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GLOBAL ADVANCED MASTER OF BUSINESS
ADMINISTRATION

CAPSTONE PROJECT REPORT

DEVELOPMENT STRATEGY FOR PETRO
CAPITAL AND INFRASTRUCTURE
Bui Minh Chinh

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Table of contents
Acknowledgement 2
Table of contents 3
List of tables 6
List of figures, graphs 6
Introduction 7
Chapter 1. Theoretical basis on business strategy and real estate business strategy
8
1.1. Definition, planning and implementation of strategy 8
1.1.1. Definition 8
1.1.2. Strategy planning and implementation 8
1.1.3. Some matrices commonly used in strategy planning 9
1.1.3.1. External factor evaluation Matrix - EFE 9
1.1.3.2. Internal factor evaluation Matrix - IFE 9

2.2.2. Situation of project implementation 21
2.3. Analysis of external environment 24
2.3.1. Macro environment 24
2.3.1.1. Economic environment 24
2.3.1.2. Political environment, policies and law 26
2.3.1.3. Socio-cultural environment 28
2.3.1.4. Technological environment 29
2.3.2. Micro economy 29
(1). Competitors 29
(2). Customers 31
(3). Supplier 33
(4). Alternative products 35
(5). Barrier from penetration into sector 36
2.3.3. Matrix of external factor evaluation – EFE 37
2.4. Analysis of internal environment 39
2.4.1. Financial capacity 39
2.4.2. Business capacity 39
2.4.3. Leading capacity 41
2.4.4. Human resources management 42
2.4.5. Marketing 43
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2.4.6. Matrix of internal factor evaluation – IFE 44
2.5. Analysis of matrices to strategically planning 46
2.5.1. Competitive Picture Matrix 46
2.5.2. SPACE Matrix 47
2.5.3. SWOT Matrix 48
2.5.4. QSPM Matrix 50
2.5.4.1. Market expansion strategy and business diversification strategy 50

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List of figures, graphs
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Figure 1.1. Model of five competitive forces of Michael Porter 11
Figure 2.1. Organization Chart of Petroland 18
Figure 2.2. GDP Per Capita in VietNam in the period of 2000-2010 25
Figure 2.3. Image of strategy (SPACE matrix) 48

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INTRODUCTION
“If we understand our situation and the competitors, we can always win victory;
otherwise, defeat is a certain result” Sun Tzu.
A company, an organization, an individual, a family that desires to gain success in
a final objective is required to identify a road. Market is like a battlefield, especially
for every company with responsibility to shareholders and employees. Therefore, all
companies should develop a proper business strategy as the basis for their business
operation in current time and future.
Business is like fighting "Sometimes it is as rapid as wind; sometimes as slow as
forest; sometimes aggressive as fire but sometimes as defensive as mountain”

The strategy management is comprised of 03 stages:
+ Strategy establishment is a process of establishing the business tasks;
carrying out the research to determine the internal and external limitations; setting
long-term objectives; and selecting alternative strategies and typical strategies for
pursuit.
+ Strategy implementation requires company to establish the annual objectives,
proposal of policies, encouragement of personnel and distribution of resources to
implement the established strategy. Implementation of strategy is comprised to
development of a culture to support strategy in the establishment of effective structure,
orientation of activities, preparation of funds, development and use of information
system, encouragement of personnel’s operation.
+ Strategy evaluation will monitor the comment on results of established
activities and strategy implementation including the measurement of personal and
organizational achievements, and the actions to be adjusted.
(1) Fred R. David, translators: Truong Cong Minh, Tran Tuan Thac, Tran Thi Tuong Nhu (2006),
Concepts of Strategic Management, Statistics Publisher, Ha Noi city, VietNam.
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1.1.3. Some matrices commonly used in strategy planning
(1)

1.1.3.1. External factor evaluation Matrix - EFE
EFE matrix is often used for assessment of external factors to enable strategists to
summarize and evaluate economic, social, cultural, demographical, geographical,
political, governmental, legal, technological and competitive information. Therefore,
strategists can summarize the main opportunities and risks of external environment

with the company among aggressive, conservative, defensive, competitive. The axis of
SPACE matrix represents two internal aspects of the organization (Financial strength
(FS) and competitive advantage (CA) and two external factors including
environmental stability and industry strength. These four factors are the most
important factors deciding the strategic position of the organization.
1.1.3.6. QSPM Matrix
The Quantitative Strategic Planning Matrix is a strategic tool which is used to
evaluate alternative set of strategies. QSPM identifies the attractiveness of various
strategies by making use of or improving key external and internal successful factors.
A QSPM matrix may consist of any quantity of strategies. However, only strategies in
a specific group must be evaluated together. For example, a group of strategies may
include backwards combination strategy, upwards combination strategy, and
associating combination strategy, while another group of strategies may include the
issue of share and sale of an unit of company to increase a necessary capital. These
two groups of strategies are completely different and QSPM only evaluates the
strategies in their group.
1.2. Model of five competitive forces of Michael Porter
(2)
According to Michael Porter, a leading strategy and competition planner,
competition intensity of the market of any production sector is under the impact of 5
forces as follows:

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products and
services
Supplier
Competitors in the
sector
Potential competitors
Alternative products
Buyer
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+ High entrance barrier is expressed in following factors including absolute cost
advantage, understanding in market fluctuation, approach to input factors, policy of
government, economic characteristic by scale, capital requirements, typical
characteristicsof commodity brand, switching cost of business industries, accessibility
to distribution channel, pay-back ability, exclusive products.
(4) Power of customer is shown in: bargaining leverage, buyer volume, buyer
information, brand identity, price sensitivity, threat of backward integration, product
differentiation, buyer concentration vs industry, substitutes available, buyer’s
incentives.
(5) Degree of rivalry: exit barrier, industry concentration, fixed costs/ value added,
industry growth, intermittent overcapacity, product differences, switching costs, brand
identity, diversity of rivals, corproate stakes.
1.3. Overview about real estate business in Vietnam

“Real estate business is the provision of investment capital to establish, buy,
receive transfer, lease, real estate lease and buy for sale, transfer, leasing, re-hiring to
gain profit.”
(3)


to sell the apartments to return capital. This results in surplus in housing. It is predicted
that owners will reduce the price to avoid capital stagnation. Some projects will be
extended in progress pending more advantageous time.
House for medium-income people
Apartments for medium-income people is a segment of real demand since its price
is suitable with most of people. The statistics of Dat Lanh Real Estate Company shows
that the apartments are transacted at high rate in the market at the price of 500 million
to 5 billion VND, in which the apartments of less than 1 billion (about 15 million/m
2
)
represents about 80% of all transactions.
Today, high-class apartments are excessive; therefore, many enterprises including
domestic and foreign enterprises gradually shift to products for medium-income
people to increase the liquidity and rapid capital pay-back. According to real estate
experts, apartments of less than 1 billion VND (60m
2
to 100m
2
) in new urban areas
will be the segment of the most interest in the near future.
(6) Reference from http://vnexpress.net/gl/kinh-doanh/bat-dong-san/2011/04/thi-truong-nha-thu-nhap-
trung-binh-nhieu-tiem-nang/

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1.3.3. Trade center market
(7)
There will be additional supply of retail business sites to be launched in the market.
In the meanwhile, some previously-opened trade centers still face with difficulties in

1.3.5. Competition in real estate market
(9)
Real estate market in 2011 is evaluated to suffer from violent competition,
especially price competition. The investors with weak financial capacity will withdraw
from the market, and the market will not be attractive to non-professional new
entrants.
In the recent period, the investors normally implements project development before
adjustment made in acordance with the market. To ensure more effective project
investment in the future, the owner needs to carry out intensive market research prior
to the design of products suitable with the need of buyers and market. In addition, the
owners should implement good control of cost and propose proper sale and
competitive price strategies.
1.4. Necessity to make business strategy of Petroland
Globalization has created lots of opportunities for enterprises as well as fiercer and
fiercer competitiveness. In order to survive and develop, enterprises must be aware of
its position in the market, its destination and way to get there. That is reason why
enterprises need to make its strategies, and Petroland is not exception. Strategy
planning helps Petroland be aware of and take advantages of opportunities, minimize
negative impacts of adverse changes, and utilize its human resources most effectively.
Currently, real estate is making high profit, and has great growth potential.
Therefore, real estate enterprises have lots of opportunities to develop. However,
demand for capital of real estate is very great, thus it is much influenced by macro
economic factors. With great fluctuation of the economy, capital arrangement,
selection of market and products, activeness in adapting to changes in the market…are
critical to survival of real estate businesses. Thus, strategy planning is very significant
to Petroland.
(9) Reference from http://www.ceco507.com.vn/Nam-2011gia-bat-dong-san-se-canh-tranh-quyet-liet-
newsview.aspx?cate=108&id=167

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relevant services;
- Invest in construction, management the operation and trading and exploiting petrol
industrial zones; industrial zones using natural gas and other industrial zones;
- Invest in construction and trading seaport, river port; storage of petrol, gas, and
chemical;
- Consult in investment into construction, consult in project management;
management and exploitation of projects;
- Trade in real estate, materials and construction equipments;
- Carry out financial investment, sell and buy holdings, joint venture with domestic
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and foreign companies to implement investment projects;
- Perform in other business fields in accordance with legal legislation if Board of
Management see that it is beneficial for the Company;
Over the past time, the Company has been focusing on two main products and
services which are construction investment and providing consultant services in
construction. Since its establishment to the end of 2010, the Company has made lots of
achievements in business, it has been carrying out many big projects, products and
services of the Company are accepted by customers. Efforts and achievements in its
business have been recognized and commended by PCV, Petro Vietnam Group and
Ministry of Industry and Trade.
Figure 2.1. Organization Chart of Petroland
(Issued in attachment with the Decision no.846/QD-PETROLAND dated 29
th
March 2011 of
the Board of Directors of Petroland)
Board of shareholders
Board of Directors
Board of Management
Board of Control
Office
Personnel
Department
Finance
Department
Legal &
Communication
Department
Investment
Department
Planning
Department
Real Estate Trading
Center
Project Management
Board
Management Board of
New urban area Projects
Housing Exploitation
and Management
Enterprise

I. Short term debts 22,719,973,289 105,093,903,614 790,633,031,520
II. Long term debts - 349,000,000 332,920,965,483
B. Capital Sources
of Shareholders 966,402,948,052 986,172,912,548 1,219,681,089,514
Paid – in capital 937,620,000,000 937,620,000,000 1,000,000,000,000
Total Capital 989,122,921,341 1,091,615,816,162 2,343,235,086,517
Source: Financial Statement of Petroland in 2008,2009 and 2010

Table 2.2. Some financial ratios of Petroland
No. Item Unit Year 2009 Year 2010
I Liquidity capability
1.1 Current Ratio times 6.72 2.03
1.2 Quick Ratio times 3.01 1.57
1.3 Interest cover ratio (EBIT/interest) times 31.07
II Financial leverage
2.1
Self-financing ratio
(Equity/Total capital) % 90.34% 52.05%
2.2 Debt ratio (Total debt/Total assets) % 9.66% 47.95%
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III Operational capability

3.1
Assets turnover
(Net revenue/ Average total assets) cycle 0.05 0.54
3.2 Net revenue / Average fixed assets cycle 0.28 3.10
3.3 Stock days days 1,974 192
3.4 Debtor's payment period days 559 189

efficiency of ownership utilization. Currently, debt ratio is 47.95%. This is quite safe
level and lower than companies operating in the same sectors (50%-70%)
(10)
. Interest
cover ratio is quite high, 31.07. This shows that Petroland has quite low financial risk.
Liquidity of the Company is also at safe level. In 2010, current ratio and quick ratio
is 2.03 and 1.57 respectively.
In general, financial situation of Petroland is quite good. Currently, financial
indicators of Petroland are at safe level. Although profitability of Petroland is lower
than average level of the sector (ROE of the sector is about 20%)
(11)
, with reasonable
investment and sales policies, together with available potentials, Petroland has great
potentials for development upcoming years.
2.2.2. Situation of project implementation
(12)
By the end of 2010, Petroland carried out many activities at the same time:
investment promotion, investment preparation, project investment, investment capital
contribution and providing consultant services – project management. The Company is
seeking for new projects and new investment opportunities. Below is situation of
promotion and implementation of projects.
 Projects directly invested by Petroland:
- Phu My Hung Petrol Commercial and Financial Center (Petroland Tower) has 3
basements and 30 levels (1
st
to 3
rd
floor will be for commercial center, 4
th
to 24

st
December 2010, execution of body
structure to 10
th
floor will be finished, 8 floors will be completed and M&E will
reach 70% of volume.
 Projects in which Petroland contributes its capital:
- My Phu Apartment Building. This Apartment Building has 22 floors, was
commenced on 16
th
July 2010. In 2010, the execution of pile and foundation of the
basement was finished.
- Vung Tau new urban area. The Company has completed the planning and get
approval for the planning scale 1/500. The project is on the process of carrying out
procedures of compensation for resettlement. The project is on the stage of basic
design and establish investment project.
- In addition, the Company also invests into some work scheduled projects such as:
+ Commercial – Services Center, Offices and hi-end apartments in Street 30/4 Vung
Tau city.
+ Golf yard and Cam Ranh eco villas. The project has compensated and supported for
60/66 households and hand over site according to new boundary of the project.
+ Huynh Tan Phat Apartment Building: Cooperation contract has been signed between
Khang Thong Company, PIV Long Son, PVFC Land and Petroland. The project was
commenced on August 2010, execution of fence and test pile are completed.
+ Thang Long Apartment Building. The Company has signed contract with Vu Anh
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General Hospital Company Ltd and cooperate to establish a construction investment
and cooperation joint stock company with charter capital of 500 billion dong, in

Tien Giang petrol services industrial zone (investor is PVC); (1) Steel pipe of
straight welding factory – Tien Giang (investor is PV-PIPE); and (12) Other projects
have been promoted, introduced to investors.
2.3. Analysis of external environment
2.3.1. Macro environment
Impacts of macro economy on real estate enterprises in Vietnam is very great.
State’s policies such as tax, profit, foreign investment, population, economic activities
and people’s income have direct influences on supply and demand in real estate
market. Most of construction works of Petroland are located in Ho Chi Minh City, thus
indicators, policies and data relating to this area will be focused. Below are analysis of
influences of macro economy on business activities of Petroland.
2.3.1.1. Economic environment
Gross domestic income (GDP)
General Statistics Office has just announced official data about economic growth
of Vietnam’s economy in 2010. Accordingly, GDP by practical price reached 1.98
million billion dong, equivalent to 104.6 billion. In comparison in term of basis period
(1994), growth rate of GDP in Vietnam in 2010 reached 6.78% against 2009.
(13)

Regarding foreign direct investment, by 21
st
December 2010, there were 969
projects in Vietnam with total registered FDI of 17.23 billion USD.
(13)

In Ho Chi Minh City, average economic growth rate for 5 years (period 2005 –
20100 reached 11%. Economic scope of the city by 2010 were 1.7 times more than the
year 2005, GDP per capita in 2010 was estimated to be 2,800USD, 1.68 times more
than the year 2005.
(14)