Development strategies of phumy thermal power company in phase 2011 – 2020

GaMBA01.D0109 Group No. 03

1




Global Advanced
MBA Program (GaMBA)




CAPSTONE PROJECT REPORT

DEVELOPMENT STRATEGIES OF
PHUMY THERMAL POWER
COMPANY IN PHASE 2011 – 2020



Dinh Quoc Lam
Phan Van Dung
Cao Minh Trung
Vo Minh Thang


Class GaMBA01.D0109

Ho Chi Minh 2010



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ACKNOWLEDGEMENTS

First of all, we extremely thank the Management of Phu My Thermal Power
Company and Baria Thermal Power Joint stock Company for belief us and creating
good conditions for us to learn, to acquire Business Administration knowledge, and
help us to access extremely valuable knowledge.
In addition, we also thank to professors and assistant professors for bringing
us invaluable knowledge and experiences. It helps us to enhance our awareness;
help us to develop and implement our goals to contribute to the Phu My thermal
power company in particular and EVN in general.
We would like to thank all of the classmates for the solidarity and sharing
difficulties with us during learning process.
Finally, we greatly appreciate to Hochiminh Electric Power College, managers
of class D0109 (mama) and board of D0109 class leaders helped us successfully
complete the course.
Sincerest thanks.
Ho Chi Minh, 20
th
November, 2010
Group No.03

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BRIEF OF CONTENTS
Page
CHAPTER 1: THE THEORY BASIS OF BUSINESS STRATEGY OF A
COMPANY 13
1.1. Concept of strategy 13
1.2. Contents of Strategic Management 15
1.3. Summary 29
CHAPTER 2 ANALYSIS OF PHU MY THERMAL POWER’S
CURRENT BUSINESS SITUATION AND THEIR STRATEGY
ESTABLISHMENT 30
2.1. Panorama of the electricity indusrtry 30
2.2. Overview of PMTP’s business situation 34
2.3. EXTERNAL ENVIRONMENT ANALYSIS 41
2.4. INTERNAL ENVIRONMENT ANALYSIS 50
2.5. ESTABLISHMENT AND CHOICE OF PMTP’S STRATEGY 58
2.5.1 Analysis of PM TP’s SPACE matrix 58
2.5.2 SWOT analysis of PMTP 60
2.5.3 Strategies options 61
2.5.4 Optimal strategic choice of PMTP 63
CHAPTER 3: SOLUTIONS FOR THE IMPLEMENTATION THE
STRATEGY OF PMTP 69
3.1 General Solution 69

3.2 Solutions for each specific strategy 76
3.3 Recommendations 94
3.3.1 For Goverment 94
3.3.2 For EVN 94
3.3.3 For PMTP 94
3.4 Summary 95
CONCLUSION 97



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TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS i
CRIEP OF CONTENTS ii
TABLE OF CONTENTS iii
LIST OF ABBREVIATIONS vii
LIST OF TABLES viii
LIST OF FIGURES ix
LIST OF CHARTS ix
INTRODUCTION 10
CHAPTER 1: THE THEORY BASIS OF BUSINESS STRATEGY OF A
COMPANY 13
1.1. Concept of strategy and strategic management 13
1.1.1 Benefits of Strategic management 14
1.1.2 Comprehensive strategic management Model 14
1.2. Contents of Strategic Management 15
1.2.1 Defining Vision, Mission 15

1.2.2 Analysis of external environment 15
1.2.2.1 Macroscopic Environment 16
1.2.2.2 Industry Environment. 18
1.2.3 Internal Environment Analysis 20
1.2.3.1 Management 21
1.2.3.2 Marketing 21
1.2.3.3 Finance / Accounting 22
1.2.3.4 Production/Operations 22
1.2.3.5 Research and Development (R&D) 23
1.2.3.6 Information System 23
1.2.4 Process formed a stratergy 23
1.2.4.1 Phase 1: Input phase 23
1.2.4.2 Phase 2: Combination phase 23
1.2.4.3 Phase 3: Decision phase 24


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1.2.5 Strategies formation and selection tools: 24
1.2.5.1 EFE Matrix 25
1.2.5.2 IFE Matrix 25
1.2.5.3 SPACE Matrix 26
1.2.5.4 SWOT Matrix 27
1.2.5.5 QSPM Matrix 28
1.3. Summary 29
CHAPTER 2 ANALYSIS OF PHU MY THERMAL POWER’S
CURRENT BUSINESS SITUATION AND THEIR STRATEGY
ESTABLISHMENT 30
2.1. Panorama of the electricity indusrtry 30

2.2. Overview of PMTP’s business situation 34
2.2.1 History of the company 34
2.2.2 Business Scope 34
2.2.3 Technology and manufacturing scale 35
2.2.3.1 Technology 35
2.2.3.2 Manufacturing scale 36
2.2.4 Organization 39
2.2.5 Company’s Mission and Vision 40
2.3. EXTERNAL ENVIRONMENT ANALYSIS 41
2.3.1 Macro-environment 41
2.3.1.1 Economic environment 41
2.3.1.2 Political and legal environment 42
2.3.1.3 Social cultural environment 43
2.3.1.4 Scientific and technological environment 43
2.3.1.5 Natural environment 44
2.3.1.6 Global environment 44
2.3.2 Analysis of the industry environment 45
2.3.2.1 Customers’ power 45
2.3.2.2 Suppliers’ power 46
2.3.2.3 Existing competitors 47


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2.3.2.4 Potential competitors 48
2.3.2.5 Threats from substitutions 49
2.3.3 External Factors Evaluation (EFE) 49
2.4. INTERNAL ENVIRONMENT ANALYSIS 50
2.4.1 Management 50

2.4.2 Human resource 51
2.4.3 Marketing 52
2.4.4 Finance/Accounting 53
2.4.5 Manufacturing 55
2.4.6 Internal Factors Evaluation (IFE) 57
2.5. ESTABLISHMENT AND CHOICE OF PMTP’S STRATEGY 58
2.5.1 Analysis of PM TP’s SPACE matrix 58
2.5.2 SWOT analysis of PMTP 60
2.5.3 Strategies options 61
2.5.4 Optimal strategic choice of PMTP 63
CHAPTER 3: SOLUTIONS FOR THE IMPLEMENTATION THE
STRATEGY OF PMTP 69
3.1 General Solution 69
3.1.1 Solutions organization 69
3.1.2 Building corporate culture 70
3.1.3 Human Resource Development Solution 70
3.1.4 Financial Solutions 72
3.1.5 Technical management, safety and quality solutions 73
3.1.6 Information technology Solutions 73
3.1.7 Planning implementation general solutions 74
3.2 Solutions for each specific strategy 76
3.2.1 Power production and trading strategy 76
3.2.1.1 Short-term goals 76
3.2.1.2 Long-term goals 77
3.2.1.3 Solutions to implement strategy 79
3.2.2 Services development Strategy 82


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3.2.2.1 Short - term goals 82
3.2.2.2 Long-term goals 83
3.2.2.3 Solutions of implement the strategy 83
3.2.3 Investment strategy 90
3.2.3.1 Short term goals 90
3.2.3.2 Long term goals 90
3.2.3.3 The strategic solutions 90
3.3 Recommendations 94
3.3.1 For Goverment 94
3.3.2 For EVN 94
3.3.3 For PMTP 94
3.4 Summary 95
CONCLUSION 97



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LIST OF ABBREVIATIONS

PMTP Phu My Thermal Power Company Limited
EVN Electricity of Vietnam
A0 The Nation load Dispatch Center
MSC Maintenance Service Center
BTP Ba Ria Thermal Power Joint Stock Company
TĐTP Thu Duc Thermal Power Company Limited
CTTP Can Tho Thermal Power Company Limited
MECO Mekong Power Company

Phu My 3 Phu My 3 Power Company
PVPS PetroVietnam Power Service Company
PV POWER PetroVietnam Power Company
PV GAS PetroVietnam Gas Company
OEM Original Equipment Manufacturer
Non-OEM Non-Original Equipment Manufacturer
BOP Balance of Plant




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LIST OF TABLES
Page
Table 1.1: The technique analysis of external environment 16
Table 1.2. SWOT Matrix 28
Table 2.1: Capacity of the power system from 2005 to 2010 31
Table 2.2: Capacity of system according to No.6 power planning 32
Table 2.3: Capacity and market share of existing competitors 47
Table 2.4: Capacity and market share of Potential competitors 48
Table 2.5: External Factors Evaluation (EFE) 49
Table 2.6: Human resource of PMTP for period from 2006-2010 51
Table 2.7: Performance report of PMTP manufacturing 2006-2010 53
Table 2.8: Some basic financial targets of PMTP 2006-2009 53
Table 2.9: Manufacturing price of electric of PMTP 2006-2010 56
Table 2.10: Operational indicators of PMTP period 2006 – 2010 57
Table 2.11: Internal Factors Evaluation (IFE) 58
Table 2.12: SPACE Matrix 61

Table 2.13: QSPM MATRIX OF S – O STRATEGIES 64
Table 2.14: QSPM MATRIX OF S – T STRATEGIES 65
Table 2.15: QSPM MATRIX OF W – O STRATEGIES 66
Table 2.16: QSPM MATRIX OF W – T STRATEGIES 67
Table 3.1: Plans for implementation of general solutions 74
Table 3.2: Plans and targets of power production and trading for
period 2011-2020 78
Table 3.3: Implementation of strategy 81
Table 3.4: Implementation plan to service development strategies 87
Table 3.5: Implementation plan to develop investment strategies 92



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LIST OF FIGURES

Figure 1.1: Comprehensive strategic management Model 14
Figure 1.2: Michael Porter’s Five Competitive Forces model 19
Figure 1.3: The strategy - formulation analytical framework 24
Figure 2.1: Simplified model of an electricity supply system 31
Figure 2.2: Organizational chart of PMTP 39

LIST OF CHARTS
Chart 2.1: Installed Capacity Progress of PMTP 36
Chart 2.2: Annual generated power energy of PMTP 37
Chart 2.3: Ratio capacity of PMTP in national power system 37
Chart 2.4: Market share of PMTP in national power system 38
Chart 2.5: Power energy ratio between PMTP and EVN 38

Chart 2.6: Strategic position of PMTP 59




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INTRODUCTION
1. Subject
Development strategies of Phu My Thermal Power Company for the period
2011 – 2020.
2. Necessity of the subject
Being a subsidiary of EVN, PMTP is undergoing the equitization process and
standing at the threshold of a competitive power market. The question is whether or
not such advantages PMTP gained in the past as: economy of scale, location,
personnel, finance and technology still has an impact on its competitiveness in the
market. Besides, there are future threats that PMTP will encounter and have to
overcome to achieve their goals and missions. In order to adapt to the new business
pattern of the competitive power market from a self-accounting system of a typical
state-owned enterprise in a monopolistic electricity industry, PMTP should have
specific strategic objectives and take step by step according to Vietnam macro
environment and electricity industry conditions that will have many changes in
coming years.
With the mission of becoming a sustainably developing and of high quality
corporation in South East Asia, PMTP should study thoroughly the business
environment factors in order to form an appropriate business strategy.
Resulting from the above mentioned reasons and imperative requirements, we
decided to select the subject “Development strategies of Phu My Thermal Power
Company for the period 2011 – 2020” for our master thesis of this MBA program,

in order to apply the knowledge obtained to our company (PMTP) practical
situation and also to carry out these strategies in the future.
3. Purpose
The purpose of studying the subject is to analyze the operation of PMTP, the
effects of the business environment to PMTP activities in order to point out its own
strengths and weaknesses as well as the opportunities and threats affecting to
PMTP. Based on that, we can build appropriate strategies as well as propose some


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solutions to make good its shortcomings and improve operational efficiency of
PMTP on the journey of sustainable development.
4. Object and Scope of strategy
Object
The study of production and business activities of PMTP and the competition
environment of the electricity industry in Vietnam
Scope
Nationwide (with consideration to the Asia region).
5. Research method
5.1. Methodology of research
Approaching to macro environment: Economic, cultural - social, political -
legal, technological and global impact on the activities of PMTP.
Approaching to electricity industry environment: Threats of new potential
entrants, levels of competition among companies in the Energy sector, negotiation
strengths of the power trading company, brand strengths of the power suppliers,
technology, threats of substitutive products.
Approaching to internal environment: Analysis of PMTP’s existing resources
to find out the strengths and weaknesses.

5.2. Empirical method
This thesis’ research methods are primarily historical approach, describing
statistical method and analysis.
- Survey data on revenue reports from 2006 to 2010 and financial statements of
PMTP.
- Review PMTP activities, statistic data of production and business activities
- Surveys on business situation of PMTP and referring to comments of
specialists, consultant experts and customers in functional units of PMTP to
review and evaluate external and internal factors’ effects on PMTP’s
operations.


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6. Theoretical and practical significance of the subject
In the globalization and international integration process, the knowledge of
mankind is rapidly spreading across all nations and peoples. The research topic of
our group is applying the knowledge acquired in master business administration of
international program – GaMBA Griggs University in Vietnam and the practical
experiences over our time working in PMTP and in the electricity industry of
Vietnam
Through the process of learning and researching topics, our group obtained the
knowledge and valuable experiences from the program and all classmates; this is
very useful for all members of the group in current and future daily work.
This topic will be presented officially as a document and contributed in
advising the leadership in direction, administration and operation of the company.
The proposals will closely accord to strategic goals in the short and long term of the
company so that they will be compliant with regulations, vision and mission of the
company.

7. Contents
Thesis is divided into three chapters as follow:
Chapter 1: The theory basis of business strategy of a company.
Chapter 2: Analysis of Phu My Thermal Power Company’s current
business situation and their strategy establishment
Chapter 3: Solutions for the implementation of the strategies of PMTP.


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CHAPTER 1: THE THEORY BASIS OF BUSINESS STRATEGY OF A
COMPANY
1.1. Concept of strategy and strategic management
Concept of strategy
There are many definitions about strategy; each definition is more or less
different depending on the perceptions of each author.
- According to Alfred Chandler: Strategy is the determination of the basic
objectives and long term of enterprises, the selection of the best direction and
manner and allocation of the necessary sources to implement those goals.
- According to Fred R. David (2003): Strategy is the means to achieve long-
term goals.
- According to Rudolf Grunig và Richard Kuhn (2003): The strategy is long
term and it orients the management manner to ensure for completion of long-
term goals, the primary purposes of the company.
In summary, no matter how you approach, the business strategy also includes
the following:
Business strategy is a series of commitments and actions that a company uses to
gain a competitive advantage by exploiting the core competence in a certain market.
The purpose of business strategy is to make the differences between a

company's positions in relation to their competitors.
Concept of strategic management
Strategic management is a set of management decisions and actions
determining the long-term performance of a company. Strategic management
includes a set of continuous actions: testing and evaluate the environment (inside
and outside); forming strategies, implementing strategies and evaluating strategies.
Therefore, research the strategy to emphases on monitoring and evaluating the
external opportunities and threats in the situation of the internal strengths and
weaknesses.


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1.1.1 Benefits of Strategic management
Achieve strategic competitive advantage. This is an advantage when a company
has been formulating and implementing a strategy to get value to the conmapy.
Achieve stable competitive advantages. This is an advantage when a company
has been forming a strategy that its competitors could not have been, creating the
advantages that the current competitors and other potential competitors could not
have been.
Achieve above-average sector profits, that are profits exceeding investors’
expectation from other investments that have similar risks.
1.1.2 Comprehensive strategic management Model (Ref. 2)


Figure 1.1: Comprehensive strategic management Model (Fred R David)
Source: Fred R David, “Strategic Management Concepts & Cases” twelfth edition, chapter 1, page 46.

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1.2. Contents of Strategic Management
1.2.1 Defining Vision, Mission
- Vision shows the highest and most general goals of a company. Vision
describes the company's aspirations about what the company wants to
achieve. According to James Collins and Jerry Porras, structure of a vision
has two basic parts: core thoughts and envisioning for the future. The core
thoughts is the most stable part in a vision. It reflects what the company
protects or supports, the reason for the company to exist. Those are the core
values and core purposes. Envisioning about the future is quite changed, is
something that the company aspire to become, creating the images of the
future is something that will require changes and significant progress to
achieve.
- Mission describes the company in its business conditions, customers that it
serves, the skills needed to develop to meet vision’s requirements.
- The scale, resources, existing capacity of a company has created core
competencies for the company. Core competence is the foundation for
competitive advantages.
- The main objectives of a company is determining what to do if the company
wants to achieve the mission. The good goals must be and accurate,
measurable, must be targeted to key problems, must be challenging but have
to identify specific time to achieve.
1.2.2 Analysis of external environment
External environment are the factors, regulations, regimes, etc. That happen
beyond the enterprise’s control, but are affecting the enterprise’s operation
efficiency.
Analysis of external environment’s objective is to find out a “limited” list of
opportunities for the enterprise and threats that the enterprise ought to shun.

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Table 1.1: The technique analysis of external environment
Technique
Objective
Scanning
Identify early signs of changes and environmental trends
Monitoring
Discovered meaning through continuous observations of changes
and trends of environment
Forecasting
Develop plans for what will happen based on changes and trends
have been reviewed and monitored
Assessing
Determine the duration and importance of the environment changes
and trends for strategies and management activity.
Source: Environmental Scanning by James L. Morrison (1992). Tallahassee, Florida: The Association for
Institutional Research.
1.2.2.1 Macroscopic Environment
(1) Economics environment
This is the key factor and has the most direct impact on enterprise.
Economics environment shows the nature and direction of domestic and global
economy within which the enterprise is operating.
Four vital factors’ in macroscopic economics environment are as follow:
- The growth rate of economy
- The interest rate and the trend of interest rate of economy

- Monetary policy and rate of exchange
- Inflation rate.
(2) Political/Legal Environment
Political and legal factors also has a major impact on activities of the business.
That the environment changes constantly will affect significantly to competition.
- Politics: political institutions and political stability are important factors in
considering investment and business decisions.
- Legislation: the legal system is the first condition affecting to the business
environment. The businesses need to understand and obey the laws to take
advantage of the opportunities, as well as coping with threats in business.
- Government plays a major role in macroscopic regulation through economic,
financial, monetary policies and its spending programs. To take advantage of


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opportunities, mitigate threats, enterprises have to capture the point of views,
rules, and priorities and establish good relationships in order to create a
favorable environment during operation.
(3) Socioculture Environment
The impact of cultural - social factors is often long-term and more subtle than
the other factors. However, the impact range is often very large because it
determines how people live, work, produce and consume products and services.
The variables impacting to Social cultural Environment are as follow:
- System of standard moral values; point of view of life quality.
- Level of consciousness, knowledge
- Trends of consumption
- Population environment: scale, increasing rate, structure, life span, etc.
(4) Technological Environment

The technological knowledge is particularly important. Some factors should be
considered when studying technology environmental are:
- The born of new technologies
- The encouragement, funds available and costs for Research and
Development activities
- Intellectural Property and copyright Law; Technology Transfer Law.
- Pressure and costs for new technology’s development and transfer.
One of the most important impacts of technological change is that it can affect
the height of the industry’s entering barriers and reshape to the root of the industry
structure. In the high-tech technologies, the identification and assessment of critical
technological opportunities and threats may be the most important part of the
control of external factors in the strategic management activities.
(5) Natural Environment
Natural conditions are always an important factor in human life, which in many
cases becomes an important element to form the competitive advantage of
products and services.


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Factors need to be studied in this environment:
- Geographical location, natural conditions and climate.
- Depletion and scarcity of natural resources, minerals, energy resources
- Environmental pollution; the attention of government and community to
environment.
- Ecological imbalance.
(6) The Global Environment
In condition of integration and globalization, there’s not any business which
does not have a relationship directly or indirectly with the world economy, and

more and more business are impacted by this effect.
Depending on the type and business measure on the international market, the
analysis level of the global environment will be different.
Globalization of business markets creates both opportunities and threats.
In summary, the main goal of the macro-environment analysis is to identify the
changes and trends expected from elements of the external environment. With focus
on the future, the analysis of the external environment allows enterprises to
recognize the opportunities and threats
1.2.2.2 Industry Environment.
(1) The need of the industry analysis
Industry environment analysis is the concepts and techniques to clarify the
key issues as follows:
- The highlighted economic characteristics of the industry
- The competitors who are operating in the industry, the essence and strengths
of each competitor.
- The motivation causing the changes in the industry and their impacts.
- The key factors for success or failure in competition
- The attractiveness of the industry based on the ability to gain profit
(2) Five Competitive Forces Model (Ref. 3)


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Michael E. Porter, Professor of business administration at Harvard
University has built a model with five forces affecting to enterprises - also known as
Five Competitive Forces Model:
 Power of Buyers:
Notice when analyzing customers:
- To classify the group of customers

- To evaluate the strong of customers’s negotiation: price and quality.
 Power of Suppliers:
Should consider these factors as follows:
- The quantity of supplyer
- Characteristics of products and services
- Price, quality and quantity of consumption of products and services
- The ability and cost when changing suppliers

Fig. 1.2: Michael Porter’s Five Competitive Forces model
Source: Adapted and reprinted by permission of Harvard Business Review. From “How Competitive Forces
Shape Strategy” by Michael E. Porter, Harvard Business Review, March/April 1979 © by the President and
Fellows of Harvard College. All rights reserved.


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 Current competitor:
To recognize the kind of competitor
Necessary content in order to analyse the competitor:
- Current Strategy
- The potential
- Recognizing the impact of Rivalry to the industry
 Potential Entrants:
The New competitors are the competitors could enter the market of industry in
the future to become new competitors.
According to Michael Porter, there are six major sources of barriers to entry:
- Economies of Scale
- Proprietary product differentiation
- Capital requirements

- Variable cost
- Approach ability to distribution channels
- Cost disadvantages independent of scale.
 The threat of substitute products:
Substitutes Products are other products which are giving consumers the features
and benefits equivalent to the products of the enterprise.
Identify Substitutes Products is a sophisticated, sensitive and very difficult
work.
The substitutes Products are often the result of the improvement or new
technology.
1.2.3 Internal Environment Analysis
Internal Environment of a business includes all the elements and its internal
systems.
According to Fred R David, purpose of internal analysis to identified and
assessed the strengths and weaknesses in the operation of the enterprise, including


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management, marketing, finance / accounting, production / operations, research &
development and information systems.

1.2.3.1 Management
Management has 05 basic functions: planning, organizing, promoting, staffing
and control.
Planning: This includes all administrative activities related to prepare resource
for the future. The specific tasks are: Forecasting, establish objectives, Devising
strategies, Develop policies and Setting goals.
Organization: includes all management activities to create the relative between

rights and responsibilities. The specific tasks are: Organizational design, Job
specialization, Job descriptions, Job specifications, Span of control, Unity of
command, Coordination, Job design, Job analysis.
Promotion: Efforts to include the orientation of human activity, specific
Leadership, Communication, Work groups, Job enrichment, Job satisfaction, Needs
fulfillment, Organizational change, Morale.
Staffing: Staffing is activities focused on individual managers or human
resources management, including Wage & salary admin, Employee benefits,
Interviewing, Hiring, Firing, Training, Management, development, Safety,
Affirmative action, EEO, Labor relations, Career development, Discipline
procedures.
Control: relating to all management activities to ensure the results match reality,
consistent with planned results. The specific tasks are: Quality control, Financial
control, Sales control, Inventory control, Expense control, Analysis of variances,
Rewards, Sanctions.
1.2.3.2 Marketing
According to Joel Evans and Barry Berman, Marketing includes 09 basic
functions:
- Customer Analysis


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- Purchase
- Sales
- Product and service planning
- Pricing
- Distribution
- Marketing research

- Opportunity analysis
- Responsibility to Society
1.2.3.3 Finance / Accounting
Financial condition is often seen as methods to evaluate the competitive
position of the company's best and most attractive conditions for investors.
The Basic Financial Indexes can be classified into 05 categories:
- Indexes of Liquidity shown the firm’s ability to meet its short-term
obligations.
- Indexes of Leverage shown the Extent of debt financing.
- Indexes of Activity shown Effective use of firm’s resources
- Indexes of Profitability shown the overall effectiveness of management, the
profit shown by returns on sales and investment.
- Indexes of Growth shows the firm’s ability to maintain economic position in
the growth of the economy and the industry.
1.2.3.4 Production/Operations
Production/Operation function of business activities including all activities to
transform inputs into goods and services.
According to Roger Schrocder, the operations management including 05 kinds
of decisions or functions:
- Process
- Capacity
- Inventory
- Workforce


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- Quality
- The main strengths or weakness of five functions which can mean the

success or failure of organization
1.2.3.5 Research and Development (R&D)
In order to evaluation the strengths, weakness of R&D activities, often based on
costs for them.
There are two kinds of R&D forms: self-control and/or hire researchers or
independent organizations to develop individual products.
1.2.3.6 Information System
The information links all of the functions in business together and provides the
basis for all of management decisions. It is the foundation of all organizations.
Evaluation of the strengths and weakness of information systems inside of the
company are important side of internal control process.
The criteria for evaluating information system
- Evaluate information intensity: The potential and existing information level
of processes and products of the company.
- Determine how the technique of the information system forms a competitive
advantage.
- Develop plans to take advantage of the technique of information systems.
1.2.4 Process formed a stratergy (Ref. 2)
In order to form a strategy, a decision-making process includes three phases:
1.2.4.1 Phase 1: Input phase
This phase summary of the basis information has been entered necessary for
the formation of strategies.
This phase uses tools: EFE matrix, IFE matrix
1.2.4.2 Phase 2: Combination phase
This phase focuses on making feasible strategies may be choices by
arrangement, combination the inside and outside important elements.
This phase uses tools: SWOT matrix, SPACE matrix


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1.2.4.3 Phase 3: Decision phase
This phase uses only one tool, strategic planning matrix can quantify
(QSPM). QSPM matrix using input information derived from phase 1 in order to
evaluate objectively feasible strategies may be selected in phase 2.

Figure 1.3: The strategy formulation framework
Source: Fred R David, “Strategic Management Concepts & Cases” twelfth edition, chapter 6, page 222.

Note: Tools such as SWOT Matrix, SPACE Matrix QSPM and matrix, can
significantly increase the quality of strategic decisions, but should not use them to
control strategies. Aspects of formation and selection strategies such as behavior,
culture and politics has always been important issues need to be reviewed and
management. Under the pressure of the law by outside groups created, the
administrator must undertake a more active role in the analysis and strategic
choices. This is a positive trend in organizations.
1.2.5 Strategies formation and selection tools:
Within the scope of this thesis, from the actual production and business
situation of PMTP, the appropriate tools for strategic planning are as follows: