GaMBA01.D0109 Group 1 GRIGGS UNIVERSITY
GLOBAL ADVANCED MASTER OF BUISINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT

ELECTRICAL ENERGY BUSINESS
DEVELOPMENT STRATEGY OF
HO CHI MINH CITY POWER CORPORATION
IN THE PERIOD OF 2011-2015, VISION 2025 Group No. 1:
Nguyen Anh Vu
Tran Van Toan
Pham Chi Nghia
Dai Nguyen Vinh

Batch: GaMBA01.D0109 Ho Chi Minh 2010 GaMBA01.D0109 Group 1
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TABLE OF CONTENTS

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Chapter 2. ANALYZING THE RECENT STATUS OF HO CHI MINH CITY
POWER CORPORATION 23
2.1. OVERVIEW OF HO CHI MINH CITY POWER CORPORATION 23
2.1.1. Introduction 23
2.1.2. Summarize the situation and business operation results of Ho Chi Minh Power
Corporation in stage 2005 - 2009 25
2.1.3. Forecast the demand for power in Ho Chi Minh City in 2011-2015 26
2.1.4. Strategic tasks and objectives of 2011-2015, vision 2025. 28
2.1.4.1. Tasks 28
2.1.4.2. Strategic objectives 28
2.2. BUILDING POWER BUSINESS STRATEGY OF HO CHI MINH CITY
POWER CORPORATION IN 2011-2015 29
2.2.1. Analyzing external environment 29
2.2.1.1. General environment 29
2.2.1.2. Industry environment 34
2.2.2. Analyzing the internal environment of Ho Chi Minh City Power Corporation 37
2.2.2.1. Human Resources 37
2.2.2.2. Finance 38
2.2.2.3. Marketing 39
2.2.3. Building and choosing business strategies 48
2.2.3.1. SWOT analysis 48
2.2.3.2. The bussiness strategies formed from SWOT matrix 49
2.2.4. Choosing strategies – QSPM 51
2.2.4.1. QSPM (Quantitative Strategic Planning Matrix) 51
2.2.4.2. Choosing strategies 53
Chapter 3. THE SPECIFIC SOLUTIONS TO IMPLEMENT STRATEGIES
54
3.1. SOLUTIONS TO DEVELOP GRID IN 2011-2015, VISION 2025 54
3.1.1. Objectives and requirements 54

EVNHCMC: Ho Chi Minh City Power Corporation
EVNSPC: Southern Power Corporation
EVNHANOI: Ha Noi Power Corporation
GDP: Gross domestic product
ODA: Official development assistance
IFE: Internal Factor Evaluation matrix
BCG: Boston Consulting Group matrix
EFE: External Factor Evaluation matrix
CPM: Competitive Profile Matrix
SWOT: strength-weaknesses- opportunities- threats
QSPM: Quantitative Strategic Planning Matrix
AS: Attractiveness Scores
TAS: Total Attractiveness Scores
SAIFI: System Average Interruption Frequency Index
SAIDI: System Average Interruption Duration Index
AMR: Automatic meter reading
AMI: Advanced metering infrastructure
QMS: Queue management system
SCADA: Supervisory Control and Data Acquisition
GIS: Geographic information system
GIS: Gas insulator system GaMBA01.D0109 Group 1
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LIST OF TABLES
Table 2.1. Some indicators of business results (unit: million USD) 25
Table 2.2. Estimated power demand each year of 2010-2015 27
Table 2.3. Forecast the power demand of HCM City in 2015, 2020 27
Table 2.4. Coefficient of elasticity of power demand in the period of 2009-2020 by

currently operating mainly in the electrical energy business, is in charge of
distribution and energy sales in the city area, is responsible for ensuring adequate
power supply with stable quality for the needs of socio-economic development of
the city. Since its establishment and development, the Corporation has completed
the above tasks.
However, with demand for electricity is increasing as the socio-economic
development of Vietnam together with the need to provide quality service to
customers have become increasingly complete, the Corporation should have
appropriate business strategies to meet those needs. On the other hand, with the
policy of restructuring state enterprises in the direction of equalization and
development of competitive retail electricity market in the future, the corporation
should also have good preparation in the business strategy in response to fulfill
these goals.
Therefore, realizing the necessity and importance of a business strategy to
meet the above requirements, the group has chosen a research topic: "Electrical
energy business development strategy of Ho Chi Minh City Power Corporation in
the period of 2011 - 2015, vision 2025”.
 Purpose of research and practical possibility:
The research aims to evaluate the Corporation’s operation in 5 recent years
and identify the current strengths and weaknesses of the Corporation. Since then,

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the identification of opportunities and challenges analyzed in the coming time for
corporation which enables it to build business strategies accordingly.
This is an opportunity for members of group to have further study on
strategic management, linked to the knowledge learned from the GaMBA program
of Griggs University – the United States to apply to a specific firm.
Members of group are currently working in Ho Chi Minh City Power
Corporation, having advantage conditions to collection necessary data so that we

to have many changes quickly: "Strategy is the direction and scope of an
organization over the long-term: which achives advantage for organisation through
its configuration of resources within a challenging environment, to meet the needs
of markets and to fulfil stakeholders expectations".
Strategies exist at several levels in any organisation - ranging from the
overall business (or group of businesses) through to individuals working in it.
- Corporate strategy is concerned with the overall purpose and scope of the
business to meet stakeholder expectations. This is a crucial level since it is heavily
influenced by investors in the business and acts to guide strategic decision-making
throughout the business. Corporate strategy is often stated explicitly in a "mission
statement".
- Business unit strategy is concerned more with how a business competes
successfully in a particular market. It concerns strategic decisions about choice of
products, meeting needs of customers, gaining advantage over competitors,
exploiting or creating new opportunities etc.
- Functional strategic is concerned with how each part of the business is
organised to deliver the corporate and business-unit level strategic direction.
Functional strategy therefore focuses on issues of resources, processes, people etc.
Currently, with the trends of globalization, companies are fast diversifying
their activities beyond national borders. Since then, global strategy is the choice to
confront the problems with international business.

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1.1.2. Strategic management
Strategic management is the process of study and analyze environment
(internal and external) at present and in the future, planning for the organization’s
missions, implementation and controlling the implementation of decisions,
adjusting in oder to achieve these missions at present and in the future with the aim
to boost the enterprise’s trading position. (Prof. Lê Văn Bảy’s slides).

business
missions
Distribute
resources
Measure and
evaluate
results
Conduct internal
control to realize
strengths and
weaknesses
Choose
strategic for
development
Make policy
Setting
long-
term goal
Setting
annual goal
Feedback
Feedback
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Carry out external
control to realize
threats and
opportunities


are different for each enterprise in various sectors, with potential impact to the

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business strategy. Some basic factors are most interested: the trend gross domestic
product (GDP) and gross national product (GNP), interest rate and interest rate
trends, international balance of payments, inflation, system of taxes and tariffs…
Political and law environment: Include systems of perspectives, and
policies of the Party and State, the current law system. It is also necessary to master
the trend of political diplomacy of the government, the political developments at
home and abroad. These factors affect the formation and development of the
business.
Natural environment: These businesses with long history of operation
recognized the impact of natural circumstances in their business decisions. The
effects of natural includes: geographical location, climate, pollution, lack of energy
and wasteful use of natural resources and increasing demands on resources provided
by nature.
Social and demography environment: Social and demography
environment, including the key factors such as the concept of morality, the notion
of living, customs, concerns and priorities of society, the level of awareness and
general social education assembly. These factors affect the business strategies.
Therefore, enterprises should pay attention to these factors when planning a
business strategy.
Technological environment: The influence of technology creates
opportunities and risks in the process of strategic management for business.
Technological advances may create new markets, the result is to create new
products and making products and services is becoming obsolete. This environment,
strongly influences the production-related areas such as telecommunications,
information technology, information.
1.2.1.2. Industry environment

weaknesses
Figure 1.1. Key content to analyze the rivals [Michael E. Porter (1985)]
Some issue to response about the rival
- Does the rival satisfy with the fact?
- The possibility rivals move and transfer
strategic trend?
- Weaknesses of the rivals?
- What can help rival to retaliate in the
strongest and the most effective way?

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(2) Customers: Customers decide the existence of the business. The trust of
customers may be the most valuable assets to the business. Gained credibility
because it knows better way to meet the needs and tastes of customers from
competitors. Pressure from customers arising from the following conditions: when
the amount of people buying large proportion of the volume of goods sold by the
seller, when the shift to buy products of others do not cost much, when the buyers
give signal credible threat that will integrate backwards (reverse) with the customers
supplied, if the goods that customers buy the kinds of low level of specialization.
(3) Suppliers: Provider can assert their power by threatening to increase prices or
reduce product quality and service provision. Providers will have the advantage if
they have the following conditions: when only a small number of suppliers selling
to a large number of buyers in an industry, when substitutes are not available, when
goods or service providers which are essential and have a high level of
specialization, when suppliers make the signal credible threat integration is going
forward.
(4) Potential competitors: New competitors can participate in the factors that
reduce their profits by putting into operation new production capacities, with the
desire to gain market share and the necessary resources. Therefore, protecting the

position of the company's best and most attractive conditions for investors. Planning
effective strategies needs to identify the strengths and weaknesses of the business
financially. It is shown through the analysis of some basic financial criteria such as
liquidity, asset structure, capital structure, rate of profit this will make the
company’s development strategies became be more feasible.
1.2.2.3. Marketing
Do marketing research to identify market opportunities, market
segmentation, target market selection and market positioning, and customers
analysis, and factors related to planning a marketing strategy to consumer-oriented
and competitive marketing through its marketing businesses design, implement and
test the product strategy, pricing, distribution network and sales promotion.

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Well-understand marketing activities, the administrator will specify the
duties of this function, the work required to be done in each period.
1.2.2.4. Management
Administration includes four basic functions such as planning, organizing,
leading and controlling.
- Planning: Includes all administrative activities related to preparing for the
future. Specifically, planning is estimating, setting goals, offering strategies,
developing policies, establishing plans.
- Organization: includes all management activities to create the structure of the
relationship between rights and responsibilities. Specifically, organizational
design, job specialization, job descriptions, detailed work, control expansion,
unified command, coordination arrangements, job design and job analysis.
- Leadership: Includes efforts to orient human activity, namely leadership,
communication, joint working groups, change activities, authorization,
improved work effectively; job satisfaction, organizational change, employees'
mental and management.

percentages, ratios and comparative numbers.
- Step 2: Assign a weight that ranges from 0.0 (not important) to 1.0 (all
important) to each factor. The weight assigned to a given factor indicates the
relative importance of the factor to being successful in the firm’s industry.
Regardless of whether a key factor is an internal strength or weakness, factors
considered to have the greatest effect on organizational performance should be
assigned the highest weights. The sum of all weights must equal 1.0.
- Step 3: Assign a 1-to-4 rating to each factor to indicate whether that factor
represents a major weakness (rating = 1), a minor weakness (rating = 2), a
minor strength (rating = 3) or a major strength (rating = 4). Note that strengths
must receive a 3 or 4 rating and weakness must receive a 1 or 2 rating. Ratings
are thus company-based, whereas the weights in step 2 are industry-based.
- Step 4: Multiply each factor’s weight by its rating to determine a weighted score
for each variable.

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- Step 5: Sum the weighted scores for each variable to determine the total
weighted score for organization.
Regardless of how many factors are included in an IFE matrix, the total
weighted score range from a low of 1.0 to a high of 4.0, with the average score
being 2.5. Total weighted scores well below 2.5 characterize organizations that are
weak internally, whereas scores significantly above 2.5 indicate a strong internal
position. The weights always sum to 1.0.
1.3.1.2. Boston Consulting Group matrix (BCG)
The BCG Matrix was created by the Boston Consulting Group (BCG) and it
became on of the most well-known portfolio management. Companies that are large
enough to be organized into strategic business units face the challenge of allocating
resources among those units. Resources are allocated to business units according to
where they are situated on the grid as follows:

1.0 (very important). The weight indicates the relative importance of that factor
to being successful in the firm’s industry. Opportunities often receive higher
weights than threats, but threats can receive high weights if they are especially
severe or threatening. Appropriate weights can be determined by comparing
successful with unsuccessful competitors or by discussing the factor and
reaching a group consensus. The sum of all weights assigned to the factors must
equal 1.0.
- Step 3: Assign a rating between 1 and 4 to each key external factor to indicate
how effectively the firm’s current strategies respond to the factor, where 4 = the
response is superior, 3 = the response is above average, 2 = the response is
average and 1 = the response is poor. Ratings are based on effectiveness of the
firm’s strategies. Ratings are thus company-based, whereas the weights in Step
2 are industry-based. It is important to note that both threats and opportunities
can receive a 1, 2, 3 or 4.
- Step 4: Multiply each factor’s weight by its rating to determine the weighted
score.
- Step 5: Sum the weighted scores for each variable to determine the total
weighted score for the organization.

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Regardless of the number of key opportunities and threats included in an
EFE matrix, the highest possible total weighted score for an organization is 4.0 and
the lowest possible total weighted score is 1.0. The average total weighted score is
2.5. A total weighted score of 4 indicates that an organization is responding in an
outstanding way to existing opportunities and threats in its industry. In other words,
the firm’s strategies effectively take advantage of existing opportunities and
minimize the potential adverse effects of external threats. A total score of 1.0
indicates that the firm’s strategies are not capitalizing on opportunities or avoiding
external threats.

SWOT matrix is an important tool for combination which helps managers
develop four types of the following strategies:
- The strategic strengths - opportunities (SO)
- The strategic weaknesses - opportunities (WO)
- The strategic strengths - threats (ST)
- The strategic weaknesses - threats (WT)
According to Fred R. David, there are eight steps involved in constructing a
SWOT matrix:
- Step 1: List the firm’s key external opportunities.
- Step 2: List the firm’s key external threats.
- Step 3: List the firm’s key internal strengths.
- Step 4: List the firm’s key internal weaknesses.
- Step 5: Match internal strengths with external opportunities, and record the
resultant SO strategies in the appropriate cell.
- Step 6: Match internal weaknesses with external opportunities, and record the
resultant WO strategies.
- Step 7: Match internal strengths with external threats, and record the resultant
ST strategies.
- Step 8: Match internal weaknesses with external threats, and record the resultant
WT strategies.

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1.3.2. Tools for choosing strategy – QSPM
According to Fred R. David, QSPM (Quantitative Strategic Planning Matrix)
uses input from the IFE matrix, EFE matrix and SWOT matrix. Six steps are needed
to develop a QSPM:
- Step 1: Make a list of the firm’s key external opportunities/threats and internal
strengths/weaknesses in the left column of the QSPM. This information should
be taken directly from the IFE matrix and EFE matrix. A minimum of 10

enterprise, belonging to Electricity of Vietnam (EVN).
- Name initials: EVNHCMC
- Address: #35 Ton Duc Thang Street, Ben Nghe Ward, District 1, Ho Chi
Minh City. Fax: (84.8) 2220.1155 - 2220.1166
- Website:
Ho Chi Minh City Power Corporation, previously known as the Ho Chi Minh
City Power Managing and Delivering Department was established on August 7,
1976 was a unit belonging to Southern Power Company (now the Southern Power
Corporation) – Ministry of Power and Coal, including 7 Offices, 5 Units of power
exploration and 2 Teams with total quantity about 1,000 staffs, following the
regulation of dependent accounting system, activity functions includes managing,
delivering, trading, improving and developing the power grid of Ho Chi Minh City.
On July 08, 1995, Ministry of Energy decided to set up Ho Chi Minh City Power
Company – state-owned enterprise, which belongs to Vietnam Power Corporation
(now Electricity of Vietnam – EVN). On February 05, 2010, Ministry of Industry
and Trade decided to set up Ho Chi Minh City Power Corporation based on Ho Chi
Minh City Power Company, acts following model of parent company-subsidiary as
the regulation of Business Law. Total charter capital of the Corporation is about 114
millions USD, which is holding 100% by Vietnam Electricity.
Main target of HCMC Power Corporation includes trading power; managing
and delivering power by transmission and distribution network in 24 districts of Ho
Chi Minh City; delivering other services such as: investigating, consulting, trading
telecommu-nication facilities … and other required mission of Vietnam Electricity.

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Permanent Deputy
General Director

President – General Director

TÂN PHÚ

TÂN BÌNH

HÓC MÔN

THỦ ĐỨC

CẦN GIỜ

THỦ THIÊM

Power
Project
Manage-
ment Board

Building
Project
Manage-
ment Board

Load
Dispatch
Centre

High
Voltage
Power
Network

nel &
Organi-
zation
Dept.

Planning
Dept.

Ac-
counting
and
Finance
Dept.

Sales
Dept.

Engi-
neering
Dept.

Safety &
Labour
Protec-
tion
Dept.

Materials
& Import-
Export


Public
Relation
Dept.

CỦ CHIFigure 2.1. The organization chart of EVNHCMC [Source: EVNHCMC annual report]

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2.1.2. Summarize the situation and business operation results of Ho Chi
Minh Power Corporation in stage 2005 - 2009
Table 2.1. Some indicators of business results (unit: million USD)
Items
Units
2005
2006
2007
2008
2009
Total assets
million
USD
288.56
298.80
333.08
322.09
330.82

0.07
0.06
0.06
Customers
Household
1,325,228
1,412,213
1,507,986
1,601,017
1,676,364
Revenue
million
USD
599.51
650.08
787.10
788.27
881.07
Cost (exclude
loan’s interest
cost)
million
USD
585.68
638.29
777.31
778.60
875.88
Profit before
tax