Luận văn chiến lược kinh doanh của công ty một thành viên cung cấp nước hải dương

LUẬN VĂN CAO HỌC
Chiến lược kinh doanh của công ty Một thành viên cung cấp nước Hải
Dương
THESIS MBA
BUSINESS STRATEGY OF HAI DUONG WATER SUPPLY SINGLE
MEMBER LIMITED COMPANY

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CONTENTS
LIST OF THE ABBREVIATIONS........................................................................
LIST OF DIAGRAMS, GRAPHS AND TABLES................................................
DECLARATION.....................................................................................................
ACKNOWLEDGEMENT.......................................................................................
AUTHORS GROUP...............................................................................................
FOREWORD...........................................................................................................
.
1. Name of the topic
2. Meaning of the study topic
3. Target of the topic
4. Study scope of the topic
5. Study method
6. Major structure of the essay
CHAPTER I: BASIC THEORIES OF THE BUSINESS STRATEGIES
1.1.

Business strategy overview

1.1.1. Concept
1.1.2. Levels of strategy

1.1.2.1. Company level strategy
a. Centralized growth strategy
b. Growth strategy by integration - association
c. Growth strategy by diversification
d. Reduction strategy
e. Innovation strategy
1.1.2.2. Business unit level strategy
a. Competitive strategies upon competitive strengths
b. Competitive strategies upon market share position in the market
c. Investment strategy
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d. Business level strategy upon life cycle of a product
1.1.2.3. Functioning strategy
a. Manufacturing and operating strategy
b. Financial strategy
c. Research and Development strategy
d. Human resources strategy
e. Information system administration strategy
f. Marketing strategy
1.1.3. Business strategy building up process
1.2.

Vision, mission and values

1.2.1. Vision
1.2.2. Mission
1.2.3. Target
a. Kinds of target

b. Role of the strategic target system of the enterprise
c. Requirements for the strategic target system
d. Factors affecting the strategic target system and selection of the strategic
targets
1.2.4. Strategy analysis
1.2.5. Analysis of macroeconomic environment
a. Natural factors
b. Social factor

c. Economic factor
d. Political - legal factor
e. Technical factor
1.2.6. Analsis of the industry environment
1.2.7. Analysis of the internal environment
1.2.8. Analysis summary table SWOT
1.3.

Selection of the business strategy

a. Selection of strategic plan by analysis of BCG Matrix
b. Selection of strategic plan by matrix EFE
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c. Selection of the strategic plan by competition image matrix
d. Selection of strategic plan by the Internal Factor Evaluation Matrix (IEF)
e. Selection of strategic plan with GREAT model
1.4.

Organization of performing the strategy

1.4.1. Organization structure
1.4.2. Control system
1.4.3. Inspection, evaluation and adjustment of the strategy
a. Target of inspection and evaluation of the strategy
b. Requirements for inspection and evaluation of the strategy
c. Contents of inspection, evaluation and adjustment of the strategy
CHAPTER II: REALITIES OF BUSINESS STRATEGY OF HAI DUONG
WATER SUPPLY SINGLE OWNER COMPANY LIMITED
2.1. General introduction of Hai Duong Water Supply Single Member Limited
Company
2.1.1. Establishment and development history
2.1.1.1. Overview of Hai Duong Water Supply Single Owner Company Limited
2.1.1.2. Establishment and development process of the Company
2.1.2. Lines of business
2.1.3. Organization structure and objectives of the departments
a. Apparatus organization structure
b. Functions, objectives and relationship in management apparatus
2.2. Results of business operations of Hai Duong Water Supply Single Owner
Company Limited
2.2.1. Major products
2.2.2. Results of business operations
2.3. Advantages and difficulties of the Company during production and business
2.3.1. Macroeconomic environment
2.3.1.1. Economic environment
2.3.1.2. Political - legal environment
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2.3.1.3. Technical environment

2.3.1.4. Social environment
2.3.2. Industry environment analysis
2.3.2.1. Realities of the industry environment
2.3.2.2. Five competitive forces
2.3.3. Competitive advantages of the Company
a. Overview of the water industry
b. Competitive advantages of the Company
c. The Company position in the industry
d. Assessment of development orientation of the Company against which of the
industry and State policy
2.3.4. Analysis summary table SWOT
a. Challenges for the Company
b. Development opportunities
c. Advantages
d. Disadvantages
e. Analysis summary table SWOT
2.4. Present business strategy of the Company
2.4.1. Applying strategy of the Company
2.4.2. Advantages and disadvantages of the present business strategies
2.4.3. Strategy performance in recently years
a. Capital solution
b. Consuming price solution
c. Labor solution
d. Market solution
e. Purified water providing solution
CHAPTER III: BUILDING UP BUSINESS STRATEGY OF HAI DUONG
WATER SUPPLY SINGLE OWNER COMPANY LIMITED DURING
THE PERIOD OF 2010 -2015.
3.1. Orienting development of the Company
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3.1.1. Orienting to develop until 2015
3.1.2. Strategic target
3.2. Specification of vision, mission and values of the Company
3.2.1. Vision
3.2.2. Mission
3.3 Selection of business strategy until 2015
3.3.1. Applicable strategies of the Company to reach the target
a. Market strategy
b. Competitive strategy
3.3.2. Orienting strategy of the Company
a. Long term
b. Middle term
c. Short term
3.4. Solutions to perform the strategy
3.4.1. Production technology
3.4.2. Product and price policy
3.4.3. Human resources solution
3.4.4. Marketing solution
a. Strengthen and increase market share at the districts of Hai Duong province
b. Protect the market share at Hai Duong City
3.4.5. Financial solutions
a. Source of funds for production operation
b. Source of funds to invest in works and projects
3.5. Undertaking performance
3.5.1. Performance route
a. During the period of 2010 -2012
b. During the period of 2012 -2015
3.5.2. Inspection, assessment and adjustment

CONCLUSION AND SUGGESTIONS
1. For the management agency of the water industry
2. Solutions to policy and regulations of the Party, State and of the province
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LIST OF REFERENCE
Appendixes
1. Full name and objective of the group members
LIST OF THE ABBREVIATIONS
Strength, Weakness, Opportunity and
SWOT

Challenges
the analysis instrument relating to the

PEST
IEF

macroeconomic, outside factors
Internal Evaluation Factors
Strategic plan with model: Gain -

GREAT

Risk - Expense - Achievable - Time

LIST OF DIAGRAMS, GRAPHS AND TABLES
1. DIAGRAM
Diagram 1.1: Business strategy building up process

Diagram 1.2: Five competitive forces upon M. Porter
Diagram 1.5: EFE Matrix
Diagram 1.6: Internal Evaluation Factors Matrix
Diagram 2.1: Organization model of the Company

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Page 25
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2. TABLE
Table 1.3: SWOT matrix analysis table of the
Company
Table 1.4: Application of BCG Matrix
Table 1.7: Strategy plan with GREAT model
Table 2.2: Business results during three years (2007-

Page 34
Page 37
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2009) of the Company
Table 2.3: Customer quantity of the Company
Table 2.4: Merchandise water yield
Table 2.5: Water losing rate
Table 2.6: Major financial criteria
Table 2.7: SWOT analysis summary table of the

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Page 52
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Page 53
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Company
Table 3.1: Target at the end of 2010 and until 2015
Table 3.2: Labor qualification structure

Page 68
Page 77
Page 89

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Table 3.3: Human resources qualification structure

Page 90

DECLARATION
We declare that : the topic “Business strategy of Hai Duong Water Supply
Single Owner Company Limited during the period of 2010-2015” is studied by
us. The figures relating to the Company are provided by very Hai Duong Water
Supply Single Owner Company Limited
Up to now, this is the first time this topic is studied. There is no contradiction in
interest with the Company among the group members.
Hanoi, date March 2010
AUTHORS GROUP PERFORM
1. Nguyễn Văn Đoàn (Captain)

2. Phan Sỹ Châu
3. Ngô Ngọc Đông
4. Vũ Trung Kiên
ACKNOWLEDGEMENT
We would like to gratitude Hai Duong Water Supply Single Owner Company
Limited for enthusiasm supporting us as providing figures as well as discussions
to carry out the most proper business strategy for the Company. We also
gratitude sincerely to the Teachers, PhDs and Professors for providing the skills
and knowledge of enterprise administration during the training course. These are
the essential fundamental for us to write this topic and apply into realities and a
guidance for us during study performance.
AUTHORS GROUP
FOREWORD
1. Name of the topic: “Business strategy of Hai Duong Water Supply Single
Owner Company Limited during the period of 2010-2015”
2. Meaning of the study topic
Stable and sustainable development is the desire of the whole society, every
nation and socio-economic organization on the whole world.
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At present, the world economy is in the trend of globalization. Many countries
and organizations have achieved many splendid successes at home and in global,
formed the stable and solid foundation for the sustainable development.
Nevertheless, some organizations failed to take their opportunities, strengths and
lacking the solutions to overcome the difficulties and challenges. As a result,
they declined, went down to the slope without brake even went bankrupt. It is
because the formed and organized business strategy is not proper with the
existing potentials, without careful study of impacts of the internal, external
environment, opportunities, strengths, difficulties and challenges to build up the

short term, middle term or long term development strategy that is sufficient of
theoretical basis and market study realities.
Vietnamese economy having been integrated into the economy in region and on
the world, presented in expansion of the business environment of many
enterprises with a lot of the opportunities. They still have to cope with many
difficulties, challenges and more and more fierce competition
At the present market condition, what determines successful of the enterprise is
selection of the right way, forming and building up the reasonable, timely business
strategy and proper with the objective and subjective conditions of each period and
stage.
For these reasons, the Vietnam enterprises in general and Hai Duong Water
Supply Single Owner Company Limited in particular are necessary to contact
with the knowledge of business strategy.
Water industry is one of the fields are in developing process. In general, water
supply system has been invested in construction at the first to third rate urban
areas rather than fourth and fifth rate urban araes and communes.
In order to guarantee development of the water industry, the State policy
encourages the socio-economic organizations at home and overseas to invest in
purifed water supply, in the fact, it is the competition between Vietnam and Hai
Duong in water supply area and service. Particularly, many foreign specialized
water supply organizations with the financial abilities and modern technologies
are conducting market survey and want to invest in Hai Duong.
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Therefore, forming and building up business strategy of Hai Duong Water
Supply Single Owner Company Limited is suitable, ability of competition is
strong enough to survive in market economy is an urgent issue. Simultaneously,
building up the business strategy is the vital factor of the Company during
present period.

3. Target of the topic:
Study of this topic is to contribute to clarify some basic theory and methodology
issues in building up and performing business strategy of Hai Duong Water
Supply Single Owner Company Limited.
This includes analyzing impacts of the business environment on financial
business operation, aware clearly of opportunities, challenges, strengths and
weaknesses of the Company. And then the necessary business strategic
measures are proposed to enhance effects of the Company's business strategy
during the period of 2010-2015
4. Study scope of the topic
The topic concentrates on Business strategy of Hai Duong Water Supply Single
Owner Company Limited during the period of 2010 - 2015
5. Study method
The topic uses some following measures:
- Analysis comparison and synthetic method: Analyzing figures from the
reports, source of information about Hai Duong Water Supply Single Owner
Company Limited
- SWOT matrix analysis method: the analysis and settlement technical of the
environment study results helping the enterprise to put forward the scientific
strategy..
- Statistical method: Reckon up the tables and draw the conclusions of the trends
to evaluate operation situation of the Company and the Industry.
6. Major structure of the essay
Foreword
Chapter I: Basis theories of business strategy

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Chapter II: Realities of the business strategy of Hai Duong Water Supply

Single Owner Company Limited.
Chapter III: Building up business strategy of Hai Duong Water Supply
Single Owner Company Limited
Conclusion and suggestions
List of reference
Chapter 1: BASIC THEORIES OF THE BUSINESS STRATEGY
1.1. Overview of the business strategy
1.1.1.Concept
Strategy administration is the strategic science and art for building up business
directions and targets, conducting short-term and long-term plans based upon
available resources helping each organization to achieve its long-term targets.
So, what is strategy? Strategy is the direction and scope of operation of an
organization in long term to gain business strengths through determination of the
available and usable resources in the specified business environment in order
that meeting market demands and for benefits of all relevant entities
For further details, strategy is to
- Achieve the long-term targets of the business in sustainable manner
- Business market or part of business market of the company, business tactics shall be
applied.
- How to take advantage over the competitors at those markets with the specific
customers?
- Which resources are needed to achieve that target?
- Potential risks from outside may affect to execution of strategy: environment,
competition, politics, resources.
- The values that brought Owners and the Society by the enterprise as a member
of it.
Apart of process, strategy management is considered as the management process
includes formation of the strategic vision, setting up the targets, drawing up and
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execution of a strategy and it must be adjusted to adapt with the circumstances
in the course of time.
There are many different approaches to strategy so proposed strategic concepts are
different. Up to now, there is no general concept of this category yet. Some below
concepts may be mentioned:
- M.Porter said that: “Strategy is the art of building up solid competitive
strengths for defense”.
- “Strategy is to outline the progress orbits are solid and permanent enough
to arrange the exactly decisions and actions of the enterprise around it”. This is
opinion of Mr.Alain Charles Martinet, who was awarded a prize of Havard
L’expandsion in 1983.
- Alain Threatart in “Company's strategy” said that: “Strategy is an art
used by the enterprise to against competition and gain the victory”.
In general, in strategiv terms, above opinions contain and reflect the
below issues:
+ Target of the strategy
+ Performance period
+ Process of making a strategic decision
+ Competitive environment factor
+ Strengths and disadvantages of the enterprise
+ The methods and ways to achieve the target.
Hence, we found that the enterprise's strategy is the "product" combines
what the market has, what the enterprise can do and what the enterprise wants.
In conclusion, in operations of the enterprise, the strategy is: “An art of
design and organization of means to achieve the long-term targets and
relationship with the changing and competitive environment”.
1.1.2. Levels of strategy
Strategy may be managed at the different levels, in general, however,
there is three basic levels of strategy in the enterprise:

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1.1.2.1.Company level strategy
Company level strategy contains general orientation of the company for
management growth of the affiliates, allocation of the financial resources and
other resources for them. This defines one expected structure of the product,
services of the fields of business of the enterprise, line of business that the
enterprise intends to execute and how to do business of each branch.
Depending on objectives and targets needed to achieve the administrator shall
choose the proper strategies. There are some strategies normally chosen by the
company level:
- Growth strategy (including 3 strategies: centralized growth strategy, growth by
integration and diversification)
- Declination strategy
- Innovation strategy
a. Centralized growth strategy
This is the decisive strategy with focus is placed on improving the products or
available markets without changing any factor.
To pursue this strategy, the enterprise should try to take all opportunities it got
from the products and services are under production, business or its available
markets by better performing what they are doing.
The centralized growth strategy normally there is three types:
+ Market entry: This is to increase of market share for the available products and
services of the existing markets by trying so hard in marketing.
This strategy is applied normally in following cases: As the present markets are
not saturated with the service products are providing by the enterprise, increase
of using demand of which and decrease of market share of the major
competitors whereas increase of sales of the whole industry or as high
correlation between revenue and marketing costs.

+ Building up a market: This is a strategy to grow by penetration into the new
market to consume the service products are manufacturing or providing by the
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enterprise. For this strategy, the enterprises build up the market by: Finding out
the market on quite new area, learning about the new using values of the product
and find out the new target customers.
This market building up strategy is applied normally as: the new distribution
channels are ready to be effect whereas the new markets are not saturated or as
the enterprise is willing to expand production and business as all conditions are
available.
+ Product development: This is a strategy to grow through development of the new
service products to consume on the existing markets of the enterprise. For this
strategy, the enterprise can develop the new products by focusing on the separate
products or group of products.
This strategy is frequent applied as: The enterprise is having succesful ripe
products or as the enterprise competes within the industry with the
characteristics of rapid developments of technology or as the competitors put
forward the better products with the competitive price.
b. Growth strategy by integration - association
This strategy is proper normally with the enterprises are trading in strong
developing economies. As the existing opportunity is suitable with the long-term
target and strategy of the enterprise, this allows the enterprise to consolidate its
position and promote all of its technical abilities.
+ Vertical integration growth strategy: That is the enterprise undertakes itself
manufacturing and supply of the input factors for production process or operates
its own product consumption stage.
+ Horizontal integration growth strategy: It is often including merging strategy,
taking over strategy, affiliation strategy and economic association strategy.

The emerging strategy may be performed by voluntary merging two or more
production and business units in order to deal with challenges and risks may
happen or more absolutely take advantage of business opportunities during
strategic period.
Taking over stategy: This is made and developed through competition on
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market. Thanks to competition the powerful enterprises and having large
economic potentials shall take over the small enterprises to develop as the
stronger and larger enterprise. However, performance of this strategy requires
the enterprise must be strong enough in all aspects and it always meet with the
law barriers.
The affiliation and association strategy (strategic alliances): this is made among
two or more equal incorporated partners. They shall help each other in order to
disperse risks, increase the power and market share.
c. Growth strategy by diversification
This is to invest in many different trades and fields of action as the enterprise
gains a competitive advantage in present business activities. In general, this
strategy is to increase value. This strategy is proper normally with the enterprise
fails to achieve growth target in present trade with the products and business
markets of the enterprise.
Generally, the enterprises apply this strategy as: Life cycle of the service
product is coming to the saturation or depression point or the enterprise is in
excess of capital to invest in the new segment with higher profits, limit risks or
increase market power against the competitors.
There are two kinds of growth strategy by diversification as: related or unrelated
diversification.
•

Related diversification means diversification of the new business

activities

relating

to

present

business

activities

by

resemblance

in

manufacturing, marketing or technology... etc
•

Unrelated diversification is an attemp to grow by leading to the new

markets with the new products are not relating to the products are manufacturing
by the enteprise in technology aspect.
d. Reduction strategy
This strategy is suitable with the enterprises need to be rearranged to increase
effects after a rapid growth period. As there is no opportunity to grow in long

term within industry and profitable trade, economy is unstable or as having more
15


attractive opportunities that the enterprise desires to catch.
There are kinds of reduction strategy such as:
Cutting down expenses: This is the temporary short-term strategy to reduce the
ineffective divisions or temporary difficult issues of the environment conditions.
Payback: This strategy is applied as the enterprise transfers, sells or shuts down
one of its affiliates in order to change the content of operation in basically and
pay back. Result of this process is to reallocate the resources to bring the
enterprises back to life or create the new business opportunities.
Harvesting: This strategy is all attempts to maximum increase the circulation
cashflows for the present purpose regardless of any consequence in the future.
This is the best strategy for the enterprises have to dealth with depression of the
industry.
e. Innovation strategy
Innovation strategy is considered as one of the strategies have the most powerful
impacts froms the outside. Innovation may impact on competition structure but
may lose the competitive power at the same time. Innovation is made during
operating and cost strengths may be created for the enterprises. Innovation of the
service product helps the enterprise to increase discrimination between the
innovated enteprises from the others.
The innovation strategies are normally difficult to perform although has an
enormous potential. It is greatly careful in aspects of organization and strategy if
the enterprises do not want to be in danger. The bonus is remarkable but very
dangerous if the enterprises do not know or unable to manage the innovation
strategy.
1.1.2.2. Business unit level strategy
The business unit level strategy concentrates on improving competitive position

of the service products or a combination of the market product that the enteprise
participates in business. The business unit level strategy includes competition
theme is chosen by the enteprise to emphasize, the way it's located in the market
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by itself to achieve the competitive advantage and different locating strategies
may be used in the different backgrounds of each industry.
If the enterprise wants to determine exactly the targets as well as the solutions
during strategic period, setting up the business unit level strategy is very
necessary. Basis for which that is different needs of service product of each
different group of customers, manufacturing technology, research and
development activities, supply of input factors as well as consumption of the
output products..
The business unit level strategy always include:
a. Competitive strategies upon competitive strengths
+ Low cost strategy: This is to create competitive strategy by manufacturing the
service product in low cost and may fix the lower price than that of the
competitors of the same industry to attract the sensittive target customers with
the low price and gain the big market share. This strategy is proper normally
with the large enterprises are possibility of reducing costs during operation. It
allows the enterprise to leave the competitors behind by manufacturing service
products in lower costs.
In order to perform this strategy, the enterprise is obliged to bring into play its
key capacities, permitting the enterprise to increase production effects and
minimize cost lower than the competitors at the same time.
+ Product differentitation strategy: This is to create competitive strengths by
creating the service products with the differences in comparison with that of the
competitors.
The enterprise pursues this strategy is possibility of meeting the customers in the

way that its competitors fail to do. Therefore, the enterprise may fixes the higher
price than medium price of the industry. Possibility of increasing earnings from
fixing the higher prices allows the enterprise could collect more profits than
average.
The enterprises pursue the product differetitation strategy choose the high level
of differentation to gain the competitive advantage.
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As pursuing the product differentiation strategy, the enterprise shall choose to
segment the market into the small markets. The enterprise shall provide
designing products for every small markets and determines to become a large
distinct enterprise. Nevertheless, the enterprise also can choose some small
markets where the enterprise has the special different strengths.
The product differentiation strategy always accompanies with the distinctive
marketing strategy.
As pursuing this strategy, the enterprise needs to concentrate into the functional
divisions are convenient to make differences in service products as R& D
division, marketing division and sale division to create competition on the
market.
The enterprise pursues this strategy always spent higher expenses than the
enterprise pursues low cost strategy. Therefore, the enterprise needs to control
all costs without making different strengths so that product price is not
exceeding the sum to be paid by the customer.
+ Main point concentration strategy: This is to concentrate on the market where
the enterprise has superior strengths over other competitors. On the other hand,
main point concentration strategy is giving its all mind into serving one special
branch of the market that is fixed upon geography, group of customers or small
segment on the particular line of product.
Target of this strategy is to focus on meeting demands of the limited group of

the consumers or a segment of the market.
+ Low cost combination strategy and different strategy: In recently,
change of production technology made selection between low cost strategy and
different strategy becoming unobvious. Development of the technology allows
the enterprise to collect benefits from both strategies. Application of the
technology and flexible manufacturing may allow the enterprise that pursuing
differentiation strategy to conduct serial productions with the costs are equal to
the enterprise pursues low cost strategy. Utilization of robots and flexible serial
production plants reduce cost on production line and relevant costs to small
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production work.
b. Competitive strategies upon market share position in the market
During development process, each business unit of the enterprises holds the
different market shares on every market area as well as in the world. In many
cases, one multi-professional enterprise there is a business unit holds a large
market share and considered as the leading unit in market share. The other units
hold the smaller markets in levels and standing behind the competitors.
Therefore, although they are in the same enterprise, but each business unit needs
the different competitive strategy upon each market share position of which in
the market.
Upon market share structure, the business units are divided as below:
Market share

Business unit type of the industry

40%

Market leading unit

30%

Market challenging unit

20%

The unit standing behind market

10%

Unit is hiding in the market or finding its position in the

market
For every kind of business unit above, it is necessary to put forward the proper
target and strategy. Specifically:
+ Business strategy for the market leading business units: At every market
region of each industry always there is business units are recognized as leading
the market. These are the units hold the largest market share and always stand at
the top of the competitors of the industry in: new product, price or development
of the sale networks
In order to protect the market, the leading enterprise may choose four general
strategies:
- Innovation strategy: In assumption that it is necessary to do something better.
Therefore these enterprises must always try in developing the new products,
services or other ways to distribute.
- Consolidation strategy: This is also a way to take initiative in order to preserve
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strength in the market. By maintaining the reasonable price level and put
forward the products with the new scale, form and design.
- Facing strategy: It is always normally quick and direct responses before the
competitors. This strategy model expressed the wars of promotion, price or
kidnapping the dealers.
- Disturbing strategy:
+ This strategy is for the challenging enterprises on the market. They may be
large enterprises but not the number one enterprises on the market. Target of
these enterprises are holding more market shares and finding the way to lead the
market.
Generally, these enterprises may attack directly the leading competitors, however,
the competitors are the enterprises have strong and enduring competitive strengths,
so, this strategy has a high risk. Therefore, these enterprises may use the different
strategies for the best effects.
+ The strategy for the enterprises are standing behind: The business units ranked at
the third position of the industry normally never want to face with the leading
competitors or challenging competitors because they have no full resources.
Therefore, these enterprises shall avoid and follow closely the leading competitors
through imitation strategy.
The behind business units have many strengths because they can learn the
lessons, copy or improve the products or marketing activities of the leading
competitors. Simultaneously, they shall save the P & D costs, costs of
development or expansion of the distribution channel.
These enterprises may not challenge all leading enterprises in the market but
their profits may be good or better because of the lower costs.
+ The strategy for the enterprises are looking for a position in the market: They
are trying to find and acquire the small positions in the market that seemed the
large enterprises ignore or do not pay attention to.
In order to take effect, too often these enterprises should carry out specialization
methods. Simultaneously, they are necessary to develop the outstanding

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marketing strategies to confirm their prestige and attract the loyalty customers
etc
c. Investment strategy
Investment strategy is understood as quantity and type of the resources must be
invested in order to create, maintain and develop the competitive strengths.
As the enterprise selects the investment strategy, it is necessary to consider two
important factors:
+ Competitive position of the enterprise: Competitive position of the enterprise
against the competitors is shown through market share and private core capacities
of each enterprise.
+ Development process of the industry: Each development process of the
industry contains opportunities and challenges, so, shall have direct influences
on investment strategies of the enterprise.
At the beginning process of establishment: Market share investment and
building strategy to create the competitive advantage. Due to limits of
investment, the enterprise may choose specialization, focusing on some market
segment to consolidate its position.
Growth period: With a view to maintain the competitive advantage, out of
maintaining the present market, the enterprise also needs to focus on expansion
to increase its market share. This is the proper stage for the enterprise to
recognize its strengths to put forward the suitable competitive strategies.
Mature period: The growth speed was slowed down. Within the industry has
established the different groups of strategy. Therefore, at this moment,
investment strategy most depends on competitive degree within industry and
ability of competition of the enterprise. If the competitive environment is at high
level, the enterprise needs to remarkable invest so that competitive advantage is
maintained and the existing competitive position is protected. Otherwise, the

enterprise would only enjoy the investment results of the previous period.
Depression period: Demand of the product was reduced and the enterprise may
lose ability to distinguish due to presentation of the more latest and effective
21


technology. At that time, the enterprise may choose the cutback strategy of
investment, minimum investment reduction or exit gradually from the market as
soon as harvested enough.
d. Business level strategy upon life cycle of the product
+ Product introduction period: Focusing on marketing and fixing price of the
product
+ Product growth and development period: Strategic target of this period is how
to maintain the resources for growth with the market. Here the essential
resources used for marketing activities and a part of which is used for research
and development activities of the product.
+ Saturated/mature period of the product: this is the longest period during life
cycle of the product. Out of protecting the market share, the enterprise also
needs to take notice of finding the unexploited market segments, market
cavities, improve the product design, create new features for the product and
consolidate stages of the production as well as consumption process of the
product.
+ Depression period of the product: During this period, the enterprise may
choose one of the two strategies: cutback of the costs, narrow field of activity to
prepare for dissolution, liquid the product or recover the status quo of it by
improving or repeating life cycle of the product.
1.1.2.3. Functioning strategy
This strategy focuses on management and utilization of the enterprise's resources in
the most effective manner. The functioning strategies are developed to implement
successfully business unit level strategy and enterprise level strategy later.

The functioning strategies are in the capacity of methods to implement the
general strategic targets of the enterprise. It is established based upon the
general strategy, business unit level strategy and specific results of environment
analysis and prediction, particular the market.
During every strategic period, in order to guarantee conditions to implement
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system of the strategic targets, the enterprise should plan many different
functioning strategies such as: Marketing strategy, development research
strategy, human resources administration strategy, financial strategy … etc.
a. Manufacturing and operating strategy
Depending on scope of activity the enterprises may choose the different
operating strategies.
The small scale enterprises always choose the low investment strategy at the
beginning, maintain the frequent operation cost at low level and combine with
the specialization. Upon this strategy, the administrators shall apply normally
strengths as the available experiences for saving cost.
The large scale enterprises always make use of the advantage upon scale to
reduce the production costs, maximum developing experiences of the workers in
order to reduce consumption of the fuel and materials and shortening completion
period of the enterprise. Besides, these enterprises may combine the operating
production division with the other divisions such as R&D, marketing...etc in
order to improve the products as well as locate its products on the market.
b. Financial strategy
Depending on the business unit level strategy, the enterprise has proper financial
options.
For the enterprise selects competition with low cost concentration strategy or
leading with the low cost leading, the financial division should pursue reduction
strategy of the financial costs as a contribution to create low cost advantage in

competition such as: mobilizing the available funds of the unit, selecting source
of borrowed funds with low interest rate, technology investment, and able to
reduce costs are lower than the present …etc
For the enterprises compete by the concentration strategy for making difference,
the financial division needs to gather funds for rising quality, improve the
products and direct efforts of the financial activities in order to increase benefits
of the input factors, in present and future.
For the enterprise selects combination of both slow cost strategy and difference
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making strategy of the financial administrative, it is necessary to examine both
low cost and quality rising priorities in their financial decisions.
c. Research and Development Strategy (R&D)
For the enterprise selects the low cost concentration strategy, the concentration
R&D methods to reduce the costs: innovating decision making process,
redesigning the organization structure so that proper with changes of the
environment, improving the business policies, innovating the leadership style,
improving administrative activities of the functioning divisions …etc
For the enterprise selects the difference making concentration strategy, the
typical method of Research and Development of product/service such as: quality
improvement, changing product composition, diversifying product design,
changing style, increasing quantity and quality of the product supporting
services… etc
d. Human resources strategy
Human resources administration is building up a qualified labor force helping
the enterprise to achieve the long-term targets.
The human resources strategies are common applied such as:
+ Head hunting strategy: This is a strategy to attract qualified labors before the
competitors as the labors are learning, or unused good labors of the other

enterprises …etc
+ Arranging the proper works: According to qualifications and characteristics of
each personnel in order to maximum develop creative ability of each labor,
make use of the accumulated experiences of the personnel so that helping the
enterprise to develop its competitive strengths and rise effects in business.
+ Developing the favorable conditions for the personnel to work: Interest and
support of the superiors to the juniors in materials and spirits if necessary, create
good conditions for everybody to promote the idea, build up a friendly and
comfortable operating atmosphere …etc
+ Building up the best lever system: In order to attract, exploit and maintain the
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qualified labor force for the organization: Proper salary payment for each
position,

operating

results,

commending

and

rewarding

timely

and

corresponding with the achievements, promotion and advancement etc to
stimulate loyalty of the personnel to their enterprise.
e. Information system administration strategy
One information system is clearly designed shall bring the whole of functioning
divisions of the business unit specific strengths. In order to effective manage the
information system; the administrator may use the strategies such as:
+ Developing the information system covering all markets upon geographic
area.
+ Diversifying the data analysis system of the environment information:
+ Maximum exploiting the collected valuable information during every period in
order to carry out the effective response to happenings of the environment
f. Marketing strategy
Functioning division level marketing strategy is very important in managing life
cycle of the product. Depending on the business unit strategy, marketing
management strategy includes:
+ Locating market: The customers shall distinguish goods product brands of the
company in comparison with that of the competitors in the market.
+ Developing market share in the new market: This strategy is applied during
introduction of the product within life cycle of the product.
+ Protecting the market share: As obtained the big market share in the market or
revenue is at the peak during life cycle of the product, the marketing administrators
must implement the existing market share protection strategy through the solutions
as: improving the product quality, design, adjustments in price, distribution channel
etc
+ Narrowing market share: As product is falling into depression period in the
present market, the marketing administrators need to implement the strategy of
narrowing the market share through proper reduction strategies.
+ Repeating life cycle of the product: In the fact, one product is falling into
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