TRUONG DAI HOC MO TP.HCM UNIVERSITEÙ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBAVB4 _________________________________________________________________ ________ CHU THI MINH HUE BUSINESS STRATEGY OF CASTROL BP PETCO CO., LTD. UNTIL 2015 MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) Supervisor: Dr. Nguyen Minh Kieu Ho Chi Minh City (2011) i ACKNOWLEGEMENT It is said that “when drinking water, remember its source”. I owe so many people for their kind support to my thesis and for all knowledges, experiences that I have gained from the MBA course. In the first place, I would like to record my gratitude to Prof. Dr. Nguyen Minh Kieu for his supervision, advices and guidance from the very early stage of this thesis. He has given me an unflinching encouragement and support in various ways. I am indebted to him more than he knows. The thesis would not be written without knowledge that I have gained from the MBA course especially from strategy subject. I would like to take this opportunity to say thank you to Prof. Georges Wanet who taught me valuable knowledge of strategy subject and thank you to all other professors from MBA course. I also would like to say thank you to Prof. Tuan, Mr. Serge, Ms. Tran, Ms. Ha and Ms. Hien for their enthusiasm in giving us the best guidelines, support and arrangement from the course beginning till the accomplishment time. I gratefully acknowledge Mr. Ta Dinh Quang – Technical Manager of CBP, my mentor, my colleague for his enthusiasm in providing me useful knowledge about lubricant technology, sharing me his valuable experiences and giving me good consultations for my thesis. Thank you all my other good colleagues at CBP and friends who spent time being interviewed by me and providing me all necessary information serving my thesis. Last but not least, I would like to express my great gratefulness to my family and my beloved relatives for their great encouragement and endless love so that I can well complete the MBA course today. ii DECLARATION This is to confirm that this thesis for MBA program is my original work. All data and information come from my survey and study. I am confident to submit this thesis to the professors of the MBA program. The work was done under the guidance of Prof. Dr. Nguyen Minh Kieu, under the framework of the Master Program in Business Management – The Joined Master Program between Ho Chi Minh City Open University (Vietnam) and Solvay Brussels School (Belgium). The work was completed in Nov 2011, in Ho Chi Minh City, Viet Nam. (Student’s name and signature) Chu Thi Minh Hue Tutor’s confirmation: In my capacity as supervisor of the candidate’s thesis, I certify that the above statements are true to the best of my knowledge and this thesis is well completed and satisfied with the requirements of MBA thesis. (Tutor’s name and signature) Prof. Dr. Nguyen Minh Kieu iii TABLE OF CONTENTS Acknowledgement i Declaration ii Table of contents iii List of tables vii List of figures viii List of abbreviations x Abstract xi Chapter 1: INTRODUCTION TO THE STUDY 1 1.1 Rationale of the study 1 1.2 Problem statement 2 1.3 Research objectives and questions 2 1.3.1 Research objectives 2 1.3.2 Research questions 3 1.4 Scope and Limitations 3 1.5 Research method 3 1.6 Structure of the study 4 1.7 Framework of the research study 5 Chapter 2: LITERATURE REVIEW 7 2.1 Strategy definition and its components 7 2.1.1 Strategy definition 7 2.1.2 Strategy components 9 2.2 The strategy hierarchy 10 2.2.1 Corporate strategy 10 2.2.2 Business strategy 10 2.2.3 Functional strategy 11 2.3 Strategy planning process 11 2.3.1 Mission and vision 12 2.3.2 Environmental analysis 13 iv 2.3.3 Strategy formulation 13 2.3.4 Strategy implementation 14 2.3.5 Strategy evaluation and control 14 2.4 PEST framework 15 2.5 Porter’s five forces model 17 2.5.1 Rivalry among competing firms 18 2.5.2 Threat Of Substitutes 20 2.5.3 Buyer Power 21 2.5.4 Supplier Power 22 2.5.5. Barriers to Entry / Threat of Entry 22 2.6 SWOT framework 25 2.6.1 SWOT Analysis Framework 25 2.6.1.1 Strengths 25 2.6.1.2 Weaknesses 26 2.6.1.3 Opportunities 26 2.6.1.4 Threats 27 2.6.2 The SWOT Matrix 27 2.6.3 SWOT / TOWS Matrix 27 Chapter 3: ANALYSIS OF EXTERNAL ENVIROMENT 29 3.1 Introduction on lubricant industry in Vietnam 29 3.1.1 Lubricant market overview 29 3.1.2 Supply and demand balance 31 3.1.3 Recent trend 31 3.1.4 Transport segment 34 3.1.5 Competitive environment 36 3.2 Environment analysis (Macro analysis) 36 3.2.1 Political (including legal) factors 37 3.2.1.1 Political stability 37 3.2.1.2 Tax policies 37 3.2.1.3 Environmental regulation 38 3.2.2 Economic factors 39 v 3.2.2.1 Economic growth 39 3.2.2.2 Inflation 40 3.2.2.3 Exchange rate 41 3.2.3 Social factors 43 3.2.3.1 Demography 43 3.2.3.2 Health consciousness 43 3.2.4 Technology 43 3.2.5 Global trend 43 3.3 Industry competitiveness and competitor’s analysis 44 3.3.1 Barrier to entry 44 3.3.2 Power of buyer 45 3.3.3 Threat of substitutes 45 3.3.4 Power of suppliers 46 3.3.5 Rivalry & competitor analysis 47 3.4 Summary of context / external analysis 55 Chapter 4: ANALYSIS OF CBP INTERNAL ENVIRONMENT 58 4.1 Company’s profile 58 4.1.1 Introduction of BP Global Group 58 4.1.2 Introduction of Castrol BP Petco Co., Ltd 59 4.2 Organization structures 61 4.2.1 Organization chart 61 4.2.2 Organization management and HR policies 62 4.3 Business operation 65 4.3.1 Market segmentation and customers 65 4.3.2 Products 67 4.3.3 Distribution channels 68 4.3.4 Business performance analysis 68 4.3.4.1 Annual sales records 68 4.3.4.2 Castrol BP Petco capability and core competencies 71 4.4 Castrol BP Petco strengths and weakness 75 4.5 SWOT analysis 77 vi Chapter 5: PROPOSED BUSINESS STRATEGY OF CBP UNTIL 2015 80 5.1 Castrol BP Petco’s vision and mission 80 5.2 Objectives of CBP strategy until 2015 80 5.3 Strategy in actions 81 5.3.1 Business strategy alternatives initiatives base on SWOT analysis 81 5.3.1.1 S-O strategy 81 5.3.1.2 S-T strategy 82 5.3.1.3 W-O strategy 82 5.3.1.4 W-T strategy 83 5.3.2 Business strategy choice 83 5.4 Strategy implementation 85 5.5 Sales forecast by market space until 2015 88 CONCLUSIONS AND RECOMMENDATION 90 References I List of support and interview persons III Some interview questions V LIST OF TABLES Table name Page Table 2.1 PEST analysis factors 16 Table 2.2 Buyer Power 21 Table 2.3 Supplier Power 22 Table 2.4 Entry and Exit Barriers 24 Table 2.5 SWOT Analysis Framework 25 Table 2.6 SWOT / TOWS Matrix 27 Table 3.1 Selected major lubricant blending plants in Viet Nam 30 Table 3.2 Evolution of lubricant demand 33 Table 3.3 Demand for transport Oil – Vietnam 34 vii Table 3.4 Demand for Non- transport Lubricants – Vietnam 35 Table 3.5 Estimated lubricant Sales and Market Shares – Vietnam 48 Table 3.6 Profiles of all lubricant operators in Viet Nam 51 Table 4.1 Some main Castrol, BP products 67 Table 5.1 SWOT analysis 77 viii LIST OF FIGURES Figure name Page Figure 1.1 Framework of the research study 5 Figure 2.1 Critical dimensions of strategy 8 Figure 2.2 The strategic planning process 12 Figure 2.3 Porter’s Five Forces Model 17 Figure 3.1 Lubricant demand by category 32 Figure 3.2 Evolution of lubricant demand 32 Figure 3.3 Motor Oil Intensity Factor 34 Figure 3.4 Industrial Oil Intensity Factor 34 Figure 3.5 Transport segment Demand 35 Figure 3.6 Demand Growth – Transportation Oil vs Motor Fuels 35 Figure 3.7 Demand for Non- transport Lubricants Vietnam 36 Figure 3.8 Real GDP Growth & per Capital 40 Figure 3.9 Unemployment & inflation 40 Figure 3.10 Exchange rate UD Dollars (D/$) 41 Figure 3.11 Main lubricant CBP suppliers 46 Figure 3.12 Lubricant Market Shares in Vietnam (2009) 47 Figure 3.13 Transport and Non-Transport segment market shares 49 Figure 4.1 BP global picture 58 Figure 4.2 Nha Be Plant picture 60 Figure 4.3 Organization chart of Castrol BP Petco 61 Figure 4.4 CBP Code of conduct 62 Figure 4.5 CBP leadership 63 Figure 4.6 CBP Employee’s benefits 64 Figure 4.7 MCO, PCO, CT Market segmentation and customers 65 Figure 4.8 HD Market segmentation and customers 66 ix Figure 4.9 OEM Market segmentation and customers 66 Figure 4.10 CBP products 67 Figure 4.11 CBP Sales volume by brand 2006 – 1011 69 Figure 4.12 CBP Sales volume by market space 2006 – 1011 70 Figure 4.13 CBP Sales volume by channel 2006 – 1011 70 Figure 4.14 CBP Sales volume, Gross Turnover, Gross Margin 2006 - 2011 71 Figure 4.15 CBP Key success factors of CBP 74 Figure 5.1 CBP forecast of sales volume by market space until 2015 89 [...]... of the company preparing for the next steps of building the strategy for Castrol BP Petco Chapter 5: Proposed business strategy of CBP until 2015 and strategy implementation Base on the analysis mentioned in Chapter 3, Chapter 4 comes up with several strategic alternatives after defining the business vision and mission as well as long term objectives of the companies An appropriate strategy until 2015. .. secondary data to develop the business strategy for CBP Viet Nam until 2015 -3- 1.3.2 Research questions: There are 3 big questions for this study, those are: What are the issues of CBP in term of business management and orientation? What are the external and internal factors influencing CBP business? How to build an appropriate business strategy for CBP in Vietnam until 2015? 1.4 SCOPE AND LIMITATIONS... offers, the strategy of CBP is very feasible and optimistic to be successful 1.3 RESEARCH OBJECTIVES AND QUESTIONS: 1.3.1 Research objectives: This thesis objective is to build up an appropriate business strategy for CBP Vietnam to implement during the period 2012 to 2015 The study will apply theories of strategy management, external and internal environment analysis, SWOT analysis, competitive strategy. .. venture between BP and Petrolimex, operating Vietnam’s largest blending plant with semi-automated filling lines and a testing laboratory Base on the merge and acquisition between the two leading lubricant companies: BP Petco Ltd (since 1992) and Castrol Viet Nam Ltd (since 1991), CBP is now is now the leading lubricant marketer in Vietnam inheriting the two global famous brands of Castrol and BP with the... factors of CBP, an appropriate strategy for CBP in Viet Nam until 2015 has been formed with details plan of implementation base on the opportunities and strengths after considering the threat and company’s weakness By gaining competitive advantages, differentiating and strengthening Castrol & BP brands, focusing on the high quality product and enhancing long term customer loyalty through innovative offers,... recommended for Castrol BP Petco -5- Objectives and strategy will not be achieved without specific actions and implementation This Chapter also helps to bring theory into reality by building specific action plans for implementation of the proposed business strategy Conclusions This section summarizes the previous chapters and evaluates the proposed business strategy and its action plan 1.7 FRAMEWORK OF THE... exploit potential sources of synergy across the firm’s businesses and product markets as a means of improving the organization’s overall efficiency and effectiveness -9- 2.2 THE STRATEGY HIERARCHY: Instead of a single comprehensive strategy, most organizations pursue a hierarchy of interrelated strategies, each formulated at a different level of the firm The three major levels of strategy in most large,... 93% of the country’s total fleet Assuming continued robust growth in the country’s vehicle fleet, its broader economy, and its industrial production, Vietnam’s lubricants demand is projected to rise at some 4.1% per year on average through 2014, to 378 kt With all of these advantages, there is a promise of an optimistic picture for all lubricant operators in Viet Nam Castrol BP Petco Co., Ltd (CBP)... sufficient definition of strategy Strategy is not only to do with the marketing of the activities of an organization to the environment in which it operates and to its resource capability, but also will be effected by the values and expectations of those who have power in the organization -7- Overall, if a definition of strategy is required, these characteristics can provide a basis for one Strategy is the... and scope of an organization over the long term, which achieves advantage for the organization through its configuration of resources within a changing environment, to meet the needs of markets and fulfill stakeholder expectations In short, reviewing some of the most important work in the field of strategy, the critical dimensions that contribute to the unified definition of the concept of strategy . PROPOSED BUSINESS STRATEGY OF CBP UNTIL 2015 80 5.1 Castrol BP Petco s vision and mission 80 5.2 Objectives of CBP strategy until 2015 80 5.3 Strategy in actions 81 5.3.1 Business strategy. 4.3 Organization chart of Castrol BP Petco 61 Figure 4.4 CBP Code of conduct 62 Figure 4.5 CBP leadership 63 Figure 4.6 CBP Employee’s benefits 64 Figure 4.7 MCO, PCO, CT Market segmentation. steps of building the strategy for Castrol BP Petco. Chapter 5: Proposed business strategy of CBP until 2015 and strategy implementation Base on the analysis mentioned in Chapter 3, Chapter 4 comes