GaMBA01.D0109 Group No. 03

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Global Advanced
MBA Program (GaMBA)

CAPSTONE PROJECT REPORT

DEVELOPMENT STRATEGIES OF
PHUMY THERMAL POWER
COMPANY IN PHASE 2011 – 2020
Dinh Quoc Lam
Phan Van Dung
Cao Minh Trung
Vo Minh Thang Class GaMBA01.D0109

GaMBA01.D0109 Group No. 03
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BRIEF OF CONTENTS
Page
CHAPTER 1: THE THEORY BASIS OF BUSINESS STRATEGY OF A
COMPANY 13
1.1. Concept of strategy 13
1.2. Contents of Strategic Management 15
1.3. Summary 29
CHAPTER 2 ANALYSIS OF PHU MY THERMAL POWER’S
CURRENT BUSINESS SITUATION AND THEIR STRATEGY
ESTABLISHMENT 30
2.1. Panorama of the electricity indusrtry 30
2.2. Overview of PMTP’s business situation 34
2.3. EXTERNAL ENVIRONMENT ANALYSIS 41
2.4. INTERNAL ENVIRONMENT ANALYSIS 50
2.5. ESTABLISHMENT AND CHOICE OF PMTP’S STRATEGY 58
2.5.1 Analysis of PM TP’s SPACE matrix 58
2.5.2 SWOT analysis of PMTP 60
2.5.3 Strategies options 61
2.5.4 Optimal strategic choice of PMTP 63
CHAPTER 3: SOLUTIONS FOR THE IMPLEMENTATION THE
STRATEGY OF PMTP 69
3.1 General Solution 69

1.2.2 Analysis of external environment 15
1.2.2.1 Macroscopic Environment 16
1.2.2.2 Industry Environment. 18
1.2.3 Internal Environment Analysis 20
1.2.3.1 Management 21
1.2.3.2 Marketing 21
1.2.3.3 Finance / Accounting 22
1.2.3.4 Production/Operations 22
1.2.3.5 Research and Development (R&D) 23
1.2.3.6 Information System 23
1.2.4 Process formed a stratergy 23
1.2.4.1 Phase 1: Input phase 23
1.2.4.2 Phase 2: Combination phase 23
1.2.4.3 Phase 3: Decision phase 24 GaMBA01.D0109 Group No. 03
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1.2.5 Strategies formation and selection tools: 24
1.2.5.1 EFE Matrix 25
1.2.5.2 IFE Matrix 25
1.2.5.3 SPACE Matrix 26
1.2.5.4 SWOT Matrix 27
1.2.5.5 QSPM Matrix 28
1.3. Summary 29
CHAPTER 2 ANALYSIS OF PHU MY THERMAL POWER’S
CURRENT BUSINESS SITUATION AND THEIR STRATEGY
ESTABLISHMENT 30
2.1. Panorama of the electricity indusrtry 30

2.4.2 Human resource 51
2.4.3 Marketing 52
2.4.4 Finance/Accounting 53
2.4.5 Manufacturing 55
2.4.6 Internal Factors Evaluation (IFE) 57
2.5. ESTABLISHMENT AND CHOICE OF PMTP’S STRATEGY 58
2.5.1 Analysis of PM TP’s SPACE matrix 58
2.5.2 SWOT analysis of PMTP 60
2.5.3 Strategies options 61
2.5.4 Optimal strategic choice of PMTP 63
CHAPTER 3: SOLUTIONS FOR THE IMPLEMENTATION THE
STRATEGY OF PMTP 69
3.1 General Solution 69
3.1.1 Solutions organization 69
3.1.2 Building corporate culture 70
3.1.3 Human Resource Development Solution 70
3.1.4 Financial Solutions 72
3.1.5 Technical management, safety and quality solutions 73
3.1.6 Information technology Solutions 73
3.1.7 Planning implementation general solutions 74
3.2 Solutions for each specific strategy 76
3.2.1 Power production and trading strategy 76
3.2.1.1 Short-term goals 76
3.2.1.2 Long-term goals 77
3.2.1.3 Solutions to implement strategy 79
3.2.2 Services development Strategy 82 GaMBA01.D0109 Group No. 03
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Phu My 3 Phu My 3 Power Company
PVPS PetroVietnam Power Service Company
PV POWER PetroVietnam Power Company
PV GAS PetroVietnam Gas Company
OEM Original Equipment Manufacturer
Non-OEM Non-Original Equipment Manufacturer
BOP Balance of Plant

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LIST OF TABLES
Page
Table 1.1: The technique analysis of external environment 16
Table 1.2. SWOT Matrix 28
Table 2.1: Capacity of the power system from 2005 to 2010 31
Table 2.2: Capacity of system according to No.6 power planning 32
Table 2.3: Capacity and market share of existing competitors 47
Table 2.4: Capacity and market share of Potential competitors 48
Table 2.5: External Factors Evaluation (EFE) 49
Table 2.6: Human resource of PMTP for period from 2006-2010 51
Table 2.7: Performance report of PMTP manufacturing 2006-2010 53
Table 2.8: Some basic financial targets of PMTP 2006-2009 53
Table 2.9: Manufacturing price of electric of PMTP 2006-2010 56
Table 2.10: Operational indicators of PMTP period 2006 – 2010 57
Table 2.11: Internal Factors Evaluation (IFE) 58
Table 2.12: SPACE Matrix 61

Chart 2.6: Strategic position of PMTP 59

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INTRODUCTION
1. Subject
Development strategies of Phu My Thermal Power Company for the period
2011 – 2020.
2. Necessity of the subject
Being a subsidiary of EVN, PMTP is undergoing the equitization process and
standing at the threshold of a competitive power market. The question is whether or
not such advantages PMTP gained in the past as: economy of scale, location,
personnel, finance and technology still has an impact on its competitiveness in the
market. Besides, there are future threats that PMTP will encounter and have to
overcome to achieve their goals and missions. In order to adapt to the new business
pattern of the competitive power market from a self-accounting system of a typical
state-owned enterprise in a monopolistic electricity industry, PMTP should have
specific strategic objectives and take step by step according to Vietnam macro
environment and electricity industry conditions that will have many changes in
coming years.
With the mission of becoming a sustainably developing and of high quality
corporation in South East Asia, PMTP should study thoroughly the business
environment factors in order to form an appropriate business strategy.
Resulting from the above mentioned reasons and imperative requirements, we
decided to select the subject “Development strategies of Phu My Thermal Power
Company for the period 2011 – 2020” for our master thesis of this MBA program,

5.2. Empirical method
This thesis’ research methods are primarily historical approach, describing
statistical method and analysis.
- Survey data on revenue reports from 2006 to 2010 and financial statements of
PMTP.
- Review PMTP activities, statistic data of production and business activities
- Surveys on business situation of PMTP and referring to comments of
specialists, consultant experts and customers in functional units of PMTP to
review and evaluate external and internal factors’ effects on PMTP’s
operations. GaMBA01.D0109 Group No.03
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6. Theoretical and practical significance of the subject
In the globalization and international integration process, the knowledge of
mankind is rapidly spreading across all nations and peoples. The research topic of
our group is applying the knowledge acquired in master business administration of
international program – GaMBA Griggs University in Vietnam and the practical
experiences over our time working in PMTP and in the electricity industry of
Vietnam
Through the process of learning and researching topics, our group obtained the
knowledge and valuable experiences from the program and all classmates; this is
very useful for all members of the group in current and future daily work.
This topic will be presented officially as a document and contributed in
advising the leadership in direction, administration and operation of the company.
The proposals will closely accord to strategic goals in the short and long term of the
company so that they will be compliant with regulations, vision and mission of the
company.

company's positions in relation to their competitors.
Concept of strategic management
Strategic management is a set of management decisions and actions
determining the long-term performance of a company. Strategic management
includes a set of continuous actions: testing and evaluate the environment (inside
and outside); forming strategies, implementing strategies and evaluating strategies.
Therefore, research the strategy to emphases on monitoring and evaluating the
external opportunities and threats in the situation of the internal strengths and
weaknesses. GaMBA01.D0109 Group No.03
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1.1.1 Benefits of Strategic management
Achieve strategic competitive advantage. This is an advantage when a company
has been formulating and implementing a strategy to get value to the conmapy.
Achieve stable competitive advantages. This is an advantage when a company
has been forming a strategy that its competitors could not have been, creating the
advantages that the current competitors and other potential competitors could not
have been.
Achieve above-average sector profits, that are profits exceeding investors’
expectation from other investments that have similar risks.
1.1.2 Comprehensive strategic management Model (Ref. 2) Figure 1.1: Comprehensive strategic management Model (Fred R David)
Source: Fred R David, “Strategic Management Concepts & Cases” twelfth edition, chapter 1, page 46.
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Table 1.1: The technique analysis of external environment
Technique
Objective
Scanning
Identify early signs of changes and environmental trends
Monitoring
Discovered meaning through continuous observations of changes
and trends of environment
Forecasting
Develop plans for what will happen based on changes and trends
have been reviewed and monitored
Assessing
Determine the duration and importance of the environment changes
and trends for strategies and management activity.
Source: Environmental Scanning by James L. Morrison (1992). Tallahassee, Florida: The Association for
Institutional Research.
1.2.2.1 Macroscopic Environment
(1) Economics environment
This is the key factor and has the most direct impact on enterprise.
Economics environment shows the nature and direction of domestic and global
economy within which the enterprise is operating.
Four vital factors’ in macroscopic economics environment are as follow:
- The growth rate of economy
- The interest rate and the trend of interest rate of economy

The technological knowledge is particularly important. Some factors should be
considered when studying technology environmental are:
- The born of new technologies
- The encouragement, funds available and costs for Research and
Development activities
- Intellectural Property and copyright Law; Technology Transfer Law.
- Pressure and costs for new technology’s development and transfer.
One of the most important impacts of technological change is that it can affect
the height of the industry’s entering barriers and reshape to the root of the industry
structure. In the high-tech technologies, the identification and assessment of critical
technological opportunities and threats may be the most important part of the
control of external factors in the strategic management activities.
(5) Natural Environment
Natural conditions are always an important factor in human life, which in many
cases becomes an important element to form the competitive advantage of
products and services. GaMBA01.D0109 Group No.03
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Factors need to be studied in this environment:
- Geographical location, natural conditions and climate.
- Depletion and scarcity of natural resources, minerals, energy resources
- Environmental pollution; the attention of government and community to
environment.
- Ecological imbalance.
(6) The Global Environment
In condition of integration and globalization, there’s not any business which
does not have a relationship directly or indirectly with the world economy, and

- To evaluate the strong of customers’s negotiation: price and quality.
 Power of Suppliers:
Should consider these factors as follows:
- The quantity of supplyer
- Characteristics of products and services
- Price, quality and quantity of consumption of products and services
- The ability and cost when changing suppliers

Fig. 1.2: Michael Porter’s Five Competitive Forces model
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. GaMBA01.D0109 Group No.03
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 Current competitor:
To recognize the kind of competitor
Necessary content in order to analyse the competitor:
- Current Strategy
- The potential
- Recognizing the impact of Rivalry to the industry
 Potential Entrants:
The New competitors are the competitors could enter the market of industry in
the future to become new competitors.
According to Michael Porter, there are six major sources of barriers to entry:
- Economies of Scale
- Proprietary product differentiation
- Capital requirements

rights and responsibilities. The specific tasks are: Organizational design, Job
specialization, Job descriptions, Job specifications, Span of control, Unity of
command, Coordination, Job design, Job analysis.
Promotion: Efforts to include the orientation of human activity, specific
Leadership, Communication, Work groups, Job enrichment, Job satisfaction, Needs
fulfillment, Organizational change, Morale.
Staffing: Staffing is activities focused on individual managers or human
resources management, including Wage & salary admin, Employee benefits,
Interviewing, Hiring, Firing, Training, Management, development, Safety,
Affirmative action, EEO, Labor relations, Career development, Discipline
procedures.
Control: relating to all management activities to ensure the results match reality,
consistent with planned results. The specific tasks are: Quality control, Financial
control, Sales control, Inventory control, Expense control, Analysis of variances,
Rewards, Sanctions.
1.2.3.2 Marketing
According to Joel Evans and Barry Berman, Marketing includes 09 basic
functions:
- Customer Analysis GaMBA01.D0109 Group No.03
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- Purchase
- Sales
- Product and service planning
- Pricing
- Distribution
- Marketing research

success or failure of organization
1.2.3.5 Research and Development (R&D)
In order to evaluation the strengths, weakness of R&D activities, often based on
costs for them.
There are two kinds of R&D forms: self-control and/or hire researchers or
independent organizations to develop individual products.
1.2.3.6 Information System
The information links all of the functions in business together and provides the
basis for all of management decisions. It is the foundation of all organizations.
Evaluation of the strengths and weakness of information systems inside of the
company are important side of internal control process.
The criteria for evaluating information system
- Evaluate information intensity: The potential and existing information level
of processes and products of the company.
- Determine how the technique of the information system forms a competitive
advantage.
- Develop plans to take advantage of the technique of information systems.
1.2.4 Process formed a stratergy (Ref. 2)
In order to form a strategy, a decision-making process includes three phases:
1.2.4.1 Phase 1: Input phase
This phase summary of the basis information has been entered necessary for
the formation of strategies.
This phase uses tools: EFE matrix, IFE matrix
1.2.4.2 Phase 2: Combination phase
This phase focuses on making feasible strategies may be choices by
arrangement, combination the inside and outside important elements.
This phase uses tools: SWOT matrix, SPACE matrix GaMBA01.D0109 Group No.03