VIETNAM NATIONAL UNIVERSITY, HANOI
SCHOOL OF BUSINESS NGUYEN DINH DUY

BUSINESS STRATEGY FOR GATEXCO 20,
PERIOD 2013 - 2018

Major: Business Administration
Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisors: Dr. Nguyen Thi Phi Nga Hanoi - 2012
ii

ABSTRACT
BUSINESS STRATEGY FOR GATEXCO 20,
PERIOD 2013 - 2018
Nguyen Dinh Duy
MBA candidate, 2008-2010
Viet Nam National University, Ha Noi.
School of Business
Supervisors: Dr. Nguyen Thi Phi Nga
December, 2012, 102 pages

The strategies of the company show the future of the company on doing its

TABLE OF CONTENTS vi
LIST OF FIGURES ix
LIST OF TABLE x
INTRODUCTION 1
A. Background and Rational 1
B. Objectives 2
C. Scope and Limitation 3
CHAPTER 1: FOUNDATION THEORY FOR STRATEGIC
MANAGEMENT 4
1.1. The definition of business strategy 4
1.2. The definition of business strategic planning 4
1.3. The business strategic planning process 5
1.4. Tools used in business strategic planning 8
1.4.1. SWOT matrix 8
1.4.2. Porter‟s Five Forces Model 9
1.4.3. PEST analysis 11
vii

1.4.4. Value chain analysis 13
CHAPTER 2: EXTERNAL AND INTERNAL ANALYSIS 16
2.1. EXTERNAL ANALYSIS 16
2.1.1. PEST Analysis 16
2.1.2. Industry analysis 32
2.1.3. Summary external analysis 38
2.2. INTERNAL ANALYSIS 41
2.2.1. Primary activities 44
2.2.2. Support activities 55
2.2.3. Summary internal analysis 60
CHAPTER 3: SELECTED STRATEGIES FOR GATEXCO 20 AND
INPLEMENTATION PLAN 64

Figure 5: Porter's Five Forces Model 9
Figure 6: Value chain analysis model of Porter (1980) 14
Figure 7: Porter‟s five forces model 32
Figure 8: Value chain analysis model 43
Figure 9: The process of receiving input materials 45
Figure 10: The operation process of GATEXCO20 46
Figure 11: Images of some major products of GATEXCO20 48
Figure 12: The distribution system of Viet Tien Garments Company and Nha
Be Garments Company 51
Figure 13: Organization structure of GATEXCO20 54
Figure 14: Five stage of building-up the raw material system 68
Figure 15: 8 key successful factors for TQM 69
Figure 16: Seven-S Framework 76
Figure 17: The business strategy process 96

x

LIST OF TABLE

Table 1: World internet usage and population statistics 2011 30
Table 2: Opportunities and Threats to Gatexco20 39
Table 3: Import and Tariff on Fuels (%) 49
Table 4: GATEXCO20 employees in 2010 and 2011 55
Table 5: Production capacity in 2011 of some garment and textile companies
in the domestic market 58
Table 6: Strengths and Weaknesses of GATEXCO20 60
Table 7: SWOT matrix for functional strategies 64
Table 8: Ranking order of functional strategies 75
Table 9: Trait models by John Gardner (1989) and Zaccaro (2004) 82
Table 10: Six Sigma system 84

competition with strong competitors such as China, India, Indonesia,
Pakistan, Korea.
Furthermore, most of the enterprises operating in garment and textile industry
do not take into account the business strategic planning and view it as one of
the vital part on the continuous development. The fact is that every enterprise
needs to apply business strategy that is help to respond quickly to changes in
the market. In each period, the company can adopt one or many strategies
which are based on analyzing and predicting the company‟s strength or
weakness and the market‟s opportunities or threats. The business strategy is
2

built on the basis of analyzing and predicting the opportunities, risks,
strengths and weaknesses of enterprises that help the enterprise obtaining the
general information on external business environment as well as internal
resources of the enterprise. Based on the mentioned problems, they plan the
strategic objectives, select the best strategy and formulate policies to achieve
those objectives and simultaneously inspect and adjust the strategy to face
with the change of business environment. The business strategy helps
enterprises not to fall into a defensive situation, but to always stand on the
offensive side to be ready to face all changes of the business environment.
GATEXCO20 is not the exceptional case in terms of issues related to the
business strategic planning. Currently, GATEXCO20‟s business strategy is
limited to the short term planning without a long term vision. The company
sometimes deals passively with the change in the market and adjusts planning.
Therefore, the need to plan and implement long-term business strategy is very
important and urgent for the survival and development of the company.
Therefore, in the respect of the important role of business strategic planning
for the orientation development of Vietnam‟s garment and textile industry and
the long-term development of GATEXCO20, the author decides to choose
“Business Strategy for GATEXCO20, period 2013 - 2018” as the name of the

implementation process will be success, this strategy will be extended for the
long term.
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CHAPTER 1: FOUNDATION THEORY FOR STRATEGIC
MANAGEMENT
1.1. The definition of business strategy
Rumelt (1980) defined business strategy as the combination of goals, objectives,
missions and action plans in order to help the firm to run its businesses
successfully. Quinn (1998) defined business strategy as the plan in order to
integrate all business activities and to align them with the goals, objectives of
development of firm. Mathur and Kenyon (1997) identified that when firm
provides its products and services in multiple, it will have a number of different
business strategy, so each business strategy has the different scope of work and
application. Favaro (2012), in addition, defined business strategy as a result of
selection in order to maximize firm‟s values for long term. However, Favaro
(2012) advised firm management should takes into account the value in short term
as well as risk factors existed in the market.
1.2. The definition of business strategic planning
Strategic Planning Handbook (2001) stated that strategic planning Is
described as a road map which is designed to help firm reaching to
expectations. Tapinos (2005) defined business strategic planning is the
combination of importance steps that helps firm to formulate business
strategies. When performing business strategic planning, Tapinos suggested
that firm should takes into consideration of four factors: long horizon,
utilization of planning tools, formality, and frequent monitoring the planning
process. Hodgetts and Kuratko (2001) addressed the importance of business

strategies implementation. Then, the sixth step where the business strategies
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are put in the frequent reviews. The last step is the strategic document are
prepared and approved by the board of management.

Figure 1: Business strategic planning process – sample 1
(Source: Grunig, 2011)
Chetthamrongchai (2009) provided the business strategic planning process
that takes into consideration seven steps, including: business mission, SWOT
analysis, goal formulation, strategy formulation, program formulation,
implementation, and feedbacks.

Figure 2: Business strategic planning process - sample 2
(Source: Chetthamrongchai, 2009)
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Hax (2003) stated that business strategic planning process includes five steps:
The missions of businesses, Internal and external environment analyses,
Business strategy formulation, Strategic programming, and Budgeting.
Strategic Planning Handbook (2001) stated that the business strategic
planning process needs to have the separate steps for mission statement,
objective creation, goal determination and action plan.

Figure 3: Business strategic planning process - sample 3
(Source: Hax, 2003)
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1.4. Tools used in business strategic planning
1.4.1. SWOT matrix

advantage of our
opportunities?
What should we do to
shore up our weakness
to prevent the threats
from slowing us down?
Figure 4: SWOT Matrix
(Source: Adopted from Bradford et al, 2000)
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1.4.2. Porter’s Five Forces Model
The model of Five Forces of an industry was provided by Porter in 1980. This
model includes five distinct entities, including the power of buyers, the power
of suppliers, the substitute products, the threat of new entrants and the rivalry
between competitors in the industry. Ehnke, Fulton, Akridge, Erickson and
Linton (2004) highlighted the importance of Porter‟s Five Forces Model as it
helps firm to determine the potential profit of an industry which firm is
operating in, and helps firm to answer the question of what the key successful
factor for competitive advantage.

Figure 5: Porter's Five Forces Model
(Source: Porter, 1980)
1.4.2.1. Power of suppliers
The suppliers are more powerful when firm has to purchase the raw materials
necessarily for manufacturing products from the small number of suppliers.
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On the other hand, it means that there are not so many suppliers in the
industry and the suppliers has the power of determining the prices and
quantity of selling raw materials for firms in this industry.

scale, the economy of scale impacts on the production process of firms. If
firms produces products in large volumes but they do not gain so much values
from the economy of scale (e.g. lower cost), they will face the high
competition from new entrants in the market. (Ehnke, Fulton, Akridge,
Erickson and Linton, 2004)
1.4.2.5. Rivalry among competitors
High rivalry among competitors is often found in slow growth market where
firms have to utilize the economy of scale to control the operating cost and to
reduce the products and services‟ prices offered to the customers. Other
reason of high rivalry among competitors is that the product of firm is not
differentiating to product of other firms. It means that other firms can
duplicate the firm‟s products and services easily. Additionally, the high
rivalry among competitors can be explained as the result of high cost for
exiting the industry.
1.4.3. PEST analysis
PEST analysis is provided by Doole and Lowe (2008) that is considered as
the important tools for firms to analyze the impacts of external environments.
PEST analysis takes into consideration of four aspects of external
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environment: political environment, economy environment, social
environment, and technology environment.
Political environment takes into account the political risks in a country or in
the globe that impact directly to firms‟ activities. Doole and Lowe (2008)
refers politics to the behavior and actions of the local government or the
internal bodies (e.g. World Trade Organization, World Bank, International
Monetary Fund) toward establishment of the business environment and legal
framework for the operation of firms. Normally, the business legal framework
in developing and emerging markets is not comprehensive as in the developed
markets. On the other hand, the local governments in developed countries

solutions for deriving the business decisions in time (SAS, 2012).
1.4.4. Value chain analysis
In 1980, Michael Porter provided the value chain analysis that is often uses to
derive the appropriate business strategies for firms. This analysis is carried on
the two important aspects of firms: primary activities and support activities.
Primary activities include inbound logistics, operation, outbound logistics,
marketing and sales, and service. Support activities include firm
infrastructure, human resource management, technology development, and
procurement. Gregorio () defined primary activity is the process of purchasing
necessary raw materials, manufacturing products and sale to the customers.
This activity also includes the after sale services and customer care; and
defined support activity as those that merely supports the primary activity.
14 Figure 6: Value chain analysis model of Porter (1980)
(Source: Porter, 1980)
Porter (1980) also highlighted the importance of linkage between primary
activities and support activities. On the other hand, it means that primary
activities and support activities are linked with each other and one activity in
the value chain can impact to other activities. For example, the procurement
process can affect to the inbound logistics. If the firm does not purchase the
assets in time, the firm cannot have sufficient resources for its operation and
thus the firm cannot meet the customers‟ commitment and loosing the market
share to other firms who have better procurement process. Porter (1980) also
addressed the challenge of which the firm often may not anticipate well the
synchronization level between activities in its value chain. The bad
anticipation is due by the weak of management board or the high fluctuation
in the market and customers‟ demands.
Value chain analysis is more important in case of firms who derive their

2.1.1. PEST Analysis
Vietnam is one of the most competitive garment and textile exporting
countries in the Asia and the world today. The buyers from other countries
supply the materials for processing and manufacturing to Vietnamese garment
and textile enterprises, then they buy the processed goods back for re-
exporting after labeling their brand names. Vietnam now is determined as the
country has the competitive advantage in garment and textile exporting due to
the Vietnamese labors have high skills but inexpensive labor cost.
It is very clearly to say the macro-economy and policies are always affecting
to the garment and textile industry. For example, Agglomeration of garment
and textile manufacturing has developed very well after the opening up of its
economy since the Doi Moi policy since 1986. Furthermore, with the
encouragement policies of the Vietnamese Government of which allowing the
development of new enterprises for manufacturing and exporting, there are
more and more garment and textile companies have been established and they
have been contributing a lot into the Vietnam‟s GDP recently.
In the next section, the author examines the key economic indicators of
Vietnamese macro-economy as well as identifying the retail consumption
volume, social and political environment. These analyses are closed to the
PEST analysis theory developed by Isobel Doole, Robin Lowe, (2008)
1
of
which, the PEST analysis will be conducted by examining the four factors:
social environment, legal, politics, economy situation and technology
availability.

1
Isobel Doole, Robin Lowe, (2008). International marketing strategy: Analysis, Development and
Implementation, 5th Edition, Cengage Learning EMEA, pp7-17
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