, changes activities, authorization, improvement of
job quality, job satisfaction, demand satisfaction, changes in organization, working
spirit of employees and managers.
- Control: Relate to all management activities to ensure satisfying results,
consistent with the results already planned. Major activities are: quality control;
financial control; sale; inventory; costs; analyze the changes; reward and
punishment.

4.2.5. Information systems: Information links all business functions together
and provides the background for all management decisions. It is the foundation of
all organizations. Information expressed major adverses or competitive advantages.
Information system is an important basic for strategies, it monitors the
changes of the environment, recognizes the threats of competition, supports for the
implementation, evaluation and control strategy.
5. Tools for planning and strategic choices:
5.1. Tools for strategic planning:
Starting from the actual situation of the Gia Lai Power Company, appropriate
tools to enemy strategy include:
5.1.1. Internal factor evaluation matrix (IFE):
Internal factors evaluation matrix (IFE) is a tool used to summarize and
evaluate the important strengths and weaknesses of functional business divisons,
and it also provides the basis for determining and evaluating the relationship
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between these divisions.
According to Fred R.David, the IFE matrix developed in five steps:
- Step 1: Listing the factors identified in the internal analysis process. Use 10
to 20 internal factors, including strengths and weaknesses.
- Step 2: Set the importance by sorting from 0.0 (not important) to 1.0 (most
important) to each factor. Importance assigned to each specific factor shows that the
relative importance of those factor for the success of company in the industry. Total
of all this critical levels must be equal to 1.0.
- Step 3: Classify from 1 to 4 for each factor, which represents the biggest
weakness (classified by 1), the smallest weakness (classified by 2), the smallest
strengths (classified by 3), the biggest strengths (classified by 4). Thus, these
classification will determine important scores for each variable (step 4 = step 2 x
step 3).
- Step 4: Multiply each level of importance of each factor with its type to

determine the important scores for each variable.
- Step 5: Plus all of important scores for each variable to determine the total of
important scores of the organization.
Regardless of IFE matrix has how many factors, total important scores can
classified from the lowest is 1.0 to the highest is 4.0 and the average score is 2.5.
If the total of important score is lower than 2.5, it is shows that the company
have internal weak and scores higher than 2.5 shows that the company have internal
strengths.
5.1.2. External factor evaluation matrix (EFE)
External factor evaluation matrix (EFE) allows summarising and evaluating
the economic, social, cultural, demographic, geographic, political, governmental,
legal, technological and competitive information.
According to Fred R.David, developing an EFE matrix consists of five steps:
- Step 1: Make a list of factors that play a decisive role for the success as
identified in the inspection process from external factors. Use from 10 to 20 factors,
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including both opportunities and threats affecting the company and the company's
business.
- Step 2: Classify the importance from 0.0 (not important) to 1.0 (very
important) for each factor. This classification shows that the respective importance
of those factors for the success of the company's business. The appropriate
classification level can be determined by comparing between compete successful
businesses with failed competitive businesses or by discussing these factors and
achieve consensus of group. Total of classification level assigned to these factors
must equal 1.0.
- Step 3: Classify from 1 to 4 for each factor, which represents the biggest
weakness (classified by 1), the smallest weakness (classified by 2), the smallest
strengths (classified by 3), the biggest strengths (classified by 4). Thus, these
classification will determine important scores for each variable (step 4 = step 2 x

step 3).
- Step 4: Multiply the importance of each variable with its type to determine
the scores on the importance (steps 4 = 2 x step 3).
- Step 5: Plus total scores of importance for each variable to determine the
important scores for the organization.
Regardless of the major opportunities and threats included in EFE matrix, the
total of the highest important score, which an organization achieved 4.0 and the
lowest was 1.0.
The total of average important scores is 2.5. Total of the highest important
score is 4 shows that the organization is responding very well to the present
opportunities and threats in their environment. Total of the lowest important score is
1 shows that the strategies set out by the company can not take advantages of
opportunities or avoiding external threats.
5.1.3. CPM Matrix (Competitive Profile Matrix):
Usage: Uses to synthesis of the analysis results of the competitive
environment; identify opportunities and threats from the competitive environment,
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assess the suitability of current competitive strategy of the company.
Data: Based on the results of the internal environmental analysis, identify the
CSFs (Critical Success Factors) and on the basis of the analysing's results of the and
identification of key competitors.
5.1.4. Strengths - weaknesses - opportunities - threats matrix (SWOT)


O: Opportunities
1)
2)

T: Threats

1)
2)

S: Strengths
1)
2)

Combination S – O
Improve the internal
strengths to take advantage
the opportunities.
Combination S – T
Improve internal strengths
to minimize external
threats
W: Weaknesses
1)
2)

Combination W – O
Overcome internal
weaknesses in order to take
advantage of the
opportunities.
Combination W – T
Overcome the internal
weaknesses in order to
minimize external threats.

SWOT matrix.

SWOT matrix is an important combination tool, which help managers
develop four types of strategies:
S-O: These strategies based on the strengths of the business to exploit
external opportunities.
S-T: These strategies based on the strengths of the business in order to
prevent or limit the external threats.
W-O: These strategies reduce internal weaknesses in order to take advantage
external opportunities.
The external factors
The internal factors
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W-T: These strategies reduce internal weaknesses in order to prevent or limit
the external threats.
Set up a SWOT matrix goes through eight steps:
- Step 1: List the major strengths within the company.
- Step 2: List the weaknesses within the company.
- Step 3: List the major external opportunities the company.
- Step 4: List the important threats outside the company.
- Step 5: Combine internal strengths with external opportunities and record the
results of the S-O strategy in the appropriate box.
- Step 6: Combine the internal weaknesses with external opportunities and
record the results of W-O strategies in the appropriate box.
- Step 7: Combine internal strengths with external threats and record the results
of the S-T strategy in the appropriate box.
- Step 8: Combine internal weaknesses with external threats and record the
results of the strategy W-T in the appropriate box.
5.1.5. SPACE Matrix (Strategic Position & Action Evaluation):
Usage: To evaluate the company's status in the relationship with the internal
and external conditions, implication for company in choosing the suitable project

selections: Attack, competition, defense or cautious.
Data: Form the results of analyzing internal and external environments.
Internal environment, include: financial strength (FS: Financial Strength);
Competitive advantage (CA: Competitive Advantage) and external environment
include: environmental stableness (ES: Environment Stableness); strength of
industry (IS: Industrial Strength).

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5.2.2. Strategy matrix (Main Strategy):

5.2. Strategy selecting tools: Quantitative Strategic Planning Matrix
(QSPM).
According to Fred R.David, QSPM matrix using the input information from
the IFE matrix, EFE matrix, the competitive profile matrix (CPM) and SWOT
matrix. Six steps to develop QSPM matrix:
- Step 1: List the external opportunities / threats, the important internal
strengths / weaknesses and 10 external important success factors.
- Step 2: Classify each external and internal important success factor. This
classification is the same as the IFE matrix and EFE matrix.
- Step 3: Identify the strategies that organization should consider
implementing. Record these strategies on the first row of QSPM matrix. Collect
strategies into separate groups if possible.
- Step 4: Identify the attractive scores of each strategy (AS). The attractive
Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 22
score allocate for each strategy denote the relative attractiveness of this strategy
compared to other strategies. The attractive scores are classified from: 1 =
unattractive; 2 = slightly attractive; 3 = quite attractive; and 4 = very attractive. If
these important success factors have no influence on the choice of strategies, they

are not grade attractive scores in this strategic group.
- Step 5: Calculate the total attractive scores (TAS). Total attractive scores is a
result of the multiply classifying scores (step 2) with attractive scores (step 4) in
each row.
- Step 6: Calculate the sum of the total attractive scores. It is the plus of the
sum of total attractive scores in strategic column of QSPM matrix. If all appropriate
internal and external factors can affect the strategies, the higher the attractive scores
indicate more attractive the strategies are.










Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 23
CHAPTER 2 - SITUATION ANALYSIS
1. Gia Lai Power Company summary:
1.1 History and development:

More than a year, after the liberation of the South completely, December 28,
1976, the Ministry of Energy has decision No. 3799/QD/TCCB3, about the
establishment of the Gia Lai - Kon Tum Electricity Management and Distribution
Department, under the Central electricity company (known as Central Power
Corporation) on the basis of taking over Pleiku electricity Center and Phu bon
electricity center (bequeathed by the former regime).

Along with the separation of the Gia Lai - Kon Tum province into Gia Lai
and Kon Tum provinces, on 09/30/1991 Ministry of Energy issued Decision No.
491/NL/TCCB-LD, seperates the Gia Lai - Kon Tum Electricity Department into
Gia Lai Electricity Department and Kon Tum Electricity Department.
To match the operating model and to meet the requirements in new situation,
on 04/14/2010, the Electricity of Vietnam (EVN) issued Decision No. 230/QD-
EVN, changes name of Gia Lai power into Gia Lai Power Company. Headquarter
located at 66 Hung Vuong Street, Hoi thuong ward, Pleiku city, Gia Lai province.
On 09/02/2012, the Electricity of Vietnam issued decision No. 63/QD-EVN,
ranks for Gia Lai Power Company into Category-I Enterprise.
Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 24
Currently, Gia Lai Power Company is allowed to operate in the following
fields:
- Producing and commercializing electricity; managing, operating and
repairing diesel generators.
- Trade in materials, electrical equipments, electrical accessories, household
electrical appliances.
- Repairing, overhauling, testing, calibrating, testing electrical equipments up
to a voltage of 35 kV.
- Consulting, planning grids up to 35 kV; consulting projects the power grids
up to 35 kV; surveying, designing and supervising power grids up to 35kV.
- Mechanical processing.
- Constructing and improving electrical networks and substations up to 35
kV.
1.2 Organizational chart of the company:

1.3 Overview of the business activities of the Company:
As introduced, Gia Lai Power Company specializes in power business, under
the Central Power Corporation (EVNCPC), the Electricity of Vietnam (EVN). The

company's area of operation is whole Gia Lai province.
Development strategy of Gia lai Power Company period 2015-2018, and vision 2025
Strategic Management - Capstone of Group No.1 - Class GaMBA01.D0111 Page 25
The organizational mechanism of the company consists of 11 functional
departments, 14 power utilities directly supply electricity to all customers of the 17
districts, and the city of Gia Lai province with a total of customers at 31/12/2012 is
306,832 customers.
After more than 36 years of development, the Company had volume of grid
assets is relatively large and modern to ensure supply power to 222/222 communes
in 17 districts, towns and a city with more than 95% of households are using
electricity. Specifically, by the end of 2012, the company owns and exploits
effectively 3,911 km of 6-35kV lines; 3,644 km of low voltage lines; 2,975
distribution substations with a total capacity of 442,574 kva; sells electricity directly
to 306,832 customers; company's total power output reached 673.426 million kWh;
revenue 828.757 billion VND.
1.3.1 The results of company' business: Unit:VND
No
Norms
2007
2008
2009
2010
2011
2012
1
Total of
revenue

305,696,367,585

345,786,242,306

416,946,626,842

523,391,537,197

750,976,616,647

845,775,217,544
1.1
Electricity
distribution

285,892,506,467

337,038,056,663

407,484,880,738

513,082,394,849

676,816,433,193

831,185,365,213
1.2
Other
production

19,803,861,118

8,748,185,643

9,461,746,104

10,309,142,348

74,160,183,454

14,589,852,331
2
Total of
assets

475,440,817,265

439,338,823,228

522,703,663,914

695,695,200,038

621,266,877,308

740,848,905,287
3
Total of
costs

317,633,582,960

345,398,529,821

344,367,140,963

515,934,998,358

769,617,610,154

856,026,317,322
3.1
Total of
electricity
distribution
costs

300,413,732,329

338,811,967,586

338,364,528,639

509,488,251,542

706,016,994,268

846,597,447,014
3.2
Fuel costs

3,539,594,432

810,929,097

417,498,131

327,057,757

22,351,503

90,631,807
3.3
Material
costs

28,268,344,219

13,122,989,537

14,042,215,342

21,658,498,982

28,755,511,949

32,598,275,875
3.4
Wages and
insurances

30,205,827,677

35,139,374,890

45,097,437,296

53,173,877,119

56,539,720,105

74,685,870,722
3.5
Depreciation

58,695,192,909

59,052,192,491

58,511,979,655

74,445,225,514

77,897,893,667

79,621,250,898
3.6
Cost of
external
electricty
purchases

156,820,543,824

205,161,699,942

242,110,035,519

324,966,880,472

509,647,209,926

622,819,876,913