XÂY DỰNG CHIẾN lược CẠNH TRANH của CÔNG TY VIGLACERA TIÊN sơn

ADMINISTRATION PROGRAM
LUẬN VĂN

CHIẾN LƯỢC CẠNH TRANH CỦA CÔNG TY
VIGLACERA TIÊN SƠN

THESIS

“COMPLETING BUSINESS STRATEGY
FOR VIGLACERA TIENSON JSC.
IN PERIOD 2015-2020”


MBA Thesis

ABSTRACT
In the 21st-century competitive landscape, the goals of creating competitive
advantage and earn above-average return are challenging the enterprises, no matter
how large scale they are. Those strategic achievements must resulted by the effectively
implementation of a right business-level strategy. This business strategy must be
formulated on the base of external and internal environmental analyses. In another
word, the strategy must be formulated from full consideration and evaluation of all
available and potential opportunities and threats that might come from the external
environment, and of the strengths and weaknesses of the enterprise itself. The success
of the formulated strategy implementation does not depend on the enterprise leader’s
commitment only, but also depends on all its divisions’ operation in all periods of time.
Viglacera Tien Son Joint Stock Company is a producer of granite tiles, the
products that useful for architectural buildings. Founded in 2001 as a state-owned
company, which was a member of Viglacera Corporation, it was invested of more than
300 billion VND value for a granite tile factory with capacity of 3 million m 2 of
product per annual. Experiencing many rises and falls, it is now equitilized and

reformed as a joint stock company and is running in a way of innovation and
development.
For many reasons, the company’s business effectiveness is still limited and not
corresponds to its capabilities and potentials. In this capstone project report, we utilize
our knowledge of strategic management to analyze and recommend a completion for
the company’s business strategy in the period of 2015-2020, in which the most
important strategic goal is the company can achieve strategic competitive advantages
which source its leading possibility in the markets and earn above average return. We
do believe that this capstone project matches with what the company is looking for.

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ACKNOWLEDGEMENTS

To fulfill the requirements under the Global Advanced Master of Business
Administration program, we submit this capstone project to Griggs University. We
commit this capstone project is result of our real study and practice and it never
been submitted to any other organizations.
In the first words of the capstone project, we would like to express our great
thanks to all the professors of Griggs University, who had transferred to us very
valuable knowledgement and understandings through the lectures in the past two
years.
We also greatly thank the leaders and managers of Viglacera Tien Son Jsc. for
their heartily help in giving us good conditions and useful information that made us
be easier in researching and completing this capstone project.

LIST OF ABBREVIATIONS
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Ass: Assistant
Bill: Billion
BOC: Board of Control
BOD: Board of Director
BOM: Board of Management
Dr: Doctor
FDI: Foreign Direct Investment
GDP: Gross Domestic Product
IMF: International Monetary Fund
Jsc : Joint Stock Company
MBA: Master of Business Management
Prf: Professor
R & D: Research and Development
SBU: Strategic Business Unit
USD: United States Dollar
VIBCA: Vietnam Building Ceramic Association
Viglacera Corp.: Vietnam Glass and Ceramic for Construction Corporation
VIT: Viglacera Tien Son Joint Stock Company
VND: Vietnamese Dong
WTO: World Trade Organization

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LIST OF FIGURES

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INTRODUCTION

1. Problems:
The Vietnam construction material market competition is increasing and Viglacera
Tien Son Jsc. (VIT) is facing with the fact of loosing its market share and its brand
name preference in customer perception. Although the company is trying to increase its
competitive ability, but the outcome is still not really significant. How VIT can reach

leading position and compete with its rivalries?
2. Objectives & Aim
Objectives
Study on the strategic management with focusing on business-level strategy.
Competition analysis on ceramic for construction market.
Analyze the VIT’s competitiveness.
Recommendations for completion of VIT’s business strategy.
Aim
Give out the applicable and effective competitive strategy and action plan to
improve the VIT’s competitive capacity.
3. Research questions
In order to achieve the objectives of the Capstone Project, the author of this
Capstone Project will try to answer the following questions:
How is the competition in granite tile sector recently and hereafter?
What is the VIT’s competitive capability recently and in period of 2010-1015 ?
What are recommendations for completion of VIT's business strategies?
4. Method/Approaches
Empirical method
Approaches: statistics
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5. Data resources and processing
Data Resources
Secondary Source: Report and Data of VIT and its competitors.
Tertiary Source: M. A. Hitt, R. D. Ireland, R. E. Hoskisson - Strategic

management, 4th edition.
Data Processing
Data Processing by excel, chart to summary, compare and analyze.
6. Significance
Theory: Introduce new theory to Vietnam.
Reality: Bring more competitive advantages to VIT.
7. Limitations
This research only focus VIT and the data is 2007-2009. It may be changed in
future.
8. Expected results
Knowledge in strategic management and competitive strategy.
What is VIT’s strengths and weaknesses comparing with its rivals.
9. Dissemination
This research can be studied further for production sectors.
10. Follow-up potential
How VIT’s competitive ability is improved if applied these recommendations? The
checking and adjusting will be done if needed.
11. Capstone Project structure
This Capstone Project is divided into three parts included theory foundation, actual
VIT’s competitive strategy analysis and recommendations for completion of its
business strategy.

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Chapter 1: Theory foundation

The strategic management theory is reviewed in this chapter by some main parts
such as: definition, strategy’s levels, strategic analysis, formulating and selecting
business strategy, and strategic implementation.
Chapter 2: Actual VIT’s business strategy recently
Applying strategic analysis and look into the actual VIT’s operation and business
strategy application recently. Giving comments on its current business strategy.
Chapter 3: Completion of VIT’s business strategy in period of 2015-2020
Based on the analysis and found reasons in theory application, some suggestions
will be delivered to VIT in order to complete its business strategy, which is aiming to
improve its competitive position.

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Chapter 1. THEORY FOUNDATION OF BUSINESS STRATEGY

I.

GENERAL ON STRATEGY
1. Definitions
The strategy definition was formed long time ago, as a broad definition and
contains many complicated connotation. Militarily: at Alexander’s time (330 year
B.C.), strategy is defined as skills to develop forces and establish world domination
system. Economically: During the development of the world economy, many
definitions of strategy have been formed, for example:
+ Chandler (1962): “Strategy is the identification of the basic long term goals

and objectives, application of a set of actions and the allocation of necessary
resources”.

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+ Quinn (1980): “Strategy are patterns or plans that aligns key targets, policies
and series of actions into a cohesive whole”
+ Johnson, Scholes: “Strategy is the orientations and scopes of an organization
in long-term for achieving its competitive advantage through determination of its
resources in the changing environment in order to adopt the market’s needs and to
satisfy stakeholder expectations”.
(Source: Khai niem quan tri chien luoc)
In the scope of this project, we focus on the definition: “strategy is a integrated
and coordinated set of actions to deploy the resources for the achievement of the
given goals” (Source: Griggs, 2009, Strategy management, Chapter1, page 2).
Thus, strategy contains following key contents: Targets that a firm wants to
achieve; Building and selecting solutions to achieve the targets; Allocating
resources and implement designed solutions. It is clear that strategy mainly focus
on ahead issues, what are goals of firm and ways to achieve such goals.
2. Levels of strategy
A multi-business firm composes strategy levels as follows:
Figure 1.1 – Strategy levels
Corporate strategy

Business-level includes

International strategy

Functional strategies
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Operational strategies

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(Source:Griggs, 2009, Lecture slide of Strategy management, Part1, page 3).
Corporate (Company) level strategy is a statement on a long –term goals, oriented
development of such Company or Corporation. It is an action taken to gain a
competitive advantage through the selection and management of a mix of businesses
competing in several industries or product markets.
Business-level strategy refers to how is a firm able to have successful competition
in a market (or market segment). Business strategy reflects a firm’s belief about where
and how it compete over its rivals in the industries or product markets. It also identifies
competitive position for Strategic Business Units (SBU) and the way to effectively
allocate resources.
Functional strategy is a specific statement on goals and short–term action plan
used by functional departments (such as production, marketing, finance, R & D, etc.) to
achieve short – term goals of SBU and long term goals of a firm.
3. Strategic formulation and management process
Figure 1.2 – Model of strategy formulation and management process

Vision, mission and
strategic goals

External analysis
(Opportunities and threats)

Internal analysis
Select and formulate
strategies

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(Strength, weakeness )

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Corporate-level strategy
Business-level strategies
Functional-level strategies

Strategic implementation
Control, evaluation of the
implementation
Feedbacks

(Source: Griggs, 2009, Lecture slide of Strategy management, Part1, page 3).

As we can see in the figure 1.2, a process of strategic formulation and management
starts from strategic vision and mission. These are foundation for formulating and
selecting strategies. As mentioned in item 2 of this part, a strategy could be at any one

of the defined levels. In order to formulate a strategy, strategic analysis is required.
Strategic analysis includes external and internal environmental analyses to determine
all the factors may influence the firm’s strategy. After being selected, a strategy will be
implemented by the firm. During the strategic implementation, the firm has to control
and evaluate the operation in all of its divisions in order to find out advantages and
disadvantages of the strategy itself and its implementation. The feedback information
will be useful for the firm in adjusting its strategies and the relevant implementation.
All of the stages of strategic management will be observed in the following parts in
this chapter.
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II.

VISION, MISSION AND STRATEGIC OBJECTIVES
1. Vision
Showing the highest and most general expectation of a firm, expressing ambition
about the achievement that the firm pursuits. Vision is composed of core ideology and
envision future.
Requirements of strategic vision:
+ The vision must be simple, clear and easy to understand.
+ Keeping a long enough period of time to adapt with big changes but also short
enough to devote best efforts of the whole firm’s employees.
+ Capable to concentrate resources with consideration taken to scale and duration.
+ Being usually involved by senior managers.
2. Mission

Mission is a critical statement of the ways that a firm acknowledges expectation of
its stakeholders. The mission formulates a foundation for whole planning process.
Mission refers to business purpose of a firm, reason and meaning of its
establishment and the existence, as well as its social responsibility. There are 4 major
features of mission as follows:
-

As a statement on firm’s attitude and prospect.

-

Settling down disputes.

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-

Customer orientation.

-

Social policy statement.

Mission statement allows to recognize a firm with the others and is a frame to
evaluate current and future activities of the firm. It confirms the correction of the

chosen of goals and strategies, formulates and consolidate its image over the public and
create the attraction to stakeholders.
A process of building a business mission is shown in the figure 1.3.
Figure 1.3 –Process of building a business mission
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
Forming initial ideas ofInternal
business
and
mission
Determi-ning
external analysis
idea Start
on business
buildingmission
a business
Verify mission
the business
Conduct-ing
mission
the
Review
business
and adjust
mission

the business mission

3. Strategic objectives
Strategic objectives are specific situations, levels and criteria a firm pursuits to
achieve at a certain period of time. They are formed for a short, medium or long term.
Long-term objectives
Long-term objectives are the outcomes that a firm expects to achieve in a long time
(3 to 5 years). The long-term objectives aim to convert mission and vision of a firm

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into real implementation goals, can be measurable. Long-term objectives are essential
for strategy formulating process.
Long-term objectives of a firm are mainly profit, competitive position, business
efficiency, human resource development, relationship with employees, ability of
leading in terms of technology or social responsibility.
Annual objectives
Annual objectives are intermediate objectives that a firm has to gain annually in
order to achieve the long-term objectives. Annual objectives are essential for strategic
implementation.
Strategic objectives’ features
Strategic objectives must contain following features:
Firstly, an objective is considered well established if it is correct and measurable.
Sencondly, it must orient to important issues.
Thirdly, it contains challenges but can be performed (feasible).

Fortly, it is determined with a period of time.
Finally, it can provide criteria for evaluating the management implementation.
III.

STRATEGIC ANALYSIS
Analysis is one of separate stages of a new strategy formulation and management
(analysis, formulation and implementation). It plays a critical role and has great
impacts towards the orientation. Therefore, the more information is collected, the better
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it is in this stage. It is necessary to analyze external and internal factors that can
influence a firm’s strategies. The purpose of the analysis is to establish a table
containing strengths, weaknesses of a firm, opportunities and threats for its future.
1. General environment analysis
Figure 1.4 – General environment’s segments
Economic
Political / Legal

Socio-cultural

Threat of new
entrants
Bargaining power

Bargaining power

of suppliers

Rivalry among

of buyers

competing firms
Threat of substitute
products

Global

Demographic
Technological

1.1 – The economic segment
The health of a nation’s economy affects the performance of individual firms and
industries. Therefore, firms study the economic environment to identify changes, trends

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and their strategic implications. The economic environment refers to the nature and
direction of the economy, in which a firm competes or may compete.
Influences of the economy segment to a firm may alternate its ability of creating
value and getting return. Key elements of a macro economic environment may include:

growth ratio of the economy, interest, exchange rate, inflation rate, etc.
1.2 – The technological segment
Pace of technological changes can greatly impact over whole organizations and
firms. The technological segment includes the institutions and activities involved with
creating new knowledge and translating such knowledge into new products, processes
and materials.
Technological changes include recreativeness and extermination, opportunities and
challenges. The changes can influence over the height of barrier of entrance and
formulate restructure of the industries at grassroots.
At global space, opportunities and threats of technological segment impact over
individual firms by quickly purchasing new technologies or inventing technology by
themselves.
1.3 – The socio-cultural segment
The socio-cultural segment is concerned with a society’s attitudes and cultural
values. Because attitudes and cultural values form the cornerstone of a society, they
often drive demographic, economic, political - legal, and technological conditions and
changes. A variation of the socio-cultural segment may create opportunities or threats
to a firm’s business, which is operating in the segment.

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1.4 – The demographic segment
The demorgraphic segment is concerned with a population’s size, age structure,
geographic distribution, ethnic mix, and income distribution.

1.5 – The political / legal segment
The political / legal segment has significant affects towards the levels and tensions
of opportunities and challenges from the general environment. Essentially, this
segment represents how firms try to influence government and how government
influence the firms. Constantly changing, the segment influences the nature of
competition.
It is necessary for firms to analyze carefully a new administration’s businessrelated policy and philosophyies, laws against monopoly, tax laws; industries which
are selected to enjoy priority or controlled by government; regulations through which
state administration policies could affect to operations and profitability of industries or
firms. At the global scope, firms have to cope with concerned issues of politics and
legal as trading policies or national protection barriers.
1.6 – The global segment
The global segment includes relevant new global markets, existing ones that are
changing, important international political events, and critical cultural and institutional
characteristics of global markets.

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Business market globalization provides both opportunities and challenges. It is
essential to understand the differentiation of society, culture and institution of global
markets.
2. Industrial environment and competition analysis
Industry defines as a group of firms which supply closely substitution products or
services. The close substitution means that products or services can satisfy basically
similar demands. Industry and competition analysis is a set of concepts and technique

to clarify key following issues on:
-

Typical economic features of the industry.

-

Competitive forces, nature and strength of every of them.

-

Motivations causing the changes in the industry and their influences.

-

Key factors for the success and failure in the competition.

-

Attractiveness in terms of ability of getting above average returns.
We can analyse industry environment and competition via the five competitive
forces model that developed by Michael E. porter. They are shown in the figure 1.5.

Figure 1.5 – The 5 competitive forces model

Threats of new
entrants
Bargaining

Bargaining

power of

Rivalry among

power of

suppliers

competitors

buyers

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Threats of
sustitutes

2.1 – Threats of new entrants
The new entrants bring additional production capacity to the industry. Thus, they
force the existing firms to be more effective and efficient and to learn how to compete
on new dimensions. The existing competitors try to develop barriers to market entry,
and the potential entrants seek market in which the entry barriers are relatively
insignificant. There are several kinds of potentially significant entry barriers as below.

Trademark loyalty
It is the buyers’ love for existing products as they believe those products are
unique over time. A firm can create trademark loyalty by continuously promoting (e.g.
advertising, etc.) its trademarks and brand names; registering and protecting patent of
its products; improving products’ quality through research and development programs;
strongly focusing on product quality and after sale services. The trademark loyalty
causes difficulties for new competitors who seek for a market shares by entering the
industry.
Economy of scale

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It is the marginal improvements in efficiency the a firm experiences as it
incrementally increases its size. It means as the quantity of a product produced during a
given period increases, the manufacturing cost of each unit declines. New entrants face
dilemma when confronting current competitor’s scale economy. Small-scale entry
places them at a cost disadvantage. However, large-scale entry with big manufacturing
capacity has to deal with risks of strong competitive retaliation.
Capital requirements
Competing in a new industry requires resources to invest. Beside the physical
facilities, capital is needed for critical business functions. The new entrants must
consider the volume of required capital if available to pursue the apparent market
opportunity.
Switching costs
These are the one-time costs customers incur when buying from different suppliers.

The cost of buying new equipment, of retraining employees and even the psychic costs
of ending a relationship, may be incurred in switching to a new supplier. Occasionally,
a decision made by manufacturers to produce a new, innovative product creates high
switching cost for the final consumers.
Government policy
Through licensing and permit requirements, government can control entry into an
industry. Also, governments restrict entry into some utility industries because of the
need to provide quality service to all and the capital requirements necessary to do so.
2.2 – Intensity of rivalry among competitors

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Because an industry’s firms are mutually dependent, actions taken by one firm
usually invite competitive retaliation. Competition rivalry intensifies when a firm is
challenged by a competitor’s actions or when an opportunity to improve a market
position is recognized. Competitive rivalry in an industry depends on: (1) competitive
structure; (2) demand condition; (3) high exit barriers.
Competitive structure
Competitive structure is the distribution of quantity and scale of firms in an
industry. Industrial structure varies from dispersed to concentrated models and relate to
competitive rivalry.
•

Dispersed industry: is including medium or small scale firms, in which no one
takes the position of domination. In dispersed industry, entry market barriers

are low and products are elementary with insignificant differentiation.
Dispersed industry structure usually brings more challenges than opportunities.

•

Concentrated industry: is an industry which is dominated by several large-scale
firms. The nature and intensity of competitive rivalry are hard to be forecasted
as firms are mutually dependent in this industry. Strong retaliation from
competitors can create a more dangerous competitive spiral.

Market demand
Market demand influences the intensity of competitive rivalry among existing
firms. Demand growth trends to loose the intensity of the competitive rivalry. In
contrast, the decline in demand will urge more intensive competition.
High exit barriers

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High exit barriers of an industry is including economic, strategic and emotional
factors which sometime cause the firms remain in the industry even though the return
on their invested capital are low or negative.
Common exit barriers of an industry are (1) specialized assets (assets with value
linked to a particular business or location); (2) fixed cost of exit (e.g. labor
agreements); (3) emotional barriers (emotional reason); (4) strategic inter-relationship
(relationship of mutual dependence between one business and other parts of a firm’s

operations) or (5) government and social restrictions.
2.3 – Bargaining power of suppliers
Suppliers’ bargaining power usually create threats of increasing prices or lowering
requirements of quality. They are most powerful when:
+ Their products are important for buyers but satisfactory substitute products are
not available.
+ The buyer is not significant customer.
+ Their products is so differentiate that can cause much switching costs to buyers.
2.4 – Bargaining power of buyer
Buyers usually require to buy products at lowest possible prices, at which the
industrial firm earns lowest acceptable return. Buyers bargain for higher quality,
greater levels of service and lower price. Buyers are powerful when:
+ They buy a large portion of the industry’s output.
+ They have low switching costs when choosing substitute products.
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+ They may gain more benefit if buying from different suppliers at the same time.
+ They are able to integrate backward to the supplier’s industry.

2.5 – Threats from substitutes
They are threats coming from similar products and services. In general, substitute
products are strong threats to a firm when customers face few switching costs and
when the substitutes’ price is lower or equally and performance capabilities are equal
or greater than then those of competing products.
3. Internal environment analysis

Internal environment includes internal components that can be controlled by the
firm. Through an analysis of internal environment, a firm determines what it can do –
that is, the actions permitted by its unique resources, capabilities and core
competencies.
Strategic
competitivene

Figure 1.6 – The components of
internal environment analysis

Competitive
advantage
Discovering core
competencies
Core
competencie
s

Value chain
analysis

4 criteria of
sustainable
advantages

Capabilities

Resources

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Outsource

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