Strategic Management Luận văn thạc sĩ Nâng cao chiến lược cạnh tranh sản phẩm dầu nhờn mỡ Công ty cổ phần hóa Dầu Petro MBA THESIS TITLE IMPROVING THE COMPETITION STRATEGY IN THE AREA OF LUBRICANT AND GREASE BUSINESS FOR PETROLIMEX PETROCHEMICAL J.S COMPANY Strategic Management INTRODUCTION Our country is in the beginning period of the market economy under the State management Market economy opens the development opportunities as well as the big challenges for Vietnam's enterprises An indispensable matter in economy - the most outstanding question of the day in the market economy that is competition Because, in spite of any fields, any sectors, the market has the division by the domestic and international enterprises The competition is more and more severe The enterprises never satisfy with the occupied market (because it means they accept to be annihilated), and they always try to expand their market share In order to reach this, the enterprises must have the suitable tools, solutions to increase the competitiveness as the foundation to ensure the enterprises to stand firmly and develop in the severe competition in the market Petrolimex Petrochemical Joint Stock Company (PLC) is specialized in doing business on the products such as Lubricants and Grease and the products originated from petroleum like asphalt, Chemical Through 17 development and operation years, the Company has built the position as one of the leading enterprises in Vietnam’s Lubricants and Grease market However, PLC Company has had to confront with the strong competition from the renowned enterprises inside and outside the country such as: BP, Castrol, Shell, EssoMobil, Caltex, PVPDC, APP in Lubricants and Grease market in Vietnam In order to continuously develop and expand the market share, the Company needs to research and set forth the suitable strategy to improve its competitiveness Then, the Company could win the competitors, stand firmly in this severe competition market Strategic Management Originated from the above mentioned overview, Team - Class M07.09 has agreed to select “Improving the competition strategy in the area of lubricant and grease business for PETROLIMEX Petrochemical J.S company (PLC)” as the capstone project report of the course THE CAPSTONE PROJECT REPORT OF GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION includes the main contents as followed: Introduction Chapter 1: The theories in regard to competition and competition improvement for enterprises Chapter 2: Analysis on PLC’s current competition power in lubricant and grease business Chapter 3: Improvement of competition power and solutions to be implemented within 2011 - 2015 Conclusion Strategic Management Chapter THE THEORIES IN REGARD TO COMPETITION AND COMPETITION IMPROVEMENT FOR ENTERPRISES Competition and its roles in regard to an enterprise’s operations 1.1 The roles of competition in regard to the operation of enterprises a The concept of competition: - The business dictionary (published in Britain in 1992) defines “competition is the rivalry between the businesses striving for the same production resource” -“Competition includes attacks and counter-attacks from businesses against each other to build/ protect their competition advantages or improve their market position”(1) Businesses have to compete against each others and at the same time keep improving their competition power to be in a better position than the rivals: + The action in which businesses compete against each other in regard to some products or in some market areas are called multimarket competition The group of attacks and counter-attacks made by the businesses is called competition motivation + As the time goes, businesses continuously attack or counter-attack each other This suggests that the businesses depend on each other in competition ”the more severe the competition is the less profit the businesses will gain” - Competitors that are similar in resources and market coverage will best define competition Similarity in market means the number of markets that competitors have in common Similarity in resources means the competitors can be compared against each other in term of tangible of Strategic Management intangible resources etc Businesses that are similar in resources and market coverage will most likely be direct competitors - The forces that lead the businesses’ competition include: perception, motivation and capabilities - Competing includes attacks and counter-attacks made by businesses in order to be in a better market position - In economics, competition is categorized as follows: + Competition between sectors: businesses from different economic sectors compete against each other to invest in the sectors that will benefit them best The competition between sectors therefore motivates businesses to look for the most beneficial sectors to invest in and transfer capital from the less profitable sectors to the more profitable ones + Competition inside the sector: the businesses/ competitors produce and market the same products/ services The competition inside the sector therefore forms market price for one product/ service basing on its common values In this type of competition, the competitors will eliminate each other Winning means expansion and losing means downsizing or even bankruptcy b The roles of competition in regard to the operation of enterprises - Competition is rooted from the freedom in business operation for greater variety in services and products or for more participation from more competitors Competition is a race without a finish line Competition means not only leading but also “winning” customers by best satisfying their demand - In a market economy, competition helps lowering prices of products services and at the same time improving their quality + Competition will remove businesses having high costs and encourage those having lower ones This pressurizes businesses to improve their competition power via lowering costs and improving their productivity, which eventually Strategic Management benefits the society in the long run but also forces some certain businesses to go bankrupt, resulting in waves of unemployment + Competition also forces businesses to apply new technology and advanced production skills for the improvement of quality, productivity and variety of products The businesses are also forced to faster access into information as well as take full advantage of opportunities In summary, competition does not mean elimination but instead it helps replacing those having bad performance and wasting resources with better ones in order to better meet the social demand for the development of nations Fair competition motivates the economies and businesses to grow 1.2 Types of competition in business The categorization of market basing on competition is closely attached to the relationship of supply-demand This categorization shows us the following types of competition: 1.2.1 Perfectly Competitive Market - In a perfectly competitive market, there are various competitors supplying the same products/ services Since the businesses can not make any differences (on model, specification, quality ) from each other; none of them are therefore able to supply a quantity of products big enough to influence the price The conditions for market entry/exit are easy Hence, the only way for businesses in the this market is to minimize their costs for better profit - This type of competition hardly exists in reality 1.2.2 Imperfectly Competitive Market Imperfectly Competitive Market is a normal one as it exists in reality There are two types of Imperfectly Competitive Market as follows: a (Full) Cartel Monopoly There are only a few (a group of) businesses that supply the majority (or all ) of certain products/ services These businesses are sensitive on each other’s Strategic Management operation They depend on each other while setting prices and deciding on the quantity of products/ services that they are to supply When a business in the cartel lowers its price, the others will lower their prices even more OR when one in the cartel increases its price while the other don’t, that one will finally lower its price to the earlier rate or else will lose its customers The way for competitors of this type is to lower their costs via various ways, such as: increasing quantity b Cartel Monopoly (with differences) There are a few businesses producing and marketing products/ services with certain differences The differences may be in quality, model etc c Monopolistic competition Many businesses are able to create differences for all or a part of their products/ services Customers recognize each business’s products/ services via label, advertisement, packaging and other services In this market, the businesses are able to set their own prices, but not entirely on their own The competitors will focus on the market segments where they can better serve their customers and therefore can set higher prices This market will best benefit big businesses 1.2.3 Complete Monopoly There is only one business supplying a certain product/ service This Monopoly is supported by the State or by patent, huge scale of investment, exclusive right in technology Competition does not exist in this market The monopolistic enterprise decides on the price 1.3 Enterprises’ adaptability to competition a Relying on competition advantages to win - The businesses’ common competitive weapons are structure of products, product quality, prices, sales services and others + Competition via quality: via reliabilities, design, technology Strategic Management + Competition via prices: businesses attract customers via competitive prices + Competition via services: businesses design pre and after sales services to build the prestige for their products This is a good competitive weapon that are used more and more by businesses today b Building entry barriers to both new businesses and existing ones: To boost the competition advantages, the businesses usually choose to build entry barriers to new players such as: increase of size, diversifying distribution channels etc - The businesses also build other types of entry barriers which try not to directly confront other competitors, such as: + Selecting certain segments: selecting the segments with no or only a few competitors; selecting areas with remarkable demand but with no competitors or selecting the segments where the competitors not perform well + Preventing other competitors’ penetration: by having big stocks, good quality, good marketing policy … + Cooperating with competitors: in such fields as science & technology etc… 1.4 Improvement of competition is vital and obvious to enterprises 1.4.1 Enterprises’ competition power a A business will have certain competition advantages when its profit is higher than the sector’s average rate This advantage is sustainable when it is maintained in a long period of time The indicators for competition advantages are the values of the products/ services that customers enjoy and the involved costs - The values that customers enjoy from a business’s products/ services are usually higher than the price they pay for those products/ services This difference is called consumer surplus The competition between businesses has awarded the consumers with this surplus In other words, this is because a business can not categories its products/ services into segments that cover the Strategic Management customers well enough so that it can ask for the right price for the values that customers enjoy… From these this standpoint, the businesses can select either of the following competition solutions: + Creating more values for customers, exceeding the customers’ demand by outstanding design, functions, quality, etc so that the customers can feel the values and therefore they are willing to pay higher prices + Improving the business’s performance/ operational efficiency in order to lower the costs  increasing the marginal profit “Hence, by fully utilizing its core business to go beyond standards, a business will create added values for their customers” (2) In order to create outstanding values, it is not a must for a business to either have the lowest costs or to make products with highest quality in the sector Instead, it is vital that the business must create a bigger difference between Value & Cost (compared to other competitors) Following M.E Porter: “competition advantage (higher profit) will be with any business that can create outstanding values The way for creating outstanding values comes the efforts in lowering costs or/ and creating differences for its products And thus, the customers will better realize and willing to pay an additional amount”(3) b Competition power/ advantage may also mean “the ability that a business has to maintain its position in the market for a long period of time and to make a profit that can cover the ambition for its strategic target” Theoretically, there are various indicators reflecting the competition power One important one is the market share that a business has The bigger the market share, the better the competition power To survive and develop, a business must have a market share that is big enough 1.4.2 Factors affecting enterprises’ competition power: Four fundamental factors: Strategic Management - Efficiency: to a business, the inputs are labor, land, capital, management, technology and the outputs are products/ services Efficiency can be measured by the ratio of output/input - Quality: this factor can influence competition power as follows: increase the quality of the product following customers’ feeling  higher price higher quality  higher efficiency and lower costs - Improvement: is the new idea or new way that a business operates or produces Successful development is the development of new products or the new way of management that creates values for customers (4) - Meeting customers’ demand/ expectation: to this, a business must meet the customers’ demand better than other competitors, These include outstanding quality and other improvement for customers’ satisfaction; supplying customers with unique products/ services; time of delivery (5) 1.4.3 The tendency of competition in the 21st century: a Competition is more and more severe because of the following reasons: + The appearance of information technology + The application of new knowledge in science & technology that has improves the quality of human resource b The differences between sectors are disappearing Knowledge plays a vital role in competition c Globalization is booming d The competition power of a nation is combined from those of businesses/ organizations 1.4.4 Improvement of competition is vital and obvious to enterprises/ businesses - In a market economy, competition in inevitable and the businesses must accept this Competition will improve production/ operation and at the same 10 Strategic Management companies account for 27% of market proportion (foreign companies account for 42% of market proportion of engine lubricant) For premium engine lubricant (mainly international trademark), two companies BP-Petco and Castrol account for 45% of market proportion (see chart No and No for details) - Regarding industrial segment, domestic companies (including Petrolimex and other private companies) accounts for 65% of market proportion Private companies tend to use base oil of low quality (such as recycled base oil ) to manufacture lubricants Thus, retail price of their products is much lower than products of international trademark Some industrial customers mainly but lubricants to mix with recycled lubricant to reduce cost but a majority of customer is not aware of this problem Some private companies such as Phuc Thanh (Nikko), Sotrans (Solube) are thought to use recycled oil to produce other products In the segment of industrial lubricant, BP is a trademark having highest market proportion, 16.7% Ranking secondly is PETROLIMEX – PLC with nearly 11% of market proportion PETROLIMEX – PLC is considered to be successful in industrial oil, especially to hydraulic oil and engine oil for transformers - Overview about distribution channel: + Distribution system of civil lubricants of foreign countries is mainly through private outlets Engine lubricants for motorbikes and cars are distributed mainly through this system, particularly at motorbike repairing outlets and service station + Regarding industrial oil, most of companies selling their products through distribution agents and wholesaler Distributors establish close relation with customers and often give “commission” for individuals in charge of selling and buying As foreign countries are often afraid of these issues (directly 52 Strategic Management giving commission), they appoint their distributors or wholesaler to solve above “delicate” issue An exception is Castrol This company sells 60% of their products directly to consumers and remaining 40% through wholesalers However, this is thought to affect competitive competence of Castrol in industrial segment (Analyze strengths, weaknesses, estimate market proportion of some current opponents in lubricants and greases business of PLC – see Table for details) 1.3.2 The major strengths, weaknesses and estimated market share of PLC in lubricant manufacturing and trading field in Vietnam: Based on the analysis of capabilities and position of the Company PLC at the above part, we could realize major strengths and weaknesses of the company as follows a Major strengths - The material facilities system, especially two lubricant blending plants are distributed evenly in both sides of the countries, convenient location, with the wharf to receive large tonnage tankers in order to import original oils to Vietnam, near to the market consume large quantities of lubricants and oils, such as Ho Chi Minh City, Hai Phong, Quang Ninh; Lubricant and grease transit depots located in the centre of all regions of the country: Hanoi, Da Nang, Can Tho This is a special advantage, one of the core competencies to help company having a competitive advantage compared to other competitors - PLC company has major distribution systems: among them, distribution system which have very special advantage compare with other competitors in Vietnam market, it is export and distributed through Petrolimex agents with more than 1,600 filling stations belongs to companies directly under petrolimex group (on total of 5,500 filling stations of Petrolimex all over Vietnam)  the special distribution system help PLC company having important position in the lubricant market and in that it's worth: Company 53 Strategic Management PLC does not need to spend considerable resources to build and develop due to it is something like "available" for PLC and to prioritize the consumption of PLC products because it is Petrolimex products also - Lubricants and greases carrying Petrolimex brand – PLC is gradually affirmed on Lubricant producting and trading markets and in perceptions of customers This intangible assets is "precious" in the spot  customer perceptions of Vietnam created for PLC lubricants and greases into the subconscious of the customers, contributing to make good customer relations, their loyalty to their products Petrolimex brand - PLC; of providers, contributed to a company's reputation for PLC - Activities in the model of joint-stock companies, the Company PLC actively exploit and mobilize internal resources, flexibility and more timely to changes in market mechanisms Restructuring the organization and operation of the PLC according to model parent company - subsidiary companies, making each area of Lubricants, Asphalts, Chemicals is specialized further and better exploit the strengths and potential ability of each branch  create the "foot stirrups" solid support together to improve business efficiency of the combined consolidated parent company - subsidiary - PLC has established and developed famous distribution system in the world anf local areas: ensuring raw material supply is stable, with large quantity, good quality, competitive price - Human resources of the PLC have a relatively high quality, staff - the employees are trained and have enthusiasm, experience, tradition and a good understanding of customs and business culture in the localities in Vietnam; maintaining close relationships between companies and units within the PLC, the PLC company with other Petrolimex members  Creating and harness the power and resources of the system - With asset size and large capital, the Company PLC eligible investment, 54 Strategic Management building the infrastructure necessary to import large quantities of raw materials and base oil Exploiting the advantages of economic efficiency through large scale Company PLC has built up a reputation with the credit institutions so it is able to borrow capital well PLC shares are listed on the Stock Exchange, therefore the Company easily mobilize capital from stock markets to raise equity to meet the needs of business and development investment - With experience in production of lubricant and grease, inherited and accumulated in the decades and distribution systems across the country, it should be said that PLC is the company that understands lubricant demand in provinces across Vietnam - There is strength in average and fair engine oil segment and lubricant segment for use in industry b Weaknesses: - The proportion of lubricant sales through the channel of general agents is high (up to 50% of total consumption)  Company PLC has not really boost the development of a system of distributed agents outside Petrolimex, the small and medium enterprises, the car washings, auto repairs to raise output of other types of lubricant barrels, cans, boxes Thus, flexibility in the distribution system of the Company is not high, not to promote the advantages of the agents outside Petrolimex - Although the activities of new lubricant development have been interested in research and development but the lubricant product structure, with PLC brand has not met all the PLC needs; despite PLC products meet international standards, but mostly at medium and high quality, not much product to supply premium quality - Competitiveness in the motor oil segment (4 and stroke) of the PLC is not enhanced by the products of the same segment of the BP and Castrol, PLC's 55 Strategic Management share of oil cans in this segment is still low compared to the two company - PLC's products are usually sold at prices lower than other same products of foreign firms such as BP and Castrol - Financial resources are not really abundant, large demand for investing and developing while capital owners can meet only a part, medium and long term capital funding for investment in some cases are difficult to raise action High proportion of loans in the source structure should finance the operational costs and high motivation to work on the part of staff - the employees are not high The company also has some part of the property, that is old and needs to be upgraded, expanded investment - The promotional activities, trade promotion, public relations (PR) and activities to promote and protect the brand is not strong c Position, estimated market shares of the PLC Company in lubricant production and business in Vietnam: - Company PLC has a high position in the market lubricants business in Vietnam, capable of understanding other provincial market town in the country (local market) - According to PFC Energy rating: PLC is the largest domestic brand with a market share second only to BP, estimated at 13.1% - PLC Company has stronger sales in the common lubricants for transport means - approximately 13.7% market share in this segment In the industrial lubricant segment, PLC about 11% market share - most of PLC's sales in this segment is hydraulic oil, gearbox oil and transformer oil Vision and mission of the PLC Company period 2011 - 2015: From the reviews of the strengths, weaknesses, opportunities and challenges as above, orientation - the overall vision and mission of the PLC is: 2.1 PLC visions: 56 Strategic Management PETROLIMEX LUBRICANT COMPANY (PLC) One of the leading company in Vietnam “PLC companies build and develop to become Petrolimex Lubricant jointstock corporation, one of Vietnam's top companies, trading in field of Lubricant and grease and other petrochemical sectors, located in the strong Economic Group, top of Vietnam - Petrolimex” - PLC Company has always keep one of the leading company, hold at nd or higher in lubricant and grease market and other petrochemical sectors in Vietnam This position shown on other sense of: + Scale, market and business; + Manufacture technology and management techniques; + Ensuring quality of products, goods and services; + Ensuring productivity and business efficiency - Oriented vision is considered the most general orientation target Like that, the company can able to achieve the mission of the company in society As one of the leading company in the above senses is the necessary and sufficient conditions can continue to develop the correct position and capacity of existing companies That can be a affirm and make the difference between PLC company with other companies in the market 2.2 The missions of PLC Company: - Implement role in ensure the supply lubricants and other petrochemical products, to meet the needs of economic development and people's life in the process industrialization and modernization of the country - In trading lubricants and petrochemical products, the PLC must have enough capacity to maintain competitive position as one of the leading company in the market (number or higher) and business high efficiency 57 Strategic Management - In other fields of business (if given the chance), doing business effectively on the basis of ownership diversification and business diversification - The above missions firstly start from the role and position of the Company PLC today and in the past - In coming time, though there are certain changes in market and policy mechanisms related to business activities, the mission has not changed PLC companies need to focus on developing and ensuring adequate capacity to fulfill this mission Such is the condition for strengthening the role the company and continue to develop in the future Strategies to improve competitiveness in the lubricants business period 2011 - 2015 of the PLC Company: 3.1 Strategic goal period 2011 - 2015, Vision 2020: a Production and trading oil and grease products and other petrochemical products, brand PETROLIMEX - PLC- having quality standards with National, International; excellent services and meet well customer needs; based on development of facilities with modern, high technology, is conveniently located in the petrochemical sector b Continue as one of the leading manufacturing business (take a position from or more) Petrochemical products: Lubricant and grease, asphalt, chemicals, in Vietnam Gradually expand its export petrochemical products to countries in the region c Diversification of production and business activities based on exploiting the existing advantages of the company, ensuring business efficiency d Building PLC Company become Petrolimex Lubricant joint stock Corporation, contribute to the development Vietnam National Petroleum Corporation into a strong and dynamic economic group e Improve the efficiency and competitiveness of company 58 Strategic Management f Constantly improve the value of the enterprise to deliver maximum value to shareholders, creating a stable job, gradually raise the incomes of workers g Fast and stable growth 3.2 Orientation to improve competitiveness in the lubricants business period 2011 - 2015 of the PLC Company: The goal orientations to enhance competitiveness in the lubricants business period 2011 - 2015 of the PLC Company as follows: - Goal-oriented No 1: To increase investment in developing infrastructure and improving technical efficiency in production and trading of lubricant and grease products - Goal orientation No 2: Continue to deeply re-organize the structure of two subsidiaries, each subsidiary operating in a field of manufacturing and trading Asphalt or Chemical and expanding selectively activities of PLC to other areas that related axis of petrochemical products - Goal oriented No.3: Ensure to meet well customer needs in quantity, quality products and services at reasonable costs on the basis of rationalizing business processes, reduce costs in the areas of core business - Goal-oriented No 4: Develop infrastructure and information technology systems such as information technology, human resources development, preparation and implementation of plans to issue shares to increase equity to strengthen the Company and business advantage in the market - Goal oriented No 5: Building model of organizational structure to meet operational requirements, on the basis of further restructuring the Company in the orientation of ownership diversification, diversification of economic sectors and operation market mechanism - Goal-oriented No 6: Adapting to economic integration trends and globalization of political-economic life Developing relationships with enterprise, of business partners (suppliers, customers and other partners ) 59 Strategic Management and state organizations, expand cooperation of mutual benefit and sustainable establishment of business relationships (with suppliers, civil partners and customers ) both domestic and foreign which continue to raise the prestige and influence of the PLC Company on the market 3.3 Strategy of improving the competitiveness in the business on Lubricants and Grease of PLC Company in the period of 2011 – 2015: 3.3.1 Matrix of evaluating the external factors (EFE model): details in attached Table 3.3.2 Matrix of evaluating the internal factors (IFE model): details in attached Table 3.3.3 Internal - External element matrix (IE): details in attached Table 3.3.4 Competitive image matrix: details in attached Table 3.3.5 Market growth rate: details in attached Table 3.3.6 Space matrix: details in attached Table 3.3.7 SWOT matrix: details in attached Table 3.4 PLC’s strategy system 3.4.1 Overall strategy - To improve market coverage and market share - To be ready to step into other areas (out of lube and grease) when opportunities come but to hinge on petroleum and gas product 3.4.2 Key competitive strategy Cost - leadership strategy (basing on SWOT analysis) Some solutions for implementing successfully strategy of improving the competitiveness of PLC Company: 4.1 Improving the quality of Marketing, promoting the trademark of Lubricants and Grease of PETROLIMEX- PLC: enhance the activity of commercial promotion, advertisement, public relations and build the image of the Company, the products of the Company for domestic and international 60 Strategic Management customers: - Improve, agree the awareness and long-term vision about investment and development of the trademark - Enhance the investment into improving the quality and distinction of the goods - Complete the system of trademark identification of Petrolimex through the network of retail distribution - Promote the investment into advertise the image of the trademark Petrolimex - PLC in mass media: invest into activities of quiet communication activities; invest in the moving communication activities; invest in the activities of public relations - Enhance the investment into protecting Petrolimex trademark 4.2 Develop the market, market share, system of distributing the products of Lubricants and Grease of PLC spreading the whole country, including the channel of General Agent Petrolimex, Distribution agents, Consumption agents, big industrial customers: - Increase the activities for support, coordination with General Agent Petrolimex to strengthen the consumption of Lubricants and Grease: agree the policies with General Agent Petrolimex, both being partners and the member unit of Petrolimex - Increase the output, market share of Lubricants and Grease: increase the annual average output by – 9%; try to maintain and reach the market share from 13 – 15% 4.3 Invest and develop the export activity of the products of Lubricants and Grease to the market of the regional countries: try to have the growth of annually average export output by 10 – 12% to the market of the countries such as China, Taiwan, Hong Kong, Philippines, Laos, Cambodia… - Participate in investing, developing the business production on the new 61 Strategic Management products under the fields of Petro chemistry, Petroleum and gas attached with PETROLIMEX – PLC trademark 4.4 Invest and develop the system of hi-tech, modern technical material facilities; having favorable position in the big economic centers of Vietnam such as Hanoi, Da Nang, Ho Chi Minh City, Can Tho: - Continue to invest and expand the nd stage of Thuong Ly Lubricants Factory - Implement and invest into improving the modernization of Be House Lubricants Factory – Ho Chi Minh City to ensure 02 Factories of processing the Lubricants of PLC to have the modern production technology, high automation, large capacity, processing the products with high quality, specialized products - Invest newly into Lubricants and Grease and Chemical in Dinh Vu – Hai Phong, prepare the necessary conditions to business on Base oil 4.5 Do business on Lubricants and Grease products with National and International standard quality; perfect services and services satisfying the highest demand of the customers: - Develop the Lubricants and Grease products with the high quality to meet the demand of equipment, new generation machines, suitable and modern technology with the demand of investment of the domestic companies and ones which pay the special attention to the market of new machines, equipments of foreign companies investing in Vietnam - Expand the service for hiring processing of the lubricants, hiring the container of petrochemical products,… 4.6 Enhance the development and investment in human resource; create the best working environment for the labor; pay the attention to development of public benefits - Recruit and train the labor with highly professional skills, good degree of 62 Strategic Management foreign languages and the suitable skills with business production activity of the Company - Build the policies to attract the human resource, good treatment regulation, friendly working environment, Company culture …creating the good motivation so that the labor promote their capacity, intelligence , long-term attachment for the Company’s joint targets and benefits - Pay attention to making the contribution to social activities, charity, study encouragement, sponsor,… 4.7 Step by step diversify the business production activities related directly (around) to the current business production fields, basing on the exploitation of the available advantages of the Company, ensuring the business effectiveness: - Make the capital contribution with VIPCO to invest into building newly 02 ships to transport the Asphalt, the loading capacity of 2.800 DWT/01 ships - Make the capital contribution with PGC Company to invest and develop the office building at 775 Giai Phong – Hanoi; prepare the procedures to make the invested capital contribution in Ho Chi Minh City and Da Nang to build some buildings with the offices/ high-level apartments for hire 4.8 Improve the financial capacity of the Company; use the price policy as the effective competition tool: - Build the feasible methods; select the suitable time to mobilize the capital from the securities market effectively - Have relationship with the big banks, domestic and international credit organizations to sign the credit contract with competitive interest rate - Have relationship with the big suppliers to negotiate the payment credit level, late payments, buying the big block with the competitive price - Make closely the late payment debt of the domestic customers, minimize the financial risks 63 Strategic Management - Save the costs for production, transportation, business to reduce the price of the products - make the sales price, sales mechanism, marketing, promotion, technical service, improve the marketing capacity of sales team…flexibly comparing with the competitors 4.9 Seriously follow the State regulations about announcing the information for the companies with the stocks listed in Stock Exchange: - announce exactly, timely and fully quarterly, annually financial statements; unusual information ….under regulation - improve the publicity, transparency in business production of the Company 4.10 Continue implementing the project of re-structuring PLC Company under model of Parent Company – Subsidiary Company: - Continue re-structuring deeply the organization and activities of PLC Company, Petrolimex Asphalt Company Limited and Petrolimex Chemical Company Limited - Participate in investment to form subsidiary companies including the enterprises with the controlling shares held by the parent company; organized under the form of joint stock company, 02 members and more company limited, joint venture company and company in foreign country - Participate in the investment to form the connection companies including the enterprises with the uncontrolled shares held by Parent Company; organized under the form of joint stock company, 02 members and more company limited, joint venture company… 64 Strategic Management Conclusion All in all, Lubricants and Grease Business Production in Vietnam belongs to the monopoly competition with the entering barrier which is not high, dispersed sector structure brings the threats rather than the opportunities for the enterprises  it is likely that the best startegy for enterprise to pursue is the Cost - leadership strategy The phase with decisive role to the effectiveness of the enterprises operating in the sector is establishing and maintaining the system of suppliers for the materials which are base oil and additives, with the most competitive price and the fastes time, from refine oil factories in the region and in the world Meanwhile, the countries with the rich natural resource or capacity for producing raw oil, the petrochemical products always have the trend to take teh advantage of their strengths to create the good changes for them, espcially the price Therefore, the supply and demand and price of the petrochemical products in general and base oil, Lubircants and Grease products in particular in the market change unusually, difficuly to forecast  In recent years, Business sector on Lubricants and Grease in Vietnam – the country with the import of base oil, additive – has become more dependent On the other hand, with the continue improvement and re-structure of the sector (buy, sell, merge) to be adaptive; Business production on Lubricants and Grease in Vietnam is changing towards the trend “gradually concentration” to move to the form of group monopoly and from period of current re-structure to saturated period of the cycle of business production on Lubricants and Grease in Vietnam  In order to compete successfully in business production on Lubricants and Grease in Vietnam, PLC Company needs to be aware of the core characteristics above to build, complete and implement suitable strategies to take the advantage of the opportunities, drive back the challenges basing on promoting its strenths, 65 Strategic Management repairing its weaknesses 66 [...]... and Petrolimex general agent channel - Petrolimex general agency channel with more than 5.500 petrol and gas outlets of Petrolimex is located nationwide Its location is convenient, creating commercial advantage, having large enough scale to make profit and above all, Petrolimex outlets give priority for consumption of Lubricants and Grease products of PLC as those products are also products of Petrolimex,... 34 petrochemical standards - PLC is now applying quality management system of ISO 9001:2008 1.9 Market & sales channels a Petrolimex master dealer channel: 21 Strategic Management Petrolimex is having more than 5,500 petrol stations nationwide that has provided PLC with a good competition advantage over other competitors PLC’s sale volume is the biggest via this channel b Dealer channel/Outside Petrolimex... and leasing land is high)… - Special distribution system of Petrolimex general agents with more than 1.600 oil and petrol outlets belonging to member companies of Petrolimex (among total more than 5.500 outlets of Petrolimex nationwide): as those outlets were developed in the past, those outlets often get convenient positions for trading petrol, oil and grease in localities nationwide This distribution... 1.1 Establishment & development a Earlier, PLC was a lubricant & grease trading company Later in 2003, the company was privatized and becomes Petrolimex Petrochemical J.S company On 27/12/2004, PLC was listed in Vietnam stock market - Full name : Petrolimex Petrochemical J.S company (PLC) - Logo : - Office address : 195 Kham Thien Str.- Dong Da Dist- Ha Noi - Before 1994, PLC imported 100% of its products... the future, demand for higher quality products will increase 2.2.6 Potential Entrants: - Currently, most of international players own and operate their own blending plants There is still excess capacity  difficult for new potential entrants However, the possibility is there may still be other international players buying over blending plants or hire blending capacity to join the market - In rural &... Moreover, in all cases, Petrolimex outlets must give priority to consume lubricants and greases of PLC as those products are also products of Petrolimex This system is “rare” and difficult to be “imitated” as among all enterprises manufacturing and doing business in lubricants and greases in Vietnam, PLC is the sole company owning this - On the basis of P letter trademark of Petrolimex, the label lubricants... (drums, plastic cans ) to ensure: sufficient quantity, right quality, timely for the two lubricant blending plants in Hai Phong and Ho Chi Minh City; neatly arranged in the warehouse, outside the yard; regularly inventory to accurately determine inventory make basis for the production of lubricants at the two plants are continuous, contributing to raise capacity, reduce transportation costs within the plant... government still allows the industry to follow market mechanism still there are also bad signs of competition + Some players import low quality/ under par products  loss and damages to buyers This must be controlled + The buyers has poor knowledge on quality  role of quality in competition decreases  unfair competition between businesses 3.2 Analysis on the existing competitors in lube & grease market 3.2.1... 15,000 tons/year blending plant in the South of Vietnam Shell distributes its products via a long time partner and a big petroleum product wholesaler – Comeco – who is operating a network of 28 petrol stations Shell also distributes its products via its partnership with some PETEC petrol stations e Chevron Vietnam is operating a 15,000 tons/year blending plant in Haiphong, North of Vietnam It is marketing... produce some certain high quality types of lube, Vietnam still have to import some for domestic distribution (26,000 tons in 2006 and increasing) (Source: PFC Energy) 2.2.4 The power of material suppliers a The power of main material suppliers As Vietnam has to import all of main materials (base oil & additives) from hot markets such as Iran, Iraq and due to the economic-petroleum policy of such powerful ... profit - This type of competition hardly exists in reality 1.2.2 Imperfectly Competitive Market Imperfectly Competitive Market is a normal one as it exists in reality There are two types of Imperfectly... the company was privatized and becomes Petrolimex Petrochemical J.S company On 27/12/2004, PLC was listed in Vietnam stock market - Full name : Petrolimex Petrochemical J.S company (PLC) - Logo... applying quality management system of ISO 9001:2008 1.9 Market & sales channels a Petrolimex master dealer channel: 21 Strategic Management Petrolimex is having more than 5,500 petrol stations