LUẬN VĂN THẠC SĨ CHIẾN LƯỢC KINH DOANH TRỰC TIẾP TẠI CÔNG TY CỔ PHẦN NHỰA TIỀN PHONG THE BUSINESS STRATEGIC DIRECTION IN TIEN PHONG PLASTIC JOINT STOCK COMPANY THANKS Through nearly years learning in GRIGGS University, Hanoi National University, we have been taught much knowledge about Business Administration And by the theoretical foundation and working reality, we have chosen the topic “The business strategic direction in Tien Phong Plastic Joint Stock Company to the year 2013” as the research topic for my graduation composition with the best regard to give small contribution to the stable development of Company We are grateful to teachers in Institution of Business Administration who are all teaching and instructing me all the real and necessary knowledge in the wholehearted way Especially, we would like to thank Assoc.Pro, PhD Vu Tri Dung who directly instructs me to complete this composition We are also thankful to all students in Gamba01.n01 class, friends, colleagues who have supplied the precious documents for composition and at the same time encourage me so much in completing my graduation composition table of contents Graduation Composition MBA GamBa01.n01 Thanks table of contents List of tables List of figures and graphs Introduction The necessity of the research topic Research problems Research objective Scope of research Scope of research Composition structure Chapter 1: ARGUMENT BASE FOR BUILDING BUSINESS STRATEGY IN BUSINESS 1.1 Primary definitions 1.1.1 Strategy’s definition 1.1.2 Strategic levels 1.1.3 Strategic procedure 7 7 9 10 11 1.2 Model in strategic building 1.2.1 Environmental analysis models 1.2.1.1 PEST Model – General environmental analysis model 1.2.1.2 Five Force model of Michael Porter – Industry analysis 11 12 12 13 model 1.2.1 Life cycle of industry 1.2.2 Internal business analysis model 1.2.2.1 Value chain model of Michael Porter - Internal business 15 16 17 analysis model 1.2.2.2 Model of Mc Kinsey – organizational analysis model 1.2.2.3 Valuable source, key capacity and competitive advantages 1.2.2.3.1 Valuable source 1.2.2.3.2 Key capacity 1.2.2.3.3 Competitive advantages 1.2.3 General model – SWOT analysis 1.3 Business strategy 1.3.1 SPACE model to locate business location 1.3.2 General business strategy 1.3.2.1 Product differentiation strategy 1.3.2.2 Low cost strategy in business 19 21 21 22 22 22 24 25 25 26 27 Graduation Composition MBA GamBa01.n01 1.3.2.3 Market concentration strategy 1.3.3 Fast and flexible reaction strategy 1.3.4 Strategy to create values and benefits for customers 1.3.5 Periodical strategy of product’s life cycle 1.4 Implement and control strategies 29 29 31 32 CHAPTER 2: INTRODUCTION ABOUT THIEU NIEN TIEN PHONG PLASTIC JOINT STOCK COMPANY AND ANALYSIS OF COMPANY’S BUSINESS ENVIRONMENT 2.1 General introduction about Thieu Nien – Tien Phong Plastic Joint 37 Stock Company 2.1.1 Establishment and development procedure 2.1.2 Function and missions 2.1.3 Business lines 2.1.4 Products and markets 2.2 Business environment analysis 2.2.1 Analyzing general environment according to 37 39 39 40 43 43 PEST model 2.2.2 Competitive environment analysis 2.2.2.1 Five Forces competitive advantages analysis of M Porter 2.2.2.2 Industry’s life cycle CHAPTER 3: ANALYZING INTERNAL SECTION OF THIEU 46 46 52 NIEN TIEN PHONG PLASTIC JOINT STOCK COMPANY 3.1 Analyzing internal company according to value chain 3.2 Internal analysis according to 7S model 3.3 Key capacities and competitive advantages of Company 3.4 SWOT Analysis 3.5 Company’s position in market 55 55 62 68 70 CHAPTER 4: THE BUSINESS STRATEGIC ORIENTATION FOR THIEU NIEN TIEN PHONG PLASTIC JOINT STOCK COMPANY IN THE PERIOD 2009-2013 4.1 Development orientation of Vietnam plastic industry 4.2 Strategic vision and mission 4.3 Suggestions the business strategy orientation 4.3.1 SPACE model to define Company’s position 4.3.2 Product differentiation strategy Graduation Composition MBA 78 78 81 81 82 82 GamBa01.n01 4.3.3 Fast and flexible business strategy 4.3.4 Strategy to create values and benefits for customers 4.4 Some suggestions to State managing agencies CONCLUSION REFERENCES 84 87 88 89 90 LIST OF TABLES Table 1.1: SWOT analysis 24 Table 2.1: General environment analysis summary 45 Table 2.2: List of suppliers 47 Table 2.3: Percentage % of each customer group 48 Table 2.4: Competitors in market 49 Table 2.5: Five Forces analysis 52 Table 2.6: Company’s revenue in plastic industry 53 Table 2.7: Profits of Thieu Nien Tien Phong Company & Binh Minh Plastic Company 53 Table 3.1: Production indicator 55 Table 3.2: The over internal business analysis according to value chain 62 Table 3.3: Target labor structure 67 Table 3.4: Internal analysis according to 7S model 69 Table 3.5: Comparison table with competitors 70 Table 3.6: Criteria on revenue, profits and charter capital 74 Table 3.7: Revenue and capacity comparison with competitors in 2008 74 Table 3.8: Criteria of Vietnam plastic industry 76 Table 3.9: Summary of SWOT analysis 79 Table 4.1: Material index of Vietnam Plastic Industry 82 Table 4.2: Product index of Vietnam Plastic Industry 82 Graduation Composition MBA GamBa01.n01 Table 4.3: Substitutes for plastic products 83 Table 4.4: Specialized industry in Vietnam plastic industry 83 Graduation Composition MBA GamBa01.n01 List of figures and graphs Figure1.1: PEST analysis model 13 Figure 1.2: Five Force Model of Michael Porter 14 Figure 1.3: Life cycle of industry Figure 16 1.4: Value chain 18 Figure 1.5: 7S Model of McKinsey 21 Figure 1.6: Sources of competitive advantages Figure 1.7: Model to 23 locate Company location Figure 2.1: 25 Plastic industry’s cycles life 55 Figure 3.1: Distribution network 58 Figure 3.2: Organization structure Figure 4.1: Model to position Graduation Composition MBA define 63 Company’s 84 GamBa01.n01 INTRODUCTION The necessity of the research topic In the current fierce competitive context, each business itself has to find the right direction and a suitable development strategy with the external environment and the internal factors if it wants to exist And after all, business strategy is a composition and the most importance foundation in order to build a business strategy Over 40 years of establishment and development, Thieu Nien – Tien Phong Plastic Joint Stock Company is now one of the leaders in the Vietnam Plastic Industry, all the products with brand “Tien Phong Plastic” have been known as the high quality products and having the good after-sale service by the domestic consumers However, Company is the longtime State company so it has not had the clear and suitable business strategy when transferring to the Joint Stock Company model, there is no common unity in Company Moreover, after Government dissolve Vietnam Plastic Corporation in 2004, there was no market segment in the North, Middle and South in plastic industry so Northern Market is the main market and it is fiercely competitive with plastic enterprises in the South Besides, when our country joined in WTO, many investors who have high potential finance, Graduation Composition MBA GamBa01.n01 technology – technique, management experience have entered Vietnam plastic market and become great threats for Company So as to become the leader business in Vietnam plastic market, it is necessary to have a long term business strategy for the development of Company As working in Business Department in Company, I choose the topic ““The business strategic direction in Tien Phong Plastic Joint Stock Company to the year 2013” as the topic for graduation composition with the regard to have small contribution to upgrade brand name “Tien Phong Plastic” and remain as the strong brand name of Vietnam plastic industry Research problems - The external environmental factors react to the business strategy building - Factors within business react to the business strategy building - Business strategy direction to 2013 for Thieu Nien Tien Phong Plastic Joint Stock Company basing on the combination between theories and real analysis Research objective - Systematizing some arguments about building business strategy for Company - Analyzing the business environment previous time and the next time - Analyzing the internal factor and potential development - Directing the suitable business strategy for Company’s products in the period from now to year 2013 and the long term development direction in the next years Scope of research Analysing the business environment for Company’s products from 2004 to 2008 in order to orient the business strategy to 2013 in Hue to Northern markets Research method The composition uses some primary and second data as following: - Collecting the second data through sources of newspaper, internet, distribution channel, internal document Graduation Composition MBA GamBa01.n01 10 - Collecting primary date: Using quantitive and qualitative method to collect primary data + The investigation method and data collection are made by questionares which are sent to some agents in distribution channel There are over 200 agents spreading from Hue to the Northern provinces, and 45 answer sheets The main content of investigation sheet is the evaluation collection of customers about some aspects of Company like: product quality, price policy, sale policy, product type and serving behavior and so on + Interviewing the members in Management Board of Company like President of Management Board, members of Management Board, General Director, Deputy General Director and so on about the development orientation of Company in the future - Using some analysing and statistical method in order to analyizing collected primary data Composition structure - Chapter 1: Argument base for building business strategy in business - Chapter 2: Introduction about Thieu Nien Tien Phong Plastic Joint Stock Company and analysis of Company’s business environment - Chapter 3: Analyzing internal section of Thieu Nien Tien Phong Plastic Joint Stock Company - Chapter 4: The business strategic orientation for Thieu Nien Tien Phong Plastic Joint Stock Company in the period 2009-2013 Graduation Composition MBA GamBa01.n01 99 Major indicators : - The growth rate of plastic industry in period 2001-2005 is 18%/year ; 15%/year in 2006-2010 - Balance according to regions : North-Middle-South with the relevant percentage o 2005 : 26 - – 69 ; 2010 : 31 - - 60 - The average consumption per capita in 2005 : 20 kg/people; 2010: 40kg/people - The production material sources in country in 2005 : satisfy 30% demand, about 560.000 tons ; in 2010 : satisfy 50% demand, about 1.560.000 tons Quantity index - About materials, half-finished goods, chemicals, additive (ton/year) : Table 4.1: Material index of Vietnam Plastic Industry NO MATERIALS 2005 2010 PVC power 300.000 500.000 PP grain 150.000 450.000 PE grain Graduation Composition MBA 450.000 GamBa01.n01 100 BOPP membrane 20.000 40.000 DOP 30.000 60.000 PS grain 60.000 60.000 Total 560.000 1.560.000 plastic chemistry (Source: General planning on Vietnam plastic industry’s development to 2010) - Model instrument: to 2010: 132.000 set/year - Main product (ton/year): Table 4.2: Product index of Vietnam Plastic Industry PRODUCTS 2000 2005 2010 Package production 360.000 800.000 1.600.000 Construction material production 170.000 400.000 900.000 Domestic plastic product 300.000 550.000 900.000 Producing high-tech product 120.000 350.000 800.000 Total 950.000 2.100.000 4.200.000 (Source: General planning on Vietnam plastic industry’s development to 2010) - Plastic waste processing: In 2010: Building plastic waste processing factory with the capacity 200.000 ton/year Some plastic products have gradually replace traditional products as following:Table 4.3: Substitutes for plastic products Graduation Composition MBA GamBa01.n01 101 Plastic products Civil plastic Water pipe Pallet Boat, canal Package Traditional products Wooden, knitting products Iron and steel pip Wooden pallet Wooden boat Paper package (Source: Vietnam Plastic Association) The demands in plastic industry: Depends on many factors because plastic industry produces diversified goods serving for many areas and it is divided into different technical – economic industries: Tap 4.4: Specialized industry in Vietnam plastic industry No Industry code Plastic materials (PVC resin, PVC compound, DOP, PS, PE) Export plastic shoe Production rubber (relating to plastic) Domestic plastic High tech industrial plastic Construction material Plastic package Plastic model (Source: Vietnam Plastic Association) 4.2 Strategic vision and mission 4.2.1 Strategic vision From the long history of establishing, operating and developing, Thieu Nien Tien Phong Plastic Joint Stock Company tries to archieve: “Tien Phong Plastic – The leading producer for plastic products in Vietnam” 4.2.2 Strategic mission In order to be “The leading producer for plastic products in Vietnam” , Company has always to ensure: - Innovate technique continuously in order to improve productivities and product qualities Graduation Composition MBA GamBa01.n01 102 - Supply on time high quality and suitable products for customer’s demands - Training, improving the knowledge of staff and workers 4.3 Suggestions the business strategy orientation for Thieu Nien Tien Phong Plastic Joint Stock Company in 2008-2013 This part bases on the analysis in Chapter 2,3 and uses the SPACE model of Fred David to define position of Company in Market, and choosing the suitable strategy with the current situations, strengths and advantages of Company 4.3.1 SPACE model to define Company’s position FS Caution Tien Phong Plastic Attack CA IS Defense Compete ES Figure 4.1: Model to define Company’s position FS - Financial Strength IS - Industry Strength ES - Environment Stability CA – Comparative Advantage Tien Phong is operating in the plastic industry which has the high growth rate (15-20%), Company has many competitive Graduation Composition MBA GamBa01.n01 103 advantages and many strengths to catch opportunities According to above analysis, Company is the leading business in Vietnam plastic industry with the market share is about 74% in its market so Company is admitted to be the leading business in market In order to keep the number one position, Company has to have the strategy to increase total demands, saving market share through the protection and attack activities, always tries to increase it market share even when the market has no change Through the above analysis, Company should apply some strategies like: 4.3.2 Product differentiation strategy As being analyzed as above chapter, from the time of establishing and developing, Company always keep the guideline “Quality is the first, ensures the right benefits of consumers” as the key and target in its operation Company’s products are highly appreciated in quality by consumers comparing with other competitors This strategy has brought successes to Company in recent years Tien Phong plastic has many advantages such as: wide distribution channel; great market share; high capacity; strong finance so Company will go on chasing the product differentiation strategy The differences need to carry out: - Product differentiation: According to customer’s opinions, Company’s products have high durability and quality comparing with competitors - Service differentiation in selling: After sale services are also highly appreciated besides the relative satisfaction for customer’s demands on product types Company also supports other services like appointing technical staff to instruct customers to build and install; supply free for customers all the installing machines; investing more PEHD machines All above make Tien phong different from other competitors - Good reputation of product: Graduation Composition MBA GamBa01.n01 104 Always the leading business in Vietnam plastic industry in recent years When mentioning about Vietnam plastic, most of people remind “Tien Phong Plastic” This is invaluable asset that Company has to keep and develop The product differentiation has help Company to have big advantages: - Outstanding position in market: Tien Phong is the first name everyone thinks about when speaking about plastic pipe Figures have proved that Company’ revenue and capacity are always on the top of Vietnam plastic industry According to the Shareholder meeting’ Resolution in 2008, Company will try to achieve the quantity is 38.2 thousand tons and the revenue archives 1.040 billion dong (15% comparing 2007) Company is continuously the leading business in Vietnam plastic pipe industry - Keeping customers: Customers are very loyal to Company’s products, and its 70 % market share in the fierce competition is an example - Pricing advantages: Thanks to high quality products, prestigious brand name and loyal customers, Company’s prices are on the top level in market According to the investigation in June 2008, the price differences comparing with some competitors as following: + The average price higher than CHIN HUEI is 8% + The average price higher than Bach Dang is 5% + The average price higher than De Nhat is 6% + The average price higher than Dat Hoa – Vinh Phuc is 10% In order to chase this strategy sucessfully, Company has the following conditions: Graduation Composition MBA GamBa01.n01 105 - Company has good capacities in researching and developing products and services thanes to good investments, modern machines and so on - Staffs and workers are skillful, high competence; many people are leading specialists in Vietnam plastic industry This strategy needs to be remained and applied for all products in recent time when Company still has the current advantages and strengths The company has chosen the differentiation strategy based on the following vital factors: 1/ The company’s core competence is prestige and quality Plastic Tien Phong is the most prominent brand on the market and has always been assured of standardized quality and met the diverse needs of consumers 2/ Market trend is now shifting from price competition to non-price competition, ie competition based on differentiation factors in terms of Brand, Products quality and so on 3/ Due to the growing purchasing power of the market and the fact that consumers always consider quality as the first base in the selection of products and brands, chosing differentiation strategy, therefore, will allow the Companies to better meet market demands and increase competitive capacity 3/ Market share objective - Since the Company is the market leader, its objective in the coming years is to remain its market share via such activities as product improvement, image promotion and customer services 4.3.3 Fast and flexible business strategy Graduation Composition MBA GamBa01.n01 106 Fast and flexible business strategy is applied successful by Company in recent years, it always catch customer’s demands and market to produce the suitable products with these requirements Through the above analysis and Company’s advantages, there are some forms needed to apply as following: - Developing new products Company always launch the new products faster than competitors, specifically : + In 1989, it became the first business in the North to produce u.PVC plastic pip to replace import galvanized iron pipe This product now take the main position and give 80% revenue for Company + In 1994, it became the first business in the North to produce PEHD plastic pipe according to the handling order from UNICEF to supply free for domestic water and environmental sanitation in agricultural regions Currently, this goods have high growth rate and contribute about 15% revenue of Company + To the end 2008, Company had enough models to produce spare parts u.PVC which had the diameter from 110-500mm serving for domestic and overseas market It is also the first business to produce this products to replace products which are made from cast iron or imported with high price + It is planned that at the end of 2009, Company will cooperate with Korean partner to produce products made from plastic – wood This is a popular materials in developing countries but completely new in Vietnam market + Company is making the feasible plans to invest production line (about 15 million USD) in order to produce gas tanks Graduation Composition MBA GamBa01.n01 107 from composite plastic This is the highly potential product in the future - Fast supply : With the wide spread agent network over the market, Company rapidly satisfy on time order and other demands about goods of customers in all markets With the available goods, the delivery time to the hand of consumers is from – days and – 10 days for the specialized goods - Catching customer’s demand rapidly : In 2004, heat resistant plastic pipe PP-R appeared and Company realized this products were easily accepted Company invested machine and instruments to produce this goods and the annual revenue increased highly (over 100% per year) Currently, this product’s revenue is about 5% revenue of Company and continuously grows In the next time, together with the economic development, demands on other plastic product are also continuously increasing, especially the high tech plastic Company will co-operate and connect with some domestic and foreign partners in order to produce new goods like plastic bar with iron content and so on and satisfy market demands, create competitive advantages from business Co-operating with IPLEX-Australia Company to produce PVC plastic spare parts to export to Australia market This plan begins in the middle 2008 Company realized that demands for plastic pallet to replace wooden pallet increase in the market Company invested in machines, instrument in order to produce plastic pallet, and it is planned to launch new product in the end 2009 Graduation Composition MBA GamBa01.n01 108 The fast reaction strategy will give some advantages for Company : - Is the leader in approaching market so Company avoid facing directly with other competitors and always have competitive advantages when joining in market - The product diversification has prevent competitors joining in market From the Tim company produced these products, there are no more import products in market The results result from : - Company has a wide distribution channel in its market With more than 200 agents, thousands of retail shops, Company’s products are given directly to the hands of consumers in the fastest ways Company has collected many contribution opinion about goods and services to make Company more perfect - Company’s managing structure is flexible, departments are connected in order to satisfy the customer’s requirements In recent times, Company has applied this strategy successfully, and it is still the important one in the next time to keep the number one position in Vietnam plastic industry 4.3.4 Strategy to create values and benefits for customers The customer satisfactions are the great contribution to Company’s success because Company itself gives values and benefits to customer This results from the strategies that company applies: - Leading product strategy: As being analysis above, Company always care about product quality The high quality products are recognized by Graduation Composition MBA GamBa01.n01 109 consumers and competitors Rewards, medals and titles for Company are clear proof about its quality - Perfect operation procedure strategy: In order to carry out this strategy apart from the assembly and modern machine, Company also applies the quality management system according to the standard ISO 9001:2000 and production process Company should continuously innovate technique to stabilize and improve product quality - Close strategy with customers: The credit and loyalty building from customers has been carried out four over 40 years When talking about “Tien Phong Plastic”, thinking about the high quality and credit products Company has spent high expenses to organize the Customer Conference in order to create oppotunities for exchanging and receiving contribution ideas from customers about Company’s products as well as create the close relationship between customers and Company In 2007, Company organized Customer Conference successfully in Do Son – Hai Phong for nearly 2.000 customers with billion dong expense This action can consolidate customer’s credit and loyalty to Company This is also the strategy that Company need to use to consolidate the credit, solidarity and loyalty of customers to Company 4.4 Some suggestions to State managing agencies In this composition, I would like to list some problems which can help to create favorable conditions for Vietnam plastic industry in general and Thieu Nien Tien Phong Plastic Joint Stock Company Graduation Composition MBA GamBa01.n01 110 in particular for the further development, stability which can contribute to the development of our country’s economy They are: - About market: Functional agencies can co-operate with each other to help plastic businesses in country; find and promote trade to the foreign market - About investment: Prefer to invest in the factories which produce materials serving plastic industry in order to ensure quality, stabilize material supplies in country, create competitiveness for plastic products in the international economic integration; avoid the dependence on foreign material sources - About scientific research and technological transfer: State strengthens in investing technical and materials for institutes, research centers and human resources training for plastic industry State supports partly expenses for businesses to research new products, apply new technology, especially in material research to replace the import materials and directing to export - About supports to stabilize the exchange rate: In the immediate time, Vietnam plastic industry still depends on the imports of machines, instruments and materials from foreign countries, so State should have the supports to stabilize the exchange rate in some other industry so that businesses can feel secure in their business operations CONCLUSION In the fierce competition as nowadays, the strategic direction in business is a urgent problem for all businesses who want to Graduation Composition MBA GamBa01.n01 111 exist and develop With the role as the business staff in Company and have the desire that Company will develop and grow more and more, I have applied the knowledge’s from schools and experiences in working in order to collecting, analyzing and evaluating business environment, internal business and give the suitable and strategic business orientation with the reality for Company’s development in the next period From this composition, I have some conclusions: - Business strategy is very necessary for business to exist and develop in the fierce competitive environment - By the business environment analysis, Thieu Nien Tien Phong Joint Stock Company has many opportunities to develop beside difficulties and threats - By the internal business analysis, Company can uphold the strengths, overcome weakness in order to create the competitiveness for business - The strategic direction is to keep Company in the top position in Vietnam plastic industry Among the composition’s scope as well as the limited knowledge’s, although I have tried my best to collect all the primary theoretical problems as well as the business strategy application on bunisness activities, I can not avoid the restriction, errors and many other problems which have not been mentioned or mentioned not in the deep way I would like to receive the contributions, directions from teachers and readers to make my composition more perfect and I can apply the knowledge’s in paper into real business of Company Graduation Composition MBA GamBa01.n01 112 Respectfully thanks! REFERENCES Ministry of Industry: “The general planning on Vietnam plastic industry development to 2010”, Decision No.11/2004/QDBCN dated February 17, 2004 of Minister of Industry Ministry Prospectus of Thieu Nien Tien Phong Plastic Joint Stock Company Prospectus of Binh Minh Plastic Joint Stock Company Financial report of Thieu Nien Tien Phong Plastic Joint Stock Company in 2004, 2005, 2006, 2007 Financial report of Binh Minh Plastic Joint Stock Company in 2004, 2005, 2006, 2007 Bullentin of Vietnam Plastic Association Philip Kilter: “Marketing principles”, Ho Chi Minh Publisher, 1994 Graduation Composition MBA GamBa01.n01 113 PhD Vu Thanh Hung (Editor), PhD Nguyen Van Thang: “Strategic Management”, Education Publisher – Hanoi, 2005 Research and training institute about management: “Building and carrying out the business strategy – The way to success”, Labor and Social Publisher, 2007 10 Websites: - http://www.nhuatienphong-tifoplast.com.vn - http://www.binhminhplastic.com - http://www.vpas.vn - http://www.vietnamplasticnews.com.vn - http://www.vinaplast.com.vn Graduation Composition MBA GamBa01.n01 ... learning in GRIGGS University, Hanoi National University, we have been taught much knowledge about Business Administration And by the theoretical foundation and working reality, we have chosen the... Nien – Tien Phong Plastic Joint Stock Company is now one of the leaders in the Vietnam Plastic Industry, all the products with brand “Tien Phong Plastic” have been known as the high quality products... quality, is the ability in transform knowledge, education and the real operations in improving efficiencies; is the skill combination of each individual to create collective skills -Staff: Quantity