LUẬN VĂN THẠC SĨ Phát triển chiến lược kinh doanh dịch vụ chuyể phát công ty cổ phần Viettel post VTP THESIS MBA DEVELOPMENT BUSINESS STRATEGY IN LOGISTIC SERVICES FOR VIETTEL POST JOINT STOCK COMPANY (VTP) FROM 2015 TO 2020 COMMITMENT STATEMENT We commit that this capstone is our group works All our data are true and verifiable Our capstone was composed for study and research only All public data we collected from Viettel Post Joint Stock Company (VTP) only for research purposes and we don’t make any commitment and statement about VTP ACKNOWLEDGEMENT Firstly, we want to send sincere thanks to VNU for their organization of this excellent training course We also would like to express our gratitude to all teachers in this training course for all what they have been doing for us We also would like to VTP for their guidance and their helps us during times we composed this capstone Last but not least, we also don’t forget to send special thanks to assessment board for their invaluable comments and helps, so we can fulfill well this capstone However, our capstone was composed in a shortage of times, so we think it is still some constraints We look forward to hearings from you more comments and contributions With best regards, TABLE OF CONTENTS CONTENTS ABBREVIATION LIST TABLES LIST INTRODUCTION I II III IV V PREFACE OBJECTIVES AND APPLICATION OF CAPSTONE PROJECT SCOPE OF RESEARCH RESEARCH METHOD STRUCTURE CHAPTER I – THEORITICAL BACKGROUND PAPE 8 9 10 11 1.1 Concepts about strategy and strategy management 1.1.1 Strategy definition 1.1.2 Typical features of business strategy 1.1.3 Role of strategy 1.1.4 Level of Business strategy 1.1.5 Strategic management 1.1.5.1 Strategic management definition 1.1.5.2 Strategic management benefits 1.1.5.3 Strategic management tasks 1.1.5.4 Process of Strategic management 1.1.5.5 Selection of strategies 1.1.5.6 Techniques of scanning 1.2 Logisitic 1.2.1 Logistic definition 1.2.2 Logisitic classification CHAPTER 2: BUSINESS STRATEGY IN LOGISTIC SERVICES OF VTP FROM 2006 TO 2009 11 11 12 13 13 14 14 14 16 17 20 23 27 27 28 29 2.1 About VTP 29 29 29 30 31 32 32 32 32 33 2.1.1 Company profile 2.1.2 History and Development of VTP 2.1.3 Organization and management structure 2.1.4 Vision 2.1.5 Mission 2.1.6 Objectives and business strategic orientation in logistic services 2.1.6.1 General objectives 2.1.6.2 Specific Objectives 2.1.6.3 Business strategic orientation 2.1.7 Business strategy of VTP in logistic services from 2006 – 2009 2.2 Development business strategy analysis 2.2.1 External environmental analysis 2.2.1.1 Macro environment 2.2.1.2 Industry Environment Analysis 2.2.1.3 Porter’s five forces analysis of competition 2.2.2 Internal environment analysis 2.2.2.1 Achievement of VTP in 2006 – 2008 2.2.2.2 Market share in Express delivery services 2.2.2.3 Services networks 2.2.2.4 Logistic systems 2.2.2.5 Human resources 2.2.2.6 Marketing 2.2.2.7 Core competencies 2.2.2.8 Key success factors 2.2.2.9 Evaluation strength and weakness of VTP in logistic services CHAPTER III DEVELOPMENT STRATEGY IN LOGISTIC SERVICE IN THE PERIOD OF 2010 – 2015 33 34 34 34 37 47 50 50 51 52 53 54 54 54 55 55 58 3.1 Diversification strategy of VTP from 2010 to 2015 58 58 60 61 62 63 64 65 67 67 68 69 69 70 71 71 71 72 72 73 73 75 76 3.1.1 SWOT analysis 3.1.2 Selection of strategy 3.1.3 Competitive strategy 3.1.4 Marketing 3.1.5 Distribution channel 3.1.6 Logistic infrastructure 3.1.7 Financial forecast 3.1.8 Human resource 3.1.9 Operation management 3.1.10 Implementation plan 3.2 Recommendations and Solution 3.2.1 Marketing solution 3.2.2 Service quality solutions 3.2 Services networks solution 3.2.4 Organization solutions 3.2.4.1 Restructure organization model 3.2.4.1 Human resources solution 3.2.5 Logistic system 3.2.6 Application information technology in management 3.2.7 Finance management solution CONCLUSION REFERENCES ABBREVIATION LIST - VTP : Viettel Post Joint Stock Company - VIFFAS : Vietnam Freight Forwarding Association - GDP : Gross Domestic Product - PL : First Party logistic - PL : Second Party logistic - PL : Third party logistic - VND : Vietnam dong - MPI : Ministry of Foreign Investment - USD : United State Dollar - GPS : Global Positioning system - ICD : Inland container depot - WTO : World Trade Organization - JSC : Joint Stock Company - PR : Public Relationship - ISO : International Standard Organization - TQM : Total quality management TABLES LIST Table Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Table 2.11 Table 2.12 Table 2.13 Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 3.7 Strategic Management Steps The process of strategic management Porter five force SWOT analysis Logistic classification Organization structure of VTP Market share of 3L in 2015 Logistic industry Comparison Table between revenue/GDP General Logistic Market Outsource Logistic Classified market shares with mode of company Classified market shares with type of services Classified market shared by Vietnamese and foreign company Market Share Financial statement of VTP in 2009 Market share of express delivery services of VTP Services net work of VTP from 2006-2008 Price statement Mode of distribution channel of VTP logistic in future Warehouse investment plan Forecast revenue from 2010 to 2015 and 2020 Operation plan Market shares of consumer goods Organization model 16 17 24 26 28 31 38 39 40 41 41 42 42 43 49 51 52 53 62 64 65 66 67 70 72 INTRODUCTION I PREFACE Along with the development of society, logistic services play very important role in development of economy in the country It participates in all production process from raw materials until the goods are delivered to hand of consumers It is considered as a blood vessel to nurture the economy in every country Efficiency of logistic services is decisive factors to create competitive advantages of each country As logistic performance index statistic, Vietnam ranked 53rd in the world and 05th in the ASEAN region Logistic market is considered as a potential market for investment: the total revenue of this logistic service sector accounts for a large proportion of the total GDP of countries (often accounting for 10-15% for developed countries, 20 -25% in developing countries) For Vietnam logistics revenue in 2008 is estimated at $18 billion larger than 3.5 times revenue of telecommunications services Although logistic services play very important roles in development of the economy of the country, Vietnamese logistic services providers still just only meet about 25% demand and most of them just only participate in small stages of logistic services process Rest 75% revenue is flowing into pockets of foreign businesses Furthermore, there are no logistic services providers who are competent to play a leading role to push development of logistics in particular and the economy in general in Vietnam With above analysis about potential, opportunities and urgent demands of logistic market in Vietnam, we select topic for our capstone is "Development business strategy in Logistic services for Viettel Post Joint Stock Company (herein called “VTP” ) from 2010 to 2015 We hope our research will be useful references for VTP to build their business strategy We believe that with strengths and strong brand of VTP, VTP can participate in this lucrative market This will contribute to increasing development of the logistics services sector, promote growth of the economy in Vietnam and increase more revenue and diversify business for VTP II OBJECTIVES AND APPLICATION OF CAPSTONE PROJECT We compose this capstone project with objectives to draw overall pictures of logistic market in Vietnam We also analyzed external and internal environment, industry environment, competitors of VTP in order to build a good development business strategy for VTP in period from 2010-2015 to become one of a leading logistic service companies in Vietnam We hope that our capstone project is practical and applicable in reality VTP and other logistic service providers can use it as reference document in building business strategy as well as other investment projects in logistic services III SCOPE OF RESEARCH Logistic services are wide range for companies to research to achieve their objectives However, in frame of capstone, we will only concentrate to research how VTP can build their development strategy to diversify their business in order to gain more revenues from this lucrative market in period from 2010-2015 IV RESEARCH METHOD We applied some following research methods to fulfill our capstone: - Collecting and researching documents about logistic services in Vietnam from different sources and websites - Working with VTP about our capstone projects, so they can allow us to approach with necessary documents and information relating with our topic - Consulting and interviewing experts and key staff from VTP as well as other experts in logistic services - Visiting some mode of logistic service companies in Ha Noi - Using theories in our MBA course such as marketing, finance, human resource, statistic, strategy management as theory base to build business strategy for VTP V STRUCTURE Our capstone was composed in three chapters Chapter we present strategic management theory and some concepts about logistic Chapter is the most important chapter in our capstone We conducted analysis about external and internal environment, opportunities and threats of market and assess current business strategy of VTP Chapter we propose development business strategy in logistic services for VTP in period from 2010-2015 and solutions to improve weakness in current business strategy CHAPTER I – THEORITICAL BACKGROUND 10 clients with the logistic service using a convenient and higher security warehouse system or clients can make payment in scratch card phone and mobile Price Quality VTP Logistics - Express High Low Low Low Table 3.119: Price statement 3.1.4 Marketing VTP should develop different new logistic products and services packages including express delivery, transportation, and warehouse base on times, quantity, volume of orders and type of services” VTP should take advantage of famous brand of VTP in post and express delivery services to attract customers VTP should promote its branding with following channels: - Making advertisement with leaflets and posters in branch and post offices in whole system of VTP about logistic services 19 Report of VTP’s business plan in 2009 63 Using traditional mails as marketing tool will promote branding of the - well and effectively to customers; it brings the opportunity to develop long term relationships with customers The postal mail address that shows specific customer, this is a good opportunity for the ads, introducing products logistics services to different customers For developing economies with strong competition, advertising on the packaging postal mail will bring great potential Making advertisement about logistic services on public media such as - radio, television, news papers Focusing on sale and marketing activities in key markets and group of - target customers who are commercial and production companies, big retails group 3.1.5 Distribution channel • VTP should focus on development of their distribution channel in both depth and width VTP should focus in develop of distribution channel for land and waterway transportation and warehouses logistic services, so VTP can complete their system to provide logistic services for 2PL market that strongly growing industries such as packaged consumer goods, electronic, furniture, fishery Modern retail channels (supermarkets, shops, trading centers…) will be very important logistic distribution channel that VTP should focus on because it is estimated to account for 30% of the retail market in 2020, equivalent to 30 billion USD • VTP should open direct distribution channel to meet 80% requirements of market VTP should develop system of agency systems for logistic services VTP will sign agent contract with other transportation partners to ensure the efficient collection of transported goods on the network • VTP should open direct consultant for logistic services through hotline and VTP website VTP Logistics - Express Material resources for production VTP Logistics - Express 64 Factory and Industrial zone Warehouse - agents (VTP Post) Company, firms - warehouse, ports Consumers Table 3.220: Mode of distribution channel of VTP logistic in future 3.1.6 Logistic infrastructure - VTP should use same infrastructure with Military Telecommunication Corporation including services net works, human resources in order to reduce cost and increase efficiency of business in first years of establishment - VTP should step and step to invest logistic infrastructure including vehicles, warehouse (see details of ware house investment plan below), stores, and offices to business independently VTP should invest newly and upgrade current information technology system (hard ware and software) - VTP should modernize their transportation services by investing modern transportation means, increasing delivering points and frequency of delivery transaction in a day, reducing transportation times VTP should apply Global GPS technology in management effectively of their transportation means, drivers, gasoline cost and operations - VTP should exploit effectively their infrastructure and services net works by cooperating with domestic and foreign partners 20 Report of development Strategy Logistic 65 Warehous No Provinces/cities Number Area/ ICD Total area e s (m2) (m2) (Billion HNI-Ha Noi 200,000 400,000 HPG- Hai phong 100,000 100,000 NAN- Nghe An 50,000 50,000 DNG- Đa Nang 100,000 100,000 DNI-Đong Nai 200,000 200,000 CTO-Can Tho 200,000 200,000 VTU-Vung Tau 200,000 200,000 HCM-Ho Chi Minh 300,000 300,000 Total 1,550,000 21 Table 3.3 : Warehouse investment plan VND) 40,000 10,000 5,000 10,000 20,000 20,000 20,000 30,000 155,000 3.1.7 Financial forecast • Total revenue will be achieved 30 billion VND in first year and it will be increased 30-40% in next coming years Gross margin will be kept at 5%10% • With development of logistics service system, VTP forecast that sales will almost negligible in the second quarter of the first year of implementation, but from the third quarter sales and the revenue growth is forecasted to increase from 30% - 40% in second year and 40% - 50% in third year compared with second year • Expected Revenue will be forecasted that 80% of sales revenue will be from the direct marketing division, agents, brokers and sales collaboration; remaining 20% is from customers who contact directly with VTP VTP will apply commission sale policy for direct sales, agents, brokers to increase volume of sale and revenue • With growth rates as forecast and if market doesn’t have large fluctuations VTP will be able to offset the costs of initial investment after first year 21 Report of development Strategy Logistic 66 • It is forecasted that VTP will suffer a loss in half of first year of establishment Profit of rest half of first year will be just enough to offset costs and bank interest deduction Since second year, profit rate on sales will always be at the 1,5% Unit: Billion USD Ta rget/ year N 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1.35 1.45 1.55 1.66 1.77 1.90 0.48 0.40 0.32 0.21 0.10 19.32 20.68 22.1 23.7 25.3 27.1 29.0 29.5 29.9 30.2 30.4 5% 7% 9% 11% 13% 15% 16% 17% 18% 19% 20% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% ewly devel oped mark et Ol d mark et % newly devel oped mark et % Old mark et 67 Fo recast reven ue 0.16 0.31 0.47 0.66 0.86 1.10 1.09 1.25 1.40 1.55 Table 3.422 : Forecast revenue from 2010 to 2015 and 2020 22 http://www.vlr.com.vn 68 1.69 3.1.8 • Human resource Organize training courses for key staffs to learn about new technology, supply chain and logistics, so these staffs will become trainers for in house training courses in VTP • Restructure of VTP to reduce the number of workers who sign long term contract with company, increase use of labor of agency or hire seasonal staff • Building good treatment policy for VTP to attract and keep good and talent people to work for company in long term 3.1.9 Operation management Operation plan: Customers Sending goods (1) Operation Customer care (Sale department) Planning department Good collecting points(ware house) Transportation fleets Customers receive goods (7) (6) (5) (4) (3) (2) 69 Table 3.523: Operation plan Process: (1): Customer sends goods and makes payment Customer care department will be responsible to receive goods and make sending orders (2):Customer cares will deliver goods and sending order to planning department (3): Planning department will process information and send orders to operation department (4): Operation will make schedule for staff to collect goods and delivers good to warehouse (5): Goods will be classified and load appropriate transportation means such as truck, bus, plane from warehouse (6):transport goods to receiving customers (7): sending customers and receiving customers will contact with each other to confirm about delivery services 3.1.10 Implementation plan Period from 2010 to 2012 - Investment of logistic system in Vietnam • Investment of building three IDC centers in Ha Noi, Da Nang and Ho Chi Minh • Investment of purchasing new transportation means and warehouse equipments - Research and develop target markets and build good price policy for VTP logistic services - Promotion of brand “VTP logistic express” which is attached with VTP brand 23 Report of development Strategy Logistic 70 Period from 2012 to 2015 - Investment of building rest ICD centers - Development and fulfill of 2PL and 3PL logistic system Strategy evaluation - Issue sanction and policy to supervise project implementation process - Assign management board and hire a consultancy companies to supervise implementation process - Make necessary amendment if there are any issues with projects 71 3.2 Recommendations and Solution 3.2.1 Marketing solution VTP should conduct following some marketing and PR programs as follow to market logistic products and services to its target markets and customers: - Program 1: creating differentiation in logistic trade mark: VTP should create differentiation in products and services and take advantages of famous VTP post trade mark to market this differentiation through post channel such as leave leaflet at post offices, advertisement on envelop - Program 2: developing identification of logistic trade mark through direct marketing channel: VTP should market its products to potentials of clients by sending their advertisement with quotation or send marketing staff come offices of customers to present about logistic new products and services VTP should promote their products through internet or public media to advertise their logistic products and services - Program 3: increasing revenue and reducing cost by establishment of loyal customers: VTP should build program to strengthen co-operation in sale & marketing by issuing commission policy for agency VTP should attract loyal of customers by creating differentiation in services and products and issuing preferential policy for customers who use their products and services regularly and introduce new customers for company VTP should focus in marketing their products and services to new booming of target market and customers who are producers of garment, electronic, industry and construction that concentrates in several major cities in Viet Nam Below is some statistic of market shares of these industries 72 No Industry Packaged Consumer goods Fishery Electronic Distribution/ retail market Auto Wood commodity Percentage 40% 23% 14% 9% 9% 5% Table 3.624: Market shares of consumer goods 3.2.2 Service quality solutions VTP should consider quality of services is one of decisive factors to create their competitive advantages, so this will improve VTP position in the industry VTP should focus in improving quality of services VTP should issue quality policies and commitments about quality of services to public VTP should apply following measure to ensure quality of services to provide for clients: - Building safety regulation for all process of transportation, warehouse storage - Building their services standards according with ISO VTP should apply TQM in service management and build supervision services system to control qualities of services to provide clients - Applying the information technology in all process from receiving to deliver goods to help clients to supervise qualities of services and their goods from E_VTP and GPS system - Making commitment in qualities of services as standards on the safety, transport time, formalities according to the VIFFAS regulation - Opening after sale and caring services centers to take care clients, solve complaints of clients and help them to fulfill their complaints procedures in shortest times to avoid wasting time on waiting for clients - Training and educating all staffs about services standards and commitment of VTP in services, so they will consider quality of their services as if it’s their life 3.2 Services networks solution 24 Report of development Strategy Logistic 73 As analysis above, currently, VTP has already provided the express delivery service over 63 cities and provinces in Viet Nam, however, the transportation service has only presented at the major 23 cities and provinces In order to finish the development strategy till 2015, VTP should focus to develop logistic service networks for transportation, warehouse, importing –exporting formalities services in whole Vietnam 3.2.4 Organization solutions 3.2.4.1 Restructure organization model VTP should transform logistic centers into mode of subsidiary companies under management of VTP and restructure their organization to be suitable with new logistic services as follow: Head of logistic service development Sales department Plan – Marketing Dept Marketing Finance department Operation Dept Planning Human resources Accounting dept 74 Accounting Cashier Operating: - Cars - Maintenance - Warehouse - Fuel (gas, oil) - Loading Table 3.725: Organization model - Head of service development is responsible for distributing resources and human forces for operating and developing service - Functioning departments perform specialize tasks and monthly evaluate result based on the monthly and weekly plan Report difficulties and solution for managing service procedure 3.2.4.2 Human resources solution 25 Report of development Strategy Logistic 75 - VTP should work with Universities about their demands of human resources for logistic services, so Universities can build programs or even set up faculties for logistic services It is main resources for human resources in long-term - VTP should hire foreign experts in logistic to work for VTP and train their staff - VTP should send their key staff abroad for training in logistic services, so they will be management teams or trainers for staff in VTP to meet requirements of logistic services in short term - VTP should build personnel policy and training program to attract talent people to work for VTP and develop human resources for logistic services - VTP should organize short training course for staff to update knowledge regularly about their profession and service quality - VTP should consider human is the most valuable property in VTP and develop the human resource policy based on the core value of VTP “Growth through challenges and failures” 3.2.5 Logistic system As analysis above, logistic system can be considered back bone for all logistic activities, apart from long term investment plan, VTP should following works to meet requirements of logistic in short term:  Upgrade all the current transportation means  Renovation of current small warehouses  Assess and improve efficiency of the current delivery services system  Invest in specialization vehicles (container vehicle, high tonnage vehicles…) 3.2.6 Application information technology in management VTP should take advantages of their strength in information technology in management such as management of transportation means and all ICD system VTP should research to use technology to link their system with clients, material suppliers and partners as well as other government body such as custom, tax office 76 VTP should build software to manage all their logistic activities as well as data base of their clients/partners 3.2.7 Finance management solution Finance can be considered as a heart of all activities, so VTP should apply following measures in finance management: - Building finance management system as Vietnamese accounting standards - Issuing financial management policy and regulation of VTP - Recruiting skilled staffs and experts to supervise whole investment progress to ensure the transparency and avoid wasting - Conducting financial analysis regular to reduce cost and increase competitive advantage - Applying information technology in finance management and using software to effectively increase capital management and expenses results 77