THESIS MBA

FORMULATING BUSINESS STRATEGY
OF OCEAN DEVELOPMENT JOINT
STOCK COMPANY TOWARDS 2020


ACKNOWLEDGEMENTS
This research is conducted by Group No.12 - M04 Class - Global Advanced
Master of Business Administration Program - Griggs University. We commit that
this is our study, and that study results are accurate and unavailable in any other
studies.
During the study, we have received valuable support from many individuals,
organizations, agencies and enterprises.
We wish to thank leaders, managers and employees of Ocean Development Joint
Stock Company for releasing the burden of data provision, cooperation, exchange
and discussion.
We extend our special thanks and appreciation to many individuals and experts
who have shared with me an opinion and response to questionnaires of the Group.
We would like to express our deepest thanks to lecturers, Board of Management,
and managerial staffs under Global Advanced Master of Business Administration
Program - Griggs University in Hanoi for communicating knowledge, creating
favorable conditions in all fields for us to accomplish this project.
Last but not least, we would like to express our deepest thanks to all students of
M04 class- Global Advanced Master of Business Administration Program -Griggs
University for sharing information, material support and invaluable support to
accomplish this project.
The authors:
1. Tran Thi Kim Oanh
2. Pham Duc Trung
3. Nguyen Van Binh

PMU:

Project Management Unit

QSPM:

Quantitative Strategic Planning Matrix

Songda:

Song Da Corporation

SWOT:

Strengths-Weaknesses-Opportunities-Threats

TAS:

Total attractive score

Vinaconex: Vietnam Construction and Import-Export Joint Stock Corporation
VND:

Vietnam Dong

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TABLE OF CONTENTS
Page

FORMULATING BUSINESS STRATEGY OF OCEAN
DEVELOPMENT JOINT STOCK COMPANY TOWARDS 2020
3.1. Strategic Task to 2015
3.2. Formulating business strategy to 2015 for OCEAN JSC
3.3. Determination and implementation of OCEAN JSC’s strategy to 2015
3.4. Implementation solutions of business strategy

Conclusions and recommendations for further research

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References

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Appendices

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LIST OF TABLES AND FIGURES
Chapter 1
Figure 1.1: Missions of business strategy management
Figure 1.2: Basic model of business strategy planning

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INTRODUCTION
1. General context, necessity and significance of the study:
 Enterprises are making a significant contribution to economic growth and
market economy reform in Vietnam. However, it is shown that most of
Vietnamese enterprises, especially private sector, are characterized by low
competitiveness, a series of constraints and inadequateness in management
including business strategy management.
 Being a private enterprise, incorporated in 2006, Ocean Development Joint

o To seek, collect, analyze and evaluate documents and data of business
environment.
 Analyst-driven approach:
o To collect opinions by questionnaire to support the business
environment assessment as well as available competence of the
Company.
o To consult directly internal and external knowledgeable experts.
4. Outline of the Study
Introduction
Chapter 1: Literature review on business strategy formulation
Chapter 2: Business environment of Ocean Development Joint Stock Company
Chapter 3: Formulating Business Strategy of Ocean Development Joint Stock
Company TOWARDS 2020
Conclusions and suggestions for further studies

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Chapter 1
SOME THEORETIC BASES FOR BUSINESS STRATEGY
FORMULATION
•

Chapter 1 aims to investigate some fundamental theories to act as a ground
for developing business strategy of Ocean Development Joint Stock Company.

•

Before investigating theories on business strategy, it is required to specify
some issues relating to real estate market- where Ocean Development Joint

with “business strategy” concept [16]:


The first approach considers the business strategy as a management norm, in
which, the business strategy is only a form of business plan by nature.
G.Arlleret revealed that strategy is the determination of how and what designed
to achieve the particular goals via policies. Sharing this perspective, D.Bizrell
specified strategy as a master plan to direct or orient enterprises to the desired
goals; acting as a background for planning policies and operation techniques.
Gluecl defined that business strategy is a consistent, comprehensive and
synthetic plan designed to achieve corporate goals.



The second approach considers business strategy as an art to compete in
market and develop enterprise. Alain Threlart said that strategy is an art
enterprise applies to protect against competition and win. M. Porter also defined
that: Strategy is an art of constructing reliable competitive advantages for
preventative purposes.



The third approach- a combination of the two aforesaid approachesconsiders business strategy as an art of consolidating and controlling operations
to obtain long- term goals of enterprise. Right in 1962, Alfred Chandler
specified that: Business strategy includes determination of corporate long- term
goals and objectives and application of a series of necessary resource allocation,
to achieve these goals. Later, Mintzberg introduced a general model and
completely reflected various concepts on business strategy with 5’s P
definitions of strategy namely Plan, Pattern, Position, Perspective, and Ploy
[10].



Business strategy refers to how companies can compete successfully in a
particular market. It involves in strategic decisions on product selection, meeting
the Buyer demand and gaining the competitive advantage against others rival to
exploit and generate new opportunities.



Operation strategy refers to how each division in the enterprise will be
organized to perform the strategic orientation at company level and every
division in the company (for example marketing strategy; financial strategy;
human resources development strategy, etc.)[5]

1.1.3. Significance of business strategy formulation in the strategic
management

5


•

Strategic management is a system of decisions and actions to
determine long- term performance of a company. Strategic management
includes the continuous activities namely review of internal and external
environment; strategic formulation; strategy performance and strategy control
assessment. Therefore, the strategy study emphasizes external opportunity and
thread supervision and evaluation in the context of internal strength and
weakness [10].


y

3. Developing
strategies to
achieve goals

4. Perform
selected
strategy

5. Performance
assessment,
supervision &
adjustment

Reform and
modify
where
necessary

Reform and
modify
where
necessary

Restore
1,2,3,4
where
necessary


and core competence)

Functional strategy

Business strategy

Global strategy
Corporate strategy

Organization
structure

Harmonizing strategy,
structure and control

Control design

Strategy modification

Source: Le The Gioi, Nguyen Thanh Liem, Tran Huu Hai (2009)
Basic model of business strategy planning as illustrated in Fig. 1.2 can be simplified
into seven step works of “Planning the business strategy” as in Figure 1-3.

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Figure 1-3: Strategy planning process
Strategic functions, tasks and objectives of
the company (1)




the strategy and shall be subject to the influence of the strategy implementation.
Therefore, when determining the vision and the mission of the enterprise, it is
important that the most relevant parties be identified and set the priority for the
strategies that can satisfy their demands. Normally, there are the relevant parties in
the enterprise (the owners, the managers, the staff, the leaders etc directly affecting
and participating in the strategy formation process, at the same time, being impacted
by the strategy under the implementation in the future) and the relevant parties
outside the business (for example, the client, the supplier, the Government, the trade
union, the local community, the public etc). These subjects may not participate in
the strategy formation but have a major impact on the content of the business
strategy, especially, the Buyer [16].
1.2.2. Determination of vision and mission


The vision shows the highest and most general purposes, desires of the
enterprise; expressing the aspiration about what the enterprise wishes to reach.
The vision needs to be impressive enough so that all persons in the business try
their best to attain their ideology. The structure of the vision shall comprise two
inseparable aspects, which 1) are the core ideology (determination of the
permanent characteristics of the business; supply of the adhesive substances of
the entire business; including the core value means the system of principles and
the guiding principle; the core purpose or the most fundamental reasons leading
the existence of the business, 2) envisioned future including the challenging
targets and the attractive, convincing description on what the challenging targets
wish to be achieved [16].




environment (consisting of the macro, microenvironment) and the internal
environment of the enterprise. However, the business environment is the general
motion, which interacts with each other among the elements and internal and
external forces of the system but shall be directly or indirectly affect to the business
and production result of the business. The purpose of the business environmental
analysis is to help the enterprises answer the question: which are the elements and
the degree of influence on the business results? Therefore, two views on the
business environment mentioned do not contradict with each other and can
replenish with each other.

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1.3.1 Macro environment
The analysis of the macro environment for the business shall identify the
opportunities and threaten to exert the influence on the operations of the business in
the future; that can comprise [10]:


The economic environment: The environment refers to the development of
the economy, the supply of capital, the growth of Gross Domestic Products; the
rate of inflation, the rate of interest, the financial policies, the developments of
types of market, the economic institution and so forth. These are the elements
affecting dramatically to the operation and business strategy of the business.



The technological scientific environment refers to the analysis of the
technological scientific environment for business identification and exploitation
of the appropriate technologies to create the competitive advantages for the

business and can cause the influences on both Buyers and business etc.
1.3.2. The industry environment
The industry environment is the external relationship of enterprise but has the direct
impact on the production and business activities as well as the existence and the
development of the enterprises. There are many theoretic models supporting the
industry environmental analysis, however, at present, the model “five competitive
models” of Michael Porter has many predominant advantages in helping the
strategic managers to realize the strengths and weaknesses so that they can issue the
appropriate policies to take advantage of the opportunities and avoid the risk caused
by the industry environment.
Figure 1-4: Michael Porter Five Forces Model
Potential
Entrants
Threat of new Entrants
Bargaining Power
of Suppliers

Supplier
s

Industry
Competitors
Rivalry among
existing firms

Threat of Substitute
Products or Service

Buyers
Bargaining Power of

 Buyers may not be really selective for the quality of goods that they buy,
thus, they shall not be ready to pay higher cost, although, the products can be
considered as having higher quality. Therefore, it is necessary to give the
advertising measures, seminars, discussions, presentation on the products in
the course of providing the training courses on the updated information on
the domestic and international quality for Buyers.
(2) Suppliers area the individuals or enterprises that can satisfy the inputs for the
enterprises such as raw material, equipment, manpower, capital, services, land, the
site for production and business etc. It is similar to the Buyer analysis. The only
difference is that the position of the enterprise is Buyer. Enterprise should exploit
radically the advantages of Buyers as analyzed as above. The suppliers can cause

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the strong pressure on the operations of the business, especially, when they are the
exclusive suppliers.
(3) Competitive competitors: competitive competitors are often the major threats
to the corporate development, especially in the saturated market period and now
when the market has impediments hindering the withdrawing from the market of the
enterprises in the sector. Therefore, it is very important for enterprises to give
analysis on the competitive competitors.

The companies should know their

competitive competitors, the competitive strength as well as the growth rate of
business sector, the density of fixed capital of the competitive competitors, the
targets and business strategies as well as the strategic policies used by them and
how they change their strategy, the financial results and market position as well as
their financial potential. It is supposed to choose some of the most important

competitiveness in the market.
1.3.3. External Factor Evaluation (EFE)
The influence of the external factor to the enterprises shall be determined through
the qualitative analysis. However, the modern business management science
demands that these be quantified in order to make the enterprises and strategic
planners have a more accurate, objective view on the influence of the chances and
challenges from the outside forces. One of the tools to realize these goals is to build
the external factor evaluation matrix (EFE). There are various forms and methods to
construct EFE matrix.
Figure 1.5 Example of the External Factor Evaluation Matrix (EFE)
Key external
factors
The first factor
The second factor
The n factor
Total

Weight

Rating

Weighted scores

------------------1.00
(100%)

-------------------

------------------ Weak
 Average

- Analysis of the production process:
The production process shall be the principal activities of the enterprise affixed to
the formation of the products and services. It decides upon the success of the
enterprises and other fields, the high quality products and services and reasonable
cost shall facilitate for the marketing and financial activities. The production
process also exerts the great reciprocal influence and shall form the premise for the
business management, development research and the information system. When
analyzing the business production process, it is important to first evaluate whether
the equipment and the manufacturing technology that can create the output meeting

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the market or not? If it is otherwise, how will be the correction measures? The
large-scale production, stable input supply with reasonable price, the suitable
arrangement of production facilities, the warehouse, and the yards shall generate the
high efficiency for the production process. Besides, it is also important to take into
account of the labor use, the satellite units, and the inspection of the enterprises [8].
- Financial analysis:
The financial resources (such as cash, the credit loan ability, owned capital, etc) are
the most basic sources because they are the premise for other resources and form
the final results of the activity sequence (or a process) of production and business of
the business.
The financial analysis shall be base on the economic, financial standards such as the
profitability per capital, the mobile capital, the capital recovery ability, the cash
flow, the debt coefficient, the short-term and long-term capital mobilization ability,
the company capital sources, the capital expenses as compared to the entire sector
and the competitors, the tax issues, the relationship with the owner etc… Assessing
the financial potentiality of the business shall be the best mean to take into account
of the competitive position of the business and shall be the condition to attract the


•

Concerning the supervision and the analysis shall help answer the questions
such as how the enterprises have the financial control system, the sales, the
production, the targets, and the inventories. Whether it has the efficient control
system? How is the quality control? How is the information system? Is it likely
to work out the business control system as soon possible? [8]

- Marketing operation:
First of all, it is important to give analysis on the Buyer structure, the consumption
channels with the scope of quantities and control degree, the flexibility in the
evaluation, product samples, advertising and assisting tools for consumption policy,
then, to compare the development of each consumption channel, to set out the
necessary instructions for the marketing strategy formation.
It is also important to pay attention to the potentiality for product consumption, the
revenue structure, the profit rate from the revenue, the quality diversification level
and the popularity of the products and services, the business market share, the trust
of Buyers, the efficiency of the promotion and advertising campaigns, the post sale
services and Buyer caring services.
Then it is assumed to analyze whether the input supply is stable and favorable,
combine the consideration of the survival cycle of products to check the research

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and development of new products as well as analyze the business opportunities that
can be promoted [11].
- Development and research activities:
In this aspect, it is important to consider the corporate interests and investment for

Total

------------------ Weak
 Average

(100%)

 Good
Source: Nguyen Thi Lien Diep (2006)
1.5. SELECTION OF BUSINESS STRATEGY
1.5.1. Formation of the business strategy options

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