CAPSTONE PROJECT REPORT BUILDING THE BUSINESS STRATEGY FOR LOGISTICS SERVICE IN VIET NAM OCEAN SHIPPING JOINT STOCK COMPANY – VOSCO PERIOD OF 2014 – 2018  Group 02:  Doan Thi Hang  Vu Minh Hien  Tran Quyet Thang  Dang Thi Dieu Lien Class: Ga.MBA C0112 Ho Chi Minh City, 2013 Capstone Project Report – Ga.MBA01.C0112 – Group 02 ACKNOWLEDGEMENT Firstly, we would like to express our sincere thanks to the Professors, The teachers of GRIGGS University, The Center for Educational Technology and Career Development (ETC) - Vietnam National University who have enthusiastically instructed us during the MBA course and our research Especially thanks to the Board of Management and all the staffs in Vietnam Ocean Shipping Joint Stock Company for help during our accomplishing this assignment The intimate, candid exchanges and seminars in your company help us to have a realistic look and analytical data in accomplishing this topic “Building the business strategy for logistics service in Vietnam Ocean Shipping Joint Stock Company, period of 2014 - 2018” Group 02 – C0112 included 04 members who come from Interni Forwarding Company, Vietcombank, Saigon New Port and Vosco decided to research the topic: ”Building the business strategy for Logistics service in Vietnam Ocean Shipping Joint Stock Company, period of 2014 – 2018” as the respectful gift to express our sincere thanks to all the Professors, all the Teachers of Griggs Andrew University who provided us the valuable skills and knowledge during the course of Master of Business Administration Ho Chi Minh City, Sep 2013 Group 02 – C0112 Page i Capstone Project Report – Ga.MBA01.C0112 – Group 02 INDEX Content Page Acknowledgement: i Index: ii Categories symbols and abbreviations vi Model, table vii Chart viii Introduction ix CHAPTER : THE THEORY OF BUILDING THE BUSINESS STRATEGY FOR LOGISTICS SERVICE 1.1 The concept of business strategy 1.1.1 The definition 1.1.2 The kinds of business strategies: 1.1.2.1 Enterprise strategy : 1.1.2.2 Business strategy: 1.1.2.3 Functional strategy: 1.1.2.4 Global Strategy 1.1.3 The strategy‟s basic rules 1.1.4 The roles of business strategy : 1.2 Planning the business strategy: 1.2.1 The external environment analysis : 1.2.1.1 PEST Model analysis : 1.2.1.2 M Porter forces model: analysis the factors in the business environment effected to the enterprise‟s business : 1.2.2 Analyzing the external environment : 1.3 The tools of building and implementing the business strategies Page ii Capstone Project Report – Ga.MBA01.C0112 – Group 02 1.3.1 EFE matrix 1.3.2 IFE matrix 10 1.3.3 Competitors Profile Matrix 11 1.3.4 SWOT Matrix 11 1.3.5 QSPM matrix 13 CHAPTER : VOSCO‟S SITUATION ANALYSIS 15 2.1 Vietnam Ocean Shipping Joint Stock Company „s general view 15 2.1.1 The history: 15 2.1.2 The current services : 16 2.1.3 The company‟s business situation : 16 2.1.4 Current Situations of Logistics Business 17 2.1.5 Customer, logistics service and branch : 18 2.1.6 Result of operation activities: 20 2.1.6.1 Revenue Target : 21 2.1.6.2 Expense target 21 2.1.6.3 Revenue target : 23 2.2 Analyzing the external factors : 23 2.2.1 The macro environment factors – PEST MODEL: 23 2.2.1.1 Economic Factors 25 2.2.1.2 Social and Culture Factors 27 2.2.1.3 Scientific, technical and technology environment factors 27 2.2.2 Competitive Factors Analysis (5 Forces M Porter) : 28 2.2.2.1 Threats of new entrants (highest) 28 2.2.2.2 Bargaining power of buyers : 29 2.2.2.3 Bargaining from the suppliers 29 2.2.2.4 Threats of substitute products (normal) 30 2.2.2.5 Competitive Rivalry : 31 Page iii Capstone Project Report – Ga.MBA01.C0112 – Group 02 2.3 Internal Enterprise analysis : 38 2.3.1.1 Human Recourses 38 2.3.2 Marketing abilities: 40 2.3.3 Technology Abilities : 41 2.3.4 Financial Capability: 41 2.3.4.1 The situation of production and business activities : 41 2.3.4.2 Analysis of balance sheet : 43 CHAPTER : CHOOSING AND BUILDING THE BUSINESS STRATEGY OF LOGISTICS SERVICES FOR ENTERPRISE IN PERIOD OF (2014-2018) 55 3.1 Enterprise‟s Mission : 55 3.2 The logistics strategies : 56 3.2.1 The solution of Business strategy with SWOT matrix : 56 3.2.2 Choosing the optimum strategy base on the QSPM matrix 60 3.2.2.1 Financial Solutions : 62 3.2.2.2 Restructure solution : 64 3.2.2.3 Technology & procedure solutions 65 3.2.2.4 Technology & procedure solutions 66 3.2.2.5 Marketing solution : 69 3.2.2.6 Traffic solution 71 CONCLUSION 73 Page iv Capstone Project Report – Ga.MBA01.C0112 – Group 02 CATEGORIES SYMBOLS AND ABBREVIATIONS AS : Attractiveness Scores APEC : Asia Pacific Economic Cooperation CSCMP : Council of Supply Chain Management Professional ISM CODE : International Safety Management Code LSP : Logistics Service Provider SCM : Supply Chain Management SQEMS : Safety Quality and Environmental Management System TAS : Total Attractiveness Scores VOSCO : Vietnam Ocean Shipping Joint Stock Company VIFFAS : Vietnam Freight Forwarders Association VITRANSS2 : Vietnam Transportation Sustanable Development Project WTO : World Trade Orgnization Page v Capstone Project Report – Ga.MBA01.C0112 – Group 02 CHART , TABLE Model 1.1: Overall business strategy model Table 1.1: SWOT matrix 13 Table 1.2 : QSPM form 14 Model 2.1 : Company organization chart 15 Model 2.2 : Vosco„s logistics operation model 16 Table 2.1: Summary of operation results from 2010 to 2012 17 Table 2.2 : Domestic logistics account list 18 Table 2.3 : The market share of domestic container transportation 19 Table 2.4 : Data of logistics service in the domestic business 20 Table 2.5 : The proportion of operating costs on net revenue: 21 Table 2.6 : CPM matrix 33 Table 2.7 : The survey of EFE results 34 Table 2.8 : The result of evaluation of EFE 36 Table 2.9 : EFE matrix 36 Table 2.10 : VOSCO‟s human resources statistic 38 Table 2.11: The machines list 39 Table 2.12 : The warehouse facilities list 39 Table 2.13 : The years of ship list 41 Table 2.14 : Report of Cash Flow 41 Table 2.15 : Consolidated Balance Sheet 43 Table 2.16 : Financial indicator Group: 45 Table 2.17 : The survey of Internal Factors 50 Table 2.18 : Internal factor survey result 52 Table 2.19: the matrix of evaluation of IFE 52 Table 2.20 SWOT analysis 53 Table 3.1: SWOT matrix of combination 56 Table 3.2 : Choosing the strategy as QSPM matrix 60 Tabble 3.3: The planning of revenue: 63 Table 3.4 The planning of cost: 63 Page vi Capstone Project Report – Ga.MBA01.C0112 – Group 02 CHART Chart 2.1 : The domestic container transportation‟s market share 19 Chart 2.2 : Revenue of logistics services 21 Chart 2.3 : Comparison of depreciation cost and administration cost 22 Chart 2.4 : Profit after tax of Logistics Services business 23 Chart 2.5 : Enterprise Asset Situation 47 Chart 2.6 : Capital resource 48 Page vii Capstone Project Report – Ga.MBA01.C0112 – Group 02 INTRODUCTION I The introduction Shipping transportation is one of the important links in the logistics supply chain Since 2014, as the commitment joining WTO, the foreign enterprises have the right to invest 100% foreign capital in Vietnam, so the Vietnamese logistics enterprises will be facing the fierce competition There are about 900 logistics companies with different scales in Vietnam now, in which 70 to 80% are small and medium scales According to Mr Nguyen Cam Tu – Deputy Minister of Industry and Trade said “ the potential of logistics development is even greater as our trading turnover considered as the country‟s fastest growth rate in the region with speed of 18 to 20 % per year and turnover nearly reached usd130 billion However the same with the other developing countries in the region, the logistics business in Viet Nam are mainly small and medium enterprises, so the business structure is fragmented, non-professional and limited human recourse Mr Bui Ngoc Hoan – The Chairman of Freight Forwarders Association Vietnam (VIFFAS) said: "About 90% of export import goods in Vietnam are transported by sea However, the Vietnam fleet covered about 18-20% of the transported goods The total volume of export import cargo in Vietnam in 2007 was 181.12 million tons, in which containerized cargo was 49.29 million tons (4,489,165 TEUs) Multimodal Transportation is an important factor of logistics services in Vietnam shipping plays a very important role in the strategy of developing the logistics services in Vietnam” Therefore, the logistics services sector has played a very important role in Vietnamese economic development in general and maritime industry in particular With the hope of contributing our efforts to our country‟s logistics service development, by the knowledge gained from the lesions in the program Global Advanced Master of Business Administration C0112, the exchange experiences learned from the partners in Asian (Japan, China, Singapore…) and EU (Holland, Germany, Belgium…) as well as in the daily works, our group members come Page viii Capstone Project Report – Ga.MBA01.C0112 – Group 02 from Saigon New Port, Vietcombank, Interni Logistics Company and Vosco decided to research the topic : „’Building the business strategy for logistics service in Vosco JSC, period 2014 – 2018” According to Dr Nguyen Van Chuong – The Deputy Director of Vietnam Transportation Strategic Development Institute‟s said: “Vietnam has actually entered the WTO, as the other manufacturing business sectors, the transport sector in general and the marine transport industry in particular has changed positively to improve their competitiveness, the service quality and efficiency There are some important directions in this process is the expansion of logistics services and value added services in the supply chain” The Vietnamese enterprises in general and Viet Nam Ocean Shipping JSC in particular have to strengthen and expand the logistics services and value added services in the supply chain, as well as promote the strategy of logistics business in the period of fierce competition with participating of 100% foreign capital companies in the process of integration WTO In order to building the effective solutions in the field of logistics service in general and in Viet Nam Ocean Shipping JSC – VOSCO in particular, firstly, we would like to introduce the concept of logistics, the concepts of supply chain as well as the roles of the stakeholders in the supply chain The concept of Logistics: In fact, the term “logistics” already had two centuries ago, considered to have originated in the military‟s need to supply itself with arms, ammunition and rations as it moved from a base to a forward position So far, this term referred to in English as „logistics‟ and widely used in a lot of fields to specify many diverse activities, focus on providing the correct amount of fuel needed, at the right time and in the right places As the settlement of the transportation, storage or commercial production and logistics services of different companies in each way or another, so there are a lot of definitions of „‟logistics‟‟as The Council of Supply Chain Management Professionals (CSCMP) : „‟Logistics management is a part of Page ix ... New Port and Vosco decided to research the topic: ? ?Building the business strategy for Logistics service in Vietnam Ocean Shipping Joint Stock Company, period of 2014 – 2018? ?? as the respectful... business strategy for logistics service in Vietnam Ocean Shipping Joint Stock Company, period of 2014 - 2018? ?? Group 02 – C0112 included 04 members who come from Interni Forwarding Company, Vietcombank,... important factor of logistics services in Vietnam shipping plays a very important role in the strategy of developing the logistics services in Vietnam” Therefore, the logistics services sector