LUÂN VĂN THẠC SĨ
Chiến lược kinh doanh của công ty PVFC giai đoạn 2015-2020

THESIS

BUSINESS STRATEGY OF PVFC
IN THE PERIOD FROM 2015 TO 2020


Strategic Management

ACKNOWLEDGEMENTS

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Strategic Management

INDEX
Page

List of tables ....................................................................................................5
List of figures .................................................................................................. 5
Appendices ................................................................................................................. 6

List of abbreviations .......................................................................................6
Introduction..................................................................................................... 7
Chapter I. ARGUMENTATIVE BASIS FOR BUSINESS STRATEGY
OF PVFC .........................................................................................................9
1.1. Some basic issues relating of business strategy .................................... 9
1.1.1. The concept of business strategy .......................................................... 9


Chapter II. ESTABLISHING AND DECIDING BUSINESS STRATEGY
OF PVFC IN THE PERIOD FROM 2015 TO 2020 ................................ 29
2.1. Brief introduction about PVFC ........................................................... 29
2.1.1. Foundation and development .................................................................... 29
2.1.2. Functions and duties of PVFC ...................................................................30
2.1.3. Business performance in 2007 - 2009 .......................................................32
2.2. PVFC’s business strategy................................................................................. 36
2.2.1. Development strategy of PVFC until 2015 and its orientation to 2025 ....36
2.2.2. PVFC’s strategic analysis ..........................................................................39
2.2.2.1. Swot analysis ......................................................................................40

2.2.2.2. Space analysis ......................................................................... 47
2.3. Deciding business strategy................................................................................48

2.3.1. General strategy ..............................................................................48
2.3.2. Deciding business strategy ........................................................................ 49

Chapter 3. RECOMMENDATIONS AND SOLUTIONS TO BUSINESS
STRATEGY IMPLEMENTATION AT PVFC ........................................ 50
3.1. Solution to organizational management ..............................................50
3.1.1. Solution for the organizational model .......................................................50

3.1.2. Suggestions for the Human Resources Division ............................. 50
3.1.2.1. Training ..............................................................................................50
3.1.2.2. Recruitment ........................................................................................ 52

3.1.2.3. Policy for employees ............................................................... 52
3.2. Solution for information technology ....................................................53
3.3. Controlling solution ...............................................................................53


Page

Table 1.1: SWOT matrix table.................................................................................. 24

Table 1.2: Type of competitive advantage being pursued ............................. 25
Table 2.1: Achievement of the production and business targets of PVFC in 2007 . 32

Table 2.2: Achievement of the production and business targets of PVFC in 2008
.........................................................................................................................32
Table 2.3: Achievement of the production and business targets of PVFC in 2009.33
Table 2.4: Qualification Report of HR to 31/12/2009 of PVFC .......................... 34
Table 2.5: Qualification Report of HR to 31/12/2009 of PVFC .......................... 34
Table 2.6: Ranking the opportunities ..............................................................40
Table 2.7: The impact evaluations of threats towards PVFC................................41
Table 2.8: Determining the steady competitive advantage ............................45
Table 2.9: Strengths and weaknesses .............................................................45
Table 2.10: Score for the factors ....................................................................... 47
Table 2.11: The matrix for choosing strategy ................................................. 49
LIST OF FIGURES

Page

LIST OF ABBREVIATIONS

MBA: Master of Business Management
PVFC: PetroVietnam Finance Corporation
HR: Human Resource
HRM: Human Resource Management
FDI: Foreign Direct Investment

management but also on appropriate business strategies – how the resources are
used.. Therefore, strategic management plays an essential role in maintaining a
competitive advantage and achieving success.
Viet Nam has recently moved away from the ‘centralized planning’ model as
defined in Marxist economic theory, to a capitalist market economy. State
enterprises have been restructured as ‘joint stock companies’. Business leaders have
had to change methods of management and administration to meet new conditions,
such as competitiveness, and the challenges of globalization. Marxism has led to
dependence on the State for strategy, and consequently, has resulted in stagnation and lack of dynamism. In
particular, this study offers solutions for human resources management as part of the business strategy.

The purpose of subject research of the group:
Based on the knowledge gained and the business strategy of PVFC, our
group would like to recommend, evaluate and make suggestions for PVFC to
implement its business strategy successfully.
Object of research:

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Strategic Management

The analysis of the internal and external environment as well as the business
situation helped PVFC establish its business strategy in the period of 2010 – 2015.
Scope of research:
Establishing business strategy of PVFC in the period od 2010 -2015.
Research methodology:


Researching and studying the related materials in Vietnam and

Threlar said "business strategy is an art that businesses use against the
competition to win".
Parter said: "Strategy is the art of building competitive advantage for a firm
defense".
These authors consider business strategy as the art of competing in the
market to develop business.
Arlleret said "Strategy is the determination of roads and other means to
reach the goals identified through the policy".
Bizrell said "strategy as a general plan or direction of the enterprise lead to
the desired target. It is the basis for the policies and the operation mechanism ".
Gluecl said: "Strategy is unification, comprehensive synthetic plan to be designed to ensure that the
objectives of the business will be carried out".
Accordingly, the combined point of view is:
"Business Strategy is the art of coordinating activities and controlling them in order to reach the
long-term goals of the enterprise”.
Chandler considers strategy as encompassing the assigned long-term goals of the business base, and
the selection process or how to act and allocate the necessary resources and organize the implementation of
the objectives. "Business strategy is an art to design, organize the means to reach the long-term goals of the
company and it’s relevance with the transformation of the business environment and competition”.

1.1.2. Basic characteristics of the business strategy
Business strategy clearly defines the objectives and basic directions of
business enterprises in each stage.

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Strategic Management

The nature of strategy is to ensure business continuity and development in a

Business environmental
analysis (O,T) (2)

Internal analysis of the
enterprise (S, W) (3)

Strategic Selection (4)

Corporate-level Strategy (5)
Business establishment strategy and
functional division

Strategy implementation (6)

Test and evaluate the implementation
results (7)

Feedback

Figure 1.1: Strategic planning process
Source: The lectures on Strategic Management. International MBA
Training Program - Ngo Kim Thanh, 2009

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Strategic Management

1.2. Steps in establishing business strategy
1.2.1. Vision and mission


- Based on the forms of expression of the objectives: oriental objectives or
quantitative objectives.
- Based on growth factors: increasing or static, or even decreasing market
share.
The main objective of any business is to have consistent growth in the
market place. However, it may be measured differently depending on conditions.
The author Peter Drucker suggests the short – term and long -term objectives as
follows:
- Business market share;
- Profit;
- Ressources distribution and risks;
- Productivity;
- Competitive advantage;
- Human resource development;
- Social responsibilities.
Strategic objectives depend on the environment and business capacity in
general. Good objectives are both strategically offensive and feasible. In order to
meet requirements, the determination of objectives needs the following basis:
- Business mission of the enterprise in general and in specific strategic
phases;
- Business philosophy (mentioned in the business mission);
- General judgment of the business environment and capacity.
1.2.3. Analysis of external environment
1.2.3.1. Macro environment
* Economic elements
The macroeconomic environment determines the prosperity of the economy,
which affects enterprises and industries. Therefore, it is essential for any enterprise

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- The investment in research and development in industry and the economy.
- The ability to apply advanced technology and mechanization to industry.
- Accomplishment of technology conversion in the national economy.

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Strategic Management

- The regulations for intellectual property rights and the application in the
real situation.
Those are extremely active factors that bring many

opportunities to

enterprises. On the other hand, they create new challenges to business operations.
* Social and cultural environment
Like the technology changes, the changes in society and culture also provide
opportunities and threats.
The social and cultural elements include:
- Population and its fluctuation trend;
- Households and mobilization trend;
- Movement of inhabitants;
- Religion;
- Life styles and living attitude;
- Women in the labour force;
- Occupation;
- Spending patterns.
Also, the society and culture have a big impact on establishing the
organizational culture, the relationship with partners and customers.

- The legal system and its implementation in the economy.
* Globalization
The global environment relates to the

significant international political

developments, the institutional features and the fundamental culture in the global
market.
Globalization creates both opportunities and challenges. All of these changes
strongly influence the enterprises and bring many opportunities to the business
arena. Globalization is the first element that affects strategic management. Some of
the elements are asfollows:
- The impact of international politics;
- The effect of the international economy;
- The effect of the international laws and regulations;
- The effect of the international technology;
- The effect of the international culture.
Therefore, the main purpose of macroeconomic

analysis is to identify

changes, and trends affecting the business operation. focussing on this analysis

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Strategic Management

allows enterprises to realize opportunities and threats so that the enterprise would
be able to deal with problems and promote business production activities.


Buyer power

Threats of substitutes
Figure 1-2: Porter's five forces model
Source: Slides of Strategic management subject – Griggs University
Presented by Ph.D Ngo Kim Thanh
Porter indicates that the stronger these five forces are, the more difficult for
the enterprises to increase the price and profit. However, the five forces might
change through time with changes in industry conditions.
The competitive environment has direct impact on business operation
activities. Thus, it is essential for enterprises to consider the mutual relationship in
these five forces.
a) Degree of rivalry
The first force is the competition scale among companies in the same
industry. The weaker the rivalry is, the more enterprises can have opportunities to
increase prices and gain profits. On the other hand, the stronger the competition
among rivals the more price competition.

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Strategic Management

The competition among rival in the same industry includes some factors such
as the competitive structure in the industry, the demands of the industry and barriers
to entry.
b) Barriers to entry/Threats of entry
A new firm may enter the industry and affect the competition. This is a threat
towards operating enterprises. It is the fact that existing firms always try their best

The threat of substitutes is the last force in Porter’s model. Substitute
products refer to products in other industries that can meet the demandsof customers
since they have more alternatives.
It is highly recommended that the enterprise should do appropriate analysis
of advanced technology to help the company innovate. Moreover, the demand
changes in the market are an important factor that creates these challenges.
1.2.4. Internal elements
Internal elements analysis aims to recognize the potential resources as well
as existing resources in order to create a competitive advantage for enterprises. The
analysis of internal elements answers the basic questions such as: (1) What are the
advantages and disadvantages of the company? (2) What causes these advantages
and disadvantages? (3) Which core resources help the company keep stable
competitive advantages?
Threrefore, the analysis of internal elements plays a key role in determining
the current strategies and establishment of practical strategies.
1.2.4.1. Strengths and weaknesses
Strengths are the company’s resources and capabilities that can be used as
the basis for developing competitive advanttage. Examples of such strengths
include:
Skills and experience; cost advantages, the technology capability; strong
brand name; Experienced customer services; the innovation of products; Promotion
and good marketing; valuable assets; modern equipment; Attractive location;
Professional and experienced staff; qualified employees; strategical thinking;
cooperation in the organization; good quality control system; intellectual property
rights and patents; customer loyalty; good reputation among customers; product
development in the short time; favorable access to distribution networks.
Weaknesses are the absence of certain strengths and the disadvantages of the
company. Some of followings may be considered weakenesses: lack of competition

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organization.
* Core competencies

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Strategic Management

Core competencies are the resources of the company and capabilities of
human resources which are used to create competitive advantage, and make the
company become unique.
Some of criteria in determining core competencies:
- Ability to evaluate: this helps enterprises prevent threats and exploit
opportunities;
- Core competencies that do not exist in other competitors;
- Ability that is hard to copy: Valuable and unique culture and brand name;
- Inability to replace: No equivalent strategies.
1.3. Using strategic analysis tools
1.3.1. SPACE Matrix
Matrix shows strategic position of the business
SPACE matrix shows that a business should choose a strategy:
Attack, Caution, Defense or Competition: The axis of the matrix as follows:
Caution

FS

Attack

+4
+3


Financial strength: FS
- Business interests on capital
- Debt
- Payment ability
- Rotate the capital
- Cash circulation
- Easy to withdraw from the sector
- Risk in business

CA

Environment stability: ES
- Change of technology
- Inflation rate
- The transformation of the demand
- Competitive price
- Market Entry Barriers
- The elasticity of price according to demand
IS

Competitive advantage: CA
- Market shares
- Product quality
- Product life cycle
- Customer loyalty
- Use the capacity to compete
- The technology secret
- The control of competitors and
Distributors


Step 4:

Drawing vector with directions from point of origin of the Space matrix through the new

intersection, this vector is strategic business: Attack, Competition, Defense or Caution.

1.3.2. SWOT Matrix
Eight steps to perform SWOT matrix:
Step 1: List the major opportunities from the outside environment (O1, O2 ...).
Step 2: List the major threat from the outside environment (T1, T2 ...).
Step 3: List the major strengths of the enterprise (S1, S2 ...).
Step 4: List the major weaknesses of the enterprise (W1, W2 ...).

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Strategic Management

Step 5: Combining the strengths with opportunities to formulate strategies (SO).
Step6: Combine the weaknesses with the opportunities to formulate strategies (WO)
Step 7: Combining strengths with threats formulate strategies (SO).
Step 8: Combine the weaknesses with threats to formulate strategies (WT).
Table 1.1: SWOT matrix table
Source: The lectures on Strategic Management. International MBA
Training Program - Ngo Kim Thanh, 2009
Opportunities (O)

Risks (T)


2.

2.

S3

3.

3.

Weaknesses (W)

Strategies (W)

Strategies (WT)

W1: Weaknesses listed in 1. Limit the weaknesses to 1.

Minimize

risks

order of importance

exploit opportunities

avoidance of threat

W2: