Constructing business development strategy by 2015 and vision by 2020 for Ha Noi Beer – Alcohol – Beverage Joint stock corporation

1



GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION
PROGRAM


CAPSTONS PROJECT REPORT

CONSTRUCTING BUSINESS DEVELOPMENT STRATEGY BY 2015 AND
VISION BY 2020 FOR HA NOI BEER – ALCOHOL – BEVERAGE
JOINT STOCK CORPORATION


Group 3
1. Nguyen Van Thao (Leader)
2. Bui Anh Linh
3. Nguyen The Than
4. Nguyen Thi Thanh Nga



NGHE AN 2012

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TABLE OF CONTENTS
Contens

Page
CHAPTER I: THEORY AND REALITY FOR CONSTRUCTING STRATEGY OF
HABECO
9
1.1. Business strategy of the enterprise
9
1.1.1. Definition of business strategy
9
1.1.2. The role of business strategy
10
1.1.3. Types of business strategy
12
1.2. Process of strategy construction
16
1.2.1. Defining mission and targets
17
1.2.2. Analysis of internal and external environment
18
1.2.3. Techniques of analysis and strategy selection
20
CHAPTER II: GENERAL INTRODUCTION AND BUSINESS
ENVIRONMENTAL ANALYSIS OF HABECO
27
2.1. General introduction of the corporation
27
2.1.1. Establishment process, function, duty and organizational structure
27
2.1.2. Reality and results of business and production within the period of
2009-2011
29

2.2. Analysis of business environmental factors impacting on the activities
of the corporation
30
2.2.1. Analysis of external environment
30
2.3.2. Analysis of sector environment and competition
36
2.3.3. Analysis of internal environment
45
2.3.4. Selection of business strategy
54
2.3.4.1 External factor evaluation matrix
53
2.3.4.2 Internal factor evaluation matrix
55
CHAPTER III: BUSINESS STRATEGY FOR HABECO BY 2015 AND VISION
58

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BY 2020
3.1 Strategic plan selection
58
3.1.1 IE matrix
58
3.1. Analysis of SWOT matrix
59
3.2. Selection of strategic solutions for HABECO within the period of 2012-
2015
61

3.2.1. Mission declaration of HABECO
61
3.2.2. Concrete targets
63
3.2.3. Selection of strategic methods for HABECO by 2015 and vision by 2020
64
3.3. Implementation plan
79
3.4. Recommendations
80
3.4.1. With regard to National Assembly and the Government
80
3.4.2. With regard to ministry of commerce and industry
80
3.4.3. With regard to Vietnamese beer, alcohol and beverage association
81












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LIST OF ABBREVIATION
Abbreviation
English
Vietnamese
HABECO
Ha noi beer, alcohol, beverage joint
stock corporation
Tổng công ty Bia- rượu- Nước
giải khát Hà Nội
SABECO
Sai Gon beer, alcohol, beverage
joint stock corporation
Tổng công ty Bia- rượu- Nước
giải khát Sài Gòn
VBL
Vietnam Brewery Limited
Công ty trách nhiệm hữu hạn
Nhà máy bia Việt Nam
VBA
Association of Beer - Alcohol -
Beverage Vietnam
Hiệp hội Bia – Rượu – NGK
Việt Nam
VCCI
Vietnam Chamber of Commerce
and Industry
Phòng thương mại và công
nghiệp Việt Nam

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LIST OF FIGURES
Contens
Page
Figure 1.1. Duty of strategic management
12
Figure 1.2. Process of constructing strategy of the enterprise
17
Figure 1.3. External environment
19
Figure 1.4: Importance Mark in IE Matrix
23
Figure 1.5. SWOT matrix
26
Figure 2.1. Beer consumption level per capita in Viet Nam
35
Figure 2.2. Vietnamese beer quantity from 2005 to 2011
37
Figure 2.3. Market share in 2011 of beers base on geographical location
38
Figure 2.4. Growth rate of quantity of beer producers from 2008 to 2011
39

Figure 2.5. Structure of Vietnamese beer market
40
Figure 2.6. Five competitive force model of Michael Porter for beer sector
45
Figure 3.1. IE matrix
59









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LIST OF TABLES
Contens
Page
Table 1.1. External factors evaluation matrix
21
Table 1.2. Synthesis table of internal factors
22
Table 2.1. Budget payment of the whole sector in 2011
31
Table 2.2. Prediction the consumption of beer, wine within the allowed age
(15+) in Viet Nam
34
Table 2.3. Some financial norms of HABECO (2009 – 2011)

47
Table 2.4. Export results in 2010 and 2011
50
Table 2.5: Competitive advantages of three biggest beer producers in Viet Nam
52
Table 2.6: Comparison with competitive opponents
53
Table 2.7: External factors evaluation matrix
54
Table 2.8: IFE matrix
56
Table 3.1. SWOT matrix
64
Table 3.2. Concrete targets of growth rate by 2015 and 2020
69
Table 3.3. Export plan by 2012
72









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PREFACE
1. The need of the topic study

Achievement of the twentieth century has marked a new development step
of the industrial production which bring the global economy to a high development
step. Coping with such strong growth rate, on the half decade of 21
st
century, a
series of big enterprises in the world have declared bankruptcy especially since
2008 with the collapse of American property market and banks and currently public
debt in Europe to deeply impact on global economy together with political
instability in some nations. In Viet Nam, integration into WTO and globalization
have deep influence on business activities of each enterprise.
And how to make an enterprise maintain stable business activities and
growth rate in the strong competitive market impacted by many external factors
that are hard to be controlled with a defined source and how to maintain stability
and development in long term? We want to apply the learned knowledge to
analyze, evaluate influences on business activities of an enterprise including
objective and subjective factors, external and internal factors of the enterprise, then
define opportunities, threats, strengths and weaknesses of enterprise (HABECO).
HABECO is one of the state-owned enterprises with strong transferring
when it transfers from state-ownership to the form of joint stock corporation in
2008; its average growth rate in recent years is 20%, average revenue annually
increases 30%, state-owned budget payment annually increases 20%, average profit
annually increases 12%. HABECO is the enterprise with the distinctive product of
Ha Noi city named Ha Noi beer; in the economic integration, deep globalization
then to maintain stable business activities and sustainable development then
enterprise must have long term strategy to cope with external influences and strong
economic competition.
Via learned knowledge and the time of research and approaching business
reality of HABECO, we have applied from the theories to reality to create the
business strategies with some detailed proposals for HABECO to be in ready
position to stabilize growth rate in the long term to become one of the leading

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enterprises of beverage in Viet Nam and the region.
2. The targets and application of the topic
The main purpose of this research is to select a strategy for the long term
development of HABECO based on environmental analysis and evaluation, internal
and external prospects of the sector of beer, alcohol and beverage by 2015 and 2020.
The targets of research are as follows:
 Reconsider the best model of development strategy of beer, alcohol, beverage
in the nation.
 Define strengths, weaknesses, opportunities and threats of HABECO
 Evaluate present situation of HABECO to develop competitive program.
 Construct business strategy by 2015 and 2020 for HABECO.
3. Study object and scope:
This report will study the business strategy of HABECO which is one of the
three leading enterprises of the sector of manufacturing beer - alcohol - beverage of
Viet Nam.
The study scope of this topic includes activities of production, trading and
external environmental factors impacting on the activities of the company. This topic
is studied and analyzed within 6 working weeks (05/08/2012 – 19/09/2012). The data
in the report has been collected since 2006.
Analyze and evaluate current business strategy of HABECO; propose ideas
and solutions to improve business strategy of HABECO within the period of 2012-
2015 an strategic vision by 2020.
4. Study methods:
- Methods of approaching: the report has used the approaching methods such as
particular approaching method; historic approaching method, qualitative and
quantitative approaching methods.
- The method of data analysis and processing: the report has used the methods

of statistical description, analysis, synthesis when evaluating business results of
HABECO; EFE matrix, IFE matrix, SWOT matrix, IE matrix.

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- Information sources: the report has use secondary information from papers,
books, internet and reports of HABECO, commercial and industrial ministry.
5. Structure of the report
This report includes 3 chapters
Preface
Chapter 1: Theory and reality of constructing strategy for HABECO
Chapter 2: general introduction and analysis of business environment of HABECO
Chapter 3: selection of development strategy for HABECO by 2015 and vision by
2020
Recommendations and conclusions










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CHAPTER 1
THEORY AND REALITY OF STRATEGY CONSTRUCTION FOR HABECO

1.1. Business strategy
1.1.1 Definition of business strategy
“strategy” is the terminology originated from the Greece word “Strategos” to
be used in the army; modern military theorist Clawzevit supposes that: military
strategy is the steering art in favorable position. According to Larous Coi
dictionary: strategy is the art to steer media to reach success.
In 1962, Chandler has defined strategy as “the task of defining basic long
term targets and purposes of the enterprise and the applying a series of action as
well as allocation of necessary resources to implement this target”. (Chandler,
A.1962. Strategy and Structure. Cambridge, Massachusetts. MIT Press)
By 1980s, Quinn has given a more general definition “strategy is the model
or plan to gather the main targets, policies and a serial action into a strongly
consolidated organization”. (Quinn, J., B. 1980. Strategies for Change: Logical
Incrementalism. Homewood, Illinois, Irwin)
Then, Johnson and Scholes have defined the strategy in the quickly changed
environmental conditions: “Strategy is the long term orientation and the scope of
an organization to occupy competitive advantages for the organization via defining
its resources in a changed environment to meet market demand and satisfy the
expectation of stakeholders”. (Johnson,G., Scholes, K.1999. Exploring Corporate
Strategy, 5
th
Ed. Prentice Hall Europe)
Brace Henderson, the strategist and the founder of Boston consultancy
corporation has defined that “strategy is to carefully search for an action plan to
develop and connect competitive advantages of the organization. The differences
between you and the competitive opponents are the advantages for you”.
Michael Proter also agrees with the opinions of Henderson: “competitive
strategy is related to the difference. This is to select carefully a serial activities to

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create a distinctive value collection”.
In spite of any approaching method then the nature of business strategy is to
draft the future image of the enterprise in the operational sector and exploitation
capacity. According to this understanding, business strategy is used according to 3
most popular significances:
- Define long term targets of the enterprise.
- Create general action plan.
- Select action plan; allocate resources to implement such targets.
Current popular viewpoint is that: “business strategy is the art to coordinate
activities and control them to reach the long term targets of the enterprise”. It
considers business strategy as a management process leading to the enterprise
management by strategic thought with the following viewpoint: a good strategy is
not enough but it must include the good implementation capacity to ensure success.
Enterprise management is the strategic duty which is the currently popular
viewpoint of strategic management.
(Source: Ngô Kim Thanh.2011. National economic university – manual book
of strategic management)
1.1.2 The role of business strategy
Business strategy has a really important role for the formation, existence,
development of the enterprise. Business strategy is considered as the guideline for the
activities of the enterprise which is the important factor to create the success for the
enterprise; the role of business strategy is shown as follows:
Business strategy will help the enterprise to define the purposes, orientation of
the enterprise which is the basis and guideline for all business activities of the
enterprise. Without strategy, enterprise will not define its own targets and orientation
in the operational process then it cannot mobilize the human resource, materials to
promote the advantages of the enterprise.
Business strategy will help the enterprise grasping and making use of business
opportunities then having the methods to overcome the threats in the competition

process of the enterprise. Thanks to the business strategy, enterprise can create

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solutions to get success in the strong competition especially in the integrated market
economy. Via business strategy, it will help enterprises making use of resources to
get high results to reach the given target which can help the enterprise to define the
way and orientation to create the competitive advantages compared to the opponents.
Business strategy will contribute to raise the effect of using resources, increase
the competitive position of the enterprise, ensure sustainable development of the
enterprise. Via business strategy, it will help the enterprises making use of resources
of the finance, personnel, infrastructure, informatics technology, brand name via
strategies of finance, human resource development, informatics technology all of
such factors will be promoted and used effectively to reach given targets.
Business strategy will create the firm basis for proposing policies and
decisions of business and production to be suitable to the market changes. A changed
business environment will create the opportunities and threats in the future; business
strategy will help the enterprises making use of opportunities and reducing threats,
helping enterprises to better prepare to cope with and control the market changes.
Business strategy will also help the enterprise reducing risks and increasing
capacity of enterprises in making use of the business strategy when they appear.
Business strategy plays the center role in developing the product distinction,
helps raising the position of enterprise and increasing the credibility from customers
and partner.

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Figure 1.1. The duty of strategic management

1.1.3 Types of business strategy
1.1.3.1 Concentrated growth strategy
Concentrated growth strategy is the strategy to orient to serve the demand of
the limited group or customers’ segmentation including three following main
strategies:
Market penetration is the strategy to exploit current market and existing
customers of the enterprise via the forms to increase the number of sale employees,
increase advertisement and promotion cost,… Strategy of market penetration is
aimed to increase the market share of existing products and services at a defined
existing market. Such strategy is used when current market is not breakeven which
still has the development potentials for products and services of the enterprise;
market share of competitive opponents is reduced but the sale revenue of the whole
sector increases.
Market development: it is the strategy related to the launching an existing
product or services into a new geographical area. Such strategy is used when the
enterprise has the capacity of market research and penetration especially foreign

Development
of strategic
prospects and
mission

Established
targets

Construction
of strategies
to reach the
targets

Implementat
ion and
management
of selected
strategies

Evaluation,
implementati
on,
monitoring,
adjustment

Improvemen
t/changing If
necessary

Adjustment
If necessary

Adjustment

If necessary


Improvemen
t/changing If
necessary


Recovery
1,2,3,4
If necessary

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markets; enterprise also has good production capacity and the distribution channel in
the new market is reliable with suitable cost and high quality.

Product development: via investment in research and development,
enterprise can launch to the market the improved and adjusted products from existing
products. Such strategies are used when the products of the enterprise are breakeven
or prepared to be breakeven (the product is in the last phase of product cycle); the
enterprise is operating in the sector with high growth rate, the high rate of
technological improvement and application and strong competition.
1.1.3.2. Basic competitive strategies
a. Leading cost strategy
Leading cost strategy is the strategy to provide products and services to be
accepted by customers with the lowest cost in the relation with all competitive
opponents. The purposes of the follower of leading cost strategy are to better
implement than competitive opponents, provide products and services with the
lowest cost which can compete with competitive opponents.
b. Differentiation strategy
Differentiation strategy is the strategy to create competitive advantage of the
company by creating products (products or services) with difference compared to
competitive opponents; this differentiation is to best meet demand of customers that
competitive opponents cannot have. With such strategy, the company must launch
distinctive products with high value to consumers; such differentiation has not been
known by opponents. The products of the company must have outstanding quality
then customers can readily accept the higher price compared to the opponents due to
the differentiation of company’s products.
c. Concentration strategy
Concentration strategy is the generally third competitive strategy. Its
difference compared to two above strategies is that it orients to serve the demand of
the limited customer segmentation. A concentration strategy will orient to the
vacancy of a concrete market that can be defined based on geographical location,
kind of customers or product segmentation. For instance, a geographical hole can be

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defined based on region or position. It can choose customers who can be elite, middle
class or the youth…
1.1.3.3. Competitive strategies for business units according to the position of
market share.
In the same company, each business unit will have different market share
within the market
a. Leading unit of the market
- Strategy to expand total market demand: look for a new geographical location
to sell products, look for new customers, develop the new tools, encourage to use
more products.
- Defending strategy: it will help the business unit leading the market and
maintaining its own position within the current market. The leading business units
will be threatened by other opponents especially the units with the challenged
position in the market. Then the business unit must defend constantly to cope with
the attacks of competitive opponents.
- Strategy of expanding market share: by acquisition or franchising of business
units of the small competitive opponents; attacking to occupy market share of the
weak opponents.
b. Business unit to challenge with the market:
Attach the leading business unit and other opponents to increase the market
share or do trading parallely with competitive opponents without collision with the
competitive opponents that stand behind it. To implement the strategy of attacking,
business units must implement the following steps:
- Define competitive opponents to attack and the targets of attacking strategy.
- Select the suitable attacking strategy: forward attack, covered attack, attack to
the side …
c. Business unit behind the market:
Those are the business units not to cope with the leading opponents or
challenge the market because of not enough resources, fearing for damages, waste of

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cost…they will try to avoid by following behind the leading opponents via
emulation strategies:
- Emulate the whole products, methods of distribution, advertisement and
marketing activities, product supply to the target market or sensitive with the low
price.
- Emulate some core contents in the marketing mixed of the leading opponents
and keep some differences of packing, price, advertisement, sale network …
- Emulate to adapt to the market based on marketing mixed of the opponents to
improve the private distinction for marketing mix to adapt to the demand and
expectation of the target market.
d. Business units lurked in the market
Such units will search for one or some lurked segmentation with profitability.
To get success within a narrow market, they will implement specialized strategies:
- Specialized based on the last consumer: depending on the market then the
business unit will choose customers with demand of using products or services.
- Specialize the phase in the process of production and product distribution:
business units will choose the details, elements of a complete products, a
supplemented product for the main product …
- Specialized based on customers: choose customers according to demographic
standards to serve such as customers with high income, medium or low income,
customers of all ages …
- Specialized based on sale area: select a geographical location to serve such as
domestic market, international market …
- Specialized based on product distinction: high quality, average quality or
luxurious quality.
- Specialized based on the products in each sector: according to one or some
products in the big sector.

- Specialized based on selected business services that competitive opponents do
not supply.
1.2. Process of constructing business strategy

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Business strategy of the enterprise must ensure the distinctive existence and
development which is constructed based on the comparative advantage to show the
relation between enterprise and the environment then prove the development of the
enterprise. The process of constructing business strategy is the beginning period in
strategic management. The process of constructing strategy will include the
following contents:
Figure 1.2: Process of strategy construction in the enterprise













1.2.1 Define mission and targets
All enterprises must define mission and operational targets. Or in other words
enterprise must clarify the purpose of existence. A good business target must be
constructed via a good working process by collecting the opinions of the whole

Mission
và mục đớch
External analysis
(Opportunities and
threats)
Selection and
construction of strategy
Internal analysis
(Find out capable
resources and the core
capacity)
Business strategy
Global strategy
Company’s strategy
Strategic changes
Create suitable strategy,
structure and control
Organizational structure
Design monitoring
Functional strategy

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enterprise. Business mission of an organization is its own purposes of business
activities, which is the reason for the appearance, existence and development of an
organization. Business mission of an organization will answer the question: for what
does the organization appear and exist? Targets are concrete results that the
organization wants to reach in a defined time.

1.2.2 External and internal factors evaluation
1.2.2.1 External factors evaluation
To make business strategy feasible, after defining business targets, enterprise
must analyze and evaluate the influences of external environmental factors to
implement the business strategy.
The process of external environmental factors will include macro and micro analysis
in which macro analysis, so-called PEST analysis including: analysis of political and
legal factors, economic factors, social factors, technological factors, natural factors.
Political and legal environment: including the stability of political institution;
legal improvement; attitude of the state toward the competitive opponent, monopoly
and economic sectors, the relation of the state and enterprise …; the economic
environment will include: features and targets; socio-economic development
orientation; GDP and GDP per capita, inflate rate, income of population, interest
rate….; social and cultural environment including the changes in realizing cultural
value, the changes of living style, education and medical healthcare, income
allocation, the change in social geography, the change of quantity and structure of
households; technological environment; natural and global environment.
Micro environment includes: analysis of competitive opponents including
strategy of the opponents, targets of the opponents, evaluation of strengths and
weaknesses of competitive opponents; analysis of customer including the features of
customers, development trend of the customers, group of customers, scale of
customers, demand of customers, orientation of customers
We will use the five force model of Michael Porter; enterprise is trading in a
sector environment and how will such factors impact on the enterprise? what are
opportunities and threats?

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Those five forces include: (1) power of supplier, (2) threats from currently
competitive opponents, (3) threats from potential competitive opponents, (4) power

of buyer (customers), (5) threats from replaced products. Each of 5 forces will bear
the influences from many other factors which must be studied to create a full picture
of competition in a sector. The mutual impacts among 5 forces will create
opportunities and threats for the enterprise in the sector to be shown in the following
diagram.
Analysis of external environment will allow enterprise realizing opportunities,
threats that enterprises will cope with then help the enterprise creating orientations,
suitable solutions to make use of opportunities and overcome threats. Researchers
will create EFE matrix to evaluate external factors.

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Figure 1.3: External environment


1.2.2.2 Analysis of internal environment
Internal analysis is the next step of constructing strategy to find out strengths,
weaknesses of the organization then find out strategies to reach competitive
advantages, and make use of the power of the enterprise, power of resources and
capacity to create and maintain the sustainable competitive advantage for the
enterprise.
Internal analysis will focus on evaluating, analyzing the following contents:
financial situation; human resource, management and control, organizational
structure, marketing, research and development, informatics technology, internal
control.
Internal analysis will allow realizing strengths and weaknesses of the
enterprise then construct strategy to promote strengths and weaknesses of the
enterprise.
1.2.3 Techniques of strategy analysis and selection
Technological

environment

Threats from potential
opponents

Threats from replaced
products
Negotiating
capacity of
provider

Competition
among existing
companies

Negotiating
capacity of
buyer
Political and legal factors
Natural
environment
Socio-cultural
environment
Economic
environment
Global
environment

21

After defining targets and mission, analyze internal and external factors of the
enterprise, to construct business strategy, enterprise will analyze and select strategy,
this process will use the following tools:
1.2.3.1 External factors evaluation (EFE)
To evaluate external factors, we will use matrix for evaluating external factors;
this matrix will be constructed via the following steps: enterprise will list external
factors which plays decisive role on the success of the enterprise. Such factors will be
the conclusion of analyzing economic factors then synthesizing to be put into the
table of factors with the most importance; depending on enterprises then quantity of
factors can be 10 or more factors.
Defining the importance of such factors in the sector will be done by
classifying from 0,00 (unimportant) to 1,00 (the most important) for each factor.
Total classification level must be equal to 1,00.
To evaluate the reaction capacity of enterprise for each factor is to follow the
scoring from 1 to 4 out of which 4 points show the very good reaction capacity and 1
point will show the slow reaction capacity; importance level will be multiplied by its
evaluation point to define organizational point.
Summing up all the points for each factor will define the total important point
of the enterprise. Maximum total important point is 4,00 and the lowest total
important point is 1,00. Average total important point is 2,50. Total important point
lower than 2,50 shows that enterprise has badly reacted to the changes from external
environment and on the contrary, total important point higher than 2,50 shows that

the company is rather sensitive with business environment.

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Table 1.1. External factors evaluation matrix
No.
External factors
evaluation
Weight
Evaluation
point
Total point
1
2
3
4
5
…

+
Changed policy
Technological development
Competitive intensity
GDP growth rate
Consumption trend
…………………………

Total

1






1.2.3.2 Internal factors evaluation (IFE)
The matrix is constructed to define strengths and weaknesses of the enterprise.
The process of setting up IFE matrix is like the process to setting up EFE matrix but
it replaces evaluated factors by strengths and weaknesses of the enterprise.
Using IFE matrix is to summarize the analysis, evaluate strengths, weaknesses
of the factors to impact on internal activities of the enterprise. The development
process of IFE matrix is similar to EFE matrix, then list factors impacting on internal
activities of the enterprise with the weight from 0,00 (unimportant) to 1,00 (the most
important) for each factor. Total defined classification level for such factors must be
equal to 1,00. Evaluation point will be classified from 1 to 4, out of which 1 point is
the biggest weakness, 2 point is the smallest weakness,3 point is the smallest strength
and 4 point is the biggest strength.

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Table 1.2. Synthesis table of internal factors
No.
Internal factors

Weight
Evaluation point
Total point
1
Capacity of leading cadre



2
Qualification and duty of cadre



3
Marketing




….




Total:
1.0



Regardless of number of IFE matrix’s factors, total important point will be

classified from the lowest with 1,0 point to the highest with 4,0 points. Total
important point is lower than 2,5 which can show the weak competitiveness and
higher than 2,5 which can show the strong competitiveness.
1.2.3.3 Matrix to evaluate competitive opponents
In all events and environmental trend to impact on the formation of
enterprise’s strategy then competition’s influences will be considered to be the most
important. Matrix of competitive image is used to realize the main competitive
opponents together with their own strengths and weaknesses.
1.2.3.4. Internal – External Matrix
IE Matrix (Internal – External Matrix) puts the different capacities of one
business entity in one table divided into 9 squares. This figure constructed bases on 2
main aspects:
- Sum of important mark of IFE is indicated in X axis
- Sum of important mark of EFE Matrix is indicated in Y axis
- The company has to construct IFE and EFE Matrix which is the foundation to
establish its own IE Matrix.
- X axis show the importance of IFE Matrix
 If Mark is from 1.0 – 1.99, means: The internal factors are weak

24

 If Mark is from 2.0 – 2.99, means: Average
 If Mark is from 3.0 – 4.0, means: Strong
 -Y axis show the importance of EFE Matrix
 If Mark is from 1.0 – 1.99, means: weak
 If Mark is from 2.0 – 2.99, means: Average
 If Mark is from 3.0 – 4.0, means: Strong
Figure 1.4: Importance Mark in IE Matrix
IE MATRIX
Importance Mark in IE Matrix

Strong
3.0 -4.0
Average
2.0 – 2.99
Weak
1.0 – 1.99
Importance
Mark in EFE
Matrix
Strong 3.0 – 4.0
I
II
III
Average 2.0 – 2.99
IV
V
VI
Weak 1.0 – 1.99
VII
VIII
IX

 If the company capacity is allocated in squares I, II, IV: should be
developed and constructed
 If the company capacity is located in squares III, V, VII: Should be
maintained
 If the company capacity is located in squares VI, VIII, and IX: Should be
harvested or rejected.
From EFE matrix and IFE matrix, we will have IE, then we can synthesize
into matrix table such as EFE is 3,2 and IFE is 2,7; we can define the center of the

round and define the round to reflect scale; if the center is green lamp then it is
growth area; if the center is yellow lamp then it is stable area; if the center is red
lamp then it is dangerous area; we must choose suitable strategy depending on the
position of the enterprise. This matrix will show us the strategic position of the
enterprise.
1.2.3.5 Analysis of SWOT matrix

25

Analysis of SWOT matrix is to analyze the opportunities, threats, strengths
and weaknesses. From external factors analysis then we can synthesize opportunities
and threats then analyze the enterprise which will help us realizing the strengths and
weaknesses, analyzing the portfolio and the core capacity to show the
competitiveness and the core capacity, advantage and dominant advantage.
Defining opportunities and threats via the analyzing the data of environmental
changes in terms of economy, finance, politics, law, society, competition in the
markets where enterprise is operating or intends to access into. Opportunities can
include the potential market development, market vacancy, near the material resource
or cheap labor force with good professional skills. The threats for enterprise can be
narrowed market, strong competition, the changes of policies, political instability in
the main markets or the development of new technology to make the production line
of enterprise outdated.
In analysis of internal environmental of the enterprise, the strengths of the
enterprise can be skills, resources and advantages of the enterprise in front of
competitive opponents (the core capacity of the enterprise) such as talented
managers, outstanding technology, famous brand name, available cash, good image
in the eyes of people or big market share in the main markets. Weaknesses of
enterprise can be the mistakes, limitations and skills, resources or the factors to limit
competitiveness of the enterprise. That can be ineffective distribution network, lack
of experienced managers, outdated products compared to competitive opponents ….

Results of SWOT analysis must ensure the detailed, accurate, realistic and
feasible quality because the enterprise will use such results to implement the next
steps such as strategic formation, strategic targets and the control of internal and
external power as well as avoiding the external threats, limiting or overcoming
weaknesses of the enterprise.
Process of SWOT analysis is as follows:
– List all opportunities and threats from external environment as well as define
strengths and weaknesses of the enterprise.