GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT CEMENT BUSINESS STRATEGY BUILDING OF COSEVCO6.,JSC FROM 2011 TO 2015 AND THE VISION TOWARDS 2020 Group number : 11 Student ' name : Vu Quang Huy Vu Minh Giang Pham Hung Nguyen Hoang Tuyet Nga Bui Thi Phuong Dung Capstone Project Report GaMBA.X0409 Group 11 COMMITMENT We certify that the content of this capstone project report has not been offered to any training program We undertake that this report is the effort of the five people in our group, which is not copied from others’ meanwhile the data and materials used in the research is true and correct to the original, unless otherwise we may bear full responsibility SIGNATURES OF STUDENTS IN GROUP -1- Capstone Project Report GaMBA.X0409 Group 11 Table of contents Page INTRODUCTION CHAPTER THEORETICAL BASE ON BUSINESS STRATEGY 1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY 1.1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY 1.1.2 Strategic administration 10 1.1.3.Roles and meanings of business strategies for enterprises 10 1.1.3.1 Roles of strategic administration 10 1.1.3.2 Meanings of strategic administration 11 1.1.4 Kinds of strategies 11 1.1.4.1 Strategy at the company level 12 1.1.4.2 Business strategy (SBU) 12 1.1.4.3 Functional strategy 12 1.2 PERIODS OF STRATEGIC ADMINISTRATION 12 1.2.1 Researching period 13 1.2.1.1 Analyzing the external environment 13 1.2.1.2 External Factor Evaluation (EFE) 15 1.2.1.3 Competitive profile matrix 15 1.2.1.4 Analyzing internal environment or domestic environment 16 1.2.2 Combining period 17 1.2.3 Decisive period 19 1.2.4 Competitive strategic directions of a product in trading 19 1.2.4.1 Domination strategy on cost 19 1.2.4.2 Differentiation strategy 20 1.2.4.3 Combining strategies of cost and differentiation 20 CHAPTER CEMENT PRODUCTION AND BUSINESS SITUATION ANALYSIS OF COSEVCO6 COMPANY FROM 2006-2010 21 -2- Capstone Project Report GaMBA.X0409 Group 11 2.1 THE OPERATION PROCESS OF COSEVCO 21 2.1.1 Introduction on Cosevco Company 21 2.1.1.1 Overview of the company 21 2.1.1.2 Main information: 21 2.1.1.3 Achievements: 22 2.1.2 Formation process and organization structure of COSEVCO6 22 2.1.2.1 Formation process 22 2.1.2.2 Organization mechanism of COSEVCO 23 2.1.2.3 Description of COSEVCO6 business activities: 24 2.1.3 Internal environment analysis of COSEVCO6 25 2.1.3.1 Product structure of the company and cement product: 25 2.1.3.2 Cement production: 27 2.1.3.3 Consumption condition 28 2.1.3.4 Marketing activity 30 2.1.3.5 Human resources: 35 2.1.3.6 Accounting and finance 39 2.1.3.7 Management 44 2.2 MACRO-ENVIRONMENT ANALYSIS 50 2.2.1Overview of cement activities 50 2.2.1.1 The cement industry in the world 50 2.2.1.2 Cement industry in Vietnam 52 2.2.2 Macro business environment analysis 54 2.2.2.1 Impacts of world economic environment 54 2.2.2.2 Impacts of domestic economic environment 56 2.2.3 Cultural and social factors 59 2.2.4 Law and political factors 60 2.2.5 Technology factors 60 2.2.6 Globalization factors 61 2.3 MICRO ENVIRONMENT ANALYSIS 62 2.3.1 Customer 62 -3- Capstone Project Report GaMBA.X0409 Group 11 2.3.2 Supplier 63 2.3.3 Competitor 63 2.3.4 Potential competitors…………………………………………………………… 2.3.5 External Factor Evaluation (EFE) 64 2.3.6 Competitive profile matrix 66 2.4 General comments 69 CHAPTER 3: BUSINESS STRATEGY BUILDING OF COSEVCO COMPANY IN THE PERIOD 2011 – 2015 68 3.1 VISION AND MISSION OF COSEVCO COMPANY 68 3.1.1 Vision 68 3.2 BUSINESS DEVELOPMENT TARGET OF COSEVCO COMPANY 68 3.2.1 Bases to identify targets 68 3.2.1.1 Forecast on the income structure towards 2015 69 3.2.1.2 Forecast on the market 69 3.2.2 Development target of Cosevco6 company towards 2015 70 3.2.2.1 General target 70 3.2.2.2 Detailed targets 70 3.3 BUSINESS STRATEGY BUILDING OF THE COMPANY 71 3.4 STRATEGY SELECTING 74 3.4.1 Strategy selecting 77 3.4.1.2 Marketing strengthening and market developing strategy 77 3.5 SOLUTIONS TO IMPLEMENT STRATEGIES 78 3.5.1 Human resources 78 3.5.2 Improving the efficiency of using machines and equipments, tools and means to serve the production and business activities 79 3.5.3 Marketing solutions 80 3.5.4 Strengthening relations with customers, gradually broadening the cement consumption market 80 3.5.5 Solutions to mobilize capitals 81 3.6 PETITION 82 3.6.1 For State 82 -4- Capstone Project Report GaMBA.X0409 Group 11 3.6.2 For the branch 83 3.6.3 For Cosevco6 Joint Stock Company 83 CONCLUSION…………………………………………………………………… 84 List of Tables Page Table 1.1: External factor evaluation 15 Table 1.2 Competitive profile matrix 16 Table 1.3 Internal factor evaluation (IFE) 17 Table 2.1: The product structure of the whole company 25 Table 2.2: The cement structure of Company 26 Table 2.3: Consumption output of three competitive companies 29 Table 2.4: Consumption output and market share in 2010 in Quang Binh 29 Table 2.5: Vietnam standard (TCVN) & PCB30 COSEVCO6 specification 31 Table 2.6: Vietnam standard (TCVN) & PCB40 Ang Son specification 31 Table 2.7: Sales discount levels 35 Table 2.8: Summary table of personnel capacities of the company 36 Table 2.9: Labor structure of the company 38 Table 2.10: The business results of the whole company from 2006 – 2010 39 Table 2.11: Asset’s structure from 2006 – 2010 43 Table 2.12: Business results of COSEVCO6 from 2006 – 2010 44 Table 2.13: Internal Factor Evaluation (IFE) 49 Table 2.14: Forecast of cement demand in the whole country 53 Table 2.1.5: Cement demand forecast in the whole country from 2007 to 2012 54 Table 2.16: Output forecast of cement plants in the whole country from 2007 to 2012 54 Table 2.17: Balance of cement demand – supply in the whole country from 2007 – 2012 54 Table 2.18: Growth speed of Vietnam GDP in recent years 57 able 2.19: The inflation rate of our country in recent years Table 2.20: GDP per capita in recent years 57 Table 2.20: GDP per capita in recent years 58 -5- Capstone Project Report GaMBA.X0409 Group 11 Table 2.21: External Factor Evaluation 64 Table 2.22: Competitive profile matrix 67 Table 3.1: Basic targets of the company in 2011 and years from 2011 – 2015 70 List of figures Page Picture 1.1: Comprehensive strategic administration model Picture 1.2: SWOT matrix 18 Picture 2.1: Organization mechanism of COSEVCO6 23 Picture 2.2: Cement production procedure 27 Picture 2.3: Cement distribution model of the company 32 Picture 2.4: Organizing the management machine of Company 45 Picture 3.1: SWOT matrix of Cosevco6 73 Picture 3.2: IE matrix of Cosevco6 76 Picture 3.3 : Quantitative Strategic Planning Matrix of COSEVCO6 77 List of charts Chart 2.1: Cement consumption market shares of the company in the areas 89 Chart 2.2: Cement market share in Quang Binh market 92 Appendix Appendix 01: Results of operations from the company from 2006 to 2010 87 Appendix 02: Structures on the property from 2006 to 2010 89 -6- Capstone Project Report GaMBA.X0409 Group 11 INTRODUCTION Our world is becoming a world without border with global citizens, global competitors, global customers, global suppliers, and global distributors The world is changing and enterprises must adapt to these changes, unless they will face with ruins Vietnam economy is gradually integrating into the local and world economies, the business environment of enterprises is broadened, but the competition also becomes more and more violent It creates the business opportunities and also holds the potential risks threatening the development of enterprises When the market has lots of changes, ignoring the accidental factors, the decisive problems affecting the success of an enterprise are the selecting an exact trend, identifying a reasonable and timely business strategy To exist, all organizations must have a sharp ability to recognize and adjust to changes The strategic administration process allows organizations to adapt effectively to changes in long term Implementing the guideline of State on arranging and innovating the enterprise, from an enterprise with 100% state capital, it was privatized in 2005, COSEVCO Joint Stock Company has applied the strategic administration into building its business strategies in the operation process and having several specific achievements Cosevco6 Joint Stock Company is a business producer in the construction field, such as: building civil, industrial, transporting, hydraulic, hydro electrical, water supply and drainage constructions, urban constructions; processing and installing machines and equipments to serve building activities; producing and trading building material products (cement, commercial concrete, tuynen brick, unburnt brick, package, and PP plastic); Trading materials and equipments, building materials; Exploiting kinds of stone, sand, grittier, soil; Transporting and loading goods, and etc The researching method: the group uses the application researching method Basing on theories to give effective solutions, to solve real problems and to support -7- Capstone Project Report GaMBA.X0409 Group 11 administrative decision making The collected information and data are based on the record storing system of the company The data are originated from many sources, such as: direct investigating, consulting ideals of experts and people with many experiences The structure of thesis includes parts:  Part I: Several theories on business strategy administration  Part II: Cement production and business situation of Cosevco6 Joint Stock Company from 2006 to 2010  Part III: Cement business strategy building of Cosevco6 Joint Stock Company from 2011 to 2015 and the vision towards 2020 -8- Capstone Project Report GaMBA.X0409 Group 11 CHAPTER THEORETICAL BASE ON BUSINESS STRATEGY 1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY The current market economy, tendency of internationalizing business activities and more and more competitive environment are gradually repelling thoughts of waiting godsends in business activities In stead, successes only come to people who have knowledge, being able to apply their professional knowledge, knowledge on managing, planning, and strategic administration clearly Understanding strategies and applying them effectively into the realities of production and business activities require that administrators; owners of enterprises must understand clearly and study carefully traditional and modern concepts on strategy and strategic administration 1.1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY Historically, the first strategy was used in the military field Then, strategies were introduced into other fields of socio-economic activities Nowadays, strategies have been deployed and applied broadly in the management field And strategies have been really confirmed as an effective management trend or method What is strategy? Strategy is “a series of complex activities in order to mobilize all possible resources of an organization/ individual to reach a specific purpose Currently there are lots of different definitions on business strategy which originate from many different approaching ways Fred R David said that “Business strategies are means to reach long-term targets” According to Alfred Chandler, Harvard university “Business strategies are identifying basic, long-term targets of enterprises, simultaneously selecting methods or processes of acting and distributing necessary resources to implement these targets”,… In general, although the definitions on business strategy are different in expression ways, they imply the main contents, as follows:  Identifying short-term and long-term targets of the organization in each period -9- ... III: Cement business strategy building of Cosevco6 Joint Stock Company from 2011 to 2015 and the vision towards 2020 -8- Capstone Project Report GaMBA.X0409 Group 11 CHAPTER THEORETICAL BASE ON BUSINESS. .. traditional and modern concepts on strategy and strategic administration 1.1.1 CONCEPT AND THEORETICAL BASE OF BUSINESS STRATEGY Historically, the first strategy was used in the military field Then,... organizations to be always active, to catch timely opportunities, to turn threats into opportunities, to invert situations, to win competitors, and to develop stably and effectively The main target of the