BUILDING BUSINESS STRATEGY FOR DUC LONG JOINT STOCK COMPANY

Group 13

DISSERTATION MBA

BUILDING BUSINESS STRATEGY FOR
DUC LONG JOINT STOCK COMPANY

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HANOI – 2011
TABLE OF CONTENT
INTRODUCTION........................................................................................................................................ 3
1.THE NECESSITY TO CHOOSE RESEARCH TOPICS.......................................................................................3
2.STUDY SUBJECTS.................................................................................................................................... 3
3.PURPOSE OF RESEARCH......................................................................................................................... 4
4.RESEARCH METHODOLOGY.................................................................................................................... 4
5.SCOPE OF RESEARCH.............................................................................................................................. 4
6.THE STRUCTURE OF THE SUBJECT........................................................................................................... 4
CHAPTER I RATIONALES FOR BUILDING ENTERPRISE’S BUSINESS STRATEGY...............................................5
1.1OVERVIEW ABOUT BUSINESS STRATEGY............................................................................................... 5
1.2PROCESS OF BUILDING BUSINESS STRATEGY......................................................................................... 6
1.3 ANALYSIS INSTRUMENTS OF BUSINESS STRATEGY..............................................................................14
CHAPTER II ANALYSIS OF RATIONALES FOR BUILDING BUSINESS STRATEGY OF DUC LONG JOINT STOCK
COMPANY.............................................................................................................................................. 20
2.1INTRODUCTION TO DUC LONG JOINT STOCK COMPANY (DLC).............................................................20
2.2 ANALYSIS ON BUSINESS ENVIRONMENT OF DLC.................................................................................21
2.3GENERAL EVALUATION OF ENVIRONMENTAL FACTORS AND SWOT ANALYSIS......................................43
CHAPTER III SELECTING STRATEGY AND IMPLEMENTATION SOLUTIONS FOR............................................47

3.1MISSION, VISIONS AND STRATEGIC OBJECTIVES..................................................................................47
3.2STRATEGY SELECTION PERIOD 2011 – 2020 OF DLC.............................................................................49
3.3STRATEGIC SOLUTIONS....................................................................................................................... 51
3.4STRATEGIC ROADMAP........................................................................................................................ 60
CONCLUSION.......................................................................................................................................... 62

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INTRODUCTION
1. The necessity to choose research topics
After six years of construction and development, the Duc Long Corporation
(DLC) has gained encouraging achievements. From an original base of polytechnic
technology burned brick manufacturing, now DLC has become one of the providers
of semi-flexible technology burn bricks with a top quality production in Bac Giang,
and Bac Ninh. The being-built factories of aerated autoclaved concrete (AAC brick)
of the company promised to elevate DLC to a new position in producing
construction materials in general and environmentally friendly bricks in particular.
In the context of economic integration, the level of competition among
enterprises increased fierce, many challenges posed to small businesses in general,
and to DLC in particular.
With a vision of striving to become one of 10 manufacturers and
distributors of environmental friendly construction materials in Vietnam in the
coming years, DLC has to apply scientific technology and scientific management in
accordance with practical conditions of the DLC. Building a business strategy is the
most important and practical thing to do to get the DLC-oriented platform for
building process and development of the company in the present and future. After
attending the program Master of International Business Administration from the

University Center Griggs and ETC - Hanoi National University, together with the
caring guidance of Prof. Ngo Kim Thanh, we, the members of Group 13 in M1009
class, implement the project "Building a Business Strategy for Duc Long
Corporation period 2011 to 2020" to help DLC select an appropriate business
strategy platform based on the knowledge and socio-economic reality of the country
as well as specific operational context of the current DLC.
2. Study subjects
Subjects of research topics are business operations analysis and competitors
analysis to form business strategies for the DLC. That helps DLC make appropriate
business strategy in the period 2011 - 2020 to realize its vision.

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3. Purpose of research
The purpose of the research is to build business strategy for the Duc Long
Joint Stock Commpany period 2011 - 2020 and to propose solution to implement
strategies that help DLC become 1 of 10 leading manufacturers and distributors of
environmental friendly building material products in Vietnam in 10 years.
4. Research Methodology
We use the methods of analysis and synthesis, and combine with the matrix
tool that has been learnt in other subjects: strategic management, marketing
management, corporate finance, production management, etc, applying to study the
characteristics of business, financial data of the DLC and some competitors in the
industry. We also use the techniques of inside - outside (IE) environmental analysis
and SWOT analysis for the DLC.
5. Scope of research
The scope of the research is limited to the industry of materials production;

simultaneously, the data analyzed is mainly from the DLC and from some
companies that are direct competitors with the DLC. Therefore, the scope of the
projects are applicable in a particular business. This is limited to this topic and we
expect the scope can be extended further to other economic sectors of our country in
the near future.
6. The structure of the subject
Topics are laid out according to the main contents as follows:
Introduction
Chapter I. Rationale for building business strategy
Chapter II. Analysis of rationales for building strategy of Duc Long joint stock
company
Chapter III. Selecting strategy and implementation solutions for Duc Long
Corporation
Conclusion
References
Appendix.

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CHAPTER I
RATIONALES FOR BUILDING ENTERPRISE’S BUSINESS
STRATEGY
1.1 Overview about business strategy
According to Alfred Chandler, "Strategy is the determination of goals and
long-term basic objectives of the enterprise, identify actions and allocate the
resources necessary to achieve that goal”
In the view of unity, "Strategy is the art of coordinating the activities and

control them to achieve long term goals of the enterprise." Chandler considered
strategy involves to setting basic long-term goals of the business and selecting the
courses of action and allocate the necessary resources and implement those goals.
In business, "Strategy is the art of design, and organizational means to
achieve long term goals of the business and relationship with the change of business
environment and competitiveness."
A business strategy has the following basic characteristics:
-

Business strategy defined the basic objectives and business direction of the
business in each period.

-

The orientation of the strategy to ensure business continuity and development
firm in the business environment is constantly fluctuating.

-

Business strategy to ensure maximum mobilization and optimal combination of
extraction, use of corporate resources in the present and future to promote the
advantages and seize the opportunity to gain in competition.

-

Business strategy of the business are reflected throughout the process
continuously.

-

Business strategy always thought offensive, winning in the marketplace
business.

-

Business strategies are often built in a long period (3, 5, 10 years).
Develop business strategies have special importance for the survival and

development of enterprises, which reflected the following aspects:

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-

Business strategy to help businesses identify the purpose, its direction as a
basis, the guideline for all production and business activities of enterprises.

-

Business strategy to help businesses understand and take advantage of business
opportunities, and proactive measures to overcome the risks and threats in the
competitive marketplace.

-

Business strategy to contribuites to improve the efficient use of resources,
enhance the competitive position of businesses to ensure sustainable

development of enterprises.

-

Business strategy creates a solid basis for the proposed policies and decisions
on production and business in accordance with the fluctuation of the market.

1.2 Process of building business strategy
Business strategy is built according to a general process as below
Table 1.1: Road map to create business strategy
Corporate functions, missions and strategic
objectives (1)

Analysis on internal factors
of company (S,W) (3)

Analysis on business
environment (O, T) (2)

Strategy selection (4)

Strategy at company level (5)
Strategy at business and function’s level

Strategy implementation (6)

Test & evaluate results (7)

Feedbacks

Source: Associate Professor, Doctor Ngo Kim Thanh.

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1.2.1 Determine mission and strategic objectives
1.2.1.1

Determine business mission

Drucker said developing a clear business mission is "responsibility of
strategists". Nature of business tasks can be expressed through competitive
advantage or disadvantage of the company.
The good mission statement is a necessary condition for preparation,
implementation and evaluation strategies. The mission statement may vary in
length, content, size and unique features, but the report should be 9 effective
management components and corresponding questions that a mission statement
needs to be answered are:
(1). Customers: Who are the consumers of the company?
(2). Products or services: What are products and services of the companies?
(3). Market: In which market, does the company compete?
(4). Technology: Technology is a leading concern of the company or not?
(5). Interest in a matter of survival, growth and profitability: the company is
tied to economic goals or not?
(6). Philosophy: What are the basic beliefs, values, aspirations and priorities
of the company's philosophy?
(7). Self-assessment: What is special power or major competitive advantage
of companies?

(8). Concern for public image: is the image of public concern is primarily for
business or not?
(9). Concern for employees: What is the company's attitude to the staff like?
1.2.1.2

Missions

Mintzberg defines a mission as follows: "A mission for the basic functions
of a social organization in terms of aspects of goods and services that organization
produced to serve its customers".
Mission is the message expressed the core values of the business. It
expresses the importance, the contribution of business in terms of business and life,
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showing the motto of the enterprise, the location of the business marketplace and
what the business is committed to comply. Mission Statement should include a
concise but meaningful platform that is dynamically and display long-term stability.
1.2.1.3

Vision

Vision is a message specifying mission statement goals that motivate and
highlight the need for improvement that is vital for businesses; it creates confidence
in the future of business and it aims to turn the impossibleness into possibleness.
1.2.1.4

Setting strategic objectives

Setting goals is the transformation of vision into specific performance that
can be measured.
The purpose of the establishment of objectives: Transforming the vision
into specific operational objectives; create standards to evaluate and monitor the
activities and, making the company to be creative, driven and focus on its action
plan.
Characteristics of goal setting are: giving commitment to achieve specific
operational objectives and the results must be made over time in terms of quantity
and types.
1.2.2 Analysis and assessment of external environment
1.2.2.1

Macro environment analysis – PEST model

Analysis of the macro environment is aimed at identifying the changes, the
trends expected from the elements of the external environment. With the focus on
the future, analyzing the external environment allows enterprises to realize the
opportunities and threats.
Political factors - the law (P)
The political factors and laws have a significant impact on the level of
opportunities and threats from the environment. The main thing in this segment is
how business can influence government and how government affects them. This
factor is constant change and will significantly affect the competition.
Economic factors (E)

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The state of macro-economic environment determines the health and
prosperity of the economy, causing impacts to businesses and industries. Economic
environment is the nature and direction of the economy in which businesses
understand relativity. The economic impact of a business can change the ability to
create value and its income. Four important factors of the macroeconomic
environment include: economic growth; interest rate, exchange rate and inflation.
Cultural factors - social (S)
The scope of the impact of cultural factors - society is often very broad, "it
defines how we live to work, production and consumption of products and
services." Thus an understanding of cultural - social facilities will be very important
for managers in the strategic management process in organizations. The
environmental aspects of social cultural forms influence significantly to business
activity.
Technology factor (T)
This is the kind of factors that has significant influence, directly to strategic
business areas, industry and business. Changing technology can make existing
products become outdated overnight, and it can generate a series of new product
capabilities. Thus, changes in technology, including creation and destruction, both
opportunities and threats.
Science and technology are key competitive factors, and the essence of the
business. Therefore, analyzing and judging the change of technology is very
important and urgent. The strategy needs to pay constant attention to changes in
investment and technological progress.
Natural factors (+)
Geographical location, climate, topography ... These are very important
factors directly affect the process of production and business of enterprises.
Unpredictable changes in climate sometimes threat to businesses their services are
seasonal.
Infrastructure availability is also considered a part of the natural factors

affecting important to the organization of work, costing the business.

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1.2.2.2 Industry environment analysis
Michael E. Porter, professor at Harvard School of Business Administration,
has a framework to help managers identify opportunities and risks that businesses
face in an industry. Framework of Michael E. Porter is called the five forces model
of competition, expressed by the following diagram:
Figure 1.1 5 forces model of Michael E. Porter

Threats of new entrants

Bargaining
power of
suppliers

Competitive
rivalry within an
industry

Bargaining
power of
customers

Threat of substitute
products

Porter pointed out that the stronger the force, the more limited ability of
existing firms to raise prices and earn higher profits. According to Porter's model,
strong competitive forces can be seen as a threat, because it will reduce profits. The
strength of five competitive forces may change over time, as industry conditions
change.
The task set for the administrator is to be aware of the opportunities and
risks that changes in competitive forces will bring, thereby building appropriately
adaptive strategy.
Competitive pressures from existing competitors
If the weaker competitors, companies have the opportunity to raise prices
and earn greater profits. Conversely, when the competition is strong, the
competition in price is significant, and all price competition will lead to injuries.
Therefore, strengthening competition among enterprises will create a strong threat
to profitability.
Competition among firms in an industry often includes contents such as:
industry competitive structure, industry’s demand, and barriers to leav the industry.
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The risk from the potential competitor
The potential competitors are companies currently do not compete within
an industry, but become competitive if they choose and decide to join the industry.
This is a threat to existing businesses. The current enterprise in trying to deter
potential rivals does not let them join the industry, the more enterprises in the
industry, the more increasingly fierce competition is.
The ease and difficulty for the entrants of potential competition depends
largely on the barriers to enter the industry. The barriers to enter the industry,

including: brand loyalty; Economies of scale and cost of conversion; the provisions
of the Government and the retaliation.
The power of buyers
Third force in Porter’s five forces is bargaining power of buyers. The buyer
of a business may be end users (end-user), the enterprise can distribute its products
to end users, or those retail and wholesale. Buyers can be viewed as a competitive
threat to their business in a position to force down prices or demand higher quality
and better service. Conversely, when people buy low, businesses will have
opportunity to raise prices and earn greater profits. Buyers can give requests to a
business depends on whether buyers have relative power to the business.
The power of suppliers
The vendor may be considered a threat when they pressure to increase input
prices or reduce quality of products and services provided, so that reduces the
profitability of the business. Conversely, major suppliers will give businesses a
chance to push down prices and demand high quality. As for buyers, the ability of
suppliers to request business does depend on the relative power between them and
the business.
Threat of substititute products and services
Final force in Porter's model is threatened from the substitutes. These are
substitute’s products that can satisfy the needs of customers.
Its characteristics are often superior to those of the product being replaced.
The existence of strong alternative products is a competitive threat, limiting the
possibility of increasing value and thus limits the profitability of the business.
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1.2.3 Analysis and assessment of internal environment
Environmental analysis within the enterprise in order to: Identify strengths

and weaknesses of the enterprise to determine the capacity of differentiation and
competitive advantage of companies (the basis for the selection of competitive
strategy); Identify core business capabilities (the basis for implementing the vision
and mission).
1.2.3.1 Resources analysis
Analysis of resources to know the reserve of resources, capabilities and
assets available to businesses. The analysis should consider the financial resources;
the material properties; human resources (skills and loyalty of employees and
managers); intangible assets (reputation, brand, name sound financial, reputation
strategy, values, corporate culture), the technological assets (including copyrights,
patents) and the long-term contracts.
1.2.3.2 Research and Development capacity (R&D)
Research and development efforts can help the enterprise role up in leading
positions in industry or vice versa, making enterprises lag behind the industryleading businesses. Therefore, enterprises must constantly change in technological
innovation related to the technology, products and materials.
1.2.3.3

Production capacity

Manufacturing is one of the primary activities of companies associated with
the creation of products, strongly influence the success of your business. The
manufacture of products with relatively high quality with relatively low prices will
bring many benefits to businesses as easy to sell more products, saving financial
resources to create positive attitude among employees.
The contents of note when analyzing the factors of production are: price
and supply of raw materials, the level of inventory turnover, the arrangement of
means of production, performance and cost of equipment equipment, cost and
technological capabilities with the industry and the competitors

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1.2.3.4

Financial capacity

The functions of the finance department include the analysis of planning
and supervising the implementation of financial planning and financial situation of
enterprises. Finance department has a deep impact across the enterprise. When
analyzing the accounting and financial factors, managers should focus on the
content: the ability to mobilize short-term and long-term total capital of the
enterprise, the flexibility of capital structure; the utilization of strategic control
capabilities to reduce cost, accounting systems and effective for cost planning,
financial planning and profitability
1.2.3.5

Marketing factor

The function of the marketing department include analysis, planning,
implementing and supervising the implementation of the program, maintaining
relationships and communication with customers on the principle of mutual
interests. Therefore, in general, the task of marketing management is to adjust level,
timing and nature of demand among consumers and businesses to achieve goals.
1.2.4

Forming strategic plans, selecting appropriate strategies
Strategy analysis and selection are mainly subjective decisions based on

objective information. Strategy analysis and selection process to determine
activities which companies can fulfill the responsibilities and objectives. The
current strategy, objectives and mission of the company plus controlled information
inside and outside will form the basis for the formation and evaluation of feasible
strategic options.
1.2.5

Building actions plan and solution for strategy execution
Stage of setting up strategies to ensure successful implementation of

successful strategies. Although being interdependent, strategies between two stages
setting up and implementation are different in nature. All "real work only begins
after the strategy was set." The implementation of successful strategies will require
support, discipline, motivation and effort from all the administrators and staff.
Implementing strategy should focus on key governance issues as well:
-

Establish annual targets.

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-

Establish policies.

-

Distribution of resources is an administrative operation spotlight to implement
the strategy.

-

Management of conflict.

-

Mounting structure with strategy.

-

Attach performance compensation strategy.

-

Administration of anti-change

-

Create a culture to support strategy.
1.2.6

Test and adjust
The strategy is too rigid mold and become obsolete when the environmental

conditions inside or outside of the business change. So the strategy to review,
evaluate and adjust the implementation of the strategy.
Rumelt set standard for evaluating the strategy as follows:

-

Consistency.

-

Compatibility.

-

Feasibility.

-

Advantages.
Assessing strategies successfully allow businesses to take advantage of

their strengths inside as they develop and exploit external opportunities as they
emerge, and against external threats and allow modification of the internal
weaknesses before weaknesses become disastrous.
1.3

Analysis instruments of business strategy

1.3.1

Matrix I.E
1.3.1.1 Matrix evaluation of external factors – EFE
Assessment matrix of external factors for strategy summarizes and

evaluates economic information, social, cultural, demographic, geographic,
political, government, law, technology and competition. There are five steps to
develop a matrix evaluation of external factors.

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-

Step 1: Make a list of 10 to 20 factors and risk opportunities primarily decisive
role for the success of businesses as identified in the inspection process from
external factors.

-

Step 2: Classification of importance from 0.0 (not important) to 1.0 (very
important) for each element. This classification shows the respective
importance of the factors for success in the business of enterprise, of the
importance of all factors must equal 1.0.

-

Step 3: Classification from 1 to 4 for each determinant of success shows how
the current strategy of the business response to these factors, of which 4 is a
good response, 3 is above average, 2 is the average response and a reaction low.
These levels are based on the effectiveness of corporate strategy. Thus the
classification step is based on firm’s size, while the classification in step 2
based on the industry.

-

Step 4: Multiply the importance of each element of its type to determine the
score of the importance of each factor.

-

Step 5: Add all the scores on the importance of factors to determine a total score
of the matrix is important for business.
The total score of the matrix does not depend on the number of elements in

the matrix; the highest is 4 points, at least one point. If the total scores of 4,
businesses respond well to opportunities and risks, if the total scores of 2.5 business
responses moderately to opportunities and risks, if the total score is 1 business
responses weakly to the opportunities and risks.
1.3.1.2 Assessment matrix for internal factors – IFE
-

Step 1: Make a list of 10 to 20 factors, including the strengths and weaknesses
affect the development of enterprises.

-

Step 2: Assign importance from 0.0 (not important) to 1.0 (most important) for
each element. The importance assigned to each factor given that the relative
importance of factors for the success of businesses in the industry. Excluding
major factor is the strength or weakness within, the elements are considered to
have the greatest impact on the performance of the organization shall be
deemed most importantly. Total of all levels of this importance must be 1.0.

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-

Step 3: Classification from 1 to 4 for each element will indicate factors that
represent the biggest weakness (classified as 1), minimal weakness (classified
by 2), the smallest strength (classified by three), and the biggest strengths
(classified by four). Thus this classification is based on business, while their
importance in step 2 based on the industry.

-

Step 4: Multiply each importance of each element with its type to determine the
importance of each factor.

-

Step 5: Add all important score of all factors to determine the total number of
critical points of the matrix.
The total score of the matrix range from 1 point to 4 points will not depend

on the number of elements in the matrix. If the total scores below 2.5 points,
enterprises are weak internally; if the total scores of 2.5 points or above, enterprises
are strong internally.
1.3.1.3 Competitive image matrix
Competitive image matrix compares enterprises with competitors basing

primarily on factors affecting the competitiveness of enterprises in the sector,
thereby helping administrators to identify strategies’ strengths and weaknesses of
the enterprises with those of competitors, identifying competitive advantages for
businesses and the weaknesses that companies need to overcome. To build
competitive image matrix, we need to perform five steps:
-

Step 1: Make a list of about 10 factors that affect critical to the competitiveness
of enterprises in the industry.

-

Step 2: Classification of importance from 0.0 (not important) to 1.0 (very
important) for each element. This classification shows the respective
importance of each factor depends on the influence of factors, the
competitiveness of enterprises in the sector, the total weight of all the factors
must equal 1.0.

-

Step 3: Determine the number from 1 to 4 for each factor, the score of each
factor depends on the ability of businesses to the elements, of which 4 is good,
3 is above average, 2 is average and 1 is weak.

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-

Step 4: Multiply the weight of each element with its scores to determine the
critical points of the elements.

-

Step 5: Sum of all important factors to determine the total number of critical
points of the matrix.
We will compare the total number of enterprises with that of major

competitors in the industry to assess the competitiveness of enterprises.
1.3.1.4 Matrix I.E
Table 1.2. Matrix I.E

EFE – external environment factors

IFE – internal environment factors

1.3.2

SWOT matrix
SWOT matrix is used to list all the opportunities, risks, strengths and

weaknesses within the business, order and proper location. Based on the
relationship between these factors, the analysis will be conducted to select
appropriate strategic solutions through the combination of: strength - opportunity (S
- O), strengths - threats (S - T), weakness – threats (W - T), weaknesses opportunities (W - O). Depending on the field of business, executives will use one
or more matrices to conduct SWOT analysis and select solution options.
SWOT often makes four basic strategic groups:
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-

S - O: The strategy is based on the strengths of the business to exploit
opportunities outside.

-

S - T: The strategy is based on the strengths of the business to prevent or limit
the threat from the outside.

-

W - O: The strategy fell within the internal weaknesses to take advantage of
external opportunities.

-

W - T: The strategy reduced the weaknesses in internal controls to prevent or
limit the threat outside.
Strategists never consider all possible strategies to benefit the company

because there are numerous feasible and countless ways to implement these
measures. Thus only the most strategic group is selected to develop.
To create a SWOT matrix, undergoes the following eight steps:
-

(1) List the opportunities outside the company.

-

(2) List the important threats outside the company.

-

(3) List the key strengths within the company.

-

(4) List the weaknesses within the company.

-

(5) Combining the strengths of the external opportunities, enter the result of
strategic S - O in the appropriate box.

-

(6) Combined internal weaknesses with external opportunities, enter the result
of strategies W - O in the appropriate box.

-

(7) Combining the strengths of the external threat, enter the result of strategic S
- T in the appropriate box.

-

(8) Combining the weaknesses within the external risks, enter the result of
strategies W - T in the appropriate box.
1.3.3

QSPM matrix
QSPM Matrix is tools used to quantify the information analyzed in the early

stages that allow administrators to select the optimal strategy, matrix QSPM include
the following six basic steps:

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-

Step 1: List the opportunities / threats and external big weaknesses / strengths in
importance within the enterprise.

-

Step 2: Classify each critical success factors inside and outside, the
classification as in the EFE Matrix, IFE matrix. (Determination of weights)

-

Step 3: Identify replaceable strategies that enterprises should consider for
implementation.

-

Step 4: Determine total points of attractions for each strategy. Points represent
attractive relative attractiveness of each strategy compared with other strategies,
assessment scale from 1 to 4: 1 is not appealing, 2 is somewhat attractive, 3 is
pretty attractive, 4 is very attractive. (AS)

-

Step 5: Calculate the total points of attractions; this is the result of multiplying
the number of classification (step 2) with some interesting points (step 4) in
each row (TAS). The higher the total scores are, the more attractive the strategy
is.

-

Step 6: Sum up the points of attractions. It is the sum of attractions points in the
column of the matrix QSPM strategy. For the degree of difference among
public attractions in a strategic group, the higher score indicates more attractive
strategy.
Table 1.3. QSPM matrix sample
Replaceable strategies

#

Important factors

Weight

External factors
Internal factors
Total attractive
scores

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Strategy 1

Strategy 2

Strategy n

AS

AS

AS

TAS

TAS

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CHAPTER II
ANALYSIS OF RATIONALES FOR BUILDING BUSINESS STRATEGY

OF DUC LONG JOINT STOCK COMPANY
2.1 Introduction to Duc Long Joint Stock Company (DLC)
2.1.1

History of the company
The precursor of Duc Long Corporation is Binh Son brick factory,

established by some workers in 08/2005, specializing in burned brick in Minh Duc,
Viet Yen, Bac Giang. This was a factory specializing in production of bricks with
Back Khoa blast furnace technology.
Through the process of capital accumulation, in 2008, Factory Binh Son
was converted into a limited liability company. In the same year, the factory was
successfully transformed to technology of producing semi-flexible burned bricks in
tunnel oven with large output, and high quality.
In 2009, Binh Son Ltd invested into factory with high technology of
unburned bricks in Que Vo, Bac Ninh, and converted into Duc Long joinst stock
company (abbreviated as DLC); headquarter was moved to # 103 zone A, Pho Moi,
Que Vo district, Bac Ninh province.
Currently, in addition to semi-flexible tunnel technology factory with
capacity of 35 million unit / year operating stability and efficiency in Viet Yen, Bac
Giang, DLC is completing production line of earated autoclaved concrete with
capacity of 150,000 m3 per year in Que Vo, Bac Ninh, and concrete unburned brick
factory of 45 million unit / year in Phu Ly, Ha Nam.
2.1.2

Business areas:
Duc Long Corporation is active in the areas registered as follows:

-

Manufacturing concrete products, cement and plaster; Production from nonmetallic minerals;

-

Production of construction materials from clay; Manufacturing refractory
products; Manufacturing other ceramic products;

-

Mechanical; treatment and metal coating; Wholesale materials and equipment
installed in the building;
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-

Manufacturing construction materials production; Construction of other civil
engineering; Transporting goods by road; local waterways cargo;
Among above business, the production of super light unburned brick, semi-

flexibe technology unburned brick and burned brick is the core content activities.
2.1.3

Organization of DLC
Figure 2.1. DLC’s organization
BOARD OF
DIRECTORS

BOARD OF
SUPERVISORS

CEO

DEPUTY CEO OF
TECHNOLOGY

DEPARTMENT
OF SUPPLIERS
AND
LOGISTICS

WORKSHOP
PRODUCTION

2.2

DEPARMENT
OF
TECHNOLOGY
- QA

FINANCE &
ACCOUNTING
DEPARTMENT

HR
DEPARTMENT

MARKETING
DEPARTMENT

Analysis on business environment of DLC

2.2.1

Analysis on macro environment of DLC

2.2.1.1

Political and regulations factors (P)

Vietnam is one of the countries with political stability in the world. This is
one of the advantages to attract foreign investment in recent years.

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Legislation, although there are many gaps in the legal system, with the
economic integration, Vietnam has gradually improved situation, creating a
favorable macro environment for investors.
The process of administrative reform, including improving procedures for
investment andbusiness legislation in recent years, has brought many positive
results but there are still matters need to improve, and are opportunities and
underlying factors that are challenging for all businesses.
The introduction of a law such as the Investment Law, Business Law,
Construction Law, Tax Law, resources – environmental Law, employment law

etc ... has created a legal framework for businesses to operate favorablely. Besides,
the perfection of the business also requires to be bound by strict obligations during
the operation.
Decision No. 121/2008/QD-TTg dated 29/08/2008 of the Prime Minister on
approving the master plan for developing the industry of construction materials up
to 2020 and Decision No. 567/QD-TTg dated 04/28/2010 by Prime Minister to
approve development program of unburned construction materials until 2020
created special opportunities for businesses that are environmentally friendly
developt. In addition to preferential policies to develop the regulations, it also
required the building to use at least 30% of light materials in construction of tall
buildings, encouraging the use of other materials will create market opportunities
open to the DLC.
Decree No. 24/2007/ND-CP dated 14/02/2007 of the Government detailing
the implementation of some articles of Law on Corporate Income Tax Circular No.
134/2007/TT-BTC on 23/11/2007 of the Ministry of Finance guiding the
implementation of Decree No. 24/2007/ND-CP February 14, 2007 of the
Government detailing the implementation of Enterprise Income Tax Law, which
stipulated that projects produce unburned brick as DLC on the list of special
investment incentives (Group A), free of corporate income tax, exemption of land
use fees and machinery import duty ... is a favorable opportunity for DLC to
perform strategic objectives for financial investors to implement new projects
effectively.

22


Group 13

2.2.1.2

Economy factors (E)

Since the renovation, Vietnam has achieved significant economic success, it
brought the country out of crisis and build market economies. Especially in recent
years, due to rapidly growing economy and relatively stable rate of urbanization
leads to demand for construction and housing also increased the demand pull on the
material collected construction also increased.
Table 2.1. Growth rate in some manufacturing industries period 2006 – 2010
Unit: %
2006

2007

Year
2008

Agriculture, forestry and fisheries

20.97

20.34

22.21

20.91

20.58

Mining

10.59

9.77

9.87

9.97

10.86

Processing & manufacturing industry

20.5

21.13

20.22

19.96

19.56

Production and distribution of electricity, gas,
hot water, steam and air conditioning

3.27

3.31

3.02

3.36

3.36

Water supplying; management activities, waste
and wastewater disposal

0.81

0.81

0.8

0.85

0.85

Construction

6.35

6.97

6.44

6.65

7.03

13.32

13.44

14.03

14.51

14.33

Transportation, warehousing

3.34

3.42

3.42

3.34

3.3

Accommodation and catering

3.49

3.93

3.84

4.06

4.08

Information and communication

1.19

1.2

1.18

1.17

1.15

Financial, banking and insurance activities

1.39

1.41

1.42

1.48

1.46

Real estate business activities
Specialize, scientific and technological

activities

2.69

2.55

2.43

2.44

2.4

1.54

1.48

1.45

1.46

1.44

Administrative and support services activities

0.46

0.45

0.43

0.43

0.43

Communist Party activities, political and social
organization, state management, national
security, compulsory social security acitivities

2.75

2.74

2.78

2.84

2.79

Education and training

3.21

3.05

2.58

2.58

2.55

Health and Social support activities

1.46

1.4

1.28

1.28

1.19

Arts and entertainment activities

0.83

0.8

0.75

0.79

0.76

Other service activities

1.67

1.65

1.68

1.75

1.74

Activities which the employees work in
household production for material products
and services for own use by these households.

0.17

0.17

0.17

0.17

0.17

TOTAL

100

100

100

100

100

Economic sector

Wholesale and retail trading; cars,
motorcycles, motorbikes and other motor
vehicles repairing and maintaining

(Source: General Statistics)

23

2009

2010


Group 13

With the determination of the country, Vietnam is considered one of the
earliest countries to overcome the hard times and fast recovery after the global
financial crisis. Total domestic product (GDP) in 2010 increased 6.78% compared
to that of 2009. This is a fairly high rate compared with an increase of 6.31% in
2008 and much higher than the rate of 5.32% in 2009, exceeding the 6.5% target
set. (Source: GSO).
Continuously for more than years from 2007 to 2010, our country was
affected badly and complexility by the world economy. Thanks to the timely and
drastically leadership and direction of the Party, the National Assembly and the
Government for the efforts and initiative in overcoming the difficulties of the
ministries, localities and corporations, venture industry, manufacturers and people’s

concensus, so that our economy and society were initially overcome some difficult
challenges, inflation was curbed, production is prioritizedly developed, the social
security objectives continue to achieve good results.
However, seven months in 2011, inflation was rising, and getting more
complicated:
Figure 2.1. Movements of inflation in seven months in 2011

January

February

March

April

May

June

July

(Source: General Statistics)
Thus, overall, the growth rate of Vietnam's economy is relatively good
compared to the overall situation of the world economy, opening up opportunities
for DLC to implement its growth strategy. However, high inflation and
24


Group 13

unpredictable undermine macroeconomic stability slow-down the economy, create
high interest rates, and the exchange rate is not stable. Inflation increases,
investment in expanding production of DLC becomes risky, causing difficulties for
expectation in future, this is the challenge for the DLC in planning and
implementing its strategies.
Although many experts forecast that Vietnam will soon curb inflation,
stablize macroeconomics, overall picture of the economy will be brighter in the
future, but businesses in general, DLC in particular, need to closely observe the
changes in situations to have appropriate response accordingly.
2.2.1.3

Social culture factors (S)

National average population in 2010 was estimated to be 86.93 million
people, including male population of 42.97 million, accounting for 49.4% of the
total population, up 1.09%; female population of 43.96 million, accounting for
50.6%, up 1%. Of the total national population in 2010, urban population was 26.01
million, accounting for 29.9% of the total population, up 2.04% over the previous
year; that in rural areas was 60.92 million people, accounting for 70.1%, up 0.63%.
Sex ratio of population in 2010 was 97.7 men per 100 women (in 2009 this was
97.6 / 100). Large population, the percentage of urban population is rising as
demand for housing increases; therefore, the product of the DLC will have a large
market.
The average income of Vietnam in 2010 reached $ 1,160 / person; this was
favorable for investment activities. As the economy developed steadily and incomes
of farmers were increasing, demand for living and working (home, office,
entertainment ...) will increase. According to Decision No. 76/2004/QD-TTg dated
06/5/2004 of the Prime Minister for approval-oriented housing development in
2020, our country strives for urban housing development in 2010 to reach 15 m2
floor / person and 20 m2 / person in 2020; and that in rural will reach average of

approximately 14 m2 to 18 m2 in 2010 and 2020. Therefore, the demand for
housing, offices, systems infrastructure for urban areas, public transport, and culture
... will be huge in the future. If reaching the goal by 2030, housing area per person
reached 30 m2 for urban areas and 25 m2 for rural areas, then we need 2,305
million m2 of housing floor, not to mention the need for development of industrial
25