VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Dang Thi Thuyet A STUDY ON HYPERCOMPETITION THE CASE OF VMS FROM 2005 TO 2007 Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: DR. NGUYEN THI PHI NGA Hanoi - 2007 TABLE OF CONTENT Pages Sub cover page Table of content List of abbreviations. List of Figures INTRODUCTION 1 CHAPTER 1: THEORY FOUNDATION 1.1. Introduction 5 1.1.1. The definition of Hypercompetition 5 1.1.2. Competitive advantages in Hypercompetition 6 1.1.3. Levels of competition within an industry 7 1.2. Four Arenas in Hypercompetition 9 1.2.1. Cost & Quality 9 1.2.2. Timing & Know-how 11 1.2.3. Strongholds 13 1.2.4. Deep pocket 16 1.3. New 7S’s Model 18 CHAPTER 2: MOBILE SECTOR AND VMS ANALYSIS 2.1. Competition analysis on Mobile market from 2005-2007 21 2.1.1. Vietnam’s Mobile market 21 2.1.1.1. Overview 21 2.1.1.2. Mobile structure 22 2.1.1.3. Regulations 23 2.1.1.4. Operators 24 2.1.1.5. Technologies 25 2.1.1.6. Market situation 27 2.1.1.7. Forecasted growth 29 2.1.2. Mobile market competition 31 2 .1.2.1. Cost & Quality Arena 35 2.1.2.2. Timing & Know-how Arena 37 2.1.2.3. Strongholds Arena 38 2.1.2.4. Deep-pocket Arena 38 2.1.3. Conclusion on Mobile Market 38 2.2. Analysis of the VMS’s Competitive ability in 2005-2007 39 2.2.1. VMS’s Overview 40 2.2.2. VMS’s competitive ability 40 2.2.2.1. Organization 40 22.2.2. Business culture 41 2.2.2.3. Infrastructure 42 2.2.2.4. Human resource 43 2.2.2.5. Financial 43 2.22.6. Products 44 22.2.1. Marketing and Sales 45 2.2.2.8. Forecasted Growth 47 2.2.3. Conclusions on VMS 48 CHAPTER 3: RECOMMENDATIONS 3.1. For Vietnamese authority 50 3.2. For VMS 51 3.2.1. New 7S’s Model 51 3.2.2. Action plan 55 CONCLUSION 58 REFERENCE 59 APPENDIX ii LIST OF ABBREVIATIONS TECH: technology MBA: Master of Business Management ID: Identify WTO: World Trade Organization BTA: Bilateral Trade Agreement BCC: Bilateral Corporation Contract FDI: Foreign Direct Investment ROA: Research Group on Asia HCM: Hochiminh City VMS: Vietnam Telecom Mobile Service Company SPT: Saigon Post Tel VIETTEL Mobile: V1ETTEL Mobile Corporation HANOI TELECOM: Hanoi Telecom Corporation VP TELECOM: Vietnam Power Telecom Coiporation GPC: Telecommunication Service Company MPT: Ministry' of Posts and Telecommunication VNPT: Vietnam Post and Telecom Corporation SMP: Signified Market Power GSM: Global System for Mobile Communication CDMA: Code Division Multiple Access BTS: Base Transceiver Station WAP: Wireless Application Protocol 3G: 3 generation NGN: Next Generation Network SMS: Short Message Service R&D: research and deploy TV: Television PR: Public relation ix LIST OF FIGURES Figure 1.1: A series of short-lived actions add up to a sustained Page: 06 advantage. Figure 1.2: Different level of competition within an industry. Page: 07 Figure 1.3: Different strategies in cost-quality arenas. Page: 09 Figure 1.4: The cycle of timing/know-how competition. Page: 11 Figure 1.5: The cycle of turf battles an entry barrier competition Page: 14 Figure 1.6: The cycle of competition in the deep pockets arena Page: 16 Figure 1.7: Disruption and the New 7S’s Model Page: 18 Figure 2.1: Vietnam’s Telecommunication structure Page: 22 Figure 2.2: The suppliers of Vietnam Mobile Market Page: 24 Figure 2.3: The subscriber growth of Vietnam Mobile Market Page: 27 Figure 2.4: The revenue growth of Vietnam Mobile Market Page: 28 Figure 2.5: The Mobile Penetration Growth Page: 29 Figure 2.6: The Mobile market share in the first quarter of 2007 Page: 29 Figure 2.7: The subscriber growth of Vietnam Mobile Market Page: 31 Figure 2.8: The Vietnam Mobile Market Share 2005-2007 Page: 33 (subscribers) Figure 2.9: The Vietnam Mobile Market Share 2005-2007 Page: 34 (revenue) Figure 2.10: History of Vietnam Mobile sector in each of the Page: 36 four arenas Figure 2.11: History of Vietnam Mobile sector in Pirce-Quality Page: 37 arenas Figure 2.12: Organization structure of VMS Page: 41 Figure 2.13: The network coverage of MobiFone Page: 43 Figure 2.14: Revenue-Cost-Profit of VMS Page: 44 Figure 2.15: MobiFone’s Market share growth Page: 46 * Figure 2.16: The choice of current customers when renewing Page: 47 Figure 2.17: The choice of new customers Page: 47 Figure 2.18: VMS' Development Forecast Page: 48 Figure 2.19: The Forecast of technology development in VMS Page: 48 Figure 2.20: The comparison of VMS’ competitiveness Page: 50 Figure 3.1: The suggestion New 7S's Model for VMS Page: 54 Figure 3.2: The suggestion action plan for VMS Page: 58 xi INTRODUCTION 1. Problems: The Vietnam mobile market’s competition is increasing and now VMS is loosing its market share and its brand name preference in customer perception. We can see that VMS’s competitive ability is decreasing. Therefore, How VMS can keep its leading position and compete with its rivalries? 2. Objectives & Aim Objectives - Study on the Hypercompetition (4 arenas and New 7S’s Model) - Competition analysis on Mobile market from 2005-2007 - Analyze the VMS’ competitiveness. - Application New 7S’s Model to VMS case. Aim - Give out the applicable and effective competitive strategy and action plan to improve the VMS competitive capacity. 3. Research questions In order to achieve the objectives of the thesis, the author of thesis will try to answer the following questions: - What is the VMS’ competitive capability in 2005-2007? - How is the competition in Mobile sector in 2005-2007? - How is the new 7S’s Model of VMS? 1 Method/Approaches - Empirical research/Case study method - Approaches: statistics Scope o f work - VMS 2005-2007 - The competition in Mobile sector Data resources and processing Data Resources - Secondary Source: Report and Data of VMS and its competitors - Tertiary Source: Richard D ’Aveni and Robert Gunther, Hypercompetition. 1994. Free Press, Grahan J. Hooley, John A. Sauders, Nigle F. Pierry, Marketing strategy & Competitive positioning. 1998. Prentice Hall Europe Data Processing Data Processed by excel, chart to summary, compare and analyze Significance - Theory: Introduce the significant theory to VN - Reality: Bring more competitive advantages to VMS Limitations - This research only focuses VMS and the data is 2005-2007. It is may be changed in future. 9. Expected results - Knowledge in Hypercompetition and Vietnam’ Mobile Market competition - What is VMS’ strength and weakness comparing with its rivalries. 10. Dissemination - This research can be studied further for service sectors 11. Follow-up potential How VMS’s competitive capability is improved if applied these recommendations? The checking and adjusting will be done if needed 12. Thesis structure This thesis is divided into three parts included theory foundation, Mobile sector and VMS analysis and recommendations. Chapter 1: Theory foundation The Hypercompetition theory of D’Aveni (1994) is reviewed in this chapter by some main parts such as: definition, advantages, four arenas and New 7S’s Model. The thesis will discuss on this theory. The New 7S’s Model will be applied to suggest suitable solution for VMS to enhance its competitiveness. Chapter 2: Mobile sector and VMS analysis The statistic data and analysis by hypercompetitive view will give the deep and detail picture of Mobile sector as well as its competition battles in 3 [...]... know-how and low-cost manufacturing methods The transformation strategy leads to a price war and the leap-frog strategy makes risks and costs that are greater than the rewards Moreover, the pioneer can also use the vertical integration to gain temporary advantages over competitors This way is can be imitated and creates a complex and no adaptable organization It makes the firm vulnerable to more flexible,... P TO A S U S T A IN E D A D V A N T A G E [D'Aveni, Hypercompetition, 1994, p 12] D ’Aveni(1994) is aware that today’s companies are fast at copying each other’s advantages Therefore, the advantage is only temporary, but if you are constantly innovative you will have temporary advantages all the time, which is then a sustainable competitive advantage In this context, the company is not seeking for a. .. definition o f Hypercompetition The economic environment is changing to the new knowledge economy It leads to Scope of competition changing from Local to Global with hypercompetition and make the new Competition Rule - the fast eats the slow” instead the old The big eats the small” The Hypercompetition is bom in this context in USA, 1994 by Richard D ’Aveni The author is the professor o f strategic management... Thirdly, if two companies recognize the opportunity to create a new advantage at the same time, the company that can create the advantage “faster” will win Therefore, the company needs speed capabilities Fourthly, surprise allows companies to act to undermine competitor advantages before the competitors can take defensive actions Furthermore, surprise can extend the period in which an advantage is unique,... sustainable advantage The primary goal o f this strategy is to disruption the current situation in order to seize the initiative through creating a series o f temporary advantages In cased o f the shortened competitive cycles, it is necessary to rapidly develop 6 new advantages It has become more important for the company to focus on generating their next advantages even before their current advantages... contribution to effective resource management in mobile sector and to sustainable development of Vietnam mobile market by safety and security in telecom activities International: Based on Telecommunication commitments in the Vietnam-US Bilateral Trade Agreement (BTA), The tariff and non-tariff commitment for telecommunication market access allows American companies and authorized Vietnamese companies to set... petition is not preferred over lower levels of com petition because lowers levels of com petition lead to more opportunity for profits • Firms attempt to stay ahead o f their com petitors in one or more o f the four arenas • Firms create new com petitive advantages that make the op pon en ts’ advantages irrelevant by m oving to com pete in another arena • Long-term sustainable advantage and profits are... Both the incumbent and the entrant initially build barriers around their strongholds The entrant launches an attach into the incumbent’s market with tactics designed to delay the incumbent’s response At the first time, the new comers always get the accommodating from the incumbent But sometimes, the reply is a fierce attack Ultimately, all incumbents respond to serious attacks by using their current advantages... level of resource of each player at a given moment in time But sometimes a small competitor can neutralize the advantage o f the deep-pocket company By dynamic maneuvering, relatively small company can defeat a large one and in the process become a large firm with its own deep pockets In addition, alliances can be built to add to the resources o f small players To end this level o f hypercompetition, ... around each other but not directly against each other Sustainable Profits • Perfect com petition • A ll four o f the com petitive advantages have been elim inated so the players are equal in all four arenas • Firms create new com petitive advantages w hich make ob solete or match opponents’ advantages in one or more o f the four arenas • Firm com pete in price until no one make abnormal profits • Norm ally, . 12] D’Aveni(1994) is aware that today’s companies are fast at copying each other’s advantages. Therefore, the advantage is only temporary, but if you are constantly innovative you will have temporary. temporary advantages all the time, which is then a sustainable competitive advantage. In this context, the company is not seeking for a sustainable advantage. The primary goal of this strategy. strategy makes risks and costs that are greater than the rewards. Moreover, the pioneer can also use the vertical integration to gain temporary advantages over competitors. This way is can