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In the market economy, competitiveness happens everywhere. As we join WTO, competitive strategy is a very important factor that every company cares for.
Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Introduction In the market economy, competitiveness happens everywhere As we join WTO, competitive strategy is a very important factor that every company cares for “Competitiveness” is the term used to refer to features which allow a company to compete effectively with other companies due to lower cost or superior technology and engineering in comparison with international matches In the market economy in our country today, the number of enterprises involved in business is increasing rapidly The amount of goods and products on the consumer markets also increases multifold Thus, competition in the market is becoming fiercer and fiercer Therefore, improving competitiveness for enterprises of Vietnam is a content that should be greatly considered Vietnam's businesses have many advantages, but there are still many limitations and weaknesses Being interested in the competitiveness of companies, I have decided to some research on the competitiveness of a company, as my thesis entitled “Competitiveness in trading activities of Trading Scientific Technological Materials Co.,Ltd (Tramat Co.,Ltd) “ The Assignment is arranged as follows: Introduction Chapter I: Theoretical and practical background of competitiveness Chapter II: The situation and competitiveness of Tramat Co., LTD Chapter III: Suggestions & Solutions to improve the competitiveness of Tramat Co., LTD Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Conclusion I hope that it will provide the reader with some overviews about Vietnam’s business in general and TramatCo., Ltd in particular, opportunities, challenges and solutions to boosting its competitiveness in the trading sector Due to lack of references and experiences, my Graduation Assignment is certainly with mistakes here and there So I am very happy and appreciate any constructive comments from anyone who are concerned Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 TABLE OF CONTENTS Introduction Chapter I: Theoretical and practical background of competitiveness .6 1.1 Theoretical background .6 1.1.1 What is competitiveness? .6 1.1.2 Competitive strategy: The core concepts 1.1.3 Industry Concepts of Competition 11 1.1.4 Differentiation in competitive strategy .13 1.1.5 Cost Advantage in Competitive strategy 16 1.2 Practical Background of Competitiveness in Vietnam 18 1.2.1 An overview of industry competitiveness in Vietnam .18 1.2.2 An overview of company competitiveness in Vietnam 20 Chapter II: The situation and competitiveness in Tramat Co.,Ltd 23 2.1 An overview of Tramat Co., Ltd .23 2.1.1 Establishment and development process of Tramat Co., Ltd, 23 2.1.2 Organizational structure of Tramat Co., Ltd 25 2.2 Trading activities of Tramat Co., Ltd .27 2.2.1 Trading activities 27 2.2.2 Achievements of the trading activities from 2007 to 2009 31 2.3 General assessments of competitiveness in trading activities of Tramat Co., Ltd .32 2.3.1 Strengths 32 2.3.2 Weaknesses 33 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Chapter III: Suggestions and Solutions to Improving Competitiveness of Tramat Co., Ltd 34 3.1 Company’s action plan for 2010: 34 3.2 Challenges the company faces 35 3.3 Solutions to improving competitiveness of Tramat Co., Ltd 36 3.3.1 Solutions to sales increase and marketing 36 3.3.2 Solutions to product and warranty 37 3.3.3 Solutions to improving customer services 37 3.3.4 Solutions to fostering and motivation staff 38 CONCLUSION 40 REFERENCES 41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Abbreviations and Acronyms WTO World Trade Organization ASEAN Association of Southeast Asian Nations APEC Asian Pacific Economic Conference GDP Gross Domestic Production TramatCo.,Ltd Trading Scientific Technological Materials Co.,Ltd VFA Vietnam Food Association ICOR Incremental Capital-Output Rate Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Chapter I: Theoretical and practical background of competitiveness 1.1 Theoretical background Among the most economists, who research about” competitive advantage”, Michael E.Porter stands out as professor in this field In his book entitled “Competitive advantage” (1985), Michael E.Porter shows two elements that play a key role in competitive strategy That is differentiation and cost advantages 1.1.1 What is competitiveness? For the company, competitiveness is the ability to provide products and services as or more effectively and efficiently than the relevant competitors In the traded sector, this means sustained success in international markets without protection or subsidies Although transportation costs might allow firms from a nation to compete successfully in their home market or in adjacent markets, competitiveness usually refers to advantage obtained through superior productivity Measures of competitiveness in the traded sector include firm profitability, the firm's export quotient (exports or foreign sales divided by output), and regional or global market share In the traded sector, performance in the international marketplace provides a direct measure of the firm's competitiveness In the non-traded sector, competitiveness is the ability to match or beat the world's best firms in cost and quality of goods or services Measuring competitiveness in the non-traded sector is often difficult, since there is no direct market performance test Measures of competitiveness in this part of the economy include firm profitability and measures of cost and quality In industries characterized by foreign direct investment, the firm's percentage of foreign sales (foreign sales divided by total sales) and its share Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 of regional or global markets provide measures of firm competitiveness At the industry level, competitiveness is the ability of the nation's firms to achieve sustained success against (or compared to) foreign competitors, again without protection or subsidies Measures of competitiveness at the industry level include overall profitability of the nation's firms in the industry, the nation's trade balance in the industry, the balance of outbound and inbound foreign direct investment, and direct measures of cost and quality at the industry level Competitiveness at the industry level is often a better indicator of the economic health of the nation than competitiveness at the firm level The success of a single firm from the nation might be due to companyspecific factors that are difficult or impossible to reproduce The success of several firms from the nation in an industry, on the other hand, is often evidence of nation-specific factors that might be extended and improved Assessing the competitiveness of an industry in which there is only one important firm requires an assessment of whether its success is due to monopoly rents, government support, or true efficiency It is also important to note that the competitiveness of a single firm does not necessarily imply the competitiveness of an industry For the nation, competitiveness means the ability of the nation's citizens to achieve a high and rising standard of living In most nations, the standard of living is determined by the productivity with which the nation's resources are deployed, the output of the economy per unit of labor and/or capital employed A high and rising standard of living for all the nation's citizens can be sustained only by continual improvements in productivity, either through achieving higher productivity in existing businesses or through successful entry into higher productivity businesses The level and growth of the nation’s standard of living, the level and growth of aggregate Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 productivity and the ability of the nation’s firms to increase their penetration of world markets through exports or foreign direct investment measure competitiveness at the national level Although it is tempting to equate a nation's competitiveness in certain industries or sets of industries with competitiveness at the national level, or with a positive balance of trade, this temptation should be avoided Comparative advantage dictates that any nation will be competitive in some industries and uncompetitive in others A positive balance of trade has as much to with the balance of domestic savings and investment as it does with the intrinsic capabilities of the nation's firms Why is competitiveness important? A nation's standard of living is increasingly dependent on the competitiveness of its firms Competitiveness is vital if the nation's firms are to take advantage of the opportunities presented by the international economy World trade and foreign investment have grown faster in the last several decades than world output Competitiveness in industries subject to international trade and foreign direct investment can therefore provide substantial advantage for economic growth This is especially true for small nations, where competitiveness can allow firms to overcome the limitations of their small home markets in order to achieve their maximum potential Competitiveness is also vital if a nation's firms are to guard against the threats posed by the international economy International competition has become fiercer than ever before Lower costs for transportation and communication, reduced trade barriers, and the spread of technology have combined to sharpen international competition This competition has put unprecedented pressure on all a nation's economic actors, including management, labor, and government In an environment in which the nation's firms must continually improve in order to meet the threat from an ever-wider array of competitors, the failure of Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 management, labor, or government to meet the challenge can spell disaster for the nation’s firms Competitiveness in the non-traded sector is also vital to the nation's economic health The non-traded sector is a large portion of each economy At a time when economic prosperity remains only a dream for most of the world's population, inefficiencies in the non-traded sector should be reduced to the greatest extent possible In addition, the competitiveness of the non-traded sector has a substantial impact on the competitiveness of the traded sector, which relies on it for a wide range of goods and services An inefficient, bloated non-traded sector can drag down the nation's productivity directly and indirectly through its impact on other non-traded and traded industries There is a growing realization that nations cannot avoid the rigors of international competition No nation is very self-sufficient Nations are linked to the international economy through trade in goods and services, through international capital flows, and through commodity prices The experience of developing nations in the 1980s has indicated that attempts to isolate an economy can have lasting detrimental effects In the modern world, nations can try to run from the world economy, but they cannot hide This is particularly true for small nations, in which the costs generated by economic isolation in terms of rent seeking and losses in efficiency can be substantial, and for developing nations, in which any loss of efficiency often means higher levels of poverty 1.1.2 Competitive strategy: The core concepts The Structural Analysis of Industries: The first fundamental determinant of a firm’s profitability is industry attractiveness Competitive strategy is to cope with and, ideally, to change those rules in the firm is favored In any industry, Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 whether it is domestic or international or produces a product or a service, the rules of competition, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among the exiting competitors The collective strength of these five competitive forces determines the ability of firms in an industry to earn, on average, rates of return on investment in excess of the cost of capital The strength of the five forces varies from industry to industry, and can change as an industry evolves The result is that not all industries are alike from the standpoint of inherent profitability In industries where the five forces are favorable, such as pharmaceuticals, soft drinks, and database publishing, many competitors earn attractive returns But in industries where pressure from one or more of the forces is intensive, such as rubber ,steel ,and video games, few firms command attractive return despite the best efforts of management Industry profitability is not a function of what the product looks like or whether it embodies high or low technology, but of industry structure Some very mundane industries such as postage meters and grain trading is extremely profitable, while some more glamorous, high-technology industries such as personal computers and cable television are not profitable for many participants The five forces determine industry profitability because they influence the prices, costs, and required investment Buyer power influences the prices that firms can charge, for example ,as does the threat of substitution The power of buyer can also influence cost and investment, because powerful buyers demand costly service The barging power of suppliers determines the cost of raw materials and other inputs The intensity of rivalry influences prices as well as the costs of competing in areas such as plant, product development, advertising, and sales force The threat of entry places a limit on prices, and shapes the investment required to deter entrants Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 10 ... Trading activities of Tramat Co., Ltd .27 2.2.1 Trading activities 27 2.2.2 Achievements of the trading activities from 2007 to 2009 31 2.3 General assessments of competitiveness in trading. .. drivers of cost behavior at the beginning of an analysis ,hence the identification of the value activities tends to require several interactions The initial breakdown of the value chain into activities. .. again without protection or subsidies Measures of competitiveness at the industry level include overall profitability of the nation''s firms in the industry, the nation''s trade balance in the industry,