Nâng cao chiến lược kinh doanh tại công ty cổ phần thương mại xây dựng hà nội

LUẬN VĂN
NÂNG CAO CHIẾN LƯỢC KINH DOANH TẠI
CÔNG TY CỔ PHẦN THƯƠNG MẠI XÂY
DỰNG HÀ NỘI
IMPROVE THE BUSINESS STRATEGY OF
HANOI JOINT STOCK COMPANY FOR
CONSTRUCTION, COMMERCE AND ARTS,
PERIOD 2010-2015

TABLE OF CONTENTS
CAPSTONE PROJECT

COMPLETE THE BUSINESS STRATEGY OF HANOI ARTS AND,
CONSTRUCTION TRADING JOINT STOCK COMPANY (ACT),
PERIOD 2008 – 2015

INTRODUCTION
1. Rational and importance of strategic business planning for Hanoi arts,
construction and trade joint stock company (ACT).
2. Research objectives
3. Object, Scope, Methodology
4. Contributions to the business strategy of ACT
CHAPTER 1


Theoretical background on strategic business planning of company
1.1. Overview of business strategy.
1.1.1. Definition.
1.1.2. Roles and importance
1.2. Strategic Management Process.
1.2.1. Strategy formulation.

1.2.2. Strategy implementation.
1.2.3. Strategy evaluation.
1.3. Process and content of strategic business planning.
1.3.1. Defining business mission and goals of the enterprise
1.3.2. Analyzing factors influencing business strategy formulation of
enterprise.
1.3.2.1. Analysis of external business environment, defining opportunities
and challenges.
1.3.2.2. Analysis of internal environment
1.3.3. Defining sustainable competitive advantages
1.3.4. SWOT Matrix
1.3.5. Generic business strategies
1.3.5.1. Cost Leadership Strategy
1.3.5.2. Differentiation strategy.
1.3.5.3. Focus Strategy
1.3.5.4. Combination of Generic Strategies
1.3.6. Selecting an optimum strategy.
1.3.7. Designing organizational structure and controlling system
1.3.7.1. Designing organizational structure
1.3.7.2. Designing control system
CHAPTER II
An evaluation on the current strategic business planning at ACT
2.1. Overview of company.


2.1.1. Historical background
2.1.2. Some financial and economic ratios of ACT in recent years.
2.1.3. Business features of the company.
2.2. Analysis and evaluation of ACT’s business strategy
2.2.1. Business Objectives and core values statement of ACT.

2.2.1.1. Strategic objectives.
2.2.1.2. Core values statement.
2.2.2. Analyzing the influences of macro environment factors on ACT
business.
2.2.3. Industrial environment, corporate environment.
2.2.4. Internal analysis.
2.2.4.1. Primary activities.
2.2.4.2. Support activities
2.2.5. Sustainable competitive advantage.
2.2.6. Current business strategy of ACT.
2.2.6.1. Basis for business strategy selection
2.2.6.2. Selecting business strategy for enterprise
2.2.7. Restructuring the current organization and controlling system of
ACT during business strategy implementation
2.2.7.1. Restructuring the organization.
2.2.7.2. Restructuring the controlling system:
2.3. Recommendations on the current business strategy of ACT
2.3.1. Advantages.
2.3.2. Disadvantages.
CHAPTER III:
Solutions to improve the strategic business planning at ACT
3.1. New business context and the requirements for improvement of
business strategy at ACT.
3.1.1. New business context.


3.1.2. Necessary adjustments on the development orientation of period
2010-22015 for an improved business strategy of ACT.
3.2. Commitment to complete the business strategy of the ATC.
3.3.

Improve the business strategy in the period to 2015

3.4. Strategic solutions:
3.4.1. Techonological solutions:
3.4.2.. Solutions on human resource :
3.4.3. Financial solutions:
3.4.4. Marketing solutions:
3.5. Improving the organizational structure and control & evaluation
system.
3.5.1. Improving organizational structure.
3.5.2. Improving control & evaluation system.
3.6. The road map of strategic solutions

CONCLUSION AND RECOMMENDATION


EXPREDDION TABLE OF CONTENTS
CAPSTONE PROJECT
Table 1.1. strategic management process.
Table 1.2: Business environment of an enterprise
Table 1.3: 5 forces model of Michael Porter
Table 1.4. Model “Value chain” of Michael Porter
Table 1.5: The process of defining sustainable advantages
Table 1.6. SWOT-analysis
Table 1.7 : Generic business strategies
Table 1.8: Matrix by quantitative criteria GREAT
Table 2.1: Organizational Structure 0f ACT.
Table 2.2: Some financial ratios 2005-2008.
Table 2.3: Business and Production results from 2005 to 2009

Table 2.4: Some construction and interior decoration contracts of ACT
Table 2.5: Environmental factors
Table 2. 6 :Review capacity relative superiority of the ACT
Table 2.7 : Total bidding value 2005 to 2009
Table 2.8 : Revenue from products and services 2005 to 2009
Table 2.9 :Revenue, cost and business results 2005 to 2009
Table 3.1: Strategic objectives of business development to 2015
Table 3.2: GREAT matrix
Table 3. road map for strategic solutions:


INTRODUCTION

1. Rational and importance of strategic business planning for Hanoi
Art, Construction and Trade joint stock company (ACT).
In recent years, the economy of Vietnam is growing rapidly. The
government have encouraged the development of private sector, many small
and medium (SME) company have been founded. These SME companies have
great contribution to the development of Vietnam’s economy.
Because of short time establishment, the management skill of many SME
company is limited. In an economy with high competition, it requires each
company to diversify the product line, enhance the quality of products and
services, expand the market and consolidate the management system. For
sustainable development, it is necessary to build a detail plan for each goal. So
building business strategy is essential for the growth of the SME Company.
Hanoi Arts, Construction and Trade JSC (ACT) belongs to SME sector. The
management board, with their knowledge and experience on building business
strategy, has created a strategy for the period of 2009-2015. However, in the
current context of global economic downturn, which has badly affected the
Vietnam’s economy, it is necessary to review the business strategy, make it

adapted to the new conditions.
2. Research Objectives.
- Study the theoretical aspects of building and implementing business
strategy in a company
- Apply the theories to the real practice of formulating and implementing
business strategy at ACT. Propose some solutions to improve its business
strategy for the period of 2009-2015.
3. Object, scope, methodology of the research
- The research object of this study is the strategic business planning of the
enterprise
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- The study will focus mainly on the strategic business planning of ACT
from 2009 to 2010 and the development orientation to 2015.
- Main research methods:
 Desk Research involves gathering data that already exists either from

internal sources of the client, publications of governmental and nongovernmental institutions, free access data on the internet, in professional
newspapers and magazines, in annual reports of companies and commercial
databases to name but a few.
 Qualitative research: Interview and consulting some leaders, managers

of different levels in enterprise as well as outside experts in management and
business relationship with enterprise. The discussions will focus on
fundamental strategic fundamental issues of enterprise.
 Sample survey research: is a survey research on a specific sample of

population. These methods will involve the probability theory to select a good
sample on a particular population to collect the data and information. The result

of the survey will reflect the features of the
 Matrix method: The matrix method is a structural analysis method used

as a fundamental principle in many applications in engineering. The method is
carried out, using either a stiffness matrix or a flexibility matrix. This method
will allow managers to have an overview on the industrial attraction and the
core competency of enterprise in cACThing up the business opportunity
4. Contributions to ACT’s business strategy
- Systematically review the theories of building business strategy for a
company. It may be used as reference in the process of building business
strategy of company.
- Provide full information and data on ACT to analyze and evaluate the
current business strategy formulation and implementation in the company.
- Propose solutions to improve the practices of strategic business planning
at ACT
Limitations:
Despite the efforts of the research team, the assignment still have some
certain limitations.

Page 2


- A limitation of the information and data collection, which is not really
sufficiently broad and deep to have a thorough and fair analysis and evaluation.
- Lack of fluency and criticism in applying theories in practices for some
analysis
- Some analysis and recommendations of the research team are still
qualitative and optimistic, despite its strong business management theoretical
and practical background.
5. Assignment Structure.

Chapter I: Theoretical background on strategic business planning of
company
Chapter II: Evaluation on the current situation of strategic business
planning at ACT
Chapter III: Solutions to improving the strategic business planning at
ACT
Conclusion and recommendation.

Page 3


CHAPTER I
THEORETICAL BACKGROUND ON STRATEGIC BUSINESS
PLANNING OF COMPANY
1.1. Overview of business strategy
1.1.1. Definitions
A strategy is a plan of Action designed to achieve a particular goal.
Business strategy refers to the aggregated strategies of single business firm or a
strategic business unit (SBU) in a diversified corporation. According
to Michael Porter, a firm must formulate a business strategy that incorporates
cost leadership, differentiation or focus in order to achieve a sustainable
competitive advantage and long-term success in its chosen arenas or industries.
Business strategy is built to create the difference between a firm and its
competitors. Here are the main features of business strategy:
- Define main goals to achieve in a period. These goals must be grasp
thoroughly at all level and all business unit of the company
- Business strategy must mobilize all resources of the company, and these
resources should be optimally allocated to get competitive advantages.
-Business strategy is a complex process, contains building, implementing,
monitoring, improving.

- Business strategy is built for medium-term and long-term.
1.1.2. Role of business strategy
Business strategy could bring benefit to the enterprise on the following
term:
- An enterprise with a clear business strategy would have higher profit,
and success. In fact, a company is considered successful when it has
perspective and sustainable development.
- A company with good financial result seems to have systematical and
long-term plan to meet changes in both internal and external business
environment.

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- A good business strategy permits the company to gain expected profit,
lower the financial risk...
- Business strategy brings discipline to the company, because all the
management level and business unit understand and follow a long-term plan.
In market economy with high level of competition, rapid change in
business environment, business strategy help the company understand how to
achieve goal in a period.
With a good business strategy, the employees in the company will see
what is the company doing and why, they should commit to the development of
the organization.
1.2. Strategic management prosess
Strategic management is a process of making “strategic decisions”, it
contains the following stages:
1.2.1. Strategy formulation
Strategic formulation is a combination of three main processes, which are
as follows:



both

Performing a situation analysis, self-evaluation and competitor analysis:
internal

and

external;

both

micro-environmental

and

macro-

environmental.


Concurrent with this assessment, objectives are set. These objectives

should be parallel to a timeline; some are in the short-term and others on the
long-term. This involves constructing vision statements (long-term view of a
possible future), mission statements (the role that the organization gives itself
in society), overall corporate objectives (both financial and strategic), strategic
business unit objectives (both financial and strategic), and tactical objectives.


These objectives should, in the light of the situation analysis, suggest a

strategic plan. The plan provides the details of how to achieve these objectives.
1.2.2. Strategy implementation


Allocation and management of sufficient resources (financial, personnel,

operational support, time, technology support)
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

Establishing a chain of command or some alternative structure (such as

cross functional teams)


Assigning responsibility of specific tasks or processes to specific

individuals or groups


It also involves managing the process. This includes monitoring results,

comparing to benchmarks and best practices, evaluating the efficacy and
efficiency of the process, controlling for variances, and adjusting the process as
necessary.



When implementing specific programs, this involves acquiring the

requisite resources, developing the process, training, process testing,
documentation, and integration with (and/or conversion from) legacy
processes.
Thus, when the strategy implementation processes, there have been many
problems arising such as human relations and/or the employee-communication.
At this stage, the greatest implementation problem usually involves marketing
strategy, with emphasis on the appropriate timing of new products. An
organization, with an effective management, should try to implement its plans
without signaling the fact to its competitors.
In order for a policy to work, there must be a level of consistency from
every person in an organization, including from the management. This is what
needs to occur on the tactical level of management as well as strategic.
1.2.3. Strategy evaluation


Measuring the effectiveness of the organizational strategy, it is

extremely important to conduct a SWOT analysis to figure out the strengths,
weaknesses, opportunities and threats (both internal and external) of the entity
in question. This may require to take certain precautionary measures or even to
change the entire strategy.
In corporate strategy, Johnson and Schools present a model in which
strategic options are evaluated against three key success criteria:


Suitability (would it work?)

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

Feasibility (can it be made to work?)



Acceptability (will they work it?)

1.3. Process and content of strategic business planning.
Building business strategy is a process of all-sided evaluation on business
environment, resources of a company. The process of building business
strategy contains several stages:
Table 1.1. strategic management process.
strategic management process
control the
business
environment

Analysis of
external
business
environment

strategic planning

implementation
strategy

task

assessment
assessment
tests
tests

target
strategy
policy

Analysis of
internal
environment

planing

budge
d

progress
implementa
implementa
tionresults
results
tion

feedback
3-1

1.3.1. Defining business mission and goals of the enterprise
Each enterprise must have a mission when it is set up. Before building
business strategy, it is very important to define the mission of the company.
Mission is a written declaration of a firm's core purpose and focus, which
normally remain unchanged, whereas business strategies and practices may
frequently be altered to adapt to the changing circumstances. Properly crafted
mission statements (1) serve as filters to separate what is important from what is

not, (2) clearly state which markets will be served and how, and (3)
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communicate a sense of intended direction to the entire organization. A mission
is different from a vision in that the former is the cause and the latter is the
effect; a mission is something to be accomplished whereas a vision is
something to be pursued for that accomplishment.
1.3.2. Analyzing factors influencing business strategy formulation of
enterprise.
Environment of a business means the external forces influencing the
business decisions. They can be forces of economic, social, political and
technological factors. These factors are outside the control of the business. The
business can do little to change them
Table 1.2: Business environment of an enterprise

1.3.2.1. Analysis of external business environment, defining opportunities
and challenges.
Business does not function in a vacuum. It has to ACT and reacts to what
happens outside the factory and office walls. The factors that happen outside
the business are known as external factors or influences. These will affect the

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main internal functions of the business and possibly the objectives of the
business and its strategies.
 Global factors
* World politic factor
Stable, peaceful world will encourage the development of world economy.
It would create great chance for foreign trade Activity of the enterprise.
* International economy:
International economic institutes, transnational corporations would
influence to demand and supply on the global market.
*International law:
Operating in era of globalization, the enterprise must have knowledge
about international laws, commitments.
*Technologies:
The enterprise should stay updated with technological changes.
*Culture:
Economic integration is accompanied with culture integration. The
enterprise should have unique organization culture for sustainable development


National factors

* Political environment:
It comprises political stability and the policies of the government. Ideological
inclination of political parties, personal interest on politicians, influence of party
forums etc. create political environment.

* Economic environment:
Economic environment consists of economic factors that influence the
business in a country. These factors include gross national product, corporate
profits, inflation rate, employment, balance of payments, interest rates
consumer income etc.
* Technological environment:

Page 9


It includes the level of technology available in a country. It also indicates
the pace of research and development and progress made in introducing
modern technology in production. Technology provides capital intensive but
cost effective alternative to traditional labor-intensive methods. In a
competitive business environment, technology is the key to development.
* Social environment:
It describes the characteristics of the society in which the organization
exists. Literacy rate, customs, values, beliefs, lifestyle, demographic features
and mobility of population are part o the social environment. It is important for
managers to notice the direction in which the society is moving and formulate
progressive policies according to the changing social scenario.


Industrial factors

An enterprise operates in a sector, so there are several sectoral factors that
have impacts to the Activity of the enterprise.
According to Michael Porter, the analysis of sectoral factors must contain
the following element:
Table 1.3: 5 forces model of Michael Porter

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* Threat of new entrants:
Profitable markets that yield high returns will draw companies. This
results in many new entrants, which will effectively decrease profitability.
Unless the entry of new firms can be blocked by incumbents, the profit rate
will fall towards a competitive level


The existence of barriers to entry (patents, rights, etc.)



economies of product differences



brand equity



switching costs or sunk costs



capital requirements



access to distribution



absolute cost advantages



expected retaliation by incumbents



government policies

* Bargaining power of suppliers:
Also described as market of inputs. Suppliers of raw materials,
components, labor, and services (such as expertise) to the firm can be a source
of power over the firm. Suppliers may refuse to work with the firm, or e.g.
charge excessively high prices for unique resources.


supplier switching costs relative to firm switching costs



degree of differentiation of inputs



presence of substitute inputs



supplier concentration to firm concentration ratio



employee solidarity (e.g. labor unions)

* Bargaining power of buyers:
Also described as the market of outputs. The ability of customers to put
the firm under pressure and it also affects the customer's sensitivity to price
changes.


buyer concentration to firm concentration ratio



degree of dependency upon existing channels of distribution



bargaining leverage, particularly in industries with high fixed costs
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

buyer volume



buyer switching costs relative to firm switching costs



buyer information availability



ability to backward integrate



availability of existing substitute products



buyer price sensitivity



differential advantage (uniqueness) of industry products

* Threat of substitute products:
The existence of substitute products outside of the realm of the common
product competitors that increases the propensity of customers to switch to
alternatives



buyer propensity to substitute



relative price performance of substitutes



buyer switching costs



perceived level of product differentiation

* Rivalry among competing firms
For most industries, this is the major determinant of the competitiveness
of the industry. Sometimes rivals compete aggressively and sometimes rivals
compete in non-price dimensions such as innovation, marketing, etc.


number of competitors



rate of industry growth



intermittent industry overcapacity



exit barriers



diversity of competitors



informational complexity and asymmetry



fixed cost allocation per value added



level of advertising expense



Economies of scale



Sustainable competitive advantage through improvisation

1.3.2.2. Analysis of internal environment

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The internal business environment consists of those factors, which the
business can control such as personal, marketing, and accounting systems.
Some of the other things a business can control within its internal environment
are its:


strategic plans, tactical plans and operational plans and vision and

mission statements


choice of prime function



organizational structure, and issues like authority, responsibility, chain

of command and span of control


Use of support services.

In order to analyze the internal business environment, we use the model
“Value chain” of Michael Porter.
Table 1.4. Model “Value chain” of Michael Porter

 Analysis of primary activities
* Marketing and sales
Marketing is perhaps the most important Activity in a business because it
has a direct effect on profitability and sales. It is important to realize that
marketing cannot be carried out in isolation from the rest of the business. For
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example: The marketing section of a business needs to work closely with
operations, research and development, finance and human resources to check
their plans are possible. Operations will need to use sales forecasts produced by
the marketing department to plan their production schedules. Sales forecasts
will also be an important part of the budgets produced by the finance
department, as well as the deployment of labor for the human resources
department. A research and development department will need to work very
closely with the marketing department to understand the needs of the customers
and to test outputs of the R&D section.
* Operations
The analysis of operation process is necessary to make sure that it
mACThes the business strategy of the enterprise.
- Productive capacity: Productive Capacity is the maximum output an
enterprise could achieve with current production equipment when it is working
for the maximum practical number of hours and with the maximum efficiency
and minimum down and change over times. Productive capacity is interesting
because it is one of those factors that can create sudden change in a market,
examples include shortage when growth brings players to their maximum
output leaving an excess of demand over supply.
- Equipment and technology: the capacity of equipment and level of
technology should be balanced and mACThed with the production plan in not

only in short-term, but also in medium-term.
- Energy and ancillary materials: should be always ready of production
activities.
- Production organization: the mechanism of production organization
should secure sequence, optimal use of all resources.
- Quality management: should be involved in strategic planning in order
to guarantee the reputation of the enterprise.
* After-sales service
In some cases, after-sales service can be almost as important as the initial
purchase. The manufacturer, retailer, or service provider determines what is
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included in any warranty (or guarantee) package. This will include the duration
of

the

warranty

maintenance

and/or

replacement

policy,

items

included/excluded, labor costs, and speed of response. In the case of a service
provider, after-sales service might include additional training or helpdesk
availability. Of equal importance is the customer's perception of the degree of
willingness with which a supplier deals with a question or complaint, speed of
response, and Action taken.
 Analysis of support activities
* Firm infrastructure
This Activity includes and is driven by corporate or strategic planning. It
includes the Management Information System (MIS) and other mechanisms for
planning and control such as the accounting department.
*Human resource management (HRM)
Employees are an expensive and vital resource. An organization would
manage recruitment and s election, training and development, and rewards and
remuneration. The mission and objectives of the organization would be driving
force behind the HRM strategy.
* R&D
New product design and development is more often than not a crucial
factor in the survival of a company. In an industry that is fast changing, firms
must continually revise their design and range of products. This is necessary
due to continuous technology change and development as well as other
competitors and the changing preference of customers. A system driven by
marketing is one that puts the customer needs first, and only produces goods
that are known to sell. Market research is carried out, which establishes what is
needed. If the development is technology driven then it is a matter of selling
what it is possible to make. The product range is developed so that production
processes are as efficient as possible and the products are technically superior,
hence possessing a natural advantage in the market place.
* Inventory management
Inventory management is primarily about specifying the size and
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placement of stocked goods. Inventory management is required at different
locations within a facility or within multiple locations of a supply network to
protect the regular and planned course of production against the random
disturbance of running out of materials or goods. The scope of inventory
management also concerns the fine lines between replenishment lead-time,
carrying costs of inventory, asset management, inventory forecasting, inventory
valuation, inventory visibility, future inventory price forecasting, physical
inventory, available physical space for inventory, quality management,
replenishment, returns and defective goods and demand forecasting.
1.3.3. Definition of sustainable competitive advantage
The process of defining sustainable advantages could be described as
follow:
Table 1.5: The process of defining sustainable advantages
Sustainable competitive
advantage

When enterprise’s capacity is higher
than competitors, in long-term it turn to be
sustainable competitive advantages

Dominant capacity

When core capacity is dominant, it turns
to be dominant capacity.

Core capacity

When fundamental capacity create

success, it turns to be core capacity

Resources

Resources in use:
- Invisible: brand, R&D
- Visible: capital, infrastructure

When the enterprise can mACTh 4/5 criteria, dominant capacity turns to
be sustainable competitive advantage. (1) – Valuable, (2) – rare, (3) – costly to
imitate, (4) – distance is big enough, (5) Factor to success
Analysis of internal factor helps the enterprise to define potential and
current competitive advantage. At the same time, it show obstacle to maintain

Page 16


competitive advantage
1.3.4. SWOT matrix
SWOT Analysis is a strategic planning method used to evaluate
the Strengths, Weaknesses, Opportunities, and Threats involved in a project or
in a business venture. It involves specifying the objective of the business
venture or project and identifying the internal and external factors that are
favorable and unfavorable to achieving that objective.
A SWOT analysis must first start with defining a desired end state or
objective. A SWOT analysis may be incorporated into the planning model. An
example of a strategic planning technique that incorporates an objective-driven
SWOT analysis is Strategic Creative Analysis (SCAN). Strategic Planning,
including SWOT and SCAN analysis, has been the subject of much research.


Strengths: attributes of the person or company that is helpful to

achieving the objective.


Weaknesses: attributes of the person or company that is harmful to

achieving the objective.


Opportunities: external conditions that is helpful to achieving the

objective.


Threats: external conditions, which could do damage to the objective.

Identification of SWOT is essential because subsequent steps in the
process of planning for achievement of the selected objective may be derived
from the SWOT.
First, the decision makers have to determine whether the objective is
attainable, given the SWOT. If the objective is NOT attainable, a different
objective must be selected and the process repeated.
The SWOT analysis is often used in academia to highlight and identify
strengths, weaknesses, opportunities and threats. It is particularly helpful in
identifying areas for development.

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Table 1.6. SWOT-analysis

1.3.5. Generic business strategies
Michael Porter has described a category scheme consisting of three
general types of strategies that are commonly used by businesses to achieve
and maintain competitive advantage. These three generic strategies are defined
along two dimensions: strategic scope and strategic strength. Strategic scope is
a demand-side dimension and looks at the size and composition of the market
enterprise intend to target. Strategic strength is a supply-side dimension and
looks at the strength or core competency of the firm.
Table 1.7 : Generic business strategies

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1.3.5.1. “Cost leadership” strategy
This strategy emphasizes efficiency. By producing high volumes of
standardized products, the firm hopes to take advantage of economies of
scale and experience curve effects. The product is often a basic no-frills
product that is produced at a relatively low cost and made available to a very
large customer base. Maintaining this strategy requires a continuous search for
cost reductions in all aspects of the business. The associated distribution
strategy is to obtain the most extensive distribution possible. Promotional
strategy often involves trying to make a virtue out of low cost product features.
1.3.5.2. Differentiation strategy
A series of actions needed to produce goods and services (at an acceptable
price may be) that the customer that the product is different and the difference
is important for them .
- Often these products are non-standardized

- Suitable when customers respected the differences rather than low prices.
Value through the unique products that allow businesses to set higher
prices without fear of being boycotted by the buyer. Higher price will not only
allow to offset the cost increase during the same product, but more than that:
thanks to the different characteristics of the product, if the provider increasing
the business can transfer the difference to the customers, because customers
can not easily find a similar product instead.
1.3.5.3. Market segmentation strategy
In this strategy, the firm concentrates on a select few target markets. It is
also called a segmentation strategy or niche strategy. It is hoped that by
focusing marketing efforts on one or two narrow market segments and
tailoring marketing mix to these specialized markets, company can better meet
the needs of that target market. The company typically looks to gain a
competitive advantage through product innovation and/or brand marketing
rather than efficiency. It is most suitable for relatively small companies but can
be used by any company. A focus strategy should target market segments that
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are less vulnerable to substitutes or where a competition is weakest to earn
above-average return on investment.
1.3.5.4. Combination of Generic Strategies
Combining multiple strategies is successful in only one case. Combining a
market segmentation strategy with a product differentiation strategy is an
effective way of matching enterprise’s product strategy (supply side) to the
characteristics

of

target

market

segments

(demand

side).

However,

combinations like cost leadership with product differentiation are hard (but not
impossible) to implement due to the potential for conflict between cost
minimization and the additional cost of value-added differentiation.
Primary benefit of successful integration of low-cost and differentiation
strategies are the difficulty it poses for competitors to duplicate or imitate
strategy.
There are three approaches to combination strategies
- Automated and flexible manufacturing systems: Firms are able to
manufacture unique products, in small quantities, with lower prices
- Exploiting the profit pool concept for competitive advantage
- Coordinating the “extended” value chain by way of information
technology: Integrate activities throughout the “extended value chain”: enables
a firm to add value for its own value-creating activities and its customers and
suppliers.
1.3.6. Selecting an optimum strategy.
Businesses to select the optimal strategy because it can not simultaneously
perform all of the strategies or in a strategic order is not calculated, because it
will take a lot of time and material resources, financial resources, human
resources. Therefore should have a choice to make a set of strategies is

considered optimal for development and consider the interests harm, the loss of
the business gained from this strategy.
On the basis of a set of strategies has been pointed out by combining
elements Strengths - Opportunities, Strengths - Risks, Weaknesses Opportunities, Weaknesses - The risk of using the matrix according to the
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