LUẬN văn CHIẾN lược KINH DOANH CÔNG TY cổ PHẦN tập đoàn THIÊN sơn e

THESIS

DEVELOPING THE BUSINESS STRATEGY
FOR THIEN SON TECHNOLOGICAL GROUP
CORPORATION DURING
PERIOD 2014-2019

i


TABLE OF CONTENT
ACKNOWLEDGEMENT.................................................................................vi
DECLARATIONS............................................................................................vii
FOREWORD......................................................................................................1
CHAPTER 1: THEORETICAL BASIS OF CORPORATE BUSINESS
STRATEGY..............................................................................................................3
1.1.

Concepts and role of business strategy and strategic management........3

1.1.1.

Concepts................................................................................................3

1.1.1.1. Strategies and business strategies.........................................................3
1.1.1.2. Strategic level........................................................................................4
1.1.1.3. Corporate Strategic Management.........................................................5
1.1.2.

The role of business strategy in business activities of a company.........6

1.2.

Introduction to some business strategies...............................................7

1.2.1.

Focused Growth strategy.......................................................................7

1.2.2.

M.Porter’s Competitive strategies.........................................................7

1.2.2.1. Cost Leadership strategy.......................................................................8
1.2.2.2. Product differentiation...........................................................................8
1.2.2.3. Focus Strategy (Low cost).....................................................................8
1.2.3.

Focus Strategy (Differentiation)............................................................8

1.2.3.1. Leading the market strategy..................................................................9
1.2.3.2. Challenging the market strategy............................................................9
1.2.3.3. Going behind market Strategy...............................................................9
1.2.3.4. Market Lurking Strategy......................................................................10
1.3.

Process of developing strategy............................................................10

1.3.1.

Determining business objectives.........................................................10

1.3.2.

Analyzing external environment..........................................................11

1.3.2.1. Economical environment.....................................................................11
1.3.2.2. Political and legal environment...........................................................12
1.3.2.3. Cultural and societal environment......................................................12
1.3.2.4. Technological environment:................................................................13

ii


1.3.3.

Industry analysis..................................................................................13

1.3.3.1. Competitive rivalry..............................................................................13
1.3.3.2. Potential rivalry..................................................................................14
1.3.3.3. Customers............................................................................................15
1.3.3.4. Suppliers..............................................................................................15
1.3.3.5. Substitute products..............................................................................16
1.3.4.

Analysis of internal environment........................................................16

1.3.4.1. Analysis of resources...........................................................................16
1.3.4.2. Analysis of functional department in a company.................................17
1.3.5.

Analyze and identify strategy..............................................................19

1.3.6.

Implement strategy..............................................................................20

1.3.7.

Control and review the implementation of strategies..........................20

1.4.

Other tools to analyze and build business strategies............................20

1.4.1.

Matrix to analyze internal and external environment (Matrix I-E)......20

1.4.2. SWOT Analysis – Analysis of Strengths, Weaknesses, Opportunities
and Threats 23
1.5.

Methodology study of the thesis..........................................................25

1.5.1.

Primary research methodology:...........................................................25

1.5.1.1. Direct interview...................................................................................25
1.5.1.2. Conducting questionnaire to collect data used in analysis of building

strategies 27
1.5.2.

Secondary Research Methodology:.....................................................27

1.6.

Chapter Summary................................................................................28

2.1.

Company overview..............................................................................30

2.1.1.

Company overview..............................................................................30

2.1.2.

Visions, Missions and Objectives........................................................32

2.1.3.

Products and consuming markets........................................................32

2.1.3.1. Business sector, main products:...........................................................32
2.1.3.2. Consuming markets.............................................................................33
2.1.4.

Business Operation Results.................................................................35

iii


2.2.

Analysis of Thien Son business environment and its competition.......37

2.2.1.

Macro environment analysis................................................................37

2.2.1.1. Political - Legal...................................................................................37
2.2.1.2. Economical..........................................................................................37
2.2.1.3. Culture and society..............................................................................38
2.2.1.4. Technology..........................................................................................39
2.2.2.

Analysis of competition in the industry...............................................42

2.2.2.1. Porter Matrix of 5 Forces....................................................................43
2.2.2.2. Analysis of internal environment.........................................................49
2.2.3.

SWOT analysis....................................................................................60

2.3.

Chapter summary................................................................................63

CHAPTER 3: RECOMMENDATION OF BUSINESS STRATEGIES FOR
THIEN SON JOINT STOCK COMPANY IN THE PERIOD 2014 - 2019.............64
3.1.

Visions, missions and objectives.........................................................64

3.1.1.

Visions.................................................................................................64

3.1.2.

Missions..............................................................................................64

3.1.3.

Objectives............................................................................................64

3.2

Identifying business strategy...............................................................65

3.2.1

Strength focusing strategy...................................................................65

3.2.2

Low cost strategy................................................................................66

Low cost strategy..............................................................................................67
3.3

Solutions to implement strategies........................................................67

3.3.1

Customer Solution...............................................................................67

3.3.2

Human resource development solution................................................69

3.3.3

Market Research solution....................................................................69

3.3.4

Products and product prices.................................................................70

3.3.5

Technology solution............................................................................71

3.3.6

Financial solution................................................................................71

SUMMARY......................................................................................................72

REFERENCES.................................................................................................74

iv


ANNEX............................................................................................................75
LIST OF TABLES
Table 1.1: Michael E.Poter’s Matrix of Generic Strategies.................................8
Table 1.2 Matrix to assess external factors (Matrix EFE).................................21
Table 1.3 Matrix to assess internal factors (Matrix IFE).................................22
Table 2.1 Remarkable in-progress projects and works......................................33
Table 2.2 Business Operation Result of Thien Son Company...........................35
Table 2.3 Summary of macro environment factors...........................................40
Table 2.4 External impact factors survey..........................................................41
Table 2.5 Companies in the same industry with Thien Son...............................43
Table 2.6 Summary of Score for Company’s Capabilities.................................45
Table 2.7 Average annual income of Thien Son company’s employees...........50
Table 2.8 List of the company’s equipments up to present................................51
Table 2.9 Survey on the company’s internal environment.................................55
Table 2.10 Surveys on Thien Son’s strategy.....................................................57
Table 2.11 Internal Factor Evaluation Matrix...................................................58
Table 2.12 Thien Son External Factor Evaluation Matrix.................................60
Table 2.13 – Thien Son SWOT matrix.............................................................61
LIST OF GRAPHS
Graph 2.1. Company Revenue..........................................................................36
Graph 2.2 Company’s profit for the period 2010-2012.....................................36
Graph 2.3 Vietnam’s GDP Growth rate in the period 2000 - 2012....................38
LIST OF FIGURES
Figure 1.1 Strategic level....................................................................................4
Figure 1.2 5 steps of strategic management........................................................6

Figure 1.3 Michael E.Porter 5 Forces...............................................................13
Figure 1.4 Matrix I – E (Matrix of Internal and External Environment)...........23
Figure 2.1 Company structure...........................................................................31

v


ACKNOWLEDGEMENT
My first appreciation goes to lecturers of PGSM Master Program and
lecturers of Thai Nguyen University, who have shared knowledge, thoughts and
ideas with me in the whole course so that I could be equipped with sufficient
knowledge and skill to apply into the topic
I would like to express my sincere gratitude to Thien Son Technological
Group Corporation for offering me opportunities to study, obtain knowledge and
complete the study.
My special appreciation and thanks go to Dr. Mai Anh who has spent
tremendous time to listen, suggest and advise me step by step in the studying
process. My study would not be a success without enthusiasm and dedication of
lecturers.
I would like to thank my close friends and classmates in MBA course, who
have been so supportive, lending a hand and contributed ideas and thoughts to make
my thesis better.
In the end, I would like to send my deep and special thanks to my family.
Once again, I would like to thank all for their help and support during the
time studying and completing this thesis
Student

Le Thanh Binh

vi

DECLARATIONS
The thesis “Building business strategy for Thien Son Technological Group
Corporation company in the period from 2014 to 2019” is my own study work. Data
and findings in the thesis were collected by me. Theories and knowledge gained
from studying and discussing with lecturers were also applied in completing this
thesis.
Ha Noi, Oct 2013
Le Thanh Binh

vii


FOREWORD
1. The necessaries of selecting study topic
Vietnam economy is gradually integrating with regional and world economy,
companies’ business environment is expanding yet the competition has become
tougher and tougher, which not only creates opportunities but also brings along
potential challenges threatening companies’ development
Till the end of 2012, construction and real-estate companies have been facing
heaped-up difficulties, especially real-estate companies due to effects from the
frozen real-estate market. This has negatively influenced companies in both realestate industry as well as non real-estate industry
To develop and improve competitiveness, setting appropriate strategies, which
suit well with particular situation of each company, is fundamental to each
company.
Arising from the above-mentioned realities, I would like to choose the topic:
“DEVELOPING

THE

BUSINESS

STRATEGY

FOR

THIEN

SON

TECHNOLOGICAL GROUP CORPORATION DURING PERIOD 2014-2019” for
my thesis and hope that I could point out right business strategy for the company.
2. Purpose of study
Studying basis for building strategies, process of building strategies and
methods of analyzing and selecting the best strategies aiming to help company
choosing the most suitable strategies
Defining and applying theories of building business strategies into realities to
build and choose the best business strategy for Thien Son Technology Joint Stock
Company in the period from 2014 to 2019.
Recommending groups of solutions to implement and successfully perform
selected business strategies to lead Thien Son Technological Group Corporation
Company becoming a strong company in traditional market as well as in nationwide market.
3. Research topic and scope of research

1


- Research topic: Business strategy of Thien Son Technological Group
Corporation Company in the period from 2014 to 2019

- Scope of research: business activities of Thien Son company in comparison
with those of rival companies in the same industry.
4. Research methodology
The thesis uses methods of analyzing, summarizing and applying analytical
tools, which have been available in strategic management, human resource
management, marketing management, decision-making management into building
business strategy for a company.
Besides, the thesis also uses qualitative analyzing methods. Board of Director,
Head of departments, seniority employees were taken into study. The method of
analyzing primary data, which was collected from questionnaire, is also used. In
addition, experts in business strategy were also approached to seek for their advices.

2


CHAPTER 1: THEORETICAL BASIS OF CORPORATE
BUSINESS STRATEGY
1.1.

Concepts and role of business strategy and strategic management
1.1.1. Concepts
1.1.1.1.

Strategies and business strategies

In 1962, Chandler, who was the first to initiate and develop theory of strategic
management, defined strategy as “determination of the basic long-term goals and
objectives of an enterprise, and the adoption of courses of action and the allocation
of resources necessary for carrying out these goals.” (Chandler, 1962).
In 1980, Quinn gave a definition which broader generalized strategy: “A

strategy is a pattern or plans that integrates an organization’s major goals, policies
and action sequences into a cohesive whole” (Quinn, 1980).
After that, Johnson and Scholes redefines strategies in a fast changing
environment: “Strategy is the direction and scope of an organization over the long
term: which achieves advantage for the organization through its configuration of
resources within a changing environment, to meet the needs of markets and to fulfill
stakeholder expectations” (Johnson, Scholes, 1999).
It is noticed that each definition focuses on a particular angle of strategy.
Therefore, an exact and comprehensive definition of strategy would be very
complex. Thus, it is necessary to have a comprehensive definition of strategy to
fully understand about it. Mintzberg suggests strategy as the interrelationship
between the 5Ps (Mintzberg, 1987).
- Plan: consciously intended course of action
- Pattern: a stream of actions consistency in behaviour, whether or not
intended
- Position: match between organisation and environment
- Perspective: an ingrained way of perceiving the world
- Ploy: a specific manoeuvre intended to outwit an opponent or competitor.

3


1.1.1.2.

Strategic level

Strategic management is carried out at many levels in a company. Levels of
strategic management are levels and units in an organization which are responsible
for building and implementing strategies for its own levels as well as contributing to
reach strategies of the whole organization. However, we can divide strategic

management into 3 levels:
Figure 1.1 Strategic level
Company

Unit 1
(SBU1)

Unit 2
(SBU2)

Human
Resource

Marketing

Production

Unit 3
(SBU3)

Finance

Source: Ngô Kim Thanh, 2012 Daft Richard L,2012; Daft,2003
Corporate Level Strategy: are strategic decisions of a company. It determines
and points out objectives and targets of the company, determines business activities
which the company pursuits, creating tactics and plans to achieve these objectives.
Thus, strategic corporate is the one which is applied for the whole company
Strategic Business Unit (SBU): relates to how the company can successfully
compete in a particular market, involving strategic decisions about deciding on
products to meet customer’s demand, finding competitive edge against competitors,

creating new opportunities
Departmental Level Strategy: relates to business processes and the value
chain which aims to support corporate level strategy and SBU Functional level
strategies in marketing, finance, operations, human resources, and R&D involve the
development and coordination of resources through which business unit level
strategies can be executed efficiently and effectively.

4


1.1.1.3.

Corporate Strategic Management

Definition of Strategic Management
According to Alfred Chandler: “determination of the basic long-term goals
and objectives of an enterprise, and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals” (Chandler,
1962)
According to John Pearce and Richard B. Robinson: strategic management is
defined as “the set of decisions and actions that result in the formulation and
implementation of plans designed to achieve a company’s objectives”
Strategy is considered to be the output of the process of setting business
strategy led by senior management, but that’s not all. It is very often that valuable
strategy is built internally by the company without prior plan.
Strategic management is a set of management decisions and actions
determining long-term effectiveness and efficiency of a company. Strategic
management involves continuous actions: examining environments (both internal
and external); building strategy; executing strategy; controlling & reviewing
strategy. Therefore, strategic management focuses on examining and assessing

external opportunities and threats in line with internal strengths and weaknesses (Lê
Thế Giới, 2007).
Strategic management arises from business strategy. Strategic management
considers not only integrating of different departments but also focusing on
environment and strategy. Thus, the term - strategic management is used as
alternative for business strategy
5 steps of strategic management: Strategic management consists of five steps
which relates closely with each other
Strategy formation: is typically the compilation and dissemination of the
vision and the mission statement. It defines the organization's purposes and how the
company intends to grow?
Set goals and objectives – transform strategic view into detailed business

5


objectives which the company aims to achieve.
Developing strategies to achieve goals
Implementing and controlling selected strategies effectively and efficiently
Reassess each strategy to determine whether it has succeeded or needs
replacement by a new strategy, long-term objectives to meet changed
circumstances, new ideas and new opportunities.
Figure 1.2 5 steps of strategic management
Strategy
formation

Set goals
and
objectives

Amend
(if
needed)

Amend
(if
needed)

Developin
g
strategies
to achieve
goals

Improve/
Amend
(if needed)

Implement
ing
and
controlling
selected
strategies

Assess
performan
ce, control
and amend

Improve/
Amend
(if needed)

Restore
1,2,3,4
(if
needed)

Source: Strategic Management, Lê Thế Giới
1.1.2. The role of business strategy in business activities of a company
In a market-driven economy, building and implementing business strategy
play an important role in the existence and development of a company. A few roles
are named below:
- Help the company to determine objectives and orientation in the future and
have guidance in every activities of the company. Business strategy serves as the
orientation for the company in the long term. It is also the solid basis to implement
business operation. The lack of strategy or ambiguous strategy might lead the
company to disorientation and many other related issues. Without strategy, the
company might just operate with short-term and narrow view

6


- Help the company to capture and make the best use of opportunities, have
proactive plans to confront with challenges and threats in business environment
- Contribute to improve effectiveness of using resources, escalates company
positions and guarantee the company’s continuous and sustainable development.
- Create solid basis for the company in making decisions responding to
changes in the market. It also brings along solid base for research and

implementation, investment in developing human resource, market expanding and
product development. In fact, majority of mistakes made in investment, technology,
market arise from building wrong strategy or setting wrong strategic objectives.
The origin of success or failure partly depends on the “quality” of business
strategy
1.2.

Introduction to some business strategies

1.2.1. Focused Growth strategy
Each of the company’s strategy is applied for Strategic Business Unit (SBU).
However, at SBU level, focused growth strategy should be put into priority because
the focuses of these strategies are products and markets
This strategy aims to improve company’s competitiveness with its current
products by investing on marketing activities or changing market strategy. This
strategy divides into 3 main ones
- Market penetration: Seeking market share increase for current products and
services through investing on marketing activities
- Market development: Launching products and services into new areas and
new markets
- Product development: Increase revenue by improving and innovating current
products and services
1.2.2. M.Porter’s Competitive strategies
Michael E.Porter – professor at Harvard has described competitive strategies in
the book “Competitive Strategies”

7


Table 1.1: Michael E.Poter’s Matrix of Generic Strategies

TARGET SCOPE

COMPETITION ADVANTAGE
Low Cost Strategy
Product Uniqueness
Cost Leadership
Product Differentiation

Wide market scope
Narrow market scope

Focus Strategy
(Low cost)

Focus Strategy
(Differentiation)

Source: Ngô Kim Thanh, 2012
1.2.2.1.

Cost Leadership strategy

Is the strategy which has low cost compared to other competitors in the
industry by applying a group of strategy? In order to achieve low cost, it is required
that the company has effective production units, minimize cost, cut cost, and
maintain a tight control of cost
Low cost will make the company achieve higher profit than the average of the
industry regardless of tough competition
Also, in order to have low cost, the company must increase market share or
obtain other competitive advantage such as access to cheaper material resource

1.2.2.2.

Product differentiation

This might include determining or building uniqueness of the company’s
products, distribution channel, pricing, marketing strategy to achieve the company’s
objectives. If the product differentiation strategy is to be successfully achieved, it
would be a sustainable on to gain profit higher than the average level in the industry
1.2.2.3.

Focus Strategy (Low cost)

According to this strategy, companies drive their focus into narrow market
scope. These market segmentations can be determined based on geography, product
and customer. Attractive market segmentations are those in which there are no
competitors or those current competitors have not met all customers’ needs
1.2.3. Focus Strategy (Differentiation)
Each business units in a company focus on a different market segmentation

8


1.2.3.1.

Leading the market strategy

- Strategy to expand total need of the market: Expanding into new
geographical area to sell and seek for new customers, develop new features of
products, encourages customers to use more products
- Defensive strategy: aims to make the company maintain the leading position

in current market. The leading company in the market is continuously threatened by
other rivals. Therefore, companies must defend to compete against the attack of
competitors
- Increasing market share strategy: by merging or acquisition of smaller
competitors, which also acquires their market share
1.2.3.2.

Challenging the market strategy

This might include attacking leading companies and other competitors in the
market to increase market share. In order to implement attacking strategy,
companies need to carry out the following steps:
- Determine competitors which need to be attacked and objectives of attacking
strategies
- Choosing appropriate attacking strategy: forward attack, side attack or
surround attack
1.2.3.3.

Going behind market Strategy

These are companies which neither want to confront with competitors nor
challenge the markets due to insufficiency in resource, loss and cost increasing, thus
they try to avoid directly confronting competitors by just following them and
imitating them:
- Imitate products, distribution , advertising and other marketing activities,
providing low-price product to targeted market.
- Imitate core content in marketing mix of leading competitors and maintaining
differences in packaging, price, advertising and distribution channel.

9

- Imitate yet improve to adapt to markets by relying on marketing mix of the
leading competitors in the market to adapt to the need and expectation from targeted
markets
1.2.3.4.

Market Lurking Strategy

Companies using market lurking strategies always seek one or a few safe
lurking and profitable markets. In order to succeed on narrow market segmentation,
they apply specialization strategies:
- Specialization in end-user: Depending on the industry of market lurking
companies, they choose a group of target customers which have needs for that
particular products or services
- Specialization in each step of the production and distribution process:
Companies can choose details, components of a finished products or a
complimentary products
- Specialization in customers: Choosing customers based on demographic: high,
medium or low income, children, teens or middle age
- Specialization in sales areas: Choose a geographical area to serve: local or
international
- Specialization in product characteristics: high quality, luxury or standard
- Specialization in product segments in an industry: Choosing one or a few
products in an industry
- Specialization in selected service which competitors have not provided
1.3.

Process of developing strategy
1.3.1. Determining business objectives

Determining objectives and goals of company is the starting point in

implementing strategic management. Clear and detailed objectives are important for
the company to succeed
The first step of strategic management is to determine missions and visions of
the company. Visions and missions provide an overview to build strategies

10


Mission explains the reasons for the existence of the company and outlining
what the company will do
Company mission are a group of business orientation & expectations and
methods which company members need to execute with maximum efforts to reach
different purposes
Company mission are formed based on combining potential internal abilities and
opportunities which the company might grasp, eliminating risks in external
environment.
According to Drucker, mission statement “says why you do what you do” and
helps to differentiating one company from another, serves as an important basis for
strategic managers determining objectives and deciding effective strategies
Determining business objectives
Key objectives determine what the company aims to achieve in medium and
long term. Most companies aim to achieve profit, leading position in the industry.
Second objectives are those of which the companies consider necessary if they want
to reach outstanding capabilities.
According to Philipte Lasserre, strategic objectives involves factors
concerning the company quantity: business scale, growth, market share, revenue,
cost and profit
1.3.2. Analyzing external environment

1.3.2.1.

Economical environment

Status of macro economical environment defines the health and prosperity of
the economy. It always influences companies and industries. Therefore, companies
need to examine economical environment to understand changes and trends
Effects of an economy toward a company might change the company’s abilities
to create value and income. There are 4 important factors in macro economical
environment:

11


- Economic growth leads to an increase in customer’s spending, thus it can lead
to a more relaxing competition in an industry. This may create opportunities for
companies to expand and gain higher profit
- Interest rate can affect need for products. It is very often that companies have
to get loans to fund for companies’ operations and investments, thus interest rates is
an important factor
- Exchange rate is determined the value of currencies between country. The
fluctuation of exchange rate influence directly toward companies’ competitiveness
in global market
- Inflation can reduce the stability of an economy, slow down economic growth,
increase interest rate and destabilize the flow of exchange rate. If inflation goes up,
business planning will involve more risk. Inflation causes difficulty in future
planning
1.3.2.2.

Political and legal environment

- Political and legal factors have great impact on opportunities and threats from
environment. It is notable in this respect that how companies can have influence on
the government and vice versa
- Companies need to carefully scrutinize new policies of the government.
Antitrust law, tax law, prioritized sectors, labor code are those areas in which the
government can influence tremendously on the operations and profitability of
companies and industries
- Stability in politic and political institution, consistency in policies of the
government
1.3.2.3.

Cultural and societal environment

- Segment in culture and society relates to cultural behavior and cultural
values. Since cultural behavior and cultural values form society foundation, they
lead to changes in technology, politic-law, economic and demographic. Variation in
cultural & societal environment produces opportunities and threats for companies
- Increase in diversification of culture, ethnic and gender have posed a series of

12


opportunities and threats relating to how to best combine between leadership style of
male and female to boost their contribution for the company. Changes in
management and company structure need to be done cautiously to prevent harmful
effects for the company
1.3.2.4.

Technological environment:

Changes in technology impact on many groups of societies. These impacts
might get their way through new products, technologies and new materials.
Technology might comprise new creation of knowledge and transmitting knowledge
into the output, products, processes and materials
1.3.3. Industry analysis
Michael E.Porter’s 5 Forces Analysis will be applied to analyze companies’
micro environment
Figure 1.3 Michael E.Porter 5 Forces
THREATS OF NEW
ENTRANTS
Threats of new entrants
Bargaining power of
suppliers

Competitive rivalry in an
industry

SUPPLIERS

CUSTOMERS
Threats of new entrants

Bargaining power of
customers

Threats of substitute
products
SUBSTITUTE
PRODUCTS

Source: Michael E. Porter, 1998
1.3.3.1.

Competitive rivalry

The number, scale and strength of each rivalry have its impact on business

13


activities as well as strategies of companies. The higher the competition is, the
lower the price. This may result in low profit. Thus, competition in price is a threat
to company’s profit. There are 3 important factors influencing competition level in
an industry, which are:
- Competition structure: is the allocation of the numbers and scales of
companies in an industry
- Growth rate of the industry: If that industry enjoys high growth rate,
competition level will not be too high since the whole market is bog enough for all
companies
- Borders hindering company’s exit out of the industry
1.3.3.2.

Potential rivalry

Potential rivalry might not make their presence available in the market at the
moment but might compete in the future. The presence of potential rivalry also
increases competition in an industry. Competitive abilities of potential rivalries are
assessed by the concept of “hurdle” hindering penetration into an industry. Hurdle
comprises the meaning that a company needs to spend a lot in order to enter an

industry.
Main hurdle hindering penetration:
- Differences in products make customers loyal to brands or products of
prestigious companies
- Absolute advantage in price: this might arise from advanced technology,
experiences, patents or technology secret, labor cost, cheap material or management
capabilities
- Cost goes down in line with production scale: mass production or standardized
products; discounts for bulk purchase of input material (which assist in lowering
advertising cost for each product)
- Besides there are other important hurdles to new entrants, which are macro
economic policies, investment capital

14


1.3.3.3.

Customers

Customers are individuals or organizations which have needs for products or
services which companies provide. Customers decide the existence and sustainable
development of companies. Customers are first priority of companies. All efforts of
companies aim to draw customer’s attention, boost interest, and encourage
customers to care about companies’ products or services. When analyzing business
environment to build strategies, customer information are collected, analyzed and
assessed. Through that, managers can obtain basis to choose targeted customers,
develop policies and action plans to better met customer’s demands. On the other
hand, understanding about customers help companies to continuously improve
marketing activities and build long-term relationship with current customers as well

as develop new ones
Customers are diversified; customer information changes quite often and
directly influences company’s effectiveness
Customer can be considered as a competition threat when they indirectly force
companies to reduce price and improve product quality and service, which then
results in an increase in operation cost and higher price
1.3.3.4.

Suppliers

Suppliers are organizations and individuals who can produce and provide input
materials such as machine and production plant, material, spare parts, labor,
information, transportation. Quantity, quality, price, and supply condition of product
input affect directly toward missions and business objectives of departments,
production cost, operation effectiveness of in each period.
Suppliers can pose a threat since they might claim to increase price or reduce
product quality, which will lead to decrease in profit.
Suppliers can make pressure for companies in the following cases: the number
of suppliers is limited, substitute products for input material is not widely available;
the company’s business sector is not important to supplier or the purchase quantity
is small compared to production scale of suppliers

15


1.3.3.5.

Substitute products

Substitute products and services are ones which can satisfy similar needs with

current ones in the industry.
Since products can be substitute for others, it will lead to increase in
competition. If the price of main product increases, the need for substitute products
will be likely to go up.
Impact of substitute products on companies: Substitute products might be more
competitive in terms of price and quality
1.3.4. Analysis of internal environment
Analysis of internal environment is necessary for all types of organizations in
the economy. It can point out strength and weakness against competitors; as well as
provide managers information about opportunities in each period
1.3.4.1.

Analysis of resources

Resources of a company includes: human resource, assets, intangible resource.
This is the crucial decision factor determining companies’ success or failure, in
which the most important resource is human resource
Human Resource
People are fundamental factor in operations of every type of businesses,
determining success level of companies. In companies, this factor is very important
because all decisions regarding strategic management are made by people.
Competition ability and company culture arise from people. Thus, people are the
first and foremost factor which managers need to consider and analyze carefully
when setting long-term plan
Frequent assessment of Human Resource set the foundation for companies to
analyze strengths and weaknesses of members in the company in comparison with
standard requirement in the industry and that of competitors. In addition, objective
assessment will support companies in proactively implement training and retraining course for employees.

16

Physical Resource
Physical resources include: production capital, production plant and machine,
material stock, information about business environment etc. Analyzing and
assessing physical resource set an important basis for managers to understand
physical resource’s potential as well as limitations, which then serve to make
adaptive decisions such as: utilize cash resource and current product plant, call
external fund then the need for fund arises, choose partners to increase scale of
physical resource, maintain a reserve level of physical asset to prepare the company
with future plan to confront competitors (defensive or attack) in both local and
international market
Intangible asset
Besides above-mentioned resources, each company has intangible assets, which
people can only perceive, not see. Intangible asset is displayed in many forms, and
managers at different levels in a company need to be provided with new knowledge to
understand and correctly assess the importance of this factor
Company resources are diversified. Depending on characteristics, industry, scale,
structure of the company, intangible asset in each company differ from others.
Comparing and contrasting current resources and its potential in each period will help
managers review the company’s performance. In addition, manager should understand
interrelation between resources of their company and those of competitors, so that they
can catch opportunities and minimize threats in business environment
1.3.4.2.

Analysis of functional department in a company

In each company, there are functional departments, namely marketing, Human
resource, Finance & Accounting, Research & Development, Production. Operations
of these departments create benefits and intangible assets for the company

Analysis of the operation of marketing department
Marketing is a system of activities involving research, estimation, identifying
customer’s need and expectations and meeting these needs by creating a marketing
mix which is better than competitors in each period and at each market

17


By understanding clearly marketing activities, managers can determine
responsibilities and tasks of this department which need be done in each period and
make decisions on dividing marketing function into suitable teams so that the
controlling of marketing activities would be more effective. Managers should
frequently assess marketing activities because they relate closely with competition
strategy in the market and influence sustainable existence of the company
Analysis of the operation of human resource department
Human resource management is a series of activities involving recruiting,
training, using, remunerating, reviewing, encouraging loyalty of employees toward
the company
Effective human resource management contributes to develop corporate culture,
creating motives to boost enthusiasm among employees in the company
Analysis of the operation of Finance & accounting department
Functions of finance & accounting relates to mobilizing and using financial
resources of the company in each period, recording all transactions of the company.
Functions of Finance & accounting department have close interrelation with other
functional department, determining feasibility, effectiveness of many other
strategies and policies of the company
Managers would assess and review strengths and weakness of the company’s
finance & accounting activities, compare it with that of competitors, forecast
upcoming trends to establish strategies and financial policies for the company,
raising programs of capital mobilization and resource allocation so that the

company can adapt well to changing environment
Analysis of the operation of research and development department
Research and Development (R&D) plays an important role in discovering and
applying advanced technology to create competitive advantage for the company in a
market. Detailed activities of R&D department includes: developing new products
in advance of competitors, improving product quality, innovating production
process to cut cost. These activities vary from companies to companies, from

18