Thesis MBA

SELECTING THE OPTIMAL STRATEGY FOR GLOBAL
LOGISTICS COMPANY

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COMMITTMENT
We commit that this capstone project report is our actual work of research on strategy
of Global Logistics Service Co ,ltd. From experience of the members in the group and
one member who used to work at the Global Logistics Service Co.,ltd. Data and result
mentioned in the capstone project report are true. The taken solutions contain many
features of learning, rise from actual experience and have not ever been public.
MAKERS

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TABLE OF CONTENTS
COMPETITIVE STRATEGY FOR GLOBAL LOGISTICS SERVICES
COMPANY LIMITED STAGE 2010-2014
Page
Cover page
Acknowledgements

i

Committment

ii

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1.1.3. Factors affacting the corporate strategy

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1.1.3.1.External environment

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1.1.3.2.Internal environment

19

1.2. STRATEGY FORMATION AND BUILDING

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1.2.1. Analysis of Strength-Weakness-Opportunity-Threat (matrix

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SWOT)
1.2.1.1.Basic factors of SWOT matric

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1.2.1.2. Strategy development procedure base on SWOT

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2.1.5. Customers

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2.2. ANALYSIS OF EXTERNAL ENVIRONMENT OF GLOBAL

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LOGISTICS
2.2.1.Marco enviroment

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2.2.2. Micro enviroment

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2.2.3. Evaluation matrices

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2.3. ANALYZE THE INNER ENVIRONMENT OF GLOBAL

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LOGISTICS COMPANY.
2.3.1. Internal factor


3.1.1.Orientation of the company for phase of 2010-2014

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61
63
63
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3.1.2. The development obligations of the company for phase of 2010-2014

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3.2.ANALYSIS OF EXTERNAL ENVIRONMENT OF GLOBAL
LOGISTICS

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3.2.1.Matrix analyzing the strength – weakness, opportunity – threat

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(SWOT) for Global Logistics,
3.2.2.Choosing the development strategy for global logistics

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company in stage 2010 –2014
3.3 SOME SOLUTIONS FOR CARRYING OUT THE DEVELOPMENT


Asymetric Digital Subcriber Line

ASN

Adavance Shipping Notice

BMI

Business Monitor International Ltd

CBM

Cubic Meter

CFS

Container Freight Station

CL

Contract Logistics

EDI

Electronic Data Interchange

f

Forecast


Inbound Logistics Management System

JBIC

Japan Bank for International Corporation

JIT

Just In Time

NVOCC Non – Vessel Operarting Common Carrier
R&D

Research and Development

SDR

Special Drawing Right

SWOT

Strength-Weakness-Opportunity-Threat

TEU

Twenty – Equivalent Unit

TMS



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LIST OF TABLES AND FIGURES
Table 1.1: Strategic viewpoints of Porter
Table 1.2: Common points of active and inactive strategies
Figure 1.3: SWOT-based strategy development procedure
Table 1.4: Logistics services
Table 1.5: Governing law on transport
Table 1.6: Capital investment structure for sectors of national economy.
Table 1.7: Reality of exploiting terminals
Table 1.8: Information system of some seaports of Vietnam
Table 1.9 : Assessment of service infrastructures intended for logistics activities
Table 2: Vietnamese, local and global logistics market base on value and growth rate
Figure 2.1 : Outsourcing percentage base on industry and form of company
Table 2.2 : Matrix of external factors
Table 2.3: Operation procedure
Table 2.4 : Operation results of the company
Table 2.5: Matrix of internal factors.
Table 2.6: SWOT matrix of global logistics
Table 2.7: Quantitive assessment of endogenous growth strategies.

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INTRODUCTION
1. Materials
Management of the company strategy is a continuous and active process. Thus,
revaluation of human resource and core capacity of the company will assist it to keep

Therefore, the material is that it is necessary to establish a long-term strategy for the
company to maintain its current advantage and catch chances from the Vietnam
logistics market.

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2. Target and research task
Orienting goal of the thesis is to construct and take a strategy to the company in the
next stage of 2010 - 2014.
To implement this task, the important step of the thesis is construction and selection of
a standard model of strategy administration for analysis. Based on the model, the
thesis will evaluate advantages and disadvantages in construction process of the
company strategy in the stage of 2007 – 2009. Finally, the thesis must take proposal of
development strategy in long-term for the global Logistics in the next stage of 2010 –
2014 on the standard model and results from the actuality of the enterprise.
3. Object and range of research
Object of research of the thesis is to construct a strategy for the Global logistics
•

Concentrating only into the strategy in stead of the whole strategy-management
process including construction, implement and control of the strategy.

•

Only concentrating into the Global logistics in stead of concentrating into the
whole Global group

•



Professional method: this method is used to forecast development trends of the
Vietnam logistics market in next years. Besides, the thesis uses methods of
strategic analysis including SWOT matrix, QSPM quantitative matrix.

5. Scientific and real meanings of the subject
* Scientific meaning:

the thesis has filtered and selected a model of strategic

development, which is proposed to use by most companies and researchers. Besides, it
supplements the source of the scientific documentation and topics of logistics
management, administration of supply chain and management of strategies.
* Meaning of reality: achievement of the thesis is the model of development strategy
of the company in the stage of 2010 – 2014. It means that the thesis also provides
“guideline” for the company on the way of stable development. Additionally, the thesis
takes some deficient competences in which the company needs to invest to keep the
high speed of growth.
6. Limitations and salient features of the thesis
* Limitations: the thesis only takes the proposed model and solution for the
development strategy of the company. It does mean that execution according to the
proposed strategy of the company will certainly bring about success for the company.
Hence, the proposed strategy should have time to execute, receive feedback and
adjust. In addition, the matrixes of quantitative evaluation show subjective will of the
generator because the method is based on the generator’s experience and opinions of

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the experts.

According to Chandler (1962), a strategy is to define basic objectives of a company
and to pick up the action method, including allocation of necessary resources so as to
achieve these objectives.
Andrew (1971) thinks that strategy is a procedure in which sound decisions are made
based on the appropriateness of corporate resources over opportunities available
outside the company.

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According to an article “What is strategy?” posted in Harvard Business Review
Michael E. Porter (1996) expresses his viewpoint concerning strategy practice using
comparison with classical viewpoint of strategy as below:
Table 1.1: Porter’s viewpoint of strategy
Strategy model used over decades

Sustainable competitive advantage

• An ideal competitive position within a

• Dominant competitive position
• Activities supports strategy

sector

• Making a comparison about all activities of • Selections and exchanges must be
the company and finding out the best

obvious compared to the




key objective of the company is to acquire a strategic position better than that of the
competitor.
To achieve this, the company must create a harmony for the entire operation so as to
build and maintain a long-term competitiveness.
1.1.2. Classification of corporate strategy
Because there are different definitions of strategy, there are also different methods of
classification based on different criteria:
Firstly, classification is based on organization and structure of the company. There are
three types:
•

Business strategy (so called functional strategy). This strategy is designed to
identify specific capacities and competitive advantage of the company over its
competitors in the same sector, of the same group of products/market.

•

This strategy is built to select, assess, develop/withdraw from a group of different
business units. Corporate strategy is greater than business strategy in terms of
magnitude.

•

Aggregate strategy. This strategy is built using activities of the company and their
exchanges with exterior environments for the purpose of controlling market or
changing results of environments through a network of organizations in which the
company participate [Fombrun and et al,1983, p.49]



Passive strategy

o Horizontal merger

o Withdrawal from business lines

o Market development

o Payment for technology

o Market diversification

o Employing manpower

o Development of new business line o Joint venture
o Development of new product

o Expansion of production line

o Product diversification

o Changing/remodeling products

o Production automation

o Increasing quality of product and service

o Staff training


(3) Legal and political factors: During creation of strategy, companies often make an
assessment about orientation and stability of the legal and political system in
which companies operate. These factors comprise regulations to which companies

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must comply, including fair trade, anti-monopoly, tax program, minimum salary,
regulations on environment and prices, and some regulations aimed at labor,
consumer, people and environment protection.
(4) Technological factors: Quick change of technology may exert a great influence
over industries in which companies operate. Technologies may give possibilities
of creation of new products or improvement of existing products. Particularly,
breakthrough technologies may result in company creating a new market or
shortening life cycles of production equipments.
(5) Economic-ecological

factors

represent

interaction

between

ecological

environment and business. Ecological environment is defined a summary of
relationships between human beings and animals; air, soil, and water are life
supports. Now, companies must consider tham as external factors affecting their

level of a sector depends on factors such as the number of competitors, growth
speed of such sector, high fixed cost, or fragile products, “standardization” level
of products, and barriers of such sector.
In fact, when analyzing sector environment and competitive environment, strategists
often give answers to four following questions: (1) What is the scope of the sector in
which the company operates? (2) What is sector structure? (3) Who are competitors?
(4) What are standards to identify competitors?
External environment is broken into two large groups, namely micro-environment and
macro-environment. In each environment, there are several factors making a direct
impact on corporate strategy. In fact, these factors always change and mutually closely
interact. In general, these factors may provide opportunities as well as risks possibly
encountered by companies. As a consequence, assessment of external environment is a
part of strategy formation and assists companies in making full use of opportunities
and reducing risks resulting from such environment.
1.1.3.2. Internal environment

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Including factors within the control of company. Assessment of internal environment
often presents both strengths and weaknesses of a certain company. Factors constitute
an internal environment, including:
•

Production/demonstration/action: including activities making input fuel and
materials output commodities and services. Normally, this function includes
factors such as process, capacity, inventories, direct labors, and quality. This is
the core function of an enterprise, so strategists put priority on other activities.

•

Human resources: including activities such us recruitment, interview, tests,
selection, orientation, training, development, evaluation, encouragement intended
for employees. Activities in human resources play a key role in strategy
implementation.

•

Information system: information links business functions together and provide a
foundation for all managerial decisions. Information system is regarded as a
foundation for all organizations. Its aim is to improve activities of a company
through improved quality of managerial decisions.

•

Management: Including activities from planning, organization, implementation to
control of the company. Now, management play a big role in formation of
strategy and competitive position of the company.

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In addition to that, corporate culture has a growing effect on corporate strategy.
Accordingly, the stronger corporate culture is, the more cultural factors influence
creation of strategic actions. These factors may direct strategy from time to time.
There are numerous factors affecting corporate strategy. In a quickly changing context
at the present, continuous reassessment of strategies when these factors are available
have a significant meaning to strategic success of the company.
1.2. STRATEGY FORMATION AND CREATION PROCESS
Dependent on viewpoints of corporate strategy, there are different strategy creation
processes. At the moment, there are several popular strategy approaches such as

•

Threat: Including conditions in operating environment having bad influences over
the company. Market penetration of competitors, decrease in market growth,
increase in negotiation power of providers and customers, changes in technology,
and new regulations may be threats to the company.

•

Strength: Including resources or capacities managed or available for the company
to make advantages over those of competitors in meeting demands of customers.

•

Weakness: Are limits or shortages of resources or capacities of the company in
relationships with its competitors, which make disadvantages for the company in
meeting demands of customers.

1.2.1.2. Strategy creation process based on SWOT analysis
Accordingly, a strategy creation process is subject to four steps as below:

•

Step 1 : Construct target/vision of the company. In this step, the company needs
to determine clearly what the existing business fields are and what the potential
chances in the future are.

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Valuate
strengths/weaknesses
- Resources
- Special capacities

Step 3

Valuate to determine the best suitability between
chances and resources

Step 4

Select chance

Source: Summarized
In fact, many companies have been using the strategy establishing process based on the
resources. For the reason, companies will analyze and valuate strategic advantages
from systematic considerations for assets, skills, capacities and intangible assets in the
organization. The premise of the approach states that the company operates in other
ways because companies own individual capacities from combination between tangible

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assets, intangible assets and organization capacity, which they do not have. To be
considered as resource making core capacity for the company, it requires:
o

Play an important role in satisfying demand of customers better than other
replacement resources


Valuate chances and risks from external environment of the company. Target of
this valuation is to support the company to use chances and avoid/reduce risks
from the external environment. The result of this valuation will allow the
company to establish a matrix of external factors and a matrix of competitive
images.

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•

Valuate strengths and weaknesses through the internal analysis of the company.
The target of this valuation is to assist the company uphold its strengths and
overcome risks of the company. The result of this valuation will allow the
company to construct a matrix of internal factors

•

Based on this valuation, the company will choose strategy.

1.3. ROLE OF STRATEGY CONSTRUCTION FOR THE COMPANY
According to some researches, when the company has applied strategy management, it
has gained more profit and success than companies has not applied. Besides, strategymaking always raises its possibility to avoid issues on organization because it raise
feelings on risks from environment, increase understanding on competitors, increase
working capacity of staffs, reduce change resistance and raise awareness of staffs in
capacity-bonus relationship in each part of the strategic plan and as a result, raise
working spirit.
In range of the thesis and with analysis on strategies and strategy construction
mentioned above, it may realize that strategy construction will make some fixed