development strategy of cam ranh port up to year 2015 2020 s vision

GLOBAL ADVANCED MASTER OF BUSINESS
ADMINISTRATION

GRADUATION THESIS
SUBJECT :
DEVELOPMENT STRATEGY OF CAM RANH PORT UP TO
YEAR 2015 – 2020’s VISION

Class: GaMBA.01.C0310
Member Group:
1. Pham Huu Tan
2. Nguyen Huy Phuong
3. Nguyen Van Thang
4. Bui Thi Le Thuy

HOME
[Pick the date]


CAPSTONE PROJECT REPORT

INDEX
INTRODUCTION. ................................................................................................... 6
CHAPTER 1: LITERATURE REVIEW AND PRACTICAL PREMISE FOR
PLANNING THE BUSINESS OF SEA PORT EXPLOITATION ...................... 8
1.1 Theory overview on strategy administration ................................................. 8
1.1.1 Concept, nature and characteristics of strategy administration. ................. 8
1.1.2 Role of strategy administration in a firm. .................................................. 8
1.1.3 Importance of strategy administration: ...................................................... 9
1.1.4 Strategy planning process........................................................................... 9
1.1.4.1

Stages of strategy management ................................................ 9
1.1.4.2
Model of strategic management ............................................... 10
1.1.5 Classification of business strategy ............................................................ 11
1.1.5.1
Strategic levels ......................................................................... 11
1.1.5.2
Strategy types ........................................................................... 11
1.2 Premise to build up a business strategy to a firm. .......................................... 13
1.2.1 Analysis of the external factor. ................................................................. 13
1.2.1.1

General environment................................................................ 13

1.2.1.2
Branch environment ................................................................. 15
1.2.2 Analysis of the internal factor of a firm .................................................... 16
1.2.2.1
Personnel .................................................................................. 17
1.2.2.2
Financing ................................................................................. 17
1.2.2.3
Marketing ................................................................................. 17
1.2.2.4
Administration activity. ........................................................... 17
1.2.2.5
Information system .................................................................. 18
1.3 Tools to plan and select the strategy................................................................. 18
1.3.1 Tools to plan strategy. ............................................................................... 18
1.3.1.1

External Factor Evaluation (EFE). ................................................ 18
1.3.1.2
Internal Factor Evaluation (IFE) ................................................... 19
1.3.1.3
1.3.1.4
1.3.1.5
1.3.1.6

Competitive Profile Matrix. ................................................................... 20

SWOT analysis .............................................................................. 20
Analysis of position strategy and evaluation of action (SPACE) . 22
QSPM analysis of strategy planning. ............................................ 23

1.3.2 Some experiences in selection of business strategy. ................................. 25
1.4 Theory on seaport and its services : ............................................................... 26
1.4.1 Concept and classification of seaport. ....................................................... 26

GROUP 4 - GaMBA.01.C0310

Page 1


CAPSTONE PROJECT REPORT

1.4.1.1
1.4.1.2

Concept on seaport ........................................................................... 26
Classification of seaport .................................................................. 26

1.4.2 Functions and duties of a seaport. ............................................................. 27
1.4.2.1

Functions .......................................................................................... 27

1.4.2.2 Duties of seaport ............................................................................... 27
1.4.3 Technical material facilities of a seaport ................................................. 28
1.4.3.1 The water part of a port normally consists of basin and fairway ..... 28
1.4.3.2

The land part is mainly the yard, traffic system and workshop ....... 28

1.4.3.3

The technical equipment of port may be divided in 6 masin groups 28

1.5 Development orientation of Viet Nam seaport. ............................................. 28
1.5.1 Development viewpoint. ........................................................................... 28
1.5.2 Target and orientation for development. ................................................... 29
CHAPTER 2: INTRODUCTION & ANALYSIS OF THE ACTUAL BUSINESS
CONDITION OF CAM RANH PORT ................................................................. 30
2.1. Introduction on Cam Ranh port .................................................................... 30
2.1.1 Overview : .............................................................................................. 30
2.1.2 Summary on the formation-development process ................................. 31
2.1.3 Organization structure ............................................................................. 31
2.2. Analysis of actual business organization and service supply conditions .... 33
2.2.1 Model and procedure of business organization ..................................... 33
2.2.2 General results of business: .................................................................... 39
2.2.3 The current status about the labor management situation .................. 45

2.3 Analysis of external factors. ............................................................................ 45
2.3.1 Analysis of macro environment .............................................................. 46
2.3.1.1 National economic situation in 2010 ............................................... 46
2.3.1.2 Economic situation in first 6 months in 2011................................. 48
2.3.1.3 Political and legal situation ............................................................ 48
2.3.2 Analysis of sector environment ............................................................ 48
2.3.2.1 Advantages and restrictions of seaport industry............................. 49
2.3.2.2 Allocation of goods output ............................................................. 50
2.3.2.3 Planning of Vietnam's seaport ........................................................ 51
2.3.2.4 Competition in sector ..................................................................... 52
2.3.3 Analysis of competitors. ....................................................................... 54
2.3.3.1 Nha Trang port................................................................................ 54
2.3.3.2 Quy Nhon port ................................................................................ 54

GROUP 4 - GaMBA.01.C0310

Page 2


CAPSTONE PROJECT REPORT

2.4

2.3.3.3
2.3.3.4

Ports in Dong Nai and Vung Tau area............................................ 55
Cam Ranh Cement Port .................................................................. 55

2.3.3.5

The other competitors ..................................................................... 55

Analysis of internal factors of Cam Ranh seaport ............................... 56

2.4.1 Managing................................................................................................. 56
2.4.1.1 System of management, organization, human resources ............... 56
2.4.1.2 Salary and bonus policy.................................................................. 56
2.4.1.3

Training and HR development activities ........................................ 57

2.4.1.4

Corporate culture ............................................................................ 57

2.4.2 Marketing. ............................................................................................... 58
2.4.3 Financing - accounting. ........................................................................... 58
2.4.4 Investing: ................................................................................................. 58
2.4.5 Producing. ............................................................................................... 60
2.4.6 Information system. ................................................................................ 60
2.4.7 The Potential of Cam Ranh Port ............................................................. 60
CHAPTER 3: STRATEGY AND SOLUTION PLANNING .............................. 62
3.1. Mission, target of development strategy up to 2015 – oriented up to year
2020. ................................................................................................................... 62
3.1.1 Mission .................................................................................................. 62
3.1.2 Target .................................................................................................... 62
3.2. Matrix application on the development strategy planning of Cam Ranh
port: ................................................................................................................... 62
3.2.1 External factor evaluation (EFE). ........................................................... 62

3.2.2 Internal factor evaluation (IFE)............................................................... 65
3.2.3 Competitive Profile Matrix ..................................................................... 67
3.2.4 Strengths-weaknesses-opportunities-threats analysis (SWOT) .............. 68
3.2.5 Strategy position and activity evaluation analysis (SPACE) ................. 73
3.2.6 Quantitative strategy planning matrix (QSPM) ...................................... 74
3.2.7 Strategy selection for the company. ........................................................ 82
3.3. Solutions on strategy performance: ............................................................... 83
3.3.1 Solution group on human resources. ....................................................... 83
3.3.2 Solution group on Marketing. ................................................................. 85
3.3.3 Solution group on Investing. ................................................................... 86
3.3.4 Solution group on producing management strategy. .............................. 87
3.3.5 Solution group on financing:................................................................... 87

GROUP 4 - GaMBA.01.C0310

Page 3


CAPSTONE PROJECT REPORT

3.3.6 Solution on restructuring company. ........................................................ 88
3.3.7 Solution group on culture of company.................................................... 89
3.4. The work of inspection and assessment. ........................................................ 89
CONCLUSION ..................................................................................................... 90
REFERENCES ..................................................................................................... 91

GROUP 4 - GaMBA.01.C0310

Page 4

CAPSTONE PROJECT REPORT

Table list:
Table 1.1 : External factor evaluation – EFE................................................. 19
Table 1.2: Competitive Profile Matrix ............................................................ 19
Table 1.3: Internal factor evaluation – IFE...................................................... 20
Table 1. 4 : SWOT matrix ............................................................................... 21
Table 1. 5 : QSPM analysis ............................................................................. 24
Table 2.1: Capital and property position ......................................................... 36
Table 2.2: Analysis of financial targets ........................................................... 39
Table 2.3: Analysis of key financial norms ..................................................... 39
Table 2.4: Scale and labor structure of the company in the latest 3 years ...... 45
Table 3.1 : External factor evaluation (EFE) of Cam Ranh port. .................... 62
Table 3.2 : : Internal factor evaluation (IFE) of Cam Ranh port .................... 65
Table 3.3 : SWOT analysis of Cam Ranh port ............................................... 67
Table 3.4 : SPACE analysis of Cam Ranh port ............................................... 68
Table 3.5: QSPM analysis of Cam Ranh port – SO strategy group ................ 73
Table 3.6: QSPM analysis of Cam Ranh port – ST strategy group ................. 74
Table 3.7: QSPM analysis of Cam Ranh port – WO strategy group ............... 76
Table 3.8: QSPM analysis of Cam Ranh port – WT strategy group ............... 77
Table 3.9 : QSPM analysis of Cam Ranh port - WT strategy group ............. 79
Figure list:
Figure 1-1 : Module of global strategy management ...................................... 11
Figure 1-2 : Illustration of general factors ....................................................... 14
Figure 1-3 : SPACE matrix ............................................................................. 22
Figure 2-1 Geographical position of Cam Ranh port ..................................... 31
Figure 2-2: Organizational Model ................................................................... 33
Figure 2-3: Description of order process.. ....................................................... 34
Figure 2-4: Production plan ............................................................................. 35

Figure 2-5: The development output by goods from 2007 to 2011 ................. 38
Figure 2-6: The revenue according to service over the years from 2007 to 2011 ... 38
Figure 2-7 : Revenue – profits – paid to the State‟s budget from 2007 – 2011
......................................................................................................................... 42
Figure 2-8: Monthly inflation happening in 2010 ........................................... 47
Figure 2-9: Chart of commodity output through Viet Nam seaport ................ 49
Figure 2-10: Chart of output distribution through 3 areas ............................... 51
Figure 3-1: SPACE matrix of Cam Ranh port ................................................ 74

GROUP 4 - GaMBA.01.C0310

Page 5


CAPSTONE PROJECT REPORT

INTRODUCTION:
The seaport is an important infra-structure of maritime economy, a terminal
connecting various transportation means in a series of logistics, and contributes in
determining the development and the marine economic growth speed of country.
The whole country owns more than 140 seaports, lying along the coast from
North to South. Many seaports are assessed having an international strategic
position. However the exploitation capacity of Viet Nam on seaport does not
deserve its potentiality. The seaport service activity is still spontaneous, small and
lacks for cooperation resulting in inefficient exploitation of port and the handling
capacity is not high as compared to the regional seaports. Though the seaports are
numerous but as their outputs are distributed unevenly: the ports at developed
economic centers such as Hai Phong, Da Nang, Ho Chi Minh city get many
commodities but as they are situated far from sea, then they have difficulty in
receiving ships of big load. The Central area has many advantageous locations to

build the seaports , especially those of deep water but due to their slow economy
development with very few industrial zones then the exploitation capacity can not
reach the design target.
Cam Ranh port which lies on Cam Ranh bay is one amongst 3 best bays in the
world for seaport construction and is situated in the center of the Southern
central part and the western highland. Even having advantageous location and
being the important gateway for the economic development in the region but the
port size is still small. The handling means are short and obsolete; the handled
cargo mainly is bagged and loose one therefore the port exploitation efficiency is
not high.
Therefore the build up of Cam Ranh port development strategy at stage 2011
– 2015 oriented up to year 2020 is required to stabilize and develop the firm. The
port development strategy build up suits the Vietnamese seaport development
planning and is necessary for the socio-economic development of the area.
 Study target and application capacity.
To study the current condition of firm, to analyze the market so as to get the
plan for development investment, market expansion, quality improvement and
service diversification, specific advantage exploitation so that Cam Ranh port
becomes a general national port, a terminal one in the area (class I) in 2020.

GROUP 4 - GaMBA.01.C0310

Page 6


CAPSTONE PROJECT REPORT

 Method of study and performance:
- Theory systematization: of strategy management, of theory on human
resource management and on production management relating to service

-

product.
Use of 2 study methods: to determine quality and quantity, based on the
market study data, of forecasts made by maritime experts, of forecasts on
use demand, of the branch growth speed, as well as to refer to some
models of successful integral service management of certain ports in the
area and in the country, to data published on the website of branches and
industries such as General Department of Statistics, Maritime Department,
Transportation and Communication Ministry.

Subject content: consists of 3 chapters
 Chapter 1: Presentation of basic theories on the strategy build up relating to
the study extent.
 Chapter 2: Analysis of Cam Ranh port current business conditions.
 Chapter 3: To buid up the development strategy of Cam Ranh port at stage
2011 – 2015 oriented up to year 2020.

GROUP 4 - GaMBA.01.C0310

Page 7


CAPSTONE PROJECT REPORT

CHAPTER 1: THEORITICAL AND PRACTICAL PREMISE FOR
PLANNING THE BUSINESS OF SEAPORT EXPLOITATION
1.1 Theoritical overview on strategy management
1.1.1 Concept, nature and characteristics of strategy management.
The business strategy is defined differently by various administrators. This

derives from different approaches of study.
- Fred R. David (2003) : Strategy is the means to achieve long- term targets.
-

Alfred Chandler, Harvard university : Business strategy is the
determination of basic and long-term targets of a firm and in the same

-

time is the selection of a mode or the process of an activity and a
distribution of required resources aiming at performing these targets.
Michael E. Porter : Strategy is the selection of what is necessary and

unnecessary to do, and what is only suitable to a group of customer rather
to all the customers.
In general, in spite of the difference in expression , the concepts on strategy
imply the main following contents:
+ To determine the short-term and long-term targets of firm.
+ To put forward and select the supporting solutions for achieving the
targets.
+ To deploy and distribute resources so as to carry out these targetss.
1.1.2 Role of strategy management in a firm.
The strategy management is the process of studying the current and future
factors , planning the firm targets, putting forward, implementing and
controlling the decision execution with the aim of achieving these targets in
the current and future factors.
- The business strategy helps the firm to see clearly the opportunities and
advantages in business, to make full use of them so as to put forward the
suitable strategies, policies aiming at achieving the defined targets.
- The business strategy helps the administrators to forecast present and

potential. Since then, based on its potentiality , the firm is more proactive
in coping with these risks .
- The business strategy helps the administrators to use effectively the
-

available firm resources and to allocate them reasonably.
The business strategy combines the firm functions in the best way with the
aim at achieving the common targets of firm.

GROUP 4 - GaMBA.01.C0310

Page 8


CAPSTONE PROJECT REPORT

1.1.3 The importance of the strategy management is:
- To help the admistrators to be proactive before the factor changes: to
know exploiting opportunities so as to relieve threats since then the
administrators can bring out solutions, targets which accommodate to
-

factors and achieve the firm targets.
To help the admistrators to care about and use effectively the resources
(human , financial…) resulting in success and high profits in business.

-

To help the admistrators to fix the short-term development in the longterm background and focus the attention to both the productivity and the

efficiency.
1.1.4 Strategy planning process.
1.1.4.1 Stages of strategy management.
The strategy management includes 3 main stages which relate and
support each other closely :
 Stage 1 : Stage of strategy formation
Is the process of setting up the business duties, performing study and
research so as to determine the internal strengths, weaknesses; external
opportunities, threats so as to put forward the long-term targets and to
select the alternative strategies. The analysis of the current condition shall
be based on realistic premises, reliable information – this is the first and

-

-

important step for the success of a strategy.
The strategy formation includes 3 basic activities : study conducting,
intuition and analysis harmonizing , decision bringing forward.
Study conducting : To determine the important strengths and weaknesses
in the fields of functional business. The internal factors may be
determined following methods such as ratio calculation, achievement
measurement, comparison versus the previous stages and versus the
branch average. Various surveys may be developed and performed so as to
study the internal factors such as the personnel spirit, production
efficiency, advertisement efficiency and the customer loyalty.
Intuition and analysis harmonizing : There are many techniques in strategy
management which help strategists to unify intuition and analysis in
bringing forward and selecting the feasible strategy alternatives, for
example: Boston Consultant Group (BCG) matrix, strategic position and

activity evaluation (SPACE).

GROUP 4 - GaMBA.01.C0310

Page 9


CAPSTONE PROJECT REPORT

-

Decision bringing forward : The decisions in the process of strategy
formation will fix firm to its products, markets, specific resources and
technologies in a prolonged period. The strategic decisions will affect long
or better or worse to the firm. The strategists need to have long and best
view so as to understand fully the sub-branches of the decision formation.

 Stage 2 : Stage of strategy performance
Is the process of deploying the strategic targets and the firm activities.
The art of using the internal and external factors at the optimum, of
creating a shortest route with cheapest and most effective expenses. Three
basic activities of strategy performance are :
- To establish annual targets;
- To bring forward the policies;
- To allocate resources.
 Stage 3 : Stage of strategy evaluation.
Is the process of evaluation, result control, solution finding so as to
accommodate the strategy to the factor situation. To supervise the strategy
performance through every stage, to analyze the right and the wrong, the
suitable and the non-suitable so as to repair timely. The supervision needs

to be made regularly and continuously with the main activities as follows :
- To consider the factors which are premises of current strategies;
- To measure achievements;
- To perform adjustments.
These three stages reflect Plan – Do – Check cycles in the modern
administration discipline which are widely applied in the current management
of a firm.
1.1.4.2 Model of strategic management :
The strategic management process may be studied and applied in the
model usage. Each model represents a certain kind of model. The illustration
in Figure 1.1 is an exhaustive management model being recognized widely.
The model does not ensure success, but it represents a clear and practical
method in the formation, the performance and evaluation of the strategies.

GROUP 4 - GaMBA.01.C0310

Page 10


CAPSTONE PROJECT REPORT

ơ

Analysis of
external factors,
determination of
opportunities and
risks

Determining the

vision, the
mission,
the
strategic
target

ơ

Long-term
target
setting up

Annual
target
setting up

ơ

ơ

Allocation
of
resources

Redetermining
the business
target

ơ

ơ

Analysis of
internal factor.
Identifying
strengths,
weaknesses

Strategy planning

Measurement and
evaluation
of the
strategic
performan
-ce

Selection
of
strategies
to be
performed

Bringing
forward
the
policies

Strategy performance

Quality evaluation

Figure 1-1 : Model of global strategic management
1.1.5 Classification of business strategy
There are various strategies in a firm; subject to its level or approach. the
business strategy may be classified as follows:
1.1.5.1 Strategic levels.
As regards level, a firm gets minimum 3 following strategic levels:
- Strategy at the firm level : It directs to the target and the overall extent of
the firm.
- Strategy at the business unit level : It relates to the successful competition
method in specific markets.
- Functional strategy (or activity strategy) : is the ones which help the
strategies at business level and at firm level to carry out effectively thanks
to the elements forming on the aspect of resources, human process and
necessary skills.

GROUP 4 - GaMBA.01.C0310

Page 11


CAPSTONE PROJECT REPORT

In a globalized environment of violent competition, the boundaries between
the countries are almost deleted, therefore there is the fourth strategy presence
which is the global one.
1.1.5.2 Strategy types
 Strategy at firm level
The firm level strategy is normally directed to the basic long-term target

therefore there are many firm level strategies with different names. As per
Fred R. David, there are 14 types of basic firm level strategy which are
classified into 4 groups as follows:
- Integrated strategy group.
+ Forward integration
+ Backward integration
+ Horizontal integration
-

Intensive strategic group.
+ Market Penetration
+ Market Development
+ Product Development
+ Concentric Diversification
+ Horizontal Diversification
+ Conglomerate Diversification.

-

-

Other strategic group.
+ Joint Venture
+ Retrenchment
+ Divestiture
+ Liquidation
Combined strategy

 Business unit level strategy.
The business unit level strategy relates to the successful competition

method in the specific markets. The business strategy includes the competition
method selected by the firm, the method of locating in the market so as to
achieve the advantage in competition and other locating strategies which may
be used in the background of the industry.
As per Michael E. Porter, at the business unit level there are 3 general
strategies of competition:
- Strategy of leading cost : (lowest and best price)

GROUP 4 - GaMBA.01.C0310

Page 12


CAPSTONE PROJECT REPORT

- Strategy of differentiated product
- Concentrated strategy
 Strategy at functional level.
Strategy at functional level is the one pertaining to the functional units such
as Marketing, financing, human resources et cetera vv…These strategies will
help improve the activity efficiency of the firm and support the business
strategies, the firm level strategies to be performed effectively.
1.2 Premise for firm business strategy buildup.
1.2.1 Analysis of external factors.
External environment is a system of complicated factors containing
both opportunities and risks affecting the firm activities at different levels.
Even the size of resources is potentially big, the firm may not face all
environmental occurrences. Since then, when performing the external factor
analysis, the administrators want to develop an opportunity list which may
bring profits to the firm, risks or threats that the firm needs to take measures

for prevention or avoidance. The external environment includes: the general
environment and the branch environment.
1.2.1.1 General environment
The factors of general environment are aspects in the society which
affect a trade and the branch firms including : population; economy; politics;
law; social culture; global technology which are illustrated in Figure 1. 2.

GROUP 4 - GaMBA.01.C0310

Page 13


CAPSTONE PROJECT REPORT

Economy

Population

Branch environment

Social
culture

Threats from new firms.
Supplier‟s power
Customer‟s power
Threats from replaced products
Competition intensity
Competition environment
Global

Politics,
legislature

Technology

Figure 1-2 : Illustration of general environment
-

-

-

Economic environment:
This environmental impact is more direct and dynamic versus other
factors of the general environment. The happenings of macroscopic
economy always contain different opportunities and threats to every
firm of different trades and affect potentially their strategies. Some
basic factors which are most cared about: gross domestic product
(GDP) and gross national product (GNP) trend; interest and interest
trend; foreign payment balance; inflation margin; taxation and tax rate.
Socio-cultural environment:
Including essential factors such as concepts on ethics, life, habits and
customs, concerns and preferences of society, awareness level, common
learning of society.
Political and legal environment:
Including the system of viewpoints, policy of the Party and State
legislature . Besides, the diplomatic policy trend of the Government, the

GROUP 4 - GaMBA.01.C0310

Page 14


CAPSTONE PROJECT REPORT

political happenings in and out the country need also to be thoroughly
understood.
-

Population environment:
The population scale affect seriously almost all products, services,
markets and the consumers. Long time ago, the firms have recognized the
impacts of natural circumstances on their business decisions. Main
impacts are : population scale, age structure, geographical allocation,
racial diversity, income distribution, climate, pollution, energy shortage
and wasteful use of natural resources and the increase of demand in
natural resources.
Technological environment:
The technological impacts create opportunities as well risks in the

-

process of firm strategy management. The technical progress may create
new markets, which turn the present products and services to be outdated.
This environment affect strongly the relevant producers such as
telecommunications, informatics, information…
-

Global environment:

In the global environment, the changes in the society and the global
economy are created by the daily increasing connections made by
countries, organizations or individuals at the angle of culture, economy…
Main impacts are : important political events, main global markets, newly
industrialized countries, differences between cultural characteristics and
institution.
1.2.1.2 Branch environment

-

Each branch has its specific characteristics,; firms of the same
trade must enquire about the characteristics of its trade; besides they
must analyze the trade factors and other trade units which affect directly
them. Since then they will consider where is opportunity and where is
threat so as to apply the suitable strategies. The factors in the trade
environment include mainly:
Competition rival: During the process of competition rival study, we
must care about matters and must respond the questions such as :
+ What the competition rival would like to achieve?
+ What the competition rival is doing and may do?
+ Is the rival satisfied with the present?

GROUP 4 - GaMBA.01.C0310

Page 15


CAPSTONE PROJECT REPORT

+ How is the rival‟s ability to convert and to redirect his strategy?
+ What is the rival‟s weakness?
+ What will help the competition rival to retaliate strongly and
effectively?
-

Customer: The customer will decide the firm existence. Its credit may
be the most valuable property of a firm. This credit will be obtained
since the firm know how to satisfy the best the customer‟s needs and
predilection as compared to its competition rival.

-

Supplier: The supplier may assert his power by threat of price increase
or quality decrease of products or supplied services . He will have more
advantages if he gets following conditions: when there is only a small
number of supplier to a huge number of purchaser in the same trade,
when the product re placement is not available, when the supplier‟s
commodities or services are the essential ones with high specialized
level, when the supplier issues the reliable threat signal that he will
integrate in the future.

-

-

Implicit rival: The freshly joined rival in the trade may be a factor of
profit decrease as he brings in and exploit new producing capacity with
the aim at disputing the necessary market share and resources.
Therefore, the protection of a firm for his position in the competition

includes the maintenance of a legal barrier preventing any penetration
from outside.
Product replacement : The product replacements will decrease the
potential profit of the trade by imposing a ceiling as regards the price

which may be exposed by firm of the same trade in the extent of profit
gaining.
1.2.2 Internal factor analysis of firm
The internal factor analysis is the premise helping a firm to know
clearly its strengths as well weaknesses as compared to its competition rival,
helping the administrators to know the ability of seỉzing the competition
advantage in each period.
The functional internal factors include: personnel, financing, marketing,
administration activity, information system.

GROUP 4 - GaMBA.01.C0310

Page 16


CAPSTONE PROJECT REPORT

1.2.2.1 Personnel.
In a current business environment which is increasingly fluctuated, the
firm personnel has an important role in the

process of performing the

strategies, and contributes to the firm success or failure. If the strategies are
right, promising and feasible but the personnel in this firm is unable to perform

then the strategies brought forward are ineffective.
1.2.2.2 Financing.
The financial conditions are normally considered as a method which
evaluates the best competition position of a firm and are the conditions which
attract the most of investor. To achieve more results, the strategies need to
determined the financial strengths and weaknesses of a firm. This will be
realized in the analysis of some basic financial criteria such as paying capacity,
property structure, capital structure, rate of return.
1.2.2.3 Marketing.
Marketing research is made to identify the market opportunity, to
partition the market, to select the market target, to locate the market, as well as
to analyze the customer and all factors relating to the formation of marketing
strategies with the aim of orienting the customer and competition.
1.2.2.4 Administration activity.
The administration includes 4 basic functions: planning; organizing;
leading and supervising.
- Planning : includes all administration activities relating to the future
preparation . Concretely are the forecast, the setup of target, strategies,
plans and the development of policies.
-

-

-

Organizing: includes all administration activities which create the
connection between power and responsibilities. Specifically are the
design-organization, work specialization, work description, work
detailing, supervision expansion , instruction unifying , arrangement
combining, work design and work analysis.

Leading : includes the effort in orienting the human activity such as
leading, liaising al work groups, changing activities, assigning, improving
the work quality, work and demand satisfying, changing the organization,
the personnel spirit and the administrative mind.
Supervising : relates to all administrative activities so as to ensure the
practical results will be suitable and consistent with the planned ones.

GROUP 4 - GaMBA.01.C0310

Page 17


CAPSTONE PROJECT REPORT

Main activities are: quality supervision, financial supervision, supervision
of sales, stored commodities, and expenses, analysis of changes, bonus
and fine.
1.2.2.5 Information system
The information will connect all functions in the business and supply
premise to all administrative decisions. It is the basis of all organizations. It
shows essential competition disadvantages or advantages. Assessment of
strengths or weaknesses on the internal information of a firm is an important
aspect of the performance of the internal supervision. The information system
is the important strategy source which tracks the environmental change,
recognizes the threats in competition and supports the performance, the
assessment and the control of strategy.
1.3 Tools for strategy planning and selection .
1.3.1 Tools for strategy planning.
1.3.1.1 External factor evaluation (EFE).
The buildup of the external factor evaluation will help us to summarize

and quantify the impacts of external factors on the firm; it will affect the
business production activities of a firm; including opportunities and challenges
to the firm
To build up the matrix, we will proceed with a list stating all external
factors which affect the firm activity. To assess the important level of every
factor by marking weighted point; the total weighted points of all factors
equals to 1. The classification shows the equivalent importance of these factors
as regards the success of the firm business trade.
The importance of every factor will be evaluated by classifying factors
from 1 to 4 in which: level 4 is the level where the firm gets best reaction; 3 is
the level over the average; 2 is average level and 1 is the lowest one. These
levels are based on the strategic efficiency of a firm .
Next the point showing the importance of each factor will be
determined by multiplying the importance with the respective classified point.
Then, add up the total important points to each variable so as to determine the
total important points of the firm: the highest is 4 , the lowest is 1 and the
average is 2,5 point.
The total important point of 4 shows that the firm is making good use of
the external opportunity and controlling successfully or minimizing to the

GROUP 4 - GaMBA.01.C0310

Page 18


CAPSTONE PROJECT REPORT

utmost the external threats. The total important point of 1 shows that the firm
is not making full use of opportunity and cannot minimize the threats from
external factors.

Table 1.1 : External factor evaluation – EFE
Các yếu tố

Importance

Classification

Important point

bên ngoài
Liệt kê các yếu tố
bên ngoài
Total

1.3.1.2 Competitive Profile Matrix .
This matrix is the extension of the evaluation matrix of external factors
in the case the importance, the classification and the total important ratings
have the same meaning.
The total ratings evaluated of the competitors are compared with that of
the reviewed company, the ratings of the competitors‟ companies can be
compared with that of the reviewed company. This analysis and comparison
will provide importantly strategic information. These factors include: market
share, competitiveness, financial position, product quality, customers‟ loyalty.
The ratings show the way that the company‟s strategies to deal with
each factor: 4 is good, 3 is above average, 2 is average and 1 is weak.
Table 1.2: Competitive Profile Matrix
1.3.1.3 Internal factor evaluation
(IFE)
The
reviewed company

The buildup of the
internal factor
evaluation
will help us to summarize,
Competitor‟s
company
1
assess the important strengths
and weaknesses
Competitor‟s
company of
2 the functional business units.
It affects the firm business production activity .
To build up the matrix,
we willfactors
proceed with a list stating all internal
The success
factors which may affect theThe
firmimportance
business production activity as defined in the
internal assessment of the firm. Rank
To assess the importance of each factor by
marking weighted point;The
the important
total weighted
ratingspoint of all factors equals to 1.
The classification shows the respective
importance of all these factors as
Rank
regards the success in theThe

firmimportant
industry. ratings
Rank
The important ratings
List the factors of the total important
ratings
GROUP
4 - GaMBA.01.C0310

Page 19


CAPSTONE PROJECT REPORT

To assess the importance of each factor by classifying the factors from
1 to 4 in which level 4 is the level where the firm gets best reaction; 3 is the
level over the average; 2 is average level and 1 is the lowest one. These levels
are based on the strategic efficiency of a firm .
Next the point showing the importance of each factor will be
determined by multiplying the importance with the respective classified point.
Then, add up the total important points to each variable so as to determine the
total important points of the firm: the highest is 4 , the lowest is 1 and the
average is 2,5 point.
The total important point of 4 shows that the firm is getting strengths
and may make good for weaknesses . Adversely the total important point of 1
shows that the firm has no strengths and gets many weaknesses which cannot
be repaired.
Table 1.3: Internal factor evaluation - IFE
Internal factors

Importance

Classification

Important point

List of internal
factors
Total
1.3.1.4 SWOT evaluation
SWOT matrix is an important combined tool which helps the
administrator develop 4 types of strategy :
- Strategy of strengths - opportunity (SO)
- Strategy of weaknesses– opportunity (WO)
- Strategy of strengths – weaknesses (ST)
- Strategy of weaknesses – weaknesses (WT)
The combination of internal and external factors is the most difficult
duty of the SWOT matrix development; it requires a good judgment and
there will not be a good combination.
The SO strategy uses the internal strengths of a firm to make full use of
the external opportunities. Normally the establishments will pursue the
WO, ST or WT strategy so that they are in the position where they can
apply SO strategy.
The WO strategies aim at improving the internal weaknesses by making
full use of the external opportunities. Sometimes the big external

GROUP 4 - GaMBA.01.C0310

Page 20

CAPSTONE PROJECT REPORT

opportunities are existing but as the firm is having internal weaknesses
which prevent it to exploit these opportunities.
The ST strategies use the firm strengths to avoid or minimize the
impacts from external threats.
The WT strategies are the defensive ones with the aim at minimizing
the internal weaknesses and at avoiding the external threats.
The chart of SWOT matrix includes 9 squares in which 4 contain the
important factors (S, W, O, T), 4 contain (SO, ST, WO, WT), 1 empty
square at the right top.
Table 1.4 : SWOT matrix

S – Strengths
- List of Strengths

(1)
W - Weaknesses
- List of
Weaknesses
(2)

O – Opportunity
- List of opportunities.

T – Threat
- List of threats.

(3)

(4)

SO strategies
- Use of Strengths to
make full use of

ST strategies
- Overcoming the risks by
making full use of

opportunities.
(1+3)

Strengths .
(1+4)

WO strategies
- Limiting the
Weaknesses to make full
use of opportunities.
(2+3)

WT strategies
- Minimizing the
Weaknesses to avoid
threats.
(2+4)

Factors need to be listed adequately, exactly and be shown the strengths

, the weaknesses as well as the threats coped with in the process of strategy
performance. This is the important premise in the strategy selection to the
firm.
1.3.1.5 Matrix is a strategic position which evaluates the action
(SPACE)
The matrix which locates the strategy and evaluates the action SPACE
(The strategic Position & Action Evaluation matrix) is an administrative tool
which is used to analyze the strategy. It is used to determine what type of
strategy the firm should perform.
FS
GROUP 4 - GaMBA.01.C0310

+6

Page 21


CAPSTONE PROJECT REPORT

CA

ES

Figure 1-3 : SPACE matrix
As illustrated in the figure, SPACE matrix divides the coordinate plane into 4
quadrant angles, each quadrant angle represents each different strategy type:
+ Aggressive,
+ Competitive,
+ Defensive,
+ Conservative

The axis of SPACE matrix represents 2 internal factors: Financial
Strengths (FS) and Competitive Advantage (CA) and 2 external factors
: Environment Stability (ES) and Internals Strengths (IS). These 4
factors are decisive for positioning the general strategy.
The development steps of SPACE matrix are as follows:
+ Step 1: To select a variable group of financial strengths, competitive
advantage, environmental stability and internal strengths.
+ Step 2: To fix a value from +1 to +6 respective to worst and best
variables which create FS and IS. Similarly to fix the value from -1 to -6
respective to best and worst variables which create ES and CA. On the
axes of FS and CA make a comparison with the rival; on axes of ES and
IS make a comparison with other trades.

GROUP 4 - GaMBA.01.C0310

Page 22


CAPSTONE PROJECT REPORT

+ Step 3: Calculating the average point to FS, CA, IS and ES by adding
the given values to the variables and then dividing to variables.
+ Step 4: Marking the average point to FS, IS, ES and CA on respective
axes of SPACE matrix.
+ Step 5: Adding 2 points of axis x and marking resulting point on X.
Adding 2 points on axis y and marking resulting point on Y. Marking the
intersection point of 2 new points on this axis xy.
+ Step 6: Drawing vector with direction from original point of SPACE
matrix through the new intersection point. This vector represents the
strategy type to the firm.

1.3.1.6 Matrix planning the strategy QSPM.
QSPM matrix aims at evaluating and ranking the strategic project
since then we have ground to select the best strategies to the firm.
This matrix will use all information, data from matrixes stated above
as follows: IFE and EFE matrix, competitive figure matrix, SWOT matrix,
SPACE matrix.
To build up, develop and form QSPM matrix, we need to proceed with
6 steps as follows:
+ Step 1: Listing the internal strengths-weaknesses and external
opportunities – threats in the left square. These information should be
taken from EFE and IFE matrix.
+ Step 2: Classifying each internal-external important factor. The
classification will be similar to EFE and IFE matrix.
+ Step 3: Determining this strategy may be replaced and the firm should
consider for performance. The strategies will be formed and gathered into
separate group.
+ Step 4: Determining the attractive point (AS) is the quantification of
the relative attractiveness of each strategy in a group of strategies which
may be replaced. The attractive point is determined by considering the
impact level on the selection of strategies which are being assessed
through every internal-external important factor. The attractive point is
allocated to each strategy to show the relative attractiveness of each
strategy as compared to other strategies. The attractive point is classified
as follows: 1 – non-attractive, 2 – few attractive, 3 – quite attractive, 4 –

GROUP 4 - GaMBA.01.C0310

Page 23

CAPSTONE PROJECT REPORT

very attractive. Should any factor not affect the selection then it will not be
marked and this line will be left empty.
+ Step 5: Totalizing the attractive point (TAS). Multiplying the
classified point with the attractive point in each line. If calculating only the
impact of internal or external factors being considered, TAS shows the
relative attractiveness of each strategy and if TAS is more and more high
then the strategy is more attractive.
+ Step 6: Totalizing the attractive points. Adding the attractive point to
each strategy. The total point of each strategy will show what strategy is
the most attractive in each strategic group.
Table 1. 5 : QSPM matrix
Optional strategies
Strategy 1
Important
factors

Strategy 2

Strategy 3

Classification Attractive Total Attractive Total Attractive Total
point
point
point
point
point
point

Internal
factors:
Administration,
financing,
accounting,
marketing,
information
system
External
factors:
Economy,
politics,
legislation,
socio-cultural,
population,
technique
Total point

GROUP 4 - GaMBA.01.C0310

Page 24