LUẬN VĂN MBA ĐÁNH GIÁ CHIẾN LƯỢC KINH DOANH CÁC SẢN PHẨM DƯỢC CÔNG TY MINH TRANG FORMULATION OF BUSINESS STRATEGY FOR EMBROIDERED PRODUCTS OF MINH TRANG LIMITED COMPANY COMMITMENT Group 04 - Class GaMBA01.X0409 pledges that the content of this Capstone Project has not been submitted to any master degree program as well as any training and diploma issuing program In addition, our Group also commits that this Project was the group’s own efforts The results, analysis and conclusions in this Project (except for the quoted parts) are the result of collective work of our group i ACKNOWLEDGEMENT Group 04 - Class GaMBA01.X0409 sincerely thanks Dr Tony Sanichara and Assoc.Prof.Dr Vu Thanh Hung who were very enthusiastic and dedicated to deliver knowledge on the last subject of Master of Business Administration Program - Strategic Management Course The knowledge has helped group members have a deeper understanding of this subject and through which the group can complete the Capstone Project according to regulation of the program Our group also sincerely thanks teachers, faculty, board of directors of the Program, student affair staff and all staff Gamba program – ETC, Vietnam National University have provided a lot of other auxiliary knowledge and support our group to complete this Project The lectures and curriculum of the program have helped many our group not only in studying but also in current operating our enterprise In addition, our group also sincerely thanks leaders and staffs of Minh Co., Ltd have created favorable conditions in providing valuable comments, data and practical knowledge for our group to carry out this Project In particular, the group would like to express our gratitude to family, colleagues and friends who have created favorable condition for our group to have time for this course Sincerely thanks friends from class GaMBA01.X0409, over the past year have always encouraged and supported us in studying process ii TABLE OF CONTENT Trang COMMITMENT i ACKNOWLEDGEMENT ii TABLE OF CONTENT iii LIST OF SYMBOLS AND ABBREVIATIONS vi LIST OF DIAGRAMS, TABLES AND FIGURES vii INTRODUCTION Name of the project Rationale for selecting the project Study purpose of the Capstone Project Scope of the study Methodology of the study Meaning of the study Structure of the Capstone Project CHAPTER 1: THEORETICAL BASE OF BUSINESS STRATEGY AND BUILDING BUSINESS STRATEGY 1.1 1.2 Business strategy concept 1.1.1 Strategy 1.1.2 Business strategy 1.1.3 Meaning of building business strategy Process of building business strategy 1.2.1 Strategic vision, mission, and target of the enterprise 1.2.2 External environment analysis 10 1.2.2.1 Macro analysis (PEST model) 11 1.2.2.2 Micro analysis (Michael Porter’ five forces model) 12 1.2.2.3 Analysis synthesis of external environment – EFE matrix 14 iii 1.2.3 16 1.2.3.1 Enterprise’s value chain analysis 16 1.2.3.2 Sustainable competitive advantage recognition process 17 1.2.4 SWOT matrix and selecting optimal strategy – SPQM matrix 17 1.2.4.1 SWOT Matrix 18 1.2.4.2 Optimal strategy selection 19 1.2.5 1.3 Internal environment analysis Competitive strategies 21 1.2.5.1 Cost leadership strategy 22 1.2.5.2 Differentiation strategy 23 1.2.5.3 Focus strategy 24 1.2.5.4 Common strategy integration 25 Summary of chapter I 26 CHAPTER 2: BUSINESS OPERATION SITUATION OF MINH TRANG CO., LTD 2.1 Overview of the company 27 2.1.1 History of establishment and development 27 2.1.2 Summary of operation situation and result from 2008 to 2010 31 2.1.2.1 Organizational structure 31 2.1.2.2 Human resource 32 2.1.2.3 Operation situation and result 34 2.2 Vision and mission of Minh Trang Co., Ltd 40 2.3 External environment analysis 40 2.3.1 Macro analysis 40 2.3.2 Sectorial environment analysis 43 2.3.2.1 Overview of embroidered handicrafts market 43 2.3.2.2 Sectorial environment analysis applying five forces model 44 2.4 Internal environment analysis 51 2.4.1 Functional activities 51 iv 2.4.2 Supporting activities CHAPTER 3: PROPOSING 52 STRATEGY AND SOLUTIONS FOR SELECTED STRATEGY 3.1 Target of Minh Trang Co., Ltd 54 3.1.1 General target 54 3.1.2 Some main targets 55 3.2 Proposing and selecting optimal strategy 56 3.2.1 SWOT matrix and strategy proposal 56 3.2.2 Selecting strategy 58 3.3 Strategy implementing solution 59 3.3.1 Solution on products 59 3.3.2 Solution on market 61 3.3.3 Solution on finance 62 3.3.4 Solution on human resources 62 3.3.5 Solution on management 63 3.4 Solutions implementation plan 64 3.5 Recommendations 66 3.5.1 For the State 66 3.5.2 For Minh Trang Co., Ltd 67 CONCLUSION 68 REFERENCES 70 v LIST OF SYMBOLS AND ABBREVIATIONS Ltd: Limited TCMN: Handicrafts vi LIST OF DIAGRAMS, TABLES AND FIGURES No Type Name Diagram 1.1 Business strategy building and selecting process 10 11 12 13 14 15 16 17 18 19 Page Diagram 1.2 External environment factors 11 Diagram 1.3 PEST model 12 Diagram 1.4 Michael E.Porter ‘s Five forces model, 1980s 13 Table 1.1 External factors evaluation matrix (EFE matrix) Diagram 1.5 Value chain model of Michael Porter Table 1.2 Table 1.3 Table 1.4 SWOT matrix 15 16 18 Strategic Planning Quantitative matrix with GREAT criteria Summary of suitable selections for each strategy in basic competitive strategies 19-20 21-22 Diagram 1.6 Advantage of low cost enterprise 23 Diagram 2.1 Production process 30 Diagram 2.2 Organizational structure of the company 31 Table 2.1 Human resource structure according to age and gender 33 Table 2.2 Labor qualification 33 Table 2.3 Statistic of capital resource of the company in three years from 2008 to 2010 34 Table 2.4 Summary of balance sheet of the company Table 2.5 Business production result of the company from 2008 to 2010 Chart 2.1 Rate of Vietnam craft villages 4.3 Chart 2.2 Comparison in term of export turn over 44 vii 35-36-37 38-39 No 20 21 22 23 24 25 26 27 Type Table 2.6 Table 2.7 Table 2.8 Table 2.9 Name National export revenue in three years from 2008 to 2010 Percentage rate of national export revenue in three years from 2008 to 2010 Percentage rate of product groups export revenue in three years from 2008 to 2010 Percentage rate of export major market share of companies with similar products group in three years from 2008 to 2010 Graph 2.3 Five forces model of embroidered sector Table 3.1 Some major quotas of Minh Trang Co., Ltd in the period 2011 - 2015 Table 3.2 SWOT matrix analysis Matrix selecting optimal strategy for Minh Trang Co., Ltd 28 Organizational structure of Minh Trang Co., Ltd Diagram 3.1 in 2011 Table 3.3 viii Page 47 48 49 50 50 55-56 58 59 63 ix - There is no experts on market analysis, information analysis, and business experience; - Marketing, sales activities are not professional, distribution is still via many intermediaries, no agents in foreign countries; - Research and development have not yet been paid much attention; - Not exploit all potential production of part-time craftsmen Opportunities: - Consumption demand for high quality products are increasing, especially products with high artistic value, natural origin and good for health; - Large consuming market with great potential, especially in foreign countries; - Material resource is stable, and available in our country and easy to import; - Political economy is stable with more and more complete legal system will create equal competitive environment for and helps the enterprise to be motivated to develop; - The trend of deep and wide integration with the world and region increase the ability of multilateral cooperation, business activities diversification of the enterprise with other companies Threats: - Strong competition of external competitors, especially China with cost leadership strategy; - Unpredicted events of the economy, unstable price of materials affect on production plan; - Changing demands of customers; - Products are easy to counterfeit which affects on their brand name Using SWOT matrix, our group would like to propose some strategies of the company in current period as following: 58 Table 3.2: SWOT matrix analysis Strength (S) Weakness (W) S-O strategy W-O strategy Design, produce high quality Opportunity consumption products with Invest in (O) high aesthetic value, made from especially natural materials, differentiation, marketing, distribution had system expanding market development, especially foreign market S-T strategy W-T strategy Focus on producing popular Stabilize Threat (T) production, products, diversify products to promote sales, keep the meet all demands of customers existing markets Strategy 1: Design, produce high quality consumption products with aesthetic value, made from natural materials with differentiation, expending and developing the market, especially foreign market Strategy 2: Invest in marketing, especially distribution system Strategy 3: Focus on producing regular products, diversify products to meet all demands of customers Strategy 4: Stabilize production, promote sales, keep existing market 3.2.2 Selecting strategy 59 In order to select optimal strategy, we use quantitative matrix with GREAT criteria as in table 3.3 Table 3.3: Selecting optimal strategy for Minh Trang Strategies Strategy Strategy Strategy Strategy Evalua Conv Eval Conver Evalua Conv Evalua Convert ted erted uated ted ted erted ted ed point point point point point point point point 4= 6= 8= 10= Gain (G) 0,4 50 2x3 20 30 2x5 12 30 2x7 12 10 2x9 Risk (R) 0,1 30 30 30 10 Expenditures (E) 0,2 10 30 30 30 Applicable (A) 0,2 40 50 10 40 50 10 0,1 30 10 40 50 Criteria Weight Timely (T) Total 36 32 33 26 Minh Trang Co., Ltd will combine strategies in the most optimal way and select one main strategy to focus on implementing which is: Designing, producing high quality consumption products with high aesthetic value made from natural materials with differentiation, expanding and developing the market, especially foreign markets 3.3 Solutions for implementing the strategy 3.3.1 Solutions on products: Through analysis and evaluation of product consumption we can see product consumption demand for hand-embroidered products especially household products such as: blankets, sheets, pillows, towels , decorations which are increasing The development of the economy improving people's lives, needs to enjoy is more and 60 more increasing then the consumption demand for high quality products increases Foreseeing this trend the company has produced high quality products - Creating differentiation for the product: This strategy particular focuses on artistic quality, the original of the products Key focuses are three product lines:  Artistic embroidered painting made by craftsmen which is genius of man made products  Natural silk blankets, sheets, pillows can take care human health  Embroidered bench cloth with good looking models bringing sophistication, luxurious, suitable with living space For these products, the company gives priority because of its huge market potential both domestic and abroad * For domestic market: The company develops differentiation strategy for the market share of high income customers This strategy is particularly paid attention to improve product quality and creating original designs especially in highquality embroidered products Main market share for differentiation strategy is the economic development urban, besides large purchasing power is differentiation consumption psychology, original products consumption psychology with special features on the usability and design, expressing personal style *For foreign market: This is a market of high-income customers, differentiation strategy of the company mainly applied for products with original artistic crafts made from natural silk materials, good for health For this market, prices are not worrying problems, so it is necessary to focus on the design and quality of the products Consumption psychology of foreign customers is very different:  Customers with real consumption demand  Customers with consumption purpose of doing research, souvenir 61  Customer love traditional products containing Vietnamese traditional culture values For this market, the company needs to pay special attention to deliver time With production capacity of Minh Trang Co., Ltd, it can completely have all conditions to fulfill orders in soon deliver time This is strength compared to other competitors including Chinese enterprises This is a strategy to grab foreign market especially EU, U.S, Japan markets, etc The potential markets always consume large quantities of products, pricing pressure is not too high, the biggest demand is about product deliver time 3.3.2 Solutions on market: With market strategy, the Company pays attention to meet demand of customers strategy To meet the demand of customers, the Company needs to know what customers want, when they want, and how they want to be satisfied - Focus on customer demands: Through analysis and evaluation of products consumption we can see that demand for consuming handicraft products is growing rapidly, especially embroidered products This is due to the growth of the economy, the process of industrialization, and modernization, urbanization process is accelerated material consumption demands of majority of the population is increasing In the case when market saturates or domestic competitors are growing then with constant product quality, old model, method of sales and after sales service are just the traditional measures: no attention to what customer needs? not know about consumer reaction after consuming and what they recommend for quality, conditions of use then the customer will not consume product of the Company any more So the company has proposed the following solutions:  Establish professional department specifying in doing market and customer demands researches and from that giving production methods, types of products 62 need to be focused on This department will help the company know what customers want, when they want and how they want to be satisfied  Improve quality of information channels on sale methods and services after sale, paying attention to feedbacks of customers  Expand market, establish distribution systems Currently, products of the company are mainly exported to the foreign countries via other distributors In the coming years the company will participate more in foreign fairs, at the same time open agents, stalls at the markets with great demand for hand embroidered products For the domestic market, due to the stage of promoting products is not good, this market is likely to be open, the embroidered household products are unknown to many people therefore, it is necessary to advertise and put information to customers about benefits the product bringing about At the same time, open new stores in Hanoi, Da Nang and Ho Chi Minh City 3.3.3 Solution on finance: Make use of capital support because today export embroidered products sector is supported in special policy by Ninh Binh’s government 3.3.4 Solution on human resource: Due to production type of embroidered sector uses a lot of manual labor, especially craftsmen Therefore human resource issues are extremely important The company will open training classes in the village and surrounding areas, using this labor force at their own home The company provides materials, tools and teaching embroider in form, check and accept of payments for workers This approach saves production space, but only ensure for the products with simple embroidered techniques, for products requiring high art, and techniques must be made by craftsmen and artisans To meet this requirement, the company encourages learn from each other in the process of production, craftsmen teach and transfer their real experiences and skills for the workers, choosing human resources to study on management, embroidered design, and style 63 3.3.5 Solution on management: General management is perception of effective organizational structure to create stability for the company to implement successfully strategies to maintain the current competitive advantages, at the same time develop competitive advantages sustainably for the future First it is necessary to stabilize the organizational structure of the company, establish separated research and development department 3.4 Plan to implement solutions: The company implement tasks in accordance with priority order as following: - Plan to implement managerial solution: Complete the reorganizing structure of the company, establish a separated research and development department in the year 2011 Organize as the following structure: Diagram 3.1: Organizational structure of Minh Trang Co., Ltd in 2011 DIRECTOR Vice director in charges of technology Administration organizing department Design, technical department Finance and accounting department Qualification department Investment and planning department Vice director in charge of market Domestic department Export department Embroider factory R&D department Embroider factory Embroider factory Showing factory Export Stitching factory Launder factory 64 The company build and improve the regulations, new management regulations to suit with the actual situation of business production of the company, in order to comply with Organizational Charter and operation of the company Internal control system of strategic plans implementation process and save management cost, ensure safety business production and get high efficiency The newly established departments has task of planning for their own activities, report for the Board of Directors approval before implementing - Plan to implement solutions on products: Factories remain regular products production according to available offers Technique – design department starts to research new models for product lines:  Artistic embroidered paintings  Silk blankets, sheets, and pillows  Embroidered bench cloth - Plan to implement solution on market: Domestic department and export department enthusiastically tout, organize product introduction events  In the year 2011, Minh Trang organized show of production processes of hand embroidered at ancient Bamboo House inside campus of the company inviting tourists to visit and practice freely  Participate in annual foreign fairs at least once per year, in September, 2011 the company will participate in the fair in Japan, in February, 2012, the company will participate in the fair in Korea In March, 2012, the company will open agent in American market (has participated the fair since 2009), and expected to open agent in French market by the year 2013  Participate in domestic trading fairs, pay attention to develop North market in Winter and Autumn In December, 2011, the company will open a stall in Hanoi 65 (expected at Big C supermarket), March, 2012, the company will open a stall in Ho Chi Minh City and Da Nang - Financial plan: From the policy of Ninh Binh province, the company has worked with Ninh Binh Enterprises Association, Department of Finance and Department of Industry and Trade of Ninh Binh on loan procedures from development fund at preferential interest rates for years (from 0-4% per year) People Committee of the province is considering to provide loans from this fund about 10 billion to support production and implementation of export contracts of the Company - Human resources training and developing plan: Every year, the company continues to open training classes on scale of the whole province to train additional labor resources for production demands of large orders The company will connect with Women Association to train vocation by "learning by doing" to create jobs on the spot This measure has been very successful in simple technical phases of items such as: towels, curtains, blankets, pillows therefore we can take advantage of agricultural leisure labor, low cost for labor, not necessary to layout the production areas In order to have skilful craftsmen, Minh Trang Co., Ltd usually deputes its labor to go for training and learning new technologies, go for sightseeing and doing research at large companies, support expenses for craftsmen so that they will train their professional skills for other persons who have ability to accept The company has rewarding policy for new ideas in production - Direct the implementation, evaluation and adjustment of strategy: Board of Directors grasps thoroughly the general strategy of the company, assigns tasks for each department to manage business production After directing the implementation of strategy, the company will test and assess the implementation of the strategy and adjust strategy to ensure that the implementation of strategy is the 66 most effective Annual the company make plan for business production to be consistent with defined strategy Inspection is necessary during the implementation of strategy There are many different test forms, depending on different purposes, the Company is held according to the following method:  Director and support department will carry out periodical or unexpected test for production department  Internal information channels including: financial reports, quarterly preliminary reports, end year summary reports, etc  The organization collects information from external environment such as: feedback from customers (contributing ideas notebook), information about competitors, etc From collected information, leaders of the company carry out analysis, assessment on strategy implementation process, situation of the environment and from which reviewing and adjusting strategy 3.5 Recommendations: 3.5.1 For the State:  To protect and develop domestic production, we would like to propose the State to have more determined solution to prevent illegal import goods into domestic market causing unequal price competition  To create favorable environment for enterprises to operate flexibly, quickly in the current market mechanism, we would like to propose State management organizations to coordinate closely to issue policies on tax, trading custom 67  Embroider sector is the ones attach much labor, resolving social security problems, at the same time bringing about a lot of foreign currency for the State, less capital investment but widely social effect We propose the State to have supportive policies for the companies in embroider sector in term of: training cost, advertising cost, hiring land for production cost, etc The State needs to have supportive policies to promote exports, support embroidered enterprise to participate in foreign fairs for handicraft goods in general and embroidered goods in particular 3.5.2 For Minh Trang Co., Ltd:  Grasp thoroughly the entire company with core contents of the strategy and determination in action, encouraging all employees in the company to work for the targets and benefits of the company and themselves  Coordinate in action, every plan, all functions are tightly linked together to implement targets of defined strategy  Develop and improve the system of regulations, rules, organizational regulations and activities of the company Regularly update and capture information, closely monitor the changes of the macro, micro environment, regulations, legal framework the sector and Government Hence the timely adjustments to adapt to new circumstances  In the implementation of the strategy, they will certainly encounters many difficulties from the environment, due to regional economic integration and globalization, leading to increasingly fierce competition Therefore, the action plan should not be too rigid, it should be convenient to adjust if necessary in order to adapt to the changing business environment Adjustments of the strategy in the future are objective and necessary 68 CONCLUSION In the current integration economy, business environment has had a lot of changes, beside fierce competition there are also abnormal factors that we cannot forecast, the enterprise wants to have long term success, stabilization and sustainable development must certainly have effective business strategy Business strategy brings about practical benefits for the enterprise such as: help the enterprise to see clearly its direction in the future so that the managers review and decide what direction the enterprise should follow and when it can achieve the target; help the managers always be active with change of the environment, help the managers to see clearly opportunities and threats in current business to analyze, assess, forecast conditions of business environment in the future Therefore, the enterprise will take advantage of opportunities, reduce risks to win and get achievement in business; help the enterprise to exploit and take use of resources, its potentials; help the enterprise to allocate its resources in each field, each period reasonably; help the enterprise to increase connection, commitment of staff, managers to create internal strengths This shows that building business strategy is a vital matter vital for the operation of a company If the strategy is built properly in line with internal resources of the company and highly adapt to the external effects then the company will have a proper "guideline" for its business production during its development The companies build long-term development strategy based on its core sustainable factors then they will take advantage of opportunities and limit the threats and challenges Based on analyzed content on development strategy of the company, we hope that Minh Trang Co., Ltd will have a long-term, sustainable development strategy which help the company to outline reasonable development orientation for each period, help the company to maintain its reputation, market share and will reach out to new markets in the future 69 Group of given solutions needs to be conducted in parallel and synchronized to create the overall strategy which connects to each other and has rational scientific factors Simultaneously in the implementation process the company must assess performance objectively and truthfully to make in time adjustments and better serving for production and business operation of the company Due to limited time, limited theoretical knowledge and practical experience, the strategy that our group has given cannot avoid limits We would like to sincerely thank teachers who guide and support our group to complete the Capstone Project We also would like to express our grateful thanks to board of managers and staff of Minh Trang Co., Ltd who gave us a lot of contributive ideas and help us to complete this Project./ 70 REFERENCES Fred R.David 2006 “Concepts of Strategic Management” – Statistics Publishing House Charles, Hill and Gareth, Jones 1995 “Strategic Management” Washington Assoc.Prof.Dr Vu, Thanh Hung – Lecture “Strategic Management” Assoc.Prof.Dr Nguyen, Lien Diep and MBA Pham, Van Nam 1998 “Strategy and business policy” – Statistics Publishing House Financial statement of the company in 2008, 2009, 2010 Internal document of the company 2008, 2009, 2010 Statistical yearbook of the year 2011 Statistic documents of Ninh Binh Handicrafts Association Website: http://minhtrang.com.vn/ 10 Strategic Management: concepts & Cases 71 APPENDICE 72 ... quotas of Minh Trang Co., Ltd in the period 2011 - 2015 Table 3.2 SWOT matrix analysis Matrix selecting optimal strategy for Minh Trang Co., Ltd 28 Organizational structure of Minh Trang Co.,... competition Dominant capacity When core capacity excesses the rivals, it becomes Dominant capacity Core capacity Main and basic capacity makes success, it becomes Core capacity (Successful factors... to build and select business strategy for Minh Trang Co., Ltd in the period 2011 -2015 - This project only researches on business operation of Minh Trang Co., Ltd with specified product is embroidered