Luận văn xây dựng chiến lược kinh doanh dịch vụ gia tăng trên di động của viettel giai đoạn 2015

Thesis topic
build vat business strategy on mobile of
viettel telecom in the period of 2011 - 2015

1/67


ACKNOWLEDGEMENT
During the learning process of GaMBA program – Griggs University, the US,
Group 11 of GaMBA M0709 class studied and accumulated much practical
valuable experience, helping us apply knowledge into our work at present and even
in the future.
Our group would like to express our faithful thank to GaMBA program for
creating favorable conditions for us during the process of study and capstone project
report completion. We sincerely thank all teachers for teaching enthusiastically,
transmitting precise knowledge and experience during 17 past months.
We would like to express heartfelt thanks to the Leadership Board of Viettel
Telecom for assisting whole-heartedly, providing documents and creating best
conditions for us to complete this graduation capstone project report.
Despite the fact that our group has tried our best; due to time and experience
restriction, the capstone will make mistakes. We respectfully wish to receive wholehearted assistance of teachers and candidates for our capstone project report to be
more perfect and practical.
We hereby pledge that the whole contents and figures in this capstone project
report are collected, studied, surveyed and implemented by our group.
Best regards!

TABLE OF CONTENTS

2/67

Page

CHARTER 1:
THEORETICAL BASIS OF STRATEGIC MANAGEMENT OF THE

9

BUSINESS
1.1.

1.2.

1.3.

1.4.

Overview on strategic management

9

1.1.1. Concepts

9

1.1.2. Process of strategic management

11

Mission, Vision, Objective, Policy, Core thought

12

1.2.1. Vision

12

1.2.2. Mission

12

1.2.3. Objective

12

1.2.4. Policy

13

1.2.5. Core thought

13

The strategy’s analysis

13

1.3.1. Analyze external environment

13

1.3.2. Analyze internal environment

16

1.3.3. Analyse the environment inside industry

16

1.3.4. Business strategies

19

Tools to build and select strategies

21

CHARTER 2:
THE REAL SITUATION OF BUILIDING VAS BUSINESS STRATEGY

25

OF VIETTEL TELECOM IN THE PERIOD OF 2004-2010
2.1.

General overview on VAS on mobile

25

2.1.1. Concept

25

2.1.2. Types of VAS

25

2.1.3. Forms of service supply VAS

27

3/67


2.1.4. Role of business development of VAS for the growth of
revenue and development of market share for mobile subscribers

27

of the enterprise
2.1.5. Factors have influenced on doing business on VAS

28

2.2.

General view on mobile market in Vietnam

29

2.3.

Introduction about Viettel Telecom

32

2.3.1. General information about Viettel Telecom

32

2.3.2. Formation and development

32

2.3.3. Main business areas and service products

33

2.3.4. Identify strategic vision

33

2.3.5. Core values

34

2.3.6. Business philosophy

34

2.3.7. Brand vision and philosophy

34

2.3.8. Development viewpoint

35

Analysis of Viettel’s business environment and inner forces

36

2.4.1. Macro environment

36

2.4.2. Analysis of telecom industry environment.

41

2.4.3. Opportunities and challenges for Viettel.

46

2.4.4. Evaluation of Viettel’s potentials.

47

2.4.5. VAS business situation of Viettel during past years.

51

2.4.

4/67


CHARTER 3:
BUILD VAS BUSINESS STRATEGY ON MOBILE OF VIETTEL

54

TELECOM IN THE PERIOD OF 2011-2015 AND SOLUTIONS
3.1.

3.2.

3.3.

Select strategy

54

3.1.1. SWOT Matrix

54

3.1.2. Quantitative Strategic Planning Matrix (QSPM)

57

Macro Strategy

59

3.2.1. Cost leadership strategy

60

3.2.2. Differentiation strategy

60

3.2.3. Some expected goals of the next years

62

Solution to implement business strategy on VAS services of Viettel

62

3.3.1. Advertisement , communication and service contribution

63

3.3.2. To consolidate and strengthen Content Centre and VAS Centre
directly under the Company
3.3.3. Strengthen cooperative program with domestic and
international content suppliers on VAS services
3.3.4. Enable clients self create services contents
3.3.5. Close cooperation with domestic and international copy right

representative organizations
CONCLUSION

63
64
64
65
66

5/67


List of designation and abbreviations
1.
2.
3.
4.
5.
6.
7.
8.
9.

Viettel
VAS
ARPU
CLKD
IFE
EFE
QSPM

BCG
SWOT

Viettel Telecom
Value Added Service
Average revenue per user
Business strategy
Internal Factor Evaluation
External Factor Evaluation
Quantitative Strategic Planning Matrix
Growth/ Share Matrix
Strengths, Weaknesses, Opportunities, Threats

10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.

27.

GSM
CDMA
GDP
BTTTT
2G
3G
WB
IMF
WTO
CNTT-TT
VTC
VNPT
Mobiphone
Vietnam Mobile
Vinaphone
Gtel
EVN Telecom
VND

TMDA Cellular System
Code Division Multiple Access
Gross Domestic Product
Ministry of Information and Communications
Second generation mobile network
Third generation technology
World Bank
International Monetary Fund
World Trade Organization

Information Technology and Communications
Multimedia Corporation
Vietnam Posts and Telecommunications Group

Global Telecommunication Corporation
Vietnam Electricity Telecommunications Corporation
Dong

6/67


List of tables
1.

Table 1.1

SWOT analysis

22

2.

Table 2.1

Vietnam mobile data – Events and predictions

30

3.

Table 2.2

Income Statement of Viettel (2004 - 2010)

50

4.

Table 2.3

Revenue density of Viettel services (2008 - 2010)

52

5.

Table 3.1

QSPM - S-O Strategic Group

54

6.

Table 3.2

QSPM - S-T Strategic Group

54

7.

Table 3.3

QSPM - W-O Strategic Group

57

8.

Table 3.4

QSPM - W-T Strategic Group

57

9.

Table 3.5

Revenue target in the period of 2011 -2013

62

List of pictures
Number of people who are interested in value1.

Picture 2.1

added services (VAS) in mobile phone (Source

27

Nokia Market Study).
List of graphs
1.

Graph 2.1

2.

Graph 2.2

3.

Graph 2.3

4.

Graph 2.4

5.

Graph 2.5

Mobile users – source from General Statistics
Office in June 2010
APRU in some countries in 2008. (source: Frost &
Sullivan)
Vietnam share mobile market (Source: General

Statistics Office, 2010)
Viettel Revenue (2000 - 2010) (Internal Source)
VAS Income Statement of Viettel (2008 - 2010)
(Internal Source)

7/67

29
30
31
50
52


INTRODUCTION
1.

Reason for choosing the subject
In recent years, competition in the mobile market has become more and more

severe, seven service providers has come into operations, others are also making
procedures for penetrating into the market. However, the market has gradually
appeared saturated. In order to attract buyers, networks have uninterruptedly reduced
fees and released a mass of promotional programs; only in 2010, 2 big networks
reduced 15-20% mobile fees. In addition, subscriber’s attraction, promotion and
ceaseless fees reduction also make revenue and profit decrease dramatically; Ministry
of Information and Communications said that in 2009 ARPU (Average revenue per
user) of Vietnam mobile decreased 20%.
Facing to this situation, telecom businesses should have new strategies in
order to increase ARPU. VAS services exploitation and development is a suitable

solution for this problem. Especially, 3G boom is a very favourable factor for trading in
these services.
Viettel is one of businesses including large share in the Vietnam Telecom and
also is one of leading businesses in developing, building and providing 3G service. In
order to take full advantage of 3G infrastructure, it should have a business strategy and
exploit VAS services correctly in accordance with the business’s capacity and the
current market’s characteristics in Vietnam.
Wish to apply knowledge and theories into practice; therefore, our group
decided to choose the subject “Build VAS business strategy on mobile of Viettel
Telecom” for our capstone.

2.

Purpose of research
Research and systematize theories on establishment and implementation of

business strategies, select effective models for analyzing the establishment and
implementation of business strategies.

8/67


Apply theoretical bases and models to analyze, evaluate both external and internal
environment in order to build VAS business strategy on mobile of Viettel Telecom.
Suggest solutions, recommendations on carrying out business strategies with a
view of completing selected business strategies of the Company.
3.

Research scope of the subject
Due to time as well as resource limit, we only focus on analyzing and building

VAS business strategy on mobile of Viettel Telecom in the period of 2011-2015.
4.

Research method
In order to solve the above matter, our report is drawn through using qualitative

analyzing method (research, analyze the real situation of Viettel Telecom). Methods of
specific data collection such as: survey questionnaires, expert interview are used for
collecting data. Use National Statistical Data, specialized information and figures; use
secondary figures about previous strategies, researches and reports of Viettel Telecom.
5.

Structure of the capstone consists of 3 charters
Charter 1: Theoretical basis of strategic management of the business.
Charter 2: Analyze the real situation of Viettel Telecom.
Charter 3: Build VAS business strategy on mobile of Viettel Telecom in the

period of 2011- 2015, solutions and conclusion.

9/67


CHARTER 1
THEORETICAL BASIS OF STRATEGIC MANAGEMENT
OF THE BUSINESS
1.1.

Overview on strategic management
1.1.1. Concepts

1.1.1.1 Strategy
There are a lot of viewpoints of strategy, within the framework of our

capstone, we would like to set forth some typical concepts through development
periods of the theory of strategic management:
-

Alfred Chander (1962): “Strategy contains defining long-term and basic

objectives of a business, selecting the method or process of implementing and
distributing essential resources and perfoming those objectives”.
-

Michael Porter: “Strategy is creating a unique and valuable position

including difference and exchangeable choice in order to muster strengths and then
create advantages for the organization”.
From the above viewpoints, we can find that strategy is related to long-term
and basic objectives of a business. However, building and deciding objectivesoriented strategy isn’t enough, the strategy should be defined in accordance with the
vision, mission of the organization and methods, means to achieve those objectives
in order to promote strengths, repair weaknesses of the organization, receive
oppotunities, avoid or reduce damages because of threats from external
environment.
Thus, we can generally define strategy as follows:
“Strategy is a mass of complex actions in order to mobilize resources of an
organization to achieve a certain objective.”
1.1.1.2. Business strategy
As mentioned, strategy is related to objectives of a business, strategies are
built with the aim of helping the business achieve given objectives. However,
business strategy is related to how a business can compete sucessfully on a specific

market. It is related to strategic decisions on selecting products, meeting the demand

10/67


of buyers, taking a competitive advantage compared to rivals, exploiting and
creating new opportunities, ETC,v.v...
Fred R.David: “Business strategy is means to achieve long-term objectives”.
It can be said that business strategy is means supporting businesses to
achieve long-term objectives. Business strategy doesn’t draw up specific methods,
but it is a general program, the most effective solution of resource mobilization with
a view of executing fixed objectives.
Business strategy of a business can be generally defined as follows:
“Business strategy is an art of means organization and design in order to achieve
long-term objectives of a business and it has a relationship with the change of
business and competitive environment”.
1.1.1.3. Basic features of business strategy
-

Business strategy is defined from basic objectives and business direction of a

business in each period.
-

The orientation of strategy is to ensure that the business will develop

ceaselessly and strongly in a changeable environment.
-

Business strategy ensures maximum mobilization and optimal combination

of resource usage and exploitation at present and in the future, promotes advantages
and catches opportunities in order to gain competitive advantage.
-

Business strategy of a business is reflected during an uninterupted process.

-

Business strategy always contains offensive thought, wins a victory in

business world.
-

Business strategy is often built during a long term (3,5,10 years).
1.1.1.4. Role of business strategy

-

Business strategy helps the business recognize its purpose, direction, it is

also a basis and guideline for all business operations of the business.
-

Business strategy helps the business catch and take advantage of business

opportunities, then have positive methods to overcome risks and threats on the
business world.

11/67

-

Business strategy contributes to improve the using capacity of resources,

strengthen the business’s competitive stand in order to ensure its sustainable
development.
-

Business strategy creates strong foundations for making policies and

decisions on business production in accordance with the market change.
1.1.2. Process of strategic management
Process of strategic management is a series of operations, including
Commitments, Decisions and Actions of a business performed to achieve Strategic
Competitive Advantage; Sustainable Competitive Advantage with Profit above
average.
Process of strategic management can be divided into 3 periods:


Period 1: Form a strategy
This is the initial period playing a very important role in the whole process of
strategic management. During this period, the business defines strategic
objectives based on building mission, vision and core thought; analyzing
external and internal factors; exactly defining opportunities, threats,
strengths, weaknesses, and then select suitable strategies.



Period 2: Implement the strategy
This is a period apply the strategy into practice in order to achieve given
objectives. During process of strategic management, this period is quite
important because whatever a strategy is formed systematically, it will
become meaningless if it isn’t performed well. Three basic steps in the
period of strategy implementation are: building annual business plans/
establishing annual objectives, putting forth policies and distributing
resources.



Period 3: Evaluate the strategy
This the final period of process of strategic management. In this period, it
should carry out the following works: re-considering basic factors of the
current strategy, measuring achievements and implementing adjustments.

12/67


1.2.

Mission, Vision, Purpose, Policy, Core thought
1.2.1. Vision
Strategic vision expresses the highest or the most general desires, aspirations

that an organization wants to obtain. It can be considered vision as a road map of
the business reflecting the future destination and the road that the business will
follow to achieve its goal. On the other hand, strategic vision is drawing a picture of
purposes, reasons and methods to attain given goals.
Define and declare that vision play a specially important role, because it

collects all expectations in the business and encourage all efforts of the business
with the aim of achieving purposes, lofty cause and ideal
1.2.2. Mission
Mission is a declaration bearing a long-term value on purpose, it helps
distinguish one business with another. Such declarations are also regarded as
business philosophies, business principles, and the Company’s faith.
Mission announcement “reason for existence” of the Company; In the
viewpoint of Drucker, the mission announcement of the Company answers the
question: “What are your business works ?”, “What/ how should you do to achieve
mission announcement ?”
1.2.3. Purpose
Purposes can be defined as achievements that an organization finds every
way to achieve when pursuing its main tasks/ mission. Correctly defining purposes
is very important to the business’s success, and objectives showing development
directions, evaluating earnings show that objectives like resource distribution,
development cooperation provide a basis to build an effective plan, organize and
evaluate the efficiency, etc,v.v...Objectives should be challengeable, measurable,
suitable, reasonable and clear. A business includes many sections, so purposes
should be built for the whole Company and each section.
1.2.4. Policy

13/67


Fred R.David: “Policy is a tool to carry out strategies, a means to achieve
objectives. Policies include instructions, rules and procedures designed to support
efforts to achieve given objectives. Policies are directions to make decisions and
express repetitive circumstances or periodical ones”.
1.2.5. Core thought
Core thought defines long-term features of an organization; this is a

consistent determination exceeding the life circle of product or market, technology
breakthrough, management methods and leaders. In fact, core thought creates the
most important and sustainable contributions for successes of a visionary company.
Core value constitutes fundamental and sustainable rules, principles of an
organization. Core values don’t need external support; they are valuable and
important to the internal organization. A company should define core values which
are independent of the current environment, competitive demands and management
method. In order to identify core values, it should select the truthfulness, and then
define which value is the focus.
1.3.

The strategy’s analysis
When developing and executing the strategy, managers should perform an

important work; i.e., analyse the business environment where the business is
competing or may penetrate in the future. Systematic analysis can help managers
evaluate the current rate of profitability, define opposite forces or take advantage of
them in order to improve the business capacity, evaluate the impact of big changes;
moreover, helps define ways to change the industry’s structure. The business
environment includes internal environment and external environment.
1.3.1. Analyse external environment
External environment includes factors, forces, and institutions occurring
outside the business and beyond its control, it influences the efficiency and
operations of the business.
Identify and evaluate opportunities and threats from external environment
allows the business to define its mission, task clearly and exactly; build strategies

14/67

and achieve long-term objectives and policies with a view of attaining annual
objectives.
External environment includes:


Macro environment or general environment



The industry’s environment or micro environment or competitive

environment.
1.3.1.1.

Analyse macro environment

Macro environment is an environment covering operations and affecting
directly or indirectly all operations of businesses.
The main purpose of macro environment analysis is to identify the change in
expected tendencies from external factors. Focusing on the future, external
environment analysis allows the business to identify and evaluate: O-Opportunities
of the environment where the business may take advantage and T-Threats that the
business may face up with. Then, allow the business to build business tasks clearly,
define long-term and feasible objectives and design strategies in conformity with
business objectives.
We can use PEST model to analyse macro environment. The model consists
of:


Political



Economic



Sociocultural



Technological

They are four environmental factors directly affecting economic industries,
those environments are external ones of businesses and industries, and industries
must be influenced by them as an objective factor. Based on impacts, businesses
will put forth appropriate policies and actions.
1.3.1.2.

Political environment

Political factors also have a big influence on the rate of opportunities and
threats from the environment. The main thing of this environment is the method that

15/67


businesses can affect the Government and vice versa, the method that the
Government affect them.
1.3.1.3.

Economic environment

The status of macroeconomic environment defines the healthiness, prosperity
of the economy; it always impacts on businesses and industries.
Economic environment indicates the nature and orientation of the economy
that the business is operating. The economy’s influences on a company can change
the profitability. Four important factors in the macro economy are the growth rate of
the economy, interest rate, exchange rate and inflation rate.
1.3.1.4.

Socio-cultural environment

Socio-cultural environment is related to social attitudes and cultural values.
Because cultural values and social attitudes create a social basis; so it often leads
changes and technological, political, economic and demographic conditions. Similar
to technological changes, social changes also create both opportunities and threats.
1.3.1.5.

Technological environment

Technological environment includes institutions, operations relating to create
new knowledge, transfer them to inputs, products, processes and new materials.
Technological change consists of creativity and termination, opportunities and
threats. One of the most important impacts of technological change is that it can
affect the height of entry barrier and re-organization on the structure’s origin.
1.3.1.6.

Natural environment

Natural environment includes: geographical position, climate, natural
landscape, land, sea and rivers, mineral resources, forestry resources, purity of
water and air environment, etc,v.v...ensuring necessary input factors and operating
environment of the business.
1.3.1.7.

Global environment

Global environment includes relevant global markets, changing markets,
important international events, institutional features and basic culture on global
markets. Globalize business markets creates both opportunities and threats.

16/67


1.3.2. Analyse internal environment
Internal environment of a business includes internal factors. In order to exist
and develop, all businesses carry out the following operations: management,
finance, accounting, production/ business/ operation, research and development,
marketing, etc… and have an information system, a management system, and
functional sections.
Internal environment analysis is to define S-Strengths as well as WWeaknesses of businesses.


S-Strengths: that the business is carrying out well or features help the

business have competitive ability, including:
-

Secrets, skills, experience or special methods

-

Have strengths in material facilities such as: abundant capital, a big

distribution system.


Have a strong human resource,v.v...
W-Weaknesses: shortcomings of the business or factors pushing the

business in difficult circumstances, including:
-

Lack of important competitive skills and experience

-

Lack of resources: human resources, financial resources, etc v.v...
The result of internal environment analysis is to define resources, capacities and

core capacities and then build a competitive advantage and strategic competitive
advantage of the business. Competitive advantage of the business means that the
business has the ability to supply the market a special value which no rival can.
1.3.2.1.

Matrix (Internal Factor Evaluation)

IFE Matrix summarizes and evaluates basic strengths and weaknesses of a
business. The matrix shows strengths that the business should promote and

weaknesses that the business should improve to raise its achievement and
competitive advantage. This is an important tool in forming the strategy for
businesses.
1.3.2.2.

Company Profile Matrix (CPM)

17/67


CPM is to compare one business with its main competitors, based on factors
affecting the competitive ability of businesses. CPM helps strategic managers
identify main competitors as well as their strengths and weaknesses, and clearly
recognize its competitive advantage and shortcomings. With this matrix, we can put
main factors of internal environment in, which influence the business’s
development such as: financial stability, the efficiency of marketing.
1.3.3. Analyse the environment inside industry
In order to form a strategy, apart from macro environment analysis, research
the environment inside industry is an absolutely important content. The
environment inside industry is an environment directly associated with each
business, most of operations and competition of businesses occur directly in this
environment.


Five competitive forces model
Michael E. Porter, a famous professor specialized in business strategies of

Harvard Business School, put forth five competitive forces model, supporting
strategic managers to analyse competitive environment, identify opportunities and
threats from this environment and then build appropriate strategies. In his opinion,

there are 5 competitive forces:
1.3.3.1. Competitive pressure from potential entrants
In the viewpoint of M-Porter, potential entrants are businesses which aren’t
present in industry but may affect the industry in the future. How many potential
entrants, how their pressure on the industry, weak or strong, depends on the
following factors:
-

The industry’s attraction: This factor is reflected through criteria such as:

profitability rate, quantity of buyers, and quantity of businesses in the industry.
-

Barriers when entering into the industry: factors make participation into an

industry more difficult and expensive (scale advantage, product difference; capital
demand; convertible cost; approach ability to distribution channels; cost

18/67


disadvantages unrelated to the size; the Government policies; reprisals of businesses
in the industry)
1.3.3.2. Competitive pressure from substitute
Substitute is the product of industries under the demand of buyers similar to
products in the industry. The appearance of substitutes can reduce the selling price
or profits of businesses. Thus, businesses should predict and analyse the
development trend of substitutes of businesses.
1.3.3.3. Competitive pressure from buyers
Buyers are subjects of businesses and key factor creating the market.

Pressure from buyers exists chiefly under two forms: claim for discount or bargain
to have a better product/ service and they are people controlling competition in the
industry through their decision. This makes competitors fight with each other and
reduce the gross profit of industry.
1.3.3.4. Competitive pressure from suppliers
Suppliers are individuals or organizations providing necessary resources for
the business’s operations. Suppliers can create opportunities for the business when
reducing the selling price, improving the quality of products, improving the quality
of attached services. On the contrary, it can also cause threats for the business when
increasing the selling price, reducing the quality of products, services, not ensuring
quantity and time of supply, etc…
1.3.3.5. Competitive pressure from the industry
Competitors are opponents trading in the same products/ services with the
business. Competitors share market share with the business and can develop more if
they have a higher competitive position. Competitiveness increase or decrease in the
industry depends on the market scale, the industry’s growth and the investment rate
of competitors. The nature and intensity of competition among available businesses
in the industry depends on many factors:
-

Competitors are crowded or have similar scale

-

The industry’s growth speed

19/67


-

Fixed cost and storage cost are high

-

Lack of product diversification and variable cost

-

The industry has redundant capacities

-

The industry’s diversification

-

Lay a bet on the industry is high

-

Barriers for withdrawal



EFE Matrix (External Factor Evaluation)
EFE Matrix summarizes and evaluates main opportunities and threats to the

business from external environment. It helps strategic managers assess the reaction
level of the business for opportunities and threats, put forth external environment

appraisals which may cause advantages or disadvantages for the business.
1.3.4. Business strategies
In order to exist in a severe competition, the Company should create a
competitive advantage. Competitive advantage is reflected under two basic forms:
the lowest cost or product differentiation. Combine two forms of competitive
advantage with the business scope of the Company will shape 3 competitive
strategies:


Cost leadership strategy.



Differentiation strategy.



Focus strategy. Focus strategy has two specific methods: cost focus or

differentiation focus.
1.3.4.1. Cost leadership strategy
Cost leadership strategy was widely applied in the 1970s of the twentieth
century in developed capitalist countries and nowadays it has been used in many
developing countries. The nature of cost leadership strategy is how achieve total
cost-leadership in the industry (production, management), on the basis of
implementing policies: focus on investing in material facilities, equipments, mass
production in order to take advantage of large-scale, pursue the aim of cost

20/67

reduction from experience, cost control and expense minimization, cost reduction
for R & D, marketing, advertisement, etc,v.v...
The purpose of the Company is to pursue this strategy; i.e., create new
products, services with the lowest cost in order to overcome competitors to exist
and develop. Companies selecting cost leadership strategy have low differentiation,
market sections are low, typical strength concentrates on production management
and material supply. With low cost, the Company has the ability to sell a large
number of products, creating favourable conditions to promote production, reduce
the price of products.
 Strong points
-

Due to low cost, the Company can sell its products lower than competitors

but keep expected profits. In case, competitors sell products at the same price, the
Company including the lowest cost will achieve higher profit.
-

When the business scope starts to develop, if a price war happens and

companies compete with each other on price, the Company including lower cost
will won based on better competitiveness.
-

The Company easily confronts when having pressure on price increase of

suppliers.
1.3.4.2. Differentiation strategy
The nature of differentiation strategy is to create things that the whole

industry recognizes “unique, incomparable”. Differentiation can be expressed under
many forms: product design, quality, trade mark, manufacturing technology,
customer service, etc,v.v...
The purpose of differentiation strategy is to achieve competitive advantage
through creating unique products for buyers, meet the demand of buyers by ways
that competitors can’t do. This possibility allows fixing a “dominant price” for
products, increasing revenue and achieving above average profits. “Dominant”
price often is much higher than the price of companies pursuing cost-leadership
strategy and received by buyers because they believe that products have a high

21/67


quality. Hence, products are valued on the basis of market, at a level that the market
accepts.
1.3.4.3. Focus strategy
Unlike cost-leadership strategy and differentiation strategy, the nature of
focus strategy is to satisfy the need of a certain part of market which is defined
through geographical factors, objects or product features, etc… Like differentiation
strategy, focus strategy can carry out under many methods: focus on low-leadership
or focus on differentiation or both, means that the Company carries out costleadership strategy or differentiation strategy only in the selected part of market in
order to gain competitive advantage.
1.4.

Tools to build and select strategies
1.4.1. SWOT Matrix
SWOT is a abbreviation set of first letters of English words: Strengths,

Weaknesses, Opportunities and Threats. This is an extremely useful tool helping us
learn about matters or making decisions in organization, management as well as

sales. In other words, SWOT is a theoretical framework that we depend on and reconsider strategies, define the position as well as road of an organization, a
company, and analyze business suggestions or any ideas relating to the business’s
rights and interests. In fact, apply SWOT in building business strategies, forming
strategies, evaluating competitors, surveying the market, developing products and
reporting researches, etc… has been increasingly selected by many businesses.
Analyze SWOT for the business to know more thoroughly about:


Strengths of resources



Weaknesses of resources



Best opportunity



Fundamental challenge
Then, the business can draw a conclusion that how to mobilize resources

inside and outside the business effectively.
Table 1.1: SWOT analysis

22/67


O: Opportunities

C: Challenges

- Serve more groups of - New competitors join in
buyer

the market

- Expand

new - Lost

geographical regions

revenue

for

substitutes

- Expand series of product - The market grows slowly
- Transfer skills to a new - Upstream
SWOT Matrix

product

exchange

- Vertical integration

changes
rate

in
and

commercial policies

- Expand to seize market - New regulations cost much
shares from competitors
- Re-purchase competitors
- Joint or joint-venture to
expand coverage
opportunities

S: Strengths

to

- The rate to be affected
before business pool
- Buyers or suppliers have

- Expand to exploit new
- Expand

money

more advantage
- Change the need of buyers

enhance - Demographical change

brand name/ image
SO strategies

ST strategies

- Strong strategy
- Strong finance
- Good reputation
- Lead the market
- Unique techniques

Use strengths to take

Use strengths to take

advantage of opportunities

advantage of avoid threats

WO strategies

WT strategies

- Price advantage
- Strong advertisement
- Production

renovation

technology
- Good customer service
- Better quality products
- Joint and joint-venture
W: Weaknesses

23/67


- Not have a clear strategic
orientation
- Backward equipments
- Bad accounting, high debts
- Overall cost is higher than
the competitor’s

Repair weaknesses to

Repair weaknesses to

exploit opportunities

overcome/ avoid threats

- Lack of some fundamental
skills/ potentials
- Loss
- Production problem

- R&D backwardness
- Narrow series of product
- Bad marketing skills

1.4.2. Quantitative Strategic Planning Matrix (QSPM)
QSPM is a tool to decide which strategy is the best for businesses. QSPM
uses input factors by analysing EFE, IFE and the summary result of SWOT analysis
in order to objectively decide the best strategy for replacement. In order to develop
QSPM, there are 6 steps as follows:


Step 1: List important external opportunities/ threats and internal

weaknesses/strengths of the business.


Step 2:

Classify each successful internal and external factor (this

classification like IFE, EFE Matrixes).


Step 3: Define replaceable strategies that the Company should consider

implementing. Collect separate groups of strategy if possible.


Step 4: Define (AS). AS expresses relative attraction of each strategy

compared to other strategies. Only strategies of the same group compare to each
other. AS is divided as follows: 1 = unattractive, 2 = a little attractive, 3 = quite
attractive, 4 = very attractive. If successful factors don’t affect the choice of
strategies, not mark attraction for these strategies.

24/67




Step 5: Calculate (TAS), by multiplying classification mark (step 2) with AS

(step 4) in each row.


Step 6: Calculate TAS for each strategy. This is an addition of TAS in

strategy column; the higher mark expresses, the more attractive strategy is.

25/67