GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUISINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING THE ORIENTATION DEVELOPING STRATEGIES AT HO CHI MINH CITY POWER COMPANY IN THE PROCESS OF MODEL TRANSFORMATION MANAGEMENT Group Mr Nguyen Thanh Nha Mr Nguyen Vo Tuan Huy Mr Banh Duc Hoai Mr Tran Ngoc Thach HO CHI MINH CITY, 2010 TABLE OF CONTENT COVER PAGE TABLE OF CONTENT LIST OF TABLE LIST OF FIGURES PREFACE Over view: Purpose and scope of research themes: Objectives and scope of research: Methodological: Chapter : BASIS OF METHODOLOGY 10 1.1 The concept of strategic management and management of change: 10 1.1.1 Concept of strategic: 10 1.1.2 Strategic Management: 11 1.2 Concept and classification business 13 1.2.1 Concept of business strategy: 13 1.2.2 Sort of business strategy 13 1.2.3 The strategic business unit 14 1.3 Business strategies planning Process 16 1.3.1 Identify tasks and mission of the enterprise 16 1.3.2 Define business objectives 16 1.3.3 Internal & External Environmental analysis 17 1.3.4 Analysis of internal environmental factors: 18 1.3.5 Analysis of External environmental factors 19 1.3.6 Setting business strategy: 21 1.3.7 Implemented business strategies solutions 21 1.3.8 Evaluate the effectiveness of the planned strategy 22 1.4 Some matrix and experience to select the strategies 22 1.4.1 External Factors: 22 1.4.2 Internal factors matrix: 23 1.4.3 SWOT matrix 24 1.4.4 Some experience in building business strategies 26 1.5 Human resource management: 27 1.5.1 Attracting and recruiting resource issues: 27 1.5.2 Using and maintenance of human resources issues: 28 1.5.3 The issue of training and developing human resources 28 Chapter : ANALYSIS THE ACTUAL SITUATION OF HCMC POWER COMPANY BEFORE TRANSFORMING THE OPERATION MODEL 30 2.1 Introduction 30 2.1.1 Name and address of company: 30 2.1.2 Process of building and development: 30 Page 2.1.3 Organizational structure: 31 2.2 Overview and analysis of the business three years ago of the company: 32 2.2.1 Business activities: 32 2.2.2 Results make business power: (Source: Report of the 2006-2009 Electricity power Company of HCMC_Vietnam) 33 2.2.3 Total assets, total capital and the value of State capital at July 1, 2009 financial report: 39 2.2.4 Labor at the plan to set up HCMPC (July 1, 2009): 40 2.2.5 Some indicators of business results: 41 2.3 Internal and External Analysis 42 2.3.1 External : 42 2.3.2 Internal Factors Environment (IFE): 49 2.4 SWOT matrix 52 2.4.1 Internal factors: 52 2.4.2 External environment Factors: 54 2.5 Other issues in the business of the Company: 58 2.5.1 Effectiveness of the current model: 58 2.5.2 The existence of restrictions and the current model: 58 2.5.3 Conclusion and the need - proposed new model: 59 Chapter : BUILDING THE ORIENTATION DEVELOPING STRATEGIES AT HO CHI MINH CITY POWER COMPANY IN THE PROCESS OF MANAGEMENT MODEL TRANSFORMATION 62 3.1 Verifiable fact 62 3.1.1 The productions business: 62 3.1.2 Investment in construction: 63 3.1.3 In the field of telecommunications: 63 3.1.4 Strategy brought decisive: 65 3.2 New performance model of the General Electricity Company City: 65 3.2.1 Proposed charter capital at the time of establishment: 66 3.2.2 Organizational structure and management model of the parent company General Power Company in Ho Chi Minh (HCMPC) 66 3.3 Analysis of the business of HCMPC after conversion: the environmental issues related inside 67 3.3.1 Advantages 67 3.3.2 Difficulty: 68 3.3.3 One of the main goals the establishment HCMPC: 70 3.4 Objectives and prospects in the new model: 73 3.4.1 Basic development goals: 73 3.4.2 Strategic business development objectives: 74 3.4.3 The solutions: 81 3.4.4 Recommendations: 88 Page CONCLUSION 90 REFERENCES 92 LIST OF TABLE Table 1-1: External Factors Matrix 23 Table 1-2: Internal factors Matrix 24 Table 1-3: SWOT Matrix 24 Table 2-1: Developing customer’s telecommunication, June 2009 37 Table 2-2: The business of the target company (Source: Report of the 2006-2008 Electricity of Vietnam) 41 Table 2-3: External Matrix elements of HCMC PC 48 Table 2-4:Matrix elements within the Electricity of Vietnam 51 Table 2-5: SWOT Matrix Power Company of HCMC 57 Table 3-1: The objectives of the business transformation activities 71 Table 3-2: Target investment HCMPC after conversion 72 Page LIST OF FIGURES Figure 1-1: process planning business strategies 16 Figure 1-2: Environmental activities of enterprises 17 Figure 1-3: The competitive model of Porter 20 Figure 2-1: Structure of HCMC PC 31 Figure 2-2: Market share of telephone in the country 45 Page PREFACE Over view: In the years from 2006 to 2008 were recognized as the completely changing of the global economic and it was ended by the seriously economic crisis in the year 2008 In Viet Nam, especially in Ho Chi Minh City, GDP had been changed unexpectedly from the growth 12.6% in the year 2007 – highest in the period of 1997 – 2007- to 11% in the year 2008 Besides, the electricity industry has been strongly affected by the specific characteristics such as unbalance between supply and demand at some time because it is very difficult to forecast the unexpected additional charge demand, some importance electricity net work improving projects have been delayed, the transformers have got break-down result to the operation are not stable On the other hand, the inflation and the change of money policies in the recent years of the Government (interest adjusting, adjust extend dollar exchange rate) have affected the input cost for investment and production activities of almost power agencies Studying the development of the world and region in this stage, it is recognized as the stage of after industry and beginning of developing knowledge economy The economic structure of the world have changed rapidly therefore Viet Nam has to adopt with it as well as taking full of owned potential in order to develop the most accordance economic policy Especially, the corporations, general companies must give out the strategies in order to change the operation model, which are accordance with the trend of the world Especially, the Corporation must be active construction plans for transformation activities in accordance with the law of economic mobilization of domestic and international At present, the businesses are equally in business relation to each other in the market However, different type of business is treated unequally under the legal documents system of the government The state owned business run under the State owned Enterprise law 2003 Whereas the other type run under The Enterprise law 2005 Page General policy of the State has confirmed transfer of state enterprises into limited liability company member is a solution to continue the renovation of management mechanism of state-owned enterprises, clearly distinguishing feature representation rights state owned enterprise management functions, decentralization more for businesses, and require higher liability of enterprises where the State needs to hold 100% capital The Decision No 60/2005/QH11 on business law stipulates on November 29, 2005 that no later than four years from July 1, 2006 (on Business Law has effect), the enterprises established accordance with the Law of SOEs 14/2003/QH11 on October 12, 2003 must be converted into a Limited Company or Corporation Therefore, before July 1, 2010, Power Company of Ho Chi Minh City has converted into Company Limited or Corporation However, the Power Company in Ho Chi Minh is the enterprise with 100% state capital, was stopped by the equalization of text: 1332/TTg-DMDN on September 18, 2007 by the Prime Minister, should only one form is converted into Corporation Limited in accordance with the time limits prescribed by law business Purpose and scope of research themes: To survive and grow in market economies with more competitive pressure, the Electricity of Vietnam, in addition to the implementation of transformation activities, need to build itself a business strategy effective Derived from the actual demands of the above authors have selected topics "BUILDING THE ORIENTATION DEVELOPING STRATEGIES AT HO CHI MINH CITY POWER COMPANY IN THE PROCESS OF MODEL TRANSFORMATION MANAGEMENT” Based on the theory of strategic management and related process analysis, research on HCMC Power Company, the project directed to: Evaluation whole situation of production and trading of HCMC Power Company in recent years; identify the difficulties and advantages in the production process, improving the quality of services to customers and increase labor Page productivity; the opportunities and challenges in the process of international economic integration to build a new model work for the company The model works produced new business, continue to identify opportunities and challenges are waiting for business to continue to offer the appropriate solutions in the new period conversion, directed to stable operation business in the new model Objectives and scope of research: Objectives: Objective research topic is the evaluation of a comprehensive real situation of production and business activities of HCMC Power Company, to find out the advantages, weaknesses, opportunities and threats from the company development strategy to 2020 Why choose the time of the year 2020 because this is a landmark time that the State has set out is to move Vietnam into industrial countries, for the electricity industry there is also the time of completing the grid system For authors made subject, this is the application of the theory of business administration in a specific situations of life, through the medium tested and advanced knowledge, both useful for the economic Current business is all the more effective Scope: Scope of research: Scope of the research topic is to develop theoretical basis for building a business strategy for a basic business For HCM City Power Company's focus analyze a most basic elements that affect the construction business from the proposed model works for HCMC Power Company in accordance with the direction of international economic integration, removing debug the barriers in operation at present, propose business strategies for HCMC Power Company the new period Content of the main topics include the following: Chapter 1: Theoretical basis of strategic management and building strategic business establishments and other related arguments: a part of these most basic Page concepts involved Also a matrix to help select the business strategy and draw some business from the study of theories on building business strategies Chapter 2: Situations business HCMC Power Company during the past: This section introduces the history and development of the company, evaluation summary of production and business situation of HCMC Power Company in recent times, together with the analysis using tools such as M Porter's five forces, the IFE and EFE matrix, SWOT Since then find the opportunities, strengths and weaknesses of the company as a basis for strategic planning of the company later in the Chapter 3: in this chapter: - Checking the analysis on the basis of the theory stated in Chapter with the actual business situation of the company in 2009 - Proposed strategic transformation activities HCMC Power Company Setting business strategy of HCMC Power Company after the switch to operate the model of parent company; - Developing the strategic management and conversion predicts difficulties and obstacles will be encountered, - Recommendations related to transition to successful - Conclusion Methodological: Topics focus on research, analysis of information directly from the Internal of the HCMC power company in the most basic content Research and build a matrix selection strategy is done by methods experts, that is consulted several experts deeply knowledgeable about the electricity industry from which to establish criteria and evaluate the criteria The advantage of this method is simple to implement, but this method has drawbacks is the precision usually not higher level than the survey because it is actually derived from the subjective will to the experts However this method is enough to build a good business strategy Page CHAPTER I: BASIS OF METHODOLOGY To be able to build a business model change for City Power Company in accordance with the Enterprise Law, the general development trend of Vietnam's economy on the path of international economic integration, team based on the theoretical basis of the next theoretical research process, evaluating business: - Theory of strategic management - Theory classified business strategy - Strategic planning process - Some matrix and experience to choose strategies 1.1 The concept of strategic management and management of change: 1.1.1 Concept of strategic: In the year 1962 Chandler strategy is defined as "determining the objectives and purposes of the long-term business and the application of a series of actions as well as the allocation of resources necessary to implement this objective” Chandler is one of the first to initiate strategic management theory Until the 1980s when the strategic management disciplines have become popular, Quinn defined more general: “Strategic planning is a pattern or integrating major goals, policies and action sequences into a cohesive whole is closely” Then, Johnson and Scholes define the strategy of environmental conditions have a lot of changes quickly: "Strategy is the direction and scope of the organization in order to gain long term competitive advantage for organizations through the format of its resources in the changing environment, easily meet market demand and meet expectations of stakeholders We found that in all definitions of strategy have appeared phrases denote different aspects should be included in it Therefore, need to have diverse definitions to better understand this area In defining its strategy 5P, Mintzberg general aspects of strategic management as follow: Page 10 ... authors have selected topics "BUILDING THE ORIENTATION DEVELOPING STRATEGIES AT HO CHI MINH CITY POWER COMPANY IN THE PROCESS OF MODEL TRANSFORMATION MANAGEMENT? ?? Based on the theory of strategic... need - proposed new model: 59 Chapter : BUILDING THE ORIENTATION DEVELOPING STRATEGIES AT HO CHI MINH CITY POWER COMPANY IN THE PROCESS OF MANAGEMENT MODEL TRANSFORMATION 62 3.1 Verifiable... Strategy for the company: The overall strategy of the company to achieve the goals of the company Page 13 Strategies for Business: It''s the strategic part of the business units of the Company, each