Research objectives
Research the subject aims at:
- Systematize and summarize theoretical matters of business strategy and building the business strategy.
- Help students obtain skills to practice building the business strategy of Vietnam Construction Joint Stock Company No 21 – VINACONEX.
- Analyze and evaluate opportunities, challenges, strengths, weaknesses of Vietnam Construction Joint Stock Company No 21 – VINACONEX.
- Build the orientation of the development strategy in the period of 2011-2015 and vision by 2020 for Vietnam Construction Joint Stock Company No 21 – VINACONEX.
Scope of research
Scope of research is the business production environment of Vietnam Construction JointStock Company No 21 – Vinaconex in the period of 2008-2010.
Method of research
The subject has applied the following methods: Qualitative and quantitative approaches:
Method of comparison, analysis and synthesis: Analyze the data from the financial statements through periods, summarize and make comments
Method of matrix analysis to analyze and handle research results of environment, helping enterprises to make strategies scientifically, etc…
Statistical and analytical approaches: table statistics, then withdraw inferences of trends to evaluate the operation situation of the Industry and enterprises.
Apart from the preamble and conclusion, the subject is divided into three chapters:
Chapter I: Theoretical foundation of building the business strategy.
Chapter II: Analysis of the real situation of Vietnam Construction Joint Stock Company No.
Chapter III: Selection and establishment of business strategy for Vietnam ConstructionJoint Stock Company No 21 – VINACONEX.
CHAPTER I THEORETICAL FOUNDATION OF BUILDING THE BUSINESS STRATEGY
The term "strategy," originating from the Greek word "Strategein," refers to the art and science of commanding in order to overcome opponents Various definitions exist, with Michael Porter describing strategy as the art of establishing robust competitive advantages for defense.
G Arlleret defined that: “Strategy is the determination of roads and means to achieve given objectives through policies”.
Gluecl defined that: “Strategy is a type of comprehensively unified and synthetic plan designed for ensuring that corporate objectives shall be implemented”.
Strategy is defined as a comprehensive set of commitments and actions designed to mobilize an organization’s and individual’s resources effectively to achieve specific objectives.
Strategic management is both an art and a science that involves the formulation, execution, and assessment of decisions across various organizational functions to meet specific objectives It aims to integrate key areas such as management, marketing, finance, production, market research, and information systems, fostering overall success The strategic management process encompasses three main stages: strategy formulation, strategy implementation, and the monitoring of the implementation process to ensure alignment with the established strategy.
1.1.3 Roles and tasks of strategic management
- Business strategy helps enterprises clearly recognize their purposes, directions as a guideline for all business production activities of enterprises.
- Business strategy helps enterprises catch and take advantage of business opportunities,and take proactive measures to overcome threats and risks in the fiercely competitive market
- Business strategy contributes to enhance the effectiveness of resources, strengthen the competitiveness of enterprises, ensuring their sustainable development.
- Business strategy creates strong foundations for proposing policies and decisions on business production in conformity with the market fluctuations.
To shape a successful future, enterprises must develop a strategic vision that clearly outlines their desired direction and transformation This long-term orientation should articulate the organization's aspirational image, fostering a sense of purpose and emotional engagement among stakeholders By defining where the enterprise aims to go and how it intends to evolve, businesses can inspire purposeful action and drive meaningful progress toward their goals.
- Build objectives: transform from strategic perspective to specific achievements which the enterprise must obtain.
- Build strategy to achieve expected objectives.
- Enforce and manage selected strategies effectively and efficiently
- Evaluate the implementation and carrying-out of perspective adjustments, long-term orientation, objectives, strategy or the implementation based on experience, variable conditions, new initiatives and opportunities.
1.2.1 Vision, mission and objectives of the strategy.
A strategic vision defines the future aspirations of an enterprise, guiding it towards innovation in technology and market differentiation By clarifying what the organization aims to become, this vision enables businesses to seize market opportunities and enhance their competitiveness It fosters a unified operational process, ensuring that resources are utilized effectively to achieve strategic objectives Consequently, companies can quickly adapt to the evolving business landscape and leverage their existing capabilities to develop new competitive advantages.
A strategic mission is essential for enterprises as it defines their future position by addressing key questions such as "Who are we?" and "What are we doing?" It guides companies in identifying the types of products they will offer to customers in the future, ensuring alignment with their core values and objectives.
Strategic objectives made from functions and tasks are more specific and may change in a certain period There are 2 types of objectives: short-term and long-term ones
- Long-term objective (from 3 years and above but depend on industry): determine a big direction but not go into the details or fix a specific figure
- Short-term objective (to 1 year and also depend on industry): specifically direct and guide long-term objectives of the enterprise
Analyzing the external environment involves examining various societal factors that impact both an industry and individual companies This analysis is categorized into two main areas: the macro environment, which encompasses broader societal influences, and the industry environment, focusing on specific market dynamics.
Analyzing the external environment is essential for identifying beneficial opportunities and potential threats for the Company This analysis encompasses macro factors like economic conditions (inflation, interest rates, exchange rates), political influences (government policies and legal regulations), natural conditions (soil and climate), technological advancements, and social factors within the target market Additionally, it considers micro factors such as consumers, suppliers, and competitors By evaluating these elements, the Company can develop effective strategies that align with both short-term and long-term objectives.
* Industry environment is an environment including a group of companies making products with highly mutually replace-ability.
* Five forces of competitive model
Threat of market share reduction due to new competitors
Price depression Price depression of suppliers of customers
Threat from substitute products and services
- Competitors: This is a pressure regularly and directly threaten enterprises; the more competitive pressure among enterprises is, the more position and existent of enterprises are threatened.
Customer trust is crucial for businesses, as it significantly impacts their operations When customers hold the upper hand, they can influence companies by pushing for lower prices and demanding extended payment terms.
Suppliers play a crucial role in the supply chain by providing essential input factors such as raw materials, machinery, equipment, finance, and labor When suppliers hold a competitive advantage, they can impose unfavorable conditions on businesses, such as increasing sales prices or demanding shorter payment terms.
- Substitute products: Ssubstituting products reduce the profitable potentials of enterprises, threaten corporate share
- Potential rivals (Barrier when joining industry): When new rivals participate in the industry, it shall reduce shares and corporate profits In order to protect their competitive
Negotiation power of customers product diversification, scale-based advantage or if want to join the industry, it requires huge initial investment cost
According to Michael E.Porter, there are two types of basic competitive advantages including cost leadership and differentiation
1.2.2.3 External Factor Evaluation - EFE Matrix:
The EFE Matrix is a strategic tool that enables businesses to assess various external factors impacting their operations, including economic, social, cultural, demographic, geographical, political, legal, technological, and competitive elements This matrix is utilized through a systematic process, where the total important point is calculated, with an average score of 2.5 serving as a benchmark A score below 2.5 indicates a weak ability to respond to environmental changes, while a score above 2.5 reflects a strong capacity for positive adaptation.
Table 1.2.2.3 External Factor Evaluation Matrix
Key external factors Weight Rating Weighted score
In order to evaluate the competitiveness of an enterprise compared to other competitors within the industry, apply Competitive Profile Matrix (CPM).
No Critical success factors Weight
Rating Score Rating Score Rating Score Rating Score Rating Score
Needs of construction and installation market
After analyzing external factors, we have the opportunities and challenges of an enterprise as follows:
Opportunities : are ones having big influence and big possibility of occurrence, it can bring enterprises a higher growth physically.
Threats: are threats having big influence and big possibility of occurrence, it can cause big losses to the enterprises if there is no due diligence.
Analyzing internal factors involves assessing resources and activities to evaluate a company's strengths and weaknesses This evaluation focuses on key aspects such as financial health and human resources, allowing businesses to identify their core competencies and areas for improvement Ultimately, the goal of internal factor analysis is to provide a clear understanding of an enterprise's capabilities.
1.2.3.1 Internal Factor Evaluation – IFE Matrix:
IFE Matrix is a tool used for evaluating strengths and weaknesses of functional parts of the enterprises.
Building IFE Matrix also includes the following steps:
- List strengths and weaknesses of the enterprises;
- Evaluate the importance of each factor;
- Classify; determine the important point of each factor;
- Total important point for evaluation.
Strong points: Form an overall picture of the internal enterprise with specific strengths and weaknesses which can affect the competitiveness of the enterprises.
Table 1.2.3 Internal Factor Evaluation Matrix
Key internal factors Weight Rating Weighted score
Analysis of internal factors, we evaluate the strengths and weaknesses of an enterprise as follows:
Strengths: are absolute and relative advantages of the enterprises compared to main competitors or the industry average which the enterprise participated in.
Weaknesses: are main weak points which the enterprise should repair immediately to maintain and develop its competitive advantage compared to main competitors.
Managers integrate identified opportunities, threats, strengths, and weaknesses from both the business and internal environment analyses with their objectives to develop effective strategies.
The SWOT Matrix is a strategic tool that helps businesses identify their strengths, weaknesses, opportunities, and threats in a structured manner To create an effective SWOT Matrix, managers must first evaluate and select relevant opportunities and challenges, along with the enterprise's key strengths and weaknesses This foundational analysis enables the formulation of appropriate strategies for the organization.
S_O: These strategies are based on corporate strengths to exploit external opportunities. The enterprises have a tendency to develop and participate in new lines of business,
S_T: These strategies are based on corporate strengths to prevent or minimize external threats The enterprises have a tendency to create their barriers for them.
W_O: These strategies repair the internal weaknesses to take advantage of external opportunities The enterprises tend to have a business cooperation with others
W_T: These strategies repair the internal weaknesses to prevent or minimize external threats The enterprises have a tendency to narrow investment or withdraw business production industry
1.3.2 Boston Consulting Group Matrix(BCG)
BCG Matrix shows growth share of the industry of each part compared to other parts within the industry.
Relative share measures the proportion of a segment within an industry compared to the leading competitor's share, plotted on the X-axis of a matrix where 0.5 indicates a segment holding half the share of the market leader The Y-axis illustrates the sales revenue growth rate within the industry, ranging from -2.0% to +2.0%, with 0.0% as the midpoint.
Parts are on I angle: Question Marks
Parts are on II angle: Stars
Parts are on III angle: Cash cows
Parts are on IV angle: Dogs.
IE Matrix ( Internal –External) is used for evaluating the position of enterprises based on analysis of opportunities, challenges, strengths, weaknesses of enterprises to the environment.
Total point of IFE Matrix on X-axis and total point of EFE Matrix on Y-axis.
On X-axis of IE Matrix, total important point from 1.0 to 1.99 of IFE Matrix shows the internal weakness, 1,0 - 2,99 is average and 3,0 – 4,0 is strong.
Like X-axis, on Y-axis, total important point from 1.0 to 1.99 of EFE Matrix is low, 1,0 -
2,99 is average and 3,0 – 4,0 is strong.
1.3.4 Quantitative Strategic Planning Matrix (QSPM)
QSPM - Quantitative Strategic Planning Matrix, is a tool allowing strategies to objectively evaluate replaceable strategies, firstly based on factors as below
THE IFE TOTAL WEIGHTED SCORE
SELECTIVE STRATEGIES Strategy 1 Strategy 2 Strategy 3
AS Total AS AS Total AS AS Total AS
Internal factors : 1 = weakest, 2 = least weak, 3 = least strong, 4 = strongest
1= Reaction ability of the company is poor
2= Reaction ability of the company is average
3= Reaction ability of the company is above average
4 = Reaction ability of the company is very good
ANALYSIS OF THE REAL SITUATION OF VIETNAM CONSTRUCTION JOINT-
2.1 Introduction about Vietnam Construction Joint-Stock Company No.21 - VINACONEX
General information about the company
- Name of company: VIET NAM CONSTRUCTION JOINT STOCK COMPANY No
- Company headquarters: Ba La street, Phu La ward, Ha Đong district, Hanoi city
- Website: VINACONEX 21.VN - Email: VINACONEX 21@gmai.com
- Account: 1020.10000.236.986 Bank for Industry and Trade - Ha Tay Branch
2.1.1 History on the establishment and development of the company.