LUẬN VĂN
Xây dựng chiến lược phát triển kinh doanh công ty cổ phẩn nước
khoáng thiên nhiên VITAL

THESIS MBA

BUILDING DEVELOPMENT STRATEGY FOR VITAL
MINERAL WATER PRODUCT OF VITAL JOINT STOCK
COMPANY


TABLE OF CONTENTS
...................................................................................................................................................................1
LUẬN VĂN..................................................................................................................................................1
Xây dựng chiến lược phát triển kinh doanh công ty cổ phẩn nước khoáng thiên nhiên VITAL...................1
THESIS MBA................................................................................................................................................1
BUILDING DEVELOPMENT STRATEGY FOR VITAL MINERAL WATER PRODUCT OF VITAL JOINT STOCK
COMPANY...................................................................................................................................................1
...................................................................................................................................................................1
................................................................................................................................................................... 2
TABLE OF CONTENTS..................................................................................................................................2
LIST OF FIGURES.........................................................................................................................................5
LIST OF TABLES...........................................................................................................................................6
ABBREVIATIONS.........................................................................................................................................7
INTRODUCTION..........................................................................................................................................8
I. Background.........................................................................................................................................8
II. Purposes of the research..................................................................................................................10
III. Objective, scale and methodology..................................................................................................10
IV. Structure of the report....................................................................................................................10
CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND STRATEGIC MANAGEMENT...................................11
1.1. Overview of strategy and strategic management..........................................................................11

2.1. History and development..........................................................................................................38
2.1.2. Operation sectors...................................................................................................................39
2.1.3. Personnel structure................................................................................................................40
2.2. Situation of production and business of Vital mineral water Company in the period of 2005 –
2009.....................................................................................................................................................42
2.2.1. Productivity growth................................................................................................................42
At the present, mineral water source of the company is exploited from drilling well and put into
operation from 2003 and a new one has be used form 2009. With the current exploiting capacity, the
company has produced some kinds of products: carbonated bottled mineral water, non-carbonated
bottled mineral water, purified mineral water. The company’s output has increased steadily over the
years, especially in the 2009 with the amount of 10.66 million liter, by 158% comparing to 2008. The
growth rate is different according to each specific product, varies from 147% to 163.7% (Table 2.1). 42
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2.2.2. Business performance and market share of Vital...................................................................43
2.3. Analysis of factors affecting on operations of Vital Joint Stock Company......................................47
2.3.1. External environment.............................................................................................................47
2.3.1.1. Macro-environment........................................................................................................47
2.3.1.2. Micro-environment.........................................................................................................51
2.3.1.3. External factor evaluation matrix EFE..............................................................................55
2.3.2. Internal environment..............................................................................................................56
2.3.2.1. Human resource..............................................................................................................56
2.3.2.2. Marketing activity............................................................................................................56
2.3.2.3. Research & Development................................................................................................57
2.3.2.4. Finance and investment...................................................................................................58
2.3.2.5. Internal factor evaluation matrix IFE...............................................................................59
2.4. Analysis on the status of creating and performing strategy for Vital mineral water product of Vital
Joint Stock Company............................................................................................................................60
2.4.1. Market expanding strategy.....................................................................................................60

Marketing is perhaps the most important activity in a business because it has a direct effect on
profitability and sales. Larger businesses will dedicate specific staff and departments for the
purpose of marketing. It is important to realize that marketing cannot be carried out in isolation
from the rest of the business. For example: The marketing section of a business needs to work
closely with operations, research and development, finance and human resources to check their
plans are possible. Operations will need to use sales forecasts produced by the marketing
department to plan their production schedules. Sales forecasts will also be an important part of
the budgets produced by the finance department, as well as the deployment of labor for the
human resources department. A research and development department will need to work very
closely with the marketing department to understand the needs of the customers and to test
outputs of the R&D section..............................................................................................................79
3.3.3. Research & Development solutions........................................................................................80
3.3.4. Personnel solutions................................................................................................................81
3.3.5. Financial solutions to invest in new technology and equipments...........................................82
CONCLUSION............................................................................................................................................85
LIST OF REFERENCES................................................................................................................................86
APPENDIX.................................................................................................................................................87
Vital natural mineral water factory project in Dong Nai.......................................................................87

LIST OF FIGURES
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Figure 1.1 Five-force model of M. Porter.................................................................................................24
Source: Comparative advantage theory, M. Porter (1990).......................................................................24
Figure 2.1 Structure of Vital product........................................................................................................40
Figure 2.2 Personnel Structure of Vital Joint Stock Company...................................................................41
Figure 2.3 Marketing department structure.............................................................................................42
Figure 2.4 Turnover growth of Vital in Hanoi, 2009..................................................................................45
Figure 2.5 Turnover of Vital mineral water in term of regions (2009)......................................................46

Table 3.2 GREAT analysis..........................................................................................................................75

ABBREVIATIONS

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Terms

Description

ATL

Above the line

BTL

Below the line

CEO

Chief Executive Officer

FAO

Food and Agriculture Organization

SBU

Strategic Business Unit

lacking products for sales because the production capacity of its unique factory in Thai
Binh cannot meet the increasing demand of customers. In addition, there are more and
more bottled water products and the market is becoming so competitive. It is clear that
Vital product is sort of clear and effective strategies, especially marketing strategy or
financial strategy to stay stable in the bottled water which is on its way to be saturated.
Therefore, we decided to choose the topic “Building development strategy for Vital
mineral water of Vital Joint Stock Company 2010- 2015” for our capstone project. This
topic does not only apply knowledge of strategic management but also contributes

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significant practical recommendations for the development of Vital JSC as well as Vital
brand.

II. Purposes of the research
The research focused on following issues:
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Fundamental theories of strategy and strategic management.

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Useful models to analyze the process of establishing and choosing strategy.

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The real situation in which Vital JSC has been implementing its strategy.

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CHAPTER 1: LITERATURE REVIEW OF STRATEGY AND
STRATEGIC MANAGEMENT
1.1. Overview of strategy and strategic management

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1.1.1. Fundamental definitions
1.1.1.1. Definition of strategy
“Strategy” is the term which has been widely and long standing used in many fields.
“Strategy” was firstly used in military then in political field. From 1950s to 1960s of XX
century, the concept of “strategy” was used in economic and social field. Generally,
“strategy” was understood as trend and method to resolve long term and overview
mission. According to UNIDO definition: “Generally, a development strategy can be
described as an outline of developing process to reach intended targets for a period from
10 to 20 years, it instruct strategic managers in attracting and allocating resources. It can
be said that, strategy provides a vision for development process and the consistence for
implement solutions. Strategy also can be basics for overview developing plan in long
term and short term or can be general awareness of related people about prospects and
willingness and challenges in a specific period”
There are many definition of “strategy”. To Fred R. David (2003), strategy includes
numbers of method to reach long term target. To Michael E. Porter (1996), strategy is
the creation of special and valuable positions include variable activities.
In general, there are some differences in expression of concepts and definitions of
strategy. They still have some common content:
• Define company’s short term and long term targets
• Bring out solutions and methods to choose these solutions
• Deploy and allocate resource to implement these targets.
1.1.1.2. Definition of strategic management

company. These roles are:

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• Strategy is the tool that generally shows the long-term goals of the organization
or enterprise. Enterprise’s goals are special targets which it wants to reach during
its operation process. Specialization and making documents these targets via
strategies will help members of enterprise or organizations when finding the
targets which they want to reach so, they will know what they have to do. It will
help the enterprise easier in reaching its goals.
• Strategy connects short term targets closely in long run conditions. In model
business situation, every enterprise has to flexibly move to adapt to changing of
environment. Sometimes this movement will make the enterprise be separated
from its long term goals. In this case, strategy with strategic goals will help
managers of enterprise a long run direction. So, resolving short term matters in
long run conditions can bring enterprise a stable development. Long run goals
also are basics for short term goals.
• Strategy helps to ensure unification and make plans for enterprise’s activities. In
existence and development process, strategy provides a comprehensive and
logical point of view in resolving problems which arises in business performance.
Strategy also helps to associate different sections in a company and orient them to
reach to a unit goal, it is enterprise’s goal.
• Strategy helps enterprises and organizations to catch up with market opportunities
and create comparative position in the market. Strategy unifies the enterprise’s
operation process in order to reach to enterprise’s strategic goals. It means that
enterprise will have to use its resource in most efficient way. So, enterprises have
to choose fastest way to catch up with market opportunities and deploy its
available abilities to create new comparative advantages.
From below analysis we can see very important roles of strategy in enterprise’s



its chosen areas or industries. Alternatively, according to W. Chan Kim and Renée
Mauborgne, an organization can achieve high growth and profits by creating a Blue
Ocean Strategy that breaks the previous value-cost tradeoff by simultaneously pursuing
both differentiation and low cost.
Functional Strategy
Functional strategies include marketing strategies, new product development strategies,
human resource strategies, financial strategies, legal strategies, supply-chain strategies,
and information technology management strategies. The emphasis is on short and
medium term plans and is limited to the domain of each department’s functional
responsibility. Each functional department attempts to do its part in meeting overall
corporate objectives, and hence to some extent their strategies are derived from broader
corporate strategies.

1.2. Strategic management process
We are now going to analyze more deeply about the process of strategic management in
an organization from the perspective of general model of strategic management.
1.2.1. Defining mission & objectives
A strategic plan starts with a business mission which has been defined clearly.
Mintzberg defined a mission as “A mission describes the organization’s basic function
in society, in terms of the products and services it produces for its customers”. A clear
business mission needs to include following factors:
• Objective
Why does the business exist? Is it to create wealth for shareholders? Does it exist to
satisfy the needs of all stakeholders (including employees, and society at large?)

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Loyalty and commitment (e.g. are employees inspired to sacrifice their personal
goals for the good of the business as a whole? And does the business demonstrate
a high level of commitment and loyalty to its staff?)

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Guidance on expected behavior – a strong sense of mission helps create a work
environment where there is a common purpose

In practice, a strong mission statement can help in three main ways:
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It provides an outline of how the marketing plan should seek to fulfill the mission
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-

It provides a means of evaluating and screening the marketing plan; are
marketing decisions consistent with the mission?

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It provides an incentive to implement the marketing plan

1.2.2. External environment analysis
No organization can exist in a vacuum; each is set in a particular country and region to
which it is inextricably linked. This setting provides multiple contexts that influence
how the organization operates and how and what it produces. Thus, the concept of

Related law: investment law, enterprise law, labor law, anti monopoly and

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dumping.
Regulations: Government’s regulations also can create favorability or challenges
for enterprises. These regulations are: commercial regulations, industry
development regulations, tax, tariff, adjusting competition regulations, consumer
protection regulations, etc.

Legal environment
The administrative and legal environment in a country provides a framework within
which an organization operates. In some countries this environment is very restrictive
and has significant impact on all aspects of the organization; in other countries the
administrative/legal context is more permissive. Understanding the administrative/legal
environment is essential to determining if organizational change can take place. The
administrative context within which the organization operates may be shaped by a
unique combination of forces, including international, governmental, nongovernmental
policy, legislative, regulatory, and legal frameworks. An organization is affected by the
policy or regulatory context that gave rise to it. This includes specific laws and
regulations that support or inhibit the institution's development.
Economic factor
Enterprise needs to take care of economic factors both in short term and long term. It
also has to take care of intervention of Government into economy. In general, enterprise
will base on economic factor to decide which industry or section to invest in.
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Natural environment
Natural condition is one of the most important factors in human life and it also provide
raw materials for many industries. Recently, natural condition is much changed because
of human destruction. It also can affect to development trend of enterprises.
Technology

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Recently, the whole world is still in technological revolution, list of model technologies
are implied and they are integrated into goods and services. Thirty years ago, computer
is only a tool used for calculation, now it is a tool with full functions and can work as a
person. Especially, in information technology section, model communication helps us to
shorten geographical distance.
1.2.2.2. Micro- environment
To analyze the micro-environment, organizations often use five-force model of M.
Porter – Father of competitive theories. Michael Porter provided a framework that
models an industry as being influenced by five forces. The strategic business manager
seeking to develop an edge over rival firms can use this model to better understand the
industry context in which the firm operates.
Potential entrants
It is not only incumbent rivals that pose a threat to firms in an industry; the possibility
that new firms may enter the industry also affects competition. In theory, any firm
should be able to enter and exit a market, and if free entry and exit exists, then profits
always should be nominal. In reality, however, industries possess characteristics that
protect the high profit levels of firms in the market and inhibit additional rivals from
entering the market.
Buyer power
The power of buyers is the impact that customers have on a producing industry. In

that determine supplier power.
Suppliers are powerful if:
•
•
•
•

Credible forward integration threat by suppliers
Suppliers concentrated
Significant cost to switch suppliers
Customers Powerful

Threat of substitutes
In Porter's model, substitute products refer to products in other industries. To the
economist, a threat of substitutes exists when a product's demand is affected by the price
change of a substitute product. A product's price elasticity is affected by substitute

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products - as more substitutes become available, the demand becomes more elastic since
customers have more alternatives. A close substitute product constrains the ability of
firms in an industry to raise prices. The competition engendered by a Threat of
Substitute comes from products outside the industry. The price of aluminum beverage
cans is constrained by the price of glass bottles, steel cans, and plastic containers. These
containers are substitutes, yet they are not rivals in the aluminum can industry. To the
manufacturer of automobile tires, tire retreads are a substitute. Today, new tires are not
so expensive that car owners give much consideration to retreading old tires. But in the
trucking industry new tires are expensive and tires must be replaced often. In the truck
tire market, retreading remains a viable substitute industry. In the disposable diaper

to create EFE matrix:
• Step 1: The first step is to gather a list of external factors. Divide factors into two
groups: opportunities and threats.
• Step 2: Assign a weight to each factor. The value of each weight should be
between 0 and 1 (or alternatively between 10 and 100 if you use the 10 to 100
scale). Zero means the factor is not important. One or hundred means that the
factor is the most influential and critical one. The total value of all weights
together should equal 1 or 100.

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• Step 3: Assign a rating to each factor. Rating should be between 1 and 4. Rating
indicates how effective the firm’s current strategies respond to the factor. 1 = the
response is poor. 2 = the response is below average. 3 = above average. 4 =
superior. Weights are industry-specific. Ratings are company-specific.
• Step 4: Multiply each factor weight with its rating. This will calculate the
weighted score for each factor.
• Step 5: Add all weighted scores for each factor. This will calculate the total
weighted score for the company.
The sum of all weighted score is equal to the total weighted score; final value of total
weighted score should be between ranges from 1.0 (low) to 4.0(high). The average
weighted score for EFE matrix is 2.5 any company total weighted score fall below 2.5
consider as weak. The company total weighted score higher then 2.5 is consider as
strong in position.

Table 1.1 An example of External Factor Evaluation

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