DEVELOP STRATEGY FOR THE POST TELECOMMUNICATION INSTITUTE OF TECHNOLOGY IN THE PERIOD OF 2015 2020

DEVELOP STRATEGY FOR THE POST &
TELECOMMUNICATION INSTITUTE OF
TECHNOLOGY IN THE PERIOD OF 2015-2020

1


TABLE OF CONTENT
TABLE OF CONTENT..................................................................................................................2
BS : Business Strategy............................................................................................................................................5
IT : Information technology...................................................................................................................................5
P&T : Post and Telecommunication.....................................................................................................................5

INTRODUCTION...........................................................................................................................8
1. THE URGENCY OF RESEARCH TOPIC:....................................................................................................8
2. RESEARCH OVERVIEW..........................................................................................................................9
3. THESIS MISSIONS:...............................................................................................................................10
3.1. Thesis objectives:............................................................................................................................10

3.1. THESIS OBJECTIVES:........................................................................................................10
3.2. Thesis missions:..............................................................................................................................10

3.2. THESIS MISSIONS:..............................................................................................................10
4. RESEARCH OBJECTS AND SCOPE ........................................................................................................10
4.1 Research objects..............................................................................................................................10

4.1 RESEARCH OBJECTS..........................................................................................................10
4.2 Research scope ...............................................................................................................................10

4.2 RESEARCH SCOPE .............................................................................................................10
5. RESEARCH METHODOLOGY.................................................................................................................11

6. THESIS’S ANTICIPATING CONTRIBUTIONS...........................................................................................11
7. THESIS STRUCTURE:............................................................................................................................11

CHAPTER I : THEORETICAL BASE.......................................................................................12
1.1. CONCEPT OF STRATEGIC ADMINISTRATION ....................................................................................12
1.1.1 Concept of strategy:......................................................................................................................12

1.1.1 CONCEPT OF STRATEGY:..............................................................................................12
1.1.2. Nature of strategy .......................................................................................................................................13
1.1.3 Mission of strategy:......................................................................................................................................14
1.1.4. Characteristics of strategy:..........................................................................................................................15
1.1.5. Mission.........................................................................................................................................................16
1.1.6. Vision...........................................................................................................................................................17
1.1.7. Objectives....................................................................................................................................................18
1.1.8. Internal environment...................................................................................................................................19

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1.1.9. External environment..................................................................................................................................19

1.2 Developing strategy.........................................................................................................................19

1.2 DEVELOPING STRATEGY.................................................................................................19
1.2.1. Analysing external environment ...............................................................................................................20
1.2.2. Environment analysis:.................................................................................................................................26

1.3. SWOT Analysis ...............................................................................................................................31

1.3. SWOT ANALYSIS ................................................................................................................31

1.4. Strategic control and evaluation ....................................................................................................32

1.4. STRATEGIC CONTROL AND EVALUATION ...............................................................32
CHAPTER II: ANALYZING STATUS AND PROPOSING STRATEGY .............................34
2.1. Introduction to the Institute: ..........................................................................................................34

2.1. INTRODUCTION TO THE INSTITUTE: .........................................................................34
2.1.1 .General introduction ..................................................................................................................................34
2.1.2. Position, roles and functions:......................................................................................................................34
2.1.3. Operation:....................................................................................................................................................34
2.1.4. Results of training and research activities in the Institute..........................................................................35

2.2. Analysis of strength and weaknesses the Institute .........................................................................36

2.2. ANALYSIS OF STRENGTH AND WEAKNESSES THE INSTITUTE ..........................36
2.2.1. Institute’s products......................................................................................................................................36
2.2.2. Organization................................................................................................................................................41
2.2.3. Operation principles of the Institute ..........................................................................................................43
2.2.4. Financial potentials and material bases of the Institute .............................................................................44

2.3. Analysis of commercial environment of Institute............................................................................48

2.3. ANALYSIS OF COMMERCIAL ENVIRONMENT OF INSTITUTE.............................48
2 .4 Internal analysis of the Institute: ...................................................................................................57

2 .4 INTERNAL ANALYSIS OF THE INSTITUTE: ................................................................57
2.4.1. Analysis of value chain:..............................................................................................................................57
2.4.2. Analysis of core competence .....................................................................................................................59
2.4.3 SWOT analysis of the Institute ...................................................................................................................61

CHAPTER III. ..............................................................................................................................64
DEVELOPING STRATEGIES, PROPOSING OPTIONS, SUGGESTIONS FOR THE
INSTITUTE IN THE PERIOD OF 2010-2012............................................................................64

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3.1. Developing strategies for the Institute ...........................................................................................64

3.1. DEVELOPING STRATEGIES FOR THE INSTITUTE ...................................................64
3.1.1. Message of Institute’s mission ..................................................................................................................64
3.1.2. Institute’s vision..........................................................................................................................................64
3.1.3. Strategy of the Institute in the period of 2010 - 2012................................................................................65
3.1.3.1. Strategy of products and servicse ...........................................................................................................65
3.1.3.2. Institute’s innovation strategy on organization.......................................................................................69
3.1.3.3. Income and yield strategies of Institute .................................................................................................71
Source: Plan 2008 of the Institute.........................................................................................................................72
3.1.3.4. Quality control strategy by internal standards.........................................................................................72
3.1.3.5. Strategy to Unite "PTIT" trademark........................................................................................................73
3.1.3.6. Strategy to improve sales system.............................................................................................................74
3.1.3.7. Strategy on human organization..............................................................................................................75
3.13.8. Financial management strategy.................................................................................................................75
3.1.3.9 Strategy for relationship............................................................................................................................76

3.2. Strategic solutions: ........................................................................................................................77

3.2. STRATEGIC SOLUTIONS: ................................................................................................77
3.2.1. Institute Management :................................................................................................................................77
3.2.2 Leading culture and strategy:......................................................................................................................79
3.2.3 Plans: ............................................................................................................................................................80

3.2.4 Quality control:.............................................................................................................................................82

3.3 Recommendations : ........................................................................................................................82

3.3 RECOMMENDATIONS : ....................................................................................................82
CONCLUSION..............................................................................................................................84

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ABBREVIATIONS
BS

: Business Strategy

IT

: Information technology

P&T

: Post and Telecommunication

PTIT

: Posts & Telecommunications Institute of Technology

R&D

: Research and Development

SWOT

: Strengths, weaknesses, opportunities and threats

VNPT

: Vietnam Post and Telecommunications Group

WB

: World Bank

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LIST OF FIGURES
Figure 1.1: Overall strategic administration model
Figure 1.2: Development process for business strategy
Figure 1.3: 5 Forces model of M. Porter
Figure 1.4: Value chain model
Figure 2.1: Competitive active force of the Institute
Figure 3.1: Overall strategy of the Institute.
Figure 3.2: Defining model of business plan implementation program

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LIST OF TABLE
Table 1.1: Steps to define business targets in enterprise

Table 1.2: SWOT matrix (Strength, Weakness, Opportunity, Threat)
Table 2.1: Institute’s labor
Table 2.2: Some key financial targets in 2008
Table 2.3: Scale of public and unpublic students in the period of 2010-2014.
Table 2.4: Enrolment statistics and training quality access in 2010
Table 2.5: SWOT analysis
Table 3.1: Revenue indicators of the Institute

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INTRODUCTION
1. The urgency of research topic:
Training, research and technology transfer in Vietnam have developed quickly
in both quality and quantity, contributing much to the national modernization and
industrialization. State-owned schools were the only to be seen in the past, but now
Vietnamese education is very abundant and various with a lot of training units,
including private, and semi-public schools; research, and technology transfer units
that belong to all economic sectors, social, occupational and even foreign
organizations. This serious development of training, research and technology
transfer in Vietnam is originated not only from the essentially objective economic
demands of diversifying and multilateralizing external economic relationships, but
also from the strong support of Party and Government. A number of decrees,
policies, and methods are important clues in management and improvement of
training, research and technology transfer all over the country, boosting up the
national career of training, research and technology transfer.
However, due to the shifting economy, Vietnam is now coping with some
difficulties. In general, market factors have not been defined completely in
combination with State economic management is under innovation, in appearance,
methods and contents to fit with State functions in market economy. In this

background, training, research and technology transfer in our country are now just
in the stage of switching and developing. Many activities of training, research and
technology transfer have not been executed or have not called much attention from
economic sectors like domestic enterprises… State management in training,
research and technology transfer has not met the requirements of economic
development in general and support for enterprises in particular. Especially, State
management in training, research, and technology transfer is not properly efficient
for schools, institutes and enterprises.

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Post and Telecommunications Institute of Technology (hereinafter be called
Institute) is established according to the Decision no. 516/TTg, issued on July 11 th
1997 by Prime Minister. Post and Telecommunications Institute of Technology
belongs to the Vietnam Post and Telecommunications Group (formerly, Vietnam
Post and Telecommunications Corporation) and operates towards the purpose of
combining research and training activities to meet the actual demands of business.
This is the pilot model to form mechanism to mobilize resources (both in economics
and actual environment) from developed State-owned enterprises for the activities
of research and training to meet the actual requirements of enterprises when the
State budget for these activities is still limited as well as the ability of applying
these activities into actual life is not high.
However, being a State career unit that belongs to Post and Telecommunications
Group and operates like a career unit, the Institute is bound by State regulations for
a career unit. In addition, although the Institute is the combined model of training
and business – a University belongs to enterprise, it does not receive any special
mechanism. Organization is changed slowly; training and research activities are
rather separate, therefore the relationship between training and research that can
build up the Institute’s strength is not closed.

2. Research overview
In the recent years, there are some authors composing researches on training,
research, and technology transfer, but there is no deep research on policies,
education quality, and financial mechanism for education. Scientific researches just
mention about mechanism and suggest some recommendations to boost up research,
but leaving the logical connection between research and business. Moreover,
researches mainly focus on a detail aspect, but not the bind and structure of
organization to achieve expected goals. Therefore, this thesis will focus on the topic
“Develop the Strategy for Post and Telecommunications Institute of Technology in
the period of 2015-2020”. The thesis will clarify kinds, methods, and content of the
development strategy of Post and Telecommunications Institute of Technology in

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the intergration period of 2010-2012.
3. Thesis missions:
3.1. Thesis objectives:
Basing on the theoretical and practical management of research and training
in some countries in combination with actual business to meet social demands, the
thesis will clarify the overall strategy and the components of that overall strategy
for the Institute in market economy in the period of 2010-2012
3.2. Thesis missions:
- Interpreting the basic theory of the strategies in research, training and
technology transfer units.
- Analysing the actual situation of management mechanism, operation method;
evaluating strong and weak points, as well as results after 12 years of operation.
- Proposing development strategy of Institute in the field of training, research, and
technology transfer of Post and Telecommunications Institute of Technology in the
period of 2010-2012.

4. Research objects and scope
4.1 Research objects
Theoretical and practical problems in the overall strategy relating to training,
research, and technology transfer of Post and Telecommunications Institute of
Technology.
4.2 Research scope
+ Mainly focusing on analyzing the organization of training, research, and
technology transfer in Post and Telecommunications Institute of Technology.
+ Proposing overall stratergy to change the Institute from a career unit into
business one in the field of training, research, and technology transfer of Post and

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Telecommunications Institute of Technology in the period of 2010-2012.
5. Research methodology
To achieve these above objectives, the methods of dialectual materialism,
historical meaterialism, aggregate analysis, statistics, comparation and combination
of theory and practice are used.
6. Thesis’s anticipating contributions
- In theory, the thesis is the reference material for not only State management
offices of education and training, scientific researches; but also for State enterprises
relating to training, research, and technology transfer to improve the roles and
operational effects of research and training organizations in international economic
integration.
- In practice, the thesis will contribute to the actual management, and
operation

of

training,

research,

and

technology

transfer

of

Post

and

Telecommunications Institute of Technology in the period of 2010-2012.
7. Thesis structure:
In addition to the introduction and conclusion, the thesis consists of 3
following chapters:
- Chapter 1: Theoretical base
- Chapter 2: Analyzing of actual situation in Post and Telecommunications
Institute of Technology
- Chapter 3: Proposing development strategy for Post and Telecommunications
Institute of Technology in the period of 2010 - 2012

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CHAPTER I : THEORETICAL BASE

1.1. Concept of strategic administration
1.1.1 Concept of strategy:
In normal concept, strategy is a military term to define a plan of force
distribution and exhibition to defeat the enemy or to gain military target. Carl von
Clausewitz - 19th century artist of war - described strategy as “planning and
forming fighting campaign. These campaigns will decide the contribution of each
individual.” Historian Edward Mead Earle described strategy as “the art of control
and make use of force of a nation or an alliance of nations to ensure and increase
effectiveness for our own benefits”.
Nowadays, concept of strategy is used commonly and considered as the basic
for operation of trading enterprises. There are many strategy concept such as
strategy is the art of developing stable competition advantage to defend (M.Porter),
strategy is model on targets, purposes and plans to reach that target (Kenneth,
1965) or strategy is the red line for every activity of an organization (Ansoff,1965),
strategy is a plan to control and make use of organization forces such as himan,
assets, finnancial, etc to ensure and increase our own benefits. Kenneth Andrews is
the first person to raise up this idea in the classical boook The Concept of
Corporrate Strategy. According to him, strategy is what an organization should do
based on strenths and weaknesses in the situation of oppotunities of threads.
Strategic administration is a complex arrangement of strategies, operations and
business results, including human resource, organization, management, technique,
and treatment methods. The effective combination of these factors will support
strategic directions and perfect service provision. This is a continuous activity to
establish and maintain strategic directions and business of an organization; daily
decision-making to solve the immerging problems and business challenges. As a
part of strategic idea about business development, enterprises should point out a
detail direction. However, this operational direction can be changed by following

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impacts on policy (new targets) or on business (increasing service demand). This
also means that enterprises should have adjustments to go in right or new direction.
Similarly, it also relates to the management of enterprise when the relationship with
other partners is changing.
Typical strategic administration model:

1.1.2. Nature of strategy
Business strategy of an enterprise is a business model; an operation program of
the enterprise; method of using resources; the foundation for solving all problem in
enterprise.
Business strategy shows the concept of value from the enterprise, the spirit of
the management board, the evaluation of managers about the objective and
subjective context of the enterprise. Only when the managers evaluate accurately
the objective and subjective context can a right business strategy be drawn out.
Otherwise, the enterprise can get mistake.
Business strategy is the creativeness in management, i.e the enterprise, basing on
the certain targets, rearrange an effective and competitive management system. If

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an enterprise just imitates the other, it can not get a real and sustainable
development. Therefore, developing a business strategy must base firstly on the real
situation of the enterprise. Two enterprises can be at the same region, the same
products, the same scale but the business strategies can not be entirely the same as
their subjective context are different. At the same time, the creativeness in
management must be connected with that of organization and technology so that
business strategy can be effective.
Business strategy is the action plan of the enterprise. The development of

strategy is important, but its implementation is even more. If the strategy is not
implemented, it is nonsense. In order for the strategy to be executed, the whole staff
should know clearly about the strategy, and change it into annual and partial plans
that are feasible.
Business strategy shows the competitiveness of the enterprise. When developing
the strategy, enterprise should analyse its own objective context, opportunities and
threats. The subjective context also needs tobe analysed to show the enterprise’s
strengths as well as the weaknesses. Business strategy of the enterprise must
combine the opportunities that objective context brings with enterprise’s strengths
as well as overcome the threats and weaknesses of the enterprise. Only in this way
can a good business strategy be drawn out.
1.1.3 Mission of strategy:
Strategic administration is very important because enterprises always have to
solve efficiently all immerging challenges, including both opportunities and
difficulties. Nowadays, organizations are towards external-orienting service
supplying, a basic conversion from traditional internal-orienting one. Meanwhile,
big opportunity of innovation may appear from communication information
technology as well as available financial sources.
There are 5 closed missions of strategic administration:

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- Establishing a strategic perspective that describes future images of the
enterprise and clarifies expected targets. This can provide long-term direction
towards the expected target and initiate actions for the enterprise.
- Establishing goals – converting strategic perspective into detail results that
must be achieved.
- Developing strategies to gain expected goals.
- Implementing and controlling selected strategies efficiently.

- Assessing the results and adjusting perspective, long term directions
1.1.4. Characteristics of strategy:
Overall characteristic: trading strategy is the overall chart on enterprise’s
development that decides the relationship between enterprise and objective
environment. Overall characteristic of trading strategy is shown in 03 aspects: being
suitable to overall trend of enterprise, being direction creed for all enterprise’s
activities; being suitable to nation’s development trend on economy, technique,
society in a specific time; being suitable to integration of the world.
Overall characteristic of trading strategy requires review of all parts of enterprise,
analysis of enterprise’s situation, as well as national and international situation.
Without overall opinion, we cannot have good trading strategy.
Foresee characteristic: In the past many enterprises did not have strategy, just did
what they met, and followed the trend only so the work was hark but the efficiency
was not so high. One reason for this situation is lack of development trend of
enterprises. Therefore, if we want to develop TS, we have to ensure the prediction
of development trend in economy, technique of society. A successful strategy
usually is based on correct prediction.
Competitiveness: Without competitiveness, TS to develop and implement is
unnecessary. Therefore, competitiveness is the most characteristic of TS. In this
modern time, there is no enterprise working n an environment without
competitiveness. TS shall concentrate on how to make advantage to compete and
gain the win.

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Risks: TS is development master planning for enterprise in the future, but living
environment of the enterprise in the future is not firm, and can be changed. The
longer time duration of strategy is, the more unstable factors of objective
environment has. The risk requires enterprise to stand high and see far, with careful

watch to have right strategy.
Now we are at the first stage of market economy, macro environment of enterprises
is changing so much; therefore, the strategy of enterprises should not consider too
long to ensure the flexibility and practicability of strategy.
Professional and creative characteristic: enterprises can base on their own
capability to select the right field suitable to strengths, avoid monopoly. Almost all
enterprises who can do that gain success and development. However, technical
achievement and market competitions are unlimited so enterprises should update
new technologies. Technical creation is an important measure to ensure the
existence and development, which is also an important characteristic on TS of small
and medium enterprises.
Relative stability: TS of enterprises shall be relatively stable in a certain period.
Otherwise, it will be meaningless with practical activities of enterprises. Objective
environment and practical activities of enterprises are moving continuously. TS
should also be adjustable to be suitable to objective environment; it cannot be one
side stable and cannot be changeable but relatively stable.
1.1.5. Mission
The mission must deliver the meaning of the enterprise’s existence and operation.
The content of the mission consists of:
-

Customers: who use the products

-

Products/Services: what the enterprise’s main products/services are

-

Market: where the enterprise compete

-

Technology: technology is the biggest concern in the enterprise or not

-

Development and profit concerns: the enterprise stick to profit or not

-

Business theory: what enterprise’s belief and priorities are

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-

Self evaluation: what enterprise’s competitive advantages are

-

Public image concern: the enterprise care about its public image or not

-

Employee concern: the enterprise treats its employees well or not

-

Business plan process
Table 1.1: Steps to define business targets in enterprise

step 1

step 2

step 3

step 4

step 5

step 6

conceive

analyze

review

build the

assess the implemen

the initial

the

the idea

business

business

t the

idea

internal

about the

mission

mission

business

about the

and

business

business

external

mission

mission

issues

mission

To build the enterprise’s vision is to plan for the enterprise’s future.
The basics of the vision are:
Managers

-

Customers

-

Employees

check
and
adjust
the
business
mission

1.1.6. Vision

-

step 7

The vision ensures:
-

To be simple, clear and straightforward

-

To enable big changes and attract human resource

-

To gather resources

-

To be reviewed by senior managers

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1.1.7. Objectives
To establish strategic objectives:
-

Long-term objectives (over 3 years)

-

Annual objectives (under 1 year)

The long-term objectives are to specify the enterprise’s strategic mission and vision.
Objectives are specific status, numbers…that the enterprise would like to archive.
Each office/department should build its specific and measurable objectives to
contribute to the overall objectives.
The common long-term objectives comprise:
-

Profit

-

Business efficiencies

-

Competitive advantages

-

Human resource development

-

Relationship with employees

-

Technological Leading capability

-

Social duties

Characteristics of strategic objectives:
-

Feasibility

-

Competitiveness

-

Flexibility

-

Measurability

-

Motivation

-

Reasonability

-

Clarity

Annual objective is the objective that the enterprise must archive every year to
reach the long-term objectives. Annual objectives are very necessary for the

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strategy implementation. They follow the SMART principle (Specific, measurable,
assignable, realistic and time-bounded).
1.1.8. Internal environment
Internal environment is the environment within the enterprise, includes available
resources, such as, visible resources (finance, human, organization…) and invisible
resources (technology, idea, fame…)
1.1.9. External environment
External environment comprises objective and macroscopic elements in which the
enterprise exists and develops. The external environment may affect the enterprise
in both sides, bringing back both opportunities and obstacles.
1.2 Developing strategy
Developing strategy can be divided into 5 steps:
(1). Selecting key missions and targets for the enterprise.
(2). Analyzing external environment to define opportunities and threats.
(3). Analyzing the internal environment to define strengths and weaknesses ò
the enterprise.
(4). Selecting strategy basing on resources, abilities, and key competence to
cope with threats and utilize the opportunities in external environment.
(5). Implementing strategy.
The mission of analyzing the internal and external environment and then

selecting suitable strategy are being seen as strategic mission. Strategy
implementation includes designing the organization and controlling system to take
the strategy into operation.
Developing business strategy is the collection of activities that change income
into outcome. The strategy is based on the enterprise’s mission. This mission
defines the business target and what to be done. Basin on this mission, the
management board can point out targets. These targets present clearly the mission

19


of organization and are used to develop action plan and access the process. These
targets are lead by practices in environment.
The process of developing strategy is shown as follow:

ENTERPRISE’S
ENTERPRISE’SSTRATEGY
STRATEGY

BUSINESS
BUSINESSANALYSIS
ANALYSIS

INTERNAL
INTERNALANALYSIS
ANALYSIS

STRATEGY
STRATEGYGENERATION
GENERATIONAND

AND
SELECTION
SELECTION
Figure 1.2 – Process of developing business strategy
1.2.1. Analysing external environment
The strategy must base on the anticipating environment conditions; therefore,
good strategy administration depend much on the knowledge of environment
conditions that the enterprise is facing with. External environment that the
enterprise often cope with includes macro and sectorial environment.
a/ Macro environment: In fact, all enterprises and sectors are in a wide macro
environment, including 6 segments: economy, technology, social culture,
anthropology, policy and globalization. Changes in macro environment can impact
directly on any forces in any sector. Therefore, it can affect other forces and even
itself. Finally, it can destroy the attractiveness of a sector.

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With the business environment in Vietnam, according to the evaluation of
World Bank (WB) in the report on doing business 2008, Vietnam ranks the 91th
position in 187 surveyed economy and increase 13 ranks in comparison with 2007.
Business environment in a country is evaluated by WB basing on 10 criteria, since
the establishment to disintergaration of an enterprise (the criteria of establishing,
licensing, recruiting and sacking, asset registering, loan borowing, investor
protecting, tax paying, global trading, contract implementing, enterprise
disintegrating). According to the evaluation of WB, in 2008, business environment
of Vietnam has been improved considerably, but there remain many problems that
need to be solved to facilitate the existance and sustainable development of the
enterprise.
b/ Analysing sectorial environment

Sectors are different in ecnomic, competitive characteristics, profit potentials in
the future. economic characteristics depends on the factors, like scale, market
growth, technology change, geographic barriers of markets (local or global),
number and scale of customers and sellers, product scale of sellers, distribution
styles… The competitiveness in different sectors is also different. In addition,
sectors are also different in competitiveness focal points; it can either be price or
quality…
Administrators can not create a long term direction or strategic decision if they
do not know exactly about the strategic status of the enterprise, the competitiveness
conditions that the enterprise is facing to, the way to form the accordance between
the resources and ability with the available conditions.
In order to analyse sectorial factors that directly affect enterprise’s operation,
the model of 5 forces of Micheal E. Porter is the most effective.

c/ The model of five competitive forces:

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Micheal E. Porter has found out 5 factors that affect most the competitiveness
in an industry, supporting the admnistrator to realize the opportunities as well as the
threats that the enterprise must cope with in a sector:
-

Threats from new competitors,

-

Negotiability of suppliers,

-

Negotiability of customers,

-

Threats from alternative products and services,

-

The competitiveness intensity in the sector.

However, there are some advantages and disadvantages when this model is applied
into special case of a certain enterprise. Therefore, the most important when using
this model is the accurate definition of each factor in the model:

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New potential
competitors

Risk of competitors
Ability of

Negotiability

Ability of

making

Competitors in the

bargain of

same sector

sellor

making
bargain of
customer

Negotiability of
customers

of sellor

Risk of competitors

Alternative
products
Figure 1.3 –Model of 5 forces of M.Porter
The competition model shows that when the competition is high, the ability of
enterprise to increase price and profit. Mission of the administrators is to be aware
of opportunities and threats that the changes in 5 forces can bring. Basing on that, a
suitable strategy can be developed.
Analyzing competitors in the sector. Sector is defined to be a group of
enterprises that supply one product or service that can be alternative. Economists
point out that alternative products are flexible. When the price of a product

23


increases that raise the demand for the alternative product, these two products can
be considered to be the alternative.
One very important thing for an enterprise to analyse the competitors in the
same sectors is that it must know exactly the attitude of these competitors towards it
and other companies in the same sector. The enterprise should collect information
about the strategies, targets, strengths, weaknesses and reactions of the competitors.
The enterprise needs to know the strategy of each competitor to foresee the methods
and reactions. When the enterprise knows the strengths and weaknesses of the
competitor, it can complete the strategy to utilize the weaknesses and avoid
strengths of the competitors. Many enterprises run the same business in a sector, so
the enterprise must balance its resources to complete its own strategy. Enterprise
should know exactly about its competitors: Who are their competitors? How are
their strategies? What are their targets? What are their strengths and weaknesses?
How are their reactions?
New potential competitors: Potential competitors are the ones that are not in the
same sector but can affect the sector in the future. Whether the number of
competitors is small or big, their impacts on the sector are strong or weak depends
on the attraction of the sector. This is shown by productivity ratio, customer’s
number, enterprises’ number in the sector.
Negotiability of customers: customer is a competitive pressure that can affect
the overall operation and business of the sector. Customer brings pressure of price,
product quality, embedded services, and they are the one that control the
competitiveness in the sector through decision-making. Customer of an enterprise
can either be an end-user of the products or the distributor to end-users like
agencies. When analyzing, the enterprise should pay attention to customer’s
importance. The advantage of analyzing the competition pressure from customers

help the enterprise to define the scale and importance of the sector. However, if the
information about customers is not accurate, the scale of sector can easily be wrong.

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Negotiability of supplier. Number and scale of the suppliers decide the
competitiveness pressure, their negotiation rights in the sector. The supplier can be
treated as a threat when they can raise the price or decrease the quality of material
input that they supply for the enterprise. On the other hand, if the supplier is weak,
it is really a chance for the enterprise to make bargain of price and ask for higher
quality. However, the ability of suppliers with enterprise depends on the relative
rights between them and the enterprise.
Threat from alternative products. Alternative products are the products of
sectors that serve for similar customers to the analyzing sector. The existence of
alternative products shows a competition that limits the ability of setting high price;
therefore reduce its ability of creating profit. The threats from alternative products
increase when:
-

The customers do not have to pay much during product transfer,

-

The price of alternative products is better,

-

The quality and efficiency of alternative products are better than current
product in use

In fact, these special products highly appreciated by customers will be less
influenced by this threat.
Actuallee enterprises in the same industry often differ from the other
companies in these factors: Distribution channel, market segment, product quality,
technology, pricing, customer service, advertising and promotion. Because of this
difference, most sectors will form groups of enterprises in which each member to
pursue similar strategies, known as group strategy. Competition between companies
in the same strategice group is often stronger than the competition with foreign
enterprises and enterprise in the same group of strategies often have similar
positions on market, with similar product, the similar action strategy.
Through the above analysis, we can see that model on 5 competitive forces
and strategic group is useful tool for thinking and analyzing the nature of

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