IMPROVING MANAGEMENT STRATEGIES AND BUILDING BUSINESS STRATEGIES IN THE PHASE OF 2015 TO 2020

THESIS MBA
IMPROVING MANAGEMENT STRATEGIES AND BUILDING
BUSINESS STRATEGIES IN THE PHASE OF 2015 TO 2020

1


CONTENTS
OPENING......................................................................................................5
CHAPTER I: FUNDAMENTAL BASIS ON STRATEGY AND
STRATEGIC MANAGEMENT..................................................................9
1.1. Strategy and strategic management.........................................................9
1.1.1. Definition of strategy.........................................................................9
1.1.2. Strategicmanagement.......................................................................10
1.1.2.1. Definition..................................................................................10
1.1.2.2. Tasks of Strategic Management................................................11
1.1.2.3. Benefits of Strategic Management............................................11
1.1.3. Strategic management model...........................................................12
1.1.3.1. Strategic management process..................................................12
1.1.3.2. Strategic system in company.....................................................14
1.1.3.2.1 Mixed strategies...................................................................14
1.1.3.2.2 Specially intensive strategies...............................................15
1.1.3.2.3 Business expansion strategies..............................................16
1.1.3.2.4 Other strategies........................................................................16
1.2 Contents of building business strategy....................................................17
1.2.1 Defining the business target..............................................................17
1.2.2 External environment analysis..........................................................17
1.2.2.1 Economic factor.......................................................................18
1.2.2.2 Cultural and social factor.........................................................18
1.2.2.3 Politic and legislation factor.....................................................18
1.2.2.4 Technological factor.................................................................18

1.2.2.5. Competitive factor...................................................................19
1.2.3. Internal environment analysis..........................................................19
1.2.3.1 Management.............................................................................19
1.2.3.2 Marketing.................................................................................20
1.2.3.3 Finance and accounting............................................................20
1.2.3.4 Information system...................................................................20
1.2.3.5 Internal supervision..................................................................20
1.2.4. Process on analysis and strategic selection......................................21
1.2.4.1 Input stage................................................................................21
2


1.2.4.2 Combination stage....................................................................23
1.2.4.3 Decision stage..........................................................................24
1.2.5 Notes to the strategy development process......................................24
1.2.5.1 Culture side..............................................................................24
1.2.5.2 Political side.............................................................................25
CHAPTER 2: OPERATION ANALYSIS OF MILITARY TELECOM
CORPORATION (VIETTEL) POST JSC...............................................26
2.1 Introduction to Viettel Post JSC..............................................................26
2.1.1 General introduction........................................................................26
2.1.2 Features of post service sector........................................................29
2.1.2.1 The popularity..........................................................................29
2.1.2.2 The assembly............................................................................29
2.1.23 The disparity..............................................................................29
2.1.2.4 The stability of the growth speed.............................................27
2.1.2.5 The market being a hard saturation..........................................30
2.1.3 Some points on activities of Viettel Post from 2006 to 2008..........30
2.1.3.1 Business statement...................................................................30
2.1.3.2 Service supply network............................................................32

2.1.3.3 Delivery service market share..................................................33
2.1.4 Assessment on present strategy.........................................................33
2.1.4.1 Mission and vision..................................................................33
2.1.4.2 Analysis on competition pressure...........................................34
2.1.4.2.1 Competition level I its internal sector............................34
2.1.4.2.2 Risks of replacement products.......................................35
2.1.4.2.3 Power of customers........................................................36
2.1.4.2.4 Power of suppliers..........................................................36
2.1.4.2.5 Entry and exit barriers....................................................37
2.1.4.3 Current strategy of Viettel post...............................................38
2.1.4.3.1 Growth objectives..........................................................38
2.1.4.3.2 Strategy focus...................................................................39
2.1.4.3.3 Solutions...........................................................................39
2.1.4.4 Assessment of current Viettel Post’ strategy in use.................40
3


2.1.4.4.1 Strengths..........................................................................40
2.1.4.4.2 Weaknesses....................................................................41
2.2 Business environment analysis...............................................................42
2.2.1 External environment.....................................................................42
2.2.1.1 Economic factor.......................................................................42
2.2.1.2 Social – cultural factor.............................................................42
2.2.1.3 Political – legal factor..............................................................43
2.2.1.4 Technological factor.................................................................43
2.2.1.5 Competitive factor....................................................................44
2.2.2 Internal environment analysis..........................................................44
2.2.2.1 Management.............................................................................44
2.2.2.2 Marketing.................................................................................45
2.2.2.3 Finance and accounting............................................................46

2.2.2.4 Informatics system...................................................................47
2.2.2.5 Internal control.........................................................................47
CHAPTER

3:

VIETTEL

POST

JSC

BUSINESS

STRATEGY

DEVELOPMENT PERIOD 2015 TO 2020..............................................48
3.1 Purpose of the business strategy development........................................48
3.1.1 Strategic vision.................................................................................48
3.1.2 Competitors identification............................................................48
3.1.3 Market trend.................................................................................49
3.1.4 Orientations for Viettel Post development period 2006-2008.....50
3.2 Inputs for development of the business strategy.....................................50
3.3 Business strategy development...............................................................51
3.3.1 Business targets identification......................................................51
3.3.1.1 General targets.......................................................................51
3.3.1.2 Target of the service product..................................................51
3.3.1.3 Targets on distribution channel..............................................51
3.3.1.4 Targets on revenue and market share.....................................51
3.3.1.5 Targets on profit.....................................................................52

3.3.2 Strategy identification....................................................................52
3.3.2.1 SWOT analysis on Viettel Post.............................................52
4


3.3.2.1.1 The strengths..................................................................52
3.3.2.1.2 The weaknesses..............................................................52
3.3.2.1.3 The opportunities...........................................................53
3.3.2.1.4 The threats......................................................................53
3.3.2.2 Strategy analysis....................................................................54
3.3.2.2.1 Strategy 1 – Low cost strategy.......................................54
3.3.2.2.2 Strategy 2 – Distinction / Differentiation strategy.........55
3.3.2.2.3 Strategy 3 – Horizontal strategy.....................................55
3.3.2.2.4 Strategy 4 – Restructure strategy...................................55
3.3.2.3 Strategy selection.................................................................56
3.3.2.4 Purpose of the strategy.........................................................57
3.3.3 Process to implement strategy........................................................58
3.3.3.1 Period 1 (2010-2012)...........................................................58
3.3.3.2 Period 2 (2013-2015)...........................................................59
3.3.4 Inspect strategy implementation.....................................................60
3.3.5 Strategy adjustment.........................................................................60
3.4 Implementation solutions........................................................................60
3.4.1 Marketing policies..........................................................................60
3.4.1.1 Product policy.......................................................................60
3.4.1.2 Price policy............................................................................60
3.4.1.3 Distribution policy................................................................60
3.4.1.4 Promotion policy...................................................................61
3.4.2 Revenue solutions..........................................................................61
3.4.3 Organization and human resource solutions..................................62
3.4.4 Information of technology application solutions...........................62

3.4.5 Group of countermeasure on cooperation......................................63
3.5 Recommendations...................................................................................63
3.5.1 Viettel Corporation.........................................................................63
3.5.2 Ministry of information and communications................................63
3.5.3 State................................................................................................63
CONCLUSION............................................................................................64
BIBLIOGRAPHY.......................................................................................65
5


OPENING
THE URGENCY OF THE PROJECT
The project "Business strategy in the period of 2010 - 2015 of Viettel JSC
- Demands and Challenges” was inspired due to the following requirements:
Firstly: "Every day I can hardly achieve anything. However, there is one
job that I can never complete, which is to build plans for the future." That
saying of an American largest corporation‘s president – Mr. General Motors has firstly clarified the reason for our strong passion for this thesis. That
business strategy construction is ever a constant renewal demand for each
enterprise. Each enterprise, if ever considered a person hiking in the woods
without a clear mandate, would only to find a way to go. The more he is going,
the more he is getting lost. Strategy management helps organizations,
enterprises clearly defined goals, directions, map out the way and reasonable
allocation of resources optimally to ensure that they would travel to the target in
a specified time. Viettel Post JSC is not out of those needs.
Secondly: Viettel Post Joint-Stock Company was actually a Limited
Company which is a member of the State Postal Viettel (Viettel Post),
belonging to the Corporation Viettel - Department of Defense (Viettel), has
been equitized in July 2009. During this transition, building business strategy
after equitization is an urgent requirement for Viettel Post JSC, deciding the
6

survival of the transferred business operating under the new mechanism to meet
the demands of shareholders.
Thirdly: The construction and strategic management of Viettel Post JSC
were to meet the demands of Viettel development. In the course of its
development, Viettel Post JSC still was required to follow the strategic
development of Viettel "becoming the leading postal and telecommunications
enterprise in Vietnam as well as in the worldwide market. The construction of
business strategy to help Viettel Post JSC realize the vision and mission of itself
lying in Viettel development direction became urgent than ever.
THE OBJECTIVES OF THE PROJECT
Facing the urgent demands mentioned above, our implementation of the
project aims to the following purposes:
Firstly: To clarify the matters relating to strategy and strategic
management in production and business activities. In addition, together with
systematizing knowledge of strategic management, our thesis is also doing
research on the influence of political and cultural factors upon the construction
and implementation of business strategy.
Secondly: Basing on the science of strategic management which has been
studied, the thesis is focusing on the complete analysis of a comprehensive
business aspect of Viettel Post JSC from 2006 to 2008 to determine business
objectives and development strategies appropriate for these enterprises after
equitization.

Research Methodology
To implement the objectives of the thesis set out:
In terms of methodology, we, authors, mainly based on the theory of strategic
management and strategic management experience in Viettel Corporation
(Viettel) and Viettel Joint Stock Company in timebeing. On that basis,

combining with specific business environment, the writers have built business
7


strategy in the period of 2010 – 2015 for Viettel Postal Corporation as well as
set out a system of solutions to successfully implement the strategy.
With logical solution as such, authors mainly use statistical and analysis
methods, which is to evaluate the operation of Viettel Post JSC in the period of
2006-2008 and to analyze the strengths, the weaknesses, the opportunities and
the challenges of this enterprise, from which later on to set out appropriate
strategy for the period of 2010-2015.
THE STRUCTURE OF THE PROJECT
Consistent with the meaning, purpose and research mentioned above, the project
is structured into 03 chapters with the main contents as follows:
Chapter 1: The scientific basis of strategies and strategic management in
business activities of enterprises
Chapter 2: Status of the strategic management of Viettel Post JSC in the phase
of 2006-2008. The existences and requirements for a renovation.
Chapter 3: Some solutions improving management strategies and building
business strategies in the phase of 2010-2015 of Viettel Post JSC.
SYMBOLS AND ABBREVIATION LIST
EFE : External Factor Evaluation
GDP : Gross Domestic Product
HACCP : Hazard Analysis and Critical Control Point System
IFE : Internal Factor Evaluation
R&D : Research and Development
SWOT : Strengths, Weaks, Opportunities, Threats
VoIP : Voice over Internet Protocol
WTO : World Trade Organization
Viettel

: Viettel Post JSC
Post
8


CHAPTER 1
FUNDAMENTAL BASIS ON STRATEGY AND STRATEGIC
MANAGEMENT
1.1.

STRATEGY AND STRATEGIC MANAGEMENT

1.1.1. Definition on strategy
The most common thing for any business to do when starting up their
business is setting goals to achieve in the long term. However, in order to
achieve that goal, managers need to set up variety of measures and actions, in
other word, managers must build a specific business strategy.
Currently, there are many definitions on strategy, and based on different
person’s point of view, there are somewhat different in definitions.
According to Chandler, one of those who initiated the first strategic
management theory, strategy is "to identify goals, long-term basic purpose of
the business and applying a sequence of actions as well as the distribution of
resources necessary to implement this goal”1.
In 1980, Quinn Glass has introduced a more general concept: "strategy is
a pattern or plan integrates major goals, policies, and action sequences into a
cohesive structure” 2.
Then, in 1999, Johnson and Scholes redefined strategy in an dynamic
environment "strategy is the orientation and scope of an organization to gain
long-term competitive advantage for organizations through mobilization of
resources in the changing environment, to meet market needs and expectations

of stakeholders”3..
1

Chandler, A. (1962). Strategy and Structure. Cambrige, Massacchusettes. MIT Press.

2

Quinn, J., B. (1980). Strategy and Change: Logical Inscrementalism. Homewood, Illinois, Irwin.

3

Johnson, G., Scholes, K. (1999). Exploring Corporate Strategy, 5th Ed.Prentice Hall Europe.

9


To have a multi-facet definition on strategy, Mintzberg had generalized
aspects of strategic management into five Ps, including:
- Plan: the action sequences have a consistent plan;
- Partern: being consistent behavior over time, may be intended or not
intended;
- Position: match between the organization and its environment;
- Perspective: ways to view the world;
- Ploy: specific way to deceive opponents.
In addition, the strategy is defined by nature, of three level strategies: corporate
level, business level and functional level. Currently, with the trend of
globalization, companies are fast diversifying their activities beyond national
borders, thus global strategy always be the first economic choice upon
internationalize.
However, in our opinion, strategies should be defined as means or as an

explanation about the direction for business to meet its objectives in the long
term.
1.1.2. Strategic management
1.1.2.1. Definition
Strategic management is the process of identifying the strategic
objectives of the organization, building policies and plans to achieve its goals,
and allocating resources for the organization to carry out those policies and
plans.
Strategic management is not only a science but also an art, through which
managers plan, organize the implementation, control and evaluate business
decisions in order to achieve long-term business goals.
10


With this concept, strategic management including continuous actions:
environmental analysis (internal and external); strategic building; strategy
implementation; and strategy testing and evaluation.
Strategic management is the origin of business policy, strategic
management and must integrated with long-term planning strategy. However
strategic management is not only interested in the integrated functions within
the same policy but also focus more on the environment and strategy.”
Therefore, the term strategic is used rather than business policy."4.
1.1.2.2. Tasks of Strategic Management:
Strategic management has 5 closely inter-related with each other, including:
Building scenarios of the future business, stating where a business is heading
and where it wants to be?
Set goals – turn scenarios into concrete results that businesses must achieve;
Building strategies to achieve desired goals;
Implementing and managing strategy effectively and efficiently;
Evaluate performance and initiate adjustments on scenarios, long-term

direction, goals, strategies or implementation based on experience, conditions
for change, ideas and new opportunities.
1.1.2.3. Benefits of Strategic Management:

4

R.E. Hoskisson, M.A. Hill, W.P.Wan, and D.Yiu, (1982), “Theory an Research in Strategic Management:

Swing of the Pendulum”, Journal of Business. Vol25, No.3, pp 417 – 456.

11


Many studies showed that, if applied strategic management, business will
achieve better performance compared to firms not implementing this process 5. If
achieve the appropriate environment for business strategy, structure and
processes then it will create positive effects on performance of the
business6. Practically the benefit of strategic management has been tested
extensively and can be summarized into the most basic points as following:
- Make clearer vision of business strategy;
- Focus more on the significance of the strategy;
- Improve awareness of the rapid changes of the environment.7
However, to have effective management strategies, there will always be a
process of answering three questions: Where are the Enterprise?, Where is it
heading? How to get there?
1.1.3. Strategic management model
1.1.3.1. Strategic management process
Until now, scientists and managers have proposed several strategic
planning models. However, in general, strategic planning process can be
divided into five steps, including:

Step 1. Selected mission and main objectives of the enterprise:
Mission presented by the existing management of the business and direction to
what it will do. The main objectives determine what companies hope to meet
within the medium and long term.
Step 2. External environment analysis to identify opportunities and challenges:
External environment has three types of relationships closely link together: the
industry, the country environment and macro environment.
5

T.J. Andersen (2000), “Strategic Planning, Autonomous Actions an Corporate Performance”, Long Range

Planning (4-2000), pp 184 – 200.
6

E.J Zajac, M.S Kraatz, R.F. Bresser. “Modeling of Dynamics of Strategic Fit: A Normative Approach to

Strategic Change, “Strategic Management Journal (4-2000), pp 429 – 453.
7

Wilson, (1994) “Strategic Planning Isn’t Dead – It Changed”, Long Range Planning (8 – 1994), p.20.

12


Industry

analysis

is

evaluating

the

competitive

structure

of

industries, including the competitive position of the business focus, the main
competitor as well as the development stage of the industry.
Country analysis to examine the national context of the country in which
enterprises are operating, and its favorable conditions as well as difficulties
affecting the operation of enterprises.
Macro-environment

analysis

includes

examining

the

macroeconomic, social, governmental, legal, international and technological
factors that can impact business.
Step 3. Environmental analysis is to identify the strengths and weaknesses of the
enterprise:
The environmental analysis will find how to achieve business competitive

advantage, and the role of different capacities, resources and ability to create
Vision and Mission
and maintain sustainable competitive advantage for business.
Step 4. Selection strategies based on the search for resources, capabilities and
External Analysis
Internal Analysis
Strategies selection and
core capabilities and develop it to take advantage of the opportunities and
strengths, solving the challenges andbuilding
weaknesses;
Functional strategy
Step 5. Implementation strategy
Business strategy
When companies have chosen to achieve strategic objectives, the
strategies that need to be put into execution. Within this topic, the
Global strategy
implementation of strategies is divided into four parts, including: (1) building
appropriate business structure, Corporate
(2) building
control system; (3) create a match
strategy
between strategy, business structure, and control systems, (4) control conflict
and change.
Organizational

Matching strategy,

structure

structure13

and control
Strategic adjustment

Control building


Figure: 1.1. Strategic planning model
1.1.3.2. Strategic system in company
1.1.3.2.1. Mixed strategies
Mixed Strategy allows companies to increase control over the
distributors, suppliers or competitors.
The strategic combination includes:
(1) Forward Mixed strategy: a strategic increase ownership or control over the
distributors or retailers (franchises to expand product distribution and services).
This strategy is used when current distribution system has low confidence or
weak to enjoy the advantages of economic scale; high profit rate from the
distribution operation.
14


(2) Backward combination strategy: is the strategy to increase the
possession or controlling over suppliers aiming to sourcing stable, competitive
price input… This strategy is applied when current suppliers are too weak,
unreliable, inability to meet the production demand of the business and the
profit rate from the intensive supply.
(3) Horizontal combination strategy: is the strategy to seek for the
possession or controlling over competitors through A&M, buy-back…in order
to achieve profit from the massive scale. This strategy works when the
enterprise is able to monopolize an industry or a business sector; or in a hard
competition and the industry is aggressively developing; or when the competitor

faces difficulties of weak management, short of resources which the enterprise
has currently been possessing.
1.1.3.2.2. Specially intensive strategies
Specially intensive strategies are those to strengthen the position of the
enterprise with the current products
Specially intensive strategies including:
(1) Market Penetration strategy: this strategy works through measures
like increasing sales staff, advertising cost and promotion… aiming to enhance
the market share of a current product or service within a defined market. This
strategy is applicable when the defined market capacity has not been reached
the saturation and the room for product or service is still available; market share
of competitors go down but the total industry sales goes up.
(2) Market development strategy: the strategy related to deployment of a
current product or service into a new market or geographical area. The strategy
application is when the enterprise is able to research and penetrate the market,
especially, oversea ones; the production capacity of enterprise has not been fully
put into operation and the distribution channel in the new market is reliable,
good quality, at a due cost.
(3) Product development strategy: through investment for research and
developing activities, the enterprise is capable to launch newly improved
15


products from current ones. This strategy is used when product is about or in the
saturation phase (the product is reaching to the end of product life cycle);
enterprise is operating in fast growing industry with high rate of technological
application and hard competition.
1.1.3.2.3. Business expansion strategies
Business expansion strategy is the activities of enterprise to diversify its
business including the following:

(1) Diversified unanimous activity strategy: is the strategy to add more
relative or interactive products or service to current ones of the enterprise. This
strategy is applied when product reach the end of its life cycle and the industry
growth rate is low; the new relative product which is incorporated with old one
is supposed to improve the sales of enterprise.
(2) Horizontally diversified activities strategy: is the strategy to explore
from current customers through providing new and separated services or
products. This strategy is applicable when the turnover from current product
dramatically increases with the presence of newly separated product; the
competition in industry is high and along with low rate of growth or even zero;
the current distribution channel is able to serve current customers.
(3) Mixed diversified activities strategy: is to promote new and separated
products or services. This is used when the industry growth rate is zero or
downward; the market is saturated with product or service provided by
enterprise; enterprise is affordable and manpower-capable to buy-back or
intrude into a new industry.
1.1.3.2.4. Other strategies
In practice, the enterprises can define some special strategies as
following:
(1) Joint venture: is the strategy to build up a new business or an
association from 2 or more origin enterprises to increase the capital, investment
opportunity, new market penetration, risk dissemination… Some popular joint
venture types are: research and development joint venture, crossed product
16


distribution contract, crossed franchise contract. This strategy is applied in
highly return projects requiring huge capital, management and other resources
that a single enterprise cannot afford; enterprises are confronting difficult
competition or risk dissemination (especially for joint venture between local and

international company); deploying or introducing a new technology.
(2) Operation reduction: is the applicable strategy in case of reduction of
profit and sales due to the weak operation of one or more affiliates. The
enterprises usually use some of the following methods: controlling and cutting
cost, eliminating unprofitable business, automating production line… This
strategy is used by the least competitive enterprise of an industry; enterprise that
use over-speed strategy which cannot be curbed and ineffective so they need to
be restructured.
(3) Operation partial cut: it can be considered as a part of operation
reduction. This strategy’s purpose is to eliminate unprofitable or unsuitable
business for enterprise’s operation. This strategy is applied when enterprise
pursues operation reduction strategy but the improvement process fails and no
positive result; the enterprise has selected the core business; enterprise needs
capital but no other source is available.
(4) Liquidation: is the recognition of failure through selling all
enterprise’s property at its real price aiming to stop the persistently irresistible
lost. This strategy is used when both operation reduction and operation partial
cut do not work; enterprise goes bankrupt.
(5) General strategy: is the method to combine 2 or more above
mentioned strategies. With the limited resources, pursuing many strategies at
the same time may bring back difficulty for business since resources are shared
for many goals. On the other hand, the moment enterprise starts to share its
resources to many goal is the best time for the attack of other competitors.
1.2.

CONTENTS OF BUILDING BUSINESS STRATEGY

1.2.1. Defining the business target
17

All enterprises has to define their own business target, in other word, they
have to find out their own target for existence. A good business must be built on
the basis of research, factor analsys (internal and external factors), and effects
(direct and indirect) to business operation. A business target must cover
following contents: development strategy, business philosophy, target
customers and market, core products and service, applicable technology,
profitability, competitiveness, social responsibility, necessary resources to
achive target.
1.2.2. External environment analysis
In order to keep the business strategy highly feasible, after evaluating the
business target, the enterprise must analyze, evaluate the effects from outside to
defined target. The following features of the outside factors should be
considered:
- These factors have a strong and long-term effect on business operation
while the enterprise cannot manage them;
- These factors give different direction and effect from business to
business, industry to industry;
- Any change among these factors may affect business’s internal
environment factor.
- These factors can provide direct or indirect effect to business’s
operation through relationship with other outside factors.
1.2.2.1. Economic Factor
The macro economic factors in which business operates, even in other
nation global wide such as growth rate, inflation, unemployment, exchange
rates… put a great effect on the decision of business strategy as well as the
ability to achieve expected results
1.2.2.2 Cultural and social factor
Cultural and social environment includes the standards and values
acceptable to a specific geography, country or civilization. In general, the social

18


and cultural transformation is later than other factor groups and influenced by
other factors from the external environment.
1.2.2.3 Politic and legislation factor
This group includes politic institution, viewpoint, policy dominated by
the current administration machinery, legal system, politic and external relations
trend etc…A switch by this group is fully capable to bring about potential
opportunities to entrepreneur, also imposed challenges to the implementation of
the set forth business targets
1.2.2.4 Technological factor
Amidst the rapid evolution of science and technology, the technological
factor is considered as the most dynamic as well as the most unstable among the
affected factors from the external environment. The progress of science and
technology will decide services, products’ recycle, business strategy and the
implementation of long term targets set forth by entrepreneur.
1.2.2.5 Competitive factor
Base on the public benefit assessment, the competition is a driving force
toward the development. However, this factor is also a biggest challenge for any
entrepreneur to overcome everyday. To sustain competitive advantage,
necessary classifications of competitors are to be conducted by manager
following different displays as influence and competitive level etc…by the way,
an appropriate competitive strategy is draw up. Though of conducting different
classification, managers have to identify and understand their competitors
before the competitive strategy to be made.
1.2.3 Internal environment analysis
Each entrepreneur has its own strengths and weaknesses due to its
essential features. The analysis process of the strengths and weaknesses will
help managers evaluate precisely entrepreneur in term of quantitive and

19


qualitative resources. So, they can work out plan to mobilize, distribute and
utilize efficiently these resources in implementing the set forth business targets.
1.2.3.1 Management
Planning work is associated with estimation work, target design, strategy
development and appropriate strategy selection. It is a fundamental to develop a
strategy, also a direction for the implementation and evaluation of the strategy.
Organizing is understood of a process to distribute work in appropriate parts,
sections and arrange personnel to positions through the identification of the link
between responsibilities and obligations toward the effective cooperation.
Supervision is a final function of the management work. The supervision is
mainly involved in the phase of strategy evaluation within the overall process of
the strategy management.
Promotion includes both scientific and artistic feature that manager can affect
on the overall system to achieve the set forth targets.

1.2.3.2 Marketing
Marketing is described as a process of identification, estimation,
development and satisfaction toward meeting maximum the need of customers.
This also means that all works include product, price, distribution channel,
promotion, customer, competitor and internal evaluation are closely linked with
marketing. In other words, good marketing also means there are potential
opportunities for entrepreneur to implement and develop well the set forth
business strategy.
1.2.3.3 Finance and Accounting
Financial factor is presented on financial indicators that are considered as
a best solution on competitive assessment, also a fundamental to work out
investment decision by investor and entrepreneur as well. Financial indicators

present entrepreneur’s readiness level and financial capacity to projects to be
20


invested following the business strategy. On the other hand, these factors also
reflect entrepreneur’s power to other entrepreneur and competitor.
1.2.3.4. Information system
Information system plays a key role in the whole strategic management
process. At different stages of the strategic management, information sources
are often seen as a fundamental toward management decisions. Information
research is not only necessary for different levels of strategic management, but
also a compulsory work for the entire staff in an entrepreneur. This work
imposes a critical demand in conducting the process of information collection,
analysis and exchange in a logic manner within the internal entrepreneur.
1.2.3.5 Internal supervision
Internal supervision which is often associated with other factors within
the internal entrepreneur, also seen as a fundamental to identify the strength and
the weakness. In order to conduct internal supervision, a series of indicators
raised by managers those are linked with management, marketing, finance,
capacity,

workforce,

products

quality,

services…In

addition,

some

entrepreneurs establish a full-time unit of internal supervision with staffs being
well trained on management.

1.2.4 Process on analysis and strategic selection
1.2.4.1 Input stage
-External factors evaluation matrix (EFA) is designed to evaluate external
factors how to affect entrepreneur. The EFA matrix development is based on the
following steps:
(1) Listing out external factors that play a key role toward the success of an
entrepreneur
(2) Identifying the importance of the factors through classification level from
0 to 1 (in which 0 - unimportance and 1 – most importance)
21


(3) Evaluating entrepreneur’s response to listed-out factors is followed
marking point from 1 to 4 (in which 4 – strong response and 1 – weak
response)
(4) Multiplying the importance of each factor to identify marking point for
entrepreneur
(5) Adding all factors’ marking point to identify important marking point
among the total. The important marking point among the total is
maximum at 4 and minimum at 1. The total medium marking point is 2.5.
The total important marking point under 2.5 presents the entrepreneur’s
weak response against external factors’ changes. The total important
marking point above 2.5 presents the entrepreneur’s fairly-well response
against the business environment.

22


INPUT STAGE
External factors

Competitive
image matrix

evaluation

Internal factors
evaluation matrix

Matrix

COMBINATION STAGE

SWOT
Matrix

SPACE
Matrix

BCG Matrix

IE
Matrix

IE
Matrix

DECISION STAGE
QSPM Matrix

Figure 1.2 Process on Strategic selection
(Source: Fred R. David –Definition of Strategic Management)
-Internal factors evaluation matrix (IFE) is designed to identify the
strength and the weakness of entrepreneur. The IFE matrix development is
nearly as same as the EFE matrix development. However, there is a little
different through replacing factors evaluation by the strength and the
weakness evaluation.
-Competitive image matrix is seen as the most importance among business
events and environment trend that probably have impact on the development
23


of entrepreneur’s strategy. The competitive image matrix is used to identify
main competitors with their strength and weakness.
1.2.4.2 Combination stage
There are different tools to be used at the combination stage. Each tool
has both advantages and limits. However, the popular tool used by
entrepreneur is SWOT matrix.
The SWOT matrix helps entrepreneur to list out strategies in line with its
Strengths, Weaknesses, Opportunities and Threats. However, it does not
mean all strategies based on SWOT matrix, are being implemented by
entrepreneur later.
The SWOT matrix analysis process is developed on the following steps:
(1) Listing out huge opportunities and threats affected by external

environment as well as identifying the strengths and the weaknesses of
entrepreneur.
(2) Combining the internal strengths with the external opportunities to
develop the SO strategy.
(3) Combining the internal weaknesses with the external opportunities to
develop the WO strategy.
(4) Combining the internal strengths with the external threats to develop the
ST strategy.
(5) Combining the internal weaknesses with the external threats to develop
WT strategy.

Opportunities

Strengths
Weaknesses
SO strategy: Bringing WO

strategy:

into full play the internal Overcoming

the

strengths to make use of entrepreneur’s
opportunities affected by weaknesses by making
external environment

Threats

ST

Strategy:

use

of

convenient

opportunities
Taking WT strategy: Minimizing

advantage of the internal the threats affected by
strengths

to
24

overcome external environment and


threats

affected

external

by overcoming

the

business weaknesses

environment
Table 1.1. SWOT Matrix Model
1.2.4.3 Decision stage
1.2.4.3.1 The QSPM matrix utilizes the collected information by the input stage
to evaluate the strategies’ feasibility by the combination stage. In other word,
the QSPM matrix provides scientific essentials in making quantitive analysis of
different strategies. By the ways, manager’s vision becomes more objective,
more accuracy before making out strategic decisions.
The necessary steps to develop the QSPM matrix:
(1) Listing out external opportunities and threats as well as the entrepreneur’s
strengths and weaknesses. Identifying the importance of each factor
following the level of marking point from 1 to 4.
(2) Selecting the strategies underlined by the combination stage. Evaluating
each strategy based on opportunities, threats, strengths, weakness factors
following the level of marking point from 1 to 4.
(3) A total mark of each strategy is accumulated between the mark of
importance evaluation on each factor and the mark of strategy evaluation.
1.2.4.3.2 The GREAT matrix is rather popular to be used in making analysis of
strategic management, competitive strategy. GREAT allows the strategy to be
selected on the basis of factors’influence rate. 8
G: Gain
R: Risk
E: Expense
A: Achievability
T: Time
1.2.5 Notes to the strategy development process
1.2.5.1 Cultural side

8

McGraw, (2007). Strategy. Sydney, Hill Company.

25