RATIONAL BASE FOR BUIDING UP A STRATERY FOR BUSINESS
Process of stratergy management
necessary solutions in the period of 2011 – 2015 in order to competitiveness and business efficiency help Sao Vang Rubber Joint Stock company develop sustainably
Improve the ability of applying strategy theories into specific enterprises.
Be the Guide for the company to implement business plan, gain target to become the leading tire manufacturer in Vietnam
Accessing approach: Qualitative method, data analysis, statistics, comparison to assess the reality and propose complete approaches
Data collection method: Using secondary data from published materials, results from market research survey about tire manufacturing industry in Vietnam.
SRC’s Internal document and corporation’s information on magazines, internet…
Data processing method: Analyzing, synthesizing, comparing
The mainstream research method is synthesis description method as well as analysis, synthesis, comparison…to clarify and concretize content of research topic.
In addition to the introduction, tables and charts, illustrative models, conclusion and reference, the essay content is divided into three chapters as follow:
CHAPTER 1: RATIONAL BASE FOR BUSINESS STRATERGY
CHAPTER 2: ANALYSIZING BUSINESS ENVIRONMENT OF SAO
VANG RUBBER JOINT STOCK COMPANY
CHAPTER 3: STRATERGY SELECTION AND IMPLEMENTATION
CHAPTER 1: RATIONAL BASE FOR BUIDING UP A
Quinn 1 proposed definition of strategy: Strategy is a model or a plan which tightly integrates all main targets, policies and series of actions into a general body.
William F Glueck defined strategy as a comprehensive plan aimed at achieving the fundamental goals of an organization However, this definition falls short, as real-world experiences demonstrate that even well-structured official plans can fail, highlighting the necessity for adaptive support plans during business operations.
Strategy serves as both the scope and direction for organizations, enabling them to achieve long-term competitive advantages by effectively managing their resources in dynamic environments while meeting the needs of all stakeholders.
- Set up relations between weaknesses and strengths in a company, back and forth relations between opportunities and challenges from outside to create comparative benefits for each company.
Managers must clearly identify current and future opportunities and challenges within the business environment By analyzing and predicting these conditions, they can effectively capitalize on opportunities, mitigate risks, enhance competitive advantage, and achieve favorable outcomes.
- Help enterprises have a better business strategy through using systematic approach, create base for increasing connections and integration among members in realizing enterprise’s targets.
+ Corporate strategy: General Strategy + Business strategy: Specific fields + Function strategy: Finance, human resource, marketing…
According to contents of strategies, managers can have four types:
+ Marketing, commercial strategy + Finance strategy
+ Humans resource strategy + Technological and technical strategy
Strategy management is a series of management decisions and actions determining long term capacity of one company
+ Determining organizations’ targets and mission
+ Analyzing internal and external environment
+ Choosing a suitable strategy to increase strengths, make the best of opportunities and overcome weaknesses and predict threats
+ Organization and control system to carry out determined strategy
Strategy management is described as the chart follow
(Source: Fred R.David - Statistics Publisher in 2006)
Business enviroment analysis
Analyzing the external environment is crucial for organizations, as it helps identify both opportunities and risks that can significantly impact their desired outcomes Understanding these external factors enables companies to make informed decisions and strategically navigate challenges in their business landscape.
Enterprise should pay attention to economics factor in both long term and short term and government’s interfere into economics
+ Economics state: Any economy has its own cycle, in each specific period of economics’ cycle, enterprise will have suitable decisions.
+ Factors that influence economy: Interest rate, inflation
+ Government’s economics’ policies: Basic salary law, economics development strategy of the government, favorable condition strategy for enterprise, favorable condition policies for each fields: Reduce tax, subsidies
+ Economics prospect in the future: Growth rate, GDP growth rate, GDP ratio over invested capital
Political and legal factors significantly impact enterprise development strategies, presenting both opportunities and risks depending on the company type For state-owned enterprises, policies that promote increased economic participation can pose threats, while private companies may view these same policies as advantageous opportunities for growth and expansion.
Technological factors significantly impact business strategies across companies and industries In today's landscape, understanding and predicting technology trends is crucial for organizational growth Moreover, advancements in technology greatly affect the life cycles of products and services.
Globalization intensifies competitive pressure as companies face rivals from all corners of the globe To thrive in this environment, businesses must adapt to leverage their competitive advantages and strategically allocate labor both regionally and globally.
Integration leads to the gradual removal of trade barriers, allowing companies to expand their reach and engage with partners over long distances As a result, businesses can access a broader customer base, extending beyond their domestic markets to attract clients from around the world.
Effective strategy management must consider the rapidly changing social and cultural factors that influence consumer behavior As lifestyles evolve and new trends emerge, individuals increasingly seek diverse and high-quality products This heightened awareness and demand present significant challenges for producers aiming to meet the expectations of a more knowledgeable consumer base.
Analyzing the external environment, including both the national context and micro factors, enables managers to identify genuine opportunities and challenges for their companies This analysis serves as a foundation for developing or selecting effective and relevant growth strategies.
M Porter, professor at Harvard school laid out a frame to help managers realize the risks and opportunities that each company has to deal with
Picture 1.3 Five competitive forces model Porter
Potential entrants are enterprises which are able to link together and create future competitors.There are five barriers that prevent enterprise from taking part in market or producing:
+ Trust and faith of consumers
+ Absolute advantage over prices due to high technology
+ Advantages due to business scale
Challenges to existing companies from potential competitors will increase, if those companies can not produce barriers big enough to prevent potential competitors
Alternative products, created by competitors within the same industry or from different sectors, fulfill similar customer needs The rapid advancement of technology has led to a growing diversity of alternative products, resulting in increased competitive pricing challenges Consequently, companies are facing reduced profit margins like never before.
Bargaining Power of suppliers Bargaining Power of buyers
Threats of substitute products or serviceThreat of new entrants
Nowadays, potentiality of emerging of alternative products from other fields will makes company become more and more unpridictable.
To effectively manage their production processes, companies must establish strong relationships with suppliers for labor, financing, and materials These suppliers can significantly impact a company's strategy, both positively and negatively, influencing various aspects of the business.
+ Few suppliers for that demand
+ Supplier having advantages of being profession over a specific kind of products or service
+ When suppliers have ability to integrate vertically in clockwise direction
+ When company are not able to integrate vertically in the opposite direction
A customer refers to an individual or organization that utilizes the products or services offered by companies In competitive markets, customers can exert significant pressure on sellers, especially when they have leverage The greater the opportunity for customers to influence sellers, the more challenges sellers may face This pressure typically arises in various scenarios, highlighting the dynamic relationship between consumers and businesses.
+ Customers account for a lager portion in a total sales
+ Customers move to a more convenient and cheaper sellers
+ Products are not really improtant to customers
1.3.2.5 Competitive companies in the same fiels
A competitive company is an entity capable of fulfilling customer demands through its products or services, which can also adapt to changes in the market When evaluating competitors, it is essential to consider various factors that influence their performance and market position.
+ Pressure factors in one field
Managers must identify and address the opportunities and challenges presented by five key factors, allowing them to develop effective strategies This process reflects a company's capability to select the right approach and leverage its strengths for competitive advantage.
The production process is crucial for a company's success, as it encompasses production technology, techniques, efficiency, cost control, inventory management, and material suppliers Effective production methods directly impact the ability to meet market demand in terms of both quality and quantity of goods Additionally, controlling production costs is vital, as it directly influences the pricing of products.
Development research plays a crucial role in enabling companies to maintain or enhance their competitive edge within the industry Key factors influencing development research include experience, scientific expertise, and the ability to learn and integrate technological advancements into production processes This adaptability is essential for meeting the ever-increasing demands of the market.
The functions of accounting and finance encompass analyzing and developing financial plans, executing company-wide financial projects, and generating timely reports that accurately reflect the company's financial status The accounting and finance department significantly influences all other business activities by managing financial resources, mobilizing short- and long-term capital for investment projects, and controlling expenditures and capital costs Additionally, it plays a crucial role in pricing strategies and assessing financial costs and benefits.
Human resource is utmost important for company’s success Only effective people can contribute efficiency to company, humane resource factor includes:
- Management board, profession and skills, experience as a leader
- Organization’s structure and suitable management
- Skills, personality of employees and officers, and effective, flexible policy for employees
Strategy selection
1.4.1 General competitive type of strategies
Companies define their market position by leveraging their unique advantages, as highlighted by Michael Porter, who identifies two key factors: cost advantage and product differentiation By utilizing these advantages, businesses can adopt one of three primary strategies: cost leadership, differentiation, or focus.
1.4.2.1 Analysis matrix TOWS : From the process of analyzing SWOT, we will use combined formula to propose feasible strategies.
The Competitive Profile Matrix (CPM) is a vital strategic management tool that enables firms to compare themselves with key industry players It provides a clear overview of a firm's strengths and weaknesses in relation to its competitors The CPM score is based on critical success factors, with each factor measured on a consistent scale, ensuring that while the weights remain the same for all firms, the ratings differ One of the key advantages of the CPM is its ability to incorporate the firm alongside other competitors, simplifying the comparative analysis process.
The IFE matrix focuses solely on internal factors, while the EFE matrix assesses external factors In contrast, the CPM incorporates both internal and external elements to evaluate a firm's overall position relative to its major competitors.
The competitive profile matrix consists of following attributes mentioned below.
Critical success factors are identified through a thorough analysis of both the external and internal environments of a company These factors can have positive or negative impacts on the organization A higher rating indicates that the company's strategy effectively supports these critical success factors, while a lower rating signifies a lack of alignment between the strategy and the necessary factors for success.
In CPM ratings, a firm's response to critical success factors is evaluated, with higher ratings indicating a better response The rating scale ranges from 1.0 to 4.0 and is applicable to any critical success factor.
There are some important point related to rating in CPM.
• Rating is applied to each factor.
• The response is poor represented by 1.0
• The response is average is represented by 2.0
• The response is above average represented by 3.0
• The response is superior represented by 4.0
The weight attribute in CPM reflects the significance of various factors for achieving success in a company's industry Weights range from 0.0, indicating no importance, to 1.0, signifying high importance It is crucial that the total of all assigned weights equals 1.0; otherwise, the calculation will be deemed incorrect.
Weighted score value is the result achieved after multiplying each factor rating with the weight.
The total weighted score is calculated by summing all weighted scores, with the final value ranging from 1.0 (low) to 4.0 (high) An average weighted score of 2.5 is established for the CPM matrix, indicating that any company's total weighted score falling below this threshold is considered below average.
2.5 consider as weak The company total weighted score higher then 2.5 is consider as strong in position.The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors.
1.4.2.2 Optimal selection with GREAT model
To have an optimal selection, there should be comparisons among strategies. Consultations from professors in the same or different fields have been referred by many businesses
Table 1.6 Quantitative Matrix under GREAT criteria
Total points 1 Xx xx Xx
ANALYSIZING BUSINESS ENVIRONMENT OF SAO VANG
Overview
2.1.1 Process of SRC establishment and development
Sao Vang Rubber Joint Stock Company, originally known as Sao Vang Rubber Mill, is a subsidiary of the Vietnam National Chemical Group Established on May 23, 1960, the company is located at 231 Nguyen Trai Street in Thanh Xuan District, Hanoi.
In its early years, the enterprise thrived under a centralized system, experiencing growth in labor and product output, with no competitors in Vietnam However, as it transitioned to a market-driven approach, the business faced numerous challenges Through strategic, timely actions and courageous decisions, the enterprise successfully navigated these obstacles and gradually established a strong foundation for sustainable development.
On August 27, 1992, the mill was transformed into Sao Vang Rubber Company following the Ministry of Heavy Industry's decision number 645/CNNg Subsequently, on May 5, 1993, the ministry issued decision number 215/TCNSDT, which enabled the reestablishment of state-owned companies, allowing Sao Vang Rubber Company to enhance its business autonomy This shift not only benefited the company but also positively impacted the country and its employees.
On 03/4/2006 the company was turned into Sao Vang Rubber Join Stock Company with 51% of capital owned by the State.
The company's primary focus is on manufacturing and trading high-quality rubber products to satisfy both domestic and international markets Renowned for its excellence, the company has received numerous prestigious awards for its outstanding products.
• Gold award – Vietnamese Quality award by the ministry of technology and environment
• Creative awards for science and technology by VIFOTEC for the subject of research in aircraft tire production for national defense
• 5 consecutive years won TOP-TEN in Vietnam’s consumer goods
• Leading position in the TOP-5 products of Vietnam with high quality – vehicles and parts
• Labeled with STRONG BRAND NAMES in 2006 voted by consumers
All attempts of the Sao Vang Joint Stock Company are aimed to the goal:
“VIETNAMESE TIRE FOR VIETNAMESE BENEFIT” Products labeled with
SVJSC ensures the highest quality standards through its Quality Management System, certified to ISO 9001:2000 by the BVQI international organization This certification enables the company to expand its reach into new markets domestically and internationally.
3 branches, over 300 agents and consumption points nationwide Products’ designs, quality and kind diversity have been constantly improved to meet consumers ‘tastes.
In recent years, the company has significantly innovated its machinery, successfully producing civil aircraft tires (TU134 - 990*305), national defense aircraft tires (800*200), and tonnage tires Additionally, there has been a strong focus on training and enhancing human resources, as well as improving management skills As a result, the company has achieved positive outcomes, fulfilling its obligations to the state budget, increasing benefits, and raising income for its workers and employees.
Company’s name: Sao Vang Rubber Joint Stock Company
Address: 231 Nguyen Trai – Thanh Xuan- Ha Noi
General Director: Mr Le Cong An
Business’s type: Joint Stock business
Establishment decision: Decision number 3500/QĐ-BCN, on 24/10/2005 of the Ministry of Industry
Controlled directly by: Vietnam Chemical Corporation
Business license number: 0100100625, the first license on 03/04/2006 granted by Hanoi Authority for Planning and Investment, changed for the third time on 20/07/2010
- Doing business with rubbery products
-Doing business with importing – exporting materials, machinery, equipment, chemicals for rubber industry
- Fabrication, installation, sale of machinery and equipment for the rubber industry
Company organization includes: Board of directors; Function departments and direct production department
Until now, total number of workers and employees is 1483 people, among that there are 178 management staff
Now Sao Vang Joint Stock Company has a system of 300 distribution agents nationwide.
The results of the company’s business activities are expressed in following indicators:
Table 2.1 Result of Production and Business in 2009 - 2010
Being founded earliest in rubber industry, Sao Vang rubber Joint Stock Company is now technical centers in the areas of:
• Designing and analyzing structure in high - level rubber products
• Setting up recipes and method to process rubber
• Applying advanced techniques into study, analysis, and experiment in order to complete production technology
• Designing, testing, and manufacturing technology means including kinds of molds, tools, spare parts, machines, equipment in the field of manufacturing rubber products
Sao Vang Joint Stock Company is committed to significant investments in funding, manpower, and materials to enhance production capabilities Their products, branded with *SRC, are designed to meet the increasing demands of consumers while featuring unique qualities tailored for Vietnam's road conditions and weather The company boasts a strong production capacity to support this growth.
Car tires: Above 700000 set/ per year
• Motorbike tires: 5.500.000 sets/ per year
• Motorbike tubes: 9.000.000 set/per year
• Bicycle tire: 10.000.000 sets/per year
• Bicycle tubes: 12.000.000 sets/per year
To concretize product quality commitment, the company attached great importance to monitor the quality of each production stage Products labeled with
SRC ensures quality assurance through its ISO 9001:2000 certified Quality Management System by BVQI However, recent technological advancements have led to a gap between the company’s production capacity and market demand With over 300 distribution agents across the country, SRC offers quick and convenient payment options, allowing agents to settle payments either monthly or immediately upon purchase Additionally, the company’s products have successfully reached international markets, further expanding its global presence.
Sao Vang Joint Stock Company operates in 10 countries worldwide, boasting a skilled team of workers and technical staff This expertise enables the company to process and manufacture unique products, reducing reliance on imported goods and enhancing its competitive pricing in the market.
Analyzing the company’s business environment
2.2.1 Analyzing external effects – PEST model
Vietnam has stable politics and a macro management policy with good care in order to integrate Vietnam’s economy into the region’s and the world’s
With an annual growth rate exceeding 8% and a population surpassing 80 million, the rising standard of living is driving an increased demand for motorbikes and cars, consequently boosting the need for tires and tubes The Ministry of Industry and Trade's decision number 002/2007/QĐ-BCT, approved on August 29, 2007, supports the development of the motorbike industry from 2006 to 2015, forecasting a rise in motorbike numbers to 31 million by 2015 and 36 million by 2020 This growth presents significant opportunities for the tire and tube production sector as vehicle usage continues to expand nationwide.
Vietnam is on a path to industrialization, aiming to achieve this goal by 2020 through extensive infrastructure development projects This growth creates significant opportunities for domestic tire and tube manufacturing companies According to a forecast by FORD VIET NAM, as reported by the Chemical Engineering Joint Stock Corporation (CECO), the demand for radial car tires in Vietnam is expected to rise by 2020.
Picture 2.2 Prediction of radical auto tire consumption in Vietnam till 2020
Car, light lorry (rim≤16” – tire PCR) 1.105 1.380 1.775 2.347 4.580
High speed car(rim ≥20” - tire TBR) 325 400 510 663 1.270
The demand for tires is expected to rise significantly in the coming years, particularly in fast-developing regions such as Asia, China, India, and Eastern Europe, where population ratios remain low The Asian market, with Vietnam as a key focus, presents a lucrative opportunity for the tire manufacturing industry due to its potential as a consumption market and the availability of inexpensive materials and labor.
SRC utilizes a combination of domestic materials, such as natural rubber, and imported resources, including synthetic rubber, coal, and steel Fluctuations in global prices for rubber, oil, and steel significantly affect the company's input costs Additionally, most of the machinery used is imported, and SRC-branded products must satisfy both domestic demand and international markets Consequently, exchange rate variations directly influence the company's overall income and expenses.
SRC continuously monitors global tire trends and technical requirements, incorporating the latest technologies in tire manufacturing for both current and future applications The company is committed to gaining experience and adopting new techniques from the global tire industry, enhancing production processes and improving product quality to remain competitive in the international market.
In the early 20th century, China began tire production by acquiring equipment from various countries, leading to the development of its own manufacturing technology Today, over 400 tire manufacturers operate in China, demonstrating the country's expertise in the industry Studies indicate that leveraging China's manufacturing experience can significantly enhance project feasibility Chinese consultants offer valuable support through capital investment, technological guidance, and operational management, ensuring products meet quality standards and minimizing defects and material waste Once quality benchmarks are achieved, tires are prepared for the global market, prompting Sao Vang Rubber Joint Stock Company to focus on producing Chinese-style tires.
Vietnam's abundant natural rubber resources provide a significant advantage, as material costs constitute over 70% of product pricing This advantage enables the country to maintain competitive pricing while aligning with government guidelines to minimize the export of raw materials.
Geographical structure is along with the North – South axis, which is very convenient for transporting products around the country.
Long coastlines with many deep – water ports lying in the international maritime transport routes help create favorable conditions for importing materials and exporting products.
Economic development leads to higher incomes and improved basic living standards, resulting in an increasing demand for enhanced quality of life Consequently, there is a growing need for better transportation options to meet these rising expectations.
Updated information of technology, and lives in the world create a trend of equipping households or families with modern equipment for their living, including demand for safe and convenient vehicles.
Being aware of energy saving and cost reduction, many consumers choose to invest in safe and energy saving products with preeminent features.
As governments implement plans to reduce urban populations, many individuals are relocating to areas farther from city centers This shift has led to a growing demand for convenient personal vehicles, resulting in a significant increase in tire consumption.
2.2.2 Analyzing impacts of environmental factor – model Porter
Entering the rubber industry poses significant challenges for foreign companies due to the substantial capital required for modern production and the need for a highly skilled workforce This barrier makes it difficult for international enterprises to compete with domestic firms, as they must invest considerable time in understanding and enhancing their market networks to achieve comparable market shares Additionally, government protective policies favor the national rubber industry, ensuring that domestic companies, including SRC, maintain their competitive edge in the foreseeable future.
There is almost no alternative products for tires and tubes therefore there will be no pressure for enterprises in this field.
The tire manufacturing industry relies heavily on advanced machinery and a robust production chain, necessitating both domestic and imported materials While local suppliers can provide natural rubber, essential components like synthetic rubber, coal, and steel must be sourced from abroad Additionally, the machinery and production systems are predominantly supplied by foreign companies, creating significant pressure on domestic enterprises operating in this competitive sector.
Sao Vang Joint Stock Company has established basic technology that allows for the easy acquisition of alternative equipment and tools, as well as standard repairs readily available in the market The company plans to invest in a tire production chain utilizing radial technology specifically for cars and light-duty trucks By collaborating with Chinese technology through capital investment, SRC aims to create a mutually beneficial relationship, minimizing the impact of suppliers on the industry.
Domestic tire manufacturers face significant challenges due to their reliance on global market prices for essential materials such as oil, rubber, and steel This dependence often subjects them to pressure from foreign suppliers, making it difficult to source alternative resources.
Table 2.3 Main Material Suppliers of SRC
Number Company’s name Product Quantity
1 Da Nang rubber joint stock company Rubber SVR 10 1.740
2 Kim Thanh im-export company Rubber L20 1.320
3 Gasoline retail enterprise Oil FO 1.980
4 Duc Giang Chemical Company CaCO3 288
Vietnam Chemicals Export and Import
(Source: Collection of reports of used materials in 2010 – Finance
It is very easy to buy other supporting materials from domestic enterprises such as carton board, nylon, tapes, stamps…
The ongoing fluctuations in global exchange rates and economic downturns have made it increasingly challenging for foreign partners, putting additional pressure on companies that rely on imported materials.
Table 2.4 Main Partners for supplying imported materials for SRC
1 Behn Mayer Ltd.,Co Synthetic rubber 1.512
2 Philips Carbon Ltd.,Co Coal 9.000
(Source: Collection of reports of used materials in 2010 – Finance
About providing specialized transportation service, with the availability, pressure from supplier is not too strong.
The tire industry, particularly SRC, is significantly affected by fluctuations in raw material prices, which directly impact company profits As the majority of materials used in tire production are closely tied to oil prices, these changes pose considerable risks for SRC amidst the current complexities and unpredictability of the global economy.
PROPOSING STRATERGY AND ACTION PLAN FOR SAO
Strategies and strategy selection
The TOWS matrix is a vital tool that combines challenges, opportunities, weaknesses, and strengths to aid strategists in formulating four key strategies: Strength-Opportunity, Strength-Weakness, Strength-Challenge, and Weakness-Challenge By analyzing both internal and external factors, this matrix provides a comprehensive framework for strategic development.
Table 3.1 Table synthesing TOWS of SRC
- Active production, local abundant material resources
- Stable financial resources to ensure ability to expand business
- Marketing business is unmatched with the available potentials
- Human resource management and policy for labour are not good
- It’s difficult to forecast raw material price because it is tremendously affected by the oil price in the world
- The market research, development and investigation are poor These have not been focused and invested properly
- International market has not been developed
- Market demand for tires is large and has high- speed growth
- Government encourages industries to use domestic materials, creating a closed model from materials to products
1.Build an automotive tire manufacturing factory for car and light duty trucks with capacity of 1 million products per year with the radial technology
2 Expand investment via cooperating with Philips Carbon Black (India) to build black coal manufacturing plant to limit import
1.Purchase Tay Ninh Rubber Joint Stock Company for being active with material resources
2 Increase marketing budget up to 50%
- More big brand competitors enter the market
- Fluctuation in price of raw material input ; material price and money management policy of
- The existence of low- quality products imported from China through small volume is out of
Increase budget for specialized quality control policy up to 30%
WT strategyIncrease revenue from export up to 20% government control
In Chapter II, we utilize the EFE and IFE matrix analytical tools to assess the business potential of the Yellow Group, focusing on SO and WO strategies to leverage opportunities and address weaknesses This strategic plan is structured into four distinct strategies, organized by operational sector, to enhance management efficiency and facilitate effective monitoring of operations.
Strategy 1: Purchase Tay Ninh Rubber Joint Stock Company for being active with material resources
Strategy 2: Increase marketing budget up to 50%
Strategy 3: Expand investment via cooperating with Philips Carbon Black (India) to build black coal manufacturing plant to limit import.
Strategy 4: Build an automotive tire manufacturing factory for car and light duty trucks with capacity of 1 million products per year with the radial technology
To determine the most suitable priority strategy for SRC, it is essential to analyze both external and internal environmental factors, utilizing insights from the TOWS matrix analysis The GREAT model will be employed to guide this selection process effectively.
Table 3.2: Quantitative Matrix under GREAT criteria
Note: The evaluation marks range from 1 to 10 The higher marks of benefits and feasibility the strategy achieves, the higher the total mark is and vice versa.
The less of time, cost and risk the strategy requires, the higher the total mark is and vice versa.
The result in the table shows the most suitable strategy with SRC from now to 2015 which is strategy 4:
Build an automotive tire manufacturing factory for car and light duty trucks with capacity of 1 million products per year with the radial technology
SRC has adopted a correlative competitive strategy to enhance its focus on tire manufacturing, specifically using radial technology for cars and light-duty trucks, as only 30% of market demand is currently being met Recognizing traffic accidents as a significant concern for both transportation officials and social researchers, SRC aims to minimize transportation incidents through improved safety in spare parts Among these, tires are critical, as they are the sole components in constant contact with the ground, bearing the vehicle's entire load while transmitting steering, braking, and turning forces To fulfill these essential functions, tires must be designed for high adaptability, excellent damping capacity, and durability over time.
That is the best insurances for both passengers and drivers.
Tires are classified into two types: BIAS tires and RADIAL tires, based on their ply cord designs and construction directions BIAS tires, commonly produced in our country, feature diagonal ply cords arranged at a 50-degree angle to the tire's centripetal line, resulting in a diamond-shaped tread formed by multiple cross fabric layers These tires have resilient casings that support heavy loads; however, their thick sidewalls can generate significant heat due to internal movement when in motion When unloaded, BIAS tires only make minimal contact with the ground, but as weight increases, they tend to collapse, reducing traction and negatively impacting ride comfort.
Radial tires feature one or two ply cords that run parallel to each other, extending to the tire's centerline at a 90-degree angle to its circumference This design results in a thin sidewall that offers excellent springiness Additionally, radial tires generate less heat due to reduced internal friction, making them lightweight and easy to handle, which in turn minimizes wear and tear on both the tires and the road.
The radial tire features a steel bumper layer, known as the carcass, which is aligned parallel to the tire's direction and forms a 90-degree angle with the ply cord, creating a distinctive radial network This innovative design minimizes shape distortion during rolling, thereby reducing rolling friction and enhancing ride performance Surrounding the steel layer is a nylon carcass that effectively resists expansion caused by centrifugal forces at high speeds Even without a load, the radial tread maintains optimal ground contact with a flat surface, and when carrying a load, the contact area remains largely unchanged, ensuring consistent traction.
The radial tire design enhances driver safety by maintaining consistent contact with the road, even during turns, which generates effective friction In contrast, BIAS tires tend to reduce their contact area with the road when navigating turns, compromising stability and safety.
Strategic solutions
To effectively implement a proactive strategy that enhances technology investment and boosts productivity and product quality in the radial tire manufacturing sector for cars and light trucks, the company must focus on key investment activities.
Investing in a radial technology manufacturing line for cars and light trucks, utilizing Chinese whole steel radial tires, presents a promising opportunity Since the early 20th century, China has developed its radial tire manufacturing by sourcing components globally, effectively integrating best practices from various manufacturers into a unique "Chinalized" approach Currently, China boasts 300 tire manufacturers, with 32 specializing in radial tires Research indicates that leveraging Chinese manufacturing expertise can enhance production efficiency Chinese consultants are eager to invest in this venture, offering technological know-how and guidance throughout the project, from planning and component selection to production management This collaboration aims to minimize material waste, maintain stable quality, and ensure that finished products meet international standards, thus facilitating global market availability Our focus is therefore directed towards establishing a whole steel tire manufacturing process based on advanced Chinese radial technology.
To ensure a stable supply of input materials for both new manufacturing lines and traditional products, it is crucial for the company to invest in building its own material supply sources, similar to the strategies employed by DRC and CSM Currently, the instability of SRC suppliers for traditional products and the fluctuating rubber prices, which are tied to global oil prices, necessitate this investment Additionally, enhancing cooperation and investment in a factory for input materials with two other companies in the Group and Philips Carbon Black (India) will help produce black coal, anticipated to be available by 2012 This initiative aims to diversify business operations and reduce reliance on imports, thereby alleviating the impact of exchange rate fluctuations on product pricing.
- Investment in building the brand name, develop the market for new products and enhance the brand name of SRC via marketing campaigns, especially concentration on social marketing.
- Investment in personnel and administrative management to employ the high-quality labour, incorporates the labour force with the company, improve the management skills and then increase the company’s competitiveness.
We have anticipated the financial and investment plan as follows:
- Maintaining the current stable financial sources by controlling reasonable and effective costs and management activities
The company plans to issue preferred stocks to raise 200 billion VND in additional capital for manufacturing development and expansion This strategy aims to engage local investors in the overall growth of the company, with specific issuance measures to be outlined by the Board of Directors.
As a key member of one of Vietnam's leading industrial groups, the company benefits from substantial financial support and has established strong, long-standing relationships with major local banks Notably, Vietin Bank Dong Da, a traditional partner, has committed to providing additional funding for upcoming investment projects This partnership includes specific conditions, such as the requirement to channel all increased revenues or half of the turnover from current activities through an account at Vietin Bank, as outlined in a commitment signed on January 1, 2011.
Radial tires have become the preferred choice for modern cars on expressways due to their superior functionality compared to traditional tires As a significant consumer product, car tires can indicate the level of economic and industrial development within a society SRC's central strategy focuses on promoting radial tires, emphasizing their advantageous features and competitive pricing to enhance consumer accessibility, ultimately driving sales and profitability for the company.
- Covering 45% the local market proportion and 60% of the market proportion in the north (traditional market)
- Making the incomings and profits with this business branch: 1.000.000 products x 2.000.000đ/ product ~ 2.000 billion (in 2013), the minimum development rate of 25% annually, the net profit of 20% under the receipts.
- Selling price of 2 million (65%- 70% compared to price of imported tires)
In order to explore the consuming market for this new product and push up the traditional product consuming, the following solutions are required:
Engaging in negotiations and collaborations with local car and light truck assembly manufacturers is essential, as Vietnam currently hosts several such manufacturers, as highlighted in the accompanying output table.
1 Xuan Kien Auto Company (VINAXUKI) 30.000
When companies choose SRC's radial tires for their products, it accounts for 30% of SRC's annual production capacity SRC can collaborate with these firms in various activities to enhance their partnership.
SRC offers competitive pricing and robust warranty service policies, highlighting the superior quality of our radial tires compared to the products currently utilized by manufacturers Our tires not only provide enhanced performance but are also priced more affordably than imported alternatives, making SRC the ideal choice for those seeking value without compromising on quality.
- Cooperate in Marketing programs, build trade-mark: SRC’s trade-mark of good quality contributes to increase customers ‘reliability of auto firms’ products
Rubber production and card manufacturing significantly affect the environment, making it essential for these companies to actively participate in social initiatives By implementing programs that promote environmental protection and support educational endeavors, they can demonstrate their commitment to sustainability and community well-being.
Formulate Marketing programs in each period, including:
The program aims to enhance the reputation of Vietnam's tire industry by collaborating with auto manufacturers to host competitions that showcase the quality of radial tires, such as mountain climbing and navigating slippery roads Additionally, it will involve researching customer opinions on the performance of radial tires compared to conventional tires, considering factors like average age and functionality The findings will be published in newspapers and online forums, and seminars will be organized to discuss the advantages of radial tires.
To effectively promote and advertise products in Vietnam, particularly radial tires, a strong emphasis on e-marketing is essential, targeting young and middle-aged consumers with medium incomes who frequently use the Internet and engage with social networks These consumers typically conduct online research before making purchases, making e-marketing a vital strategy Potential marketing initiatives include collaborating with reputable social networks and e-newspapers to host online competitions, advertising within automotive-related games, conducting online surveys to assess radial tire quality, creating and disseminating humorous and sentimental viral clips that highlight the benefits of radial tires, and enlisting popular influencers to serve as brand ambassadors for the product.
To establish a unique trademark for radial tires, it is essential to focus on branding in a competitive market where quality improvements can be costly Designers should prioritize creating a strong product image, particularly appealing to the predominantly male demographic of car and truck users Incorporating themes of male strength or safety symbols can significantly enhance marketing and sales effectiveness Additionally, producing attractive decals for vehicles as promotional gifts with tire purchases can further engage customers and strengthen brand identity.
Organizing community responsibility programs in collaboration with auto manufacturers can significantly promote environmental protection and safe transportation These initiatives not only educate the public on managing environmental releases but also encourage academic pursuits By providing various awards for Vietnamese intellectuals, these programs can inspire young people to develop a sense of patriotism and a desire for success while simultaneously aiding those in need.
To enhance market expansion in the Central and Southern regions, it is essential to review and finalize the SRC product consumption system in the North Implementing policies that incentivize affiliates for achieving monthly, quarterly, and annual targets will support the overall completion of the company's strategic goals.
Organize programs which unite the powers inside and outside the company:
Roadmap to implement the strategic solutions
Table 3.3 Roadmap to implement strategic solutions
No Solution Requirements Period Leader Coordinator Estimated expense
200 billion - Minute of meetings of coupons.
- Official correspondence of Department of Planning and investment’s approval
Head of administratio n and organization department
20 billion - Description of duties and rewards
3 Technology - Managerial system of quality
- Complete, improve the quality of available products.
150 billion - Registration of quality management
5 billion - Report on structure accessment
In conclusion, organizations must develop and implement effective strategies tailored to their unique internal strengths and weaknesses, as well as external opportunities and threats By doing so, companies can identify and seize promising business opportunities, while also refining their approaches to maintain and improve their market position.
Developing effective production and business strategies is essential for companies operating in a highly competitive non-market economy, as these strategies significantly influence overall success Establishing a well-defined business strategy is vital for enhancing the competitive strength of each organization.
With regards to the topic: “Business strategy for Sao Vang Joint Stock
From 2011 to 2015, we aim to enhance our understanding and offer valuable insights to support the strategic development of production and business for Sao Vang Rubber Joint Stock Company.
This topic presents significant challenges, necessitating extensive theoretical and practical expertise Consequently, despite our best efforts, this essay may not fully meet expectations due to time constraints, geographical distances among team members and the company, and the limited knowledge and experience of officials in the rubber industry We welcome feedback from all lecturers and peers to enhance our work.