(Luận văn thạc sĩ) improving the competitiveness of construction steel products of vietnam steel corporation in the period 2018 2022

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

TRẦN TUẤN DŨNG

IMPROVING THE COMPETITIVENESS
OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM
STEEL CORPORATION IN THE PERIOD 2018-2022

NÂNG CAO NĂNG LỰC CẠNH TRANH ĐỐI VỚI
CÁC SẢN PHẨM THÉP XÂY DỰNG CỦA TỔNG CÔNG TY
THÉP VIỆT NAM TRONG GIAI ĐOẠN 2018-2022

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

TRẦN TUẤN DŨNG

IMPROVING THE COMPETITIVENESS
OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM
STEEL CORPORATION IN THE PERIOD 2018-2022

NÂNG CAO NĂNG LỰC CẠNH TRANH ĐỐI VỚI
CÁC SẢN PHẨM THÉP XÂY DỰNG CỦA TỔNG CÔNG TY

THÉP VIỆT NAM TRONG GIAI ĐOẠN 2018-2022
Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. PHẠM VĂN HỒNG

HÀ NỘI - 2019


DECLARATION

The author confirms that the research outcome in the thesis is the result of
author’s independent work during study and research period and it is not yet published
in other’s research and article.
The other’s research result and documentation (extraction, table, figure,
formula, and other document) used in the thesis are cited properly and the permission
(if required) is given.
The author is responsible in front of the Thesis Assessment Committee, Hanoi
School of Business and Management, and the laws for above-mentioned declaration.
Date…………………………..
Author

Trần Tuấn Dũng


ACKNOWLEDGEMENT

The topic " Improving the competitiveness of construction steel products of
Vietnam steel corporation in the period 2018-2022" is the content chosen by the

author to study and make a graduation thesis after two years learning a master's
program in business administration organized by Hanoi School of Business and
Management (HSB) - Hanoi National University.
First of all, I would like to express my sincere thanks to the faculty leaders,
teachers who have devotedly taught in the course of studying. In particular, I sincerely
thank Associate Prof. Dr. Hoang Dinh Phi helped me to gain valuable knowledge
about the subject of Planning and Strategic Management and Technology and
Innovation Management.
I sincerely thank Dr. Pham Van Hong was very devoted to caring, guiding and
instructing me in the process of implementing the graduation thesis.
I also sincerely thank the staff of Vietnam Steel Corporation (VNSTEEL) for
their help in providing information and giving favorable conditions for me to complete
my research.
Finally, I would like to thank my family and friends of the 13th MBA class
who have always been with me, encouraging me to complete this course and thesis.
Along with the help from many sides, author has also made great efforts to
complete the thesis in the best way but due to certain limitations of knowledge, time,
and information, the thesis certainly does not avoid limitations. I look forward to
receiving sympathy, contribution and supplementation from teachers and readers to
make the topic more complete.
Sincerely thanks !
Date…………………………..


CONTENTS

ABBREVIATION ...........................................................................................................i
LIST OF TABLES, FIGURES .................................................................................... ii
TITLE CHAPTER ........................................................................................................ 1
1. RATIONALE ............................................................................................................. 1

2. LITERATURE REVIEW ......................................................................................... 2
3. AIMS OF RESEARCH ............................................................................................. 3
4. OBJECTS OF RESEARCH ..................................................................................... 4
5. SCOPE OF THE STUDY ......................................................................................... 4
6. RESEARCH METHODOLOGY ............................................................................. 4
7. THESIS STRUCTURE ............................................................................................. 6
CHAPTER I: BASIS THEORY ON COMPETITION AND PRODUCT
COMPETITIVENESS .................................................................................................. 7
1.1. BASIS THEORY ON COMPETITION AND COMPETITIVENESS ............. 7
1.1.1 Concept of competition ........................................................................................ 7
1.1.2 Concept of competitiveness .................................................................................. 8
1.2. CRITERIA FOR EVALUATING COMPETITIVE RESULT OF PRODUCT ... 10
1.2.1. Market ................................................................................................................ 10
1.2.2. Market share ...................................................................................................... 11
1.2.3. Profit ................................................................................................................... 11
1.3. BASIC FACTORS OF PRODUCT COMPETITIVENESS ............................ 13
1.3..1. Technology ........................................................................................................ 13
1.3.2. Product price ...................................................................................................... 13
1.3.3. Distribution system ............................................................................................ 14
1.3.4. Promotion ........................................................................................................... 15
1.3.5. Financial capacity .............................................................................................. 16
1.3.6 Human resources ................................................................................................ 17
1.3.7. Management system .......................................................................................... 18
1.4. EXTERNAL FACTORS AFFECT PRODUCT COMPETITIVENESS ........ 19
1.4.1. Factors of macre environment ......................................................................... 20
1.4.2. Factors of industry environment ...................................................................... 21


CHAPTER

2:

CURRENT

SITUATION

OF

COMPETITIVENESS

OF

CONSTRUCTION
STEEL
PRODUCTS
OF
VIETNAM
STEEL
CORPORATION ......................................................................................................... 23
2.1. OVERVIEW OF VIETNAM STEEL CORPORATION ................................. 23
2.1.1 General introduction .......................................................................................... 23
2.1.2. Business results of VNSTEEL 2015-2017 ........................................................ 29
2.2. THE CURRENT COMPETITIVENESS OF CONSTRUCTION STEEL
PRODUCTS OF VIETNAM STEEL CORPORATION. ........................................ 32
2.2.1. Situation of criteria to evaluate the competitive results of construction steel
products of Vietnam Steel Corporation .................................................................... 32
2.2.1.1. Market ............................................................................................................. 32
2.2.1.2. Market share ................................................................................................... 33
2.2.1.3. Profit ................................................................................................................ 37
2.2.2. Current situation of basic factors affecting the competitiveness of

VNSTEEL’s construction steel products .................................................................. 39
2.2.2.1. Technology ...................................................................................................... 39
2.2.2.2. Product price ................................................................................................... 43
2.2.2.3. Distribution system ......................................................................................... 47
2.2.2.4 Promotion ........................................................................................................ 48
2.2.2.5 Financial capacity ............................................................................................ 52
2.2.2.6 Human resources ............................................................................................. 54
2.2.2.7 Management system ........................................................................................ 56
2.3. ASSESSING THE COMPETITIVENESS OF CONSTRUCTION STEEL
PRODUCTS OF VIETNAM STEEL CORPORATION ......................................... 57
2.3.1. Strengths ............................................................................................................. 57
2.3.2. Weaknesses and causes ..................................................................................... 59
2.4. EXTERNAL FACTORS AFFECT PRODUCT COMPETITIVENESS ........ 62
2.4.1. Factors of macro environment ......................................................................... 62
2.4.2. Factors of the industry environment ............................................................... 65
CHAPTER 3: SOME SOLUTIONS TO IMPROVE THE COMPETITIVENESS
OF CONSTRUCTION STEEL PRODUCTS OF VIETNAM STEEL
CORPORATION. ........................................................................................................ 68


3.1. ORIENTATION TO DEVELOP VNSTEEL'S STEEL PRODUCTS IN THE
COMING TIME .......................................................................................................... 68
3.2 SOME SOLUTIONS TO IMPROVE THE COMPETITIVENESS OF
CONSTRUCTION
STEEL
PRODUCTS
OF
VIETNAM
STEEL
CORPORATION ......................................................................................................... 69

CONCLUSIONS .......................................................................................................... 72
REFERENCES ............................................................................................................ 74


ABBREVIATION

Abbreviated letters
/ Symbols

Complete phrase

WSA

World Steel Association

VSA

Vietnam Steel Association

FDI

Foreign Direct Investment

GDP

Gross Domestic Product

WTO

World Trade Organization

AEC

ASEAN Economic Community

ASEAN

Association of Southeast Asian Nations

EU

European Union

TNHH

Limited Liability

TNHH MTV

One member limited liability Company

VNSTEEL

Vietnam Steel Corporation

LD VNSTEEL

Joint-venture Companies with Vietnam Steel Corporation

TISCO

Thai Nguyen Iron and Steel making Joint Stock Company

SSCV

Southern Steel Co., Ltd - Vnsteel

VTM

Viet-Trung Minerals and Metallurgy Company Limited

VICASA

Vicasa Steel Joint Stock Company - Vnsteel

Hòa Phát

Hoa Phat Group Joint Stock Company

POMINA

Pomina Steel Joint Stock Company

Vina Kyoei

Vina Kyoei Steel Company Limited

HRC

Hot rolled coil

CRC

cold rolled coil

SBQ

Special Steel

BF

Blast furnace (iron making)

EAF

Electric arc furnace (steel making)

i


LIST OF TABLES, FIGURES

1. TABLES:
Table 2.1. Production and Consumption of Construction steel 2015-2017 ............ 29
Table 2.2. Consolidated business results of the Corporation 2015-2017 ................ 30
Table 2.3. Business results of the Parent Corporation 2015-2017 .......................... 31
Table 2.4. Consumption of construction steel by market in 2017 ........................... 32
Table 2.4. Situation of consumption and market share ........................................... 33
Table 2.5. Situation of consumption and market share in the Northern market .. 34
Table 2.6. Situation of consumption and market share in Central market ........... 35

Table 2.7. Situation of consumption and market share in the Southern market .. 36
Table 2.8. Situation of export and market share ...................................................... 37
Table 2.9. Business results of the Corporation 2015-2017 ....................................... 38
Table 2.10. Classify production capacity by technology .......................................... 40
Table 2.11. Comparison of technical indicators of blast furnace technology ........ 41
Table 2.12. Compare technical indicators of electric furnace technology ............. 41
Table 2.13. Comparing labor productivity in iron production ............................... 42
Table 2.14. Comparing labor productivity in billet production ............................. 42
Table 2.15. Comparing labor productivity in the production of coke .................... 42
Table 2.16. Comparing labor productivity in rolling ............................................... 43
Table 2.17. Situation of selling prices of southern producers ................................. 45
Table 2.18. Customer reviews of customer care services ......................................... 49
Table 2.19. Customer survey results on sales staff ................................................... 50
Table 2.20. Some financial indicators 2015 - 2017.................................................... 52
Table 2.21. Compare financial capacity of VNSTEEL with other enterprises ..... 53
Table 2.22. Labor quality statistics of VNSTEEL 2017 ........................................... 54
Table 2.23. Import situation of billet and steel products 2015-2017....................... 65
Table 2.24. Export situation of steel products 2015-2017 ........................................ 65
Table 2.25. Apparent construction steel consumption in Vietnam 2015-2017 ...... 66

ii


2. FIGURE:
Figure 1.1. Product distribution system model ......................................................... 15
Figure 1.2. Factors affect product competitiveness .................................................. 19
Figure 2.1. VNSTEEL operating areas ..................................................................... 26
Figure 2.2. Organizational structure of VNSTEEL ................................................. 27
Figure 2.3. Production and Consumption of VNSTEEL ......................................... 29
Figure 2.4. Situation of consumption and market share.......................................... 33

Figure 2.5. Situation of consumption and market share in the Northern market 34
Figure 2.6. Situation of consumption and market share in Central market .......... 35
Figure 2.7. Situation of consumption and market share in the Southern market. 36
Figure 2.8. Situation of export and market share .................................................... 37
Figure 2.9. Technology process of construction steel production ........................... 40
Figure 2.10. Situation of selling prices of northern producers ................................ 45
Figure 2.11. Situation of selling prices of southern producers ................................ 46
Figure 2.12. Distribution model of other steel producers ....................................... 47
Figure 2.13. Distribution model of VNSTEEL ......................................................... 48

iii


TITLE CHAPTER

1. RATIONALE
In the current period, when the globalization of the world economy is going on
strongly, we all have the recognition that in all activities there must be competition,
competition is not only the environment and motivation for the development of society
in general, but also promote production and business, increase labor productivity,
increase the efficiency of enterprises in particular.
The importance of competitiveness for enterprises today should be considered
in a broad framework of the environment created by the forces of globalization and
technological progress, in which knowledge is the most important resource. These
factors add to new challenges and opportunities for businesses and policymakers in
countries. The key to success is that businesses must set strategies to take full
advantage of the potential advantages that globalization, technology and competition
bring. The main issue is how to create, maintain and further improve the
competitiveness of products and businesses effectively.
Vietnam Steel Corporation is a joint stock company operating in the steel

industry including more than 40 subsidiaries and affiliated companies operating in the
country, with chartered capital of VND 6,780 billion, of which 93.93% is owned by
the state, 6, 07% is owned by other shareholders, the corporation model was born in
the pilot program of building strong economic corporations of the Government at the
beginning of in 1990. Through over 25 years of operation under the corporation
model, Vietnam Steel Corporation has achieved significant results with high growth
rate, increased production capacity due to intensive investment and expand production.
The competitiveness of Vietnam Steel Corporation has been gradually increased
significantly.
However, in recent years, the participation of many FDI enterprises and the
private sector in the steel industry in Vietnam has been associated with a sharp
increase in new investment capacity in steel production, causing oversupply for steel
products in the country more severe. By 2017, the total capacity of billet production is
12 million tons/year; the total capacity of construction steel rolling has reached over

1


12 million tons/year, while total consumption for construction steel of Vietnam in
2017 reached 9.12 million tons. Private sector competitors have rapidly grown in terms
of production scale, market share and operating areas (such as Hoa Phat, Pomina in
long products segment and Hoa Sen, Dong A in flat, galvanized and pipe products
segment). Foreign investment projects have become increasingly active and dominate
the market in both segments of long and flat products (such as POSCO Vietnam,
CSVC-Sumikin, Formosa...). Competition between steelmakers is increasingly fierce.
In addition, competition with imported steel has been accelerated by the impact of
international integration and trade liberalization. Therefore, the opportunities for steel
products of Vietnam Steel Corporation are narrowing and the operating environment is
increasingly difficult for the development of the market share of Vietnam Steel
Corporation.

In conditions and business environment increasingly fierce competition requires
the steel enterprises in the country must constantly innovate, enhance competitiveness
and improve its position in the market to maintain the market share and compete not
only with domestic steelmakers and also with foreign steelmakers will enter the market
in the near future.
Based on mentioned reasons and analyzing, the author decides to select the research
topic "Improving the competitiveness of construction steel products of Vietnam Steel
Corporation in the period 2018-2022".
2. LITERATURE REVIEW
As working on such topic, the author has studied some researches related to
improving the competitiveness of product and service.
The first research was the study of “Improving the competitiveness of
petroleum products of Military Petroleum Corporation” prepared by Mr. Tran Ngoc
Anh class EMBA (2013). In this study, the author focused on building theoretical
framework

on

competitiveness

of

petroleum

products,

evaluation

of

the

competitiveness of petroleum products of the Vietnam Petroleum Corporation and
proposed solutions to improve the competitiveness of products of Military Petroleum
Corporation.

2


The second research was the study of “Improving the competitiveness of
Vinaphone mobile telecommunication services of Yen Thanh Telecom Center”
prepared by Mr. Truong Van Thai, National Economics University (2013). The author
Researched framework on competitiveness of mobile telecommunication services of
telecommunication enterprises, assessment of the competitive capacity of Vinaphone
mobile telecommunication services of Yen Thanh Telecommunications Center and
propose some solutions to improve competitive capacity of Vinaphone mobile
information services of Yen Thanh Telecommunications Center.
The third research was the study of "Improving the competitiveness of plastic
pipe products of Dong Nai Plastic Joint Stock Company" prepared by Mr. Hoang Anh
Tuan class EMBA (2014). The research has defined the theoretical framework of
competitiveness of plastic pipe products of plastic companies, analyzed the current
competitiveness of plastic pipe products of Dong Nai Plastic Joint Stock Company and
proposes some solutions to improve competitiveness of plastic pipe products of Dong
Nai Plastic Joint Stock Company to 2017.
Another research was the study of "Improving the competitiveness of stainless
steel products of Nhat Quang Steel Co., Ltd." prepared by Mr. Pham Cong Danh class
EMBA (2016). The research has defined 5 direct factors impacting the
competitiveness of stainless steel products (human resources, financial capacity,
technology, management system, marketing activities) and analyzed the current
competitiveness of stainless steel products Nhat Quang Steel Co., Ltd and proposes

some solutions to improve competitiveness of stainless steel products of the company.
The above mentioned studies have given the author more insight knowledge on
such topic to start working on the thesis.
3. AIMS OF RESEARCH
The overall purpose of the thesis is to analyze the competitiveness of
construction steel products of Vietnam Steel Corporation on the basis of identifying
the basic factors impacting the competitiveness of construction steel products of
Vietnam Steel Corporation.
The aims of research are following:

3


- Reviewing related theories of competitiveness to identify the basic factors
impacting product competitiveness.
- Evaluate the capability of basic factors impacting the competitiveness of
construction steel products of Vietnam Steel Corporation.
- Giving some recommendations to improve the competitiveness of
construction steel products of Vietnam Steel Corporation.
RESEARCH QUESTIONS:
1. What is the current competitiveness of construction steel products of
Vietnam Steel Corporation? And which factors affect competitiveness? Which aspects
are advantages and disadvantages?
2. What should Vietnam Steel Corporation do to maintain and improve the
competitiveness of construction steel products?
4. OBJECTS OF RESEARCH
Objects of research are the competitiveness of construction steel products. In
this study the author focus on the product competitiveness and the basic factors affect
to the competitiveness of construction steel products.
5. SCOPE OF THE STUDY

- Content:
Research focus on assessing current the competitiveness of construction steel
products of Vietnam Steel Corporation, identifying the strengths and limitations from
which to propose solutions to improve the competitiveness of construction steel
products of Vietnam Steel Corporation.
- Research object:
Research focus on the competitiveness and the major factors affect to the
competitiveness of construction steel products of Vietnam Steel Corporation.
- Timeframe:
+ Secondary data: 2015-2017
- Location: The study focus on the case at Vietnam Steel Corporation Head
Office and its subsidiaries and affiliates.
6. RESEARCH METHODOLOGY
6.1. Theoretical framework

4


In order to evaluate product competitiveness, it is necessary to evaluate
comprehensively on many factors: technology, product diversity, product price,
distribution system, promotion, finance, personnel, management system and marketing
system, security, culture etc. However, in this thesis, the author evaluates on 7 most
basic factors that affect to the competitiveness of products, including: technology,
product price, distribution system, promotion activities, financial capacity, human
resources, and management system. Specifically, the theoretical framework evaluates
as follows:

6.2. Research process
The author follows 6 steps which are described in the figure following:

5


6.3. Data collection
- Secondary data: In this study, secondary data is collected from literature
review on previous studies and researches related to Vietnam steel industry. In detail,
the study will use reports about steel industry in Vietnam and Vnsteel’s annual reports
and other reports from various agencies such as Vietnam Steel Association, World
Steel Association, Business Intelligent Monitor, World Steel Dynamic, and SEAISI…
- Primary data: The author collects primary data through questionnaire survey
and interview (if any).
6.4. Analyzing data
The author uses several methods of analysis, synthesized as follows:
+ Composite analysis, time series comparison (Period 2015-2017)
+ Cross Comparative Analysis (comparable with other steel enterprises)
+ Comparative analysis with the potential of Vietnam Steel Corporation.
+ Comprehensive analysis by problem group, target group.
7. THESIS STRUCTURE
Excluding the Introduction, Conclusion and Reference, the thesis includes three
chapters as below:
 Chapter 1: Basis theory on competition and product competitiveness.
 Chapter 2: Assessing the competitiveness of construction steel products of
Vietnam Steel Corporation.
 Chapter 3: Propose solutions to improve competitiveness of construction
steel products of Vietnam Steel Corporation.

6


CHAPTER I: BASIS THEORY ON COMPETITION AND PRODUCT COMPETITIVENESS

1.1. BASIS THEORY ON COMPETITION AND COMPETITIVENESS
1.1.1 Concept of competition
In the view of political economy research, competition is a complex socioeconomic phenomenon with many different approaches. Therefore, there are many
different concepts about competition.
Two American economists P.A Samuelson and W.D Nordhaus in Economics
(12th edition) stated that "Competition is the rivalry between companies for achieving
customers or markets."
According to the Vietnam Encyclopedia [4, Vol 1] defines: "Competition in
business is a rivalry activity between goods producers, between traders, businessmen
in a market economy, dominated by supply-demand relations, in order to gain the most
favorable production, consumption and market conditions ”.
According to the Marxist-Leninist political economics textbook [Vol 1], it
defines the definition: "Competition is rivalry, struggle in economic between entities
involved in production - business together to win the favorable conditions in
production - business, consumption of goods and services to gain the most benefits for
themselves. The goal of competition is to gain the greatest benefits and profits,
ensuring the existence and development of the competing participants.
Through the above concepts, the author found that competition includes some
basic contents:
- Firstly, competition is rivalry and contests in order to win of participants.
- Second, the direct purpose of competition is often a specific object such as
product, project, and customer. However, the ultimate goal of all competition is to
maximize the benefits of competing entities.
- Thirdly, competition always takes place in a specific environment with
common constraints that all participants must comply with such as market, legal
regulations, and business practices.

7

- Finally, in the competition process, competing participants can use different
competitive tools such as product quality and characteristics, selling price, sales art,
sales service and payment tools.
Thus, in the most general sense, competition in business is understood as an
economic relationship in which economic entities compete to find all measures
including art and tricks to achieve economic goals. In fact, it is common to dominate
the market, gain customers as well as the most profitable production and market
conditions, with the ultimate goal of maximizing the interests of the subject.
In the field of construction steel, competition is a rivalry between steel
producers to achieve business goals. Therefore, in order to compete, each business
must create advantages in providing products and applying it in business. The
advantages can be better product quality, lower prices, better distribution systems,
compared to other manufacturing enterprises to achieve specific objectives such as
profit, market share, improving its position in the market than other businesses.
1.1.2 Concept of competitiveness
The concept of competitiveness was first mentioned in the US in the early
1990s. According to Aldington Report (1985): "A competitive enterprise is an
enterprise that can produce products and services with outstanding quality and prices
are lower than other domestic and international rivals. Competitiveness means
achieving long-term benefits of businesses and the ability to secure income for
employees and business owners”.
In 1998, the British Ministry of Commerce and Industry defined "For
businesses, competitiveness is the ability to produce the right product, determine the
right price and at the right time. That means meeting customer demands with more
performance and efficiency than other businesses”.
According to Randall, enterprise competitiveness is the ability to gain and
maintain market share with a certain level of profit.
According to Hoang Dinh Phi, 2015. Lecture on management of technology
and innovation “Firm’s competiveness is a degree to which a firm, under normal
market conditions, can develop its capabilities to produce goods or services that can be

marketed with profit”

8


From concepts on competitiveness can be understood as the ability of a
company to survive in competition, implying that companies succeed by trying to rise
to the top, by reducing prices, by increasing Quality of current products and services
and by creating new products. Competitiveness of a company is a function of factors
such as: (i) The company's own resources (such as human resources, finance and
technology); (ii) Market power of the company; (iii) The company's attitude toward
competitors and other economic agents; (iv) The capacity of the company to adapt to
changing situations; (v) The capacity of the company to create new markets and (vi)
Institutional environment, widely provided by the government, including the physical
infrastructure and the quality of government policies.
Thus, in fact, there are many different views about the competitiveness of
enterprises on many different perspectives. However, when approaching the
competitiveness of enterprises, the author found that the competitiveness of enterprises is
the ability to create competitive advantages, capable of creating higher productivity and
quality than competitors, dominate large market share, create high income and sustainable
development. Competitiveness of enterprises covers some of the following basic contents:
- In a market economy, the requirements of customers (markets) must become
the standard to assess the competitiveness of enterprises. This comes from the
objective that the customer's request is both a goal and a driving force for production
and business.
- The main factor that creates the strength in attracting customers is the strength
of the business. This force must be derived from the intrinsic factor of the business,
reflected in the prestige of the business.
- Competitiveness of enterprises, in itself, refers to the comparison with
competitors operating in the same market. In order to create a real competitive power,

businesses must create comparative advantages with competitors in order to attract
customers.
- The competitiveness of enterprises always has a binding relationship. A
business has a strong competitiveness when it meets the requirements of customers in
the best way. However, in fact, it is very difficult to meet the customer's requirements
because sometimes the business has the advantage of this point but is weak in some

9


other areas. Therefore, finding and assessing the strengths and weaknesses of
enterprises is important in proposing solutions to improve competitiveness.
Competitiveness at the enterprise level includes enterprise competitiveness and
product competitiveness. In this thesis, the author only focuses on product
competitiveness. A commodity product is considered to be competitive when it meets
the needs of customers in terms of quality, price, and brand ... far superior to products
of the same type. But the competitiveness of products is determined by the
competitiveness of enterprises. There will be no competitiveness of products when the
competitiveness of enterprises is low.
From the above approaches, it is understandable that product competitiveness is
the ability of enterprises to create, maintain and develop the advantages of products so
that they can maintain and develop market, market share and profits for businesses.
1.2. CRITERIA FOR EVALUATING COMPETITIVE RESULT OF PRODUCT
1.2.1. Market
Market is a category of commodity economy. The market is defined by many
economists. Some consider the market a market, a place to buy and sell goods. The
American Society for Scientific Management considers: "the market is a combination
of forces and conditions in which buyers and sellers make decisions to transfer goods
and services from sellers to buyers". There are economists who conceive: "markets and
exchanges in which buyers and sellers compete with each other to determine prices of

goods and services", or more simply: the market is aggregated buyer's numbers for a
product or service. Recently an economist has defined: "the market is a place to buy
and sell goods, is a process in which buyers and sellers of a commodity interact to
determine prices and quantities of goods, and is the place where buying and selling
activities are conducted in a certain time and space ".
In a market economy, the market plays an important role with a central position.
The market is both a goal of producers and an environment of goods production and
trading activities. The market is also a place to transfer production and business
activities. In the market, buyers, sellers and middlemen meet to exchange goods services.

10


The process of social production has 4 stages: production, distribution,
exchange, consumption, the market consists of two stages of distribution and
exchange. It is a necessary intermediary, a bridge between production and
consumption. So it has a multifaceted impact on production, social consumption.
In this thesis, the construction steel market is understood to be associated with a
certain location such as the Northern market, the Central market and the Southern
market through which to measure market parameters such as:
+ Total construction steel products supplied to the market in a period of time, in
a certain market area.
+ Revenue and growth rate of enterprises in each period for each market.
1.2.2. Market share
Market share is the portion of a market controlled by a particular company or
product. Market share clearly states the product consumption of the enterprise as
compared to the total product consumed in the market. To win market share in front of
competitors, businesses often have to have appropriate price policies through
necessary discounts. Especially when starting to penetrate new markets.
Market share plays an important role in modern marketing and strategic

management. Companies that have a large market share will have the advantage of
dominating the market. Because of the strategy of gaining market share, many
companies are willing to spend big money and sacrifice other benefits. However,
gaining large market share also gives the company countless benefits.
Market share of enterprises can be measured as follows:
+ Market share = Number of products sold by the enterprise / Total
consumption products of the market.
+ Market share = Sales of enterprises / Total market sales
1.2.3. Profit
The profitability of an enterprise is the difference between the revenue and the
cost that an enterprise spends on that revenue from the activities of the enterprise.
Profit is the final financial result of production, business, financial activities and other

11


activities, which is a quality indicator to evaluate the economic efficiency of business
activities.
Profit rate is a relative indicator that allows comparing the production and
business efficiency between different periods in an enterprise or between businesses.
The high rate of profitability proves that the production and business activities of
enterprises are more effective.
Any business that operates in the market mechanism, the first thing they care
about is profit. This is a comprehensive economic indicator reflecting the efficiency of
the business process, which is a vital element of the business. Enterprises only exist
and develop when it creates profits, if the enterprises operate ineffectively, the revenue
is not enough to offset the expenses already spent, the enterprises will be eliminated,
go to bankruptcy. Especially in the context of market economy, competition is
becoming more and fiercer, so profit is an extremely important factor and decides the
existence of enterprises:

- Profit affects all activities of the business. It directly affects the financial
situation of enterprises, is an important condition to ensure the payment ability of the
business. If businesses do business effectively, have high profits, their payment ability
is strong, businesses can repay all due debts and vice versa.
- Profits ensure extended reproduction. Profitable production and business
activities will give enterprises an undistributed after-tax profit, which is a basis for
supplementing re-investment capital; applying scientific and technical advances
through the exchange new equipment ... expanding the scale of operations is a basis
for businesses to develop steadily in the market, as a basis for businesses to borrow
capital from outside easily.
- Profit target is also a basis for assessing human resource capacity, financial
capacity, management and operating capacity of enterprises...
- High profits have conditions to improve income, improve the lives of workers,
create excitement to stimulate creativity, maximize the ability of employees in the
enterprise, is the basis for next steps development.
Profit and profit ratio of enterprises are determined as follows:
+ Profit = Revenue - Cost

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+ Return on equity (ROE) = Profit / Equity
+ Return on Assets (ROA) = Profit / Total assets
1.3. BASIC FACTORS OF PRODUCT COMPETITIVENESS
1.3..1. Technology
Technology is an important factor in the business operations of each business,
especially the manufacturing enterprises; the technology plays the core role that every
business needs to meet business requirements. Enterprises based on the advantages of
equipment and technology capacity are the foundation to create the initiative in
business, contributing to increasing competitive advantage for businesses.

The modern level of machinery, equipment and technology has a great
influence on the competitiveness of businesses. It is the material factor that plays the
most important role in expressing the production capacity of the business and directly
affecting the quality of products. Technology, the modern and advanced level of
equipment affects the cost of products. A business with advanced equipment, modern
technology, their products are of high quality and increase competitive advantage.
1.3.2. Product price
The rule of value clearly tells us that the same quality product, which has the
lower price, will have a big advantage in competition and win. Therefore, in parallel
with improving product quality, enterprises need to find all measures to reduce
production costs, management costs, selling expenses, and financial costs ... Selling
prices are an important factor in Competition of enterprises, and each enterprise must
have a specific selling price policy to promote consumption, bring the highest benefits
to businesses and customers in each period. Selling prices are constituted mainly from
the following main expense items:
- Production cost or product import price.
- Administration costs are general management expenses of the enterprise,
including expenses for employees in the management department, expenses for office
materials, labor tools, depreciation of fixed assets used for management…

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- Selling expenses are expenses for the consumption of products of the
enterprise, including the costs of offering, product introduction, product advertising,
sales commissions, warranty costs of products, storage costs, packaging, shipping…
- Financial expenses are the interest expenses that enterprises have to pay to
credit institutions to borrow capital for use in production and business purposes of
enterprises.
- Expected profit of the enterprise (if any)

In general, the selling price of enterprises in each stage is different. Therefore,
businesses that are eligible to build lower selling prices than their competitors have
higher competitiveness, attracting customers.
1.3.3. Distribution system
The distribution system is to gather channels to bring products of enterprises
from production to consumption quickly, stably and effectively. The essence of
distribution is the art of bringing enterprise products to consumers. Distribution system
is a component of competitiveness of products. A good distribution system will help
bring your products to customers quickly and effectively and vice versa, the poor
distribution system will result in stagnant products, losing the opportunity to dominate
the market.
Depending on the characteristics of the business, the product and the market,
enterprises apply a type of channel or collection of consumption channels, using them
as a competitive tool to promote product consumption. Currently businesses often use
mixed distribution channels including direct distribution channels and indirect
distribution channels. However, the proportion of sales through indirect distribution
channels still accounts for a large proportion in the distribution model of
manufacturing enterprises.
- Direct distribution channels: Enterprises organize direct distribution channels
to advise, introduce and supply products to customers. The advantage of direct
distribution channel is that business enterprises will reduce brokerage costs and control
the customer portfolio. However, the disadvantage of this channel is that the business
apparatus will be large, leading to high sales management costs even when the product
cannot be sold.

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- Indirect distribution channel: is a distribution channel in which business and
production enterprises sell their products to users through intermediate buyers (level 1

distributors / level 2 distributors). ). Goods change ownership over a number of times
depending on each case. Direct customers of enterprises are level 1 distributors.
Enterprises do not directly sell goods to users. The advantage of indirect distribution
channel is to increase the specialization in production and trade, products are widely
distributed, limit capital stagnation and reduce risks. However, the disadvantage of this
channel is to prolong the distance between manufacturers and consumers,
manufacturing enterprises have difficulty in grasping customer and market
information, increasing commercial operation costs of enterprises.

Figure 1.1. Product distribution system model
1.3.4. Promotion
This is a business activity aimed at promoting and communicating products to
customers. Promotion activities have a rather important position in business activities
of enterprises, help increase sales, build a good image of businesses, thereby improve
the competitiveness of businesses, and attract more customers. Business promotion
capacity is also an important criterion to assess competitiveness. Enterprises create
quality products, competitive prices but ineffective promotion and communication
activities, fail to convey the superiority of products to customers, the consumption of
products will also hard. So if businesses have the ability to promote, sales will be more
favorable.

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