LUẬN văn THẠC sĩ xây DỰNG CHIẾN lược PHÁT TRIỂN CÔNG TY xây DỰNG SÔNG đà

CONSTRUCTION OF BUSINESS STRATEGY IN PERIOD OF 2010 – 2015
OF SONG DA SOMECO JOINT STOCK COMPANY
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CHAPTER I: BASIC ISSUES OF STRATEGY ADMINISTRATION..............................6
1.1. Overview of strategy management...........................................................................6
1.1.1. Definition:..........................................................................................................6
1.1.2.Approach.............................................................................................................8
1.1.3.Process................................................................................................................8
1.2.Vision, missions and values.....................................................................................13
1.2.1.Vision................................................................................................................13
1.2.2.Missions............................................................................................................13
1.2.3.Values................................................................................................................14
1.3.Strategic analysis.....................................................................................................15
1.3.1.Macro environment analysis.............................................................................15
1.3.2. Industry environment analysis.........................................................................18
1.3.3. Internal environment analysis..........................................................................21
1.3.4. Analysis summary - SWOT.............................................................................25
1. 4. General business strategies....................................................................................28
1.4.1. Product differentiation strategy........................................................................29
1.4.2.Strategy of production cost reduction...............................................................31
1.4.3. Market concentration strategy..........................................................................34
1.4.4. Quick response and flexible strategy...............................................................34
1.4.5. Strategy creating value and benefit to customers............................................36
1.5. Organize for strategy implementation and control.................................................37
1.5.1. Organize for strategy implementation.............................................................37
1.5.2. Inspection for strategy implementation...........................................................38
CHAPTER II: BUSINESS STRATEGY REALITY OF SOMECO SONG DA JOINT
STOCK COMPANY IN THE PAST YEARS....................................................................42
2.1. General introduction of Someco Song Da..............................................................42
2.1.1. Process of foundation and development..........................................................42

2.1.2. Business performance:.....................................................................................43
2.1.3. Someco Song Da’s Performance result in recent years:..................................48
2.2. Analyzation and evaluation of Someco Song Da business strategy.......................49
2.2.1. Agreement of Someco Song Da Jointstock Company.....................................49
2.2.2. The real situation of the organization to implement and control current
strategy of Song Da Someco Joint Stock Company..................................................50
2.2.3. Analyzing the macroscopic environment.........................................................57
2.2.4. Analyze sector environment.............................................................................71
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CHAPTER III: SOLUTIONS TO COMPLETE BUSINESS STRATEGY OF SOMECO
SONG DA JSC FOR THE PERIOD 2010 – 2015.............................................................83
3.1. Development orientation.........................................................................................83
3.1.1. Vision...............................................................................................................83
3.1.2. Mission.............................................................................................................83
3.1.3. Core values.......................................................................................................83
3.1.4. Production targets in business strategy up to 2015:.........................................84
3.2. Choosing business strategy for the period 2010 – 2015.........................................85
3.3.1. Organizational solutions..................................................................................89
3.3.2. Technological solutions....................................................................................90
3.3.3. Human resources solutions..............................................................................91
3.3.4 Financial solutions............................................................................................95
3.3.5 Marketing solutions..........................................................................................95
CONCLUSION................................................................................................................101
REFERENCE DOCUMENT...........................................................................................103

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INTRODUCTION

1. Reasons to select the theme
Song Da Someco Joint Stock Company is an equitized state owned
enterprise capitalized (Formerly Song Da Mechanical Assembling Joint Stock
Company) directly under Song Da Corporation that includes 06 branches, related
and subsidiary companies.
As an enterprise specializing on construction, real estate, and commerce for
years, Song Da Someco Joint Stock Company has carried out so many large
projects on constructing hydropower and cement plant,…, which contributes to the
cause of modernization and industrialization of the country.
The official integration into the World Trade Organization (WTO) of
Vietnam has brought both new opportunities and challenges for all Vietnamese
enterprises, of which the challenges include the pressure in competition, shift in
economic structure, requirements in human resources,…Therefore, the research to
put forth the solutions to business strategy in the period of 2010-2020 and the
vision by 2020 of Song Da Someco Joint Stock Company (one of the established
and prestigious companies in the fields of investment in construction, real estate,
…) in the period of integration is a necessary selection.
2. Purposes in theme research
To systematize and generalize the business affairs of Song Da Someco Joint
Stock Company
To analyze and assess the feasibility of Song Da Someco Joint Stock
Company in the last time.
In order to Complete business strategy of the Song Da Someco Joint-stock
Company between 2010 and 2015.

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3. Object and scope of Research
Business strategy and business related issues.
Scope of applications: Business strategy of the Song Da Someco Jointstock Company in operating field.
In the aspect of time: Estimated five years (from 2010 to 2015)

4. Research method
Some research approaches in this assay as follow:
Document research approach: In this research, information, documents
include: publication, research, chart result, analysis data, summary report… about
business performance and other issues related research topic.
Qualitative research approach: Interview and refer opinion of leaders,
managers, in Enterprise and foreign specialists who cooperate about Business
management and performance. Content focuses on major issues about Company
strategy administration in the past time.
Sample selection research approach: is a non entire investigation method.
This approach makes use of probability theory for selecting some specific units
(called sample overall) in the whole of overall (called general overall). Processed
information result is used for generalizing for general overall. In order to achieve
trusted generalizing result, we should select one sample that nearly similar or
similar to general overall (about structure components, quantity specifications of
researching objects, specification spread). However, this approach is practiced in
narrow scope to practice the design of Strategy Administration subject due to be
limited time and human resource. In other words, we just use this sample selection
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approach with the aim to define participants who investigate interview inside and
outside Enterprise.
Matrix research approach: Matrix approach analyzes effect, draws out
environment causes/elements (inside and outside) that impact on Enterprise’s

strategy performance. This approach provides one overall outlook and
attractiveness and core capability for Administrator to catch that business
opportunities.
Combination of practice, theory, collation and comparison is an approach
for writing, graduation essay relating to research scope and topic application.
Use secondary documents, research practice, market investigation, survey
for primary data via internet, interview with economic specialists, CEO of general
companies and large groups…

5. Structure of the Thesis
Includes the introduction, main content, and conclusions and proposals
6. Contribution to the thesis
Base on methodology and practice to give out the solutions to business
strategy and vision of a company specializing on construction, real estate in the
course of integration.

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PART II: CONTENT
CHAPTER I: BASIC ISSUES OF STRATEGY ADMINISTRATION
1.1. Overview of strategy management
1.1.1. Definition:
The term “Strategies” were first used and popularized in military affairs.
According to American encyclopeodic dictionary, “Strategies are the science and
art in military management applied in making schedule and performance in the
general scope to win the final victory” whereas Larouse dictionary wrotes that
“Strategies are the art directing all the means to win, which is the fighting art in
competitive position”.
To day, the term ‘Strategy” is applied popularly in business. The

“Strategies” in business is defined differently, as follows:
“Strategies are the model on objectives, targets and plans to reach them”.
(by Kenneth L.Andrew – in 1965)
“Strategies imply the fixation of basic and long-term goals, the selection of
the methods or action progress and the distribution of vital natural resources to
carry out the objectives”.
(by Alfred Chandler)
“Strategies are the ways, means of transportation to win the defined
objectives with the polices”.
(by General Ailleret)
“A strategy is either the trends or plans to combine the goals, main policies
and action programs of an organization into an united entityt”.
(by Quinn, in 1980)

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“A strategy is the harmonious combination of actions and distribution of
the resources to win the objectives given out by the organization. Strategies of one
organization are efforts aimed at use its capacity and resoureces at best to respont
to the opportunities and challenges with the outside environment” .
(by Bateman và Zeithaml, in 1990)
“Strategies consists of goals, policies and plans”.
(by Dess và Miller,in 1993)
Despite of difference in the above concepts, all of them point out the
overall feature of the goals, policies and action plans defined by the organization
in advance. Mintzberg gave out the concept of strategy that “Strategies are
schemes, tactics, tendencies, positions and visibilities” in 1987
Strategies are schemes:
According to the concept, strategies are goals, policies and programs

defined by the organization in advance.
Strategies are tactics:
Those in the intentions of the organization to defeat is competitors.
Strategies are tendencies:
They may neither defined prior, nor publicized, however, all actions of an
organization share one trend, which is considered as a strategy.
Strategies are positions:
The position of an enterprise in a certain environment, particularly in the
comparison with its competitors, is an important factor in the strategy. According
to the concept, a strategy is the fitness between internal factors in the enterprise
and environmental elements. The position of an enterprise may be identified and
developed via either the action scheme or tendency.
Strategies are visibilities:
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According to the concept, strategies are ideas at first, they exist in the
imagination and creation of the administrators. It is so important to share the ideas
with other members in the organization.
Combining the above different concepts on strategies, we may gain the
overall definition of strategies as follows:
“A strategy is the process of stable construction and development of
competitive advantages via the identification of the organization in the business
world as well as the effective development and use of the resources of the
strategy”.
(By Dr. Vu Thanh Hung - Chief Editor, Dr. Nguyen Van Thang; Strategy
Administration Syllabus– Education Publishing House )

1.1.2.Approach
Logic and historic system approach method

Approach method for the practice of argument affairs.
Method of new economic thought– Optimal method

1.1.3.Process
Strategies are the range of complex actions to mobilize the available
resources in one organization to win a certain purpose. The identification complies
with a process including varied periods but in the strict logic relation.

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PROCESS OF STRATEGY MAKING
Strategic functions, missions &
objectives of the enterprise (1)

Analysis of
enterprise’s internal
nghiÖp (S,W) (3)

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

Strategy selection (4)
Company - level strategies (5)
n
Business & Function Strategies

Strategy development (6)
Performance inspection & Evaluation (7)

Feedback

Figure 1.1 – Process of strategy making
1.1.3.1.Period of Strategy Establishment.
Strategy establishment is the process of establishing business misions,
research inspection to identify internal and external elements, giving out longterm objectives and selecting alternative strategies. Sometimes, the period of
strategy

establishment

is

callsed

“making

strategy

scheme”.

Strategy

establishment includes 3 basic activities:
Carrying out reserach: relating to the collection and treatment of the
information on market, scopes of business of the enterprise. The stage is called

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“skimming the business enterprise”. Naturally, research performance is to identify

strong and important points in functional business. The varied types of inspection
are regared as the development and performance to survey the internal elements
such as labor spirit, effectiveness in production, adverticement and loyalty of the
clients.
Combinating intuition and analysis harmoniously: some administrators and
owners of the enterprise declare their extraordinary talents in using their intuitions
to give out the excellent strategies. Althought few organizations still exist and
thrive thanks to the talent intuition in administration, the majority are less lucky.
Most of them gain benefit from the strategies on their capital based on the
harmonious combination of intuition and analysis to give out resolutions.
Giving out resolutions: Because no organization owns endless resources,
the strategists have to give out the resolutions relating to the selection of the most
benefit one for the Company. The resolutions in the period of strategy
establishment are the glue to stick the company to its products, markets, resources
and certain technologies in long time.
1.1.3.2.Period of strategy development.
Strategy performance is called the period of actions for strategy
administrators. Development means the mobilization of administrators and staffs
to perform the given strategies. The basic actions in the period are:
Establishing annual objectives: are the milestones that the organization
reach to approach its long-term objectives. The annual objectives must be
measurable, quantitative, challagable, practical, appropriate and priority. The
objectives are given out in the level of the Company, devisions and funtions in a
large company. They should be displayed under the form of achievement on
administration, marketing, finance, accounting, management, information research
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and development. A range of annual objectives are needed for each long-term
objective. The annual objectives are extremely important for strategies, and it is

the basis of resource distribution.
Policies: Policies are the method to reach objectives. The policies include
instructions, rules and procedures established to support the efforts on gaining the
given objects. Policies are the guidance for giving out decisions, and displaying
the repeated or periodical circumstance. Like annual objectives, policies are so
important to the strategy development because they are the overall thrists and
expectation of the administrators and staffs in the organization. Policies allow the
internal cooperation and synchrony among departments and divisions in the
organization.
Natural distribution: is one action of the central administration, focusing on
the strategy development. Strategy administration allows the resource distribution
subject to priority order established in annual objectives. It is worst for the process
of strategy administration and success of an organization to distribute its resources
in inappropriate methods with priorities pointed out in the approved annual
objectives. All organizations have to include 4 types of resources at least to reach
their targets:
Financial resource;
Material resource;
Human resource;
Resource of technologies and techniques.
In short, the strategy development period is considered as the most difficult.
It requires the good sense of discipline, dedication and and sacricife of each
individual. The strategy development is succcessful due to the capacity to promote
staffs by the administration, which is an art rather than a science. A strategy is
given out without development shall not serve for any useful purposes.

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1.1.3.3.Strategy assessment period.

Almost strategy planners agree that strategy assessment is necessary to
reach the prosperity of the organization, timely assessment may alert the
administration of difficulties or potential challanges before they become serious.
The sufficient and timely feedback, the basis of strategy assessment, is not
far from current information. Too pressure for the senior administrators make the
junior ones find out the appropriate figures.
Although one or more than one strategy is right , this methodology may be
wrong because strategic assessment always consists of both long- term and
short-term goals. Normally, the strategies do not affect short-term actions until it is
too late to change. It is impossible to prove that one typical strategy is the best or
ensure that it is working. However, it may be assessed via serious mistakes.
Richard Rumel suggests 4 standards to assess strategies, which are the
consistency, appropirateness, advantage, and feasibility.
Process of Strategy administration.
Include: Commit → Decide → Act
One company may win:
Strategically competive advantages:Are the advantages that a company
wins as constructing and performing one strategy and gaining benefits to it.
Stably competive advantages: Are the advantages that a company wins as
constructing and performing one exclusive strategy that are not owned by its
opponents; Creating the advantages that are not owned by both the curent and
potential opponents

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Benefit over the average:The benefit exceeds those expected to gain from
other investments with equivalent risks by the investors.

1.2.Vision, missions and values

1.2.1.Vision
Strategic vision: "Orientation for future, a thirst for winning the objectives
of an enterprise ". Basic values for stable development.
The important factor in the construction and selection of strategies is the
vision of individual or organization who participate into making strategies, which
depends on intuition of each or the whole. The analysis and intuition are the
foundation to give out the decisions on forming the strategies suitable to business
environment. Placed in a varied changing business environment, the leader with
good intuition and exact vision may assist the enteprise to analysize the overal
approachment to the busniess environment and to point out actual advantaces and
difficutlties affecting to the business and production of the enteprise. Furthermore,
they help to form the highly feasible strategies suitable to the environment and
missions given out by the enteprise.

1.2.2.Missions
Missions describe the organizations in their business conditions, their
clients, development of necessary skills to meet the perspective. Perspective is the
destination of ideas, and purposes of the organization whereas missions describe
the perspectives less abstractly and “theoretically”. Missions are more particular
than perspectives, of which, they set up significant orientation on the methods that
the organization would reach or meet any perspective in a certain period. The
organization interprets the perspectives into the reports on its missions, of which

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plans on their boundaries and an orientation. Mission report describes generally its
clients, main products and services as well as the orientation in a certain period.
What you may recognize in the mission declaration is that all of them force
the company toward the ambitious goals, i.e. “To become number one”, “the best”,

“to reach the target of one billion computers connecting the global network” and
“the leading supplier,..”. The mission declaration is examples on strategic
schemes.
Basically, strategy schemes are the concepts so that the administrators
enable to place an ambitious target to challenge one organization. Normally,
missions or perspective declaration refers to the strategy schemes of the company.

1.2.3.Values
The values of a company confirm the methods that the administrators plan
to self control, with which they desire to do business and the characteristics that
they want to establish for the organization. The values control behaviors in the
aspect of an organization, which is considered as the cultural basis of organization
in the firm and as a leader with competitive advantages.
There are so many definitions on the crucial values of an enterprise such as:
The crucial values are considered as all of the things that are not paid or
changed by t he Company. They are the basis to form the Corporate bylaws.
The crucial values are a system of trusts affecting the behaviors among
people, or among the groups of people; they are the “spirit” of the organization; as
the effective values rooted so deeply in the organization, the crucial ones
contribute into the establishment of the psychology in the organization so that they
enable to support or remove personal psychology

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The crucial values are the rules guiding essentially and temporarily: helping
the orientation of decisions and actions of an organization; they are not either
cultural or certain actions; therefore, it is impossible to construct them for the sake
of financial objectives or short-term benefit; the organizations desire to maintain
their core values, even their missions have changed.

The crucial values do not pay attention to the public opinion, but they are
valid and important to the internal of the organization. The core values are little,
valid and decisive rules, spirit of the organizations; they are the values with the
mission instructing all actions.
The crucial values are so deep and important. They rarely change subject to
the change of the market. On the other hand, the organizations would change their
market if it is necessary to maintain their practically core values
In short, the values of an enterprise are:
Confirmation of methods of administrators:
Self-control,
Doing business,
Desire of establishing characteristics of the organization.
Behavior control in the organization,
Being the organizational cultural foundation in the company
As a leader with competitive advantages.

1.3.Strategic analysis
1.3.1.Macro environment analysis
Macro environment analysis answers the question: What are businesses
dealing with? There are five macro environment’s elements: natural element,
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social element, economic element, political-legislative element, and technicaltechnological element. Those ones affect the organizations independently or in
association with the other elements.
Natural elements
Natural elements include energy, natural resource, water, etc., which can
create both opportunities and challenges for the firms.
Social elements
Every firm has to analyze social elements to define potential opportunities

and challenges. Those usually change or progress slowly that sometimes make
them difficult to be recognized. Social elements consist of life quality, life style,
consumers’ flexibility, career, population, population density, religion, etc.
Economic elements
Economic elements have great influence on firms. Because these elements
are so extensive, firms should be selective to identify concrete and the most direct
impacts, the primary include:
Interest rate: This can impact on demand for the firms’ products. Interest
rate is so important since consumers usually borrow money to pay for their bills.
This also determines the capital cost that brings to investment decision. This cost
is an essential factor to decide the strategy feasibility.
Exchange rate: exchange rate between two currencies specifies how much
one currency is worth in term of the other. Change in exchange rate has direct
effect on the competitiveness of the firms’ products on the international market.
This change also makes great influence on price of import and export
commodities.
Inflation rate: inflation rate can disorder the economy, slowdown the
economic growth and make currency fluctuation unestimated. Thus, investment
activities become hazardous, business future is difficult to be forecasted.

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International exchange relationship: Changes in international environment
bring foreign investors a lot of opportunities as well as increase competition in
domestic market.
Political – legislative elements
Elements in political – legislative environment strongly dominate the firms’
operation. Political stabilization is considered as one of the most important
premises in the firms’ operation. Changes in political environment may be

advantages for these businesses but inhibit the development of the others, and
conversely. The perfect impartial legislation is one of the out of economics
premises. The perfectness, change and legal enforcement in the economy affect
widely firms’ business strategy implement planning and organizing. Political –
legislative environment has direct effect on the enterprise’s operation efficiency
because it affects product, career, business method, etc. of the company.
Furthermore, it has impacts on the cost: production cost, circulation cost,
transportation cost, tax level, etc. especially import and export enterprises are also
influenced by international trade policy, national quota, and protective law for
participating enterprises. In summary, political – legislative environment has great
effect on improving business efficiency of the enterprise by acting on its operation
through a system of legislation, macro economy adjustment tool, etc.
Technical- technological elements
Advanced technical and technological levels allow enterprises actively
improve their goods quality, labor productivity. These elements affect most of the
product’s aspects such as product feature, product price, and product
competitiveness. Thanks to this, enterprises can increase competitiveness, mobile
capital circulation, profit that ensures their open reprocessing. On the contrary, the
low technological level decreases not only the enterprises’ competitiveness but
also reduces profit, holds back development. In brief, technical and technological
element helps enterprises increase their labor productivity, product quality so as to

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increase competitiveness, capital circulation, and profit as well as business
efficiency.

1.3.2. Industry environment analysis
Strategies planned base on the estimated environment conditions, so the

good strategic management is much up to having a thorough knowledge of
environmental conditions, which the organization is facing with. The general
environments, which the organization usually confronts, are divided into three
levels: macro environment, demonstrative environment, and internal environment.
Macro environment affects all the industries, but doesn’t follow a specific way.
Demonstrative environment are defined with a concrete industry, with all the
industry companies influenced by that industry demonstrative environment, in this
case macro environment and demonstrative environment co-ordinate with each
other and called external environment or peripheral environment of the enterprise.
The peripheral environment analysis help the enterprise partially answer the
question What the company is confronting with; simultaneously identifying
opportunities and challenges, which threaten the business operation. Many
elements of the peripheral environment may affect directly or indirectly the
company’s operation or the company’s competitors. To analyze how peripheral
environment’s elements influence directly on the company’s operation , the five
forces model of Micheal Porter is the most useful tool.
As we know, business includes companies creating products together
(goods and services), which can be replace each other to satisfy the same demand
of the consumers. The mission of the strategists is to analyze competitive
interaction in business environment to define opportunities and challenges facing
the company. Theoretically, the selection of five forces model of M.Porter will
help strategy maker identify that issue. There are both advantages and
disadvantages when applying this model to analyze. Thus, the important thing
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when using this model is to have exact identifications of every component of the
model.
Five forces mode of M.Porter is described at Figure 1.2

Figure 1.2 - Five competitive forces model

Industry competitors. One thing rather useful for the company when
analyzing industry competitors is to catch the appraisals of themselves and of the
other industry companies. However, if these ones are not accurate, there will be
“blind spots”, which are the weaknesses of the competitors. Also, the company
will get inaccurate understandings of the industry or of its industry environment.
For example, American automobile companies had once reckoned that demand of
cars depends on the economic condition, but this idea was a mistake when the
foreign competitors made cars with more luxurious equipment and are accepted
thanks to much higher quality.

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Potential entrants. Potential entrants are industry businesses but they can
influence the industry in the future. The number of potential competitors, and the
level of their pressure on the industry depend on the following factors:
The industry attractiveness: this is shown through categories such as profit
rate, the amount of customers, business in the industry.
The integration barriers: the elements make the integration into an industry
more difficult and expensive, including: Technique, Capital. Commercial factors
as distribution system, branding, customer system or specific resources containing
inputs (controlled), qualifications, inventions, human resources, government’s
protection.
Customers. Customer is a competitive pressure which can affect the whole
business operations of the industry. Customer is divided into two groups: retailer
and distributor. Both the two groups put pressure on enterprises of price, product
quality, services concerned, and they are the industry competitiveness controller
through purchase decision. Especially, when analyzing, it is necessary for the

distributors to mind their importance, because they can directly go further to
overwhelm the internal of enterprise. For instance, with the small and mediumsized enterprises of Vietnam, bringing products into the distribution system of the
supermarkets is always facing with difficulty and obstacle because of price and
quality pressure. Most of Vietnamese products such as textiles, shoes are difficult
to integrate into the large markets of American, EU if not through distribution
system. That’s why there is a story of a pair of shoes made in Vietnam is sold for
the distributor with low price but Vietnamese in that market have to bear an
exorbitant price of the same product. The advantage of the competitive pressure
analysis from the customer helps us determine the industry’s role and the
importance. However, if the customers’ information is not accurate, there will be
inexact, even wrong judgment on the industry’s scale.
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Distributors. The number and the scale of the distributors will determine
their competitive pressure, negotiable power with the industry and the enterprises.
Substitutes. The major competitive pressure is the ability of meeting
demand between the industry products. Other factors of price, quality, and
environmental elements of culture, politics, and technology also affect the threat of
the substitutes. Nonetheless, one flaw of the substitutes is the surprise and
predicting difficulty. For example, just in the industry with the development of
technology, enterprises can create their own substitutes.
In brief, according to the author’s point of view, the five forces model has a
defect that the analysis is based on the past statistics, but limited future overview.
On the other hand, Micheal Porter developed this model supposing that the market
is stable, so in the condition of a fast fluctuating market, this model may be not
really useful. Nevertheless, the model is a wonderful tool for analysts to bring out
reports on the market’s competitiveness.
1.3.3. Internal environment analysis
If the analysis of five forces of M.P helps strategy maker identify

opportunities and hallenges of the company in the angle of action, the value chain
model help to classify valuable resources to indentify its competitive advantages.
In other words, Micheal Porter releases the value chain concept to evaluate the
competitiveness of the firm, more exactly to let firms self-locate on the market, in
the relationship with the buyer suppliers and other competitors. The value chain
help firms choose the method of creating competitive advantage by answering the
two basic questions: 1) How to provide customers with a product (goods and
services) with the value equivalent to their competitors’ one but with lower price
(low price strategy); or 2) How to produce products which the customers want to
buy at a higher price (differentiating strategy). Like that, the value chain analysis

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has a special important meaning, as a key for firms to find out their competitive
advantage on the value creation.

Figure 1.3 – Value chain model

The main operating groups in the value chain are divided into five basic
ones (Inbound Logistics, Production/Operation, Outbound Logistics, Marketing
and Sales, Services). However, this division is just relative because according to
career, and firms’ features, the characteristics, quantity, quality requirement for the
operations will be different. Hereinafter, the author describes some of the
fundamental features of these groups:
The Inbound logistics: Include the operations relating to transportation,
shipping and receiving, storing, distribution all resources for the processing as:
loading and unloading cargo, in-storage transportation, raw materials’ quality
testing, reserves, transport system coordination, working (settlement) with the
suppliers. All of those activities take place in the internal of the surveyed object

(firm, industry, economic organization).

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Operations: All the activities concern with the transfer from inputs to
outputs. This group, which operates abundantly and diversely, depends on
production form and features. Those begin from operations as design, production
trial, experiment, large scale production, quality testing, packaging, storing to the
activities serving the production solely as machine and equipment repairing and
maintaining, which can happen in workshops, factories, production centers on a
location or be allocated to different places globally.
The outbound logisticss: This area consists of activities concerning with
collecting, storing, and transporting the full products to the consumers. For
instance, the order form processing, scheduling, and implement organizing to
distribute products to consumers exactly, timely, uncostly.
Marketing and sales: Including activities to ensure the goods and services
transactions on the market the most effectively. These ones focus on the
fundamental steps of marketing mix: market research, product development, price
policy making, distribution channel establishment, and selling support promotion.
Among them, the selling and selling promotion play an important role
After-sale service: Including the auxiliary activities to boost market outlet
of product and create value added after the product sold to the consumer:
Installation, warranty, maintain, repair, instructions for use, replacement,
consumption consulting…according to the customer’s requirement. These
activities are multiform and abundant. It is also center, which develops the profits
and establishes the trade name to the enterprise effectively.

However, many

enterprises, especially the enterprises that are operating in a developing market as
in our country’s market still do not care about this appropriately.
Above activities are the basic activity groups, which contribute to develop
the general value chain of the enterprise. Obviously, this value chain can be
changed and adjusted for agreement basing on type of product, operation area, and
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business line. As example, the enterprise that operates in the distribution fields,
Logistics group (in and out) will be concerned mostly. For the local suppliers,
connecting closely with a fixed space such as hotel and restaurant services, at that
time the logistics is secondary. The most important aspect for these enterprises is
their production process (or service supply). For a bank, the phase that creates the
value is serving and marketing phase. However, operating in any fields with any
product’s specific characteristics and nature, it is still necessary to converge five
working groups fully as mentioned above to establish the fully worked-out value
chain. They play an important role in establishing the competitive advantage for
the enterprise, the branch, as well as the economy of a country.
Auxiliary activities group for process of making the value of enterprise is
mentioned frequently with four main working sets: 1) Guarantee ability on
material and technique; 2) Development standard of producing technique; 3)
Ability of human resources management; 4) infrastructure condition. Similar to
the main activities, four auxiliary activity groups also have type, nature, feature,
component, and other factors depending on the concrete condition of each
enterprise, business line or the country.
Guarantee ability for material and techniques. Firstly, these activities aim
at ensuring the material resource for an enterprise throughout process of producing
and trading. Out of material, it is necessary to mention the production facilities
and tools such as workshop, machine, equipment, laboratory, office … as well as
the other sources for production. The other departments of the enterprise

implement these activities; however, they also participate in process of making the
value for the product as well as the operation result of the enterprise actively.
Because the input source ensuring connects closely, the using effectiveness
improvement for production expenses and directly influences to product costs.

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Development standard of producing technique. Each product is produced
basing on a fixed technique foundation. This technique foundation will contribute
to value increase for the product, plays an important role in value chain of the
enterprise. The concept of producing techniques is understood in the broad sense
as the set of technique types including the management technique, which have
closely relation with each other to make the general competitive value for the
enterprise. Especially, the research and development (R&D) is an outstanding
activity. Research and Development will contribute to make the new knowledge
and value, actively contribute to the value chain of the product or the enterprise.
Out of R&D, the producing technique standard also has an important role. For
many fields, the development standard of producing technique has great meaning
for the final value of the value chain.
Human resources management: Including activities as selecting human
resources, training, enhancing professional skill, salary policy, treatment. The
human is foundation of all value. Therefore, the human resources management is
an important activity that is present at all phases in process of making the value.
Factually, if an enterprise takes interested in investing into the human resources
development and management, that enterprise will create its difference in the
market and attain the long-term competitive advantage.
Infrastructure: In here, infrastructure includes activities as follows: general
management, strategy planning, financial management, accounting, law,
relationship with civil authority organs, quality management….Similar to the

sources, the infrastructure activity directly affects all other activity groups in the
value chain.

1.3.4. Analysis summary - SWOT

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