Development stratery of Binh Phuoc power company to 2015 and vision to 2020

Strategic Management- Topic of Group No.5 1

FOREWORD

Finally, it is time for the course’s completion after fifteen
months studying and researching. The course was rather short
but they left in our hearts the good feeling and highly valuable
knowledge. Finish this course, we come back to the work and
never forget the enthusiastic and interesting discussions in the
class.
The feeling to be nervous when preparing quiz tasks, be
palpitated with fear once lecturers ask tough questions at
presentation of group tasks, or the parties at the end of each
subject, gathering together and be saturated and filled with
affection and gratitude between lecturers and students, even
he/she is a Vietnamese or foreign lecturer.
Oh! How beautiful that student time is.
Give us a thousand times for our sincere gratitude to the
lecturers who have brought all your enthusiasm, dedication and
best to communicate to us with extensive and practical
knowledge. Thanks to the extremely valuable knowledge that
shall help us live and work in each working position.
Thank you very much the university, class managers and
service personnel have enabled us to complete the course.
Dear our classmates,
Please give a nostalgic moment about our old dear days!

MEMBERS OF GROUP 5: SANG – THIEN – VAN – THAO

Strategic Management- Topic of Group No.5 2
ANNEX
Sub - cover page
Remarks of the company
Commitment
Annex
List of abbreviation
List of tables
List of figures and diagrams
Foreword
PREAMBLE: GENERAL INTRODUCTION
Figure No. Name of Figures Page
1. General background, necessity and significance of the topic
1.1. General Background 1
1.2. The necessity and significance of the topic "Building Strategic Development of
Power Company No. 2 to 2015 and 2020 vision" 2
2. Objectives of research 4
2.1. Scope of research 4
2.2. Objectives of research 4
3. Approaches 5
3.1. Qualitative research 5
3.2. Quantitative research 5
4. Structure of Task 6
CHAPTER I: THEORETICAL BASIS - OVERVIEW OF STRATEGIC
MANAGEMENT 7
1.1. Strategic Management 7
1.1.1. Concept 7
1.1.2. Requirements on building and implementing the strategies 8
1.1.3. Role and importance of Strategies and Strategic Management 9

1.1.4. Stages of Strategic Management 11
1.1.4.1. Strategy formation 11
1.1.4.2. Strategy implementation 11

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1.1.4.3. Test and assessment of strategies 12
1.1.5. Levels of Strategic Management 13
1.1.5.1. Company - level strategy 13
1.1.5.2. Business - level strategy 13
1.1.5.3. Function - level strategy 13
1.1.6. Mission and Objective Identification 13
1.1.6.1. Mission 14
1.1.6.2. Objectives/Goals 14
1.2. The methods and tools used to develop strategies 20
1.2.1. Research on macro and micro environment 21
1.2.1.1. Macro environment 21
1.2.1.2. Micro environment 26
1.2.2. Analysis on internal environment 29
1.2.2.1. Value chain analysis 30
1.2.2.2. Analysis on factors outside the value chain 31
1.2.3. Develop strategies on SWOT matrix 33
CHAPTER II: ANALYSIS ON THE CURRENT STATEMENT OF BINH
PHUOC POWER COMPANY 35
2.1. Background of Vietnam Electricity Corporation 35
2.1.1. Functions, duties 36
2.1.2. Organization of the corporation 36
2.1.3. Relations between Vietnam Electricity Corp with Power Companies 38
2.1.3.1 Business Manufacturing Plan 38
2.1.3.2 Electricity Business 38
2.1.3.3 Financial Works 39

2.2. Background of Vietnam Electricity Corporation (EVN – SPC) 41
2.2.1. Functions, duties 42
2.2.1.1. Functions 42
2.2.1.2. Duties 42
2.2.2. Organization of Southern Power Company 44
2.2.3. Relations between the Southern Power Company and Provincial Power
Companies 45

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2.2.3.1. Entitlements of SPC 45
2.2.3.2. Obligations of the Southern Power Company 47
2.3. Background of Binh Phuoc Province 48
2.4. Background of Binh Phuoc Power Company 51
2.4.1. Foundation and Development Process of BPPC 52
2.4.1.1. Foundation Process 52
2.4.1.2. Development Process 52
2.4.2. Functions, duties 55
2.4.2.1. Functions 55
2.4.2.2. Duties: Business lines of the Company 55
2.4.3. Organization of Binh Phuoc Power Company 57
2.4.3.1. Organization of the company 57
2.4.3.2. Technological Process of Production 61
2.4.4. Overview of the current statement and business performance
at Binh Phuoc Power Company in recent years 62
2.4.4.1. Business Capital, the actual value of the Company and the actual value of the
State capital in the Company 63
2.4.4.2. Results on business performance of the company in recent years 65
2.5. Analysis on strategic issues and administration of the company in recent years72
2.5.1. External environment analysis 72
2.5.1.1. Macro environment 72

2.5.1.2. Micro environment 77
2.5.1.3. Matrix of external factors 80
2.5.2. Internal Environment Analysis 84
2.5.2.1. Value chain analysis 85
2.5.2.2. Analysis of factors outside the value chain 100
2.5.2.3. Matrix of internal factors 106
2.6. SWOT matrix analysis 110
2.6.1. Opportunities – Threats 110
2.6.1.1. Opportunities 110
2.6.1.2. Threats 111
2.6.2. Strengths and Weaknesses 112

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2.6.2.1. Strengths 112
2.6.2.2. Weaknesses 112
2.7. Matrix of strategy position and performance evaluation (SPACE Matrix) 113
2.8. Grand Strategy Matrix 116
2.9. Strategy Selection 118
CHAPTER III: SOLUTION – RECOMMENDATION & CONCLUSION 125
3.1. Orientation for electricity sector in National Energy Development Strategy
of Vietnam up to the year 2020 and vision to 2050 of the Prime Minister 124
3.2. Development strategy of Electricity of Vietnam 126
3.3. Development plan for national electricity for period 2006 - 2015 and vision to
2025 of Binh Phuoc province 127
3.3.1. Objective 127
3.3.2. Objective of electricity sector 128
3.4. Development strategy of Southern Power Company 128
3.4.1. Development strategy 128
3.4.2. Forecasting some key strategic index of EVN - SPC 129
3.4.2.1. Forecast sale electricity in 2015 and vision to 2020 130

3.4.2.2. Forecast turnover – average selling price in 2015 and vision to 2020 130
3.4.2.3. Forecast electricity loss in 2015 and oriented to 2020 130
3.5. Forecasting and matters related to BPPC development strategy 130
3.5.1. Objectives of Binh Phuoc electricity sector 130
3.5.2. Forecasts 131
3.5.2.1 Forecasting Sale electricity to the year 2015 and oriented to 2020 134
3.5.2.2 Forecasting revenue – average price until 2015 and oriented to 2020 134
3.5.2.3 Forecasting power loss in 2015 and oriented to 2020 137
3.6. Identify strategy, vision, mission and target 140
3.6.1. Identify vision 140
3.6.2. Mission 140
3.6.3. Target to 2015 and orient to 2020 141
3.6.4. Analyze SWOT matrix to build strategy for BPPC 143
3.6.5. Strategic solutions 147
3.7. Selecting strategy for BPPC in 2015 and oriented to 2020 148

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3.7.1. Strategies selected at company level 148
3.7.2. Strategies selected at functional level 148
3.8. Implementing measure and action plan 149
3.8.1. Measures for company leve 149
3.8.1.1. Measures for market development strategy 149
3.8.1.2. Solutions for entering and enlarging international market 150
3.8.1.3. Solution for product development strategy 150
3.8.1.4. Diversify strategy, joint venture, growth by toward integration 151
3.8.2. Measures for functional strategy 152
3.8.2.1. Measures for financial strategy 152
3.8.2.2. Measures for Marketing strategy 153
3.8.2.3. Measures for human resource strategy 155
3.8.2.4. Measures for strategy to develop trade and rural electricity 155

3.8.2.5. Measures for financial strategy 156
3.8.2.6. Measures for telecommunication development strategy 158
3.8.2.7. Measures for power loss reduction 158
3.8.2.8. Measures for electricity agents, departments and the agencies belong to the
company 159
CONCLUSION AND RECOMMENDATION 162
RECOMMENDATION 162
1. For the State 162
2. For Binh Phuoc province 164
3. For EVN and Southern Electricity Company 165
CONCLUSION 166
REFERENTIAL DOCUMENTS 169

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LIST OF FIGURES AND DIAGRAMS
Figure No. Name of Figures Page
Figure 1.1. SWOT general model 20
Figure 1.2. Model of five competitive pressures 26
Figure 1.3. Model of SWOT matrix 34
Figure 2.1. Map of area management of EVN 35
Figure 2.2. Organization of EVN 40
Figure 2.3. Office of EVN - SPC 41
Figure 2.4. Map of area management of PC2 42
Figure 2.5. Organization of SPC 45
Figure 2.6. Office of Binh Phuoc Provincial People’s Committee 48
Figure 2.7. Office of Binh Phuoc Power Company 51
Figure 2.8. Organization of Binh Phuoc Power Company 61
Figure 2.9. Management Area of Power Grid of BPPC 63
Figure 2.10. Diagram of power distribution grid growth in period 2000 - 2009 87
Figure 2.11. Diagram 110kV grid growth in period 2000 - 2009 87

Figure 2.12. Diagram of 110kV grid incidents in period 2000 - 2009 89
Figure 2.13. Diagram of distribution grid incidents in period 2000 - 2009 89
Figure 2.14. Diagram of Labor structure by level 91
Figure 2.15. Diagram of customer growth in period 2000 - 2009 94
Figure 2.16. Diagram of commercial electricity columns in period 2000 - 2009 96
Figure 2.17. Diagram of commercial electricity of five economic sectors in 2009 97
Figure 2.18. Diagram of commercial electricity of five economic sectors in 2000 -
2009 97
Figure 2.19. Diagram of power losses of BPPC in period 2000 - 2009 99
Figure 3.1. Diagram of BPPC sale electricity and direction function for period 1998 -
2009 133
Figure 3.2. Forecast diagram of billed electricity from 2010 to 2020 134

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Figure 3.3. Diagram of revenue and direction function for period 2000 - 2009 135
Figure 3.4. Forecasting growth revenue for period 2010 - 2020 135
Figure 3.5. Diagram of power loss 2000 - 2009 and forecast function 137
Figure 3.6. Power loss rate chart in 2010 - 2009 138
Figure 3.7. SWOT matrix for strategy building 147
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LIST OF TABLES
Table No. Name of table Page
Table 2.1. Results on business performance of BPPC in period 2005 - 2009 66
Table 2.2. Wire infrastructure and transformer station of BPPC in period 2005 - 200966
Table 2.3. Volume and capital for basic construction investment of BPPC in period
2005 - 2009 67
Table 2.4. Some main targets of business performance 2005 - 2009 69
Table 2.5. Macro economic Data of Vietnam in period 2004 - 2008 60 72

Table 2.6. Volume of transmission lines and transformer stations managed 86
Table 2.7. Status of grid incidents 88
Table 2.8. Structure of labor qualification 91
Table 2.9. Disposition of employees in Binh Phuoc Power Company 92
Table 2.10. Number of customers buying power of BPPC in period 2000 - 2009 94
Table 2.11. Commercial electricity under 5 economic sectors of BPPC in period 2000
- 2009 95
Table 2.12. The proportion of commercial electricity in period 2000 - 2009 96
Table 2.13. Power losses of BPPC in period 2000 - 2009 99
Table 2.14. Accounting Balance Sheet in period 2005 - 2009 100
Table 2.15. Report on the business results of BPPC in period 2005 - 2009 101
Table 2.16. Results on financial analysis of BPPC in period 2005 - 2009 101
Table 2.17 Assessing matrix of internal factors of a company 108
Table 2.18: Competitive Criteria of BPPC and the Cambodia Royal Electricity and a
small power company 109
Table 3.1. Sale electricity 1998 - 2009 131
Table 3.2. Forecasting sale electricity for period 2009 - 2020 132
Table 3.3. Revenue – average price from 2000 - 2009 134
Table 3.4. Forecast revenue – average price from 2010 until 2020 136
Table 3.5. Power loss 2000 - 2009 137

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Table 3.6. Power loss forecast in period 2010 - 2020 139
Table 3.7. Summarized targets and investment fund for period 2009 - 2020 161
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Strategic Management- Topic of Group No.5 11
LIST OF ACRONYMS, ABBREVIATIONS
- ADB: Asian Development Bank
- AFD: Agence Française de Développement

- APE: Asia Pacific Economic Cooperation
- ATM: Automatic Teller Machine
- ASEAN: Association of South East Asia Nation
- CBCNV: Employees
- CPC: Cambodia
- CMIS: Customer Management Information Network
- CN - XD: Industry - Construction
- CNTT: Information and Technology
- DSM: Demand Side Management
- EVN: Electricity of Vietnam
- FDI: Foreign Direct Investment
- FMIS: Financial Management Information Network
- GBBQ: Average price
- GDP: Gross Domestic Product
- GENCO: Generation Company
- GNP: Gross Nation Product
- JBIC: Japan Bank for International Cooperation
- JICA: Japan International Co - operation Agency
- KCN: Industrial Park
- KCX: Export Processing Zone
- LAN: Local Area Network
- MBA: Tranformer
- NMĐ: Power Plants
- ODA: Official Development Assistance
- PC2: Power Company number 2

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- QLTDDC: Residental Consume Management
- QTCL: Strategic Management
- ROA: Return on total assets

- ROE: Return on common equity
- SADA: Supervisory Control And Data Acquisition
- SMS: Short Message Service
- SRP: South Region Power Company
- SWOT: Strength, Weakness, Opportunity, Threat
- TN KS - NH: Commercial Hotel– Restaurant
- TTĐN: Electricity Losses
- WAN: Wide Area Network
- WB: World Bank
- WTO: World Trade Organization

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PREAMBLE: GENERAL INTRODUCTION
1.1. General Background
Binh Phuoc is one of eight provinces of the southern key economic zones. In the
industrialization and modernization of the country, Binh Phuoc also has remarkable
progress, the economy is initially developed, live of local people are improved.
During the process of development, it has been promoting the province's comparative
advantages and has a larger contribution to the general growing and important target
of socio-economic development of the southern key economic development in
particular and national development in general.
However, compared to its position, potential and comparative advantages, the
province has not still promoted its fast, efficient and sustainable development. One of
the main reasons to that development includes an important contribution of the
electricity industry.
Today in the world of science and technology and human civilization, power energy is
essential and indispensable. No one can imagine how a world will look like without
power. For power is an essential energy source to maintain life activities of people,
directly impacts on the economic development and issues of social security in the
country in general and in Binh Phuoc province in particular. Electricity has penetrated

to almost every corner, created favorable conditions for developing communication
systems, and opportunities for progressing up of mountainous people with citizens in
some aspects of knowledge, to be the lighting source for childhood education, to be
the happiness of humanity. The image of the 80-year-old man in remote areas was
crying when electric light shining between the house on stilts, crying in happiness for
the light has come to ethnic minorities, to the village, such feeling has been remained
in the memories of many people. Like fresh air to breathe, like clean water for
drinking and daily life, like rice to eat everyday. Electricity has come to life and
become so familiar to everyone that we can not recognize the existence of electricity,
but just one day even an hour without electricity, all activities were paralyzed; fan

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stopped returning; newspapers stopped printing, information interrupted; machine
stopped weaving, steel furnace stopped; doctors surgeries stopped and many other
great damages. Unfortunately, recent times due to lack of electricity capacity and
production so the power shortages happened too much, causing urgent and
discontented issues in society.
Electric Power shortages in Vietnam at present should not have reached such critical
issues if the development strategy of EVN was in the right direction and the
consulting and planning of EVN was good to adapt "ahead of anticipation" to provide
electricity for demands of economic growth and the increasing demands of the people.
There were more power plants operated on schedule should help reduce the shortage
in electric power.
So, that why we choose this topic with highly agreement and desire it become the
truth in future.
1.2. The necessity and significance of the topic "Building Strategy Development
of Binh Phuoc Power Company to 2015 and vision to year 2020"
We think that the topic "Building strategic development of Binh Phuoc Power
Company to 2015 and vision to year 2020” is very necessary for all Electric power
Companies in general and Binh Phuoc Power Company in particular, it is also a

requirement of the whole society and especially for leaders of Binh Phuoc Power
Company for the following reasons:
- The Binh Phuoc Electric Power Company is going to change the accounting
system from dependent into independent with the Mother Company and become the
Limited Company is operated with larger scale, advanced technology, approaching to
the advanced modern methods in the world, exploiting the maximum advantages of
the company. Become an independent accounting company, he can be operated more
active, more advanced capabilities, production and business efficiency and
competitiveness in the market mechanism, ensuring the important role of the
provincial economy. If the change is successful, Binh Phuoc Power Company will
distribute together with the power general industry to enough dominate the economic

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sector, the domestic markets in conditions of international economic integration and
contribute to the country's international economic integration effectively.
- Building the development strategy is the first task of the company, and a
continuous innovation of enterprises. If enterprises want to survive and develop must
constantly renew as society is constantly changing, techniques are constantly
advanced, employees who work in the enterprises are constantly changing.
- Technical progress and people's living standards are constantly being
enhanced are promoting the formation of many new services, if the enterprises are
stalled will be soon eliminated. Therefore, the enterprises must continually renew, but
if they want to renew, they must have clear strategies. Whether on business field,
technology, service products and services, manufacturing process, manufacturing
management, marketing works all must have a strategy, based on the direction of the
strategy.
- Building business strategy is the need of international economic integration.
For businesses, the internationalization of business will happens, but to do that there
are the strategy. We are proceeding to participate in the world trade organization. That
means the enterprises are facing a situation of a more fierce competition. Foreign

goods will be more and more in the domestic market. Domestic and International
market shall be treated exactly alike and the competition will be more violent. It will
be difficult if the enterprises have not the business strategy.
- In recent years, theoretical and practical management have greatly changed
and strategic management has received a special attention of all the theorists and
administrators. Indeed, the process of internationalization is taking place worldwide,
revolutionary of scientific technology happened with rushing speed, rapid change of
business environment, those things that create opportunities and challenges for the
enterprises. Facing with that situation, the enterprises must set out their strategies for
their enterprises and strategic management to "achieve the goals of the organization,
have a broad interest to the concerned characters, and shall attach short-term
development to the long-term context".

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For these reasons, the topic "Building strategic development of Binh Phuoc Power
Company to 2015 and vision to year 2020" is very practical and has great
significance for Leaders of Binh Phuoc Power Company in order to adapt to rapid
changes of business environment and meet the requirements of local leaders, the
society and customers.
2. Objectives of research
2.1. Scope of research
Scope of Research of this topic is the matters related to strategy development of Binh
Phuoc Power Company and to study the views on the restructuring direction any
clearly see the purpose, orientation and desired results creatively.
+ Helping the company achieve an objective effectively thanks to its ability to
capture opportunities, limit risks, better use of resources of the company.
+ Helping the company create and sustain a competitive advantage to better
adapt to market needs and customer goals in order to maintain position and maximize
profits in the long term.
Applicability: The group has two members who are key officials, including one who

is the leader of Binh Phuoc Power Company, and two members are the leaders of
other companies, so the applicability of this topic to reality at the company will be
very high.






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3. Approaches
In this report, the research carried out based on steps of qualitative and quantitative
research.
3.1. Qualitative research
- Identify the criteria that customers often set out when selecting and
purchasing products of the Company.
- Determine the degree of satisfaction, and desired level of customer for each
above criteria.
3.2. Quantitative research
Based on the results of the qualitative analysis, researched from primary information
source, we proceed to conduct quantitative analysis.
The data analyzes by the Excel Data Analysis Program and applies in the SWOT
Model.
In the process of implementation, the methods used are as follows:
Methods of collecting information:
Secondary information received from
- Internal documents of the company: The records, statistics, stored documents,
reports, business plans, etc.
- External resources: Newspapers, radio, statistical documents, internet, etc.
Primary information received from

- Opinion from customers through interviews, consultation, etc
Methods of processing information:

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Application of technical and strategic administration tools to implement:
- Analyze the business environment to identify opportunities, risks, strengths
and weaknesses of the Binh Phuoc Power Company.
- Apply SWOT analysis to incorporate the opportunities, risks, strengths and
weaknesses in order to propose strategies for Binh Phuoc Power Company.
4. Structure of Task
This task includes an introduction and three chapters, as follows:
• Preamble: Introduction
• Chapter 1: Theoretical basis - Overview of Strategic Management
• Chapter 2: Analyzing the current business of the Company
• Chapter 3: Solutions and Strategy for the company to 2015 and vision to year
2020 and Conclusions

Strategic Management- Topic of Group No.5 19
CHAPTER I
THEORETICAL BASIS - OVERVIEW OF
STRATEGIC MANAGEMENT
1.1. Strategic Management
Strategic Management is the first task of any high-level administrator, sometimes it is
not only duty of an individual but also for a collective leadership of organizations and
enterprises. This term, although frequently be used and discussed, not all of
administrators can understand it properly, leads to making mistakes while
implementation, sometimes by high price even by life of organizations and
enterprises. What is strategic management?
1.1.1. Concept
There are many different concepts of strategic management; but there are three

common concept of strategic management that we can suggest as the following:
• Environmental approach:
"Strategic Management is a decision process to link the inner ability of the
organization with the opportunities and risks of the outside environment." This
approach makes the company has environmental orientation, exploit opportunities and
avoid risks.
• The approach on objectives and measures:
"Strategic Management is a part of decisions and administrative actions, determine
long-term performance of the company". This approach allows administrators to
define more precisely the objectives of the organization as well as allowing them to
use more efficiently the resources of the organization.


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• The approach on actions:
"Strategic Management is conducting the current and future environmental review,
creating goals of the organization, decision-making, implementing and controlling
decisions implementation, to achieve the objectives in the current and future
environment".
From the approach above, we can concept as follows:
"Strategic Management is an art and science, is the process of studying the current as
well as future environment; is planning of the basic and long-term objectives of the
enterprise; selects the action plans, implement and allocate all the resources of
company. Propose, implement and inspect the implementation of decisions to achieve
these objectives in the current and future environment".
Thus, strategic management task consists of three main parts:
+ Setting the Goal: Determine where is the position and the goal of the
company?
+ Building Plan: Identify the ways by which the enterprise will go the goal.
+ Arrange and allocate the Resources: Determine what tools and means that the

company is using to reach goal.
1.1.2. Requirements on building and implementing the strategy
• First: The business strategies are to achieve the aim of increasing the power of
the enterprise and gain competitive advantages. Therefore, when building the strategy,
the company has to exploit his comparative advantages, to focus on measures of
taking advantages, not too much effort improving weaknesses.
• Second: The business strategies are to ensure the business safety for the
enterprise. Business activities contained risks that enterprises often face with them.
Therefore, the business strategies must have a safe zone, in which potential risks can

Strategic Management- Topic of Group No.5 21
occur but are in minimum.
• Third: We have to determine the business scope, objectives and the basic
conditions to achieve the objectives. The determination of the business scope in the
business strategies must ensure the spread of resources, avoid or do not use up the
resources. The goals must be appropriate with the specific conditions of the enterprise,
to be clear and point out the most basic and critical goals. Associated with goals,
should have a system of policies, measures and material and technical conditions,
labor as a precondition for the implementation of that goals.
• Fourth: We have to predict the business environment in the future. The
prediction is more accurate the more appropriate business strategies. So should have a
certain volume of information and knowledge, as well as accurate thought methods to
get real and wisdom overview about everything that the enterprise may face with in
the future.
• Fifth: There should have standby strategies. Business strategy is to execute in
the future, but the future is an unknown quantity, so when developing business
strategies, it should take into account the worst possibility that the enterprise may
encounter. Which strategy will be replaced in that such situation?
• Sixth: We have to combine mature time with chances. If the business
strategies are not mature, the business plan will certainly be failed, but there seemed a

paradox that some business strategies have been failed because too mature. That is the
reason of perfectively ideas in building the strategy for company; take too much time
working the details for expecting to have a perfect strategy. Until the strategy building
is completed, it has become obsolete compared to changes of the market daily.
1.1.3. Roles and importance of Strategies of Strategic Management
The strategy helps the company to be more active and keener with forecasts and
fluctuation of the market, then shall have appropriate decisions and control its
activities, increase competitiveness of the company and gradually ensure strong
position of the company in the market mechanism.

Strategic Management- Topic of Group No.5 22
• Strategic management process enables organizations to find his purposes and
directions. It causes administrators to consider and determine where and when to
reach a certain position.
• Strategic management helps administrators to find out opportunities and risks
in the future, in the varied environmental conditions that the enterprise always face
with, to help administrators take advantage of opportunities and minimize risks.
• Thanks to the strategic management process, the enterprises will attach to the
proposed decisions with relevant environmental conditions, try to assume the active
position or passive attacks, to cope with changes in the environment and master the
situation.
• Most researches showed that which enterprises apply strategic management
would achieve better results than the results they achieved earlier and compared with
other enterprises that do not apply the strategic management.
However, strategic management also has its disadvantages:
• The establishment of strategic management process requires more time and
effort.
• Strategic Management often wrongly applied, rigidly as they are set in
writing.
• Limitation of errors in predicting long-term environment can sometimes be

very large.
• Some enterprise are likely to remain at the planning stage and too little
attention to implementation issues, this phenomenon led the administrator to doubt
about the usefulness of the strategic management process.
Strategy is an important role for enterprises/companies. Strategic planning that means
to identify where we are; where we want to go, how we will get there but how to do it
is more important. The strategy do not action, it is just a dream.

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1.1.4. Stages of Strategic Management
The strategic management includes 03 stages: Strategy formation, strategy
implementation, and checking and assessment of strategy.
1.1.4.1. Strategy formation Stage
This stage is to set up the business mission and make investigations to determine the
strengths, inner weaknesses and opportunities, external risks, set long-term goals,
building and selecting alternative strategies. The three basic activities in this stage are:
• Researching Activity: Including the activities relation to the collection and
processing of information on markets and businesses of the enterprise in order to
identify key strengths and fundamental weaknesses in the business works. The
decisions in the strategic forming stage will attach company to products, market,
resources and technologies.
• Reconcile intuition: There are many strategic management methods enable
intuitive integration with analysis in making and selecting feasibly alternative
strategies.
• Making decisions: There are any organization has infinite resources, so
administrators must make decisions regarding the selection of alternative strategies
that will get most benefit the company. Strategic decisions have long-term effects or
better or worse impacts on the organization. Strategists need to have good foresight to
understand the stages of the formation of decisions.
1.1.4.2. Strategy implementation

This is a stage of doing strategic management. The basic operation is to set short-term
goals, set up the policy and distribution of resources. Strategy implementation is the
most difficult stage in the process of strategic management. The strategy
implementation requires discipline, dedication and sacrifices virtue of all members of
the company. In this time, the role of administrators is very important, shall express
leadership arts, ability to promote staff to implement the strategy in order to achieve

Strategic Management- Topic of Group No.5 24
success.
Strategy implementation includes financial policies, programs and cultural
environment, preferential policies of encouragement and reward for employees.
Challenges in implementing the strategy is how to stimulate the administrators and
staff throughout the company to work hard with pride and enthusiasm towards
achieving the ultimate goals set out by the company.
1.1.4.3. Test and evaluate the strategy
The final stage of strategic management is testing and evaluating the strategy. Test
and evaluation of strategies is to monitor the results of operations of setting and
implementing the strategies. This is essential work for current results may not result
successes in the future.
The main activities of this stage are as following:
+ Review the factors that are basis for the current strategy.
+ Measure the results are achieved.
+ Carry out all necessary activities for adjustment.
Despite the responsibility of the managers is making good strategic decisions, but both
managers and executive staff also have to connect with the practical activities,
implement, test and assess the strategies. All the members of the company participate
in doing the strategy will to get the success of the company, and to achieve adherence
to necessary changes.