Building business strategy for one member limited liability company 17 in period 2017 2020 and vision to 2025

Lunghwa Universityof Scienceand Technology
Department of Business Administration
Thesis for a Master’s Degree

Building business strategy for one-member
limited liability company 17
in period 2017-2020 and vision to 2025

Researcher: Khuong Tat Thang
Supervisor: Le Thai Phong
Yuan Cheng Kang

November 2018


Lunghwa University of Science and Technology
Approval Certificate of Master's Degree Examination Board
This is to certify that the Master’s Degree Examinations Board has
approved the thesis “Building business strategy for one-member limited
liability company 17 in period 2017-2020 and vision to 2025”published by
Mr. Khuong Tat Thang in the Master Program of Graduate School of
Department of Business Administration.

Master’s Degree Examination Board

Board Members： Tsan. Chia -Chi

Nguyen Van Dinh
Doan Thu Trang
Advisors：Le Thai Phong

Yuan, Cheng-Kang
Chair：

Tsan. Chia -Chi


Date: 24/11/2018


ABSTRACT
Thesis Title：Building business strategy for one-member limited liability company 17
in period 2017-2020 and vision to 2025
University：Lunghwa University of Science and Technology
Graduate School：Department of Business Administration
Date：January, 2018

Degree：Master

Researcher：Khuong Tat Thang

Advisor：Le Thai Phong

Keywords: Business strategy

Based on actual requirements, theoretical basis, documents, preceding studies on
the issue about the business strategy in general and the business strategy one-member
limited liability company in particular, I have chosen topic for my thesis: “Building
business strategy for one-member limited liability company 17 in period 2017-2020
and vision to 2025”. In this thesis, I use secondary data sources from the reports of
Company 17 to analyze.

In thesis, the author simultaneously use primary data sources collected from of
Company 17 to study. At the same time, the author use the data of Truong Son
Construction Corporation to compare.
Research methods: In the thesis, I use both qualitative quantitative research
methods.
Documentation Methodology: The studied information and materials include
publications, survey results, research, maps, statistics, summary reports on construction
industry and issues related to research topics.
Qualitative research methodology: Interview and consultation with some
leaders, managers at all levels of the One Member Limited Company 17. The content of
the discussion focused on fundamental issues of business strategy of the company in the
construction market.

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Comparative analysis methodology: PEST analysis, Five forces model M.Porter,
SWOT analysis, IE matrix for analysis of strategic basis for Company 17. This is the
main method of research in this topic. Through comparative studies, the thesis will
clarify the influence of business environment factors on the process of developing and
implementing the business strategy of Company 17. Based on the summary of results,
the thesis proposes suitable business strategy for One Member Limited Company 17 in
the period 2017-2020.

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ACKNOWLEDGEMENT
I sincerely thank the advior Prof. Le Thai Phong, and the senior leader of of
Truong Son Construction Corporation as well as the staffs in company 17 devoted to

guide and help me complete this thesis.

Thank you!
Author
Khuong Tat Thang

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Table of contents
ABSTRACT ................................................................................................................. i
ACKNOWLEDGEMENT .......................................................................................... iii
1. INTRODUCTION ..................................................................................................... 1
1.1 Urgency of the topic ......................................................................................... 1
1.2 Overview of research projects in the fields of the theme ................................ 2
1.3 Objectives of the research ................................................................................ 3
1.4 Subjects and scope of research ........................................................................ 4
1.5 Research methodology ..................................................................................... 4
1.6 The expected results of the dissertation .......................................................... 4
1.7 The meaning and contributions of the thesis .................................................. 5
2. THEORETICAL FRAMEWORK OF STRATEGY FORMULATION APPLIED
FOR ENTERPRISES .................................................................................................... 6
2.1. General view of enterprise’s strategy .............................................................. 6
2.1.1. Some basic terms of enterprise’s strategy .............................................. 6
2.1.2. Roles of strategy in bussiness activities of enteprises............................. 8
1.1.3. Levels of strategy ..................................................................................... 8
2.2. Process of strategy formulation of company ................................................. 10
2.2.1. Identification of mission, vision and objectives.................................... 11
2.2.2. Analysis of external impacts ................................................................. 14
2.2.3. Analysis of impacts of enterprise’s internal environment ................... 17

2.3. Analysis techniques and Selection of strategy ............................................... 21
2.3.1. General introduction............................................................................. 21
2.3.2. External Factors Evaluation (EFE) and Internal Factors Evaluation
(IFE) . .............................................................................................................. 21
2.3.3. Competitive Profile Matrix (CPM) ...................................................... 23
2.3.4. Determination of feasible strategy with SWOT analysis ..................... 24
2.3.5. Selection of optimal strategy with QSPM ............................................ 26
2.4. Basic competitive (business) strategies .......................................................... 27
2.4.1. Basis of business strategy ...................................................................... 27
2.4.2. Basic competitive strategies .................................................................. 29
2.4.3. Seletion of suitable stratery .................................................................. 31
2.5. “Characteristics” affecting to determination of business strategy of military
construction enterprise .......................................................................................... 31
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2.5.1. Characteristics of organization structure ............................................ 31
2.5.2. Characteristics of duties ....................................................................... 32
2.5.3. General evaluation ................................................................................ 32
3. ANALYSIS OF CONDITIONS FOR FORMULATING STRATEGY OF ONE
MEMBER LTD. COMPANY 17 ............................................................................. 34
3.1. Introduction of One-member Ltd. Company 17 ........................................... 34
3.1.1. Sketch of establishment and development processes of One-Member
Ltd. Company 17 ............................................................................................. 34
3.1.2. Structure of organization, management and operation....................... 37
3.1.3. Result of business activity period 2014-2016........................................ 39
3.2. Analysis of macroenvironmental impacts on strategy building of Onemember Ltd. Company 17. .................................................................................... 41
3.2.1. Analysis of economic factors................................................................. 41
2.2.2 Analysis of policy-stipulation factors: .................................................... 44
3.2.2. Analysis of culture-society factors ........................................................ 45

3.2.3. Analysis of technology, infrastructure factors ..................................... 46
3.2.4. Analysis of international economic integration environment: ............ 48
3.2.5. Matrix of External Factor Evaluation - EFE of one-member Ltd.
Company 17. .................................................................................................... 49
3.3. Analysis of task environment per model of competitive pressure year ........ 50
3.3.1. Analysis of pressure from customers ................................................... 50
3.3.2. Analysis of pressure from suppliers ..................................................... 51
3.3.3. Analysis of risk from substantial products .......................................... 52
3.3.4. Analysis of competitive intensity between present opponents ............. 52
3.3.5. Analysis of risk of new opponents ........................................................ 55
3.4. Analysis of internal environment of One-Member Limited Company 17 ... 56
3.4.1. Capacity of production ......................................................................... 56
3.4.2. Quality of manpower resource ............................................................. 57
3.4.3. Capacity of finance ............................................................................... 59
3.4.4. Level of marketing ................................................................................ 59
3.4.5. Organization and management ............................................................ 60
3.4.6. Matrix of Internal Factors Evaluation of Company 17 ....................... 60
3.4.7. Building of Competitive Profile Matrix CPM ...................................... 61
3.5. General evaluation on SWOT of One-member Ltd. Company 17 ............... 62
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3.5.1. General evaluation on opportunities and threats ................................ 62
3.5.2. Evaluation on strengths, weaknesses of Company 17 .......................... 63
4. PROPOSAL AND SELECTION OF BUSINESS STRATEGY FOR ONE
MEMBER LTD. COMPANY 17 PERIOD 2017-2020 AND BUSINESS VISION
TO 2025 .................................................................................................................. 65
4.1. Vision, mission and strategic target............................................................... 65
4.1.1. Business vision....................................................................................... 65
4.1.2. Mission .................................................................................................. 66

4.1.3. Strategic target ...................................................................................... 66
4.2. Proposal and selection of business strategy................................................... 67
4.2.1. Summary of SWOT analysis ................................................................ 67
4.2.2. Strategies under consideration ............................................................. 70
4.2.3. Select strategy based on QSPM matrix ................................................ 72
4.3. Main solutions for implementation of chosen strategy ................................. 77
4.3.1. Solutions on organization and management ........................................ 77
4.3.2. Solutions on production and technology .............................................. 78
4.3.3. Solutions on manpower management .................................................. 78
4.3.4. Solutions on finance .............................................................................. 78
4.3.5. Solutions on Marketing and PR ........................................................... 79
4.4. Requirements and conditions of strategy implementation ........................... 79
5. CONCLUSION ...................................................................................................... 81
REFERENCES .......................................................................................................... 82

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1. INTRODUCTION
1.1 Urgency of the topic
Nowadays, Vietnamese enterprises operate in a constantly changing
environment, which requires companies to set up new approaches in managing
economic activities in order to keep up with changes. The instability of the economic
situation, the tightening of competition, the increasing demand of consumers for the
product, the reduction in the life cycle of the goods significantly complicate the
managerial process, and the prospects for development are becoming less predictable. In
these conditions, the advancement in the practice of new ideas and technologies in
strategic management play an undeniably important role.
The main goal of strategy development is to achieve long-term competitive
advantages that will ensure the survival, sustainable functioning and development of

enterprises. However, as the practice of the majority of market participants shows, not
all domestic enterprises are ready to form long-term development guidelines. Even with
a stable financial position and competitive advantages in the market, many of local
businesses are not able to formulate an effective strategic plan due to the lack of
methodology and methodological tools of strategic management that are relevant to
specific Vietnamese conditions. Consequently, principles, methods and tools of strategic
development are of great interest to Vietnamese enterprises.
Vietnam construction industry is one of the key economic sectors, attracting
investment. The share of construction sector in GDP of Vietnam is approximated to 5
percent to over 6 percent of GDP. However, the construction industry are still facing
some difficulties and challenges. Therefore, in order to survive and develop sustainably,
construction firms must formulate a strategic plan that is not only scientific but also
practical.
As one member of the Corps 12 (Truong Son Construction Corporation), Onemember limited liability company 17 is also under implementation of comprehensive
renovation, reorganization of the security apparatus. In operation, the company always
persevered with the orientation "Taking basic construction as a core business, in which
infrastructure construction, transportation is the center, combined with diversified
trading activities"... quickly adapting to market conditions, actively investing in
modernizing equipment and acquiring, applying advanced science and technology,
creating high quality products and always " keep promise" with customers. With the
right managing direction and the efforts of officers, soldiers and defense workers,
company 17 has step by step strived for self-recognition. However, with the increasing
demand for construction, company 17 is facing strong competition in the market. The
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company still has competitive advantages but is not dominant compared to other
competitors. Therefore, it is necessary to set up company 17 as well as Truong Son
Corporation in front of many challenges in the construction market, especially for
competitors from the Ministry of Transportation, the Ministry of Construction ...

In that context, as a member of the board of directors of the company, I decided
to select the topic "Building business strategy for One-member limited liability
company 17, period 2017-2020 and vision to 2025 » as my master's thesis.

1.2 Overview of research projects in the fields of the theme
The subject of business strategy is increasingly popular for reseachers to choose
as a topic of master thesis. Here are some researches on the topic of business strategy.
Ngo Dinh Khoi, 2015: “Building Business Strategy to 2020 by
NATSTEELVINA Ltd. Company” (National Economics University - HNU). The thesis
aims to build a suitable business strategy for NATSTEELVINA (under the Vietnam
Steel Corporation) in order to contribute to raising the competitiveness of steel
producers in the period 2015-2020. For the common goal of sustainable brand
development, growth and profitability for Vietnam Steel Corporation, the thesis has
implemented a number of specific objectives: a) Choosing a theoretical framework; b)
Analyzing the external business environment to define opportunities and challenges; c)
Analyzing the internal environment of NATSTEELVINA Company to explore the
strengths, weaknesses and impacts on steel production; d) developing and selecting
strategic options; and e) proposing solutions. However, this thesis only makes sense for
heavy industry company.
Nguyen Thi Cam Tu, 2014, "Building Business Strategies for Vietnam
Prosperity Joint Stock Commercial Bank in Ha Tinh" (National University). The thesis
aims at two main objectives. Firstly, in the context of globalization and market
economy, the development of strategies is an urgent issue for any enterprise. The thesis
is meant as an overview of the situation and a suggestion of future business strategies.
Secondly, the thesis proposes the business strategy for the period 2015-2020 on the
basis of internal analysis and external environment to forecast the business development
trend for banking system. By defining the scope of the dissertation research that only
mentions and delves into the operation of a particular branch, the applicability is
relatively limited. On the other hand, the thesis only provides a comprehensive business
strategy, not detailed plans for each specific action of the branch.

Hoang Thi Hien, 2016, "Complete solution to build business strategy at Dong
Thai Son Ltd. Company". The thesis (FPT University) achieves the following major
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objectives: Building the rationale for strategy development for the company in the
period 2016-2020; Analyzing the macro environment, micro environment and internal
environment of Dong Thai Son Ltd. Company to identify opportunities, threats,
strengths and weaknesses; determining the company's strategic objectives for 20162020. However, this thesis is focused mainly on the business and supply of construction
materials of the company so the scope of application is still limited.
Nguyen Dai Loi, 2010, "Business Strategy in Construction Company 3 - 2"
(Hong Bang University). Thesis has achieved certain results. Firstly, the analysis and
assessment of the impact of external environmental factors as well as internal factors on
the operation of Company 3-2. Secondly, this work also proposes appropriate business
strategies and some solutions to improve the competitive position and promote business
efficiency for the Construction company 3-2 in the period 2010-2020.
In the field of business as well as the scale of operation, the Construction
Company 3-2 can be considered one of direct competitors of the One-member Limited
Company 17. However, with the type of organization as a private joint stock company,
the characteristics of the operation also have many differences.

1.3 Objectives of the research
Overall objectives
Research and propose business strategy for One-member limited company 17 by
2020 with a vision to 2025.
Detailed objectives
• Studying the theoretical framework for building a business strategy.
• Analyzing and assessing the impact of business environment factors (external
environment, industry environment and internal potentials and potential of the
company17) to identify the strengths, weaknesses, opportunities and challenges in order

to determine the company's business strategy in the coming years.
• Proposing and selecting suitable business strategies for Company 17 in the
period of 2017-2020, with orientation to 2025.
• Proposing solutions for the implementation of the selected strategy.

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1.4 Subjects and scope of research
Research subjects
The subjects of the thesis are the practical and theoretical arguments, the steps to
build the business strategy.
Research scope
• Content: Building business strategies for construction activities.
• Regarding space: At One-member Limited Company 17.
• Time frame: Historical data from 2013-2015, survey data for 2016-2017.

1.5 Research methodology
Documentation Methodology: The studied information and materials include
publications, survey results, research, maps, statistics, summary reports on construction
industry and issues related to research topics.
Qualitative research methodology: Interview and consultation with some
leaders, managers at all levels of the One Member Limited Company 17. The content of
the discussion focused on fundamental issues of business strategy of the company in the
construction market.
Comparative analysis methodology: PEST analysis, Five forces model M.Porter,
SWOT analysis, IE matrix for analysis of strategic basis for Company 17. This is the
main method of research in this topic. Through comparative studies, the thesis will
clarify the influence of business environment factors on the process of developing and
implementing the business strategy of Company 17. Based on the summary of results,

the thesis proposes suitable business strategy for One Member Limited Company 17 in
the period 2017-2020.

1.6 The expected results of the dissertation
• Awareness of the role and importance of business strategy formulation for
Company 17.
• Systematizing the theory of business strategies in a market economy.
• Analyzing the basis of business strategy formulation for Company 17 with the
main contents.

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• Proposing and selecting business strategies for Company 17 until 2020 as well
as the necessary solutions for the implementation of the selected business strategy.

1.7 The meaning and contributions of the thesis
There are many researches on business strategies for enterprises in Vietnam.
However, there are no work done directly and specifically for One-member Limited
Company 17 (under the Truong Son Construction Corporation) in the context of
restructuring and developing markets outside the Ministry of Defesnse. Research results
will bring important contributions as following:
• Firstly: Researching and selecting the rationale for building a business strategy
of a construction enterprise under the Ministry of Defense in the context of new
mission.
• Secondly: Developing business strategy and propose strategic solutions for
Company 17, one of the leading enterprises of Truong Son Construction Corporation.
• Thirdly: contributing as research materials, refer to businesses under the
Ministry of Defense in the context of restructuring and sustainable market development.
• Contributing a journal article on the subject matter of the research.

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2. THEORETICAL FRAMEWORK OF STRATEGY
FORMULATIONAPPLIED FOR ENTERPRISES
2.1. General view of enterprise’s strategy
2.1.1.

Some basic terms of enterprise’s strategy

The concept « Strategy » was first created by the Greeks with a military
connotation, which meant a general in command of troops or the art of the general or
plan to destroy enemies through effective use of resources. However, according to
Mintzberg and Quinn, the term « Strategy » only entered into the business world after
the World War 2 and since then, it has been used widely in the field of management.
George Steiner, one of the founders of The California Management Review,
notes that strategy entered the management literature as a description to what someone
did to counter a competitor’s actual or predicted moves. He also points out some
definitions on the word « Strategy » as follows:
- Strategy is what top management does, which is greatly important to the
organization.
- Strategy refers to basic directional decisions, that is, to purposes and missions.
- Strategy consists of the important actions necessary to realize these directions.
- Strategy answers the question : What should the organization be doing?
- Strategy answers the question : What are the ends we seek and how should we
achieve them?
In Top Management Strategy, Benjamin Tregoe and John Zimmerman, of
Kepner-Tregoe, Inc., define strategy as « the framework which guides those choices that
determine the nature and direction of an organization ». Tregoe and Zimmerman urge

executives to base these decisions on a single "driving force" of the business. Although
there are nine possible driving forces, only one can serve as the basis for strategy for a
given business. The nine possibilities are listed below :Products offered ; Production
capability ; Natural resources ; Market needs ; Method of sale ; Size/growth ;
Technology ; Method of distribution and Return/profit.
Michel Robert takes a similar view of strategy in Strategy Pure & Simple, where
he argues that the real issues are "strategic management". For Robert, this boils down to
decisions pertaining to four factors:
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1. Products and services
2. Market segments
3. Customers
4. Geographic areas
Like Tregoe and Zimmerman, Robert claims that decisions about which
products and services to offer, the customers to be served, the market segments in which
to operate, and the geographic areas of operations should be made on the basis of a
single "driving force." Again, like Tregoe and Zimmerman, Robert claims that several
possible driving forces exist but only one can be the basis for strategy.
Based on these above definitions of « Strategy », we can summurize that
strategy of an economic organization is a set of its main goals and the main ways to
achieve them. In other words, to establish an enterprise strategy means to form a general
direction of its activity, oriented to the future development. The strategy should be
based on the search for real opportunities for the actions of the enterprise. Therefore,
strategy is, first of all, the organization's response to the influence of objective and
subjective elements of the external and internal environment.
Strategic planning is a tool that helps in making managerial decisions. Its task is
to ensure innovations and changes in the organization to a sufficient extent. Three main
types of management activities can be identified within the strategic planning proccess :

resource allocation, adaptation to the external environment and internal coordination.
 Resource allocation: This process involves the distribution of limited
organizational resources: funds, scarce managerial talents and managerial experience.
For instance, splitting a large company into several smaller ones, in order to reduce the
number of managers and company personnel. The money saved is reinvested in the
branch data.
 Adaptation to the external environment : covers all strategic actions that
improve the company's relations with its environment. Companies need to adapt to
external opportunities as well as hazards, identify appropriate options and ensure
effective adaptation of the strategy to environmental conditions. That is the creation of
new favorable conditions through the dismantling of better production systems or
interaction with the government and society as a whole, etc.
 Internal coordination : Coordination of strategic activities is to reflect the
strengths and weaknesses of the firm in order to achieve effective integration of internal
operations. Ensuring effective internal operations in organizations is an integral part of
management activities.

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2.1.2. Roles of strategy in bussiness activities of enteprises
Helen (2007) made the following statement about the role of strategic planning
to businesses :
 Orientation : Defining the purpose of the organization and setting realistic
goals in line with the mission, which can be clearly communicated to the component
parts. Providing a basis to measure the company's development process and establishing
boundaries for effective decision-making;
 Make wise business decisions : How to distinguish between good ideas and
great ideas ? Without a clear vision of what the company wants and the task or purpose
of business, it is very difficult to choose the ideas and determine which projects to

invest. Strategies will help clarify what the company wants, how to achieve it, and how
to effectively allocate limited financial and human resources.
 Increase the longevity of the business : The world's markets and industries are
changing faster than ever, and those relying on luck or opportunity without a solid
foundation are unlikely to survive in the future. Marker data reflects that one out of top
three companies in a industry will not be able to maintain its position for five years.
Then, the right and approriate business strategy will increase the survivability of
enterprises in the market.
 Increase profitability and market share : Centralized planning and strategic
thinking will help to discover new customer segments, market conditions, type of
products and services which are the most profitable. Targeted access and aiming at
promising markets will not only increase profit but also improve competitive position
and market share.
 Increase job satisfaction : Employees need to be motivated to work and feel
as a team member. Employees are the greatest source of creativity. Determining the
purpose and meaning of the work in the company's strategic planning will bring the
focus to the work and create a source of daily creative motivation for employees.

2.1.3. Levels of strategy
Most companies develop more than one strategic plan, and several are united by
a common goal of strategies for different levels of management, thus forming a
hierarchy of strategies. All levels are closely related to each other and form a pyramid of
strategies within the organization, where each level is like a frame for the next level
(Figure 1.1).

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Figure 1.1Levels of strategies in an corporate
In a diversified company, which simultaneously focuses on several types of

business activities, there are usually four levels of strategy : corporate, business,
functional or operational. Specialized firms are limited to three levels. In this case, the
corporate and business strategies coincide, as the strategy is developed for one business
area.
A corporate strategy is a general management plan for a diversified company.
The corporate strategy covers all areas of the company's activities. The general strategic
plan is developed for a period of time, usually up to five years and reflects the position
that the company wants to occupy in the coming years. In fact, the definition of a
corporate strategy is the decision to choose the general direction of the organization's
development.
The development of a corporate strategy usually involves six basic elements :
- Mission : Defining the scope of the corporate mission is the problem of
defining a set of activities. In particular, it is determined in which sectors the company
will operate, what level of integration it will choose, whether diversification will be
limited to several industries or will spread to many, whether the company will be guided
by strategic correspondences between different activities or not.
- Corporate tasks : The initial basis for setting objectives is basically the results
of marketing and innovation. It is efficiency in these areas that determines the demand
for the products or services of the firm. The tasks of the company should be focused not
on profit, but on methods of obtaining it.

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- Determination of strategic business units (SBU) : In the development of
corporate strategy, most large diversified companies comprise of many business units,
which have a pronounced specialization, a certain range of suppliers, consumers and
competitors. Each SBU should be a real administrative and economic unit and act as an
independent firm.
- Resource allocation : Diversified firms in their composition have a set of SBU,

or business economic "portfolio." The members of the SBU structure may differ in their
development potential and current financial performance. Some SBUs are engaged in
bringing new products to the market or developing new markets ; they obviously need
additional financial investments. Others with a stable share in the mature market are a
source of cash. To comply with corporate goals, company management must ensure the
redistribution of monetary resources between SBUs.
- Synergy. Each type of activity involves a source of synergism. Coordination of
efforts in such activities as procurement, introduction of new technologies, R & D,
production, marketing, human resources management, allows to reduce costs and
improve staff development. For example, combining several types of procurement
allows the supplier to obtain discounts, and combining research and development - to
successfully cope with the development of technologies that will be used in various
SBUs.
- Corporate development : This is the final stage in the development of the
corporate strategy, which, as already mentioned, ends with the development of an
integrated plan that includes solving the problems of corporate development. The
diversity of corporate strategy can be reduced to three main types : offensive (growth),
defensive (reduction), compromise (stabilization).

2.2. Process of strategy formulation of company
The process of strategy management will be best performed, in case,
everybody in the Enterprise understand thoroughly that. Five stages of this process are :
setting up objectives, analysis, formulating strategy, implemeting strategy and
monitoring strategy.

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External
Enviroment

Mission

Goal

Strategy

Program

Internal
Enviroment

Perfomance

Feedback &
controlling

Figure 1.2. Process of planning business strategy

2.2.1. Identification of mission, vision and objectives
The mission clarifies the main purpose of the enterprise. The vision also
determines the purpose of the organization, but focuses on tasks and aspirations. The
vision is unlimited: even if the organization rebuilds its strategy, the vision must remain
unchanged.
A mission is a business concept that reflects the purpose of the business, its
main goal. Unlike the vision, the mission characterizes only the "real" organization : the
type, scale of activity, differences from competitors, prospects for business
development. The mission details the status of the enterprise and provides guidance for
the development of goals and strategies at various organizational levels.
The mission is what the company exists for, and the vision is the future image of

the company. Without defining the direction of business development, it is impossible
to explain the essence of the activity. The mission explains the essence of the business,
the specifics of the business and the development path of the company - all that
distinguishes this company from the rest in this industry.
The formulation of the mission contributes to the solution of the following
management problems :
Firstly, the mission forces managers to systematically engage in a
comprehensive analysis of the strengths and weaknesses of the organization and its
competitors, opportunities and threats, which increases the validity of strategic
decisions.

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Secondly, in the case of large companies, the mission contributes to the
integration of local organizational units into one, the motivation of staff and more
effective interaction of managers and subordinates at different levels.
Thirdly, a good mission contributes to the projecting of a rational and positive
image of the company on business partners, shareholders, investors, on which the
destiny of the enterprise depends in various forms and extent.
The mission statement contains three elements:
- Customer needs, i.e. that which must be satisfied.
- Groups of buyers, i.e. who will be the object of product and service.
- Actions, technology and knowledge, i.e. how the company creates and
distributes consummer value and satisfies the needs of its customers.
The vision of an organization is a figurative representation of the meaning of the
organization's activities and prospects (future). It explains and demonstrates to all
employees and the public what an organization is, what it should become and what it
strives for.
Forming a vision is one of the tasks of top management. The horizon of vision,

i.e. the period of remoteness in time of the formed image of the enterprise can be
different, from several months to several years.
The vision refers only to the future : it loses its relevance when the desired state
of the organization is achieved and must be formulated again.
The formulation of the vision should be a laconic, dynamic design, easy to
understand (often a slogan), and meet the following requirements : to inspire, to be
simple, as a memory or image, to deserve trust and provide guidance that can serve as
the basis for strategy development.
The formation of a strategic vision begins with the creation of its three main
components:
- The company's mission, which determines the position and business of the
company at the moment.
- A long-term course based on the mission and determining the company's
strategic path.
- Clear formulation of the strategic vision for obtaining broad support for all
employees of the company.

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Goals are the desired result that any organization seeks to achieve. Goals should
be realistic and answer the questions : what do we want to achieve ? Who will do this ?
When will we get the result ? Why do we need this ?
Goal setting translates the theoretical part - the development of the strategic
vision and direction of the company's development - into the plane of practical
application.
The targets in the company's activity are only goals that are defined in
quantitative or measurable indicators and contain specific values that need to be
achieved.
Long-term goals determine the strategic intention of the enterprise. The

definition of overall long-term goals is required for each key result that managers
consider important for achieving success and creating appropriate competitive
advantages for the organization.
Objectives of the organization should have a number of characteristics, which
are sometimes called the criteria for the quality of the goals set.
Main characteristics (criteria) of the goal :
- Concreteness and measurability. Expressing goals in clear measurable forms,
management creates a basis for decision-making and assessment of the progress of
work.
- Planning horizon. Highlight long-term (planning horizon more than 5 years),
medium-term (planning period from 1 year to 5 years) and short-term (usually within a
year) goal. The narrower the planning horizon, the more specific the goal must be
expressed.
- Possibility of success. Goals are set so that they do not exceed the capacity of
the enterprise. The establishment of unattainable goals blocks the desire of employees to
succeed and reduces the motivation for work.
- Consistency. The actions and decisions necessary to achieve one goal should
not interfere with the achievement of others.
Insufficient attention to the process of setting goals or, conversely, the pursuit of
unachievable goals causes damage to the organization.

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2.2.2. Analysis of external impacts
2.2.2.1. Analysis of macro-environment factors
Macroeconomic factors have an impact on any enterprise. These include
demographic, socio-economic, natural, technological, political and cultural factors.
Demographic factorsinclude :
- Population ;

- Age structure ;
- The level of education ;
- The structure of the household ;
- Geographical displacements of the population, etc.
Ecomonical-social

factors:One

of

the

most

important

objects

of

macroeconomic study is the socio-economic environment, since the events that occur in
it depend on supply and demand in the market. The general state of the economy
determines the financial possibilities of buyers. Economic factors are not less important
than demographic factors. It's not enough to identify how many potential customers a
firm would have. It is also important to determine how much and what services they
want to purchase. The solvent process of the population is influenced by many factors,
including the level of the country's economic development, wages, inflation, and
unemployment. For instance, it is necessary to take into account the high dependence of
the demand for tourist services on the level of income.
Natural factors: can affect the activities of the enterprise, especially as the

issues of rational use of natural resources and environmental protection are becoming
global.
Political and legal factors: the study of the political and legal factors of the
macro-environment should be carried out first in order to have a clear idea of the
intentions of the state authorities and administration regarding the development of
society and the means by which the state intends to implement its policy. The analysis
of laws and other normative acts that establish legal norms and the framework of
relations, gives the enterprise the opportunity to determine for itself the permissible
limits of actions and acceptable methods of defending their interests.
The cultural environment : the strongest are the established norms adopted in
society, the system of social rules, spiritual values, the relationship of people to nature,
work, to each other and to themselves. Knowledge of socio-cultural factors is very

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important, because they affect both other elements of the macro environment and the
internal environment of the enterprise (for example, the attitude of employees to work).
Scientific and technological environment:the technological factor has an
increasing influence on most enterprises. It is, for example, already impossible to
imagine booking tickets in hotels, on transport without using a fax. PCs, the Internet are
an integral component of the development of the society. The changes of scientific and
technology not only improve products, service according to customers’ need but also
can create new products replacing for current products.

2.2.2.2. Analysis of task environment impacts
The analysis of the working environment of the enterprise is carried out at two
levels:
- industry analysis;
- specific analysis.

Industry analysis is primarily an analysis of proposal. In the course of the
industry analysis, it is expedient to establish the dominant economic characteristics of
the industry: market size, market growth rate, total production capacity, level of use,
market saturation level, number of customers.
M.Poter pointed out some forces that have the ability to change the situation in
the industry:
- change in demand ;
- product update ;
- change in the composition of customers and ways of using the product;
- innovation ;
- marketing innovations ;
- entrance or exit of large enterprises ;
- a change in costs and efficiency ;
- distribution of technical and technological achievements ;
- changes in public policy.
Competitive analysis of the external environment is carried out through the
study of the five main forces of competition, which determine the level of profit in the
industry (according to M.Poter).

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Porter’s five forces model
New entrant

Threat of new entrants

Bargaining
power of
supplier

Supplier

Customer

Competitive rivalry
Bargaining
power of
Customer
Threat of substitutes
Substitutes
Figure 1.3. Model of 5 forces

(1) Competition rivalry: Most is manifested in industries with a large number of
operators with homogeneous products.
It is analyzed for such directions :
- the position of competitors in the market (sales volumes, product range, market
shares);
- characteristics of competitors' products (technical and operational parameters,
price, quality, novelty, trademarks, image of the company and products);
- marketing and promotion of goods on the market;
- scientific and technical potential of firms - competitors (R & D base,
availability of patents, licenses);
- production potential of competitors (capacities, loading, dynamics of receipts
of orders);
- financial condition (solvency, profitability, ability to mobilize financial
resources to protect market interests).
(2) New entrants : Analysis - the forecast of the emergence of new competitors in
the industry is determined by the barrier of entry, which is an obstacle to the

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