The development strategy of power engineering consulting JS company 2

GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

THE DEVELOPMENT STRATEGY OF
POWER ENGINEERING CONSULTING JS COMPANY 2

Class
: D0109
Group Number : 4
Students:
Hồ Nam
Tạ Quốc Dũng
Nguyễn Chơn Hùng
Hồ Minh Quang

HOCHIMINH CITY, 2010


The Development Strategy of PECC2

ACKNOWLEDGEMENT

To complete the Masters program and write this essay, we have received
guidance, help and enthusiastic suggestions from the Global Advanced
Master of Business Administration Program, which is the joint program
between Hanoi National University and Griggs University.
First of all, we kindly thank the professors who have taught us
enthusiastically and helped us all along.
Especially, we would like to express special thanks to Professor - Dr. Le

Van Bay who has helped us tremendously in completing this essay.
We also thank deeply the Board of Directors of the Power Engineering
Consulting Joint Stock Company 2, who has facilitated and allowed us to
investigate and conduct surveys to gather data for this essay.
Although we were dedicated and tried hard to complete the essay, we
cannot avoid shortcomings. Thus, we welcome comments from all
Professors and classmates.
Hochiminh City, November 25, 2010
Group 4 Class D0109

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The Development Strategy of PECC2

TABLE OF CONTENTS
Acknowledgement
List of Abbreviations
List of Tables
List of Figures
INTRODUCTION ....................................................................................... 1
CHAPTER 1 THEORETICAL BASIS ................................................... 4
1.1 The basic concepts of strategy ....................................................... 4
1.1.1 Strategy....................................................................................... 4
1.1.2 Strategic Management ................................................................ 4
1.2 Strategy Classification.................................................................... 5
1.2.1 Classified by strategic level ....................................................... 5
1.2.2 Classified by scope of strategy................................................... 6
1.2.3 Classified by the approach of strategy ....................................... 6
1.3 The process of strategic business planning .................................. 6

1.3.1 Overview .................................................................................... 6
1.3.2 Identify the tasks and objectives of the enterprise ..................... 7
1.3.3 Analysis and forecast the business environment ....................... 9
1.4 The tools of strategy formulation and choice............................. 15
1.4.1 The matrix of external factor evaluation (EFE) ....................... 15
1.4.2 The matrix of internal factor evaluation (IFE) ......................... 16
1.4.3 The matrix of competitive profile ............................................ 16
1.4.4 The matrix of SWOT ............................................................... 16
1.4.5 The matrix of SPACE .............................................................. 17
CHAPTER 2 ANALYSIS OF ACTUAL SITUATION AT PECC2... 19
2.1 The formation and development of the company...................... 19
2.1.1 The establishment and development of the company .............. 19
2.1.2 The functions and duties of the company ................................ 19
2.1.3 Corporate Culture ..................................................................... 20
2.1.4 The vision and mission of the company .................................. 22
2.2 The characteristics of power engineering consulting industry 23
2.2.1 The characteristics of products and services of power
engineering consulting ......................................................................... 23
2.2.2 Market characteristics .............................................................. 25
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The Development Strategy of PECC2

2.2.3 Criteria for evaluation of a consulting company...................... 27
2.3 Organization and business practices of PECC2 ........................ 28
2.3.1 Characteristics of the organization structure............................ 28
2.3.2 The process of production organization ................................... 30
2.3.3 Financial features of the company ........................................... 30
2.3.4 Overview of the production plan ............................................. 31

2.3.5 Assessment of the plan implementation .................................. 31
2.4 The objective of PECC2 to year 2020 ......................................... 34
2.4.1 Criteria to build objective......................................................... 34
2.4.2 The objective of the company to year 2020 ............................. 38
CHAPTER 3 SOLUTIONS,
RECOMMENDATIONS
AND
CONCLUSIONS ....................................................................................... 41
3.1 External environment analysis .................................................... 41
3.1.1 Sector analysis .......................................................................... 41
3.1.2 Competitive forces analysis ..................................................... 51
3.1.3 Analysis on the macro environment......................................... 52
3.2 Internal environment analysis ..................................................... 53
3.2.1 Specific capacity of the company ............................................ 53
3.2.2 The value chain of the company .............................................. 55
3.2.3 The competitive advantages ..................................................... 55
3.3 The strategies to achieve the objectives ...................................... 56
3.3.1 Strategy formulation................................................................. 56
3.3.2 Strategy analysis and choice .................................................... 62
3.4 The solutions to carry out the strategy ....................................... 64
3.4.1 The group of solution of human resourse ................................ 64
3.4.2 The group of solution of expand the business market ............. 66
3.4.3 The group of organizational solution, management, business
production............................................................................................. 66
3.4.4 The group of solutions to improve product quality ................. 67
3.4.5 The group of financial solutions .............................................. 67
3.4.6 Other solutions ......................................................................... 67
3.5 Recommendations......................................................................... 67
3.5.1 Recommendations towards EVN ............................................. 68
3.5.2 Recommendations towards the ministries and government .... 68

3.6 Conclusions ................................................................................... 68
REFERENCES
APPENDICES
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The Development Strategy of PECC2

LIST OF ABBREVIATIONS

PECCs

: Power Engineering Consulting Companies

PECC2

: Power Engineering Consulting Joint Stock Company 2

PECC1 (3, 4)

: Power Engineering Consulting Joint Stock Company 1 (3,4)

IE

: Institute of Energy

EVN

: Vietnam Electricity

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The Development Strategy of PECC2

LIST OF FIGURES

Figure 1-1: The elements of internal industry............................................. 11
Figure 1-2: Matrix of SPACE ..................................................................... 18
Figure 2-1: A typical Project Engineering Cycle ........................................ 24
Figure 2-2: Organization Chart PECC2 ...................................................... 29
Figure 2-3: Chart of revenue in year 2009 .................................................. 33
Figure 2-4: Revenue from 2006 to 2009 ..................................................... 33
Figure 3-1: Map of Vietnam and EVN/PECCs Location ........................... 43
Figure 3-2: Market share of PECCs in 2008 ............................................... 44
Figure 3-3: Market share of PECCs in 2009 ............................................... 45
Figure 3-4: Value series of the company .................................................... 55
Figure 3-5: Import, purchase of area power............................................... 71
Figure 3-6: Zoning Power system until 2020 ............................................. 71
Figure 3-7: Connection of power system of the Three Indochinese
Countries ..................................................................................................... 72

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LIST OF TABLES

Table 1-1: The 3-stages process of strategic planning .................................. 7

Table 1-2: The matrix of opportunities - threats / strengths - weaknesses . 17
Table 2-1 : Consulting evaluation criteria .................................................. 28
Table 2-2: Revenue and growth rates ......................................................... 32
Table 2-3: Electricity demand in the period until 2020 .............................. 35
Table 2-4: Predicted results in accordance with scenarios ......................... 36
Table 3-1: Market share of PECCs in 2008, 2009 based on gross revenue 44
Table 3-2: Matrix of External Factor Evaluation (EFE) ............................. 56
Table 3-3: Matrix to evaluate internal factors IEF ..................................... 57
Table 3-4: Matrix of competitive profile .................................................... 57

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The Development Strategy of PECC2

INTRODUCTION

1.

The reasons for choosing the research topic:
Since our country made the change of the economy, from administrative
structure and centralized planning to market mechanism, enterprises have
started to polarize. Some are adapting to the new mechanism to be
profitable and expand. Conversely, some could not find a way out, incurred
losses, and eventually became bankrupt.
Today, not a single successful business operates without paying attention to
their market. The market mechanism makes the rigidity of the short-term as
well as long-term planning become the main cause that obstructs the
development of enterprises. Therefore, enterprises need to plan and
implement a new planning tool that is fully flexible to respond to market

changes. That is business strategy.
The business strategy is built on the basis of analyzing and predicting the
opportunities, risks, strengths and weaknesses of enterprises that help the
enterprise obtaining the general information on external business
environment as well as internal resources of the enterprise. Based on those
mentioned, they plan the strategic objectives, select the best strategy and
formulate policies to achieve those objectives and simultaneously inspect
and adjust the strategy to meet the changing business environment. The
business strategy helps enterprises not to fall into a defensive situation, but
to always stand on the offensive side to be ready to face all changes of the
business environment. Thereby, it has increasingly become the essential
role as a sharp competitive tool in the market economy.
The work of planning, organizing and implementing a business strategy is
actually quite new for most Vietnamese companies. The Power
Engineering Consulting Joint Stock Company 2 is one of them. Planning
for the company is limited to the annual planning without a strategic vision.
Therefore, the need to plan and implement long-term business strategy is
very important and urgent for the survival and development of the
company.

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With that scientific and practical meaning, and the knowledge from the
Training Program of Master of Business Administration for Leaders
organized by Griggs University (United States) in collaboration with Hanoi
National University (Vietnam), our group decided to develope a business
plan for The Power Engineering Consulting Joint Stock Company 2.

Our team hopes that our researched topics can become a reality when it is
presented to the Leaders of The Power Engineering Consulting Joint Stock
Company 2 and contribute to the future development of the company.
2.

Objective and scope of the research
Given our limited knowledge and experience concerning strategy
development, and considering the limitation of time, the group's objectives
are as follows:
 Systematize the theory basis of strategic planning.
 Generalize estimations of the actual situation of production and
business operation of the company; find out the advantages,
weaknesses, opportunities and threats which will be used to
formulate a development strategy for the company until 2020.
 Suggest some solutions to improve the planning and implementing of
the company strategy.
Our team hopes that our study will be a premise for further studies to
amend the development strategy of the Power Engineering Consulting Joint
Stock Company 2 and contribute to the consolidation and development of
the company.

3.

Research method
The findings are based on information from primary and secondary data
collected from means of mass communication, units directly involved in
production and business operation of the company, and from the company
itself.
The construction and research of the strategic choice matrixes are based on
the expert method, which consists of consultation with well understood

experts of the company's products, and market situation, in particular, the
general and electrical construction consulting industry. From here, we can
establish features and evaluate those features. The advantage of this method
is simple and easy to implement.
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4.

The structure of the report
Besides the general opening, this report is made in three chapters as
follows:
Chapter 1 – The theoretical basis
This chapter is a brief introduction of the theoretical basis that will be
applied in the research and implementation process of the project. The
theoretical contents include: the concept of strategy and strategic
management, strategic planning process, and the tools for strategic
planning and choices.
Chapter 2 – Analysis of the actual situation of the Power Engineering
Consulting Joint Stock Company 2 (PECC2)
This chapter includes: General introduction of PECC2, characteristics of
the power engineering consulting industry presentation, the actual
construction work and plans implementation at PECC2; and the objectives
of PECC2 from now to year 2020.
Chapter 3 – Solutions, recommendations and conclusions
This chapter reviews the ex-internal factors; particularly those that may
affect the production and business operation of the company. We then
create strategies and specific solutions to achieve the objectives. On the

other hand, this chapter also makes some recommendations to policy
makers and EVN to help create favourable conditions for the development
of the power sector in general and electrical construction consulting
industry.

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CHAPTER 1
THEORETICAL BASIS
1.1

The basic concepts of strategy

1.1.1

Strategy
It is a term which has the origin from the military field, from year 50 of the
20th century and it is used more widely in the business sector. Over time,
the concepts of strategic are also changed upwardly. Up to date, there are
many different concepts of business strategy, but there are two concepts are
used very popular as follows:
"Strategy is a draft of the future including objectives which the enterprise
has to achieve as well as the necessary means to implement those
objectives ".
"Business strategy of a company is a combination of long-term goals,
policies and large solutions on production and business operation, financial
and human settlement in order to operate production and business operation

or company development to a new higher state of nature".

1.1.2

Strategic Management
The role of strategic management increasingly is expressed as an
orientation. The effective management method is extremely important
mean for the success or failure of enterprises in the varied business
environment. Today, it still exist many different concepts of strategic
management. There the author thinks that strategic management of
enterprise is the art and science of the construction, implementation and
evaluation of collective decisions that helps enterprise achieving their
goals. Some other authors define: Strategic Management is a method of
managing to orient the strategy and combine administrative functions in the
process of long-term development of enterprises that base on analysis and
forecast the business environment in a comprehensive way....
Therefore, we can define the strategic enterprise management is a
combination of planned activities, organize to implement and checking,
adjusting business strategy that perform and repeat in accordance cycle or
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non-cycle of time to ensure that enterprise always take advantage of every
opportunity, good time as well as limit or eliminate the threats and pitfalls
on the path of implementing their goals.
Moreover, strategic management helps enterprises to solve those problems
as follows:
Firstly, it helps enterprise answering the question: What are we trying to do

in the present to achieve development objectives in the long term.
Development objective in the long-term of the enterprise is a competitive
advantage, the power of business and profitable capacity. The basis of
competitive advantage is the key capacity of enterprise, the business
strategy of enterprise that plans the route to reach the objective.
Secondly, it alerts administrators the changes in business environment,
opportunities and new challenges. The changes in business environment are
always leading to review and adjust business strategy that make how
enterprise capturing the business opportunities for its development in the
long term and simultaneously creating appropriate precautions for the
challenge from the external environment.
Thirdly, it provides the basis for administrators to estimate the demand of
capital, equipment and manpower, in other words, the allocation of human
resource of enterprise into the supporting areas of implementation strategy
in enterprise. The recourse of enterprise is limited and should be invested
effectively.
Business strategy is a basis of resource allocation for enterprise as most
effectively. Thus, strategic management will help to unify the decisions of
enterprise administrators toward to supporting the strategic
implementation.
1.2

Strategy Classification

1.2.1

Classified by strategic level
- The strategy of corporate level: The general strategy of the company
that arms to achieve the objective of the company
- The strategy of business unit level: The strategy of business unit of

the company. The strategy of each unit will arm to achieve the
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objective of that unit and all strategies of units that arms to help the
company achieve the company’s objective
- The strategy of functional level: The strategy is mentioned as
accurate function of the company
1.2.2

Classified by scope of strategy
- Common strategy: is the general strategy of the company
- Component strategy: is a second-level strategy such as marketing,
finance etc
Common strategy and component strategy are closely linked together
that form a fully-done business strategy

1.2.3

Classified by the approach of strategy
- Focused strategy: Focus on the key points that have crucial mean of
the production and business operation of the company
- The strategy is based on absolute advantage: based on strength of
enterprise to make the foundation for strategic planning
- Innovative attacking strategy: based on new exploration to take
advantage
- Liberal strategy: not targeted at the key any factor that exploits the
factors surrounding the key factor that is the basis of business

planning for enterprise

1.3

The process of strategic business planning

1.3.1

Overview
There are some different concepts of strategic business planning. Some
Authors divide the strategic planning process into steps; also some authors
have the concept of only a few steps of the strategic planning process.
Intrinsic differences of opinions are the determining scope of the work that
is needed for implementation to plan the strategy. In this report, it will use
the three stages strategic planning process as present as follows:
Stage 1: Establishing information systems, data and status from the
external and internal business environment of enterprise as a basis for
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formulating strategy. It may use technical analysis that has been
summarized as the matrix evaluation of external factors, evaluating the
matrix internal elements.
Stage 2: Analysis and determine the combination at between of
opportunity, opportunities, risks of external business environment with the
strengths and weaknesses of enterprise to establish the combination that is a
basis of business strategy planning.
Stage 3: Identify lay-outs, evaluate and select strategic decisions from the

combination of stage 2. Selecting and form the strategic plans. Evaluate
and select according to the priority objectives.
Table 1-1: The 3-stages process of strategic planning

Stage 1 – The input stage
The matrix of external
factors estimating
(EFE)

The matrix of
competitive profile
(CPM)

The matrix of internal
factors estimating (IFE)

Stage 2 – The matching stage
The matrix of The matrix
The
strengths,
of strategic
Boston
weaknesses, location and Consulting
opportunities, operational
Group
threats
estimating
(BCG)
matrix
(SWOT)

The internal
– external
(IE) matrix

The Grand
strategy
matrix

Stage 3 – The decision stage
The Quantitative strategic planning matrix (QSPM)
(Source: Strategic Management – Concepts and Cases, Fred R. David)
1.3.2

Identify the tasks and objectives of the enterprise
Certainly, all enterprise is contenting its functions and duties at the time it
was established, although it has been said or not. However, in practice,
"What business do we have?", or "What is our duty?" It is always a difficult
question to answer. To answer this question, it needs to have a business
duty report. It is a declaration of existed reason and distinguishes a business
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organization with other organizations. The clear duty report is essential to
establish the objectives and drafting a strategy effectively.
There is no specific template for a duty report, but according to experts of
strategic management that the effective report should answer the 9
questions as follows:

1.

Customers: Who will consume the products of the company: people
have high, low or average income?

2.

What are the main products, services of the company?

3.

Market: Rural or urban? Domestic or export? Competing with whom?
What is their strength?

4.

Technology: Is the technology leading concern of the company or not?

5.

The concern of vital issue, development and profitability.

6.

Business philosophy: What are the basic beliefs, values, aspirations
and priorities, the company's philosophy?

7.

Self-assessment of yourself: special powers or major competitive

advantage of the company in comparing with competitors.

8.

The concern of the company on social responsibility: environmental
issues and society etc.

9.

Personnel policy: the interest of the company on material life
(guarantee income, increase income etc.), spiritual life (the reward
regime, promotion, improve higher level, ensuring hygiene and
working safety etc.).

The objective is most generally understood that is the destination to
achieve. System of strategic objective reflects the desires to achieve exact
results in a certain period of the business strategy. There are many ways of
objective classification but according of reviewing the time, we will
classify the entire objective system into long-term objective (strategy) and
short-term goals (tactics). Long-term objective is the desired results that is
set out in a relatively long period of time, usually over a year, and it often
objectives such as maximizing profitability, productivity and competitive
position of enterprise, the rising ability and develop employment, social
responsibility etc. Shorter-term objective describes the desired business
results to achieve in the shorter term comparing to long term and it is often
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more specific long-term objective. Normally, the system of strategic
objectives has to meet, satisfy the following requirements: specificity,
feasibility, consistency and flexibility. Of course, the objective themselves
in the system of strategic objective of enterprise also in conflict with each
other so the system cannot have strategic objective that can satisfy
maximally to all the objectives that need a reasonable tolerance.
1.3.3

Analysis and forecast the business environment
Business environment is understood as the overall factors, internal and
external factors are in the interactive campaign, affect directly and
indirectly to the production and business operation of enterprise.
These factors constitute the business environment that is always active and
affect the production and business operation of enterprise under the
direction and at different levels. These factors act upon actively and create
opportunities, business opportunities or create advantages, the strength of
enterprise comparing to competitors. Conversely, the negative factors that
create pitfalls, threatening or weakness of enterprise comparing to
competitors so to plan business strategy, administrators have to research,
analyze and forecast the business environment.

1.3.3.1 The external business environment
a) The international business environment
The influence of international policies: globalization issues; forming,
expanding or terminating of multilateral and bilateral alliance treaties; basic
conflict resolution around the world and regions; wars ... These factors may
impact positively or negatively with different levels to different businesses.
The influence of regulations, national laws, international laws common
practice: In the trend of integration of the enterprises, to survive and
develop, they have to obligate the laws and international common

practices. These regulations may be opportunities for enterprises (such as
Vietnam - U.S trade agreement creating conditions for garment, fisheries
enterprises... exporting to the U.S.) but they can also cause risks for the
existence and development of enterprises (Joining the AFTA, most of
businesses face to blazing hot competition etc.). Laws of a nation would

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impact; control the business operation of enterprises participating in the
market of that nation.
The influence of technical factors - technology: is the factor of strong
influence on competitiveness of enterprises as it directly affects the
productivity, quality, designs and prices …
The influence of social - cultural factors
b) National economic environment
Including five groups of basic elements:
Economic elements: The trend of GDP, rate of inflation, bank interest rates,
monetary policy, rate of unemployment, balance of payments and exchange
rates ... Each factor may be an opportunity or threat and different effects to
various different businesses so businesses need to identify selectively the
specific impact that will most directly affect the production and business
operation of enterprises.
Elements of policies and laws: the taxes, the special treatment regimes, the
anti-monopoly provisions, the law on environmental protection,
advertising, the stability of government etc, these factors will create a
healthy business environment or not. From that will impact positively or
negatively on business operation of enterprises, especially those doing

genuine business. On the other hand, these factors also create an
opportunity or risk for enterprises in the sectors, certain economic areas,
such as: The increasing of tax in some industries and services (electronic
games ...) that could threaten the profitability of these enterprises.
Social elements: Traditional habits, educational level, religion, beliefs,
habits of consumption, population growth rate etc, these factors often
change or evolve slowly, but it is often difficult to identify and effect
deeply to the management operation and business of all enterprises.
Natural elements: natural resources can be exploited (mineral mines,
forests, marine resources etc.), climate, land etc, depending on the
characteristics of every business enterprise so this factor influences
differently to the business operation of enterprises. For example, if it is
beverages businesses that is heavily influenced by weather factor: hot
weather will be more consumption, in contrast, cold weather will be less
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consumption, if it is a mining company that is influenced by characteristics
of resource exploitation.
Technologic elements: is a sharp tool for competitive of enterprises in the
economy of the trend of recent market integration. Select an appropriate
technology with the ability of the enterprise that will help enterprise taking
advantage of their power resources and also not be left behind, loosing
competitive advantage comparing to competitors.
c) Competitive environment of internal industry:
Including 5 elements as follows: The recent competitors, potential,
customers, suppliers of raw materials and goods of replacement and the
relationship between these factors are described in the following diagram:

Figure 1-1: The elements of internal industry

(Source: Michael Porter's Five Forces Model)
We alternately review the effect of each element:
i)

Customers

Customers who create profit, generating a victory for business, customers
of an industry can differ about the need of purchasing; different customers
may have different requirements on levels of service, quality of goods etc
that leads customers to different rights of negotiation. The following
customers will have less internal bargaining power compared to other and
they will be good customers in the customer list should be selected:
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Customers purchase small quantity comparing to the turn-over of the seller.
Customers have the lack of supply with full standard for selecting.
These customers have special difficulties in finding alternative products,
negotiation or implementation of transition (major cost ...).
Customers have no ability of opposite linking.
Also need to consider the sensibility on price of customers. If customers
use products and services of company, they almost sensibility on price
that's why the use of strategy of increased is not a good idea. Even, it may
lose a part of the big market. These big customers are not necessarily of
sensibility on price.

Well satisfying the need of customers is the key to the success of the
enterprise. But the demand of customers is not limited categories so
enterprises need to know how to operate and turn their needs into the needs
of the enterprise. On the other hand, it is also necessary that the enterprise
must count the specific shopping needs of customers which match the
relative capacity of the enterprise or not? If there is a fit that will make the
enterprise achieving the differentiation of high product comparing to
competitors in front the eyes of customers and minimize the cost of
customer service.
Thus, the selection of target customers becoming an important strategic
factor and businesses are not only interested in existing customers, but also
must consider the potential customers.
ii)

Supplier

The people who supply the input factors for enterprises: raw materials,
labour, machinery and equipment, capital, etc, the suppliers will have
different influence and pressure to enterprises that is depending on the
nature of the supplying market. From then on, they will affect the business
operations of the enterprises such as: the speed of product supplying, price,
product quality etc. According to Porter, The following factors will
influence and create pressure from suppliers to purchasing activities, as
well as reserve and labour employment of enterprises: The less or more
quantity of suppliers, the alternative nature of the input factors are difficult

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or easy, the ability of providers, important location of enterprises to
suppliers, the importance of specific input factors to enterprises.
iii)

Competitors:

Understanding of competitors is important mean for enterprises because of:
Firstly, the competitors decide the nature and competitive extent or
operation of advantage gaining in the industry.
Secondly, helping the enterprises having strategy of relevant competitive
policy to attack the weaknesses of the competitors of both achieves such as
our objective and avoiding the conflict of basic objective of the competitors
and avoiding the heavy retaliation at all costs from the competitors.
iv)

Potential competitors

The enterprises will enter the market, the impact of those enterprises to
business operation of enterprises in the industry, how far where it is
completely depended on the competitive strength of those enterprises.
According to M.Porter the factors effecting to the process of entering the
market of new competitors: barriers to access the market, scale of
economic efficiency, disadvantage on cost due to other causes, the
differentiation of products, switching costs, the policies of macroeconomic
management etc.
1.3.3.2 The internal environment of enterprise
The internal situation of the enterprise is including all elements and
systems within the enterprise. Enterprises have to try a thorough analysis of
internal factors in order to identify clearly the strengths and weaknesses

comparing to competitors. In that basis, they must offer the measures to
overcome and limit the weaknesses and promoting the strengths to achieve
maximum advantage. The internal factors mainly included as follows:
a) The impact of marketing activities
It is the sales promotion activities, distribution of goods, diversify or focus
of certain products, the ability to collect necessary information on market,
structure of products, pricing strategy, advertising , sales promotion and
service after sales etc, the goal of marketing activity is to satisfy the needs
and wishes of customers, ensuring products providing and stable services
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with quality and reasonable prices to help businesses achieve victory in the
competition and achieve profitability, high market share in the long term.
In particular, the needs of human is increasing time by time, changing
tastes constantly so the marketing activities is more important for the
success or failure of your business.
b) The influence of production capacity, research and development
Production capacity will affect production costs as well as time and meet
the demand of products and services. The research and development help
businesses manufacturing new products and services to suit the market's
demand, accelerate the speed of innovation and product differentiation ...
As such, these activities will create and direct impact to the competitive
advantages of enterprises.
c) The impact of human resources
Including the issues of labour structure, skill and ethics of employees, the
measures of working encourage, the level of transferring staff, quitting and
the forms of training and development of labour etc.

All of properties, materials as well as spirit are all creation of human-made.
Despite machinery and modern technology of how far and no man
operational control, it cannot do anything, the use of human resources
efficiently that depends on how the qualifications of the staff labour.
Therefore, businesses should have the measures of attracting skill qualified
labour as well as facilitating the necessary technical - material conditions
and labour organizations to promote labour force working with their full
potential ability.
d) The impact of financial accounting
All investment activities, procurement, research and development etc, all
depend on the financial situation of enterprises. In estimating the financial
situation of our enterprises, we need to focus on the issues such as: the
ability of mobilizing short-term and long term capital, the cost of capital
comparing to the whole industry and the competition, the efficiency capital
allocation in general business and production of enterprise in each division,
the flexibility of capital structure, ability of liquidity, the situation of capital
flow etc.
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e) The influence of organizational structure and enterprise culture
Enterprise organizational structure reflects the functional division of rights
and duties of each employee, department. A compacted light, closed
organizational structure will help departments coordinating together in a
harmonious way, quick information, exploit and take advantage of all
ideas, not to ignore any opportunity.
Environmental corporate culture: the concept of value qualities, rites,
rituals, the mirror model, business philosophy ... Environment healthy

corporate culture will create conditions to promote the development of
individuals, specially creating non-economic benefits for businesses. That
is: there are many opportunities to select good labour force, creating the
trust, reputation with customers, with the input markets, especially labour
markets.
1.4

The tools of strategy formulation and choice
Strategic choice is an important stage of the whole process of business and
development strategic planning. To ensure the right strategic selection, in
line with the market as well as the capacity of enterprises, the process of
selecting business strategies for each specific period, to ensure some
specific requirements as follows: Firstly, guarantee the long-term
effectiveness of business process; Secondly, to ensure the strategic
continuity and succession; Thirdly, strategy must be comprehensive, clear;
orderliness; Fourthly, ensure the consistency and feasibility; Fifth, ensure
the implementation of priority objective.
There are many models used for analysis and selection of business strategy.
Here are some models for analysis and options of business strategy that
enterprises can apply.

1.4.1

The matrix of external factor evaluation (EFE)
The EFE matrix estimates external factors, synthesize and summarize the
major opportunities and risks of external environment that affecting the
operation of enterprises. Thereby, it helps business administrators can
estimate the level of response of enterprises to opportunities, risks and
generating judgments on the impact external factors that may be
advantages or difficulty for enterprises.

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The Development Strategy of PECC2

1.4.2

The matrix of internal factor evaluation (IFE)
Internal factors are considered very important in every business strategy
and objectives are set up by enterprises, after consideration of internal
factors, strategic managers need to establish a matrix of elements to
consider this response and recognize the advantages and disadvantages.
Then, it helps enterprises of taking advantage of strengths maximally to
exploit and prepare domestic resources to confront the weaknesses and find
out how to improve this weakness.

1.4.3

The matrix of competitive profile
Set this matrix to identify the comparative evaluations of company with the
major competitors in the industry, the comparison is based on the affecting
factors of company's competitiveness in the industry. In which, the
managers can recognize the strengths and weaknesses of the company
comparing to competitors, identify competitive advantages for the company
and its weaknesses that should be overcome.

1.4.4

The matrix of SWOT
Analysis the matrix of SWOT that helps enterprises to consider all the

opportunities those enterprises can take advantage. And by understanding
the weaknesses of the enterprise in business, the enterprise will be able to
manage and eliminate risks that the enterprise is not aware yet. Moreover,
by using a basis for comparison and SWOT analysis between enterprises
and the competitors, enterprises are able to craft a business strategy that
helps the enterprise differentiate enterprise with competitors, so that helps
enterprises to compete effectively in the market.
The matrix of SWOT is an important tool to help strategists to develop the
four strategic groups as following:
 The strategy of strength - opportunities (SO): Using the internal
strengths of the company to take advantage of external opportunities.
 The strategy of weaknesses - Opportunities (WO): Improving of
internal strengths - threats by taking advantage of external
opportunities.

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The Development Strategy of PECC2

 The strategy of strengths - threats (ST): Take advantage of the
strengths of the business to avoid or reduce the impact of external
threats.
 The strategy of weaknesses - threats (WT): Defence of reducing the
weaknesses and avoid threats from the external environment.
Table 1-2: The matrix of opportunities - threats / strengths weaknesses
* Strengths (S)

* Weaknesses (W)

1. Relatively good
finance

1. Non level
management labour,
low-skilled workers

2. Abundant labor
resources with low labor
costs
3. Owning some modern
techniques

2. Most equipment and
technology are
backward

* opportunities (O)

Using
the
internal
1. Expanded market strengths of the company
to take advantage of
2. Transferring
external opportunities
techniques and
technology

Improving of internal

strengths - threats by
taking advantage of
external opportunities

* Threats (T)

Defence of reducing
the weaknesses and
avoid threats from the
external environment

Take advantage of the
1. High-tech of rival strengths of the business
to avoid or reduce the
2. The loose
impact of external threats
management of the
State sector

1.4.5

The matrix of SPACE
The matrix of SPACE shows that a business should choose the following
strategy: attack, cautious, defence, or competition. Those axes of the matrix
have the following meanings:
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The Development Strategy of PECC2

FS

Cautious

CA

-4

-3

Defence

+4
+3
+2
+1
0
-2

-1

Attack

+1 +2 +3 +4
-1
-2
-3
-4

IS

Competition

ES

Figure 1-2: Matrix of SPACE

- FS: (Financials Strengths) - financial strength of the business
- CA: (Competitive Advantage) - The competitive advantage of business
- ES: (Environment Stability) - The stability of the environment
- IS: (Internal Strengths) - The strength of the industry

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