Cement business strategy building of cosevco6.,jsc from 2011 to 2015 and the vision towards 2020

GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

CAPSTONE PROJECT REPORT
CEMENT BUSINESS STRATEGY
BUILDING OF COSEVCO6.,JSC FROM
2011 TO 2015
AND THE VISION TOWARDS 2020

Group number : 11
Student ' name :
Vu Quang Huy
Vu Minh Giang
Pham Hung
Nguyen Hoang Tuyet Nga
Bui Thi Phuong Dung





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COMMITMENT
We certify that the content of this capstone project report has not been offered to
any training program. We undertake that this report is the effort of the five people in
our group, which is not copied from others’ meanwhile the data and materials used

in the research is true and correct to the original, unless otherwise we may bear full
responsibility.
SIGNATURES OF STUDENTS IN GROUP




















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Table of contents

Page
INTRODUCTION 7
CHAPTER 1 THEORETICAL BASE ON BUSINESS STRATEGY 9
1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY 9
1.1.1. CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY 9
1.1.2 Strategic administration 10
1.1.3.Roles and meanings of business strategies for enterprises 10
1.1.3.1 Roles of strategic administration 10
1.1.3.2 Meanings of strategic administration 11
1.1.4 Kinds of strategies 11
1.1.4.1 Strategy at the company level 12
1.1.4.2 Business strategy (SBU) 12
1.1.4.3 Functional strategy 12
1.2 PERIODS OF STRATEGIC ADMINISTRATION 12
1.2.1 Researching period 13
1.2.1.1 Analyzing the external environment 13
1.2.1.2 External Factor Evaluation (EFE) 15
1.2.1.3 Competitive profile matrix 15
1.2.1.4 Analyzing internal environment or domestic environment 16
1.2.2 Combining period 17
1.2.3 Decisive period 19
1.2.4 Competitive strategic directions of a product in trading 19
1.2.4.1 Domination strategy on cost 19
1.2.4.2 Differentiation strategy 20
1.2.4.3 Combining strategies of cost and differentiation 20
CHAPTER 2 CEMENT PRODUCTION AND BUSINESS SITUATION
ANALYSIS OF COSEVCO6 COMPANY FROM 2006-2010 21

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2.1 THE OPERATION PROCESS OF COSEVCO 6 21
2.1.1 Introduction on Cosevco 6 Company 21
2.1.1.1 Overview of the company 21
2.1.1.2 Main information: 21
2.1.1.3 Achievements: 22
2.1.2 Formation process and organization structure of COSEVCO6 22
2.1.2.1 Formation process 22
2.1.2.2 Organization mechanism of COSEVCO 6 23
2.1.2.3 Description of COSEVCO6 business activities: 24
2.1.3 Internal environment analysis of COSEVCO6 25
2.1.3.1 Product structure of the company and cement product: 25
2.1.3.2 Cement production: 27
2.1.3.3 Consumption condition 28
2.1.3.4 Marketing activity 30
2.1.3.5 Human resources: 35
2.1.3.6 Accounting and finance 39
2.1.3.7 Management 44
2.2 MACRO-ENVIRONMENT ANALYSIS 50
2.2.1Overview of cement activities 50
2.2.1.1 The cement industry in the world 50
2.2.1.2 Cement industry in Vietnam 52
2.2.2 Macro business environment analysis 54
2.2.2.1 Impacts of world economic environment 54
2.2.2.2 Impacts of domestic economic environment 56
2.2.3 Cultural and social factors 59
2.2.4 Law and political factors 60
2.2.5 Technology factors 60
2.2.6 Globalization factors 61

2.3 MICRO ENVIRONMENT ANALYSIS 62
2.3.1 Customer 62

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2.3.2 Supplier 63
2.3.3 Competitor 63
2.3.4 Potential competitors……………………………………………………………
2.3.5 External Factor Evaluation (EFE) 64
2.3.6 Competitive profile matrix 66
2.4. General comments 69
CHAPTER 3: BUSINESS STRATEGY BUILDING OF COSEVCO 6
COMPANY IN THE PERIOD 2011 – 2015 68
3.1 VISION AND MISSION OF COSEVCO 6 COMPANY 68
3.1.1 Vision 68
3.2 BUSINESS DEVELOPMENT TARGET OF COSEVCO 6 COMPANY 68
3.2.1 Bases to identify targets 68
3.2.1.1 Forecast on the income structure towards 2015 69
3.2.1.2 Forecast on the market 69
3.2.2 Development target of Cosevco6 company towards 2015 70
3.2.2.1 General target 70
3.2.2.2 Detailed targets 70
3.3 BUSINESS STRATEGY BUILDING OF THE COMPANY 71
3.4 STRATEGY SELECTING 74
3.4.1 Strategy selecting 77
3.4.1.2 Marketing strengthening and market developing strategy 77
3.5 SOLUTIONS TO IMPLEMENT STRATEGIES 78
3.5.1 Human resources 78

3.5.2 Improving the efficiency of using machines and equipments, tools and means
to serve the production and business activities. 79
3.5.3 Marketing solutions 80
3.5.4 Strengthening relations with customers, gradually broadening the cement
consumption market 80
3.5.5 Solutions to mobilize capitals 81
3.6 PETITION 82
3.6.1 For State 82

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3.6.2 For the branch 83
3.6.3 For Cosevco6 Joint Stock Company 83
CONCLUSION…………………………………………………………………… 84
List of Tables
Page
Table 1.1: External factor evaluation 15
Table 1.2 Competitive profile matrix 16
Table 1.3 Internal factor evaluation (IFE) 17
Table 2.1: The product structure of the whole company 25
Table 2.2: The cement structure of Company 26
Table 2.3: Consumption output of three competitive companies 29
Table 2.4: Consumption output and market share in 2010 in Quang Binh 29
Table 2.5: Vietnam standard (TCVN) & PCB30 COSEVCO6 specification 31
Table 2.6: Vietnam standard (TCVN) & PCB40 Ang Son specification 31
Table 2.7: Sales discount levels 35
Table 2.8: Summary table of personnel capacities of the company 36
Table 2.9: Labor structure of the company 38

Table 2.10: The business results of the whole company from 2006 – 2010 39
Table 2.11: Asset’s structure from 2006 – 2010 43
Table 2.12: Business results of COSEVCO6 from 2006 – 2010 44
Table 2.13: Internal Factor Evaluation (IFE) 49
Table 2.14: Forecast of cement demand in the whole country 53
Table 2.1.5: Cement demand forecast in the whole country from 2007 to 2012 54
Table 2.16: Output forecast of cement plants in the whole country from 2007 to 2012. 54
Table 2.17: Balance of cement demand – supply in the whole country from 2007 – 2012. 54
Table 2.18: Growth speed of Vietnam GDP in recent years 57
able 2.19: The inflation rate of our country in recent years Table 2.20: GDP per
capita in recent years 57
Table 2.20: GDP per capita in recent years 58

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Table 2.21: External Factor Evaluation 64
Table 2.22: Competitive profile matrix 67
Table 3.1: Basic targets of the company in 2011 and 5 years from 2011 – 2015 70

List of figures
Page
Picture 1.1: Comprehensive strategic administration model
Picture 1.2: SWOT matrix 18
Picture 2.1: Organization mechanism of COSEVCO6 23
Picture 2.2: Cement production procedure 27
Picture 2.3: Cement distribution model of the company 32
Picture 2.4: Organizing the management machine of Company 45
Picture 3.1: SWOT matrix of Cosevco6 73

Picture 3.2: IE matrix of Cosevco6 76
Picture 3.3 : Quantitative Strategic Planning Matrix of COSEVCO6 77
List of charts
Chart 2.1: Cement consumption market shares of the company in the areas 89
Chart 2.2: Cement market share in Quang Binh market 92
Appendix
Appendix 01: Results of operations from the company from 2006 to 2010 87
Appendix 02: Structures on the property from 2006 to 2010 89







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INTRODUCTION
Our world is becoming a world without border with global citizens, global
competitors, global customers, global suppliers, and global distributors. The world is
changing and enterprises must adapt to these changes, unless they will face with ruins.
Vietnam economy is gradually integrating into the local and world
economies, the business environment of enterprises is broadened, but the
competition also becomes more and more violent. It creates the business
opportunities and also holds the potential risks threatening the development of
enterprises.
When the market has lots of changes, ignoring the accidental factors, the
decisive problems affecting the success of an enterprise are the selecting an exact

trend, identifying a reasonable and timely business strategy. To exist, all
organizations must have a sharp ability to recognize and adjust to changes. The
strategic administration process allows organizations to adapt effectively to changes
in long term.
Implementing the guideline of State on arranging and innovating the
enterprise, from an enterprise with 100% state capital, it was privatized in 2005,
COSEVCO 6 Joint Stock Company has applied the strategic administration into
building its business strategies in the operation process and having several specific
achievements. Cosevco6 Joint Stock Company is a business producer in the
construction field, such as: building civil, industrial, transporting, hydraulic, hydro
electrical, water supply and drainage constructions, urban constructions; processing
and installing machines and equipments to serve building activities; producing and
trading building material products (cement, commercial concrete, tuynen brick, un-
burnt brick, package, and PP plastic); Trading materials and equipments, building
materials; Exploiting kinds of stone, sand, grittier, soil; Transporting and loading
goods, and etc.
The researching method: the group uses the application researching method.
Basing on theories to give effective solutions, to solve real problems and to support

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administrative decision making. The collected information and data are based on the
record storing system of the company. The data are originated from many sources,
such as: direct investigating, consulting ideals of experts and people with many
experiences.
The structure of thesis includes 3 parts:
 Part I: Several theories on business strategy administration
 Part II: Cement production and business situation of Cosevco6 Joint

Stock Company from 2006 to 2010
 Part III: Cement business strategy building of Cosevco6 Joint Stock
Company from 2011 to 2015 and the vision towards 2020.

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CHAPTER 1
THEORETICAL BASE ON BUSINESS STRATEGY

1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY
The current market economy, tendency of internationalizing business activities
and more and more competitive environment are gradually repelling thoughts of
waiting godsends in business activities. In stead, successes only come to people
who have knowledge, being able to apply their professional knowledge, knowledge
on managing, planning, and strategic administration clearly.
Understanding strategies and applying them effectively into the realities of
production and business activities require that administrators; owners of enterprises
must understand clearly and study carefully traditional and modern concepts on
strategy and strategic administration.
1.1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY
Historically, the first strategy was used in the military field. Then, strategies
were introduced into other fields of socio-economic activities. Nowadays, strategies
have been deployed and applied broadly in the management field. And strategies
have been really confirmed as an effective management trend or method. What is
strategy? Strategy is “a series of complex activities in order to mobilize all possible
resources of an organization/ individual to reach a specific purpose.
Currently there are lots of different definitions on business strategy which
originate from many different approaching ways. Fred R David said that “Business

strategies are means to reach long-term targets”. According to Alfred Chandler,
Harvard university “Business strategies are identifying basic, long-term targets of
enterprises, simultaneously selecting methods or processes of acting and
distributing necessary resources to implement these targets”,…
In general, although the definitions on business strategy are different in
expression ways, they imply the main contents, as follows:
 Identifying short-term and long-term targets of the organization in each period.

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 Orientation of strategies to ensure that the enterprise develops continuously
and stably in the business environment which frequently changes.
 The business strategy is depicted during the continuous process.
 Business strategy always tends to attack in order to requiring successes in the
business environment.
 Proposing and selecting solutions to reach targets
 Deploying and allocating resources to implement these targets, promoting
strengths and catching opportunities to acquire advantages in competition.
1.1.2 Strategic administration
Strategic administration can be defined as an art and science to establish,
implement and evaluate decisions related to lots of permitted functions of an
organization in order to achieve the proposed targets. As in this definition, the
business administration focuses on unifying the management, marketing, finance
and accounting, production, study and developing activities and information
systems in business fields in order to achieve successes of the organization.
1.1.3 Roles and meanings of business strategies for enterprises
1.1.3.1 Roles of strategic administration
 Business strategies help enterprises to recognize clearly their trends, and being

bases, guidelines for all production and business activities of enterprises.
 Strategies help enterprises to catch and utilize the business opportunities, at
the same time having methods to overcome threats and risks in the
competitive market.
 Business strategies contribute into improving the efficiencies of using
resources, increasing competitive strengths of enterprises in order to ensure
the stable developments of enterprises.
 Business strategies create firm bases for proposing policies and decisions on
business and production which are suitable to the market’s changes.
 Business strategies are cooperated with functions in an organization
optimally basing on reaching common targets of this organization.

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1.1.3.2 Meanings of strategic administration
When there are many complicated displacements, lots of newly arising problems,
many changes which happen fast, to exist and develop, to develop stably and
effectively, each enterprise/ organization must answer the key questions: “Which
product is produced?”, “Which market is are product sold in?”, “Which provision
chain do products participate into and which position in the chain do products
participate into?” and etc. For each enterprise/ organization, strategies play an
important role as a wheel of ship, thanks to the wheel of strategic administration
ship; the enterprise can identify its vision, mission and a strategic target system,
policies, solutions to implement targets. By identifying exactly trends and steps, the
enterprise will succeed all competitors and confirming its adequate position in the
domestic and world markets. Therefore, the strategic administration helps
enterprises to recognize clearly their purposes and roads, so they can uphold in
exact direction and effectively.

Strategic administration is originated from analyzing the external environment
to identify opportunities and threats, from analyzing the internal environment to
identify strengths and weaknesses, then combining to find strategies which can help
organizations to uphold their strengths, to overcome threats and to restrict
weaknesses to avoid threats, risks. Because of being attached to the environment
and forecasting changes in the environment, being active and creative, the strategic
administration helps organizations to be always active, to catch timely
opportunities, to turn threats into opportunities, to invert situations, to win
competitors, and to develop stably and effectively.
The main target of the strategic administration process is to reach knowledge
and to link all managers and employees; the mutual understanding may be the most
important benefit of the strategic administration, after that is the attachment.
1.1.4 Kinds of strategies

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There are lots of strategies which are used in the process of production and
business, but generally there are the most common 3 kinds of strategies which are
currently used by enterprises.
1.1.4.1 Strategy at the company level
Company strategy is a kind of long-term strategy related to mission, overall
target and scale of the enterprise in order to achieve expectations and wills of
owners, senior administrators in the organization. Company strategies are long-
term, with general vision and controlling all other strategies, such as: business
strategy, functional strategy.
1.1.4.2 Business strategy (SBU)
Business strategy relates to how enterprises can compete successfully in a
market detailed and related to strategic decisions on selecting products, meeting

customers’ demands, finding competitive advantages in comparison with
competitors, exploiting and creating new opportunities.
1.1.4.3 Functional strategy
Function strategy is an operation strategy related to how each part in the
enterprise will organize, deploy, and evaluate in order to implement his
business strategy and company strategy. The functional strategy focuses on
problems of resources and detailed deploying strategies, such as: product
strategy, price strategy, distribution strategy, market penetration strategy,
technology strategy, and etc.
1.2 PERIODS OF STRATEGIC ADMINISTRATION
Strategic administration includes three main periods with close and complementary
relations:
 Period of forming strategies: includes developing business duties,
identifying opportunities and risks of organizations caused by internal
factors, showing clearly strengths, weaknesses in an organization,
establishing long-term targets, creating alternative strategies and selecting
specific strategies to change.

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 Period of implementing strategies: requires that the company must
establish targets in each year, planning policies, encouraging staffs and
allocating resources, so that proposed strategies can be implemented.
 Period of evaluating strategies: supervises results of establishing activities
and executing strategies. This step includes measuring and identifying
achievements of individuals and organization, at the same time having
necessary adjustments.
Three periods above reflect the cycle Plan – Do – Check in the modern

administration, being broadly applied in current activities of managing
enterprises. The illustration model in picture 1.1 introduces a definition base
for applying the strategic administration that is applied broadly.
With the study scope of topic, the group of authors will only concentrate
into the period of planning strategies. The important techniques to form a
strategy can be merged into a decision making process which includes 3
periods: the 1st period is the researching period or input period. The 2nd
period is the period of merging intuitively and analyzing to build a strategy or
the combining period and the 3rd period is the period of selecting/ deciding a
strategy.
1.2.1 Researching period
The researching period or input period, the tools used for this period
include an external factor evaluation (EFE), a competitive profile matrix and
an internal factor evaluation (IFE).
The environment can be understood as factors, forces, institutions which
exist, affect, and affect the activities and operating results of enterprises. The
environment of an enterprise includes external environment and internal
environment, which are divided basing on the available resources criteria
of enterprise.
1.2.1.1 Analyzing the external environment

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The external environment includes the macro environment and task
environment/ branch environment.
Picture 1.1: Comprehensive strategic administration model
Feedback

Feedback
Form Execute Evaluate
strategies

(1) Macro environment: Is means in the broad society and has great impacts
on a branch and companies in this branch. The macro environment includes
economic, cultural, geographic, legal, political, policy factors of State, techniques,
technologies and globalization factors.
(2) Task environment or branch environment: is a series of factors which
have direct impacts on a company and the competitive activities and competitive
reactions of this company.
Identify

the current
duties,
targets and

strategies
Analyze

external
factors to
identify
opportunities
and threats
Review
business
strategies
Analyze
internal
factors to
know
strengths
and
weaknesses
Establish
long-term
targets
Select
strategies
Establish
annual targets
Make
policies
Allocate
natural
resources

Identify
and
evaluate
achievem
ents

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The task environment includes: competitors in the branch, customers,
providers, and alternative products, units who are preparing to participate into or to
withdraw from the branch.
1.2.1.2 External Factor Evaluation (EFE)
This matrix allows strategists to summarize and evaluate economic, social,
cultural, demographic, geographic, political, legal, technology and competitive
information. There are five steps to develop an external factor evaluation.
Even the number of main opportunities and threats include in the external
factor evaluation, the sum of the most important points which an organization can
reach is 4.0 and the lowest point is 1.0. The sum of averagely important points is
2.5. The sum of important points is 4.0, which shows that this organization is
reacting well upon the current oppositions and threats in his environment. Total
point is 1.0, which shows that proposed strategies of company have not utilized
opportunities or avoided external risks. The model of external factor evaluation is
shown in Picture 1.1.
Table 1.1: External factor evaluation
External factors Importance Classification Important points
Listing external factors
Total 1.00

1.2.1.3 Competitive profile matrix
In all environmental events and tendencies which can affect the strategic
position of an enterprise, the effect of competition is usually considered as the most
important factor. The competitive profile matrix identifies the main competitors and
their special strengths and weaknesses. The competitive profile matrix is a
broadening of the external factor evaluation, in case all of importance, classification
and total important points are meaningful.
Total evaluated points of competitive companies is compared with a model
company, special classification levels of competitive companies can be compared

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with the classification levels of model company. Analyzing this comparison will
providing important strategic information. Picture 1.2 is the model of competitive
profile matrix.
Table 1.2 Competitive profile matrix
Importance

Model competitive
company
1
st
competitive
company
2
nd
competitive
company

Classification

Importa
nt point
Classif
ication

Importa
nt point
Classific
ation
Important
point
Listing factors
Total of important
points
1.00

Factors include: Market share, competitive ability, financial position, product
quality, loyalty of customers, economy, culture, and etc.
The classification levels present modes by which the company deals with each
factor: With 4.0 is the best level, 3.0 is over average level, 2.0 is the average level
and 1.0 is the weak level.
1.2.1.4 Analyzing internal environment or domestic environment
All organizations have their strengths and weaknesses in business fields. There
is not any company with equal strengths and weaknesses in all aspects.
The internal environment includes the immanent factors which an enterprise
can control. Analyzing internally requires collecting and processing financial,
personal, researching and developing, marketing information and the information
system which shows the core activities of enterprises. Controlling strategic

administration on internal activities of the company is necessary for the
organization’s power. There are more and more organizations that succeed in using
the internal management method to acquire the competitive advantages before their
competitors.
Internal factor evaluation (IFE):

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The internal factor evaluation is a tool which is used to summarize and
evaluate the important strengths and weaknesses of functional business parts and it
also provides the bases to identify and evaluate relations between these parts. The
model of internal factor evaluation is shown in the picture 1.3.
Table 1.3 Internal factor evaluation (IFE)
Internal main
factors
Importance Classification Important point
Listing factors
Total 1.00

Exclusive of factors in the internal factor evaluation, the total of important
points can be classified from the lowest level of 1.0, to the highest level of 4.0, and
the average point of 2.5. The total of important points is lower than 2.5, which
shows that this company is weak in internal organization and the point is higher
than 2.5 shows that the company is strong in internal organization.
1.2.2 Combining period
This is the 2nd period, which concentrates into making the feasible strategies
that can be selected by arranging, combining the important internal and external
factors.

These strategic methods will be selected, filtered to have the optimal and most
feasible methods. The feasibility is a requisition, so it requires that strategies must
be originated from the detailed realities, then applying the processing techniques to
meet the optimality.
The techniques used in this period include the Strength – weakness,
opportunity – threat matrix (SWOT), Strategic position & action evaluation
(SPACE), Boston consulting group (BCG), Internal Factor Evaluation and External
Factor Evaluation and Main strategic matrix.
Strength – weakness, opportunity – threat matrix (SWOT):

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SWOT matrix is the important combining tool to help administrators develop
04 kinds of strategy, as follows:
- Strategy: Strength – opportunity (SO)
- Strategy:: Weakness – opportunity (WO)
- Strategy:: Strength – threat (ST)
- Strategy:: Weakness – threat (WT)
The combination of internal and external important factors is the most
difficult duty to develop a SWOT matrix, it requires a good judgment, and there is
not any the best simultaneous combination.
So strategies use internal strengths of enterprises to utilize external
opportunities. Commonly, organizations will pursue WO, ST or WT strategy, so
these organizations can be qualified to apply SO strategy.
WO strategies use internal strengths of enterprises to utilize external
opportunities. Sometimes there are many big external opportunities, but internal
weaknesses of enterprises prevent them from exploiting these opportunities.
Picture 1.2: SWOT matrix

O: External opportunities
Listing opportunities
(3)
T: Threats
Listing threats
(4)
S: Strengths
Listing strengths
(1)
SO strategies
Using strengths to utilize
opportunities
(1+3)
ST strategies
Overcoming threats by
utilizing strengths
(1+4)
W: Weaknesses
Listing weaknesses
(2)
WO strategies
Limiting weaknesses to
utility opportunities
(2+3)
WT strategies
Minimizing weaknesses
and avoiding from threats
(2+4)
ST strategies use strengths of enterprises to avoid from or reduce impacts of
external threats.

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WT strategies are defensive strategies to reduce the internal weaknesses and
to avoid external threats.
The diagram of SWOT matrix includes 9 boxes, as picture 1.2, with 4 boxes
of important factors (S, W, O, T), 4 strategic boxes (SO, ST, WO, WT), 1 blank box
is the right box.
The listed factors must be sufficient, exact, showing strengths, weaknesses,
and also threats which the company have met in the process of implementing
strategies. This is an important base to select strategies.
The targets of each combining tool in the 2
nd
period are making selective feasible
strategies, instead of selecting or deciding which strategy is the best. Therefore, not that
all strategies developed in SWOT matrix will be selected to implement.
1.2.3 Decisive period
This is the 3rd period of the strategy forming period, it only includes a
technique. Quantitative strategic planning matrix (QSPM). QSPM matrix uses the
input information withdrawn from the 1st period to evaluate objectively the feasible
strategies in order to be selected in the 2nd period. QSPM matrix shows the relative
attraction of strategies which can be selected, and thus it provides the objective base
for selecting the individual strategies.
All techniques in the strategy forming process require the combination of the
institutive ability and analyzing process.
1.2.4 Competitive strategic directions of a product in trading
The strategy planning matrix can determine QSPM, use input factors thanks to
analyses in the 1st period and combination results of analyses in the 2nd period to

determine objectively alternative strategies.
The aforesaid steps are the main and basic contents in the process of planning
strategies.
However, enterprises can base on their actual conditions to ignore several
steps, so that building strategies will happen faster.
1.2.4.1 Domination strategy on cost

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The domination strategy on cost is a series of activities to manufacture
products or services with leading properties on reasonable and lowest cost, equally
to competitors’ costs with properties agreed by customers.
Cost saving activities: Building effective equipments in scale, controlling
closely production costs and the total cost, minimizing selling expenses,
researching, developing services, simplifying production, etc.
1.2.4.2 Differentiation strategy
The differentiation strategy is a series of necessary actions to produce goods
and services (with a acceptable cost) which customers think that this product is
different and this difference is important for them.
Enterprises can create the differentiation by controlling cost factors (if
necessary) and re-structuring the value series to maximize capacity.
1.2.4.3 Combining strategies of cost and differentiation
A company succeeding in combining cost & differentiation strategies will have
better position, because: Adjusting faster with environmental changes, studying new
skills and technologies fast, utilizing his potentials when competing with
competitors.
Pursuing patiently the flexibility on strategies is necessary to implement the
strategy of combining cost & differentiation strategies.

In summary, planning strategies is the most initial and important step of
managing strategies. Having the high generality and orientation, the strategic
planning is the necessary condition for the success of a process.

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CHAPTER 2:
CEMENT PRODUCTION AND BUSINESS SITUATION ANALYSIS
OF COSEVCO6 COMPANY FROM 2006-2010

2.1 THE OPERATION PROCESS OF COSEVCO 6
2.1.1 Introduction on Cosevco 6 Company
2.1.1.1 Overview of the company
Cosevco6 Joint Stock Company is a producer and trader in the fields:
Construction investment, such as: Civil construction, industry, transportation,
irrigation, hydroelectricity, water supply and drainage, urban structures; processing
and installing machines and equipments to serve construction activities; Producing
and trading construction products and materials, such as: cement, commercial
concrete, tuynel brick, adobe brick, cover and polypropylene; construction materials
and equipments; Exploiting kinds of stone, sand, grittier, soil; Transporting and
loading goods.
The headquarters of company is located in Dong Hoi city, Quang Binh province.
2.1.1.2 Main information:

. The company’s address: No. 02 – Huyen Tran Princess street – Dong Hoi city
– Quang Binh province
. Tel: (0523) 825030/825031
. Fax: (0523) 827466

. Website:
. Number of employees: 1.000

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2.1.1.3 Achievements:
With its achievements, COSEVCO6 Company is honored that it was awarded a
third class labor medal in 2005, a second class labor medal in 2009. He was awarded a
certificate of merit in 2005, 2006, and 2007 and being a leading unit in the emulation
movement in 2007; a Godden cup for enterprise culture in 2008; Vietnam gold star in
2009 and many Certificates of merit, emulation flags and other noble awards, etc.
2.1.2 Formation process and organization structure of COSEVCO6
2.1.2.1 Formation process
After Binh Tri Thien province was divided into three provinces: Quang Binh,
Quang Tri, and Thua Thien Hue, successively in three next years, companies which
afterwards related to Cosevco6 were established, such as:
In 1985, Quang Binh Construction Company No. 1 and Quang Binh
Construction Company No. 2 were established;
In 1990, Ang Son Cement Company was formed and came into operation.
In 1994, 1-5 Building Materials Company was established in Quang Binh.
According to Decision No. 07/1998/QD-UB dated April 11
th
, 1998 by People’s
Committee of Quang Ninh province, the provincial People’s Committee decided to
merge 4 above companies (Ang Son Cement Company, 1-5 Building Materials
Company, Quang Binh Construction Company No. 1, and Quang Binh Construction
Company No. 2) into Quang Binh Building Materials and Construction Company.
In 2001, 1-5 Building Materials Company was privatized and separated independently.

In April 2002, Quang Binh Building Materials and Construction Company was
permitted to merge into Midland Construction Corporation – Ministry of
Construction by Quang Binh province and renamed into Cosevco6 Building
Materials and Construction Company.
Implementing the great guideline of Government on arranging and innovating state
enterprises, the company executed to privatize in 2005. The first general shareholders
meeting on 26/11/2005 agreed that Cosevco6 Building Materials and Construction
Company was renamed into COSEVCO 6 JOINT STOCK COMPANY.
When the company was newly established, its charter capital was 25 billion

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dongs; State did not hold any control share. In which the contribution shareholders
occupied 60.25%, state shareholders was 39.75%.
In March 2007, the annual general shareholders meeting No. 2 decided to
increase the company’s charter capital into 65 billion dongs. Until the end of
December 2010, shareholders contributed only 35 billion dongs, in which State
shareholders occupied 71.43% charter capital.
2.1.2.2 Organization mechanism of COSEVCO 6: is shown in Picture 2.1
Picture 2.1: Organization mechanism of COSEVCO6

(Source: Cosevco 6 - 2010)


Board of Directors Control board
General management

Finance and
Accounting
Department

Engineering
and
Technologies
Department

Civil
Engineering
Department

Market and

Plan
Department


Administration
Department
Units directly under its control
- Company office
- COSEVCO 61 enterprise
- COSEVCO 63 enterprise
- COSEVCO 64 enterprise
- COSEVCO 65 enterprise
- COSEVCO 66 enterprise
- COSEVCO 67 enterprise
- Concrete enterprise No. 68
- Ang Son Cement plant
- Project management board of
Ang Son cement plant

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2.1.2.3 Description of COSEVCO6 business activities:
The company implements the business and production activities through 9
member units, including: the company office; Cosevco61 enterprise; Cosevco63 tuynel
brick enterprise; Cosevco64 mine exploiting enterprise; Cosevco65 construction
enterprise; Cosevco66 cement enterprise; Cosevco67 packaging enterprise; 68
Concrete enterprise and the project management board of Ang Son cement plant. The
operation area is located from Nghe An province to Ninh Thuan province.

The company office: is responsible for controlling all activities of member
enterprises, presiding over mobilizing capitals and financial trading.
Cosevco61 & Cosevco65 construction enterprises: trade in the field of basic
construction, including civil construction, industry, transportation, irrigation,
electricity, hydroelectricity, water supply and drainage, urban structures; processing
and installing machines and equipments to serve building materials and construction
activities. The operation area of these units is mainly located in the midland
provinces from Nghe An to Ninh Thuan.
Cosevco63 Tuynel brick enterprise: specializes in producing and providing the
market with kinds of tuynel bricks to serve construction, such as: solid bricks,
bricks 2 holes, bricks 4 holes, bricks 6 holes. The business area of Enterprise is
mainly located in Quang Binh and Quang Tri provinces. The enterprise sells goods
through two forms: direct selling (retailing) and selling to consumption agents.
Consevco64 Mine exploiting enterprise: specializes in exploiting and
producing kinds of stone: fence stone, kinds of ballast, base stone, stones for
producing cement and goods transporting service. The operation area is mainly
located in Quang Binh province.
Cosevco66 cement enterprise: specializes in producing and trading PCB30,
PCB40 cement products. The enterprise sells through two forms: retailing and selling
directly to distributors. The business area of unit is mainly located in Central provinces
including Quang Binh, Quang Tri, Da Nang, Quang Nam and Quang Ngai.
Cosevco67 packaging enterprise: specializes in producing kinds of packages