Xây dựng chiến lược kinh doanh công ty cổ phần địa ốc MB land

PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

LUẬN VĂN THẠC SĨ
Xây dựng chiến lược kinh doanh công ty Cổ phần địa ốc MB Land

THESIS SUBJECT
BUILDING THE REAL-ESTATE BUSINESS STRATEGY OF MILITARY
BANK LAND JOINT STOCK COMPANY PERIOD 2010 - 2015

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

COMMITMENT
We do hereby assure this graduation capstone project is the result of an
independent research by our team. The data and findings described in this study is
honest and quoted from a clear source, the prediction about market is completely
based on scientific basis.
We also confirm that the analysis in the capstone project is the achievement of
entire group’s efforts based on data provided by Military Bank Land Joint Stock
Company, reference materials, learning and practical experience of all members.
Also, analyses in this capstone project is not statement of any single individual in
the role of an officer working for their company.

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

ACKNOWLEDGEMENT

Over the time studying and completing major task of Strategic Administration
Subject, we can get further learning of subjects in the MBA course help by the
University of Griggs in the association with center of technology and work system –
Hanoi National University. Thanks to theory taught by of professors, Doctor of
Philosophy, and lecturers of the university combining with our own practical
experience, by scientific researching method we have completed this report in the
best way during such as short time.
We would like to express our sincere thank-you to:
- Management and Steering Board of Military Bank Land Joitn Stock
Company;
Especially, we would like to express our great thank-you to the enthusiastic
and direct help of:
- Associate. Prof. Dr. Ngo Kim Thanh – Head of Business Administration
Department – National Economics University.
- Lieutenant-general Pham Tuan – Chairman of Management Board of
MBLand.
- Colonel Pham Viet Thich – Vice Chairman of Management Board of
MBLand
- Colonel Ho Sy Mau – General Director of MBLand
Teachers and lecturers who have spent time teaching and helping us complete
this graduation thesis.
Management and Steering Board of Military Bank Land Joint Stock Company
has provided data, given advice, discussion and help us complete this report timely.
Members of group 2 - GaMBA01.M03 Class
Le Minh Huyen

Nguyen Trung Kien
Lam Thi Hoan
Pham Viet Thuong
LIST OF SYMBOLS AND ABBREVIATION

No.

ABBREVIATION

1

BDSC

Detailed contents
Business Development Solutions Corporation
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

CB Richard Eliss Real Estate Management and
2

CBRE

3

MB

4

MBLand

Consultant Corporation

Military Commercial Joint Stock Bank
Land Joint Stock Company – Military Commercial
Joint Stock Bank

LIST OF TABLES
Tables
Table 1.1

Contents
Analysis of Swot matrix of the Company
Evaluation of strategy performance sequence according to

Page
32
33

Table 1.2

Smart matrix
Overview of Vietnam Economic condition in the last three

60

Table 2.1
Table 2.2
Table 2.3

years
GDP growth rate of some Asian countries
Income per head of some Asian countries

Price trend from 2001 to 2008 of apartment classification

62
64
81

Table 2.4
Table 2.5
Table 2.6
Table 2.7
Table 2.8

in the Hanoi compass
Supplying source of apartments in years
Number of employees of MBLand
Swot analysis of office market segment
Swot analysis of housing market segment
Evaluation of strategy performance sequence according to

81
90
98
98
106

Table 3.1
Table 3.2
Table 3.3

Smart matrix

MBLand’s route of strategy performance
Evaluation of strategic target performance
LIST OF FIGURES

Figure
Figure 1.1
Figure 1.2

Contents
Process of building business strategy
Factors of macro environment
Model of five competitiveness pressures in M. Porter’s

Figure 1.3
Figure 1.4
Figure 1.5
Figure 2.2

opinion
Model of company value chain of Micheal E.Porter
Basic blocks create competitiveness advantage
Organization structure of MBLand
LIST OF CHARTS
4

107
110

Page
22

24
26
30
31
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

Chart

Contents

Page

Chart 2.1

Vietnam Real estate fever

43
61

Chart 2.2

GDP growth rate of Vietnam (Forecast for the year 2009
and 2010)

Chart 2.3

Average income per head

63

Chart 2.4

Happening of inflation in Vietnam from 2000 until now

65
65

Chart 2.5

FDI capital invested in Vietnam from 2001 – 2009 (Unit:
billion USD)

Chart 2.6

Rate of operated FDI compared to commitment

66

Chart 2.7

Population divided in urban – rural area

69

Chart 2.8

Urban population: nationwide – Hanoi – Ho Chi Minh City

70
77

Chart 2.9

Supplying source in Hanoi and Ho Chi Minh City in
development process

77

Chart 2.10

Demanding source and price for leasing real estate in
Hanoi over the past years
Demanding source and price for leasing real estate in Ho
Chi Minh City over the past years

78

Chart 2.11
Chart 2.12

General strategic layout of MBLand

78

Chart 3.1

Process of risk management

102

FOREWORD
1. Necessity of the research topic
Real-estate is a big property of a nation, a special commodity, and the realestate transactions and business activity there of have strong influence on most of
the socio-economic activities.
The economic development and the real estate have a close relationship with
each other, which is closer than that of other sectors. When the economy develops
leading to the raised standard of living and an increase in the housing demands, the
real-estate market accordingly develops and vice versa. Reality in Vietnam for
recent years shows this relationship obviously. Since Vietnamese economy speeds

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

up, the open market policy has been opener and the real-state demands has strongly
gone up, making Vietnamese real-estate market become quite exciting.
Due to considerable value as a feature, the investment capital into the real
estate is usually mobilized more, so development of the real estate market will bring
about the development of the finance-bank systems. According to the experience of
the developed countries, the money banks lend on mortgage occupies more than
70% total credit funds. As a result, development of the real-estate investment and
business plays an important role to turn the assets into plentiful capital sources to
serve the socio-economic development, especially the investment in the economic
infrastructure.
In Vietnam, by the end of 2007, the account outstanding of the real-estate
loans in 2007, particularly from the beginning of Quarter III, strongly accelerated.

The account outstanding of the real-estate loans in Hanoi increased from 2-3 % (at
the end of 2006) to 10% of the total account outstanding in the middle of 2008. At
some times, density of the real-estate loans, in some banks, reached to 40% of total
account outstanding. At the end of Quarter I of 2008, the account outstanding of the
loans increases approximately by 12% (4% per month on average) in comparison
with that at the end of 2007; but in April 2008, credit growth slowed down much,
just by more than 1%. In particular, the account outstanding of the real-estate loans
is VND135,000 billion, including loans for house purchase, lending the enterprises
to invest in the infrastructure serving their production, business, loans for
constructing the houses for sale and offices for rent, ...1
In addition, the real-estate market has direct relationship with other markets
related to construction, construction materials, interior decoration, architecture and
labour, ... . According to analysis and evaluation of the economists in the developed
countries, if the investment in the real estate increases by one billion USD, it is
possible to speed up other relevant sectors to increase by 1.5 – 2 USD. Sound
development and governance of the real-estate market will impulse the economic
growth through incentives for lands, establishment of the projects, factories,
structure,.... and since then to make a significant movement in respect of structure in
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

the sectors, territorial regions and in the whole country. It could be said that
construction materials is a factor reflecting the demands in the real estate. The
strong development of the real estate market along with highly-increased demands
bring about large demands on the construction materials consumption and vice
versa.
As a result, development of the real-estate has direct and indirect influence on
development of the national economy and social culture of each nation.

Simultaneously, the real-estate market is one of the important markets of the
economy because it is directly related to extreme big amount of properties in size,
nature as well as value of the aspects of the national economy. Real-estate business
activities in the market much depend on the operations of the real-estate enterprises
and individuals, which is the factor deciding existence and development of the real
estate market.
MB Land Joint stock Company, a real-estate business, was founded in January
2006 by 6 shareholders, of whom two main shareholders are Military Commercial
Joint stock Bank and Service Flight Cooperation of Vietnam with the initial charter
capital of VND 475 billion. From the foundation date, MBLand worked out its
mission statement: “MBLand will make efforts to introduce the dominant realestate products in term of quality and value to every client. MBLand
ceaselessly creates and maintains the most equal development environment for
all the staff and officers. MBLand will develop for the sustainable development
of the real-estate market of Vietnam.” To gain that goal, a business strategy for
the company is needed and required to be used as basis for all the business activities
toward correct directions, to gain the given goal and to follow the selected mission
assigned by the shareholders.
On that basis, along with enthusiastic support and approval of leaders of the MB
Land Company, our group selects the research topic of final-course assignment as:
“Building the real-estate business strategy of the Land Joint-stock Company –
The Military Commercial Joint-stock Bank in period of 2010-2015”. In this
topic, we focus on the development and movement of the real-estate market of
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

Vietnam for recent time; analyze the environments inside and outside the company
and at the same time work out appropriate business strategies in coming time so as
for the Company to develop strongly; make the best of any opportunities, limit the

weakness and overcome any threats, helping the Company achieve its given
strategic goals quickly.
2. Purposes of the research and applications in reality
Research purposes: Systematizing the argumentative basis of the strategies to
be premise for analysis on the factors affecting the company’s operations, the
business strategy construction in next periods.
Analyzing the factors which affect the real-estate business environment,
production and operation of the company and since then combining with
orientations and goals of MB Land to build the real-estate business strategies of
MBLand.
Studying the topic is very important practically. It provides a comprehensive
view about the operation and development trend of MB Land Joint stock Company
at the moment. Objects of this topic are real-estate companies, organizations and
individuals taking part in the real-estate market – one of the most exciting
developing markets at the moment which a lot of organizations and individuals at
home and abroad pay special attention to.
The research provides MB Land Joint-stock Company a panorama about real
state of fevers in the real-estate market of Vietnam since Law on Land (1993) was
promulgated. It also analyzes opportunities and threats brought by the external
environment, and simultaneously points out the company’s advantages to be
promoted and disadvantages to be repaired, analyzes strategies concerning the
company’s operation. Thus, several measures are proposed to implement the
strategies and accelerate the others in respect of stabilization and development of
the business strategy of the company in a context of increasingly critical
competitions.
Moreover, it is possible to use this research as a materials for other works,
researches in respect of the market management, operation effectiveness of the land
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

and/or real-estate companies. Furthermore, the research also has argumentative
value, providing a new view about strategy and methods of the operation
management of the real-estate company, other than the approach and analysis on the
strategy of some real-estate companies for recent time.
3. Scope of the research
Strategies proposed by MBLand Company are based on assumptions, and
current situations of the Company as well as forecast of the market at level of
serious and careful research.
Assumptions:
Period of the strategy is from 2010 to 2015. The business strategy is designed
for the Real-estate Business according to the definition in the Law on Real-estate
Business dated 2006.
Geographic market scope: MBLand’s headquarter is located in Hanoi. Its
registered main business line is real-estate business, so the strategic report will
concentrate on the real-estate business strategy of MBLand in Hanoi. The report,
however, will analyze the statistic data of the real-estate market in Ho Chi Minh
City to sum up the overall evaluations about the real-estate market of Vietnam.
Market segments are currently selected on basis of the first key project that is
MBLand Tower, of which segments of High and Middle class houses; Office class
B has been chosen for investment by MBLand based on results of the market
evaluation studies conducted by MBLand’s executive board as well as opinions of
the experts and/or specialists.
Real conditions
However, besides the assumptions, making those strategies true or not depends
on the following important elements:
- Common consent of the general meetings of the shareholders, the
Management Board and the control board.
- Coordination and mutual support between shareholder companies within MB

Group
- Care and consistency of the executive board of the Company
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

- Unity of the officers and staff.
4. Research methodology
Information to make the report is mainly collected from books, magazines,
statistics data in the electronic website of the press agencies at home and abroad,
information, statistic data, reports of real-estate management consultants and
researches on the real-estate market of Vietnam and other countries.
Interal information sources include the operation charter of the company,
production and business by-law, the balance sheets, reports on operation results,
financial statement of the year 2008 and the first six months of 2009.
After that it is possible to use methods of synthetic analysis, comparison and
expert to analyze situations in the production and business and select the business
strategy for the company as well as procedures of the strategy performance.
5. Limitations of the research process and future research orientation
Sensitivity of the data
Real-estate market is a high-level market, the market of information and
psychology. Consequently, information from both the government and the realestate companies, even just a small issue, may make the market fluctuate and be
affected. Therefore, analyzing the topic can mention any matters and/or problems
generated from the recent financial crisis in detailed and sufficiently. Some
information cannot be disclosed without permission of MBLand and competent
authorities. This aims at keeping information security of MBLand away from its
competitors and for its own benefits. As a result, this research will not mention all
the aspects of the issue to repair any problems happening to MBLand thoroughly.
Time for the research

Except for the aforesaid factors, the time also affects our group during the
research. However, with data availbale and support from MBLand and experts in
the sector, particularly efforts of the group members, the topic basically reflects full
of aspects of MBLand and the real-estate market in the context of the global
financial crisis at present.
6. Outline of the research
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

Besides the foreword and the conclusion, the research focuses on three main
parts:
Chapter 1: Argumentative basis to build the business strategy
Chapter 2: Building the real-estate business strategy of Military Commercial
Joint stock Bank Land Joint stock Company
Chapter 3: Selecting strategies, schedule of implementation and measures of
strategy implementation

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

CHAPTER 1:
ARGUMENTATIVE BASIS OF THE BUSINESS STRATEGY
CINSTRUCTION
1.1. Basic issues about strategy and modern business strategy
1.1.1. Origin of the strategy and definition of the business strategy
In competitive world, people sometimes wonder why some companies achieve

success while others fail? Actually, each enterprise has its own method for
existence and development. In order to see how companies in different industries
with different conditions and situations develop strategies to gain competitive
advantage, it is first to understand source of strategy and concepts of business
strategy.
”Strategy” is the term originating from Greek “Strategos” used in military.
Modern military theorist Clawzevit thinks that: “Military strategy is the art of
commanding in advantageous position”. A publication of Larous dictionary
presents: “Strategy is the art of commanding tools for victory.”
Strategy has been applied to business since 60s of twentieth century and the
term “business strategy” emerged. The concept of business strategy has been
developed through the time and people accessed it in different ways.
In 1962, Chandler gave definition of strategy as “Identifying long-term basic
goals, purposes and applying activities as well as distributing necessary resources to
achieve this goal1.
In 1980s, Quin gave a more general definition: “Strategy is the patterns or
plans integrated key goals, policies and action chains into a general united
properly”2.
After that, Johnson and Scholes re-defined strategy in changing conditions:
“Strategy is the orientation and scope of an organization in long term to gain
competitive advantage for the organization by formatting its resources in changing
environment to meet demand of the market and satisfy expectation of related
parties”3.

- Chandler, A. (1962). Strategy and Structure. Cambrige, Masacchusettes. MIT Press
- Quin, J., B.1980. Strategies for Change: Logical Incrementalism. Homewood, Illnois, Inwin
3
- Johnson, G., Scholes, K.(1999). Exploring Corporate Strategy, 5th Ed. Prentice Hall Europe
1
2

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Apart from above traditional approach, many business organizations approach
strategy in new method: Business strategy is the plan to control and utilize
resources, assets and finance in order to enhance and ensure its essential rights.
Kenneth Andrews is the first person to pose this outstanding idea in classic book
“The Concept of Corporate Strategy”. In his opinion, strategy is what an
organization has to do on the basic of strong and weak points in the context of both
opportunities and threads.
Professor Michael Porter, father of competitive strategy said: “Competitive
advantage relates to the difference. That is the careful selection of different activity
chain to create original value set”4.
Whatever the approach is, business strategy nature is to outline future image
of the enterprise in activity area and exploration ability. It can be said that strategy
construction and implementation becomes the top task and important content,
function of business administration. It is widely applied in enterprises. The common
viewpoint shows that: “Business strategy is the combined art of activities and
controls them to achieve long term goals of the enterprises”. Therefore, a good
strategy is not enough but there needs a good organization to ensure success of the
enterprises.
1.1.2. Basic characteristics of the strategy
By analyzing the origin of the strategy previously, we can see that strategically
there are still different opinions and approaches. However, at any angle and in any
period of time, the basic characteristics of the business strategy are considered in a
rather unified look, that is:
+ Business strategy identifies basic targets that the business policy should

reach and should be grasped through in all aspects and all fields of the enterprises’
administration.
+ Business strategy only sketch out long term operating directions of the
enterprise and the future operating frame of the enterprise. Therefore, it is only
directional. In the reality, it quires the combination of strategy’s target and the
enterprise’s economic target.
4

- M.E. Porter, Competitive Strategy, Free Press New York, 1980

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

+ Business strategy of the enterprise is built basing on the competitive
advantages of the enterprise to mobilize at maximum level the deployment and
using of enterprise’s resources.
+ Business strategy is reflected in a continual progress from its establishment
to its implementation, assessments and adjustment.
+ Business strategy is formed and implemented by taking advantage of strong
points and making the most of business opportunities to achieve the highest
operational efficiency.
+ The establishment, organization, examination, assessment and adjustment of
the strategy are focused on the group of senior administrators of the enterprise.
By analyzing the characteristics of the strategy, we can see that its remarkable
problem is the production of ideas, plans and supports for an enterprise to compete
successfully against its competitors. This is a modern approach to study the
competitive position of an enterprise
1.1.3. Strategy system in an enterprise

- Functional strategy: Functional strategy is the strategy leading to the
improvement of the effect of basic activities in a company such as production,
marketing, material management, human resource study and development.
- Business unit level strategy: “Business unit level strategies are the whole of
commitments and actions that help the enterprise gain the equal competitive
advantage by deploying their essence of capacity into specific markets of
products”5. Three type of business unit level strategies: Strategy of leading in
expense, strategy of making different and the strategy of focusing in the gaps of the
market.
- Global strategy: In the context of present market and global competition,
having a competitive advantage and maximizing company’s capacity require that
the company should expand its activity outside the country. On seeking for the way
of global access, the company should weight the benefit and expenses basing on
four strategies: National strategy, international strategy, global strategy and
multinational strategy.
- Company level strategy: Company level strategy indentifies actions that the
company executes to gain the competitive advantage by selecting and
- P.rindova & C.J.Formbrun, (1999), ”Constructing competitive advantage: The role of firm –
constitute interaction”, Strategic Management Journal, 20: 691-710
5

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administrating a group of different business activities in some branches and markets
of products.
1.1.4. Roles of business strategy
In market mechanism, the construction and implementation of business

strategy are playing an important role in the existence and development of the
enterprises. An organization without strategy is like a ship without steering wheel.
Almost all failure in business is because of lackage of proper strategy or strategy
implementation in right direction. The role of business strategy for the enterprises is
presented in the following aspects:
- Business strategy helps enterprises recognize goals in each stage and see
direction in the future for the guideline of all activities of the enterprises.
- Business strategy helps enterprises catch and take advantage business
oppotunitiess as well as take the initiative in applying measures to deal with and
prevent dangers and risks in the competitive market.
- Help enterprises exploit and maximize their resources and promote available
strength as well as overcome existing shortcomings existing in the enterprises.
- Business strategy helps allocate resources properly in each stage and enhance
enterprises’ position to ensure the continuous, stable and sustainable development
of the enterprises.
- Business strategy creates solid base for the enterprises to make reasonable
decisions in consistent with changes of the market. It is also the solid base for the
study, implementation, investment and development of the human resources and for
technology renovation, market expansion and development, product development
and labour productivity increase as well as business administration effectiveness
enhancement.
- In addition, business strategy helps enterprises increase closeness and
consensus of staff and leaders in the implementation of common goals of the
enterprises.
Therefore, strategy is the tool to express general long term goals of the
organizations and enterprises. Strategy helps enterprises quickly complete the goals.
The key causes of success or failure of the enterprises depend on the very important
factor of how the business strategy is. That helps enterprises to promptly achieve
their goals.
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

1.2. Process of business strategy planning
Generally, strategy is understood as the result of proper planning process
carefully arranged. Up to now, administrative and competitive scientists have
recommended various strategic planning models. In each model, there exists a
framework for the whole strategic administration process based on the concepts
mentioned above. However, the review of planning process as a starting point is
useful for our journey to the strategic world.
The strategic construction process can be divided into five main steps
including:
Step 1: Identify strategic tasks and goals of the enterprises.
Step 2: Analyze external environment to realize oppotunitiess and risks.
Step 3: Analyze internal environment to identify strengths and shortcomings
of the organization.
Step 4: Select strategies (on the basis of searching resources, possibilities and
core abilities and develop them to overcome risks and take advantage of the
opportunities from external environment)
Step 5: Strategy implementation

Figure 1.1: Business strategy construction process

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

Strategic function, task and strategic goal of the

enterprise (1)

Internal enterprise analysis
(S, W) (3)

External environment
analysis (O, T) (2)

Strategic selection (4)
Corporate strategy (5)
Business bases and functional section strategy

Deployment and implementation of strategy (6)
Inspection and evaluation of the result (7)

Feedback

Strategic plans induced from this process take about 5 years and are updated
yearly. Therefore, strategic planning is the orientation of resources distribution in
the organization. Details of the steps in business strategy construction are as
follows:
1.2.1. Identify strategic tasks and goals of the enterprises
Identifying strategic tasks and goals of the enterprise is the first and important
stage in the whole process of business strategy construction and strategic
administration process. Administrator needs to answer two key questions: Which
field of business does the enterprise participate? And why does the enterprise exist
and do business in that field? Those contents are expressed in the mission statement
of the company.
Mission of the company is the concept to identify purpose of the company,
reasons for the establishment of the company, existence and development basis. In

fact, mission statement of the company focuses on the very important issue: what

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

purpose does the company business aims at?” Scope of the mission statement
usually refers to technological products, markets, customers and other philosophies
the enterprises are pursuing. Therefore, it can be said that it is the mission statement
that shows existence meaning of an organization, the thing that they wish to be, the
customers they wish to serve and the methods that they are operating....
A mission statement of an enterprise should include the followings:
+ Customer orientation and business definition: The first and important step in
building a mission statement is to identify business activities of the organization.
The key in this identification is to answer a question: What kind of business we are
doing?” What will it be” and “What should it be” 6 It is the answers that will guide
the construction of the mission statement.
+ Values: Values of a company clearly confirm manner administrators intend
to control, the way they do business and characteristics they wish to build for the
organization. Values adjust behaviors in the organization. They are considered
company’s organization culture base and a competitive advantage leader.
+ Goals: are future state company is trying to implement or the final result of
the planned activities. Goals of an organization can be regarded as the cause for
the organization’s existence. Therefore, approach of strategic planners to target
problems will create orientation for the strategy formation and impact to contents of
the strategy.
Goals pay the way for orientation to pursue and affect kinds of activities of the
enterprise. Goals are the motivation and can be used as a tool for assessment and
control. Goals also play central role as the result of comparison. For each enterprise,

goals can be long term, medium term or shot term. Economists assume that
enterprises set the goals in the following 8 areas: Market position, renovation,
productivity, finance source and logistics, profit, development and efficiency of
officers, attitude and efficiency of workers, responsibilities for society.
1.2.2. External environment analysis for identifying opportunities and risks.

6

- FF. Drucker Management – Task, Responsabilities, Newyork: Harper & Row, pp 74-94

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

External environment is the factor that has influence on the implementation of
goals that enterprise wishes to achieve. The goal of external analysis is to identify
opportunities and risks from external environment of the company. External
environment

analysis

includes

macro-environment

analysis

and

industry

environment. The analysis of those factors help enterprises determine their position
and particularity of environment and era they are living, shape influence of external
environment to the enterprises and goals of the enterprises, then make decision in
planning business strategy to take maximum advantage of the opportunity and
minimize threats as well as apply reasonable management decision.
1.2.2.1. Macro-environment:
Macro-environment is the large aspect in the society having great influence on
an industry and companies in that industry, …economy; politics and law; culture
and society; technology, natural factors.
Figure 1.2: Factors of macro-environment
Economy
factor
Technology
factor

Internal
enterprise
environment

Politics
and law
factor

Culture
and
society
factor

Natural
factor

- Economy environment: Economy factors have great influence on
enterprises. They are the most changeable and most difficult factors to predict in
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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

macro-factors. Their changes contain both opportunity and threats for enterprises of
which the most prominent ones are the change trend of: Trend of Gross Domestic
Product and Gross National Product; interest rate; inflation rate, balance, foreign
exchange rate; economic policies expressing government’s opinion in the industry
development.
- Politics and law environment: Politics and law factors have great impact on
level of opportunity and thread from the environment; therefore, they have great
influence on enterprises’ activities including: politic stability, system of opinions
and policies of the government, existing law system, diplomatic trends of the
government, local, regional and international politic happenings...
- Culture and society environment: Culture and society environment include
norms and values accepted and respected by a specific society or civilization.
Culture and society environment have strong impacts on business activities, mainly
the following factors: change in age pyramid, marriage and maternity create,
attitude of consumer, opinion of aesthetics, ethics, lifestyle, profession; custom,
practice, tradition; priority of the society; general awareness and literacy of the, …
- Natural environment: Natural conditions include: geological location,
climate, natural landscape, land, river, sea, underground mineral resources, forest
and sea resources, purity of water and air environment…
Their impacts to decision making have been recognized by enterprises so far.

In many cases, natural conditions become very important factors to form
competitive advantage of the products and services. Environmental pollution, low
quality products, resources waste together with increasing demand for limited
resources make enterprises change their related decisions activities.
- Technology environment: Technology environment includes institution,
activities related to creation of new knowledge, transition of the knowledge to
outputs, products, processes and new materials. This is one of the very dynamic
factors containing various opportunities and threads to enterprises. Therefore,
enterprises should pay attention to new technologies because it can make the

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

product out of date directly or indirectly, besides profits that technology
development brings.
1.2.2.2. Industry environment:
Industry environment is the range of facts directly impacting on a company
and competitive activities and competitive response of that company. Main
technique used to analyze competitive competence in industry environment is the
model of five competitive pressures of Pro. Michael Porter: Risks due to penetration
of potential opponents, competitive intensity of companies in industry, buyer and
seller’s strength and threat of substitution products.
Figure 1.3: Model of five competitive pressures according to M. Porter7
Risk of potential
opponent

Negotiation
competence of

supplier

Competition
between
opponent in
profession

Negotiation
competence
of purchaser

Threat of substitution
product

- Potential opponents: are companies which do not compete in the same
production at the moment, but capable of competitiveness if they join the industry.
Penetration capability of these potential opponents depends on industry penetration
barriers. If enterprises have a strategy to enhance penetration barriers, its risks will
be limited.
- Current competitive opponents: Competitive opponents is the regular
pressure and makes threats directly against companies. The more current
7

- M.E. Porter, Competitive Strategy, Free Press New York, 1980

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

competition of companies in industry increases, the more profit capability, existence
and development of the company is threatened. Therefore, this competition forces
the company to enhance investment expenses to create differentiation of product,
service approaching to market or price reduction.
- Supplier: Suppliers can increase the pressure when they can raise input price
or reduce quality of product, service they offer that leads to decrease in seeking for
profit of enterprise. In other words, this threat creates more or less dependence for
enterprises.
- Substitution product: Substitution product is other products which can meet
demand of customer. Basically, this has the strong point over substituted products in
specific features. This threat requires that enterprises must analyze, keep track of
technological advance regularly, in which related to innovation of technology and
product.
- Competition between opponents in the industry: Enterprises doing business
in one industry is usually different in terms of market, distribution channel, product
quality, technology, sale price and promotion. However, in the same industry, some
enterprises follow and implement one strategy or similar ones creating group of
strategies. Number and capability of companies in industry decides property and
competitive intensity in industry.
Thus, by researching external environment, companies can decide what they
can do. In order to succeed, either its strategy must be suitable with operation
environment or company can shape the environment to take its advantages
throughout strategy selecting process.
1.2.3. Analyzing internal environment to recognize strong and weak points
of enterprises
Enterprise’s capability is a basic factor to decide whether companies can do,
its business strategy has successfully implemented or not. To ensure the feasibility
of strategy when building, we must evaluate the actual situation, define strong and
weak points and thus determine actual capability of enterprise. The purpose of
analysis inside enterprise is to recognize potential resources as well as creating

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

sustainable competitive benefits of enterprise, at the same time, defining obstacles
in maintaining these benefits. The internal analysis includes: analyzing sustainable
competitive benefits, analyzing strategy and financial efficiency.
1.2.3.1. Analyzing sustainable competitive benefits
There are two ways to analyze the sustainable competitive benefits namely
resource analysis and value sequence analysis. The former helps to recognize core
competence in range of the company and the latter helps the company understand
expense benefits or the difference in range of business unit.
a. Analyzing resource
Resource analysis shows reserves of resources, capacities and assets available
for the business unit or the whole company.
- Resources: ”Resources, as widely accepted, include a range of elements of
organization, technique, material, human resource, finance of company. Resources
can be classified into two types: tangible and intangible resources”8. Tangible
resources are resources which can be seen such as finance resources, organization,
physical conditions and technology. Intangible ones include human resources,
innovation capability and reputation.
- Potential capability: ” Potential capability is the company’s capability of
using integrated resources in purpose to gain desired goad state”9. General speaking,
potential capability of one company is the product of organizational structure and
control system.
- Core competence : resources and capabilities of the company are used as
resource of creating competitive benefit, competitive distinction of that company,
through activities that company conducts extra-over as compared with opponents
and those activities create unique value for its products and services over time.

b. Analyzing value sequence:
Analyzing value sequence enables the company to understand chains which
create its product value and chains which do not. The term “value sequence” refers
- Wernerfelt (1994), ”A Resource Base View of the Firm”, Strategic Management Journal, 5
(1994) 171 – 180
9
- C.E.Helfat & R.S.Raubitschek, 2000, ”Product sequencing: Co-evolution of knowledge
capabilities and product, ”strategic Management Journal, 21: 961-979
8

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PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

to the idea which considers a company as a sequence of activities transforming
input into output to create value for customer. The process includes main and
supportive activity; each one increases the product value. Supportive activities take
part in each main activity.
- Main activities: The activities associated with enterprise’s products and
services. Those are purchase activities, input management, marketing of service and
service after sales. The more economical and more satisfying these activities, the
higher the value sequences of the company are evaluated and the more competitive
benefit the company has.
- Supportive activities: Help main activities of enterprises be executed better
and more efficiently. The mentioned main activities mean human resource
administration, technology development, and purchase.
Figure 1.4: Model of company value sequence of Micheal E.Porter10

Supportive

activities

Infrastructure of organization

Internal
Logistics

Human resources administration
Technology
development
( tuyển
chọn, huấn
luyện,
phát triển )activity
(R&D, cảiProcurement
tiến sản phẩm và quy
tŕnliệu
h) thô, máy móc
(mua nguyên vật
Marketing
thiết ḅ, cung
cấp) Service
Produc
External
and
sale
tion
Logistics
Dominant
quality

In short: Analysis of sustainable competitive advantage is a result of
resources and unique capability of using on value creation activities according to
the ways that the opponents cannot copy or be stripped by other partners. Factors
create sustainable competitive advantages: efficiency, quality, innovation and
customer’s demand meeting.
Dominant
Figure
effect

10
11

Competitive
advantage
Differential
low cost

1.5: Basic blocks creating competitive

Dominant
customer 11
advantage
response

- Charles, Hill and Garth, Jone, 1995, Strategic Management, Washington
- M.E. Porter, Competitive Strategy, Free Press New York, 1980

24
Dominant

innovation


PROGRAM ABOUT MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION

1.2.3.2. Analyzing strategy
All enterprises have their strategies so task of analyst is to describe their current
ones. Description of strategies focuses usually on product strategy – customer,
competitive viewpoint and strategy logics. Analysis will concentrate on: company’s
strategy; product strategy; competitive strategy viewpoint; functional strategy and
goodness of current strategy.
1.2.3.3. Analyzing financial efficiency
Basic purpose of analyzing financial efficiency is to evaluate financial
efficiency of the enterprise through analyzing financial parameters, current
standards and time: profitability, liquidity, leverage effect, operation parameters
along with increase economic value or its fluctuation, measuring direct increase
price for shareholders, etc.
Conclusion: By researching internal environment, enterprises will determine
what they are capable.
1.2.4. Selecting strategies

25