Business development of PMTP - EVNGENCO 3
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1. Phan Thanh Xuan
2. Truong Quoc Phuc
3. Truong Van Phuong
4. Nguyen Thi Thanh Hien Ho Chi Minh City - 2013

Business development of PMTP - EVNGENCO 3
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TABLE OF CONTENT

ABBREVIATIONS 5
ACKNOWLEDGEMENT 6
LITERATURE REVIEW OF BUSINESS STRATEGY 12
1.1 Concept of strategy and strategic management 12
1.1.1 The benefit of strategic management 13
1.1.2 The model of comprehensive strategic management 13
1.3.1 Vision, mission and objectives 14
1.3.2 External factor evaluation 15
1.3.2.1 Macro-condition 15

2.3.1.3 Cultural and social environment 41
2.3.1.4 Technological - scientific environment 42
2.3.1.5 Natural environment 42
2.3.1.6 Global environment 43
2.3.2 Analysis of industry environment 44
2.3.2.1 The power of buyers (customers) 44
2.3.2.2 The power of suppliers 45
2.3.2.3 The current competitors 46
2.3.2.4 The potential competitors. 47
2.3.2.5 The threats alternative products 48
2.3.3 External factors evaluation (Matrix EFE) 48
2.4 Developing strategies for Phu My Thermal Power Production
Division 60
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2.4.1 Vision and mission 60
2.4.2 Analyzing the SPACE matrix of Phu My Thermal Power Production
Division 61
2.4.4 Selection of strategies 64
CHAPTER 3 68
SOLUTIONS TO IMPLEMENT THE STRATEGIES OF PMTP DIVISION 68
3.1 The business strategy for power production 68
3.1.1 Short-term objectives 68
3.1.2 Long-term objectives 68
3.1.3 Solutions to implement the strategy 70
3.1.4 Plans for implementating the strategy 72
3.2.1 The human resource strategy 73
3.2.1.4. Plans for implementating the strategy 76
3.2 .2 The cost reduction strategy 77
3.2.2.1 Short - term objectives 77

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ACKNOWLEDGEMENT

First of all, we respectfully show my gratitude towards the Leadership of Phu
My Thermal Power Company/Power Generation Corporation 3 for creating
conditions for us to have the opportunities to learn and absorb the knowledge of
business administration, and helping us to have opportunities to approach the
valuable knowledge from the program.
We respectfully thank the leadership, the lecturers and assistants of program
for transmitting us the valuable knowledge and experience and helping us to open
my awareness as the mean for us to develop, implement our objectives and serve
for Power Generation Corporation 3 in specific and Electricity of Vietnam (EVN)
in general.
We respectfully thank our classmates for attracting, supporting and sharing
with us so that we can get over the difficulties during our learning process.
Finally, we would like to send my gratitude towards HCMC Electricity
College, the lecturers and the assistants of GAMBA, and the management board of
class D0111 for assisting us to complete the course and accomplish the topic.
Best regards!
Ho Chi Minh City, - March , 2013

that its duty is to play the key roles in the fields of production, transmission and
distribution. With such mission, during the past time, despite of difficult finance, it
not only does business, but serves for the public, contributes and supports for the
implementation of mode and policy of the State; EVN also implemented the
mission of providing the electricity for the national economy and securing the
national power well.
However, the apparatus and the economic - financial mechanism of EVN in
specific and the electricity industry in general are not consistent with the market
economy to continue the powerful and stable growth and meet the general demand
for growth of the country.
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For above reasons, according to the guidelines of the Government and
Ministry of Industry and Commerce, EVN is in the process of restructuring the
organization to form and develop the electricity market: firstly, establish 5
electricity distribution corporations and then 3 power generation corporations (3
power generation corporations are based on upgrading 3 one member limited
liability companies: Uong Bi Thermal Power, Can Tho Thermal Power and Phu My
Thermal Power).
Our group includes members who previously work for Phu My Thermal
Power Company and are working at Power Generator Corporations 3 (EVNGENCO
3) as one of three corporations which are new and entered into from January 1
st
,
2013.
With a new organizational structure, thermal power companies: Phu My 1,
Phu My 2.1, Phu My 2.1 and Phu My 4 are located in the parent company
EVNGENCO 3, although the operating scope almost does not change, it is mainly
the operation and maintenance, and repair of combined cycle gas turbine power
generators. However, in the new situation, the internal and external factors of these

these plants On such basis, business strategy of Phu My power plants, as well as
offer some solutions in order to overcome the weaknesses and improve the
operations of Phu My power plants, in the first stage of construction and
development of EVNGENCO 3.
4. Scope
Object:
Although our group has an ambition that we will research all power
generation units directly under EVNGENCO 3 in order to construct the business
strategy got these units, we are concentrating on the direct management and
operation and obtaining the comprehensive operating process as well as the present
working aspects of member units because EVNGENCO 3 is new and it was entered
into from the beginning of 2013 - the basis needs to construct the business strategy.
Therefore, the objects of these dissertations are: the research of business
environment of electricity industry nationwide, the operation of SBU of Phu My
power plants, the activities of domestic and foreign competitors that cause a strong
impact on the operations of these plants.
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Scope: Nationwide.
5. Research method
5.1. Research methodology
Approach the macro-environment: How do economics, culture-society,
politic-law, technology and global factors affect the operations of PMTP. Approach
the electricity industry: Threats from the entry of potential competitors, the degree
of competition between the power generation companies, the bargaining power of
the power purchasing company, the bargaining power of fuel suppliers, technology,
and the threat of alternative products.
Approach the internal environment: Analyze the existing resources of
PMTPin order to find out the strengths and weaknesses.
5.2. Practical research method
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CHAPTER 1
LITERATURE REVIEW OF BUSINESS STRATEGY

1.1 Concept of strategy and strategic management
Concept of strategy.
There are many definitions of strategy, each definition is more or less
different subjecting to the point of view of each author:
- According to Fred R. David (2003): the strategy is the means to reach the
long-term objectives.
- According to Alfred Chandler: the strategy os the determinaiton of basic
and long-term objectives for an enterprise, the selection of mehod and direction of
Fig 1.1: Comprehensive strategic management
Feedback
Determine
the mission
and
objectives
and current
strategy
Implement the
external control to
identify the
opportunities and
threats
Set up
the long-
term

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1.2 The levels of business strategy
The strategy definition also depends on the level of strategy. There are three
strategy levels have been identified:
1.2.1 Corporate - level strategy
Corporate-level strategy determines the orientation of the organization in the
long term in order to complete the mission, achieve the growth target. On the basis
of corporate-level strategy, the organization will implement its own strategy.
1.2.2 Strategic Busniss Unit: in relation to how the competition on a
specific market
Strategic Business Unit (SBU) within a company can be a business industry
or a sort of product, etc. This strategy aims at development orientation of each
industry or each sort of product contributing to the completion of corporate-level
strategy, to define clearly the advantages of each industry in comparison with its
competitors to devise strategies suited to corporate-level strategy.
Functional - level strategy
A company would have the functional divisions such as: marketing, human
resources, finance, manufacturing, research and development, etc. These functional
divisions should support to implement the strategic business unit and corporate-
level strategy.
1.3 Content of strategic management
1.3.1 Vision, mission and objectives
- Vision: offer an orientation to the future, a desire of an organization for
what it wishes to reach. The vision is a lively image and picture of what can happen
to an organization in the future. Describe what an organization should reach by the
sign or i ni. The vision creates the endless source of inspiration of all members of
organization in order to gain the higher level of the ordinary activity and create the
new thinking.
- Mission: presented by the declaration of mission of an organization. It
makes clear the trust and guidance of identified visions. The mission of the

1.3.2.1 Macro-condition
(1) Economics
This is a very important factor that attracts the concern of all managers. The
impact of these environmental factors is direct. The development of the economic
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condition always contains different risks and threats towards each company in
different industries, and causes the potential effect on the strategy of company.
The main effect of the economic factors includes: the economic growth arte,
the banking interest, the payment balance, the exchange rate, the actual income, the
inflation rate, the tax system and tax rate.
(2) Politic and law
It includes the system of opinions, the guideline and policy of the
government, the current law system, main tendency of foreign affair of the
government and the political development in domestic, regional and the global
country. It can affect the political and legal conditions towards the enterprises as
follows:
- Politic: the political institution and the complicated changes in the
political environment will create the opportunities and threats for the enterprises.
- Law: offer the provisions that allow or do not allow, or give the
constraints that request the enterprises to observe. The problem is that the
enterprises need to obtain and observe the law well aiming to take use of the
opportunities as well as cope up with the threats of business.
- Government: plays a big role in regulating the macro conditions by the
policy on economics, finance, currency and spending programs. The enterprises
must obtain the opinions, stipulation and spending programs of the State and set up
good relationship aiming to create the favorable condition for the operation of the
company if it wishes to take advantage of opportunities and cut down on the threats.
(3) Culture and society
The change in cultural and social factors is a part of consequence of the long-

following requirements:
- Take priority for developing the production and sale or services aiming to
exploit the conditions and advantage of natural conditions on basis of ensuring the
maintenance and renovation. Especially, it enhances the natural conditions
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- Have the saving method and effective use of natural resources.
Particularly, it can be gradually transferred from the use of resources that are not
renewable in the nature to the use of artificial materials.
(6) Global conditions
In the global and integration trend, no enterprises have direct or indirect
relationship with the world economy. In contrast, the relationship between the
company and the world economy is stronger. Thus, the change in economic
conditions will affect the business environment of the domestic countries.
In conclusion, the main objectives of the macro factor evaluation are to
identify the change of expected tendencies from the external environmental factors.
If the enterprise wishes to look for the opportunities and threats, it must include the
all factors and forces that affect the operation and implementation of enterprise.
1.3.2.2 Industry condition.
(1) The necessity of industry analysis
Industry factor evaluaiton is a necessary factor for planning the strategy for
the managers, especially the decision making in business.
Objectives of the industry factor evaluation towards the company is to find
out a position in an industry that the company is able to have the best defense before
these competitive factors or they can change them in the useful way. Understand the
fundamental origin of the competitive pressure will clarify the strengths and
weaknesses of company, bring the life for the company of the same industry,
identify the areas that the startegic change can bring the most benefits and point out
the regions that the tendency in the promising industry will be the most important,
whether the opportunities or threat.


Fig 1.2: Model of 5 competitive forces
Michael Porter, a famous professor of business startegy of the Harvard School,
offered the model with 5 competitive pressures, they are:
- Power of customer:
The contents that need to be noticed when analyzing the customer:
+ Customer segment.
+ Assess the bargaining power of customer: price and quality.
- Power of supplier:
Consider factors:
+ The quantity of suppliers
+ Nature, specific characteristics of products and services
Alternative products
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1.3.3.1 Management
The management has 5 basic functions: planning, organization, promotion,
personnel and control:
- Planning: include all managerial operations related to the preparation for
the future. The specific missions are: prediction, set up the objectives, propose the
strategy, develop the policies, and establish the purposes.
- Organization: includes all managerial operations that create the structure
of relationship between the rights and responsibility. The specific tasks: design the
organization, describe the job, expand the control, design the job and analyze the
job.
- Promotion: includes the efforts aiming to orient the operations for people
including the leadership, contact, group work, and change of operation,
authorization, and improvement of job quality, satisfaction of the work and needs,
change of organization, spirit of staff and spirit of management.
- Personnel: the personnel focuses on managing the individuals or human
resources including the management of salary and wage, benefit of staff, interview,
recruitment, unemployment, training, development, management, safety for the
staff, development of qualification, policy of discipline, the public work.
- Control: relates to the management aiming to ensure that the actual result
is appropriate and consistent with the planned result. The main operations:
inspection of finance, inspection of quality, sale, inventory, cost, reward.
1.3.3.2 Marketing
Marketing is described as the process of determination, forecast,
establishment and satisfaction of needs and wishes of onsumers towards the
products and services.
Joel Evans and Barry Berman suppose that Marketing consists of 9 basic
funcitons:
- Analysis of customer
- Purchase

- Capacity
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- Inventory
- Labor force
- Quality
Strengths and weaknesses in 5 functions are similar to the success or failure
of an organization.
1.3.3.5 Research & Development (R&D)
The R&D aims to develop new products before the competitors, improve the
product quality or renovate the produciton process in order to cut down on the cost.
There are 2 forms of R&D: self - perform/or rent the researchers or
independent organizations in order to develop the seperate products.
1.3.3.6 Information system
The information connects all business functions to each other and provides
the basis for all decisions on management. It is fundamental for all organizations.
Assess the strengths and weaknesses of the internal informaiton system as an
important aspect for implementing the internal control.
According to Porter and Miller, if we wish to establish the effecient
information system and exploit the competitve advanatge of information, we need
to implement the following steps:
- Assess the information intensity: the level of potential and current
informaiton on the process and products of company.
- Identify how the technique of informaiton ystem can establish the
competitve advantage.
- Develop the plan to take use of the technique of informaiton system.
1.3.4 Process to implement strategies
To implement the strategy, we need to have a decision making process
including 3 stages:
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- Step 1: Establsih the factors that plays a decisive roles in the business that
the company is doing including the opportunities and threats of company and line of
business of company.
- Step 2: Assess the level of importance of each factor according to the
range from 0.0 to 1.0 (the gradual increase in level of importance) with total score
of each factor is 1. The appropriate classification is compared between by the
sucessful enterpises and unsucessful ones.
- Step 3: the range from 1 to 4 for each factor with the score showing the
degree of response of enterprise to such factor. 4 is good response. 3 is over average
response. 2 is average response and 1 is less response. These levels are based on the
efefctiveness of the startegy of company. Therefore, this classification is based on
the company while the classification in the step 2 is based on the industry.
- Step 4: Multipy the importance of each variable with its classification to
get the score of importance (step 4 = step 2 x step 3).
- Step 5: Identify teh total score of importance of enterprise by total score
that we got in the step 3.
Total highest score is 4 and the lowest score is 1, the average is 2.5. The
higher score show that the company has a good response to external factors.
1.3.5.2 Competitive Profile Matrix
In order to build a competitive profile matrix (CPM) should be made via 5
steps:
- Step 1: Make a list of the main elements to have an important influence to
the competitiveness of companies in the industry.
- Step 2: Classify the importance from 0.0 (not important) to 1.0 (very
important) for each factors.The total score of the importance of these factors must
be equal to 1.0.
- Step 3: Determine the weight from 1 to 4 for each factors, the weight of
each factors depending on the ability of the company to the factors, of which 4 are
good, 3 is over average, 2 is average , 1 is weak.