GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION
PROGRAM
CAPSTONE PROJECT REPORT BUILDING THE BUSINESS STRATERGY
FOR IALY HYDRO-POWER COMPANY
IN THE PERIOD 2010 - 2015
Group No.: 4
Student’s name:
Nguyen Le Duc Chuong
Ta Van Luan - Group leader
Nguyen Ngoc Minh
Dinh Van Son

Class: GeMBA01.E04 ACKNOWLEGEMENTS
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After more than one year following course Masters of International Business
Administration – Griggs University, we have been provided with valuable
knowledge from our enthusiastic teachers, who have continuously guilded us to
complete this MBA course. Therefore, we take this chance to express our sincere
thank to all your monumental support.
In particular, we want to thank the Steering Committee of Ialy Hydro Power
Company; departments and workshops here for substantial help and favourable
conditions they have created for us. We wish all Company’s staff health and
happiness; and obviously success will come to Ialy Hydro Power Company so
Company’s position will be strengthened more and more in Vietnam Electricity
Industry.
Last but not least, we would not have the opportunity to follow this MBA course
and attempt to achieve our dream without Vietnam Electricity (EVN) support,
which we highly appreciate and wish to send our special thank to them.
We are grateful to all your time and support which should deserve beyond a mere
thank.

Students
Group 4 - Class GeMBA01.E04

1.2.4. The formation of business strategy 23
1.2.5. Methods for the implementation of business strategy 23
1.2.6. Evaluating the efficiency of established business strategy 24
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1.3. SOME MATRIX CAN BE PURSUED FOR BUSINESS STRATEGY
PLANNING 24
1.3.1. External Factor Evaluation (EFE) Matrix 24
1.3.2. Internal factor evaluation (IFE) matrix 25
1.3.3. Competitive profile matrix 26
1.3.4. SWOT Matrix 27
1.3.5. Internal – External matrix (IE) 29
1.3.6. QSPM matrix (Quantitative strategic planning matrix) 30
1.3.7. Experience in planning business strategy for enterprises. 32
CHAPTER 2: ANALYSIS OF CURRENT SITUATION OF IALY HYDRO
POWER COMPANY 34
2.1. INTRODUCTION OF IALY HYDRO POWER COMPANY 34
2.1.1. History of establishment and development 34
2.1.2. Company’s current organizational structure: 38
2.1.3. Fields of business of the Company 42
2.2. EXTERNAL ENVIRONMENT ANALYSIS 43
2.2.1. Macro-environment 43
2.2.2. Micro-environment 49
2.3. INTERNAL ENVIRONMENT ANALYSIS 59
2.3.1. Analysis of power production and business period 2000 – 2009 59
2.3.2. Analysis of cost for production and business 64
2.3.3. Analysis of production business of services period 2007 – 2009 66
2.3.4. Company’s available resources 69

3.6.2. Priority of business strategy implementation (see Table 3.9) 100
3.6.3. Selection of business strategy 100
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3.7. SOME SOLUTIONS FOR THE IMPLEMENTATION OF SERVICES
BUSINESS STRATEGY FOR IALY HYDRO POWER COMPANY IN THE
PERIOD 2010 - 2015 106
3.7.1. Human resources and organization management 106
3.7.2. Marketing the service business 111
3.8. REVENUE SCHEME OF SERVICES BUSINESS 116
3.8.1. Total investment capital and financial strength 116
3.8.2. Calculation of annual revenue 117
3.9. DEVELOPMENT OF ORGANIZATIONAL STRUCTURE OF REPAIR
SERVICE CENTER 120
3.9.1. Structure (see organization Diagram 3.3): 120
3.9.2. Human resources: 121
3.9.3. Rights and responsibility of Director and Deputy Director of Center 122
3.9.4. Relationship of Center and Company 124
3.9.5. Operation budget 124
3.10. PLANNING TO DO THE STRATEGY 125
3.10.1 . Restructure based on roadmap of enterprise privatization 125
3.10.2. Establishing a repair service center in form of Ialy Hydro Power Company’s
subsidiary 127
3.11. SOME RECOMMENDATIONS 130
3.11.1. Recommendation to Government 130
3.11.2. Recommendation to Vietnam electricity (EVN) 130
3.11.3. Recommendation to Ialy Hydro Power Company 130
CONCLUSION 131

1
Ialy HPC
Ialy Hydro Power Company
2
PR
Public relations
3
ROA
Return On Assets
4
EVN
Vietnam Electricity
5
WTO
World Trade Organization
6
PMP VI
Power Master Plan VI
7
SRV
Socialist Republic of Vietnam
LIST OF CHARTS, DIAGRAMS AND TABLES IN THIS ASSIGNMENT
1. List of diagrams:
No.
Name of chart
Page
Diagram 1.1
Business strategy planning process
18
Diagram 1.2

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2009 (million kWh)
Chart 2.4
Power production period 2000 to 2009 (MW)
62
Chart 2.5
Power output from 2000 to 2009 (million kWh)
62
Chart 2.6
Revenue from service period 2007 - 2009
68
Chart 3.1
Revenue from service business2007 – 2009
105
Chart 3.2
Capital structure
117
Chart 3.3
Market for service in 3 provinces of Western – Highlands
119
3. List of Tables
No.
Name of Table
Page
Table 1.1
External Factor Evaluation (EFE) Matrix
25
Table 1.2
Internal Factor Evaluation (IFE) Matrix
26

76
Table 3.1
Internal Factor Evaluation (IEF) Matrix
83
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Table 3.2
External Factor Evaluation (EFE) Matrix
84
Table 3.3
Competitive Profile Matrix
85
Table 3.4
IE Matrix
87
Table 3.5
QSPM Matrix
95
Table 3.6
Priority of business strategy implementation
100
Table 3.7
Salary for repair staff
104
Table 3.8
Revenue from services business
104
Table 3.9

Electricity industry in line with market economy and economic integration in the
region and the world. It is scheduled that power-generating facilities will be
restructured and reorganized in 2010, including Ialy Hydropower Company.
Because Company is currently a dependent accounting unit of Vietnam Electricity
(EVN), therefore Company own business strategy is not explicit and dependent on
Parent Company’s strategy. All business activities are assigned by Vietnam
Electricity (EVN) in order to ensure electricity production and other technical and
economic characteristics; business efficiency is not appropriately paid attention to.
Therefore, to prepare for the reorganization of power-generating facilities and
coming equitization, Ialy is recommended to develop its own business strategy.
Besides, Company will not be able to succeed in today market economy without an
effective business strategy to improve business performance. A business strategy
thus is considered as an essential and indispensable task of every enterprise during
this transition process. In these contexts, our group has come to an agreement to
select this capstone of:
Building the business strategy for Ialy Hydro Power Company in the period 2010 -
2015.

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2. Objectives and scope of the capstone
2.1. Objectives
The objective of this capstone is analyzing, evaluating the current business situation
of Ialy Hydro Power Company; and factors which influence on Company’s business
development. Then we can find its strengths, weaknesses, opportunities and threats
in order to develop an effective business strategy for Company in the period; and
propose suitable solutions for strategy implementation. We have together selected
the year 2015 because this time is stated in National Electricity Development Plan

4. Scientific significance and merit of this capstone
4.1. Scientific significance of this capstone
In the context of market economy today, a business strategy is one of the most
important factors to success or failure of one enterprise. It is essential not only to
private but also state-owned enterprises. Therefore, the top priority of each
enterprise should be building one effective business strategy.
There are different methods which can help to develop a good business strategy for
enterprises. Regarding scientific significance, this capstone summarizes different
sources of methodology and based on those findings to develop a business strategy
which is most concise and practical for Company.
4.2. Merit of this capstone
One general business strategy planning process is employed to develop business
strategy for Ialy Hydro Power Company in the period. In fact, State-owned
companies have not paid much attention to the development of business strategy
since the date of establishment because their annual business targets are always
assigned by higher authority. Therefore, in order to successfully operate during
transition into privatized company in near future, a good and effective business
strategy is repeatedly emphasized for all enterprises.
This capstone is implemented with purpose of providing valuable resources for
development of business strategy for enterprises with similar characteristics of Ialy
Hydro Power Company.
5. Organization of the capstone
Besides Introduction, Conclusion and enclosed Appendix, the capstone is divided
into three main parts as follows:
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CHAPTER 1: Review of Literature
This Chapter will present theories of strategy and strategy planning for enterprises;
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CHAPTER 1: REVIEW OF LITERATURE

1.1. DEFINITION AND CLASSIFICATION OF BUSINESS STRATEGY
1.1.1. Definition of business strategy
Since the very beginning of this world, different military analysts such as Sun Tzu,
Alexander, Clausewitz, Napoleon, Douglas MacArthur have discussed about
strategy. The basic concept of strategy is that one party may defeat its competitor(s)
– even stronger one with more soldiers – if they can control the battle and lead their
competitor into a battlefield which includes advantageous conditions for their
operation.
Nowadays, strategy is applied not only in military but also other fields, especially
business. There are different definitions of strategy depending on author’s point of
view. Chandler (1962) defined strategy as ”the identification of basic goals and
objectives in the long run of each enterprise and the application of suitable
activities as well as the distribution of necessary human resources to achieve those
goals and objectives”
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. Besides, Quinn defined: ”strategy is a model or plan which
combines core objectives, policies and series of activities into a well-linked
structure”.
According to those popular definitions, we can see that business strategy is involved
in defining goals, making plan to achieve those goals on the market at present and
in the future.
1.1.2. Classification of business strategy
1.1.2.1. Level-based classification:
Level-based classification of business strategy may vary depending on person’s
point of view; but there are at least three strategy levels as follows:

strategy for enterprises.
1.1.3. Business-level strategy
1.1.3.1. Michael E.Porter’s competitive forces:
Porter has mentioned competitive factors which an enterprise emphasizes to gain
competitive position in the market. Michael E.Porter’s generic types of strategy
include:
 Cost leadership: Each enterprise attempts to produce and distribute goods or
services at lower cost than its competitors. This strategy help enterprises to
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gain cost-advantageous position with other players on the market, so they can
provide customers with more cost-attractive goods and services, achieve larger
market share and bigger revenue for their enterprise.
 Differentiation: The generic type of differentiation means providing new and
unique goods and services to attract more and more customers and take
competitive advantages against enterprise’s competitor.
 Cost leadership and differentiation: In the context of technology
development, enterprises can see that they will get more benefit when
combining strategy of cost leadership and differentiation.
1.1.3.2. Competitive strategies for market-challenger:
These strategies are applied for enterprises which are currently ranked at second or
third position on the market, but they are potential to overtake other enterprises and
gain larger market share. In order to successfully implement this strategy,
enterprises should clearly define their goals, competitors and select a suitable
strategy.
1.1.3.3. Strategies for market-follower:
This strategy is selected by weak enterprises which can’t confront with other strong
enterprises. These weak enterprises have no other choice of following strong ones.
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The second step of business strategy planning is analyzing enterprise’s external
environment. The objective of external environment analysis is to understand
opportunities and threats from this environment.
To understand possible opportunities, we have to analyze every external factors
which may bring about opportunities for enterprise. Besides analyzing and
evaluating possible opportunities, we should evaluate the best opportunities to
timely take advantage of them.
To analyze threats, we have to summarize every external factors which may cause
threats for enterprise. Besides analyzing and evaluating possible threats, we should
consider the worst threat and immediately find solutions to prevent them from
happening or to overcome them, as well as the other equally serious threat after that.
We can divide into two different sectors when analyzing external factors, including
macro-environment factors and micro-environment factors.
 Macro-environment factor:
In fact every enterprise is influenced by changes in macro- environment factors,
which included six segmentations: Economics, technology, social culture,
demographics, politics and the globe. Enterprise’s production and business therefore
will be impacted accordingly.
 Micro-environment factor:
Analyzing impacts of micro-environment factors is one important task in analyzing external
environment factors. Major micro-environment factors include competition in today market
environment and the globalization. Michael E.Porter, professor at Harvard Business
School has created a model to help executives timely identify possible opportunities
and threats, which is called the five competitive factors shown in diagram 1.2
below:
demand best goods and services with lowest price from suppliers. Therefore,
enterprises will have to undergo bargain pressure from their customer. Whether
customer may request special conditions from suppliers or not, it is upon their
relative power over the enterprise.
 Pressure from suppliers
During production and business operation, company always need suppliers for input
sources such as materials, equipments, labor, etc. Suppliers may be considered as
one threat to their buyers when they tend to increase selling price or decrease input
quality, which will reduce enterprise’s profitability. Like Customer, supplier’s
ability to request also depends on their relative power over the enterprise.
 Pressure from alternative products
Alternative products are goods or services of other industries, which however can
satisfy Customer’s similar demand as goods or services of one certain industry.
Existence of alternative products on market is one threat to enterprises because they
restrict price increase, and in turns reduce company’s profit. In other words, if the
Company have products which are rare on market and other factors are favorable,
they will have chance to increase price and obtain larger profit. Therefore, a
Company’s business strategy is developed to seize competitive advantage based on
the above-mentioned fact.
1.2.3. Analysis of internal environment
Internal environment factors are objective. These factors may influence positively
and negatively to enterprises and enterprise’s production and business. Analyzing
internal environment is the third step in business strategy planning process in order
to identify enterprise’s strengths and weaknesses, by which we attempt to find
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method for enterprises to achieve competitive advantage and role of distinguished
capacity.

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 Marketing: Marketing is described as a process of identifying, predicting,
establishing and satisfying consumer’s demands for goods and services.
Marketing management includes: marker research and development (R&D),
determination of target market, distribution channel system, after-sales
services, etc.
1.2.4. The formation of business strategy
Based on enterprise’s objectives, external environment and internal environment of
each enterprise, a business strategy can be established with following contents:
 Identify and seize opportunities which can help enterprises to achieve
business objective
 Select target market
 Select suitable goods and service to distribute in target market
 Develop Marketing-mix strategy for selected market, goods and services.
+ Product strategy: aim at well satisfying target market in terms of product
variety, number, dimension, design, quality, and price to help enterprises to
achieve their objectives.
+ Price strategy: Decide a suitable price policy to meet customer’s
requirements
+ Distribution strategy: Develop an effective distribution channel system to
provide goods and services to target market in the fastest manner.
+ Promotion strategy: this strategy aims at building, improving brand name
for enterprises to attract more and more customers.
1.2.5. Methods for the implementation of business strategy
In order to effectively implement established business strategies, enterprises are
supposed to process solutions in production management, business management; in
human resources and finance, etc… to implement their strategies. Enterprises have
to appropriately organize, arrange their resources to successfully perform selected
business strategy, specifically:
 Arrange organizational structure approriately

weight point of all factors is 1. The classification will reflect its corresponding
significance to the success of Company’s business.