LUẬN văn xây DỰNG CHIẾN lược KINH DOANH CÔNG TY cổ PHẦN CHẾ tạo máy – TKV

BUILDING BUSINESS STRATEGY
MACHINERY JOINT STOCK COMPANY – TKV
V

ACKNOWLEDGEMENT
The research group would like to thank Teachers of Griggs University and
Centre for Educational Technology and Career Development – Vietnam National
University for helping and instructing our group with basis and methodology of the
report.
We would like to thank Dr. Phung Manh Dac – Deputy General Director of
TKV Group, Chairman of Administration Board of VMC Company; Dr. Ta Ngoc Hai
– TKV Mechanics Department Manager; Mr. Cao Ngoc Dau – Institute Head of Mine
Energy Mechanics and Mr. Nguyen Cong Hoan – Director of VMC company for
contributing ideas and creating conditions for us to complete this report.


APPENDIX
ACKNOWLEDGEMENT.........................................................................................................ii
APPENDIX..............................................................................................................................iii
List of abbreviated words..........................................................................................................v
List of tables..............................................................................................................................v
Introduction: GENERAL INTRODUCTION............................................................................1
Chapter I: REASONING BACKGROUND..............................................................................4
1.1. Overview of business strategy........................................................................................4
1.1.1. Concept of business strategy...................................................................................4
1.1.2. Administering business strategy..............................................................................5
1.1.3. Benefits and limitations in business strategy building............................................5
1.2. Method of building business strategy.............................................................................6
1.2.1. Analyzing environmental factors affecting business strategy.................................6
1.2.2. Method of analyzing and forecasting strategy.........................................................9
1.2.3. Analyzing SWOT...................................................................................................11

1.2.4. Determining competition status of the enterprise..................................................12
1.2. Choosing business strategy...........................................................................................15
1.2.1. Concentrated growth strategy................................................................................15
1.2.2. Diversification strategy..........................................................................................16
1.3. Implementing the strategy.............................................................................................18
1.3.1. Reviewing strategic environment..........................................................................19
1.3.2. Evaluating, adjusting and ensuring resources........................................................20
1.3.3. Determining organization structure to implement the strategy.............................20
1.4. Checking and evaluating business strategy...................................................................21
1.4.1. Controlling basic grounds of company’s strategy.................................................21
1.4.2. Reviewing basis of the strategy.............................................................................21
1.5. Research method of the report......................................................................................22
1.6. Scientific and practical meaning of the report..............................................................22
Chapter II: ANALYZING REAL STATE OF VMC...........................................................23
2.1. Overview of the enterprise............................................................................................23
2.1.1. Process of establishing, developing of VMC........................................................24
2.1.2. Human resources and organizational structure......................................................26
2.1.3. Traditional product line of VMC...........................................................................30
2.2. Analyzing situation and results of business activity of VMC from 2005 - 6/2009......35
2.2.1. Business production situation................................................................................37
2.2.2. Market....................................................................................................................38
2.2.3. Business efficiency................................................................................................39
2.3. Analyzing business environment..................................................................................40
2.3.1. Analyzing external environment............................................................................40
2.3.2. Analyzing internal environment............................................................................46
2.4 Results and shortcomings of VMC in the past time..................................................49
2.4.1. Results...................................................................................................................49

ii

2.4.2. Shortcomings need to be improved.......................................................................50
2.5. Analyzing problems of strategy and administration of VMC.......................................50
2.5.1. General objective of the strategy...........................................................................50
2.5.2. Strategy orientation................................................................................................50
2.5.3. Basic objectives.....................................................................................................51
2.5.4. Affecting factors....................................................................................................52
Chapter III. SOLUTIONS, RECOMMENDATIONS AND CONCLUSION.........................56
3.1. Recommending business strategy.................................................................................56
3.2. Basic solution to implement and administer business strategy.....................................56
3.2.1. Modernizing manufacturing technology................................................................56
3.2.2. Modernizing repair technology..............................................................................57
3.2.3. Improving energy supply system...........................................................................57
3.2.4. Human resources development strategy................................................................58
3.2.5. Technological science development strategy.........................................................58
2.3.6. Protecting environment and industrial hygiene.....................................................60
3.2.7. Ensuring labor safety, occupational disease..........................................................60
3.2.8. Expanding cooperation, association......................................................................60
3.2.9. Building and developing trade mark......................................................................61
3.3. Proposal.........................................................................................................................61
3.4. Conclusion....................................................................................................................61
REFERENCES........................................................................................................................64

iii


List of abbreviated words
HĐQT
TKV
VMC

WTO
EPC
CNC
FO
CAT
COALIMEX
MATEXIM
LILAMA
LICOGI
VINAINCON
IMSAT
NARIME

Administration Board
Vietnam Coal – Mineral Industry Group
VINACOMIN- MACHINERY JOIN STOCK COMPANY
World Trade Organization.
Engineering - Procurement - Construction
Computer Numerical Control
Fuel Oil.
Caterpillar Inc.
Coal import and export joint stock company - TKV
Material and Complete Equipment Export-import Corporation
Vietnam Machinery Erection Corporation
Infrastructure Development and Construction Corporation
Vietnam Industrial Construction Corporation
Institute for Medical Science and Technology
Institute for Mechanical Engineering

List of tables

Table 1.1.
Table 2.1.
Table 2.2.
Table 2.3.
Table 2.4.

Evaluating influences of business environment
Labor structure of VMC
Labor quality of VMC
Quality of manufacturing, repairing products of VMC
Business operation results of VMC from 2005 – 6/2009

Table 2.5.
Table 2.6.

Business operation results
Exhibit value of Company from 2005 - 2009
Mechanics production value and revenue density of 5 units in

33
41

Table 2.7.
Table 2.8.

the sector
Table of synthesizing business environment of VMC
SWOT matrix of VMC

48

50

Figure 1.1.
Figure 1.2.
Figure 1.3.
Figure 1.4.
Figure 1.5.
Figure 1.6.
Figure 2.1.
Figure 2.2.

Mc Kinsey matrix
IE matrix
Concentrating on a market part
Specializing the market
Optional specialization including many parts
Specializing products
Organizational model of VMC Company
Sectional sale revenue density

12
14
15
15
15
15
27
34

iv

10
26
26
29 - 31
32


Figure 2.3. Profit rate on revenue
Figure 2.4. Competition status of VMC
Figure 2.5. I.E matrix of VMC

35
48
50

v


Introduction: GENERAL INTRODUCTION
Machinery Joint stock company – TKV (Vietnam Mine – Minerals),
which is abbreviated as VMC (VINACOMIN- MACHINERY JOIN STOCK
COMPANY) was changed from Cam Pha Central Mechanics Company. The
company was established in 1968, has headquarters at 486, Tran Phu Road,
Cam Pha town, Quang Ninh. For years of building and developing, VMC has
become the leading equipment, accessories manufacturing company in
Vietnam and is gradually reaching to international market. Products of VMC
mainly are equipment, accessories serving mine ores, cement, and electricity
industry in the whole country. Scale of the enterprise is relatively big with
1300 staff and annual revenue is about VND 800 billion. Average growth

speed of the company in the last five years has reached 20%/year. VMC
organizes production into blocks: Accurate processing, Steel component
production, rough draft supply (founding, processing pressure) and other
auxiliary production.
At present, VMC is a joint stock company under Vietnam Mine - Mineral
Group. The company has relatively diversified number of commodities, has
many customers of different organizations. For many years, VMC has had
many achievements in business production, contributing to industrialization –
modernization process of Vietnam mechanics sector in general and mine
sector in particular.
To be in accordance with the market economy and international
economic integration that Vietnam is building and developing, implementing
Decree No. 109/2007/NĐ-CP dated June 21st, 2007 of Prime Minister on
changing State owned enterprise to join stock company and Resolution of
HĐQT of Vietnam Mine - Mineral Group on changing enterprises in the group
to operate according to equitization model, from March 30 th, 2008, VMC has
officially changed operation to Joint stock enterprise model with ownership
structure as follow: State holds 36%, staff hold 37,5%, trade union hold 1,5%

1


and external shareholders hold 25%. Charter capital of VMC is VND 40.850
million.
Before changing to equitization, VMC operated according to State
Enterprise Law and was controlled by plan of superior, and thus business
strategy building and administration of the company was not displayed clearly.
Business production activities of VMC mainly were to ensure output and
revenue according to the assigned plan, even profit target. When changing to
operate according to charter of joint stock company, it is clear that VMC has to

become more initiative and pay more attention to business strategy building
and administration of the company. This is also a common CERN of all the
enterprises when changing from State owned companies to joint stock ones.
From the real state above, our study group did choose the theme:
“BUILDING BUSINESS STRATEGY FOR MACHINERY JOINT STOCK
COMPANY – TKV FROM 2010 TO 2015” to be the content of Graduation
big exercise of International business administration master training program.
The objective of this report is to evaluate relatively comprehensive the
real state of business production of VMC. Find existing advantages, strong
points as well as challenges, weak points of the company. At the same time,
discover opportunities, risks threatening the company in the future. From that,
build business strategy of VMC from 2010 to 2015.
Study group set the mark of 2015 for business strategy of VMC to give
petition and recommend relatively comprehensive and specific solutions.
However, our group also set a goal that business strategy of VMC must have
look forward to 2020 to be in accordance with the Coal development sector
strategy which was built, as well as Decision No. 186/2002/QĐ-TTg dated
December 26th, 2002 of Prime Minister regarding ratifying development
strategy for Vietnam mechanics sector to 2010, looking forward to 2020.

2


Research scale of this report is REASONING BACKGROUND on
building business strategy; studying, analyzing the real state of the enterprise
to build the most fundamental business strategy for studied enterprise – VMC.
The report has main parts as follow:
Chapter 1: Reasoning background on business strategy. In this part, the
report will show concepts of business strategy and processes to make a
business strategy in the most fundamental way.

Chapter 2: Analyzing the real state of VMC. In this part, the report will
concentrate on introducing the overview of VMC, collecting and analyzing,
evaluating the business production situation of VMC in 5 recent years. The
research group finds out strong, weak points, opportunities and challenges of
the enterprise. From that, build business strategy of VMC from 2010 to 2015.
Chapter 3: Solution, proposal and conclusion. The research group
recommends comprehensive, specific solutions for VMC and petition for
VMC, superior agency and State.
Our group hopes to apply knowledge from the course of the International
Business Administration Master Training Program, Griggs University, United
State into practice. This report both helps members of the group improve
knowledge and is a useful scientific report for VMC Company to apply in
practice.

3


Chapter I: REASONING BACKGROUND
1.1. Overview of business strategy
1.1.1. Concept of business strategy
Term “strategy” originating from Greek language with two words
“Stratos” means military, formation and word “Agoss” means leadership,
control. The strategy was used firstly in military to illustrate big, long-term
plans which were given on the reliable basis that what the enemy could and
could not do. Commonly, strategy is understood as science and art of military
control, is applied to make general plan and carry out large-scale campaign.
Beginning from the 1960s of the 20th century, strategy has been applied in
business area and term “Business strategy” was born. Over time, people access
to it in different ways. According to traditional approach, strategy means
determining long-term basic targets of the enterprise and implementing action

program together with distributing necessary resources to reach determined
targets. We can also understand that strategy is a way that enterprises use to
orient the future to reach and maintain development.
At present, term “business strategy” is used with three most common
meanings: determining long-term, basic goal of the enterprise; giving general
action programs; choosing action plans, implementing to distributing natural
resources to do that goal.
Specific feature of strategy is moving and attacking. In the process of
administering strategy, we must attach special importance to forecast, take
initiative in anticipating changes of the business environment to outline
offensive solutions to take advantage of opportunities, restrict possible risks in
business environment of the enterprise.
M. Porter brings out three common types of competition strategy:
minimal cost, special difference and central making. He also give out a very

4


exact analysis diagram to study an operation field and develop new concept
“value series”, helping enterprises determine their own competition
advantages.
1.1.2. Administering business strategy
Is a process of determining strategic goals of the organization, building
policies and plans to achieve goals and allocate resources of the organization
for the implementation of theses policies, plans.
The process of administering strategy is implemented through four main
stages:
-

Analyzing the situation: includes external and internal environment.

This analysis often involves political, environmental, social, technological
analysis; analysis of factors affecting the organization and of strong, weak
points, opportunities, challenges.
-

Building strategy: includes determination of mission, establishment of

goals, strategy and policy proposal.
-

Implementing strategy: includes action programs, budget, and

process.
-

Evaluating and controlling: involve evaluation of results and making

of necessary adjustments.
When building strategy, we understand that, business strategy does not
mean determining goals, visibility of the enterprise; but business strategy must
be proposals with unique nature and be suitable to the enterprise in each
certain stage. Strategy needs to create a different value chain from competitor,
and clearly determine what needs or need not to be done, and show unchanged
nature in positioning.
1.1.3. Benefits and limitations in business strategy building
In the market economy, building and implementation of business strategy
will bring about following benefits for the enterprise:

5

-

Help the enterprise know clearly its direction in the future so that the

administrator can consider and decide the direction of organization and when
to reach a certain goal.
-

Help administrator clearly realize opportunities and risks occurring in

business of the integration economy. AT the same time help to analyze,
evaluate and forecast environmental conditions in the future, take advantage of
opportunities, decrease risks, helping the enterprise overcome competition, get
success.
-

Help administrator make decisions to deal with each business

environment, improve business production efficiency, pushing the enterprise
to go forward.
-

Help the enterprise create better business plans through the use of

system approaches, creating basis for the increase of connection and closeness
of staff and administrator in the implementation of goal of the enterprise.
-

Business strategy helps the company increase the revenue, working

capacity and business production efficiency, avoid financial risks, increase
preventive ability, prevent risks that the company may face in business.
However, strategy also has following limitations:
-

It takes the enterprise much time, cost for strategy building.

-

The strategy must be always suitable for the environment, if it is so

inflexible, the enterprise may face risks.
-

Limitation of shortcomings in long-term market forecast is sometimes

big. If we cannot improve, it can cause high risk.
-

If the organization does not implement the strategy well, it may fail.

1.2. Method of building business strategy
1.2.1. Analyzing environmental factors affecting business strategy
1.2.1.1. Macro environment

6

Macro environment factor has long-term influence on a large scale on
business production sector, and business strategy of the enterprise. The
enterprise, when analyzing macro environment needs to use PESLTE (Policy –
Economic - Social – Technology - Law – Environment) model.
When making business on an administrative unit, enterprises need to
obey legal institutions in that region. If institutions have high stability, they
will create favorable conditions for business activity. Enterprises should
carefully analyze policies related to State management. Anti-monopoly law,
tax, labor law, competition, commerce regulation policy, protection barrier,
consumer right protection regulations, priority sectors, etc all have influences
on revenue, profit of enterprises or are challenges to them.
Influences of the economy on an enterprise can change the possibility of
creating value and income of the enterprise. Four important factors of macro
economic environment are growth rate of the economy, interest rate, exchange
rate and inflation rate.
Social cultural factors create foundation of society and lead other
changes. Social changes such as awareness of health, labor diversification, and
attitude of working quality create opportunities and threats for many business
sectors. Cultural interference of other cultures into nations will change
consumption psychology, life style, create opportunities for some business
sectors.
Technological changes continually increase. It is both creative and
destructive factor, both opportunity and threat. The most important influence
of technological change on height of barrier takes part in and re-makes
sectional structure from the root.
Population

environment

relates

to

population.

Age

structure,

geographical distribution, ethnic minority group, income distribution. Global
environment relates to important political events, basic global market, etc.

7


Change of these environments all may create opportunities and threats to
business sector.
1.2.1.2. Sectional environment:
Enterprises cannot have strategic decisions if they do not have deep
understanding of strategic situation of company, competition nature and
condition, way to create conformability between resources and capacity with
such condition. Sectional environment factors have direct influences on
business strategy of enterprise. Enterprises should analyze influences of
sectional environment according to five-competition force model of Michael
E. Porter. According to him, they are (1) risk of taking part of potential
competitors, (2) competition degree between existing companies in the sector;
(3) negotiation strength of buyer; (4) negotiation strength of seller; (5) threat
of alternative products.
Potential competitors include companies which do not compete in the
sector currently but they have capacity to do so if they want. Identifying these

competitors is important as they threaten existing market share of companies.
If the risk of taking part is low, current companies will use advantages of this
opportunity to increase the price.
Strong competition between competitors in the sector can create big
threat of profit making capacity. If sectional competition is weak, companies
will have opportunity to increase the price and get high profit. Competition
degree in the section depends much on sectional competition structure,
demand condition and high barrier of leaving section.
Negotiation capacity of buyers is considered as competition threat when
they are in the position of offering lower price or when they demand for better
service (increasing cost)

8


Negotiation capacity of suppliers is considered as threat when they force
price raise or reduce demand for input quality that they supply for companies,
decrease profit making of companies.
The existence of alternative products limits possibility of setting high
price, profit making of companies.
1.2.1.3. Enterprise’s internal environment:
Includes technological level, marketing, financial capacity, laborer, etc.
This analysis should find out key capacity of enterprise. Enterprise’s internal
environment creates strong points, competition advantages of enterprise.
1.2.2. Method of analyzing and forecasting strategy
Enterprise should have information system serving strategy forecast
activity. That is information about business environment inside and outside the
enterprise which is collected into a system and treated to ensure scientific
nature. To establish an information system of analyzing and forecasting
strategy, we need to carry out following activities:

-

Determine information demand: number and type of information

which can be collected to draft many business strategies. However, not all
information is valuable and accurate. Thus, administrator needs to select
information in accordance with requirements of business production.
-

Determine information sources: secondary information is the one

which is collected for any purpose to serve strategy building. It includes
internal secondary information and external one. Such as payment form, debt
report, accounting report, business statistics.
-

Ways of collecting information as follow: collect continuously, collect

periodically and collect irregularly.
-

Information contents need to be collected:

 Collecting and analyzing information about competition includes:
Considering whether competitor has competition strategy or not, threatens us

9


or not? Whether competitor can display their competition content or not, put to

customers’ conference for discussion or not. Whether competitor has business
trick inside the enterprise or not.
 Information about human resources: Includes evaluations on staff
capacity of enterprise, scale and characteristic of existing labor market, salary
structure of the enterprise compared with other competitors.
 Information about production: Factors related to cost price includes:
labor cost, transport cost, attitude of the public about product and service’s
price, product’s quality, efficiency of production means for reserve in terms of
materials, etc.
 Analyzing technological environment: technology has influences on
opportunities and threats to business production activity of the Enterprise,
thus, when drafting strategy, we must account for technology. Technique
progresses can have deep influences on service products, market of suppliers,
distributors, competitors, producing process, practical marketing and
competition status of the enterprise.
Expert method to forecast business environment: is a forecast method
basing on quick collection and treatment of forecast evaluations of experts.
Requiring to make Synthetic table of business environment (Table 1.1)
Table 1.1. Evaluating influences of business environment []
1
2
Environmental Importance
factors
degree of
those factors
to the sector
Listing basic
Classifying
environmental relative
factors and

importance
their
degree of each
components
factor:
3= high; 2=
medium; 1=

3
Influences on
the enterprise

4
Affecting
nature

5
Mark

Classifying
affecting degree
of each factor to
the company:
3= much; 2 =
medium; 1=
little

Describin
g affecting
nature: (+)

= good;
(-)= bad

Multiplying
numeric value in
column 1 with
column 2, column
3, showing affect
degree and setting
mark (+) or (-) in

10


low

achieved result

Column 1 lists the most important business environment factors and their
components, such as international business environment factors, competitors,
marketing, price, advertisement.
Column 2: is used to classify environmental factors according to their
general importance degree to the sector such as price, exchange rate, bank
interest rate.
Column 3: is used to illustrate influences of factors in creating
opportunities and strong points of companies which are marked with (+), and
risk and weak point factors are marked with (-).
Column 5: is adjusting coefficient for each factor, multiplying
importance value of each factor to the section (column 2) with its influence
degree to the company (column 3) and fixing mark (-) in column 4 with

calculated result.
1.2.3. Analyzing SWOT
Reviewing all strong, weak points, opportunities and risks helping
enterprises compete effectively in the market. Understanding weak points will
help enterprises manage and remove risks that they have not been aware. To
make SWOT matrix, administrator must do 8 following steps []
1. Listing opportunities mainly from external environment, according to
importance order
2. Listing threats mainly from external environment, according to
importance order.
3. Listing main strong points of the enterprise, according to importance
order.
4. Listing main weak points of the enterprise, according to importance
order.

11


5. Combining internal strong points with external threats and writing
result of ST strategy. Using strong points to avoid risks.
6. Combining internal weak points with external opportunities and
writing result of WO strategy. Limiting weak points to exploit opportunity.
7. Combining internal weak points and external threats and writing
result of WT strategy. Minimizing risks and avoiding disaster.
1.2.4. Determining competition status of the enterprise
Building Mc Kinsey matrix or GE matrix (Figure 1.1.) to determine
competition status of the enterprise

Attractiveness
of the section

High
Medium
Low

Competition status
Strong
Medium
Low
Invest for
Invest for
Grow or
growth
growth
retreat
Invest
Grow or
Grow or
selectively for retreat
retreat
growth
Grow or
Grow or
Eliminate
retreat
retreat

Figure 1.1. Mc Kinsey matrix []
Strategies in the matrix include 3 main areas:
o Area 1: includes 3 squares in the left corner above, enterprise

should concentrate resources to develop
o Area 2: includes 3 squares at the cross line from left below corner
to the right corner above, enterprises should be careful when making
investment decision to grow, narrow or retreat from the section.
o Area 3: includes three squares in the below right corner,
enterprises are weak in competition status and business ection is not attractive,
so they concentrate on harvesting and eliminating strategy.
To build GE matrix, enterprises need to implement following steps:

12


a. Building

attractiveness

matrix

of

business

sector

reflects

attractiveness degree of business sector to enterprises according to following
order:
+ Choosing at least 10 factors showing the attractiveness of the
business sector, these factors are collected when analyzing the environment

outside the enterprise (market scale, market growth,

average profit rate,

number of competitors, capital, number of suppliers, preferential policies,
technological development of the sector, circle nature of the demand, number
of alternative products.
+ Determining coefficient of importance degree of each factor,
according to evaluation of enterprises according to degree from 0 (not
important) to 1 (very important). Total factors in the matrix must be = 1
+ Evaluating attractiveness of each factor according to mark ladder
from 1 (not attractive) to 5 (very attractive). Multiplying coefficient of
importance degree with attractiveness mark to determine mark for each factor.
+ Adding mark of all the factors in the matrix to determine total mark
for the matrix of attractiveness of the sector and determine position of this
matrix on length of GE matrix.
b. Building matrix of competition status of the enterprise, reflecting
competition status of the enterprise in business sector according to following
order:
+ Choosing at least 10 factors reflecting competition status of the
enterprise in the business sector, these factors are collected when analyzing
external environment of the enterprise (market share, product quality,
distribution capacity, brand name prestige, cost price of product unit,
production technology, advertising efficiency, production scale, internal
financial capacity, R and D ability).

13


+ Determining weight of each factor according to evaluation of the

enterprise about its importance. Degree from 0 (not important) to 1 (very
important). Total weights must = 1
+ Evaluating attractiveness of each factor according to mark ladder
from 1 (not attractive) to 5 (very attractive). Multiplying weight with value of
each factor to determine mark for each factor.
+ Adding marks of all the factors in the matrix to determine total marks
for matrix of competition status of enterprise and determine position of this
matrix on the width of GE matrix.
c. Determining position of the enterprise on the GE matrix: is reflected
with a circle with center is intersection point between position of matrix of
attractiveness of the sector and position of matrix of competition status. The
bigness of the circle depends on sector scale, the black part is market share of
the company in the business sector.
d. Based on position of the enterprise on GE matrix, determining
strategic plan for enterprise
GE matrix has strong point as it uses many factors to determine
position of the enterprise, so it has high flexibility. However it also has weak
point as evaluation of factors is subjective and the matrix only considers
enterprises at current time, not development stage of the sector.
-

Internal – External Matrix: based on total important marks of IFE

matrix reflected on X axis (internal) and of EFE matrix on Y axis

Total
important
marks in EFE
matrix

High
3.0 – 4.0
Medium
2.0 – 2.99
Low
1.0 – 1.99

Total important marks in IFE matrix
Strong
Medium
Low
3.0 – 4.0
2.0 – 2.99
1.0 – 1.99
I
II
III
IV

V

VI

VII

VIII

IX

14

Figure 1.2. IE matrix []
Strategies for the enterprise inclue three main areas:
o Area 1: enterprise lying in square I, II, III should develop and build
o Area 2: enterprise lying in square III, V, VIII should hold and maintain
o Area 3: enterprise lying in square VI, VIII, IX should harvest or eliminate
1.2. Choosing business strategy
1.2.1. Concentrated growth strategy
Concentrated growth strategy means focusing on business in a business
production area that has opportunity in the market currently. Concentrated
growth strategy bases on the promotion of marketing activity or improvement
of existing products and development of the market, does not need to change
any factor.
Concentrated growth can follow one of the following models:

M1
M

M2

M3

M2

M3

P1

1

P2

P1

P3

P2
P3
Figure 1.3. Concentrating on a market

Figure 1.4. Specializing the market

fragment
M1

M2

M3

M1

P1

P1

P2

P2

P3

P3

Figure 1.5. Specializing optionally

M2

M3

Figure 1.6. Specializing products

including many fragments

15


1.2.2. Diversification strategy
Diversification strategy is a strategy implementing many business
production activities on different markets. To implement this strategy, there are
many plans. Depending on strong, weak points of enterprise in each period to
choose plan. We have following plans:
-

Correlative diversification: adding new products or services but they

have connection and are suitable for technology and marketing.
-

Uncorrelative diversification (wide diversification): adding new

products and services which have no connection for old customers. It means
that new products made by technology are not related to existing product
making technologies.
-

Mix diversification: adding new products and services which have no

connection for new market. It means that new products look forward to new
market and in terms of production technology, they are not related to existing
product making technologies.
1.2. 3. Integration growth strategy
Is a strategy that enterprises in the same or different sector combine to
each other to become a new organization to improve competition capacity in
the market. This strategy has long and wide integration forms.
1.2.4. Narrowing strategy
Strategy of narrowing business is re-arrangement, cutting of cost and
properties after a time of rapid growth to enhance business production
efficiency. This strategy includes measures of cutting cost, withdrawing
investment capital, strategy of giving up operation, etc.
1.2.5. Suitable strategy for living circle of product
Depending on stages of the product, market, we give strategies as follow:
-

Strategy in the market penetrating stage

16


-

Strategy in the growth stage

-

Strategy in the saturated stage

-

Strategy in the market regression stage

1.2.6. Joint venture and association strategy
Is the strategy that companies associate to each other for the purpose of
exploiting any opportunity in business production. Enterprises have special
potentials, if they participate in joint venture, they will supplement mutually
and get high efficiency.
1.2.7. Competition strategy.
Means implementing measures to enhance competitiveness of the
enterprise:
-

Taking the lead in terms of low cost: objective of this strategy is to

produce new products, services with lowest cost among producers in the same
sector. This is the strategy creating competition advantage in terms of price.
-

Differentiating the product: objective of this strategy is to reach

competition advantages by creating products, services with unique strong

point, satisfying special demand of customers.
-

Centralizing: objective of the centralizing strategy is to concentrate on

meeting demands of a customer group according to geographic area, income
degree, consumption custom, etc.
1.2.8. Trade mark strategy.
Trade mark is a new issue to Vietnam and it has been newly paid
attention to by the world economists. Recently, people have brought out plans
of evaluating value of a strong trade mark. Trade mark value is formed due to
higher life. Consumers gradually change from determining value on the basis
of usage value to trademark of the product. They increasingly tend to choose

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products having strong trademark (prestigious of quality, reliability) other than
price.
1.3. Implementing the strategy.
After choosing and deciding suitable strategy, administrator should
communicate spirits of the strategy to the staff to understand every matter of
the strategy. Every member of the enterprise must be close to the
implementation of strategy and have highest effort to do it. The
implementation of business strategy must be done according to following
processes:
1.3.1. Reviewing strategic environment
-

The first important step in implementing the strategy is to review

collected analysis results previously and decisions related to the target,
environmental condition and strategy. Reviewing is as the last evaluation step
of the proposed objectives and strategy. It is also to evaluate whether in the
process of building strategy, environmental factors change or not. If they are
the same, there is no need to change the strategy. If not, we must adjust the
strategy accordingly.
-

Building annual strategic objectives: big objective of the strategy is

only implemented through the building of annual objectives. That is division
of general goal into specific ones to assign to specific units, individuals for
implementation. This creates consensus and connection of everyone in
implementing the strategy. The establishment of long-term strategic objectives
is basis for the distribution of resources; tool to control developments in
reaching long-term objective; creates priorities of the company, divisions,
summarizes into action instructions. Annual objectives should be measurable,
conformable, suitable and challenging to enhance effort of each division and
of the whole company.

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-

Building implementation policies of the strategy, including: direction

principles; methods, procedures, rules, forms; administrative jobs to assist the
promotion of jobs according to the target; tools, mechanism scale of reward

and fine, etc create limitations to operation kinds.
1.3.2. Evaluating, adjusting and ensuring resources
After reviewing and clearly realizing given strategies and plans, we
need to carry out distribution of resources including mental power, financial
and material resources factors.
-

Evaluating resources: the important question need to be raised is “do

we have enough resources to implement given strategies effectively: if there is
lack of any resources for the implementation of the strategy, we must adjust
two big issues related to resources quality which needs to be paid attention
here”.
-

Adjusting resources: to improve quality and quantity of resources

such as improving skills, training professional knowledge for human resources
to implement business strategy effectively.
-

Ensuring resources: ensure that there are sufficient resources to

implement the strategy. Administrator must have spare measures to ensure
resources despite changes of the external environment.
1.3.3. Determining organization structure to implement the strategy
To implement the strategy, enterprise should determine an appropriate
organizational structure in which the first thing is organizational structure
model. There are some structure models as follow:
-

Organizing according to strategic business unit: this is a model which

is organized according to market, product stages. It is suitable for big
companies with diversified activities to some extent.

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-

Organizational structure according to customer: this structure is

convenient for serving small customer groups in strategies of developing small
market fragments.
-

Organizational structure according to matrix: arranging functional

departments and product market stages connecting to each other through
matrix

1.4. Checking and evaluating business strategy
The evaluation of the strategy includes three fundamental activities
1.4.1. Controlling basic grounds of company’s strategy
Is an act of checking and comparing collected results with expected
results, receiving acts that can ensure that work is being implemented in
accordance with the plan. Administrators often use four following standards to
evaluate the strategy: consistency, conformability, convenience, feasibility.
1.4.2. Reviewing basis of the strategy

- Considering competitors: bases on questions:
o How did competitors react to our strategy
o How do strategies of competitors changes
o Why is strategy of competitors more successful
o Are our competitors satisfied with their current position
o How can we combine effectively to our competitors
- Considering internal and external factors
o External factors include: acts of competitors, changes of the
economy, of technological science, population structure changes
o Internal factors include: Is our selected strategy effective, targets
maybe out of date already
- Some questions need to be raised when evaluating:
o Are our strong points still really strong

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