Business strategy planning of Dong Anh Thanh Cong auto JSC., Phase 2013 – 2015

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CAPSTONE PROJECT REPORT
BUSINESS STRATEGY PLANNING
OF DONG ANH THANH CONG AUTO
JSC., PHASE 2013 - 2015

Group No.10:
Phan Thanh Phong
Nguyen Van Khanh
Phan Van Tien
Pham Thi Tu
GAMBA.M0111
H A N O I 2 0 1 2
2012 I GLOBAL ADVANCED MBA PROGRAM (GAMBA.M0111) I Group No.: 10
.

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GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM




CAPSTONE PROJECT REPORT

BUSINESS STRATEGY PLANNING
OF DONG ANH THANH CONG AUTO JSC.,

PHASE 2013 - 2015



Group Number: 10
Student’s name: Phan Thanh Phong
Nguyen Van Khanh
Phan Van Tien
Pham Thi Tu




HANOI, 2012


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ACKNOWLEDGEMENT

First, our group would like to send sincere thanks to the Management Board of
Training Technology and Occupational System Center ETC - Hanoi National
University, Griggs University - Andrew (the United States) and lecturers of the
International MBA program, for giving us the opportunity to experience an useful and
highly practical program.
We would like to thank the Management Board and all staff – Dong Anh Thanh
Cong Auto JSC., - for creating the best conditions for us during the period of field
survey, research and information collection.
We would like to thank our families, friends, colleagues, for their support,
encouragement and help during the learning process.

Finally, we declare the sources of data used in the thesis are cited clearly in the
list of references and without any academic fraudulent act.

Thanks and best regards,
Phan Van Tien - Team leader
Phan Thanh Phong
Nguyen Van Khanh
Pham Thi Tu








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EXECUTIVE SUMMARY

According to the Vietnam Association of Automobile Manufacturers (VAMA),
the year of 2012 is proving a very difficult one for the automotive industry in Vietnam.
In fact, new car sales in the first half of this year fell by 41% (y-o-y), only 42, 928
units.
The main reason for the slide in new car sales has been the sharp increase in
vehicle registration taxes imposed by the government since the start of the year, which
has stifled demand for new vehicles. In addition, interest rates on car loans remain very
high (at around 20%), despite recent cuts to benchmark interest rates, making it very
difficult for Vietnamese consumers to afford car loans.
Looking forward, much will depend on the attitude of the Government and

whether it chooses to continue with the collection of three new charges, one of which -
the road maintenance fee - reportedly came into force on June 1
st
, 2012. So far, the
Ministry of Transport (MoT) has not outlined any timeframe for implementing the
other two tariffs - a fee on personal vehicle users and a charge for cars entering the
downtown area of cities in rush hour. However, the chairman of VAMA, Laurent
Charpentier, has stated that 'this does not mean it will not eventually collect the fee'.
In this difficult context, many companies have realized the important role of the
business strategy for the existence and development of every enterprise. A sound
business strategy will provide a good direction for an enterprise, it can be said that it is
as a guide to lead enterprises to overcome this difficult period and enhance the
enterprises’ positions in the market.
With the topic of "Building a business strategy for Hyundai Dong Anh in the
period of 2013 - 2015", we use the PEST model, Five Competition Forces Model and
other analysis tools learned from the Strategic Management subject to assess the status
of Dong Anh Thanh Cong Auto JSC’s operations (abrreviated as Hyundai Dong Anh).

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On the basis of the analysis results, the research team develops business strategy for the
enterprise and come up with solutions to the implementation of strategies so that the
operation of Hyundai Dong Anh can be conducted most efficiently and sustainably.
In addition to the introduction and conclusion, list of references, appendices, of
structure of the graduation paper are divided into three chapters:

Chapter I: Rationale for strategy and strategic management
In this chapter, the research team presents the basic contents of strategy and
strategic management in the enterprises. In particular, the research team focuses
emphasis on building basic contents of enterprises’ strategy development, including

analysis of enterprises’ operating environments and select business strategies for
enterprises on the basis of the analysis of the current operating environments.
Chapter I also presents the models and methods of analysis and strategy
development of enterprises such as PEST model, the Five Forces Model, EFE Matrix,
IFE Matrix commonly used in the analysis, environmental assessment inside and
outside of the enterprises’ environments. With the above-mentioned analysis results,
Chapter I also offers 02 popular techniques to determine the appropriate strategies
which are the SWOT analysis technique and IE Matrix. From these appropriate
strategies, Chapter I presents the method of using QSPM Matrix to select the optimal
strategy for the enterprises.
Overall, in the Chapter I, the research team focuses primarily on mentioning
models, analysis techniques, development and selection of strategies to provide a
theoretical basis for the study on the current status of Hyundai Dong Anh in the next
chapter.




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Chapter II: Current situation of Hyundai Dong Anh
Chapter II analyzes on 02 major areas: The Part 1 provides an overview of the the
organizational structure model, the development process and some basic activity
indicators of Hyundai Dong Anh from the establishment period until now; and the Part
2 mentions the state of production and business activities of the enterprise in the
current period. In terms of the focus of Chapter II, the team will conduct in-depth
analysis of the strengths, weaknesses, opportunities and challenges for the enterprise’s
activities in the current period. This is the basis for the development and selection of
business strategies of Hyundai Dong Anh in the period 2013 - 2015.

Chapter III: Business strategy planning for Hyundai Dong Anh in the period
of 2013 - 2015
Chapter III focuses on some strategies proposed by the research team can select
to enhance its capacity and business performance. On the basis of these strategies, the
team will select the optimal strategy for the enterprise. In addition, Chapter III also
provides the enterprise with suitable solutions to ensure the effective implementation of
strategies.

In summary, according to the presented contents, the paper has contributed to
strategic management activities in Hyundai Dong Anh. However, the study still has
some limitations in the analysis process and cannot avoid certain shortcomings. The
research team would look forward to receiving the additional comments of teachers,
friends and colleagues.





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TABLE OF CONTENTS

COVER PAGE ……………………………………………………………….…
ACKNOWLEDGEMENT ………………………………………………… …
EXECUTIVE SUMMARY ………………………………………………… …
TABLE OF CONTENTS …………………………………………………….…
LIST OF SYMBOLS AND ABBREVIATIONS ………………………… …
LIST OF TABLES ………………………………………………………… …
LIST OF FIGURES AND CHARTS ……………………………………… …
INTRODUCTION ………………………………………………………………

1. The necessity of the research topic ………… ………………………….…
2. The purpose of the research topic ……….……………………………….…
3. The subject and scope of research topic ……………………………………
4. The research methods … ……………………………………………….…
5. The contributions of the graduation paper …………………………………
6. The structure of the graduation paper ………………………………….…
CHAPTER I. RATIONALE FOR STRATEGY AND STRATEGIC
MANAGEMENT ………………………………………………………………
1.1. Natures of strategy and strategic management …………………… ….…
1.1.1. Definition and role of strategy …………………………… ………
1.1.1.1. Definition of business strategy……………… …….….…
1.1.1.2. Roles of strategy……………………………………… …
1.1.2. Definition and meaning of strategic management …………………
1.1.2.1. Definition of strategic management ………………………
1.1.2.2. Meaning of strategic management ………………………
1.1.3. Strategic levels ………… ……………………………………….
1.2. Strategic planning ………………………………………………………
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1.2.1. Determination of main tasks (missions) and objectives ……… …
1.2.2. Analysis of external environment ….………………………………
1.2.2.1. Analysis of the macro environment following PEST model
1.2.2.2. Analysis of industry environment ………………………
1.2.2.3. Summary of external environment analysis results -
Opportunities and Threats ………………………………
1.2.3. Internal analysis of the enterprise ………….………………………
1.2.3.1. Marketing evaluation ……….……………………………
1.2.3.2. Financial and accounting evaluation .……………………
1.2.3.3. Evaluation of production and operation .………………….
1.2.3.4. Evaluation of human resources management .…………….
1.2.3.5. Summary of internal corporate environment analysis
results - Strengths and Weaknesses ……… ………………….…
1.2.4. Strategic analysis and evaluation .………………………………….
1.2.4.1. Techniques of the enterprise’s strategy orientation analysis

1.2.4.2. Business strategy selection of the enterprises …………….
CHAPTER II. ANALYSIS OF CURRENT SITUATION OF HYUNDAI
DONG ANH ……………………………………………… …
2.1. Introduction about Hyundai Dong Anh .………………………………….
2.1.1. General information about Hyundai Dong Anh …………………
2.1.2. Establishment and development process ………………………….
2.1.3. Main business lines … …………………………………………….
2.1.4. Products of Hyundai Dong Anh ………………………………….
2.1.5. Organizational structure and management mechanism …………
2.1.6. Share ownership structure of Hyundai Dong Anh …………… …
2.1.7. Business results from the establishment period to now .…………
2.2. Analysis of business environment .……………………………………….
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2.2.1. Analysis of macro environment following PEST model .………….
2.2.1.1. Legal and political environments …………………………
2.2.1.2. Economic environment .…………………………………
2.2.1.3. Socio - cultural environment .……………………………
2.2.1.4. Technological environment ……….………………………
2.2.2. Analysis of the industry environment following Michael Porter’s
five competitive force model …………………….……………………….
2.2.2.1. Analysis of customers’ powers …………………………
2.2.2.2. Analysis of the suppliers’ pressure .……………………….
2.2.2.3. Analysis of substitute products’ risks .…………………….
2.2.2.4. Analysis of potential competitors .………………………
2.2.2.5. Analysis of current competitors …………………………
2.2.2.6. Competitive Profile matrix (CPM) ………………………
2.2.3. Summary of business environment analysis results of Hyundai
Dong Anh …
2.2.3.1. Determination of Opportunities and Threats ……………
2.2.3.2. External Factor Evaluation Matrix (EFE Matrix) ……….
2.3. Internal analysis and evaluation of the enterprise ……………………….

2.3.1. Evaluation of Marketing tasks ………….………………………….
2.3.1.1. Customer analysis .…………… ………………………
2.3.1.2. Market segments and identification of target markets ……
2.3.2. Evaluation of financial and accounting activities .…………………
2.3.2.1. Earnings report in 2012 …………………………………
2.3.2.2. Analysis of balance sheet as of November 30
th
2012 ……
2.3.3. Evaluation of production and operation …………………………
2.3.3.1. Forecast of product demands .……………….…………….
2.3.3.2. Production arrangement for the enterprise .……………….
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2.3.3.3. Plans of resources for production activities ………………
2.3.3.4. Production moderation and production system control .…
2.3.4. Evaluation of HR management …………………………………
2.3.4.1. Overview of Hyundai Dong Anh human resources ……
2.3.4.2. Evaluation of HR management policy …………………
2.3.5. Summary of internal environment analysis results ………………
2.3.5.1. Determination of strengths and weaknesses .……………
2.3.5.2. Internal Factor Evaluation Matrix (IFE Matrix) … ……
CHAPTER III. BUSINESS STRATEGY PLANNING FOR HYUNDAI
DONG ANH IN THE PERIOD OF 2013 - 2015 …….……
3.1. Determination of mission, vision and strategic objectives of …………
3.1.1. Mission ……………… ……………………………………………
3.1.2. Vision ……….……………………………………………………
3.1.3. Strategic objectives ….……………………………………………
3.2. Analyis and selection of business strategy of Hyundai Dong Anh in the
period of 2013 - 2015 …………………………………………………………
3.2.1. Analysis of the enterprise’s strategy orientations (SWOT matrix)
3.2.2. Selection of strategies for Hyundai Dong Anh ….…………………
3.2.2.1. Quantitative Strategy Planning Matrix (QSPM) ………

3.2.2.2. Selection of strategies for Hyundai Dong Anh …………
3.3. Solutions to business strategy implementation of Hyundai Dong Anh in
the period of 2013 - 2015 ……………… ……………………………………
3.3.1. Marketing solutions ……… ………………………………………
3.3.2. Financial and accounting solutions ………………………………
3.3.3. Production and operation solutions .……………………………….
3.3.4. HR solutions ….……………………………………………………
3.4. Limitations of research process and research orientations in the future
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3.4.1. Geographical position for the research …… ……………………
3.4.2. Research materials ……… ………………………………………
3.4.3. Analysis period …… ……………………………………………
3.4.4. The set objectives ………………… ………………………………
3.4.5. Next research orientations ………………………………………….
CONCLUSIONS ……… ………………………………………………………
REFERENCES …….……………………………………………………………
APPENDICES …………… ……………………………………………………
CERTIFICATION OF HYUNDAI DONG ANH …………………………….
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LIST OF SYMBOLS AND ABBREVIATIONS

ASEAN
Association of Southeast Asian Nations
CPI
Consumer Price Index
CPM
Competitive Profile Matrix
EFE
External Factor Evaluation
FDI
Foreign Direct Investment
GDP

Gross Domestic Product
HR
Human Resources
HTC
Hyundai Thanh Cong
IFE
Internal Factor Evaluation
JSC
Joint Stock Company
ODA
Official Development Assistance
QSPM
Quantitative Strategic Planning Matrix
SWOT
Strengs - Weaknesses - Opportunities - Threats
VAMA
Vietnam Automobile Manufacturers’ Association
WTO
World Trade Organization

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LIST OF TABLES

Table 1.1. External Factor Evaluation Matrix (EFE Matrix)………………………
Table 1.2. The Competitive profile matrix (CPM)…………………………………
Table 1.3. Internal Factor Evaluation Matrix (IFE Matrix)………………………
Table 1.4. SWOT Matrix-Strengths-Weaknesses-Opportunities-Threats Matrix
Table 1.5. Quantitative Strategy Planning Matrix (QSPM)………………………
Table 2.1. Share ownership structure of Hyundai Dong Anh……………………
Table 2.2. Competitive profile matrix (CPM) of Hyundai Dong Anh…….……….
Table 2.3. Determination of Opportunities and Threats of Hyundai Dong Anh…
Table 2.4. External Factor Evaluation (EFE) Matrix of Hyundai Dong Anh ……
Table 2.5. Achieved marketing results of Hyundai Dong Anh in the first 9 months
2012 ……………………………………………………………………………….
Table 2.6. Some main business indicators of Thanh Cong Corporation JSC., in
the period of 2009 - 2011 ……………………….……………………… ……….
Table 2.7. Earnings report of Hyundai Dong Anh in 2012 .……………………….
Table 2.8. Balance sheet as of November 30
th
2012 ………………………………
Table 2.9. Forecast of product demands and consumption in the years of 2013,
2014, 2015 …………………………………………………………………………
Table 2.10. Analysis and evaluation of advantages, shortcomings in HR
management of Hyundai Dong Anh ……………………………………………….
Table 2.11. Determination of Strengths and Weaknesses of Hyundai Dong Anh
Table 2.12. Internal Factor Evaluation (IFE) Matrix of Hyundai Dong Anh ……
Table 3.1. Strategic objectives of Hyundai Dong Anh in the period of 2013-2015
Table 3.2. SWOT Matrix applied to Hyundai Dong Anh…………………………
Table 3.3. Quantitative Strategic Planning Matrix (QSPM) of Hyundai Dong Anh

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LIST OF FIGURES AND CHARTS

Figure 1.1. Five competitive force model………………………………………….
Figure 1.2. Components of macro-environment and the industry environment …
Figure 1.3. Business strategy development analysis process ……………………
Figure 2.1. Organizational structure of Hyundai Dong Anh……………………….
Figure 2.2. Labor structure following expertise …………………………………
Figure 2.3. Labor structure following years of experience ………………………

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INTRODUCTION

1. The necessity of the research topic
In the 10 years from 2000 to 2010, thanks to the renovative guidelines of the
Party, the country's economy has experienced rapid and strong growth with the average
GDP growth rate of 7.2% p.a. However, in 2011 - 2012, the impacts of the economic
crisis has caused the economy of Vietnam to fall in the very difficult period. Many
enterprises have lost business, reduced the scale of production, suspended operations
and even gone bankrupt and dissolved.
So the question for enterprises: “which are still operating is how to survive, to
overcome this difficult period?”
In reality, in the current market economy, if an enterprise wants to succeed, it
must have a sound business strategy. This requires enterprise managers to grasp market
trends, understand competitors, capture customer desires, be aware of weaknesses and
exploit strengths of the enterprises, thereby making strategic decisions as a guide for
the operations of the enterprises to help them achieve successes.
The problems mentioned above has set out the urgent need for the research on
"Building business strategy for Dong Anh Thanh Cong Auto JSC., in the period of
2013 - 2015” (abbreviated as Hyundai Dong Anh).
2. The purpose of the research topic
In order to generalize the theoretical issues of strategic management in enterprises
and application of research, analysis and evaluation model on the practical operations
of Hyundai Dong Anh. On that basis, strategies and measures are proposed to
implement appropriate strategies for corporate governance in the phase from 2013 to
2015.

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3. The subject and scope of research topic
Research topic focuses on the basic contents of the strategic management theory
as well as strategy formulation process in the enterprises and reality of strategic
management organization in Hyundai Dong Anh.
4. The research methods
The graduation paper applies specific methods in the research process such as
methods of analysis, synthesis, comparison, survey methods, statistics for the analysis
of theoretical issues and practical operations of. On that basis, synthesis is made to
draw out the strengths, weaknesses, opportunities and threats for Hyundai Dong Anh,
propose strategies and solutions, complete suitable ad feasible strategies for the
Company.
5. The contributions of the graduation paper
The graduation paper analyzes, clarifies the role and significance of strategic
management in the enterprises as well as the application of the basic models (PEST
model, Five Force Model, SWOT Matrix, etc.) to develop business strategy. Then the
specific case of Hyundai Dong Anh is studied and applied. The graduation paper
describes and analyzes the state of organization and administration activities in
Hyundai Dong Anh. It also presents strengths, weaknesses, opportunities and
challenges for Hyundai Dong Anh.
On the basis of theoretical and practical research on activities of Hyundai Dong
Anh, the graduation paper builds business strategies that Hyundai Dong Anh should
apply in the next 03 years and specifies the directions and solutions to implement
strategies effectively, bringing successes to enterprises.
6. The structure of the graduation paper
In addition to the introduction and conclusion, list of references, appendices, of

structure of the graduation paper are divided into three chapters:
- Chapter I: Rationale for strategy and strategic management

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- Chapter II: Current situation of Hyundai Dong Anh
- Chapter III: Business strategy planning for Hyundai Dong Anh in the
phase of 2013 - 2015.

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CHAPTER I
LITERATURE REVIEW ON STRATEGY AND STRATEGIC MANAGEMENT

1.1. Nature of strategy and strategic management
1.1.1. Definition and role of strategy
1.1.1.1. Definition of business strategy
Definition of business strategy has been approached following many ways as
follows:
- According to Alfred Chandler, University, “business planning is concerned with
the determination of basic long-term goals and objectives and the adoption of courses
of action and allocation of resources necessary for carrying out these goals”.
- In Fred R.David’s opinion, [14], “Business strategy is a mean to achieve long
term objectives”.
Another definition: “a coordinated series of actions which involve the deployment
of resources to which one has access for the achievement of a given purpose” [5]
Whichever approach is implemented, the nature of business strategy still outlines
future images of enterprises in the field of operation and the ability to exploit. Good
strategy is not enough, but a new organization must be able to be implemented to
ensure enterprises’ successes [9, p.9]
1.1.1.2. Roles of strategy
The roles of business strategy for enterprises are shown in the following aspects:
- Help enterprises identify purposes, directions as foundations, guidelines for all
business activities of the enterprises.
- Helps enterprises understand and take advantage of business opportunities, and
take proactive measures to overcome risks and threats in the business marketplace.

- Contribute to improving efficiency of resource utilization, enhacing competitive
position of enterprises and ensuring sustainable development of enterprises.

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- Create solid foundations for the formulation of policies and business &
production decisions, which are consistent with market fluctuations.
Sources of successes or failure depend on one important factor which is
enterprises’business strategy.
[9, p.11]
1.1.2. Definition and meaning of strategic management
1.1.2.1. Definition of strategic management
Strategic management is an important issue which is paid due attention to by
many economists and adminstrators.
Fred R. David provides definition of strategic management “Stategic management
is defined as the art and science of formulating, implementing and evaluating cross-
functional decisions that enable the organization to achieve its objectives”. [14]
1.1.2.2. Meaning of strategic management
Strategic management is a prerequisite, and effective tool to help create successes
for enterprises. Benefits of the strategic management process include financial and
non-financial benefits.
- Help identify, prioritize and take advantage of opportunities.
- Provide practical perspective and difficulties in governance.
- Provide an outline for the synchronous development of operations and control.
- Minimize risks.
- Help reach decisions to better serve for set goals.
- Allow to reduce time and necessary resources to amend errors and decisions.
- Create framework for relationships among individuals within firms.
- Help combine individual behaviors into a common effort.
- Provide basis for clarifying individual responsibilities.

- Provide incentives for progressive thoughts.

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- Provide ways of cooperating, engaging and being engrossed in handling
problems as well as opportunities.
- Encourage positive attitude to changes.
- Form a discipline level and formal corporate governance in firms.
[9, p.19]
1.1.3. Strategic levels
Strategic management is conducted at different levels within an enterprise.
However, we can divide strategic management at three levels as follows:
- Enterprise level: develope overall strategy, determine business dates or business
sectors which have been conducted by enterprises.
- Basic level (SBU - strategic business unit): identify foundations that this unit
can fulfill functions and duties.
- Functional level: develop specific strategies following each administration
function and area.
[9. p.32-33]
Currently, in the context of globalization trend, many firms quickly expand their
operations outside national borders. To penetrate and compete in the global
environment, the firms also use strategies such as multi-national strategy, international
strategy, global strategy, and trans-national strategy.
1.2. Strategic planning
All vital strategic decisions for organizations and enterprises need to be carefully
considered prior to be deployed in actual operations of enterprises. [9, p.35]
1.2.1. Determination of main tasks (missions) and objectives
Determination of strategic missions and goals of enterprises is an extremely
important stage in the whole strategic management process.

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- Identification of tasks of enterprises is actual definition of business areas.
Missions of enterprises are shown through products, services, markets and also
manufacturing technologies.
- Strategic goal is to specify purposes of enterprises regarding implementation
directions, scope, structure and implementation in each period. In the market economy,
enterprises generally pursue three major goals: survival, growth and diversification.
The process of analysis, judgment, selection, application and evaluation of
strategy stems from this starting point.
[9, p.40, p.44]
1.2.2. Analysis of external environment
The purpose of the business environment analysis is to seek opportunities and
identify challenges for enterprises.
Scope and contents of the environmental analysis include: analysis of the macro
and micro environments is also known as the industry environment.
1.2.2.1. Analysis of the macro environment following PEST model
a. Governmental, legal and political environments
Governmental, legal and political factors have impacts on enterprises in different
directions. These factors can create opportunities, obstacles, even real risks for
enterprises. They usually include: political stability, decisions on advertising, decisions
on taxes and fees, law on labor
b. Economic environment
Economic situation and future trends can affect successes and strategies of an
enterprise. Major factors which are often analyzed by enterprises are the growth rate of
the economy, interest rates, exchange rates and inflation rate.
c. Social - cultural environment
Medium-and long-term strategies can be the biggest changing factors. Enterprises
must also take into account the import of new lifestyles, consumer behaviors, the

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changes of the age tower, the marriage and childbirth rates, the role, and position of
women in the working place and family Increasingly high, and diversified
intellectual standards of the people will be a challenge for manufacturers
d. Technological environment
This is a major and direct influential factor to the business strategy of the sectors,
industries and many enterprises. Obviously, technological changes affect the life cycle
of a product or a service. Moreover, technological changes also affect production
methods, raw materials as well as behaviors of workers.
Besides, the natural environment (climate, ecology, etc.), the global environment
(trend of regionalization and globalization) also affect the business strategy
development of enterprises.
[9, p.53-56]
1.2.2.2. Analysis of industry environment
Industry environment is a variety of factors that directly affect a firm and
competitive actions and competitive responses of the firm [5]
Missions of strategiest are to analyze and judge the competitive forces in the
industry environment to identify opportunities and threats to enterprises.
An analytical model of 5 competitive forces is built by M.Porter, which helps
the strategiests in this analysis. This model is shown in Figure 1.1 below:

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Figure 1.1. The model of five forces of competition
[Source: Strategic Management Textbook]
a. Analysis of exisiting competitors
The first force of the 5 forces in M.Porter’s model is scope of competititon among

current enterprises in a production industry. Competition between enterprises in a
production industry often include main content such as the industry’s competitive
structure, the status of the industry’s demands and exit barriers.
b. Analysis of potential competition
The second force needs to be analyzed is potential competitors who don’t have
competitive business in the same industry at current period; but they can compete if
they choose and decide to join the industry. Advantages and difficulties for the entry of
potential competitors depend largely on the barriers to penetrate into an industry. Its
contents usually include absolute cost advantages, product differentiation, economies
of scale, distribution channels, in response to the current enterprises in the field of
business.

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c. Analysis of suppliers’ pressure
Providers can be seen as a threatening pressure when they are able to increase
input prices or reduce the quality of the products and services that they provide.
Thereby the profitability of enterprises can decrease. A certain dependence on
enterprises can be created in anyway.
d. Analysis of customers’ pressure
This force creates buyers’ ability to bargain. Buyers can be viewed as a
competitive threat to force enterprises to reduce prices or have demands for high
quality and better service. In contrast, poor buyers will give enterprises an opportunity
to raise prices to earn more profit. Buyers include end-users, distributors (wholesale
and retail) and industrial buyers.
e. Analysis of substitute products’ risks
The final force in M.Porter model is the threat of substitute products. A substitute
product is another product that can satisfy the needs of consumers. Its basic
characteristics are usually more dominant than substitute products in terms of separate
features. Moreover, any change in market demands is also an important factor for

creating this threat.
Combination of components of macro and industry environments leads to Figure
1.2:


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Figure 1.2. Components of macro and indutry environments
[Source: Strategic Management Text-book]
[9, p.58-64]
Thus, on the basis of external environment analysis, enterprises judge
environments to identify opportunities and threats, thereby provide reasonable strategic
decisions.
1.2.2.3. Summary of external environment analysis results - Opportunities and
Threats
a. External Factor Evaluation (EFE) Matrix
After analyzing all factors of macro and industry environments, we use external
factor evaluation (EFE). EFE matrix is developed following Table 1.1 below.