Luận văn xây dựng chiến lược kinh doanh công ty du lịch viettravel

F
LUẬN VĂN THẠC SĨ
Xây dựng chiến lược kinh doanh Công ty Du Lịch Viettravel

THESIS TITLE

BUSINESS STRATEGY BUILDING FOR
VIETTRAVEL CO., LTD


ACKNOWLEDGEMENTS
Our appreciation goes to the Master of Business Administration Programs –
Special mention also goes to all Lecturers of the Program provided us with
valuable knowledge during the MBA course so that we can sum up into this as a
final report.
Our gratitude also goes to the VIETTRAVEL Directorate and its staff has
facilitated our Group during the practice time there.
Appreciation also goes to all the Students of and “Mama” staff for
encouraging and helps us during the MBA course and report time.
Lastly, our appreciation goes especially to the Group’s families who
facilitate us to fully participate in the MBA course.
Although our Group has tried our best to perform this Capstone Project
Report within our capacities but it definitely still have unavoidable deficiencies. We
are thus hope that we will continuously receive more valuable comments from you
all for the next step – the strategy implementation of VIETTRAVEL.

2


TABLE OF CONTENTS

Page

F..............................................................................................................................................1
ACKNOWLEDGEMENTS.................................................................................................2
LIST OF ABBREVIATIONS..............................................................................................8
a. The necessity of topics.................................................................................................10
a.The necessity of topics.....................................................................................................10
b. Research purposes........................................................................................................12
b.Research purposes...........................................................................................................12
c. Object and scope of the research..................................................................................12
c.Object and scope of the research....................................................................................12
d. Research methodology.................................................................................................12
d.Research methodology....................................................................................................12
e. Expected output............................................................................................................12
e.Expected output...............................................................................................................12
f. Lay-out of Capstone Project Report..............................................................................13
f.Lay-out of Capstone Project Report..............................................................................13
1. Basic theory of strategic management..........................................................................14
1. Basic theory of strategic management..........................................................................14
1.1. Concept of strategy....................................................................................................14
1.1.Concept of strategy.......................................................................................................14
1.2. Concept of business strategy.....................................................................................15
1.2.Concept of business strategy.......................................................................................15
1.3. Business strategy clarification...................................................................................15
1.3.Business strategy clarification.....................................................................................15
1.4. Basic model of business strategy management.........................................................16
1.4.Basic model of business strategy management..........................................................16
2. Strategy building for an enterprise...............................................................................18
2. Strategy building for an enterprise...............................................................................18
2.1. Business environment analysis..................................................................................18

2.1.Business environment analysis....................................................................................18
2.1.1. External business environment...............................................................................18
2.1.1.External business environment................................................................................18
2.1.2. Macro environment analysis..................................................................................18
2.1.2.Macro environment analysis....................................................................................18
2.1.2.1. Economic environment........................................................................................18
2.1.2.1.Economic environment..........................................................................................18
2.1.2.2. Technological environment.................................................................................18
2.1.2.2.Technological environment...................................................................................18
2.1.2.3. Sociocultural environment..................................................................................18
2.1.2.3.Sociocultural environment.....................................................................................18
2.1.2.4. Demographic environment..................................................................................19
2.1.2.4.Demographic environment....................................................................................19
2.1.2.5. Political - Legal environment..............................................................................19
2.1.2.5.Political - Legal environment................................................................................19
2.1.2.6. Global environment.............................................................................................19

3


2.1.2.6.Global environment................................................................................................19
2.1.3. Micro environment analysis...................................................................................19
2.1.3.Micro environment analysis.....................................................................................19
2.1.3.1. Bargaining power of buyers................................................................................19
2.1.3.1.Bargaining power of buyers..................................................................................19
2.1.3.2. The Bargaining power of suppliers analysis.......................................................20
2.1.3.2.The Bargaining power of suppliers analysis........................................................20
2.1.3.3. Rivalry among competing firm analysis.............................................................20
2.1.3.3.Rivalry among competing firm analysis...............................................................20
2.1.3.4. Threat of new entrants analysis...........................................................................20

2.1.3.4.Threat of new entrants analysis............................................................................20
2.1.3.5. Threat of substitute products analysis.................................................................21
2.1.3.5.Threat of substitute products analysis.................................................................21
2.1.4. Internal environment analysis................................................................................21
2.1.4.Internal environment analysis..................................................................................21
2.2. SWOT Matrix Tool...................................................................................................21
2.2.SWOT Matrix Tool......................................................................................................21
2.3. External Factor Evaluation Matrix (EFE Matrix).....................................................23
2.3.External Factor Evaluation Matrix (EFE Matrix)....................................................23
2.4. Internal Factor Evaluation Matrix (IFE Matrix)........................................................23
2.4.Internal Factor Evaluation Matrix (IFE Matrix)......................................................23
2.5. Internal - External Matrix (IE Matrix)......................................................................24
2.5.Internal - External Matrix (IE Matrix)......................................................................24
CHAPTER II: COMPANY’S BUSINESS ENVIROMENT ANALYSIS.....................25
1. Overview about VIETTRAVEL..................................................................................25
1. Overview about VIETTRAVEL...................................................................................25
1.1. Foundation and development....................................................................................25
1.1.Foundation and development......................................................................................25
1.2. Company’s organization structure.............................................................................27
1.2.Company’s organization structure.............................................................................27
1.2.1. Head office in Hanoi..............................................................................................27
1.2.1.Head office in Hanoi..................................................................................................27
1.2.2. Representative office in Hochiminh city................................................................28
1.2.2.Representative office in Hochiminh city.................................................................28
1.2.3. Partners system.......................................................................................................28
1.2.3.Partners system..........................................................................................................28
1.3. Main products and services.......................................................................................28
1.3.Main products and services.........................................................................................28
1.3.1. Tourism products and services...............................................................................28
1.3.1.Tourism products and services................................................................................28

1.3.2. Other kind of products and services.......................................................................28
1.3.2.Other kind of products and services........................................................................28
1.4. Some results of business operations of the company................................................28
1.4. Some results of business operations of the company................................................28
2. External business environment analysis.......................................................................29
2. External business environment analysis......................................................................29
2.1. Macro environment analysis.....................................................................................29

4


2.1. Macro environment analysis......................................................................................29
2.1.1. Economic environment...........................................................................................29
2.1.1.Economic environment.............................................................................................29
2.1.2. Technological environment....................................................................................31
2.1.2.Technological environment......................................................................................31
2.1.3. Socio-cultural environment....................................................................................31
2.1.3.Socio-cultural environment......................................................................................31
2.1.4. Demographic environment.....................................................................................32
2.1.4.Demographic environment.......................................................................................32
2.1.5. Political- Legal Environment.................................................................................32
2.1.5.Political- Legal Environment...................................................................................32
2.1.6. Natural environment...............................................................................................33
2.1.6.Natural environment.................................................................................................33
2.1.7. Global environment................................................................................................34
2.1.7.Global environment...................................................................................................34
2.2. Micro environment analysis......................................................................................35
2.2.Micro environment analysis........................................................................................35
2.2.1. Bargaining power of buyer analysis.......................................................................35
2.2.1.Bargaining power of buyer analysis........................................................................35

2.2.2. Bargaining power of suppliers...............................................................................36
2.2.2.Bargaining power of suppliers.................................................................................36
2.2.3. Rivalry among competing firms.............................................................................37
2.2.3.Rivalry among competing firms...............................................................................37
2.2.4. Threat of new entrants analysis..............................................................................38
2.2.4.Threat of new entrants analysis...............................................................................38
2.2.5. Threat of substitute products..................................................................................38
2.2.5.Threat of substitute products...................................................................................38
2.3. External Factor Evaluation........................................................................................39
2.3.External Factor Evaluation.........................................................................................39
3. Internal environment analysis......................................................................................40
3. Internal environment analysis.......................................................................................40
3.1. Analysis of current strategy.......................................................................................40
3.1.Analysis of current strategy.........................................................................................40
3.2. Competitive edges.....................................................................................................41
3.2.Competitive edges.........................................................................................................41
3.3. Origin of sustainable completion advantage.............................................................44
3.3.Origin of sustainable completion advantage..............................................................44
3.3.1. Resources................................................................................................................44
3.3.1.Resources....................................................................................................................44
3.3.1.2. The company now has the closed travel business procedure including the stages:
..........................................................................................................................................44
3.3.1.2.The company now has the closed travel business procedure including the
stages:..................................................................................................................................44
3.3.1.3. Infrastructure and business production capacity.................................................45
3.3.1.3.Infrastructure and business production capacity...............................................45
3.3.1.4. Human resource...................................................................................................45
3.3.1.4.Human resource.....................................................................................................45

5

3.3.1.5. Financial Source..................................................................................................46
3.3.1.5.Financial Source.....................................................................................................46
3.3.1.6. Business capabilities of VIETTRAVEL.............................................................47
3.3.1.6.Business capabilities of VIETTRAVEL...............................................................47
3.3.2. Market....................................................................................................................48
3.3.2.Market........................................................................................................................48
3.3.2.1. Outbound Market................................................................................................48
3.3.2.1.Outbound Market..................................................................................................48
3.3.2.2. Inbound market....................................................................................................49
3.3.2.2.Inbound market......................................................................................................49
3.3.2.3. The values of the VIETTRAVEL brand.............................................................50
3.3.2.3.The values of the VIETTRAVEL brand..............................................................50
3.3.2.4. VIETTRAVEL brand awareness.........................................................................51
3.3.2.4.VIETTRAVEL brand awareness.........................................................................51
3.3.2.5. Sense of superior quality.....................................................................................51
3.3.2.5.Sense of superior quality........................................................................................51
3.3.3. Brand Image...........................................................................................................51
3.3.3.Brand Image..............................................................................................................51
3.3.4. Brand loyalty..........................................................................................................52
3.3.4.Brand loyalty..............................................................................................................52
3.3.5. Other values of the brand.......................................................................................52
3.3.5.Other values of the brand.........................................................................................52
3.4. Value chains and the creation of value chains of the company:...............................53
3.4.Value chains and the creation of value chains of the company:..............................53
3.4.1. Research and development.....................................................................................53
3.4.1.Research and development.......................................................................................53
3.4.2. Marketing and sales................................................................................................53
3.4.2.Marketing and sales..................................................................................................53

3.5. Out sourcing..............................................................................................................53
3.5.Out sourcing..................................................................................................................53
3.6. Internal Factor Evaluation (IFE Matrix)...................................................................53
3.6.Internal Factor Evaluation (IFE Matrix)...................................................................53
CHAPTER III: BUSINESS STRATEGIES OF VIETTRAVEL FOR PERIOD OF
2010-2015.............................................................................................................................55
1. Visions and missions of VIETTRAVEL for period of 2010-2015..............................55
1.Visions and missions of VIETTRAVEL for period of 2010-2015...............................55
2. Business strategies selection for VIETTRAVEL period 2010-2015...........................57
2.Business strategies selection for VIETTRAVEL period 2010-2015...........................57
2.1. SWOT Matrix............................................................................................................57
2.1.SWOT Matrix...............................................................................................................57
2.2. Internal - External Matrix (IE Matrix)......................................................................58
2.2.Internal - External Matrix (IE Matrix)......................................................................58
3. Solutions to implement strategies chosen....................................................................58
3.Solutions to implement strategies chosen......................................................................58
3.1. Solution 1..................................................................................................................59
3.1.Solution 1.......................................................................................................................59
3.2. Solution 2..................................................................................................................59

6


3.2. Solution 2......................................................................................................................59
3.3. Solution 3..................................................................................................................59
3.3. Solution 3......................................................................................................................59
3.4. Solution 4..................................................................................................................59
3.4. Solution 4......................................................................................................................59
3.5. Solution 5..................................................................................................................59
3.5. Solution 5......................................................................................................................59

3.6. Solution 6..................................................................................................................59
3.6. Solution 6......................................................................................................................59
3.7. Solution 7..................................................................................................................60
3.7. Solution 7......................................................................................................................60
RECOMMENDATIONS...................................................................................................61
1. Vietnam Administration Tourism and stakeholders.....................................................61
1.Vietnam Administration Tourism and stakeholders...................................................61
2. Higher authorities – The Union of Vietnam Transport................................................61
2.Higher authorities – The Union of Vietnam Transport...............................................61
CONCLUSION...................................................................................................................62
REFERENCES...................................................................................................................63
APPENDICES....................................................................................................................64

7


LIST OF ABBREVIATIONS

WTO

World Trade Organization

ASEAN

Association of Southeast Asian Nations

UNESCO

United Nations Educational Scientific and Cultural Organization

UNDP

United Nations Development Programme

MBA

Master of Business Administration

FDI

Foreign Direct Investment

ODA

Official Development Assistance

GDP

Gross Domestic Product

MICE

The Meetings, Incentives, Conventions and Exhibitions

VND

Vietnam dong

USD

American Dollar

8


LIST OF TABLES AND FIGURES
Page
TABLES
Table 1: Some results of the company’s business operation
Table 2: External Factor Evaluation Matrix

24-25
35

Table 3: Human resource statistic

41-42

Table 4: Company’s capital structure

42-43

Table 5: Company’s revenue over the years

44

Table 6: Internal Factor Evaluation Matrix

50-51

Table 7: VIETTRAVEL goals and targets till 2015
Table 8: Balance Sheet 2007, 2008

53
63-68

FIGURES
Figure 1: Business Strategy

11

Figure 2: Basic Model of business strategy management

13

Figure 3: Values of brand

47

Figure 4: SWOT Matrix

54

Figure 5: Internal External Matrix

55

9

INTRODUCTION
a. The necessity of topics
Vietnam is a country located at the center of East Asia with a geographical
location of advantages in economic cooperation and exchanges with other countries
in the region and international with its economy is growing and gained important
achievements in the renovation of the country.
With diverse and abundant natural resources of 3,200 km coastline with
diversity marine ecosystems and island; famous beautiful beaches; Ha Long Bay is
recognized World Natural Heritage by UNESCO; Nha Trang Bay is considered as
amongst the 29 world's most beautiful bays by The World Bay Club; Da Nang
beach is rated as one of the 6 most beautiful beaches the planet by Forbist magazine
(USA) . In addition, many marine ecosystems, islands and beaches such as the Lang
Co Mui Ne-Phan Thiet, Phu Quoc Island etc. Many caves, forests and natural
protected areas such as Phong Nha-Ke Bang, Can Gio Area Biosphere Reserves
World, Ca Mau salt-marsh forest... Also, Vietnam is the country with its excellent
culture- history with many cultural festivals-cultural art traditions, ancient capital
Hue, Hoi An, My Son relics... Of these, 8 heritages were recognized as the world
natural and culture heritages by UNESCO. Vietnam has a stable political regime
wiht hospitality people, refined food, handicrafts and traditional fine-arts...is
attracting more international tourists to Vietnam .
Currently, tourism is one of the key economic sectors of many countries
including Vietnam. Tourism is important for the country's economic development
and improving people's incomes, particularly for people in the trade villages of
tourist sites in the development strategies of national economy. The most important
in the integration period, tourism is the opportunity to exchange, convergence of
global tangible and intangible civilizations; create believe, understanding, solidarity
among nations ... In other words, tourism is a bridge to promote the economy, is the
face of a nation. In order to promote economic development needs to promote

10

tourism development and to strong tourism development, leaders at level are
required to be interested in and make suitable strategies and plans.
VIETTRAVEL Co., Ltd is a state-owned enterprise directly under the Union
of Vietnam Transport, participating in travel field from 1998 with the precursor is
Travel Center under the Union of Vietnam Transport. It officially established as a
company in 2004. The company together with the whole tourism industry has been
trying to make tourism position as a key economic sector of the country. With more
than 5 years of experience, VIETTRAVEL has continuously success and develop
with many significant achievements. For many years the company received
certificate of merit as a good economic enterprise of Hoan Kiem District, Hanoi
Capital and is continually ranked in the top 10 sales agents of Vietnam Airlines.
Our Vietnam has great efforts in the process of international economic
integration which create favorable conditions for business travel but also put the
tourism enterprises face up with fierce competitive pressures and VIETTRAVEL is
not an exception although it has some certain achievements by using its competitive
advantages in accordance with the socio-economic context in the past time. With
current context when the world economy initially just has restored after the great
financial crisis in 2008, it continuously creates new pressures for tourism
enterprises to force them to method renovation in order to create added values.
These require necessary and urgent activities for enterprise in product positioning,
business orientation... in the new context.
Through practice time at VIETTRAVEL, the Group found that
VIETTRAVEL Directorate is too busy with current business activities and although
there are many ideas for future development but they are still ideas in their mind,
not specific business strategy. Thus, the most important thing VIETTRAVEL
should do in this context is to build business strategies for period 2010 - 2015
urgently. That’s why the Group selected topic "Building business strategy for
VIETTRAVEL period 2010-2015” for our Capstone Project Report with our desire

11


to apply theory from MBA course to practice to support VIETTRAVEL in building
its business strategies.

b. Research purposes
(i) Re-recognize and systematize basic theoretical issues of strategic
management learnt from MBA course.
(ii) Based on theoretical strategic management will apply them in tourism
field to analyze and appreciate the company’s capabilities in order to build business
strategies for VIETTRAVEL in the period 2010 – 2015.

c. Object and scope of the research
VIETTRAVEL is doing business in many fields such as tourism, trade,
printing, training... Among which tourism activities are identified as the company’s
core competency that bring major profit. The other business activities exist just to
support this core competency.
Within research sphere of the Capstone Project Report, the research objects
and scopes of research are in tourism operations. The time proposed to build
business strategy is 5 years from 2010 to 2015; the research time is 3 years from
2007-2009.

d. Research methodology
This Capstone Project Report use synthetic, analysis, statistical comparison,
and critic methods.
This Capstone Project also uses some experiences of foreign tourism
agencies and uses the scientific basis for management strategies to build business
strategies for the company.

e. Expected output
Feasible business strategies for VIETTRAVEL, period 2010-2015

12


f. Lay-out of Capstone Project Report
Besides the introduction, table of contents, conclusions, references, it is
divided into three chapters as follows:
Chapter I: Basic theory of strategic management;
Chapter II: Company’s business environment analysis; and
Chapter III: Business strategies for VIETTRAVEL period 2010-2015.

13


CHAPTER I: BASIC THEORY OF STRATEGIC
MANAGEMENT
1. Basic theory of strategic management
1.1.

Concept of strategy
There are many concepts of strategy depends on viewpoint of each author. In

Strategy and Structure (1962), Chandler A., one of the first to initiate strategic
management theory defined as follows: "Strategy is the determination of the
objectives and purposes of the long-term business and the application of a series of
actions as well as the allocation of necessary resources to implement these
objectives.

In 1980, when strategic management disciplines have become ripe, author
Quinn, J., B. in Strategic Change: Logical Inscrementalism was made to define a
more general: "Strategy is series of patterns or integrated plans of major goals,
policies, series actions into the whole closely”
After that, Johnson, G., Scholes, K in Exploring Corporate Strategy (1999)
defined the strategy in the environmental conditions have changed rapidly:
"Strategy is the direction and scope of an organization in long-term to gain a
competitive advantage for organizations through the format of its resources in the
changing environment, to meet market demand and satisfy the expectations of
stakeholders "
In defining strategy with 5 P letters, Mintzberg gave general aspects of
strategic management as follows:
(i) Plan: series of actions intended consistently;
(ii) Pattern: being consistent behavior over time, may be intended or not
intended;
(iii) Position: match between the organization and its environment;
(iv) Perspective: how to identify deeply about the world;
(v) Ploy: how specific to be able to fool rivals.

14


A concise definition that is commonly used today is the definition of
strategies in curriculum "strategy is a complex series of activities aimed at
mobilizing the resources of an organization may have to achieve a certain goal”

1.2.

Concept of business strategy
Business strategy is understood as a set of plans and actions to help business

enterprises to achieve business goals. The following image illustrates the business
strategy of an enterprise:
Opportunities

Strengths
Apply,
maintain

Internal

Discover

External

STRATEGY

Overcome

Prevent
Threats

Weaknesses

Figure 1: Business Strategy
(Source: Strategic Management – Associate Prof. Le
The Gioi)

Each enterprise must respond to strategic business decisions continuously.
However, some of strategic decisions can become more pressing in some certain

periods depending on the specific context. That is the process of strategic business
management.

1.3.

Business strategy clarification
Depending on the strategic business level, people can be divided into 3 types

of business strategy, including: company strategy; business unit strategy and
function strategy.

15


(i) Company strategies toward goals and overall scope of organization;
(ii) Business unit strategies regarding how to succeed on specific markets;
(iii) Function strategies are strategies to help business strategies for
companies and for proper implementation by the components on the aspects of
resources of human, finance, processes and skills needed. Currently, with
globalization trend, enterprises are fast diversifying their activities beyond national
borders, from which global strategy as a choice to face with international business
issues.

1.4.

Basic model of business strategy management
Basic model of business strategy management also called 5 stages model in

the process of strategic planning include: (i) Select the mission and main objectives
of an enterprise, (ii) External environmental analysis to identify opportunities and

threats; (iii) Internal environment analysis to identify strengths and weaknesses, (iv)
Strategies selection based on the search resources, capabilities and core competency
and develop these to overcome threats, utilize opportunities from external
environment; (v) Strategy implementation.
Task of external and internal environment analysis and then select strategies
is considered as business strategy building. Strategies implementation will include
designing organizational structure and control systems appropriate to put into
practice strategies.
Each section described in Figure 2 is a step in the order in the strategic
planning process. Each cycle of strategic planning begins with a mission statement
and key objectives of the enterprise. After mission report and main objectives of
enterprise is analysis of internal and external environments and strategy selection.
The process ends with the design of organizational structure and control systems
necessary to implement selected strategies.

16


BASIC MODEL OF BUSINESS STRATEGY MANAGEMENT

VISIONS AND
MISSIONS

External
External Analysis
Analysis
(Opportunities
(Opportunities &
& Threats)
Threats)

Strategies
Strategies Selection
Selection
and
and Building
Building

Internal
Internal Analysis
Analysis
(to
(to find
find resources
resources and
and core
core
competency)
competency)

Function
Function Strategies
Strategies

Business
Business Strategies
Strategies

Global
Global Strategies

Strategies

Company
Company Strategies
Strategies

Organization
Organization
Structure
Structure

Conformable
Conformable with
with strategies,
strategies,
control
structure
control structure

Control
Control Design
Design

Strategy
Strategy Change
Change

Figure 2: Basic model of business strategy management
(Source: Strategic Management – Associate Prof. Le The Gioi)

17


2. Strategy building for an enterprise
2.1.

Business environment analysis

2.1.1. External business environment
The purpose of external environment analysis is to identify opportunities and
threats from external environment for enterprise.

2.1.2. Macro environment analysis
2.1.2.1.

Economic environment

Economic environment show the nature and direction of that economy
including enterprise operation. Four important factors of macro-economic
environment are: (i) growth rate of the economy, (ii) interest rates; (iii) foreign
exchange rates; (iv) the inflation rate.
Status of the macroeconomic environment determines the health, prosperity
of an economy. It always causes the impact on business and industry. Therefore, the
impact of the economy to an enterprise can change the ability to create value and its
income.
2.1.2.2.

Technological environment

Changes in technology are the most rapidly changes and they impact on

many parts of society including enterprises. They are changes on creating new
knowledge and the transition to the knowledge into products, processes and new
materials... Technology changes include creation and destruction, the risks and
threats. It also can shape new structure for industry.
In the global space, opportunities and threats of technology to all the
enterprises by buying out or self-created new technologies.
2.1.2.3.

Sociocultural environment

Sociocultural environment related to social attitudes and cultural values - the
foundation of society. Social changes also create opportunities and threats for
enterprises, especially for tourism enterprises.

18


2.1.2.4.

Demographic environment

Demographic segments in the macro environment related to: population; age
structure; geographic distribution; community of nations; income distribution etc
2.1.2.5.

Political - Legal environment

Political - Legal factors also impact significantly to level of opportunities and
threats from business environment for enterprises and mostly in how the interaction
between enterprises and the government. This segment will affect significantly to

competitiveness of enterprises.

Thus, once considering political – legal

environment, it should consider the new policies relevant related to State
management; law on anti-monopoly, tax law; selected priority industries; Law on
labor; the areas in which state management policies can impact operations and
profitability of the ability of the industry or enterprises.
In addition, it should mention a series of problems that enterprises must face
on a global scale related to politics – legal environment such as: trade policy; the
national barrier protection etc.
2.1.2.6.

Global environment

Globalization of business market creates both opportunities and threats for
enterprise include concerned global market; the current market is changing;
important international political events; institutional characteristics and basic
cultural on the global market...

2.1.3. Micro environment analysis
Micro environmental analysis is common uses of 5 forces analysis of
Michael Porter:
2.1.3.1.

Bargaining power of buyers

Buyers or customers are a competitive pressure affect directly on the entire
production and business of industry. Customers are divided into 2 groups of retail
customers and distributor customers. Both groups will pressure on companies about

price, quality products, services by continue bargaining. They are the persons who

19


control competition in the industry through their decisions of purchasing products
and services.
When analyzing the distributors, enterprise need to pay attention to
importance of customers, they can directly go deep into internal environment of the
enterprise.
2.1.3.2.

The Bargaining power of suppliers analysis

Number of suppliers and the size of the providers will decide competitive
pressure, the power to negotiate their industries and enterprises. If the market only a
few vendors have a large scale will create competitive pressure, affects the entire
production and business activities of the sector. So in the current era where
information is a factor promoting the development of the commercial information
providers have a large impact on the selection of suppliers in the business.
2.1.3.3.

Rivalry among competing firm analysis

Current competitors are competitors are doing production and business
activities similar with enterprise. Analyzing current competitors need to analyze
strategies, objectives, evaluate strengths, weaknesses ... of competitors to select
suitable strategy for enterprise.
2.1.3.4.

Threat of new entrants analysis

The risk of appearance of new entrants or potential competitors maybe affect
the industry in the future. Potential competitors have more or less pressure to
industry will depend on the following factors:
(i) The attractiveness of the sector: This factor is expressed through profit
indicators, number of enterprises in industry...
(ii) The barriers to joining sector are the factors that make joining a sector
more difficult and expensive.

20


2.1.3.5.

Threat of substitute products analysis

Substitute products and services are products and services can meet the
demand equivalent to the products and services in the industry.
Competitive pressure primarily of alternative products and services is the
ability to meet demand in the industry, adding other factors are price, quality and
other factors of the environment such as culture, politics, technology will also affect
the threat of alternative products and services.

2.1.4. Internal environment analysis
Internal environment include human resources, finance, technology,
technology, ability and capacity of core competency of enterprise. Analyzing
resources and capabilities of enterprise as conducted through analysis of the
activities of the business functions such as marketing activities, human resources,
finance etc. In addition, internal environment including culture of enterprise and

"before the leaders can shape a new strategy, they need to reach a common
understanding about the current location of their enterprises" - W. Chan Kim and
Renee Moubourgne. Therefore, the purpose of internal environmental analysis is to
find the strengths and weaknesses of enterprise and from which to combine the
external business environment to create appropriate strategies and solutions for the
enterprise.

2.2.

SWOT Matrix Tool
To identify and select business strategies often use SWOT matrix. SWOT is

the abbreviation of the collection of the first letter of the English words: Strengths,
Weaknesses, Opportunities and Threats.
(i) Strengths: What are the advantages of enterprise? What kind of work the
enterprise is doing best? Which resources that enterprise need and can use? What
are te advantages that others see in your business? Problems from the business
aspect itself and other enterprises must be considered. Advantages are usually
formed when compared to competitors. For example, if all the competitors offer

21


products of high quality, quality manufacturing process will not be advantage that it
is essential to have to survive on the market.
(ii) Weaknesses: Anything can improve? Is task of business worst? What
should avoid? Problems on the basis of inside and outside of the enterprise must be
considered. Others may see weaknesses that do not see themselves. Why
competitors can do better than them? Recognize and face with the truth.
(iii) Opportunities: Where are good opportunities? What are concerned

trends that enterprise has been known? Opportunities can arise from technological
change and international market or even in narrow spaces, from a change in state
policy related enterprise activities; from the change of social patterns, population
structure or fashion etc, from the events in the region. Search method is most useful
review of the advantages of their own and question whether these advantages open
new opportunities or not. Can also do the opposite, reviewing the weaknesses of
enterprise and give questions if there are any opportunities appear if removing
them.
(iv) Threats: What are obstacles? What are competitors doing? The specific
demands of work, products or services changed or not? Technology change gets
risk or not? Is there any overdue debt or cash flow? Are there any weaknesses with
enterprise? Analysis often helps to find out what to do and turn weaknesses into
prospects.
Internal factors need to analyze should include: enterprise culture and image,
organization structure; key persons; ability to use resources; experience; capacity
operation; Reputation and brand name; market share; finance, major contracts;
Copyright and trade secret business etc.
The external factors need to analyze maybe are: Customers; competitors;
market trends; suppliers; Partners; Social change; new technology, economic and
Political-legal Environments etc impact on enterprises.
Effective strategy is the strategy to take advantage of opportunities from
external environment combine with internal strengths as well as disable or minimize

22


the external threats and limited or overcome the weaknesses of enterprise itself. So
use the SWOT matrix can form the following strategies for business:
(i) S-O strategies: pursue opportunities that best suits the strengths of the
enterprise;

(ii) W-O Strategies: overcome weaknesses to pursue opportunities;
(iii) S-T Strategies: determine how companies can use their advantages to
reduce damage to the external challenges;
(iv) W-T: set up a defense plan to prevent weaknesses of the business from
the effects from the outside environment.

2.3.

External Factor Evaluation Matrix (EFE Matrix)
EFE matrix method is a strategic-management tool often used for assessment

of current business conditions. The EFE matrix is a good tool to visualize and
prioritize the opportunities and threats that a business is facing.
External factors assessed in the EFE matrix are the ones that are subjected to
the will of social, economic, political, legal, and other external forces
The EFE matrix method conceptually relates to the Balanced Scorecard
method of external factors.

2.4.

Internal Factor Evaluation Matrix (IFE Matrix)
IFE matrix is a strategic management tool for auditing or evaluating major

strengths and weaknesses in functional areas of a business. IFE matrix also provides
a basis for identifying and evaluating relationships among those areas. The Internal
Factor Evaluation matrix or short IFE matrix is used in strategy formulation.
The IFE Matrix together with the EFE matrix is a strategy-formulation tool
that can be utilized to evaluate how a company is performing in regards to identified
internal

strengths

and

weaknesses

of

a

company.

The

IFE

matrix

method conceptually relates to the Balanced Scorecard method in some aspects.

23


2.5.

Internal - External Matrix (IE Matrix)
The IE matrix is another strategic management tool used to analyze working

conditions and strategic position of a business. The Internal External Matrix or short
IE matrix is based on an analysis of internal and external business factors which are

combined into one suggestive model. The IE matrix is a continuation of the EFE
matrix and IFE matrix models.
The IE matrix is based on the following two criteria:
Score from the EFE matrix -- this score is plotted on the y-axis
Score from the IFE matrix -- plotted on the x-axis
The IE matrix works in a way that you plot the total weighted score from
the EFE matrix on the y axis and draw a horizontal line across the plane. Then
you take the score calculated in the IFE matrix, plot it on the x axis, and draw a
vertical line across the plane. The point where your horizontal line meets your
vertical line is the determinant of company’s strategy. This point shows the strategy
that the company should follow.
The IE matrix can be divided into three major regions that have different
strategy implications.
Cells I, II, and III (horizontal) suggest the grow and build strategy. This
means intensive and aggressive tactical strategies. Your strategies should focus on
market penetration, market development, and product development. From the
operational perspective, a backward integration, forward integration, and horizontal
integration should also be considered.
Cells IV, V, and VI suggest the hold and maintain strategy. In this case,
your tactical strategies should focus on market penetration and product
development.
Cells VII, VIII, and IX are characterized with the harvest or exit strategy. If
costs for rejuvenating the business are low, then it should be attempted to revitalize
the business. In other cases, aggressive cost management is a way to play the end
game.

24


CHAPTER II: COMPANY’S BUSINESS ENVIROMENT

ANALYSIS
1. Overview about VIETTRAVEL
1.1. Foundation and development
VIETTRAVEL Co., Ltd is state-owned enterprises directly under the Union
of Vietnam Transport. With annual revenues of tens billion; enthusiastic and
professional employees are over 60; VIETTRAVEL contributes significantly to the
state budget every year.
Taking part in tourism market since 1998 with the precursor is Tourism
Center under the Union of Vietnam Transport.
In April 2004, the Center was strong enough to establish a company as
VIETTRAVEL today. In 2005, to meet demand for big volume of Chinese inbound
visitors at that time, VIETTRAVEL established a representative office in Mong Cai
and Lang Son.
In 2006, after two years confirmed the existence and development,
VIETTRAVEL

identified

its

strengths

is

organizing

outbound

tours.

VIETTRAVEL’s customers are not just customers at the Northern of Vietnam but
nationwide. To meet customer requirements at that time, VIETTRAVEL also
established representative office in Ho Chi Minh and its operation with
effectiveness nowadays.
Also from outbound activities are growing, VIETTRAVEL leaders realize
the potential to develop MICE outbound tours for Vietnamese is very high due to
demand to learn foreign experience in the integration period is increasing. Thus, in
2006 the company focused on exploiting customers is agencies, companies who
wished to go abroad for learning experience combined with tourism. Also in 2006,

25