BUILDING A DEVELOPMENT STRATEGY
FOR THANH LINH CO., LTD. FOR 2013 – 2018 STAGE


TABLE OF CONTENTS
FIGURE 1.1: MATRIX OF OVERALL COMPETITIVE STRATEGY
11
ACCORDING TO THE AUTHORS D.SMITH GARRY, DANNY R.ARNOLD, BOPBY G.BIZZELL IN "STRATEGY AND
BUSINESS STRATEGY" THAT THE BUSINESS ENVIRONMENT INCLUDES: INTERNAL AND EXTERNAL BUSINESS
ENVIRONMENTS.
18
2.2. Efficient of business..............................................................................................................................42

LIST OF ACRONYMS
Acronyms
DN

:

Meaning
Enterprise

TNHH

:

Limited liability

KD

:

CATALOGUE OF CHART

FIGURE 1.1: MATRIX OF OVERALL COMPETITIVE STRATEGY
11
ACCORDING TO THE AUTHORS D.SMITH GARRY, DANNY R.ARNOLD, BOPBY G.BIZZELL IN "STRATEGY AND
BUSINESS STRATEGY" THAT THE BUSINESS ENVIRONMENT INCLUDES: INTERNAL AND EXTERNAL BUSINESS
ENVIRONMENTS.
18

ABSTRACT
1. Necessity of the topic
Today, in the context of fierce competition taking place in all areas of business,
if an enterprise wants to survive and develop on the market, the most important and
necessary thing for them is to direct the enterprise to a right way and in accordance
with frequent and sudden changes of the environment to achieve high adaptability and

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sustainability. To achieve these, enterprises must identify and build a proper
development strategy for their your own business.
In 2007, the event that Vietnam formally joined World Trade Organization
(WTO) marked a major turning-point for the economy of Vietnam. The opportunities
offered by economic integration have been welcoming dynamic enterprises who know
to seek and take advantage of investment opportunities. However, besides
opportunities, there are always threats and potential risks that can come at any time
and enterprises will get stuck into difficulties without good preparation and suitable
measures to cope with. In addition, the continued advance of science and technology
also helps to shorten the development cycle of products and services, the market
globalization helps to increase significantly existing and potential competitors ... This

the author decided to choose the topic "BUILDING A DEVELOPMENT
STRATEGY FOR THANH LINH CO., LTD. FOR 2013 – 2018 STAGE" for
master thesis.
2. Purposes and applicability of the thesis
a- Systematize knowledges of building strategy for an enterprise.
b- Analyze factors from external environment and internal business to indicate
opportunities, challenges, strengths and weaknesses of the company.
c - Propose orientation and strategic strategy for Thanh Linh Co., Ltd, period of
2013-2018.
3. Researching methods
The topic uses methods of description, information gathering, synthesis,
analysis.
About information gathering, the topic mainly uses secondary information such
as financial reports, market analyzing reports and other types of reports of the
company ...
About information analysis, it includes information processing, aggregating,
calculating, comparing, evaluating and making conclusion. The information gathered
from the sources mentioned above is analyzed and classified to groups of important
information, statistical information will be handled according to the principles of
statistical analysis. Conclusion is based on the analysis and evaluation of data.
4. Structure and layout of the thesis
a- Chapter I: Theoretical background for building development strategy
b- Chapter II: Analyze business situation of Thanh Linh Co., Ltd
c- Chapter III: Conclusion and recommendations .

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CHAPTER I: THEORETICAL BACKGROUND FOR BUILDING
DEVELOPMENT STRATEGY

Group had strategic connections concept with a competitive advantage.. Competitive
advantage is to put a company in a better position to create rival economic value to
the customer. Henderson wrote that "the search strategy is a prudent action plan to
develop and incorporate competitive advantage of the organization. The difference
between you and the competition is the basis for your advantage. " Henderson
believes that it can not coexist 2 competitors if their business practices are same. Need
to create new differences may exist. Michael Porter also agreed with the endorsement
of Henderson: "Competitive strategy related to differences. It is the careful selection
of a different chain activities to create a set of unique values. "

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Under the traditional approach, the strategy is to develop long-term view of
the overall as an organization to achieve long-term goals.. The researcher of history of
management , Alfred D. Chandler said that "strategy is the determination of the basic
long-term goals of the business and operations of the program along with the
allocation of resources necessary to achieve that goal." As such, his ideas reflected a
strategic planning process with lucidity, in which businesses choose their goals, define
action plans to accomplish the goals that best and find ways to allocate resources
accordingly. Traditional approach has the advantage that helps businesses easily
imagine the work that needs doing to strategic planning and see the benefits of a
comprehensive strategy for the long-term plan. However, in the business environment
with fluctuating shows the limitations of traditional approaches because it does not
have the ability to flexibly adapt to the change of business environment.
Under the modern approach, the strategy can what the broader that business
plans to implement.. According to Mintzberg's conception, he said that strategy is a
pattern in the flow of decisions and action plans. The pattern can be any type of
strategy: strategies designed in advance or mutation strategies. He provided models:
Modern approach to help businesses easily respond flexibly to changes in the business

individuals with different interests together towards a common goal, and business
development.. It creates a close bond between employees and between managers and
staff. Thereby strengthening and further enhance the enterprise's internal resources.
- Development Strategy is a tool of effective competitive business.. In the

conditions of globalization and economic integration now makes the influence and
mutual interdependence between enterprises. That process has created fierce
competition between enterprises in the market. In addition to competitive factors such
as: price, quality, advertising, marketing, business strategy also used as a tool to
develop effective competition.
1.1.3 Level of business strategy
The strategy is divided into 3 main categories:
i) Business strategy is the strategy of the corporation or enterprise to guide
business's activity and how to allocate resources to achieve common goals. Businesslevel strategy is a statement of the long-term goal, the development orientation of the
organization.

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(ii) Development strategy to implement a strategic business areas, specific
business activities, the overall commitment and action to help businesses to gain a
competitive advantage by harnessing their core in specific markets, only businesses
constantly upgrade their competitive ad vantage then can be used to achieve longterm success of Business-level strategy.
(iii) Functional strategy is the implementation of operational functions of the
business such as HR strategy, marketing strategy. These are strategies related to the
operation of individual businesses to support the development strategy of enterprise
and business strategy. Functional strategy as a detailed statement of the goals and
methods of short-term actions are the functional areas used to achieve short-term
goals and long term goals of the organization. Functional strategy solve two problems
related to the functional area.

- Easy to withstand pressure when rising prices from suppliers.
- Creating barriers to entry.
Disadvantages:
- Opponents can provide a lower price;
- Easy to be imitated by competitors;
- The ability to find production methods with lower cost to competitors
- Due to target for low cost, businesses can ignore, fail to meet the changing
tastes of customers.
(Ii) Differentiation strategy: Businesses will create products and services that
consumers are only considered in their evaluation
Advantages:
- Maybe sell "outstanding" price compared to competitors, to increase sales
and profit margins achieved over average value.
- Creating customer's loyalty to the brand.
- There may be an increase in raw material's prices better than the low-cost business.
- Creating barriers to entry.
Disadvantages:
- Easy to be imitated by competitors.
- The loyal for trademarks prone to lose as information is more and product
quality is constantly improving.
- Businesses to take costly features that customers do not need on the product
- The change in the needs and tastes of customers very quickly that business is
difficult to meet.
- Needing to communication ability to promote business

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(iii) Focus strategy (based on low cost or differentiation): Enterprise will
orient satisfy of customer groups or market segments defined by pursuing a certain

Management

Make a
difference
High
(primarily by the
uniqueness)
High (more
maket
segmentation)
R&D, sales
and Marketing

Figure 1.2: Matrix of basic factors

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Focus
Low to high,
or the unique value
Low (one or
several segments)
Any ability to
make a difference


1.1.4.2. Typical strategy of enterprises
Definition: Typical strategy is a comprehensive approach, in order to achieve
the overall objectives of the business. The typical strategy of the enterprise:
• The diversification strategy.



-

(ii) Integrated strategy: Integrated strategy is enable businesses to gain

new resources, strengthen competitive capabilities. The integrated strategy is enable
businesses to gain control for distributors, and suppliers or competitors. The
integrated strategy includes:
- Front integration:: Enterprises applying this strategy to win the right to
ownership or increased control over distributors or retailers. This strategy is
appropriate if: The current distribution is expensive, unreliable, or do not meet the
requirements of the enterprise is no more proficient distributors, can create a
competitive advantage for those front-integrated businesses, in the sector is predicted
to develop highly; sufficient capital and manpower to manage the distribution of its
own products; When distributors and retailers have high profit margins.
- Back integration: Enterprises are seeking ownership or increased control
over suppliers. Back-Integrated strategy are appropriate if: The current supply is
expensive, unreliable, insufficient capacity to meet the needs of businesses, less
number of suppliers, the number of major competitors; number of companies in fast
growing sectors quickly; enough capital and manpower to manage the supply of raw
materials, product price is stability and crucial; suppliers have high profit margins;
enterprise needs to achieve the necessary resources quickly.
- Horizontal integration strategy: To seeking ownership or increased control
over the competition through M&A, partnership, alliance, ... enables enterprises to
increase the economies under scale and improve the transfer of resources and
symbiotic capacity. Horizontal integration strategy is appropriate when: Enterprises
owns exclusive features that are not affected by the reduced by the government;
enterprises in the sector developing; Economy under scale are added to create the
main advantages; sufficient capital and human resources to manage a new business;

the business was on the "Ripen" stage of the life cycle, sector with rapidly-changing
business technology, competitors provide dominant product at the same price,
enterprises must compete in the sector with a high-speed of development, enterprise
can research and strong development.
(iv) Other strategies:
-

Consolidation strategy: As a strategy is gathered through cutting cost and

asset to impact sales and profits declining. Consolidation can lead to sell their land
and homes in order to create the necessary amount of cash, closing product lines,
closing the business line, closing obsolete factories, automating process, closing job
and establish a system of rational spending control.
- Cutting strategy: As strategic to sale a part of business. Stripping is often
used to create capital for the purchase of land or investment strategy. Stripping can be
a part of a strategy to consolidate the entire help business to go out from the

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unprofitable sector, or require too much capital, or inconsistent with the other
activities of the business
- Liquidation strategy:: Strategy about sale all assets of a business, or part,
by its tangible value.
- Collaboration Strategy: Business to pursue a combination of two or more
strategies simultaneously.
1.2. Planning business development strategy
1.2.1 The process of strategic planning for business development
1.2.1.1. Identify tasks or mission of business
A strategic plan starts with a business mission was clearly defined. Mintzberg defines

Macro Environment
The economic factor
The political factor
The social factors
Natural factors:
The technological factors
Microenvironment (sector)
The competitors
Customer
The supply
Potential rivals
Spread effects
The internal environment
Marketing
Production Technology
Manpower
Finance and Accounting
Management

(KD strategy and tactics - Garry D.Smith, Danny R.Arnold, Bobby G.Bizzell)

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Figure 1.3: These factors of the business environment
a) Macro Environment
Economic Environment
This is a very important factor to attract the attention of all managers. The
evolution of the economic environment always contains opportunities and threats in
different industries and has the potential influence to strategy of business.

In many cases, the policy conditions become a very important factor to form the
competitive advantage of products and services. We can say that, the natural
conditions are always a key factor in human life (especially the factors of the
ecological environment), on the other hand, it also is a very input factors key
economic sectors such as: agriculture, sector, mining, tourism, transport, ...
Environmental technology
New technology can create conditions for the production of cheaper products with
higher quality, making the product with better competitiveness. The introduction of new
technology can make products with more features and can generate new markets for
products and services of the business.
However, the explosion of new technology makes technology cycles tend to
shorten, this further increases the pressure to shorten the depreciation period and
create pressure for businesses to technological innovation to increase their
competitiveness.
Impact pressure of technological development and expenditure for the development
of different technologies in the sector. For those industries affected by rapid technological
change, the process of evaluating opportunities and threats brought the technology
became a particularly important problem of the control of external factors.
b) Environment sector (micro environment)
New potential
competitors
The ability of
the price
squeeze
suppliers

Supplier

The risk of new
competitors The ability of

The current competition is the organization running in the same business
sector, creating the competitive structure in the region, the constant pressure direct
threat to the enterprise.
The competitors are looking ways to increase sales, increase profits by
policies and measures to create disadvantages for businesses.
Because of limited market size, "competitive" business fight for market share by
means of discounts, promotional, promotions, persuade customers, improving the
product quality, create focus difference in providing products and services, creating
value for customers.
There are 3 important factors forming the level of competition between the
companies operating the same business sector, that is: Competitive structure,
sector growth; barrier preventing businesses out of business.
The power of customer

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Customers are entitled to service by enterprises, as survival factor, not customers
then no business. Buyers can be viewed as a competitive threat when they force down
prices or businesses in need of high quality and better service.
While purchasing, customers often use their power to make adverse claims to the
seller of the purchase price, terms of delivery, product quality, payment terms ...,
creating pressure to reduced profitability of the business.
Thus, customers have a god just as competitors of the business, customers bring
business opportunities to enterprises, but also can take away the profits of the
enterprise.
Therefore, when developing strategies for business needing to be aware of the
opportunities and risks that may occur due to customers bring to the specific plan
to take advantage of opportunities and minimize these risks.
The power of suppliers

Potential rivals may be a factor in reducing the profitability of the company as
they put into operation new production capacity, with the desire to gain market share and
the necessary resources. When the analysis of threat level of the potential entrants, people
often come to analyze the factors that create barriers to entry, which is a combination of
the factors preventing new entrants into the business of a certain sector. If barriers is high,
its threat is low and vice versa.
Pressure of substitute products
Final threaten Forces of M.Porter is the threat of substitute products.
The appearance of substitute products is very diverse and complex creating risks
of price competition for old products, reducing the profitability of the business.
Alternative products limit potential profit of an industry by placing a maximum price
level that all companies in the industry can be profitable. This is reflected by the
elasticity of demand by cross price.
Due to interchangeable products, it leads to a competitive market. When the
price product increases, the trend of using alternative products is higher and vice
versa. The more attractive the ability to choose the price of alternative products is, the
stronger the threshold for the profitability is.
So, alternative products can brings opportunities for businesses to expand
production catalogs, looking for new markets, but also brings significant challenges for

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businesses if their products now do not compete with it.
c) Analysis of enterprise internal environment
Internal environment includes the system of visible and invisible factors
existing in the normal business course of enterprises or organizations and directly
influences the strategic management process.
Therefore, analyzing the internal environment is essential for all types of
economical organizations; this is the basis to help businesses know the strengths and

Adequate analysis and evaluation of material resources is an important basis to
help business managers understand potential material resources, limitations etc. .. to
make management decisions to adapt to the practical situation such as: maximum
exploitation of capital resources and existing facilities, selection and mobilization of
external funds, selection of partners to increase the scale of material resources,
reserve a necessary proportion to ensure the ability to cope (defensive or offensive)
with competitors on domestic or foreign markets …
Intangible resources
In addition to the resources mentioned above, every business or organization has
other resources that are identified only through perception, it is intangible resources.
This resource may be the overall success of all members in the organization or a
particular individual that affects the organization’s operation.
Depending on available resources, the size and value of this resource are
different among enterprises and change from time to time. If intangible resources are
not recognized and appreciated properly, managers are easy to loose their companies’
existing advantages in the production and business process.
In fact that many businesses have not only recognized the importance of
available intangible resources yet, not taken advantage of, just looked down or wasted
them, but also fueling to competitors by selling their intangible resources to them at
cheap price.
In summary, the resources of every business are diverse. The characteristics,
activities, size, structure of these resources are different among enterprises.
Adequate analysis and assessment of existing and potential resources in each
period will help business executives clearly determine their progress in the
development process. At the same time, it helps identify their strengths and

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