GeMBA01.E04 GROUP No.10

1 GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUSINESS
ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT PHU MY THERMAL POWER BUSINESS
STRATEGY FORMULATION IN PHASE 2010-2015
Class GeMBA01.E04
Group No.: 10
Student’s name: Duong Thanh Dung
Tran Van Luat
Thien Thanh Son
Le Van Tai
Nguyen Thi Hai Yen (Group Leader)


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TABLE OF CONTENTS
Page
Acknowledgements i
Table of contents ii
List of abbreviations vi
List of tables vii
List of figures, graphs viii
INTRODUCTION 1
Chapter 1 Methodology Of Business Strategy Of The Company 4
1.1. Definition of Strategy and Strategic Management 4
1.1.1 Definition of Strategic Management 4
1.1.2 Benefits of Strategic Management 6
1.1.3 Strategic Management Process 6
1.2. Process of Strategy Formulation and Selection 7
1.2.1 Determining vision, mission and objectives 7
1.2.1.1 Vision 7
1.2.1.2 Mission 7
1.2.1.3 Main objectives 7
1.2.2 Analyzing external environment 7
1.2.2.1 Analytical techniques of external environment 8
1.2.2.2 Marco environment 9
1.2.2.3 Industry environment. 12
1.2.2.4 Key factors for success 15
1.2.3 Analyzing internal environment 15
1.2.3.1 Strengths and Weaknesses 16

2.2.1.1 Macroenvironment 42
2.2.1.2 Microinvironment 46
2.2.1.3 External Factor Evaluation Matrix 55
2.2.2 Internal Environment 56
2.2.2.1 Human Resources 56
2.2.2.2 Financial Capacity 64
2.2.2.3 Organization 64
2.2.2.4 Technology and production scale 65
2.2.2.5 Inventory Management 67 GeMBA01.E04 GROUP No.10

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2.2.2.6 Marketing 67
2.2.2.7 Leadership and management 67
2.2.2.8 Research and Developing Investment 68
2.2.2.9 Electricity Quality 69
2.2.2.10 Trade-mark 71
2.2.2.11 Internal Factor Evaluation Matrix 71
2.2.3 SWOT analysis 73
2.3. Analyzing Business Environment of Maintenance Service 75
2.3.1 External Environment analysis 75
2.3.1.1 Macroenvironment: 75
2.3.1.2 Microenvironment: 77
2.3.2 Internal Environment analysis: 80
2.3.2.1 Human Resources 80
2.3.2.2 Marketing 81
2.3.2.3 Technology 81

3.3.1.3 Management 103
3.3.1.4 Human resource management 104
3.3.1.5 Financial solutions 107
3.3.2 Specific solutions: 109
3.3.2.1 To electricity business 109
3.3.2.2 To maintenance services business 111
3.3.2.3 Marketing: 112
3.4. Recommendations 112
3.4.1 To Government 112
3.4.2 To Electricity of Vietnam (EVN) 112
3.4.3 To Phu My Thermal Power Co. 113
3.5. Summary 113
CONCLUSION 115
REFERENCES 116
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LIST OF ABBREVIATIONS

PMTP Phu My Thermal Power Company Limited
EVN Electricity of Vietnam
A0 The Nation load Dispatch Center
MSC Maintenance Service Center
BTP Ba Ria Thermal Power Joint Stock Company
TĐTP Thu Duc Thermal Power Company Limited
CTTP Can Tho Thermal Power Company Limited

Table 1.9 SWOT Analysis – What to look for 23
Table 2.1 Price of electricity production PMTP in 2006 - 2009 34
Table 2.2 Some production targets in business of PMTP in 2006 - 2009 35
Table 2.3 Human resources of PMTP from 2006 to 2009 39
Table 2.4 Business activities Results of Maintenance Service Center from 2006
to 2009 41
Table 2.5 Analysis of competitors 52
Table 2.6 External Factor Evaluation Matrix (EFE) 55
Table 2.7 Power production of PMTP in 2006 – 2009 69
Table 2.8 Internal Factor Evaluation Matrix (IFE) 71
Table 2.9 SWOT analysis of Generation Business 73
Table 2.10 Competitiveness evaluation 83
Table 2.11 SWOT analysis of MSC 84
Table 3.1 Strategy Selection 88
Table 3.2 Business plan of electricity production 2010-2015 93
Table 3.3 Maintenance Service Business Plan 101 GeMBA01.E04 GROUP No.10

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LIST OF FIGURES, GRAPHS

Figure 1.1 The Strategy-Making, Strategy-Executing Process 5
Figure 1.2 The Strategic management Process 6
Figure 1.3 Components of External Environment 9
Figure 1.4 The Five Forces Model of Competition 14
Figure 1.5 Components of Internal Analysis leading to Competitive Advantage
and Strategic Competitiveness 16

on its competitions in the power market. Besides, there are future threats that PMTP
will encounter and have to overcome to achieve the goal. In order to adapt to the
new business pattern of competitive power market, from the self-accounting system
of a typical state-owned enterprise with monopolistic competition in electricity
sector, PMTP should have specific strategic objectives, each step in accordance
with Vietnam macro environment and electricity sector conditions that will have
many changes in the coming years.
Therefore, it is necessary to know thoroughly business environment of PMTP,
so that it can take full advantage of opportunities, reduce weaknesses and minimize
risks to its own business activities in competitive power market – that PMTP has
never had neither any experiences nor figures out how hard business competition
will be. With the mission is to become a strong development and top grade
corporation in South East Asia, PMTP should know thoroughly business
environment factors in order to form appropriate business strategy.
Proceeding from imperative requirements and the reasons above, therefore we
pick out the subject “Phu My Thermal Power Business Strategy Formulation in
Phase 2010-2015” for our master's thesis of this MBA program, so that we can
apply the learning to where we are working for, PMTP, in future practice.

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3. Purpose
The purpose of researching the subject is analyzing the state of PMTP, the
effect of the business environment to PMTP activities, to be aware of its own
strengths and weaknesses as well as business opportunities in comparison with

- Survey situation of PMTP and referring to comments of specialists in
functional units of PMTP and consultant experts and customers to review and
evaluate external and internal factors effect to operations of PMTP.
- Competitiveness evaluation of MSC is also done in same way.
6. Theoretical and practical significance of the subject
In the globalization and international integration process, human knowledge is
spread over all nations, ethnic groups thanks to worldwide information networks. It
is highly important for us to acquire the knowledge of basic business management
of the US economy through this program at the University of Griggs in Vietnam.
Besides, we need to acquire the academic knowledge applied to such the most-
developed economy in the world as US and creatively use it in small businesses of
Vietnam economy.
Our subject begins with applying scientific knowledge digested in specific
business conditions to PMTP where we are working with the hope to find out the
internal strengths and weaknesses as well as discover the opportunities, challenges
and risks from external environment to advise the leaders in the process-oriented
company to achieve the strategic objectives in the long term.
During the process of business strategy formulation and application, we hope
that our team will collect more practical experiences thence gradually improve
strategies to help PMTP stand firm in the competitive electricity market in Vietnam
and gradually reaching out global market in the future.
7. Contents
Thesis is divided into three chapters as follows:
Chapter 1: Methodology Of Business Strategy Of The Company.
Chapter 2: Real Business Situation Analysis in Phu My Thermal Power
Company.
Chapter 3: Phu My Thermal Power Company Business Strategy In Phase
2010 – 2015.
Figure 1.1: The Strategy-Making, Strategy-Executing Process
Source: Lesson plan of Jana F. Kuzmicki, Ph.D. Troy University
Phase 1: Making a strategic vision that describes the future image of a
company and is intended to move the company in that direction. This provides the
main long-term orientation, points out the image that a company want to achieve
and spread purposeful actions to company.
Phase 2: Setting objectives to transform a strategic vision into specific
implementary results that a company can be achieve.
Phase 3: Developing a strategy to gain desired objectives.
Phase 4: Implementing and executing the selected strategy effectively and
efficiently.
Phase 5: Evaluating performance and adjusting the vision, long-term
orientation, objectives, strategy or implementation based on experience, changing
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1.1.2 Benefits of Strategic Management
Achieving strategic competitive advantage when a company builds and
implements a valuable strategy.
Achieving substainable competitive advantage when a company builds a
strategy that its competitors can’t do it and creats advantages that both present and
potential competitors can’t gain it.
Earning profit above average of a industry i.e. profit exceeds what investors
have expected from other investments with similar risks
1.1.3 Strategic Management Process


toward key issues, be challenging but reality and determine specific time to achieve.
They include:
- Maximizing shareholders’ income
- Maximizing annual turnover.
- Earning long-term profit GeMBA01.E04 GROUP No.10

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1.2.2 Analyzing external environment
External environment includes general environment - focuses on the future,
industry environment - focus on factors and conditions that affect profit of industry,
competitor environment - focus on forecasting dynamic level of actions, reactions
and intentions from competitors.
1.2.2.1 Analytical techniques of external environment
Models that are used to analyze the external environment will provide format
for identification of opportunities and threats of the environment. The opportunity is
a condition that if the company knows to exploit, it will achieve strategic
competitive advantage. The challenge is a condition that can restrain the company
from gaining competitive advantage and strategic competitive advantage. The threat
arises when the external environmental conditions endanger the integrity and
profitability from bussiness operations in the company. The basic techniques to
analyze the external environment include Scanning, Monitoring, Forecasting and
Assessing.
Summary of analytical techniques of external environment in the following
table:
Table 1.1: Analytical techniques of external environment
Technique

Status of the macro economic environment determines healthiness and
prosperity in the economy and it always affect companies and industries. Therefore,
the company must study economic environment to identify changes, trends and
strategic implication.
Economic environment shows nature and orientation of domestic and global
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economic environment is growth rate of the economy, interest rate, exchange rate
and inflation rate.
(2) Technological environment
Technological segment includes institutions, activities involved in creation of
new knowledge, shifting the knowledge to outputs, products, processes and new
materials. Technological change also include creation and destruction as well as
opportunities and threats.
One of the most important impacts of technological change is the impact on
the height of the entrance barrier and reforming structure of the industry to the
every roots. Knowledges of technology are vitally important. Certainly
opportunities and threats of technology in the macro environment have an impact on
enterprises including purchasing technology from outside or self-creating new
technology.
(3) Sociocultural environment
Sociocultural segment is related to social attitudes and cultural values.
Because the cultural values and social attitudes form foundation of society, they
often lead changes as well as technological, political/legal, economic and
demographic conditions. Like technological changes, social changes also create

focus on the future, analyzing the external environment allows enterprises to
identify opportunities and threats. Summary of analyzing the macro environment in
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Table 1.2: The General environment: Segments and Elements

Sources: http://moodle.griggs.edu.vn/mod/resource/view.php?id=808
1.2.2.3 Industry environment.
(1) Necessity of analyzing industry and competition
Analyzing industry and competition is a set of conceptions and techniques to
clarify the key issues as follows:
- The economic characteristics are remarkable in the industry.
- Competitive forces with their nature and strength are operating in the
industry.
- Driving forces and their impact cause change in the industry.
- Companies is positioned to be the most powerful and weakest.
- Who may make the next move in the industry?
- Critical factors for success or failure in competition.
- Attractiveness of the industry in aspect of profitable ability above average.

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Source: Adapted and reprinted by permission of Harvard Business Review. From “How Competitive Forces Shape
Strategy,” by Michael E. Porter, Harvard Business Review, March/April 1979 © by the President and Fellows of Harvard
College. All rights reserved.
Threat of subsstitutes: Threat of subsstitutes is implementation of strategy
“industry entrance barrier”. The size advantage is an increase of marginal efficiency
when a company raise its size. Advantages and disadvantages is involved in
entrancing in large-scale and small-scale such as flexibility in pricing and market
share, cost related to size advantage, response of competitors. Product difference i.e.
unique product, customer loyalty, products at competitive prices.
Bargaining power of suppliers: Power of suppliers will increase in case: The
number of suppliers is not many and they have large-scale; There are few substitute
products; Supplier’s product is extremely important in customers’ success in the
market; Product change may need high cost; Suppliers have the ability to penetrate
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Bargaining power of buyers: Power of buyers will increase in case: The
number of buyers are few and they are large customers; Buyers consume mostly
products of industry; Buyers make up large proportion of annual revenue from
sellers; Conversion cost of other products is low; Buyers are able to penetrate back
industry of sellers; Buyers have full information.
Risk of entry by potential competitors: Threat of substitute products increases
in case: Buyers have not to pay high cost when conversing products; Price of
substitute product is lower; Quality and effectiveness of substitute product are better
product they are using; Special products that are highly appreciated by customers

Advantage and Strategic Competitiveness
Sources: http://moodle.griggs.edu.vn/mod/resource/view.php?id=813
1.2.3.1 Strengths and Weaknesses
A strength is a thing that the company is doing good or features to help it
improve competitiveness. Strengths may exist in the following kinds:
- A important skill or experience such as manufacturing know-how with
low cost, technological know-how, non-defect production, experience of
providing good customer service, skills of product improvement,
commercial skills for large-scale products, unique promotions.
- Valuable tangible assets such as modern factory, attractive location,
reserving natural resources, having facilities around the world.
- Valuable assets of human resources such as capable and experienced labor
force, skilled workers in key sectors, managemental know-how, learning
and collaboration in the whole organization.