XÂY DỰNG CHIẾN lược PHÁT TRIỂN NGUỒN NHÂN lực CHO CÔNG TY cổ PHẦN tập đoàn HOÀNG hà e

INTERNATIONAL EXECUTIVE
MASTER OF BUSINESS ADMINISTRATION PROGRAM

THESIS

BUILDING HUMAN RESOURCE
DEVELOPMENT STRATEGY OF HOANG HA
GROUP JOINT STOCK COMPANY IN THE
PERIOD 2014 – 2018.


ACKNOWLEDGEMENT
I would like to send our deepest gratitude to all lecturers. I have studied your
lectures and materials carefully and sought for various practical references to
complete this Thesis. I also would like to thank the leadership and staffs of the
Hoang Ha Group Joint Stock Company, who have enthusiastically shared
with us data and relevant documents to accomplish this important Thesis.
I swear this is my thesis and I wrote and self-published first.
Yours respectfully,

2


LIST OF ACRONYMS
JS

Joint stock

E

Enterprise

ISO

International Organization for Standardization

HR

Human resources

BD

Board of Directors

Ltd

Limited

CM

Building Materials

CC

Corporate Culture

M

Manpower

3

Table of Contents
INTRODUCTION................................................................................................6
1. Purpose of research and applicable ability........................................................6
2. Methodology.....................................................................................................7
3. Thesis structure.................................................................................................7
CHAPTER 1.........................................................................................................8
THEORY OF STRATEGY AND HUMAN RESOURCES DEVELOPMENT
STRATEGY..........................................................................................................8
1.1. Strategic concept and role..............................................................................8
1.1.1. Concept of strategy.................................................................................8
1.1.2 . Role of strategy....................................................................................11
1.3. Classification of strategy 1.1.3.1. Classification of business strategy
according to the strategic level............................................................................12
- Function level strategy is strategy of each separate function within the company
such as finance , marketing , human etc Function level strategy can seen as
supporting strategy aims at the successful implementation for business level
strategy and corporate level strategy...................................................................12
1.1.3.2. Classification of business strategy in strategic content..........................12
1.1.3.3. Classification of business strategy in the strategy process.....................12
1.2. Development process of the business strategy.............................................13
1.2.1. Determination of the strategic missions and goals....................................13
1.2.2. Analysis of the external environment........................................................14
1.2.2.1. Analysis of macro environment (PEST + + model)................................14
1.2.2.2. Analysis of industry environment (5 competitive pressures of M. Porter)
............................................................................................................................ 15
1.2.3 . Analysis of internal environment.............................................................18
1.2.4. Development of strategic plans.................................................................18
1.2.4.1. External factor evaluation matrix (EFE)................................................18

1.2.4.2. Internal factor evaluation matrix (IFE)...................................................19
1.2.4.3. SWOT Matrix.......................................................................................19
1.2.4.4. QSPM Matrix.........................................................................................21
4


1.2.5. Construction and selection of strategic plans............................................22
1.2.5.1. Construction of strategic plans...............................................................22
1.2.5.2. Selection of strategic plan......................................................................23
1.3. Workforce development strategy..................................................................24
1.3.1. Human role, factor in business and enterprise development.....................24
1.3.2. Concept of manpower...............................................................................26
1.3.3. Planning process of human resources.......................................................27
1.3.4. Identificatin of organizational structure....................................................28
1.3.5 . Identification of human resource requirements for the business..............28
1.3.6. Role of manpower training and impacts of training activities with
production, business results of the firm.............................................................30
1.3.7 . Development of the human resource strategy of the enterprise................30
CHAPTER 2.......................................................................................................34
CURRENT SITUATION ANALYSIS OF HOANG HA GROUP......................34
2.1. Introduction about Hoang Ha Group............................................................34
2.1.1. Process of formation and development.....................................................34
2.1.2. Organzational structure.............................................................................34
2.1.3. Vision........................................................................................................35
2.1.4. Mission.....................................................................................................35
2.1.5. Business philosophy..................................................................................35
2.1.6. Main business fields..................................................................................35
2.2. Analysis of the business environment of Hoang Ha Group.........................36
2.2.1. Analysis of the macro environment (PEST + +)........................................36
2.2.1.1. Economic factors...................................................................................36

2.2.1.2 . Political, legal factors............................................................................37
2.2.1.3 . Cultural - social factors.........................................................................38
2.2.1.4. Natural factors........................................................................................39
2.1.5 . Technological factor.................................................................................39
2.2.2. Analysis of the business industry environment.........................................40
2.2.2.1. Power of customer.................................................................................40
2.2.2.2. Power of suppliers..................................................................................40
5


2.2.2.3. Current competitors................................................................................40
2.2.2.4. Threat of new entrants............................................................................41
2.2.2.5. Threat of substitute products..................................................................41
2.2.3. Opportunities and threats..........................................................................41
2.2.4. External factor evaluation (EFE)...............................................................42
2.3. Analysis of internal environment of Hoang Ha Group.................................43
2.3.1. Analysis of human resources.....................................................................43
2.3.1.1. Human resources....................................................................................43
2.3.1.2. Finance...................................................................................................47
2.3.1.3. Technical facilities.................................................................................47
2.3.1.4. Technology.............................................................................................47
2.3.2. Factors affecting the management of human resources.............................48
2.3.2.1. Planning human resources for the production of business......................48
3.2.2. Ability to perform proper recruitment.......................................................48
2.3.2.3. Possibility of labor assignment..............................................................48
2.3.2.4. New training, retraining and advanced training organization for the
employees of the enterprise.................................................................................49
2.3.2.5. Personnel appraisal................................................................................49
2.3.2.6. Salary.....................................................................................................49
2.3.2.7. Bonus mode...........................................................................................50

2.3.2.8. Training..................................................................................................50
2.3.2.9 . Attracting talent.....................................................................................51
2.3.3. Strengths and weaknesses (S, W)..............................................................51
2.3.4. Internal factor evaluation (IFE).................................................................53
2.4. SWOT matrix analysis of Human Resource of Hoang Ha Group...............54
CHAPTER 3.......................................................................................................56
HUMAN RESOURCE DEVELOPMENT STRATEGY IMPLEMENTATION
SOLUTIONS......................................................................................................56
3.1. Conclusions drawn from the current situation of human resources
development of Hoang Ha Group......................................................................56
3.1.1. Gained advantages...................................................................................56
6


3.1.2. Limitations needed to be overcome...........................................................56
3.1.3. Cause of existing problems.......................................................................58
3.2. Development orientation of Hoang Ha Group during 2014-2018 period.....58
3.3. Choice of strategic plan................................................................................59
3.4. Implementation solution of human resources development strategy of Hoang
Ha Group in the period of 2014-2018 3.5.1. Management mechanism...............62
3.4.2 . Determination of labor requirement.....................................................62
3.4.3 . Labor recruitment.................................................................................62
3.4.4 . Labor use..............................................................................................64
3.4.5. Good organization, arrangement of workplace to create a professional
environment........................................................................................................64
3.4.6. Link between training and business production........................................65
3.4.6.1. Additional training organization for newly hired staff in the Group...65
3.4.6.2. Retraining and advanced training organization for the employees of
the Group........................................................................................................65
3.4.7 . Personnel appraisal..............................................................................67

3.4.8. Policy development of wages................................................................67
3.4.9. Bonus policy..........................................................................................67
3.4.10.Retaining talent....................................................................................68
CONCLUSION...................................................................................................70

7


INTRODUCTION

1. Purpose of research and applicable ability
Now, as Vietnam economy has moved from subsidizing to market
economy, the mode of production has changed, along with that the application of
science and technology, managing of business operations. This raises the issue of
human resources development to meet both quantity and quality for the socioeconomic development of the country. However, in our country today, the quality
of human resources has not been paid adequate attention and has remained many
weaknesses and limitations. Abundant labor resources, unemployment rate in our
country in recent years have continued to increase, but the firms have still
complained a lack of employees. The reason is that Vietnam only meets the
demand for numbers, but does not meet quality requirement. This not only makes
the firms difficult and also makes the labor lose job opportunities for themselves.
The international integration of Vietnam has set the requirements for
Vietnam enterprises should focus more attention on the issue of human resources
development. In addition to Vietnam Enterprises, the enterprises who now have
foreign investment in our country are lacking source of skilled labor, high
quality. Meanwhile, the percentage of workers with our quality is too low, not
enough to meet the needs of the businesses.
The acknowledgment of business for the role in the development of
human resources is limited at present, only temporary solution, short term and no
long term and overall strategy to develop their human resources sustainably.

Hoang Ha Group is a strong firm operating in the construction, real estate
business fields, so the Group's human resources is now relatively diverse, from
senior managers, professional engineers to technical workers and unskilled
workers. However, like most Vietnam businesses today, Hoang Ha Group has
still not built holistic and comprehensive strategy of human resources
development to meet the development of the business. Therefore, the research
thesis of human resource development strategy of Hoang Ha Group will be able
8


to apply in the fact will help Hoang Ha Group to solve the existing problems
which have been encountered now in the personnel matter.
a. Study subject: Building Human Resource Development Strategy of
Hoang Ha Group in the period of 2014 – 2018.
b. Scope of Study: Thesis research on HRM of Hoang Ha Group during
the period from 2010 to now. Analysis of the results obtained, the limitations and
the propasals for the strategy of human resource development of Hoang Ha
Group.
2. Methodology
- Source of data: primary, secondary. The data of Hoang Ha Group, Internet
- Data collection method: gathering documents, writings; interviewing and
exchanging.
- Analysis technique: Matrices of IFE, EFE, SWOT, IE, QSPM, 5 competitive
force model of Michael Porter.
- Method of data collection is done by statistics, gathered from raw data
which is provided by Hoang Ha Group Joint Stock Company.
- Data interview, survey and collection to build the matrices, performing of
analysis and evaluation technique.
3. Thesis structure
Chapter 1: Theory of strategy and human resources strategy

Chapter 2: Current situation analysis of Human Resources of Hoang Ha Group
Chapter 3: Human resources development strategy and implementing solution

9


CHAPTER 1
THEORY OF STRATEGY AND HUMAN RESOURCES DEVELOPMENT
STRATEGY
1.1. Strategic concept and role
1.1.1. Concept of strategy
According to the definition of Oxford dictionary "Strategy" is a term
derived from the military , is defined as " art of coaching , is art of planning and
command of military operations , combat in a campaign " (Source : Michael
Armstrong (2008 ) , Strategic Human Resources Management - A guide to action
, 4th edition , Kogan Page ).
This term does not exist in the business sector or the public sector ,
however, this definition also gives a message that the strategy is the supreme
responsibility of the head of the organization , is the art of combination between
the plan making and guidelines for the implementation of such important plans .
The concept of strategic business was developed and more complete with
the later definitions of Alfred Chandler (1962 ) , Kenneth Andrews (1987 ) and
Igor Ansoff (1987). Later, authors such as Michael Porter ( 1985 ) , Hamel and
Prahalad ( 1989 ) ,etc developed in a more comprehensive way and applied to
business practices .
Strategies are also defined by many other authors in many different ways and
depending on the approach , thinking about the strategy that defines appropriate
strategy for their business .
The strategy is basic long-term decisions, is goals of a business, and of
course is acceptance of allocation of necessary resources to carry out those

objectives (Chandler, 1962).
Strategy is related to long-term orientation and goals of an organization. It
is also closely related to the self-positioning of that organization with the
environment and especially with its competitors etc The strategy involves in
establishing competitive advantages, ideally lasting over time, not because of
technical change that because of an overall long-term perspective (Faulkner &
Johnson, 1992),
Strategy is long-term direction and goals of an organization, in accordance
with that organization's resources and the changing environment around it,
10


especially with the market, customers, users to reach the expectations of the
shareholders. (Johnson & Scholes, 1993),
The strategy has three basic characteristics as follows :
First is always directing forward . It implies determination where you
want to go and how to get there . It involves in the implementation way and
results . According to Abell 's judgement (1993 ) , " a good strategy is strategy
that can be implemented and generate its business , organization can best meet at
the present time and also can predict the future " , or according to Boxall
(1996 ) , " strategy should be understood as the key frame of the goals and
methods of implementation . "
Second, the intrinsic capacities of an organization depend on the ability of
the deparments within that organization . This is the internal resource-based view
of the organization in the view of Penrose ( 1959 ) , business is " an
administrative organization with set of efficient resources " and explained clearly
" strategy is a balance between the exploitation of internal existing resources and
development exploitation of new ones "
Third, the characteristics of the strategy is appropriate , it is necessary
condition when developing human resource strategies to achieve the fitness

between HR strategy with the business strategy of the organization in the context
relating to internal and external factors of the surrounding environment .
From the above typical definitions can find the strategy even is
understood in any way that has the most general purpose, which is to ensure the
long term success of an organization or business and strategy of an organization
or the firm that is a combination of internal resources of the organization, the
business and external environmental factors to achieve the goals which the
business expects. A firm’s strategy will include goals, resources, and
commitment, policy to achieve those objectives.
Strategy is also understood as a set of goals and policies, as well as major
plan to achieve those goals, it shows the business is or will do what business
activities and the business will belong to what business fields ..
In addition, business strategy and competitive strategy is also defined by
the following six factors:

11


- Product Market: Opportunity of business depends on its products, the
markets that it serves, the competitors that it can confront or avoid, and its
integration degree.
- Level of investment : Should select the abilities are expansion or entering
investment of product market or investing to maintain the current position, or to
minimize investment to withdraw or liquidate to dissolve the business.
- Function strategy: Competitive method can focus on one or more
following functions: product strategy, strategic position, pricing strategy,
distribution strategy, manufacturing strategy, information technology strategy,
segmentation strategy, global strategy .
- Strategic property and strategic capability: strategic capability is
dominant aspects of the business. Strategic property is the resource power of

enterprise compared with other competitors. When making the strategies it
should pay attention to the costs as well as can create/maintain assets and
capabilities as a basis for long-term competitive advantage of the enterprise.
- Allocation of the resources: Financial resources and non-financial
resources such as buildings, equipment, people all have to be allocated.
Allocation decision is a key factor for the strategy.
- Synergistic effects between the enterprises: Only enterprises achieving
new synergistic advantages can have superior advantages compared to those
businesses ignore or don’t exploit these synergistic effects.
In general, strategy is a set of actions and decisions which are closely
related to each other, helping the organization achieve its objectives, it is also
constructed how to take advantage of the basic strengths including the resources
of the organization as well as considering the opportunities and challenges of the
environment.
1.1.2 . Role of strategy
- Business strategy helps the business realize its purpose, direction as a
basis, a guideline for all business activities of the enterprise. Business strategy
plays a role as orienting activities of the business in the long term, it is a solid
base for the implementation of the operations. The absence of strategy or non12


clear setting strategy, there is no strong arguments to make the operation of the
business disoriented , there are many issues that arise only in sight but was not
associated with long -term or show only locally but do not see the role of the
local in the entire operation of the business.
- Business strategy helps the firm understand and take advantage of
business opportunities, and simualtaneously have proactive measures to
overcome the risks and threats in the competitive market.
- Business strategy contributes to improving the efficiency of resource
use, enhancing the competitive position of the firm to ensure the sustainable

development of its.
- Business strategy creates solid bases for the formulation of policies and
decisions about business production in line with market fluctuations. It provides
a solid basis for research and development, investment in developing personnel
training, market expansion activities and product development. In fact most of
the mistakes in investment, technology, markets etc is derived from place
strategy or bias in determining the strategic objectives.
The source of success or failure depends on one important factors as how
the enterprise has business strategy.
- Role of planning : Business strategy helps the firm see its purpose and
direction and help the administrators know what to consider and determine what
direction the organization will go and what time will achieve desired results.
- Role of forecast : In an environment which is always volatile, the risks
and opportunities always appear, strategic planning process helps the
administrator analyze the environment and make predictions with the aim at
outline the right direction , so that the managers have the ability to capture and
make better use of opportunities and reduce the threats related to the
environment .
- Control Role : Business Strategies helps managers use and allocation of
available resources in an optimal way , as well as an effective coordination of
functions within the organization to achieve common goals outlined .

13


1.3. Classification of strategy
1.1.3.1. Classification of business strategy according to the strategic level
Sorting in strategic level , they split the strategies into :
- Corporate strategy ( or overall strategy ) , is strategy built for the whole
company in all areas the company is involved in . The objective of this strategy

is that it show the destination which the company wants to achieve to look
holistically across the entire activities that the company pursues as well as
directions and measures to achieve that goal .
- Business level strategy ( field ) is built for a narrow specialized business
industry . In the case, the company is involved in only one area of business, the
business strategy is also the corporate strategy.
- Function level strategy is strategy of each separate function within the
company such as finance , marketing , human etc Function level strategy can
seen as supporting strategy aims at the successful implementation for business
level strategy and corporate level strategy.
The difference between business strategy and human resource
development strategy.
Business strategy : is a strategy which is more relevant to how a business
can compete successfully in a particular market. It relates to the strategic
decisions of the choice of products to meet customer needs, to gain competitive
advantage over competitors, to exploit and create new opportunities etc.
Human resource development strategy is personnel forecast, attracting
recruiting, training and development, incentives to motivate , how to maintain
the appropriate human resources, planning and building an adjacent team for the
firm, team development, offsetting of deficiencies when scale is extended,
investment costs reduce or risks in business is limited.
It can be said that business strategy is overall strategy and human resource
strategy is functional strategy. When building human resource strategy, it must
keep close to the strategy of the firm to have appropriate personnel strategy.

14


1.1.3.2. Classification of business strategy in strategic content
Based on the content of the strategies, the French managers suppose that

the business strategy covers:
- Commercial strategy.
- Financial strategy.
- Human strategy.
- Technological and technical strategy.
1.1.3.3. Classification of business strategy in the strategy process
According to this classification, the business strategy includes:
- Orientation strategy refers to the major orientations of the goals of the
enterprise, directions and measures for the firm to achieve business objectives, it
is built based on the results of environmental analysis and internal analysis of the
enterprise.
- Action strategy is action plans of the business in each specific situation
and the strategic adjustment expectations. Action strategy can be selected from
the strategies have been developed while building orientation strategy and can
also be selected from the emerging strategies in the implementation process of
orientation strategy.

15


1.2. Development process of the business strategy

Execute external
evaluation, show
opportunities and threats

Give

current

Reviwe

missions,

company's

objectives and

missions

Set
longterm goals

Set common
goals

the
Allocate
resources

strategies

Execute external evluation,
indicate
strengths
and
weaknesses

Select
strategies

pursue

Measure and
evaluate the
level
of
implementing

Department
to

policy

Planning

Implement

Evaluate

strategy

strategy

strategy

Figure 1.1. Strategic Management Model of F. David
Building business strategy is the first stage in the process of strategic
management. Strategic formulation process consists of 5 steps, as follows:
1.2.1. Determination of the strategic missions and goals
The business mission of an organization is the purpose of its business

activities, is the reason for the foundation, survival and development of an
organization. The business mission of an organization answers the question: The
organization is founded and exists for what?
The goals are states, specific outcomes that the organization wants to
achieve in a certain period of time. Most organizations pursue profit, goals
16


achieving outstanding capacity occupy the top position. The second goals are the
goals that the organization deems necessity if they want to achieve outstanding
capacity.
1.2.2. Analysis of the external environment
As the factors, forces, alternatives etc are located outside the firm while
the administrators can not control them but they affect the operations and results
of operations of the Company. Especially, impacts of external environment on
the issues of human resources and human resources management of the firm.
1.2.2.1. Analysis of macro environment (PEST + + model)
Including external factors of the firm, creating opportunities and threats
for the firm. For the development of human resources in the firm, main factors
are the economic environment , labor law and labor market , science technology
and cultural, social factors of the country that it is interpreted as follows :
Economic environment : includes factors such as economic growth
speed, inflation , population etc have direct impact on the labor demand both
quality and quantity , affecting income , the lives of workers . This would create
opportunities or pressures to the human resources development of the business.
Law , Politics : This factor affect mechanism and wage policies of the
enterprise , leading to changes in the attractive level of human resources of the
businesses . Therefore, the development of human resources in the business
must be conducted in accordance with the labor law and labor market .
Science and technology: the development makes appear

the new

industries, new techniques require the employee must be equipped with the new
knowledge and skills. Therefore, the development of human resources in the
business becomes more urgent.
Cultural and social factors: of the nation have major impact on
psychology, behavior, style, lifestyle and changes in the way of recognition for
the value of the employee. So, it affects only the form of thinkings and the
development policies of human resources to promote highly positive factors,

17


simultaneously to overcome the negative aspects of the labor behavior of the
workforce in the business.
1.2.2.2. Analysis of industry environment (5 competitive pressures of M.
Porter)
In addition to the factors of macro environment, the firm has also been
directly impacted by the environment in the business industry which it is
operating.

Figure 1.2. 5 pressure model of M. Porter
(Source: Michael E. Porter, Competitive strategy, Tre publishing house, 2009)
The factors of the micro-environment in the human resources
development is a competitive matter to attract human of the firm for other firms
and supply capacity of the labor market . Besides, it is buyer power , supplier
power , new entrants who are entering the market ... Going deeply into details of
each factor to clarify more the impacts of these factors as follows :
Human resources attracting competition: of the business in the same

industry of the competitors significantly impacts on the quantity and quality of
the human resources of every business. It creates the movement of human
18


resources from tese businesses to other businesses , especially high-quality
human resources .
Supply capacity of labor market is one of very important labor sources
for the enterprises , this ability is high or low will directly affect the level of
excess or shortage of the human resources in the different periods.
The factors of this micro- environment affect supply factor in the labor
market of the same industry , making increase of competitive pressures on
human resources of the businesses and affecting human resources orientation ,
development goals of every enterprise.
Five key factors of the business environment - 5 pressures for the firm,
such as:
- Supplier power:
The suppliers are capable as a threat to the production industry when they
raise prices, restrict quantity or supply products with unguaranteed quality. The
enterprise should pay attention to the negative impacts from the suppliers.
However, providers can only cause pressure for the enterprise in some cases such
there are few suppliers, there are subsitute products and services, or the
advantage of specialized products and services , or there is positively vertical
integration ability, self-contained product.
- Buyer power:

19


Buyers are persons or organizations using the products or services of the

business, they are divided into five objects, those are : end consumers,
intermediary distributors , resellers , wholesalers and the industrial buyers .
Customers are the main subjects involved in the process of product
consumption . Identifying customer objects and impact on the customers is to
have basis to identify product , service market and investment structures needed .
Customer demand is the most basic factor that is concerned by the business to
decide whether or not to maintain long-term competitive advantage for that
product. The higher ability of the customers’ pressure causing the higher the
adverse risk for the business . The customers often put pressure on the business
in cases they are traditional customers , large-scale purchase , or there are
multiple vendors with a same product , there are many choices , or they have the
ability to adverse integration to own all or a part of the product production .
When the customer has more advantage than the seller , it’s inevitable to reduce
the price and increase the quality of products and services , which means that
profits will decrease .
-

Substitute products:

Substitute product does compete stiffly, but it can affect the profitability
of the market as a threat to the enterprise. It needs to pay special attention to the
substitute products which are likely to improve, converse by advances in the
technology. Most new substitute products are the result of the explosion of
technology. To want to succeed in their business, the businesses need to spend
the necessary resources to develop new technologies in development strategy.
-

Rivalry:
Competitive intensity of existing competitors reflects in the level of

concentration of the industry, the difficulty as drawing from industry, fixed costs,
added value, the enhancing status of the industry, surplus capacity, differences
between the products, costs of conversion, specificity of consumer brands,
diversity of competitors, screening status in the industry. The competitors also
have strengths but also have weaknesses affecting the competitiveness.
- Potential competitors:
20


Potential competitors are not currently available in the industry, but may
affect the industry in the future. The risk of potential competitors presents in the
factors: absolute cost advantages, the government’s policies, economies in scale,
capital requirements, specificity of trademarks, the cost of business industry
transformation, access ability to distribution channels, the possibility of
retaliation, the proprietary products. If the industry has many advantages, the
potential competitors will be certainly a lot. The potential competitors can be
only better than the old firm with 2 matters, or as capital and technology, or
sheltering the shadow of other forces.
1.2.3 . Analysis of internal environment
Internal business environment is all things belonged to the business itself ,
directly related to the business production operations of the business to identify
the strengths and weaknesses of the business , creating the basis for strategic
planning and implementation of business strategy . Considered subjects are the
main factors occurring within the enterprise , in the enterprise's control range .
Internal situation analysis of the enterprise aims at finding out the
strengths and weaknesses of the business, finding ways to achieve competitive
advantage , and role of different capacities , resources and capacity of building
and maintaining competitive advantage sustainability for the business .
The internal situation of the enterprise is analyzed based on functional
operations such as Human Resources , technical infrastructure , technology and

finance .
1.2.4. Development of strategic plans
1.2.4.1. External factor evaluation matrix (EFE)
Table 1.1. EFE matrix building model
Factors of the
external business

Weight

Rating

(2)

(3)

environment
(1)

Weighted
score
(4)

List of the factors Score from 0 to 1, 1 = Less response (4) = (2) x (3)
21


belonged
external

to

the the

higher

business score

environment

the

the 2 = Average response
more 3 = Above average

important

the response

corresponding

4 = Good response

factor
Total = 1
Total = A
EFE Matrix helps strategic administrators summarize and evaluate the
economic,

social,

cultural,

demographic,

geographic,

political,

legal,

technological and competitive information etc by classifying importance and
scoring from 0.0 to 1.0 for each factor. From there, it is possible to identify the
external opportunities and threats affecting the business.
1.2.4.2. Internal factor evaluation matrix (IFE)
Table 1.2. IFE matrix building model

Factors of the

Weight

Rating

Weighted

internal business

score

environment
(1)

(2)

(3)

List of the factors

1

belonged to the

important weakness

internal business

2 = Weakness

environment

3 = Strength
4

=

=

The

(4)

The

most (4) = (2) x (3)

most

important strength
Total = 1

Total = B

Internal factor evaluation matrix allows the strategists to summarize and
evaluate the important strengths and weaknesses of the functional business

22


departments, and it’s basis to identify and assess the relations between these
departments.
1.2.4.3. SWOT Matrix
Technical analysis of Strengths - Weaknesses - Opportunities and Threats
(SWOT)
SWOT stands for the set of the first letters of the English word: Strengths,
Weaknesses, Opportunities and Threats. This is a very useful tool to help us
understand the matters or make decision in the organization, management as well
business.

23

Table 1.3. SWOT Matrix
Internal

business Strengths (S)

Weaknesses (W)

List

important List the most significant

Environment

the

most

strengths from the summary weaknesses
table of the internal business summary
External

business environment

environment
Opportunities (O)
List

the

important

table

internal

Strategic combinations SO
most Take

from

advantage

of

the

of

the

business

environment
Strategic
combinations

the WO

strengths of the enterprise to Take advantage of external

opportunities from the exploit the opportunities in opportunities to overcome
summary table of the the
external

business the weaknesses within the

business environment

environment
Threats (T)
List

external

the

enterprise

Strategic combinations ST Strategic
most Take

advantage

of

combinations

the WT

important threats from strengths of the internal As

the

strategic

the summary table of business in order to reduce combinations of "defense",
the external business the
environment

impact

of

threats

external trying

to

overcome

weaknesses and reduce the
impact (or avoid) external
threats

SWOT matrix is analysis matrix model of strengths, weaknesses,
opportunities and threats of the firm, so that combining these factors with each
other to determine the strategy for the firm:
- Combination S / O: Helping the business take advantage of their
strengths to seize the opportunities.

- Combination B / L: The enterprise uses its strengths to reduce the
threats.

24


- Combination W / O: The enterprises takes advantage of the opportunities
to remedy the weaknesses.
- Combination W / T: The enterprise overcomes or minimizes the
weaknesses to avoid the threats.
1.2.4.4. QSPM Matrix
QSPM matrix (QSPM Quantitative Strategic Planning Matrix) using the
input data from the analysis in steps (described in the previous chapters) to help
the strategists decide objectively that what strategy of which the alternative
strategies is the most attractive and worthy strategy for the enterprise to pursuit
to successfully implement its goals.
Table 1.5. QSPM Matrix

(2)

Number of

Selected strategies

Classification

Strategy 1
A

B

Strategy 2
A

B

Strategy 3
A

attractive
score

B

Internal
factors
External
factors
Total

S

S

S

In principle , a matrix QSPM can include any number of group of what
alternative strategic and in a certain group can include any number of what
strategy , but there are only strategies in the same group will be evaluated
together . These strategic groups are different and QSPM strategy only evaluates

strategies in the same group .
It’s noted that QSPM matrix indicates relative attractiveness of alternative
strategies and more importantly, it provides objective basis to consider and
decide on selecting the most suitable product strategy. However, QSPM matrix
also has limitations and must have certain conditions to be used in practice . One
25