MBA THESIS “PLANNING THE BUSINESS STRATEGY OF VIETNAM RAILWAY TILL 2020” TABLE OF CONTENTS No Content INTRODUCTION The reason for choosing this project Target and research objective Object and scope of the research Research method Project meaning Project limitations Expected results of the project Project structure CHAPTER 1: THEORETICAL BASIS AND Page 1 1 2 2 PLANNING OF BUSINESS STRATEGY The concepts Business strategy Strategic management Concept of strategic management Necessity of strategic management in the enterprise The process of strategic management Strategy planning The process of planning the strategy Vision, mission and strategic objective of the company Vision Mission Determination of strategic objective Analyzing and forecasting the business environment International economic environment National economy environment Competitive environment of internal sector Environment of internal enterprise Collecting results of analysis and forecast of business 4 6 9 10 10 10 10 11 13 13 15 17 20 22 environment 1.2.3.1 Summary table of results of analysis and forecast of 22 external and internal business environment Types of matrices for evaluation of business environment Setting up strategic options Choosing strategic options Strategic decision and institutionalization of strategy Tools for formation and selection of strategy : SWOT 23 26 26 27 27 1.1 1.1.1 1.1.2 1.1.2.1 1.1.2.2 1.1.2.3 1.1.3 1.2 1.2.1 1.2.1.1 1.2.1.2 1.2.1.3 1.2.2 1.2.2.1 1.2.2.2 1.2.2.3 1.2.2.4 1.2.3 1.2.3.2 1.2.4 1.2.5 1.2.6 1.3 -1- matrix CHAPTER II: REAL SITUATION OF BUSINESS 30 TRATEGY PLANNING OF VIETNAM RAILWAYS 2.1 An Overview o f VIETNAM RAILWAYS 2.2 Analysis of VIETNAM RAILWAYS’s business 30 33 2.2.1 2.2.1.1 2.2.1.1.1 2.2.1.1.2 2.2.1.2 2.2.1.3 2.2.1.4 2.2.2 2.2.2.1 2.2.2.2 2.2.2.3 2.2.2.4 2.2.3 2.2.3.1 2.2.3.2 2.2.3.3 2.2.3.4 2.2.4 2.3 2.3.1 2.3.2 2.4 2.4.1 2.4.2 2.4.3 environment National and International Economic Environment Development Tendency of World’s Railway An Overview of World’s Railway Experience on Railway Development Features of Railway Transport Market Governmental Legal Policies Features of Railway Transport Sectoral Competitiveness Suppliers Main Customers Existing Competitors Other Transport Means Analysis of Vietnam Railways Labor Features Financial Features Features of Technical Facilities Managing and Operating Structure Vietnam railways’s Business Environment Planning Works at Vietnam railways Basis Process and Method for Strategy Definition Assessment of Current Status Existing Situation of Vietnam Railways Achievements Shortcomings and Causes CHAPTER 3: SOLUTIONS AND 33 34 34 36 36 39 39 45 47 48 48 50 52 52 53 56 60 61 63 63 65 67 67 67 68 71 RECOMMENDATIONS FOR BUSINESS DEVELOPMENT OF VIETNAM RAILWAYS UNTIL 2015 3.1 Sector and Vietnam railways’s Development Orientations 3.1.1 Development Strategy for Vietnam Railway Transport 3.1.1.1 Development Opinions 3.1.1.2 Development Targets -2- 71 71 71 72 3.1.2 Targets and Orientation of Vietnam Railways Sector and 75 Vietnam railways Transport Investment into Infrastructure Development Investment into Vietnam railways’s Development Development Policies Railway Transport Demand Projection Projection Method and Basis for Data Seclection Railway Transport Demand from Key Economic 75 76 78 79 80 80 81 Corridors Socio-economic Projection until 2020 Existing Transport Quantity in Key Corridors Projection of Transport Quantity SWOT matrix in Strategy Definition Strength Weaknesses Opportunities Threats Supporting Solutions for Strategic Planning Organizational and Institution Solutions for Development Investment Solution on Finance and Fund Mobilization Solutions on Human Resource Development Application of Technology and Science Co-operation Recommendation To the Government To the Vietnam railways CONCLUSION REFERENCE 81 82 82 85 85 86 88 89 92 93 94 95 96 96 97 97 98 100 101 102 3.1.2.1 3.1.2.2 3.1.2.3 3.1.3 3.2 3.2.1 3.2.2 3.2.2.1 3.2.2.2 3.2.2.3 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.4 3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 3.4.6 3.5 3.5.1 3.5.2 LIST OF TABLES No 2.1.4 Diagram 2.1: Content Vietnam railways’s Organizational Page 31 Structure 2.1.5 Table 2.1 Vietnam railways’s Business of Transport 31 Business in the Period of 2003 - 2008 Table 2.2 Business Results of other Vietnam railways’s 32 Sectors (2003 – 2008) -3- 2.2.1.1.1 Table 2.3: Summary of criteria for railway development 35 of the countries and regions 2.2.1.4 Table 2.4: Quantity of Vietnam railways’s Annual 41 Transported Passengers and Freight Table 2.5: Transported Passengers and Freights by 42 Railway and Proportion with Transport Sector 2.2.3.1 Table 2.6: Vietnam railways’s Labor and Income until 52 December 31st 2008 2.2.3.2 Table 2.7: Plan for Use of Investment Funds 2003 - 2008 2.2.3.3 Table 2.8: Length – Gauge Dimension – Interval 53 58 Capacity Table 2.9: Major Technical Standard on National 59 Railway Routes 2.2.4 Table 2.10: Internal Business Environment Table 2.11: External Business Environment 3.2.2.2 Table 3.1: Current Transport Quantity on Several Routes 3.2.2.3 Figure 3.1: Quantity of Transported Freights and 62 63 82 83 Passengers and Transport Methods Table 3.2: Projection of Transported Passengers until 83 2020 Table 3.3: Projection of Transported Freights until 2020 Table 3.4: Projection of Transported Passengers after 83 84 2020 Table 3.5: Projection of Transported Freights after 2020 85 LIST OF FIGURES AND DIAGRAMS No Content 1.1.2 Diagram 1.1: The process of general strategic management Page 1.2 Diagram 1.2: Diagram of the process of planning strategy 1.2.2 Diagram 1.3 Five competitive pressures in the environment 10 18 of sector by M Porter 1.3 Table Model of theory of SWOT -4- 28 LIST OF ABBREVIATIONS QD: Decision TCCB-LD: Labor organization officers TTg: Prime Minister VND: Vietnam dong V: Velocity Km: Kilometer ODA: Official Development Assistance BOT: Ministry of Transport of Vietnam -5- GDP: Gross Domestic Product JICA: Japan International Cooperation Agency WTO: World Trade Organization AFTA: ASEAN Free Trade Area R&D: Research and Development -6- INTRODUCTION The reason for choosing this project Business development strategy is the very important part for the development of enterprises Strategy defines the way and specific objectives that have been reached, it also helps the enterprises prepare resources and adapt to the business environment in each specific period to get the best business efficiency The condition that our country has been involving deeper and deeper into the world economy has created many opportunities and challenges for Vietnam enterprises, especially for transportation in general and railway transportation in particular One of the general weak points of the current transportation is that it has not methodical business development strategies to make the most of opportunities and overcome challenges to improve the competition power, maximize the operation efficiency This study will contribute to provide a picture of transportation environment, since then, helping to choose and set up the business strategy of the companies to help Vietnam railways catch the strong points better to promote, take full advantage of opportunities, overcome weak points, realize challenges to avoid and turn into new opportunities At the same time, this study also contributes to reference documents for transportation sector Target and research objective • Analysis of business environment impact of activity on provision of transportation service of railway sector • Realization of opportunities and challenges, strong points and weak points of Vietnam railways sector • Since then, setting up and choosing the suitable development strategies and at the same time, bringing out necessary solutions to implement these strategies to improve the ability of competition and business efficiency of railway sector, helping the sector develop solidly Object and scope of the research -7- Focusing on researching, setting up business strategy of Vietnam railways to the year 2020 and the Vision to the year 2030 Research method The methods used in the research of thesis are: • The methods of qualitative, data analysis, statistics, and comparison to evaluate the actual situation and bring out complete solutions Project meaning • In theory: Researching the basis, the process of setting up the strategies and the way of choosing applicable strategy for setting up and choosing optimal strategy for Vietnam railways • Clarifying and applying the theory of setting up business strategy to a specific company of Vietnam Railways • Being the reference documents for transportation companies of transportation sector to set up their development strategy Project limitations • Study scope: Limit to a specific business line • The data are incomplete because of limited research framework • Changes of State policy • Fluctuation of the economy of the country and the world Expected results of the project • Choosing, setting up the development strategy in accordance with the activities of Vietnam railways; • Bringing out the specific solution, implementation plan of development strategy of Vietnam railways in transportation sector • Being the reference documents for companies of transportation sector 10 Project structure The project includes: Overview, three chapters and conclusion The main content of each chapter are presented as follows: -8- • Chapter 1: Theoretical basis and planning of strategy • Chapter 2: Real situation of business strategy planning of Vietnam railways • Chapter 3: Solutions and recommendation -9- The mentioned factors are the motive forces for the growth of the transport market in general and the railway sector in particular, including transport of passengers and freights 3.3.4 Threats: The strategic development targets of the railway transport sector to the year 2020 require break-through, intensive development; the demand until 2020 shall be for express railway; iron wheel transport in Ha Noi, Ho Chi Minh City which require construction and basic completion in 2020; The target transport share until 2020 shall reach 13% for passenger transport and 14% for freight transport and urban railway transport shall account for at least 20%; The infrastructure is still too weak which is featured by degrading tracks, weak bridges with flow rehabilitation; small duty length in most of the station ([...]... requirement of economic and culture exchange among regions and provinces which railways is passing Name: Tổng Công ty đường sắt Việt Nam International Name: Vietnam Railways Abbreviated Name: VNR Address: 118 Le Duan, Dong Da District, Ha Noi Tel: 04 9425972 Fax: 04 9422866 Website: www.vr.com.vn The charter capital of Vienam Railways is the ownership capital at December 31st, 2008 which is VND 2,687... - of CHAPTER II: REAL SITUATION OF BUSSINESS STRATEGY PLANNING OF VIETNAM RAILWAYS 2 1.An Overview of Vienam Railways Vienam Railways is a State-owned enterprise with 100% of the State investment and the establishment decisions and charter approval have been issued by the Prime Minister Vienam Railways is a special Corporation in Viet Nam The purpose of it operation is not only for benefit but also... the business and attract the investment of other countries in the world - The impact of international law and practices This factor affects the world and regions For example, when Vietnam became a member of ASEAN of WTO, Vietnam has to comply with the regulations of ASEAN of WTO The factor of international economy, it is performed by the following factors: - The level of prosperity of international economy... loans among the capital which is owned by the Company; Stamps, accounts at the State Treasury, at local and abroad banks; Balance sheets, central funds as specified by the regulations * Milestones in Vietnam railways Development - 35 - ... social factors includes national cultural character, manners and customs, consumption habit, taste, etc., National culture impacts directly on the formation of taste, consumption habit (such as the Vietnamese culture is burning votive paper on the fifteenth day and the first day of the month and it made the product of votive paper) Because each country has a particular culture so the establishment... effect more or less depends on the nature of the crisis - Changes in the international business relations create both opportunities and dangers for enterprises For example, the tariff after signing the Vietnam – American commercial agreement gives enterprises the opportunities to participate in the U.S market but also gives the danger of fierce competition with U.S goods The technical – technological factors