Thesis topic
build vat business strategy on mobile of
viettel telecom in the period of 2011 - 2015

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ACKNOWLEDGEMENT
During the learning process of GaMBA program – Griggs University, the US,
Group 11 of GaMBA M0709 class studied and accumulated much practical
valuable experience, helping us apply knowledge into our work at present and even
in the future.
Our group would like to express our faithful thank to GaMBA program for
creating favorable conditions for us during the process of study and capstone project
report completion. We sincerely thank all teachers for teaching enthusiastically,
transmitting precise knowledge and experience during 17 past months.
We would like to express heartfelt thanks to the Leadership Board of Viettel
Telecom for assisting whole-heartedly, providing documents and creating best
conditions for us to complete this graduation capstone project report.
Despite the fact that our group has tried our best; due to time and experience
restriction, the capstone will make mistakes. We respectfully wish to receive wholehearted assistance of teachers and candidates for our capstone project report to be
more perfect and practical.
We hereby pledge that the whole contents and figures in this capstone project
report are collected, studied, surveyed and implemented by our group.
Best regards!

TABLE OF CONTENTS

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Page

12

1.2.1. Vision

12

1.2.2. Mission

12

1.2.3. Objective

12

1.2.4. Policy

13

1.2.5. Core thought

13

The strategy’s analysis

13

1.3.1. Analyze external environment

13


25

2.1.2. Types of VAS

25

2.1.3. Forms of service supply VAS

27

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2.1.4. Role of business development of VAS for the growth of
revenue and development of market share for mobile subscribers

27

of the enterprise
2.1.5. Factors have influenced on doing business on VAS

28

2.2.

General view on mobile market in Vietnam

29

2.3.


34

2.3.8. Development viewpoint

35

Analysis of Viettel’s business environment and inner forces

36

2.4.1. Macro environment

36

2.4.2. Analysis of telecom industry environment.

41

2.4.3. Opportunities and challenges for Viettel.

46

2.4.4. Evaluation of Viettel’s potentials.

47

2.4.5. VAS business situation of Viettel during past years.

51

Macro Strategy

59

3.2.1. Cost leadership strategy

60

3.2.2. Differentiation strategy

60

3.2.3. Some expected goals of the next years

62

Solution to implement business strategy on VAS services of Viettel

62

3.3.1. Advertisement , communication and service contribution

63

3.3.2. To consolidate and strengthen Content Centre and VAS Centre
directly under the Company
3.3.3. Strengthen cooperative program with domestic and
international content suppliers on VAS services
3.3.4. Enable clients self create services contents
3.3.5. Close cooperation with domestic and international copy right

BCG
SWOT

Viettel Telecom
Value Added Service
Average revenue per user
Business strategy
Internal Factor Evaluation
External Factor Evaluation
Quantitative Strategic Planning Matrix
Growth/ Share Matrix
Strengths, Weaknesses, Opportunities, Threats

10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.

Information Technology and Communications
Multimedia Corporation
Vietnam Posts and Telecommunications Group

Global Telecommunication Corporation
Vietnam Electricity Telecommunications Corporation
Dong

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List of tables
1.

Table 1.1

SWOT analysis

22

2.

Table 2.1

Vietnam mobile data – Events and predictions

30

3.


7.

Table 3.3

QSPM - W-O Strategic Group

57

8.

Table 3.4

QSPM - W-T Strategic Group

57

9.

Table 3.5

Revenue target in the period of 2011 -2013

62

List of pictures
Number of people who are interested in value1.

Picture 2.1

added services (VAS) in mobile phone (Source

Statistics Office, 2010)
Viettel Revenue (2000 - 2010) (Internal Source)
VAS Income Statement of Viettel (2008 - 2010)
(Internal Source)

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29
30
31
50
52


INTRODUCTION
1.

Reason for choosing the subject
In recent years, competition in the mobile market has become more and more

severe, seven service providers has come into operations, others are also making
procedures for penetrating into the market. However, the market has gradually
appeared saturated. In order to attract buyers, networks have uninterruptedly reduced
fees and released a mass of promotional programs; only in 2010, 2 big networks
reduced 15-20% mobile fees. In addition, subscriber’s attraction, promotion and
ceaseless fees reduction also make revenue and profit decrease dramatically; Ministry
of Information and Communications said that in 2009 ARPU (Average revenue per
user) of Vietnam mobile decreased 20%.
Facing to this situation, telecom businesses should have new strategies in
order to increase ARPU. VAS services exploitation and development is a suitable


VAS business strategy on mobile of Viettel Telecom in the period of 2011-2015.
4.

Research method
In order to solve the above matter, our report is drawn through using qualitative

analyzing method (research, analyze the real situation of Viettel Telecom). Methods of
specific data collection such as: survey questionnaires, expert interview are used for
collecting data. Use National Statistical Data, specialized information and figures; use
secondary figures about previous strategies, researches and reports of Viettel Telecom.
5.

Structure of the capstone consists of 3 charters
Charter 1: Theoretical basis of strategic management of the business.
Charter 2: Analyze the real situation of Viettel Telecom.
Charter 3: Build VAS business strategy on mobile of Viettel Telecom in the

period of 2011- 2015, solutions and conclusion.

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CHARTER 1
THEORETICAL BASIS OF STRATEGIC MANAGEMENT
OF THE BUSINESS
1.1.

Overview on strategic management
1.1.1. Concepts

market. It is related to strategic decisions on selecting products, meeting the demand

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of buyers, taking a competitive advantage compared to rivals, exploiting and
creating new opportunities, ETC,v.v...
Fred R.David: “Business strategy is means to achieve long-term objectives”.
It can be said that business strategy is means supporting businesses to
achieve long-term objectives. Business strategy doesn’t draw up specific methods,
but it is a general program, the most effective solution of resource mobilization with
a view of executing fixed objectives.
Business strategy of a business can be generally defined as follows:
“Business strategy is an art of means organization and design in order to achieve
long-term objectives of a business and it has a relationship with the change of
business and competitive environment”.
1.1.1.3. Basic features of business strategy
-

Business strategy is defined from basic objectives and business direction of a

business in each period.
-

The orientation of strategy is to ensure that the business will develop

ceaselessly and strongly in a changeable environment.
-

Business strategy ensures maximum mobilization and optimal combination



-

Business strategy contributes to improve the using capacity of resources,

strengthen the business’s competitive stand in order to ensure its sustainable
development.
-

Business strategy creates strong foundations for making policies and

decisions on business production in accordance with the market change.
1.1.2. Process of strategic management
Process of strategic management is a series of operations, including
Commitments, Decisions and Actions of a business performed to achieve Strategic
Competitive Advantage; Sustainable Competitive Advantage with Profit above
average.
Process of strategic management can be divided into 3 periods:


Period 1: Form a strategy
This is the initial period playing a very important role in the whole process of
strategic management. During this period, the business defines strategic
objectives based on building mission, vision and core thought; analyzing
external and internal factors; exactly defining opportunities, threats,
strengths, weaknesses, and then select suitable strategies.




collects all expectations in the business and encourage all efforts of the business
with the aim of achieving purposes, lofty cause and ideal
1.2.2. Mission
Mission is a declaration bearing a long-term value on purpose, it helps
distinguish one business with another. Such declarations are also regarded as
business philosophies, business principles, and the Company’s faith.
Mission announcement “reason for existence” of the Company; In the
viewpoint of Drucker, the mission announcement of the Company answers the
question: “What are your business works ?”, “What/ how should you do to achieve
mission announcement ?”
1.2.3. Purpose
Purposes can be defined as achievements that an organization finds every
way to achieve when pursuing its main tasks/ mission. Correctly defining purposes
is very important to the business’s success, and objectives showing development
directions, evaluating earnings show that objectives like resource distribution,
development cooperation provide a basis to build an effective plan, organize and
evaluate the efficiency, etc,v.v...Objectives should be challengeable, measurable,
suitable, reasonable and clear. A business includes many sections, so purposes
should be built for the whole Company and each section.
1.2.4. Policy

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Fred R.David: “Policy is a tool to carry out strategies, a means to achieve
objectives. Policies include instructions, rules and procedures designed to support
efforts to achieve given objectives. Policies are directions to make decisions and
express repetitive circumstances or periodical ones”.
1.2.5. Core thought
Core thought defines long-term features of an organization; this is a

and achieve long-term objectives and policies with a view of attaining annual
objectives.
External environment includes:


Macro environment or general environment



The industry’s environment or micro environment or competitive

environment.
1.3.1.1.

Analyse macro environment

Macro environment is an environment covering operations and affecting
directly or indirectly all operations of businesses.
The main purpose of macro environment analysis is to identify the change in
expected tendencies from external factors. Focusing on the future, external
environment analysis allows the business to identify and evaluate: O-Opportunities
of the environment where the business may take advantage and T-Threats that the
business may face up with. Then, allow the business to build business tasks clearly,
define long-term and feasible objectives and design strategies in conformity with
business objectives.
We can use PEST model to analyse macro environment. The model consists
of:


Political


Economic environment

The status of macroeconomic environment defines the healthiness, prosperity
of the economy; it always impacts on businesses and industries.
Economic environment indicates the nature and orientation of the economy
that the business is operating. The economy’s influences on a company can change
the profitability. Four important factors in the macro economy are the growth rate of
the economy, interest rate, exchange rate and inflation rate.
1.3.1.4.

Socio-cultural environment

Socio-cultural environment is related to social attitudes and cultural values.
Because cultural values and social attitudes create a social basis; so it often leads
changes and technological, political, economic and demographic conditions. Similar
to technological changes, social changes also create both opportunities and threats.
1.3.1.5.

Technological environment

Technological environment includes institutions, operations relating to create
new knowledge, transfer them to inputs, products, processes and new materials.
Technological change consists of creativity and termination, opportunities and
threats. One of the most important impacts of technological change is that it can
affect the height of entry barrier and re-organization on the structure’s origin.
1.3.1.6.

Natural environment



-

Have strengths in material facilities such as: abundant capital, a big

distribution system.


Have a strong human resource,v.v...
W-Weaknesses: shortcomings of the business or factors pushing the

business in difficult circumstances, including:
-

Lack of important competitive skills and experience

-

Lack of resources: human resources, financial resources, etc v.v...
The result of internal environment analysis is to define resources, capacities and

core capacities and then build a competitive advantage and strategic competitive
advantage of the business. Competitive advantage of the business means that the
business has the ability to supply the market a special value which no rival can.
1.3.2.1.

Matrix (Internal Factor Evaluation)

IFE Matrix summarizes and evaluates basic strengths and weaknesses of a
business. The matrix shows strengths that the business should promote and

there are 5 competitive forces:
1.3.3.1. Competitive pressure from potential entrants
In the viewpoint of M-Porter, potential entrants are businesses which aren’t
present in industry but may affect the industry in the future. How many potential
entrants, how their pressure on the industry, weak or strong, depends on the
following factors:
-

The industry’s attraction: This factor is reflected through criteria such as:

profitability rate, quantity of buyers, and quantity of businesses in the industry.
-

Barriers when entering into the industry: factors make participation into an

industry more difficult and expensive (scale advantage, product difference; capital
demand; convertible cost; approach ability to distribution channels; cost

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disadvantages unrelated to the size; the Government policies; reprisals of businesses
in the industry)
1.3.3.2. Competitive pressure from substitute
Substitute is the product of industries under the demand of buyers similar to
products in the industry. The appearance of substitutes can reduce the selling price
or profits of businesses. Thus, businesses should predict and analyse the
development trend of substitutes of businesses.
1.3.3.3. Competitive pressure from buyers
Buyers are subjects of businesses and key factor creating the market.


Fixed cost and storage cost are high

-

Lack of product diversification and variable cost

-

The industry has redundant capacities

-

The industry’s diversification

-

Lay a bet on the industry is high

-

Barriers for withdrawal



EFE Matrix (External Factor Evaluation)
EFE Matrix summarizes and evaluates main opportunities and threats to the

business from external environment. It helps strategic managers assess the reaction
level of the business for opportunities and threats, put forth external environment


reduction from experience, cost control and expense minimization, cost reduction
for R & D, marketing, advertisement, etc,v.v...
The purpose of the Company is to pursue this strategy; i.e., create new
products, services with the lowest cost in order to overcome competitors to exist
and develop. Companies selecting cost leadership strategy have low differentiation,
market sections are low, typical strength concentrates on production management
and material supply. With low cost, the Company has the ability to sell a large
number of products, creating favourable conditions to promote production, reduce
the price of products.
 Strong points
-

Due to low cost, the Company can sell its products lower than competitors

but keep expected profits. In case, competitors sell products at the same price, the
Company including the lowest cost will achieve higher profit.
-

When the business scope starts to develop, if a price war happens and

companies compete with each other on price, the Company including lower cost
will won based on better competitiveness.
-

The Company easily confronts when having pressure on price increase of

suppliers.
1.3.4.2. Differentiation strategy
The nature of differentiation strategy is to create things that the whole

sales. In other words, SWOT is a theoretical framework that we depend on and reconsider strategies, define the position as well as road of an organization, a
company, and analyze business suggestions or any ideas relating to the business’s
rights and interests. In fact, apply SWOT in building business strategies, forming
strategies, evaluating competitors, surveying the market, developing products and
reporting researches, etc… has been increasingly selected by many businesses.
Analyze SWOT for the business to know more thoroughly about:


Strengths of resources



Weaknesses of resources



Best opportunity



Fundamental challenge
Then, the business can draw a conclusion that how to mobilize resources

inside and outside the business effectively.
Table 1.1: SWOT analysis

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O: Opportunities

changes
rate

in
and

commercial policies

- Expand to seize market - New regulations cost much
shares from competitors
- Re-purchase competitors
- Joint or joint-venture to
expand coverage
opportunities

S: Strengths

to

- The rate to be affected
before business pool
- Buyers or suppliers have

- Expand to exploit new
- Expand

money

more advantage
- Change the need of buyers

renovation

technology
- Good customer service
- Better quality products
- Joint and joint-venture
W: Weaknesses

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- Not have a clear strategic
orientation
- Backward equipments
- Bad accounting, high debts
- Overall cost is higher than
the competitor’s

Repair weaknesses to

Repair weaknesses to

exploit opportunities

overcome/ avoid threats

- Lack of some fundamental
skills/ potentials
- Loss
- Production problem

compared to other strategies. Only strategies of the same group compare to each
other. AS is divided as follows: 1 = unattractive, 2 = a little attractive, 3 = quite
attractive, 4 = very attractive. If successful factors don’t affect the choice of
strategies, not mark attraction for these strategies.

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

Step 5: Calculate (TAS), by multiplying classification mark (step 2) with AS

(step 4) in each row.


Step 6: Calculate TAS for each strategy. This is an addition of TAS in

strategy column; the higher mark expresses, the more attractive strategy is.

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