TRƯỜNG ĐẠI HỌC MỞ TP.HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES SOLWAYS BRUSSELS SCHOOL MBAVB3 LÊ PHONG DINH BUILDING A COMPETITIVE STRATEGY FOR DATACRAFT VIETNAM UNTIL 2015 MASTER PROJECT MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City (2010) COMMITMENT I hereby, Le Phong Dinh, committed my honesty for my thesis preparation and the content was written by myself with information retrieved and obtained from reliable sources The information was re-produced from publication information and clearly indicated with no plagiarism violation HoChiMinh City, December 2010 Le Phong Dinh i ACKNOWLEDGMENT I would like to express my since thanks to all professors of the program My deepest gratefulness goes to professors of Solway Brussels School – University of Brussels for the profound knowledge I have achieved during the courses and great time for discussion in case studies I am also thankful to Dr Tran Anh Tuan, Co-director of Vietnam-Belgium program for organizing the program My thanks are also to Mr Serge Bywaski, the helpful co-ordinator, who has been with us throughout the MBAVB3 course, giving help when needed and acting enthusiastically as a bridge connection between the class and Solway professors I would like to express my sincere thanks to Mr Lim Puay Koon, ASEAN Managing Director of Datacraft Asia, for his advices for my thesis I also would like to extend my gratitude to colleagues, Mr Francis Lee – Head of Solution of Datacraft Asia, executive managers of technology vendors and managers of different companies who have spent time answering the questionnaires that help to drive the market direction I would like to thanks Dr Nguyen Dinh Tho, my tutor, for helping me to complete the thesis Last but not least, I also would like to express my sincere thanks to my wife for her support during the past two years of my study Ho Chi Minh City, December 2010 LE PHONG DINH ii EXECUTIVE SUMMARY Datacraft Vietnam is the subsidiary of Dimension Data, one of the leading system integrators in the world In Vietnam, Datacraft has been operated for many years and competed well with many local companies Given the fact that there are big opportunities as Vietnam is growing fast and more investment in the telecommunications industry is expected, it is necessary for Datacraft to maintain competitive The thesis therefore goes deeply into analyzing the internal and external environment of the company to find the fittest strategy for the company The thesis firstly conducts an external audit of the company environment to figure out opportunities and threats Following the external audit, an internal audit is done to illustrate the strengths and weaknesses Putting altogether, the Quantitative Strategic Planning Matrix is built up to choose the best suitable strategies among three generic strategic, cost leadership, differentiation and focus To make the study more realistic and objective, two surveys and one direct interview are conducted The result of the surveys and information collected from direct interview are consolidated into the Quantitative Strategic Planning Matrix Based on main findings from the Quantitative Strategic Planning Matrix, differentiation strategy was chosen Some recommendations have then been suggested to build up differentiation strategy for Datacraft Vietnam iii TABLE OF CONTENTS COMMITMENT i ACKNOWLEDGMENT ii EXECUTIVE SUMMARY iii TABLE OF CONTENTS iv LIST OF ABBREVIATIONS vii LIST OF FIGURES viii LIST OF TABLES ix INTRODUCTION OF THE STUDY x Chapter LITERATURE REVIEW 1.1 Definition of competitive advantage 1.2 Porter’s generic competitive strategy 1.2.1 Cost leadership strategy 1.2.2 Differentiation strategy 1.2.3 Focus strategy 1.2.4 Summary of generic strategies and its requirements 1.3 Strategy formulation process 1.3.1 Mission and goals 1.3.2 External analysis 1.3.2.1 Macro environment analysis 1.3.2.2 Micro environment analysis 1.3.3 Internal environment analysis 10 1.3.4 Strategy formulation and strategic choice 11 1.3.5 Strategy implementation 12 Chapter 14 ANALYSIS OF DATACRAFT VIETNAM’S EXTERNAL ENVIRONMENT 14 2.1 Macro environment analysis 14 2.1.1 Political environment 14 2.1.2 Economics environment 15 2.1.3 Social environment 16 2.1.4 Technological environment 17 iv 2.2 Microenvironment analysis 18 2.2.1 Industry and market overview 18 2.2.2 Industry competitiveness and competitors analysis 22 2.2.2.1 2.2.2.2 Substitute products 23 2.2.2.3 Bargaining power of buyers 23 2.2.2.4 Bargaining power of suppliers and suppliers analysis 24 2.2.2.5 2.3 Barriers of entry 22 Competitors Analysis 25 Summary of company’s opportunities and threats 28 2.3.1 Opportunities 28 2.3.2 Threats 28 2.4 External Factor Evaluation Matrix 29 Chapter 32 ANALYSIS OF DATACRAFT VIETNAM’S INTERNAL ENVIRONMENT 32 3.1 Company’s profile 32 3.1.1 Introduction of Datacraft Asia 32 3.1.2 Introduction of Datacraft Vietnam 32 3.2 Organizational structure 33 3.2.1 Organization chart 33 3.2.2 Management 34 3.2.3 Human resources 35 3.3 Business operation 35 3.3.1 Company vision and goals 35 3.3.2 Market segmentation 36 3.3.3 Major Suppliers 38 3.3.4 Products and services 38 3.3.5 Operation - Sales Team 41 3.3.6 Pricing 43 3.4 Financial analysis 44 3.5 Capabilities 47 3.6 Summary of Datacraft’s strength and weakness 48 3.6.1 Strengths 48 3.6.2 Weaknesses 48 v 3.6.3 The Internal Factor Evaluation (IFE) Matrix 49 3.6.4 Competitive Profile Matrix (CPM) 51 Chapter 53 DEVELOPING COMPETITIVE STRATEGIES FOR DATACRAFT VIETNAM 53 4.1 SWOT analysis 53 4.2 SWOT strategies 55 4.3 Strategy formulation 56 4.3.1 Mission and vision for the company till 2015 56 4.3.2 Developing competitive strategies for Datacraft Vietnam 56 4.3.2.1 Cost leadership strategy 56 4.3.2.2 Differentiation strategy 58 4.3.2.3 Focus strategy 59 4.4 Strategy evaluation – Quantitative Strategic Planning Matrix 59 4.5 Strategy implementation 63 CONCLUSIONS AND RECOMMENDATIONS 66 REFERENCES i APPENDIX CUSTOMER SURVEY iii APPENDIX RESULTS OF CUSTOMERS’ SURVEY ix APPENDIX EMPLOYEE SURVEY xv APPENDIX RESPONSES FROM DATACRAFT’S SALES TEAM xvii APPENDIX DIRECT EXECUTIVE INTERVIEW xx APPENDIX KPI TEMPLATE FOR CLIENT MANAGERS xxii APPENDIX KPI SETTING TEMPLATE FOR SALES MANAGERS xxiv vi LIST OF ABBREVIATIONS 3G 3GPP 4G CDMA CPI DPI FDI FSI GPRS GSM ITU KPI LAN LTE MNC MPI MPT PC QSPM SI VNNIC VNPT VPN WAN Wi-Max WTO Third-generation The 3rd Generation Partnership Project Fourth-generation Code division multiple access Consumer Price Index Department of Planning and Investment Foreign Direct Investment Finance, Securities and Insurance General packet radio service Global System for Mobile Communications International Telecommunications Union Key Performance Index Local Area Network Long-term Evolution Multi-National Companies Ministry of Planning and Investment Ministry of Post and Telecommunications Personal Computer Quantitative Strategic Planning Matrix System Integrator Vietnam Internet Network Information Center Vietnam Post and Telecommunications Virtual Private network Wide Area Network Worldwide Interoperability for Microwave Access World Trade Organization vii LIST OF FIGURES Figure 2.1 Revenue of the telecommunications industry 19 Figure 2.2 Revenue structure of the telecommunications industry 2006-2009 20 Figure 2.3 Suppliers’ market share 25 Figure 2.4 System Integrators’market share 27 Figure 3.1 Organization chart of Datacraft Vietnam 34 Figure 3.2 Datacraft Vietnam’s revenue by customers’ segmentation 37 Figure 3.3 Salesforces screenshot 43 Figure 3.4 Datacraft Vietnam’s Growth rate 2005 - 2010 45 Figure 3.5 Revenue structure of Datacraft Vietnam 46 viii LIST OF TABLES Table 1.1 Generic competitive strategies and required competencies 04 Table 1.2 Generic strategies and the five forces 10 Table 1.3 The Quantitative Strategic Planning Matrix (QSPM) 12 Table 2.1 Summary of Vietnam’s key economic indicators 15 Table 2.2 External Factor Evaluation (EFE) Matrix of Datacraft Vietnam 29 Table 3.1 Benchmark Datacraft’s products and services with key competitors 40 Table 3.2 Datacraft Financial Performance 2005 – 2010 44 Table 3.3 Internal Factor Evaluation (IFE) Matrix of Datacraft Vietnam 49 Table 3.4 Competitive Profile Matrix 52 Table 4.1 Benchmark key requirements of cost leadership strategy and Datacraft’s resources and capabilities Table 4.2 57 Benchmark key requirements of differentiation strategy and Datacraft’s resources and capabilities 58 Table 4.3 Quantitative Strategic Planning Matrix (QSPM) of Datacraft Vietnam 60 Table 4.4 Summary of strategy evaluation 63 ix Table 8: Datacraft is a reliable system integrator Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 9: Percent 13 22 50 Customer will continue to work with Datacraft Frequency We will We are not sure We will not Total: Table 10a: Percent 34 11 50 68 22 10 100 Customer satisfaction with Datacraft's sales team Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 10b: 26 44 12 10 100 Percent 12 23 50 24 46 12 10 100 Customer satisfaction with Datacraft's service team Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Percent 13 20 12 50 xii 26 40 24 100 Table 10c: Customer satisfaction with Datacraft's pre-sales team Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 11: Percent 24 50 18 48 16 10 100 Datacraft's advance technology certified partner by Cisco Frequency Telepresence UCS Securities Video conferencing CRS1-3 (Routing and Switching) Total: Percent 26 15 50 xiii 52 30 100 Table 12: Datacraft’s consultant team skill set on Networking Security Voice Storage and system Datacenter Disaster recovery Virtualization Video conferencing Training Professional service Manage services Project management Under average Frequency Percent 10 10 13 26 18 14 16 11 22 12 16 Average Frequency Percent 13 26 14 28 11 22 13 26 16 32 16 32 15 30 14 28 15 30 17 34 14 28 13 26 Fair Frequency Percent 14 28 15 30 18 36 15 30 11 22 15 30 13 26 13 26 18 36 15 30 18 36 16 32 xiv Good Frequency Percent 21 42 18 36 16 32 17 34 10 20 10 20 15 30 15 30 12 12 24 10 20 17 34 Total Frequency 50 50 50 50 50 50 50 50 50 50 50 50 Total Percent 100 100 100 100 100 100 100 100 100 100 100 100 APPENDIX EMPLOYEE SURVEY Dear Sirs/Madams, This questionnaire is for the study of MBAVB3 course, and it is intended for no other purpose than that Would you please answer the below questions (by checking the appropriate box or writing a few words)? Your answer will greatly assist me in completing the course Thank you Sales people are assigned with their own segment and quota? Yes/No Does salesforce.com system value for sales people to manage his/her own accounts? Strongly agree Agree Neutral Disagree Strongly disagree The corporate leadership of Datacraft has a clear strategy and is executing it effectively Strongly agree Agree Neutral Disagree Strongly disagree Datacraft’s management has communicated the company’s strategy clearly and effectively to sales team ? Strongly agree Agree Neutral Disagree Strongly disagree There is effective communication within sales team with other unit like technical and finance departments? Strongly agree Agree Neutral xv Disagree Strongly disagree DC-info (Datacraft Intranet) is a useful source of information about Datacraft business units, solutions, policies and successes? Strongly agree Agree Neutral Disagree Strongly disagree Are your Individual Performance Goals (KPIs and values) realistic and challenging ? Strongly agree Agree Neutral Disagree Strongly disagree The current bonus plan provides a fair means for incentivizing and rewarding sales team when you are performing well? Strongly agree Agree Neutral Disagree Strongly disagree Working in your current sales job provides you with career development opportunities in Datacraft? Strongly agree Agree Neutral Disagree Strongly disagree 10 Your current total remuneration from Datacraft is competitive with the industry/market compensation Strongly agree Agree Neutral Disagree Strongly disagree 11 What factor(s) would improve your satisfaction at work ? List one or two factors …………: ……………………………………………………………………………… …………………………………………………………………………………………… MANY THANKS FOR YOUR TIME xvi APPENDIX RESPONSES FROM DATACRAFT’S SALES TEAM Below tables summarize responses from Datacraft’s sales team Table 1: Quota assignment Frequency percent 10 100 0 10 100 Yes No Total: Table 2: Salesforce.com Frequency 0 10 Table 3: percent 20 80 0 100 1 10 percent 20 60 10 10 100 0 10 Strongly agree Agree Neutral Disagree Strongly disagree Total: percent 30 50 20 0 100 Leadership strategy Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 4: Communication of the company’s strategy Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: xvii Table 5: Effective communication within sales team with other departments Frequency 2 10 1 10 Table 6: percent 30 50 10 10 100 2 10 percent 10 40 20 20 10 100 1 10 Strongly agree Agree Neutral Disagree Strongly disagree Total: percent 10 40 20 20 10 100 percent 20 60 10 10 100 Datacraft Intranet is a useful source of information Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 7: Performance Goals (KPIs and values) Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 8: Bonus scheme Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: xviii Table 9: Career development opportunities Frequency 10 1 10 Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 10: percent 20 50 20 10 100 percent 20 50 10 10 10 100 Package remuneration from Datacraft is competitive Frequency Strongly agree Agree Neutral Disagree Strongly disagree Total: Table 11: What factor(s) would improve your satisfaction at work Frequency percent 30 10 Base Salary Allowance Working environment Oversea training Career development Incentive Bonus Company share/stock Total: 2 3 20 xix 10 10 15 10 15 100 APPENDIX DIRECT EXECUTIVE INTERVIEW An interview of senior management from top key technology suppliers of Datacraft on how they are viewing the market trends and the belief to set strategy to match the technology shifting landscape with the real potential market The interview is conducted through senior managers from the following technology companies: Mr Lee Chiang Toh, Country Manager – Vietnam Mr Ed Lenta, ASEAN Managing Director Mr Kok Leong, ASEAN Channel Partner Manager Mr Scott Moris, Regional Director Mr Eng Tong Guan, ASEAN Director Mr Chin Keng Lim, Chief Technology Officer – ASEAN Mr John Ong, ASEAN Director Mr Roger Dean McGregor Grant, Asia Pacific Partner Alliance Mr Vorkon Patra Yanan, Indochina Managing Director xx How has technology changed from the past decade, and how has that influence the industry? a How has that influenced your company? b How has your company changed its strategy to accommodate the changes in technology and market needs? What is the current industry/technology trend and how is your company addressing it? a New products and solutions? b or just re-packaging the same but addressing a different market segment? What you think is your key value-proposition in the current myriad of competition? In your perspective, you think Datacraft-Asia is embarking on the right direction / strategy? a If not, what areas should Datacraft-Asia should also be embarking on? b Or give your comments on how Datacraft-Asia should change? How you see a winning formula between Datacraft-Asia and your company? Vietnam as a country has been slow on the up-take in terms of technology Do you think your company's high-tech products are viable in such a developing country? Why? In your perspective, how should Vietnam play to utilize its strengths to grow its technology industry internally? xxi APPENDIX KPI TEMPLATE FOR CLIENT MANAGERS EMPLOYEE MANAGER OF EMPLOYEE (LEADER/MANAGER) Name: Date: Name: Date: ORGANIZATION DETAILS Entity/Country: Department/Function/Unit: KPI Drive Monthly Booking Consistency Perspective Financial (Profitable Growth) Drive PS/MS/TS/Solutions Adoption Financial (Profitable Growth) Drive GS Adoption Conduct Account Planning workshops with the assigned TOP clients Workshops must be attended by the clients and all functional business unit heads Utilize pipeline management best practices Improve Win/Lost Ratio Develop & improve sales skills and solution knowledge – formal training Milestone/Indicator Annual Booking Quota / 12 = Bookings per month (not more than 5% reduction from forecast/budget) Solutions > 50% PS>10% MS>20% TS> 3% > 30% of Product Booking Quota Internal (Operational Excellence) People & Culture 1) 2) Account Planning Workshop to be conducted once every two quarters with the assigned TOP Clients 15 Always maintain a minimum Total Pipeline of x quarterly budget, a minimum Weighted Pipeline of x quarterly budget on a 90 days rolling forward basis, and zero expired opportunities >60% ( on a 180 days backward rolling basis ) Internal (Operational Excellence) Weight 10 Account Planning Workshop to be conducted once every two quarters with the assigned TOP Clients Financial (Profitable Growth) Client Experience Annual Goal Annual Booking Quota / 12 = Bookings per month (not more than 5% reduction from forecast/budget) Solutions > 50% PS>10% MS>20% TS> 3% > 30% of Product Booking Quota Always maintain a minimum Total Pipeline of x quarterly budget, a minimum Weighted Pipeline of x quarterly budget on a 90 days rolling forward basis, and zero expired opportunities >60% ( on a 180 days backward rolling basis ) To attend the Sales Academy program To attend the monthly Solutions xxii 1) To attend the Sales Academy program 10 15 10 Training by Sales Specialist Enhance Sales effectiveness – sales coaching 1) People & Culture 2) 3) Value Behaviour Assessment (Mandatory) People & Culture 2) Ensure the adoption of SPIN Selling Technique Completion of Opportunity Profiler for all opportunities in SFDC To prepare and apply the SPIN Call Planners for each client meeting 1) Demonstration of Corporate Values 2) 3) To attend the monthly Solutions Training by Sales Specialist Ensure the adoption of SPIN Selling Technique Completion of Opportunity Profiler for all opportunities in SFDC To prepare and apply the SPIN Call Planners for each client meeting Demonstration of Corporate Values Total xxiii 20 100 APPENDIX KPI SETTING TEMPLATE FOR SALES MANAGERS EMPLOYEE MANAGER OF EMPLOYEE (LEADER/MANAGER) Name: Date: Name: Date: ORGANIZATION DETAILS Entity/Country: Department/Function/Unit: KPI Perspective Drive Monthly Booking Consistency Drive GS Adoption Financial (Profitable Growth) Client Experience Conduct Account Planning workshops with the targeted GAM Clients and TOP 10 LNE Clients Workshops must be attended by the clients and all functional business unit heads Conduct Account Planning workshops with the targeted GAM Clients and TOP 10 LNE Clients with all GS Vendors Mid-market Account Mapping and Alignment Client Experience Client Experience 1) Annual Booking Quota / 12 = Bookings per month (not more than 5% reduction from forecast/budget) Solutions > 50% PS>10% MS>20% TS> 3% > 30% of Product Booking Quota Account Planning Workshop to be conducted once every two quarters with each of the targeted GAM Clients and TOP 10 LNE Clients in each country Each GS vendors on a quarterly basis Financial (Profitable Growth) Annual Goal Annual Booking Quota / 12 = Bookings per month (not more than 5% reduction from forecast/budget) Solutions > 50% PS>10% MS>20% TS> 3% > 30% of Product Booking Quota Financial (Profitable Growth) Drive PS/MS/TS/Solutions Adoption Milestone/Indicator Account Planning Workshop to be conducted once every two quarters with each of the targeted GAM Clients and TOP 10 LNE Clients in each country 15 Each GS vendors on a quarterly basis 15 Appoint a Mid-Market Lead 15 Appoint a Mid-Market Lead xxiv 1) Weight 5 15 with Cisco and GS Vendors mid-market program Utilize pipeline management best practices Improve Win/Lost Ratio Develop & improve sales skills and solution knowledge – formal training 2) Internal (Operational Excellence) Internal (Operational Excellence) 3) People & Culture 4) 4) Enhance Sales effectiveness – sales coaching People & Culture 5) Value Behaviour Assessment (Mandatory) People & Culture Quarterly management review with Vendors on Mid-Market Always maintain a minimum Total Pipeline of x quarterly budget, a minimum Weighted Pipeline of x quarterly budget on a 90 days rolling forward basis, and zero expired opportunities >50% ( on a 180 days backward rolling basis ) 2) Ensure all QBS attends the Sales Academy program Conduct monthly Solutions Training by Sales Specialist Minimum of sales coaching calls per week utilizing SPIN Sales Coaching Template Ensure all QBS adopts SPIN Opportunity Profiler in SFDC and Call Plans 3) Demonstration of Corporate Values 4) 1) 2) Quarterly management review with Vendors on Mid-Market Always maintain a minimum Total Pipeline of x quarterly budget, a minimum Weighted Pipeline of x quarterly budget on a 90 days rolling forward basis, and zero expired opportunities >50% ( on a 180 days backward rolling basis ) Ensure all QBS attends the Sales Academy program Conduct monthly Solutions Training by Sales Specialist Minimum of sales coaching calls per week utilizing SPIN Sales Coaching Template Ensure all QBS adopts SPIN Opportunity Profiler in SFDC and Call Plans 5 10 Demonstration of Corporate Values Total xxv 100 xxvi ... of small scale in Vietnam, Datacraft can participate in any large project as the company can utilize resources from head office if needed As a subsidiary of Datacraft Asia, Datacraft Vietnam enjoys... 3.1 Organization chart of Datacraft Vietnam 3.2.2 Management Datacraft Vietnam is assigned the quota from head office for every fiscal year The quota and budget are based on the performance of... demands, Datacraft has built up a regional center Datacraft also received financial support from headquarters and other regional offices As a well known brand name, Datacraft has built up relationship