1 GRIGGS UNIVERSITY GOLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT Group Number: 09 HA NOI - 2011 TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES INTRODUCTION Necessity Objective Subject and scope of the study Approaches .8 Outline CHAPTER I THEORETICAL FOUNDATION OF STRAGIC MANAGEMENT 1.1 Concept and role of strategic management .9 1.1.1 Concept 1.1.2 The role of strategic management 1.1.3 Types of strategy 10 1.2 Stages of strategic management 11 1.2.1 Strategy Planning 11 1.2.1.1 Identify tasks and objectives 12 1.2.1.2 Analysis of external environment 12 1.2.1.3 Analysis of internal environment 13 1.2.1.4 Choosing the optimal strategy 13 1.2.2 Strategy Implementation 13 1.2.3 Strategy Assessment 13 1.3 Models and matrixes 14 1.3.1 Models 14 1.3.2 Matrixes .14 CHAPTER II BUSINESS SITUATION ANALYSIS OF VIETTEL GROUP 17 2.1 Introduction of Viettel Group 17 2.2 Business situation of Viettel from 2005 to 2010 18 2.3 Business environment analysis .22 2.3.1 External environment 22 2.3.1.1 Macro environment 22 2.3.1.2 Industry Environment 26 2.3.1.3 External environment evaluation .31 2.3.2 Internal environment 33 2.3.2.1 Analysis of resources .33 2.3.2.2 Strengths 38 2.3.2.3 Weaknesses 41 2.3.2.4 Evaluation of internal environment 42 CHAPTER III STRATEGY SELECTION & IMPLEMENTATION SOLUTIONS 44 3.1 Vision - Mission of Viettel .44 3.1.1 Viettel’s brand vision 44 3.1.2 Mission of Viettel 44 3.1.3 Core values 45 3.2 Strategic identification and selection 46 3.2.1 Strategy of market development 50 3.2.2 Strategy of product development 51 3.2.3 Strategy of business diversification .52 3.2.4 Strategy selection for Viettel in the period of 2011-2015 53 3.3 Implementation solutions 56 3.3.1 Target market and basic policies for the market 56 3.3.2 Continuing maintenance of expansion investment and improvement of coverage quality, customer service capabilities 58 3.3.3 Continuing development of price policies for product package, competition and flexibility for each customer segment 59 3.3.4 Management of human resources for changing the structure and improving the quality of service from the human factor .59 3.3.5 Financial management solutions 61 3.3.6 Marketing solutions 62 3.4 Implementation process 65 3.4.1 Construction of annual goals .65 3.4.2 Construction of policy system and support plan 65 3.4.3 Development of action plans, budgets and implementation processes 65 34.4 Allocation of human resources, finance, facilities 65 3.4.5 Selection of organization structure consistent with the strategy .66 3.4.6 Strategic commitment and implementation 66 3.4.7 Strategic inspection control, evaluation and adjustment in the implementation process 66 CONCLUSION 68 REFERENCES 70 LIST OF FIGURES Figure 1.1 Levels of strategic management .10 Figure 1.2 The process of strategic management .11 Figure 1.3 The PEST and Five Forces models 14 Figure 1.4 The matrixes used in analyzing 15 Figure 2.1 Revenue and profit of Viettel from 2005 to 2010 19 Figure 2.2 Revenue of Viettel Mobile from 2005 to 2010 20 Figure 2.3 Manpower of Viettel Group from 2005 to 2010 .37 Figure 2.4 Market-share of mobile phone subscribers in Vietnam (12/2010) 40 Figure 3.1 Hierarchy of competition in Vietnam mobile market .64 Figure 3.2 Levels of competition in Vietnam mobile market .64 LIST OF TABLES Table 2.1 Some data on Vietnam's economy in the recent 05 years (GSO) 23 Table 2.2 Viettel’s external factor evaluation matrix (EFE) .32 Table 2.3 CPM matrix compares the competition with a number of companies 32 Table 2.4 Some financial data of Viettel from 2005 to 2010 34 Table 2.5 Number of mobile phone subscribers in Vietnam (12/2010) 39 Table 2.6 Internal factor evaluation matrix of Viettel (IFE) .42 Table 3.1 Table of SWOT Matrix for Viettel Group 48 Table 3.2 QSPM Matrix for Viettel 54 INTRODUCTION Necessity In Vietnam, after the conversion from the command economy to market economy, the local enterprises faced many difficulties in strategic management Businesses need to research, develop a strategic tool to have enough flexibility to respond to market changes A business strategy must be formulated on the basis of analysis and forecast opportunities, threats, strengths and weaknesses of the enterprise, helping businesses obtain general information about the external and internal business environment Viettel Group is one successful model of change to the market economy From a small company, facing many difficulties, unknown brand in the market, now Viettel is one of the leading service providers in the Vietnamese telecommunication market and expanding to neighboring countries The brand positioning parts the crucial part in this achievement of Viettel The planning and implementation of business strategy is very important to decide the existence and development of a company Within the limits of the subject, our group offers the research and analysis to introduce “Developing the business strategy for Viettel Mobile in Vietnam for the years 2011-2015” The research and analysis apply the theories from the Master of Business Administration program (MBA) offered by the Hanoi National University of Vietnam and Griggs University Andrews University, the United States Objective The objective of this study is to conduct the complete top-down and competitive analyses, develop alternative strategies and select a prioritized set of strategies that will ensure a competitive advantage for Viettel and above normal returns (strategy to expand the market of Viettel Group in Vietnam during 2011 to 2015) This study based on the analysis and application of the theories of strategic management Subject and scope of the study Subject of this topic is in-depth analysis, evaluation and provides the direction to formulate a business strategy based on the theory of business strategic management The scope of this study based on specific statistics on the macro environment, industry and organizational environment of the Viettel Group from 2005 to 2010 and orientation until 2015 Approaches Topics of study based on the methodology of dialectical materialism combined with the knowledge of strategic management subject and other subjects in the MBA program to assess overall the business operations of telecommunications services Viettel Group In addition, the research also uses methods such as statistical analysis, analytical modeling to evaluate and develop business strategy for Viettel Telecom Group in the field of mobile telecommunications Outline The main contents of the analysis and strategic planning for Viettel Telecom Group in the period of 2011 to 2015 are presented in three chapters as the following: - Chapter I The theoretical foundation of strategic management - Chapter II Analysis of business activities of Viettel Group - Chapter III Strategy selection and implementation solutions CHAPTER I THEORETICAL FOUNDATION OF STRAGIC MANAGEMENT 1.1 Concept and role of strategic management 1.1.1 Concept In the early stages of the development of strategic management theory, people have seen the strategic long term plan, are an integral part of the planning system of the organization and thus just press strong strategic planning function Although there are many authors and researchers presented different ways of strategic management, strategic management but is now both a scientific definition, and is an art and science of planning, organization implementation and evaluation strategies Therefore, during the development, the concept of strategic management has been expanded greatly At the first phase, strategic decisions are made once for a long period of time and it is the job of senior executives However, the process of strategic management is made regularly and continuously and requires the participation of all members of the organization 1.1.2 The role of strategic management In the current business environment, there are opportunities and threats Strategic management helps us to identify opportunities and threats The perception of desired results and goals in the future can help managers and employees to understand what needs to be done to achieve success This will encourage both the above groups to achieve short-term achievements, in order to better improve the long term welfare of the business Strategic management process enables enterprises to match the proposed plan with the external environment The greater the volatility is, the more effort the business has to take the initiative To be able to survive and grow, businesses must develop their own strategic management systems that can adapt with the market fluctuations Therefore, strategic management is in the direction of future action It does not follow the market but change the business environment instead In short, strategic management is a product of modern management sciencebased practices, accumulating experiences from many companies However, the success of every business depends on the capacity of implementation and control of the internal system and is seen as the state of art in business administration 1.1.3 Types of strategy Corporate Strategy Functional Strategy Operational Strategy Figure 1.1 Levels of strategic management According to Red R.David the strategy includes only corporate and business strategy However, the strategy can be divided into three main categories: (i) corporate strategy is the strategy of the corporation or company; (ii) functional strategy is to implement a strategic business areas, business specifically; (iii) operational strategy is the implementation strategy of the operational functions of the company's HR strategy, marketing strategy (Figure 1.1) 10 mobile telecommunications in the country suitable for Viettel in the period of 20112015 is the market development strategy This strategy helps Viettel promote its strengths and take advantage of market opportunities in the period of 2011 to 2015, targets to the end of 2015 Viettel will account for at least 40% market share of mobile subscription with the number of subscribers over 50 million 3.3 Implementation solutions 3.3.1 Target market and basic policies for the market With market development strategy of Viettel in the period of 2011 to 2015 on the basis of promoting its strengths to take advantage of market opportunities, Viettel identifies the market, the solution to penetrate and develop further including:  Markets in rural, remote areas, fishermen, mountain and island: Statistics show that 80% of the population in rural areas, this is the object of the market which is very huge because of the growing economy; the cost of using the phone is increasingly less With the advantage of the coverage and capacity to meet customer needs in these areas, Viettel is very convenient to win the market Together with the rich and poor inequality process is migration process from rural to urban So, if these people had previously used Viettel, after coming to the city, the rate of continuous use is very high and contributing to increase market shares of Viettel in urban areas; With this object is primarily focused on the telephone product of low price, building fees only focus on good service of hearing and calling, message does not need much for the value-added services  Urban market is focused on areas for students, pupils and unskilled workers: As the most dynamic object and preferred to use value-added services such as Internet, chat, music, social networks s such as facebook The number at a time is not much but is subject that always maintains a large team from these classes out of school to 56 other classes If they use at school, then later when they graduate and work with income the ratio of continuous use of Viettel will be higher and at that time they are people who have income willing to pay high prices for good service Therefore, for this object, Viettel needs to focus on taking care low prices for value-added services to retain existing customers then later they shall become loyal customers and bringing higher benefits;  With the scale of coverage, good 3G technology, Viettel should focus strongly on for market penetration of competitors Especially, in urban area, office employees mostly use email at work and surfing the web becomes a habit like reading the newspaper every day so the 3G technology of Viettel is a big advantage along with flexible policies on rates and packages of products to penetrate in the market In addition, other small telecom operations on the market also have certain difficulties, with management experience of market development and financing resources, Viettel has prepared plans to acquire other firms to penetrate the market  Besides, Viettel has just purchased EVN Telecom Company under the agreement of Vietnamese Government Purchasing EVN Telecom has strong effects to development strategy of Viettel This can be explained as the following: - EVN Telecom occupied 1.6 million subscribers, so that Viettel’s market share rises over 1.4% immediately (~38% market share) after mergence; - Viettel takes many advantages of EVN Telecom such as the large network coverage and professional human resources; - Viettel also inherits all advanced BTS stations, 3000 km optical cable strengthening whole country; 03 International connection gates to increase speed for 3G Internet mobile protocol that will be a key factor to extent number of 57 mobile subscribers in the near future whenever the telecom mobile market is approaching to the saturated stage Thus, after purchasing EVN Telecom, the capable of network coverage and ability to meet customer’s needs as well as infrastructure, human resource, technology and market potential of Viettel are considerably improved and developed This can entirely be created more strength for Viettel to compete with Vinaphone and Mobifone including in the case of both Vinaphone and Mobifone mergence in future  The special client objects such as military force is the large force with the advantage of the military, wide coverage area, combined with the national security, the subscription development to this object also has a very huge and stable market For these objects implementing separate policies relating to general policy of the military and national security, cost are not an issue that other benefits brought for Viettel is important even very important and from which no firm can compete with Viettel  Along with the market expansion & development, Viettel must also keep the market thus it’s necessary to have positive policies of changing prepaid to postpaid subscribers, improving service quality and maintaining price policies, products to ensure competitiveness and flexible and timely response with the rivals to retain existing subscribers not run to other firms in the promotion programs 3.3.2 Continuing maintenance of expansion investment and improvement of coverage quality, customer service capabilities These are important advantages for Viettel to have great development in recent years and also will determine the future development Therefore, it’s necessary to continue to invest methodically to maintain this advantage 58 Not only maintaining wide network coverage but also improving quality of voice service, 3G, and simultaneously test investment for deploying the next generation as 4G then guaranteeing technology after the year of 2015 The investment is not only for telecommunication, transmission systems but also investment for new products, new technologies and investment in production to reduce costs Especially, the terminals with the advantages as the only firm which can produce phone, Viettel have many policies combined with services and equipment to access and develop its market 3.3.3 Continuing development of price policies for product package, competition and flexibility for each customer segment Viettel have advantages in pricing and products in package very competitively and flexibly, but if it does not maintain the new policies, the companies will also have the same policies and will compete strongly with Viettel Viettel, therefore, should maintain good pricing, product with each group of customers The new small telecommunications operators that just enter the market have foreign partners whose financial resources are very strong and ready to use price to compete and response flexibly While due to the specific characteristics of state enterprise and belonged to the Ministry of Defense so the decisions, the structure of decision-making processing of Viettel is not quick Therefore, Viettel should especially have particular mechanism to respond more quickly for competitors’ policy 3.3.4 Management of human resources for changing the structure and improving the quality of service from the human factor In the market economy today, before the strong fluctuations of the business environment, the fierce nature of competition and demands and needs met increasingly by staff, all of these issues has been great pressure for the enterprise In 59 particular, the issue of human resources management is one of vital factors, especially with Viettel will help overcome its weaknesses as the business is dependent on the military, service quality is not high From the practical needs of Viettel is must increase its competitive advantage compared to other telecom operators by organizing a comprehensive system of human resources management: building of organizational chart clearly, modern and precise system of information check, efficient labor using, resolving of policy, time mode, criteria for evaluating the work is standardized, fair remuneration policies, human resources planning must ensure the right people, right job  Selection and training of human resources: The selection and training of human resources of an enterprise is very important, contributing to decisions and development of the enterprises For Viettel Telecom Group should: - Develop recruitment process for each department, recruitment criteria on each title; depending on the vacancy that has the form of various recruitments such as examinations or interviews - Annually, the Group is based on the plan and needs to recruit workers with the motto to attract young workers, love the industry and career, meeting the requirements of the job In addition, the company is often interested in arranging, organizing workers in accordance with their capabilities and qualifications to meet the requirements and missions of the production business - Always focus on promoting the training and retraining activities, particularly on the professional skills of professional staff in units such as: regularly open training classes in place to improve skill and knowledge of workers in the industry, conduct training and retraining to improve labor efficiency of the current employees The employee is also encouraged and facilitated to participate in training classes to improve 60 their expertise Especially, for network technology department, service software development department, marketing, service  Policies for employee: To ensure the policies for employees in the group is always a concern of the leaders The Group is applying the payroll system of the Decree No 205/2004/ND-CP dated 14/12/2004 of the Government on the regulations for state enterprises Payroll policy is not reasonable and is needed to amend and applied the specific mechanisms to encourage staff and employee in the Group, increasing the effective contribution, increasing the quality, productivity of work completion 3.3.5 Financial management solution Currently, the world economy is in recovery phase, but still very weak and unstable, our economy is facing many difficulties, risen inflation, trade imbalance, so the financial risks of the group still have the risk of existence, affecting the business operation and the expansion of local and international market share of the Group The financial management work of the Group during this period, therefore, must always focus on the ability to raise working capital and efficient capital use and avoid waste Capital mobilization plan must be consistent with the business programs, investments, not passive on the capital Viettel’s Finance and Accounting Department should coordinate with other departments such as planning and investment to establish the financial plans monthly, quarterly, annual and regularly reviewing the implementation of those plans to have basis of raising capital timely The financial plans must always consider the standby abilities and changes to adapt to needs The financial plan also needs special attention how to use financial resources in the most effective way to bring the lowest operation cost and simultaneously enough 61 resources to invest in new technologies such as 4G, terminal production technology and extension and improvement of coverage quality 3.3.6 Marketing solution This is one of the important measures, contributing to the huge success of Viettel Here, we aim primarily at the market segment of workers, civil servants, students, pupils, rural and urban areas middle income class are crucial Based on analysis and evaluation of business environment, review of the objectives and tasks identified, managers should select development strategy, to increase the Group's position by focusing development of products and services that are strengths such as mobile, Internet information services To continue maintaining of different service suitable for many different subjects in the society, such as father and son package; Happy Zone; Tomato; Sumo Sim; Homephone; Sea + Dcom-3G service is the type of Internet access services via phone, iPad then it is used by classes of workers with above average income and over and increasingly growing trend Users can easily check information exchange with friends, partners and family anywhere across the country with high speed at low cost Should offer many types of Dcom-3G services and furthermore to attract other different using objects such as package or partial subscription, using card, support package of learning – informatics - technology - foreign languages and information packages to support the community Sea+ package is expected package which will be used by numerous people in the sea area Thanks to this Sea + package, Vietnamese fisherman can easily connect with family, members, friends, Navy, salvage and rescue and look up information about the weather, tsunamis in the fishing areas and sea areas that they care Currently, the telecommunications market in Vietnam is growing very strong; the operators are competing to dominate the market share Therefore, Viettel should try 62 to launch the cheap packages, support strong marketing advertising aimed at the students, pupils in order to increase its market share Also, Viettel should continue and intensify promotional campaigns such as offering cheap packages to attract new customers as the subject of the commoners Besides, Viettel also often maintains regular promotions such as gift of 100% cards, presenting module port for an Internet subscriber in the holidays, New Year In parallel with the above activities, Viettel also should reorganize the system of agents, distributors, monopoly In the large cities and urban areas in the country; it has the main supply agents To expand the network to receive warranty from 800 now to 1200 points, increasing the number of service center from to Finally, Viettel plans to continue to promote the introduction of product information on the means: seminars, media and propaganda, banners, television, bus, taxi, humanitarian programs, cultural programs with Slogan of the group's traditional "Speak your way." 63 S-fone Mobifone Viettel, Vinaphone Vietnam mobile, Gtel, EVN, Beeline Figure 3.1 Hierarchy of competition in Vietnam mobile market Quality S-Fone Viettel, Mobifone Vinaphone VN mobile, Gtel, EVN, Beeline Price Figure 3.2 Levels of competition in Vietnam mobile market 64 3.4 Implementation process 3.4.1 Construction of annual goals With the market development strategy, each year Viettel should grow at least 1% of market share with the subscribers of two million subscribers/year This is really a great challenge for Viettel, but with actual data on the growth of Viettel in the years from 2006 to the present, this can be fully achieved 3.4.2 Construction of policy system and support plan It’s based on the current situation with specific annual targets for implementing the necessary policies and appropriate implementation support plan In particular, Viettel should develop and complete main policies in the mentioned-above solutions on investment, price and product, personnel, financial management, marketing The policies also must have the action support plan and the implementation organization 3.4.3 Development of action plans, budgets and implementation processes From the annual goals and strategic objectives, with the systematic policies can continue to be institutionalized into the action plans by implementation process procedures and the action plans The action plan must include at least the main contents: Implementation object, implementation time, content of work, supporter, supervisors, reporter and budget for resources needed 34.4 Allocation of human resources, finance, facilities From the specific action plans will deploy the policies to implement the annual goals and necessary strategic objectives must allocate resources in personnel, finance, 65 facilities and time plan to organize the implementation This is the budget plan to implement the annual business plan as well strategic implementation of Viettel 3.4.5 Selection of organization structure consistent with the strategy Pursuant to the specific requirements of the strategy and annual plans of the departments should consider appropriate adjustments such as competitive decision making structure with rivals; Policy structure of the research development department; Structure for the network development department In the next time after 2015-2020, inevitably if wanting to compete with rivals, Viettel must change the business model into joint-stock company Thus, the current period is also necessary to study and apply partial model for the subsidiaries, the functional departments 3.4.6 Strategic commitment and implementation To implement successful strategies, an important task is communicating to all the company's employees to understand the strategies of his company Thereby, they imagine goals, vision, and mission and are aware of the core values of the company These contents make employees feel secure and be determined to perform their own plans and contributing to complete the strategic plans and objectives of the company In those contents, the communication of strategic implementation commitment between employees and the leaders of the company is very important and it is the commitment between the parties to jointly implement and try to achieve the strategic objectives already set 3.4.7 Strategic inspection control, evaluation and adjustment in the implementation process During the implementation of business strategy, supervision, inspection is required, must be done There are many different forms of testing, depending on different purposes Viettel Telecom Group organizes the inspection system as follows: 66 - The Control Board conducts examination regularly for the activities of the Group’s Board of Directors, Center for Viettel Telecom, and the departments; - Irregular check for activities of the member units, then make report to submit the Board; - General Director and the assistance department conduct irregular or regular inspections for the member units Internal communication channels include financial reports, quarterly preliminary reports; summarizing reports of the year end Viettel also organized collection of external information such as feedback from customers (opinion contribution notebook), information about competitors From the information gathered, the leaders of the Group will analyze and evaluate the progress of the strategic implementation, the situation of the environment from which reviewing and adjusting strategies Every year, the Group adjusts the strategic targets and implementation in the annual plans; implementation of the adjustment of rates; research to improve the financial management mechanism During the strategic implementation, the Group must always pay attention to the inspection, monitoring and collection of the necessary information and reasonable adjustments in time Hopefully, with the proposed objectives, Viettel will continue to reap much more success, helping the Viettel brand stand firmly in the customer’s heart in Vietnam, Southeast Asia and emerging markets With the right strategy and utilization effectiveness the resources of the Group together with the direction of the leadership board and the consensus of the staff of the Group will help Viettel stand firmly in the economic crisis period, continuing its growth and market expansion 67 CONCLUSION Construction of business strategy for a service business production unit is extremely important, very complicated and not easy to perform In the era of integration and internationally economic development, the formulation of business strategy for the business has long-term meaning, making orientation, firm steps for the enterprise to stabilize forward and reap success From dissected problems when orienting strategy will take steps to resolve new issues such as technology innovation, production rationalization, market expansion, service quality improvement, human resource development in order to make the business reach the strategic goals set out Viettel Telecom Group is an enterprise established relatively late, but over the past years has constantly strived to find direction to adapt to business environment although the Group's operating model has coordination of the state Today, Viettel has had a solid foothold in the market, is the largest telecommunications market supplier and has the most coverage area in the country, is an operator that providing the highest speed Internet access service in the Southeast Asia With the knowledge learned in the master program in business administration and practical knowledge during working in the Group, our Group (No 9) would like to present our views in constructing the business strategy for Viettel Telecommunications Group in the phase of 2011-2015 The strategic planning for a full range of steps will bring the group’s leaders a clearer view of their works, contributing to improving competitiveness and determining the optimal solutions with the aim of stabilization and development of the Group in the resolution of General Assembly of the Group which has proposed to be ranked No in the telecommunications market in the country, Southeast Asia and expanded into other International markets 68 In the framework of capstone of the course "Strategic Management", we only give the basic issues of business management theory and our views in formulating the business strategy of Viettel Telecom Group However, because of limits on theoretical knowledge as well practice of the group’s members ourselves, this report can not avoid the shortcomings; we look forward to receiving the comments of the teachers and classmates Finally, we would like to express gratitude to the lecturer Dr Tony Sanichara, Dr Tran Doan Kim who taught us dedicatedly the course of "Strategic Management" and “Marketing Management”, guided and facilitated our group to complete this capstone Simultaneously, our group would like to thank the teachers in Center for Educational Technology and Career Development (ETC), Vietnam National University, Hanoi National Economics University, Griggs - Andrew University, United States taught the knowledge through the course designed by the program 69 REFERENCES Fred R David, Strategic management - Concept and cases, 13th Edition, Pearson International Edition, 2011 Garry D Smith, Danny R Arnold, Bobby G Bizzell, Competitive & Business Strategies, Statistic Publish House, Hanoi, 2006 GRIGGS - MBA Program, Human Resource Management, GRIGGS University, 2010 GRIGGS - MBA Program, Organizational Behavior, GRIGGS University, 2010 Michael E Porter, Competitive Strategy, Scientific & technique Publish House, Hanoi, 1996 Philip Kotler, Northern western University and Kevin Lane Keller, Dartmouth College Marketing Management, 13th Edition, Pearson International Edition, 2009 70 ... The research and analysis apply the theories from the Master of Business Administration program (MBA) offered by the Hanoi National University of Vietnam and Griggs University Andrews University,... materialism combined with the knowledge of strategic management subject and other subjects in the MBA program to assess overall the business operations of telecommunications services Viettel Group